Inside The Hard Tech Startups Turning Sci-Fi Into Reality

Inside The Hard Tech Startups Turning Sci-Fi Into Reality

Coming Up (00:00:00)

  • 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 (00:02:42)

  • 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 (00:04:19)

  • 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.

Examples (00:08:30)

  • 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 (00:21:09)

  • 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.

More Examples (00:22:18)

  • 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 (00:37:12)

  • 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 (00:44:09)

  • 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 (00:46:25)

  • 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.

Outro (00:47:58)

  • 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.

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