Today's post is about Vickrey Auctions, and figuring out how to make it feasible to run ultra-small batches of Clocks. The Voltmeter Clock was originally designed to be profitable in batches of 50, but I want to push the viable batch size below 10, to the point where I can build runs in my spare time, in my basement.
I talked a little about the practicalities of setting up for small runs in last week's post, and today's post will be about the financial half. The idea is to run a sort of "mini-Kickstarter", called a Vickrey Auction for all interested buyers before building. More on Vickrey Auctions in a second.
Why bring the Clocks back at all?
Well, I frequently get a inquiries about the clocks and I decided its time for a limited edition run. When I was in the full swing of things, it was almost a full time effort, and when it became too much to run on the side, I decided to let materials run out and "shut down" the AwkEng store. The PCBs ran out first, but I still have enclosures, meters, and knobs.
I miss shipping clocks to people and making them happy and I continue to get periodic emails about it.
What about the time and effort, even for 10?
If you read the "The AwkEng Keeps In Touch," I let drop somewhere in there, that I have a virtual personal assistant that helps me run things. This is probably an entirely separate blog post, but in short, her name is Abby, and she helps manage follow up activities, research projects, small logistical items, and helps me leverage my time. [True story, Abby wrote most of this e-mail, although I claim full authorship on all the other blog posts. -Sam] She'll help with a lot of the logistics work of running the auction.
Okay, what is a Vickrey Auction and how does it work?
Ok, Econ nerds. A Vickrey auction is a sealed-bid second price auction. That means you submit a bid privately, but unlike other private bid auctions, if you win, you are guaranteed to pay less than your offer, which is kinda neat. Let's break it down:
Bid A: $300
Bid B: $289
Bid C: $250
In this example, the Bidder A bid $300, but will pay $289 (the next highest bid). Bidder B will pay Bidder C's price, and so on.
The goal for my Vickrey auction is to raise funds for 10 Clocks. So the top ten bidders will win and each pay the next highest bid price. Your bid represents the highest you are willing to pay, and you're guaranteed to pay less. Nerdy economists say the optimal strategy is to bid exactly what you want to pay.
Is it Bidding Time?
Not quite yet. I still need to go through my BOM and make sure all the components for my PCB are source able and in stock, a legitimate risk issue with supply chains these days.
aka THE Awkward Engineer
P.S. jobs jobs jobs! I'm getting a ton of chatter through my personal network these days, both from employers and employees, looking for electrical, mechanical, process engineers, and hardware QA. If you're looking for a new role, or looking to hire, let me know! I'll see what I can do to help! And of course, my day job, Tulip.co, recently raised a $100m Series C, and is hiring across the board.