I have built both kinds of companies. Quaternion Studios is mostly software—WebGL, AI, digital products. OctaPulse is hardware and robotics—cameras, enclosures, edge computing devices that have to survive in fish farms. The difference is not just in what you build. It is in how you think, how you move, and how you fail.
Here is what nobody tells you: hardware is not just harder than software. It is a fundamentally different game with different rules.
The Speed Difference Is Not What You Think
Everyone knows hardware is slower than software. But until you experience it, you do not understand how much that changes everything.
In software, your iteration cycle is measured in hours or days. You write code, deploy it, see what happens, fix the bugs, deploy again. If something breaks in production, you push a hotfix. If users hate a feature, you remove it. The cost of being wrong is low, so you can afford to move fast and learn.
In hardware, your iteration cycle is measured in months. You design a part, send it for manufacturing, wait for it to arrive, assemble it, test it, discover it does not work, redesign it, and start over. A mistake in your initial design can haunt you for the entire lifecycle of the product. You cannot push a hotfix to a physical object sitting in a customer’s facility.
This means hardware startups have to measure twice and cut once on every decision. You cannot afford to be sloppy about requirements, because changing them later costs real money and real time. You have to think more carefully upfront, which feels slow but is actually the only way to move fast in the long run.
At OctaPulse, we learned this the hard way. Early prototypes that worked perfectly in our lab failed in actual fish farm conditions. The humidity was different. The lighting was different. The vibrations were different. Each iteration to fix these problems took weeks, not hours. That forced us to get much better at anticipating problems before building anything.
The Cost of Being Wrong
In software, the cost of a mistake is usually time. You built the wrong feature, so you wasted a sprint. You shipped a bug, so you spent a day fixing it. These costs are real but manageable. They do not threaten the existence of the company.
In hardware, the cost of a mistake can be existential.
According to CB Insights, 97% of hardware startups fail to deliver their product on time, and 70% fail to deliver at all. Running out of cash accounts for 38% of startup failures, and hardware development burns cash fast. It is not uncommon to see hardware startups raise a million dollars and still not ship their product, because they underestimated tooling costs, certification requirements, assembly, packaging, warehousing, and shipping.
Fitbit, which became a massive success, spent 15 months in what they called “manufacturing and QA abyss” and was “pretty close to being dead” multiple times. And that was a company that eventually figured it out.
The margin for error is just smaller. In software, you can sometimes survive being wrong about a lot of things as long as you are right about a few key things. In hardware, a single critical mistake—a component that does not scale, a design that is not manufacturable, a supply chain that falls apart—can kill the company.
Prototyping Is Not Manufacturing
This is the mistake that kills the most hardware startups. They build a prototype that works, they show it to investors, they raise money, and then they discover that their prototype cannot be manufactured at scale.
Prototyping and 3D printing are not the same as mass production. A part that works beautifully when you make one of them might be impossible to make when you need a thousand. The tolerances are different. The materials are different. The assembly process is different.
Design for Manufacturability—DFM—is a discipline that most software founders have never heard of. It is the art of designing products that can actually be built at volume, with acceptable defect rates, at reasonable cost. Ignoring DFM is like ignoring scalability in software architecture. It will not matter when you have ten users, but it will destroy you when you try to grow.
At OctaPulse, we had to learn this. Our early prototypes were hand-assembled, which was fine for testing but impossible to scale. We had to redesign significant portions of the system to make them manufacturable, which meant more time and more money before we could ship.
The lesson is that you need someone who understands manufacturing from day one. Much like a full-stack developer is the first critical hire for a software company, a supply chain professional is the first critical hire for a hardware company. They have made the mistakes already and can help you avoid them.
Fundraising Is a Different Conversation
When you pitch a software startup, investors ask about your market, your team, your growth metrics, your unit economics. They want to see traction, and traction in software usually means users or revenue that is growing quickly.
When you pitch a hardware startup, investors ask all of that plus a bunch of questions software founders never think about. What is your BOM cost? What is your manufacturing strategy? Who are your suppliers? What certifications do you need? What is your timeline to production? What happens if a key component becomes unavailable?
Many hardware founders hear some version of “we love the technology, but come back when you have proven it at scale.” The irony is that you need funding to achieve scale in the first place. This chicken-and-egg problem forces hardware startups toward creative financing—government grants, strategic corporate partners, debt financing, crowdfunding—in ways that software startups rarely need.
The most notable trend in 2024-2025 is that late-stage and M&A activity in robotics has surged while early-stage funding has declined. It is getting harder to raise seed rounds for hardware, which means the bar for what you need to prove before raising is higher.
This is not necessarily bad news. It just means you have to be more strategic. Start with angels and pre-seed funds who understand hardware. Layer in strategic corporate VCs who can also be customers or partners. Use non-dilutive capital from government sources like DOE and DOD grants. Build relationships with investors early, before you need the money.
The Sales Cycle Is Measured in Months, Not Days
In software, especially B2C software, you can sometimes acquire customers in minutes. Someone sees an ad, clicks through, signs up, starts using the product. Even in B2B SaaS, sales cycles are measured in weeks or maybe a couple months.
In hardware and robotics, enterprise sales cycles are 12-18 months minimum. You are not selling API access. You are deploying physical machines that require installation, training, integration with existing systems, and ongoing support. Customers want pilots. Pilots take time. Evaluations take time. Procurement processes take time.
This has huge implications for how you plan your business. You need much longer runways because the time from first customer contact to first revenue is much longer. You need to start sales conversations way earlier than you think. You need to be patient in a way that software founders often are not.
Why Build Hardware At All?
After all of that, you might wonder why anyone would build a hardware startup. The iteration cycles are slower. The costs are higher. The risks are greater. The fundraising is harder. Why not just build software?
Here is the thing: the difficulty is the point.
Everything that makes hardware hard also makes it defensible. If you build something that requires custom hardware, deep domain expertise, and years of iteration in hostile environments, you have built something that competitors cannot easily replicate. They cannot just hire some engineers and catch up in six months. They have to go through the same painful learning process you did.
In software, if you build something successful, you will have competitors within months. They can copy your features, undercut your pricing, and compete with similar marketing. Your moat is your brand, your distribution, maybe your data. But the core technology is usually replicable.
In hardware, the technology itself is the moat.
This is why deep tech companies, when they succeed, tend to succeed big. Over 50% of the world’s most successful companies are hardware companies. The difficulty filters out competitors and creates durable advantages.
Hardware startups also bring more diverse exit options than software. You can be acquired by strategic buyers who want your technology. You can be acquired by private equity firms who want your manufacturing capability. You can IPO. The paths to liquidity are more varied.
The Hybrid Approach
The best hardware startups today are not pure hardware companies. They are hybrid companies that combine hardware with software to create value that neither could achieve alone.
At OctaPulse, the hardware—the cameras, the enclosures, the edge computing devices—is necessary but not sufficient. The real value is in the software that runs on that hardware: the computer vision models, the phenotyping algorithms, the data analytics that help fish farmers make better decisions. The hardware is the platform. The software is the intelligence.
This hybrid approach changes the economics. You still have the defensibility of hardware, but you also have the margin structure of software. You can charge for the hardware upfront and then charge recurring fees for the software and data services. This makes the business model more attractive to investors and more sustainable long-term.
The key is to think of hardware as a means to an end, not an end in itself. Nobody wants to buy a camera. They want to buy the insights that the camera enables. Build the hardware you need to capture the data, then build the software that turns that data into value.
What I Would Tell My Past Self
If I could go back and give myself advice before starting a hardware company, here is what I would say:
Hire for manufacturing expertise early. Do not wait until you have a working prototype to think about how you will build it at scale. Bring in someone who has done manufacturing before, ideally someone who has made expensive mistakes and learned from them.
Budget for twice as long and twice as much money as you think you need. Everything takes longer in hardware. Components are late. Designs need revision. Certifications take forever. If you plan for this, you will not be caught off guard.
Start customer conversations immediately. The sales cycle is so long that you need to be talking to customers before you have anything to sell them. Build relationships, understand their problems deeply, and let that guide your development.
Do not fall in love with your prototype. A prototype is a hypothesis, not a product. Be willing to throw it away and start over if that is what manufacturing realities require.
Find investors who understand hardware. Pitching hardware to software-focused VCs is frustrating for everyone. Seek out investors who have done hardware deals before and understand the timelines and capital requirements.
The Bottom Line
Building hardware is harder than building software. The iteration cycles are longer. The costs are higher. The risks are greater. The fundraising is more challenging.
But hardware creates something that software alone cannot: physical products that exist in the real world, solving problems that software cannot reach. The defensibility is real. The impact is tangible. The opportunity, if you can navigate the challenges, is enormous.
If you are thinking about starting a hardware company, go in with your eyes open. Understand that the rules are different. Plan for longer timelines and higher costs. Build a team that knows manufacturing. Start selling before you are ready.
And then build something that matters.