I love LED lights. Anytime I see an LED light, I give a nod of approval. This is the story of how I became obsessed with LED lights.
It all started at the University of Toronto science camp. Along with my brother and cousin, we scavenged any and all the gizmos we could find from syringes to batteries to motors to light emitting diodes (LEDs). We didn't really accomplish much with this loot other than illuminating the LEDs and making the motors spin really fast by connecting the batteries in series. Over the years, I had similar encounters with simple electronics that kept growing my interest.
In grade 10, I'm not sure what, but something gave me an urge to start an LED business. LED bulbs were just beginning to gain traction. Their upfront cost was significantly higher than that of incandescent or fluorescent bulbs, but their reduced operating costs could pay off in as little as a year. I thought this would be my chance to make it big.
The first step I took was purchasing $300 worth of LED bulb samples after a few awkward Skype calls with Chinese manufacturers from Alibaba. I did my best to learn how to not get scammed when dealing with distant manufacturers. I received all of my samples in about a month. I knew nothing about shipping goods and was hit with an unwelcome surprise when I was charged for duties and taxes. Since then I've learned you're supposed to tell the manufacturer to write down the value of the goods much lower than they actually are. When I was setting up a merchant account with DHL for shipping my bulbs to customers, they asked what kind of volume I thought I'd be doing. My answer was $10,000/month. You have to be ambitious if you want to make it big.
I wanted to be selling quality products so I had to do quality testing on my LED bulbs. I was a high school student. I didn't have money for fancy equipment like thermal shock test chambers for testing the lights. Instead, I just gave my parents' house a free makeover with one condition - the lights always had to be on.
For a long while, I distracted myself with purchasing and testing the quality of my Alibaba samples. Not much energy was put into figuring out how to actually sell the bulbs.
I took a hiatus to play Minecraft until grade 12 when I finally broke my addiction. This time around, I had confidence in my purchasing skills and knew I had to focus on actually selling the bulbs. I set up a Wordpress shop website and spent a bunch of time taking photos of samples and writing copy. Once again, I distracted myself with things that didn't matter. I purchased even more bulb samples, but never actually came around to marketing. However, I did manage to sell a few bulbs to one of my teachers.
I was doubting whether I'd be able to sell any bulbs before I'd even tried. Ikea had just announced it would only sell LED fixtures and bulbs by 2016. I pondered on how I could provide more value to the LED industry instead of just being a middleman. Eventually, I came up with a pretty bright idea (sorry).
LED bulbs are composed of three primary parts:
- Housing (acts as a heatsink)
- LED array (contains one or more LEDs)
- Driver (a circuit that regulates power to the LED array)
I found that the driver is generally the limiting factor in the lifespan of bulbs and contributes a significant portion to their cost. Due to their cost, manufacturers use cheaper components in the drivers (especially cheap capacitors), resulting in even lower lifespans.
My idea was to separate the driver from the rest of the bulb. This way, multiple bulbs could share a single, high-quality driver that could easily be replaced if it ever broke. My electrical knowledge was too limited at this point to know if this driverless LED bulb idea was actually viable.
Fast forwarding to my first year in university, I had a teaching assistant, John, who was the only reason I passed my physics course. John was an electrical engineer pursuing a quantum computing Ph.D. I pitched my driverless LED bulb idea to him. He said the idea was viable and became my “co-founder”.
To fund development, we decided to resell normal LED bulbs as middlemen in the short term. This time I create a landing page, product catalog, and brochure.
We began to cold call local small business owners. Out of 67 calls, I landed 0 meetings and John landed 1 meeting. He gave the business some samples and never heard back afterward. One of my calls was with the international construction project manager at Costco. I couldn’t explain why our bulbs were better than any of the other LED bulbs on the market. Our sales pitch and material lacked a solid value proposition. My pitch delivery was also terrible and I probably came off as a typical telemarketer. We also sent a "proposal" to the Toronto Transit Commission:
We are Beta Lighting, an LED lighting solutions company. We have operated in Ontario for several years focusing on lighting solutions for local organizations. We sell a wide variety of LED lights including bulbs and tubes and design solutions to retrofit existing CFL technology with LED technology.
As passengers of the TTC subways and buses, we noticed the infrastructure uses CFL lighting. We believe we can work with the TTC to retrofit its infrastructure with energy-efficient and environmentally-friendly LED lighting. The costs can be recouped in 2 years and after that, it’s all savings.
What do we, Beta Lighting, need to do to help the TTC make the move to LED lighting?
Eventually, we lost momentum as we got caught up in other things in life. Since then, LED bulbs have gone on to absolutely dominate the lighting market.
That's the story. Now let's talk about what I learned and where the LED market is at now.
Honestly, the biggest mistake I made was not committing to the idea. When I first had the idea in grade 10 (2010), I was ahead of the curve. Each time I took a hiatus, my chances worsened. At some point, I toyed with the idea of using Fulfillment by Amazon, but I'm not sure why I didn't actually commit. Instead, I focused on cold call tactics, which aren't great for a low margin, low price product like LED bulbs. Even Facebook ads were cheap at the time. One of the biggest struggles I have when starting a business is spending money where it counts. I'm a frugal person in general and find it hard to spend any money even when there's the possibility of a payoff.
The State of the LED Market
I haven't extensively researched current LED bulbs, but I believe their cost has decreased because they have cheaper drivers and superior heat management (allowing their housing to be smaller). The first LED bulb samples I purchased had a heavy metal heatsink as its housing. Now, the housings are just cheap plastic.
Interestingly, the Amazon Basics LED bulbs are only rated for a 15,000hour lifespan when the LED bulbs I bought were rated for 50,000hours. Light emitting diodes don't burn out like incandescent bulbs. Instead, they slowly dim as they get older. I've seen claims that some diodes will retain 80% of their original brightness after 100,000hours or 11.5 years of continuous use. Clearly, the driver is the limiting factor here.
The brightness or amount of light emitted by a source is measured in lumens, a unit of luminous flux. The 40watt incandescent equivalent Amazon Basics LED bulbs require 6.5watts to output 450lm. The bulbs I purchased required 5watts to output 400-450lm.
Of course I never actually tested my LED bulbs' full lifespan, luminous flux, or power requirements since I didn't have the right equipment. However, from the numbers, it looks like they were superior in every way except price, coming in at $3.02/bulb from the manufacturer compared to $2.33/bulb from Amazon (who is a middleman and adds to the cost).
I didn't mean for this to become a post about Amazon Basics bulbs, but there is something weird happening there. If I go back to Alibaba, the LED bulbs have specifications more similar to my original bulbs, but cost a third of the price. It's not unthinkable that Alibaba manufacturers would overstate their bulbs' actual specifications.
LED bulbs have given rise to new types of lighting fixtures where the LEDs are integrated directly into them. When the LED dies, the fixture dies. For the average consumer, this is fine as the LEDs could last upwards of a decade with light use.
Let's revisit the driverless LED bulb idea. It already existed at the time I thought of it, but was still an emerging technology. AC drivers function exactly like I envisioned. Multiple LED bulbs could be connected to a single AC driver as long as they match its voltage and current specifications (depends on if the bulb wiring is series and/or parallel).
Every time I think about my timing in the LED bulb market, I give myself an undeserved pat on the back. I was ahead of the curve, but failed to execute my vision.