You need to try and fail a few times before you succeed in business, at least that's how the story usually goes.
But for the founders of one Company putting in the thought, effort, and care (plus having some solid connections in China) helped them get it right the first time.
Andrew and Ryan Beltran are the co-founders of Original Grain, the premier maker of all-natural wood and stainless steel watches.
On this episode of Shopify Masters, these two first-time entrepreneurs join us to talk about how they started a $15 million watch company with one founder in China.
- Why one of the founders moved to China to start a business.
- Why you should launch on Kickstarter even if you already have a completed product.
- How to price your products correctly.
Listen to Shopify Masters below…
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Felix: Today I’m joined by Andrew and Ryan Beltran from originalgrain.com. Original Grain is the premiere maker of all natural wood and stainless steel watches and was started in 2012, and based out of San Diego, California. Welcome Andrew and Ryan.
Ryan: Hey thanks for having us.
Andrew: Yeah thanks man, appreciate it.
Felix: Yeah, excited to have you guys on. So yeah, tell us a little bit more about your story, and these watches that you sell.
Ryan: Yeah! I think we can… Like you mentioned, 2012 was kinda more when the idea was conceptualized. I was actually living in China, of all places at the time. I moved out there in 2011 after graduating from college. We both grew up in Oregon, Pacific northwest. After school I just said “Hey, it’s time for a change, lets mix it up.” Moved halfway around the world.
Was really looking for an opportunity, wasn’t sure what I wanted to do. Taught English part time just to get by, pay the bills. Had an amazing experience, and you know, kinda fell into it. I always wanted to start a brand, I always wanted to be an entrepreneur, that’s why I moved out there. So, when I was living in China, I basically came across the idea and I was like “Hey, there’s these wooden watches.” And as soon I saw ’em the kinda light bulb went off, and I realized, hey there could be something here. And so I did a little bit of research, I saw that there is a few companies out there doing all wood watches, there was actually a really company in Portland that some of you may know, it’s called Schwood, they do all wood sunglasses. They actually were a big inspiration just because everything they had done, and it’s made in America all that.
And I was like “Hey what’s something I could do, that’s a little different?” And basically pioneer a new category within the watch niche. So anyway, I started playing with the idea over there, and kinda conceptualized it in 2012.
Felix: Okay, cool. So you wanted to start a brand like you were saying, you wanted to be an entrepreneur. You said you were in China at this point?
Ryan: Yeah I moved out there in 2011, and then in 2012 I kinda started playing with the idea.
Felix: Yeah, so why China? Why did you, you know that you wanted to be an entrepreneur and the people they think about startups, they think about the big cities, I guess probably in the US for the most part. If you’re in fashion, maybe you’re in New York, maybe you’re in tech, maybe you’re in San Francisco. But you’re talking moving to other side of the world in China to be an entrepreneur. What made you attracted to that location to start a business?
Ryan: I think definitely the reason was because I knew that… I wanted to go straight to the source. If I wanted to do a physical product, a branded product, I knew that I would more than likely be manufacturing it at scale in China. It’s just kinda the way things go. I wasn’t necessarily going for a brand that had the whole “Made in America” thing. For me I knew that I would ultimately probably be out there, so for me I was kinda utilizing that as somewhat of a competitive advantage, and being directly… Being located in southern China I lived in Guangzhou. I was able to literally go into the factories, work on the first designs with them, in person. I spent over a year on that first design Andrew and I both did.
It was a huge point of leverage for us in the beginning.
Felix: Very cool. So did you have other ideas that you’re bouncing around at the time, or were these watches, these wooden watches your very first kind of idea and you just kinda ran with it?
Ryan: It was pretty much the first idea. And honestly it didn’t take much research to realize that there was a void in the market for these watches, and no one had done it. Again, people had done wood watches, but no one had done wooden steel watches. As soon as I got that first sample I realized that these were in some ways an upgraded version of what was already on the market, a little more durable, a little more stylish, at least in my opinion. It could definitely serve a need.
Andrew: Right. This is Andrew, again, as soon as I was introduced to the watches and Ryan had shown me them, he was really excited about it. Kinda going back to where we’re from in the northwest, being outdoors, infused with nature at all times. This product really is inspiring to us and kinda holds a little bit of a mark of who we are. Whether crafted in China or made in the US, the wood does go through a pretty gnarly handcrafted process. It’s not necessarily pour a mold and get the watches out, put a logo on it. That’s something I know Ryan’s always spoke to, and I fell in love with too was the process and just how the wood grain looks. Yeah that’s something that we loved right off the bat, and we wanted to go to work.
Felix: Okay so while Ryan was running around China, Andrew, were you in the US like what were you doing at the time?
Andrew: Yeah so I have a little different kinda background I guess. I was actually in the military, I was in the Marine Corp prior to doing the watch business. So I wanted to get… Right outta high school I joined the Marines, I wanted to serve the country, did that. I was a field radio operator and it’s funny how it all worked out, I was returning from my first tour and we just so happened to stop in Hong Kong on the way back. And so we had 3 days kinda like R&R I guess, we’re headed home though. And obviously I let Ryan know in advance and he was there, and he showed me the samples on site and I obviously was really excited the moment I saw ’em. We kinda got to work from there.
Ryan: As soon as I… It was kind of another one of those light bulb moments or “Ah-hah” moment like “Wait a minute, we could do this together.” Andrews actually younger than I am, but he had the money at the time and he’d saved a little bit. I needed some money to make those first samples, first round of watches, and I was like “How about we do this together?” He believed in it, and it was like… Within a second he was like “Yep, I’ll give it to you.” And so that’s kinda how we went into business together, and it’s worked out.
Andrew: Yeah, it definitely was always a dream. We figured it’d happen later in life the work together, and just kinda being… We grew up best friends, and he was always kind of a role-model for me, kinda like helped me get through a lot of things so to see it happen at a young age and how it’s really played out it’s been a blessing for sure.
Felix: Yeah, very cool how it all worked out for you guys. So Andrew when you… Or no sorry Ryan, when you were in China and you were at these factories, like tell us a little more about it. I think this is a really interesting story because a lot of times I have entrepreneurs come on here that will say, that started businesses outside of China, but then realized that you really have to be at the factory, or at least at the very beginning spend time in the same city where your goods are being made. At least just to make sure the quality is there, to make sure the iterations are a lot faster. But you started right there, and you were searching for I guess manufacturers on the ground. Tell us about that experience like how did you even begin this search, like you had this idea for these wooden stainless steel watches, then what? Like how did you even begin to look for these manufacturers?
Ryan: Yeah I mean again I think it was a huge advantage first and foremost to be located in China, in southern China especially cause that’s where, I don’t know if many people know but a lot of the manufacturing in general happens. Apple has their Foxconns there and electronics galore. But also watches, a big hub for watches is in Xinjiang, which is about an hour train ride from Guangzhou where I was living. So yeah, I think again I had an advantage and the luxury of being located there, and it helped us tremendously just because I was able to like you said, go into the factories, meet with them, make revisions in real time. I mean we didn’t have a designer, it was just our first business I was 23, when the idea… Again I didn’t have any money or the ability to hire a designer. And so I was leaning on them, my Chinese wasn’t that good but I had some friends and that’s kinda how actually I found a lot of the suppliers initially was just through my network that I built over the last year, year and a half prior while living there.
A lot of the friends that I made had sourcing backgrounds, and they knew suppliers, or knew friends of friends that knew watchmakers, and there’s fares and there’s ways to… If you’re located that makes it easy, you don’t have to fly 16 hours and pay the travel fees. So yeah, it was amazing experience and it also helped us a lot in the beginning.
Felix: Cool, so, you were young like you were saying, your early 20’s at the time. You didn’t have cash, you didn’t have the money, did they take you seriously when you starting meeting with these manufacturers, did it take any convincing at all? Like what was the initial experience like when you were at the very first meetings with these manufacturers.
Ryan: That’s an interesting point, I think they actually at first didn’t take me all that seriously if I think back on it. I think in the beginning I had to bring in, I brought a friend of mine. She kinda posed as my assistant, I’ll never forget that, I was like “Can you come with to factory?” Obviously she was Chinese, so obviously she spoke the language. I think that helped me a little bit, not seem like some random guy standing in the back looking for a hundred watches. I didn’t even… What’s an MOP? Yeah I think at first maybe it was a little bit strange for them but I found a decent supplier who was able to do what I needed to do.
Since then we’ve been kinda to Andrew’s point about these watches being handcrafted and rather difficult to make. We’ve been through… We’re on our 4th supplier I think. So we definitely made changes since the beginning to where we’re at now.
Felix: Cool so, on the other side of this were… Are we ever worried about being had? Because you were coming into these places, you didn’t really speak the language that well, and maybe you look like an easy target because there’s this guy that wants to start a business, of course we’ll take his money. It’s an experience I think a lot of business have early on. I don’t think it’s as big, I think it’s a bigger issue when you can’t see them face to face but did you ever not have the kinda trust early on? Because you were surrounded by… Not surrounded by people that you didn’t know, but just like other they’ve worked with, you know companies that are much bigger than yours. Were you ever worried about being taken advantage of?
Andrew: Yeah, this is Andrew. We actually did come across that a few times. Watch making alone is pretty difficult, from the movement, to the materials, to the steel, to the glass cover. We went through a few phases where we were getting had, as you said. We thought we were paying a little bit more premium for something that actually wasn’t that. So you know, we did have to self teach ourselves a lot of things and just really refine the process. Check and balances across the board. For the first actually few years Ryan did handle all our production and development and it was definitely a crazy learning curve and there was late nights.
Ryan: Yeah I mean, at some point I had to move back. So I moved to the states. I guess to progress a little bit in the story… Back to the states in 2014, so I’ve been back for almost a year. It’s crazy. So then it was a little more difficult to manage, so I had to fly back over there. Since then we’ve hired a full time people on the ground as well as someone here in the states who goes over a few times a year, but yeah.
Felix: Very cool. So now that you have this experience of going through the very early stages working with these manufacturers, how would you prevent this if there’s an entrepreneur out there that’s thinking about working a manufacturer, maybe they don’t have the ability or the advantage of being on the ground floor at these factories. What kind of advice can you give them to make sure that they don’t run in to these issues where they are potentially being exploited I guess.
Ryan: Yeah. I think first and foremost, the product will help you identify the things. So like for example, like Andrew said, watches are difficult because there’s so many different materials that they’re using from the movement to the glass and steel and stuff. Whereas maybe something that’s a widget or made from a molded plastic might not be something you have to worry so much about being take on, because you just need to make sure the colony’s on par. I think the first thing I would say is definitely go over there, like you kinda were saying in the beginning and meet them face to face. Chinese from what I experienced and just culturally, they have a lot of respect for people that actually go and meet with them face to face. I know a lot of people already know that but it’s worth the investment in going over there. So I think that’s step number one for sure.
And just you know, during the process when your first big run comes out, go back over there. And maybe that’s the first time you go over there and right as stuff’s being finished, check it by hand personally. It’s gonna be difficult for them to take you on that if you’re sitting there after. I mean we’ve done that ourselves and now that we have a QC team, there’s always gonna be concerns, there’s always gonna be issues but I mean you can obviously just do your best to make sure the quality’s on point. They’re not using things not, they’re saying they are.
Andrew: And like anything, it’s really relationship based. The more face-time they have with their laoban, which is boss. I probably didn’t say that right. But the more face-time you have with them, and the more that… Like Ryan said they’ll respect you more and it’s just building that relationship with the factories. We had a sourcing agent at one time too and we made sure he was in there a few times a week. Make sure they’re see your companies name across their desk a bunch, it seems like.
Felix: Yeah makes sense, so when you were working these factories did you go through… What was the iteration process, like how many times would you say you had to go through these iterations before you had a product that was good enough.
Ryan: On the first one it was 2–3, it might have been more like 4 or 5 to be honest just cause again we didn’t have a real, real designer here in the states doing for us. Actually Andrew and I get ourselves into this funny story, for another day. It took a few times, and I remember the first one we got we were like “Oh, you can’t sell this.” Same thing goes for… But then you learn that, and so for the next collection, and honestly our most recent collection that’s actually coming out it’s on prestarter now it will be available next month. That took us a year. But you understand that and you work it into your timeline as a company. You know, when you’re first starting it’s almost like you want instant gratification, you want it now but as you grow you realize there’s a timeline and there’s a merchandising strategy and there’s a plot development timeline and that’s something we’ve learned. Now that we understand that we can work within those timelines and we know there’s gonna be iterations.
Felix: Yeah, I think that makes sense that you don’t wanna rush things and like you’re saying it’s a process to this and you can’t always rush the process. But now that you’ve been through this a few times, were there things that you learn along the way that you either worked on improving or maybe removed to reduce this iteration time?
Ryan: I mean I think the first thing was, there’s not really that much you can do to be honest like I said the iteration process is only natural. But we did hire… Again we were able now that we have the resources just financially then bring someone on and help us to help with the design process that definitely helped 100%. But even the first chronograph watch, the one it’s coming out next month. We just saw an image when our prod. development manger was in China just 2 weeks ago and he sent us an image of the watch in China that was the first sample that we got back from them of this watch and it looked like a toy. You just come so far on anything, so I don’t know. It’s difficult to cut it short.
Andrew: If you really want to right, you just take the proper steps to improving. That’s what we’re really about, we’re kinda gnarly into always improving the process and the product. Yeah we’re always refining. We will go through 3 or 4 different reiterations just to make sure we hit everything we like whether it’s how the crown looks, the indentation on the bezel. We’re pretty…
Ryan: Any business owner knows right?
Felix: Yeah the details. For sure. So when you had that first iteration and you… I think one of you were saying that you saw it and you said “There’s know way we can sell this.” What made you think to “Let’s go back and fix this” rather than say “You know what, this might not be the right industry for us we don’t have what we need” whether it be the factories or the design, or just expertise to make this better. What made you guys decide, let’s keep on doing this, let’s keep on trying to improve this thing rather than trying to move on to something else.
Ryan: For me, it’s gonna kinda sound funny. For me I wanted to make it right because I owed my brother some money. And I couldn’t pay him back unless this thing would sell so I don’t know Andrew do you have anything on that?
Andrew: That, I didn’t really think about that. But that goes to kinda testament to Ryan, honestly Ryan’s a perfectionist. That’s kinda his side and his personality, and a lot of successful people are like that. They wanna make sure it’s exactly how they wanna sell it and present it. It wasn’t good enough so you have to set your standards high for everything.
Felix: Okay cool, so you also mentioned that at this point you’re on your 4th supplier? Is that what you said?
Ryan: Yeah our 4th one. So the thing with our watches is we have a watch manufacturer who makes the steel and they’ll source the movement and they’ll source the generic typical watch parts, like crowns and the whole thing. And then we have a woodcutting source as well, that helps us source the wood and manufacture the wood. So our process is a little more complicated than most watchmakers is because of the wooden element so, we’re on I think our 3rd watch manufacturer, and on our 4th wood supplier, wood cutter. And then we just brought that in house to our… We bought the machines in China to cut the wood, like we’re pretty far down the road now so we’ve kinda taken those steps, that’s helped the time.
Andrew: Yeah seriously.
Felix: Yeah, so what makes you decide to switch suppliers, or manufacturers.
Ryan: I think the biggest thing is quality, and then behind that would be pricing, and then honestly volume and ability to deliver within the lead times. One supplier, he just couldn’t hit the lead times, it was like 60 to 90 days, pretty standard, but then you start hitting 120 and it’s like 4 months, you know just too long. And so you gotta have a reliable supplier on all fronts. Big time’s huge, but again I mean at the end of the day quality’s just as important.
Felix: Mm-hmm (affirmative). So when you are evaluating new suppliers and new manufacturers to move on to next, what’s the process? I mean are you just asking them what’s your lead time, and asking these questions, cause how much can you I guess trust… I sound so untrustful right now, to these manufacturer suppliers based on my questions. But how do you know, how do you interview I guess, or how do you determine what’s a good supplier what’s a manufacturer when you are trying to improve your supply chain?
Ryan: Yeah so, I know Matt who’s our manager, he would definitely be able to answer better than I would but if I had to say, just from my experience, who are there current clients? Who are they already making product for? Granted they might be a competitor or they might not be, but if they can deliver for them you gotta bet they can deliver for you. In the beginning it’s gonna be tough because until you hit certain volumes with a supplier that is good you’re gonna be pretty low on the totem pole, in terms of just like the volume. And so you’ll run in to issues sure. But you know at the end of the day it’s a little bit of a gut instinct and also just like who are they working with? I mean that’s kind of a big one for us, for sure.
Felix: Mm-hmm (affirmative). And do you remember that original investment, like how much did you owe to Andrew at the end of the day? What was that initial investment, or how many… What was the minimum order quantity that you had to hit before these manufacturers started talking to you?
Ryan: Well yeah, today it sounds funny but at the time it was a lot of money. I think it was like 100000, around 9 or 10 thousand. And I think the initial run was like 300 watches.
Felix: Three-hundred watches yeah.
Ryan: Yeah Andrew was trying to sell out of his backpack until the other light bulb went off. And we decided we wanted to do a Kickstarter but yeah.
Felix: Cool, yeah definitely want to talk about the Kickstarter in a bit. Before we move on to that though, you mentioned that today you have hired some roles, not just… Oh you have roles on the ground, in China, and then also someone locally, or in your office that works directly with the manufacturers as well?
Andrew: Yeah, yeah we have somebody here kinda helps with all the prod. design, development and works with the manufacturers. And we have a few other bodies here to kinda take some of the load off me and Ryan and just kinda really drive that whatever it is their job is. Social media manager, as well as creative director. [crosstalk 00:22:44]
Felix: Yeah so did you also have someone working for you in China?
Ryan: Yeah so, my first assistant over there, she’s still on board with us. And she knows the product really well, she’s just total angel so we’re blessed to have her. And then we do have a QC team, but also there’s like a… I can’t think of the name of it. But basically they help facilitate the production side of it, and make sure that everything’s running smoothly. And then Joanna our assistant’s just kinda our right-hand girl who works with us day to day and is the [inaudible 00:23:21] between us an that product management company and the factory.
Felix: Yeah that’s cool that you have a quality control team that’s in independent from the supplier and the manufacturer. How do they work though? How do they work for you? Like what are they doing on a not sorta day to day basis, but what kind of tasks are they responsible for?
Ryan: The quality control team?
Ryan: They’re really in charge of checking orders as they come out. So we know based on our lead time, when an orders about to be delivered and they’ll go literally into the factory and they will check either every piece in the beginning, if it’s a new supplier especially. Or a large percentage of it and at some point you have to kinda just play the percentage game right? And you’re talking orders of 10000, 15, and 200000, 30. I mean however watches you’re making it’s gonna be difficult to check every watch. It’d also be rather expensive. So in the beginning, definitely with a new supplier it’d be 100% QC. And then you kinda taper back as they prove themselves and then we had an additional QC here in the states with our fulfillment center. Prior to sending a watch they literally open the box, make sure there’s a watch in there. Which there should be. And then obviously check the crown, make sure everything’s good, there’s no blemishes on the wood. And so there was kinda a twice-over on the watch before it actually gets to the customer.
Felix: Yeah this might be an interesting strategy for folks that might not be able to go to the manufacturers at least all the time is to have someone there doing the quality control for them. So do you need to hire, or do you hire a full-time team over there? Or you hire them by a project? Like what’s the business arrangement usually with a quality control team?
Ryan: Yeah it’s definitely by project so you’re not… More than likely they wouldn’t be… Cause a lot of quality control companies have lots of clients and so they’re just hired, service oriented. When you have an order coming out they’re you’re go to for QC. Obviously have a relationship with them is gonna be some type of charge based on the number of units they’re checking. Usually there’s a daily rate. It’s actually not by the number of units. But you can break it down that way as well. In an 8 hour day, they can check 100 watches, or 200 watches and then you can just do the math. But yeah.
Felix: Yeah, and is quality something that’s I guess quantitative like how do you… This is a weird question. How do you measure, how do you tell them, how do you communicate to these QC teams what you’re looking for?
Ryan: [inaudible 00:25:47] There’s a document, I mean it’s just kinda like a same procedure. They’re looking at… For us, with our product… Every products different again, but for us, there’s gonna be the glass, there’s gonna be the band, there’s gonna be wood, there’s gonna be how it’s in like, there’s gonna be the belt. There’s just every element of the watch and then they’re literally going through and checking everything that we ask them to. And then there’s a report that comes back, with any defects, with images. Literally they take photos in the factory and put them in the document. Typically there’s not that many, but there’s definitely some which is why you have them.
Felix: All right cool, so now you have, at least in this run, you have these 300 watches that are made. Then what, like what did you do with them, how did you sell those?
Andrew: Yeah we weren’t necessarily sure at the time. We had our website up, we weren’t sure how to drag traffic. We had our social media going, weren’t sure how to do that either. But yeah we were… Honestly I was selling out of the backpack. Doing kinda super boost wrapped gorilla no experience type sales. Which obviously isn’t the route to go. And as Ryan said a light bulb went off that we should look into crowd funding and just getting these on the market, getting them in front of a bunch of eyeballs and seeing how people react to them. And that’s exactly what we did March 2013. And we ended up raising I think over 3300000 I think on our first campaign, so that was kinda the first testament knowing that what we had was something special, that we needed to really dive in.
Felix: Yeah, let’s talk about it. So Kickstarter for you guys, you have two campaigns which started the first wanted that was the original grain I guess was the title of the Kickstarter campaign. You had a goal of a 100000 dollars, ended up raising almost, actually almost 400000 dollars from over 2000 backers. So did that 10000 dollars that you wanted to raise. Was this more like a sale? Cause you guys already had the products and stuff, what did you need the money for? Was it just a straight up sale or did you need to reinvest that 10 grand.
Ryan: Yeah I mean for me honestly it was kind of like a… Like almost pulling it back, and starting over again. Like we had these 2 or 300 watches, we weren’t really trying to sell. Let’s almost in some ways like reset, and relaunch this via Kickstarter. We hadn’t even launched it, so really just launch it and be a Kickstarter. And use that as our launchpad which obviously worked out really well. Again we didn’t… Clearly by our goal of 100000 dollars we had no idea how well it was gonna go. And even when Andrew’s looking at the campaign now it’s funny to look at it but there’s a very a genuine approach and I think it resonated really well with people. We also launched during a time when Kickstarter was relatively new, crowdfunding in general was relatively new. We were featured pretty much on the homepage for almost 30 days which is a huge advantage now.
I mean there’s always an element of luck right? With most success stories. And I think for us that was our little piece of luck for the company when we launched, was hey this got in front of a lot of people, but also it validated the product. I mean you can get anything in front of a lot of people and that doesn’t necessarily mean they’re gonna buy it. But people did and that was like our validation, for the product and the business. And really what took us forward here was the cast to invest in inventory and obviously deliver the products to the backers, have a little bit of money for marketing and kinda get on our way.
Felix: Yeah I’ve heard this recently with Kickstarter. Because at one point I think it was heavily used to basically fund an idea. No product yet, no even road map to create the product. Just to fund an idea. Now it’s gotten to the point where it’s an effective way to launch a product where the products already completed, or very close to completion, just needs the funds to place that initial run, that initial order.
But I think Kickstarter has evolved a lot, it’s now a great way to just launch a product, and I’ve seen the statistics I’ve even heard people on this podcast talk about statistics about how people just spend more time on Kickstarter than on a product page. And because they spend more time on a Kickstarter page, they have more opportunity to explain your product, and I think it’s just a much more engaged audience. So I think what you guys did back then is still an effective strategy today even if you already have an existing product, you didn’t have an official launch. Yeah I think you guys hit the nail on the head with the reason why you wanted to go with it. Yeah 100000 dollars was the goal, raised almost 400000 dollars, and the campaign you said lasted about 30 days. Were you guys freaking out that all this came in or were you excited? Like what were the emotions like during this period?
Ryan: Yeah I love this story because I was in China, when we launched, I hadn’t moved back since March 2013, I moved back the following year. I remember the night before we launched because it was night, it was about 11… We wanted to launch in the morning here in the states. So China’s about, I think it was 14–15 hours ahead. So, I don’t know what the map was. But around 7am would’ve been like 10pm in China.
So we press launch, and I was so like didn’t know, I remember calling Andrew the night before on Skype and being like “I think we can do like 40–50 thousand.” The goals 10 obviously let’s be modest about that. But I think we’ll do 40 or 50. That was kinda the high goal for us. And I literally pressed launch, I’ve been working so hard, I wouldn’t sleep. I don’t even know how I went to sleep I wouldn’t sleep. And I wake up and there are like, my Facebook’s exploded, I have 100 messages from my brother, Skype’s going off and I’m like “What’s going on?” And I wake up and we’ve got like I don’t know I think it was like 20000 or something. It was crazy.
Felix: This is overnight?
Ryan: Pretty much overnight so it was one of those like “I feel like I made a million bucks overnight.” Obviously it was only 20 grand but the way I felt you could imagine.
Felix: Cool, so once you guys got these funds, the campaign ended, how did you even decide how to use the money?
Ryan: Well, actually I think Andrew you’d probably answer that pretty well. We didn’t know, I think that’s a pretty humble beginnings. Neither of us had a solid background, and it’s not like we came from a previous brand or an agency or anything like that. We really just had that entrepreneurial instinct and so when we got the money it was like well, let’s make the watch. And it’s like, you gotta make those, you gotta deliver them. And then let’s put a decent chunk back into inventory so we had more watches to sell, business went on right?
And then from there, we actually wanted to take a very retail approach, that was our “strategy”. We weren’t sure about online market, like we didn’t know, so we were like “Let’s start getting into retail” so to speak. And so we put up [inaudible 00:32:44] kits and we literally go out and try and sell ’em which is kinda funny. Like we realize that’s not how it works, but at the time that’s really what we were trying to do. We put some money into advertising here and there but again we didn’t really know and so we were kinda learning as we went.
Andrew: Yeah, like as Ryan said we didn’t come necessarily from a background so a lot of this is self taught. It’s funny to think how far we’ve come in 3 years. Our strategy currently is, I think really on par with a lot of successful companies and brands but at the time we didn’t know where to go and at one point we ended up having to consult… A guy consulting us that’s actually our product developer now, Matt, and he kinda came from the industry, he worked with a few brands. So he kinda Sheppard’d us along the way, kinda where to put your chips, how to structure your company, how to set a business plan and how to align it with your marketing.
Yeah they just really helped us through our first year to kinda just… We still had a successful first year, even post Kickstarter there’s still a tonne of organic traffic coming to the site, and people still interested in the product when they see it. And then obviously we ended up launching our second campaign and that’s really when we turned on the jet fuel and understanded kinda what we were doing. Kinda how big the internet is, the beast that it is and how you can really get involved, through all the different channels and that’s when we were kinda running at full steam I guess we started getting going.
Felix: Yeah hearing about how you guys talk about your story, it kind of almost helps me visualize 2 types of businesses that get started. I think a lotta entrepreneurs are in one of these 2 chams which is one where you’re almost constantly pushing this big boulder up a hill. Every inch, you’re pushing with all you’ve got. For you guys it almost seems like this thing just had a life of it’s own and just took off, and you’re on this ride with it, and just trying to figure it out along the way. First of all is that fair assessment of how it feels?
Andrew: Yeah it totally speaks to the product that we’ve created, it’s very unique. And like you said we jumped on the roller coaster with this thing, and it really is a testament to what we have. And then yeah, we were figuring it out day to day for sure.
Felix: Yeah and I’ve heard of other very quickly successful businesses where the uber success of it all is actually detrimental to the business where you’re just growing too fast. You’re jumping from the minor leagues because you guys are just trying to figure out now into the major leagues because of all this funding all these customers, you’re dealing with much larger orders. At any point did you ever feel like you’re about to fall off this ride?
Ryan: I don’t think so, not in the beginning. I think if anything it’d be now the growth is even crazier at this point than it was back then. A successful Kickstarter campaign is relatively easy to manage. There was growth for sure, don’t get me wrong, but there wasn’t massive scale in the beginning. It was more of like a validation again of the concept. A lot of the time spent on figuring out who our customer is, figuring out the pricing model that we wanted to work at, whether that was online versus retail. Even at one point we were like “Do we market ourselves as D to C.” Right to consumer with this, and price accordingly versus being a retail and pull that back. We’ve done a lot of things over the last… I mean really 2013 we launched, but 2014 was our first year in business, we had product to sell. And then 2015, last year, was a lot about just figuring out the real strategy of what we wanted to do, building up the product collections and planning for this year. And so yeah, that kinda gets us to where we are now.
Felix: Very cool. So when you… Once you had that successful Kickstarter campaign, you guys returned back to Kickstarter in 2015, last year. Had another relatively modest goal of 25000 dollars and blew that out the water again. Raising 433000 dollars from 2442 backers. So when you returned to Kickstarter was this a similar situation where you already had the product ready to go, and you just wanted to use Kickstarter as a launch pad? Like what was the state of the product at that point.
Ryan: Yeah so we actually, at this point we, and I think you mentioned this earlier, we didn’t have any inventory. So we purely use Kickstarter as a way to more or less, like a lot of companies, pre-sell in a lot of ways you’re pre-selling product. And obviously bringing in some money to invest in inventory. So that was really what we used it for on this second campaign is we knew we were probably gonna do pretty well. We had obviously had that success, we had a decent size following, good email list, knew how to market a little bit online. And so we thought we would do, honestly we were shooting for about 500, 600, so we were a little short but still relatively successful and gave me some money to again put back into the company.
Felix: And did you change anything between the first, second campaign in terms of how you promoted it, how you set up the campaign page or anything involving the marketing of a Kickstarter campaign?
Andrew: Yeah I say it switched up quite a bit. The first campaign was pretty amateur, the second campaign was pretty pro I put behind it in regards to PR we were featured on a lot of different tech blogs, fashion blogs, we kinda had all that queued up. We had a few samples that we had sent out to, what’s it, GQ, 9 to 5 mag, Tech Crunch, just so they could review and kinda put their notes behind it to their following and we had a pretty good story. What we were doing again, we were reclaiming whiskey barrels at the time. That’s something unique and special, especially for the Kickstarter community, they really take pride in bringing ratchet to market, you know, whiskey barrel reclaiming that down is something obviously can drive massive PL. So we’re bringing definitely, bringing an A-game I think.
Felix: Did you find that that’s the best use of any Kickstarter creators time is on the PR getting early samples to these outlets?
Andrew: I think it’s pretty… Yeah I think it definitely helps, it gets that initial boost. You want people to be talking about it, and it trending. Links being shared, PL blast went out, we had a tonne of great coverage happening.
Ryan: With anything you’re always looking at the ROI. So I mean PR is great… From our experience, PR doesn’t drive always the most, like the best ROI even free, it’s just 100% ROI. But even if it’s someone pay to play or whatever, none of these work for the second Kickstarter. But since then we’ve done some paid PR coverage, and this and that. I think what PR does more than anything is it helps establish credibility and like a sense of like… Yeah just credibility for the consumer that this is a legitimate product, these people wouldn’t put their name behind it unless it was.
Felix: Yeah you’re definitely kinda borrowing some of the credibility from these outlets because you’re saying they’re putting their name behind your project. I think that’s a good way of putting it. So do you, you know today, 2015, your first Kickstarter was back in 2012. Do you feel like the crowdfunding community as change, and if so how? Do you feel like it’s saturated, like what are your thoughts on people that want to launch a Kickstarter today or a crowdfunding in general.
Ryan: I think it’s changed tremendously, I would say it’s unfortunate, but it’s not. There’s a lot more people going to the site. And I guess let me say the reason I would almost say it is is because it’s harder to stand out. It definitely is more difficult now today than it was when we did the first one. Not necessarily the second one, because I think it’s similar to what it was back then even in 2015. It’s only been a year since. But it’s harder to stand out now than it was back then. So it requires a little more, preparation, execution. You can be authentic, you can be genuine and I think that goes a long way. But at the end of the day it’s harder to get eyeballs on the campaign without a little bit of paid advertising. And I think the organic traffic back in 2013 again was a little bit of a lucky charm, and helped kinda get us in front of a lot of people.
Felix: Makes sense. So once you had the, I guess maybe the first successful Kickstarter campaign, did you have your own independent website that time? Like what was the transition like into owning your own kinda domain, your own website.
Ryan: Yeah we had a website that we had pretty much built out. Nothing like we had today, it was pretty bare-bones we only had 1 collection or about 4 or 5 different skews so. We had a website that was ready and then about halfway through the campaign and on that first one we used it as a way to kinda like promote “Our websites up!” And people really liked that and they thought it was cool they could go to an official page and check out the watches in a different setting. Yeah so we had something.
Felix: Cool so, now that you have your own store at originalgrain.com, what’s been the most successful way for you to drive your traffic and sales to that site?
Ryan: Well, we do a lot of different things. Right now I’d say it’s online with paid advertising, primarily on Facebook, I think that’s right now that number one way to drive scale, outside of maybe influence or marketing. If you were to get on a huge celebrity or something, but that costs a lot. So I think the biggest bang for your buck is gonna be online advertising through Facebook. We do some display advertising, we work with Pinterest we work with a lot of different… Actually Andrew manages our whole social influencer program with another guy on the team.
So we do a lot of different things I mean we have a PR guy who really… He gets… We’ve probably been in, I don’t even know, at least I think it was 60 or 70, maybe upwards of 100 outlets this year. So he does an amazing job just getting us in places. But again I think the number one way we’ve driven traffic in the last year has been through online advertising and primarily Facebook.
Felix: Yeah so you know talking about all these different marketing channels and the hyper growth that you guys are going through. Maybe tell us a little bit how you’re managing all of this. When there’s so much going on, I think you obviously have a team working for you now but I would say it’s probably relative to all the people that are maybe solo founders with a much smaller business that’s not going through as much growth. What are your tips I guess on how to manage all these things that are going on, making sure that you’re aware of what’s going on, and making sure you’re making the decisions with all the information that you two can get, like how do you guys handle all of it?
Andrew: Yeah I mean I’ll kinda just speak in regards to some of the influencer marketing strategy. We have our systems really structured and in place for myself and I kinda have an assistant helping me do some of the research and development there. But yeah, we have our systems in place and everybody’s gonna be different, how they like to keep it structured that’s something I’ve always been taught is there’s a few ways to do it, it’s however it makes sense to you. Whether it’s in spreadsheets. That’s how we’ve done a lot of our influence or outreach, it’s a lot of grind work. We don’t necessarily like to work with a tonne of big agencies that do the work for you. We’ve tried it before it just necessarily hasn’t worked out to our liking. We kinda are pretty demanding and the results and kinda the success that we have through some of these outlets that are definitely crucial to the business and growing on Instagram, and Facebook, and Twitter.
So yeah you just gotta have your systems, kinda what your goals are weekly and monthly. That’s something I’m always harping on my guy, he’ll tell you and if we’re not hitting our goals there’s definitely a problem. So yeah we stay on task, and we understand what is expected, what is gonna make us successful, yeah we’re just on it.
Ryan: Yeah we have a team right now. We’ve gone through different stages where we’ve had like Andrew said, thing’s outsourced, different agencies for even online advertising. Brought that in house, little bit of influence from marketing, brought that in house. We’re a small team, we’re lean, we’re super lean for how the size that we are right now. And so we got a great team, really talented, really committed and believe. As any successful entrepreneur can speak to it’s like talent, I think outweighs, and people, outweigh anything. So, hiring is hard but I think once you find talent you gotta swoop it up and just kinda Sheppard) it along the way.
Felix: So can you give us an idea of how successful the business is today? Whether it be the growth or the size of the business.
Ryan: Yeah so we obviously launched our first Kickstarter and 2014 was kind of a little bit of a year where we were figuring it out, we didn’t really know. And then in 2015, we had like our breakout year that was last year. And so we did like 10x growth. And then this year, we’re projected to do upwards of like 15 million in revenue. So huge growth from that first year of kinda hovering in the 500, 700 thousand dollar range to where we are now.
Felix: Wow that is a huge kinda uptake. What do you… I’m sure there’s more than one reason, but are there a few things that you can kinda credit this big spike to?
Ryan: Yeah I think, I mean it’s again, it’s being really… I think the first couple years we were again… You can validate a product more quickly than 2 years but for us we were kinda setting the stage for this, and that’s what 2013, 2014, and even part of 2015 until we finished that second Kickstarter campaign was about. And then really turning on the jetfuel and being like “We can do this” we got it to work. And we were [inaudible 00:47:04] the scale campaigns online. I mean, our online advertising, granted it takes… It’s a difficult ballgame. I mean DR marketing is not easy, and it takes a product that the consumers like at a price that they’re willing to pay.
I think we’ve been really fortunate and blessed to a certain extent to be able to do what we do. I think having the right product offering and again right pricing strategy it’s huge. So yeah, and then I think we’re at a point now where we’re looking for additional channels to help run the business. We’re really gonna be planning on pushing into retail next year and obviously maintaining our online sales growth. But yeah, it’s a lot to juggle, but it’s fun and a lot of ups and downs and be definitely more exciting times than not.
Felix: And do you remember what maybe sometime last year or maybe in the last year where you realized like “Wow, this is really taking off.” Do you guys remember looking at each other and saying “This is going to become many millions of dollars in revenue.”
Andrew: Yeah it was pretty much this time last year, rolling in the Q4 with the barrel was on the market. [crosstalk 00:48:16] Classic and the barrel were both on the market. We were stocked up. That was another thing that we had come across in the first 2 years is we’d have great selling seasons and then we’d run out of our best ace q’s, we’d be sold out. Obviously that’s detrimental to your total revenue, but last year we were skewed up, we had a tonne of inventory and we were ready to rock’n’roll. I think at that time we had just brung on our director and he was creating rad content, we were getting it out in front of everybody, right around this time. And we were like “Oh here we go.” And since then we’ve just successfully launched 3 more collections.
Felix: Very cool. And you mentioned I think, Ryan you mentioned that the right pricing strategy was also big for you guys, can you speak more to that? Like what do you mean by… How did you figure the pricing, and what do you mean by the pricing strategy?
Ryan: I love this topic and it’s one that honestly drives me insane, I feel like nobody in the office wants to ever talk about it anymore. Because it’s so important right? It’s your margin, I mean obviously everyone’s margins are different based on their cost of goods. I just think it’s… Again, for us, we played with it. In 2015 we looked at… We price tested, full on. Our classic is not priced at 169 dollars, it’s definitely not something you always want to do because it’s tough on the consumer side to see, maybe they notice, maybe they don’t. But I do think it’s that important that I was willing to do that and in almost in some sense risk what it looked like on the outside. But we had it priced all the way down, and I think like $129 at one point. And what we noticed was, it didn’t really shift sales that much. At least not enough to make it worth it. And there’s gonna be a point where… There’s a delta there. And so for us I also think because of the handcrafted nature and the way we market the product, that there’s also a point where it seems to cheap. If it’s only 100… Like what if we played in the 100 dollar range? It would be difficult from a margin standpoint, but we thought well maybe we’d sell a lot more watched it would make it worth it.
I don’t think our… It’s also about understanding how your marketing your product, how you wanna market your product, and how the consumer is gonna look at it at a certain price point. Anyway, it’s something I put a lot of thought into. I also look really closely at what competitors do again. The watch market has exploded, it’s crazy, in the last year and a half 2 years with online brands just kinda popping up and having success. And they kinda take that direct consumer pricing model and so that was another reason why I thought about it, but ultimately I wanted to maintain the brand image. Not that they don’t have a good one, but I just wanted to be who we are, and work ina different price range. So we’re curently like, we’ll be in the 150 to 400 dollar price range.
Felix: Wow so even though you decrease the prices, I’m looking at the prices now they’re $149, $169, I think $89 as well. Even though you decrease the prices you didn’t see an uptake in the sales?
Ryan: Not enough to make… Obviously there was a little bit, but you’re making $120 that’s 40 bucks. That’s not enough, not enough to make it worth it. And that’s a lot of money when you’re talking, a lot of watches. And more margin to work with on the marketing side I mean, to a certain extent that’s 40 more dollars you can spend on marketing. Yeah there’s just a happy medium there and it’s something that I’m a little bit obsessive about but I think it’s important especially early on. And I think early on for companies can be the first year or two, it’s not like you can… Ideally you want to make those decisions as quickly as possible, but don’t be afraid to test it and see what the reaction is and then make a decision.
Felix: Yeah I think one of the difficult things when it comes to testing things like a pricing strategy, or AB testing anything is trying to control all the other elements that could affect it. Are there any ways to mitigate that, or at least normalize the data so that there are other factors that might be impacting the changes in the sales just because you changed the pricing?
Ryan: Well that’s a good question I was gonna just touch on the fact that pricing is really difficult. Because technically you’re not allowed to AB test on the same day a price point, like it’s literally against the law. I know Amazon I think at one point had some issues with that where they were actually advertising one price and someone would get another price and their friend would be like “Wait a minute I saw…” In the same day, I think this was years ago, and I could be wrong but don’t sue me Amazon. But that’s one of those things that made it really difficult. I don’t know, I think for us the way we “normalize” it, taking these difficulties into consideration was just by running it for more than a day, or more than 2 days. We would run it for a month.
Andrew: A month, yeah test it for a month.
Ryan: And then look at the data. At the end of the day that’s the beautiful thing about kinda the world we live in right now and I think right now the easiest way to validate and know if you’re gonna have something is to promote it via online advertising and see how it sticks. And there’s a lot of companies still popping up, taking a more traditional retail route. But if I were start a company today I would still lean on that in the beginning stages.
Felix: Makes sense. So now we’re in Q4 so obviously how this season is pretty much here what are you guys doing to prepare for it, for this holiday shopping season?
Andrew: Well we’re releasing our best collection yet. Something that our consumers have been waiting for, definitely our following. They’ve been wanting something a little nicer, something that… Higher end, and we’re really excited about so we just released that.
Ryan: Yeah and then I think a lot of the preparation has actually already taken place back in… Yeah that was one thing we learned right was like… Even last year this time, we were kinda in the heat of the moment like right now, doing a bunch of crazy photoshoots trying to get it all ready. We’ve actually taken care a lotta that leg work and so we’ve already placed bids or assigned IO’s with different media companies for paid placements on gift guides and gotten in some for free through our PR outreach. And then also just kinda seating the watches we always do to different influencers who will then promote it during the holidays. I mean the key for the holidays is, it is without a doubt as everyone knows, this goes without saying, the best time of year to sell anything online. Really in general the best time to sell anything. So I think it’s just about getting a name anywhere and everywhere, and that’s what we’re doing.
Andrew: Yeah and kinda just going into that, you kinda scale your whole strategy behind. You have your projections on what you wanna sell, so in turn you need to be spending that much more. This Q4 is gonna be… We’re setting more watches, we’re doing a little bit extra because we have projections on what we wanna get to, and to get there we need to be spending x.
Felix: Very cool, so you obviously had a crazy 12 months for you guys, I’m sure you guys are gonna kill it during this Q4 as well. Where do you want to see the business this time next year?
Ryan: I wanna see the business, I would say the number one thing I would like to see us next year is in retail. I really see… I mean look, 85 to 90% of watch sales still actually happen in retail and this does not discount online cause I’m a firm believer in that. But I would love to see us taking on that approach and having a hybrid effect of online versus retail and seeing that work together. I think it will have amazing results where people can actually see.
One thing we do a lot of, sorry again, this is a little off-topic but Andrew also manages a lot of our I guess onsite activations, differen’t… Like we were at the dew tour, and we’ve been to a lot of different street fares just to kinda see what peoples reactions are in somewhat of a retail environment. And that was kinda what queued us to like we needa get these in to shops. People see the product and they automatically like. They may have seen it online through a Facebook ad. And then they come to the street fare or whatever it might be and they’re like “This is amazing, I would’ve totally bought this if I had seen it in person from the beginning.” Anyway, little bit of a tangent, but yeah I would love to see us in retail next year, and obviously just continuing to grow.
Andrew: Yeah. And-kinda on the brand something that Ryan and I have been definitely working on a tonne over the last year is bringing some of… We want to do a lot more very unique stories, the whiskey barrel is kind of a, it’s been one of our best sellers and we want to continue that going forward to be able to tell stories maybe more limited watches, more uniqueness, collaborations. We actually have a few special collaborations coming out this year. And yeah just really tying in our marketing to the consumers we want to reach. And just being super unique with our product. Our stuff is special, with the wood, you can tell a tonne of stories and there’s a tonne of history there. And we’re gonna go out and get that and be very unique this year.
Felix: Very cool. Thanks so much Ryan and Andrew. So originalgrain.com, again is the website. Anywhere else you recommend the listeners check out, they want to follow along with what you guys are up to?
Ryan: Yeah check out our Instagram @originalgrain, we’re just posting a tonne of unique fashion, and just some of our best styles and shots that we have. You can find us there.
Felix: Cool, thanks so much again for your time guys.
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