Keeping Your Crowdfunding Backers In the Loop, Philip Winter – AOTK 226

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.

Welcome to another edition of Art of the Kickstart. Today, I am joined with Philip Winter from Nebia, and if you guys don’t know, Philip has joined us almost 100 episodes ago, basically almost two years ago since he first had his original campaign, the Nebia Shower, which absolutely crushed it on Kickstarter back in August-September of 2015, raising over $3.1 million. Philip, thank you so much for coming back on the show.

Philip Winter:
Roy, it is a pleasure to be here again. Thanks for having me.

Roy Morejon:
It’s our pleasure. So this was one of those super awesome campaigns, so I backed the campaigned. I think we did a little consulting for you guys as you guys launched it. I’ve got my shower now at my house, and let me tell you, it is an experience. I think people take it for granted. It’s just … the water comes out, but it is truly a unique experience. So thank you for changing my mornings forever now.

Philip Winter:
I’m glad to hear that I’m a part of your mornings now.

Roy Morejon:
Yeah. Just a little history lesson, I guess, for community … so the campaign absolutely crushed it. You surpassed your $100,000 goal in the first 8 hours, doubled that in another 2 and a half hours. And you guys did a ton of work and events before ever launching. You got some pretty high profile investors of Eric Schmidt and Tim Cook to come in, and you guys really put in a lot of effort into the campaign. So backtracking a little bit, it’s been two years since we last spoke. Give our listeners a little bit of an update and background of where Nebia is currently.

Philip Winter:
Sure. So as you mentioned, we launched on Kickstarter in August of 2015, so it’s coming on two and a half years since we’ve launched. I think like many folks who do a campaign on Kickstarter, there is a life before Kickstarter and a life after Kickstarter and a series of work and communications and milestones that look very different on the before and then on the after. And we had a lot of work to do afterwards. We still were in prototype phase, and we had to finish some product development and ramp up our supply chain.

And I think as with anybody doing hardware, it’s always more challenging and more costly than you can really ever forecast for. Unless you’ve done it two or three times, it’s really hard to know with precision. But it’s been an amazing ride. We had an obsessive focus on getting a certain quality, and we were relentless in our pursuit after that. We’ve talked to a bunch of suppliers in Asia and in the US, and we ended up choosing a manufacturer in Minnesota we’ve been very happy to work with. And we have now shipped 15,000 units to about 45 different countries in the world and are excited and working on our next generation products.

Roy Morejon:
Well, let’s back up, Philip. When you guys were creating Nebia, I know you talked about the overall design process in making an exceptional product. How did you guys go about deciding what features to ultimately include with the campaign launch and with the product’s initial version?

Philip Winter:
Lots of user testing and lots of beta testing with prototypes. And so we had done a lot of that already before Kickstarter, and we the feature set mostly locked down. There were a couple of things that still needed to be decided and a couple of decisions that came up through the process that we didn’t know would be decisions. And it’s a combination of product design engineers and people more on the customer side and marketing side weighing in and just getting lots of people to try it.

I remember we had to make some tough calls. One of them was, “How do we mount this to the wall?” We had one system on Kickstarter that we thought worked pretty well, but through extensive testing, we realized it wasn’t as reliable as we wanted it to be. So we had to go back to the drawing board, and we came up with a much better system. The wand mounting … we had just sort of a simple latch-on, but we ended up discovering that magnets made it a much more magical experience. It also made it more expensive, and we decided to eat the cost to make the product better. And so there was a number of those where the coin fell one way or the other.

Roy Morejon:
What were some of the biggest challenges that you guys encountered when you were designing the product?

Philip Winter:
The biggest challenges are around making something that is functional and beautiful, but also feasible to build on a mass production level. And one thing I would go back and do differently in a future campaign is involve our manufacturer sooner in the process so that a lot of the design decisions are taken into consideration with the experience of the manufacturer and what the challenges are going to be in making this in a reliable, mass producible way. That, I think, is super important for anybody building a physical product.

Roy Morejon:
Absolutely. So we always talk a lot about how important the month or two leading up to a launch of a crowdfunding campaign is, and I think you guys spent even longer than that. Can you give our audience some ideas of how to put their product in position to fully fund on the first day or what you would recommend to other projects to do before they launch to put themselves in such a great position?

Philip Winter:
I think for us, it was talking to a lot of people who had been through it before. And by doing so, you sort of pick up on the common themes and common threads of what did all the successful campaigns do, right? Basically, building up a lot of hype beforehand in the way of people expecting your campaign, whether it’s in the 100s or 1,000s or 10s of 1000s, just having a really good cohort of people who you know are going to support it in the first 24 hours to give it some initial traction, because that will really help.

We really studied videos and said, “What makes a great video,” and really sort of looked for the emotion in a video. And there’s sort of key aspects to a video of explaining the products, the story, the vision, and why Kickstarter’s the right place, but really putting a lot of diligence into the video, because that’s the most important component. And then, if you can get in touch with Kickstarter and have somebody answer questions and facilitate getting the project up, that’s also super important. And then, the best advice I can give is talk to a lot of people who have done successful campaigns, and by a lot I mean at least a dozen.

Roy Morejon:
Yeah, and I think that’s solid advice, especially for first-time entrepreneurs and startups that are cash-strapped. That’s just a matter of your time and reaching out and following up and trying to just have engagement there, so solid advice there. On your video, it’s unusual, because your campaign video is longer than what we would typically advise our clients or people to do. But it truly did captivate people throughout the entire process … very captivated, very testimonial-heavy, as well, which kind of personalized the brand, which we think really captivated the audience throughout the entire process to know that they were going to have this magical experience, if you will, that they’ve never had before with a shower experience.

Philip Winter:
We looked at a lot of different video lengths and tried to make sure that we hit on each of the different aspects that we thought was core to the video, and we were probably in the upper end of how long you want to be. But you really have to sort of study the medium and understand what is working and what’s not working, and it looks very different across projects, hardware versus something in the arts. The best advice I can give is to really understand what made the successful campaigns successful. And then, there’s an element of it that’s sort of out of your hands, which is a virality effect, and press certainly helps for that. But you can do everything to sort of key yourself up for at least reaching your goal and surpassing it by some margin.

Roy Morejon:
Definitely. So you talked a little bit about communicating with just anybody that you could get to view the product and get some insights on it. Let’s talk about your backer communication after your campaign ended.

Philip Winter:
Sure.

Roy Morejon:
What did that look like? How did you guys handle that? Because you had over 8,000 backers for this campaign, so how did you continually keep them in the loop and continue to engage them until delivery?

Philip Winter:
I think we learned throughout the way. When we finished the campaign, we were overwhelmed with the amount of support we had, and we weren’t prepared for it. So for the first couple of months, we didn’t have a very formal update process, and we were figuring out some of our plans. A few months in, we decided that in order to keep an open and transparent dialogue, we were going to commit to a very consistent update cadence.

And so the last day of every month for … let’s see. We did it from January until … for almost two years, so there’s probably about 22 updates. We sent it on the last day of every single months, and it would detail what we did, and it was a good 10 to 15 paragraphs of information, along with images. And that made sure that we were moving, because we knew that we were accountable to tell them what we had done at the end of the month.

And we had some delays. We put a lot of thought into how we communicated them and tried to be as transparent and upfront as we could while also explaining what was going on. I think the cadence of our updates was super important, and a lot of people commented on … “Hey, don’t worry. They’re going to give us an update in three days, right?” And that, I think, gave us some credibility.

Roy Morejon:
Yeah, absolutely, and people could still take showers with their pedestrian shower heads still in the meantime while waiting for their Nebia experience, right?

Philip Winter:
Exactly.

Roy Morejon:
So you had mentioned something earlier before of involving the assembly or the manufacturing or the product development teams involved in that process early on. What other tips might you have in that same vein to help some of the hardware folks coming out with products involve those aspects of their business in the campaigns before they ever launch?

Philip Winter:
I think a couple things are super important. In order for a Kickstarter campaign to be successful after you’ve already achieved your funding, you want the project to live on, right? And so it’s super important to know with as much precision as possible what your real cost structure is. Are you charging enough for whatever the reward is on Kickstarter? Do you have enough margin? Do you understand what the margin structure will look like after the fact when you start to go into other modes of distribution, whether it’s directly on your website, you use Shopify, or whether it’s in retail or on Amazon, as much of that as you can study beforehand.

And really, without your manufacturer fully locked down, invested in the product, it’s very hard to know that. And if you get that wrong, it can be very costly, and I think that’s an important part of the downfall for a lot of companies and a lot of projects and campaigns on Kickstarter. So as much as you can have that fully vetted beforehand, it’ll give you confidence to know that you’re setting yourself up for success post-campaign.

Roy Morejon:
Absolutely, yeah, and that’s certainly what happened with Ryan with the Coolest Cooler, right? Just didn’t have them involved in the full process and drastically misquoted that development cost of that product.

Philip Winter:
Yeah.

Roy Morejon:
So you talked about Amazon. I know I went on Amazon right now just to check it out, and you guys are … you’re out of stock out there. It looks like things are moving off the shelf pretty quickly for you.

Philip Winter:
Things are moving pretty well. That just happened yesterday, so we should be back up in the next day or two. But it’s been a really good channel for us.

Roy Morejon:
Nice. So talk to me a little bit about your experience with shipping, because this box is absolutely … it’s a big box. It’s not massive. It’s a big box, but what lessons have you guys learned? Because that always can be a problem for a lot of our entrepreneurs and startups with shipping. What lessons have you learned that you can share with our audience there?

Philip Winter:
It’s important to also have an understanding of what distribution will look like and fulfillment logistics. There’s many different ways to go about it, and most companies work with a third party logistics firm, and they ship them all of the inventory. And then, they deal with slapping on the labels and making sure it gets to the customers. Because of the size of our box and because of the capabilities of our manufacturer and the geographic location, we decided to ship directly from our manufacturer’s warehouse, and so we cut out one of the steps in fulfillment, which is getting from manufacturer to the 3PL.

That worked for us. It basically also … that, like many parts of the process, just took a lot of studying. Talk to other companies. What have they done? What’s worked well? There’s no stock solution for every company. You have to sort of understand the nuances of your own customer base. And for us, given the location of the manufacturer and the size of the box, it economically made more sense to have a relationship with FedEx ourselves to negotiate a discounted rate, and we were able to get a really good rate and just ship it directly. It also means that we can deliver a little bit more quickly, because there’s one less step in the process. It also means that we have to deal with more stuff internally. We have to have someone managing that pretty much full time. These are the aspects of setting up a company and an operations team that come with process.

Roy Morejon:
Yeah, and it’s an absolutely beautiful box and presentation of the product, as well, so I know a ton of thought went into that, just the same as the physical product itself.

Philip Winter:
Thank you. We actually have had two boxes. The first one was about 11% larger, volume-wise, but it came from manufacturers that were further away from our facility, and it was just too much waste. And so we worked hard, and about halfway through fulfilling all of our Kickstarter units, we were able to work in new packaging that not only cost less, but it was manufactured within 100 miles of our product manufacturer versus a couple thousand miles away. And so we cut down on the CO2 emissions of moving all that stuff around, and that sort of constant iteration is one of the advantages of having a team of people that can continue to work and iterate. So we were able to leverage our engineering team for a lot of that.

Roy Morejon:
Yeah, that’s great. So as you mentioned, you guys have fulfilled over 15,000 orders for this? I guess 8,000 of those-

Philip Winter:
That’s right.

Roy Morejon:
… from the crowdfunding campaign itself. So if you were to do it over differently, what would you do differently?

Philip Winter:
If I were to do it over differently, I would know what I know now, and I would probably have more planning beforehand and have a better expectation around cost, around timeline, around suppliers … but I wouldn’t change it in the past. It worked for us. The timing worked for us. We were able to build the product we wanted to build. We’re already working on the next product, but experience, on some level, definitely pays off. We were fortunate to raise additional financing from investors. That was important for getting everything off the ground. If we didn’t have that, we wouldn’t have been able to do it, and I think it’s a commonality with a lot of projects that raise additional financing beyond just their Kickstarter funds.

Roy Morejon:
So answer if you don’t want to … or if you do or don’t want to. But on the financing side, in terms of raising capital … so we have a lot of startups that look to be valuated based off of their campaign raise, but I think I heard you say that you guys were able to raise capital before your campaign finished to give actual sales numbers. How would a first time entrepreneur or a startup potentially navigate those waters?

Philip Winter:
That’s a good question. It was the first time raising capital for me, and we raised some capital before and after Kickstarter. I think there’s lots of good stuff written on the internet about how to do it and lots of good videos, and you sort of have to understand the terminology first and foremost. But pretty much everybody in their first venture starts with friends and family. That’s always the first round, and whether it’s $10,000 or 50 or 100,000 or several hundred thousand dollars, most people start there.

It allows you to build the prototype, to build a proof of concept, to show some promise, and people are really just backing you at that point. Once you have the prototype, you can go to slightly more formal investors, angel investors who invest money that they have made regularly in startups, and they’re used to working in that very early stage. And that allows you to build a campaign with some resources, perhaps have a little bit of a team to have some investment in the marketing and the production side. I think Kickstarter is where you prove a proof of concept. There’s interest, market demand, and off of a successful Kickstarter campaign, you can raise more money to really go scale it. And that’s the general process for almost all ventures that I’ve known about.

Roy Morejon:
If you were to give one piece of advice to someone else looking to crowdfund their home product or bathroom product, whatever it may be, what advice would you give to them?

Philip Winter:
I would say find something that you’re passionate about and you really love doing and try and build it first, and figure out what it’s going to take to build it and really understand the nuance of what it takes to build something if you haven’t built it before. And go for it. I mean, it’s a … whether it becomes a company or it’s just a project that you can generate a little bit of extra money on the side or just have a fulfilling experience and build something that you think the world needs that doesn’t exist there, there’s a wide range of ways to do it. And Kickstarter is an amazing, amazing platform, and we’re living in an amazing time to do that. It’s inspiring, and the only regret you’ll have is not trying. And so you might as well go for it.

Roy Morejon:
Absolutely. So you had mentioned another product coming out. Where else do you see Nebia headed in the next two or three years?

Philip Winter:
Yeah, we have built Nebia, and the vision, even since Kickstarter, was to build a company that transforms the way people interact with water in their daily lives and doing that by building products that people love and that are better for the planet. And we think there’s a lot of room for innovation in terms of how we experience water and making it more sustainable. And so we are working on some versions of Nebia that will be accessible to more people, that will open up new markets, continue to transform the way people shower. You can envision other products in the home that use water, and we’re looking at those as well, some new solutions.

Roy Morejon:
This gets us into our launch round. Now, I know, Phillip, you did this last time. I’m going to try and change up the questions as much as I can. Are you good to go?

Philip Winter:
Good to go.

Roy Morejon:
So what inspired you to be an entrepreneur?

Philip Winter:
Undoubtedly my previous job, which was at a nonprofit called Endeavor that helps entrepreneurs in the developing world scale their companies. And I was basically immersed in a world of entrepreneurs for about a year, just seeing them at different stages of the companies. And I said the thrill of this and building something is what I want, so it definitely traces back to that experience.

Roy Morejon:
So if you could grab a beer with any entrepreneur throughout history, who would it be?

Philip Winter:
Oh, man. I’d grab it with more than one person. Definitely on the list somewhere would be Steve Jobs, and for obvious reasons. It’s cliché, but I mean, what he’s built and his stories and the passion are second to none. Probably Yvon Chouinard, who built Patagonia, a very different type of business but one that really has his DNA. Those are probably two that I look to the most that inspire my company, because there’s a lot of similarities in the way that we’re trying to build our businesses.

Roy Morejon:
If you had a chance to ask Yvon a question, what would be your first question for him?

Philip Winter:
How do you keep a relentless focus on your vision and mission for the company when there’s so much pressure to scale and to grow sales, and just to stay alive sometimes? How did he keep such a mission-oriented focus to the company and push the limits and do things that were counterproductive to profits, knowing that it was best for the planet, for his company, and for his own long-term health and interest?

Roy Morejon:
Yeah, I actually ended up buying that book after you recommended it a couple years ago and read through it. So it was an interesting journey he’s going through. Favorite place to shower? I’m getting intimate now.

Philip Winter:
Favorite place to shower? Oh man. We have a really phenomenal showroom in our office in San Francisco, and it’s pretty awesome. We have two Nebias set up where we’re constantly testing newer versions. So that’s probably my favorite place to shower. If anybody’s in San Francisco and wants to visit, please just visit our website and drop us a line. We have a little portal where you can schedule a shower visit, and I think you’ll enjoy it, as well.

Roy Morejon:
Favorite song to sing in the shower?

Philip Winter:
Favorite song to sing in the shower? Boy, that’s a tough one. I like White Christmas by … Bing Crosby, I think it is.

Roy Morejon:
There you go. All right, Philip, last question. What does the future of crowdfunding look like?

Philip Winter:
I think it continues to grow and expand well beyond small projects, and I think big companies start to get into it. Tesla did this two years ago where they essentially did a crowdfunding project for the Model 3. I think it’s going to evolve a little bit and get more sophisticated. I just hope that the long tail, which is the artists and the creators who are doing it sort of on a mom-and-pop basis … I hope that that continues to have a really big voice and really big share of the crowdfunding market, because that’s what makes it magical, in my opinion.

Roy Morejon:
Absolutely. Philip, this has been awesome. This is your chance to give our audience your pitch. Tell them what you’re all about, where they should go, and why they should go buy a Nebia shower.

Philip Winter:
Yeah, we are Nebia. Our first product is the Nebia spa shower, and it is a better shower experience, a beautiful, innovative design. And it saves up to 70% of the water used by regular showers. Imagine it as sort of feeling like halfway between a steam shower and a regular shower, but in your home. And you can upgrade it and install it in about 10 minutes with very easy installation. If you want to learn more, visit our website, nebia.com, N-E-B-I-A.com, or shoot us a line, and we’d be happy to answer any questions.

Roy Morejon:
Killer. Philip, thanks so much for being on the show. Audience, thanks again for tuning in. Make sure to visit artofthekickstart.com for the show notes, transcript, links to everything we talked about today. And of course, thank you to our crowdfunding podcast sponsors, The Gadget Flow and BackerKit. And if you loved this episode and you loved Philip, make sure to leave us a review on iTunes. We would definitely appreciate it. Philip, thank you so much for being on the show today.

Philip Winter:
Thanks a lot, Roy, and thanks, everybody, for listening.

Roy Morejon:
Thanks for tuning in to 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 love 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.