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Income Report: SwitchPod—The Final Numbers, Churn, Retail, and How Much Are We Taking Home?

Income Report: SwitchPod—The Final Numbers, Churn, Retail, and How Much Are We Taking Home?

Dive into my latest income report on the SwitchPod Kickstarter, including our final sales and profit numbers, churn, our plan for retail sales, and what's next on the physical product front.

Pat Flynn
Income Report: SwitchPod—The Final Numbers, Churn, Retail, and How Much Are We Taking Home?

I’ve been talking about the SwitchPod a lot in the past few months, and I’m excited to finally share this big report with you!

To start off, I want to talk about how amazingly thankful I am for everybody’s support for the Kickstarter campaign. It’s been an incredible journey, and I’m really excited for the actual release of the SwitchPod.

It wasn’t always smooth, of course. Not all of our marketing efforts panned out, and since it was such new territory, we ran into a lot of things we didn’t know about. In this post, I’ll share some of the numbers from the campaign. I’ll also talk about what worked well, what didn’t, and some plans for what’s coming next for us in the physical product space.

The SwitchPod Kickstarter Campaign: Digging into the Numbers

I’ll get into the numbers in a moment. But before I do, it’s important to mention how working on a physical product has definitely made me appreciate the things I’ve been doing in the digital space. Physical products are a completely different beast. I still don’t know close to everything. There were times when Caleb and I were asked about things we just didn’t know.

More on that coming up—but right now, let’s get to the hard numbers!

The campaign ran for 60 days—and let me tell you, it felt like a long time. But I’m glad we kept it going for that long, because it definitely helped us raise more money.

That said, a huge portion of the funds we raised came in the first half of the first day. In 11 hours and 26 minutes, we fully funded the $100,000 minimum goal, which was amazingly fast. Our internal goal for the whole campaign was $250,000, and we hit it within four days.

What did all that mean? It meant the project was definitely a go, which was great because we could even start the process of manufacturing the SwitchPod a little earlier than planned!

But the campaign kept some momentum through the whole 60 days. After the first week, we were at just under $272,000.

By the end of the second week, we’d hit just over $300,000. By the third week we’d hit $317,000, and after one month we were at $330,000. Growth slowed after that point, but we were still bringing in an average of $7-$8K per week. Then in the last 10 days, the pace picked up and we raised another $62,000 to close out strong.

Switchpod campaign performance

You can find a more detailed graph of the campaign’s performance at BackerKit.

Churn, Fees, Promotions, and How Much We’re Taking Home

On Saturday, March 30 at 9:00 am, the 60-day campaign closed with a total of 4,148 backers and $415,748. But we didn’t “go home” with that exact amount. Why?

A large part of it is something called churn.

What’s churn? Well, when people are asked to pay for something, sometimes they don’t end up actually paying for it, or their credit card doesn’t go through. The churn for our campaign ended up being $14,402—that’s how much we were pledged by backers but never received.

There were also several fees we had to pay that cut into the final amount. Kickstarter charged a 5% fee, and there was a credit card fee too. Once those were taken out, we received a total of $368,393.60 from Kickstarter.

We also paid about $23,500 to Kickbooster. Kickbooster is a service that allowed us to create and run an affiliate program for our Kickstarter campaign, which was very useful. We had a number of affiliates come on—a few dozen, in fact. However, as in most cases, just a few of the top people made a bulk of the income. But these affiliates drove over six figures in sales for us, and the affiliates’ payments plus fees for Kickbooster totaled $23,565.47.

We also spent $6,943 to hire a company called Jellop to run some Facebook ads. The ads were profitable, but not as much as we’d hoped. I honestly don’t know what went wrong, but the campaign just it didn’t take off like some other campaigns we’ve done before using the same company. (We hadn’t used this particular company before, but had heard from and spoke to others that had massive success with them.) Maybe it was because of Facebook algorithm changes, or something else we can’t pinpoint. It wasn’t a failure by any means, but we thought it was going to go better.

We also spent $1,404 on Google AdWords and $900 on a PR company that got the SwitchPod featured in a number of articles. The impact of the latter was difficult to measure, but we did get some good publicity out of it.

We also ordered additional prototypes, which cost $15,000, to get them out to people and hopefully collect more video reviews, but unfortunately there was a problem with the shipment—some of the parts were not working correctly, due to miscommunication with the manufacturing company, which delayed us receiving shippable prototypes. That was unfortunate, but not the end of the world. We now have more prototypes currently available that we’ve been sending to people after the campaign, so all was not a loss.

After all expenses were paid, we earned a grand total of $313,212.43. The final numbers were a little lower because of the churn, fees, and expenses, but overall the campaign was definitely a major success.

However, are we taking home that money and putting it in our pockets? No, definitely not. Likely, nearly 100% of this amount will be used to create the molds and produce the SwitchPods, as well as fulfill orders made through our website at SwitchPod.co and supply them to retail outlets. (More on retail later.)

Since the campaign ended, we’ve sold nearly 100 additional pre-orders at the retail price, which has earned us $11,151.59. Again, all this pre-order money will go into ordering the actual units that will be sent our way and brought to the fulfillment house and then shipped out to everybody.

And you can still pre-order the SwitchPod before it hopefully gets produced and shipped by August, which is still the current plan. As with anything, there could be delays, but we’re hoping not. Just go to SwitchPod.co.

To Retail or Not to Retail the SwitchPod

Our goal is to get the product into backers’ hands by August as promised—if not sooner.

And we’re working through that process right now. A big part of that is deciding on the final dimensions and design of the packaging—not just for the Kickstarter campaign backers, but also for how the Switchpod will be displayed in retail stores.

That’s right: the Switchpod is going to be on store shelves.

To get ready for this, Caleb and I have done a lot of research and visited a lot of stores to see how similar and competitive products are packaged and displayed.

As part of our research, we had a conversation with Tom Gerhardt and Dan Provost from Studio Neat on a recent episode of the Smart Passive Income. Their company makes physical products for video creators, like the Glif, which is an awesome smartphone tripod mount. But I’d never seen any of their products in a store, so one of the questions we asked them was, “Why haven’t you gone the retail route?”

They gave us some specific reasons about why they chose to stay away from retail: how it cuts into your margins, how it can be a headache sometimes, how it didn’t fit their goals.

All valid reasons. But Caleb and I decided to try out the retail route, and for two main reasons of our own.

The first was pure experimentation. We wanted to better understand the world of retail products, and we’ve already learned a lot. It’s a completely different world.

The second reason—especially since this is still very much a side business right now—is that we’re not trying to make a ton of money from the SwitchPod. If we were, we would just set up a Shopify website and sell the SwitchPod that way.

Sticking with online sales would give us the biggest margins, and we would have less to worry about overall, especially because of all the guidance we could have gotten from all the relationships we’ve developed in the online world.

But we also know that retail gives us a reach we wouldn’t have if we only sold the SwitchPod online. There are tons of people we wouldn’t be able to reach on our own, even through our own networks. This is why retail is so interesting to us, because it allows us to reach a much bigger scale.

What’s In Store for the SwitchPod on the Retail Front

So where will you be able to buy the SwitchPod in brick and mortar stores? We’ve already had discussions with several retailers, and the SwitchPod is actually available now for presale at places like B&Hand Adorama. They even placed orders upfront with us, though I can’t share how many at this stage. Whether or not we end up in huge retail stores like Target, for example, is still an open question, but for some of these top audio and video retailers, it makes a lot of sense for us to be there.

And entering the retail world has been a whole new adventure.

When Caleb and I went to New York, we had a discussion with a buyer from B&H. It was one of the most intense discussions we’ve had related to the SwitchPod. The buyers were asking us questions like, “What is your MAP?” We had know idea what a MAP is, although we now know that it means minimum advertised price. It’s the amount that resellers agree to not advertise below. If a MAP is $50, for example, a reseller can’t advertise the product less than that. But there were several questions like this that we just didn’t know how to answer.

Luckily, we’ve had a lot of help from the team at Prouduct, who have been vital to helping get this thing off the ground. We’ve also had a hand from lots of others in the retail world, especially a number of folks in the camera space. There are just too many people to thank, but we’re incredibly grateful for all of their support.

Creators to the Rescue

We’re also especially grateful and excited about the help we’ve gotten from other creators in the video space. People like Marques Brownlee and Peter McKinnon, two of the top YouTubers right now, have purchased a SwitchPod. Justine Ezarik (iJustine) was on our list of buyers as well. We’re just so excited to see the YouTube community and the vlogger community get behind the SwitchPod. It’s been really fun to see, and really encouraging.

A lot of the people we’ve met have heard about the SwitchPod thanks to videos like this one by Peter McKinnon:

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We’ve also traveled to different conferences since the end of the campaign to let people know about it. We were in Vegas at the National Association of Broadcasters (NAB), to meet friends, check out equipment for our new video studio, and share the SwitchPod with people. While we were there, we actually had people come up to us—people who didn’t know who we were—and say, “Hey, is that the SwitchPod?” They already knew the product.

It was really amazing to see that a product itself could have that much of an impact on people and create so much excitement. It was definitely a different experience from going to conferences and having people recognize me because of the brand I’ve built at Smart Passive Income. It’s been a really cool thing to see people get behind the product.

 

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So many people here at #nabshow2019 ? Definitely overwhelming but then you see @seancannell and then everything is okay ?

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As we were at NAB demoing the Switchpod, a lot of people also asked how they could get their hands on one, and some even asked if they could pre-order it on the spot. They seemed to love getting their hands on it so they could feel it for themselves and see if it was something they could imagine using in the real world.

This crowd interest was apparent at NAB, but it was even more so at Social Media Marketing World (SMMW) in March.

We set up a booth at SMMW during the final week of the Kickstarter campaign. We had a little table set up with a computer where people could pre-order it. Behind we had set up a video screen with our favorite parts of the Kickstarter video on a loop, as well as other people’s videos supporting the SwitchPod, like Peter McKinnon’s, Levi Allen’s and many others.

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We actually made several dozen SwitchPod sales from the floor at SMMW from people who got their hands on it and asked us, “Where can I buy this?”

 

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And that’s a wrap! The @switchpod_ booth at #SMMW19 was a HUGE success! Over 1000 people came over to get hands on with the SwitchPod, and it was the coolest to see everyone’s reactions! Lots bought right on the spot, too ?? Shout out to @calebwojcik, @richie_norton, @tfnmagre, @jenwojcik for handling the booth most of the week and making magic happen!

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The whole experience has come with a ton of positives—but it’s also had a few minor downsides.

The Negative Side of the SwitchPod Experiment (It’s Not That Negative)

It’s been interesting to see and experience the negative side of creating and fundraising for a physical product. The biggest downside we’ve encountered is criticism of the SwitchPod itself. There have been people who’ve told us it’s a terrible product, that it’s not going to work, that it can’t compete with the JOBY GorillaPod, and that people would never use it.

And you know what? In a previous world, I’d have been pretty upset about criticism like that. I’d have wanted to create something that pleased everybody. But what I quickly realized with the SwitchPod was we’d built the right product—because it serves a very specific purpose. When the right people—the ones we designed it for—see the SwitchPod, they know it’s for them. Others who don’t see the SwitchPod as a solution for themselves might end up hating it. But that’s totally fine.

The analogy I like to use here is that sometimes people build products that end up looking like that TV remote control with 100 buttons on it, yet you only use about seven of them. Instead, we built something that serves a very specific purpose, and it does so simply and clearly. When you’re building a business, you want to create something like that because then it’s much easier to sell it to the people who you built it for. They get it.

Another big reason the SwitchPod is making such a big splash with the people who know it’s for them is because they’re the ones who actually built it, not us. We started the process of creating this product, but it was through a lot of research and sharing prototypes with people for over 14 months, then collecting and incorporating feedback (or not incorporating some feedback, depending on how useful it was), that we were able to create something that works really well for a specific purpose and a specific audience.

As a result, SwitchPod has taken off. It’s becoming a name. People are using it. To see people create videos with it—especially people like Peter McKinnon, who’s obviously using the SwitchPod in some of his recent videos but doesn’t even mention it—is awesome. To me, that shows the whole purpose of the SwitchPod, which is to help creators make creating easier.

What’s Next After the SwitchPod When It Comes to Physical Products?

The SwitchPod isn’t the beginning and end of our physical product experiment.

We’re already thinking of other products we can build, and even developing a new brand, one focused on helping creators make creating easier. That’s what the SwitchPod does, and it’s what all the products in our pipeline will do. Of course, we want to be smart about it and not rush into things, but we’re excited about what we’ve got in store.

I can’t wait for the SwitchPod to make it out into the wider world! Whether or not this becomes a fully fledged business, remains a side hustle, or turns into something we eventually sell is to be determined, but we’re excited to bring you along for the journey. We’re especially thankful to have a successful Kickstarter campaign under our belt, and we’re looking forward to the next one.

If you’re thinking about creating your own physical product, and maybe already running your own Kickstarter campaign, we hope our process has been helpful and inspiring to you.

And Caleb and I would love to know: If you’ve been following our journey with the SwitchPod, what’s the biggest lesson you’ve learned from it all? How might you use our experience to create a physical product of your own?

And don’t forget—you can still pre-order the SwitchPod at SwitchPod.co! Backers will get theirs first, but we’ll deliver yours soon after.

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