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Hard Tech is Back (samaltman.com)
453 points by firloop on Mar 11, 2016 | hide | past | web | favorite | 287 comments

Every company doing hard tech should be considering federal funding for early stage R&D. The US gov't has been consistently providing more early stage capital than VC for several decades through the SBIR program. (About $2.5B each year). Capital through the program is NON-DILUTIVE, Phase 1 grants can be $225K, Phase 2 grants to $1.5MM, and you likely have government and private sector customers at the end of Phase 2.

Steve Blank's Innovation Corp initiative is now working with the NIH, NSF and Defense to help companies development product-market-fit once basic funding has been achieved as well.

Disclaimer: My company GrantIQ.com helps companies find federal funding opportunities & helps large companies identify breakthrough technologies being developed through these programs.

Every company doing hard tech should be considering federal funding for early stage R&D. The US gov't has been consistently providing more early stage capital than VC for several decades through the SBIR program.

This is generally good advice, but I'm a grant writer (see http://www.seliger.com if you're curious) and have worked on many SBIRs and STTRs. I'll add that there are downsides as well. One is simple timing: if the appropriate SBIR or STTR funding cycle just concluded for that year, you may have to wait another year to apply. Then another 1 – 3 months for a decision. Then longer for final authorization of the budget. The other day I talked to a guy whose best potential SBIR source had had a deadline the month prior.

Second, Phase 1 grants can just be too small for the amount of effort that goes into them.

Third, they don't come with the advice / community / expertise of good VCs.

Fourth, they take a lot of effort to prepare, and for first-time grant writers they can be quite hard. The alternative is to hire someone like my firm. While I'm biased towards doing that for obvious reasons, we also cost money.

While I don't want to talk anyone out of applying, I do want to note that the downsides are considerable too.

As a side note, I used to submit some SBIR and STTR RFPs to Hacker News (search for "seliger" here: https://news.ycombinator.com/from?site=nsf.gov), but I stopped after a while because no one upvotes the submissions.

These are some good warnings. The way I like to think about it is that the actual free cash available to spend from the grant is on the order of 1/3 of the sticker price when you fully account for the costs of getting the grant, administering it, and fulfilling the requirements which inevitablly do not line up exactly with your business goals.

Many companies get stuck in a kind of grant hamster wheel where they end up only producing enough from a grant to be able to get another grant, and not advance in commercializing their technology. I think there are few companies that make the transition from being primarily grant funded for a period into a high growth success.

Sometimes it's your only option for funding, but ideally, it makes up 0 to a fraction of your R&D funding so that it doesn't dilute your focus.

This advice is specific to companies that have a path to be VC-fundable, high growth, commercial success. There are many other (most) companies that can be funded by grants and build their technology incrementally over time.

> Third, they don't come with the advice / community / expertise of good VCs.

Definitely not business advice/community, but if a startup is doing significant R&D, it can be useful for the scientific and technical advice and community. Not guaranteed by any means, but I've seen it work out well, mainly in the case where a company submits an STTR jointly with a university research group. If the arrangement ends up working, the most valuable thing to the company in that case is sometimes not even the actual NSF grant money, but the connection to the research group it opens up. Having a joint STTR provides an excuse to get a company sort of attached to the research group as an external partner, with a forcing factor ensuring you end up on their schedule with regular project meetings, access to grad students, etc. Can also end up useless, of course, but when it works out well, it can provide value equivalent to something you'd have to pay a lot for if you were hiring technical consultants (especially in areas like machine learning).

The last time I looked into these types of grants was admittedly years ago, but from what I recall, there's extensive reporting and research requirements that you have to fulfill. It seemed like an overly onerous burden compared to the resources available to an early stage startup. Is that accurate? Have things changed?

I attended the SBIR conference about twenty years ago with a genuine interest in getting involved. I left the conference with an image embedded in my head:

"SBIR = The PhD Club of America".

Perhaps things have changed. My impression leaving the conference was that it was a complete waste of time if you did not have a PhD in your team who had some connection with the PhD at SBIR in charge of reviewing applications.

In other words: Not a single Silicon Valley college dropout or "college-interruptus" need apply as the process seemed to exhibit favoritism towards members of the aforementioned club.

> My impression leaving the conference was that it was a complete waste of time if you did not have a PhD in your team who had some connection with the PhD at SBIR in charge of reviewing applications.

For the second part, it is standard advice from the granting organizations themselves to contact whomever is overseeing the solicitation (for DoD, they're the "topic author") to establish a good working relationship. Does someone who has a previous history have an advantage? Yes, in the same way that a SV startup founder with prior experience has an advantage seeking funding for a new venture.

For the first part, SBIR/STTR emphasize research, and a PhD (or equivalent degree) is the standard academic research qualification. Teams having technical members without PhDs but with significant domain experience are funded all the time. You're right that having research credentials is necessary, but it's not in itself sufficient. If I put together an application for an area in which I have no prior research experience and no preliminary data, I would expect my application to not be scored.

> In other words: Not a single Silicon Valley college dropout or "college-interruptus" need apply as the process seemed to exhibit favoritism towards members of the aforementioned club.

I don't see it as favoritism, I see it as a mismatch in experience and expectations. My "research currency" (PhD, publication record, patents, grantsmanship experience) isn't worth much if I were wanting to work at a SV startup because I don't have a GitHub account (or so I am led to believe). The kind of currency that an SBIR/STTR values naturally tends to be held by people with PhDs (or equivalent).

It's also important to remember that SBIR/STTRs are highly competitive. A few years ago, I applied to an SBIR from the NCI that ended up funding 1% of applicants that cycle!

SBIR would not have funded Einstein, the Wright Brothers and a myriad of other innovators who would not "qualify".

I've worked with enough PhD's to be guarded. If you want to get shit actually done sometimes a guy who knows nothing about the field but is full of fire and ambition can run circles around an entire industry.

That's not to say all PhD's are bad, I have met a number who are brilliant. And the secret, in all cases, is in who they were and what they did before their PhD, in most cases even before college.

Programs like SBIR are not about attracting the best. They are about great looking presentations with enough check boxes filled in. The best don't usually fit that mold.

Name the top hundred discoveries or developments of the last century. Let's see how many PhD's originated and drove them to fruition.

Can you share more info? Or maybe an email address?

thanks! :)

I worked in industrial automation for a few years and most of the software there is terribly outdated. It's definitely ripe for disruption. There are "firm tech" business ideas that involve building better sensing and control software for hard tech industries. Given the low cost of sensors and networking these days it's not prohibitively expensive.

I think making a hard tech product for consumers is still very hard, and those who succeed should be commended. People wanting to dip their toes in the water might consider things like building a factory management portal like Splunk that aggregates sensor data, or something that involves sensing and reporting rather than actuation. Actuation can be dangerous and therefore legally risky.

I think the reason these systems haven't been challenged yet is lack of knowledge. People tend to attack areas and industries that they know a lot about. This is why college hackathons have tons of dating, what to do, and delivery apps. It's their world.

If you don't have people coming out of the industrial automation space with a good understanding, it's hard to walk back in with a useful product.

That helps but you have to understand that most industrial and utilities sites hate new tech. They like proven tech that's been used in three other places before they adopt anything. And once they settle on something they want to stick with it for 15-30 years and have support for longer because everyone knows that it's going to take another 3 years to get approval for purchase of new components because the old stuff has been giving faulty readings the past year and a half which requires hard reboots, the firmware is no longer being upgraded and the guys who first used the stuff are starting to retire. Even then they just want something that fits into the same slot.

Sorry for the runon but this is a major gripe of mine. Most managers just want it to work and unless it doubles your profit, cuts failures and makes you coffee for when other stuff breaks and you're working overtime to fix it they don't want to change anything.

Well, naturally. Their job is not to use tech. It's to build something, or run something, etc.

I can sympathize, and I bet you can too. My dishwasher, my car, my garage door... I just want these things to do their job and let me get on with my actual work. I don't want the latest garage door or vacuum.

I find that kind of odd. Cooking is not a passion of mine, so i don't care about a fancy dishwasher, i agree i want something that just works. I'm not much of a gamer, but i completely understand friends who dump hundreds or thousands a year into hardware, because that is something they're passionate about.

If the whole point of the organization is to build things, it seems like they should use the best tools for building things. Now, there's a good argument for tried and true solutions, and if the new stuff isn't rock solid, you're going to have wasted materials. It really seems like they should be completely geeking out over better, shinier, fancier tools for building stuff.

Maybe the costs are so high, and the margins so thin there's no room at all for experimentation. But it can't be lack of desire. If it is indeed lack of desire, they're going to go out of business.

Absolutely. I wasn't talking about getting adoption for a new solution.

I meant identifying the problem and coming up with a solution in the first place.

Go to market is another level of complexity.

To expand on that, lack of awareness of the problem space and lack of knowledge of the specifics involved. And I think the latter is a huge barrier.

From what I've seen (relatively minimal), industrial automation tends to be incredibly bespoke. E.g. we had consultant X from Y integrator (sometimes now defunct) come in Z years ago (where Z is always > 10) and set up this system: we've been using it as a black box without change since.

In short the "Linux on the desktop" problem - the burden of having to support 1,000+ unique configurations, each with their own edge case behaviors (or outright bugs). And from what I've seen, the ideal startup growth pattern doesn't fit with a services "send one engineer out to an account to custom fix it" way of doing things.

"we had consultant X from Y integrator (sometimes now defunct) come in Z years ago (where Z is always > 10) and set up this system: we've been using it as a black box without change since"

This is accurate and it stems from the proprietary technologies that integrators must sew together. Want to build a better Siemens Step 7 IDE? Get a job at Siemens.

I think ultimately it stems from lack of source code ownership / use of open platforms / clearly defined interfaces.

Best case, with clearly documented and defined interfaces, you can rewrite or swap out an entire component. Worst case, you have no source, no standard technologies, and no interface barriers, in which case your choices are leave as-is (no additional features) or replace everything (impractical due to size of codebase / legacy functionality coverage).

> I think the reason these systems haven't been challenged yet is lack of knowledge

As a software engineer that works in this space, I disagree. The thing that keeps us using things like MODBUS and CAN are because the problems we are solving are themselves are very simple. So we tend to use simple solutions to address them. The latest dynamic languages and protocols (XML, JSON, YAML, etc) don't solve our existing problems any better.

Quite frankly, the extreme level of complexity in deploying something like Android to control a basic IoT device is beyond appalling. 640k may not be enough for everyone, but it is more than plenty to control IoT devices.

Exactly. Industrial automation also isn't sexy and manufacturing margins are small so the big dogs in the industry have limited R&D resources.

The upside is a lack of competition and a B2B environment. No need for a marketing department when you just have to attend a few industry trade shows a year.

Be careful with "lack of competition". You are ALWAYS competing with the incumbent solution. No matter how clumsy or awkward it seems; no matter how much better it could be; those solutions have amazing staying power and your niche can become your enemy because there's a limit universe of customers to sell the solution to.

In the industrial space, no one ever got fired for buying Rockwell Automation.

Even if FactoryTalk is absolutely horrid.

And most places already have a system that works and no incentive to upgrade their tech from 15 years ago.

> I think the reason these systems haven't been challenged yet is lack of knowledge.

As a software engineer, I always thought that the best way to have a great business (not a blow out VC style business, but a good business) is to be a decent-to-good software developer and have deep domain knowledge of some other industry. I thought the best way to get that would be to apprentice in that industry, but the opportunity cost is high (esp as you get older), so the second best way may be to take a job as a dev in that industry and learn as much as you can from the domain experts.

The combo of software development + domain expertise means you see problems to automate away all around you and you can actually execute on what you see.

Agree and also Investors have a bias towards the student crowd as they are much easier to impress and deal with, than an experienced Academic or Engineer.

I've actually wanted to do this for a while. I worked in large-scale analytics (Crittercism) and have a friend who does robotics work in Chicago.

I see two big problems here.

The first is, what's the business case for the buyer? What tangible improvement in their business is possible with all this new technology? Maybe less downtime? Predictive failure models? I feel like the tech is so disruptive, you'd be better off building a completely new factory from scratch rather than convincing an existing one to adopt such a radical process/ops change.

Second, there is a profound skepticism for large-scale software projects in true "industry". My father worked for a long time at Andrew, a maker of coaxial cable in Illinois, which was later acquired by Commscope; their view of software projects was a lot like war in 1984: a constant, ongoing struggle, with no end in sight, of huge promises and lack of good delivery. I'm not sure whether that means the barrier to entry is huge, or once you make great software you'll have a massive differentiated advantage -- probably both -- but just understand, these guys have spent their career dealing with vendors selling overpriced junk from Oracle, SAP, etc. and just expect things will fail from the getgo.

To respond to your points:

1) I assume you're referring to "Splunk for factories". You could make the same claim about plain-old Splunk. One business case is better real-time response to failure and later, better forensics. I agree, there are many factories where the process is perfected and the operators can read the tea leaves when something goes wrong. Another business case, and probably a better one, might be report generation for managers - people hate making the same reports over and over again.

2) Industrial software largely sucks now. But software in general sucked 20 years ago, and has improved much since then. True industry is behind the software curve by 10-20 years, so they are using old, bad (by today's standards) software. The thing is we've already improved that old, bad software - they just haven't adopted it yet. Once industry begins adopting "newer" software (think Java, .NET, web services) and they see the falling development costs and better features, they get behind it.

There is also a talent shortage in industrial software, because there are higher wages and better working conditions in the desktop, web, and mobile industries. However what has happened is we are now in diminishing returns in those latter three industries because they are saturated with talent, while all the cool things we've built to service those industries can now be repurposed by hard tech. It's the reverse of what happened after the Cold War ended and defense industry veterans fled for greener pastures in Silicon Valley.

I am with you - I'd love to do this, but it's a daunting prospect. Seems like the RasPi kids get better toys than the adults these days.

the problem with those industries is that the software is closed because of the hardware. while on one hand it is ready for disruption, on the other it is locked down by ever changing hardware interfaces outside of your control.

You would also have a hard time convincing the buyers to not use the manufacturer software and instead use yours.

>> building a factory management portal like Splunk that aggregates sensor data, or something that involves sensing and reporting rather than actuation

Haven't ThingWorx solved this problem very well already ?

Yes. Industrial automation is very ready to be disrupted.

I'd like to see better support for actuation in terms of being able to audit things and feed that back to design decisions, which ties very much back to aggregation.

I'm biased to think there may not be much difference between the two domains. And it should be pretty clear that machine learning is going to be increasingly important.

This being said, the customers may not be all that ready for it.

Well written and mostly agreeable but I've got a lowbrow dismissal incoming: I disagree that Cruise could be considered hard tech. The hard tech in that space was done by universities competing for DARPA awards, and Google after that. Cruise took inaccessible hard tech and made it more accessible.

And that isn't an insult to Cruise. The problem space is still difficult, and they created more value tackling that than the vast majority of startups do on much easier problems. I happen to think that the opportunities for making the cutting edge more accessible vastly outweigh the opportunities for cutting new edges, and nobody should be discouraged from doing it because it isn't as glamorous as the research on the ground floor.

"Cruise took inaccessible hard tech and made it more accessible."

This seems to be a standard path for businesses in the tech space. The value many of these companies bring is not the tech itself but the ability to get that tech to the masses (which is no small feat).

It's why the classic techie response to a tech product is "who cares I can already do that with {insert X inaccessible technologies glued together with shell scripts}." The original dropbox thread on HN is a great example of this.

I'm wondering how much of that is due to how "hard" the tech is (the research had been done by Sebastian Thrun/Carnegie Mellon in the 90s) vs. the maker renaissance spurred by the drastically falling cost of hardware?

Though I suppose "true" fully autonomous self-driving cars that can handle things like rain, human driver non-verbal communication (like eye contact and the finger), and left turns onto oncoming traffic are still at least a decade away, at least according to MIT's John Leonard, the Cruise founder's likely protégé. [1]

It goes without saying that California with its perfect weather and perfect highways is a rather unfair testing ground for autonomous vehicles, as unfortunate as it is the hotspot for a lot of the autonomous driving research. (Maybe that's why the researchers more grounded in reality are the ones in Pittsburgh and MIT/Boston?)

I remember when a LIDAR unit was a $30,000 SICK laser unit, but now you have the same kind of sensor in your $100 Kinect.

[1] https://www.youtube.com/watch?v=x5CZmlaMNCs

Also here's the original Cruise HN thread where some skepticism was also expressed. Interestingly the criticisms were more that it was too hard and a $10k bolt on box wouldn't drive safely enough https://news.ycombinator.com/item?id=7933045

Interestingly, Kyle (founder of Cruise) was intimately involved with the DARPA Grand Challenge at MIT when the goal was to engineer a self-driving car.

In his book Let My People Go Surfing, Yvon Chouinard makes a distinction between invention and innovation. Innovation is the application of an invention to solve a problem and create a marketable product.

Chouinard is one of the most innovative folks in the history of the climbing industry, having introduced a lot of now-standard technologies like curved ice axe picks, polyester long underwear, and polyester fleece for warmth. I highly recommend the book.

I don't think you're being dismissive at all - if anything I think you've added some much relevant context to the discussion. I appreciate you mentioning this relationship between development and monetization.

As a mechanical engineer, I am excited to see more of a focus on hard tech content here! Unfortunately, there isn't really a HackerNews for EE's or ME's (though if someone wants to build it, I'd be grateful). So it can be tough to find startups working on these sorts of hard problems that are looking for all flavors of engineer (except civil, they stink and nothing they make moves /s). Personally, I work in ocean robotics and defense, which is I think is very cool, but mostly handled by large defense contractors and military research departments.

As a CE/EE myself, I feel your pain. This area of engineering seems to have such a high barrier to entry. I imagine that is mostly because of the production cost and most necessary software tools still being heavily license based with their physical counterparts being prohibitively expensive as well.

It's just easier to play around with software until you find something novel.

If you live in the SF Bay Area, Detroit, Austin, DC, Pittsburg or Chandler, I disagree. Try the TechShop and its host of classes.


It's Pittsburgh with an h at the end.

Source: Born and raised black and yellow.

My mechanical co-founder swears by Hackaday. It's somewhat different, but a great place to see mechanical projects.

Is that a community? I thought that was just a blog.

There's a forum: http://forums.hackaday.com/

As an amateur inventor with a serious backlog of "hard tech" type inventions (e.g. actual products, not software or 'platforms') I've done my best to inquire and reach out to several different potential funding sources, all of which have been extremely quick to pass. The basic reasoning is "this doesn't fit with our preferred verticals" and I'm left to figure out what that meant other than We only speak app as a self-imagined consolation.

This article is not exactly re-assuring because the noted interests - AI, biotech, and energy - are all extremely crowded fields more than likely competing with large institutions, research organizations, and let's be honest, probably a TON of regulatory hurdles to consider if planning to do business in the US.

For context, one of my primary inventions is a mobility / utility device that would have residential, commerical, and industrial applications. By design it can be applied to a variety of uses. I've done basic patent research and the pathway looks extremely good, quite tempting for me to just go ahead and file ASAP. It's hard tech. It's not glamorous, but it's a huge market opportunity on prima face.

I've got a co-worker pal who finally got his beverage and branding invention patented and now he's in the marketing to local schools, catalogs, and if early indications are correct, he may have an genuinely lucrative future with it. In my view, he's a more likely investor target than anybody out on the West Coast or in a VC room. I simply base this perspective on personal experience and how this post sounds promising yet concludes with a short list of massive goals. Might as well wrap it up with "We just want to invest in a better mousetrap" considering the scope. Cottage industry isn't runaway freight train profit creation, I get that, but I'd also counter that if one wants to get into the next frothy bubble of biotech then good luck with that.

> isn't runaway freight train profit creation

But YC is in the business of hopping aboard every rocket ship it can find. Sam & Co do not want to invest in small business. They want massive payouts. It's the only way the VC game works.

If you're dedicated to getting funding, you have to keep knocking on tons of doors until you find an investor that matches your particular payout goals.

The West Coast / SV venture capital scene makes a ton of noise about massive successes to entice many otherwise-profitable small business ideas to try and become huge. When they don't reach a hyperbolic trajectory, it's a VC failure, but the same business could have easily done well for the founders and early employees as a lifestyle business. A stable orbit if you will, but not going to the Moon.

Find investors who want reasonable returns from your business at your scale. Don't think that the SV VC approach is the only way to get your business idea funded.

Oh I understand, but in this case making such a public post about "come on, join us, we can do it" and then targeting essentially stud 'just graduated, have other backing' type teams in massive fields is conflicting to me. I'm basically under the assumption that any serious venture in AI, biotech, or energy can actually compete for investments outside of the YC sphere. As in, YC actually has more competition than these teams have to sacrifice to get started. It is common knowledge capital is sloshing around everywhere looking for yield and returns.

I do understand VC might not be the proper target in the purest sense but it's a similar story for most small businesses if I'm not mistaken. Like in hard bench science research - funding goes to those already being successful. Is it really practical to "boot strap" a hard tech company? I draw a lot of inspiration from the Wright Brothers, but I'm still pragmatic.

If there's a 'ground floor' arena where cottage industry would be best served, I'm all ears and would love links, guidance and direction to make progress. Not kidding, it's already been a few years and I've got another half a lifetime to keep plodding away.

Have you looked into SBIR[1] grants for developing your product? You might have to do a little leg work to set yourself up to receive Federal funding but if you'd like to commercialize any technology you'll probably have to do that anyway...

[1]: https://www.sbir.gov/about/about-sbir

I'm in sort of the same train and am getting slow but steady progress. If you want to talk about things (without giving away anything) feel free to email me.

>AI, biotech, and energy

The problems you described with these fields are known as "barriers to entry". They are bad for competition and foster lower-order market structures and/or price distortion in virtually any industry, not just those in the tech sector. Thus they're generally frowned upon by all but the most extreme laissez faire capitalists:


So, was the Cruise acquisition for the talent or the tech? How many other "Hard Tech" startups have had successful exits, when compared to how many have failed? How does this ratio compare to software startups?

> So, was the Cruise acquisition for the talent or the tech?

It has to be the tech or tech + talent. Are there enough people worth $1 billion or more to do only a talent acquisition?

I'm sure the tech was part of it, but my guess is that they were mostly buying it for the ready made team.

I think this is pretty similar to the Monsanto acquisition of Climate Corporation (where I worked) several years ago.

If you're a big traditional company, building an innovative technology team from scratch is really hard, even if you're willing to spend a lot of money on it. It takes a lot of time and effort, and you probably don't have the internal leaders or culture to attract top talent.

Buying a promising startup and continuing to operate it as an independent organization is a straightforward (if expensive) way to solve this bootstrapping problem. From a strategic perspective, it can make complete sense if the opportunity cost of getting a product to market a year or two late can be measured in billions of dollars. There are a lot of advantages to being first to market.

Yes. That's the thing about acqui-hiring. As much as we like to pretend that with enough dollars you can buy the talent required to own a product-space, the fact is that in certain spaces, individual mortals can create billions of dollars of value. You just have to pick the right space and the right individual.

> Yes

Do you have any data showing acqui-hiring of $1 billion or more? I've never heard of such an amount and retention after an acquisition is really, really hard. Seems crazy to spend so much only to have people leave after 1-2 years (or less depending on the company).

To take an example at the far end of the spectrum: in 1989 WPP (the world's largest owner of advertising agencies) bought The Ogilvy Group (a very large ad agency) for $864 million ($1.7 billion in today's dollars.) Ogilvy was nothing but people...there was no other value (except, maybe, the brand, but that's debatable.) At the time people criticized the deal, saying "all of their assets go down the elevator every night." But it turned out to be a great acquisition for WPP.

While the founders and first few employees may leave after an acquisition, preferring to work for themselves, everyone after that is an employee and, as long as they are managed and compensated well, will generally not care so much who the company's owner is.

Fair enough. Good example. I just don't hear anything near this size happening as a talent acquisition but I guess it's possible then.

Maybe more plausible when it's the core talent + specific tech applicable to the problem?

You're buying both a base platform / proof of concept+ implementation and the key individuals responsible for creating it. Then training your people on the platform with the deeper knowledge from the key individuals in the 1-2 years you've got them employed.

If you can buy a breakthrough and enough knowledge transfer to get your people operational on adapting it, it's worth it even if you don't get any additional breakthroughs?

A lot of the ad network and exchange companies were bought by Yahoo and Google for $100+ million basically for the team and not the technology.

Although the "technology" more or less worked, it was discarded and re-written or substantially changed.

In the case of Google, I'm thinking of AdMob.

In the case of Yahoo, I'm thinking of the 2-sided ad exchange network they bought and then ripped out the 2-sided features.

Self driving cars is a fiercely competitive space, maybe they shopped it around?

Uber, Apple, Tesla, and every car company would be interested.

It's both. They still have a long way to go for autonomous driving, but they have a young ambitious team and their leadership seems very strong.

Relative to a company like Google, their weakness may be on the hardware side, but GM likely has access to very strong mechanical engineers, and they certainly now have the funds to go out and hire more folks.

I'm all for taking Medium thought pieces on the fundraising environment down a peg, but the problem with Hard Tech is that it requires a nontrivial amount of venture capital. You can't be ramen-profitable when your startup requires purchasing cars for testing or renting giant computing clusters for training AI models.

In relative contrast, it is trivial and risk-free to make a lean MVP for a generic Uber-for-X and send in a YC application.

I'm all for taking Medium thought pieces on the fundraising environment down a peg, but the problem with Hard Tech is that it requires a nontrivial amount of venture capital.

I don't begrudge the fact profitability isn't tied to how much work went into building something, how novel the product is, or whatever. Those bloggers are great because they point out startups like to use the cachet of "solving hard problems" to try and impress me with their less-impressive products.

This blog post makes me laugh because why does it matter to a venture fund if they're "hard tech" or not? It shouldn't, should it? It's about business potential, right? If "hard tech" does that, wouldn't you just invest in it without bragging on it and hope the competition doesn't notice? Maybe Sam is making this post because kids are starting to wise up to the fact "hacker" isn't anything more than something they let you call yourself to feel cool when don't go home after 40 hours. Now the tech is "hard," so nobody asks "why am I wasting my life on this piece of shit?"

My understanding is that deep tech (or hard tech) is more defensible than otherwise.

One problem is finding VC capital: majority of VCs in SV don't know that hard-tech so they don't want to invest into something they are not familiar with.

On the other hand, the problem might be also that founders which base their startup on technology gave up too easily when looking for funding. So they gave up and get cozy and well paid job at Amazon, Google, Microsoft, Oracle, etc.

And YC application process does not help here: if something is "hard tech", then YC is probably not going to fund it. Why? There are so many application and people who are very very good at hard tech are not type of founders YC would like to invest in since they do not have great communication skills. So their YC application is probably confusing, there is no clear pitch, etc. They cannot explain their start up as "Uber for X" - since it is.... complicated.

In other words, if we get few founders who got rich and get into VC business because they did some hard-tech then we will have more hard tech companies. As of now, majority VCs did some social network / uber-for-X and that is how they got into VC business.

This is generally true, most VCs are afraid of things that have strong technical risk. But the point of the post is that starting a few years ago some VCs are finally catching up to founders on this. YC, Lux Capital, AH, Khosla, and of course our firm are trying to increase funding in the space and will continue to.

Exactly. I've worked on autonomous vehicles by myself to the point of acquiring a vehicle for development. But the vehicle's conditions were less than ideal and it became too expensive to repair. I am using parts from it to mock up some prototypes. Acquiring a reliable vehicle for development is too expensive. Mind you, I'm an individual working on this as a hobby project. A startup will have a harder time due to overhead costs.

If anyone wants to talk autonomous vehicles feel free to email me. I enjoy it. :)

Did you try using simulations? I built a rigid body car driving simulation in college using OpenGL. Now I get a lot of inbound interest from the self driving car geeks.

Yes, I did data simulations and analysis. My main interest is in vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) real time communications. Those things were simulated with a series of Python scripts, but there is nothing like real world testing. I am in the process of acquiring an SDR like HackRF to mock up some tests. But that also gets expensive when you have multiple SDRs transmitting or receiving data. Hopefully it will happen by the end of this year.

Anybody have some spare SDRs or some Lidars while we are at it?

What band are you going to use?

DSRC. Link to explanation for the curious: https://en.wikipedia.org/wiki/Dedicated_short-range_communic...

Actually, I have a friend who is a SDR enthusiast. Let me ask him.

I appreciate the gesture. :)

I catch your drift, but I don't think it's necessarily true for all "hard tech" problems. For example, putting together a proof of concept or even an MVP for a robotics product (maybe not drivable cars) is totally feasible, but taking that kind of product to market absolutely does require a huge amount of capital. The latter part of that equation is where something like YC is going to provide an immense amount of value.

The main issue with brassboard prototypes done on a shoestring budget is that they don't show well. On top of that, they carry the risk of not being able to go from brassboard to finished product. This was probably implied by Sam's comment that fundraising will still be harder for such a company.

Absolutely. My point was that something like YC (and other programs, I'm sure) is that they'd at least help. Fundraising for this kind of company is always going to be difficult, but a foot in the door with an investor that might actually understand the end goal is a pretty big win.

You can go pretty far with AI using just a few GPU's.

10's of Teraflops is cheap.

Curious what YC could do from their perspective to leverage their semi-unique position here as well.

The big cloud vendors are probably more geared towards the infrastructure side, but given problems (a) that "hard tech" requires non-trivial capex, (b) that many startups fail (nature of the space), & (c) that YC sees a lot of startups, then maybe there are opportunities to more efficiently handle "hard tech" needs by time-sharing common resources.

There are always going to be bespoke needs, but things like shared vehicle fleets with standardized interfaces, etc seem plausible when you've got a stable of 5 startups, with each being perfectly fine only testing their autonomous UAV / vehicle platform Tuesdays and Thursdays (or once a month) and letting someone else use it the rest of the time.

Purchasing a Titan X for 1k is still quite painful if you do a startup with virtually no funding.

Source: I just did that.

You don't have to get a Titan X to get to work. People were doing good GPU work prior to 2015 and Titan's didn't even exist then.

You can get the 980 Ti w/ 6GB of ram for $600 and some change. And if that's too much, the 970 w/ 4GB can be found for under $400.

And if even that is too high, you can troll gamer forums for used cards and cut that cost in 1/2.

See my other comment.

You need to have a Titan X to produce comparable benchmarks, otherwise a lot of people won't take them seriously. Also the 6GB of a 980Ti already rule out quite a few popular networks we needed to run.

I was not really in a position to wait much when buying the card, and I didn't want to risk waiting a few weeks to get a used card I bought on a forum, which then comes out being just as expensive in living cost. You also as a startup don't generally have the luxury to risk waiting.

I don't regret the purchase, I more wanted to show the reality of a "hard tech" startup.

>the 970 w/ 4GB

3.5GB usefully. The last 512MB performs significantly slower.

Why buy when you can rent?

You mean on AWS/Azure? Because I have to develop a framework (https://github.com/autumnai/leaf) with it, and there is no way I am going to introduce any more complexity than necessary that early.

Understood. Leaf looks interesting. Will be keeping an eye on it. Having just recently focused on machine learning I still haven't settled on a stack. I find your rational behind using Rust quite helpful. What kind of timeframe are we looking at for when this is production ready?

Really depends on what use case. There should be a nice production-ish demo out towards end of the month, but I am afraid I can't say anything less vague at the moment.

Does the rust core team have any plans towards being able to write kernels directly in Rust using the NVPTX LLVM backend? Otherwise if you're all just calling into CuDNN anyway, pretty narrow differentiation in performance (and big difference in development resources) between you, Torch, and TensorFlow.

Take it away, Koons Crooks.

There's a company in my e.f. cohort who do most of their work on a box with 48GB of video memory. Another regularly spins up clusters to do machine learning on large video datasets to identify theft.

Most accelerators have partners that can get this stuff for cheap or free - including physical boxes.

That's a good point. Don't YC companies get some crazy amount of AWS credit?

Up to 15,000 dollars of AWS credit for qualifying startups (1-2 years)[0]

[0] - http://aws.amazon.com/activate/

e.f. cohort?

It's a European accelerator that focuses on founders with deep tech (I seem to be the only person here without a doctorate in machine learning) and lets them form teams in the actual programme.

Some of the other people here are predicting (with massively higher certainty than doctors) which early-onset brain issue folks will develop alzheimers, making a standard simple way to run experiments in outer space (first launch in a few weeks), doing natural language interfaces for personal finance, and other crunchy stuff.

Seems the entire website has been replaced with the letter 'b'.

Probably just lots of traffic to blame

At the University of Waterloo Waterloo, the Velocity Venture Fund (http://velocity.uwaterloo.ca/funding/velocity-fund/) awards an additional $10k prize to a hardware team every term to help offset the additional cost, so they could end up walking away with $35k (as opposed to $25k for a software company).

Sure, but that only serves to emphasize the difficulties faced by companies that need to do true R&D. Your typical HW startup has way more than 10k more costs than a typical SW startup.

(Yes, I know the issue is apps vs. tech, not SW vs. HW, but there are parallels)

AI is cheaper than you think. A ridiculous deep learning cluster can probably be had for < $30k.

Can anyone actually identify a profitable business area which DL has solved? I haven't seen one yet.

Now if we all just stop focusing on how to make better CSS, we might actually create some new hard tech.

No need to devalue the work of others. It's likely many of these new hard tech problems will require software. Software that runs on the web. Software that is styled via CSS.

CSS styles fine, it could be a lot better in terms of ease of use for the developer.

It often feels like black magic getting something to style the way I want it, and its not something that I can sit down and work out with a pen and paper, instead it seems to rely on knowing lots of tricks and obscure features.

I thought HTML/CSS was part of the design profession, and not computer-science leaning software development.

My guess is that CSS is used by far more developers than designers.

Flexbox is life-altering though.

Considering I write exactly 0 lines of any sort of web based code on my median day it hasn't altered my life at all.

have you used a website before? have you built a car before? have you driven a car before?

Sure, but I don't consider most of those life altering events.

The new safety features on my current car, like collision detection and dynamic cruise control, have certainly changed the way I drive and so altered my life in a small way.

Congratulations to Cruise!

Cruise Kyle Vogt's third acquired company. It's still ambiguous as to whether your first startup should be "hard tech" or not. I think in the case of self-driving cars it makes sense because automobiles are a trillion dollar market and the anxiety to stay competitive with the rapidly changing landscape is intense.

Plenty of room in this market yet. What is the biggest competitive advantage and who has it? Data & Tesla. Tesla is the only company with the appropriate data to make self-driving a reality faster than anyone else (tell me when Google starts collecting data in Norway). Data collection equipment is relatively inexpensive. Maybe figure out how to get people to attach sonar or lidar or tap into their car's computer to access that data. What else is a problem, even for Tesla? How about predicting pedestrian behavior and making eye contact -- or identifying if a pedestrian is disabled and sending a signal to those pedestrians that it is OK to walk.

At the end of the day the market being targeted has huge weight to the likelihood of a successful outcome.

Incidentally, if you want to get into YC: https://twitter.com/hunterwalk/status/708304772055441408

What is meant by "Hard Tech"? Hardware technology, nontrivial problems, or something else?

Lasers, satellites, really accurate rifles, decade-long life extensions, industrial meat production without a nervous system, advanced optics, cheaper / better sensors, swarm AI.

In contrast Facebook is largely just a couple of web forms and some Big O problems at scale.

>> In contrast Facebook is largely just a couple of web forms and some Big O problems at scale.

Yes, and Steph Curry is just a guy shooting a ball in a basket.

I don't think parent meant to say that the technology behind Facebook is trivial. Just that it's trivial when contrasted with a bunch of technologies that are at best in prototype stage.

A decade-long life extension or growing meat without animals would both probably involve more "Hard Tech" style innovation than building Facebook.

Other observations are IMO less pat. E.g. designing cheaper/better sensors could be either harder or significantly easier than building a Facebook. Depending on the type of sensor and the cost improvement.

A lot of the FB tech circa 2010 seemed to be reinvented versions of things ex-Google FB staff used. They've done a lot of innovation since then though.

Which is absolutely true if there were no such thing as the NBA. Being good at Donkey Kong is also difficult.

You must find it puzzling that FB is arguably the world leader in AI research right now.

Really? Tomorrow night, Google's DeepMind is probably going to mop the floor with a 9-dan Go professional for the third game in a row. What's Facebook doing for fun these days?

Facebook's building a Go playing AI too. They're just a bit behind.

Yeah, well, just wait until my new Go AI is up and running. Those other guys had better run and hide. Real soon now.

'A' leader. Not 'the' leader. Or is there something very specific that makes you say that?

But it wasn't when it started. Which is the point.

>In contrast Facebook is largely just a couple of web forms and some Big O problems at scale.

Facebook is doing more than that. Mark recently claimed that they are working on "a world-class News Feed, and a world-class messaging product, and a world-class search product, and a world-class ad system, and invent[ing] virtual reality, and build[ing] drones".

FB may be trying to do more than that.

Based on the glaring flaws in the base product, I'm unconvinced it has the smarts to do any of those things well.

Although I agree with you, if they can do it "good enough", it'll take off, and I'm scared they might

To me, "Hard Tech" is more science oriented, like the Space Shuttle material that you can hand hold at 1500 degrees: https://www.youtube.com/watch?v=Pp9Yax8UNoM

Stuff that's non-obvious but amazing and makes you think sci-fi... DARPA does a lot of this kind of stuff.

Definitely non-trivial problems, most likely hardware, maybe materials science or something in the other science fields. Maybe new math, or solvers that take days to run on thousands of CPUs. Stuff that might take thousands of man-hours to develop.

Not sure how YC would be involved here, as this is expensive to develop, but DARPA has a funding model.

Hard Tech means nontrivial problems in all varieties, but Altman is particularly "excited about AI (both general AI and narrow AI applied to specific industries, which seems like the most obvious win in all of startups right now), biotech, and energy."

(edit: okay, okay, maybe the article isn't clear.)

I didn't find it to be clear, otherwise I wouldn't have asked.

SV has its own jargon, and not being from SV, I think it's fair to want to clarify what is meant by a capitalized phrase like "Hard Tech" in case there is a deeper meaning known to those inside SV.

Fair enough. But I don't think "Hard Tech" is being used as SV jargon here. The first paragraph defines what is meant by "hard technology" mainly in the negative -- critics who say "SV isn't doing hard technology", for whatever value of "hard technology" they mean.

If the article was clear, it would have replaced "hard" with "difficult." Hard is ambiguous, especially when talking about technology.

Yes. My reading of the headline was "hard" in the sense of "hardware" because hardware tends to require larger investments and more time--and it's often much harder to advance to a viable point incrementally. To be sure, these characteristics also mean that hardware tends to be more difficult than many types of software but the terms don't mean the same thing.

Hard Problem: Current internet discussion technology does not allow millions of users to participate in a discussion without loosing overview. In other words: Current discussion protocols do not scale.

A technology providing that could help make our politics more democratic. It could also lower the need for communication hierarchies like in big companies.

I'm doing research in this area and built several prototypes. I strongly believe we can achieve the goal, but doing it with only one teammate researcher makes the process very slow. We are two master degree computer scientists and need a bigger team.

Contact me if you are interested.

It's not just the discussion protocols, it's the topology upon which those protocols run.

Exactly. Was that not clear from my description?

Building hard core technology products is very risky and challenging for entrepreneurs. Complicating matters further, recent financial market volatility and sentiments being expressed in "Medium thought pieces about when the stock market is going to crash" are amping up the fear and uncertainty faced by newcomers.

It is therefore extremely encouraging and important to hear this message clearly and directly from Sam, that this is indeed a lucrative area worth pursuing and that there are investors who have the risk appetite to continue to fund such ventures.

But is it compatible with YC? "Hard tech" usually means years of work and millions of dollars up front. YC is oriented towards sub-$100K fundings and a few months to "demo day".

Demo day expectations would be different. The point of any accelerator is to push you forward as much as they can during those few months, so you can show a lot of progress and make the most out of a demo day.

$100K in funding can help you go a long way towards raising those millions of dollars.

> " popular criticism of Silicon Valley, usually levied by people not building anything at all themselves, is that no one is working on or funding “hard technology”."

Wow. Passive aggressive much?

Not really. Read the other top comments on this thread. Quite a few of them are basically along the lines of "Sam, don't kid yourself, Silicon Valley mostly works on trivial apps."

And? Ycombinator companies are using my non-trivial software for free and I happen to agree with some of those comments.

Same as many people who have built much more than Sam Altman ever will.

My point is, what he's saying is not passive-aggressive. He's attacking head-on comments like yours. I'm not commenting on whether or not his argument is valid.

Those comments have merit. Brushing comments off because you look down your nose at the choices or priorities of others ought to be called out. Besides, the bit about "people not building anything at all themselves" is at best a non sequitur distraction that lowers the writing quality of the post. There's no defending it.

I don't think it's fair to say he's looking down his nose at people that don't build anything if he's responding to those people saying him and his friends aren't building things that are hard enough.

It's simply using the targets own values to point out their hypocrisy. You don't insult based on the things you would personally would be offended by.

> to point out their hypocrisy.

What hypocrisy? Since when does someone have to build a start-up top be entitled to opinions about what important start-up priorities ought to be, or what the social impact of current start-ups is, or whether current start-ups actually pursue the creation of value for society or not?

I don't see any other way of interpreting a comment like "usually levied by people not building anything at all themselves" -- something completely non-sequitur to the question of whether or not their criticism has merit -- aside from haughty superiority complex that working near the bleeding edge of what start-ups do somehow entitles you to a more valid opinion about whether or not start-ups create actual value or pursue fundamentally important work.

There is no hypocrisy in an OSS developer who has no interest in start-ups pointing out how questionable it is that start-ups actually add value or pursue fundamentally important work. Similarly, there's no hypocrisy in a regular employee of a tech firm pointing that out. Or a single mother who works two retail jobs and couldn't possibly be expected to "build something".

Their opinions about the social value of start-ups still matters absolutely every bit as much as Sam Altman's opinion of the social value of start-ups. Positioning one's self near the bleeding edge of start-ups might entitle you to have a more legitimate opinion about business matters, funding matters, certain technology matters ... but it absolutely does not entitle you to consider your opinions about social value to be more legitimate than someone else's just because they "don't build anything."

It reminds me of John Terry's ridiculous comments earlier in the British soccer season, saying that soccer pundit Robbie Savage is not entitled to make analytical criticism of soccer performance because he (Savage) didn't play on a team that won at a high level during his playing career [0].

It's a bit of nonsense. And I definitely believe that seeing it seep into this post needlessly is at least suggestive of a passive aggressive feeling against people who, while not themselves caring about personally building a start-up, still do care about the lack of social value present in our current start-up culture.

[0] http://www.bbc.com/sport/football/34753162

I find the idea that startups need to have social value or that there exists such a thing as "fundamentally important work" to be one of entitlement and self importance. As if it's owed to the critic that Sam/Silicon Valley be trying to help them in some way.

As for hypocritical, it's seems pretty clear to me that demanding someone undertake incredibly risky, intense, life consuming work for the purpose of bettering society, while they themselves do not, would qualify. I'm not sure how it wouldn't.

Your analogy doesn't work because that's just evaluating people based on their own personal goals, not saying they should have loftier ones. If Robbie Savage was saying that professional soccer players should be donating their high salaries to charity, or building houses instead of playing a silly game, that would be hypocrisy.

It's not the least bit entitled to expect anyone to produce social value as a side effect of their living.

Further, I don't think anyone is saying Silicon Valley has to produce this value. It's not mandatory. Folks are just going to have their opinion, a low opinion, if you don't.

If you don't care that many people see the side effect of Silicon Valley as on net socially and value destructive, that's fine. No one is speaking to you who doesn't care.

But it's absurd to equate an appraisal of the social side effects of something with entitlement or a "demand for help."

Seriously. Sam Altman has an interesting view of the world, which goes exactly as far as the boundaries of the SV bubble (bubble as in insularity as well as market inflation). He seems to be increasingly against anyone not exactly like him.

Yeah, I've contributed a lot to OSS (has Sam Altman done so?), and he comes across as a taker.

IMO OSS licences should exclude Silicon Valley parasites until they show a modicum of gratitude.

Let me take the opportunity to repeat myself.

We need a "professional-courtesy" license. Something like a GPL on steroids that can only ever be distributed as tarballs.

The minute to pass a binary around, the minute you try to deploy with any sort of devops, etc, you have just opted-in for a commercial license, which requires a (modest) yearly fee.

This way, your generosity will gain jobs for a fellow hackers somewhere. Takers still can pay for the benefit of convenience, though.

I've never heard you say it, but I have a model that will do what you are describing here.


OSS is supposed to be about donating your time, without asking for anything in return.

Othetwise, you are just as bad as your perception of silicon valley.

> A popular criticism of Silicon Valley, usually levied by people not building anything at all themselves, is that no one is working on or funding “hard technology”.

I'm not critical of Silicon Valley. Silicon Valley includes many companies working on hard problems, or investing money into long-term moonshot programs.

The criticism is levied towards, for example, the social media giants that pull in top engineers to work on social media problems exclusively. The criticism is also directed at Silicon Valley VCs, who lure smart young people to work on semi-trivial problems because it's the quickest path to profit.

It's not necessarily fair criticism. VCs have an incentive, first and foremost, to fund successful businesses. If their surest path to success in today's economy involves building semi-trivial apps, that's what they'll pursue. The same can be said for the finance industry, where the most successful players are employing our nation's top mathematicians and scientists to extract money from public markets using high-frequency trading. We can't expect them to self-regulate. But how can we incentivize smart people to work on something less lucrative?

Some of the criticism has just been that there's kind of a category error being made: not that these aren't good businesses, but that they aren't really tech companies, and calling them "tech companies" is more of a PR move. For example AirBnB is a successful business, but very little of its success has to do with technology it builds. It certainly operates in a field shaped by technology, and does need some amount of technology to operate the business (a website, some billing infrastructure, etc., roughly technology on par with any airline or hotel company). But, like Wal-mart a generation earlier, its success comes mainly from noticing that ongoing changes in technology and purchase habits open up new kinds of business opportunities as a specific kind of intermediary, and pushing hard to exploit that market opening.

Craigslist is perhaps an even more pure example of that, a "technology company" where having almost no actual technology, beyond the very basic level of "a webpage", is kind of their ethos.

I think this criticism comes from not understanding how much of a positive effect social media has on a modern world. There have been a lot of discussion of the negative sides of twitter, facebook, instagram and others, but the positive effects are either so positive that they don't warrant a discussion or so hidden that no one really has patience to research them properly.

It was always kind of frustrating to see the amount of brain power and tech going into the place I worked in Italy, www.CenterVue.com compared with typical 'web' startups. Those guys have computer vision, mechanical and electriconic engineering, and lots of software of various kinds. They're doing pretty well, but not nearly as well as plenty of way more "trivial" startups. I put trivial in quotes because it's never easy, but... you'd like to hope there's some correlation between effort and reward.

There is a correlation, but effort is a vector more than a magnitude. Lots of effort in the wrong direction gets you nowhere. Meanwhile small effort surfing on a trend can work quite well.

This is the rationale of EF (said as someone who was in it). They've recognised that IP is VERY valuable again and are capitalising on it in a massive way.

Here's a several billion dollar hard tech idea that would benefit many, many, many people: cheap/fast/efficient water desalination and purification. It's a hard problem. Current solutions aren't cutting it.

Unlock water from the oceans, and a lot of people can be helped. I'm ready to start this company, just need a few dozen engineers/chemists and a boatload of funding.

Do you have a scientific breakthrough in cheap/fast/efficient water desalination and purification?

No, that needs to be invented.

That's why it's hard.

If it has to be invented it's not hard tech, it is hard science. YC has a separate strategy for that.

For these kinds of projects, the line is very blurry, though I agree there is a large science component.

Can't make use of the science portion of it if the engineering portion isn't ready, too.

I'm not convinced that's a better approach than making sure we capture all the rain water.

This acquisition fits exactly with GM's plans outlined by investing $500 million in Lyft to create self-driving car infrastructure [0].

It seems like companies who build products that have clear and significant business value with excellent market timing are successful. Perhaps you can extrapolate to saying hard tech is now a hot field but this is the first successful exit that comes to mind recently, rather than private investors putting more money on the table.

[0] http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN...

Good post. Congrats to Cruise for the acquisition and to YC for generating a return on their investment. There are definitely opportunities in AI-narrow applications using machine learning-and biotechnology right now.

My impression on Appification vs Hard Tech is the length of the development cycle.

The combination of a few trends (Predominately smart phones, social networks & data analytics) enabled a whole new wave of technical possibilities. It was relatively quick to monetize this via App development, so that was the first wave to take advantage. Hard Tech can take longer (though from Cruise's point of view, not always that much longer) so these companies are only coming to fruition now.

When I look at AlphaGo's success, I think we are a new dawn of amazing things from Hard Tech.

If I dont know anything about developing AI specifically - but have an idea of how AI can help an industry, how could I go about making that hard idea something with merit/velocity/validity?

Learn AI?

Sure - but I'd rather bounce off someone who already knows it and can tell me if I am nuts, first. I know its a hard problem, the idea - I just dont know if its worth doing...

If it's worth doing or not is entirely detached from the methods used to do it. Your business brain should be able to figure that out. If you want to work with AI/Machine Learning do a course to understand at least the basics. Besides the fact that you won't regret it, understanding the capabilities of a technology through how it works will help you understand how to apply it. AI isn't necessarily obvious like a CRUD app is.

Thank you for this input. May you please point me in the right direction to start learning?

I am pretty senior role in my tech career and have not too much time - so even if its just a youtube channel that could start me learning by watching, I would appreciate it.

Dont do the coursera one. Try this one instead: https://www.youtube.com/watch?v=UzxYlbK2c7E&list=PLA89DCFA6A...

Follow up with cs224/cs231 if interested.

I found Andrew Ng's Coursera course to be very quick to get up to speed on the basics. If you're already in a tech role you will find it easy but informative. Definitely something you could do in a couple of evenings a week.

>From the Summer 2014 batch, 3 of the 4 companies who have raised the most money since graduating YC are “hard tech” companies.

So I guess that's

Cruise $18.8m

Ginkgo Bioworks $54.12M (engineers new organisms) and

Helion Energy $12.11M (fusion) ?

I wonder how significant that 3 of 4 observation is, given that "hard tech" is requires more money all around to operate.

In context, those numbers don't feel that big to me.

Hardware is difficult. Investors are wary of difficult problems. They will invest if the problem is difficult and they think they are speaking to a team of people who can deliver the technology to market no matter what. Lots of good inventors are terrible implementers.

If the invention is good but the team seems incapable that would be a reason for non-investment.

Also - "hard tech" seems like the wrong thing to be aiming for. There are lots of hard problems to solve with simple tech and disrupting markets. Are these not valuable targets?

The article, along with the zeitgeist that it refers to, is that all SV has been thinking about for the last ~5 years has been "simple tech and disrupting markets", at the expense of developing real technology.

Simple tech and simple problems are not the same thing. SV has been going after simple (or non existent) problems.

I remember meeting one of the founders 2 years ago in a party and congratulating him for doing a startup with truly innovative goals.

Amazing to believe 2 years later they got bought for a billion dollars.

It seems to me that nuclear (Gen IV), space (propulsion, moon bases) and AI (virtual prototyping) may speed up innovation in a combined manner. Elon Musk and Sam Altman in the US are at the top of the game here and may counter stiff competition from China. On the other hand, my team of middle-aged nuclear engineers & related network from Italy can't do that much but would gladly help, if needed.

Is there a list somewhere of these kind of companies?

Not sure, but biggest one so far is probably Deepmind, from the UK.

Magic Pony (machine learning for reverse-compressing video data, re-adding data that was removed during the compression process) is pretty cool.

I'm thinking from the perspective of "I'm sick of working at your standard SaaS. I'd like to see what else is out there for software developers."

Isn't that just a buzzword-heavy way of saying "better video compression"?

No. AFAICT, it's perceptual reverse-compression: ie, you look at a bad mp4 of a brick wall, and even though it's shitty, you mentally figure out the mass of pixels is a brick wall. Imagine if the computer actually re-added a crisp brick wall there.

Video compression algorithms already optimize for perception rather than objective measures like PSNR, so I still don't see the fundamental difference.

Congrats on the exit, but the idea that GM will be around for the next wave of innovation is what it is. To me hard tech is about building the future, not finding an off ramp. In fact, this maybe one of the many factors killing real change, the desire to make for the hills when a giant offers to take you.

GM has been doing great stuff. The Tesla Model 3 is already here; it's the Chevy Volt.

I'm the founder of AgFunder. We've worked with a bunch of agtech/hard tech companies and it's been very very frustrating taking them to VCs because they don't fit in their box. We had one company called SWIIM which we called the AirBnb for water that was creating a market for water and in doing so helping to fix a major issue of properly valuing water--enormous market, great unit economics, but there was hardware and deployment and it didn't look anything like VCs normally invest in. Another company we have on now called Autonomous Tractor Company (ATC) which is basically Cruise Automatic for tractors... There are 500,000 used tractors out that they can turn into true driverless tractors (not just GPS assist). VCs can't get their heads around the fact that they don't actually have to build tractors and that this is actually very capital efficient. Kudos to YC which gives great signalling to many misunderstood companies.

A lot of this stuff takes the form of government grants and university collaborations. Check out CMU's National Robotics Engineering Center. If I remember right, they were at one time partnering with John Deere to build autonomous tractors.


Good luck with your funding. I can certainly commiserate.

We're working on "Hard Tech" over at Playa. If you're interested in AI/Cybernetics/ML/Ambient Intelligence come check out the platform we're building out. Http://getplaya.com/

> Leave the Medium thought pieces about when the stock market is going to crash and the effect it’s going to have on the fundraising environment to other people—it’s boring, and history will forget those people anyway.

Blunt. True, but blunt.

Hats off to Sam.

Sure, but history will also forget Sam and Ycombinator (Dropbox, AirBnB, give me a break).

Not if they end up funding the next Ford, IBM or Intel. Hence, I suppose, the point of this post.



Dan, with all due respect, and I have tons of it for you, it was his remark not mine and I found it cheeky because in my honest opinion, running YC is not significant, certainly not historically.

But you're right, it is bitter. My apologies. I take it back.

Edit: Why doesn't the delete button last longer? I would like to delete that comment and it's not that old.

I don't know what remark you had in mind and am sorry I missed the context there.

We recently changed how comment deletion works because too many users were abusing the feature by deleting comments with ongoing replies. We're still happy to delete individual comments on request. I've deleted yours provisionally on the assumption that's what you still want. (If not, let us know.) I've deleted mine as well.

So yeah, Sam is trying to recruit people into starting these kinds of companies.

Hard tech has always been "back" (when did it go away, Elon Musk?), but it is quite the pivot from the YC of yesteryear that capitalized on things like better UX for AJAX calendars, web hosting, and drag-and-drop file storage.

The really hard tech though really evokes that initial visceral reaction of "too risky" for investors, especially if there's no real indicators in the form of traction or an MVP ("well just wait a sec there, professor, the problem is hard, so we haven't solved it yet").

As an investor, I certainly wouldn't feel comfortable shoveling stacks over to some guys who told me they were going to build true AI with a decade-long outlook. Yikes!

It's also a tougher proposition for founders. You're basically betting 5-10 years of your life on a problem that you don't even know you can solve with no revenue/exit strategy in sight. Meanwhile, that guaranteed salary at Google sure is looking more and more appealing.

I would almost recommend graduate school for these types of people looking to leave their mark on the world in solving a really hard problem where any real contribution only inches the world closer to solving it.

The struggle is real for all actors here.

For founders, the trick is finding that sweet spot where a problem sounds hard on paper (such as self-driving cars or VR headsets, wooo!), but actually is feasible using current technology (e.g. stick some lenses in a piece of cardboard), but due to timing or market forces or whatever, nobody is currently paying attention to it yet.

Then at least, you can execute just like an AJAX calendar app would and obtain the same outcome (to vastly understate the challenges involved!).

AJAX calendar apps were themselves in that category when they came out. The conventional wisdom pre-2004 was that webapps could never replace the vast majority of desktop apps, because they required a hard page refresh and lots of clumsy session-management whenever the user performed an action. But a few technologies (XMLHttpRequest/IFRAMES, developed in the late 90s but not well publicized; faster computers & JS interpreters; and cross-browser JS libraries that abstracted away browser differences, developed in 2003-2006) had silently made it possible to build all your app logic in Javascript in the browser, and then just communicate with the server via a tether. This was not at all how people made websites in the early 2000s. I still remember seeing Outlook Web Access in 2001 and thinking "Wow, you can do this?"

People think of AJAX calendars as a joke startup idea now because the techniques for doing this have been well-publicized for a decade now. The trick to creating (what appears to be) a revolutionary startup is to find other techniques that are not well-publicized and then apply them in a new, surprising, and useful domain.

Yes, and AJAX calendar apps would definitely be in that category in the 1950's also. That's not what he said. He said it's "quite the pivot from the YC of yesteryear that capitalized on things like better UX for AJAX calendars, web hosting, and drag-and-drop file storage."

YC was founded in 2005; these weren't especially hard problems in 2008.

YC funded their AJAX calendar app (Kiko) in 2005, before Google Calender or JQuery came out. Indeed, in the blog post where John Resig announced that he was working on JQuery, the first comment is by the founder of Kiko (who later went on to found and sell Twitch):


DropBox was also "hard tech" when it came out in 2007; it was file storage, but it was file storage that worked by reverse engineering the operating system so it could hook into Windows Explorer, Finder, and whatever Linux file manager you were using.

No, no, no... tricky != hard tech.

I think you're arguing away from what the YC Partners would admit. They didn't fund DropBox because Drew showed up and said, "I don't know if file syncing will work but..." He was a designer who said, "I can make the user experience easier." Whether there were aspects during implementation that were tricky is not surprising but also moot. (And remember Gmail was introduced in 2004; by 2005, AJAX was not as crazy new as you're trying to make it sound.)

YC doesn't fund "hard tech" because they want to make money and the fastest way to make money is to find new uses of existing tech. Now we've found we've driven that car as far as it would go and because we didn't invest in gas (new tech), we're stuck.

What do you mean "reverse engineering"? Linux and Darwin/Mach are open source, and writing NT filter drivers is extremely well documented (especially for anything MSDN documentation) [1].

Either way, I doubt Dropbox even touches the OS kernel. You can implement all of Dropbox's functionality in userspace using things like Shell32 and file CRUD operations over system calls.

You can't possibly tell me I need to reverse engineer my OS to write a program that downloads and uploads files to the Interwebs? Maybe inotify is the one mystical ingredient...

2007 wasn't exactly the dark ages of computing technology that you make it sound like. BitTorrent was solving the "hard problem" equivalent of Dropbox in 2001, AND it was decentralized :o


They reverse engineered the Finder to get the DropBox icon onto the Dock with custom functionality:


Do you have anything a little more technical? I'm curious.

When I messed with Finder, I could get it to do a surprising amount of things just by editing plist files.

I didn't realize they had a hard time getting the DropBox icon onto the Dock. I take it back about YC not funding 'hard tech'.



Then why make the distinction? Why are certain startups considered "hard"?

Certainly, the real legwork was done by the browser authors at the time who revolutionized the web by adding these features?

Is it more of a call-to-action? "Make startups!"

In some ways, I don't think it is a useful distinction. I had a boss once say (tongue-in-cheek), "It's work that I don't know how to do, which makes it hard." I think that's how most people actually think about it: "hard tech" is anything I don't know how to do, while "trivial problems" are anything that I know how to solve.

There are certainly some things that other people view as hard - like searching the web on every keystroke - that I view as...well, not trivial, but a simple matter of applying capital and writing code, because I know how it all works behind the scenes.

I'm guessing this article is attempting to focus attention away from all of the "The fundraising environment is falling!" and "My mobile app never got traction!" posts to where there are opportunities to exploit an information monopoly, and trying to recruit founders with this specialized technical information to YC.

(As a side note, I actually expect we're in for a large mobile renaissance in a year or two, with many more actually useful mobile apps becoming commonplace. But the "specialized knowledge" that will drive this is market knowledge, not technical knowledge. It's people with intimate knowledge of a problem space being able to acquire just enough technical skills (or partner with a mobile app dev) so that they can build & market a useful app. This is a power shift from technical founders to business founders in the mobile space, while the technical founders go off and build hardware/VR/AI startups.)

Great points, I can agree with that.

For founders, the trick is finding that sweet spot where a problem sounds hard on paper (such as self-driving cars or VR headsets, wooo!), but actually is feasible using current technology...

This is how true innovation happens. Like evolution, innovation is not a steady inching forward (though that kind of progress certainly operates continuously in the background), but a series of sudden leaps punctuated by relative stability. Those sudden leaps happen when the right brain is in the right place at the right time to make the right analogy or synthesis with existing ideas. You can't fund people to produce it on command, you can only hope to be among the first to recognize that it has happened and to invest in it at that early point, before the innovation is disseminated.

For an approach that does seek to produce innovation on command, see Ken Stanley's work on novelty search: https://www.youtube.com/watch?v=dXQPL9GooyI

>The really hard tech though really evokes that initial visceral reaction of "too risky" for investors, especially if there's no real indicators in the form of traction or an MVP

I feel like there is probably near parity in the risk between these "hard tech" problems and things like social tech, etc., that many investors have gravitated toward. It's like "Can we build it?" vs "Will they use it if we build it?"

Unfortunately, the investment climate these days focuses more towards the latter. "Make something people want" is what they say.

I really do hope Sam's article raises attention more toward the former though. I suspect you'll see more startups coming out of that bucket in the impending winter while the latters' collective refrigerators all run out of Odwalla.

>> For founders, the trick is finding that sweet spot where a problem sounds hard on paper (such as self-driving cars or VR headsets, wooo!), but actually is feasible using current technology

Or create short-term intermediate technologies and make money of them and use that for r&d on the hard part.

It's pretty tough to do that though. You're essentially building O(n) businesses.

You don't have to build O(n). Just build one business as a revenue source. For example theranos sold lab services for pharma companies, which had easier requirements than blood testing(which require thousands of tests, and other stuff). Google's Verily uses the same strategy - selling testing and data services for companies, while build it's future patient platform.

I'm not sure how citing the most controversial startup in the Valley (who allegedly raised boatloads of cash with a fundamentally broken product) and a big company with infinite cash as examples really helps your case?

I couldn't even find anything about the "services" Theranos offered (and it seems unlikely they would pursue the multi-year bureaucratic hurdle-jumping FDA approval process for two different products concurrently). I only see something about an equally controversial SARS detector but with strong indications that it was developed pre-Theranos by the founder.

Any pointers on who might be a good VC outfit for SaaS type startup that actually needs to run their own clusters as opposed to throwing everything onto AWS?

> Any pointers on who might be a good VC outfit for SaaS type startup that actually needs to run their own clusters as opposed to throwing everything onto AWS?

Very curious, why do you think you need to run your own clusters, to the point where you think you need to seek unusually risk prone capital?

If your justification is that you are are optimizing for cost (e.g. maximizing your performance per dollar), then you must think the capex dramatically lowers opex at scale if you move from AWS to specialized hardware (say, an FPGA bare metal cluster instead of a GPU or CPU cluster in AWS). In such a case I would argue that you should just get enough paying customers first using AWS, to build up enough cash-flow that would then clearly justify the capex for scaling up and going colo. And at that point, you would not need to shop around for wild risk taking capital, the CBA could easily be explained to any VC and in fact you could probably even just get a bank loan to finance the capex if it is a clear winner in reducing costs.

The only scenario I can see where you really need to run your own hardware from day 1 is if you need to terminate some dedicated circuits for specialized data feeds (e.g. real-time market data)... In that scenario, I would recommend looking into co-locating the data appliance in a third-party data center that is physically nearby to US-EAST and can run a Direct Connection into AWS for you.

Otherwise, you may want to consider the possibility that your desire to own your own cluster may be a case of premature optimization and scaling up too early/too fast. It's a very expensive thing to do and an easy way to accidentally run out of money if you don't have client contracts signed beforehand.

We connect storage nodes via infiniband for lower latency and higher throughput. Think RDS type service where you can have significantly larger instances like say up 40TB DB running on 4 way box (soon 8 way) box.

Couldn't you get at least similar storage performance from EBS Provisioned IOPS SSDs in AWS? And maybe "scale out," instead of "scaling up," to maintain performance within AWS constraints? The advantage obviously is that you avoid the capex and if you don't achieve the sales that you foretasted then you can just rapidly scale down your AWS footprint, thus avoiding financial catastrophe. You could spring for the fancy custom bare metal hardware when you reach a "hyperscale" amount of workload where it makes sense to switch to your own hardware, like Google or Facebook. And if your customers really want the fancy Infiniband clusters right now, why not license your software and make them put up the capital to buy the hardware themselves? Just my two cents, maybe I'm missing something and your approach makes sense.

Nope you really can't that's why RDS, Azure SQL etc. have pretty bad limitations on max instance sizes. The service itself is integrated storage layer (think PostgreSQL + ElasticSearch + Event Bus) that can scale far beyond what is possible with current options.

Well good luck, but as far as Infiniband goes, keep in mind that cloud cluster interconnects will get better over time and AWS is at 10Mbit now ...

What does he mean by "hard tech"?

And would most engineers consider Cruise really hard tech? I don't know (I mean that honestly, not passive agressively).

If Cruise is hard depends on the end goal. If it's a fully autonomous vehicle, yes that's hard.

Can someone expand on the definition of hard tech? With possibly examples of what is or isn't considered hard tech?

Cruise is an N=1, ironic to make this proclamation. And Cruise founder had massively successful exiting history. I wouldn't say this validates YC's recent bets on hard tech. People who do hard tech for a living (myself included) are more measured.

Sama sounds like Donald Trump with the "I told you so". Unlike real estate, science can't be bullied to success. This makes me increasingly bearish on YC's future.

It comes across as a grotesque arrogance to assert, with no facts cited, that people expressing opinions are usually not building anything themselves. Citations if you please.

A popular criticism of Silicon Valley, usually levied by people not building anything at all themselves, is that no one is working on or funding “hard technology”.

Don't pretend that Silicon Valley is not superficial in many regards. Yes, some of those silly, fluff apps have gone on to make money and that's your metric so you defend it.

But for many people, Silicon Valley embodies a different principle, like the one found at Xerox PARC, of people trying to make the future better and not just drive a nicer car.

Entirely agreed. This whole thing is frustrating. I just went to apply to YC but ended up closing the tab. A significant portion of the process seemed geared towards "We want highly visible projects with highly charismatic individuals."

For example, I'm required to post a video of myself/group talking about the project. I'm not posting a damn video. Fine - I get that you want to be able to see the product/s up close with the passion of the founders, etc. But, hell - the project I'm working on is dirty, "hard", far from glamorous and isn't very presentable - especially on camera where my strong anxieties come out. Though, because of my personality I'm effectively disqualified, despite all else.

If I'm missing something I'd very much like to me corrected.

The video isn't to see the product up close, its to see the founders. YC isn't selecting for charisma. Most founders (myself included) who submitted videos fumbled over our words and are completely awkward on camera. We also had no product to show at the time. What YC is looking for is that you're passionate about your project/company and that will come through regardless.

They're also looking for you be willing to step outside your comfort zone. As a founder you'll constantly have to do things that don't come naturally to you -- talking to investors or customers, interviewing employees, and even firing employees. The fact that you're not willing to make a 1-min video of yourself is a negative signal that you won't be able to step up and do those hard tasks that make you uncomfortable. Being a founder takes more than just being able to build the best technology.

Thanks. I agree with just about everything you said. And another thanks for not being immediately dismissive and sharing your insights from going through the process.

I do think that there could be a middle ground, though. An explanation of the video requirements within arm's reach would be nice. I didn't see anything relevant on the FAQ when I looked.

did you check this out? https://www.ycombinator.com/video/

Nope - thanks! I'll check these out.

The reality is that in most cases in order to be successful you need to constantly talk to customers, both to sell and to get feedback. Having social anxiety is a pretty strong negative signal.

This isn't most cases and the kind of work doesn't really require talking to that many folk, really.

I understand what it shows as a signal. It's a shitty signal.

Not trying to sound too negative here, but it's a legitimate problem that needs to be addressed. The general heuristic these days is to follow charisma, which in my experience has led to mediocrity, disaster and only everything that comes between. It's the exact impression I got from YC after that process.

You're claiming that VCs select for charisma as a general heuristic today. You also claim that you're a special case, and that you're project doesn't require that you interact with many people.

Fine. But if you want VC money, give them some credit and assume that they can decide for themselves whether or not your lack of charisma will be a factor in your business. Presumably, some of them are good at their jobs and can correctly make that determination.

Furthermore, to refute your entire claim, there have been many articles suggesting that VCs actually exhibit a selection bias towards social awkwardness, since so many socially awkward people have been terribly successful recently. You're assuming that they're looking for highly charismatic salespeople (and maybe for some companies they are), but what facts support your claim?

The heuristics comment was more of a reflection of what I've seen outside of YC - at workplaces, gatherings, etc. It is what it is.

What makes you think it's a problem with social awkwardness. There's nothing awkward about it, unfortunately. I'm sure I'm not the only one dissuaded by the requirement to post a video. Phone call, skype, in-person, morse code would be better.

I'm not exactly saying that they're actively looking for charismatic people. I'm saying that requiring a video artificially creates a preventable bias towards those much more comfortable in front of a camera.

> What makes you think it's a problem with social awkwardness.

I'm using "social awkwardness" (perhaps incorrectly) as an antonym of charisma. If things are biased in favor of charismatic people, then presumably they're biased against uncharismatic people.

> I'm sure I'm not the only one dissuaded by the requirement to post a video. Phone call, skype, in-person, morse code would be better.

You're probably not the only one, but personally, a phone or Skype call causes me more social anxiety since I'm on the spot and have less control over the presentation. So, yes, a video biases towards people who are comfortable on camera, just as a phone call biases towards people who are comfortable on the phone.

You're thinking of the problem only from your own perspective. Can you imagine difference in logistics between watching 1,000 one-minute videos versus organizing 1,000 one-minute Skype calls?

>> The general heuristic these days is to follow charisma ... It's the exact impression I got from YC after that process.

> I'm not exactly saying that they're actively looking for charismatic people.


Ugh, man. Ever hear of the principle of charity? I'm just offering my thoughts on why /I/ was thrown off by it with mild suggestions. The number of upvotes I got seems to indicate that others agree with me, so maybe, just maybe, there's something there.

It's a complicated problem that unfortunately has very little visibility. The only reason I post these thoughts is to hopefully help raise visibility on folk similar to me so that those who aren't similar can have a little extra understanding.

Another way to look at my posts is, "Let's be slightly more accommodating, less rigid and less nitpicky to the dissimilar." Because that's where a lot of hidden things lay..

I agree with you, but as a matter of perspective YC is about investing in businesses and 90% of business does not involve technical challenges, but rather selling, marketing, evangelizing, and managing people.

What would you think is a better proposition for investment?

1. Someone who can do all that, partnered (or to later hire) someone who does deep technical dives.

2. Someone who must necessarily hire sales, management, and PR in order to get to step #2 of any business plan: make money.

Even so their bar is low. They're not looking for generalist experts, merely people who are at least willing to participate in all parts of the trade---including making video proposals, and giving press conferences.

if you can't convey why your project is interesting or important why would anyone care? even here in text form you aren't doing a good job of selling it

I'm not trying to sell it here. I'm expressing my frustrations. Nothing more.

Honestly, that's part of the problem with your mindset. You had a perfectly good opportunity to try and sell the product here if for no other reason than to get people on your side. Like it or not, persuasion is a key skill because almost no venture can be done by one man.

You need to persuade people to invest.

You need to persuade people to work for you, good people especially, in the early stages when maybe you can't pay as much as other people or you can't promise a stable career path.

You need to persuade customers to buy your product, or if you don't sell it directly you have to convince store fronts, manufacturers, and the whole gamut that they're taking a justified risk on you.

And yes, when you go onto the Ycombinator forums to complain about their approval process you need to persuade readers that you have a point.

Having social anxiety, or a distinct lack of charisma will interfere with all of these.

I think it's a mindset problem on both ends. But - agreed that my mindset is shallow on the subject. Maybe from a lack of exposure or maybe from something else.

Really, all I'd like to see is some sort of other avenue through YC that doesn't necessarily require a video to be posted since that adds to a particular sort of bias.

but that's how reality works. you can't just hide in the basement and wait for success to come for you.

Bit extreme, don't you think? What gives you the impression I'm hiding in a basement waiting for success? There are other routes, you know.

I had actually never checked out any YC demo day presentations, so this post pushed me to do so. I watched about a dozen of them from the latest batches and I must say I did feel that they were very underwhelming.

Sure, I understand that my expectations of how a company looks so early on might be skewed and they have only about 3 minutes, but all the speeches were so templated (stressing ridiculously overhyped market values etc.) that I thought they were really uninspiring. Might be the fault of the VCs who are just looking to randomly jump on the next potentially successful ship endorsed by YC, but I honestly got tired of hearing about the next app that will change the world of X within 10 minutes.

As you mentioned, some of these products have been genuinely amazing and winning lottery tickets that on average bring huge profits to YC, so we should probably look at it more pragmatically rather than expecting them to make the future better.

On the flip side, there's some that are willing to sell their soul to play with the tech of the future. Honestly wish it was easier to find people that aren't into tech for the money or somehow forgot the meaning of what it is to be evil.

Right, there are enough "builders" out there (some of the most brilliant implementers I know even) that take that stance about SV that I'm not sure you can use hypocrisy/cognitive dissonance as an argument.

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