How Hacksmith Turned a $1M Gamble into More Than $6.5M on Kickstarter with COO Ian Hillier

0:00Ian Shepherd:There's currently a Kickstarter project blowing up the internet. And today on The Business of Creators, I get the inside scoop from behind the scenes. It's crazy. Totally surreal. We had big hopes for this project, but it's kind of blown that out of the water. Ian Hillier, COO at Hacksmith, reveals the huge amount of work that's gone into it. We started the project a year and a half ago, and we set out to make the best multi-tool we could. Over a year and a half, we probably invested about a million dollars developing this. He also talks us through their long-term strategy to build a sustainable future.

0:34We've kind of been a bit stuck on the YouTube treadmill of we need to release a video so that we can have a sponsorship, so that we can pay the employees and pay the mortgage. And we want to work more for ourselves. We really see a transition into a product business being a more sustainable future for us.

0:54Ian Shepherd:This is definitely one of the most interesting product launches of the year.

1:05Ian Shepherd:Before we dive into today's episode, let's talk about what happens when you've developed a winning product. Once you've built something amazing, you need a trusted, lasting place to promote it. And that starts with your domain name. A.store domain is a branded, commerce-focused web address that tells your audience, this is where I sell. It boosts click-through rate by nearly 90 % and doubles organic visibility, all while staying platform independent and fully owned by you. Hacksmith are just one of the many big creators using a.store domain name. And so whether you're building your first course or your 10th product line, give your brand a domain name that's built to sell.

1:42Ian Shepherd:Get yours today by using my special link in the description. Right, let's get on with the show. Six and a half million US dollars pledged and it's still growing. What's going through your head right now? It's crazy, totally surreal. um it we had big hopes for this project but like it's kind of blown that out of the water and kind of it's it's a mixture of like okay we've hit it big with a big product but now we have to now we have to deliver on that it's both a windfall and a now i've got to make we're making these in-house so i've got to make as of today like 22 000 knives and more every day so um a lot of work to actually earn that money.

2:24Ian Shepherd:Yeah, well, I mean, I'm really excited to learn more about the project and the product. Just tell me when you started, what did you have in mind for the campaign? What did success look like? We started the project a year and a half ago, and we set out to make the best multi-tool we could, and we invested a lot of money in order to get there. So over a year and a half, probably invested about a million dollars developing this. So what success looked like in my mind was okay i need to make that money back and then i need to make a little more on top of that so kind of in my mind of what was success was minimum million to actually have some margin on there pay 1.5 and then what i was kind of picturing was yeah likely around three but now we're at nine and i'm saying this in canadian dollars we're from canada and kickstarter makes you launch in in your home currency so and so what does that mean now for the project now that it's sort of far exceeded the expectations i mean that that mainly means that we needed to deliver on the promise there i think we've got a fantastic project a fantastic product and we have a manufacturing plan it's just a matter of executing on that plan just expanding it a bit i mean i've got a lot already have a lot of machines on order i just had to up that number of fair bits and make a lot make more space and expand the hiring plan and really just roll that out faster than initially initially plans and it's uh yeah i mean when we when we first started this this youtube channel there was a lot of a lot of fun in in growing the business okay you release a new video and it it's a banger and you you get to you get some more money to play with and you get to get new tools and new new people and then kind of grow the business and that was that was very exciting but that was i mean we've been doing this for 10 years now and some of those those things have become a little bit mundane of okay i can i do another video i'd do another sponsorship and do another video do another sponsorship and this this really brings me back to the the earlier days of okay we have this really big project it's really big growth We have this big opportunity and it's super exciting to be part of this again.

4:39Ian Shepherd:I'm sure. I'm sure. And what do you think is the biggest driver for the momentum? Is it the audience? Is it the product? Is it the campaign? What do you think has really sort of driven it? Yeah, I mean, a mixture of everything. It's hard to kind of pull each piece of that apart. I mean, when we release videos of whether it does really well or whether it doesn't, And we often try to picture like what is the components of a video that make it a banger? You're never able, there's so many variables, you're never able to pull each part out and figure out what made that success. So in the case of this product, I think it's the same as a video.

5:14If you release a good video, it's going to perform well. And the algorithm sees that and it's going to pick it up and share it. So in the case of a product, if you release a good product, then it should perform well. So this is, it's a fantastic product. It stands for itself. And so that's step number one. And then step number two is it has really good product market fit where it resonates really well with our particular audience. It's something that we use in the shop every day. It's something that I carry on me every single day. So then it just resonates with our audience. And then we've got a fantastic audience as well.

5:49And we've been promoting it for about a year now, teasing that it's coming. So there's a bit of a pent-up interest in the product. And then just kind of unleashing that on Kickstarter is kind of like just blown it all out of proportion of kind of gamifying it a little bit with Kickstarter really digging off there.

6:10Ian Shepherd:Yeah, a mixture of all that, but hard to really pick out what was the actual, what caused the main success. And of course, there's James as well, which has been a bit of a marketing genius from being a YouTuber for the past 20 years of what what resonates and what's what works with the audience. That's great and I know from what I understand about Kickstarter it's not an overnight success as you say there's lots of work done beforehand in terms of designing the product but also teasing the product so when it comes to release everybody's there waiting to go. In terms of the rewards that you've got are there any that have surprised you just in terms of the trends and what you've seen yeah so we um we went we went with a laddered approach on the on the designs the main version is the pro and that's where that's the the version that we set out to this is the product to get all of the all the features we can into this product and then from there it's like okay this is a fantastic product but not everyone's going to be able to afford it so let's make some um some cheaper version so that's where the light and the standard come in kind of the idea is to ladder you up to the proper one the one that we actually want to sell and the one actually the one that i carry for example so we expected more people to go for the the cheaper version we priced the middle version kind of as a a stepping stone expecting more people to go for the pro and yet overwhelmingly people are choosing the pro and i guess that's because it's the it's the best product it's the the one that i think everyone wants and so it's it's the one that's selling which i think it's a good a good choice so that's that's the one i would personally buy and that's the yeah great and tell us a bit about the history because i know in the video james mentions like a previous version of the tool which you tried and then you made an order and they didn't come out right so So you just didn't sell them, right?

8:03Yeah, we've been wanting to carry some sort of utility knife for a few years now. So we originally found a product that we liked the idea of, and we were going to work with the manufacturer to customize and improve. And we got some samples in, and they were pretty decent. So we placed an order for about a thousand of them to come in. And then once we had them in, we were going to design some additional features for them so that you could replace with your own blade and things like that. And it was a decent product. I carried it for a while and it was a nice knife. It had some interesting things about it.

8:42But it wasn't, number one, it wasn't a fantastic product. It was a good product, but it wasn't a fantastic product. And then we really discovered the safety issue, which was once we found out, it's okay, we can't sell this, which was unfortunate because there's the sunk cost fallacy and all that. But yeah, we just, it's okay. Let's start from the basics. Let's start from the beginning and redo this. So then we found a, I mean, when you're designing anything, you don't necessarily start from scratch. You look at what's available. How do I innovate instead of start from scratch? So we found a design that we liked, a nice lightweight blade that looked pretty futuristic, that looks cool.

9:25And we said, okay, how do we make this better? so we we started looking at it and say well we want to have some precision screwdrivers and where we put that okay well okay maybe if we put it in the side we can fit this many and great and then we prototyped that it kind of worked and okay what else what else can we add to this and uh it rapidly turned into okay we're just like adding features adding features and pretty quickly and we go and look at like a list of let's say other multi-tools on the market and okay here's here's the list of tools that they have what from this can we kind of take and either make better and add it to ours or innovate on what tools can we keep adding to this we quickly got up to i think 15 tools and that's when we started kind of carrying it every day and and really testing it out and thinking about what how is this actually used and as we started carrying it every day then it's like oh maybe we could add this maybe we could this would be interesting oh there's there's a little bit of space right here what could we what could we put right here and that's that's from there it kind of took a few deviations in the product design of it branched off into this one area of maybe we can add this feature and it would be really cool and we started using it and we started trying to make that work and it just didn't work so okay kill that and go back onto this path and it took a few variations like that and then finally it resulted in the product which say and it's uh about a year and a half of that it really making products takes time of you have to really put your heart and soul into a product if you're going to make a good product you have to carry it every day you have to use it every day and figure out what's what are the things that it's missing how do you make this better how do you make this the perfect product you make it sound

11:10Ian Shepherd:easy what was the biggest challenge that you um you came up with a year and a half and a million dollars yeah i mean that's fair that's fair yeah any any specific challenges though like what was the biggest was it the way was it a particular function the biggest challenge i'd say is the bit retention and that yeah a year ago we're like oh yeah this we'll have this on the market in a few months and the bit retention was really the piece of the puzzle that prevented us from doing that and there was because of that delay i think other improvements were made whereas if we had launched it a year ago there would have been there would have been other things about it that wouldn't have been perfect and other delays and like in that in that time we also did custom bits and so the bits are nicer now because they're they're custom just prototyping those things take takes a lot of time a lot of iterations other other little improvements of the the bubble level used to be in a different spot and now it's in a better spot and it's retained better and things things like that that just take time but the really yeah the biggest challenge was the bit retention where what it what it used to be was there there's the slots for the bits and they were retained with a magnet so if you drop it the bits would fall out and that's that's a terrible user experience for something that you you carry every day and it's generally on your belt or your pocket or you're you're fumbling with it and you drop it like i've dropped it a bunch of times so having your bits fall out is is not a good user experience you can say okay we can't we can't sell this yet we can't we have we've got to solve this problem so how do we how do we solve the problem well ben and james have been the primary uh leaders of this project um they kind of set off on two different paths so james james designed a spring mechanism that would kind of hold the bits in place he he worked on making that and he made one that kind of worked and then you know it was it was kind of it was kind of working but it didn't work perfectly and he was having a really hard time repeating that like once he made one it worked really well And then he couldn't get that success again.

13:14Whatever material he was laser cutting just wasn't working. And then in parallel, Ben came up with another idea for retaining the bits, where the bits would kind of slide into the slot and then get racked up a notch. And so if you drop it, it would be hitting a surface and preventing it from sliding out of the slot. And that was working okay, but we figured out that, okay, if you drop it on a concrete, it worked every single time. If you drop it on a hardwood floor, it doesn't work. So then, okay, well, let's put the two ideas together. And now somehow you put them both together and it works. If you drop it repeatedly, the bits will fall out eventually.

13:52But we assume that, okay, if you drop your knife, you're going to pick it up and you're going to check your bits. It works every time you drop it once. So I'd say that's the hardest challenge we had to overcome. Aside from manufacturability and all the iterations and quality control and normal kind of things of launching a product in mass, that's a large endeavor just by itself.

14:18Ian Shepherd:I love hearing the story and sort of how genuine and authentic it is. Like you've really designed this product from scratch. You haven't just gone on to Alibaba or something and branded, you know, a generic knife on there. It's like truly something that you've designed in-house and you're building in-house. how have the your fans reacted to the product yeah i'd say overwhelmingly positive um there's i think in large part because of the the efforts that we've put into it where we've because it's designed from scratch because it's yeah if we had gone on alibaba and just slapped our name on something we wouldn't be in the position we are now and we've we've seen that we've seen that happen before that yeah i guess with minisaver for example the the first minisaver that we launched that was a white labeled product and it's sold surprisingly well but then okay we took it back to the drawing board it's like let's let's design this from scratch and we did that and then it sold extremely well and so in this case again you start with a white labeled product it's probably not going to perform well you you do a properly designed from the ground up you tell that story and it's going to resonate with the audience and it's going to be a better product and it's going to have all of that mixture of things that work well for a product.

15:34And that's, unfortunately, that's what we did.

15:36Ian Shepherd:That's great. And we've known each other for a long time, but for everyone listening, what's your role within the team and how do you know James? Yeah, so I'm the chief operating officer. And that means that I do a lot of the behind the scenes day-to-day operations of managing the team, a bit of finance, a bit of operations, uh hr a bit of uh all the legal of reviewing contracts yeah a lot of a lot of a lot of things there i know james from from high school we we met in grade nine tech class and we were i'd say the nerdiest kids in the class and uh naturally gravitated towards towards each other started working on projects and then that led into started working on robotics together we won some robotics competitions in high school.

16:24So then we went to college together to get our engineering degree, won some more competitions, did some more extra, lots of extracurriculars together. Then we graduated and started working in industry. And in the background, James had started, had been making YouTube videos since he was 16. And like basically since the platform was launched. And at the time, I had no interest in YouTube. What's the point? But he's making all these videos And so we're working these industry jobs and he got the YouTube channel to a point where it's like, okay, maybe there's something here. And at the same time, he had bought a house with a fantastic garage on the back, quite a large garage.

17:08So I was working with him in the garage just on projects for the fun of it. The whole reason I got into this was to make cool things. And so, yeah, James quit his job to focus on YouTube full-time. I got jealous and quit my job. And at the time, there was no money. This was just, okay, let's make some things in the garage and see what happens if we don't have to go back to work. That's success. And we really started focusing on making good content, making good projects. It worked. We made a banger video. It was the Captain America ElectroMegas Shield. And that video has, there's two videos on that now, but the more popular one has, I think, like 44 million views or something like that now.

17:57And that really skyrocketed the channel of people that came and watched that video. So, oh, there's a bunch of other content back here. And we went from like 100 ,000 subscribers to I think 500 ,000 practically overnight. And then it gave us a little bit of a cash injection of, okay, now we can spend a little bit more on projects. and we did that and we made more more content and it's just like everything we um everything we made we invested back into the business of bigger projects bigger team to make more videos and and james being the creative lead behind all of it the the personality the youtuber if you will of of driving everything everything forward it's just like yeah massive massive growth over the the initial years.

18:40So yeah, now we're one of the largest maker channels in the world. And we have this fantastic facility in Cambridge. It's got about 15 ,000 square feet. We have every tool imaginable. We have probably 40 3D printers sprinkled around the building and laser cutters, welders, robots, all sorts of things. It's an engineer's playground. And how we've gotten there largely on the back of sponsorships and ad revenue paying the bills. But we really see a transition into a product business being a more sustainable future for us. That's the direction that we're investing in from where are we going to be in five years?

19:21Because we've kind of been a bit stuck on the YouTube treadmill of, okay, we need to release a video so that we can have a sponsorship so that we can have so we can pay the employees and pay the mortgage and and and do these things and every every video has to hit these metrics and just in order to pay the bills and we'd love to get it a little bit out of that okay we want to work more for ourselves rather than for sponsors and products is kind of how i see us doing that is that we're i mean i'd much rather promote my own product than a mobile game or other other thing we've we work with fantastic sponsors there there's been some some great products that we stand behind as well but even the great products i'd still rather promote my own products than a sponsor so it's been it's kind of developing the hacksmith.store and our product line and i really see that as the future of hacksmith of developing our product line further and being able to do even bigger projects because of the product line of if If we can do a, instead of doing an ad read for a sponsor, we do an ad read for a product.

20:28And if we can make more on the products, then we can invest that back into doing even bigger projects. And the cycle just kind of continues, which has been the whole point from the beginning of, okay, let's make really cool things. Let's do crazy projects. And instead of having sponsors support that, having our own products support that is even better.

20:49Ian Shepherd:It makes absolute sense. And it's such a great story. so what's your favorite project over the years yeah i've got a few i've been very fortunate in that i don't have a i don't have a boring job i mean some days i come in i stuck in my office doing doing boring things but i've done a lot of crazy things over the years personally my favorite project is the the red hot rebar crossbow which just combines a lot of the things i love in in engineering so it's a it's a crossbow where you put a piece of rebar and so a metal bolt and then you press the button, it passes about a thousand amps through the rebar.

21:26It starts to glow red hot and then you pull the trigger and shoot it. Now you have this red hot projectile flying around and usually it hits something and ricochets and bounces around the shop and then you have to chase after it and grab it with some pliers before it starts to fire. When we built it, it was fantastic and every time we pull it off the shelf, it just works and it's always a great time. So that's my personal favorite. lightsabers are probably my next favorite just they've been fantastic for the channel and they're just always always fun but yeah i've been i've done some crazy things on the channel before like slapping jet engines on a canoe or flying a jet pack or launching things with airbags or

22:07Ian Shepherd:all sorts of things it's been it's been a wild ride i'm sure you've seen a lot from launching the products what advice would you give to other creators thinking about launching a product yeah Yeah, so we got some fantastic advice from Linus Tech Tips when we did a collaboration with Linus in 2020. So about five years ago, maybe coming up on six years. I forget exactly when it was. And when he came to our shop and we started talking about business as YouTubers usually do when they get together. And he started telling us about his product business. I think he was about two or three years in at that point.

22:45and he was having some pretty good success with his products. And we were talking about that and got some great advice from him. But one of the main things was that you have to start and it takes time to start. But once you start, it's a long burn, but it's worth it in the end. We had tried doing some products before, like custom t-shirts and little things here and there. We just didn't have any kind of return on them. We might advertise a t-shirt in the video and get like five or 10 sales. Like it was pathetic what we were getting. It's like, why would we ever do a product business? But talking to him, it's like, you have to lay the groundwork.

23:25You have to have the infrastructure. It's not necessarily about the one video. It's about the aggregate of 10, 20, 100 videos. And we're seeing the results of that now. So we started working on that in 2020. And year over year, we've seen improvement, kind of growth in those areas so that even at a time when we're not releasing a lot of content, we're still getting a decent amount of sales because we have both a back catalog of good products and then we have residual views from past videos that are promoting those products. Yeah.

24:03Ian Shepherd:So what else do I want to say on that? Let me go to my notes here. give me a study i'd say the the other advice that i'd give is know your audience and go premium so like i mentioned with the shirts where we tried advertising a shirt a long long time ago and apparel is not what our audience cares about we have apparel on the store just partially because it's something that the team wants to have wear this shirt every single day and i you know i just have a drawer full of these shirts but we don't sell many many shirts we sell we sell a few but So it's worth having in the store. But if I'm going to invest in a product, it's not going to be apparel.

24:40So our specific niche is kind of everyday carry. And what we're focusing more on is tools. So no re-audience because some people sell a lot of merch, sorry, a lot of apparel, and that's great for their audience. For us, if we were relying on apparel, we wouldn't be in business. And then for creators specifically, I'd say go more premium and more customizable. that don't just go to Alibaba and buy a cheap product and slap your name on it. That's not what your audience wants to see. Your audience probably is going to trust you a bit more and willing to pay more for a premium product. And you'll be able to charge more, have higher margins and have a bit more success with a premium product.

25:29Cheaper products, you're going to be undercut by Amazon by a cheaper, better product anyway. So go premium.

25:36Ian Shepherd:That's great. Well, very wise words from Linus there. Products make more than 50 % of his business now into data that he released. It's been great speaking and learning about the campaign. There's 17 days still to go as we're recording this. But tell us, what does the future for Hacksmith look like in five years time? I wish I had a crystal ball to answer that properly. It's hard to say because, I mean, if you'd asked me that a week ago, it would probably be a different answer. But now with the success of the campaign, I mean, in the near future, my focus is entirely on manufacturing. I'm spinning up a large manufacturing operation, and I've got to do that very quickly in order to meet the expectations of all the backers.

26:18So in five years time, that's harder to predict, especially with the rise of AI and with all the changes that are coming. I'd say for Hacksmith, there's definitely more Epic builds in the future. There's definitely more products in the future. It's just a matter of how does that pan out? But yeah, so the more kind of what I was saying before, like investing back in the business of like, as we sell more products, we're able to invest that back into making really cool things because that's what we want to do. And at the same time, okay, now we can develop more products and have more confidence in developing those products.

26:56And also products that we want to use, but we think will other people want to use and will solve some sort of problem as well. having having a tool on you i carry this every day and the amount of times that i use it throughout the day it's a useful thing to have so if we can develop more things that help people solve

27:17Ian Shepherd:problems that's a that's a great thing that we want to do right and final question if you had unlimited budget and time what's sort of the ultimate hacksmith product that you would want to bring to life yeah so there there's a i'm a bit of a fastener nerd and i i've got this idea for a kind of like a fastener organizer ready-made solution that i'd love to bring to life but i don't think that's what you want to hear but that's not that's the that's kind of a boring answer more more like dreaming big i'd say that the answer is a real commercially viable lightsaber i'd love i'd love to make a uh a real lightsaber that you can number one that i can sell and number number two that like someone can buy pick up and have a lightsaber okay now i have a i can burn something ideally it's not used for nefarious purposes but it yeah i love a future where that's a reality and that's not i'm not sure how feasible that is but i mean given unlimited uh budget and time that i'd say that's possible we're still working on the liquid oxygen fully contained lightsaber which has been a huge r &d undertaking so it's that's in in progress but then how would you take something like that and commercialize it and make it safe and make it so that people can actually afford it and buy it that's another huge r &d challenge well ian thank you so much for explaining everything on the campaign i'm really excited to see where it lands and what the next product is so all the best yeah i mean we've we've gotten to where we've gotten like purely organically we haven't we haven't spent any anything on um paid ads or anything like that so it's been a very humbling to to get here and we've got a lot we've got a lot of work to do congratulations thank you thanks