Gary Gesellchen and Rick Kernen had spent decades together working at a local computer printer manufacturer, and left the field about the time the iPhone was introduced. Together, they thought they saw an opportunity to become entrepreneurs with a high-quality wireless compact speaker system - but it wasn't easy, as Gary related.

They asked themselves many questions - do a service or sell a product? Resell or make their own thing? Build or buy? They read books on starting a company. Did they want to be big or small? Could they live with failure? What legal things had to be done? Where would the startup money come from, and how would it be budgeted? What was the competition? How to engineer a product? How would marketing and distribution be handled?

All of these questions, and more, had to be answered and the answers were not always as expected. Gary recommended not skimping on a proper and legal business framework, which in their case meant creating an LLC. He then related what they did for market research and to decide their feature set and target markets. One main result was that they did not incorporate a wireless system within their unit: there are too many, and they change far too frequently. Better to let the user decide on their own wireless system. This is also a hedge against future obsolescence.

The engineering part might have been more straightforward, but it still was not without surprises. They decided to work with a Chinese partner for development, parts and manufacturing. With their (lack of) size, they recommended working with a partner that has a U.S. office. They also had lists of Dos and Don'ts for dealing with such non-local partners based on their experience. (see PowerPoint)

Speaker engineering was already their avocation and they knew their goals. Many cycles of listening, measuring and re-doing prototypes were needed. They licensed the XBL woofer patent to get the performance they wanted. (US Pat 7039213)   Different amplifier and converter modules had to be tried. Their Chinese partner contributed much to the design, but Vanatoo had to steer them to get the total design and performance they wanted.

Next, the little startup had to consider sales and marketing. Rather than trying to distribute widely themselves, they went with their own website and Amazon for direct sales. It was very cost effective to have Amazon handle warehousing, sales and shipping, with their e-commerce clout. They have regional placement (WA/OR) in stereo stores and want to work on more retail channels, as well as promotion. So far, they report positive cash flow in the middle-range of their projections.

After a break, some door prizes were given out, and attendees could audition the Vanatoo Tansparent One speakers.