"How dare he say that about my product!" was my first thought after a top executive at a national retailer told me his feedback on my prototype.
It was on a return flight from a life-changing vacation in Alaska when I decided to become an entrepreneur.
I was so moved by the wildlife and natural beauty of Alaska that I wanted to make lots of money so I could help protect such wild places.
But, being a microchip design engineer for Texas Instruments was the job I dreamed of since I was a child.
And I’ve always been obsessed with electronics.
I loved my job. I was good at my job. And I was passionate about it, for about 10 years...
But, I’ve also dreamed of being an entrepreneur since I was child.
And, honestly, I was tired of spending so much of my life in a tiny office in a city.
I wanted more freedom, more control, and more impact in the world!
You probably have similar feelings or you wouldn’t be reading this story:)
So I began the process of brainstorming different business and product ideas.
Then one night while struggling to see the buttons on a remote control while watching a movie in the dark, my product idea struck me.
That idea was a low-cost miniature lighting device that illuminated any surface that it was attached to, including among many things, remote controls.
I named it the Pop-up MicroLite.
When you pressed the top it would pop-up and shine light downward illuminating the surface it was attached to.
Keep in mind this was years ago before illuminated remote controls and smartphones were popular.
Next, I began building early prototypes using just clay and foam.
Within a few months I had my first 3D printed prototype which was quite crude and not functional yet.
Before proceeding further with prototyping, and spending a large sum of money, I decided my strategy would be to get a single big company to express interest in my product.
I hoped this would be the product-market validation I needed, and that it would open up new doors for me.
So I decided to make Blockbuster Video my primary target.
They seemed ideal for a product that could illuminate remote controls when watching movies in the dark.
You do remember Blockbuster, right?
This was back when they were a huge, internationally known company.
So how did I get through to Blockbuster Video?
First, I found the email addresses for several of their vice presidents.
Then I decided to reach out to their Vice-President of Purchasing.
I sent him a really short email describing my product.
And I also attached a sales flyer featuring a picture of my product in use on a remote control.
Although, at this point my prototype was still barely functional, and was nowhere near ready for market.
Within a day, he replied. His message was brief but blissful for me to hear:
"Looks interesting, tell me more"
Needless to say, I was absolutely thrilled!
To have a top executive at a multi-billion dollar retailer tell me my product was "interesting" was a huge jolt of energy.
I’m pretty sure I did some sort of a ridiculously looking dance:)
A few days later, I was in communication with their head retail buyer over merchandise in all of their thousands of stores.
But, this communication was painfully s...l...o...w.
I spent the next few months improving my prototype, and constantly playing phone tag with the Blockbuster buyer who was nearly impossible to catch on the phone.
In addition to the electrical design, my product also needed considerable mechanical design, which I had no experience with at the time.
I tried hiring a few different mechanical engineers. But that didn’t go so well.
None of them could focus entirely on my project, so I kept getting frustrated with how long it was taking.
I was excited and highly motivated to move fast!
Can you relate to ever wanting things to move more quickly?
After one engineer yelled at me to stop rushing him, I decided to learn enclosure design and finish it myself.
Oh yeah, I also quit my dream job at TI, and did something a little crazy:)
We moved from Tucson, Arizona to Homer, Alaska for a couple of years while I worked on my product and did remote consulting work for TI.
Finally, I secured a meeting with the Blockbuster head buyer at their corporate headquarters in Dallas, Texas.
I was thrilled. But I was terrified too.
Going from my relaxing, secluded life in a small Alaskan town to presenting my product to a billion dollar company was a HUGE shock to my system.
Talk about being outside your comfort zone!
Their headquarters were located downtown near the top of a tall skyscraper making the whole event even that more intimidating for me.
I didn’t sleep at all the night before my presentation, and I was sick to my stomach almost the entire trip.
Uh. Needless to say I was not operating at my best.
Fortunately, I must have done okay and they were still interested. The buyer requested that I send him an updated prototype once I had it ready.
A few months later I finally had a fully-functional prototype, although it was still 3D printed.
I shipped him this latest prototype and crossed my fingers.
I was so anxious to hear his reaction, confident he would be impressed.
The buyer received it, and it was time to talk with him on the phone.
His response, let’s just say, was not what I hoped for.
I remember vividly the chills running down my back when I asked him what he thought of the prototype.
His blunt answer was "I think it’s awkward to use."
I was speechless and completely devastated by that response.
I’m not going to lie, I teared up that day:(
But, thankfully, the story does not end there…
So what happened next?
Well, I spent a day or two wallowing in self-pity.
But then I recovered and decided to figure out what happened.
My first reaction was to be defensive and to blame the Blockbuster buyer.
I wanted to believe that maybe he’s a moron who doesn’t know how to push a button:)
Darn it, that wasn’t the case!
So I did some research and talked more with the Blockbuster buyer.
I did my own experiments, and ultimately I discovered exactly what happened.
I sent him a 3D-printed prototype made with a type of resin with low heat resistance.
And, I shipped the prototype to him in the middle of a summer heat wave.
Duh! Not my brightest move.
My prototype had warped or partially melted. But, it didn’t melt enough to be obvious to the buyer.
It had melted just enough to make the product awkward to operate.
I worked with the buyer, even though I was devastated, and he was actually pretty understanding.
He knew it was a prototype, and not a production unit.
Ultimately, I think it impressed him that I worked through this problem.
Um. Thankfully he didn’t hear all the bad words I called him just a few days earlier:)
I was able to work past this to eventually get a Letter Of Intent (an LOI) from Blockbuster.
Basically, an LOI just says “We’re interested, and would like to test this product in our stores once available.”
This is exactly what I wanted from the start!
Well, an actual purchase order would have been even better, but that wasn’t feasible at this early stage without inventory.
Unfortunately, Blockbuster was beginning to die by that point, and it wasn’t much longer before they filed for bankruptcy.
So I never got an actual order from them, but their LOI opened up all kinds of doors for me.
PART 3 (FINAL):
Next, I leveraged my prototype and my letter of intent from Blockbuster to find a manufacturing partner.
I wanted a manufacturer that believed in my product enough to invest in it.
How did I find my manufacturing partner?
Well, it started just like with Blockbuster.
I did an online search for manufacturers that produced products with similar manufacturing requirements to my own.
Your manufacturer doesn’t need to be in the exact same market as you. They just need similar manufacturing processes.
For example, you don’t want to approach a tire manufacturer to make your electronic product.
I began by emailing my list of potential manufacturers.
Just like I did with Blockbuster, I included a sales flyer showing my product in use.
Of course, I also mentioned having a letter of intent from Blockbuster.
I probably emailed several dozen manufacturers, and about 5-6 of them replied expressing some level of interest.
But, there was one manufacturer that really stood out.
They stood out to me because I could instantly tell they saw and understood the potential of my product.
They essentially told me:
“We get pitched products all the time by entrepreneurs. 99% of them we just ignore. But we feel that your product warrants an exception.”
If I didn’t already have the progress with Blockbuster I seriously doubt they would have been interested.
But what happened next exceeded all of my expectations on what was possible.
So what happened next?
Well…at this time we still lived in a small, beautiful town in Alaska named Homer.
I was shocked to discover that the general manager of their Chinese factory wanted to fly all the way to Alaska to meet with me.
Um. Yeah. Wow.
Needless to say I was thrilled they believed in my product enough to personally come and meet with me.
We met him at a park with views of the ocean, mountains, and lots of glaciers.
Shortly after that meeting we signed a formal agreement.
The agreement helped me in so many ways.
This was much more than just a contract manufacturing relationship. This was a real business partnership.
First of all, they let me use their engineering department to finalize my design and prepare it for mass manufacturing.
I had taken my product development pretty far, and I had all the main design requirements figured out.
But, there were a lot of small changes that needed to be done to get my product completely ready for mass manufacturing.
The second thing they agreed to do was to amortize the cost of my injection molds.
The injection molds for my product were going to cost a little over $100,000.
Nope. That is not a typo!
Normally, I would never suggest you jump from a prototype directly to high-volume manufacturing requiring molds this expensive.
You can purchase lower volume molds for only a few thousand dollars each.
But in this case, the manufacturer felt so confident in my product that they wanted to finance the higher cost molds.
I was fine with this, since they were the ones taking the risk if my product ended up a failure.
They would pay the upfront cost of the molds.
Then, they would charge me $1 extra per unit for the first 100,000 units that I sold.
This is called amortization.
This is a great arrangement, since it’s basically an interest-free loan that was essentially risk-free for me.
Most importantly it didn’t require me to give away any equity in my company.
The third really beneficial thing they did was to fund all of my initial inventory!
This was tremendously helpful because it removed one of the biggest obstacles to scaling a hardware company – cash flow.
Cash flow for a hardware startup is one of the biggest obstacles to growth, and that’s because typically you have to pay your manufacturer upfront.
In my case they agreed to give me payment terms of 90 days.
This allowed me to get paid by my customers BEFORE I had to pay the manufacturer.
This. was. HUGE!
In return for all these benefits they gave me, they got an exclusive manufacturing agreement.
This meant that I couldn’t go to another manufacturer for the first two years, or for the first million units, whichever happened first.
All that was left now was for me to market and sell the product, which is never as easy as anyone thinks it will be.
But, that’s a story for another day…
This is just the story of my own journey to market, and there’s really nothing special about me!
Your journey with your product will surely look different, but the fundamental lessons still apply.
The key is persistence and a good strategy, while always seeking feedback and advice, and then adapting as necessary.
If you set your mind to it, I know you can do it too!