Happy New Year everybody! January is the month where you actually start executing on your New Year resolutions. I am sure some of you decided to become entrepreneurs this year. What if you wanted to start a Hardware Startup? How do you go about it? How much customer feedback do you incorporate into your product? What are the first iterations? Is design actually important? If so, when should you consider it?
So many questions, yet so little answers out there. Our next guest, Balint Horvath has set himself on the quest of building a body of knowledge for hardware entrepreneurs in the form of a podcast to which I had the privilege of being invited. You can listen to the episode here.
You can read the previous “Tracing the Routes” episode here.
Radu: Hi Balint. Do you remember the first hardware project that you worked from idea all the way to execution? Tell us more about it.
Balint: In my early days as a child I was busy thinking creatively about some new projects, i.e. chemistry- or physics- or electronics-related experiments. I remember that downstairs in our cellar below our flat I even built up a small chemistry lab with cuvettes, chemicals. Luckily our home above was never affected in any ways, by toxic fumes or flames. But then I was steered by one of my family’s friends who was a physics teacher in another direction: to apply for university to study computer science. Computer science was a hot field at that time. I realized however soon afterwards, that programming is not for me. I didn’t like the fact that it heavily involved sitting in front of the computer, hitting the keyboard, rather than the hammer. I was looked at as a rare species by my peers and the department, when I shared with them that I would like to switch back to another field. This other field had to do more with hardware, rather than programming, which was electrical engineering. My first big project was during my Master’s thesis. Together with a PhD student we studied various articles in microwave photonics, in essence a field that deals with high-speed signal transmission via optics. At one point we came across some interesting papers by some JPL (NASA) scientists. We liked their results on how to generate high-purity microwave signals via photonics (using a fiber optic link), however there was a technical issue we found that they didn’t solve. We analyzed it subsequently by building a model of it in a microwave simulation environment. Then we had our Heureka moment: by taking more than one fiber and connecting them parallely with the right lengths we could solve a major technical issue. I did measurements in the lab using an oscilloscope, characterizing the signal, learning about fiber optics. The results were pretty exciting and we even decided to publish a conference paper on it which I presented in the US. Oh boy, I was quite proud of my achievements and my travel to a country far away. I consider this story as one of the defining stories for me which led me to where I am now.
R: What made you make this switch from working in R&D to being involved and covering the HW movement?
B: I read a blog post by Tim Ferriss last year on how to start a podcast. Then I had a sudden realization that this could be for me. If I had been listening to podcasts earlier for years, why not creating content on my own? This question became relevant especially when I realized that there is no podcast that covers how startups are built in the quickly expanding hardware field. When I read the article, I told myself: this looks easy. In retrospect, I was wrong. Nothing is really easy when you want to start something on your own, be it a business or a mini-startup, that is a podcast as I sometimes refer to it. I had to overcome similar challenges as what a startup has, e.g. working with very limited resources, cold calling/emailing, organising my workflow, last but not least outsourcing the implementation of tasks where I myself don’t have a high added value.
I have to add that another circumstance that helped me making this jump is that before I made a decision to start a podcast I went backpacking for half a year. This allowed me to learn a lot about how to move around and live with limited resources, how to find my way around every day, how to communicate in different cultures. I did this trip after quitting my job working for a big corporation, from my role as R&D Program Manager. The winds changed at the company, we got acquired and major (not so good) changes were about to happen to the employees of the acquired company. So in a way I made my preemptive move.
R: What are the differences that you see between HW development in the R&D department of a big corporation to HW development inside a startup?
B: Having experienced living in both world, there are certainly some differences, major differences. They could actually learn from each other. Big corporations are not bad places, what they’re doing in spite of some bad publicity that they receive. I have two major aspects to highlight. There is an organized structure with division of labor, which translates to having experts in different domains, in accounting, control, manufacturing, R&D and you can learn something valuable from all of them. They are usually very process-oriented and have standards for many things at work. I could actually greatly benefit from this in my podcasting as podcasting has many many steps involved as without a structure I’d be nearly dead, I’d be running around doing this and that with being constantly stressed most of the time to finish things. All these.
Startups on the other hand are less structured by definition since things are constantly evolving. They are more agile so they can make decisions faster with less levels of hierarchy, unlike at big companies where multiple levels are involved and many meetings have to happen when things start to move. Startups have typically smaller teams so members need to have skills in various domains as the necessary skill set in order to make a company work has to be covered with a smaller number of team members than at big corporations.
R: From your experience what is the biggest mistake done by startups when doing HW development? What about the one big mistake done by big corporations?
B: A big mistake by big corporations is that since they are so much process-oriented, they can overplan things with long development times stretching even over multiple years with little consideration on the fast-changing external environment. A classical example is that of Nokia that followed the 5 year plan despite the iPhone coming out in 2007, missing the chance of responding to this change of environment. We know the end of their story as they were driven to the ground.
One mistake startups typically do is having the wrong team with founders that cannot cover all the domains needed to make a company successful. If you’re successful in a role, the path that led you to that point won’t make you successful in a new role. Make sure you hire the right team members so there’s cohesion and complementary skill set. If you cannot cover all skill sets, don’t be afraid to outsource some activities, especially ones that are not related to the core skills, technologies. It’s more important to move ahead faster, validating your business with actual sale rather than optimizing for cost at the beginning or waiting for the right candidate to come. As a matter of fact, outsourcing can be cheaper than hiring someone. There are a lot of uncertainties, business or technology risks at the beginning and taking on a permanent employee can result in a unnecessarily high burn-rate. Why risk running out of cash or having to look for further funding, when instead you should be validating and iterating?
R: You’ve interviewed several HW people in the past years; do you see any trends in the sector?
B: Validating your idea on a small-scale is essential, as well as thinking about business models. We’ve seen many hardware startup failures recently, e.g. Juicero, Jawbone. This connects with the previous point about failure at hardware startups. Funding alone is not going to solve your problems. Beyond funding aspect, Juicero used custom-made parts that contributed to its demise. One of my guests of the podcast instead, Alok Tayi of Tetrascience had a solution around this, namely they used off-the-shelf component for their first IoT device.
R: What final piece of advice you would give to HW people around the world?
B: Albert Einstein had many interesting quotes but one that I keep in mind still is “If I had an hour to solve a problem I'd spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.”. Think about the problem first, try to understand it from various angles. When going after your business idea try to attack it from different angles, even from the point of view of your competitors. As Prof. Guenter Faltin said in an interview I recorded with him, who I call the German Tim Ferriss, an idea has to be able to stand not only on one foot but it has to have multiple feet to stand firmly. How many feet does your idea have?
R: Thank you very much Balint. I hope our readers find your insights as interesting as I did. For more episodes, don’t forget to subscribe to our newsletter and follow us on Twitter, Facebook or LinkedIN. If you have any questions or suggestions, please send me an email to firstname.lastname@example.org