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Journey through Presale hell

A detailed account of a Fastlane process...

Ddowns46

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Hi Everyone, I made a single post back in February introducing myself (INTRO - Hey fastlaners!). In that post I mentioned that my new company was launching a presale campaign for a new product. Fast forward to now and we had an enormously successful campaign and have shipped out a large number of orders to the early customers. Customer feedback has been great so far! Crazy to think my business partner and I started this company with no investors, no loans, and only 15k personal investment.

I'll be back to post the full story. But the attached image should be proof. Imgur

A special thanks to MJ, his two books changed my life. I read his second book during the process of building out my current business and it helped shape a lot of decisions we made. We have a long way to go, but i believe we are off to a great start.
 
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Ddowns46

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Dang, looks like the picture didn't link. I posted it to imgur- is there another image hosting site that works better?

Edit: Was able to link to the imgur screenshot
 
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Argue

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imgur should work fine.

Upload image to Imgur > open image in new tab > copy link > paste image URL into image field.

That works for me.
 

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An average order value of nearly $1100?! AND it’s a product based ecom business? Well now you’ve piqued my curiousity.

Can’t wait to read more.
 
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Late Bloomer

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I'm curious, how was the $15k startup budget used? What's the breakdown between R&D, living expenses, marketing, overhead, legal etc.?
 

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Well done so far! Some great numbers there. I'm curious as to the "hell" part of your pre-sale process?
 

Ddowns46

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Well done so far! Some great numbers there. I'm curious as to the "hell" part of your pre-sale process?


Thank you. Once we finished the development phase of our product, we really only had two options for generating the capital necessary to go into production. One option was to try to seek an investor. We decided against this option because we didnt want to give up equity, and more importantly we didnt want to relinquish control of the companies direction.

The other option was to complete a presale campaign. At this point we brought in a very skilled web developer for a small equity stake and he built us an incredible website and really led the way on our marketing strategy. We chose him because he was already successfully running his own e commerce business so he had great experience and insight. We would not have been successful without him. We also contracted a childhood friend to do all of our product photography and film an incredibly professional promotional video for our product. That was really important to our success. From there it was just a matter of blasting ads before we launched our store and started accepting preorders. We had something like 7000 unique emails before launch.

We had a very successful launch and generated the required capital to enter production.

Heres the thing, when you use a presale strategy, you instantly have a large number of customers. Those customers have high expectations that you will deliver the product to them that you have never delivered to anyone before. If you fail to deliver (in any capacity) your business fails. There is enormous pressure that goes along with that. Anyone that has mass produced a product understands that it is easy to make 1, and hard to make 1000. An established company will typically have the luxury of doing short production runs, sending out beta units for feedback, making tweaks, and then moving forward with a second larger trial run, etc. We did not have that option.

I think what made us successful is that we aggressively scanned the horizon for possible hazards on a daily basis. We were constantly identifying what could go wrong, and then acting accordingly to make sure it was addressed. This process enabled us to find and eliminate multiple threats to our business in order to survive.

We’re not out of dangerous territory yet, but when you deliver a product and get amazing feedback from actual customers, its a huge relief.
 
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Ddowns46

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I'm curious, how was the $15k startup budget used? What's the breakdown between R&D, living expenses, marketing, overhead, legal etc.?

We used the money to build two prototoypes. These prototypes werent productionized, but merely proofs of concept. We finalized the production designs and had samples made by a variety of vendors. Our product is quite complicated and so is the supply chain required. Getting samples made allowed ua to get feedback on manufacturability and also get pretty close on our unit cost estimates. This was critical in order to set presale pricing.

A pretty signifigant chunk of the money was spent on advertising ahead of our presale campaign.

I had a full time job at the time, so i didnt need to worry about living expenses.
 

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@Ddowns46 Well done!
Could you say a bit about how you sniffed out that your product would be hot? I.e. what kinds of indications did you get from the market before hand? How did you gain your "pulse" on the market, or decide on the right market, and know enough about that product / market area to know what was missing?

he built us an incredible website
Out of interest, what made the website "incredible" in your eyes, that you feel helped in good conversion?

Cheers
 

Ddowns46

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@Ddowns46 Well done!
Could you say a bit about how you sniffed out that your product would be hot? I.e. what kinds of indications did you get from the market before hand? How did you gain your "pulse" on the market, or decide on the right market, and know enough about that product / market area to know what was missing?


Out of interest, what made the website "incredible" in your eyes, that you feel helped in good conversion?

Cheers

Our product is the solution to a very familiar pain point to members of our customer base. I knew that if such a product existed, that i would buy it without hesitation because it would eliminate an enormous source of frustration. It helped that I am an avid participant in the niche that my company is in. I don't think thats mandatory for success, but pretty close. You have to know how your customers think and what their needs are in order to serve them.

Our website really stands out among our competitors. When you come to our website, it screams professionalism. It communicates to the customer that everything we do, we do to the highest degree. All of the pictures and videos are high quality. There are no broken links, the layout is modern, and the content is easy to digest. With a presale campaign it is critical to have a polished site. A customer has to get the sense that "if they have a quality website, there's a good chance they will deliver a quality product"
 
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Bearcorp

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Thank you. Once we finished the development phase of our product, we really only had two options for generating the capital necessary to go into production. One option was to try to seek an investor. We decided against this option because we didnt want to give up equity, and more importantly we didnt want to relinquish control of the companies direction.

The other option was to complete a presale campaign. At this point we brought in a very skilled web developer for a small equity stake and he built us an incredible website and really led the way on our marketing strategy. We chose him because he was already successfully running his own e commerce business so he had great experience and insight. We would not have been successful without him. We also contracted a childhood friend to do all of our product photography and film an incredibly professional promotional video for our product. That was really important to our success. From there it was just a matter of blasting ads before we launched our store and started accepting preorders. We had something like 7000 unique emails before launch.

We had a very successful launch and generated the required capital to enter production.

Heres the thing, when you use a presale strategy, you instantly have a large number of customers. Those customers have high expectations that you will deliver the product to them that you have never delivered to anyone before. If you fail to deliver (in any capacity) your business fails. There is enormous pressure that goes along with that. Anyone that has mass produced a product understands that it is easy to make 1, and hard to make 1000. An established company will typically have the luxury of doing short production runs, sending out beta units for feedback, making tweaks, and then moving forward with a second larger trial run, etc. We did not have that option.

I think what made us successful is that we aggressively scanned the horizon for possible hazards on a daily basis. We were constantly identifying what could go wrong, and then acting accordingly to make sure it was addressed. This process enabled us to find and eliminate multiple threats to our business in order to survive.

We’re not out of dangerous territory yet, but when you deliver a product and get amazing feedback from actual customers, its a huge relief.

Great summary thanks for sharing! big props for avoiding giving up equity in the business for investment and making it happen yourself, can be a hard call at such an early stage to have that confidence.
 

Ddowns46

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Great summary thanks for sharing! big props for avoiding giving up equity in the business for investment and making it happen yourself, can be a hard call at such an early stage to have that confidence.

Having the first business that i mentioned in my introduction thread was critical to our success. I learned so much about how to operate a business and how to serve customers. Although it violated the rule of scale, It gave me a pretty good idea of the trajectory this new company would need to take in order to be successful.

It’s a pretty common mistake to drastically underestimate the true cost of your product. That is a fatal error in a presale campaign because even if you do a lot of sales, your business will fail if youre selling hundred dollar bills for 50.

We spent a signifigant amount of time doing cost projections before our launch to ensure that we were priced right. To us, ‘right’ meant being able to purchase enough inventory to cover the preorder commitments and also have enough cash leftover to transition to normal business operation where we can ship product same day and have product on the shelves. Pulling that off meant that we needed to have healthy margins right off the bat in order to avoid needing an investor or a loan to help us with inventory costs.

My partner had also run a fairly successful business nefore we started this business. He brought incredible insignt, experience, and vision to the table. Without him we would have failed, no question. Smartest guy ive ever met. When it comes to controlling cost he is aggressive to a fault. He comes into work everyday looking for ways to reduce costs. I love that about him. Great dude. He was the one to introduce me to millionaire fastlane .
 
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Fox

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Great thread and fantastic progress.

Your sales system must be excellent to presell that much at that price. Well done.

Mind me asking what % the web developer took? I had thought about doing deals like this myself in the future.
 

Ddowns46

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Great thread and fantastic progress.

Your sales system must be excellent to presell that much at that price. Well done.

Mind me asking what % the web developer took? I had thought about doing deals like this myself in the future.

Without providing a specific number, it was a large enough stake in his eyes to ditch his e commerce company and work full time on this business. We didn't bring him on just to build a website, we brougnt him on to become a key piece of our team. We knew his value (friends since early high school, he is smart as hell). He has been actively engaged since day 1 and has put his heart and soul into making this successful. Something needs done ASAP? He’ll work on it all night without hesitation. Its rare to get that level of commitment from a contractor.
 

Ddowns46

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Was on instagram this morning and came across two customers that were praising our product. I can’t describe how that feels. For a few minutes, the stress and pressure of entrepreurship leaves my body/mind. It feels better than any sale we have ever made.
 
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inputchip

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Wow, this is incredible. Well done to you and your team. I have some questions if you don't mind.

1. How did you initially start collecting email addresses before pre-launch?
2. What were your primary traffic sources for the pre-launch?
3. Why did you choose to go this route rather than Kickstarter?
4. Did you use a referral based pre-launch similar to Harry's?
 

Ddowns46

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Wow, this is incredible. Well done to you and your team. I have some questions if you don't mind.

1. How did you initially start collecting email addresses before pre-launch?
2. What were your primary traffic sources for the pre-launch?
3. Why did you choose to go this route rather than Kickstarter?
4. Did you use a referral based pre-launch similar to Harry's?

It was pretty simple. We built a quality website filled with videos and pictures and then started blasting ads on facebook primarily. Facebook works well because its easy to target groups based on your products niche.

We chose not to go with kickstarter because we didnt feel their service would offer us much. I think you have to pay like 10% fee to kickstarter which was a huge turnoff. Additionally, we preferred to send traffic to our website where we could better control brand perception and get better page ranking. There has been a ton of high high visibility kickstarters that have failed as of recent which i believe is really beginning to tarnish kickstarter’s reputation (at least to me it is). We didnt want to associate ourselves with those negative perceptions.

Heres the thing though, we could have used many different strategies and still succeeded. Why? Because our product has pull. As stated before we didnt have a huge ad budget. Most of our traffic came from our ads being shared. Even now we spend almost nothing on ads. Today alone we did $11k in profit.
 

Ddowns46

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As more customers continue to rave about our product, our sales have been growing rapidly. There have been a few days where we have sold nearly $25k. Even though customer satisifaction has been great, we are documenting and rectifying any minor nitpick that we come across. Our ear is definetely tuned to hear about ways we can improve. Customer satisification can never be high enough in my opinion.

We have spent a lot of effort hiring lately. Initially the owners were working the line doing assembly and packaging. We started hiring and quickly got to a point that our goal production rate was being met, but still required us to be on the line to meet it.
This week will be the first week that we will have our employees doing all of the production work. This will open our time up to focus completely on growing the company and solidifying our place in the market.

Its crazy to think that tomorrow i can literally do nothing except provide some basic direction and product will still leave the door at the end of the day. Of course i’ll be working my a$$ off like usual, but knowing that i dont need to is a great feeling.
 
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Ddowns46

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Wanted to post an update on our business. Things have been going very well still. We are averaging about 15k in sales per day even though our product is back-ordered for months. Not really sure what our sales will be once we can ship it same day. There has been a lot of road bumps along the way but we have been pretty successful at navigating them.

We recently faced a huge obstacle that I felt was a major threat to the health of our business. One of our containers from China was lost at the port of entry terminal. We called the terminal when we heard and told us that it happens every so often and that they are almost always found within 24 hours.

A day went by, then two, then five...We got to the point where we were calling every hour for a status update. We explained them that THEIR mistake was going to cost us our business. Every order that we get is refundable upon request. Replacing the lost parts would have taken about 2 months. Explaining that to our customers would have led to a flurry of refunds that would have likely put us way into the red.

It got to the point where the terminal just simply stopped answering our calls and emails. We came up with the plan to make a bunch of 'lost container' flyers with a $2000 cash reward and hand them out to the union workers walking into the terminal for work. It was our last ditch effort.

Thankfully, we got a call this morning that it was found! It has been one week since it was reported lost. What a huge relief.

In his book MJ talks about having total control of your business, and I admit that we failed to adhere to that principle. While we could not have prevented the terminal from losing our container, we COULD have insured the container for the actual financial impact to our business and not just the value of the goods inside. I am glad we learned that lesson the easy way and not the hard way.
 

Ddowns46

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Making steady progress. We have bumped one of our shop floor guys up to shop supervisor/manager. In that role he will be responsible for making sure we meet our production goals each week. Up until now the other co-founder and myself have been spending 15-20 hours a week just managing our employees and keeping product flying out the door. Having a manager opens our time up to focus on growth.

We are currently shipping orders about twice as fast as they are selling. In a few months we will for the first time ever be able to ship same day. We’ll see if our sales take off even further from there. A lot of our current prospective customers walk away once they find out theres a pretty lengthy wait time.

We are currently negotiating a rental agreement for a 11,000 square foot building right next to ours. It’s bigger than we need, but the 6500sqft one we are in now is smaller than we need. We are working on a major update to our staple product and also in the early stages of developing our second major product. For that we are going to need the space.

Overall it’s been pretty exciting and fun with plenty of scary to go along with it. We have yet to take any profit from the business (aside from our very meager salaries) but i think we may give ourselves a little christmas bonus at the end of year. I’d love to make a dent in my mortgage.

Stay tuned...
 

Ddowns46

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It has been longer than I was expecting to post another update. Our business is definetely becoming more mature and established. We moved from our first building into an 11,000 sqft building and added more employees. Thanks to a lot of efficiency improvements and streamlining, we finally made it to the point where we can ship our products same day. This in combination with increased marketing budget has increased our sales rather substantially. We’re on track to have our best month ever (700k+), and are confident that at some point this year we will exceed $1M per month. Fingers crossed on that.

Working hard to automate the main business and hiring the right people has created the oppurtunity for the founders to refocus on new product development and we have made great strides in the development of some really kick a$$ new products that we are hoping to launch within the next 12-18 months. These products are marketable to our existing customer base which is really great and we also believe that it will protect our business to have multiple unique product lines.

One area that we are struggling with is optimizing our ad spend. Logic would tell you to spend as much as humanly possible as long as the cost of acquisition remains reasonable from a profitability standpoint. But we have found that making a mistake on an digital marketing becomes very expensive very fast. We’ve gotten burned a few times.
 
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