Failure to iterate

For context, read Ben Einstein's very smart post, "The Real Reason Why Quirky Failed."

Quirky had two classes of customer.

As Ben describes, Quirky sold pieces of hardware to one class of customer. I was one of them - I bought a few of their products (and generally disliked them) a few years back. And as Ben accurately noted, those products were often poorly supported and maintained. Which sucked for those customers.

But Quirky also sold a second product, in the form of product execution services & royalties. The customers of this product were people with ideas, and those customers "paid" Quirky by giving them the right to develop, manufacture, and distribute those ideas. 

I believe that Quirky's key failing was that that second product never got market fit. In other words: As a person with an idea for a hardware product, it just never made sense to give up the rights to that idea in exchange for product execution services & royalties.

I bring a few pieces of supporting evidence for this claim:

• First, anecdotally: While Quirky was in business, I had a few (passable) ideas for products that I didn't have the bandwidth to execute - and I didn't give them to Quirky. And when I had a pretty good idea for a product, I didn't even consider Quirky as an option - opting instead for Kickstarter, which provided me with *much* more value in return.
• Second: As evidenced by the fact that Quirky halved their royalty structure in early 2015, we know that they struggled to figure out how the economics of that product really worked.
• Third, compare the paths of Quirky and Kickstarter. Both of their business models necessarily requires people to have ideas, and to give up some part of those ideas in exchange for help getting them off the ground. But while top tier Kickstarter creators (see Pebble, 99 Percent Invisible, countless others) have in many cases made their second and third campaigns *way* bigger than their first, Quirky creators never had that kind of follow-on success - or never attempted it in the first place.

I believe that this - exchanging ideas for execution and royalties - was Quirky's primary product. They were, to be sure, very proud of that fact: Kaufman repeatedly said things like "The mission of what we do is to make invention accessible to people all around the world." Nothing about the best coffee maker, or air conditioner, or flashlight: Quirky's primary product was invention services, and they would live or die based on the extent to which they convinced people to give them good ideas. But they failed to iterate on this product, and it never attained product-market-fit. And so no matter how successful their [insert consumer product here] was, that disconnect would ultimately have killed them regardless.

Goals

I've been thinking of the things I want to focus on in metal additive manufacturing, and came up with these two goals:

1. Reduce the time & effort that independent designers spend developing & validating metal AM parts.
2. Reduce the time & effort that service providers spend getting their shops capable of reliably making their customers' parts at a profit.

The reason I *don't* mention OEMs here is because I assume that if 1. and 2. are achieved, then the OEMs will be just fine, as they'll have a healthy supply of both engineering talent and manufacturing capabilities available to them. That's not to say that I don't want to help OEMs too, but in my opinion you can have a bigger long term impact (and help save yourself from the client-driven feature creep common in industrial solutions) if you keep small shops' needs in mind.

I have some initial thoughts on how I'd begin to address these, but I'm still in the process of developing them. If anyone has ideas, I'd love to chat about them - drop me a line!

Misled

From a good piece on time and cost estimation in software engineering, emphasis mine:

All software development effort estimation, even when using formal estimation models, requires expert judgment. But although expert judgment can be very accurate, it’s also easily misled. Perhaps the strongest misleading happens when those responsible for the effort estimates, before or during the estimation work, are made aware of the budget, client expectations, time available, or other values that can act as so-called estimation anchors. Without noticing it, those people will tend to produce effort estimates that are too close to the anchors. Knowing that the client expects a low price or a low number of work - hours, for example, is likely to contribute to an underestimation of effort. Expert judgment can also be misled when an estimation request includes loaded words, such as, “How much will this small and simple project cost?”

In spite of much research on how to recover from being misled and how to neutralize estimation biases, no reliable methods have so far been found. The main consequence is that those in charge of effort estimation should try hard not to be exposed to misleading or irrelevant information - for example, by removing misleading and irrelevant information from requirements documentations.

I'm always shocked when a supplier asks me for a target price on a part I've asked them to bid. Customer-driven price anchors are really dangerous; I avoid them at all costs.

Tony Hsieh

Zappos CEO Tony Hsieh, from a talk given to the Long Now Foundation: 

A company's culture and a company's brand are really just two sides of the same coin. The brand is just a lagging indicator of the culture. And with social media, and everyone being hyper connected, that brand is actually [lagging] less and less. So for example, if you ask a random person off the street "what do you think of the airline industry," you'll probably get back responses about bad customer service or apathetic employees and so on. And like it or not, that is the brand of the industry, even though no airline obviously set out for that to be their brand. 

Arbitrary and meaningless

Squarespace CEO Anthony Casalena, talking with First Round Review about developing a high quality product:

We tend to see a lot of deadlines as arbitrary and meaningless. At their worst, they compromise design quality and burn people out so much that they stop having good, creative ideas. Sprinting is not our core differentiator.

Ahh, product life :)

But seriously: Remember that not all successful companies sprint. Develop products how you want to, and reflect on whether it's going well. 

Accountability is a Team Concept

From a piece in Fast Company about the (DoD-funded) Software Engineering Institute:

Importantly, the group avoids blaming people for errors. The process assumes blame - and it's the process that is analyzed to discover why and how an error got through. At the same time, accountability is a team concept: no one person is ever solely responsible for writing or inspecting code. "You don't get punished for making errors," says Marjorie Seiter, a senior member of the technical staff. "If I make a mistake, and others reviewed my work, then I'm not alone. I'm not being blamed for this."

It's my belief that organizations run best when accountability - for both failures and successes - is shared widely. At SEI, where NASA flight software is developed, big failures can be catastrophic. In order to ensure the overall project success, all individual output is reviewed at multiple stages of development; if errors are overlooked, responsibility falls to the team – not to any individual in the process.

A game played by robots

Ben Thompson, writing about Dropbox:

Business is not a game played by robots; it’s about real people building products that they believe in

"Quick, Big Wins."

According to his LinkedIn page, Piet Morgan began working on Hammerhead in September 2012. Hammerhead went on to raise $190K on Dragon in October of 2013. Immediately afterwards, they entered the R/GA+Techstars accelerator, where they received a $20K stipend + (I'm guessing here - it's a safe bet) an additional $100K convertible note.

Hammerhead matriculated from R/GA in March, and today TomorrowLab announced that they've been hired by Hammerhead to "get to market by September 2014."

They also have Brad Feld and Scott Miller as advisors - two consummate hardware startup experts.

---

Things take time. Developing products is hard. Sure: money, guidance, and a space to work in help. But product development is still time consuming, and quick, big wins don't come easily.

As a cyclist, I must say that I'm not particularly interested in Hammerhead; it's just not my style. But I saw their pitch in person at a meetup a few months back, and I must say that it was very good. Piet seems really smart, and the team appears to be down-to-earth and rather personable. We've got friends in common, and from everything I know about their team it seems like they're kicking ass.

But launching things is hard, and quick, big wins are elusive. Remember this, and don't trick yourself into thinking you're above it.

Looking sideways

Nobel Laureate and longtime bell Labs researcher Arno Penzias, in an excerpt from his book "Harmony." The focus here is organizational change at Bell Labs, presumably in the 1990s. Emphasis is mine.

The change didn't take place overnight, but over time our behavior has changed radically. Today about half our researchers work full-time in partnership with colleagues from other parts of AT&T. Similar changes have taken place in management as well. While most research managers have kept their titles and the trappings of office, their jobs have undergone 90-degree turns. Instead of looking up and down, so to speak, they now spend most of their time looking sideways.

For example, each research director now works with one of AT&T's business units, making sure that its needs get attention. The directors also make sure that Bell's researchers have access to potential customers for their work. These directors work not just for the sake of the people in their own organizations but rather for the research operation as a whole. With organizational roles now more clearly defined on the basis of function rather than scientific discipline, management's primary attention has shifted to external interactions.

Recasting first-level management roles has proved the most challenging undertaking. Experienced researchers themselves, managers had worked hard to ensure the best possible research in their departments. But "best" as they defined it. In one particular case, this meant producing the world's most powerful laser diode--a record-breaking experiment. It won the "best paper" award at a major professional conference. While certainly not unworthy, this internally generated pursuit of excellence paid insufficient attention to the priorities of potential customers. While colleagues in our Lightwave Business Unit sought more powerful lasers, they might have preferred to trade some of that device's performance for compatibility with their existing fabrication methods.

Ben Horowitz

Ben Horowitz, in an old blog post titled "Why We Prefer Founding CEOs." Emphasis mine.

The music business has been continuously disrupted and revolutionized by the underlying technology since the outset. In fact, it’s still widely referred to as the “record industry,” because the entire business was created by the invention of the vinyl record. For the first few decades of the industry, songs were never longer than 3 minutes due to a technological limitation (the record would skip if the grooves were too thin). The album itself is a construct that originated with the total number of songs one could fit on a 33 1/3 Revolutions Per Minute (RPM) vinyl record. In the 80s, the invention of the CD completely revitalized the industry and led to (literally) record-breaking sales.
Despite this dynamic history, modern record company executives badly missed the most sweeping technical innovation—the Internet.  How was that possible? By the time the Internet arrived, all of the original founders of the record companies had been bought out, retired, or died. The new, professional CEOs were unwilling to let go of the most basic assumptions driving the cost structure of their businesses. Specifically, they wouldn’t give up their stranglehold on distribution and the value they placed on owning the recording.
They were proficient at running the current business, but lacked both the courage and the moral authority to jeopardize the old business model by embracing the new technology. The transition would have been far easier if these executives running the companies had invented the old models. The founders of the music industry likely would have ditched old assumptions, because they would have been nuts to do continue believing an assumption that no longer makes sense.
Conversely, Netflix, run by cofounder Reed Hastings, provides an excellent counter-example. Faced with a similar transition (from distribution of the physical recording to electronic distribution of the bits), Netflix let go of its old assumption that customers wanted DVDs mailed to them, invested in innovation and produced a series of brilliant new offerings (streaming video to Xbox 360, Sony Playstation 3, Tivo, Wii, connected DVD players, and a host of  devices) that are enabling them to transition smoothly. Hastings wasn’t married to the old distribution model precisely because he invented it.

A quick thought: Angle of Organizational Repose

Thinking about the [citation needed] trend of traditionally hierarchical organizations going flat. Remembering how much I like the term "angle of repose."

Think there's something here.

It seems likely that there is some angle of repose for hierarchy in an organization. I hesitate, though, to suggest (literally or figuratively) that highly hierarchical organizations can't support themselves/will tend to collapse under their own weight. That seems a bit too on-the-nose, and anyway the analogy gets really complicated really quickly. There are too many factors to consider in an organization's structure, and each must be considered against an arbitrarily large set of organizational purposes & principles. 

Still, it's a fun comparison to consider.

Hugh Fiennes

Electric Imp CEO Hugo Fiennes, paraphrased:

Root cause every. Single. Problem. 

When you ship 200 units and you get two back, it's just two units. But when you ship 200,000, that's 2000 back, and when you ship 200 million... you do the math.

Failures scale. You *need* to understand them.

Being Copied

Bunnie Huang, responding to a question about IP theft in Chinese contract manufacturing. The question is at about 22:30, here.

I'm different than a lot of people - I'm a big fan of open hardware, so before I get to that point with the factory I'll publish my schematics and everything online anyways. Feel free to copy me. Right? And the good news is that your idea was good. You were copied. None of my ideas are ever copied, so obviously they're not very good. 

Title/Position

Yup.

Should I sell this?

Was at NYCVelo today and saw some of the Swrve selvedge aprons, which retail at $100... And I'm like, "mine is *way* better!"

View fullsize

This is like 2010. I had been wanting a nice apron for a while, and worked with a local seamstress to make this one. I sourced all the fabric & straps and made all the leather and copper fittings (I literally had to bend and braze custom copper rings for this); she sewed the apron body together. 

Is this worth my time & effort to resurrect? Kickstart it, sell a handful? Or is it just a crafty thing I designed back when I was young and full of energy?

If you've got feelings one way or the other (read: if you'd buy one) then speak up!

Markets that don't exist

Marc Andreessen, from an old (now archived) blog post titled "The only thing that matters."

Hopefully a great team also gets you a great market -- but I can also name you lots of examples of great teams that executed brilliantly against terrible markets and failed. Markets that don't exist don't care how smart you are.

Rack Ends -> Indiegogo

The time has come: My rack ends are on Indiegogo.

This project has been in a weird filler state for a while, but I finally sat down and worked out my pricing structure and launched the campaign last night - and I'm excited to get it off the ground! In the interest of clarity, I'm disclosing a lot of information here about the development process and my pricing/cost structure. 

After receiving a number of quotes from around the world, I decided to go with a supplier who I have a good professional relationship with: Mattson-Witt Precision of Barrington IL. In 2011 and 2012, I sourced many thousands of dollars of parts from them, and the results were excellent. I have clear lines of communication with the director of operations and consider them a partner in this project. Incidentally, they were *not* the cheapest bid I received - their quote fell somewhere in the middle of the pack - but their delivery timetable was good and I can trust that they'll stick to their word.

When I first resurrected this project, I posted a bit of background on the design here and shared it with the framebuilding community. I received a bit of interest and some informal preorders, and based my RFQ quantities around an extrapolation of that data. I wanted the retail price of the parts to be similar to other similar parts on the market, and also wanted to offer quantities that made sense to my customers. 

The price from the machine shop is $5.07 apiece at a quantity of 150 (I had tentative preorders of about 90). The retail price structure is as follows:

• $8.50@2 = 68% markup = $6.89 net income
• $8@4 = 58% = $11.76
• $7.50@8 = 48% = $19.47
• $7.32@16 = 45% = $36.10
• $6.08@32 = 20% = $32.45
• $5.85@64 = 15.5% = $50.29

If I sell just 150 parts, my net income tops out at $516.75 and tapers down from there - precipitously, if I get a few large orders. My hope is that I can sell more that 150 parts and increase my order quantity accordingly. At quantities of 500, I expect my wholesale price to be closer to $4 each, which obviously means more money in my pocket. My best case scenario is that I pre-sell enough parts to justify folding my profits into a larger order, which I can then sell to new or repeat customers down the line. I hope to determine the order quantity by early-mid February (a few weeks before the campaign ends) and be able to place my order so that it's delivered right after my funding date. That way I can be ahead of schedule on shipping and ensure that none of my customers are put out by delays. 

A note about shipping and handling: I was a little unclear on how to deal with this, and decided in the end to apply a $5 flat S&H fee to all orders. I suspect that I'll be in the black on small orders, but on larger quantities that'll probably change quickly. I'm not investing in any fancy packaging - I'll probably do a small ziploc bag from McMaster + a small plain envelope - so all I need to recoup is the actual shipping charges and my time counting and bagging the parts and getting them to the carrier (likely USPS). 

I'll be updating this project as I near my funding goals. If anyone has *any* questions about the design, how the parts are used, or the cost structures I've listed here, please comment below - and thanks for your support!

NOTE: For anyone who's curious, you can see a fully dimensioned drawing of the parts here!

Chris Dixon

Chris Dixon, in an old post on his blog titled "The next big thing will start out looking like a toy." Emphasis mine.

Social software is an interesting special case where the strongest forces of improvement are users’ actions. As Clay Shirky explains in his latest book, Wikipedia is literally a process – every day it is edited by spammers, vandals, wackos etc., yet every day the good guys make it better at a faster rate. If you had gone back to 2001 and analyzed Wikipedia as a static product it would have looked very much like a toy. The reason Wikipedia works so brilliantly are subtle design features that sculpt the torrent of user edits such that they yield a net improvement over time. Since users’ needs for encyclopedic information remains relatively steady, as long as Wikipedia got steadily better, it would eventually meet and surpass user needs.

Hardware needs this too, and more and more it's possible.

Marc Hedlund

Marc Hedlund, in an excellent post mortem on his blog titled "Why Wesabe Lost to Mint." Emphasis mine.

You’ll hear a lot about why company A won and company B lost in any market, and in my experience, a lot of the theories thrown about – even or especially by the participants – are utter crap. A domain name doesn’t win you a market; launching second or fifth or tenth doesn’t lose you a market. You can’t blame your competitors or your board or the lack of or excess of investment. Focus on what really matters: making users happy with your product as quickly as you can, and helping them as much as you can after that.  If you do those better than anyone else out there you’ll win.

The Public Radio v1.1

Today Zach and I completed v1.1 of The Public Radio. 

I'll write more about our hacknight in the next few days, but for now I wanted to give a brief description of the project - for any latecomers, you know :)

The Public Radio is a collaboration between myself and Zach Dunham. It is an ongoing project; we are planning a full launch this spring.

The Public Radio is an FM radio which is not tuneable by the user. Instead, it is purchased pre-tuned to your station of choice - whether that be your local NPR affiliate (Zach prefers 93.9 WNYC) or your favorite pop station (I prefer HOT97). Once you receive your Public Radio, it's set to your station only, and that can only be changed by sending the unit in to us.* The radio only has one knob; it controls power and volume only.

If you use FM radio to discover new content - if your Scan/Seek controls are in heavy use - then The Public Radio may not be for you. But if you discover new content as we do - mostly online - but still want to maintain the personal, emotional connection that you've built with your favorite local station - then The Public Radio is a convenient and appropriately understated way of doing that. Its design fits in anywhere, and its portability makes it easy to use in areas of your house where you don't have easy access to iTunes or Spotify.

The Public Radio is currently available for beta testers; if you're interested, send a note and we'll put you on our list :)