6 ms·

Main question - what led this company to think they could even get close to a $99 price? Did someone give them a misleading estimate early on, or did they just

by no_wave 12y ago

Main question - what led this company to think they could even get close to a $99 price? Did someone give them a misleading estimate early on, or did they just come up with that number out of thin air?

anigbrowl 12y ago
Desire; they asked themselves how much they wanted to pay as photography consumers, asked other people if they'd buy into a device at $99, and convinced themselves that it should be easily doable at that price, most likely by deconstructing the marginal (per unit) costs without considering the large fixed costs that allow you to manufacture anything in volume. In fairness this seems to be a normal blind spot in many peoples' thinking. When I've discussed film piracy and market economics with people on HN, many people focus on the duplication cost of printing and packaging a blu-ray disc or suchlike in order to argue that films are extremely overpriced, or assume that there is a conspiracy among distributors to obstruct availability of films in order to extort money from consumers. It takes lengthy explanation to clue people into the numerous hidden costs of distribution (eg language-specific marketing materials, soundtrack-dubbing and so on), and that the considerable up-front costs of film production are typically financed by pre-sales agreements, and that most films do not have hyper-lucrative tie-ins like action figures, theme park rides, and worldwide audience anticipation that pretty much guarantees everyone will make a profit. People tend to focus on the objective and then tell themselves a fairy story about how they're going to get there. I'm not immune. Now when I'm planning a project I try to come up with my best estimates on everything but then I go through and multiply lots of them x 2 because of the things that I don't know I don't know.
- jkestner 12y ago
  I think you're largely right in that optimism led to a bunch of unforced errors. Evidence: They thought that they'd get 20% conversion on preorders (probably because it made their numbers line up), when those interested had their expectations set at ~$99 and instead got $350. But specifically about not rolling in the fixed costs, it's much larger than that. Their BOM alone blew up 3x. Even if you planned poorly up to that point, what you then do is cut. You find the biggest cost drivers and get them down. Find a cheaper way to make a less-polished case. Ship with 40 hours of battery life instead of spending developer-months getting to 400. Anyway, I really appreciate that he posted this post-mortem. There are too few of these for others to learn from. I hate when someone who obviously loves Kickstarter (and has successfully used it before) is called a scam artist. It may be all the same to a backer, but he's only guilty of mismanagement.
  - bravo22 12y ago
    Perhaps he should put his vendor quotations online, along with his BOM choices? I design products for a living and I'm finding it hard to believe that the component BOM for this would be anything over $15. Additionally, their case is a pretty simple two half-shell design. I can think of 5 vendors off the top of my head who would make the mold for about 5-8K. I want to take his word about mismanagement but the disclosed details don't add up, unless he really has no product knowledge and is being taken for a ride by his supplier.
    - jkestner 12y ago
      Yes, project planning docs with hard numbers, for better or worse, would be particularly valuable for others to learn from. Though I suspect that the difference is that the BOM he built early estimates on was composed of optimistic guesses, and the later BOM was compiled and padded by his consultant. It's not exactly two parts. You've also got the pad for the buttons, perhaps the window over the display, and there appear to be three different body variations, for a total of maybe 8 pieces. Still, $50K is high for Chinese molds. If you don't understand manufacturing well, you won't be able to effectively design a low-cost product - that's knowledge that should inform your early decisions. For starters, I wouldn't have made several modules - that's essentially making several products at once. Start with the minimum useful product and add modules after you've shipped.
      - bravo22 12y ago
        I agree. It was very poor project planning. The multiple radio modules doesn't make sense for starters and in fact all but laser could easily be built into the current design for little cost (PIR, Light intensity, sound intensity). As for the mold (and this is just an exercise at this point) I considered that the window would just be built into the mold and would be parallel to the parting line. The buttons could easily be cap sense buttons, and not membrane. It would only need an inexpensive pad printing operation, which they're doing anyways for branding.

by no_wave 12y ago

anigbrowl 12y ago

Desire; they asked themselves how much they wanted to pay as photography consumers, asked other people if they'd buy into a device at $99, and convinced themselves that it should be easily doable at that price, most likely by deconstructing the marginal (per unit) costs without considering the large fixed costs that allow you to manufacture anything in volume. In fairness this seems to be a normal blind spot in many peoples' thinking. When I've discussed film piracy and market economics with people on HN, many people focus on the duplication cost of printing and packaging a blu-ray disc or suchlike in order to argue that films are extremely overpriced, or assume that there is a conspiracy among distributors to obstruct availability of films in order to extort money from consumers. It takes lengthy explanation to clue people into the numerous hidden costs of distribution (eg language-specific marketing materials, soundtrack-dubbing and so on), and that the considerable up-front costs of film production are typically financed by pre-sales agreements, and that most films do not have hyper-lucrative tie-ins like action figures, theme park rides, and worldwide audience anticipation that pretty much guarantees everyone will make a profit. People tend to focus on the objective and then tell themselves a fairy story about how they're going to get there. I'm not immune. Now when I'm planning a project I try to come up with my best estimates on everything but then I go through and multiply lots of them x 2 because of the things that I don't know I don't know.

jkestner 12y ago
I think you're largely right in that optimism led to a bunch of unforced errors. Evidence: They thought that they'd get 20% conversion on preorders (probably because it made their numbers line up), when those interested had their expectations set at ~$99 and instead got $350. But specifically about not rolling in the fixed costs, it's much larger than that. Their BOM alone blew up 3x. Even if you planned poorly up to that point, what you then do is cut. You find the biggest cost drivers and get them down. Find a cheaper way to make a less-polished case. Ship with 40 hours of battery life instead of spending developer-months getting to 400. Anyway, I really appreciate that he posted this post-mortem. There are too few of these for others to learn from. I hate when someone who obviously loves Kickstarter (and has successfully used it before) is called a scam artist. It may be all the same to a backer, but he's only guilty of mismanagement.
- bravo22 12y ago
  Perhaps he should put his vendor quotations online, along with his BOM choices? I design products for a living and I'm finding it hard to believe that the component BOM for this would be anything over $15. Additionally, their case is a pretty simple two half-shell design. I can think of 5 vendors off the top of my head who would make the mold for about 5-8K. I want to take his word about mismanagement but the disclosed details don't add up, unless he really has no product knowledge and is being taken for a ride by his supplier.
  - jkestner 12y ago
    Yes, project planning docs with hard numbers, for better or worse, would be particularly valuable for others to learn from. Though I suspect that the difference is that the BOM he built early estimates on was composed of optimistic guesses, and the later BOM was compiled and padded by his consultant. It's not exactly two parts. You've also got the pad for the buttons, perhaps the window over the display, and there appear to be three different body variations, for a total of maybe 8 pieces. Still, $50K is high for Chinese molds. If you don't understand manufacturing well, you won't be able to effectively design a low-cost product - that's knowledge that should inform your early decisions. For starters, I wouldn't have made several modules - that's essentially making several products at once. Start with the minimum useful product and add modules after you've shipped.
    - bravo22 12y ago
      I agree. It was very poor project planning. The multiple radio modules doesn't make sense for starters and in fact all but laser could easily be built into the current design for little cost (PIR, Light intensity, sound intensity). As for the mold (and this is just an exercise at this point) I considered that the window would just be built into the mold and would be parallel to the parting line. The buttons could easily be cap sense buttons, and not membrane. It would only need an inexpensive pad printing operation, which they're doing anyways for branding.