Inside The Hard Tech Startups Turning Sci-Fi Into Reality
12 Apr 2024 (8 months ago)
Coming Up (0s)
- YC has successful investments in hardtech companies that deal with physical products, not just software.
- The biggest challenge for hardtech startups is tactical risk, not market risk.
- There is a call to action for hardcore engineers to build something huge and change the world by solving significant problems.
YC's Model for Hard Tech (2m42s)
- YC's model works well for hardtech companies because there's usually a small part of the project that can make significant progress with $500k in 3 months.
- Hardtech founders often come into YC thinking they need $50 million to start, but YC advises them to think like software companies and focus on doing things cheaply, quickly, and showing something on demo day.
- After the initial adjustment, hardtech founders realize they can accomplish a lot in three months and develop a plan for the second half of the batch.
Mindset Shift and Proving Technical Feasibility (4m19s)
- YC-funded startups shift from ideas to tangible products, attracting investors.
- The focus is on "why you" rather than "why now" or "why".
- Investors in hard tech are cautious and require proof of concept and financial viability.
- Technical milestones are crucial, demonstrating the ability to build and the science behind the idea.
- A trick from a software company (Brex) is used to present hard tech progress: comparing the startup's achievements to the regular industry timeline and costs.
- This approach highlights the founders' capabilities and potential.
- Building this habit during YC creates a lasting impact on the companies' operating cadence.
- Boom Supersonic (YC W16):
- Building a supersonic passenger jet to replace the Concorde.
- A challenging industry with few advancements since the Concorde.
- Boom's progress during YC:
- Secured partnerships with major airlines.
- Completed successful test flights.
- Raised significant funding.
- Relativity Space (YC S17):
- Developing 3D-printed rockets to reduce costs and increase production speed.
- Progress during YC:
- Built and launched a 3D-printed rocket engine.
- Secured partnerships with major space agencies.
- Raised substantial funding.
- Form Energy (YC W17):
- Creating a long-duration energy storage system using iron-air batteries.
- Progress during YC:
- Developed a prototype battery system.
- Secured partnerships with utilities and energy companies.
- Raised significant funding.
- Boom, a startup company, successfully developed and flew its first supersonic jet eight years after its inception, despite the high costs and risks involved.
- Cruise, another YC startup founded by Kyle Vogt, played a crucial role in developing the video streaming and encoding technology that made Twitch profitable and was acquired for almost a billion dollars just a few years after its founding.
- Hard tech startups like Boom and Cruise have the potential to disrupt industries and turn science fiction into reality.
- Astrapis, a YC-funded space company, demonstrated its technical innovation by building and launching a fully functional telecommunications satellite within three months, leveraging SpaceX's small satellite launch services, and generating real revenue from putting satellites into space.
- Astro Forge, a company funded by Initialized, plans to fly a satellite to an asteroid, extract precious metals, and bring them back to Earth, potentially yielding significant financial gains.
Evaluating Risk in Hard Tech (21m9s)
- Hard tech startups need to show a clear path to building technology and monetization.
- Relativity Space, a YC W16 company, was able to pick an asteroid with high concentrations of precious metals.
- The United States confers ownership rights to asteroids that are landed on, creating a potential revenue stream.
- Self-driving cars and flying back a billion dollars worth of platinum are not necessary on day one, but a clear path to achieving these goals is important.
- YC W16 batch had 3 aerospace companies, including Relativity Space.
- 2016 was a great time to start an aerospace company due to a confluence of factors.
- Relativity Space, founded by young entrepreneurs, made history by 3D printing a rocket engine and launching a full-scale 3D printed rocket.
- Hard Aerospace, a Swedish company, is developing fully electric planes to address the financial losses and government subsidies associated with regional flights. They have a prototype, purchase orders from airlines, and government grants.
- Remora aims to retrofit semi-trucks to achieve carbon neutrality by capturing 80% of emissions. They collaborated with an expert in mobile carbon capture and have a prototype.
- Cound retrofits cargo ships to reduce CO2 emissions. They have deals with ship owners and successfully conducted a pilot on an actual cargo ship.
- Solugen, a chemical company, achieved profitability from day one by selling their products without incurring losses.
- K-Scale Labs plans to build consumer humanoid robots and open-source their hardware designs to foster a community of robot builders.
- Astrome Mechanica developed an efficient electric jet engine applicable to various aircraft, including subsonic and supersonic models. They focus on innovating key hardware components while utilizing off-the-shelf parts for the rest. Commercially, they aim to launch payloads into orbit to fund future endeavors.
- Many hard tech startup founders have meticulously developed their products in their minds, leading to well-conceived applications and accurate predictions of their companies' progress.
- A technology startup is working on carbon capture using calcium looping, a proven method at a large scale. Their primary challenge lies in implementing their technology.
Vision Breakdown (37m12s)
- Hard tech startups have a clear vision of the future and must prove their product's value before funding runs out.
- Hard tech companies face technical risks but no market risks, while software companies have no technical risks but face all market risks.
- The success rate of hard tech companies in YC's portfolio is comparable to other segments, with space companies being among the highest performers.
- Founders of hard tech startups possess a unique ability to inspire and convince others of their vision, as exemplified by Blake Scholl, the founder of Boom Supersonic.
- Scholl's success highlights the challenges of building a hard tech company, requiring the founder to convince talented employees, investors, and users to care about a product that is not yet tangible.
Mission-Oriented and Prototyping (44m9s)
- Startups are mission-oriented, solving critical problems like climate change.
- The cost of prototyping is decreasing, making it easier to build things with less money and faster.
- Platforms build on themselves, making it easier to start companies in hard tech.
- Robotics is a promising vertical in hard tech, with Nvidia's market cap and access to capital accelerating its development.
Robotics and Fundraising (46m25s)
- There are two paths to building a huge company: being a fantastic fundraiser like Elon Musk or thinking like a software company and surrounding yourself with software people and investors.
- Founders should focus on figuring out how to do things with limited funding rather than raising large amounts of money.
- This approach teaches discipline and sets people up to run real businesses instead of money-raising exercises.
- You don't have to be a multi-time billionaire or an Elon Musk to succeed in hard tech.
- Surrounding yourself with smart people can help you figure out the rest.