When we first started Bohemian Guitars, everyone told us manufacturing is easy, and that the hard part would be getting people to want our product enough to buy it. I wish that were true. The truth is that running a manufacturing company while building an international lifestyle brand is incredibly complex. Way more complex than Shaun and I (my brother and co-founder) could have ever imagined.
Manufacturing is tricky. There are many third parties involved during every critical phase (sourcing, design, assembly, quality control, packaging, logistics, insurance, IP, etc.), and the success of your business ultimately depends on other people executing for you. I can’t emphasize enough the importance of building trust and relationships with the partners you work with.
But no matter how much effort you put into a relationship, it’ll be impossible to have full control over everything, especially when the majority of your key business initiatives are being managed by strangers thousands of miles away. If you’re a control freak, start practicing deep breathing exercises and put monthly therapist visits on your calendar. You’ll also likely start overeating.
Along our journey, Shaun and I had to stomach some pretty expensive lessons as we navigated the pains of manufacturing. We’ve had contractual obligations broken and hundreds of thousands of dollars stolen from us. We’ve had to reject product from suppliers and manufacturers because they failed to meet our quality standards – resulting in us losing millions of dollars in revenue and missing customer deadlines. Even when everything is going great, something is usually going wrong. There are tons of stories that come to mind, but one memory is still fresh.
Last year, we were working with a sourcing agent (a flattering term for middle man) who was introduced to us by one of the Sharks from ABC’s Shark Tank (please note: we were never on Shark Tank nor do we have a Shark as an investor). This was an A+++ introduction to a proven badass that had been in manufacturing for 20+ years working with some of the biggest names and brands. The agent hooked us up with a home run manufacturer who builds for the biggest guitar brands on earth. He delivered our first order a little late, which admittedly is normal for small orders, but the final product was breathtaking. We couldn’t have been happier. So we put an agreement in place and wired him a big deposit for a much larger order. We were graduating from 500 Startups, had a deal lined up with Urban Outfitters, and continued to see tremendous demand and monthly growth. Everything was finally going in our favor, until it nearly all went wrong.
The sourcing agent ended up taking on too many clients and turned our deposit into a letter of credit to fund other projects. All of which ended up going belly up. Meaning, he didn’t have any money to pay our factories. The photos of progress provided throughout production were photos he had taken during our previous order. The progress updates he provided us were all lies. It wasn’t until I arrived at the factory in China for quality control about 2 weeks before the order was ‘scheduled’ for completion that I realized something was wrong. After hours of talking through interpreters and relaying messages between all parties, the agent finally pulled me aside, looked me in the eyes and admitted he had not paid the factory a deposit. They hadn’t started manufacturing yet.
Despite this enormous setback, my immediate instinct was to identify a solution. Fortunately, we had the right team, contingency plans, and investors (Dave McClure & Mike Walsh) who helped us avoid this near disaster. Thanks to the foundation we had worked hard to build, we were able to get production off the ground. While we didn’t meet all of our goals last year, we survived and are now thriving.
This entire experience might also have been a blessing in disguise. The agent is now out of the way (we actually can’t find him but are taking legal action), and we finally control the relationship with the factory which has reduced our costs and increased margins.
The moral of the story: manufacturing is hard. At some point a scumbag is going to try and take advantage of you.
Nothing is insurmountable and as long as you have the right plans, people, and the unique psychological disorder found in startup founders that allows you to ignore failure. I’ll leave you with a few of the key lessons learned we learned along the way:
- Do NOT work with sourcing agents aka middlemen. See above. It’s expensive, they make about 16% / unit. If you don’t have a direct relationship with the factory, then you really do not own your product or the supply chain.
- Slow down. Move fast and break things does not apply to producing physical products.
- Over plan. Something is going to go wrong; you need to have contingency plans in place for everything. Most people learn this when it’s too late.
- No two businesses are the same. Don’t do something just because it worked for someone on Quora. (Okay, I think I’ve hit my tech blog cliche quota now)
- Your first employees are more important than your first customers. They just are.
- Stop worrying about investors. Most investors aren’t going to write you a check until you have your supply chain under control.
- Finance with pre-orders. You’re likely too early for a bank loan. Also, see #6.
- Manufacturing is about keeping your business alive while others try to f**k you over. Learn this early.
- Collaborate with people in similar situations. For example, I work closely with Steven Blustein, the founder of PrideBItes, who has revolutionized short-run manufacturing.
- Get used to eating airplane food. You’re going to spend a lot of time on substandard airlines.
Running Bohemian Guitars has been a roller coaster ride full of emotional ups and downs – I’ve experienced the highest highs and the lowest lows, sometimes both in the same day. We’ve overcome what originally felt like insurmountable obstacles, but I know our journey is still in its infancy.
I hope the lessons I shared above will help you bounce back if you ever find yourself in a tough situation. Feel free to email me at email@example.com if you have any questions or just want to vent about your manufacturing woes.