Dylan Jacob grew up running his own businesses and knew early on when to change course and adapt.
During high school, Dylan grew a small phone repairs business into a parts manufacturer and later founded a company that offered the largest color selection of interior tiles in the United States.
Despite reaching financial success, Dylan always viewed these ventures as "buffer businesses" and only found his true calling when he dove deep into solving the common problem of how to keep drinks cold.
In this episode of Shopify Masters, you'll learn from Dylan Jacob of BrüMates on how he built businesses ever since high school and how he's been able to generate $21 Million in sales by making a major business pivot.
As an entrepreneur, I think that it is your duty to have that vision, stick with the vision, but you have to be willing to pivot in everything else.
Tune in to learn
- Do you really need to fly to China to meet with manufacturers
- Why Facebook might drive low-quality leads and how to improve the quality of your leads
- When to pivot your business and what happens when you do
Show Notes
Transcript
Felix: Today I'm joined by Dylan Jacob from BrüMate. BrüMate is on a mission to put an end to boring drinkware one sip at a time and earned $21 million in sales last year. It was started in 2016 and is based out of Denver, Colorado. Welcome, Dylan.
Dylan: Hey, Felix, thanks for having me on the show.
Felix: Yeah, so you mentioned that you started BrüMate out of necessity. What was the problem that you were facing?
Dylan: I had just turned 21, and I just noticed this reoccurring trend everywhere I went, whether it was on the boat, or tailgating, that, my beer constantly got warm, and then that everyone else's beer was getting warm as well, but rather than trying to figure out how to keep it cold, people were just throwing away the beer, or leaving it on the side, and then going and grabbing another one out of the cooler. So, at the end of the day when we were all cleaning up, you would find 20, 30 beers that were half drank.
Dylan: I just thought there had to be a better way to do this. I was just sick and tired ... I drink 16 ounce beers, the majority of them are craft beers, and they usually come in 16 ounce cans, and when you're out tailgating in 80, 90 degree heat it's almost impossible to keep it cold until the last drop. So, you almost always waste the last quarter or half of your beer. So, I kind of set out to put an end to that. I looked for solutions that were currently on the market. I didn't see anything specifically for the drinks that I drank.
Dylan: I started talking with other people to see what their pain points were and if they were experiencing the same thing. I had already noticed that people were, but I wanted their feedback, and they kind of echoed that, but then I found out that it wasn't just beer. People were having issues with their cocktails, they were having issues with wine, they were having issues with glass-free zones, so they couldn't take wine to pools, or to the beach and stuff like that. So, I saw this huge market opportunity of creating solutions for the adult beverage community and no one else was doing it.
Felix: Got it. So, was this always a business idea, or did you want to just solve this for your own personal use?
Dylan: The beginning was my own personal use. I actually was doing a Google search to try and find an insulated beer koozie for 16 ounce cans to just buy myself, and I couldn't find anything. I couldn't even find a neoprene koozie, which is the most basic standard koozie there is for a 16 ounce can, unless it was on Etsy, which is custom made, but from a mass-produced product there was nothing out there for that can size. So yeah, I set out to create this mainly for myself, but then the more I talked to people I realized that this was something that everyone else needed as well.
Felix: Got it, did you have experience starting businesses, or creating products previously?
Dylan: Yeah, I started two other businesses prior to BrüMate, and I've had a lot of side projects and stuff. My first company I started was the sophomore year of high school. So, eighth grade and ninth grade I would buy up a bunch of broken devices off Craigslist, like iPads, cellphones, stuff like that, and then I would order the parts directly from China, and I would repair them, refurbish them, and then relist them on places like Swappa, and eBay, and also Craigslist.
Dylan: Then my sophomore year ... At this point, I already had decent connections in China for all the parts that I was ordering, and then sophomore year, all these repair shops started popping up in my local town. So, it was really taking away my business. I couldn't really find a lot of broken devices anymore, and if I did the prices were much higher, because people were now getting them fixed. So, I kind of evolved, and I started importing those parts directly and selling them directly to the repair shops.
Dylan: So, that was my first company, it was called GV Supply Company, and that business itself kind of started from ... I went into one of the repair shops, I just wanted to feel it out, see what they're charging, stuff like that. I started talking with one of the owners, and I was asking ... because at the time this was very new industry, and I was asking him basically, "Hey, where are you getting your parts from? Are you happy with the quality?", and after I spoke with him, I went and talked to other people, and I kind of got the same resounding answer, it was like, "We're ordering these from eBay, and they're horrible quality, and our customers are unhappy."
Dylan: I had always had really good success with my manufacturer. The quality was impeccable, I always checked them when they came in. So, I started to talk with them, and asked them, "Hey, would you be interested in having a local supplier for parts? I'd be happy to supply you guys." I gave them samples to test out. So, I acquired my first 10 or 12 repair shops in my sophomore year, and then I continued to grow that throughout high school. By senior year I was actually on my way to Purdue for engineering. The first semester of college I was running this out of my dorm. We were working with about 60 repair shops, roughly, across the nation.
Dylan: Then I took ... So, the first semester of college I was on Christmas break, and I was really overwhelmed. I was taking 18 credit hours, and also running this business at the same time, and something had to give. I obviously didn't want to shut down my business, so I took a semester off, and then I ended up getting a contract with a large repair shop franchise called CPR Wireless. So, CPR had, at the time, I think 120 stores. We worked with their Midwest division which was 40. So, we went from supplying 60 stores to 100 overnight, and our revenue increased significantly.
Dylan: So, I decided to just take a whole semester off of school, and really just focus on the business and its growth, and then in May of 2014, so this would've been the same semester that I took off, CPR offered to buy me out. I sold the company to them, and then from there, I started my next venture. I didn't really know what I wanted to do at the time. I knew that I wasn't too keen on going back to school, so I was looking for other things that I could do in the meantime until I found a project that I could work on.
Dylan: So, a little backstory on why I wanted to be an engineer. I've always wanted to be an entrepreneur, but I've always had more of a creative and innovative side to me, and so creating these companies that are just kind of white-labeling, or whatever, weren't really fulfilling my personal destiny. They were paying the bills, but it wasn't what I had seen myself doing. So, I was going to Purdue for engineering, I wanted to do product ... and design, and eventually, become an inventor and everything else.
Dylan: And then, through my first and second companies, going to China, meeting with manufacturers, working with their engineering teams, I realized really quickly that I didn't need a degree to be innovative and creative, and to create a company that's doing big things. So, from each of those businesses ... I always call them buffer businesses, so they were like just a buffer period of my life where it was paying my bills. I haven't had a job since I was 15. I've always run my own companies, had my own side hustles to pay my bills and everything else. So, they were just buffers until I found that right idea, and that's what BrüMate was.
Dylan: So, BrüMate for me was the ideal company. I had finally found an industry that was kind of untouched, I had found a product that didn't exist, I had found a product that personally I was invested in, because it was something that I knew I would use and I wanted, and it was also something that I was very, very comfortable in creating. I already had the idea for what I wanted it to look like, and do, and everything else. So, I took a trip to China. I went and visited three different manufacturers for BrüMate, had solidified on our first manufacturer, and then from there, we started working on the prototyping and MVP phases of the company.
Dylan: Yeah so, the second company I can touch base on a little bit, but long story short, I took the money I got from selling GV Supply Company, I bought a house to rehab and fix it. I spent about 11 months doing that, and in the process I had noticed that when I was working on the kitchen I was working with some interior designers and stuff, and they echoed the same thing that I saw was that no one was creating really colorful and vivid glass tile options for kitchens and bathrooms, and that's becoming more of a trend that you're seeing with paint colors, and everything else inside homes, but tile didn't really reflect that. A lot of it was really boring.
Dylan: So, I had created a company called Vicci Design, that was a glass tile company. We imported subway tiles, kitchen and bath tile, stuff like that, for commercial and residential remodels, and then we had the largest color selection in the U.S. We had over 30 different colors available. I had landed contracts with Wayfair and Overstock, so we did a lot of dropshipping with them, and then we worked with a lot of local tile showrooms, and did a little bit of sales on our website. But, each company that I had taught me new elements to entrepreneurship that I didn't know before, and without those previous companies, I wouldn't have been able to start BrüMate.
Dylan: Once I had that idea I wouldn't have even known where to start, but because I had had experience with sourcing, experience with design, experience with importing, all of the things that people look at when they're looking to start a business, and it scares them, they're like, "I have no idea how to do this. I don't even know who to reach out to.", those companies taught me that. It was school for me kind of.
Felix: Right, so you mentioned that these buffer businesses were helpful. Could you have learned those same skills if you were to just ... if you had the idea, or came across the idea of BrüMate from the get-go, or do you feel like those were necessary training grounds? Could BrüMate have been the training grounds as well?
Dylan: Yeah so, BrüMate definitely could've been the training grounds, but I'm afraid that from an innovative standpoint, and also an invention standpoint, it's very just ... Okay so, for instance, if you're starting a company, and you want to start a clothing brand, it's not too hard to source a manufacturer and create your own designs with them based on things that they already have built out, and that's something I feel like you can just jump into and learn as you go.
Dylan: But for me, the actual design portion of BrüMate was very new. So, if that was my first venture, combined with the fact that I wouldn't know how to import, I wouldn't know how to source a manufacturer, I wouldn't know how to do any of the basic fundamental steps to start a true business, it would've been very, very hard for me. It would've taken a much longer ... the time period for me to actually get to the point where we're at now.
Felix: I got it, so basically the skillsets that you learned in the buffer businesses were like table stakes, and then allowed you to free up the time, energy, and capital to focus more on the new skills you had to learn, which is around building this brand new, never before product.
Dylan: Yeah, exactly.
Felix: So, what are some of the most important skillsets you found that you needed to build a more consumer-facing brand, because it sounded like before BrüMate you were doing some B2B, and then before that, you were selling these white-labeled like you mentioned, solutions. Now that you need to build a more consumer-facing brand, what skill sets did you feel you need to either gain in order to be successful with BrüMate or maybe what are some skillsets that you brought along from your past experience that prove very vital to the success of a consumer-facing brand?
Dylan: Yeah so, from that perspective, that was a completely clean slate. So, that was learning from scratch. I had no idea how to build a brand. I was looking at all these other brands that were either in similar industries, or just brands that I looked up to, and I just didn't understand how they got to where they're at. So, you're trying to write this down on paper, and put together a plan like, who am I trying to reach, how am I going to reach them, and it just doesn't work that way.
Dylan: I've learned this over the years, and anyone I've talked to has echoed the same thing, but in the beginning, you have this idea of what the brand is going to look like, and the truth is, is every brand that's out there has evolved tenfold from where it started, and it's never the same company. You probably won't even recognize most brands from where they're at now, compared to where they were maybe a few years ago. The reason for that is because if you're truly listening to your customers, the beginning customers that are buying into what you have going on, even though you don't have a brand established, you can start to form a brand around those customers.
Dylan: So, that's what I did. Over time, I figured out who our customer base is, what they react to best, and then that kind of shaped the direction that we went as a brand, and shaped our overall vibe. That was just an evolving process, it was learning. I think that's different for everything brand. I don't think there's a true way to do that. The most important thing from the get-go though was trying to reach those people that were having the same pain points, pitching them on the product, basically, whether it was through Facebook ads or whatever, getting them to buy the product, getting their feedback, and then using that to dial in what your brand voice is. What are people reacting to? What aren't they reacting to? And that shapes your company, and that's just that's over time.
Felix: Right, so you mentioned that you feel like you did not need a degree eventually, and you feel like you didn't need this kind of permission, or certification, that you could get started in this direction. How do you make sure that you have the expertise required, and maybe not necessarily in yourself, but in the company, or the founding team, or just the team in general, to make sure that you guys know, essentially, what you're doing when you're launching ... when you're building a product from scratch?
Dylan: So, I mean, when you're building a product from scratch, I think the most important thing is, is to find a manufacturer that specializes in the closest industry possible. So, if you're creating a new type of spandex clothing or something, you're going to want to find the best manufacturer possible that's already creating very similar products, because their design team, and their engineer team, are going to know what's possible, and what's not. So, if you're taking them your sketches, and your ideas and stuff, they can tell you like, "That's doable. This isn't.", and they can help you craft the right ... a manufacturable product and that's what I did.
Dylan: So, I had my initial sketches, I had the initial product that I wanted, I even had a 3D model created by a company up in New York. So, when I went to China I took this to them, and basically worked with their engineering team to create a product that was actually manufacturable. I think that's the most important thing is just aligning yourself with a manufacturer that knows what they're doing, because just to be honest, if I just went to a random manufacturer, like a steel fabrication company that didn't specialize in my industry, it would've been a nightmare trying to get them to make this product.
Dylan: With the way that I did it, by finding someone that aligned very, very closely, it was a breeze. I mean, don't get me wrong, it took a long time, and there was a lot of different design changes and stuff like that, but as far as them being comfortable helping you create the product, and as far my vision and how it came out, I don't think it would've been doable unless I found someone that was very close.
Dylan: So, if you're doing hardware you're going to want to find someone that is doing something very similar, regardless of what it is. It doesn't matter what product you have, just try and find someone that's kind of doing something similar, and then generally, they can ... they have their own in-house teams that can really help you bring that to life, and set realistic expectations as to what's possible for your product, and what's not, and how long it would take to manufacture, and what the costs would be, and stuff like that.
Felix: Right, so you don't have to learn it yourself necessarily, or figure it ourself, or hire someone even, it's if they are ... if you are their clients they're going to be inclined to help you make sure you're successful. They don't want to invest their time in something that's not going to be ... to have longevity. So, you went all the way to China to meet with these manufacturers, and I think that step is sometimes not on a lot of entrepreneurs radar, like actually physically getting up, buying a plane ticket, and flying ... if they're from the U.S., flying to the other side of the world. How necessary is this for an entrepreneur to take this step of going to China and meeting with manufacturers?
Dylan: Traditionally, let's say you order 1,000 units from your manufacturer, you'll usually have to pay around 30% to 50% upfront just for a starting base to get that manufactured, and once it's done, you'll pay the other remaining balance before it actually ships out. I was able to negotiate 10 and 90, which means I paid 10% upfront, and then I paid 90% before it shipped. What that did for me, in the beginning, we did a lot of pre-orders, so I could put 10% down, and the 60 days that it took to manufacture, I would work on getting all those units sold, and then I would use that money to pay off the remaining 90% balance, because I didn't have the 30% or 50% upfront to invest in this in the beginning.
Dylan: I told them, I was like, "Hey listen, we'll do a couple trial runs on this. If I can prove to you that I can do this, then we'll continue to do this until we get to a better point.", and so I did. Each time we did these pre-orders it turned out really well, and over time we've completely changed that. So now we have a huge line of credit, I don't even have to pay anything until it's been here, landed in the warehouse, and then I have 30 days to pay it off.
Dylan: So, over time I've been able to negotiate, negotiate, negotiate, and because of that, our business has been able to flourish. We've never had to take any investment. We've never had to take any ... give away any portion of the business, and I don't think I would've been able to do any of that without going there physically, and meeting with them, and building those relationships.
Felix: Got it, so building the personal relationships was the biggest win for you, for doing this. Maybe the question then is around timing. How much of the business or product do you feel like you have to realized or developed before taking this step because you might have 10 ideas, you can't fly to China for every single one. How do you know how far along in your business before it makes sense to go out and meet with manufacturers?
Dylan: I went to China first to ... In my previous businesses, I had already been to China, so this wasn't my first time going. At this point when I went to visit, it was to visit a few different manufacturers. I just wanted to see what the facilities looked like, what type of clients they were working with and stuff like that. That was to figure out who I wanted to work with. Once I figured out who I was going to work with, I didn't visit again until we were at a place where we were ready for actual production. So, the timing between that was basically creating a very crappy prototype that I worked with our engineering team to make.
Dylan: So, just to give you an idea, the end-mold that we ended up using at the very end for most of our products range from $25,000 to $30,000. The prototypical mold that I used was only $3,000. So, what they did was, they just created a no-frills design that worked with 16 ounce cans, it served its purpose, it didn't look very good, but they also ... I, again, negotiated with them. Generally, you have to order 1,000 plus units, I negotiated 500 units for our first run, so it was only a few thousand investment total.
Dylan: I got that in. I started running Facebook ads. I started talking with local breweries that were selling 16 ounce cans to see if they'd put this on their shelf for their customers, and a lot of this I did before we actually pulled the trigger on production. Especially working with the breweries that ... I had already had a few different breweries that committed to basically stocking this on their shelves and pushing it to their customers to get their feedback on the products itself and see if it's something that we wanted to really invest this large sum of money into.
Dylan: That is what generally is called your MVP, so it's the Minimum Viable Product, it's proving the concept before you go into a large manufacturing run, or waste a bunch of money on a product that may not sell. So, the only real way to do that is ... there are two different ways, actually. One is creating a really generic basic version that does the main core concept. So, in our case, that was holding a 16 ounce can.
Dylan: Or, you can do ... and we did this for one of our other products, we actually had a digital render created, and then we had lifestyle imagery and stuff created with those digital renders, and then we ran Facebook ads for those, and then drove them to a launchpad, and then from there they just inputted their email, and basically it said, "We'll let you know when this is ready to launch."
Dylan: So, that was for our next part, that was the Winesulator, and this was kind of the same thing. So, the timeline here was, we started working on the minimum viable product for the Hopsulator, we got those 500 units in, they sold out in like two weeks. So, a concept proved for the most part, all the feedback I got back was great, pointed out a lot of things that I already knew that were flaws in the design and stuff, and again, this was just a generic version. We started working on ... and this is when I went to visit again. I started work with the design team there to create the finished product.
Dylan: So, the initial concept for the Hopsulator Trio was to just put 16 ounce cans. Our final product was actually designed to fit 16 ounce cans, 12 ounce cans, so it has an adapter, and then we also created a lid. So, we patented this process, both the design and utility, but we own the patent on the idea of using a koozie as a drinking vessel. So, our Hopsulator can be used as a pint glass, or as a beer koozie. You can actually pour the drink directly inside, and it comes with a lid.
Dylan: In order to do that, I mean, we worked on 12 different variations of this. So, tons and tons of time went into doing that, and we didn't actually launch it for another year. In the meantime, I didn't want to just shut down the company. I had all these other ideas I wanted to work on. So, I picked the easiest one. I met with their design team, I said, "Here's all the things that I want to do, which one's going to be the cheapest and easiest to make?", and they said, "The Winesulator."
Dylan: So, the Winesulator's a wine canteen. It holds a full bottle of wine and keeps it cold for 24 hours. They basically said, "Hey listen, this is going to be super easy to make compared to all the other things you want to do, and we'll work with you again on small minimums, and we'll also comp 50% of the mold cost for this one. We really like this, we think it'll work. We'll comp 50% of the mold cost." So, for me, that was a no brainer. I was like, "Okay."
Dylan: So, obviously, we're still working on the Hopsulator design. I need to be bringing in some type of revenue in the meantime. I can't just ... I was running my other company at the time, but I still wasn't pulling a paycheck, and I was investing a lot of money into BrüMate as well. So, what I did for that was I had them create 3D renders, then I worked with a designer to get all these lifestyle images created, and I started running the lead generation as I was telling you about.
Dylan: I collected 7,000 emails. So, we placed an order in August, it finished in November, there were some issues that we had, but that was for 7,000 units, and then we launched it in November. So, November 23rd of 2016 is our first true production launch. That was 7,000 units, and it sold out in around 14 days, like two weeks we were completely sold out of everything.
Dylan: That was mainly attributed to ... So, I was hardly running any Facebook ads. I think we only ran maybe $5,000 in ads collectively after we had collected those emails. So, those 7,000 emails that we had collected, basically, I think we had a conversion rate of close to 30% that ended up buying from that list. For me, that was our first true win. That was when I was like ... We had went from doing a few thousand dollars in revenue to $250,000 in revenue in the span of two weeks and-
Felix: That's amazing, so you ... Was this the approach where you got the digital render, and you drove ads to the opt-in page, or-
Dylan: Yeah.
Felix: Okay. So, when you ... Is that an approach that you would continue taking today if you were to launch future products, just to get a digital rendering created, and then drive ads to email signup?
Dylan: Well, okay so, now we have a really cool tool, and we're one of the only brands that I know that do this, but we have a private Facebook group, it's about 7,000 members, and they're all our VIP customers, so that means they've spent more than $250 with us. So now, instead of having to run lead-ads, we basically have this private group where we post those renders, and say, "Hey, what do you think about this? What ... you like, what don't you like?"
Dylan: So, we don't have to do anything like that anymore. We basically get to use our 7,000 best customers as a focus group for every product we launch, every color we launch, new product ideas, feedback on customer service, new website. Whatever it is, they're there, and I interact with them on a personal level. I have a few moderators in the group that are honestly just employees I give them in-store credit every month, and they moderate. We have 7,000 members so there's a lot of stuff going on, but-
Felix: I was going to say, for people out there that might not have 7,000 customers as a focus group, when you took this initial approach of driving people to an opt-in page, and you were launching the product and sending them emails, what were you looking for though to determine if you should move forward beyond just the digital render? Did you look for a certain number of opt-ins or a conversion rate on the signup page? What were you looking for to say there's some potential behind this?
Dylan: Yeah, I was very new to Facebook ads, and I was running these myself, so mind you, Google degree here, I was over here Googling blogs and everything else, Reddit posts, whatever it was, on how to run generic Facebook ads. For me, I didn't know a lot, and I wouldn't use this same method in the future, so anyone listening, this probably isn't the best thing to do, but it was just about the cost to get people to input their email for me. What I've learned over time is just because of people ... I got very lucky with this, a lot of times Facebook can drive low-quality leads. So, you might get 10,000 emails, but you may only get a conversion rate of 1%, 2%. We've seen that with other brands that I know.
Dylan: In our case, I got 7,000 emails, and in my mind, that was a win. That was like, "Wow, 7,000 people stand behind this product, and want to buy it.", so I ordered 7,000 units. That was the logic I used. Mind you again, we hadn't really launched any product like this previously, so I didn't know the rules or what to even look for. So, for me, it was just like we're getting these ... I think I only spent $5,000 or $6,000 to get those 7,000 emails, so it was very cheap.
Dylan: In terms of what I was reading for what was good, we were doing way above what was normal for a lead generation, and so that was just a win in my mind. Would I recommend to other people doing the same? To an extent, I mean, it's kind of like the Kickstarter. People use Kickstarter and Indiegogo, a lot of them are using 3D renders, and they're using Kickstarter and Indiegogo to prove the concept, so they can fund ... and it's basically like a pre-order, but you're funding the idea, you're funding the manufacturing, you're funding the molding, but you're also proving the concept. So, they're not taking the risk of ordering 10,000 units and then figuring out how to sell them later. They're making sure that people actually want the product from the beginning.
Dylan: So, Kickstarter and Indiegogo, from my point of view, might be a better option. I haven't worked with those platforms. My biggest thing with them was just the revenue that they took away, I wanted to have control over that, and I wanted ... I don't know, I just wasn't familiar with them, and I was a little bit more familiar with Facebook ads since I had started working with them at the beginning for the Hopsulator Trio and stuff. So, I just ran it that way, and it worked.
Dylan: I wouldn't do it, personally, moving forward, just because again, a lot of times you get low quality leads from those. You can ... People do really well with them, a lot of people even do those for Indiegogo and Kickstarter campaigns, they'll run lead generation campaigns on Facebook, but for the most part, I honestly would just recommend getting out there and talking to your ideal customers. People are very scared to tell people about what they're working on, because they're scared they're going to steal it, or whatever the issue is, or it's just not ready to show people, it's so crappy, I'm not 100% sure on it yet, you know what I mean?
Felix: So, how do you make sure that Facebook is not just driving cheap leads, and instead of driving actual buyers onto your email? Are there things that you can do based on your experience?
Dylan: Yeah, so you can do interaction email campaigns. So, let's say you collect 1,000 emails first, you can send out an email blast to those customers, and see what the open rate is, what the interaction rate is, you can run surveys, whatever it is, just to see how interactive these people are. If you ... Let's say you send out an email to 1,000 people, then your open rate's like 1% or 5%, and then your interaction rate, or whatever it is that you're doing, is super, super low, then you know that those are low-quality leads.
Dylan: There's not a great way to figure out if they're going to convert into customers, but the idea behind it is that if they are actually opening your emails and interacting with you, then they subscribe to your email for a reason, they are generally interested in your product, or whatever you're offering, and that's the low-level way to test, but you can't just apply that, and go, "Well, 10% open the emails, that means 100 people want to buy the product.", because that may not be how it works, but that is a very good way just to gauge what kind of traffic you're getting. You can do that every week, so you can switch up the lead generation campaign that you're doing, and then test the segregated data.
Dylan: So, if you were advertising to one audience, and you collected 300 emails, then you can segregate that into one email list, and then you started advertising to another audience, and you can segregate that to another email list, and then you can send all of them emails, see what the open rates are, the interaction rates, whatever, and then figure out what audience is responding the best, and then scale from there.
Dylan: There are different ways to do it, but I still think aside from that, from a low level before you even start doing that, just talking to customers. Figure out where your customers would be, whether it's on an online forum, or a subreddit, or whatever, and just pitch people the product. No one's going to steal your idea, so just pitch to people like, "Hey, I'm starting to work on this." Most people are going to be super supportive, and they're going, to be honest, they'll tell you if they think it's a bad idea, or if they think it's a good idea, but it should actually be doing this, or whatever it is. But that's a very low-level way.
Dylan: Other ways to do it ... So, I went onto Amazon, and I looked for similar products, and just read Amazon reviews. I would read reviews all over the web, whether it was Amazon or wherever, for either what people were doing wrong with products that existed, or for product ideas. A lot of customers will comment on Amazon and go like, "This is great, but I wish it did this." I compiled a bunch of data from that like, "Okay, what don't people like, and then also what are people looking for?", and that was how I shaped a lot of the products that we have was just based on customer feedback in the beginning, because I didn't have this big customer base, I didn't have a private Facebook group, so I had to be crafty.
Dylan: I posted on Reddit, I posted in subreddits, like the beer subreddit, I posted in This Is Why I'm Broke, I posted it just in general ... I think technology, a few other places. The entrepreneurial subreddit, all over Reddit. I went on Amazon, I looked at reviews for hours, and hours, and hours, and compiled data on what people liked, and didn't like, I read Google reviews. I went onto websites and read blogs on what people were ... just search for keywords that were related to the pain points that I noticed.
Dylan: I compiled all this data and basically that, for me, proved the concept even before I started doing the lead generation campaigns, because I wouldn't have invested the time to do those if I wasn't confident in the first place. So, that wasn't really the first step. The first step, for me, was proving the concept, the second step was to start doing lead generation campaigns before we actually placed the order, and then we did the pre-order stuff on everything. So, like a Kickstarter model but without Kickstarter from that perspective, and then used that to fund that, got them in before Christmas, shipped them out to everyone before Christmas, and then ... Yeah, that was the beginning.
Felix: Yeah so, you're saying before you even invest a bunch of time and money into [inaudible] a bunch of leads, start by just talking to customers, and you mentioned a bunch of subreddits, were there any other places that you went, either online or offline, that worked well for you to get customers talking to you and giving you feedback?
Dylan: No, I didn't find anything specifically related, because it's hard for the adult beverage industry, there's not a lot of good forums. I went on to a couple of beer forums, and I did do a couple of posts, and those ... Beer Advocate I think was one of them, and just post feelers there. So, if you can find a forum that is directly related to the product that you're trying to launch, or is your ideal demographic, then that's a good place, but you have to be really careful. You don't want to sound chilly. People don't like people that are coming in there and they're trying to sell you things.
Dylan: So, you have to be honest like, "Hey, I'm a young entrepreneur, I'm trying to create this product. Here are the pain points that I think it will solve. What are your guys' opinions on this?" That's the type of post that do really well. If you come in after you already have the product and you're like, "Hey, buy my product, this is what it does.", people aren't supportive of that, but people are supportive of innovators, and they're supportive, for the most part, of people who are out there trying to reshape the way people do things.
Dylan: So, a lot of the times you'll find these forums are great tools. Especially ... You don't want to make your first post about that either. I was active in all the subreddits that I was in, commenting, interacting with people, so people saw that I wasn't just there to ask one question and leave because that doesn't feel very real either, right?
Dylan: People don't want you to come and get their advice and leave. So, you really have to be careful in how you do things like that, but as long as you're genuine, and you're there, and people realize that you're there just to get their feedback, and your not trying to sell them anything, and you're genuinely curious, and you're trying to solve something, you'll get good feedback.
Dylan: So for me, I know I kind of jumped around, but that's what I did in the beginning with the Hopsulator and everything else before I even started doing the lead generation campaigns. It was just different because with the Hopsulator after I had gotten the feedback, I decided to do the MVP, but that was because I knew that I didn't have the money yet to pay for the molds for the final product. With the Winesulator, it was a cheaper mold to create, and it was much easier, so I had the money to do the molds, and they were going to help me on the mold costs.
Dylan: So, I was basically in a position to place an order, but I didn't want to place an order without proving that people actually wanted it first, and I had no idea how many to order, and everything else. So, that was why I did the lead generation campaigns, because I was out there talking to people. I already knew they wanted it on a small scale, but I had to prove that people wanted it on a large scale before I placed this order. So, those campaigns kind of did that for me.
Felix: Makes sense.
Dylan: I collected those emails, and we didn't send out any test emails, I didn't really test any of that. I didn't know how to do a lot of that, again, the learning process, and it worked out well. The hindsight's obviously 20/20. They could've been a disaster, so just-
Felix: Right. I mean, I like that approach of that it's not enough to get the customer on your list, but then see how much further you can take them, see how much further you get them to commit to learning more about your product, and interacting with your emails, maybe even driving them to a pre-sales page, or something like that if you wanted to really get it as far as possible to find out if they're willing to trade their dollars for your product.
Felix: You mentioned that you're going out there, talking to customers, and this is super important, I think, what you're bringing up. What kind of feedback, or was there any feedback that really sticks out in your head that changed the direction of the business or the product?
Dylan: So, feedback itself not really in terms of the product, but what happened was is I was originally running those Facebook ads for the Hopsulator and stuff like that to get rid of those 500 units and get our first few hundred customers on board. It was really expensive to acquire the customers for the Hopsulator. When I started selling the Winesulator it was really cheap. Over time what I realized was ... In February of 2017, we launched our insulated wine glasses, and this only further proved my theory was that women were much, much cheaper to advertise to, and they were much more invested in the brand.
Dylan: So, that's what shifted the direction of the company from obviously I'm a male, I understand the male demographic fairly well, and so my main idea was creating all these different beer products for men, and that was going to be ... we're going to be a very masculine company, and we were going to have products for women too, but that wasn't going to be the main focus, and then overtime every single time that we would do a pre-order or launch for anything that was related to wine, it did so well. It was super cheap to drive these conversions.
Dylan: The customers went bonkers over the product. We would get 20,000 shares on posts on Facebook. That, to me, was like, okay ... I had been advertising to the wrong demographic the whole time, and I switched the whole direction of the company. We make products for everyone, but if you look at our website, at our social media, who we actually cater to is largely women. Men love the product, but men are very hard to get on board to make an impulse purchase like this.
Dylan: With women, it's easier to get the initial conversion, and then we can build that brand rapport with them to where they're invested in the brand, and they're telling friends and family about the brand, and they're buying products for their husband, or their husband has seen their products in use ... or their significant other, whoever, has seen these products in use, and is like, "Hey, I want one of these too.", or whatever it is, and we've built out the brand that way. Now, obviously, that's changed. We advertise to both men and women, we have a very large audience pool now, but in the beginning, as a small company, you kind of have to do what's most efficient.
Dylan: We didn't have an investment or anything like that, so for us, it was like, "How can we drive the cheapest conversions possible, and make as much money to continue to grow?", and that's why we went the direction we did. The customer feedback was more about customer reaction to the type of ads we were running, the different copies we were running, the visuals, and what we just noticed was that women were reacting to the brand, and they loved it. So, that was the direction we decided to go.
Felix: Got it, so it was much easier and cheaper to get the sale with this new demographic. So, you pivoted the marketing towards a woman. So, when you do have to change this up because you were initially marketing to yourself, and to the demographic pool that you were in, now you're into new territory that you maybe didn't know as much about. How did you, I guess, bridge that gap? What did you ... I'm assuming the content is not going to be a lot different, the content that you maybe never created before, how did you make sure that you were able to gracefully land into this new demographic, and the way that you're messaging and marketing to a new demographic?
Dylan: Yeah so, it wasn't really an overnight change. In the beginning, we were marketing only to men. Then we started marketing to both men and women when we launched the Winesulator, and when we were looking at all the data, the women were converting at a much cheaper rate. So, what we started to do was gradually shift more of our marketing dollars, and our campaigns towards a female audience, and with that, we just started ... we would run different campaigns. We would run some for men, some for women, some for men and women, with different copies, visuals, whatever, and just over, and over, and over it kept proving our theory that women ... they love our brand. They just resonate with the brand, they understood the direction that we were going and what we were trying to solve.
Dylan: It was just an evolving process. I mean, we didn't fully completely transfer over to a very feminine company for almost a year. So, it was an evolving process, it wasn't overnight, it was just something that we noticed over time, and we slowly changed our copy and visuals to match what was working. If we had a visual that was geared towards women, and it worked really well, then we would continue to try and create things similar to that, and recreate that for different products, or new product launches.
Dylan: Same thing with our copy. We keep track of all of our best performing copy, and then we try and emulate that in our other products and stuff. So, for us, it was just a slow process, and bridging the gap was more about just trial and error, and figuring out what works and what people are resonating with, and what they're not. Over time, we just figured out that women were our target demographic, and it was largely the gift buying demographic, which is like 30 to 55.
Felix: So you didn't basically have it perfect right off the bat when you made this switch. I'm sure it was a process where you were creating things that maybe you thought the demographic would like, and some things worked, some things didn't, over time you refined that. So, I think this is a really important point because there are two sides to this. One is that you ... as an entrepreneur, it's your job to have ironclad vision, nothing changes that, you move forward, and don't flip flop back and forth, and you're saying that what really made a big difference for your business, what probably lead to the $21 million in sales last year, was your ability to recognize that there was a new market that was way easier to get access to. How do you know ... What signs are you looking for to determine if you should stay the course versus adapting?
Dylan: Okay so, a lot of people say that as an entrepreneur you have a huge risk to fail, and I don't believe that. I think that every entrepreneur has micro-failures, a lot of micro-failures, which are kind of me marketing to men, that was a micro-failure. Then you have complete failures, which are you're ignoring all of the warning signs, and you're just hellbent on advertising to this one demographic, or whatever it is, and you're not willing to change your vision, even though all the signs are telling you that you're wrong. That's when you see people catastrophically fail.
Dylan: As an entrepreneur, I think that it is your duty to have that vision, stick with the vision, but you have to be willing to pivot in everything else. So, for me, I knew I wanted to create all these insulated drink containers for the adult beverage community but I was fluid in terms of being able to change the direction in every other facet of the company. So, if I got wind from customers that we were doing something wrong, or our data said that we were doing something wrong, I was immediately trying to figure out what we were doing wrong, and how we can fix it.
Dylan: Over time ... And that's what I was talking about at the very beginning of this was you'll never recognize the brand a couple of years after you start it because of those minor changes over time that you're constantly making, and you'll see that with almost every company. They're completely different, because over time, they're figuring out, "Okay, this audience doesn't work. This audience does work. These types of visuals don't work. These visuals do work. This is our target audience, here's what they see.", and over time you almost establish a brand book.
Dylan: We have an actual brand book, it's like 50 pages long, but it's all the things that we know people love about our company. Those have just been over time, just listening to ... feedback, gauging their reactions, looking at the data, and for us, that's how we kind of shape that. You just have to be willing to listen. Your customers, especially the beginning ones, are always going to be very vocal. They'll send you ... Especially if they know you're a new company, they'll feel much more open to reach out to you and say, "Hey, I got this product, I know it's new, I really like it, but here are the things that I don't like about it."
Dylan: That's kind of the product phase, so that's the feedback that you need to listen to, to create the perfect product, but you also need to listen to the customer in terms of looking at how they're reacting to your visuals, whether it just be through what you're posting on Instagram or Facebook, or how your ads are performing, and this isn't directly talking to the customer, but this is more seeing how they're interacting with your brand.
Dylan: So, if you post 10 things on Instagram, and you see one post is doing super, super well and the rest aren't, look at that post, and go, "Okay, what about this made everyone interact with us on a much higher scale than they did with everything else?", and then take that, and try and emulate that in every future post that you do. If you can use that mindset in every facet of your business, you'll be successful.
Dylan: I mean, that's the one thing every person I've ever talked to, their business, again, changed drastically, and it was just because they're willing to change, and they're willing to listen, they're willing to take criticism, that ... another thing, you can be very humble, and open to the idea that the product you're starting out with, isn't going to be the product you're going to end with, and it's also probably, honestly, not very good, and people are going to tell you that, and you can't get hurt by that. You have to understand that nothing's ever perfect on the first try, and the only way you can reach perfection is by listening to that customer feedback to create the perfect product.
Felix: Got it, so when you say listen, it sometimes means them telling you directly about emailing, calling, customer support things, or sometimes it's the data like the sales all of a sudden are way easier to get, and sometimes it's just lots of engagement on your post, and then it's up to you as an entrepreneur to determine or infer what it is about this that took things off. Does that cover the basis for where you listen for customers?
Dylan: Yeah, even Amazon reviews. I know a lot of people are sketch to put their product on Amazon in the beginning, just because they don't want those low-quality reviews, but if you can kind of convey that it's a newer product, and you put version one or whatever, people generally will leave bad feedback, that's fine, because you can release a new product with a different SKU, and call it version two or whatever it is, it's new and improved, but you can use those reviews to gauge what people like and they don't like about the product. I did the exact same thing.
Dylan: But then on the flip side, yeah, I mean, you should be ... and any product that you're launching, you should be an expert at it. You should already know the industry better than your customers. You should know what they want, but you're not going to know everything. So, it's your job to look at everything collectively and figure out what you're doing right and wrong, and yeah, you have to infer, but you should be able to do that if you are truly an expert at the industry that you're working in.
Dylan: You shouldn't just start a company just to start a company. It should be something that you're passionate about, and you know about, because if your customers know your product better than you do that's a recipe for disaster because they're just going to be ripping you apart constantly. That's kind of okay, I mean, if you're in that position, and you did start a company or created a product that you didn't know a ton about, and your customers just ripped it to shreds, you can still use that data. Like, "Okay, I don't ... They know more about it than I do. I need to reeducate myself.", but now you can use that feedback.
Felix: Like going back to the-
Dylan: ... to create a good product, and continue to learn.
Felix: Right, going back to the listening and learning. That's awesome. So, brumate.com is the website, what ... I'll leave you with this last question. What has to happen this year, 2019, for you to consider the year a success?
Dylan: So, last year was kind of a year of growth. With that, we went from $2 million in 2017 to $21 million in 2018, and we did that without any investment. So, a lot of that was taking things like Shopify Capital Loans, PayPal loans, all these different avenues that were willing to offer us money based on our historical sales data, where a traditional bank wouldn't because we weren't old enough as a company, and because of that our profitability suffered. We were so focused on growth, we weren't really focused on profitability.
Dylan: This year it's about safe growth and profitability, and we're still doing new testing. We're testing out podcast ads, and a few other avenues, but for us, it's about really dialing in the brand. So, we just launched a new wholesale website for our retail partner, we're trying to grow that. We're launching a new website on brumate.com that's much faster and done a ton of testing to increase conversions, and we hired a copy team to constantly change copy, and stuff like that.
Dylan: So, for us, it's just we've built this great brand, we have a huge following, we have great products that are on the horizon, and that is already launched, and now we're just kind of dialing everything in, and trying to bring it all up to speed, because when you go from $2 million to $20 million, your infrastructure kind of suffers. There was just a lot of things that we didn't do last year that we should've.
Dylan: So, we're redialing in all of our emails, for our email list, we're redoing our website, we're launching blogs, we're doing cocktail videos, we're being more interactive with our customers, we're growing our social media. Those were all things we didn't focus on last year. Last year was like, "Sell, sell, sell." This year, that is still a big focus for us, but now it's about really creating this real brand, and ... with the customers, and building something even bigger, because if you can grow everything else around your company, your company will grow organically. That's honestly the plan for this year, is just really focus on those things.
Felix: Awesome, thank you so much for your time, Dylan.
Dylan: Yeah. No, thank you, Felix.