Thursday, 4 July 2013

Hardware Meetup in Brighton

I went to the first (hopefully of many) Hardware Meetups in Brighton last night. It was both an interesting, but - sadly - slightly demoralising evening. There were four speakers and the evening was billed as follows:
If you're interested in the future of manufacturing, being a pro or semi-pro maker, and making a living, by making what you love ... join us for the first Hardware Startup event in Brighton.

BuildBrighton's own Jason Hotchkiss was one of the speakers, explaining how he has taken the step from working full-time to becoming self-employed by selling electronics kits online.

Also speaking was Alice Taylor, inventor behind the Makie Lab and dolls

... as well as Andy Huntington of BERG, talking about his miniature thermal printer called LittlePrinter

... and David Stoughton, a digital futures consultant and advisor.
David inspired us with news that the micro-business (one-man bands and groups of three or four people) was the fastest growing sector in the UK economy. Digital products have the most potential over the coming years. But then, rather peculiarly at a meeting aimed at hardware makers, he went on to say that purely digital (ie software) based businesses were better placed to thrive, grow and become "scaleable" and this was were the opportunity for business lies.

The other three people who actually make stuff had interesting stories and were all local start-ups, on the face of it. But they all had something in common, each to a lesser or greater degree - and that was outsourcing the actual manufacturing.

Jason does the least of the three - getting PCBs made in China for a fraction of the cost of having them made locally (by a UK-based company - though not as cheaply as printing and etching them at the local hackspace!). He sources all the components online (although these too most likely originate from the Far East, such is the nature of the electronics supply chain) but actually puts in the assembly work himself. Having sourced the components for his products, he doesn't use cheap overseas labour for assembly and manufacture - he's in there, rolling up his sleeves and doing the manual work to actually produce a product for someone to buy.

What's nice about Jason's business is that it acts like a small-scale start up: that's not a bad thing - quite the opposite in fact - in that he sources materials, makes something himself (with his own hands, assembling and packaging his electronics kits) and sells a product for a profit. The perfect "classic" business process!

Andy started out telling us about his miniature thermal printer, LittlePrinter: a high-end product that users either love or hate. For those who hate it, they would never be converted to customers; but those who love it are quite prepared to pay a high-end premium for one of his little printers. He mentioned a retail price of about £200. It seemed a little steep for what the final product actually does, but his customers are prepared to pay this premium. His first production run was "only" 1,000 units - so each customer was buying into a limited edition product too.

But this is where it started to get a little bit depressing.
Because Andy then showed us photos and slides of  his visit to China, to see the tools being made and the factory set-up. He explained about the £15k cost of getting a 650kg lump of aluminium formed into a mould for injection moulding and about the repeated iterations of production, as the factory kept changing the spec and finish of the prototype before they could go into production. It was a bleakly familiar story to everyone who has had products manufactured in China - you give them one thing and a whole set of plans, they agree to make it, and what comes back is completely different.

The short version of his tale is that they successfully sold all 1,000 units, learned a lot about manufacturing along the way and made a few quid to boot.

But Andy's story sounded like it was more about the learning experience of dealing with a factory in China - not actually getting a product manufactured and out on the shelf. Because the final cost of producing each little printer was somewhere in the region of about £100 (and that's why they had to sell at a premium price of £200).

And all the while, I was thinking that the finished product is still an injection moulded bit of plastic with some clever electronics inside it.

What an amazing product could have been manufactured, locally, for £100?
With an order book of 1,000 units, they could probably have employed the services of a few local artisan cabinet makers, and used really good quality materials - had a hand-polished finish, exotic looking materials, customised each individual printer.... the end product could have been so much more exciting.
Even if the thing had cost £150 to manufacture, is £200 a price-break point?
Would someone willing to pay £200 for effectively a high-end novelty item suddenly baulk at £250? Why was the default option to go to the Far East first? (Andy had the electronics made in somewhere like Singapore - and more electronics companies are finding that even China is not the cheapest place on the planet to get things hand-assembled).

But when the alternatives to manufacturing overseas are considered, it's the loss of skills and opportunities back home that are most depressing. Firstly, and most obviously, is the lack of work - outsourcing manufacturing means fewer people need to be employed locally. But worse than this, is the lack of opportunity: the inability to pass on skills and ideas to the next generation, because our current crop of artisans and skilled people aren't getting the work to enable them to teach their skills to anyone else.

If these printers were made in the UK, someone assembling these printers would have had an opportunity to learn new skills - to be introduced to electronics and even just soldering; to learn that when something doesn't work as expected, it can be debugged and fixed. People making the enclosures could teach either hand-crafts (if it were made from a natural material, such as wood) or more technical skills, like how to use a cnc/laser/3d printer to the next generation of micro-business entrepreneurs.

While I'm sure the whole process was very exciting for Andy and his friends, I can't help but feel that they missed a trick - for such a niche product, at such a high retail price, having a (let's be honest about it) cheap bit of injection moulded plastic as an enclosure seems like a missed opportunity.

Alice told us all about the dolls and how their business had exploded from just an idea 12 months ago, to being on the verge of featuring in major toy stores across the UK, and even opening her own retail outlet in London.
The original idea was a website where people could design their own fully-articulated dolls, and they would be 3d-printed and sent within a few weeks.

So far, so good. These dolls, too, are sold for a premium price (about £60) because the cost of production was so high (about £45 per doll) and each took a long time to print.
Alice explained how she won a grant from the local bank and had to match the funding of £100,000 (which they managed) and bought a super, top-of-the-range 3d printer. It sounded like the perfect example of how to start up a business in the hardware/technology sector.

But then talk turned to scaleability, growing the business and investment funding.
Alice admitted that this is very difficult to achieve - but with a lot of determination, and a few lucky breaks, is possible. To date, Makies has received three rounds of funding, to grow very quickly. Little was discussed about what this has done to the company, what is needed to pay it back, how the business could have grown without this investment etc.
Then there was talk of having pre-made body parts for the dolls, which - once again - means going to China, getting tools made, injection moulded parts and so on.....

The talk was great for people aspiring to set up and run massive globally competing companies. It was quite inspiring to see what other people have managed to achieve from a design on the back of a fag packet, to a professionally manufactured retail product at the end of it.

But two of the three gave the impression that at the core of the business was money. As stupid as this sounds (since businesses need to make money to survive) it would be easy to leave the meeting with the idea that without a massive cash injection, and access to overseas manufacturing, hardware start up projects would struggle to get off the ground. And this seemed rather "old-school" for a meetup group to discuss the future of business in general, in hardware specifically, and how recent technological advances can be used to aid businesses. For all the talk of factories, manufacturing, capital investment and all that, there was only one person who addressed how to actually get a (hardware/tech) business up and running, in a way that is available to all.

For me, the most inspirational speaker of the evening was Jason.
He said that he took and idea, spent $20 on getting some PCBs made up and got ten orders in for his product. For an initial outlay of about £50 he made and sold his first batch of products, which gave him the money to buy components for more kits. He made the whole process accessible - at the end of his presentation, you genuinely believed that this was possible for anyone with even the most meagre of start-up funds. Of course, he's not living the lavish lifestyle, flying over to the other side of the world, nor (I'm sure he won't mind me saying) making a fortune from his business. But he's got the basics in place - he bought something, added some value, and sold it at a profit.

He's making stuff with his hands - not outsourcing it (all) and in return, has kept his start-up costs low enough for his model to be copied by anyone with a bit of know-how and inclination. I think that this model - rather than the VC/investor funding route - is the way that businesses of the future should - and will - thrive.

Just as every corner shop can't (and probably shouldn't) aspire to be the next Tesco's, sometimes there's a lot to be said for filling a niche, serving a relatively small community (whether in interest or locality) and just making a living. In the UK, we used to be called a nation of shopkeepers. Maybe sometime soon, with Tindie, eBay and etsy, we will be again?   

1 comment:

  1. Great summary Chris. Looking forward to talking to you again about how we make local manufacturing possible in Brighton.