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  • Neil Ide

The hardware business is hard, but it doesn't have to be this way.

Updated: Aug 14

Ask anyone who knows me, I'm a hardware nut. I get hard for hardware. So naturally when I finally decided that I could no longer tolerate the standard model of a safe secure job. I started a hardware startup company.


Nyborg is the second of three hardware startups I've started. The first was a 3D printing company called Phanedyne; and my 'fetus' company is Neutron Blue.


Before being a hardware startup junkie I was a hardware junkie for:

  • US Navy Nuclear Submarines: I worked in the Nuclear Engine room on the USS Los Angeles and OMG what fun!

  • Bloom Energy R&D: I built so many cool things for science people and learned a lot about hardware startup culture.

  • Swagelok Business Development: I got to see all the cool hardware, all over northern California. Orgasmic.

Since that time I've worked in stealth mostly and can't really talk about it.


Now as a founder who has never raised investment capital let me tell you this...it's hard...at first.


There is a reason Elon Musk did PayPal before Tesla or SpaceX. Software is waaaaay easier and so VC's and Angels have gravitated toward software investing such that most investing is in software. As an entrepreneur you must overcome a cognitive bias that "you aren't worth anything when you're broke". Once you have your 'first money in' things ease up.


There is hardware investing for sure but its a space that's shaped differently. Here are common 'first money in' trends I see in hardware investing:

  • Crowdfunded - Gadgets on Kickstarter and similar platforms

  • Previous exits - A previous successful exit is practically a golden ticket for raising money

  • Ivy Club - Well educated and degreed

Crowdfunded is perfect for consumer/prosumer gadgets but I'm less confident about commercial/industrial things as the industrial and commercial markets are normally much better understood by specialists. Commercial/industrial hardware usually always requires more capital than can be raised in a crowdfund, because funders are more focused on short term self-interests like a cool new gadget in 6-12 months.


Previous exits is a strategy that I recommend to any hardware fetishist that wants to do something really cool. The previous exit is a golden ticket to cool town and as a newly inspired entrepreneur think stupid-simple. Seriously. Don't shoot the moon, just do something so simple that it's stupid to you. Like Slack. Slack is fucking stupid, but apparently not so stupid that millions of people use it, and its like a billion dollar company. Are there going to be museums that inspire our grandchildren to build SaaS tools? Not a chance. SaaS is however like 90% of venture capital right now. Slack isn't stupid. I'm stupid. I rushed to a moonshot on a bootstrap and it went up in smoke and I had no capital to recover it. If you want to build a hardware company, build a stupid company first.


Ivy Club companies are hallmarked with extremely well educated founders many who have been bigtime executives. I have nothing against these people. Let me be clear about that. Rich people are ones who are reliant on income from assets, not jobs. Poor people are ones who are reliant on income from jobs, not assets. Middle class are typically glorified poor people, sorry folks. (I was raised poor) Rich people have a tendency to begat rich people and poor people have a tendency to begat poor people. Because parents teach their children what they know both consciously and unconsciously. Investors have confidence that Ivy Club people will allocate resources wisely because they perceive it to be so and its often true.


Excessive spending


Once I was talking to a business consultant who told me that businesses that strangle their engineering department for resources usually extract great innovations from their team. I was appalled by this idea at the time and yet I have come to believe that they we're not entirely incorrect. At Bloom Energy collectively as an engineering department we fucking torched capital on a regular basis. No one had apparently ever heard of Lean product development, including me. I was right there with many others roasting the Ivy Club capital in a "might makes right" approach to technology development.


Oh how I long for that sweet sweet Ivy Club capital. The jolt of buying brand new preciouses from National Instruments, Swagelok, Keysight, Agilent, and beyond.


Might makes right is a terrible strategy for a hardware startup. That shit works on government money (barely). Not private capital.


Systems>People


The Milgram Experiment proved a startling truth that many still ignore. That is, a system is more powerful than a person. People easily succumb to the gravity of a social system and behave by the prescribed rules of that system. One of the most amazing examples of this feature of human behavior is the Delancey Street Foundation. One of the most abhorrent examples is the Holocaust.


Don't get me wrong, by no means am I saying specialized skills is meaningless. But specialized skills applied in an improperly structured system is not very productive.


The Wright brothers applied themselves to the art of lean technology development. Their greatest achievement wasn't the first sustained powered flight. It was the application of lean technology development. The successful flight was merely a hallmark of the use of lean tech dev.


To all would be founders, startup junkies, and hardware fetishists: THINK LEAN!!! The power of lean has enabled me to get a $6000 analytical balance for $25.21 and much more. Lean practitioners usually learn more faster. Our brain is lazy it doesn't want to learn or change perspective. Its the same reason the USA might very well embroil itself in a civil war rather than pursue productive bi-partisan unification. It takes energy to see something from a different point of view and our lazy brain doesn't typically want to do this. Its way easier to let brain integrate with an echo-chamber social system. Excerpt from "The Decline" by NOFX - "lies are simple, simple is bliss".


Lean Learners Learn enLightening Lessons. Yep. That just happened.


To all the would-be Elons of the world. Think lean.




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