Episode #5 – From Crowdfunding to Development and Manufacturing with Erik Hunter of InD Creation
In this episode I speak with hardware entrepreneur Eric Hunter of InD Creation. Erik successfully raised over $40,000 in a recent Kickstarter campaign for his product.
We discuss both his experiences with crowdfunding, and his strategies for developing and manufacturing his frozen fish food feeder product.
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Erik Hunter, Founder of InD Creation
Links mentioned in the show:
InDCreation.com
Erik’s Kickstarter campaign
Knectiv.com
SpyGuy.com
TheHardwareAcademy.com
Podcast Transcript:
John: Welcome to the Predictable Designs Podcast where we discuss all things related to developing, manufacturing, marketing, and selling successful new electronic hardware products. I’m your host, John Teel. This is episode number five. Today, I’m speaking with hardware entrepreneur, Erik Hunter of InD creation. Erik successfully raised over $40,000 in a recent Kickstarter campaign for his frozen fish food feeder product. Today we’re going to be discussing both his experiences with crowdfunding and strategies for developing and manufacturing his product. Welcome to the show, Erik.
Erik: Hey John. Thanks for having me on.
John: Maybe just tell everyone a little bit about yourself. I know from your post in the academy, you’re not an engineer, you don’t have a technical background which I think a lot of people find interesting because, obviously, a lot of listeners are in the same boat. Tell us a bit about your background and then maybe a little bit more about your product.
Erik: Yes, like you mentioned, I do not have any technical training in any of the engineering that I’ve self-taught throughout this to get to where I’m at. Basically, what I have is I’ve always been an aquarium hobbyist and I’ve always liked to leave the house and take vacations. For me, to do that I’d have to get basically a fish sitter, someone that could come to the house and feed the fish because most of my fish prefer frozen food. Some of them will only frozen food, so there’s really no way around it I’d have to get somebody- I have to basically beg somebody to come over and take care of my fish and hope they did everything right. That’s a story that a lot of other people in my- that saltwater tank aquarium keepers have is, who’s going to take care of the tank, are you going to pay a fish store 60 bucks a day to come over or are they going to find a friend or neighbor?
This is a product I would’ve bought 10 years ago if it existed and I’ve been looking for one for a long time. I looked into it seeing if it was even possible without building basically a– People have done this before with small refrigerators and running pipes through the refrigerators or freezers. Kind of like a dorm freezer, just running pipes through that and it ends up being this huge project that’s expensive and loud and takes up a ton of room. I couldn’t deal with that in my house. That’s where I came up with this idea. It’s the first one of its kind. I had no competition which has been very helpful for me and I’ve been-
John: This is only for saltwater tanks or for freshwater also?
Erik: That’s something that I needed to work on a little bit, this is definitely a crossover for freshwater and saltwater. I did a freshwater podcast earlier to try and get that market a little bit, but myself being a saltwater guy, it’s like a light side and dark side if you think about it from a Star Wars perspective. [chuckles] The two sides don’t really communicate too much. It can be both. It can definitely both.
John: Interesting. It’s a niche within a niche.
Erik: Yes. I made it niche within a niche and that’s something I need to work on it’s expanding it to the freshwater side because they’re actually bigger than the saltwater side.
John: Yes. It’s hard to say. I would assume the freshwater is bigger but sometimes it’s better to start with the smaller niche that’s even easier to reach than the larger niche.
Erik: That is my niche. I had that community already that I knew what they wanted. I had more expertise there. Future expansion in the freshwater, definitely. For now, I’m focusing on what I like and what I know.
John: I think that’s smart. I think you took the right strategy to stick with what you know initially and then you can expand out from there. What is the price that you have in mind for the product?
Erik: The price that I have in mind right now for retail is around $240 for the base unit and there’s a whole slew of accessories already that people can add onto that. Basically, $240 is the base unit. That’s not what I did the Kickstarter at, but when people buy it, once we’re in production, that’s what I’ll be shipping it for. Then with accessories, the average price will probably be around $300.
John: Okay. Is that a cost that people in this market, you think, are used to paying?
Erik: Saltwater? Yes. People spend ridiculous amounts of money on their equipment to take care of their ecosystem they basically created, and they’re in their house. It’s a little bit on the high side and that’s something that I found as I pushed on. I kind of priced some people out I believe, and I have a strategy to tackle that later on, but for now, I wanted to I think it’s easier to come down in price than it is to go up. So that’s the price point that we’ve set for now.
John: I think that’s good because early on when your manufacturing volumes are going to be lower, your manufacturing cost is going to be higher. It’s nice to have a little extra margin if you’ve set your sales price on the high side instead of the low side, it’s easier to go down than it is to go up. As I mentioned, you ran a successful Kickstarter campaign recently where I know your fundraising goal was $40,000. It looks like you may be raised around $42,000 or $43,000. First of all, congratulations on that. That’s a huge accomplishment. I’m curious how that felt to meet or even exceed your goal. I imagine it’s pretty exciting.
Erik: No, it was really exciting. That 30-ish days is definitely very nerve-wracking. Watching days go by with no pledges, days go by with a handful of pledges, figuring out exactly how many new per day and trying to figure out what went wrong basically.
John: Be honest, how many times a day did you check, do an update to see?
Erik: Oh God, my wife was going crazy watching me on my phone because I would check it probably every two hours.
John: Well, that’s not too bad. Every two hours, I think that’s pretty typical for any type of thing like this. I know I’ve been in the same boat where I’m just obsessively checking the status.
Erik: Yes and it notifies me, so I didn’t even need to be checking it. Every time somebody backed it, I would get a notification, I would just go in and be like, “Well, maybe something happened, they didn’t notify me,” radically checking it.
John: I think that’s the excitement of an entrepreneur there. I think we all go through that. $40,000 is obviously, I mean that’s a huge market validation for your product. That’s what I find is one of the main advantages of crowdfunding, it’s not just the money but that it gives you market validation that people put down money for the product that is equivalent or even a little bit higher than what you plan on selling the product for. That’s really good market validation. I’m curious, how did you decide on the $40,000? Did you do any research to see what type of money you thought you would need or did you just think that sounded like a good amount to start with?
Erik: Yes, I did do some research on the amount of money that I would need for a couple of scenarios. If I decided to just sell the product as is, 3D-printed and with a more professionally done Arduino controller, I could get that done for under $40,000, that’s my worst possible case scenario. I could sell them what I basically made myself, but my plan for this has always been to get some real money behind this and in order to do that, I needed something a little more professional than a 3D-printed Arduino control box made by somebody with no technical engineering training. In my exploring that, I found that $40,000 would probably get me to the point where I could get a really good prototype to go show investors and retailers.
John: I think that’s a smart strategy instead of trying to raise everything you think you’re going to need all the way to market. That’s a big risk you’re asking people to invest in. I find it much better to take more frequent, smaller steps than to take one giant leap forward. I think that’s good that you started off raising $40,000, it should be enough to get you to the next step that you can then use your new progress to even raise more money and to go from there. I think that’s a really good strategy.
Erik: Yes, and like you said earlier, it’s a good validation when I go approach– I’ve already been approached by potential partners in the industry that want to get on board with this and now that I have a customer base and proof that people will pay where we set the price, it definitely gives me a little bit more leverage when I go in there and say, “Hey, do you guys want to get on board with this?”
John: Absolutely. From my own experience, I found having a customer interested that expressed interest, for me it was a retailer, but for you, you’ve got just a bunch of consumers, that is the best type of leverage that you can get. It just opens up doors to whether that be other distributors that want to carry the product and manufacturers, it really just opens up the doors, and it proves that you’re serious and that there’s real market interest. I think that’s really good.
What are your plans? I know that we talked about this 40K would get you to the next steps, what are your next fundraising goals? I believe you had mentioned in the academy form that you were planning on $40,000 now and then you were going to try to get another 40,000 from other investors once you get a more presentable manufacturable prototype. Is that correct?
Erik: Yes, going to be at least another $40,000 and that’s to get the molds and the first order made depending on what quantity goals. I’m expecting at least another $40,000. One of the little hiccups I hit in joining the Hardware Academy actually really helped was I had toyed with the idea of just handing my design off to China and saying, “Can you guys make this?” They all said, “Yes, of course, no problem. We’ll have it to you by summer and it will be this much.” I just had no confidence in that actually happening.
John: I think that was smart that you didn’t have confidence in that because my experience with Chinese manufacturers, it’s a cultural thing, they’re not trying to be dishonest, but they don’t like to tell you, they’re very optimistic. “Sure, we can do that. No problem.” Someone else I’d interviewed for another podcast had recommended if you can ask them how they will do it instead of-
Erik: That’s exactly where I lost my confidence is when they started asking me questions about the product that was so basic and so far off base, I was like, “If this is where you guys are at, this isn’t going to happen,” which led me in the forum through my exploring. I got put in contact with Nick from Connective and just in the future talks we’ve had, one of his head engineers alleviated all those worries I had. He was so knowledgeable about my product and what technologies I would need and what they would be able to do for me that I felt that- and I had skipped a step and jumping back to a design firm was a necessary step.
John: That’s something that a lot of entrepreneurs do is they have a product, and they have a very crude prototype, and then they think the next step is to find a manufacturer, but you’re skipping the development phase. There are manufacturers that will be happy to help with development, but it’s generally not the way that I recommend it. It can be the cheapest way to get a product developed, but it also is the slowest working with the Chinese engineers to get something designed, it’s going to be just a lot of communication back and forth and it just can really complicate things.
In general, it’s much better to go with a firm or someone that specializes in development, get it to the point of being manufacturable or at least really close to manufacturing and then the manufacturer can maybe help you optimize your 3D designs to make it a little bit more manufacturable. In general, I wouldn’t recommend having them do the full development. I know Nick at Connective, they are a development firm based in the US, but I know they also have some manufacturing partners or facilities in China, so that’s a good combination there. For my knowledge of them, they’re mostly development firm that does some manufacturing. I feel like that’s a better fit than a manufacturer that is willing to do a little bit of development.
Erik: I’ve talked to Nick about taking it all the way with him. Once we get to the stage where I have everything I need to go to other manufacturers and just see what see what’s out there, we’ll explore that a little bit, but there’s a good chance we’ll just do everything through his company.
John: The reason I think I’d even mentioned him was that he had helped another member in the academy. Their product is on the market now, Alan Walton at SpyGuy.com had a new product called the Scout and I know that Nick and them, within about a year they went from at least idea or maybe early prototype to having something that could be sold because Alan had sent out an email, I think it was several weeks ago that his product was available. That’s the best recommendation is someone else that’s used that firm to develop a product and they’ve succeeded and are on the market already. I think that’s really good.
Erik: I talked to Alan too just to see what his experience was like. I’ve been very careful with this next step because I feel it’s the most important step for me.
John: It is. It really is. That’s great that you spoke, Alan’s a really nice guy. He’s done a lot of things right. He’s a really good person for you to talk to. Can you maybe tell me a little bit more about your prototype that you had created? I know you mentioned there’s– Everything was 3D printed and an Arduino. I’m assuming everything was just off the shelf components.
Erik: Basically, like I said, earlier, I had this idea and I actually started with a YouTube video using this technology, thermoelectric cooling technology to cool a small styrofoam space down to negative 10 Celsius or something. I was like, “Wow. If they can do that, I can cool something much smaller with the same principle.” I took that idea and bought a 3D printer and really I did all the 3D modeling with this- it’s embarrassing, but this program called Tinkercad. That’s been a difficulty in communicating with other engineers when I can only give them STLs, the step files that they are used to working with. I didn’t have the time to actually teach myself or to take classes. I have a full-time job, so to go and actually get classical training on how to actually do these correctly, I just wanted to get a proof of concept to prove that this was a viable idea and to show and see how many other people wanted it.
John: You, I’m assuming, have never done anything like this before, any type of 3D modeling or anything. You taught yourself just from scratch.
Erik: Yes. I’ve never done anything like this before.
John: That’s awesome. That’s really great. I’m impressed that you were able to– You may say it’s an embarrassing tool, but it got you to where you’re at now. Whatever works and gets you to the next point. You’ve done a great job with it and looking at the images on your Kickstarter page, your 3D print, it looks really nice.
Erik: Yes, really dove headfirst into that hobby. That’s an excellent tool that I could never have done this 15 years ago.
John: Do you have your own 3D printer or did you send them off to a prototype shop?
Erik: No, I bought one of the Prusa MK3S’s, which is a really nice printer actually and very user-friendly and pretty customizable.
John: It’s really great to have your own 3D printer, you can quickly produce something that you can hold in your hand. I know that when I developed my product maybe seven years ago, there weren’t at-home 3D printers and I’d do a tweak, then it would obviously be- well, this is with me doing the design. Initially, I had an engineer doing it, so I’d come up with a change and he had to do the change. I had to order the prototype and then eventually try it. I’m like, “Oh, well, that’s not quite right. I need to do this.” Being able to just do this in your own at home, just this iteration of printing it out, testing it, modifying it, printing it out, testing it and repeating, it can really speed up your development time.
Erik: To your point because I’d make three changes in a day, sometimes of the same part because I-
John: That’s really the best way to get to market fast with anything is to iterate quickly. Normally, you’re limited financially to iterate whether it’s a printed circuit board or the enclosure if you’re paying a prototype shop, but when you do this at home, that 3D printer pays for itself pretty quickly.
Erik: Yes, definitely, it’s been the biggest part of this project for me and getting something that people can actually see is very valuable.
John: Absolutely. I know that your prototype has an Arduino embedded inside. Had you ever done any projects with an Arduino before?
Erik: No, I haven’t. I actually didn’t do this. My brother is a programmer for Amazon. He did all the Arduino works for free which was a great favor. I had offered to give him equity in the company. He’s like, “No, no. Just tell me what you need. I’ll help you with it.” That was a huge asset for me, was just reaching out to him and he was able to do exactly what I needed quickly.
John: Had he worked with Arduinos before or is he just a programmer but hadn’t worked with an Arduino?
Erik: He had one, but just to tinker with. He took that and I told him what I needed and about a week later, he gave me exactly what I needed.
John: Wow, that’s great.
Erik: He’s a really smart guy and he was able to help me out.
John: That’s really helpful. You can’t beat the price of free.
Erik: Exactly. Free and high quality.
John: Those two don’t usually go together. It’s free and low quality or expensive and high quality. Not always, obviously. We’re still talking about crowdfunding, but maybe switch gears a little bit away from that prototype and talk about maybe that the marketing side of your Kickstarter campaign, your successful crowdfunding campaign. Did you have any online audience? You mentioned that you had an audience from being in the seawater aquarium market, but did you have any- like a email list, or anything that you had built up online, any type of following whether email list or on social media?
Erik: I’ll get into that a little bit. When I say I had a following, I was actually part of a following. I was an audience and I knew what people liked and what they looked at. I started from basically zero with this company, but before, basically what I did was I looked into how much it’s going to cost to pay somebody to do what I was going to do and I just didn’t have that budget. They would take large percentages of your take and then they take a decent upfront cost.
John: Are you talking about a marketing company?
Erik: They’re crowdfunding marketing companies that specializes in-
John: Okay, yes. Got you.
Erik: I have a couple of friends that have successfully crowdfunded other products that used these companies that they came recommended, but I couldn’t put that sort of budget down. I just copied what they said they were going to do for me. I think you’ve said this in some of your blogs, was start with a- get a captive audience. In order to do that, I had to get this product– Up to this point, no one knew that I was working on this. I filed a provisional patent for it and just started sharing what I was working on, wherever I could, learning as I went and I started with a website to begin with so that anybody that wanted more and more information on this, they could go somewhere, get some more information and I could collect their email.
John: You’re collecting emails specifically from people that want more interest or more information about your product. It’s like a waitlist for your product.
Erik: Exactly. I said, “I’ll notify you as soon as I’m ready to take pre-orders, anytime I’m making product updates, if you have input on the product and features you’d like, we’ll talk about it via email.” I was very responsive, it wasn’t like just a spam email list. People could respond and I’d respond back within hours usually. I got a lot of good input from people and I acted on that and I think a lot of people were impressed that we were able to accommodate some of the requests. I’ll get into that with the Kickstarter. I have the chart in front of me, but basically what I did was I figured out what I wanted for a goal and I figured out that best case I would get a third of my email subscribers to actually pull the trigger and pay. I was wrong on that. I did not get a third. I got less than that.
John: A third would be very, very high.
Erik: I know. I just felt like I have cited these people about something that had no competition for it and I thought that that would be reasonable, but I was wrong.
John: Those are the types of things I think- I do it, everyone does it, you tend to overestimate how many you’re going to sell or how many people are interested. That’s a common thing, especially if you don’t have any data. You were just making a ballpark estimate.
Erik: Exactly. A lot of people just don’t trust Kickstarter anymore. There’s been a lot of failed projects on there and there’s no guarantee to get your money back. People are like, “As soon as you can actually sell me one of these, I’ll pay you, but I don’t trust Kickstarter anymore. I love your product, but I can’t. I’d rather pay more later.”
John: Did you find having the higher price- it’s not expensive, but $300 versus a $49 product, did you find– Obviously, that’s an obstacle. You’re asking someone to put down more money, so they’re taking on more risk, but you also need a lot less backers than you would if it was a $49 product. Did you find that to be an advantage you think as far as less backers needed, or was that an obstacle?
Erik: I think it was a blessing and a curse because I needed less to get where I needed to go, but like I said earlier, I think I priced a lot of people out. I had 3000 people that watched my entire video and 146 backers. It was just under 3000 people. As I was watching that, and then I had another 200 people that followed the project, and of that only 50 actually ended up backing it. I think a lot of those people were just like, “This is just too expensive for me. I don’t trust it.” I think people would be more willing to gamble as a smaller number like $50 to $100.
John: That’s a pretty big commitment for something that you don’t know- isn’t available quite yet. That doesn’t seem too surprising. Typically, at least a normal email list, not necessarily a waitlist, a waitlist tends to convert a little bit more because it’s people that said they’re interested in your product and not just your content, but a normal email list, if you get typically single digits, 5% would be fairly good conversion rate, but for a waitlist, it typically will be higher, but a third would be- 33% conversion would be extremely high. I think you did good. You obviously met your goals. That was the goal obviously.
Erik: I got 19% from my email list, is what I ended up getting on my campaign.
John: That’s really good. That’s what I would think is pretty typical for a waitlist. Probably 10-20% would be good for a waitlist. I’ve heard as high as 33-40% but that seems really unlikely and it’s more likely maybe with the lower cost product. I’m curious, as far as the audience that you had a website set up and you had people requesting more information, how were you driving traffic to the website? Were you doing any blogging or was this paid traffic?
Erik: I think I mentioned on the message board that I tried to do this as much on a budget as I could. Mostly because I have a very strict budget manager that I live with.
John: [chuckles] Don’t we all?
Erik: She was definitely- it was good and bad at the same time, but it’s one of the reasons I went crowdfunding was just to prove that this was a viable idea.
John: I’m assuming you didn’t do paid traffic.
Erik: I did as momentum rolled. It started out. Basically, as soon as I put this out there that this existed, I got contacted by some new sites that basically cover all the new products and one of the new sites, in particular, it’s brief builders.com, the owner of that site, Jake Adams has been a huge help to me throughout the process. He took this product under his wing because something he really wants for his own tanks. He guided me on some marketing advice and even pricing advice and helped me get to some of the conventions for this aquariums, hobby stuff. I was able to ship him even like a non-working prototype just to put in a booth. That was basically the cost of shipping to get exposure at these big conventions. That’s like CES.
John: You’d be surprised how many shows there are for these niches, there’s a lot of trade shows out there for just about any industry it seems like.
Erik: He helped me, he’s like, “You’ve got to be in the show. This is very important to your growth.” I got in the show, he did several articles for me, other sites had articles. I wrote up like a basic, what it is, and took a bunch of attractive pictures of the prototype from some good angles. About three of the places I reached out, two actually wrote something up. I reached out to probably 12. The other ones that either never wrote anything or they wanted me to pay them and that was just something I wasn’t doing at that stage. A lot of forums wouldn’t let me talk about my product without paying a monthly fee. I had to find a creative way to talk about it and the way I did that was instead of even referring to my site, I just said, “This is what I’m developing. What do you guys think? What can be better about it?” In doing that, I got a ton of people just messaging me like, “Where can I buy this? Can I pay for it right now?”
John: Sometimes it’s better to not ask for that cell, you just present that or ask for their feedback. It sounds like then all of a sudden they were asking where they can buy it.
Erik: Basically once I did that, I decided I was going to not spend much on marketing, even though marketing is probably the most important part of crowdfunding. I had to do a bunch of the work myself, which included the email lists. I started an Instagram and Facebook just for this product and just started putting out content and following other people in the same industry and commenting on their stuff, so people would be like, “Who’s this person?” Click on and see what I had.
I got a good amount of followers that way and a good amount of interest from just getting out there and doing the work myself instead of paying somebody else to do it. I think the benefit to doing that was I really got in touch with my customers and the product stayed where I think that they wanted to go instead of just what I want it to be.
John: That’s like a gold mine that you just said there. You started by interfacing with the customer, and it’s always much better to start with the customer and work backwards to the product instead of most people, they focused on the product and they’ll get it perfect in their own mind, and that’s when they bring in the customer. I encourage everyone to speak to as many potential customers as possible because it’s not just, will you buy or won’t you buy, but you get so much valuable feedback that can sometimes make you pivot in a totally new direction or just give you insight that you would have never had on your own. I think that’s really good. You mentioned that you’ve been creating content. You have a blog, have you been doing blogging like just on water aquariums or anything?
Erik: No, I didn’t do any blogging and that’s something that I either would’ve paid somebody to do or I would have had to– I just didn’t know how to get people to come to my blog. I did know how to use Instagram. I did know how to use Facebook, so I did it that way. It’s not blogging, but I blogged via my email list. I’d send out updates and I’d ask questions to the people in the emails and I’d say, “This is what the features are, what else would you like to see? Just please write me back and we’ll talk about it.”
John: Doing a blog can definitely take a while to get the momentum going because in the early days, you’re not going to have to have anybody reading the blog unless you have an audience, but if you’re just consistent with it, typically within a month or two, you’ll start getting some traffic from Google and then that just keeps compounding month after month after month. It’s a slow process, but it’s a really great way to build an audience and you’re, just on a regular basis, providing them free content that is helpful for them.
That’s obviously the strategy that I have followed is to blog, it’s a ton of work and it’s hard to- especially, until you get in that routine, it’s really challenging to try to come up with something new each week that you want to write about because obviously you’re focused on developing your product and you’re doing like a million other things, but it’s definitely something I very much encourage people to do as much as possible.
You found a lot of other great avenues to bring people and get them on your email list, but I still wouldn’t– Even though you’ve gotten past the crowdfunding, marketing never stops, so I would consider revisiting that because this is definitely something that I would imagine there’s a huge amount of information you can write about aquariums. Even saltwater aquariums alone, obviously it’s just a massive topic. I’m sure there’s no shortage of things that you could write about.
Erik: Yes, that’s how I found you guys. I was searching for something that I needed help with and one of your blog articles came up and I think I subscribed to one of the first ones. I’ve pretty much read every one. Some of them were a little bit too above my skill level, but a lot of it was valuable information in those blogs.
John: I’m a huge proponent for blogging because mainly it’s worked so well for me and it just keeps building up and up. It’s not just about getting traffic, but it allows you to- it’s not a real personal relationship, it’s one way, but people do get to know you through your content and then that just makes them trust you better. For me, it’s been a really good strategy and it’s something I courage for. It doesn’t matter whether you’re doing a hardware product or a service company or software, you need to build an audience. There’s a lot of power behind that audience and you’ve found some creative ways to build your own audience without doing a lot of blogging. That’s really good.
My other comment was on the- first of all, I think you made the right decision to not outsource marketing. The key point was you outsource marketing, then you don’t get to interface with the customer. You’re missing out on that learning. It’s just something that’s so common. Especially engineers tend to be the worst because they just hate marketing. They love design and development, but they don’t like marketing. They put that off or they want to pay someone else to do that.
It’s just not really something– First of all, it’s expensive and you’re just increasing your financial risks. Secondly, you’re missing out on a lot of things that you can learn by doing the marketing yourself. I think that’s good ultimately that you didn’t have the money. Sometimes having a lot of money to spend can force you to take risky shortcuts and those don’t typically work out. Having your wife, making sure you don’t spend too much money, that can be a good thing for an entrepreneur because we’re very optimistic and we tend to let our dreams get ahead of reality sometimes. It’s good to not just have endless amounts of money, otherwise you’re just going to try to take a lot of shortcuts and throw away a lot of money.
Erik: No, I 100% would have paid somebody to do this if I had disposable money basically and I’m glad that I didn’t. That’s something I would’ve definitely done.
John: Speaking of traffic, I’m curious, once you get the momentum going, did you feel like you got any traffic from Kickstarter, from your campaign being promoted, or was it all traffic that you were having to drive or do you really have any data on that to answer that?
Erik: I do have data. I actually have that page up right now. From Kickstarter, the site itself, I got two sales all from outside Kickstarter. It tells you pretty much all the sources of where your traffic comes from. I had 10 Kickstarter-
John: How many backers did you have total?
Erik: 146.
John: Okay. Like single- maybe 6-7% of your backers who came from Kickstarter, that’s pretty good. It’s very consistent. It’s all about you have to be the one to drive the traffic. I know a lot of people including myself, I tried a Kickstarter campaign, gosh, seven, eight years ago. At that time, I knew nothing about how to do a Kickstarter campaign. I created a nice campaign and just thought, “Well, people will find it and see it.”
Of course, people I think realize today that that’s not going to happen. You’ve got to be the one to drive the traffic. If you get enough momentum and it goes viral, then you’ll get a lot of backers directly from Kickstarter. In general, I think the majority of you’re going to have to drive there yourself. Do you have any valuable lessons that you felt like you’ve learned from the crowdfunding process that you’ve not shared? You’ve given quite a few valuable lessons already, but is there anything else that you’ve not said that you think was a lesson that you learned that was valuable?
Erik: I’ll get into the actual campaign which just started a little bit. The first day when I first launched it, I had my audience. I had like 700-plus emails on my list, all lined up ready to go. When I launched, I had almost 1000 followers on Instagram. I had a bunch of people on Facebook that were interested, so I was really hoping to get really close to my goal on day one. When I launched, I was just under halfway there, which was a super exciting day because every time I looked at it, there’s $1,000 more, $1,000 more and then it just stopped. That’s something that happens in these Kickstarter campaigns.
I know this because I started searching for graphs and how this works over and over and over and there’s a plateau in the middle of these campaigns. It’s easy to think that a lot of people are just waiting to the end to buy, but that’s not the case. The graphs look like that because there’s a spike at the end too. That spike is created by the people behind the campaigns just going out there and pushing as hard as they can. It’s not just an automatic thing that happens.
If anybody else has a Kickstarter campaign and they get to that plateau and they’re still ways from their goal because my plateau was about halfway, the rest of my graph is just a steady climb to the goal. The steady climb just represents- I went out there every day and I would basically be a salesperson. I’d get like three or four sales a day, and this is from talking to people specifically. They’d ask me questions and I tell them this and I tell them that. They’d be like, “Okay. Let me have the link.” I’d go there and I’d get a sale.
It was a lot of work, the last 10 days. I’d literally just go on these Facebook group which would allow me to advertise. I’d just go on there and say, “Hey, I built this. If you want this, tell me what features you’d like and you can direct message me,” and they’d direct message me and I’d direct them to the campaign after I answered their questions. It was a lot of work after that, once I hit that plateau.
John: That’s interesting. It’s similar to the results you’ll see, whether it’s like- say you’re launching something- like for instance, when I launched the Academy, the day that door opens, there’s always a huge spike on that first day and then things level off after that first day. At least for online launches, you tend to also get a spike at the end. It’s kind of similar. It’s not going to be consistent in the middle. The middle is where you have to really go out and work to get those, you get the automatic ones in the early days. That’s interesting. Thanks for sharing that.
Erik: There’s no spike at the end of mine.
John: That’s what you said. You had to force that spike at the end of your-
Erik: I was hopeful that there’d be a spike and we’d get to 60 at the end but there was zero spike. I got four sales on our last day.
John: Okay. Interesting. Well, you got the spike at the beginning and obviously that gets your energy up and gets you motivated versus if a lot of people– You don’t see any excitement on that first day and it can be a downer.
Erik: Anybody who’s doing Kickstarter or Indiegogo campaign, you need to create an audience where you will get a spike in the beginning because it’s so hard to back something that has no backers.
John: Yes. Nobody wants to be the first and especially people that have no idea who you are. It’s like you’ve got to get those people that know you and trust you first and then go from there. I know Pebble, the smartwatch maker, they had two record-breaking Kickstarter campaigns where they raised over a million dollars. I know their first one, I had read that they started while developing the product, which is exactly what I recommend people do. They started building up their email list.
By the time they got their prototype done and were ready for a crowdfunding campaign, I think they had 3,000 to 4,000 people on their email list and then they were able to use that as momentum to get things going to the point of raising over $1 million. I know the founders were very much that they needed their own audience to really get things going and then the momentum just carried it from there. That sounds pretty much what you’re describing as well.
Erik: I wanted more time to build a bigger audience, but there is definitely a fear that this is going to be done quicker by a bigger company. Even though I have that provisional patent out there, there’s only so much that protects- I know anybody can get around something like that. I kind of rushed myself and I’m still trying to move quickly because I’ve had other companies contacting me about buying it or about licensing it and it just hasn’t been what I want. It’s not something I want to give up just yet. I don’t know how much time I really have, so that’s something I’ve been worried about throughout this thing is to try and get out there before anybody else does.
John: I think you made a good compromise. You obviously built your audience to a large enough size to meet your fundraising goals. If you had instead waited another year to try to get more people, then you’d obviously be a year behind where you’re at now. I think you made the right decision. I don’t encourage most- because entrepreneurs can get in the mindset of, “I have to rush, rush, rush,” I was the exact same way. Most of the engineers I ever hired, they would get annoyed with me because I was so pushing and I wanted every hour, every day- just constantly pushing, and you’ll drive yourself crazy doing that and those people that are working for you.
You have to push, you’ve got to obviously push, you can’t just, “Whenever you get around to it,” there’s a fine balance between pushing and being in too much of a rush because everything’s going to take longer than you think. If you’re always in rush mode, then you’re always just going to be disappointed that things don’t move as quickly as you would like.
Erik: And your family.
John: Yes. [chuckles] Your pledges obviously came in around where- you had them close to your retail price. We’ve already talked about your targeted retail price. Have you done any estimations upfront on your manufacturing costs?
Erik: Yes, the way that I did that was I used all the components that I used to build it at retail prices more or less and came up with that number which was around 60 bucks. Basically I figured when I’m purchasing in bulk it will be lower than that, but then there’ll be other costs that will come in and this is not counting like molds and all that stuff, but just the actual per-unit cost. I felt like that $60 range was a appropriate target to hit.
John: You’re looking at basically about a 4X market factor. You’re looking at selling it around 240-250.
Erik: Yes, that’s correct. Then a bunch of the accessories that I sell with it aren’t hardware part. They’re just piece of plastic for the most part that are helpful, those parts are just are basically bonus money after the mold costs. For the main part of it, each one would cost me approximately $60 in off-the-shelf costs.
John: Your estimates, how detailed did you get? Did you include things like labor costs for product assembly or the retail package costs, the shipping costs, warehousing costs, all those different things or was this a component cost estimate?
Erik: I didn’t get into a lot of that and that’s one of the reasons when people say, “Oh, it’s going to cost you way less to make that,” I’ve always stuck with that $60 cost point because I know there’s all those other costs, but I don’t know what they are yet. I don’t want to say I can make this for $20 and use that as my-
John: No, no, you’re better off to estimate on the high side than estimating on the low side. It’s not out yet. By the time people are listening to this, it will be, but I am working on a course- I’m hoping to have it- I’ll have it done next week, a new course in the Academy where I walk you through how to estimate the manufacturing costs for your products. How to estimate all the components, the printed circuit board cost, how much to assemble it, how much to test it and package it and ship it and store it in a warehouse and all those different costs. Definitely may want to check that out here soon so you can get a better idea of some of those other costs in addition to just your component costs.
Erik: 100%, that would be extremely helpful.
John: Okay, great. This has really been awesome. I’ve really enjoyed chatting with you. I think you’ve shared a lot of lessons learned on your crowdfunding campaign. You’ve made tremendous progress. I think you’re really doing a lot of things right. I just congratulate you on that. Is there anything else before we end the podcast that you wanted to bring up or ask or talk about?
Erik: I would like to add that, I was hesitant on joining that Academy. Immediately, first day in there or first time posting, all those worries were gone. It was completely worth the value to get that knowledge from people that aren’t trying to sell you something.
John: Yes, absolutely.
Erik: That’s very valuable. You got to take everything, any advice you get from somebody who’s trying to sell you something with a grain of salt.
John: Yes, because other than the $49 a month, I don’t have anything set up where I’m getting commissions or anything for referring people to certain products or services in general. In the past, I had some but now I’m more interested instead of me getting a commission, I’d rather just pass that on to my members as a discount.
Erik: No, but that monthly fee, it’s worth every penny. I already feel like I saved myself tons of headache instead of going down the straight to China route and being here in the same place I’m at now a year later with less money.
John: I suspect if you’d gone that route, you would’ve burned a lot more than $49 a month.
Erik: Yes. Exactly.
John: Well, great. I appreciate you saying that and I’m thrilled that you are finding it so helpful and I’m glad that you posted and that you’re getting a lot of feedback. I found your story interesting. I like that you had some success but now you’ve got the crowdfunding done, but now you’re looking for advice on manufacturing. I think you’ve done a lot of things right and I appreciate you coming on today. If people want to learn more about you or your product, what’s your website? I’m assuming that’s the best place to learn more.
Erik: Yes. If they go to my website, it’s www.indcreation.com and my email is erik@nullindcreation.com and I’ll answer whatever questions anybody has gladly.
John: Great. Well, Erik, thank you so much for doing this call and obviously we’ll keep talking in the Academy on there if you have any other questions or need any advice. I’ll let you go and I hope you have a good day. It was great chatting with you.
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- The Importance of Early Marketing, Selling, and Networking for Hardware Startups
- Lesson 3: The Strategic Way to Develop and Sell Your New Electronic Hardware Product
- The Right Way to Bring a New Product to Market
- Episode #25: How to Validate Your Product Idea Before You Spend Serious Money On It
