Catching up on some past threads I wish I would have participated in, such as this one.
Interesting fact: when I started Jolly Logic, I assumed I would be private labeling products for companies like Estes that had established distribution. "Reaching the customer" and "product awareness" are two classic business problems that I've worked on throughout my professional life as a marketing and tech exec, and so I thought making products for Estes would be a wise move.
Some basic facts prevented this from happening:
- For the vast majority of people model rocketry is casual and occasional (someone might build and launch a rocket once or twice, perhaps as a part of a school or scouting event, and never launch again that year, or perhaps ever)
- The vast majority of Estes sales have come through retail stores, which cater to casual or impulse buyers looking for gifts
- Retail distribution is expensive (to wit: the success of Amazon, with its dramatically lower costs and highly sophisticated software systems)
These facts lead to the following results:
- To appeal to casual purchasers, rocket kits need to be low priced
- High distribution costs leave very few dollars for material and labor
The need to make costs as low possible drives a company like Estes to pursue the cheapest labor available and to also keep the kits as cheaply built as possible.
So you can imagine how the early conversations went between Estes and Jolly Logic. I started the company to make products that worked the way I would like products to work. That includes:
- Be as easy to use as possible
- Be totally self-contained and rugged
- Not require weird batteries
- Have great tech specs
- Be financially sustainable
The conversations with Estes and Quest were short. Their requirements were simple: they already knew the price the products should sell for ($19.95), and what they would pay me for them: ($4.95). They knew this with startling (to me) certainty, without even knowing exactly what the product would do or look like.
Think about that for a second. They in effect were saying, "What the product is like, or what it does, is not what we care about. What we care about is what it costs. We start from there." The principals involved in those conversations can feel free to jump in and give their characterizations, but I think I'm capturing them fairly. These conversations continued annually for the first couple/few years of Jolly Logic's existence back in 2009-2012.
That's a very disappointing situation for someone like me who loves products and has very fond memories for the model rocketry of my youth. But because I was rather inflexible about my product design philosophy—it is the motivation behind the company—we ended up with a conflict we could not resolve.
So Estes and Jolly Logic would not work together, and Estes would eventually take my first product (the original AltimeterOne), send it to China, and ask them to copy it as best they could. The result closely mimicked the user interface, packaging, and the electronics to a large degree. Unfortunately, software is not China's strong suit, and much of the reliability of AltimeterOne is due to its software.
After that very first product, the software in my products escalated in sophistication enough to make further copying much harder to do. AltimeterTwo, which I think doesn't get enough credit for being so self-contained and dedicated to rocketry statistics, has approximately 100x the software sophistication of AltimeterOne. And AltimeterThree, with its modes and mobile phone apps, stretches that to 10,000x. While not
technically impossible, it is
practically impossible to ask China to copy AltimeterThree.
If I had to sum it up, I'd say Estes has been beset by two huge global business shifts:
- The rise of software as the primary source of value in every industry (logistics, medicine, farming, real rockets, cars, communications)
- The rise of more efficient means of distribution (Amazon)
So Estes is left making relatively uninspiring products with little/no software content in a world where people pay good money for everyday objects to be "smart," and rockets to "think in the air" and land themselves. And without innovation they are shackled to the failing economics of retail hobby stores that force them to make very cheaply-constructed products and to use price as the primary attraction to their products. Products come in economically-large containers from China via slow boat, there is frequent supply lumpiness (too much or too little product at once), and it takes a long time to innovate and put new products in the channel. Designing a new product is fairly simple compared to getting it manufactured overseas and accepted into the old-fashioned systems of distributors and retailers, whereas it takes approximately 30 minutes to add a new product into online systems for sale over the Internet.
I tried to work with them, I really did. But they were wedded to their ways, and I to mine.
Sigh.