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djfluffkins
157
Dec 26, 2017
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Will
8470
Chief Product Officer
Dec 27, 2017
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djfluffkinsThanks for taking the time to write this post! There's nothing on these topics we can't discuss and I'd like to chime in with some clarification. I can see you're not presenting your guess as fact (per your specification of "guess" at the start) but I've found if someone presents a logical sounding argument in a long post with other information that's already been verified, folks tend to accept it as truth. This is less a response to you, and more an addendum to your post.
Why can't we ship to your country?
As stated in my previous posts, Focal has distribution agreements for different territories which designate exclusivity for those regions. In these agreements, the distributor gets exclusivity (thus all the money they can generate selling Focal product in their territory) at the cost of supporting the product and faithfully representing Focal in their territory. Support is a pain, it means you have to have a support team with considerable overhead. Depending on the terms of the agreement, "faithfully representing the brand" might involve agreed-upon marketing spend to promote the brand in the distributor's territory. So it's a give and a take, as with all things business arrangements. At this time, Focal has decided (through their own process, they're our partners but I can't claim to completely understand their decision making process) that we can only offer the elex to this limited list of countries at the moment.
Does Massdrop change manufacturing locations as part of collaborations?
We have not changed manufacturing locations for any of our collaborations. All of our collaboration products are made in the same factory, on the same production line, as the products they're based on.
I've seen this assumption (that we change manufacturing location, presumably for cost savings) posted a few times and while it sounds logical (people hear about companies "moving production off shore" on the news all the time so it must be easy right?), it's not correct.
Of all the things a manufacturer has to do, moving manufacturing facilities is probably the hardest, most expensive, time consuming, and overall riskiest process possible. Presumably you've moved residences at some point in your life. Imagine doing that, but to another country with a generally less predicable government, and tens of millions of dollars in custom/specialized machinery. Then you've gotta recruit a workforce, put management in place, hire local managers to manage the factory managers, etc, etc. In general, a move like this for a company like Focal would probably take 12 months minimum from start to finish.
So 12 months of work, massive risk, and massive opportunity cost vs... do none of that and just make them where you're already setup to make a product that already uses 80% of the same parts. Until we're doing 50,000 - 100,000 units on every collaboration, nobody's moving anything.
Why can't we ship to your country?
As stated in my previous posts, Focal has distribution agreements for different territories which designate exclusivity for those regions. In these agreements, the distributor gets exclusivity (thus all the money they can generate selling Focal product in their territory) at the cost of supporting the product and faithfully representing Focal in their territory. Support is a pain, it means you have to have a support team with considerable overhead. Depending on the terms of the agreement, "faithfully representing the brand" might involve agreed-upon marketing spend to promote the brand in the distributor's territory. So it's a give and a take, as with all things business arrangements. At this time, Focal has decided (through their own process, they're our partners but I can't claim to completely understand their decision making process) that we can only offer the elex to this limited list of countries at the moment.
Does Massdrop change manufacturing locations as part of collaborations?
We have not changed manufacturing locations for any of our collaborations. All of our collaboration products are made in the same factory, on the same production line, as the products they're based on.
I've seen this assumption (that we change manufacturing location, presumably for cost savings) posted a few times and while it sounds logical (people hear about companies "moving production off shore" on the news all the time so it must be easy right?), it's not correct.
Of all the things a manufacturer has to do, moving manufacturing facilities is probably the hardest, most expensive, time consuming, and overall riskiest process possible. Presumably you've moved residences at some point in your life. Imagine doing that, but to another country with a generally less predicable government, and tens of millions of dollars in custom/specialized machinery. Then you've gotta recruit a workforce, put management in place, hire local managers to manage the factory managers, etc, etc. In general, a move like this for a company like Focal would probably take 12 months minimum from start to finish.
So 12 months of work, massive risk, and massive opportunity cost vs... do none of that and just make them where you're already setup to make a product that already uses 80% of the same parts. Until we're doing 50,000 - 100,000 units on every collaboration, nobody's moving anything.
djfluffkins
157
Dec 27, 2017
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WillThanks for the clarification/addendum, Will.
The support angle is definitely one I wasn't considering but does make sense. I know there are a lot of Japanese companies that won't sell their bidet/toilet attachments because they won't be able to service them.
As for manufacturing, I'm probably the victim of a post or two about something similar and just parroting. I think the original one that went through my head was the K7XXs where I thought the "equivalent" pair came from Germany by the Massdrop was coming from China. I've been very happy with the K7XXs and the price point, so no complaints, but apologies for parroting not-correct information.
I might have something down the road that could potentially help Massdrop from a shipping perspective, is there a BD-type contact I could reach out to? Nothing is finalized yet, but it could be a good opportunity to improve shipping times while reducing costs.
The support angle is definitely one I wasn't considering but does make sense. I know there are a lot of Japanese companies that won't sell their bidet/toilet attachments because they won't be able to service them.
As for manufacturing, I'm probably the victim of a post or two about something similar and just parroting. I think the original one that went through my head was the K7XXs where I thought the "equivalent" pair came from Germany by the Massdrop was coming from China. I've been very happy with the K7XXs and the price point, so no complaints, but apologies for parroting not-correct information.
I might have something down the road that could potentially help Massdrop from a shipping perspective, is there a BD-type contact I could reach out to? Nothing is finalized yet, but it could be a good opportunity to improve shipping times while reducing costs.
Will
8470
Chief Product Officer
Dec 28, 2017
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djfluffkinsNp, these things are pretty unintuitive. My email is will@massdrop.com, send me an email when you're ready to present and I can point you in the right direction from there.
rhenom
528
Dec 28, 2017
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Will"We have not changed manufacturing locations for any of our collaborations. All of our collaboration products are made in the same factory, on the same production line, as the products they're based on. "
As I understand it there are two different types of Massdrop collaborations: the "Massdrop Made" type, where the manufacturing is done in a Chinese factory run by Massdrop (e.g. AKG x Massdrop K7XX) and non-Massdrop made collaborations where Massdrop usually helps with design elements of a product, but it is ultimately manufactured by the original company, in their factory (e.g. Focal Elex).
If I got anything wrong there feel free to correct me.
As I understand it there are two different types of Massdrop collaborations: the "Massdrop Made" type, where the manufacturing is done in a Chinese factory run by Massdrop (e.g. AKG x Massdrop K7XX) and non-Massdrop made collaborations where Massdrop usually helps with design elements of a product, but it is ultimately manufactured by the original company, in their factory (e.g. Focal Elex).
If I got anything wrong there feel free to correct me.
Will
8470
Chief Product Officer
Dec 28, 2017
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rhenomHey, Massdrop Made is the label we use for all collaborations.
There are some collaborations in which we manage manufacturing, these are referred to internally as community collaborations. This is what we do with keycaps where we work with a community designer to bring their vision to life via our manufacturing infrastructure. It's also what we did with Ferrum Forge on the Falcon, Cruz, and Gent. It's also what we did with Alex cavalli, he provided the designs for the liquid carbon and CTH circuit , we made them and designed all the housing. These drop titles start with Massdrop x *Designer*.
We run the manufacturing in community collaborations because our community designers do not have the capability themselves.
The other type of collaboration is referred to internally as corporate collaborations. This is the K7XX, Elex, TH-X00, 6XX, etc. These drop titles start with Massdrop x *Brand*. Unlike designers, brands have a manufacturing infrastructure because they are larger organizations who already produce products. Because they already have manufacturing established, we use their infrastructure. Why would I spend tons of time, money, and resources establishing something they already have?
In any collaboration it's about leveraging the strengths of your partner. Designers don't have manufacturing, so we step in there. Brands have manufacturing, so we bring in new design in the form of community feedback.
Finally, we did not move production to China for the K7XX. AKG has been producing all their headphones (aside from the k8 line which is now made in hungary) in China since 2013. The K7XX is based on the K702 65th anniversary edition which was the last k7 series headphone made in Austria, but AKG had moved all production for the K7 series to China long before we started the K7XX project.
There are some collaborations in which we manage manufacturing, these are referred to internally as community collaborations. This is what we do with keycaps where we work with a community designer to bring their vision to life via our manufacturing infrastructure. It's also what we did with Ferrum Forge on the Falcon, Cruz, and Gent. It's also what we did with Alex cavalli, he provided the designs for the liquid carbon and CTH circuit , we made them and designed all the housing. These drop titles start with Massdrop x *Designer*.
We run the manufacturing in community collaborations because our community designers do not have the capability themselves.
The other type of collaboration is referred to internally as corporate collaborations. This is the K7XX, Elex, TH-X00, 6XX, etc. These drop titles start with Massdrop x *Brand*. Unlike designers, brands have a manufacturing infrastructure because they are larger organizations who already produce products. Because they already have manufacturing established, we use their infrastructure. Why would I spend tons of time, money, and resources establishing something they already have?
In any collaboration it's about leveraging the strengths of your partner. Designers don't have manufacturing, so we step in there. Brands have manufacturing, so we bring in new design in the form of community feedback.
Finally, we did not move production to China for the K7XX. AKG has been producing all their headphones (aside from the k8 line which is now made in hungary) in China since 2013. The K7XX is based on the K702 65th anniversary edition which was the last k7 series headphone made in Austria, but AKG had moved all production for the K7 series to China long before we started the K7XX project.
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I'm guessing Focal has specific distribution agreements with vendors in certain countries. These agreements incentivize a distributor to take on the risk of inventory for products on top of some form of retail markup. For reference, I was looking at doing a bike startup a few years back, and my research showed that the retail markup could be 100% of wholesale price, i.e. a $1,000 bike was only $500 to the manufacturer. With bikes they probably want to saturate stores so they MSRP higher and then let the bike stores take the markup. With headphones there may be less margin to keep it competitive and establish markup. Based on some of the Head-Fi videos about the drivers and how they are made (and what they are made from) it seems like there is a pretty significant materials cost to them, and the actual manufacturing probably also costs a pretty penny, so to keep them competitive to other headphones they probably went with more exclusivity agreements in favor of reducing MSRP.
So what does this have to do with shipping? Well if Focal is entering into exclusive or semi-exclusive distribution agreements with distributors in certain countries, letting Massdrop enter their market (even with a new product) may be a no-no. They may even have a right of first refusal agreement on the distribution of new products (which this likely is). Now you might say, ok, but Massdrop does this with a bunch of other companies, so why can they distribute those to other countries and not these. My guess is two things. 1. Focal's headphone line is pretty high end. Their lowest model is $249 and they really only have 6 to begin with, so they simply don't have the clout to negotiate better agreements (the way Sennheiser might). 2. Most of the headphones that Massdrop has partnered on have also been manufactured in China (usually not in the same place as the original). I'm guessing there's some workaround where a licensing agreement may get around distribution agreements already in place. I don't think I'd trust a Chinese manufacturer with a Focal Elear/Elex/Clear/Utopia, at least not for an initial run.
So this may or may not be the case regarding these Focals. It's obviously kind of sad that not everyone can get their hands on these (even if they want to). I definitely don't think it's Massdrop or Focal's intent to limit the sale. I am curious about how Massdrop enters into agreements with such a variable amount of product (i.e. this drop is at ~200 sold now and declining, but the cap is 1,000). I wonder if that means Focal will actually manufacturer the 1,000, whether the 200 people will get theirs way earlier, or if Massdrop is just going to take a hit in their fees from Focal (since I'm sure some form of guarantee is always in the works). I just hope the lack of a sellout doesn't impact a future relationship with Focal.
Anyways, I doubt this post will stop people from asking, but hopefully this makes sense in a way Massdrop probably can't come out and say themselves.