Only 19% of backers would back you again if you fail. That’s why we are starting “Monozukuri Bootcamp” for Hardware Startups
“Nearly 1 in 10 Kickstarter Projects Fails to Deliver Rewards” — Entrepreneur Magazine reported a few months ago. Kickstarter is not a store, and backers are generous. In fact, 73% of backers who backed a failed project agreed to back another Kickstarter project. However, only 19% of such backers would back another project by the same creator whose project failed, according to an analysis from the University of Pennsylvania to which the Entrepreneur’s article refers.
So, it is important to know that you cannot fail delivery if your project is crowdfunded, especially if you are an entrepreneur who wants to make full use of crowdfunding even if your project is to manufacture only a few hundreds of products.
Underestimated Manufacturing Time
Hardware is tough, especially delivering products is a long and winding road. A NYC-based investor Matt Turck pointed out in his recent blog post on the Internet of Things (IoT) that there is a gap in perception of the product timeline — manufacturing is grossly underestimated by startups.
True, there are quite a few crowdfunded projects whose delivery is delayed. Personally, I backed several projects and none of these projects succeeded in delivering on schedule.
Industries already have some solutions to improve this. There are some business accelerators that specialize in hardware startups such as HAX and Highway1, where participating hardware startups are sent to China to get trained for mass production. Consultancy like Dragon Innovation helps hardware startups lower costs, improve quality, and accelerate time-to-market by connecting hardware companies to expertise in China.
Demand for High-variety, Low-volume Manufacturing
To satisfy demand, most companies who help hardware startups are based in San Francisco (Dragon Innovation is from MIT community in Massachusetts but a number of their well-known customers are from the San Francisco Bay Area). The Silicon Valley loves scalability. And factories in China excel at mass production. So, connecting hardware startups in the Valley to factories in China makes perfect sense.
However, as the IoT industry grows, the market is going to demand lower volumes of a wide-variety of quality products as consumers want to own something unique that fits their lifestyle.
Factories in China probably have enough skills to manufacture a small number of products at lower cost than those in almost any other countries. Seeed, formerly known as Seeed Studio, is a pioneer in this category.
However, it is often overheard that factories in China do not want to get engaged in a project whose production volume is less than 1,000. There should be lots of order requests that ask for higher volume in production, so from such factories’ point of view, it makes no sense to work on a project that generates less money.
So, here is a gap to fill — more demand for high-variety, low-volume production is expected but factories in China are not where your order requests are satisfied.
Matching creators to manufacturing communities
It is still a hypothesis, but we decided to move on. We started a project to connect hardware startups to resources that help them design their products for manufacturing with cost and schedule under control.
We named this project “Monozukuri Bootcamp”. As I wrote in a past post, monozukuri literally means “making things” in Japanese, but “while monozukuri is used to describe technology and processes integrating development, production and procurement, it also includes intangible qualities such as craftsmanship and dedication to continuous improvement”, according to an article of Patricia Pringle from Japan Intercultural Consulting.
First iteration to Japan begins this summer
For the first iteration, we plan on selecting several IoT startups and sending them to our partners’ facility to get them trained for manufacturing their products.
We already started talking with some initiatives that are designed to help hardware startups, and are happy to announce that Makers Boot Camp, a Japan-based hardware accelerator program, agrees to accept a few startups in late June/early July for 4–6 weeks. Narimasa Makino, CEO and Co-founder of Makers Boot Camp, said “Makers Boot Camp is collaborating with Kyoto Shisaku Net, prototype experts with over a hundred skillful factories and manufacturers who do not need production volume for big margins. We are good at production between 1,000 and 5,000, or even smaller volume.”
We want to collaborate with a few more accelerators and initiatives in Japan that are interested in helping out hardware startups with resources and expertise.
Once we close talks with our partners, we will announce the application process for the first cohort. Currently, we are not interested in taking equity from the first startups in our bootcamp, so those who graduated from an accelerator but are struggling in production may want to consider joining our first iteration.
Initiatives for “More Variety” will follow
Our next (and concurrent) project is to proceed with “more variety” of products, as our assumption is that the industry would see more demand for high-variety, low-volume manufacturing.
Obviously, there are lots of crowdfunded projects that need production volumes of less than 1,000 units. Together with our partners, we would like to invent a new way to make such startups sustainable and plug it into existing startup ecosystems. First in New York City (NYC) and then expanding to other markets, globally.
We believe NYC is a great place to start a series of projects to test.
NYC generates lots of resources, such as 37,500 graduates of creative and engineering talent and more than 400 new products launched with crowdfunding, according to NYC’s Economic and Development Corporation.