Developing a Delicious Keto Meal Shake with Ted Tieken - AOTK 249

Roy Morejon:                    Welcome to Art of the Kickstart, your source for crowdfunding campaign success. I’m your host, Roy Morejon, President of Enventys Partners, the top full service turnkey product development and crowdfunding marketing agency in the world. We have helped startups raise over $100 million for our clients since 2010. Each week I’ll interview a crowdfunding success story, an inspirational entrepreneur, or a business expert in order to help you take your startup to the next level with crowdfunding. Art of the Kickstart is honored to be sponsored by BackerKit and The Gadget Flow. BackerKit makes software that crowdfunding project creators use to survey backers, organize data, and manage orders for fulfillment by automating your operations and helping you print and ship faster. The Gadget Flow is a product discovery platform that helps you discover, save, and buy awesome products. It is the ultimate buyer’s guide for luxury gadgets and creative gifts. Now, let’s get on with the show.

Roy Morejon:                    Welcome to another edition of Art of the Kickstart. Today I am joined with Ted Tieken with the Sated campaign. Ted, thank you so much for joining us.

Ted Tieken:                        Thanks for having me on.

Roy Morejon:                    So, this ready to drink keto meal shake, you have taken this product, launched on Kickstarter, raised over, I think now we’re over $170,000 with a little over two weeks left to go. This campaign was fully funded in under two hours. So you met a really good funding goal, able to achieve it, have a lot of backers come in. I’m always interested to know how does this product start? How did your product come to life? So let’s begin there.

Ted Tieken:                        Yeah. So I think the story on that starts about four and a half years ago. I started doing this ultra low carb keto diet, somewhat on a lark. I was indulging a friend of mine who suggested I try it for a chronic pain condition. I started following keto, about four days in I had really good improvement in my pain, which is to say a decrease in the pain and I just was like, “Wow, this is awesome.” I get less pain and I think cleaner and I have more energy. That just never happens and so that continued on.

Ted Tieken:                        About a month into it, I was getting really bored with doing all of the cooking because there, especially four and a half years ago, there weren’t any commercially available keto products, and I started making a shake. You know, that was mostly nutritionally complete at the time, and over about four months I made tweak after tweak after tweak and it became a nutritionally complete shake. I would eat that for breakfast and lunch and then cook myself dinner.

Ted Tieken:                        Late that year, so that was 2014, I was thinking through what I was going to do next. I’d left a software as a service startup in late 2013 and was kind of wandering through the wilderness. I went through a process where I evaluated a number of different things and thought to myself, “Hey, you know, I know nothing about making food and I know nothing about e-commerce. Let’s try to do both of them together,” and it actually ended up working out great. It only took three months to go from, “Hey, I’m going to try this,” to the product was on sale. We sold out of that first, and it was a mix it yourself keto meal shake, we sold out of the first run of that product in five days and we’ve been rapidly building a company around it ever since.

Roy Morejon:                    So you took on two industries you had no idea on and just dove in. I love it.

Ted Tieken:                        Yeah and, you know, I was able to get a food science class through the state of Massachusetts, they do these like four hour classes and most states do that, where they teach you the bare minimum you need to know to run a food company or run the science of a food company safely. I drove to western Massachusetts from Boston where we’re based, you know, it was two hours each way to take a two hour class to drive two hours home, two weeks in a row. They taught me what I needed to know, to know why it was safe to sell this product over the Internet and e-commerce, you know, you can kind of figure it out as you go. So I just kind of dove in with both feet.

Ted Tieken:                        I actually took the approach when I started this of not trying to prove that it would work, but instead trying to prove that it would fail. I find that it’s a lot easier to think about the information that you need if you’re trying to prove the negative hypothesis. A very scientific approach to it, and for the first three months it just kept hitting every proof point. I tried to disprove the unit economics, I tried to disprove the operating economics, I tried to disprove my own financial situation and all of those worked and I was like, “All right. Let’s try to disprove that people are interested in this.” Put up a quick ad, rapidly got About 250 emails, which at the time I thought was a lot, and then I was like, “All right. Let’s make two years’ worth of this stuff. If I don’t sell any of it, I can just literally eat the losses myself,” and that sold out in five days.

Ted Tieken:                        We’ve continued that try to prove it won’t work, try to fail quickly, try to just be very objective about what is and isn’t working into the company since then, and I find it to be something that it takes people a while to get used to. This whole, like this assumption that most of what we do won’t work, but once people get used to it, it gets to be very comfortable because it’s like, “All right. We tried this, it didn’t work, move on to the next,” and over time, you know, if nine out of 10 things fail, but you just only keep doing the 10th that works, over time 90% of what you’re doing is correct. Even though 90% of what you try is wrong. I’ve really enjoyed taking this failure based approach to building a company and it’s been very successful for us so far.

Roy Morejon:                    And you guys bootstrapped it?

Ted Tieken:                        We are fully bootstrapped through the middle of this year. We took an SBA loan in June and that was the first major external capital that has come into it. I actually started with $5,000 and we’ve grown completely out of retained earnings, which in and of itself is a little bit of financial alchemy.

Roy Morejon:                    Always. So I’m always intrigued, Kickstarting a beverage company is incredibly difficult, yet we, you know, had great success with this campaign. What’s been some of the biggest challenges you’ve encountered, you know, getting this project launch? You know, let’s talk about pre-campaign and some of the challenges there.

Ted Tieken:                        Yeah. I think everything about shelf stable protein beverages is hard. The logistics are hard, the R&D is hard, the manufacturing is hard, the pricing is hard, the flavors are hard, it is just hard, hard, hard, hard. So, you know, the first thing is just finding people who are experienced in it as food scientists is really not the easiest thing. There’s only, you know, maybe four or five dozen brands that do this in the United States. So it’s not as deep of a pool as some of the other food science.

Ted Tieken:                        Then other things pre-campaign that are hard, I mean the video is always hard. Figuring out how to take something that you’re passionate enough to spend five years on and distill it into two minutes or less, it is a very interesting exercise. I would say that it is class two fun, which is it’s something that’s great to have done, but it is a horrible, painful experience to get through. You end up just having to cut things that just feel crucial, vital, like they’re just part of your DNA because there’s not time for them and there are other things that resonate better with the customers.

Roy Morejon:                    So we always talk a lot about, you know, how important that month or two leading up to launch is, especially from the marketing and pre-campaign engagement side. Talk about some of the things that you did for growing the email list or putting yourself in such a good position to have the campaign fully funded in the first two hours.

Ted Tieken:                        Yeah. So I think email list is absolutely the most crucial part of this. As I said before, you know, it’s a food product and so a lot of people are very reluctant to buy a grocery item six months before it’s going to be delivered and so you’ve got to really search for the true fanatics. You’ve got to find the people who are just so excited about this thing coming into the world that they’re willing to give you their money early on trust. Our major prelaunch marketing was about, actually close to nine months of email lead generation and we used a service called MailMunch. They do popups and email response forms. I’ve used Launchrock in the past, they’re great too, but we were using MailMunch for our, you know, subscribe to the newsletter and get a coupon on our website. So we went with that this time.

Ted Tieken:                        Our basic strategy was put an ad up on Reddit in the subreddits where we have super fans. So that would be the keto subreddit and the keto gains subreddit and some of the meal replacement shake subreddits. Take them to a landing page with a pretty mock up and the basic value propositions and say, you know, “Coming soon. Be the first to know. Get exclusive prelaunch pricing,” and we’re offering up to 50% off retail to the backers. So we have a very compelling savings offer if you’re somebody who’s been a habitual consumer.

Ted Tieken:                        The other thing I would say is having had a product live in the market for almost four years before we launched really helped with our credibility. We’ve met our deadlines in the past, we have Amazon reviews, we have Facebook reviews, we have our own website reviews of the flavor of our mix it yourself version and so that really helped us in the trust building phase of the Kickstarter and because we have all those reviews and because it actually is delicious and keeps you in ketosis as we promise, they’re good.

Ted Tieken:                        So those have been a huge asset to us and if I was to do this again, I would seriously think if it was in a new venture, in a new something, if there was a way that I could get some social proof or proof of competence or proof of, you know, we deliver on our promises. Even if it’s something smaller than the ultimate end goal, I would really think about being able to build a track record of customer delight, a track record of good reviews, a track record of shipping on time going into it, but track record plus email list is really what it was.

Ted Tieken:                        We did also try Facebook lead ads. We kept the two lists separate and the Facebook lead ads ended up costing about the same amount per email, but they are performing at about 25% as good. So, you know, even though it costs us about the same amount, the cost per backer through Facebook lead ads ended up being about four times as much. So we wouldn’t do those again in the future. We would stick to just Reddit to a landing page with some social sharing requests. We actually didn’t give anybody any, there was no coupon, there was no like hairy style like win free shakes for life. It was just, “If you’re really excited about this, please share.”

Roy Morejon:                    Yeah and then we always typically see that that does convert a little bit better when the people are out there just looking for freebies, right. They don’t usually convert, especially on a campaign, but they are vested into the product idea and, you know, looking for an early bird discount. That’s usually when they convert best.

Ted Tieken:                        Yep, they do and we have an approach we take, we don’t do a lot of contests, but we do a few. My head of marketing is very deep in email and she hates contests because they just destroy the metrics of your email list. Your open rates go down a ton. Your unsubscribe rates don’t actually go up, which is frustrating because if you’ve got junk emails, you just want to get rid of them. So the approach we take is when we do these contests, we quarantine that list, we put it on its own contest list and we only move the people who are engaged. Who open more than once onto our main email list, which makes sure that we are sending our messages to people who are actually fans as opposed to people who are, to your point, just searching for freebies.

Roy Morejon:                    Interesting. So, you know, you’ve mentioned that you’ve been out in the market for years now and one of the big things with campaigns is always earning trust and you’ve also gotten some great press coverage. Do you think that that’s helped, you know, the overall consumer trust index, if you will, for the Kickstarter campaign to increase the amount of backers supporting you?

Ted Tieken:                        Absolutely. I think and I’m not sure how much press has helped us in terms of trust. You know, it’s obviously good. Press has more lead to wholesale inquiries and so that’s been fantastic. I think the thing that has led to trust is the third party platforms. So the Amazon reviews I think are the thing that help us the most because we have no ability to, you know, edit that. If it’s reviews just on our own website, people have to trust that we’re not going to play games and remove the two star, three star, one star, but on Amazon we don’t have that option. So I think Amazon reviews are the biggest thing that has helped people trust us.

Ted Tieken:                        The other thing I think that helps us get trust with our customers is we admit the use cases where our product isn’t perfect. So, you know, it’s a meal replacement shake, but it’s not a food replacement shake. You know, this isn’t some dystopian future, only this for the rest of your life. It’s designed that you could do that, theoretically at least, but we don’t promote that. You know, we take a very pragmatic, very open approach of, “Look, if you have time to cook, cook. If you’re busy and you were going to eat junk instead, that’s where our product comes in,” but we’re not trying to over force our product into people’s lives in ways that it doesn’t fit.

Ted Tieken:                        I think customers are very used to these kind of over marketed, overly enthusiastic marketing messages where it’s like, “Eat only this.” You know, “Never eat breakfast again,” and I think customers recognize and appreciate some authenticity and some character, some depth, some nuance to the marketing message. At least that’s what we found.

Roy Morejon:                    What tips would you have for someone crazy enough to crowdfund a beverage product?

Ted Tieken:                        Oh man. I’m not sure I would say don’t, but I would say just know what you’re getting into. The invisible costs of the campaign are at least as much as we’ve raised in the campaign. So just be aware that a million dollars is considered to be nothing in the beverage industry. If you’re dealing with [inaudible 00:14:00] beverages or, you know, like energy drinks or things that have a low Ph, those actually are a little bit easier, there a million dollars is considered almost nothing. Not absolutely nothing, but you absolutely have to build your email list. You absolutely have to find your super fans because the only people who are going to give you money six months before the product ships are the absolute super fans.

Roy Morejon:                    What’s been the most interesting thing that you’ve learned throughout this whole process of launching on Kickstarter?

Ted Tieken:                        I think the most interesting thing I’ve learned in this whole process on launching on Kickstarter is how much work goes into every minute of video. You know, I assumed it was something like, oh, you know, it’s 40 hours per minute or less, and it’s way more than that. So I think the amount of work it takes to get video that is polished to the level that people are expecting these days is an order of magnitude more than I expected.

Roy Morejon:                    Yeah. Video is definitely one of those key components of any campaign to tell the story and entice a backer to truly commit and go through the process with you, right?

Ted Tieken:                        Yeah, absolutely. You know, it’s a great exercise, as I said, class two fun, but definitely a ton of work. We actually, we shot our video entirely three separate times. We tried the just wing it approach and that was a miserable failure. Tried to film it after a two day conference and, for having come off of this enormous amount of work, you know, double shifts two days in a row, we didn’t look quite as tired as we were, but man we looked exhausted on video. So the third time we finally took all the things we learned, all of the two prior failures. You know, as I mentioned before, we have a very failure forward culture and, you know, we tried it and it failed. We tried it and it failed. We sat, we said, “Why did that fail? What didn’t work? What was wrong,” and the third time it only took six hours to film two and a half minutes the third time.

Roy Morejon:                    Nice. All right Ted. Well this is going to get us into our launch round. You’re familiar with the podcast, so you good to go?

Ted Tieken:                        I’m good to go. I’m a huge fan of the podcast.

Roy Morejon:                    Thank you so much. All right. So what inspired you to be an entrepreneur?

Ted Tieken:                        It was just in my DNA. I couldn’t imagine doing anything else.

Roy Morejon:                    So if you could share a Sated drink with any entrepreneur throughout history, who would it be?

Ted Tieken:                        I think Ben Franklin, and I think because he was such a broad thinker, you know, he was an engineer, he was a statesman, he was a writer, he was a brewer. I think he would just have the most interesting depths and breadths of any of the entrepreneurs that really come to mind.

Roy Morejon:                    Nice. So what would have been your first question for Sir Benjamin Franklin?

Ted Tieken:                        How do we make a beer that doesn’t have carbohydrates in it?

Roy Morejon:                    There we go. That would be fun. So who did you look up to growing up as a kid?

Ted Tieken:                        I didn’t have any like heroes, you know, I looked up to my parents. I looked up to, you know, a lot of the historical figures. I guess the people I looked up to most were kind of like founding fathers, statesman’s type people. People who could have done something really good for themself, but decided to do something better for society and not take all the money for themselves, but share it. That’s really what I looked up to. So I would say the statesmen founders of the US were probably the people I looked up to the most.

Roy Morejon:                    Any books you would recommend to our audience?

Ted Tieken:                        I’m a huge podcast person, and I listen to a ton. Right now I’m listening to 100 Years of Solitude, and it is fantastic for those nights when I’m just too exhausted to think, and I just need something for my brain to turn on that isn’t work. But in terms of best business books, probably the most impactful book that I’ve listened to as an entrepreneur was The E-Myth Revisited, and it’s a really kind of a cheesy title, but it had a couple of points in there. The most important of which was the separation between what they call the integrator, the person who runs the operations, like the COO and the visionary, and it’s helped me have a number of conversations with other entrepreneurs about which of these two roles do you really want. You actually want to be COO or CEO or do you want to be the visionary?

Roy Morejon:                    Yeah, definitely a good book. Probably one of those ones that needs to be revisited I think by a lot of founders.

Ted Tieken:                        I think so.

Roy Morejon:                    Last question. What does the future of crowdfunding look like?

Ted Tieken:                        I think we’re going to see one, more equity crowdfunding and two, I think at some point we’re going to move away from this, it’s not a presale. The customers want it to be a presale. It’s used as a presale a lot of the time. It seems to be an artifice that’s antiquated.

Roy Morejon:                    Awesome. Well, Ted, this is your opportunity to give our audience your pitch, tell people what you’re all about, where people should go and why they should check you out.

Ted Tieken:                        Yep. So Sated is a ultra-low carbohydrate meal shake designed to be as filling as possible. It’s delicious and nutritionally complete, full of all kinds of awesome stuff, two kinds of protein, four different kinds of fat, 27 vitamins and minerals and we go way further down the list than virtually anyone into including things like prebiotic fiber and Omega-3. Really looking towards what is an optimal human nutrition, so you don’t have to have this tradeoff between eating well and being in a hurry. You can find us at Sated.com and right now it’s available on Kickstarter for the next two weeks or so and we’re offering huge discounts on the ready to drink shake on Kickstarter to backers. Now of course it’s not a presale, but if you wanted to use it as one, that would be fine with me.

Roy Morejon:                    Fair enough. Awesome Ted. Well audience, thanks again for tuning in. Make sure to visit artofthekickstart.com for the notes, the transcript, links to everything we talked about today and of course thank you to our crowdfunding podcast sponsors The Gadget Flow and BackerKit. If you liked this episode, make sure to leave us a review on iTunes. Ted, thank you so much for joining us today on Art of the Kickstart.

Ted Tieken:                        Thanks for having me.

Roy Morejon:                    Thanks for tuning into another episode of Art of the Kickstart, the show about building a business world and life with crowdfunding. If you’ve enjoyed today’s episode, awesome. Make sure to visit artofthekickstart.com and tell us all about it. There you’ll find additional information about past episodes, our Kickstarter guide to crushing it, and of course if you loved this episode a lot, leave us a review at artofthekickstart.com/iTunes. It helps more inventors, entrepreneurs, and startups find this show and helps us get better guests to help you build a better business. If you need more hands on crowdfunding strategy advice, please feel free to request a quote on Enventyspartners.com. Thanks again for tuning in and we’ll see you again next week.