Tell HN: Unicorns aren't ad-supported
Looking at the "Complete list of unicorns"[1], something stands out. Out of the top 50 startups by valuation, only three, Snapchat, Pintrest, and Vice, are ad-supported. The others all sell a product or service paid for by its users.
Advertising may have powered the first dot-com boom, but it's not powering this one.
[1] https://www.cbinsights.com/research-unicorn-companies/
64 comments
[ 507 ms ] story [ 1513 ms ] threadAirbnb, Xiaomi and Palantir are probably profitable now. That's 3 out of the first 5, and I suspect that is broardly correct for most if the list.
Atlassian is a good example[1]. Early employees sold their shares directly to the VC fund - none of the money went to the company.
That's pretty common - in the couple of years before Facebook float VCs were buying their way in anyway they could.
[1] http://www.smh.com.au/it-pro/business-it/atlassian-valued-at...
Edit: plus Trendy and Theranos and probably a few more from the other categories.
Don't get me wrong, I don't think this is because of any inherent difference between hardware and software. Sure, the requirement to physically build something adds a bit of a delay, but computer simulation is so good these days that the actual building bit is pretty infrequent. Plus, turnaround time is usually pretty short - two weeks lead was pretty standard for the shops I've worked with and at.
No, the problem IMO is that frankly, our software is shit. The end users of, for example, Solidworks, aren't the people paying for the software, so there's no direct market feedback. Mechanical design software was some of the earliest software ever written, and it's been some of the slowest to change. The hiccups are negotiable if you're working serially and alone, but the second you want to do parallel development on something, or to collaborate with anyone else, you're stuck throwing workaround after workaround on an already slow process. And then there's the catastrophic state of CAM software, BOM integration, inventory management, keeping the books on all that... everything is its own walled system, nothing talks to anything else, and everything sucks. I've spent literally days before duplicating information between Arena and Solidworks drawings -- and they even actually have an integration.
I'm wholly convinced hardware unicorns are so rare because the toolchain we use to build hardware is so bad. It stays bad for historical and short-sighted economic reasons. That is to say, the whole situation is ripe for change. And it's not hard to do, either: I coded up 85% of an MVP for a solid model merge tool that would make solidworks files more or less git compatible in just a month or two. If you want to play with that, it's a hacked-up VBA macro called smgimport/smgexport available here: https://github.com/Badg/SolidworksUtils. I have a lot of thoughts on how to do this right. If you're working in this space and want advice, I'm happy to help.
But I think that understates the many other problems with hardware.
Just off the top of my head, the following are problems that are incredibly hard to solve for any new hardware company:
Distribution (how do you get your device into the physical and online stores where people buy)
Logistics (how do you bring the parts together, make sure you always have the correct parts, ship them to distributors etc)
Fast followers (If you do have a good device, why can't an existing manufacturer copy what you made and use their better distribution to outsell you and their bigger scale to get better prices on parts?)
Regulation (Many hardware devices need certification of various kinds before you can even try to sell them. I'm not opposed to this, but it is harder than in the software world)
etc, etc
Distribution of physical product to stores is something unique to consumer goods, and for physical hardware I think that landscape is currently experiencing a great deal of change. Even ignoring marketplaces like Amazon, we're starting to see the emergence of distribution / fulfillment as a service, and the burden of entry into the online retail market is much lower. Many very successful hardware startups have gone in this direction first, only arriving at brick-and-mortar retail stores once the company is large enough and established enough to spare the resources to keep that up.
Logistics and supply chain management are basically managed by software at this point, but because there's no effective integration between software (even packages that have the integration botch it) means that it's actually in some ways made into a harder problem because the data is stored in 10 "convenient" places rather than a single unconvenient place.
The fast followers / competitors problem is, I think, actually a bigger problem for the software industry than the hardware industry, with the exception of offshoring. If you offshore, particularly to China, and don't have a very good relationship with the factor(ies) you're working with, this is a very real risk, if the entirety of the widget is being produced by that one factory. With more complex widgets, this risk is substantially mitigated. In general I'd say this is more a function of the quality and uniqueness of the product coupled with your execution on it than something inherent to hardware. This is not, however, a problem that good hardware software will solve. The ability to rapidly develop things will actually make this worse. I don't have a problem with that! Execution is everything, even in entrenched industries, and Davids have always managed to topple Goliaths.
Regulation is also, in my mind, being held up by software. There's certainly a component that's out of your control - once you fire off the paperwork, you just sit and wait - but there's a lot you can do to smooth the approval process on your own end, and a lot of that has to do with proper design documentation, which is once again suffering from terrible software.
I'm not trying to say that having better software for hardware will fix everything. It certainly won't. But, I do think it is the single greatest limiting factor by far in hardware production. I would estimate it consumed 80% of my productivity or more. It's an astounding timesuck.
I also recommend creating a standalone C# application, rather than trying to fit in the confines of a typical Solidworks Macro. Sure, you don't get a little button in the toolbar saying 'Export/Import', but instead you have the full flexibility of a console (or graphical diff potentially) application.
In the short term (I noticed your last commit was 7 months ago), you may/may not know about the Solidworks 'Compare' utility. In 2015, Tools->Compare. In the Solidworks Tutorials there is a small and trivial example of using it.
Interesting idea overall of trying to encapsulate a SLDPRT as a yaml. I imagine that assemblies are going to be a bear in this fashion.
Have you looked into trying to reverse the SLDPRT file format? It must be possible if other companies are offering the option to import a SLDPRT (I believe the last time I used Creo there was a MVP importer).
It's actually been a whole lot longer than 7 months since I worked on it. The whole thing was basically one monolithic commit I did after writing the snapshotting utility while doing release documentation for a product I was managing. Since then (and even while I was working on it) I've thought of a lot of much better approaches to this than I was taking with the macro. The macro was just a very early proof of concept. I'm also not totally sold on the yaml choice, I can see a lot of reasons to go with an open binary format -- but I think part of the success of JSON has been predicated on its choice of universally-parseable text. The ultimate goal would be to create a new CAD program marketed towards the sub-$100 software market. I'd couple that with a version control system specifically tailored (even if just in UI) to a hardware workflow, and then get recurring revenue from a github-like service. Really neat project and I'm confident I could execute on it successfully.
Except I've actually put this project on hold while I work on something more important to me - creating, implementing, and financially sustaining an open, encrypted, distributable social networking protocol (https://www.ethyr.net/blog/muse-101.html). Fixing solid modeling is an awesome and potentially very lucrative endeavor, but it's much less timing sensitive (and much less personally meaningful) than my current project is.
Based on the past 150 years of so of history, ad-supported companies have consistently delivered excellent returns. First the newspaper empires, then TV, then Internet.
Additionally, exactly the criticism could be made for this list.
[0] "Valve is self-funded.We haven’t ever brought in outside financing." pg 3, http://www.valvesoftware.com/company/Valve_Handbook_LowRes.p...
[1] https://www.crunchbase.com/organization/airbnb/funding-round...
I can't imagine there are two multibillion dollar food recipe delivery subscription companies.
Is this as crazy as I think it is?
https://www.cbinsights.com/blog/rocket-internet-clone-fundin...
Also, given the rate at which HelloFresh is throwing around free boxes and discount coupons and special offers here in Australia, I would be astonished if they're profitable at all.
Lets look at their "Classic Box" (https://www.hellofresh.co.uk/food-boxes/classic-box/), which is £39 a week for three meals. I priced up what I could see of the box contents using Hubbub (https://beta.hubbub.co.uk) - largely because I work there, and so know my way around, and it came to a little over £20, and that's without any real effort to match the portion sizes they're shipping, I could probably get it down to more like £15 just by buying just the amount of each ingredient needed for the meals being made, and going direct to the producer rather than via high street shops who are going to be adding their own margin.
That leaves, pessimistically about £20 to cover delivery, and the customer's share of central costs such as recipe development, packing, and the usual business expenses of a web based company. At the sort of volume they're doing, I could see them easily making 40% profit, and potentially more than that.
I'd be really surprised not to see quite a few companies pop up in the same sector, there are already a couple I know of, possibly targeting particular niches such as oriental food.
HelloFresh buys in bulk, so spices/nuts etc. are especially packed for one box. Which becomes really inexpensive if you serve the same kind of food world wide. This massive globalization is (or will be) their competitive advantage.
But restaurants have much higher real-estate costs, typically need more staff, need to stock a wider range of product... plus, product that spoils in customers' fridges was still paid for.
"Also, given the rate at which HelloFresh is throwing around free boxes and discount coupons and special offers here in Australia, I would be astonished if they're profitable at all."
If they're a high growth company in a niche with high growth competitors and sticky customers, being profitable at all would be a horrible move.
I can't imagine there are two multibillion dollar food recipe delivery subscription companies.
Is this as crazy as I think it is?
It's my personal unicorn!
But I admire them, they have figured out post mainstream post adblock monetization of news.
1. Preventing Global Warming / Dealing with what's already occurred etc
2. Unaffordable / low quality healthcare etc
3. Income Inequality / Affordable higher education etc
There's a bunch of big problems, but I bet you could make the case that they go in those 3 categories above. The point is none of these are solved by having a fancy animated website that makes money via ads. Facebook/Google/Reddit etc created a bunch of value by connecting everyone. They were a necessary unicorn for the time, and they can still be replaced.
But if you're looking to create a unicorn, you need to set your sights on solving the big problems.