About this episode
Sometimes things go wrong…
Who are we kidding, EVERYTHING goes wrong! It’s crowdfunding....
Which means it’s likely the first time you have built and audience, reached out to media, made a sales video, or even designed a product. You’re going to mess a lot up.
But of all the mistakes you can make, screwing up manufacturing is possibly the easiest to do and also the most catastrophic for the viability of your business after a successful campaign.
That’s because mistakes are compounded with every unit sold.
So, the greater the “success” of the campaign, the bigger the hole to climb out of.
This is how the Manufacturing Death Spiral happens.
You’ve probably seen the Manufacturing Death Spiral from the outside multiple times because it always looks the same:
So what do you do when you don’t have the money to fulfill the orders you have because you find out your manufacturer’s quality is not up to par, or you didn’t price things out properly?
(...avoid the pitfalls in the first place… but more on that in a moment)
Michael Mataluni was the COO of the thingCHARGER, a brilliant and beautifully designed adaptor that lets you neatly charge all your devices while keeping your electrical outlets free.
thingCharger was in the midst of a Death Spiral of its own after a hugely successful, $600,000 raise. They had problems with the quality from their manufacturer and had to ultimately cut ties.
While trying to solve the problem, shipping delays, and subsequent backer complaints rose to such a level that he had to hire a team of people to handle them, which further strained the cash-strapped team.
It got so bad, they fell almost a year behind shipping at one point, that they didn’t have the money fulfill their original orders.
They didn’t know how to get angel investment and certainly weren’t in much of position to negotiate if they did.
But Michael Mataluni and the thingCharger team were able to regroup and fall back on their strengths while shoring up their weaknesses through effective partnerships.
Fast forward to today and they have since raised an additional $11 million over two separate crowdfunding campaigns:
...and most important of all, they have manufactured and shipped over 250,000 units to their (now) very happy backers.
So how did Michael and the thingCHARGER team stop and reverse the Death Spiral?
What mistakes did they make after their original campaign and how can you avoid them?
Listen to find out!
About This Episode
In this episode we are continuing our theme of “what to do when the campaign ends” with Maxwell Salzberg of BackerKit.
Full Disclosure: If you haven’t noticed already, BackerKit is a sponsor of the podcast.
But that is not why Maxwell is on the show.
Of anyone in the WORLD, Maxwell is one of the leading experts on how to fulfill the orders of your crowdfunding campaign.
That’s because he and the team over at BackerKit have helped over 2000 funded campaigns ship perks to their backers.
But Max didn’t come from the fulfillment or shipping world into Crowdfunding. He started as a Creator.
Back in the good old days of 2010, no one knew what Kickstarter or Crowdfunding was about.
Max and his friends had an idea of a decentralized social network so your data and privacy would not be solely controlled by “Big Zuck”.
They heard about the fledgling site, Kickstarter, threw together a “poorly scripted and edited video”, launched a campaign, and told “like three or four people”.
And the project, Diaspora, took off!
Their original goal was for $10,000, as Max puts it “so we could go up to a cottage and hack for 3 months, eat ramen, and not get real jobs for the summer”.
Diaspora ended up raising over $200,000 and was, in fact, the FIRST project to break six figures on the site.
Which is where the problems started.
Even though backers were supporting a software project, the perks were physical products... T-shirts, CD’s, and stickers.
And now a software engineer with no production or shipping experience had to ship items to almost 7000 excited fans.
“I planned to have a bad weekend burning a couple hundred CDs….”
Frustration soon mounted as he was spending all of this time fulfilling t-shirt orders and no time doing what his backers paid him to do… build Diaspora.
From that experience, and watching countless other Creators bang their heads against the wall of order fulfillment, he decided to found BackerKit.
Since then, he has seen every problem that can go wrong, go wrong. From orders getting lost, to shipping the wrong sizes of things, to address changes on three separate orders for the same person, to receiving email money transfers from people after the campaign ends because they want a second t-shirt and “ ...that’s easy right? Thanks! - Backer”.
Max will shed light on the “unknown unknowns” in fulfillment so you can avoid having the “ticking time bomb of Crowdfunding” blow up in your face.
About this Episode
What is your plan for after you successfully launch your product on Kickstarter or Indiegogo?
In last week’s episode, you learned how Julianne Ponan got her superfood snack bars onto the shelves of the largest grocery retailer in the United Kingdom with persistence and creativity.
This week it’s all about Amazon with Scott Voelker of The Amazing Seller.
After running a successful, six-figure, portrait studio business for 10 years with his wife Lisa, Scott wanted to increase his income online, so he started teaching people how to start and run portrait studios themselves with New Portrait Biz.
That business was also successful, but he had caught the online bug, and eventually came across Amazon’s Fulfillment By Amazon (FBA) program.
FBA allows entrepreneurs and business owners to ship physical products from the factory to Amazon’s Warehouses. Once an order is placed either on Amazon, or your own website, Amazon will package and ship the order to the customer. No wrapping stamp licking required!
This means that Amazon has almost made running a physical product business like a digital product business. Your time can be focused on high value tasks like marketing and product creation.
Since discovering FBA, Scott has launched a number of successful private label products on Amazon.
He shares his knowledge and expertise on his Podcast, The Amazing Seller, which has over 4 million downloads to date.
In this episode, Scott offers an honest overview of Amazon’s platform and how it applies to your crowdfunded product.
There are a ton of tools and tips for you to sink your teeth into.
So you’ve listened to all the podcasts....
Perhaps even taken my course, Crowdfunding Domination...
You had a successful crowdfunding launch and now it’s time to create a real business.
How do you transition from having a “campaign” to having a “business”?
If you are looking to eventually get your product into large retail stores, then this episode will provide the blueprint.
Julianne Ponan is the owner of Creative Nature Superfoods based in the United Kingdom. Five years ago, at 22 years old, she bought the company off of her father. It had £56,000 (~$75,000 USD as of publishing) in debt, and was also losing money month over month.
“It was a bit stupid, and when I look back it would have been easier to start from scratch....” - Julianne Ponan
The first thing she did was cut back on unnecessary expenses, eliminated almost all the products they were selling, and focused on hypoallergenic superfood snack bars.
Julianne then methodically built a group of loyal repeat customers with local retailers, but she had eyes on going national.
After hundreds of phone calls, trade shows, pitch meetings, she was finally able to secure listings in Tesco, the #1 grocery retailer in the UK. Creative Nature products are also in Ocado, Asda, and Sainsbury’s, as well as a host of other smaller health food stores.
So how did she do it?
She got “Creative”.
In this episode and you will learn some unconventional tactics, like “ethical stalking” and strategic brownie baking, that allowed her business to explode.
You’ll hear stories about her biggest mistakes so you can avoid them in the future.