Rebranding a Company and Overcoming Challenges with Kurt Swanson – AOTK 244

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.

Roy Morejon:                    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.

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Roy Morejon:                    Welcome to another edition of Art of the Kickstart. Today, I am joined with Kurt Swanson from the Kapsule team. Kurt, thank you so much for joining us.

Kurt Swanson:                  Roy, it’s good to be here. Thanks for having me on.

Roy Morejon:                    So it’s awesome to have a repeat client on the show. Just going through the list, you guys were episode 140, so almost 100 episodes ago, which seems like about two years. Which makes sense. A couple years ago, we interviewed your CFO, marketing specialist, Justin, like I said, on episode 140. Now we get the pleasure of talking to you, Kurt. CEO of Kapsule.

Roy Morejon:                    So let’s talk about Kapsule, or many crowdfunding backers or listeners of the show will know it as Noria. Let’s talk about that, I guess, to begin with. You guys have a new name. What happened there?

Kurt Swanson:                  At some point last year, we were contacted by an international trademark holder, and thought that Noria was a unique and creative name that we loved, but to avoid any kind of dispute, we rebranded early this year to Kapsule. We spent a lot of time developing the new brand, and we love it. I think it’s a great brand, and I want to be in the business of making air conditioners. We didn’t want to fight about a trademark. So we’ve gone all in the new Kapsule brand.

Roy Morejon:                    So when you guys were thinking of the original name, Noria, what research did you do into it to potentially protect yourself at the time being?

Kurt Swanson:                  Well, we did do a trademark clearance. We made sure that no one had Noria as trademarked. There was some diligence done on our end to make sure there were no collisions there, but frankly, I think we could have done more expansive trademark clearance with an attorney.

Roy Morejon:                    So is that what happened on the second go around now? You guys did the search there, and did some brainstorming on new ideas?

Kurt Swanson:                  Yeah. That’s correct. I mean, we brainstormed a lot of idea. We considered hundreds of names. It all leads back to names that we were interested in, we would submit those to council, who then do a claim study to make sure that we were all set. And we were surprised along the way with a lot of the names that we found, actually, were potential collisions, I’ll call them. So we came to Kapsule after quite a bit of internal discussion and external review.

Roy Morejon:                    So I’m always captivated by internal brainstorming for company or product names. Did you guys follow a certain flow? Or did you all get drunk and just start throwing out names? How did that go down?

Kurt Swanson:                  It actually came together over several months. And one of the things that we did, is we had some mentorship help from some people who had done [inaudible 00:03:42] before. And frankly, we had a very large Google Doc with all of these prospective names, number of dedicated sessions where everyone was in a conference room. The whole team got together, and everyone talked about each name that we had on this list, and we just went through it. We got to a short list. We submitted that final list to council, and then when we got back the approved names, we down selected from there. And we made some stylistic choices with the way Kapsule is spelled, and couldn’t be happier with the result. But it was a result of, actually, quite a bit of intelligence on our part. It wasn’t a casual affair.

Roy Morejon:                    Yeah I bet. So we recently had a client and a guest on this show for a product called Sun Dots, which is basically a vitamin to protect your skin from the sun’s harmful rays. And similar to you, they got a letter saying, “Oh this is a trademarked term.” And what they did, which was unique was, they went right back out to their crowd and said, “Hey crowd, so we need to change our name. Here’s a Facebook contest. Publish or post all of the names that we should be now.”

Roy Morejon:                    And I think they got a list of over 700 new names, basically, where the crowd, basically, sourced the new company name, and the winner of that got a year’s worth of product and a few other gifts and bonuses. Any thoughts on doing that to your crowd at the time when you were going through that?

Kurt Swanson:                  I think we went to the crowd on that regard, but of course that’s one of the powerful thing about having a crowdsourced product, is that you get to leverage those inputs. We did get some suggestions I believe, from some of our backers, but it wasn’t something that we solicited in a big way, no.

Roy Morejon:                    Got it. So let’s jump in. I know, since the last time we talked to Justin, in episode 140, a lot has happened with your project. You want to get us up to speed?

Kurt Swanson:                  Sure. Yeah. So we launched our crowdfunding campaign ended a little over two years ago. We spent the first 18 months or so really struggling through achieving energy efficiency requirements in the United States, which just so happened to change right around the beginning of the project. Window air conditioners, are actually, American energy standards are some of the most stringent in the world for window air conditioners in particular. And then just getting those efficiency numbers to work, and the form factor that we set out to achieve, the form factor that all of our backers loved, it was really difficult.

Kurt Swanson:                  It took eight major redesigns to achieve the energy efficiency rating we needed to be able to move forward with the project. So that’s technically a high level overview of the things we’ve been through to get ready for production, and right now we’re getting samples back from our manufacturer. We’re testing those in our windows right now, actually. I have one at my house. I love it. It’s working great. I’ve got the app working, making sure it’s bug free and all the firmware’s working before we jump into production an Q3, Q4 this year, for delivery next spring.

Roy Morejon:                    So I’m just looking through all the project updates, following along, and back in April of last year, you guys had the title of “Designing a Motor for the World’s Most Advanced Window Air Conditioner.” You want to dive in on that one?

Kurt Swanson:                  So just to give you something, at what a high level about our product. This is relatively complex system. I mean, people look at window air conditioners, and they seem relatively simple. But to make our form factor work, and to make it quiet and easy to use, and easy to install, required major redesigns of all the sub components. We have a custom compressor from our compressor manufacturer. We have a custom fan motor that was developed for this product. And we worked closely with the suppliers of different motors to make sure that they met the requirements for both power and efficiency, but also things like making sure that they had a silent wave driver, so that you didn’t have a tone associated with the motor itself.

Kurt Swanson:                  So there was a lot of effort that went into all the sub components to make this product work, and it just was significantly more complex and time consuming than we ever anticipated at the start.

Roy Morejon:                    So last month you guys ended up going on kind of a east coast tour with Kapsule. You guys hit up like, two or three, Boston, Philly, New York. How did that end up going, and what was the feedback from the crowd?

Kurt Swanson:                  Oh it was really great. So we went to Boston, Brooklyn, and Manhattan, and of course, Philadelphia. You know, it was great. It was really well attended at all three locations. I think we had at least 40 people attend in each of the locations. And it was great to see everyone’s feedback. A lot of people took off work. Some people drove from out of state, and when at our Philadelphia location, a couple of backers drove from Virginia to see the product in person. Of course there’s been a lot of anticipation, as you can imagine, on the part of our backers.

Kurt Swanson:                  But to have everyone there was really exciting, and really motivating because so much hard work has gone into this project from the start, and to see the final product in front of everyone, and see how people interact with it, and the positive feedback. It was really exciting.

Kurt Swanson:                  And of course, we get some really useful information from our backers. Going back to what you were talking about earlier with crowdsourced information. It was helpful, and we have some ideas for additional add on products. People are asking for small accessories that’ll help in their ownership and operation of the product. These are all new things that we’re considering now as a result of their feedback. So that’s really cool.

Roy Morejon:                    Definitely. So I know with crowdfunding campaigns, delays are inevitable, but any advice for the entrepreneurs out there, to what they can do to potentially avoid running into delays?

Kurt Swanson:                  You know it’s a great question. I think the best answer is to have a crystal ball so that you know in advance all the things that you’re going to have to deal with. But I think, actually, really the right answer is to set realistic expectations and to provide realistic uncertainty to your backers up front. That if a couple of things have gone right [inaudible 00:09:40] we would have been on time. But because of a number of iterations required, and then the seasonality of the product, it doesn’t make sense to deliver air conditioners in the winter.

Kurt Swanson:                  I think people should convey the uncertainty associated with launching a new product doing all this R and D. They should convey that to their backers. Because it’s really hard. I’ve been an engineer for over a decade. My whole career, I’ve been in engineering, and one of the things, it’s really to know at the outset, especially when you’re doing new R and D, is to know how long it’ll take.

Kurt Swanson:                  It’s hard to predict how quickly innovation [inaudible 00:10:13]. Especially because this is a team that, we’ve done product development before. As a business, we’ve worked together as a team before this project. And our careers, before that, we recognized that even when you’re doing something you’ve done 100 times before, there could be delays. And when you’re doing something like this, a really revolutionary new product, there’s just a huge amount of uncertainty at the outset.

Kurt Swanson:                  And that’s always a tradeoff people have. We did a lot of up front work. We probably could have done even more, but at the same time, people use Kickstarter, I think rightfully so, as a way to gauge, “Does the universe want this product to exist?”

Kurt Swanson:                  And I think a lot of people enter a Kickstarter campaign not knowing what the result will be. We certainly didn’t ourselves. And there’s a point you say, “Well, we’ve done a lot of research on this product. We have prototypes. We’ve done a lot of the initial ground work. Do we launch it?” And it’s always a tough decision to know if you’ve done enough work before the Kickstarter campaign.

Kurt Swanson:                  If I had my crystal ball back then, I probably would’ve done a little more ground work in advance, but having said that, this product, I can say, whole heartedly, would not exist without the Kickstarter campaign.

Kurt Swanson:                  You see some products out there. Well-funded startups. They’re completely ready to manufacture. They’re almost already [inaudible 00:11:35] to manufacture. They’re bringing products to Kickstarter. That’s a very different thing than what we did. We were a team of creators who wanted to change a whole industry, and it’s really only possible because of Kickstarter.

Roy Morejon:                    So you guys ended up hiring a community manager a few months ago. Was that kind of out of the need for customer service or just the amount of delays that were coming on? Or just the need to prime the market for when the product comes out next spring?

Kurt Swanson:                  I think those are all, there’s a lot of good reasons that we hired our community manager, but I think, really what it comes down to is, we have a large community. We owe it to them to communicate with everyone individually. And before we brought Caitlyn, our community manager in, it was, while we were hair on fire, trying to get all engineering done, and get production ready. We just weren’t able to devote the time our backers deserved. And so, for all the reasons you mentioned, we brought Caitlyn on.

Kurt Swanson:                  And actually it’s been great to have Caitlyn helping out, communicating with our backers about the timeline because if nothing else, I think, in addition to a product, we owe backers the ability to be on this journey with us. And it makes it so much easier with having someone devoted to that full time.

Roy Morejon:                    Absolutely. So what would you do differently if you could start all over again, and look into that crystal ball?

Kurt Swanson:                  We certainly would’ve hired a community manager earlier. And I think that would’ve allowed us to put more into the update process to give people insight about the setbacks and successes along the way. But I think that’s something I would have done more.

Kurt Swanson:                  Again, I think that letting the backers in on the journey that we’re going through is really important, and I wish we had done a better job of that at the outset.

Roy Morejon:                    So what tip would you have for someone about to launch their first Kickstarter campaign?

Kurt Swanson:                  Well, you know, I’ve certainly been asked about it in advance about this from other people who have reached out to say, “What advice do you have for me, as a potential Kickstarter project?” My advice has been really what I’ve talked about so far. Convey uncertainty and delivery timelines, right? Most people who get on to Kickstarter understand that they’re backing a project, and this not a store, as Kickstarter likes to say.

Kurt Swanson:                  I think it’s important to convey, in the campaign, that we have an estimated timeline, there’s uncertainty in the timeline for the launch of a new product, and to be totally up front about that uncertainty.

Roy Morejon:                    Fair enough. All right Kurt. This is gonna get us into our launch round, where I’m gonna rapid fire a handful of questions at you. You good to go?

Kurt Swanson:                  Yeah.

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

Kurt Swanson:                  I started to pick up the business before this because I wanted to have the experience of not only developing products, but being able to control my own destiny in that regard, for better or worse.

Roy Morejon:                    If you could meet an entrepreneur throughout history, who would it be?

Kurt Swanson:                  Thomas Edison.

Roy Morejon:                    Nice. What would’ve been your first question for him?

Kurt Swanson:                  My first question would have been, “So how much of the invention did you really do yourself?”

Roy Morejon:                    There you go. Who did you look up to when you were growing up?

Kurt Swanson:                  You know, the easy answer is my dad, but I think in terms of people, historically, that I looked up to, I really enjoyed science fiction writers like Michael Crichton, and Arthur C. Clarke. They wrote great stories, but what they really did, that I loved was create these worlds that were based around scientific advancement, which is something that’s really resonated with me.

Roy Morejon:                    That’s a nice transition in my next question. What business book or life book would you recommend to our listeners?

Kurt Swanson:                   That’s a tough one. I think there’s a lot of good ones out there, and frankly, haven’t had much opportunity to read over the past year. But I’d say James Dyson’s book, the title evades me right now, but I recommend James Dyson’s book on how he created and launched his business. I recommend that one.

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

Kurt Swanson:                  The future of crowdfunding looks like more equity based solutions. I know that there’s many available right now, but I think that the [inaudible 00:15:47] shake out in those platforms, and that there will be a few smaller equity crowdfunding sights such as Kickstarter and Indiegogo are kind of the big guys for direct pre order crowdfunding. I think we’ll see consolidation and the emergence of one, two, maybe three, really strong crowdfunding equity sites. And I believe that we’ll see more companies launch that way.

Roy Morejon:                    Awesome. I agree. Well Kurt, this has been awesome. This is your opportunity to give our audience your pitch. Tell them what you’re all about, where people should go, and why they should check you out.

Kurt Swanson:                  Here at Kapsule, we’re building the world’s first premium home comfort brands, and our launch product is a window air conditioner that’s half the height, twice as quiet as traditional air conditioners. It’s safe, and easy to install. It’s smart connected, and it’s beautiful both inside and outside the home.

Kurt Swanson:                  Like I said, it’s just our launch product. We have ambitions to be a premium brand that is recognized the world over, and we’re gonna be moving into dehumidifiers, and other associated room comfort devices in the future.

Roy Morejon:                    Awesome. Are you gonna be crowdfunding those Kurt?

Kurt Swanson:                  That remains to be seen. I think right now we’re gauging interest through our site, and if there’s a lot of support in that regard, we may consider one of the platforms, but right now, we’ve switched to a direct pre order through our website, and we leverage a platform called Try Celery to take those reservations in advance. And I suspect we’ll probably use that almost certainly, when we launch our future products.

Roy Morejon:                    Nice. Yeah. Try Celery is a great product. Chris is an awesome owner there. But this has been great. Audience thank you 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.

Roy Morejon:                    And if you love this episode as much as I did, make sure to leave us a review on iTunes. Kurt, thank you so much for being our guest today on Art of the Kickstart.

Kurt Swanson:                  Roy, pleasure talking to you.

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.

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Roy Morejon:                    Thanks again for tuning in, and we’ll see you again next week.