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.
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.
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."
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."
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.
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.