Why Pebble Time and Kickstarter are a new model for launching a product

When the Pebble Time smart watch launched on Kickstarter this week, it quickly set the record as fastest campaign to raise $1 million in just 30 minutes.  Entrepreneur and blogger Jason Calacanis summarized it best with his tweet:

As a bit of history lesson, it was May 2012 when Pebble, the second-largest manufacturer of smart watches behind Samsung, set the then total funding record on Kickstarter as they “raised” over $10.2 million.  And now with Time, Pebble claims two of the four most successful launches ever on Kickstarter – the self-proclaimed “new way to fund creative projects.”  Launched in 2009, 8 million people have pledged more than $1.6 billion on the platform, funding 79,000 creative projects.   Kickstarter spends a lot of time focusing on the word “creative” because it’s meant to be a place where projects of all kinds come to life.  Just look at its 2014 Year in Review, where highlights included “saving a neighborhood taco joint” and “TIME named five projects in its 25 best inventions of the year.”  I had a chance to personally experience the power of the platform as my friends at Braxton Brewing set the Kickstarter record for most funded brewery project on the site.

Creative project vs commercial launch?

As a marketer, the part that really stands out to me is the go-to-market strategy that Pebble used to launch the Time as its defense against the upcoming Apple Watch.  The first Pebble Watch in 2012 was truly a “creative project”.  It was about entrepreneurs that wanted to bring their dream of an eWatch to life.  But fast forward to today and Pebble has raised $15 million in Venture Capital, sold over 400,000 watches, and generated at least $60 million in revenue.   Pebble is no longer just a creative project… it is a company and a successful one at that.

With that in mind, Pebble Time might mark a tipping point for Kickstarter in its commercial evolution.   It is clearly the most visible example yet where Kickstarter has served as a marketing and sales platform for a brand product launch.  Kickstarter’s CEO said as much when he recently commented that “The Pebble Time project will show that the real power and utility of our platform is not in money, it’s in community and distribution.”

Kickstarter might be the new DRTV for marketers

Direct response television (DRTV) was once reserved exclusively for the likes of Billy Mays and his infomercials.  But back in the early 2000’s, CPG leaders like Procter & Gamble, 3M, and Clorox started to turn to DRTV as a channel for direct to consumer and drive to retail strategies.  For instance, one of the most successful examples at P&G was the launch of Crest Whitestrips, which leveraged DRTV and channels like Home Shopping Network to pre-seed the market in advance of the mass retail launch.  It was a model that P&G used repeatedly over the next decade for launches as varied as the Folgers Single Cup Brewing System and Iams Savory Sauce.  By seeding the market through DRTV and proving the consumer demand, P&G was able to use those results to secure retailer support.  I would argue that is the exact same strategy that Pebble used to eventually secure its exclusive retail distribution with Best Buy in 2013.

DRTV also shines for the sense of urgency it creates by encouraging viewers to pick up the phone or go to a website in order to not miss out on an offer.  It was the precursor to Woot.com and Groupon, where a time-sensitive offer causes you to take action.  In many ways, Kickstarter is the latest evolution of this DRTV model.    In the case of Pebble Time, if you were one of the first 10,000 backers, you were able to buy the watch for $159…a $40 savings off the retail price of $199.  That offer was gone in a matter of hours which meant the next 30,000 backers could get the watch for $20 more at $179.  It is the exact same sense of urgency that Proactiv used with DRTV to build a $1 billion annual business.

By pre-seeding the market with direct response and a sense of urgency to purchase, Pebble is turning Kickstarter into the digital equivalent of DRTV.

Evolution of Direct to Consumer

Pebble Time is just the latest example of the rise in direct to consumer and the tension it is creating in the traditional retail world.   You have Dollar Shave Club embracing subscription commerce to solve a consumer frustration of paying too much for their razor blades.  Then there are companies like Frameri and Greats creating remarkable fashion brands without traditional wholesale or retail sitting in the middle.  And you have the rise of Digital Shopper Marketing as shoppers turn to their mobile phones and search the “shelves” of Amazon.

Now you have Kickstarter moving into not just funding “creative projects” but being a platform for a brand to launch a new product and drive millions of dollars of revenue in a matter of hours.  These are fundamental changes that will shake the very foundation of retail, CPG and brand marketing in the years to come as consumers and businesses alike embrace these new models.

This article originally appeared in an edited version on AdAge.com on March 5, 2015.

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