James Monsees, Founder and CEO of PAX Labs Inc.
Thank You For Vaping: How PAX Labs Designed a Luxury Vaporizer with James Monsees
PAX Labs is changing the way we look at smoking. The beautiful elegance of the product is restoring luxury to the vaping world. But, developing a product that essentially sold itself for the first two years required an innovative approach to need finding.
As a Fellow at Stanford’s d.school, James Monsees often found refuge in smoking cigarettes behind the studio space; it was here that he met future business partner, Adam Bowen. “We would kind of look at each other like cavemen and thought it was quite a curiosity that there weren’t products target[ing] people like us; that want the joys of smoking without the detriments that typically come from it.”
PAX Labs grew from a joint thesis project into a global company that has now sold more than half a million units. On this journey, James has tackled funding challenges while achieving exceptional growth and implementing a global manufacturing strategy.
Defining the Dream
From the outset, the vision was clear: improve the smoking experience and leverage the appeal, consumer awareness and proliferation of e-cigarettes to introduce new products that are so innovative and so differentiated that they stand on their own as a product category.
In 2005, James Monsees and Adam Bowen were focused on developing the IP of the loose-leaf vaporizer, PAX. James and Adam knew that they were developing a luxury product that would be marketed to a refined, upscale consumer base; one that would have a broad set of applications and several performance advantages over novelty, e-cigarette products.
Lean and Clean
It wasn’t until 2007, when the duo devoted themselves fulltime to the venture and began looking for funding, that they realized most VC firms were off-limits since bylaws prevented investments in the “vice space.” As a result, PAX Labs (then known as Ploom) found limited funding in individual and family offices but “really had to prove the upside opportunity on next to nothing.”
Following a lean approach, James and Adam paid themselves very little or not at all; but as many entrepreneurs can attest, the “the fun of being involved in a company with so much upside potential outweighs not having a salary.” They hired a few employees that were just as excited about the company’s future as they were.
The small team found comradery based on what James calls being T-shaped, a principle he learned in d.school (Stanford’s Product Design School). Everyone on the PAX Labs team has a breadth of knowledge that connects one to another enabling them to work in harmony; and a depth of knowledge (expertise) in a very specific, core area.
The first 1000 sales were very difficult; “we were a new company in the market and extremely cash constrained.” The sales were accomplished without broad scale marketing; no TV and very limited print advertising. The magazines that did advertise the product did so out of a belief in the ethos and the mindset of the company; knowing that when the funds were available, PAX Labs would be back for more advertising space.
“PR was our largest asset, it got the word out really early on…we benefited initially by getting the word out with core subsets of consumers and then once people had the product they understood how much better this was than anything else out there.” As a result, for the first two years their strongest growth asset was word-of-mouth marketing.
To get this kind of product/market fit, where the product essentially sells itself, requires a unique take on defining key consumer insights. “For us, we had the benefit of being target consumers…we had a pretty good sense of what quality and desire looked like in the marketplace.”
To gain additional consumer insight, James and Adam invested a significant amount of time speaking to retailers, manufacturers, distributors and consumers to understand “what people are looking for and where the need case exists.”
James prioritizes this level of customer insight over focus groups, which he believes can be easily manipulated. “If you know how to perform need finding, where you are actually shadowing the customers; watching exactly how they use the products, regardless of what they say, if you can see what they do and you can see when they are frustrated, that’s where you get the real insight, that’s when you know, in your gut, that this is something that people are going to resonate with.”
The Sweet Spot for Epic Growth
The growth of PAX Labs has been excellent; growth drivers have recently switched from wholly organic (fueled by product differentiation) to more targeted marketing and sales activities.
To get to this point, James and Adam honed in on the perfect product/market fit by developing a product that has a broad set of applications and then focusing on the one individual problem with the best mix of opportunity and capital; making it the optimal spot for new product introduction. For PAX Labs, this was the tobacco market. There is still a lot of opportunity in tobacco but the success they have enjoyed thus far is fueling other opportunities.
As d.school graduates, James and Adam learned product design as a diverse pursuit. Pairing skills traditionally associated with creating and designing consumer products (CAD modeling, mechanical and electrical engineering and industrial design) with non-traditional skillsets.
They led elite interdisciplinary teams that built both a product and a business. The program instilled the importance of ethos, brand and core marketing messages in developing a vital business in which a product can grow; “you need great surroundings in order for a product to really flourish. In fact, a product is not just a product; it is a brand and it is what consumers care about and how they resonate with it. It’s how much they are willing to mention it and show it to other people and how voraciously they do so.”
Global Manufacturing: A Strategic Approach
The growth PAX Labs has enjoyed allowed it to reduce the price of its PAX product by 20%. This price reduction is a direct result of lowered manufacturing costs.
Preceding this success was a struggle to balance a desire for U.S.-based manufacturing with the clear advantages of manufacturing in China. PAX is hi-tech and complicated; the type of product that has been notoriously difficult and costly to manufacture in the States. Conversely, China’s long manufacturing history has forced the creation of an efficient supply chain to lower costs and remain competitive. With this infrastructure in place, manufacturing practices are now more sophisticated than those available in the United States.
However, James has found that automated manufacturing, referred to as “lights out” manufacturing, is easier to navigate in the U.S.; it is affordable, scalable and comes with greater expertise. To take advantage of the strengths in each geography, PAX Labs employs a global manufacturing strategy; sourcing components from 20+ countries with assembly being accomplished in China.
Before making any manufacturing decisions, James advises reaching out to those with specific expertise in both the product and supply chain to understand appropriates costs and quality expectations.
Building a successful business requires persistence. But James challenges you to re-evaluate your definitions of both success and persistence. Persistence is not just carrying on in the face of a difficult situation; instead, it “starts with the insight that develops into the product and company as something you believe, in your heart of hearts, can be a success…success in commitment comes from the inside out.”
Pivot or Persist – Get the Number One Asset Your Need to Make the Right Choice
Knowing when to pivot and when persist is a crucial aspect of employing the Lean Startup Methodology; both of which require confidence in your product and in your gut. Employ these confidence boosters to up your lean game:
- Individualized interactions with customers. Nothing boosts confidence like an “Atta boy!” (or girl!). Get in front of your customers and soak up the love.
- Sell products. The ultimate validation is sales. Gain confidence from sales numbers that are heading in the right direction.
- Gain perspective. Talk to experts and benefit from their experiences. Products and gut-feelings backed up by expertise are easy to promote.
- Build-in scalability. Find partners and manufacturers that make it happen on a small scale so there is minimal risk when you ship.
- What goes into developing a product so innovative that it is its own category
- The T-Shaped principle when it comes to building an effective and harmonious tea
- How to use personal experience to develop a product that achieves immediate market response
- Secrets in finding that sweet spot between the product and market to achieve epic growth
- The ‘lights out’ approach to mass-producing with affordability, scalability, and expertise
Full Transcript of the Podcast with James Monsees
Nathan: Hey, guys. Welcome to another episode of the Foundr Podcast. My name is, Nathan Chan, and I’m coming to you live from Melbourne, Australia. Hope you’re having a wonderful day where ever you are around the world. And we’ve got a real cool guest coming on today, and his name is James Monsees. And he’s the founder of PAX, they are a vaporizer. Now, if you don’t know what a vaporizer is, to be honest, I wasn’t that familiar with what a vaporizer is because I don’t smoke. But, it’s like an electronic cigarette.
And yeah, look, these guys are absolutely crushing it in the States. They’ve got a beautiful physical product. And they’ve sold, you know, at the time of doing the interview with James, well, this was over six months ago, they had sold over half-million units.
And I didn’t know of PAX because I’m from Australia. But in America, apparently, everyone knows about them. You know everyone wants one. They’re just like these beautiful electric. You know, when you look at the website paxvapor.com. Like, when you look at the website, you can see this beautify designed product. And what’s really cool about this episode, is I really challenged James, and really go deep on what it takes to build a beautiful consumer-based physical product. And its really, really fascinating.
So, there’s a lot of takeaways here, not just about, you know, wanting to develop a physical product, but also the logistics behind it. You know, the customer feedback side of things. And really, what it takes to build a extremely successful consumer-based product. So, that’s it for me guys. I’m really pumped about this episode because it’s a little different. As opposed to us, you know, interviewing tech entrepreneurs. Like, don’t get me wrong. PAX is based out of the Bay area in San Fran. And, you know, he did study at Stanford, and he comes from that circumvalued type world. But, he is a very interesting founder.
He’s doing some really cool stuff. And I’m sure there’s a ton you can takeaways from this one. Alright guys, if you are enjoying these episodes, please do take the time to leave us a review. Please do check out the magazine, as well, it is the fruits of our labor. I’d love to hear from you if you are enjoying these episodes, [email protected] F-O-U-N-D-Rmag.com. Alright, now, let’s jump into the show. The first question I ask anyone that’s coming on is, how’d you get your job?
James: How’d I get my job? Yeah. Will, I suppose, through will. How’d I get my job? Well, Adam, my co-founder Adam and I were buddies in grad-school and in product design at Stanford. And we spent a lot of time working in a studio that we had on campus. And part of the pain of being there all the time was relieved by occasionally smoking cigarettes behind the studio space. And we would kind of look at each other like we were cavemen. And thought, you know, it was quite a curious why there weren’t products that were targeted more for people like us that want the sort of the joys of smoking, but without the detriments that typically come from it.
And then, I guess I got my job through effectively deciding that Adam and I were just gonna give it a go. And I was a fellow at the d. School at Stanford at the time and I quit doing that. And Adam and I started dedicating all of the time to trying to get this thing started. Trying to raise money. Trying to put together a sort of plan of action for, you know, building a company based on this underlying vaporization technology. And eventually, people would give us money and I took a very small paycheck. And then I got a job I suppose.
Nathan: Awesome. So there’s a lot I’d like to unpack there, James. First of all, how long ago was it that you could conceptualize the idea for Plume? And how did you go about raising funding, because that’s something that a lot of our audience are looking to do? And yeah, let’s start there.
James: So, I mean the concept for Plume in general was, which is now PAX Labs by the way. But, it originally was Plume and through most of our existence, it has been. But, the concept had started then, I guess in around 2005 we started, sort of talking about it. That sort of story I just told about smoking cigarettes out back, that was back around that time period. But, we didn’t really commit, we weren’t able to commit our time fully to turning this into a business until, 2007. So around the beginning of 2007, that’s when we started looking for funding. I guess we spent some time before that meeting with BC’s around the Valley’s, to sort of gage interest. And, you know, basically give us notes, you know, on early business plans for what we were gonna try to do.
For us, funding was not as straightforward, I guess you could say, as most companies in the Valley. One of the wonderful things about starting in Silicone Valley is that there are, you know, there are funding sources in the form of venture capital. And that specifically available for, you know, starting such businesses. So there’s no better place on earth to start a company. And generally, in the tech space, there’s never been more availability of capital to fund good ideas.
For us, all of that stuff was really off limits, because venture capital in the Valley, almost all the venture money, venture funds in the Valley had LP agreements that restrict investments even what could be considered was more traditionally considered vice, those sort of vice space. Often that even includes things like alcohol, investments, things like that. The LP basis is so broad that it’s very difficult to create SPD’s or side funds to invest in. Although what we found, was a lot more interest from individuals in participating. So what we wound up doing was finding more money from private individuals, family offices, that’s where our capital is traditionally been from in the company.
But, is really a result and most of the work that we had to do just had to be cheap. We just didn’t have a lot of money, a lot of resources. We did it with very few people. We had to, kind of prove the upside of opportunity on next to nothing. We had to pay ourselves very little for a long time. Very little or nothing, for a very long time. You know, when you do that very well, and the fun of being involved in a company with so much upside opportunity, you know, outweighs the, you know, can outweigh, you know, the personal limitations of just not having a salary, or not having much of a salary.
Obviously, we always valued our employees. Although, in the earliest days we had very few of them in getting paid a fairly reasonable wage. But, even those wages were pretty low. And, you know, we were all just kind of in it together to try to make it work, and there was a lot of risk. But, you know, a lot of potential, reward. And that’s fun. It’s a fun environment to work in for some people.
Nathan: Could you describe for our audience a little bit more information on PAX Labs which was Plume, just about the product?
James: About the product, sure. Yeah. So, there’s one product line on the market right now that we’re selling, it’s called PAX. PAX is a loosely vaporizer and is pretty unique in the space. In that, you know, we’re really targeting, a more kind of refined, upscale consumer group for the product. We felt that there were other products in the market were a bit too gadgety, a bit to cumbersome, not really intuitive in nature. And ultimately, not just really refined.
That said, we spend a lot of time on the sort of underlying intellectual property on everything that we do. So there’s a lot sort of performance advantages on that product, as well. And over the next couple of years, you’ll see product introductions in a lot more categories. Where that becomes even more clear, the differentiation becomes more clear. The beauty of what we do emphasizing the taking a really core focus on vaporization technology is that it has a broad set of applications.
So PAX is, you know, in the tobacco space and that’s been a really interesting one that we saw a lot of really upside potential in the short-term. There’s some more, let’s say complicated business models that we’re, you know, now at a scale that we can really start addressing some of those opportunities. I think maybe interesting for your readership, you know, we very much had the stage thing in that way, right.
There’s no individual problem that we could tackle where there was sort of A, the size of funding and addressable opportunity nicks that was more revealable addressable than the tobacco market through early introduction. So, that’s why we started there. And it’s one we take really seriously, and we see a lot of growth opportunity there with a multitude of products. But, it’s not the end-all of the company, there’s a lot more we’ll be introducing later.
Nathan: I see. And why do people call vaporizers an e-cigarette? I’m curious around that because I don’t smoke. I don’t smoke. So I’ve seen people use these vaporizers, and they look really cool, and stuff like that. And I know you guys are killing it. So, I just like to get a little bit more insight around that.
James: Sure. Well, PAX is definitely not an e-cigarette. PAX is a different kind of vaporizer in that it uses loose leaf material in the product. So their sort of a different category. E-cigarettes, you know, got their name from just being, effectively a novelty product. And initially, they were simply electronic cigarettes. And they were marketed to be, effectively in the electronic version of the cigarette, right.
Something that would, in some ways simulate smoking in sort of the electronic form. I don’t love the name, right. Understand sort of where that came from, that’s a category that we’re not in right now. But, we did recently announce that there’s a product that we’ll be introducing in the e-cigarette space. But, we’re not interested in calling it an e-cigarette, and that goes back to sort of the ethos of the company. In the problem with the e-cigarette market is exactly what you just kind of eluded to is that you know, they’re making electronic cigarettes.
What we’re much more interested in is introducing new products that sort of leverage, you know, the consumer appeal of e-cigarettes. But, introducing something that’s sort of new and so differentiated that it stands on its own as a product category that has consumer awareness based on proliferation of e-cigarettes in the marketplace.
Nathan: I see. And I’m curious with Plume or like when we first started, how did you get, you know, your first thousand customers? Because I know it must have been a difficult sell or was it? Or was it a difficult sell?
James: Yeah, I mean, it was a difficult sell, Look, we’re a totally new company to the marketplace, right. And we were extremely cash constraint, right. There’s only so much we can do in terms of, you know, getting the messaging out. We couldn’t do, you know, broadscale advertising, they’re certainly not doing television advertising. Really, for the most part, we weren’t doing print advertising, magazines, whatever.
Sarah is on was able to negotiate, you know, great deals, you know, with certain periodicals that are willing to, you know, print on the cheap press because they just believe in sort of the ecos and the mindset of the company. And that we potentially, ultimately be able to spend more money on subsequent advertising and that came to be. But, really, for the most part, you know, PR was our strongest asset.
It got the word out really early on. But, we benefited most from the, you know, leveraging PR to get the word out initially with core subsets of consumers. And then, once people had the product, they understood how much better this thing was than anything else that’s out there. And the product really kind of sold itself, right. It became just so obviously differentiated and so much better. And so much more appealing that word of mouth marketing, you know, was our strongest growth asset for the first, god, first probably two years, with PAX in particular.
Nathan: Okay, I see. And when did you launch, and where you guys at now? Can you give our audience an indication of the growth that you’re getting?
James: Yeah. I mean, we recently announced, you know, that we surpassed half-million PAX’s sold. And, you know, as a result, you know, from the benefits of scale manufacturing, we’re able to lower the price on the old PAX, on PAX I from $250.00 dollars down to $200.00 dollars. And that’s reflected on our website now. That’s probably the only real metric I can give you at the moment for sort of the scale we’re at.
But, what I can tell you is the growth has been fantastic. The other thing I can tell you is that the drivers for growth have shifted from being wholly organic, right. With as I sort of eluded before, where we really so depended on the differentiation of the product to really drive growth. And now, much more towards, you know, targeted marketing and sales activities that are much more strategic in nature. But, that keeps growth coming along, you know, at a really significant clip.
Nathan: They say no. You mentioned that word-of-mouth was a big one, payoff. Was there any other, like you come from a product design background, now I’ve never seen a PAX. I don’t know if you guys sell them in Australia, I’m not sure. Like I said, I’m not a smoker, but I found it really interesting. Tell me about what our audience can learn from your product design skills?
James: Okay. Yeah. Well, first of all, no, we don’t sell in Australia yet. Although the, you know, the fact that you haven’t seen a PAX, sort of demonstrates a lot of upside potential that we really need to address. In the US it would be, it’s more and more rare for people to not have seen a PAX, at least at some point in their lifetime. So, there’s a lot of growth available.
What can people learn from my background as a product designer? Product design, in the way that I sort of studied and learned product design, is a really diverse pursuit. Obviously, there’s core components of that where, you know, you understand CAD modeling, mechanical and electrical engineering, you know, industrial design, you know, things like that.
Things that are sort of more traditionally associated with creating consumer products, and or the design of consumer products. These days, and especially at Standford, product design is much more broad than that. So, at the d.school, which probably the best way to sort of understand this. The people who study product design, generally lead teams of, lead interdisciplinary teams from all over the university. You know, building not just a product, but a business potentially, right.
So, my background is much more broadly, and not just building consumer products, but building companies to, you know, support the growth and the introduction of those consumer products, and a brand, and an ethos. And, you know, a set of core marketing messaging so that the product can really grow, right. You need great surroundings for the product to really flourish. In fact, a product is not just a product, right. It’s a brand, and it’s what consumers care about, and it’s how they resonate with it.
And it’s how much they’re willing to mention it, and show it to other people on how graciously they do so, right. All of those components are really early key. At the d.school, one of my favorite ways of talking about this was in the formation of what we call, T-shaped people. In that everyone on a team should have really like a breath of knowledge, that kind of connects them from one to another, right. So that your all kind of working together in harmony. But, each of those people should have a depth of knowledge, as well. Where they’re really experts in sort of one core area.
I guess what you could say is my depth of knowledge is, I mean, look I’ve worn hats of, you know, being a mechanical engineer. Being an electrical engineer, being a product designer, being an industrial designer, different things like that. But, really my core depth of knowledge is in product design in general. And sort of structuring products for consumer appeal, as well as, you know, a company a strategic organization to sort of make all of that work in that way, right. My depth of knowledge is really so broad that it may not even be a depth.
But, everyone else in our company really does have that depth in terms of some very specific that they bring to the table. And we’re very cautious about making sure that everyone is really well connected here. That everyone’s really working well as a team. And that everyone is participating pretty much across the board, even if the vast majority of their work is focused on one activity.
Nathan: Okay. And when comes to creating a physical product like you have. Do you recommend for because there’s, you know, many entrepreneurs that would look to create a physical product and design it? Do you recommend, you know, sourcing it in China? I’m curious to hear your thoughts on sourcing production of that product.
James: Yeah, that’s a good question. I mean it’s one that we struggle with a lot, right, because there’s a lot of history to US-based manufacturing. And, you know West these days it’s sort of, you know, become sort of the norm too, kind of, manufacture overseas, particularly in China, sort of complicated consumer products, especially technology products. But certainly, we always wanna manufacture as close to home as really possible. I guess what I can say is if your manufacturing a product that’s a complicated technology product like ours, it’s hard to do that at scale in the US.
Even ignoring cost, right, the supply chain really is so much more efficient these days through those types of products. In China, in particular, and certainly in some other parts of the world. But, initially, it was cost that brought that supply chain to China. And now the bulk of that supply chain, you know, was built on that early cost production. And now, just exists so much more efficiently there that that’s really the only way your gonna be able to get to scale really easily.
That’s not to say it’s impossible, you know, to do at least some component of manufacturing in the US. There are products that we’re introducing where we have, you know, we have major component of that manufacturing done back in the United States again. But, it really depends on what you’re doing. More automated manufacturing is much easier to do in the US. Depending on how much your product can be automated, there are a lot of US manufacturers that have been able to shift over to what’s called, ‘lights out manufacturing.
‘Where the automation is so good, that’s there actually no one supervising the manufacturing of it at any given point, it’s just all being done by the machines. And then, the people that are involved are just overseeing the quality control and production of those components. And, you know, we get real expertise out of that, but affordable expertise that’s scalable in the US. And then, there’s different countries, different, you know, we source components, you know, from all over the world. Probably, I don’t know.
Yeah, at least 20 plus countries, you know, at this point. And in a way, right, as a result, you can think of manufacturing being, you know, much more global than it is centralized in one area. Even if, you know, the actual manufacturer is putting together these pieces, you know, occurs, for the most part for us, China.
Nathan: I’d just like to unpack that a little more. So, do you recommend if you are designing a physical product that you should go to China, and try and source a manufacturer there? Or, you know, when you guys first started, how big of a run did you do for your first run?
James: Well, look I mean, we have the benefit, right, of having manufactured products or consumer products in particular, right. I’ve done that, at least on a consulting basis for a number of companies. And so we had some background in it. I think the most important place to start is getting some specific expertise, and manufacturing, and supply chain for your particular type of product, right. You just have to have some knowledge base and what margins really appropriate.
What quality control standards are absolutely necessary. And then, ultimately, where do you need to do that, right? It might not be China for anyone in particular. I do not recommend anyone who thinks they wanna make a consumer product, to just run over to China and start poking around. That’s not easy, get some expertise first. Find someone,you know, who’s really done it before.
Looking in the typical manufacturing processes that are, you know, for us this level of complication is, you know, is a number of different product runs, right. We generally do, you know, four, five test manufacturing runs at increasing scale before we actually start producing the product for the mass market. So, our earlies product runs were, you know, tens at a time. And then, we scale up to, you know, a few hundred generally before we can do enough testing to say that this is statistically significant enough data.
You know, that all problems, all bugs have been removed enough to be ready to launch the product for mass market. And, you know, start manufacturing in the thousands, or tens or hundreds of thousands, as the case may be now.
Nathan: When you first started, like did you go through like the phase of focus groups? And how much testing did you go through to make sure you got the product right? To create something that people really, really wanted that they would speak about because that’s not easy.
James: No, it’s not easy. For us, right, we had the benefit of being target consumers, right, and for the actual product. And having spent a lot of time, you know, engineering, and designing, and developing other consumer products. So we had a pretty good sense of what, you know, in quality and desire in the marketplace looked like. Especially after we spent just a very, very long time scouring the markets, speaking to distributors, speaking to manufactures, speaking to retails, speaking to consumers.
And just understanding what it is that people are really looking for, and where the need case really exists. We prioritize that always, right. Like that level of consumer insight, we always prioritize over things like focus groups. I’ve had times in my career where I’ve run focus groups. And to be honest, I don’t have a lot of faith in focus groups being the be-all, end-all answer.
That a lot of companies really utilize them for in telling them, you know, how well is this thing gonna sell? And how well is it gonna resonate with consumers? Because the reality is, depending on the structure of the focus group, you can get out pretty much any answer you want. If you do it well, if you know how to perform need finding, where your actually shadowing customers, watching exactly how they use the products, regardless of what they say. If you can see what they do, right.
And if you can see where their frustrated, that’s where you get the real insight, and where you know just in your gut that this is something that people are gonna resonate with. Now, that’s tough, right, for people to do. Because when you’re going out and raising money, your not gonna have the results of a focus group to point to. Your gonna say, “Here are my key consumer insights, and this is what I believe is gonna really, you know, change the market.”
We, the benefit of having some really dedicated investors early on, that wanted to invest in us and believed that, you know, our insights were true, and we were able to convince them of that. But, in a lot of cases, if your gonna go out and find venture financing or whatever, the proof-points are gonna have to be much more clear too, you know, solicit investment, you know, at a reasonable valuation. So, sometimes your gonna have to do a little bit of each. But, if you wholly focus, you where product development based on focus group testing. I think you’re setting yourself up for likely failure.
Nathan: So when you guys launched, tell me about some roadblocks you had, or any big. I don’t like to call them failures, but any learning lessons that our audience can learn from, from you guys and launching, and achieving scale, and doing stuff you’re doing now?
James: You know, if there’s one thing that I think is probably the most valuable insight that we learned from just getting up and started is, persistence. And persistence, is not best achieved just by, you know, finding out the, you know, far along the line that you need to, you know, that your choice is either to stick with it or abandon it. You know, your in a set of pretty, you know, difficult situations,right.
It starts with, you know, the insight going, developing the products, you know, developing the company in the first place. This is something that I really believe in. This is something that I really wanna dedicate a meaningful portion of my life to. And this is something that I believe in my heart-of-hearts that can achieve real success at scale as qualified by whoever it is that, you know, wants to do it. And, you know, you really have to commit to it, very much early on.
Because you don’t want to find yourself in a situation later on where you’ve taken on capital and you’re committed to investors. And that becomes your rationale for why you’re committing your time to it. The success and commitment comes from the inside out, right, not from some external party. In terms of achieving scale, it’s really about roadmap. You know, I may wanna get to X place, right, at some point in the future.
But, I’m going to need to run a company in the meantime. I’m going to need to show some level of investor success along the way. And each of these, sort of stages of the company, needs to kind of fit together in a way that really can be addressable.
You may need to do focus groups as useless as they may be early on in your company. That may be a major focus of what you need to do to access capital. And the results of those focus groups, to some degree may generate insights that you need to validate through external means. And you may be introducing a product that’s a bit different from what you really want to get to eventually. But, you may need to do that for awhile to make yourself a really investable entity.
And when you achieve those goals, you’ve already mapped out hopefully, how the success of those goals leads you into steering the company towards the thing that you really wanted to be able to have it be eventually. Obviously, you don’t wanna sell yourself short and just be, you know, doing something, that you’re not interested in long-term. So the belief really becomes, can I get from point A to point B as long as it continues, you know, along a trajectory?
Nathan: Awesome. You know that’s a really good one. Persistence is so key and we have to work towards wrapping up. But, I have a question for you that I’m dying to ask because I know you’re from the Bay area. You know you studied at Stanford, did you use your lean startup methodology, did you pivot? Did you go through any of that phase of looking at launching and using that methodology for manufacturing?
James: For manufacturing? Oh, yeah, definitely. I mean, we’ve had a lot of supplier and manufacturer shift. But, at the contract-manufacturer level, we’ve really only done that once in our lifetime. But, we moved from doing initially a butane powered product over to electronic products.
And that required, you know, a shift in our, yeah, a major pivot in our contract-manufacturing resources, as well as our entire supply chain. But, you know, the value is always on the consumer side. It’s always consumer first for us. So, if that shift is required to sort of meet consumer needs, you always need to be ready to pivot anything in the company to sort of meet and address those consumer needs.
And we’ve done that a lot, and a lot, a lot in the company. And it comes back to, you know, persistence and confidence in making those decisions, right. The easiest way to achieve confidence is knowing. Is from, honestly, individualized interactions with consumers, right. If you show something to a consumer whose ultimately gonna buy or subscribe to your product, your brand, your ethos.
And they really, really resonate with it, it is undoubtedly worth shifting anything you need to. Moving mountains to make that happen, and we’ve certainly done that over and over again in the company.
Nathan: One thing that I find is we talk about persistence, but then you find that a lot of people they’re using the lean start of methodology in there and they’re constantly pivoting, you know. How do you know when to pivot? And how do you know when to be persistent on a certain direction or product roadmap, would have you? I’m just really curious around that because it’s hard to know right, how do you know?
James: Yeah. Well, look, I mean, as I said I mean for me, and I believe this from having done it a number of times, right. That belief, you know, your core belief it’s internal, right. And that’s why founders lead companies, you know, have generally been so valued in the Bay area.
In particular, you know, that core feeling just in your gut, right. That this is what it takes to really achieve success in this specific area, is only achieved through persistence, right. It’s not through, you know, hiring someone to come in externally. It has to be, sort of part of the ethos of the company. But, it all comes down to the consumer, right, whoever is buying your products.
If it’s B to B, then your consumer is, you know, that business and you wanna meet people in a bunch of these businesses. And you wanna, you know, understand what they’re looking for, what their problems are, right. And they’re not gonna be able to just tell you these things. Your gonna need to shadow them.
Your gonna need to find out what really makes them tick? What does their life look like on a sort of day-to-day basis, right? What decisions are they making? What do they struggle with? What would make their life a lot easier in a product that you can introduce? Now, the stuff that we’re talking about in terms of focus groups, as an example, right, of proof-points in those core beliefs. Can also, you know, be pretty valuable error check in your methodology. You wanna be able to trust your gut.
But part of trusting your gut is getting multiple perspectives. And sometimes generating that confidence is not just from relying just on your gut, it’s that’s a very long way feeling. But, actually having outside forces, right, telling you I need proof-point. I wanna see, right, the results of the survey, or a focus group, or whatever. Well, if you run that in such a way that you’re testing your internal assumptions, and your able to get out a result that proves that. And you feel like heh, I didn’t have to fudge the numbers. Or, you know, or the strategies to much to actually do it. Well then, you know, you’ve achieved a level of confidence that is impossible to get just on your own.
The ultimate conscience that you can ever get that your gut or your knowledge of consumer needs is really on track is only ever achieved through actually selling products, right. It is the holistic marketplace dynamics and consumer dynamics of selling that product where you really get knowledge. So, sometimes the best way to do it is really on a prototype scale.
We sold a product early on where we just selling a few hundred of these products. We had, you know, some component of that consumer base be so in love with that product that, you know, we knew we really had something there. But, it wasn’t really scalable, right, because of the butane thing and because of other, you know, consumer education. You know, there’s a lot of reasons that you may have to shift components of the business to really make it work.
Nathan: Awesome. Yeah. No. Thank you. You’ve unpacked that really nicely then. Two more questions before I let you go. One, with your, you know, your level of knowledge about product design, how did you know that you guys were ready to ship your first version? How did you know?
James: You ever heard the old adage, “When in doubt, ship it.” There’s a varation on that on which is, “Fuck it, ship it.” I’d prefer the latter. But, look, I mean, often early on in the lifecycle of a company, your looking at, you know, volumes of product.
Where look, you just butted your head against the wall long enough that you know that to achieve a certain level of confidence, you just have to get it out into the marketplace and see how it does. And the scale of that product, worse case is so small, that there’s ust not necessarily a lot of risk in it. And you need to find, really lead manufacturing techniques, really good deals. really good partners, right. To just to make it happen on a small scale, even if that means that people in the office just slamming these things together, right.
James: That’s how we knew. We thought we had something that we thought could be really compelling to a core group of consumers. We want to test it, and we did. And, you know, one time we did that and we learned a lot about how the company is to ship. And one time we did that and, holy shit, we’re selling a ton of these things. And it just keeps growing it at an incredible rate. And either can happen, and you learn a lot from it, regardless.
Nathan: Awesome. Well look, thank you so much for your time. You’re really, really good. There’s a lot of eco insights around product design, launch, shipping. It was fantastic.
James: Great, my pleasure. Thanks so much.
- Explore PAX labs Inc.
- Check out Pax vapors accessories
- Learn more about PAX labs Inc.
- Follow James on Twitter