Online crowdfunding provided three innovative business partners who share a passion for great sound a powerful kick-start to their business. Now the pressure is on to deliver.
Company. Ekko Industry. Technology, online crowdfunding Key. Company had fast success in online fundraising though Kickstarter.
One morning in late March, three friends and business partners, techies to the core, sat around a computer and nervously hit the return button.
With the click of that key, the trio — Frank Elge, Rob Hackle and Sean Murray — launched a crowdfunding Kickstarter campaign for their nascent invention: a high fidelity, Wi-Fi audio hub for headphones and speakers that allows uses to instantly share wireless audio with others. While high-resolution video has been around for several years, an equivalent in quality for sound, says Murray, has lagged. So too, the partners add, has an audio system that's both powerful enough for a discerning audiophile and simple enough for a novice to enjoy.
“The technology has not kept pace with video,” Murray says. “We wanted to bring this to the market.”
Murray and his comrades, with the Sarasota-based company they founded, ekko, believed the best way to bring it would be to start with Kickstarter — an all or nothing, online capital raising carnival. On Kickstarter and similar sites, such as indiegogo, one entity, from a painter to a rock band to a business, sets up a campaign asking for funds for a project. Anyone with a credit card can make a pledge, which normally comes with some kind of perk, in addition to the actual product behind the campaign. Perks vary, from T-shirts and coffee mugs to product discounts and autographs — anything but equity in a company. The project is only funded if the original fundraising goal is met in the time period.
For the rare few, Kickstarter is the fundraising lottery. A Silicon Valley company, for example, raised $10 million on the site in 2012 and another $20 million last year to support its Pebble smartwatch. Many other campaigns expire before the goals are met.
That's why high anxiety filled the room March 23, when ekko's founders launched a campaign for their audio system, Hub by ekko.
The fears quickly evaporated. The dings from Hackle's email that declared a pledge rolled in rapidly. By the end of the day, the company had $30,000 in pledges, which provided the backers with a slew of early bird discounts. “It was like a telethon without the phones,” Hackle says. “It was surreal.”
The dings kept on coming. Hub by ekko surpassed its $100,000 funding goal within six days. It had $180,000 in pledges, from more than 900 backers, in the final week of the project in late May. That puts it in the top 2% of tech product launches ever on Kickstarter, says Murray, and a leader among Florida-based entrepreneurs currently seeking funds for a project on the site.
More love came from the tech industry media: The product received glowing reviews from a slew of prominent websites, including The Verge, Macworld and Digital Trends, and Kickstarter placed Hub by ekko on its “projects we love” list. TechHive called Hub “the most intriguing multiroom audio we've seen since Sonos,” an audio gear company that has raised $100 million in venture capital.
“We are certainly pleased by how fast this happened,” says Murray. “We are absolutely thrilled.”
Shoots and scores
The small army of Hub Kickstarter backers validate what the ekko founders thought a few years ago, when, through mutual friends, they got together to talk about their passion for high-quality speakers. “It's something we always wanted in our house,” says Murray, with a business background in accounting and finance, “but no one had.”
Hackle, who studied at the Ringling College of Art and Design, and the partners began with sketches. The system they created allows up to 10 users to simultaneously listen to the same audio stream by connecting headphones or ear buds to multiple wireless receivers called sound pucks. Users can share 96 kHz/24-bit audio, which ekko says is double the quality of CDs, over the pucks. Each individual can independently control volume and equalizer settings. Hub can even connect multiple speakers or stereo systems over Wi-Fi, with no wires.
Murray says Hub is the first system on the market that can connect an entire house to an audio stream over an internal Wi-Fi connection. Potential uses within the house include streaming music for multiple listeners, gaming and watching TV where everyone can control their own speaker volume.
Each Hub comes with two to four sound pucks, which are housed in a sleek charging base/transmitter and have a range of up to 100 feet. A Hub with two sound pucks will retail for $199, and a unit with four pucks will retail for $299.
“This does more than address a sound pain point,” says Elge, who has started a few businesses, including one that develops virtual reality systems for the real estate industry. “It actually enhances the listening experience.”
Confidence is high
With money about to be in hand, courtesy of Kickstarter, ekko has to navigate through phase two: production and distribution.
That process started more than a year before the Kickstarter campaign, in January 2015, when the ekko team initially designed the concept. They flew in an engineer from Italy to help connect the technology pieces. But most of the guts of hub stems from trial and error the founders did on their own. They bootstrapped the business in the early going, putting in money from savings.
The bootstrap strategy led to Kickstarter, where ekko could scope out the potential market without overspending on production before demand. “The whole point of this was to not break the bank,” Hackle says. “We wanted to bring this to market with as little cost as possible.”
The company is working with a manufacturer in China on the first run of products, and plans to handle some assembly and engineering from Sarasota, in addition to packaging and distribution. The ekko founders have so far worked out of their homes, but currently seek an office/distribution space to handle marketing, accounting and operations. The company has committed to shipping the first Hubs to Kickstarter backers by July 2017. The product will also be available on the company's website to the general public at the point at the full retail price — at least 30% more than what Kickstarter backers paid for it.
Ekko's confidence in Hub isn't just from its Kickstarter fan base and media support. Another boost: The wireless audio device market, according to data firm Research and Markets, is expected to hit nearly $14 billion by 2018. With few dominant firms, Murray believes opportunities abound to score big in the sector. He adds that he hopes Hub will be the first of many products made by ekko.
“There is incredible interest in high-end wireless audio,” Murray says. “It's a really good time to be in this market.”
Several entrepreneurs on the Gulf Coast have found success raising capital on crowdfunding websites, in addition to Hub by ekko. Other recent success stories include:
Black Cat Creamery: Startup fund for Tampa-based small batch ice cream business raised $2,636 with 35 backers in a campaign that ended May 10;
Boy Story: Action dolls with companion books designed specifically for young boys. The Odessa-based company, founded and run by two sisters, one with young sons, oversold its $25,000 goal with a campaign that had at least 200 backers and ended May 18;
Triune Pen: Sarasota-based product design firm Aion Innovation raised $15,560 with 98 backers in a campaign that ended April 28 for what it calls a three-in-one pen that “could save your life.” The back of the pen has a hardened glass break tip; the ink writes in the rain; and the cap contains a small amount of tinder to start a fire in an emergency.
Start with heart
Online crowdfunding website Kickstarter has millions of projects, but few raise nearly $200,000 in two months. The Sarasota-based entrepreneurs behind Hub by ekko, a high fidelity, Wi-Fi audio system, say there are several important elements of a successful Kickstarter campaign. Tips include:
Pregame hustle: Don't just show up on Kickstarter with a project and wait for money to roll in. Rob Hackle, an ekko co-founder, says the company spent a considerable amount of time, money and effort promoting Hub on social media before the Kickstarter campaign launched. Then you bring those followers with you, from Twitter and Facebook, to Kickstarter. “If you don't pre-plan,” Hackle says, “you roll the dice that you will be viral.”
Big screen: A video of the product or project, fun and simple, is a must-have, says ekko co-founder Sean Murray. Ekko brought in a film crew from San Francisco for its Kickstarter video. “You have to have a good video,” he says, “and it pays to have a professional do it.”
Push press: Find reporters and editors in the industry to generate attention for the product or project. Hackle, for example, emailed and cold-called reporters at tech sites and publications for months. “You have to stick with it,” he says.
Tier time: Hackle says Kickstarter entrepreneurs should take full advantage of the site's perks feature for backers. Ekko went with an early bird theme, and the company offered a dozen levels of early bird perks and rewards, with a focus on product discounts. Says Hackle: “Give people a lot of choices.”
Have gratitude: Take the time, says Murray, to send thank you and update emails to every backer.