It should come as no surprise that there's a world of difference between selling an idea on Kickstarter and creating a successful product for retail.
Our guest on this episode of Shopify Masters is Nate Barr, the founder of Zootility Tools, surprisingly thin multi-tools that fit in your wallet.
Find out why he launched a Kickstarter campaign just to break even and how he had to completely rethink his product for retailers.
What makes one product more likely to succeed than others.
The rule of thumb for pricing for retail.
How to create packaging appropriate for retailers.
Listen to Shopify Masters below…
Like this podcast? Leave a review on iTunes!
Store: Zootility Tools
Social Profiles: Facebook | Twitter | Instagram
Felix: Today I’m joined by Nate Bar from zootilitytools.com. Zootility tools makes surprisingly thin the multi-tools. They pulls the tools that you need where you need them right in your wallet. It was started in 2012 and based out of Portland, Maine. Welcome, Nate.
Nate: Hey, good to be here.
Felix: Hey, yeah, excited to have you here. Tell us a little bit more about your store and these multi-tools that you sell.
Nate: Sure. I feel like it frames the picture best to share where I started it. That was on Kickstarter. I had this idea while I was working as a software engineer. This was a mechanical device and it was just a simple idea. It’s like a widget at its most basic sense. It’s a piece of metal the size of a credit card like you were describing that has a whole bunch of cutouts in it that function as different tools like an orange peeler, screwdrivers, one that’s meant for eyeglass screws which is something that people don’t commonly carry with them or are often trying to scramble for. Then something that is creative as a door latch slip to help you break into those janitor closets, you know, when those kind of occasions occur.
I realized this seemed like a perfect opportunity to try out Kickstarter because it seemed like the right type of product and the right platform to see if there was any interest in it before I got going. I put it on there. I had 2000 supporters in just two weeks. From there the next step was to put up a Shopify store to be able to get continued sales. I’ve just rolled it from there.
Felix: That’s cool that you had an idea and it was almost like a let’s see what happens approach to starting a business. You had this business and you wanted to try Kickstarter out, so you went ahead with that. I think that’s a great attitude to have for any entrepreneur just to go out and see what happens, try it out. I’ve seen these, I’m not sure if it’s your product or products like this. I’ve always had this fear, I really want this but I feel like I’ll put it in my wallet and then go on an airplane or something and forget to take it out. Is it ever an issue when you go to an airport having a tool like this?
Nate: You know, I decided early on that unlike some like devices that could be categorized in the same product category before mine existed that I discovered after I have the idea that I wanted mine to be TSA compliant. I left out some tools that had previously been on such a device like a saw blade or a knife edge so that it would have nothing that TSA doesn’t allow. It is in fact TSA approved and it doesn’t, it carries very nicely inside of a wallet or a purse and is not uncomfortable at all, as well as TSA is now very familiar with these tools and realizes that that they’re compatible. Early on there were some headaches with consumers saying that TSA was confiscating them because at the end of the day they are allowed to have final jurisdiction by each agent as to what they want. Sometimes people just want to go on a power trip.
Felix: Right. Yeah, that’s different comforting to hear. I don’t have to sweat while I’m waiting in line with a product like this. Yeah, that definitely …
Nate: Our newest product is pretty neat, the wildcard. It’s a pocket-sized folding knife that fits in your wallet because it’s only 2 millimeters thin. It’s the most novel knife on the market. It’s truly a work of steel origami. This one is not TSA compliant but I decide to do with the same kind of mindset in mind. I designed it so that the blame can be removed if you find yourself accidentally at TSA so you can remove the blade and buy a replacement pack later. Trying to be very creative about all the approaches to these things, not just accepting industry standards. I think that’s played out in some of the other things we’ve done as well.
Felix: Very cool. You mentioned this a couple times that you designed these products. I’m looking at them now and they do look like great designs. They look very sturdy. Did you have a background in this? You said you were a software engineer but you’re creating a very, it looks like a piece of hardware piece of tool that probably requires a lot of knowledge about how to create. Did you have a background in this prior to designing the Zootility tools?
Nate: Yeah. I actually went to college for mechanical engineering. I found my way into software engineering just through interest and doing startups. My origin was closer to where this product lies.
Felix: Very cool, make sense. Okay, so when you had this idea for creating a product like this, like you were saying, you didn’t know if there were other I guess competitors or other similar products out there. You knew that you had this idea yourself. What were the very first steps? Did you first put up on Kickstarter or did you try to get some early prototypes made first? What were the very first steps towards creating a product and eventually a business?
Nate: Yeah, In the software world, they talk a lot about the minimal viable product or the MVP. The first step wouldn’t be to just put the idea on Kickstarter as a one sentence statement or a crude drawing. In this case it’s such a simple mechanical device that surely I could have some type of prototype. I took it as far as iterating on the design to the point where I was satisfied with it, creating prototypes to see that it worked, finding a manufacturer that could make this, figuring out the pricing so that I do when I was asking people for how much money I needed that I could actually accomplish what I was saying I could do.
For a Kickstarter product, the minimal viable product is pretty far along. It doesn’t have to be all the way to being able to deliver it yet, which is the beauty of crowdfunding. You can see if there’s interest in your product before you take on the financial risk of investing and setting up the products and business to see, does anybody care about this? Because there’s two things you risk by going farther. One is your money, but the other one I would almost argue is more important, and that’s your time. You’ll spend a lot of time. That equates to money and opportunity loss of other projects you could have been working on if you weren’t working on the right project. Knowing early on or as early on is possible that there’s interest in what you’re doing and that there’s a market fit for your product is really important.
Felix: Did you have other product ideas that you were brewing around at the same time as this one?
Nate: Yeah, I had been working on some other ideas that I thought had such huge potential that there was no way I couldn’t work on them. I had compiled a list of ideas just as I came up with them day by day, week by week and kept on going back to that list and reevaluating what I was working on so that I wouldn’t just work on one thing for a decade because they tell you when you go to meet ups or read books that you have to be determined and you can’t give up. You also don’t want to be stuck on the wrong project and never get anywhere just because you spend your time on the wrong thing.
I took this list and I rated each of my ideas on the likelihood of success, the potential outcome on dollars that I thought this might be able to accomplish, and how much time I thought it would take. I scored each of those things and then multiplied them together for a final total and then ranked all my ideas by that total to see which one’s at the top. When I had Pocket Monkey float to the top, it almost felt like one of those data points that the pollsters in the last few weeks would’ve looked at and said, “No, that’s not right, that’s not going to happen.” Sometimes these things surprise you and you need to take the data seriously.
In this case, it maybe took me a week or two to fully digest what I was seeing that I should put on hold this project that I have spent the last two years working on and pick up this other thing that instead of having $100 million outcome opportunity, but it’s going to take me another two years and have a 10% chance of being successful, Pocket Monkey in my mind was at the most I could make maybe $1 million on this if everybody thought it was really cool. It was only going to take me a month to really know if this was on the right track and viable. I thought the chance of success with this were pretty decent, maybe like 30% or maybe a little higher. That score came out above.
Felix: Yeah. I love the very analytical approach being a very engineering I guess focused approach to coming up with a product idea. When you look at these numbers and you looked at the rankings and everything, it sounds like you weren’t just looking at the raw what can make me the most money. I think this is an issue, not an issue, maybe not so much an issue now but for a long time, especially in the software startup software engineering world there was always this idea of making a billion dollar exit, making hundreds of millions of dollars. You are saying that Pocket Monkey didn’t necessarily have the kind of potential, revenue potential as some of the other ideas but it sounds like it had a higher likelihood of success or at least you would know sooner if it would succeed or not. Was that more important to you then the actual revenue outcome or potential revenue?
Nate: I think once you take each of those components and put them together, the total picture that it tells you is worth paying attention to. If you have, in this case of Pocket Monkey, I wasn’t going to spend a whole lot of time and it seemed like it had a very high chance of success. It doesn’t matter how much money it’s going to make you, that’s a pretty overwhelmingly interesting idea because you can take that and hopefully turn it into more. I’ve now overshot my estimate as to what I thought Pocket Monkey would be worth. I’ve been able to reinvest everything I’ve made back into growing the business because it’s still I think with more in the future than it is today.
That’s the same idea with looking at $1 million idea compared to $100 million idea and going for that one because you’re putting yourself towards long-term success which might be even greater than your other idea just because it builds on itself and you have success sooner. Success begets success. If you don’t have anywhere to start from, you just spin your wheels. I feel like that’s probably a frustration that a lot of entrepreneurs can identify with that you’ve been trying for a long time and feel like they should have more success than they have had so far.
I think a lot of people become discouraged after feeling that way for too long and just fall back into normal nine to five job that there’s good merits to it. Some days I lament the fact that I don’t have a traditional nine to five anymore and I would love the opportunity to just not have to take home any kind of stress of the business and just clock out at five and let the bigger picture be worried about by someone else.
Felix: Yeah, no, there’s definitely …
Nate: Perks to both.
Felix: Yeah, no. I think that sometimes people do forget that you get a lot of things too just from having a day job like this. Like you’re talking about, the ability to let someone else worry about paying the paychecks rather than yourself.
Nate: To this date, I can look back and say I would be better off financially if I had just stuck with engineering and working nine to five from when I graduated college to now and just save my money and piled it, you know, reinvested in the stock market, done those kinds of things. It’s a wise track to take. For a lot of people who are risk-averse, it’s a great way to go. For me, I’m more satisfied now than I would be in that track just because I don’t enjoy doing what people tell me I should do. I want to do things differently just by design. I have a hard time accepting anything that anybody else tells me to do. I want to try it myself to see what the outcome is, and then it might be the same as what they told me but then I’ll believe it.
Felix: Yeah, let me learn my lesson myself.
Nate: You have to be willing to sacrifice in order to achieve what you want.
Felix: Yeah. One thing that you were mentioning about how successful begets success and maybe more I think a great piece of advice you gave was that you want to try to get those wins as early as possible, because again, I think if you shoot too big, have too great of a goal right off the bat, you either have to hit a home run or you’re going to strike out. There is no middle ground. You’re either going to be successful or you’re going to fail miserably. You’re saying that try to get to first base first. It might not be a billion dollar exit but at least it will get you in the game.
Then like you’re saying you have that encouragement, you have the ability to actually practice and learn how to be an entrepreneur because you are in the game and then have the confidence, have the kind of track record to keep on building on top of this. I think that’s a great point that there’s always this idea that you always want to dream big, definitely dream big, but you want to try to break that down in a way where you can almost reach these kinds of almost like base camps along the way of the mountain so you don’t have to shoot right for the summit right off the bat.
Nate: That’s exactly right.
Felix: Cool. You mentioned that one of the pieces of criteria that you looked at when you were determining which product after was the likelihood for success. You saw something in Pocket Monkey which is the first product that you offered, the first Kickstarter campaign that made you realize that this was going to be much more successful, much more likely to succeed than any other products. What did you see in it that made you say that?
Nate: With a product like Pocket Monkey, it’s not like you have to try to search out the end user. Since anybody can be a user of a multi tool and want to have something on them at all times, there’s 100 million people in the country that you can identify as potential users. You just have to put it out there and it’s going to find its mark as opposed to something that’s very niche, trying to get it in front of your audience is a real challenge oftentimes, especially with consumer products.
Felix: Yeah, that makes sense that there’s such a huge market for it that you’re likely to end up landing somewhere into some kind of target customer. When you talk about it, it all makes sense to me that there is, you don’t have to explain what a multitool is. There are a lot of people already buying multi-tools. Was this a hunch that you went with? Obviously a very measured hunch. Or did you actually go out and do any market research or did you look at any, I guess just for any listeners out there that are trying to take this approach to breakdown what’s a good product or not. Are there tools, websites that you referenced to determine if there was going to be a big market?
Nate: I want to say that I’m a bad example in this case but maybe not. Maybe this is oftentimes what people do when they end up having something that’s successful. I just had an instinctual feeling that because it resonated so strongly with me that this was a product I wanted. The reason that I knew so strongly that I wanted this thing was that my first instinct when I realized I needed something like this was to go on the Internet and try to find it. When I couldn’t find it, then I realized, wait a minute, this is a really, I can’t believe this isn’t here. This is quite an opportunity.
Felix: Yeah. It sounds like obviously a need that you had. It almost to you, I’ve heard other entrepreneurs say this too where you almost feel like this should already exist in the world. If it doesn’t, then maybe that intuition like you’re talking about is a sign that you should be the one that brings it to the world. Obviously you’re saying you had a lot of different ideas. You chose this one because there was a higher likelihood of success or at least you’ll be able to know sooner than later. What was the timeline we’re talking about here? From the very first I guess inception of the idea to let say having the very first early prototypes being built, how long did that take?
Nate: One month from when I started thinking about the idea and drawing sketches for it to when I had the first prototype. In that time I probably did 100 iterations on the design. I was pretty focused on it during that time. Then from there, it took me a long time to find a manufacturer. Everyone I talked to said it wasn’t a project they were interested in. It sounded too complex a lot of them said, or they the price point I was trying to achieve they just thought wasn’t doable. Pretty much everyone was time you need to go to China with this.
It wasn’t something that I ever took seriously. I felt like as soon as I sold it over there as soon as I had it manufactured over there I would end up seeing copies of my product coming onto the market over here. Some of them maybe by other manufacturers, but most likely the same manufacturer that I had paid to have their tooling set up to start producing these things would just be overproducing them and selling them out the back door. It’s a really common problem that people are familiar with. I didn’t want to be competing against myself where the competition had essentially zero cost of doing business.
With platforms like Amazon, eBay, and the current laws in the country, it’s extremely difficult to stomp out those types of infringing products. They’re hugely damaging. I also just felt like the right thing to do. I could make it over there and save a few bucks or I can do it here and have it be a product that I could believe more in that I’d have more of a hand in making but I could have a real eye for quality with because I could talk more directly with the manufacturer and iterate more quickly with them so that it would be the product that I wanted it to be. Those felt like such compelling reasons that I kept on searching for someone to do it domestically.
Finally I found someone. It cost more than I would have liked. The first Kickstarter that I did sold it for … sold Pocket Monkey for $12. It cost me about seven for each one that I made. That didn’t include having to put some kind of packaging around it. That didn’t include the mailing that I was going to have to do. I’m pretty sure I just about broke even, not paying myself anything on the project. I proved that there was potential for this product at this retail price because I figure $12 was where I saw it selling well at retail.
I didn’t want to put it on Kickstarter at $30 and have two people back it and wonder, would it have done better at a lower price? I just put it right at the point where I thought it would sell at retail and wanted to prove it out. For me it was all about proving it as well as getting the money to get started without having to fork out all that money on my own. Those are interesting considerations that people should take into account.
Felix: Yeah, so you were selling this like you were saying pretty much at cost. You’re just breaking even on it but you just wanted to see if people would buy it at this price, and then later you’d figure out how to reduce the cost.
Nate: That’s the important stuff there.
Felix: Yeah, no, I think that’s important to point out.
Nate: In low volume, it’s expensive. The volumes, the investment needed to get the price down. I eventually spent almost $100,000 setting up the manufacturing for Pocket Monkey. If I had set my project goal for starting this project is $175,000, the cost of setting up plus at least what it would cost me for the raw materials to produce stuff, nobody would have taken the project seriously. It never would’ve gotten off the ground. You have to start small, have a small win just like you’re saying, get on first base, and then look towards the next step of okay, now I’ve proved this out, how do I get to there?
For me it was selling the product on Shopify and trying to bootstrap the business through the money I could make continuing to sell the product once I had proven the business, the viability of the product. I also had to put some of my own money in at that point. It felt much less risk-averse because I knew that there was market potential for this thing. The customers wanted it.
Felix: Yeah, so let’s talk about that first Kickstarter again for the Pocket Monkeys. The Pocket Monkey, the wallet utility tool, the goal was just $4500 which is probably one of the lowest goals I’ve seen for anybody that’s been on this podcast. You obviously beat the goal, raising over $27,000. How did you set that initial goal of just $4500?
Nate: It was just the bare minimum cost to cover the setup cost for the run. I was going to lose money at that point. It was all about proving it out and it was an amount of money that I felt squeamish about just working over to set up manufacturing for something that when I asked my friends what they thought about this idea, I would say half of them told me they couldn’t see the potential there. That didn’t seem like a smart thing to be putting your money into when you’re working hard and you’re earning it slowly.
Felix: The 4500, again, was just to get things rolling. You weren’t ever concerned at all about let’s say that it was assessed when you were able to continue selling these, lots of demand. You were never concerned about, man, and I ever going to turn a profit on this? Am I ever going to reduce deposit? That was never a concern for you?
Nate: No. I figured I would cross that bridge when I got there. I didn’t want to waste my time working on something that wasn’t relevant. If nobody cared about this, then why would I spend another day thinking about how to reduce the cost to get it to where it needs to be if no one cares? The first up step just figuring out who cares and then figure out if it’s with spending more time on this project. The answer was yes, so then I spent more time, quite a bit more time. It took me I think almost a year to get the manufacturing set up. I was able to keep it here in the US again. This time was able to cut the cost by down to maybe a third or a quarter, no, a third or a half of what it initially cost, which was pretty good.
Felix: Yeah, that’s great.
Nate: For retail, the general rule of thumb is it needs to cost one … you have to have five times multiple on your cost of goods in order to be able to really get to retail successfully.
Felix: Okay. Let’s go talk about the pricing then. How did you figure out this, like you’re saying, it was $12 for Kickstarter campaign now looking at the site now, it’s a $14 price point. How did you determine these price points? Was it a hunch or did you put any numbers behind it?
Nate: For the price, I put up an AB test on the website. I tried out selling the product for $12. I tried selling it for 10. I tried selling it for 15. I saw what the sellthrough rate was. It dropped off when you went up to 15 enough that you actually made more money at 12. It didn’t really change the result when you went to nine. It just made sense to have it there. I tested the different pricing and found that that was the most beneficial.
Felix: Was this on your own site? Was it on Kickstarter? Where are you doing this test?
Nate: Yeah, on Kickstarter it’s frustrating. You just have to launch into your final version of the project without any way to test anything on their platform. You can do stuff on your own, but it’s a different beast once you put the project on the site. It’s frustrating that you have to lock in the price, you have to lock in your goal before you really know what people are willing to pay for it and what kind of goal is reasonable. I did it on Shopify. I had to just lock in a price. My gut said $12 would be the amount for the product category would sell well. I set it there on Kickstarter. I played around with it on Shopify once the project had ended and found that my hunch was actually pretty spot on. That was what optimized income.
Felix: The traffic that you’re getting from, the success of this campaign and I guess just the awareness of it from the promotion of this campaign was what was driving traffic to your own store, and then from there you could do some maybe testing with that traffic?
Nate: Yeah, especially on Reddit. At the time, Kickstarter had a rule that you couldn’t sell multiples of anything that was a product. They’ve since softened the terms a little bit. They’re still pretty weird about it. At the time what I did was I had a friend who really liked the project. He posted it on Reddit. I told him to point his URL towards the Shopify website instead of the Kickstarter project so that people could buy multiples over there because it was near the holiday time that I was launching this thing and my manufacturer had promised that he could turn around these parts in, man, I want to say it was three weeks.
Coming from initially at a college I worked as a product development engineer. We would do prototypes all the time where people would turned stuff around in 48 hours and they never missed a deadline. I was inclined to believe this guy because he sounded believable. It took more like 16 weeks. It was quite catastrophe when people thought they were getting Christmas presents and they weren’t. The upshot was since I had pointed Reddit towards the Shopify site, I continued to have a lot of traffic even after the Kickstarter project ended.
Felix: Oh, so this was a Reddit post that obviously Reddit will eventually I guess slowly decay a post and bump it down over time, but people were still finding the post and still coming to your store from this Reddit post?
Nate: Yeah, a large amount of our traffic was from there.
Felix: Oh, wow, very cool.
Nate: For a decent amount of time.
Felix: I see, make sense. Okay, cool. Again, a successful campaign, almost 2000 backers raising a little under $20,000, again, with the goal of just $4500. You got this influx of capital for you to start working with. You said you still had to set up manufacturing, set up everything needed to produce at scale and had to almost spend $100,000 on it. Was the rest of it just your own money? How were you able to get the capital together to prepare for a larger production run?
Nate: Yeah. The larger production run was, a lot of it was me paying that down. I was fortunate enough that my wife who was my girlfriend at the time, she and I lived together. I guess maybe we were engaged. She was my sugar mama. I had the apartment expenses paid for. I could take my salary while I was working as a software engineer and dump it into funding the manufacturing set up. She saw the potential as well so she was cool with what’s going for it. To her credit, she even said, “It doesn’t matter whether you turn a profit on this or not. I know it’ll make you happy to see where this goes. Your happiness is worth more to me than the money you’re spending on it.”
Felix: That’s why you married her. That sounds like a great partnership.
Nate: Then I married her.
Felix: Cool. Let’s talk about bootstrapping then. I think this is another situation that a lot of listeners will find themselves in where they don’t have the capital and they’re trying to make it work with just their own paychecks. Maybe they’re in a situation where they can reduce a lot of their cost, living cost and put a lot of their paycheck into their business. It’s still a very precarious situation because you’re funding a lot of into a project that could go into savings, could go into investments like you were talking about early on. You have to be very selective with how you spend your money. How did you decide that? How did you sure that you were, even though you had the cash to invest in the business, you didn’t have to worry about paying the living expense bills. How did you still decide how to spend your money on your business?
Nate: Yeah. I guess we just took it one step at a time. The first question right out of the gates after the Kickstarter project was, how do we keep this going? Once you have a Kickstarter project, just like you were saying the posts on other places like Reddit decay over time. The same thing happens would Kickstarter. At first you’re showing on the recently funded page and then eventually you’re no longer there. Word of mouth at first is driving people to your site, but then that decays. You go from having this onslaught of traffic to just an anemic drip. The question is, how can you continue sales and get to the next stage of even more sales hopefully?
For me it seemed like that sales channel that was going to be successful was going to retailers, having them purchase the products from us as a manufacturer at a lower price, marking them up and reselling them to consumers in their stores. Most of them that we work with are brick-and-mortar stores. There are some online retailers as well. We try to avoid anybody who’s going to resell it on places like Amazon or eBay because they oftentimes don’t play by the rules. It’s very difficult to enforce, figure out who they are and enforce your minimums. There’s no reason we can’t just do it ourselves. It’s a platform that anybody can just put a product on. It would be foolish for us not to be the ones doing that.
Getting to retail was the big question. The first way that I thought of doing this was to go to a tradeshow so that I can get in front of a lot of people all at once. I took the money that would be required for that. I think once the Kickstarter had worked its way out, I figured that there was just enough left to gamble on going to the tradeshow. I spent it on that. It in one sense failed miserably. I think in the four days that we were there I had 12 orders, each of which were $120. People would buy, maybe it was $240. They’d buy 20, yeah, $120. It was $120 because they’d by 20 Pocket Monkeys at half price from retail. I only made a few thousand dollars, but it cost about $7000 to attend the show [crosstalk 00:33:34] all your costs.
I had lost a lot of money but I had proven that retailers were in fact interested and I got a lot of valuable feedback from them being that that I could then incorporate. One people that people kept telling me was the packaging wasn’t right. Retail packaging needs to be very different from what is acceptable or even desirable on Kickstarter. That became the next thing to invest in. How do we get the packaging right? We stuck with our existing manufacturer and just got the packaging right to see, okay, if we do that, can we then sell enough of these that it’s going to be worth continuing down this road?
The answer was yeah, we started getting more and larger orders. We were losing a dollar on every single one that we sold but it proved that it was ramping up. That was the point that then I took the next step of getting the price down so that we were actually making money on each one we were selling instead of losing money. That was like the logical set of steps that we just followed what needed to be done next.
Felix: Yeah, I love that you are able to take these what you’re calling failures and actually learn from them. You hear it all the time, you want to learn from your mistakes, learn from your failures. You actually did get things out of, you might not have made your money back when it came down to the actual return on investment for that particular day, that particular week during that tradeshow, but you still got valuable feedback that you have a takeback that could be potentially more valuable than what you invested into the tradeshow itself.
Nate: It goes back to the original theme of looking at just a small win that if you take the idea of going for $1 million idea instead of $100 million idea is to just get a short term win. Worry about the long-term later. On Kickstarter I was pricing things aggressively, and at the tradeshows I was doing the same. Thinking about the short term, worry about the long-term later.
Felix: I love that approach. I think it’s a great way to get people that are really hesitant about starting business, still hesitant about executing just to get out there and start playing the game and then seeing where it takes you rather than just trying to plan out this roadmap that takes you from point A to point B and all the stops along the way. Because we all know that it never goes the way that you plan it out, especially the longer term you look out. This feedback that you got about the retail packaging, tell us a little bit more about this. What did it look prior to I guess when you went to the tradeshow and what kind of particular specific advice did you get on how to make it more retail friendly, especially for any listeners out there that are thinking about going towards retailers as well?
Nate: Yeah, sure. I started off thinking, okay, I want to exude quality. I used kraft paper that was printed on to attach the product to. I used silver coated twist ties to attach the product to the packaging. It looked nice. It definitely gave you the idea that this was a handcrafted artisan product, not just a run-of-the-mill stamped out in volume and made from cheap alloy and shipped across with a high carbon footprint. We were talking a very different customer. Going to retail, everybody said, “How is this going to stay on here? This packaging is going to get damaged. It’s going to get stolen.” All these kind of questions that didn’t value the things that I had tried to embody. It was challenging to figure out how to create packaging that continued to exude the ideals and properties behind this product while accomplishing the things these retailers were saying they needed.
Felix: Okay. What was the step by step approach? Did you design this yourself? Did you hire someone to help you with creating more retail friendly packaging?
Nate: I took a stab at it myself because I always like to … I was trying to learn as much as possible. I found that once again, I probably did 50 iterations of this packaging. It was kind of moving along. You would think you’d be there, you’d walk away from a day, come back to it, look at the screen again and say, “Oh, God, how did I think yesterday that that was a good idea?” Eventually I found a graphic designer to work with. She and I worked really well together because she would have some ideas and send them over to me and then I would modify them and send them back to her as like a sketch back. She would then play around with it some more and send it back. The two of us iteratively giving each other feedback came to the design that still to this day is pretty similar to the packaging style that we were using.
Felix: Were you still able to I guess highlight the qualities that you wanted to highlight when you had to Kickstarter packaging now that you had this more retail friendly packaging?
Nate: Yeah. One thing I chose to do was use a, we have a trap style blister. It’s this idea of a piece of plastic that’s sandwiched between two pieces of paper. You’ve seen these in the store. Oftentimes you’ve seen them with just the blister tray glued onto the front of a face card. Those ones, they’re very commonly uses the packaging style for hardware items in a hardware store where it’s just all about functionality and low-cost. Whereas having two pieces of paper together has a better feel to it. It’s thicker, it’s more rigid, it hides the face seal so that it feels more premium. It costs more, but I thought it was worth it. It was one of those things where financially it didn’t seem like to make sense to use this type of style of packaging but I thought that for the investment, I liked the outcome.
Felix: Okay, makes sense. We only talked about the very first Kickstarter campaign that was funded successfully. You’ve had I think five total on there. It seemed like you were returning back to Kickstarter every time there was every new product that you were releasing through Zootility tools. Is that the process? Every time a new product idea comes along, test the waters through a Kickstarter?
Nate: Yeah. We’ve continued to reinvest everything back into the business. We’ve been able to slowly do more of these processes ourselves instead of relying on outside groups to do them. That’s meant that we’ve had a lot of upfront costs to pay down because we don’t have any investors. Kickstarter has continued to be our method of getting the next project off the ground without disrupting our stability, because if we were to launch a new product and take on the financial investments of getting it off the ground and not have it be successful, we’d be going double or nothing on each one of these, essentially. The Kickstarter community has been our … it’s become our new sugar mama.
Felix: Nice. Because you’ve had so much experience on Kickstarter, it looks like 2012 was the first year you launched the first campaign. What have you seen over the years? How has crowdfunding changed especially on Kickstarter over those last four years or so?
Nate: I think it’s changed quite dramatically. The number of projects on there has skyrocketed. I could be wrong in this but I’m pretty sure the number of users has not kept pace with how fast projects have come on. I think there’s also a lot of copycat projects which has created backer fatigue. It’s harder to stand out. There’s fewer backers willing to try out something that looks as, what’s the word? Amateur maybe as mine did when I first started.
It’s unfortunate in a way because it means that it’s more … these more established you might call them makers that are being able to be successful there, there’s not a great way in their algorithms to highlight the new makers who are just getting started. There’s not as much backer interest in those projects. It’s not just a question of Kickstarter and it’s not a question of these semi professional makers. I think it’s more just backers are voting with their money and it’s becoming more difficult for someone like where I was four years ago to get a lot of attention and to get started.
Felix: What’s your approach like today? How has it changed when you are launching, let’s say you have a campaign you want to launch in the next couple months? How do you approach it differently now to stand out in a much more competitive Kickstarter environment?
Nate: Yeah. I think video and images have become more important. It’s not to say that there aren’t campaigns out there that don’t buck the trend. Sometimes it can be refreshing to see a project that doesn’t add all those things and it feels like it’s more raw. If it’s the right equation, it can work out really well. More often than not, you’ve got more success with having good images, good video. The other thing I learned was to keep the rewards as simple as possible because they become a nightmare to organize and to fulfill.
Any kind of variable that you add in to your rewards, you’ll have people asking all kinds of permutations for that variable in their reward. I get it from their perspective. It’s like, “Hey, this is a community. Can you just do this one thing for me? It’s not that big of a deal.” From their perspective it’s the only email they’re sending out that night. It doesn’t seem like that big of a deal.
When you get 10 of those a day and you’re already behind on other things that you’re trying to do to keep your business running successfully and you’re trying to start this new project and hoping that you’re not going double or nothing on it and you get all these other requests coming in where it’s permutations where the backer really wouldn’t be happy with just, if that variable hadn’t existed, they would never would have known the difference and they’d be totally happy. It’s a distraction and what a waste of everybody’s time.
Felix: Yeah, it’s like a Pandora’s box once you give them the idea that they could customize the rewards, then they’re going to start thinking of options to add or to throw at you.
Nate: Keep it simple.
Felix: Got you, makes sense. WHere do you think crowdfunding will go in the next year or so? Are there any new opportunities that you think are opening up because of the I guess evolution of crowdfunding?
Nate: I’m not sure where the community will go. I know where we’re going. We’re trying to help other makers get that initial start to bridge the chasm between their idea and getting to a larger audience. We’ve been working with a few makers who have just come across us and reached out trying to get help getting started and are bringing their products to retail for them. That’s an interesting model that I would like to see shake up the industry so that there aren’t these gatekeepers charging $5000 to attend a tradeshow that you have to be willing to shell out, you have to be at large enough scale in order for that to make sense to be able to take that risk to take that chance to get there.
There’s so many hurdles along the way that stumble small makers and make them fall before they can make it across the chasm that I was describing that we don’t see their products in the market. I’d like to see more of these products stick around as a long-term option for consumers and not just a one-time project of interest which is what the community oftentimes has become.
Felix: Yeah, I like that idea of looking to partner, looking for people to have gone down the road before you and working with them in getting their mentor ship to get into these channels or to maybe even help you help them run a Kickstarter campaign, help them get some visibility rather than going to these gate keepers like you’re talking about, rather than shelling out all this money to go to these tradeshows or launching on Kickstarter when there’s so much saturation already. Trying to find people that have already been on a path and reach out to them and see how you guys can work together. I think that’s a great piece of advice.
I’ve heard this previously too from other entrepreneurs that haven’t gone down the traditional route and looked for partners of existing companies that are sometimes the same size as them, but ideally it’s a slightly bigger than them, slightly further along than them, and partnering with them because there’s definitely things that you guys can learn and help each other with and doesn’t have to be strictly like a monetary I guess trade. Holiday shopping season is definitely officially here, especially once this episode goes live. You have a very giftable product because of like you’re saying, it’s very general I guess. A lot of the market understands what the product does. It’s at a price point that makes sense. It’s a gift. What are you guys doing to prepare for or I guess have you prepared for the holiday shopping season?
Nate: We’ve been trying to build up inventory. We’ve been doing a revamp of our website that will hopefully go live before Black Friday. Both of those things strive to once again to use the best images and videos that we have on the site. Where right now the site has been static for almost 2 years. It doesn’t adequately represent the brand that we want people to know about. These qualities that I was talking about that we tried to exude with the packaging early on, I’m not sure that it comes through on our sites. The easiest thing you can do to really stand apart and make your site pop is photos.
I finally bit the bullet and paid a professional photographer to do a shoot with us to get the photos we need. He started off with a grand plan. He’s a great guy, I really enjoyed working with him, but it was a really expensive proposal he put in front of me. I pushed back and he was willing to consider a smaller outset to get started with the set of photos that could help us define the brand, see some success on the site, know that it’s worth spending more money on this type of thing to improve it in the future.
Felix: All right, cool. It looks like revamp with the website is something that’s on the horizon, more photos. Anywhere else you want to see that the brand itself go in the next year or so?
Nate: The other thing that I think is a great way to draw more interest is to do more of what I’m best at is design more products. New products provide opportunity for marketing and get people to pay attention to your brand. Launching new products is a good way to get people to rediscover our old products. It’s tough to balance all these different business needs while trying to still work on the original thing that I did, which was to just sit down and design a product. Now I’m trying to do that thing that I was able to do 100 iterations of in one month over a six month period. Trying to get an iteration in a day.
Felix: Yeah, you got a lot more to juggle these days. Yeah, thanks so much again for your time, Nate. Zootilitytools.com again is a website. Anywhere else you recommend our listeners go and check out if they want to learn more about what you’re up to, these new products that are coming out?
Nate: You know, you can always find our projects on Kickstarter. If you search for me, Nate Barr, you’ll find the projects. You can learn more about all the features and the history of them and then click through to find the website to see where you can get them yourself.
Felix: Very cool. Again, thanks so much for your time, Nate.
Nate: Thank you.
Felix: Thanks for listening to Shopify Masters, the e-commerce marketing podcast for ambitious entrepreneurs. To start your store today, visit shopify.com/masters to claim your extended 30 day free trial.
Ready to build a business of your own?
Start your free 14-day trial of Shopify today!