Use Your BOM Like a Crystal Ball

THOS NILES: They're shutting the doors, which I think means we're supposed to start. But I'm going to start slow and give people a chance to roll in. We were hanging out with some people last night who are much better presenters and speakers than I am, and they were giving lots of good tips. And I was told that you're supposed to start with some type of quiz. Oh, here's one of them now. So I was just saying that I was hanging out last night with much more accomplished speakers than I, and the tip I got was that you're supposed to serve with a quiz.

So I was wondering, when's the last time any of you went outside of this building? Yesterday? Like, anybody been in this building for more than 24 hours? How about more than 36 hours, without going outside? This is without-- no fresh air, 36 hours, yes, from now. OK. So we get you two.

SCOTT MILLER: Yeah, since I got here.

THOS NILES: So what's the most? Who thinks they've been here the longest? Probably you, I'm guessing you.

AUDIENCE: Step out of the competition.

THOS NILES: How about you? Vic you've been here since, what'd you say? Sunday night.

AUDIENCE: Yeah, since Sunday night. But I did get some fresh air.

THOS NILES: You did go outside. I went outside, it's been more than 24 hours. Probably 40 hours ago, on general principle I went across the street to get a bottle of water just to say I left the building. But cool, I'm glad we've all been in here breathing each other's spent air for days and days. And I really appreciate you guys coming out at 8:30 in the morning on day whatever this is of a long conference to talk about something as exciting as bills of materials.

When we were putting this together, I was talking to some folks at Autodesk. And I said, I really want to talk about BOMs. And the response was, no, no, no, no nobody's going to go, don't do it, don't do it. But here we are. And I think what turned it around in that conversation was, I said, I don't want to talk about BOMs, I want to talk about what you can do with a BOM, and what becomes possible. So if I knew how to use this thing, down is forward, cool.

So before we dive in, I see a couple of familiar faces in here. Making sure folks know about this awesome start up track that this is a part of. We are officially halfway through, and you got a couple more left after me that you should definitely check out if you have time in your schedule. So Dr. Casey Kerrigan is going to talk this afternoon about these amazing shoes that she's been making, truly inspirational story, and completely awesome.

And then Eric Klein is going to be batting cleanup-- oh no, it's the same time it's head to head. So you have to make a choice. You must choose wisely. You must choose, and you must choose wisely. And it would be awesome if they were right next to each other so people could go back and forth, but I bet they're not. But definitely check those out if you have time.

This is pulled straight from the catalog that you all signed up for. So what are we trying to do today? We're going to learn a little bit about bills of materials, think about how they apply to going into manufacturing, and get a better understanding of the insights you can pull out of a well structured BOM. And then I'll flip out of this PowerPoint and give you a demo with some tools that we've been building that we think help address this.

So who the heck are we? Just real quick before we jump in too deeply, I'm Thos Niles, COO at Dragon Innovation. And I've brought along Scott, who has much better star power than I do, to talk about some of the more technical parts of this stuff. And Scott, why don't you say a couple words?

SCOTT MILLER: Cool. So I'm Scott Miller, the CEO of Dragon Innovation, and also a partner at a a small BC fund. And I got my start at iRobot, where I was leading the team that built the first about 4 million Roombas back in the early 2000s. So I got to live this through the perspective of a hardware startup back in the dark ages, and sort of experience firsthand what it's like going through the journey when you don't really have a good sharp set of tools, and how challenging that can be.

So we've tried to, at Dragon, take those warnings and insights, and then be able to help a bunch of companies navigate the waters, but also start writing product and web apps around that to make it more scalable.

THOS NILES: Cool. So just by way of agenda, we're going to talk about Dragon a little bit more, and some manufacturing overviews. We'll talk about why bills of materials are important, and then we'll tell you some horror stories about-- well, actually this is a little more uplifting. One of our friends did a talk earlier this week where he talked about lots of bad things that could happen. He called it, was it good questions and bad answers. And ours is going to be more a little more good answers and situations you don't want to be in.

So what are we trying to do at Dragon? The vision is as big as it is simple. We want to make something as insanely complex as manufacturing electronics feel easy. And like any good vision or mission statement, it's sort of carefully semantically crafted where we're not going to make it easy, we're going to make it feel easy. Because it definitely will not be easy.

As Scott said, we've been doing this for a while. We've got kind of a range of ways we help from product like Product Planner that will we'll show you a little bit later on to much deeper engagements, feet on the ground in the Far East, helping folks move from prototype to production. So moving from I've got one and it works mostly, and it works pretty well, now I want tens of thousands, hundreds of thousands, millions of this product to work consistently and perfectly all the time. How do you bridge that gap?

We've been we've been really lucky to work with some great companies over the years, and have honed this we call approvement process that helps us move at entrepreneur speed. So whether you're a first time hardware entrepreneur or a established company that wants to move quickly, we know the right way to get things done. But we also know when that's not the right thing to do. So we can safely skip certain steps.

And as Scott mentioned, we've been doing this increasingly leveraging technology. I got to keep myself in check because I get fired up about it, but I get really worked up about the difference between online and offline. I think that that's kind of an antiquated notion. And it made sense in 1999 when there were these computers, and you did things in there, and then there were things that happened in real life. And there was a real church and state divide between the two.

But I feel like I spent the first 12 years of my career trying to make lifelike experiences in a browser, and now I get to make browser-like experiences in real life. And that's the coolest thing in the world. It's completely seamlessly integrated.

So we're really excited about the opportunity to take the stuff we've done in the physical world-- because when you're manufacturing you're making things-- and seamlessly joining it up with browser based experiences to make things work the way we all want them to.

A little bit more about us. As Scott mentioned, we are, we think, a pretty unique combination of highly experienced engineers. Folks who have made tons and tons of products. And then we've combine that with more of a startup DNA. My background is more in internet marketplaces, going back through the high-flying internet '90s. And joining these two things together, we think, is the most exciting thing I've ever done, frankly.

I mentioned we've had the opportunity to work with some folks. And the thing I want to-- I sort of give it away. I'll point out, there's some names on there that hopefully surprise you a little bit. It's not just the Kickstarter driven consumer gadgets, there's some bigger companies on there, too.

And we see this trend happening where increasingly it's not about early stage companies, it's about early stage products. Every product has a day zero, and a day one. And regardless of the size of the organization, what we've discovered is there are some entrenched, kind of sloppy, or bad, or homegrown processes that are totally ripe for improvement. You should feel free to jump in any time, by the way.

SCOTT MILLER: Doing great.

THOS NILES: So let's start by going a little bit about why manufacturing's so hard. This is yours, you should do this one.

SCOTT MILLER: Sure. So with any complex task, we try to break it down into basic principles. And we've found that using this as kind of a North Star in how to think about manufacturing has been really helpful. So you've got quality, cost, and schedule. And we're in the consumer electronic field, and often people joke like you get to pick two out of three of them. But actually if you want to succeed you got to get all three right.

So you can imagine that typically for our selling cycle or our customers, the holiday season is a really big revenue driver. In fact, it's exponential. And if you're late, you're going to throw away that revenue and have to survive another year where you're probably going to be burning, and you're open to competitors coming in and beating you.

So schedule's insanely important. But on top of that you've got quality constraints So that you probably don't have enough time to test everything and have to be able to put in some quality systems so you get early confidence whether you're good to ship or not. So that's at odds with schedule, and then of course there's costs that as a business you probably want to sell a product for more than it costs to make it. But if you could buy better motors or better processors, you could go faster and have better quality. So that's sort of balanced with the other two.

So the art is, how do you get all three of them lined up so they can grow a successful business? And we find by breaking down any product into these three basic principles and then managing each one of those things is a good way to make sure that you succeed.

THOS NILES: And something we've seen over the years is not of ill intent, but there's often this sort of, we'll figure some of this stuff out later. People just assume that it will work out, or I'm going to make this thing cost efficiently and quickly, and I'll worry about quality after they start coming out the line. I'll evaluate my quality. So all of this stuff needs to be considered and managed from the beginning if you want to have the outcome that you expect.

So one of the things that we see a lot is this fallacy about how long things are going to take in manufacturing. And Scott came up with this great metaphor of the letters of the alphabet as a timeline. So we see a lot of teams that are optimistic, and they work really hard. They come up with an idea and they labor through the design process. They get to a prototype, and they labor through it, and then maybe they launch it on a crowdfunding platform. And then we're going to make a bunch of them fulfill the minutes, sort of the end.

But getting something manufactured in China is not like sending something out to Kinko's to get copied. You don't just say, hey, China, make 10,000 of these, I'll be back at five to pick them up. So we found that the more realistic timeline is probably something more like this. By the time you get done with climbing the mountain of coming up with a great idea, and building a compelling prototype, and marketing it effectively, and getting some potential early adopters, you still have the bulk of the alphabet in front of you to make a quality product.

So here's another way of looking at it. This is a funny slide. The challenge was make the craziest looking slide you can to underscore how complex this is. So I'll just tip my hand and give it away. This is a nutty looking slide. And the idea here, though, is that everybody wants to manufacture like Apple. But guess what? Nobody but Apple is Apple.

And if you are Apple, you have the next iPhone, and you're going to make 10 million of them. And you can do this with mature processes, mature relationships, mature systems. So you can easily just say, OK, we've got our captive factories, our existing relationships, and we're going to optimize for a high quality, cost effective product.

But if you're anybody else, you start all the way over on the left. My left. You start all the way over on the other side. And even if you want to make 10,000 of something, you don't start at 10,000. You start at one, and then you make 10, and then you make 100, and then you make 1,000. And you work your way over. And every single one of those phases has different tools, different processes, different challenges, and most importantly, different economics. So you have to relearn and renavigate as you move your way across.

But the one thing that all of these things have foundationally in common is bill of materials. It's a tool in your bag that if you start early you can carry through this entire process. And again, this is not a startup problem, this is an early stage product problem. So it transcends organization size.

This is another expression of that alphabet diagram, where as you think about the development process from the entrepreneur's point of view, they think a lot about coming up with an idea, design engineering, and then after that you go and find a factory. And then once you've found a factory, you go through a process with them to make sure that your design is manufacturable, and then you start production.

And that makes linear sense. But as we said, if you want to create and ensure the outcomes of a quality product that's on time on that schedule, you actually need to run a parallel process. And these manufacturing activities start before your product's done being built. I forget who it was, somebody who was in our office, but talking to us. And I love this guy, said, people talk about DFM, and it makes me laugh. Because why else are you designing the thing? Nobody talks about designed for fun, or design for kicks, it's design for manufacturing. And as such, you need to start thinking about it early in the process.

Planning phase is when you need to understand, is this thing buildable? Am I going to have enough money to build this thing? What kind of factories am I going to want to start shopping this thing to? What's the MSA, the manufacturing services agreement? How does that need to be structured? And making sure that quality is built in from day one.

You get into pre-production, and there's even more DFM. You think about your tooling, think about parts sourcing. All this test equipment, so many activities that you need to start thinking about as you begin to go into production. And then finally, once it's going, you're not done, you're just starting a new and complex process where you need to think about shipments, you need to keep an eye on costs, you've got all these moving parts. Quality is job one, you're evaluating what the failure modes are, and warranty returns are coming in. You're thinking about, is my factory doing what they said they're going to do? It's incredibly complex.

And this is part of what makes-- now we're finally going to talk about BOMs. So this is what makes BOMs so critical. It's really the Rosetta Stone through this process where it's going to help you collaborate with your team, it's going to help you collaborate with third parties. You're going to communicate what the recipe for your product is.

But most importantly, it's this source of insight. If you've got a well structured BOM, you're going to be able to understand early, you're going to be able to see into the future and understand your cogs, you're going to be able to understand your schedule. You're going to have the opportunity to call out the parts that are going to be quality issues potentially and focus on them. And most importantly for most startups and early stage products, you're going to be able to think about your cash flow. Because at the end of the day, if you don't have enough money to build this thing, you might as well pack up and go home now.

So it's funny, I was talking to our friend Vic earlier, and he was saying how people often don't even know what a BOM is.

AUDIENCE: You gotta be really careful with the TSA.

THOS NILES: Something I got to say earlier this year, I had the opportunity to go to the White House, and I got to say BOM in the White House, which is not something that many people get to do.

AUDIENCE: And you're still here.

THOS NILES: And I'm still here, exactly. But it's funny, a thing I do when I'm illustrating this to people, sometimes I will say, if I say the word resume, everybody in this room is thinking about same document, right? It's got a name and address at the top, it's got a little summary statement, chronological work history, something about how you like sunsets and kung fu at the bottom, and that's that. That's what a resume is. But if I say BOM, if we were to go through an exercise and try to match up everybody's idea of what a BOM was, I guarantee you of the 15, 20 people in this room, we'd probably get 30 answers.

But if you boil it down to what it is, like Wikipedia style, it's a detailed, precise list of ingredients required to build a product, which you could say is a parts list, not a BOM. It's often organized hierarchically in the subassemblies. So OK, now it's more than just a parts list. It starts to suggest architecture. And it includes all the pieces. Not just the pieces to build one product, but the pieces to build the entire product. I don't know the order of my own slides, but oh well.

So what do you include? There's a ton of stuff you can include. I don't know if you have a comment on this guy.

SCOTT MILLER: Oh, sure. I mean, as we can get at, it's a fairly complex document if you want to be accurate. And if you want to think of it in terms of a traditional spreadsheet, you can imagine you get a lot of columns that you have to keep track of. Because as you're building really high volume, maybe you're building 40,000 units a week, you can imagine that getting any one of these things wrong is going to be catastrophic. So you want to keep track of every nuance of every component and make sure that it's always up to date, but that's a lot of data to keep track of. And here's just a few things that might be on it. But you could put a lot more, too.

THOS NILES: So probably about a year ago we put a thing together to help with folks who said that, you know, I don't know where to start. We built this thing we call the Dragon standard BOM. And the idea back then was, if we could just we could take care of this resume problem a little bit, if we can start to put some standardization around where people start, it will be a big help.

We were talking to a lot of customers and asking them how they manage their bill of materials, and overwhelmingly it was spreadsheets. And then within spreadsheets, it was a lot of Google Sheets. So we said, oh, we could build an add-on. And I had never built an add-on in the Google store. I never even used an add-on, but they're actually really cool. So anybody who's using the Docs family, or the Google Apps family, I would suggest you check out add-ons, because there are hidden gems in there. It's got top level navigation real estate in Sheets, but you never really think about it, or I had never really thought about it.

So the idea is that you can build these apps that extend the functionality. So what we did was we built this thing that's kind of like a template on steroids. You can spin the thing up, it gives you sort of a predefined format with headers that, based on our experience working with tons of CMs, tons of startups, tons of bigger companies, this is sort of a universal leveling place to start. And we built a couple nifty things in there. So some like data validation, you can check for duplicate part numbers. A way to take the taps that we broke out the different material types or part types into and squish them into a flat BOM, and a couple of just little charts. So you can take a look where are most of your costs coming from, what types of parts do you have the most of. Just quick and easy stuff.

And the reception's been pretty good. It's something that surprised me, we had this little FAQ thing in the bottom of the glossary, and people love the glossary. They're like, oh, I never understood what all these things really meant. I'm going on a tangent, and [? Sashleen ?] knows I'll do that.

But one of the things that's really blown me away in this journey of working on these tools is there's like this almost imposter syndrome that's pervasive about people's BOMs, that you ask, this was going to be my quiz at the beginning before I decided to ask who had left the building. But if I was to say, rate the quality of your BOM. And we did this as a real survey. We said that rate the quality of your BOM, and we went from it's a work of art, to it's good, to it's adequate, to it's not pretty.

And based on the folks we surveyed, I think one person said it was a work of art, because you've got one in every crowd. And the next highest response was adequate. And next after that it was think about 20% said good, and everybody else said it's not pretty. And then we did some follow-up with people who had said it was good and they folded like a cheap suit. They were like, oh no, it's crap, I just was embarrassed to say anything.

So even when people have a decent BOM, they're insecure and they think that their BOM is crap. And in some respect, odds are they're right. Because there's something, if you take a harsh definition of crap, for a system or a tool that's supposed to bring clarity, there's confusion. So inherently it's suboptimal.

So anyway, this thing's out there. It's free, it's in the Google Store. And if you know or anyone you encounter is starting from absolutely nothing, this is a great place to start. It's going to be better than any format they make up, and it's going to be more commonly understood.

AUDIENCE: And that comes in right after your prototyping stage, or at the very beginning?

THOS NILES: Sir?

SCOTT MILLER: Well I think the sooner you start with good BOM hygiene the easier it is later, because what happens is you'll start working on a prototype, and eventually, maybe sooner than later, you'll start to get traction, and things will take off. And you'll have a lot of competing things vying for your time. And if you just start with a good foundation, it's a lot easier to build a house on top of that rather than get data all over the place and then realize you have to go back and backfill it, and oh, did I do this, did I do that?

So whenever you start like ordering materials, or have CAD files and things like that, and start thinking about, oh, maybe I will build more than one of these, then it makes sense. For example, we just, as simple as it is, built a treehouse. And I wanted to keep track, how much did it cost me to build? So just in the Dragon standard BOM I had on my two by fours, and my bolts, and everything. And it was kind of fun so that if I ever want to share it with somebody else, or go back and build it again, I can be like, oh, there it is. Whereas if I had to create that retroactively, I'd never do it. And it's so easy. It's pretty painless if you do it while you go on.

THOS NILES: Yeah. I mean, I'll pile on that and say that many teams just starting out, they'll look at some of these formats and say, I don't know how to answer any of these questions, I don't know how to fill this data, and that's fine, that's great. Because it's not about having the answers, it's about knowing the questions. And if you have a single source of truth where you might look at it and say, wow, only 5% of these fields are filled in, well great, you got 95% of your work ahead of you. It gives you a way to quantify what you need to know.

So we always say, it's good to have an opinion about this stuff. You got to have an opinion. And as I mentioned before, your bill of materials isn't just about the parts to make your one product. So we came up with this metaphor to help explain this to people, and we used hamburgers because we love burgers. And if your product is like a burger, you can think about what is going into that burger. How is it made up? So we'll think of the burger as a product item.

This is one thing. It's like your clicker, or your laptop. It's a burger. And that burger's made up of assemblies. It's got a top assembly, which is a fabricated part. It's your top bun, you put that thing together. You got purchase parts, you bought some tomatoes and some lettuce. And then you get the meats. For us we say it's PCBA, and it's made up of some things smushed together. It's PCB, and you've got maybe some chopped up onions and spices in there to make your burger tasty, which would be like your electrical parts, and then the bottom assembly, it's another bun.

But I'm going to mix my two metaphors, this is like your product with a lowercase p. It's the thing you designed, it's a thing, but it's not what people are going to buy. You don't walk into a burger restaurant and somebody hands you a greasy burger over the counter that you just walk away with and eat, you got to turn the thing into a SKU. Because a SKU is what's going to come off the loading dock at your factory.

So in this metaphor you've got your product item that we just talked about, But then you've got packaging. You've got your box and your wrapper. You've got some accessories to make people want to buy this burger even more. So you've got some fries, and even the fries have their own packaging. And then you've got your SKU, it's your non-branded cheerful meal.

So this is where I'm going to let you talk a bunch more. But what we're going to go into is some key concepts that lay a little bit more of a foundation for the exciting insights that you can get out of your BOM. But this is where it gets dangerous.

SCOTT MILLER: Sure. Yeah, you can click away. So one of the things as you start building in higher volume-- so going from one to many-- you'll bump into is the idea of a minimum order quantity. And what happens is, if anybody's seen an SMT line, it'll sound familiar. But often you'll buy, say, your capacitors in reels of 5,000 units. But it gets tricky if you're only building 4,000 units, because how do you account for that extra 1,000?

And the analogy I would make is, suppose you want to drink five Goslings, or beers. It's probably cheaper to buy a six pack just because of the volume stepped pricing, but you are going to have that one beer or soda left over, and that's something that you got to pay for and account for. But it doesn't necessarily sit in any product that you've built. So that's one of the complexities or nonlinearities that we start to see in bills of material.

And the second one is lead time. So again, when you're building onesies, twosies, you'll probably order from DigiKey or Mouser or Newark, and you get whatever parts you want the next day, and that's awesome. But when you build in volume, you're probably looking at lead times of 12 weeks for a processor or anything big.

And just remembering our manufacturing triangle of cost, quality, and schedule, if you're trying to hit a shipment date of the holidays, you need to be on the water, say, at the end of August. But if you haven't accounted for a 12 week lead time item, you're going to be really late, and that can be catastrophic. So that's one of the really, really critical things to keep track of.

And then the third thing is just procurement. So manufacturing tends to drift over time if you don't have it under control. And one of the ways it can drift is that the factory can trade out the component you speced with a lower cost component, and often they'll keep the savings, which is sort of a different discussion. But on the BOM, to prevent this from happening, you have to be really clear as to what parts that's OK do it for. So that'd be like a generic resistor or capacitor, as long as the product works, and it's within spec, that's fine. Factory, pick whatever you want.

But some components you really might care a lot about using this particular component. And you have to call that out on your BOM. That would be an assigned part. The problem there is it's a single source. And if that component is end of life, or Apple vacuums them all up, then you're in trouble. So you might say, well, to diversify, I'd do something like an approved vendor list, or an AVL. And that would be where you qualify, say, three to five different components, and the factory can use any one of those three to five. But if they can't find it, they have to get your permission before using another one that you'd go and qualify. So in your BOM you'd want to specify, like, these are my AVLs. These three suppliers are acceptable.

And then there's also a situation where you may want to consign part of your product. So typically what happens is, you'll give let's say a PO to the factory to bill 5,000 units, and they'll go and procure the parts. But the problem is now and then you'll hit what's called a ghost shift. So imagine we're building sneakers. I put in an order for my 5,000 sneakers, and I get those during the day. But if the factory is not reputable, they're going to run the line at night and build another 5,000. And those are not counterfeit. They are real, legitimate sneakers, but they're not going through my sales channel, they're going through the gray market.

So the technique to prevent that is-- it doesn't work for sneakers, but for electrical components-- is that you can consign one of the components that's critical to build the product. So we'll often consign the processor and give that to the factory. So I know that if I buy 5,000 processors, the factory can only build 5,000 units minus the scrap. But that's something you'd want to specify in the BOM, because the BOM is often used to trigger the component by. And the factory'd have to know, oh, Scott sourced in that, or shoot, we'd better be sourcing that. So it's really important to be clear on this stuff.

THOS NILES: We can ham and egg it, either way. So you know, I've mentioned before, but the idea about your cost. And it's not just the sum of your parts. Something that we find teams misunderstand, or maybe figure out too late is that in a spreadsheet-driven BOM, typically you're going to have your extended cost, and a lot of people just let's say that's in column F, they just sum it up and they're like, right, I got my cogs, I know how much it's going to cost. But there's a lot more that goes into your product.

I won't go down the laundry list, but there are hidden taxes and hidden costs that you need to be considering when you think about your cogs. And this is the non-linear math that makes spreadsheets dangerous when you try to think about your manufacturing future. These are all things you need to consider so you can understand what it's going to take to build your product. I don't know if you have any further--

SCOTT MILLER: Yeah, and again, just always going back to the manufacturing triangle. This gets to the cost side of it so that you understand the cogs which is going to drive your per-unit profit, but then there's all this other stuff on top of it outside of the cogs that you have to keep track of that's super important. And while this may not entirely be the scale, if you're just looking at your bill of materials and thinking that's how much money the product costs you, but that's not entirely right, it actually cost this amount. But then there's all this extra tax you have to pay.

And what we're going to get to in a little bit is just helping you with some insights, making sure you have enough money to get from your prototype through ongoing production. And it's really important to keep track of that other kind of hidden cost, as [? Cos ?] was saying.

AUDIENCE: If you go back to that slide, there were two different profits. There's the profit [INAUDIBLE] the factory you're working with profit, and the factory [INAUDIBLE] profit.

SCOTT MILLER: Yeah, great question. So this is the profit for the factory, the CM, what you have to pay them, and then this would be as a company, the profit that you put in your pocket. And typically it depends how you're selling, whether you're direct or through retail. We usually talk about there's ex-factory price, which is what you pay the factory to buy your product. There's selling price, which is what your customer pays you. And then if it's through retail, there's sell through price, which is what their customer pays them. And everybody gets their profit accordingly from the factory, to you, to the retail. But of course, if you sell direct, then you get rid of the middleman and get more profit, but you have to do more work.

AUDIENCE: So for your own [INAUDIBLE] think about that way. [INAUDIBLE]

SCOTT MILLER: Right. Yes, I mean, here you could also-- often in the markup we include overhead. So maybe in the case for your factory, there's no profit, but it's the overhead of running it would be there.

THOS NILES: So there's other taxes, too, so NRE. You need to think about the cost to engineer the thing, you got to think about your tooling costs. Pilot runs, samples. All of these things have costs associated. The equipment that it's going to take to test, your certifications. And a lot of these certifications especially is time, not just a cost. So there's the hard cost of paying you well, but then there's the time it takes, and the opportunity cost, especially for small teams, can be a huge. Production line test fixtures, it stacks up, and stacks up, and stacks up.

SCOTT MILLER: And one of the interesting things that you can think about early is depending on your volume, like tooling can obviously be a huge amount of money. Which if you're building a small number of units, maybe a disproportionate amount of the cost. And so as you're designing your product, you might think, well, do I need to do injection molding, or could I do it in CNC, or could I do rubber molds? Things like that to try to figure out how you want to handle that blue column.

But of course, that has a market impact on your design. Because what you can CNC doesn't mean that's something that you can mold, or what you can 3D print doesn't mean you can CNC it. So you've got to make those kind of architectural decisions early. And also they all have lead times associated with them. Typically for our tools it's six to eight weeks. But thinking of cost, quality, and schedule, if you don't have time for that, you might either make a simpler part with a plainer parting line because that will take less time to tool, or maybe you try it in sheet metal, which you can bang out a lot more quickly.

THOS NILES: But again, just reinforcing that these are all the things that if you can plan for, if you can think about early, then you make good decisions that you won't be surprised by or regret later. The smartest person I know once told me that expectations are just disappointments expressed in advance. So if you think about what's that equation, expectations minus reality equals happiness.

So if you can think about ahead of time what you don't want to have happen, and then plan to mitigate that. And these are all levers and knobs you have to turn.

So like I said, we had built the Dragon standard BOM about a year ago, and based on the appetite of folks to use that kind of BOM-centric tool, we said there's a lot of things that it can't do. Because it's a spreadsheet, and a spreadsheet is a spreadsheet. And we see a lot of teams that build their BOM in the sheet, and they build these really clever sheets, it's very impressive. And they stretch them to their limit and make them do just unnatural things. But ultimately, it's going to break. Because unless you have six monitors lined up, you're going to run out of columns, and it gets pretty unwieldy.

Another feedback we got about the Dragon standard BOM is that it was pretty flat. We used a tab structure to approximate some hierarchy, but you can't really make a usable hierarchical BOM in it. And it got us really excited about the opportunity to build something that's a little bit more robust. I mean, I'm guessing around the room people have used across the spectrum spreadsheets to manage BOMs. And there's probably some experience using more traditional enterprise tools.

But at least, we think there's a big gap in the middle, where you start in the sheet. I mean, we were talking to somebody from I'll call it like a Fortune 5,000 company, maybe, that said, you know, God, all day long we're in Oracle's shop, but I would never put something I was building in Oracle until I'd built like 5,000 of them. Because once I put it in Oracle, then everybody's in my shorts, and I got to play by these rules. And I need the flexibility is I'm going to into manufacturing, so I just manage it in sheets. And it's like, well, I either do it suboptimally this way or suboptimally that way.

So what we've been working on are some tools to help make it a little easier, or a little more approachable. Where you can keep track of more of the sort of depth of data and have a great BOM.

So let me hop out of this for a second and show you guys our product planner a little bit. Fill time while I do this.

SCOTT MILLER: Cool So as Thos will get at, one of the other really important things about BOMs is the ability to do a hierarchical BOm. So if you remember that-- wasn't the Happy Meal, the cheerful meal. Like you may want to do different SKU configuration where, I always use the Roomba as an example, because it's an easy one, and I'm out of my NDA, and it's obvious how they work. But you might want to do like a robot, and a charger, and a couple virtual walls as one SKU for Costco. You may want to do another SKU of a virtual and five virtual walls for a different company. And they're kind of all the same parts, but you're just assembling them in a different way.

If you had a flat BOM it would be really confusing to figure out how many resistors for the virtual walls you need and adding them up. But if you can do a hierarchical BOM, you can really easily keep track of that and move parts in and out. And that's one of the ways where spreadsheets just really literally fall flat. So we're just kind of think of some better ways to do it.

THOS NILES: Yeah, definitely. Jump in here too. I don't have a strict script, and apologies, I'm going to sit down so I can do this more easily. So like I said, this is a tool we've been working on, it's called Product Planner. It's in a closed beta right now. If anybody is working on a product and they want to try this out, definitely sign up. If you're working on a product and you're going to sign up, come up afterwards, tell me you're going to do it, I'll make sure you get fast tracked in.

So we wanted to make it as easy as possible for folks to get started, and hopefully we have. All you've got to do is drag and drop your BOM in here. You drag and drop your BOM in here and we're going to get the data in for you. You don't have to worry about a thing, give us a day to turn it around. But first things first, nobody wants to build a product where the first thing you ask your customers to do is shit shoveling data entry. There it is, I swore. I promised [? Sashleen ?] and I wouldn't swear, but now I've done it.

But like I said, we've built-- wake up. There we go. So we've built this around this idea, remember, the hamburger. You've got SKUs, you've got product items. You're thinking about what people are going to buy, and a way to organize multiple product items into different kinds of SKUs. So an example here, you've got this single item, demoSKU. Come on, trade show internet. There we go. And you can see we've got this thing set up in an indented view, where you've got assemblies and subassemblies, parts.

And you're able to click through these. You've got different depth of data and all kinds of things you can interact with, see where they're used. Lot of the things you'd expect. You have the ability to attach, say, data sheets, or really any kind of arbitrary file against these things. Sort of going through here. And I should say, this demo data is realistic but not real, so don't try to figure out what this product is. It's never going to come together.