Buckley is whisking me through the 10,000-square-foot factory his company,DODOcase, operates in an industrial area of San Francisco. We've stopped to admire the 32-year-old CEO's "Ferrari." It's not an Italian sports car, but a very loud programmable CNC router with about the same footprint, and half the price tag. Right now the $98,000, red and white SCM Pratix is cutting precision details into 18 bamboo frames held in place by a vacuum-sealed jig. Ultimately, each 8 x 10?inch rectangle will be glued into a handmade book cover. The final product: a $60 iPad case.
Resembling a Moleskine notebook, the DODOcase has exploded in popularity since debuting alongside the iPad in April 2010. Within a month, orders spiked from 10 to 900 a day. Retailers like J. Crew carry them, and President Obama keeps one on his desk.
DODOcase hasn't always had a big robot room. Or its own bookbindery. Or 25 full-time employees. When Buckleyand co-founders Craig Dalton and Mark Manning started the company, it seemed more like a hobby than an assembly line. They cut bamboo on routers at the DIY hackerspace TechShop, outsourced covers to a local bookbinder, and assembled the cases in Buckley's basement. Three years later, DODOcase has grown into a model of success for a new breed of small-scale manufacturers.
They're not alone. Manufacturing used to require lots of capital and scale. But new technology is making it easier, faster, and cheaper to transform an idea into a business. Free, easy-touse computer-aided design (CAD) programs and inexpensive 3D printers help entrepreneurs prototype quickly. Shared R&D spaces such as NextFab and TechShop give anyone access to expensive tools for around $100 a month. And crowdfunding websites such as Kickstarter let innovators raise capital quickly while maintaining control of their companies.
Starting a business still takes plenty of sweat equity and a bit of luck. But if you want to graduate from spare-time tinkerer to full-time manufacturer, there has never been a better time to do it. Here are five essential strategies for getting started.
7 Easy Steps for Launching a Startup
Lesson 1: Build Connections.
Manufacturing hasn't always been a welcoming industry for small-batch entrepreneurs. Equipment and resources were most available to companies that produce hundreds of thousands of products, leaving the little guy on his own. The rise of shared workspaces for innovators is changing that.
In 1997 Edmund Villarreal began crafting magnesium fire starters on his apartment balcony in Euless, Texas. Featuring a handle cut from specialty woods such as hickory, dogwood, and mesquite, the screwdriver-size All-Weather Firestarters weren't that complicated to produce. He had his own magnesium cutter and band saw. But it was time-consuming. At best, Villarreal could crank out one Firestarter every 20 to 30 minutes. After a decade of doing odd jobs during the day and making Firestarters at night, he had managed to sell a respectable 20,000 units, but he was maxed out.
"I needed to manufacture these things on a bigger scale, but I just didn't know how," he says. In 2009, after moving to Raleigh, N.C., Villarreal posted an ad on Craigslist, hoping to find an out-of-work engineer to cut his magnesium. He scored one?and more. The engineer turned out to be a member of TechShop.
Villarreal joined TechShop, too, and other members soon offered helpful tips: Don't swap out bits every time you drill a countersinker. Try a bit with an integrated countersink! Don't polish and cut the magnesium one piece at a time. Automate!
Villarreal gained instant access to high-end equipment and skilled tradespeople. "I'm learning how to work smarter, not harder," he says. Today, whenever he gets an order, he hires an ad hoc team of four parttime engineers to set up and run a custom line at TechShop. The guy who programs the ShopBot PRSalpha router gets $50 an hour, but it's worth the money. The team produces one Firestarter every 10 minutes. Sales have picked up too. In 2012 Villarreal sold 5000 Firestarters.
Lesson 2: Keep Inventory Lean.
Matching supply to demand is the most critical balancing act in business. Ramping up production requires investments in equipment, materials, and staff. For companies that are just getting off the ground, gauging demand often amounts to a lot of guesswork.
The fundraising website Kickstarter fundamentally flips that equation, with small investors promising money up front for early access to goods that haven't been produced yet. It's a transformative idea, and it's launched a lot of little companies into the big time faster than they expected. Last spring the smart-watch startup Pebble began a campaign on the site to raise $100,000 but raised 100 times that amount. The company suddenly had an obligation to produce 85,000 smart watches. So instead of continuing in its small factory in San Jose, Calif., where the team had made its batch of 1500 samples, the founders turned to Dragon Innovation, a firm that helps companies outsource manufacturing to Asia.
But an initial flood of orders doesn't guarantee long-term success. In 2011 Dave Petrillo and his partner started a Kickstarter campaign for Coffee Joulies, stainless-steel beans filled with a phase-change material to keep coffee at a desired temperature. They planned to raise $9500 to cover half the initial cost of tooling, but the company ended up with $306,944. That's when they decided to set up manufacturing in a 110-year-old silverware plant in Sherrill, N.Y. Six months later the company had filled the 4818 Kickstarter orders. But then it hit a speed bump.
After the holidays demand slowed but the factory didn't?soon the company had a backlog of 32,000 unsold units. "Just when we got into a comfortable work pace, we had to stop. We underestimated the seasonality of our product," Petrillo says. Good PR saved the day?after a January 2013 appearance on the ABC show Shark Tank, sales boomed, and now Joulies are on back order.
The perfect balance, according to DODOcase's Buckley, is to link production to demand. "We control the manufacturing process. We can turn our machines on and off whenever we want," he says. "We won't ever have more than two weeks of inventory."