In this episode I speak with Nick Frank who is the founder of Knectiv, a company based in Austin Texas that offers product design services and manufacturing in China. We discuss in-depth both product development and manufacturing for hardware products.
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Nick Frank, Founder of Knectiv
John Teel: Welcome to the Predictable Designs podcast, where we discuss all things related to developing, manufacturing, marketing and selling successful new electronic hardware products. I am your host John Teel. This is episode six. Today, I would like ton welcome Nick Frank, who is the founder of a company located in Austin, Texas, that does design and manufacturing for electronic products, and the name of the company is Knectiv. Welcome to the show, Nick.
Nick Frank: Yes, thanks for having me on.
John: Let’s go on and get started. Can you maybe just tell everyone a bit about yourself and the background and about Knectiv?
Nick: Yes, sure. My name is Nick Frank, and I’m the founder and C.E.O of Knectiv, I’m recently from Texas, but got my start in hardware in Switzerland when I co-founded a contract manufacturing company in 2005. It so happened that my co-founder’s father owned a very large electronics manufacturing group in China, which afforded certain access and resources that weren’t available to everyone.
Over the years, through that company, we manufactured millions of hardware products for Swiss and European companies with Austin managing over 100 product-lines at any given time. Then in 2017, I fully divested from the company there and relocated to Austin, Texas, where I founded Knectiv.
Knectiv is a full service design, development and contract manufacturing company. We help everyone from hardware startups to more established enterprises develop and manufacture their electronic products through a combination of local engineering and strategic offshore manufacturing. We offer turn key solutions which basically means, you can essentially explain your product concept to us, and we can design it, make a prototype of it and then manufacture it.
John: You guys do all the different steps or you do the electronics design, firmware programming, mobile apps or 3D modelling as well also, or?
Nick: We work with partners that help with things like mobile apps, but typically, we stick to the hardware design and the firmware.
John: Got you. Do you specialize in the electronic products or do you do other hardware products that aren’t necessarily electronics?
Nick: We stick mostly to electronic products, but if there’s a mechanical design that we can help with, sometimes we will help out with that because we’re also able to source different types of mechanical parts, we can do machine tooling and stuff like that, so if it’s something that is in our wheelhouse, we’ll definitely take a look at it.
John: Got you. Can you maybe just tell us a little bit about the team at Knectiv. What type of engineers– You’ve kind of mentioned the areas that you focus on, which is obvioussly electronics design and not necessarily the mobile app or 3D modelling, but maybe just tell us a bit the team you have at Knectiv.
Nick: Yes, sure. We’ve assembled just amazing group of really smart people both here and in China that make it possible to do what we do at a high level. Our product development team is based here in the US, and that group is spearheaded by Scott, who’s just really talented and accomplished product development expert, who’s got more than 30 years of experience and worked with a wide range of companies from Apple to At&T and a lot of startups. He’s got tons of experience with everything from IT devises, to consumer products, industrial control, robotics. He oversees our core team of electrical and mechanical engineers here and he also sometimes liaise directly with the client early stages of product development.
On the Chinese side, our office in Beijing is managed by a colleague who I’ve known and worked with since 2004. Before he worked with us, he oversaw quality control systems through the Hoang Dong Group in China, was a very prestigious company that had printed circuit board assembly, classic injection molding. He oversaw quality control for us nearly 1,000 employees. He kind of make sure all the manufacturing partners are living up to our strict quality standards that we expect and he manages team over there that oversees logistics, account management, especially sourcing and partner management.
John: The team you have here in the US development team, were these people that you knew before you ended up relocating to Austin, or you relocated here and then built the team? How did you go about making that transition?
Nick: Yes, absolutely. These are people that I had not met before I moved back to the States. I went out specifically looking for a certain type of team members, trying to build on that, on what we needed to compliment our manufacturing and through some of our resources in different companies that we’ve worked with in Switzerland and Europe and also that had connections in the US, we’re able to get some good introductions and meet some great people that filled those roles.
John: Okay. Great. That’s what I assumed. I suspect it’s hard to build a US team based on when you were in Switzerland. It makes sense. You waited until you were here to do that.
Nick: Yes, exactly.
John: Let’s maybe switch gears a little bit. I’m curious, what are some of the mistakes that you commonly see people making when it comes to product development? Do you have a list of common mistakes that you see? Is there any one thing that stands out as a common mistake?
Nick: The most glaring mistake that I see, and typically the most costly that it comes to mind is when people fail to design their product for manufacturing. You have to develop a product with manufacturing in mind. Manufacturing has to be one of the primary considerations in every aspect of the design process. I believe that there has to be a DFM or design for manufacturability analysis from the start.
For us, big part of our value proposition is having a development team that works in unison with our manufacturing department. I mean, that’s key in delivering excellent product design that is actually manufacturable from the get-go. Another mistake I’d say probably waiting too long before getting a grasp on what your manufacturing costs are going to be. Cash flow is just so key for almost every aspect of your business. I’m still shocked when people haven’t made that a priority to really look at what that’s going to look like.
John: You’re taking the words right out of my mouth. Obviously, the hardware report that I offer, that was one of the key reasons for doing it is to give people insight into the manufacturing cost as soon as possible.
Nick: Yes. I highly suggest that people look at that because it’s extremely helpful and beneficial and I think it’s great you’re doing that. Before we start any design work for a client, we always lay out some of the bigger costs they’ll need to consider such as molds, certifications and like, because it’s one thing to think about your unit price and it’s another thing to look at your all end costs from the start of dev all the way through your first mass production run. They’re just serious cashflow considerations and understanding them should be a top priority.
John: Yes, I couldn’t agree more. I see the injection molds is one of the biggest surprises and biggest obstacles people find from going from prototype to manufacturing is just the cost of the molds. If it’s a really complex part and you have lots of molds, then the cost can easily be tens of thousands or even over $100,000 for mold cost alone.
John: That’s definitely something that people need to understand upfront. There’s no point in starting something if you don’t have the visibility to know everything that it’s going to take to finish it. I feel like so many people are just going to jump in without having any estimate on the manufacturing cost or the scaling cost and then they get a few thousand dollars in and they’re out of money and they haven’t got very far and now they’re stuck and frustrated. I think I couldn’t agree more that that’s good to have that big picture visibility up front as soon as possible. Do you guys do any work with proof of concept prototypes, I mean something based on it like an Arduino or Raspberry PI or is it strictly production quality custom design?
Nick: Yes, if I understand correctly, we evaluate each project on a case by case basis. In some cases, we can help with a proof of concept project, but typically, if we do take them on, they should have a clear path towards becoming a full fledged product with a potential later of having quantity production runs in the future because that’s where we think that we’ll be able to add the most value overall.
John: Got you and that’s what I assumed and that’s the way most firms operate. There are some people they don’t even have the technical skills to build a proof of concept prototype. I’ve worked with various entrepreneurs who are also looking for someone that can actually build the proof of concept prototype before they’re actually ready to start on a fully custom design. I wasn’t sure if that was something that you help people with or it sounds like you do, but your emphasis is actually obviously I think on the production side.
Nick: Yes we can do it but I guess it’s just not often that– Well, it happens that someone just comes with a basic idea and then they have some money they’d like to spend to try to get it to a proof of concept and that does happen occasionally. That can also be a lot of fun. Just taking an idea and just say, all right let’s take this from the sketch on the napkin and let’s start making something. Why not?
John: Yes, absolutely. I mentioned in the intro that you have worked with a couple of members inside the Hardware Academy, and one of them is Allen Walton of SpyGuy.com, and I know that you developed and manufactured his product, it’s actually on the market. He sells it at least through his website, it’s a product called The Scout, which is used for finding hidden cameras in hotel rooms and different things like that. I’d be interested to hear what the process was, what the timeline looked like, just describe that process of developing The Scout?
Nick: Sure. What a fun project that was and really just a pleasure working with Allen. For listeners that haven’t seen it, The Scout is a nippy little device that uses directionally the use to detect hidden cameras in hotels, Airbnbs, Dormans and the like. We started developing this product, I want to say, March of 2019, somewhere around there, and by November 2019, I think 2,000 units was first mass production run.
John: Wow, that’s impressive. That’s a quick timeline to go.
Nick: It was a quick timeline. I’ll give a little bit more details of what went into that, but we were really happy we were able to do that in such a short timeline because he was trying to get that out before the holidays and everything like that. We were short on time, but we were able to get it where it needed to be.
John: I just want to throw in that Allen actually has his own e-commerce site where he sells spy cameras and things like that, called SpyGuy.com, so he had an immediate outlet for selling his product, so this isn’t like he was just trying to hit a couple of thousand units and hoped he could find some way to sell them. He actually has an e-commerce store that sells products similar or related to The Scout, which I think is just a beautiful idea.
I don’t think that was his long term strategy, but I love the idea of starting an e-commerce business that sells products similar to what you’re planning on and manufacturing yourself because it just gives you so much insight into what people want, and what the market wants. I really think that he did it in a smart way. Anyway, I just had to put that out.
Nick: Absolutely yes, he’s a very smart guy. This hidden camera detector is a great case study of what one of these turn-key operations would look like. In this case, we had a pretty cool mechanical design file of the enclosure to work with, but little else other than the general concept of what the product needed to do and to look like and to be. In a relatively short period of time, and we designed the PCB, modified the enclosure to make it manufacturable, created the bill materials, and worked the firmware.
Once Allen had validated our working prototype, we quickly shifted over to the manufacturing side of things. This consisted of creating the steel molds while simultaneously kicking off PCB production and ordering the components, so they’d be at our assembly factory once the PCBs were ready to be assembled.
As soon as Allen validated the injection samples from our new mold, we got busy injecting the enclosures, meanwhile, we are also working on validating the shape, size, material, the packaging box, and printing some samples for Allen, while also sourcing and testing hidden cameras that were to be included in the box.
Once everything was validated, we assembled the PCBs,the packaging boxes, and sent everything to the final assembly location where the products underwent one last quality control check before being assembled in their shells, boxed and shipped out the next day. I’m really proud of the work we did on this project.
John: It’s quite impressive. What was the most challenging aspect of the product? Because electronically it seems like a relatively simple design, not that anything is ever simple. I really hesitate to use that word, but in the scheme of things, it’s relatively simple electronically. Was it more the mechanical aspects and the enclosure that was more of a challenge, or was it distributed evenly between the different aspects of the product?
Nick: Yes, and I think in this case the biggest challenge was the plastic enclosure. Allen, he had a very specific vision of what it needed to look like and feel like. We were trying to make this a premium type of product, so it had to have a really, really high touch, really nice feel, and design. We did go through some iterations on that plastic enclosure and trying different finishes, looking at different textures, different materials. I would say that’s where we probably went through the most iterations, but overall, it was a pretty smooth process I would say.
John: One thing I really liked about The Scout is it’s a really simple solution to what seems like a complex problem: trying to find hidden cameras in a hotel room or wherever. I really liked the solution that he came up with, which is basically just you have this, correct me if I’m wrong on any of this, but a ring of infrared LEDs that emit IR light and then that will hit the infrared filter on any hidden cameras, which that filter blocks IR lights, therefore it reflects it back to the Scout. Then you just look through a hole in the middle of these IR LEDs and then you look for any reflections off of any camera lenses. Is that pretty much a correct summary, you think?
Nick: Yes, pretty much. The only thing is it’s not necessarily an IR LED, they’re actually a special type of Amber LED, a very, very bright and directional type of Amber LED and that particular color in that brightness and in a certain direction is very efficient at balancing off of IR filters or types of lenses that you typically find in hidden cameras. It’s really a visual thing where it just lights it up like a Christmas tree when you do come across one of those camera lenses.
John: Got you. I really think this product could do well. As soon as I told my wife about it, she immediately said she wants one before we travel anywhere else. That’s a concern for a lot of people are hidden cameras.
Nick: Absolutely, yes. I think he’s getting it out there and getting the word out. I think it’s yet to really take off. It’s already starting, but I think it has a really, really big market.
John: It takes a lot of energy and momentum to get it really going, but I think the fact that he already had an E-commerce store and now that he’s had for years and has got a good business, that that was a great way to test it. I’m assuming he’s probably, I’m sure getting feedback from customers and then in the future maybe we’ll do revisions or new versions of it based on that feedback. I think he had a really good way to sell the product that’s a strategy that he followed.
Is there anything else you wanted to say about Allen’s project? If not, I was going to jump to another project that I know that you’re working on for an Academy member.
Nick: No, I think we can move on.
John: Okay. You’re also working on a product for a member of the Hardware Academy called Eric Hunter of InD Creation and his is a frozen fish food feeder, automatic frozen fish food feeder. That’s quite a mouthful. He had reached out in the Academy basically saying that he had a successful crowdfunding campaign on Kickstarter. I think he raised $40,000 and now, there’s little not panic in his message, but you could tell that he’d gotten this probably a lot of the focus was on doing the crowdfunding and he got this money and he’s like, “My campaign was a success. Now I’ve got to go find a way to develop a manufacturer of this.” or beyond just his proof of concept prototype. I know he was quite excited to connect up with you. I’m interested to hear more about how that’s going.
Nick: Yes, absolutely. It’s still in the very early stages, I’ll stick to speaking in broad terms and the actual design and where we are.
John: Yes, this has only been a few weeks ago. I just want to throw that out. This isn’t going to be something I’m expecting. You don’t have this to market yet?
Nick: Yes, sorry.
John: It has taken so long.
Nick: I know now. We’re thrilled to be working with Eric and very excited about the potential that this product has on the market. For listeners that might not know and you said a little bit, but yes he made this excellent proof of concept for an automated frozen fish food feeder. Basically, anyone with aquariums I think is going to love. He then ran a very successful Kickstarter campaign where he was able to raise the funds he needed to further develop his product and get it manufacturable. That’s where we come in, Knectiv.
We’re actively working to optimize this concept for mass production. We’re also testing out some different approaches to how the device can work in general, just with the aim of making it as efficient as possible, less prone to any potential user and less expensive to produce. We’ll make modifications also that should reduce mold tooling cost for them.
Overall though, we’re just looking at this from a holistic point of view and trying to make the best product possible. He came up with a brilliant concept that we believe will be in high demand and it’s our job to deliver a finished product that will be extremely appealing to his audience and easy to manufacture it at scale. It should be a lot of fun and we can’t wait for everyone to see what we’re working on.
John: Yes. I think both of these projects had a lot of really good things that they had done right. That’s to validate the product. Eric validated it with a crowdfunding campaign. Allen validated his because he already sells to the market. He knows what they want. I’m not sure if he had actually, pulled any of his customers to get feedback, he knows what the market wants because he has an e-commerce business. I think both of them did a great thing by validating their product before they start spending a lot of money.
The other thing I like that Eric did is he tried to take a small step or a medium-sized step. Instead, he could set a goal of raising $200,000 that would get him all the way to market and buy inventory. That’s a huge obstacle to get past and that’s a giant leap to take forward. Instead I always recommend that people take smaller steps and I think that’s what he did.
He knows that $40,000 isn’t going to get him through all the way to market and having a large amount of inventory, but he knew that that was the amount that it would take to getting to the next point where he can perhaps have a production-quality prototype and some other feedback. Then he can use that to get a second round of funding. I think that is a good strategy that he took
Nick: Yes, I agree.
John: I’m curious, how does Knectiv bill your clients? Is it always on an hourly basis? Is it by project? Is it by milestone? Do you offer different payment strategies to different people?
Nick: Sure. I assume you’re talking on the development side.
John: Yes. The development side, mot the manufacturing.
Nick: Yes, sure. We never build by the hour, only by project. We do that because we’re very confident in our ability to assess the project and understand what it will take to complete it. In order to be able to do this, we spend a lot of time speaking with the client before we start on a project in order to gain an intimate understanding what they’re looking for, which allows us to define the scope of the project concisely and get everyone on the same page before any dev work starts. With that said, we might break a project down in milestones, particularly if we’re on a discovery mission.
For example, we might be tasked with designing a new type of product that, it’s never been made before. We don’t always know what the discovery phase will yield. In this case, we might break the project down into milestones and then only move forward with phase two or three if desired by the client and if we think there’s a reason to keep going.
John: Okay, that’s great. I like that you guys charge by the project unless it’s a project with a lot of unknowns because that takes away a lot of the risk for the client versus paying hourly. I know you’re familiar with this, but what happens with most firms is you go to get a quote, they’ll give you a quote based on the hours that they estimate, this is just an estimate. There’s nothing that says, okay, we can’t go higher than that. Typically, you’ll find that what they quoted you initially by the time you’re done, you may be twice as high as what they had initially quoted.
It’s not that their line and underestimating, but I think firms, they tend to estimate on the most positive side because they know if they bid too high, then they’re going to get passed up for the project. It can really put the client in a bind, once they find out that, “Okay, I’m only halfway through the project. I’ve already hit the amount that they had estimated.” I really liked you guys do it on a project basis or milestone basis.
I think that, first of all, that shows that you guys have the skill and experience to be able to accurately forecast how long it’s going to take because that’s always challenging. It takes a lot of experience to know accurately how long it’s going to take to develop a product. I think that’s really good.
If you charge on a per-project basis, How are the payments arranged? Is it 50% upfront, 50% of a prototype? Or third upfront, third in the middle and third at the end? How do you do that?
Nick: It depends on the length of the project, it depends on how many milestones there are, the overall scope. Yes, typically there’s an initial down payment, sometimes around 50%, to kick off the project, then maybe the rest, the other 50% will be broken up into a few milestones along the way that we might put in there and agree with the client. It’s on a case by case basis and it depends, Yes, typically, there’s the upfront, then the rest is broken down into a few other segments.
John: Got you. From my experience, I’ve always found that things like the schematic design or the PCB layout are fairly easy to estimate exactly how long it’s going to take. I always found that the testing and the debug process is the most– The part of the development has the biggest unknowns. Obviously, you’re dealing with unknowns, because when you’re debugging problems, because if you knew about those problems, obviously you would have designed it to not have those problems. I know a lot of projects that bill on the hour, that’s where things start to really bogging down is once they get that first prototype and they start testing, evaluating, debugging it. Even when I was a chip designer at TEI, that’s where all projects would tend to get stuck. Is that as soon as things would come back, and then if there were any problems that were discovered, first of all, you had to evaluate and find those problems. Then once you found them, you had to go off and understand them and find a solution or work around for them, so that that can be a little bit challenging to forecast. That’s something to be cautious of for hourly payment. I really liked that you guys do project or by milestone because I think that really lowers the risk for the client.
Nick: Yes, absolutely.
John: Initially my question about payment was around development, but since you specifically asked me if I was referring to development or manufacturing? We can go ahead and if you don’t mind touch on how you bill for manufacturing? I’m assuming you do a commission per part sold or what is your payment structure for that manufacturing setting?
Nick: Contract manufacturing almost anywhere you look, it’s on a cost plus type of basis. We come to an agreement with the customer for what the per unit price is going to be, and then as far as the molds and everything like that go, that’s all list it up upfront. If we’re talking about pricing terms, so that’s one thing, that’s something that’s negotiable and that we evolved over time as we have good payment history, depending on the length of the type of product. These kind of things can evolve and change over time, but otherwise we give straight prices so nonrecurring expenses and then a per unit price for everything else.
Then we’ll typically break that down if requested to show, here’s what’s going towards your billing material costs, here’s what’s going towards your printed circuit board costs, here’s what you’re going to be paying for packaging assembly. It’s pretty transparent as far as where the money’s going per each unit.
John: Okay, got you. Okay, excellent. Okay, thank you. As we’ve discussed, your development team is in the US and your manufacturing facility is in China, so let’s maybe just touch on what are some of the advantages of– I tend to think at least longterm, that’s way you want to do it, if you’re in the US I find that development tends to be best done in the US, or domestically where you’re located, and then eventually, manufacturing can be done in China.
I wanted to discuss the advantages of doing the product development in the US. I thought you have an interesting viewpoint on this and to do development in the US, but you also do manufacturing in China. I don’t know if you guys have had any experience doing any new product development in China or not? I’m just curious, what are the major advantages that you see to doing development domestically or in the US?
Nick: Great question. There a reason we still base our entire development team in the US even with our deep rooted connections in China. While there are certainly talented product designers in China, most manufacturers don’t have high level product development work as on staff that you want them to draft that injection design? Excellent, they can do that. You want to make some tweaks to your circuit design, that’s easy enough.
If you start asking them to help you go from a proof of concept to a polished final product, you’re likely to have a very frustrating experience. They really excel in making exactly what you give them, but there are real challenges in collaborating on creative endeavors. While we can all read CAD files, trying to express small nuances and design preferences can be a different animal all together. The culture and language gap is real. That’s why we base all of our product development in the US, but still happily call on our Chinese partners to offer their input on our designs from a manufacturing standpoint.
One last note I’d add for those who want to test the waters on your own, there’s also the question of IP to consider if you approach a Chinese designer manufacturer that you don’t have any relationship with, something I wouldn’t suggest by the way, but you should get a very concise development agreement in place to make sure you’re actually going to own what you design after all is said and done.
John: Absolutely. That’s one of the big things that I see happen is that entrepreneurs especially will reach out to manufacturers in China to develop their product and they’ll say we’ll do it really cheap even first of all, they’re not necessarily that good at doing product development like you said. I think they’re more about doing tweaks to a design or making it more manufacturable, but not necessarily jumping in and doing a product development from the very beginning. What they’ll typically want is they want exclusive rights or even own the design there there’s a reason they say they can develop this product for you for $1,000, is that they’re going to end up owning the design and even own the rights to manufacture it.
I have a lot of entrepreneurs or people contact me and they have an idea for a product and they’re looking, they’re like, “Can you connect me with a manufacturer that can make this?” And I always have to tell them, I’m like, you’re skipping a huge part of it called development. You can’t just have an idea and give it to a manufacturer or that’s just not the way it works. As you know, there’s so much work and so many details that have to happen in development that you don’t want a manufacturer that only does this on the side or does a little bit of improvement to a design. You want a firm that specializes in designing new products.
John: My experience matches what you had found. I know with my own manufacturer that I had connected within China at that point I already had a prototype. It was mostly manufacturable prototype and they had an engineering team and that engineering team was a great resource for improving my design and making it ready for manufacturing, adding draft and doing injection mold flow analysis on it and all of that, the different aspects of getting it manufacturable, but I would not recommend in most cases finding a Chinese manufacturer to develop your product from scratch. I think that’s, like you said, it’s best done in the US or domestically and then do manufacturing in China.
Nick: We are in agreeance.
John: Yes. I thought we may be on that one. Speaking of location, how important do you think it is for your client to be physically located near your facility? You guys are in Austin, Texas, I’m curious your thoughts on that as far as do they need to be near you? Is there any advantage to that? What percentage of your clients do you ever meet or ever visit your office, that type of thing?
Nick: Yes, sure. We’re located in Texas as you said, but we have clients, partners and offices and in 12 states and 6 countries. You can probably guess my answer is if I think it’s absolutely necessary but we’ve been working with clients on a global and remote basis for more than 15 years now. We’ve put some great systems in place over the years and learned a lot working with our Chinese office and in our global clients on a daily basis. With today’s communication technology, it’s really not necessary to physically be with someone to efficiently move projects forward. That doesn’t mean we never see our clients.
I still enjoy face-to-face meetings and myself or someone from the team will travel as often as possible to sit down with a client and get some face time.
With that said, I get it, I understand if certain people or clients want to be more hands on and feel a certain proximity to the rest of the team. For us though, and for most of our clients, we are able to remain extremely effective working remotely when needed.
John: Okay. That’s pretty much how I feel about it as well. I think if you limit yourself to finding someone local, you’re limiting your choices and you may end up finding someone local, but they’re not going to be nearly as good as if you– Especially if you’re in a small town or not in a hotbed of new development like in the Valley or something like that. I really think that it limits your options and I think you’re much better off trying to find someone that’s really good and not necessarily worrying so much about the location.
The main thing where it’s location, I find that can be challenging is if you’re doing development in China, just the time difference because it’s essentially almost 12 hours difference so it makes communication really slow.
John: Oh, 14? Okay, it makes communication so slow that you ask a question, then you have to wait the next day to get the answer. There’s always like a day lag time going back and forth. That’s not huge. I don’t find that huge from most– The area where I find that there’s the most interaction between the client and the developer is for things where appearances is critical like the enclosure design.
I don’t think there’s probably a whole lot of input needed on the electronics design or the programming other than features. But when you get to how something looks, that’s probably where I could see there being more back and forth. I don’t know if you–
Nick: That’s true. Also, just when you are working with China from here, we just work in batches, and then we just adapted the way we work. There’s the advantage of I might send off a list of things I need before I go to bed and I wake up and it magically appears and it’s done. If you organize in a certain way, it’s not too bad.
John: One other thing I’d like to just mention quickly is, and I think you mentioned that China is obviously a different culture. One thing that I’ve found that you just need to be aware of is, I found that their culture is, they don’t want to be rude or tell you something isn’t possible. No matter what you ask them, they tend to say, “Oh, no problem. We can do that.”
I’m not saying they’re being dishonest, but I just found that in my experience, it’s part of their culture to tell you what they think you want to hear. Another person I interviewed recently suggested that don’t ask them if you can do something, but ask them how they would do it. That’s one way to kind of–
Nick: That’s a great tip.
John: I’m curious, what type of project specifics do you typically require from new clients? Do you have a standard product definition document that you have them fill out or do they just send you any document that they put together? How does that work?
Nick: When we’re first evaluating a project, we do have a standard form that we ask our clients to fill out, it acts as a de facto product requirements document until we get something more substantial in place. There’s about 60 questions on there. It’s pretty thorough, we ask people to fill out as much as possible, those questions just as basic as what does your product do? Or what is this process supposed to be? Or maybe where will this product be sold? And what certifications will it need?
Well, we also ask the client to list all the must-have features along with a list of would-be-nice to have features to get an idea of what they really have to have and what they’re just hoping their their dream scenario what this product could be if they had unlimited budget and the price of cost of goods sold didn’t matter, all that stuff. The forum is really just a jumping-off point that allows us to get a snapshot of the project. It makes the initial client call much more seamless and allows us to really drill down on the specifics so we can create an accurate product development budget and timeline.
John: Got you. I’m curious, do you end up having to encourage a good number of clients to simplify their product? I find a lot of entrepreneurs, they want to throw every feature they can possibly think of into a product and I always have to spend a decent amount of effort to try to convince them that it would be in their interest to simplify the product. Otherwise, you may find yourself 30, 40 years down the road and you’re still stuck in product development. Is that something that you run into?
Nick: Yes. From a development standpoint, we could probably do it. It’s really just working backwards with them, looking at what is the price you want to sell this at? What’s your price point for selling it and then working backwards from there. Like if you want to sell it for $100, if we put all these things in there, the components are going to cost 80 well, then that’s not going to be a good situation.
I think going through that with them and really looking at the numbers, and just working through that. It just makes it a little bit more real and they’re able to visualize and see, well, “Okay, this could be really nice, but here’s the situation, here’s what we have to work with.” Maybe that’s for v2, or maybe if this is just really selling a lot, then maybe the price structure changes. That’s typically how we look at it: work backwards, and then try to come to a good place of what kind of cost what do we need to be with that number?
John: Good point. I agree. One of the things that I do in the hardware report that I offer is if they have a bunch of different features that even the ones that are optional, what I typically will recommend them to do is I’ll include them in the report, but they can turn those features off and then see how that impacts the manufacturing cost. I feel like that’s exactly what you’re saying. I think knowing the impact and the cost of these additional features is really important to help you hone in on the minimum viable product. Obviously, you want the features that are going to be the most popular, but ideally also that the simplest to develop and the lowest cost to develop. I think that’s important to know that as early as possible.
Nick: Yes, absolutely.
John: We kind of already touched on this a briefly, but I’m curious if there are any key challenges that you see commonly when it comes to scaling from prototype to manufacturing. Since you guys obviously do both so you obviously deal with that transitionary phase between prototype and manufacturing. I know I mentioned injection molding tends to be one of the big obstacles in scaling because of the cost of the molds. Is there any other challenges that you run into in addition to that?
Nick: Yes. As we discussed earlier, we see a lot of prototypes and designs show up at the door that didn’t go through the DFM design for the manufacturability stress test. They often require pretty extensive redesign. The client ends up having to spend additional time and resources because they may have tried to cut corners earlier on the process or maybe they just weren’t aware what they needed.
Beyond that and sticking to the client’s standpoint and to your point, one of the biggest challenges is typically financial. Molds, certifications, initial costs can be expensive. Then in many cases, you’re going to need to put down 50% upfront to cover that first order and then come up with the other 50% not too long after you receive the goods.
Then from a manufacturing point of view, on our side we just want to make sure we’ve made at least a small production run using the mass manufacturing production methods and feel completely comfortable every step along the way. Once the client validates our product and we start moving forward, we’re on the hook if something goes wrong with that product.
This, by the way, it is another advantage of sticking with one contract manufacturer or many manufacturing partner from design to prototype to mass production as it can allow them or us or whoever to become very familiar with the products and make tweaks to the processes needed. Then once we validate the process, it’s very easy to go from one to 100,000 or more very quickly.
John: Okay. I really like that aspect that you do development and manufacturing because you understand manufacturing so you have the visibility to know what’s the requirement for manufacturing. Once you get to the manufacturing process and optimizing that, you have a really intimate understanding of the product since you developed it. I know, the old days. I don’t know, maybe 20 years ago or so, it was quite common for companies, engineering and manufacturing or product development and manufacturing just did not talk. There was no communication. There was a big wall between them. Engineering thought they were above manufacturing. Didn’t need to get any of their input, so they would just develop their product and then say, “Okay, we’re done developing. Here you go manufacturing. You guys figure out how to make it.” That was just a nightmare because then all of a sudden you have all these design changes that are required and it’s so much easier to do the design for manufacturing upfront than to do it afterwards.
Nick: Yes, it all complements each other.
John: Yes, I think it’s really good regardless of who you end up having develop your product. I think it’s just to make sure that they understand manufacturing. Especially with the electronics, but especially with the injection mold because I’ve found that the enclosure that there are so many people out there that have enough experience. They know how to 3D model, they can make you something really pretty, but they have no engineering or manufacturing experience, so they can’t make it. I’m sorry, what was that?
Nick: No, I said you’re absolutely right. That’s where a lot of people get into trouble.
John: Yes, so just make sure, anyone listening, if you hire someone to develop your enclosure especially, just make sure they understand injection molding and that they understand design for manufacturing. Otherwise, you’re going to open yourself up to a world of hurt when one you try to transition to manufacturing.
Nick: Yes. There’s tons of information out there. Just kind of do your homework and that will really go a long way.
John: Absolutely. I think that’s a good suggestion to end on. Nick, this has been really great. Before we go, can you maybe just tell listeners how they can learn more about you and Knectiv.
Nick: Yes, sure. The best place to learn about Knectiv would be probably first of all the website. www.Knectiv.com. That’s K-N-E-C-T-I-V .com. You can also connect with me and Knectiv on LinkedIn or follow us on Twitter @Knectiv.
John: Okay. I’ll be sure to put all these links in the show notes as well so people can easily find you. Nick, this has been really great. I thank you so much for taking the time to share all this with us. I hope you have a great day.
Nick: Thanks. Thanks for having me, John. Thank you.
John: All right. See you, Nick.
John: I hope you found this podcast to be helpful. This was actually a shortened version of my interview. The full interview is available exclusively to members inside the Hardware Academy. Okay, that’s it for today. Be sure to tune in next week for another episode of the Predictable Designs podcast.Finally, don't forget to download your free PDF: Ultimate Guide to Develop and Sell Your New Electronic Hardware Product. You will also receive my weekly newsletter where I share premium content not available on my blog.
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