DISCOVER HOW TO BUILD THE RETAIL STORE
“If you love someone, let them nap."
What is that actually entails? [12:02]
Using technology ability to talk to anybody anywhere in the world, the processes should be easier - is that true [14:02]
Hear the Krisztina's thoughts on manufacturing offshore vs onshore.[22:14]
How can you not have to reinvent the wheel? ? Is it possible? [32:11]
Salena: Hey there and welcome to this week's episode of the Bringing Business to Retail Podcast. If you are a product creator, a product manufacturer or just a retailer who thinks that making your own products is going to give you a different revenue stream then today's guest is definitely going to help you with some tips and tricks on how to get the most out of your manufacturing. Welcome to the show Krisztina Holly.
Krisztina: Nice to meet you.
Salena: Hi. So, manufacturing is your gem.
Krisztina: It is, it is.
Salena: Tell us how did you get into this severe of putting product creators in touch with manufacturers?
Krisztina: Well, it's funny; myself I am an engineer originally but then became a tech entrepreneur for over a decade. After that, I started two different innovation centers at universities at M.I.T and U.S.C and in that process helped faculty and students to turn their research into companies and in that process I really realized the value of creating community and of helping people take their ideas and make them bigger than themselves. Whether it's turning them into a new start-up or we also created the first ever Tedex event at UXC as well and I created that. Just the idea of helping people get their ideas out there and communicate it with the public. And so when the mayor of Los Angeles asked me to be an entrepreneurial resident let's explore the different ways of transferring this experience that I have in building these helping people start companies and realize that this is a huge opportunity in manufactured goods. And so, I'm reapplying that passion that I have for helping people make something bigger than themselves in a new realm. It's just another version of this where they are helping them turn a prototype or an idea into an actually manufactured product and tap into the manufacturing eco-system and the infrastructure that we have in L.A. I also host a podcast called the Art of Manufacturing which helps highlight some of the pioneers that are making things.
Salena: That's fantastic. As much as that's really awesome, everybody stopped when you said, entrepreneur in residence. Can you just give us a little thirty seconds about what that actually entails?
Krisztina: It was a new program and the Mayor said, hey, well can you help us to even define what this program might look like and the idea was to make links between the entrepreneurial community in Los Angeles and City Hall. That went both ways. One way was, how does City Hall help the entrepreneurial community? And economic development and economic growth and then the other way is how do we bring some of the entrepreneurial thinking into City Hall? I was enthusiastically willing to help and play this role as long as I could look at an underserved and untapped part of the eco-system. Most people don't know that L.A is the largest manufacturing center in the country, it's a huge industry, everything for food and fashion and aerospace and hardware and in fact, we think that L.A is about Hollywood but for every job and film and television there is four jobs in manufacturing. It's a really important part of our economy. But, it's not connected like tech or Hollywood is, so that's where I saw the real opportunity. I did a study and ended up just discovering how big the eco-system is, how complex it is and how hard it is in my very first start-up was a hardware start-up decades ago, it was a long time ago. I remember how hard it was to tap into and just navigate the vast expansive manufacturing options and now it's even more complicated. You know a lot of folks are just going overseas and so people just don't know where to start, should it be domestic, should it be overseas? It's very daunting.
Salena: It's funny that you say that decades ago it was hard but now it's even harder because we think that with all about technology and the ability to talk to anybody anywhere in the world, the processes should be easier but you're saying actually it's harder now.
Krisztina: Well I think that it's both. It's going to be easier. It depends, so, I think there's been some attempts to create directories of manufacturers and they're not that successful yet however, the awesome entrepreneurs that have created these business models around very specific purposes that make it easier for designers to get things made. I'll give you a few examples, in fact these are folks that I interviewed on the podcast and they have great stories. You know one of them is, Eve Kadan who started the Iconery and the whole idea she had experienced in E-commerce and she loved jewelry and she created this platform where an influencer can work with them to design their own jewelry custom jewelry line. They will have it made locally and then sell it for them on their direct consumer eCommerce platform. So, that makes it way easier. Then you have Justin Junay from Lummie who started that when she was sixteen years old. She started as a manufacturer entrepreneur; she had this crazy idea for an ink special kind of ink. She was on Shark Tank, she ended up turning down Mark Cuban that's a crazy story behind that. But ultimately she realized that there was a much bigger idea there. So, as an entrepreneur there are certain resources that she had available to her for the digital side. So, you have Mailchip and Square Space and Square and you can put up a website in three hours but when it comes to fulfilling orders and dealing with all the physical aspects of running a business then it's a lot harder. She created this business that handles your entire supply chain for the packaging part and when your direct consumer company, let's say you're creating a product that is direct to consumer the packaging is there first experience with your product and so it's like your store front, so she handles that. One more example Nick Pinkston, he has created a fully automated machine shop that not only uses automation to program the machines. But, then there is this front end tool that enables a designer who doesn't have the same kind of engineering background that you used to have to program a CNC machine to design and then know immediately how much it's going to cost and what kind of design changes you can make to make it less expensive maybe make it meet certain requirements and with the push of a button you basically get a quote and you can order the part. So, it is getting easier.
Salena: That's amazing.
Krisztina: I have this amazing vision of when the push button manufacturer the same way that you can order from Amazon and just have something delivered to your door. You can have something made and have it fulfilled for you, you could become a manufacturer basically and just outsource your manufacturing. That's the future but it's still early stages.
Salena: How do you find these people? How do you find the special ink and the platforms? These are amazing examples. Where do you find these people?
Krisztina: That's what I do and I love to meet people and I love you know that's where I loved Fedex, USC it was really so much fun to discover. I think that's kind of my super power is to find and discover talent and ideas and help them make an impact and help them tell stories. So, that's why I'm doing what I'm doing with L.A because it's not profit because it's another way for me to be able to help entrepreneurs and designers who have these crazy dreams turn those passion into products.
Salena: That's a fantastic super power if I do say so myself. I'm just sitting here thinking about CNC machine. I'm a fan of wood and I'm forever asking for things to be created out of wood so if I had my own CNC machine I would just be in heaven, I can't draw, I'm not an engineering but I just think my whole house would be made out of ply, if I had a choice.
Krisztina: I'm the opposite in some ways because even though I'm originally in engineering you think that all these new tools would be really great, at the same time I miss the days of just working with your hands and thinking with your hands. So, when I was in engineering school and we designed new products and new ideas, we would take these huge honks of blue foam and hot wire and we would use the hot wire to cut these pieces of foam into different shapes and you could just play around with it. So, there is something very primal about the physical interface and maybe I'm just old fashioned but I still love to hold a book, I still love to play with clay or to make design and physical and I think that's not going away, I think that now we've had these cad tools, I think that we're going to start seeing some more tools in the future that integrate that physical touch. I've seen some, I can't remember off the top of my head the names but that's going to be a really exciting I think direction in the future.
Salena: I think you're right like remember adult coloring books came back I think those other platforms for people like me for instant gratification. I'm not about the process, just give me the final product.
Krisztina: Well, I think that each person we don't want everybody to be a designer right! I think that's, but I do think
Salena: Trust me you don't want me to be a designer.
Krisztina: One thing I worry about this is more of a philosophical thought I'm very excited about the progression of manufacturing so you think about everybody's talking about industry 4.0 well at least the people who are in manufacturing are geeing out on something called industry 4.0. Most people haven't heard of this but this is the next progression from industry 1.0 was when you had the steam engine and it kind of took away the physical toil away from manufacturing and then industry 2.0 was electricity and the exemplary line that enabled us to create more mass production and then industry 3.0 was more like the I.T revolution with more robotics and a lot of the innovations during that time had been much more you know computer programming and that side of things. But I think that we're going into this new realm of industry 4.0 where things are much more nimble you have smarter robots, collaborative robots, innovative things, new materials, 3-D printing et cetera and they are all connected and it makes easier for manufacturing to be much more nimble which allows more and more people to be designers, to create their products that we're talking about. Now, on the flip side you think back when was the last time that happened, think about the printing press, mass consumption, the internet, mass production. Everyone now is a journalist right and that's not always a good thing. So, I think that that's one thing that we need to be careful of is I think that designers need to reassert themselves now more than ever to say that where there's a real value in knowing how to understand trends, understand drive trend, understand customer needs and respond to them as opposed to just allowing I mean anyone can design anything right but, I think that designers really need to more than ever to kind of show their value because I think that, that is going to be the job of the future is the designer. To be able to do that, it's going to be a super power.
Salena: Speaking of value, I would love to know your thoughts on manufacturing offshore versus onshore.
Krisztina: It really depends. Of course, I'm a huge fan of local manufacturing but, I'm also a very pragmatic and I think it's very important that every company makes the decision for themselves. I do think that there's a bit of assumption that going overseas is the right thing to do without really having all the information. So, there's a lot of reasons why local manufacturing is much better. First of all, you have the quality control, you can see the product on line, in fact if you're not really experienced entrepreneur when it comes to manufacturing then, you really don't want to have to be communicating overseas and with more complex products like hardware products you need to be there like four months you're setting up the production and so there's cultural differences. I know I have a colleague who had ordered a particular part with an LED light it was supposed to be low profiled, someone ordered the wrong ones and sent them to the manufacturer, well the manufacturer in China, in Asia in general I think they tend to be a little bit more differential and don't question and so well they must have meant that. So they ended up cutting like a sunroof in the product to allow the light to show you know instead of asking is this the right product, right component. So, you know that would have never happened had it been local. There's that there's also sustainability and ethical reasons it is a lot easier to make sure that you have your finger on that if that's something that's important to you. There's also this assumption that manufacturing locally is more expensive and that can sometimes be the case but, a lot of times it's not. As time goes on, Chinese labor is going up, the shipping cost add a lot, a lot of duty and taxes and all this. In the end, there's something they call the total cost of ownership and if you're in the United States there is an organization called I think it's resurenow.org and there's a TCO estimator on there and so you can put in all the information and figure out just for pure cost perspective which is going to cost more so you factor that in, but, I think it's really important to not forget all those extra cost. That's not to mention all the risk involved in intellectual property thief of not getting what you want and also I think the most exciting thing is the innovation potential. So, innovation tends to happen where near the manufacturing is happening and that's just the general thing. As an entrepreneur if you're trying to iterate on an idea you're not going to iterate as fast if you're doing it remotely and if you're waiting for a shipping container for six weeks to show up. Of course, you can send it by air freight but if we're going to be talking about volumes it takes a long time. So, there's a lot of reasons why local can be much more compelling beyond just the branding elements of the fact that it's locally made.
Salena: I was thinking of one of my clients who manufacture small rounds of hair products at the moment and now she's going to contract manufacturers because she's gotten so large and it's been a bit of a night mare for her because she has quite stringent status that she needs to meet to maintain the credentials that she has but, what she has discovered is when she's out there meeting with the contract manufacturers that they're giving her ideas on how they could actually improve her already pretty good formula and so like you're saying the innovation is there from someone who is doing this day in day out and who isn't involved with your particular product. They might be able to suggest something that can radically change the effectiveness of whatever or even the profitability of the thing that you're manufacturing.
Krisztina: Definitely, definitely. I think that there's a huge value in having that face to face relationship and see how it's made too. A lot of times you have insights, when you see it being made, you're like oh, could make it a lot cheaper if I did it a different way and sometimes whenever one of my semi-podcast had a long history of apparel manufacturing and was explaining how a lot of the students that are coming out of fashion school these days, they don't understand the manufacturing so they will expect a certain type of hand or sleeve whatever say okay go do it and they send it off to a really low cost place in Vietnam and then they get it and then it turns out that they can get it way cheaper locally if they were just working with the manufacturer who would say you know you can save a lot of money if you do it this other way.
Salena: Let me just tell you a quick story about that because that one stay close to home. We used to manufacture these really simple sort of pin and fold dresses in our shop and I used to have a local seamstress who made them and we used to cut them in the store and then it got too popular so we went out contract manufacturer and we still continue to cut them in store because I was a little bit fuzzy about the way that they were cut and nobody mentioned to me even though we did have a manufacturer nobody mentioned to me that the cutting was actually the most expensive part of the process and most time consuming part of the process not the most expensive. It was the most expensive for us because I was paying someone $25 an hour to do the cutting and then one of my staff who had worked in the fashion industry had said to me why doesn't the manufacturer cut these? This seems really odd that you're cutting them in the back storeroom. I was like, oh I just think that's probably going to be the really expensive part. She said, why don't you just get a cord. So not only did we get a cord at 30 cents would make a total of 30 cents to each garment. But, they actually said, if you want us to cut them, we can lay them out in a certain way like you tell us the ratio you want in sizes and we'll put the fabric out and we'll maximize the amount of clothes you can get. So, we end up getting like an extra 20% of garment out of the fabric because they knew how to position every thing to get the best run out of it. So, the 30 cents became nothing in the end because we ended up with dozens of more product.
Salena: I know it's funny too because depending on where you're getting it manufactured the labor and the materials play a different role in the price. If you're in Asia the labor is nothing but the materials maybe a bigger issue. But then, if you're in the U.S and labor is really high then you don't care as much as. So, if depends on where you are doing it.
Salena: It also just means that you just have to go out there and talk to people because you might be pleasantly surprised like I was at how much easier and quicker because these people are specialized at what they do, they have the products, they have the experience, they have the machinery to be able to give you the best product. But, sometimes for product creators it can be hard to let go off that handmade philosophy. Do you think? Do you find that?
Krisztina: I don't know. L.A is a different place than a lot of other cities that are kind of having a resurgence of interest in local manufacturing. A good example is we have friends up in San Francisco and they are an amazing organization that has been around for a while that basically all the manufacturers in the city of San Francisco are members and that's six hundred manufacturers and then in L.A we have something like depending on how you count twelve thousand to thirty thousand manufacturers in L.A county it's just huge and they're doing everything from bolts to entire transportation systems like Hyper loop or Space X so they're such a company and they're not, a lot of them are not contract manufacturers and so I think that the manufacturers in L.A are less focused on the brand aspect from L.A. That said I think there is an advantage when it comes to consumer facing things like fashion and food, especially food because we're kind of like the bread basket, California is the bread basket of the country. I think it depends, I think it really depends.
Salena: Do you see people run into problems like intellectual property? I know we just briefly touched on if you go off shore sometimes your intellectual property itself is at risk but in terms of say you are manufacturing something that's not clothing because usually that's the first thing that comes to people's mind, say your manufacturing a tech product and the product that you need maybe a piece of gadget or a widget or a piece of technology already exist, how can you not have to reinvent the wheel? Is it possible? Or do you have to go and create it yourself?
Krisztina: Yea, I mean fashion there is no IP protection and so your whole business model needs to be constantly innovated, constantly creating and that's pretty cool. That's own kind of beast and then on the hardware side you know I think that like one of my interviews was from local roots. They are a vertical farming company, they decided to take a lot of their LED development and some other manufacturing in house because to them the lighting was their core competency, their secret sauce and so they felt that it was really important to develop their own rather than depend on other suppliers and have something special. I think that was one of the things that you need to think about is how much is that development your secret sauce in which case you may want to keep that in house. Another consideration when you're looking for a contract manufacturers is that you may have to work with a contract manufacturer who may not have the expertise in some of the technology, you're just rearranging the technology in a new way so that there's not a lot of IP there except for you know can protect with a patent if you have a certain concept but it's not really that hard but you want to when you're looking that the CM, the contract manufacturer you do a tour, there's like a whole process for you. You want to make sure that you can trust them and I always find that a really good sign when you go in and you say oh, can I take a picture of that? If they say oh no, you have to or they're very particular about what you take pictures of, if they say no that's a client's work then that's a good sign because that means that they are taking the client's work seriously, the IP seriously. I think a lot of it is based on trust.
Salena: What is the one thing that you see happening over and over again where if somebody is going to get their product manufactured, this is the one thing that they should do first? Because you say time and time again if someone doesn't do it then the whole process just ends up going pear-shaped.
Krisztina: Make sure you have a dozen spoilers that works. I think that a lot of folks just they have a fanciful idea but they don't know that anyone actually buy the product and I do think that product types are great. A way to test that out so just make sure that you have a product market fit and I think that there is a tendency for designers or engineers or for whomever to say okay, I'm going to make these perfect and then I'm going to go into mass production. There's two things wrong with that, first of all, it's not going to be perfect and that means that you've waited too long to release it. The second one, you're investing a lot of money into it when you don't even know. The iteration process is really important.
Salena: That's why places like Kick Starter exist.
Krisztina: That's true. I think a lot of companies gotten into trouble with kick starter. So, that's a whole other conversation but, there have been a hardware products that don't...
Salena: In terms of testing the market.
Krisztina: I think they're testing the market, Kick Start is good for that because it helps validate some interest. But, I think that a lot of times folks that put ideas on Kick Starter, they don't realize how much it's really going to cost to take something to market with the bill of materials or bonds understanding that you don't just basically charge bond a little over the bond the way you sell it. A lot of folks get into trouble and time lines. So, I think that the best in that particular case, the best solution is to talk with an engineer even if you have to pay for it and there are services out there like Drag and Certify is one that will take a look and give you kind of like a sense of your hill of materials make sense, your timeline makes sense and then Kick Starter themselves will help you with that. They have a new program that they're doing that will work with creators and we also make it locally as well. So, companies that are interested in manufacturing locally. We have a program called Catalyst Program that we are just launching for creators who are interested in doing that and then we will give hands on help to the companies to figure out how do you pick the partner, are you ready go into manufacturing it providing exclusive tours and workshops and access to different services like legal business package and stuff like that and building a community of like-minded entrepreneurs that want to make it L.A .
Salena: That sounds like a fabulous program for anybody who wants to get their product into manufacturing and get it out into the world.
Krisztina: Depending on when this airs our deadline is in early April so hope that people will apply for the program if they're close enough to L.A where it makes sense.
Krisztina Holly, known by her colleagues as 'Z' is a Hungarian American innovator, entrepreneur, and adventurer. She is the host of The Art of Manufacturing podcast and the Founder and Chief Instigator of MAKE IT IN LA, which was launched from her term as Entrepreneur-in-Residence for LA Mayor Garcetti.
She is best known as the creator of the first TEDx, the founding executive director of the Deshpande Center for Technological Innovation at the Massachusetts Institute of Technology and the Vice Provost for Innovation and founding executive director of the Stevens Center for Innovation at the University of Southern California.
She was founder or key team member of various technology startups including Stylus Innovation, Direct Hit Technologies, and Jeeves Solutions and was a prominent mountain bike advocate in New England for a decade. She is a founding donor and board member of the River LA, serves on the board of TTI/Vanguard, and has been an advisor to nearly two dozen other companies and organizations, including the Obama Administration as an inaugural member of the National Advisory Council on Innovation and Entrepreneurship, and a global agenda council member of the World Economic Forum advising in the areas of entrepreneurship and manufacturing. She is married and resides in Los Angeles.
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