The Case for Selling Your Products Before You Launch on Kickstarter

Transcript

Felix: Today, I’m joined by Toby and Frank from Wipebook. Wipebook is zero waste office gear for those of us that have to write stuff down, which started in 2013, and based out of Ottawa. Welcome, guys.

Toby: How’s it going?

Frank: How you doing?

Felix: Good, good. Glad to have you guys on. I talked very briefly and gave you a brief introduction about in general the products that you guys have to offer. Can you give us a little more details on some of the flagship products that you sell?

Frank: For sure. We’re essentially a producer of paper that erases like a white board. We produce a wide variety of different products like notebooks and flip charts and really, it’s a really cool, iterative, brainstorming tool for techie people that like low tech solutions, as well.

Felix: Very cool. Where did the idea come from? How did you guys come up with the idea of … To solve this particular need?

Frank: It’s a pretty funny story, actually. We both went to the University of Ottawa, and essentially, I had this weird phobia that I hated writing things down permanently on paper. I don’t like to commit ideas down, I like that erasability, and so I would walk around in all my classes with this laminated notebook, and people thought it was weird and bizarre. I met Toby in a class during our Masters, and it was an entrepreneurship class actually, and our prof said, “Pick a very simple idea that you can validate your idea.” We settled on the Wipebook and started it from there, essentially.

Felix: Looking at the product now, it makes a ton of sense to have a product like this, but I’ve never seen something like this exist until coming across your business. What did you guys do to validate this? It’s obviously a problem that you had. How did you make sure that there were other people out there that had the same problem before you went any further with creating this business?

Frank: I think one of the infancy of validation was in this entrepreneurship class. We formulated a simple business model canvas, and then we … Where we defined our targets and all the other stuff that goes with the canvas. We just basically went out and got feedback to see, for example, if the education space liked it, if engineers and techies liked it, or if the arts people liked it, and just kept moving on from there. One of the bigger, one of the key validation points was probably about a year into the Wipebook journey, when we launched a Kickstarter, and that’s when we really, truly validated sales at that point.

Toby: That was a really freaky adventure, because we had one prototype at the time, and this was a Friday afternoon. We tried to raise about $4,000. A very mediocre goal to just make a batch and see if people would buy this thing, and literally, within the first 24 hours, we raised that $4,000 bucks and within the first month, we raised half a million bucks.

Felix: Wow.

Toby: For us, that was that validation, and that was really viral and organic, and it showed us that there was a clear market for something like this out there.

Felix: Certainly, $500,000 is enough validation for any business. Before you got to that point, and what convinced you to even go with a Kickstarter? What were you hearing from the education space, engineers? What kind of feedback were you hearing them that made you both decide, “Let’s give this a shot and put together a Kickstarter campaign?”

Frank: Initially, I think, we were students at the time so we played around a little bit with student populations, like engineers like ourselves, that solved a lot of problems all the time, so we focused on them.

Toby: Pancake breakfasts.

Frank: Yeah, we cooked pancakes for students in the halls of the university and tried to get their feedback and see if they would, essentially, buy our products. We also… We were both professionals as well in our own kind of space. My job was in the education space. Toby’s job was in the intellectual property space. So we kind of tested with the demographics that we had access to and that we knew really well. In both sectors, we saw a lot of individuals that were like, this is such a simple idea. Why didn’t I think of that? So, that was … I think that was to say, listen, that was something that we should try out.

Toby: One of the litmus tests for me was showing up at a toastmasters and just giving the spiel on the product and then I’d remember one individual going, “Do you have any samples?” Then I just threw out “Well, what would you pay for it?” Right? At that point, we’re still trying to validate price point. Then he’s like “Well, maybe 40 bucks.” You just get those little hints and stuff along the way that just keep you motivated and keep you going.

Felix: Yeah, so it was enough to make you guys think, Why not? Let’s try this out and try to launch this on Kickstarter. So when you were going out and trying to validate the product, you were specifically listening for, maybe asking, if people would actually pay you for this product, or were you asking other questions to get feedback, or were you specifically focused on how much would they pay? Would they pay?

Frank: For me, that was a key point. Although, that kind of goes against the grain of lean startup validation, it’s not all about sales. I remember the prof highlighting that point at a couple times. But for me, that was one of the key factors that I was looking for. I always said if some individual’s looking to pull money out of their wallet or money out of for something, then I think that’s a key indicator, right?

Toby: Yeah, so we ended up buying a first batch of maybe 150 of these things, and we just sold them, I think, at like 30 bucks each to validate whether or not people would buy this thing and that was before the Kickstarter. Yeah, it seemed to be a price point that worked. The other thing you got to work out is, you know, you have a price point in mind initially, and then you need to have a sustainable business out of it. And then you’re like, oh well, there’s all kinds of cost that you need to bake in. And so you force increase your product price from there as well.

Felix: Definitely want to talk about how you came about the price in a second. One thing I do like that you did was that you actually were trying to sell this before Kickstarter. I think a lot of times, the campaigns that are out there either don’t have a working prototype yet, or at least maybe nowadays they’re more strict, but they don’t have anything they can sell immediately. But you guys went out and bought … got these manufactured or put it together so that you could actually try to sell it before going on Kickstarter. What was that process like? How were you able to get 150 of these before launching the campaign?

Frank: This was like minimal viable product. At the time, we had no intellectual property on this thing. These were like laminated paper notebooks that we just went and shopped and got done. For us, it was a very rough prototype the stuff wouldn’t even erase really well. But, at least, we would validate with that minimal viable product. If somebody’s willing to pay for something that’s really, really, rough, then if we really put the research and development into it, then we could probably validate that there’s a really big market for this. That ended up being the case.

Toby: It was forcing it actually, because if you look into your own network, which is what we did, right? A good friend mine, Jimmy, actually ran a print shop. So I just went to him and said, “Jimmy, hey, dude, can you queue up 150 of these?” He did it.

Frank: Yep.

Felix: Nice, I like that you used your network to do that. Were you getting any feedback while you were selling these 150 that allowed you, or forced you to make adjustments, prior to launching the Kickstarter campaign?

Frank: It’s funny, because in those pancake breakfast that we mentioned, initially, the book wasn’t a dry erase book. It was a wet erase book. So, you’ve probably seen those markers that you spray a little bit of water, like those acetate pages. So initially the book was a wet erase notebook. We actually tried to launch it on Indie GoGo as a wet erase notebook and that failed completely as well.

But it was in those kind of times when we were cooking those pancakes and we had one prototype for a dry erase book. It wasn’t like a plastic laminate. It was actually a varnish essentially that was applied to the pages so it would give it that dry erase kind of look and feel. People are like, I really want a dry erase notebook. Like this is way more convenient than something where you gotta spray water. So, that was actually one big pivot in our process before our Kickstarter. We actually launched our Kickstarter with the dry erase version and I think that actually did make a pretty big difference because we were listening to those students that were telling us that the dry erase was something that was really important to them.

Felix: Yeah, that’s great that you were … You ran into an obstacle, and you recognized that, or you saw that people weren’t interested in the initial product. The wet erase version of it. But you didn’t stop there and say this entire project, this entire idea, this entire business is a fail. Let’s move on. You looked to see what kind of redeeming feedback you got from those experiences and then pivoted to going to a different direction. That’s actually what took off.

Frank: Yeah, because the indicators … As you go along the journey right, if the indicators are still there than you just pivot towards those beacons, then.

Felix: Definitely. You mentioned something earlier, I think, during your coursework, which was around this business model canvas. What is the business model canvas?

Frank: Oh, poor Toby.

Toby: Yeah, it’s just a simple kind of framework to just understand a very simple business that you’d like to validate. There’s a lot of … So, yeah, instead of having, for example, a 600 page business plan, this thing is a simple one pager with kind of your key factors, right? So your cost structure, your target …

Frank: Key partners, your value proposition is right in the middle of the canvas-

Toby: Yeah.

Frank: And you’re trying to validate-

Toby: Your messaging.

Frank: Yeah.

Toby: So like there’s probably, five or six key elements that, you know, come from these. The startup philosophy that you have it on canvas that you constantly look at, again as opposed to that 600 page doc. And then you’re just trying to validate that yes, the canvas makes sense. Maybe you plug in [inaudible 00:11:13][crosstalk 00:11:13]-

Frank: Invalidate

Toby: Invalidate each of the components of the canvas, right? So you build little experiments. Alright. Well I, my hypothesis is this is going to work with these students, and then you make an experiment if you were actually… You were right or you were wrong, and if you were wrong, you pivot to a new hypothesis and keep going from there, so … It’s built on lean start-up goals.

Felix: Yeah, I’m sure it’s … Folks can Google and look up the canvas. Now when you are going through this process, or writing down the initial hypothesis, you’re trying to invalidate each of these pieces of the canvas. Did you guys run into any of these along the way, and what kind of changes were you making as you were running these experiments for all of these different factors?

Toby: Yeah, one of the key ones that pops up right away is … So, we had mentioned three verticals that we wanted to hit up. One was techies in the professional space, we named them the pros. The education space, whether they were going to be teachers or students directly. And then, another one was, we called them the arts people. People that would want to sketch and doodle and stuff like that. We validated pretty quickly that this wasn’t a product for arts-type individuals.

Frank: Yeah, it was more the technical problem solvers that need to visualize stuff-

Toby: As a key market. As a beachhead. We’re not saying that there’s not a component of these individuals that don’t like the product. But as a beachhead to get a business going off the ground-

Frank: For sure.

Toby: … it wasn’t one that we … It was one that we pulled off pretty quickly.

Felix: Are you able to invalidate each of these factors in isolation and in a vacuum, or are there situations where if one of these factors completely blows up, it’s complete invalidated, you have to scratch the entire hypothesis and start from the beginning?

Frank: Yeah, I’m not sure because … One of the problems also with our product is that at the end of the day, we’re dealing with erasable paper. Paper is used in so many different industries and demographics so it’s … I think for us it’s a little harder to kind of invalidate a market completely because you can still justify that. You know, paper is used in all kinds of demographics. But like Toby said, in those three different demographics, in the education space there was need. It was clear in the professional space, there’s a need. There’s less of a need from the artsy communities. Yeah, that’s what we kind of played around with.

Toby: So, I guess, the term there would be don’t throw the baby out with the bathwater. We’re not … We wouldn’t … We scratched it off, but we didn’t kill it, you know?

Frank: Yeah, exactly.

Felix: Yeah, that makes sense. So I think we talked a little bit about how you ran experiments to test the target market by having these pancake breakfasts and getting the feedback. Were there other experiments that you can think of that you ran to test the other factors?

Frank: I think the big one was the Kickstarter, honestly. Literally, the class itself was six months and then we were almost saying to ourselves, let’s give ourselves, like, a hardcore six months to really, you know, go knocking on doors to see if people would buy this thing. We actually went to little bookstores and things like that, and tried to pitch it to them. Those were some of the things. But the Kickstarter happened really, really early on in our validation process. So once the Kickstarter success happened, we were just thrown into this world of actually building a business.

For actually a good year, two years we were still just working through that huge kind of initial success. We never really had the chance to re-test out our markets and stuff like that because it’s one thing to sell a one-time Kickstarter but it’s another thing to sell a sustainable business model, right? So, we’re coming back to our roots now and trying to re-validate some of those markets to really hash out and understand the space around the education space, the engineering, techie space. We’re coming back to those basics now, but it wasn’t done really deeply in the initial stages because we had so much success, I would say, too soon.

Toby: Yeah, and circling back a little bit, even before the Kickstarter. Again, if we’re talking about marketing and getting stuff off the ground, a couple of things. One of them, I think for us, again … Well, for me, anyway, in my testing was using my network, going through my network, and I ended up making a sale with IT company that used it in their support. Not a huge bulk order, but it was maybe 2–300 units.

And even there, Frank alluded to earlier there, these were very MVP products right? We knew the erasibility wasn’t great, but … So we got these out and this IT support group, and then I was able to get a survey from them after, and the response rate was good.

Frank: That’s true.

Toby: Yeah, the survey results were pretty good, you know. Small sample set, though, you know. So a gain, that was just little indicators and stuff we could do pretty quickly. But like Frank said, the real big one though was the second or third Kickstarter.

Felix: Yeah, it sounds like very early on, at least, it was very much a work in progress throughout this entire journey where you were selling products, you were getting feedback on products, but you were still working through the design of this product. How were you guys able to get comfortable with just shipping the product finally or just getting it good enough to get it out to the market?

Frank: That’s so funny. So this was the big debate, right? I’m very much of a perfectionist. Toby’s a very pragmatic, get it out the door. If it was only up to me, I would have been like, oh, let’s keep refining it until it’s perfect, perfect, the most perfect product ever. But if that was the case, we’d never would have shipped the product. I think it was a nice balance between getting it to a certain point where it’s like this is good enough that we can ship it out the door.

Toby: Better than good enough! I think-

Frank: Yeah.

Toby: The first few … We did something interesting, too, Felix. We transitioned from that laminate, from that wet solution, pure wet, to our own film and that allowed us… When we did that, it cultivated our own recipe. Then we could make up our own film and this thing comprised …

Frank: We could really leverage Toby’s background as a chemical engineer to get that formula working.

Toby: And we could tweak it as we move along right?

Felix: Right.

Toby: So we could …

Frank: On a sustaining lap we could really dial in on the product. You know.

Toby: Make it better.

Frank: And making it better.

Felix: Got it. So it sounds like the factors that were most important, you guys made sure to get it right and the others that might not have been as important, or as of a big piece of your core value proposition. Those are things you can kind of figure out a little bit later or on the way. Now the question, then is, how do you decide which is which? How do you decide which ones are factors or properties of your product that you needed to get right versus others that are not as important?

Frank: The problem with us is that when I launched this Kickstarter campaign, I had promised people were going to get their books in January, and we launched the thing in December. So there was

Felix: Wow.

Frank: So there was enormous pressure from these 8,000 backers to get their stuff in January. So that was … We didn’t really doubt it too much. We were really pragmatically trying to think about how do we fulfill these 8,000 orders in 68 countries around the world. I don’t think we thought about it that deeply at the time, which we do more now, but ….

Toby: It was more about executing [crosstalk 00:19:28]

Frank: It was more about execution than trying to resolve [crosstalk 00:19:31]

Felix: So that deadline, that pressure forced you guys to ship.

Toby: Then we had a whole mess of other problems, right.

Frank: So we were kind of geared up, I mentioned earlier. Yeah, I mentioned earlier, we were thinking okay, Jimmy could probably ramp up his production a little bit and if we did 4,000 units he could do that. I don’t know. Initially we did 17,000. [crosstalk 00:19:51]

Toby: People bought two or three-

Frank: But so say 20,000 units, there’s was no way he could do that so then we had to find another manufacturer and then … We were initially dropping these things at the post office ourselves or post office distribution centers in Canada, right? Well, there was no way that we could do that. All kinds of logistics issues. So we had to pick and pack facility online. We had to figure out which carrier we were going to use, so …

Frank: And then we had to take … The business wasn’t really a real business. It wasn’t incorporated, and then we trademarked [crosstalk 00:20:29] and got the patents.

Toby: Trademark, patents, yeah. So it was just … It was pure chaos, man. [inaudible 00:20:36]

Felix: Yeah, let’s talk about this. The success that leads to a lot more problems, right? Especially on crowdfunding campaigns where you have such a big surge of demand right from the beginning. You might not have anything figured out yet beyond just trying to get these products sold. So once the campaign was running and you had lots of success very quickly, what went into action next to make sure that you were able to fulfill as quickly as possible?

Frank: Yeah, a couple of things. One was manufacturing. Two, it was shipping. We didn’t know how to ship this thing, and the one that we totally underestimated was customer support. When you deal with 8,000 people that want one-on-one conversations with the creators of the product, you realize there’s a lot of resources allocated to that.

Toby: And they’re a Kickstarter community, right? They’re backers and they want the … That’s the thing about Kickstarter people.

Frank: They wanna be involved. You want that. You want feedback, but …

Toby: Your in box, like Frank said, the inbox is [inaudible 00:21:40][crosstalk 00:21:40].

Frank: A lot of people. So those are some things, and at the same time, we wanted to leverage this kind of success that we were having and we want to keep on selling our product. So we had our Shopify store online right after as well. We wanted to keep on going because we had so much good momentum and I think Shopify really allowed us to do that really well.

Speaker 2: Absolutely.

Toby: Yeah, it was really interesting, actually, because we could see that traffic was coming. We didn’t have … I think we had the old version posted on our, like the real [crosstalk 00:22:15]

Frank: Yeah, the original, laminated one …

Toby: And then just after the campaign ended … Put it up on Shopify, like our new product, which kind of uses the same verbiage or the same language as the Kickstarter. And within 15 minutes it hits. And this is purely organic, there’s no marketing. There’s no Facebook ads or anything like that, just traffic coming inbound. Shopify hits, so this is happening concurrently, fifty grand a month, maybe, in Shopify sales that we had to deal with as well. Compound that with our Kickstarter [inaudible 00:23:02], you know.

Felix: Now, what kind of supply chain management did you put in place? As a manufacturer, that’s something you had to figure out. You mentioned that you had to fulfill the product to 68 different countries. What was the solution to help you organize all of this?

Toby: Yeah, there was a couple, I mean-

Frank: Few options.

Toby: Few options, we haven’t kept a lot of those options because we iterated through, for example, shipping. By off loading it to a third party. Pick and Packer, based out of Montreal. And that didn’t work out. Well, actually that did work out because they made a mistake initially and instead of paying $20 per shipment to all these countries it was actually costing them $80 to ship it to all these different countries. So, their mistake ended up saving us quite a bit of money at the end of the day. But they were just not reliable at all in terms of fulfillment and so we ended up moving to another third-party provider. I think it was Shipwire, which was … they had a warehouse in Chicago, London and Toronto as well. So we were shipping from a bunch of different warehouses, but that was really difficult for inventory management. Like lets say you send a whole wack of skids over to London, well they’re kind of stuck there if ever your warehouse in Chicago is empty. So inventory management so inventory management, it was really [crosstalk 00:24:23]

Frank: Macroeconomics.

Toby: Macroeconomics played a role too because ShipWire was USD, and then the Canadian dollar was pretty high up at the time we were pretty much at par, and then the Canadian dollar dropped pretty quick.

Frank: Yup

Toby: You know, dropped down to like … Anyway, the numbers didn’t make sense after awhile.

Frank: Yeah, then we ended up [crosstalk 00:24:43][inaudible 00:24:43]. Then the solution we have in place now is that we have our own little shop here in Ottawa and essentially we have team here and they fulfill all the orders. All the … And we’re close enough to the states that we can actually get it into the US system pretty easily so that seems to be a good solution that’s working for us so far. So [crosstalk 00:25:01][inaudible 00:25:01] on the shipping side.

Toby: And internationally we just found, trying to open up a product to basically anybody in the world, [crosstalk 00:25:08]

Frank: Not a good idea.

Toby: Not a good idea when you’re promising 5 dollar shipping anywhere in the world initially because you think you’re going to have, you know [crosstalk 00:25:18][inaudible 00:25:18]. That was a lot of issues.

Felix: So what would you do today? Do you just limit the countries that can purchase the product? How do you get around … how do you solve that issue of exorbitant shipping costs?

Toby: I don’t understand. So basically we just looked at our database, define the top 10 counties and put the actual cost of shipping to other countries. So the other kind of unique things we are piloting as well are some social shipping campaigns where, for example, if groups of individuals in London … If you have a team in your office and everyone wants to try a Whitebook, then we program some stuff on Shopwise backend where everybody could make their own individual order and the shipment all comes to the same location and you cut down on shipping costs. It just gets divided by a bunch of people. So we started playing around with some novel stuff like that. But yeah, those are some of the solutions that…

Felix: Mm-hmm (affirmative)

Frank: Then in technical manufacturing it was just a question of finding the right manufacturer. The initial manufacturer that we could just-

Toby: Totally ignored the process.

Frank: Yeah, this is our own specific proprietary film. We have a recipe, we have a process that we need to follow in order to get the desired end products, and he just wasn’t doing that. So then we tried another manufacturer and they were doing the same thing then. We had a good kind of kick of the can I guess from before and we picked a manufacturer that we [inaudible 00:26:56] through and now we’ve got a pretty good relationship with-[crosstalk 00:26:58]

Toby: Yeah, the relationship building with your suppliers is a really, really important one because you want to be able to trust that they’re going to produce a quality product for you and it’s now based out of Ottawa, which is really easy for quality control and stuff like that.

Frank: And they have to be sold on your vision too, right. Obviously we’re still a growing company but we’re not Apple. You know, the account reps of these companies and stuff, and you as an entrepreneur, they have to buy into your vision and say look, this is where we’re going and you guys need to come along for the ride.

Felix: Yeah, sounds like you guys got pretty beat up along the way to, to get to where you are today. That speaks to your resiliency and sticking it through. And now you are going through this process of finding the priority logistics. Sounds like you have a solution to that but let’s say there are others out there that are going through this process. What was important to you guys back then, what were you looking for to determine if they would be a good partner or not? To be your provider?

Frank: For shipping in this kind of … We just played around with-

Toby: Cost.

Frank: Cost. Shipping is like, nobody loves shipping. Shipping is … Until you have autonomous cars that are electric and exponentially drive the shipping cost down, I think we’re still going to have to deal with the pain of shipping. So costs the big one. So providers that are able to provide reliable service with a low cost. Some third party providers it was really difficult is the pick rates are often really, really high. So if, for example, Shipwire was a difficult situation because if you wanted to, for example, put a piece of paper additionally in the box they would charge you $3 or $4 bucks as a pick. And that seems to be the business model that a lot of shipping third party shippers kind of use for every item that goes in the box you’re paying an additional couple of bucks. Right.

Felix: For a piece of paper it cost $3 per shipment?

Toby: Yeah. Any add on-

Felix: Exactly. And when you add in a pen, a fruity B, a coupon. Anything that goes additionally in the box that is inventoried in their system, it’s a couple bucks. That makes it really difficult. But when we migrated to the Shine warehouse with another company, we started an agreement where it was pay per hour So we were paying of the number of hours that the employee was pick and packing for us. So then we could really hone in and say, if we can make this process really, really efficient because we had a lot more control, we had control of the warehouse. Then we could really save on shipping logistics and shipping costs. So that’s what we initially did and then we kind of implemented those same strategies with our own warehouse now.

Toby: We contacted Shopify’s support and said this is what we’re looking to do can you guys recommend some fulfillment software. Shopify support ended up recommending ShipStation.

Frank: Yeah, which is rocking. Awesome.

Toby: Which integrates some with Shopify. We ended up using that, using live automation rules like Frank said and really just dialed in on the fulfillment process.

Frank: Yeah.

Toby: And the great thing about the Shopify and the ShipStation combination is that event if they did not have a feature that we needed, we’re techy enough to be able to tap right into the API and build something ourselves to make that happen. So those are kind … when we’re looking for services we were looking for stuff that gave us enough flexibility ’cause now we’re selling with providers like Costco, Walmart, Staples as well. And they all have their unique processes to ship stuff out which we couldn’t use with a third party provider ’cause it’s too limited in terms of flexibility. But with our own kind of shop and our own kind of features, and our own kind of techy brains, we were able to just hack solutions in place to be able to plug into different channels.

Frank: So that’s a big lesson learned for anyone out there, that’s looking at third party fulfillers. Right? The thing with these guys is, and I’m not knocking … I mean they have to make money. Because their volume based, they’ll get crazy ship rates. They have to make their money somehow, and the way that they do it is on the pick and pack right. So you have to watch how they’re gonna … the value add or negative value add on your side.

Felix: Right. That makes sense. Now, one thing you mentioned was that a lot of the time … early on you were not able to find a reliable fulfillment partner. Are you able to determine that reliability before you work with them or is that something you learn after the fact?

Toby: Yeah, I think you kind of meet up with them initially. We visited a couple of people actually and a lot of times it was up front. Do you have this level of flexibility if we have orders for Staples that need their own custom slips, which is what we were dealing with at the time. And a lot of third party providers just said “Sorry, you know we” … Well first they’ll say “Yeah, yeah we can do it” and then when you dig a little deeper you realize no, they actually can’t do it. And so that eliminates a whole rack of people. But I think it’s about meeting those people and getting references too.

Felix: Yeah. Vetting. You know, [inaudible 00:32:30][crosstalk 00:32:30] through your network.

Toby: Exactly. We have a couple of companies that we deal with in Ottawa that also do pick and pack and we kind of share who are the good providers, who are not the good providers, and sometimes we kind of jump onto similar solutions that work really well for one particular individuals. So connecting with other companies that might be doing the same kind of shipping logistics, might be a really good idea.

Felix: MM-mm-hmm (affirmative). And now that you use ShipStation today you mentioned that you use a lot of the automation features. What are some out of the box automation that maybe the tech-savvy folks ut there that might not be able to hook into the API. What are some of the out of the box automation that you guys like to use?

Toby: Yeah I think that just shipping a whole wack of orders automatically-

Felix: I see.

Toby: …just makes the process really straightforward.

Frank: Yeah. Their batching functionality is really cool. So, you batch your orders. You simply print off the labels. You know, 100 orders, 50 orders, whatever. Another thing that we have set up is, we make use of a lot of the automation rules. So they run down from Shopify and go into ShipStation, we pick it up. For example the package dimensions are automatically set by the automation rule.

Felix: Mm-hmm (affirmative)

Frank: The HS codes … yeah. Just everything you need to do for shipping, is actually … I was actually surprised when Toby proposed this solution. I am really hesitant. I don’t think there is going to be one provider that has everything. They are really everything that you need for a really flexible solution. And like Toby said, the automation rules are really good one, especially weights and dims … automatically setting the weights and dims and from there that correlates to which packaging we use in-house. Yeah. I mean, they have a mess of different features right up front.

Toby: Yeah.

Felix: Alright. Cool. Now, you mentioned something earlier on about how there is a difference in either a launch or Kickstarter campaign verses running a business that has sustainable sales. Now that you’ve transitioned into this new world of sustainable sales, what was that like? What had to happen to get into this new state of your business?

Toby: I think you go from a world where you’re originally getting sales to a world where you have to invest time and resources into systematically investing a dollar here and you’ll get two dollars there. I think we’re still working through that journey, cause one of the things is that our product is really great for a lot of different markets. We’re trying to see which market is going to be the winner, sooner than later. So right now we have a lot of really good traction in the education space with school boards, with giant flip charts that we produce.

So for us, it’s really identifying the right conferences and stuff like that, the right channels. For example, Twitter is a really good one that is conducive for teachers. It’s really building those systematic marketing efforts that will actually enable to invest one dollar and get to dollars back. So I think that’s the big difference between our big one-offs initially and some of the channels that we have now. It’s really how do you kind of invest that time and effort into developing a formula essentially where you put X amount of dollars and X amount of time in, and you get X amount of output. We haven’t figured everything out. It is still very much an entrepreneurial journey for us. But that’s the goal, right. To make a machine out of it.

Felix: [crosstalk 00:36:16]

Toby: And I think that our approach is really … the way we look at the world when we look at things. Maybe we’re a little to engineering at times, we look at it in business it is a bunch of systems. Functionally, you have your fulfillment, your logistics, your connections. The machine is still pretty loose. In terms of operations, weekly you go though and go okay, we’re going to dial in on this component of the business this week.

Felix: Mm-hmm (affirmative)

Toby: This operational-[inaudible 00:36:48] tweak in the screws and tweak in the system and just make the whole of it tighter. The one thing that you realize is that it’s almost parallel. These components have to work I concert really to make a really solid business. If one gear is really loose over here, it messes with a lot of different stuff.

You don’t know these things really when you’re kicking off. You think “oh I’ll just make a bunch of crap on Kickstarter, and there’s interest, and you sell it and then.”

Felix: You definitely have to build that system, which is what you’re talking about and be able to feed it with time, and of course capital to get it to grow. One other thing that I liked that you mentioned was the idea that if you try to serve everyone you end up serving nobody. Where you could be in any market where everyone needs a product like this, in any industry, but you have to focus and zoom in on one particular need or particular market. How are you able to determine this? What are you looking at to say this is the market we should focus on, even though it means we are not going to be winning the dollars in a different market, by focusing on this one we can grow the business?

Toby: I think for us-

Frank: That’s interesting. So interesting.

Toby: It’s pretty much what we’re working on right now. We’re looking at all our channels and we look at all our revenue that comes in and it come in all kinds of different channels. And actually, the channels that we’re focusing more in on are the ones where we didn’t have as much revenue as the other ones, but there is a really tight product market fit. And because of the really tight marketing fit we think that’s going to be able to develop a more systematic sustainable business [inaudible 00:38:39][crosstalk 00:38:39].

Frank: That and we pivoted … We think it’s easier in a business context to be in a B to B world. It’s more predictable, you have better growth. Product markets [inaudible 00:38:51] being one of them, and reoccurring business, right. ’Cause it takes time, there’s customer acquisition, there’s a lot of energy to acquire a customer. So, and that’s a component that you have to look at. So if you take [inaudible 00:39:05]-

Felix: What are you looking at to determine that a particular market has a tighter product market fit?

Toby: I think for us it’s in the education space is the big one that we’re kind of looking at right now. We’re seeing, and we understanding exactly why people are buying this. We understand the need that they have. So for us the big need in the education space with our flip charts is that, you know, white boards are really, really expensive and a lot of new education strategies rely on having whiteboards all over your classroom.

Frank: Particularly in math.

Toby: Particularly in math. And so that’s a really big problem that they’re having in the education space, and we just fit right in. It’s almost like it’s a perfect match for a product. Whereas other channels, we’re selling a lot of good stuff but we don’t really fully understand as much why people are buying it. We know people love it and they’re using it on a daily basis, but it’s used for some many different little things that it is hard to hone in on one big major product market fit.

So for example, like with the techies, it is a whiteboard, is it eco, it is a brainstormer. Like all these little … they might sound like little nuances but it really makes … like in your messaging. Like if you’re trying to acquire a new customer it really changes the transaction right?

Felix: Exactly.

Toby: Whereas in education, we know it’s engagement. We know teachers want this in their classroom because whiteboards are more mistake friendly, more engaging for kids. Easier to write down. And we aren’t a disruptive solution in there, it is way easier to put a flip chart and a dry erase piece of paper on the wall than it is to install a big, giant, clunky whiteboard.

Felix: You’re not talking about changing a product. You’re talking about how you message the product?

Toby: We’ve done both.

Frank: We do both.

Toby: We’ve done both. You kind of hone in on the … For example the flip charts ones were specifically designed in parallel with the schools that were saying “Well the notebooks are great, but what if you had like a really giant, huge one that replaced our conventional flip charts that are just like, you write on them and you put them in the garbage.” So you kind of do that. You do the product development at the same time, and you kind of tweak the messaging to kind of figure out what they want to hear and what they want out of a product.

Frank: I think if you leave the product static, that’s a mistake.

Felix: Right.

Frank: You’ve got to listen and tweak it, and iterate until you get … Once you get that perfect product market fit then … you rock it.

Felix: Now what about the differences in how you market and where you market compared between B to C compared to B to B?

Toby: Yeah, B to B is interesting because there’s a lot more of your conventional sales tactics. Like your sales man going to trade shows and conferences. For the education space for example going to meet the people on the different school boards and the different schools. It’s a lot more on the ground knocking on doors. But you onboard a client, then it’s a recurring kind of … hopefully recurring channel for you. I think B to C is more your conventional social media channels which is pure digital. Where I think when we look at B to B it’s more of a hybrid solution right? You get the message out there, they are qualified somehow. Customers qualify and the come in and it’s more of, like Frank said, it’s more of an old school tactic-

Frank: Conversation.

Toby: Call them up and you know. And the other thing is that the sales cycle is longer.

Frank: Yeah.

Toby: It’s not one hit type of thing. It’s definitely a longer cycle.

Frank: Try to understand the cycle for the education space. You see little blips at different times of the year, which are not the same blips as, for example, Christmas time when you’re selling via your online website to people looking for cool gifts for Christmas. It’s totally different cycles, right. So, try to understand the different types of cycles for the different businesses, and you kind of go from there.

Felix: Right. ’Cause they all set their budgets and do al their buying a different times. So do you work with a distributor? Do you have an in-house sales team? How do you go after the B to B clients?

Toby: The B to B clients is different. We do most of the stuff ourselves. We’ve onboarded kind of big retail partners like Staples, Costco, and Walmart, by specifically making cold calls and getting meetings with the category managers and using the retail channels as good venues for us. And the other stuff is just figuring out who the targets are, and going to set meetings to identify who you want to talk to. And going to trade shows you get a whole bunch of leads, a whole bunch of business cards, and you follow-up with phone conversations and things like that.

Frank: Grommet Wholesale.

Toby: That was another good one too.

Frank: Yeah.

Toby: Yeah.

Felix: What was that?

Toby: Grommet. We sell a lot of product through Grommet. I don’t know if you are familiar with those guys. They’re an online re-seller I guess and they have their own in-house distribution as well. So we move product through them. We label them as kind of tier two retailers, you know. So small novelty shops. But they’re not ordering one-offs through Grommet. They’re ordering 20 units, 30 units at a time.

Felix: I see. So you sell to Grommet and then the Grommets clients are retailers, like physical brick and mortar retailers who are buying from their catalog?

Toby: Yeah.

Felix: Is that easy to get into? What is the process getting into a place like Grommet?

Toby: Grommet was interesting actually because they contacted us a number of times after the Kickstarter. We were doing announcements on our database and stuff like Shopify EB and stuff

Speaker 2: They still collect.

Toby: The sales rep from Grommet was like “Yeah, I think your product will be really conducive for our demo.” I’m like whose your demo? He’s like, predominately women, 40+, 44–55-

Frank: Professional.

Toby: I’m like that’s not our target.

Felix: Yeah.

Toby: So. And then he came back a couple of times and he’s like “Yeah, I think would do really well.” So then finally I was like okay, let’s set up a little test here. And we got online, did a little video and they launched it on their site. So, Grommet is kind of like a tier two Kickstarter, right? So it’s kind of like Kickstarter but more like validated products. Anyway, so it goes on their site and yeah, it just kicked off.

Felix: You have to be approved to get on Grommet? Or do they-

Toby: Yes.

Felix: Okay.

Frank: Yeah. You deal with their rep and stuff like that.

Toby: Yeah, deal with their rep. As I said, what they do, they look at kind of novelty products. Kickstarters that have moved around maybe a year in. So they are defined in their processes. You know all those hurdles that we talked about earlier? You know, that we made it though. Grommet says, okay these guys-

Frank: You survived.

Toby: You survive that, looks like you can reproduce. We might be able to use you in our wholesale channels. So you’re on your way to being a legitimate business. You know, okay. We want to recruit you, whatever. SodaStream I think was a big Grommet product, they did a lot of stuff there. So anyway, we worked with … the irony you know, I had blinders on … I’m like professional women, not our target. We ended up … We sold I think … I got some stats from the rep the other day and last year they sold $500,000 worth of our stuff. So.

Felix: Wow.

Frank: Good channel.

Toby: Good channel. Frank you-[crosstalk 00:47:34]

Felix: Good thing you eventually said yes. That leads me to my next question. What is the harm of just saying yes to everybody that wants to comes buy from you whether they hear about you from a trade show or from your online?

Toby: Cycles. Cycles. Cycles on our side.

Frank: Just investing time and effort. You’ve got to identify the ones that you’re going to have a [inaudible 00:47:55] return on investment. Because you can get … We get a lot of emails all the time. Well, can we sell this through our channels or we don’t know who our … so you kind of vet them a little bit to understand if they are really legitimate or just some random Joe Blow. Because you can get really caught up in wasting a lot of cycles on that-

Toby: Distributors.

Frank: … distributors and stuff.

Toby: Yeah.

Felix: Right. That makes sense. Now when you are running the business, whether it’s through the Shopify site or just trying to tie all the pieces of the entire system together. Are there any tools or applications that you rely heavily on?

Frank: It’s funny because Toby is very much of a “lets plug any App in right away” and I’m a-

Toby: Not necessarily.

Frank: I’m more of a hesitant no “We’ve got to do everything ourselves.” So for us, I think most of the stuff if we’ve had a little issue I’ve developed a little homegrown something to kind of plug and solve that issue. I know that ShipStation is one that we heavily rely on. Zendesk for customer support is another really crucial one. [Phonetic Tuvio 00:49:07], put books online for counting. Those are the big ones. I think that’s pretty much it. And everything else is really. Like I said, we’re engineers. So if a service has an API it’s like you get all excited, like “Ooh what can I build to solve my issues?”

Toby: Frank is like Whitebooks Zappier.

Felix: Nice. Piece is all together. Awesome. Thank you so much for your time Toby and Frank of Wipebook.com. W-I-P-E-B-O-O-K.com is their website. What do you guys have planned for this year? What are some of the goals that you want to accomplish this year?

Toby: Yeah, I think we have an app coming out in the next couple of weeks that will be able to digitize your Wipebook. And save it in your services like Google Drive, Dropbox. I think Evernote as well. So that’s coming out in the net couple of weeks. We really want to sell more of these flip charts to the education sector, and we have some cool new versions of our notebooks coming out as well.

Felix: Very cool. Thank you again so much for your time guys.

Toby: Awesome.

Frank: Thanks.

Felix: Here’s a sneak peek for what’s in store for the next Shopify Masters episode.

Speaker 5: The cool thing about Facebook Live is that people want to engage with you, they want to know the face behind the brand.

Source: Felix Thea 26/03/2019, https://www.shopify.co.id/blog/wipebook-selling-before-crowdfunding