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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/
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DRAGON INNOVATION, INC. !
PREPARING FOR CROWDFUNDING !
MAY 13, 2014 MAKERCON 2014 | REDWOOD CITY
!!!!!
SCOTT N. MILLER | CEO | @DRAGONINNOVATE | WWW.DRAGONINNOVATION.COM
No Need To Take Notes
<<Slideshare Link>>
Product Development !
The Old Way: Build then Sell
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Woohoo!!!
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Agenda
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Arrgh!
Product Development !
The New Way: Sell then Build
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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
PROTOTYPING HAS NEVER BEEN EASIER
• 3D Printing • Arduino, Raspberry Pi, Beagle Bone • TechShop • GrabCAD, Upverter, GitHub • SparkFund, Adafruit • Easier Access to Capital
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
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)
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.
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
75% OF CROWDFUNDED
HARDWARE PROJECTS DELIVER LATE OR
NOT AT ALL !
!PROF. ETHAN MOLLICK, UNIVERSITY OF PENNSYLVANIA / WHARTON
15
BE CAREFUL YOU DON’T SELL
SOMETHING YOU CAN’T BUILD
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•COGS & Tooling Estimation •DFMA •Funding Threshold Calculation •Production Strategy & Scheduling •Marketing Strategy •Connections
Manufacturing Management Triangle
Quality
Cost
Schedule
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.
Very Simple Retail Costing Model
$
Sell-Through Price (Retail Price)
Sell-In Price (Wholesale Price)
COGS
Retailer Gross Profit
Company Gross Profit
COGS
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).
Controlling Costs
1.Deconstruct the BOM. 2.Separate special components. 3.Transparency 4.Compare to standards. 5.NegoAate Inclusions
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)
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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
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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
• 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
HK Resin Prices (USD/Ton)
Reference: http://www.nhh.com.hk/eng/trading/price_trend.asp (you will need to create a login)
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
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
Typical PRC CM Margins (Profit, Scrap, Overhead)
PCBA 6–8%
Toys 12%
Consumer 15%
Medical >40%
Other BOM Costs
• Deco (Tampo, Paint, etc.) • Labor (PRC $2 – 6 / hr) • Packaging (Gift + Master)
Add It Up
• Plastic • Purchased Parts • Electrical Components • Consigned Components • Deco • Packaging • Assembly Labor • CM Profit, Overhead and Scrap • Overland Transportation
Agenda
31
Q&A