This transcript was generated from the episode audio and may contain minor errors.
[Music]
Welcome to a new week that will take us into December. This is Chris Guillebeau. I'm gonna have a State of the Union message for you soon all about the state of Saadisil School, some things we've been working on for a while in our quest to continuously improve this experience for you. But for now, as we kick off the week, I have a story about two business school students who actually start a business. This is notable and surprisingly rare because most business schools don't teach much about starting a business and most business school students are more interested in going to work for a big company.
So good for them. And also we're gonna talk about a problem hiding in plain sight. These guys end up making $125,000, so far it's still going, selling headphone attachments or earphone attachments. If you've ever used iPhone earbuds or earphones, especially the older versions, you may have had a hard time getting them to stay in place. I had that problem myself when running many times.
In fact, I switched earbuds because of that problem. Why Apple hasn't properly solved this issue is anyone's guess, who knows? But in any case, these guys go to market with a simple yet elegant solution that ends up bringing them a lot of orders. We're gonna talk about how they got their idea, how they made it happen, how they got the money for it, all that good stuff, perhaps something that might help you along your journey or bring you an idea of your own. So here's a thank you to our sponsor.
They allow the show to be free to you. Always appreciate them. And I'm gonna tell you all about these business students who make a lot of money selling headphone attachments. [Music]
Helmut Weizach and Jeff Becker spent most of their time at business school generating business ideas. They came up with grandiose schemes to start companies that would challenge the status quo and knock the likes of Google and Facebook off their pedestals.
But they also wanted to make some money. They never found an idea they were ready to take action on. Or at least until the would-be world dominators went their separate ways, moving to different parts of the country, only keeping an occasional contact at first. They still liked the idea of starting their own shop, but they needed to wait for the right idea to come along. Thankfully, they didn't have to wait long.
Helmut stumbled upon the pair's first profitable idea in the headphone section of an electronics store. He noticed all these top of the line headphones from bows and beats. They had a little piece of rubber to keep the in-ear versions sit much tighter than the ones every iPhone owner had. He tried them on, gave his head a few shakes, and found they worked pretty well. There was just one issue, they cost $300.
Helmut thought there had to be a cheaper option, or at least there should be. The little piece of rubber can't have been too expensive to make. What if there was a clip-on version he could add to the free headphones everyone received with their iPhone? He called up Jeff, who loved the idea. They decided to do some testing to see if there was a market for it.
The first step was to contact local engineers to see how expensive the molds would be and whether it was even possible to make the product. They used these conversations to get an insight into product creation and understand the different aspects like creating the molds, ordering samples, and what materials to use. Once they had the confidence they could actually create the product, they moved to searching on Alibaba, where they contacted every silicone manufacturer they could find. They used the chat function on the website to start lots of conversations and see what people responded with. This helped them to find an average market price and understand who was trying to fleece them.
They found a few manufacturers they were comfortable with and put them on hold to see first if there was market demand. To trial the idea, Helmut and Jeff created an Indiegogo campaign. They used a designer from Upwork to help generate some basic concept art showing the product in their ear. They also gave their idea a name, Earhooks, with an X. To generate interest, they assembled a street team of their family and friends.
They printed some cheap T-shirts and business cards and went around asking anybody wearing headphones if they would be interested in this kind of product. If they were, they directed them to the Indiegogo campaign where they could pre-order a pair. Over the course of 30 days, Earhooks raised $9,751 from 400 backers in 32 different countries. Helmut and Jeff couldn't believe there was such demand for the product, but they weren't complaining. They felt like they finally had a real business venture on their hands.
They used that Indiegogo money as their entire startup costs without taking a profit. They invested it all into buying samples, building a website and ordering their initial product run. They say that one of the most expensive and time-intensive parts of the process was getting the initial sample to fit in a human ear. They hired that same Upwork designer to create the design for the mold and sent it to their manufacturer for a $200 sample. But once they received it, they found it was far too big for a human ear.
It took a few weeks and a couple hundred dollars more to get it right. Eventually they did and they placed their first large order. Earhooks pricing was based around their backers' comments on Indiegogo. They found that people commonly wanted to pay around $10 for them. So they settled on that.
The silicone products were cheap to make while still being high quality, which left enough margin for the business to have a profit. When they launched online, sales were slow at first. That profit margin was high percentage-wise, but not dollar-wise. So they couldn't afford to invest in advertising. Instead, they put their time and effort into blogging and online videos.
This helped them get whatever traffic they could. The most surprising aspect of earhooks, they found, was people's visceral and emotional reaction to them. Consumers had struggled with their headphones falling out for years and couldn't believe they finally had an affordable solution to the problem. They also couldn't believe that these weren't included with the purchase of an iPhone, but that's another story. This meant that their product reviews were always positive and they generated a lot of referrals, which despite their slow start, led to a snowball effect on sales over time.
The biggest turning point was adding the product to Amazon. Although they were worried that platform might eat into the profits on their website, they quickly found a brand new audience and profits soared. To get attention on Amazon, Helmut recommends you focus as much time as possible on the basics. Get your images and product descriptions right, and when you do, you'll be in the top 10% of sellers by default. From there, it's just a case of tweaking, improving, and testing.
Ear hooks currently generates around $125,000 a year in sales. They've been able to ensure a lot of this is profit by always keeping fulfillment in-house. For the first few years, they did this themselves from boxes in the spare bedroom until demand grew enough to where they had to hire a small team to run fulfillment from a warehouse space. The business now runs itself now, at least more or less. They don't need to spend much time on it.
Despite starting as a full-time hustle, this allowed them to transition ear hooks into a side hustle and both work on different projects. Jeff now has a full-time job at LinkedIn while Helmut works in consulting. They continue to enjoy this passive income, even as they focus elsewhere. [Music]
All right, a bit of analysis here. First of all, congratulations to these guys, super fun.
I need this product myself. I actually went and just added it to my little wish list on Amazon, so I will make that purchase and see how it goes for myself. Now, a product-based business does not need to be expensive to start. I mean, here they had a $10,000 crowdfunding campaign. They used all that money toward their business, but they probably could have even spent less.
So $10,000 at the high end to have a product that is now selling six figures every year. And remember, they kind of tested each step along the way, so they weren't making a big commitment. They weren't spending $10,000 from their savings. That was all from the crowdfunding campaign. So definitely a clear solution to a real problem, like I said, and good for them.
Now, this is the kind of product that tends to do well with crowdfunding. I recently saw another one I liked that had raised more than half a million dollars, and some of these things can really just take off. The danger that these guys face, so there are some negatives here. The danger is that it's easy to copy this. In fact, I went and looked and I saw like a bunch of copycats already.
Second, Apple is always changing its products, so you never know. They could come out with something like this or just fix the problem in the first place. And then lastly, they're dependent on other factors outside their control, including how their products are displayed on Amazon. So a lot of things could happen that could essentially not completely knock the business out of commission, but definitely create some really major substantial structural changes for the worse. Probably the best thing they could do is branch out and create another product based on what they've learned through this experience.
So I took a look at their website, it looks like they're already thinking about that. They're already working in that direction. They're marketing the ear hooks toward people who have AirPods now. And it does seem a little problematic because just looking at the reviews, you have to take these things off every time you put the AirPods in the case, which is a bit of a hassle. But the point is they're thinking in the right direction.
Hopefully they'll come up with another product or iteration or design line at some point soon. And if not, worst case scenario is, well, they've made a lot of money, they've had a great experience, and now they're applying this in different ways, and it'll help them for the next one. So well done. Like I said, I'm gonna check it out for myself. And I hope you, the listener, enjoyed this episode.
Hope you learned something from it. There's always something to learn, always something to apply, even if you don't wanna have a physical product business. In fact, you might listen to an episode and say, actually, having listened to that episode, now I know what I don't wanna do because that sounds like a lot of work, and that sounds like something that is apart from my skillset, and maybe I could do something better. But in evaluating comparative ideas, you'll get an understanding of what you're gonna be best at and what you're gonna be most successful at. And of course, that's what you should do.
So I hope your week is starting well, wherever you are. Inspiration is good, but inspiration with action is better. We're gonna link all this stuff up as well as everything that I mentioned. I mentioned things like Upwork, where they found their designer. I mentioned Alibaba, where they found their manufacturer.
All that kind of stuff will be at sidehustleschool.com/695. This episode, 695, our free show notes page, which we have for every single episode so far, and many more to come. Thank you so much for listening. I'll be back tomorrow. My name is Chris Guillebeau.
This is Saddleschool.
