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I Started a New Business. It Didn't Go Well…

2024-05-07 · Long video (solo, talking head or whiteboard) · Ali, Hipyo · recording, 36:20 · watch on YouTube

Topic: Business and entrepreneurship (also: Tools, apps and tech) · mode: Reflection and life update · tags: His own products discussed, His own numbers, Lesson from a book, He changed his mind

After the mechanical keyboard reviewer Hipyo tore apart the first product of Lightmode, the tech brand Ali's team launched in November 2023, Ali answers his criticisms, gives the keyboard's costs and sales (at least £200,000 in the red) and draws lessons: do fewer things, obsess over quality, take a bad feeling seriously and shift from "move fast and break things" to "go slow to go fast".

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — Introduction: a launched product that did not work and why Ali shares the failure

  • ★★ Ali has documented growing his YouTube channel and business for seven years and thinks it is good to share the failures and lessons along the way, not only the wins. — 00:00:23

00:01:27 — The context: the Lightmode launch, Hipyo's review and the money lost

  • ★★★ In November 2023 Ali and his team launched a new brand, Lightmode (lightmode.com); its first product was a mechanical keyboard. — 00:01:29
  • ★★★ Ali's worst fear came true a few weeks before he recorded this video: Hipyo, who specialises in reviewing mechanical keyboards, made a video tearing the Lightmode keyboard to shreds. — 00:01:29
  • ★★ Ali has always felt weird about the word "haters", which implies that any negative criticism comes only from the critic's psychopathy; Hipyo's review made him feel really bad, but he thanks him for reviewing the keyboard fairly. — 00:01:58
  • ★★★ Ali's business invested about $300,000 or pounds (he does not remember the currency) in bulk stock of the Lightmode keyboard and has made back about 40,000 to 50,000, leaving it about £250,000 in the red. (hedged) — 00:03:02
    • a number in question (doubtful): "40, 50K" — check against the recording

00:03:52 — Why make the keyboard in the first place: it would be cool, and key man risk

  • ★★ Asked whether the keyboard is a cash grab, a product made primarily for profit, Ali says physical products are not a good thing to do if you are trying to make a cash grab. — 00:03:54
  • ★★ Ali's main reason for making a keyboard was that he thought it would be really cool: interested in tech all his life, he is always hunting for the perfect productivity keyboard and desk setup. — 00:04:21
  • ★★★ Ali's business reason: everything in his business is tied to him, so if he retired from YouTube it would die; in many ways it is not really a business but a very well-paying job. — 00:04:49
  • ★★★ A business tied to one individual has key man risk; Ali says his is absolutely huge: almost no one would want to buy his business, with its team of 20, because it relies so much on him. — 00:05:16
  • ★★★ To build a business not reliant on him, Ali thought of a hardware brand with a name not tied to him: he would push it at first, and over five to ten years, if the products were good, people would associate it with the brand rather than with him. (hedged) — 00:05:43
  • ★★ A brand like Lightmode would be a potentially saleable asset; Ali probably would not want to sell it, but would have the option if he no longer wanted to run it. — 00:05:43
  • ★★ Having tried 20 to 30 keyboards, Ali wanted to build his personal favourite mechanical keyboard; the Lightmode keyboard is it, and he has used it every day since the first samples over six months earlier. — 00:06:33
  • ★★ Ali thinks the Lightmode keyboard is really nice but almost certainly not the best or the cheapest on the market; through all the sampling, his north star was whether he actually uses it, and he does. — 00:07:12
  • ★★ The goal of the Lightmode keyboard is a pretty basic first mechanical keyboard for people who are not enthusiasts; Lightmode is not trying to compete with keyboard specialists like Keychron or IQUnix and aims to be a reasonable all-rounder brand. — 00:07:34

00:07:56 — How long it took to make, and filming the marketing in a rush

  • ★★ Asked why he said both 12 and 18 months, Ali explains that the keyboard took 18 months from the first design sketch and 12 from the first physical sample, and he got confused when filming the launch videos. — 00:08:22
  • ★ Ali had four hours in an Airbnb in Los Angeles to film the keyboard's launch videos, with Harry, one of the people his team worked with, flown in. — 00:08:22
  • ★★ Ali's lesson: when filming marketing materials he needs to be clear on what he is actually trying to say and what feeling he wants to get across. — 00:09:33

00:10:27 — Why it is priced at $159: unit economics and economies of scale

  • ★★ To Ali, a reasonably affordable mid-range mechanical keyboard brand means about a $150 price point; high-end is $300 plus and budget under $100. — 00:10:57
  • ★★ Building the Lightmode keyboard was hard, Ali says: his team did not just take an existing off-the-shelf design and slap a logo on it. — 00:10:57
  • ★★ Lightmode ordered relatively small numbers of keyboards, maybe 3,000 units in total, nothing next to the volumes of factories in China, so each requested sample takes months to arrive. (hedged) — 00:11:56
  • ★★ Lightmode cannot compete with budget keyboard brands, Ali says: they have volume discounts, better terms with factories in China, where many of them are based, and far more understanding of the business. — 00:12:26
  • ★★ Ali prefers the Lightmode keyboard to Keychron's for its looks and feel; an extra $50 for a keyboard he uses eight hours or more every day seems worth it to him, though others will conclude differently. — 00:12:55
  • ★★★ Lightmode sells the keyboard for $149 plus $15.90 shipping; the product itself costs $73.42 and freight including duties $8.23 per unit. — 00:13:21
  • ★★★ Per Lightmode keyboard, fulfilment costs $3.67 and payment processing $5.77; operating costs such as the GenFlow agency fee, storage, warehousing and the CRM are about 40% of the product's cost, so selling at $120 would only break even. — 00:13:44
  • ★★ When Ali's team sold Essentiali stationery, a productivity planner at about $25 or $30, he mentioned it once on YouTube and commenters were absolutely outraged at the price. — 00:14:51
  • ★★ A business launched from scratch has no volume discounts or economies of scale: Walmart orders millions of planners and can charge tiny amounts, while a business ordering hundreds to thousands of units cannot if it wants any margin. — 00:15:17
  • ★★★ The Lightmode keyboard has an 18% net margin, against about 95% for Ali's online courses business. — 00:15:17
  • ★★★ When getting a business off the ground it is almost impossible to compete on price, and Ali advises not even trying: competing on price is a race to the bottom; ideally target people for whom $150 versus $100 for a keyboard makes little difference. — 00:15:44
  • ★★ Hipyo (quoted): Hipyo, underwhelmed, says the Lightmode keyboard isn't exactly a bad keyboard, but it has no gasket mount and lacks a lot of enthusiast features. — 00:15:44

00:16:09 — Is this actually a good product?

  • ★★ Ali was relieved that Hipyo said the keyboard does what it says on the tin, because that is what his team was going for. — 00:16:22
  • ★★ Ali's team added weights to the Lightmode keyboard because without them it felt very plasticky, and an aluminium design would have cost more. — 00:17:08

00:18:08 — Hipyo's biggest problem: using a productivity expert's authority to sell tech

  • ★★ Hipyo (quoted): Hipyo's biggest problem is that Ali, with a productivity expert's authority, appeals to an audience that knows nothing about keyboards and sells it a tech product worse than it could find with a little research. — 00:18:09
  • ★★ Lightmode targets people who don't know or care much about mechanical keyboards and want a first, starter one, Ali says; it does not claim to be the best or the cheapest on the market. — 00:18:34
  • ★★ In what he calls a grandiose analogy, Ali notes that The Rock's tequila brand does not tell buyers there are 400 other tequila brands and they should taste them all first. — 00:19:17
  • ★★ If not urging buyers to research other brands were scummy, Ali says, every tech company would be scummy, since none encourages that. — 00:21:03
  • ★★ Ali would agree with Hipyo if he were claiming the keyboard is categorically the best on the market, but he is not. — 00:21:39
  • ★ Ali's publisher calls him a productivity expert, and he is hired as one to give talks at Google and Facebook. — 00:21:39 · Google, Facebook
  • ★★ Asked whether designing a keyboard he likes, as a productivity enthusiast, and selling it is scummy, Ali says he doesn't know and leaves it to viewers to decide. (unsure) — 00:21:39
  • ★★★ As of 13 March 2024 the Lightmode keyboard had made £23,167.43 in sales from 206 orders, with a 0.32% conversion rate Ali calls not amazing; the business is at least £200,000 in the red on it. — 00:22:16

00:22:19 — How much money the keyboard has made

  • ★★ Started over two years earlier, Lightmode was always at the bottom of the business's priority list, a side hustle with a meeting every few months with the agency GenFlow to review samples. — 00:22:41

00:22:42 — Lessons learned: focus, the marketing message, quality, go slow to go fast, the bad feeling

  • ★★ Cal Newport (quoted): In Slow Productivity, the principles of slow productivity are to do fewer things, to work at a natural pace and to obsess over quality. — 00:23:23 · Cal Newport
  • ★★ Measured against Slow Productivity, Ali says Lightmode did not obsess over quality, its bar being whether Ali would use the keyboard, and his business is still trying to do way too much. — 00:23:23
  • ★★★ Ali's advice to himself two years earlier: don't take on a new project unless you can commit large amounts of focus to it; doing something half-baked is worse than not doing it at all. — 00:23:50
  • ★★ After Hipyo's video, Bhav, on Ali's team for about three years and a lover of tech, bags and keyboards, became the team member in charge of taking Lightmode forward. — 00:24:12
  • ★★ Ali thinks the Lightmode keyboard's marketing message was too strong and on the nose; while filming it in Los Angeles he already felt uncomfortable saying it. — 00:24:12
  • ★★ Ali let the pressure of the single filming window, and all the money already spent on the keyboard, rush him into filming the marketing anyway. — 00:24:50
  • ★★★ Ali's advice to himself for marketing a product: take your time and make your own comfort with the message and the brand's vibe the north star, rather than doing whatever it takes to get the product out. — 00:25:25
  • ★★★ Ali's team will reshoot the Lightmode keyboard's videos and ads and redo the website material so as not to oversell it. — 00:25:47
  • ★★★ Ali expects the Lightmode keyboard to make no profit; the team will be lucky to break even on it. — 00:25:47

  • ★★ The keyboard is a first version and testing ground for whether Ali's team wants to keep building tech products: the goal is to learn rather than to earn. — 00:26:10

    “to learn rather than to earn”

  • ★★★ Ali wishes he had asked the mechanical keyboard reviewers on YouTube for feedback, paying for their expert opinion, to review the keyboard offline so it could be improved before launch. — 00:26:10

  • ★★ Ali also wishes he had done more user testing with ordinary people, for example asking a hundred people at a Q&A event in London to try the keyboard. — 00:26:10 · London
  • ★★ Historically Ali has operated on "move fast and break things": a bias to action, putting ideas out, letting the market give feedback and iterating, the lean-startup way of building a minimum viable product. — 00:26:58

  • ★★★ Now that he has an established brand, Ali says a rushed bad product does more damage than moving fast is worth, so his team is shifting from "move fast and break things" to "go slow to go fast". — 00:28:05

    “shift from move fast and break things to go slow to go fast”

  • ★★★ Before paying the factory invoice of 200,000 to 300,000, Ali had a weird feeling but ignored it, telling himself he was irrational and a perfectionist, a classic sunk cost fallacy: two years were spent, and GenFlow, paid only through a profit split, had invested much. — 00:28:05

  • ★★★ Ali's lesson: if you have a bad feeling about something, take it really seriously. — 00:28:54
  • ★★ Lightmode was going to release a bag next and has sampled about eight versions, but none is yet better than Ali's daily driver, the 30-litre Peak Design Everyday Backpack, which he calls really good. — 00:29:21
  • ★★ Once Ali is happy with a Lightmode bag sample, the team would send it for feedback to bag experts, people at Nomatic and Peak Design, and tech YouTubers. — 00:29:49
  • ★★★ The quality bar for a product Ali's team releases should be whether the team thinks it good enough and stands behind it, rather than whether Ali does. — 00:30:45
  • ★★ Anyone who bought the Lightmode keyboard and does not like it can email the team for a refund, a no-questions-asked money-back guarantee as with all their products. — 00:30:45
  • ★★ Ali agrees with a commenter that Lightmode probably would have been better off making a keycap set, as much of a keyboard's feel comes from its keycaps; customising a white Keychron or NuPhy would have been easier. (hedged) — 00:31:37
  • ★★ Ali's team still wants to build its own keyboards: the Lightmode keyboard is the first version, and they would like a second version to be even better. — 00:32:05

00:32:18 — Call with Hipyo

  • ★★ On a Zoom call with Hipyo, Ali proposes repositioning Lightmode away from optimisation and efficiency claims such as typing faster, towards making things that look nice and are delightful to use. (hedged) — 00:32:34 · Zoom
  • ★★ Hipyo says that repositioning suits keyboards, which are ultimately about everyone getting their own personalised experience of what they like best. — 00:33:02
  • ★★ Hipyo: Before he had a really nice keyboard Hipyo did not like sitting down and typing; once he got one he began to enjoy typing more. — 00:33:29
  • ★★ Hipyo: Explaining his "scummy" remark, Hipyo says Ali uses his authority as a productivity figure to position himself as an authority on productivity tech. — 00:34:52
  • ★★ Ali sums up Hipyo's point: he is seen as a guru in one domain and tries to transfer that authority to a somewhat unrelated one. — 00:34:52
  • ★★ Hipyo's advice to Ali for the keyboard: listen to your audience, to him as the keyboard guy and to everyone, and Ali can make a really good keyboard. — 00:35:19

00:35:41 — What is one thing you're taking away from this?

  • ★★ Ali says the video is no apology and there is no record to set straight: pretty much all of Hipyo's comments were spot on. — 00:35:42

Threads in this video

Where the stories that moved here went next

Mentioned

Central: Ali's tech, keyboards and bags product brand · Hipyo · key man risk

Also: People: Bhav · Cal Newport · Dwayne Johnson

Projects: Essentiali

Works: Slow Productivity

Organizations: Airbnb · Amazon · Facebook · GenFlow · Google · Grovemade · IQUnix · Keychron · LG · Logitech · Nomatic · NuPhy · Peak Design · Shopify · Ugmonk · Walmart

Concepts: bias to action · go slow to go fast · minimum viable product · move fast and break things · personal brand · sunk cost fallacy

Places: China · London · Los Angeles

Products: Cherry MX Red · Peak Design Everyday Backpack · Zoom

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