“Whatever can go wrong, will go wrong”: Pix about creating a backpack that raised $300k
Pix began working on the backpack back in 2016. Initially, a team comprised Ivan Kaunov (former CTO, who left the project) and Sergii Iezdin (CMO). Later, Margaret Rimek joined the team as CEO. The team wanted to revamp an urban backpack by adding a display.
“We were thinking of what it could be. We exchanged ideas and made a decision. We realized that this is the way for backpack owners to express themselves,” Rimek recalls.
At that moment the team toiled at DIY Lab. Not long before that the founders had closed their previous project and were looking for fresh ideas. Pix backpack became their new project. “DIY Lab awarded a $1,000 grant to us to validate the hypothesis. The money went on the prototype development and participation in a few exhibitions,” Ivan Kaunov says.
The team worked in that mode for a year and a half. This time allowed the entrepreneurs to finalize the idea and the prototype. The results allowed Pix to get investments from IoT Hub accelerator and move to it. The investments covered the creation of backpack prototypes, develop software, and lay the marketing foundation for the next step — Kickstarter and then Indiegogo campaign.
Pix notes that a Kickstarter campaign is a great way to boost the demand for the product and define its target audience. That is why the team decided to go this way. Pix launched the campaign in August 2018, and within a month the project raised $150,000, which is four times more than the initial goal. Later, the startup launched its campaign on Indiegogo where it raised approximately $165,000. Following that the team had to deliver the backpack to almost 1,100 backers across 50 countries.
Setting up manufacturing in China and delivering on time
From the beginning, Pix was thinking of manufacturing in China. The team did their calculations and decided that it would be cheaper to make backpacks this way largely due to the wide selection of parts. Plus – the scale. “In China, we could count on a thousand backpacks per week. In Ukraine, that number would take months to manufacture,” Kaunov says.
Before commencing the manufacturing, the Pix did not have experience working with China. That is why the team gathered all possible information, met and talked to potential partners, as well as looked for the information on the Internet.
Margaret Rimek notes that the most valuable were the meetings with seasoned Ukrainian entrepreneurs: “IoT Hub shared contacts of Ukrainian entrepreneurs with manufacturing experience in China. It is rather a small, but professional community comprising many Ukrainian hardware startups. We held dozens of meetings and accumulated a lot of information. This way we were able to prepare ourselves for the trip to China.”
Creating a finished product beforehand
Even before the manufacturing had begun, Pix already had about 80 backpacks. Most importantly, these were not prototypes, but full-fledged products that could be sold. The idea was to go to China with the ready-made molds and show them to factories. The team is unequivocal in saying that it was one of the most important decisions as far as the manufacturing goes. The startup did not lose time to make tweaks to the product, and instead, it focused on quality control only.
Trip to China
Before going to China the team tried to locate factories on the Internet through Alibaba and the likes. It was in vain: many factories simply have no website, and those that have a website show different prices. “We even contacted one of the clothing factories and sent them the molds. As a result, their work was horrible. At that moment all out doubts about the necessity of going to China were dispelled,” Rimek recalls.
Setting up manufacturing in China without visiting the country is extremely difficult. If you have an ordinary product and you know that the Chinese produce similar products — you can try. However, if you want to create something truly unique, you have to go and set it up in person.
The team aligned their trip to China with one of the largest backpack and bags manufacturing fairs — Canton Fair 2018. The team believes it was a good decision because they managed to get a few warm contacts and set up a connection with multiple factories. The selection process followed.
The startup selected several factories and asked them to manufacture sample backpacks. “And the intricacies began: some replied in after a week, some produced in 35 months, some asked an exorbitant price,” Ivan Kaunov recalls. Eventually, Pix managed to find a factory that met all the criteria.
Communication is paramount in China. Firstly, it is the knowledge of English, not many know it here. We managed to find partners who knew the language. Secondly, the approach itself is also important. Some say that they can do the product within three days come rain or shine, while others say that they do not work weekends.
Precise process planning
The Pix team divided the manufacture into three stages: one factory produced electronics, the other made it into ready-made parts, the third one manufactured backpacks and assembled everything together. According to Kaunov, this was due to several reasons. First, it helped avoid plagiarism by Chinese companies. Second, it allowed for more quality and cheaper manufacturing.
“Our selected factories did not communicate with each other, so we did not worry about copycats. In addition, if we asked a factory to make the backpack with electronics, it would not do it independently. They would outsource it to their colleagues and add their mark-up,” Kaunov says.
In total, Pix had four iterations of backpack fabrication. The team underlines that you should treat the results very seriously. “We thought that they would make a perfect backpack for us on the first try. That was not the case. Following the first iteration, we had about 50 comments on the product. We spent three hours explaining what had to be altered. The factory manager said that we were the most demanding client they ever had. We just tried to achieve the best match with our molds,” Margaret Rimek recalls.
Cooperation on site
While the team was in China, they met Andrei Glizhinskiy, hardware product expert. At the time, Glizhinskiy had already been there five years, he knew the language and local mentality. These skills made him perfect for Pix, and the team put him in charge of quality control.
They say that this encounter had a significant, if not crucial, impact on the manufacturing process. Glizhinskiy was able to supervise the Chinese factories on site. That is paramount, as Margaret Rimek puts it because without consistent control local factories will be less efficient. Ultimately, Glizhinskiy replaced Ivan Kaunov as the CTO.
When you make something in Chine, you have to be close to factories and go through the work process together. As soon as you leave the process unattended, whatever can go wrong, will go wrong: timings get messed up, wrong paint job, wrong fabrication. There are very few chances to impact the process remotely.
The startup visits CES
Manufacturing speed allowed to send the first batch of product to the backers only by January 2019, which is as little as 4 months after the completion of Kickstarter. Such a result was possible only due to high-quality preparation long before the start of the campaign. Already in January of 2019, the startup was attending the largest electronics exhibition, CES.
Margaret Rimek notes that the fact that the startup managed to deliver the product to its backers on time became huge leverage at the exhibition. “We wanted to go to CES in January 2018, but back then we only had a prototype. The IoT Hub team, which has experience participating in CES, explained to us then that the trip at that stage would not give us anything, because CES is about selling. This time we came with a finished product and fulfilled our commitment before the backers – an excellent position to start selling.”
At CES Pix managed to secure several contracts with partners. The startup notes that part of the second batch, which will be produced in May 2019, was ordered back in January at CES. In addition, the team still gets feedback from the exhibition.
We used a life hack: we took pictures of the business cards we received at CES and immediately forwarded them to our assistant in Kyiv. The latter prepared the letters in the spirit of “We’ve just talked, let’s continue the negotiations.” Thanks to this, we were able to secure the attention of potential distributors on Pix and finalize deals immediately upon returning to Ukraine.
Now Pix is manufacturing the second batch of backpacks and is simultaneously working on its marketing promotion. When everything is ready, the team will launch sales on Amazon and its website. In addition, the startup is also negotiating the sale of backpacks in retail stores around the world and has already begun working on a new product.