Calling all builders, believers, and badasses
Easily forgotten among the champagne-filled refrigerators, catered meals, and swanky parties that dominate today's Silicon Valley startup scene are the likes of Robert Noyce, William Hewlett, and David Packard whose startups once sprinkled the apricot orchards of the Valley of Heart's Delight.
Everyone knows their names and the iconic companies they created, but the appreciation for the massively risky endeavors they undertook—in an era when risk taking was not considered as sexy as it is today—is gone. At the time, there was no safety net or acqui-hire for them to fall back on, and they were building physical products for markets that didn't yet exist—an almost unthinkable proposition today.
They and many others were true builders, believers, and badasses. They had to be. Success was their only option.
For the last 10 years or so, a mini revival of sorts has been taking place in Silicon Valley. Some call it the Maker Movement or the New Industrial Revolution. Whatever your preferred nomenclature, the technological advancements that are empowering a new wave of hardware entrepreneurs is astounding.
Our ability to build and iterate faster, cheaper, and easier is nothing short of amazing, and yet we are still in the early innings of what is possible. Despite our new product development superpowers, the financing model for hardware companies has failed to keep pace.
For the last 25 years, venture capitalists have been riding the Internet and smartphone waves to new heights. A supercomputer in the hands of billions of people creates total addressable markets of an unprecedented size and scale. Combine that with a near-zero marginal cost for software applications, and you have venture capitalists chomping at the bit to put money to work.
The focus now, more so than ever, is on speed and growth, with an entirely new vocabulary of growth hacking and "blitzscaling" to help us. Fast-growing companies can raise money at any price (whether or not they have a sustainable economic model), and companies with slow or declining growth are dead in the water.
The venture industry has a mental model that doesn’t apply to a company building, manufacturing, and distributing physical products not to mention the lack of expertise, network, and resources to help these companies.
Enter Playground Global
Decades worth of industry data shows that what separates high-performing venture funds from poor performers is not fewer losses, but instead bigger winners. The goal of any venture capital firm should be to invest in category-defining companies.
At Playground, we have the same objective. We are focused on partnering with entrepreneurs who have the depth of vision and ambition to build large, standalone companies. We recognize that our investments will not be overnight success stories and that the traditional venture playbook is not applicable. A new model is required.
In hardware, the mentality of moving fast and breaking things is a surefire way to launch a shitty product, alienate customers, and run out of cash. The challenges of building and scaling a hardware company are well known, yet most entrepreneurs we meet are building hardware for the very first time (even if they are repeat entrepreneurs).
While building a functional prototype has never been easier, there is still a massive valley of death between prototype and manufacturing at scale, and our job at Playground is to help entrepreneurs navigate this chasm. It’s not just capital. Playground is an amalgamation of expertise, tools, resources, and community to help you build better products faster.
To be clear, our focus on hardware is not half-sighted. Hardware done well is a means to an end—a delivery mechanism for something more powerful.
Our investment thesis will never be based on the ability of a company to sustain a viable economic model based on the profitability of a point product. We expect that most, if not all, hardware becomes commoditized over time. Therefore, our goal is to find companies building “systems,” not products.
Systems can exist in a variety of different forms, including network effects from a machine-learning back end, subscription software, an ecosystem of value-added products and services, data and analytics, etc. In addition, we are excited to learn from entrepreneurs who have a unique insight or perspective from which they teach us about a new system approach.
We don’t stop there. If you are building software, services, marketplaces, etc., that serve the hardware ecosystem, you fall within our purview as well.
Every day, we are excited by the groundswell of entrepreneurs we meet who aim to take advantage of a progressive supply chain and the smartphone cost curve to deliver a previously unachievable value proposition to consumers and businesses. Entrepreneurs are redefining the way we interact with our homes, our health, our communities, and our world, and they're using hardware to do so.
It’s not going to be easy, and it was never meant to be. Yet the opportunity couldn't be bigger. It’s going to take special entrepreneurs to build the next generation of computing platforms. Those men and women who exemplify the ability to execute, the vision to succeed, and the fortitude to take challenges head on -- the next generation of builders, believers, and badasses. Playground Global is here to support YOU.