Amazon FBA Seller Round Table - Selling On Amazon - Amazon Seller Podcast - Learn To Sell On Amazon - E-commerce Tips - Shopify & Woocommerce - Inventions And Start Ups - Marketing School For Amazon Sellers
Launching Ecommerce Business and Crowdfunding- Amazon seller tips with Mark Pecota (Part 1)
Manage episode 297814175 series 2492296
A.Mark Pecota - Part 1
Transcription in this episode:
[00:00:01] spk_1: Welcome to the seller, roundtable e commerce coaching and business strategies with and er, [00:00:06] spk_0: not and amy Wiis. [00:00:08] spk_1: Mm, Hey, what's up everybody this is Andy are not with and this is still a round table number 100. We get Mark Takata on our lucky [00:00:23] spk_2: 100th [00:00:23] spk_1: episode winner. Mark Welcome [00:00:26] spk_0: 100 [00:00:27] spk_1: Well you're 100. It's pretty, pretty special episodes actually. Yeah. Welcome Mark. So Mark, we always like to start out with a little background on you just to get people to uh, get your, your street cred so they believe what you're saying. And also we just want to know about you. So if you can tell us, you know, as little or as much as you like, we like to go back to like where you were born, where you lived, your struggles, your past jobs, college school, you know, any of that fun stuff. [00:00:57] spk_0: Yeah, definitely. So I'm from SAN Jose originally, um, that's where I was born. And then, I mean the big, the big shift in my life really came when I moved down to SAn Diego. So that's actually where I'm at right now. Been down here since 2000 and eight, came down here to go to college. Uh one of my friends, when I was in high school, he went down to come visit first and he said, hey, The girls down there are the most beautiful woman I've ever seen and by that point as they think I was a 17 year old kid, I was pretty much sold. But anyways, I went down to San Diego state and I was actually really into music at the beginning. I was, I didn't even see in the background somewhere but guitars hanging up and stuff, so I am, but I always thought I was going to be doing music as a career, then it got really into electronic music and there was a moment when I got into, it was my senior year of college that I really had a big transition state where I remember I was actually at a show and I was looking up at the DJ and have this moment of clarity where I actually couldn't see myself being living that life, and it was this really strange moment of clarity I remember, but I went back home the next day and and, and woke up and thought, you know what, I need to do something else, going to my senior year of college, and that was when I started really getting into entrepreneurship in general, I would say, you know, the music was always like an entrepreneurial, uh there was an entrepreneurial aspect of music I think, and then I even come from an entrepreneurial family, my grandpa starting a business that my, my dad ended up taking over as well. Um But I really got involved in something like all the entrepreneurial scene that was in SAn Diego. And SAn Diego State actually has done a great job facilitating that. So flash forward for my last year SAn Diego State, I ended up getting a job at this place called the booze consulting company that still exists and besides like really diving into the whole digital marketing world, the other best part about it was I met two of my current business partners, I still work with today and I remember one of the guys name is Tommy Dorian. He said he's like uh instead of going and getting a job, why don't we just try to do this digital marketing thing ourselves? Was like, all right, great, we're gonna get clients. He's like, you know what, I actually have a lead right now, It's this law firm that used to be in my fraternity at U. C. S. D. I was like, all right. And so we put this proposal together. I still actually have it somewhere in my room. It's like a frosted over cover and all this stuff that we got probably made at like Fedex office or something And a $5,000 package. And I remember they took it and so we're like, all right, we're in business, we're doing God knows what. So that that that started our journey and the beginning of our company called label creative. So this is right out of college in 2013. And we did that for a few years and I would love to tell you that it was some super innovative company that we were starting, but it was really nothing different than any other creative agency that was out there. We were doing website design, work, video production branding, mostly really just trying to hustle and keep the lights on because we were making hardly any money at that point. Um and there was a, there was a big shift where actually in 2014, 1 of our clients came to us and he said, um hey guys, like I have this product that I want to launch on Kickstarter, and we had heard a Kickstarter, um we had never done anything on it, so we just helped him launch uh by doing the video production. So we did a Kickstarter video that ended up raising $78,000. It was a product called Eco Q, like that was pretty cool. One of our other clients saw that came to us and said I want to launch a product. So we helped him launch on Indiegogo did a little bit more. We started to learn more about the pre launch process, which is like doing lead generation before building a community before. Um and that one did 100 and $1000 and then to go go, it's called One Hour Break. And the first client came back to us about a year later with the new and updated version of their products and it's called Eco KFC. And that's what really got involved to a much larger degree and really discovered why it's so important to get funded on the first day. And we ended up doing $375,000 in that project. This is still under the guise of label Creative. Um and so after the end of that last Step, third project that has told you about, also read this book called Built to Sell. I don't know if anyone in your audience has heard of it, I would highly recommend it. And really, it's a cool book is that it's teaching you business principles, but it's it's written like a fiction And it's telling the story of this creative business owner that has been doing it for 15 years. He's like, you know, we're successful, we're in the multimillion dollar range, I'm ready to sell this thing. He goes to his friend that's an investment banker and when he learns that his company is basically worthless because they're not doing anything that's unique, it's not scalable. Um and he realized that he needed to make his thing about his service business more like a product. And so I felt like I was reading My future, you know, this is like the path that we were going down, they will create a kind of like, a similar moment of, like, in the club, looking at the DJ being like, I don't want to do that, like reading this book and being like, I don't, I don't want to do that. And so like when the vision got blurry, it's like, okay, I need to figure out what's the new vision that we want to create. And so using the principles of this book built to sell, we realized that we wanted to create more of a uh, something that was more nick niche and much more product Ized. And so looking at those three campaigns on crowdfunding were like, hey, we did the same thing from A to Z to get this end result. It's super niche, super Product Ized, and we can charge like one rate for this thing instead of having custom packages. And so long story short, we ended up, Um yeah, there's a link to a long story short, we ended up re branding our company from label creative to launch boom at the end of 2015 and our mission was to essentially help entrepreneurs take their product ideas and show them how they can launch it through crowdfunding. And since that point we've grown our company to 60 people fully remote team um spread out all over the world and uh we've, we've been helping a lot of entrepreneurs, hundreds of entrepreneurs and have plans to do much bigger things. [00:07:21] spk_1: Awesome. That was an extremely thorough backstory and I love it. Usually people are a little bit shy and don't give us the whole, the whole shebang. So I appreciate that um you know, my journey as an entrepreneur started when I was like 19, so if you ask me like how many hours do you have? Right, But I love, I love all of that kind of, you know, the pivoting the, you know, you know, failure or this thing is not working because a lot of times in the amazon com, you know, digital products in general space, you know, it's the, it's the Lamborghini dream, right? They see all the Lamborghini gurus and they think it's going to be just super easy, I can spend, you know, a couple grand, you know, I'm gonna build this empire in amazon and sell it for like millions in a few years. Um you know, so I love to kind of get here more about the grind to give people kind of the real story that, you know, there's a lot of things out there that can help you uh but it's gonna be a grind and you know, the person's shoulders that that you're gonna have to stand on on your own. Um So I I love I love that a lot. Um But let's get to what what what you're here for, which is crowdfunding, crowdfunding. Uh you know, I've been dabbling in it, I've never launched my own, I keep like having it on my to do list, right, as one of those things I need to do, because I have a I have a couple of inventions, I also have some uh you know, digital products, things like that, board games, a lot of things that I could, I think would have a great crowd funding, you know, uh launch, but it just seems like there's a lot of work involved. Um So before we get to that though, like where did you learn about crowdfunding? Where did you see the opportunity and why did you start digging, You know, into it a little bit more? [00:09:01] spk_0: I mean, it kind of hit us. It was like being hit with a brick in the face maybe a little less painful, but um you know, I mean it really came to us, it's like with the clients echo cube and then one hour break that you go keep see. Um but we started to really dive into it and there was this post actually that was written on tim Farriss blog, um forgetting the name. It was called packing, packing Kickstarter. Sorry, of course. Um that was actually pretty influential as well. And they talked a lot about building like pre launch email us as well. Um and so I mean that's that's like how it came to me, but why it was so powerful was because you literally don't need to manufacture your product in order to generate hundreds of thousands if not millions of dollars in the course of a few months, which sounds crazy, but we watched it happen multiple times, and you can go on the crowdfunding sites now and see what's happening, and you'll go on Kickstarter and Indiegogo over the two most popular crowdfunding sites, reward based crowdfunding sites, and they will claim that they're not a store, which is true. It's like technically a donation, it's kind of weird. Um, but if you view it as a pre order platform, like that's essentially what we're doing, and so let's say that this is like a new product that you have, all you have to do on crowdfunding is to have one prototype, and then you can do all the marketing around it, and then you can pre sell it to an audience and generate all the money up front to then go manufacture your product and hopefully get some price breaks on the manufacturing as well. Um, But the biggest thing I like to like to say is that, I feel like crowdfunding is distributing risk, so it's instead of having a risk so focused on the entrepreneur themselves and like whoever might be investing in them, um, instead of your distributing out amongst your backers, so like, these people are pre ordering your product and they're taking some risks to, because you as entrepreneur needs to take that money and you'll make your product, and there are some failures for sure, crowdfunding. Um, it's a real thing they're scams to, unfortunately, it has cleaned up quite a bit, um, but the whole distributed risk concept, I think it's something that a lot of people don't talk about, but at the end of the day, that's that's really one of the most powerful aspects of crowdfunding, I think. [00:11:35] spk_1: Yeah, absolutely, and and some of the things that come up so follow up. One of the things that I want to point out that you mentioned not only in your business but I think relates a lot to crowdfunding is M. V. P. Right? If you guys don't know what that means it means minimum minimum viable product and what I love about you know you do this a lot and then in the software consulting kind of world. But it could be true for amazon as well right? So like we have a course that we teach called sourcing small and it was like you don't need a label, you don't need a brand on it. You don't know you just you're putting the product up to test the demand right? And so I love that. You mentioned that because for you said oh my customers brought me that idea and that's why it's so important to get your service out the door and then solicit that feedback from your customers, like the people who know what they need the most are going to be the people who are trying to hire you, right? So if you get into, you know, you got into this consulting work and people are like, well, you know, my need really right now is kick starter and you probably heard that over and over again. You guys are like, oh, wait a minute, Yuriko, right? Um, and I think that, that you know, type of ideas can be completely related to uh, Kickstarter, right? I mean, you like, you were saying, you can go with even like a three D cad that is, you know, really detailed, that looks like a real product that you can then put in a slice into a video and then you got, you know, you technically got a product there. Um So one of the one of the other things though that I'm super interested in because we actually hit this issue with one of our products um that we're thinking about launching on Indiegogo is you know once you put your product out there if you don't have a patent or something like that then you get these and I've heard this happening a lot now where a lot of chinese companies are are stalking Indiegogo and Kickstarter for ideas and they knock off these ideas. They might iterate on them a little bit. Um And then they can push them to market even before the Indiegogo or the Kickstarter is over. Um You know how are you or your clients how are people protecting their ideas once they go up on those platforms? [00:13:31] spk_0: So I'll just first off I'm not an expert when it comes to all the patent law or even the I. P. Protect protection, I'll be honest, but I'll say in doing this for the past five years has happened actually very few times for the hundreds of projects we worked with. Um Or it's actually been something like really really serious for the company. I think the one that we experienced that was really bad was this company called Net Comic 1.6 million uh in our launch. And uh it got knocked off almost immediately like you were talking about. And I mean the thing with their product like it wasn't very complex, it was it is what it sounds like it's a hammock for your neck, but it's for like McKinley, it's like a cervical traction, that's how it works. Um So we've got knocked off really really fast. Um So I guess when it comes, whether its products or services or anything like that, like sure there is a level of protection that I think should be put in place when it comes to getting patents and some type of IP protection and just being, you know, having some common sense in general about not trying to give too much of your secrets out, but like, again, whether it's a service or product, I truly believe that I don't like to lead with like fear. It's really trying to, for for example, I trust myself to be able to execute better than my competition. They want to try to copy the stuff that we're going to do, like go ahead because we're gonna be, I don't know that it sounds arrogant, but it's like how much we trust in our team for example, and this might be going a little bit off topic, but just really quickly, like we share, I'm sure I'm going to share, I'll share as much as you guys want me to about how our process works. We'll share how our process works and really excruciating detail and we have, we have competitors that copy our stuff now, that's fine with me, like totally fine. I want to spread that out, I think we're going to do it better. Um, so anyways, competition is just part of the game when it comes down to it and I just think like, don't, I just try not to leave with fear as much and try to execute better than everyone else as much as possible. [00:15:42] spk_1: I love that. Cool. Yeah, that's that's that's that's a huge one. You know, as an entrepreneur, people are always so fearful of, you know, I can't reach out to that person because there's this big name or they, you know, and what I've learned, you know, it's, I'm 43 years old now, so what I've finally learned is that, you know, you don't have the old adage, you don't, you won't get what you don't ask for, right? So, I mean, you got to really get out there and, and, and uh, you know, not be afraid to launch the product to test the thing, you know, to do whatever it is that's kind of holding you back, you know, I keep trying to teach my cure that my kids that fear is a useless emotion, right? And I don't mean that in terms of like, you know, there's there's the intrinsic fear of being a human, right? Like somebody swings a fist at you, you're gonna, you're gonna move out of the way. But I mean more so in terms of, you know, putting self limitations like listening to that that voice in your head that says like oh you've never done this before, you're not good enough for you know, those kinds of things. So um yeah I agree with you, you know, if that's holding you back, you know for a year, two years then what good is it? Right? Like it's sitting on the shelf because you're too afraid that somebody's going to knock it off rather than just getting it out there and and trying it, you know, So I completely agree that uh you know sometimes it's just worth it to just hit the ground running. Um [00:17:00] spk_0: Yeah, I mean we get we get we get a lot of people that you know want to like sign N. B. A. And do all the stuff we usually will, but again there's there's all the people that have been so cautious about their products. I've never seen any of them due to, well and this is like, I know very anecdotal. But um I'm just thinking about it now. It's like there, I feel like they're leading with a lot of fear and then there's a lot of people that are even worried about putting up a landing page before they go to launch their products because someone will find it and rip their idea off. I'm like, guys, it's like the chance of that happening is like so tiny. You know, and you really don't believe that you can, you have a product that's like you're gonna be able to execute on better than anyone else. Then I don't know if you're even the right team to do this. Um, to a circus. Huh? Might be using some strong language there, but I think there's a lot of fear when it comes to it and it's usually unwarranted a lot of the bigger guys don't really care. I don't think, I think that the chinese, you know, or whatever, like other other countries looking at together and started looking to knock it off is blown out of proportion a little bit. Um, there has been some very widely publicized cases of it happening. Fidget cube is probably like the biggest one you guys have heard about that one. Um, so it does happen, but it doesn't happen as much as I think a lot of people think [00:18:27] spk_2: and I think that, you know, in the inventors community, there's definitely that fear. Um, and you're coming to dr inventors group, which will be really cool and it will be kind of from that fear aspect, I'm sure you're going to get a lot of questions. Um, but any product that does well is going to get knocked off, whether it's patented million times or not, if it does well, it's going to be, it's going to get knocked off, So, I mean, you know, I think if you look [00:18:56] spk_0: at it, like you said [00:18:57] spk_2: with that, with a view of like, have confidence in what you're doing, of course protect yourself, you know, take the time to, to do the necessary intellectual property on your products, but at the same time, get out there and launch with a bang so that you're not having to worry about, you know, [00:19:18] spk_1: these little [00:19:19] spk_2: people that just put a copycat on amazon or something, you know? Um but yeah, either way it's gonna be, you're gonna get knocked off, no matter what, [00:19:28] spk_0: I would be more cautious about it going the other way, like creating a product where you're infringing on someone else that might be large, that's going to then shut down your campaign because we've actually seen that happen more. Um where someone, you know, either works with some manufacturer that like, creates their product and they work to design the product with them, but it ends up infringing on someone else's patent and kick start on Kickstarter Indiegogo. It's like no joke, if they get someone saying that you're infringing on the patent and it looks like it might be true. They'll start your campaign down and we've had the campaign we were working on where In the 1st 48 hours we had raised somewhere close to $200,000. And without the creator knowing that he was infringing on a patent, the whole thing got shut down, lost all the money, all that. So as a creator, in my experience, I would be more worried about that And like really, really, really not. I mean part of the people, usually the people that get shut down are taking some shortcuts, I will admit like they might be working with manufacturers that, you know, aren't the most reputable and they might be using products that already exists or something or designs that are patented. So I think the due diligence process, the beginning is super important. But I just thought it was interesting thinking about it. I've seen it happen more the other way where creators infringe on other people's patterns in the other way around. [00:20:54] spk_2: Just a quick follow up question on that, you mentioned they lost all the money. So does Kickstarter Indiegogo to these platforms have a policy where if you are found infringing you forfeit everything. Are you able to actually refund those investors and or those backers and then just move on? [00:21:12] spk_0: Yeah, the backers get all their money back. So [00:21:15] spk_2: it's at least not. At least not. You haven't pissed off a bunch of people at the same time. [00:21:20] spk_0: Yeah, It's just typically there's, there still is investment going into these campaigns to make them happen. So there will be lost money and time, you know, But yeah, you're right. It does go back to the backers. Mm. [00:21:36] spk_1: So, uh, Mark, one of the things I'd love to go into is just kind of the basics of, of your crowdfunding strategy. So, you know, say somebody comes to you that hey, they say, hey, I have this widget, you know, I want to launch it on Kickstarter. Um, you know, kind of, what are the early steps that you guys uh, take? [00:21:55] spk_0: Yeah, sure. Yeah. So we break up our, our system into three phases. We call it test boom, launch boom and scale boom. And so test boom at the beginning, it's where this came from. Was at the, when we first started our company, we did no like testing, meaning that if you can to me and said how, when I launch launch the product and go like really big with it, it's a great, it's going to be $50,000 to do this, $25,000 to ad spend and we'll do everything from the video production etcetera, etcetera to make this thing happen. The thing was that once we started actually working on a few of the projects, um, we'll see at the very beginning. I would almost say it was luck where we had a lot of big successes at the beginning and then we started to have some projects that would pay us that much money and it became really apparent once we started advertising that it wasn't going to be a fun launch. It was, there was a lot of challenges in getting this thing to really have, really stick in the market. There wasn't really a product market fit and but we were committed to launch, etcetera, etcetera. So there was some painful launches, let's put it that way. And so we realized that like, hey, let's, let's test these products first and really get a better idea of the market validation for the product. Um, what the best audiences are, how we should position this thing. So that's where test boom came in. So people come to us and all of our clients get through the testing process and how this works is that you'll come and you'll send us your prototype or to our studio in downtown SAn, Diego will build all the marketing assets with the lifestyle photography, will then build a whole website landing page and funnel, um, for, for the product. And then we'll do all the messaging around it, like how we should position it and come up with different angles that we want to test, different audiences that we want to test And then we start to drive. Um, we do $3,000 in advertising on facebook and instagram down that funnel that we created. Now, the funnel is like the most important part because it's broken up into multiple steps. The first step is that we're asking for their email address, so, like lead generation. Um, but where it really gets interesting is that in the second step of the funnel is where we say, Hey, you're in now, you can put down a $1 deposit to reserve the product when it launches. Okay, so, and the reason why they would do that is because if they get the best discount that will offer by putting down that $1 deposit more so than you would if you just give us your email and that's how you become a VIP, is what we call it. And so a lot of people ask us like why a dollar, you know what, what does that really show? We found that if someone that puts down a $1 deposit is on average 30 times more likely to back your campaign or buy your product than someone that doesn't like someone that just gives you their email address. So it really is a much better sign of quality of the list than just an elite. Um And so what we can do is we can start to optimize the advertising based off of a better indicator of purchase intent than just, you know, lead intent. And so we build up a large audience during this phase, um, at the end of the day, at the end of the test we're trying to do is say, okay, now we know what the best audiences, how to position the product and what we think the expected return on ad spend will be if we launched this product and we present that all to the client and then we make a decision whether or not we want to go into phase two, which would be our launch Moon phase or if they want to like, well actually give them all the data and say, we think you might want to launch us yourself because working with our agency, you're not going to make, you know, the money that you want. The profit you want on this campaign is typically how it works. And so face to the launch moon phases, really just more of what we're doing in test boom. It's now we're scaling it up. And so the general strategy of crowdfunding is that you want to build a community of people that want to buy your product before you actually go launch. So we just continue to ramp that up, continue to get more leads, more reservations and then build up all the assets of the campaign you launch. I I alluded to this earlier the first day is really important. It's actually our brand name of launch boom. What that means is to get funded in the first day. So we use that big list that we built, we sent out an email on the first day, we get funded extremely quickly. Um, what that does is it has lots of ancillary benefits where it shows credibility in the campaign, it boosts you up in the rankings on Kickstarter and Indiegogo as well. And people are like, well, what does that matter matter? Well, both of those platforms have tens of millions of unique visitors a month that are looking for cool stuff. Think about it like amazon, amazon is obviously on a way different scale, but it's a marketplace to a certain extent and people are just, they're early adopters, that's the segment that you're going after. And so on average, it's around like a quarter of all of the funding on a campaign comes from the platform itself. So think about that, like that big of a boost comes from the platform itself. But the thing is that you have to actually bring like, you know, you have to drive traffic first and get it funded first for your, for your campaign to tap into that traffic. So that that's why it's really, it's really important to do all the pre launch work and then have a big campaign funding and then to rise up in the rankings and then continue the funding from there. [00:27:22] spk_1: Thanks for tuning in to Part One of this episode, join us every Tuesday at one PM pacific standard time for live Q and A. And bonus content after the recording at cellar Roundtable dot com, sponsored by the ultimate software tool for amazon sales and growth seller S C o dot com and amazing at home dot com.