Jon Richards: Nomatic, E-Commerce, Margins, CPG, Crowdfunding, Retail, Sourcing

00:00:00 - A Yes. 00:00:00 - B Because today we have John Richards and I call this John Richards versus John Richards. John led Nomadic from one product to now a globally recognized name and travel. If you've ever seen a Nomadic bag out in the wild, this is the guy behind it.

And you have a co founder as well. 00:00:17 - C I think there's information that you can get that's more valuable than just making money at the beginning. 00:00:22 - A Yeah. 00:00:22 - C If you're like going to run yourself into a hole and not be able to order your next purchase order, then it's like, it's obviously not smart.

But if it's like, no. With these 300 units, we're actually going to prove that X, Y and Z or customers will tell us how much they love or hate or we'll be able to change the product and launch a V2 based on this. Like, you can learn a lot by getting product out in the wild. 00:01:05 - B Welcome back to the Startup Ignition podcast.

Thank you so much for watching every episode. We've had so many fun guests. 00:01:10 - C But we have another one today. 00:01:11 - B I'm Tyler, this is John.

00:01:13 - A Hello. 00:01:14 - B We are your co hosts and we have someone very close to our heart here in the studio today because he bears the same name as John Richards. Because today we have John Richards. 00:01:27 - A J O N.

And I'm J O H N. There you go. There we go. 00:01:30 - B And John and I go way back.

And actually therefore you two go way back. It's been. 00:01:36 - A Yep. 00:01:37 - B 15, 20 years.

00:01:39 - C Yeah. Oh my gosh. 00:01:40 - A Yep. 00:01:41 - B I see the gray in your hair.

00:01:42 - C Actually. I know it's wild. 00:01:43 - B I have some bad grace. I have to keep my hair really short.

Otherwise I get some salt and pepper going on in the sun. 00:01:48 - C You gotta embrace that. 00:01:49 - B I know you are doing it well. You got the long hair look going down.

I can't pull off long hair. I look like I look homeless if I have long hair. And same with a beard too. 00:01:59 - B But okay, we have John Richards.

I haven't even said who he is or what he does or who, who the guy is, but he needs no introduction. John Richards is the CEO of Nomadic bag and apparel company and what wallet company. What do you brand yourself as now? 00:02:12 - C Gear for life on the move.

00:02:14 - B Gear for life on the move. So if you've ever seen a nomadic bad bag out in the wild, this 00:02:18 - C is the guy behind it. 00:02:19 - B And you have a co founder as well. 00:02:22 - A Let's just say it up front.

They're the best tech bags, the best camera bags. Apparently the studio, the one who runs the studio here where we record this just went gaga over you. Because he says it's the best camera bag ever made. So if you don't have a Nomadic bag, you're way behind the times.

00:02:38 - A Go get one. 00:02:39 - B So I said, John with Nomadic is here. 00:02:41 - C And then the guy that runs the 00:02:42 - B studio, he's like, Nomadic. You work for Nomadic, the founder?

He's like, what? His jaw dropped to the floor. So that's who John is. So I have a bio for John.

John. 00:02:50 - B I'm going to read the bio. John Richards is the co founder and CEO of Nomadic, a Utah based company known for its sleek, functional travel gear and wildly successful crowdfunding launches. You guys have done a ton of those so far.

What started off in 2014 as an idea. You designing minimalist wallets. 00:03:10 - A Right? 00:03:10 - B That's what you started with.

I still have mine. Oh, it's in my car. I left it in my car. I have mine still to this day.

00:03:16 - B But that Kickstarter turned into what is now multiple millions of dollars of product that you're doing every year, sales and through crowdfunding. And Kickstarter is still a huge model for you guys, right? Or not so much now. 00:03:29 - C Yeah, yeah, it's.

We still launch products on there. We have one or two campaigns coming up this year. 00:03:34 - B So I think one of the best companies to do it, like, you guys are probably one of the models that you guys. I.

I'm sure you have a ton of companies and founders coming at you like, hey, how do I do this? Right? What do I do? You guys have had so many successful campaigns.

I'm sure everybody's begging you for tips and tricks, but. So, yeah, John led Nomadic from one product to now a globally recognized name and travel selling everything from backpacks to luggage to camera gear. 00:03:55 - B Like my dad said, with a background in physical product design and a scrappy customer first mindset, John and I know him from his college days. This is totally who John is.

00:04:04 - C He. 00:04:04 - B He's super into design. Super scrappy, super bootstrappy, but also very sleek and actually fashion forward, which is 00:04:11 - A actually kind of reminds me of you, 00:04:13 - B Tyler, a little bit, but he actually did something with it. I didn't do anything with my background, my design background.

I like being creative, but I just never had a way to express it. I guess maybe a little bit through technology, but not through like product. 00:04:26 - C I finally got rid of my garish shirt. Hey, garish.

00:04:29 - B He's talking about a shirt that I designed back in college. I think I had a high school. 00:04:34 - C You did that? 00:04:34 - A High school brand.

That was your brand? 00:04:35 - B Yeah, that was actually high school. That went all the way back to high school. But, yeah, John and I are university and college buddies and we go way back living in the dorms together.

And I'm just so excited to have you. So thank you for coming. 00:04:45 - C John. 00:04:46 - B I am seriously stoked to talk to you and just honestly catch up, but also hear more about your background and get updated on what you're doing with nomadic and what's new.

So before we go, though, before we ask any questions that you said you've watched a couple of podcasts, I got an icebreaker for you. We're going to do a fun little icebreaker here, and we're going to call this John Richards versus John Richards. So here we go. Who's ready to play with me?

00:05:10 - B John Richards versus John Richards. It's going to be easy. Here's what we're going to do. We're going to play a who said that?

Okay. I'm going to give you quotes that I think are pretty famous entrepreneurial startup quotes. 00:05:21 - A Okay. 00:05:21 - C And I want to know, oh, my 00:05:22 - B gosh, who can get it first?

And it's just whoever. If you know it, just blurt out the name. Okay, here we go. 00:05:28 - C You ready?

00:05:29 - B John Richards versus John Richards. Move fast and break things. Move fast and break things. 00:05:38 - A It's Steve Jobs.

No, but Elon Musk. 00:05:41 - B You're closer than he was. 00:05:44 - A Wozniak. 00:05:45 - B No.

00:05:45 - A Okay. 00:05:46 - C No idea. 00:05:48 - B Meta. 00:05:48 - A Oh, Facebook.

00:05:50 - B Zuckerberg. John got it first one point to John. 00:05:53 - C Ding, ding, ding. Okay.

00:05:54 - B Even though you said you start out with Edison. Yeah. You got the point with Zuckerberg. 00:05:57 - C Okay, go ahead.

00:05:58 - A He said the name. 00:05:59 - B Okay, here we go. Ready? If you are not embarrassed by the first version of your product, you've launched too late.

00:06:05 - A Oh, my gosh. That is Steve Jobs. 00:06:07 - C He's going to know all of these. Nope.

00:06:09 - B They're all modern. 00:06:10 - C They're pretty modern. 00:06:11 - A Elon Musk. 00:06:11 - C Modern.

00:06:12 - A No, it's not Bill Gates. Paul Allen. 00:06:16 - B Close to Bill Gates. 00:06:17 - A Steve Ballmer.

00:06:18 - C His. 00:06:18 - B His company was acquired by Bill Gates. 00:06:20 - A Oh, my gosh. 00:06:21 - B Oh.

00:06:23 - A Reed Hastings. 00:06:23 - B Reed Hoffman. 00:06:25 - A Hoffman. I meant LinkedIn found Reed Hastings is Netflix.

Reid Hoffman. I got the first name. 00:06:29 - B So Reid Hoffman said that. Hey, one, one there.

Going to keep track. Okay. Your brand is what people say about you when you're not in the room. 00:06:39 - B This is a guy who's very customer facing, very brand conscious, very well known for his, like, I am obsessed with the customer.

00:06:46 - A We should probably only get one guess. So we're going to run through all the names. I don't know brand. Is it Steve Jobs?

00:06:51 - C Nope. 00:06:52 - A Okay. That's my guess. 00:06:53 - B Who's your guess?

00:06:53 - C Jack Dorsey. 00:06:54 - B Nope. 00:06:55 - A Who is it? 00:06:55 - B Jeff Bezos.

00:06:56 - A Oh, that was Jeff Bezos. 00:06:58 - B Yep. Okay, here we go. 00:07:01 - C This.

00:07:01 - B Okay, now we're gonna get a little bit harder. 00:07:03 - A Oh, those are pretty hard. 00:07:04 - C Really hard. 00:07:05 - B I thought those were kind of favorable.

00:07:07 - C Okay. 00:07:07 - B Okay, here we go. Okay, I'll give you multiple choice. 00:07:11 - C How about that?

00:07:11 - B I'll do multiple choice or I'll change it to multiple choice. A no is just a yes waiting to happen. Drew Houston from Dropbox. Jeff Bezos.

Peter Drucker or Mark Cuban. 00:07:26 - A Mark Cuban. 00:07:26 - B It was Mark Cuban. Yes.

00:07:27 - A I've heard that one. Okay, I know I'll be good with multiple choice. 00:07:30 - C Okay. 00:07:31 - A Not pulling out.

00:07:32 - B Okay, maybe that's unfair. Okay, now we got two. One here. Maybe I'll stop keeping track.

I know it's just a yes waiting to happen. 00:07:37 - C I love that quote, by the way. 00:07:39 - B Okay, here's a good one, John. You'll know this one.

I skate to where the puck is going, not to where it has been. 00:07:44 - C Wayne Gretzky. Boom. He nailed that one.

He knew that one. 00:07:47 - B There we go. That's a good one, though. 00:07:49 - C And I think that's applicable to everything.

Okay, last one. 00:07:52 - B Work. Actually, not last one. Work like hell.

I mean, you just have to put in 80 to 100 hours every week. 00:07:58 - C Elon Musk. 00:07:59 - B That is Elon Musk. 00:08:00 - C Oh, man.

00:08:01 - A What? 00:08:01 - B I think it's actually. 00:08:02 - C Okay, Here we go. 00:08:04 - B Okay.

Every overnight success is 10 years in the making. 00:08:08 - C I've heard this one is. Alex Hormozi. No.

Cody Sanchez. No, but you're. 00:08:17 - B You're. You're.

00:08:17 - C You're close. Gary Vaynerchuk. 00:08:20 - B No, it's Tom Clancy. Every overnight success is 10 years in the making.

Okay, here's. Here's a modern founder. Okay, here we go. 00:08:29 - B Build something a hundred people love, not something one million million people.

Kind of like. Let me repeat that. Build something a hundred people love, not something one million people. Kind of like.

00:08:40 - C No idea. 00:08:41 - B He was a YC founder and he says he actually got this from Graham. He said he got it from Paul Graham. 00:08:49 - A Paul Graham.

00:08:49 - B That's what he says. But he's the one infamous, famously quoted for. It's Brian Chesky of Airbnb. 00:08:55 - A Okay.

00:08:55 - C I love. 00:08:56 - B These are good quotes. Anyways, okay, we'll call it a tie. Let's just do that.

00:09:00 - A I give our guest. Okay. 00:09:02 - B Yeah, you got a couple of them. You opened up a multiple choice one.

So he kind of cheated. 00:09:05 - C Anyway, stop while I'm ahead. 00:09:07 - A Right? 00:09:07 - C Yeah.

Good job. Okay. 00:09:09 - A It's a good Quote. 00:09:10 - B So, yeah, John versus John.

I loved it. That's so funny. You're both John Richards, and we obviously 00:09:14 - C knew that back all the way in 00:09:15 - B the day when I was going to college. I think when I first met you, I'm like, dude, my dad, it's always 00:09:19 - A been a fun story.

00:09:20 - B And I have a, we have a. My brother's name is John Jr. Right. 00:09:23 - A It's always been a fun thing.

Yeah. 00:09:24 - B And then we're really close friends with a lot of johns, and we call them all by nicknames or initials or something just to keep it all straight. 00:09:30 - C But yeah. 00:09:31 - B Okay, so I want to dive into your background, John.

00:09:35 - C Like, I, I, I know you, I 00:09:37 - B do know you, and I know where you grew up and went to high school. But for all the viewers and listeners, like, where does this begin? How does the whole nomadic and your entrepreneurial journey start? Take us back to wherever you want to go.

00:09:48 - A Nomadic. But I mean, were you entrepreneurial in high school? 00:09:50 - C Yeah. Let's talk about it.

So first, I want to correct the intro. 00:09:54 - B Oh, shoot. Was intro bad? 00:09:55 - C Well, no, it was great.

You just, you just said I was the CEO. I want to give credit where credit deserve. My, my business partner Jacob's been the CEO. Oh, he's been the CEO.

00:10:03 - B Okay. 00:10:04 - C Jacob's awesome. He's my co founder and cousin, actually. Oh.

We, we are distant, I guess we're first cousins once removed. We tell everyone that we're cousins because it's easier not to have to explain 00:10:19 - A generation who, Who's. 00:10:20 - C Yeah, so me and his mother are cousins. 00:10:23 - A So he's young.

00:10:25 - B Okay. 00:10:26 - C My dad was the youngest in that family and his mom was one of the older ones. 00:10:30 - A Oh, that's so interesting. 00:10:31 - C It kind of like balanced out so that we, I grew up with my cousin's kids, a lot of my cousins.

Kids. Wow, that's crazy. 00:10:36 - B So how, how close is he to you in actual age? 00:10:39 - C He's a year older than me.

00:10:40 - B Oh, he's actually older than. Wow. 00:10:42 - C Yeah. 00:10:42 - B That's cool.

00:10:43 - C So we love Jacob. Grew up with him. We, we actually, both of our parents had cabins in Montana, so we grew up going up to West Yellowstone every summer and playing on the lake there. And we'd get jobs in the in town and like bus tables and stuff.

So had a lot of fun on that upbringing. 00:11:00 - C And then you asked about entrepreneurship. It did kind of start in high school. I actually started working for a company called LoveSac, which I'm sure you've heard of at the time.

They were booming and it was exciting. I was kind of in retail sales there. 00:11:13 - C But then the company kind of hit some roadblocks and filed for Chapter 11 bankruptcy. And in that process, I decided, you know what, Rather than, like, going and finding another retail job, I'm just gonna start my own thing.

So I just started cleaning garbage cans. So I'd follow the garbage truck around. On Wednesdays was when they'd pick up the trash, and I would just ask people to clean their garbage cans. 00:11:34 - C And I would spend one day working, and I'd make as much as my friends who were working a full week, because, you know, you're making 20 bucks a can.

You clean, you know, however many 20, 30, 40 cans in a day, and pretty soon the numbers added up pretty fast. So it's like just a high school kid. It was nasty work, but, like, it 00:11:52 - B was just literally carry a pressure washer around or something. 00:11:55 - C So I would just bring a hose and soap and a brush, and I would use their water supply.

00:12:00 - A Yeah. 00:12:01 - C And just knock on their door, and I did the classic, like, hey, I just cleaned your neighbor's cans. You want me to clean yours as well? You know, and I would just go house to house and just do that.

And I would do it on garbage day because they were empty, you know, and I'd just be able to clean them out. And so I did that for like a year, maybe two years. I was able to save up enough money to. 00:12:20 - C To go on a humanitarian trip.

And then obviously a mission, sort of a mission in Argentina, and came back, went to byu. That's where we met. And I guess we met our freshman year. So that was pre premission.

00:12:32 - C Yeah, but 2006, baby, you were in Mexico and I was in Argentina. And I remember that. Yeah, good times. But, yeah, coming back, I just decided I wanted to do construction management.

I just had this vision of, like, dude, one day I'm gonna build, like, temples. 00:12:48 - C Like, I'm gonna just build. 00:12:49 - B Or like, airports. 00:12:50 - C Awesome, awesome buildings.

Yeah. And so I did the construction management program at BYU for a semester, and I was like this. These are not my people. Like, I just don't feel like I belong here.

00:13:01 - C And for whatever reason, it just felt off. And so I was like, all right, I'm going into business. And so started the business program. Luckily, I got in.

I was on the wait list, and I wasn't expecting to get in, but they let me in. 00:13:13 - C And then, yeah, the rest is history. I took a job in sales out of the byu. I guess had the entre entrepreneurship emphasis at the time.

It wasn't a major yet. But I went to BYU with the emphasis on entrepreneurship and out of college took up a job at Bamboo HR doing software sales. 00:13:32 - B Straight outta school? 00:13:33 - C Yeah.

00:13:33 - B Oh, just doing sales. 00:13:34 - C Sales. 00:13:35 - B Oh. 00:13:35 - C So, yeah, I was just doing a hundred calls a day and same kind of thing.

Like within a couple months of doing that, I was just like, I'm destined for so much more, you know, like, 00:13:45 - B how was the sales job? Was it, was it tough? 00:13:47 - C It was, it was awesome. I loved the cold trip bamboo.

I was employee number 100. They were still a small, like, felt like startup environment there. It was growing rapidly. 00:13:57 - C I had really good sales leaders, you know, Jed Smith and a couple other like mentors that were just awesome individuals, awesome humans.

But I, I actually, I hit my sales quota faster than anyone had ever hit their sales quota. And I was like, really good at sales. But I realized the secret was you just needed to make more calls than everyone else. So I'd get in an hour earlier and I'd leave an hour later and I was able to make a really good living there.

00:14:23 - C But like I said, after like eight months of doing that, I was just like, I don't want to do this. I'm sick of making a hundred calls a day. 00:14:29 - B How long were you in the sales role? 00:14:31 - C That was eight months.

00:14:32 - B I know a lot of founders, they, the ones that have actually taken an in the trenches sales role are pretty good founders. Like, they know how to sell, so when it comes to their own product, they implement what they've learned elsewhere at a different startup or different company. And I just feel like it's a good skill to have. 00:14:49 - C Honestly.

00:14:49 - B It's a, it's a good milestone to hit in your entrepreneurial journey. 00:14:53 - A Or else they're saying, I want to hire salespeople. I don't want to be a sales. 00:14:56 - B Oh yeah.

Or it could go the opposite way where they absolutely loathe sales. But I'm just saying, I think a lot of good founders need that skillset of like, you need to learn how to sell. 00:15:03 - A Founders should never get away from sales. 00:15:05 - C Yeah, totally.

So that's. As we were at Bamboo hr, I actually went to a jazz game with my cousin. We were sitting there talking about like, let's start a business together. Just kind of like joking, like, should we buy some vending machines or like, what should we do to like, do something on the side?

00:15:20 - B Yeah. 00:15:20 - C I told him what Kickstarter was and he kind of grabbed onto this idea and he went home and started researching Kickstarter and within like a week he'd messaged me back he's like, dude, there's something here. Like, this business model is super interesting. You basically get all your funding up front, you get your customer base up front.

You get to prove out your product and your price point before you even go to market with it. And then you can go manufacture it. 00:15:42 - C People are willing to wait for it, and then you deliver something that is better than what you originally promised. And so he had this whole.

He. He really leaned into it hard. I'm like, let's try it. 00:15:52 - C I've never launched a Kickstarter before.

And so, like you said, we launched a minimalist wallet. This is the. The first product we ever launched. It's just the pull tab.

00:15:59 - B Has that changed? 00:16:00 - C Yeah, it's changed a bit. So it. First of all, it was called the Basics Wallet.

Yeah, I remember. 00:16:05 - B Oh, yeah. 00:16:06 - C When it was called Basics, initially, we were Basics Products. That was the name of the company.

I remember that. So we saw. 00:16:11 - B We. 00:16:11 - C We just wanted to create like everyday carry items like a notebook and wallet, watch things that you wear or keep with you every day.

And then we kind of had to pivot because we got a cease and desist on our notebook. Someone was Basics Office Products Company out of Canada was like, you can't sell the Basics Notebook anymore. And so we kind of were like. We did some research and found out there were 1600 trademarks on the name Basics.

00:16:38 - C And so we were like, we're not going to be able to exist as Basics anymore. Let's change the name. And we were developing a travel bag at the time because we're obviously like, let's make the bag that you put everything into. And so we, we researched a ton of names.

We got a domain list of like 1500 different domains. 00:16:57 - C We scrubbed the whole thing for anything that was like seven letters or less. And we narrowed it down to like two or three. And we ultimately decided on Nomadic, which at the time was super scary for me because Basics felt like it was such a brand identity at the time.

Like, we'd been running for two years as Basics. And so for me, it was like, no one's going to remember us. 00:17:17 - C Like, we're going to be forgotten if we make this name change. But now looking back, I'm like, did 00:17:21 - B you get the URL at that time?

00:17:23 - C Yeah. Yeah. So that's like why we decided on the name. 00:17:25 - B I feel like that's every entrepreneur's thing.

It's like, if the URL's available, let's just call our whole company and brand that name. 00:17:31 - C Such a silly thing. And I was Always I was like, let's just choose like, you know, let's. Doesn't really matter if it's a dot com.

Like let's just find something that we like and. But Nomadic ended up being a really good name because. 00:17:43 - A Excellent. 00:17:44 - C It really jives with like the, the brand we developed.

00:17:47 - A When you have a D and Civiti, it's consistent with your gear on the go type philosophy. Yeah, Nomadic. 00:17:53 - C Yeah. 00:17:53 - A A Nomad.

00:17:54 - C Exactly. Yeah. That's awesome. That's kind of how where the name came from.

That's how. 00:17:59 - C Like that's when we decided to make that change. But that was, that was a big change for us. 00:18:04 - B So when the.

So you had never done a Kickstarter before and you had just shared with your cousin. We now know that's once removed but not true cousin, but you were sharing with him. Hey, let's do something. What year was this?

00:18:19 - B Was it. Was Kickstarter like a pretty stapled thing or is this pretty early in the day? 00:18:23 - C This is 2014. I think Kickstarter probably launched in like 2009, but they didn't really start gaining traction until like 2010.

00:18:31 - A Utah was an early leader. I mean there were I, during my time. I stopped teaching at BYU in 2013, but Kickstarter was huge. During my last few years, so many BYU and students in Utah, people launched Kicks.

00:18:44 - B Well, I think it had to do a lot of. Around the regulation and laws. 00:18:47 - C Right? 00:18:47 - B Like it wasn't allowed or what?

Or Utah always was allowed or what was it? Was it ever. 00:18:52 - A No, no. You're confusing probably with equity crowdfunding.

Regular crowdfunding, like that was fine. Oh yeah, that's rewards based crowdfunding. Right? 00:19:02 - A Equity crowdfunding, if you're buying a product, 00:19:04 - B it's exactly pre sell.

00:19:06 - A But there was stuff, I mean it was bad. You know, there were several cases where people did a Kickstarter, raised millions of dollars and never came out with the product. Yeah, that's a problem because there's no, there was no recourse. 00:19:18 - C They can't, there's nothing they can do.

Because in the wording, it's like you're giving a donation to this campaign and in reward they'll send you a product reward. 00:19:27 - B Oh man, was that a. Was that common? 00:19:29 - C It's happened like I've backed at least two Kickstarters that have run off with the money.

Like this one, this one company did these super screen things they called it and it was like basically an iPad that extended from your, your like MacBook or whatever. So you could have like an Extra screen. Yeah, but they like pitched it as this really amazing thing, raised millions of dollars and just make a good video 00:19:49 - A and give millions of dollars and walk away. And Kickstarter keeps 5%.

Right. 00:19:55 - B I mean, where do you go if 00:19:56 - C you just run away with millions? 00:19:57 - B Isn't it? And like hundreds of thousands, tens of thousands of people gonna hunt you down.

00:20:01 - A The problem is everybody that's donated has checked the box on accepting that. Yeah. 00:20:05 - B It's a donation. 00:20:06 - C That's crazy.

00:20:07 - B But you. Okay, so you. 00:20:08 - A It's still not good for that person who pulls that off. Yeah, they're gonna, their name's gonna be tainted.

00:20:13 - C Right. Those, those people are, I think, are rare. What usually happens when they, when they take your money is they launch a campaign and they don't realize how much it actually takes to like create something. And they get to the point where they're like, crap, we're out of money and.

Or they're not able to actually deliver anything that's happened. 00:20:29 - B I feel like that's pretty, that's way more forgivable than just scamming people. 00:20:32 - A And their product vision was too big and they couldn't deliver. I mean they're just the product they thought would be an 8, 9 or 10.

It comes out and people think it's a 4 and they fail. Yeah, that's. 00:20:42 - C Yeah, that probably happens. Yep.

00:20:44 - B But in your circumstance, that obviously has went well. People were coming out and saying, wow, this is like an 8, 9, 10 for nomadic. 00:20:50 - A There's been some incredible stories out of BYU and Utah county for incredible successes on Kickstarter. 00:20:55 - B Yeah.

00:20:56 - C Hey, yeah. Yeah. So we launched 15 different campaigns and we've raised over $16 million through crowdfunding throughout the course of our. 00:21:03 - A All on Kickstarter.

Or do you use other. Sometimes. So there's, there was Rocket Hub. 00:21:08 - C Yeah.

So we would, when we would finish a Kickstarter campaign, we would go over to Indiegogo. 00:21:12 - A Indiegogo was a big one for that company. 00:21:14 - C And that was because they actually offered pre orders and Kickstarter didn't. Kickstarter.

You had to do a set campaign for a set duration. 00:21:22 - A Yeah. 00:21:22 - C But when that would finish, then you'd have this, you know, one month to six month gap that you didn't actually have the product yet that you could have continued to do sales, but it would drop off. So we would previously we would go to Indiegogo and we just run pre orders for four or five months.

00:21:36 - A So what. Indiegogo would first have a phase one where it was the donation rewards based crowdfunding and then when that was completed, you could still take more orders. 00:21:46 - C Yes. 00:21:46 - A And those were just pre orders based on the promise.

00:21:49 - C Exactly. 00:21:49 - A Those would be real orders, not a donation. 00:21:52 - C Right, right. 00:21:53 - A So then you are incurring liability.

00:21:54 - C Yeah, that one, it's like every 11 days the cash would clear and you have to like you're responsible for sending those products out. Yeah, yeah, that. So Indiegogo used to offer that. Now Kickstarter does offer pre sales as well.

So you can switch on Kickstarter now and just keep taking pre orders. 00:22:11 - C Wow. 00:22:11 - A Yeah, yeah, you just don't hear about Kickstarter as much anymore. 00:22:15 - C So because it's so saturated, this is my opinion on it.

It was directly. Our success on Kickstarter was directly tied to how well matter ads were performing at the time. Facebook ads. So like we would create a campaign within a week or two we would know whether or not that was going to be a multimillion dollar campaign just based on how well our ads were performing.

00:22:37 - C And we found that conversion rate on Kickstarter was actually higher than our own website. We were building this social platform on Kickstarter and we were driving traffic from like Facebook to, to Kickstarter and then it would convert even better there. And so in some cases we would be like you know, doing 10, $20,000 a day of just of just revenue, I guess pre sales. But really it was just Facebook driving all of that traffic.

Traffic Facebook in the last, I mean get ever since like the updates they've done and everything, like it's getting harder and harder. 00:23:11 - C It's getting more diluted. The spend doesn't go as far on that platform. So now like getting a 2 to 1 return on Kickstarter is like really hard to do now.

So I'm just saying like from driving meta ads directly to Kickstarter, it doesn't work as well for us. I know there's brands that pull it off, but you have to have a more like innovative product. 00:23:31 - C You have to have something that's more groundbreaking, more disruptive. More disruptive if you want it to like go viral on Kickstarter or people are sharing it.

00:23:38 - A So you're saying early days a huge amount of your revenue was from Kickstarter. 00:23:42 - C Yeah. 00:23:43 - A But now sitting here today, that pie revenue chart, how much is from Kickstarter percentage wise? 00:23:47 - C Nothing like like 11 to 1 to 5% in any given year.

And so we'll like last year we did 32 million in revenue. And I think of that, I think 00:23:58 - A like 200k was from Kickstarter and so Your omnichannel. What's your, what's your top channel? 00:24:02 - C So our website is the majority of our sales and then you've got Amazon's probably the next biggest bucket.

And then we have a wholesale which. 00:24:10 - A So the website's dtc. So you're not paying the middleman like Amazon. 00:24:13 - C Right.

00:24:13 - A Or you do FBA or fbm. 00:24:15 - C So we do FBA for Amazon and 00:24:18 - A so for our listeners, explain the difference. 00:24:20 - C Yeah. So fulfilled by Amazon or fulfilled by merchant.

Right. So essentially you either ship the inventory to Amazon and they hold it and ship it for you, or you're literally doing the shipments yourself. I don't know if you're allowed to use their warehouses for that or not because I've never done it. 00:24:35 - C But with fba, like we ship them a very specific amount of inventory and they know exactly when it's going to run out.

They tell us when to restock it and they're constantly doing this. 00:24:43 - A Have you ever had to take inventory back from them because they it didn't sell fast enough? 00:24:48 - C One time in Q4, I remember we had some slow moving product and they were like, this has been sitting for three months, we need you to take. And it was like one of our SKUs.

It wasn't a big amount. 00:24:58 - A Where did you store it when it came back? 00:25:00 - C We have a returns warehouse in Pleasant Grove. 00:25:02 - A Okay.

00:25:02 - C So we just shipped it back there. 00:25:04 - A Okay. 00:25:04 - C Yeah. 00:25:05 - B But the majority of your sales are just on your own e commerce website.

00:25:09 - C Just probably like 50, 60% of our sales. 00:25:12 - B Oh that's, that's really good. 00:25:13 - A So how much of your sales is through promotional marketing versus word of mouth? 00:25:18 - C So when we hack, we have a post purchase survey.

So at the after they buy the number one thing on there is like word of mouth. Like in terms of where did you hear about us? 00:25:29 - B Yeah, well like that situation that we just had here in the front lobby of our studio. The guy raves about it.

00:25:34 - C Right. 00:25:34 - B The bags are amazing. The best thing, I've had it for four years, I take it everywhere. 00:25:38 - A So what, so, so word of mouth number one.

So what's like of the channels or what? Like what's the paid advertising promotion? What's your number one page? 00:25:49 - C So, so if you're talking like top of funnel, when you're looking at a marketing funnel, how you're driving traffic, meta, Google, Instagram, all the paid section that accounts for like 70 to 80% of our top of funnel traffic, right?

Yeah. So the majority of people are actually learning about us there. First they'll say they learned about it from word of mouth, but it's because they're seeing our ads, they're doing the research. 00:26:10 - A Yeah.

00:26:10 - C And then they bump into a buddy in the front office here and they're like, yeah, you have that bag, do you like it? And they're like, this is the best bag I've ever had in my life. And then they go by and then they say it was word of mouth, even though they had seven touchpoints. 00:26:20 - A That's what a lot of entrepreneurs don't understand.

It's not just one method. It's literally, it takes about five instances of interaction with your product before they buy that they hear so. And they hear about from all these different channels, like you got to run three different paid promotions. Then somebody tells them a great word of mouth story and then you hit them just right with something next.

00:26:39 - A And then they buy, right? 00:26:40 - C Yeah. 00:26:40 - A And it's hard to track and know exactly how that all comes through. 00:26:43 - C It's impossible.

And so we had to shift our mindset. Actually, years ago we shifted from focusing on direct meta ads to focusing on just marketing as a whole because we had to start looking at our brand and say, okay, we're spending, you know, this much on mailers, where we send an actual physical mailer into their mailbox. This is TV advertising, this is meta advertising. And we just had to do all of it.

00:27:05 - C And, and you watch everything kind of rise and it's like, okay, now we're finally getting a 4 to 1 return or whatever we needed to make our margins work. But if you just look at one channel and you just put all your money into meta, then it's like, then, yeah, you're able to track it a lot easier because you know exactly where the traffic's coming from. But at the same time, they need, they need touch points from lots of different space. 00:27:28 - A And, and in the reverse, let's say you take one of those channels and say, that's, I don't think that one's performing.

I'm going to cut that one. And then all of a sudden your sales go down and it's not because that one was really performing on its own. It was part of the mix. Getting like, you know, the average purchase takes like five sales attempts by a company.

00:27:47 - A So they see a meta ad and they say Instagram. Then they hear good word of mouth. And then now here comes another Instagram. And then back to meta for the fifth one.

And it was the fifth meta that got them to click. 00:27:58 - A Yeah, but the others all contributed. 00:28:01 - C Right? 00:28:01 - A And that's really, really hard to Track.

00:28:03 - B But when you were, when you were doing the Wallet, did you have all this figured out? You didn't have all this figured out, did you? 00:28:08 - C So that's why, like that's what I was saying back, back in 2014, when we launched the Wallet, like Meta was the place. The place, it was the only place.

In fact, very few brands were spending there. Like if you saw our ad, it would be next to someone being like lose belly fat instantly. And the next ad would be like this is some campaign for some political thing. 00:28:28 - C Like it was very, like it was the wild west back then and so.

00:28:31 - A But it was very high performing for every. There was a while where Facebook was unbelievable. 00:28:35 - C It was. 00:28:35 - B Our company was on Meta ads like crazy too.

Like we would pump a ton through and then when Instagram came out and everything, I mean for a while it was just Facebook and then they advertisements went on to Instagram. Those all performed so well back in like. Yeah, the early teens. 00:28:49 - A It seems like Instagram would be good for you.

00:28:51 - C Yeah, it does, it does. Well, we, we have a pretty big audience in Instagram. It's a lot more curated and so our audience is like professional that, you know, especially now that we have camera bags, like the amount of ugc like user generated content that we get from these creators. So people like him that carry his camera with them all the time, they produce very high quality content.

00:29:15 - B Yeah. 00:29:15 - C And they're constantly posting about how much they love their bags or whatever. And so we, we just have this like flow of, of content now. 00:29:23 - B It's a viral engine.

Yeah. 00:29:26 - A Yeah. So I, that's just fascinating. 00:29:28 - B I, I have a question.

You know, we at Startup Ignition, we now have a venture fund, but it started out as a startup boot camp. The brand really, we taught people what to do and what not to do. And it's heavily based on like lean startup principles where you're validating a market, validating a product before you're going and making it, producing it, spending all this time, effort, energy, money into getting all the, you know, the product out to market. Right.

00:29:55 - B In a way what you're doing with Kickstarter is like you're kind of validating the market before you're actually spending the dollars building. 00:30:02 - A Yeah, that's not. In a way I used to talk 15 years ago when Kickstarter first came out, I said this is amazing. It is the way because consumer products, tangible products, had a very hard time actually doing Lean start.

When Lean Startup first came out circa 2007, ish, it was really good for software and online Companies and. And mobile apps, and you went and had to talk to customers and you could get. 00:30:25 - A But tangible products. How do you get a tangible product made in prototype form to give the person an idea when you're going to sit down, interview them, and this is what the product's going to be.

The idea that you could make a promotional video with a virtual product represented in the video, play it online for somebody and have them preorder. It was amazing. Right? 00:30:45 - A And that was incredible.

Lean startup testing. 00:30:48 - C Yeah. Yeah. The perfect example I give of that is when we launched our first travel bag.

All the comments started rolling in, like, why do you not have waterproof zippers on this? And it's something we hadn't even considered. 00:30:59 - A Yeah. 00:30:59 - C And so then we're like, dude, let's just swap it.

So we. We swap the zippers for waterproof. And then everyone got a product that they were happier about and excited about rather than. 00:31:07 - B So you would change the product launch?

00:31:09 - C Yeah, so we would. We'd be like 80% when we launched the campaign, and then we would make tweaks as. As the campaign would go based on feedback. 00:31:16 - A That is literally the definition of.

00:31:18 - C No. 00:31:18 - B I was. I was bringing that up to just pull in the similarities of, like, you basically drink the same Kool Aid that we drink is like you're testing the market, you're validating the product. You're testing and validating the customer before you even sink any dollars into it.

So other than the first initial R and D or initial designs, which I'm sure you have a pretty mature process around, but back in the wallet days, you probably didn't put too much into the wallet before you actually built the campaign, got a lot of feedback, and then shipped out an awesome wallet to everybody. 00:31:46 - C Right? Yeah. The wallet was a little different because we could actually prototype it, like, in our basement, because it's elastic.

00:31:51 - B Yeah. 00:31:51 - C So, like, we would make them, give them to people, actually get feedback. 00:31:55 - A The nomadic travel bag with that travel 00:31:57 - C bag, you can't make that in your basement. No, no.

When we got it, we got it from Asia. We actually had a manufacturer in China lined up, and we were like, all right, it's pretty good. Like, we flew out there. 00:32:07 - C It felt right, but it was kind of like it wasn't quite what we wanted.

We ended up sending that best prototype we had to a factory in Vietnam. And the prototype we got back was like, 10 times better than what we were getting out of China. Really? And we're like, all right, we're.

We're going to go with this Factory now. 00:32:23 - C And we actually made a change mid campaign to who our manufacturing partner was going to be. And we've stuck with them all these years, like they're still our number one part. 00:32:32 - B What was the difference?

The materials or something? 00:32:34 - C The quality, just overall, like stitch quality, the build, like they just understood the technique, the technical side of how you create a bag better than these Chinese. 00:32:43 - A Let's frame this. I.

Okay. For our viewers and listeners, especially those outside Utah, and we have a pretty good audience building outside of Utah. Utah is really known for software, SAS software and things like that. 00:32:53 - A But it's actually a huge hotbed for consumer products to what you do really, you know, putting out well designed, thoughtful consumer products.

And we're sitting here with you, one of the kingpins of that in Utah. And I think we all want to learn from that. So I got some questions about your business. So when people start a business like what you're doing, one of the first things that they have to go explore.

00:33:18 - A Even though Kickstarter is a great way to do lean startup and do this, they at some point have to choose a manufacturer. Okay, so how. That's been a problem for a lot of people. And tell us the story of.

And maybe not with the wallets. 00:33:32 - A That was easy. Let's take the most complex product after the wallet was like a bag. Was that it?

00:33:37 - C Yep. 00:33:37 - A Okay, so your first nomadic bag, which is kind of famous. How did you find a manufacturer and how did that work out and where'd you choose to do it? Tell that whole story.

00:33:46 - B Okay. 00:33:47 - A Because that, that's huge for these entrepreneurs. 00:33:49 - C No, it's actually really valuable. And it's a lesson that I actually had to learn because my business partner, Jacob, he actually came from a sourcing background.

So he had, he had learned how to do this process. And it's not rocket science. There's not like some secret tip that I can give you to be like, here's the thing you have to do. 00:34:04 - C But I will say your story will teach lessons if you go.

If you, if you do it more simple than you think. So a lot of people get this idea in their heads like, oh, I have to, you know, get introduced to a specific factory, or I have to know them, or I have to have volumes to be able to get specific factories. And some of that is true. 00:34:22 - A Volumes does come into play.

00:34:24 - C It does come into play. But there is a, there is a little hack here that I'll give you, which is like if you, if you want to find a manufacturer, let's say I'll just Use bags because it's. It's what we're talking about right now. Let's say you want to find a bag manufacturer.

What I would do is I would go on Alibaba and I would look at all the different bag manufacturers that make the type of bags that you want to make and the quality you would want. 00:34:46 - C You look and make sure that these are established factories. They. They can't be started within the last couple years.

We're talking like five to ten years plus. Okay. 00:34:54 - C You find these factories that have, you know, at least 100 employees. Not like, not some small, like 10 employee operation that's operating out of a small place.

You. So you make sure they're established, you make sure they're legit. But then what you do is you just type there, you type the factory name into Google and you go to Google and you find an email from like a salesperson on their team. 00:35:17 - C Rather than going through Alibaba and using that platform and getting spammed with messages and all that, just find out who this factory is, find out what the name of the factory is, go find an email of someone that works at that factory, email them directly.

And what you want to do is essentially just position yourself to say, you know, I'm John. I'm going to launch this product on Kickstarter. Historically, products on Kickstarter do this. Well, you know, I would love to prototype with you guys, if you're open to it.

00:35:43 - C And so then you kind of build a relationship with this person. We did this, though, with probably 10 factories, and then we narrowed it down to like our top two or three. We actually flew out to China, which everyone gets intimidated with this as well. But it's not as scary as you think.

You fly to the country, you meet with these people in person. 00:36:01 - A So no broke. You didn't go through brokers. 00:36:04 - C What are you.

00:36:04 - B What's your. 00:36:05 - A Not to interrupt you, but your quote. What about brokers? Yes or no?

So middlemen, agents or whatever? 00:36:11 - C Yeah, that's a really tricky question because the factor we ended up with was brought to us through a middleman. 00:36:19 - A Okay. 00:36:20 - C But I will say that we had.

We gone about it the way that I'm teaching you right now. 00:36:24 - B The Vietnam one or the Chinese one. 00:36:26 - C So. So ultimately this is what happened.

You guys have probably heard of. There's a guy named Joseph May who started a company called Breton Bags. 00:36:36 - B Yeah. 00:36:36 - C Yeah.

Okay. So Joe May's great guy. He's like, I have a really good factory, if you're interested. He made an intro to someone who was a middleman that introduced us to this factory.

00:36:45 - A Okay. 00:36:46 - C So it wasn't like us going to the middleman and saying, we help us source this product overseas. It was more just. 00:36:52 - A I didn't want to take you off course, but I just want to know if you.

But you said you went direct first. 00:36:56 - C Yeah. 00:36:57 - A And then you did meet the best factory through a middleman. 00:36:59 - C Yes.

00:36:59 - A So just keep your eyes and ears open. 00:37:02 - C Yep. I. I think so.

I think the, the thing, though, that I will say is we have spent the last three years trying to unwind this middleman relationship, because what can happen is they'll charge a percent or they. They end up charging more at the factory level to get their percent off the top without telling you. 00:37:21 - C So I don't know how. However they're doing business, there's a chance that they're getting some kickback somehow.

And if that continues year after year after year, when you grow from, you know, at the time, we're whatever, doing a million dollars a year to now $30 million a year. This. This third party middleman made over a million dollars in one year, just based on the volumes that we're doing, which is crazy for one introduction and not pulling weight in anywhere else. 00:37:46 - A I mean, so.

00:37:47 - C So we've tried our very hardest to unwind those relationships, and it's. It gets really messy and sticky. And so my, My personal opinion is, like, if you can do it yourself, you're better off, obviously, if you can find someone you trust. But the middlemen are there for a reason.

It's because they have connections to these trusted factories. 00:38:03 - A So your hack. Back to your hack. Because I took you off that.

00:38:06 - C No, you're good. Back to hack. 00:38:07 - A Find an email. 00:38:08 - C You find an email directly to a 00:38:09 - A salesperson for that factory.

00:38:10 - C Email them directly and just choose, you know, keep your own little spreadsheet or whatever. Just choose your top five to 10 factories. Start. Start communicating with those people.

Jump on a Skype call with them, test how. 00:38:21 - C How good is their English, How. How. How good are they communicating?

And then you kind of narrow that down to, like, your top couple. You fly out there, actually meet with those. Those people, and you'll know immediately. 00:38:33 - C Like, when we walked in those facilities, there was one where I looked at my partner.

I'm like, we have a meeting. We have to get to. It's. I just made something up because I'm like, we need to get out of here.

00:38:42 - C Like, this is not what. 00:38:43 - B The facility was just so bad. 00:38:45 - C Yeah, it was just so bad. 00:38:46 - A Like, how's the English?

00:38:48 - C The English Just depends. They'll usually have a salesperson that speaks perfect English, and they'll do either translating or, you know, 50, 50, 60% of the time, the people, like the management, actually speaks English. 00:39:00 - A So let's talk. Let's talk.

Okay. You have more to go on now. I'm going to talk about volume. 00:39:04 - A So, yeah, that's the thing, too.

You know, sometimes the volumes are 5,000 units, and they only want to get 500. How. How do you get around volume issues? 00:39:12 - C So volume, for us, it was obviously for the very first one, we found a factory that it was.

It was wallet. So it was like they were willing to make something that wasn't very complex. Right. But you're back for the bag.

00:39:24 - C We had already. We had a proven track record where we had raised, you know, 170,000 on our first Kickstarter. We'd raised 380,000 on our notebook Kickstarter. And when we went to launch the bag, we had.

We had thousands of customers at this point. 00:39:40 - C It was like. 00:39:40 - A What was your first order with the bag? 00:39:42 - C Our first bag order, we did 3 million in pre sales within 60 days.

So I think we ordered, like. I want to say we ordered like, 7,000 bags. 00:39:51 - A So you could do that because of what you raised, because of a lot of entrepreneurs that don't get that. They can't pull that off.

00:39:56 - C Right. So then you would have to go to minimum order quantities, and depending on the factory, you're looking at 300 bags or something. 00:40:02 - A Talk to a lot of people. Negotiate.

And it's wild west negotiation, too, isn't it? 00:40:06 - C Yeah, yeah. I mean, the negotiating is tricky because they'll come at you with a price that, you know you're going to end up trimming down a little bit. And what we usually do is we come back to them and say we need it to be here.

And that's what. We just draw a line in the sand. 00:40:18 - C And it's usually a little bit lower than what we really need. You know, it's like, we need our price to be $50 for this bag.

Can you get it there or not? And they'll be like, oh, we can get it to 55. And. And it's like, all right, well, if we can get it to 52, we'll.

00:40:29 - C We'll, you know. So you kind of just trim down. 00:40:31 - A Tell us about gray market, black market, copycat. That whole thing that everybody's.

00:40:35 - B Is that happening to you? 00:40:36 - C I would say it's more of a volume thing. Like Codapaxi. It's happening, too.

So you Travel to Asia. You actually see codapaxi bags getting ripped off in stores there and stuff like I think they're 100 million plus now. 00:40:47 - C I think if you're our size that's not really happening because they need a 00:40:51 - A brand that's well known to be worth it. Needs to totally rip off the name and everything.

00:40:56 - C Someone needs to walk into a store and say that's a coat of paxi bag for $5 or whatever instead of 50, you know but. 00:41:02 - A But is gray market, black market and copycat that whole arena as concern for somebody like you. 00:41:09 - C I would say it hasn't been but it's because I've built a really good relationship with our factory owner to the point where it's like I trust him. I know he's not just going to go behind my back and try to produce this but there could be.

00:41:20 - A That could happen. 00:41:20 - C Could happen. And I've seen it on Alibaba. I've seen our bag where they've liter images from our site and said we will make this backpack.

We've had probably 5 to 10 e commerce brands pop up that have a version of our bag with a different name on it. It happens, right? 00:41:35 - A Yeah. 00:41:36 - B And they're getting it produced.

Not even at your Vietnam factory, it's somewhere else. 00:41:39 - C Yeah, they're making literally just straight up 00:41:41 - B hey, hey, copy this design. 00:41:43 - A I'm keep going down my question. If that's it, let's do it.

So let's talk about unit economics and you don't need to shares if you don't want to but you can. We teach a hard principle. You need at least 4x unit economics so whatever your landed ready to ship costs is you need to charge MSRP of at least 4x or you don't have a real business. 00:42:00 - A Do you agree with that?

00:42:01 - C Very similar. We're 5x on our initial cost not landed so we'll get the cost of the bag back and we 5x that which probably ends up being about 4x landed once you include packaging and shipping and everything else. 00:42:15 - A Okay, so just the manufacturing 5x okay. 00:42:17 - C Yeah but.

00:42:18 - A So you have to. But unit economics, how important are they to you in running this business? 00:42:21 - C They're very important. Super important.

00:42:23 - A I want you to teach everybody how important that is and that's why because we get in my history, you know I've mentored thousands right. So I get these CPG entrepreneurs coming in and they say yeah I I've tested I can sell this for $179 and they'll say I go what's Your landed costs on this. $93.93 landing costs with 179 retail.

That's not even good enough almost for DTC to even skate by. 00:42:51 - A And you're never going to be able to do it through Amazon or Costco or Walmart. 00:42:56 - C Yeah, and a lot of people explain all that. Yeah, a lot of people come to us and they critique us because they're like, oh, your products are so expensive or whatever.

It's like we have to charge 5x our cost, otherwise we make zero margin, of course. And so it's like if, if we're, there's been products where we have launched and they have, for example, a higher return rate. So let's say you have, you know, a backpack that looks like another backpack that you sell and then people are buying it and then it's not the one they wanted, so they're returning it. 00:43:23 - C That one in exchange you end up losing, you know, 20 or $30 on that shipping to and from to like replace their bag though that, that kills your margin.

That, that essentially wipes out whatever profit you are you stood to make on that. And then when you get to D, when you're, when you're on your website, you have these codes that people are sharing that are being linked all like leaked all the time. Right. So it's like at any given time, if you were just to go into Google and type nomadic coupon code, like you're going to find 10% off for sure, maybe 20% off.

00:43:53 - C Like if we're not doing a really good job of controlling those codes. So when you look at the total price of what you're charging those bags, like people now expect to, to get 10 or 20% off. They expect to see free shipping. They expect to be able to return it if they have any problems whatsoever.

And you have to factor all that into this, this cost. 00:44:10 - C And when we run our numbers, it's like, okay, we have to be at 5x otherwise you don't make money. 00:44:16 - A Okay, so you're now a rich and famous entrepreneur. So imagine that you're an investor in the future and somebody like you comes to you for investment.

So, and they tell you they've got like a 2.8x on their unit. Economics. 00:44:29 - A What would you tell them?

00:44:29 - C Yeah, I would tell them you either have to find a better manufacturer to get that price down. You have to launch it somewhere like on Kickstarter where you can do volumes that will get, get you to get a better price, or you're going to have to just charge more and the, the one thing I think a lot 00:44:44 - A of make up for bad economics with more volume because it doesn't improve it. 00:44:49 - C Right, right. It doesn't.

Unless. 00:44:51 - A Unless unit economics. It's not company economics, it's a unit. 00:44:54 - C I'm saying on the manufacturing side, let's say you're producing 300 instead of 3,000.

Like they'll give you major price breaks if you can produce more. 00:45:01 - A Right, exactly. 00:45:02 - C So you have to produce more volume and be able to go back to your factory. 00:45:05 - A Think somebody should do a First, let's say 300 unit order and the economics don't work out, they're taking a loss overall, you know, because the company's expensive to run.

Right. To get them to where they can start earning 3,000 and make it profitable. Should they take that risk? They make the first.

The first order have good unit economics that are forex or better. 00:45:23 - A That's my question. 00:45:26 - C I think there's more. I think there's information that you can get that's more valuable than just making money at the beginning.

00:45:32 - A Yeah. 00:45:33 - C If, if you're like going to run yourself into a hole and not be able to order your next purchase order, then it's like, it's obviously not smart. But if it's like, no, with these 300 units, we're actually going to prove X, Y and Z or customers will tell us how much they love or hate. Or we'll be able to change the product and launch a V2 based on this.

Like, you can learn a lot by getting product out in the wild. The perfect example is our wallet. 00:45:54 - C When we launched this originally, this pull tab right here, we had just laser. We use the laser to cut that little tab, that section where the tab goes in.

We cut that out with the laser. What we didn't understand is when you cut elastic with laser, it, it likes it. Well, it melts it. 00:46:11 - C But over time, when you're pulling a tab like this in and out, in and out, in and out, that starts to fray.

00:46:16 - A Okay. 00:46:16 - C And so within a month or two, we sent out 6,000 wallets. All 6,000 of them started to fray. 00:46:21 - A Okay.

00:46:22 - C We're like, holy crap, we're going to go out of business for sure. Right. But then we, we quickly prototype this version with a ribbon wrapped around right here. And we sewed a ribbon in.

And then it was like we had an opportunity then to go back to our customers that had already purchased and said, all your wallets are going to break down in the next month or two. 00:46:39 - C This is a flaw that we didn't realize we had initially like, like let's, let's give you guys a wallet for 70 off. This essentially eliminated all of our margin. This was basically giving it to them for free.

But what it did for us was it built the trust in the customers to say oh sweet, like I'll, I'll still pay for it. Like they're gonna have to pay 30, that 30% or whatever. 00:46:59 - C But it was for them it's worth it to get a product that works and performs how they were expecting. And so for us that was an example of like we launched something maybe premature that we didn't fully understand if it would break down.

It did start breaking down. We quickly fixed it and were able to resell to a lot of those same customers and earn their trust back. And so I think your questions are really good. 00:47:24 - C One like should they launch, should they not launch if their unit economics are good?

00:47:27 - A Kind of a lot more information may be needed to make this decision. 00:47:30 - C It's not just an easy cut and dry. It depends if you, if you're trying to put, prove or test or validate something there may be a case to say you should do this, put you 00:47:38 - A in the investor seat again. Okay so now somebody comes to you and says there and, and you and it bears out.

And their unit economics are like 7x. What do you think? If you heard that, would you believe it? 00:47:50 - C I mean there are products like that.

Yeah for sure. If you're seeing those, it's like dude, this is a really great product. 00:47:55 - A There's two student teams from my day BYU. This 7X.

One was a Lumable and the other was Snap Power. Those two Utah county based ones. And of course they didn't need any money because they were, they did Kickstarters. 00:48:08 - C Right.

00:48:09 - A And then solo these things at 7x unit economics. So they're just, they do their first orders and it's just. So that's why I try to teach people say you got to get these unit unit economics and it's straightened out. 00:48:20 - B Funny how much cost goes into that because you can charge the customer more or you can lower your cost.

Those are the two levers you have. 00:48:27 - A Right. 00:48:28 - C So yeah, I think one thing I was going to say that a lot of people don't understand when they're trying to validate pricing in Utah people are cheap. 00:48:35 - A Yes.

00:48:35 - C And if you're asking people in Utah how much they would pay for something. Yes. They're going to tell you lower than what the national average is. 00:48:42 - B What do you think that figure is the difference between state and out of 00:48:45 - A State and the same in Utah.

We've said it for 30 years here, 25 years. If you can sell in Utah, you can sell it anywhere. 00:48:52 - C Yeah, well, when you talk, talking about like California or New York, you're like for, for example, with bags, sometimes we'll, we'll prototype something and say, what, what would you pay for this? And the feedback in Utah, it's like, oh, I'd pay, you know, 100 bucks, 150 bucks.

You go to like New York or California, like I pay $400 for that. And you're like, that's like three times what. Yeah, everyone else is telling me. And so you have to, you have to do a valid survey with your customer base to say, let's find like who's your core customer?

00:49:20 - C You know, if it is a Utah customer, then that is what it is. You should price it for Utah people. But if it's like, no, this is an international product that I could sell anywhere in the world, you should get a good demographic to actually survey. 00:49:32 - B Good group of surveys.

00:49:33 - A Did you ever hear of the name Warren Osborne? He's a friend of ours and he's passed away now. He taught me to also though. But like when you are running those 6, 7x unit economics, you're also open to competition because if you can pull that kind of profit out of a tangible product, competitors are going to be right around the corner.

00:49:51 - B They're going to notice. 00:49:52 - A Right. They're going to start undercutting your prices and. Because they can survive at 5x.

Right. And so that's why you kind of really want to be in that 4 to 5x for long term, right? 00:50:02 - A Yeah. To make it.

Yeah. That's good. So I, I hope it's okay. 00:50:05 - A I'm kind of grilling.

00:50:06 - C No, this is great. Yeah, I'm having a good time. 00:50:08 - B No, I, I think for those entrepreneurs that are seeking out tangible products, CPG products, e commerce type products, like, I think this is really valuable information for them. But back to the validation thing.

And I don't think we've kind of put a stamp on this conversation. Should a new CPG entrepreneur, product entrepreneur, do a Kickstarter today? Like, are you, are you saying it's worth the validation, the feedback and the market and the grouping, maybe the volume based purchasing and manufacturing that you could get. Is a Kickstarter still worth it?

00:50:41 - C If I'm starting to tomorrow, that's such a hard question. 00:50:43 - B Is it? 00:50:44 - C Yeah, it's very, it's very individual. I would say.

Here's the, here's the filter. I'D put that through. If the product is unique and special, like the market disrupt, you can't just go to Amazon and buy this product. 00:50:56 - A Yeah.

00:50:56 - C Then, yes, I would say look at Kickstarter. 00:50:58 - A Yeah. 00:50:59 - C If you're like creating a new stuffed animal that. Right.

It's like, that's great, that's cool. But I can go on Amazon and find 100 other ripoff products that look similar to this. Why would I ever want to go on Kickstarter and do that? 00:51:12 - C Like, if you're, if you're doing it, that reason.

But the validating is super important. Like you. We would actually use. We would do quite a bit of surveying outside of Kickstarter.

00:51:24 - C So we would. For example, when we created the travel bag, we surveyed all our customers to say, when you travel, make a list. Like, we had them make lists of here's everything I bring with me. Or we said, what's.

What are some of your biggest pain points that you're experiencing as you travel? 00:51:37 - C And we essentially built that bag around the feedback we got from those surveys that we sent out. So you should definitely survey. You should definitely ask people if you have the ability to prototype it.

The very best thing you can do is actually give people physical products that they can test themselves and give you honest feedback on. That's like, that's like number one in my book for, for getting good feedback. 00:52:00 - C Then you're talking about surveys. And then focus groups, I think are hit and miss depending on if you run them correctly and if you know how to, how to ask the right questions.

You're not inserting bias and things like that. But if you can do that, not an unbiased way, focus groups can actually be super valuable as well. And then I would say Kickstarter is like a massive focus. 00:52:19 - C It's a massive focus group and it does all of those things in one.

But you just have to be able to invest a month. Month worth of time and energy to build the campaign and get it ready. And it has to be a product that is differentiated in some way. Yeah.

00:52:32 - A How important has influencer marketing been to you, if at all? 00:52:36 - C Influencer marketing is, is constantly changing. And I would say it's been some of our biggest revenue drivers and some of our biggest fails have come from influencer marketing. 00:52:48 - B We need some stories.

00:52:49 - C Yeah. So I'll give you the perfect example. We, we met this guy out here that has a Peter McKinnon bag. Right.

Like, Peter McKinnon was a YouTuber who had, I think at the time, like between 2 and 4 million followers on YouTube and he taught photography hacks. 00:53:04 - C So someone like him goes and creates a camera bag. His audience immediately trusts him because they, they're already coming to him for photography hack information. So then he says, I launched a camera bag with Nomadic.

You should go check it out. We did. 00:53:17 - C With him posting one video. We did 600k in sales from one video.

That's the perfect example. Okay. 00:53:24 - A Influencer is that good? 00:53:26 - C Yeah.

Right. Like, find another person that has that much push power and I'll, I'll work with them. No, but that, that was a huge collaboration. Right.

00:53:35 - C That's perfect example of something that went really well. Now we've had influencers where they say, I've got 2 million followers. I'd love to talk about your bag. Great.

What does it cost? 00:53:44 - C It's, you know, $10,000 for a post or whatever. 00:53:48 - B Great. 00:53:48 - C You pay them 10 grand, they drive like one sale or nothing.

And it's like, what happened? What in the world? Like, your audience is, is terrible. Or you just push so much product that no one cares or listens to you anymore.

Right. So you have. 00:54:03 - C In my opinion, influencers are really good to work with. If you find someone that's in the vertical, that is the vertical that you're in.

00:54:09 - A Yeah. 00:54:09 - C They can add a ton of value to your audience based on the audience that they have. So if they're teaching photography tips and tricks, they're going to be a great person to launch a photography bag. 00:54:19 - B Yeah, it's, it's kind of like general business.

Like, you can't really get a quick win if you put more effort and, and in, into the relationship or partnership. Like with Peter, you literally made a bag, branded it. His, like, went all in his name. 00:54:31 - C Right?

Yeah. 00:54:32 - B Versus just paying a random influencer $10,000 to get a quick win. 00:54:35 - A Let me ask you. But you're so successful now.

But let's go back to if you were starting today and you, you know, didn't have the track record, success and you wanted to go influencer marketing is there. What do you. What's the characteristics or traits of an influencer? 00:54:49 - A Whatever the vertical is.

You could take camera bag or whatever, but is there a minimum number of followers? Is it Instagram versus other. Is it TikTok? What like right now, if you were starting off a new company with a CPG product, what's the best platform?

What's the parameters you're looking for in an influencer that would say, I'll take a risk on this one with my precious dollars? 00:55:09 - C 100%. 00:55:10 - A Okay. 00:55:10 - C Yeah.

I think there's there's an audience of influencers that are these. You know, you hear people talk about macro versus micro influencers all the time. Right. You've got these big people that have 2 million or I guess a million plus, let's call it.

00:55:23 - C And then you have people in the hundreds of thousands and you have people that are like 10,000 or less and they're just starting to build their following. Now the interesting, interesting thing about this, if you're doing a product, depending on the price point of the product, let's say it's not something cheap, that's a couple bucks, let's say it costs a hundred dollars for your product. That's actually a pretty good incentive for someone that doesn't have a pretty big following to post so you can give away free product.

So I would say the first thing I would do is I would, I would have already chosen a product that exists somewhere between say 50 and $150. Just because you can't make meta ads work unless you're dealing with higher dollar value. 00:56:02 - A Okay. 00:56:03 - C If, if you're starting.

If I tried to launch this wallet today, it wouldn't, it wouldn't work. 00:56:07 - B Right. 00:56:07 - C I wouldn't be able to pull this off. So the reason this worked back in the days, because we were getting 8 to 1 returns on Facebook.

Nowadays you go and do that, it doesn't work. So I would say start with a product that's at least a hundred dollars, you know, that costs a hundred dollars, then you can approach these influencers that have smaller followings. And I would say if you can find someone that is perfect in your audience that has, you know, a couple hundred thousand followers, they're, they're more, more likely than not, they want something to talk about. 00:56:35 - C And if you can build a relationship with them and you just say, hey, maybe you ask what their pricing is initially and they give it to you, but then you just say, I'd love to just send you a product organically so you can see if you like it or not.

00:56:46 - B Yeah. 00:56:46 - C 90% of the time they're going to post about that product anyway. 00:56:49 - A Yeah. 00:56:50 - C Without you signing anything?

Without you paying them. Yeah, because they're excited about talking about it. It fits within. 00:56:56 - A And they're trying to grow an audience.

00:56:57 - C They're trying to grow. And so a lot of our, a lot of our influencer marketing is just done because we're able to give away a $400 bag. And of course they're going to post about how they pack out their bag. They're going to post about that, so a lot of that's just quote unquote free.

The marketing cost is essentially your cost of product. 00:57:15 - A I know I kind of took over here with a lot of grilled questions, but I know this is what people want to hear about from him. So let me ask one more because we are running out of time. A little bit here is what's the single moment in Nomadic's history that really was an inflection point that said, okay, this, this was the, this is, we're, we're making it now.

This is the moment. I know we're doing great. 00:57:38 - A What, what, what happened? What caused that inflection point?

00:57:43 - C Yeah, there's. 00:57:43 - A Was it an influencer you went with? Was it, there's. You invented an incredibly disruptive product or combination.

What, what, what is the moment that you point to that because right now you're wildly successful. Okay, so what's the moment? 00:57:57 - B Yeah, not many people can claim, you know, 30 plus million dollar revenue. 00:58:00 - C Yeah.

00:58:01 - A And, and also your word of mouth and the quality of your product. I mean, I am a convert. And by the way, I got my first bag. If you remember when you saw me early in Nomadic history and you said, I ate a lot of food at your house, here's a free bag.

Do you remember that? 00:58:14 - A Yeah. And I love that Nomadic bag. And then we also have Startup Ignition branded Nomadic bags.

So again, viewers and listeners, we don't shield products on this, but it's a great product. Okay. 00:58:25 - B I'm wearing Nomadic pants right now. 00:58:27 - A Yeah.

So what's, what's the, what, what's the moment you're thinking of? 00:58:31 - C Yeah, yeah, I'm gonna, like, I guess there's, there's a couple thoughts I've had as you've been asking this question, because I think there's a couple different facets to this. The first one would be the success we've had. I like that quote you read about 10 years.

Like how. Read that quote again because that I think applies to what he's asking here. 00:58:52 - C It said 00:58:55 - B over every overnight success is 10 years in the making. 00:58:58 - A Yeah.

00:58:58 - C So when you say, oh, Nomadic is hugely successful, what was that inflection point like? I can point to a hundred different times where something worked or something didn't work and we had something blow up in our face and we had to make a drastic change like switching our name to Nomadic. But ultimately when I look back and connect all these dots, all of those things created what Nomadic is today and it made us stronger, more capable to survive. Things like travel bans during COVID or Tariff stuff that's going on right now.

Like, all the challenges we face in today's world are all things that we were able to overcome because of things we faced in the past. And so there have been specific times we worked with an influencer like Peter McKinnon. 00:59:40 - C It was like overnight. Camera photographers absolutely love our bags.

We're in over 200 different camera stores now because of that relationship. So I can point to that and say that was a huge, huge moment, a huge win when we launched that travel bag on Kickstarter. We raised. 00:59:57 - C We went from raising $300,000 on a campaign to raising 3 million.

And when we did that, I was like. That, for me, was a point in my mind where I was like, we're a bag company now. 01:00:07 - A Yeah. 01:00:07 - C We're going to make really high quality bags.

10x that. Yeah, exactly. That just, like, put in stone. All right, this is who we are today.

01:00:14 - C And that's. 01:00:15 - A So here's what. Based on that answer, I'm going to reflect back to that answer that I think I'm hearing. I think that it's because, number one, you're good operators.

What do I mean by that? That you're frugal and not wasteful with money. And you, all the things from left field that come and could wipe you out. 01:00:32 - A You weren't overexposed because you didn't take too big a risk without counting your chickens before they hatch type of thing.

You're just frugal, good operator. So that allowed you to keep going. And then overall, you staying in the game, you. That allows you to stay in the game.

01:00:46 - A You extended your Runway, and then all of a sudden everybody goes, man. And you gave time for the product to be accepted and get good word of mouth and be recognized as a quality product. Because if early on you would have made a huge gamble, used up too much your capital and went for the gusto and blew it, game over. 01:01:05 - C Yeah, right.

01:01:07 - A Do you think I'm describing you guys pretty well? 01:01:09 - C Well, it's funny you say that, because 01:01:11 - B he's like, stop flattering me. 01:01:12 - C No, no, it's. It's the pride cycle, right?

It's like we. We have had moments where we got out ahead of our skis and we said, let's shoot for the moon. Like, away away luggage. Just got a billion dollar valuation.

01:01:23 - C Yeah, let's go do that. Let's raise capital from investment bankers and let's shoot for the moon. And we go and we push as hard as we can and we get out in front of our skis and realize we're super uncomfortable out here. We're going to fall in on our faces and then we, we reel it back and say, let's focus on being profitable again.

So we go through these cycles where it's like we, we see opportunities and we try to take them. 01:01:44 - C But then sometimes we're like, no, we need to remember who we are. Let's focus on being profitable. And a point I want to make here, which is really interesting.

We, like I said, we did over 30 million last year, but we've done between 20 and 30 million the last four or five years. So we've done, we've done over 100 million of sales. 01:02:01 - C It's not like, yeah, when you look at our track record, we're just steadily growing year over year and we're just going to keep taking market share. 01:02:08 - B That, but that's good company, business building.

That's what you should be doing. 01:02:11 - A And also I think someday some big, huge conglomerate is going to come in and say, look at this, we could take this thing to 200 million in revenue. 01:02:19 - C Right. 01:02:20 - A And something that's very hard for entrepreneurs such as yourself to really pull off or it takes 20 years.

Right. But I'm just saying. Yeah, I, I just compliment you on your operating. It's apparent that you've got these great operations.

01:02:32 - B Okay, I'm gonna close with two more questions and then we're gonna, we're gonna wrap it up because we've actually been 01:02:36 - C talking for over an hour. 01:02:37 - B So one John fast. Wait, I know what, what's next? What like what, what is Nomadic doing?

What are you excited about? Where are you going? That's question number one. And then number two, in your part in parting of this podcast, what's the one thing you would give like someone where you were 15 years ago, what's the one piece of advice that you're like, this is it.

This is what I would focus on or tell myself. So those, that two part question. 01:03:08 - C Okay, well, I'm a product guy, so 01:03:10 - B I know you're the designer. 01:03:12 - C I get super excited about new products and we've been working on a collection for like three years.

So we historically have made bags for ourselves, which me and Jacob are men. Right. So we make these bigger, bulkier bags that are always black and. 01:03:27 - B Yeah, they are always.

Yeah. 01:03:29 - C And so it's like, what, what would we want to carry? Right. We make it like super sleek and it's always, it's always like masculine.

So we've actually been working online for women for a long time and I think we're finally there, like this year we're going to launch Women's Bag. I'm super excited to get all our female listeners, super excited to get into a new category because there's a lot of women who have been asking us for products that are very functional. The women's space right now is very design focused and very little focused on like, or excuse me, fashion focused and very little focused on design, like functionality design.

01:04:04 - C It's just an empty sack. They put everything inside of it. It's like, let's give them some organization and let's make it like, put a little nomadic school women's line. 01:04:12 - A That's exciting.

01:04:13 - C So I'm excited about that. Really excited about that. And then I would say, to answer your second question, which is like, what's the one piece of advice that I would give anyone who's starting out? I would say, and I've given this advice before, but I think it's super important, is like, it's never like, I, I, I don't, I wish I had a way to like, word this that was my own.

Because this has been said a hundred different times by a hundred different entrepreneurs. Entrepreneurs. 01:04:40 - C But the gist of it is like, go start now. Like just whether that's just creating a cardboard prototype in your house, like that's starting.

You don't have to find that manufacturer in China to start. Go get a piece of paper, cut some things with scissors, tape it together. That's your first prototype. 01:04:58 - C Go start talking to people about that.

Go start getting feedback on that. Start asking them if they would use it. Like, you have to start somewhere. Start as scrappy as you possibly can and just get going.

01:05:08 - C Rather than just like stewing on your, in your brain over and over, trying to figure out the perfect business model or the perfect time or being worried about financing. Like, just go do it. 01:05:17 - A That's great advice. And it follows the startup ignition way.

01:05:20 - B And honestly, yeah, every minute you wait is a minute lost. 01:05:23 - C Right. 01:05:23 - B So that makes a ton of sense. So.

And then you can end up like John, going from the dorm rooms to multiple millions in revenue. Tens of millions. Deca millions. 01:05:32 - B So, okay, thank you so much, John, for coming.

01:05:35 - A Thank you for coming. That was great. 01:05:36 - B Yes. 01:05:36 - A This is a treasure trove for CPG entrepreneurs to listen to for sure.

01:05:41 - C It's really fun. We've had a lot of lessons throughout the years and I would just say thanks to you guys for having me on. It's fun to share the story. We don't usually get grilled on like questions like this.

Yeah, it's really fun to be able to share some of the things we've learned in, in this format. 01:05:53 - A Tyler and I get in the trenches. 01:05:55 - B Yeah, I just find it interesting. I want to know the numbers, I want to know the ratios.

I want to know what works and what's not. Like, I just, I love, I'm a meat and potatoes, like, practical kind of guy. 01:06:03 - C Like the rah rah. 01:06:04 - B Fluff.

Fluff is awesome. But at the same time, like the actual hard earned, like, trenches knowledge is really, really cool. All right, so if you love this podcast, follow John. He's a LinkedIn influencer at this point now.

01:06:16 - B He has a ton of followers. He has awesome posts, he's posting amazing things. Go follow John on LinkedIn. Not this John Richards.

Even though you could follow him on LinkedIn as well. 01:06:25 - B Follow us on Startup Ignition. Thank you for listening. You know, comment on this and I will give you one of the Startup Ignition nomadic bags.

Comment on this video, comment on this podcast and I will. 01:06:37 - A You'll choose one random. 01:06:39 - B We will pick a random winner to give you a Nomadic bag. Yeah, no, we will comment right now.

Yeah, we will choose one to give away. But thank you so much for listening. 01:06:50 - C And we are out 01:06:54 - B next to next.