Lean Hardware Series: discover what investors think about investing in hardware startups!

1. <LEAN/>
<HARDWARE/>
INVESTING IN
HARDWARE
STARTUPS
BENJAMIN JOFFE
GENERAL PARTNER
HAXLR8R
wow
much wearable
such excite
very hardware
so future
much haxlr8r

2. HAXLR8R
ME

3. NICE TO MEET YOU
NICE TO MEET YOU!
14 years in China, Japan, Korea
2013~
General Partner, HAXLR8R
“Lean Hardware” advocate
2000~2012
Founder, Plus Eight Star Ltd.
Founder, MobileMonday Beijing
Angel investor
(OtakuMode, Gengo, etc.)

4. Hardware Startup Accelerator
From prototype to real business
In Shenzhen San Francisco
ABOUT HAXLR8R

5. INVESTMENTS
• 40 startups
– Wearables, Drones
– 3D printing, IOT…
• 16 campaigns
– 100% success
– $250,000 average
• Hardware Fund

7. MEDIA COVERAGE

8. LEAN
HARDWARE

9. HARDWARE RENAISSANCE
PROTOTYPING IS SOLVED
Arduino / Raspberry Pi / Spark Core / Sensors /
BLE / Smartphones / Cloud / 3D Printing
SUPPLY CHAIN IS BETTER THAN EVER
– China (Shenzhen) has the whole chain
– Fast,Affordable, Scalable
MORE FUNDING
– 250,000+ hardware crowdfunding backers
– MoreVC Angel

10. INVESTING IN
HARDWARE

11. DISCLAIMER
• Hardware is hard
• Talking is easy
• Respect makers failures

12. MINIMUM VIABLE STARTUP
$1m
Lifestyle
$10m
SME
$100m
Startup
Ocean of
problems
to solve

13. WHICH PROBLEMS DO THEY SOLVE?
• Alerts
• Memory
• Replay
• Streaming
• Gaming
• Live coaching
• Focus
• Relaxation
• Safety
• Health
• Motivation
• Training
• Performance
• Location
• Navigation
• Proximity
• Communication
• Contextual data
• Customer service
• Entertainment
• Fashion
• Art
• …
What matters is the problem, not the solution!

14. STARTUP
CHECKLIST

15. STARTUP CHECKLIST
1. Product
Is something working
2. Skills
Can the team make it
3. Spirit
Resourceful, Optimistic, Persistent
4. Positioning
New segment or new market

16. PROBLEM / SOLUTION ITERATIONS
Is
there
a
bigger
problem?
Ini2al
solu2on
Ini2al
problem
Is
there
a
be4er
solu2on?
Yes
No
No
Ini2al
solu2on
Ini2al
problem
Ini2al
solu2on
New
problem
Build
New
solu-on
Ini2al
problem
New
solu-on
New
problem
Yes

17. STARTUP CHECKLIST
1. Product
Is something working
2. Skills
Can the team make it
3. Spirit
Resourceful, Optimistic, Persistent
4. Positioning
New segment or new market
5. Demand
Proof / Customer discovery
6. Distribution
How to sell
7. Plan
Beyond first product
8. Valuation
Is the price right

18. NOT JUST HARDWARE
• Pure hardware can be copied
• Combine Hardware Software
• Build community (e.g. GoPro)

19. BEWARE
OF THOSE
“WARES”

20. TWELVE “WARES” TO AVOID
1. FUNware
No business
Kenji Kawakami
Chindogu pioneer

21. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible

22. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible
3. SAMEware
Bad positioning

23. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible
3. SAMEware
Bad positioning
4. SOLUTIONware
Solution looking for a problem
“When you have a hammer, everything looks like a nail”

24. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible
3. SAMEware
Bad positioning
4. SOLUTIONware
Solution looking for a problem
5. VAPORware
Can’t be made

25. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible
3. SAMEware
Bad positioning
4. SOLUTIONware
Solution looking for a problem
5. VAPORware
Can’t be made
6. LAMEware
Not on spec

26. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible
3. SAMEware
Bad positioning
4. SOLUTIONware
Solution looking for a problem
5. VAPORware
Can’t be made
6. LAMEware
Not on spec
7. FAILware
Successfully built the wrong thing

27. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible
3. SAMEware
Bad positioning
4. SOLUTIONware
Solution looking for a problem
5. VAPORware
Can’t be made
6. LAMEware
Not on spec
7. FAILware
Successfully built the wrong thing
8. LATEware
Validated market but woke up competitors

28. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible
3. SAMEware
Bad positioning
4. SOLUTIONware
Solution looking for a problem
5. VAPORware
Can’t be made
6. LAMEware
Not on spec
7. FAILware
Successfully built the wrong thing
8. LATEware
Validated market but woke up competitors
9. LOSSware
Minimal or negative margins

29. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible
3. SAMEware
Bad positioning
4. SOLUTIONware
Solution looking for a problem
5. VAPORware
Can’t be made
6. LAMEware
Not on spec
7. FAILware
Successfully built the wrong thing
8. LATEware
Validated market but woke up competitors
9. LOSSware
Minimal or negative margins
10. BOREware
People stop using it

30. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible
3. SAMEware
Bad positioning
4. SOLUTIONware
Solution looking for a problem
5. VAPORware
Can’t be made
6. LAMEware
Not on spec
7. FAILware
Successfully built the wrong thing
8. LATEware
Validated market but woke up competitors
9. LOSSware
Minimal or negative margins
10. BOREware
People stop using it
11. FUTUREware
No market before years

31. TWELVE “WARES” TO AVOID
1. FUNware
No business
2. EASYware
Not defensible
3. SAMEware
Bad positioning
4. SOLUTIONware
Solution looking for a problem
5. VAPORware
Can’t be made
6. LAMEware
Not on spec
7. FAILware
Successfully built the wrong thing
8. LATEware
Validated market but woke up competitors
9. LOSSware
Minimal or negative margins
10. BOREware
People stop using it
11. FUTUREware
No market before years
12. LOCALware
Too tied to a local ecosystem

32. QUICK NOTE
ON RECENT
DEALS

33. FACEBOOK BUYS OCULUS VR FOR $2B

34. INTEL BUYS BASIS FOR $100M

35. GOOGLE BUYS NEST FOR $3.2B

36. XIAOMI OVER $10B VALUATION
• Start in 2010
• $130 phone
• 18.7m sold in 2013
• $5B revenue
• 40m in 2014 (est.)
• Sells direct

37. INVESTMENT
STAGES

38. KEY STAGES FOR INVESTMENT
1. Concept
2. Work-like prototype
3. Look-like Prototype
4. Design-for-Manufacture (DFM)
5. Crowdfunding
6. First shipment
7. Retail
8. Pre-IPO

39. INNOVATING AT LARGE COMPANIES
1. Copy modify
2. Buy it then scale it
– Most projects fail
– Buying a successful product reduces risk
3. Make a team work like a startup
– Give autonomy
– Limit resources

40. CHALLENGES
OF WEARABLES

41. WEARABILITY
• Style
• Comfort
• Weight
• Sizes
Steve Mann
Wearable Pioneer

42. UTILITY
• Price
• Speed
• Latency
• Feedback
• Data vs. meaning
• Active vs. Passive input
• Battery charge time

43. HOW TO MAKE WEARABLES…
• Fun
• Social
• Personal
• Contextual
• Niche
• Invisible
• Viral
• Habit forming
• Non invasive
• Blend with fabric
• …

44. thank you!
APPLY TO HAXLR8R
WWW.HAXLR8R.COM
GET THIS PRESENTATION
WWW.SLIDESHARE.COM/HAXLR8R
wow
much haxlr8r
very excite
so hardware
much wearable
so future
BENJAMIN@HAXLR8R.COM
@BENJAMINJOFFE