Welcome to the fourth and final part of my conversation with Les Kelly, Gadget Freak turned inventor and entrepreneur. In this part we’ll learn a little about Les’s business, investors, and retail plans.
Who are your investors, and how did you find them? How did you find a manufacturing facility? I know some of these questions may be too personal, or proprietary, so just answer what you feel comfortable with.
I was connected to my investor by another person I had contacted to get listed on his website of pet products. I never expected this tip, and I never would have met my investor without it. I met a lot of other people along the way from searching the internet for anyone and everyone who might be able to help me in any way. I had one 6 month relationship with the largest crate manufacturer in the world that almost worked out very well, but got stalled right when I thought it would take off.
My investor and I hope to resume that relationship once we have a working, high volume production product available that they can easily integrate into their existing production lines as a “premium” feature on their existing line of crates. I learned something from every company/interaction that I was able to apply and improve my chances of success with. The 2 most important things I learned are that even if you have an idea or product that people like, you must 1) develop a manufacturing capability and 2) figure out how to make it as cheaply as possible!
Has it been the same factory all along, from prototype to production? Have you been to the factory, or do they just ship you prototypes for approval?
I’m just now preparing to transition from the prototype to production stages, but I certainly hope to stay with the same factory. I’ve never been there, they just ship prototypes to me for approval. Their quality has been mostly good and only lax on 1 occasion, but my investor has assured me that is only because we’re still in prototype phase, and once production starts they are top notch.
The main challenge in working with Chinese factories is communication. This is mostly because of the language barrier, and also due to them being asleep while we work in the US and vice versa. As I mentioned above, what they do is take whatever you send them and break it down to where they understand how it works, and then re-build it using suppliers and methods they are comfortable with. They don’t rely much on what you send them in writing, and they don’t ask a lot of questions. This is good in that you don’t have to spend a lot of time answering questions, but its bad because sometimes you’ll get something back that is out of whack, which could have been avoided with better communications.
They are always VERY friendly, and want to help and do things the way you need, but even though I’m sure they get the guy with the best English to translate and proof read their responses, there are always funny phrases coming back and the occasional item that gets made completely differently than you intended. But they always fix whatever is necessary.
Any interesting stories about working with a Chinese factory?
Looking back, the funnniest story relates to the 1st prototype I got back from my current factory. They had totally ignored the drawings and written explanations and parts lists I sent and instead tried to understand what I wanted from only the physical prototype I sent. They built and sent back a thing that was mostly in the ballpark but there was an extra part built onto it that was completely wrong and unintended. When I opened the package and took it out, it was kind of like expecting to receive a pony and receiving a unicorn, and asking “what the heck is this horn doing on here?”
Another really interesting thing I learned is that most things you see in stores cost about 1/4 their retail prices or less to make. The retailer bought it for 1/2 the retail price from a distributer, and that distributor made a decent profit too from the manufacturer, so the bottom line is you really have to make things cheaply to have any chance at success. And even then, in order to sell them at the beginning the manufacturer is not going to make a lot of profit per unit, which means your royalty as an inventor is not going to be much per unit if you’re trying to sell high volumes. The good surprise is how cheaply things can be made in China. Most anything from China is about 1/3 or less the price of the same thing purchased through a normal US supplier. I would love to do things 100% US made, but I learned from all the folks I’ve contacted that it’s almost impossible to do that for high volume production.
I think you mentioned that you’re hoping to get into stores like Target and Walmart. Did you think about selling direct online, or eBay? Is the retail arrangement settled or still in the works?
I will mostly have to save this answer for later, as I’m still talking and learning about this stuff with my investor. I know he has his own distribution channels for foreign sales that he plans to utilize first, in additon to contacts he makes at big trade shows. Then there are the various interested parties such as crate manufacturers, online pet stores, walkup pet stores, automation sellers, etc. that I met during my earlier efforts that we plan to go back and talk to. Then finally there are the big walkup US non-pet-centric retail outlets like WalMart, etc.
My investor has product already in such chains, but I believe he has said that there is more profit to be made in foreign sales, so that’s where we’ll be going first. As I mentioned I’m already listed on petgadgets.com as a prototype status only, and plan to sell it there once we have the real product available. I was going to go onto eBay myself if none of this had worked out, since I’ve had a lot of luck with eBay in the past, but I don’t know if that will end up happening now that I have the investor.
Do the retailers offer any assistance to new inventors regarding getting a product onto their shelves?
Some of the places I contacted do indeed have special hotlines or contact folks for independent investors, and they do get back to you fairly quickly and are very helpful and interested up until the point they realize it won’t work for them. The trick is to make it work for them. In my case, my biggest hangup with such contacts was having no high volume manufacturing capability. With that taken care of soon it is a very exciting time for me now. Like they say, “be careful what you ask for, because you may get it”! Now instead of worrying about how to sell the product I have to worry about what happens if they don’t work for some/many people.
I know it sounds corny, but like you hear everywhere else, the best advice I can give is to keep thinking of new ways to succeed, keep tryng and contacting people who might be able to help you, and never give up. I got my biggest positive step forward, my current investor, when I least expected it, and out of the blue, from another person I’d contacted but never expected such a lead from.
Have there been any conflicts between this project and your day job?
Yes, some, and also with my home life. But I try to treat this as a “hobby” I do on my “spare time”, and I have a very supportive wife which is great. Sadly, the part of my life that has taken the biggest hit is my exercise time! It seems that is always the first thing to get crossed off the list of things to do. I used to play a lot of basketball, but very little now. I need to fix that before I get too fat!
When will it be available?
We are shooting to unveil the production model at a big trade show in the February/March 2011 timeframe, if not earlier.
Anything else you’d like to add?
The main thing I’d like to say is that although it sounds corny and you hear it all the time, it really does pay off to keep going through all the rejections and never give up. You never know what seemingly insignificant step you take might yield the biggest payoff. For my example, I never expected my conversations with my friend who runs the website to lead to an actual investor who would really follow through and get it built, but that’s how it worked out. You never know which door you go through will lead to that golden opportunity.
The other thing I’d like to say is find a good friend who knows a lot about something you don’t that will be helpful, and see if you can get him to work with you. My background is mechanical engineering, but I’m not good with electrical design. I got lucky and learned that a colleague and good friend of mine at work was also a sort of inventor at heart, and when I told him about my product he became interested and started helping me with the EE challenges I would encounter. He is now an invaluable asset not only for EE issues, but also as another set of eyes and another perspective for ideas. Plus it’s great to have a friend to share the ride with!
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