Why You Should Prioritize Design for Your Business

0:00Customer reviews are pure gold. Every entrepreneur and any employee should obsess over what feedback you're getting from your customers. The voice of the customer is essential.

0:21Hello, welcome to Shopify On Location. I'm Shuang Esther Shan coming to you from our space in San Francisco. Why is it that the coffee you make at home never tastes as good as the cup from your favorite cafe? Well, Jake Miller has the answer. You don't have the right setup. To bring that coffee shop experience home, Jake started Fellow in 2013. Since then, he has redefined at-home brewing by creating kettles, grinders, and steepers that perform better while looking good on your countertop. Jake is here now to talk about how to run a design-focused business and how the Bay Area's love of coffee fueled Fellow's growth.

1:04Jake, welcome to the show. Well, thank you for having me. Excited to be here. Very excited to chat with you. At the time that Fellow started, there were a lot of people making kettles, grinders, what have you. But what made you feel like there was something missing in the market. Yeah, I started Fellow in 2013. And at that point in time, to me, at least, there was this disconnect between the quality of coffee that these great roasters around the US were producing and roasting and serving their customers and the quality of the equipment that home brewers were using. And typically that home brewer, that customer had to choose between something that looked good or something that worked pretty good, right?

1:47And Fellow from day one, our goal was to design products that could do both to be what we call beautifully functional. Some people might argue to say at a cafe, they are having industrialized machinery that sometimes costs the price of a car. And how can you even start to compete with that when you're trying to brew coffee at home? When you think espresso, that's true, right? The espresso machines that cafes are using can be$20 ,000,$30 ,000,$40 ,000. And most people can't bring that into their home. But when you think about brewed coffee, a lot of what we do is focused on pour over coffee. The price points are actually much lower.

2:25And a lot of that equipment that's being used in the cafe is the same equipment that you can use at your house. So there's a rich coffee scene in San Francisco. I personally love walking through different neighborhoods, checking out different cafes. How would you describe the local coffee scene? We're lucky. We are lucky. Absolutely. I think San Francisco, the Bay Area has one of the best coffee cultures in all the U.S., maybe all the world. So it's great that we can be headquartered here and we can plug into that community. And how does the home brewing experience plug in being a company that's based in a place where there's rich cafe culture and you're creating a company that actually takes people maybe out of the cafes, but more so into their own homes?

3:13I don't think you have to pick, right? I love going to cafes, but the reality is still nine out of every 10 cups are still consumed at home. So Fellow tries to make those nine cups that are made at home really dang good. I think it's also really fun because you have so many local groceries that you can pick up beans from and then start to experiment and hack your brewing setup at home. Yeah. Yeah, we're blessed with incredible roasters in the Bay. And certainly the position that we're in as a brand, you know, we curate and sell coffees and we're able to taste hundreds of coffees from around the world and offer kind of our favorites to our customers.

3:53So I think before Fellow, you also had extensive experience visiting farms at Origin, also visiting roasteries at their facilities. So you could have easily entered more towards that roastery realm, maybe starting your own coffee brand. But instead, you took this product route. How did you decide when you reached that fork in the road when you were trying to start a new company? Yeah. Extensive experience is an overstatement. So about 15 years ago, I worked at Caribou Coffee in the Midwest. I took the job as a brand manager. So my background is in marketing. And at the time, I just happened to be assigned to the coffee category.

4:36So I got to work with the Roastmasters and travel a bit to origin and really fell in love with coffee at that point in time, even though I took the job just because I liked cafes in that third place that the cafe offered. And to your point about, hey, why product and not a cafe or a roastery? I just love product design. So I love the idea of making a physical thing that someone can have an experience with every morning. And did you have any experience with industrial design and product design? No, I'm a fraud. I am a marketer with an MBA who has started this design forward product company, But it's a passion of mine, and it's something I care deeply about.

5:25So I started Fellow out of the D School at Stanford. And what's great about graduate school at Stanford, or at least the program that I was a part of, is you can take classes at other schools. So, yes, I got an MBA, but I was able to take classes at the School of Engineering and at the D School. And Fellow was actually started out of the D School at Stanford. So I got to learn a lot about design. I interned at a design consultancy and kind of parlayed that experience into fellow.

5:57I think that's also really good encouragement for anyone who has an idea or see something that is missing in the market. And they can actually chase after their idea, even though maybe for their undergrad or for their career, they weren't necessarily in that particular field to begin with. Yeah, I think really smart people make bad entrepreneurs because they're smart enough to see all the reasons why they shouldn't pursue their idea. Right. And I thankfully I'm just stupid enough to believe that I could have pulled it off. Right. And I said, hey, I'm going to try to figure out how to make a physical thing and sell it to people around the world.

6:37You need that optimism to fuel the beginning, because if you shot down all of the ideas, then nothing would have started. Yeah, optimism is probably a better word than stupidity. But yes, I was an optimist who believes a lot in what we can accomplish as humans. Yeah, well, you're very humble because your ideas are actually loved by a lot of strangers. They backed your projects on Kickstarter and crowdfunding without actually seeing or testing out these products to begin with. So how did you distill your ideas, the designs into those campaigns that actually spoke to strangers on the Internet? Kickstarter played a huge part in Fellow's origin story.

7:20Fellow wouldn't exist today without Kickstarter. So I mentioned the D school at Stanford. There's a class called Launchpad. And the idea with Launchpad is you go from idea to kind of company in 12 weeks. So this was my second semester of second year of grad school. I had this choice of like, do I take a job or do I try to start this company? And I said, hey, I'm going to go for it. And I'm going to put this product on Kickstarter. It was the Duo Coffee Steeper. It was the first product I'd ever designed. and if it gets funded, I'm going to go for it. If it doesn't, I'm going to take a job. It got funded.

8:01So in 30 days, we raised about$200 ,000. And that gave me the confidence to say, let's go. What people don't understand is that making products is really hard. And the reality is, is it took about 18 months to deliver those Kickstarter units and cost me$300 ,000 to deliver on a$200 ,000 campaign. People think my campaign is backed success, like let's celebrate versus that's actually a moment of stress starting. You actually have to like make the product happen now. Yeah. Yeah. Delivering on the Kickstarter campaign for me was that master's degree in engineering and product design and development, right?

8:42It was almost two years of my life trying to figure out how you make something and just kind of this very real reality that physical products are hard. And very interested and intrigued to dig in deeper into that production process and also finding the right manufacturers. But before we get there, I wanted to talk a little bit about the design because Fellow is known for that. As someone who works at Shopify, we love talking about gear. There's designated Slack channels about brewing coffee at home. And there's so many fans that choose Fellow. So for our listeners, can you talk to us about design and the philosophies you have when approaching each of the products?

9:26Yeah. At the highest level, we aim for what I call being beautifully functional. And beautifully, like we want to make objects that are sculptural. We want objects that people want to display in their countertop, right? Our products are sold in the New York Museum of Modern Art. All the Kardashian sisters have them, right? They have them because they think they're beautiful products.

9:54But the functional part of beautifully functional is what we make has to perform to the level of the professional barista. I think six out of the last seven world brewers champions actually used a fellow product in their routine. So with everything that we do, and we haven't achieved this with everything, but we want that product to be both beautiful and functional. And looking at photos of different people's interior design, kitchens, right away you can spot a fellow product. And that's something I think very hard to achieve where the shape of a product can just tell you exactly what it is. Yeah.

10:33And that design language carries through, whether it's a kettle or a grinder or a dripper or drinkware. It just feels fellow. Mm-hmm. Okay. So back to the Kickstarter campaigns, you reach your goal. There were $200 ,000 backed, celebratory moment, but it's also the start of a lot of stress, finding people who can actually make the products, manufacture it, and deliver it. So tell us about that process. How did you find production partners that you can trust? I felt like I was a bit like a dog chasing a car, and then I caught the car, and I didn't know what to do. So we had successfully funded this Kickstarter campaign.

11:14There was no supply chain setup, right? We didn't know how to make the thing. There was no factory selected. So what I did was I just started calling other entrepreneurs that were using similar materials, whether it's stainless steel or glass, to the materials used in Duo. And I just said, hey, I'm Jake. Nice to meet you. I'm trying to start a company for the first time. Do you have any factories that you could recommend? So that's how I sourced factories and was thankfully got a few referrals, did light RFPs with those companies, flew to Asia, met with them in person, toured the factories, and ultimately landed on a factory shortly after the Kickstarter campaign closed.

11:55To your point, San Francisco is known for innovation and entrepreneurship, but not necessarily in the industry that you are in, which is physical products and industrial design. How did you navigate having Fellow being headquartered in San Francisco? Early on, it was just brute force. It was, I'm going to figure this out, hell or high water. And, you know, that's quite a few trips to Asia. A lot of time in our factories. I remember when we launched the Steg EKG, I spent Christmas and New Year's in a factory by myself, thinking to myself, what am I doing as my family's having Christmas dinner together?

12:35But that's what's required. Again, this is hard. I hadn't done it before. I had to be there. Now, fast forward to today or certainly over the past five years, the answer to that question is just hire great people. Like the beauty of the Bay Area is the talent that exists here. Fellow is now a team of about 100 people. We have an R &D lab here in San Francisco. And the people that we have working on our products today, our product designers, our engineers, are all ex-Apple, Tesla, Google, you name hot, cool Bay Area company. And they kind of cut their teeth there. And now they're at Fellow helping us design really great things.

13:19That's extremely cool to hear about how you're tapping into the local talent pool. So you mentioned when your kettle launched, you were spending your holidays in factories, but it ended up being an iconic product where unfortunately there's a lot of other brands copying that similar design, especially the ergonomic handle and the shape. How have you tackled the copycats and other people mimicking your designs? As a designer, it drives me mad. Like, how do I deal with it? Like, I go into a closet, shut the door, and scream as loud as I possibly can. These people are really just kind of stealing what we've poured our heart and soul into.

14:10But, like, I can't just sit in that closet and not move forward, right? So two things. One, we try to protect our work with utility and design patents. And, you know, we try to get people who infringe on RIP to stop. It's really hard. It's expensive. But we try. And the other approach is, like, we're just going to not stop. We're going to continue to out-innovate. And we're going to continue to launch new products. And those that are simply just copying what we're doing are always going to be two steps behind. And it sounds like you are tackling different parts of the at-home brewing setup and tackling different equipments and gear.

14:51Do you think Fellow could have existed elsewhere in another city? And would that even be possible? Because you do have that talent pool. you do have the atmosphere and the drive and the inspiration from this innovative space. I don't know. But I feel very lucky that, you know, I happened to go to school in the Bay Area. I happened to start the company here after graduation. I really think San Francisco has helped us accelerate what we've tried to do. And the other side, which we kind of hinted at in the beginning, where the local coffee scene is stellar and uncomparable to other cities, where it also is a genesis for another arm of the business where you have a coffee subscription.

15:36Tell us how that has also helped fellows growth. Our mission is to help you brew great coffee at home. And to do that, we need to have great products. And over the last 10 years, this is our 10th year, we're celebrating our 10th year in July. We've built out a portfolio of products and you're now able to go from beaned a cup of coffee with only fellow gear. So the gear stuff, we're in a good spot. But what we found, especially in the last few years, is even if you have the best products in the world, if you're buying and brewing bad coffee, you're going to get bad coffee. You can't make bad coffee taste good just because you have a good grinder.

16:15So if you go back to our mission, we want to help you make the best coffee at home. We felt like we needed to step in on the coffee side. So what we do now is we partner with roasters from around the world. We have a team of three Q graders, which is kind of like the SOM equivalent in coffee, who taste hundreds of coffees a year. We pick our favorite coffees and then we sell those coffees to our customers. So that's the gear part, the coffee part. And then we're trying to layer on the education part and teach people how to use our stuff and give them recipes and help them create. Very excited to talk about the education component as well as your patent experience and expansion plans.

16:57I'm joined by Jake Miller, the CEO and founder of Fellow. By the way, while I have your attention, do us a favor, take a moment and subscribe to the show. Let us know what you think by leaving a review. Thank you. You actually have seven patents of different products. What advice do you have for founders who are going down this path? And what did you wish you knew before starting all of this? Advice on the IP side specifically is find great counsel. It's important that you protect the work and your original ideas and do what you can to protect that work, both in the U.S. and abroad, depending on where you're going to sell and where you manufacture.

17:43It's one of those scary sides of business that people tend to want to avoid, like taxes, but it's so essential to the growth and scale of a business. Especially if you're bootstrapping. Like us early on with Duo, our first product, you know, filing patents is not cheap. So you've got this choice. You're like, I have limited cash. Do I spend this limited cash on marketing or sales or IP? It's a little easier now that we have a bit more cash in the bank, but everything's a trade-off. Yeah, and I think it's when you invest in marketing or product, you can see the implications right away versus when you're investing in legal side, you can't see the rewards of your investment right away, which is sometimes hard for you to visualize as you're planning for a business.

18:30Exactly. Yeah. And then, of course, Fellows products are beloved by a lot of media outlets. How has the team handled relationships with journalists and reviewers? PR has been a big part of our success. We have a team at Fellow that's dedicated to kind of our PR efforts. Again, we, especially the first nine years, just didn't have a lot of cash. We didn't have big budgets to acquire customers. So we needed to get coverage. We needed to get that free media whenever possible. So on the flip side, fellow's reputation is also very much helped through customer reviews. How do you make sure it's super easy for someone wanting to leave a review?

19:13And how do you manage relationships with influencers and customers alike? Yeah, I'll separate that into two responses. One on the review side, customer reviews are pure gold, right? Like every entrepreneur and any employee should obsess over what feedback you're getting from your customers, whether that's on fellowproducts.com or Amazon or through our customer support. The voice of the customer is essential. You know, we're weekly as a company reading the feedback that we get, both the good stuff and the bad stuff. And then our product team translates the bad stuff into product improvements. So we're seeing our NPS scores, our customer SAT scores improve over time because we're constantly trying to make our stuff better.

19:57The second part of that question is how do we manage the relationships with influencers on the PR side? And I kind of feel like managing the relationships with influencers is somewhat inauthentic. We just love the community that is coffee. And we really love the people that participate in this community. And the influencers in coffee are friends. And we view them as friends and try to support them and like hanging out with them. And if they want to cover us, that's great. And we get excited about it. Because all of that falls into that giant marketing umbrella, but there's so many different spectrums and sectors of what you do to tell your story.

20:39You mentioned that you're getting more into the educational content where you're sharing about how to use the gear, what kind of coffee to try out. So, yeah, how are you tackling that to make it educational but still entertaining and fun for the community?

20:57we are fortunate enough to design products that people can create with you know we make tools it's not a kettle right this is a tool that you use to to create a beautiful cup of coffee

21:18and what's fun about that just like cooking baking mixology is that there's a process and there's education and a learning curve so we get excited about kind of plugging into that and being a part of that customer's journey to the ultimate goal of you know an incredible cup of coffee i also think you're in a very intimate relationship with these customers right they're using it every day through rituals. They're seeing your products every day in their kitchens. So any kind of performance that is like not to their desire is very acutely known because they're interacting with these products so often.

21:58So it also puts you under a microscope. And what a blessing, right? We get to design products for identities. Like people are obsessed with coffee, you know, and with that comes the good and the bad, right? That becomes, hey, fellow is an integral part of my morning experience, right? And it's so cool to be able to design for that experience and for that passionate customer. But with that, as you said, comes the passion when things don't go perfect, right? I've never written a thousand word complaint about a toaster, right? And we've received thousand word complaints about our grinder, right? And I just love that we design in a space where we can have people that are that passionate about what we do.

22:46So we talked about PR, we talked about reviews, and also creating content for this community. These are not necessarily large campaigns or huge marketing investments. What are some of the experimental channels or campaigns that you've recently done that have been really impactful for Fellow? We have two retail stores. We just opened our second retail store on Abbott Kinney in Venice, California. And thinking about kind of a successful campaign, we held this big grand opening launch event. And it was, hey, we're going to give away a few free products and come check out some of the new things we're working on.

23:28And we had hundreds of people RSVP to this event. It's this small 600 square foot space. But just to have hundreds of people show up on opening day, brew coffee together, and just have a great time. It was a pretty special moment in activation for our brand and our marketing team. It also sounds like it's a hub that will have a lot of butterfly effect on the brand as well. People who might not know Fellow before in the area, friends of friends, like they have a new exposure point to the brand. Yeah, exactly. And hopefully that exposure point can be more than just, hey, I want to buy a kettle. Our products are sold at fellowproducts.com, in Williams-Sonoma, Crate and Barrel, thousands of cafes and roasters around the world.

24:20So you can find our stuff. What we're trying to do with retail is be a bit more than that. So come in, brew a cup of coffee with our team, learn a little bit about our products, learn a little bit about the coffees that we source, and whether or not you walk out with one of our products, hopefully you walk out knowing a bit more about coffee. So over a year ago, you also did a very successful Series B fundraising, over$30 million, which gives lots of room for Fellow to create and innovate. What are some growth plans you can share with us? Yeah, it was a big moment for us. We had never raised institutional funding.

25:00This was the first time that we went outside of just angel investors. So very thankful to Next World Evergreen, which is a San Francisco-based growth equity fund here. They led the round. Incredible consumer experience and an incredible partner for us. One of the big reasons why we picked Next World is that the proceeds from that evergreen fund are reinvested into arts equality in the environment. So I feel like we've got a strong partner there. Now our challenge is to say, okay, we've got$30 million. What do we do with it? And we talk a lot internally about building a 100-year company. So that$30 million is going to hopefully fund that 100-year company.

25:40So big investments on the product and R &D side. We've hired about 50 people in the last 18 months. So doubled the team size and working on a bunch of cool stuff at the R &D lab about two miles away from here. Also making big investments in distribution. Our goal is to be a global omni-channel brand. So we want to sell online and in-store around the world in most major countries. So lots of investments behind the scene on trying to make that happen. And I guess for yourself personally, tackling the challenge of being on Kickstarter is very different in terms of mindset when you're running a company that has huge plans of expanding and also this resource financially from investors.

26:30How are you adjusting yourself when you're thinking about where to bring Fellow to next? I've been in the same role for 10 years and it's looked wildly different every year since year one. And I think in the last year, it's been the biggest change for me personally, right? We now have a board of directors. I could technically be fired. I think a lot more about longer term strategy, people and culture, cash management, where Jake seven years ago was in the factory trying to figure out how to make stuff. But that's exciting for me. Like my job is new every year and I'm excited for this new challenge and kind of trying to figure out if I can lead this company through the next stage of growth.