Product Startup Podcast Episode 224: Expand Into New Markets

00:00:00 Kevin Mako: Hello, product innovators. Today we learn how to expand your product to new types of customers from a co-founder who used this strategy to grow to over $150 million per year in sales.

00:00:10 Kevin Mako: This is the Product Startup Podcast, a show to learn from top leaders in hardware product development, prototyping, manufacturing, product selling, and everything in between. Hosted by Kevin Mako, the leading expert on product development for hardware startups.

00:00:24 Kevin Mako: Welcome back, everyone. I'm very excited to introduce Danny Angers to the show. Danny is one of the co-founders at VOSKER cameras, a company that in just five years has grown to over $150 million in sales in 45 countries with over 2 million devices sold. Today, Danny will share valuable knowledge from inventor startups and small manufacturers on how to take customer feedback from your first product so that you can expand to many other customer groups you did not

00:00:49 Kevin Mako: Even know existed. Now, onto the episode. This show is produced by Mako Design, the original firm providing end-to-end consumer product development services tailored specifically to hardware startups, small manufacturers, and inventors. Take your product from idea to store shelves at MakoDesign.com. Now, onto the episode. Hi, Danny. Welcome to the show.

00:01:14 Danny Angers: Hi, Kevin. Nice to have the chance to work with you today.

00:01:17 Kevin Mako: Well, we're looking forward to talking to you today about scaling your product through new customer verticals. And your story is really interesting about how you grew VOSKER to literally selling millions of units in 40 plus countries around the world. Before we get into all those details on best practices and some of the techniques and tricks you use to take your original product and then expand it 15x, before we get involved, just give us a bit of a backstory of how you became the success story that you are today.

00:01:42 Danny Angers: Yeah, well, the story started with me and my two other co-founder. We had the previous business where we were selling devices and we took these devices and brought cellular connectivity to those hardware.

00:01:55 Danny Angers: And then we listened to the client and sort of saw use cases that we didn't even knew the client were using our product line to do or to work with. So that's how the story started for VOSKER.

00:02:07 Kevin Mako: Yeah, that's amazing. Tell everyone a bit about what the product is like. What did it start at? And then then we'll get into some of the tactics that you use to listen to the customers and really expand your product. Because a lot of the hardware startups listening to the show start with their first product. I mean, that is the right way to start a hardware product. Start with an MVP version, a really well-designed, engineered, manufactured first version of your

00:02:30 Kevin Mako: Core idea and your core technology. But from there, you guys are able to take that and just make explosive growth from that. So I want to go through those steps. So just talk big picture.

00:02:40 Kevin Mako: First of all, what does it mean to take one technology or product and then expand into to new customer verticals?

00:02:47 Danny Angers: Yeah, well, when you start from the client, it's easier to expand into new vertical because they're the one who are going to tell you like, look, your product is great for doing x, y, z.

00:02:56 Danny Angers: But when I'm using it to do that specific thing, I would require this new feature so that I can be able to use it. And for us, it really started with, we were building cameras that were deployed in the woods to monitor wildlife.

00:03:10 Danny Angers: And our user or the expectation from us, from our users is that they were only doing exactly that. So deploying these devices in the wood. And then when we brought the cellular connectivity to it, we saw into our platform that there was so much more other applications. Like 50% of the time, the user that bought the device was doing anything else in another vertical than what we were currently selling

00:03:37 Danny Angers: The device for. That's how it got started. That is amazing because I assume that you were marketing, it's very specifically to this one core application.

00:03:45 Kevin Mako: But even despite a very targeted marketing base, your customers were able to almost innovate themselves and think, hey, I see that product, but I could figure out another use that could apply to my situation.

00:03:56 Danny Angers: Totally, totally. So they bought the device, for example, for the wildlife, and then they brought it home and say, hey, maybe I could use that on my farm to monitor my cattle all or monitor my water tank level. Or I can bring that on my construction side of the job side onto our work to secure the old building and the whole place. And we were amazed by this sort of innovation coming in for a client. And that really starts when you start asking them, what

00:04:22 Danny Angers: Is it that they really want to do? Or what is it they're really doing with this device?

00:04:27 Kevin Mako: That's an important key step that you mentioned there, because you didn't just sell these and magically, you found out that they were selling for all these applications. What was the critical step that you took in order to realize that more than 50% of your customers were using the product in alternative ways?

00:04:42 Danny Angers: Yeah, well, we actually surveyed the customer base because once we were able to get them on a app and get them connected, we were about to filter them out through our AI and try to bucketize what was the use cases.

00:04:54 Danny Angers: And from that bucketization, we were so amazed that it was not what we thought it was that but at first we thought it was our AI that was not doing the job correctly.

00:05:03 Danny Angers: And then we said, well, maybe we should just pick up the phone or start to contact directly the client. And so we did. Obviously, we've asked them the permission to do so.

00:05:12 Danny Angers: But once we've done that, they told us all these things that they were doing or monitoring with our cameras because of that feature or that other feature with the solar panel, the battery and all these things. We're like, wow, what an amazing discovery.

00:05:24 Danny Angers: So now how do we repackage a product that does sort of answer this more vertical agnostic approach and try to 15x or at least at that point, we just thought we found something.

00:05:38 Danny Angers: We didn't expect that it would 15x the top line.

00:05:41 Kevin Mako: Wow, that's amazing. I want to break down a little bit more in detail what you meant by actually reaching out directly because you tried one approach and then you tried a more customer centric approach and reaching out to them.

00:05:51 Kevin Mako: And I think this is really important for hardware startups, because if this is your first product as a hardware startup, presumably you start selling a low amount of units. Maybe it's only a few hundred units, eventually maybe a few thousand units.

00:06:02 Kevin Mako: But at the early days, you really only are selling a small amount to begin with. So it's really easy for you to reach out and contact those customers because you have the time to reach out to them at that phase in your business, especially.

00:06:15 Kevin Mako: So how was it that you decided to actually reach out? And what really is the key technique here to extract what that information is?

00:06:24 Danny Angers: Well, the first thing is that we sold about 10,000 devices the first year. So it was like, well, we cannot, because we're a very small team at the beginning, like you know your tree.

00:06:33 Danny Angers: So like from that aspect, if you want to keep growing, you cannot just pick up the phone and call the 10,000 people. But we did some sampling and we went to these clients that add a certain amount of units it or that we're using it for very, well, unsuspectful, or at least we didn't expect them to use it for that.

00:06:51 Danny Angers: So we sort of like cut the whole 10,000 into very small pieces of what we would call customer persona. So we gave them names.

00:07:00 Danny Angers: So like joe construction and responding from joe construction was the typical user that we assess was using the device for construction. Then we went on and we've called these maybe four or five clients that we've assigned as joe construction. And we've asked them either through the phone or we've sent an email saying, can we have a discussion with you? And then they accept and then we've contacted them.

00:07:21 Danny Angers: And then through that, they basically gave us some information. And in exchange, we did send them the first line of product that we have so that they could test really what they gave us as advice and back very quickly with us. So that's how we've done things.

00:07:36 Kevin Mako: That's a really great approach. So you sampled because you're at the point there, especially with 10,000 people, you couldn't reach out to all of them. So you started sampling them and it gives you a very good idea of your customer base. But you took it one step further.

00:07:47 Kevin Mako: Of the people that actually responded, you then sent them the specific device that you eventually developed for that exact use case. That's brilliant. You're almost teeing up your next customer from your previous customer and creating lifetime value right away.

00:08:02 Kevin Mako: But as well, you're then monitoring that feedback very closely.

00:08:05 Danny Angers: Exactly. Well, at that point, we knew you can imagine what the client's going to do with your product unless you are very specifically yourself in that field.

00:08:15 Danny Angers: Well, you need not to assume that you know things about what it is that they truly want to do with your device. We have this saying at VOSKER where assumption kills. Ok, so don't assume anything.

00:08:27 Danny Angers: Just really ask questions. So that's how we've done things from that perspective.

00:08:32 Kevin Mako: What percentage of the people that you reached out to? So these were customers, you reached out to a sample size. What percentage of those actually responded back to you?

00:08:42 Danny Angers: I'd say it was less than half. And of course, when we approached them at first, we did send them like, look, if you want to help us out, we're going to give you a discount on all these things. So you got to put some sugar on the thing so that they do respond accordingly positively.

00:08:58 Danny Angers: But I'd said it was maybe less than 50% or something like that. But it was enough.

00:09:02 Danny Angers: It was enough. You don't need to talk to 10,000 people. Maybe a couple of great users or great use cases will do the trick, but you need to figure out which are the ones that really will talk to you and will tell you the honest truth.

00:09:16 Danny Angers: And sometimes as entrepreneurs, we're so proud of what we've built that we don't really want to listen to, well, the client and what the client is saying.

00:09:24 Danny Angers: And to us as three co-founders, I was the one like picking up these information and bringing back to the other guy who are developing the product and say, no, no Danny, this is not how it works. The product is already good this way, you know?

00:09:35 Danny Angers: So you have to be able to take a step back and accept the comment from the client.

00:09:41 Kevin Mako: How did you proceed to develop niche products for these different verticals? And was that important in addressing those specific markets or new markets that you had now identified with those customers?

00:09:53 Danny Angers: A hundred percent. So it first comes down to the hardware, but what we've wanted to do first is how do we take a product that was much more niche into a specific vertical that we were marketing directly to those and get out of that vertical and then try to assess, well, how many vertical do we want to attack with the same sort of product line?

00:10:14 Danny Angers: That would ensure not specifically 100% of all the needs, but at least 80%, like the 80-20% of, let's say, three verticals so that we have an expansion of the total addressable market without diluting too much and trying to design something that's going to go to mars.

00:10:32 Danny Angers: You need to narrow things down and be focused as much as possible. So we've identified the bucket of construction site monitoring and agricultural monitoring into two buckets.

00:10:44 Danny Angers: And we know that there are like 12 use cases in each one of these buckets. But if you open up these 12, what product would fit most likely like 80% of the needs?

00:10:56 Danny Angers: And that's how we try to package things up.

00:10:58 Kevin Mako: That's great. So you weren't creating a new product for every vertical. You were looking at verticals and putting them into a batch, essentially taking those batches and saying, okay, what features is consistent across 80% for the users within these sub-batches?

00:11:12 Danny Angers: Yep.

00:11:12 Kevin Mako: Then you develop the product that works for them so that you don't have to go crazy on having like such an extensive product line until you actually start to address scale.

00:11:20 Kevin Mako: And I imagine if you start getting some very specific niches that could be a big deal, you then maybe will do a product for those as you start to identify, you know, a certain large total addressable market within a very specific category.

00:11:32 Danny Angers: Exactly. You can always redo the products when they are successful.

00:11:36 Danny Angers: You can always improve on them and bring new iteration, but to go back to your MVP, if you've designed an MVP that's selling and that the client are giving you feedback and that's good enough so that you've got a business case that can grow on top of that, then move on.

00:11:52 Danny Angers: And after that, try to reiterate and improve it, but you need to get that first.

00:11:58 Danny Angers: Otherwise, you will spend quite a lot of time and money and effort maybe on something that's not going to bring any value to you nor the customer.

00:12:06 Kevin Mako: It's interesting. You keep mentioning this concept of MVP, even though you guys are now north of $150 million per year in sales, it still is a factor when thinking about design, engineering, prototyping, etc.

00:12:19 Kevin Mako: You really have to look at your product and say, what is the next logical step? You're not trying to be everything to everybody from day one. You're trying to climb the ladder and grow the product base at a reasonable pace.

00:12:30 Kevin Mako: I also like how you mentioned which kind of ties with this concept of MVP is make your first product successful. And when that's successful, then make your second one and ensure that's accessible and so on. You can then piggyback on those, right? Again, focus on MVP, make it a success and then continue to evolve and iterate progressively as you do so. Well, it is still true to this day.

00:12:50 Danny Angers: We are heading towards 200 mil and the assumption kills type of thinking is still there. So every one of the sub vertical that we're trying to get into and be specific, we first start with an MVP. We know it's not going to be perfect. And we're blunt enough to tell it to the client, look, it's not a perfect solution. Please tell us give us ratings, give us what you want to do,

00:13:14 Danny Angers: Or what is it that you want us to improve. And you've got us working very hard to get there and try to attach or build something that's going to suit your need. But that's always about out an MVP. That's not going to be 100% what it should be at the beginning, but it doesn't matter because you're really truly assessing and bringing a solution to someone that didn't have that solution prior to you getting there at first.

00:13:37 Kevin Mako: That is amazing. Are there any last tips or tricks for startups that are going through this scaling phase of diversifying their product line or starting even just to listen to customers to figure out what their expansion should look like next?

00:13:49 Danny Angers: I think there are so many. There are so many. I think it's bound from the fact that there is a lot of success in our story, but it also spawns from every failure that we face down. So even though something may seem a failure, like the first product line that you're selling is not selling that much, you may be very close to getting something that's absolutely incredible, just like us. And so you need to keep pushing

00:14:12 Danny Angers: Forward. Whatever happens, either the fall all, you just like step up again and try again. There's something afterward if you really improve.

00:14:22 Kevin Mako: That's powerful advice. I mean, failure, if you use it as a tool and as a learning lesson, can be very powerful in your journey, especially in long term. So I'm glad that you addressed that because the reality is it's true. Especially even on this podcast, we have so many people that have had such huge successes. But if you talk to all of them unanimously, they had failures and troubles along the way as well. But the key difference was they leveraged those failures.

00:14:45 Kevin Mako: Theirs they learned from them they almost got excited about them and they used those to figure out what went wrong and how are they going to come back swinging that much harder and that much more accurately and correctly based on if you're doing it the way that you're talking about Danny using your customers as the primary guiding light to the next versions or next elements of success of

00:15:03 Danny Angers: Your product 100 it's hard on the ego but it's it's nice on the resolve so that's that's what

00:15:09 Kevin Mako: Counts that was minor where can listeners go to learn more about the cameras that you guys have in the ever-expanding lineup that you're producing?

00:15:17 Danny Angers: Well, VOSKER.com is the best place to see all our product line and see how the business is evolving. And I encourage anyone who wants to do remote area monitoring to at least get on this site.

00:15:27 Danny Angers: They're going to find out something that may solve their problem.

00:15:31 Kevin Mako: Danny, much appreciated. I'll put the links below for anyone who wanted to click through as well. Thanks for all your words of wisdom today on scaling up, especially listening to your customers and figuring out how to actually diversify through your existing customer base, listening to what they have to say so you can figure out what your next hot product vertical is going to be.

00:15:47 Kevin Mako: Danny, thanks again. And we'll talk again soon.

00:15:49 Danny Angers: Thank you, Kevin. It's been a pleasure.

00:15:51 Kevin Mako: Great. Take care. Bye-bye. Thanks for tuning in to this episode of the Product Startup Podcast. If you found some value in the show, please do us a huge favor and hit the like button and subscribe.

00:16:03 Kevin Mako: If you have any questions, guest suggestions or anything else, feel free to reach out to us anytime at our email podcast@MakoDesign.com.

00:16:12 Kevin Mako: This show is hosted by Kevin Mako, North America's leading expert on product development for hardware startups.

00:16:18 Kevin Mako: And the podcast is produced by Mako Design, the original firm providing end-to-end consumer product development services tailored specifically to hardware startups, small manufacturers, and inventors.

00:16:30 Kevin Mako: Take your product from idea to store shelves at MakoDesign.com. That's M-A-K-O Design dot com. Thanks for joining and see you again soon.