Last year, Jon Fawcett and his co-founders at Fuse Chicken, a four-person firm based in Akron, Ohio, launched their first Kickstarter campaign.

Their product was Une Bobine, an iPhone charger crammed into a metal gooseneck, allowing it to double as a flexible dock.

After 40 days, the team has raised $212,265. Then the hard work began.

From previous jobs, Fawcett already had relationships with manufacturers lined up. Getting that product home, however, was thorny. After a go with a less-than-efficient freight forwarding company, Fawcett cut out the middle man and worked through UPS directly to get his product home.

Of course, shipping the units to the Kickstarter backers was a trial of its own, involving a string of programs and a custom-built database to get the labels and postage automated.

Final cost for postage, after fulfilling all the Kickstarter requests (nearly 12,000 units in total): $25,000.

Here, an injection mold for the Bobine.

After fulfilling the Kickstarter orders, Fawcett and co. signed agreements to sell the product worldwide. That required a three month crash course in international tax law.

Then came the matter of finding retailers and distributors. Bobine, which had been featured widely in the press, wasn’t wanting for attention--the challenge was figuring out who was worth working with.

"We realized you needed to have a really solid grasp of who is selling your product," Fawcett says, "to make sure it’s legitimate companies, not just somebody who’s going to buy it at wholesale, mark it up by a dollar and just try to get rid of 'em."

Recently, he hired a channel management company to sort out those retailer relationships. In no time flat, they had the Bobine on big name electronics sites like Amazon, New Egg, and BestBuy.com

For Fawcett and the rest of his team, the last year has been an A-Z overview of everything it takes to get a product into a customer’s hands.

"We added up our entire supply chain, from the very first raw materials supplier all the way to the consumers hands, and there’s 15 steps," Fawcett explains, summing up the hard work. "Fifteen different people who have to get paid, from the time we say 'build this’ to the time the consumer buys it."

"I finally understand why the retail cost of a product is so much more than what the manufacturing cost is," he says.

Life After Kickstarter: 5 Costly Lessons From A Kickstarter-Backed Designer

Kickstarter backers pledged $212,265 to make Jon Fawcett’s flexible iPod dock a reality. Here’s what came next.

For Jon Fawcett, Kickstarter success came with an unusual soundtrack: an air horn.

The din started on May 7, 2012, the day Fawcett and his colleagues at Fuse Chicken, a four-person design outfit in Akron, Ohio, launched their first Kickstarter campaign. They were trying to raise funding for Une Bobine, a product of Fawcett’s design that stuffed an iPhone charging cable inside a metal gooseneck, allowing it to double as a flexible docking station and makeshift tripod. It was a simple, clever idea, and the team set out with the modest goal of raising $9,800 to put it into production.

In anticipation of their micro-windfall, the Fuse Chicken office prepared a ceremony of sorts. In the days leading up to the campaign, team members downloaded a slew of sound effects to their computers, with the idea that they’d play them in celebration whenever they received a new pledge. Fawcett’s sound effect was an air horn. Starting that Monday morning when the project launched, every time he’d get an email notification that a pledge was made, Fawcett would let the horn blast forth from his speakers. Then his co-founders would join in the fanfare with sounds of their own—a cacophonous, call-and-response ode to their crowdfunded success.

"That lasted for about two days," Fawcett says.

In the week following the launch, the Bobine racked up a good deal of favorable press coverage. Pledges poured in, and the air horn threatened to upset the collective mental health of the office. It was promptly abandoned. Still, things remained stomach-turningly tense, as unexpected, outsized success can often be.

"There were some days where every five minutes we would have a new backer pop through," Fawcett recalls. "To the point that I just had to close my email sometimes. I turned email notifications off on my iPhone. I closed Outlook. I’d just go sit in a quiet room for five minutes, just to get some sanity."

By the end of the 40-day campaign, in June, some 4,500 backers had pledged $212,265 to make Une Bobine a reality. Along the way, Fuse Chicken had expanded its offerings, introducing a micro USB version of the charger suitable for Android handsets, as well as a shorter length option for each version.

It was an undeniable, unmitigated Kickstarter triumph. But as Fawcett would quickly learn, it was just the beginning of the Bobine’s journey.

***

Kickstarter successes like Fawcett’s aren’t uncommon. Of the 100,000 projects launched on the site to date, nearly half of them have reached their funding goals, drawing in some $630 million in total pledges. Many are things that probably wouldn’t exist if not for Kickstarter.

Indeed, in the long journey from an idea’s inception to its reality as a product in the hands of a user, funding is an all-important early step. But it’s just one step. Once people have pledged their cash, they expect an actual product, and actually fulfilling an order—getting the product manufactured and in the hands of a customer—is a fantastically complex process.

That could be, in part, why Kickstarter’s been trying to discourage products like the Bobine in recent months. At one point, for every glowing story of Kickstarter successes you’d hear about, you’d see another one about a product failing to come together, or a team sheepishly announcing yet another delay.

That trend came to a head last September, when founder Perry Chen wrote a blog post entitled Kickstarter Is Not A Store, introducing a slew of rules to discourage the types of products that were prone to these sorts of issues. Now, Kickstarter’s in the process of reasserting itself as a community for artists to find funding, as opposed to a place where designers go to raise capital to build products.

Still, even now, scores of gizmos do make it onto the site, and there will be many more teams, like Fuse Chicken, who find themselves faced with the daunting task of figuring out the second part of the Kickstarter equation. In Fawcett’s case, it required opaque negotiations with manufacturers on the other side of the globe, the mastery of dozens of different international tax codes, shrewd management of inventory, and some positively heroic acts of shipping.

And while Kickstarter helped raise the funds, it certainly didn’t lend a hand with any of that other stuff. As Fawcett says, "You have to navigate those waters on your own." Here’s how he did it.

1. MANUFACTURING: Line it up beforehand

Right from the start, in terms of fulfillment, Fawcett had a big advantage over many of his Kickstarter cohorts. He already had relationships with manufacturers in China.

In the 15 years Fawcett’s been the head of Fuse Chicken, he’s designed dozens of products for other companies. In many cases, as designs were being finalized, he’d work directly with manufacturers, ensuring that the product coming off the assembly line was the one he and his partners had dreamed up. So when he launched his Kickstarter in May, he already had a manufacturer for the Bobine selected.

"We were basically ready to go," he says. "It’d be pretty dangerous if you weren’t … And that’s probably why you see some of these products fail miserably. Because they don’t truly know how much it’s going to cost for production."

With that previous experience, Fawcett was able to set goals that were grounded in the real world of manufacturing. He knew that it would cost $2,000 or so to make an injection mold for the first product—the full-size, iPhone-compatible Bobine—and he was already ordering the steel for that purpose while the campaign was still live, hoping to get a jump start on fulfillment.

As he saw interest balloon in the following weeks, Fawcett calculated how much additional molds for new versions of the Bobine would cost and introduced them correspondingly, as the pledge level grew higher and higher. In the end, the team spent nearly $50,000 on eight different injection molds for all the parts they needed. That may seem like a tremendous expense, and it is. But Fawcett could go through with it confidently, knowing both the amount of funding he had to work with and the prices associated with the molds and manufacturing.

Still, that was about as far as the designer’s familiarity with the manufacturing process went. For everything after, he’d have to learn on the fly. "This was our first time having pallets of product in China," he says. The next challenge was getting them home.

2. BRINGING THE PRODUCT HOME: Cut out the middleman

In many senses, at this point, the product is very real. It’s been manufactured and it’s sitting somewhere on a pallet. A single pallet is 3,000 units. That’s 3,000 products for which you’ve already accepted hard-earned money and are now responsible for delivering to customers.

Still, at this stage, those products can be agonizingly distant. You imagine them being susceptible to clumsy handlers and whatever other unknown dangers might befall a pallet of 3,000 products sitting in some warehouse in Shenzen. The first order of business, then, is getting them home safely.

Here, Fawcett allowed himself a shortcut. He was already running behind on his promised fulfillment date, and he wanted to get the first Bobines out to backers as quickly as possible. So he figured he’d let an experienced, third-party company handle the business of getting the first batch of units back to Akron. "We thought, right up front, let’s find a freight forwarding type of company. Somebody that we can call and just say, 'Pick up the product, deliver it to our office. Tell us how much it’s gonna cost, and handle everything,'" he remembers. "That’s what we thought we were getting."

It’s not exactly what he got. Fawcett did find a company that said they’d handle the job, coordinating with the Chinese factory and UPS to make sure the pallet got to Ohio safe and sound. He and his co-founders even elected to go with an expedited shipping option, paying $7,000 to get the first pallet back to the office in one week, as opposed to the typical three.

Yet, one week and dozens of frantic phone calls later, the pallet was still sitting in the warehouse in China. The freight forwarders had failed miserably. "I don’t know if they were a little bit of scam artists, or if they just weren’t competent at what they were doing," he says, but for the next pallet, he resolved to cut out the middleman and go through UPS directly.

That meant a little extra leg work, but in the end it was worth it. "It was about four hours of reading through UPS web pages and documents to figure out how to do it, and one phone call to make the arrangements—and then it was done," Fawcett says. "It’s not that difficult, having done it—but it’s one of those learning experiences. Now, fast forward eight months, we’re shipping between other countries without ever even seeing the product. Our last shipment was five pallets from Hong Kong to the United Kingdom, without ever seeing it or touching it."

That first pallet, the one handled by the freight forwarder, did eventually show up in Ohio—just as Fawcett was receiving the fourth pallet he’d shipped himself. "It’s the age old adage," he says, "'If you want something done right, do it yourself.' In some cases, that’s true."

3. FULFILLMENT: Automate, automate, automate

With pallets arriving at home in the U.S.—safe now but quickly taking up Fuse Chicken’s limited storage space—the task turned to shipping the products out to backers. Compared to the hazy and perilous realm of international freight, you’d think this would be a piece of cake. Then again, this wasn’t just dropping off a package at the post office. Fawcett had 4,500 boxes to get out the door.

The first challenge was a deceivingly simple one: pulling the backers’ shipping information off Kickstarter. The site has improved its administration tools in recent months, Fawcett says, but at the time, they were "horrific." The only way to get the addresses off the site at that point was as a CSV file, which they then had to import into Excel, only to export again as something that could be read by their shipping software—an application the team was relying on for printing labels and postage by the thousands.

He thought he had things worked out, until he noticed that some component of his byzantine workflow had stripped the data of its UTF-8 encoding, transforming all the tildas and umlauts in the international backers’ addresses to wing-ding gibberish. Unfortunately, he only caught the error on the second day of shipping.

Eventually, Fawcett and his team ended up designing their own database from scratch, allowing them to selectively sort shipments based on where they were going and what products they included. By September, they’d fulfilled all of the Kickstarter requests—nearly 7,000 units in total. The final cost for all the postage: $25,000.

This shipping morass, Fawcett came to understand, was the flip side of the project’s success. "Those are the types of issues you don’t really have if you have 100 backers," he explains. "If you have 100 backers, you could hand write all the mailing labels. We had to figure out a way to automate the process.

"If you’re planning to raise $10,000 and you raise $200,000, it’s a whole lot harder," he continues. "You have to produce a whole lot more right up front. We ship to 70 different countries. We had to figure that out."

4. THE SUPPLY CHAIN (AND THE TAXES THAT COME WITH IT)

After fulfilling all the outstanding orders from the initial campaign, Fawcett and company started looking beyond Kickstarter. They wanted to keep selling the Bobine, which required signing agreements with sales managers for North America and EMEA, comprising Europe, the Middle East, and Africa. This time, it wasn’t just an issue of getting the tildas and umlauts sorted. It meant getting a handle on the esoteric world of international tax law.

It took nearly four months from Kickstarter fulfillment until Fawcett signed an EMEA agreement. Nearly all of that time went into looking at the taxes in the various countries involved and figuring out how it affected their price structure. "Working through the logistics of that was an enormous undertaking," Fawcett says.

The most eye-opening thing was coming to terms with the VAT, or value added tax, which calls for a new tax on the value added at every stage in the process. "They pay VAT every step of the way" in the U.K., Fawcett says, likening it to an additional import tax on the items. "Whereas here, if I bought raw materials with China, did something with them, and then exported them to another country, I could do most of that probably without ever paying sales tax. Over there, if you import something, improve it, and sell it, they get VAT on that."

In addition to being tough to grasp in all its detail, the U.K. VAT posed a more immediate problem for Fawcett. As inventory continued to accumulate, he’d started looking at renting additional warehouse space overseas to store it, and the U.K. seemed like a prime location. But he didn’t want to have to pay the British government a 20% cut if his product ended up getting shipped right back out to some other destination in Europe.

Thankfully, he found a solution in something called a bonded warehouse—a facility that technically exists outside of the reach of the tax code. "In a nutshell," Fawcett says, "the product is no different than if it’s sitting on a boat in the ocean." The designer was now speaking in the language of a true importer/exporter.

5. RESELLERS AND RETAILERS: Be careful who you trust

Of course, no matter what country it’s taxed in, inventory doesn’t mean much unless there’s a demand for it. The world of resellers, retailers, and distributors was yet another Fawcett was forced to dive into in the months following the campaign.

Thanks to the Bobine’s initial success, there was no shortage of interest in the product. "We got hundreds of messages—literally hundreds—from every corner of the planet, saying, 'I’m the biggest distributor in Czechoslovakia,'" Fawcett says. "I think I actually got five of those from Czechoslovakia."

And indeed the challenge wasn’t in finding retailers so much as picking the right ones. There were comers big and small, from Mom and Pop websites to distributors responsible for entire geographic regions. They tried to be shrewd, but Fawcett admits some mistakes were made early on.

In one instance, they sold a batch of Bobines at wholesale price to a vendor in Australia, who promptly set up a website in the U.K. and hawked them there for cheap, undercutting some other deals Fawcett was making in the region. "We realized you needed to have a really solid grasp of who is selling your product," he says, "to make sure it’s legitimate companies, not just somebody who’s going to buy it at wholesale, mark it up by a dollar and just try to get rid of 'em."

They had a few bites from some big-name retailers here in the U.S., too—though that experience proved to be daunting in a different way. The January after the Kickstarter campaign, the team rented a booth at CES, the annual gadget gala in Las Vegas, in hopes of making some in-roads in the industry. Shortly thereafter, they got a cryptic email from the retailer—Fawcett wouldn’t name them on account of the deal having fallen through, though he says they have "thousands" of stores. It just had a photo of their booth and a note to call them.

As soon as Fawcett returned the call, the retailer immediately replied with a barrage of emails, leaden with massive zip files including some 60 documents in total. There were complex, 30-page PDFs on getting set up as a new vendor. "That was kind of the eye-opener, where we said, 'We need to find people who do this for a living,'" Fawcett says.

Recently, Fuse Chicken hired just such help—a channel management company, as they’re called—to handle pitching the product to retailers. "That was probably the smartest thing we’ve ever done," Fawcett says. "It allows us to focus on new products, and developing products, and manufacturing products, and not have to learn the ins and outs of the retail market." Just a month or so after hiring the outside help, Une Bobine is now available on the five largest consumer electronics retailers on the web, including Amazon, New Egg, BestBuy.com, and more.

***

Since the first blast of the air horn in May of last year—only a year and a half after the idea for the Bobine first came to him him while he was laying in bed—Fawcett and his co-founders at Fuse Chicken have brought just shy of 50,000 of the things into the world. That, in and of itself, is a testament to the power of Kickstarter.

But Fawcett’s story is a reminder that a product’s journey doesn’t end with funding. While Kickstarter has democratized and decentralized the process of raising capital, concerns of manufacturing, shipping, and storage still retain the unglamorous grit of the real world. There’s no flashy website for setting up your supply chain. Perhaps that’s the next part of this grand process prime for disruption.

Figuring out that end game is always the next step after funding, whether the product is a documentary or a quilt or an iPhone charger or a smart wristwatch. And yet, as tedious as it may be to complete a movie to satisfaction, smart watches and iPhone chargers leave significantly more room for trouble.

For Fawcett, the last year has essentially been the process of discovering all those little places where things can go wrong. It was a crash course in everything it takes to put a product in a customer’s hands—and an education in how that can end up being so expensive. "I finally understand why the retail cost of a product is so much more than what the manufacturing cost is," he says.

"We added up our entire supply chain, from the very first raw materials supplier all the way to the consumers hands, and there’s 15 steps," Fawcett explains, summing up the hard work. "Fifteen different people who have to get paid, from the time we say 'build this’ to the time the consumer buys it."

About a third of that is manufacturing; another third is worldwide shipping logistics; the rest involves getting it from the final warehouse into the consumer’s hands. But it all happens only after the Kickstarter has been a success.

Only recently, finally, has Fawcett been able to breathe a bit, having worked out a supply chain that’s operating smoothly and without constant oversight. Still, he and his partners have plenty to work on. They’re currently busy planning their next Kickstarter campaign.

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50 Comments

  • geebostew

    They never taught us any of this part of the process in college. Thank you for helping so many of us...

  • James Chanbonpin

    Amazing amount of info in the article...I got lost and took the journey with them for a good 7-10 minutes =) Thank you.

  • jacobbulk187

    I don't think I have ever read this much stuff with out getting bored and quitting and I don't even plan to ever have a kick starter I don't even know why I read this to be honest I don't even know how I got on this website but somehow I must say that was interesting till the end good job on the article lol

  • For product designers looking to run a crowdfunding campaign for their work, checkout CrowdyHouse: http://www.crowdyhouse.com/. It solves many of the admin and collecting order issues mentioned above and is specifically made for product campaigns. You can see all your customers in the admin and print the packing notes for each customer straight after the campaign has finished.

  • Kimberly Jacobs

    Here is what concerns me—the product was a success and they learned a lot. The last sentence says they are working on their next Kickstarter campaign. Why!?! They should be learning how to make a successful product into a profitable business which can then reinvest that profit into product development. Kickstarter campaign reliance makes lazy businesses. Perhaps, Kickstarter should limit the number of campaigns businesses can do.

  • Thank you for sharing your experience. This was very informative and caused me to think more critically about pre campain preparation. Its easy to get caught up in the excitement of the overall product and potential success of it and look over what makes it come to life in real world application. Really well written and thought out article. Thank you!

  • Jakub Kriš

    yeah, never trust someone who will tell you "'I’m the biggest distributor in Czechoslovakia,'" as this country doesn't exist for good 21 years.

  • NetscapePizza

    Holding my $700 device up on what is effectively a $5 shower cable… great idea

  • General Wrath

    As a member of the EU VAT should not be compounded, you pay it once, then it can go to or through any other EU members without VAT, Find the member with the lowest VAT and operate from there.

  • Ryan Patch

    Have you ever heard of Dragon Innovation's marketplace?  They are a kickstarter-like funding market, but unlike KS, they are there 100% to support the makers and get the product out.

  • Sam Alison

    Really interesting article with a lot of good points for people new to manufacturing to look out for. But if they really were taking orders from people referencing a country which hasn't existed for over 20 years you really need to question their capability for dealing in international business...

  • Jsunlight

     I had initial success on kickstarter, raising almost 400 percent of goal,  but it soon turned into a nightmare as printers stopped returning emails or upped rates in the 40 days since i got qoutes and all the vendors and manufacturers were lined up, making me scramble to find new ones when I thought i was ahead of the game. And i had less than 100 backers. No matter how well you plan it seems like the rate of change is so fast, you're always destined to be behind the 8-ball.

  • HellRa1SeR

     The cost of making the bobines has not been mentioned here. Also the warehouse charges and the taxes involved selling them.

  • Doug Heffernan

    Great article.  We saw this coming and found a great solution.  There is a company in California that is set up to support the whole supply chain for Kickstarter companies.  They are currently supporting several companies.  They manage the international shipment to the US, the warehousing and distribution (including good rates under UPS, USPS and FedEx).  Help with VAT/GST/Duties.  And all customs compliance and RMA issues.  There are companies that can help.

  • Cmcurtola

    Doug, 

    This is amazing news! DO you happen to know the name of the company? Cheers!

    Colby

  • Doug Heffernan

    Hi Gautch, I used a guy Scott Logsdon @ TransPak.  He knows the KS space.