so for the last year we've been talking open source hardware and watching that progress...there are more and more open source hardware projects, to the extent that you can get venture funding now for OSH (ie buglabs)
one thing we only mention briefly, is the business model of how this works
i started my OS hardware business 'formally' in 2005, after seeing the proliferation of MP3 player projects online that were backed with webshops (such as jelu.se)
a lot of my friends, seeing that my business is sustainable/profitable have asked me
"limor, how can *i* get the wealth i deserve using the internet?"
i believe that every good business starts 'by accident', but here are some hints that may help you know if its accident time
assumptions:
a) theres only one of you - starting a biz with more than one person is exponentially more difficult and complex
b) you have a current job (or are coming out of school) with 'middle class' income
c) you are very computer literate & the internet does not scare you
beginning:
start organically, only get what you need not what you want - this will get you thru the unpleasant first part
1) you will need some skillset that can be allayed into a product. i have no idea what it is that is. think of what you like to do. for me its electrical engineering
COST: ???
2) think of a name 'brand' for you/your company. this doesnt have to be crazy insane like SuperMegaTronixLLCinc. It could be your name! (Kip Kay/Ben Heck) or your handle from hax0ring days (ladyada)...whatever, just pick something. you can pick a 'logo' but id wait
TIME: 1 week
COST: none
WHY: you want to be remembered
3) register a domain name - do this first because man it sucks if you cant get what you want cause some jerk snagged it and has trannie porn links on it. the domain name does not have to be short but it should be memorable (sparkfun, hackaday, instructables)
google the name, make sure theres nothing out there that will be confusing. do a trademark search as well (this is free). get the .com, .net and .org but you can skip the .info, .biz if you're short on cizzash.
this is something you will have choose on your own. cycle thru #2 and #3 until you're happy
TIME: less than a week
COST: you can register domains for really cheap, lets say $15-$20 each, so $50 on ave
WHY: if you cant be found you cant sell something
4a) file a DBA. you most likely do not need to LLC or incorperate. DBAs let you do business under your chosen name instead of your given one. they are very very easily, do it by mail or in person. costs maybe $40
4b) open a bank account under your DBA, a free checking account. you'll be writing checks!
4c) get a credit card under your DBA name, if you have the credit, get one with rewards or cashback.
4d) go to the library and read every relevant book by Nolo press
TIME: 1 week
COST: $40
WHY: you can do business under your company name!
5) get, borrow a digital camera, and some bright lightbulbs. i have an SD200 it was $200 4 years ago. seriously, do not go crazy here, you will not take significantly better photos with a SLR. however, you cant use a webcam. build a simple lightbox (using a diffusing gel)
COST: $250
WHY: a good photo will be used over and over and over again
6) make a lot of stuff. the only way to 'get good' is to make a lot of stuff. dont tell people about the failures (yet). get maybe 4-5 projects under your belt. purchase everything related to your biz on the bank account/credit card. this makes your bookkeeping hella easier than 'receipts in a box'. hopefully you've done some of this. take lots and lots of photos of progress.
TIME: 2-12 months
COST: $500-$2000
WHY: to get experience building things
7) Take very nice photos of your one-off projects. spend a few hours. take many many photos. find good photos of pictures online to get a sense of what is good. Do not take just pictures of just a circuit board, there is nothing more horrifying than a photo of a PCB. take photos of your project 'in action' - what does it DO? use video if necessary. use free software to adjust levels, colors, of your photos. you must have a 'moneyshot' photo, the excellent photo that will explain what it is, how it looks, etc. etc. it can be a diagram or whatever
TIME: 2-3 days
COST: $250
WHY: a good photo will be used over and over and over again
8) do basic documentation of your projects. with the domain names you've got, you can even get some basic free webhosting using a drupal/wordpress/blogger/instructables/etc site. your first website will eventually be scrapped but draw a picture of what youd like and then make a very simple site. you will need to know html. put the picture at the top of the project page. below that picture have a one paragraph description of the project with stats. So you built a DMX-controlled RGB LED light, your paragraph should describe how bright it is, that it is DMX-controllable, how many LEDs, etc. why is it cool? make it short and sweet. you do not have to go into crazy ass technical details. we dont need to know the wavelength of the LEDS, you can just say 'red green blue' we dont need to know the specifics of the protocol if its DMX compatible.
steal your website design ideas from someone who does it well, theres no point in being unique here.
TIME: 1 week
COST: Free or very very cheap
WHY: the people who will give you publicity are very very lazy. they do not want to dig thru a 10 page latex document to figure out wtf it is. they want to copy and paste a paragraph.
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LADYADA BRAND SEKRET: publish how you made the project, using photos you took. do not have a huge block of mindnumbing text. the photos must tell the story, and the text is for people who want more info. the more media the better, video, audio, photos, etcetc
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REPEAT FOR EACH PROJECT
9) fill out the rest of the website with info about yourself so you are not a nobody. hell, put a picture of your cat. also put up an email address. for spammy purposes maybe choose a new email addr.
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LADYADA BRAND SEKRET: on your contact page or on the project page put a short but friendly note "if you're interested in purchasing one of my products, drop me a line"
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10) once you think you have a nice presence you are ready to get visitors. send a nice short email with a link to your site, & 2 sentence abstract/description, to blogs that would be interested in your stuff like Make!. also post (BUT NOT SPAM) forums that are into your type of DIY stuff (lighting, arduino, carmods, etc). be polite, and to the point. if you did a good job with steps 1-6 you can proceed to step 7. otherwise, revise
TIME: a few hours
COST: free
WHY: to get people to know about you
11) Hopefully at this point you will get feedback and comments and traffic. using your internet skills (following up, looking at logs) you should figure out what people think is cool and pay attention to the stupid comments. they are stupid so dont take them personally but use it as a way to gaze into the internets psyche.
you should also have gotten some feedback about what people want to buy. you dont have to sell them anything yet, just keep a note of what people were interested in
TIME: a week
COST: free
WHY: to understand your market
12) find the project that is easiest for you to sell/recreate en-mass. think of how you can simplify it, with the knowledge you have now. then do a full pricelist of how much parts would cost if you made 100 of these. get the best pricing you can. this is your raw cost now add 40% to this cost. this is your 'wholesale cost'. now add 40% again, this is your retail cost
so: project is $10 in parts, wholesale is $16.50, retail is $27.50
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LADYADA BRAND SEKRET: If you dont add the retail 40% you will have a lot of trouble growing. also, you made mistakes in step 8 and did not realize how expensive it really is going to be so this gives you extra buffer. I strongly suggest going with a ~$25-$75 'retail' project to start.
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do not under any circumstances sell the parts for "slightly above" raw cost because you want to do people a favor and 'just break even'. sure its great at first but, you will quickly burn out, lose money and become frustrated.
refine your project to lower the costs. make it simpler, easier, and to the point. do you -really- need a supercap when a coin cell battery will do? look on ebay, surplus tronix sites, mcmaster, digikey/mouser, uline, etc.
buy enough parts to make 25 projects, to sell them as kits or finished products. Use paypal buy now buttons and place them on the project page. figure out whether you want to ship internationally, it is much more expensive than you may think and there are higher paypal fees but its an additional market and the USD is low so this is not a bad thing.
email the people who contacted you in step 7, & post a followup to the forums, blogs, etc.
TIME: a few months
COST: $500-$2000
WHY: refining your project is a good way to make your life easier
13) create a support network for your new customers. start a forum/mailinglist (you can do this for free). watch for support problems, things that annoy customers. despite customers being customers, they can be right. offer support and at the same time, update your online documentation. questions should only be asked -once-! then they go into the documentation or FAQ. soon your support will drop down significantly and you can go back to designing more projects. you will also have some cash flow. nice! perform minor revisions to get your project better and better. once its good to go, and you are selling enough to buy 100 kits-worth at a time, you can start thinking about getting resellers. because you added that 40% margin in step 8 you wont get weird pricing issues and can offer retailers a 40% margin
TIME: a few weeks
COST: 0
WHY: creating 'passive income'
14) repeat last few steps, making new projects. create a blog if you havent yet to document projects as you build them. try to release new projects and/or products every few months. you'll get better and better at creating projects that are well documented, desired and useful. do not stagnate, because you will eventually get bored and/or burn out.
at this point you can investigate getting better webservice, starting up a store (either use an online 'kit' or installing your own...dont build one), hiring help, incorperating, upgrading your bookkeeping, purchasing equiptment, upgrading your shipping methods, storage, etc. etc
15) profit! less
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