Not many companies have the guts to tell you exactly where they messed up. But at ADIFF, we believe in embracing our failures because they’re the most important lessons you’ll never forget. Instead of putting out a “Success Report” for 2017, we found it more productive to create a “Failure Report” to show you full transparency of how many times we made mistakes last year and what we learned. And we figured why not write a post about it all and put it on the internet? Without further ado, here’s a candid report of all the times we admittedly fucked up in 2017.
Kickstarters fail like 99% of the time.
We jumped right into 2017 with the launch of our first Kickstarter pre-sale. Technically it was a success because we were 160% funded, but I’m declaring it as a failure. Why? Because for the first 6 weeks, we were only at like 20% of our goal. In the end, we got lucky with some social media videos. But pretty much all over our ideas about kickstarter were wrong from the start.
1) The longer the campaign, the more time for people to pledge. False! People are deadline driven and only give money when absolutely need to. It’s better to do a campaign for one day, than a campaign for two months.
2) We were in the news before, so we can be in the news again. Also false. Many established news publications refuse to write about kickstarters, because they show that a company is “unresolved.”
3) We don’t need to record a custom video or spend too much time with graphic design. Hah, yes you do. For our campaign, we used a video that was pre-recorded about the brand and showed the entire collection, not just the jacket we were selling. So there was some confusion as to which jacket was available for purchase.
4) People know how to read. You’d be surprised. This echos the point above — it’s surprising how many people will type in their credit card before reading anything about the product they’re buying or looking at the photos. In the end we had more than a few pledge cancellations due to confusion over the product.
I’m declaring that the single hardest thing of starting a product-oriented business is getting the product made. Correctly. In high quality. To scale. With sustainable materials. Within a certain budget. On time. In another country. In an ethical factory. (Every new addition of criteria makes it even harder.)
Production has been and still continues to be an issue for us. For the Kickstarter orders, our factory found us, which was pure luck because we had no reliable connections to any factories. But even though they found us, the jackets were produced well over our original budget, 2 months late, and only in acceptable quality. Going forward with production of the tent jacket, we didn’t want to make the same mistakes twice, and decided to hire a sourcing team that could handle the day-to-day interactions with the factory for us. We thought having a team that spoke the language, had boots on the ground, and constant interaction with the factory would make the work easier! We were shocked when that wasn’t the case.
Hiring externally for sourcing made our production process even longer. We started looking for manufacturers for the tent jacket in March 2017 with our original sourcing team. We didn’t get our first sample until late July, and it wasn’t even close to the construction or quality we needed. In August, we found out the factory had been lying about their progress for the past few months, we had no choice but to jump ship and start again with another factory and another team. Second time around was more of the same - with unrealistic timelines, constant delays, and reluctant compromises. Our original delivery deadline of January 2018 soon became March 2018, and later we were told we would be lucky if a small quantity of the jackets were finished by May. Meanwhile we had orders customers had placed back in June 2017! This wasn’t acceptable for us, so we set out to source all of our materials and manufacturing on our own, which ended up being our saving grace for 2018.
This is more of an elaboration about our production process. Unfortunately at our small stage, it’s hard to get full transparency from manufacturers or sourcing agents. Since our production order sizes are small, we’re much more of a burden to them than an asset. So when checking in on progress about a sample, or asking about accurate pricing or sustainability/ethics reports, it’s nearly impossible to get answers. We’ve found some startup hacks that allowed us to work around this, but for 2017 we weren’t nearly at the level of transparency with our manufacturers or our customers as we wanted to be.
Almost all factories quote with a form of “grouped pricing,” where they’ll give you a set price that includes all fabric, trim, labor, freight, etc. This is actually called vertical manufacturing, and is the most common way of doing business within the industry. Unfortunately when you ask for a breakdown of that pricing, your emails will go unanswered or are met with a perpetual “let me check on that.” With this lack of transparency, it’s impossible to know how much they are paying their employees for the job, if the materials are high quality, or if they’re pocketing cash for themselves.
So far for 2018, we’ve taken leaps in this department and are making sustainable connections and relationships with our vendors, to ensure for more honesty in our supply chain. We’ve found that meeting every supplier and manufacturer personally is the only way around this, which comes with additional expenses. In today’s world of production, it seems that transparency is not something inherently given, it must be earned.
Boots on the ground.
Hey look, more failures in production! Who would’ve guessed it?
Trying to work with any vendors overseas is impossible unless the representative you’re talking to everyday is, in fact, also overseas. While all of our sourcing teams did have people working with them who live internationally, our point of contacts themselves weren’t there. They claimed to have boots on the ground, but their literal boots were not on the ground. That means that there is another level of bullshit and opacity that all daily messages must go through, and quality control becomes a fantasy. If there isn’t someone there to check that the ordered materials are correct, that everything was delivered on time, or that the factory has actually started production when they said they did, it’s impossible to regulate and maintain control.
Without having someone on the ground you can trust to maintain standards, samples and prototypes must be shipped back and forth across the world, only adding extra costs and delays. And 99% of the time, the product isn’t right in the first place, so you just wasted 1 week of precious development time and $100 for the cost of expedited shipping. Due to our lack of contacts in 2017, this was how we had to carry out most of our development, which is one of the main reasons why our production was so delayed.
Contracts + MOUs
The quickest way to ruin a friendship is to work with a friend without a contract. Not necessarily one that’s legally binding, but one that at least sets the parameters of the scope of work, with established deadlines and a process of accountability. Unfortunately 2017 was the year of “well, I thought you said this one the phone,” leading to unanticipated delays, not-so-pleasant surprises, frustration, and inevitably hurt feelings. This happened countless times to us last year, because most of the collaborations we had were verbal agreements without set guidelines. For 2018, we now have some third party vendor agreements to pull from, and always kick off anything with a scope of work terms sheet.
Why is it so hard to give out free things?
For the jackets that were to be donated from our Kickstarter campaign, I was looking to pull from the contacts that were previously made while testing our jackets in Greece. I thought it would be most productive to conduct our distribution independently, as sometimes items that are donated to larger organizations never actually get distributed. We contacted all of the refugee camp directors, organized a warehouse to accept the delivery, solidified the freight shipping, etc. — the only thing missing was the customs declaration information, which for donated relief items, one would think to be $0.
We were shocked to learn that we were actually facing a customs/VAT import charge of over $20,000.
Unfortunately, this charge was non-negotiable. This import fee is actually a key reason why many local nonprofits in Europe do not accept product donations coming from outside the EU. The only nonprofits that could help us obtain a waiver were the big players (UNHCR, IRC, Red Cross), where we had limited contacts and donation coordination/approval could take months or years. So unfortunately, donating to Greece was no longer an option, and we looked for donation partners we could work with to get our products out.
We found help from an organization called Delivering Good, who paired us up with Rahma Relief, a local nonprofit that operates in Turkey and Syria. They were thrilled to take our jackets and were able to distribute them to refugees at camps in Northern Syria — actually the exact region I had in mind when designing the [in]visible jacket.
The entire donation distribution process took much longer than anticipated: a total of 6 months went by from our original plan to when the jackets were finally given out. We now know that independent internal distribution is chaotic and unsustainable, and the best distribution experience comes from partnerships with vetted NGOs.
The more you say, the more you pay.
Best to leave this one short (it’s part of the lesson), but it should be valuable to any entrepreneur. Lawyers. Keep any correspondence brief and to the point.
These are the key mistakes we’ve made and lessons we’ve learned, but our main takeaway is that failure is the thing you can rely on most when starting something different. We believe that it’s not about how you handle your successes, but how you move forward from your failures. It’s okay to fall down and lie under your desk, so long as you eventually get up and find a solution. This year, we hope to be better for you, our generous customers and supporters. Here’s looking to a positive and successful 2018!