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Hey there, freedom fighters, my name is Andrew Warner and I am the founder of Mixergy.com, home of the ambitious upstart and home of hundreds of interviews with software entrepreneurs who basically write code, launch it, put it out in the world. Do you ever feel like those guys have it easier than the guys and the women who run companies that create physical products and have to deal with manufacturing, shipping, returns, problems along the way? Do you ever feel like they have it harder but we, we meaning people like me who report on entrepreneurs don’t talk about their issues nearly enough?
Well, today’s guest says that, that’s the way he’s been feeling. The challenges of companies like his that make physical products aren’t being discussed nearly enough, not nearly as much as software startups are. So I invited him here to talk about how he built his business. Ben Lipschitz is the cofounder of Flipsters, a range of foldable flip-flops and other footwear that fold into the size of an I-phone and can fit in a handbag. So imagine a woman who has high heels that she wears to work? Maybe she doesn’t have to wear them to work, she can take them off, put on her Flipsters flip-flops, once she gets to work fold them up, go right into her purse and doesn’t take up much space. That’s what Ben’s company does and Ben, thank you for coming here.
Ben: Thank you for having me.
Andrew: I want to hear how you built this business, how you figured out how to manufacture, all the problems along the way and how you overcame them. Why don’t we start with one issue, one incident that I think kind of illustrates the problems that companies like yours have. This was when you were going to ship to Canada, Australia, and Austria, go international. What happened at that point?
Ben: This was our first international order. We’d sort of just launched in the last six to eight months and already we’d found some distributors in those two countries. The way it worked with the factories, we’d give the order, a bulk order, so we needed something for Australia, something for Canada, and something for Austria. This is the second order that we’ve done with the factory and we sort of thought, “These guys are starting to get it a bit.” We’ve spent a lot of money flying to and from China doing the molds doing all the design work. Let’s see if we can leave it to some sort of third party, quality control agents, the factory kind of gets it now.
Andrew: Yup.
Ben: We’ll save a bit of money in the process which was a terrible idea in hindsight because the order got made and got shipped off to Canada, Austria, and Australia and because Australia is the closest to china of those three countries we got our order first. What actually happened was we hit customs, very excited, opened up the first box of shoes just to have a look. Our sole for the Flipster is really the unique part of the product. It’s got to be elastic enough to fold many times but still solid and brittle enough that you get a nice solid feeling under your foot. That’s what really makes the Flipster.
Andrew: You don’t feel like you’re walking around stepping on paper every time.
Ben: Exactly. And we put a lot of effort into making that mix of materials. Unfortunately, when we opened up this particular batch, we went to unfold the shoe and it just ripped. It ripped clear into two pieces straight out the box. Which obviously is not meant to happen. I remember, Rick, my business partner and I just gave each other this look like, “Oh, that’s bad. I wonder if it’s just this shoe,” [laughs] and opened up another one and that ripped and opened up another one and that ripped.
And we kind of went and had look at the material and we quickly realized that everything else looked good, the [??] looked good, the packaging everything had been assembled perfectly but someone who had made the sole had got the wrong mixture of materials. And what you’ve got there is something that’s just too brittle and if nothing was going to save that product, which [??] really, really tough decision to basically reject the entire batch. And because we, I guess, naively assumed it’ll be fine for us and Canada and Australia, we also had to call those distributors, whose stuff was still on the boat, and say, “Listen, don’t sell those shoes. Don’t sell that stock. It’s stuffed [sounds like] basically. We’re really sorry.” So, yeah.
Andrew: Wow. Can you actually correct it, or is it too late, because the season is over?
Ben: Yeah, so a lot of bad things happened after that. So the first is, yes, you miss the season. Okay. So your distributors aren’t happy, because they’ve gone forward, sold some of the stock, and they’ve got to pull out. The second thing is you’ve got to try and negotiate with the factory firstly to convince them that they’re wrong or that they’ve made a mistake, which is hard in itself, and secondly to try working out a situation, whether financially or just in terms of replacement of costs or replacement of goods, to try and solve the issue, and that became the much harder thing to do. The distributors were surprisingly understanding.
Andrew: [??] understanding?
Ben: Yeah, the distributors were understanding. I think that they saw we had a bit of integrity in saying, “Listen, we’ve stuffed [sounds like] up. We’re sorry. Please, don’t sell those shoes. We’re going to work this out.” The problem became when we had to deal with the factory. There are so many parts that go into making it. Even though we knew exactly where things had gone wrong, no one really [??] accept responsibility, and the approach was kind of like “well, you bought them, they’re on a boat, they’re no longer in China, what do you want us to do” sort of thing, which you can imagine as a startup six to nine months in, I think we were at that time, we kind of felt the pressure and just the despair.
Andrew: We’ll come to that story and see what you ended up doing, but to put this all in context, I want to understand where you came from, you’re a guy who was supposed to be lawyer, weren’t you?
Ben: Yeah, I studied law, and I even went to work at a law firm for a little bit, but it wasn’t really for me.
Andrew: Why not?
Ben: I guess I just didn’t really feel passionate about it. I enjoyed the nature of the work in terms of it being quite challenging and intellectually stimulating, all that stuff. People were very nice. The [??] working on was a big commercial law firm in Australia, and you work on, I guess, things that you see in the media. They seem quite high profile, but there was just a massive disconnect for me between what they were asking me to do now and, as I saw it, into the future. It wasn’t just what they had me doing as a young graduate.
Andrew: What were they about to ask you to do?
Ben: Well, what I mean is when I would look at the more senior lawyers and the partners and things like that, it wasn’t the sort of thing where I felt, well, it’s not right now, but it’ll become great. It was the sort of involvement that as I saw things progressing, it wasn’t as involved . . .
Andrew: Give me an example. What were you looking at in the future and saying, ‘I don’t want to do that?’
Ben: Well, as a graduate lawyer, you’re probably not doing as meaningful tasks within the context of what the firm does, but then I thought, okay, well, what would I do if I stuck around here?
Andrew: Yeah.
Ben: And even then, they sort of seemed on the outside of the deals and the things that they were doing. I thought the fun part kind of seems to be happening over there. I want to be negotiating that deal between whatever company X and company Y and putting something together and creating value and dealing with all the cost diminishes [sounds like] and selling some . . .
Andrew: [??] lawyers don’t get to do that. The lawyers just write it up?
Ben: As I saw it, yeah. It’s a really exciting, relevant role, but, for me, it just became about, I guess, understanding myself and just saying, ‘I’m not going to be passionate about this now. I’m not going to be passionate about this ever.’ So, yeah.
Andrew: I heard that you were, despite on track to being a lawyer, still entrepreneurial. In fact, at one point you would be doing some kind of coaching.
Ben: Yeah.
Andrew: What did you do?
Ben: Yeah, in your second to last year of studying law, you go off and do a summer internship. In Australia we call a clerkship. So you apply to all the firms at once. It’s a really intense process, and you’re interviewing all the time, and ideally you end up with one job, so I’d done that. So at in my last year at university, I used to work selling [??] phones, and I thought I want a different job, let me see what I can do, and I had this idea that I’d spend all my time doing interviews, doing the resume writing and all that, but I can’t really do anything with that experience that experience anymore. It’s done. I had done my summer internship. I put posters up around the various law schools around Sidney and I called it Clerkship [sp] Coaching and I said, “I’ll teach you, if you want, what the questions are.” Just share my experience. I didn’t kind of say that I’m an expert.
Andrew: You’re going to teach them how to get a clerkship. How to get an internship, as we call it here in the U. S.
Ben: Yes.
Andrew: I see. What were you going to charge for that?
Ben: I charged 50 dollars an hour, which…
Andrew: How’d you do?
Ben: It was good. I mean, I didn’t have to go back and sell phones. That kind of got me a part time job through my last year of university. And it was fun. I had students coming in. And you know, you forget what you’ve learned so the questions were quite basic but anyone who had gone through the process could have told you, “This is the sort of questions they’re going to ask you.” And all that. It was good. I really enjoyed it.
Andrew: Alright. So that part’s fun. Being an actual lawyer did not look like it was going to be fun. So were you at that point starting to hunt down an idea for a business? Or did one just hit you in the face?
Ben: A bit of both. I think the realization was I need to do something I’m passionate about. So my eyes were opened. If you want to say that. But I also kind of was aware that I didn’t just want to jump into anything because that would have seemed a bit rash. Especially when I had a reasonable career option. But as it happens at the end of my final year of university, I do have this idea. And I thought it was an okay one, but it was also the kind of one that I couldn’t get out of my head. That sort of became Flipsters.
Andrew: Where did the idea come from?
Ben: I was out with a bunch of friends and one of the girls in the group was complaining about how her high heels were sore. Which every guy has seen that. And we started talking about taking flip flops out and why some girls do it and why some girls don’t. And the discussion sort of became, “Well, I would take them out with me wherever I went if I could fit them into my bag.” I sort of said, “Well, why can’t you?” She said, “Well, sometimes I take a clutch. It’s like the tiniest thing you’ve ever seen and they just don’t fit.” I said, “That’s fine just buy a pair that fold up.” And she said, “That doesn’t exist.” That’s the light bulb moment.
Andrew: That’s when you said, “I could do that.”
Ben: [??] I said, “Would you buy it if it did exist?” And she said, “Yeah. Yeah, I would.” I kind of thought, “Huh.” I did a lot of Googling and such and it just didn’t exist. And, yeah, that’s when I took the idea to Rick and we started working on Flipsters.
Andrew: Rick is your co-founder, but who was he to you at the time? Why go Rick?
Ben: Rick’s a good friend of mine. We’ve sort of known each other from high school days. He had just finished university studying industrial design. I knew that this would have to be something that required a bit of design and obviously we were friends anyway. It was just a very normal, open chat at the beginning. Like, “Could you actually do this? Do you think it could be done?” It kind of generated a bit of momentum from there.
Andrew: What do you think attracted him to this problem? Was it just the curiosity of whether he could solve it or not? Or did he think at that point even, “Maybe there’s a business here and I’d like to be partners with Ben in it”?
Ben: Yeah, I think for him at the beginning was the design challenge. In particularly it was the fact that it was footwear. Because footwear has been around for ever and ever and is very, as he thought, this is something hard to innovate. These are shoes. How are we going to change a shoe? It’s been around for that long. So the idea of taking footwear, I think for him, and making it fold, making it do something that it’s never done before, I think was really interesting for him.
Andrew: I see. I keep hearing cars in the background. Are you in the warehouse right now and it that over a highway?
Ben: Yeah, sorry. So we do have a bit of a road coming by. I’m sorry about that, but it’s also kind of peak hour at the moment in Australia. So it should…
Andrew: What time is it where you are?
Ben: It’s 8:30 in the morning.
Andrew: So you came in before 8:00 a.m. for me to record this interview with you or is that normal?
Ben: Normally I get in about 8:30 anyway, yeah.
Andrew: Wow.
Ben: 8:00 a.m. It’s a little earlier.
Andrew: I appreciate you doing that. So you take this to Rick. He’s kind of curious about it. You guys still don’t have a business. You’re still just trying to figure out what’s here and how you can even do it.
Ben: Yeah.
Andrew: What’s the first version that Rick came up with?
Ben: So initially we just sort of thought let’s make it thin, let’s make it small, and let’s just have it roll up. That just seemed to make the most sense. So we went to Rick, I guess at the workshop attached to where he lived, and we just started cutting out bits of rubber and cutting out different materials, so the beginning was really an exploration of materials. There were a lot of first versions. Some of them, we were just aiming for size. They were very flimsy. They didn’t really look good, but they were tie [sounds like].
But we quickly kind of realized, as we started interviewing more and more girls and really kind of trialing what worked and what didn’t, that it would have to have a bit of, I guess, integrity to the sole. We started, as we did these versions, building a bit of a checklist. Because we were guys designing for girls, we really didn’t have an idea where to start, but what we learned really quickly is what would be ideal and what would be a deal breaker.
Andrew: Okay. Give me examples. What would be ideal and what would be a deal breaker?
Ben: Yeah, this was really interesting, because we were guys, so we thought, well, ideally it’ll look good, but that’s a deal breaker. If it doesn’t look good, no one was really going to wear it to begin with.
Andrew: Oh, I see. Okay. So it’s not a nice to have. That’s critical.
Ben: Critical, yeah. Whereas we put it in the “it’d be a bonus if it looked good” kind of category.
Andrew: Okay.
Ben: But that really quickly in the beginning, and it was really Rick’s recognition of that which changed the whole tack of the project, which was let’s actually make these things look awesome. Like, why should the fact that they fold up stop them from being fashionable and colorful and good looking? There were other things, as well, so, for example, again, we’re guys, and we thought, well, it’d be really practical and cool if, after you’ve taken your high heels off, you had a bag or something to carry your heels. So you’ve put your Flipsters on and [sound of traffic] . . . Sorry, it’s a bit noisy. It’ll quiet down soon. So we thought, as guys, it’d be really cool if you had somewhere to basically put your heels when you’re done with them.
Andrew: Yep.
Ben: And that [??] to be not critical at all. Girls didn’t really mind. They were happy to carry them in their hand. It was something that would’ve been . . .
Andrew: [??] expected that either. Right.
Ben: Yeah.
Andrew: I would think in addition to this bag that I put the folded up flip flops in, it should be big enough that I could put heels in, but you’re saying, no, that’s not an issue.
Ben: No, it wasn’t. We thought it was critical. It turned out to be a kind of nice to have thing.
Andrew: Why? What do women do when they put their fold up flip flops on their feet? What do they do with their heels?
Ben: Well, yeah, we thought let’s have a separate bag, and in the end what Rick designed was a very small strap. It’s kind of literally this big, and you just slip your stilettos into it and keep them together, and that kind of did the job.
Andrew: I saw that on the site. It’s so simple, and it’s so innovative at the same time.
Ben: Yeah, yeah, it was great and really small and just did the job. But the list . . .
Andrew: I’m sorry, go on, please.
Ben: I was going to say the list ended up being it’s got to be comfy, it’s got to look good, it’s got to be small, it’s got to be durable, they’ve got to feel like they’ve got a good value for the money, and those are the sort of key criteria. And all the rest, some of which I’ve mentioned, just ended up being nice to haves, and we put what we could in, but the rest, it just didn’t seem that important.
Andrew: I feel like if you ask a woman about what she’d want from a folding shoe, the list wouldn’t be what she really wants if she actually tries it. That seems to be the pattern that I’ve seen with these customer interviews. You talk to customers, you ask them what they want, they give you one thing, you actually see them use what you’ve created, and you realize that what they want is a whole other thing. So how did you figure out what they really wanted, not what they just said they wanted?
Ben: I think what you’ve said is true to an extent, but I think that it also depends on the kind of research that you do. So figuring out what women wanted, I think as guys, we just accepted from the beginning this needs to be really well researched. We’re not really sure, so we wanted to get at different kinds, different methods of understanding what women wanted. So we went out and asked random people at bars and clubs. We actually had a survey, and we would go up to them, and they thought it was crazy. Actually thought we were trying to pick them up, which we really, we said, “No, no.” We’re actually trying to do this. “Here’s a prototype. What do you think?” There was that which was objective, it was, they really didn’t have a reason, so I guess . . . [SS] . . .
Andrew: . . . [SS] . . .
Ben: . . . neither of us. We also did in depth focus groups of us, friends, get them around in a group and [??] and throw around a few ideas. That was really drilling a little bit deeper down. Through this broad looking at things and also the very deep but narrow, we worked out what it is our customers wanted. I think that they were quite clear, with us at least, what it is that they wanted.
Andrew: Ben, when I think of focus groups I think of what I see on television. A room full of people, moderator asking questions, and making sure that everyone gets to speak. Is it that formal or was it, what was yours like?
Ben: Ours, there was just basically a lot of alcohol and food. It was friends and friends of friends, so you . . . [SS] . . .
Andrew: Just have some friends and friends of friends over and talk about your idea with them.
Ben: It was a little more structured than that, we did sort of have white boards and things like that. We wanted to capture what people were saying, so it wasn’t just a kind of chitchat and they knew that coming in. We wanted to formalize it a little so that people thought about what they were saying and understood that Rick and I were taking this really seriously. That we . . . [SS] . . .
Andrew: What you’re saying makes sense, but I can still hear the person listening to us who wants to do this feeling like, I’m going to be a dork if I tell people to come over. Why would they want to come over just to help me with my idea, because I don’t have anything yet. Then it feels like a selfish thing if I ask them to come over and just talk about my idea, so did you have any of those feeling?
Ben: Not really.
Andrew: No? Okay.
Ben: We thought it was fun. We thought this is a new idea. Rick and I were starting to take it obviously by that point seriously, and we thought this is something we have to do if we want to succeed. We need the feedback, we need to know what our customers want out of this product. And we need to verify some of our design decisions, brand decisions, and business decisions. I completely understand what you’re saying, but we really didn’t have time I guess to think like that.
Andrew: Excuse me. I hit the mute button because I was sneezing. All right. I see the way you guys are working. It all makes sense. You’re building the product out, you had an idea, and you’re still trying to figure out what the shoe looks like. One of the earlier versions that you made included chicken wire.
Ben: Oh, yeah. That was one, I think everyone has an idea of how they might want something like this to work. I remember coming up to Rick’s studio and saying, “All right, chicken wire.” And he just looks at me and it’s, like, “why chicken wire?” I said, “Well, it’s kind of mesh, but it’s got a solidness to it, but you can kind of flex it, let’s see if we can do this. No, that didn’t work at all. [laughs] That was the first idea that I had, and I said to Rick after that riot, you’re the designer, this is really your place to go. Let me start looking at the brand. The payments, the websites, that’s the value I’m going to add.
Andrew: That’s the kind of prototype that you guys were creating in the early days though. It wasn’t something as elaborate as a real shoe. It was just messing around with whatever materials you had and whatever ideas you could come up with. At what point do you take it from something you can make in your home to something that’s more professional?
Ben: That was kind of the jump I guess, we had the idea in January, and this was now coming to about July, so we had been working on it for six months. When we had a design where enough people and ourselves were starting to say, “This is really cool. I would buy this. When are you going to start making it? Why isn’t it being made now?” These sorts of questions, that’s when we sort of decided okay, we’ve settled on the design. We think it’s good. The customers we’re talking to are starting to say it’s good. Let’s actually try and see if we can get this made . . . [SS] . . .
Andrew: . . . [SS] . . . that final prototype that people liked enough that they wanted you to actually have professionally made? What did that look like? I’ll leave it there. What did it look like?
Ben: The design of Flipsters, what makes them special is the [fold], so I’ll show you. This is how they come, and this is obviously the latest version. But the fact that Flipsters can kind of fold on the two angles is really what makes them special, and that was substantially what the design looked like in the beginning with that triangle fold. But the construction of it was not nearly as finished, so we sort of wedged a piece of polypropylene, which is a flexible plastic, and on the one side we had EVA, which is some foam cushioning that you might find in any athletic footwear, and the other side was rubber [sounds like].
We sort of sandwiched it all together with ribbon, satin straps, and it all had been hand stitched and cut and glued, and that was the original Flipster. But the key, which has never changed, which is really what has made us, I think, the product that we are, is that triangle fold, which I showed you a second ago. That has never changed, yeah.
Andrew: And you guys were able to make that on your own. The places where it just folds, how did you make it so those creases folded properly but didn’t fall apart?
Ben: Yeah, so that was the middle layer, which was made from polypropylene, which is a hard plastic, but if you score it, you hinge it at certain points. This is the sort of thing like Tupperware or something might have where you can open it many times, but it’s never going to break, and so that was the secret to the first design, which was [??]
Andrew: Wasn’t it the movie . . . Sorry?
Ben: I said it was terrible for manufacturing it, but from a design point of view, it kind of explains the way we wanted it to fold.
Andrew: Was it the movie Without Limits with Bill Bowerman, who was making Nike shoes in a waffle iron at first?
Ben: Yeah, yeah.
Andrew: And then they eventually became the prototypes for Nike shoes?
Ben: Yeah, yeah, I remember reading about that. I think his wife came up one day and went to make breakfast, and the waffle iron just had plastic and goo all over it. It was completely broken.
Andrew: Yeah.
Ben: But that was the original Nike tread pattern.
Andrew: And I’m imagining that’s kind of the way that you guys were putting your first versions together. So now it’s time to have someone create a professional prototype. Where do you find a company that does that?
Ben: Yeah, so that was a great challenge for us, and we made a really big mistake in the beginning, which we paid for a while after, which was we went through a network that we had in Sydney, I guess, of friends, of family, or shoemakers, anyone we could really find, because we knew manufacturing was going to be a challenge, and we thought it would be a good idea if we went through someone we knew, or at least someone who was recommended.
Andrew: Yep.
Ben: The problem was that we were put in touch with someone who was very friend and really had the best of intentions but was not a footwear expert. I think they made crockery and cutlery and things like this, and we had no idea back then that manufacturing is highly, highly segmented. It’s very specialized. Just because you make plates and cups doesn’t mean you can make shoes, and so the manufacturer that we first went with put us in touch with a factory, which they had never really dealt with, tried to advise us on the general principles of making things, but ultimately it was kind of the blind leading the blind at the beginning. So that was a huge challenge at the beginning, and we had to kind of go back to square one after that and find a specialist footwear agent and a specialist footwear factory.
Andrew: And that’s what you need? You need an agent who can show you how to turn your prototype into a real product and then a factory?
Ben: Yeah, that’s how we work. The reason we work that way . . . Look, you can work directly with factories more and more these days. For us, because we were 25, we really didn’t feel confident about at that point just going in and working with the factory directly, so, yeah, we did want an agent. We also had other elements to the shoe. There was a pouch, there was packaging, there were other products we wanted to make, and we felt that an agent would have a wider awareness of other factories, whereas if we just went straight to the footwear guys, they wouldn’t necessarily know the best place to get the pouch made or any of the other add-ons that we wanted.
Andrew: So how does someone find an agent, the kind of person who can then put them in touch with a factory and can help them get everything in place, so that they’re ready to go to the factory?
Ben: Yeah, so originally we’d gone through someone who knew someone, so someone in Sydney, and said, ‘I know someone in China,’ but that was the wrong agent for us. So after that we started looking much more narrowly at footwear manufacturers in Australia, footwear manufacturers in China, and we did actually find a footwear manufacturer in Australia who made half of their stuff here and half of their stuff in China.
Andrew: But how do you find it? Are you just looking at shoe stores and seeing what’s made in Australia and calling them up [??] directory?
Ben: There’s no directory. I wish there was. Yeah, you look at brands, and you start to quickly understand the landscape, that such and such brand is made from a global point of view. Like Steve Madden, for example, it’s everywhere, and that’s not the sort of company that you can approach and say, “Hey, listen, we want to make shoes with you.” They do the whole branding, the whole exercise . . .
Andrew: They do it all themselves. So you’re looking for someone who’s smaller than them who could, in addition to making the shoes that you’re seeing in the stores, make your shoes. That’s the goal.
Ben: Yeah.
Andrew: But then how do you find them, because they don’t have their phone number on the shoe, do they?
Ben: No, no, basically, first you get a lay of the land, I guess, which is a local company, which is an Australian company, and then it’s just a matter of research and, yeah, popping into retailers, trying to understand the nature of that business, where are these made, are they made in Australia, or it’s an Australian owned company, but they’re made in China.
Andrew: And then maybe the retailer gives you the introduction to the manufacturer?
Ben: No, the retailer would kind of just let us know if we’re poking in the right area, and then it’s a matter of cold calling, I guess, and saying, “This is an idea we have. We know you guys make shoes. Is this something you’d be interested in working with us on?”
Andrew: I see.
Ben: And starting from there. At the same time you’re also looking, I guess, on Ali Baba, and you’re looking at options in China. The problem was, I think, we weren’t very experienced, and we really felt if we just go to China and start looking for factories, we’re just going to get . . .
Andrew: Taken?
Ben: Yeah, taken in a lot, however you want to put it.
Andrew: And that’s a good concern to have.
Ben: Yeah.
Andrew: What I’m trying to do is help the person who’s listening avoid those mistakes, and what we’re saying to them is look at the shoe stores, or look at the stores that sell whatever it is that they’re trying to do, and figure out which are local and small enough for you to contact, and then cold call in. Now, if you do that, you’re not going to get to the agent, right? How do you end up getting the agent?
Ben: Some of them did actually have agents in China, and, in fact, that’s how . . .
Andrew: And so they would just tell you, “Our agent is,” and then you’d call up the agent?
Ben: Yeah, that’s how we found the person that we’ve been working with for the last few years, is they said we . . .
Andrew: How do you know who is good, who’s a good agent and who just has . . .
Ben: Yeah, you really just have to have trial and error, I think, because . . .
Andrew: Okay.
Ben: . . . even sometimes when you think you’re dealing directly with the factory, you’re not. They’re an agent who has hired out a room in the factory. Even if you go see them in China and it legitimately looks like they are actually a part of that factory, they’re not. They’ve got a little office in every factory, so you really don’t know. Unfortunately, it’s one of those things of trial and error. I guess if I was to offer advice in terms of how to vet [sounds like] them, try and understand if they are a part of the factory or if they’re just kind of floating around, and you also want to know what other brands they work with, what other work they do. For us . . .
Andrew: [??] agent who’s a part of the factory, or do I want who’s not, because then he’ll have more options for me?
Ben: Both are okay, but it’s a matter of what they say they are and what . . .
Andrew: I see.
Ben: . . . they actually are. So if they’re saying . . .
Andrew: You don’t want anyone who’s pretending to be something he’s not?
Ben: Yes, exactly, because if they say, “We are actually a part of this factory, and you’re getting the best price,” and so on and so on, what’s actually happening is the factory has got a different agenda to the agent. You’ll be talking to the agent, thinking you’re talking to the factory, they’re relaying your message, and that just adds a whole lot of complications. Whereas when it’s clear and open for everyone that that they’re your agent, the relationship is clear, and when the relationship’s clear, you start to understand some of the risks that you could face in dealing with that relationship.
Andrew: All right. You also got trademarks and patents. How much money did that cost?
Ben: Yeah, so the patent’s expensive. It’s $7,000 in Australia, $7,000, $8,000, just to lodge the Australian option, and then you want to take it into national from there. So that’s another $20,000 just.
Andrew: So, $27,000 total.
Ben: Just, No, no, this is just for the provisional. So, this is just to have the right to later on register a patent.
Andrew: Okay.
Ben: Once you go into national you then have, it’s about an eighteen month window where you need to go country by country by country. And each country is about seven or eight thousand dollars. So, just to do Europe, Australia and say America and Canada, you’re looking in excess of $40,000 – $50,000 for the provisional.
Andrew: Just the provisional. And then you still have to get the actual patent.
Ben: Yes, then you go to get it.
Andrew: How much will that cost you?
Ben: So, then there are various stages but it’s another sort of $7,000 – $8,000. It’s a long complicated.
Andrew: [xx]
Ben: IT’s a long complicated process but more or less it’s another $7,000 or $8,000 over the sort of 12 – 18 months it takes to get it all done.
Andrew: Trademarking is a little cheaper, a lot cheaper isn’t it?
Ben: Yeah
Andrew: And it’s easier to do internationally.
Ben: Correct. And, with patent law, you know, I wasn’t really comfortable writing about patent. It’s just I wasn’t specialized or anything like that. Trademarks are a lot easier. It’s more, it’s more comfortable doing that. So, I managed to do that mostly ourselves. It saved a lot of costs which was good.
Andrew: Way to go, Rick. Finding a good partner.
Ben: Yeah.
Andrew: I guess this is basics but let me make sure I’m understanding this. A patent of course is about the design of the actual product.
Ben: Yeah.
Andrew: The trademark is for the name, Flipsters so that someone doesn’t come around with another flipsters flip-flop [xx]. And then you have to fight them.
Ben: Yeah. Exactly.
Andrew: Okay. So, it’s time now, you get your, the first manufacture the one that you did flatware, you get ready with them, do they ever create the actual shoe?
Ben: Yeah, The first shoe to get done,
Andrew: And how did that go?
Ben: That was challenging but we got a product to market. You know, so, so, we did manage to show them our version of what we’d designed which I explained earlier was that three layers and I said yeah it’s time it turned out that it mass manufacture because as you can imagine with three different layers there’s a lot of manual labor in there. The more hands that are touching it the more opportunity unfortunately for something to go wrong.
Andrew: Yep.
Ben: But we got it made. We got it made and you know managed to launch by, so the idea in January, designed and finished it by July August and we were launched by October.
Andrew: How did you get the, the distribution?
Ben: Internationally? Or in Australia? Or?
Andrew: I guess you started with Australia first then you went international, right?
Ben: Yeah.
Andrew: How did you get people to even care about this new idea? Let alone to agree to buy it and put it into stores.
Ben: Yeah. So, we sort of ran out of money by that point in terms of.
Andrew: How much money did you put into it at that point?
Ben: We put $30,000 each. So, $60,000 was our [xx] I guess.
Andrew: OK. And that went into the first batch of manufactured products. It went into the legal parts, you know, the trademarks that we talked about etc. it went into a little bit of web design, that’s into you’re almost running out. OK.
Ben: Yeah, And so, I mean we, we weren’t completely out but what we realised is marketing is just not an expense that we can really handle, you know, so let’s look at PR, try getting some backing for our [xx]. It’s a bit of an interesting idea. We went to a PR agent and we sent a few of these out to the media and we got this great response where we, you know, within sort of a few months of launching we’re on TV, we were in blogs, we were in newspapers.
And that’s how we started to get our international distributors cause they actually started approaching us until I saw you on, you know, XYZ blog, whatever it is. Have you thought about being in Canada? Have you thought about being in Austria? You know, it was really exciting.
Andrew: That is cool. And you get to start to see that people are paying attention to this thing that you’ve created.
Ben: Yeah.
Andrew: You know, at this point I want to do a quick plug here for Mixergy Premiums, since we talked about PR and how effective it was for you. I’m just going to say this guys, I’m at mixergy.com/find and I just typed in the word, the letter PR and I came up with interviews and courses about by entrepreneurship down PR especially well. Including the PR from founder grasshopper. PR for kick starter if you in kicks, if you’re selling, sorry, if you’re raising money for your product in kick starter and you want PR, that’s in there too. We have a course, where is it, PR for start-ups. If you are in a tech-company and you want PR, it’s all in there mixerg.com/find. So, if there’s anything that you trying to do. Just go to that page, type it in, and you’re going to find a bunch of courses and interviews by entrepreneurs who are especially good at it, who teach it. Mixergy.com/find. Alright, you now have distributers. You’ve got some PR. You’re starting to make sells. How does it take you to break even?
Ben: That actually took a little longer, again, than we wanted. And part of that was we were reinvesting a lot of the money back into stock. I would say it took us a year until we were properly on our feet with a little bit of cash flow, ability to buy more stock, and sort of getting to what we call even.
Andrew: Did you have any outside funding at all?
Ben: No. We’re 50/50. We haven’t taken funding.
Andrew: How long after you launched did you start taking a salary?
Ben: That took a while as well. It really was only, I would say, so we launched October 2009. We really only started taking a little bit of money out, again, sort of the end of 2010. Maybe even earlier.
Andrew: Did you launch 2005?
Ben: Sorry, nine.
Andrew: 2009, okay. So that’s not too long. About under two years.
Ben: About a year and half, but it wasn’t what I would have been making as a lawyer.
Andrew: No.
Ben: Which was a fact that I kind of thought about every now and then. We were [??] and we also kind of knew that the idea was starting to get some traction. And let’s take a little bit out.
Andrew: If I understand this right, you had the idea, then you went to manufacture it from this flatware company. They did an okay job. Enough that you were able to sell to the people that found you because of the PR, but they didn’t do a great job. Then you found another company. Was it the second company that you had the issues with when you were trying to get into Canada, Australia, and Austria?
Ben: Yes. Yes.
Andrew: I see. So that’s where you had that problem. You told us earlier that the distributors were understanding. Even though you missed out on those sells at least they understood the problem. Going back to the factory and asking for a refund, what was that like?
Ben: Yeah. That was tough. We were in a really tough position because at that point we had just expanded and put a lot of money into the stock and all of that. This was sort of about six to nine months after having launched. So to go back to the factory and say, and we need them by the way, we really need this factory because we put a lot of effort into teaching them how to make these things and dealing with them. It was tough. You want to kind of keep the relationship going I guess. You don’t want to be rude and cut your ties especially when you’re a small manufacturer and you need them more than they need you.
Andrew: Yeah.
Ben: But at the same time, you’re in a position where if you don’t get some sort of stock remade or some sort of refund, your business could be done. We couldn’t really afford to just by ourselves remake the order for Canada and Austria with zero refund. We sort of got into a bit of a negotiating game and managed to come up with a solution.
Andrew: I see. And this isn’t all happening remotely. Rick was in China.
Ben: Yeah.
Andrew: He’s helping them out. Helping them understand it. Supervising.
Ben: Correct. So in the beginning, Rick spent four to five months of the year in China. In different stints. And I think that was a big deal is the fact that they saw, “They are young guys. This is their business. He’s not a designer working for another company. This is his product that he’s created and he’s flown over here to negotiate or to show us how to design or show us new ideas that he’s having.” I like to believe that helped them to see, “Okay. We should look at a solution with these guys and maybe we can work with them longer term.”
Andrew: How long was he there?
Ben: When? On that trip?
Andrew: Yeah. Or overall. How much time would you say that Rick has spent in China just…
Ben: Overall…
Andrew: Talking about manufacturing or dealing with manufacturing?
Ben: At least a year cumulatively. Sort of four months -ish in 2010, 11, 12. In the last year, it’s been less and less because we’ve cracked it a bit in terms of, yeah we worked out the best way to do things without obviously having to spend too much time there.
Andrew: I haven’t done a ton of interviews with entrepreneurs who’ve manufactured the way that you have, but it seems like that’s common. They go to China. Gauri Nanda was, I think, the first one that I talked to. She created Clocky the alarm clock that as soon as it goes off, it just jumps off of your side table and runs away so you can’t hit snooze. And she had to do the same thing. She had to go to China and practically live in the factory to make sure that everything was right.
Ben: Yeah, that’s 100 percent. I’m not surprised at all to hear that.
Andrew: Unbelievable. Then you keep growing. Where are you today? How many pairs have you sold overall?
Ben: Overall today. . . You mean globally?
Andrew: Yeah, what’s the number of pairs of shoes that you’ve sold?
Ben: So if we were actually going to look at the pairs that we’ve sold globally, I’d say it’s sort of 300,000 to 400,000. In my head I start going to margins, which I always think of it differently in terms of a global sale versus an online sale versus a wholesale sale.
Andrew: Why, what’s the difference?
Ben: Oh, because your margins are completely different. But if you want to look at the complete number, I guess it’s 300,000 to 400,000. But what I sell to a distributor for versus what I sell to an online customer for versus a retailer, it’s totally different, so, yeah.
Andrew: I imagine that ideally you want people to go to Flipsters.com and then buy it from you there.
Ben: Yeah, I have to sell three to retailer for every one that I sell online and six to someone in Canada for every one that I see online.
Andrew: Then you end up with a direct relationship with your customer when they go to Flipsters.
Ben: Yeah, and so this is happening more and more these days, is you can distribute directly through online, so that’s happening a bit more. We are in 16 countries, including Australia.
Andrew: These are flip flops, but there’s still a back to them. Why isn’t there just a standard front part for a flip flop?
Ben: Yeah, so the back of the Flipster gives it just a bit more of a solid feel in terms of adhering to the foot. Part of that is because the sole is thinner than other flip flops, so as you walk, it doesn’t always kind of clip forward to your foot. But also part of it is that we wanted girls to be able to dance in them and walk around in them day to day, and we wanted that security, so it all kind of wraps your foot really nicely and allows your foot to just relax into the Flipster, rather than sort of gripping at the sole.
Andrew: And it’s more than just flip flops now. How did you figure out what to do after flip flops?
Ben: Winter came and sales dropped.
Andrew: I see.
Ben: Said, oh, ‘That’s right, no one buys flip flops in winter.’ So the first winter was just kind of designing a closed toe shoe and one that could be worn with socks and tights.
Andrew: [??] Rick?
Ben: With the product ideas, things like that, we always discuss together, so, yeah.
Andrew: But you’re still making it internally, the two cofounders?
Ben: Yeah, sorry. In terms of the design of it or the [??]
Andrew: Yeah, the idea still comes internally. You don’t yet have a person that you can say, “Hey, it’s too cold for flip flops. Come up with something else,” and they create it for you?
Ben: Oh, no, that’s our job. That’s the fun part.
Andrew: That’s you?
Ben: Yeah, so Rick and I sort of sat down and said, ‘What’s the most popular style of shoe that can be worn in winter?’ The ballet flat quite quickly became the winner, but since then we’ve even released more and more shoe versions of the Flipster.
Andrew: I see it. Let’s see where I want to go next with this interview. How’d you get the money? How’d you get $30,000, a guy who just went to law school, which is pretty fricking expensive?
Ben: Yeah, I’d worked all the way through university, and that was my life savings, to be totally honest. I was actually going to take a gap year and travel. That was my gap year money. I never took that trip. I decided to put it instead into a business, which again came back to what I was saying earlier, that the idea that I just wanted to something I was passionate about, and I didn’t think that traveling for a year was kind of going to help me come any closer to a decision.
Andrew: You worked, you had side jobs, and you were able to save $30,000, as a guy who went to law school, who went to university before that.
Ben: Yeah, I had worked and saved up, and I also used to invest in the share market, and that was sort of 2006, 2007, 2008, so it was . . .
Andrew: [??] doing well?
Ben: Yeah, you could kind of throw it into anything, and everyone seemed to do all right, which was lucky, actually, so benefited off of that, and then took the money out and invested in Flipsters just as the financial crisis hit.
Andrew: I’m trying to find it. I saw an article somewhere, there it is, it’s on onTechStartUp.com, there were go, NonTechStartUp.com, where they asked you about marketing , online of course, which you and I talked about. You said vending machines and direct-to-public events, and party planning like Tupperware. Do you do Tupperware type parties? Do you do vending machines?
Ben: We’re looking at that now. [??] is my blog where I try and talk about some of the things that are related to really making a physical product and actually having to get it out there. And yeah, Tupperware parties and things like that, are not really that well known. But there’s some huge brands in fashion and in footwear and in lingerie, things like that where lots of things have been sold. Vending machines as well.
Andrew: It’s just you thinking out loud where someone who is manufacturing products, where they could sell. What marketing channels they have.
Ben: Yeah, other than our mind. Because that’s the reality of what we face every day. How do we actually get Flipsters out there into people’s hands. Not just through traditional retail or on line.
Andrew: Thanks for calling that out. Of course I’m on your website. I see your face on the right side. It’s clearly your site. But I was so busy looking at that section that I missed it. Here’s the other thing you said. When you talked to Jeremy Wise in the pre-interview about this, Guthy Renker, the people behind Tony Robbins, the people behind ProActive, they took your product on and they created an infomercial and they ran it with you, but it didn’t seem to do well, did it?
Ben: This guy was actually ex-Guthy Renker, a gentleman in America who had left Guthy Renker. And he was looking for innovative products that he could take to market in that exact same…
Andrew: I see, it wasn’t a partnership with Guthy Renker. It was a guy who used to work there that was looking for products to do his own business, his own version of Guthy Renker.
Ben: Exactly.
Andrew: Okay. And so what happened there?
Ben: So we got in touch with him about this time last year. He actually flew out to Australia to meet us and see the product and understand what the business was about. We put together an ad which is similar to those ProActive style of ads, where there is an immediate call for action. We put that to market and launched it nationally in America across a variety of different TV channels, MTV and what have you. Anywhere where we thought this is where the Flipster customer is watching TV. Typically it’s off- peak, late at night time slots.
Andrew: It’s not on the air anymore. I’m assuming it didn’t work. And based on what I’m seeing online it didn’t, right?
Ben: Yeah.
Andrew: Why not?
Ben: He was always open about this is my channel to market, this is the way I want to go. I don’t know why not. I guess he didn’t really know, either. No one really knew if this would work or not.
I suspect that there was a bit of a price point issue. If you’re selling something on TV, it should be priced at about $20 or something like that. For the Flipster, just with the cost of production and by the time everyone makes their money, and also the cost of putting the ads on TV, at that price it wasn’t really going to work.
So I think it was a question of did we have the right channel to market and could the price point and the channel work together for the kind of product we had. I don’t know if it hit quite the right metrics to be able to scale it massively which is obviously what you need.
Andrew: It’s got to be exciting, though, to be on TV like that. I love infomercials and, you know what, it’s not a goal that I’m aiming for but I would love to me in an infomercial.
Ben: It’s great. It’s really, really cool. We flew over to Los Angeles where it was all filmed. We had a meeting with the director, we met the model who was going to talk about the shoes, it was great. To have someone in America talking about your product and putting together an ad so that you can be on American national television is so exciting.
Andrew: Yeah. And everyone sees it. And they don’t just watch it, they get to really understand the product. It’s not a 15 second clip. It’s an in depth understanding of the product.
Ben: He did a really, really good job explaining it. And I think he had the perfect idea which is you have to see Flipsters to really understand it. This shouldn’t always be in a retail setting, sitting there in packaging. Why not show people what it is? Why not explain it visually? That I still think is a really good idea, as I said with price points and things like that, I don’t know if that was the exact best way to do it but the idea of showing it visually is a good one.
Andrew: I’m going to ask you to show one other thing. Beer. Do you make beer?
Ben: Yeah.
Andrew: You and Jeremy apparently talked about that.
Ben: Yeah. Yeah. Wheat beer is my favorite beer and actually you guys in America have Blue Moon which is amazing and I would love to either bring something like that out here or just do it in Australia, because we don’t have anything close to that.
Andrew: Really?
Ben: Yeah. There’s no widely drunk wheat beer like Blue Moon and it’s a great beer. It should be here.
Andrew: Revenue. What size revenue do you guys bring in?
Ben: That’s not something that we normally share with people. We don’t really have outside investors yet, so we keep it private. If we start thinking about looking for investors it’s something that we’ll probably start putting out there more to the public, but it’s just something we like to keep to ourselves.
Andrew: You haven’t hit a million in annual sales yet though, right?
Ben: Approaching. Approaching. Yeah.
Andrew: Okay. So the other thing I wanted to see is, I was hoping you can show, we showed a flip-flop. Do you want to show one of the ballet shoes? Is that what they’re called? Ballet shoes?
Ben: Yeah. So we do the ballet flats and flipster flat and things like that. Let me see if I can find you…
Andrew: The range of things that I saw online, I actually don’t see them all on your website, but I started hunting around on YouTube to see what the shoes look like, to see them in action and I couldn’t believe how many kinds of shoes could be folded and squished into a small package and then not look like they’re just fabric. Which I would be able to understand being able to manipulate like that.
Ben: Yeah. When we were talking earlier and you asked what did the original design look like and I spoke about this triangle bit, that’s the genius of it. You can apply this to so many different kinds of shoes. This the ballet flat.
Andrew: There they are.
Ben: So it just folds into that triangle shape.
Andrew: Look at when it opens up.
Ben: Then it just opens up. When that’s on the customer’s foot and this is feedback which we love to get and we get it all the time, no one knows they’re wearing folding shoes. They get complimented on where did you get those shoes from, just as a shoe. Which is what you want. That’s one of the goals we wanted to hit from the beginning.
Andrew: Those shoes look like day-to-day shoes to me. They don’t look like the kind wear when you take off your day-to-day shoes.
Ben: Yeah.
Andrew: Are you still marketing them as shoes that you wear to give yourself some relief from the heels?
Ben: That’s one of the angles, but now we have several. So the big one has become traveling. Because we have so many different styles now, the one thing you can’t compress is shoes. So people who only want to take carry- on luggage are able to take a loafer and a flip-flop option and a canvas, sort of Tom’s-sytle option all with them in the space where you could only fit one shoe before. So that’s a big one for us. Weddings, party time, Christmas time, and things like that are important. Also for pedicures. That was completely unexpected, but a huge market for us is that we sell through a lot of beauty salons. After women get their nails painted they wear the flip-flops after that.
Andrew: Alright. If people want to take a look at this the website is flipsters.com and take a click around. I went to, where was it, the shopping page or the checkout page to see what the shoes look like. Ben, thank you so much for doing this interview.
Ben: Alright. Thank you, Andrew.
Andrew: Alright. Thank you all for being a part of it. Bye guys.
