How Start-ups Fail

Great post on the bolt blog talking about how hardware start ups fail.   It really hits the nail right on the head with a couple quotes and graphics namely “There’s a valley of death for hardware startups. Ironically, it occurs when companies start selling their product.”

This really speaks to the transition stage between being a start up (hey let’s make 10 or 100) and being a real product company (let’s make 50k).   This gulf can be huge.   Anyone can make it through 100 unit pilot run with a litany of problems, but once you have to make 50k or 200 a day (over a 250 day work year) all the problems have to be gone or you’re simply not going to make your cost, profit or timing goals.   Likewise beta testers and kickstarter backers will be tolerant.   Walmart/Best Buy/regular consumers will not be.

How does a start up make it through this “valley of death”?

  • The original post had some good suggestions that I’d sum up as understand your pricing fully: sell price, make price and make price changes with volume changes.
  • Solid funding that anticipates this period not just the first phase.   This is easier said than done, but it comes down to understanding the funding you need to be successful and working to get to that level.
  • Skilled employees and consultants to quickly mitigate problems, sell your product and get you through to the 50k order as quickly as possible.   This is where spending money on superstars is better than just checking the box.   If you increase your burn rate by 150%, but only burn for 6 months, its better than a slow burn for 24 months of misery and failure.

This last point is where Bayard Design shines.   Trust us to make your product production ready for effortless scaling on a tight schedule.

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