Just one week after launching on Kickstarter, LIFX, the Melbourne-based company co-founded by Andrew Birt had raised more than $1.3 million to produce an initial production round. That solves some problems, and introduces others.
LIFX is a Wi-Fi enabled LED light which can be controlled using an iPhone.
Six-weeks later, the team is busy finalising manufacturing and delivery to the 9,000 people who supported their campaign. Birt has just returned from a trip to the US, stopping in Hong Kong on the way home to visit the 2012 LED Light Fair.
He says it’s been surprisingly easy to organise production; because LIFX is producing a large number of bulbs at the same time, there are thousands of businesses lining up to do their production. It means production costs are also quite competitive. The company hopes to ship its bulbs by March.
“When you’ve got some money, you can prototype in two weeks,” says Birt. “If the Kickstarter campaign hadn’t gone so well it’d be much more difficult.”
Birt says there is a massive spreadsheet on the wall of the new office, just around the corner from Inspire9 (home to AngelCube; the incubator Birt co-founded with Adrian Stone), which helps keep everything in check. It lays out the next few months of work: prototyping fifty production bulbs, finalising the firmware, hiring customer service staff, and shipping the hardware product.
“Once the bulbs pass quality control testing we can go into full production.”
Birt says that the successful Kickstarter campaign has put the team in an interesting position; while they still function like a startup, they need to act like a larger company; because of the scale of the procurement, customer service and manufacturing they need to deliver.
“From day one, customer service should be done by the co-founders. You need to be hands-on at the start.”
So how do you get such a massive response to a product? Birt says too many people talk about marketing ‘tactics’ and forget about how they actually want to position the brand. He says you need to pitch your product in a way that makes people ask ‘how’, not ‘why’.
“We say to people we are reinventing the lightbulb, and they want to know how. You don’t want to pitch your idea and have people ask why you’re bothering.”
Turning a Kickstarter campaign into a sustainable business can be challenging (as Roby Ward explained to FLT). Birt says the team focuses on two areas, in the hope they can build a market before companies like Philips, with its hue lighting system, begin to catch up:
- Delivering the best user experience. Birt says larger companies are more likely to rush to market, focussing more on distribution than the user experience. The benefit of being in a startup is that you can push updates three times a week, instead of three times a year.
- Securing distribution partners. LIFX has signed a deal with a large US retailer. Birt can’t reveal which one just yet, but says the deal will mean the bulbs are stocked on retail shelves around the country. He says the team decided to cap Kickstarter contributions at $1.3 million, in order to create some scarcity around the product. That’s helped get distributors excited about the product.
A few people have joined the team to help deliver the product. Birt says they realised they needed someone with an electrical engineering background, so brought in Marc Alexander (founder of Freetronics), who worked on the Apple Newton, one of the first PDA devices, released in the ’90s. Co-founder Daniel May, has significant project management experience which has helped get that extensive wall plan in order.
Although they raised significant money with Kickstarter, Birt says the team are just about to close a $1.5 million investment round. He says this will give LIFX a 12 month runway, and also enables the company to pay the eight people now working on the product.
“I think angel (investment) is the way to go. If we wanted to raise $40-50 million in the future, we’d need to look at the US — we haven’t had any in-depth conversations with VCs here.”
LIFX has received coverage all over the world — in Germany, the US, France, Holland, Singapore and China. That helped build the excitement around the product, and saw it skyrocket to the top of the Kickstarter charts.
Birt says the team have worked hard to ensure customers are kept up-to-date. This may be because of some issues with LIFX co-founder Phil Bosua experienced with a previous campaign. As BRW reported in September, delayed delivery of Bosua’s ScanBox, a cardboard structure that allows you to use your iPhone as a scanner, led to complaints from customers.
Birt says he agrees with the theory which says founders should personally email or call the first thousand customers. It’s an important part of customer development, and helps build a brand. He says LIFX would never hire anyone to do something just because the founders hate a task.
“From day one, customer service should be done by the co-founders. You need to be hands-on at the start.”
LIFX has just run a competition calling for people’s ideas for features to be included in the app (used to control the globes). The top 10 suggestions will be included in the app at launch. More than 1,000 people entered on Facebook and Twitter.
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