A hardware startup is like a train

Time and again I was baffled by people talking about hardware startups exclusively from the manufacturing angle, as if they believe that solving manufacturing problems would make hardware startups successful.

One could not be more wrong on this account.

First, if solving the manufacturing problems is key to the success of a hardware startup, all Taiwanese EMS firms such as Foxconn, Pegatron, Quanta, etc should already have built very successful consumer brands themselves, instead of focusing only in OEM/ODM businesses.

But that did not happen, and any Taiwanese aspiring to have a real brand born in this small island knows it better than any random American or European.

The key to the success of a consumer electronics hardware startup remains marketing and branding. In other words, how to sell products faster and achieve scale and defensibility of sort faster than others.

The best analogy is to think of a hardware startup as a train.

What's pulling the train ahead is the locomotive. For a hardware startup, the locomotive is marketing/branding, which drives sales and then hopefully brand recognition, which then eventually drives more sales.

Manufacturing and other operational activities would be freight cars behind the locomotive. One can optimize as much as possible the arrangement and settings of the freight cars, achieving maximum space, weight or even fuel efficiency. However, if the locomotive (marketing/branding) is not working, all that freight-car optimization is null.

On the other hand, if the marketing/branding shows good traction – no pun intended – it's easier to get professional EMS on-board as a partner. And any professional EMS firm knows a lot more about optimizing the supply chain than a random entrepreneur who has attended some hardware workshops or joined some accelerators.

Leaving expert tasks to experts and focus on the value creation through product design, marketing and branding, that's the real key to success in the hardware business.

This is how Fitbit (working with Flex) became successful. This is how GoPro (working with Chicony) became successful. This is how Nest (working with Pegatron) became successful.

To be sure, failing to execute on manufacturing will kill a hardware startup. However, solving manufacturing issues does not make a brand and a successful startup. It would only leave you a nicely arranged and optimized series of freight cars. Without a powerful locomotive, you're not going anywhere.

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