In 2013, Jozef Zemla and Viktor Reviliak ran probably the first globally successful Slovak crowdfunding campaign. Since then, CulCharge has developed into a publicly recognized brand with an interesting product portfolio. What are their tips for a successful crowdfunding campaign? What have been the greatest challenges they had to face? What is it like to produce hardware products in the age of apps?
Jozef, Viktor, what has been going on lately with CulCharge? What are you working on these days?
CulCharge has been pretty busy since it’s early beginnings. During this year, our team, products portfolio, distribution network and sales channels have grown pretty fast, which has transformed into transforming CulCharge from a freestyle startup mode to a more serious and organized business. CulCharge is shaping into a hardware company, with the main focus on development, design, manufacturing, and distribution of unique ODM&OEM charging devices.
Since we are still bootstrapping, we always need to find the most effective ways to run the company and manage and forecast inventory of our products for our distributors.
This year, we’ve started strategic partnership (besides many others) with Westech s.r.o. (iStores SK&CZ), which became our regional exclusive importer and distributor for Central Europe. We set up a warehouse in Hong Kong, which has made our logistic operations more effective especially for the third countries. Since our team has grown as well, we are setting up processes, building departments, and dividing tasks between them.
At the same time, we are getting ready for Grape music festival, where we will have our own zone, exhibit our products and charge all juiced-off phones 🙂
Moreover, we are working on new products, opening new sales channels, and getting ready for a busy autumn and winter season.
Anything new in terms of products?
We have added portfolio of charging stations, which helped us to increase our reach and attract big B2B customers. We can now offer merchandise as well as unique B2B charging solutions for companies, events, expos, etcetera. Our new line of products has already attracted top tier brands like McDonalds, Eset, KPMG, Wakelake, The Taste, Zoot, and many others.
You made the first well known successful Slovak crowdfunding campaign on a global scale. What were the thoughts behind the idea to do a campaign for a charge-data cable?
Three years ago, reward-based crowdfunding was a relatively new solution of financing new business ideas. Since we were already running some small-scale businesses, we were always looking for new opportunities. We were curious about the new phenomenon of Crowdfunding, so we decided to give it a try. After a short research, we found out that the most successful campaigns were mobile gadgets in the price range of $15 to $30. We were looking for a niche in this market. Moreover, we needed something simple to start with, since we did not have much experience in product development, mass production, worldwide distribution, etcetera. Short keychain charging cable met our criteria.
What do you think were the key success factors of your campaign?
We did our homework – we did deep research into crowdfunding, product development, mass production, logistics, distribution, certifications, etcetera. We prepared a real prototype of our product as well as a campaign with our limited resources and know-how.
Regarding product – we found a market niche, we made a product with added value for our customers and solved an everyday problem. Moreover, with the planned outsourced manufacturing in Asia, we were able to offer products with MFi license (Made for iPhone) for competitive prices.
When it comes to timing – when we launched our first campaign (2013), crowdfunding was in a growing phase, which means that it was popular and interesting enough to have a chance to succeed but not as over-crowded as it is these days. When we compared our first and second campaign that we did in 2015, we felt that last year crowdfunding was at its peak and it was much more difficult to attract media and consequently prospective backers. Luckily for us, we had a better starting point for our second campaign – know-how, resources, experience, initial pledge from Slovak Telekom, bigger team, brand recognition, etcetera.
After the Campaign
What followed after the campaign?
Party, of course 😉 After that, trip to China to select a manufacturer (from our preselected candidates), afterwards some contests where we succeeded (StartupAwards, Business Idea of the Year), which helped us to get to CES (Consumer Electronic Show in Las Vegas), where we exhibited as CulCharge for the first time. After that came a new product, new campaign, new exhibitions, new distributors, new team members, new warehouse, new office, and CulBar 🙂
If you had 3 hints for a would-be successful Slovak crowdfunding campaign, what would those be?
When talking about product, find a market niche and solve an everyday problem of a crowd, then find a solution to produce and deliver the product for a reasonable and acceptable price.
Do your homework – learn as much as possible, study crowdfunding, successful and unsuccessful campaigns, product development, set up your goal, double it, etcetera.
Have a finished prototype ready – each product developer needs to show, that he is really capable of going through the whole process from idea to delivery of the final products to his/her backers. To gain the trust of a mass, they should come up with an almost final product (final look, final functionality, final packaging, final supplier,…), and prove that their costs will be spent effectively and realistically and that backers can get their rewards in form of a final product.
What were the greatest challenges you have faced on your way up till now?
Every day at CulCharge is one big adventure and challenge, with many ups and downs.
One of the biggest challenges was and still is our decision to bootstrap as long as possible. This ensured natural growth of the company and is forcing us to be as effective as possible, since running a hardware company is very specific in more aspects, such as:
financing – hardware requires more cashflow not only for development but especially for inventory and net terms of bigger customers (e.g. payments of invoices 60 days after delivery);
outsourced manufacturing – since the most efficient way to produce mobile accessory is an outsourced manufacturing in Asia, development, mass production and problem solving is more difficult than at some local facility;
logistics – our products obtain batteries, and worldwide regulation of Air Shipment of batteries has already changed three times in 2016;
product development – the lifecycle of our products is limited and related to smart phones and other mobile devices in the market. During new product development, we need to forecast future trends and have to be fast enough to launch the product in the market on time.
Can we dive deeper into hardware production? What are the advantages and pitfalls of such a production? What were the lessons you had to learn the hard way?
Hardware mass production is pretty hardcore for any hardware startup for many reasons.
Lack of experience meant we needed to learn and understand the Chinese culture and their way of thinking. It took us 2 years to learn how to communicate with our suppliers, how to solve problems and how to avoid them.
Due to lack of references – it was pretty difficult to find reliable manufacturing partners at the beginning, since we did not have any references (an unknown brand, an unsecured future&orders, etcetera).
Lack of resources was an issue as well. Hardware production is very difficult also from the financial perspective, and this was solved by crowdfunding, bank loans, and pre-orders from our early distributors.
Last but not least, we had lack of control over the processes due to – limited financial and HR resources in the beginning in combination with outsourced mass production and logistics. That included being outsourced by local Quality Control partners, Local Logistic partners,..
If you were to start over again, what would you do differently?
With the know-how and resources we have now, we would do many things differently. However, if we started from the same position as we started 3 years ago, we would probably have a similar track, since we are always trying to do our best. If we do not know something, we study, ask the people who might know the answers, and when none of these is enough, we just learn by doing or play rock, paper, scissors 🙂
What does the team look like today?
Our core team is group of 5 people today.
Robert Mucska is our Design Guru, our first in-house colleague, who joined us last year. A great designer with rich experience from the top-notch companies, CulBar barman and a great personal fit as well. Robo redesigned the whole CulCharge, and takes care of the final look of our product portfolio and the whole CulCharge presence.
Katka Klinkova is our Sales Ninja. She came to CulCharge just a couple of weeks ago with her great experience and know-how from her previous very successful career (Kate is the co-founder of Staffino). Kate is our queen and sunshine, and she brought a bit of culture to the company 🙂 Moreover, in just a couple of weeks, she already closed the first deals with very important accounts and set up our sales strategy and processes, too.
Andrej Sirotny is our LAPD (Logistic & Purchasing Department) accounting and logistics guru and joined us in May 2016. Andrej is a funny guy with a great personality, has 10 years of experience from running his own accounting company, and is primarily responsible for all paperwork, logistics and accounting. Andrej brought a system, organized processes and is becoming responsible for daily operations of CulCharge.
We, Viktor Reviliak and Jozef Zemla as the founders, are slowly trying to switch from daily operations to the strategic ones. We are mainly taking care of business development & strategic partnerships, product portfolio, financing, and helping to set up processes at departments.
The rest of the services required for running CulCharge are outsourced through our partners.
Who are your most common clients? What does the client base look like?
Our client portfolio is growing together with our product portfolio, our team, and brand recognition. Our gadgets (Cables, PowerBanks) are most attractive for Retails, E-tails, Telco providers, APRs (Apple Premium Resellers), CE Importers, Wholesalers, Distributors, Merchandise companies, Marketing Departments of Corporations, and so on. Our recently added charging stations are attractive as B2B solutions for HORECA, retails, exhibitions, and events.
What are the plans for the near future?
To evaluate, stabilize and set up all the processes (development, manufacturing, logistics, sales, merchandise). To set up a second warehouse in Hong Kong, in order to split the risk. To finalize negotiations with our strategic partners abroad (USA, UK, Middle East, Germany, Australia, etcetera).
To exploit possibilities of strategic cooperation with iStores (and its mother companies – Westech & ELKO group). To close the deals with plenty of prospective customers we are working with, both on the local and the global level.
To engage B2C through our strategic partners like Amazon and consequently start active social network presence and marketing. We entered strategic cooperation with Kreativ Gang – a great team of fellas with lots of experience in marketing, brand building and partying.
To exhibit CulCharge at Grape Festival next week – everybody is welcome 🙂 To catch Christmas season with the current and coming customers and, last but not least, to develop new CulCharge products with a planned launch at CES in Las Vegas during 2017 🙂