Tuesday, July 19, 2005

Instant companies

This excellent article (PDF) from Business2.0 discusses the drastically reduced barriers to entry for designing, manufacturing, marketing and distributing new products. The combination of Web collaboration platforms, outsourced design and outsourced manufacturing (typically in China) are changing the landscape dramatically.

A related phenomena is the "long tail" -- as you might expect, the distribution of market sizes in a product category is a power law, with a few big niches and lots of smaller ones. Now, with efficient search and distribution using the Web, small virtual companies can profitably attack the smaller niches. The winner, of course, is the consumer, who has greater and greater access to inexpensive and innovative goods.

The first question for anyone who wants to build the next superstar widget is this: What's it going to look like? Arriving at an answer was traditionally an arduous task, an age-old struggle between designers and manufacturing engineers to balance what's desirable and what's possible. But the new army of hit makers is getting it done faster and cheaper than ever before. Take Kidrobot founder Paul Budnitz, who describes himself as a "decent artist and database programmer." Just three years after Budnitz began selling collectible dolls on the Web, sales of the figurines -- inspired by hip-hop culture and Japanese anime -- are on track to hit $5.5 million in 2005. There are bustling Kidrobot stores in Los Angeles, New York, and San Francisco and a TV cartoon deal in the works. Aside from salespeople in the stores, Kidrobot has only 11 employees.

To create new characters, Kidrobot's designers first sketch them using Adobe Illustrator, the off-the-shelf drawing program that goes for $500 a copy. They produce six views of each toy, plus blowups of detailed areas like eyelashes. Then they move to Basecamp. Released less than a year ago by software maker 37signals, Basecamp is a Web-based application that links everyone who works on Kidrobot's toys -- from its New York City design team to manufacturers in China. Established toy companies spend tens of thousands of dollars shuttling designers around the world to iron out product details. Kidrobot pays about $100 per month for Basecamp.

Once Budnitz is satisfied with the initial designs, his team uses Basecamp to share Illustrator files with engineers in China who transform them into clay or wax models. One week later the models arrive in New York. With Basecamp acting as the messenger, the two sides repeat the back-and-forth until the toys meet Budnitz's approval. The final design -- along with specs for paint and form-fitting packaging - is then uploaded to Basecamp, and 30 days later finished toys march off production lines in China. "I can have as many as 40 toys in various stages of production at one time, and we can still manage all of these projects with just a few people," Budnitz says. "It's stupid simple."

...Outsourced manufacturing has long been available to the big guys. But thanks to folks like Yu, it's now an option for anybody. Born and raised in the United States, Yu is as comfortable in North America as she is flitting between her office in Taiwan, her shipping center in Hong Kong, and the Union Electric factory in southern China. In addition to Color Kinetics, Yu's clients include Brookstone, Discovery Channel Stores, and RadioShack (RSH). She has shepherded the manufacture of singing cake cutters, golf pedometers, and scads of digital recording devices. Through her, companies tap into some of the deepest manufacturing expertise on the planet -- at a third of what similar work would cost in the United States. "In the States they have such great ideas, but they don't know how to put those ideas into production and they don't have the infrastructure to do it," Yu says. "We do."

...Start with Google: Type in "China," "manufacturer," and your product and you'll get a list of factories. Or look on eBay for something similar to your gizmo and research who made it.

No comments:

Blog Archive