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Topic: State of DP, 2011 (Read 12492 times) previous topic - next topic

State of DP, 2011

[quote author="dpropicweb"][quote author="ian"] @100 they're 4.80 - what should we charge?[/quote]

$7 seems good value to me. I'd certainly buy one at that price for my BP even though I have a couple of PICkits.[/quote]

I think 7 is good; because at that price you have to get shipping (under 50) so it will end up being >10$ prolly more like 15-20$ :/ just because all you use is SEEED in china for some reason... I wish you had an american factory... I hate buying from SEEEED plus there checkout system (creditcard99.com lol or whatever) seems shady; why not use PayPal or somthing trusted; There is weird; they dont even have a good domain name; they added 99 to it....

I dont understand why you dont find a differnt factory, closer to you. and purchase them yourself and sell through your site? Why do you middle man with SEEED? Or you should atleast have like half the order shipped to you; then sell that half to USA customers and asia customers can buy from SEEED or something. I would like that!

Re: Re: Where to got a PicProgrammer adapter for BusPirate?

Reply #1
This is a great discussion and I'm going to split it to another thread. Thanks everyone for the questions and the answers.

Here's some thoughts about how we (I) run the business.

First, I will say up front that we are totally tiny :) Most of what we do can be attributed to lack of resources - mostly time, but also money. That is how every business is, so I'm not whining or complaining, actually it's a ton of fun and I love every second of it. This operation is run on a shoestring and a prayer though for sure ;)

DP owes its complete existence to Seeed, and the Bus Pirate was a part of building Seeed's reputation. Eric and I grew our business together in a mutually beneficial way, and it is a relationship I value and depend on. Without seeed there simply would not be a Dangerous Prototypes in the current form. I would still be hacking projects, but you wouldn't be able to get a copy :)

I was Seeed's first cooperating designer and we forged this approach to open hardware together - harness low cost parts and labor in china to help spread low volumes of open hardware to a wider audience. My favorite thing is designing hardware and hanging out with you guys in the forum, Seeed does the boring stuff like putting things in boxes, mailing them (logistics), securing a website, payment processing, component inventory (ERP), returns, legal compliance, and all that jazz.

DP is owned and run by an Iowa company called Where Labs, LLC. I was a poor student and started it with my last $500 (last USD, not Euros mind you, I haven't lived on rice and beans since Hawaii...), $50 for the LLC license, $400 for the first 20 Bus Pirates, and $50 to open a bank account. It's based in my parent's woodworking shop, where I have a small office with access to the legally required company documents. I spent 13 years in university living all around the world and my folk's house is still my only permanent address... Amsterdam is sort of where I ended up last, but it is not a permanent setup (it's quite possible I'll pack up and move to Tokyo next week, but that is another thing ;) ).

In terms of our team, for a long time it was just me and my kitchen table, and I still do most of my tinkering in the dining room of my apartment. A bit over a year ago I hired Lynn to do bookkeeping (from her home, 5000miles away), but she is super motivated and awesome and took on a ton of other stuff too like blogging, the free PCB store, and more. Then later I hired a couple engineers to help with PCB design and routing for 5-10 hours a week. Just a few months ago Filip, a forum member, came to work with us full time doing documentation and design. Our lead part-time engineer is going to start working full time in January, so we will have more full time staff than ever and are growing in fast in the primary money making part of the business. There's been a number of other full and part time people, paid volunteers (stipend-ed), etc, in there for other stuff like coding, server management, blogging, etc. Everyone is all over the world - US, EU, Asia, etc. I have never actually met any of the crew, though I have gone out with one of our stipend-ed volunteers a few times.

Quote
Really the best solution, and im sure everyone would agree, is Ian needs more distributors.

This is a double edged sword because distributors want so much discount, and at our tiny volumes we can't give it to them. Wholesale takes 75-80% of my profit from a Bus Pirate, and likely takes away from more profitable Seeed sales. Our sales at seeed double when adafruit is out of the Bus Pirate. Wholesalers are also customers, so if something goes wrong I have to deal with angry wholesalers. Due to some recent events I've really considered ending all wholesale because it is so much hassle with so little payout.

As it stands, all our distributors have approached us and asked to sell our stuff because it is so cool ;) Lynn compiled a list of new distributors to target based on some sneaky research we did. I ordered huge batches of our popular stuff in anticipation of a reseller push, but then we grew a bit last quarter and most of our stock went to our own sales and existing distributors. 

In terms of selling it myself - we're just not there yet. We have very little overhead, and I tend to change countries quite frequently, so I am not in a position to manage logistics or ERP. You can bet I've run the numbers though, and while DP could become a physically larger operation, I don't see any opportunity for additional [s:]revenue[/s:] profit until we have 3 or 4 times as much well-selling stuff. Seeed is doing their part at prices I could never compete with, the only reason to take on those responsibilities is for more control and to service US customers directly. There are a number of other options I've considered, like importing from Seeed and doing amazon fulfillment, starting my own shipping company out of a shack somewhere with no minimum wage (WY, TX?) and being a Seeed reseller, etc. The bottom line is I can't find money in it yet, and it would take 6months to a year away from our core profitable activities. You are obviously right though, this probably isn't a business model we can follow forever.

In terms of building it myself - we're not there yet either. We could contract the big stuff like Bus Pirate @1000+pcs, but most of our stuff is on 100s and nobody will bother with us. I haven't found anywhere that beats seeed prices, and they do fulfillment too for that price (all the running the store junk). Nate at SparkFun and I compared prices on the Bus Pirate, and he couldn't believe I was buying them (with fulfillment) for close to what it costs SFE just to build one.

We could go P&P, but that is a whole other can of worms. In my open hardware manufacturing presentation I always take a second to admonish people not to buy pick and place machine and start a garage assembly line. It's a cool machine, but it eats up 6months to a year of core profit activities to get it setup, and you only get an extra few cents per board for that investment. I know now of dozens of people world wide who went this route and became a slave to the P&P instead of building their business, and lost a ton of momentum. Every time I give this presentation someone tells me afterwards that they fell into this trap too. Adafruit likely had millions in revenue before buying a P&P, and I don't know how much they actually use it. Seeed bought a P&P (multimillions in revenue a year), and Eric says they don't really use it because it's faster, cheaper, and cleaner to send it to a pro assembly house. SparkFun has 2 P&Ps @ 32million revenue, Bert and Ernie, and their buyer (Pete, I think) also told me they are sending things out whenever possible instead of using their P&Ps. We're riding at just about (maybe we break it?) $1million in revenue this year (profit is only a tiny fraction of that), until we get to $10M I wouldn't seriously consider a P&P, even then...

I kinda lost where I was going, so I'm gonna post this now :) I hope this gives a bit of background to anyone interested in DP and how/why we do things.

Here's my goal for the next year:
*Find assembly help so I don;t have to build every single prototype, that is a huge bottleneck
*Find graphics help (forum icons, logos, banners, example diagrams for the docs). I want cool artwork
*A really good looking landing page and sales pages for our projects, this is in progress to some extent with the work Sven has been doing
*Refine the existing big sellers with better illustrated docs, logos on PCBs, cases, accessories, PR, etc
*Quadruple the breakout hits from 2011 (2-4 so far) using our expanded full-time crew
*Team up with hackerspaces, provide them whatever resources we can. A couple secret plans in progress here :)
*Do actual PR - try to arrange interviews before going to the different faires
*Develop a 50 year plan
Got a question? Please ask in the forum for the fastest answers.

Re: State of DP, 2011

Reply #2
I split this off from the original thread here:

viewtopic.php?f=38&t=1042&p=32055#p32055
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Re: State of DP, 2011

Reply #3
[quote author="ian"]We could go P&P, but that is a whole other can of worms. In my open hardware manufacturing presentation I always take a second to admonish people not to buy pick and place machine and start a garage assembly line. It's a cool machine, but it eats up 6months to a year of core profit activities to get it setup, and you only get an extra few cents per board for that investment. I know now of dozens of people world wide who went this route and became a slave to the P&P instead of building their business, and lost a ton of momentum. Every time I give this presentation someone tells me afterwards that they fell into this trap too. Adafruit likely had millions in revenue before buying a P&P, and I don't know how much they actually use it. Seeed bought a P&P (multimillions in revenue a year), and Eric says they don't really use it because it's faster, cheaper, and cleaner to send it to a pro assembly house. SparkFun has 2 P&Ps @ 32million revenue, Bert and Ernie, and their buyer (Pete, I think) also told me they are sending things out whenever possible instead of using their P&Ps. We're riding at just about (maybe we break it?) $1million in revenue this year, until we get to $10 I wouldn't seriously consider a P&P, even then...[/quote]
I've mentioned this elsewhere in the forum, but it seems pertinent to tell the story again here. One of my commercial clients in the USA got tired of communications problems with China and decided to buy their own P&P. They never had an "Eric" like Ian has at Seeed, so every new project resulted in 100 non-working boards and lots of money lost on parts and shipping. Sometimes TSA or Homeland Security kept PCBs at the border for months. They got a 6-figure bank loan, bought a P&P with enough feeders to make their complex PIC-based USB board, and then slowly learned that they did not have the skills to operate a robot placing 64-pin TQFP packages. After all that expense, they now outsource board stuffing to a local business in the same city (that they could have easily used without a huge bank loan) and use their over-qualified P&P to place buttons on simple front panel boards.

In other words, I totally agree with your presentation.

Re: State of DP, 2011

Reply #4
I spent almost an hour in reading this and typing a some 1000 words reply. But when I clicked submit(before reply of rsdio), I was forwarded to login page (I was previously logged in) saying "You need to login in order to reply to topics within this forum.". Ok. I've entered my login details and the page said "You have been successfully logged in. Return to the previous page", and I see my typings vanished and I'm in "Post a reply" page.
Still learning
-Arup

Re: State of DP, 2011

Reply #5
Sorry about that! Maybe if you hit back it is still there? I hate it when that happens. Please do share your thoughts.

@rsdio - Yes, that is another example I repeat frequently :) It's not just garage assembly lines and internet startups, established businesses find it overwhelming too.
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Re: State of DP, 2011

Reply #6
Browser back option didnt get it back. I should stop using the quick reply option and go for the Post Reply page always :)
Well summary of my previous writing is as follows,

If Seeed and DP didn't tied together we won't be able to see and get BP. Ian was doubtful if the first batch of BP sell or not, but it was a big success, and Seeed had many preorders that caused PIC sourcing issues too.
If you (Brentbxr)are going to start own business by opening a USA based factory then supplying BP to UDS customers in quick shipping time, you are free to do that since this is a open hardware. There are many others who do that. Adafruit,sparkfun etc sells BP too. And you may also read this http://dangerousprototypes.com/2011/08/ ... ate-sales/ . At DP, Ian will never ask you for royalty if you are copying the design, but there's always something bigger than just business.
And business is not only push money,get money. Business is mix of many marketing complexities. Ian want to save his time for hacking so he needs someone else to handle the business side. Here Seeed comes.
Still learning
-Arup

Re: State of DP, 2011

Reply #7
Brent's questions are perfectly valid, I'm really glad he asked and made the suggestions. It is really valuable feedback he didn't have to take time to give me. I don't feel it was intended in any ill way. Please don't feel the need to defend DP - I really don't think that was Brent's intent. He has brought big enthusiasm and made huge contributions in his first weeks as a forum member, I feel like he probably knows what we are all about :)

Edit - This isn't directed to anyone in particular
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Re: State of DP, 2011

Reply #8
[quote author="ian"]@rsdio - Yes, that is another example I repeat frequently :) It's not just garage assembly lines and internet startups, established businesses find it overwhelming too.[/quote]
Meanwhile, my new startup is launching its first hardware product (after a software product that helped raise funding for the hardware R&D). All work that can be outsourced is actually being kept within the local area - within the same county. The only outside sourcing is the parts, which are obviously manufactured in Thailand, Philippines, Japan, and all over SE Asia / Oceania. We have a small factory for final assembly, but at my urging we are hiring professionals to do every task that can be done as a "standard" service. That way we can spend all of our time on the unique parts of our product design instead of losing all our time doing the same things that other companies are doing. We've already worked with two local PCB fab houses, and there are more hungry local ones to choose from. We've also worked with two local assembly shops, one with better pricing on small runs of 1 to 4 boards and another with better pricing on runs of 100 boards. Again, there are more hungry local shops to choose from if we take the time to request more quotes. These places are all close enough that I can drive to pick up the orders when they're complete (in my electric car!) without waiting for UPS or FedEx to deliver, and one is even close enough that I can walk!

I realize that not every hardware designer lives in an area where there is so much competition for this kind of work, but sometimes you'd never know what sorts of businesses are hiding down some industrial road that you never see. Many of these places are not even on the web or listed in the phone book. One of them even acted very surprised when I called them on the phone, because I think they assumed I was selling something instead of actually wanting to hire their services. But, once I started working with one or two of them, I started learning about the rest. The PCB fab houses will tell me which assembly shops are hungry for business, and which ones have a reputation for good work. Meanwhile, the assembly shops can tell me who their customers use for PCB fab, and who has the best pricing. The assembly shops are also answering many of my questions about design for manufacturing, giving advice on resizing those default Eagle package pads to work better with SMD ovens and their particular P&P.

Bottom line: Look around your city and see what you can learn!

Re: State of DP, 2011

Reply #9
several years ago i was working on a project where i ended up hand placing all the parts for an order of 500 boards, it took about 6 weeks to go through and correct all the problems that a small reflow-oven caused.

overall unless you like being your own assembly line, it is not worth the effort or time to populate boards yourself in quantity more than a handful.

Re: State of DP, 2011

Reply #10
Man that is super interesting. Awesome writeup and information. And im glad to hear you have things just keep getting better; thats great!.

Re: State of DP, 2011

Reply #11
[quote author="ian"]Brent's questions are perfectly valid, I'm really glad he asked and made the suggestions. It is really valuable feedback he didn't have to take time to give me. I don't feel it was intended in any ill way. Please don't feel the need to defend DP - I really don't think that was Brent's intent. He has brought big enthusiasm and made huge contributions in his first weeks as a forum member, I feel like he probably knows what we are all about :)

Edit - This isn't directed to anyone in particular[/quote]


Thanks Ian; I must have mis-spoken for so many people to take my post the wrong way, it seems people think every posts have been either a jab at DP and/or mocking DP as in I could do better. That was not the intention at all, quite the conterary; as I feel Ian is doing a fantastic job. However; as I said before when I feel something I like to think that many many other people do too; Luckly I am a hardened DP fan; so I will purchase through SEEED if I need too. I was mearly suggesting that if I wasnt; and I was just a normal person then DP could be loosing sales due to selling exclusively though SEEED. Its simple as that, that was it... It wasnt a jab, not a mock, nor a challenge... It was simply a statement and required no action or even thought. That said; I also have no idea what it entails to start selling in the US more and I wasnt trying to suggest I knew it was easy or anything. I was suggesting any action; It was simply a statment that could or could not get Ian thinking about somthing. Although as Ian stated; he has thought of this before and came to a solid business decision DP is just not ready, boom, done. thats it, now I completely understand.

 I was in no way trying to say I could do better, and I sure as hell dont want to try. And if anyone thought I was mocking or jabbing DP is soarly mistaken; and sorry if my post seemed that way. as it was not the intent. at all.

Geeze. :)

edit: infact after reading Ians post; I now know to start buying exclusively though seed (I bought my BP 3 through adafruit) but it seems its more profitable for Ian and DP when purchased through SEEED. So now if I want a DP product you best believe I will purchase it exclusively through SEEED just for the benefits of DP. I will suffer through the wait of shipping (I am so impatient its crazy) if it benefits DP more then me getting it a few days faster. Its just not all people will do that.

Re: State of DP, 2011

Reply #12
Nice BrentBXR that you'll be purchasing from DP/Seeed. But I also wonder why Seeed shipping takes one month for you US peoples.
I'm from India, Asia. And anything sent to my address through chinapost(or hongkongpost) registered airmail takes time like the following figure.
1. China intracountry shipping: 2 days
2. China to India by Air: 1-2 days
3. 1day in customs office for checking and tax-ing if applicable.
4. Inbound delivery by India's slowest govt. of India post: 2-7 days.

As it is clear in my cases that I also believe that shipments from china to USA takes following time,
1. China intracountry shipping: 2 days (same as it is independent of buyer's address)
2. China to US by Air: 1-2 days, 3days max (It's air shipping, cant take more time)
3. & 4. Customs and Inbound delivery by US's slowest postal service: 3weeks.

Man, this is quite unbelievable. If Seeed's shipping was through surface mode, then 30days total may seem  normal, but for Air mode shipping this is uncanny.
Can anyone share what he's seeing through the tracking of Seeed's parcel?
Still learning
-Arup

Re: State of DP, 2011

Reply #13
Well you have to understand; I am very spoiled. I am used to 4-5 days MAX. I usually see packages within a few days; and normally I pay for expidited and/or overnight because for the most part its a matter of 5-15bucks. With seeed its quite differnt; you can get 10-30 day for ~5-15$ but if you want it any quicker we are speaking a huge difference; something that cost 10$ to ship now cost 60 and still not gurenteed within a week.

Like I said; Im very impatient. I often say forget it if somthing may take over 2 weeks; very often and dont get it at all.

For example; a sample shipment from Microchip takes 2 days. literally I make the order go to bed twice and its there. From digikey it takes maybe 4-5 days. Nothing in my little world takes over 2 weeks and rarely over one week.

Re: State of DP, 2011

Reply #14
I think you may also have joined us at the wrong time :) During summer it usually takes about 4-5days for our PCB shipments to arrive, never more than a week. In winter the HongKong post (or Singapore post, or whatever they're using now) slows WAY down. I don't think it is the post, so much as outbound customs and security.

I am also going to chop this thread up a little bit now, I think we're all sorted :)
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