20 responses to “Starting A Technology Manufacturing Company — Now and Then”

  1. Fluxor

    Did the entrepreneurial thing years ago. During my last year in university, I started a partnership with 3 classmates and sold a computer-based fax system to my own university to replace their leased (and expensive) fax machines. We wrote software from scratch to receive faxes, print faxes, and view faxes on the screen. It also included a voice prompt to allow fax senders to enter info via their touch tone phone so the faxes can be better sorted. We were even stupid enough to write our own database from scratch to store faxes along with the fax sender information and cross reference it against the school’s student database.

    We promised delivery in 4 months for $15,000. In retrospect, that was a ridiculously stupid schedule matched with a ridiculously low price. We were late and the product was buggy; we ended up supporting this product for years after graduation. In the end, I think we saved the school more than $15k in leasing costs, but at the expense of us working for less than minimum wage. But looking back, it was a wonderful experience. From product conception to selling to design and implementation to support, we did it all. Learned lots. Tried more ventures that never got us anywhere. Got married. Settled down. Moved to the suburbs. Now work for The Man.

  2. Cherish The Scientist

    Back in ’95, I was going to start a business with a bunch of friends at Caltech. We were going to do web development for local businesses and call it something like “city pages”. (Because back then, no one had a web page.) Unfortunately, we were all students at the time, and so I made a bunch of arrangements for things to get going (like a space)…and then everyone got busy and bailed. There were supposed to be 4 of us…way too much work for one person to do.

    I think that, if we’d had the time to do it, it would’ve worked fairly well (at least until the dot bomb). I did gain a lot of experience with web page design and worked as a contractor for a couple places for a while.

  3. Janne

    Did for a while when a graduate student. But having your own small company is very hard work, for very low pay, with little job security. Academic research offers exactly the same thing except with more freedom to do what you want, rather than what a client wants to pay for, than a tech company.

    In general, I suspect academic researchers are an unlikely source for entrepreneurship. Most start-up people seem to be motivated by either the freedom to be your own boss or the chance to get rich. But academia already lets you be your own boss to a remarkable degree; and if you care deeply about wealth you don’t enter academia in the first place.

    1. Cherish The Scientist

      Actually, I know quite a few academics who’ve discovered some cool widget and gone on to start their own business selling it.

      1. Janne

        I did say unlikely, not impossible. My point is that academic researchers are underrepresented as entrepreneurs given the opportunities they have for new ideas to commercialize.

        1. Cherish The Scientist

          I guess I’m surprised you’d say that. I realize I have a skewed experience, but I’d say it’s half of the people I know who’ve started businesses. But that may be a pitfall of working at a university. :-)

        2. FrauTech

          I’m with Cherish, a lot of the *successful* entrepreneurs I’ve known developed their product in academia. With the time, lab space, etc there provided for them they were able to get it to a point where they could launch it on the outside. Strange people don’t think about public universities as free market entrepreneurial breeding grounds anymore.

  4. Dave Jones

    Quote:
    “how and when to hit the bricks trying to sell my new ideas”

    I hope you’ll be selling products and not ideas.
    Ideas are worth less than a dime a dozen!

    Dave.

  5. GEARS

    Go for the smaller niche market. I’d avoid VC like the plague if your intention is to run your own business. If your intention is to be a millionaire, then take the VC money and the buyout 6 months after you’ve proven something great.

  6. Bill

    Good list, one more thing I’d add is ever increasing government regulations, especially for hardware guys. I always thought it would be nice to try to start small, design a product and use a contract manufacturer to deal with the inventory and production stuff. Realistically though, if you want to sell a commercial product in the US you have to go for FCC approval, if you want to sell in Europe, you need CE, if you are designing anything remotely novel you’re probably violated a dozen or so bogus patents that need to be addressed. To be totally legit, you’ve got to drop 10s of thousands of dollars before you can even start selling the gizmo. When’s the last time you heard of some billionaire hardware guy that started out as a geek in his basement? It seems that the software world, with much less regulation and lower barrier to entry, is more likely to provide such a path to success. Experiments can be tried with little investment risk, which provides a great environment for innovation. I think a lot of over regulation is screwing the little guy, and wish the government would set up some entrepreneurial type programs that would make it easier for small companies to get off the ground. After all, if Maytag is a allowed to produce a dishwasher that spews out an absolute boat load of RF noise (they’re exempt from FCC testing), why does a little company need FCC approval for a small product they may start off selling in the 100s. It pays to have good lobbyists, apparently.

  7. Otto Hunt

    Forget graphene, and everybody does software. Though I am an EE (specializing in analog and power supplies), I really believe the future for the garage shop is in mechatronics.

    Mechatronic ideas: A plant leaf moisture sensor (been tried in a university setting, but I could do better in my garage).

    A night light that illuminates in response to proximity. This eliminates the need to turn on the (way too bright) room light for a night time bathroom visit.

    A truly personal alarm clock that takes the form of a soft bracelet that inaudibly vibrates.

  8. Miss Outlier

    What a great discussion!

    I have always been aware of entrepreneurship as something I might be interested in, but the idea really has taken hold in grad school. My father is an entrepreneur, and so I know how tough the life is. But I also know how exciting chasing down an idea and making it a reality can be – and I can’t imagine life working for The Man, and academia doesn’t appeal to me. I definitely plan to work for a startup, or start my own company some day. My minor is Entrepreneurship, so I get to take some really cool classes and come into contact with some relevant people.

    One of the classes I took had project teams work on putting lab inventions into business plans for commercialization. One of the teams worked on a better way to make graphene, actually!

    I don’t know if it’s harder now than 20 years ago to launch a hardware company – but I will say that it’s underrepresented (and maybe under-appreciated?). Seems like *everyone* who wants to launch a startup automatically means a web company or an iPhone app. I went to a venture capital conference last fall, and when I introduced myself as a machine and product designer, the majority of the time I got the response, “And what are you doing here?” Gees…

    @Otto Hunt: The bracelet actually exists – a product like that just launched, I know the lady who launched the company – she’s a student! http://www.ourlark.com/indexa.html

  9. FrauTech

    I agree with all the things you’ve laid out Chris. I’ve tried to think about what kinds of businesses would be successful in the US startup market today, and tried to think of the particularly mechanically focused ones. And I run into the same issues, high startup costs due to equipment and manufacturing. Meaning large companies that start a side branch will always be more successful in many arenas over the individual entrepreneur. But then I’m not particularly creative and only do that as a thought exercise as I’m pretty sure I was built/bred/made to be a corporate drone.

  10. Future of Engineering | Scientopia Guests' Blog

    [...] of my fellow engineers, Chris Gammel, just wrote a great post on starting a technology manufacturing company- then and now. He looked at the success of the guys who started HP and the relative comparison of startup costs [...]

  11. Dino Segovis

    Great discussion going on here…. and yes things are different THEN vs NOW.

    I think there IS one thing that works out for the better. That being the ability to market your product via online resources.

    THEN: You had to go to an ad agency, get a corporate identity, a logo. You find venues to advertise which costs money. You MIGHT get a 4% return on your advertising. You needed a store front, be it your own or someone else’s, to sell your product from. More money and a middleman taking some of your profits.
    NOW: You post your idea/product on every possible free venue on the internet and reach a world wide audience. You set up an online storefront with much less overhead than brick and mortar and lower the middleman costs.

    One thing I must say I’m disappointed about. I’m 51 and in my life I have watched manufacturing disappear from this country… try finding something that’s “Made in the USA”. It’s all about bottom line. To compete you are now forced to out source. At some point though, there won’t be any money to buy the product because the manufacturing jobs are gone! Oh yeah that’s right! We’re in the middle of that now. duh. :)

    I think that what I call “garage tech” will save this country’s economy.
    Go get em you entrepreneurs!

  12. SiliconFarmer

    Good discussion here.

    In this instance, I have to side with most of the commentors over Chris’s arguments against entrepreneurship today.

    I’ve written my own response at http://www.siliconfarmers.com/post/2011/02/27/Contrasting-the-mythical-then-versus-Now.aspx

    Summary: the advantage is Now. Then only looks good due to selection bias of a pair of great innovators and entrepreneurs.

    1. Chris Gammell

      You have some good points on your site. Also, every time you wrote “Advantage: now”, I read it in Sean Connery’s voice. (ha, just try and read it any other way now)

  13. Garrett Mace

    I have to disagree with almost every point you make. Starting an electronics business just keeps getting easier. We don’t have to make our own tubes because there are so many useful components available. We don’t need to start out with 50,000 of anything, because PCB manufacturing and assembly techniques are now cheap enough that you can realistically test-market only 100 devices and not lose money.

    We don’t have to come out with some amazing advance in fundamental semiconductor technology, because there is plenty of market for useful assemblies of available parts. With the communication standards and programmable devices of today, devices can become more than the sum of their parts.

    And it doesn’t matter if you don’t perceive your device as truly unique or revolutionary…the fact that you’re building it, and have it for sale as a real physical product, is a huge step. All of my products would be easy for someone else to duplicate, and in fact several of them have…but people will buy an existing product before building their own, and there’s plenty of room down here with the small fish.

    That’s what scares of most hardware entrepreneurs…they look at a pile of components on their desk and then skip forward to going toe-to-toe with a giant corporation. You can’t worry about that…it’s 10 years away. Someone will draw the short straw and run afoul of some megacorp’s territory, but that’s why you try to diversify quickly. You can’t be the company that sells one widget, you have to be a steady producer of ideas. Most failures are because someone who doesn’t understand the market thinks up one idea and is impatient to make a billion dollars. They have no time for the small details that are key to success.

    Maybe I’m just ignorant, but of the small electronics hardware businesses we’ve seen start up with the plan to keep innovating and building new products…who has failed yet? I see more of these businesses starting up in my sector and I have not seen one throw in the towel after incorporating.

  14. Technology Now and Then, A response | Inventors Viewpoint

    [...] in February 27th, 2011 by Ron Amundson in Operations, Planning, and Vision The blogs of Chris Gammell and Silicon Farmer were going back and forth on the issues of starting a small tech company back [...]

  15. Carroll Payne

    I have been in corporate financing for 41 years. Probably no story I haven’t heard. The desire to become an entrepreneur is inherent in most of us. Unfortunately very few of us know how to get started. I have interviewed many such people and find it almost impossible to get across to them what you have to do to get started in a way that will almost guarantee success. Now don’t get me wrong. Many new companies do go under,but for the most,it is simply because they refuse to listen to the professionals.

    I can guide anyone that wants to go in business. I have helped many business over the years, and owned several. Our website features factoring because that is by far the easiest way for any business to get funding. We do work with established companies that need funding for growth and expansion in the millions of dollars. If interested,get in touch with me.