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The Rise of Hardware Startups: Why Y Combinator Sees a Growing Trend

3d ago· 3 min readenInsight

Summary

Paul Graham analyzes the rise of hardware startups in Y Combinator's portfolio, noting that 7 out of 84 companies in the latest batch were hardware-focused and performed better on average than software-only startups. He identifies multiple driving forces including crowdfunding, improved manufacturing tools (Arduinos, 3D printing, laser cutters), better electric motors, wireless connectivity, and the shift to online retail. Graham argues that while investors have historically been biased against hardware, founders are better at seeing the future because they're building it. He suggests the historical advantage of software over hardware for building rapidly growing businesses may be temporary, and encourages hardware entrepreneurs not to be deterred by investor bias.

Source

Twitter / XThe Rise of Hardware Startups: Why Y Combinator Sees a Growing Trendpaulgraham.com

Key quotes

· 5 pulled

The best founders are better at seeing the future than the best investors, because the best founders are making it.

Investors have a deep-seated bias against hardware. But investors' opinions are a trailing indicator.

Physical things are great. They just haven't been as great a way to start a rapidly growing business as software. But that rule may not be permanent.

It wouldn't be the first time something was a bad idea till it wasn't. And it wouldn't be the first time investors learned that lesson from founders.

Hackers love to build hardware, and customers love to buy it. So if the ease of shipping hardware even approached the ease of shipping software, we'd see a lot more hardware startups.

Snippet from the RSS feed

October 2012One advantage of Y Combinator's early, broad focus is that we see trends before most other people. And one of the most conspicuous trends in the last batch was the large number of hardware startups. Out of 84 companies, 7 were making hardware

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