ET19- Crowdfunding Success and Unique Product Launch Profits

How A New to The World Product Found Success

Launching a brand new product is no easy feat and even more so when that product is something that doesn’t even have any comparable competition to match. Now, you have to educate the market as well as make sales.

Even with those hurdles the guys at Innovative Lifestyles have done amazingly well! Their product has fantastic reviews, good reorder rates, had a very successful campaign on Indiegogo and is promoted by many in the natural remedies market.

All that’s left now is to let the rest of the world know what they’ve been missing! Very cool interview with a ton of good tips for anyone going down the same road.

Show Links:

Website: https://www.1hourbreak.com/
Email: vdon@1hourbreak.com
Twitter: @1HourBreak
Instagram: http://instagram.com/1hourbreak

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Listen right here:

Transcript

Matt: Welcome to today’s episode. I have on the line with me here, Don Lardizabal, from 1hourbreak.com. Don has been a long time client of ours and a friend as well. I’m excited to have him on to share his story. He and his partner have come up with a very unique product that they’ve done extremely well with. I only see good things for their future. Don, thanks so much for being on. I appreciate it. Why don’t you kinda just jump in and give us a little bit of your background and your story too? Tell us how you guys got started.

Don: Absolutely. Thanks for having me, Matt. My background in business was boring. I was in the financial services side. I was in investment real estate brokers. I decided that I wasn’t passionate about commercial real estate but I do know that I’m passionate about living a healthy life, traveling, seeing different cultures, being in nature, being happy and helping others. It was passion for living a happy, long, healthy life kinda the driving force behind our company, One Hour Break. One Hour Break is a lifestyle brand that promotes natural living, natural health and happiness. Our flagship is also called one hour break and what it is is our first own natural oil spray that relives social anxiety and stress instantly when you use it. So, we kinda take in traditional urban medicine and wrap it in 21st century product design and packaging to create a sleek design, fast-acting, and simple to use anytime you’re stressed out. It’s perfect to use while travelling, on a plane, driving in traffic, or if you’re stressed out at work, you could simply take a few sprays in one hour break and get back to being calm and confident. That’s the gist of our company and our product. What else is there to say, Matt?

Matt: That’s a good start, kind of leaving behind the cubicle, leaving behind the corporate life that doesn’t really hold any interest for you and getting to that entrepreneurial path is always, I think that’s something a lot of people can relate to whether they made the leap or not, there’s a lot of people who are thinking about it. How did you guys sort of center in your product and how did you kinda decide that using cava which is kinda the main ingredient in your product would be something that you can take to the mainstream from where it is now. My experience with cava, and probably a lot of people have never tried it, was one in PG and they would put it on, squeeze cava root into a bowl and you would drink it. It was sort of like a cava infused water but it tasted like dishwater and it was an interesting experience. But having your tried your product, you’ve got something that much better to put it short and a much improved version of cava. How did you guys figure out that that was something you wanted to do for your business?

Don: Absolutely. When we decided we have to use cava, first of all, having this problem, being stressed out in the cubicle and researching what was available in the market. There’s just wasn’t anything available in the market that was effective. We tried every product personally for ourselves. And since, there wasn’t a product that was effective that kinda led to “Hey! I think we are onto something.” And that led us to the research of what were the most affective, all natural, solutions out there. We went to a lot of conferences. We spoke to a lot of people and the American herbal practice association. There’s an incredible botanical scientist and all science clinic took cava and we have our first experience in cava and [inaudible 0:08:46.1] Hawaii. It’s a local cava bar. So I haven’t prepared it traditionally. You were very kind in calling it dish waterish. In my opinion, traditionally, it tastes like wood and mud. But that makes sense it is a root, right? So it’s gonna taste natural. That’s kind of the reason why we have this 21st century packaging and design of the product. The traditional preparation making it as a tea is very time consuming. Shape is something that you have to be accustomed to. It was not efficient. You can’t go to work and make it in advance. It’s just strange and it’s just weird so it’s inconvenient. So, we took all the problems with consuming it traditionally and we made it convenient, fast and portable. Also, we made it taste great. So, spray it underneath your tongue and letting it absorb underneath your tongue [inaudible 0:10:07.7] work quickly. Our blend of other herbs magnifies the positive effects. The taste of something that took a couple of years to find tune and we did a lot of market testing and planning before we did our crowd funding venture which was our catalysts for major growth for us. First off, me and my partner, we boot start out company with our own funds to make our beta product which is called one hour break. We call it our version, 1.0. After selling tens of thousands of units of it, we develop a pretty big email list of buyers and by emailing our buyers to review or comment or give us feedback about our product, we got great comments and we also got some bad feedback. But we weren’t [inaudible 0:11:14.7] but the bad feedback. We thought of that as really great real information better than what you could pay any type of focus group with because these are actual paying customers. We’ve taken this feedback. We design our product to meet their needs and we use a crowd funding platform called indie go-go.com. Are you familiar with crowd funding, Matt?

Matt: Yeah. I think it’s gotten pretty popular. Most people have heard of kick start and there’s lots of other similar types of platform but were a whole group of people come together and contribute certain amount of money in order to get new products, new projects off the ground and usually they get something back as the results of their funding.

Don: Absolutely. They don’t actually – people that donate don’t actually own any stake in the company. What they are doing is they are purchasing in advance your finished product. So, that allows entrepreneurs the ability to pretty much market test the product to see if there is a point to be a consumer group willing to buy your product. It’s great in that aspect. But, it’s not as easy as you think. You can’t show and say “I’m gonna do this and I am going to create this product and put it out there.” You need to have a lot of work done in advance. You need to have working prototypes. You need a great video commercial that shows your brand and what you are trying to do. So, it’s not as simple as “I have decided yet and I’m gonna just do this video in my home.” Then people are gonna start giving you money. I wish it was that simple but what we have done is with our e-mail list of buyers, we already had a source of thousands of thousands of buyers that were already paying customers and their friends. So, we promoted “Hey guys! We took your comments and feedbacks. We’ve improved the product for you. This is how we are going to make it. Please support our campaign. Share it with your friends and family.” That was a great jumpstart. In the end, through this project with Indiegogo, our company was able to fund about a hundred thousand dollars within 3-4 weeks time period. That’s very important because once you showcase to Indiegogo or kicks tarter that you guys know what you are doing as far as driving traffic to your campaign and generating sales. For Indiegogo and Kick start as well, they would promote it to their audience which is very very large. Were great for that. We were able to use Indiegogo but to be honest I wish we were able to use Kick starter because they actually control an audience that is 2 or 3 times larger than Indiegogo. But unfortunately, Kickstarter has some policies regarding diet supplements which are part of dietary supplement and they don’t allow it. But we used the next best platform which is Indiegogo.

Matt: Right. That was an important point you made in terms of – I think there are some people out there, they write something out on the back of a napkin and then they can throw it right on a crowdsourcing platform and expect to raise all kinds of money. You guys went to initial prototyping. You got tons of reviews and feedbacks and actual sales. Then, you made a really sleek video and promotional page all before you went out and raise the first dollar on that crowdsourcing platform. I think the fact that you were able to raise that much was a testament to the fact that this wasn’t just some flyby night idea or just somebody kinda throwing something out there to see if it’s stuck. You guys, have already gone quite a ways down the road of developing the product and proving its efficacy and working on improving it long before you reach the point where you are launching it through that crowdsourcing platform. I think that, as much as anything else, is the reason you guys had success with it.

Don: I completely agree. There was a great source that we followed. It was written by a gentleman by the name of Kim Perez. We kinda took his blueprint, apply it to what we do best and improved on what had done. Actually, our web design and video production team that does all the work for us was so successful with our campaign and other campaigns that they have been able to help a series of entrepreneurs launch incredible kick starter campaigns that have all these success. I think they are betting a hundred percent as far as success on all the projects that they’ve managed to produce campaigns with. That’s something that Ill love to point any listeners to if they feel the need that crowd funding is something that they want to do.

Matt: It’s definitely great to work with a team that knows what they’re doing and has a good track or record of success. I think something else is interesting about what you guys are doing. Anytime you go to a grocery store anywhere else, the whole shelf is filled with stuff like 5-hour energy and all that kind of knockoffs for that, everything about getting you sort of hyped up and energized or whatever, but there’s really nothing on the market until you guys came along. That was a sort of the opposite approach. “Hey! I already had a rough day. I already gotten all hyped up. I need something that bring me down, helps me relax, relieve the stress.” So, you guys are really feeling a niche that have been underserved until you came along. That unique factor about your product, I think, really helped you as well.

Don: Absolutely. Up until we came out, I don’t think there is one product that can compete with us as far as does the product work. One of our main goals and the reason why we were able to build a foundation of customers was that our number role is no matter how it tasted or how it looked, it has to work. Right now on the shelves, there’s probably no product that can compete as far as effectiveness because essentially we use the very best ingredient that money can buy and we use the strongest concentration of them. One other competitive point that we do is we have a whole – we are trying to create a lifestyle brand. It’s not just “Hey! Take this product. It will relieve anxiety or stress.” Our lifestyle brand is sending them around the customer and imagining how they could live if they were calm and confident and always the best person of themselves. Our lifestyle brand is centered around the phrase that’s called “Enjoy life. Experience more.” Living life to the fullest, and not letting fear, anxiety or social awkwardness prevent you from meeting the person of your dreams or kick in butt during a work presentation, that’s what were kinda want to promote. Imagine the super version of yourself and always being that person when you need to.

Matt: Yeah. I think that’s the message that most people are gonna warm up to. It’s hard to argue with that as a message. In terms of the marketing, aside from obviously, the indiegogo campaign, the crowd funding campaign got the word out, but what other kinds of marketing have you done? What worked best for you in terms of being able to promote your brand and get that message out?

Don: Well, we have a lot of ideas and were very data-driven. When we first launched our beta product, we have a number of case we wanted to test. We wanted to test the viability of the product in the brick and motor environment which is the background of my business of my business partner. It didn’t resignate as well as we want it. The biggest hurdle was the product was so unique, no one could get it. The buyers for these just didn’t understand the product and how it work. We did have a lot of interest with natural food suppliers and growth restores such as whole foods but for a startup company without the budget to market, that’s pretty much business suicide. We didn’t want to go into retail distribution in the regional area. When I say regional area, it is multi-state and not be able to support the product with marketing where its being sold. So, we were able to quickly hid it and say “Hey! I think we need to be in the online retail space.” Being in the online retail space, we pretty much tried every single method – banner advertising. You could look at any publisher’s media kit and we tried everything. I think you always find to have the best mix of what’s working. There’s some times where you have to change things up and let some things cool down. If you are oversaturating an audience, let it cool down and come back to it and change it up. But I think the most effective thing is being able to create your own list of buyers, email list subscribers. Whether they are buyers or whether they are signing up for education and information on some content that you create, that is the best form of marketing in my opinion. One of the things that isn’t very effective is social advertising in social media such as Facebook. If you have a social page or a Facebook page, that’s great. But one of the things that scares me is we haven’t enough control even though we have a large Facebook audience sending promotions or messages to them through that page doesn’t actually reach your whole audience and you have to actually pay for them. So, being able to drive your Facebook fans into a subscription list is far more safer and it’s the best way to hedge against advertising risk because you actually have no control over Facebook. They can change their policies or regulations anytime. So that was something that scared us. Email marketing is the best.

Matt: I would imagine that the biggest challenge with your product is just getting people to try it the first time. Once they’ve tried it and they liked it, then it’s easy to keep marketing to them and you got potentially recurring revenue stream as they continue to re-order. The 300 million in this country and the whole rest of the world that have never tried it before have no idea what it is or if they like it. Getting them to try once is probably the biggest challenge overall.

Don: Absolutely.

Matt: What are your plans from here in terms of growth and what are your kind of challenges as you do that with the product business? We discussed a little bit beforehand the other challenges with stock and inventory and cash flow. What kind of challenges are you facing and how are you dealing with them?

Don: I would say the biggest challenge for us since we are an e-commerce company is managing cash flow and inventory. I would say payment processing and what they call rolling reserves would be one of the major challenges that we have. Once you make a sale, Matt, you do not immediate get a hundred percent of revenue driven right there. That’s one thing I did not know until I became an entrepreneur and started selling products online. That number is significantly low than what you expect and the problem is you still need to pay for processing that payment, shipping and handling in getting that product out there. For e-commerce companies, that’s a very large portion of your expenses. I would say probably the largest. So, that creates a bottle neck. It’s very hard to grow quickly. You have to grow in the fines of how quickly you get paid back all the reserves that’s being held from you. That is probably our biggest challenges. As far as growth as concerned, there’s a number of things that we are gonna be working on. Providing content is probably a goal for 2016 and create content and that is related to managing your anxiety and your stress in a holistic way. We know are product is not a cure but what we know is it’s a tool, a tool kit of methods and things that help anxiety such as positive psychology, mindfulness and meditation are very big right now and also some nutrition and yoga routines that you could easily incorporate into your lives. So, what we want to do for 2016 is provide incredible content to our email subscribers and buyers that have purchased our product and show them how they could not only incorporate our product into our lives but easily incorporate these other methods of stress and anxiety management in their lives. So, that’s something that we want to do vs. always sending promotions and coupons. We want to keep very engaged audience and I think the best way to do that is give them the content that they’re looking for to have them always send them a sale or promotion.

Matt: Yeah. I think you want to become a trusted information source as much as retail of a product. I think it makes it a national progression for them to keep buying from you and to share your information with other people vs. just always having a hard sales pitch for something that they may not always be ready to buy and can get a little turned off by being constantly being sold to.

Don: Absolutely. It also opens the words for networking opportunities. Were always looking to partner and network with thought leaders in those field that I talked about – positive psychology, therapist, nutrition and fitness expert, the list goes on and on. But it offers us the ability to cross-promote, to joint ventures with these folks and get their email to our audience and also our product out to their audience as well. That’s one.

Matt: Yeah. It sounds like if you hooked up with some of the right people and particularly maybe the people with
the bigger national audience that might be a great return on the investment of your time and effort to connect with them because the audience that they have is interested in hearing their recommendations. If they were to recommend people to try your product, that might be a way to reach a large audience without having – being able to just speak with a few influencers rather than trying to do direct marketing or banner advertising or that kind of just shooting stuff off into space. If you can get referred by somebody that people trust and has a lot audience that seems like that might be a really good way to get the work out.

Don: Absolutely. E-commerce is data driven. We are always looking at the analytics. The main one is conversion rate. If an influencer with a large audience has a positive review to your product and they recommend a product to their audience, that conversion rate is gonna be higher than if there was a cold piece of traffic. So, that’s very important and those are one of the tips that I would talk to your audience about is if they are in e-commerce, learn all the data points and metrics that you need to follow regarding your industry.

Matt: Yeah. I think anybody that’s in business and particularly, e-commerce are online business because the data is also readily available. You really got to study that and figure out what your metrics are that matter to your business and work on improving them. Otherwise, you just kinda destined to keep bouncing along without knowing what’s working and what’s not. If you guys were starting over, is there anything that you would have done differently? I know you had some sort of founding team challenges and you’ve taken a few different twists and turns to get where you at today. Is there anything you’ve learned along the way that either you would advice other people to do differently or you, in hindsight, would have changed how you did it?

Don: Great question. Because of how we started by boot starting our company, I don’t think there’s much that we could have done to done differently. One of the things that I probably would have done would’ve been to jump into e-commerce immediately vs. spending a lot of time investigating brick and motor but we just didn’t know. But their planning and strategy is very important, matt. But you could have analysis paralysis and sometimes to make your dream happen is you have to just do it. You do need to have some planning but you need a plan A and a plan B and you need to be able to pivot quickly. If you don’t, your company is gonna die.

Matt: Yeah. Definitely. I think you learn the most by taking action. You can make a perfect plan that shows you, you go from zero to a hundred million on paper and it all sounds good but you actually go out and make a sale and see how the market really reacts, it’s all just numbers on paper. It doesn’t mean anything.

Don: Absolutely. I would also recommend this – there was a question that you had asked me before we started recording. It had to deal with how we become more efficient. I think as a company you need to decide what your core business is and what you really want to be good at. For us, we want to be able to network. We want to create great content. We want to have the most amazing customer service available for our customers. Those are things that were always gonna be keeping in house because we could have the most control over those processes, the pieces that we’ve outsources that we felt that can be handled professionally in the way that is adequate for us is shipping fulfillment, things about nature but also accounting and bookkeeping which you are doing for us, which you are doing amazing for us. It definitely saves us a lot of time knowing that we could count on professionals such as yourself and lean on your expertise and we could focus on what we want to do good at.

Matt: Well, thank you. I appreciate that. And I appreciate you taking the time to come on and share your story and tell us about your business. I think, back when I first met you guys, and you told me what you were doing. I was excited about it then. I thought you really kind of found a unique niche and a unique way to solve that particular problem. I thought you guys were gonna do really well and I feel really justified in that thought because here we are a couple of years later and you still are continuing to grow strong. You still sold thousands of thousands of units. You are just continuing to do really well. I’m glad that I was able to meet you guys and help out. It’s great to have seen your success today and the continuing success that I fully expect you guys to have. For people who are interested in finding out more, what’s the best way for them to check out your product and get a hold of you?

Don: Well, thank you, Matt! I sure do have the same feelings. You can always find me on LinkedIn. That’s a great place where we could network, Don Lardizabal. I’m hoping that you’re gonna have my name spelled out, Matt. I’m always looking to network, always looking to meet natural health and fitness experts, psychology and mental health experts. If you’re into yoga, meditation and even have a small studio where you provide any type of a natural medicine techniques to your clients, feel free to reach out to me. If there’s any way we could cross-promote and do business together, I’m always looking to connect. So, finding me on LinkedIn or also e-mailing me at donat1hourbreak.com. That’s the same domain as our URL – 1hourbreak.com. That’s an easy way to get hold of me.

Matt: Awesome! I definitely recommend people check out the site too. You guys have a beautiful site which in itself is just kinda relaxing to look at the pictures of the ocean. It’s just got a real mellow vibe to it which I think is cool. That’s 1hourbreak.com with the number one. But Ill also put the links in the show notes. Again, thanks Don for taking the time to share your story and talk about your business. I think there’s a lot of good lessons in there. I just wish you nothing but to continue success.

Don: Well, thank you very much. Thanks for having me.