The Difference Between “Pre-sale” and “Crowd Designing”

Larry Ho LH Labs Blog Leave a Comment

I’ve wanted to provide insight on this topic for a while now. Why did it take much longer than I anticipated? Mainly because I’ve received tons of feedback from other people on the forum so I’ve decided to include their points of view as well.

This blog will let you know more details about how our crowd designing campaign products were researched and developed. It will also explore the nature of the whole cycle which will also answer one common question: Why backers sometimes need to wait longer?

The Difference Between “Pre-sale” and “Crowd Designing”

First thing first, LH Labs, like many other companies, will offer a pre-sale campaign primarily to make a marketing splash in order to get people’s attention as well as leverage that momentum to create more future sales. By promoting, and letting people test drive the products that have already been 100% completely designed, we hope to let people start talking or reviewing our about-to-launch products which is a great “go to market” strategy. That’s utilized by many high tech startup. We’ve seen this type approach taken countless times via Indiegogo and Kickstarter. More often than not, the campaigner will tell you, “We have EVERYTHING ready, just need tooling or some little extra time we could kick start this project.”

The key points here are: (1) Products have already been designed. (2) The first batch of production is either on its way, or is already completed.

If everything goes properly as designed, usually backers of these campaigns will receive their product around 2 ~ 3 months which includes shipping time, survey time and logistical flow.

The other type of Indiegogo/Kickstarter campaigns are more unique and are what LH Labs usually offers. These are what we call “Crowd Designing” campaigns.

The concept is this: “We only have a working prototype” of our major initial product specifications and we will create the video and content in the campaign in order to convey our message that— “This is the best products in our mind that we should make for you”.

After that, the most important process/feedback begin! The whole research and development cycle is NOT stopping there. Instead, it STARTS right after the campaign launches.

During the campaign, or even few weeks AFTER the campaign’s done. We will discuss with backers (or we should say: Co-designers) about “how do we make this product fit better?” or “What else do you think we should add to this product?” Also a not very rare situation, we will more often than not receive feedback like – “You should not do this, why not do THIS instead.”

Even better, when we provide ‘upgrades’ or ‘new perks’ (I know we are kind of famous/notorious for this) the actual backer numbers will give us the most valuable feedback about how popular this new feature will be. These are fact based true market impressions we receive from the campaign which are are incredibly valuable to us and backers.

With this kind of open source concept of products in an open environment with good interactions, usually three to four weeks AFTER that, our product plan/specification is finalized. At this point in time, all R&D and engineering effort will focus on finalizing that product design. Sometimes, after two or three iterations, which we call EP1, EP2 or EP3 The whole design will be completed according to our specifications. After that, we freeze the design and send the product off to the production lines. Often times, it can take from 7 to 9 iterations to make a finalized bug free design, each iteration requires around need 3 to 4 weeks to complete.

So here are TWO things about the process and schedules mentioned above, let me share with you again. (A) The product specification will be done AFTER the campaign. Not before. (B) The whole R&D process will start from literally 0% all the way to the end – 100%.

“Crowd Designing” Will Bring us More With Longer Mature Time

Unlike like “Pre-sales” campaign, no matter how hard we work, the research and development process is not linear. And we exchange the “more development time” with “better products” or “the products fit users need more.”

For example, in our first Geek Wave campaign, we initially wanted to launch a product that worked in conjunction with a smartphone only allowing it to sound better. In the end, the feedback we received was loud and clear: People need a dedicated high-res stand alone player! From there we ‘rebooted’ the campaign, made a whole new one product plan and started the discussion with our backers. During the ‘re-booted’ campaign, and the feedback we received from it, we added multiple new features like: “Dual SD card reader”, “Femto Clocks options”, “Low noise OLED display”, “Dual Mono Full Balanced Design”, “Balanced Headphone Output” and so on.

Without these crowd designing efforts, these plans would never come to life. By giving the product “plan” itself more time to mature and allowing it to be tested by market, it ensures our R&D effort will be laser sharp to what our backers need.

“R&D Center” vs “Revenue center”

We are truly thankful for all of this valuable feedback and that’s the reason we give these co-designers an almost impossibly good price that reflect the material cost only. Some people misunderstand the nature of crowd design, or mix up the pre-sales with crowd-designing. So in essence they thought the crowd designing campaign is our company’s sales revenue center.

In actuality, it is not. Take our first crowd designing campaign, Geek Out, as an example. We achieved a decent result that sourced around $300K. And from that campaign, we were able to learn that people need multiple levels of power output to custom match to their headphone or earbuds. Also, our backers requested different digital filters or other tweaks to make their listening experience even better. For the enhanced cross feed circuit, which we called 3D awesomifier, it was not a popular feature they liked to use. As you could see, the product is at least 30% ~ 40% different than its original ideas. And as for today, we sold at least 6 times the original $300K in numbers of real sales revenue. For initial backers, some of them only spent $99 to get $299 worth of product. They’re happy with their product, we’re happy with the market research. It’s a Win-Win!

In short, crowd designing is a R&D cost sharing center and market research tool. Even though it will usually take longer than other “Pre-sale” campaigns, in return, we add a lot of FREE goodies during the process to offset the wait time for our backers.

Let’s Talk About Some FREE Upgrades for “Geek Pulse”

During the Geek Pulse development process, I’ve noted what our backers received “EXTRA” for free during the time. Here is a quick list.

(A) To get the best sound out of different headphone outputs, we threw in silver contact relays array. EVERY Geek Pulse DAC in every level has that which is unheard or seen in this industry.

(B) To get the best sound out of digital playback, we threw in innovative “Digital Modes” which changes digital filters from linear to minimum phase, as well as the analog parts so you will hear a different sound spectrum.

(C) To establish a standard, Geek Pulse backer got the chance to taste the benefit of balanced AES input, every Geek Pulse standard DAC has the same AES input just like the others.

(D) As a stretch goal, every Geek Pulse backer, in each level, received one of the best power filtering caps, Ellna Silkmic, Neutrik output connectors, Mu metal shielding and tons of goodies which will never appear in the same price level of DACs.

(E) Just by the end of the delivery cycle, again, we listened to our backers and upgraded the chassis design of Geek Pulse Infinite. Again, for FREE.

Also, there is another interesting event regarding the $22 upgrade of new 2015 ESS DAC IC. We got complaints from other vendor for ‘giving people too much for too low price.’

12 Month Development Cycle

Another example is Geek Pulse. Originally, many people may not recall that Geek Pulse was simply a desktop version of Geek Out when we launched the first Indiegogo campaign.

During the campaign, our Geek Force began acting proactively by providing TONS of input and feedback. In the end, Geek Pulse evolved from a simple desktop DAC to the most powerful and feature laden desktop DAC currently on the market. It has SIX levels from the standard, to dual mono version, to Femto clocks enhanced version, to Amplification enhanced version, to super fine tuned THD, zero inductance resistor version with the new ESS 2015 DAC inside. Yeah, we went a bit over the top.

The whole ‘designing process’ took only one year. From the end of campaign, 2013 Christmas to 2014 Christmas.

For some people, this was a much longer time than they expected, and the interesting thing is, that expectation time varies so much. We even got one email asked us to deliver his perk before Christmas that he just pledged on the end of November. While some experienced backers tell us, he could wait for another three months, but make sure one key feature he needed is there.

Trust me, I hate waiting too. On the other hand, from product designing perspective, any high end audio company will tell you, finalizing a completed design within 12 months is incredibly AGGRESSIVE and FAST! What? 12 month is FAST? I could humbly answer here: Yes. 12 months of development cycle is completely out of the norm in most R&D cycles.

If we use the previous projects as reference. In Geek Out, it took us 8 months. In Geek Pulse, it took us 12 months.

So while we are in the middle of Geek Wave development, it looks like 12 months are still the best estimate now. Vi DAC should be shorter due to the majority of specification didn’t change much. So we could focus on the exchangeable module, CCX, and tube output circuit.

We will keep make our development communication better. Keep you posted about where we are now. Sorry if sometimes I got too techie and didn’t explain well enough.

How About Pre-Sales Campaigns?

We will selectively launch certain products that we believe to fit the market need already. We will complete the design, put that into Indiegogo or Amazon or other places. In that case, when you buy it, you will receive whatever we list on the page, no less, no more. All withIn a very predictable timeframe And you will still receive your early adopter discount, however, the discount won’t be as deep and our product specifications are completely finalized.

You will see we will have MORE and MORE pre-sales campaigns because our product roadmap becomes more and more mature and there will be a wealth of products already gathering wonderful features sets that came from backer in previous campaigns.

As a result, you will see “Pulse DAC” pre-sales campaign after we shipped out all Geek Pulse DACs to our previous campaign backers. And in that “Pre-sales” campaign, the delivery time will be firm. You will have a very predictable schedule about when you will gonna get it and what EXACTLY the features will be. Again, no more, no less.

My Personal Thoughts for Crowd-Designing vs Pre-Sales.

As an engineer and designer, let me tell you from my heart, if I am not brave enough, we will not have any crowd designing campaigns at all. It is INCREDIBLY stressful, it demands a much greater amount of time, and you will see all kinds of complaining while backers are waiting. Why do we do it? I could just simply wait for 8 to 9 months, get the designs I like done and start the pre-sales. The delivery time will be shorter, and it is more predictable.

The answer is above there already. I want to do crowd designing campaign only because that is the best chance we have to communicate with a multitude of great thinkers, innovative idea givers, cynical but deep knowledge professors, passionate dreamers, 30 year long audiophiles all in one place and generate the BEST product as a crowd.

Yes, we love the whole crowd-designing process, the good parts and the not so good parts, which allow us the chance to forge the best specifications in order to get the best products!

You may say I’m too crazy about building the best products. You may say I’m a dreamer. But I’m not the only one. 😉