How to Scale a Hardware Startup in a SaaS World

Most major cities have decent support infrastructure for software startups. Unfortunately, many of those resources – incubators, mentors, coworking spaces – don’t translate for hardware startups. Still, it’s possible to scale a hardware startup, especially with some guidance.

Here are seven tips my partners and I learned from scaling Azumo, our electronics display tech company that enables 10x battery savings and brighter, higher contrast screen resolution in sunlight.

1: Get Something Out There

In software, there’s a lot of emphasis on building a minimum viable product, or MVP, to see how the market responds. The rules aren’t that different for hardware – but the work required to produce and distribute that MVP is.

In 2008, I pledged my house mortgage to get a loan for Azumo, which was hugely risky. But it lit a fire. We had to produce something we could sell.

Our first product was called Invisisign. It was an invisible sign you could put on glass – windows, beverage coolers, storefronts. Turned off, it was see-through. But when you lit the LED lights inside it, high-resolution graphics would start glowing.

The takeaway: Focus from day one on getting a product out. Even if that isn’t the product you scale, the process of sourcing, manufacturing, and selling will teach you an incredible amount.

2: Get Feedback and Refine

VCs like investing in software startups because scaling them initially doesn’t take that much money. With hardware, scaling to mass production requires a lot of infrastructure: suppliers, production facilities, inventory, distributors, etc. And it doesn’t make sense to scale until you know you have product-market fit.

Once we had our initial offering, we focused on producing small batches, getting customer feedback, and refining.

The takeaway: Don’t scale too soon. Production will teach you about your supply chain; customer feedback will teach you about your market. Early on, the goal is to tweak your product based on what that market wants and needs.

3: Find the Right Partners

We couldn’t scale without the right supplier and producer partners. Finding them was a challenge, in part because we didn’t know where to look.

So as we were learning how we needed to tweak the product itself, we were also figuring out where to source the right materials and what production processes and facilities we could use.

Our networks proved invaluable. We just kept asking questions. I was getting my MBA at Northwestern during Azumo’s early years, and the Kellogg network proved indispensable. Everyone I reached out to was happy to help – even if they didn’t have relevant experience, they made introductions to people who did.

When we did find potential partners, we had an uphill battle trying to convince them to work with us. Most companies have their production equipment set up a certain way for a reason, and they’re not thrilled at the prospect of letting a startup adjust knobs and levers – especially because we were largely experimenting. We had to test different things to see what would work for our panels.

The takeaways: First, leverage your entire network. Don’t be afraid to ask for advice or introductions – you’ll need both. Second, be persistent. You understand your technology and market better than anyone, so your goal is to make your case to potential partners.

4: Be Open to Big Pivots

In 2011, we were at CES, using Invisisign to promote our booth, when some display industry people and some media people approached us and asked if we’d ever considered using our technology to light an LCD.

We hadn’t, but we started investigating.

As we learned more, we realized the thin lighting panel we’d built could be incorporated into LCD screens to make them more visible in sunlight and seriously increase their battery life.

It was clear we needed to pivot. Once we understood the potential value, our focus became figuring out the best applications.

The takeaway: Listen to knowledgeable people in your space. It’s difficult for a hardware startup to pivot, but it’s much easier before you’ve scaled up.

5: Hire to Scale

As we discovered where our technology offered the greatest benefits, we started scaling in earnest. But there was still a lot of trial and error as we learned to navigate the industry and the relationships required to drive serious growth.

By 2017, we had the right mix and commercially launched our front-light panel for reflective LCDs. We were the only ones out there and quickly realized we had something. Within a year, Sharp named us a value-added partner and their preferred lighting component supplier.

Then, in 2019, we hired our COO, the first executive from outside the company. He knows the industry and has been crucial to our ability to scale. His experience has made us much more efficient and a much more grown-up company.

The takeaway: Never underestimate the value of experience. Sure, you could figure it all out on your own, but bringing on someone with industry expertise will save you a lot of time and money.

6: Expand Strategically

We’ve known since the start that Chicago was the right place for our headquarters. The region’s extensive roll-to-roll manufacturing expertise and key lighting and electronics players contribute to a valuable ecosystem for hardware startups.

But as we focused on scaling, we had to look at our entire value chain. A lot of that – materials, LCD manufacturers, integrators, customers – is in Asia. To be a true player in the space, we knew we had to have a presence there.

So last year, we started building a team in Changzhou, China, a key location for some of our materials and customers. We’re really excited about this expansion. Since day one, we knew that protecting our IP would be a key part of our business plan, so Chicago will always be home to our HQ. But to scale, we have to have a global presence where other parts of this industry are centered.

The takeaway: Think globally. SaaS startups can scale from anywhere. The success of hardware startups depends a lot more on their physical location.

7: Network Like Crazy

I mentioned how important the Kellogg network was, but that’s far from the only network we relied on. As a hardware startup, you have to tap everyone you know.

Early on, our network was essential to securing funding, getting advice on production and supply, and connecting us to the larger community. Later, networking helped us find manufacturer partners and industry players.

The more people you talk to, the better.

Hardware-specific startup resources are great, but many more established companies want to innovate. They just may not know where to start.

By proactively reaching out and showing them what you’re doing, you can have great results.

The takeaway: Don’t be afraid to outright ask if someone can make something for you. Even if the answer is no, you’ll have a new contact who might be able to point you to another great resource. In my experience, people are open to helping more than you’d expect!

You May Feel Like an Island… But You’re Not!

The hardware startup community will likely never be as large as its SaaS counterpart. But remember: no startup is an island. Even if the hardware support system isn’t obvious, it exists – and it’s not all explicitly built or marketed to startups.

By tapping into the network of larger, more established hardware firms, you can gain access to amazing resources that provide you with the information and support necessary to scale.

Mike Casper is the cofounder and CEO of Azumo, a Chicago-based breakthrough display technology company revolutionizing a $130 billion industry. It’s LCD 2.0™ reflective technology is the first in a generation of high performance displays that improve user experience and battery life for end users in consumer, medical, industrial, and educational markets. Azumo’s ultra-thin light transmission technology has 42 patents and enables 10 times the battery savings compared to traditional LCDs.