For hardware startups looking to make their big move, Brady Forrest is a good guy to know. As the head of PCH International’s Highway1 accelerator for hardware startups, Forrest is helping growing hardware companies scale up and get ready to start mass-producing their product.
Highway1 is currently accepting applications for its third class until June 20. Companies that get accepted will receive a number of benefits, including $50,000 in exchange for an equity stake, as well as mentorship from a staff of experienced engineers, office and machine shop space in San Francisco and a trip to visit factories in China.
Forrest said that investors aren’t always interested in hardware startups, but those companies can provide returns for investors interested in taking a risk.
“Hardware is harder, hardware is more challenging, hardware is potentially more capital intensive,” he said. “However, hardware also has a really proven business model. People buy things. And then, if you have the API set up, then hopefully you can sell a service on top of it, and continue to make money and provide new value. I think it takes a little more bravery, but definite returns are possible.”
Forrest is a former Seattleite known in part as a co-founder of the popular Ignite event series. GeekWire caught up with him recently at Highway1’s headquarters in San Francisco’s Mission District, a former art gallery and event space now filled with oscilloscopes, 3D printers, and other tools of the hardware design trade.
Read on for more insights from his Highway1 experience, including how to build a successful hardware startup and the effects of Kickstarter on the hardware industry.
What have you learned from the first two classes of Highway1 companies?
Number one is, the teams need more people. It’s even more so than software. If you’re doing web, one person, maybe two, can build an app. … Of course, it won’t be as pretty, and it won’t be as well-designed, but you can really build the whole thing end-to-end. It’s when you get into scaling that you might start to need other people. But you can really build your base-level prototype and serve your first few customers that way.
In hardware, there are just so many discrete skills that have to come together. And so, you really need a team of 3 or 4, at least two full time, and then the best teams are ones that have a bunch of people working for equity, off to the side.
The other thing is, you have to really get good at selling the dream. Because you can’t ever ship the final product to all your customers first to really test it out. You have to give it to them in some sort of deficient way to get learnings, and then you’ll end up scaling up with your final piece later. That’s what the best companies do, but it’s also more painful. You think you know what the ideal product is, but it turns out you don’t, until you’ve actually gotten it in the hands of customers.
How has Kickstarter changed the hardware industry?
It’s huge. One, to produce a product, you don’t necessarily have to become a company. You can just want to make something happen and get the money to do it. Two, if you are a company, and you haven’t been able to sell the dream, and you didn’t get your big round of funding, you can raise a little bit of money, and then go out and prove demand, the way that you could with a website virally.
What do you think about the Washington Attorney General’s decision to sue a Kickstarter creator for failing to deliver on his promised rewards?
I think it’s a positive, because I think there’s always been the concern of fraud. And this will make people really check their plans before they go on Kickstarter, or Indiegogo, or any of these other crowdfunding sites. Backers will come in more informed. And hopefully, the companies, instead of deciding to launch as soon as they have an idea, will make sure they know how that idea can be made. And if they want to make a thousand, that they can actually make a thousand before they put that up there. And that they’re pricing it in such a way that it works for them.
If I see a Kickstarter that has a t-shirt for sale, and the t-shirt costs less than 30 dollars, then I know they’re not making any money off the t-shirt, or it’s an incredibly crappy t-shirt, so either way they’re screwing up.
How valuable is it to have companies in the incubator visit China as a part of Highway1’s program?
I think it’s probably one of the most valuable parts (of the program), because you get access to these factories in a way you wouldn’t otherwise. And you wouldn’t know what is possible if you weren’t over there. and then, because we’re part of PCH, we have access to factories that nobody else would.
So you get to see production at scale. And you start to understand more about the process, because you have to come up with something that can be made by people 10,000 miles away, who don’t speak your language.
Follow Forrest on Twitter @brady. People interested in applying for Highway1’s third class can do so here.
