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Creative Recycling: Dumpster Diving
gnewton writes "One angle of Open Source software that perhaps has not been emphasised enough is how the lower cost of software and operating systems as compared to proprietary/commercial solutions can allow for greater creativity and actually open up markets and solutions that were previously unavailable, in the area of Recycling. This article talks about a new startup which recycles old LCDs into cool and fun digital picture frames."
Last week I covered Roku, the high-end digital media player for HDTV buyers with money to burn. Roku was founded and financed by Anthony Wood, who made out well when he sold ReplayTV to SonicBlue. He's a rich guy selling gizmos to other rich guys, but not all startups have Anthony's resources. Here is a success story from one resource-challenged startup. Wallflower, which is also in the digital photograph display business, managed to get itself off the ground with a strategy I've seen only once before: dumpster diving.
The company makes (expensive) digital picture frames that compete with Ceiva, Digiframe, and Pacific Digital. Nothing special there. But Wallflower's startup plan was based around building its high-end products with pieces from recycled computers. To get started, Wallflower founders Mitch Kahn and Gordon Clyne bought 150 old but unused laptops from liquidators and via eBay, for $25 to $150 each. They were obsolete as workstations (most had 133MHz CPUs and smallish hard drives) but had the right pieces to make nice picture frames--most importantly, working 12" LCD panels.
Mitch and Gordon's small team disassembled the machines, mounted the displays in handmade wood frames with the motherboard and hard disk, and added Wi-Fi and their own Linux-based software. Basically, the Wallflower displays are Web servers that appear on a Windows desktop as disk drives--you put one on your network and you can just drag pictures onto it, and call up its internal home page to manage its settings. Now you have a nice big electronic photo frame to show your digital pictures, and changing the display is as easy as typing a URL into your home computer.
Frankly I can't see spending $500 for one of these things--but what do I know? Shortly after Forbes ran an article about the product, Wallflower sold out of its inventory of Frankensteined picture frames. Left with nice cashflow from its rising order volume, and needing more certainty in its supply chain than Weird Stuff Warehouse could provide, Wallflower recently gave up on the whole recycled kick and started buying components from manufacturers, the way most computer companies do.
With the new manufacturing strategy, the company is able to offer more features and bigger screens, but it had to raise its prices since these components are more expensive. Although I imagine they save a fortune in assembly costs, since they no longer have to dismantle laptops to get their parts.
There is a thriving economy in the leftover computer business. Another company in this space, RetroBox, makes money coming and going. First of all, they take in used computers from businesses that no longer need of them, and carefully scrub the hard disks clean of data--companies are so worried that old machines will get out into the world with sensitive data on them that they'll pay nicely for this service. Then, of course, RetroBox is free to re-sell the scrubbed hardware to new users or to re-builders like Wallflower.
But back to Wallflower. I love this story, since it combines the identification of an unusual but growing market space (digital picture frames) with the extremely clever, low-cost startup strategy of making its first products from unloved, unsold, obsolete technology. The founders knew full well that strategy wouldn't scale if they became successful, and they were able to switch to more ordinary production methods when they did, about one-and-a-half years ahead of plan.
As I said earlier, this manufacturing model isn't completely new: In 2000, startup Scout Electromedia released the Modo, a pager-like device that functioned as a city guide in New York. Scout made me look like a chump by folding shortly after I wrote a Catch of the Day about it. But the guts of the unsold Modos lived on: Wideray's first batch of products (it makes devices that beam data to PDAs and phones) used disassembled Modos for their pager receivers; it was a lot cheaper than buying or building new parts. Three years later, Wideray is of course no longer using Mo
Wow...what I just wrote isn't funny...should I delete it...Oh, go on and "troll mod" me for this misfire. I don't care.