The Road After Kickstarter
The number of successful Kickstarter projects that fail to deliver their rewards on time has been estimated to be somewhere between 75 and 85%. Of those, even fewer go on to become actual businesses. This is primarily due to the fact that many people who launch Kickstarter campaigns lack experience in manufacturing or bringing a product to market.
We were certainly among the group of people who lacked experience going into Kickstarter. Despite our best efforts, our rewards shipped about two months after the date we had estimated at the beginning of our Kickstarter campaign. To be honest, two months is actually pretty good as far as Kickstarter delays go. However, the bigger issue wasn’t the delay of shipping rewards, instead it’s the fact that one year has passed and we are only now ready to put the product on the market. There were a number of issues that should have been resolved prior to launching our Kickstarter campaign that essentially forced us to go back to square one.
This will be a four part series where I explain what issues we faced and how we have dealt with them over the past year. Anyone interested in launching a product based Kickstarter or just generally interested product based entrepreneurship should read these posts in order to learn from the mistakes we made.
Part 1: The Foam & The Clip
Part 1 of this series deals with issues we faced related to components of our product. For the foam it was an issue of quality and scalability, and for the clip it was simply one of quality. A more experienced team would have already considered these issues prior to launching the Kickstarter campaign. Unfortunately we had to learn these lessons first hand.
- Problem: All of the foam liners on the iPad clipboards had to be hand cut by members of our team in a time consuming and often inexact process. We next had to hand glue, using spray glue, each individual foam piece to the flat clipboards in an additional time consuming and often inexact process. Then we would take the flat clipboards with the foam glued on to the manufacturer where they would be bent into shape and have the clips riveted on. This was one of the reasons for our shipping delay because it took much longer to do this than we had anticipated.
- Solution: We needed to find a new foam supplier who could pre die-cut the foam into the exact shape we needed, and apply a self-adhesive backing (kind of like a sticker). Not only would this speed up manufacturing but it would also prevent the foam from ever becoming unstuck to the inside of the clipboard (which is something that happened on some of the original clipboards). I requested samples from a ton of suppliers who met our requirements and selected one of the highest quality foam liners they offered.
- Problem: While the clip was one of the more trivial problems we faced, it was still an issue nonetheless. We received a decent amount of feedback saying that the clip felt cheap, had some functionality issues, and made a scratching noise when in use.
- Solution: We found a new clip. This was also a little easier said than done, as we not only wanted to find the best quality clip available but also one that was made in the United States. Most clipboard clips available are cheap and almost all of them are made in China, but after a long search we found a company based out of New York that makes awesome clips.
The lessons to takeaway from this post are that you should absolutely consider scalability of manufacturing before launching your campaign. One reason being that you will need to have a scalable solution in order to make a business from your successful campaign. And the other reason being that you never know how many units you will need to produce as rewards, so you better have a plan in place to meet the demand.
Part 2: The Design & The Manufacturer
The problems we faced with the design of our product, along with the manufacturer were the most significant obstacles in the way of turning Clipboard+ into a business. Essentially we didn’t have a product we could sell, and it was too expensive for us to earn a healthy margin.
- Problem Design: After we received funding we took our prototypes to the manufacturer and asked them to make the design changes we needed, and that we had previously discussed. Those changes were adjusting the bends to be more ergonomic along with making sure it tightly fit the iPad. They ended up charging us a whole lot for engineering and they had to go through way too many iterations. This contributed heavily to our delay, and even worse they couldn’t even get the iPad tightness right!! It was a crushing blow when we received the clipboards and realized that an iPad would slide out if held upside down. There was little recourse we could take with the manufacturer so we took it in stride and realized that we could hand bend the clipboards to the correct tightness ourselves. Once again this added to our delay and made the product un-scalable at the time.
- Problem Manufacturer: In addition to the design problems we discussed above, the manufacturer used for our Kickstarter run was a specialized job shop that mainly did work on precision parts for research and other high performance projects. Because of this, their labor cost, and ultimately the price we paid for the clipboards was very high and made it impractical to try and scale using this manufacturer.
- Solution Design and Manufacturer: I wish I could say it was as easy as finding a new manufacturer. Unfortunately, finding a manufacturer that meets all of your needs and is willing to work with inexperienced entrepreneurs is way easier said than done. Several months had passed since we shipped the Kickstarter rewards and we had received feedback on all sorts of new features/design change ideas from our backers. We spent a lot of time deciding if we should completely redesign the product, or stick with our simple and functional design. Ultimately we realized that as much as we wanted to design a radically different version, we didn’t have the time, money, or engineering experience and doing so would have been a mistake. In the end we used the outstanding sourcing site MFG.com to find the perfect manufacturer that fit our needs. Our new manufacturer is great to work with and they were able to solve all of the iPad tightness related problems without charging for engineering.
Part 3: Shipping
While your campaign is live on Kickstarter the focus is almost entirely on reaching the goal. Soon after the campaign has ended however, reality starts to set in. Now you have to make hundreds of widgets and somehow make sure that every backer gets the appropriate reward. Going into Kickstarter you should have a clear plan for how you are going to ship the rewards, what to charge for international shipping, and what the cost for domestic shipping (including all packaging will be). Unfortunately it is difficult to know the answers to all of these questions especially when you don’t know how many rewards you are shipping and to where.
It is certainly possible to handle all the rewards yourself but that isn’t a very sustainable option for growing your business. It takes time away from value added activities and greatly limits your ability to quickly reach customers in a cost effective manner. Below is how we dealt with shipping for our Kickstarter. After I have some more expereince using Fulfillment by Amazon I plan on writing a post about our experience with the service as well as how to set it up for your business.
- Problem: Shipping is a problem that all product based Kickstarters deal with, and most likely the more experienced projects get it right from the beginning. We definitely didn’t. We hand packed and shipped each reward through USPS. The costs of packaging and postage added up very quickly. Beyond that, trying to make sure every package had the right contents and right recipient was a huge headache on top of also keeping track of what rewards had been shipped and what hadn’t. Also, international shipping costs are difficult to predict, vary widely by destination, and add up quickly.
- Solution: Self-fulfilling our shipments was definitely not going to fly if we wanted to turn this into a business. It takes away so much time away from value adding activities, and it is way more expensive to do yourself. So I evaluated all of the different fulfillment service options and decided to go withFulfillment By Amazon. It takes a little bit to figure out all of the rules/requirements, but it is definitely worth it. You get access to their negotiated rates with UPS (we’ll end up paying about what we paid just for packaging on the entire fulfillment process for one order). Beyond cost, they automate everything and integrate with our eCommerce provider so that when a customer places an order on our site it is automatically received and processed at their warehouse and will be on the customer’s doorstep within two days.
Part 4: Team
The issues that had to be resolved with our team were not issues of conflict, but rather other obligations that resulted in the separation of our members and temporarily prevented us from moving forward full steam ahead with Clipboard+.
- Problem: As full time college students our team members also had a number of other responsibilities beyond Clipboard+. Maintaining a full credit load of graduate level accounting courses while trying to build a business is certainly a juggling act, but a more serious problem existed as it related to the growth plans of our company. By the time we finished with the Kickstarter orders it was about mid-November of 2012. We wanted to take Clipboard+ further, but all of the problems discussed in parts 1-3 were staring us in the face without clear answers. Essentially we would be starting from scratch. The real issue wasn’t even the problems that needed to be solved, but the other commitments of our team members. I had accepted a full time Audit position with KPMG in Philadelphia and was taking the spring semester off from college to do that. Eric was going to Paris to study abroad for the Spring semester. The Spring was Zhaojun’s last semester so he was trying to figure out what he would be doing after graduation. And Patrick was working full time on starting another company.
- Solution: We realized that we would have to manage our expectations and do the best we could because of our other obligations during the Spring semester. We put up our ecommerce site using Shopify so that customers could place orders and we could sell the remaining inventory. We did absolutely zero promotion of the site during the Winter/Spring because of all the uncertainty, but we ended up selling out anyway. During the time while I was working at KPMG in the Winter/Spring I started working to resolve all of the issues described in the other posts. I sourced new suppliers for the foam and clip, looked into fulfillment options, and started talking with prospective manufacturers. By the end of the Spring most of those problems had been resolved. We decided on a new manufacturer in mid-June and I moved out to Denver for the Summer to work on Clipboard+ with Patrick and Zhaojun. Now it is about a year since we shipped the last Kickstarter rewards and we have a product/business that can scale, I’m looking forward to seeing what happens.