Hardware Startups vs. Software Startups: Lessons from CNBC's #PowerPitch

During my recent appearance on Power Pitch, we looked at Ampy, a company building kinetic chargers—batteries that charge up through your movement, that you can then use to recharge your smartphone. It’s an interesting concept, but ultimately I was “out” on the deal, for reasons that provide more general lessons for software CEOs.

 

First, match your funding goals to your strategy.  Ampy will be attractive to consumers because it will give them status; it will let them “earn what they burn” and give them bragging rights over their kinetic prowess.  But before they can engage in this kind of social interaction, they will need to have a hardware device.  Ampy’s challenge is that they aren’t capitalized to design, manufacture and distribute a consumer electronics device.  They will be competing with the likes of Google, Apple and Samsung, and doing it on a web startup budget.

 

Second, cool hardware ideas like this are why we like software so much. There are no barriers between a software company and its customers.  Software companies can build out and scale quickly, without needing to deal with the inventory, manufacturing, supply chain and other issues that make hardware so difficult to scale. It can be tempting to add a hardware component to your strategy, but it’s rarely worth the extra complications and barriers to scale.

Posted by , on 22 June 2015
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