The last two months or so has been a wild ride at Luma Labs, the camera accessory company that I’m a co-owner of with Greg Koenig. To give a bit of background, we launched our company with an improved camera sling last year called the Loop to a warm reception. It did well and was a great product, but we knew it could be better. So we dug in, did our homework, and came up with a second-generation Loop that improved on every single aspect of the original, including having a bad-ass new connector that took a lot of collaboration and design work to come up with.
Late in the development process of the new Loop, we got our first hint that it might exceed our expectations in the form of a leak. Albert, one of the people that we had sent an evaluation unit to decided to write it up and post it on a few forums, including the Canon Digital Photography Forums, the XtremeSystems Forums, the Around the World forum, and more. This was quite the surprise. Greg and I didn’t expect that our little company would have a leak like this, but we weren’t angry about it either. Instead, we saw it as a vote of confidence and adjusted our planning numbers up.
The question for us what what numbers should we plan for. After all, we knew we had a good product on our hands. We were happy with it and we had lots of validation from our field testers, both privately and—thanks to the leak—publicly. The wild card was that we were going to be launching it during the holiday shopping season, the craziest time of year to plan for. Usually, to plan for the holiday season, a company relies on historical sales, plots some curves, and make some guesses. While we had a year of sales figures with the original Loop, what we were hearing from the field made us think that that we would exceed our historical figures. In addition, we weren’t just launching the Loop. We were also launching a sister product, the LoopIt. We knew for sure were in unknown territory.
Here’s the problem with producing product for a launch of a new product. If you guess really high and you don’t sell what you expected, you’ve sunk a lot of capital and might destroy your profit margins for a while or, even worse if you really bet wrong, bankrupt your company. On the other hand, if you guess low, you leave money on the table and disappoint your customers that can’t buy your product because you are sold out. Every company, big or small, faces this problem. Some of the best companies in the world succeed because they’ve mastered the art of making these guesses.
We made the best guess we could about our potential demand, sunk in as much money as we dared, and made a bunch of inventory to launch right after Thanksgiving. We didn’t bet small, mind you. Given the reaction to Albert’s posts, the reviews from our trusted friends, and our own feelings that we had something special, we bet the company. We put every dollar of capital our company had at the time at risk. We were nervous, but also excited.
We launched the weekend after Thanksgiving. The initial demand was even higher than we expected for the amount of promotion we did. It was manageable, but we started really worrying about what would happen if we got a big pop from a site like Gizmodo or Daring Fireball. It didn’t take long to find out. John Gruber linked to the Loop on December 6th with an awesome four-line review. Gizmodo piled on. Our site was flooded with visitors and we were sold out less than two days later.
The good news is that our site stood up to the shock wave just fine. We’re running on Heroku and even though I was on assignment at TEDWomen, all I needed to do was crank up the number of servers we had responding and the site performed flawlessly.
While we were pleased about the demand, it showed that we had bet way too low. We had exceeded every wild expectation we could have had in November before launch. We took the biggest gamble we could, put every dollar the company had at risk, and still were way behind the demand curve. Exciting, thrilling, and scary all wrapped up together.
We dug in and did everything we could to get as big a production run together as possible. We wanted to get in stock again before the Christmas season came to a close. After driving some of our partners crazy with rush orders and managing the product pipeline, we were able to get stock on hand yesterday. We put it up for sale at about 10:30 AM PST. We notified the customers on our mailing list that we were back in stock.
Six hours later, we were out of stock again.
My own personal reaction: Holy ****!
To say that it’s been a wild ride is an understatement. I’m personally blown away. Unfortunately, the Christmas shipping window closes early next week and then it’s vacation time for our suppliers. That means that we won’t be back in stock until January. We’re already feeling the disappointment—along with a bit of anger—from potential customers that visit our site and see the out of stock message. But, the situation is what it is. We‘ll deal with it. That’s part of business.
The next big challenge we face is as big as any challenge we’ve faced so far. We’re going to be back in stock in January, but how far should we push the throttle? We know we were way behind the December demand curve, but we actually don’t know by how far we were under. That gives us very little guidance to head into January with. And, as you know, the post-holiday market is a much different beast than the pre-Christmas one. We could actually negate our success this last month pretty easily if we make the wrong guesses.
We’re still in unknown territory. Fun times.