Establishing a successful product-centric business requires creativity, time, money -- and a thorough knowledge of Chinese culture. Like many other entrepreneurs, we had to learn that last one the hard way.
In 2008 at the University of California, Santa Barbara, we realized that the problem of misplacing phones, keys, wallets and other things was a pain point without a solution. We had our idea. We set out on the mission to keep track of the world’s items and created TrackR -- an iPhone/Android app that tethers (via low energy Bluetooth) to all of your essential personal belongings.
To bring the idea to life and allow the TrackR app to communicate with the items we wanted to track required a small hardware sensor. Finding a good manufacturing partner was essential for our success. Through trial and error, we found the right manufacturer in China and learned a few valuable lessons along the way:
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Use your network. When searching for your manufacturing partner, it’s best to take the old-school approach and get an introduction through your network -- no different from meeting investors. While Alibaba can be a great resource, it is nearly impossible to distinguish between the good and bad contract manufacturers (CM’s). Often times these CM’s can reverse engineer your product and sell it to other companies, despite any patents you may hold.
Look for experience. Once you’re introduced, one crucial caveat is to make sure the person making the introduction has actually done business with the manufacturing partner. The introduction is most effective when the person introducing you is currently doing business with the manufacturer in a related space (i.e. producing wi-fi routers when you want to make wi-fi sensors). As you evaluate manufacturing partners, match the size of your company with the size of the manufacturer. Connecting to a huge manufacturing partner, such as Foxconn, can lead to an excellent partnership and deliver quality product. However, customer service can differ greatly from a new client with annual volume of less than 10,000 units versus a large customer ordering more than 100,000 units each year.
Search closer to home. Attending trade shows such as the Consumer Electronics Show can also be effective. The investment of setting up a booth and displaying products acts as a filter by bringing in manufacturers with some degree of success. Often times they are scouting new business as well. No need to hop on a plane to China -- go to the Las Vegas Convention Center and start asking questions.
Mind your (cultural) manners. To build a strong relationship with your manufacturing partners, it’s essential to learn the basic customs and holidays of your manufacturing partner, especially if they are located outside of the country.
When we were preparing to make the first sample run of product to launch at DEMO in 2010, we were blindsided by the Chinese New Year. Chinese New Year is the most important holiday in manufacturing. It can cause upwards of three weeks of downtime in early February. Since we weren’t aware of this, we once received product a mere 18 hours before a trade show started. Ever since then, we have blocked off Chinese holidays on our calendars.
Keep close communication. Communication is especially important in manufacturing because the smallest detail can make or (literally) break your product. When selecting your partner, make sure both the business development and project manager can speak your native language. The project manager will be your day-to-day contact with the manufacturer and clearly communicating with the project team is essential to creating your product according to your specifications. Log into Skype and prepare to chat from 7 p.m. to 3 a.m. (EST).
Always follow up verbal communications with summary emails to ensure that all parties understand what was discussed. Pictures and video are great ways to communicate test procedures, essential components of the product, and reporting manufacturing defects. Over communication with your partner is nearly impossible to achieve, while under communication is commonplace and leads to disaster.
After several iterations and several manufacturing partners, our team has now produced and delivered more than 150,000 TrackR devices that have helped hundreds of thousands of customers keep track of their essential items. While manufacturing can seem like a daunting process, clear communication and attention to detail will bring excellent results.
Best of luck on your hardware business!
Chris Herbert and Christian Smith are the co-founders of Phone Halo, based in Santa Barbara, Calif. Their product, TrackR, provides a solution for the time-consuming task of finding misplaced and lost items, including keys, wallets and bikes.