For Tech Startups: Software Remains > Hardware

The press is abuzz with how hardware startups are ‘hot’ again but software remains the most desirable part of the high-tech startup business.  

In software, you’re licensing intellectual property.  Hit ‘copy’ and you have another satisfied customer for practically nothing.  In network effect businesses, adding another customer actually makes your product more valuable.

In hardware, you need to make another physical device — or another 100,000 just to get a manufacturer to talk to you.  Hardware businesses are more expensive, riskier, and much harder to scale rapidly.  While the press loves the story of hardware, it’s still an inferior space compared to software.

Michael Girdley