FORTUNE — With 40 employees and $15.6 million in venture backing, modular electronics startup littleBits is on a mission to democratize hardware and engineering for kids and adults alike. At the South by Southwest Interactive festival, Fortune caught up with founder and CEO Ayah Bdeir to discuss the the open hardware movement, the perils of retail, and why white circuit boards help get girls interested in engineering.
What has changed in the last five years to make it easier for hardware startups like yours to flourish?
There is the obvious answer, which is that the tools have become cheaper and more easily accessible for prototyping. So anything from a 3-D printer to a laser cutter have become cheaper and easier to purchase, and they take up less space.
The other big one, which people don’t talk about enough, is that people who make hardware have generally a sense of activism, and it’s about bringing hardware back. It’s a little bit of a reaction to the surge of software, where suddenly we saw ourselves losing things that we could touch.
And so people like myself, who believe that hardware and physical products have the capacity to change people at a deep physical level, we sort of felt that urge to fight and bring it back. And that was a jolt of energy. It was kind of that feeling where it’s like, you saw us slipping in a different direction, and it was like, “Oh, holy shit, we have to do something about this.”
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Is there a tension between hardware people and software people?
Not people, but industries. Investors are much more readily available for software companies. They are investing in a lot more stuff, knowing that many more of them will fail, but a few of them will make it through the roof, and knowing that scalability when it comes to software is an easy game. And they are afraid of hardware because, even though I believe it’s a less risky proposition, it has less potential to scale like crazy overnight, because reality kind of gets in the way.
The thing that people forget is that hardware has figured out its shit. You don’t have to invent a business model in hardware, you make a product, and you sell it for more than you made it and then you keep the money, you know?
What are the big challenges facing hardware companies today?
There are many of them. The difficult thing we are starting to overcome is that a lot of hardware companies have to relearn the same thing over and over again that other hardware companies also have to learn. Things like how to warehouse, how to do inventory management, how to forecast, how to get something from a prototype to a project. Things that every single company has to figure out.
That’s what drove me to start doing working with the Open Hardware movement, because I believe the barrier is just sharing that knowledge. We used to think it’s like a trade secret and you want to hide it, but now we believe it’s in our best interest to share it. Once you make that available, people’s starting points will just get higher and that’s happening. I believe its one of the big reasons why we’re seeing so many more [hardware startups].
How have the big hardware companies reacted to the open hardware movement and surge in hardware startups? Is there pushback? Are they scared? Are they embracing it? Are they trying to buy you?
Kind of all of the above to be honest. In the beginning it was lot of like, “Oh, that’s cute, how quaint, your little thing. That’s fine, you’re little makers, with your ideological principles. That’s not going to go anywhere.”
But now they’re paying attention, and many of them are trying to align very closely with the maker movement. Either they do it generally, where they’re supporting and doing initiatives together, or some are just trying to do PR stunts, but you can tell them apart very quickly.
Others are trying to buy some of these companies outright, and some are just trying to compete, but I feel like we have a leg up because we came from this world. We’re not trying to learn it. It’s just innate.
What’s the latest on littleBits as a business?
We raised a Series B round of funding for $11 million led by Foundry Group and True Ventures [in the fall]. We are in over 70 countries and have sold hundreds of thousands of units. We also have about 1,800 schools that use littleBits.
I’ve been working on littleBits since early 2008. It’s always been the same vision of bringing the power of electronics into everyone’s hands and democratizing hardware. In the beginning, it used to be like, “Oh, that’s cute, you’re a toy, its good for my kids.” And I have intentionally not put it all out there. But now we are starting to play out our vision, and people are starting to understand it’s a genuinely powerful and disruptive hardware platform that is like nothing else around. We are the most versatile, most extensive, and easy to use, modular hardware platform in the world. We want people to see that for what it is.
Your products are primarily sold online. Is there a reason you’re not in many stores?
I’ve seen a lot of companies go to retail too early, and it broke them. The mechanics of retail are on a different time-scale, different orders of magnitude. The level of risk is higher, and the retailers put all the onus on the business to carry the risk, and so if you put your product on the shelf, it’s either a home run or you’re going to tank.
So … someday?
Absolutely, someday, and we get requests — thousands of requests all the time — and we’re just trying to be very selective so we can pick the right partners. People who really believe in the vision and are not just interested in putting us up on the shelf and then marking us down and kicking us out.
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What’s your opinion of GoldieBlox? The company got a lot of attention, and it’s similar to what you guys have been doing all along, but you haven’t been as out there.
I think ultimately we’re after the same mission but coming at it from different angles. I respect [founder Debra Sterling] and think she’s done a great job of inspiring girls to want to get involved in engineering.
I believe in gender-neutral products. That’s my prerogative. I believe we will level the playing field and we will really empower girls when we are empowering girls and boys, and designers and artists, and adults and young people all alike, because I don’t believe there is an inherent difference between genders.
It’s been working. We have 50% to 60% girls in the younger demographic that play with littleBits and love littleBits because we’re very deliberate about being gender-neutral.
Some people would argue that with girls, you have to encourage them more because there are so many things in society that discourage them from going into engineering.
We make very deliberate choices in the product to enforce gender neutrality, and it’s not an easy thing. Every single day, many, many decisions go into keeping that true. I take a lot of those ideas from how I was brought up … I had programming lessons when I was 8, and I never, ever thought I was doing a boy thing. I think we just have to make sure it’s not called a girl or a boy thing, it’s just a thing and you may or may not be interested, and that’s fine.
What are some examples of the decisions you’ve made to keep the product gender-neutral?
Very, very many decisions. The circuit boards are white. We’re some of the first people that made circuit boards that are white because it’s less alienating. Usually they’re green — they just look a lot like electronics, and they have a history of being attached to that. So we wanted to start out with a new language. All the colors are very gender-neutral.
And the projects that we showcase are always androgynous. It’s not a dollhouse or a robot, it’s a ferris wheel. I don’t believe you have to constantly play into the stereotypes. We just make things that we think are cool.
What are you most excited about this year?
We have lots of things coming up that I can’t talk about yet. The mission of the company is to put the power of electronics in the people’s hands. The first two years, we were focused on the word “everyone,” and now the next phase of the company is to focus on the word “power.”
