preparing for crowdfunding - makercon 2014 - may 13, 2014
DESCRIPTION
In this presentation, Dragon Innovation will provide an overview for how to prepare for crowdfunding. This presentation was given at MakerCon in May 2014. Topics will include: - Product Development - The Old Way: Build then Sell Share the presentation here: http://bit.ly/Dragon-MakerCon-Crowdfunding About Dragon Innovation Dragon Innovation works with entrepreneurs to launch hardware products and scale companies. Founded by a team of hardware experts, Dragon provides a clear path from prototype through production with unmatched manufacturing expertise and trusted connections. Dragon's client roster includes Coin, MakerBot, LIFX, Scout, Romotive, Sifteo, Orbotix, FormLabs and over 100 more companies paving the road for how new technology gets made. Connect with Dragon Innovation Website: http://www.dragoninnovation.com Blog: http://blog.dragoninnovation.com Twitter: http://twitter.com/dragoninnovate Slideshare: http://www.slideshare.net/dragoninnovation/TRANSCRIPT
![Page 1: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/1.jpg)
DRAGON INNOVATION, INC. !
PREPARING FOR CROWDFUNDING !
MAY 13, 2014 MAKERCON 2014 | REDWOOD CITY
!!!!!
SCOTT N. MILLER | CEO | @DRAGONINNOVATE | WWW.DRAGONINNOVATION.COM
![Page 2: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/2.jpg)
No Need To Take Notes
<<Slideshare Link>>
![Page 3: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/3.jpg)
Product Development !
The Old Way: Build then Sell
3
![Page 4: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/4.jpg)
Woohoo!!!
4
![Page 5: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/5.jpg)
Agenda
5
Arrgh!
![Page 6: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/6.jpg)
Product Development !
The New Way: Sell then Build
6
![Page 7: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/7.jpg)
Hardware Wave Enablers
• Nearly Ubiquitous High-Speed Wireless Access
• Unprecedented Global Technology Innovation
• Fearless and Connected Entrepreneurs & Consumers
• Available Capital • Inexpensive Devices, Access & Apps • Ability to Reach Millions of New Users in
Record Time
KPCB DECEMBER 2012
![Page 8: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/8.jpg)
PROTOTYPING HAS NEVER BEEN EASIER
• 3D Printing • Arduino, Raspberry Pi, Beagle Bone • TechShop • GrabCAD, Upverter, GitHub • SparkFund, Adafruit • Easier Access to Capital
![Page 9: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/9.jpg)
CROWDFUNDING IS FUEL ON THE FIRE
•Raise capital upfront •Validate product / market fit •Create engaged & passionate community early •Get the attention of media and investors •Understand build volumes
New transactional model is perfect for hardware
![Page 10: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/10.jpg)
Delivering Is Hard
Getting from prototype to delivery is a long journey with many ‘unknown unknowns ’: •COGS, tooling and manufacturing costs •Lead times •Permanence of Quality •Iteration cycles •DFMA •Factory Selection and Management •Team Scalability •Schedule & Project Management •Specialized skills (ME / EE / SW/ Q / SC / Logs)
![Page 11: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/11.jpg)
POP QUIZ
Question: What is the biggest challenge in manufacturing? Answer: Communication! You cannot design in a vacuum (even if you design vacuums). Strong communication and teamwork skills are critical to success. Engineering is team sport. It’s all about the people. “Us” and “Them” won’t work.
![Page 12: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/12.jpg)
Communication At Work
Bi-Directional Knowledge Flow
Product Designed In U.S.A. Database Sent To Cm Tooling Manufactured
Parts Molded Product Assembled Final Inspection & Shipping
![Page 13: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/13.jpg)
![Page 14: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/14.jpg)
75% OF CROWDFUNDED
HARDWARE PROJECTS DELIVER LATE OR
NOT AT ALL !
!PROF. ETHAN MOLLICK, UNIVERSITY OF PENNSYLVANIA / WHARTON
![Page 15: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/15.jpg)
15
BE CAREFUL YOU DON’T SELL
SOMETHING YOU CAN’T BUILD
![Page 16: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/16.jpg)
16
•COGS & Tooling Estimation •DFMA •Funding Threshold Calculation •Production Strategy & Scheduling •Marketing Strategy •Connections
![Page 17: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/17.jpg)
Manufacturing Management Triangle
Quality
Cost
Schedule
![Page 18: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/18.jpg)
Cost of Goods Sold (COGS)
• Direct costs for goods produced. • Does NOT include Tooling. • Actual price depends on where a
company takes ownership: - Ex-Factory (XF) - FOB (add overland transport to
XF) - Landed (add shipping to FOB) - Inventory (add warehousing)
• Price will vary by date depending on running changes, transportation costs, currency exchange, commodity costs, etc.
![Page 19: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/19.jpg)
Very Simple Retail Costing Model
$
Sell-Through Price (Retail Price)
Sell-In Price (Wholesale Price)
COGS
Retailer Gross Profit
Company Gross Profit
COGS
![Page 20: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/20.jpg)
COGS YOUR DESIGN
• Material and Component Selection
• Fabrication Method • Manufacturing Efficiency (First
Time Yield, machine tonnage, assembly labor, number of operations, etc.)
• Quality Requirements (driven by requirements / Voice of Customer)
• Packout (replaceable vs. rechargeable batteries; packaging; spares, etc.)
MANUFACTURING PARTNER • BOM Transparency • Profit Margin • Labor Rate • Currency • Geographic Location (shipping,
tariffs, etc.) • Capability (in-house vs.
outsourced) • Supply Chain (Purchasing Power,
volume (piggy back), Consigned vs Purchased, etc).
![Page 21: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/21.jpg)
Controlling Costs
1.Deconstruct the BOM. 2.Separate special components. 3.Transparency 4.Compare to standards. 5.NegoAate Inclusions
![Page 22: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/22.jpg)
Additional COGS Strategies
Cost
•Bill of Material Transparency: Require factories to provide an item by item costed BOM. No mysteries or hidden formulas.
•Calculate labor rates. Pop Quiz – How???
•Build a “Standard Cost” database. Price out cost reducJons.
•If Jme permits, develop relaJonships with mulJple vendors to avoid single source suppliers. Leverage is a beauJful word.
•When manufacturing in volume for a CE product, it is criJcal to understand and control COGS. Focus here! Because of the volume, every penny counts ($10k @ 1M units)
![Page 23: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/23.jpg)
1
19
34
14
11
1328
20
221721
36
30
37
10
24
1812 23
5
25
2915
166
897
2
35
34
13
26
33
31
ITEM NO. PART NUMBER DESCRIPTION QTY.
1 100132 Heatsink, Aavid 60520 12 PCB 1
100104 Circuit board blank 1 100015 LED, Luxeon LXHL-LW6C 1
3 GATE 1 100110 Film Gate 1 100011 Backgate 1 100024 Film Spacer 1
4 Bottom 1 100144 Bottom Plate 1 100029 Leaf Spring 2
5 Knobreel 2 100106 Cover Bush 1 100151 Dowel .125 dia 2.000 long 1 100009 Driver 1 100153 Gripring .125 dia 1 100149 Knob bush 1 100007 Clutch, one-way, Torrington RC-02 1 100152 Washer, ss .125 id, McMaster 98019A310 1 100017 Knob, plastic McMaster 7354K15 1 100045 Felt washer 1
6 Reel 27 condentube 1
100031 Condenser lens, small Fisher Price 1 100105 Condenser Tube 1 100154 O-ring Buna -120 1 100035 Retaining ring, internal 1.062 dia 1 100031b Condenser lens, large, Fisher-Price 2
8 100162 Spacer, condenser lens, short 19 100136 Spacer, condenser lens, long 1
10 100163 Spacer, projector, short 111 FHMS Phillips M4x20 812 PHMS Phillips M4x8 613 PHMS Phillips M4x6 514 PHMS Phillips M5x16 815 FHMS Phillips M4x12 616 PHMS Phillips M4x12 117 PHMS M4x8 618 100150 Endplate, Right 119 100160 Endplate, Left 120 100100 Front Plate 121 100138 Projector Lens Housing 122 100148 End Spacer 223 100145 Top Plate 124 100158 Window Edmund R39-773 125 100146 Handle 126 100161 M5 Acorn Nut 127 100147 Half Bridge 128 100012 Focus Screw McMaster 92558A170 129 100143 Spacer, .25 dia, .19 long 430 100156 Spacer, projector, long 131 FHMS Phillips M4x8 232 100150 Washer, Nylon, MSC 05401757 133 100159 Detent 134 100101 Bumper, rubber McMaster 9540K35 835 100039 Switch, SPST rocker Carlingswitch 136 100155 Projector lens, concave 137 100157 Projector lens, plano 1
D
C
B
AA
B
C
D
12345678
8 7 6 5 4 3 2 1
APPLICATION
DIMENSIONS ARE IN MILLIMETERSTOLERANCES: 0,1MM ANGULAR: 0 30'
MATERIAL
FINISH
DRAWN
APPROVED
DATENAME
TITLE:
SIZE
BDWG. NO. REV
SCALE 2:5
UNLESS OTHERWISE SPECIFIED:
KINKAJOU DELTA100141
DO NOT SCALE DRAWING
REMOVE ALL BURRS AND SHARP EDGES
allen 21july04
Anatomy of a BOM• Plastic • Purchased Parts • Electrical Components • Consigned Components • Deco • Packaging • Assembly Labor • CM Profit, Overhead and Scrap • Overland Transportation
![Page 24: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/24.jpg)
• Does it matter that it is a gear???
• Components (3) 1.Material Cost = Part Weight * Resin Cost 2.Machine Overhead: = Hourly Cost * Cycle Time (sec) / (3,600 sec / hr) 3.Factory Mark-up, Scrap and Overhead (%)
• Total Part Cost: = (Material Cost + Overhead Cost) * (1+Factory M/U)
How to Calculate Plastic
![Page 25: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/25.jpg)
HK Resin Prices (USD/Ton)
Reference: http://www.nhh.com.hk/eng/trading/price_trend.asp (you will need to create a login)
![Page 26: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/26.jpg)
Item Cost (USD)
280 Ton / hr $15.48
220 Ton / hr $10.96
180 Ton / hr $8.38
140 Ton / hr $7.09
100 Ton / hr $5.80
80 Ton / hr $5.16
Example PRC
![Page 27: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/27.jpg)
How to Calculate EE Costs
• Cost = Component * Usage • Separate high cost components over a certain
threshold. Apply a lower mark-up. • Apply Factory M/U
![Page 28: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/28.jpg)
Typical PRC CM Margins (Profit, Scrap, Overhead)
PCBA 6–8%
Toys 12%
Consumer 15%
Medical >40%
![Page 29: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/29.jpg)
Other BOM Costs
• Deco (Tampo, Paint, etc.) • Labor (PRC $2 – 6 / hr) • Packaging (Gift + Master)
![Page 30: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/30.jpg)
Add It Up
• Plastic • Purchased Parts • Electrical Components • Consigned Components • Deco • Packaging • Assembly Labor • CM Profit, Overhead and Scrap • Overland Transportation
![Page 31: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/31.jpg)
Agenda
31
Q&A
![Page 32: Preparing for Crowdfunding - MakerCon 2014 - May 13, 2014](https://reader033.vdocuments.us/reader033/viewer/2022051412/54bbf8b94a7959de458b45f7/html5/thumbnails/32.jpg)