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Activity Forums Q & A $1.2MM/year selling light-up ice cubes and bath toys [liquid activated]

  • $1.2MM/year selling light-up ice cubes and bath toys [liquid activated]

    updated 1 week, 6 days ago 0 Member · 1 Post
  • Christine

    Member
    October 29, 2019 at 11:03 am

    Hey – Pat from StarterStory.com here with another interview. Today’s interview is with Hagan Walker (u/haganwalker) of Glo®, a brand that makes liquid activated products Some stats: Product: liquid activated products Revenue/mo: $104,166 Started: March 2015 Location: Starkville, Mississippi Founders: 2 Employees: 5 Hello! Who are you and what business did you start? Hey, y’all! I’m Hagan Walker – one of the co-founders of Glo! We make liquid-activated products under two different brands – Glo Cubes, which are light up drink cubes – and Glo Pals, light-up sensory toys for children. Both incorporate the same patented liquid activation circuitry. Basically, you drop one of our products in liquid and it uses ions in the liquid to bridge an electrical circuit, causing the cube to light up. Not only is the circuit patented, but we also have a unique design that isn’t triggered by residual fluid or ice. This means Glo Cubes work very well in a restaurant setting. When someone finishes a drink, the light goes out, indicating to the server that a refill is needed. The same idea translates to the Glo Pals. These bath toys only work in liquid – just draw a bath and drop them in. They automatically light up, and when you drain the tub, they turn off on their own – no buttons or switches to forget about! It’s a strange combination (internally, we joke about kids and cocktails – ha!), but I’ll get into how that all came about in just a bit. We’re a bit quirky and, in this fast-paced world of e-commerce and dropshipping, we’ve found a small niche where we design, prototype, and package every single product from our headquarters in Starkville, Mississippi. This year, we’ll sell over 3 million of our products to customers in 37 countries. Hold on to your seats. I believe telling a story should be real – it should include the highs and lows, tell you about how the path isn’t always straightforward, and detail how some things work out for a reason, so let’s start from the beginning. What’s your backstory and how did you come up with the idea? The story of Glo starts in 2015 – my senior year of college. I wasn’t the best student or the brightest, but I found my niche and studied electrical engineering. I thought I had it all figured out – I had some great internships lined up and were the first student from the state of Mississippi to intern at Tesla in Palo Alto, California. My passion was automotive engineering and we had a great program here at Mississippi State University, called EcoCAR, that gave me some excellent hands-on engineering experience. The goal was to make it to Tesla, get offered a job, and take off to California. That didn’t happen. I was offered a position at Tesla as a body controls engineer, working on the falcon wing doors for Model X, but fate had different plans. I turned that position down to return to Mississippi and take a chance with something a bit different – making light-up drink cubes. You see, right before I left for my summer internship at Tesla, a friend of mine asked for my help with a classroom project. Kaylie Mitchell was studying graphic design and her professor tasked her with coming up with a conceptual company and product that naturally drew one’s eye to the product. Kaylie thought, if a drink lit up, people would inherently look at it. She wanted to go above and beyond on this assignment and reached out to me to create a prototype for her class assignment. We decided it had to be liquid-activated for ease of use and sanitary reasons. The first prototype was made out of a toothbrush travel case with some electronic components encased in hot glue to make it waterproof. It certainly wasn’t pretty, but it worked, and her professor was impressed with the initiative. She encouraged Kaylie and me to present the idea for this conceptual company and the product to the Mississippi State Center for Entrepreneurship and Outreach’s (CEO) annual competition. We decided to give it a try – there was nothing to lose. Neither of us had a background in business, but we practiced, rehearsed, made new prototypes, and finally presented. We won first place – $15,000 and free participation in a summer incubator program. While I was off at Tesla that summer, Kaylie spent the summer helping to further refine what the hell we were doing. I would task friends that I met during my internship into helping design CAD models, and we used a bit of the money from the competition to buy a 3D printer. We shipped it to California and it was in the closet of the room that I was renting. I’d work at Tesla during the day, and then my friend, Nick Beyrer, and I would print 3D prototypes at night. I’d ship those back to Kaylie for the weekly design reviews that she had to participate in, and that’s how our first 124 prototypes were developed. image The 3D printer in our first “office” – a walk-in closet At the end of summer, Tesla asked if I was interested in staying on. At this point, Kaylie and I thought we had a good chance of finding an angel investor. I packed up and headed back to Mississippi to finish my final semester and make a final decision on my post-graduation life. We found an investor, and I decided to stay in Mississippi – trading my automotive engineering dreams to instead created liquid-activated, light up drink cubes. Take us through the process of designing, prototyping, and manufacturing your first product. I graduated in December 2015 and started as employee number 1 at Glo in January 2016. Our bank account had $30,000 in it from our previous winnings and our first investor. We thought we were set. I found a manufacturer in China and sent over the CAD files. We spent about $10,000 on tooling and various startup costs and received our first shipment a few weeks later. They were awful. My background has nothing to do with CAD – I had no idea what I was doing – and ** I realized I had just blown $10,000 – just like that**. Luckily, I found some help through a mutual friend, David Francis, who fixed our files for manufacturing. We dropped another $10,000 and gave it a second go. This shipment was much better, but that $30,000 had dwindled to just $10,000 because of my mistakes. I was living off of a $17,000 yearly salary and things weren’t looking great. We still had to pay for patents, website costs, shipping software, office space, etc. I pleaded with an attorney to write our patent application for $500. We negotiated with a landlord for deferred rent. We “stole” the internet from the neighbors next door. I found a label printer for $25 from eBay. We had no idea how to mass-produce items, so our first packs of Glo Cubes were heat-sealed – by hand – in the office, with a paper label stapled to the top. We made it work – but we knew we had to start selling to stay afloat. Describe the process of launching the business. We found a cocktail maniac, the Tipsy Bartender, on YouTube and reached out. He loved the Glo Cubes and asked us to send some. A few weeks later, the Aurora Borealis video came out. It got about 7 million views in the first week and we quickly found ourselves in a manufacturing and logistical nightmare. For about two days, we averaged an order of Glo Cubes every two minutes. Kaylie and I stayed at the office until 2:00 am every day that week hand packaging Glo Cubes and we brought in several friends to help us catch up with orders. image Us hand-packaging Glo Cubes to fulfill initial orders (Left to right: Hagan, Hagan’s sister Caroline (seated), Anna Barker, Kaylie Mitchell, Parker Stewart) We had a taste of what could be – and it was exhilarating, but we had to figure out how to make it last. After the initial excitement of the video wore down, so did sales. We had to figure out how to actually sell our items – which I was awful at. Picking up the phone and getting repeatedly turned down over a product that I created was like someone punching me in the gut, over and over again. However, this eventually paid off – we found a tea bar (of all things) that agreed to a $40,000 recurring order and kept us afloat for a while. This wasn’t our only order, but it was the biggest at the time. We hustled for the next year, working to capture and retain customers, creating actual packaging, hiring our first intern, Shelby Baldwin, and finding out what we needed to do next. We were hitting our stride and ended 2016 in the black. Not by much – but not bad after just a year of sales. In early 2017, Kaylie made a decision to depart the company. We had different views on company direction, but she also had an excellent opportunity to get her Master’s degree from the University of Arkansas, completely paid for. For a few months, things were looking bleak. It was just Shelby and me working day-to-day to find the next key account (by the way, Kaylie and I are still good friends and talk regularly). Thankfully, we were able to find a rockstar. I can’t speak enough about the Mississippi State CEO. Every time it seemed like all was going to fall apart, the CEO’s Directors Eric Hill and Jeffrey Rupp were there to motivate, to encourage, and to help bring the pieces back together. They introduced me to Anna Barker – an international business major – who had an ambitious idea of her own, which landed her with a stellar job offer from insurance conglomerate AIG. I was somehow able to convince Anna to stay in Mississippi and join in as my partner, and her accepting likely saved the company – and that’s how I now have a co-founder and also a partner. We brainstormed about new avenues, pursuing new sales leads, next steps, and everything in between. About that time, we also received an email from a parent. She had gotten our Glo Cubes from a restaurant in California and realized they were liquid-activated. She took them home and threw them into the bathtub. It was the first time her son, who is autistic, took a bath in weeks without crying, and it got us thinking – what if we targeted our products towards an entirely different market? That’s exactly what we did. Anna led efforts on the Glo Pals, creating the whole brand and little characters with their own personalities. We used our same liquid-activation technology, and pad printed each character’s face on our light-up cubes to create these products for a new market. Since the only difference between the Glo Cubes and Glo Pals is a pad print, the costs for creating this new product were super low. We were also extremely lucky to obtain the domain as well as @glopals for all of our social media handles. In late 2017, Anna and I went through our first funding round and secured $125,000 for growth. We were hitting our stride again and had money to take the next step. We hired our first full-time employee, Hanna Bridge, as our sales director and as sales picked up, we moved from our 700 square foot office into an incredible 3,500 square foot office in 2018. The Glo Pals also launched in 2018 and blew us away. In the first half of 2018, we picked up 400 retailers across the USA and Canada. By the end of 2018, we had picked up 600 more. Our small team of 3 full-time employees and 5 part-timers were working overtime to keep up, and things got so busy during Christmas that we had friends and family sitting on the floor packaging boxes because we were out of space. image January 2018 – Hanna, Anna, and I cut the ribbon at the new Glo offices, surrounded by friends, family, and community members. Since launch, what has worked to attract and retain customers? So now, there’s two brands – Glo Cubes and Glo Pals – and each has to be marketed completely differently. Let’s start with Glo Cubes: We look for key accounts. The Glo Cube model is based on volume. We attend trade shows and try to find restaurants, bars, and other entertainment venues that can buy in bulk. This helps our margins significantly because we can also sell in bulk without having to use retail packaging. These places tend to place a carton behind the bar and the bartenders do the job of adding them to drinks. We set up recurring sales. We’ll give discounts of 10 to 20% off of our wholesale pricing if they’ll sign a recurring contract. For most, this means receiving between 5,000 to 50,000 cubes monthly. By doing it this way, it makes it much easier for us to forecast sales and also helps provide a consistent revenue stream. We continuously brainstorm. It’s important to keep innovating. We patented the light-up bath bomb concept and then partnered with Da Bomb Bath Fizzers. They put our Glo Cubes inside their Glow Bomb and Disco Bomb. When you drop these bath bombs in water, they fizz, as all bath bombs do, but as soon as water enters the liquid activation chamber of the Glo Cube, the bath bomb lights up – and so does your tub. It’s a fun product that is a win-win for both companies. You can find the Glow and Disco Bombs at Target and Ulta. For Glo Pals: We appeal much more to the end customer. We focus heavily on the environmentally-conscious trendy mom, with children between ages 3-6 years old. We do this through more traditional avenues, like Facebook Ads and through collaborations with other notable and trusted brands, like Kaplan Early Learning Company. We are real. A strategic move by Anna and our Creative Director, Brittney Dowell, is to be completely transparent. We work very hard to engage with customers on Facebook and Instagram, we strive to have amazing customer service, and we show what’s happening behind the scenes – including showing how the Glo Pals are packaged, our office dogs, Brittney’s daughter Ida, and more. We don’t ever hide or delete comments, and we tackle issues head-on. So much of social media is a perception, and we want everyone to know that the products you see are designed right here in the USA to be both fun and safe by the team you see behind the scenes – not an illusion. We utilize rep groups. We’re still a small team, so it’s impossible to do everything in-house. We’re very selective, but we have a number of rep groups that help us pick up new stores throughout the USA and Canada. For their efforts, they get between 10%-15% of the sale as commission. This allows us to focus on core areas, such as customer service, quality, safety, and logistics while letting customers engage with sales reps that they already know and trust. How are you doing today and what does the future look like? Things are going well! We just hired an office manager and are releasing new products for the Glo Pals in about a week – stay tuned! We have been profitable since 2016, and have tripled revenue every year since then. Our average gross margin across both brands is 62%, including wholesale customers. I do believe ads are important, as long as you’re seeing the return that you want. For example, during the Christmas season 2018, we were spending $800 a day on ads. This seems crazy to me, but we set up rules on Facebook that as long as our cost per purchase was below $4.00 (a pack of four cubes is only $10.00), to increase spending by 2x daily. The ad spends after Thanksgiving started at $25, then went to $50, then $100 and so on. From November 15th to December 21st, we brought in $50,000 in sales with an average order volume of $19.75 and a gross margin of 79.6% (our gross margins are much better selling direct to consumers, of course). Since this time, we’ve seen a much less effective return on ads – our products have lots of seasonality – so we’ve cut down on spend significantly. We might spend $50/week on ads right now just to keep our Facebook pixel happy. We’ll pick things back up during the new product launch and as Christmas gets a bit closer. Earlier this year, we also picked up Cracker Barrel and Nordstrom as Glo Pals retailers and are working on several more key retailer partnerships for 2020. However, we’ve also spent a considerable amount of time this year working on the new Glo Pals product – it’s been a very close repeat of my first experience trying to get the Glo Cubes manufactured. The product is more complex, further complicating the manufacturing process – and it’s a good reminder of the things we take for granted every day. No one thinks about material thickness of the plastic on your phone case or how many iterations of that plastic cups were made before mass production started. Even the simplest of items probably took months of iterations before the design moved forward. Through starting the business, have you learned anything particularly helpful or advantageous? Yes! I’ve learned so much – and I continue to learn every day. I’ve always told myself the day that I’m no longer learning something new is the day that it’ll be time for me to find something else to do. That hasn’t happened yet, and I don’t expect it anytime soon. Starting a business can really test you as a person. You carry the stress with you – you’ll likely age a bit faster than your friends. I also worry about what’s next, and now that we have 15 people on the payroll, you also realize that those people are depending on you and your guidance for a paycheck. That can be compounded more when you know some of your employees have families, young children, and issues of their own. On the other hand, I’ve learned a lot about people. I’ve learned what to look for in new hires, how to find people that truly care about their jobs and are always willing to go above and beyond to move the needle forward (hint, it’s not always a good resume). I’ve learned a bit about compassion, and I’ve learned to be more appreciative. I’ve learned the value of a good partner – a true business partner is not someone who will always agree with you. Anna and I might disagree daily, but it forces us both to approach ideas from a different view, and typically, it allows us to land on the best decision, which is incredibly important. I also have this strong belief that we’re all put on earth to help one another. You can’t ever think of yourself as too good to help someone in need or too big to roll up your sleeves and get dirty. Even if your company or products don’t inherently help someone, you can take just a bit of your earnings and give back to a local charity, school, or community. It doesn’t matter how, as long as you’re doing good. What platform/tools do you use for your business? Yep, we’re the quirky group that doesn’t use Shopify. It doesn’t make sense to my engineer-y brain. I hate Shopify’s liquid language. So, for now, we’re sticking with Squarespace (which also has some work to do for more advanced users, but it’s the easiest platform for our whole team to use). We also have guest contributors write blog posts for us from time to time and it’s so easy to give permissions for temporary users in Squarespace. I also love their new integration with Zapier, and am a huge fan of ShipStation. For example, if a customer needs a replacement, they can just fill out a Squarespace form. This, in conjunction with Zapier, pushes a replacement request into ShipStation and automatically creates a shipping label for our fulfillment team. I mentioned ShipStation earlier and our team LOVES ShipStation. We’ve also been very happy with Finale Inventory once we outgrew the built-in inventory features of ShipStation. We also use QuickBooks, as it makes it easy to do online invoicing and is essentially the standard in small business accounting. We are an open book company and use Geckoboard to show company stats in real-time to a display in the company kitchen. It shows weekly sales for each rep, our overall company goal, aged accounts receivables, production stats, and more. We also use Pipedrive as our CRM and couldn’t make it without Zoho Desk for customer support management. We also use Zoho Mail – it’s dirt cheap and is packed with features. What have been the most influential books, podcasts, or other resources? I’m a big fan of the Great Game of Business by Jack Stack and Traction by Gino Wickman. These two books both emphasize the importance of making sure your team is on the same page and both provide helpful tools to get to that point. I also believe that running an open company is important. Every single one of our employees knows our revenue goal and each knows how their job affects that number. Those ideas came from the books I mentioned above. Advice for other entrepreneurs who want to get started or are just starting out? You have to have a drive. I believe starting a business is one of the single hardest things that one can do. We also use this term often – you have to be teachable. If you’re unteachable, you likely won’t make it very far. What I mean by that is that you have to not only listen but be comfortable with adapting. There are people out there that are much more talented than you or I, and if you get a chance to hear their views on your product or company idea, take them, think about them, and seriously consider what they have to say. I also think it’s extremely important to have a partner, or at a minimum, a sounding board. There have been several occasions that without Anna’s perspective, my decision would have been the wrong one. Having a partner or co-founder (or both, in my case) also helps you to share the load and each of you can use your respective talents for overall success. Whereas I’m extremely analytical and focus more on operations and items behind the scenes, Anna focuses heavily on the front-scene items – like marketing, public relations, and design. I believe it’s extremely important to recognize your weaknesses and find someone that can help fill those gaps. Lastly, you need to enjoy what you do, and how you do it. For us, it’s having dogs at the office, a laid back atmosphere, company happy hours, and celebrating the wins – no matter how big or small. You may do things differently, but be sure to enjoy it. Are you looking to hire for certain positions right now? We’re always looking for talent in a number of areas. We’re in a unique position to create positions as we grow, so if this story inspired you and you have a talent that you think would benefit our team, please do reach out! Where can we go to learn more? I’m extremely grateful to be able to share our company’s story with you, and to whoever of you made it to the end of this article, thanks for your time, and best of luck to each of you and your future endeavors! Glo Pals: Instagram Facebook glopals.com Glo Cubes: Instagram Facebook glocubes.com Me: Email If you have any questions or comments, drop a comment below! Liked this text interview? Check out the full interview with photos, tools, books, and other data. For more interviews, check out r/starter_story – I post new stories there daily. Interested in sharing your own story? Send me a PM – by hq overview youngrichntasteless – –

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