Tuesday, October 4, 2011

Hackers helping hackers

Here's an interesting article from Jameco.  This is more or less what I want to be doing.


We are not box shifters, we are hackers helping hackers.  If we're not having a dialog with our customers, I think we've failed.

I think it's that approachability that will make one hacker tell his friend about us, and will make a hacker buy from us a second time.  Repeat business is good business.

I have a friend who has an online store here in Australia (http://www.ultrakeet.com.au).  He keeps it nice and quirky, a fun place to shop.  He says he often sends an order to place X, then next week, he'll get four new orders in a cluster within 10km of X.  That's because hackers are social creatures, inhabiting their own social networks, and if you give a hacker good service, he'll talk.  Far more potent advertising than we could ever do.

Tuesday, September 27, 2011

Suppliers: A look inside the component markets of Shenzhen

Welcome to my "office".
(A bird's eye view of where I spend my time, just one of many floors of many such buildings covering several city blocks)
The markets in Shenzhen, or at least the most visible part, consist of thousands upon thousands of individual stallholders.  The markets fill multiple floors, and take up several city blocks.  Each stall is only a couple of square metres, and may hold one or two people jammed in at impossible angles.  Stallholders are generally of two types:
  • Factory showroom.
    Those that represent a factory and the outputs of the factory.  The factory is usually within 50km.  A common example of this is companies that make switches and sockets.  Look under a glass-topped counter of a stall of a seller in this category,q and you'll see somewhere between 400-2000 different products, all made by the one factory, glued onto a display card using double sided tape.  You can point at an interesting switch, and they'll fish it out and you can inspect it.  In essence, the stall is acting as a showroom.  The idea is that if you're manufacturing  product, you pick a switch you like the look of, and order 10,000 of them.  These guys will happily gives you samples, but the expectation is that you're trying them out in your design with a view to buying, rather than freeloading for a 1-off project.
  • Good place to buy passives by the reel.
    Those that represent the end of a long supply "food chain" from the manufacturer to the market.  The manufacturers could be anywhere in the world, especially with ICs.  Typically, the manufacturers produce items in the 100,000-1,000,000s of items.  The items are fed into a tree-shaped distribution structure, with the distributors in each downstream level handling an order of magnitude's less parts than the level above.  Where you buy in the food chain depends on the quantity you're buying.  Typically, the sellers in the Shenzhen market like to handle sales in the 500-5000 range, and the items are often passive components and ICs.  (The office buildings around the markets contain the larger upstream distributors).  These sellers typically don't have sample tables because the parts are standard, and well, chips just look like chips.  But they do have reels and reels and bags and bags of stuff.  I've seen one stall that sells just one value of one kind of capacitor.  And the fact that the stallholder is still there shows that it's economically viable for the stallholder to do this.
These suppliers are interesting creatures.  For a start, 80% of them come from a region about 300km up the coast called 潮州 (Cháo​zhōu, loosly pronounced as "Chowjoe").  There is a strong correlation between this regional group, and the electronics trade, just as Hasidic Jews in New York have monopolised diamond trading.  Coming from the same region makes it easier for them to do business with each other, because there's the implicit assumption that you wouldn't "cheat your neighbour".

Because of this, it's hard getting a trusted relationship if you're a non-Cháo​zhōu Chinese, and even harder if you're a Westerner like me.  Symptoms of a trust issue is sellers who won't look at you, or give you outrageously inflated prices (I was offered a switch for 15x it's nominal trading price, and it was the best I could do), or they'll trade with you but it's an opportunity to shift some stock to you that's been sitting there for years, and is hence terribly oxidised.

Sellers generally only want to do business if you've done business with them before, so it's a chicken-and-egg situation.  The reason is the Chinese concept of 关系 (guān​xì​, loosely pronounced as "gwunshee", and even more loosely translated as "relationship").  I'll write another blog post about that soon.

One way to overcome this is to get an introduction from someone already doing business with them.  The sociological theory is that neither side is unlikely to do anything stupid (like cheat) to the other, because it would reflect poorly on the introducing friend.  And to put someone in a situation which makes them look bad is something you just don't do in Chinese culture.  Alternatively, an alternative explanation based on economics is that suppliers run on reputation: If I'm a big buyer and a seller just shipped some bad stuff to my small time friend, I'll now start worrying about whether the seller is going to do the same to me.  That may be enough to encourage me to look elsewhere for supplies.  A seller can't afford to lose that relationship.

About six weeks ago I started talking with the founder of a PCB manufacturer here in Shenzhen.  He has graciously allowed me to go along with his buyers to the component markets.  I was introduced to the sellers by the buyers as "a friend of the boss", and each time I'd collect the business card of the seller.  By the suppliers seeing me several times a week, and being introduced in this way, the suppliers have come to recognise me.  The plan has been for me to become familiar to them.

With only one more week left in Shenzhen, the time has come for me to line up those suppliers as my own suppliers, and bring them in on what I want to do. To help me, I had the help of "T", a Westerner friend of mine who may well play a big part in Hackvana's future, and "C" a lady friend of his who can speak 闽南语 (Mǐn​nán​yǔ​, roughly pronounced as "Min nun you"). Mǐn​nán​yǔ is the language of Cháo​zhōu.  The idea was for me to pitch the basic idea to them in Mandarin, then C would follow up in Mandarin or Mǐn​nán​yǔ as appropriate with the operational aspects.  T was introduced as the guy who would be there to do the face-to-face work, especially in the coming month.

These sellers all work in a certain way, which usually involves a good deal of face-to-face business.  This system has evolved to where it is today because it represents an economic maximum.  That economic maximum however, maybe just a local maximum - by working differently, they may be able to find an economic maximum that is higher than what they have at present.  I hope in the future to find a way to migrate sellers to a new maximum, one which is of benefit to both me and them.  However the difficulty is in making it compelling enough for sellers to do business in a new way.  If it's too much of a departure from what's already done, they won't do it.

Yesterday I broke out my ever-growing contact book, and we went to all of those suppliers in turn, and told them my plan - to start my own business.  I told each one, "Using instant messaging, I will tell you what I want, then you take the goods to a certain nearby address, and I will give you cash".  (I must say here that QQ, an instant messaging network, is huge in China.  Everyone uses it, so there's no acceptance risk in having it as part of our plan).

In this case, the departure from standard practice that I'm asking of them is to not do face-to-face business for everything.  Rather, I want them to take the goods to a certain place, and they will receive payment on the spot: Cash-on-delivery.  Cash really is king here.

The three of us all worked pretty hard and we were all exhausted at the end.  I am happy to report though, that of the thirty or so suppliers we talked with yesterday, only one wasn't prepared to do business our way.  (Curiously enough, that supplier doesn't sell regularly to my PCB making friend, doesn't have a catalog, and doesn't have a website.  That supplier can consider themselves dropped from my list).

I put the success of our day down to being able to present to the suppliers an easy-to-understand plan for operation that wasn't too different to what they already do, the goodwill I've inherited from being introduced as my PCB making friend's friend (thank you, you know who you are), and having a local to help out who could speak both Mandarin and Mǐn​nán​yǔ, in order to convey the message.

The reason I want the suppliers to do CoD is because I want to do purchasing in a way that involves no physical effort on my part.  Physical effort on my part takes time (and therefore has an effective money cost), and I don't scale. Ok, in order to deliver the purchases, the buyers may well have to use a courier, and I would expect that cost to be added to the price.  That's ok, because they are much better at sourcing cheap local labour to do the task than I'll ever be, and I'm better off spending the time I'd take in collecting stuff on something else.

What I hope for is to end up with a system where the QQ messages we send to suppliers are not sent by a human, but by our automation systems.  We want to take humans out of the loop (our loop) as much as we possibly can, except in a QC/validation role.  That's how we can scale in the future.  And I want to do it in a way where suppliers don't have to radically change the way they do things, at least not at the moment, because otherwise they won't work with me.  I consider getting all the suppliers on board with an agreement to supply via QQ and using CoD to be a vitally important part of my future plans, and I am so very happy that yesterday went so well.

Wednesday, July 27, 2011

Filling the pipe

I have short term, medium term, and long term plans for the things I want to achieve in China. I am sure that no-one is doing the things we have planned for the medium and long term. The hope of seeing those dreams come to life is what drives me. Meanwhile back in Australia I have a hungry mortgage and family to feed, and the medium and long term plans will take time and money to develop. That's why we have to get the short term things going, in order to get some cash flow going.

My short term plans fall in two areas. The first is to provide quality assurance services to western companies who want to source electronics in Shenzhen, or want things manufactured in Shenzhen. By having me look over things, I can weed out the bad eggs and find and fix problems before time and money is wasted.

The second plan is to set up an online retail operation. I'm certainly not claiming to be the first to do that! I doubt we will make any money from doing it, and it's not my purpose to try. The purpose is to start getting our name out there, and to start engaging with the customers (hackers) who will be interested in what we develop in the medium and long term.

For the past two years I have been admiring the product range of a particular company in Beijing. They are nicely made products that will appeal to every hacker. But this company only sells inside of China. So there's an opportunity for us to take these fine products and make them available outside of China. I have just come back from a visit on the weekend to that company in Beijing, and I can report that an agreement which will allow us to sell these outside of China is imminent.

Ok, so with access to a range of cool products, it should just be a simple matter of loading them up into an e-store and raking in the millions. Well, not quite. When someone makes an order, we still have to get the items and ship them out. That's something we don't really want to do, as we don't know much about that area of business, it's something others can do far better and cheaper than us, and we can spend the time we save doing other things. So for that reason, yesterday I visited a gentleman here in Shenzhen who runs a successful online store shipping to outside of China. We talked for many hours about what he does, and what our plans are, and how we could help each other. Similarly, we are close to having an agreement to use him to do fulfilment for us. That, plus the money handling side of things, and the website, will pretty much have us covered for the retail side of things.

So far, I've been here in China for four weeks, and I'd have to say I am very happy with the progress we're making. I have told many people about our vision for the future, and have received universally positive feedback. That's very heartening.

For our next step, I'm about to go to Hong Kong to investigate starting a company there. Hong Kong's corporate tax rate is very low (10%), and having a company there will let us accept payment for both internet sales, and the quality assurance consulting work. I'm learning heaps and doing what I love, and I can't ask for more than that.

Wednesday, July 20, 2011

A hackerspace in Shenzhen

Hello folks,

Well, I've now been in Shenzhen China for nearly three weeks. It's been very hot and humid here, especially during the first week, when the weather web page would typically report "35C, feels like 45C". A little better since then, but there's no escaping that it's summer.

I have been to the electronics markets and they are even more riotous than I had imagined. I think if you laid out all the stalls flat in a plane, the combined area of the stalls would be about half the size of Melbourne's "Hoddle Grid" CBD. Yes, really that big. And most of the roughly 8'x12' stalls are just the iceberg tip for some manufacturing company off somewhere else in the surrounding area. And all the office space for several blocks around the walk-through markets is devoted to the electronics supply chain. The problem here is the sheer embarrassment of choice!


Yesterday I got the go-ahead from an Australian company to do some consulting work here. The money is good, and it will give me a lot of time to work on developing my business, and helping hackers.

Speaking of which, there are some amazing things happening here. I went to a meeting of the Shenzhen Linux User's Group about a week ago (was it really that long?) and found a really cool bunch of very capable hackers. Walking into the room for the first time was quite an experience, as the back half of the room was empty and I had a lot of floor distance to cover. There were literally thirty pairs of eyes watching me, thinking "Oh no, there's a lost foreigner here, what are we going to do?". Well, a few sentences in Chinese later, and we were off and running. I enjoyed the meeting very much, although I didn't understand half of what was said. They've asked me to speak at next month's meeting, and I will do a talk on makefiles.

Some of the hackers have their own group called SZDIY. After the meeting I went to dinner with a bunch of these hackers, and we talked about all things hackerspacey. Had a wonderful time. Here's me and those guys at the subway station:


So, a few days after that meeting there was an SZDIY meeting. We had a lovely dinner together, and afterwards I got to see and play with some of the cool hardware projects they've worked on.

The guys in SZDIY have wanted their own hackerspace for quite some time, but have been unsure of what to do next. In particular, whether they could have a hackerspace without a space. I have encouraged them to "start light, make it interesting, maintain momentum, recruit hard, and according to Linus' Law, eventually someone will come along for whom it is easy to provide a space". That's the theory anyway. I think the most important thing, and what I found most surprising, was that in my opinion, I think these guys already have all the ingredients to be successful: Talented technical people, talented "people" people, a good knowledge of hacker lore, and an existing sense of community and purpose. I think that with this as a base, everything else will fall into place.

Although the SZDIY guys have met and worked together before, I feel that this might be the first meeting where the SZDIY guys felt they could call themselves a hackerspace. I certainly feel it had all the necessary ingredients of a hackerspace meeting.

So a week later, I'm champing at the bit to have another SZDIY meeting. I suggested that if we had it at the same time as Xinchejian (the hackerspace in Shanghai), we could have a cool video link-up over Skype. In particular, Xinchejian were having "show and tell night", so I thought this was a chance for people in each hackerspace to show and tell to each other. In talking with the Shanghai guys to arrange this, someone CC:ed Eric Pan, who is the founder of SeeedStudio.

Most of you will know SeeedStudio. They have a fine range of products that are very popular with hackers, and also offer a few services such as affordable PCB manufacture. Curiously enough, SeeedStudio is right here in Shenzhen! And when Eric replied to the CC:, his response was more or less "OMG I have visited hackerspaces in the USA but hadn't thought of getting one started right here!". He is very excited by the idea of Shenzhen having its own hackerspace, and he invited us to have last night's meeting at the SeeedStudio headquarters. So that's how I came to be sitting in the offices of SeeedStudio on a Wednesday night. Things move fast here in China!

The Skype connection quality was pretty ordinary, so we didn't get any real to-and-fro communication going, but we at least were able to talk with them and put ourselves on their mental map. Maybe it's something we can try again in the future if we can get a better connection.

So as well as the video connection, here's a list of the things we did:

  • Eric showed us the cool photos he took at Maker Faire.

  • I demonstrated my USB touchscreen tablet for practising Chinese characters.

  • Mr. Atommann demonstrated the AVR-powered phone he made for his blind grandma, which is basically a large 4x4 speed-dial keyboard. No dialing needed, just push the button for the friend you want to call.

    He also demonstrated many other cool projects he's made. He's one of those fine people who are obsessed by the GNU ideals, and if he's not wearing a GNU or FSF t-shirt, he's wishing he was! :-)

  • There was a discussion about the projects that SZDIY has done over the past two years, for example, TV-B-Gone, and work with IR transmission and reception.

  • An exclusive no-holds-barred access-all-areas tour of the SeeedStudio office, where we got to play with everything and talk with Eric and his R&D manager, Steve. That was sooo cool.

  • A look at my blog for projects I've worked on, like the Playpause button, USB Doodad, at-home PCB making, and home SMD soldering.
In short, we had a fantastic evening! I think SZDIY is ready to take it to the next level, and I am so buzzed to be part of it!

Wednesday, July 6, 2011

Hello from Shenzhen

This post is coming to you live from Shenzhen China!

So far, things are pretty much how I expected. Getting my residence paperwork sorted out was a pain, needing several trips to the police station and apartment management office. At least everything's sorted now.

Shenzhen is pretty cool. Well actually rather hot and humid. Fortunately I don't mind humidity. But I know my wife would hate it if she lived here.

I am staying with a gentleman named Dave, who I am looking to do the business with. I'm all set up in my own comfy room. Today was the first day I walked down the street and it didn't feel entirely alien. I'm starting to develop my mental map of where stuff is, and I now have some brain capacity to start really looking at which of the local shops sell what.

The city of Shenzhen has a population of 3.3 million, with an average population density of more than 8,000 people per square kilometre. There is an extensive bus and train network, but it still takes about an hour to get to the downtown area.

The electronics markets are awesome. Can you imagine, a whole building dedicated to the selling of LEDs? I just have to figure out the minor detail of how to have a successful and hugely profitable business, while changing the world :-)

So this is day four of my ninety-five day trip to check things out. At the end, I'll head back home to my family. But if things look good, I'll come back again to run the business.

Monday, June 20, 2011

Visa's in

I put my visa paperwork in this morning.  I hadn't forgotten anything or stuffed anything up, and the lady said I'd done a good job.  I wanted a one year multiple entry visa, but she said she could only give me a six month multiple entry, because I've not had a multiple entry visa before.  I don't understand their system.  I don't know what they're trying to guard against.  The visa will allow me to stay in China 30 days at a time.  Fortunately Shenzhen is right across the border from Hong Kong, so doing a "visa run" every thirty days will be cheap and easy.


Several weeks ago I found myself once again frustrated by how time consuming the fiddly bits of a hacking project can be.  Things like getting all the parts together for a project, and how to effectively share open designs with others.  And then I thought that if I was feeling this frustration, it's likely others are facing it too.  And it hit me in a flash that with my Chinese skills and my love of hacking, I could set up a business in Shenzhen run by hackers, for hackers.

I want to make it so that hackers can spend more time hacking, and less time running around chasing after parts.

There is so much cool stuff in Shenzhen that I'm sure hackers would love to get their hands on.  If you haven't seen what the markets are like, here's a look:


It is just totally insane. It's every hacker's dream, a bazaar of every conceivable electronic thing, and a lot that's inconcievable.

How lucky am I to be alive at this moment, when the hackerspace movement is taking off. Five years ago our "electronics" shops had ditched their components, and the world looked set to be slave to the consumerist mindset: We buy it, it fails, we throw it away, we buy it again. But a funny thing has happened in the past three years: The advent of inexpensive microprocessors, of open source hardware and software (I'm thinking in particular of the Arduino, that incredible gateway enabler) and the manufacturing power of China means that now anyone can get into electronics. And come to think of it, electronics isn't even the main point - it's just the vehicle. The main point is that we don't have to consume, we can realise how satisfying it is to create, to repurpose, to collaborate and share.

The hackerspace movement is amazing. Folks at my local hackerspace in Melbourne are doing some cool things, just like people all over the world.  I want to see what contribution I can make.

I am giving myself three months to go to Shenzhen and see what I can make of it.  Three months should give me the time to do the research, and do some test runs, to know whether it's worth making a longer term commitment.  If it doesn't work out, I will have lost three months of my time, three months of income, and a modest amount of my own investment money.  But if it does work out, then I feel this is a way I can really make a difference.

It's June 20, and the clock is ticking.  It's just 9½ days until I hop on a plane bound for Singapore, then Shenzhen.  Tomorrow is my last day at work.  Feels very strange to ditch a perfectly good job.  Kind of like parachutists, who jump out of perfectly good aeroplanes.

I have my flights booked, and someone with whom I can share the challenge in Shenzhen.  I have my accomodation sorted for the three months, and a bunch of good contacts I've made over the past month.  I don't yet have a definite idea of how this business can work, but I have many dozens of pages of ideas.  In the near future I will sit down and work out a business plan, especially a concrete list of what I want to achieve in this three months.

One thing I don't have yet is a visa for China.  I'm taking a bit of a risk here, because there's every chance my visa application will be rejected.  There's an event next month in Shenzhen which a lot of foreigners will go to, and foreigners of course being inherently suspicious, one wouldn't be seen to be doing one's visa-approving job properly unless one met the arbitrary rejection quota eh?

Anyway, I now have the visa paperwork in order, ready to submit tomorrow morning.  Worst case, I'll find out about the rejection next Monday, and I'll pay the rush job fee to get it on Wednesday.  Fingers crossed though.

Something else that might be an issue: Chile's Puyehue-Cordon Caulle volcano.  The ash from the initial eruption is about to pass by and over Australia on its second loop of the planet.  I'm hoping that it's not a problem on the 30th, but who knows?

Anyway, I am indeed living in interesting times.