Inside Tony Hsieh’s Quiet Plan to Bankroll Hardware Startups
When Jen McCabe joined smartphone robot startup Romotive, the crew was still in its frantic post-Kickstarter afterglow—a flood of pre-orders, an apartment full of parts, nonstop sessions of assembling and shipping products.
Soon enough, though, the manic energy gave way to some cold realities. Even with relatively cheap components, cloud-based software, and enthusiastic crowdfunders, building hardware products just isn’t that easy.
“We faced this kind of valley of utter despair that most hardware companies face,” McCabe recalls. “You realize that you can’t make many more products in-house, and you can’t do it in the United States—you have to go overseas.”
They did just that, sending McCabe to China to scout contract manufacturers who could help make the next wave of Romotive’s “Romo” products. A 10-day factory tour turned into a six-month stay as the startup dealt with an unending list of things that need shepherding when you’re trying to get something built on the other side of the globe.
That round of suitcase living—followed by more 17-hour flights and 2 a.m. video calls with Romotive’s Chinese partners—left McCabe with a nagging feeling that, somewhere in the startup world, another group of wide-eyed dreamers would soon hit the same hurdle.
“Hardware is hard,” she says. “But it doesn’t have to be that hard.”
Now she’s hoping to do something about it. McCabe heads up the Nimbus Portfolio, a hardware-focused segment of the Vegas Tech Fund, Zappos founder Tony Hsieh’s $50 million early stage investment vehicle.
Nimbus has jumped into hardware investing without much fanfare, writing checks to a dozen or so startups, with more on the way. They range from a Star Trek tricorder-inspired mobile medical scanner (Scanadu) to a system of drop-off locations for package deliveries (Swapbox) and even a souped-up personal scooter device (WHILL).
Since it’s aiming mostly at the earliest stages of building companies, Nimbus’s average investment is about $100,000—although the fund has done some later-round investing, including participation in educational electronics startup littleBits’ $11 million Series B round.
McCabe recently told TechCocktail that Nimbus has invested less than $2 million since getting started in August. She also says that Hsieh’s Vegas Tech Fund hasn’t carved out a specific amount to bankroll hardware startups, leaving it as an open-ended project: “The end goal is to find and fund the next generation of founders. We haven’t put a cap on those investments yet.”
So, why is Tony Hsieh so interested in hardware startups? After all, you’d probably expect the founder of a company like Zappos to throw money into e-commerce, fashion, marketplaces, and websites rather than diving into the very specialized worlds of robots and drones.
The answer probably goes back to … Next Page »