Thursday, September 13th 2012 by Molly McHugh, Digital TrendsAmerica has electronic innovation bragging rights. We’re home to titans like IBM, Apple, Microsoft, Google, and the technology startup scene has never been hotter. Despite this enviable position, there's also no doubt that when it comes to actually manufacturing hardware, there's not as much happening stateside.
• Within recent years, major names in electronics and technology (the ones gutsy enough to eschew software in favor of hardware development) have come under fire for their overseas facilities, for a variety reasons: avoidance of child labor laws; illegal and harmful working conditions; exposure to regional disasters that have massively impacted inventory; and, of course, choosing to locate jobs and invest money outside of the United States. But the lure of cheap labor and cheap parts is often too difficult to pass up.
• Which is initially what Vendscreen thought.
• Vendscreen is an Android-based, high-tech, touch-friendly vending machine. "We wanted to change something that hadn’t been changed in 30 years,” Butler tells me. Not only do Vendscreens upgrade the very basic mechanics behind vending machines, but they offer nutritional information and integrate with supplier-side inventory. Basically, Vendscreen wants to erase that sinking feeling you get when A5 is empty, or the unbearable horror of your snack getting stuck in E9.
• Butler and Paresh met while both participating in a vending industry standards board. "[Patel] reached out to me to do some consulting, and needed me to sign an NDA,” says Butler. "But I wanted to know more before I signed it, and it turned out we were working on the same idea.” They decided to combine their efforts into Vendscreen.
• From a hardware perspective, this was all new territory for the small team. Developing software for a hardware device is one thing – actually setting up and managing the process is another entirely.
• We’re experiencing something of a hardware renaissance right now: While the tech scene has had no shortage of software, design, and web and mobile-facing innovation to show off, the hardware situation hasn’t typically drawn the same developer attention. But a recent rash of startups is attacking the physical world – and for the most part, they are still outsourcing the actual making of these things.
• Thus Vendscreen’s path to local – hyperlocal, even – manufacturing is the one not-often taken. "We got all kinds of different advice about what we should do and even engaged a company that sets you up to work with Asian manufacturing facilities,” Butler says. "But I can’t even begin to imagine what a nightmare that would have been. We made so many changes along the way, so the local factor was big.”
• That local factor, specifically, is MegaTech, an end-to-end contract manufacturing facility in Corvallis, Oregon. Butler and Patel met with MegaTech nearly a year ago, when Vendscreen was but a mere prototype. "[Patel] contacted us and basically said, ‘Hey I need someone to build this for me,’” says MegaTech exec Patty Younger. "He said he’d woke up in the middle of the night and realized,’Oh--MegaTech--they build things.' "
• After a casual initial meeting, the MegaTech crew made a stop in Portland to see what Vendscreen was up to – and were impressed to say the least. "We went by and saw his facility and thought, ‘This guy’s for real,’” says Younger. From there, things started to take shape – literally: MegaTech engineers educated Vendscreen on the aspects of Vendscreen’s prototype that were not manufacturable, and the designers created a working model. Then production dates started to get tossed around.
• The communication and ease with which the two worked is in stark contrast to the picture painted of most manufacturing environments. In a recent panel at Portland Digital eXperience, iOS case maker Grove commented on the overseas assembly system: For anyone but the big names in electronics – your HPs, your Sonys, your Samsungs, etc – it’s a painful endeavor. Unless you’re able to employ the proper precautions, usually meaning time-spent on location, there can be quality or build issues. And order minimums are usually so large that early stage products steer clear.
• "There’s a general misconception that electronics are all made overseas,” says Younger. "But there’s a lot being done here.”
• So why the hush hush? Well for starters, hardware is something of a quiet business in comparison to the software and social giants peppering the tech landscape. But also, hardware is risky: Vendscreen had to dive in and order displays for its devices early in the process, and small companies in this line of business often have to make such critical decisions with no or little funding – and that’s scary, to say the least.
• The MegaTech safety net meant the relationship was more cooperative than you might expect – a partnership and not just an out-sourcing. It’s just part of the wave of easier hardware startup production that is sweeping the industry; as bubble talk percolates and concerns about Facebook’s stock price plague us, there’s value in funding and supporting the tech we can touch – something both Vendscreen and MegaTech can vouch for.
Molly McHugh, Staff Writer, Digital Trends .