How to go from innovative prototype to retail distribution

Is an innovative product enough to grow a small niche market into a booming consumer market?

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Alex Andon (founder of Jelly Fish Art) has perfected aquarium designs for jelly fish and he now has a consumer version ready for the market. With no background in design or manufacturing, he’s created a product that people are raving about and was one of the most popular campaigns on Kickstarter. Find out how he’s managed all this in less than 2 years.

Transcript:

Stephen: Hey, everyone, welcome to another episode. Today I’m speaking with Alex of Jellyfish Art, and we’re going to talk about his new Jellyfish start-up, how he got started, and what he’s got going on, and some general tips he has for hardware start-ups. So Alex, thanks for chatting with us. I appreciate it.

Alex: Thanks for having me.

Stephen: So, give us the 30 second pitch. What is Jellyfish Art? What is it that you guys do?

Alex: We basically started off, we saw how popular jellyfish exhibits were in public aquariums over the past 10/15 years, and they require special tank design so they don’t get sucked into the filters. And people were obsessed with jellyfish. So we came up with the tank design, and started selling the tanks and the live jellyfish as pets online. And it just took off from there.

Stephen: So how long has your start-up been around, ‘cuz you started re-fabricating existing aquariums?

Alex: Yeah, in one capacity or another, it’s been around for a long time, but I’d say we really got our start with Kickstarter in October of last year, 2011, which is where we launched our new desktop jellyfish tank that we are manufacturing to the public. And it was one of their top campaigns and did really well.

Stephen: Which is awesome. I checked it out, and it was huge, right? You were trying to raise a couple thousand and you raised a hundred, or something?

Alex: Yeah, yeah. It was great.

Stephen: It’s awesome. So, Kickstarter was your main source of funding for your new prototype, I take it?

Alex: Yeah. Definitely. Kickstarter is ideal, because the hardest thing about getting a hardware product off the ground is meeting minimum order quantities from the factories. And you need to get those quantities in order to get your manufacturing costs down. And you’re small, and you have a lot of money, so it’s just this impossible gap to bridge. And Kickstarter solves it. You put up your idea. If people back it, not only are they saying “Yes, we want to buy this product,” but they are buying it. They are putting the cash up front, and then you go to the factory, you build it, and get it to them and you’re off and running.

Stephen: And there’s a lot less risk, right, because if you don’t meet your minimum goals nobody gets charged on Kickstarter, right?

Alex: Right. Exactly. So you could conceivably just pitch a product, and if it doesn’t work out, you find something new.

Stephen: So you were only trying to raise a little bit of money at Kickstarter, and then you raised a whole lot. What did that let you do that you weren’t expecting? Did it really compress your timeline, or did it let you ramp up really quickly? What did that let you do?

Alex: Yeah, it just let us grow really quickly. It got us great exposure, so we immediately lined up a lot of great deals with some retailers who ended up carrying the product. And just having all that inventory allowed us to ramp up the operating foundation, as well.

Stephen: So, how many prototypes did you go through? You went from existing aquariums to state-of-the-art custom jellyfish aquariums. How long did that take? What was that process like?

Alex: Countless prototypes. The prototyping process takes a long time. And you can very quickly get a very basic working design, but working out all the little kinks and details takes a frustratingly long amount of time. So, that whole process of product design was probably about a year.

Stephen: Yeah, because you’re not only making a working model, you have to make something that can be manufactured at a reasonable cost, right?

Alex: Right. Exactly. You’re not just finding something that works, but you’re finding something that can be mass manufactured, like you said, and looks good and has a low error rate in manufacturing, etc. And a year actually isn’t that bad for a product design.

Stephen: That seems fairly quick.

Alex: Yeah, I was in a rush. I always am.

Stephen: Can’t blame you. Your background is in biology, right?

Alex: Yeah, I did a lot of marine biology in college.

Stephen: Did that prepare you for this hardware start-up? Was there stuff you had to learn as you go? All of a sudden you’re building something.

Alex: Oh, I didn’t know a damn thing. I literally started with just a back-of-a-napkin sketch, and I still have it on my computer. And we just went from there. And it was a lot of work with the factory, so working directly with the factory helped a lot, because you’re talking directly to the people who are going to be making it, and they know and were not afraid to give input. So they said, “No, have you considered doing it this way, because that will be a lot easier and simpler,” etc.

Stephen: So, how did you learn the things that you needed to learn? You’re going through this process. You’re building the prototypes. Was it the factory helping you out? Was it you had friends who had experience? How did you get the skill sets as you needed them to actually make this thing work?

Alex: It’s the same as you do with any other start-up. You just hustle and find friends who might know something or know someone who knows something, and just ask around. Don’t be afraid to ask questions, and take a lot of risks for sure. But just try to learn as much as you can as you go. And it was definitely a nerve-wracking process, but it worked out well.

Stephen: I imagine so. So, where did you find this factory? Was it you know like Thomas Register, or one of your friends introduced you?

Alex: Alibaba is actually a great resource, and we had someone over there in China where they’re made, helping to find the factory and talk to them. And then, ultimately I went there and made sure that it wasn’t just a guy with a laptop scamming us.

Stephen: So, did you start working with them after Kickstarter, after you had all these funds, that was when you started this whole process or was that before?

Alex: No, we were working with them beforehand, ‘cuz Kickstarter moves very quickly, and those people, as soon as they get the money in that want that product. And manufacturing takes a long time, too. So we were already working with the factory quite a bit before we did Kickstarter.

Stephen: Okay, were they pretty receptive to lower order quantities? Was that something that they were okay with and they saw the potential, or they were really well suited for small order quantities?

Alex: I think we got pretty lucky with the factory. They were a perfect size, small enough that they paid a lot of attention to us, and were willing to do smaller order quantities, but big enough that they can scale with us.

Stephen: Okay, very cool. So when you were building your prototype, did you use a tech shop or a maker space, or was it in your garage …

Alex: Actually, since I wasn’t a hardware person or product designer or anything, and didn’t really know much about it, I really left it up to other people. I found a local, really awesome old plastics shop with these guys who had just been doing it for 40 years, and know everything there is to know about plastic. And they don’t have a website or email address, that kind of thing. And those guys were great for prototyping locally, and then once we got to a certain stage, we would start sending the prototypes back and forth to the factory so they could fine tune it.

Stephen: So, you did all that in a year? It was outsourcing the prototype, manufacturing overseas, and you’re shipping all this stuff?

Alex: Yeah.

Stephen: Which is really cool, because you don’t need to have a background in hardware. Your background is in biology, which is where the jellyfish come into play. So you outsource that, and it didn’t cost a huge sum of money. It was doable for your budget?

Alex: Yeah, I mean, it seemed expensive at the time, because we just bootstrapped this business, but in retrospect, it’s one of the cheapest product development projects I’ve ever heard of. So, we really bootstrapped it and did it on the cheap.

Stephen: And were you still altering existing aquariums at this time, too, so you’re sort of doing the same thing?

Alex: Yeah, that helped a lot, too. And that was a really, in retrospect again, a really clever way to get off the ground. We basically took another company’s tank and retrofitted it for jellyfish. And we were selling that online. So we had this existing business supporting our development costs, and that definitely helped. And then, with a new product you’re bridging this gap between what can I make and what is the market want. And so, we solved one problem. We knew the market wanted this, at least to some extent. So then we just had to figure out a better way to make a new product and connect the two.

Stephen: Yeah, you know that people want jellyfish tanks, ‘cuz they’re already buying them from you. So you just have to figure out, how do I make it a lot easier to do so I’m not sitting there altering tanks, which was great. And then, not only that, you’re proving the market, but they’re paying you for it.

Alex: Yeah, and the age old catch-22 with new products, new hardware products, at least, is you need to figure out whether there is a market that will buy this product, but you can’t figure that out unless you have the product. And you can’t manufacture the product unless you have a huge market that’s willing to place huge orders. So it’s this horrible catch-22 that I don’t think was really attacked at all until Kickstarter. Kickstarter is definitely taking a huge dent out of it, and I think a lot of other start-ups and new technologies will help, too.

Stephen: Which is huge.

Alex: Like rapid 3D printing and tech shop and all this stuff, they are all chipping away at this horrible catch-22 that’s been plaguing us forever.

Stephen: So, what did you learn about Kickstarter? Obviously you’re one of the most successful projects that this site has seen. So what is it that you learned, if you were going to do another Kickstarter?

Alex: I’ve had a ton of people ask me, how do I make my Kickstarter awesome? So, a good video was really key. And we were just copying the other success stories at the time. A good video is key, a good story, key, and certain products do better than others. I don’t think that necessarily all good products will do well on Kickstarter. I think it’s more of the quirky, cool design consumer products that do very well. You can have an extremely useful product that will do amazingly well in the market, but it’s just overly practical and doesn’t have any character, I don’t think it will necessarily do well on Kickstarter.

Stephen: What about the reward levels. Do you think that has an effect? Is there a way that you can create good reward levels or at least take a stab at it?

Alex: Yeah, ultimately it’s a pre-order sale, and so you’re just pre-selling your product at a slight discount from what the retail cost will be. And so, everyone doesn’t their range of rewards, just as you do with any product, so you can capture as much of the market as possible. So, if someone wants to give ten bucks, you give them a pencil or whatever. And if they want to give a thousand, you give them, I don’t know, a handwritten note and a sweatshirt or whatever. So, we kind of did that, too. But the vast majority of people were just preordering the tank.

Stephen: That’s really cool, because your tanks are affordable, but they’re not super cheap; I mean, they’re a couple hundred bucks.

Alex: Yeah, definitely.

Stephen: So you had all those people actually, “Yes, it’s not built yet, but I want it. I’m gonna give you money and ship it to me.”

Alex: Yeah.

Stephen: Which is awesome. I wish all start-ups had that problem.

Alex: Yeah. And I think it was the first live start-up that Kickstarter did, and we had to kind of do this weird thing where Amazon payment services wouldn’t allow us to process payments for live animals, so we did a voucher system, so customers could get the voucher and then can buy the live animals. So, as far as I know it’s the only live animal thing Kickstarter has ever done.

Stephen: You haven’t started a trend? There’s no new aquariums or new animals going out there now?

Alex: Not that I know of. It was a tough loophole to bridge.

Stephen: That’s a really good point, though, because you not only have to build this aquarium, you have to get jellyfish. I don’t imagine that there’s a huge supply of jellyfish commercially available. Maybe I’m wrong.

Alex: That was probably less time consuming, but a tougher nut to crack than the tank design. So what we’ve done is magically found a supplier, now a whole network of suppliers, of live moon jellyfish, and then we’ve also started to breed them.

Stephen: How does one go about finding a network of live jellyfish providers?

Alex: Well, it’s very old fashioned. You just get on the phone and start asking around, and eventually the trail started leading to suppliers who go out and catch aquarium fish, and they will then sometimes see jellyfish and catch them. And then you start to get to know the seasons and stuff like that.

Stephen: So, did that take longer than you thought it would?

Alex: Yeah, and when I first started I was just going out in a rubber boat catching these things out here in the bay. So, I came a long way from that.

Stephen: That’s awesome. So, do you have mentors and advisors, people who have helped you through this whole process? How did you find them? What was it friends, just networking, picking up the phone?

Alex: Yeah, I wouldn’t say we have any official mentors or advisors, but definitely people that we go to to ask for help, for sure, and all the time. We needed a lot of help this whole time.

Stephen: And from your experience, is it the cooler your idea the more likely there is someone to help you, or just the fact that you’re asking them as you want their help?

Alex: For the mentors and advisors or for Kickstarter?

Stephen: Yeah, yeah.

Alex: I don’t know. It’s everything from friends and friends of friends to just people you randomly meet. I don’t know, networking is very complicated.

Stephen: It takes a long time, too.

Alex: Yeah, exactly. That too.

Stephen: So in closing, what would be the lessons learned that you’d want to tell somebody if they were thinking about a hardware start-up? What are some of the general guidelines you could give them? “Here are the three things that you should do or that don’t forget these things.”

Alex: I would say I still think it is pretty difficult to start a hardware company, like it is still way more capital intensive than a software company. Also, as that scales, it gets very expensive, so cash flow becomes extremely important. I think people underestimate distribution, like developing the product and getting it to market is 5 percent of the battle. The other 95 percent is distribution, and that’s a lot of work. And it takes a lot of time. So, if you take the approach of going through big retailers and setting up contracts with large companies who can sell a lot of your product, which I think ultimately everyone has to do, just the sales cycle takes a year. These are catalogs that have to vet the product and test it and take photographs and then print it for their catalog, and then test it in stores. It’s a long process of big companies that move very slowly. So, you can’t expect it to grow like software.

Stephen: And this is a year after you’ve built the prototype, you have something manufactured. You have something ready to sell. It takes them a year from that point.

Alex: Yeah, exactly. And you can be scrappy about it and bring prototypes to trade shows and line up contracts before you actually have the product, and ideally, you should do that. But everything takes a long time.

Stephen: Well, thanks for joining us. I really appreciate it.

Alex: Yeah, any time.

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