Got Hardware? Dragon Innovation Helps Big Names Get Built

3/7/13Follow @curtwoodward

A few months before his little startup company became a poster child for the crowdfunding revolution, Eric Migicovsky had one of those moments of serious panic.

He’d been through the prestigious Y Combinator accelerator program, and attracted some early money. But bigger investors weren’t willing to back the project he’d been working on—and when the deals fell through, the future of the Pebble smart watch suddenly seemed pretty dicey.

That’s when Scott Miller got a call. As the CEO of Dragon Innovation, a Boston-area firm that connects hardware startups with high-tech manufacturers, he’d been looking forward to helping get Pebble off the ground.

“And I just remember saying, `Don’t worry about it, it’s going to be fine. Get a beer, take a deep breath, and hang in there. There’s good days and bad days,’” Miller recalls. “And then roll forward, I think to mid-April—I got a note from Eric saying, `Uh, Scott, I think we need you guys back.’ And that’s when they raised $200,000 in an hour.”

Miller may have just been trying to soothe a panicked partner when he said it was going to be OK. But he’d also been through the roller-coaster ride of building high-tech products before—at MIT, then at Disney’s Imagineering unit, and finally in a decade at iRobot (NASDAQ: IRBT).

These days, he’s helping a lot more entrepreneurs like Migicovsky.

Dragon Innovation, the firm that Miller founded with other veterans of iRobot’s Chinese supply and manufacturing operation, has increasingly added crowdfunded projects to its list of hardware startup clients. And that roster is pretty impressive: 3D printer companies like MakerBot and Formlabs; fun mini-robotics startups like Romotive and Orbotix; intelligent LED maker Digital Lumens; and manufacturing robot provider Rethink Robotics.

There could be plenty more in the future. The combination of powerful, cheap design and computing tools, overseas manufacturing, and crowdfunding platforms like Kickstarter points to a near future where product designers can get market validation and start cranking out consumer products well before taking on traditional venture financing.

Miller

Miller (with a disclaimer that he’s a “terrible surfer”) says the current climate around hardware startups feels like that moment when you paddle along with a swell and look back to see the water building all around, ready to sweep you along.

“The best and the brightest aren’t going to the Googles or the Apples. They’re starting their own thing,” Miller says. “It feels like we’re just at the beginning of the hardware wave. And it’s just going to get bigger and bigger, and more powerful.”

Miller got his start building serious hardware projects at MIT, where he was part of a team that produced the “RoboTuna,” an underwater vehicle that mimicked the motions of a real fish. He then joined Disney, part of a team that built a walking triceratops robot that ran on a Corvette engine for the company’s theme parks.

But it was at a young iRobot that Miller would pick up the skills and connections that made his career. After working on the company’s first commercial product, a Hasbro doll called My Real Baby, Miller was tapped to work with the team that had built a functional prototype of what would become the Roomba, the disc-shaped robotic vacuum that would make iRobot’s name with consumers.

“It was actually funny because it was a vacuum cleaner, and it was … very brittle,” Miller recalls. “When it would break—which it would all the time—it would basically pick up its parts, so you could always pick them out of the dustbin and then glue them together again. So it was pretty convenient that way.”

Soon enough, Miller was flying back and forth to Hong Kong, dealing with the far-flung manufacturing and supply process. When the trips became too frequent, iRobot sent him east for the long haul, where he set up an office and pulled a team together to run things in Asia.

He worked his way up to vice president as iRobot built the first 3 million Roombas. “I got to sit in everybody’s seat on the way up and get great visibility into what they did for their job and how it worked,” Miller says.

In 2007, he came back to the U.S. to work on new product development efforts for the company. But things had changed in other ways—iRobot was now trading on the public stock market, and operations were necessarily a little less nimble than the days when setting up a Chinese division took a three-minute conversation with the CEO, Miller says.

“We used to have these weekly meetings where you’d have to have your PowerPoint font just right. And that was like—there’s no fuckin’ way,” Miller says with a laugh. So in 2009, when the economy was at bottom, he left to start Dragon Innovation.

He scooped up co-founder Herman Pang, the partner who had originally joined Miller in iRobot’s Hong Kong operations years earlier, and the company has since grown to 14 people—five in the U.S., two in Hong Kong, and seven in China proper.

Dragon works as a consultant, but Miller says there’s plenty of shadiness in the world of manufacturing middlemen—something Dragon takes pains to avoid by sticking to a simple credo: “Our goal is to be drinking beer with our clients 80 years from now,” he says.

The company works on a flat monthly fee, and doesn’t take any money from the factories it lines up to produce a client’s product. Dragon shows its clients all of the facilities they might be using and encourages them to develop a relationship with the factory, as opposed to other operators who Miller says might keep as much of the information to themselves in a bid to be indispensable.

The company also makes a point to develop a detailed bill of materials, which shows clients where all of the money is flowing in a particular project before they choose a factory.

Keeping things up-front, transparent, and clean is just easier, Miller says—and a better way to live. “We always want to get a good night’s sleep,” Miller says. “And you’ve got to pick one or the other.”

As the momentum builds for entrepreneurship, crowdfunding, and high-end gadgets, Miller sees a good chance for growth ahead for Dragon Innovation. “I’d expect us to come close to doubling this year, and a lot of the growth will be on the U.S. side too, which is fun.”

Dragon is already a part of the Bolt accelerator, a new Boston-based effort to help hardware startups get off the ground by supplying seed equity financing and mentorship.

But Dragon Innovation is also eyeing manufacturing, too. While huge attention-getters like the Pebble watch wind up churning out tens of thousands of units, there are plenty of smaller projects that don’t have enough output to warrant a good Chinese factory, but also are too big to build at your dining room table.

“There’s this weird no man’s land of 1,000 to 5,000 [units]. China’s not really interested in it, nor is it worth the overhead of dealing with somebody so far away,” Miller says. “It’s much, much easier to build it locally.”

For projects in that range, Miller says, Dragon Innovation is looking at the possibility of eventually using contract manufacturers in the U.S.—or, at some point, perhaps setting up its own manufacturing operations.

“We’ve got the know-how,” he says. “It’s almost funny: Taking it from China, which is very well established, and applying that manufacturing back to the U.S. But that starts to get exciting.”

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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