@giorodriguez Computer hardware startups -- again -- are poised for major investment. Why Puerto Rican companies might have an edge
It's Thursday night, and I'm looking at an email from the co-founder of a small Puerto Rican startup called Kytelabs. The company is scheduled to run its first Kickstarter campaign -- the first for a hardware startup based in Puerto Rico -- and they are eager for some coverage. I eventually connect with them on Saturday, but it's clear they don't really need my help any longer. That morning, they had already reached 75% of their goal ($15,000). By Sunday -- just 52 hours after launch -- they met their goal and kept signing up supporters. Last I checked, a few minutes ago, they've cleared more than 20K with 415 backers, and have 25 days to go.
Those stats, of course, are interesting. But here's another: the campaign last weekend was not just an "aw, how cute" Kickstarter debut for a Puerto Rican startup. It's in fact the fastest-growing hardware campaign in all of Kickstarter this weekend. Speaking with the Kytelabs team this week, I got the strong sense that Puerto Rican hardware startups may get lots of support in the coming years, despite the very real challenges (lack of support for startups, a business ecosystem that favors larger companies, a business culture averse to risk taking). Kytelabs founder Jonathan Gonzalez told me about the "hardware renaissance" that's ignited the technology accelerator community in the mainland US. For several reasons, Puerto Rican startups might have an edge in the new hardware economy.
Costs
This is not the strongest differentiator, for there are other regions -- including other parts of Latin America -- where the cost of living can stretch the value of any investment. But the Kytelabs crew -- Jonathan Gonzalez, Ramon Gonzalez (no relation), and Angel Viera -- have spent only $1,500 of their own money since their launch in January this year. On the mainland US, we call that "ramen money" -- just enough, maybe, to eat and survive. Actually, it's less than ramen money (or mofongo money). It's a big reminder of how much you can do in Puerto Rico for so little. And it's not like the crew didn't have other options. Jonathan and Ramon each had six-figure offers to work for large companies. Angel left college early (Peter Thiel should be smiling) to work for Kytelabs. So when you think of the 20K that they've cleared so far from their little weekend project, the economics of starting something on the island look quite appealing. The investment will help the company order enough units to return a profit on this first product (a computer board for devices that can be a controlled via bluetooth).
Talent
But here's where Puerto Rico may have an even greater edge. Jonathan, Ramon, and Angel all hail from the University of Puerto Rico, Mayaguez, a school that turns out scores of computer engineers every year with an unusually strong orientation toward hardware. Problem is, there are almost no jobs for hardware engineers in Puerto Rico, so graduates must either change direction or seek work on the US mainland (or elsewhere). Those six-figure jobs I mentioned in the last paragraph? Yes, they were in the US. But the Kytelabs crew is betting that the new hardware ecosystem that is emerging globally can help create jobs on the Puerto Rican archipelago. One way that Kytelabs expects to continue reducing costs is by leveraging its connections to the new open-source communities that are driving the development of the hardware renaissance. With the "open design" movement, engineers everywhere are sharing formats and templates that reduce the time to manufacture products and bring them to market. Add to this new mix a steady supply of hardware engineers and Puerto Rico begins to look like a really smart place to invest in computer hardware.
Community
But what about those challenges we looked at a little while ago -- the cultural barriers to doing the startup thing in Puerto Rico. Jonathan, Ramon and Angel were often discouraged. Friends and family thought they were crazy for turning down big jobs (and in Angel's case, leaving school). Leaders in business, government and other sectors in the Puerto Rican economy didn't get the vision or understand the support they needed. But what they couldn't get locally they were able to get virtually through the open source communities that were emerging in the hardware world outside Puerto Rico. And ultimately, they found common cause with other engineers in Puerto Rico -- through groups like Startups of Puerto Rico -- who similarly were coming of age by virtue of their membership in the global community. My friend and colleague Marcos Polanco and I recently wrote about this emerging class of Puerto Rican professional who is Island-bound yet a citizen of the world. We call it the "Fifth Floor," a new addition to the house of Puerto Rico. Understanding the profound role that computer hardware has played in other regions -- think Silicon Valley -- investors everywhere should take a close look at the potential that Puerto Rico has to jumpstart (kickstart) the redevelopment of that house with a focus on hardware. Already they have. When I looked at the stats this weekend for the Kytelabs Kickstarter campaign I was surprised to see the geographic spread: 40% of the investment came from Puerto Ricans, while 60% percent came from people outside Puerto Rico. Note to self (and Marcos): the Fifth Floor of Puerto Rico already has global reach, and that reach is already powering a small enterprise. Stay tuned. I think this is just the beginning.
