Podcast: How to Fast Track Profitable Product Launches

Written By Sherilee Maxcy

Episode Summary

In this episode of the Free to Grow CFO podcast, Jon Blair and Clay Banks discuss the essential strategies for successfully launching a new product in the e-commerce space. They emphasize the importance of customer discovery, the process of moving from concept to prototype, and the critical steps involved in sourcing and setting up a supply chain. The conversation also covers best practices for launching a product effectively, overcoming financial constraints, and the significance of maintaining strong relationships with customers and suppliers. Clay shares valuable insights from his extensive experience in product development and entrepreneurship, providing listeners with actionable advice to minimize risk and maximize success in their product launches.

Key Takeaways

  • Customer discovery is crucial and should never stop.

  • Always aim to reduce risk before making capital investments.

  • Ensure every new product is designed for profitability upfront (not just market fit).

  • Continue learning by answering support emails and gathering real user feedback.

Meet Clay Banks

Clay Banks is a seasoned entrepreneur and growth strategist with a proven track record of bringing ideas to market and scaling them to success. Over 23 years, he has co-founded or led eight companies, raising more than $7 million in seed and venture capital. Specializing in go-to-market strategy, Clay has successfully launched over 23 hardware and software products, driving their adoption across direct-to-consumer and B2B channels.

In 2022, Clay achieved a successful exit, selling his equity position in HavenLock—best known for its appearance on ABC’s Shark Tank and features in Forbes, TechCrunch, and Entrepreneur—to a venture capital firm. Today, Clay focuses on advising and investing in early-stage startups and short-term rental properties, leveraging his expertise to help founders navigate growth and achieve market fit.

Passionate about enabling visionary entrepreneurs, Clay offers mentorship and consulting in growth strategies, eCommerce scaling, and operational excellence. Outside of business, he’s a five-time Ironman, published author, and dedicated advocate for turning big visions into impactful results.



Transcript

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00:00 Introduction to Product Launch Strategies

06:48 The Importance of Customer Discovery

17:05 From Concept to Prototype

23:47 Transitioning to Sourcing and Supply Chain Management

28:50 Building Relationships with Manufacturers

37:24 Launching Like a Pro

45:49 Overcoming Financial Constraints

52:22 Key Takeaways and Final Thoughts


Jon Blair (00:00)

Alright, hey everyone, welcome back to another episode of the Free to Grow CFO podcast where we dive deep into conversations about scaling a DTC brand with a profit-focused mindset. I'm your host, Jon Blair, founder of Free to Grow CFO. We are the go-to outsource finance and accounting firm for eight and nine-figure DTC brands and today I'm here again with my good buddy, Clay Banks. Clay, what's happening, man?

Clay Banks (00:26)

What's up Jon, glad to be back on the show with you. Happy New Year!

Jon Blair (00:29)

Yeah, happy new year. think we were talking... I think we talked on Cyber Monday. I remember that distinctly, last time. And you were, you were chatting... You, you mentioned...

Clay Banks (00:39)

Yeah, probably the craziest time of the year for an e-commerce brand to step out and do a podcast. But we had everything kind of planned and everything was working pretty smoothly, so it worked out for us.

Jon Blair (00:51)

Yeah, so for those of you who haven't heard that episode with Clay, it's a few weeks back. I highly recommend going and checking it out. A lot of really great meaty conversation. Clay has a really extensive entrepreneurial background and definitely in the e-commerce world. Most recently, he's the founder of an e-commerce brand called GloriLight and he also runs a consultancy called InPaceLine. You know, if you want a more comprehensive background on Clay, I highly recommend going back and checking out that episode.

But I wanted to bring them back because what we didn't get into that episode, we kind of touched on a few times, but Clay has a really extensive background in his new product launch. And so today's topic is we're gonna talk about how to fast track your first product launch, going from idea to market. And this is super, super important because we see time and time again at Free to Grow CFO, we get asked all the time, like, hey, can I launch this product? And here's the thing, you as a founder, I would say 95% of the founders we work with, they're very heavily product oriented. They're super excited about the problem that they're solving in the marketplace with their product. And so with that comes what? Comes the propensity to launch too many products or to just always be excited and always be thinking of product ideas. And the reality is, is there a place for new product launches in scaling an e-com brand? Of course there is, but there's also a great danger in doing it the wrong way and not having a framework to use. And Clay is hands down the most knowledgeable guy I know, especially in the e-commerce world when it comes to thinking about new product launches. So really quick, Clay, before we get into the meat of this, why don't you just run the audience through briefly your background as it relates to launching new products.

Clay Banks (02:43)

Yeah, Jon, glad to be on with you again today. Launching products and building things that don't exist is a big passion for mine. I've been starting...

Mostly physical good product companies ever since I was 20 years old in college. That was 24 years ago I've taken I'm guessing probably 30 different products to market all in the everything from consumer electronics to food products to my first I kind of show some of them for it because I'm like a show-and-tell kind of guy When I was in college, we published this book called A Vols Walk

Jon Blair (03:18)

Heck yeah. Heck yeah.

Clay Banks (03:24)

This was when Amazon was just a bookstore. So put yourself back into 2002 and and the nuances of selling a book that had you know, the power tea on the book and the color orange collegiate licensing from Selling it into Borders Books, Barnes and Noble, Books-A-Million and in learning about working with other my co-founders in that business and and ultimately a

Jon Blair (03:28)

Yep.

Clay Banks (03:54)

less than learned about margin in that one but probably most famous for building a company starting a company called Haven Lock. We and my business partner and I invented and patented a home security lock that could detect and prevent home break-ins. It would alert you through an accelerometer back to a to a mobile phone through an app or to your Google Nest or to your Alexa.

And ultimately that product had other peripherals that went with it such as fobs and internet gateways that had to connect to it wirelessly. That whole company kind of spun out and created a product that we sold into schools and churches to prevent active shooters from getting into classrooms which had its own set of peripherals and own set of wireless protocols. Through that company we created this battery. It's a 20,000 milliamp rechargeable battery to run things like lights or small electronics or charge things like your phone or something like that. We sold these on Amazon, our website, big on QVC. We sold a bunch of these on QVC.

Jon Blair (05:15)

Mm-hmm.

Clay Banks (05:18)

Right now I'm running a company called GloriLight. It's a kids nightlight that projects Bible verses on the ceiling. So we kind of use this as an example of everything we want to talk about today and kind of how to get a product idea to market as fast, as cheap and as efficiently as possible so that you don't build something that no one will buy or you build something that is broken from the first place. So I'm going to be using GloriLight as an example throughout most of the concepts and strategies that we're going to be talking about today.

Jon Blair (05:50)

Yeah.

Yeah, and actually another layer that I want to add to like why this episode is so important. Why can product development failures be so costly to a business? Think about it. Product development is one of those functions in a business that requires resources and collaboration with every single function in the business. You have to collaborate with accounting and finance. You have to, they're involved in sourcing and, you know, replenishment planning and product design and marketing, sales channel selection, right? All of these different things. And here's the thing, if you design the wrong product at the wrong time, you may be designing in, right, the failure financially of that product. like when we as CFOs talk about unit economics and margins, or you talk about the ability to scale advertising, so much of that is designed into the product upfront. And so you actually have to consider, you don't just have to consider the technical engineering aspects of getting a product made. You have to consider every single piece of the business and design accordingly.

Right. And so there is a lot at stake and it's also the reason why it's so easy to do wrong. Right. And so with that being said, let's chat first about kind of stage one as you've laid it out for us as like concept to prototype.

Clay Banks (07:33)

Yeah, and you bring up a good point. If you're an established business with all of these different teammates, so you talked about marketing and accounting and whatnot, right? If you're launching a new product or a service on top of what you're currently doing, then it could be a distraction, right? But it can also be a big opportunity for new growth. If you're a first-time founder and this is your first product or service, you're kind of wearing all the hats.

Right? You are the marketing guy. You are the accounting guy. You are the designer. You are the product dev guy. You are the salesperson. So when we think about this, I'm trying to limit the impact on that one founder to get to market as fast and as cheaply as possible. And same thing for a bigger business that might have more people on the team. And they're all common struggles, whether you're a one man band trying to launch a brand or you're an established brand trying to add on or create something of value to your existing customer base. And really the concepts and the things that we're talking about today are gonna correlate to both. ultimately we're gonna be taking and talking about how we turn an idea into a tangible product or service. Okay, and kind of the steps that we go through and and Yeah, we'll kind of dive in Jon, when talking about GloriLight okay, it's this brand here I'm going to use this one as the example for most everything today. I at the point of launching this one in 2022 a friend of mine who I knew and had an existing relationship for over a decade kind of came to me with the idea. It was not my idea. And his basic concept was, hey, how could we put Bible verses into a kid's nightlight so that it shines a Bible verse on the ceiling? And when I'm thinking about this, before I even start to consider if I'm gonna put my time and resources into something, I'm first gonna go to do customer discovery. Okay? And for sake of this call and this podcast today, we don't have time to do customer discovery.

However, it's so important that it starts with customer discovery and maybe that's a different call that we do later. I have an entrepreneur community and I coach a lot of people on customer discovery and it's super important that before you ever even think about spending an hour or time or resource, dollar resource to a product idea, it starts with customer discovery. Yep.

Jon Blair (10:34)

Can I add something really quick?

when I first, I got an accounting degree, but I never went big four. I worked for an entrepreneur day one who designed and brought to market consumer electronics products that he saw like some sort of white space in the market, right? And he told me, he told me when I was 20 years old working for him in my last year of getting a business degree, he's like, Jon, I don't care what you do. I don't care what space you're in.

always do your marketing homework first. Always. Always, always, always. And if the marketing homework doesn't pan out, don't spend any more time on it.

Clay Banks (11:16)

Yeah, and another good thing to think about exactly on top of what you're saying, don't get so deeply emotionally connected and involved and ignore the real numbers and the real signs coming from that customer discovery. Because sometimes we can have this sense of passion and ownership once we start talking about something to our customers or perceived customers that we put these blinders on

Jon Blair (11:44)

for

Clay Banks (11:45)

and that can easily derail you into the value or the superpower that you're creating. I always tell founders this, and it's a goal that I try to live by when I'm thinking about building a product, starting a product, or iterating on a product, the 10:1 ratio. So I'm gonna spend 10:1 of my time doing customer discovery interaction.

And like I said, we don't have enough time to go through all the customer discovery stuff today and what types of questions, how to get to pricing, how to get to the real value prop of what you're trying to get. But 10 to 1. So if you're spending 10 hours doing customer discovery, then you can spend one hour on actually building and engineering and designing and crafting that product or service. So if you spend 10... Yeah.

Jon Blair (12:40)

That's a really easy kind of like rule of thumb to use and I will say to further elaborate on what you're saying like the trap Psychologically is like I think it's called a confirmation bias right that like if you do everything in a bubble like like let's say I go do my own research just online and I'm not I'm not soliciting the perspective of a customer or potential customer I can just go research my way through confirmation bias to confirm my initial assumptions and hypotheses are correct, right? Whereas when you get out there and you go talk to a third party and most importantly, someone who is a potential customer, you can still trick yourself, right? Into thinking that you're right through, you know, something like a confirmation bias, but at least you're, if you're doing what Clay is talking about, 10 to one.

Clay Banks (13:29)

Thank

Jon Blair (13:38)

10 to one, you are spending 10 times as much time getting third party perspective to hopefully fill in the blind spots that you have, right?

Clay Banks (13:49)

Yeah, and definitely put that perspective, so you're out there talking to customers and.

This is kind of leading us more toward a customer discovery exercise But if if if they're giving you good feedback and you're nodding and you're agreeing and they're listening and they're agreeing with you that that's sometimes a good sign, but really are they pulling out a credit card to buy it? Are they are they anxious to pre-order it? Those are the types of things you want to try to get told and if you're not ready for that pre-order state Or you're not ready for that transaction state then at minimum

Jon Blair (14:11)

Mm.

Clay Banks (14:24)

Ask for an email address or some way to follow back up because if they're willing to give you their email address and they don't know you then the likelihood of what you were talking about building with them resonated enough to say I'm willing to stay connected to learn more. And that's usually your first launching base to when you do launch your product. So when we were building HavenLock.

We literally started with a wooden prototype and then we moved took a foam prototype and then we hired a CAD designer and this is all kind of way before AI and stuff but we we started taking pictures on our phone of the CAD designs and when I was standing in line at a coffee shops or waiting on a meeting or whatever I would just spark up conversation like hey, we're trying to solve home break-ins happens every 13 seconds in America we're creating this product that does this and I'll show it to him on my phone and I'd start asking them questions. But I would always try to end that quick conversation with, do you mind if I grab your email address? Because when we launched on Kickstarter,

After doing that customer discovery stuff for about nine months, we had a good sized list to let those people know to go back us and fund the Kickstarter campaign. We did like $116,000 in 30 days. The bulk, like 70 of it came in the first day. So all that kind of led up to having a sounding board to launch.

Jon Blair (15:55)

Wow.

Clay Banks (16:04)

the product, right? When we're talking about...

Creating a product or idea we want to have a clear problem and a clear solution to that problem unless it's like a food product and you're trying to solve like a savory or a a delicacy type of thing But usually 99 % of the time a customer has a problem and you have a product or service that solves it, right?

Jon Blair (16:26)

Sure.

So really quick, just to kind of summarize a little bit of this, we're talking about going from concept, idea, to a prototype. Be as early prototypes, quote, right? They can be as simple as sketches, mock-ups, something very simple and cheap and something that you can probably iterate on really, really quickly and just get it in front of people and start gauging feedback and reactions and all of that before you go on to physical prototypes unless for some reason you need one, right?

Clay Banks (17:11)

For sure, absolutely. Start, I mean, now with AI, there's all these image generators that you can create to get to concepting faster. Stuff in Canva that you can kind of design and layout. We actually, back when we started HavenLock, we had to hire a CAD engineer right and and the the rapidness of what AI has brought and the cheapness at scale you can start to really get some really good ideas in a visual state that you can start to do your customer discovery with and for sure sketches and mock-ups for is always the starting point don't actually go to a physical state yet or do what we did and go to Home Depot and buy some wood and carve it out or some foam. We got the foam at like a JoAnn Fabrics or something like that. I coach a lot of high school entrepreneurs and I'm like go to hobby lobby.

Jon Blair (18:02)

Mm-hmm.

Clay Banks (18:16)

and just, they don't have any money, right? I'm not asking them to go buy this stuff. But this is an exercise that I take them through. Go to Hobby Lobby and list out the items that how you would build your prototype. There should be enough things inside of Hobby Lobby only to be able to pretty much get some sort of concept idea built, right?

Jon Blair (18:38)

I love that.

Build out the concept so that you can demonstrate, so you can have conversations about it, right? Do it as quickly as you can and iterate quickly. What, do you have any other advice on iterating quickly and being efficient or even effective with your iteration?

Clay Banks (18:57)

Yeah, so.

Absolutely, you want to get that first that wooden that raw prototype out into the hands as many people as possible remembering the 10 to 1 ratio right and And you're going through that customer discovery asking them certain questions. They're giving you certain feedback You're also gauging and trying to get qualitative and quantitative data that can help you guide the next iteration of that prototype and ultimately whether you're getting all the way to a final finished good in production, it's multiple iterations as fast as possible and as cheap as possible so that when you do take it to a manufacturing state and you're actually having to buy tooling and molds and jigs and stuff like that, when you go to put that type of capital upfront, you know your customer is aligned. You have a higher degree of confidence that they're willing to buy it. You know the price point and all of your pricing strategies already worked out at that point before you go make that capital investment in tooling and equipment.

Jon Blair (20:05)

Okay, so really quick, I want to point something out here because I've been having a lot of conversations about this recently and actually had one on the episode I recorded right before this. This actually, what you're talking through is, I would say in my opinion, it is universal sound investment strategy and let me give you let me take that a step further to make it a little more tangible. I have some I'm also a real estate investor and I also have one client that I coach there we're not fractional CFOs for them I'm an EOS coach for them and they're one of the biggest ground up multi-family real estate developers in Texas very sound investors and they always talk about what's the next amount of capital we have to go hard on when that means like what money are you putting down for the next stage? Like when they get a property under contract to just do diligence, they're trying to put the least amount of money down to get it under contract and give themselves as much of a diligence window to spend as much time doing diligence before they have to go hard on additional earnest money because they're taking the next step on that investment, right? This is actually no different than that. It's just in the investing in a new product. What you're saying is, generally speaking, when it comes to investment strategy in new products, let's not, let's be careful, let's be sound and strategic about how much capital we're committing to, right, before we go on to the next stage. And here is the series of actions that we want to take before committing more capital so that we have removed risk.

Right? We've removed risk and we've given ourselves some sense of additional probability of success. Would you agree?

Clay Banks (22:00)

A thousand percent. That's a great analogy. In most cases, if you're a first time starting a service or product, you don't have a ton of cash resources in most cases, right? So you're having to go raise money from some sort of outside investor or outside source. And the more data that you have from doing this due diligence, this period of due diligence, the better. And the more from a third party, public facing due diligence source it is, the better. I get that a Kickstarter campaign may not be the right avenue for every product or service. It's very male dominant blah blah blah. However you can go create online communities. I've got a guy that I coach created an online Facebook group and now has over 700 beta users into a service that he's built.

Okay, started from a Facebook group. Okay, you can do this through a Reddit thread. I had this initiative and this strategy I call Rent the Room. go through the exercise of renting a room in your community. like at some sort of like, it could be a restaurant, it could be just like a country club room or any kind of open space that you have to rent it. And you have to get warm bodies in the room that are one degree of separation from you. Okay? And you have to have at least coffee and water there. And you have to be talking about your product or service. So that's a hard exercise for people to go through but it makes you go through getting out there and filling a room with bodies.

Okay, and you can do that in a virtual state too. Maybe it's a webinar, right? I get that everybody may not live in a space or your customer may not live in your community, but in a virtual way, host a webinar to try to get that feedback and do that due diligence. And then when you go out to raise money or you go to put your capital at risk on the tooling and the next phases of development, you're making a more educated decision on that allocation of capital and that risk.

Jon Blair (24:21)

So if you, okay, let's now talk about like, how do you know it's time to start sourcing and set up a supply chain? You've gone through concept to prototype. How do know it's time and what do you start doing?

Clay Banks (24:38)

Okay, so I'm first gonna look at what's the minimum path of resistance to get a, what we call MVP, minimum viable product in the hands of my customers that they're willing to make a transaction for. Okay, and I've got to put aside my long-term big grand vision for what I think is the real key core value of my product right away. So with GloriLight, for example, my big grand vision is an app enabled communication tool for parents to teach their kids the word of God. And we send Bible verses and Bible characters to the light via Bluetooth and have a community around helping parents guide their kids spiritually. That's my long-term vision. That's a lot to build. I got an app, I got to write hardware, firmware, software, right? All that takes a lot of time and lot of resources. But how do I just build a light that takes these disks and I insert them into the light, right? Like what's the minimum viable product that I can offer and get to market as fast as possible?

Okay. That people actually really, yeah, almost broke a million in sales last year in our first full year of business. I'm coaching this entrepreneur. She's created a date rate drug testing kit, right? It's on a key chain. It's called Spiky, spikyfirst.com. She...

Jon Blair (25:56)

that people vote for with their dollars. That's what they actually, they'll purchase.

Clay Banks (26:17)

She has a big vision for this product, right? But for now, all she has done is gone out to Alibaba and bought simple key chains that she could put the test strips in. Okay, the packaging's not ideal, it's not perfect, but she's taking transactions. And by the way, she's a high school student.

Jon Blair (26:38)

I love it. When I always say people are voting with their dollars, that's the ultimate vote you want to get on your MVP, right? It's not just a verbal, yeah, I would buy that, that they voted yes for your product with their dollars.

Clay Banks (26:52)

And what we want to get to is understanding the outcome that that yes brings them.

Jon Blair (27:00)

Mm, yes.

Clay Banks (27:05)

when you buy a, let's call a smartwatch for example, right? I'm not buying, yes, I am buying it for all the features and benefits that it has, right? It's got GPS, it's got altimeters, it's got all this cool bells and whistles, but I am buying it because it is helping shape my physical future self.

It's helping me be a better athlete. It's helping me be a better performer. And the sense of pride, the sense of self-worth, the sense of confidence that that brings is the outcome.

And that's what I'm trying to coach people on is let's separate benefits and features from outcomes, right? And we start to say, what do we need to build to get the best outcome for our customer?

Jon Blair (28:03)

Yep, I love that. love that. So as you start transitioning into sourcing and building a supply chain, besides taking your MVP, your minimum viable product into that, What are some of the best practices around sourcing, setting up the supply chain? It's a big task. So what advice do you have there?

Clay Banks (28:28)

So let's go ahead and assume you've done a lot of customer discovery and you have proof of product market fit and some social proof. That's when we're ready to start getting quotes and estimates from manufacturers, whether they're domestic or abroad. If it's a domestic supplier and you're wanting to be made in America or your brand ethos has something to do with locally sourced type of products. For the manufacturers or the producers or the aggregators of those types of products here in America, they're gonna wanna have some confidence that you're worth dealing with. You're worth their time, right? And if you go to them prior to doing this customer discovery stuff that we're talking about, you come across as not yet ready for them to put time and energy into it. And I can tell you, building a product in America takes a lot of time and energy, whether you're contracting them out or not, whether you have the resources to pay them or not, for them to take you seriously, there needs to be some sort of third party validation of product market fit. Especially in America, not so much overseas. When we were doing HavenLock, we had data that we could present to different manufacturers on our Kickstarter campaign, we were starting to raise some capital. We had been featured in a lot of press publications, Forbes, CNET, TechCrunch, all these other types of publications, So when we went to a Berkshire Hathaway-owned subsidiary and said, this is what we're looking to have you contract manufacturer, they took us seriously. And we stayed engaged with them for...

well over more than a year, if not two years, keeping them apprised of our prototyping process. They weren't prototypers, okay, they were manufacturers, right? So when we get through the final prototyping stages, we have built a relationship with them over a couple of years that had built confidence and rapport so that they could really help us bring, go from a prototyping stage to a...designed for manufacturing and then ultimately designed for test phase, right? If you're sourcing overseas, not so much. Most, you go to China, any Asian, Vietnam type of countries, looking to buy something, they're gonna sell you whatever you spec them, okay? So your specs.

Jon Blair (31:14)

Yeah, even if it's the wrong, even if your specs are wrong or, or I mean, I'm sure we saw this all the time at Guardian Bikes, because at the time that I was there, we were making our bikes in China. Having to, not that this challenge doesn't exist with US manufacturers, because it definitely does, but the extra level of care that you have to put into making sure that they are actually making the spec that you have provided to them.

is a huge, huge challenge with dealing with, specifically, factories in China.

Clay Banks (31:49)

Specifically China there they don't have the I'm gonna call it just for lack of a better term They're not gonna push back on you the cut their customer on the spec they're gonna assume you've already dialed in your spec to a thousand percent accuracy and Then they're they're just gonna make it if once you get past, you know the terms and the payment and and all that stuff

They're just gonna make it. A US manufacturer that you've built rapport with and have a relationship with, they're gonna say, this spec or this specific piece of the spec in your best interest? And they're gonna contest you, which is good. You want that, right? As a founder, they may be looking at something from a different perspective that you don't know you know or you need to know.

They're just the nature of Americans. They're gonna be more, I'll call it friendly facing in a way that says, hey, before we go spend time here, are we sure we want this design this way? Or would it be, are there better options or there alternatives to this? Because downstream it's gonna cause this other problem, right? That's a big thing, right? You may design something in on CAD, it looks great and it works and functions great, but actually when it comes time to assembly,

Human being can't do it or it's very very labor consuming so like we built a product with HavenLock and it had nylon straps woven through steel a steel base plate and Delrin which is this thermoplastic that was flexible and we sewed it together with nylon. All right in CAD it worked great

Jon Blair (33:38)

Yeah.

Clay Banks (33:39)

on the production floor and on the assembly line, it was very difficult and we had to train people on how to do that and we had to buy a really expensive sewing machine. Like who would have thought you would have had to buy a sewing machine, right? And...

Those are just things that come up in the complexities of manufacturing. What I like to do first is, is there a white label opportunity for me to get close to what I wanna build? So I'm now, I'm probably more, there's more ways to go about white labeling than just putting your logo on another product, right?

I look for first, before I go out and build the big dream, how do I find the real core value in something? And if I'm testing my brand in the market and trying to get more product market fit and proof of transactions, I really look at is there a white labeling opportunity, somebody making something similar.

Or can I combine two or three things that are already being manufactured for a different use case? And that's kind of how you leverage the next step before you go out and custom build something that requires a lot of tooling and a lot of capital expenditure.

Jon Blair (34:54)

Totally.

Yeah, man. mean, dude, this, it takes my mind back to that like real estate investing example, right? Which is like there's multiple stages in a real estate deal. What's the minimum amount of capital that you can invest to get to the next stage? But what's the reason you want to get to the next stage? You want to learn a new set of, you want a new set of learnings. And what is the point of that new set of learnings? It's the reduction of risk before you put down the next piece of capital. And so when you're talking about like white labeling, it's like, hey, for very little capital outlay, can I test selling this product that exists that gets the point across, right? Allows me to learn and confirm that, yeah, I think that I have removed a layer of risk and I'm willing to fork out the next dollars to make my own version of this, right? And so all of this is thinking about creative ways

Look, like the complete opposite of this is to go, hey, I've got this product in my head, it's got all the bells and whistles, I'm just gonna make it, I'm gonna order 10,000 of them, I'm gonna bring them in the US, and then we're gonna try to sell them. And it's like, you either kill it, totally flop, or somewhere in the middle, right? And you learn all those, you end up having to learn all those hard learnings anyways, right? Just in a, but you've quite possibly outlaid a lot of time, capital.

an actual physical like monetary capital, right? And so, everything that Clay's going through is just like little tidbits of wisdom that he's, you know, accumulated over the years of like, how do we learn the next set of learnings with the minimum amount of capital outlay to reduce risk before we outlay the next amount of capital on launching a new product? So, if you've got the initial sourcing done, an initial, least initial supply chain set up, and you're ready to launch, what are the best practices that brands need to be thinking about when they're getting ready to launch or what you say is launching like a pro?

Clay Banks (37:24)

So, but as we lead into thinking about how we launch or actually deliver the product or the service for a transaction, we want to make sure that we understand our build of materials, right? The list of items that go into manufacturing that product, right? That list can be two or three items, or it could be with Haven Locks, thousands of items.

and understanding the lead times per each item. And I'll make a simple example. If you're making a cake, you've got to have eggs, sugar, and flour, right? But if it takes you a week to get flour and two weeks to get sugar, but it takes you six weeks to get eggs, you've got to work backwards from that longest lead time, right? In Haven Lock's case, we had a 52-week lead time. It was miserable.

Jon Blair (38:20)

Man, we had that at one point

at Guardian.

Clay Banks (38:23)

It had to do with we were we had to buy Bluetooth chips and you guys probably remember in the news when when all the automotive companies and everybody using Bluetooth couldn't get Bluetooth chips Well you as a cash flow exercise In some cases you have to put out that cash to be able to buy that item So you have to go and say in six weeks. I got a I got to have eggs at my facility So I'm gonna buy the eggs now

Jon Blair (38:52)

sure.

Clay Banks (38:53)

Right

and then now the clock is ticking on that capital right cost time money It's capital boom boom boom right you can be doing something else with that cash, so You've got to really get good at negotiating those longer lead items where you your payment terms are in it more in your favor to help that cash cycle Okay, so you got to really have what I call a costed BOM of a build a BOM is build a materials every single item that goes into your product that's boxing that's charging cables that's plastic baggies that's late that stickers labels printed inserts everything right you you list all that out and what does it cost per piece okay that's ultimately later on how we will

Find efficiencies in scale is on a per piece line basis Do we know another printer or can we go find another printer to make the printed insert because we're now doing it at scale And we're charging a dollar a piece now, but we can get it down to 72 cents Whatever right so we want that costed BOM and that costed BOM is a living breathing document every It has your timelines with it. Okay your timelines are

Jon Blair (40:05)

for sure.

Clay Banks (40:17)

How long does it take if we place an order today? How long is it going to take to get it and? Then on top of that you got it You need to know what the payment terms are and what the MOQs are minimum order quantities

Okay, so keep all that in a spreadsheet. There's a few other things that are tracked in that BOM outside of time and Things like tariffs and duties and stuff like that all have to be accounted for if you're gonna be importing But let's just say you're now you have a product that I would like to say is not your foot your full dream product, but it's you're more than halfway there and you're ready to put that product in the hands of customers. over the period of time, however long it took you, whether it was in GloriLight's case, less than 90 days, in Haven Lock's case, it was almost five years. So we had connection points of collecting email addresses of every person that we'd interact with, whether that was on our website or in person, to launch our Kickstarter campaign.

Like I said, not everybody has a Kickstarter campaign. It has a Kickstarter type of process to launch it, but you want to be building your what we call owned media list so that you do have a established base to be able to put that out to, right? And owned media comes in the form of your Instagram, Facebook, YouTube, TikTok account followers, your email list, your SMS subscriber lists, or do you have a launch partner?

somebody that already has an established customer base that is willing to maybe put out your product to their customer base in the form of some sort of commission or some sort of

Jon Blair (42:01)

Mmm.

Clay Banks (42:10)

joint venture. If you don't have a sounding board, your customer acquisition costs are going to go up much higher because you don't yet have an established brand. You've got to go find new ways to establish your customer acquisition strategy. So a lot of times founders will go, I'll just start running Google ads and Facebook ads and I'll put it on Amazon. Okay, yes, that's definitely doable. Don't get me wrong. It takes a lot of time and training those algorithms to be able to start working in your favor and build some credibility and social proof on those those types of platforms. So what I try to do is find some sort of affiliate network or build an affiliate network before I launch a product so that that can get those engines started where I don't have to go out and necessarily acquire every customer.

Jon Blair (43:06)

Yeah, that's interesting. It's sort of akin, I think in my mind, it's akin to the idea of using a white label product first, right? To test product market fit and get people to buy before creating your own. When you're talking about launching with partners, whether they're affiliates or otherwise, you're selling through their established network and social proof and following and whatnot. And you may layer on your own you know, over time through your own, you know, meta and Google and, you know, top of funnel paid advertising. like, again, launching through someone else's following or platform can minimize the capital investment to get that first round of learnings, right? And again, it's all in the name of learning to reduce risk before the next capital outlay, right?

Clay Banks (44:04)

and you might be an established business, I've got a client right now, we're building, I'm not gonna go into exactly what we're building, but it's a new, better version of something he already sells and distributes, but he's buying it from another party. Okay, so he already has a customer base, he already sells about three to 500 units of these a month.

Jon Blair (44:18)

Hmm.

Clay Banks (44:26)

He already knows the buyer and has the relationship with the buyer and he is going to build something better than what he's currently selling to that buyer. He's already got that customer base established. Now we're now looking at what other channels are out there to sell besides going to that one buyer.

Jon Blair (44:50)

Got it. Yep.

Clay Banks (44:50)

So you

might be a bigger business and already have a customer base and that's why you see big companies get bigger faster. They have access to a customer base. If you're building a customer base from the start, you've got to find creative ways to leverage other brands or other affiliates or other influencers or whatever that already have access to potential customers in your core demographic.

Jon Blair (45:20)

So as post-launch, you know, we, kind of preparing for this episode, you outlined some common hurdles to overcome. What are those and what are some, like what's some of the advice? We can start with like financial constraints is one that you outlined. What are some typical financial constraints that you see during launching a new product and what are some thoughts around how to overcome them?

Clay Banks (45:48)

My biggest thing over my 20-something years is thinking I was hiring the right engineering talent when and after spending a lot of money a lot of time found out they didn't have the expertise or They didn't know the next step of the game, right? So I might have hired like a firmware developer or embedded developer, but

Jon Blair (45:59)

Mm-hmm.

Clay Banks (46:17)

They didn't know how to get that design that they created into a circuit board manufacturing protocol process that included, you know, bed of nails testing and all this other stuff, right? And you gotta kinda look at yourself and go, okay, what is that I don't know, don't know? And...surround you and the people that you're hiring with with other competitive or other types of, I don't know, competitions, not that right word. So like in this case, if I'm hiring and working with an embedded developer on the design of a circuit board, go ahead and bring in who you think is gonna be the manufacturer into the meetings and the conversations because the two of them will figure out each other's problems or deficiencies or gaps or something that might have been missed. A lot of times we take where I've made the most mistakes, I would hire an engineer to do something, something that I couldn't do. I'm not an engineer. And they would give it back to me.

Jon Blair (47:15)

Yeah, that's interesting. That's interesting.

Clay Banks (47:31)

And I would think it's perfect. Whether it's in CAD or it's actually, they prototype something and I would take it to the manufacturer and the manufacturer would go, you're nowhere near ready, I'm like, wait a minute, we just spent hundreds of thousands of dollars in engineering. I've got a prototype that shows that it works. And then they're like, yeah, but there's no injection molding designs for these pieces, the radiuses and the molds aren't called out. And you're like, whoa, whoa, whoa, I didn't know that needed to be done. And what I'm saying is try to put all the pieces together in a way that they each hold each other accountable for the next step. if we put this into, let's just call it a sports term, right?

Jon Blair (48:06)

for

Clay Banks (48:25)

Like running around a track passing a baton, right? I need to know that batons gonna be coming and where I say it's gonna be put right you guess I know we're gonna be listening to this but like if I'm taking if I start to take off running and I put my arm back that baton needs to go right in that

Jon Blair (48:34)

for Yep.

Clay Banks (48:43)

hand right and that is the exact same way manufacturing is done and if someone drops the baton or it doesn't show up on time or doesn't do something then the next person putting the leg of the relay together is not going to be able to do their job

Jon Blair (48:44)

for

Yeah, well, so there's another thing that comes to mind here, another way to illustrate this point. A lot of brands that are doing, you know, 10, 20 million in revenue that we work with that are launching new products, the real savvy ones know that they need to create a cross-functional NPI team, new product introduction team. And so they'll get someone from marketing, someone from ops and supply chain, someone from finance and anywhere else they need a pull, maybe manufacture, you know, there's usually the manufacturers and they'll bring them together on a cross-functional team that meets regularly from the very beginning of the process. And it's because, you know, there may be, you're talking about the interchange between or the handoff between engineering and manufacturing, which seen that multiple times, we had to bring our engineer to China with us one time to meet with the factory because they both saw like, oh no, you can't do that. That's not a steel safe mold change, right? Like all kinds of different things, right? But the other thing is there's other functions involved as well. Like hold on a second, I can't sell that through our 3PL because they have constraints on packaging size, right? Or hold on a second, the finance guys, like hold on a second, we can't do that because of this. And the point I'm making, going back to the very beginning of the episode, we're like, what's at stake?

If you're, whether you're like Clay said, a one man show, getting a product off the ground for the first time, a company off the ground, or you're an existing brand that's launching new products, you have to think about the impact on marketing, sales and marketing, operations, and then not just supply chain, also fulfillment and logistics, finance. You to think about all of those things when you're developing and launching new products. And it takes a very, I would say it's actually the hardest function in the entire business because it is, it literally draws on every discipline within business to get it right and even furthermore to get it right and do it right continuously, right? And so that's why all of this stuff is so important. That's why we wanted to chat about this is because there's a lot of capital.

There's a lot of capital, explicit capital outlays during the new product development and launch phase that are at stake, but there's a lot of future capital outlays that are at stake as well, right? Because you bake so much into your business in the form of the decisions you make on new product development and new product launches. So, you know, I think...

Unfortunately, we have to land the plane soon here and obviously like, man, we might have to have an episode for just each one of these stages because there really is a lot. But again, because it's a multi-functional and multi-discipline disciplinary like, you know, process to launch new products. But before we like fully land the plane, key takeaways, like what are the big points that you want to make sure that the audience remembers from our conversation today, Clay?

Clay Banks (52:22)

Yeah, it starts with customer discovery and customer discovery is never not done. And it continues even when you're in a fully manufactured state. To this day, I've been running this brand for two years. I, as the CEO and co-founder, still answer every one of our customer support tickets. And I do that not to say it's like that customer support is below me as the founder. It is pivotal in to me understanding how do I make my product better? How do I make my instructions better? How do I create better online videos to sell my product better? So when I'm, we get, let's call it 10 to 20 on a normal day tickets a day. So let's call it 20 tickets a day. That's 20 customers that I get to actually have an interaction with. And not only does that build brand, meaning they get to talk to the founder and it, it could be something as simple as where's my order, where's my tracking number? Or it could be something as, hey, when I insert the disk, if we put it in upside down, it gets jammed. Real life case, right? It happened.

So it started to happen more frequently. So then we designed a video to show how it was supposed to be done. And then we put up arrows on the disks to teach people how to put them in right. And then we created a video to teach people how to unstick, basically disassemble the light to get the tray unstuck if they put their disk in upside down, right? So if I would have farmed out customer discovery, I mean sorry, customer support. It's a lot of people go, you can farm this out to the Philippines for eight bucks an hour you lose the connection to the customer and then therefore you start losing on how to build the product better and how to build the brand better. those are things that all comes back to customer, getting involved with the customer and then iterating over time to...

Basically get it perfected right so now we can build now on a customer support. I can start building in automations With macros to say if somebody puts in their stuck disk disk stuck Whatever form of writing that I now can send them back Automated videos and instructions on how to get their their trays unstuck without me actually getting involved you know, as you're building out your supply chain, it really comes down to relationships. I buy stuff container load from China and I buy stuff in different brands and work with small stuff in America to big stuff in America. And ultimately, the better the relationship I have, the more willingness they're willing to help find problems, solve problems, cut costs when I need them. Like my manufacturer in China, I went to him right, it was during the election in November, and we're putting out a lot of cash to order inventory for Christmas. And I'm like, look, we're having to compete on a CPM basis with all the political ads. My advertising costs have gone up because we're just having to compete to buy it, right, on a cost CPM basis.

Is there any way if we order more or we work out a relationship, a little more of a longer term relationship, can we come down on cost?

Jon Blair (56:10)

Yeah.

Clay Banks (56:11)

Well, I've got a two-year relationship with the guy and now he's like, yeah well for this we'll do this and I'm like, okay That's perfect and then something and then we had a tariff come in unbeknownst to us We weren't planning for 25 % tariff got it was under exemption We had a 17 I think $17,000 bill hit us on that on that shipment. It's not good right before Christmas, but nonetheless those are things you just kind of have to you know, start learning sometimes the hard way and then plan for them in the future so they don't happen again or ways to get around them.

Jon Blair (56:41)

Yeah.

So start with the customer, stay with the customer, Leverage relationships, real relationships, and I'll say my last takeaway and summary is like, remember, we're trying to make the minimum capital investment to learn as much as possible to reduce risk before making the next capital investment. If you can remember that, you'll make better decisions around launching new products. Before we close, I actually realized, Clay, I don't know why, this is the only podcast episode, the last one we did, that I forgot to ask this. I want you to tell the listeners where they can find more information about you and InPaceLine because I think there's a lot of people that are gonna listen to this that might benefit from potentially getting some help from you.

Clay Banks (57:31)

Yeah, first and foremost, I'm an entrepreneur. believe in...practicing what I preach and staying in the game keeps me on my toes and keeps me active. So first and foremost, I run a company called GloriLight. It's G-L-O-R-I light.com. But I also run and help other entrepreneurs and help other companies build up, scale up. And I do that through an organization I created called InPaceline. It's I-N-P-A-C-E-L-I-N-E.com. Socials especially on Instagram @inpaceline and I'm trying to trying to put out more content to help other people kind of going through those same things that I've gone through and Jon quite frankly you've gone through as it's kind of a founder so that people don't make the same mistakes and same delays that I've had over the years and yeah I'd love to connect with anybody at InPaceLine.com

Jon Blair (58:33)

Yeah, definitely check out Clay's content. I highly recommend following him. And if you want any more helpful tips on scaling a DTC brand with a profit-focused mindset, you can consider following me, Jon Blair, on LinkedIn. And if you're interested in learning any more about how Free To Grow's DTC accountants and fractional CFOs can help your brand increase profit and cash flow as you scale, check us out at freetogrowcfo.com. And Clay, I'm gonna have to have you back on maybe many times. Maybe we'll have to co-host a podcast sometime soon. We have a lot that we could chat about, but I appreciate you dropping some knowledge. I know that this episode's gonna be helpful for our audience. So thanks for coming on and everyone, until next time, scale on.

Clay Banks (59:18)

Scale on.

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