The Hardware Startup: Building Your Product, Business, and Brand

by Renee DiResta, Brady Forrest, Ryan Vinyard

Overview

Thanks to the decreasing cost of prototyping, it's more feasible for professional makers and first-time entrepreneurs to launch a hardware startup. But exactly how do you go about it? This book provides the roadmap and best practices you need for turning a product idea into a full-fledged business.

Written by three experts from the field, The Hardware Startup takes you from idea validation to launch, complete with practical strategies for funding, market research, branding, prototyping, manufacturing, and distribution. Two dozen case studies of real-world startups illustrate possible successes and failures at every stage of the process.

• Validate your idea by learning the needs of potential users
• Develop branding, marketing, and sales strategies early on
• Form relationships with the right investment partners
• Prototype early and often to ensure you're on the right path
• Understand processes and pitfalls of manufacturing at scale
• Jumpstart your business with the help of an accelerator
• Learn strategies for pricing, marketing, and distribution
• Be aware of the legal issues your new company may face

Product Details

ISBN-13:	9781449371005
Publisher:	O'Reilly Media, Incorporated
Publication date:	05/20/2015
Sold by:	Barnes & Noble
Format:	eBook
Pages:	326
File size:	6 MB

About the Author

Renee DiResta is Vice President of Business Development at Haven, a marketplace for ocean freight shipping, and a cofounder of the IoT Syndicate on AngelList. She was previously a Principal at O’Reilly AlphaTech Ventures (OATV), where she spent four years as a VC investing in seed-stage technology startups. Prior to OATV, Renee spent seven years an equity derivatives trader at Jane Street Capital, a quantitative proprietary trading firm in NYC. For fun, she plays with data sets, helps run The Maker Map open-source project, and is an avid crafter. Renee holds a B.S. in Computer Science and Political Science from the Honors College of SUNY Stony Brook. She lives on the web at http://noupsi.de and @noupside.

Brady Forrest (@brady) runs Highway1, PCH's accelerator. You can see his day-to-day work with hardware startups on Syfy's Bazillion Dollar Club (to be released Fall 2015). He cofounded and shepherds Ignite, a global talk series, and is part of the team currently organizing Ignite SF. He's a Venture Advisor to 500 Startups and helps arts organizations via CAST-sf.org. Formerly, he worked on a number of things at O'Reilly Media, including the Radar blog, Web 2.0 Expo, Where 2.0, ETech, and Foo Camp. Most years, you can find him on the playa.

Ryan Vinyard is the Engineering Lead at Highway1, a hardware-focused startup accelerator located in San Francisco under parent company PCH International. He is a mechanical engineer who came to PCH through its consulting arm Lime Lab, where he developed consumer products for Fortune 500 brands. Previously, Ryan worked at startups in the cleantech and electric vehicle space, where he developed novel powertrain, motor control, and thermal systems. Ryan holds a B.S. in Product Design from Stanford University.

Table of Contents

Preface ix

1 The Hardware Startup Landscape 1

Early Makers 1

The Whole Earth Catalog 2

Communities Around New Technology 2

MIT Center for Bits and Atoms 3

Make Magazine 3

Technology Enables Scale 4

Rapid Prototyping 5

Inexpensive Components 5

Small-Batch Manufacturing 6

Open Source Hardware 6

Online Community 7

The Supplemental Ecosystem 7

The "Lean Startup" and Efficient Entrepreneurship 8

The Hardware Companies of Today 9

Connected Devices 9

Personal Sensor Devices (Wearables) 11

Robotics 13

Designed Products 14

2 Idea Validation and Community Engagement… 17

Your Fellow Hardwarians 20

Your Cofounder and Team 21

Your Mentor(s) 23

Your True Believers and Early Community 26

3 Knowing Your Market 35

The Who, What, and Why of Your Product 36

Researching Your Market: Trends and Competition 36

Market Size 37

Market Trajectory 38

Market Analysis 39

Differentiators 41

Segmenting Your Market 43

Customer Aquisition Cost (CAC) and Lifetime Value (LTV) 43

Demographics and Psychographics 44

Behavioral Segmentation 45

Customer Development 46

4 Branding 53

Your Mission 58

Brand Identity and Personality 61

Brand Assets and Touchpoints 67

Positioning and Differentiation 74

5 Prototyping 79

Reasons for Prototyping 79

Types of Prototyping 83

Prototyping Terms 84

Works-Like and Looks-Like Prototypes 85

Teardowns 86

Assembling Your Team 87

Industrial Design 87

User Experience, Interface, and Interaction Design 88

Mechanical and Electrical Engineering 89

Software 90

Outsourcing Versus Insourcing 90

Outsourcing 91

Insourcing 91

Integrated Circuits 94

Connectivity 98

Software Platforms 102

Software Security and Privacy 107

Glossary of Terms 108

Prototyping and Manufacturing Processes 108

Electrical Components 110

Sensors 111

6 Manufacturing 113

Preparing to Manufacture 114

Where to Manufacture? 120

Supply Chain Management 128

Importing from Foreign Manufacturers 129

What to Look for During Manufacturing 131

Certification 134

Packaging 136

Sustaining Manufacturing 138

7 Acceleration 139

Lemnos Labs 142

HAXLR8R 144

AlphaLab Gear 145

PCH 146

Highwayi 147

PCH Access 148

Flextronics 149

Choosing an Incubator or Accelerator 150

8 Crowdfunding 155

The Crowdfunding Ecosystem 155

Kickstarter 156

Indiegogo 157

The DIY Approach 158

Planning Your Campaign 161

Understanding Backers and Choosing Campaign Perks 161

Pricing Your Perks 164

Creating a Financial Model 169

Timing with Manufacturing 171

Campaign Page Marketing Materials 172

Driving Traffic 175

Leveraging Social Media and Email Lists 175

Connecting with the Media 179

Organizing PR Materials 180

While Your Campaign Is Live 183

Data-Driven Crowdfunding and Real-Time Adaptation 183

Publishing Updates for Your Community 186

Beyond Crowdfunding: Fundraising for a Company 187

9 Fundraising 189

First Things First 190

Bootstrapping, Debt, and Grants 191

Friends and Family 195

Angel Investors 196

The JOBS Act 197

AngelList 197

Venture Capital 201

Targeting Investors 201

Personalized Introductions 202

Telling a Story 204

Due Diligence 208

Strategics 209

Structuring Your Round 210

10 Going to Market 213

Business Models for Hardware Startups 214

Selling Additional (Physical) Products 215

Selling Services or Content 217

Selling Data 219

Open Source 219

Pricing 220

Cost-Pius Pricing: A Bottom-Up Approach 223

Market-Based Pricing: A Top-Down Approach 225

Value-Based Pricing: Segmentation meets Differentiation 226

Selling It: Marketing IOI 228

Step 1 Define your Objective 231

Step 2 Choose your KPIs 232

Step 3 Identify Your Audience, the "Who" 233

Step 4 Select Your Marketing Channels 233

Step 5 Formulate Your Message 237

Step 6 Incorporate a Call to Action 237

Step 7 Specify a Timeline and Budget 238

Step 8 Refine Your Campaign 238

Distribution Channels and Related Marketing Strategies 241

Online Direct Sales 241

Online Specialty Retailers and Retail Aggregator Platforms 245

Small Retailers and Specialty Shops 248

Big-Box Retail 249

Warehousing and Fulfillment 261

11 Legal 269

Company Formation 270

Trademarks 274

Trade Secrets 275

Patents 275

Manufacturing Concerns 281

Liability 281

Manufacturing Agreements 282

Import/Export Considerations 283

Regulatory Concerns and Certification 285

Medical Devices and the FDA 286

Hardware and the FCC 290

Epilogue: The Third Industrial Revolution 291

Index 293