Creating Your Product – Two Anecdotes

The first thing to do is determine whether you will be manufacturing your product in-house or outsourcing your manufacturing. In cases where production requires heavy and expensive machinery, you’ll want to outsource production initially. In cases where the needed equipment can be purchased fairly inexpensively, it may be less expensive to purchase the equipment yourself. If you choose to produce your product(s) yourself, you’ll need to source (find suppliers for) all the parts and machinery you’ll need. If you will be outsourcing everything to a manufacturing partner, you’ll need to make a request for quote (RFQ) from potential manufacturers. You’ll describe exactly what you need done and then evaluate the possibilities based on the information and price quotes you receive in return. Here are two stories of young entrepreneurs I’ve met who have developed products.
When I first met a current friend of mine by the name of Erik, he was developing a product that would allow, at the touch of a button, information to be passed from a small hub to a PDA device. Erik envisioned that the device could be used at trade shows to quickly transfer information from a company to a prospect or from a prospect to a company, between business persons, or at the front desks of hotels.  He had incorporated a company to sell the product by the name of FastCAT, Inc. and had spent over a year developing his product. He used his skills learned as a network and systems engineer to take a computer chip process and modify it to load and wirelessly transfer the needed information. He then constructed a half-sphere case out of a light cover and a piece of PVC pipe. He then sourced a press button and connected the button to the chip. He learned about the transfer standards with the major PDA operating systems, and finally, after over a year of work, got the device to function. His next step was to raise the funding he needed so he could hire a graphic designer to redesign the graphic casing to make it look less like a science project and more like a high technology device, locate a manufacturer, and outsource the production of a functioning prototype with the new design. Unfortunately, Erik was unable to find the funding, and he soon moved on to other ventures. His story does provide a good illustration of just how many steps there are in developing a product, however.
In February 2003, I met Dan Bowman and Chirag Nanavati. Dan and Chirag had been working on developing a technology that was a more efficient, healthy, and tasty way to remove fat from potato chips. While Dan was a first year MBA student at UNC Kenan Flagler Business School, he was working for the Office of Technology Development and was looking through UNC’s intellectual property portfolio. Within, he found out that professors at UNC and NC State University had developed a method of using carbon dioxide to extract the fat from snack foods. Dan talked to the Technology Transfer office and obtained permission to build a company to commercialize this technology.
The first step was to choose the application. After completing market research, Dan decided that he would start-up by building a machine that would take the fat out of potato chips. He went through the process of finding a manufacturer that could produce such equipment and worked with them over many months to develop a working prototype. During that time, he brought on partners Chirag as well as Randy Diefenthal, whom I never had a chance to meet, and came up with the company name of Singras. Finally, just in time to present at the Venture Capital Investment Competition in February 2003, the manufacturing firm came up with a prototype machine needed to produce the chips. They were excited to bring their first batch to the competition. I last talked to Dan and Chirag in April 2003. Last I knew they were still pushing forward, attempting to find customers and raise the needed money to build their equipment and launch their technology in the marketplace.
These quick stories can only begin to illustrate the number of steps and difficulty of creating some types of products. From naming a product to obtaining a trademark to designing label and packaging to evaluating manufacturers to going through the patent process it surely can become complex. If you have the right team, a good technology, and a good partner in your supplier, it can be done however. The benefits are often worth it.