Hello, Beautiful People of The Jollylook Community!
Thank you for backing Jollylook!
This update is special, it sums up an important phase of the Jollylook project, which you all supported. We expected that we would summarize one and a half years earlier, but today's update will be more interesting, and perhaps more instructive, than the one that failed.
After our successful Kickstarter campaign
There were euphoria and a feeling of success - people loved the camera that we created, people believed in us and backed our project. We had sufficient resources for the qualitative implementation of the project - a great start to an interesting project.
How it all happened
As an engineer with many years of experience in managing and organizing production, OIeg was confident that we would cope with the organization of camera production in three to four months: we had the resources, the qualifications of our engineers are high, we have considerable experience and a clear understanding of the tasks, and the developed production ecosystem of China has attracted us by its accessibility...
Our optimism was also supported by the interest of many dealers and distributors to our product, which meant that after fulfilling our obligations to those who supported us, we would have sales and will be able to continue this project as a business.
Using the recommendation of friends, we contacted a company that specializes in finding Chinese contractors and accompanying orders for Europe and the United States, under an agreement with us, this company provided the selection of suppliers and contractors, product quality inspection and negotiation support when visiting enterprises. They had a monthly fixed fee for their services, which also fit into the budget because it was only for three months...
Within a month and a half, the main contractors were found, and in the course of several of our trips to China, production was examined and decisions on cooperation were made. We wrote about it in update #8.
We placed orders for the manufacture of molds and dies for the manufacture of components. Everything seemed to be going right.
Our engineers and the contractor's engineers coordinated the details and refined the technical solutions, the work was very active, it turned out that the drawings of some parts required changes, and each change or approval of samples of components and materials took one or two weeks, the delivery of samples from China also took time or sometimes a trip to China to address production issues, it became clear that the expected period of pre-production will be exceeded.
The preparation of the production of plastic and metal components was completed only in November 2017... and although the result was good, the total costs at that time already exceeded the expected almost one and a half times.
Oleg admits that, based on his own experience, he considered making the cardboard part of the Jollylook camera a task less complicated than manufacturing the development unit and its elements, and this turned out to be the main miscalculation.
The cardboard box factory had the necessary equipment and personnel, the managers and workers with whom we collected the samples made a very good impression, in the process of preparing and manufacturing the first samples people worked overtimes and tried very hard, we were delighted with this attitude.
Taking into account the technological processes adopted at the factory, we changed the design of the camera body. The samples made in our presence looked great and met the requirements. We then proudly informed you about this, and placed an order for making a batch and made an advance payment, however, instead of paying 50% of the contract amount, we paid for the full amount of the order as a result of an accountant mistake! Due to the fact that the reverse transaction led to additional costs in connection with the conversion of RMB into USD, we did not insist on a return, especially since only a month later a batch of ten thousand cameras should be ready... It was a big mistake - when the deadline was broken - we did not have any levers of influence on the situation.
With the beginning of the manufacturing of the cardboard body on the conveyor, the first problems appeared: we regularly detected a issues, it was mostly a glue defect - many parts were stuck or stuck unevenly during storage, it turned out that the assembly workers where not skilled enough and the glue was unreliable, this glue was permanently sticky and differed from that used in the manufacture of the first samples with the glue of constant fixation; moreover, in the first batch of cameras almost all the bellows were with damages that violate the opacity.
At the same time, whenever we detected these defects, the production was stopped and the factory managers showed absolute determination to eliminate the cause of the defects and fix everything, but then everything repeated, so we discovered a previously unnoticed lack of technological discipline. Later it turned out that when we left the factory the work stopped and our order was simply put off.
Meanwhile, our financial costs grew and it was obvious that the state of financial resources would not allow us to change the contractor at this stage, the cost of many trips and monthly payments to our Chinese assistants significantly worsened our financial position.
In May 2018 when all the components for the development units were produced and a part of the cassettes was purchased, it was time to pay the remaining amounts under the contracts, while the money ran out. OIeg had to invest an additional $65,000 of his own savings in order for us to receive the manufactured components of the development unit. (update #21)
For constant quality control and working rhythm, we agreed with our Chinese assistants on the permanent presence of their representative at the factory. There was hope that having achieved the required quality, we would save the situation by starting sales simultaneously with sending the rewards to our backers, (some dealers were ready to make an advance payment), some of the cameras were still made and passed the control and as you remember in June 2018 we started shipping Jollylook cameras to our backers and sold some to dealers.
What happened next was terrible: sometime after shipping we started receiving messages about the defects, the defects were mainly due to the fact that parts of the cameras started ungluing, the percentage of the defects was unacceptably high, it turned out that despite our requirements to use permanent fixing glue, the factory continued to use the glue of permanent stickiness which unglued a couple of weeks after gluing.
Meanwhile, the factory reported on the readiness of the majority of the cameras for shipment, and we sent our engineer from Ukraine for detailed inspection, and he confirmed the worst assumptions: all the cameras that were produced were defective: some cameras started ungluing in the factory, some shutters were ungluing and got jammed, and some were carelessly reglued and had defects in appearance.
We made a difficult decision, which had to be made earlier, to stop working with this contractor. When we demanded the return of our money, it turned out that above all the troubles - there was a fraud: a person from the company's administration made a forgery of documents and sent half of the money we paid to his personal account and only half of the amount was sent to the factory’s account.
The lawyers told us that if we went to court then it would have made it immediately impossible to use all the components - made and paid with such difficulty, and besides, there was simply no money for the litigation. With threats and promises to go to court, we managed to return only 10% of the money that we paid plus all the components and all the defective cameras produced, we used the remaining money to pay for the shipment to Ukraine, and finally last week the ship arrived in Odessa, it was cleared, customs duty was paid. In parallel with the decision to stop assembly in China, We immediately began to prepare production in Ukraine: we told about the progress in the previous updates, for this, we had to borrow funds - an additional $65 thousand.
Today, taking into account all the complexities of assembly, the design of the camera has been updated, equipment has been purchased, manufactured and installed: a conveyor, a press for compressing boxes when gluing together (these presses had to be designed and manufactured independently), machines for applying glue, a laser cutting machine, a lot of equipment and tools, glues were selected and gluing modes were tested, production premises and production infrastructure were prepared, it was decided to do everything under our control and at our facility, we hired assemblers and trained them. Today we have ten assemblers who have completed the internship!
On Friday we received the first blanks for camera bodies made in the Ukrainian printing house, before that, we collected test batches of camera parts using blanks cut on a laser engraver. Now we are dismantling the cameras brought from China to extract plastic parts and developing units. Available components will be enough for 9,000 cameras. of which 6,800 we have to send to you - our backers.
So after almost two years from the start of the project, spending $130 thousand in addition to the funds collected on Kickstarter, we start assembly in our own small factory, of course we will fulfill our obligations to those who supported us - and we will start shipping this December and plan to send all the cameras to our backers by March 2019, although we will have to go along with the selling of some cameras to be able to pay for shipping and cassettes.
You may be interested in the conclusions that we made:
Planning costs for three months, you need to assess the fixed costs for the year and see if you can cope with them - We underestimated the need for strict control of fixed costs, operating in unfamiliar territory and we got into a situation when we were temporarily unable to stop paying these costs.
The need for a quick reaction if something went wrong - it is very dangerous to allow others to calm you down with promises to solve a problem, in our case we let ourselves be calmed down several times, so the reaction to the problem was overdue.
Understand the cost of time and the importance of real planning – unacceptable to relax until everything is complete: each link in the chain is important - in our case, one out of eight contractors was unreliable, which put the project on the verge of collapse - Oleg admits that he was calm when he was holding a perfectly executed sample of Jollylook, believing that in a month the most important stage would be passed, while everything was just beginning! We must avoid false hopes that the partners will do your work - we must control every step: to our shame, it did not occur to us to check the authenticity of invoices and documents. It is necessary to understand the price of promises - when you give promises based on other people's promises it is always a risk. Time reserve is always necessary when you are working in an unfamiliar business environment. It is necessary to take into account differences in mentality and cultural characteristics - in the Western business environment, cheating partners are much less common, in China, as it turned out, one cannot be sure that the person who leads you through the factory is actually its co-owner and not just an intermediary... also in the eastern culture it is considered shameful to admit difficulties or ignorance, so you can be assured that all problems will be solved and this will be said only to pleasantly end the conversation, for the same reason in China a person on the street can send somewhere random because he doesn't know the road to the place you are looking for.
It is necessary to show perseverance in achieving your goal and to be honest. We are persistent, therefore we will achieve results.
We once again express our sincere Thank You to all who supported us. Each of you will receive your reward! We thank you for your patience and for sharing your emotions, even when some of you are unhappy with us. Without you, this project would not be possible, and because of you, it will succeed.
We will keep you updated on our progress.
THANK YOU!
Until next time,
The Jollylook team.