When iRobot first sent Scott Miller to Asia a decade ago to help oversee manufacturing of the Roomba, its robotic vacuum cleaner, he saw it as a business trip. Instead, he spent the next four years in Hong Kong and mainland China unraveling the intricacies of the manufacturing process.
The recent rise of crowdfunding websites like Kickstarter and IndieGoGo has proven an effective way to create Roomba-esque product ideas, many coming from individuals or small groups of people, rather than from actual companies. But building a prototype and raising money online do little to prepare people for everything that comes next. Even some of the highest-profile successes in crowdfunding have struggled to follow through. Pebble, a wildly successful smartwatch, was delayed for months, and the company irked customers by distributing the watches through retail stores while some of their donors were still waiting for the devices they expected in exchange for their financial support. Over the weekend Ouya, a Kickstarter-funded gaming console, apologized to its backers and handed out store credits for similar distribution troubles.
Such problems are inevitable when people raise money without really knowing what comes next, according to Miller. “The model of crowdfunding is fundamentally flawed for hardware,” he says.
So Miller is starting his own crowdfunding site, which will focus specifically on several types of gadgets: home health devices, consumer technology, robotics, tech for pets, and home security. (It went up in a private beta on Thursday and will be public early next month.) The site also offers something novel: consulting for entrepreneurs to help turn their ideas into mass-produced products. Miller has experience here. The site’s an offshoot of Dragon Innovation, an advisory firm for small hardware companies working in Asia that Miller’s been running for the last five years. Many of Dragon’s current clients got their start with crowdfunding campaigns, including Pebble and Romotive, a company building a toy robot. Miller balks at describing his new project as a Kickstarter competitor, but most of his potential clients would presumably choose to work with Dragon from the start, rather than starting a Kickstarter campaign and then seeking out Dragon when the going gets tough.
And it almost always gets tough. Hardware start-ups contend with a manufacturing process that’s rife with hidden pitfalls, from the surprisingly high cost of packaging and shipping; to problems with product quality that only become clear at scale; to the unfortunate result of stacking too many pallets on top of one another (you crush that bottom row of products). “We find that there’s a lot of unknown unknowns,” says Miller. “They don’t even know what to be afraid of.”
Miller argues that those who raise money before turning an eye to the logistics of mass production have it backwards. People who want to use Dragon’s crowdfunding platform will come to the company at the planning phase, and pay a fixed fee in the “low thousands” for its consulting. The advisors will help entrepreneurs design a product that can actually be built at scale, and counsel them on how much money they’ll need to raise to build it. The fee’s in place partially to discourage people who aren’t looking to build serious businesses.
The crowdfunding platform will work much like Kickstarter, with entrepreneurs setting a funding goal and getting nothing if they don’t reach it. Unlike Kickstarter, backers will be able to order items in bulk, to help companies raise larger sums. Companies who reach their goal aren’t obligated to hire Dragon as a consultant, but they can decide to hire it on a retainer basis for help with manufacturing and shipping. Dragon’s future plans also include a retailing component.
“If you think of an alphabet where Z is shipping the product and A is the idea, crowdfunding is a C or D,” says Miller.
