Hardware is Hard is a meme.
But the average person in tech doesnโt know WHY it is hard.
1) cash flow: you usually have to pay your suppliers months or even years before you generate profit from sales/lease.
2) forecasting scale: this might be the number one company killer. Order too much of the wrong thing, you are dead. Too little, you donโt hit your growth. Build a bunch of units with a defect? โ> firefighting mode for the next year.
3) talent: if you are building in the US, we have very few people that have actually shipped products at scale. You mostly find hobbyists or academic talent. Or people that have spent their career inside a big company and only have a narrow area of expertise.
4) logistics: your supply chain is global and any one vendor failing to ship can break timelines. You are also exposed to geopolitical risk and tariff fluctuation. And once you get your product to your market, you need to pay to store it somewhere and pay to ship it to the customer.
5) fundraising: VC hates hardware in part bc they donโt understand it and bc of the other reasons on this list. At every stage of fundraising you are being judged against software companies that seem further along. Your one time sales revenue is basically discounted to zero, and you are almost entirely judged by recurring revenue (hope you figured out your saas add-on!)
6) integration complexity: once you actually build hardware, you still have to make the software. You have to get embedded teams to talk to web/mobile fe/be teams and there are always competing priorities.
7) regulatory requirements: most products require a variety of certifications, which require lab time, paperwork, and approval delays.
8) product support: difficult reverse logistics to return and service a product.
9) product commoditization: in order to be competitive, in most cases you have to be in China. But that means you are at risk of products being copied and fast followed. Good software, UX, branding, and continuous innovation is your best defense.
10) Distribution: sell online and you need to pay the Facebook/google/amazon/shopify tax to get awareness. Sell in stores, prepare for fickle buyers and slow procurements. Sell to enterprise, expect egregious payment terms. Operate the hardware yourself, no available capex financing.
Hardware is hard, but if you can overcome all of this, you have a competitive advantage and almost no AI disruption risk.