Life After Kickstarter
HIDDEN, the makers of HiddenRadio radio and wireless speaker, had a choice to make: Was it better to keep up production with their first model, or concentrate their resources on the new-and-improved version? They went with the latter, which is why, heading into the fourth quarter all the units on their website were sold out.
“With hardware, every time you do a production run, it’s a lot of money so we had to decide if we wanted to put that into sales or did we want to put that into production, and we just decided to bet it all on the new product,” says John Van Den Nieuwenhuizen, who founded San Francisco-based HIDDEN along with partner Vitor Santa Maria, who are both industrial designers.
HiddenRadio raised almost $940,000 during its first Kickstarter campaign (751% funded), but to keep their product current and incorporate design improvements, they launched a second campaign in December for HiddenRadio2. Like many new, small companies that have used Kickstarter campaigns to launch products, they’ve had to grapple with the realities of having a viable product and building a company for the long-term. As a powerful, high-traffic site that attracts backers, Kickstarter can be great to get start-ups started, but what happens after the campaign ends?
Preparing for Product Life Post-Kickstarter
Once a Kickstarter campaign is over and its goal met, that’s the end of one project, but it’s the beginning of the rest of a product’s life. Even for products helmed by leaders with consumer electronics experience, issues can arise, like production problems.
That’s what happened with People People’s Transparent Speaker, which raised $170,000 during a campaign that ended in January 2013. Even though the company lined up their production ahead of time, their manufacturer’s quality was below par, which delayed the project by several months. “They overpromised that they could deliver on our design intent and their sound wasn’t that good so we had to change pretty late in the game,” said Martin Willers, co-founder and head of new business at the Stockholm, Sweden-based design firm. “But we’re looking at it long-term and we don’t want to stress and risk getting a product we’re not super proud of.”
The optimal plan is to milk the Kickstarter magic dust for as long as possible. Because campaigns are archived in perpetuity on Kickstarter’s site, frozen as they were when the final second ticked off, clever project managers are using that to their advantage.
Occipital, a tech company based in San Francisco and Boulder, Colo., previously focused on apps. (It created RedLaser, one of the first barcode scanning apps, which was bought by eBay 2010.) It raised $1.3 million for its Structure Sensor, a 3D sensor for mobile devices. The company ensured that, post-Kickstarter, buyers would know where to get their product. “We made sure about 30 minutes before the campaign ended to put in a number of call-to-action buttons at the top (of the campaign page) that linked to our preorder site and our developer site so going forward, anybody who visited our page knows where to go to buy one,” said Adam Rodnitzky, director of marketing.
The top funded campaigns in each category are also permanently (for now, at least) featured on Kicstarter’s Most Funded page, which still drives traffic to the product site. “It’s something that you have to reach the level of success that we did to get that benefit,” Rodnitzky said. “But if you can, you absolutely have to think about how you use that.”
What to do once the Kickstarter fumes wear off? Any entrepreneur who doesn’t want their project to get lost in the scrum of new CE products needs a plan. And that doesn’t mean sticking with tried-and-true marketing tricks. The owners of Kickstarter-funded projects are taking a variety of – in some cases innovative – routes to ensure their products get in front of the right people.
Eschewing CE outlets, People People held a press event for lifestyle journalists in Stockholm. The product was featured in several magazines that don’t usually focus on audio products, like interior decoration publications. People People also took its speaker to London Fashion Week last fall to show alongside Swedish designers. That landed a feature in Stuff magazine, a radio interview with Monocle magazine, and shelf space at London’s famed Selfridges department store.
But the marketing company executives didn’t plan on—in fact, were approached to do without any initiative on their own—was when their speaker was used in two music videos by mainstream artists. The TransparentSpeaker briefly appears in the video for Will.i.am’s and Britney Spear’s hit song, “Scream and Shout” (along with a host of other up-and-coming electronic products). The speaker was also used in Swedish pop star Robyn’s video for her song “U Should Know Better,” which also features Snoop Dogg. The benefits are hard to measure, Willers said, particularly since the general audiences forthose artists aren’t quite the demographic People People was targeting. But it still got their product in front of millions of eyes—for free. “If you check off the list of Britney Spears, Robyn, Snoop Dogg and Will.i.am as your first free marketing, it’s not bad,” Willers said.
People People also employed a new method of collectingmarket data. They were approached by a research group from Roskilde University in Denmark, which analyzed blog traffic and comments. People People also used IP tagging and geotagging to discover which markets were most responsive totheir product so they could focus their marketing. “We can see what markets are going to be the most accessible from what we already have in viral marketing, so it’s easier for us, as a very small company to take it, for example, to the UK first, then France,” Willers said.
Finding the Consumer
Brick and mortar still builds a brand, said Van Den Nieuwenhuizen. Both HIDDEN and People People are focusing on design stores for their brick-and-mortar sales, looking for a consumer who values design just as much as the technology housed within. That means negotiating an often complex and fragmented marketplace, said Willers, who has discovered that design, lifestyle and fashion stores have less of a solid distribution structure than consumer electronics.
For many of these start-ups, diversifying their sales outlets is a primary concern. HIDDEN used a multi-tiered approach. Once the companyfilled its first backer orders, they looked for wider distribution at a variety of outlets where they thought HiddenRadio would sell well, which for them meant national and international markets of differing sizes. The pace in Southeast Asia is much faster than in the U.S., Van Den Nieuwenhuizen said, with buyers always on the lookout for the newest electronics and ready to snap up promising products. “A lot of the foreign buyers are so hungry, especially in Southeast Asia, they love technology and they’re very fast and very entrepreneurial,” Van Den Nieuwenhuizen said. “They say, ‘Give us this many units,’ they test it and they’ll try many things.”
HIDDEN still looking at the major U.S. consumer electronics distributors and retailers. The Holy Grail is direct-to-consumer website sales, Van Den Nieuwenhuizen said, because it’s the most cost-effective approach to sales. But HIDDEN wants to do more than depend solely on online sales. It’s now zeroing in on smaller retailers that are looking for new products and are oftentimes more open to taking a chance on an untested company. “Some of the great outlets, like the little mom and pop design stores, consistently turn over product and they’re good little money earners,” Van Den Nieuwenhuizen said. “Going directly to them and saying, ‘Hey, do you want to sell it?’ and then keeping in contact does very well.”
Part of the company’s education has been learning why a product sells in one outlet and not another. “Some stores you think will sell well, they don’t sell,” he said. “And then some you just sell incredibly well. So you have to learn from them and find out why.”
Other companies aren’t looking for a broad consumer base … at least, not to start with. From day one, Occipital has focused on developers as their primary target. Kickstarter already has a great community of developers who support projects and are looking for new products they can work on, Rodnitzky said. The company’s Kickstarter campaign allowed Occipital to quickly connect with a large number of developers. The next phase of its marketing will be focused on getting more developers on board, with the long-term view of making the Structure Sensor appealing to a broader consumer base. The killer app that will take the Structure Sensor to the next level is just waiting for the right developer, Rodnitzky said, which would mean a win-win: both Occipital and the developer would profit.
“Our goal is to make this one of the top platforms that developers want to create on, so we’re putting a lot of effort into making it really, really nice for developers,” he said. “We have a lot of programs planned where we’re going to provide a lot of incentives to developers in terms of marketing support and support from our company to make sure they feel like they’re being taken care of.“
Regardless of what fame and fortune may be in the cards for any of these fledgling companies, the biggest challenge of all just might staying true to themselves as innovators and to their hard-won fan base.
“I think what people relate to a lot is that it’s two guys who started it,” Van Den Nieuwenhuizen said. “All of these large companies, they’re very faceless. We always want to have that grassroots look but with high technology.”