Independent Electronics Company: How To?

Discussion in 'Off-Topic' started by aws505, Jul 9, 2013.

  1. aws505

    Thread Starter Member

    Mar 11, 2013
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    Hey Guys,

    I'm considering starting my own small electronics company. I have a few nice project ideas, and I'd like to get everybody's ideas and advice on how to proceed, business-wise. I have enough experience with making prototype electronics to ensure that my projects come to life, but I'm not too sure where to go from there.

    One project idea, for example, is very similar to an FM Tuner for an iPod. Of course, that's not the real meat of it, but it's conceptually similar. As you know, the design and fabrication of such a prototype is not terribly expensive. After I have my own working prototype, I'd plan to produce a few more for friends, design spiraling all the while, and then perhaps do a KickStarter to sell some V1.0's. My question, really, is where do I go from there?

    Do I try to patent my circuit concept and sell the patents to larger companies who would do industrial-size runs of the electronics? How do I ensure that my idea is not CC'd by a big company? Or, would I then have to bite the bullet and mass-produce the product myself, selling the final product to retailers for resale? I imagine someone somewhere has some experience with this sort of thing, I just hope that someone on this site does, too.

    Thanks!
    - Aws
     
  2. tracecom

    AAC Fanatic!

    Apr 16, 2010
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    Patented or not, if your electronics invention has any market success at all, it will be copied and sold by far east manufacturers on e-bay. Whatever business plan you come up with needs to take that into account. Some people have success with market skimming, i.e., getting into the market in a big way, selling a large number of units at a large margin, and getting out when the low-ballers show up. The risk there is that your market entry costs are high and if your product fails, you lose a lot.
     
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  3. Papabravo

    Expert

    Feb 24, 2006
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    Do not under any circumstances come anywhere near the patent system. It will bleed you white for no discernible benefit. Rather you should understand the market and pick your entry and exit points appropriately.

    Also for the first couple of projects I would keep my day job.
     
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  4. aws505

    Thread Starter Member

    Mar 11, 2013
    59
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    Okay; I'm actually glad ot hear the overwhelming hatred for patents. They seem like a waste of time nowadays. It does sound like I'd be either market-skimming or selling my idea to a larger company. Does anyone have any experience selling to a larger company? I imagine that market-skimming can only work for so long: At some point, the personal time spent fabricating would become overwhelming. On the other hand, I could see that trying to sell my idea to a company would greatly reduce the amount of time I was able to market skim.

    Yeah... I'm glad to hear you say that, but sad. I am on the verge of losing my day job (lay off, not fire) and was thinking of working for myself. While it sounds nice, I'm sure that you're right: Even if I'm great at this, I'll need practice.

    Thanks for the advice, so far!
     
  5. Papabravo

    Expert

    Feb 24, 2006
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    I have had some experience working with larger companies. In general they are not keen on working with "inventors" and "free-lancers". The reason for this is that, being risk-averse, they wish to avoid any potential litigation over who has done what and to whom. So they will generally give you the cold shoulder if you cold call them.

    The one contrary example was a company that was promulgating an open network standard and allowed us, the developers of this standard, to start our own company, while we were still working for them, to provide design, training and custom products for this open standard. It is kinda rare, but it does happen.
     
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  6. JoeJester

    AAC Fanatic!

    Apr 26, 2005
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  7. bountyhunter

    Well-Known Member

    Sep 7, 2009
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    You probably shouldn't hire me. When I read that line, the first thing I thought was: "Dead in the water."

    The IPod carries so much MP3 music that nobody would want an FM tuner for music, and there isn't much content on FM these days. There would be so little demand for this it would be a loser (IMHO)
     
  8. bountyhunter

    Well-Known Member

    Sep 7, 2009
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    You can't really since other countries don't follow our laws, they just rip things off with no hesitation.
     
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  9. bountyhunter

    Well-Known Member

    Sep 7, 2009
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    And their time to market would probably be 90 days or less.
     
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  10. bountyhunter

    Well-Known Member

    Sep 7, 2009
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    +1 steer wide of the scammers out their who "help people get thier ideas patented". All they do is drain your money.
     
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  11. Papabravo

    Expert

    Feb 24, 2006
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    Companies in the USA are not afraid of a single individual with a patent. They will infringe on your patent with reckless and willful abandon and DARE you to sue them.

    Why?

    Because they're older, more experienced, and have deeper pockets than you do. While they are bleeding you white with legal expenses they will be raking in cash by the barrel.

    If you don't have 1.5 million in ready cash I would give up on the patent route.
     
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  12. Papabravo

    Expert

    Feb 24, 2006
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    The best market research technique on a limited budget is to:

    "make a few -- sell a few"

    Even a business phobic techie ought to be able to manage that. That will tell you all you need to know about weather you should make more and sell more. Don't ever get caught up in making large numbers of units "on spec".
     
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  13. tracecom

    AAC Fanatic!

    Apr 16, 2010
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    "Make a few and sell a few" sounds a little like niche marketing, which is sometimes a viable plan. Keep your expenses at rock bottom, your margin as high as the market will bear, and tread carefully while presenting your product to potential customers, but staying "under the radar" of competitors, foreign and domestic.
     
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  14. aws505

    Thread Starter Member

    Mar 11, 2013
    59
    7
    Right. It's not the idea at all, it's just conceptually similar.

    Thanks for all the pointers, Papabravo. It's been really nice to hear all about your experiences. I was imagining that was the case with big companies nowadays, but I couldn't be sure until I heard it from somebody else. Tracecom, it's been great hearing from you, as well. I appreciate everyone else's comments, too, but these two have been spectacular.

    I think for the moment, I'll just look for a new job and continue moonlighting on my own electronics projects.
     
  15. Papabravo

    Expert

    Feb 24, 2006
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    The other thrust of Lancaster's thesis is, that to establish yourself as an expert so people will come to you, publish those ideas frequently and often. If you have a large number of ideas one or two might pay off. Don't ever stop running, cuz you might fall off the treadmill.
     
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