The Strange Inspiration Behind a $254,561 Sleep Headphone Breakout Success

Today on Masters of Crowdfunding, we have Keith the founder of Salmi Buds. It just finished a campaign on Kickstarter that did about $250,000. Now, he walks us through how he did it, but also how he was inspired by kids that were actually cheating on exams in order to create the tech for this product that's never been seen before. So such a tease. Well, you have to find out more by listening to this episode of Masters of Crowdfunding. (upbeat music) (upbeat music) - All right, Keith, welcome to the podcast. - Hi Mark. - Side to have you here. Why don't you let everyone know who are you and what did you launch? - Okay, my name's Keith and I launched a set of earbuds for sleeping that don't have batteries in them and don't need charging. No, that sounds unlikely, but it's totally what we did. That is an amazing hook, if you could. - The first time I read it, I was like, what is, how is that possible? So you need to take us, you need to take us back. How did you come up with the idea, even go back to like what your background was before this and that led you to coming up with Salmi Buds? - Okay, I mean, I've always been kind of a bit of a tech geek and I've enjoyed doing a little bit of, I mean, I build computers and stuff as a main job design computer systems, and I've done a little bit of my own kind of amateur electronics and I've always wanted to solve a problem that most cyclists have of being able to hear their communication systems. And the problem for motorcyclists is that there's an awful lot of road noise and it's up to about 150 decibels and it can damage your hearing in less than a couple of minutes. And a lot of my friends actually have permanent tinnitus from not using earplugs. But now everybody wants to use it. Common systems, satnav and ride a pillion. They wear earplugs and then they try to hear their speakers in the helmet which you just can't do. So I was looking for a solution for that and for years and not really finding one because I've tried it with wires and they flap and break in the wind and even that earbuds are a bit big and uncomfortable. And then I was reading about some children in China who were cheating in exams by dropping these tiny little magnets for one here. You can see how tiny they are. I can board you out without dropping it like that size. - Yeah, if you're listening to this, this is like the size of a. No, it's okay, but it's like a size of a fingernail or something. - It's like the size of a kind of a pinhead. Well, maybe somewhere between a pinhead. - Oh, it's even that. - Okay. - Yeah, no, you're just looking at it. - Yeah, it's even smaller than that. - Yeah, yeah, yeah. - It's even smaller than that. - So it's just a couple of millimeters. And they drop deep inside their ear and then wear a wire around their neck which is connected to a little Bluetooth receiver. And they can create a magnetic wave that makes the magnet vibrate against their skin, not with any real audio quality, but like almost like using bone or skin conduction to be able to hear what someone's saying. And then they can talk to somebody. And if an examiner walks past, they can't see they've got anything in their ear. There's no ear plug or anything to see because, and then they just fish it out by putting a metal rod in their ear and it sticks to the rod and they pull it out again. And they actually still sell them on Amazon. Actually, as exam cheating kits and they've got photographs of people thinking they're taking their exams. That's ridiculous. So, and I just got some thinking. Look, if you can make at some distance because I guess it's about nine inches from your shirt to teoria, at that distance, if you can make a magnet vibrate, maybe it might be possible to make a diaphragm that was sensitive enough to create high quality audio, especially if the transmission coil, which is not under your shirt, it's next to your head in the helmet. And so that's what started it all. And I started trying to find a solution for making a tiny earbud that you could use on a motorcycle and it would block all the road noise out, but actually allow you to hear the communications through the earbud. - And you were, at this time, you were planning motorcycle tours, right? Like that was your main gig for, yeah, I think you told me like the last 20 or 25 years? - Yeah, I mean, it's, it wasn't, I'd be used to do about what we still do, do a couple of years. It's not, it wasn't ever really a kind of a full-time job for me or anything, I was always in technology. But it was a very serious hobby and it grew accidentally, really. We used to post or-- - Okay, okay, gotcha. - Yeah, so we started that when we were talking before. - Yeah, I arranged tours with a couple of friends and we posted our pictures online and people started saying, can we come, can we come? And then before we knew where you got 50 people and you can't just turn up at hotel and hope to get room. So it got to be planned. So then we started planning them. And yeah, we used to, we used to use communications between the two people who were guiding. This was before people had sat and abs on bikes just to make sure we hadn't lost anybody or taking a wrong turning or something. And so yeah, that was the problem I tried to solve and then I was on a tour just a couple of years ago having designed my first prototype for using a helmet. And one of the pillions said, can you do it for people who sleep? Because when I'm at home, I kick him, meaning the rider into the spare room, but when we're on holiday, I don't have that luxury. So I've had no sleep and I'm getting increasingly more affordable every day that passes. - Yeah, so we looked at that question. Oh yeah, sorry, go ahead, go ahead. - Yeah, so we looked at the market and we're stagger to find how many people get significantly better sleep if they sleep with audio. And there's obviously a lot more people who sleep than my motorcycles. So we sort of changed direction and focus and thought, you know, actually we can, if we can make this product work, then there's a huge market for it. And we solved the problem that really up until even now nobody's managed to solve because with earbuds, on one hand you want to have the battery as small as possible so that you can't fill it in your ear. On the other hand, you want it to last all night because if you're trying to block out something that a noise that carries on all night, such as snoring or environmental noise, then if it runs out, then you get working up. So lots of people have tried to make those batteries last, but batteries don't like being charged full to flat every night and every time you do that, they lose a little bit of capacity. So even if you get most of the night when you first buy them before very long, they, you're getting very small amounts. In fact, there were, it was a company called Bose who bought out a product called Dundesleep, but there was very well-liked, but they ended up withdrawing off the market because they were having to refund so many people inside warranty periods. They were well-documented online that story. And they didn't want to upset their dealers so they were literally sending checks out to the end users to refund them. So they didn't upset the dealer chain. And so we knew there was a problem and the big, the two big problems was one was comfort and size and the other one was battery life. And by taking the battery out, we solved both those problems. So that was interesting. - It's a super elegant solution to the problem, which I love. Okay, so now you have this new direction, which originally you're gonna go to the motorcycle market which I know you're still looking at, but now you have the sleep market, which is a massive market. Take us through, okay, now you have this new direction. When was that and how long did it take for you to get to? All right, now I have the prototype and I'm ready to launch. - Well, I started making prototypes for that. Probably not until about October, about a year ago, October of last year. And we got some input from, I mentioned a PhD at Cambridge University and the quality just started getting better and better and fairly soon we realized that we were going to be able to do it. I mean, we still improve it all the time. Now, even we're working with a factory and adding some extra improvements to it. And once we knew that we could make it, we decided that we'd go to market with that product. And we looked, I'd noticed that there was another sleep product in the market for earbuds that had been launched that had done extremely well on crowdfunding, so we came up with the idea that perhaps crowdfunding is a good idea for us because when we start looking at factories, lots of them want minimal and orders and things and if you can go to the factory with a pre-order, then you can get a much better deal and they take you more seriously and they're more excited by it. So that's when we first had the idea of doing some crowdfunding and we were ready to, I mean, I knew nothing about it. That crowdfunding at all, I'd read a bit online and I was pretty much ready to launch the product on Kickstarter and as part of the last phase, I thought, I'm just gonna have a look at some of these agencies that help you and one of the agencies that came across was launch boom and I saw you on YouTube and I also, yeah, I found a forum where some people were discussing it and I suddenly thought, hang on, we've got this wrong. And I think if you go back and look on your school, my first post on there was, nice to be here, we've really nearly got this wrong. I didn't know, I didn't know you had to go, I just thought you put the, you had good media, we had a great video, we had all the story and it was all real and I just thought you put it on there and people would find it like eBay. And I didn't realize that there was this whole process and then we had to, so we were gonna launch, I think originally March this year and then we stopped that and started to do it the other way and we eventually launched in September this year. - You know, that I guess believe for, I guess I'll call it myth now that you can put it up on Kickstarter and they will come was it comes from a place of truth that used to be that way. At when it first started and I would say peak hype of Kickstarter, which was probably 2012, 2013, I believe. You could put campaigns on there and have 75% of the funding come from Kickstarter and that's just not the case anymore. It's become more, I guess like professionalized is the way that we think about it. It's like you need to have a professional marketing strategy in place in order for people to come to the campaigns and buy your product at the end of the day. Okay, yeah, but it's like, I talk to people all the time it still persists, but it makes sense why it persists because that's what it used to be, you know, and that's how people would envision it happening. So now you have this, I guess you've been enlightened that there's bored to the marketing strategy that you need to or you just have to put, have a marketing strategy when it comes to the pre-launch and getting prepared for the campaign. Could you walk us all through what your marketing strategy was? Like what was this, I guess like enlightenment for you coming in and now working with us? - Yeah, I mean, I guess the first, so my first feeling having spoken to people who had our prototypes was that people weren't gonna think it was real. So we had, I knew we were gonna have to have a video that was probably a little bit more polished and a little bit more to give us some credibility and that has, even with a really good video, that was probably still our biggest challenge because there's very few complete new things in this space, most of them are kind of different versions of something else. So when something completely new comes along, people are understandably skeptical. But I thought that's where my focus was. I thought make it really credible, show our story as best we can and then we'll launch. And then as I say, I found you guys and first of all, I wasn't sure if we should change our strategy because I didn't want to push the launch back, but then realized that it was a really good idea to do that because the chances are if we launched without a good list of engaged followers, the chances are we were gonna just disappear into the fog of 1,000 other launches and never actually get any traction. And that was really good for us. I mean, it wasn't just the strategy that I learned so much from, but the process I learned a lot from, I didn't know much about meta advertising, why I didn't know anything about meta advertising. I didn't really realize quite how accurately you could track it. I was staggered by the some tiny little changes that really made a big difference. Like, for example, on our funnel page out, the page we set up to get people to register. I had the price only in pounds 'cause we're British and that's what we do. And there wasn't, we couldn't have the pricing more than one currency there. So I was looking at the stats and then we did an A/B test and I just put in brackets the dollar, right. And it increased by like 40%. The amount of reservations we were getting. Little tiny change. And yeah, and then I had another instance when I did an ad that I, so one of the great things about having been involved with you guys is there's been a real community and I only, you know, I'd get crashed and I'd accidentally get crashed another podcast and I thought somebody who I'd been chatting with on the large boom site, on the school site and it was great 'cause we're in the same marketplace, but you know, it's a huge marketplace. So we're happy to support each other and that's been great. And I saw another product on there had been getting really great, unbelievably low reservations for their funnel. And they had a curiosity hook, which basically said, you know, these, I think it was the ankle bracelet girls. And then they said, you know, the step back, yeah. And we said, there's an ankle bracelet. It's something else. But so I, I didn't, I thought, well, let's give it a go. So I didn't advert this said, these are not earbuds, but they'll stream Bluetooth. These are not Bluetooth earbuds, but they'll stream audio all night long. And we got great results and then it suddenly crashed. And I had no idea why. And what it was was that I didn't say there were sleep earbuds. So people originally thought this is interesting, they'd click it and then people started to put comments on the adverts saying, but you can only use them in bed. You mean, you can't walk around with them all this is it. And then we started getting loads of negative comments and that's made it crash. So I went back and did the ad again, put the words, grieve in there and it kind of picked up again. So it was crazy to me how these these tiny little things can massively affect the campaign. And having the support of a community of other people on there for somebody who is raw and new to it was great. And as I say, I've been dancing with ideas off of your other guest who's in a similar space to us and that's been great. It's been a real community spirit and it helps us grow. - Yeah, whoever's listening to this, I was recording a podcast with another client, Oliver from Blistel and Keith came on a little bit too early to his podcast schedule time. So we had a good laugh about that. I was like, who's here right now? You all are going to have to listen to the other podcast and see that happen if we don't edit it out. I don't know. We might have to leave it in because it was too good. - All right, so on the very first day you did, let me look at this, you did 64,000 pounds. That's a lot of money. And you were talking about a bit about the strategy pre-launch, building the followers, reservations. But can you explain in a little bit more detail how that was possible? - Yeah, so we used your turnkey funnel and that saved us a huge amount of work. I know I'm talking to you, but it was true. That was one of the big attractions for me to sit down and develop all that ourself would be in a pain in the neck and costly. So that was great. So we used our, we had good media. So we used our media, we developed the funnel and then we used your help to educate us about having a meta campaign to get people to make a dollar reservation. And we were doing pretty well with that. Our numbers were really good, which was very encouraging 'cause it gave us some feedback to know that there was demand and there was people who were willing to buy it. So you get a chance to test the market, if you like. And we knew that we had all these other people that we could compare our figures again. So we knew if we were doing quite well or not bad and we were doing well. In fact, we're talking about some of the other products. So at one point, we were getting our $1 reservations in probably at a third of the price of some of the other people. So we were very encouraged by that and we, in a month, we got about 1,300. I think we launched with 1,300 $1 reservations and about 10,000 people who put their name down. And that was a very, another bit of interesting lesson for me because in the UK, we can reach people and get a registration for an email address much cheaper than we can in the States. Probably 50% more expensive in the States. And there's other markets that you can advertise in. And we could get lots of registrations for people over 50 because they have the biggest sleep problems. So we thought, well, this is great, we're just going to advertise to people in England over 50 and it's really cheap, but they don't want to buy on Kickstarter because they don't understand it. So what we noticed, we were getting loads of registrations, but when we then started trying to ask for a dollar reservations, oh, and I've got put my credit card number in and the fall off was big. And it actually was in more money in the US, in the 30, you know, the lower market. But I mean, it was interesting for us, but it's also in its strange way encouraging for us because we know that when we have the product in stock and we're selling it now website or on Amazon or in places that my generation typically are more familiar with, well, we should do really well because they're happy to buy it, you know, when they're going to get it the next day and they can set it back through Amazon. So again, I think the food rush is going to be good. And that was a real lesson and it was really interesting to do. So we got to 1300 and then we knew, I knew about gel up and we thought there comes a point where you decide not to carry on spending money on reservations, but to spend some money actually driving traffic to the campaign. And because of how well we did with our VIP registrations in cost, we were confident that we would actually get some quite good returns on ad spend there, you know, maybe, well, I mean, and in our first week we did, we were getting about six times return on ad spend, which was great. It was awesome. We were really ready to scale. And then after a week, again, it just dropped, it dropped off really rapidly. And I think the reason for that was twofold. First of all, there's another product in our market space who kind of launched a month who wore us, who you know well. And I think it's very probably they probably took quite a lot of the early buyers out of the gel up ad pools and sets. And unfortunately, there was another product that was some Bluetooth earbuds aimed for sleeping, who launched and it turned out, it looks like they're not going to deliver. I have to say, when I look to the project, I was about it. And now it's kind of broken on the internet that, you know, the people that invested in the product, probably I'm going to get the product and we got caught in the garage. Which one's that? I didn't know if I should say, but there's one called S-L-E-A-P. S-L-E-A-P, a little tiny Bluetooth earbuds, but knowing about battery life and about some, you know, other technical aspect challenges that we've overcome along the way in terms of comfort and seal, when I was looking at what looked like 3D renders to me and kickstart to tell us we couldn't use 3D renders, but they definitely are. These are so obviously 3D renders. Yeah, I'm looking at it. I mean, it's delivered well, and they raised, I think they raised 300,000 on kickstart and another 300 on indie go-go. And the news broke about them. And now I mentioned earlier on, our biggest problem was credibility because it's a brand new product and no one's seen it before. It's never been invented before. And then this broke that this was probably not going to deliver. And I found some reddits and some discord forums where we did get caught in the crossfire of those people saying, "Oh, yeah, I was thinking about backing somebody, and now I'm not going to because I'm fed up with these people who put on impossible products and just take your money." So we had some bad luck, but on the upside, I saw it happen and I stopped with jail up and we didn't spend the money. So we've still got that and we can use that in another promotion. We're thinking about relaunching on what? Not relaunching, but having a second launch on indie go-go. - That's interesting. - Okay, that now. Yeah, I always look at Kickstarter doesn't have to be this thing where you still made a lot of money. I mean, in terms of a pre-sale for basically a 30-day period, it still is quite a lot of pre-sales in terms of revenue. I mean, you're in the top 1%, I think, somewhere around there. Yeah, definitely in the top 1%, I can't. This wall is not to be sniffed at any. Yeah, but I guess my point is that I always like to make this point to people listening is, you know, this is just the first step in their company's existence and there's so many benefits besides, I guess, like getting the funding, of course, is great, right, and getting the validation and all that. But just getting the validation, you learn so much as well through the entire process that's now going to be directly applicable to scaling in e-commerce and whatever other future channels that you're going to go down because you learn so much about your market and how to market your product as well. Yeah, absolutely. Anyway, is that your work? Yeah. Sorry, I saw a lot of the other things too, Mark. I mean, I mean, yeah, I mean, I have learnt so much about it. But also, there were things that happened because of the way we did it. But with you guys, that's had some other spin-off benefits. So because we had our funding goal very quickly, we popped up on a lot of people's radars and we got taken seriously by both suppliers and future customers. So we have had lots of wholesalers from around the world contacting us and, you know, you googled them and some of them, but you do your research because obviously, never quite know when some concept shoe, you know, what they're around. But we've had, there's one company called Gideop who turn over something like $2.5 billion. Well, you know them because I think that you had an employee go there. We spoke. Yeah, yeah, we did, we did. Yeah, we were fans of Gideop. Yeah, well, they're really, I mean, they're selling products in our space, like 3,000 units a day, some of them. And, and, and, and are very comfort about our product working, you know, working for them. And so they're, they're very keen to work with us. We've had probably a dozen people in Japan who said, look, we're not after any money. We will set up, we think this is so right for the Japanese market. We will set up a website. We will buy the product up front of you. We just want a trade deal with you. So, and all of these people only took us seriously because our products went quickly on day one, and, and we got the visibility. So, and the fact, and from the other side, the factories, we, we've, we found, we had a couple of factories that we were talking about, dealing with, we couldn't find our perfect match. Our, our perfect match was a company where there was big enough to be sure that we're going to deliver the product quality in the timescale they promised. But also somebody who perhaps had a factory in Vietnam because there was the whole tariff thing going on as well, one with, and a lot of people shipping from Vietnam. And we found a factory, who, what they found us, they found a factory, and who, who had got a low cost manufacturing in Shenzhen for shipping to the rest of the world and Vietnam for shipping into the US. So, we can, you know, get minimal tariffs. So, so all of, all of that really came as a result of doing it this way. Yeah, that, it's very interesting because I, I feel like on the surface, you know, people just look at the, you know, the, I'm funding amount. Okay, that is the, that's the benefit, you know, getting that money. But then there are all these branching benefits that you get as well to your point. I'm curious, if you could go back to yourself, like, let's say a year ago, and give yourself some advice based off of everything that you've experienced and launching this product, what would be the number one piece of advice that you would give yourself? Start the process with you sooner. I, I'm, I'm saying that for a very, I'm very black and white, logical thinker. I'm not, I'm not sure anything. And the reason for that is a very, really good reason for that. And that is, I, I noticed that, well, everybody else knew it except me, but, but increasing ad spend, if the faster you go, the worse you do in terms of value for money, you can't put pressure on those markets because you need people to be turning over in the markets that you're advertising to. You don't want to be advertised, you go too fast and you hit the same people, you're spending lots of money advertising to people, you're really seeing it. So because we nearly got it wrong and, and nearly launched without any pre campaign, when we decided to have the pre campaign, we didn't want to launch after September because we do want to get into the whole Christmas, Black Friday kind of area. So we pushed it a little bit faster and harder than we should have. If I could go back, I would have spent more time letting Meta learn how to get the best value for money, building out VIP list. We were actually quite, we set up a VIP Facebook page and we were quite good at engaging with people. So in the past, when I was doing the motorcycle tours, I had these motorcycle forums, I was quite used to engaging with people on forums and asking and questioning and then letting you're correctly developed. So I think I could have kept the people engaged and then just increased our spend a little bit and tried different things and really found a formula that was giving us the best value for money and then increased it slowly to allow us to do that. When we were speaking to gel up in the campaign and it was going well at the beginning, they said, I said, you know, why don't we increase the spend if any got 30 days and it was going, well, the return is inversely proportional to how much you spend, how quickly you spend it. You know, you can't afford to do that, you need to just little bits. So you need more time. I would like more time. I'd like to have started the campaign in, you know, for a February and spend maybe six months building a really engaged list and then I think we could have done, we could have done very, well, they even better than we did. Well, amazing, amazing feedback. I do yourself and everyone. I mean, I was just thinking I've been recording a lot of these podcasts lately and I've gotten, talk to a lot of people I've given similar advice to themselves, in testing things sooner and it just got me thinking like the sooner that people can start to test, you know, the sooner that you start to get insights about your product, about your marketing, that you are just, it like compounds on itself, you know, it's like you're setting yourself up to have a better foundation that then everything else can build upon. So the sooner that you can do that, the better. We even have like another client that was talking about how he started. He actually did start pretty early with only photorealistic renders of his product and that allowed him to start to get data and feedback about his product even sooner and then he could iterate on the photorealistic renders as well, like faster. So anyways, the whole starting earlier thing, I think for most people, that advice will probably be very, very relevant. You can probably start sooner than you think. If they see this earlier than I saw it, because you know, yeah, exactly. So I just didn't know what I was doing. I had this idea that agencies were there to help you after you launched. I didn't realize that, you know, I didn't, didn't realize the journey started, should have started so much earlier. So well, you know, if we ever do it again, I'll know. But yeah, well, you did amazing and I appreciate you being on the podcast and sharing everything with us. So thank you so much for being on Keith. Yeah, no problem at all. Nice to meet you, Mark. Thanks a lot. Of course, you do.