It’s common for a hardware startup to be wary of the retail space. Margins, upfront costs, logistics, new marketing tactics, and other moving pieces can be unfamiliar to many smaller teams of engineers, designers, or developers who come up with a new product.
I interviewed up-and-coming technology and hardware CEO – Danny at EVEN (MeQ Inc) – to learn how differentiating yourself, providing real value to customers lives, and understanding your market can allow you to go from “just an idea” to full-fledged company.
Please give a brief history of your company and the products you sell.
Danny: The company was founded in 2014 and had developed a technology which we tend to call “glasses for your ears” designed to solve peoples’ specific, changing, and unfortunately worsening hearing. This EarPrint Technology – which has been clinically validated – can be self administered to come up with your specific hearing profile.
This technology and algorithm compensates and adjusts each ear individually in real time using our enclosed system. We’re first and foremost a technology company (MeQ Inc); however, we have our branded hardware arm – known as EVEN – which went into the market 2 years ago.
What’s been one of the hardest-earned lessons of building the EVEN brand into the market so far?
Danny: We’ve had a lot of success as an online, direct-to-consumer company; however, in the past year or so we’ve gone out of the online world into the physical world to let people experience the product first-hand.
We’ve seen a lot of success with these offline initiatives. As an example, when we first started we were looking at other direct-to-consumer companies like Harry’s, Casper, or Dollar Shave Club. We had this idea that you could also build a headphone company to function like these models. The only issue is that there’s really no technology in these examples.
There’s nothing unique from a technology standpoint – what’s unique about these examples is the direct-to-consumer model, their value-for-money proposition, and brand positioning.
Niche is a Retail Experience
Having new technology is different. It means that you need to educate people and get them to understand. Carving out a niche is by having a retail experience. Having a place customers can physically go to try our headphones on, feel the product, and test the technology out for themselves has proven to be very effective.
The more we explore the offline experience model, the more validation we see that this is the direction EVEN is headed.
As a more concrete example, we have our website which looks relatively good. The website has a pretty decent conversion rate for today’s standards. When we do pop-ups or physical locations, that conversation rate goes up to anywhere from 20-40 times that of the website which is absolutely crazy!
Investors are also very wary about investing in hardware. They’re wary of marketing and all that stuff. You need to convince them that your model is sustainable and working.
Supply chain can also be very challenging.
The playing field is very uneven. There’s a lot of bias for companies who have large manufacturing capacities and can get the economies of scale down significantly. How can you compete with those margins while still having enough money to build your small brand?
Out of the 4 P’s of Marketing (Product, Placement, Pricing, Positioning) – pricing is one of the trickiest things to nail down. The only way to solve that is by going out and seeing peoples’ reactions to your price, value proposition, and brand recognition. You need to be at a price where customers are willing to give you the benefit of the doubt and try your product.
If people spend more than $100 on headphones, most people will see that as an investment rather than just a purchase. The headphone market is very odd. There’s no reason to pay $300, $400, or $500 for headphones with no improvement to technology. Part of EVEN’s story is to get a better product, a better technology at half the price.
What’s been your experience going into retail with Retailbound?
About 6 months ago (May) we decided to engage with Retailbound. Part of the solution that Retailbound gives to us is having an outsourced channel manager – Yohan Jacob. He manages all of our relationships with retailers, distributors, and others involved in the process. We rely heavily on these connections, but it’s also Retailbound’s ability to tell us which directions to take, which terms are negotiable, and other day-to-day execution tasks that can only be done well with years and years of hands-on knowledge.
I’ve worked with and interviewed many other companies in the past who were also in the retail space. These retail firms wanted too much commission or control over the brand’s direction – which would’ve hindered overall growth for the company. Many sales agencies and retail partners will say “I talked to so-and-so and we’re waiting to hear back”, and nothing ever happens or it takes forever.
One of my favorite things about working with Retailbound is the methodical approach for getting results for our brand. There’s no wasted time.
With Retailbound, there was a really well thought-out process from the beginning. Weekly meetings and reports help me keep a concrete feel for what’s going on today and in the future. Startups like us in the manufacturing business need the ability to forecast production and output capacity – which is what Yohan and the Retailbound team have been very useful for.
What’s not managed properly, simply doesn’t happen. After 6 months with Retailbound we’ve got relationships with Best Buy, Sharper Image, Brookstone, etc. Plus we’re already talking to Best Buy about in-store opportunities for 2019. This has helped immensely validate our efforts to investors – who need real proof that you’re doing things right.
What excites you the most about the future of EVEN?
We’ve managed to do something unique in a very crowded market; however, when you look closer at other headphone companies they’re all selling very similar products. EVEN takes a completely different way of looking at the industry, and now that we’ve overcome issues on pricing strategies and finding what excites our customers. I’m feeling very bullish towards 2019.
We’re looking at rolling out pop-ups across the US and Europe as well as increasing our partnerships with retailers like Best Buy. I think we have a really good shot at establishing the brand securely in the marketplace.
What is some advice you’d give to a hardware Founder who’s thinking about entering the retail market?
There’s a lot of things I could say. First of all, don’t be afraid. There’s a lot of misinformation and fear-mongering when you start talking about putting a physical product into the world. The biggest companies in the world are those who make stuff, for example Apple. This industry is fascinating to be in.
The experience is absolutely amazing when someone loves your product and gets a real benefit out of it. When you do something well and it shows in your customers’ faces, it’s very rewarding.
All that being said… investors always want to see quick results, quick numbers, quick sales. They want to see huge turnouts, and that can be very detrimental to startups. You need to talk to real people (not family or friends) and get their opinions and reactions to everything you’re doing.
We’ve gone through 5 complete iterations over 2 years – which is a lot. Don’t fall for the short-term goals just for investors. Think long-term and where you want to be with your brand. If you have a product that really benefits people and is different, then think long-term.
Contact Yohan Jacob at firstname.lastname@example.org for more information on our services for innovative product brands that want to scale into retail.