Meet crowdfunding expert Heri Rakotomalala and 19 year old Neptune Pine watch founder Simon Tian. Learn how this young entrepreneur raised $800,000 in just months on Kickstarter.
Whether you are a marketer, designer, growth hacker or entrepreneur, this podcast shows you HOW TO create an effective crowdfunding campaign.
Here’s what you will learn:
1. What makes a campaign success or where it can go wrong!
2. The very best campaign creation practices that work
3. How to raise funds leveraging your contacts and press releases
4 How to build a prototype of your unique idea easily and affordably.
Listen and learn!
Full transcription (untouched):
Presenter: Welcome to Learnica Crowdfunding Podcast.
Interviewer 1: Alright everyone. Welcome to the Crowdfunding Podcast. We’re here with Ildar Khakimov and Heri Rakotomalala. It’s a very special edition because we have in our studio the CEO of the Neptune Pine Watch Project, Simon Tian.
We’re going to pick Simon’s brain, hopefully get some useful information for our listeners about crowdfunding. Just to start off is to ask Simon to present himself. Just tell us a bit about yourself.
Simon: Sure. So, I’m Simon. I’m CEO of Neptune Computers. Before I founded the company in May, 2012. I was actually studying in college,in CEGEP, in pure and applied sciences. I’ve always had an interest for technology since very young, and have always been encouraged to try new things, try new ideas. That really brought me to found a wearable tech company last year.
Interviewer 1: Interesting. Can you tell us more about the product itself, like the key features? Just tell us more about the Neptune Pine Watch?
Simon: Sure. The Neptune Pine is a completely standalone Smart Watch, in that it can do voice calls, text messaging, browse the Internet, provide GPS navigation – all of that without the dependency on a nearby Smartphone. It runs on an Android Jellybean operating system. It supports most of the hundreds of thousands of existing applications on Android.
We have two cameras; a front facing camera that allows users to video chat with the watch, and a rear facing one to take pictures. It’s definitely the most feature complete Smart Watch right now on the market.
Interviewer 1: I want to go back to the one thing that’s mentioned about the differentiation, and I guess that’s where it differentiates from all the other Smart Watches out there. We’ve heard about the “Pebble”, we’ve heard about the Samsung Galaxy Gear. Can you tell us maybe in one sentence, how do you differentiate from them?
Simon: The biggest differentiator, as I said, would be the stand alone factor. The fact that it really does all of the features without the dependency on a nearby Smartphone, that’s really the biggest differentiator from what’s currently existing.
Interviewer 1: Interesting. How did you come up with this idea?
Simon: Well, it was about a year ago not even back on January, we were always interested in wearable tech as soon as we founded the company and we saw the smart watches in particular was a very healthy field that was getting pretty huge. And at the time, there wasn’t as many competitors, but we could already see that the current crop of smart watches back then that pebbled the Sony smart watch.
All of them were very good at very specific things like pairing up with your phone to receive notifications – or – acts as some sort of remote control – or – acts as basic fitness data but there was no one smart watch that could do all these of features in one single package so that’s what really brought us to develop the Neptune Pine.
Interviewer 1: Well, it all sounds very exciting. I believe you have very exciting projects here. Now, today is Monday, December 7. I just checked (Kickstarter). It’s at 400 dollars so official congratulations on…Now, let’s go back into that again. We have a list that be inspire by your projects.
First, maybe tell us more about your team like who you are working with. Who is exactly doing what to make this happen.
Simon: Talk about the Kickstarter campaign? Right?
Interviewer 1: We are talking about the Kickstarter.
Simon: Well, I am have been doing most of the posts of the updates on the Kickstarter and replying to personal messages and comment in comment thread. We’ve planned the whole Kickstarter campaign, me and my team. There is Chris Fairchild the CEO and Aaron Wilkins, our CTO. We are a small team of five people internally in Montreal. That being said, I have outsourced a lot of staff like the PR. I have outsourced the PR to deal with all the coverage that we have been getting in setting up appointments.
Interviewer 1: Awesome. We see now the Neptune Pine everywhere; we go to CNET, Egadget, we go to different blogs and even mentioned in media. You guys are everywhere, I guess what people would be very interested in is how did you actually promote it?
Did you have inquiries from the media, or did you actually do any advertising? Did you call all of them?
Simon: What’s interesting is that what happened with the Pine is that we actually marketed it before the Kickstarter campaign. Before the Kickstarter, we actually already had a website running for months. We accumulated a steady flow of followers over the months.
We actually released a website in early 2013, back in February. From that moment we already said, “OK, we have this wonderful smart watch concept that we’re planning to develop. If you guys are interested there’s an opt-in list, a newsletter list or a subscribing list, to put in your email and your credentials.”
We got about 20,000 followers on this project. That’s really what also gave us the green-light, saying that this would definitely have a market of its own.
We got this group of followers and we kept them updated since then with our design process, and our manufacturing, and all that. So, these people were actually following very closely the development of the project. When we launched the Kickstarter, we made sure that these people would know beforehand.
We did a couple of soft launches first. A few weeks before we launched we’d say, “OK, we’re going to launch a Kickstarter very soon.” That’s really what I would think brought us the success that we had.
Interviewer 2: Interesting because, just to go back to talk more about the website. Here in Montreal Harry does light workshops for Crowdfuning . One of the things they mentioned which is very important is having that website. When you had that website, can you talk a bit more about that?
Did you have a video, like a hi-res image, or a video intro explaining the project? How did you actually promote that website?
Simon: You’re talking about before the campaign?
Interviewer 1: Before the campaign, yes I am.
Simon: Before the campaign we didn’t have any videos, actually. We had renderings of the product on the site.
It was product pitch, basically. We would put up these renderings with different UIs. We would say, “OK, it can do this. It can do that.”
“It can make phone calls. It can do text messaging. There’s WiFi, Bluetooth, GPS and gyroscope.”
That’s really what it was. There was no video, unfortunately. Only when we launched the Kickstarter, we launched the video.
Interviewer 2: What about promoting the website did you use services? Did you go to AdWords, Facebook Ads?
Simon: This is what happened. We had a reservation list, like an opt-in list, in January. In August we launched a pre-order site because we were actually getting pretty close. We made it able to pre-order the watch.
And, What was the question again?
Interviewer 2: Just that…as far as the marketing, when that…
Simon: For the pre-orders we did a press release. The reception wasn’t really that good because we didn’t have a platform like Kickstarter to get more attention.
So, yes, we did go to AdWords and Facebook Ads to receive more visibility.
Interviewer 2: Interesting.
Interviewer 1: Was it then picked up by any big publications, you would say, that brought you those, or that you could say, “This was our main source of…”?
Simon: Yeah, basically back in February when we launched the site we actually did a press release saying, “OK, we’re working on this.” We got a ton of attention from press.
We got a “TechCrunch” article and “CNET.” This story just went everywhere. It went to a level that we never intended or planned to be. A lot of the concept drawings that we had at the time actually are still find-able on the Internet.
Interviewer 2: Was that the PR company that you hired that helped you get into “TechCrunch” or was it you by yourself?
Interviewer 2: How did you get into “TechCrunch” in that case?
Simon: We did a press release and…
Interviewer 1: Just by doing a press release?
Simon: …And they picked it up. I guess because the subject was so interesting.
Interviewer 2: Interesting?
Interviewer 1: Perfect.
Interviewer 1: What I found interesting.. like what you just said… you have an existing community around the Neptune Pine vectors. I would say mostly in social media — Twitter and Facebook. I think I want to maybe stress on that…you would say that by having that community was a factor of success for your company?
Simon: Yeah, definitely. Actually, most of our followers were not on Facebook or Twitter, were actually subscribed on our newsletter. We could deliver once or twice per month an update and we saw that the opening rates were pretty high, about 40-45 percent.
Interviewer 2: So we are talking about the mailing list here.
Simon: The mailing list. Yes, exactly.
Interviewer 2: I want to go to the goal. You guys advertised an $ 100,000 goal. Can you talk to us about it? How did you establish that?
Simon: The watch, as it is, is entirely developed already. The technology has been developed. That being said, we need to put it into mass introduction. That involves hefty tooling costs. The biggest cost of all is the purchase of all the different components — chips and components required.
There’s about 150different suppliers for components in this device, so we need to source all of these components a few weeks before mass production begins. Because there’s lead times for most of them of about five to eight weeks.
So we need an injection of funds, if you will, before the manufacture. That’s where most of the funds on Kickstarter would go to.
Interviewer 2: How did you determine the perks for thecrowdfunding campaign?
Simon: Most of all…we do have a retail price set in mind that has been tabulated by determining what our cost of product is and then adding markups for potential distributors, retailers, potential sales reps, commissions. That gave us the manufacturer’s suggested retail price.
What we did with the pledges is that basically we looked at examples. We looked at different samples of existing projects on Kickstarter, looking at how much of a promotion…how much of a deduction there would give to their backers basically.
We saw that it varied around 20 to 30 percent. Most of them were 30 percent.
We’re setting the price of the 16 GB at $335 minus about 30 percent. We’re giving it at $200 to the initial backers.
Interviewer 2: So you would say that this funding of several companies actually a way to reward the early funds contributors — to offer discount for your product.
Interviewer 1: It’s interesting. You mentioned that you were basically analyzing other people on Kickstarter and what it is that they do, and that’s how you determined your own price.
Simon: Yup. And I’d say for a lot of things to look at successful examples and…
Interviewer 1: And not so successful examples.
Simon: Yeah, exactly. I think that’s one of the best ways to learn.
Interviewer 1: Interesting..
Interviewer 2: As you said previously, the Neptune Pine is very inspiring to what you guys have done in very few days. It has really inspired a lot of people. Maybe the question is how did you guys come up to that success. Did you follow workshops, in your tutorials, on your online resources that for advise to put together the company?
Simon: For the fact that we’ve reached our goal very fast?
Interviewer 2: Yup.
Simon: I think that, by far, it’s really the following that we’ve accumulated beforehand and also the product itself. Because if the product wasn’t interesting, we wouldn’t have accumulated a big following.
Obviously, the product needs to be interesting and…Actually in terms of tutorials or video blogs, whatever stuff like that, we haven’t done much. We’ve only done two videos — the Kickstarter video and the homemade one where I showed you the watch.
I’d say it’s really focus on product development, focus on really developing a strong product with a…The branding is also very important and accumulating a good following base beforehand.
Interviewer 2: I saw the company page. It’s a page that I’m checking out almost every day.
Interviewer 2: What’s interesting is that the discussions are on the community, they’re discussing about the different features. Like what’s possible and what’s not possible.
Interviewer 2: Maybe you kind of tell us, now that you’ve reached $400,000, what are you going to do with the next stretch goals. Are there any ideas that you guys are discussing?
Simon: Definitely. We’ve already out in place four stretch goals, which we think will be far reached. The 500k one will be reached pretty soon.
We have a new strap design for the 200 CDMA version that would support…Because right now the plan as it is supports carriers like Rogers, Fido, AT&T.
Interviewer 2: GSM.
Simon: GSM exactly. But CDMA would support Bell, TELUS, Verizon, Sprint. We also added a tougher glass on the Pine, which we’re still conserving different materials for that, as of now speaking. The 500 k goal would be a 64 GB version of the Pine — which has been asked for a lot on Kickstarter.
As for future stretch goals, we definitely want to have as much as possible to incenticize potential backers to back the project. That being said, we need to meet our timeline for January.
We’re definitely considering a lot of stretch goals. I personally think that the fact that the watch handset is easily removable from the strap, I think that’s a big advantage. That we can take advantage of the fact that we can design different straps for your watch. So that’s a potential…How do I say this?
Interviewer 1: Stretch goal?
Simon: Yeah, a potential origin for a lot of stretch goals. And…
Interviewer 1: Maybe different mounts as well? Because I saw there’s some kind of a head or helmet mount.
Simon: Yeah. Helmet mount for the pine as a GoPro.
Interviewer 1: Almost as a GoPro.
Simon: Yeah, because you can record 720p video with defined megapixel camera and…But a lot of our backers have been asking for more RAM, a better display, a better camera, which we are actively looking into. The fact that the Pine is already at the final stages of development it’s going to be pretty hard to meet some of those demands.
Interviewer 2: You mentioned a very interesting number before. You said that you guys have components from over 150 manufacturers, correct?
Simon: Yeah, exactly.
Interviewer 2: How do you manage that? How did you establish 150 relationships, I guess?
Simon: Not exactly. Most of them are components and chips that you don’t need a solid relationship with the manufacturer, per se. You can get it from part distributors.
A lot of distribution companies, like Digi-Key or Arrow, they can actually manage your purchasing. A lot of them, they can take your building materials and do a lot of the purchasing required. In our case we’ve delegated most of that to our OEM, our manufacturer. Development, obviously, has been done mostly in Montreal. We’ve also outsourced a few firms globally to make this happen.
When you design the chip you can use whatever you want. You don’t need to source your chips. After development, that’s when you build a list called the “BOM,” the bill of materials. That basically contains all the chip sets or components that you need to acquire. Then you forward that to some company that can do the purchasing, such as a distributor here locally in North America, or your OEM, your manufacturer in Asia. They can do most of that, year.
Interviewer 2: I also have a question about the manufacturing. Since we’re talking about hardware, and it’s not about software, is there a minimum number of watches that you have to make? Or it’s the other way around. Is there a maximum?
Simon: I guess the backers are interested in it because they seeing lots and lots of orders…
Simon: There’s definitely a theoretical maximum, but it’s a number that’s unlikely going to be attained.
Interviewer 2: You’re saying that you can actually add in any number of backers, be it 2,000, 3,000, 4,000?
Simon: Yeah, yeah, that’s no problem. We can.
At the current capacity of our manufacturing it’s about 300,000 per month.
Interviewer 2: Units?
Simon: Units, yeah. 300,000 units. That can still be increased. If that’s the case it will be a good problem to have. [laughs]
Interviewer 2: That’s true.
Simon: As far as minimum order quantities, the MOQ, there are definitely minimum order quantities, but it really depends on the manufacturer you choose and on the contract that you set with them.
A lot of them will say, “OK, we have an upfront cost that you need to pay,” sort of like a deposit. If you don’t surpass, if you don’t go over a certain amount, the MOQ, then this amount will be paid in full. Whereas if you surpass your MOQ, this amount will actually count as part of the manufacturing. It varies a lot. There’s a lot of discrepancy between different manufacturers and different OEMs.
Interviewer 1: There’s a question that I saw in the startup page. It’s mostly about shipping. Your manufacturer, do they ship directly to the person? Or do they ship to you, and then you…?
Simon: No, we do the order fulfillment here in North America, yeah.
Interviewer 2: OK, I’ve got you. It’s been super-informative. Thank you so much, Simon, for coming in.
I guess the final question would be for our listeners, the people that are thinking about launching their own crowd-funding company, what piece of advice would you give those people?
Simon: I would say to really work as hard as you can to develop a good product because in the end that’s really what matters. Really make sure you have something that’s good, that’s reliable, and that you think yourself would be a good product to have.
The campaign itself needs to be well-planned and well thought out. It needs at least a month of pre-planning. Basically, good preparation, good product development, and acquire a good following before launching the product. Doing soft launches.
Interviewer 2: Excellent interview. This is the reason why we like bringing in people like you, people that actually have been in the trenches and have performed these campaigns. It’s super valid information.
Thank you everyone for tuning in, and we’ll catch you later.