His name isn’t well-known in elite business circles, but in the tech hardware scene, Liam Casey is “the guy.” He’s the one you call for a factory connection, the guy you hire for your packaging design, and the one you ask about FedEx (FDX) negotiations. All you have to do is find him. Casey, the 49-year-old founder and CEO of PCH International, splits his time between Shenzhen, China, and San Francisco; he lives out of hotels and carries three phones set to different time zones.
Casey is the guy because since 1996 he’s been facilitating hardware manufacturing for companies large and small in China, the world’s largest manufacturer of (and market for) electronics. The simplest way to explain PCH (named for California’s Pacific Coast Highway) is that it offers “end-to-end” services: from design to engineering, manufacturing to packaging, fulfillment to retail distribution. If you gave PCH a sketch on a napkin, the company could turn it into a product on a shelf—as it actually did recently with Drop, a connected kitchen scale. “Some people expect a ‘China button,’ ” Casey says. “But they’re looking for an end-to-end button.”
With nine offices and 2,600 employees, PCH moves as many as 10 million products through the 1,200-plus factories in its network each day. Last year the company’s revenue reached $1.1 billion.
PCH’s clients don’t want to broadcast the fact that they’re outsourcing their secret sauce, so it’s hard to pinpoint exactly where, and how deeply, the company is involved in the supply chains of its largest clients. Apple (AAPL), for example, lists the company as one of its top 200 suppliers; Casey calls Foxconn, the famous Apple contract manufacturer, “a customer, a supplier, and a competitor.”
The idea of hiring a fixer like Casey and PCH is alluring for big companies and startups alike that see the Chinese manufacturing industry as a black box packed with potential complication. We know electronics are made in China. We rarely wonder how.
That’s an especially pressing concern for startups that don’t know their way around a supply chain. In recent years hardware startups have proliferated in Silicon Valley—Casey calls it a prototyping renaissance—fueled by online crowdfunding platforms that make it easy to take money and preorders, but provide little else. Consider the case of Pebble, which raised $10.2 million on Kickstarter for its smartwatch before realizing it didn’t have the infrastructure to deliver 85,000 of them. It took the startup (which isn’t a PCH client) more than a year to fill those orders, prompting a brutal online backlash.
Casey has gotten used to hearing from founders in distress. Sometimes it’s because they’ve found out they designed a product that wasn’t engineered for manufacturing. Other times it’s after they realize they’ve signed one-sided contracts with big-box retailers. The calls came in so frequently that in 2013 Casey set up an accelerator program in San Francisco, called Highway1, designed to help hardware startups. The four-month program offers access to a prototyping lab, consultation with product and business experts, and a visit to Shenzhen.
“We wanted them to have something that basically protected them from themselves,” says Brady Forrest, vice president of Highway1.
On Sept. 22, the program will be the subject of a new reality-TV series on Syfy called Bazillion Dollar Club, which follows Highway1 and a software accelerator called 500 Startups as they try to turn ideas into real companies. Unlike other entrepreneur-themed reality shows, such as Shark Tank and ABC Family’s new series Startup U, Bazillion Dollar Club aims to expose the challenges involved in creating the gadgets we take for granted every day (minus any contrived competition).
“Shark Tank takes this pivotal time for a startup and condenses it to five to 10 minutes,” Forrest says. “We want to take a step back and show how the product is actually made and how we got to this point.”
The TV show will offer only a tiny glimpse of the work PCH does with startups. The up-and-comers it has collaborated with include Ringly, which makes smart jewelry; Littlebits, known for its DIY electronics kits; and 3D Robotics, a dronemaker. PCH benefits from working with startups, Forrest says. It keeps the company (and its even larger clients) nimble.
“We learn how to make the things that the big companies are going to want in two years,” Forrest says. Working with wearable-tech firms like Ringly and Cue, which makes health trackers, helped PCH learn about extreme hardware miniaturization and microfluidics, respectively.
Casey himself didn’t know much about manufacturing when he began working in China in the ’90s. So he went to Taiwan and learned by watching. He landed early clients by finding ways to save them time. “Confusion was a competitive advantage,” he quips. As PCH matured and its client portfolio grew, Casey raised venture capital—a total of $84.5 million—from a combination of Silicon Valley VCs and a Chinese backer. He acquired a company called LimeLab to offer clients design and engineering services. He added PCH Access, a program that helps startups scale up their manufacturing capabilities. And in a move that grabbed the attention of the startup world, PCH this year acquired the remains of Fab, a highflying e-commerce startup that imploded spectacularly, in order to sell PCH-made products on Fab.com.
Casey’s next step: teaching Western clients some of the lessons PCH has learned from its proximity to Chinese companies, which Casey says are light-years ahead when it comes to the supply chain. Factories in China simply manufacture and ship items directly to consumers after they’re ordered, Casey says; he sees a future where inventory and even warehouses are “history.”
Casey believes that’s one reason Xiaomi, the Chinese smartphone maker, carries a $45 billion valuation and Western hardware success stories like Fitbit and GoPro haven’t topped $10 billion. “They ask, ‘What’s the difference?’ It’s mostly in the supply chain.”
A version of this article appears in the September 1, 2015 issue of Coins2Day magazine with the headline “The China Fixer.”
