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.

Travel is an opportunity to nurture your network

2015 is shaping up to be one of those years where I am spending more time than I’d like as a patron of Delta Airlines and Starwood Hotels.  In fact, as I write this I am in the Delta Sky Club at LaGuardia in the middle of trips to New York City and San Francisco.  As I was catching up on my Instapaper reading, I came across John Battelle’s post of “Your Network Transcends Time – Care For It.”  John perfectly captured two conversations that I have had in the recent weeks, one with a colleague at Rockfish and the other a friend who asked how I spend my time at the upcoming SXSW event.

First with my colleague, we had one of those trips where we were going to be traveling across the country to two different cities for business pitches.  The first stop was the West Coast, which meant we had to fly in on Sunday in order to make the pitch on Monday.  So I took advantage of the extra time and organized two different meetings with former colleagues / friends on Sunday and then another breakfast meeting on Monday before the pitch.  We then flew to Missouri for a pitch on Tuesday, where I once again scheduled two separate coffee meetings with friends who lived in the town where we were pitching.  My colleague remarked that I seem to make it my mission to have every single hour booked with something when I’m on the road.  That very topic came up again with SXSW where I talked about the meetings I already had lined up for the entire time I’d be in Austin for SXSW from Thursday night to Sunday morning.

What I have found is that people have different philosophies when they travel for business.  Some focus on the single task at hand that is the reason for the trip.  So they spend their time locked in the hotel room getting ready for that big meeting or presentation.  Others use it as a time to connect with their co-workers, sticking together and going to dinner with the people they are traveling with.  I take a different approach and view every business trip as an opportunity to “care for my network.”  In particular, I am a big believer of the statement that Battelle made in his post when he wrote:

You’re only as good as your relationships – and those relationships often exist outside traditional boundaries of time and space.

Over my career, I have always been in roles that were external by nature.  So in just about every city that I have to travel for business, there is someone from my past that I might be able to reconnect with – whether it is a former P&G colleague that moved to a new company or a startup founder that I had met in the past.  I believe that catching over email can only go so far and thus I love to grab a cup of coffee or a drink with people when I travel to a town.  Those discussions always take a different direction that if you were just catching up via phone or email.  But I also think it is important to expand your network as well.  So for instance on this most recent trip to New York, I not only caught up with some old friends but I also planned meetings with folks I had never met in person.  One was an entrepreneur that was launching a new Brandy and wanted advice on fundraising, while the other was our new contact at a partner company of The Brandery.   Both were fascinating conversations that were well worth the investment of time.

This approach is not for everyone but its one I find works best for me.  And its why my next item on the to-do list is pinging some friends about the next city I’m off to, as well as finalizing that schedule for Austin and SXSW.

How To Stand Out When Applying To The Brandery

Did you know that getting into a top tier startup accelerator is actually statistically more difficult than getting into Harvard? For its Class of 2018, Harvard accepted around 5.9% of their 34,000 applicants. In 2014, The Brandery accepted half that percentage with <2.5% of applicants being offered a spot in the program (a number we consistently see with other top-ranked peer programs).

So what should a founder do in order to get their application to stick out? After reviewing thousands of applications over our five previous classes, here are a few best practices I have seen work to help your startup stand out from the crowd. None of these are hard and fast rules, but more what I personally look at when I am reviewing our applications.

1. Become a known entity

If there were only thing that a startup could do when applying to The Brandery, this would be it. It amazes me how many startups apply for The Brandery but do not do any personal outreach. It is pretty easy to find out the decision makers behind our program. All of the founders and staff are listed on the website. All of us are very open about our contact info with emails and Twitter. And we hold a ton of events during application season where you can meet Brandery staff, alumni, and mentors in person. Yet despite this, an amazingly low number of applicants take any steps to reach out beyond their written applications. One of the keys to standing out is to have champions that believe in your team and your company. You can increase your odds of finding those champions by putting in the extra effort to meet the people behind the selection process.

2. Get a personal introduction / endorsement

Speaking of finding champions, one of the best ways to stand out from the crowd is with a warm introduction from someone in the Brandery network. We have an amazing group of mentors, investors, and alumni that are part of The Brandery family. If I get an email introduction from any of them telling me that “so and so startup is applying for The Brandery and they are awesome”, then I put that application on the top of my list. For instance, we had one application a few years ago that had a so-so initial product. But right before they applied, I received an email from an investor I trusted who said the startup had “one of the best mobile product teams” they had ever seen. Needless to say, that type of endorsement changed how I viewed the application right off the bat.

3. Do not be a “Me Too” Startup

Every year, The Brandery receives around two dozen applications that are best classified as “Me Too” Startups. The common theme of these companies is that they are a small twist on whatever the hot startup happened to be that year. When Groupon was gearing up for an IPO in 2011, we had an influx of companies with takes on the Daily Deal space. When Instagram was bought in 2012, our application inbox was flooded with photo startups. The shame with these applications is that I often don’t spend the time digging into the team because I’ve already dismissed the potential of the idea right off the bat.

4. Prove your hustle instead of telling us about it

Every startup talks about having the perfect “Hacker, Hustler, and Designer”. But it is interesting how often The Hustler actually doesn’t show their hustle. If you want to see hustle, talk to Michael Wohlschlaeger, CEO & Co-Founder of Ahalogy. When Michael applied to The Brandery, he and his wife were living in China. That year, The Brandery was having a “get to know us” happy hour during applications at a local bar in Cincinnati. Michael showed up at the event, where we learned that he flew from China to St. Louis (where his family was from) and then drove six hours from St. Louis to Cincinnati— just for the happy hour. That is the definition of hustle. I knew at that moment I would place a bet on Michael as an entrepreneur no matter what. Since Ahalogy has been ranked the fastest growing startup in Ohio the past two years, I think Michael has lived up to that reputation for hustle.

5. Apply early

Do not wait to the last minute to apply. Yes, the final deadline to apply is April 16th, but don’t make the mistake of waiting that long. All of us are reading applications as they come in, and I personally have a ranking of my top 10 applicants that is evolving in real-time. If your company has applied early, that has given me a longer time to learn about you, the company, and your team. I have been able to research the space you are playing in and talked with other investors about the opportunity. If you apply at the last minute, you are “forcing” me to make a quick decision about whether you should be a company we interview and accept.

All that being said, applications to the Class of 2015 are open now. The deadline is April 16.

Never Stop Fighting ‘Til The Fight Is Done

Hanging on my office wall is one of my favorite prints that I bought a few years ago in Chicago.  It is a quote from the movie The Untouchables that reads:

“Never Stop Fighting ‘Til The Fight Is Done”

That quote has come up in at least three conversations this past week as I talked with people about what makes an entrepreneur succeed.  Through five classes at The Brandery, we have seen nearly 50 startups come through our doors with our fair share of successes and failures.   And while it is tough to point out one thing that separates the companies that make it from the ones that don’t, there is a common thread.  The ones who make it are the ones who “never stop fighting”.

The life of a startup is one hell of a roller coaster.  Even the companies that ultimately succeed go through their fair share of moments where their backs are against the wall and the future looks bleak.  It is in those those moments that it is easy to quit.  To take the fall back option that they all have.  After all, the entrepreneurs that walk through our door at The Brandery come from remarkable backgrounds.  We have folks that were in Med School, were working as a Product Manager at Google, or were running very successful digital agencies.  It would be really easy for any of them to throw in the towel and go back to that world they came from.

But the best entrepreneurs are not wired that way.  Once they have gone down the path of starting a company, they do not want to go back to the world they came from.  For them, failure is not an option.  Or said differently, failure would be going back to what they were doing before.

I was reminded of this when I recently sat down with one of our Brandery alumni.  This was a company that had moved here from the East Coast and stayed in Cincinnati when they raised their seed funding.  Over the last two years, they have been cranking on their MVP but it never really got to product/market fit.  Fast forward to today and some folks would have hung up the towel.  But not these guys.   For them, the fight isn’t done.  Instead, they bootstrapped a little more capital and are using it on a new concept.  And this new concept might actually be bigger than their original idea.  They could have given up many times along the way but quitting just isn’t in their DNA.  Sure they still might fail…but they won’t be a failure.  These folks gave it their all and I know they put everything into it.  They did not just quit because things were tough.

Even after 5 years working with startups at the Accelerator stage, I am still trying to figure out how you determine if someone is wired this way.  It is a trait that is rarely going to show up in the “resume” of a first-time founder.  But it just might be the single most valuable trait an entrepreneur can have in succeeding in their early days.

The Truth of Selling to Brands vs Agencies

One of the constant questions that I see startups wrestle with is how to think about the selling process of brand marketers vs their agency partners.  Frankly it is a question that does not have clean cut answer.  But, it is a question that I think I am well positioned to at least help with since over my career I have spent two-thirds of my time on the brand side (P&G) and one-third on the agency side (Rockfish).  So how should startups handle the brand vs agency debate?  In my eyes, there is not a single answer but instead several questions that a startup should consider as they build their selling strategy:

Question #1:  Brand Tech? Ad Tech? Retail Tech?  Which budget would your service come out of?

Not all marketing budgets are created equal and not everyone on a brand has equal control on those budgets.  It is vital that a startup realize the type of spend that their company would fall under.  For instance, if you are a media buy or asking people to purchase based on CPMs than you are most likely AdTech.  And as such, you are not going to have much luck pitching to a Brand Manager.  In most cases, especially with the rise of programmatic buying, brands have empowered their media agency or internal media group to own all AdTech decisions.  For all but the largest strategic discussions, marketers turn over the decision on which sites to buy and do not even begin to get into the details of things like real-time bidding.   If you are a shopper marketing play (ie Retail Tech), then you need to be talking to the marketer (and their agency) that owns the relationships with their retail partners and customer teams.  Or if you are Brand Tech / Digital Marketing, then you are probably talking to the Brand Manager and their digital agency.  Startups can waste a lot of time and energy having meetings with people on the brand that really do not have a say on making the buy.  Figure out which budget you fit into and then map the right relationships based on that.

Question #2:  Who is impacted by your product? What work would take place to implement it?

While there is often a single decision maker that gives the go / no go decision on working with your startup, there is a good chance that decision will impact a multitude of folks on the brand and agency side.  Those people can become champions of your solution or there is an equal chance they can become a poison pill that kills the deal.  It is important to try and gain a 360 degree view of the landscape and how your solution might fit.  For instance, many brands are currently working on global templates to bring a common architecture to their websites globally.  If you are attempting to sell a social media content hub to the brand team in North America, you will have to realize the impact that would make on the global template work that another team might have been working on for over a year.  As the worlds of the CMO and CIO continue to blend together, the need to understand the impact of your solution is more important than ever.

Question #3:  Are you selling a “test & learn” to start or a broader implementation?

When a startup first sells to a brand marketer, they quickly learn the term “test & learn”.  Think of it essentially as a trial or foot in the door with the brand that lasts a set amount of time (and usually is under $50K at max).  Done right, it can lead to a bigger long term relationship.  Done poorly, it can mean you have shot yourself in the foot and ruined any opportunities in the future.  Some startups try to inherently avoid test & learns but that is a dangerous path.  Instead, you should focus on clearly defining the success metrics of the test & learn and what next steps would look like if those metrics are met.  Excuse the bad analogy, but you want to think of the test & learn as the engagement period that will hopefully lead to a marriage.  Even in those situations where you are pitching a much broader engagement (for instance switching to an entirely new Content Marketing Platform), the startup should look for a way to get a brand to dip their toe in the water.  If you have a great product that truly solves a problem that a brand faces, this trial can be what ultimately leads to you winning the business.

Question #4:  Have other brands or clients at the company / agency worked with you before?

Most startups learn about the concept of social signaling when first dealing with investors.  Well the same holds true with brand marketers and agencies as well.  If your startup has worked with another client at an agency, they are going to do the due diligence of finding out what worked and what did not.  And they will do the same if you have worked with another brand within a company.  You can use this to your advantage as well because marketers like to know that someone else has taken that first risk on your startup and worked out all of the kinks.  And frankly even more importantly, they know that someone else has the scars on their back from doing the hard work of getting your startup through legal and set up in their purchasing / payment system.  That seems like a small thing but it is actually a very big thing for most folks.  On the flip side, if this is the first time your startup has worked with a certain company, realize that you are asking that person on the other side of the table to not only say yes, but to also be a champion  for you internally.  You need to reward and recognize them for the extra work that in many times they will be doing on your behalf (this holds true if its on the brand or agency side).

Question #5:  What is the role and authority of the person you are talking to?

One of the biggest mistakes that a startup makes is not understanding the person they are selling to.  In general, they make two types of mistakes in this regard.  The first is they assume the more senior the person is, the better for them to sell to.  For instance, just last week a startup sent a LinkedIn message to the President of a large CPG that I know.  This President has overall Profit & Loss responsibility for his division yet this startup was trying to get him to meet to talk about a small digital activation of less than $100K (a rounding error in his budget).  The second mistake is that they don’t understand the role the person has within the organization.  There is a big difference between a Brand Manager that has budget responsibility and an Innovation Manager that is responsibility for exploring new areas.  Its not that one is better than the other but instead their internal reward structures are different.  For instance, the Brand Manager is going to be measured on growing their top and bottom line of the business – not on creating a new innovative marketing campaign necessarily.  Likewise on the agency side, the Account Director might not “own” the budget for the client, but they likely have one of the closest relationships and ability to convince them why it is worth taking a risk on a new idea.

If a startup goes in understanding these questions about their business and the company they are talking with, it will help them figure out the right path to explore.  There are amazing opportunities for brands and startups to more closely collaborate but it will take both sides working to make the most of the relationship.