Never stop discussing with more EMS firms until ...

... until you're stably manufacturing 50k units or 100k units per year with your EMS partner.

This is a recurring mistake I'm seeing in early-stage hardware startups.

  • As an industry outsider the startup is so happy to finally get over the hump and sign a contract with a relatively good EMS firm for production, thinking everything would be okay going forward
  • Then trouble comes along the way: cyclical natures of the electronics businesses forcing EMS firms to sacrifice small companies, component suppliers missing a few steps, BOM costs rising above the initial quotes, etc
  • The startup panics and tries to send many emails a day to get things right and eventually flies to China thinking that they could get it right.
  • Then reality comes that they are trapped in a situation where they'll be missing the shipping deadline by 3 months at least

For many of our member startups, I advise them early on to talk to more EMS firms, especially when the EMS firms want to talk.

Unfortunately usually some will be in the glory of "me miraculously pulling this off as a newbie" when I offer to introduce more EMS firms to them. They'll say "We're fine for now but thanks, Jerry!"

It's not uncommon that they send an emergency email to me 2 or 3 months later saying everything has unravelled and whether I could help.

This is really unfortunate as none of the above is a new thing in this old industry called electronics. 

Being able to listen, learn and evolve is definitely what separates a great hardware founder from a good one.

To Crowd or Not to Crowd

An Interview with former CFO of Xiaomi, Ming-To Yu