Voices: 15 steps to starting your own electronic-kit business is an interesting article. This engineer started her own successful electronics-kit business. Limor Fried has made Adafruit Industries into a successful electronics-kit business. You can too. Based on her own experience, she offers 15 practical steps for engineers who dream of starting their own kit business.
716 Comments
wordpress says:
Why users still use to read news papers when in this technological globe all is accessible on web?
Chris Cherchio says:
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Tomi Engdahl says:
Do new technologies ease small-scale product innovation?
http://www.edn.com/article/521760-Do_new_technologies_ease_small_scale_product_innovation_.php
PC-based simulation and tools, manufacturing setups, and production equipment mean that it is easier to develop lower-volume products.
The two extremes of product volume have their own attributes. If you’re designing and building a high-volume product, you can justify manufacturing tooling and test fixtures—whether at your facility or at a contract assembly house. At the other end of the volume spectrum, if you are producing only a few units per month, or doing semicustom or full-custom work, you usually must perform many aspects of the manufacture using manual techniques.
But what about those projects with low to moderate volume of approximately 10 to 50 units per month? They are often caught in the small-scale, in-between zone: too few to afford serious tooling and fixturing but too many to build by hand.
Machining is not the only technique that has changed radically. Using a variety of high-end plastics, sintered powdered metal, and other materials, along with CAD/CAM software, rapid prototyping lets you build both prototypes and modest production runs, with virtually no tooling cost or lag time.
For the PCB, you can use modeling tools and software to prepare the layout and then get a batch of boards made outside in 24 to 48 hours.
If you step back and look at the tools, tooling, components, and processes it takes to develop and produce a lower-volume product, you’ll see that these developments have changed things for the better. You can then market your product directly through the Web, avoiding the need for a more formal channel of distribution until you get some customers and traction.
Tomi Engdahl says:
Club Jameco wants to help you make money in the kit business
http://www.edn.com/blog/PowerSource/41789-Club_Jameco_wants_to_help_you_make_money_in_the_kit_business.php
What red-blooded engineer doesn’t fantasize about leaving their day job to create a start-up business? Maybe you’ve fantasized about starting the next electronics kit business – one like Sparkfun or Adafruit, companies that started offering kits or specialized electronic parts, and grew into multi-million dollar businesses.
Well, stop dreaming and start designing: Jameco would like to help you get started in the electronics kit business. The electronics distributor has started Club Jameco, an electronics project community where members can design, sell, teach and learn about electronics projects and kits.
You design a step-by-step project, Jameco creates the kit for your project and sells it, and then pays you as the designer a royalty on every sale.
You start by creating a Product Brief for your kit idea.
Club Jameco Frequently Asked Questions
http://www.clubjameco.com/index.php/questions/view/29
Tomi Engdahl says:
Do new technologies ease small-scale product innovation?
http://www.edn.com/article/521760-Do_new_technologies_ease_small_scale_product_innovation_.php
PC-based simulation and tools, manufacturing setups, and production equipment mean that it is easier to develop lower-volume products.
dvb-t tuners says:
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Tomi Engdahl says:
Nathan Seidle: open source, open mind, open for business
http://www.edn.com/blog/Voice_of_the_Engineer/41800-Nathan_Seidle_open_source_open_mind_open_for_business.php
As an undergraduate electrical-engineering student in 2003, Nathan Seidle founded SparkFun Inc, an online retail store that describes itself as selling “the bits and pieces to make electronics projects possible.” Since then, the company has expanded to more than 450 original products, which its growing and varied customer base of EEs, hobbyists, artists, students, do-it-yourselfers, and others is snatching up by the shopping cartful. Seidle recently spoke to EDN about SparkFun’s approach to open-source hardware; the “maker” movement, and ways to spread engineering education, including the company’s new learn.sparkfun.com site.
Tomi Engdahl says:
Vote engineer Limor ‘Ladyada’ Fried in as entrepreneur of the year
http://www.edn.com/electronics-blogs/other/4392145/Vote-engineer-Limor–Ladyada–Fried-in-as-entrepreneur-of-the-year?cid=EDNToday
The good folks at Adafruit have shared some exciting news. Their own Limor “Ladyada” Fried is up for the prestigious “Entrepreneur of the Year” title awarded by Entrepreneur Magazine.
If you are not familiar with open-source hardware and software company Adafruit, it was founded by Limor about seven years ago and is on a mission to educate and inspire the next generation of scientists and engineers. It has grown to 25 employees and $4.5 million in 2011 revenue, placing Limor in Entrepreneur Magazine’s “established entrepreneur” category.
Tomi Engdahl says:
After Getting Funded, Some Kickstarter Projects Stall
http://go.bloomberg.com/tech-deals/2012-08-21-after-getting-funded-some-kickstarter-projects-stall/
Kickstarter began in 2009 as a way for entrepreneurs to raise money to get projects off the ground. Though the company’s fundraising platform has been a success, many projects have not.
More than a million backers have given $274 million to more than 28,000 home-grown ideas through the New York-based website, which entreats visitors to “fund and follow creativity.” Some donors are growing disillusioned as entrepreneurs miss deadlines or fail to produce. Among technology and design-related projects, 75 percent didn’t finish on time
The stalled projects underscore the risks of crowd-funding and raise questions about Kickstarter’s promise as the next wave of venture capital. The company, which is backed by Union Square Ventures and other firms, takes 5 percent of the money raised on its site.
That lack of direct oversight means some successfully funded ideas may have trouble following through.
Technology and design-related projects, three-quarters of which don’t finish on time, make up 4.2 percent of successfully funded projects on the site, according to Kickstarter’s statistics. They drew in 21 percent of money raised.
The website has helped spawn several consumer-electronics makers and artistic endeavors that probably wouldn’t have existed otherwise. Success stories include the LunaTik iPod Nano watch
Enough Kickstarter campaigns have hit snags that some rivals are seizing on the opportunity. New crowd-funding contenders have emerged, including Indiegogo Inc. and RocketHub Inc.
Tomi Engdahl says:
Kickstarter isn’t a store anymore
http://hackaday.com/2012/09/23/kickstarter-isnt-a-store-anymore/
Kickstarter is implementing a few new rules for hardware and product design projects. The new rules prohibit product simulations. This means project creators can’t suggest what the product might do in the future. Only what the prototype can currently do is allowed in the Kickstarter project. Also, product renders aren’t allowed. The only pictures allowed on your Kickstarter project are photos as the prototype currently exists.
There’s also another catch for hardware and product design projects: offering multiple quantities of a reward are prohibited. Of course there’s a provision for things that only make sense as a set (building blocks, for instance)
Of course Kickstarter is looking at the long-term, trying to dissuade project creators from taking the money and running off to South America. We’re wondering what the effect will be in the coming months
Tomi Engdahl says:
The Story Of Lockitron: Crowdfunding Without Kickstarter
http://techcrunch.com/2012/10/07/the-story-of-lockitron-crowdfunding-without-kickstarter/
After a rejection by Kickstarter, the co-founders of Lockitron, Cameron Robertson and Paul Gerhardt, decided to follow in the footsteps of App.net and take pre-orders for their innovative deadbolt add-on directly. This gamble paid off. Big time. The initial goal of $150,000 pre-orders was hit within 24 hours. Now, just five days after launching, the company has $1,500,000 in pre-orders. This is their story told by Cameron.
Tomi Engdahl says:
Starting v. Building a Company
http://daslee.me/starting-v-building-a-company
It’s never been easier to start a company in Silicon Valley and New York.
But, while it’s never been easier to start a company, it’s never been harder to build one.
“Building” a company suggests creating a durable franchise that innovates and thrives through multiple tech cycles. That’s a ten to twenty year time horizon.
Joe Kraus once told me, “Durability is the rarest thing in technology.” He meant that it is really hard to have a long-term, consistent and persistent impact through technology cycles given how rapidly these cycles change.
We’re in a time that glorifies the company starters. Startups get all the attention while the company builders go on quietly building their businesses. And it’s completely understandable since it’s a sexier story.
Tomi Engdahl says:
Tindie gets Fundraisers for kickstarting and group buys
http://hackaday.com/2012/12/18/tindie-gets-fundraisers-for-kickstarting-and-group-buys/
The etsy of electronics project, Tindie, has a brand new feature: It’s a Kickstarter-esque endeavor called a Fundraiser that allows you to sell your projects to other electron enthusiasts.
Of course the new Tindie Fundraisers may soon be just another Kickstarter clone for “exciting,” “new,” and “innovative” Arduino dev boards, something we’ve lamented before. We’re really interested in seeing Tindie used as a platform for group buys
Tomi Engdahl says:
Open-Source Hardware Hacker Ladyada Awarded Entrepreneur of the Year
http://hardware.slashdot.org/story/12/12/19/0053228/open-source-hardware-hacker-ladyada-awarded-entrepreneur-of-the-year
“Limor ‘Ladyada’ Fried of open-source hardware company Adafruit Industries was awarded Entrepreneur of the Year by Entrepreneur Magazine.”
Tomi Engdahl says:
Entrepreneur of 2012: Limor Fried
http://www.entrepreneur.com/article/225213
Limor Fried notes that once upon a time, it might have seemed strange for a person to spend an afternoon building something like the MintyBoost, a portable USB mobile-device charger assembled from an Altoids tin and bits of electronic hardware. But if the 50,000 MintyBoost kits sold so far by Fried’s company, Adafruit Industries, are any indication, the world is now a different sort of place.
Recognizable by her signature vivid-pink locks, Fried (or Ladyada, as she is known on the internet) is one of the dominant forces behind the maker movement–a legion of do-it-yourself-minded folks who create cool things by tweaking everyday technology. Last year New York City-based Adafruit did a booming $10 million trade in sales of DIY open-source electronic hardware kits, so-called because project designs are free and publicly accessible, and customers are encouraged to modify or “hack” the final product.
In October Fried moved her 35 employees from a 2,000-square-foot loft near Wall Street to a 12,000-square-foot industrial space in SoHo, then hired 15 more people.
Fried is also throwing her creative weight behind education initiatives, designing school curricula in electronic circuitry and robotics and creating stickers and badges, à la Girl Scouts, to get kids to brag about their skills in areas like welding and programming.
Adafruit’s own schematics were drawn up in 2005, while Fried was studying for a master’s degree in computer science and electrical engineering at the Massachusetts Institute of Technology.
With $10,000 her parents had allocated for her tuition, Fried bought a bulk quantity of parts and began assembling and selling her kits, making about $10 on each unit.
“I think the company took off because, before these kits, there wasn’t a learning project out there that you would actually use or wanted to keep,” she says. “Some people will learn for the sake of learning it, but most people need a reason.”
Tomi Engdahl says:
Why 84% of Kickstarter’s top projects shipped late
http://money.cnn.com/2012/12/18/technology/innovation/kickstarter-ship-delay/
If you pledged cash for a crowdfunded product, be prepared to be very, very patient: A CNNMoney examination of the top 50 most-funded projects on Kickstarter found that 84% missed their target delivery dates.
It sounds like a dream for artists and entrepreneurs: Set up a webpage hawking your project and raise cash in small increments from enthusiastic fans. The market’s pioneer and biggest player, Kickstarter, has served as the conduit for $376 million in fundraising since it went live in 2009, funding nearly 34,000 projects.
The site’s killer feature is its simplicity. Creators describe their project, set a fundraising goal, and announce their target shipping date. Backers pledge money in exchange for rewards like a fresh-off-the-production-line copy of the item being created.
CNNMoney contacted the creators of the 50 highest-funded Kickstarter campaigns with estimated delivery dates of November 2012 or earlier to determine their shipping status. We found that only eight of those 50 projects hit their deadline.
Tomi Engdahl says:
Kickstarter’s best of 2012: 2.2M backers, $319M raised, 18K projects funded
Read more at http://venturebeat.com/2013/01/08/kickstarters-best-of-2012-2-2m-backers-319m-raised-18109-projects-funded/#20yLz4WxGFCwGU3d.99
tomi says:
How Kickstarter stole CES: the rise of the indie hardware developer
http://www.theverge.com/2013/1/10/3861406/kickstarter-at-ces
While corporate giants hog the floor space, indie gadgets are getting the rave reviews
Kickstarter has really changed the dynamics at CES
Kickstarter’s influence pervades the trade show. Many of these Kickstarted products probably wouldn’t exist if it weren’t for the kindness of strangers with credit cards. Others used Kickstarter as a supplemental tool for fundraising or marketing.
The Kickstarter bug has spread to bigger corporations, too.
That’s partly because big companies like Sony, Asus, Samsung, and the rest tend to look at their existing technology portfolio and manufacturing capabilities to get ideas for what to make next. On Kickstarter, by contrast, the product starts with a need or desire, and the creators figure out how to build it from there. Of course — there’s also the issue of relativity. If Sony sold 85,000 watches, we’d call it a failure. When Pebble does it, it’s a rousing success.
At CES, Kickstarter seemed to be everywhere. “CES probably has the largest amount of Kickstarter backers in the world concentrated in one place,” Pebble CEO Eric Migicovsky told The Verge. “We invited our backers to list who’s coming, and over 900 backers are here at CES. That’s the reason we chose CES for announcing the ship date.”
If Kickstarter had a booth, it would be the most impressive and creative display on the show floor
Noel Boulds says:
Hmm it seems like your site ate my first comment (it was super long) so I guess I’ll just sum it up what I had written and say, I’m thoroughly enjoying your blog. I as well am an aspiring blog writer but I’m still new to the whole thing. Do you have any suggestions for first-time blog writers? I’d really appreciate it.|
Tomi Engdahl says:
10 lessons I learned by taking the entrepreneurial Red Pill
http://thenextweb.com/entrepreneur/2013/01/27/10-lessons-i-learned-by-taking-the-entrepreneurial-red-pill/
Startup Weekend provided an absolute cultural shock to me. I was amazed at the atmosphere going on all weekend. Amazed at all the beautifully designed products that came out of only 76 hours. Amazed at the fact that, apparently, I wasn’t the only person in the world walking around with weird ideas.
Tomi Engdahl says:
4 things to know about crowdfunding versus raising capital
http://thenextweb.com/entrepreneur/2013/01/27/4-things-to-know-about-crowdfunding-versus-raising-capital/
Crowdfunding is the process of raising capital by offering rewards to ‘backers’ by pre-selling your product or offering equity in exchange.
While the latter is not yet legal in the United States, the JOBS Act, which was signed into law in April 2012, mandates that the SEC makes it legal by January 1st of 2013.
Let’s take a look at what equity crowdfunding looks like when compared to the traditional capital raising process. What I think you’ll find is that it is a great solution for the majority of entrepreneurs, especially those who have limited access to investment capital due to not being in the right industry, location or networks.
1. You still start with credit cards or savings
2. You spend more time pitching
3. You get more exposure through the process
4. You have access to more capital
Tomi Engdahl says:
So, you want to do a start-up?
http://www.edn.com/electronics-blogs/analog-ic-startup/4406737/So–you-want-to-do-a-start-up-
Here’s my top 5 list of things to expect:
1. It won’t be like working for a large, established company. Things moving at a lightning pace in a start-up, so buckle-up.
2. Mistakes count a lot more. The enemy of all young companies is time.
3. Don’t expect to go home until you meet your commitments.
4. Job description? There is no job description. You can be doing anything on any day
5. The highs are unbelievably high, and the lows can be unbelievably low. There are no two ways around it, but a start-up is a wild roller coaster ride.
You need world-class talent to win, and it’s even more true in a small company. There is no room, or money, to carry people. Every person needs to contribute at a very high level.
Tomi Engdahl says:
Helping American designers make it in America (video)
http://news.cnet.com/8301-10797_3-57569520-235/helping-american-designers-make-it-in-america-video/
In an age when most apparel is made overseas, a new Web site aims to help independent designers manufacture their goods on American soil. CNET’s Kara Tsuboi reports.
He found a manufacturer in Hong Kong that could produce his designs, but it wasn’t always seamless. After OKing one production sample, Bennett later received a shipment of 1,000 pieces of defective goods — goods he couldn’t sell or return to the factory. “Manufacturing overseas is such a gamble,” says Bennett. “I figured getting a sample would be something that would give me some sort of security to sleep well at night, but I had no way of holding anyone responsible for that as a small business.”
After that experience, Bennett knew he had to try to manufacture his watches stateside. But finding an American factory proved to be much more difficult than performing a simple Google search. And if he was having this problem for his watch business, surely designers around the country were struggling with similar issues? “As of right now, it’s much easier to find manufacturers on the other side of the globe than it is to find them in your own backyard,” he says.
started flushing out the idea for Maker’s Row, a Web site that would serve as an online portal or directory to connect American designers with American factories
Tomi Engdahl says:
When to Sell Your Company
https://medium.com/on-startups/6a25c0cbd358
It seems to me, there are three reasons to sell a company. Any of them will suffice:
1. The offer captures the upside
Every business has natural growth limits.
However, not every company is chasing a Google-sized opportunity.
2. Imminent threat
there are cases in which your chances of reaching your potential are slimmer than normal and maybe even totally out of your control
3. Personal choice
Sometimes the founders or other key people may just be done. This is actually quite common and drives a lot of small acquisitions. It doesn’t apply as much as companies get larger, because everyone is (eventually) replaceable—especially if the company is doing well.
Tomi Engdahl says:
Why You Shouldn’t Take That Start-Up Job
http://www.businessinsider.com/why-you-shouldnt-take-a-start-up-job-2013-2
Perhaps most surprisingly, when I asked him about his thoughts on taking a job at a start-up, his knee-jerk response was, “Don’t do it.”
there are shockingly few non-founders who work their way through the ranks at start-up businesses.
Go with the law of large numbers on this one: as the number of people in an organization increases, the quality of work regresses to the mean.
The chances of anyone (especially the founders, whose perspectives are understandably biased) being able to accurately determine the proper valuation of a pre-profitability business is next-to-zero. If you’re thinking about joining a VC-backed start-up, you’ve already missed the train, and the chances that an early-stage VC fund left money on the table is tiny, at best.
Tomi Engdahl says:
The Handshake Deal Protocol
http://ycombinator.com/hdp.html
Silicon Valley runs on handshake deals. A handshake deal is a verbal commitment to a transaction. The actual transaction comes later, when documents are signed and money changes hands.
Why do we need handshake deals? Why not just wait till the actual transaction? Because things can happen fast in the startup world.
Handshake deals are not unique to Silicon Valley of course. They tend to arise wherever trust is sufficiently high and speed is sufficiently important. Diamond dealers apparently use them a lot.
Unfortunately, things don’t work as smoothly in Silicon Valley as among diamond dealers. This is not a closed community of pros who deal with one another day after day. Many participants in the funding market are noobs, and some are dishonest.
Fortunately there is a way to fix most of these problems: to define a standard protocol for handshake deals. We’re going to start using this within YC, and we hope it will spread to the rest of the startup community.
A definite protocol that leaves a trail will both prevent founders from misleading themselves, and discourage investors from misleading them.
Tomi Engdahl says:
Words of wisdom from a maker entrepreneur
http://hackaday.com/2013/03/21/words-of-wisdom-from-a-maker-entrepreneur/
Have an awesome invention that you want to create and sell to the world? Think you have everything all planned out and you’re ready to just let the money flow in? Maybe not. Take a few moments and read [Jonathan]‘s first hand experience of a maker start up business that didn’t go anything like he had planned.
[Jonathan] thought he was ready. He had created a unique product and, by taking pre-orders, didn’t have to front any of his own capital. He had shown that there was demand for such a device. The big problem…supply. Selling things was the easy part. Actually making them was another story.
Pianocade post-mortem: lessons learned starting a maker business
http://upnotnorth.net/2013/03/06/pianocade-post-mortem-lessons-learned-starting-a-maker-business/
Several months behind schedule and significantly above budget, I’ve finally managed to ship all the preorders. Needless to say, things did not go as planned.
If you’d asked me a few weeks ago whether I would ever do this again, I’d have laughed (and then maybe cried a little). But as I finished off the last few units, I started thinking about how much I’d learned from the experience.
The problem is supply, not demand
Though in hindsight it seems hopelessly naïve, I thought that taking preorders was the perfect business model: it removes the need for any sort of external investment, while simultaneously demonstrating that demand exists for your product at your price point.
selling was easy, it was actually making things that was hard.
It’s not that I thought manufacturing would be easy, it’s just that I believed I had anticipated the potential problems and addressed them reasonably well.
Part of my manufacturing plan was that I made an effort to contract out all the big tasks, leaving myself just a few “quick little things” to do for each unit before shipping them. What I soon found was that a few “quick little things” soon combine
The less space you have for a task, the more time it will take to finish.
“Small” means a few things here: physical size (see the previous paragraph), complexity (see the entire rest of this post), and also number of units.
Doing around 100 units was hard; I shudder to think about what it would’ve been like to do more.
Not all the lessons were so harsh
Do not start your first business at the same time that you have your first baby (or My wife is awesome)
Entrepreneurship is just another set of problems to solve
Tomi Engdahl says:
DESIGN West: How to fund your tech startup with Kickstarter
http://www.eetimes.com/electronics-news/4407225/Kickstarter-DESIGN-West
“Running a crowdfunding campaign takes a lot of work,” said Baddeley. “You need to be very well prepared and go after every media outlet if you hope to attract enough attention.”
“My analysis is that our Kickstarter failure was not a result of weakness in Portable Score’s product, but a direct result of not enough media attention–you need to generate buzz to persuade people to make pledges on Kickstarter. We have fixed that now by continuing to refine the product, get working prototypes out to beta-testers and put together a professional marketing campaign for our second attempt at crowd-funding,” said Baddeley.
Besides Kickstarter, there are now about a half dozen alternatives including Fundable, Microventures, and Indiegogo, from which Portable Ventures can choose for its second stab at crowd-funding. Plus there are a number of case studies revealing the psychology of why people make pledges
By following the examples of Pebble and other successful Kickstart projects, Portable Scores is prepared this time to succeed at crowdfunding too. It has hired a marketing expert to work full time alerting online new outlets during the entire crowd-funding period.
Portable Scores also now has multi-faceted press kits with high-quality images and is planning a high-quality video that makes it easy for new outlets to write about Portable Score’s crowd-funding campaign
Tomi Engdahl says:
Has Kickstarter Peaked?
http://tech.slashdot.org/story/13/03/27/0010233/has-kickstarter-peaked
“Kickstarter has taken off in the past year, raising big money for a wide variety of projects.”
“With all this competition, has crowdfunding gotten, well, too crowded?”
COMMENT:
Kickstarter didn’t really change anything. The success stories have been on the back of great marketing campaigns done by experienced marketeers. Hence, Elite and Ouya were able to make money, without really offering very much that couldn’t have been done anyway
Saying it’s “peaked” is missing the point.
Pointing the finger at under-achieving projects as evidence of some kind of peak is silly – under-publicity is more likely to be the cause there, especially for projects that get nothing at all. I seem to recall iTunes have a similar problem for a lot of it’s artists,
Most projects are bad ideas or don’t appeal widely enough to be worth funding.
Tomi Engdahl says:
“Over the last 12-18 months there has been exceptional growth in the DIY [do-it-yourself] electronics ‘maker’ and open source markets supported by a growing interest in wireless generally,” comments Open Source RF founder Armen Kazanchian.
Source: http://www.edn.com/electronics-products/other/4410524/Coin-sized-Arduino-compatible-computer-with-Bluetooth-LE-wirelessly-connects-to-smartphones–tablets
Tomi Engdahl says:
SparkFun’s Chris Taylor: Community key to open-source hardware
http://www.edn.com/electronics-blogs/voice-of-the-engineer/4411373/SparkFun-s-Chris-Taylor–Community-key-to-open-source-hardware
When it comes down to it, engineer and seven-year SparkFun Electronics veteran Chris Taylor believes anything can be open source, to be shared and improved.
Does open-source hardware have a place in the world of professional engineering?
That’s a complicated question. There will always be a place for open source in the professional market because, in many people’s opinions, it’s the way to prototype. You can start from the ground up with whatever you are designing, or you can take a little bit from open-source companies that have already done the work and written the tutorials, and build up whatever prototype you are designing and go through the design phases a lot faster.
Where that gets complicated is open-source licensing. That is still nebulous. For example, the hardware could have a different license than the software or the firmware.
When open-source designs do make it into closed-source products, you often don’t see it. It’s done in the background. When a company has done the work on a good process or design, of course that has a place in the design process of on-the-shelf products.
Open source brings up a lot of questions on “trust.” Without IP, without patents, how do you know what can be trusted?
With any open-source design, there should be a certain amount of caution. Regardless of the design, you’re going to have to learn a great deal of it yourself. But in a lot of cases, we save the designer from digging through datasheets, testing, and retesting by providing example code, boards, and layouts.
Yes, there is always going to be that fear.
Where do you see OSH in the future for engineering?
Where you now start to see open source come into play and shaking things up is in 3-D printers and any sort of low-volume home production devices and businesses, because now we are starting to see the ability of people to create more complete objects from designs that would normally be closed source.
We’re getting closer and closer to being able to e-mail someone a design and print out a cell phone.
Do you have any advice for established engineers who are looking to dip their toes into OSH?
It goes without saying for me that if an engineer is considering a design, by all means, open-source products are the best and fastest way and a fun way to do it. If you are doing a home project or planning to create an on-the-shelf product, the advice is really just go for it. You’ve got nothing to lose and you have a whole community of people vetting designs for you. Not only can your good idea be profitable, but you’re going to have fun in the long run.
Tomi Engdahl says:
Do’s and don’t’s for changing the ratio of women in tech
http://programming.oreilly.com/2013/04/dos-and-donts-for-changing-the-ratio-in-tech.html
You’ve probably heard of Etsy, the bustling online marketplace for crafters and artists. You probably wouldn’t be surprised to learn that most of its customers are women, both buyers and sellers. Ditto that the Etsy team is a pretty good representation of the Earth’s gender ratio.
How did he do it? In his video interview, Hedlund offers concrete advice for companies who want to hire more women in technical roles.
Tomi says:
Ask Slashdot: What’s Your Company’s Marketing-to-Engineering Ratio?
http://ask.slashdot.org/story/13/05/04/1523259/ask-slashdot-whats-your-companys-marketing-to-engineering-ratio
“I just learned that the company I work for annually budgets ~$17,000 for non-labor engineering expenses, but budgets ~$250,000 for non-labor marketing and sales expenses. Am I just being cynical when I say that my company spends almost 15 times as much trying to convince the outside world that we make a good product, than it spends on actually making a good product?”
Seem like cherry picking the numbers if you ask me.
Simply because the engineers already have all the tools, desks, materials, computers that they need to develop the the products means they don’t need a big non-labor budget.
But you don’t sell stuff without advertising, travel, swag, etc. And that is an ongoing expense.
I would expect almost any company to have bigger sales costs than development costs. Especially for any product that
has to compete in the marketplace.
Indeed – what are Engineering’s expenses outside labour? A few computers, that’s about it. Marketting will need to fly all over the place to you know sell some shit.
Depending on the market you are in, I would very much expect your non-labor expenses in Sales and Marketing to vastly outweigh your engineering non-labor costs.
There are very few products that serve needs, so manufacturing the desire for conspicuous consumption is more important than making sure the product works reliably.
Non-labor expense is usually stuff like paying consulting firms, “cloud services,” buying advertisements, paying for training, etc. Capital expense is where you typically book things like servers, enterprise software, storage, etc.
Short answer, yes you are being needlessly cynical.
Longer answer, don’t underestimate how hard it is to sell any product, even a very good one. Further, it isn’t a moral issue. Activities cost what they cost. Pick any software company you care to mention and you’ll find that their engineering costs are somewhere between 10-20% of total expenses. Most of the rest is the cost of sales and administration with sales and marketing accounting for the lions share of the expense. The reason for that isn’t because the sales team is wasting money but because it requires a lot of resources to convince people to buy something. The activities used to sell products frequently don’t benefit from economies of scale and like basic research have uncertain paybacks on the investment.
Frankly I think it is a worthwhile exercise for every engineer to spend some time trying to sell their product. Engineers too often are dismissive of sales and marketing and they shouldn’t be.
A good sales man is an incredibly valuable asset and frequently harder to find than a good engineer
basically any product where the competition makes the same thing that is not very different from yours, you have to spend a lot on marketing. investing in engineering in this case is usually a waste of resources since most of your potential customers won’t care
Engineers rarely need to travel anywhere, whereas sales people need to be on the road all the time working with and at customers, even in technical (e.g. “sales engineering”) roles. Travel is very costly,
After a successful technical career, someone launches his or her own consulting business and very soon comes to realize that 90% of the job is marketing. You might be the best tech person around but without contracts / engagements, you starve.
Tomi says:
Donald Trump Launches FundAnything, a Kickstarter Clone Meant to Bring Crowdfunding to the Masses
http://allthingsd.com/20130508/donald-trump-launches-fundanything-a-kickstarter-clone-meant-to-bring-crowdfunding-to-the-masses/
Crowdfunding now has a celebrity mogul endorsement.
A new site called FundAnything from Learning Annex founder Bill Zanker launches today with help from loudmouth businessman Donald Trump.
Tomi says:
FundAnything
Raise Money for Anything
http://fundanything.com/en
Tomi Engdahl says:
Why International Online Sales Are Still a Huge Headache
http://www.wired.com/business/2013/05/global-e-commerce-headaches/
It’s never been easier to open an online store. The experience is basically seamless, between point-and-click store builders, beginner-friendly payment gateways, web-based accounting systems, and real-time fulfillment providers. But selling to customers around the world — fulfilling the ultimate, global potential of e-commerce — remains extraordinarily painful.
International orders invite problems with customs, fraud, shipping, user interfaces, and billing that are rare or non-existent with domestic orders.
Practices vary from country to country around attitudes toward paying with credit cards, when you must and should offer a refund, how and when to tax, and how to bill overseas customers. Then there are the customer support issues
While Stripe has always allowed U.S.-based businesses to take orders from any country, its experience bringing that same service into other countries should help the company better smooth out global commerce issues on behalf of its customers, if only because Stripe will be tackling many of those same issues itself.
“The U.S. dollar is in many ways the currency of the internet,” Collison says.
Stripe is also seeing growth in charges from global companies that don’t have to physically ship anything because they deal in all-digital goods and services.
Tomi Engdahl says:
“How will they make money?” is the wrong question
https://medium.com/i-m-h-o/a5890c2c2cc0
Seems like every year we hear about a few new consumer networks raising large amounts of money at high valuations. And right on cue, we hear cynics asking, “But how will they ever make money?” let alone “enough money to justify the valuation.”
I like to ask four things:
1. Is there a new behavior here that you can see 100M+ people doing?
2. Is the product evolving in a way where people are getting more and more engaged and committed over time?
3. Will the growth be sustainable?
4. If the product succeeds at scale, can you monetize the key behaviors?
Tomi Engdahl says:
50 Ways How NOT To Make Money Online
http://sourcesofinsight.com/50-ways-how-not-to-make-money-online/comment-page-1/
“A fool and his money are soon parted.” — Dr. John Bridge
I know a lot of people that make money online, either as a living on the Web or as a second income.
I also see a lot of people fail to make money online. Time and again. They either chase the wrong things, follow bad advice, or don’t know who to learn from.
Strategy, skills, and persistence pay off (in more ways than one.)
Maybe this post can help shed some light on the differences that make the difference?
How many ways can you not make money online? Let me count the ways …
I know a lot of people that make money online, either as a living on the Web or as a second income.
I also see a lot of people fail to make money online. Time and again. They either chase the wrong things, follow bad advice, or don’t know who to learn from.
Strategy, skills, and persistence pay off (in more ways than one.)
Maybe this post can help shed some light on the differences that make the difference?
Just because it’s the Web, doesn’t mean that the basics of business don’t apply. In fact, if anything, the rule of business apply even more so. And, what you don’t now, can hurt you.
On the upside, the Web can help you take advantage of a digital economy. You can sell your information products to a tribe of raving fans around the world, while you streamline and scale your operations, and enhance your customer experience. You can even move the free line to bootstrap your success.
It takes real skills and abilities. It’s a tough game. With a low-barrier to entry, the Web is a breeding ground of ultra-competition.
The Golden Rule – Create Extreme Value
If you want to make real money online, you first need to generate real value.
Zig Ziglar said it best when he said, “You will get all you want in life, if you help enough other people get what they want.”
If you can give way more than you take, AND, capture the value, you have found sweet spot. If you want to create more value, then solve more valuable problems, or help people achieve their greatest desired outcomes.
Tomi says:
Do things that don’t scale
http://paulgraham.com/ds.html
One of the most common types of advice we give at Y Combinator is to do things that don’t scale. A lot of would-be founders believe that startups either take off or don’t. You build something, make it available, and if you’ve made a better mousetrap, people beat a path to your door as promised. Or they don’t, in which case the market must not exist.
Actually startups take off because the founders make them take off. There may be a handful that just grew by themselves, but usually it takes some sort of push to get them going. A good metaphor would be the cranks that car engines had before they got electric starters. Once the engine was going, it would keep going, but there was a separate and laborious process to get it going.
The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all startups have to. You can’t wait for users to come to you. You have to go out and get them.
There are two reasons founders resist going out and recruiting users individually. One is a combination of shyness and laziness. They’d rather sit at home writing code than go out and talk to a bunch of strangers and probably be rejected by most of them. But for a startup to succeed, at least one founder (usually the CEO) will have to spend a lot of time on sales and marketing.
The other reason founders ignore this path is that the absolute numbers seem so small at first. This can’t be how the big, famous startups got started, they think. The mistake they make is to underestimate the power of compound growth.
You should take extraordinary measures not just to acquire users, but also to make them happy.
Why do we have to teach startups this? Why is it counterintuitive for founders? Three reasons, I think.
One is that a lot of of startup founders are trained as engineers, and customer service is not part of the training of engineers. You’re supposed to build things that are robust and elegant, not be slavishly attentive to individual users like some kind of salesperson.
Another reason founders don’t focus enough on individual customers is that they worry it won’t scale. But when founders of larval startups worry about this, I point out that in their current state they have nothing to lose.
I have never once seen a startup lured down a blind alley by trying too hard to make their initial users happy.
I was trying to think of a phrase to convey how extreme your attention to users should be, and I realized Steve Jobs had already done it: insanely great.
For hardware startups there’s a variant of doing things that don’t scale that we call “pulling a Meraki.” Although we didn’t fund Meraki, the founders were Robert Morris’s grad students, so we know their history. They got started by doing something that really doesn’t scale: assembling their routers themselves.
Hardware startups face an obstacle that software startups don’t. The minimum order for a factory production run is usually several hundred thousand dollars. Which can put you in a catch-22: without a product you can’t generate the growth you need to raise the money to manufacture your product. Back when hardware startups had to rely on investors for money, you had to be pretty convincing to overcome this. The arrival of crowdfunding (or more precisely, preorders) has helped a lot. But even so I’d advise startups to pull a Meraki initially if they can. That’s what Pebble did. The Pebbles assembled the first several hundred watches themselves. If they hadn’t gone through that phase, they probably wouldn’t have sold $10 million worth of watches when they did go on Kickstarter.
Sometimes we advise founders of B2B startups to take over-engagement to an extreme, and to pick a single user and act as if they were consultants building something just for that one user. The initial user serves as the form for your mold; keep tweaking till you fit their needs perfectly, and you’ll usually find you’ve made something other users want too.
Consulting is the canonical example of work that doesn’t scale. But (like other ways of bestowing one’s favors liberally) it’s safe to do it so long as you’re not being paid to. That’s where companies cross the line. So long as you’re a product company that’s merely being extra attentive to a customer, they’re very grateful even if you don’t solve all their problems. But when they start paying you specifically for that attentiveness—when they start paying you by the hour—they expect you do everything.
I should mention one sort of initial tactic that usually doesn’t work: the Big Launch. I occasionally meet founders who seem to believe startups are projectiles rather than powered aircraft, and that they’ll make it big if and only if they’re launched with sufficient initial velocity.
It’s easy to see how little launches matter. Think of some successful startups. How many of their launches do you remember? All you need from a launch is some initial core of users.
So why do founders think launches matter? A combination of solipsism and laziness. They think what they’re building is so great that everyone who hears about it will immediately sign up.
The need to do something unscalably laborious to get started is so nearly universal that it might be a good idea to stop thinking of startup ideas as scalars. Instead we should try thinking of them as pairs of what you’re going to build, plus the unscalable thing(s) you’re going to do initially to get the company going.
Cotton Candy Artist says:
You could certainly see your expertise in the article you write.
The sector hopes for even more passionate writers like you who aren’t afraid to mention how they believe. All the time follow your heart.
Tomi says:
Why Founders Fail: The Product CEO Paradox
http://techcrunch.com/2013/08/10/why-founders-fail-the-product-ceo-paradox/
This happens all the time. A founder develops a breakthrough idea and starts a company to build it. As originator of the idea, she works tirelessly to bring it to life by involving herself in every detail of the product to ensure that the execution meets the vision. The product succeeds and the company grows. Then somewhere along the line, employees start complaining that the CEO is paying too much attention to what the employees can do better without her and not enough attention to the rest of the company. The board or CEO Coach then advises the founder to “trust her people and delegate.” And then the product loses focus and starts to look like a camel (a horse built by committee). In the meanwhile, it turns out that the CEO was only world-class at the product, so she effectively transformed herself from an excellent, product-oriented CEO into a crappy, general-purpose CEO. Looks like we need a new CEO.
How can we prevent that? It turns out that almost all the great product-oriented founder/CEOs stay involved in the product throughout their careers. Bill Gates sat in every product review at Microsoft until he retired. Larry Ellison still runs the product strategy at Oracle. Steve Jobs famously weighed in on every important product direction at Apple. Mark Zuckerberg drives the product direction at Facebook. How do they do it without blowing their companies to bits?
Over the years, each one of them reduced their level of involvement in any individual set of product decisions, but maintained their essential involvement. The product-oriented CEO’s essential involvement consists of at least the following activities:
Keep and drive the product vision.
Maintain the quality standard.
Be the integrator.
Make people consider the data they don’t have.
The exact process depends on you, your strengths, your work style and your personality, but will usually benefit from these elements:
Write it; don’t say it. If there is something that you want in the products, then write it out completely. Not as a quick email, but as a formal document.
Formalize and attend product reviews.
Don’t communicate direction outside of your formal mechanisms. Only give direction via a formal communication channel l
Note that it is really difficult to back off of any non-essential involvement yet remain engaged where you are needed. This is where most people blow themselves up: either by not letting go or by letting go.
Tomi says:
Flea market merchant, the main way to acquire customers is, therefore, to introduce its range of the most popular products in the foreground, and the range always dig out from under the counter, the curious customers to come in range.
The online store for the first time, customers do not do business in most cases do not even know what the dealer has to offer, as the majority made up of prying like a yard sale.
The online store most visited in the starting point is the front page, which is, however, often terrifying text and picture mess. Ultimately, the client is interested in the products, not models that do presentation, loyalty programs, or other content.
Online stores are by far the largest part is, therefore, unknown to the customer in advance like flea market tables and not known brand shops.
Guest did not realize that if the home page does not appear immediately in product selection.
Flea Market Seller is putting up for sale several times more powerful online merchants.
Its brands in the construction of millions of users do not need signs online, or basement to play on exactly the same terms as the average Web merchants. Upon arrival at the customer knows your brand online home as soon as the deeper depths of navigation to find, for example, to identify a trade because of the logo, and combine this with their image.
The more times to visit is required prior to final purchase, the more important it is to remind returning customers in the past thoughtful products immediately at the beginning of the visit.
Simple product withdrawals are only the beginning of the front page to improve. Personalizing content and customized views based on other data, such as customer profile or traffic source is achieved even better results. The rule of thumb trade in the demonstration, however, can not ignore.
Try to actively and boldly new. Replace non-functional elements of the new ones.
Source: http://www.tietoviikko.fi/blogit/naamapalmu/kirpputorimyyja+on+patevampi+kuin+keskiverto+verkkokauppias/a920073
Tomi Engdahl says:
Starting an LED Business
http://www.allledlighting.com/author.asp?section_id=508&doc_id=560657&elq=b968a3854691472699c474e1b301cba4&elqCampaignId=751
Ever since we attended high school, my friend Mike and I dreamt of starting a business together. Here’s how we finally did it.
As the years progressed, often the discussions would center on our perception that there was a steady decline in the way corporate America viewed and treated its employees. We knew there was a better way, one that cultivated an environment of respect and trust. But, unfortunately, we still didn’t have that aha idea needed to start a company.
At least not until my career crossed paths with lighting. I led the development of one of the first applications of LED-based general lighting in aerospace, and presto! The rapid acceptance of the product and our view of the future foretold a massive need for engineering resources with specialized skills.
LEDs, wow! That’s it! Those little darlings offered huge promise, but they bore much in common with gremlins. Treat them properly and they behave wonderfully; neglect a key parameter and unleash a monster.
We knew how to stay on their good side and were convinced there was a market need for the skills our team could bring to the table. So was born LED Specialists in 2004.
We entered a lighting market where many lighting suppliers didn’t need sophisticated engineering resources to develop products. Everybody used the same basic light bulbs, so many of the suppliers branded themselves by the shape, quality, and image of their fixtures.
Our marketing strategy was to forge relationships with these companies, become their adjunct or surrogate engineering department, and help them to enter the LED era successfully.
We found the key to starting a new business is having the aha idea. It has to be one that evokes passion because, over the course of time, it will be put to the test.
Starting and running a company isn’t easy, and it’s certainly not for the faint of heart. It requires solid preparation, patience, and fortitude. Preparation includes good business plans, marketing plans, and capitalization plans.
Tomi Engdahl says:
New Twist on Crowdfunding for Startups
http://online.wsj.com/article_email/SB10001424127887324063304578523783553197610-lMyQjAxMTAzMDEwOTExNDkyWj.html
Looking for capital? There’s a new way to crowdsource it.
A pair of online platforms are offering a new twist on the usual crowdfunding model for small businesses. Entrepreneurs can post their vitals, their business ideas and how much cash they need—and then solicit donations from interested backers.
So far, that’s familiar. The twist is in what backers get in return. The entrepreneurs agree to give backers a small percentage of their earnings each month for a certain period. In effect, they’re selling a temporary equity stake in themselves.
The sites, Upstart and Pave, aren’t designed to completely fund a business idea or cover all of an entrepreneur’s expenses—just to provide some breathing room, such as paying down some outstanding school debt.
And they come with caveats. They don’t have long track records, and it isn’t clear how the model will play out over time.
And there are restrictions on who can use the services. Backers must be well-heeled “accredited” investors, and the sites are either explicitly or implicitly targeted at a very specific demographic: recent graduates.
Tomi Engdahl says:
Ubuntu Edge crowdsauce cash stash comes up short
Community-backed smartphone still breaks record for dosh-slosh
http://www.theregister.co.uk/2013/08/22/ubuntu_edge_no_go/
Canonical’s Ubuntu Edge crowd-funded smartphone will remain a Shuttleworthian dream, having failed to hit its $32m funding target.
The phone raised $12.8m ahead of today’s deadline on the Indiegogo site, less than half the figure stated necessary to fund production of 40,000 units when the campaign started on 23 July.
Canonical chief executive Jane Silber told The Reg in a statement that the Ubuntu Edge “as described in the Indiegogo campaign” will therefore not be produced.
Penguins who pledged money will get a full refund.
“We still believe that the campaign has ben successful in that it has given voice to the need for innovation. We hope that this campaign will positively disrupt the way the phone industry brings out new technology and devices,” she said.
The Edge set a record in raising “crowdfunds”, beating current record holder the Pebble smartwatch, which sourced $10m on Kickstarter.
Tomi Engdahl says:
DIY manufacturing, open source hardware, and the New Long Tail
http://www.edn.com/electronics-blogs/powersource/4307824/DIY-manufacturing-open-source-hardware-and-the-New-Long-Tail
Remember The Long Tail? The Long Tail is Chris Anderson’s theory he proposed in a 2004 Wired magazine article that in the Internet world, where the cost of information storage has become vanishingly small, it’s now profitable to sell (mostly digital) products to much, much smaller market sizes.
Anderson has a new article in Wired magazine, Atoms are the New Bits, where he proposes that a similar change is taking place in hardware design and manufacturing: One of the biggest obstacles for start-ups that sell new hardware products (as opposed to software) is the capital required for tooling and parts/labor. Anderson writes, “As ideas go straight into production, no financing or tooling is required.” Hoo-boy, that’s a gross simplification, but his point is that hardware startup businesses are moving into the realm of the garage tinkerer who can make use of low-cost 3D design tools and fast-turn-around prototyping, and China-based manufacturing.
Unlike most journalists, he has some real-world experience to base his premise upon
Comment: Old news…. Yes most are only now becoming aware of the possibilities. If you are doing something simple .. any good tech can design the product… soup to nuts… If you are doing something complex .. you need the skills/education/experience with most/all the issues related to design/manufacture/selling of the product in question. Key to being effective as a single person providing their own product.. knowing all the tools involved. Most electronics engineers only know the simulation and schematic capture tools.. Most electronic pcb designers only know the pcb layout and CAM tools Most mechanical designers only know their 2D or 3D CAD system… Production people need to have tools to control BOMs/assembly documents/ pick and place data/inventory control/etc…. If you are doing something complex.. You will need to know all of these tools… and more.
Tomi Engdahl says:
Paypal not sure if its bargepole is long enough for crowdfunding
We’ll sell you bug-infested rugs or dud lava-lamps, but not another man’s dreams
http://www.theregister.co.uk/2013/09/16/paypal_mulls_ban_on_crowdfunded_payments/
Paypal is considering its policy on crowdfund payments after freezing transactions on a number of mob-monetised projects.
The online money-sending service has announced that is looking into how best to move forward with crowdfunding, after admitting that its “existing policies and processes aren’t working quite right for this particular fundraising model”.
In a statement, Paypal warned that crowdfunding is based around a model that is “so new, it is potentially open to abuse”.
The firm said:
There are unique regulatory and risk aspects inherent to this new way to raise money from supporters around the world. To name one, we sometimes hear from campaign contributors that they are confused about what exactly their money is going towards, and assume that they’ll get it back if the venture is not successful.
It added:
“When done right, crowdfunding is a powerful catalyst for innovation. However, it’s clear that our existing policies and processes aren’t working quite right for this particular fundraising model.
Tomi Engdahl says:
The Hardest Lessons for Startups to Learn
http://paulgraham.com/startuplessons.html
1. Release Early.
2. Keep Pumping Out Features.
3. Make Users Happy.
4. Fear the Right Things.
5. Commitment Is a Self-Fulfilling Prophecy.
6. There Is Always Room.
7. Don’t Get Your Hopes Up.
Speed, not Money
Tomi Engdahl says:
Everything I need to know about startups, I learned from a crime boss
http://gigaom.com/2012/01/07/desantis-startups-crime-boss/
In his early 20s, entrepreneur Donald DeSantis had an interesting mentor — a very successful businessman whose business happened to be organized crime. Despite — or perhaps because of — his seedy profession, the mentor taught DeSantis much about managing risk, acquisitions and networking.
Don’t sell rocks when you can sell mountains
Kobayashi didn’t work with small packages. His business transactions involved risk at every stage – product acquisition, transport, and distribution. But the marginal risk on each decreased with the size of the transaction.
Cut out the middleman
Instead of dealing with distributors, he went straight to producers. Instead of hiring contractors, he purchased required equipment and moved people onto payroll. Everywhere he saw a third party making money, he figured out a way to replace that person or bring them in-house. He reduced costs at every step.
Don’t shit where you eat
“When someone’s doing something for the money, people can sense it, like a desperate lover. It’s a turnoff.” – Derek Sivers, Anything You Want
If it don’t make dollars, it don’t make sense
“A business without a path to profit isn’t a business, it’s a hobby.” – Jason Fried, Rework
Closed mouths don’t get fed
Be a badass
“There’s only one thing that will make them stop hating you. And that’s being so good at what you do that they can’t ignore you.” – Orson Scott Card, Ender’s Game
Tomi Engdahl says:
How to Fund a Startup
http://paulgraham.com/startupfunding.html