2014-06-13

Co.Labs

Do You Have To Be A China Expert To Make Hardware?

How to approach design when your parts suppliers can make or break your product.



In the world of wireless Bluetooth headphones, size is everything. That's because most electronics components these days are sourced in China, and the price, quality, and design of those components can vary enormously from supplier to supplier.

So it's particularly impressive when a startup like Outdoor Technology can produce the first pair we've seen that don't have any heavy battery pack badly concealed within the enclosure. (Look at the headphones below—those are battery powered!) Cofounder Caro Krissman says his secret is his background in sourcing parts from China.

“It seems like a lot of brands will charge about $100 extra for their wireless products, but that’s not the reality of how much of that is premium, from a cost-of-goods perspective,” Krissman says. “Since it’s our core focus, however, we can put out really quality headphones at a reasonable price point.”

To make something that stands out in the marketplace, Krissman says, you have to start with the right guts. “Vetting suppliers and understanding compliance are the two biggest things,” he says. “Hire a good freight forwarder and customers broker. There are a ton of them, but a good one can make a huge difference in cost of goods and speed to market.”

In general Krissman says that hardware startups should have more cash available to burn during the development phase before sales ramp up. Krissman also says that if someone doesn’t have experience sourcing parts from China, they need to find someone that does. It’s too hard to get the expertise quickly.

“It’s helpful when factories know you and have done business with you in the past,” says Krissman. “They are more inclined to provide support when they know you will deliver volume to them. Building a brand requires all the same work on the back end as a sourcing/contract manufacturing company, but with a lot more work on the branding, marketing, channel sales, and distribution side. In one sense it is a very natural transition, in another it was learning and adapting to a very different environment.”

Another wireless headset about to launch after a $3 million Kickstarter campaign is The Dash from Bragi. The small, independent, wireless earbuds’s success also had a lot to do with the people and resources behind it.

Head of software for Bragi, Toby Martin, says that ultimately the product is a result of timing. “It’s a huge technical challenge, but it has to be said that [our CEO] happened to have the idea at the right time, and had the vision and resources to manage to assemble a team capable of pulling it off.”

Martin wouldn’t name names, but did say that at least one large electric manufacturer tried something similar to The Dash a few years ago and couldn’t pull it off technically. For Bragi, Martin also says the slow global economy has helped them find smart engineers willing to risk a startup job.

“Thanks to the European recession we’ve been able to hire some great engineers that were shortsightedly let go by larger companies that didn’t see the value in the people they had,” he says. Launching a hardware startup isn’t easy, but having the right people with China expertise can determine whether the path is hard or a path to failure.

[Image: Flickr user Sascha Kohlmann]




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