Flextronics brings US manufacturing to the startup set
At the end of the San Francisco Bay, in the center of the town of Milpitas, sits a nondescript office park. The Flextronics' campus is situated in the middle of this sprawl surrounded by rows of parking spaces and strips of manicured grass. It looks like any other set of buildings in any other industrial park in any other metropolitan area in the United States. But its seemingly boring location is what makes this bland row of buildings in the San Jose suburb so intriguing. Flextronics is doing something that was unheard of just a few years ago -- it built a US-based factory that's manufacturing hardware for small companies. One of those companies is Recon.
Two years ago, sports wearable company Recon had an idea. It would bring its Snow2 HUD technology to sunglasses for runners and cyclists. The Recon Jet (launching today) would be the Google Glass for athletes and the teaser video got people excited. Then it had to build it. The company has used a manufacturing partner in Mexico for its previous hardware. The partnership was fruitful, but the Jet was a new product and the team thought that the 13-hour plane rides to Mexico and the language barrier could delay the lead up to production. It was already into the prototyping phase when CEO and co-founder Dan Eisenhardt met Flextronics President Mike Dennison at CES.
At the time, Flextronics was doing something to expand its manufacturing portfolio. It had set aside a portion of the company's Milpitas campus to help cultivate the small, but growing wearables market. "Our idea was if we create this capability in this infrastructure and organizational structure -- in this case, it was about $15 million of investment -- we can create the playground for these young companies to come in and really, really nurture their ideas into a real product," says Dennison. That playground is right in Silicon Valley's backyard giving both large and small hardware businesses the opportunity to prototype and manufacture their products without traveling to China, Brazil or Mexico.
Google already took advantage of the campus' proximity and know-how to bring the Chromecast to market. Unlike other projects, the Chromecast was brought to Flextronics before a design had been finalized. They worked together to iterate the design and production until the unit was ready for manufacturing. Flextronics took the lessons learned during those four weeks and applied them to its partnership with Recon and other hardware companies.
However, building a new product isn't the same as updating an existing device. It's an ongoing process that requires continually building new prototypes. "Design it. Run it down the line. Test it. Play with it. Go back and do it again as many times as you can, as cheaply as you can," says Dennison. Flextronics offers Recon the tools, talent and suppliers to get the Jet out the door quicker than the traditional path of working with factories in other countries. The on-site tooling and molding shops were used not only for the device, but also for the tools being used on the manufacturing line. The facility's one-stop-shop approach also helps reduce further delays of the already delayed Jet.
Like the Chromecast, the Jet would undergo significant changes before actual manufacturing would begin. It also had to look good. Recon Director of Manufacturing Dominique Kwong noted, "It's eyewear; it's fashion; that's part of the product." Therefore blemishes and slight variations in the shell color were unacceptable. Recon could give suppliers feedback quicker than when it was manufacturing out of Mexico. "For myself, for my staff, to be able to jump on a plane and two hours later be able to make those decisions is invaluable," said Kwong.
The hardware startup world is filled with stories of founders living next to a Chinese factory for months at a time iterating on a design. They patiently wait to pump out a few prototypes between runs of larger-volume products. Flextronics wants to be the one that ends that hassle. But don't expect the manufacturer to embrace every small company with an idea for a new piece of hardware. So far, it's built only four highly secure confidential centers for small firms to work on their prototypes with a dedicated team. Interested outfits are vetted on how far along the product is in the prototyping and design phase and whether or not it fits with Flextronics. In other words, if it will sell.
And it's really all about getting products in consumers' hands. Flextronics gives these companies the ability to scale quickly because they're already in its system. If the Recon Jet becomes the next GoPro or Pebble, manufacturing can be moved to the company's factory in Austin, Texas, or even overseas. It's a win-win for Flextronics. It gets to be at the forefront of an emerging market and if one of those devices hits the big time, it's primed for big-time scale and big-time profits.
