Anna Shedletsky, Instrumental

We talk with Anna Shedletsky, CEO of Instrumental, about defect analysis & detection in mid- to high-volume manufacturing.

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Notes:

Toyota City with Lucas Lappe

A quick chat with Lucas Lappe about his tour of Toyota City. Lucas is design engineer at Doris Dev, and is currently traveling on the Magical Mystery Plant Tour.

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Zach Dunham, Centerline Labs // The Public Radio

Another in our continuing series on the state of small-scale US consumer electronics manufacturing. Zach Dunham is co-founder of Centerline Labs LLC, and co-creator of The Public Radio.

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 A late weekend worksession during The Public Radio’s first fulfillment drive, 2015

A late weekend worksession during The Public Radio’s first fulfillment drive, 2015

Notes:

Note: Listeners of this podcast are friends of ours! Use offer code “THEPREPARED” for 20% off any order made through our website.

Show transcript

Spencer Wright - 00:00 - Welcome back to The Prepared podcast. I am Spencer Wright. So I wanted to record a quick preface to this week's episode, which is a conversation between myself and my good friend and co founder Zach Dunham, about our project, The Public Radio. A long time listeners will know, uh, and, and also readers of the newsletter will be well aware. The Public Radio has kind of become a case study for me that I use to test different ideas about the way the world works and trends in manufacturing. Uh, but for those who haven't been following along on a high level, the Public Radio is an FM radio that is tuned to a single station at our factory and is housed in a mason jar. We initially launched on kickstarter in 2014. We sold about 2,500 units back then, which we shipped ourselves, um, myself and Zach and a bunch of our friends here in New York who we continue to owe a great debt to.

Spencer Wright - 01:09 - And we shortly after we fulfilled the first 2,500 units. A couple of things happen in each of our personal lives. That meant the project was basically sidelined for two and a half years and when we relaunched in 2017, it was with the specific goal of figuring out how to make this thing into a small business, making it a piece of consumer electronics that was sustainable without either of us having to quit our job. Both of us do have full time employment elsewhere. Um, and so we need to engineer systems and processes that would allow at least some part of the business to run without our daily involvement.

Spencer Wright - 02:00 - This episode is meant to be kind of an update to that question and process. Um, we recorded it a couple of months ago, which is about maybe 10 months after we officially relaunch the project. Over those 10 months we shipped around 5,000 units, uh, and you know, put in a lot of work ourselves, but also did a figure out how to outsource it and run a lot of it on our autopilot. If you're looking for more backstory here that there is, there's no dearth of that. A first check out the back catalog of this podcast. Zach and I recorded a couple of episodes last year. We also had Gabe Ochoa on to talk about the order management system he built for us. Uh, and then I spoke to Rony Kubat of Tulip a couple of months ago about how we have used to lip as part of our process as well.

Spencer Wright - 02:59 - In addition to the podcast, you should check out Zach's writing on his website, which is zachdunham.com. That's Z-A-C-H D-U-N-H-A-M.com. I have also written a lot about it on my personal website which is pencerw.com, P-E-N-C-E-R-W.com. And then of course if you're interested at all in these things, do follow along with the prepared newsletter where I will often look at a new product or process in manufacturing through the lens of this thing that, that we're trying to make ourselves. So with no further ado, here's my conversation with my good friend and co founder, Zach Dunham.

Zach Dunham - 03:45 - How awake are you?

Spencer Wright - 03:46 - I'm pretty awake.

Zach Dunham - 03:49 - I'm not totally awake. I had a long day.

--Intro music--

Zach Dunham - 04:11 - I'm excited to talk about this.

Spencer Wright - 04:13 - Do you want to share that you're not living in the city anymore and are expecting a baby like, is that.

Zach Dunham - 04:18 - Yeah, totally. Okay. I don't live in the city anymore and I'm expecting a baby in a week and three days next Friday. Yeah. Uh, I mean due dates. What are due dates? It's, yeah. I'm like, yeah. Like I'm, I'm, I live in a town that is the furthest south that you can be north of the suburbs, um, on the Hudson River. So basically I live in the woods, but, um, within commuting distance to Manhattan, which is awesome. Yeah. Um, which, uh, we're rolling. We're rolling.

Spencer Wright - 04:52 - Yeah. Um, so kind of a throwback episode. Uh, Zach, how's it going?

Zach Dunham - 05:00 - It's going well. It's great. It's great to be back at a Public Radio HQ.

Spencer Wright - 05:04 - Yes. Yeah. Uh, so the last time we recorded an update was the end of July. Yeah, last year.

Zach Dunham - 05:13 - It just listened to it so young and naive and excited.

Spencer Wright - 05:19 - But I mean, yeah, like we allow happened since then. Um, in net I feel really good about where we're at. Um, we're working on and people should go back and actually listen to that episode, going to be like, we're continuing a narrative here.

Zach Dunham - 05:37 - Yeah. I'm with a huge gap. I mean that was a, lots of lots of countries. So we do you want to. Well I don't wanna cut you off in net. You feel

Spencer Wright - 05:46 - I feel good about where we are. Like we, we wrote out a couple of storms, none of which were, there was no, there was actually like if you like listed off all the things that happened, you'd be like, man, sounds hectic and it actually wasn't that bad really. Um, but yeah, we're at a point now where we have this business. Um, it'd be interesting. Did you listen to the first episode? We recorded the one in like June or may or something like that

Zach Dunham - 06:19 - No today. No.

Spencer Wright - 06:20 - It'd be interesting comparing where we are at now from what we said then

Zach Dunham - 06:26 - like as in dollars in the bank account or where we were. We connect this to this to be.

Spencer Wright - 06:31 - Oh yeah. More like the, like the place it's at in our lives and careers.

Zach Dunham - 06:35 - Oh yeah.

Spencer Wright - 06:36 - Yeah. Which I think in some ways is remarkably close to what we had hoped. Um, you know, we're, this is

Zach Dunham - 06:44 - what was that to be specific,

Spencer Wright - 06:46 - uh, I think, I mean, I don't think we actually said this, but the implication of going back into this was that we wanted a passive source of income

Zach Dunham - 06:57 - checks in the mail,

Spencer Wright - 06:58 - checks in the mail, which is, it actually is happening, but uh, the business is not like massively profitable or anything like that. There's a ton of sweat equity that's gone over the past.

Zach Dunham - 07:08 - Yeah, yeah, yeah. I, uh, I was in eat, pray, love as a, this was way back in the day, found a craigslist ad and I played tabla in some yoga scene in eat, pray, love. And this actually happening. I'm not making this up. And uh, for awhile, uh, like I don't, I was like immediately admitted into sag and uh, I get checks in the mail from that and that's amazing. Yeah. I mean now they're like, they're like 20 bucks. Everyone's smile, but for awhile it was like $500 out of the blue. That's amazing. Yeah. When like jet blue is streaming the eat, pray love on, on the plane, you get royalties from it. This is not that.

Spencer Wright - 07:46 - This is not that I, it's, it's funny. I wonder what your impression of it is because like, I actually like the checks come to my house. Yeah. And so not only did I have like literally like I deposit the checks on the bank mobile app and I import them into our accounting software and so on and so forth. And there's something that's,

Zach Dunham - 08:06 - feels very,

Spencer Wright - 08:08 - it feels like it's like an, like it'll happen on a Monday or whatever. And I have not been working on this for like, I've not been like actively managing it, um, for the past couple of days or whatever. And that feels nice. Like it's nice getting a check and depositing it.

Zach Dunham - 08:28 - So I think um, for me I would have to go back and listen to the first episode. But um, in general, yes, there's still occupies a place in my heart and generally in my life that I think I was anticipating then. But uh, and we can go into this more later. But yeah, it's definitely a struggle like managing full time job and then where this in and how we each deal with like our differences in time commitments and like that, that whole thing. Um, I think that in June and July or May when we were like prelaunch or the ramp up for almost a year ago, um, uh, I, I don't think I was truly, really considering because it was this checks and mail thing. It was like, we're going to launch this, we're going to hand it off to a manufacturer, we're going to set up some retailers, people are be buying the thing, we're going to be managing inventory sounds great. Checks in the mail and it's been considerably more than that. So maybe should we go back and like. Yeah, yeah, yeah. What happened?

Spencer Wright - 09:36 - Yeah. So we recorded July 25th or something like that. Um, right after our campaign is closed and we had raised

Zach Dunham - 09:47 - 68,000. Yeah.

Spencer Wright - 09:49 - Um, and we had a committed ship date of October, I think it was September, I think it was November. Yeah. But she's actually have this in front of us, but we don't. Um, uh, regardless we were, we ended up basically meaning that we had a couple of orders that went out a little bit late, but the vast majority of our kickstarter orders went out on time.

Zach Dunham - 10:13 - You're right, it was October,

Spencer Wright - 10:15 - I think it was October, it was October and I think maybe we had a couple of orders that went out like the, like the first couple of days of November, something like that. Yeah. And started those people like, that's like, it's, it's funny because I think there's a tendency to say like, man, you really kick the ass of that project, but really you were late like you, like it was, it was, it was late to these couple of people or however many people it was and that's, that sucks for them. Um, no equivocation about that. But like, it felt like a success be like we got most of it out and it was a quality product and there was, I would say, well, so yeah, so July. August was pretty good.

Zach Dunham - 11:05 - In what sense?

Spencer Wright - 11:09 - Well, it wasn't like last time where we didn't have an engineered product beforehand. Yes, we had our product fully engineered, um, we had our supply chain, not a hundred percent established, but the vast majority that was vendors that we had used previously. Yep. Um, and we had mostly figuring out out are like, like our manufacturing operations with a bunch of big caveats which are important.

Zach Dunham - 11:39 - Yeah. Yeah.

Spencer Wright - 11:40 - But we, like, we knew a lot more about them than we did in 2015.

Zach Dunham - 11:44 - We have a fully functional thing that we could hand build and that, you know, the first time that we sent boards to manufacturer and they returned samples to us, a eight out of the 10 worked flawlessly and two I think had like there was something weird with the firmware, which we later discovered I think all the issues that we saw there were related to a firmware. Um, but yeah, we had a way to, a much bigger leg up going into manufacturing. We are also making a lot of assumptions. Have we had cut a lot of costs. We had decided to go with a potential geometer supplier that was like, we're trying to save thirty cents or something like that.

Spencer Wright - 12:28 - Half of the cost of the part or something. Yeah, it was significant amount of money in our bom and ended up being a mistake like we've gone back to the original supplier, the potential butter, which I'm happy about. I wish that we had made the decision a little bit earlier, although I think it was, it was a risk that was at least interesting to take a. yeah, we've got a couple of other costs as well and we also, we hadn't done mass quantities of the mechanical design. You and there were some, some issues there that in a different context would not have been a problem, but we had chosen a vendor to actually do our printed circuit board assembly in our menu. Our actual final assembling fulfillment

Zach Dunham - 13:19 - that is a printed circuit board assembly house was acting as our contract manufacturer,

Spencer Wright - 13:25 - which is rare. Yeah. And like I think we knew that that was a risk that we knew that there was. Yeah, it was, it was risky to be hiring somebody for something that was a little bit out of their wheel house. Um, I had kind of worked with them before and it was a, it was, that gave us good terms and we'd also looked at another couple of shops in the U, s we had looked at buying our boards from China. The boards from China option ended up making no sense at all, which was great to discover like it was,

Zach Dunham - 14:05 - this was getting printed circuit boards and then shipping them to the US and then assembling them here and then doing the fulfillment. Yeah, it was like a lot of that extra leg work for us

Spencer Wright - 14:14 - and also we didn't have to foot the bill for parts that we're shipping from China wouldn't actually ship from our fulfillment center for 60 days or something like that. Or 90 days.

Zach Dunham - 14:24 - Yeah. Right. So like this is a huge thing and negotiating point, right. If you can get terms with your manufacturer, you're essentially getting a loan a zero interest loan. Usually if you're manufacturers like yeah, we'll give you 30 days net 30 terms on like product that we're shipping and, and that. And we had term similar to that. I mean, we had really, really great terms and um, I mean she would just do this spoiler alert. Yeah. Now. Yeah. So we had to ship like 2000 of these radios. I think it was 1700 from the kickstarter campaign and uh, the remaining like 800 or so, you mostly me some built in your basement here?

Spencer Wright - 15:07 - I actually think that I shipped closer to 1500 radios, so yeah, I think it was, I think that between a, yeah, a couple hundred kickstarter orders at least and then a bunch of retail orders for the holidays. And then additionally we did, we did all of our direct istation sales. So for anybody who's following along, like we have this product, we sell it. We, we presold slash crowdfunded, whatever the term is.

Zach Dunham - 15:33 - I think it was 1700 radios

Spencer Wright - 15:35 - on kickstart on kickstarter kickstarter. It was $1,100 to start and then a bunch of radio station or as on top of that, wasn't it?

Zach Dunham - 15:40 - No, right. When we did the subtraction it was 14 or 1500 on kickstarter and then. And then we went to uncommon goods and we started, we were in there, I'm coming soon program and we pre sold

Spencer Wright - 15:53 - a couple hundred there,

Zach Dunham - 15:55 - a couple there

Spencer Wright - 15:55 - and then we also sold a couple hundred, two radio stations directly, the radio stations. They get some customization options and we had kind of always planned to do some of that in house or we had like, we were kind of keeping that option to open. Yup. So all in all, I believe that I shipped something on the order of 1500 radius on my basement or we collectively did between me and yourself and Leo who helped out a little bit as well. Yeah. So, um, and we fired our contract manufacturer and critical courthouse to. Yeah.

Zach Dunham - 16:27 - Um, yeah. So there was, we had, we had a trip there together to, to you, you had a trip, had one trip there to essentially ship our tools to build the product and meetings, get the line going. I went once solo because I was there for a work trip and so I spent a day there or better part of a day

Spencer Wright - 16:51 - and then we went together once and then I think I want my solo an additional time, which was really the beginning of the end. And it was like, like I went there, uh, yeah. And it was on the table on our side at least that we might fire this pupil.

Zach Dunham - 17:11 - And then the last trip was me there with, to Pelican cases and uh, put it this way. I landed in Chicago and I was back at the airport with filled Pelican cases three hours later. So, um, and a $7,000 later or something, you know.

Spencer Wright - 17:29 - Yeah. So, and that all happened that, that's kind of started, haven't really fastly quickly. Um, it also happened before we had finished with the kickstarter campaign orders. I think we had.

Zach Dunham - 17:42 - Yeah, yeah, because we had to fulfill those, but we had already committed to holiday orders. So it was hitting us like right at this worst time of year where we were like, this is October, middle of October. We need to, we still had like, yeah, to your point, something like a thousand or $1,500 radios, so we needed to fulfill and then we were at the same time ramping up our commitments for holiday orders. I mean, I talked to people about this situation and they were like, Oh man, I'm so sorry. Look, you just, just stop, just stop. Don't take anyone else's money. Just like literally pull the plug. What are you doing? Why are you committing? And we committed. Yeah, it was. And we succeeded.

Spencer Wright - 18:25 - Oh yeah, we did it like it was, it was a bunch of work. There were plenty of long nights and long weekends. Um, the, there was like, yeah, I'm like snapshots of manufacturing, radios and basements, but you don't realize is like everything has to come down the stairs and then back up the stairs, including like art, like. So each radio weighs about 12 ounces. So you know, there's like, there's like a bunch of packaging and also so like what you end up with is roughly a ton of stuff. Had to come from the street, her lay down a story and then back up the story and it's like my house is like 100 years old. Like your a narrow little stairway. You're carrying boxes and is a um,

Zach Dunham - 19:18 - yeah, there were definitely things that we did that we're not there. We're out of the ordinary. I mean, you had a less than truck load, a pallet drop off in the middle of Lincoln place here. Yes.

Spencer Wright - 19:32 - Yeah. Um, but, and, and we did. So we made this. Yeah, we, like we were, we're still pretty confident about our ability to do this because we'd done it before. We'd done more than this before and the product was better engineered this go around.

Zach Dunham - 19:51 - What do you mean by that? You mean

Spencer Wright - 19:52 - 2015? We had shipped 2,500 units. Right? Like we had a better engineer product. Our process was better. It was much better engineered. Yep. Um, it was way easier assemble a. and it was also like, like, Yo, we doubled down on this two years later. Like, we're not gonna stop in the middle. Yeah. So, so we, we ended up executing this really remarkable transition. We ended up being out of stock for, I think it was like two, two and a half weeks.

Zach Dunham - 20:25 - The worst time of the year. I think it was the, it was two weeks after thanksgiving. Yeah. It was great about it because we had this like it was like the product will deliver in 14 days after the date of purchase or something. And we, we actually managed to. I mean in retrospect that was lucky. Yeah. I mean that was. And it was a risky decision to

Spencer Wright - 20:47 - shout out to uncommon goods for

Zach Dunham - 20:48 - huge common goods. Yeah.

Spencer Wright - 20:52 - And huge shout out to where the, to the assembly who like, like took our business in this crazy time of year and delivered the shit out of it. Um, we were able to. Yeah, we were able to still fulfill holiday orders after having switched vendors at the worst possible time of year. Yeah. Which was incredible.

Zach Dunham - 21:22 - Yeah. I mean it was like, it was, we were in a bad spot and we kind of got lucky when we doubled down on that whole thing. I mean, it could have, it could have really blown up. Yeah, I'm a and, and so and so now we continue. I mean, and that's like that. That is, that is, I mean there's so much more that we can go into the details of this and when we can talk about Tulip and you've written a lot about Tulip and I had all these like really amazing little engineering feats that amounted to literally this streamlined process that you had created here in the basement where someone could walk in off the street and start hand assembling these radios in under five minutes flat and um, and then get better at it and better at it and better at it. Yeah, I know.

Spencer Wright - 22:15 - And then two minutes flat.

Zach Dunham - 22:18 - No one's keeping track here.

Spencer Wright - 22:20 - Um, yeah. So I think the, the one thing that I think is really useful to share is that, so this is like,

Zach Dunham - 22:32 - okay, so postmortem, what went wrong?

Spencer Wright - 22:34 - So the vendor that we selected the initially was the wrong fit for the job. It was not only were they a little bit, it wasn't like they were like over their head per se, but they took on more than they were capable of doing and, and they just ended up kind of being jerks about it and buy it. I mean, like just anything that went wrong. Um, and critically we've rolled out with them too soon. Like I and I, I can use, I can use I statements on that too. Like I thought that our manufacturing process was pretty well baked and it, it was, I mean it was like pretty, like the general scope was defined. I think I didn't realize how many ways even intelligent people could misuse the process. Um, there are all these cases were like

Zach Dunham - 23:35 - we had never ever done it we'd ever done and our manufacturing process before was you and I like before meaning the last time we made several thousand of these things, we were, for all intents and purposes for it from an engineering perspective, we are making a different product. Right? Um, and you had done a ton of work thinking about how the assembly process would work and integrating that with Tulip. But yeah, I think like we had never, we had never thrown new people in front of this and said go and can you make 500 of them this week please? And then by week two we were like, we need 500 of them please. Yeah.

Spencer Wright - 24:16 - Yeah. Um, and so it's funny. So like a whatever. I'm sure if this happens to YouTube like on like a maybe not weekly basis, but like every like month or two months, like somebody will ask me like, oh just go into contrary campaign or whatever. I'm just like making this thing and there, I don't know if they're like looking to me for like sage advice or anything, but they're just kind of picking my brain about it.

Zach Dunham - 24:43 - And that happens to me a lot.

Spencer Wright - 24:48 - And I think one of the, one of the things that I like I like get on my high horse about this. Like you should be making more of your products. Like you personally should be shipping a lot of your product. And expecting that you're just going like engineer the finished product and hand that over to a contract manufacturer for the scale of team that we are at least in like the, like the numbers of units that we're trying to sell. Like it just doesn't make any sense. Um, yeah. Like we, we had shipped, we had

Zach Dunham - 25:31 - from a financial perspective, you mean like, well we're not at the size of a business where we could say

Spencer Wright - 25:37 - we're not hiring foxconn. Foxconn brings manufacturing engineers. Like, like, yeah, like they can like the best in the world, you know, like they bring, they bring people who know how to take Shay widget and tear it apart or they take even before that they teach like a Spec. They say like, like, Hey, make me think that dues ex and, or like a contract manufacturer of that's kind of scale will engineer the product for you. Sure, sure. Process to make the product.

Zach Dunham - 26:06 - Yeah. Well I think at some point in the day you, like you literally, you literally were having texts and phone call conversations with someone who had a screwdriver in hand and where's assembling the product? We're putting a label on there and so in as much as there's not going to be a middleman, you need to know this is the, I know the failure mode that you're experiencing right now, or if I don't know the failure mode then shit, I have to stop what I'm doing and try and recreate the failure mode that you're in right now so that I can troubleshoot it with you.

Spencer Wright - 26:38 - And that's really difficult, especially when it comes to like radio frequency and you're dealing with

Zach Dunham - 26:44 - It's kind of comical though.

Spencer Wright - 26:45 - It is. So.

Zach Dunham - 26:46 - Yeah. And then then they realized they were like, God. We're like, wait, what did you hear it make the sound? Did it produce a signal? And they're like, what? And we're like, yeah, we're broadcasting a test tone over there. It's like, my good FM radio. And you're like, the quality can like what our quality control plan was at that point, which was pretty minimal. Yeah, I mean we were, we were developing that in real time with them. Um, I think you're, you're totally right on, like we scaled up too fast. I would say also, part of our thing was we had a really on paper, we had a really great deal, but also we were like, man, this would be great. Chicago, uh, uh, you know, this is happening in the US. Um, uh, and we could, we could go there, we can fly there. It was, I think so long as the operation isn't happening in your, in your office.

Zach Dunham - 27:44 - If you're not there like, you, you, you may as well be in some, in some cases halfway around the world because you're not doing it and you're having to make that point of communication to somebody else and do all the documentation. So, I don't know, I felt like halfway through that I realized, Oh, maybe we aren't as close as I thought. And I think that.

Spencer Wright - 28:06 - Well, yes, I'll just as a note, uh, like one of my favorite work spaces I've ever worked in was Riley when my desk, like I sat next to the machinists who is making the parts that I was designing and next to that machinists was a hard enslave. And then a South Bentley and then a bridgeport. And then like, like the machinery was right there. And so if he had a question, he just said, hey Spencer, you know, like the barrier to even just picking up the phone is significant and I think people don't realize, um, well, so yeah, the, I think the other part of it is people talk about doing business in China and they're being the distance and there's the language and the culture right there.

Spencer Wright - 29:01 - The, all these things that are really like getting in your way of communicating with a partner in your process. And I think one thing that is maybe underrated is the cultural difference between just anybody. Like, yeah, like this, this vendor that we had yet, they were like, yeah, they're like the guy who was born in the US. Like it's like, like I share, like I could probably talk to him about Seinfeld if I really, if like if I really wanted to, you know, like, and, and yet there were significant cultural barriers to actually understanding what he knew, what he was like. And um, and they were like, look, we wanted a certain kind of quality of our product. And they ultimately were not able to really grok that I think,

Zach Dunham - 29:58 - but this is, um, this is this thing, right? It's like no one's going to care about your thing as much as you are. And like, I think, yeah, as many, uh, you know, points of humor that you can connect on, whether it's Seinfeld or, or, you know, the mets game, know whatever it is, like at the end of the day, like that person's going to go home to their family and you are going to be literally working on those until 2:00 AM, you know, uh, several hours away. Um, and yeah, I don't know, money makes people committed.

Spencer Wright - 30:41 - Um, but I think it also matters that like Chris and Neil at Worthington and Rafal too, like this guy is like, like they read the prepared, they will listen to this podcast. Like they, like they like, and I say that not to promote us or them or whatever. But like they're like, they do definitely get us on a different level, I think. Yeah. And

Zach Dunham - 31:10 - well I think there is. So you talk about fit, right? Like you first said, like we, I think the, having some perspective, I feel like ultimately we were not a good fit for them. They were not a good fit for us. And I hope, I think the reason, part of the reason why we're a good fit at Worthington is that there's some real interest in some of the unique challenges with manufacturing and fulfilling our product in some of the processes that we spend a lot of time trying to develop and they're legitimately interested. Um, thank you for being interested in, in that. And so there's some shared. Sure. Call it cultural perspective, which is. Yeah, I think that that's. If I had some sage advice, I would say finding that, finding that, finding someone who can really be simpatico.

Spencer Wright - 32:03 - And in that sense I think we are speaking from a very privileged perspective here that we're able to find that. But yeah, I don't know how I would do that if I weren't me. And like

Zach Dunham - 32:19 - what was that movie? Joy, right?

Spencer Wright - 32:20 - Yeah, yeah, yeah, exactly. Yeah. It, which honestly is like, it's like kind of a terrible movie, but also his brother, you, it's

Zach Dunham - 32:30 - the person has an idea, like find some money.

Spencer Wright - 32:33 - Incredibly frustrating.

Zach Dunham - 32:34 - Throws the money literally like over the fence to a factory and they start producing this product then. Yeah.

Spencer Wright - 32:40 - Yeah. I, I was not expecting to resonate with. I feel like he told me no, he probably didn't. Like, it wasn't that good of a movie, but it was like, like I felt that man. I'm all right. Yeah, we've covered that. Yeah. There's probably more there, but email us, email us. Yeah.

Zach Dunham - 33:07 - We'll talk about Seinfeld.

Spencer Wright - 33:12 - Um, so there's that, uh, what other things have been. Oh, well. So it's been interesting seeing the seasonality of our product. This is the first time that we've actually lived through a Christmas season.

Zach Dunham - 33:30 - Yeah. Christmas season. We send stuff to people for the holidays. We handled a returns through this potential geometers issue. We got product reviews. Random people are buying this thing. Yup. WBEZ as has our radio in their fund drive. They've had done multiple pledge drives using the Public Radio, like real a public media outlets. And just individuals who like the product are purchasing it. It's enormously validating. It's. Yeah, that has been, that's something that we hoped to happen the first time around and we just, I mean, we were out of stock trying to make these deals with NPR stations and um, I think that we have eight NPR stations at this point that that's about right. Yeah. Are, have purchased and are using the Public Radio in pledge drives and we're close to 7,000 radios, you know, considering the, the first uh, you know, in that's including the first round road.

Zach Dunham - 34:32 - He is 2,500 that we, that we produced that are out in the world. I mean it's been, um, yeah. Anyway, just shameless self promotional plug. I think that we should pat ourselves on the back.

Spencer Wright - 34:42 - Oh definitely. Yeah. Yeah. And so, but yeah, so we had never actually lived through a sales cycle like we had on our first run. We had just done kickstarter. You had done a couple of hundred dollars, 200, something like that for like pre holiday sales. But it was a very different product in some, like the manufacturing process is very different. The sales process was very different. It was, it looked a lot more like a bake sale, right? Like totally. Um, yeah. And how this is in 2017, we had a product that was there. I also, I just want to underline the fact how crazy it is that we manufacturer a piece of consumer electronics just in time, like we, like nobody does that and literally people place orders on our retail or our retailer's websites. This is combat and it's.

Spencer Wright - 35:40 - And, and they and they get sent in a CSV to an automated email account. That email account automatically imports them into our order system and literally like Worthington is shipping radios like 12 hours later. It's, it's incredible. And the radios are not fully built when the order is placed. It's so cool. Um, it has been so gratifying to see that actually work given the amount of. Yeah. It's just like, it's a hard process set up

Zach Dunham - 36:16 - given the amount of sweat equity last. You underlined that multiple times throughout the remaining 20 minutes.

Spencer Wright - 36:23 - Yeah. Yeah. The amazing thing is we haven't, like the checks come in, but we have not made a ton of cash off this like this.

Zach Dunham - 36:32 - No, we, we've, we've reinvest everything. We've reinvested everything and we've doubled,

Spencer Wright - 36:37 - We've invested more of our, our own personal cash that we are, that we have not made. Making radios also still, neither of us have taken a single paycheck for this. Nope. So it's like, yes. So I guess what I'm saying is

Zach Dunham - 36:52 - like building that nest egg yo,

Spencer Wright - 36:55 - like, like in the absence of all that stuff like yo, it's so gratifying seeing the just in time manufacturing happens because you really do

Zach Dunham - 37:03 - better look for those gratifying moments. It's worth 15 k um,

Spencer Wright - 37:12 - yeah, but then, but, and then also like I, I tell you what, like, so we both, we were actually both in the Pacific northwest over the holidays. Um, both of our wives are from the Seattle area and so we, like I think our trips I left before you did and then you were gone and there was like maybe a week or nine days when both of us were out of town. And so we shut down our, shut down all of our orders that period of time where the team wasn't up to shipping orders yet. Um, we rolled them in in January, February. Um,

Zach Dunham - 37:45 - that was, sorry, that was a crazy moment that like the last week. No, the law, the last week before Christmas literally were Santa Claus here. We're making these radios in the basement. We had to get them out every single day. We were having another hundred radios. So we need to ship. Yeah. And USPS wasn't picking them up fast enough. And so I would me or you would drive a USPS several USPS bags to the post office

Spencer Wright - 38:14 - Transfer sacks

Zach Dunham - 38:15 - Transfer sacks. Thanks. Transfers sacks and cut in line because you could, because you were making real dropoff and then you're putting several hundred radios in the little window at the who are you and then running back to the basement and doing it all over again. Yeah. That it was like, that is the snapshot of like, Oh, holiday order crunch time anywhere. Yeah. And then we had this break.

Spencer Wright - 38:42 - Not only that, like, like, so you did the last couple of hundred radios, I was in Seattle, like driving around the San Juan Islands or whatever and I'm like calling the bed stuy post office being like, Yo, why hasn't this thing been delivered yet? And actually it is worth it is worth mentioning that like uh, it is, I have been really impressed and also frustrated with the logistics of doing this. Um, had this awesome ups driver who was so cool about me like calling the cell phone at 9:00 AM, finding where he was in my neighborhood because I couldn't wait until 6:00 to get the package. Like I needed the package today too.

Zach Dunham - 39:33 - Process oriented specific the process that the package was printed circuit boards from Worthington that we were then turning into a finished product yet that day, like 100 pcps, but show up we would like strike two and turning them into radios and then be rushing them off to the post office. So yeah, I remember it yet. Jeff, just shout out to Jeff. Lots of shout outs.

Spencer Wright - 39:55 - Yeah. And then on the other hand, like USPS is such an incredible organization when it works and so incredibly frustrating when it doesn't. And there like many times did I schedule a pickup pickup doesn't happen. I call the post office. I'm like the pickup didn't happen. She's like he's on the way and that. And that would happen like three times for the pickup. It actually happened. It was incredibly frustrating. And also they did like, first of all USPS amazingly good rates. Like it's, it's so cheap to ship these things across the country. Yeah. Like a third of what it costs via ups or Fedex or something like that. Right. And when it does work and when they actually do end up being delivered on time, it's so great.

Zach Dunham - 40:49 - Yeah, for the most part they do.

Spencer Wright - 40:52 - We had a couple of issues with things we had. So yeah, we shipped a 3,800, something like that. Radio is between whatever, September and now. And we had less than 10 shipping failures. I'm weirdly, we had like one person lose two radios and I am very confident it was not the recipient. There's a couple of like weird snafu is like that, but in general, yeah, for $3 and 78 essential piece that they delivered a lot of radios. So yeah.

Zach Dunham - 41:30 - Yeah. So we went through the holiday is, it was crazy. We were doing like several, I think at times like several hundred radio orders were coming in a week and a last three days. I don't think we've sold a single radio the last few days.

Spencer Wright - 41:52 - Yeah, it's definitely tapered off. Um, yeah. Which is, yeah, it's weird.

Zach Dunham - 42:00 - It's, well now we're in this other phase where we're like getting our hustle on and we're trying to like figure out how do we continue to push this, how do we continue to, to sell this product, how do we, how do we market it, how do we remedy this is a new phase of us learning how to manage the business and it's also this thing of we are cashflow positive, but we have, you know, small amounts of capital in the bank. And so what do you do with that? Do you, do you preemptively purchase a new components that you know, you, that you're low in stock on, or do you, do you wait until you're really at, at the point of which, all right, now we actually know, like how do you manage capital at that as a small business? Like that's been a stressful.

Spencer Wright - 42:55 - Yeah. Um, yeah, we, yes, we're cashflow positive. We have a ton of inventory of unassembled parts. Yep. I'm gonna have to last us through a good part of this year. Uh, and the orders are trickling in. It's like it's still happening, right? Um, but it is, it was, it was such a relief to come back from the holidays and not have to do 100 radios a day. Um, but, but yeah, it's a different type of hustle for sure. Um, other interesting things I have, I have one interesting thing that you actually don't even know about yet.

Zach Dunham - 43:45 - Is this not. I mean like I want to make v2, but

Spencer Wright - 43:51 - it's actually an international trade issue.

Zach Dunham - 43:54 - Oh Jesus. But did we break a law?

Spencer Wright - 43:56 - No, no, no, no, no, no. Uh, so one of the components that we import from China is potentially subject to a 25 percent tariff under the US trade representatives proposed trade war, which

Zach Dunham - 44:16 - I listened to this planet money episode and there's. Yeah. Okay. Yeah. So yes, component, I'm not even talking about talking like five cents

Spencer Wright - 44:30 - A. I think it's a nine cent part, if I recall correctly. Um, so there are a couple of interesting things about this. Um, we,

Zach Dunham - 44:41 - how did you hear about this?

Spencer Wright - 44:43 - Uh, so our freight forwarder flexport's emailed a saying one of the hs codes that you have used in the past is listed under the trade representatives new tariff schedule.

Zach Dunham - 44:55 - Okay. Wait, so the new trade, the trade war, one of the things, but it's, it's still aluminum. Yeah. And then,

Spencer Wright - 45:03 - which I know was like soybeans though, and all of Iowa's like, Oh my God, Oh my God. Oh my God. And then, and we've been garth. Our, yeah, our expletive country decides to then put tariffs on a whole bunch of other stuff that's going to China. So, um, I spent most of an evening looking through the hs codes, the harmonized codes. I actually don't know what the HS.

Zach Dunham - 45:34 - Yeah, what does that even mean

Spencer Wright - 45:35 - just means like a practice of nation basically. It's like, what is this thing? How is it classified by your Customs Department or whatever it is. Right. Um, and I don't know. Yeah, I'm not a procurement expert or a trade expert. The HS codes that we're using, we're chosen like partly like with, by my guidance, but by our freight forwarder. Like they say like, Hey, like what is this thing, how are we going to classify it? I give them some, like, verbal description. I'd tell them what it is.

Zach Dunham - 46:08 - And they looked up the code. It's like an insurance company.

Spencer Wright - 46:10 - Yeah, probably. Yeah. So, uh, this one part, but like, okay, so one part, this one hs code that we have used in the past is listed in the 25 percent tariffs, which means that I think that we want an annual basis purchase, you know, maybe $5,000 worth of stuff of this one part. I think our last order was like 22,000, something like that.

Zach Dunham - 46:34 - Okay. Wait. So could you just be like A. Yes. So the part that is in question is actually a baseball and you're like, and they're like, Huh, baseball's aren't part of this code. And you're like, exactly, use the harmonized code

Spencer Wright - 46:48 - Well, so yeah, not baseball, right. But like you been reading this, it's this weird legal ease, this weird like trade legal ease and so there are like for any given component you can look at it from a couple different angles and I think that actually it's, it's likely that you could make a very strong case that a different angle applies to this part because basically like it's, it is soldered to a printed circuit board and then is used to the fast and the rest of the assembly to it essentially.

Zach Dunham - 47:28 - I'm just surprised that there are people that are gonna so like who is looking at this like

Spencer Wright - 47:34 - it's self reporting.

Zach Dunham - 47:35 - It's self reporting. Exactly. So okay,

Spencer Wright - 47:38 - so say baseball, but then like if they opened up their leg is not baseball's.

Zach Dunham - 47:43 - Yeah. Okay. And so you're like this, this, you know, aluminum and Morrow is, they don't say aluminum because

Spencer Wright - 47:53 - No, no, no. It's. So it's like being listed as a base, it's been listed as a minute. Um, I think that the, the read that I have is that, like we, we do refer to this thing as a, as an smt nut, get a surface mount. Not However, what it really is is a threaded standoff. Like it's A.

Zach Dunham - 48:20 - Yeah. Which is, that's what, if that's how it's listed by the manufacturer that it's a knockoff.

Spencer Wright - 48:25 - Possibly. Yeah. Yeah. Um, and when you, when you think about it in the context of how our product works, it's actually a part of an electronic device that has a particular use and that use isn't really a nut that use is like, like mechanical assembly, right? It's like, it's. So you found this loophole, how late did you stay up? So would it be clear? It's not a loophole that the thing that I, like, again, I'm not an expert in this stuff and I, I don't actually know what reclassifying it. Yeah. Like how these things are red. Yep. Um, it's also worth noting that like you read these hs codes and they're all abbreviated and this very weird way and you can't understand what the actual word is they meant to put in there

Zach Dunham - 49:21 - like intentionally. Yeah. No one is supposed to stay up late trying to figure this out. You're supposed to just pay the 25 percent.

Spencer Wright - 49:29 - No, you supposed to pay the, the. So our original tariff schedule was free and we have a bunch of other components that are supposed to have like a 2.6 percent tariff or something like that. Which like you're like, yeah, whatever, take it, you know. Um, but, but yeah, like we would be, we'd be spending like $500, thousand dollars a year, which doesn't sound like much but in the context of our bill of materials and our actual cost of goods sold or two people.

Zach Dunham - 49:57 - Well, so this is my thing is like those, that $500 here, $10,000 there as the two people who again, I haven't said sweat equity enough, sweat equity as sweat equity in it. I, that's money that could be in your pocket too. Yeah, and so yeah, as the, as much as this is sort of the, a small, small business moment here, like you do need to fight for those moments where you're like, oh I could have a conversation with somebody and save 250 bucks. That's 250 bucks that could go towards paying us for this in our time in. And it's, it's, it's very easy to overlook those moments

Spencer Wright - 50:38 - or like actually like a, like right now we have a couple of upcoming projects with Gabe to improve our internal business operations and to make it yet to make it easier to do business with us and to make our business more efficient and

Zach Dunham - 51:00 - here that retailers very easy to do business with.

Spencer Wright - 51:04 - But it's like it's a funny thing because. Well, so if you do the math, the Chinese component is significantly cheaper than any version of it that's made in the US. And I think that like we like yeah, we like supporting businesses here and also like can we make this thing in China is very efficient. Like they, like they are doing a good job making a high quality thing and we are happy with the service they have given us and their cost is way lower than their American counterparts. I don't have a strong opinion on whether or not they are part of like bad acting on the part of the Chinese government. What I do know is that even with the terrorists, the parts still cheaper from China. So it's kind of like you look at from a policy perspective,

Spencer Wright - 52:08 - I don't, yeah, I would rather put that money towards paying Gabe to improve our business processes to make it easier for like we're paying somebody who also lives in New York and who pays taxes and whatever else. Like we pay him on the books, you know, and we're an. And what the work is doing for us makes us more effective. It makes us more efficient. It makes, it means that there is more business activity happening in United States if this weird. Um, yeah. It's like that's actually the intended result is that you spend money on that kind of stuff. So, I don't know, it's an interesting, interesting little microcosm.

Zach Dunham - 52:48 - Yeah. I can't talk about the macro economics of the Public Radio. That's, it's too. It's too complicated. I feel like I'm going to be passing. We have a couple minutes left. Um, it's an, it's been interesting to hear how we individually talk about this over the years, uh, specifically like pitch to the thing that we make. Um, and at first it's been very sheepish. Um, I think probably as most things go make this thing. It's. Yeah, well it's not, it's a, what is it, you know, and um, I don't know. I mean we will, we haven't really described this. So like what is the Public Radio, Spencer?

Spencer Wright - 53:42 - Public Radio is a single station FM radio that is housed in a mason jar, a half point mason jar. Nice. Um, it is the simplest possible listening device for your morning routine. Uh, it's, I mean it's geared towards most of the NPR listeners, people who are going to listen to talk radio or light music in the morning or in the evening. Like I, like I grew up listening to all things considered. Right. I'm with Robert Spiegel or whatever, you know, and it's like my parents listened to, I think it was Connecticut public broadcasting.

Zach Dunham - 54:21 - Yeah. Yeah. Because the local NPR station was but Connecticut, the Connecticut public broadcasting was significantly better

Spencer Wright - 54:30 - and there and we were closer to Connecticut where it made sense. Yeah. Um, so yeah, and like my parents listened to that station at home. Yeah, know. So

Zach Dunham - 54:40 - anyway, I just thought it was fun. It was just, it was good. Good. Cool.

Spencer Wright - 54:43 - So, yeah, so I think it's funny, like you mentioned that you listened to the planet money episode about it, whatever. Like I listened to a lot of podcasts. I listen to podcasts all the time,

Zach Dunham - 54:55 - but yeah, take a different what you're saying

Spencer Wright - 54:59 - and the Public Radio, it doesn't, doesn't play podcasts, right? Yeah, I know you're, you're bridging for this. Um, I think that the thing like, part of the way that I have pitched it just because it like it is more relevant to more of the people that I'm talking to on a daily basis is that it's this really interesting manufacturing operation, which of course is not customer facing pitch. Like it's a, here's the pitch I give to whoever listens to this podcast. Like it's like, it's a super, it's been so interesting making this just in time made to order product. Um, yeah, which is not a good pitch for the project itself, but it's an excellent pitch for, I think at least for the work you've put in over the past nine months.

Zach Dunham - 55:51 - And what excites you about it? Um, I feel the same way. I also get super excited when I see that it's a radio that makes people want to listen to radio more and not because I'm like some huge radio nerd because I'm not, but I just think that we figured out a way to, um, make the interaction with a physical device such that it's playful and it's, um, it looks nice and the byproduct of that is that people are like, oh, it sounds good and I enjoy doing this thing I have a routine with and that, that has been, um, uh, yeah, really gratifying.

Spencer Wright - 56:36 - It's a high quality product that we have, like, like we've thought a lot about the user experience more so than this, like sin thing behind me. Like, like we, we keep like random radios around the Public Radio's assembly line because every once in a while you actually do want to like, sanity check yourself on something and that thing is designed terribly. Like it's.

Zach Dunham - 57:02 - Sure. Sure. Yeah. But yeah, it's interesting. So the reason why I brought this up is I think it's just interesting over the years hearing each other talk about it where we're like, it's this weird thing that it does this one interaction and now I'm just like, yeah, we make an FM radio and it's beautiful and 7,000 people like it. Yeah. Um, or 77,000 people have them. I think that most of them like it. Yeah. Many of them have expressed that. So. Yeah. But, um, uh, I hope that we do another one of these before six months. Um, it's, it's possible that it will be six months from now. I hope we stay with it.

Spencer Wright - 57:54 - Yeah. I would be curious. I mean it's funny like it is this thing that I think both of us have used in like talking in public about what we do are about like, like you work at kickstarter like um, and I'm, I would like this to be two way as much as possible and so like if people are listening to have questions, totally interested to hear whether this isn't like we have a, what about this is cool to you and like we're like, I guess what I'm saying is like our operation is actually like kind of an open book and so people will have like, like below this weird detail let us know. So

Zach Dunham - 58:44 - yeah. Actually the last episode that we did, we answered questions. I was, it's funny I was listening and there was, we went, we literally broke out a calculator and we talked about the PNL on our ad spend from our campaign and it was really funny and there was all these moments where I was like, yeah, but if we divide by the number of the radios. And I was like trying to get this weird thing. Even listening backstage, what are you? Literally after A. Yeah. Questions. That'd be be great. Shoot us questions, uh, and you can learn more about it at thepublicrad.io. The public R-A-D.io.

Spencer Wright - 59:19 - Yeah. Cool.

Zach Dunham - 59:23 - I'm gonna go back up north to my north for this south north of the suburbs place.

Spencer Wright - 59:28 - Yeah. Um, well, talk soon.

Kipp Bradford

This week we talk with Kipp Bradford about low volume/high value manufacturing, the tradeoffs of domestic & international trade, and manufacturing things in-house.