in this box is the first laptop that i've bought for myself since high school
you heard me right i've certainly obtained new portable computers since
2005 through work or my connections as a youtuber but i have gone 16 years now
without ever feeling compelled to actually buy one for myself until i saw
the framework laptop i don't remember the last time i saw a device that so
clearly rejected the trends towards disposable
non-upgradable non-repairable electronics while still managing to
maintain the premium feel that we expect from a modern ultrabook i was so
impressed during my initial impressions that on top of ordering one on the spot
i publicly offered to invest in the company surprise they called my bluff
offering me a chance to put up or shut up and i never shut up about sponsors
like i fix it oh wow what an appropriate sponsor from iphones to nintendo
switches ifixit has your repair needs covered with their lineup of fix kits
find out how ifixit can help you repair your devices at the end of this video
the point of this video is three-fold to disclose my position as a long-term
investor and framework to explain why i decided to make this unprecedented move
and to talk about what this means for LTT going forward and as we go along i
will be building up the bare bones framework laptop that i ordered to my
exact specifications this is actually my first time opening this i've got my
packing slip my framework laptop diy edition core i7 1165 g7
my accessories love the recyclable packaging what's the padding
oh wow it is it's shredded paper one of the coolest things about the framework
laptop is that you choose your own i o they come in these little cardboard
containers and i went with a single usb type a two usb type cs and an HDMI it
drove me crazy not having one of these when i was daily driving the xps 13 two
and one i also got totally unsolicited
this envelope a couple of weeks after my framework laptop arrived so we're not
only going to be building it we're going to be fixing it because there's an issue with some of the early units
of course none of this would even be worth talking about if the machine itself wasn't any good it's got
surprising stiffness for a laptop that is missing a bunch of pieces all
aluminum construction 2256 by 1504
display easily swappable bezel you can even change the color if you really want
to and a surprisingly good keyboard considering that it's like modular
overall good machine at a fair price but of
course the laptop isn't the only thing that i bought my preferred shares in the
company cost me exactly 224
998. 998.37 and they give me a small but significant
stake in framework computer inc my investment was part of a seed funding
round that will hopefully give framework the cash it needs to reinvest in its
core business by building out its team and designing and stocking new products
something that we've learned the hard way over the last three years is that supporting a growing physical goods
business is shockingly expensive let's use lttstore.com as an example our gross
margins are somewhere in the 60 to 70
range but that doesn't mean that every time we sell a 30 water bottle we make
20 out of that gross margin comes business
overhead like storage and handling fees employee salaries and benefits rent
insurance consumables customer support shrink platform fees i'm sure i'm
forgetting some but the point is that our net profit what remains before we
pay the tax man is in the 30 neighborhood i'm not complaining that's a healthy
business which is kind of a confusing message how can LTT Store be both
profitable and expensive to support what
sinks a fledgling company more often than not is a lack of cash flow not a
lack of profit margin oh let's open up this computer and talk about how this
applies to frameworks business i ordered the diy edition so just add your own
wi-fi SSD RAM and operating system they charge
1049 for the mid-tier core i7 model that i
chose and if we wanted to know the actual cost of all of this or the bill
of materials we would need to add up every single little capacitor and wire
tedious thankfully we can take some shortcuts the bulk goes to Intel who
lists the CPU in this unit at 426 us
dollars in quantities of a thousand most of the major cost contributors like the
battery keyboard trackpad screen and cooler we can approximate based on the
street prices of similar replacement parts and for the motherboard a non-tech
did a wonderful write-up back in 2009 that we're just gonna
borrow let's say 120 bucks that puts us at 770 us dollars and we haven't
accounted for the chassis or any of the other odds and ends yet but it's also
common knowledge that Intel never charges oem's list price for their cpus
so i'm going to say that the cost of this finished package is somewhere in
the neighborhood of 800 us dollars that's certainly a lot less than one
thousand forty nine dollars so good business plan here we go right hold
on the first run of let's say a thousand
units of this thing will easily cost north of a million dollars once we
factor in production setup costs like tooling and molds much of that or
sometimes all of it needs to be paid up front let's be optimistic though and say
that on top of fronting the r d to design this thing the founder happens to
have a million dollars in the bank and that order takes just eight weeks to get
through production and reach frameworks warehouse now we make another assumption
that demand is strong and all one thousand units sell out in two weeks
with a cool quarter million dollars of gross profit damn
that's a lot of money sort of remember all that pesky business overhead we got
to deal with that now leaving half if we're lucky 100 grand profit is
certainly better than a kick in the teeth but if you want to grow your sales
well you need to take all of that profit and put it back into your second order
which is going to give you a little over 1100 units you'll get them
eight weeks from now if you are insanely lucky and in the meantime you have
absolutely nothing to sell and no money in the bank to pay your staff while they
twiddle their thumbs waiting for the next shipment so even if my numbers are
way off and framework is netting twice that let's say 200 a unit on this bare
bones the best case scenario for them after a year of utterly flawless
execution is three million dollars in cash that's enough to increase their by
monthly order from just a thousand to three thousand units but they still
wouldn't have enough to meet customer demand and keep orders flowing smoothly
from the factory and they wouldn't have saved a penny to reinvest in facilities
equipment or r d their competitors would bring new products to market slowing
demand for this now out of date design and unless they adapt they will
eventually have nothing but a warehouse full of laptops that nobody wants and an
empty bank account gg now let's do it
again but with a big bucket of borrowed cash at eight percent interest
compounding monthly in this scenario framework now gets to place four
separate one million dollar orders spaced two weeks apart right out of the
gate after eight weeks they start to get these orders in generating both the cash
that they need to restock them and a cool 200 000 in profit every time
an order sells through a year into this scenario assuming zero sales growth
which is very unlikely framework has now paid 330 000 in interest which sucks but
they also low key shipped 26 000 laptops
and made over four million dollars net party time right
not quite remember that four million dollar loan whoever lent them that money
needs something in return or they're gonna start looking for some legs to
break framework could pay it back but
that would completely wipe them out so they make a deal how about instead of
the money we give you guys a chunk of this company and then we can just keep
using that money to expand our product portfolio the same way we did last time
we eventually grow so big that we go public and you can sell that portion of
the company that you bought on the open market for way more than you paid or you
can just keep it forever if it suits you maybe you just like the stock well now
instead of a loan it's an investment and
if all goes according to plan framework grows faster so more customers get super
cool laptops and the investors get paid back their original money and then some
everybody wins by the way i need to invest in some RAM and an SSD i bought
the bare bones one moment please conveniently framework includes the only
tool that you'll need to assemble the device but i'm sure i fix it's not too
upset about it because these guys are 100 on the same team and you'll need one
of these for almost any other laptop it's refreshing not to be treated like i
can't be trusted with my own hardware and you know what there's going to be
costs associated with that because people will break them and they will complain but it's worth it to have more
open devices available for consumers and what's cool is for repair shops they
have even committed to providing the schematics of the boards if they want to
do board level repair which is super awesome the labels in each slot indicate
that it supports up to 32 gig modules but rather than go all the way to the
limits i've actually just gone with two 8 gig 3200 megahertz modules from
crucial and for storage it supports up to a single pci express gen 4 m.2 2280
SSD i decided not to go gen 4 though
because i'm more concerned with good enough performance and excellent battery
life so i went with the sk hynex gold p31 SSD now at this point in the video
we've nailed down that framework clearly needs money so they can build more of
these things but i haven't explained why they need mine and the truth is they
don't they actually closed the bulk of this funding round back in q2 and one of
the other investors was already in line to take the remainder they could have
accepted that offer but they didn't instead both framework and i decided to
take a leap of faith and i call it that because both of us are taking some big
risks here here are their risks in no particular order i could bring my own
ego into internal discussions and try to have an outsized influence on their
direction as a company compounding that risk i could take my disagreements
public or worse suffer some kind of catastrophic fall from grace jung shuang
style ultimately damaging their brand by association far more than i ever could
have boosted it the thing is dropping an influencer from your ad campaign pretty
straightforward affair ousting a shareholder it's a little more complicated meanwhile
i carry my own bag of risks starting of course with the most obvious one i could
easily lose my entire investment of nearly a quarter million dollars because
unlike a loan investments typically carry no personal guarantee or other
securities if we win we win big if we lose it's tough luck brah and second if
i pump this company's tires only for them to turn around and abandon their
open approach to repairability and upgradeability i'm gonna look like a
complete asshat and finally since we're on the subject of my credibility this
move creates an enormous conflict of interest anytime i'm covering or
commenting on any laptop can i really be trusted to speak my mind about a
competing device when it directly damages the prospects of a company i'm
financially linked to can i handle being pulled in two directions like this
i think so but even if that's true a portion of you
won't believe me and it means that i'm gonna have to clutter up our videos with
non-entertaining disclaimers disclosing my position all the time so then
why do it well the bottom line is that i fell in love
with the vision behind this product the moment i saw it i want a framework in my
backpack and i want a seat at the front of this crazy ride and as a shareholder
i get to throw my weight behind framework in ways that you guys might
not consider believe it or not i have some connections in the tech industry i
know i know i know crazy right i don't find much time for personal
relationships these days i mean you all know about my friendship with taryn from
Corsair actually dell now but he doesn't even work in press relations i talk to
john from unread on a fairly regular basis but we usually talk shop and the
same goes for gary key from ASUS who by the way was one of my idols when i was a
young tech reviewer i'm not a sociopath or anything i've just always believed
that i have a finite amount of time and if i focus that on making the best
content i can with my writing team eventually i'll reach the point where
whether i enjoy schmoozing or not people can't really ignore me anymore and i'm
hoping to use that to help framework get connected with partners you'd think of
like AMD a ryzen version is the number
one request they've received since my original video and ones you might not
think of like dbrand the co-branding opportunities of working with someone
like dbrand on a skin drop are huge however prickly their public persona
might be those robots are absolute genius level mad lads now to be clear
framework would have sorted this stuff out on their own but in the same way
that bringing in outside money can accelerate growth i'm just hoping to
pour a little bit of gasoline on the relationship fire speaking of fires by
the way please do not light up our support email asking when the LTT
backpack is coming it is coming confirmed here but not
until sometime in the mid to distant future the cleanest way to handle this
is to recuse myself from all decisions
related to our editorial coverage of notebooks with the size and talent of
our team that's a legitimate option these days frankly i've had very little
to do with it for a long time since there's been so little in the space
that's excited me but my only issue with that is that means i'll be giving up the
opportunity to talk to you guys about truly incredible machines that i am
excited about like the ASUS rog flow x13 that i've been daily driving for the
last few months aside from some yeah we sent you a prototype bugginess i
absolutely love that thing it is so cool
so for that reason i'm reluctant to completely butt out when there's still
going to be stuff that i'm going to think is cool and i'm going to want to talk about what i know for sure is that
even though i'm not ready to make a firm commitment to covering or not covering
notebooks in the future i will make a firm commitment to maintain the same
level of honesty and transparency that you guys have come to expect from me i
will never say that i like something i don't i won't hold back from anything i
love and i will keep you guys 100 apprised of the situation my second
commitment to you is that if framework reneges on the promise they made to me
my breakup with them will be swift absolute and in public here it is i got
this in writing from the founder nirav patel we do promise not to up from
a pro-consumer and pro-environment perspective and you would be fully
justified in holding us to the fire if we break that promise
sounds good to me just like our sponsor i fix ifixit thank you ifixit for
sponsoring today's video this is totally on message you guys i fix it is all
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they've got iphone screen replacement kits from 75 us dollars and the kits
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ifixit also has numerous repair guides with clear photos and instructions to
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out our link to ifixit down in the video description to get your kit today if you
guys enjoyed this video maybe go check out my original video on the framework
laptop where i went into a little bit more depth about who these guys are
where they came from and how it actually all goes together speaking of which i
forgot to put my i o in and i forgot to fix my touchpad cable issue because i
was so busy hosting the video the only reason other companies can't do this and
framework proved it is because they don't care