MtoM #98 - Entrepreneur Takes New Product to Market

This is the White Coat Investor podcast, Milestones to Millionaire, celebrating stories of success along the journey to financial freedom. Hello, and welcome to another episode of Milestones to Millionaire. This is episode number 98. We're here to tell the story of Eli, who brought a product to market. And this is going to be a little bit of a different podcast than you're used to, but I think there's a lot to learn here, so let's dive in.

If you are finding our podcast informative and helpful, check out our website. Since 2011, we've been working hard to provide valuable personal finance and investing information. Through thousands of blog posts written by an array of authors, you can find information on how to manage your student loans, fix and avoid common financial mistakes, understand your retirement accounts, optimize your investments, find professional help at a fair price, get started investing in real estate, and so much more, all at no cost to you. You can find out more about the courses we offer, the conferences we put on, the newsletters we provide, and interact with other WCI readers through our online forum. Head on over to whitecoatinvestor.com to start learning today. You can do this, and White Coat Investor can help.

All right, Eli. Hi, how are you?

Excellent. Thank you so much for having me.

I'm so glad you're here. Thank you so much for sharing your journey with us. So, as I understand it, you have brought eight products to market. You're an entrepreneur. So is that correct?

That is correct. Soon to be nine, but yes.

Wonderful. So you're bringing your ninth product to market next year? The first quarter of next year?

That's correct.

So tell us about your product a little bit, and tell us about how you got into doing all of this in the first place.

So the latest product that I'm bringing to market has been in R and D for five years, and so it's quite exciting to finally deliver it to our customers. And it's called Instafloss. It's a device that can floss all of your teeth in 10 seconds. And I had the idea for the product when I was eating a bunch of mango with my brother. And we're like, there has to be a way to get rid of this, you know, much quicker. And by that time, I don't remember how many products we came out with, but, you know, somewhere between four and eight. And, you know, we were already in the consumer technology world and we had already been building it. So we're thinking about this very mechanically. And so, you know, I started buying dental textbooks, I started reading about the problem. I had ideas, but, you know, of course, I'm more of a mechanical person, so I brought on dentists and a dental scientist in order to, you know, discuss the science with them and how to validate the idea. And I didn't really know how much I was getting myself into five years ago. But five years of R and D later, uh, we are now just around the corner to deliver to customers. So it's been quite a ride.

Oh, my goodness. So, like, regular floss wouldn't do for you? You had to get it done within 10 seconds?

Uh, well, it's not just me. It's 70% of people regularly skip flossing, and the reason they give is because it takes too long. Yeah. So if you remove the number one obstacle, you can really help people's health.

Yeah, yeah, absolutely. And so that's so cool that you, you know, mangoes especially. I totally understand your struggle there. Delicious. But, yes, bad for the. For the flossing. So I'm just really. Okay, so first of all, Eli, you are not a medical professional. Right. You are an entrepreneur. So I'm just really fascinated by how you took this one problem and then you spent five years coming up with all this data and talking to all these experts. How did. How did even get there? How did you get started? Like, how did this whole journey start for you?

So I got into the consumer technology world well over a decade ago when my brother, who's a musician, he had the idea for a drum machine inside a guitar pedal, which is something that most musicians have a hard time finding drummers to play with. And if you can buy drum machines, you need to use your hands, and you can't use your hands for the drum machine and the guitar at the same time. So it's like, can we do this hand, Hands free in a way that's not very difficult and intuitive? And we came up with sketches, and neither of us really had any money, but we found a engineering firm that believed in the product because there were a bunch of musicians in the engineering firm, and anyone who's a musician would know that that was easily going to make money. So they said, look, we'll take this with no payment up front, but you need to run a crowdfunding campaign, and when we know you're successful, you'll be able to pay us back. Now, that was a great way to be able to start it, but it also meant that we really had a lot on the line. So we worked very hard on that crowdfunding campaign, and luckily, we broke the record for the largest crowdfunding campaign for a musical tech item ever at the time. So we were able to pay the engineers back, and that's how our first company started.

Oh, my God. How much did you raise?

We raised 350. And this was in 2013. So there have been companies that have broken our record since then, but at the time, we were number one.

Amazing. So you just, you brought this, you brought this idea to a bunch of people that could, you know, make it a reality, and then you made it happen. So you and your brother started the first company, and then where have you gone since then?

So we've come up with a number of products. The Instafloss, though, because it's in a completely different industry. I started a new company and I brought on from the beginning, I brought on Dr. Animas Karenhas, who's the ADA chair of the Council of Science. And so she really advised us on how to be sure that this is actually effective and accomplishing what we're supposed to accomplish. So we started with our initial prototypes. We actually were flossing pig heads. We would floss the pigs. We would cut away the gums. We would see how much, how much plaque we were getting rid of. We would make adjustments to the prototype. This actually caused a little bit of strife because I started the second company in the office of my first company, and some people who worked there were like, why are you flossing pigs in the food sink? Do science in the science sink. And it was just a mess. And then the next stage, after we got it right, and we're like, okay, the mechanics work, the device can do what it's supposed to do, and it works on pigs. Now it's time to move into humans. But before we did any, you know, actual approved trials, I wanted to try it myself. And so I started flossing with it. And it felt really amazing. But I'm used to flossing for, you know, like, two, three minutes perhaps. And if you do the math, 10 seconds with the InstaFloss is the equivalent of two minutes with another device. So two minutes with the Insta Floss is 120 seconds, which is the equivalent to 24 minutes. If you do it for three minutes, it's 36 minutes. And so I was flossing for half an hour multiple, the equivalent of half an hour multiple times a day. And any dental professional will tell you that that's not a good idea. And so after, like a week of this, I actually started breaking out in sores. Like on my gums, on my, on my, like my tongue, everything. Oh, my go. They went to a dentist, sort of an emergency, and he's like, okay, you got anog. This is essentially trench mouth. This is what they would get in World War I because you stripped the top layer from your gums and you got infected. So we're going to give you antivirals, antibacterials, antifungals, any domain of life, we're just going to kill.

Oh my God.

And so that's when I realized, like, okay, there was a big problem that people don't floss enough, but you also want to prevent over flossing. It's a good thing I did it on myself before we went into human trials, because what we added to the device from that was after the 10 second floss, it blinks yellow, it stops, essentially says, cool off, slow down, don't do this again. So you would have to really intentionally do what I did. You can't do it by accident anymore. And then we went into human trials and then we saw that we are actually more effective than any device currently on the market. And then we spent the last two years working on the molds for manufacturing. And finally, after five years and three and a half million dollars of development costs, we are ready to finally deliver to customers.

Wow. So you put literally your own skin in the game. That is, that's pretty impressive. So I want to know more about like your personal financial journey during all of this. So that first, that first product that you made, you said it was, you did really well fundraising for it with the drum machine into the guitar pedal. How did it do on sale and did that help your personal finances at all?

It did. However, what we would do is we would. When you're coming out with new products, the sort of fixed cost, the R and D of that can be expensive. So if we were to just decide, let's not develop anything new and let's just take the money from the profits and pocket that, then, then, you know, I would see some personal finance, immediate financial gain. However, I think the last 10 years I've definitely been case studying a person who's rich on paper, but not really taking much of the money for myself because, you know, I really believe in the, the potential of, you know, expanding, creating something better, making a V2, making a V3, etc. So we've been funneling that in. But on paper, you know, should we ever sell the previous company and if we were to sell, you know, the insta plus at the current valuation, my net worth would be $25 million. But frankly I wouldn't accept that money right now because there's currently $1.2 billion worth of water floss for sold every year. And they take the number one complaint that flossing takes too long and they make it even worse. They make it take even longer. So Instafloss solves that complaint. So I think we can do better than that and therefore I think I would be a fool to sell out at the current moment before we actually demonstrate our market share.

Okay, yeah, fair enough. Do you pay yourself a salary from the company?

I do pay myself a salary, but I only pay myself what I need to live comfortably in the location that I currently am.

Yeah, I mean that makes sense. So you're paying enough for living. Are you saving for retirement at all?

I'm not saving for retirement. I am building value of the corporation for retirement.

Okay.

That's where all my chips are.

So you're investing for retirement in a company which is both high risk but really high gain as well?

I would say so, yes.

Yeah. Okay, so now that you have developed Instafloss, I saw your website and it's very impressive looking. Well, first of all, tell us about if someone else wanted to do this, they wanted to develop a product and put it on the market. What are the steps that they need to take to get there? Just like you have just done, right?

So if you have a product rather than a service and I could talk a lot more about products and services because that's, that's what I've created, I understand that industry way better. I would say the first thing you want to make sure is does it actually solve a problem? You know, there's nothing worse than a solution and look of a in search of a problem. It's not going to do anything. Nobody's going to want it. You have to solve a problem. If you solved a problem, my next recommendation to you would be to go to go to Google and type in Google patents. And Google has a great patent search function. Now this is not a professional patent search, but it should be your step one because it's free and you can see. Did anybody else patent this? And just because they have doesn't mean you can't do anything. You might be able to find an innovation, you might be able to work around their patents or maybe you'll just owe them a licensing the fee, you know, depending on the situation. But if they haven't patented it and your idea is patentable, which for that I would Contact a lawyer. Once you see, once you've done the search yourself, don't waste money on a lawyer. If you search it up and you find that it's already been patented, then I think you're in a much better position. Because especially if you haven't done this before and you don't have the capital and you don't have the team and you don't have, you know, the market position and the customers, et cetera, if you don't have a patent, you're probably going to get eaten alive pretty quickly. So I would say it's much safer and it's also much profitable if you have a patentable idea. So are you solving a problem? Has it been patented before? And if it hasn't been patented before, contact your patent lawyer, see if you could patent it. If you can patent it now, I would start contacting engineering firms, seeing how much it would cost to develop and what an estimated cost of the product would be. Okay, so now you know how much it will cost you to develop, what it might cost, anything that it might cost you, you want to multiply by at least three. So it costs you $10 to create, you need to be selling it for at least 30 in order to make money. If you could sell it for more than that, that's better. It gives you room to play with. Because if you are selling direct, you probably are going to need to spend a third on marketing. If you're selling to stores, you're probably gonna need to spend a third of goes to the store, sometimes more, depending on the situation, if it's a distributor. So anything less than 3 is very hard to make work. So if you know that your product is going to cost $10 to create, and you know that you need to sell it for at least 30, the next bit of research you need to do is will it sell at 30 and how much will it sell at 30? And that's sometimes more of an art than a science, because how do you know the answer to something that doesn't exist? So I would look at comparables. So, for example, with us, we looked at Waterpik and we saw how much Waterpik was being sold for. And we're like, well, if we can come in at the same price as Waterpik. But we're. But instead of making the number one complaint about flossing worse, we make the number one complaint better. I think that we have a pretty good shot at cannibalizing some, if not all, of those sales. And so you would want to do the similar thing depending on what your product is, and the more innovative it is, the harder it is to answer that directly. And so you'll probably have to start being a little bit less certain about will this price be good, will the demands be what I think it is? But at the same time, if it's that innovative, perhaps the reward is that much greater. So it could be even more worth it to pursue that idea if there truly is nothing like it.

Okay, and how do you know you've hit the, you know, all of these steps? How do you know that you have brought something to market that is valuable to customers? What is the measure of. Well, of course, the sale. Right. Of your product. But is there any other measure that you should really take into account before you even go to go to market?

If possible, get people's reactions of using it. You know, if people try it and they're like, man, you know, you're going to have a hard time. Because I think we undervalue just how important word of mouth is on Amazon. If you're less than four stars, you're essentially one star. So if people don't have like a four plus experience, then they're really just having, you know, if you're not making something great, it's, you're, you're really making something that's, that's not going to sell. So it depends on where you are in the stage. If you can create a prototype and you can try it and you love it, and all your friends love it, and then random people you give it to who don't have to be nice to you, love it and it solves the problem that you're seeking. Right. If you've solved the problem, then it has value. And so I would say see how well you've solved the problem and how much people like your solution to the problem. Obviously, if you solve the problem, but you create five new ones, that might not be the greatest value proposition.

Yeah. So do you, like, sell the product before it even comes to market? Are you able to do that?

So that is a great way to require less investment. And we have done that. I've done that pretty much for every product, including Instafloss. So with Instafloss, we've pre sold 2.5 million direct to consumers, which is one way that we've validated the demand. We validated people's experiences long before we even started selling to them, you know, because we would get testers in. If the testers didn't like it, we wouldn't even start to Pre order. Because then you're just going to get yourself in trouble. If you are selling things to people, things to people that they're not even going to like, that's more of a liability than anything. Sure, you have money right now, but they're going to want to return it. They're going to trash talk you. So step one, make sure it's good. And then once you know it's good, you can open pre orders. There's a lot of platforms like Kickstarter, Indiegogo and so on, and people will give you money full up front for a discount. And if you're doing that, I'd recommend to really work with either a marketer or an agency that really knows what they're doing. Because if it's not your expertise, that can really be hard to do. But luckily it doesn't have to be your expert. You know, in fact, none of this has to be your expertise. If you have the idea, you can partner every step of the way with people who know more than you. And you should, you know, everybody should know more than you every step of the way. The marketer should know more than you about marketing. The engineers should know more than you about engineers. If you need specialists, medical advisors, they should know more than you about the medical advice. And you should listen to people who know more than you. And if you have a team of people who are smart and competent and your product solves a need, then as long as you don't mess it up, I think you're going to be well on your way to a great success.

Wonderful. Thank you so much for all that vast knowledge. I'm going to ask you a couple of extra questions just about what you've just said. So you said an idea needs to be patentable. What makes an idea patentable?

So I don't think an idea needs to be patentable. There are plenty of ideas that can make money that are not patentable. In fact, most of them, most of the things that you see in the store either, are not patentable. At least they're no longer patentable because they've expired and they're making plenty of money. I just think that it's harder to maintain your market share and especially if this is your first time doing it, if you don't have a patent, you're going to be in a tough position. The big companies are probably going to eat you up. So I highly recommend that if you're going to be pursuing something, you pursue a patentable idea and I recommend that you get it patented with A decent lawyer. What makes a idea patentable is, in the words of law, it's novel and inventive. So it has to have never been done before. And it has to also provide some kind of utility, at least for a utility patent, which is the type of patent we're talking about. There's design patents. They're not really worth anything. Don't pursue it, because that just means the way it looks is patented. But if it looks different, then it's no longer patented. So. So who cares? Right? So you want to pursue a utility patent, which means that it provides utility and that the idea is. The way in which it provides utility is novel. So if you. If you created a new way of a better mousetrap, that's. That's a patented idea, patentable. Ide.

Okay. All right. And so you would go to a lawyer to get that patent, and. And then you would get engineers. Where do you find these people to hire?

So the Internet is the short answer of that. I think. I think the hardest question there is is vetting people that you're looking up, right? Yeah. Because sure, you can find people, but how do you know if they're there, if they're any good?

Right.

And honestly, that is also a little bit more of an art than a science. So I would. I would get a lot of quotes. Just because someone's more expensive doesn't necessarily mean they're good. And just because someone says they can do it for cheap doesn't mean they actually can. So there usually is some sort of middle ground between these two things. Some people will be overpriced, and some people will underdeliver. Definitely vet them to the best of your ability. If they're an engineering firm, say, what have you made that is like this? Is it on the market? You know, so if you're making a dental product, have you worked in dental products before? Are they in the market? Can I go to cvs? Can I buy them? Are they good? Can I contact the founders of that company and say, hey, these manufacturer. Sorry, these engineers said that they designed this. Did they really? What role did they play? Did they play a helping role? Or did they, you know, actually hinder your design? You had to hire another firm to. To fix all their mess, you know, which happens more than you would think. People say, I worked on this, and technically true, they did work on this, but not in the way that you would think. So it's kind of an arduous process. But if it's your money, you should be smart with your money. Try not to waste it. You know, really try to do your homework and try to verify as much as you can. Just because somebody says something doesn't mean it's true or the full truth. So contact, contact, contact as many verifiable third sources as possible. And even then you're going to be taking something on faith, but at least you're going to be taking it on as little faith as possible.

So there's no like website like Fiverr where you can hire freelancers. There's no website that has like a bunch of these people listed, is there?

So I found people for smaller and less important projects on something like Upwork, for example, and there's a million sites like this. So for example, I needed some 3D renders done because I wanted to show investors what it will look like. Hey, give me some money. And we're going to create this. And this is. And so I went to Upwork and you know, I didn't really need to verify so much because they have a portfolio and they're like, look, I did some 3D renders, but for engineers, you can find engineers via UPWORK as well, and they have reviews and it could be good. And honestly, for industrial design, I found some great people, but in terms of a more long term, thorough project, I've really tried to look up firms and verify their work. Not saying you can't do it via Upwork or any of the competitors, just it might not necessarily be your best route for that specifically.

Okay, thank you. That's all knowledge that you know us medical professionals following a very prescriptive path to our employment. That's stuff that we don't learn. And I'm sure a lot of our listeners will be interested in that process. So thank you for sharing.

Yeah, I just want to say that as medical professionals, you know what you need, you know what the patient needs. And so you're really in a prime position to come up with something patentable because you have knowledge and experience that very few people have as a percentage of the population. So if there's anybody who could come up with something and then realize that no one else has come up with this particular idea before, it's very likely a medical professional.

Yeah. And do you have any sort of like consulting roles available? Is that a thing?

So I don't have any consulting roles available, but I am happy to answer any questions if you email me@eliinstafloss.com I won't charge you. The worst I'll do is say, look, I'm not spending my time on this. But no, I think it's much more valuable for me to work on bringing Instafloss and our other products to market. But that being said, I want to see what other people come up with and I want the world to have more cool things that solve more problems. So I'm happy to, to answer emails, I'm happy to point you in the right direction. I'm happy to recommend engineers if I believe they're a good fit for you. I'm happy to recommend lawyers if I believe they're a good fit for you. The world is round, so I'm sure it will come back. But yeah, I won't charge for that.

Oh, that's wonderful. What is your next step now? Now that you're going to take it to market? What's the, what's in the future for you?

So we have, I would say a few different vectors. So one is getting it, we get it to market and we deliver to the people who've pre ordered. But then we have to get it on every bathroom counter. So for that we have to go through E commerce, we have to work on Amazon, we have to work on marketing, we have to get into stores as well as dental practices. We're going to have an educational arm to educate dental practitioners on our five years of research. We've put a lot of work into the Instafloss and we want them to know the science behind our product and we want to, we want them to be aware so when their patients ask them the question, they don't just say, well, I don't know. Sounds too good to be true, just probably not. So we want to have that conversation and so we need to develop the team to educate. In addition, we have more products that we're coming out with that are going to be complementary and we have to start developing that. And there's a lot of scaling we need to do on the manufacturing side. So that is going to be where I'm going to spend a lot of my time personally is making sure that we can produce enough units to meet demand.

Right, wonderful. Well, I hope that does become a problem for you, is to keep up with demand. What's one thing, if you were going to talk to another entrepreneur, what's one thing that you would tell them? One piece of advice that would be the key to your success.

One key to success, I would say, is be able to find, talk to and take the advice from people who know much more than you and at the same time really try to understand their work. So when the, the lawyers, the patent lawyers send you the work they've done. You could just be like, I don't understand any of this. I'll just take your advice point blank. No, really try to understand it. Try to learn from everyone, because then, because you have an idea, this is your baby, and you just see if you need to see it through. And in order to do that, you need to understand the advice that's being given to you by people who've spent decades learning more than you. So really try to understand as much as possible for everything that's going on in your business, because it will only help you if you don't understand the marketing, if you don't understand the engineering, if you don't understand the legal, you're probably going to make bigger mistakes than you otherwise would have made. That that would have been avoidable. I'm not saying you have to be the most competent person. In fact, you shouldn't. Your lawyer should be better than you. You know, your engineer should be better than you, and your marketer should be better than you. But you should try your hardest to learn as much as possible of their professions and their expertise, because otherwise you're wasting their time talking to them. And, you know, you might as well just say, hey, look, run this without me. And I'm just going to take it on faith because you're also going to need to realize when to fire somebody. You will encounter people who are not the best fit for you or your business. They're not necessarily as competent as you thought they were. And the more competent you make yourself, the sooner you're going to realize that.

I love that humility and I love that perspective of work with people that know more than you and learn from them. Thank you so much for sharing your journey with us, and I wish you all the best in your new product launch. Thank you again and have a great day and thank you for being here.

Thank you so much for having me.

Okay, so that was a much different milestones to Millionaire than we're used to hearing. I was really interested in how Eli was going to. Was going to develop his product, and now that he's taking that to market, he shared several different insights with us that I thought were very interesting. First thing he said was understand how big of a need there is for your product first before you go forward and make sure you can patent it, because without a patent, it's difficult to be successful. Then research the IP framework before anything else and learn manufacturing fundamentals to see if you can create a product in the target price range. So you want to get, you know, there's a lot of R and D, there's a lot of time spent on this product before it even came to market. And getting a little bit of insight into how that's done can be really valuable to white code investors. Because like he said, you know, we do have a lot of knowledge and a lot of personal experience that we can apply to create products that are actually needed in the space. So I hope you found that podcast helpful. And if you want to learn more about eli, he's@instafloss.com if you are finding.

Our podcast informative and helpful, check out our website. Since 2011, we've been working hard to provide valuable personal finance and investing information. Through thousands of blog posts written by an array of authors, you can find information on how to manage your student loans, fix and avoid common financial mistakes, understand your retirement accounts, optimize your investments, find professional help at a fair price, get started investing in real estate, and so much more, all at no cost to you. You can find out more about the courses we offer, the conferences we put on, the newsletters we provide, and interact with other WCI readers through our online forum. Head on over to whitecoatinvestor.com to start learning today. You can do this and the White Coat Investor can help.

Thank you for listening today. Keep your head up, shoulders back. You've got this and we can help at the White Coat Investor the hosts of the White Coat Investor Podcast are not licensed accountants, attorneys, or financial advisors. This podcast is free, entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.