Your BOM is not your COGS

“The prototype was $12 in parts, so I’ll sell it for $15.” That is your recipe for disaster, and why so many Kickstarter projects fail. The Bill of Materials (BOM) is just a subset of the Cost of Goods Sold (COGS), and if you aren’t selling your product for more than your COGS, you will lose money and go out of business.

We’ve all been there; we throw together a project using parts we have laying around, and in our writeup we list the major components and their price. We ignore all the little bits of wire and screws and hot glue and time, and we aren’t shipping it, so there’s no packaging to consider. Someone asks how much it cost, and you throw out a ballpark number. They say “hey, that’s pretty reasonable” and now you’re imagining making it in volume and selling it for slightly higher than your BOM. Stop right there. Here’s how pricing really works, and how to avoid sinking time into an untenable business.

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Working on a Startup? New Fund is Building Portfolio from Hard Technology

Root Ventures just announced it has raised a second fund and is in search of startups to invest the $76,726,900 they now have burning a hole on their balance sheet. Their first fund of $31,415,926.53 went to some very cool hardware companies like Shaper, Particle, Plethora, and Prynt. For those keeping score, the first fund is Pi and the second is the speed of sound — it’s a geeky engineer thing.

This is a seed fund, and founding partner Avidan Ross described their role in your company as being the world’s “greatest sherpa to take you on a really tumultuous path”. That path is one of building a product around which a great company can arise. Repeatedly during the conference call with Hackaday, Avidan stressed that what makes Root Ventures stand out is that the partners in the firm are themselves engineers and have hardware backgrounds. For instance, Avidan spoke at the 2016 Hackaday Superconference about his 45-second pizza oven and other food/automation hacks. Partner Chrissy Meyer was an engineering manager at Apple and led hardware programs at Square, before founding a vehicle technology startup. Their point is that if you’re going to entrust part of your company to someone, it’s nice if they have the background to understand it.

Whether or not you have a startup in the works, it’s interesting to know what the keepers of the cash are looking for. Avidan described this as a engineering-heavy seed fund, but stopped short of calling it a hardware seed fund, using the more coy term “hard-tech fund”  although more than half of the portfolio companies already on board are building new, original hardware. It’s impossible to nail down exactly what the fund is seeking — they’ll know it when they see it — but we had a nice conversation of some of the future trends he has in mind.

While economies of scale in the smartphone industry delivered low cost sensors such as accelerometers, GPS, and cameras, along with connectivity, the next wave may be from the self-driving industry. Avidan foresees rising availability of ASICs, specialized GPUs, and the sensing hardware currently under heavy R&D in the automotive industry. His take is that not only will this be a hardware boon for startups, but the machine learning aspects of it will produce both talent and opportunity for new companies.

Pull together those proofs of concept and get your presentation decks ready. That $76 million is just waiting for a great idea to come along. If you make it big, Hackaday still wants an early look at your awesome new hardware!

What It’s Like to Quit Your Job and Start a Company – Then Fail

Some of our more dedicated readers may remember me as that promising and talented new writer who disappeared after only a couple of months last fall. Or, alternatively, that moronic new writer who had no idea what he was talking about. But, I’m just going to go ahead and assume it was the former in order to protect my ego. In either case, if you remember me at all, you may have wondered why I left. Was it cholera? Was I drafted into a top-secret CIA program? Did I join a circus as a fledgling trapeze artist?

No, it was none of that. That would be absurd. What would make you think I had any trapeze skills at all, much less circus-worthy ones? The truth is a lot more straightforward, but was also a lot scarier (and more exciting) for me — I started a business. The astute readers among you have probably already put the dots together and figured out that I failed. The title was a pretty strong hint, right? This isn’t a story of bootstraps-pulling success, or a heartwarming underdog tale. This is an opportunity for me to talk about the lessons I learned as I failed, and to give the entrepreneurs out there something to consider when they start their businesses. We’ll laugh together, we’ll cry together, and maybe we’ll even learn something together. Ready? Alright, let’s dive right into the heart of it, starting when I was seven years old…

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Supplyframe Design Lab Opens Its Doors

Today marks the opening of the Supplyframe Design Lab in Pasadena, California. The Design Lab bills itself as the “leading edge creative center built to foster new ideas in technology and design”. Supplyframe had the vision to acquire Hackaday a few years ago, launched the Hackaday.io Community site which now has more than 150,000 members, and established The Hackaday Prize to spark engineering projects that benefit humanity. Pay attention to the Design Lab; looking back on this day you’re going to be able to say that you remember when it all started.

The equipment enshrined in the new space is spectacular. Name your material, and there are tools to work with it. Working with electronics? Mill your prototypes on a number of OtherMills available. Custom enclosure? Take your pick of milling it on the Tormach, PolyJet printing it on the Statasys, or FDM printing with a number of different high-end 3D printers. Need design software and beefy boxes to run it on? They have that too. Working in wood? A shopbot awaits you, as do traditional tools like a tablesaw, routers, sanders, etc. It’s a wonderland for making the imaginable real. If there ever was a time to quit your job and spend three months launching that dream product, this is it. The Design Lab has a residency program.

Supplyframe is all about enabling hardware creation. This is what sites like Parts.io and Findchips.com do: provide powerful tools for hardware engineers to better use their design skills. Founding a space like the Design Lab is a natural extension of this. Providing a work area, mentorships, and funding residencies breaks down the barriers that can prevent new hardware seeing the light of day. The Design Lab solves the issues of tools, materials, and hands-on experience that plague many a new hardware company.

Residencies will start on July 1st. Each runs for three months in which residents have unfettered access to the space and its tools, as well as financial support of $2000 per month. Each resident will self-identify into the product-track (you’re on your way to market with new hardware) or the art-track (you have a calling for an ambitious project and need to make it a reality). So far the Design Lab page lists three residents; a network of low-cost air quality sensors called Scintilla, a music synthesizer based around Teensy 3 called NanoEgg, and a mixed-reality public arts initiative called Perceptoscope. The Design Lab is still accepting applications for new residencies this summer and beyond — one of these residencies will also be offered to the Grand Prize winner of the 2016 Hackaday Prize.

When You Get Serious About Selling A Project, Consider an Accelerator

I was visiting San Francisco, scratching my head for something cool to cover for Hackaday. When it hit me: this is one of the leading cities in the world for starting new companies. It’s known for its software, but with Tesla, Type A Machines, Intel, Apple, and more within an hour’s drive of the city, there’s got to be a hardware scene as well. Silicon isn’t a software product after-all. But where do you find it, and how do you get a hardware start-up going in one of the most expensive cities in the world?

That’s where hardware accelerators or incubators, whichever name they prefer, come in. One-third hackerspace, two-thirds business crash course, they help you skip a lot of the growing pains associated with starting a capital intensive thing like a hardware business. I dropped in, and they kindly gave me a few minutes of their time. I wanted to find out what a hacker could do if they felt it was time to turn those skulls into dollars. What are the requirements. What is the cost? What help does the incubator offer to the burgeoning capitalist in a hacker?

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How to Be the Hardware Engineer at a Startup

For those who prefer the smell of solder smoke to lines of code then you may be a hardware engineer. What you should consider is how to land a job at a startup, how to work fast, be a team player, keep an open mind, and be organized. Joining a startup will be the greatest challenge of your career. You can do it! Be a hardware engineer at a startup and change the world.

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