GeoOp founder pulls the plug on Kickstarter campaign and says he'll return $188,000 | Sphero co-founder reveals how he successfully negotiated China's cheap manufacturing challenge. With special feature audio.
The experiences of two different startups – one a failure, one a success – show the right and wrong ways to unlock the potential of cheap manufacturing in China.
The wrong way
GeoOp co-founder and original chief executive Nick Bartlett has given up on Bluejay, his new company’s Kickstarter campaign for a device called Bluejay – a "world first" smartphone mount for your car with built-in Bluetooth and iBeacon technology.
The Kiwi Factory (as his new outfit is called) raised $188,000 successfully but manufacturing quality issues ensued and soon contributors to the crowdfunding campaign were leaving angry messages about delays.
The July deadline came and went. The Kiwi Factory crew issued an update saying the new deadline was November; they planned a trip to China to sort things out.
In the end, they’ve thrown in the towel. A new update to investors says Bluejay has been abandoned, and full refunds will be issued given within 10 days.
The right way
This happens time and time again. A clever idea for a gadget hits its capital-raising target but founders on delays or quality issues as the startup discovers that while China might be a cheap place to get something made, it’s also tricky territory for a newcomer to negotiate. You’re as likely to become the exploited as the exploiter.
But it can work, and work well. You’ve just got to take the right approach.
Sphero co-founder Ian Bernstein visited NBR earlier this week to show off his company’s latest robot toy (it’s pretty cool but under embargo for a bit).
In hoodie and jeans, he looked more like someone applying for our web producer role* than the co-founder of a successful startup that has now raised $US84 million in venture capital money, sold more than one million toy robots at around $200 a pop, and landed a Star Wars licensing deal with Disney for its BB-8 robot. But in Silicon Valley, clothes don’t make the man.
Back in 2010, Sphero had raised $US1.1 million – an amount that’s quite within reach of a Kiwi startup.
Mr Bernstein and co-founder Adam Wilson had a rough prototype for their eponymous product – a robot ball that could be controlled via an iPhone or iPad.
The occidental tourists
How to get it manufactured? Their first step was to approach companies that had products that had the same level of complexity, which included a toy dinosaur with 16 motors.
Through this process, they learned some of the lay of the land for manufacturing in Asia, and they were also introduced to Dragon Connect, a company that connects startups with manufacturers in China who employed between 3000 (small local standards) to 20,000 staff and made everything from Roomba to Nerf guns to Furbies.
"It's very much a mutual relationship with these factories. They’re vetting you as much as you’re vetting them," Mr Bernstein says.
Mr Bernstein camped out at the factory they settled on in Guandong as multiple prototypes were hand-built.
"We found spending a lot of time in Asia is probably the best thing you can do," he says.
“A lot of other companies will just hire some other company to manage it or just send emails and stuff to Asia and that’s when you run into issues."
Cumulatively, Mr Bernstein has spent around two and a half years in Guandong since 2010, he estimates, closely overseeing everything from materials to colour matching to manufacturing.
This lesson scales up
Australian Stewart Askey, who was recently in New Zealand talking about his decades overseeing quality control with for big infrastructure projects across the Tasman, emphasised that anyone buying steel from a China fabricator (especially a so-called tier 2 plant) needs to budget for a non-Chinese expert – or several – to constantly oversee quality control.
Mr Askey say beyond the benefit of an independent inspector preventing corners being cut, there are cultural issues.
As an example, he says an in-house inspector will never pull up a welder for dodgy work if the welder is older than the inspector.
His tales of Chinese factories' self-certification processes, and outright false certificates are scary and shocking, and they make the New Zealand government look naive as it grapples with controversy over steel quality on major projects.
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* Sorry, taken
