Peak Design’s Crowdfunding Strategies That Raised Over $34 Million

0:00I really believe that if you're using Kickstarter as a way to test out an idea, you're going to fail.

0:16Hello and welcome to Shopify On Location. I'm Shuang Esther Shan coming to you from our space in downtown San Francisco. The Bay Area is a nexus of innovation. A lot of new product ideas are brought to life through crowdfunding. Then some of the successful campaigns turn into thriving businesses. And the poster child of this phenomenon is Peak Design. Founder Peter Daring launched his first Kickstarter campaign back in 2011 to fund his project, the Camera Capture Clip, the device that attaches a camera to a photographer's body, making it easier for outdoor enthusiasts to shoot their favorite moments.

0:59Today, Peak Design has raised over $34 million on Kickstarter, it remains an independent company without outside investors. Peter, welcome to the show. Thank you so much for being here. Thanks. Great to be here. So your love for the outdoors, travel, and photography inspired you to create the very first camera capture clip. Why did you choose crowdfunding to bring the product to life? Well, you know, it's something that became probably the most obvious business decision that there was, I didn't go into my entrepreneurial journey with a business plan per se. I just saw and I really believed in the product itself.

1:39And my plan was I was going to make this product, and I'd figure out how to sell it later. Frankly, Kickstarter just kind of cropped up in the meantime. And that was just probably the first piece of dumb luck that has really contributed significantly to Peak Design success. So the major reason for starting Peak Design also has to do with the freedom that you'll get. Why was entrepreneurship so appealing to you? You know, what's funny is that I never even contemplated trying to raise money. My whole calculus was how much do I have saved up? When am I going to go need to get a job to raise additional money?

2:17And by a job, I'm talking about at a restaurant, kind of to make ends meet. And it just never even entered my calculus. And probably that's in part because the capture camera clip, it was something that I was going to sell for$75. It wasn't some world-saving invention. And the goal was to make things for a little bit and sell them for more. So it just never even entered my mind that I would be raising money. I was planning on just literally going door-to-door to camera stores, which is something I did, and saying, hey, this is how it works. Do you want to sell this thing? And I was actually finding moderate success before the Kickstarter campaign.

2:53But when the Kickstarter campaign came, it was like, oh, this is the internet. This is cooking. And you have an engineering background, which helped with designing. You had a job, but you actually wanted more freedom, which I guess that scares certain people. But you kind of embrace that entrepreneurship journey. Yeah, I suppose that is. I know that a lot of people like that sort of security. And for me, I took four months, bought a one-way ticket to start it in Hong Kong. And this was just like the most exceptional journey of my life. I had no plan whatsoever, nothing other than freedom and the 15 grand in my bank account.

3:35And those four months just showed me how much I wanted to be an independent person.

3:46I was previously doing construction engineering, big projects for a big company. And I was always attracted to what it's really like to put physical work into place every day. But even more powerful than being a part of that for me was wanting to do something, showing that I could make it on my own. That's what seemed important. And you did over and over again, about to launch your 11th campaign on Kickstarter. So what are some tips for people who want to have a successful campaign? What are the essential elements? Number one, in my opinion, is the product. Like what problem is it trying to solve?

4:26Has that problem already been solved elsewhere? Like what is your unique selling point? A lot of approach Kickstarter. And I don't think they have a good notion of how big the problem they're trying to solve is it may be that it's just a big problem for them, or they perceive it a little bit differently. The first product capture almost every photographer who has ever put on a neck strap has experienced, wow, this literally hurts my neck. And I can't be hands free. I have to have one hand on the camera while walking. Every photographer who has endeavored to pick up a camera has experienced this problem, and that problem wasn't being well solved.

5:08And so you kind of look at the magnitude of the problem, people's ability to perceive it, and then what is your solution? How effectively does it actually attack that problem? Really, that's what defines an addressable market. These are all terms that were a bit foreign to me at the time, but there was something intuitive to me about that. And I felt like there's a need here, and the solution that I have aptly solves the problem. And so I think people are going to buy it. And I went into it with that kind of confidence. And there's like a huge component of storytelling there. How do you distill all the ideas and all of the things that you want to say in short, snappy sentences and really eye-catching visuals?

5:49Well, the edit button is your friend. But even, you know, you look at the progression of peak design. I believe that first Kickstarter video was six minutes and 30 seconds of me going on and on and on. The progression not just of peak design, but also of this like small entrepreneur getting their points across. Like back in 2011, it was early enough where the formula was still very much being defined. And it was not outlandish to have a six minute and 30 second video. It also goes to show you that attention spans have changed so much in just the 12 years that has passed. I mean, never, never, never would I take a simple product like Capture and take that long to explain it.

6:30And so we've been honing that edge over the years and the concision with which you explain ideas. Not sure I'm doing it right now, but it is critical to success. And I think a lot of it in the early days of Kickstarter is you want to address all the questions within your video. You want to hit all the points. And to your point, the way that we look at campaigns have definitely changed. And you evolve with that. Yeah, absolutely. We've evolved with it. And we've driven a lot of the strategy. And I don't mean to sound like we're making too big of assumptions there. But virtually nobody's done more Kickstarter campaigns than us with more consistency.

7:09And the degree to which we see kind of the imitation is maybe too harsh of a term, but like those campaigns that are very clearly inspired by ours. That's not to say there's not a whole ton of other original ideas and campaigns out there. But we've definitely been a part of kind of driving the current way to approach a Kickstarter. And having a successful campaign is just the beginning. the next stage is where all the stress happens, where you have to find manufacturers, and it's something that you had to iterate and perfect over the years. Give us some tips for working with manufacturers. Well, the first step, and this is something that a lot of people have made early on, is the time to look for manufacturers is not during your Kickstarter campaign and certainly not after.

8:00It's months and most likely years before your Kickstarter campaign.

8:09I really believe that if you're using Kickstarter as a way to test out an idea, you're going to fail. Even if your idea is good and you get traction, if you don't have the manufacturing dialed in, it's going to take much longer than you think to bring that to market. And then all the goodwill and the excitement that you've generated in that campaign, the air will be sucked out of the room. So you've got to be there, ready to come toward with a working product relatively soon after that Kickstarter. And that's challenging, right? Because the reason you do Kickstarter is so you can raise money. And the primary thing that you use that money for, at least in a physical product, is purchasing an inventory.

8:48And if you're saying, well, you've got to get far in the purchasing of inventory along that process, well, how do you marry those two? And really, it's a delicate dance of hitting it just right. You've got to get through your first article creation. You've got to get your product to be working well. And you can kind of work out the kinks and allow for those shipping timelines to happen. But if you go too early or too late, it's not going to work out well. So once a campaign reaches its goals, you now have to make the product. How did you go about finding the right manufacturing partners? And how did those relationships change over the last decade?

9:27At the beginning of a journey, you're not going to be able to have enough leverage to say to a manufacturer, we need you sourcing renewables. We need solar panels on the roof. We need you to follow BlueSign material procurement. These are all things that we get to impart over time as we grow in power. And there's a couple, I'd say Apple and Nike are the two best companies that I know that are really turning the screws on their manufacturers and making sure that they are as sustainable as possible. And let's be clear, that doesn't mean they're solving climate change at this point. But just being as sustainable as the current state of the art allows.

10:04It's something that I'm very proud that Peak Design has achieved a scale where we can also begin to play that game. Certainly not as deeply as an Apple or a Nike who are getting into the second and third tier manufacturing. But we're doing a great job with our first tier manufacturers and starting to do more with our second tier manufacturers. I'm pretty proud of that. It's very exciting. And I'm excited to get into your latest venture later on in the show. So after these successful campaigns on Kickstarter, it's also a great foundation of a customer base. How are you now talking to people outside of that community and using different marketing channels and tactics to reach a bigger audience?

10:48Well, I think like any, really any successful brand out there right now, marketing is something where you need to canvas a lot of ground. Because still in today's world, if you're not a photographer, you probably haven't heard of Peak Design. And yet, we make a lot of products for people that don't own a camera. And so we are, I mean, performance marketing through social and email. Yes, yes, of course. We've even run some billboard campaigns. We've got physical stores now that are important. We're just getting into the podcast interviewing. Excuse me, podcast advertising. The interviewing is great.

11:29This one doesn't cost a dime. But it's got to be a very broad approach. And my personal pipeline is I talk to my friends who are gearheads. They give me suggestions. than I go on the internet and read a bunch of reviews and watch a bunch of review videos, which all signs point to Peak Design. So yeah, talk to us about managing your reputation in so many different fragmented little pieces all over the internet. You know what's kind of hilarious that I didn't mention it? It almost certainly is the most important and biggest form of our marketing, but we've come by it very honestly. And what I mean by that is that we have not injected money into the influencer sphere or the review sphere in our past.

12:17And we've always just gotten a lot of great reviews and a lot of internet traffic. And I think that because that's happened organically, there's an authenticity that comes through that people are somehow able to glean. And it's honestly just now at this stage that we're thinking, gosh, maybe we should be actually spending some money here to be a little bit more intentional about propping that side of things up. I'm curious about doing that. I don't want to lose the organic nature of people talking about peak design. And I think there's a way we can do it without losing that. But I think that the sophistication of our marketing engine is kind of due to, we have such incredible creative and it's worth spreading that around a little bit more and smartly allocating marketing dollars more than Peak has done in the past.

13:11I mean, it's also a double-edged sword because Peak Design is known for its design. It also results in a lot of other creators and companies wanting to copy that design. How have you handled that aspect of competition? Intellectual property is a huge part of it. And we have a massive trove of patents and trademarks that we do enforce a lot. And frankly, we need to do a lot more of it because the brand is really starting to get ripped off a lot right now. And to a certain degree, there's only so much that you can do. And the cleanest way out of it is innovate the next thing. There's a line in one of my favorite My Morning Jacket songs.

13:57It's simple. It's they are the imitators. We are the innovators.

14:18And that is the role that we play in the market. We are here to innovate and make the next big thing or the next little thing. Our job is to create that. And as a result, we get to sell our products for higher prices because it didn't exist before. We are always going to have a trove of imitators behind us sort of nipping at our heels. And that's just capitalism, baby. You know, it really is. And it's okay. I'm not mad about it. It's just the way of the world. and we will fight hard to play fair with the rules and laws set up by this nation and others. But we're always going to have imitators and that is the price of being an innovator.

15:00Just moving forward and you will stay ahead of the game in a sense. I am joined by Peter Daring, the CEO and founder of Peak Design. Thanks for listening to this episode. I hope you're enjoying our conversation. And if you haven't already, please subscribe or follow Shopify Masters wherever you listen. And because we love to bring you helpful stories, give us feedback for the show with a review. Thanks. So let's talk about the Bay Area because I think the population in San Francisco in general are so open to new ideas and they're eager to support new startups. How has the city impacted when you were starting peak design and influence the company over the years?

15:47Massively. It's hard to describe. There's a culture of entrepreneurship here that is just so incredibly thick. And I think that other cities, especially since COVID, more people have gone other places and the whole notion of remoteness has taken off so much. But there is an in-person kind of magic to whether you're a software or a hardware company, getting something started here. And I got a lot of help from other people who, I feel like the most common tips and tricks I got were just about like 3D CAD software, and how to use that more effectively. But I don't know, there's just so many people going through the kind of hopes and dreams process here that you're bound to find relevant conversations kind of around every corner.

16:41And it's certainly a part of what has allowed Peak Design to be successful. And then the other part is just the incredible quality of workers who are attracted to this area. Again, I think that is diversifying, especially due to COVID and remote working. But no doubt it's been a critical part of our, at least our early DNA. Was it tough being a product-based company to try to exist in this space and also compete with tech companies against the talent pool? Not really. And one, there's kind of a little cottage industry. We're in the Dogpatch neighborhood in San Francisco, and it's much grittier.

17:25It's like where you find the kind of the more mechanical engineering and industrial design based companies. So there's good precedent for that. And there's just a lot of people who are drawn not to those big tech companies, but they specifically want something small and cool and different and unique. And so finding talent has never been difficult for Peak. I like the way that you think about how you are building culture in your team. One of the things that you brought up when we were chatting earlier was you were thinking of new ways to compensate the team. So it shows that you're constantly thinking about how you're structuring the company as well and rewarding the talent that decides to join Peak Design.

18:09Yeah, I mean, it's critical. The most profound thing that I can say in a business podcast has to do with what I call the purpose of Peak Design. You ready for it? The purpose of Peak Design is for the employees of Peak Design to live happy and meaningful lives. That is why we exist. And like, you can either take that as a trite statement, or if you really think about it, like, what the hell are we all doing here on this planet, right? One hell of a stroke of luck that we happen to be here. I'm one of those who believes we probably just get one crack at it. And I want for myself, I want to enjoy my time.

18:51And that's why I started Peak Design. It's because I thought it was a more enjoyable path than working for the construction company I was working for, which was also an enjoyable path, but this one more so. And having the ability and the privilege to get to hopefully inflect some of that upon the employees who work for Peak Design is a massively rewarding part of the job. The people who are most sincerely affected by Peak Design, a thousand to one over our customers or even our vendors, is the employees. So if I want that for myself, I'd have to be a pretty selfish guy and pretty unaware to not also want that same thing for my employees.

19:34And that's really what drives the purpose of Peak Design, why we exist. It sounds like you're trying to offer a bit of that freedom and fun that you were searching for. Yeah, absolutely. I mean, it's literally life-changing. And I have so much feedback from the employees of Peak over the years that I know that the sentiment is sensed, it's felt, it's believed, and it's really working. You know, generally speaking, very few people have left Peak Design because they appreciate that what we're trying to do here, we're not trying to save the world. We're not trying to take over the world. We are trying to be really thoughtful and active participants in the world so that we can each individually pursue lives that are meaningful to us.

20:24That's the point. I know that we talked a lot about venture funding a little bit earlier on the show, being in this environment, which is one of the capitals of venture funding. Was it ever tempting to think about that? And how do you stay kind of very stubborn on the path that you've chosen and make it work for yourself? Well, initially, I have to cop to a bit of naivety when it comes to that original. It wasn't through stalwart resistance to funding. I just like, again, I was like, well, I can make this thing. I'm going to do it on my own. It was over time that I developed the, oh, interesting, something's different about this company.

21:06And it's because I don't have a boss. I'm not serving somebody other than myself and my employees. And that is a massive game changer. So no, frankly, it's never been tempting to take VC money. And also, we've been a profitable company since year one. And so the types of investors that call or text or email literally every day are more those who are like, hey, why don't you just take some chips off the table? Give us a little bit and secure yourself a little bit and take a little bit of a liquidity event. And I've successfully resisted those because Peak Design has been profitable enough where my needs are met.

21:47I own a house in San Francisco, which I think is a tremendous achievement. And I don't need much more than that. I'm really, really comfortable. And so that allows me to continue to grow the business really, really organically and not have that temptation. The way that we're allowed to run the business, like the difference is really, really profound because basically it is the key to unlocking that purpose that I described.

22:20If we're owned by some other company, especially above 50%, we don't get to pursue meaningful and happy lives for the employees as why we're here. Suddenly, we have to make money in returns for that growth equity fund, that private equity fund who's expecting it to transact again in four years or seven years or go public in 10 years. We don't have that pressure. We can pursue something far more pure. So you had this financial sustainability, which allows you to take a closer look at environmental sustainability while you're running Peak Design. And that has really inspired you to start climate neutral.

23:05Tell us about that. Yeah, okay. I'd say that journey started in 2015. That's when we joined 1 % for the planet. Again, with that financial stability, it's like, okay, it's time to start giving back. We're blowing it out of the water, but we're doing well enough. So 1 % of the planet says you're going to donate 1 % of your revenue, not your profit, but your revenue. So it's a significant amount to environmental nonprofits. And here's a list of 2 ,000 suitable environmental nonprofits. So we started doing that. And three years into doing it, great that we're doing it. But like I didn't, I had been kind of developing an opinion with respect to the environment that is very much climate focused.

23:53And I kind of came to feel that like any dollar that I spend that's not going toward solving the CO2 and its equivalence problem is a dollar that could be better spent. And so I looked for the environmental nonprofit that was attacking this best. And the ones that I came across were actually carbon offsetting nonprofits. I understand probably far better than most due to where I've been now, the controversy around carbon offsets. So there's a whole topic there that I could speak at length about, but let's leave that aside for a moment. especially because I got attracted by the landfill gas carbon offset.

24:44This is a type of carbon offset mechanism that takes landfills that aren't required by law to be properly capped and their methane captured. And carbon offsets allow a company like Peak Design in San Francisco to cover a landfill in South Carolina and thereby trap the methane and turn that methane into electricity. It's this kind of perfect vision of, okay, we're making bags and clips and straps in Vietnam and China, and we're emitting over there, but we can prevent methane over in South Carolina. And I can see how we could do that on a one-for-one basis. So that initial concept started percolating in my mind and seeing how actually financially reasonable it was to do that.

25:31Back in 2018, when we first cleared our carbon footprint, the landfill gas offsets were trading for about$3.50 a ton. So for$60 ,000 on a$30 million revenue company at the time, we were able to offset our whole carbon footprint. And it begged the question, holy shit, how come everyone isn't doing this? Obviously, there aren't enough carbon offsets to go around. but don't companies that are claiming to be sustainable know about these types of carbon mitigation techniques and the ones that do what are they doing with it so this launched this whole deep investigation into corporate sustainability where are people actually putting their money and what are the claims that they're making and gosh it's such a kind of deep story but the first thing we did is we had to measure our carbon footprint.

26:24It cost us 40 grand to measure our carbon footprint, but it was only 60 ,000 to offset the whole thing. So the first thing I said was, well, that's screwed up. It doesn't have to be that hard to measure your carbon footprint. So we made a tool. Eventually the organization that would be created from this thought process made a software tool to very, very efficiently and cheaply measure carbon footprints. The second thing we did is procure these offsets. And knowing that it was one-fifth of 1 % of our revenue, we thought, well, surely more companies should be offsetting their entire carbon footprint.