SIFT: Choosing The Right Funding For Your Startup - Kickstarter Webinar Takeaways
Whether your company needs a bit of a boost when it comes to funding while it’s on its way to the top or if you’re in need of a real beginner’s boost, this webinar can help give you the tricks and tips you need to get started—literally.
In our Alley Webinar, SIFT-Kickstarter, we take a closer look at all things funding. We want to help foster that education and exposure to various channels that can be opened for your business to get funded, raise funding, and kickstart a great cash flow-in to help get you off the ground—or just moving along.
In this event, our panelist, Adrian Solgaard, shares his real-world experience when it comes to choosing the right funding for his startup and how his history can help you with your startups.
We hope this Webinar can help encourage you and give you the advice you need to help find the perfect Kickstarter for your campaign or small business.
How to Kickstart the Perfect Kickstarter
Whether you’re following Adrian’s advice on starting a campaign with a single prototype or if you’re absolutely onboard and ready to launch to market, his real-world advice can help you get the funding you need.
First, you have to figure out which kind of supporters you want to target. You’ll have your audience who is:
- Simply there to be a part of the thrill of anew enterprise or new entrepreneurial activity
- There for the equity and the investment
Once you know your target audience, you can then figure out the perfect campaign to help tailor to their support.
Knowing how much and for how long your campaign should be are also important takeaway points that Adrian will address, as well—since these are major turning points for a Kickstarter campaign.
Kicking It Off with the Perfect Kickstarter
We hope that our SIFT-Kickstarter Webinar has helped you gain the impactful knowledge and learn points from real-world experience to help you kick off your company with a great (and effective)funding campaign.
At Alley, our team is focusing on supporting our community digitally by sharing resources and hosting virtual events. We hope this event and our entire event series can help keep your business stay connected to the community, move forward in development, and grow with intentionality.
- Tech For Good Accelerator - The accelerator is a three-month virtual program with access to mentorship, enrichment programming, networking, and the support of our community resources for innovators looking to create positive change in the tech industry.
Noelle Tassey 0:00
Everyone, welcome today to our first installment of SIFT hosted by Alley. Super excited to be here with all of you on this Thursday. Thursday in quarantine, I think this is day 58 for me, so hopefully, everybody's been staying busy and we're really excited that y'all were willing to share your afternoons with us. So today we're gonna be talking— this is kicking off our series about funding. All things- funding your startup, raising money. We're kicking off today by talking about Kickstarter, which is not always something that comes to mind when you're thinking of getting funded, but it is definitely an avenue you can pursue and we've got a veteran Kickstarter champion, you know, with Adrian. So we're gonna kick off with intros. I'm Noelle for those of you who don't know I'm CEO of Alley. At Alley, we are really committed to helping startups grow through providing them with community resources and leveraging our partnerships with large corporations to give them access to technology and funding including Verizon, Anheuser-Busch, and Microsoft. We've got our Tech For Good Accelerator kicking off soon in the Bay Area, which will be a remote accelerator. Check it out on our site, if you haven't already, and definitely drop in an application. My dog is also joining us if you can hear in the background, I'm really sorry. But this is— this is life for all of us now, and I'm going to hand it over to Adrian to tell us a little bit about himself.
Adrian Solgaard 1:36
Hello, nice to meet you. I'm Adrian born in Canada. Norwegian mom, German dad spent the last several years in a bunch of different countries. But now live in New York so little confused as to where I'm actually from, but live in New York now. I've started three different businesses, two of which I launched via Kickstarter. The current one that I'm running is called Solgaard. It's a sustainable travel gear company. We make backpacks, suitcases, watches, and other accessories. And we use ocean plastic to make a bunch of different products that we put together. Every item we sell, we pull five pounds of plastic out of the ocean. And our goal is to really do as much as we can with sustainability and do as much as we can for helping stop ocean plastics. So our goal is to implement systems that can help cut ocean plastic in half in the next five years.
Noelle Tassey 2:27
So, obviously, super cool company, we're incredibly excited to learn more about your journey as an entrepreneur. You know, from the beginning to now how you started the company and a little bit about your experiences with Kickstarter. And also for those of you who don't know, Alley's mission is to create good change. So startups and entrepreneurs with a social impact angle are really at the heart of everything that we do, which is just another reason I'm really excited about today's talk. So you know, Adrian, let's— let's get started and just go way, way back. I would love to hear from you how you got your start as an entrepreneur.
Adrian Solgaard 3:05
Yeah, so when I was 16 years old, I started a t-shirt company in high school, making t-shirts selling them at a little table in the hallway at my high school selling to kids. And I used that to pay for gas money so I could travel to BMX contests. I used to ride BMX bikes. So I think I sold something like 600 or 700 shirts throughout high school. And then shortly after high school, I had been making a bunch of demo tapes for BMX and skateboard videos. And I realized that Oh, that could be a potential job, actually, if I don't want to just risk my skin on riding bikes and jumping off stuff. So I started working on improving my skills as an editor and I got a job as the head editor of a talk show about marriage counseling, when I was 19 years old, and started out there. So I was working in television, then I started my first real business at 23, which was a TV commercial— making TV commercials and music videos, called Streetlight Creative. So we made TV commercials, music videos, and as we kind of were making commercials for some of them, it was like, "Hey, your website kind of sucks. Can we help you fix that?" We started developing some websites for some of our clients. And then it was like, "well, and your social media kind of sucks, too. Can we help you with that?" Like we were doing this kind of full-service marketing agency thing. And I realized I'd been picking up the skills of all these different aspects of the business. And I realized I really wanted to run a brand. And I wanted to make a physical product. Fast forward to 2013— 2012, my bicycle got stolen, Kickstarter had just become a thing. And I thought, well, what if I made a bike lock, and I put it on Kickstarter and made that happen? So I put this bike lock idea on Kickstarter. It got funded, I had an investor come on board, and I got that company up and running distribution into about 24 different countries. And yeah, that was sort of three years from there.
Noelle Tassey 4:51
That is so cool. And there's so much I love about your story. You know, not just that you started as an entrepreneur selling a consumer product in high school and to kind of come full circle back to that. But also something I didn't know, that hadn't come up yet was the editing the marriage counseling show, which I can imagine from a people-management perspective must be very helpful in terms of running a business.
Adrian Solgaard 5:11
I'm sure you learned a lot there. But that's really, really cool. So you— you were really one of the first people to you know, get on Kickstarter, you were an early adopter. Can you tell us about, you know, the decision to— "okay, I have this great idea for a consumer product, I want to run a brand. This is where I'm going." You know, what—what kind of the decision to do that rather than raise venture capital or pursue another avenue?
Adrian Solgaard 5:35
Well, at that point I didn't know about— so this was— I was living in Vancouver, Canada at this point, there was— I didn't know that venture— what venture capital was, I didn't know that was a thing. I didn't go to any post-secondary school beyond a three-month film school thing. So I had no idea about what sort of access to capital there was. I figured your only option was to go to the bank and get a loan. And I was like, Okay, well, that's probably not an option for this product idea that doesn't exist. But Kickstarter could be a way to fund this thing. So really just an old-school way of thinking of, hey, I want to make this thing happen. I think it's exciting enough that people will pay for it before they get it. And it turns out that I was right, so yeah. So I think that's why I decided to go the Kickstarter route, then. Now, if I met anybody that was, you know, in the realm of having an understanding of what it takes to start a business, I would still suggest Kickstarter can work for a lot of areas. Because when you're selling a product, if you have a product that is exciting enough that people are gonna want to be a part of it, you can launch it on Kickstarter and find out if the market is gonna respond to it before raising money at a weird valuation. Because how can you— if you're pre-revenue, how can you have any sort of valuation especially in the weird post-Corona economy that we're gonna be living in? I think that's a really difficult way to raise capital. And so rather than spending all your time making pitch sets and talking to investors, just go straight to the consumer and see if people want to have— have that thing that you're making.
Noelle Tassey 7:02
So that— and that touches on three themes we've been talking about a lot just as— as a business and I think as a— as a community, right? One is sort of this weird look at when you look at like direct and consumer startups that raised a lot of venture capital, the pitfalls of raising at a weird valuation, as you said, and kind of being forced into that exponential growth model that, you know, probably isn't attainable, because you're not building a software product. And then, on the other hand, you've got the economy that we're coming back out into, and the kind of unique opportunity Kickstarter gives you to test against, you know, a real market whether people are willing to pay for your product. So I'd love to know, with your first foray into Kickstarter, how much do you raise and what did you do specifically to make sure that your project got funded? Because in the past, you and I have talked about how unique the Kickstarter audiences and we'll talk about this more when we get to your current company. But—
Adrian Solgaard 7:58
The first campaign raised $52,000 something like that. And that was— I priced the product really low was like $29 or $39 or something. And so that was from 13— well 1,112 backers, yeah. So, and it was— well, I think what's interesting, and this is sort of circling back, what you can do with launching a Kickstarter campaign, I think I spent maybe $2,000-$3,000 to get this campaign up and running. And with that, I was able to make 50 K. And so if you can use similar economics to that, that's where you can make a Kickstarter project with a prototype. It doesn't need to be like the perfect thing that you would go to launch to market with and it gives you a chance to improve that product and get feedback from the Kickstarter community. So yeah, sorry, I'm kind of randomly jumping into a different rabbit hole, but—
Noelle Tassey 8:53
I think that's a really important one because when people think about Kickstarter and the prototyping process, it's one of those things you know, "okay, I have a great idea for this product, but how do I even get a prototype? How do I get factories to talk to me? And how much does it cost?" And I think that feels very daunting for a lot of people. And then that can drive you also to the route of like, "Okay, well maybe I'll take out a loan or I'll raise money from a VC." So can you tell us a little bit about what that was like the first time you did it?
Adrian Solgaard 9:20
The like, with dealing with factories and that kind of thing?
Noelle Tassey 9:22
Yeah. Then the prototyping process and kind of going on betting, you know, $3,000 on that.
Adrian Solgaard 9:28
Yeah. So 3-D printing was in its early days, then. I wonder if— I feel like if I talk a little bit more about the second campaign we did, that'll almost have more relevance to the world that we're living in today. That was a campaign for Lifepack, which was a solar-powered anti-theft backpack. It raised $600,000. And I spent $600 to build that campaign out. That one, the— the first project that I did, I had gone through like a friend who had been manufacturing bike parts in— in Asia for a number of years. And I just asked him, "Hey, who should I talk to? What kind of factories should I talk to?" He connected me with his agent in Taiwan, and then we went from there. Whereas with the backpack, we had a backpack, a solar panel, a lock and a bunch of features to put into it. So I actually sourced the factories on Alibaba. I just went onto alibaba.com, and like, went "backpack", who has the thing? I ordered different samples, and then I customized those samples, and I actually have one of the original samples with me here, which is a really rough, janky-looking of the— and it disappeared in my virtual background, janky-looking backpack. But you know, you order a sample from a factory, and then you customize it. And for this one, what I did was I literally just got out a sewing needle and started sewing on different custom bits to it. 3-D printed this like, solar-powered little box. It didn't actually function. There's a photograph of a solar panel that I glued on to it and stuck it on. And I was like okay, here's the thing we're going to launch but we need your money to help make it a reality. So I think that what's exciting about Kickstarter is that if you have a rough prototype, you have a clear vision and you know what the steps are you need to take to make it happen and you paint a big enough dream that people want to get behind; building that community, rallying people together to propel your project forward is really what the key is.
Noelle Tassey 11:21
So, and then I think that kind of jumping into Lifepack and Solgaard is a— is a really great segue. When you were going to develop this next product, what was like the one thing that you learned from your first go-round with the bike lock that you made sure to do differently?
Adrian Solgaard 11:41
So the bike lock was selling a component for someone else's bike. It was like you already have a bike, or there's another bike brand has a thing. Here's something you can add on to that thing. Whereas I want to sell, I want to sell a standalone product that you buy and be like, Okay, this has everything I need, and I buy that one thing and then I have it I can go from there. So that's where— you're not reliant on that— that outside party. So I really wanted to do that. And I want to do something that had more of a brand feel associated to it, that had more of a purpose behind it. The bike lock was like, Okay, this is a bike lock, it's really hard to build a culture around a bike lock. Whereas the first product was the mobile office. So it was all about remote work and how you can function as a team working remotely how you know, all that. So I wanted to have these pieces that there was more to it than just the product. And I think that that's one of the reasons for the success of the campaigns as well is you're speaking to more than just that one thing.
Noelle Tassey 12:39
Right. And you've said before, and I don't know if this was your first Kickstarter or for— for Lifepack, or later ones that you tailor the products specifically to Kickstarter, can you tell us a little more about that?
Adrian Solgaard 12:52
So the Kickstarter community is a very tech-savvy tech-friendly group. You know, like if you look at the bell curve, people 10 years— whatever, eight, nine years ago, we were talking all about early adopters who's the early adopters? Well, Kickstarter campaign people aren't— like, so early adopters are that first, you know, 5% to 10% of the bell curve, or 5% to 15%. Kickstarter people are like the even before that. They're like the pre-early adopters. And they're people who want to be a part of something so early on, it's kind of like, in the 90s, getting the Radiohead album before anybody else and saying, I've got this CD. People that love Kickstarter love to be the very first people getting their hands on this new and exciting product, even if that means it might have a few quirks to it. And they love to be a part of the thrill of a new enterprise, of a new entrepreneurial activity, but they're not in there for equity. They just want to be along for part of the ride. So it's important that you take that into consideration. So having products that are tech-focused and tech-friendly, is really key. Giving them something that's going to improve their life, but then building that community around who they are, and making sure that you kind of include them in that is one of the most important things for— yeah, well, those are all important things in building a successful Kickstarter campaign, making sure you rally the troops behind you.
Noelle Tassey 14:12
And how did it feel, you know, plugging into that community? How did that help you scale your business?
Adrian Solgaard 14:19
I think so, for the first— when Lifepack was first up and running, there was you know, we had tried to deliver them within eight months, I think we delivered them within nine or 10 months, there was a couple months' delay. But once everyone got their products, they were super excited. And they were telling their friends to tell their friends and then that's kind of what— what got the business up and running on its own two feet coming out of the gate after Kickstarter. And I think that that's one of the important things to recognize is that a Kickstarter campaign is just that it's a kickstart, it's not like a kickstart and then coast— and you're coasting down the hill, it's— it's enough to kind of— if you run a Kickstarter campaign, you get it up and running, and you sell through your first batch of inventory, and you have no money left, that's the win. That means you have customers and you're kind of up and running. So having that community be able to rally behind and boost us, to be able to continue to sell after Kickstarter was super important. These are the first people that are going to write your reviews on Amazon and your website and all that. So it's really important you treat them with, not kid gloves, but you treat them really well. And you make sure you listen to what they're saying. It's really important for the long run of your business that you treat them well because they give really valuable feedback.
Noelle Tassey 15:30
For sure, what was the most surprising piece of feedback that you— that you got from that first round?
Adrian Solgaard 15:36
I'm not sure. I can't think of anything like off the top of my head other than like, some very granular product-specific details of like, oh, why didn't you do fast charging the two USB ports but like that's, yeah, I can't think of a surprising one right now.
Noelle Tassey 15:52
I mean, that's that is helpful, though, right? If you're trying to figure out product-market fit, you can do as many interviews and surveys as you want and then you get your product into the hands of somebody who is really vocal and really into— into what they're doing and yeah. Cool! So we have actually two questions that we're going to break for right now because they're both on this topic. So— of just you know that first Kickstarter and treating— treating the people that you've raised from with kid gloves. The first one from Aaron is: "I've been told that most Kickstarters come from audiences that exist somewhere else already. It's just a manager of a transfer to Kickstarter as a platform. Do you agree or disagree given your experience? Getting other adopters you don't already have in the platform itself. What's the ratio from Kickstarter versus people who are already your audience? Even quantify on other channels."
Right, I'm trying to see where the— where is that question asked? I'm just trying to see—
Look at the bottom, in the Q&A thing.
Adrian Solgaard 16:50
Okay, opened the... until the most... someone keeps spamming there... So most of the people— so on our first campaign, most of them came from Kickstarter, because it was a brand new brand that we were launching, there was nothing else to begin with. So I think that's one of the important things is that you can build that audience off of existing Kickstarter people. For us now that we've been in business for a number of years we'd have— we'd bring more customers over. But I would still say that most, most Kickstarter campaigns excluding the— the ones that are like, had several repeat multimillion-dollar campaigns, most campaigns come from a Kickstarter-based audience, I'd say 70% to 80%. And so that's something to take into consideration when you're running your advertising and building a marketing campaign is that you need to be marketing to the Kickstarter audience specifically, not just marketing to— you can't just go wide with your funnel and say like, Oh, these people travel— work remotely, therefore they want remote work products. No, you need to go target the Kickstarters specifically, people who have already been using Kickstarter, because only about 0.25% of the world is comfortable with buying something off Kickstarter. Which I think it's like, there's 8 million or 10 million Americans who have— have used Kickstarter before. So that like factors down to that. So rather than marketing to everyone in the States, it's better off— you're better off going at it like, okay, these are the people that already are comfortable using Kickstarter and then marketing to them. Because it's weird to give your money to someone for something that you hope you might get, even though there's like tons of stories of failures on Kickstarter. So a lot of people are pretty wary of that risk. So that's why going with people that know Kickstarter, and are comfortable with that risk it's gonna have a better— yield a better success rate.
Noelle Tassey 18:41
Yeah, definitely. And I think the last panel that you and I are on together we kind of did a blanket question with everybody as to who had been part of a Kickstarter where they never received a product or received money back. Yeah, I've— I've experienced both and in the one case the product I received, I don't— I don't really know what to do with it or how to use. It was a Christmas present that came two years late. you know, it's— that's the risk you take when— when you buy on Kickstarter, but it's fun. It's fun to be, you know, along for that ride. So that's super cool. And you went on to raise a few more rounds or sorry, you did a few more Kickstarters, excuse me.
Adrian Solgaard 19:23
Yeah, I've done five Kickstarter campaigns in total. I think cumulatively it's like, $3,000,00-$3,500,000 between the campaigns. Yeah. So three different— three different backpacks, a suitcase, and a bike lock.
Noelle Tassey 19:36
Okay, so that— for the backpacks and suitcase as you're sort of iterating on that product, what— you know what changed Kickstarter over Kickstarter, from your perspective in terms of how you approached it, you know, as a funding mechanism, or as a campaign to launch a new product?
Adrian Solgaard 19:54
More advertising spend. Unfortunately, and that's just the reality. The platform used to be a lot more organic and it used to be— so like on that— on that Lifepack campaign that raised 600K, I think we spent something like $30,000 on ads. Which we found this one group— the campaign hit its target in the first day of like 20K and then organically with no ads did I think it's first like hundred and 50 k but one group approached us and said like hey we want to run your ads I said I have literally no money until this campaign's done. Well, we can front you the ad spend, and then you'll pay us once you get the funds afterward. It's like okay, all right. So but now— now the campaigns are a lot more ad-heavy, just because there's more products on the platform. It's not a brand new platform anymore. So there's not as many like loyal Kickstarter people just hitting refresh on the "what's brand new" page. But yeah, still that "what's brand new" page is super important. Your first three days of your Kickstarter campaign are— really, well your first like four hours, really set the pace and your first three days, and your last three days on like the tail end— front nose and tail end of the thing, will be probably 60% of your funding. And whatever that middle period is will be like a long, a long slog, let's say.
Noelle Tassey 21:13
Wow, what was— I mean, did you learn anything about like, kind of ideal campaign likes or anything like that?
Adrian Solgaard 21:21
Yeah, well, I mean, they say, "they", the ultimate gods at Kickstarter, they say that 30-day campaigns are ideal, 30 or less, which makes sense because of that, like, top and tail.
Noelle Tassey 21:32
Adrian Solgaard 21:33
But if you're doing a campaign, and you already have a strong Kickstarter audience, you can do a longer campaign. You can do like a 60-day campaign if you have, you know, the means to— to go through that long period of time because you don't get any of the funds until the end. So another reason for the shorter pier is if you don't know how the product's going to do if you only do a 30-day campaign, you have more you— you compress the ratio of failure, right? Because if it's gonna go badly that you can come back to the drawing board sooner.
Noelle Tassey 22:06
That makes a lot of sense. So interesting. I obviously I've never raised money for a product on Kickstarter, my backgrounds all in venture-backed tech. So it's a totally— it's a totally different world in some ways, other ways, kind of similar. So—
Adrian Solgaard 22:22
You're just selling to people, you're just telling people, you're building trust with people and you're saying, Hey, we're gonna, we're gonna do this thing. This is our goal it might be a little bit different by the time we get there, but this is what we're trying to do. And it's like, it's like micro VC of people being like, okay, here's 75 bucks. Here's 100 bucks, here's 150 bucks.
Noelle Tassey 22:39
I can't imagine going from having three board members to having like 30,000 though that, that seems like a lot.
Adrian Solgaard 22:48
Yeah, they're not equity holders, but they are if you— if you ignore your Kickstarter backers, and don't give them enough updates and, you know, treat them badly, they will. They're a very aggressive bunch, as they should be because they're giving you money for something that doesn't yet exist. So yeah, you gotta be on it.
Noelle Tassey 23:07
Yeah, I can imagine. From a customer's perspective, that must be interesting. So something you said that really struck me there and that we've heard sort of in our direct-to-consumer series, you were talking about how it's just cost more now from an advertising perspective to run a Kickstarter. And I think the thing that we hear from like more traditional, like, let's say your venture-backed direct-to-consumer companies is, you know, it's now costing my customer acquisition costs and Instagram and my ad spend is so high it's like the same as paying rent on brick and mortar. So would you say like, it seems like across the board just for new entrants, it's so much harder to launch a consumer product right now. What does it take to really push past the noise on that and still make an impact and make a splash either on Kickstarter or more broadly?
Adrian Solgaard 24:02
Make a product that's solving a need, always, right? A lot of people will make a product and they think that they're doing it. But it's like if nobody's asking for it, you're gonna have a real uphill battle that's just gonna cost and bleed. Whereas if you make something that people want and that people are sharing about, I think that's it. It's like doing— there's kind of this, this concept around like a triple bottom line for a company, right? Where if you make a product that— I think there's some somewhere to tie that in, if you make a product that solves someone's need, that does something good for the planet, and it looks good, or like you need to kind of have those three checkpoints. And so I think that's important to take all those factors into consideration.
Noelle Tassey 24:43
Definitely. So for you, I mean, it feels like the triple bottom line piece, and this is something we love to talk about, obviously being social impact-focused as a business. It feels like that was really in the DNA of your business from the start with the solar cell idea. But can you just, I guess tell us a little bit more about how you've woven that more into the fabric of your business. And also whether Kickstarter influenced your interest in doing that.
Adrian Solgaard 25:09
Well, we've literally woven it into our fabric. We've been using plastic to weave our fabric. Thank you for that handoff.
Noelle Tassey 25:15
[inaudble]... all day.
Adrian Solgaard 25:19
No, it was always something that I wanted to do. But I didn't know how to do it. So when I was running the bike lock company, it was like, okay, cool, this is like helping people not get their bike stolen. But that's like not as big of a thing. I wanted to make more of an impact. I was like, looking at, maybe there was a way to make an app that could like help protect everyone's bike from getting stolen, and I was like, it's still not big enough. And then as I was thinking, like, maybe I should go into like grid-scale solar or something like that, but I don't have, you know, an engineering degree in photovoltaics, there's no way I'm going to be able to make these massive projects without years of education. So I thought, okay, well, step one, I can put a solar panel on this backpack, and that'll be like the first step in the right direction of moving— going towards sustainability. And then, as I've been learning more about the sustainability space, I started realizing the math behind like how much plastic is going into the oceans-- 17 billion pounds a year. Just think about that, it's a garbage truck every minute, getting dumped into the ocean. So I started thinking about ways we could use that material to make fabric for our bags. And so then as we started making the fabric from that, it's just been like, oh, wait, now we can use that plastic to make the hard goods to make our solar-powered items and all that. And it's like, I've just been, it's just this thread that I started pulling on of like, how can I do a better thing in the world? I just started pulling it and I just kept getting further and further, and I just keep going deeper and deeper down the rabbit hole and I love it.
Noelle Tassey 26:43
That's so cool. How many of your customers do you— I mean, do you feel like that really has been the differentiator both in terms of like the success of the subsequent Kickstarters and just customer loyalty to the brand?
Adrian Solgaard 26:57
I would love to say yes, I think that having— using sustainable materials in a product will only get you so far. The product— at the end of the day consumers are selfish and they want to have a product that's good for them. It looks good, it does everything. And if it's also made sustainably and it doesn't cost a whole lot more, then that's the kicker to win them over. And I think that that's the way that it needs to be thought about from a— from a, you know, P&L mindset, you need to do it that way. From an emotional standpoint about you know, what's your purpose in life? What are you trying to accomplish with the business as your grander vision? It means a whole lot more. But I think in terms of the actual nuts and bolts of the sale of a product that's made sustainably, it'll give you a 10%-20% boost, I would say.
Noelle Tassey 27:48
Very cool. We had somebody write in and I think this— I just want to field this question because it's something that we were going to touch on and then I just got really excited and wanted to jump right into Solgaard and just have that conversation. But— so somebody, David asked, "What's the current status of the first two companies? Did you sell them? Or do you still run them?"
Adrian Solgaard 28:08
So the first company that was doing TV commercials, music videos, one of my designers that I hired, during that time, he still works for us. So we kind of wrapped that company into the bike lock company, and then kind of like carrying some of that through. And then the bike lock company. I was in the process of selling the patents to a guy in Belgium and the deal kind of fell through in a bit of an uncomfortable way, let's say. And then those products are still being sold, but it's through another group. And it didn't work out super well for me.
Noelle Tassey 28:40
I think Kickstarters and patents could be probably the topic of an entire 60-minute fireside chat.
Adrian Solgaard 28:51
Noelle Tassey 28:52
Yeah, yeah. It's a story we hear more than I'd like.
Adrian Solgaard 28:55
Yeah. Well, pat— what's interesting with patents and a Kickstarter campaign, people are really worried. You can write your own provisional patent, pretty— like a one-page provisional patent, and launch that on before you launch your campaign on Kickstarter. And as long as you're sort of vague enough with it, you can then build off that patent later. So that doesn't necessarily need to be too much of a preventer from— from getting you started. But, yeah,
Noelle Tassey 29:21
Yeah, still definitely challenging. So we had two people kind of asking around what makes a campaign successful? And— which I think we've touched on but also just would you recommend Kickstarter for maybe non-consumer goods products? And I feel like there are definitely a lot of alternatives. So we have somebody writing in about an online economics publication. Like, I've heard a lot about Patreon being a really great solution for like journalism or kind of creative work online and then for an app or software.
Adrian Solgaard 29:56
For an app it's— I think that Kickstarters aren't really the right platform for an app. There are so many other ways to fund getting an app started. And an app is really just time of developers you need from the outset. So that's where it's easier to raise, you know, 10, 20 30, 50K in the friends and family round kind of thing, or through a bank loan or whatever, to get yourself up to an MVP, and then you've got to go the venture capital route. I think that's kind of the reality for software.
Noelle Tassey 30:27
Yep. Definitely. I don't actually know if I know of any successful software Kickstarters, although I'm definitely not an expert. But— so we have, and we also have a question here about fulfillment. So I think this is just a general question around advice for after succeeding with your Kickstarter, how to really make sure that you can get the orders out, which we've already talked about a little bit, it's hard. And, yeah.
Adrian Solgaard 30:53
Fulfillment is super important. And you need to be really careful that you factor in your cost to fulfillment early on. Are you going to be offering to pay shipping and duties for people? Are you going to be for international people? Because if you say that you are it sounds really nice on your campaign. But at the end of the day, that's a, you know, a six-month hangover that you're just waiting to have happen. And on one of our campaigns, we underestimated our fulfillment budget by like, $70,000. That's like, great, we raised $440,000 in this campaign, made the product, shipped the product and lost 30 grand it's like because that really easily eats into your profit margin. So fulfillment's really important to take into consideration and with fulfillment, you need to think about everything from how do you package the product, how big is the box? What sort of sizes do you measure? And all that kind of stuff.
Noelle Tassey 31:43
Yeah, that's all— Yeah, fulfilments, it's super interesting, just like as a challenge. And when you were sort of over by 70 K, what— how did that impact the growth of your business? Because I would imagine and correct me if I'm wrong, you do the Kickstarter, hopefully, you're able to fulfill all of the pledges, you ship out the product and then you're also just trying to run your business on the other hand. So I'd imagine your hope is to take some that money and put it back into production marketing from your website directly.
Adrian Solgaard 32:14
Absolutely. No, and that one was a pretty serious pinch that was pretty difficult to recover from. So yeah.
Noelle Tassey 32:25
Yeah, it can— it can really catch you. In my direct-to-consumer experience, we got hit with like, storage fees at a warehouse that we just completely miscalculated. There needed to be fire suppression, and it was like, you know? It can crush you.
Adrian Solgaard 32:42
Yeah, you need to be really careful with— the operation side is definitely my weakness. And that's where I've made probably most of my biggest mistakes in business is in miss— underestimating what some of those costs are. And then how that— how that comes to bite you later. So what's interesting about Kickstarter is it's like, if you're running a direct-to-consumer business model you're making, you know, on day— let's say from Day Zero to Day 365 of Year One. On Day One, you sell one product, on Day 30, you sell 30 products, and you go, and your cash comes in slowly, and you work your way up the graph. Whereas with Kickstarter, you get all your cash in at first, and then you just slowly spend it all. And hopefully, you don't— and you need to estimate that out over 6, 8, 9, 12 months, however long the development cycle is of that product. And so at the beginning, it feels like oh, we're sitting on half-million dollars in cash, this is great. Oh, 10 grand for that no problem, and then all of a sudden it starts dwindling down. Whereas— because you need to just— you need to really be careful with your cash if you have a big Kickstarter campaign because there's a lot of costs towards the end in the fulfillment. So—
Noelle Tassey 33:51
Yeah, definitely sneaks up on you. So another question coming out of this is in a post-COVID world, and we've talked a little bit just generally, a hot topic has been a disruption of supply chains, right, in this moment. And operations issue really goes directly into that, you know, you're sourcing parts from Mexico and China and they're being assembled in India or what have you. And all of a sudden, all of this is in complete and utter disarray. So for somebody who's looking to raise money for your Kickstarter right now for a direct-to-consumer product of some kind, what would your advice be and how much harder is that going to be in the climate now and really for the next year?
Adrian Solgaard 34:36
I think it depends on what your product is. It'll be easier to raise money for certain products, it'll be harder to raise money for other products. And so I think it's, it's a great pivot for all of us to just think about what is this new normal? What is this new world we live in? And how can we make sure that we do the best things that we can for this new world?
Noelle Tassey 34:55
Are you anticipating any kind of new costs that you hadn't planned for as a result of this?
Adrian Solgaard 35:04
New costs? I don't think so. That we had an impact on our sales? For sure. By— by when it— like by when things got started in March. But like actual new costs? I don't think so.
Noelle Tassey 35:22
Adrian Solgaard 35:23
Have you heard of anyone having any big new costs?
Noelle Tassey 35:26
I mean definitely taking a financial hit in terms of you know, suddenly you can't produce the product and fulfill orders anymore. I think we had a panelist a few weeks ago who was sort of speaking to the channel the challenge of having their entire supply chain disrupted and you know, having to manage for that either by shifting production to more expensive areas or—
Adrian Solgaard 35:49
We had a temporary— we had a temporary blip in our supply chain, but it's— they're all back up and running now.
Noelle Tassey 35:55
That's great. That's awesome.
Adrian Solgaard 35:57
Yeah, like one of our— our watch factory, for example. So a lot of the factories in Asia, in China, if the owner's from a certain province, they'll end up hiring people from that province just because you know, you have the same dialect or whatever. And the watch factory that we use was— the owner was from Hubei Province, which is where Wuhan is, and they were fully down for two and a half, three months kind of thing. So it was like, okay, yep, we know those samples are in progress, but like, we're all trapped in our houses so—
Noelle Tassey 36:31
But that's back on track now you said?
Adrian Solgaard 36:33
That's back on track now. Yeah.
Noelle Tassey 36:34
So what's next for your business? Are you guys looking to raise again on Kickstarter, do another campaign?
Adrian Solgaard 36:40
Yeah, we're actually— we're working on one now. That we're gonna launch around the end of May, early June. Because yeah, we're just like, it's, it's a great opportunity for a way to launch new products. And most of our products are meant for life on the go. And so we're like, okay, well, what about some pro— what can we twist in some of our current product offering to make it more simple for in-home? And so that's kind of what we're working on now and getting some of those ready to go. So I'm excited.
Noelle Tassey 37:05
That's really exciting. Can you— can you give us any sort of sneak peek as to what we could expect?
Adrian Solgaard 37:11
What can I say? One— well, so we're doing a— we're doing an updated version of our portable speaker that we're making. We're improving the solar quality on it, we're improving the audio quality on it. And we're adding some other features to it. And then we're making a home base station for it for charging that and charging your other devices and kind of making a tech home hub for your stuff. So—
Noelle Tassey 37:37
Very cool. So for everyone working from home from your fire escape, from your roof, this is a— this is news it seems.
Adrian Solgaard 37:46
Yeah, for sure. So I'm excited about it. It's fun to— we haven't done a campaign for a year and a half or so. And so it's like, alright, okay, getting back into the groove and doing this. We're— and we're planning on doing— we're— one of the really cool innovations that's come out of this time that we've had to think about things is all this time to think we've been like, well— and research, we found a new product or new material, and we can use ocean plastic to make a hard material. So we can actually start making the shell of our solar-powered speakers out of recycled ocean plastic. And so we're testing that out now, we're shipping over the first sample batch to our speaker factory as we speak. So I'm excited about that. And then there's another like really large-scale project that I'm working on, which is, for argument— the easiest way to call it is an ocean plastic filter. So 90% of plastic comes from 10 rivers, and almost half of that comes from one river, which is the Yangtze River in China. And so we're setting up like a river collection system. We're doing— we're like laying out a prototype for it, and then we're going to put it out to the public to try and raise funding to get it started. But if we can— if we're successful in installing this river filter scooper collector we'll be able to cut ocean-bound plastic in almost half, like 40% in like one river in one spot in the world.
Noelle Tassey 39:08
That is so cool. Wow, I— that's mind-blowing. Honestly, those numbers are incredible. So is this gonna be like, I— mean, I have many questions you can be raising.
Adrian Solgaard 39:22
I took— I took you off the Kickstarter course I know, Sorry,
Noelle Tassey 39:24
But this is, this is super cool. And you know, we were— we're kind of at the end of like what we normally cordon off for fireside chats, but we've— I've got more time if you do. ...put these on the calendar for the hour. So, you know, this is— this is pretty amazing. And really, I mean, from our perspective, again, like I said earlier, Alley, our core mission is to create good change. So this is exactly what we love to talk about. So tell me more. This is very cool.
Adrian Solgaard 39:54
Yeah, so I guess it's been about two, three years that I've been working on like just researching ocean plastic and figuring what to do about it. And all the math keeps coming back to— there's these 10 rivers that are putting it out. 90% of plastic sinks within five months of getting into the ocean. There are some big projects that people are working on that have raised hundreds of millions of dollars to collect the plastic from the Great Garbage Patch. But it's like 90% of that's already on the ocean floor. We need to stop it before it gets out into the ocean. And so maybe it's just my really simple like problem/solution brain thinking like, well, if it's coming out of that river, let's just block it and keep scooping it up, then it won't get into the ocean, right? Like and it turns out that not that many people have thought about just doing that on a massive scale. So it's like, okay, well, so we all agree that this is— the science agrees that this is what works right? Okay, well, let's just do it then. Like we built hospitals in six days for Coronavirus, like China built what was it 6000-bed hospitals in six days. If they can do that in six days, we can certainly do this. So yeah, kind of raising it— raising it and going with it profile-first, going like attention-first and be like, here's this solution we could do, everybody, let's figure out how to do it together. This is probably this— the location in the river that makes sense to do it. But we need the government, we need corporations, and we need funding to just build it. Like so, yeah.
Noelle Tassey 41:21
This is a side venture, I assume? Not under the Solgaard—
Adrian Solgaard 41:24
It's— well, we're in the process of creating like the Solgaard foundation that it'll live under because it's very much a part of the mission of what the brand is, but like we don't have $50 million to build this thing. So it's like it needs to be set up as a non—
Noelle Tassey 41:38
I mean, that could be a totally wild Kickstarter. I would contribute. You would have my pledge.
Adrian Solgaard 41:46
That would be fun, actually. I haven't thought about using Kickstarter for it, but it definitely could be a way to get it started.
Noelle Tassey 41:51
You never know. The power of Kickstarter, we could be doing this again in a year talking about that. That's really cool. So would you like seed that right into your— I mean, like, in theory, you— I assume there's lots of industrial sites in that region. Would you actually just scoop up the plastic and like feed it right into your factory and others?
Adrian Solgaard 42:10
That's the goal is to build like one site where it's like, we scoop the plastic out, it goes into a sorting facility and then from that sorting facility it's like there's a fabric mill on-site, we can make our fabric. And then the stuff that can't be used for fabric goes to another factory there and that can be converted into energy or whatever it needs to be done.
Noelle Tassey 42:26
Very cool. And do you see that you know, sort of the plastics and fabric angle? I know sustainability and fashions been one of those things that like the fashion industry has got a very, let's say, like uncomfortable relationship with and is more and more having to grapple with in strange ways, but it felt like there's still not a ton of action because everyone loves their Zara dress or whatever. Do you see like the sorts of fabrics that you're manufacturing, having applicability outside of, you know, higher-end, tech-focused consumer products?
Adrian Solgaard 43:00
Yeah, for sure, I think you need to be careful with it from a usability standpoint. So using recycled plastic to make clothing, for example, there's brands that will advertise oh yeah, we made this jacket, this sweater out of recycled bottles. It's like, cool, sounds great. But when you put that sweater into a washing machine, the plastic breaks down, that goes into the water system and that goes into a river and that goes into the ocean. Clothing produces about 30% of the microplastics that are in the ocean, which is what fish eat, and then therefore, we end up eating it and it gets into our water, and anyway. So using fabrics for clothing— using plastic for clothing, not a good move. Using it for durable materials, carpeting. upholstery for seating, you know, in permanent goods? It can— it can be fine.
Noelle Tassey 43:48
Yeah, that is super interesting. I did not know that about microplastics. I'm totally grossed out by that. I'm— I feel like I sense like 5 am Wikipedia binge coming on, on those topics so—
Adrian Solgaard 44:05
Yeah, no. Anytime you see like poly-blend, whatever, even companies making hoodies, and they're like, oh, it's made from a great poly-blend, but like, guys, that's not good. That's not— it's not sustainable to make products that break down. So, yeah, there's a lot, there's a lot of education to be done around that. And I think it can be done in a simple way. That's one thing like where we're thinking about ways to raise funding for this, for this larger factory idea is like, well, if we just sell some clothing, and we make sure that the clothing is made in a sustainable way, and it's made of 100% cotton, we could just tell the story about why we're using cotton instead of poly-blend that can help— like basically, it's like, I've got my tunnel vision on like, okay, how do we build this factory? How do we like cut ocean plastic in half? And how like, what are all the bits and pieces we can pull together to make it happen?
Noelle Tassey 44:54
Very cool. I love that.
Adrian Solgaard 44:57
I tried answering someone's question but I think— I don't know if I hit "Delete" but someone had asked a question about where the math comes from for that for the numbers about rivers and stuff. It's widely documented if you— like National Geographic has a bunch of numbers about where that math comes from. And there's different groups that have done research. It's not like— we don't own the research to any of that.
Noelle Tassey 45:18
Very, very cool. I'm so— I'm so excited to hopefully have you back here in a year talking about, talking about this incredible Kickstarter that you're gonna be running to pull plastic out of the river. It's, really, really amazing and definitely the kind of thing we want to see more and more entrepreneurs inspired to do. What would you give, you know, as— since we're gonna have to wrap soon, just last kind of piece of advice to entrepreneurs who are interested in sustainability, and exploring— exploring this and connecting in some way with a deeper mission, right? Like we talk to so many CEOs, and I've had this moment where you think oh, my God, you know, this is why "create good change" is our mission. I sat and I was like if I'm going to do this for the next 10 years, I really want it to be doing something good for the world so that I can keep waking up and doing this for 10 years. But so for entrepreneurs who are maybe trying to find that what, what did you learn from your journey that you could share with them?
Adrian Solgaard 46:22
I think just for people that want— or are trying to find out what their purpose is or whatever, just keep asking yourself you know, what is something that I could keep doing every single day and not lose passion for? And for me, I grew up near the ocean and I love swimming in the sea. I love going sailing, I love being on a boat like anything to do with the ocean is like, I don't get bored of that. I don't get bored of looking out at the ocean so much that it is my background on Zoom. And by doing that, it's a way to sort of hack your motivation, but it's like okay, yes, today I need to do this boring-ass shipment— to figure out how to get this shipment from this place to that place or whatever. And it's like okay, but the reason I'm doing it is for this bigger purpose. So it really can make a pretty big impact on your motivation as long as you're able to pair it to something you actually care about.
Noelle Tassey 47:16
Yeah, definitely. That's definitely what keeps us going. Everyone has those days. I'd imagine especially if you've just raised money off Kickstarter and you're trying to get your product out. I'm sure there are a lot of days of I really don't want to call this warehouse, I really don't want to call this warehouse. So very cool. Well, Adrian, that you know, we're up for today. But thank you so much. This has been such an interesting conversation. I've learned so much. I hope to everybody who's joined us and shared this hour with us, this has been equally informative and fun for you guys. We've recorded this, it'll be available tomorrow on our website Alley.com. So definitely check it out, share it with anybody in your community, especially if they are thinking about raising money on Kickstarter or potentially saving the world through scooping plastics out of a river. Which is one of those amazing things I didn't think I'd be talking about today. That makes me really happy. Adrian, thank you again, and thank you to everybody. Good luck with everything and we'll talk to you soon.
Adrian Solgaard 48:21
Thank you very much. Thanks, everybody. Have a good day. Bye.