A few words on Million dollar baby

in kit biz, News by Ian | 7 comments

Adafruit gave a presentation at Foo Camp about businesses that make money selling open source hardware. We’re ecstatic to be included in the ‘approaching a million in revenue’ category with household names like Evil Mad Scientist Laboratories, Bug Labs, and DIY Drones.

It went down like this… pt sent an email to a bunch of open source hardware people. In our case, he asked if we might hit 1 million dollars in revenue in 12 to 24 months.

We immediately hit Wikipedia because we weren’t exactly sure what revenue means. Turns out revenue is total income, before expenses (revenue-expenses=profit). That’s a lot more realistic than a million in profit, but we haven’t even been doing this for a year.

A million in revenue is 33 thousand Bus Pirates, 22 thousand Logic Sniffers, or a load of USB IR Toys. It’ll take a lot to get there, but if we keep turning out an open source project every month for the next two years it’s conceivable we might do it. With a lot of luck and a bunch of awesome supporters.

The presentation has generated a lot of interest in our relationship with Seeed, and our light-weight business model. We’ll address these in more detail in an upcoming series of posts about the business side of stuff. In the mean time you can also ask questions in the new OS hardware biz forum.

The Dangerous Prototypes slide has us in the Netherlands, but we’re actually an  Iowa, United States based business (though some of the crew studies outside the US, and all manufacturing and fulfillment is done in Shenzhen, China). For more about the history of the Bus Pirate design you can read the BPv3 how-to, the preorder process we use with Seeed Studio is explained here.

Thanks to everyone who has bought a project, posted in the forum, or left a comment, your support is what makes this all possible.

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Comments

  1. Michal says:

    She mentioned “one man company” for DP. How many people are there running DP ? :) (just curious)

  2. Ian says:

    I run it, design the projects, and write the articles. It’s getting a bit overwhelming, so very recently I’ve been using proceeds from sales to hire help for some things I’ll never get to. I hired someone to write an open source USB stack, and someone to start the port of uIP to the web platform, for example. Great projects, but I’m never going to have time to site down and do it myself.

    The editorial ‘we’ used on the site is just a carry-over from other blogs I wrote for before starting DP. Hack a Day, for example, always uses ‘we’, even though it’s just one person writing the article. It’s also nice not to see articles littered with ‘I’ this-and-that :)

  3. I respect you beyond any measures for runninng this whole operation, Ian. You’re a true Open Hardware supastar in my eyes.

    Keep it going and I wish you further great success!

  4. Luke S says:

    So if you don’t mind me asking how do you make money? Do you get a cut from every board sold on seeed? But good work on making the “moneys”

    • Ian says:

      DP gets a couple dollars from each of our projects that sells at Seeed (and Adafruit). I set the price for the projects, so ‘the sky’s the limit’. My goal is just to share the open source hardware fun with other people though, so I try to price things where I’d buy them myself. That’s usually just a few bucks over the actual cost (depends heavily on volume!).

      The big problem with this is when distributors approach about a project. They usually want 20-40% discounts off list price. For most projects, that’s less than my actual cost to have the stuff made. This sends most distributors running, and 90% of the time I never hear back from a distributor after I explain the situation (even if I’m willing to sell stuff at cost, just to get the name out there). One exception is Adafruit, who has been really awesome and supportive, and carries the Bus Pirate.

      The solution to the resale problem is to increase project prices to 50%-100% over the actual cost, then there’s room for distributor discounts. That’s not what DP is about though, and that is certainly not reflective of the quality of projects I put out :)

      My goal is to do the same thing I did at Hack a Day, DIY Life, Instructables, etc – make electronic prototypes that interest me. Except with Seeed’s help, people can now get an assembled copy for (usually) slightly less than getting all the parts yourself.

      As this has grown, however, and the volumes get larger, it’s getting way more complicated than that. There are increasing demands for a commercial quality product, and more people to disappoint when there’s a problem. That’s started to paralyze me a bit, there hasn’t been a new project for two months (Bus Pirate upgrade doesn’t really count). I’m getting mired in revisions, tests, quality control, etc. All of which are fine, but not consistent with the current pricing of DP projects.

      All of the meta stuff has me thinking about the mission, direction, and goals of Dangerous Prototypes. I really want to get back to the monthly project and not worry about the consequences :) I’m considering a series of badges for projects that range from ‘Don’t buy this, untested’ to ‘multiple revisions, works pretty well’. Each level would have specific support and repair policies.

      Sorry for the long reply. I’m sketching the articles about the business side of things and your comment made me reflect on some of these issues that I’ll be addressing. Look for this comment to be recycled (in the editorial we, of course) in those articles :)

      • What you’re doing is not that far away from entrepreneurship, except you don’t think like an entrepreneur, but a fellow DIYer.

        You try to keep the prices as low as practically possible for the hardware to be accessible by the largest pool of people, but you’re starting to see that quality control and related issues take more and more of your time.

        I personally would buy your hardware if its cost was 50-100% higher because I think that your stuff is awesome and lastly but not leastly I wanna own (hack) the hardware I have, so I always perfer Open Hardware.

        You’ve already done the hardest part: creating the hardware. All the other tasks, like quality control, handling most support issues, writing a printed manual, designing a box and creating a dedicated consumer site could be delegated.

        On one hand I can perfectly understand the DIYer view that you represent. On the other hand I think that you’re wasting your time on issues that should be handled by some people who are more specialized and less creative. That way you could contentrate better on what you love best which is probably research and development in your case. That would ultimately benefit everyone, I believe.

        I’d love to see Open Logic Sniffer and Bus Pirate taking over all the closed commercial products in their arena. Yeah, that would make my day! :)

        Laci

  5. Chris says:

    I have to hand it to you, you are doing a very impressive job. After viewing your site it motivated me enough to start my own. It will never be even half as useful as yours is [especially with university the way it is] nor do I expect it to have a large number of original designs. It is more of a build log for various projects I am working on. There is also a few just idea’s I had of projects I would like to develop.

    I am curious how you managed to start writing for Hack A Day, and other WebPages or blogs? I secretly [or not so secretly anymore] always liked the idea of doing that my self.

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