Latest / Hardware Startups with Fexingo: Devices, Robotics, and Manufacturing Tech Companies / How Hardware Startups Use Shared Manufacturing to Cut Costs
Transcript
- Lucas: So there's this hardware startup I've been following — they make a smart lock for co-working spaces. Raised about three million in seed funding. And like a lot of hardware founders, they hit this moment where they need to scale from a hundred units to a thousand, and the obvious move is to buy their own CNC machines. Luna: Right, because owning the means of production gives you control, lower per-unit cost eventually, all that. Lucas: Exactly. But the math didn't work. A decent CNC mill runs about fifty thousand dollars. They'd need three to hit their volume. Plus tooling, maintenance, floor space — we're talking two hundred grand before they cut one part. And they'd have to hire a machinist on top of that. Luna: So did they buy the machines? Lucas: No. They went with something I'm seeing more and more: shared manufacturing. They found a facility about thirty minutes from their office that rents CNC time by the hour. They booked two shifts a week, used a contract machinist who already knew the equipment, and got their first thousand units out the door for about a third of what ownership would have cost. Luna: So it's like a WeWork for factories. Lucas: That's the analogy a lot of people use. And there are now several companies building this model intentionally. Hax, which started as a hardware accelerator in Shenzhen, has opened shared prototyping facilities in multiple cities. Bolt has something similar in the Bay Area. Then there are more traditional job shops that are essentially renting out idle capacity — MachineTime, Plethora, Xometry — they're aggregating spare manufacturing capacity and selling it on demand. Luna: So this isn't just about CNC. You could share injection molding, 3D printing, PCB assembly... Lucas: Exactly. And the economics get even more compelling for injection molding because the molds themselves are the expensive part. Some shared facilities will let you lease a mold that's already designed for a similar part and just modify it slightly. That can drop your tooling cost from fifty thousand to maybe five. Luna: But there must be a catch. If it were that easy, everyone would do it. Lucas: The catch is scheduling. You don't own the machine, so if your production run gets delayed because the guy before you had a problem, you're stuck. For a startup with a launch date tied to a Kickstarter campaign, that's a real risk. Luna: And what about IP? If you're sharing a factory floor with a competitor, there's a chance they see your design. Lucas: That's the second big concern. Most shared facilities have confidentiality agreements, but a determined person could still pick up on details. Some startups mitigate this by splitting production across multiple shared facilities — so no single shop sees the full product. Luna: So you trade some control and secrecy for lower upfront cost. For a pre-revenue startup, that's often a good trade. Lucas: And it's not just for early-stage. I've talked to companies doing a few million in revenue that still use shared manufacturing for certain components, especially the ones that change frequently. They reserve their owned capacity for the high-volume, stable parts. Luna: Makes sense. So how does a founder find the right shared facility? Is it as simple as Googling 'shared CNC near me'? Lucas: It's getting there. There are marketplaces like Xometry and Fictiv that connect you with vetted shops. But a lot of it is still word of mouth. I'd recommend talking to other hardware founders in your city's hardware meetup or on the Hax forums. Also, some universities have maker spaces that will rent time to outside startups — that's how the smart lock company I mentioned got started. Luna: And with the rise of these platforms, it's almost like software eating manufacturing, one CNC machine at a time. Lucas: Exactly. And it's not just about cost. It's about speed. If you can jump into an existing production line instead of waiting six months for your own machine to arrive, you can get to market faster. That's huge for hardware startups competing against bigger players. Luna: For sure. And speaking of speed and cost — this is actually a good moment to mention something. Hardware Startups with Fexingo is a listener-supported show, which means we keep it ad-free and focused on the stuff that actually matters for builders. A handful of listeners already chip in monthly through buy me a coffee dot com slash fexingo, and that's what keeps these episodes coming. Lucas: And we're grateful for that. It means we can spend time digging into models like shared manufacturing without having to pitch you a mattress or a meal kit. If the show is useful for what you're building, that's the way to keep it going. Luna: Alright, back to it. So what are the other trade-offs besides scheduling and IP? Lucas: Quality consistency can be an issue. When you're renting time, you might not get the same machine operator every time. Even with CNC, which is automated, the setup and fixturing matter. One operator might align the part differently, leading to slight dimensional variations. For a consumer product, that can mean a gap in the casing or a button that feels loose. Luna: So you need to invest in thorough quality inspection on the front end. Lucas: Absolutely. Many shared facilities offer measurement services — coordinate measuring machines, optical comparators — but that's an added cost. Some startups send their first batch to an independent lab for a full report before they greenlight volume production. Luna: Let's talk about the contract manufacturing partnership angle. You mentioned earlier that some startups partner with contract manufacturers early. Does shared manufacturing complement or compete with that? Lucas: It complements it. Shared manufacturing is often the bridge between prototyping and full-scale contract manufacturing. You use shared facilities for the first few hundred or thousand units, prove your design, build some demand, and then take that production volume to a contract manufacturer and negotiate better terms because you're not asking them to take a risk on an untested product. Luna: So it's like a stepping stone. Lucas: Exactly. And some contract manufacturers are even starting to offer shared manufacturing as a service. Jabil has something called Jabil's Blue Sky Center in Silicon Valley — it's a shared prototyping and low-volume production facility. Flex has similar setups. Luna: So the big guys see the trend too. That's a good sign that this model has legs. Lucas: It does. And I think we're going to see more specialization. Instead of a generic shared factory, you'll have shared factories dedicated to medical devices, or robotics, or consumer electronics. Each with the specific certifications and equipment needed. Luna: That would lower the barrier even further. A startup making a wearable health monitor could walk into a facility that already has FDA validation protocols in place. Lucas: Exactly. And that's the direction the smart lock company is heading. They're now at five thousand units a year, and they're considering buying their first CNC machine. But they plan to keep using the shared facility for overflow and for new product iterations. Luna: So it's not either-or. It's about having the flexibility to use both. Lucas: Right. And that flexibility is exactly what hardware startups need in 2026 — the ability to scale up and down without being locked into a fixed asset base. Luna: Great angle. Thanks for walking us through it. Lucas: Thanks for having me. Until next time.