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05 September 2025

585: The $100K Mistake Most Founders Make with Manufacturers (and How to Avoid It) (Best of Foundr)

8Frameworks
8Insights

Frameworks in this episode

Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Myth Buster· 1

Myth Buster06:00

Seven-Figure Revenue Says Little About Product Profit

Gazari rejects revenue alone as a useful measure of e-commerce health. He says founders need to understand the full cost of the product, including shipping and import duty, then examine savings across the item, packaging, delivery, supplier stock arrangements, and freight relationships.

  • A marketplace unit price is not the complete landed cost
  • Shipping and import duty affect actual profitability
  • Packaging and delivery can contain savings as well as the product itself
  • Supplier and shipping-company arrangements can change working economics

that means nothing unless like you're extremely profitable

Keon Gazari · 06:30
#profitability#landed-cost#margins#ecommerce

Hot Take· 1

Hot Take03:30

Why Gazari Prefers Branded Production to Dropshipping

Gazari says he is not a fan of dropshipping because the seller has less control over consistency, customisation, delivery time, and the overall customer experience. He contrasts that model with branded mass production, which he believes gives founders more control and can support community, pricing power, and a higher business valuation.

  • Gazari argues that dropshipped units may be less consistent across orders
  • He says longer delivery can conflict with customer expectations
  • Custom production can better express a brand's requirements and identity
  • He claims a real brand can support stronger pricing and exit multiples

So, I've never been such a big fan of it because you have less control on the production process.

Keon Gazari · 04:00

You are leaving a lot of money on the table if you don't develop your products into a real brand experience.

Keon Gazari · 05:00
#dropshipping#branding#customer-experience#valuation

Explainer· 1

Explainer21:00

A First Product Run May Need Three to Four Months

Gazari offers a planning estimate rather than a guarantee: about ten days to find suppliers, roughly two weeks for a sample, a week for delivery, around two months for production, and potentially another month for shipping. He says innovation level and current supply-chain conditions can extend the schedule, while a repeat order may still need about 100 days from order to received stock.

  • Supplier search and communication may take about ten days
  • A sample may take roughly two weeks plus delivery time
  • He allocates around two months for material preparation, manufacturing, and quality control
  • Shipping destination and supply-chain conditions can change the estimate
  • Novel products may require a longer development window

You could allow maybe 3 to 4 months uh in that window period.

Keon Gazari · 22:00

100 days is a safe measure and stick to be like here's your order to when I get my stock.

Keon Gazari · 22:30
#lead-times#planning#production#shipping

Story· 2

Story01:00

How Factory-Floor Curiosity Became a Sourcing Career

Keon Gazari says his father introduced him to manufacturing through a family business and childhood trips to China. A planned two-week visit after university became a three-month stay, followed by an office in China, about five years living there, and frequent return trips.

  • His interest began with products his father brought home from China
  • A short post-university visit expanded into a longer stay
  • He says hands-on factory experience shaped how he approaches sourcing
  • He estimates making more than 50 trips to China and attending more than 20 Canton fairs
#career#china#sourcing#factories
Story37:30

The Travel Pillow Redesign That Started With the Real Problem

Gazari describes working with Scottish partners on an alternative to a U-shaped travel pillow. Instead of changing only thickness or fabric, they reframed the job as helping travellers sleep and created a fleece scarf with internal foam and a shaped support. He says the product cost roughly the same as the conventional option and sold more than one million units.

  • The team focused on inability to sleep rather than cosmetic changes to the existing pillow
  • The proposed design combined a scarf, foam padding, and a shaped support
  • Gazari claims its cost was roughly comparable to the conventional product
  • He reports that the resulting product sold more than one million units

But the actual problem is people can't sleep while they're traveling. So how do we fix this?

Keon Gazari · 38:00

And that product is sold over a million units.

Keon Gazari · 38:00
#product-design#problem-solving#travel#innovation

Tool· 1

Tool30:30

Ask Factories What Cancelled-Order Materials They Already Hold

Gazari suggests asking manufacturers which materials are sitting unused from cancelled orders or failed customers. A buyer whose design can use that inventory may receive a large discount, but the example depends on accepting available colours or specifications rather than forcing unsuitable material into the product.

  • Factories may hold materials left by cancelled orders
  • The manufacturer may value clearing long-idle inventory
  • Gazari says discounts can be substantial in some cases
  • The material still has to satisfy the product's specification and customer promise

Always ask your manufacturer, "What materials are you holding in stock?"

Keon Gazari · 31:00
#materials#discounts#factories#inventory

Takeaway· 2

Takeaway15:30

Use Relationships for Factory Visibility, Not Verbal Terms

Gazari recommends building a human relationship with the factory contact through video calls and informal communication. He keeps delivery dates, prices, and other formal matters in email, while using the relationship to gain practical visibility such as a live video from the production floor near a deadline.

  • Informal contact can make the supplier relationship more human
  • Formal requirements and commercial terms should remain in written channels
  • A trusted contact may provide live production-floor visibility
  • Relationship complements rather than replaces documented quality controls

Like obviously on email stick it to like the more formal delivery dates, prices, all that sort of stuff.

Keon Gazari · 16:00

So now you've got eyes and ears inside the factory because you built that relationship as well.

Keon Gazari · 16:30
#supplier-relationships#communication#factories#visibility
Takeaway28:30

Turn Shared Supply-Chain Pressure Into a Supplier Conversation

Gazari frames supply-chain disruption as a shared competitive problem rather than a reason to stop ordering. His example is asking a manufacturer to share part of a container-cost increase, supported by the argument that customer savings can drive more sales and therefore more supplier orders. This is presented as a negotiation tactic, not a guaranteed concession.

  • Competitors face many of the same shipping and lead-time pressures
  • A negotiation is stronger when the supplier can see its own upside
  • The guest suggests linking a requested saving to potential repeat volume
  • Whether a factory shares the cost depends on the actual relationship and economics

Can we split that 50/50 so I can pass that saving on to my consumer?

Keon Gazari · 29:00
#shipping#negotiation#supply-chain#costs