1 00:00:00,000 --> 00:00:05,820 Kevin Mako: Hello, product innovators. Today we learn from the Vice President of an international manufacturing equipment dealer on why startups should consider 2 00:00:05,820 --> 00:00:09,860 Kevin Mako: building your own production facility to manufacture your new or scaling product product. 3 00:00:09,920 --> 00:00:17,940 Narrator: You're listening to the Product Startup. You're listening to the top leaders in product development, product selling, and everything in between. 4 00:00:17,940 --> 00:00:22,100 Narrator: hosted by Kevin Mako, the leading expert on product development for physical product startups, 5 00:00:22,620 --> 00:00:27,300 Narrator: sponsored by PTC's two best-in-class 3D CAD product development software solutions Onshape and 6 00:00:27,300 --> 00:00:31,660 Narrator: Creo, and produced by Mako Design + Invent, the original firm providing world-class consumer 7 00:00:31,660 --> 00:00:36,420 Narrator: product development services tailored specifically to startups, small manufacturers, and inventors. 8 00:00:36,540 --> 00:00:39,780 Kevin Mako: Welcome back, everyone. Today I'm excited to introduce Noah Graff to the show. 9 00:00:40,040 --> 00:00:48,340 Kevin Mako: Noah's vice president at Graff-Pinkert, an 80-year-old manufacturing machinery dealer that buys and sells used equipment all over the world with a central warehouse in the USA. 10 00:00:48,640 --> 00:00:54,840 Kevin Mako: NOAA is also the host of the Swarfcast podcast, a show all about manufacturing machinery and tool machining. Today, NOAA is going to 11 00:00:54,840 --> 00:00:58,720 Kevin Mako: share some valuable knowledge in how inventors, startups, and small manufacturers can consider starting 12 00:00:58,720 --> 00:01:05,700 Kevin Mako: your own production facility locally to produce your product and what to think about when buying used manufacturing or equipment for your own production facility. 13 00:01:05,800 --> 00:01:07,140 Kevin Mako: Now, on to the episode. 14 00:01:08,330 --> 00:01:09,530 Noah Graff: I know, welcome to the show. 15 00:01:10,650 --> 00:01:14,590 Noah Graff: Oh, thank you for having me. It's really an honor and it's nice to be 16 00:01:14,590 --> 00:01:20,830 Kevin Mako: on somebody else's podcast for once. Well, it's nice to have you on the show. I know you run your own podcast in and around the industry and what we're talking about 17 00:01:20,830 --> 00:01:26,670 Kevin Mako: today, especially in around machining and setting up your own manufacturing. I'm very excited to talk to you about that today, not just because you have the podcast, 18 00:01:26,870 --> 00:01:34,170 Kevin Mako: but also you've been in this business. I mean, your grandfather started this business 80 years ago, buying and selling manufacturing equipment around the world. 19 00:01:34,270 --> 00:01:42,550 Kevin Mako: So what I'm really eager to talk to you about today is how startups can think about potentially setting up their own manufacturing operation, either potentially for when they 20 00:01:42,550 --> 00:01:44,350 Kevin Mako: start to produce their new product, 21 00:01:45,010 --> 00:01:51,230 Kevin Mako: or as they start to scale it, or as they want to start putting maybe elements of their product manufacturing locally at home. 22 00:01:51,410 --> 00:01:58,510 Kevin Mako: So you've been buying and selling equipment for a long time, obviously part of the podcast as well. Excited to talk to you about that today, but just give us a bit of a history. 23 00:01:58,770 --> 00:02:06,630 Noah Graff: How did you get to the point where you are at now? You know, my grandfather, he had a used machine tool business started around 80 years ago. 24 00:02:07,050 --> 00:02:12,950 Noah Graff: And then my father and my uncle went into the business. And I always had it in the back of my mind, maybe I would go in. 25 00:02:13,190 --> 00:02:22,270 Noah Graff: But then I went to college, was a film major, came out. My father, he had started a magazine about the machining industry. 26 00:02:22,470 --> 00:02:27,530 Noah Graff: It was called Today's Machining World. And I'm out of college and this is like 2005. 27 00:02:28,250 --> 00:02:35,970 Noah Graff: And he's like, hey, broadband is coming. You can make videos of our stories and you can go and use your skills and whatever. And he was just a little bit ahead 28 00:02:35,970 --> 00:02:41,370 Noah Graff: of his time. But I decided, all right, I'm going to try this. So I went into the journalism business and 29 00:02:41,370 --> 00:02:49,310 Noah Graff: And of course, videos didn't catch on for another couple years, but I started editing and writing about precision machining industry. 30 00:02:49,650 --> 00:02:58,010 Noah Graff: Then a couple years later, print was dying, and we said, all right, let's just take the whole thing online and I'll try the machinery business or 31 00:02:58,010 --> 00:03:04,070 Noah Graff: the treasure hunting business, as I like to call it. So started that about 10 years ago. 32 00:03:04,490 --> 00:03:12,470 Noah Graff: We buy and sell mainly turning equipment around the world, turning equipment for metalwork. primarily these machines are called screw machines. 33 00:03:12,750 --> 00:03:21,230 Noah Graff: So they make all the cylindrical products, metal products that go into aerospace, medical, ammunition, anything where you got round 34 00:03:21,230 --> 00:03:30,230 Noah Graff: parts, they're made on screw machines. Some of them are kind of new CNC machines and some of them are actually old, 50, 60, 70 years old. 35 00:03:30,330 --> 00:03:31,850 Noah Graff: People are still using those machines 36 00:03:31,850 --> 00:03:39,990 Kevin Mako: and those are some of the ones we actually specialize in. Yeah, that's amazing. You're still buying and selling machinery that's 60, 70 years old. 37 00:03:40,270 --> 00:03:47,110 Kevin Mako: And a lot of that actually comes into best practices for setting up your own manufacturing operation. Now, talk to us a bit about a hardware 38 00:03:47,110 --> 00:03:55,350 Kevin Mako: startup actually building their own facility and what you can be thinking about in terms of the actual machinery that goes behind making your own manufacturing operation. 39 00:03:55,450 --> 00:04:03,630 Noah Graff: That is a really good question. You know, I run into a lot of startup lately. In fact, this last year, I think more startups 40 00:04:03,630 --> 00:04:12,550 Noah Graff: have contacted us about machines than we've ever seen, which is really a wonderful thing to see. Some people come in and they're like, yeah, I want something new. 41 00:04:12,690 --> 00:04:18,770 Noah Graff: I want something newish. It's got to be five years old or younger, you know, and other people are a little bit more open-minded. 42 00:04:19,110 --> 00:04:28,650 Noah Graff: Sometimes you start talking about prices with people and then they start becoming even more open-minded. I think, you know, it all comes down to the right application. 43 00:04:28,650 --> 00:04:33,610 Noah Graff: Do you need to make hundreds of thousands of parts? Do you need to make a hundred parts of 44 00:04:33,630 --> 00:04:39,130 Kevin Mako: at a time. That's one thing to look at. Something I'm curious about in terms of the people that have been calling you. 45 00:04:39,290 --> 00:04:46,570 Kevin Mako: It's a really interesting fact that you mentioned that more hardware startups are calling you about machinery to set up their own production operation. Have you got 46 00:04:46,570 --> 00:04:50,790 Kevin Mako: any intel as to why there are more startups now looking to 47 00:04:50,790 --> 00:04:59,910 Noah Graff: set up their own facility locally? I think lately maybe people feel like you could have your garage. You could have one machine in 48 00:04:59,910 --> 00:05:07,010 Noah Graff: your garage, maybe you pay 20 grand for a machine and fix it up. And it's possible to make certain 49 00:05:07,010 --> 00:05:14,610 Kevin Mako: kinds of things. So you're finding that like micromanufacturing of smaller things is more common now than maybe it was even a few years ago. 50 00:05:14,810 --> 00:05:16,630 Kevin Mako: More people are kind of getting into the actual 51 00:05:16,630 --> 00:05:25,670 Noah Graff: small product manufacturing space looking to start small and grow their way up from there. I think so. I mean, there are certain niches. There are certain places. 52 00:05:25,890 --> 00:05:32,490 Noah Graff: Some are easier to get into than others. I've found some of the startups. I know one startup, you know, they came in thinking 53 00:05:32,490 --> 00:05:38,570 Noah Graff: they were going to make medical parts and they bought all this really expensive equipment. And they ended up having to make gun parts. 54 00:05:38,810 --> 00:05:47,970 Noah Graff: People say they're in the shoot them up, sew them up, business. It also makes me think of sometimes people who have their own product. One thing they do is 55 00:05:47,970 --> 00:05:55,770 Noah Graff: they like to buy machines that they can also run product for other people in addition to the thing they're making for themselves. 56 00:05:56,330 --> 00:06:03,330 Kevin Mako: That's another way to sort of insulate yourself. That's a very interesting analysis there that it gives you more opportunities potentially for revenue. 57 00:06:03,570 --> 00:06:10,510 Kevin Mako: So if you're starting your product, you really want to build a local manufacturing hub or whatever else, realize that you don't just need to focus on your product, but you 58 00:06:10,510 --> 00:06:18,630 Kevin Mako: may actually be providing a service for other products as well to maybe dilute some of the early stage costs while you're building your product brand until the point where maybe 59 00:06:18,630 --> 00:06:26,790 Kevin Mako: you can use the whole facility or the whole piece of machinery for, you know, all the time on your product, but maybe it's a way to kind of have your cake and eat it too. 60 00:06:26,910 --> 00:06:33,110 Noah Graff: It's a really interesting other way to look at it. Well, as you say, what you were saying, like sort of micro-manufacturer, if you're making 61 00:06:33,110 --> 00:06:41,210 Noah Graff: your own product, you're probably not going to have that many widgets you're going to actually have to make. So you may have all this excess capacity right there. 62 00:06:41,550 --> 00:06:47,870 Noah Graff: And you could take that and start making parts for other people, too, and get a hell of a lot more return on your investment. 63 00:06:48,110 --> 00:06:57,670 Noah Graff: You know, two interviews ago, probably your listeners would like it. We interviewed a guy on our podcast who's in the luxury watch making business. 64 00:06:58,010 --> 00:07:00,870 Noah Graff: And this guy, he sells watches for $70,000. 65 00:07:01,710 --> 00:07:09,490 Noah Graff: And it's interesting how he's approached his equipment. We first met him because he bought a Swiss CNC screw machine from us. 66 00:07:09,590 --> 00:07:19,530 Noah Graff: He paid like $15,000 for it. And he was going to learn using that machine. And then he went out and bought a brand new one, which probably cost them about $300,000. 67 00:07:19,530 --> 00:07:27,670 Noah Graff: So that's another thing to think about. It's good perhaps to start small, just know just because something is more expensive and brand new. 68 00:07:27,750 --> 00:07:32,310 Noah Graff: It doesn't mean that it's going to do any better for your part than if 69 00:07:32,310 --> 00:07:38,030 Kevin Mako: it's a little bit older. That's a good piece of advice there too. It's looking at really what you need, the cost and benefits. 70 00:07:38,190 --> 00:07:44,690 Kevin Mako: And I imagine you help a lot with those decision-making criteria with somebody who's looking to set up manufacturing operation. They're buying the machine from you. 71 00:07:44,790 --> 00:07:48,290 Kevin Mako: You can work with them to say, is it really necessary to have the newest and latest and greatest machine? 72 00:07:48,310 --> 00:07:54,770 Noah Graff: Or is your partner going to be well served by this 30-year-old machine? that's a fraction of the cost. A fraction, literally a fraction. 73 00:07:55,170 --> 00:08:00,770 Noah Graff: You might be able to buy a machine for $10,000 or somebody might be doing the same part for $100,000. 74 00:08:01,450 --> 00:08:07,230 Noah Graff: And if you're good at knowing exactly where to go to find it, what exactly you need, that's a big piece of it. 75 00:08:07,430 --> 00:08:16,670 Noah Graff: Another thing people will say to me sometimes, all right, what brand of machine should I buy? And they'll be choosing between, like, again, like Swiss CNC machines. 76 00:08:16,670 --> 00:08:24,930 Noah Graff: Those are the ones we specialize in with the CNC. So there's like Citizen, there's Star, there's Sugami, there's Tornos. And I'm like, look, they're all good. 77 00:08:25,170 --> 00:08:30,590 Noah Graff: Machine Tools is almost like a religion. Everybody has their one thing and their people only want to run that one thing. 78 00:08:30,710 --> 00:08:40,050 Noah Graff: But if you don't know what you want, just look at who's going to give you the best support. Look at who's in your area, ask around to people, and that 79 00:08:40,050 --> 00:08:42,270 Noah Graff: is going to really serve you in 80 00:08:42,270 --> 00:08:49,370 Kevin Mako: the end because it's really all about who's going to help you. They're all making pretty decent stuff. That's support. That's a big one. After sale, support, pre-sale. 81 00:08:49,390 --> 00:08:53,230 Kevin Mako: support, that's a big deal, even setting it up, right? How do you actually operate this machinery? 82 00:08:53,410 --> 00:08:57,590 Kevin Mako: There's something else you noted in there that I like, not only can you improve the manufacturing 83 00:08:57,590 --> 00:09:02,270 Kevin Mako: of your product by having your own machinery and your own equipment, but you may actually improve the product itself. 84 00:09:02,270 --> 00:09:11,150 Kevin Mako: You actually find this relationship between the product and the machinery that's used to make it. That relationship sometimes can have very profound end user benefits and 85 00:09:11,150 --> 00:09:15,370 Kevin Mako: features of the actual product itself, all because of the things that you can 86 00:09:15,370 --> 00:09:21,530 Noah Graff: learn while you're working with that piece of machinery on your own product? That's really interesting. So you're saying that 87 00:09:21,530 --> 00:09:28,770 Noah Graff: by doing your own in-house manufacturing, you are going to make a better product. There's a good chance 88 00:09:28,770 --> 00:09:33,110 Noah Graff: you could make a better product than outsourcing the machining because while 89 00:09:33,110 --> 00:09:36,370 Kevin Mako: you're making it, you're going to really understand your product better. 90 00:09:36,450 --> 00:09:39,790 Noah Graff: Well, you mentioned learning and that's what queues me on. I think of it from a design. 91 00:09:40,510 --> 00:09:49,470 Kevin Mako: That's a very astute observation there. Well, another question I'd be curious to you about as well is in regards to local manufacturing. Have you found that people are 92 00:09:49,470 --> 00:09:56,230 Kevin Mako: buying more machinery now than before? Like in 2023, are people looking to potentially put more of their 93 00:09:56,230 --> 00:10:03,550 Kevin Mako: production operations here locally in Canada or the USA? Or are they doing it for other reasons when you see 94 00:10:03,550 --> 00:10:07,830 Kevin Mako: some of these kind of people that, even the startups you mentioned that historically don't buy as much 95 00:10:07,830 --> 00:10:15,950 Noah Graff: machinery or any machinery now are starting to get into the idea of doing their own manufacturing operation locally? Well, absolutely. you are seeing the reshorring. 96 00:10:16,310 --> 00:10:25,650 Noah Graff: Before it was a lot of anecdotal evidence. Ah, the stuff is coming back. Like, now you really do hear about people. I'm not quoting any more jobs. And I only want people 97 00:10:25,650 --> 00:10:33,270 Noah Graff: in the United States to do my stuff because there's just too many problems with the logistics or the material. 98 00:10:33,530 --> 00:10:41,650 Noah Graff: You are seeing a lot more at home. And I think you're seeing kind of what you were saying before about people want control of their product. 99 00:10:41,650 --> 00:10:51,370 Noah Graff: I think that does come right. back to the equipment. A lot of these people, these inventions, their products, they're like their baby. So they want everything at home. 100 00:10:51,610 --> 00:11:00,850 Noah Graff: We interviewed a guy in Wisconsin. He had his own product. He makes vaporizers for smoking various types of flour. And they're just these incredible 101 00:11:00,850 --> 00:11:08,810 Noah Graff: colors and he anodizes them. And the guy comes to me and he is like, I want to make the greatest product ever. 102 00:11:08,930 --> 00:11:16,110 Noah Graff: And he was so obsessed with the machines. He tells me in the interview, I'm going to buy these German Swiss machines. 103 00:11:16,350 --> 00:11:24,730 Noah Graff: And I was like, you know, I don't think you really need that machine for what you're doing. And he's like, no, I want them to be the greatest parts ever. 104 00:11:25,030 --> 00:11:34,110 Noah Graff: And I need to buy the greatest piece of engineering in the world ever. And he went and he bought these machines. They're a customer. I don't want to say exactly what they were. 105 00:11:34,350 --> 00:11:41,870 Noah Graff: But he paid a couple hundred thousand dollars too much for these machines. The customer service ended up being rather so-so. 106 00:11:41,870 --> 00:11:50,050 Noah Graff: And he ended up getting rid of them and buying cheaper machines. But he was so seduced by this reputation, oh, these 107 00:11:50,050 --> 00:11:59,910 Noah Graff: are, this is European manufacturer. And these are the most expensive. So these must be the best. And then after that, he realized, all right, first he needed to 108 00:11:59,910 --> 00:12:09,710 Noah Graff: let go and find out what the best service was nearby. And then he needed to realize it's just because something has the reputation for being the greatest ever, 109 00:12:09,710 --> 00:12:15,430 Noah Graff: doesn't mean it is the right weapon for the job. I just talked to a gun manufacturer before this interview. 110 00:12:15,530 --> 00:12:17,430 Kevin Mako: Maybe that's why my mind is on weapons. 111 00:12:18,730 --> 00:12:25,650 Kevin Mako: Talk to me a bit about valuations as well, because one of the things that I've seen, especially in a hardware startup, is as a product out in the industry, 112 00:12:25,650 --> 00:12:32,470 Kevin Mako: you have a certain amount of value, right? This new IP that you've created, the sales that you're generating, as a startup that's going to be low on the sales side, 113 00:12:32,510 --> 00:12:39,470 Kevin Mako: but as it grows, it becomes more valuable, almost exponentially. Now, if you pair that with the fact that you actually produce your own product in-house, 114 00:12:39,710 --> 00:12:45,270 Kevin Mako: Not only do you have intellectual property from the product itself, but you have intellectual property from your manufacturing operation. 115 00:12:45,450 --> 00:12:53,730 Noah Graff: And that inherently has compounding value to the overall organization too. Yeah, both the control of it and as I said before, they're going to bring in 116 00:12:53,730 --> 00:13:03,510 Noah Graff: this machine to make their product. And then they're going to pay for that machine by having excess capacity that they could start making products for somebody else. 117 00:13:03,530 --> 00:13:09,690 Noah Graff: You buy a machine for $100,000 to make your own product. And then you easily get that money back. 118 00:13:09,710 --> 00:13:14,470 Kevin Mako: without even having to sell that much of your own product because you're making other people's stuff. 119 00:13:14,590 --> 00:13:22,010 Kevin Mako: It's a great way to reduce the risk or at least reduce the nervousness about making such a commitment because obviously this is capital. It's a capital expense. 120 00:13:22,130 --> 00:13:27,450 Kevin Mako: You've got to come up with money in advance to buy this machinery to set up your operation. And there's going to be a lag in time before you 121 00:13:27,450 --> 00:13:31,190 Kevin Mako: actually get that paid back via the products you're putting to market. Noah, can you talk a bit 122 00:13:31,190 --> 00:13:39,510 Noah Graff: about your podcast and what are some of the things that you're talking about on the podcast in and around the machining world? Sure. Yeah. The podcast is called Swarf 123 00:13:39,710 --> 00:13:46,970 Noah Graff: That's S-W-A-R-F-C-A-S-T. Swarf is like the chips and oil and grime 124 00:13:46,970 --> 00:13:56,170 Noah Graff: that goes down in the belly of these screw machines. We interviewed a guy. He's using technology that's like 100 years old, 125 00:13:56,550 --> 00:14:06,490 Noah Graff: and some of the machines are brand new. You know, he just bought one from Germany. It's called a Kern machine to make these watches. You know, he paid $600,000 for one machine. 126 00:14:06,490 --> 00:14:14,590 Noah Graff: And then another machine is like 100 years old. literally. One of the secrets we have in machinery business, you have a long conversation with 127 00:14:14,590 --> 00:14:18,530 Noah Graff: somebody, you never know what they're going to say. Something's going to resonate with you. 128 00:14:18,770 --> 00:14:26,810 Noah Graff: You'll come into a shop looking for one machine and then you'll ask them, so what are you looking for? And it turns out you have something way better. 129 00:14:27,070 --> 00:14:33,730 Noah Graff: That was just what came to mind when I was going to be on this show. I saw it's inventors. You guys are observing everything. The thing with 130 00:14:33,730 --> 00:14:38,230 Noah Graff: machinery business, we don't exactly know what's going to happen, but your ears and your eyes are out and 131 00:14:38,230 --> 00:14:43,130 Noah Graff: you're paying attention and you're observing, sometimes amazing things will happen. That's my 132 00:14:43,130 --> 00:14:47,910 Kevin Mako: advice. Keep an open mind and look for serendipity. Noah, thanks for all your words of wisdom on the show 133 00:14:47,910 --> 00:14:54,430 Narrator: today and we look forward to talk to you again. Thank you. Take care of it. Thanks for tuning in to this episode of the Product Startup Podcast. 134 00:14:54,690 --> 00:15:00,910 Narrator: If you found some value in the show, please do us a huge favor and leave us a quick five-star review. If you have any questions, guest suggestions, or anything 135 00:15:00,910 --> 00:15:10,190 Narrator: else, feel free to reach out to us anytime at our email, podcast at MakoDesign.com. That's podcast at MakoDesign.com. This show is hosted by Kevin Mako. 136 00:15:10,370 --> 00:15:18,910 Narrator: North America is a leading expert on product development for physical product startups. Huge thanks to our sponsors, PTC, and their two best in class 3D CAD product development 137 00:15:18,910 --> 00:15:27,310 Narrator: software solutions Onshape and Creo and Mako Design + Invent. The original firm providing world-class consumer product development services tailored specifically to startups, 138 00:15:27,530 --> 00:15:31,270 Narrator: small manufacturers, and inventors. Thanks for joining and see you next time.