- 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 field that we expect from a modern ultra book.
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.
About sponsors like iFixit.
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.
(upbeat music)
The point of this video is threefold,
to disclose my position
as a long-term investor in 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 Barebones 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 11 65G seven.
My accessories,
love the recyclable packaging.
Mhh, 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 IO,
they come in these little cardboard containers.
And I went with a single USB type A,
two USB type C's and an HTMI.
It drove me crazy, not having one of these.
When I was daily driving the XPS 13 two in 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 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 $224,998,37 cents.
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 good business
is shockingly expensive.
Let's use LTT store.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 cashflow, not a lack of profit margin.
Oh, let's open up this computer
and talk about how this applies to Framework's business.
I ordered the DIY edition.
So just add your own wifi, 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, track pad, 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,
we're just going to 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 OEMs list price for their CPU's.
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 $1049.
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 and 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 1000 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've got to deal with that now
leaving half, if we're lucky,
a hundred 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 the spare bones,
the best case scenario for them
after a year of utterly flawless execution
is $3 million in cash.
That's enough to increase their bimonthly order
from just a 1000 to 3000 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 and 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 8% interest compounding monthly.
In this scenario Framework now gets to place
four separate $1 million 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 $4 million net
Party time, right?
Not quite,
remember that $4 million loan,
whoever lend them that money needs something in return,
or they're going to 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 remanent SSD,
I bought the Barebones, one moment please.
Conveniently Framework includes the only tool
that you'll need to assemble the device,
but I'm sure iFixit is 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 of repair,
which is super awesome.
The labels in each slot indicate that it supports
up to 32G modules,
but rather than go all the way to the limit.
So I've actually just gone with two 8G,
3200 megahertz modules from Crucial
and for storage it supports up to
a single PCI express gen four, M.2 22 80 SSD.
I decided not to go gen four though,
because I'm more concerned with good enough performance
and excellent battery life.
So I want the SK Hynix gold P 31 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 outsize 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,
Zheng 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,
hosting 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 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 upgradability,
I'm going to look like a complete ass hat.
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 going to 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 Terren from Coursera,
actually Dell now,
but he doesn't even work in press relations.
I talked to John from Unraid
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,
Horizon version has the number one request they've received
since my original video.
And once you might not think of like D brand,
the co-branding opportunities of working with
someone like D brand 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 books.
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 RG flow X 13,
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 bud 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 (beep) 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 iFixit.
Thank you iFixit for sponsoring today's video.
This is totally on message you guys.
iFixit is all about consumer rights and repairability.
They make it affordable to fix or upgrade your devices,
using their custom iFixit kits.
For example, the Nintendo switch
has an all-in-one kit to fix joy con drift
for just $20 US Dollars.
They've got iPhone screen replacement kits
from $75 US Dollars,
and the kits include all the parts you need
to do your repairs,
including precision bits, opening tools,
and suction cups to make the installation
as easy as possible.
iFixit also has numerous repair guides with clear photos
and instructions to prevent you from getting lost while
you're deep inside your repair.
So check out our link to iFixit
down in the video description to get your kit today.
(upbeat music)
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 IO in
and I forgot to fix my touch pad 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.