Andrew Chen: The End of the Software Era and the Beginning of the Hardware/Robotics Era
a16z partner Andrew Chen stated that the mainstream theory of software entrepreneurship over the past 20 years has been "rapid iteration, early customer acquisition, and quick validation of revenue and PMF".
However, he finds it hard to imagine a software startup raising $800 million without any revenue. In the next decade, hardware, robotics, and deep technology will dominate entrepreneurship, requiring a completely new set of assumptions and theoretical frameworks for capital and entrepreneurs.
In terms of market mechanisms, venture capital is rapidly shifting from pure software SaaS to hardware, robotics, embodied intelligence, and deep technology. Funding is moving from low-cost, quick validation models to long-cycle projects that require significant upfront investment. This shift is driving capital towards hard tech companies like NVIDIA, Figure, SpaceX, and xAI, while traditional pure software early-stage project valuations are under pressure.
Source: Public Information
ABAB AI Insight
Andrew Chen's observations are very accurate. The core advantage of software entrepreneurship in the 2010s was the near-zero marginal cost, allowing for rapid expansion and validation; however, the hardware/robotics era requires substantial upfront capital for physical products, supply chains, and engineering validation, resulting in longer cycles but creating high barriers and long-term pricing power once successful.
In terms of capital pathways, top VCs are adjusting their investment frameworks from "growth speed" to "technical depth + manufacturing capability + capital efficiency," preparing more long-term supportive capital for the next generation of startups.
This essentially represents a concentration of capital: the "light asset quick validation" logic of the software era is being replaced by the "heavy asset high barrier" logic of the hardware era. The underlying mechanism is that AI is moving from the virtual world to the physical world, relying on real hardware infrastructure to complete the loop.
ABAB News · Cognitive Law
Software wins with speed, hardware reigns with depth.
When a company can raise $800 million without revenue, the era has shifted from validating PMF to validating belief.
The winners of the next decade will belong to those entrepreneurs and investors who dare to exchange heavy capital for long-term barriers.