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post #1471 of 4524
Quote:
Originally Posted by judmarc View Post
I don't know whether this was an actual figure or some BS anecdote, but I seem to remember a statistic about 4 out of 5 business startups cratering in the first 5 years.

This is one of the giant holes in the information available in modern culture.

 

Since we live in a competitive society, then information is only available if there is some incentive for providing it.

 

So, we constantly hear about some kid who pursued his dream to become the top _____ and never hear about the thousands of kids who failed to become the top _____ .  Why not?  Well, would you watch a ten hour series about everyone who failed to become an NFL quarterback or who failed to become a ballerina, or came in 4th in the Olympics and so on ?   It would have the worst ratings ever.

 

And, of course there is actually big incentive from established industry players, to have hordes of morons start up really lame competing businesses.  Nothing helps your bottom line more than crushing the competition (and it makes for good marketing copy).

 

In general, there are strong incentives in society for everyone having false information about everything.

 

So, the next time you say " If there really are zero studies indicating health problems from eating fat, then why do I keep hearing about 'heart attack on a plate' ?  Wouldn't I have heard about it on the news channels ? " - now you know why you haven't heard anything.


Edited by kstuart - 6/29/14 at 1:56pm
post #1472 of 4524
Quote:
Originally Posted by KLJTech View Post
 

I have full blow Audiophile OCD and I still didn't notice it. 

 

Not OCD enough then.

 

post #1473 of 4524
Quote:
Originally Posted by Eee Pee View Post
 

 

Not OCD enough then.

 

 

Okay, I guess I don't spend enough time checking out the bottom of my gear (my bad) and since it sits next to a monitor stand that blocks the side view I never noticed the seam...looks like they did a pretty nice job to me. 

If it bothers anyone too much the good news is that there's always the Bryston BDA-2 with Dual 32-bit AKM DAC's available for $2395...not sure if it has a metal seam on the bottom or not. 

post #1474 of 4524
Quote:
Originally Posted by Jason Stoddard View Post
 

Make crappy-looking prototypes and show them to people who won’t understand they’re prototypes, no matter how big the signs are.

 

LOL!  To all of the illiterate people that were moaning and groaning about the Ragnarok prototype at CanJam last year, this means you.

 

 

Literacy.  It's not just for breakfast anymore.

post #1475 of 4524
Quote:
Originally Posted by KLJTech View Post
 

 

Okay, I guess I don't spend enough time checking out the bottom of my gear (my bad) and since it sits next to a monitor stand that blocks the side view I never noticed the seam...looks like they did a pretty nice job to me. 

If it bothers anyone too much the good news is that there's always the Bryston BDA-2 with Dual 32-bit AKM DAC's available for $2395...not sure if it has a metal seam on the bottom or not. 


ALWAYS check out the bottom - oh wait - we're talking about electronics.  Never mind.

post #1476 of 4524
Quote:
Originally Posted by aamefford View Post
 


ALWAYS check out the bottom - oh wait - we're talking about electronics.  Never mind.A

 

"ALWAYS check out the bottom"...I couldn't agree more. :D

post #1477 of 4524

I'm certain it is not a coincidence that my random music mix just segued from Queen to Sir Mix A Lot...

post #1478 of 4524
HA! Going to see Queen with Adam Lambert tonight. I hope they play "that" song...
post #1479 of 4524
Thread Starter 

Chapter 22:

Introducing the Schiithole

 

Okay, the last time I talked about moving out of the garage, I left you hanging—with the realtor saying, “Well, maybe we can find a way for you to do your light manufacturing in a zoned-for-commercial space, but no promises.”

 

To cut to the chase, we got it. What finally sold it was probably three things:

 

  1. Persistence.
  2. Not appearing too flaky or insane.
  3. Willingness to take the property as-is.

 

Believe it or not, #2 matters quite a bit. There are plenty of flaky, insane people in commercial real estate. Landlords want nothing to do with them. And #3 is also a big deal. Landlords don’t want to do a bunch of custom buildout—even if you’re signing a long-term lease.

 

And—one other thing: the willingness to take a little bit of risk. Because we were in a commercial space, after all. Not industrial. The city inspector could conceivably come by, decide we weren’t conforming, and shut us down.

 

Yes, it was a risk.

 

But it was a risk worth taking, because it got us an inexpensive space near our other office. And the risk, we told ourselves, wasn’t high. After all, we were retailers. We sold direct to customers. And if 99.99% of it was shipped via FedEx and USPS, did it really matter, as long as we had a place that someone could theoretically walk in and purchase something?

 

Perhaps. But that would be up to the inspector. If they ever came by. I crossed my fingers, hoped they wouldn’t, picked up our first liability insurance*, and signed the lease.

 

And that’s how, around March 2012, we got the worn and pitted keys to our first Schiit building.

 

 

*Hidden Expenses and DIY Dreams

 

I precede this aside with a * to connect it to the liability insurance mention above. I do this because this is a great corollary to “everything is your problem” reality of having your own business. Well, here’s the second harsh reality of your own business: there are a hell of a lot of hidden expenses ready to jump up and bite you in the ass.

 

I sometimes get taken to task by DIYers who say, “I can build something like that for a lot less than you’re charging.”

 

Sure.

 

Well, maybe.

 

No. Wait.

 

Actually, they can’t, because the price on single pieces of stuff like transformers and chassis will make any one-off a budget-busting exercise. Even if you’re talking off-the-shelf transformers and project boxes, it really isn’t going to be that much cheaper. And that’s not factoring in the time the DIYer spent building it, nor the time it took to learn their construction skills, nor the cost of their tools, nor the cost of the new tools they had to get while making it. You get the picture.

 

(And, just to be clear, I love and support DIY. As far as I’m concerned, we should all be juggling soldering irons and dropping them in our laps, grabbing on to 120V (or 230V) once in a while, putting transistors in backwards, watching capacitors explode, spending endless hours wondering why the new prototype doesn’t work quite right, getting excited when the new PC boards come in…)

 

But DIY isn’t production. It’s not production in a garage, and it’s not a business with all sorts of crazy expenses. Expenses like:

 

  • Liability insurance
  • Product liability insurance
  • Workman’s comp insurance
  • Facilities lease
  • Facilities upkeep
  • Facilities changes/expansion
  • Equipment cost
  • Equipment upkeep and calibration
  • Bookkeeping
  • Local gross receipts tax
  • Sales or VAT
  • Business licensing/registration (if applicable)

 

And this is on top of the normal, fun stuff like local, state, and federal taxes, payroll, parts cost, shipping, assembly cost, etc.

 

Yep. Tons of fun.

 

 

Mike’s Perspective

 

Mike, of course, saw right through me, as soon as he drove by the place. He took one look at Rina running a shop-vac over the cracked and dusty floor (and vacuuming up big pieces of ancient tile in the process), and told me:

 

“You got it because it was cheap.”

 

“Right,” I told him, not even hesitating.

 

Rina and Eddie were also arguing over space for shipping versus space for production. Eddie was arguing that we should take all the used, battered Ikea office desks (that I got from Centric’s storage unit) back outside and blow the dust out of the space with a compressor.

 

“There’s about a hundred pounds of dirt per square foot up there,” Eddie said, pointing up at the sprayed acoustic ceiling. “That crap’s gonna fall down if we don’t blow it out.”

 

“It may fall down if we blow it out anyway,” I told him. The ceiling didn’t look too robust. We could be looking at sheets of acoustic cottage cheese if we started blowing on it.

 

“But it was cheap!” Mike said.
 

“Yes,” I snapped. “And convenient. And it keeps the HOA from shutting us down.”

 

“Until the city inspector comes.”

 

“If he comes.”

 

“I’m going to need more space for shipping,” Rina interrupted, indicating where she wanted her finished-goods racks placed.

 

“That’s two-thirds of the building,” I told her. “Eddie and Tony need more space.”

 

“We need more space for shipping!” she insisted.

 

Eddie shook his head. “And we should stop this crazy vacuuming and blow this place out. This dust is gonna get everywhere!”

 

“But it was cheap!” Mike added.

 

I groaned. Thankfully, Tony wasn’t there, or would have probably had a comment or three as well. Suffice to say, it wasn’t our finest day moving in. The place was really a mess.

 

Maybe I should step back and describe the Schiithole (the name Rina dubbed it with on that first contentious day—and it stuck.)

 

The Schiithole was an old, L-shaped stucco-and-siding building on the corner of 6th and Railroad in Newhall. Railroad is named because of, well, the railroad that parallels it. This railroad was instrumental in making Newhall one of the first boom towns of the late 1800s (together with the discovery of oil.) It now carries mainly Metrolink traffic. Many times a day, trains rattle by, shaking the old building. Cars rush by on the 5-lane street outside at all hours. With no insulation, it was a hollow, loud, booming space.

 

Outside, the stucco was fading to an off-white from what had once been a taupe color. Several large holes had been punched in it, whether from frustrated passerby, or by some other mechanism, I don’t know. The siding was peeling paint, and much of the external wood was collapsing into dry rot.

 

Inside, the floor was uneven and patched crudely with concrete. And by uneven, I mean “like, one side was a good foot lower than another.” Some traces of fiberglass tiles remained, but they were rapidly flaking off as we cleaned. The sheetrock walls were relatively unmarked, but the bathrooms were only partially functional, after the building had been stripped of plumbing and wiring by thieves and only makeshift restored. There was no hot water. No heating. No AC.

 

Out back, it had a dirt-and-concrete yard full of knee-high weeds and assorted detritus. Of the four doors, one looked out on the back area, two were on the Railroad side, plus a roll-up door the realtor warned us “never to leave open, because that’s a sure sign you’re making things here,” and a door on Market Street. None of the doors matched. None of them were handicap accessible.

 

I didn’t know it at the time, but it had once been the home of the Daily Signal, Santa Clarita’s newspaper that still survives (barely) to this day. We were later shown the room where they used to melt down the lead plates every night, to re-cast them for the next day’s paper. We were using it as a storeroom.

 

But, as Mike said, it was cheap.

 

So, yeah, a fun move. But by the end of that first day, we had test equipment plugged in and running, Eddie had his assembly bench set up, and we were moving things in from the garage and the rest of the house.

 

We had a home away from home. The Schiithole.

 

 

Interlude: Business Space Philosophy

 

Okay, so why did we take such a crappy place (because it was cheap) and tolerate the noise (because it was cheap) and the dust (because it was cheap) and the lack of any typical niceties, like heat and AC (because it was cheap!)

 

Well, yes. But also because of an observation I’ve had about business space:

 

The moment you build a palace is the moment you die.

 

Now, it may take many years for that palace to kill you. You may end up with some very good years there. It may serve as a very useful way to awe and astound customers or clients that are easily impressed by such things.

 

But the moment you start focusing on business wants, rather than needs, you’re dead.

 

It happened to Sherwood. It happened to Marantz. It happened to dozens of ad agencies I’ve seen come and go. It’s happened to scores of clients who spent their startup money on nice offices and celeb chefs and foosball tables and lounges. We’ll see how Apple’s “spaceship” campus does for them, but I’m betting right now I know how it ends.

 

Here’s the deal. I business, there are certain things you need. These are things like:

 

  • A functional space. That is, one large enough to contain what you want to do. Trying to put a full wood shop in a 20 x 20’ space isn’t gonna work out very well. Depending on what you’re doing, you may need no more than a single office—or a home office—or a whole lot more space for stock, finished goods, production area, machinery, etc. But first and foremost, you need a functional space.

 

  • Effective places to work. This may mean an Ikea desk and a Wacom Cintiq and a WiFi router and nothing more. Or it might mean heavy-duty workbenches with static mitigation and 10 outlets for work on sensitive electronics. It it may mean self-built 2x4-and-fiberboard tables with static mats for accomplishing the same thing. Plus chairs and such.**

 

  • The equipment you need to do your work. This may be nothing more than a laptop, or it could be an entire suite of test equipment. Or CNC routers and laser engraving machines. Bottom line, stuff like this is critical, if it is critical for doing your work. Don’t skimp.

 

  • The right connectivity for your business. This may mean nothing more than a simple DSL line for basic spreadsheets, web surfing, and ordering, or super-high-speed optical cable with dedicated symmetric lines for a phone bank to serve a creative shop with outbound calling.

 

**I have never seen such a rip-off as high-end office chairs. Please don’t get me started on this. Might as well buy audio jewelry lovingly carved from hunks of solid titanium by master craftspeople living in Monterey. Just go to Office Depot, plop your butt in a bunch of chairs that are $150 or less, and pick the ones that are most tolerable and cheapest. Our creative director once tried to talk me into getting Aerons for the whole office. I swapped his chair for a steel folding chair the next day. We bought sensible chairs.

 

Please notice that none of the above includes things like:

 

  • A cool-looking building. Please. Who cares? Save money for your house.

 

  • A cool-looking office space with polished concrete floors, $16,000 European couches, and iDevice-controlled programmable LED lighting. See above. If stuff like that impresses your customers or clients, they’re not analytical enough to understand:

 

  • Every cent of that came from their pocket.
  • You’re making far too much money.
  • You’re not good with impulse control and probably won’t be around long.

 

  • Corner offices for everyone. Geometrically impossible, anyway. Plus, let the infighting begin.***

 

  • Nice private offices for everyone. Yep. Let’s give them reasons to close the door and hide from problems. Not a great idea, especially in a startup.

 

  • Lounge/recliner/videogame/relaxation/informal meeting areas. Yeah, you love your employees. But it’s more important they love you and believe in what you’re doing, without having to be tempted by silly perks. The best person for the job is one who wants to work for you above all others—because of what you’re doing, not because of the icing on the cake. If nobody wants to work for you, start looking in the mirror—and hard.

 

  • A big sign in front of the building. Might as well advertise “there’s expensive electronics in here,” in our case. In most cases, this is nothing more than ego.

 

***Let’s talk about this a little bit more. The biggest fights I’ve ever witnessed amongst employees was regarding “who gets what office,” or “who gets which desk.” Honestly, this is completely useless and divisive stuff that you really don’t need to deal with. Start-ups probably shouldn’t have private offices, period.

 

And that’s why we ended up with a space that was really nothing more than a large production floor, with no offices, in an ugly, run-down building. Because it had what we needed. And nothing we didn’t.

 

And it was cheap.

 

 

The Earliest Days of the Schiithole

 

Going to the Schiithole in the early mornings, shortly after we moved in, are some of my most vivid memories of Schiit, beyond the early start-up phase. Why? Because we were finally in our own space—and that opened up so many new possibilities.

 

And because I was crapping-my-pants busy.

 

The move, as simple as it was, put us back a few days in production. And in those times of “build tonight, ship the next day,” that means that we were very behind. Tony and Eddie would come in during the evening and build the boards that Jaxx delivered, but I was doing all the sound-checking.

 

So, I’d come in before going into Centric (5-6AM), take the plastic sheet off the pile of finished units on the burn rack, and run them through sound check. If any failed, I’d note it and put it on my desk for later that evening, when I’d come back in from Centric at 6-7PM, and fix whatever didn’t make it through burn.

 

Rina would come in during the afternoon and ship, but her time was starting to come at a premium—her own business, Twilight’s Fancy, was taking off. She had to spend more time there and less at Centric.

 

And I was quickly burning out from the long days. You can do 14-hour days for a while, but they’ll eventually kill you (if your significant other doesn’t do so first.)

 

Tony wasn’t going to be able to take over shipping—he had his hands full, especially with Mjolnir and Gungnir imminent, and Bifrost flying off the shelves. Eddie couldn’t do shipping, either—he liked to work at night, when it was cooler and quieter in the shop.

 

Yep, you know where this is going. It was time to grow again.

 

And this time, we needed to look at it more strategically. Sure, we needed someone who could ship. But what we really needed was someone who could do a lot more than that—someone who could grow to be in charge of operations.

 

Luckily, Rina had the “perfect” candidate…

post #1480 of 4524

Another great chapter.  re: "infighting" about insignificant crap: the biggest fight ever at my last company was between two engineers over the proper setting for the A/C system.  It literally led to fist fights and me having to fire two otherwise great employees.  Over 72 VS 76 degrees F.  After that I locked the thermostats and made their setting "company policy."  Let them bitch about me, not each other.

post #1481 of 4524
Quote:
Originally Posted by Jason Stoddard View Post
 

Chapter 22:

Introducing the Schiithole

 

 

Interlude: Business Space Philosophy

 

Okay, so why did we take such a crappy place (because it was cheap) and tolerate the noise (because it was cheap) and the dust (because it was cheap) and the lack of any typical niceties, like heat and AC (because it was cheap!)

 

Well, yes. But also because of an observation I’ve had about business space:

 

The moment you build a palace is the moment you die.

 

your observations about building a palace mirror mine.  the moment a company's leadership starts thinking that this type of sh*t (I won't take your company's name in vain in this context!) is important, they've lost sight of what is truly important and they usually crash & burn afterwards.  

 

However, I do like my Aeron chair that I got used for less than $150...just sayin...

post #1482 of 4524

This is one of the most profound things ever said on Head-Fi, and anyone thinking about starting their own business ignores it at their peril. More than half a century ago, C. Northcote Parkinson observed that any business or other organization does its best work in the halcyon days of makeshift accommodations. Soon as they move into an impressive, purpose-built facility, the rot sets in. Examples too numerous to cite, though Congress springs to mind...

 

 

Quote:

 

The moment you build a palace is the moment you die.   

post #1483 of 4524
Quote:
Originally Posted by 7ryder View Post

However, I do like my Aeron chair that I got used for less than $150...just sayin...
You shouldn't go out and buy $600+ chairs for anyone, IMO. However, you also shouldn't be too cheap on chairs for people who sit in them for 8 hours a day (and you probably should spend a little more on your own desk chair at home if you spend a lot of time there).

I don't sit in anything special at work, but I can easily sit for 8+ hours, and it has held up for the 2.5 years I've been here much better than the cheaper ones at home (that I got from Office Depot). I think I looked up this model once and it ran for $300 (not sure...it's been a while). That's more than I've ever spent on a chair, but I think that I would probably spend less in the long run hopping from cheapo to cheapo.
Edited by superjawes - 7/2/14 at 8:55am
post #1484 of 4524
Thread Starter 
Quote:
Originally Posted by 45longcolt View Post
 

 

Thank you for pointing me at Parkinson! I'm going to have to read some of his work. A brief skim of his ideas about committees and meetings confirms this.

 

And, simply:

 

Expansion means complexity and complexity decay.

 

We take a lot of crap about not having 38 different variations on our products--black, silver, red, with remote, without remote, with the latest audiophile buzzwords, with additional expansion/inputs/features. But the reality is that having many different variations on a product results in two very, very bad things, and perhaps a third:

 

1. Dramatically higher cost to manage all the SKUs. You should see our warehouse as it is. If we had, say, 8 different product variants per product, we would need literally twice the space and probably 4 times the staff (because of #2.)

 

2. Many, many more shipping errors. Wait, did he order the purple one with the extra optical input, the gigadeluxe output stage, and the yottaclock, with the special custom engraving? Hmm, don't know, let's have someone double-check that. Oh, it was still wrong? Let's bring it back and get him the right one. 

 

And, perhaps the biggest one:

 

3. Possible unmaintainability. If you have 38 variations on a product that involve circuit changes, what happens when it breaks? Do you have all the documentation on the changes? Do the techs know what they're working on? Will the repairs have the same molecularly-aligned parts? Sure, you can just go to a wholesale "swap the module" approach, but the costs of that have to be built in to the margin (translation: more costly products.)

 

We keep it simple, because it benefits everyone who finds our products a solution for their needs. This, by necessity, means if your needs include a DAC with 2 ADC inputs, 5 optical outputs, and I2S to a specific format only used by one manufacturer in 2006, you won't be able to use our products. But by designing for the vast majority of use cases and keeping things simple, we stay sane...and all of our customers benefit.

post #1485 of 4524
Thread Starter 
Quote:
Originally Posted by Ableza View Post
 

Another great chapter.  re: "infighting" about insignificant crap: the biggest fight ever at my last company was between two engineers over the proper setting for the A/C system.  It literally led to fist fights and me having to fire two otherwise great employees.  Over 72 VS 76 degrees F.  After that I locked the thermostats and made their setting "company policy."  Let them bitch about me, not each other.

 

Yeah, and that. Ask Alex (next chapter) about going through a Santa Clarita summer in the Schiithole without air conditioning. Temps 100+ are common.

 

We once had a fight like that at Centric. I did the same thing you did. I locked the thermostat. Then I sent a memo that read exactly like this:

 

Due to fighting over the thermostat setting, I have locked it at 75 degrees in summer and 70 degrees in winter. 

 

For those of you who wish to complain, please be aware that humanity has survived for over 100k years in climates much hotter and cooler than the thermostat range. If you wish to discuss this personally with me, I will be happy to reset the temperatures to the Federally-recommended 78 degrees in summer and 68 degrees in winter. Any inquiry will result in this temperature reset.

 

For those who are cold, there are these items called "sweaters."

 

For those who are warm, there are these devices called "fans."

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