Why Hardware Startups can’t Afford to Fail Slowly

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Summary: Hardware startups don’t have the time or money to fail slowly. By connecting processes and people, cloud PLM lets them fail fast, and get innovative products to market quickly.


The hardware industry is a competitive place to be, especially if you’re a newcomer.

Of the hundreds of hardware startups that crop up each year, very few find success.

In fact, a recent CBInsights report found that 97% of hardware startups fail to exit in any meaningful way.

97% of hardware startups ultimately fail or fizzle out without a large exit.

And of the remaining 3% that successfully scale, only 24% of them make it to their second round of funding.

Which tells us one thing – hardware is hard.

But it can be easier.

Today, we’re going to look at how hardware startups can increase their chance of success by adopting an agile, fail-fast approach to manufacturing.

What does fail fast even mean?

Let’s start by looking at what it means to fail fast.

Failing fast is an approach used to foster innovation that welcomes out-of-the-box ideas to be tried and tested, and uses the data from those tests to optimize and learn.

Because the fail-fast approach embraces failure, teams are free to take risks and try new things, with each failure being very small, cheap, and fast.

The caveat to failing fast is that when an idea doesn’t work out, teams learn from their failure, and quickly establish a new course of action.

The idea is that you can crank through lots of bad ideas quickly and easily, learning as you go before you make a big commitment to your final product or production run.

Now that we’re clear on failing fast, let’s dive into why it’s important for hardware startups.

Why hardware startups need to fail fast

With the hardware industry as challenging as it is, hardware startups can’t afford to fail slowly.

The limited time and money most hardware startups have, plus the significant capital required for every production run make developing an innovative product fast a top priority.

This challenge is further exacerbated if you rely on a finite amount of venture capital because so few hardware startups secure even a series B.

To even go for a series B, you usually have to have a successful product or a promise of significant growth — both of which require a lot of early innovation.

Basically, hardware businesses are rarely given the benefit of the doubt, so they need to reach profitability fast just to survive.

And that’s where failing fast comes in.

Here’s how hardware startups benefit from a fail-fast approach.

Reduce production costs

A fail-fast approach requires ideas to be tested early in the lifecycle.

Which means design changes take place early and often, long before production starts in earnest.

And with the minimum number of units for one run of production in the 5,000 range, it’s crucial products are optimized pre-production.

Because when design changes happen later in the production cycle, hardware startups lose out on time and money as design mistakes post-production require another 5,000 units to be produced or modified, and increase time to market, and cost.

As Oleg Baranov, co-founder of the successful hardware startup CleanSlate UV, says:

“It’s cheaper to design right the first time than to engineer the fix it later.”

“It’s cheaper to design right the first time than to engineer the fix it later.”

Build better products

It’s okay to fail.

As Elon Musk put it:

“If things are not failing, you are not innovating enough.”

“If things are not failing, you are not innovating enough.”

Failing is how innovation happens, and a fail fast approach gives product teams the freedom to try new things and figure out the best way to design the product.

Ultimately, this leads to better, higher-quality products eventually reaching customers.

But this sort of culture doesn’t just happen on its own.

It needs to be cultivated, from the CEO on down throughout the organization.

According to Ed Catmull, the president of Pixar, the problem is that failure is both positive and negative.

‘Fail fast, fail’ often sounds great…

But at the same time, ‘failure’ is synonymous with, well, failing.

Failing a class, failing school, a failing business — none of these activities are fun.

It’s challenging for an organization to maintain this duality, especially because there’s always going to be a notion of the ‘right’ kind of failure and the ‘wrong’ kind.

But finding and striking that balance is essential for scaling hardware companies.

In addition to generally saving money and building better products, you’ll be able to create products that truly delight your target audience.

For instance, the IDC reports over 90% satisfaction rates with high-quality products.

And in our experience, happy customers tend to be generous ones.

The benefits of quality also feed back to reducing production and product cost, as products that work mitigate the risk of malfunction, recall, and sky-high warranty-associated costs.

Fail Fast with Cloud PLM

While culture is important for organizations, it’s not the be-all to end all.

Failing for hardware startups is all about testing out innovative ideas, and executing the ones that work.

And requires hardware startups to easily implement change fast.

One way to speed up this process is with cloud PLM (Product Lifecycle Management).

Cloud PLM helps hardware startups fail fast by speeding up product development in three major ways.

1) It makes referencing product data easy.

With so many changes happening in fail-fast organizations, cloud PLM creates and keeps an up-to-date record of product data.

Which makes finding information, and reverting back to earlier product designs quick and easy.

2) It allows stakeholders to easily collaborate from wherever they are.

Failing fast is all about developing innovative solutions and problems.

Cloud PLM lets product teams receive feedback from product development stakeholders in real-time, driving product delivery.

What’s more, for most hardware companies, supplier relations are critical because of the amount of procured-in parts.

By sharing product data with suppliers, you can get feedback for sub-assembly specialists.

For instance, say you’re building a new drone.

You might be an expert at aerodynamic engineering, but are outsourcing your camera and lens sub-assembly.

If you can share the actual product data with the camera company, you get to leverage their insight and experience, and ultimately deliver a better product.

3) It automates processes so you can get products out the door faster.

Cloud PLM automates processes like change requests and approvals so that the process of failing fast is, well, faster.

This lets teams find out what works and what doesn’t a faster clip to get products out to the door.

By automating manual and often repetitive workflow and project management processes, teams can also use their time more effectively to innovate faster.

For instance, one NPD manager reported that once he tracked his teams’ hours, he found that 50-70% of their time was “wasted on non-engineering tasks.”

By adopting cloud PLM, organizations empower their teams to fail fast, by giving them the time and breathing room needed to do so.

Wrap Up

In such a cut-throat space, the opportunity cost of not trying new things is too great for hardware startups low on time and money to fail slowly.

They need to get innovative products out the door as fast as possible.

And the way to do this is to fail fast.

Cloud PLM helps hardware startups fail faster by:

  • Making product data easily accessible
  • Fostering collaboration across the value chain
  • Automating review and approval processes

All of which helps hardware startups win.

Image Credit: Pablo García Saldaña via Unsplash


Want to see what cloud PLM make innovating easier for hardware startups? Request a demo.

2018-12-12T13:50:48+00:00