36: Crowdfunding Prototypes & Mass-Production
In this episode, we’re going to familiarize you with the world of prototyping and mass-production, specifically as it relates to crowdfunding. Whom should you contact? How can you best keep your ideas from being stolen? How can you best ensure quality? We’re going to overview all of these topics and more in this episode with our very special guest, Gaston Liang, who is an expert in sourcing, manufacturing, packaging, and logistics. So, let’s get started…
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1. Crowdfunding campaigners should develop their concepts into working prototypes before starting to raise funds to mass-produce them.
2. Creators should ideally patent their ideas, both in their own country and in their manufacturer’s country, before approaching a manufacturer—and should hire manufacturers through an NNN agreement to minimize their risk of their ideas being stolen.
3. Creators should consider manufacturing in Asia due to lower costs, may use tools like Alibaba or Jungle Scout or in-person visits to explore manufacturing options for their type of product, should avoid profiteering middlemen like sourcing agents, and should consider both communication and trust when choosing among viable options, plus the ability to accommodate unpredictable order sizes during mass-production phase.
4. Some manufacturers (like The LGG Corp) can help creators through all phases of production by providing cost-effective professional services like vetting concepts for viability, sketching them, rendering them, engineering and/or designing them into beautiful working prototypes, creating molds to mass-produce finished products, designing manuals and/or packaging to accompany these products, mass-producing and then assembling all of these items properly, warehousing them, shipping them worldwide, and handling legal requirements throughout this process—and it’s advantageous to hire a single agent for all of these tasks who can become intimately familiar with the product.
5. An average product may require several thousand dollars over 3-4 weeks to be transformed from concept to prototype, which creators may then market-test and perhaps iteratively refine—and it’s ideal to make all errors during prototype phase while it’s cheapest to correct them.
6. Creators should ideally produce at least 3-5 final prototypes for various purposes, which may include durability testing, product certifications, media production, user feedback, reporter reviews, and packaging design.
7. Crowdfunding campaigners should avoid being overcharged for molds for mass-production, and should expect to pay 30%-50% upfront for mass-production.
8. Creators can encourage high-quality mass-production through both effective project management and hired third-party inspections.
9. Although manufacturers may ship finished products temporarily to creators to store and then mail to consumers, creators may hire professional fulfillment agencies like ShipMonk to perform these tasks, instead, but it’s generally both cheapest and fastest for creators to hire a manufacturer (like The LGG Corp) that performs these tasks.
[01:01] Zach reminds listeners about Funded Today’s growing array of free resources for crowdfunding campaigners, along with the previous episode.
[01:27] Zach introduces Gaston Liang, who left his family’s import-export business to found China’s thriving The LGG Corp, which helps product creators to transform their concepts into prototypes, to put their prototypes into mass-production, to warehouse their manufactured products, and to ship those products worldwide.
[07:34] Thomas reminisces about a campaign that raised lots of money without having any idea how to manufacture its product, which Gaston agrees is terribly out-of-order, which may be why Kickstarter now requires campaigners to provide proof of a working prototype, while Indiegogo requires campaigners to specify their development phase.
[11:29] Zach and Gaston briefly discuss creators’ concerns about having their ideas stolen by Chinese factories, such as Fidget Cube.
[13:09] Gaston explains that The LGG Corp’s 28 factories are especially skilled at making molds, and that they specialize in household goods, electronics, and textiles, including cutting-edge products for crowdfunding campaigns like Digi-Chill, some of which use titanium or carbon-fiber or recycled materials.
[18:15] Gaston asserts that creators should develop their concepts sufficiently before approaching a manufacturer, and should expect a vetting process to ensure that their concept is viable.
[21:52] Gaston warns creators to ensure that they interact directly with manufacturers rather than with sourcing agents, who may seek the best deal for themselves to a creator’s detriment, and proposes that both communication and trust are vital in choosing the right manufacturer, and that the rest depends upon one’s specific product, for which visiting Jungle Scout or Alibaba or in-person can help creators to identify options.
[28:18] Gaston observes that Asia remains a popular place for manufacturing due to relatively-cheap labor, despite higher shipping costs plus concerns about trust, and that larger scale generally results in lower costs-per-unit.
[33:00] Gaston recommends that creators patent their concepts (both in their home country and in their manufacturer’s country) before approaching manufacturers, although it’s not vital, and that creators use NNN (non-use, non-disclosure, non-circumvention) agreements when hiring factories.
[35:12] Gaston notes that manufacturers like The LGG Corp can provide engineering services to transform concepts into prototypes, for which an average project may require 5-6 days to sketch via professional artist, 7-10 days to 3D-render via computer, and 5 days to print via SLA, for a total of 3-4 weeks, although times vary considerably according to the complexity of each product.
[38:45] Gaston teaches that prototyping is all about proving viability without spending excessively, and that average prototypes may cost $5,000-$8,000 to create, although costs may vary considerably according to the complexity of each product.
[43:03] Gaston’s company provides not only engineering services but also design services to transform a product’s functionality into a good form, and also to create appealing packaging, which is a factor that creators sometimes overlook.
[44:31] Gaston suggests that it may be cheaper to market-test product renderings than actual prototypes.
[46:01] Gaston urges creators to make all of their mistakes during prototyping phase, when it’s cheaper to fix errors.
[47:52] Gaston advises creators to ultimately produce at least 3-5 prototypes for various reasons, which may include durability testing, product certifications, media production, customer feedback, reporter reviews, and packaging design.
[51:00] Gaston counsels creators that, according to the Pareto Principle, it’s better for them to outsource their prototyping to a hired professional so that they can focus more attention on what they do best, and also to hire only one manufacturer who can get intimately familiar with their product.
[53:30] Gaston states that mass-production often involves mold-production, which some manufacturers overcharge for this due to uncertainty that your product will work, and that manufacturers often require a 30%-50% downpayment for mass-production.
[56:24] Gaston reveals that mass-production delays are normal and should be anticipated when making plans, and that crowdfunding campaigners should work with manufacturers who can remain flexible to handle unpredictable order sizes.
[63:30] Gaston reiterates that manufacturers like him also design both manuals and packaging to include with mass-produced products.
[65:15] Gaston proposes that hired third-party inspections, along with effective project management, can help to minimize problems with poor quality.
[69:37] Gaston encourages creators to seek an agency solution (if their manufacturer won’t do it) for dealing with legal requirements related to mass-production.
[72:03] Gaston considers three options for shipping mass-produced products and recommends shipping directly from manufacturers as the most cost-effective (and quick) option.
[76:30] Gaston stresses that crowdfunding campaigners should avoid trying to do everything entirely by themselves, but focus on what they do best while delegating other tasks to hired experts.
[77:12] Zach and Thomas and Gaston present this episode’s Projects of the Week.
Zach Smith: (00:00) Funded Today Nation, welcome back to the Funded Today podcast. Today, we're going to familiarize you with the world of Prototyping and Mass Production, specifically as it relates to Crowdfunding. What do you need to know beforehand whom should you contact? What should you expect? How can you best keep your ideas from being stolen? How can you best ensure quality? We're going to have you pull these topics and more in this episode with our very special guest Gaston Liang who is an expert in sourcing, manufacturing, packaging and logistics so let's get started
Announcer: (00:28) The Funded Today podcast is brought to you by fundedtoday.com. Funded Today is a premier marketing and video agency. From startups to Crowdfunding to Amazon and beyond, Funded Today has helped their clients generate hundreds of millions of dollars in revenue. If you’d like help launching or growing your business visit www.fundedtoday.com to speak with one of their experts.
Zach Smith: (00:54) Welcome back to Get Funded Today, The Funded Today Podcast, I am your host, Zach Smith.
Thomas Alvord: (00:58) And I’m Thomas Alvord.
Zach Smith: (00:59) And we are really excited to get started today. Now before we begin, we have a lot of very sources of recommend you downloading on our site, in our show notes, we've talked about our page design analyzer, our Ultimate Crowdfunding Success Guide, and of course, our book that's coming up as well, so you're going to want to get your hands on those let us know. And remember, if you haven't already listened last couple of episodes they've been I think, really good if you're looking to figure out why your project isn’t converting? What you need to do for a relaunch? What to do if you run into some trouble? And today I think perhaps, is going to be one of our usual episodes ever. We're going to talk about prototyping and manufacturing, and to do that we've brought on world renowned expert Guest Donnelly, and he's going to answer some questions for us. So, before we begin guest Don welcome to the show it's good to have you today.
Gaston Liang: (01:45) Well thank you for having me guys really appreciate and hopefully I can bring some value to all your listeners.
Zach Smith: (01:50) Oh, I think it's no doubt. For me myself I'm kind of excited to listen this episode as well, because I think a lot of people they have this idea in their head, and they understand the marketing, they understand Kickstarter, they listened to all of our episodes but they're like "well I still need to get this product, how do I build my product, how do I get what's on the napkin or in my head, on paper and eventually into something tangible that I can sell to people" I think that's what you’ve been right?
Gaston Liang: (02:14) Well absolutely at The LGG Corp this is – the solution that we want to provide to all content creator Kickstarter project then also E-Commerces right? Our philosophy is simple we want to provide that A2Z solution, and let the creator do what they do best, create a project, or have an idea and invention and kind of put it to market and leave us with the engineering, the prototyping and to figure out how to make it the best way possible, and eventually at the end fulfilling for your guys.
Zach Smith: (02:41) Yes, I love it. So what's the name of your company again, just for everybody listening, and tell us a little bit about your story and how you got involved working with Funded Today, and some of the different things that you've done so far?
Gaston Liang: (02:51) Well, absolutely so The LGG Corp is the name of the company, and the story is as such as is pretty simple. My family has been into the export, import business for 30 plus years they've been making stuff out of China, before I was born or thereabout the time, and they kind of grew, grew the business overtime and we ended up now currently with 28 factories across Southern China, and a little bit of Northern China factories. We also end up getting logistics hub warehouse for just customers need right? So, we have six logistics hubs there. So we can kind of make a little bit of everything, right? And the grand plan for them was always that, "hey, eventually guess and we kind of integrate in the family business and kind of takeover or have a portion of that. Being a strong willed person I've decided to not really do that, so I actually went into engineering myself. Did engineering here in Georgia, Georgia Tech, and then, work in the industry, did project management, engineering type work.
Zach Smith: (03:57) Which is one of the best engineering universities in the world, right?
Gaston Liang: (04:00) That is what I’ve been told.
Zach Smith: (04:03) That's what I've heard, so they're perpetuating now it’s pretty good story here
Gaston Liang: (04:08) Absolutely, yes, but my education was pretty good, it's pretty good. But you know, so after getting that nothing beats in a real world experience, right? So, I went into field and I worked for seven, eight years, but and after you kind of have the entrepreneurial bug right? So, you can't just be working for somebody and build somebody else's dream. So, I took that experience, the resources that has been given to me and kind of I want to make something out of it, right? So, I didn't just want to end up working for the family I wanted to bring something to the table. So, I took what I've learned at school and my professional years, saved up all my money and kind of like want to see that table, and I'm basically tapping into the resources that we have had for the last 30 years and kind of make my own business, right? So, all the factories are available to me all the logistics hubs, and all the manufacturing expertise has been available to me. But again, I didn't just wanted it to end up working for the family. So, what I've done is create “The LGG Corp” and the philosophy and the idea behind it is to provide a modern solution for content creator, inventor and e-commerce people are like, where we will provide A2Z service, right? So, anything from engineering to prototyping, post manufacturing, we can do contract manufacturing when people actually have the idea and is ready to go, and also do logistics, warehousing and fulfillment for people. So, that's kind of the idea behind it. And now how did I came to that right? So I to better understand this I had to kind of been there done that kind of deal. So I joined a few e-commerce group launch a few product myself and just kind of see what people, what kind of problem people are having, right? And then that's also how I got into touch with Funded Today and initially as "oh, we have this client and they're facing this problem, that problem can you help?" And I think over time we kind of build a relationship with you guys and now I do a few projects for us here in there.
Zach Smith: (06:15) Oh, yes it's been amazing I know, a couple projects that you've actually stood for them, where we raise them a ton of money marketing, and suddenly it's real to them, and they need to be able to create a great product, and then we're able to send them to you. So, I think it's really good for the Crowdfunding ecosystem, Kickstarter and Indiegogo to have people like you involve because if we make them a lot of money, and they don't deliver, or they turn into a coolest cooler situation where they've raised millions and 10s of millions of dollars, but then only a few people get the product it's just bad for Crowdfunding in general, and I think having people like you, in that ecosystem kind of in that supply chain make a world of difference, and really make Crowdfunding the powerful vehicle that it can become. And a lot of people don't even realize that without you all the marketing the world is never going to actually bring a product to life.
Gaston Liang: (07:01) Absolutely you know a lot of people I think creators are good at creating in market right but when it comes down to actual engineering prototyping, manufacturing I think even if it wasn't for us, and you'll find world expert to do it and take on a project that you raise millions, millions and millions of dollars, it takes some project management skills, a lot of unexpected can happen, and will happen and I think that's what we see a lot of right where the project they had a good intent that a good product, a good marketing, but they can really follow-up.
Thomas Alvord: (07:34) You know that reminds me Zach, remember like when was it maybe four years ago there was a campaign, and we were talking with them we didn't we didn't work with them on their campaign, but they well and there was some liability issues there, but basically they came to us and they had this product, and they basically told us “hey we've raised half a million, we don't know how to make this”, our goal is to raise as much as we can, and then we're going to go get a venture round and then we'll figure out how to build it right? Do you recall that Zach?
Zach Smith: (08:12) I remember that, I remember very clearly.
Gaston Liang: (08:14) And that's not to be just to clarify this and sorry I didn't mean to cut you off Thomas but this is not the way should go.
Thomas Alvord: (08:24) And that's why I think Kickstarter has changed their product design campaigns, and they say “look we need to see a working prototype” it's not your final product, but the very basis of what you're looking at doing, you have a prototype and you will be able to do this because like we were talking about earlier you don't – people don't understand even though we hope they would that it's not a store right? They are helping a creator bring something to life, and a lot of these people they do need to get that prototype first right? And that's what you're so good at.
Gaston Liang: (08:59) Yes, that's so yeah very the first critical step in in getting the whole manufacturing process going right. A lot of people kind of overlook this, the engineering behind it, the prototyping and making sure that you have something viable and manufacturable, is critical, this is a step that I think some people may be a lot of people skip over but in order to have a successful project I mean this cannot be overlooked, and now we really try to make content creator an inventor understand so most of them do and they are reasonable but you have other project whereas, we have a cool concept will sell the idea and concept, and we'll worry about the project later, that's too late already.
Thomas Alvord: (09:48) It is, well it's like a chicken a issue because you have to sometimes raise the money to go prototype or even see if there's a market demand for it before you even go build it right, and like we talked about on our last episode Zach that's where the Indiegogo has had different categories for what stage are you right? Are you just at the idea stage? Or are you manufacturing currently Kickstarter doesn't really have that and it is a difficult dilemma that I've chatted with friends who come to me and say “hey, here's this issue, what should I do?” I look at it sometimes and say yes it's tough right? because you might go spend $20,000 to build some prototyping, do some other things or, or even more, and then you launch a campaign, and then you realize, oh there's no demand for it, but then on the flipside you could launch a campaign raised half a million and then realize I can't even create this thing, so it's tough.
Gaston Liang: (10:43) Yes, and here's what I'll say to that there's a there's a happy medium, between the pay the concept and one that is undoable and where another project has to pin 10s of thousands of dollars, right before we take on any project we kind of vet it anyway. We look at it, and it doesn't cost a thing we schedule a consultation with the client and just kind of go over the idea. Obviously, before any meeting with us all conversation are protected we have NDA contracted place, but so that content creator feel free to share with us but if someone kind of come up with us, and say we need to make this out of an opinion for $2 we’ll be frank with them, and we'll tell them hey, you know, it's just not realistic.
Zach Smith: (11:29) I just work with you two guests on in the sense that I think a lot of people they hear China especially perhaps if they're American and they're like “oh, no they're going to steal our idea there's something right I mean, isn't that that doesn't have to worry we hear that from creators all the time but having somebody like you in China connected to 28 factories doing all the stuff you do, your family business, and now your experience out on your own with your own company I think that creates a lot of relief to somebody who doesn't speak Mandarin or Cantonese who haven't been to China to understand the lip syncs of communication and the different cultural barriers that exists between those two countries right?
Gaston Liang: (12:00) Oh absolutely and I think this is where we kind of have a business and an end right, and all these concerns of question are definitely something that we on a day-to-day basis here's what I'll tell people, The LGG Corp is a US based company my family owns those 28 factories, we're not outsourcing, we don't sharing this with anybody, doesn't really go beyond those 28 times for that many walls, so but we'll go a little bit more in depth it doesn't have to be The LGG Corp we’ll still give tips and how people can bring a project to China without getting the ideas that we’ll learn or pre-manufacture before the event the end of the campaign because we seeing some that right, there's been some project where, even in our factories where somebody will come to you says “hey, make this quick”.
Zach Smith: (12:48) Did you ever see anything with fidget cube?
Gaston Liang: (12:49) Yes the fidget cube was one of them another one of them about two years ago that somebody came to our factory is the it was a lettuce chopper, some kind of like vegetable chopper it was like a circular blade and that project actually went live before the end of the 30 days or 60 days.
Zach Smith: (13:10) Wow, that’s crazy, so I guess on backing up just a little bit, we've talked about a few, but just a couple rapid fire questions for you what kind of products do you manufacture apparel electronics household does it run the gamut again on that what's the most unique one you've ever done as well in your opinion?
Gaston Liang: (13:23) Absolutely, so with 28 factors I mean, this is what kind of where it falls into most of our manufacturing workforce goes to household goods everyday goods, right? We do a lot of kitchen we do a lot of home improvement one that that's maybe about 60% of our business. We also do 30% of electronics, electronics, it's a very difficult niche there's a lot of problem with it so we kind of curve that down a little bit, and in the remaining 10% is more like textile and soft goods. So, really what you know, we specialize our self into his mold making that's kind of work started the whole business, right? We do a lot of molds and we make multiple out of factors to, we have a CNC farm, computer Numerical Controlled Milling Machines, we have a farm where we hold 98 machines and that's you know we have the goods come from.
Zach Smith: (14:14) You do any mold shoes at all?
Gaston Liang: (14:17) It's not really a mold at this point it's more of a fixture to kind of put things together. The shoes where we've made mold for it and I'm sure you've seen them is like the one that looks like Crocs.
Zach Smith: (14:29) Oh okay.
Gaston Liang: (14:30) Where we actually inject the polymer into a mold and polymers is also an industry where we are pretty strong in, we do a lot of silicon, plastic and exotic combust material as well, and we also do like very specialty item like we work a lot with titanium we do a lot of like carbon fiber products and also fiberglass reinforced products.
Zach Smith: (14:55) So especially you do everything?
Gaston Liang: (14:59) I wouldn't want to say that I'd say 80% of the product we've put our hands.
Zach Smith: (15:04) You have to pick one out of the hundreds or thousands that you've worked with what is your favorite or your most unique one you've ever done?
Gaston Liang: (15:10) We've done quite a bit, and I would say recently, one that kind of stood out to me, it's covered it last time is Digi-Chill, right? Where this creator actually is a really neat idea where he has a really good idea he came to us with some design drawings and working prototype is “hey, at this point, can you guys help me kind of put it over the top, and we kind of looked over his design, and work with his prototype, and I think it's a very neat project, that's one of them but here's what I'll tell you without running the risk of breaking any of my existing NDA, and I think most of you listeners wants you kind of hear what project a product are being, are successful in a sense? We work with a lot of innovative people right, I think those project where innovation is first and foremost and bring an existing product with improvement or something totally new. Those projects really, really, do really well another good one is usage of different material for an existing product right so we have a client here that utilize a lot of carbon fiber which is typically found in the automotive industry, and he came to us as “hey, you guys can do carbon fiber, but I want to use it in the sports and outdoors because of the carbon fiber properties can you do it?”
Zach Smith: (16:34) That is such a takeaway, that really is such good takeaway.
Donnelley: (16:36) Absolutely.
Zach Smith: (16:37) I guess on because I mean we do the same thing I remember when people started using bamboo and silver, and they infused it in towels and shirts, and typically you see cotton or polyester or something right? And then suddenly by using just a different material for a product that already existed it felt new it felt modern, it felt techie is the word absolutely right, and then it finally made all this successful that's a good takeaway I love that absolutely.
Gaston Liang: (17:02) and then this just from experience those project typically 95% plus do really, really well, so every time we have a content creator or an inventor that come to us and say “hey can we do something new you've never seen it before, we don't know how quite to do it yet but with your help, maybe we can bring it to market, we get really excited” and, sometimes it doesn't happen and we’ll make suggestion to I earlier mentioned we evaluate product, right so we will recommend the “hey, if you switch out this material not only you could benefit as far as production but also it's a new functionality, blah, blah, blah, and maybe there will be also some taxing duty import implications.
Zach Smith: (17:42) And one thing I like about what you guys are trying to do is and I think this goes to like the “Going Green Movement” is a lot of times you're looking to source sustainable materials and different things like that to better the world, and make it a better place kind of go with what Kickstarter is trying to do as a Public Benefit Corporation in some ways as well to create businesses that not only create livings for people but also have sustainability and other things like that as well so like.
Gaston Liang: (18:06) Yes, I love this comment, because we have some creator the requests that we use recycled material and that's a great idea it impact the cost a little bit, but that's, that's a quick requirement.
Zach Smith: (18:16) Yes, all right, Gaston so now let's get into the nitty-gritty this is our prototyping topic I think this is where a lot of people the idea in their head, what do I do? How do I work with so I want to just rapid fire some questions, and Thomas will probably do the same, let's just have you kind of go through them and, and give us 30 second answers on these and let's see where we end up all right?
Gaston Liang: (18:36) Sure think.
Zach Smith: (18:37) All right so at what point in a crowdfunding campaign should a product creators start seeking a manufacturer?
Gaston Liang: (18:42) So this one that's a pretty good question, so I think prior to even finding the right manufacturer the creators should have a working prototype right, so that it's either they have it made in their own garage or have somebody else make it that would eliminate a lot of the miscommunication, right? So, once you have something in hand, you can really illustrate your points what it does, and for wherever the factory you approach or us, we will totally understand what is it that you're trying to make in the scale of it.
Zach Smith: (19:14) Perfect makes a lot of sense. All right next question, what should creators already know, or have before they approach a manufacturer? Is that kind of going with what you said something that you've manufactured or done yourself, or what else do they know about the process?
Gaston Liang: (19:29) What they need to know it's at least an idea, right? Not a broad idea but at least kind of narrow it down, “hey I want to make this gizmo it should do this, this and that, solve this problem, we would like it to be, made of this material that's a good starting point we've never run into a project whereas it's like well, we trying to solve this problem I catch a mouse, but we don't really know how to go about it. I think that's a little premature to kind of contact anyone not only you might get the idea to the wrong person but it's not focused right it's not realistic. What do you need to work somebody like you? What's the required requirement? I mean, obviously one benefit that people have who are clients work with Funded Today is we don't make anything on you I mean, we help you create great products for our clients, and then that helps us be able to market them there but we're not really a middleman, we don't charge fees or do anything to make an introduction. So when you work with Funded Today essentially you get to work with Gaston as well, and Gaston has his own structure and different things of how he works, but we connect you directly to Gaston in his company, but for people who maybe aren't working with us, what do they need to know to start working with somebody like you?
Gaston Liang: (20:38) Well, what we do is we're A to Z, right so we kind of will do, and can do everything from the predesign engineering phases to all the way down to the fulfillment in the warehousing. So in order to work with us what we do is that you need to pass a vetting process right so kind of what I mentioned earlier make sure that we're not making any Unobtainium Products, we vet the stage of the product if you're just an idea then we might say, “hey you might want to reach out back to us when you are ready to kind of put something on paper when we can actually help you. Or if they already have the idea, but you can go any further for the prototyping then we'll go and assist right? So it's, it's a very delicate question I don't want to turn anybody down but then again there's such a thing as too early. The good thing with working with people, like with Funded Today is that they the project is technically mid vetted already most creator already have a Kickstarter page, or they've talked you to one of your sales rep and we know that they already have the idea.
Zach Smith: (21:39) Yes, absolutely.
Gaston Liang: (21:42) So those are my ideal customer so whoever you sent me from Funded Today they get the benefit of working with us and kind of skip the vetting process, but we'll schedule a call and come see where it's at.
Zach Smith: (21:54) Okay, so now a little bit of question still when seeking manufacturers how can client and our creators identify their options and then choose the right ones?
Gaston Liang: (22:03) Yes, this is the million dollar question, right? It's kind of saying, “Hey, when do you found the right mechanic for your car?” I'll tell you how people typically find in and get in touch with those factories and what's important, right? But this is going to send you people in such a wild goose chase that you might not be even worth talking about, so here you go the right manufacturer what does it boil down to? Is really communication and trust? Those are the founding pillar of any type of manufacturing I don't care if it's in China, USA, Germany, France, wherever, if you guys cannot be on the same page, cannot speak the same technical language and don't understand each other's requirement it doesn't matter who your manufacturer is, you'll never get something. And then the second, component to that is trust you can be working with somebody that you'd be worried they're going to steal your idea if they cannot fulfill your item if they going to actually make what they say they’ll make and we see a lot of that a lot of the customer that you sent to us is like “hey the manufactures said that they could do this, but they really can't” or “hey he said there was going to be $5, but really is 15” now what happened and then you like chasing your tail right? So, finding the right manufacturer is really tricky, and it's really product specific now, how do people find manufacturer, which I've seen people do it, it's definitely doable, but you'll be spending a lot of time effort and potentially money, a quick way to do it is go www.madeinchina.com or Google it, or go on a site like Alibaba and hopefully you get connected with right person but then again everything you see is online. So that thing is truly real you don’t know who you talking to so that there's nothing anybody can do for that, or you can go they're locally and maybe go to I don't know the Canton Fair or the Hong Kong fair or any type of fame, right and kind of connect with them there that's a little bit better than just, going online but then again, you don't know until you know it's been vetted by somebody we know trust or been working with in the past.
Zach Smith: (24:18) And I think you're exactly right there I mean, we've talked to lots of different people and work with and we make lots of different recommendations for all the different stages of entrepreneurship and I can say this definitively about you and your company every single client that has worked with you has had positive things to say literally never anything negative, and I think that is a testament to just how difficult it is to work with China to source the right after make sure you make those 10 mistakes before you get the right one to spend, or waste I should say tens of thousands of dollars, so I think you're exactly right and what you're speaking to on this with Gaston but again, people might not even trust you and I talking about this right now they might still be like, well, they can figure it out maybe I can make it know what I mean, then, “oh Zach I wish I would have listened to that episode I wish I would to just listen to somebody's already been there and pave that path that would have been way less expensive anyway, you know.
Gaston Liang: (25:04) Lot of people will do that right? And that’s heard how does it look, I'll tell you how to go about getting a supplier or get connected and then here's my number just in case a lot of time we get a lot of callbacks, and I'm not seeing this in an arrogant way it's just that, this is a very big endeavor, and I wouldn't take it lightly, and then another thing that with caution people and a lot of people think that they're working with a manufacturer or direct source or whatever right? And they end up with a sourcing agent, you don't want to sourcing agent for that, because the sourcing agent what they're going to do is like okay well I kind of understand the project or the product I'm going to shoot a call on whoever like 20 factories, so your idea now is floating around, right? And then, they're going to squeeze the best possible price at the detriment or the cost of your project, right because they're working on a commission
Zach Smith: (25:56) Or they might like it so much and they might not believe in NDAs or American Bond and then suddenly your ideas are on…
Gaston Liang: (26:01) Oh yes, absolutely.
Zach Smith: (26:02) In a bunch of different factories.
Gaston Liang: (26:05) Yes, absolutely and right and you always being held hostage by that agent right because they'll not they’re not going to divulge their resources, they’d certainly not going to tell you what factories because you're undercut them and sometimes prices are so different that they can make two, three, four times what they quoted and you would never think.
Zach Smith: (26:25) Interesting, yes that's fascinating.
Gaston Liang: (26:27) So it's totally different working with us, right so like, like I said before, we are the manufacturer, you don't go through any middleman or sourcing agent or one of then we have 28 factories, we can make most of this stuff out there, and first and foremost, we are US based right? So if you call us at 10 am your time someone's going to pick up the phone.
Zach Smith: (26:47) Right, that's nice by the way, I've spent a lot of days up at two or three in the morning sometimes four or five in the morning to speak with people overseas and eventually where for sure,
Gaston Liang: (26:55) Right that and you don't have to use Google Translate either.
Zach Smith: (26:57) Good point. Okay now – if you still want to be a Do It Yourself? Or if you want to in a past episode, we talked about Jungle Scout and Thomas got into this quite a bit are there any good directories like that that creators could use in your opinion?
Gaston Liang: (27:12) Yes, I mean I think well first of all Jungle Scout is we've used it to and then we use it in the Amazon Space, right? I wouldn't use it for to as a directory to find, a manufacturer or anything like that, but it was kind of like you emailed this right that directory that that really good directory, is that something you share? Anything that you find online that has a director, whatever it there pass through? So, it's in this affiliate link. I honestly don't think there's a good directory now for people that been in the game for 30 odd years you do this long enough, you make some contacts. I would say we have a pretty good directory because sometimes they are proud that we either can take on or won’t take on due to capacity, or maybe expertise or maybe it's so niche down that leave it to a specialist, right and one that comes to mind is working with ceramic and pottery, you really need to know your stuff. So we'll pass that along, but it’s all entity businesses that's been vetted by us, we've been doing business for like 10, 20 sometimes 30 years, so we have a directory, but it's not something for sale.
Zach Smith: (28:22) Okay, let's talk about the million dollar question now why is Asia so popular manufacturers? And then, in addition to that is it still worthwhile for American and European creators to manufacture overseas, especially made considering some of the terrifies them, I know China and America working out different deals and things like that but how does all of that shake things up in your opinion what are the considerable problems with that, and do you think there's another place that you're looking at? I hear people talk about Cambodia or Vietnam and what is your expertise and experience with perhaps that next place that we need to go after China?
Gaston Liang: (28:52) Yes, absolutely let's talk about that, well, I'd say it's that million dollar question and I'll tell you frankly why people actually attracted to working with China and Asia, it's because cheap labor? I think you can get things done there faster and cheaper than most US factories all most. Now with the recent tariff hike and how does that impact a manufacturing? Also it is a lot of people don't really understand how the tariff is applied to their manufacturing right, and just to clarify the tariff is only applied on your cost of goods and your cost of shipping, and even though if it's another like 25% on top of an existing 15%, 18% that shouldn't break your business. Now it is a speedbump but with profit margin set properly it shouldn't stop you yes it's a speed bump like this.
Zach Smith: (29:49) I like how you say properly to it reminds me of another episode we've had you shouldn't be starting a business if you don't have 50% 60% profit margin right.
Gaston Liang: (29:58) Well I have project where people come to us “hey we trying to make two bucks per item I like they sent me a Walmart model, until you get to be Walmart let's talk about 10s of dollars you can afford to do that, but a lot of people they don't really understand this, but we’d really tried to help them out right. And it's been a topic of content discussion even here at The LGG Corp we've developed a few strategy to kind of mitigate the tax and duty right? Some of strategy are pretty proprietary so maybe we can do a special episode with you guys on that but we've definitely save people a lot of money on tax and duty the legal way, the legal way. They all I wouldn't say a workaround, but there's definitely solution to kind of alleviate some of those tax problems.
Zach Smith: (30:48) Common concerns what do you think? What are the biggest concerns about manufacturing overseas and what do you aside from your proprietary stuff how do you resolve those?
Gaston Liang: (30:57) Common concern I think it's not even taxes or import or export anything like that, I think it's just because a lot of people is in the unknown for them right? They don't know anything about China, they don't work with, you know, people that don't speak their language right it's very difficult there's that cultural clash that you were talking about, I think those are primary the consumer, and also the big elephant in the room is that some people spend, send $10,000, $20,000, $30,000 $50,000 overseas right to somebody that you might or might not hear back from.
Zach Smith: (31:27) Oh isn’t that scary, I know you said that earlier you drop the cash off, and okay is this ship going to deliver my product in a couple months so?
Gaston Liang: (31:35) Well, absolutely I mean, that you think about just buying stuff online, right? When you buy something online before the day of Amazon I mean I remember a time where okay I paid this guy is he going to send me my stuff? And he is US based, so can you imagine that with a foreign entity where you do a Wire Transfer most people haven't even done the Wire Transfer and now they have this stuff is going to show up in 90 days that's very scary I think that's mainly the main concern it kind of goes back to my initial point it's really trust and communication.
Zach Smith: (32:11) Yes, that's fascinating on Amazon Gaston just to think I mean, now you get yourself in a couple hours sometimes for half hour shipping coming to Amazon and drones and all this other stuff in worst case, it's two days and you make really good point before Amazon when you made an order online are you going to get your stuff I was on the cusp of that so I remember thinking this is weird I'm buying something online I'm not going to a store, is it going to come you know, so I can totally understand where that's coming from?
Gaston Liang: (32:36) No absolutely then again trust is earned, right? It's not it's not you can buy this so we typically work with a lot of different projects, then pass client, right, we kind of get along referral and I think that put a lot of the creator's mind at ease where “hey, we know that we're working with an entity here that is not just going to disappear” or “hey they took my money right so absolutely.
Zach Smith: (33:01) Absolutely, I think that's a huge benefit for sure. Do creators need to patent ideas then before seeking people like you, and before seeking their manufacturer? What's your thoughts on patents without speaking like a lawyer of course, but what are your thoughts there?
Gaston Liang: (33:13) This is something I strongly recommend it is not a must to have but well number one that tells us that the creator is serious that's definitely one thing, another other thing two is that they are getting somewhat protected on their idea, right so, they're usually more free about sharing what they have. For the content creator too it does provide some, basic essential protection so that if anything happens that they can take it to court. But one thing that we stress more is that seek patent in China, and that does everything right. First of all if you have a Chinese patent, the Chinese factory can actually read it and they wouldn't attempt to steal the idea because they won't want it to legal problem later and is more on forcible than a US patent that's number one. Number two is that you can actually take that to Border Control in China and then restrict exploitation of the product and that's more powerful than anything else. We actually have a network of Legal Attorneys in China that we've worked very closely with and one of the firm that we use is Ernst & Young in Taiwan we send a lot of clients there to get their Chinese patent done, it's a lot cheaper than the US it's still free but it's definitely a lot cheaper than hey somebody stole a product before even launch. So that's what I would say but I think the dominant document that we use and tell people to look into is the NNN right, a triple and that's a very good and governing document that a lot of factory respect, you know, that's not something to take lightly. Your NDA they couldn’t kill us, but if you have an NNN here's what it means and for people that are unaware of the term it's A Non Use Non-Disclosure and non-supervision. Basically they cannot take your IP and know basically make a product. that is like yours.
Zach Smith: (35:15) Now, what if a creator only has one idea? What do you do then?
Gaston Liang: (35:20) So we've worked with a different creative project at all different stages, right? So, definitely, it came to our attention that they could only take it so far. So as mentioned numerous times on this podcast and I don't want to sound like a broken record, but we can provide engineering and prototyping services, right? We do need a starting point in an idea but if the inventor is running a roadblock, where he doesn't know how the physics, the mechanics, the engineering works, then we can always use one of our engineering staff to kind of help things along. Another thing to keep in mind is the idea might be there, but somebody might not really think through on how this thing will get manufacturer or even if it's manufacturable. So we'll definitely run those checks before even, you know, considering taking on as a client, but to make the question or answer short we can definitely help creator inventor to further their cause and get past the pencil sketch on the back of a napkin.
Zach Smith: (36:26) Fabulous that's great.
Gaston Liang: (36:27) Okay.
Zach Smith: (36:28) How long does it take if they contact you I think a lot of people want to know is this five years in the making is a month how long does it take to develop that idea into a working prototype? And then just for people who are budget conscious, what are they looking at, in terms of a range for costs?
Gaston Liang: (36:44) Obviously, all projects that different right and you know, if a creator is very far along, then processes is really quick and it costs a lot less. If the creator just have a concept on the back of a napkin it might cost him a little bit more and take a little bit more time, but I'll give you guys the typical turnaround time from here here's the idea we need a prototype, can you make it, how much you going to cost, and can we get going on the manufacturing process right? Here's the pre-steps major steps that we like to take on when we do the engineering prototyping right? So we like to do a just a sketch right? A lot of people say, hey I have this idea, and we don't have a drawing for it we don't have anything for it right? so we have a scribble which is fine absolutely fine so what we do is we always recommend to get a technical drawing or sketch done professionally, right, that keeps everybody accountable what it looks like we know what it looks like, we know what material you want to use, we know what's spec so this is the first step and typically that takes us about five days, five to six days to turn this around. The next one is we take your 2D Sketch or CAD or whatever, right? We make a 3D rendering so this is a 3D model that we play in space with it and just to make sure that everything is were supposed to be, some creator take it a step further they will do like, 3D rendering to make it like photo realistic that way you can even visualize how this will look in a setting right. So this is typically seven to ten days, and then from that 3D model we start the prototyping process, we use SLA, which is like state-of-the-art right so think about your 3D printing but like on a crack. This is an exact one to one and there's no rough edges it's a really nice finish and that gives you the physical product that you can actually evaluate right, and typically the printing process with SLA it's about five days. So roughly you look at three to four weeks if there's no major showstopper.
Zach Smith: (38:49) Remind does an SLA satisfied the prototype minimum viability requirement that Crowdfunding people want to know about it?
Gaston Liang: (38:55) Yes absolutely so either the SLA Printing is your base, we obviously will make it photo ready or prototype ready, right, you can do a lot of treatment to it or part of the prototype would be SLA and other parts be the actual functional parts, but at the end of the prototype phase no matter what we provide a fully functional prototype. So it definitely will be working definitely can be used on Kickstarter.
Zach Smith: (39:25) Now that people talk about with crowdfunding, and we preach about this quite a bit on the podcast is the idea that with crowdfunding you can bring ideas to life on the cheap essentially, right?
Gaston Liang: (39:36) Yes, absolutely.
Zach Smith: (39:36) So, how do you decide which features if any postpone on your product either new stretch goals or follow-up crowdfunding campaigns? How do you get the minimum viability product out there without breaking the bank?
Gaston Liang: (39:50) So absolutely I mean and this is why we do prototyping, right? I mean I think we need to maybe talk a little bit about the philosophy behind prototyping the whole point is to prove your concept and make something physical tangible where you can use without breaking the bank. So anybody that come to us and say “hey, we need a prototype, we try to do as much as we can to have you that minimal viable products without having to get mold involve, or any setup costs or like, workers working on your project right? So, this is always in the back of our mind, and I would tell people that this phase that you should not skip the engineering, in the prototyping phase is the least amount of money you will spend before getting to the big bucks where you have like in a mold fabrication or you have to find a facility or expert in whatever material you use.
Zach Smith: (40:46) So you kind of playing off that a little bit let's talk about design, let's say they've got a good prototype but it doesn't look very nice, what do you recommend in terms of functionality to the product, look a little nicer in prototype form and you guys provide those types of design services you recommend certain principles or elements of design to get that prototype to look like a nice sleek finished product even though it might not quite be there yet?
Gaston Liang: (41:09) Before, we answer this question, I think we skipped on a very important one that I think a lot of your listeners going to want to know, how much does it cost the timeframe behind it getting the prototype is roughly a month, month and a half if we have to go back and forth, right? And typical cost behind a functional prototype is anywhere from $5,000 to $8,000 for typical project. Now, we have done some for less, and we've done some for more, but I would say 80% of the prototype out there it's about $5,000 to $8,000. Now talking about when do we decide about adding features for stretch goals or whatever, the first thing we want to focus on is a functional product, we will consult with you and say, "hey, we can add this function or it is a potential for it or you give us more time then, we can have this sister product or add-on whatever, all these questions it is part of the consultation that we have with the client, and like are projects are different but we since we know the Kickstarter came in we know how creator think we want to put those concerns forward, and everything will be hashed out, before we even put any money at work. I think that's kind of you mentioned a lot of referrals to us we're really happy is because we take those precautionary measure we want to make sure that you're happy and not just "hey give us $8,000 or $10,000 or whatever, and we'll make this for you”. We want to be more than just the people that make you stuff, we are essentially becoming your manufacturing partner.
Zach Smith: (42:47) We have a core value at Funded Today called "consider the customer or client lifetime value" it sounds like you simplified that as well, it's not about what you can make today it's how much you can make together…
Gaston Liang: (42:56) Oh! Absolutely and then as a manufacturer, that's the only way to survive and that's been -- we've learned this 30 years ago.
Zach Smith: (43:07) That makes a lot of sense, so when you get past all that, you got this ugly looking prototype, how do you -- what's the -- what do you do to kind of make it look a since it's not but you don't want to spend tons of money to bring this thing to life yet right?
Gaston Liang: (43:19) No, absolutely and then this is kind of part of that prototyping phase, right? So, we will get your 3D rendering that you can easily manipulate have somebody manipulate or even us we can change everything for you we have two designer on staff and we don't outsource nothing against outsourcing designers. But, we have to two US based designer that are more attuned to the taste of the West, right? So, if needed, we can provide design services for product looks or designer features one thing that a lot of people tend to overlook is their packaging I think UP somebody like UP or they exemplify this this concept where your product has to be beautiful, your packaging has to be beautiful, so we tend to get this process going, we encourage the creator to really put something on paper, but you know a lot of inventors they are good at inventing their product but like that special little something, that's when we get our in-house designer involved if needed to kind of beautify the product to go in conjunction with the possibly functions..
Zach Smith: (44:36) Now, this is probably our area of expertise but I'd like to ask it to you to anyway, what about market testing? Any tips on getting good feedback from the market about a finished prototype, whether for product development, like further development or just for being able to possibly sell this product to the masses?
Gaston Liang: (44:52) I was going to say, you are asking the wrong person, but his what I will say and kind of add a little golden nugget to do this, right? So, obviously you want experts like Funded Today to do your market research to see how to reach the right people and market to the right person, but in our initial prototype phase, you can definitely use the 3D files that we give you, have us or have somebody else render those 3D model to be kind of putting context and have those lifestyle photos, right? And then maybe turned up over to a Funded Today or Funded Today, and kind of see, what impact it makes, right? A lot of people do AB Testing that way, is the probably the cheapest possible way, right? And then once you get your 3D model into a real prototype a physical product, right? You can definitely use that, we've made a lot of prototype that looks 95% like a real deal and then get your opinion group or social media whatnot, but this is the magic of getting prototype right? You actually get the item exactly the way you want it, so you can field test it a lot of people kind of omit that step.
Zach Smith: (46:05) So now field testing begins and you decide to have your clients and your creators test this out, right, they get people to start determining whether they liked this or not, but let's say the worst case happens and you discover there's a problem with it, we worked with a client recently and they had a little issue with one of their products and so they had to redo a certain little bit on it, and it end up being a pretty good experience for them because they created an even more amazing product, but from your perspective how hard is it for creators to produce new and improved versions of those original prototypes when a certain aspect of the prototype turns out that it needs to be changed?
Gaston Liang: (46:44) No, I mean, here's the truth, right? The engineering prototyping phase is way where you want to make all your mistakes. So, this is that's what I'm saying, right, make your mistake early and make a lot of them so once you go into the manufacturing phase, everything's perfect. It is that difficult, that's the whole point of prototyping so that this is made so that we can make changes on the fly. The sad news is, obviously if you're going to make changes and or a do over whatever it's kind of restart the clock a little, but we definitely have the ability to improve upon our existing design or the creator's design or even in the existing product to give it more function this is where you want to do all this do all the testing, all the prototyping as soon as possible, right? A lot of people say, "When should I do prototype?" I was like "Today" it's like, get Funded Today, get prototype today, you know. So, that when you are ready to launch your campaign or whatever, you don't have all that scrambling around to…
Zach Smith: (47:47) Yes rebrand for you guys you going to be prototypetoday.com.
Gaston Liang: (47:51) Hey what, we can definitely collaborate on this further down the road.
Zach Smith: (47:56) So speaking of prototype if you've only got one final prototype, which is what I think a lot of bootstrap creators are going to want to do. A lot of times they can feel challenged to take the right product photography or build a campaign video, or sometimes when we work with the press and media that’s across the world, and they'll say, "Well send me a sample, send me a product, I want to review it, I want to touch it, I need a tangible thing to see if this is as good as your video, your page says it is" what do you recommend in a situation like that? Is it a best to just create more prototypes or?
Gaston Liang: (48:24) Oh, you have to, having one prototype that’s just to prove it to yourself. When you hire a firm to do prototype for you, I'll be a little surprised if they only offer you one that should never happen, and beyond what you just mentioned or beyond the market study or the field testing or it is more usage for and here is a few. First of all, I recommend people to get three to five prototype that’s you should at least get that. It's being used for market study and all that but one that people tend to overlook look is certifications. Some of your product might need certification, especially in the electronic world you will need to send a physical one a working prototype for them to get a jump on it, right? If you don't, and you wait till the end, and you only send the complete manufactured version, that's going to add some time two, three, four months to your clock, that's how people get in trouble, so certification is definitely one of them. Another one is once you get your prototype a jump on your package design. Now that how it should look, you can start planning hey, how am I going to package this, how is this going to fit in this box, and how am I going to design this box around this product?
Zach Smith: (49:39) And you help with the boxes and the package design as well?
Gaston Liang: (49:42) Oh, yes absolutely yes. This is, we don't we are A to Z but we also ala carte if you don't want us to help you with packages, that's fine. We don't force the service upon anybody but once we -- when we take on a project and we do A to Z then we fully account that's where we can really have control and help you manage your time and expectation a lot better, right? A lot of times people say “Oh! I'm going to get my package somewhere else", well sure no problem, and then they run into problem in communication or whatever and we're waiting on the boxes, so that adds time to the project. In a lot of time, people when they realize that, that if you streamline your whole process not only save money, but you essentially really saving time which time is money, which is double money I guess.
Zach Smith: (50:30) We brought something to people, don't keep track of as much as they should, but really, time is the most important of all of our precious resource.
Gaston Liang: (50:35) Yes, absolutely, no, absolutely, so yes to answer the questions that definitely get more than one and use them to the full extent, right? You're paying for this prototype use them, get some feedback, play with them, tweak them, break them, break them, see where the stress point is. Do we need to make better ones, do your package design star on your certification and that all these steps will ensure that you have the best possible project and product out there.
Zach Smith: (51:05) Now Gaston just to wrap up this topic, and we'll get into the final topic, which is the exciting one “mass production”, and again, I think this has already been answered but if you had to sum it up in a sentence or two why hire an outsource manufacturer like you when maybe people can try to create these prototypes in-house they can 3D render or they can mock something up, or they can sow it on their machine or something in your opinion if you only had to pick a couple, what are the advantages of hiring the same manufacturer for both prototypes and mass production?
Gaston Liang: (51:33) I'll make it really quick 80% 20%. 80% 20% focus on what you're good at, if you're just a creator and an inventor like focus on that let the professional or dedicated firm do the legwork, right? Don't let this spend 30 40 hours not having the right tool trying to cobble this together. Nothing wrong about doing it yourself I strongly advocate people to try it themselves first, and then you realize that, okay, I need a system, so I could take it as far as I can take it, but now I need something professional, but the other benefit to is to have the manufacturer, whoever or somebody like us that or inclusive is that when we make you a prototype we become more familiar, more intimate with the product. So that ensure that, when we manufacture all the little tips and tricks that we discover along the way, that's not lost knowledge. If you keep on shopping around doing yourself, give it to one guy, give it to another guy now somebody else's manufacturing, you lose a lot of knowledge and transit.
Zach Smith: (52:37) That is so valuable to say as well I mean, I'm building a house myself, and I've had to, I just got done doing a bathroom in my existing house, we had to redo some things and we had to work with probably 10 or 11 different contractors and it was so funny that I had to remember all these different tips and tricks that I had to tell the next one inline and if I didn't keep track of it, sure enough, they made a mistake and we had to go back and fix it. So, I think that my biggest takeaway of all when you start with something and finished with the same person you're so much further ahead than trying to work with five or six different agencies or people that's brilliant.
Gaston Liang: (53:07) Absolutely and here's one more thing we don't like stepping into an existing project. We we've done it in the past and we've done it for some of your clients until they tell us if this is not working out they are messing with us, this is no longer a viable for our business then we'll take it on, but following somebody's footstep regardless if it's good, bad or whenever it's always difficult there's always a catching up here.
Zach Smith: (53:35) Okay well, let's move on to the final topic of today's presentation to Gaston and that is “Mass Production” to get started, how much does it cost upfront to get a product ready for mass production?
Gaston Liang: (53:45) So there's only a few things to consider when you start mass production or whatever, right? There's the cost of the mold, and we can definitely speak to that because we make mold as a business, right? So a lot of creators are like "hey, we got quoted like 30 Grand for the mold is this right?" I was like "absolutely not", this is what's going on, the manufacturer, they don't know if you actually going to take this product to fruition, so instead of wasting their time and working for free and whenever they'll bite you on the mold it costs three or four times more than what it should cost. Our philosophy behind it is, if we vetted your product, we've done through the engineering and done the prototyping, we know if it's going to work on that. So, we provide the mold cost at cost, if it costs us five grand to make it 10,000 to make it, that's what you're going to pay, the reason is, we also guarantee to give the mold costs back. So let's say that you spend $5,000 with us in fabricating this mold after a certain number of unit we give that money back either in money, or in manufacturing credit, and that's the only way to go.
Thomas Alvord: (54:51) And it's incredible because it lowers the barrier to entry the I’ve challenged the people The Gogo Mouse as Zach recalls right and I went and I chatted with people it's basically a mouse that has speech-to-text it works with your computer program, and it would have speech-to-text, right? So you could write your emails you could use your computer commands, and it's all just built into your mouse, and I never went for it I got busy with other things, but one of the big reasons why things stopped is because as I chatted with people, it's like, "yes, your molds going to be $80,000, right?" Or it was like, well, I wanted to build off an existing mouse and integrate into that, but then they seem to make it so complicated. For people who haven't manufactured or gone through that process, what Gaston is saying here is incredibly valuable, just that alone would be reason to work with Gaston yes that's fabulous.
Gaston Liang: (55:46) Really, appreciate that Thomas and the reason I know that mold are being overcharged is because we sell mold, like you need some serious CNC capability to make nice molds. Not everything need a nice mold, but most of them, it will cost something and those factories they buy mold from us, let's say like $1,000 or a $3,000 they're not going to sell it to their client that cost, this is something that they will make money on, and this is something that we are combating, right? I don't think it's right if we are going to manufacture for us it is your mold this is just a two of three we should not be making money on this, as a matter of fact eventually we commit to pay you back for the investment.
Zach Smith: (56:29) All right, Gaston 65% of successful Crowdfunding campaigns suffered delays in fulfillment, that's a fact. Do you have any suggestions for comforting creators about how they can minimize these delays or even failures in the fulfillment process? I mean, literally it's not Kickstarter is "yes, I ordered that two years ago, I should be getting for Christmas this year.
Gaston Liang: (56:53) I'll speak to that, before that one more component to the initial concept production right? One thing that I need to say is like after you get past the initial mold cost, you need to put a down payment in your production, depending on the complexity and the cost of manufacturing it can vary from 30% to 50% down from what you want to make.
Zach Smith: (57:14) Another reason why Crowdfunding is so important you raise a couple of hundred thousand dollars and when you have that done.
Gaston Liang: (57:19) Yes, absolutely it shouldn't be a problem but a lot of people I don't want to be a surprise, but "oh! You just said the mold, what about" so, just to put it out there. Going back to your question 65% of Crowdfunding campaigns suffered delays, why? Inexperience, plainly a lot of people, a lot of project, they don't really have a contingency plan they, think that everything goes smoothly from day one no roadblock no design change no material shortage, no mold breakdown or whatever. It's just inexperience.
Zach Smith: (57:52) So if I start a project in January, and I say I'm going to deliver in April, should I tell people that I'm going to deliver in December up front, just knowing that it's going to take five or six extra months, just because or what's the best way to deliver in your case?
Gaston Liang: (58:06) No, I wouldn't say that, I would say, get with somebody that know what they're talking about as far as manufacturing right? Get something realistic from them when people work with us we know this can be delayed so in the process, we kind of outline everything we also have a buffer days buffer weeks or whatever so, the “hey, worse come to worse if something breaks at this stage or we need to redesign we will add so many weeks”, so, by the time we are done with the consultation or before we go into manufacturing, the creator has a really good idea of what we are capable of. Of when we can deliver now if they choose to misinform or dis-inform that’s a different story but when we go in manufacturing we have a really good timeline plus or minus like I've seen maybe a month or two nothing like a year.
Zach Smith: (59:01) Maybe 30 days after you guys determined what a proper shipping date is?
Gaston Liang: (59:03) Absolutely I mean but then again it's the information is only as good as what you get out of whoever you work with, right? So, if they misinform you, you misinform your people and then you get in trouble. But always account for setbacks I mean, I know a lot of people don't want to hear that then they think their project is perfect, but I haven't encountered the perfect project yet. I'm just being seriously.
Zach Smith: (59:29) When you do, let us know that'll be great.
Gaston Liang: (59:32) Right absolutely, that will be one of my project.
Zach Smith: (59:35) Okay, so perfect, perfect product how do you predict how many units of this perfect product you need to order for your first production run? I know -- coolest cooler right there an example we talked about them in the last episode, it seems like we're always referring to them one way or another, whether it's was really good marketing or the battle film or other issues that they ran into. But they're a campaign that raised 10s of millions of dollars, and I don't even think the creators expected to raise that much. What actually do you do in situations like that? And how do you know how much to order? And how do you build that into your costs and know how much money you need to raise, so that you don't run into a situation where you make $10 million plus, and are still short $4 million to fulfill?
Gaston Liang: (60:13) Absolutely, and here's what I would say, it's again, going back to planning, right? But this is a little bit on the spec that getting people like Funded Today, I mean, like you guys should be able to and I'm sure you guys do have a good idea as a "hey, we think that this is probably going to be five, ten thousand unit right?" If the campaign has been properly done initially in the first two or three weeks you guys probably will have a pretty good idea on how to extrapolate the number to kind of predict right, and obviously…
Zach Smith: (60:43) Absolutely, yes we like to make to projections.
Gaston Liang: (60:47) But also will have, unexpected to happen, right? And that's absolutely normal. And that's something that you want to have a conversation that you want how would you manufacture it? “Hey, we want to put down for 5,000 but if we run into 15”, what are you contingency plans like how would you support my project, right? And I always have this conversation with people was like, "Hey, you were, like lesser than I said of mold cost, I don't know, we just use the wrong numbers like this $10,000 $10,000 for a set of mold, right?” At that stage, I know, my production level, I know that with one set of more with one facility or this part of the facility, I can produce I don't know 5,000 units a month. Now, if the creator already knows, "Hey, I'm going to run into a problem where I need to fulfill 25,000 how would you do it?" And obviously, we'll have options, right? The easiest one is to scale the operation, we'll take the same set of mold, and we'll duplicate in one another location or a factory or just go to a sister factory that's the easy one. But I think when it gets a little bit more complicated is like the creator does it make sense for him or her to invest another $10,000 whatever for a new set of mold? Is this because, we have a surge in sales because of the proportion from Funded Today? And then after that, if they take it over to the E-commerce is going to taper off, then it makes no sense, to have two sets of mold. So, there's a fine balance between hey, production time and also like, long term business.
Zach Smith: (62:30) I mean that’s really well said, I like that one.
Gaston Liang: (62:32) But to really answer the question shortly is I get with somebody that will work with you and become your manufacturing partner, that they know their craft they have to know how that's probably the biggest thing.
Zach Smith: (62:44) Okay, that makes sense. So, let's say they decide to work with you what sort of volume can you handle? How nuts can this go?
Gaston Liang: (62:52) We typically, I'll give you a great example, we typically we do a minimum of 3,000 to 5,000 units that's for the average product. Now you have product that costs like hundreds of dollars, their cost, then, obviously, we curve the number a little bit. But, we've supplied 250,000 units in the span of three months, we had a few projects that got a little crazier than we anticipated, and what we've done is we just mobilize some of our other factors that "hey, shutdown whatever you doing, or make space for this project that we really need to crank out", I'm not putting any project on the side, but we optimize our space that, if there's a project in more production capability, then we can accommodate.
Zach Smith: (63:35) So, we talked a little bit about manuals and packaging and different things like that, do you help with manuals packaging, or do you recommend creators kind of doing that themselves or working hand-in-hand with you on that? I would imagine like, I would imagine digital for example, probably need a little bit of explanation for how best to use it.
Gaston Liang: (63:53) Yes, absolutely this is a great product and we are in the process of talking to him and this is what I tell people, right? I like cart do you want to assistant or not? We would love and hope to work with you but we don't want to force services on people. But yes, we help with the packages, and we do a lot of packaging so we kind of are familiar with the current trends, we'll make suggestion we'll try to help you as much as we can, AND we have, designer, graphic designer on staff. I think the new trend for packaging and instruction manual is, do away with words, right? I mean, what was the last time you read an instruction manual? A lot of people don't do that but if you have like a cool drawing on it or whenever then, it catches people's attention you want to flip through it because it looks cool. I don't want to make it dominant it sounds but one of my clients, instead of illustrating this complicated process, we had a guy create a comic script for him we did a eight page comic script that's serve as the instruction manual.
Zach Smith: (65:05) That's awesome those kind of things make your product stick out to and compete with morality and social sharing things like that, they show the comic script? Those are the things that you get a lot of extra value for very little upfront.
Gaston Liang: (65:21) You know absolutely.
Zach Smith: (65:22) Okay, so Gaston this one, I think, and I can relate to this one from a first about a decade ago, I was working with our client Brandon with the RooSport and we connected them with some people in China before you and I even knew each other, and we were working together and for a while, things went pretty good but then they actually started scaling, maybe 5,000 or 10,000 units at a time and at this point some of the cut and sole wasn't very good, quality was bad there were issues and we got these products suddenly it was Brenda having to fix every single one of them herself because she's really quality is very important to her and she wants to make sure her product is always really good. But when you're trying to fix 5,000 bad RooSport Pockets that's problematic, right? How do you avoid that? Do you need to be the one as a creator, managing that yourself? How does communication work there? What's the best way if you are a quality control?
Gaston Liang: (66:15) So here is how I don't know about other factories and how they ran into this problem and here's how we made it get it. Every project has one to two project managers and that's you go to person, it can be me or it can be another of my project manager, but he is your go to guy his sole job is to make sure that your product is exactly the way you want it. And I tell this to my manager all the time, I don't care if they're making 5,000 or 500,000 they need to be that good. What we see a lot of is that, creators or E-commerce people, they get to that 500,000 and they try to squeeze every single penny out of this production right? Or they really beat on their suppliers that and at that point, I think slippage can happen. I don't know the particulars, but I think that proper project management, and expectation management is really key to that, and I also strongly encourage people to do third-party verification, right? At the early stages of working with anybody us, another manufacturer, another firm whenever, get yourself a third-party verification done and as you build trust, as the project go further and further then you can learn off a little bit.
Zach Smith: (67:35) And what's that third-party verification, just for our listeners who might not be familiar with that?
Gaston Liang: (67:39) There are firms out there that will, do a QA, QC check for you or they'll go inspect your products, they'll just make sure that everything is running, they basically its they just inspectors, so they'll -- you pay them on the side as a third-party, they'll do whatever you need to inspect.
Zach Smith: (67:55) They'll make sure that you don't have a shipment of 10,000 bad ones and you'll know that your first 100 are good and then your next 500,000 are going to be just as good.
Gaston Liang: (68:04) Absolutely, this is a lot of people use that for pre-shipment, right? So like, let's say that you it's your first 10,000 unit or whatever, then the inspector will come over, they have a set of ISO rules and guideline on how many and how to inspect them and if the loads fail on inspection, then everything gets rejected and the manufacturer has to fix it.
Zach Smith: (68:24) Now, this question might be kind of strange for you Gaston but what do you think about recommendations? You don't have to provide these now, but I know like when you get an appraisal for in house, it's kind of weird because those estate agents the one who gets the appraiser but is it similar in your fashion where you can recommend a third-party agency to come in and audit and look at things and it's not necessarily awkward, they're separate and different from your factories?
Gaston Liang: (68:46) It's definitely weird for me to make a recommendation just because you don't want a fox to watch a henhouse, and I don't want people to have this impression either. Here's what I will say it's a Google click away just make sure you find a reputable one don't skimp on it we are not shy of inspectors, we welcome them, we want to make sure that this is done properly, we don't want to run into a situation where now we have 10,000 of those and you don't want them, I don't want them you don't want to pay I don't want to ship we don't want that. We are striving for long term business relationship, this is not a onetime deal, a lot of business owners that are maybe less experienced or haven't done a lot of businesses don't really get that. We want you guys that on your 10th product, you think of us first, before going anywhere else well.
Zach Smith: (69:42) Love it, that’s great. All right Gaston governments, well, we talked about this a little bit, which I thought was I thought was pretty good when you mentioned some different things earlier for how to deal with inspectors and different things what do craft and creators need to know if anything quality control other criteria any tips for dealing with the state of bureaucrats, bureaucracy, inspectors, custom agents getting the product of America what do you recommend there?
Gaston Liang: (70:05) So, I recommend that you get in touch with a firm that will provide A to Z solution to you, like us, is the real answer, right? I mean, some products do need certification, right? Then I can think of a few top of my head, like, a lot of electronic the have CC Certifications if you don't know how to go about getting one of those, get in touch with people that do that, that's something that you want to take on your own or like something as simple as trademarks or like even patents right, you wouldn't do that yourself you'll get a professional to do it. But here's one thing I will say, during the engineering prototyping phase and the manufacturing phase, we kind of look at your product and try to anticipate what your needs are going to be and kind of get the process started, right? Case and point I was making a specialty toy for a client, right? He didn't realize that, he needed some Child Certification, Safety Certification before it could be exported, we caught that early on and told him "Hey, this is coming up, let's do this now", so that we don't end up with dead time where we just manufacture, and then now they're trying to export and like "Hey, we don't have this cert." Or like worse yet let's say that somebody do electronic product and somehow it has a wireless capability, right? And somehow they did not get the FCC Certification, let's say that it actually went through that export was no problem whoever was checking the shipment did not catch it let's say that you put it on Amazon, or you own platform then you get challenge, then listing get shutdown and you won't be able to move your product, that can be six months wait.
Zach Smith: (71:45) Not to mention, issues you might that would do so.
Gaston Liang: (71:49) Absolutely so long story short, you make sure that whoever you are dealing with get informed right get ahead of the game, before the product is finished or even before the manufacturing remember to get all your certification, ask all the questions and make sure that you have at least a good understanding of what's going on and always double check, don't just take their word for it.
Zach Smith: (72:08) Okay, so finally you've got the government's got that taken care of, you've got your customs agent stuff figured out, you've got your quality control down. Now you got to ship your product what about the logistics? Is it better for either best containers full of finished products that they store at their house? I remember the RooSport they had shelves in their entire house of all these RooSport Pockets and I don't know what they're doing now but it was amazing what they've done to their basement to hold all these products their product was -- a it's a pretty small product, so they were able to probably fit thousands in their house, or do you recommend perhaps outsourcing to agency like ShipMonk for example, or maybe doing Amazon where you store your product at a bunch of their different fulfillment factories, or do you like to omit the warehousing and ship directly from your factories, to the backers, to the customers what do you think the best option, all these wonderful choices I guess people have in this modern age?
Gaston Liang: (72:59) So logistic is the last corner of our business we talked about engineering prototyping, manufacturing, logistics is definitely one thing that one service we can offer all these options that you mentioned is they're all viable is just that how can we tailor custom a solution to this particular client or project, right? So, let's talk about the most essential one right? Just get your book shipment or container shipped to the US, so even before you can ship that there is a few steps that needs to happen right? If you have imported anything in the past that is in significant numbers you will need a broker's agent to clear custom. You should have a bond and before anything can happen, right? So, let's say that you actually go do all this stuff and then yes, it is an option to ship your product somewhere and do fulfillment yourself. It might not be the best usage of your time because once you start labeling, packaging and sending thousands and thousands of products it gets old real quick. Some people think that they're saving money but they're really not, especially after some of the options that we can offer. Another option is to ship to someone like ShipMonk yes absolutely they can absolutely do this for you and this is a business that made a business about fulfilling, right? So, if you are willing to pay somebody pay US labor price absolutely I don't recommend it I'm all about high profit margin and making your project successful and reorder it and making money, it's definitely an option, but I don't recommend it. Right now if you have your own warehouse or have 3PL at your fingertip then you already have the system in place, and just go ahead and do that or you use FBA right? Again, it's an option, it's a little bit more hands on if you FBA, but it definitely can be done. Now, what we've been offering to a lot of your backers, and I think that's something that a lot of people's myth is, have somebody like us, like the manufacturer or a logistics side of the business fulfill your product, right? There are definitely a lot of incentive with that so number one, it's actually faster instead of like waiting for the boat to get to the pier and get to wherever offload on load, get to the fulfillment warehouse and then ship that could be three months, two months 30 days on the boat, two weeks between transport to the final destination and the final destination, maybe like another week or two, so definitely a month to two months. When we ship out as individual package, we use the air postage, and our timeline is about 15 to 20 days, that's just a tip of the iceberg, right? So, now you don't have to do any of the fulfillment you don't have to wait for the boat, you don't have to pay a third-party, we do it for you kind of part of the shipping costs, but one thing a lot of people admit and, I want to say this with a lot of caution here is tax and duty. When you import the whole container, guess who's responsible for tax and duty, but when you fill them on the individual basis and sell them by the units, guess what? I don't want to get too explicit here but that is definitely something that we've consulted with a lot of clients when we do the fulfillment for you, you'll get them there faster, cheaper, and save some taxes.
Zach Smith: (76:39) Okay, well Gaston it has been an absolute pleasure having you on Funded Today, in Funded Today Podcast today any parting words in terms of everything we've talked about before we get into the product of the week section? Anything you want to add?
Gaston Liang: (76:54) Absolutely, I think Crowdfunding through Kickstarter is an amazing platform, but a lot of people underestimate it, and try to tend to do it all themselves like really 80% 20% is the parting word. Focus on what you're good at, and do the best possible way and let the professional handle the rest or seek assistance for more difficult tasks.
Zach Smith: (77:19) Love it that's great, all right now. For Thomas's, and my favorite part of the episode, this is our products of the week, and this is where we get to showcase really cool products on Kickstarter or Indiegogo or products that we're both passionate about we want to give you a chance to talk about Digi-Chill and then also talk about your businesses just a little bit, make a pitch talk about some different things that will be included in the show notes. So, I'll start it off, this is the Funded Today product of the week session and the product I'm going to talk about today is a pretty cool one because this was one of those not doing so well, then we fixed a bunch of things then we relaunched and they are already close to $20,000 raised, this is Ears 360 and interesting enough it kind of is a little different than last one, this is your last reusable ear cleaner the better way to clean your ears. It's kind of a little bit hard to describe but essentially it's a reusable ear cleaner but instead of being like a cotton swab, number one is most looks like last one in that way, number two it's ecofriendly it's safe, because apparently when you stick a cotton swab down in your ear there's all kinds of issues and damage that can happen. I was talking to my doctor, we just had a baby a couple days ago and asked about that and I guess you don't ever want to go too deep in the ear canal, so Ear 360 kind of helps with that, easy to carry, well under budget it's going to be good for the environment. I think you should check it out it's really cool essentially when you stick a Q:-tip down your ear you're getting that ear wax blocked if I can speak right today, and you have the potential for damage in your eardrum. Thomas I know you love to clean your ears quite a bit so Ears 360, the better way to clean your ears check it out it's on Kickstarter right now they're 15 days to go as of this recording you'll probably be able to pick it up on their website or Indiegogo InDemand if you miss the Kickstarter. What do you got for us though Thomas for your product of the week?
Thomas Alvord: (79:04) My product of the week is Tempest and I didn't even know something like this exists. It is actually your own personal weather station that you can setup wherever you're at. So, if you're at your house, you could set it up, if you're traveling you could set it up, if you're camping you could set it up. And so you have this weather station and it uses its AI powered and it has an accompanying App that you use on your phone, and it will tell you the weather data for exactly where you live, and it's using the same technology that the weather stations use. So, check it out it's actually really cool it's already raised $725,000 there's actually on Kickstarter, only a few days left and then by the time this recording goes live, it likely will be on Indiegogo, so check it out on Indiegogo, that's Tempest.
Gaston Liang: (70:02) Well, my favorite product is the company that we actually been working with Digi-Chill this could invented to how to an amazing idea honestly, he retrofitted some technology using culture device device to incorporate that into a wireless charger. Now, the benefits of this is that now all devices that is using his charger the Digi-Chill to power up is being actively cool. Similar technology is being used by Tesla and the idea behind it is it keeps your phone cooler while it's charging and the battery cool like does extending the life of the actual battery, your phone everything's run smooth, everything runs better, and Digi-Chill has been one of our client, they are the example of what we can do, right? They came to us with a initial design and we tweaked a little bit more improved upon it made the changes that the inventor couldn't really take along, right, and made it a working prototype for them. It's been an amazing episode with Funded Today and again I really appreciate you guys having me on. Again, for any prototyping need, manufacturing need, engineering need, logistics need, basically you’re AtoZ please feel free to contact us. We'll be happy to look at your project and make it a successful one. I've sent some notes and slides to Funded Today to be incorporated into their show notes that is the best way to get in touch with us and we can schedule a call, and also we included a roadmap to kind of showcase where a project is and where it can be. It's been a pleasure I know that a lot of projects have gone through Funded Today and has been a complete 180 where you guys totally turned this project around, and we hope to do the same right we want to tackle the engineering, the manufacturing, the prototyping as well as the fulfillment and the logistics for any project and make it successful.
Zach Smith: (72:02) All right Funded Today Nation wow that was a good one, you're going to want to take out your notebook, go back through this with a fine toothcomb and make sure you take some really, really good notes because wow I was impressed there's so much to learn about Prototyping and Manufacturing and Mass Production, and I don't think we could have done it without Gaston, so great to have you. Funded Today nation what did you think about it? We want to hear about it let us know in the comments, leave us a review on iTunes or any of the other podcast platforms where a Funded Today podcast is located, we read every one of them, they kind of make or break our show we love to hear from you and we want to hear from you, and based upon some of the feedback we receive we got really good one lined up for you next week. We're going to have John Coyle, he is the internationally renowned Expert Growth Strategist who has helped to take a lot of E-commerce businesses to multiple seven figures revenue, and he's going to talk about how to advantages, how to capitalize, and how to grow your brand, and how to strategize successfully through the three phase of Bootstrapped E-commerce. And he's going to talk about how to identify your competitive advantages, how to capitalize upon them to grow your brand, and how to strategize successfully through the different phases of Bootstrapped E-commerce, you're not going to want to miss it it's going to be really exciting. And remember, as always, “don't wait until tomorrow, get Funded Today”.
Announcer: (73:24) Funded Today is the worldwide leader in rewards based Crowdfunding on Kickstarter and Indiegogo, combined they have raised over $200 million and counting for thousands of new ideas and inventions worldwide, if you got an idea for a new product or invention visit fundedtoday.com to speak with one of their experts.
References and Resources
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