Do you wonder how to make money with Open Source Hardware, without any Venture Capital Funding?
Today I’m going to show you exactly how Adafruit became one of the fastest growing hardware manufacturers in the US for 3 years in a row so you can copy this EXACT strategy to make money with open source hardware and create a community of contributors who will help you develop and promote your project faster than you ever dreamed of.
Limor Fried, Adafruit’s founder, is a force of nature among open hardware pioneers.
You might have already heard about her, but if you haven’t …
- Adafruit was founded in 2005 by MIT hacker & engineer, Limor “Ladyada” Fried.
- Her goal with Adafruit was to create the best place online for learning electronics and making the best designed products for makers of all ages and skill levels
- She’s grown her manufacturing company by by 742% between 2013 and 2015 to over $33 million
- Adafruit has grown to over 100+ employees in the heart of NYC with a 50,000+ sq ft. factory.
- She’s rubbed shoulders with other figures of the maker movement like Massimo Banzi and David Cuartielles, Arduino’s founders or Mitch Altman, the creator of TV-B-Gone, among many more …
- Her company’s website has over 1 million unique visitors per month, and its Youtube Channel has more than 250,000 subscribers
So she’s clearly doing something right…
How did she do it? Check this out.
[Step 0] Learn Something Other People Want… Then Validate it
Limor Fried demo-ing the Project Glass alpha-version in 1999
Photo Source: MIT Media
Before Limor Fried sold electronic kits, she was a student at MIT. There, while she was studying for a master’s degree in computer science and electrical engineering, she learnt how to draw her own schematics.
So she went to school, like thousands of other students each year. But unlike most of us, she didn’t just take notes in class, or learn her lines and then continue with her life.
What made the difference for her was that she PRACTICED the skills she learnt in class. She did it by building functional objects like MP3 players, synthesizers and light toys from scratch using custom-ordered parts.
And that’s how she became original. Through practice. By applying what she learnt.
This was before YouTube and smartphones. So she posted DIY tutorials for her projects on her personal website. Soon, a crowd of viewers bombarded her email inbox with requests to sell pre-assembled kits.
At first she says that she was like, ‘No dude, I’m really busy, leave me alone’. But after a few months, her fans wore her down and “forced” her to open Adafruit to sell the kits people were asking of her.
What Limor didn’t realize at the time is that she was validating a business idea for free. And this is the best way to start a business. Before you spend money and time on a business idea, that’s the kind of validation you want to get before you start anything …
So if you want to start a business, before you worry about selling anything, learn a skill that’s useful to you and to other people. But don’t just learn it. Practice it until you find your originality. And then share how you do it.
Even if you can’t get into the MIT, there are loads of free or cheap courses where you can learn really cool and valuable skills. There are hundreds of free or cheap courses in places like Coursera, Free Code Camp, Udemy, Udacity, Instructables, but also many amazing open source resources you can find in Github, Wevolver and pretty much all over the internet.
If you are learning or know how to design electronic boards, robots, computers, cars, drones, shoes, bamboo bikes, clothing, indoor aquaponic systems, 3D printers, … make your own versions, with your own flavor. Then go organize a meetup or post some youtube videos to teach others around you how they can do it themselves.
Once you’ve found something to teach that other people rave about, you’ll be able to build pretty much any business around it. That could be a starter kit, a curation of products you used to build something, or custom consulting for people who want you to hand-hold them. Here are a few more ideas of how to find valuable ideas.
Today there is more noise and competition than ever on Youtube and other social media, so it might be easier to invite some friends, coworkers or to start a meetup or some offline event where you share your practice. Once you are confident enough, you can go online. there are still plenty of content taught by people who have never put them into practice.
Once you start teaching, whether online or offline, people will let you know what they want, and you’ll find what you need to offer. If they don’t, just listen to the problems they have and see how you can help them.
- Learn a new skill
- Practice your skill and get cool results for yourself or for other people
- Teach other people how to get the results you got
[Step 1] Starting Simple with the 3 fundamentals
So to build her business she just needed three super simple things:
- A product: kits for people who wanted to learn how to create their own electronics with her tutorials.
- A marketing channel: The free tutorials and the Open Source blueprints of her kits, so that anyone can study, modify, distribute, make and sell the design or hardware based on that design. This way she would teach people how to assemble electronics, how to improve their skills, and eventually, how to create a business on top of her idea. A pretty compelling idea for everybody.
- A selling channel: A simple e-commerce website where people could order her kits.
That’s how simple an open source hardware business should be at the beginning. So if you are going to create an open source project, don’t over-complicate it and stick to these basics.
For example if you sell kits, you can probably start creating them manually at your closest fablab, or assemble some custom parts you can order on the Internet.
With Youtube and WordPress you have everything you need to start your own tutorial channel.
And with Prestashop, Woocommerce or any other E-commerce website, you can start a free or low-cost selling site very quickly.
But be warned, there is a condition if you want your open project to really work. There must be no previous tutorials on how to do what you want to share: “I think the company took off because, before these kits, there wasn’t a learning project out there that you would actually use or wanted to keep,” says Limor Fried.
- Make sure your idea or skill has not been widely taught elsewhere
- Teach your skills online or offline, this will help you find one product or idea that people crave
- Create free tutorials and open source your blueprints to market your idea
- And set up a way of selling it, like a simple website or Ecommerce
For Adafruit, people were craving for her pre-assembled electronic kits. She marketed them by creating and sharing unique web-tutorials on how to put kits together and she sold through her website.
[Step 2] Open Source your technology to create a community of co-creators and … save time
To get the community to innovate with Adafruit, Limor Fried open sourced its designs and allowed everybody to build on top of it by giving access to it on Github.
Adafruit also created online tutorials for each and every one of their kits. The link for the instructions is on every product page (here’s an example of a tutorial they created to reverse engineer a Kinnect with their parts).
Having the documentation online allows Adafruit to update the instructions easily and get people to work with their products quickly and easily.
But documenting also multiplies their efforts.
It sure looks like a lot of work to document each step of the process. But once you’ve done the whole documentation for a product, it will become a resource thousands of users can reuse without you having to re-explain it over and over, saving you hundreds of hours and multiplying your effort by a thousand fold.
“Everything is designed to be painless,” Fried says. “I spend a lot of time thinking about how customers will interact with products so they won’t break them. And when we sell something, we always give good documentation to get [them] going in a couple minutes.”
And this is not only useful for electronic products. Other open source hardware companies, like Aquapioneers, who sell aquaponic kits, Afforestt, who grow urban forests 10 times faster, or Myfood, who sell connected greenhouses, have also documented their processes for their community, helping attract a lot of initial interest, or millions of views from communities of users, media and partners.
- Open Source your designs and tutorials, so you build a community of people who can freely build on top of your products and create new use cases and innovations
- To always stay on top of copycats, keep updating your products by including your community’s innovations and feedbacks
[Step 3] How To Find Funding, Shipping and Ramp Up Operations
With $10,000 Fried’s parents had allocated for her tuition, she bought a bulk quantity of parts and began assembling and selling her kits, making about $10 on each unit.
Once she found a way to fund her first orders, the running of the company consisted of shipping a couple of packages a day from the 24-hour post office next door to her dorm.
As orders increased, she hired friends, and before she knew it, she was designing a new project every week around newfangled components like gyrometric sensors, solar panels and thermal printers.
If you don’t have a family that can afford to help you fund your first batch of orders, you should have taken extra care at the step 1 and 2 to gather a tight community that wants to support you. This way you’ll be able to crowdfund your first batches of products.
And when you can’t keep up with the pace of demand, ask your friends to help. And also ask your open source network if they know great people you can hire to help you increase this pace.
- Hardware is expensive to start, so secure funding for your first orders, either through your family and friends, either through crowdfunding with your community
- Make a profit on each kit or product you sell to fund the next batches
- When demand becomes too big for you to handle, find friends to help you scale your operations
- Keep updating your products by including the innovations and feedbacks of your community
In Adafruit’s case, Limor Fried got $10,000 in funding to buy parts and turn them into kits from her family. And as orders grew she hired friends.
[Step 4] The open source circle of awesome: Fostering innovation, talent and sharing among the community
To encourage people to stick around and really be proud of their projects, the company fostered a community, both online and offline.
Adafruit scaled the open source tutorials and the customer support, by inviting every user to post their DIY projects in their hardware platform, filling their website with third party tutorials.
Indeed, everyone is invited to the DIY party, from elementary-school students building robotic arms to grandmothers sewing jackets with working LED movie displays using Flora, a wearable electronics platform with conductive threads and washable hardware.
The web is full of third-party tutorials for Adafruit’s open-source projects, but Adafruit also has three full-time engineers dedicated to troubleshooting.
Involving the community in the creation of content and innovation create an awesome virtuous circle.
Imagine you start with 1000 people following you through Facebook, Youtube or your Newsletter, and a 100 people buy products from you.
Well, among these 1000 people, you might be getting 10 people who submit new tutorials and product ideas of their own, like prosthetics, children’s toys, tv controllers, 3d printers and whatnot. And this in turn attracts and enables more people to create new ideas, and on and on.
“That’s when the fun really begins. The open-source designs lend themselves to “a culture of sharing,” and tens of thousands of Adafruit customers are feeding off each other’s creativity, tinkering with more powerful MintyBoosts and iNecklaces that flash at different speeds and cycle through bright colors. People learn and come back with fixes, send us weird Halloween costumes based off our kits,” Fried says. “I read blog posts and tweets from customers, and I definitely get ideas from them that I personally might not have thought of.”
Adafruit’s community in action, building cosplay costume with their electronics and 3D printed parts
Little by little the power of this virtuous circle is what helped attract millions of people every month to Adafruit’s website and what led it to grow over 700% over 3 years in a row and get 1 million unique visitors per month to their website.
- Create open channels for your community to interact with you, listen to what they are saying and creating, and promote their own innovations on your blog. This will create additional content to create buzz around yourself, and it gives back to your community by showcasing their work on a platform that they wouldn’t otherwise have access to.
- More on other open channels you can create below.
[Step 5] An old school forum to do support 10 times easier
The forum is only for Adafruit customers who need assistance with their purchases. But even if it’s not for “everybody, it’s an open and transparent door for the customers to interact with the the company, and search for solutions that might already have been answered.
A forum. A.k.a How a jurassic tool (in digital terms) can do a lot of heavy lifting
People ask their questions, and once they are answered in public, it’s far easier to redirect to that thread than to serve each individual request for support.
In fact, sometimes the community of users will spontaneously help other users, helping the staff cover more ground.
A word of caution: Open a forum if you are not completely swamped with production. Depending on the number of customers you have, answering and moderating questions can take a quarter to half of your working time.
But again, investing a little time here would go a long way, and you should consider it just as important as selling or marketing.
- If you or someone in your staff can devote 1 to 2 hours a day to support, open a forum, and reply to support questions there.
[Step 6] Keep validating your new product ideas with the community
Photo Source: Adafruit Industries
Show-and-Tell is Adafruit’s live show where makers from all around the world come in and share the electronic projects that they are currently working on.
The show runs on Hangouts for 30 minutes every week and it is the place where they offer 8 to 10 makers from their community to showcase the projects they’ve been working on.
Instead of doing typical market research to learn what their customers want, Show and Tell is a great way for Adafruit to get insight into not only how people use its products but also what they might want in new ones.
Over the four years that it has been running, Show-and-Tell has been produced more than 200 times, collecting more than 2.8 million minutes watched and an astounding half a million video views.
To find some examples of their Show and Tell broadcasts you can go here.
- Host and broadcast a weekly Hangouts with up to 10 people where makers showcase their own creations and get feedback from the rest of the community, it will give you great inputs on new innovations you can take over, and potentially discover makers with whom you could create new partnerships.
[Step 7] Promote by teaching with $0 tools
Limor Fried started the Ask an Engineer weekly show in 2010 in her living room. And since that day she’s gotten over a half million video views to add to the ones of Show and Tell.
To get these results she uses free tools like Youtube and Periscope to broadcast every week interesting or useful behind the scenes content about:
- the week’s product that appeared in the shop
- Time Travel: the hosts look back on the world of makers, hackers, artists and engineers and highlight a special person or event
- 3D Printing: they showcase a special project or product related to the industry
- a Q&A session and a trivia question, where the first viewer with the correct answer wins a product
- a section dedicated to Raspberry Pi and Arduino news and a section where the hosts read a positive email that they have received from a satisfied customer.
- Every week, a coupon code for a 10% rebate on everything in the store is issued and is valid only for the night.
To find some examples of their broadcasts you can go to their YouTube playlist.
Adafruit also produces the YouTube series Circuit Playground, meant for children. Each episode covers an electrical engineering concept. For example, one episode is titled “F Is for Frequency.” Fried says she wants electronics to be “just as enjoyable for kids as watching their favorite movies.”
So as you can see, this is not super complex, it’s just a matter of being regular and making a list of interesting content that you can share with your audience.And if you fear you’ll run out of topics to talk about, your community is full of interesting people that you can invite to talk about cool things they’re doing.
As you’ve probably realized by now, Adafruit’s main way of growing is by teaching. So teach, teach, teach!
- Make a list of things useful and interesting to your community, like the latest news of your products, or personalities in your industry, or a section about complementary products to your product
- Plan a regular moment each week to broadcast this content.
- If you feel good in front of the camera, you can launch a live youtube channel where you talk with your community about all of this content.
- If you are camera-shy, do a live podcast, write a blog post, or whatever you can think of to get the word out there to a crowd.
- Consider rewarding your viewers with a coupon at the end of the broadcast.
[Step 8] Finding talented employees among the maker community
Photo Source: Adafruit Industries
Once you’ve reached hyper growth as Adafruit has, it becomes essential to hire people with high potential who can help lead the company to keep up with this pace.
Adafruit doesn’t do unpaid internships, only paid ones, but as they report themselves “most of our recent hires at Adafruit have been because the maker was sharing what they do online. We actively seek out amazing people sharing and publishing online, if you want a paid position at Adafruit, this is the best way to go about it for sure!”
Nurturing an open source community of makers made it possible for Adafruit to find people who built on top of their products. This has the added benefit of making it super easy to spot capable people who fit their sharing culture, taking away the daunting risk of hiring untested prospects who might not be a good fit.
- Invite your community to submit their work on your platform. In exchange promote their work.
Once you need to hire talent, you can go to the community you’ve nurtured to hire the right persons who are already familiar with the company and who you know do great work.
[Step 9] Open Source Prize: Pick an “open fight” with a big player
A screenshot of the article announcing the Challenge Prize to open source the kinect driver
In response to the launch of Microsoft’s Kinect for the Xbox 360 in 2010, Adafruit organized a $3,000 challenge to create an open source driver of the motion control system.
Microsoft responded by condemning the challenge to modify their product, but after significant advancements in the open source drivers, Microsoft backed off and corrected by saying that they did not condemn it. They were in fact excited to see what the community developed.
So not only was it a great PR campaign for Adafruit, but it helped Microsoft understand and embrace the benefits of open source and a community of makers.
- Find a product from a big player that you and your community would love to see in open source.
- Sponsor and launch a challenge Prize to get the community to develop an open source alternative
9+1 Key Takeaways from Adafruit’s Open Source Multi-Million Growth Strategy
As Matt Weinberg reports: “Compared with the hockey-stick growth of some Silicon Valley startups, taking 10 years to get to $33 million in sales revenue may seem slow.
But Fried prides herself on never taking a dime of venture-capital funding for Adafruit Industries, meaning the company can pay its bills and focus on its main mission of helping people understand and build technology, without having to panic about whether it’s growing fast enough.”
So yes, Adafruit has become a small giant in the electronics world, but as you can see you don’t need a huge marketing team or venture capital to get similar results.
You just need a smart plan to build your community of users and contributors.
Here are the 9+1 key takeaways you can borrow, modify and adopt for your own business based on Adafruit real-life marketing tactics:
0. Learn something useful. But don’t just learn it. Apply your learnings and practice it until you find your originality.
1. Teach for free. Teach what you practiced for free online or offline. When you find something that people crave for, then you can sell kits or consulting through your website or offline.
2. Open Source your designs and tutorials. This way you’ll find a community that can freely build on top of your products and create new use cases and innovations
3. Find funding. Either ask friends or family to help fund your first batches, or, if you’ve gathered an audience large enough, crowdfund your first orders with your community.
4. Create open channels to interact with the community. Listen to what your community of makers are saying and creating, and promote back their inventions. This will create additional content to create buzz around yourself, and it gives back to your community by giving them a platform than they wouldn’t have otherwise.
5. Use a forum to do support. Devote 1 to 2 hours a day to reply to support questions on the forum.
6. Discover and showcase the communities innovations. Host and broadcast a weekly Hangouts with up to 10 people where makers can showcase their own creations and get feedback from the rest of the community.
7. Create content useful to your community. You can launch a live youtube channel where you talk with your community about a number of things useful and interesting to your community, like the latest news of your products, or personalities in your industry, or a section about complementary products to your product.
8. Hire your community of makers. Whenever you need to hire someone, you can find the most talented prospects among those who contribute on your platform.
9. Launch a challenge to invite makers to create open source alternatives to big player products. Sponsor and launch a challenge Prize to get the community to develop an open source alternative to a product you’d love to see open. This will be great PR, and show other companies of the benefits of open source. And don’t skip steps. Launch a Challenge Prize only once you’re making cash!