On October 20^th 2016, Gabriel Goldstein, Chief Product Designer of Anidea Engineering, the expert in product development, had a great talk with David Alexander, the President of BaySource Global, the expert in business process outsourcing and offshoring, to discuss preparation steps and common issues when outsourcing in Asia, especially China.

Hi David, Thanks for taking the time to speak with me today and share what you learned about outsourcing manufacturing work to Asia, specifically China. Please tell us a little bit about yourself and BaySource, and how you got started?

I was in the consumer products industry and I’m going back to before the year 2000. We owned some brands that went to the value-price-point category and we needed to develop the new brands, new packaging and we were over a hundred-million-dollar company, but we had very limited expertise in our purchasing and procurement department. Really China was just coming on board. It was really all the Fortune 500 companies that had the resources to send people to China. We didn’t. So we struggled getting some packaging done the right way. We were challenged with that, and it dawned on me that there was no enterprise set up for serving small and medium size businesses. To help them navigate China, to become a bridge to doing business in China and you know having a trusted resource to mitigate the usual anxiety, which are costs and quality. And so, around 2004 I put a business plan together to kind of take a look at how we can serve small-middle sized companies in the United States having a trusted bridge to China setting up offices over there, and I kind of felt the opportunities would be enormous. That is how I got started. I left that position to start what is BaySource now. That was 2005.

{{cta(‘23563541-74d9-4623-9d12-399febf7f4a1′,’justifycenter’)}}

Wow. Okay. That is a good history you have there, so when someone’s considering offshoring their manufacturing to either China or other Asian countries, what are the things they should consider?

They have to consider the potential volume of the product they are looking to source. And, more importantly than that, they need to understand how much of their cost of goods labor makes up in term of the total landed costs. So,  if labor is not at least around 25% of your cost of goods, it generally doesn’t make sense to go to China because until you start adding labor vis-à-vis secondary processes, manual processes, finishing, handwork, anything with labor…assembly, that’s when it makes sense for China. And, they should also look at their design. Are they making or designing products, which keep costs, whether involving labor or not…are they keeping the costs of their products to the minimum when designing their products?

All right, very good, so things kind of need to be designed for China and have a good fit for Asian manufacturing.

Not even designed for China. I am just talking in general, you know? Whenever you’re designing or creating or developing a new product, you want to design a product that is going to be suitable to the market you’re serving or you’re selling in, right? That you are not going to out-cost yourself based on either what is currently available or where the costs are going to out-weigh the value.

Sure! Right! Thanks for the clarification there. So, what are some other advantages beside costs to offshoring the manufacturing?

The other advantages we see, mostly now for offshore manufacturing is that there is infrastructure in place, particularly in China. So, China’s benefited from a steep learning curve in the past 15 years. Their efficiencies are up. There’s infrastructure in place, plant property and equipment. The municipalities infrastructures are there, highway systems, rail, obviously shipping. So really startup costs are a huge advantage, when offshoring because you don’t have to invest in assets: equipment, plants, facilities, people, training, all of that kind of overhead.

Well, they really have built quite a system over there and I can really see that if you had the volume to warrant it, they can really turn out a lot very quickly for you. What about some of the pitfalls or disadvantages of outsourcing your manufacturing?

Sure. So, what I like to say is whether you’re making a product in Chicago or China, the product has to be managed: the life cycle, the development, the quality. You have to manage new product development, and so the obvious disadvantages are time and distance. Not to mention the built-in disadvantages which are communication and translation, so a lot of details can get lost in translation. Another disadvantage is that the Chinese are often making products that they have no idea what the applications for those products are. They’re making just literal widgets based on drawings, designs, specifications, but don’t always necessarily know what these product are being used for in the U.S. So there isn’t that proactive nature for somebody at the factory level to say: Hey! We can make this product a little bit better or wouldn’t it work better if we did this? Whereas, you know, locally there is probably more common knowledge built-in around: Hey why are they doing it this way? If they made it this way, we could fit it in a box better or it would be more efficient or it would show up on the shelves better or something like that.  You’re not going to get that sort of proactive participation when you are offshoring.

So I guess in that example, it’s kind of like you get exactly what you asked for, and not much else, which is very interesting… uncounted costs or advantages, which I think is a pretty interesting aspect there. As far as, the kind of person or business… I mean at what scale or where should a personal or entity be at when they consider their outsourcing manufacturing? Kind of like size, volumes, financial, capability and where should someone really to be at when they start approaching manufacturing in China?

Wherever you are going to manufacture something, you need funding. I don’t mean to state the obvious, but a lot of people don’t take into consideration once that product is developed, once you’ve gone through your first article of inspection, your prototypes, your samples….now you’ve got to place a purchase order. So people have been able to float their ideas, their business, their startup up to a certain point but if you don’t have the right finances and resources in place…to place orders, literally just place the first orders, to cash flow those orders, you’re at a loss there, right? So, a person or business should consider creating a budget, you know, startup budget, and understanding what their cash flow needs are going to be when they’re manufacturing, I didn’t even mention the tooling and startup costs that need to be built into the equation.

So let’s be a little more pointed about that. I mean minimum order quantity. It would be easier if you said you had an order of 100 or maybe a 1000 of the product but is that realistic when outsourcing to Asia?

Everybody always asks us, so what is your minimum order quantities, but they’re really not our minimum order quantities? They are a factory’s minimum order quantities. We have a sporting goods client that just placed their first order for a new product. We’ve done several orders for them before but it is a new product for them, and they are going to order 700 of these products, and they are going to order 700 at $40 each. Now, you know now it is a $30,000 order, and that is not a huge order, but their resale on the items, the margin of the resale on that item supports getting into that business, watching that product. The next order will be doubled that or triple that, and also we have found a manufacturer suitable, who is pleased with…..you know who is not stopping at those lower sub 1000 unit orders because they’re a family owned factory, and they have capacity and so they are delighted to help these guys get into the business, because the guys have already proven on other products that they are making, that they’re doing with us. They are proven that they have ability to capture the market. They have already been successful with their other products. There is no one size fits all on the minimum order quantity. The other thing that I’ll mention to you is that freight…any good business decision maker understands that your freight whether in Chicago or China, freight should not eat into any more than 10% of your costs of good. So a container is a container is a container, so a 40-foot container all-in, let’s just call that $5000. So, if you don’t have $50,000 of value on that container, you really should be looking for something else. Likewise, a 20-foot container is generally…you know with taxes and import fees, tariffs, $3500. So if you do not have $35,000 worth of value on that container, you might want to reconsider. We should still do “Less Than Container Loads”, LCL but the trade value at cost of the products on those containers support the exercise.

Very good. That’s good metrics and numbers there. For that one example that you gave about that product, can you give a general category of that kind of product as far as you know, was it a soft good, was it engineering intensive, or would something that ….

Yeah, it’s engineering, it’s sports training equipment and it’s got good margin over here, so they will sell it for double what they pay for it, but they have to work in distributor margins and things like that. For me to say okay that $30,000 order doesn’t make sense even though it is going to cost them $3500 dollars to get it in. The margin on that $30000 of product supports the little bit of overage over that 10% of costs of good.

{{cta(‘23563541-74d9-4623-9d12-399febf7f4a1′,’justifycenter’)}}

Very interesting. You mentioned that there was engineering involved with that, so let’s talk about design work. What should be designed offshore? What should not be designed offshore? And what is available in turnkey design services?

We’re seeing more and more Chinese firms pop up to say we’ll do your design and development work, help you get into prototypes, things like that. Generally, the cost, the managerial cost or the salary of the designer over there, the CAD designers would still be less than over here. However, going back to the original translation issue and application issue, where they can help you design something, but if they don’t know the literal use or the practical everyday use of the product, they are not going to be suited to design nearly as well as the U.S. designer. So, you get what you paid for, right? And also, when dealing with a designer offshore, just the translation, the back and forth, the product revisions, their understanding of what you’re asking them to do, and how you are asking them to change things. When you start meshing creativity with practical services and design work, it’s definitely an advantage to stay local.

Yes. Very good. Thank you. So, wrapping up! if someone has an idea and they have their finances in place and they’re confident they want to go offshore with their design, their product. What is the next step for them to get started?

So that goes kind of to a question you have, it says: How should a person prepare to outsource their manufacturing? I gave a talk out at a tradeshow in Las Vegas last year, which was essentially how to do business in China. The thesis or the main argument of my discussion was sort of from the garbage in…garbage out. You will be received to the degree that you are prepared, meaning you need to have a…it’s not a business plan but a formal product document, product briefing. A little bit of background about you, the business, you know…. where you are selling to. Not that you have to devolve the whole business plan to the Chinese factory, but you want to put a very professional request of proposal together, because the more thorough and detailed that package of information is, the more creditable you will be with the factory and the greater sense of urgency that they are going to share around helping you with manufacturing your product. So we talked about a budget. You shouldn’t even be near China, until you’ve done a budget, and what I meant by a budget is sort of a breakeven analysis that if you’ve identified what percentage of the potential market, whether that would be one percent or one tenth of one percent of the market here. And that should extrapolate into top line numbers. And then what your margin needs to be on those numbers to support the business and help you cash flow the business. So having a budget in place and particularly including those startup costs, those purchase order costs, and then a lot of people don’t even work in the selling and marketing expense. They just think it’s their time but there’s time, there’s travel, the opportunity costs, right? Having a good budget and a sound game plan and a professionally presented package of information around your product.

Very good! So, that last question prompted me to ask something else here. How do you handle IP and licensing issues when you’re working oversea?

So, that is a great question, and you know kind of tongue in cheek I tell people if the Chinese factory or somebody that works in China tells you not to worry about IP…run from that person! That’s just not viable advice. How we help mitigate that is we work two ways. One, we work with reputable people, reputable suppliers that are owned by decent people, and have worked with Western companies before. So, it is kind of on the coattails of other businesses that have come before them and they have had a good track record with supporting the manufacturing businesses, and not running off with their IP. That’s one way to mitigate it. So if ‘Black & Decker’ has been working with the factory for a while, you know that they’ve audited and scrutinized and challenged that factory’s willingness to protect their IP. One is really reputation and experience and knowing where to go, having sort of that extra sense in instinct to understand if the factory is reputable or not. Two is really working with somebody in China that coordinates the manufacturing from a supply chain perspective, and doesn’t necessarily tell the right hand what the left hand is doing. So, we are making injection molded parts over here. We’re doing our SMT technology and our circuitry over here. We’ve got metal parts and components over here. We select the final assembly point which can usually be one of those factories, but the factories we are going to choose are not the ones that are already participating. Meaning, they’re not vertical, which means they are not manufacturing and marketing companies. They were not already at all the tradeshows in those respective industries over here in U.S, right? So, we work with really pure contract manufactures. We seldom work with companies that are already marketing their own products. Another thing I’ll tell you that we don’t work with anybody that doesn’t have a patent.

Got it! So, it helps protect you on the US sale side too. That is very handy.

That protects us, and protects them. We just don’t want to work with someone who doesn’t have a patent because we can get well in the process and find out that our customer has no right to launch the product because somebody else has a patent.

Oh interesting. I wasn’t thinking about that originally. David, very good. This is a wealth of information. I appreciate your time and thank you very much.

Yeah! Thank you, Gabriel.

#1. Rugged LED Spotlight

#2. PCB Layout of an Ethernet PHY

Want to see how a printed circuit board layout is designed? This video is a quick overview of how things get done!

We hope you have enjoyed these videos and please share them with your friends! Now get back to work! Chop chop!

This book was a serious wakeup call for me and I wish I had discovered it 15 years ago.  It is an incredibly easy read and packed with very tangible concepts.  It’s not usually in the standard list of books people have read and posted on Facebook. It’s not like a Good to Great or 4-Hour Work Week that every entrepreneur grins at the mention of, however, as I spoke to some seasoned entrepreneurs (read older) they gave the grin.

It’s funny how I happened to come across this book.  I was listening to a podcast and they were ripping on the 4-Hour Work Week. I had decided not to read the book a while ago, as I had heard so many negative things about it, but the podcast ultimately inspired me to give it a shot.

So, I asked around to borrow a copy, and one of my friends obliged. It  took a few months before I scheduled lunch with my friend and he showed up with a stack of books.  He started out saying something like, “Here is the book you asked for, but this is the book you need to read [The E Myth Revisited].” He gave me an overview and I was hooked. I started reading it immediately.

The Problem

So, have you ever been sitting there at your desk, knowing you are more capable, skilled, and talented than those around you, and you just know that you could do this job better than your incompetent boss? If so, this book is for you.  It details the struggle between the Technician, the Entrepreneur, and the Manager.

You are a skilled technician. You live in the present. You have work, you do work, you deliver work, you move on.  This is a valuable skill, but you want something bigger; now you’ve added the entrepreneur.  This person lives in the future.  He is what got you to leave the comfort of your old company and start out on your own.  He is the one that sees the vision of what your business could be.  You need him to go out and get the work, because without him the technician has nothing to do.  Now you balance your time between two jobs.  You spend some of your time selling/growing and some of your time performing the work you sold.  For you this led to an undesirable boom bust cycle.

As it turns out, the technician has a lack of appreciation for the other aspects that make your former company run, and if you continue to overlook these details, you will perfectly craft yourself a career dungeon.  As the book outlines, you start your company for the independence and flexibility, but those overlooked details will start to be required, and you’ll need to react.  So you hire another technician.  They may be as skilled as you, but they won’t quite do things the same way.  When you have just one or two, you can handle that and things get done.  You get a few more and the cracks in the system get bigger. Then, thinking to yourself, I need a manager to keep these guys in line!  The manager lives in the past trying to clean up messes.

So, now you have all of these people working for you, and you are working harder and you still aren’t making any more money than you made working for your former company. Additionally, the quality of your product or service drops due to a lack of systems and defined expectations. Furthermore, you didn’t start a company, you just made yourself a job! This place would fall apart without you.

Franchise Model

No one is suggesting that your shop should be the next McDonalds, however what Gerber and I are suggesting is that you run it like a franchise.  I can envision a company that is represented by a large stack of documents:  How you do everything in XYZ Co.  If you can document how your entire company operates, then you don’t have a job, you have a business, and a business should be an asset.  It should work for you.  You may have a job, but it shouldn’t be any more critical than other jobs there. When you want to open a McDonalds franchise, you get a large stack of documents and go through a lot of training that effectively says, “this is how we do it here.”  How do you do it at XYZ Co.?  If it’s not written down and repeatable, only you know. Then only you can run the company, then you have a career dungeon.  Did you want to build a dungeon?

Vision and Goals

As Gerber points out, when starting a company you should really sit back and think about your goals.  Not your business goals, but your life goals.  What do you want your life to be like?  Do you want to work 40 hours a week, make a decent living, have benefits, paid vacation, and insurance?  Or do you want to work 60 to 80 for the rest of your life, struggling to keep your company together, with little benefits, sacrificing your family life with no vacation, and if you leave for a week, it all falls apart?  The first example is where many entrepreneurs start.  The latter is where most entrepreneurs end up.  So what are you going to do differently?  Create a vision for your life.  If it involves starting a company, build an asset.  From day one, you need to think about how you are going to build your business.  Yes, you need to do this while you are still figuring out what your business is and how it needs to operate.  You need to slowly and interactively document how your company will do things and train your employees to follow the process.

 Action Steps

So, you still want to start a company, or you are in the early stages of one, and you don’t want to build a dungeon.  Here are my suggestions:

• Create job descriptions for every position in your company.  Not one person, one position.  If there are just 3 of you, you each may have 5 positions.  This delegates and assigns responsibility and you get a great idea of everything that actually needs to get done.
• Document how important things get done.  There are many little things and big things that happen in a company every day.  I suggest doing this iteratively.  Being proactive would be great, but I personally find that problems are more quickly solved reactively.  Plug the holes as they come up. When you have focused on a problem, you can document the solution and hopefully prevent it from coming up again.  Most quality standard systems have a continuous improvement process.  It doesn’t need to be perfect the first time.  Something beats nothing and done is better than perfect.
• Iterate and grow.  These are living documents.  Early on they will change often and you need to have ways of keeping everyone updated.  Also, as you gain a broader vision for the overall system, you can begin to be proactive in your process documentation.  

I fully suggest you find this book and read it, ideally, before you start your own company.  I’ve found extreme value in it even 15 years into my Product Development and Design firm.

On Amazon: Click here!

Also I’d like to thank Jason Zook for the term ‘career dungeon’.

History and description

The escape room game was developed in 2007 by 35-year-old Takao Kato, of the Kyoto Publishing Company in Kyoto, Japan. The game was exported and became extremely popular in many Asian countries, especially Taiwan, Singapore, and the mainland of China. In 2012, the physical escape room appeared in San Francisco and opened the new age of spatial adventure games in U.S.

Based on the concept of his earlier video games, Kato created the physical version of the game, where a group of 2 to 6 people are typically locked in a room, and must use their brains and critical thinking skills to solve a series of puzzles and escape within 60 minutes.  Players can book a particular room they want to play;  anything from a prison cell to a haunted room, ancient tomb, medical laboratory, or any other innovative ideas the developer can come up with.

Unlike many other games, the physical escape room requires participating teams to promote the necessary teamwork and open-mindedness to be able to play and complete the game successfully. Not only does it require teamwork, but also problem solving, communication skills, and even a good basic knowledge of math, physics, science, history, chemistry and geography would be helpful. The game sometimes leads players to experience intense emotions, including joy, anger and frustration while the game is being played. The combination of all these factors produces a most unique atmospheric adventure for participants, where they find themselves not only in the game, but in a real escape.

Why is it so attractive?

While the game was invented in Japan in 2007 and has only become popular here in the U.S. since 2014, it is still relatively new to the American entertainment industry.  According to the Google Trends, the current Interest over Time rate (IoT) of the keyword “Escape Room” in America is fairly high, increasing gradually from 2014 to 2016. It seems to have remained constant in those couple of years without any major declines. This data tells us that the game is generating a lot of interest among people over this two-year period.

It’s very challenging

Everyone who loves challenging puzzles should try it out. As mentioned earlier, the escape room demands many skills from players to win a game. They have to use nothing but their wits and their brainpower to solve all the riddles to reach the final destination. However, the riddles are sometimes very difficult and people have to wait until the end, when an instructor unlocks the door to give them answers they couldn’t figure out during the game.

It’s highly interactive

While there are many aspects of a good video game, people always seek the one that has human interactions between a player and the game’s characters. It means the player can use the main character to interact with the objects and communicate with other characters during a gameplay. The more interaction, the more interesting the game is.

Growing beyond a video game, the real-life escape room presents a higher-level interactive form. Players can physically interact with the real objects and directly talk to their teammates to figure out the solutions to escape. During the game, players are going to feel joy, fear, and frustration. This is the perfect combination to make this physical adventure game so much fun and interesting.

It’s a great team-building exercise

Teamwork is the key to escape room success. Without teamwork, you won’t be able to win these games. Breaking codes, finding keys, solving riddles, and decrypting combinations within a time limit are not simple tasks for a single individual, but require contributions from all team members. Team members should learn how to work and communicate effectively, so they can help each other in order to complete the tasks.

It’s generating memories

The escape room generates delightful memories. You will definitely have a good time with your friends and families, regardless of whether you win the game or not. Again, this game is a great team builder that creates a big chance for participants to get to know each other, understand more about the personalities, and most importantly, connect people with people.

Understanding the history, the original concept, and the attractiveness of the game can help you determine the way to recreate a better concept of the game. The escape room game is all about practicing teamwork and generating life memories. These two things are at the very core of creating the good escape room game, so they must go hand in hand. The more people who walk together through the game, the more life memories are generated. If you can create an escape room that allows a good human interaction and a good foundation for generating life memories, there is no doubt that people will come and play your game over and over again.

At Anidea, we have the capabilities to help you achieve these goals. Please check out our page for escape room services.

Embracing the concept of the Escape Game room and taking advantage of our capabilities in product design, Anidea was inspired by the evolution of the escape game room in the entertainment industry.  We promptly formed a new division creating escape game electronics and props to fulfill our clients’ needs.

Why has Anidea Chosen the Escape Game?

Background Experience

Anidea has been an expert in entertainment industry electronics for many years and we have all the resources and abilities to design and install all of our clients’ needs. From building props to designing full turnkey escape game puzzles, Anidea has a great advantage with our expertise in electronic design capabilities.

In the past, we had a chance to work on many projects in the entertainment industry, such as snow machines, fog machines, bubble machines, and special effect lighting controllers. As a result, our clients greatly appreciated our major contribution to the success of their projects.

It’s well-suited to our capabilities

The escape game room market is growing faster each year and it requires more involvement of creative people and better technology. We are doing a lot of designing of electronic puzzles to constructing metal props. To quote our chief product designer, Gabriel Goldstein, “We are born engineers and by nature like puzzles. We can build anything we put our minds to.”

It’s fun

Solving puzzles is hard. Creating puzzles is even harder, but putting puzzles together that match  the theme of the game room is the most challenging. Therefore, creating puzzles that meet requirements takes a lot of time, brainpower, and a flair for creativity. Even though it is a trying process, it is fun to see the final product, and to watch how people solve your riddles.

What we do for your escape room

At our new Division of  Escape Room Electronics, we have a wide variety of capabilities to tackle  customer challenges:

• Electronic Puzzle Designs: We can turn any kind of puzzle to be electrical, whether we use RFID, laser, sensor, etc. We can pretty much accomplish it with any system to replicate as puzzles are solved autonomously.

• Puzzle Construction: Build and design puzzles from raw materials, like wood or metal or plastic.

• Automation: Automate most any kind of puzzles. We can also make automated lights and sounds for the puzzles.

• Light/Optic Sensors: The latest trend! Using lasers either within the puzzle or as a part of puzzle, as additional flare, as an access control.

• RFID Detector: Create a system that detects the presence of tagged objects using the RFID. We can create a large network of sensors throughout the entire game, not just in isolated areas.

• Sequence Detector: The puzzles are revolved around the players solving puzzles by performing certain tasks in a sequence.

• State Detector: Puzzles that detect when everything is together in their solved states/positions.

• Access Control: Automation of padlock, keypad wire/wireless, etc.

Overall, there is no doubt that the escape game room is definitely growing bigger in the coming years. The game is truly a valuable ‘asset’ for people who have a strong passion for creating cool things, just like Anidea. We are the best choice for your escape room props and puzzle designs.  Please check out our new page for more information about our new division.

Thanks to a few brilliant minds over the course of the last hundred years or so, wireless technologies have become ubiquitous, but that hardly means they have become easy.  Yes, there are many options out there that make things ‘easy’, but those easy things come at a cost which involves compromises on cost and/or capability.                                                                                    

If they say, “Hardware is hard”, then “RF is FM” is freaking magic 

1. Define requirements
   
   

What do you need the wireless component of your system to do?  There are scores of protocols and technologies out there for wireless devices.  Most are familiar with the standard ones like Bluetooth and Wi-Fi, but even in each of those there are many components.  Also, the standard ones are only worth it, usually, if you need to communicate with other existing devices.  If you are creating your own system, and you don’t need to talk to phones or other networks, then a proprietary network can be a large cost savings.  

Range and battery life are other requirements that define which wireless system to use.  These two are usually at odds with each other.  Even when you don’t have battery life issues, there are maximum output power limitations that will affect range capability.  

2. Pick a protocol
   
   

As stated above, a key requirement is to define what other devices you’ll want to communicate with. These are divided into two categories, proprietary and standardized. Standards are great because you can talk to common and existing devices. However, they can cost more to implement and you usually have to pay a fee to use them. Proprietary protocols are great too, as you can choose components that fit your requirements. If designed properly, proprietary protocols can be as secure or more secure than standard ones as well. It all depends on what features are more important in your application.

3. Determine volume
   

Almost all engineering design tasks are haunted by the volume question.  Final product cost can almost always be driven down with volume. Of course, the catch is that while new products are being developed, the number of units that will be sold is mostly a guess at best.  All the market research in the world can lead the best and the worst companies to the wrong conclusions.  Take the best guess you can, be conservative, then be more conservative, and start there.  Once the market is validated, more engineering can always (and more justifiably so) be put into the product to reduce production costs.

One of the most common ways to reduce upfront costs when developing a wireless product is to utilize a module.  Sure they cost about 2 – 10 times the cost of the raw components, but they can save $10K to $300K in development and compliance costs.  For instance, it may make sense to use a Bluetooth radio system module for up to a few thousand units.  A cellular radio system module may be cost effective up to 50K units.

4. Choose a Country of Operation

Yep, where you operate a radio system matters.  Radio (wireless) emissions are regulated throughout the world (FCC in the USA) and the rules change everywhere.  Luckily, there are some common bands or frequencies that can be used throughout the world (thanks to the microwave oven).  The most common is 2.4GHz; this is where Bluetooth and Wi-Fi operate.  However, these frequencies aren’t the best for long distance communications.  900Mhz (ISM) is a band that is used in the USA for high power and longer range communications.   However, this same band is not legal in Europe and only parts are legal in other countries.  It can get complicated and these are just the open or public radio bands.  There are myriads of bands that are used for government, police, air traffic and maritime uses.

Keep in mind also that these regulations in various countries require compliance.  This means they must be tested by an independent lab that states that your device works properly, follows the rules, and plays well with others.  Compliance is a significant cost and is one of the major up-front cost savings when using a pre-certified module.

5. Specify
   

This is the hard work where the rubber hits the road.  You need to write down your requirements and be prepared to make compromises.  Items like range, capability, and overall system operation need to be carefully thought out, then validated with an engineer.  We are here to help you do this.  Check out our blog at 5 Tips for Writing Your Specification for Product Development for help writing your specification document.

Creating or adding wireless communication to a product is a complex task, but with the right help it can be a fairly deterministic process.  Carefully thinking about all of the parameters and requirements from a business and technical perspective is key to getting the right radio system designed and developed.  Also, the radio system is just part of your product design.  For more information about designing your electronic system, check out our e-Book below.

The Plan

It all starts with an idea!  You start doing research on your idea.  You read (our) blogs about invention and product development and get to work.  You validate your idea, talk to potential customers, and start to formulate a plan.  Now you begin to realize that this is going to take a lot of money.  The term ‘tooling’ keeps coming up and it is very expensive.  Then there is engineering, software, testing, development, and we’ve not even started to sell the product.  You are not a rich person, but you believe that if the world knew about this product idea, you’d be able to sell millions of them.

Now the fun invention project has turned into a business.  You are going to need significant outside money and resources to get this thing going. This is when you can’t help but turn to the exciting world of crowd funding.

The Myth

It looks so simple.  Make a video, post it on Kickstarter, and the money comes pouring in.  All you have to do is build it, ship it and you’re rich.  No.  According to Sally Outlaw of Peerbackers:

“70% of Kickstarter hardware projects are already funded before they go onto the platform…which means they usually already have angel or VC money behind them before launch”

Ouch!  Ask yourself, “Why would I launch my product on Kickstarter if I had angel or VC money?”  Because you need it when it comes to hardware.  Kickstarter and others are simply pre-sales platforms.  Yes, there are some success stories, many of them are from a few years ago before some of the rules changed.  I use Kickstarter as an example, but others have similar rules. 

There was a huge upset from the Pebble Watch Kickstarter.  In 2012, Pebble became the most funded project in Kickstarter history however Pebble could not commit to fulfilling their promises.  This caused Kickstarter to change the rules for hardware projects by requiring companies to be very honest about how far along they were in the development process.  Renderings are so impressive these days that products look real when they may only exist in a computer. The challenges of actually designing and manufacturing a working product had not yet been conquered and this caused a number of products to fail or deliver late.

The facts are that nowadays many of the most successful products launched through Kickstarter and other crowdfunding websites are mostly complete by the time you see them.  A common phrase to hear in campaign videos is ‘we just need to fund our tooling’ or ‘we need to gear up for mass manufacture’.  That basically means they are ready to go and want to make sure they can pre-sell enough to warrant the expenditure of hard-tooling and manufacturing setup.

Another important fact about the most successful crowd funded campaigns is that the real campaign starts before the Kickstarter one.  Crowdsource-ers network with the media and collect fans, followers and an audience before they launch their public campaign.  Nothing draws a crowd like a crowd, and these campaigns ensure they have a crowd waiting to review, talk, and fund before they launch. 

The Legends

Pebble

Pebble is a wearable electronics manufacturer launched in 2012.  I used Pebble as a failure example, but they ultimately made good on their promises and have managed to launch several more campaigns, albeit far more successfully and with less fuss.  In 2015, Pebble raised $20M for their Pebble Time product and is now shipping.

Coolest Cooler

This product takes your typical ice chest to the HNL.  It incorporates a blender, Bluetooth speakers, cutting board, and it holds ice too.  Originally, when the product launched in 2013, it was a failure.

“As most people who are first launching a project on Kickstarter do, you do some research, you put the product out there, and you hope for and secretly expect that because this idea is great, magically it will get funded,” Grepper said of his failed first campaign. “It was very disappointing.”

He tried again later, with better preparation and it became (at the time) the most successful Kickstarter campaign ever.  They still had problems delivering.

SkyBell

The world apparently needed a Wi-Fi doorbell.  This product raised $600K in 2013 on Indiegogo.  A big advantage with Indiegogo is that even if you don’t hit your funding goal, you can still get the money that was pledged.  Kickstarter is all or nothing.

Tips for a Successful Crowd Funding Campaign 

1. Find funding to get your product through the prototype phase. It needs to work and you need to have a clear path to manufacturing. 

2. Build your audience before you launch your campaign. Create lead generation pages and social media accounts. And don’t forget networking at off-line events as well to build your audience. 

3. Create relationships with the media.  Figure out who has an interest in the product and who is willing to write about it. Review other similar campaigns on Kickstarter and see which media outlets wrote about them.  Then add these journalists to your own outreach list. Media needs content , and if you have a good story, that helps too. 

4. Get a professional video. Unless you are an awesome videographer and editor, pay someone to make it shine. If you MUST shoot it yourself, make sure viewers can see you, hear you and that you are in an environment that makes sense (ie., film yourself in your work space while talking about the product, not sitting at your kitchen table). 

5. Hire a professional crowdfunding strategist. Many people have done this before.  Pay for their experience as it can be the difference between a wildly successful campaign and one that does not get off the ground.  One resource for this service is Peerbackers. 

6. Set a realistic goal – one that is the minimum you would require to take your product to the next level. Then outline stretch goals in your campaign narrative so backers will be motivated to continue to donate once you reach your initial target. It’s better to be successful with a smaller goal than to be unfunded with a larger one (this varies by platform). 

Good luck out there!

#1 The Marble Machine

Music and Engineering.  A mechanical wonder. This gentleman is part engineer and part musician (as Front man for the Swedish band Wintergatan), and plays this hand-crafted mechanical engineering beast like it’s an instrument. A circuit of 2000 cascading steel marbles activate a vibraphone, an electrical bass guitar, a built-in Turkish cymbal and other instruments. Incredible sounds and fun to watch.

#2. Bridge building machine

Got a bridge you need to build in place?  Necessity is the mother of invention.  We don’t know how else they would do this, but this machine is amazing in the way it can lift itself up and move things around to build a bridge, in place.

#3. 5-Axis CNC machine

Machining a crank shaft in one shot.  I’ll never be this coordinated.  Beauty is in the details.  Yes, it’s a long watch, but anyone familiar with the complexities of a crank shaft will appreciate the coordination of multiple axes working together to polish the journals.  

#4. Lego Mindstorms

#5. Tree Cutting Machine

Printed wiring board (PWB) is an older term used for PCBs.  It was exactly what it sounds like, it was a way to print wiring.  This term could still be used for very simple PCBs where the function is more for mechanical wiring than active circuitry.

A look inside a modern cell phone is a PCB that reflects the ‘work of art’ side.  It’s a finely crafted network of wiring and components, flexible and rigid PCBs which all work together perfectly to provide the functionality we’ve come to take for granted in modern technology.

No matter what your needs are, it’s important to realize that all PCBs are a combination of at least 2, if not more engineering disciplines.  Understanding what these disciplines are and how to specify your requirements are important aspects of getting your PCB done right the first time.  The disciplines are:

Electrical engineering – this is the obvious one. The goal is to wire electronic circuits together.  Of course we’ll need some electrical engineering.

Mechanical engineering – while perhaps not so obvious, we live in the physical world. We are wiring in the physical world so there are mechanical requirements to consider.  Some PCBs have very few mechanical requirements like put 4 holes in the corners.  Others move towards the work of art level, but most are in between.

Software engineering – Almost all PCBs these days have some level of software in them. If there is a microcontroller, then there is software.

Thermal engineering – Many times grand assumptions are made about the environment something will operate in. The environment something will operate in can change the design drastically. Specialties – If there are lights, then perhaps there is an optical engineer involved.

Other specialties can be involved just depending on what needs to be done.

Below is a How-to guide to help you communicate details of the PCB to your engineer for design of your circuit board

{{cta(‘c11f1602-72cd-4abd-be0b-41cfad610249’)}}

High Level Functionality – The first step is to write down what you want it to do.  You can start out with very broad definitions of your inputs and outputs and what it does.  Provide whatever level of detail you can.  Helpful aspects to think about are parameters like: 

Think about these types of questions and have an understanding about how it all goes together. Of course your engineer will be happy to fill in the gaps, but the more effectively you can communicate, the better chance of getting what you want and saving costs due to miscommunication. 

For more details on how to write a specification, please check out this article. 

Mechanical and Thermal Requirements – We know we need to understand the kind of space you want to put your PCB into.  Sometimes it’s as simple as ‘put it in this box’.  However, even that can lead to issues.  What about these questions:

Software Requirements – While many boards have very basic functionality like ‘turn this on when this happens’, other PCBs can have very complicated logic built into them.  In some cases, software can drive 75% of a PCBs design cost, and sometimes more.  Software is a double edge sword in modern day PCB design.  On the one hand, it offers extreme flexibility and capability to create complex functionality and control.  On the downside, all of the flexibility and control can lead to software never being finished.  If there is a new idea to implement, it’s likely you’ll be able to add it in to the software.  This is great if it means you can sell more of your product with a software change.  It’s not so great if changes are made haphazardly because software changes are ‘easy’.  A specification is very important for this phase.  Make sure you can answer these questions:

What does the software have to do in all cases? Not just in the main case, but in everything you want it to do.

Other Specialties – If other specialty engineering disciplines are required, specification and design can get more complicated.  Some companies, like ours, are familiar with LEDs where we can cover most of the requirements for a LED lighting project without an optical engineer.  However, there are other cases where complicated instrumentation may need to be researched or subcontracted for very specific design aspects.  Below are some examples of some non-standard engineering requirements.

In many of these cases, modules have been developed by 3rd parties that can help reduce the engineering requirements of the specialty work to the level of skilled engineer.  In some cases, it is the scientist who needs the PCB built and they can provide the first-hand expertise on how the other engineers need to interface to their specialty systems.

One more very important engineer that was not mentioned is the manufacturing engineer.  This isn’t necessarily a specific engineering discipline, but to consider how your PCB assembly will be produced.  Placing a surface mount component is cheaper than placing a through hole component.  (Machines do the surface mount work.)  There are scores of items to review to ensure high yield PCB development.  Many are standard practices, but the skill lies in the hands of the engineers building the board.
Printed circuit board development is a complex and highly skilled craft.  With all of the various skills involved, it is best completed by a team of engineers.  Sure, there are many design challenges that are small enough to be completed effectively by a single engineer in a reasonable amount of time.  However, as the saying goes, two heads are better than one.  Having an engineering team develop your PCB where there are design processes and reviews in place help ensure a high quality design for your product.

 {{cta(‘c11f1602-72cd-4abd-be0b-41cfad610249’)}} 

The costs of creating something. Engineers are generally the ones responsible for creating a product. Depending on what the product is, you could have industrial designers, mechanical engineers, electrical engineers, and software engineers. There are other specialties as well, but most products require these as the core.

Engineers are generally well educated and skilled individuals. People with this kind of expertise usually earn an excellent income. So there is a large human cost to product development. And it takes a lot of time, especially if you want it done right.

The costs of making it. Now that the design engineers have created and developed the product, it needs to be made, and you want it made in mass. While the engineers above could certainly make your product, it would not be cost effective.  Therefore, we need more engineers and resources to reduce the product cost by engineering the complexity out of the manufacturing process.  Only then can lesser skilled labor and machines manufacture your product and reduce overall costs. This can range from robot automation, to creating tools to stamp steel or injection molding plastic, to documentation for an assembly work station. This is all before you actually make the first production part. This is one of the single most misunderstood costs in product development. Then you have to actually produce it, which then requires additional raw materials (read costs) for your tools and your assemblers to actually produce the parts and products you need.

The cost of selling it. You’ve invested money into the engineering and the production. Now I am sure you did not want to fill your garage with copies of your product. You want to sell it. While there are many ways to sell your product, almost none are free. Whether it is traditional advertising, a pay per click campaign, or a crowdfunding platform, they all cost money. It will also take a lot of your time, or at least a lot of someone’s time. Factor that in.

The hidden costs. Ah, the unknown unknowns. This is why you go to experts. If you are starting a company, you may have regulations that you need to adhere to. For any electrical product you develop, you need to consider the FCC regulations. If you plan to sell into a big box store, you may need to adhere to a UL specification. Do you want to sell into Europe? You need CE specification. Does your product have Bluetooth? You’ll need to join their consortium. There are all sorts of hidden costs you may need to consider when selling and marketing your product. Some are governmentally mandated; some are industry specific. Research your industry and consult with experts to learn what these hidden costs are so you can plan for them.

The single biggest problem startups and inventors have is not understanding these costs. It is very common to look at a product on the market that costs $10 and expect that it can be designed and made for $1000. A single, simple plastic part can have a tooling cost of $5000 or more, and that is before the engineering or selling part. A good example is a home coffee maker you can buy for $100 (a nice one). It may have cost the company upwards of $500,000 to get the first one to the store shelves. They only make their money back because they are going sell 100,000 of them. You can see quickly here how volume plays a major role in what a product costs. Investigate and understand the costs of product development, then proceed accordingly.

Please check out my other blog posts Engineering Design Based on Volume and The Missing Link Between Prototype and Production for more information.