Many accredited investors are looking for alternatives to stocks, bonds, gold, real estate, and bank accounts. With excess funds available for speculation, investors are willing to take some risk with significant potential for the upside. The buzz around IPOs has caused investors with substantial amounts of capital to ask themselves 'where can I get in on the next ground floor opportunity'?
Investors who are willing and able to take a chance on these opportunities are taking closer looks at early-stage venture capital opportunities. What goes on in a startup? What are the opportunities and challenges with startups? In order to give readers an inside look at a startup, we decided to interview Lief Storer, CEO and founder of a San Francisco based company called BoomBotix Inc.
(Reprinted courtesy of Stockerblog.com. Originally published in March 2012.)
Let's start by having you describe your current product line. What is it that you are selling?
BoomBotix makes portable speakers designed for life in motion. Our current product offering is the Boombot line which is a skull shaped speaker inspired from Japanese Urban vinyl toy design. We’ve fused together modern audio technologies with a fun aesthetic that we thought would really resonate with our target demographic.
How did you happen to come up with the idea for the product?
I was an engineer by day and artist by night. I painted skate decks, canvas, and sneakers typically going for an urban-surrealist style. My company flew me out to Taiwan to work on programming LED illuminators. I was at this place called the Dream Mall when I discovered all these blank Do-it-yourself toys and that’s when I started working on this toy as a new medium.
I blew out my knee skiing and I started to ride my bike to work to rehab. During my healing, I was painting a lot and I discovered this toy called the Skully that was basically a tennis ball sized skull with asymmetrical eyes. In looking for an alternative to my DJ headphones for riding, I thought I’d hack together my own hand-made speaker using an iHome audio portable speaker and a Motorola walkie-talkie belt clip. I made my first prototype as a weekend project and my life went on another adventure from there.
Who is your target consumer?
I think our product line will do great in mass market, BUT our core market is 12-28 years of age with an active lifestyle, a passion for music and technology. Smartphone users are getting younger and few companies are really addressing accessories that hit home with this market. We are not just addressing the way a product looks, but adapting our products to the lifestyle of this market. To really understand it, you have to really get in their shoes and understand what their day-to-day life consists of.
Any direct competitors?
It really depends on how you look at it. On one side of the spectrum, there are a number of brands that are offering mobile audio solutions whether it is headphones or speakers. Most notably, we would say Skullcandy and Jawbone are major competitors to us in the space. We’re trying to distinguish ourselves with software AND hardware solutions that have substantial barriers to entry supplemented by a close tie to our core community.
How do you go about marketing your product?
With very few resources, we have relied on social media and grassroots marketing. Major tradeshows like CES, Interbike, and Surf Expo have been good for us as well, but they are also tough on cash flow when there is no marketing budget. Our key to success has been to really pursue relationships where people are just happy to use our product and promote it knowing that we can’t offer them much more than that. The bike market has been great for finding customers that truly love the experience that Boombotix offers.
When did you first start your company and was it hard to get started?
I came up with the idea in 2009 and I spent about a year designing and sourcing a good vendor in China. It was REALLY hard to get started. It's really intimidating to raise cash when you’ve never done it before. I funded the company to get to the point of having our first production quality prototype. Once I had a piece that looked and sounded as amazing as I envisioned, raising investment got easier, but it is still hard as hell in today’s economic climate!
Tell us a little about your background, such as where you went to college, previous jobs, etc.
I went to UC Davis for Optical Engineering. It was a unique program that let you bounce around a lot of different departments. Out of college, I was the lead engineer in a new LED Lighting division at DiCon Fiberoptics. That job taught me so much about product design and marketing. It was essentially a startup division that had the backing of the parent company. A lot of the skillsets I learned there, I transferred right over to BoomBotix and was able to spec and design my own product. I pride myself in my eye for design and I think my artistic side has really allowed me to share my vision with everyone around me much better. It’s really important as an entrepreneur because if nobody GETS your vision, there is no way you can expect them to help execute it.
How did you happen to locate it in San Francisco?
I was running the business out of my parent’s garage until March 2010. My CFO had me go into the office of another tech-toy startup where I met Mike North. He was a super cool guy with a lot of amazing projects under his belt and he offered me some studio space. As soon as I got in there, I brought more hands on deck and it made sales skyrocket. We quickly outgrew the spot and I found a sweet studio on 23rd and Mission that I thought would be the ultimate headquarters for a startup like ours.
What is your current staffing level like?
We have six people in the office every day and we’re always churning in interns to help us with social media and PR. We like to keep a small team of really talented individuals that understand the scrappy startup life and just love getting their hands dirty. After all, even the CEO takes out the garbage.
Can you give us an idea of what your growth has been in terms of products sold and revenues?
Just to give you a ROUGH idea, at our 18-month mark, we hit the half-million in trailing revenue milestone. In one year, we had 127% growth in sales and we are currently on pace to shatter last year. Our goal isn’t to spike it and burn out but rather sustain year after year of triple figure growth and continue fostering relationships that we have.
How did you get your original funding for the company?
By clawing and scratching at friends and family and taking out loans. I’m so thankful to have the support of everyone around me.
What do you consider your biggest challenges relating to running a start-up?
Being a boss. Before this job, I had absolutely no management experience and human capital is by far the biggest variable. I’ve always been strong with interpersonal relationships, but managing people was completely new. Every time that I’m not happy with someone’s performance, I try to always ask myself, “Is it their fault, or can I do something better as a manager to help make them better at it?”
Every day, your mood dictates your organization. If you’re down about something, your entire team will be too. Be stoked, be inspiring, and sell the future.
Can you let us in on any new products on the horizon?
I’m very excited for the waterproof watch we’re making for the iPod nano. I get tons of compliments on the prototype, but it’s got some work to get the bugs out. We’re also just starting to get into advancing our software to allow audio networks to be created on the fly and that is the technology that I think is going to set our sound systems apart from the rest.
Are you still looking for more funding?
We’re looking to raise $1.5 million to float us through 2013. Most of the funding will be used to finance inventory production and keeping our team fed. We’re fortunate enough to have a good amount of investors hovering around so now we get to be a little more selective about whom we bring on to our team. We really are looking for investors that have more to offer than just cash.
What is your long-term goal for the company?
First and foremost, we want to make key innovations in mobile audio technology. We think there are a lot of shortcomings of current hardware/software products and we would like to fill the voids and really define our niche in the space. Beyond that, we also want to create a lifestyle around our products and ultimately have a big impact on culture. We are not really thinking of exit strategies, but selling to a conglomerate or going public are viable ways to cash out for our investors.
Anything else you would like to add?
Yes. If you are trying to pronounce our name, its Boom-bah-tics. The name is derived from creating a field of science around the mobile audio.
Thank you for your time and enlightening us.
No investment recommendation nor any investment promotion is expressed or implied by either the publisher, the interviewer, BoomBotix Inc., or the interviewee.