Berberian's Blog

Our New Product Selfiebot

At Orbotix we pride ourselves in inventing fun and innovative robots. Today, April 1st, we are announcing Selfiebot - a robot 100% dedicated to taking selfies of you all the time. Check it out and reserve yours today.

 

Orbotix - A Revolution in Play

Almost four years ago Ian and Adam set out to control things with their smartphones - which at the time no one was really doing. Today we are defining a new category of "connected play." I'm so proud of the entire team for taking a simple idea - "Our smart devices should control things in the physical world" and building a business that is out front creating new ways for us to play. Here is a video we made - a look back and a glimpse of how we think. Enjoy.

 

Should You Exhibit at CES? Our Story

CES - the Consumer Electronics Show is held annually during the first full week of January in Las Vegas, NV. It is the largest show of its kind in the US. We’ve exhibited at CES for 4 years in a row. Each year has been an amazing experience.

As a hardware startup you may ask yourself - is it worth it to exhibit? My short is yes.

How much does CES cost?

I have a simple answer - take the size of your booth in square feet and multiply by $300. That is a ballpark of what it will cost you all in - booth, CES fee, hotels, airfare, food, transportation - everything. 10’ x 10’ = $30k - 20’ x 20’ = $120k. As you get bigger it may get slightly cheaper - but not by much. We’ve gone from a 20’ x 20’ to 20’ x 30’ to 20’ x 30’ (double decker so add that sq ft too) to 30’ x 50’. The math holds. Sure you can skimp by staying in Motel 6 off the strip and do a cheap ass booth - but it will be tough on your employees and the booth will look super startup.

Here is our experience over the years - your milage may vary.

2011 - Year 1: New Startup with Prototypes

As a freshly minted hardware company we got the ultimate audience to give us real time feedback on our robotic ball, Sphero. People whose livelihood is in the CE industry are the early adopters and techno geeks and they are looking for the latest gadget. We got to talk to them in their most receptive state. If they didn't like us at CES, we would have had problems. Thankfully they fell in love with Sphero. Of course we did a web video and got great feedback but nothing beats prospective customers trying your product. On top of the user feedback we also got hundreds of articles and over a thousand signups. If money is tight 10 x 10 is the way to go. If you want to look like a real company 10 x 20. If you product is more than 12 months from shipping, I suggest don’t exhibit at CES - wait until you are closer. We shipped Dec 15th, 2011 - barely made it.

2012 - Year 2: Selling Product Looking to Expand

Our second year we showed up after shipping our first 500 units. We were still figuring out our manufacturing process. We were selling direct and through Amazon but no retail partners yet. CES helped us get noticed with buyers. First, we generated a frenzy of press now that we were shipping and second, we had a lot of booth traffic. Due to the press we drove a bunch of online orders and many positive reviews that helped build credibility with buyers. Nowhere else will you find such a concentration of press and bloggers from around the world. The money part happened when we met with real buyers from US or UK based retail stores. The names we recognized - we went out of your way to schmooze. The ones we didn’t know (like a lot of foreign distributors) we were courteous but said we were still evaluating our options. After CES we did our homework and reached out to those that were of interest. We purposely did not try to go after major retailers since we knew we couldn’t meet their demand and we were uncertain if Sphero would sell in mass market yet. No one wrote a huge PO on site - but we did set up several meetings after CES. It took us 8 to 14 months to go from a first time meeting at CES to the time our product was on the shelf. Chance are you will pick a hand full of smaller retailers (sub 500 stores) to try in this first retail selling season.

2013 - Year 3: In Retail Looking to Expand Footprint

2012 was our first real year selling and we were in mostly boutique retail stores in the US and UK. 2013 was all about expansion - both domestically and internationally. We expanded to 6000 storefronts worldwide and drove 38% of our sales from international customers. CES was essential for this expansion effort. While there were buyers from mega stores like Best Buy and Walmart they were still trying to figure out this new category of “connected toy”. I believe they like to watch a new category’s progress before they jump in - mega retailers typically do not blaze new category trails. Press at this CES was more about “what’s new” vs. the coming out story of Sphero. We showed off new software apps and purposely did not publicly debut our new version of Sphero that was coming out in August. We showed it to buyers in private to prepare them but was wanted to protect the sales of our existing product in stores until we were ready to make a shift. We used this CES event to sit with our current retail partners and recap the previous year and plan for the upcoming selling season. We also met with several international partners at the show which would have taken months of travel to accomplish the same if we didn’t attend. This third year was hugely impactful to our success in 2013.

2014 - Year 4: Going Mass Market

Since we made it to year 4 we feel pretty good that we’re ready to expand into a major retail store. We announced a new robot at CES, 2B and once again got a ton of positive press hits. Our booth was a non stop circus and we really stood out - hopefully impressing our current and future retail partners. We also won two best in show awards. CES really let’s you shine in all your glory - it lets you flaunt your past success and talk about your entire product line - current and future. We are now in the courting process with some major players and are settling in for a long ramp up process. Going main stream is way more than finding the right buyer for your product; it requires a negotiation to get the right deal in terms of margin and placement and making sure you have the financial wherewithal to handle their needs. Once again - it was a success simply by a measure of the quality meetings we had with serious buyers.

CES Press Events

Sometimes it is hard to compete on the show floor with the mega booths of Sony and Samsung and it is hard to get noticed. There are 3 press events that allow companies to be put on an even footing to tell their story and it is an invite only for the press. Press comes because it is not too crowded, free food and cocktails - companies come because they know no one can steal the show. These events happen after show hours and cost between $5k and $10k each. You get a 6 foot table and can place up a banner or two. These are worth the money just for the press hits. We’ve done at least one of these events every year. They are CES Unveiled, Pepcom, and Showstoppers. If all you want is press and are on a budget - you could just do one of these events and not exhibit on the show floor.

Caveat

At some point you become established enough that you can only use CES as a way to meet some of your buyers. Product announcements that are new models of existing products cannot be made at CES unless you plan to swap everything out that day (typically you need to work with your partners to “clean the channel” of old models to make way for the new stuff - no public surprises). New product announcements can be made but it is better to message that shipping is eminent - otherwise competitors may use the time to develop similar products and steal some of your momentum. Not all buyers will show up to CES and at this point you’re established enough that you are meeting with them on a regular basis anyways. That said it is still good to show your progress and use CES as a venue to generate press for new things.

The ROI

It is hard to measure precisely - one deal with a retailer can pay for the entire event many times over. This has been the case for us every time we’ve exhibited. Several of our key relationships were born out of CES. The press hits are numerous and generally fantastic but since we sell a ton at Christmas the press hits do not drive sales as much as they build credibility. We’ll keep doing CES but I think we’re keeping our booth size stable for the forceable future. And we’ll look to spend less than $300 a square foot if we can.

Related articles

Orbotix reveals the Sphero 2B at CES 2014

CES 2014: Sphero 2B Will Drive Into Stores This Fall

This is Why I Love Working at Orbotix

Some outtakes from our shenanigans over the last three years.

 

Picking a Contract Manufacturer (CM)

In September, 2010 we needed to figure out who was going to make our little robot, Sphero. We had very little experience outsourcing a high tech electromechanical product for manufacturing and needed to find someone to help us. Fortunately for us, we hooked us with a firm called Dragon Innovation and they ushered us through he process of finding a CM and building our beloved Sphero in China. Here are some lessons from our experience:

1. Before you start, ask yourself if you need an overseas CM. Parts are parts - you’ll be able to buy them at roughly the same place anywhere in the world - so don’t think parts are cheaper in China. If you answer yes to some of the following questions going offshore may be a good solution for you. Does your product have a fair amount of manual assembly? Are you going to order north of 10k units to start with an eye to 100k+ units on an annual basis? Do you have any electromechanical actions? Do you have time to dedicate to travel and communicating your idea to a CM?
2. Get an intro to various CMs. We used Dragon but there are other firms that can make an intro. You think you are picking a factory but in reality they are picking you. Factories do not have thousands of clients - they have a handful that make up the majority of their business and every year they take a bet on a couple that they think will turn into something big. You need to convince them you are a worthy bet. While they may cover their costs on your initial product run - chances are they will be losing money until they crank out hundreds of thousands of units. This is why an intro is necessary - the best CMs will want to know there has been some sort of vetting process.
3. Pick a firm / person to help you. When picking a firm or person to make the intros you should look for folks that have built similar products in the past. The Dragon team came from iRobot and was part of the Roomba team - one member of the team spent time at Hasbro earlier in his career. If you were to look at what we are building with Sphero, their past experience lines up directly with our goal to build a sophisticated consumer robot that is also an electronic toy. Some firms may also bring industrial, electrical and mechanical design to help take your idea to a level that can be manufactured. Alternatively you can hire folks to do this in house but that will take time to build. We eventually graduated from using Dragon, as our volume became large enough where we have built our own team of experts, but they were hugely important to our initial success.
4. Travel and meet the CMs. Plan a trip and expect to see one factory a day. There will be a lot of driving. Remember you are selling and being sold. You’ll most likely meet the CEO or owner of the factory. You’ll base yourself out of Hong Kong and travel to China. Dress casually but not like a slob - jeans and a polo or button down shirt are fine. No flip flops (I hate flip flops in the work place).
5. Examine products they have made in the past. Buy them from retailers and look at the quality, ask to talk to some of their clients if able. Every factory will have a showcase in their lobby of what they have built in the past. Look for similar products. Look for products that are original designs vs. knock offs. If you see a bunch of products that are knock offs then you know that this factory might not have a problem sharing IP. If you only see brands you recognize and products that are still current then you know the big companies trust this factory with their IP. Be alert for factories that try to develop their own products and then slap on someone else's brand. This isn’t bad but remember if it is their design, they will try to sell it to as many companies as possible. Our factory only builds products that are for major brands and does not design generic products for others to label.
6. Don’t pick the factory based on the CEO. In our case, we met a very outgoing CEO of a factory that was super excited about our product. He took us to a fancy lunch and had some great ideas. They made a lot of robot construction kits which spoke to our DNA. But Dragon recommend that we choose the factory that was more down to earth. We ate lunch with their employees in their canteen. Their attitude was very calm and professional and their pride was more subdued. They were a bit larger than the other factory and worked with major toy brands. The back channel from the CM was very positive and Dragon felt like they had the best R&D group for our type of product.
7. Contracts are not for your legal protection. They are great for finding a meeting of the minds but are nearly impossible to enforce without a great expense on your end. Bottom line - you have to trust the people. If the trust is violated you will have to walk. Don’t expect great payment terms as a startup - trust is earned both ways so pay on time and once you are humming along making product reopen the conversation about terms. It isn’t worth the energy to fight for it up front. Don’t pick a factory based on terms.
8. Meet the team. Ask to meet the team(s) managing the project. Chances are you will have one team to build the prototypes and then you will be handed off to another team to actually make the product. You may even be moved to a different facility (many CMs have multiple factories).
9. Get a price quote. Asking for a quote is fair game but remember it is a quote. If the product is loosely defined the quote will just be an estimate. If you have spec’ed every part down to the resistors and the exact packaging, then the quote will be more accurate but still may fluctuate due to changing labor costs and part availability. If you are reading this far then you probably not well spec'ed. Determine what is the most important metric to hit - price, design, or features and focus on that. What is quoted is not the real price - plan for variability. If you hold their feet to the fire on price to the point it is a losing proposition, they will fire you as a client.
10. Be present. Selecting a CM requires active management and plenty of face time. If you think you can do it all by Skype - you're wrong. You need to travel and spend significant time at the factory working with the various teams. Senior management needs to show up as well - you can't delegate the creation process especially if you are a startup. If your product is super simple like a plush toy or a simple IC - you may get away without a ton of travel. But if you are building a product no one has ever built, you'll want to be there to make sure things are going well.

Here is a video I made to share with our company about my most recent trip to China.

 

Sphero Story - Induction Charging (part 1)

Often times as a young startup, you wave your hands about some piece of technology that is important for your product or service to work but is not part of the core experience. Like - “we’ll virtualize the servers” - “we’ll just put it in the cloud” - “the crowd will filter content for us”... For us we simply said “induction” as the way we’d charge Sphero. Little did we know that this one word would occupy so much of our engineering effort and literally almost kill our company - twice!

In 2010 when Sphero was just a rough prototype and a growing idea, no one knew anything about induction other than a basic understanding of the concept and a faint memory of a few forgotten mathematical equations. The first 6 months of our existence were spent focused on the mechanics of the ball and making Sphero actually drive in a constant direction. Around March of 2011 we started thinking how we would actually charge the ball and began to learn a few things that didn’t sound good.

Thing #1 - LiPo batteries are not meant to be sealed in an airtight vessel - they can be dangerous if not managed properly (the new Boeing 787 was grounded for months due to LiPo issues). We quickly learned that if we put LiPo batteries in Sphero we'd need to engineer numerous levels of safety controls. We could have used another type of battery but Sphero would only last for about 15 minutes before it needed to be charged. This put us into a spiral for about 2 weeks while we redesigned the battery compartment, the electronics and the shell to essentially contain anything that could go bad inside the ball. For a while we thought we were not going to make it.

Thing #2 - We mistakenly concluded that since induction charging is used on electric toothbrushes it should be easy to implement for Sphero. Nope. Sphero has two batteries in series - these need to be charged in a specific manner. Everything else on the market that uses induction in our price range has one battery. We searched for months until we found a chip set that worked with some custom firmware for our application. During this time frame we were thinking that we couldn’t do it at a reasonable price. Simple “wireless” chargers for smartphones sell for the price of Sphero - we had to build a more complicated charger for Sphero and do it for a fraction of the price.

Thing #3 - Sphero is a ball with a moving robot inside - there is no battery charging point. This was the hardest of all problems to solve. Most induction charging systems you get flat coils really close to each other to transfer power - we can’t do that with Sphero because the robot moves inside the shell - our coils aren’t flat or close to each other. Not a lot of examples to copy on this one. The math gets really complex with curved coils and a gap of 1cm. We ended up seeking the help of a CU professor Al Gasiewski to help us figure this all out. Here is just one image from a 28 page document on the math behind charging Sphero and the model used to design the circuit and coils. Along with the mechanical design and prototype coils.

It took 6 months to figure this all out. During that time we didn’t know if we could make a product that would work and be safe. There were many dark days when it felt like it was all going to fall apart.

We were naive and didn’t know better - sometimes that is the best way to make a breakthrough. If I knew how hard it would be to charge Sphero back in 2010 we would have never pursued the technology and Sphero would not be as magical as it is today.

The second time charging almost killed the business is even more exciting...

Sharing Again

It’s been over a year since my last post and there is a good reason - discretion.

My world is consumed by Orbotix. When I feel like sharing something I want to talk about the most important issue in my life right now. Most of my focus is either on our next step as a company or figuring out how not to screw things up that should be going well. Over the past year however, every time I tried to write something it felt a little too transparent - so much so it might make someone on our team fell uncomfortable or make us seem like we really are screwing up - when in fact I think we are doing quite well. Writing about only good news things seems a little too much like Fantasy Island.

I now have a solution. Enough time has passed that I can tell stories that are ancient history yet still allow me to share some of our experiences - mainly for me to remember.

There is an old Armenian saying (might not be Armenian but my dad said it so there you have it) - “Not even a jackass will step in the same hole twice!”

Hopefully by sharing the lessons they will stick and I won’t step in the same hole again.