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How to Test Market a Product without Buying Inventory – From a Shark Tank Alumni
Kevin Williams was the guy investors would call to come in and make sure their venture capital monies were being well spent. Often times he discovered they were not. This experience lead him to a methodology that enables him to test the viability of a product and see how the audience reacts, before investing monies in inventory.
He does this with a few hours of his time, and a relatively small budget.
Kevin’s path also has led him to work with patent holders who are experts at what they do, but do not have the online direct marketing experience needed to take a product to market. One of his recent deals, Brush Hero was featured on Shark Tank! Kevin talks about his positive experience with that process and how it helped his business.
- Test a product concept without inventory.
- Fail fast and don’t fall in love with a product.
- Know what you are looking for. Set up the test and let it run. Don’t micromanage it.
- Use Facebook advertising for testing. It is not rocket science.
- Landing pages are designed and up in an afternoon, and FB testing runs for a week.
- The budget is small, $50-100 per campaign (2-3) per day for 7 days.
- A CTR minimum is established. Write the goal down, put it in an envelope, then check the number i 7 days.
- More testing can be done if the results are positive. Negative ones are scrapped.
- Licensing deals with patent holders are ideal.
- His Shark Tank experience was fantastic…did he get a deal?
Mark: Hello Joe, how are you?
Joe: I’m doing well, how are you Mark?
Mark: I’m hanging in there. It’s been a busy couple of days. Busy [inaudible 0:00:50] You’ve been busy too. You’ve been talking to a lot of people.
Joe: I have. I think we did probably three or four calls, Podcasts in the last seven days and get some great ones coming up.
Mark: Awesome. Well, who are we talking about today?
Joe: Kevin Williams. You and I saw Kevin do a presentation at eCommerceFuel in January. I don’t know if you remember me saying to you what a jackass I am as he did his presentation.
Mark: Maybe I wrote it down.
Joe: Like Kevin did a presentation on testing products without any inventory, and this is exactly what I used to do in my radio direct response days. I’d write copy, we’d buy media, we’d send it to a call center or any answering service just to get the calls for a thousand count. I knew which media was going to drive the right revenue, so wasn’t an issue. I just needed to see if the audience was interested, and that’s exactly what Kevin is doing online now and then afternoon he’s writing the copy, he’s building a landing page for a website, and he’s setting up a Facebook campaign and sends traffic to it, and counts the add to cart buttons and collects and clicks or rate, and measures it wether or not he wants to take on a new product based upon that success. These products come to him patented and looking for licensing agreement with him so it’s a great system that he had setup.
Mark: Let’s back up a little bit. We can certainly cover the fact that you’re a jackass. But I think we’ve covered that in other Podcast episodes..
Joe: Okay let’s re-record this. That’s not appropriate. Now you’re calling me…
Mark: We’re just going to start with that but let’s get to the bigger point here and let’s bring this to somebody who bind a product based business. Something I know I talked to James Thompson about this, I talked to Chad Rubin about this as well in that episode about this idea of continually building products. For somebody looking to buy an eccomerce business, this is going to be obvious for some but maybe not for others, why do they need to be looking at testing new products? Why can’t they work with the stable products they already have and who’s just really going to appeal to?
Joe: Well for Kevin’s point of view, he thought that this will be most appealing for non FDA products. I specifically asked that question. I think folks can make their own decision. Kevin looks at it like did in my old days, direct response oriented products. His main product is called Brush Hero. It’s a product you might see on TV, you connect a hose to it to wash your tires, you can do it inside the house on dishes and all sorts of different things. It’s a problem solution oriented. The fact is, most products are problem solution oriented. So it’s great when people are expanding I think in their product lines and want to test something new and see if instead of them thinking “oh no, this is going to be great, my customers are going to love this”, instead of going and spending 15,000 dollars on product and finding out that customers don’t love it, you spend 1,500 dollars on ads, and let the customers tell you whether they love it or not…
Mark: These are principles from what I understand, that you can also use in non-eCommerce applications, even with SaaS product or any business that’s taking payments online. This idea of testing before you invest a bunch of money in creation is one of the basic principles of successful online business and developing and growing your business.
Joe: Yeah he learned about it through, he was a hired gun for venture cap companies to come in and fix the problems after millions of dollars are spent on a product and it was going nowhere. And one of these particular products, he says, “you know what, we could have built a fake boost and tested it to see if people are interested. Instead of spending ten million dollars in developing the product and testing it that way, they could’ve spent 10,000” and his point was very well taken and I could see this being something that people with SaaS products or physical products can use, and whether or not it’s going to be a product that can be sold on Amazon or not, I think it’s disputable. I see most things as problem solution oriented when it’s a physical product.
Mark: Awesome. Alright, we’ve talked a lot. Let’s go and get right on to the center because this is going to be super interesting.
Joe: One more thing real quick, he was on Shark Tank as well. We’ll talk about that at the end so stay tuned for it.
Mark: Pretty cool.
Joe: Kevin Williams, welcome to the Quiet Light Podcast. How are you doing my friend?
Kevin: I’m doing well Joe, thanks for having me.
Joe: Good, good to see you out at ECF in Laguna Beach last month.
Kevin: Indeed, it was a good time.
Joe: Now you did a presentation out there that made me think what a jackass I am and I can say that because it’s really [inaudible 0:05:39] but really, I honestly felt that way sitting in the audience because what you talked about, I used to do in my direct response radio days and then, my wife created this product and we did just the opposite. Spent a whole bunch of money on inventory, and tested it and find that it didn’t really works very well so I want to talk about that and I want to talk about your experience. Your recent experience on Shark Tank and see how it worked out. But first, tell these folks a little bit about yourself, where you come from, what your business is, and all that.
Kevin: So I like what Joe said that I was really good in extricating wealthy people from bad investment decisions. Not necessarily saving the money that they’ve invested at the end of the day but before my ecom adventure started, I was essentially a mercenary operations executive for angel investors, private equity companies, venture capitalists, etc. They’d parachute me into a company after they’ve already spent 5, 10, 15 million dollars in developing a concept, and my job was to create org, create structure to figure out which direction the company could actually go next. To be honest, a lot of the time, my job ended up winding these companies down because they gotten really far down abroad before they really understood what their value proposition was, whether they actually had a product or not. Instead, what they almost always had was a charismatic founder, or an inventor who had really done a great job with raising money. The great personality, good people, interesting ideas that they sold to investors who then fell in love with the ideas. So they would start pouring money into it and the project/products often sounds like “oh it’s only going to cost us half a million dollars to get this thing to market” Well, that rarely actually happens since several million dollars on the line, the products still hadn’t materialized.
Joe: Income you?
Kevin: Income me, income me to try and figure out which way to go but what I recognized in doing a bunch of these different engagements, and I added some pretty crazy things. I built the world’s first hotdog vending machine which I talked about in Laguna, which the abstract seems like a horrendous idea but there was a pretty good market case, for a hotdog vending machine, trust me on this, I helped run a direct consumer tire company that sold tires online, we have 10,000 in-actives gears, and then we would come to your driveway to install them, piece of electrics company, a drone company that was trying to compete with a Predator drone, a virtual reality environment for kids, just a whole bunch of different concepts are across my desk. I found it really cool to, I have to learn about new industries every couple of years. But in almost all of these cases, If I could’ve backed up the clock, before I was ever involved, I realized that there were a lot of different ways that I could’ve tested these concepts before people had put hundreds of thousands of dollars since then. Take the hotdog vending machine, we talked about minimum viable products, Eric Ries, etc. about iterating on ideas but if you want to build a vending machine, this thing weighed 900 pounds, had ten thousand parts in it, I ended up costing tens of thousands of dollars per unit. If you want to test the idea of a hotdog vending machine, you literally could take a vending machine, strip everything out of it, put a person in it and serve a hotdog through the door and see if people actually buy from it. Pretty cheap compared to 10,000 parts and patents and manufacturing I would imagine. And seven years of a lot of people’s lives. I honestly think that one could’ve worked. There is a business case for it, but 2008 was a pretty rough time to be domestic manufacturer of hotdog vending machines.
Joe: Yeah we could debate whether or not, we think that one would work or not, I know my wife would be like “hell no, I’m not buying that hotdog vending machine” we’ll let the kids do that as well. Tell us now what you’re doing today.
Kevin: Okay so, my current business, our flagship product is the Brush Hero which is a water powered turbine brush but that’s not the only thing that we do. We actually acquire or license patents for consumer facing products and then we do direct consumer marketing. We’ve built a global infrastructure for selling products direct to consumers and we become pretty good at it. But before we ever acquire our products, so way back to day 1, we do, what I like to call my mini MVP testing, so an MVP which isn’t actually getting to the Minimum Viable Product, it’s getting to the Minimum Hypothetical Product. Instead of actually building something actually [inaudible 0:10:39] something, it’s doing digital representations of the product and getting them in front of as many people as we possibly can, as quickly as we can, to determine if we have something or not. And part of the methodology is moving super quickly as we do this. We don’t want to fall in love with these products, I like anyone else and susceptible falling in love with ideas. You nurture it, you care for it, you build it, you hypothesize about how big the market size is, and I need the one that let it go. So even before we necessarily have an option on a product, but if we have an opportunity, we’ll take the product idea, we’ll have our graphic designer, well back in the day it would’ve been me, mock up a landing page, that has a big [inaudible 0:11:23] clearly defines what we think are the unique selling propositions of the product, whatever the product may be. I mock up through stock arts or stock video, or even just running around with an iPhone and shooting some quick video. What that product is going to do for the consumer, put a big CTA on it, and then setup a series of Facebook campaigns that test a few different audiences that pump a few thousand people to the page and at the end of the day, what’s most important to me is even with a halfway done website, a halfway done lander, how many people actually click on that add to cart button? So if I can get a significant number of people from one of those audiences that are interested in clicking on that button, I know that I may actually have something, then I proceed with the conversation with the patent holder and proceed with the licensing, and then I process to a more traditional MVP where we may buy five hundred or may buy a thousand, it sort of depends on the MLQ and the cost of investment on the product. But before I ever do that, I have a really much better idea if whether the products could work or not. I’d be honest, this isn’t rocket science. When you think about it, most of the people who’re going to be listening to your Podcast do digital marketing. So they have these tool sets. It’s sort of a reluctance to commit to having that cold hard data I think. We all fall in love with these products and we’d want to nurture them and want to make them work. I would much rather have a large portfolio products that I can test and fail rapidly on 50% or 75% of them and then focus my efforts on the few that the data tells me are going to work rather than hammering on one bet my instinct, my gut tells let’s go.
Joe: How often is the data contrasting your gut instict?
Kevin: Not all the time.
Joe: That’s where AD testing came up with right?
Kevin: Yeah that’s where AD testing came up with
Joe: I always thought I knew what my customers wanted and for the longest time, I’m like, this is exactly what they want and ultimately, it’s the exact opposite of what they wanted. And when I figured out how to do AD testing, I vowed never ever to go back. Let me summarize you quickly then I want to get in this in details. You don’t own the products, you don’t invest money in manufacturing them, you don’t develop them, you don’t ship products from [inaudible 0:13:53], you don’t do a big paid advertising campaign after it’s on a boat for 12 months, you don’t put it up on Amazon, you sit in your home office, and you tell somebody to create and ad for somebody that has a patented product that you’re going to get a license too, and you see the works! If there’s enough interest then you say, “okay I’ll pursue this”. Is that pretty much summarized? Okay so everybody listening is going “God damn it! Why didn’t I think of that?”
Kevin: It’s a digital version of slapping it up against the law and seeing if anybody care. I’d be clear about this, sometimes the product doesn’t even exist. The patent exists. But there is nothing but a functional prototype. So I’ll mock something up. Our graphic designers are pretty good. They’ll mock up something that looks good enough and put that forward. Now my expectations are going to adjust by how close to market our product is. If it’s really just slap together, then what I’m expecting to see as far as a clicks rate, I’m might add to cart button, it’s probably going to be lower than something that has a bunch of video content and other bits and pieces that are [inaudible 0:15:04]
Joe: So, how much time and money do you put into the development of this page and the Facebook advertiser.
Kevin: I can’t stress this enough. We really like to move fast on these things, and it’s not just because I like to be efficient because I can waste time like anybody else. It’s not falling in love with these products. Getting together in an afternoon like, conceptualizing what the lander’s gonna look like, what’s the cold action going to be, what’s the unique selling proposition, or what are a few unique selling proposition, you might have two or three that you want to test. Looking good enough using a template, whatever it is, putting it up on a some sort of a landing page has like leave pages, sometimes we use it [inaudible 0:15:49] other sites like that, and putting up a few ads sets, a few different campaigns, driving down through a couple of different concept ads and then walking away for a week. So, I’ve probably invested of my own time with two or three hours, stretches into 5 or 6 because I am thinking about it.
Joe: So when you walk away for a week, what do you mean you walk away for a week? You test it and let it run for a week or you walk away for a week and look back at it?
Kevin: I walk away for a week and I tend not to do too much tweaking of the ads sets. It’s tempting to do high level of ad optimization, I mean that’s what I want to do. If I did a products rate, and yeah I’ll get in there everyday and I’ll tweak just a little bit at certain ads are performing better than others, I’ll allocate budget that way. In it’s first cost, we’re not talking about a whole bunch here. We’re talking in 20, 50, a hundred dollars per ads set a day.
Joe: And how many ads sets?
Kevin: Usually two or three different ads sets. So each ads set is, I test on Facebook based on audiences on the ads set level, and I firmly believe that audience selection is generally more important than creative. Creative optimization comes after you found your audience, so I want to cast a reasonable net on audiences so it may be older men, it may be older women, it may be younger men, whatever it might be at interest based targeting. But I tend not to get too granular because I’m trying to get a big bucket of data as quickly as I can. You do if you’re willing to spend some money. 50 or a hundred dollars a day per ads set does add up but you’re not doing it for weeks and weeks at a time. You’re doing it until you have a comfort level with the day that you accumulated.
Joe: We’re talking less than a couple of thousand dollars right?
Kevin: Sure, yeah usually about a thousand dollars is what we spend. A thousand, 1,200 or 1,500 dollars on the direct ads spent.
Joe: This is where the jackass part comes in because I did this exact same thing on radio. We would have a product, somebody would come to us with a product idea concept the manufacturer generally said “hey Joe look, these guys’ design is, they built it, it’s packed, it’s ready to go, but they can’t seem to sell it, do you want it?” We would write a 60 second ad for it, test it, specifically to the market or the audience that it was geared towards and send it to the call centers. [inaudible 0:18:06] calls, we called it calls for a thousand, we get, and we could deal with 500,000 dollars because we knew the stations that work really well and that we’re very responsive, we’ve measured it against other campaigns. And if it worked, then we get, “okay, now let’s see if we can convert sales”. Do you follow a similar process? Like, sounds like you did all of that in one week because you’re also converting or you’re adding the cart, right?
Kevin: Yes, it’s not a real cart. I’ll flank that out, that people we’ve asked [inaudible 0:18:36] well, unless they click that add to cart button, where’s it going? If you build a whole Shopify store and setup processing everything else, no, [inaudible 0:18:43]. Click on that add to cart button it goes to a “Thanks for your interest” type page, “I’m sorry we’re already sold out, leave your email” so now we have a lead gen and at worst, we’re going to, take off a few hundred people and if we’ve manage to get a few hundred people..
Joe: Take off? Is that what you say?
Kevin: Take off.
Joe: Because they can’t buy the wonderful product..
Kevin: They can’t buy the wonderful product and at worst, the most enthusiastic of those people are going to leave their email, and now we may have 25, 30, 40 people who we can contact our real MVP, get products in their hands, get some reviews, get some interactions, etc. But feel a lot better about it, this isn’t the end of the road at all. This is just the first betting process, I’m not going to mortgage my business or my house to buy a hundred thousand of something right off the bet. The trick is to iterate and learn about your market and learn about your customers and then follow more regress product development path.
Joe: Okay so you get to this point where you’re adding the cart, what percent are you looking for? In terms of people that go there and click the add to cart? What is the measurement that is the cut off for you to move on or to move forward?
Kevin: So there is some gut to this as far as the assumption of how large the market is and how good the lander is and how close the product is to market. The fancier the collateral that we have as far as content, the higher the CTR I expect, the Clickthrough rate on that add to cart button. If it’s really sort of slap together, well work. I usually look for, I’d like to see five to seven percent on a really well developed product and a minimum of three percent. I can really work with that. But you’re gonna have a ton of cart loss after that. We all see, well not all. There’s some special unicorns out there that don’t, but most of us see cart losses in the 60% to 70% range, so you know that if you have only 3% of people who are adding to cart, you’re going to lose 60 or 70 of those people anyway, so your overall conversion rate is going to be below a percent which isn’t great. But it gives you a starting point in something you can work front. Sometimes you’ll see this come in at like 1%, and if you have a 1% CTR on this, this lander has nothing left to work with. If the market is not big enough or your unique selling proposition isn’t how strong enough, and I’ll admit sometimes we’ll look at the USP, that unique selling proposition that we’re offering, and we may do this again, like, I think we missed the boat. Like look at the comments that come into the ads and say, “oh my grandma would love that”, why am I getting this? Who knows what it is? So run another ads set and try to revalidate it. You don’t want to go down the rabbit hole that way and keep chasing it, but if you feel like you have a good angle on a good opportunity then it could be worth testing.
Joe: So at that point you might, split test the lander page and do a few different ones to see which one has a higher add to cart ratio?
Kevin: Absolutely, so ABT, always be testing. You’re paying for this data, you’re paying possibly thousands of dollars, at least hundreds of dollars for, you want to learn as much as you possibly can so we’re very serious about our data and what we look at and how we look at it. Making sure that analytics pieces are in place, that our pixels are setup properly, that we’re collecting them a graphic data so we can learn about those customers.
Joe: Alright so for the people that are listening and scratching their head, going “is this even legal?”. Please address that question because I know the answer.
Kevin: Well, is it legal to sell somebody’s product that you don’t have the rights to sell? Not really, I’m not really selling it. It’s very very low volume stuff. Obviously everybody’s going to have a risk towards this, I’m not gonna go out and I’m not gonna take money from people for a product that are not authorized to sell. I like not being in jail.
Joe: And you’re not even selling to product, you’re just doing an add to cart button, right?
Kevin: I’m just doing market research and market research works on all the time.
Joe: Does the patent holder know that you’re doing this? I approach you and say “hey would you be interested?” you say “yeah okay but I’m going to do a test first” or do you just say “guys let’s test this and see if it makes sense”?
Kevin: We’ve got it both ways. Usually by the time the patent holder finds us, they were big and far enough down that path we’re having an open conversation with them and they like the idea of validation. A lot of them have been to lots of different investor conversations. They don’t have a whole lot from that, so we’re open about it, “hey we’re going to, before we do anything, before we sign anything, how about, we’ll run a test, we’ll let you know what we find and let you know if we’re still interested in your product. If it’s one that we feel that there may be more competition for, or we really need to move quickly, we might run a really lightweight for even more lightweight version of this before we approach them.
Joe: Can this concept work for people that wanna sell on Amazon and they wanted to start with that process? Is this a low cost, low budget way of testing the market to see if they’d even be an interest there? Will it correlate to Amazon sales?
Kevin: I’m torn on that, I run a pretty large Amazon business globally and we have been successful with some of our products that are new niche products that literally don’t exist anywhere else on Amazon but it’s hard. Amazon isn’t really a new product discovery engine, it’s a search engine. So people have to be looking for your niche, for you to put a product in front of them for them to care about it. They’re not looking for it and you’re going to have a really hard time ranking it. Also, what people are looking for on Amazon, and what people are looking for out there in the wild aren’t necessarily the same things. I maintain that this works really well on direct response products, spin things that people see and they want to buy. So if you can get attraction in this testing off Amazon, as you grow that individual brand, there’s no reason that that Amazon business will continue to grow, but you need to assess the niche that more traditional Amazon research techniques as far as number of expressions for the niche, the traditional tools that are out there like Jungle Scout and others you can add to determine how competitive that niche is. A few years ago I would’ve said “yes absolutely!” when Amazon was a lot easier because there were more tools that we could use as far as ranking products. Now as a very wide hat, even the simplest doesn’t sound like it, it’s a lot harder to rank on Amazon. So Amazon tends to be a little bit more of a tail of the opportunity as opposed to the leading edge.
Joe: Okay, so one of the keys to success in making this work for you is getting the traffic through Facebook advertising. If the novice that’s listening, or maybe their not a novice but somebody that does eCommerce the physical products but has not done Facebook yet, is there any particular program or approach that you would recommend they follow to test really really well?
Kevin: So there are a thousand people that are out there selling shovels for digging into the Facebook piece of course. I think it’s very easy to get wrapped up in whatever the trend is. In the last few months it’s been Messenger. People are making tons of money on Messenger. I’m not one of them, we’ve tried. That’s for my products or whatever reason. But keep to the basics which is a [inaudible 0:26:23] campaign structure, so you’re campaign is testing an approach, like an idea, a unique selling proposition. The ads sets that sit under that campaign are testing the audiences and then the ads that sit under there are testing the creatives that are match to those audiences. So, it’s pretty easy to setup. You have a campaign, you have one, two, three ads sets, and then if the ads set audiences are similar enough for the unique selling proposition is pretty much the same, then you’re launched in three ads under each of those ads sets that are the same ads, and it’s really that simple. Then you need to run the traffic that you’re running to each of those ads sets and see which ones are actually performing. And you’re optimizing those ads. Again, I say walk away because it’s too easy to get in there, pick and choose. You’re pixel doesn’t know, okay so, pixel is what tracks the data that’s flowing through Facebook and into your page. In Facebook that pixel is trained by a lot of exposure to audiences so Facebook realizes overtime the X Y or Z profile is most likely to do A B C action on your site so it tries to put those together. When you launch one of these sites, your pixel doesn’t know anything. It’s fresh, so Facebook doesn’t know how to optimize on it and as a result, you don’t want to be doing too much tweaking to your ads. You don’t want to be constantly having your fingers in there. It’s like people who talk about gate trading is like, most investors aren’t going to make a ton of money gate trading. Sitting back and being a little bit more patient and letting the data come to you is what I would advise. But making sure you have the technical bits and pieces, and again, you don’t have to pay the consultant a ton of money for this, you don’t have to go do a program, and a little bit of Google research as far as how do I setup a pixel, and then a basic campaign structure which Facebook has plenty of tutorials and things on how to do that. It’s easy for me to say because it’s what you do everyday, but at least you’re setting the path and the guidelines for somebody that wants to test this model without spending a whole bunch of money on inventory which I think is a brilliant concept.
Joe: Let’s touch real quickly on the next phase. So let’s say you’ve been approached by somebody who has this patent but they can’t market it, that they’ve done what they can, you go ahead and you try this. Most people listening are probably going to go the approach of marketing their own physical product. Where it’s great way to test cheap. Here you were marketing somebody else’s product. Are you getting a licensing deal on that patent, is that right?
Kevin: Generally, we do licenses. I say we buy patents but we’ve never actually consummated the purchase. Generally it ends up with a license that has an option that’s based on volume. I’m looking for global exclusivity, in definitely on whatever the product is. I’m also looking for first writer refusal for whatever comes out of that inventor’s great brain, which sometimes they’re reluctant to do. We work at different license rate based on where the technology is, how much money it’s going to cost us to invest in it, or sometimes [inaudible 0:29:31] are already done so we don’t have to worry about that. Different rates based on derivative products that may be using the patents but that we developed versus things the inventor developed, etc. I like to say and think that we’re good to work with. We try to integrate these guys and gals into our world and make them feel loved. We write a pretty large checks to some of them for not doing a ton of work. They did all that work years ago. By first [inaudible 0:29:59] this product and they try to invent it, whatever. I’m not in the business trying to take advantage of these people, and I want to make that really really clear because there are a lot of disingenuous business mauls out there that are trying to extract all the value they can from these inventors. I’d like to sleep at night, I like the collaborative relationships that I have with these folks.
Joe: It sounds like a good marriage if you will. With the inventor doing his job, you doing the testing and you’re job. Now, you’re investing money in the manufacturing process but you didn’t tell that you’ve got a winner based upon your pre testing, so you’re more comfortable there. I would assume. One of these products, we’re running a little short on time so I wanted to just jump right to one of these products which is, Brush Hero, right? You’ve had a situation where you took on the licensing deal and you’ve run through the testing process and it’s, I think, probably your biggest product that you’re selling now. And you’re just on this funky little show called Shark Tank, is that right?
Kevin: Yeah, back in January. I’ll be frank like, we got a little lucky with this product where in we did the MVP on it, we tested it, it came in at 7.5% or 8% CTR within a pretty accessible demographic of upper, middle income that we knew that we could reach. We already have the Twolang, so we rolled forward. The inventor already invested in the two language, which was really expensive, so for us, this one’s pretty much no-brainer. We may have paid a little bit more on the license but we have the Twolang so the actual dollar investment was just on the inventory. We didn’t have to do any other developments. We already had a supply engine setup, so we ordered the parts, brought them together, assembled them, got them in front of people. We’ve done really well with it. Mainly direct response advertising but increasing in retail.
Joe: Define direct response advertising for those listening.
Kevin: So direct response advertising is advertising that’s designed to get a response now. I want a direct response from my advertising, as in, widget is in front of you, shut up and take my money, click buy, versus brand advertising which is what you see with Coke, and automakers and etc. with their building this ethos that surrounds around their brand. You can measure direct response advertising in terms of clicks and conversions. A brand advertising is served with different deal and that’s honestly, we’re having a move into, with the retail presence. Shark Tank happened, I’m not allowed to talk about too much about the details of it but it was a marvelous experience. The whole thing working with the producers and it took a while, eight or nine months to get to their whole process and the rounds…
Joe: I was hoping for some [inaudible 0:32:49] I think these people are looking for some information on Mr. wonderful or anything like that. Did you have trouble? What was the process like in terms of applying? How long did it take?
Kevin: Every process is different, they do have scouting producers who were out there looking for opportunities.
Joe: Did they find you or you found them?
Kevin: It was suggested that we apply. We didn’t necessarily, we didn’t go to the front of the line or anything. We still had to apply, we still had to go through a very complicated process but there’s somebody saw our product, recognized that it couldn’t do well on the show and suggested that we go through the application process. It never felt like it was a clean done deal. In fact it was extremely stressful. A lot of ups and downs through the process. Up until it aired, up until two weeks before it aired, we had no certainty at all. Kind of make that very clear, they can do whatever they want, as far as the content and there is no guarantee that it’ll air even if you do get a deal. I mean it’s aired now, so I didn’t get a deal but we had two offers that were solid. I think we could’ve done, there are some things I wish I could have or do overrun out there but now, that particular business, independence of Shark Tank has blown up or entering COSCO or entering Walmart, Canadian Tire of Canada, international COSCO, etc. and had I given away what was on the table as a quarter of the company for a 500,000 dollars cash would’ve been nice. We were stretched because of inventory but that’s a lot of equity to be giving up and immediately the company has already doubled in size. So it would’ve been great for [inaudible 0:34:39] who were the Sharks who gave us offer to basically double their money in a matter of a month.
Joe: Which was the business doubling in size, pre Shark Tank of because of Shark Tank?
Kevin: Pre Shark Tank. It’s for two years timing. This is a hose powered device, so I’ve lived in Utah and looking at my window with all the snow, it’s frozen so airing January 21st was not ideal for us. People simply aren’t, even in Florida, people it’s not [inaudible 0:35:11] It would’ve been much much better for us to air in March, April, or May. May would’ve been great. But we still saw a huge surge in traffic. We had thousands of simultaneous visitors on our site. Sales definitely spiked. It’s been great. What is really setting us up for is this retail launch, right? So we have no brand recognition except among the few hundred thousand people who bought these things, but they’re going to be in retail so you’r fighting product brand identification in retail, now at least, since 79 people have encountered the brand and hopefully they’ll run across it in retail stores and they’ll buy it which will cost the retailers want to buy from us again, onward and upward.
Joe: So at the end of the day, a positive experience on Shark Tank. Would you recommend our folks going down abroad at some point if they have the opportunity?
Kevin: Absolutely, I think that’s universal among Shark Tank, [inaudible 0:36:06] who I’ve spoken to, not everybody feels great about the deals that they may have struck, but everybody’s universally positive about the experience. It makes you focus on your business a little bit more than some entrepreneurs may be used to. It’s great. There’s a risk though, you get up there and they make you look like a jerk. If you watch the show you will see, we’re struggling with that, between pushing back and serve bizarre questions. Not why do I look like a jerk on national television. Most important is making sure the product looks good, and in this case, we had two offers on the product. There’s product validation, right? So we could’ve made us look bad if the product didn’t look bad but if you go on there and make your look horrible, wow, that can be really dangerous. So you need to make sure that you have something that isn’t just a joke.
Joe: Obviously, yeah. You want to have a good product for sure. Alright then we’re running short on time, I love the testing with zero inventory, just to make sure the model works and then moving on through that, with that low budget, great idea. Great concept. Hopefully lots of people will try it. Any last thoughts for anybody listening in terms of that process and what they should do?
Kevin: I think the [inaudible 0:37:18] of fail fast and don’t fall in love are keys here when we talk about those metrics that we’re looking for, we sit down and we sometimes make up. Is it three, is it five, is it seven? Whatever it is, but we literally write that down on a piece of paper and we shove it in an envelope. And at the end of the test you open up that envelope and if the test result is two, and you were after four, it didn’t make it and you need to be intellectually honest about that. Like, you gave it a good shot and you didn’t make it, maybe there’s a stain on it that is worth taking, but if the next one comes out at 2% to, move on, move on. Scariest resources scares time, but there’s a lot of opportunity out there.
Joe: Kevin listen, I appreciate your time, this is great information. I hope a lot of folks will have benefit from it and I’m gonna go find Shark Tank on Youtube and probably see your show right?
Kevin: On abc.com
Joe: It’s out there somewhere I’m sure. I’ll find it then. I appreciate your time, we’ll talk to you soon.
Kevin: Alright, cheers.