We've looked at hundreds of hardware-first founders over the years - and fell in love with a few of them.
Below I've compiled 99 battle-tested insights that every construction-tech hardware founder needs to understand before building their next product.
Table of Contents:
Part 1: Technical Philosophy & The Dominance of Accuracy And Versatility
Part 2: Market Timing & Winning Before You Even Compete
Part 3: Positioning & The Ingredients For A Platform
Part 4: Customer Psychology & Framing Your Value
Part 5: Distribution & Mastering Your Conversion
Part 6: Revenue Strategy & Pricing Yourself Right
Part 7: Manufacturing & Excelling On Your Shop Floor
Part 8: Talent & Organizing For Excellence
Part 9: Capital Strategy & Nailing Valuation
Technical Philosophy & The Dominance of Accuracy And Versatility
1. Hardware precision requirements in construction are exponentially more valuable than consumer applications because millimeter errors create thousands in waste.
2. Consumer-grade sensors have fundamental physics limitations (such as number of photons on a lense) that eventually cannot be overcome through software improvements alone. (Public example: Tesla betting on many simple cameras and SLAM).
3. Professional-grade accuracy requirements eliminate most consumer-oriented competitors from serious consideration.
4. Your hardware accuracy becomes your competitive moat when competitors rely on consumer-grade sensors that physically cannot match your accuracy.
5. Embedding unused sensors on existing boards that activate through software updates creates future optionality without upfront capital costs.
6. Building on existing OEM platforms (eg. chassis) cuts time-to-market by years and economics by tens of millions while leveraging established performance and expertise, with multiple fallback vendors reducing risk. (hit me up if you'd like to understand this point better)
7. Integrating multiple tool functions into one device can eliminate the need for separate expensive tools, reducing perceived product cost by hundreds of dollars. (this is a very core part of my taste for both robotics and hardware tooling for construction and industry).
8. Multi-dimensional measurement capability exponentially increases your addressable use cases without proportional complexity increases.
9. Over-investing on including cheap but not-yet-used components will almost always be cheaper for you as you can remote-update your installed base for new capabilities and you can switch off your installed base for lease/fleet type pricing models easily.
10. Perception improvements of 10-100x between hardware generations can happen within 18 months with proper sensor selection and software capabilities.
11. Make iteration inexpensive: 1 prototype built-and-tested-once can cost 10-15% of 1 production-ready robot to enable rapid testing cycles – not the other way around – with the right dev philosophy.
12. Succeed with off-the-shelf iterable components like programmable microcontrollers rather than custom silicon early on.
13. Iterate in an owned near-real life simulation environment daily to compress development cycles.
14. Build repeatable modular actions (pick up A, lift by X, extrude Y) that can be recombined into complex workflows.
15. Good simulation and coordination software sets robots up for scale by enabling reliable workflow orchestration.
16. Optimize for shipping/release velocity over everything else, as your velocity advantages compound over time as competitors fall further behind with each iteration cycle.
17. Rapid hardware iteration velocity creates a moving target that customers eventually will "salivate" about and established competitors cannot match. Velocity is a key ingredient to unlock favorable dynamics and optionality for you.
Market Timing & Winning Before You Even Compete
18. Real-time processing limitations force smartphone-based solutions to use less sophisticated algorithms, creating permanent accuracy gaps. Proprietary hardware for precision-based markets is a big opportunity (and has always been).
19. Premium sensors prevent costly field rework that far exceeds their upfront cost premium.
20. Economic downturns increase demand for precision tools as rework becomes prohibitively expensive.
21. Technology adoption in construction can correlate with workforce generational changes, not just product improvements.
22. Regulatory changes requiring even more accuracy create demand surges that can accelerate new-hardware adoption by years. But: Make sure the change is timeless, not trendy.
23. Regulatory changes requirements that require more documentation needs provide additional fertile ground for hardware precision adoption. Same applies as above.
24. Construction/renovation industry digitization happens slowly, but once started, creates sustained tailwinds for technology adoption. In other words: Our markets are often timeless, not trendy.
25. Professional markets adopt provable solutions faster than consumer markets adopt innovative ones when pain points are severe.
26. International hardware expansion works best where regulatory frameworks and core workflows are similar across target markets. Prioritize as such.
27. Ecosystem effects require 5+ years to manifest but create exponential optionality when they reach critical mass.
28. Professional tool markets have longer replacement cycles but higher customer lifetime values than consumer markets. Consider this in your market size and unit economic assumptions.
29. Market timing for hardware requires anticipating component cost curves and manufacturing scalability 2-3 years ahead.
30. Manufacturing cost advantages from lower starting base compound as components commoditize across the industry. The player who achieves this right at the start will always beat the player who starts telling themselves "We will become less expensive and higher margin over time" as the scale and learning curve effects affect both equally.
Positioning & The Ingredients For A Platform
31. Software-focused competitors will often lack the hardware development capabilities to respond quickly to precision-based competitive advantages.
32. Compounding data assets and ecosystem effects create more sustainable advantages than hardware specifications alone.
33. Platform/Ecosystem visions must follow/evolve from proven product foundations rather than led by theoretical concepts such as "data network effects will kick in".
34. Platform complexity should only be added after achieving proven product-market fit, not before.
35. Platform demand from your customers will come from "can your suite of products also do this" and "can they inter-operate smoothly". Your platform benefits come from near-zero-cost distribution, instant scale-up after new releases, and stickiness. This is how a hardware ecosystem can outperform SaaS.
36. Data collection should focus on unique proprietary information rather than easily replicable metrics.
37. Creating new performance classes (eg. genuinely 10x better) will always capture more value than competing on features within existing categories.
38. Enterprise hardware incumbents optimize for high-margin sales rather than accessible pricing, creating market gaps for disruptive entrants.
39. If your positioning includes a pricing advantage, then positioning as eg. "affordable precision" rather than "cheap substitute" commands premium pricing while maintaining accessibility.
40. Integration capabilities with widely-used spatial coordination software (eg. CAD, GIS, 2D, diagnostic tools) create switching costs and ecosystem lock-in.
41. Long-term data accessibility/auditing requirements create value beyond the immediate measurement task.
42. Any theorized network effects become valuable only after reaching an absurdly critical mass of data (scale varies by market density and use case) typically late in the game – you must win on other aspects before network effects.
43. Integrated hardware+software solutions create more durable competitive advantages than pure software or pure hardware plays. (obvious, but worth re-stating)
Customer Psychology & Framing Your Value
44. When creating categories that don't exist in buyers' frameworks, consider if your category is better invoked visually/haptically and if yes, adapt your channels to either creating images (Instagram, TikTok, YT etc) or experiences (roadshows, customer academy etc) and don't waste marketing dollars on semantic channels.
45. AEC professionals didn't spend a decade to master their jobs to do the dull parts of their jobs, such as taking measurements, all day – hardware is adopted to eliminate the undesirable parts of their job, not the fulfilling ones.
46. Professionals with liability concerns view accuracy as risk management, not just efficiency – and they often have the willingness to pay for it.
47. Large stakeholders losing millions annually to errors make precision tools instantly ROI-positive – how you prove your precision will drive your sales velocity.
48. Workflow integration matters more than n+1 features – professionals resist tools requiring complete process overhauls.
49. Hardware enabling remote work capabilities become more valuable than the tool itself for field professionals managing multiple sites.
50. In markets with unprotected trades, professionals without formal credentials use precision tooling to gain credibility and differentiate from competitors with formal credentials.
51. Professional users prioritize reliability and precision over visual appeal or consumer-friendly interfaces, regardless how often we as outsiders tell ourselves that an interface is slick and cool – it does not move the needle usually.
52. Non-invasive capabilities open markets where traditional methods risk damaging valuable assets.
Distribution & Mastering Your Conversion
53. Visual hardware products benefit from distribution in ways that traditional B2B software cannot replicate.
54. Professional tools that create "wow moments" naturally generate user-created social content, reducing marketing costs dramatically – consider the visual/haptic experience in your content and channel setup.
55. Conversion rates of 30-35%+ are achievable when your product solves a painful, measurable problem (much higher achievable compared to SaaS norms).
56. Trade show performance can range from zero to tens of units sold based on audience selection, making show choice critical.
57. Professional associations provide distribution leverage that scales beyond individual relationship building.
58. Bottom-up adoption in large organizations happens when individual users become internal champions, not through enterprise sales.
59. That's also why webinars can achieve 50%+ conversion rate immediately at end of webinar if (1) webinars are opened by existing customers fanboy/girl-ing your product and (2) your device and software are truly plug and play.
60. Consider in your resource allocation that geographic expansion requires product localization (imperial measurements, specific fractions) and not just marketing translation.
61. Cost-per-acquisition metrics vary dramatically by geography and should drive marketing spend allocation.
62. Customer testimonials in native languages will more powerful social proof than translated content. (obvious, but an often overlooked detail)
63. Adoption by less tech-savvy segments indicates mainstream market penetration beyond early adopters not just to yourselves, but also to your future customers.
64. Partner relationship management requires balancing distribution access with competitive positioning to avoid channel conflicts. (obvious, but too often not considered properly)
65. Partnership strategies must balance access benefits with intellectual property protection and competitive risks. (obvious, but case-by-case details are critical)
Revenue Strategy & Pricing Yourself Right
66. The magic rule of thumb: Hardware pricing at 5x bill of materials maintains healthy margins while staying accessible to professional users. This is almost always applicable. If you cannot achieve this, chances are you are in the wrong market or you can be more ingenious. (yes, I have seen this)
67. Hardware gross margins of 75%+ are achievable when you control the entire value chain and avoid commodity positioning. (yes, I have seen this)
68. Software revenue can grow to 33% of your total monthly revenue within a matter of months.
69. Multi-year customer relationships starting with hardware purchase can generate 3-5x more revenue through software and services expansion, unless you get needlessly fixated on "everything must be recurring all the time".
70. Usage-based pricing removes friction for professionals with variable workloads and irregular usage patterns and can still work for you if your hardware ACVs and margins are cash cows.
71. Professionals pay premium prices when accuracy directly impacts their project profitability, reputation, and liability.
72. Subscription tiers should align with usage patterns, not artificial feature restrictions, for professional tools.
73. Enterprise pricing per hardware+software package can be 3-4x or more the individual pricing when value proposition scales with organizational complexity.
74. Transaction-based revenue models can exceed hardware revenue when marketplace volume reaches scale, but it will kick in late in your game and thus deserves resource allocation only then.
Manufacturing & Excelling On Your Shop Floor
75. Monthly production rates of hundreds of units are achievable with constrained capital when (1) you designed well (see chapter 1) and (2) when optimizing for throughput over scale. (it's worthwhile thinking about the difference)
76. In-house manufacturing prevents quality dilution that occurs when outsourcing precision-critical components.
77. And quality control investments in precision components prevent downstream issues that cost multiples more to fix.
78. Component-level quality metrics, not just final product testing, maintain precision standards at scale.
79. Hardware development cycles must account for ample physical testing time (and organization).
80. Multi-geography supply chains (overseas manufacturing, local assembly) provide resilience against disruptions and are possible early.
81. Proven in-house manufacturing capabilities can additionally unlock TAM expansion via contract development opportunities worth 100x+ your revenue potential.
82. Custom circuit board integration can reduce component costs by 20%+ once volumes justify development investment.
83. Manufacturing scalability planning should anticipate 10x monthly shipped volume increases within 18 months of product-market fit.
84. Seasonal demand patterns require flexible production planning and inventory management strategies.
Talent & Organizing For Excellence
85. Founders with both hardware and software expertise create products that single-discipline teams cannot replicate.
86. Generational founders can build profitable hardware businesses with just three full-time employees plus strategic freelancers before scale effects. (yes, I have seen this multiple times)
87. Founder-led sales remains effective at significant scale when reputation/word-of-mouth and ACVs justify it.
88. Engineering ingenuity under constraints creates more innovative solutions than unlimited capital availability.
89. Lean organizational structures with an insanely high talent bar can ship two hardware iterations per year, and will outperform the velocity of much larger teams.
90. Unfiltered customer feedback loops enable rapid iteration and shipping velocity without management layers degrading signal quality.
91. Small teams succeed by hiring exceptional generalist engineers rather than building specialized departments.
92. Strategic contractors and freelancers of an exceptional quality provide specialized expertise without full-time overhead costs. (this is a way too often unused tool in hardware – some of the very best talent will prefer this mode with you).
93. Substance-over-marketing culture creates sustainable competitive advantages in professional hardware markets where credibility matters (such as construction).
94. Personal taste: Founders with product backgrounds in complex software are often more ideally equipped to implement my investment beliefs in this list than those with pure automation experience.
Capital Strategy & Nailing Valuation
95. Bootstrapping hardware to profitability demonstrates capital discipline that commands premium valuations from quality investors early. (yes, this is doable and happens more often than you think, also in the highest-labor-cost markets). Requires "Dolphin founders".
96. During the later scale-up journey, Dolphin founders reach profitability before major funding rounds and again achieve better terms and maintain a high degree of founder ownership and control.
97. Recurring software revenue where the hardware is seen as the proprietary software distribution platform creates a highly attractive investment profile.
98. Pre-orders and just-in-time manufacturing reduce working capital requirements for inventory management.
99. Large enterprise accounts coupled with recurring leasing contracts (rather than software contracts) can be factored into a debt facility/vehicle that you control, thus operating on negative working capital and delaying fundraising to insane degrees (the best source of cash is your customers).
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