If you want to make smart hardware, listen to these four pieces of advice

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In recent years, Sinovation Ventures has invested in more than a dozen smart hardware projects, which makes it the investment institution with the most smart hardware investment among all domestic investment institutions. Although many investment companies say that smart hardware is great and we want to do it, in fact, we are probably the only company that has invested in so many projects.

For example, in the field of personal smart hardware, we have LeTV TV, The One smart piano, and Meitu mobile phone; in the professional field, we have Xiaoyu at Home, Sugar Nurse Medical, and the water supply system adopted by Disney in the United States. It can be said that we have invested in a lot of smart hardware projects in this field. Our entry into the smart hardware project was also due to my own science fiction of the future. At that time, I was thinking about what the future world would look like, and what exactly are we investing in?

What is the essence of investment?

In fact, the mobile Internet makes everything more automated, connecting people, objects, and brains, which is to continuously improve the efficiency of the real world. Before the Industrial Revolution, 90% of people were farming. Whether we invest in O2O or smart hardware, we are continuing to automate the real society. If 10% of people farm, the remaining 90% can engage in modern industry and service industries. In the future, we may only need 10% of people to farm, 20% to engage in modern manufacturing and service industries, and the remaining 70% may be newer industries, the virtual world. The virtual world has newer things, so I thought about it for a long time and found that our investment in the future world is two-fold. One is to automate the real world, and the second is for us to create a new virtual world together.

I imagine that smart hardware is the most important part of automating the real world. It is not only used in our daily lives, but also in services, manufacturing, and the service industry. It will turn the entire world into our brain. In the past, we have invested a lot in smart hardware, not only for individuals, but also for enterprises or industries.

Why are there so many pitfalls in smart hardware entrepreneurship?

Yesterday, I looked through the list of smart hardware companies we invested in and talked to a person who works in smart hardware. He said, "You are crazy. Why do you invest in so many hardware companies?" I asked him, "Aren't you a hardware company?" He said, "Yes, but I won't invest in hardware companies." I asked him why. He said, "It's too difficult to make hardware and the success rate is too low." I thought about it and it was true.

When we make software, we just need two people, one is a designer and the other is an engineer, and that's it. We can use Amazon's cloud service, and once it's made, it can be released through the APP store, which is quite pleasant for users. But to be honest, when making hardware, you need a lot of people at the beginning, to do supply chain, electronics, software, drivers, etc., you need a lot of people, and you need to accumulate knowledge in all aspects. Then find a designer, even if it's just to make a sample, find a supplier, and work hard to find someone willing to take our work, open a small order for us, and make a board for us. Finally, the sample is made, and this is when the profit model just begins. We have to find downstream channels that are willing to help us sell goods, I want to promote the brand, and finally send out the product. Murphy's Law tells you that there will be problems with the supply chain, the product will definitely need maintenance, and the production capacity will decline, which is another nightmare. Even if we work hard and finally get a lot of orders, we can sell our products and make them a hit product, the copycat students will come over and directly copy your version, the price is half of yours, the quality is worse than yours, but they sell desperately. It's really very distressing.

Smart hardware entrepreneurs who can win at the end of the tunnel really have to go through mountains of swords and seas of fire to get to the end of the tunnel, so I really admire every entrepreneur who does smart hardware. This is also why when I saw the Taihuoniao project, I felt that I must invest in Taihuoniao, because Taihuoniao is really doing something very, very meaningful. It can help us hardware entrepreneurs solve many problems. It is the Amazon of hardware entrepreneurs. When we invested in this project ourselves, we worked with smart hardware entrepreneurs in person. For example, if a video website wants to make TV, there is no one at all, so we connected them with Foxconn to do OEM and connected the supply chain. When the first version of Meitu mobile phone was just released, there were countless problems, such as freezing and returns. We also worked with Meitu to solve the problems, find new OEM manufacturers, and go to Taiwan to see if there are better hardware talents to dig over.

Including Xiaoyu at Home, after it was launched, our co-founder Zhao Hui took Xiaoyu at Home to visit celebrities one by one so that everyone could use it. Because this product is difficult to explain, there must be many usage scenarios, so that many people can promote it and give it a good exposure opportunity. So we found that there are too many things to do here. If we invest in Taihuoniao, we don’t have to do these things in the future. Taihuoniao can do this for us, and our burden will be put down.

If you want to make hardware, listen to these four pieces of advice.

Having said so much about the previous things, we invested in many hardware companies later, and I also have some opinions or suggestions of my own.

***, it is precisely because it is not easy to start a hardware business, so you must be careful and cautious when choosing a direction at the beginning. Never start a business in a field that seems to be very popular now. There are two ways to do hardware, hundreds of bracelets, 50 wifi routers, one is Xiaomi's way. You entered a market that was originally a red ocean. It doesn't matter. I have a strong supply chain and strong channel resources. Even if it is a red ocean, I can kill all competitors with a strong supply chain and strong channel resources. But for most ordinary entrepreneurs, Xiaomi's path may not be suitable for most hardware entrepreneurs to imitate, unless you have strong supply chain capabilities, strong supply chain funds and very, very strong downstream sales channels. Otherwise, you will take another path and try to do a wider field and create brands.

The field of smart hardware is very, very broad. As I just said, the companies we invested in already cover a lot of fields, including those used on people, cars, homes, and industries. The market is not necessarily limited to the Chinese market, but also to foreign markets. Smart hardware covers a lot of fields and should not be limited to the already very popular fields. It is very difficult to iterate smart hardware. Every time you make a mistake, it is not like a server that can be changed in two days. A mistake will take one or two months. When your product is launched a year later, the market situation may have completely changed.

Second, when making smart hardware, we need to return to the hardware itself. Because I see that many entrepreneurs think too much when making hardware. For example, the hardware itself is a user's entrance. Although the hardware does not make money, there are many ecosystems and business models behind it. These things may be the patents of large companies. For our ordinary entrepreneurs, we really don't need to think too much in this regard. Even for Xiaomi and Apple, the real money is still made by hardware. Very good software is based on the user experience of hardware, very good software solves your barriers, and very good software can make your hardware sell with added value, but don't think too much about the platform concept or the background ecosystem, or the later business model. We can only return to the hardware itself.

Third, make really good things and really solve problems. This wave of hardware startup opportunities not only comes from intelligence, but also from consumption upgrades. Let’s first talk about why 2C consumers need smart hardware. Intelligence is not the purpose. Consumers use smart hardware to have a better life. So it’s not that all existing things are smart just by adding an Internet chip and an APP so that it can connect to a mobile phone. What’s more important is that it is really a good and useful thing. For example, if you make a smart speaker, it must first be a good speaker. For example, if you make a smart piano, it must first be a good piano. These are very, very important. Another thing is to solve real problems, don’t make toys.

The last thing is, never underestimate the hardware itself in terms of mass production and supply chain. You must estimate the difficulty of all these problems. What you think is likely to happen will definitely happen. Never try to solve all the problems by yourself. We have Taihuoniao, investors, and various partners. Try to seek help from everyone and work together to solve the problems.