Andrew: Hey there freedom fighters. My name is Andrew Warner. I am the founder of mixergy.com, home of the ambitious upstart.
How does an entrepreneur who loves beautifully designed products build a profitable hardware company? Shane Kofoed is the founder of Beacon Audio which makes beautifully designed speakers that just work. I know, because I’ve got one in my house. I was actually going to bring it here and show it to you, but I still have it in my house and I’m still enjoying it. I have another one here in the box that gives you a sense of what the speakers look like. I wish I could communicate how well they sound.
Before I do the full introduction or finish it, I should say this interview is sponsored by Scott Edward Walker of Walker Corporate Law. I’ll tell you more about him and why he’s the startup’s lawyer later on.
First, Shane, welcome.
Shane: Thanks, Andrew, great to be here.
Andrew: You know what? It’s got to feel great to actually have a product you can feel and touch and not just have software that’s on a computer – which still feels good, but the ability to feel and touch it… Do you remember the first time that you got to see it in the box already like this?
Shane: Yeah. You know, it’s funny. In high school that was kind of my start to physical product things. I did custom stickers for people. Seeing them on people’s cars, or on their locker, or whatever that I didn’t know, that gave me the biggest rush ever. Any time I see it, or we’ll get pictures that people send of hey I saw this guy at the beach, that’s like the ultimate rush. It’s replaced Christmas as kind of like the greatest time ever, you know, product wise.
Andrew: This past Sunday I was at a Google engineer’s house for tacos. I saw that his wife was playing music on this speaker. I said what’s the speaker. I walked over and it was this exact one in this color.
Shane: Oh, serious?
Andrew: Yeah, yeah, yeah. The other thing I noticed was…
Shane: Yeah, that is like the ultimate…
Andrew: …she used to be on iPhone, now she’s on Android. So, he’s got her switched to Android, and he introduced her to this speaker.
Shane: Yeah. Something like my mom uses it which is great but it’s a different thing when you don’t know, when you didn’t give it to, that has it.
Andrew: Yeah.
Shane: It’s pretty exciting.
Andrew: I said wait I know that guy.
Shane: Yeah.
Andrew: You said that you made stickers in high school. Were you always making things and selling them? Were you that kind of entrepreneur from back then?
Shane: Yeah. I don’t know. I’ve always been kind of obsessed with products and with things you can feel and things you can touch. In high school I had a job doing design and production work at a sign shop. I was always kind of tinkering with different vinyl applications.
The very first thing I made actually was a sticker that would go over your iPod at the time. It was before the iPhone. [??] and that kind of thing. I just always got a kick out of having them in my car and people asking for them and selling them for people.
I just loved the aspect of hey something I made I can see it when I drive down the road. There’s a sign I did. There’s a banner. There’s a sticker I made for somebody. Yeah, I’ve always kind of had the entrepreneur bug and the product bug. I’ve just been obsessed since…
Andrew: What about the idea of charging for your product? When you love it, it’s sometimes harder to ask people for money, because it feels like a passion project. Did you have any of those hang-ups?
Shane: Oh, that is so true. Yeah. Something that I would like to talk about that I hate is the term minimum viable product. But, early on when the product is kind of early in its development and you feel like it’s not quite ready, sometimes you almost feel guilty charging for it. Like, you personally know what it could be, so you’re going hey I feel bad charging you full price. Here, I’ll just give it to you.
Yeah, I ended up giving [??] in my day. Ultimately, that’s how you get better at it, and when you finally get to a point where you feel like you feel comfortable charging for something then that’s a pretty good feeling. Yeah, I totally…
Andrew: How do you get past that? Yeah, how did you get past that?
Shane: You know, I wish there was a magic formula or something for it. Ultimately, it just came down to enough experience to really put everything into the right product. There’s a quote, I think from Ira Glass, where he says when you start out there’s… You know that one where you see this gap where you want to be and where you’re not quite there yet.
The first five, six years, all I had was gap. Now, it feels like we’re finally catching up. There’s product that I love and that’s good to share, but also it’s kind of that realization of understanding that the consumer doesn’t see the product the way you do. So, they don’t see all the little nuances, and they don’t see oh you weren’t able to get this feature, this feature.
Being able to step [??] focus groups and have friends give it honest feedback is a really helpful way to say hey it’s… The product is generally better than you as the founder or entrepreneur think it is…
Andrew: When I see it now what is…
Shane: …but that’s the [??]
Andrew: When I see it now, what do you look at and say oh he doesn’t know that this is missing, that I wanted this in it. What is this?
Shane: It depends on the product. I feel really confident in the two products we have right now. A big result of that is just being able to focus. We launched with like five or six products. We were like hey instead of having five or six products that are really sub-par let’s bring it down to two that are really developed and really focused.
Like I said, as far as history goes this is the best that we’ve fielded so far. But, that packaging holdup, that was a last minute change. We had a whole elaborate acrylic box that displayed it like a museum style product. We had all these cool inserts. We had all this stuff that was going into it.
Then, it always comes down to last [??] budget constraints. We had to switch to that kind of cardboard box. Every time I look at that I see that as the last minute mistake that shouldn’t have gone to production, but it ended up going.
Andrew: To me it looks great. It looks like you spent a lot of time and attention on the box. But, I see what you mean. You had acrylic in mind which would’ve shown the product itself really nicely with a transparent container.
Shane: Yeah. We had a design at one point that the packaging was almost as much as the cost of the product. It’s like it doesn’t really work. But, if budget was never an issue it would be so much fun to make product. That’s part of the balance, bringing them both together.
Andrew: I was looking at your LinkedIn profile and saw that when you were 18 you started a company called SIEGE Audio. What happened there?
Shane: Yes. Backing up a little bit, right after high school I was making these cases and covers products for iPods. I kind of got really excited with iPod accessories. It was right before the iPhone came out.
I started a kiosk in the mall. It was like one of those guys selling scalp massagers and all that. But, it was all iPhone and iPod accessories. It was pretty cool. We sold a ton of headphones. We sold speakers that we brought in from China. We sold… I’d find little stuff here and there. We’d find silicone cases.
It was kind of before the accessory, before everything just boomed. We were selling a lot of headphones. I had this concept for an earbud and thought hey if I bring this in, even discounting it to half the perceived retail, we could make a lot of money and be more profitable than selling somebody else’s products.
I called it SIEGE Audio and brought in one pair of earbuds that I found from a manufacturer that had done the tooling and everything like that. We basically slapped our logo on it, threw it in some crazy packaging that we had like drawn out. It was super funny. It didn’t have any tech specs. It was the most basic high school project kind of packaging ever.
We brought in a thousand of them. In two months we sold through 900 pair of them. I was going hey this is actually maybe more profitable and a better route to go than the retail market. I had always wanted to have a brand.
That’s where it started from. From there we bootstrapped it along. I brought in some partners, made some rookie mistakes. Made some good things and bad things. But, that was really kind of my learning ground. We built that to just over a million in sales. It was little to no capital, no partners really. It was as bootstrapped as it could possibly get. Making every mistake in the book, but it was fun.
Andrew: How did you sell 900 of them?
Shane: I lost you there. Say that again.
Andrew: How did you lose, oh, not lose, how did you sell 900 of these earphones?
Shane: At the kiosk I was there most every single day. I’d be standing there selling people product, and [??] the little things. Hey, get this for Christmas, get this here.
People would come up to buy another brand that we carried. We sold Bose. We sold Skullcandy. We sold a bunch of other brands.
People would come up and say hey my son or daughter asked for this specific headphone. It was funny. I never said oh hey we do SIEGE too. But, I would say hey have you heard of SIEGE, they’re a local company. They’re from here in town. Super cool. They hook us up with product. The product’s amazing.
Andrew: Okay.
Shane: So, I was kind of like the incognito salesman. Pushing that, and then especially being able to say hey I could probably get you a deal on them. I’ll kind of hook you up. It was funny. It was super guerrilla.
Andrew: That’s impressive.
Shane: [??]
Andrew: Basically, you’re saying one on one retail sales you moved 900 of these.
Shane: Oh yeah, one on one. It was crazy.
Andrew: How did you find them?
Shane: That product I actually found through somebody in my neighborhood that had done some sourcing in China, and I said, “Hey, I’m looking for an ear bud.” And he found a factory that had already developed that product and we added one feature into it that was, we had this nylon cord at the time. There’s a few other companies that do it now, back then nobody was doing it. So, it was one of those products, it was, like, very QVC style where you can wad it up in your hands and then just pull it out and they wouldn’t tangle up and so we’d have the other models there that were all tangled up. And you know how the headphone wires get all sticky.
Andrew: Yep.
Shane: Yeah.
Andrew: It drives me crazy, by the way, when I walk down the street and see people who have still knots in their headphone cables in their ears.
Shane: I know, yeah.
Andrew: Just looks so distracting. Okay. So, because you used the nylon material, you were able to keep it from getting all tangled up.
Shane: Yeah, so it was like, I mean, those were kind of . . .
Andrew: But that was your idea, you said to the factory, “I like your earphones but please make them with this material.” Or did you just happen to find earphones that will not tangle and you knew that’s what you were going to sell?
Shane: Well, it was funny, so we had the sample of the headphones over here that sounded really good and they fit in your ear well and they wouldn’t fall out. And then we had a sample of this charging cord that had this kind of cable on it, so I wish I could say I invented this. I’d probably be a mutigazzillionaire if I invented it. But I just kind of said, “Hey, put this on this headphone, combine them and let’s see if they can do that.” And so they sampled it up and they’re like, “Oh, that actually works really well.” It’s just kind of . . .
Andrew: That’s great.
Shane: . . . One of those things where [??] puzzle pieces together.
Andrew: So, we hear numbers like a million, and that’s sales. How much did you net from all that?
Shane: That’s always been the tricky question, because I think it could have been profitable if I would’ve just said, “Hey I’m going to stick to these small sales channels and we’ll sell a million dollars worth and we’ll have zero to no staff.” And nowadays especially with the internet and with everything you get on social media, it’s possible to have a million dollar business that’s profitable. I invested almost all of that back in and more, and so, there wasn’t really much money made from . . .
Andrew: Invested in what? Where did the money go?
Shane: I mean, at that point, we were still, we made a lot of mistakes when it comes to sourcing product and so I [??] a lot of money on overpriced product that we ultimately had to mark down or sell less than what we paid for. We spent a lot on tooling that didn’t end up going anywhere, we spent, I went to China probably 12 or 15 times and those trips add up. And then doing a trade show that you don’t get any sales from, so it’s kind of that experiment. Hindsight, it’d be pretty easy to turn that into a profitable business, but when you kind of don’t really know the ropes, I mean, I was 19, 20 at the time, so a lot of it you just can’t know when you’re that age, you know?
Andrew: You said a few times, “I made every mistake in the book.”
Shane: Oh yeah.
Andrew: What’s the biggest mistake? Your big regret?
Shane: The biggest mistake. I mean, it’s hard to say regret, because it all kind of, every piece is kind of lumped along and ultimately Beacon and what I’m doing now wouldn’t be here without the prior experience, right? So, regret’s hard to say. The biggest mistake that I made that I’ve learned kind of after Siege folded and bit the dust, so to speak, I was part of a group here in town it’s called Junto and they kind of mentor entrepreneurs. I don’t know if you’ve ever heard that, but it’s . . .
Andrew: No, but Benjamin Franklin first put together a Junto, right?
Shane: Yeah. [??]
Andrew: Junta, I think?
Shane: Yeah, yeah the Junta.
Andrew: And so you guys have one of those groups. OK.
Shane: So, yeah, some local investors here [??] entrepreneurs in, and have like a six week class and you’d have to go do these challenges, like you’d have to go sell the most amount of product, you had to get somebody to . . . the craziest is you had to get somebody to commit to invest 10 thousand dollars into you like and you had four days to do it or something like that.
So you do kind of these challenges and at the end of the thing we put on a conference, we called it the Junto prodigee conference and we brought in, it was pretty cool, we leveraged all their networks and we brought in all these entrepreneurs from all over Utah.
People that have been there, done that, investors, and so we had kind of these big panel discussions and we set up a speed [??] thing where you could go sit with, you basically had your five tickets and you could go sit with any five CEOs or entrepreneurs if you wanted to for kind of a 10 minute session and one of them was with a person names Amy Rees Anderson that sold a really successful company here called Mediconnect Global. She’s really cool.
We’ve stayed in contact over the years and the thing she said, she’s like, “When you’re starting out, everybody wants you to think there’s some magic formula with business that they know and you don’t.” And she’s like, “Beware those guys.” The quote on quote experts that said, “Oh, you can’t do this, but I’ll do it for you for a fee.” Kind of thing.
So the biggest mistake I think was just kind of doubting myself and saying oh, it’s too scary to design a project or a product. It’s scary to go to China. It’s too scary to go out and sell, I could never get in the door, this guy will never call me back. And having those type of doubts is definitely what held me back in the past. I think it’s what holds everybody back. And just kind of realizing that you can get in the door, you can design it, really, you can learn anything you want, right, if you want to [??] you can get on a plane just like anybody else and at the end of the day it’s what she always said, it’s like, you’re [??] your common sense is worth a lot.
Andrew: Did you recognize that you had this doubt, did you recognize that you were actively saying to yourself you can’t get your foot in the door with these customers, you can’t go to China, you can’t have this manufactured for you or was it just these thoughts that were kind of accepted in the back of your head and unrecognized?
Shane: I think they were more accepted.
Andrew: You mean accepted and unrecognized as opposed to being very clearly aware when you wake up in the morning you are not going to China?
Shane: Totally, yes.
And first when you start out, and specially I was 18, 19 and you’re think, I actually found some old notes from the start of [??] and I remember having the notes and I was like my goals for the next 6 months: we’re going to do $20 million in sales, you know, like all these things that we’re going to do and you’re so blind and you’re so ambitious that you go out and you think oh, we’re going to get in target first, we’re going to sell a million of these units, we’re going to get this big investment.
And then you go out into the world and you get beat up a little bit, right, you have the real world experience and after getting kind of kicked in the teeth a couple of times you realize like oh, hey this is harder than I thought. And I think at that point is when a lot of people give up, go get a job or do whatever. For me it was kind of when I started saying like oh, I should probably trust these experts and let them kind of do their thing.
Andrew: I see. And that’s where your money was going, you’re saying, some of it.
Shane: Yes. Hundreds of thousands.
Andrew: You know what, it seems like in the physical product business there are a lot of experts. And you’re saying you hired them and they were going to source for you. You hired them and they were going to open doors for you, that kind of thing.
Shane: Yes. You know, in my experience, yes. Like mentors are inanely valuable and I see a mentor in somebody that’s like hey, I want to help you succeed, I want to introduce you, I can do this and that. So, I mean, latch on to mentors and then experts are the ones that are like oh, I’ve been there done that for a retainer or a portion of your sales, I can do this for you. And in my experience the experts are the ones you need to stay away from.
Andrew: I see. All right, that makes sense.
One of the first physical product entrepreneurs that I ever interviewed was Gauri Nanda. I talk about her a lot because her interview was so good and she’s so bright and she’s just inspiring. And she had similar problems and I said what would you do to avoid it and she said talk to others who’ve done it before, others who’ve gone to China, who’ve manufactured or done what you’re trying to do and they will help you out and in that case they don’t charge.
I think I even said would you accept a call from someone who is a real entrepreneur, who is building something and help them out because now that you’ve done it, she said yes, absolutely. I think I made some introductions.
Would you be open to, if anyone’s actually built a product, contacting you and saying hey, look, here’s my prototype, I’m not just sitting on my ass with an idea but I’m producing it. Would you be open to talking to them?
Shane: Oh, absolutely. And going back to a mistake or a regret, that kind of thing, that was one thing, getting enough feedback was one thing that I didn’t do very well. Like I met one person that said I produce things in China, I can do this for you. And I was like OK, you’re my guy, I’m going to go with you, where like you said if you want to do something, say produce product in China, talk to ten people who’ve been there done that. And if one person is telling you one thing, you can kind of run it by the other ones.
So yes, I would love on either side, I would love to talk to anybody that has a prototype that’s looking to getting produced, I would love to talk to people who are further along in the process. And that’s what’s so cool about physical product is you always have something to kind of offer up, you know, and it’s an easy introduction to kind of say hey, I want to send you some free product, I’d love to get your advice and people seem to really open it up and it’s easy to kind of break the ice so to speak with that.
Andrew: By the way, I saw a lot of reviews of different Beacon Audio products.
Do you send out your speakers to review them and let them keep them?
Shane: It depends. We have an amazing publicist that work with since the beginning and she’s amazing at getting them into the right hands. So if it’s the right people we’ll absolutely send them product and let them keep them.
Andrew: But what I mean is do they end up like… I think Engadget had a great write-up of you. I looked you up. I said am I just being carried away, or are other people who are real gadgetphiles, gadget lovers,…
Shane: Yeah.
Andrew: …and experienced reviewers, are they finding flaws that I’m not catching that I need to bring up in the interview? I didn’t see a negative review, which isn’t to say that they don’t exist.
Then, I walked away saying are they kind of excited because now they get to keep the speaker? Because it’s low enough that they could maybe keep it without feeling like they’ve been bought, but it’s still valuable enough that they could take home. So, are they getting to keep it, these reviewers?
Shane: That’s definitely a perk of being in that field. But, on the other hand, you know, these guys get so much product. They get ten shipments a day of similar products.
Andrew: I see. They get…
Shane: …[??]…
Andrew: …every Android phone that comes out. Yeah.
Shane: Yeah, and if they want to call up any company in the world and say hey send us free product, anybody would. Sending them the product is definitely icing on the cake. But, at the end of the day if the product can’t stand up they’ll send it back. It’ll get thrown in a bin somewhere. It’ll get given away.
Yeah, we ran into people that a year later at certain publications were like oh my gosh I still use that every single day. It’s sitting on my desk as we speak. That’s a crazy feeling. That feels really good.
Andrew: Let me do a quick plug here for Scott Edward Walker of Walker Corporate Law. Do you have a lawyer? Did you get a lawyer for your first business right away, or did you wait?
Shane: No. Again, back to regrets, I wish I would have with the first business. We do now. But, yeah, everything I’ve heard about Walker Corporate Law sounds great. Like I said, I was listening to one of your episodes this morning and considering dialing that phone number myself. Invaluable.
Andrew: Well, I’d be happy to introduce you, not that you even need it. You can just either call him or email him scott@walkercorporatelaw.com. So can anyone else in the audience.
I remember actually having my dad’s lawyer. That was so useless. Because the guy really basically wanted to blow me off. Because I didn’t have an established business that existed for a long time, unlike my dad and his friends who were in the clothing manufacturing business for years. So, he took that seriously.
A startup that lawyer didn’t take seriously at all. I was just a side project for him.
Shane: Yeah.
Andrew: It was so painful that I wouldn’t even ping him with a small problem. I would just hold my tongue or say this is too small. I don’t want to show him how insignificant I am. What a mistake, what a mistake.
But, when you’re starting you don’t know who to go to.
Shane: Yeah, totally. That’s a common problem. I think especially when you’re starting up you kind of feel like oh all my problems are unique to me. Nobody else would know. You know, I don’t know if you’ve ever experienced that.
Andrew: Yes. Yeah, and you don’t even catch that there are mistakes that you make over and over. One mistake I remember having was I’d have insertion orders, and I would send them out to advertisers. They would be able to sit on those insertion orders forever, because I put no expiration. I didn’t even know you could.
So, I’d say here’s the offer, and I sent it over. They could sit on it for a couple of months. Meanwhile, the industry changes. My deal could be exceptionally good two months later for them and bad for me. At that point they say all right I’ll sign it now. Oh. But, my insertion orders I think at first came from copying other people’s insertion orders. It was just…
Anyway, you don’t have to live like that.
Shane: Been there.
Andrew: You guys can call Walker Corporate Law. Or, just go to walkercorporatelaw.com. If you’re in the tech space probably one of your friends has already talked to them and knows them. Ask for feedback from them.
Or just, like I said, email Scott directly. It’s scott@walkercorporatelaw.com. I’ll keep holding up the mug so you guys can remember Walker Corporate Law.
All right. The new business. In the pre-interview we asked you what’s the first step you took. I was surprised. One of the first steps was just going to China.
Shane: Yeah, definitely. It’s funny. I’ve done some speaking engagements through the entrepreneur classes here at colleges, or random things here and there. People always seem to ask hey I have an idea, but I have no idea where to start. It seems like such a funny question.
Because I’m like well just start. Do something. Talk to a designer. Go to China. Set up an LLC so you at least have an official thing. Do something.
Yeah, I just kind of jumped on a plane. We went over to China. That was really where we started.
Andrew: Why China first? Why not try to prototype it first, or go to Ali Baba and try to find a supplier first? Why fly so soon in the process?
Shane: You know, a big part of that was something I learned at SIEGE. With the previous product, like I mentioned, we had been working with a guy that was sourcing it for us. It kind of came out as I started talking to other people that had done it and other mentors, I would say, that we were really getting over charged for the product, that the product was near the quality that he was promising it was.
In some cases we were paying ten times what the manufacturing price was. And so it screwed up the margins and everything like that. So with product I knew that was the most critical component. If we couldn’t manufacture the product, if we didn’t have a relationship with our supplier, the entire business fails to exist if you don’t have good products.
So I kind of thought, “Well, heck, this guy can do it, and he says he’s been there. He’s done it. He doesn’t seem that bright. I can do it. And so we started the process of, you know, we wanted to find a supplier that we can work with even before we had the designs because a lot of people go down the rabbit hole of designing this crazy invention. Unless you’re Apple and you can invent a new way of manufacturing something, nine times out of ten you’re going to have to comply with what’s reasonable, tooling-wise, development-wise, production-wise.
And so we didn’t want to go down this rabbit hole of designing a product that would cost $300 to manufacture or $300,000 in tooling, or something like that. So…
Andrew: I see. Where did the idea come from? What was the original idea?
Shane: So the original idea… Well, it sounds backwards because on one side I’m talking about product and the importance of nailing the product first. The original idea actually came from people that I’d met during SIEGE and again it was one of those things where I had a physical product. Looking back I’m kind of embarrassed. I wouldn’t sell it to anybody now because again I’m kind of back to that embarrassment thing, but I, at least, had a physical product.
And we had imagery. We had a website. I had something I could go show. And so I met a few people because of SIEGE that were really experienced in, you know, had done prior businesses, really experienced in the music industry side. Tons of connections on that side, connections to capital. And so when Siege folded I called him up and said, “Hey, I want to start something. I love the product. I want to start a brand that can really cut through and can mean something to people. And can stand for something.
The partner that I talked to that’s my partner now, he had the same thing. He had been in the music industry for 20 years, and he had all of these relationships. His thought was, “I had these relationships and don’t have a way to do something meaningful with them.” And so we agreed on the idea that we wanted to start a brand that can engage with the customer, that can be authentic, that can be real, that we can express our confidence.
Andrew: Why speakers? Speakers have existed for decades now. Why did you say, “I’m going to start a new speaker company as opposed to maybe a case company for mobile devices because that market’s fairly new? Why speakers?
Shane: Well, at first we actually played around with headphones. We played around with earbuds. We wanted it to be an audio type product because of the music connections we had and we love music. I mean, that’s a huge part of our culture. So we knew it had to be an audio product. We knew we wanted to go the consumer route because of my obsession with building a brand and selling a consumer product.
I wasn’t really interested in selling like Pro Audio or anything like that. So we knew it had to be somewhere in the headphones, speakers, somewhere in that realm. Ultimately we settled on speakers because we really see a trend where three years ago it used to be all about… You remember the iPod ads? You have your iPod. It’s just a silhouette. You put them in your ears, like you listen to music by yourself.
Andrew: Uh-huh.
Shane: You really see the trend now where it’s less about listening to music by yourself, and it’s more about listening to music with your group of friends. You mentioned using the product. You want to be able to play it for your friends. You want to show off your playlist. You want to show how you have such great taste in music. So music is a lot more a social thing. And so we see that market as where the growth is going to be occurring, not necessarily the headphones, private one on one listening.
Andrew: I see.
Shane: Although that market is huge, but…
Andrew: What about the price? Earlier you said, “We wanted to make sure that this wouldn’t be a $300 price.” Were you also saying to yourself, “There’s room to create a new speaker so people can enjoy their music with their friends, but it’s got to be cheaper than what’s available now.”
Shane: Yeah. Price is a huge…especially in the product is a huge component. That’s something where you really have to consult a lot people. You know, ultimately… Consumer products are funny. To some people $200 is insanely premium and for some people premium is $3,000. There’s speakers out there that are hundred thousand dollars. It depends on the market.
We kind of felt that we wanted to make a better product or a comparable or better product than anything else on the market, but we wanted to offer it at a cheaper price. We came up with some ways we could do that without sacrificing quality but just through different creative things we’d do with packaging, with materials, with components.
Our mantra when it comes to product is we want to make things that are we call it attainable luxury. So, we still consider it a luxury premium item, but it’s at a price where if you lose it, or it breaks, or somebody runs over it or something you’re not…
Andrew: Or steals it from your party…
Shane: Yeah, steals it.
Andrew: I see Jawbone has a great speaker. It sells for over $100. Your first speaker, the Phoenix, sells for $49.99 on Amazon, Phoenix 2 $69.99 on Amazon, in direct comparison.
Shane: Correct, yeah.
Andrew: That was the original idea. Let’s offer people that remote, the wireless speaker, at a price that’s under $100.
Shane: Yeah. We don’t want to be like the bottom feeder brand. Our goal isn’t to be… If we don’t ever get in Walmart we’re fine with that. Our goal isn’t to sell the $20 or $10 item.
You do have to break that threshold where somebody’s willing to spend a little bit. But, our first of the Phoenix, when it first came out it retailed at 99. We have reviews that compared the Phoenix against the Jawbone.
The Phoenix was $100. The Jawbone was, at the time, $200. They were saying that ours beat the Jawbone. That was our stake in the ground where we could say…
Andrew: You know what though, Shane? If we’re creating a web app…
Shane: Yeah.
Andrew: …we can invent a price, say $20 a month, and then a week later we can say we were crazy. Let’s lower it. We go down to $10. It doesn’t change our cost infrastructure. Maybe increases our revenue. We experiment. If we see that both of those don’t work, we up it to $60. We could play as much as we want.
With hardware you have limited flexibility. You can’t sell it for less than it costs you to make. So, you have to… And, it takes a long time to make. So, I imagine you have to be sure that the price point you’re going for will be one that consumers care about, really will be within reach like you imagine. Is there a way to test for that?
Shane: Yeah. One of my favorite quotes when it comes to product is there are no bad products, only bad price points.
Andrew: That’s a great line.
Shane: Yeah. Any product can be good at the right price. But, yeah, there are a lot of things you really have to think through on price, especially when you’re going… We’re in the stage where we’re going after wholesale distribution through different retailers. We’re working with [Inaudible 0:02:48]. We’re working with distributors.
When you’re all online, like our Kickstarter campaign for example, you can experiment quite a bit. I would actually recommend experimenting online before you take it to retail. Once you go to retail if you drop your price once your price is dropped…
Andrew: Wow.
Shane: …from then on henceforth. Especially…
Andrew: You can’t raise it back up you mean.
Shane: …[??]…
Andrew: You can’t go back to Walmart and say oopsie we need to charge twice as much for this.
But what about, then, before you make it? Is there any way to research it? Can you put up a minimum viable product like an image of the speaker that you want to sell up on your site or up on Amazon and see if people are willing to buy it? Is there something like that?
Or, is it just the crowdfunding sites like Kickstarter that are the only ways to test price?
Shane: You know, you totally can do that, and I’ve heard of a lot of people doing that. I hate the idea of minimum viable product. Because I see minimum viable product as saying we’re going to put almost the crappiest version of it that we can sell and see if people will buy it.
People don’t buy our product because it has X or X feature. They buy it because of the whole experience of the product. So, if your minimum viable product means that it just is a plastic box with two speakers and a Bluetooth chip it’s…
Andrew: I don’t know that that’s what minimum viable product needs to mean. If you just put it up on Kickstarter before you start manufacturing it, if that’s the minimum that you can do which is create a prototype and know how to manufacture it, I think Erik Ries would agree that that’s a minimum viable product.
Shane: Yeah, yeah, true. There are a lot of definitions. It could go all across the board. In a lot of ways we’ve taken the MVP route.
But, in theory I would say it’s better to pick a couple of features that are extremely important and focus on those. Our first product, for example, we were able to get the price low because we left off a microphone. We saw it as a feature. We said okay what’s more important is the packaging and the look and feel of the product and that it’s easy to use. So, if people can use it, they enjoy using it, that’s more important than the occasional user that’s actually using a microphone. So, I don’t say that I’m about product, it doesn’t necessarily have to be the worst crappiest version but you have to get enough into the product where…
Andrew: So how do you test it? How do you avoid the problem of spending money on this, getting it in the stores, getting it manufactured, getting into stores and then suddenly realizing you know what, 49 is too expensive for people who are looking for inexpensive speakers and it’s too cheap for someone who wants quality? We made a mistake. We’ve now created it all this.
Is there a way to test or is it just an understanding of the market that comes from selling it one on one the way that you did for years and things like that that will allow you to figure out what the price should be?
Shane: I think there are definitely ways to test. I think the most valuable way to discern the proper point price is to talk to mentors and develop people that have experience and have that instinct, you know. For example, we have a price, we wanted to come out, we had something that was going to be a $59.99 and people that had been there done that, they’re like that’s a no man land’s price point. You either need to be a $49 or you might as well just be a $79 because that’s where the price point is.
Andrew: I also heard that you had several iterations at different price points from $39 to a few hundred dollars.
How did you know which of those was the right one to eventually launch/
Shane: That was pure trial and error and again, that was one of those making every mistake in the book.
Andrew: So what kind of trial are you doing then? Are you creating a few new products and putting them up for sale online or is there some other way that you’re doing the trial and error?
Shane: Yes. We would actually create. This is one thing that we fell into from the beginning. We would actually create a product, you know, we would make the minimum run with the factory, say 2,000 or 3,000 units. We’d bring it over and our cash was tied up in that product so if it was too high, you know, we’re trying to sell for $99, all of the sudden we take it to a discount site, an off price site like [??] or whiskeymilitia.com.
And we’d sell them for a perceived value of $99 but now you can get it for $39 and so then we’d sell 2,000 or 3,000 of them. We kind of took that as hey, that product is actually selling and so we’d still keep [??]. Just because you can sell it at a discounted rate doesn’t mean you can sell it at full price, right?
So we did trial and error by literally bringing product over and seeing what sells and that’s a really good way to tie up a ton of cash and have a warehouse full of product you can’t move.
Andrew: I see.
Shane: Now what we do, you have to start with the price from the beginning, right? So every step of the process we’re comparing it against similar products, we’re talking to people that are in the industry that have been there, they’ve seen a million products. We’re showing designs and we have these huge spec lists for saying okay, if I want to compete and be aggressive at a $99 price, it has to have these 5 features, it has to have these packaging aspects. If you go about it in a scientific way, I mean, it’s tough. You might be off by $10 one way or another but you’re not going to be off by $50 like in the beginning. We’re experienced.
Andrew: I said that you just went to China but you didn’t just land in China and figured things out. One of the things that you did was you went to the electronic fair in Hong Kong.
Shane: Yes.
Andrew: What is that about?
Shane: So actually I went to 2 main ones; there’s the consumer electronics show in Las Vegas. I’m sure it’s the biggest show in the U.S. and they have a whole sourcing section where you can go talk to different factories that show up and have a booth. And then there’s the Hong Kong electronics fair.
So I went to CES and I would just find people that had similar products in their showroom and I would say hey, if I come to China, can I come see your factory? Can I come meet with you? Can I come talk to you? And I found out pretty quickly there’s a lot of people at those shows that go out and they don’t necessarily have a factory but they work these relationships and so they bring a bunch of product and they’re kind of the middleman.
And so by literally saying hey, I’m coming to China, I want to see your factory, you can tell pretty quickly those that are saying oh, you can’t come see our factory because it’s proprietary, those are usually the guys that are like the middleman and don’t actually have a factory. The ones that are like oh, yes, come over whenever, we’ll pick you up and do this, those are the guys that you want to work with.
So I did that at CES, made some introductions. That was the first time I went over to China and met a lot of those guys and then the big one is Hong Kong Electronics Fair where a ton of those factories go and there’s a million of those you can talk to and go right over and see them.
Andrew: And then it was time to launch.
Shane: Yes.
Andrew:: And what did you launch?
Shane: So we launched our first product. We launched, because we wanted the brand site so important, we launched at the Coachella Music Festival. This was, it will be two years ago this April and we launched to press media and artists. That was in April but we didn’t actually start shipping the product until August. So we really wanted to get a ground swell and get people to love the product; get people that are talking about it, get people that are tweeting, and kind of pull out our team of influencers and taste makers.
We launched the product there and it was a huge success. It was, again, one of those things where people actually use the product. We give certain bands and certain friends these products and then a couple of months later we start getting calls from their manager saying, “Hey we need ten more of these. They literally have not stopped using these since you gave it to them.”
Andrew: So you give it to them, they need ten more for what? Just to listen to around their houses?
Shane: Yeah, a lot of them would drop us a line and say,”Hey I have three or four friends who need them. Hey these all got stolen off our tour bus.” That’s actually my favorite, my favorite thing when the product gets stolen from their tour bus. Because that’s like they came in and they recognized that that was an item of value and they took it. Or “hey we lost them, our bags got lost.” So just the idea that people are using it and when they didn’t have it all of a sudden they were going. “hey I need one of these, I can’t.”
Andrew: I see. So it’s putting a physical product in people’s hands that gets them to understand and connect with it and appreciate it. Especially if they can take it back home.
Shane: Totally, yeah.
Andrew: I was just reading the Twitter book; Hatching Twitter, about how they launched at a music festival. People just weren’t paying attention to them. They would take the free booze that the twitter founders offered and then move on and not really pay attention how to create a Twitter account. I guess that’s the difference; they were launching software and a website to people who just wanted to have fun, you were actually putting a product into peoples hands. One that’s valuable and they can’t not notice that.
Shane: Yeah, that’s one of the things I love about physical product is putting it in their hands; having the music, showing them, demoing them. You know we would actually , it seems kind of cheesy now, we would actually sneak it up and have their music playing through it. It had this huge sound and we were in kind of a noisy area and you could still hear it super loud.
Andrew: So how do you know then that it’s going to spread? You sent me a speaker, that I’ve got at home. How do you know that you are going to get any promotion out of it? That, what, people are going to come to my house? If we weren’t doing this interview how would anyone even notice that it was there? I’d have to really walk them over and say, “This is Incredible Speaker,” and talk it up, then they have to go out and buy it. Doesn’t seem like it’s viral enough and here you are spending money to create it and send it.
Shane: Yeah, that’s the age old question when it comes to giving product away, right? The way I look at it you’re going to spend money somewhere with marketing, right? Unless you can be completely viral or completely social you have to get the product out there. So one, I see it as a really good test that if you do hear something back, if you do get a comment on it that means you are doing something right with the product. Early on, especially with seed, we’d give product to people. You know to some cheese DJ and it would break on them, it would short out, Next time we talked to them they’d be like, “Oh that stuff was pretty bad.”
Andrew: Yeah.
Shane: So that’s kind of like, “Oh okay we really got to,”. So sometimes it does work and sometimes it does just go into a black hole but at the end of the day it’s just kind of trusting. That if you are confident in the product and it’s something that people will like. Maybe you’ll mention it to one friend, or just you having it and somebody seeing it is enough. Now we have this buzz where we talked to a lot of people who are like, “oh my daughter has one of those,” or “oh I just saw that,” or like you said, “oh my friend has the blue one,”. That’s just one of those things you kind of just have to just put it out and have faith that people are good and that your products can break through.
Andrew: Alright, I see how you launched it. How did you get your first customers?
Shane: So our first customers. We sold it strictly online to begin with. We had a really aggressive press strategy. We hit up, kind of seeding the product, we sent product out to all of these media outlets and we had a couple that hit really big. We had Mashable was our very first media post ever; they put it as like their top 10 tech for the week. We had a landing paid before we were actually selling, we got something like 1,800 sign-ups.
Andrew: 1,800 people gave you their e-mail addresses and said, “tell me about this when you launch so I can potentially buy it,”?
Shane: Yeah, so we basically put it up, we said it’s going to be X amount, it’s going to start selling in August, sign up now to reserve your place in line. So we just had a quick page up; people could select the color they wanted and put it in. we had about 1,800 sign-ups, we got really aggressive with social media, Instagram, and the press. So by the time we launched we had about 4 to 5,000 e-mails saved up. Once we launched we had some press that hit.
We had an Engadget that we called our favorite speaker of the year. We had a couple that just drove a huge amount of sales. And that’s really where the first product came and from there we started getting cold calls from retailers saying, “Hey, I’m surprised I haven’t heard about you. We actually had the buyer for Target email us and say, “Hey, I just saw this on Engadget. We’d like to start talking with you guys.” And so, yeah, it was all media based back then. So…
Andrew: Do you have any sense of how many customers you got from being in Mashable?
Shane: Yeah. We could track traffic. You know, a lot of people, especially online, it’s all a numbers game. So a lot of people would comment and look at the product and leave right away and that’s why we wanted to have that very clear conversion. The very first step, we didn’t want to get them to put in a credit card. We wanted them to say, “Hey, I’m interested in this. I valued it enough to put my email in.
And so the Mashable was I think we had something like 10,000 hits, and we had about 1800 sign-ups which we viewed as a pretty good conversion.
Andrew: I see it here. A sneak peek Beacon, Phoenix, Bluetooth speaker – where is that there? – We listened to this cute $99 cube available for pre- order next month, et cetera. It was $99 at the time. At what point did you reduce the price?
Shane: So we reduced it to… So that the first version of the product and that was one of those things again where we didn’t get everything into the product that we wanted. We ended up pricing it just a little big too high, and so we said, “Hey, we’re going to revamp this and that’s where the Phoenix2 came. And we realized that… We’re actually priced at $79.
Right now we have some promos that bring it down to $69, but we’re priced at $79 on the Phoenix2 and we knew that since we undercutting the previous product we wanted to drop the first version even lower. So we just barely dropped the price on that about three, four months ago, something like that.
Andrew: I see it here along with Porsche and an aircraft and Windows 8. I mean, really, lots of products that even seem actually… How did you end up in this list when you’re a brand new company?
Shane: We still don’t know. It’s funny. One quote that we always said in kind of that Hinto [sp] Group, they always said, “Luck favors the man in motion. And so if you’re working, if you’re doing everything you can, you’re sending product to the right people, every once in a while you’ll get lucky. It’s funny they put it, it was number one on their list. And I think it was just because the design is really different than any other speaker. It doesn’t look like a speaker.
A lot of people thought it looks more like a cupcake or a tennis ball or something like that. It had that kind of soft texture to it. It’s just one of those things when you pick it up people just kind of fall in love with it, especially at the price, realizing that it’s the kind of thing anybody can use. That’s one of those things where we really got lucky.
Andrew: And it was sending them an email saying, “This is what we’re coming out with?”
Shane: So we actually worked with that through our publicist. Our publicist got us right in the door there and they were able to get the product to the right person. You know, like I said, you have to be able to open the door, but once the door is opened you have to… An introduction alone won’t get you to the right office.
Andrew: Who is your publicist?
Shane: We work with a group in New York called Azione. Leland Drummond over there, she’s amazing. She does… She does someone, in fact, that you interviewed, Mike. She does a lot in the consumer electronics world. And they’re just small. They’re boutique and they’re just aggressive. Their relationships are amazing.
Andrew: Did you do any ad buys?
Shane: We still haven’t done any ad buys. No. What we did in the beginning, so after the press launch we started working with festivals and we’d partner with certain festivals. And we’d go in and we’d say, “I want a booth at your show.” We did the K-Rock Weenie Roast which is a huge kind of all rock show in L.A. We did that and we’d say, “Hey, we want to be able to demo the product. We want to be able to sign people up. And we want to be able to gift all of your artists.”
And so we’d go in and we made… It’s funny, we actually made custom stickers for every single member of each band, and so it would say, “Chris Martin of Cold Play, here’s your private thing.” And it’s cool. So we started getting a bunch of tweets. We started getting people that were really excited, mentioning the product. And then we actually had an interview series where we’d interview artists. We called it the Beacon Moment.
Again, getting back to the brand thing, we wanted Beacon to be something that stood for, you know, Beacon is kind of a light on the hill. It’s kind of aspirational. And so we did the Beacon Moment which is like the moment when you realized you wanted to be a musician instead of flipping burgers, or something like that. So we had this interview series. So we still leveraged their social media to get a lot of attention around this cool content we created. And then we didn’t plug the product. We didn’t do anything, but as a result we started getting a huge amount of online traffic and people that just understood our vision and where we were kind of going for.
Andrew: You mentioned that retailers started to contact you. Now, you have this vision for a product, it’s going to be inexpensive but it’s not going to be cheap, right, because otherwise you can’t make it function as well, you can’t make it as beautiful.
Retailers have a different agenda. They want to reduce the price as much as possible. What do you do when all these retailers are saying to you how about $29? How about $19? Why don’t you just sell it for $5?
Shane: You know, it’s funny. That was one thing I thought too going in. Retailers, everybody’s going to want to undercut each other. We actually found the opposite to be true. We went in and we said we want to sell this product, we want to protect the price, we’re not going to sell to anybody who is going to be discounting it at least for an x amount of period. You’re not going to see it on eBay for $29, you’re not going to see it all over Amazon for $3 above wholesale.
And we actually had an insanely positive reaction to that and there’s very few brands that are price protect and so retailers were saying, retailers would rather sell it for more, right, because if they’re selling it for $100 and they rather make $50 than sell it for $70.
Andrew: Including Target? Target isn’t trying to get you to reduce the price?
Shane: Oh, Target is crazy about that, I mean, in any meeting at Target first thing they’ll do is call Amazon and they’ll say you’re telling me the retail is $99. It’s on Amazon for $49 so we want it for half of $49. We want to sell for $49.
Andrew: What do you do? And by the way, I looked for that and I happened not to see it.
But what do you do when that stuff happens?
Shane: It’s something you have to be just relentless about that from the very start. You have to, first part is selecting retailers that won’t break. You know, we set up a minimum advertisement price policy and it’s something that legally it can be tricky to enforce. But basically you’re saying like hey, you’re either with us or you’re not. And so you’re either with our vision, you’re going to sell it at our price and here’s what we’re going to do for you to sell it or you have a different agenda, we just choose not to sell it to you. Not that you can’t sell it for less but we just chose not to sell it to you.
Andrew: What can you do actually about that because you’re legally not allowed to tell them what to charge. The bigger companies, the bigger manufacturers will say things like we will support you with advertising only if you charge at this price and otherwise you miss out on this great benefit. And that’s how they keep people in line.
You don’t have that kind of power. So what do you do? What can a company your size do?
Shane: The only thing you can do is first letting the right retailers and setting their relationships from the beginning and then second is just having the kind of relationship. It’s one of those things where everybody knows you can’t really enforce it but they also know that if they’re flipping it on eBay and nobody calls on them, nobody notices, nobody comments they are going to say oh, you’re doing that. And so every time we saw kind of an infraction on our pricing policy, we would call them and say hey, come on, you know what we’re trying to do. You know this is bad, it’s not only bad for you, it’s bad for the entire market, it’s actually the entire industry in general.
Andrew: I see. So it’s just get on the phone and persuade.
Shane: Yes, you just talk to them. And once they know, a lot of them it’s kind of like training a dog, like Pavlov’s response. You talk to them and you say hey, you know this isn’t what we talked about. Will you bring it back up? And just having that contact, they’d be like oh, wow. We’re surprised [??]. It was a mistake. We’ll fix that right away.
So it’s just relationship, relationship.
Andrew: Then you went to Kickstarter. Why?
Shane: So we had, by the time we went to Kickstarter we’d been selling product for about a year and we’re still kind of making some mistakes at that point. we were kind of trying to figure out where our sales channel was, we were really trying to activate our core customer and get them really engaged and involved.
We started Kickstarter as a way to really get our customers back and engaged with our product and have them learn about us as a company and a place where we could basically tell our story as a brand and what we stood for rather than just hey, it’s on Amazon for x amount price, buy it. Because a lot of what you buy when you’re buying it, Apple for example, you’re buying the whole company culture. You’re buying the product philosophy, you’re buying all of that.
So we said, hey, we’re not Apple, we’re not getting interviews on Oprah, whatever, we have to tell our story somehow and so we came up with this idea. We said hey, let’s launch a second version of this product which we feel it’s going to be really market significant. Let’s launch it on Kickstarter, let’s do a lot of the development beforehand, explain the story and see what the reaction is.
So that is kind of where it came to Kickstarter, you know. And it is great to pre-sell product. I wouldn’t discount that at all. But, the main course was hey let’s activate these consumers. Let’s touch them one on one.
Andrew: How did you get people to support the Kickstarter campaign. I see you were trying to get $90,000. You ended up with 323.
Shane: Yeah. Crowdfunding is such an interesting way to launch product, for good and for bad. Yeah, the goal went way beyond what we had anticipated.
We had this whole kind of method for okay we’re going to get traffic through these channels. We’ve already worked with these media outlets. We’re going to get to do write-ups on it. We’re estimating X amount of traffic. Our goal’s 90,000.
Our entire playbook went out the window after the first day. It was crazy. A lot of the conversions actually came from Kickstarter itself, people browsing the site, and seeing the product, and going and buying it. Our conversion rate as compared to other projects was like triple what some of the others were.
I think just putting a lot of that legwork in, and telling the story, and doing as much as you can on the campaign, this is kind of back to the minimum viable product. If we would’ve gone on and said hey we need $5,000 to design this product, help us out, we might’ve raised $5,000.
But, doing a lot of the legwork beforehand and getting the product, say, 90 percent there, I think people really identified with that. They said hey this is something that’s pretty cool.
Andrew: All right. So, we know that there are going to be people in the audience who are listening to this interview because they have an idea for a physical product that they want to manufacture. You’ve done it now a few times. What advice do you have for them?
Shane: The biggest advice I would have for anybody that wants to make a product is just learn everything you can about the product, about the industry you’re going into, about how you’re going to sell it, and about how to manufacture it. There’s so much to find.
Obviously, Mixergy’s an amazing way to learn from people that have done it. Books, there’s tons of stuff on the Internet, all sorts of blogs. But, I would just get aggressive about learning everything you possibly can. Talk to anybody and everybody.
The biggest thing is just be active. Be out there doing it. Share your vision with people. Tell them what you want to do. Be willing to ask for introductions or anything like that. I wish there was some magic formula to it, but at the end of the day in my experience it’s just been you’ve got to pick up the phone and start dialing. You’ve got to…
Andrew: And you’ll just call up someone who’s done it before and ask them for advice. How do you get them to care? Especially in your case now, you’ve got a reputation. You’ve got a product. You’ve got a track record.
But, when you didn’t… And, when the person listening to us maybe doesn’t have a track record, how do they get someone who’s done it to care enough to give them feedback, to help them along, to help them figure out China, and then to figure out the manufacturing process there and so on? How do you get someone to care about you when they don’t know who you are?
Shane: That’s a good question. I think a lot of it comes in stages. People you want to go to for mentorship, they’re getting approached by a lot of different people – especially the high level guys. So, yeah, standing out, it’s tough to call them and say hey I have an idea. Will you talk to me about an idea?
It’s a lot harder to stand out with that than saying hey I’ve actually made something, even if it’s totally crap, but hey I’ve actually produced something. Hey, I have some packaging. Hey, I have this website up with these awesome renderings. Hey, I’ve done something.
I think you have to do something to get their attention. As you go, if you only have renderings, you can get a certain group of people involved. Then, as you kind of take it to the next step with hey I have a rapid prototype…
Andrew: I see.
Shane: …I want to talk to you about.
I think what mentors want to see is action. People that come and say hey I have this idea, but I just don’t know where to start – I think they get hit up by so many people it’s kind of like well let’s see if you can actually do some of this on your own before I invest my time with you. I think just that…
Andrew: If people want to reach out to you, what’s a good email address for them to use to say hey Shane here are my renderings, or here’s the prototype, or here’s where I am?
Shane: Yeah, I love to talk to anybody especially about products. So, just shane@beaconaudio.com is a great place to get a hold…
Andrew: For the transcribers, it’s S-H-A-N-E. It’s B-E-A-C-O-N. It’s A-U-D- I-O. It’s shane@beaconaudio.com.
We asked you for who you admire and respect, because I’m looking for other people to interview – people who you admire. You said Mike from Soma. Medium, of course, the Twitter guys are doing great. Subtle, Dustin Curtis. But, you also said Stance, the sock company. Why Stance?
Shane: Stance is a really interesting company. So, back to this kind of software versus hardware thing. In some of your interviews you talked about software guys that are fascinated with doing a physical product. With software I think it’s a little easier to carve out a niche to say hey we do X features at this price. Or, hey we’re doing this exact function, if you’re looking for this exact function come talk to us.
With physical product, it’s almost impossible to do something that hasn’t been done, like, a hundred other times. The reason I admire Stance is that’s a company that… I mean, you know, there’s probably 5,000 sock brands or companies that make socks. You go to the mall and you can buy Gold Toe. I mean every company in the world makes socks.
But, Stance came out and they did it in a way where they made it cool, and they added a lifestyle spin to socks. They created a whole new sales distribution through kind of these action sports and image retailers that are selling their product. I think the way they’ve done it by taking a really boring product and injecting just a huge dose of lifestyle, a huge dose of wildness into a product, it’s a really cool way to stand out.
Being in the physical product world knowing how difficult it can be to carve a niche, that’s why I think that’s a cool company to watch.
Andrew: I’m on their site right now. It’s stance.com. Do you know the founder of the company, or should we find them directly?
Shane: I’ve exchanged emails with him, actually. I could get in touch with them.
Andrew: I would love it.
Shane: Yeah, I could, absolutely.
Andrew: If anyone in the audience knows the founder or anyone at Stance, send them an email and say hey you should do Mixergy. You should say yes when Shane emails you.
Shane: Yeah, great idea.
Andrew: One other thing. We asked you if you had a book club what books would you recommend. You said “How to Win Friends and Influence People” by Malcolm Gladwell and “Unlabel” by Mark Ecko. Why? Why “Unlabel?”
Shane: [??] see your interview with Mark before I recommended that. I just finished his book. It blows me away. Because obviously I’ve seen the Ecko brand, him building that. By the time I started taking notice of it it was already probably $700,000,000 or something like that.
The way he built the company, his story of going through, it’s cool to hear for him it was just that raw action, guerrilla warfare, making product, talking to people. I like that book because he shares a lot of his successes, but he shares a lot of his failures, too.
I think that’s something that on the entrepreneur’s side… Again, kind of back to the Ira Glass quote. People dive in and they try something. They come up with a prototype and they come up with a rendering. They try to get investment. Nobody will invest with them. So, they go oh well maybe I’m not cut out for this.
I love that book because he goes through all these different things about how he tried to get to Bell Biv Devoe and they totally blew him off. Or, he tried to sell product and it wouldn’t sell. He couldn’t produce it. It’s just so cool, and it’s just so really raw down to the grit version of building a company. And, the fact that he built a billion dollar company…
Andrew: Yeah.
Shane: …with no investors and no outside help. The guy knows brand like no one else. It’s crazy.
Andrew: You know, there are some times where I feel like my interview is better than the book. In that case I know the book is better than the interview. I’m a little disappointed that I couldn’t do even better, because the book is so good. I like the book a lot.
Shane: I liked it. It’s just so raw.
Andrew: Yeah.
Shane: A lot of them try to fluff up their story and pull out all this stuff, and you’re like I’m sure it wasn’t really like that along the way. But, yeah, he nailed it with that book. It’s just perfect.
Andrew: I also liked the musicians that he was into, the artists. It was a lot of fun to read.
Shane: Yeah I liked…
Andrew: Let’s see what else…
Shane: …[??]…
Andrew: …I want to ask you about. Oh, I know what.
Well, first of all, before I ask you that final question I’ve got to thank Ecamm. I’ve said for years I use Ecamm call recorder to record my interviews. That’s what we use to create these interviews for you.
When we connected, Shane and I for some reason had a bad connection. Shane was good enough to download a copy of Ecamm call recorder so we could record a backup of this interview on his computer directly from his mic directly from his camera, and it makes me feel so much more secure in this interview to know that you have that.
I have to thank Ecamm for creating this software that I’ve used for years in coming through for us. I can’t recommend them enough. It’s been on my list of things that you have to have if you’re an interviewer for years. I haven’t found anything better.
But, here’s the final question. Current revenue? We’ve seen how hard you worked. It’s been, what, two years now since you launched? Where’s the revenue today?
Shane: We actually started selling products in August of last year. So, we’ve been 16 months, something like that.
Andrew: Okay.
Shane: We’re just approaching that kind of $1.9 million in revenue.
Andrew: $1.9 million.
Shane: $1.9 million, yeah. So not [??] but since kind of inception. It’s growing quickly but you know, it’s funny, we’re still very much aware that in the consumer electronics world that’s like pretty tinny, our growth.
Andrew: But not outside funding or boot strap?
Shane: No. We did have a seed round of $1.5 million which really gave us the foundation to build on. And what we really want to do with our growth, our goal isn’t to build it to $300 million and sell it and walk away. We want something sustainable. We want to build a brand that can be around and so we’re really choosing the right partners.
For example, we’re not working with, we kind of made a conscious effort to not work with any big box retailers for the first year because historically, you know, they’ll take the brand. Like he said they’ll try to force you into selling at a lower price, they’ll try to force you into making cheaper product, they’ll kind of shift your vision, your plans for the company. So we said hey, we want to build through a small network of authorized Mac resellers, [??] channels, wireless stores, boutiques, shops that they can understand our vision, that we can have a one on one touch with them.
And then when we go to this bigger distribution, we actually have a solid foundation. We can say hey, this is how we do it. If you want to believe in our vision, you want to get involved with us, this is what we do.
Andrew: The site is BeaconAudio.com if you want to see these speakers and see what these products are and I hope after you do that that first you buy them. I think it is a terrific product. You have 1,000 day guarantee. It’s risk free.
But beyond that, I hope if you guys listened and you got anything of value from this interview, that you’ll find a way to connect with Shane and say thank you. I can’t tell you how many times I’ve gotten emails from people who have done, who emailed a guest and said thank you and then they’ve ended up building relationships.
Shane has said over and over again in this interview that he’ll reach out to strangers and ask them for help. My suggestion is if that’s what you want to do great. Start up by saying thank you. Say you know what, I saw your blog post, I saw your interview, I saw whatever. Thank you for doing it and then later on you can follow up and get more help from him. I’ve seen that happen over and over and I urge you not to just be a passive listener in life but be an active participant.
And I’m going to do it right now, thank you for doing this interview.
Shane: Thanks so much, Andrew. Glad to be here. It was fun.
Andrew: Bye, everyone.
