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The State of Open Hardware Entrepreneurship 2013

I’m just back from the Open Hardware Summit 2013 that happened last Friday September 6 at the MIT in Boston, MA. I had a great time, met new friends and came back full of inspiration and motivation. The open hardware movement is build by amazing people, I’m very grateful to be a part of it.

This Summit edition was also a big first time for me as I had never been to Boston, to the MIT or gave a talk in English in front of 500 attendees including heroes such as Lady Ada, Massimo Banzi or Nathan Seidle before. Such an amazing experience, and a lot of fun!

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Picture by Jeremy Blum sciguy14 on Instagram

My presentation was about the State of Open Hardware Entrepreneurship in 2013. I feel that there is a need for the open hardware community to know more about ourselves. Because the movement is still new, there is very little data available regarding the entrepreneurial side of the movement. I tried to fill the gap.

Here is a readable transcript of the talk (avoiding you the pain of guessing what was behind my slides), including links and extra information:

My talk is about the state of open hardware entrepreneurship in 2013. I decided to pick 100 open hardware startups. Selection was based on 3 criteria: company had to actually develop and sell physical products (no media, consulting or manufacturing-only startups… which means that MakingSociety, theAmpHour or OpenMaterials are not included), products had to be under an open hardware license and the company is currently in activity (sorry Simputer, OpenMoko).

I created an open hardware startups directory: the MakingSociety Wiki

I opened a wiki on MakingSociety, called MakingSociety Wiki, which is a directory of open hardware startups. The 100 startups gathered for the talk are all on the wiki, and I now update it every time I find a new open hardware company. Feel free to add your company and/or complete information. This database of open hardware companies can benefit to all of us, as entrepreneurs and contributors. There is no similar resource so far.

Here is what I found…

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Open Hardware startups are primarily based in the United States: 68% of them have their headquarters in the US. Europe comes as secondary hub with 19%, followed by Asia with 7%.

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If you get a closer look at the United States, you’ll notice that startups are mostly based on the coasts: San Francisco Bay Area (19%), New York and Boston Area (18%). It’s not a real surprise as this is where the open hardware ecosystem is the most active: universities with dedicated programs (ITP NYU, MIT Media Lab, Cornell, Stanford D School), very active and structured hackerspaces (Noisebridge, NYC Resistor, Artisan’s Asylum), entrepreneurial hubs.

What is more surprising is how open hardware startups are spread all over the US. Most open hardware businesses are fully online. Collaboration, distribution and communication don’t require any prime located headquarters. In the open hardware world, location doesn’t really matter.

Open hardware movement is growing

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The number of open hardware startups is increasing, mostly since 2007. Before this date, about only one company per year was launched: Parallax (1986), Solarbotics (1994), Lynxmotion (1995, acquired since then by RobotShop), ShopBot (1996), Egnite (1997), WIZnet (1998). Since 2007, the number of new open hardware startups is growing pretty fast. It takes an average of two years to go from a project to a product. With the rapid increase of open hardware projects – reaching now the thousands-, we might expect the birth of many new open hardware startups in the coming years.

Who is behind open hardware startups? Let’s look at the entrepreneurs

Most founders have a background in engineering (83%), going from advanced hobbyist to NASA physicist. Many of them have a day job and work on their company project in their spare time. Founders with a background in design reach the second position with 17%, including many digital artists who also know how to solder and code. Teachers and researchers are in the third group with 14%, and guess what… many of them are sciences and engineering teachers.

Interestingly, numbers show that 47% of open hardware companies are led by solo entrepreneurs (52% are in teams). Hardware makes it usually very hard to be on your own, but with open hardware, it’s a bit easier as soon as you have contributors to your project. A culture of sharing knowledge and skills also helps tremendously. Many entrepreneurs are building their open hardware business in their free time, on their own.

Women are not launching open hardware companies?

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Expect exemplary Lady Ada with Adafruit Industries or Ayah Bdeir with LittleBits, the vast majority of open hardware startups have been founded by men so far. Only 5% of companies have been launched by women-only, and a total of only 10% include women in the founding team. It’s surprising as the open hardware world is pretty inclusive and many women are very active in hackerspaces, events and research projects. Not so many of them jump from project to company so far.

A diner for the women of the Open Hardware Summit was organized at the end of the day, and an Open Hardware Women group including 27 members so far has been created. Hopefully a great kick off for the open hardware women community.

Markets of the Open Hardware Startup movement

slide-markets-open-hardware-startupsElectronics for hobbyists and education is by far the number one market addressed by open hardware companies. 63% of them are developing products for hobbyists’ electronics, education and prototyping. Many of them are inspired by Arduino or Rasperry Pi success, developing compatible boards, shields and kits.

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The second position goes to fabrication tools (15%), and more specifically to 3D printing (11%). Market is then fragmented between many niches that reflects open hardware entrepreneurs passions: drones (3%), lights (3%), synthesizers (2%), construction kits…

There are MANY opportunities for the open hardware entrepreneur

Think outside of the hobbyist electronics box and go to new markets, so many fields could benefit from open hardware companies: fabrication and prototyping tools, kitchen and food, energy, health, transportation, business to business…

Go for it!

The last part of my talk focuses on a few data that makes open hardware startups different from regular hardware startups.

Open hardware startups are mostly boostrapped

62% of them are bootstrapped. 28% are fully or partially financed by crowdfunding. Very little are VC backed. Crowdfunding is getting a lot of (deserved) attention and many open hardware startups have strongly benefited from their campaign. Printrbot, Makey Makey, Pinoccio, Galago, NeoLucida, RFduino, Foldarap are just a few examples that show that open hardware fit very well with the crowdfunding strategy. Product strategy, from development to sales, is driven by the community.

Open hardware startups allow for innovative product strategies

Because they are not closed entities anymore, open hardware products enables interesting product strategies. One product can be sold already assembled, as a kit, as multiple parts. It can be associated with workshops, manufactured in a distributed way… I’m extremely interested by these points and more articles will come about it on MakingSociety.

Documentation sharing practices

Most open hardware companies share their documentation on two places: their website and GitHub.

But rarely show their license.

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To finish, I’d like to share two little communication advice. I compared logos and here is the sad truth: most open hardware companies choose grey or blue logo colors. Choose red and you would be in the direct path of SparkFun, Evil Mad Scientist or Rasbperry Pi – and MakingSociety ! – who doesn’t want it?

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Also, pick a name that is truly special… “tiny”, “duino”, “labs” or “blocks” are already taken!

Big thanks to the organizers of the Open Hardware Summit, it’s an event that matters.

Thanks also to all of you for your kind words after my talk. I was very happy to meet MakingSociety readers and podcast listeners, and know that my presentation was appreciated.

Feel free to add your remarks and thoughts in the comments below.

Best,

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  • Paul Beaudet

    Great job on the talk, I enjoyed it. Particularly the warning vs common suffixes and bringing to light the commonality of bootstrapping. I am curious however, as to why raspberry pi is considered an open source hardware start-up in your slides? From what I understand the SOC on the pi is specifically licenced to the pi foundation not the community around it.

    • http://www.makingsociety.com/ MakingSociety

      Good question. Raspberry Pi has licensed manufacturing deals with Farnell, RS and Egoman so the SOC is not fully open hardware but the Foundation shares abridged Datasheet and schematics and support open source software. I considered it “open hardware enough” to make the list but it is clearly not fully open hardware.

      Actually, many open hardware companies are borderline: missing documentation, unclear licenses, hardware partly open… As Windell Oskay from Evil Mad Scientist said at last year’s Summit: being open hardware is a scale more than a state.

      Hopefully it’ll get clearer in the coming years.

  • Drew Fustini

    Thanks for posting, I really enjoyed your talk and its great to be able to refresh my memory of the stats you presented.

    • http://www.makingsociety.com/ MakingSociety

      Thanks so much for your good words Drew! I really appreciate it.

  • Anool J M

    I’m glad our logo (http://wyolum.com/blog/wp-content/uploads/2012/10/Wyolum.png) isn’t grey or blue :)

    • http://www.makingsociety.com/ MakingSociety

      Ahah, yes, you’re one of the few!

  • MICHAEL JAMES

    Great talk at the conference!

    • http://www.makingsociety.com/ MakingSociety

      Thanks a lot!

  • ptroxler

    Thanks for your analysis … not so surprising that there are 95 % men ;)

    However, regarding geographical distribution, I wonder: did you actually reach the non-US OH communities? Or could your data have the usual US-centric bias?

    And, have you seen the earlier database drawn up by Kerstin Balka, Christina Raasch, Cornelius Herstatt (2009): http://open-innovation-projects.org/ which contains some 150+ projects

    • http://www.makingsociety.com/ MakingSociety

      Hello Peter,

      My focus in this talk was exclusively on open source hardware companies. There are thousands of open source projects but not that many companies actually doing open source hardware (I excluded consulting and services-only firms as well as media). I actually had a hard time reaching 100 open hardware companies (I got stuck around 80). That’s why I decided to stop at 100, which is a good number to make comparisons.

      I think you’re right about the US bias (I was surprised to not find more European OH startups as I know the Fab Lab/maker scene is very active). To find the companies, I looked at successfully crowdfunded projects that were actually selling, Maker Faire attendees (Bay Area, New York… Rome didn’t happen at the time), open hardware directory on wikipedia, cern open hardware directory, among many other sources. My guess is that US companies are more visible because they communicate in English.

      Thanks for the link to the Open Innovation Projects Directory, I didn’t know about it. I’m sure we could find open hardware startups that I didn’t find for my study. Cool!

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