No one needs reminding that times are tight. A tanking stock market, global credit problems and a drop-off in consumer spending have put a chokehold on small business startups. Combining an industrial design mentality reminiscent of Apple with a Web-based fundraising scheme, the adult toy manufacturer Crave has not only successfully built a new company amidst the ruin of the so-called Great Recession, but they have laid out a blueprint for how other small businesses can help bring their consumer-ready products to market.
After the online group-funding site Kickstarter rejected the project as too risqué, Crave turned to online product-funding site CKIE (pronounced "seek-y") to crowdsource out their seed money. Eight hundred backers and more than $92,000 later, Crave has already received enough orders to strain the capacity of their supply chain. Forget venture capital, forget the angel investors, forget mounds of credit card debt; in today's business environment, companies need more than a good idea. They need a product, a fan base and a culture of innovation before they even start, and with a initial funding round that ends this Saturday, Crave has built all those things into their business model.
"We weren't sure how it was going to go. CKIE was a new platform, but the response has been tremendous for us. It has really helped us raise money. It was also great to get a community of people who were excited about what we were doing. It was a tremendous bit of visibility, and it’s resonating, which is very important for the team, to know those late nights paid off," Crave co-founder Michael Topolovac said. "I raised money in the more traditional way in my previous life, but this is a phenomenal way to do it. The first company was internally funded; basically just eat a lot of ramen and go into credit card debt. My second company, I raised money from [venture capital firms] for software. When you do something like CKIE, success seems much more likely. You see that what you're doing is finding an audience, which gives it an authenticity."
Crave began where many businesses start: they identified a glaring and profitable absence in the marketplace. Namely, they realized that many women's sex toys were cheap, tacky and poorly designed. To fill that void, Crave co-founder Ti Chang leveraged her industrial design skill to create a sleek, high-end product, one that essentially looked like the Lexus or iPad of vibrators. Chang succeeded in producing a highly functional product that wouldn't embarrass someone if their parents or a Transportation Security Administration worker stumbled upon it. In fact, with its futuristic contours and 24-karat gold plating, the "Duet" toy wouldn't look out of place next to Riedel stemware and the latest issue of Monocle Magazine.
Had Crave pursued a traditional startup path, Chang and Topolovac contend they couldn't have baked that kind of innovation into the company from the start. Rather than having to listen to venture capitalists request features in a product area they didn't specialize in, Crave's crowdsourcing method combined funding with audience testing, placing customer service and technological advancement into the heart of their business.
"What I think is cool with CKIE is that you’re putting the product directly in front of customers. Instead of listening to VCs, the enthusiasm of the audience tells you a lot," Chang told InnovationNewsDaily.
"[With CKIE], it's not just people telling us we should make x, y, or z. Innovation is more ingrained in our DNA. We have an environment where you aren’t afraid of failure, and we turned that into a product that speaks to customers emotionally."
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