INSIGHTS by HDTS

Hardware Renaissance

Recently a number of factors have made starting up a hardware company much more possible. An investor/mentor of ours, Paul Graham, recently coined the term 'Hardware Renaissance' in an essay where he outlines why we may be seeing an influx of hardware companies in the very near future. He mentions that hardware performs very well on platforms like Kickstarter and Indiegogo. These websites can prove a market before any real manufacturing. While investors may be slow to move on new trends, they still clamor at the opportunity to bet on a company that already has millions of dollars in sales with only a prototype.

I've had a successful Kickstarter campaign, I've won right?

There are a number of factors that lead to a successful Kickstarter campaign. I am not going to go into any of them besides that having a kick ass prototype certainly helps. Most of the hardware companies that have performed very well have done so for a reason, they have an awesome prototype and the world wants it bad. It is important to look at how the top companies have performed afterwards.

This image is from a CNN Money report titled Why 84% of Kickstarter's top projects shipped late. The problem is that creating a great prototype and bringing it to market are two very different processes. I wonder what would happen to the reputation of KIckstarter and the implication on future campaigns should the % of late shipping products does not decrease.

What we have learned 

Our friends who build hardware have asked us for advice on how to source components and manufacture products. It actually shouldn't have surprised us but most of these hardware teams would love to keep focusing on making a great product and not on the nuances of sourcing, manufacturing, assembly, logistics, customs clearance, fulfillment and distribution. Sourcing great products is not easy, especially on websites like Alibaba where you have no trust in the suppliers you are dealing with. This trend made us take a hard look internally and this is what we found:

1. We build tablet based Quality Control software and have partnerships that give us access to hundreds of QC specialists on the ground in China.
2. We already sorted through the crap; we have relationships with premium suppliers in major production regions.
3. We are already integrated into the supply chain.
4. We are building a vetted B2B marketplace with multiple sales channels.

Our New Goal : Assist hardware startups bring their product to market

Pretty simple. We are excited to be working with some of the best new hardware companies to help with all the nitty gritty of shipping products on time. We are even more excited that we can now provide a fulfillment solution that hits over 50% of the US population in 1 day and over 98% in 2 day ground shipping.  While our marketplace is still in beta, we are also already putting select products in front of millions of consumers and businesses as a part of offers programs. In fact, we buy these products at wholesale quantities and then we handle the rest.

If you have had a successful campaign, you probably know the feeling

"In the first 24 hours, everyone is happy and slapping your hand," says Oculus CEO Brendan Iribe. "And 48 hours later, the reality sets in. There's a bit of fear: We're going to have to make all of these."

It is important to ask yourself:

1. Do we really have the expertise in sourcing, manufacturing, quality control, logistics and fulfillment?
2. Do we really want to spend our time worrying about the nuances of bringing a product to market?
3. Is E-commerce driven from our SEO marketing strategy for our website enough to hit our sales projections?
4. Do we want to build a multi-channel distribution strategy from scratch on our own?
5. Would we rather spend our time focused on building a great product and iterating?

Chances are, you need a partner you can rely on.

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