Howler and Breaking Even on a Successful Campaign

Tim: 0:00
Which is also a risk because you put a lot of time and your own money into it. Yeah. Did you guys make any money on your campaign? No break even Yes, I think so. Uh, maybe, maybe a few Thousand.

George: 0:36
Our guests today are Jim and Tim, founders of Howler Audio. Their first product Howler allows DJs and musicians to record and live stream their performances at the same time. They brought the project to life with a Kickstarter campaign last year, and they’re currently fulfilling their orders. Welcome Jim, and Tim. Hi,

Tim: 0:53
welcome.

George: 0:54
Could you guys start us off by telling a little bit about your personal background and then what led you guys to this project?

Tim: 1:01
Sure. My name is Tim and as a background in industrial design engineering. At a point I was DJing as a student and I met Jim at a party and at that moment I also worked at another startup, where I was making audio equipment, uh, designing it and for one of those equipment I thought, we need somebody to make the actual electronics and Jim as an electronic engineer. So, at that point we started producing audio equipment together.

George: 1:36
Awesome. Yeah. And so, Jim, you’re an electrical engineer, right?

Jim: 1:40
I studied mechanical engineering, but sort of switched to electrical engineering, via, YouTube because I wanted to have my own business, I always wanted to have that. And, um, with mechanical engineering it’s quite hard because it’s really capital intensive and electrical engineering is much more accessible. So that’s sort of the reason why I switched.

George: 2:02
And so you currently work as a freelance electrical engineer, right. You have your own electric engineering consulting firm, right? Yeah, right. Okay, and then Tim, you work as a software engineer by day?

Tim: 2:14
Exactly. I switched from industrial design engineering to software engineering for software development, mostly on the front end.

George: 2:24
So we have two engineers here that love partying, that love music, and then you guys decided to build a product together. How did you guys, and why did you guys decide to do crowdfunding?

Jim: 2:39
I think the main goal for us was always to see how it is to bring a product to market. See if we can from scratch, really build something and sell it. I think at least initially we didn’t even care if it was gonna be like a big success or anything. We just really wanted to try it and see what we would run into.

Tim: 3:00
Because we want to just launch product that was a goal. It was not needed to do that with crowdfunding. We had some connections with audio distribution companies. We really wanted just do it with crowd because we thought it would be much fun to do it.

George: 3:18
Yeah, was it fun Yes. Oh yeah. Yes. Yeah. It really was.

Jim: 3:22
It was hard to work, but also a lot of fun. Yeah. A lot of things we learned and yeah, it was really fun. It’s nice to see all the exciting people that backed us and they’re still super involved and sending messages, emails, also sharing their own stories, so that’s super nice.

George: 3:41
That’s one of the cool things about crowdfunding, right? Like when you just, if you just sell something to a distributor or whatever, you’ll, you’ll never hear from anyone who’s using your product unless they’re super unhappy and they want to refund. Yeah. But then with crowdfunding, Even without sending a product, you get all these people supporting you and sharing their journeys with you. You said you learned a lot. What are some of the things that you learned?

Jim: 4:01
One thing for sure that everything takes about 10 times as much time as you think. I sort of knew that, but yeah, like really making something from scratch and doing everything. So not just the electronics, but also the enclosure and the design and everything. Yeah. There’s so many times where you change, uh, one part, but it sort of trickles down to all the other parts. And then you have to do complete new revision and change something on the pcb. And then you also have to order a new enclosures because you really wanna be sure it fits Exactly. And stuff like,

Tim: 4:36
And a thing I learned because I created the page together with another graphic designer. We thought, oh, let’s make it nice looking and then we just put it online. And then we thought, we just have a couple of friends and family and we let everybody know that we are live. And then people come on this page and then project will be funded. I think I learned a lot is that no, it doesn’t work really like that. Yeah. It’s still, you have to get people on your page.

Jim: 5:07
You really need a strategy. Yeah. And you need advertisement as well.

Tim: 5:10
Yeah.

George: 5:11
The big learning for you, Jim, the tech takes way more time than you think because you’re doing everything from scratch. And then for you, Tim, the other, your big learning was you can build a nice page, but that doesn’t really mean anything yet. Like you need an advertising strategy behind it and getting traffic onto the page. Otherwise still nothing will happen.

Tim: 5:31
Yeah, exactly.

George: 5:33
Knowing what you know now, had you known it at the start, would you still have done it?

Tim: 5:38
Yeah, of course. Yeah, because it was a really nice experience. When when we launched, it was super exciting. We bought some cake and some champagne. And then you can see like the numbers, people backing and that was so much fun to just see it and then okay, people are actually ordering it. And that’s, yeah, that was really amazing.

Jim: 6:00
Yeah, within like one hour we got 6,000 euros. So we were just seeing the number go up. That was really cool.

George: 6:06
What was the most challenging thing in this entire journey?

Jim: 6:11
For me, honestly the engineering, which sounds stupid, but, um, it said the chip that we selected, it comes with the software library. It looks like it almost does exactly what we want and then making it do exactly what we want has taken about two years and Wow. And every time I thought like, okay, it’s, it’s almost there. I just need to change this little thing. And then it takes another couple of weeks. And then another thing and another thing, and I’ve been so many times, I’ve been at the point of switching to an R chip. And in retrospect, maybe would’ve been the better choice, but we’ve been so close to finishing for so long that Yeah, that was really, uh, tough.

Tim: 6:56
Yeah. And I think it’s nice that we waited until we launched the whole crowdfunding after we were really confident that the product could be finished. Yeah. And still then you have to produce it. And then you still have like some setbacks where you have to explain to the backer that orders have been delayed a bit, which always never fun. I’m really glad we did it like that. Yeah, yeah.

George: 7:21
Yeah. So you worked really, really long on the product before you even went into crowdfunding, right?

Jim: 7:25
Yeah, yeah. It was basically done.

Tim: 7:27
Which is also a risk because you put a lot of time and your own money into it. Yeah. Did you guys make any money on your campaign? No break even Yes, I think so. Uh, maybe, maybe a few thousand.

George: 7:42
A few thousand. That’s still pretty good.

Jim: 7:45
Well, I think basically our profit is that we sold 400 Howlers, but we were able to produce 500. Yeah. If you look at the market value of that 100, then we made quite a decent profit actually.

Tim: 7:58
Yeah.

George: 8:00
I saw you guys are continuing to take pre-orders essentially on your own site, right? So the, the campaign is over. Yeah. But that excess inventory that you have is now being sold on your site, is that correct? Yeah.

Jim: 8:15
We just keep getting orders. I mean, not that much every week we have like two, three orders.

Tim: 8:20
I mean, we, not sure where they come from. Maybe some from the Kickstarter page and some from news like audio geek pages because we really wrote to media to write about our crowdfunding project.

George: 8:35
What have been the most effective ways of promoting your campaign? Was it the media? Was it ads? Was it friends and family?

Jim: 8:42
I think ads, right? Ads.

Tim: 8:44
Yeah. Ads. Hundred percent. It works really well because I think we have a typical niche product. It’s aimed at DJs that want to record or live stream their live DJ sets. Yeah, through their the phones, they can just read the ad and then act on that immediately so I think this was the best way to go.

George: 9:04
We helped run some of those ads for a while. Were there certain things about the whole ad process that you found surprising?

Tim: 9:11
I think the pixel thing.

George: 9:14
The Facebook pixel?

Tim: 9:15
Yeah. I really like how that worked like the pixel learning about our customer and then at the point it like, yeah, the whole pixel engine picked it up and then just knew what our right customer was and then send those ads to those profiles, and then we just saw the conversion going up.

George: 9:40
Yeah. one of the great things still about Facebook’s ad platforms that they just, they know so much about people and the systems just learn so quickly, even in a niche like yours it just learns who those people are and goes after them so efficiently. Kickstarter has recently seen quite a few improvements to the platform. They have actually introduced the Facebook Pixel as a feature now. That used to not be the case. Uh, they’re adding images to rewards. What would be the top three things that you would like to see out of the platform, like Kickstarter, if you could design their product.

Jim: 10:14
I think that the tracking was lacking quite a bit. Right. So, yeah. So that’s fixed now, if I understand correctly. Other payment methods besides credit card?

Tim: 10:23
Yes, there was one big issue for us.

George: 10:26
Because of the European payments.

Tim: 10:28
Exactly. Not, not everyone has a credit. So then they contact, I really want to back you, but I don’t have a credit card, is there another way.

Jim: 10:37
Especially since PayPal is apparently also not a great payment method for crowd funding. So we resorted to sending payment links or just asking them to transfer it to our bank account.

George: 10:50
Yeah. That’s a very specific, but a very big issue I think for people who are not based in credit card countries like Europe. And then because your community, obviously your friends and family and everything is Yeah. Is in a country that doesn’t really have credit card as the default payment option. Yeah. That makes it harder to raise from your local community. And also I saw you guys are using a service called Pledge Box, right? For your pledge management. How’s that working out?

Tim: 11:16
We use it for two things. One is to let people like our backers put in their shipping address. And we, uh, approached our Kickstarter that we still have to collect shipping fees because we didn’t know beforehand how much the shipping fees will cost. So that’s why we postponed it.

George: 11:38
Yeah. And do you like pledge box?

Tim: 11:41
It’s difficult because I, I don’t have anything to compare to really. Yeah. But I do like that it’s connects with Kickstarter and then it syncs with your backers there. I think it works.

Jim: 11:53
The tax calculation is annoying. Yeah. The tax calculation is annoying. it doesn’t work.

George: 11:58
What are the taxes that you need to charge? cuz you’re obviously a European business, you have a lot of backers in Europe. How do you manage that whole process?

Jim: 12:06
Basically everything that we sell has to include VAT, but Kickstarter doesn’t say that. So we have to back calculate what would be the price without VAT, and then the rest is VAT, and we have to pay that to the tax man. This took us quite a lot of time because the VAT rates also differ per country. Yeah. And if it’s outside the eu, then we just don’t have to think about it at all. Yeah. Uh, with Pledge Box, we ran into a little bit of an issue because you can enter all the VAT rates, um, but then it will just simply add the VAT on top of the amount. Actually, this is a bit strange because normally if you pay as a consumer, you pay the amount, including VAT. And actually there’s no way to change that.

George: 12:52
That’s really annoying. So you calculate a different for each country, and then you subtract that basically for your own accounting, right? You don’t charge it to your backer.

Tim: 13:00
Right. That is basically the amount of money we have to pay to the tax man for that purpose.

George: 13:06
It looks like your fulfillment is on track. I saw your last update showing the PCBs and also a previous update where you showed the enclosures. What’s next for your business? You’re going to fulfill this soon. Are you guys going to plan a V2 of the product or is it gonna be like an app extension or are you guys totally done with making independent hardware for the next couple years?

Jim: 13:28
Well, first, like, we’re definitely not done with making hardware and also we wanna make a V2, and we want to make an app, but before that we just want to sell more of this product. And this is what we’re currently looking at how to do this because as we said before, we sold 400 Howlers and with that money we were able to make 500. But now if we sell the excess hundred, We still don’t have enough money to make another batch of 500. So this is a bit difficult. So we’re trying to figure out if we want to work with an investor or if we want to work with a distributor where they purchase in larger quantities, which allows us to make batches.

Tim: 14:09
And we hope with doing a crowdfunding, we have evidence to show to investment parties to trust us. And I think that’s working out.

Jim: 14:18
Yeah. This is also actually at the beginning. We said this as one of the, the reasons, one of the reasons to do crowd funding, just to prove to someone that people really want it.

George: 14:27
How big of a batch do you need to make would that be 500 every time?

Jim: 14:32
Yeah, minimum 500, a thousand would be even better.

George: 14:37
What do you guys have lined up right now? Like, is it, are you looking more at the distributor route or the investor route, or both?

Jim: 14:44
We are, we are definitely talking with some people. One way we’re thinking of doing it now is doing a collaboration we start a new company and they basically purchase stock for a certain amount. And that gives the company the money to build another batch. And then from then on we will do the further development and they will do the fulfillment and advertising.

George: 15:09
If people want to get their own Howler out of those last hundred that you have available, where can people go?

Jim: 15:15
They can just go to our website, which is Howler/audio.com

George: 15:20
and they can pre-order it. Yep. And when will they get it?

Jim: 15:25
End of April.

George: 15:26
End of April. Oh, that is soon. Yeah. Yeah, that is super soon. Okay. Well guys, thank you so much for your time. I’m gonna let you go because I imagine you have a lot of soldering and assembly and work to do. Howler/audio.com is where you can get your own Howler. They have, how many do you have left?

Tim: 15:45
50, I think. Yeah, a bit more, but yeah. Okay.

George: 15:49
About 50. So be quick if you wanna get yours. Amazing guys, thank you so much for your time. I really appreciate it. No problem, George. All the best with fulfillment. Thank you.