It's very difficult to know how to plan for a project on this scale when you've never done it before. The problem of "unknown unknowns" makes it awfully haphazard to proceed without adequate experience, and I'm guessing the creators of the Phoenix3D are another group of people Fresh Outta College! with a degree and a dream. I don't mean to bash them, but rather to figure out a few of the high-level mistakes they made, and hopefully to extract some actionable advice from their experience.
This is what happens to a lot of startups, and sadly, Phoenix3D was no exception:
[img]http://forum.seemecnc.com/download/file ... &mode=view[/img]
Bad idea: Trying to build your own super complicated thing before you've figured out how to fix someone else's (broken/inadequate/etc.) super complicated thing. Even if it's broken or inadequate, there's probably a lot of aspects to it that aren't broken or inadequate. Building a 3D printer from scratch requires a much bigger skillset than simply putting together and improving someone else's. Better to learn on an existing design, and benefit from the majority of stuff they did right, than to have to go through making all the same mistakes yourself. It makes the learning curve much steeper, and can encourage corner-cutting and abandonment of features (if not the whole project).We started designing 3D printers in response to the designs and printers we had originally purchased. None of them worked the way we liked. So, we set out to design a new printer.
After you're good at fixing someone else's designs, maybe it's time to do your own design.
Another bad idea: They had no idea who they were going to buy the parts from, what they'd cost, whether they'd get bad samples and have to choose different vendors, etc. - and they started selling anyway, assuming that they would just figure out everything on the fly. This is OK when you're building a bespoke printer for yourself, or your friend who isn't going to come after you if you miss a deadline. It's not okay when you're selling them to dispassionate 3rd parties who just want a printer, and have no legitimate reason to care about you or your problems, having plenty of their own to solve, among them not getting a 3D printer they paid for. One might assume that they didn't mock up a production line or do anything else to figure out how to run it, what it would cost to furnish, supply, operate, upgrade and repair it, etc. All those units were sold before a method of producing them existed. Not a good move!So, we ran the Kickstarter. [...] We didn’t think it would take off like it did, going on to pre-sell nearly $110,000 of product. [...] This also allowed us some time to firm up who we wanted to buy inventory from.
Fixed, variable & sunk costs for the plant? Sales tax? The production line? The wages? Administrative and ancillary stuff like filing taxes, running a website, hiring legal counsel, etc.? The thousand-and-one grafts that federal, state, county, and municipal governments bleed business owners dry with? ...Profit? I don't see much room for these things if 80%+ was spent on materials alone. A business can easily sink 10% of its money on legal stuff, especially early on when the corporate structure, contracts, IP research, etc. are going on.Flash forward three weeks later, we start buying inventory. Over 80% of the money we received was used on inventory.
They were going to use a bunch of 3D printers to 3D print parts for other 3D printers. It would have been far better to have the parts printed to a high dimensional accuracy by Shapeways (or just get a DLP?) and then use those to make forms for injection molding. If they didn't have the dough for that, it would have been better to hold off on the launch until it was figured out. As it is, they figured all this stuff out after they had already sold units, at which point it was too late. They painted themselves into a corner.As we started building our “fleet” of printers to print out additional parts, [...] Unfortunately, injection molding the parts was out of the question – we didn’t have the money, expertise, or the money to hire the expertise to make this happen.
...Oh?For the longest time, things were always looking “okay.” Things always looked like they were just about to improve significantly.
After 80%+ of the money was already spent on materials, it became apparent that they needed to hire more people. Yikes!Back to the topic of time: we knew that the three of us could not do it alone, it would take too long to finish the Kickstarter printers, and we would run out of money for basic living expenses. The instinct here was to hire people, because that’s what growing companies do – they hire people!
I bet all kinds of misery went on regarding that. I know what it's like to work with unmotivated people who never carry their weight. They ruin everything. So now, in addition to blowing 80%+ of their money on materials, they had to not only hire and fire some series of employees, but also move their facility to another city. Adequate simulation and planning beforehand, with a willingness to abort the project if it couldn't be satisfactorily worked out ahead of time, would have allowed them to avoid so much grief.This proved to be challenging. We found some talent in our rural community, but they were, unfortunately, not helping to expedite the processes. Of course, these were employees – which meant that we were now starting to put money into payroll. This led to the first round of layoffs, and our move into Fort Collins, to be closer to a more diverse workforce where, hopefully, we could find people with actual experience in assembly or manufacturing.
There wasn't much else they could do at this point, but this passage highlights something important. They could not, and did not, stop taking orders. Their backs were up against the wall. They kept having to dig themselves in deeper and deeper, making more and more promises that they would eventually fail to deliver on. This is just one link in a terrible chain of events. The first link in that chain? Lack of patience, planning, and a willingness to either delay or abort.This process of laying people off and hiring new ones repeated a few times. We went through three or four large groups of employees trying to find the right mix of talent. As deposits came in for new orders, we were able to open a line of credit to start buying more inventory.
I wonder if, at that point, they still thought they "didn't have enough money" to hire someone to convert their operation to use injection molding. How much did they spend building and assembling a fleet of 3D printers to knock out the parts at an agonizingly slow pace? Can't you get an injection molding machine for like $5K on eBay? This sounds like a decision that was made hurriedly, without research, on the assumption that what they knew (3D printing) was "good enough."We fought and fought molds. Jerry spent countless hours creating new molds trying to replenish them as they died. We eventually came up with a template technique to make that process faster, but it didn’t work for all the molds. [...] ...despite the massive amount of money we had to spent to keep re-creating molds (all in, I’m guessing we spent well over $10,000 on silicone).
When you promise someone something, and then you don't deliver on it after you took $1,500.00 from them, they're supposed to get mad. If someone calls you a horrible person when you rip them off for fifteen hundred bucks, rather than suing you or trying to beat you up, consider yourself lucky. A person who has been swindled (whether the swindle was voluntary, or simply due to really bad planning) has a right to vent about it. You should expect that. Taking that venting personally (when your actions are what provoked it in the first place) and writing a passive-aggressive comment about it on what's supposed to be a letter of apology, is just not reasonable.But, obviously, word got out that deliveries were a problem, and that delivering was slow. My favorite comments were the ones calling us “horrible people.”
Remember when they spent 80%+ of their money on material? Going by this, they were spending about the same on payroll as material. Then, another 25% on top of that to rent and operate their facility. They didn't see this coming because they didn't have a good plan.Over $100,000 went to payroll, over $100,000 went to inventory, and at least $25,000 went to rents, utilities, and more.
In summary, entrepreneurs need to spend as much time planning ahead as is necessary, and they need to be willing to either wait on, or abort the project, until they have a clear path ahead. They should have got firm estimates from suppliers and B2B manufacturers before they went public, let alone started taking peoples' money. They should have mocked up a production line, done walkthroughs to calculate how long it would take to assemble things, etc. They should have gone the injection molding route rather than fooling around with a fleet of 3D printers and high-maintenance resin casting. And, I don't know this for sure, but it sounds like they probably got a bunch of computer science majors and nobody with a business background. (Maybe they had a business major, dunno.) It seems to me that they should have got more experience in the industry, before trying to become a part of it in a single step.
I don't blame them for not knowing what they didn't know, but hopefully others will look at their experience and figure out how to avoid repeating it.
