Ask Us Anything: Y Combinator Hardware Companies Crowdfunding

[liseman]

I'm the Director of Hardware at Y Combinator, and we have awesome companies in our current batch running crowdfunding campaigns. Ask their founders anything! Participating will be the founders of Tovala, Soundboks, Enflux, and Hykso. Also joining me will be Philip Winter, CEO of Nebia, from our most recent batch.

[louprado]

Last month my hardware start-up was almost shut down because our power supplies are CEC efficiency level 5 and not 6. Customs would have seized our entire last shipment. Prior to that I got a cease and desist from the Bluetooth SIG unless I immediately paid $2500 to $10000. I paid immediately.

I have no problem following regulations and paying for licenses. The problem is getting blind-sided by it. I still don't even understand if I need a RoHS certification to ship in my home state of California. Is there any resource you found helpful ? Thanks in advance.

[JonFish85]

"I have no problem following regulations and paying for licenses. The problem is getting blind-sided by it. I still don't even understand if I need a RoHS certification to ship in my home state of California. Is there any resource you found helpful ? Thanks in advance."

At least in my own work this has been something that pops up time & time again. Not only are there regulations that are tricky to nail down, there are things like intellectual property that you may not even be aware you're using. Build a blinking LED to detect activity on a data line? Wouldn't be surprised to receive a letter from a law firm. And unfortunately I don't know of any great ways to avoid the nasty surprise of receiving patent-backed threats. Personally I think this is why the big companies bulk up on patents, so that they can at least promise Mutually Assured Destruction against each other. For smaller companies & people selling products, you're probably infringing on some patent that they own without even realizing it.

[Undertow10]

For what it's worth, here is an excerpt from the Bluetooth SIG agreement that you probably accepted when signing up on their site:

"BLUETOOTH TRADEMARK LICENSE AGREEMENT

This Bluetooth Trademark License Agreement (the “License”) is made as of the date of acceptance by you as a member of Bluetooth SIG, Inc., a Delaware corporation (“Bluetooth SIG”), as evidenced by you entering into the Bluetooth SIG Membership Agreement by clicking the “I Accept” button at the bottom of the Bluetooth SIG Membership Application and Commitment Agreement.

Effective upon such date, Bluetooth SIG, having ownership of the Bluetooth Trademarks (as defined below) hereby grants you the following rights related to such Bluetooth Trademarks in consideration for your acceptance of the terms and conditions of the Bluetooth SIG Membership Agreement."

....

"2 LICENSE GRANT. 2.1 Scope. Subject to the Member complying with the terms and conditions of the Membership Agreement, this License and the Instructions, Bluetooth SIG hereby grants Member a worldwide, royalty-free, non-exclusive, nontransferable (with no right to sublicense), personal right to use the Bluetooth Trademark(s) in relation to production, manufacture, supply, promotion, marketing, sale, lease or other distribution and advertisement of Bluetooth Services and/or Bluetooth Products that include Compliant Portions (the “Trademark License”)."

[dalanmiller]

Does your device use bluetooth in a special way or just general purpose Bluetooth usage? Did you have to pay that much just to put the "Bluetooth certified" logo somewhere?

[Undertow10]

Can you elaborate more on the events that led up to customs potentially seizing your power supplies? We have heard shipments for other companies have gone through with no problem.

[joshavant]

Hi folks!

I graduated from a moderately-ranked undergrad program with a 3.0 in Computer Engineering (the HW-centric flavor of CS), going on 6 years ago.

After graduation, I wanted to get into the embedded field, but was discouraged by the employment options (hardware hadn't yet made the comeback it has been making over the last 3-5 years... 'old' players like Intel still dominated, which wasn't particularly attractive to a bright-eyed 21 year old).

In the interim 6 years, I've been doing iOS development, and believe I've amassed a CV that speaks well to my dedication and work ethic (and is moderately accomplished, at that!).

My question is... how far off am I from being a viable candidate for embedded job opportunities? What kinds of projects/side-work would you like to see to prove that I 'still have it' and/or could sufficiently think on my feet, and get back into embedded development?

FWIW, I have resume experience at Apple, Microsoft, and Google (I actually was hired at Apple out of college to do hardware QA but, once I realized the path from QA to embedded development would be a near impossible feat, I quickly moved on to iOS development).

Thanks! And good luck with your respective products!!

[liseman]

Build things you want for yourself and publish them. Don't worry about cost optimization, production at scale, patents, etc.: just make something with unique functionality. Repeat. You'll be pleasantly surprised how quickly you learn and amass a portfolio of unique toys:)

[Hykso]

The best candidate we had just asked us to work for free for a month to see if we would like him. We could not say no. And today he's a co-founder :D

[FUSAR_rs]

Where are you based? We're currently looking for someone with iOS experience and a desire to get into embedded HW.

[thebiglebrewski]

I have a bunch of hardware stuff lying around. Arduino kits, soldering equipment, even a pocket oscilloscope! I had good intentions with it but now it's mostly just sitting there. Any small cool project ideas to build? Also I always have this problem where I'm missing one tiny component (I live in NYC in Brooklyn) and have to run to a store in Manhattan or wait for an online order to fill it...any tips on things to keep around that everyone should have (I have different types of resistors, etc).

Mostly I feel like a software guy that's a bit of a hardware wannabe and it feels like I'd never get to the point where I could build a legit product, and would love some guidance on how to ideate in this space.

[spacebug]

Try doing some connected device, esp8266 that turns on an led when you POST to a server (minimal soldering maximal programming). And develop from there. Also there are a lot of tuts for this things. Later try to integrate some sensors. A lot of hardware today is software inside a plastic box.

[zeeshanm]

You should def go to NYC Resistor in Brooklyn. They have open hack nights every Thursday evenings. http://www.nycresistor.com/

[liseman]

Check out the common part libraries released by Octopart / Seeed , and consider getting a resistor / cap library from your neighbors at Adafruit. Hackerspaces can be good resources for spare parts (and finding potential partners).

You're in luck: prototyping is mostly software:)

[Hykso]

A hardware cofounder :D

[franciscop]

I won a worldwide NASA contest with a friend designing and building a Space Helmet in a weekend [1] and my friends won two of the Hyperloop categories [2]. We have created a community of students [3] in our University in Spain and now we are launching a robot competition [4].

Would you consider sponsoring our community or the contest? We are operating with a budget under 1000$. Both money and products would be awesome :D

[1] https://2014.spaceappschallenge.org/awards/#globalwin Next Vision (Space Helmet)

[2] http://hyperloopupv.com/

[3] http://makersupv.com/

[4] http://orchallenge.es/

[spacebug]

What is Your thought on shiping prototype stage products to early backer as a way of getting user feedback. Even if product is not yet certified, with the promise that you will ship them the finished product?

This way you are not selling the product you shipped them, so I'm not sure what are regulations regarding this strategy. The product would be clearly labeled as prototype version and not fit for end use.

Bonus points for complexity: The product is intended for children age 6+.

[grape_]

YC and many other incubators provide startups technology incentive programs (Digital Ocean providing $250k credits, Azure providing $500k in credits, etc.). Are any of the hardware startups here utilizing any of the incentive programs? If so, how so? Very interested to hear about cloud strategies, especially as they relate to hardware companies (APIs, IOTs, etc.).

[jonesb6]

From my brief research digital ocean only provides credits to YC companies unlike Microsoft, Azure, and even IBM's SoftLayer. I'd just like to point that out. That immediately disqualifies DO for large cloud products due to their pricing and product offerings.

[gourneau]

Is building an IoT product based on the ESP8266 (esp-12e) a reasonable thing to do? Would there be any hidden fees or licensing issues?

[ogreveins]

Serious question: How do you keep your stuff from getting replicated, tweaked and crushed by people with possibly better tooling and more machines than you? China comes to mind tbh.

[pwinter28]

This is a common concern amongst all founders I'm pretty sure. It certainly was for us at first. But it shouldn't be. Most people have their own problems to worry about. Obviously it depends on what stage you're at. If you are "pre-market", that is, if you haven't shipped yet. I wouldn't worry to much about it. Just focus on making it better than anyone else and understanding what your customers or potential customers actually want, from an end-to-end experience. It's unlikely that someone with better tools and more machines will ALSO be scrappier and learn to understand their user better and execute on all of those fronts better (I'm thinking customer service and e-commerce for example).

I would focus less on being replicated, and focus more on handling your own issues. Another way to think about it is if you get to the point where you product is good enough and with enough attention that it gets copied in a serious way, you've clearly achieved something.

Cover your bases with IP and be smart, but just focus on getting the best product to market fastest and delivering a great customer experience.

[drabie]

Honestly, you don't. You just need to focus on building something that people want and making sure that the experience you deliver is better than any other.

Further, if you start to think about your hardware as a means of delivering something else (for us, that's food), then getting copycatted on the hardware won't be as hard to deal with from a business standpoint.

[thirru]

Hey Martin from ShapeScale (S15) here.

Did any of you attempt any influencer marketing? (celebrities or connectors on Instagram, Twitter, Facebook, Snapchat)

If so, how well did it work and did you pay them (if so what was the model, commission, or up-front payment). Would you do it again?

[Hykso]

Hi Martin,

We actually went through some influencers on our side (known fighters or coaches).

It definitely helped gain a lot of credibility on our end because if it was that much of a revolutionary product, why would pro athletes not use it amd endorse it. so for us it helped a lot convince our customers that it was a legit product.

However, we have been offered to post on a few famous people pages for 5k but we didn't do it as we thought it would actually be seen as paid advertising instead of genuine and authentic love for the product. We're still exploring those avenues though.

[drabie]

We thought about it, but ultimately it was too expensive and we weren't able to find the right influencers that fit with our brand.

[rdl]

What do you do when a hardware startup/kickstarter/etc. has raised, say, $150/unit, but needs $250-300/unit to ship? I se this a lot with crowdfunded projects -- either they underestimated costs, or had a single huge setback.

[compumike]

The answer is basically that the company dies and customers get nothing.

We (Pantelligent, YC W13) did a Kickstarter, then successfully shipped to customers, and are now transitioning to normal orders. Our actual production costs and timeline were within ~15% of our before-the-fact spreadsheet estimates, but then again, we were experienced engineers who know how to ship hardware & software products, which is quite unlike most new entrants.

Just within the "temperature controlled cooking products" space, I could name a bunch of "competitors," but not a single one besides ourselves has shipped, with the exception of the existing sous-vide field which has had more time to develop and is fairly simple from an engineering perspective. Most of these products will likely never ship.

Sadly, crowdfunding usually leads to dramatic overpromising on features (some of which are not even manufacturable!), and severe and unsustainable underpricing, in order to drive pre-orders. That's just a recipe for disappointed customers and dead companies.

[dfox]

What is your approach to low-volume prototyping? Do you use same components for prototypes that you intend for volume manufacturing? How do you source them? (for example LCD panels, where there seems to be nothing in the intersection of "long-time available", "available in unit quantities", "available in bulk" and "reasonable quality")

And another question for the business side of things: where is the line for consumer products that are not meaningful to crowdfund? niche-ness? complexity of installation? does it make sense to crowdfund what is essentially an B2B product?

[wilcoxbr]

We approach prototyping as a process. http://www.themacro.com/articles/2016/01/minimum-viable-prod...

Early prototypes use whatever we have laying around to get the most fundamental feature of the idea vetted.

Right before production, you will build a prototype that we call a First Article. This is a Golden Sample, and every production unit should be just like the First Article.

Prototypes in between those two are built to answer specific questions and we spend no extra resources on sourcing special components that do not directly impact accurate answering of the question.

For things like displays, wireless modules, etc. we work with the manufacturer's Field Application Engineers. They can get you insight on what will be available for production, documentation for the components, etc. They can also probably get you samples for your development work.

McMaster-Carr, DigiKey, Mouser, AdaFruit, SparkFun, etc. are your friends for making those early prototypes.

Crowdfunding is essentially pre-ordering on a social platform. If your market is there and interested, crowdfunding can be a viable market validation step for any business model.

[cbw5]

Great hardware has the tradeoff of being "built to last" but then not re-engaging the customer for new purchases for quite some time. How do you think about re-engaging customers who purchase a Nebia shower?

[pwinter28]

Great question. Fortunately showerheads are often something that people need more than one of for different bathrooms in their home. So if they like one, hopefully they will buy more.

Further to that we have plans for making the Nebia experience more customizable. And so in future versions there will be features that allow you to make the experience even more personal, and these will allow for repeated brand interactions with the customer.

[anujdeshpande]

A lot of the advice seems to be geared towards B2C startups. Most startups http://www.ycombinator.com/hardware/ seem B2C too. A lot of the reports/blogs/opinions of the Interweb suggest that connected hardware will make the most sense in industrial and smart city kind of environments (which are probably more B2B than B2C) in the early days. Would you advise differently for people working on B2B?

- Getting early prototypes out there has kind of been decremental for us. Even the smaller bizs are willing to pay higher for a more "field-tested" device. Which seems like a recursive problem ;). Should one spend more time on getting v1.0 done ? - Is there anyone who you'd recommend to handle global shipping and taxes? The way that Pebble had tied up with distributors in different places depending on your country, etc.

(We are building talking posters. One's with BLE play prerecorded messages, and you can interact with them, and the one's with WiFi are connected to the Internet and are more interactive.)

Thanks !

[erohead]

- stick through it! You should be able to find early customers who are willing to work with early prototypes, even when asking them to pay. Just make sure you give them insanely good customer support. Consider flying out to get them set up! Don't wait til v1.0 to sell, get out there sooner.

- I'd recommend sticking to a local fulfillment service that has great customer support for your early shipments. There is absolutely no need to optimize for cost in the early days. Just make sure you have someone you can call to sort out shipment delays, lost packages, etc. You can always expand to more fulfillment centres later.

Sounds like a cool idea! Are the posters epaper or static?

[martinushk]

Hi guys. What did YC helped you the most with? I guess none of you had the product on the market while being in the batch (maybe I'm wrong?).

[dalanmiller]

Would also like to hear this.

[cfederico]

Hi Guys, we are a hardware startup developing a smart LED lamp. We plan to launch a Kickstarter campaign late Q3 and now we are testing the product with our early adopters.

- What is the best way to get traction on the product before launching the campaign?

- How much money you need to set up a good marketing Kickstarter campaign ? Is it needed to use a good PR agency ? (Any suggestions about a good PR agency ? )

Thank you so much!

Federico

[liseman]

Hire a PR agency halfway through your campaign when you're so overwhelmed with backers and attention that you can't handle it yourself. Until then, DIY:)

[Hykso]

Build an email list! And try to pump up the subscriptions with different sales channels - you'll be able to know which ones work best for your business before launching your campaign

[jmcmahon443]

What do I do if I need to use another company's patent in my product? How do I approach the situation/negotiation?

[liseman]

Don't copy people's products. Other than that, companies spend too much time too early worrying about (and spending money on) IP. Prove demand for your product by launching; you've got a year post-disclosure to file a provisional patent.

[thirru]

For those of you that did Kickstarter and not Indiegogo or a selfstarter (Celery/Tilt/Shopify) campaign:

How happy were you with the experience so far? There are a few up and downsides as drabie had mentioned before.

Taking all of that into account, would you use Kickstarter again if you had the choice again?

[pwinter28]

Yes, we would use Kickstarter again. It drove a lot of our traffic and the community of backers seems to have a unique cohesion. People on KS know what they are getting in to, and are there to help. It has it's downsides, but in my opinion the pros outweigh the cons.

I think each company is different though, and you have to consider your strengths, as in do you have a strong online acquisition strategy/team, in which case a campaign on your own site may make more sense.

Now that our campaign is over we use Celery for pre-orders on nebia.com

[elijahparker]

I'm just about to launch a new hardware product and was planning on using Kickstarter (it would be my 2nd time), however a partner (and reseller) in the industry brought up the option of them preordering my entire Kickstarter goal so I can get to selling/shipping the final product sooner at retail price.

Seems like an enticing option, my main concern is how much of the Kickstarter market might I miss?

Are people who buy on Kickstarter a subset of those who buy a finished product, or is it an entirely separate group?

I can see pros and cons of both ways, and I know a lot has to do with my specific market (niche time-lapse), but would love to hear any comments or insight. Thanks!

[mrshuptrine]

Do you think US companies have any ethical obligations to manufacture in the US? On that same vein, is there a marketing value of saying, "American-made" that could justify the higher manufacturing costs?

[pwinter28]

Good question. I'll take this one since we are trying to do all of our manufacturing in the US. I do not think companies have an ethical obligation to manufacture in the US at all. Make the product where you can make it BEST. And you have to self-define what BEST is. In our case we care a lot about high quality and cosmetics. So it made sense to focus on the US, where you can have more oversight and be on the line.

As for marketing value of "American Made" I think it can be very helpful, but you have to make that a part of your brand. Otherwise it won't make much of a difference.

[gabsong]

During crowdfunding, we're busy taking orders, talking to press, making sure we update our users with marketing campaigns, etc. How do you manage customer care during the time of the campaign?

[pwinter28]

It's really important to have a plan for this. We were not prepared and got blindsided and it took basically the whole teams effort for a couple of days before we systematized it.

Here is a direct quote from the guy who set up and manages our customer service system "be meticulous but also efficient".

The best platform we've used is "Front" also a YC company. Clean and super fast interface.