MIT Founders Journey - October 23, 2014

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In this SlideShare, Dragon Innovation will provide an overview of Scott N. Miller, CEO of Dragon Innovation, and his journey as a founder. This presentation was given at the MIT Founder Journey course in October 2014. Topics include: - Dragon Innovation Background - Manufacturing Overview - How to Prepare for Crowdfunding - Understanding Product Cost (COGS) Share the presentation here: About Dragon Innovation Dragon Innovation works with entrepreneurs to launch hardware products and scale companies. Founded by a team of hardware experts, Dragon provides a clear path from prototype through production with unmatched manufacturing expertise and trusted connections. Dragon's client roster includes Coin, MakerBot, LIFX, Scout, Romotive, Sifteo, Orbotix, FormLabs and over 100 more companies paving the road for how new technology gets made. Connect with Dragon Innovation Website: Blog: Twitter: Slideshare:

Transcript of MIT Founders Journey - October 23, 2014


2. Presentation Download 3. 3AgendaQuick SurveyDragon BackgroundManufacturing OverviewHow to Prepare for CrowdfundingUnderstanding Product Cost (COGS)Q & A 4. Quick Survey4 5. Dragon InnovationBackground5 6. MIT RoboTuna6 7. Agenda7 8. Robotic Corvette Powered Dino8 9. Agenda9 10. Initial iRobot Expertise (Revenue)10 11. Journey from $100,000 to $100 Price11 12. My Real Baby ~ 100k12Velociraptor ~100k+ 13. Rooomba and Scooba13 14. Agenda14 15. VISIONWe are going to takesomething as insanelycomplex as manufacturingconsumer electronics andmake it feel easy. 16. Bolt 17. Bolt 18. 20 19. MANUFACTURING SERVICESFocus on what you do best. Benefit from real-time responses, improved quality,higher efficiencies and easier communications. Plus, youll save a bundle in travel costs.FACTORY SELECTION SERVICESFind the right manufacturing partner for your product. Factory Selection & Vetting Preparation of Request for Quote (RFQ)package Quote comparison / Apples-to-Applesanalysis Far East and US location supportPROJECT MANAGEMENTFull Dragon team support plus a dedicated Project Manager located on-site at the factory. Factory contract negotiation On-site support with dedicated ProjectManagement Schedule and budget planning Independent inspections and factoryoversight Certification process coordination andassistance Iterative design reviews Component sourcing assistance Total product lifecycle cost reduction Creation and implementation of quality plan Schedule negotiation / acceleration Sustaining engineering strategies Rapid response / fire fighting Factory relationship management 20. Applying 250 Combined Years Experience To Build >100Hardware CompaniesDuring the final stages of product design,we have the Dragon team come in to assessmanufacturability and assembly. Theyvebeen very helpful and made our productsstrong. Dragon Innovation can act as atrailguide to help navigate the decisions anddrama of producing hardware.BRE PETTISMAKERBOTWe really had no concept as to themanufacturing process. Thankfully,Dragon was keen on educating us -helping us identify gaps in our design,and guiding us on the fullmanufacturing process from inceptionto fulfillment.CARLOS HERRERACEO / FOUNDER, PINTOFEED"Dragon helped us take our crowdfundingsuccess and translate it into to shippingmore than 100,000 Pebbles in just over ayear. They provided critical supporton-the-ground in China and sourcedexcellent suppliers."During the final stages of product design,we have the Dragon team come in to assessmanufacturability and assembly. Theyvebeen very helpful and made our productsstrong. Dragon Innovation can act as atrailguide to help navigate the decisions anddrama of producing hardware.ERIC MIGICOVSKYPEBBLEKELLER RINAUDOROMOTIVEJEEVAN KALINITHISIFTEOIf youre looking to produce stuff at scale,you have to realize that the manufacturingprocess is hard. Dragon helped us climbthe manufacturing learning curve withtheir expertise. 21. DRAGON INNOVATION HAS HELPED LAUNCH AND SCALE OVER 100COMPANIES SINCE 2009 22. HARDWARE ISEXPLODINGUnprecedented periods of growth come with lots ofchaos. 23. Hardware WaveEnablers Nearly Ubiquitous High-Speed WirelessAccess Unprecedented Global TechnologyInnovation Fearless and Connected Entrepreneurs& Consumers Available Capital Inexpensive Devices, Access & Apps Ability to Reach Millions of New Users inRecord TimeKPCB DECEMBER 2012 24. PROTOTYPING HASNEVER BEEN EASIER 3D Printing Arduino, Raspberry Pi, Beagle Bone,Edison TechShop GrabCAD, Upverter, GitHub SparkFund, Adafruit Easier Access to Capital 25. HARDWARE INNOVATION NOW COMES FROM THE LITTLE GUY 26. Product DevelopmentThe New Way: Sell then Build28 27. Raise capital upfront Validate product / market fit Create engaged & passionate communityearly Get the attention of media and investors 28. BE CAREFUL YOU DONTSELL SOMETHING YOUCANT BUILD30 29. A B C D E F G H I J K L M N O P Q R S T U V W X Y ZPERCEIVED PRODUCT TIMELINEIdea Crowdfund DeliverA B C R S T U V W X Y ZManufacturePrototypeD E F G H I J K L M N O P Q 30. MORE REALISTIC PRODUCT TIMELINEIdea ProtoCrowdfund Manufacture DeliverA B C D E F G H I J K L M N O P Q R S T U V W X Y ZCF Prep 31. Manufacturing is Complex 32. Why Delivering Is HardGetting from prototype to delivery is a longjourney with many unknown unknowns : COGS, tooling and manufacturing costs Lead times Permanence of Quality Iteration cycles DFMA Factory Selection and Management Team Scalability Schedule & Project Management Specialized skills (ME / EE / SW/ Q / SC / Logs) 33. Calculate An Accurate Funding ThresholdNRE for Prototype to DFMCOGSTooling CostsManufacturing CostsPre-Sale PriceTransaction Costs35 34. COGS DriversYOUR DESIGN Material and Component Selection Fabrication Method Manufacturing Efficiency (FirstTime Yield, machine tonnage,assembly labor, number ofoperations, etc.) Quality Requirements (driven byrequirements / Voice of Customer) Packout (replaceable vs.rechargeable batteries; packaging;spares, etc.)MANUFACTURING PARTNER BOM Transparency Profit Margin Labor Rate Currency Geographic Location (shipping,tariffs, etc.) Capability (in-house vs.outsourced) Supply Chain (Purchasing Power,volume (piggy back), Consigned vsPurchased, etc). 35. Controlling Costs1.DeconstructtheBOM.2.Separatespecialcomponents.3.Transparency4.Comparetostandards.5.NegoIateInclusions 36. 8 7 6 5 4 3 2 111934141120333128 1317 222136303710241812 2352529156 1687 9235341326ITEM NO. PART NUMBER DESCRIPTION QTY.1 100132 Heatsink, Aavid 60520 12 PCB 1100104 Circuit board blank 1100015 LED, Luxeon LXHL-LW6C 13 GATE 1100110 Film Gate 1100011 Backgate 1100024 Film Spacer 14 Bottom 1100144 Bottom Plate 1100029 Leaf Spring 25 Knobreel 2100106 Cover Bush 1100151 Dowel .125 dia 2.000 long 1100009 Driver 1100153 Gripring .125 dia 1100149 Knob bush 1100007 Clutch, one-way, Torrington RC-02 1100152 Washer, ss .125 id, McMaster 98019A310 1100017 Knob, plastic McMaster 7354K15 1100045 Felt washer 16 Reel 27 condentube 1100031 Condenser lens, small Fisher Price 1100105 Condenser Tube 1100154 O-ring Buna -120 1100035 Retaining ring, internal 1.062 dia 1100031b Condenser lens, large, Fisher-Price 28 100162 Spacer, condenser lens, short 19 100136 Spacer, condenser lens, long 110 100163 Spacer, projector, short 111 FHMS Phillips M4x20 812 PHMS Phillips M4x8 613 PHMS Phillips M4x6 514 PHMS Phillips M5x16 815 FHMS Phillips M4x12 616 PHMS Phillips M4x12 117 PHMS M4x8 618 100150 Endplate, Right 119 100160 Endplate, Left 120 100100 Front Plate 121 100138 Projector Lens Housing 122 100148 End Spacer 223 100145 Top Plate 124 100158 Window Edmund R39-773 125 100146 Handle 126 100161 M5 Acorn Nut 127 100147 Half Bridge 128 100012 Focus Screw McMaster 92558A170 129 100143 Spacer, .25 dia, .19 long 430 100156 Spacer, projector, long 131 FHMS Phillips M4x8 232 100150 Washer, Nylon, MSC 05401757 133 100159 Detent 134 100101 Bumper, rubber McMaster 9540K35 835 100039 Switch, SPST rocker Carlingswitch 136 100155 Projector lens, concave 137 100157 Projector lens, plano 1DCBDCBDIMENSIONS ARE IN MILLIMETERSTOLERANCES: 0,1MMANGULAR: 0 30'MATERIALDRAWNAPPROVEDA AAPPLICATIONFINISHREMOVE ALL BURRS AND SHARP EDGES8 7 6 5 4 3 2 1NAME DATETITLE:SIZE B DWG. NO. REVSCALE 2:5UNLESS OTHERWISE SPECIFIED:KINKAJOU DELTA100141DO NOT SCALE DRAWINGallen 21july04Anatomy of a BOM Plastic Purchased Parts Electrical Components Consigned Components Deco Packaging Assembly Labor CM Profit, Overhead and Scrap Overland Transportation 37. How to Calculate Plastic Costs Does it matter that it is a gear??? Components (3) 1.Material Cost= Part Weight * Resin Cost 2.Machine Overhead:= Hourly Cost * Cycle Time (sec) / (3,600 sec / hr) 3.Factory Mark-up, Scrap and Overhead (%) Total Part Cost:= (Material Cost + Overhead Cost) * (1+Factory M/U) 38. HK Resin Prices (USD/Ton)Reference: will need to create a login) 39. Example PRC MoldingItem Cost (USD)280 Ton / hr $15.48220 Ton / hr $10.96180 Ton / hr $8.38140 Ton / hr $7.09100 Ton / hr $5.8080 Ton / hr $5.16 40. How to Calculate EE Costs Cost = Component * Usage Separate high cost components over a certain threshold.Apply a lower mark-up. Apply Factory M/U 41. Typical PRC CM Margins(Profit, Scrap, Overhead)PCBA68%Toys12%Consumer15%Medical>40% 42. Manufacturing StrategyVolume Dependent (5k units Threshold)Domestic CM (USA)Overseas CM (China)44 43. Current Dragon Products