Is hardware a viable category for venture investment despite widespread investor aversion?

Dharmesh Shah · published Jun 13, 2022

Investing in atoms rather than bits was a mistake; he now only invests in software because physical-product businesses are hard and outside his competence.

Physical products make for a hard business he knows nothing about, even though trillion-dollar hardware companies exist

57:16 Investing in physical products was a mistake software only is safer given lack of hardware competence

Matteo Franceschetti · published Nov 20, 2023

Investors' aversion to hardware is justified about 98% of the time, but with the right company and team hardware can build trillion-dollar businesses

Tesla and Apple are hardware companies, so the outcome exists — it is just extremely hard to reach

8:33 Hardware aversion is mostly justified but right team can build trillion dollar outcomes

Paul Graham · published Oct 2012

Hardware startups are a conspicuous emerging trend, and in YC's latest batch they outperformed the non-hardware companies

Out of 84 companies in the batch, 7 were making hardware, and on the whole they did better than the rest

source Yc batch data shows hardware startups outperforming non hardware peers

Paul Graham · published Oct 2012

The hardware trend has no single cause but results from many converging enablers: crowdfunding, tablets, better electric motors, ubiquitous wireless, easier manufacturing, cheap prototyping tools, and online retail

Each of these developments independently lowers the cost or difficulty of building and selling hardware

source Converging enablers crowdfunding tablets motors wireless manufacturing and retail make hardware viable now

Paul Graham · published Oct 2012 · hedged

Software's advantage over hardware as a startup vehicle may turn out to have been temporary, since the rule only dates from about 1990

The rule is not even that old, dating only from about 1990, so it need not be permanent

source Software only advantage was a temporary post 1990 rule not a permanent truth

Paul Graham · published Oct 2012

Founders who want to work on hardware should not be deterred by fear of investor discrimination

Investor bias is a trailing indicator and hardware is a bad idea only till it isn't

source Investor hardware aversion is a trailing indicator that founders should ignore

Paul Graham · published Oct 2012

There is room for the next Steve Jobs and almost certainly for an entirely new, as-yet-unknown hardware entrepreneur

source Room remains for a new jobs like hardware entrepreneur to emerge