← The Foundr Podcast with Nathan Chan
The Foundr Podcast with Nathan Chan
625: From $70M in Debt to $1B Amazon Deal in 45 Days | Jamie Siminoff
00:53:04
One billion dollars. That’s what today’s guest built — after being rejected on Shark Tank, nearly going bankrupt multiple times, and spending millions before making a single sale. In this video, Jamie Siminoff, founder of Ring, breaks down the real story behind building one of the most successful hardware startups of all time and selling it to Amazon for over $1B.
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- [00:02]
A
Hey, founder fam. I want to talk to you about something super exciting. We're officially partnered with Omnisend, the email marketing and SMS platform built specifically for e commerce founders. We've been recommending Omnisend to founder students for a while now because it just works. Whether you're launching your first store or you're scaling to seven figures, it really helps you automate your marketing and get real results. Did you know on average, OMNISEND customers make $68 for every $1 they spend, which is an insanely good return. And because you're part of the founder community, you get 50% off your first three months with the code. Founder50. Just head to omnisend.com founder without the e to get started. All right, now let's jump back into the show. $1 billion. That's what today's guest business was acquired for by Amazon in 2018. And you probably recognize him as Shark Tank's most notorious rejection. Where every shark passed a deal that today would have been worth hundreds, millions. His name is Jamie Simoff, the founder and the inventor of Ring. So in this episode you're going to hear how Jamie spent 2 to 3 million in R D before his first sale by pre selling products he hadn't built yet. How he negotiated the Ring.com domain for 1 million with only 187,000 in the bank. How he went from 70 million in supplier debt to a billion dollar acquisition in just 45 days. Plus Jamie reveals while scaling from 75 to 1000 employees in 18 months was actually a complete disaster. And. And how generating 23.6 million in sales in a single day on QVC actually saved the company from bankruptcy. This is one of the most raw and honest conversations I've had about what it takes to build a billion dollar hardware company when the odds are truly stacked against you.
- [01:57]
B
Here are the stories. Learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the Founder podcast with Nathan Chan.
- [02:11]
A
Jamie, welcome to the show. Really excited about our conversation. You famously launched Doorbot in your garage because you kept missing deliveries. Can you take us back to that 2011 moment that led you to know. You know, this wi fi doorbell prototype would be something that would serve millions and millions and millions of people around the world.
- [02:36]
B
So it's, it was a slow burn. It wasn't a like a thunderclap of aha moment. I was in my garage, I was inventing other things, working on a bunch of like sort of random things. Snap Garden, a modular gardening system. Poketty Poke, which is A conference calling system so a bunch of stuff couldn't hear the doorbell. And so the first thing was just solving my own problem. So I just built it for myself and then actually go back. The first problem was I couldn't hear the doorbell. I had gotten an iPhone recently and I thought, why wouldn't someone, you know, someone must have built something to go to the iPhone for this. And so I looked online for a wifi doorbell. Nothing existed. I then built it to scratch my own itch. And then it was really my wife that said, this makes me feel safer at home. Which was the true, I'll say, invention of Ring. And what really built us to where we are is this idea that we could reinvent how sort of residential home security was done.
- [03:36]
A
And that became like the really core part of your mission. And that's been a really strong, I guess, reason for your success in many ways. Like, you know, when you, you know, you got, you lost 100 million in funding. There's, there's all these different things, but it tied back to that mission. Can you tell me about kind of when it comes to building a company, how important is it having that mission and why was it so important for you?
- [04:04]
B
Yeah, I mean, I think there's not one way to do anything, but for me, if I, if I've seen one common way that people are successful, it's a strong. You match a strong mission with passionate people that are willing to sort of like, you know, chew through walls and you typically have successful companies and, and with, with the strong mission, like, you know, you just mentioned, like, one of the many things that happened along the way. The strong mission keeps you focused on going like on the business. Even in the times when, when everything's stacked against you and it's very hard to sort of, you know, keep pushing forward. And so I do think, you know, when I look at it, I just think having a really strong mission that can align everyone, have everyone believe in, is just for, certainly for Ring, it was critical to our success. But I think it is one of the most, you know, common things I see with other successful startups and companies.
- [05:02]
A
Yeah. So you first conceptualized the product was.
- [05:07]
B
2011, right around 2011. Yeah.
- [05:11]
A
You went live the, the episode on Shark Tank, Very, very famous. Went live in 2013. I want to get to that. But what happened in between? Like, you, you created this product, you scratch your own itch. How did you start selling it? What did first sales look like? How did you bring it to life?
- [05:33]
B
Yeah, so, so, I mean, for the first like year. It was truly like scratching your own itch and kind of playing with it. At the time I was, I was still working on other stuff. So as I said, it was not an aha, was a slow burn. And then Kickstarter in 2012 was not allowing hardware products onto its platform anymore. There was like a problem. They, you know, had done some, they hadn't shipped. And so there was kind of Kickstarter was like kind of this new pre sale thing. And so it's kind of up and down. And I thought wouldn't there be an interesting business in having a hardware sort of centric pre sale business? And so I, I started this con, this, you know, startup concept, whatever site called Edison Jr. I wanted to launch it. And it turns out when you launch a hardware pre sale site, what do you need? Hardware. And so I asked my friend Loic Lemure, who ran the web conference in Paris where I was going to launch it. I said, which of these, you know, six ideas of hardware you think we should put on here to sort of be best for the launch? And he said, Z doorbell. And so, you know, just one of these lucky sort of things that if he had said something else that we, you know, there's a lot of other ideas I had and if he had said one of them, you know, who knows what would happen. And when we launched the, the pre sale site in 2012, it was the doorbell that everyone talked about, not the pre sale site. And so that was kind of like where and where we kind of saw this sort of starting to come up and that led to Shark Tank and then, you know, kind of kept going from there.
- [07:11]
A
Got you. So talk me through. Because a lot of, a lot of our listeners are inventors at heart or they have a physical product idea in mind. Like how, how did you source, like you, you handmade the product, it was a hardware product. How did you even work out how to do that? Like talk us through that.
- [07:32]
B
Yeah, it's like one of those things. I wish I had some like great tidbits of advice that, you know, someone could just like take a pad out and write down, like, here's the five things you have to do. The reality is hardware is just so hard, it's so unique. Unless you know how to do it, unless you have some sort of edge in it. I mean, and I did not. So we kind of just flailed through it by first working with a friend and then that didn't work, and then finding a factory that was based out of Taipei and then that's it just. We sort of just, you know, scratched around and found stuff and I flew to Asia and asked people and. But we certainly, I would say we did it right. But the other side is, I'm not sure if there is a right path to doing it. I think, you know, it's, it's such terrible advice. But sometimes, like, you have, you know, the only way to go and do it is to go and do it. Like, you just have to sort of just go out there and do it. And it's, it's scary because there's a, certainly a high risk, you know, with doing that, especially in hardware where there's so much capital costs so quickly. But I don't know how else to, to do it. And I'd say, like, you know, the people that I've talked to that have wanted to do hardware things, each one is usually unique and different and you have to find, you know, someone to make it. You have to find someone to help you. It's, it's, there's, with hardware, there's a lot of different expertises. It's not, you know, software. If you can figure out a software business, do a software business. It's like, it's, it's, you know, you use aws, all the services are there. A couple engineers can sort of usually build and mock up and even create something scalable. And you get to go, yeah, hardware is really hard because each piece is unique. Like the camera chip is unique to work on the, the computer onboard is firmware, not just software. And so, yeah, I wish I had a better answer other than just saying, just go out there and try to fail and hopefully succeed at some point.
- [09:32]
A
No, that's okay. I respect the honesty. It is tough. It is not easy. When I spoke to the founder of whoop, like, the amount of times trying to bring that product, the amount of variations, like the amount of times that company almost died, the amount of money he had to raise to keep it going to even get to the first original prototype. No one would have got that. Like, it's insane.
- [09:53]
B
Yeah. And I actually, I've heard him talk about it and I think it's very similar. And again, it's hard to find someone who started from scratch in hardware and has not had that experience of just. It's like kind of near death the entire time because it's just such a scale business that, you know, going into it so small is. It's really hard to, you know, make it without blowing up along the way.
- [10:19]
A
So let me ask you a better Question then, how much would have you spent to be able to receive your first sales? Like how much would have you spent in R D prototyping, all of that stuff?
- [10:36]
B
So we probably spent, you know, it's probably, it's definitely more than a million at that time. You know, I would say probably closer, like 2 and a half to 3 million is what we spent. Which. So it's like, it's like, did you raise that money? No. So how did you have the R and D money to spend the 3 million is like, well, we pre sold the product. Well, how did you pay for the pre sales? Well, we didn't. That was the problem. So like we got lucky that we kept selling and then we use that money to buy the product. But the reality is we use the pre sale money to fund the development because it was way more than we thought it would be. And, and even that product at a couple million dollars of investment was a very, very challenged, you know, not complete, you know, as you think of a product today kind of product.
- [11:28]
A
And so that's how you found yourself on Shark Tank. You know, you went, you went on with many, you know, many sharks. Absolutely tearing you apart. Yeah, you, you asking for $700,000 for 10% equity. All sharks passed. You got absolutely teared apart. Now with true context though, knowing how much you'd raised previously and it was a pre Sam or like it wasn't that far fetched. It wasn't like you were just going on there for press. Like you legitimately were looking to raise money, correct?
- [12:04]
B
Oh, I, I totally needed the money. And it's funny because today, you know, everyone always like hits me on the shoulder and is like, yeah, of course you didn that money, you know, because they're looking at it as the success that we became. And what they don't realize, like, no, not only did I need that money, like we still had to raise that money after I was on the show. Like, it was like we were dying. Like we needed that cash. And I, I was so certain that Mark Cuban, you know, this sort of tech guy, he's on there and I'm like, Mark Cuban's gonna put the money in. Like, I am just sure that Mark's gonna do it. And you know, it, the taping of it, they edited a little bit, but Mark was out within like minutes of us being on the show or me being on the show.
- [12:45]
A
Yeah, so some. So the first Shark Tank that came to Australia, I almost got on for, for this, for, for, but, but not for a physical product, for A founder, we're a digital magazine, still are didn't get on right. They tend to choose inventions or something more out there. And I got to the last part when they brought it to Australia. The first season didn't get on. And you know, for me I felt like it was a blessing in disguise. I didn't need the money, I just wanted to do it for press, honestly. And for you, you know, it was an extreme blessing in disguise because, you know, that rejection like that, that really kind of helped catapult the business in many ways. But I wanted to ask you like, because I, if you're listening, watching this, you've got to see like this, this, this pitch, like I've seen it so many times all online. There's so many memes around. Like, you know, like it's the most, I guess the, you know, like one of the biggest kind of Shark Tank failures they would say, because then you've, you've gone on to sell Ring to Amazon for over a billion dollars and everyone, everyone backed out. But I have to ask like, what happened? Like what, like how, how long was the season airing before like, like what was the time gap? Because sometimes it's like a six month wait. Sometimes like how, how fast was it and did you think you were going to get a rough edit? Because some people, they get a rough edit and like it, it's really bad for them.
- [14:24]
B
Yeah, so there's like, so, I mean like so many sort of questions in that and so many things is, you know, you get on quote unquote, like on Shark Tank, which means you're gonna go on and you tape and you. We, we taped in September. That didn't mean we were actually going to be like airing on the show. It just meant that we taped an episode. Sometimes they don't air because when they go to edit it it's like, yeah, it's boring. It just doesn't, you know, it's like sometimes like the chemistry is not there, whatever. Like it's just not good. So, you know, some percentage of people don't even get on. We, that was a worry. The other thing was we were running out of cash and the season started in like October and went to I think May. And they don't tell you like when you're going to be airing. And if we had aired at the end of the season, I don't, I don't think we, I'm almost certain we would not have made it. Like I, I don't think we would have made it that far because we you know, we tape in September. I'm still trying to raise money, but then we air in November right when we were about to start having product to ship. And basically, I mean if you think about again going into the holidays, like if you're, if you're a product company, no matter what you're selling, people buy products in November and December. And so it was like the perfect storm for us in a good way of we go on the air in November, it's like a 12 minute commercial. You can't, I mean there's just, at that time was a huge show. You could not have gotten more awareness and credibility from it. And so it, I think it might be the single biggest factor of our success was getting, you know, in the end was airing on Shark Tank because I, I don't know if we would have made it over the hump without that.
- [16:11]
A
Yeah. So you, during that time period you're still trying to raise money. Did you have any like many bites, much commitment? Like, like how was that looking?
- [16:18]
B
It was, you know, it's just a lot of like maybes and like thank yous. But you know, it's like you don't get like, it's funny, people always say, do you get nos? Like you never get a no, you get like a thank you follow up, like let's talk again. You know, like, great to see you. Like, you get a lot of those. You know, you don't. So, so it's like. And you don't find any yeses. So it's really a tough thing. But yeah, you don't, sadly you don't get like actually like no. Which would make it a little bit easier in some ways more, more transactional. But yeah, we, we were ripping and trying to raise money and it was super hard and we kind of stitched together a little bit more. But then when with Shark Tank aired, I mean not only did we get the sales, but it also then gave us this sort of like, you know, it's just extra boost in every position including raising, you know, a little extra capital.
- [17:08]
A
Yep, got you. So that really got to put you guys on the map in a big way. You made a hundred. On the first day, you made a hundred thousand dollars and, and to by the third day you did $175,000 in sales. What did you do immediately after that sales bump to make sure like you could meet supply logistics, all of that and customer demand.
- [17:35]
B
You know, it's funny, like, luckily I had over ordered the door bot. I mean like it's, it's More. The other question, which is what happens if you had not gone on air is I would have had a ton of inventory and no one to sell it to. So, you know, and this is like, it's like, why. It's not advice because it's like a. Like this is like the worst thing you could ever tell someone is order too much and then pray that something good happens. I mean, it's like such a. It's. It's. You're praying for a lottery ticket. We got the lottery ticket and the lottery ticket was Shark Tank because we had to order that stuff way before we even knew we were going to be on Shark Tank. I mean, and that's the problem with hardware is like, the minimum order sizes are so big, especially for a startup. I mean, you're talking about ordering 20, 30,000 units. Like, you know, it's. It's like, you know, five, six million dollars worth of stuff. Like, how do you do that when you're literally haven't sold a single thing yet and have, you know, zero. Marketing, distribution, whatever.
- [18:34]
A
Yeah, it's. It's wild. Like, you talk about fear. Like, you must have been so worried. Afraid, stressed. No co founder, right?
- [18:46]
B
It's no co founder. I think I'm more worried, afraid and stressed today. Thinking about it, like, it's almost like in the moment I was so. I. It was like I was so in the moment that I didn't have the time. It's almost like I didn't have the luxury to be stressed. I mean, I was stressed. I shouldn't say. Like, I was. I was stressed about getting stuff done. I was stressed about, like, are we going to get this out? Is it going to work? Like, I was stressed about like the, the execution parts, but I wasn't. You think I'd be more like, holy cow, like, we're going to go. Like, I'm going to go out of. I'm out of money, I'm going to die. Like, this is going to be terrible. And I sort of had it. But not. I've thinking about. Thinking about it now makes me more stressed than actually in the moment of it back then. And I think it's how like professional athletes, when they're at that big moment in the game and you're like, how do they do that? How do they make that shot? How do they make that whatever? And I think you do it by like, it's actually you're not thinking about it. It's like in that moment, like, that's when like a professional really rises up to the occasion. And if, if I'm a professional at anything, I think that is when I'm the best is like when that, when that pressure is like, you know, un. Imaginable. Yeah.
- [20:02]
A
And where do you think that comes from?
- [20:04]
B
You know, I, I'd like to say you could sort of learn it. I, I think, I think it's a little bit of just who you are and it's why, you know, people should find who they are, what they do. I think so it's who you are and it's also like having a mission that you care about. So I think, you know, when, when you match something you care about with, you know, a. The ability to sort of just keep pushing. I mean, it's, you know, one of my, I don't have a lot of good traits, but like, one of them is like, I never stop. Like, I just keep grinding and I always have, I just, I just always have. And so I think. And I. And overall, you know, there's always people that get lucky in startups and I think that's a good for them. But I think it's tough for the community of people that are entrepreneurs because it creates a lot of like, mental health stuff where you see someone just, you know, do something for three months and they sell it for a ton of money or they get, you know, whatever and it's a huge win and you're out there grinding. For most of us, I think for 99 of us, it's. We're just grinding. It's tough and it's like, it's, it's a, it's like a mental health thing. It's really, really tough. And so how do you keep going is. Is a. It's brutal. It's a grind.
- [21:17]
A
Yeah, I agree. 120 along the way, you know, you've had these trials and tribulations. I want to go through them. But before I do, in 2014, you know, autumn, you change the name of the company. It was Doorbot to Ring and you said, you know, your wife helped you identify, you know, changing and getting really clear, doubling down on this central mission around creating a ring of security around the home, not just selling a doorbell. How did you make sure that you were able to make sure you'd already had millions of dollars in sales? How did you make sure that the transition was successful? And the, the mission was really clear with the new name.
- [22:07]
B
So I, One of the other things I fairly quickly came to with again, Doorbot Ring, like the, the company call it was that I wanted to Sort of go big or. Or die trying. But I didn't want to. I didn't want to, like, have a small business. Like, I didn't want to limp my way through. And I've seen a lot of companies, especially companies that raise money that end up like, it's almost like they're. I call them ghost ships. It's like they have enough money to stay in business, but they don't ever actually achieve anything. And so it's like, to me, like, that's, like, that's actually purgatory is being stuck where you're sort of in the middle, like, you're not going out of business, but you're also really not, like, making an impact. And so I had this idea, like, we are going to go for it on everything. Like, we are just going to drop the hammer and go for it. And the name was one of those things, which is like, we saw quickly that Doorbot was a bad, it turned out, terrible name for a product that goes on your front door. People, the front door is like a cherished area in their minds, how you enter a home. They want names and brands and things that fit that emotional sort of concept that they have for the front door. And Doorbot was like a punch in the face. It was just a terrible name. It didn't fit how they felt about that area of the house. And we got. And again, this is where Ground Truth is so great. I was on every email. I saw the feedback very quickly and realized, like, we have the wrong name. We need to rebrand this business. At the time, it was also, we need to also rebuild the product. We need to, like, it was kind of like a, we need to redo everything. And again, I guess I'd say the lesson that is good is, you know, we were able to. We were willing to iterate fast. We were willing to sort of break, not have any of these sacred cows where, you know, you can't change something. And we were learning fast because we put it out there. And I think a lot of times people try to, like, they iterate without putting something out there because they don't want to sort of have the embarrassment of the fail. Whereas, like Doorbot, I'd say in some ways is a complete failure, except it was a complete success because we learned everything about the video doorbell market quickly and iterated on it by learning that directly with Ground Truth data from customers. Yeah.
- [24:32]
A
And when it came to the rebrand as well, I'd love to know, was there much confusion or like, like what happened, you know, when you made that shift, was there much confusion?
- [24:46]
B
So we were lucky that we had not hit physical distribution yet. And the real. So the reality was when you kind of boiled it down, the only place someone could buy our product was at our website. And so changing the name at that time was simple because you just redirected the website like you, you, you were able to control, if you think about it, all the traffic, like all the links, all the news things, which we actually had a, a decent amount of. So you don't want to throw it all away. But it all went to doorbot.com or get, I think it was getdorbot.com. we didn't even have doorbot.com and so it all went to get door to getdoorbot.com so you just put a interstitial page that you. Getdorbot.com is now, you know, now ring.com and then you hit them to ring.com and so we were able to move the traffic so we didn't lose any of the sort of the other stuff. The other thing we found is that on like the press, people like they love this kind of a story. So like the press gobbled it up. They loved a rebrand story and a like underdog tries to, you know, go like, like Doorbot had certainly challenges and they were very public. And so it was like, I'm not stopping, I'm doubling down. We're going for it again. And it was incredible. Like at that point in our sort of cycle of, of startup, that's when people wanted to build us up. Like the press actually wanted to help us. They wanted to support this up and coming entrepreneur. They then turn, you know, when you get big enough, they then turn the other way. They want to just tear you in pieces, which is, you know, it's fine also like, I guess like when you're, when you're big, you can handle it.
- [26:23]
A
Yeah. And I'm curious as well, the domain name, are you able to share, how much did it cost? How'd you get, how do you get the money to pay for that?
- [26:33]
B
Also I did write my, I wrote, I wrote my book and so it's, it's in there. But yeah, I, the domain name was crazy because I went to one of my venture capitalists, you know, who is one of our seed investors and I had, I asked them for a meeting not to get more money, but I needed to sort of run by them the pitch that I was going to be putting out there to try to raise more money as we transition to from doorbot to this new thing. And I pitched them on this whole, like, what we learned and what that new thing was and how, like, what that product would look like. And at the end of it, it said, you know, we, we don't. We need a new name. Like, the, The Doorbot name is not good. We know that we're going to rename the business. And so we're looking for a new name right now. And I didn't mean it like, to have them help me. I just spent, like, FYI, we're going to rename the company. And one of the partners there, Hame Watt, this is at Upfront Ventures in la, said basically just quickly was like, what about ring? And I was like, it was funny too. Because I'm like, I don't know. It was a good. But he's like, you keep saying the ring. You keep saying ring.com, ring this or not ring.com. he said, you can do like the ring of security. Like, you've used the word ring a thousand times. And I didn't even notice I was saying it. And then I saw that Ring.com was available for $2 billion, I think was the first offer. And through a crazy set of negotiations, we ended up getting it for a lot less. Like, you know, about a million bucks. And we also were able to create the payments. And again, great, you know, from a, you know, advice or whatever I call it, or learnings to other founders, is just because something's a million dollars and you can't afford it doesn't mean you can't have it. You just have to break the payments up. And so I asked, you know, I sort of said to the guy that owned it, I said, like, I'll give you this down, which I had $187,000 in the bank at the time. So I said, I'll give you 175,000. You know, it was like, basically about what I could give him. And, you know, today it will pay you over X years and do this payment. And, you know, it's kind of like, okay, and, you know, and from their side, what was the harm? Like, he was going to get the money, and if I stopped paying, he was going to get the domain back. So, like, it's, you know, it's kind of like not that bad either way. And so it was a good way to figure out how to kind of finance something, you know, when we didn't, I certainly did not have the money to buy it.
- [28:56]
A
Yeah, that's a great story. Thank you for sharing. I'M the same like for the founder. F O U N D R. We're not found as correct spelling. That's a big Chinese company. We can't get that one. But our brand is founder without the E. That cost around 80 grand and I didn't really have that money at the time either. And I met somebody that was like a domains acquisition expert and she helped me negotiate and we broke it up. 12 payments, you know, 12. 12, like 12 payments over, over literally 12 months. Like it was. Yeah, it's 100, like, and I didn't have the money. Like 80. 80 grand for a domain is a lot of money, right? For early business. Yeah.
- [29:36]
B
And again, I just take that, it's not just domains. Like take that into anything in your business. You know, a lot of times people will lean in and especially, you know, I looked at it as if we couldn't pay for the domain, it meant the business went out. Like, again, to this idea that like we wanted to be big or zero. If we couldn't pay for the domain, it meant we went out of business. If we went out of business, who cares if the domain went back to the owner? Like, what do. I don't care. Like, so from our side, it was so simple of just saying I'll pay you over X years. If we stop paying, it's because our business failed, which means you can take it back, which is good for them. And so again, I think, like align with that. If you're trying to finance something and you can get someone to believe in it with you, like get them along for the ride. And worst case, if it goes back to them, who cares?
- [30:26]
A
Yeah, and I bet you the person that sold you the domain wish they had to take an equity instead if that was up for grabs.
- [30:33]
B
I mean, that's the, you know, the craziest thing is I would have given any equity at that point because cash was, I literally, I gave, I literally gave this person like all the cash I had left at the time. And so, yeah, I would, I would have done anything to have reserved that cash. You know, who knows exactly what I would have given in terms of percentage, but it would have been high. Like, it would have been much more than the million dollars because to me, a million dollars of cash was probably worth, you know, $10 million of cash in terms of like, you know, from. Because I just couldn't get the cash. I couldn't raise the money. So I, I, yeah, I would have given a lot. I bet you would have given like 5 or 10% of the company at that time which would have been, you know, after dilution or whatever, probably 30, 40, 50 million. So probably 30, 30, 40 times what it was.
- [31:22]
A
Yeah. There's a lot to be said in like one word domain names. The strength of it from a branding perspective. And you see like a lot of Silicon Valley startups and like it is a strong branding play. Like the, like they're not stupid. They always encourage startups to do this for a reason and it's so powerful to build immediate trust. But yeah, I think, I think it's a smart move. So.
- [31:51]
B
And I do think, I think to your point, Brand, I actually used to not think this. So like I, I would have been on the other side being like it's so stupid that someone's gonna pay this much. Like why would a company that's basically like, like, like Doorbot to Ring. I mean a friend of mine was, I mean he literally assaulted me almost saying like you are gonna bankrupt your business buying ring.com. like this is so dumb. Call it anything. Like call it whatever you want. Like just get a 999. I get a $9 domain name. Like why are you doing this? And I think that is as silly as it sort of can be. It's like I think Brand does matter. Like I actually, I really am at this place where I believe it maybe even matters more than sometimes like the tech. I mean and I don't want to discount the product but brand matters 100%.
- [32:35]
A
And your domain name matters. Like if someone's never heard of your product and you've got a one word domain name and it's a known word, you're like wow, okay, this is, this is the real deal. It's not just some random drop shipping Shopify spun up type product that's bought off AliExpress. It's like okay, like even just subconsciously in that first second you're like, your mind goes, you trust like that this is legitimate. So yeah, it speaks volumes. Yeah. Especially for a mass market product. If you're going mass market, want to appeal to a wide, wide range of people. I think it's, yeah, it's clever and if you can afford it, why not? Yep. So I want to talk about margins. So you we've talked about scaling a hardware business. It is expensive and it is so difficult for a business like Ring in order, you know, have inventory of 6 to 12 months in advance. What, what kind of cogs or gross margin targets were like are a non negotiable where you use to just kind of Work through the risk pace.
- [33:41]
B
So I mean again to start and this is what's scary is like the first ones that I bought, I was upside down on every sale. Not, not door but we actually made a little money on and that was okay. But we started doing the ring. Like we, we just the. I know you could, here's the problem with hardware. Like you know how many, how much it costs to buy 100,000 chips, a million chips, 10 million chips. You can see how like cheap it gets. And if you want to access like it really starts at about a million units I would say or a hundred thousand to like a million units. So we started to get these like big drops of cost across the board. And so you know, I, I kind of took the approach that we're going to lose some money to start but to get to higher volume so we can make the cogs, which that was really tough. And so we definitely raised some money around that. We then did have though we always had like a path to profitability. So for, especially out of, on the economics of the, like the unit economics of the customer. And I think that's when people see a company losing money and they think like, oh look like you can just go lose money. And it's like some companies by the way do, and they don't actually get themselves out of that because they didn't have a plan. Like we weren't losing money without a plan. We knew that when we got to 100,000 units it would, the, the cost would be you know, $10 less, $20 less. Then we could do like we knew all like where we were getting to and what we'd have to invest to get there. But that's part of our problem the whole way is as we grew we went, you know, from revenue. When we hit revenue we did 3 million, 30 million, 170, 480. And the cash, it's crazy. And the, the cash need to, you're asking about like, you know, how do you order inventory? It's like you're talking about when you're a 30 million dollar company, you're ordering like 200 million dollars of inventory that you're paying partly for. And so it's, it's like insane. And if you did, if like the business slowed down at all in that process, if you weren't right, I mean you are dead.
- [35:45]
A
Yeah. So let's talk about that. Because you had a near death story where you raised you, you were expecting 100 million to, to kind of fund that next wave of growth and inventory and they pulled the pin.
- [36:03]
B
Yeah, that was, that was. That was a tough one. And pulled the pin is exactly the, the right, you know, the, the right metaphor for it. And we were at. It was right going into the holidays, so we didn't have the sales hitting yet. We had all the inventory, all the money outlaid, and we had a big round of funding coming in. And it got affected by this lawsuit that we had that came up that was, you know, I'll say not intentional in terms of, you know, the, the decisions that got us into that were sort of. Each one didn't feel like any of. None of them felt like they were putting the company on the line. But, you know, as it sort of got deeper and deeper, you realize like you were getting deeper and deeper into it. And so, yeah, we all of a sudden, you know, we're talking to our factory and saying, listen, if you don't keep sending product to us, we're going to go out of business. And if we go out of business, these things all become bricks and you have nothing. And they're saying, well, you owe us 50, 60, $70 million and you need to pay us. And so, like, it was a terrible time and the only way we got through it was one is not paying some suppliers for a certain amount of time. But the other thing I did was I just focused on also sales. Like, I went back into this, like, just very calm, you know, like, the only way to get out of it was to get. Have a great business and like, and fix the problem. But also just like, I just focused on selling. Like, I just was like, got the team focus and we just kept our heads down because it would have been easy to. Honestly, like, just like you could have just exploded, like the whole business, like, everyone could have just gone crazy.
- [37:53]
A
Yeah. And you went on. I think it was qvc. Right. That was a. That was a. That was the big, big game changer. How much did you sell on QVC?
- [38:02]
B
$23.6 million in a day.
- [38:05]
A
That is insane.
- [38:06]
B
It was, it was, it broke the record, I think, for that year of qvc. It was a sellout of the product for the day. It was, it was like unbelievable. And that was the, you know, it's like the Black Friday sort of weekend. The. The black. They call it Black Saturday. So it's like the day. The. The Saturday of Black Friday. So it's a huge sales weekend, but that was it. Like, we just had to. We just had to win and sell everything. And we had one way out of this thing. Was. Was to get ourselves up.
- [38:35]
A
And before the funding got pulled, did you forecast that level of sales that you had that you had to make to know?
- [38:42]
B
No, we didn't. I mean, like, the overall sales for the holidays came in way higher than we had thought the whole way through. So we just were able to just kind of. And yeah, and it was focus. It was certainly. We sort of pushed it. It was also just luck and. And that we had built a brand that had a lot of momentum going in the holidays and people. We became like the number one selling hardware product for the holidays. It just became a huge phenomena of that holiday. And that was obviously. But, you know, what a weird thing to be selling like that and having that and at the same time knowing that basically you're probably losing the business because it's. Because, you know, we had this lawsuit thing and if it didn't get solved, we couldn't raise any money. And as much as it was selling, the cash flow was going to kill us because we had been so. We were so upside down on cash flow.
- [39:41]
A
Do you think if you didn't have that level of pressure, you would have been able to generate that amount of sales?
- [39:49]
B
Probably not, because everybody. And this is what's cool about being transparent with your teams. I think a lot of times people get scared of telling their teams when bad things are happening, but I find that the more transparent you are with them, the sort of, like, it's people. Like, people would say, like, why did people stay in the business if they thought it was going out of business? And it's like, actually the opposite. People, People were like, don't even pay me. Like, I'll do anything. Like, I will. Like, so it's. It's amazing how humans want to be part of something and fixing something and helping something and how, like, good they are in those times. And so we were super transparent with everyone that, like, what kind of the conversation, you know, what we needed to do to get out of this. And so it wasn't just me. It was like the collective team was working to save our lives. And they were working like, as if it was life and death. And I think without that constraint, no, I don't think we would have been able to have as crazy of a sales bump as we did in that Q4 of 2017.
- [40:55]
A
And did you have the QVC spot booked before that?
- [41:00]
B
Yeah, it was booked. It was. It was booked before that. But still, I think, like, just the. The, like, even me, like, I mean, I did 12 hours of live TV that day on QVC you know, would I have worked? I worked for every sale. I was just like, I was not willing to. I brought the energy. I was like, you know, and so would I been as good on it if I had, you know, felt like I had all the money in the world and didn't need anything and we're fine. I'm not sure, you know, who knows?
- [41:31]
A
Because also, 45 days later, that's when you sign the term sheet for Amazon, right?
- [41:37]
B
Which. That's the. I mean, that's the craziest. Like, you know, that's that. And that, I think that is the greatest example of, like, true, you know, founder, entrepreneur or whatever is. Is you can go from literally being 70 million, negative 70 million and facing complete death and, you know, less than two months after that, signing a deal for $1.15 billion or sell to Amazon. And, like, so, like, the, the, the ups and the downs are so, like, the highs are so high and the lows are so low and they could be so close together.
- [42:08]
A
Yeah. It's crazy, and it's an interesting thought. You, you're bringing me back to a conversation I had with a team member quite a few years ago where the business was scaling really well and we're doubling down on this one channel. And he said, oh, you know, what if. What if things break? Or what if. What if we can't keep up that same performance on that channel? I'm like, well, we've always got these other channels that we can kind of double down on if we need to, but we don't want to. And he said to me, well, if we can, why wouldn't we? And that always. That I always thought about that conversation because he was right. Like, you know, paid advertising. Yeah, like, our channel, like, that channel really started to die off. We were some of the biggest spenders in Australia on Facebook ads, and it died off. And he was right. Like, why. Why wouldn't you? And it's kind of. That kind of. You must have thought, like, hey, well, if we just. It all worked out really well for you. But it's an interesting thought that you guys, you and your team had the capability, but it was only that outside pressure that forced you and that constraint that forced you, that pressure to really kind of take it up a whole nother level.
- [43:16]
B
And you do. You wouldn't want to, like, that kind of pressure. You wouldn't want to, like, artificially try to put on a team. But I do think it's a good, you know, certainly constraint, you know, like, like, necessity is the mother of invention. You know, pressure does make diamonds. And so you do need to have, like, this is why I worry about the AI startups that are happening today that raise, you know, literally hundreds of billions of dollars in a first round is without the pressure, without the constraints. Like, I worry they're not going to make diamonds and they'll cover it up for a little bit because that's what always happens. But, you know, in two or three years, when you have to be a real business, like, are you going to have built and invented and really constrained yourself to be a real business, or are you going to be a kind of giant mess of cost and process and politics and crap?
- [44:10]
A
Yeah, it's a. It's an interesting dynamic. Raising money, bootstrapping. What do you choose? We were talking about a little bit offline, and, you know, you've raised a sizable amount of money. Worked out really, really well for you if you, you know, now you're. You stepped down as CEO of Ring. Now you're back as chief inventor.
- [44:38]
B
Well, I was actually. It's funny, I was always the chief inventor of Ring. I actually never. I was. I mean, I guess technically I was a CEO, sure, but there was no one else in the chair. But I was. I always had the title of chief inventor. That's always been. And again, to, you know, to brand what an important thing, because I'm not a traditional CEO in terms of operating a business. I don't like to operate the business. And so by branding myself as the chief inventor, I was able to lead the company, lead invention, lead sort of the mission, but also allow for other people to brand them in the company themselves as people running and operating things without stepping on me. And so it allowed, like, I gave the sort of the autonomy to the rest of the team to do some of these things that I wasn't good at, versus just trying to call myself the CEO, which, again, that brand matters. No matter what you say. If you're the CEO, you're the CEO. And so I was. Everyone always knew me as the chief inventor.
- [45:33]
A
Yeah. And so you're back in the, you know, back in the helm. And I'm curious, you've recently got a book coming out. You wrote a book? What compelled you to write a book?
- [45:48]
B
I think the story, it's not that much probably crazier than any other entrepreneur story, but entrepreneur stories are crazy. And so I felt like at some point I kept telling these stories of what we'd done, and people said, that's amazing. And I. That kind of was like, kind of kicked it off, I'd say. The other side of it that I didn't realize would be so important for me is it was like a therapy session. It allowed me to unpack all of these things that I had done, all of these, like, and really unpack them. I mean, really. You know, writing a book allows you to really think them through in a different way. And so for me, it's probably one of the best mental sort of things I've done in a long time of just trying to, like, kind of the healing process. Because it was a. This was a crazy journey. I mean, it's. There was lots of ups and downs and that stuff. Like, I think that's something people don't respect enough is just how, you know, impact, like, how much that hits you as a. As a human being, as a person, and why it's important to have the people around you, you know, the sort of your village of people and support. Because it is. It's tough out there. Like, it's tough. And some people are, I guess, a little tougher than others in it, but not me. Like, I need help.
- [46:57]
A
Yeah, no, I respect that. And, you know, ring scaled from 75 employees to 1,000 employees in 18 months. Like, that's extreme scale. And this is, you know, you said you started many other inventions or, you know, product ideas, but this is like the. Your first real business. It's. It's seriously impressive.
- [47:20]
B
Almost no one's. Like, there's. There's a. Almost like only a handful of people in the world that have seen that kind of growth. I mean, like, it's. It's like, that is just like, it's not healthy. The other thing that, when you. When you say, like, you know, it's like you look at the scale, you're like, oh, you went from, you know, like. Like, you know, kind of. Yeah, 50, 60, 70 people to like over a thousand in, you know, sort of a year. That's crazy. It's like, the problem is also when you're doing that, not only are you going to a thousand people, but the people you've hired. So, like, the number 200th, like the. The head of customer service, for example, that you hire when you're doing 30 million is not necessarily someone who can run it when it's doing over a hundred million, that happened in less than. In less than 12 months. And so it's not even that you're hiring a thousand people. It's that you're actually. The turnover is in there also because a lot of the people you're hiring are no longer able to scale to the jobs you hired them for because the business is different. It's not their fault. It's like, it's a totally different company every few months.
- [48:15]
A
I can only can't even begin to imagine how much of a mess that would have been.
- [48:20]
B
It's, it's, it's a total disaster. It's like, that's why, like, you hear, like, oh, it grew like this. Everyone's like, that's so cool. Or you, you, you know, you added so many people. Oh, that's so cool. It's like, it was a disaster. It was like, literally a giant disaster.
- [48:36]
A
Did you need to scale up to that many people?
- [48:39]
B
Oh, we probably were under. I mean, again, like, it's also like, think about how long it takes someone to get productive in their job. It's probably, you know, a month, two months, three months, whatever. If you're growing 3 million, 30 million 170, 480, you have to hire, like, the customer service team. You have to hire them, like, months before it gets to that scale. You literally, you just cannot do it fast enough. Like, you, you cannot do anything fast enough. And so you start to just be okay with trying to be as good as you can be because there's just. There's. You're never going to get to everything. I mean, I was working. I was probably, honestly working 20. Probably working 18 hours a day. Truthfully. Like, I mean, like, literally, like, I mean, people always say, startups, I work so hard, but there was a time when I was just not sleeping, you know, minimal hours, you know, three, four hours a night because I just had so much to do, and I wasn't even scratching the surface of getting done what we needed to get done.
- [49:40]
A
Yeah. Wow. So during that time period, how did you maintain focus? Like, did you. You had one KPI, right?
- [49:49]
B
Yeah, I'd say. I mean, the, the, the overall company KPI was, you know, make neighborhood safer. And that was it. And that was again, like, looking back with that kind of growth, if we had tried to do some sort of goal around growth, like, you can't. When you're doing 30 million, you can't say to the team, the goal is like, 170, and then the goal is 480. Like, like, people would just be like, that's like, it's, it's, it's like a joke. Like, everyone would laugh at you. And so the goal was to do, like, as grow. So, like, when my head of sales came back and closed, you know, a store, like a chain of stores. He was like, that's amazing. We closed this. I'm like, great. What about the next ones? Like, it was never, like, we never. It wasn't like there was no goal. Like, if, if we had set a goal, it'd probably been like, close one set of stores and then he would have hit the goal and would have been happy. And instead it was like there was no goal. It was like an infinite goal. And so I think that is why, partly why we grew so fast. Now, the other side of that is we ate up all our cash and almost killed ourselves. So, like, that's bad. So maybe, you know, maybe there's a balance there. And, like, you know, that's even writing the book. That's kind of what I saw is I'm like, maybe we should have slowed down a little bit. Like, maybe. Maybe we should have had a little bit of break and gas, you know?
- [51:00]
A
Yeah. But look, it worked out so well. And yeah, it's a wild journey. So. So, Jamie, we have to work towards wrapping up. What a fantastic story. And you've been so, so giving and so open and honest with your experiences. A couple last questions. One, where's the best place people can find out more about your new book?
- [51:24]
B
So Ding Dong, which is what we called the book, what I called the book for many reasons, is available on Amazon.com awesome.
- [51:33]
A
And two, just final parting words of wisdom that you would want to share with aspiring early stage ecom founders. People that are just getting in the game, wanting to launch a physical product business, build something, a product that, you know, helps millions.
- [51:50]
B
Yeah, I think in, I think AI makes us even more important, which is, is just like work hard and work towards something that you believe in. Like, I think if you, if you believe you're doing something that's going to benefit the world and you work hard, those are the two best ingredients to success that I've seen.
- [52:07]
A
Incredible. Well, Jamie, thank you so much for your time. Congratulations on all of your success and thank you for taking the time to give back to our community.
- [52:15]
B
Thanks for having me.
- [52:16]
A
Hey, founder fam. Thank you so much for tuning in today and if you enjoyed this episode, please take the time to leave us a review and let us know what you think. This podcast is a hundred percent free. We work so hard to go out and find the most successful founders and entrepreneurs all around the globe. So your feedback helps us grow, improve, and even bring on more incredible guests and insights. So if you haven't a second, please take a moment and leave us a review. It really means a lot to me and the founder team. It makes so much of a difference. Thank you again for listening and I'll catch you on the next episode.