ET47- Bootstrapping From Product Idea to Global Sales
How to Plan, Launch, Grow and Profit From Your Own Product Idea
I love this story because it is such a pure tale of coming up with a brainstorm for an idea one day and turning it into a product and turning that into a product line and then continuing on to a type of success orders of magnitude greater than ever imagined.
Noah of iStabilizer.com did just and tells us exactly how in this episode. He came up with his own design, found a factory to make it and built it from there into a large and now globally reaching brand across three related niches.
It is an inspiring story, all the more so because it features an accidental entrepreneur and one who did it all on his own.
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Matt: Welcome to the Entrepreneur Talk Podcast. My guest today is Noah Rasheta of iStabilizer.com. As it turns out, he’s actually got three companies all in the same photography – accessory market but a very cool story of starting out from scratch. Thanks so much Noah for being on the show today. Why don’t you with how you got started, the initial idea and where that took you to get you to where you are today.
Noah: So my background with all of these … I guess you could say it all started in college. I was studying multimedia and film making. I wanted to be a filmmaker. During that time, because the program for filmmaking was combined with multimedia in general. Let’s say you’d work on film stuff but then they’d make you design a website. It’s just kind of a mash up of all things multimedia. I stayed with the desire to do filmmaking but I gained a new skill doing web development and that comes into play later. By the time I graduated, I got a job doing exactly what I wanted doing television commercial production work with a large advertising agency. I was the producer. I did 26 different commercials in the time that I worked with them and they were pretty big budgeted films for big clients. It was really fun, really exciting work. But I realized that working in an ad agency that you’re always competing for the newest, greatest ideas … I started to notice this trend. The new young guys come in right out of college; they’re willing to work for nothing. You’re always competing against their creativity. During that time I thought, “I need to start doing something on my own, on the side.” Because I had also learned to do web development, I kind of started doing that on the side think, “I can build the site. I just need to decide what it should be about.” I have that mindset when I was at the part when my wife and I have just had our first child and he was almost 2 so he was walking. My parents wanted to be in on the entire experience and the only way to do that was to try to capture everything, every moment with him on film. Of course I had my big nice cameras and stuff. On this day I’m at the park and the only thing I have in my pocket is my phone and that’s when I realized, “ Why aren’t we just using our phones?”. They’re getting better and better with the cameras. The whole camera phone was still kind of a novelty with the iPhone 3Gs. I thought, “If I could just take my phone and attach it to the cool gear I already have for my big cameras then that would certainly increase the quality of the video footage”. And I thought, “I just wanted it on the tripods.” So I’m chasing my son around at the park with my phone and trying to send these videos to my parents and realized just how shaky and they’re just not good. That’s where I got the idea to create a tripod adapter that will be able to put your smartphone on a standard tripod then I could just take my tripod with me. That’s what really started it all, playing at the park with my son and wanting to get better video footage on my phone. That kind of came together with my whole idea, “Oh! I wanted to build a website and saw something, now I know what to sell.” I just had to figure out how to make something and I had no experience with manufacturing and product development. I just kind of figured it out as I went and luckily found a factory in China that was really good to work with and they helped make my idea into a reality. And my whole goal was to have a website on the side, as it be a side thing. Within months it had taken off and stores wanted it and Wal-Mart wanted it and what was supposed to be my little side project turned into my full time job and ended up being the company that it is now. Five years later, we’ve got 15 different products all around the original mission statement, the original idea of improving the photo and digital quality of smartphones. It’s been really exciting because throughout that whole time, smartphone cameras are getting better, better and better. So, it’s got a really good fit. That’s my background and that’s what got me to where I am now.
Matt: Awesome! You kind of hit it in the right point. Cameras continue to get better in phones and there are continue to be more and more people who have phones. You’re building into a growing market. But let me back up a step and ask you this. So, you got an idea of what you want – maybe you scratched it out on paper, or even done a really good engineering drawing. How did you translate that? You said that you’ve found a good company in China to work with but I imagine there’s probably a million companies in China. How did you translate “I’m not a manufacturer or a mechanical engineer but I’ve got an idea for a product.” into actually seeing a prototype and then a production run come out of a factory that’s halfway around the world. What were some of the steps in there that you took to find a good company to work with and actually have your idea become a reality?
Noah: Yeah. That’s a good question. I think it helps that part of my background is marketing because I was able to present the concept as an idea to the factory. When I did it, I went on to Alibaba and started looking for factories. I didn’t want a smartphone accessory factory because I knew they would have all the inroads already. They’ll just take my idea and run with it. I found a photography accessory company that manufactured tripods. I knew that that’s probably safer because they are not already dealing with the smartphone accessory market. At that time, there was no smartphone photography accessory market. So, I just reached out to them and they were kind of like “Yeah. We can do whatever you want but it has to be thousands of it.” I said, “Oh no! I needed like 50.” So, I kind of sketched out the idea on paper and sent it over and presented the marketing collateral like a flyer of “This is what the marketing collateral looks like for a product that doesn’t exist yet but this is how I will make it work.” So, I kind of sold them on the idea that “Hey! If you guys help me to make this, I can probably sell a lot of them. Then, I can order a lot of them. So, in the end, you guys will be making a lot of them. You will be the factory that helps make it.” Once I sold them on that idea, they were completely willing to just do a fill at that time and figure out the molding. They made a prototype for me and then I sent it back with some revisions. It was amazing that they were willing to do all that with me but I think it’s because I sold them on the idea on what this could be. That’s exactly what ended up happening.
Matt: Well, that’s an interesting approach to kind of sell them into the idea, essentially partnering with you, investing; because I’m sure it cost them more time and money than they were getting from you initially but, you sold them on the potential. They were willing to take that gamble. Ultimately, it paid off nicely for them. So, you’re taking to them. You’re saying “Here’s what I want to build.” Did you also say to them “And, it’s got to come in under X dollars per unit.”? Or did you kind of let them drive the discussion by saying “Hey! We can build this and this is what it’s going to cost. Then, you figure out if you can charge it out to make it work.” How did that piece of it come into play?
Noah: They decided that – initially, they said, “If you were to make 10,000 of this, this is what it would cost you per unit.” I can’t pull it back saying “Look, I can’t. Can we do a thousand?” We finally found out that we’re going to make sense of it if we made 3,000 units at a time. They said, “If you can do that, we would be willing to help you with the molding fee to make the mold for this first unit.” So then, it became do-able again. All I have to do is raise enough capital to pay for half of the molding fee and the first order of 3,000 units. That was kind of my gamble. I put in the savings that I had and found a friend who was willing to help me with that and they kind of put up the other side of it, also in the risk. But the pricing, once they came back and said “This is how much it’ll cost to make them.” I liked to say, I wish I could say that I was really smart and pick these great numbers to retail but I just guessed. It was like this is what I would pay for something like this that existed. That’s how I choose the retail price. Luckily, it worked! It worked out pretty well. Since they now know what the standard percentages are from what something cost to what it’s going to retail for, and know all that, solved down with formulas, I just guessed the first time around and got lucky.
Matt: A lot of times, first time entrepreneurs, that’s what happens. You can use yourself as one example “If I was going to see this in a store, what would it be worth to me? I wouldn’t pay a thousand bucks but at 20 cents, it would seem too cheap.” So, you start to narrow it down, what’s a reasonable range and then, hopefully, that fits pretty well with what you can get it for. You got to remember you’ve got shipping and you got all the other costs that go in that you don’t necessarily think off right off the bath. If you were able to come up with a price that work, that the market was willing to pay, and that you can make it for that would make the business viable, it sounds like you did got lucky in that sense but it all came together for you on that first one.
Noah: Yeah. Definitely.
Matt: So, how did you come up with the money? Did you use your own savings and then you convinced somebody to put in the rest?
Noah: Yeah. I did.
Matt: Did they get a piece of the company or was it loan that got to get paid back?
Noah: He got a piece of the company early on. It was a very small percentage. He’s just kind of been a silent minority owner ever since then. He is kind of watching from the side saying “We’ll see what this turns into one day.” But, never really had the intention or hurrying paying me back or doing anything with it. Honestly, it wasn’t that much. It didn’t require that much to do it. So, that’s how we set it up.
Matt: So, once you made the decision, you plunked down the money. You have 3,000 units coming to you. How did you then get the word out and bring this idea to market? This new product that was a new product and a new product class.
Noah: So, what I did to get the idea out there, I started doing everything just online. I made it so that if you search for a smartphone tripod adapter or specifically an iPhone tripod adapter, it would bring up the ads and images to show our product. People were searching for it. As soon as people start searching for it, then it started spreading. People would just spread the word on on social media about this new thing that they just found.
Matt: So, you start with some Google ads and then some SCO maybe to help draw traffic in. then, once people saw it, they were ready to buy.
Matt: Did you build your own shopping cart for it too? Did you use one of the e-commerce platforms? How did you handle that end of it?
Noah: When we started out, I use Magento Open Source Free Version and that’s kind of how I set it up to start with. As it got bigger and bigger, this was on my own like share hosting. As the site got more traffic, it was a lot more difficult for the resources to make all that work. So, over time, I just upgraded. Eventually, we had our own server and then we had different e-commerce software that we switch to. It’s kind of taking different steps throughout the entire process to grow but that’s how I started.
Matt: Now, you said you’re up to 15 products? How did you kind of come up with product no.2 and product no.3?
Noah: We’re up to 15 products for iStabilizer, but I branched off and created 2 other photography accessory companies. Combined, I have well over a hundred products now. So, the way back process work. I started with a tripod adapter. I’d say the next products it was all based on “Well, what do I want to be able to do with my phone? What do I want to be able to attach this to?” That’s what give the next idea. It was pretty easy because I was already familiar with videography and with film-making classes in College. We had Dolly and a steady cam. We had all these things that you use for filming. It was just a matter of saying whatever I can do as a filmmaker; I want to be able to do it on my phone. So, how do I do it on my phone? That how the idea comes up for the next product. That’s how products 2 to 15 came out. And then, somewhere in that whole process, now, there’s this GoPro and it’s popular. What do I want my GoPro to be able to do? So, I came up with ideas with GoPro accessories. By then, the relationship with the factory had grown to the point where they said, “Our engineering department is here. Whatever ideas you have, why don’t you work with us? We’ll engineer it, prototype it and do everything. You just give us the ideas.” So, the product ideas have just been coming left and right. We have iStablizer as our smartphone accessory brand, smartphone photography accessories. We have ProGearX which is a brand that manufactures action camera and GoPro mounting solutions. Then, we have FotoPro which is our professional photography line, which is kind of that they did to start it, which is really high-end carbon fiber tripods and really cool photography gears. Now, we started out as “Here’s a factory. You guys OEM stuff for me.” Now, we are in actual partnership and we’ve got 3 brands together and I’m a part owner of their factory that I approached 5 years ago. It’s been crazy.
Matt: Wow! So, you are a part owner in a company in China that’s actually building all your products?
Matt: They are essentially tied to you because you are the sales channel for everything they are building. So, that’s a pretty cool relationship.
Noah: Yes. It is.
Matt: That’s awesome. Have you been out to China to actually visit in person?
Noah: Yeah. I’ve been several times. I’m actually going out in April to spend almost the entire month out there. We’re going to do a few different photography expos and just spending time at the factory working on. We have several new products ideas that are coming out this years that I think will be a lot easier to work in person to finish the final touches of those products.
Matt: So, are you still primarily selling online or have you expanded your sales channels into other distribution methods?
Noah: Yeah. It’s expanded. I’m not sure what the exact percentage is. We do a lot of sales online through sites like Amazon but we also do a ton of sales through photography stores like DMH Photo and Adorama and all the big photography outlets. We also sell accessories in AT&T Wireless stores. That’s like 2,300 stores nationwide. We have accessories in Wal-Mart. That’s like 2,000 – 3,000 stores. It’s been kind of a mix. Some big box retail cases are stuffed. Tons of pop shops and carrier stuff that are photography type stores and of course online where all three of our brands have their own websites. We also sell through the other big e-commerce sites that specialize in photography.
Matt: Other than the original help in funding up front, have you had to get lines of credits or loans or anything else the help fund the inventory that’s got to take to put the products in 2,000 stores or is it all self-funded and bootstraps?
Noah: It was all bootstraps until Wal-Mart came along. To be able to supply them, I couldn’t do it. I approached an angel investor and he set up a line of credit for us to be able to manufacture. It’s almost like invoice factoring with a private individual. That’s how we got through Wal-Mart and kept growing the company. But at that point, when I realize, we could be making more many if we didn’t have to finance it this way, that’s when I approached the factory in China and said “Look. This is where we were from day 1. This is where we are now. We’ve done all this because we are collaborating very well together, but the one piece of the puzzle that could solve all of our growth problems is if we were the same company, if we were truly on the same page, then, I don’t have to borrow money to pay you to make stuff to make money in return. You could just make stuff. And then, you guys better margins. I make better margins. We don’t have to borrow from anyone.” That’s when we decided, “Yeah. Let’s just partner.” Now, they are owners in my brand and I am an owner in their factory. But, it’s the collaboration that allows us to make whatever we need to make. I don’t have to finance it anymore. We just make it and send it out.
Matt: That definitely has the synergy there that could be better for everybody, except for the angel investor. He doesn’t get to make money on you anymore. But, everybody else wins.
Matt: That’s always a challenge though. Growth costs money especially in the business that you’re in when you are providing physical goods ahead of being able to collect. I’m sure Wal-Mart takes it’s sway time to pay you after they’ve sold your products.
Noah: Yes. They will nook it every single day and hour that they can.
Matt: Are they one of your biggest channels now though? Or just a smaller piece of the pie?
Noah: At first, when we brought them on, they accounted for like 70% of the sales. But the thing is when you do something like that, it creates so much more brand recognition that other stores starts selling it. It starts to make all the other channels grow. Luckily for us, we have multiple channels. If anyone channel went down, it’s not doom and gloom for the whole thing which at first, it is. That’s the scary phase when you are growing and you landed a deal like Wal-Mart. It’s pretty scary because if that deals fall through a few months into, and there are tons of horror stories when that happens, they could sink you if you had all your eggs in that basket.
Matt: Yeah. For sure. That can be a dangerous move and its best to hold off if you can until you could have absorb potentially them pulling out or not working out but that’s not always a possibility. That’s part of entrepreneurship, right? Its weighing the pros and cons and the risks and the rewards and deciding to take that leap of faith if that’s the way to go. You hope it works out. Fortunately for you, it worked out and you continue to build the brand. Now, you got lots of sales from other channels as well. They are not as big as piece of the pie anymore. So, what’s next? You said you’ve got some other new products coming out. What else is kind of on your radar for the future or for the next 12 months?
Noah: The kind of the next big thing that we’re doing is trying to push the brands to become the global brands. We’ve done really well just trying to sell and getting them out there. But, our intention is to become the top photography accessory brand hopefully in the world. We’ve been spending a lot of time developing the brand and other markets and other international markets – Europe, Asia, and Australia. It’s starting to do really well. Now, it’s the same technique of instead putting all of our eggs in one basket as far as sales channel goes. Now, we want to do that in regions too in case our product isn’t very popular in US. It might be extremely popular in Asia. That exactly what we are finding. Some products do really well in one region of the world and another product is kind of the flagship product from another part of the world. So, we are just trying to expand the brand and get products shipped out all over the world.
Matt: I would imagine that’s not a trivial undertaking, right? Because you’ve got to now take your marketing message and re-craft it in whatever the local language is. But, not just the words have to be translated obviously. You’ve got to tweak the message in each case to appeal to what is going to be interesting to that audience which isn’t necessarily exactly the same as what might work for US Audience or European Audience vs. Asian. That’s going to be a pretty significant investment of time and effort. Right?
Noah: Yeah. It is. Luckily, we’ve developed throughout the time of growing, really good relationships with distributors in all these regions. So, what we started to do is just take all of our key distributors and meet up somewhere once per year. Just last year, we picked Bali, conveniently, and said “Let’s all meet in Bali and talk about the global strategy for the brands.” Of course, they love it because it’s a great trip and a fun experience for them. But they have a voice in how we develop the message of our brand and our products for their specific region. That’s been really helpful for us because we don’t have to have all that work done in house or internally. We’re letting our own channels work with us to make sure that our products are working well for their channel and for their region.
Matt: That makes a lot of sense to collaborate with people who are most familiar with their own products rather than trying hand them a finish product and say “Here’s the brochure we came up with for your market.” Which they may not love. But then, have a good hand in it and help you help them sell better.
Noah: Yeah. Exactly.
Matt: Awesome! Well, that is a really cool entrepreneurial story – sort of the American dream of you have the idea and that leads from one to the next to the next and before you know it, you’re talking about global brands for 2 different companies. That’s so cool.
Matt: Do you ever just pinch yourself and kind of go “I can’t believe this is where I become.”
Noah: Yeah. I have on different occasions. I’ve also pinched myself on different occasion saying “Why the heck am I doing this?” I think that’s part of the nature of any entrepreneurial venture. There are days where you’re like “This is amazing. I’m so glad I’m doing this.” But, there are also days where you’re like “This is really scary. If I would’ve known this, I don’t know if I wouldn’t done this.” It’s all part of the game.
Matt: For sure. There are definitely days where you just think “Man, I just wish I work somewhere. I could just go home at the end of the day then I’m done with it.”
Matt: Well, awesome! I appreciate you taking the time to share your story. For people who are looking for more information and/or maybe to pick up some photography accessories, where should they go to find you?
Noah: Our website is iStabilizer.com. Just like the “I” in iPhone. Its iStabilizer.com. That’s our smartphone accessory brand. FotoPro.com is our professional photography accessory brand. And, ProGearX.com is our action camera, GoPro accessory brand.
Matt: Awesome! Well, I really appreciate your time and you sharing the story with us. Thank you very much and have a great rest of your day!
Noah: You too! I really appreciate you having me on your show. It’s been great. Thank you!