On this episode Josh speaks with Chris Prendergast, Founder and CEO of Jamstack. They talk about the path Chris took to develop and get his product ready for market.

With a background in engineering, design, music and education, Chris is dedicated to providing engaging and collaborative musical experiences via new and exciting hardware and software.

He first studied engineering and physics at McMaster University and then went on to get a teaching degree in Australia. Throughout his university career, he was heavily involved in leadership and camp counseling. His first job was the head of science at a small private school in Ontario for three years. When an opportunity to be a part of a young exciting Ed-Tech start-up company arose, he jumped at the chance.

Through the last four years, he has worked with them to develop exciting hands on workshops for students and facilitators around Canada. His love of music and guitar playing has been always been consistent throughout his life, and through tinkering and exploration developed what is now the Jamstack.

In today’s episode you’ll learn:

  • How does a science teacher decide to become an entrepreneur?
  • How to progress on limited funds?
  • Pros and cons for having contractors versus staff.
  • The challenges of creating the first prototype and how to overcome them.
  • How to find a manufacturer you can trust?


Transcript

Narrator:         Welcome to The Sustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In The Sustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful. Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.

Josh:                 Hey, how are you today? This is Josh Patrick. You’re at The Sustainable Business podcast.

Today, we have Chris Prendergast from a company called Jamstack. We’re going to bring Chris on and he’s going to tell us about why he left the wonderful world of being a science teacher to joining the hard and tough world of entrepreneurism – although I’m not sure that’s always true, but we’ll bring Chris on anyhow.

Hey, Chris. How are you today?

Chris:                I’m fantastic. Thank you for asking. How are you doing?

Josh:                 I’m doing well.

Chris informed me that he is a friend of ours from the north. In Vermont, we happen to like our Canadian friends.

Chris:                That’s good to hear.

Josh:                 Yes. In fact, my son used to always go around telling people that he was a Canadian. I never could quite figure out why but he would do that anyhow.

Chris, you have lots of interesting things to talk about but let’s start off with why a science teacher decides to become an entrepreneur.

Chris:                Sure. Yeah, it was a slow thing, actually that happened. I never knew that that’s what I was or what something that I would be happy doing. I started off just teaching at an elementary school, a small private school. I was lucky enough to get a teaching job out of Teachers’ College. It was really hard. I’m not sure what it’s like over there. But it was very challenging. But I got a job at a private school and I was happy. I really enjoyed being with the kids.

After three years, I kind of felt like– it’s not that it wasn’t challenging, I just felt like I wasn’t being challenged and I wanted to do more innovative things. I was pushing the envelope as far as I could but there was kind of some push back there. Luckily, this edtech startup approached me and I ended up going over there. That was an incredibly fulfilling experience. I worked there for four years. That was my first taste, probably, of what entrepreneurship really meant, and what startup culture was like, and what resources were available to you in our area, and how that all worked. Between all of this, I started off in engineering and I was always a tinkerer – building things, and a guitar player, and I was frustrated with the experience of playing the electric guitar.

The seminal moment, I always tell people was when I wanted to play along to another song and sound like the guitar player of that song. That process was incredibly difficult and annoying. It felt to me that it was ridiculous. Really quick, you have to get the pedal that the guitar player was using and then that needed power. And then, you had to drag your amp out and then that needed power. And then you can’t play the music through your amp because it’s only a mid-range speaker and can’t handle both at the same time, so then you need to plug your computer into your stereo system and turn all of those things up and try and get the levels right. It was just this 15-minute pain in the neck. I just remember thinking, “I wish all of this was just on my guitar. How cool would that feel if everything was just with me all the time?” And then, got obsessed with that for a little bit – built the proof of concept myself – not to start a business, not to really bring it to market or anything like that. I was just obsessed with the fact that I thought that “It could be done and why hasn’t anyone done it?” And I wanted to use it myself.

Slowly but surely, I started showing people what this was like. I can talk more about this later but saw a path to maybe make this a reality. I want to be clear that I didn’t just quit the job – teaching. I did both for a very long time before I felt that it was the right time and that I really didn’t have a choice. I couldn’t do both things anymore.

Josh:                 Are you familiar with a guy named Michael Gerber who wrote a book called the E‑myth?

Chris:                Yes. I’ve read it. Great book.

Josh:                 Okay. Well, you are the posterchild for his book. One of my favorite quotes he has in there – and there’s lots of things around the E-myth that I do have some issues with. But the one thing I really like is his definition of a private business owner who is “a technician, who’s had an entrepreneurial cramp.” That definitely sounds like you.

Chris:                Yup.

Josh:                 I’m assuming you didn’t have a whole lot of training in how to run a business?

Chris:                I’m embarrassed to say I knew nothing about business. I knew nothing about cashflow, documents, business plans, marketing strategy, marketing in general. I knew about design. I didn’t know about proper product development. None of that stuff. I knew I was a good learner. And I knew I had good communication skills. And I knew that I knew what good design was. But that was about it.

And I’ve learned, in over the last two years, an enormous amount and in a way that I don’t think I ever could’ve at an MBA or anywhere else by essentially project-based learning, they used to call in the teacher world, where by learning by doing and by sitting down with mentors and other entrepreneurs, and innovation hubs, and workshops, and just trying and failing and all of those other things.

Josh:                 By the way, in my opinion, getting an MBA and then starting a business after you get an MBA is one of the more useless activities you can possibly pursue–

Chris:                There you go.

Josh:                 –because there’s nothing in an MBA program that will teach you what you’ve learned and what you need to know to get your business off the ground. Having said that, what was the biggest challenge that you faced when you were starting your business?

Chris:                Well, the biggest thing is always really refinancing. At first, I needed a path. I’m like, “Well, how does this even happen?” So I needed to understand how that happened. And, for the most part, you find out that there’s always a way – if you have money. But it’s how you–

I’ve talked about this a few times. I’m not trying to coin a term here but I call it the credibility ladder. The way it works is you, hopefully, through begging and borrowing friends and family, you get a teeny little bit of money. And then, all of that money needs to go towards usually a prototype where you have something – even if it’s a wireframe of what you’re doing, or a great render, or hopefully is something that actually works. And then, you use that to get as much credibility as you can. And you use that credibility again to get to the next point of financing, right?

So with me, with my dad mostly, and a little bit of savings, was able to get enough people together and a business plan together to apply for some funding by an organization here in Canada called Futurpreneur which lends money to early-stage startups. I had that chunk of change and I knew that– it ended up being about 45-grand. They’re great because as long as I had a great business plan and understood– I learned a ton during this. I had a cashflow document. I had to have a bunch of like a team in place or who at least I wanted to have in place.

I got 45 grand, so it was my task to take that 45 grand to the next milestone that would allow me to get the next level of funding. So, with me personally, to get a beautiful-looking prototype and launch a crowdfunding campaign. Then, the crowdfunding campaign got us quite a lot of financing and allowed us to do continued pre-orders for a period of time. Which then, the next piece was actually fundraising and raising capital through equity.

That was a long answer. But like that’s the way I look at it, when you’re an entrepreneur, on how you progress because so many companies get stalled out because they take every bit of cash they have and– maybe they developed their product farther than they really should and they end up getting to this point where it’s not quite ready to show anyone but they spend every cent they have. And then, now, they have no next step, so they have no second place to go. You’ve got to draw a straight line there because it’s hard enough if you’re going straight there but some people waver and go all over the place. I think that’s the number one most important thing that I did well to get where I am.

Josh:                 How many employees do you have today?

Chris:                Zero.

Josh:                 Oh, really?

Chris:                I have no employees. I have a lot of contractors that I talk with every day. For example, I have a virtual assistant who’s amazing and fantastic, who handles a lot of our customer service stuff. I have kind of our “head of engineering.” He’s a contractor, technically. He runs his own industrial design firm.

But no, it doesn’t make sense for me now – and may not make sense for a little while as well to have any full-time staff. We are going to hire somebody – probably a sales focus person, in the next six months or less. But, yeah, I’m full time. Everyone else is a contractor. There’s pros and cons to contractors and staff which we can dive more into. But, for me, that’s worked out really well.

Josh:                 What do you see as the pros and cons for having contractors versus staff?

Chris:                With a contractor, you get someone with tons of experience right off the bat. You can pay them on initiative-based work, so when you need them, you need them, when you don’t, you don’t, and you’re not tied down to that. Someone who may have other contacts in the industry is someone who you probably couldn’t afford to hire full time, usually.

However, the cons is that they’re not 100% focused on what you’re doing. Your interests are somewhat aligned but not perfectly. They, for example, if you happen to work with a contractor- I’ve been lucky enough to work with amazing contractors. But if you work with one and a larger client becomes more of a priority, you could get sidelined, for example, or not as prioritized as someone else. And you don’t always know exactly what’s going on. Sometimes, they’ll communicate within themselves because you’re not as plugged in to the discussion through the early stages of something. Having an employee is nice because you’ve got all the authority. You can do things 100% the way you want to but there’s a steep learning curve that everyone needs to have and there’s risk taking on that person. Whereas, you can be much leaner, usually, using contractors.

Josh:                 I would agree that you can be much leaner. I’m not convinced that there’s no training involved. They may have technical skills but they don’t know what you want and they don’t know how you want it. In my experience of working with contractors versus regular employees is that the amount of training– there actually isn’t much different except one is usually in your office and the other person’s not in your office.

Chris:                The training is different. That’s right. You’re training them what you need and how you need. And that’s where being a great communicator comes in. And like whether they’re sending PowerPoint documents or constant check-up calls, and you’ve got to be the squeaky wheel. And you’ve got a bug. And you’ve got to constantly make sure and be very particular. Otherwise, the tendency is them to do the easy thing, right? And that’s not what creates something that’s an excellent product.

I completely agree. Just, I guess, on the other side, if you hire someone, the training is just maybe a different kind of training.

Josh:                 Yeah. I would agree with that. So, where are you in your entrepreneurial journey?

Chris:                I guess, yeah, it’s me and the company are pretty tied together. We’ve done over $850,000 in pre-orders so far. We are shipping out to our backers at the end of this month, finally. It’s been a very long journey. We’ve got about 4000 people that have bought a Jamstack and they are going to be getting them– they’ll be leaving at the end of this month and arriving shortly thereafter.

Most of our major expenses are behind us. We’ve paid for all our tooling. Two patents as well granted which we are really excited about. We’re in the middle of doing some fundraising so that we can have some profit-making inventory and do some cool marketing initiatives that we’re excited about and, of course, start on some other products that we want to bring to market as well. We’re in the middle of doing that. That’s going really well. It’s taking up a lot of my time, to be honest, because fundraising is a very time-intensive thing.

Josh:                 It is. Are you raising funds through equity or debt?

Chris:                Equity, right now.

Josh:                 Okay. Are you going to be looking at fundraising in the future through debt or equity?

Chris:                That’s a great question. It depends on a few things. We’re probably flexible to both, if the terms are good, right? It depends on the debt terms, what they are. Sometimes, you don’t want to delude everyone. And if the terms are great them and the margins are great on what you’re doing, then debt sometimes is the way to go. Sometimes, equity can be lower risk and make more sense, especially if you want a strategic person with you. But, I imagine, we’ll always be open to both, probably.

Josh:                 Yup.

I assume you’re doing contract manufacturing as well as contract design?

Chris:                Correct.

Josh:                 How did you go about finding a manufacturer you can trust? Where is the manufacturing operation?

Chris:                The factory’s in China. I’ve been there three times now. There’s a few ways I’ve seen this done well. I’ll start off by saying we’re very, very happy with the factory that we’ve chosen. I’ve heard every horror story in the book and continue to. Everyone loves to tell you a horror story about manufacturing in China. That being said, it can be done well. There are definitely things you have to be careful about, even with a great factory, just making sure that you’re happy with the end result.

Finding that factory, we had two great resources with us. One is, when you’re partnering with a good industrial design firm that’s been in business for a while and has made — they had made audio devices before or at least been a part of that. They had connections in that world. And they also had connections to– there’s these third-party companies. They lie in between the contract design shop and the contract manufacturer. Their job is to liaison, to source, to find the right factory, to inspect and validate that factory, to be there when they’re producing the units, to be there and do checks afterwards.

We have another contractor – there’s three entities in this operation, that we were introduced to through the design shop. That was really important. Sometimes, they have relationships and you can get into factories that maybe wouldn’t entertain a startup, necessarily. That’s kind of what you want. I mean, it depends. But we ended up getting with a factory that makes speakers for larger companies which means that they are trained to do things properly and have a reputation to uphold. And, you know, we pitched them, “This was going to grow and do really well and that it would be worth their time in the long run.”

And then someone has to go there probably. It doesn’t have to be you. It can be any one of those two – the design shop people or the liaison people, to go there and check it out. There’s a bit of faith for sure. I mean, you do the best you can, and you vet, and you take a look at what else they’re doing. But really, I mean, you can sign anything you want. But if things go badly, everyone’s going to lose so you’ve got to just do whatever you can.

Josh:                 When you designed your product– can I ask you what your percent of gross profit is?

Chris:                I can give you an idea. We started off with a target. We kind of knew what we would be selling this for and realized what we wanted – if we wanted to do distribution. But things grew a little bit as we didn’t want to make concessions for quality and things.

We’ve got good margins. If we’re talking about our gross margin, it’s not quite good enough probably to do a massive retail endeavor right now with like a Best Buy, for example. But we’re only making 4000 units at a time which means that the factory puts a premium on that because that’s nothing to them. So, that changes drastically when you start to talk about 10,000 units or 100,000 units. But they’re healthy for online, for sure.

Josh:                 The point I was going to make, if I could tell this, is that one of the keys, in my experience, for having startup businesses be successful is to price your product so there’s enough margin, so when you actually do start running a real business, you don’t have to raise your prices by 100% to do anything.

Chris:                Yeah and it’s always easier to go down than it is to go up. That’s number one.

Josh:                 That’s true.

Chris:                You will be shocked with how many pieces end up falling away and what your margins really need to be like in order to be successful.

Josh:                 I also think you’re doing this very intelligently as you’re starting this off as a direct‑to‑consumer business. If you get to the point where you start scaling and you start having the ability to buy 30,000 or 40,000 units at a time, that’s probably the time to go start talking to Best Buy.

Chris:                100% and that’s the plan.

Josh:                 For two reasons. One is you can afford to. And two, you’ve sold enough where you might get their attention.

Chris:                Exactly. And get terms – that makes sense because there’s some really nefarious terms that can go in there. I’ve heard a lot of horror stories with Wal-Mart and Best Buy too where they had the right to like slash your prices or initiate buy backs. Wal-Mart has bankrupted companies by– “Oh, you know, it didn’t move as fast as they were hoping” so they just slash the price or make you do a buy back. I’m not saying that always happens but it’s reality.

So, yep, that was always the plan. Again, I was always thinking deeply about the right way to do this and tried to see how some other companies did it. It always just made sense to do it that way.

While on the topic of price, another part of price. You know, you can test that. There’s ways. I’m sure you’ve heard of the Tim Ferris books. One of the things he talks about in 4-Hour Workweek is go online and whether it’s– I think he uses eBay as an example. But we used Facebook and this was years ago. We saw what the click-through rate was when we advertised this product at $200 versus $250, versus $300 and saw how price-sensitive that was. I would recommend something like that as well. Or even if you can go out and just start talking to people and see if someone’s willing to actually put up their money for something – even if it doesn’t exist yet.

Josh:                 That’s called AB testing.

Chris, unfortunately, we are out of time for the podcast. I’m going to bet that people will be interested in finding out what it is you’re actually doing and what your little gizmo does. How would they go about doing that?

Chris:                Sure. Jamstack.io is our home on the web. Obviously, if you search Jamstack on YouTube, you’ll find lots of great videos there, too. But yeah, our main website, you should be able to find everything there.

Josh:                 I have one more question for you. Does your think work with bass or is it just guitars?

Chris:                It does work with bass, absolutely. Yeah. No, totally. We have a lot of bass players that are really excited about it. We might, at some point, want to make a bass version because it does take a lot more energy to reproduce lower frequencies than it does higher ones. But no, it works great as a bass amp.

Josh:                 Cool.

I also have an offer for you. I wrote a book which came out in January. It’s called Sustainable: A Fable About Creating a Personally and Economically Sustainable Business. It’s pretty easy to get it. You can go to Amazon and get a print version or a Kindle version there. Or, you can go to our book website where you get a couple of bonuses. That site is www.sustainablethebook.com. If you buy the book off that site, you get to have a free 20-minute strategy call with me and you’ll also get a 37-page cheat sheet for how-to implement all of the stuff that we talk about in the book Sustainable.

This is Josh Patrick. We’ve been with Chris Prendergast. You’re at the Sustainable Business. Thanks a lot for stopping by. I hope to see you back here really soon.

Narrator:         You’ve been listening to The Sustainable Business podcast where we ask the question, “What would it take for your business to still be around a hundred years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802-846-1264 ext 2, or visit us on our website at www.askjoshpatrick.com, or you can send Josh an email at jpatrick@askjoshpatrick.com.

Thanks for listening. We hope to see you at The Sustainable Business in the near future.

 

 
 
 
 

 

Topics: sustainable business podcast, Sustainable Business, prototype, fundraising, zero employees, entrepreneur, crowdfunding

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