Whether you’re an inventor wondering how to manufacture your product and expand into sales or an Amazon seller looking to expand into retailers, the fact is the ability to sell product right now is big. On today’s show, Timothy Bush talks to Steven Selikoff of the Product Development Academy, a company that teaches everything you need to know – from unique product concept, through factories and manufacturing, to getting your products onto retailer’s shelves. Want to know all about developing a product from the onset all the way through to getting to retail? Then this is an episode you don’t want to miss.
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Making Your Dream A Reality With Steven Selikoff
There are lots going on in retail right now. Every time I open my phone, a lot of times I look at news stories on Facebook or on Twitter or whatever, 20,000 retailers closing 20,000 doors here. They’re calling it the retail apocalypse out there. One of the things I want you to focus on, one of the things I want you to think about is I want you to start thinking in terms of the essential retailers. What are the essential retailers that were moving forward during the shutdown, during the quarantine? How does your product fit into those retailers? Costco, BJ’s, Sam’s Club, Walmart, all the grocery stores, the drug store chains, the home improvement chains, all were essential retailers and even more than that.
Let’s start thinking about if we have another shutdown, the effects that’s going to have on department store retail and this and that is going to be unbelievably catastrophic. I’m hoping that it doesn’t get there. In preparation for the retailers that are growing and crushing it like Costco. Let’s think about how our products fit into essential retail. It’s been a long time since TLB Consulting has focused on specifically Costco. Our company several years ago was founded on working with companies specifically to get into Costco. That was our whole premise that we were Costco experts. We branched out in the last several years. We do a lot of different things. We’re starting to come back to looking at Costco specifically. I don’t even know how to make it, but I’m talking to my web guy about a little thing on our website where you can go in and answer some questions to see if your product is right for Costco. If it is, do you want to pursue that?Every decision has to be validated through the customers and pass two questions - do you want this and would you pay for it? Click To Tweet
Whether or not you are dealing with the whole mass, no mass thing, who cares? I’m talking about their ability to sell product right now is big. That’s where I’m looking. Now on the program, we have somebody that’s no stranger to On The Shelf. His name is Steven Selikoff. You have heard him on here talking about The Canton Fair Experience before. Steven has his own company. He’s developed it over the last couple of months. Steven has a new company that he’s been developing called the Product Development Academy. He finished writing a book about how to develop a product from the onset all the way through to get to retail, a complete guide, everything that you need to know. He’s coming on the show to specifically to talk about that and his experience and the things that he’s good at negotiation and working with factories. Steven is a wealth of information. We’re super excited to have him on the show again talking about his new company, what they’re doing, and his new book that’s out. Before we get to Steven though, I want to talk a little bit about our VIP Facebook Group. It’s up and running. You can go to the website under Consulting, scroll down, there’s a thing that you can click on that says the VIP Facebook Group. What is that? Why should you join another group? Besides that, why should you pay for it? First of all, it’s $19 a month.
It’s not going to break anybody’s bank. What you’re going to get in this VIP Facebook Group is the real deal. You’re going to be working side by side with me hearing what’s going on with the retailers that I’m talking to, the emails that I’m getting, the requests for samples, problems that we’re having with shipments or inspections, everything that’s going on. We’re going to be talking about it real-time in this VIP Facebook Group. It’s going to be targeted. You’re going to have access as you’ve never had access to before. I’m going to be showing you here’s a real email coming from a real buyer asking for a sample or wanting to do this or this is an email from a buyer that’s wanting to change the way we send them information. This is what they mean. We’re going to be talking about problems that are coming up. I have this huge order with Costco with a company in Canada. Every single day is a new issue that arises. We’re going to be talking about those as they’re coming up as they’re being solved so that you will know this is what happens. What is an inspection? What’s a preproduction inspection? What is the production inspection? What does it mean when they say out of the first 10% of production that they need samples sent to the buyer? What does all that mean? How do you do it? How do you make it happen? What are some things that you can do to avoid any issues, any mistakes, any problems? I’ll give you one now.
We had a product that failed because I’m going to say this wrong but the desiccant, it’s that little packet that sometimes you see in clothing or in a piece of furniture that absorbs moisture. In China, we sent them to the inspection factory but the person who was sending them to let them sit out on the desk for three days. They’d already absorbed a ton of moisture so they weren’t fresh. They failed. We had to write a whole report. This is what happened. I’ll get into that in the Facebook group. If you want to go to retail, if you want to get your products into retail, this is a Facebook group that you need to be in. No, if, ands or buts about it. We’re going to be talking about real things. We’re going to be engaging as a group. We’re going to be doing hot seats. If you have a problem, if you’re struggling with something, we’re going to put you out there and we’re going to let the group along with myself fix it for you.
If you’ve never done a hot seat before, the cool thing about it is you don’t come out of the hot seat. You have one problem. You talk about it and the group solves it. You don’t come out of that problem with one solution. You come out with ten possible solutions. It’s not a mastermind. It’s not a class. It’s a place where we’re going to gather on a weekly basis to talk about what’s going on in the situation whether it’s COVID-19, the retail apocalypse, eCommerce or Amazon’s having issues. It doesn’t matter. We’re going to be talking about it right then. We’re going to be discussing it and solving it right then.
Also, you’re going to have access. If I’m talking to a buyer, you are going to hear about it. If I’m getting emails from a buyer, we’re going to be reading those in the Facebook group. We’re going to be taking my clients out of it and all of that for NDA issues, weren’t going to be talking pricing and this and that. When buyers are asking me for something specific, never ever before have I ever gone into a forum, shared what the buyer was asking for and how we’re going to solve that? It’s access like you’ve never had. I’m super excited about that.
I can’t wait for you to be part of that. Go to TLBConsulting.com, go to Consulting, scroll all the way to the bottom and there’s a square that says VIP Facebook Group, click on that and hit join and then we’ll get you into the group. I almost forgot Steven Selikoff is here. We’re going to talk to him. I’m excited for you to understand what he’s doing, what he’s all about, and hear from him again. Without any further ado, let’s get right into it with Steven.
Steven, welcome to the program.
Tim, how are you doing?
Big Boxers, if you have read most of the episodes, you’ve heard Steven before. Probably the most prominent thing that you’ve ever heard Steven do is when we did an advertisement. It was in the middle of a lot of the different episodes went back when we were doing The Canton Fair Experience and probably because that was the longest advertisement that I’ve ever done. That was the one that people were like, “Can you do that at the beginning or at the end?” As you tune into the show, I’m sure that you became familiar with Steven. Since The Canton Fair Experience, there has been some changes and Steven has his own company, new zone thing that he’s doing. Before we like dive into my questions, Steven, why don’t you to tell everybody a little bit about what you’ve been doing maybe since the last time we heard from you and what’s going on in Steven’s land?
I’ve got the Product Development Academy, which is focused on people who are producing, creating new products and bringing them to market. It is a step-by-step program that starts off with ideation, going through a design, going deep into the details and using the same product development processes that large corporations have done. Names you may be familiar with like the Booz Allen Hamilton method or phase-gate approach or Scorecard-Markov method. I’ve combined them to gather and cherry-pick the best parts and put them into a package that is built for entrepreneurs and small businesses. That takes advantage of the nimbleness we have and don’t have to worry about team meetings and stuff like that.Knowing what the customer wants, what they need, what they say could be better, and then listening to them is critical. Click To Tweet
That’s a fourteen-week program and then the super exciting thing that I want to talk about is that it also came out into a book, THE COMPLETE BOOK of Product Design, Development, Manufacturing and Sales, which is full of useful information in every single chapter. That’s been a lot of fun. It’s also responses to reality. These days we can’t travel to China easily. We can’t travel to other countries easily. First, the program is teaching people in their homes and then the program itself teaches people how to do all of this and accomplish all of this from your home without having to go to China and manage everything remotely and so on.
Big Boxers, what Steven is saying is his brand-new book, which has launched. It’s probably the most complete gathering of information. It’s the most complete A to Z, how to create a product, get it manufactured, get it over here, get it on the shelf. Anything that you would need to know about any of those things. When he says the Product Development Academy, maybe you are out there and you have a product, but you’re stifled because the people that make that product won’t let you do this or won’t let you do that or they can’t make enough for you to land it big. You’ve been thinking about creating your own product, but you don’t know where to start. You know that when you do anything for the first time, every mistake costs you money.
If you make enough mistakes, it can put you out of business. This course that Steven does, the Product Development Academy, along with his book is a compilation of not only his experience, but the experience that he’s gained from other people that will help you to avoid all those mistakes. I quote Jim Rohn all the time and his big thing was, “If you want to do something, why would you try to do it on your own when people that have done it successfully have written a book about it? Why would you not go get that book, read it, follow what they’ve done? They’ve already done it. They’ve already been successful.” That’s what we’re talking. That’s what you’ve been up to.
It’s been a busy time. We haven’t been able to get out of our homes until now. As you know on the product side, we’ve got nice retailer responses on products that I’m doing. Being able to write the book, to redesign the program, to be able to be done virtually and from home. It has kept me busy. I don’t know about this slow in this slow downtime because I’ve been going 100 miles an hour and loving it.
When things are tough or things change or we have a pandemic, we’re having rioting. We’re having all civil unrest and things are seemingly going crazy. There are always going to be people that move forward. There’s going to be people that standstill. The pandemic can get you paralyzed, but the key is to lean into it and move forward, which it sounds like that’s what you’ve been doing. How many chapters are in the book?
I will tell you that it is over 100, but it’s broken down into five major sections. The final section is on the business of the business. The first four sections are based on the traditional breakdown of product development. People always laugh when they hear the words. The first section is called The Fuzzy Frontend. That’s the name. You can go into boardrooms. People are wearing shirts, ties, and talking about The Fuzzy Frontend. That’s because everything is still assumptions, guesses, and fuzzy, the information is not clear yet, still dealing with ambiguity. The second is the design. When we go into design, we go into details of the design. You don’t need the details for every single product.
I was asking you how many chapters?
There are four.
There are only four. I thought you said there are 100 chapters.
There are four sections, 100 chapters. You have got me there more than 100 chapters. It’s the Fuzzy Frontend Design manufacturing and the messy backend, which is sales. There’s a section on the business because this is a business. You need to treat it as a business. There are five major sections and over 100 chapters spread between them and all of them have a lot of information.
What was the chapter that was the most fun to write? What was the chapter that was the most painful?
I’ll start on the most painful because I wanted to add so much more into it and that’s on financing your business. I realized that I started going down a long slippery slope because I can start going into the details between common shares, preferred stock, common stock, and everything else when you’re dealing with investors. I realize that this is what a lot of investment programs and the Harvard Entrepreneur Program does. If I start doing this, I’ll have another 150 pages. I had to stop. I kept that high level even though I wanted to go deeper into it. There’s a lot that was fun. I enjoyed writing about how to age your factory remotely. That’s something people don’t talk about a lot. That was a lot of fun. I also had a lot of fun talking about my own failures because I have a tendency to look at life with a sense of humor. I can look back on some of those failures and recognize them as lessons to be learned rather than being emotionally crushed by buyers at Walgreens.
Failure can come in a lot of different ways. Failure can also be brought on by circumstances, not necessarily something that you personally did or a decision that you made but circumstances that create a downward turn in what you’re doing. I worked for a guy once CEO of a large company took it over from his father and when things were good. He was great but when things started to turn poorly, he had absolutely no idea what to do, how to do it, how to turn things around, how to right the ship. What ends up happening is you start thinking and believing that things will get better on their own and sometimes things do right on their own. Failure is what builds in us the ability to pass through adversity. If you’ve never failed, if you’ve never done it wrong and had to pick yourself up, dust yourself off and keep going, when that happens, it’s much harder to figure that out. It’s a lesson learned, but I watched a guy running a multimillion-dollar company who had never failed before or never been in charge of failure, completely struggling, ended up having to give up the entire company to a private equity firm because he hadn’t failed a lot. Either he hadn’t failed or he’d been shrouded or sheltered from failure growing up in an affluent family. I liked that you said that. I always call when I had my franchise stores, every mistake I made, I called it the $5,000 Rule. Every mistake I made cost me at least $5,000. The biggest mistake I made without a doubt was opening a business in California. I should have never registered it in California.The Product Development Academy is focused on people who are creating new products and bringing them to market. Click To Tweet
That’s one of the mistakes, but that’s not the biggest. The biggest one is I’m going to get my resell license. I go down to the office. I’m filling out the paperwork. I submit my forms. I had written down what these businesses are going to do. I’m turning to leave the window and she’s like, “By the way, we’re going to need that $75,000 deposit.” What? $75,000 what?” I had no idea. What they do is they take your projections of what you’re going to do in sales and you have to put down a deposit for a certain percentage of that.
What I ended up having to do was I had to go to a bond company, pay for a bond. It was a big old mess, but what I realized was if I would have underrated what my stores were going to do. If I had started super conservatively, then maybe my deposit would have been $5,000, $6,000. I was taking over company-owned stores and they had been in business 5, 6 years. I was like, “We’re going to crush it.” I had no idea that me thinking that we were going to crush it was going to cost me $75,000 of money that had to sit there with the government.
Did you end up meeting your expectations?
No, but we did fine. I don’t know if you know my franchise store story. Five minutes after we bought those stores and moved from Louisiana back to California, Katrina hit four months after we moved. The plant that made the vacuums was in Mississippi. Although the plant was spared, they couldn’t make it. They’d had no employees. They couldn’t make any product. Even if they could, they couldn’t. There were no roads or anything to get it. Everything had been wiped out. They couldn’t get the product out. During my first six months of business, I couldn’t get any product. Once we sold out of what we had, we were paying rent. It was a nightmare.
You’ve got to realize every mistake you make that costs you money is capital that you need to be using to keep your business going. I was talking to a couple of business people that we both know that received their product finally back from the US that they had sent here to sell on Amazon that never went well. That whole situation costs them a tremendous amount of money. They’ve gone now through your class and realized some of the mistakes that they made and wishing that they had this information before they made their first product and sent it to the US to sell on Amazon. That’s fun that you highlight those things in the book.
I know who you’re talking about and they are on a good new path. Using your $5,000 Rule, I should rename this the $200,000 book. There are a lot of mistakes you’re going to keep from making by following along. I took an investor with me one time to China. I had stepped out of the room in the middle of negotiations. They had made some promises of future orders. When I came back in the negotiations progressed well. I didn’t give it a second thought, I should have. We came to an agreement. They said and your story prompted this memory. We need a deposit on that next order.” I said, “What next order?” The investor had promised a future order to sweeten the deal. It’s something you don’t do and that I address. Never make a promise on the future. Anything can happen including COVID-19. I had to walk that back and that was an ugly situation. You learn from mistakes.
You’re not going to make any mistakes on your own. Back to what Jim Rohn said, “Why would you try to do something that you’ve never done before? When there are people that have successfully done it and written a book about it, why would you not buy that book and read what they’ve done and then go on?” If you make a mistake that wasn’t in the book, everybody’s going to make mistakes. If you can mitigate even $50,000 worth of mistakes, $50,000 is a lot. I have a mentor client that’s going through my mentoring program. He was in China with us. He got his first prototypes from his new factory. After going through the program and working with you, he is going to make double what he was making before on basically a better product that’s more high-tech by understanding how to work with the factory, understanding what pressure points to push on and how you can be a good partner and everybody can win. We could talk about multiple examples of that. Let’s go back a little bit. When you were a kid, did you always want to be an entrepreneur?
Yes. This is going to date me. There is a reference point in this because Star Trek was on TV and they had conventions. My mom was friends with someone who arranged these original conventions. These are the grandfathers of these cosplay conventions that go on and comic cons and stuff these days. Nothing else existed like this. I went to the second-ever Star Trek convention. I had a film that was used for filming the TV episodes. They edited the film by hand. They dropped the film on the floor. Majel Barrett, the wife of the producer would pick up that film and send it out to fans who paid pennies for it. We would get film clips. I took film clips. I made big black and white and color 8×10 images put them on frames. I showed up the convention, put up a display wall, had all those pictures there and people were buying tons of it, which was great. I would go back, use the film clips, and get more pictures printed up and people would buy more of them. I made a lot of money. I caught the entrepreneur bug. It was 1973 and I never lost it.
These days you would have been slapped with a lawsuit for image infringement, not having a license to sell those images. Nobody could do that now but back then, yeah.
My brother had a signed script from the original pilot of Star Trek. I had these little fuzzy things called Triples that came right off of the show floor, all sorts of things. My brother also had one of these tasers. All these things that were taken from the set by the producer’s wife, who was also an actress on the show. There would be so much trouble these days, but it was the Wild Wild West back then. This was all brand new.
You figure it out, “I can do this. I can go somewhere. I can sell. I can make my own money.” Did you decide that you always wanted to be your own boss, have your own company, have your own business? How did that manifest itself?
I continued with the entrepreneur bug. Years later, I became a fashion photographer. I was in business for myself. Me, my camera and portfolio would allow me to live all over the world, New York, Brazil, Milan. I did get corporate jobs. I was a highly paid consultant. I worked at Microsoft for twelve years. I liked that paycheck that gives you comfort, but it’s also a trap because you get comfortable with that paycheck that you start depending on it too much. I was lucky. I kept that entrepreneurial spirit. I use it in interesting ways. I fell in love with glassblowing. Glassblowing lessons and glassblowing time is expensive. I took the glass pieces that we did for a class like little Christmas ornaments. I made them in purple and lavenders and I sold them to gift shops at Lavender Farms where all the tourists came from around the world. The little class exercises were paying for my studio time to do more glassblowing. I kept coming back to that and I kept coming back to being my own boss as nice as it is to have that paycheck.
When you’re putting in 60, 70, even 40 hours a week for someone else and their performance review and their boss’ performance review. Stock options that are all the way up high above you. Compared to putting in that same time or twice that time on your own business. There is no comparison. It’s risky. It’s scary. I know people that would never do what you and I do. It’s out of their comfort zone. If you become addicted to it like I am and many other entrepreneurs are like you are, you understand that being your boss, there is no comparison. You control your own destiny.
I started in retail. Let’s say I’m working at Bed Bath & Beyond or whatever, my paychecks the same every day, every time, every week, every month. If I need extra money to pay for a bill that came up or whatever, the only way to get that was extra money was either to put it on a credit card, borrow some money, get a loan, or get a second job. I’m working twice as much to pay a little bit. As an entrepreneur, you can have an idea. You can turn that idea into an offer. You turn that offer into cash. Before you know it, you needed an extra $2,500 to do something, there it is. I’ve had ideas for services. I used to be when people would bring me an idea or product and I brought them on as a client, I would do this evaluation on their product and I would never share it with them. I did it for myself to understand where they were and where they needed to go. I had to turn away a lot of people from being clients of mine because they simply knew that their products weren’t ready. I had this idea, “What service am I giving if I don’t tell them what’s wrong or how they can get their products ready?” Before I even put it on the website or even made it formal, I started offering my product evaluation to people.
The next person I talked to, “Your product is not ready to go to retail right now, but we can do an evaluation on it. We’ll give you some steps and tell you where it is and with respect to where you need to go.” That day, the first person I told it to, I sold one and a new product was born. My business went exponentially up often an idea that I had and I put it into practice. When you work for somebody else that doesn’t happen. You might have an idea. You tell your boss. They implemented in the company, but you don’t make any money from that. You don’t get money from that. You remember the guy that you were telling me about that made the little thing on the gun, on the Navy ship. Every Navy ship in the world has his invention and he got paid $500 because he was in the Navy.
He got his picture in the paper.
When you make something up for people that you work for, they get to benefit from selling it, using it. When you have your own business and you come up with an idea instantly, you can have a reward.
When I first started in Microsoft, I realized that we were doing something that was inefficient. I made a recommendation to my boss who push it up to his boss and so on. It was a recommendation that would save us $4 million a year, which was good. They called me out at the team meeting and talked about my initiative and the way that I thought through the problems. I felt good. About 1.5 years later, I found out that his boss submitted it all the way up to the executive level and got a major bonus out of it.
That’s on him though. He should have rolled that all the way down to your boss and then to you, that’s common decency. If somebody rolled it up and got a bonus, that’s bad management.
She wasn’t the best of bosses. I’ll leave it at that. What happens in the corporate world. In our world when you’re an entrepreneur and you have an idea, it may be a great one and if it works out that reward is yours. It may not be a great one. That’s where hopefully you’re able to evaluate it and weed out mistakes before you risk a lot of money. You’re in charge. My nephew told me that he and his wife are having a baby. If you’re an entrepreneur and you suddenly realize that there is a child coming into your world, if you’re working 9:00 to 5:00 or 8:00 to 5:00, maybe you can put in more hours if you’re working hourly or you look for another job. If you’re working salary, do you try to get a promotion or you look for another position? When you’re an entrepreneur, you can say, “It’s time for me to take this up another notch. It’s time for me to change the way that I’m marketing or add new products to my line, or maybe it’s time to move forward with that product I’ve been thinking about.” That puts us in a rare category.
I hate to go back to Jim Rohn, but probably the one thing that he said that stuck with me the most throughout the years was, “Work harder on yourself than you do at your job.” He goes on to explain when he says that multiple times work harder on yourself than you do at your job because you get paid based on value. Do you ever wonder why Tony Robbins has 4 or 5 people in his personal mastermind that he spends one-on-one time with? It’s $1 million to be part of that. There’s a waiting list, hoping that somebody drops off. He doesn’t add anybody. These people meet with him four times a year for $1 million. That means every visit is $250,000 to meet with him for a day.
Why can he charge $1 million a year to meet with somebody four times? It’s based on his value. It’s not an hourly rate or that he’s finally built his way up to that level. It’s based on his value when you’re thinking about entrepreneurs out there, when you’re thinking about, “How do I take it to the next level?” Become more valuable and before we dream too much, I want to talk a minute and bring it back down to earth. When I’m talking about adding a service, that’s a service that I do, there’s no inventory that I have to buy for that.
There’s no output of financial investment that I have to do to launch this new service that I’m going to do, which is the great part of my business. It’s mental. I’m drawing on my own experience and I can charge for that. If you’re going to go to China, to wherever, to Taiwan and you’re going to make a product and you’re going to build $2,500, whatever, $1,000. You’re going to bring them back to the US. You’re going to store them in your garage and then you’re going to want to sell them to somebody else. That’s an investment. You took some hard-earned money, most likely from a job that you already have to invest in that. Only to find out that by the time you get it online, maybe there’s 10 or 15, 20, 30, 100 more like it. Believe me, Steven and I have run into many people that when they finally got their product online, they were like, “When I first started thinking of this or decided to go down this road, there were a couple of people. Now that I finally launch it, there are 100 people.” It’s important when you’re going to make an investment in a product, you’re going to buy it. You’re going to store it and then you want to sell it that you understand what you’re doing. Do you understand what makes a product sell? What makes it interesting to people. One of the things that Steven talks about in his book that’s a core piece of his course, it’s one of the key things in what he shows is how to validate your product. Talk a minute about validation.
I’m going to use the story of the Porsche Cayenne. What Porsche did when they realized that they were going to take a leap into the SUV field was they got together their best customers and their potential customers. Every decision was validated through the customers. Every decision had to pass two questions. Do you want this? Would you pay for it? They did cup holders. They asked about the cup holders. The customer said, “The cup holders need to be bigger, more cup holders, more cowbell.” They had more cup holders and they were larger. They asked about the famous Porsche six-speed transmission, which the engineers’ thought was a given. The customer said, “We don’t care about that and we’re not going to pay for it.” They left out the six-speed transmission and the engineers were upset. The automobile racing media, my brother who’s a big auto guy was upset. They made all of these decisions were first put in front of customers for validation, the end results they launched in 2003. In ten years, it became the category leader and became responsible for more than half of the revenue for Porsche, which means every other vehicle model they had combined was still less than the Cayenne itself. That lesson is repeated throughout the program and throughout the book. We have pages in the book and it’s shamed because the book is black and white.
The Kindle version is in color. There’s a big thing with a yes-no decision time page. You get to stop at that gate and has it passed that validation? Do customers want it? Is it profitable? Are there showstoppers and so on? What customers say that’s king and making the right decisions. That’s critical. You can spend a lot of money getting 25,000 units and then find that there’s too much competition or customers don’t want it. I don’t want to see people making that mistake. Being an entrepreneur is full of risk, which is strange for me because I hate risk. I drive too slow on the highway. I’ve gone to casinos. I’ve never put down a penny. Entrepreneurship is full of risk and that cautiousness takes place in the program and in the book. The number one place with cautiousness is, do your customers want your product? Do they want the change that you made? Do they want the modification you made? Do they want your concept as much as you do?
It’s a hard thing because when you come up with an idea, you’re attached to it. When people tell you, “It’s not a good idea.” Your first reaction generally is to say, “You don’t know what you’re talking about. I know better than you.” What you’re not realizing is those are your customers. Those are the ones that you’re going to count on to buy it. The Porsche Cayenne was a leader. Do you think that we would ever see a Jaguar SUV or even a Lamborghini SUV had Porsche not done that initial research to realize that their customers would buy a bigger version and a more family-style SUV of what’s exclusive high-end sports car?
It’s the customers that the customers know. If I can build on what you said right there, when you go to customers and they say, “This isn’t a good idea.” First of all, that’s valuable information. You’re certainly able to ask them, “What would you do to improve this?” You can certainly get information from customers. What you don’t want to do is go to your friends, go to the people you play basketball with.
Don’t go to your mother.
Your mother’s either going to say yes because she loves you or no, because she doesn’t want to see you taking the risk. Either way, it’s not good information. Your spouse is the same way. Your friends, they love you. They care about you. They’re not unbiased. If you go only to your friends or your family, you can fall into a confirmation bias where you think, since everyone is saying, “Yes, it’s a great idea,” and all they’re saying is, “I care about you.”
Let’s talk about two things, one on TV and what happened to me personally. The one I’d like to talk about on Shark Tank to me is the famous one where the guy’s got the little clip that goes over the camera on your laptop. He’s looking at Robert Herjavec because he’s in the cybersecurity industry. He’s like “Robert, are you looking for validation that people can turn on your camera and spy on you? You need this clip.” Robert says to him, “Can I put a sticky note over that?” The whole guy’s presentation goes down. Nothing that he did after that made any sense to anybody and the rest of the Sharks were like, “Piece of tape or this or that.” They started coming up with ten different things that you can put in front of your camera other than shutting your laptop.Look back on your failures and recognize them as lessons learned rather than be emotionally crushed. Click To Tweet
Too many people leave their laptop on and open, shut it when you’re not using it. Once Robert said that, it was an avalanche of stuff. This guy had no chance. What had happened was he never took it out to enough people other than probably friends and family to validate. He had already made this product. The second one was a client of mine who had two grown daughters. They grew up in a small place. They shared the same bathroom. She would buy the twelve packet Daisy pink razors for her and her daughters. Once they got in the shower, they’d look around and there were three Daisy razors in there. She could never tell which one was whose. They didn’t mark it with a Sharpie or anything. She created this silicone gel razor glove that would go on the handle.
It did a lot of things other than being carpet, color. It made the razor feel high-end. She felt, “This is needed. People want this.” Somebody convinced her to buy 60,000 units. I’m good at what I do. I did get her into retail with it, but it didn’t sell. The simple reason is because people couldn’t put together what it did. It was on a clip strip right in the shaving aisle. Had we have included a generic white razor in the package would have been a game-changer. I shouldn’t say we. I came in way late. She already had the 60,000 units. Had she asked anybody, done some validation, she might have known that, “If I include a razor in it, people are going to be able to understand exactly what it does and what it is.” They’re going to get that added value of getting a razor with it. Even when we went to dump it to like TJ Max, they would have taken it, but they’re like, “We don’t sell razors, it has no frame of reference in our stores. We can’t even sell it.” She was stuck with them. It was horrible. Proper validation would have made a huge difference there.
That’s customer validation. When we get to the design stage, the second section in this book, we talk about EVT and DVT. That’s your Engineering Validation and Testing, your Design Validation and Test. The second one, Design Validation and Test. I have a lot of fun because one of the people in the program, one of the experts we do a video with is a friend of mine, Victor, who used to work for Apple. He shares a story about how he was recruited by Steve Jobs. Apple is known for design. Everything has to be tested and made sure it works. He talks about the cord on the earplugs, whatever they were when they first had cords. They did so much testing to make sure that someone who spends a lot of money in Apple is not going to come back and complain about a penny part on a cord not working. That’s on the design.
On the functional testing, you and I know about a product that I have, where we have a competitor, luckily only a single competitor. They never did functional testing what’s called EVT, Engineering Validation and Testing on their product and their product doesn’t work, which is wild. That happens a lot these days. You want to validate primarily, “Do customers want this? Will they pay for it?” You also want to validate that your product works, that the functionality is there, that the design is there. When we talk about in the book is every step when you do your packaging, validate it with customers again. There are ways of validating it. This is called a reverse explanation where you give them the package. Don’t tell them what it is. The package is what’s going to be on the shelf. That’s going to be compelling. You give them the package and let them tell you what it is, why they should buy it and why it’s different.
It’s customer feedback. We have someone who did a wonderful logo for a product that relieves anxiety. She did some customer validation of her logo without telling people what the product is. This one is made-up of words. People looked at the product name and the logo. They’re coming back saying to her, “This is soothing. This is comforting. This is relaxing. This is for children.” She was over the moon excited because she now knew that the logo and the brand name communicated those intangibles that she wanted to communicate. The customer is key. They come back. They tell you whether it works or it doesn’t work.
It’s difficult as it is to get into Costco. Good buying is probably the most lost art in retail. Costco buyers don’t hire buyers from other companies to come and work at Costco as a buyer. You have to come up a lot of times from the store to an inventory control specialist and to an assistant buyer and then to a buyer. It takes years and so when you talk to a buyer at Costco, they know what they’re talking about in the Costco world. They still want to validate it. Even though they’ve put it through their metrics. They’ve looked at their pricing, how big the package is, how much it weighs and how much it goes into a container. They still want to validate it and what they do is 10 stores for 7 days. Your product has to do at least $500 a retail in the 4×4 foot space that it’s in on average. There are no ifs, and, or buts. It doesn’t matter what it is. If it doesn’t do that, they know they can put toilet paper in that same spot and by the way, this is before COVID-19. They know they can put paper plates, toilet paper, whatever in that spot, and make $500. Even if it’s in ten more spots across the store, they know.
If they can’t put a product there that’s going to make at least $500 in 7 days, it won’t pass. No matter how much the buyer loved it or it’s cut and dry. That’s because they have a validation process that they know that works. They see an average of 30,000 members a week, per location. They know that if the product is going to sell when those 30,000 members circulate through there in that one week. They’ll sell at least $500. If they don’t, it’s not going to work no matter what it is. They have their own validation system. They don’t mess around with it. Jim Senegal when he started Costco said, “The parking spaces in our parking lot have to be this big.”
One of the things he would do when a new Costco opened up, he would walk out there and he’d measure the parking spaces. People always want to, “We want to get more cars in the parking lot” and he was like, “People that shop at Costco buy in bulk. They drive big cars. They need to be able to swing in there into their space and not worry that they can’t open their door.” It was a big deal to him enough that he would go out in the parking lot and measure the parking spaces. I can’t even imagine what it would be like to be in charge of opening that store and having him go out and measure. Finding out that the space was not right and that you had to pave over the entire thing and re-mark all the spaces. I would not want to have been that guy.
That is critical. It’s one of the many points that we go through on this. It’s how the book itself was put together. The authors have a great opportunity to take a moment and thank the people that contributed to the book. Tim, you’re on there. You’re the first name on the dedication and thank you. I got all the years of advice. Thank you very much, but so did many other people. I’m lucky. I’ve learned from lots of amazing people over the years. I also learned from people who said, “I have a question about this or I don’t understand this or can you explain this? When we did The Canton Fair Experience, I wrote a lot. It was 140 pages. I wrote 120 pages of it. I thought I was to catch me out. When people would say, “I don’t understand this.” To me, that’s product feedback. They’re telling me I need to explain this better. I have a question about this. I need to explain more and so on.”
The customer feedback of everyone who’s asked questions, everyone who said, “Can you explain this? Can you include this?” they went into the book. That’s why the book is large because it’s real information that real people want that are real customers. The customers albeit are entrepreneurs building up their own products, but for a book, they are the customers. I was grateful to be able to include all of them in the dedication too because their questions, their feedback. Many times, their feedback while I was writing this book, was invaluable. Whether your product is a store and you’re selling retail, whether your product is a physical product itself, whether it’s a service or whether it’s a book, it all comes back to what we were saying. The customer is imperative. Finding out what the customer wants, what they need, what they say could be better and then listening to them, that’s critical.
One of the other things Steven is great at and to watch him in action is like watching a magician negotiating with factories. I want to be clear because negotiation has this bad connotation that we’re trying to get something for nothing from somebody or we’re trying to win a situation. Real negotiation is when both parties get something that they want. They both are happy. Make no mistake that if you negotiate and screw over your factory, that’s a relationship that they’re not going to be happy with. Therefore, it won’t be long-term. Steven is a master at getting what he wants and also giving the factory what they want. I’m sure that you have this detailed out in the book. I’ve seen it in person. The Canton Fair was magical but, I’m sure you have plenty of scenarios about that in the book.
There is a lot about negotiating in the book. In the course, some people had surreptitiously recorded me during some negotiations. We have recordings of negotiations in the course. You can watch a video and see the conversations. See where things go off track and they come back on track. One of the phrases that I use in negotiation and I say it because I sincerely believe it is that I want my factory to be happy. I want to be happy. I want my customers to be happy. No one’s here to try to put someone else out of business. We should be working together. Particularly when you’re dealing with China, they have a word for business relationships. It’s important. They say you can tell society and a culture by what words they have in their vocabulary. China has a word for business relationship which we don’t have in English. If you build guanxi, if you build a relationship, then you’ll get the product that you need, the price that you need and importantly, the communication that allows you to get that point where everyone can relate it. It’s a lot of fun. I enjoy it.
What’s one thing that you should never do in negotiation with the factory whether it’s in China or anywhere?
There’s a handful of them. There’s one that always sticks out in my mind because I see a lot of bad advice about this. From the beginning, you are the owner of your company. You are the founder and that’s who you should be. I’ve seen advice, people saying, “If you want to get a low price, tell them that you’re a purchasing agent and that your big boss is going to have to approve things” or say no and so on. Right at the beginning, you’re lying about who you are. You want your product to be successful. The truth is your factory and your supplier want it to be successful as well because they’re going to sell more of it. You’re going to have to admit if it is successful, “I lied. That’s not me. I own the company.” You’re telling them right at the beginning, “I’m a liar.” The truth of the matter is a lot of suppliers in China have seen these YouTube videos. They know the moment that you start off by saying, “I’m a purchase agent.” They know that you’re being deceptive.
Most importantly though, you’re missing on the best opportunity in China, most Asian countries, kings, the decision-maker, the owner of the factory or the head of sales, they negotiate with kings. If you want the best price, you as a king should be negotiating with a king. If you present yourself as a mid-level manager, then the person they’re going to align you with is a middle-level account executive. You won’t have that opportunity to be making good deals king to king. Instead, you’re the mid-level manager who’s pushing paper, saying yes, and trying to make their sales photo.
There were a lot of women in China in-charge of factories, these days, owners of factories. Queens can also negotiate with queens.
There is a section in this book about negotiating as a woman in China. China had their one child rule that came in the late ‘70s, mid-’80s. Families only had one child and now people who own real estate companies, corporations, and factories, their owners are now getting to the point of retirement. It is required for a female of 55 and a male at 62 in China to retire. Their sons and daughters are taking over these businesses. In the case of a daughter taking over the business, they are amazing to watch when they do business. They are a class onto themselves. They are highly respected. They can be more resolute in negotiations. They can be stronger and they’re given a lot of respect. It’s interesting because China itself is a chauvinistic or misogynistic culture. They do treat women as a second class with the exception of these business owners. These business owners are raised on a pedestal.
As a female, when you are ready to negotiate, even if you don’t feel confident, do the self-affirmation, look in the mirror, tell yourself how great you are, or listen to some fearless motivation or whoever you listen to get yourself confident and go in it. You will get great success because there is this class of woman business owner that is treated separately than China treats women in general and with great respect. They have a superpower.
That was one thing you shouldn’t do is tell them you’re somebody you’re not. What’s something that you for sure should do? I know there’s a lot of doing this. What’s one thing you need to make sure that you do when you’re negotiating with a factory?
You need to protect yourself. That’s not part of the negotiation, but it should be part of that relationship. You need to think about having an audit of a factory if you’ve never been there. These days, we can’t travel. One of the best and smartest things to do is to have an audit of a supplier before you begin. If it is a factory, which means that it can protect IP and so on, the trading company can’t. You want to make sure that you protect yourself with the proper agreements and so on. That these agreements are done properly, that all legal agreements in China either have to be in Chinese or if they’re in English and you do have to enforce them, you and the party you’re fighting both have to agree together on a translator to translate the document. It’s a lot of money and expense and everything else. You want to make sure it’s in Chinese. You want to make sure it’s signed by a Chinese seal, which is a little circular stamp.
That’s the equivalent of a signature in China. You want to make sure that’s done. You want to manage your factory remotely. You want to make sure you’ve got people on the ground watching the production, overseeing the loading of the container, inspecting your product before it’s shipped. You want to make sure that you protect your business. A quick note in there as well, if you are launching a brand or even an established brand in China and if you have not yet done so, always get your trademark in China as well. China is a first to file country. There are people who sit on trademarks and then your successful products suddenly while I’m selling a whole bunch of these, I’m selling thousands and thousands won’t leave the port. Someone else says, “I own the trademark for that.”
Dan Harris, one of the experts you hear about in the program as well is the most well-known attorney for the US and European businesses working in China. He’s has dealt with a number of cases where a Chinese individual has sat on a trademark and kept the products from being shipped out of the country. Advice right away, if you’re doing anything in China, go apply and get your trademark applied for in China at the date that you apply for it, as long as this is the day before someone else applies for it, it’s yours. No question about it.Being your own boss has no comparison. You control your destiny. Click To Tweet
Big Boxers, this is a couple of things. The stuff we’ve talked about maybe takes up 25 pages and think about all the other stuff that you could learn by reading this book. This is what we’re talking about when you think about not having the trademark in China, you have it in the US but you don’t have it in China and all of a sudden you spent $10,000, let’s say $1 million on the product. That’s now sitting in China and can’t come to you because somebody says, “I own the trademark on that.” What are you going to do then? That’s a costly mistake that by reading this book that you can avoid or going to and joining Steven’s course. One of the first things you’re going to do though is you’re going to go and you’re going to follow Product Development Academy on Facebook. That’s going to put you on their Facebook page and so you can keep track of all the announcements. That’s the easiest, freest thing that you can do. That’ll also give you access to deals and anything going on with the book, if it’s on sale, you’ll find that out there. I would recommend that you do that right away. Steven, I appreciate you being on. Congratulations on the book. I’m excited for you.
I’ve got to tell you when it came, I was amazed at how heavy it was. The old story of being lost in the forest with the trees. I focused on the trees. I wanted to make sure that each section was as useful and as valuable as possible. I had no idea until the book physically came how large the forest was. I looked at those trees and making them as useful, as actionable as possible, but the forest got big and heavy quickly.
In order to make sure every tree is planted, grows right, is strong, has a good root system, you have to focus on each tree first. If you were to focus on the entire forest, most likely some trees are not going to take root. Some trees are going to fall down. What that means to me is every section of your book stands on its own. It could be plucked out of the book and created its own little side book on its own because you paid attention to each individual chapter.
If you were going to read this from beginning to end, it’s a narrative or it takes you through step-by-step. If you’re already working on products and you have questions, the table of contents is about 6, 7 pages long. You go through there and find those items that you’re stuck on and you jump in there and get some advice. That itself should be helpful as well. The goal is that you don’t want to make mistakes as Tim keeps on referring to Jim Rohn and I love that. Why make the mistakes when the information is already there from someone who’s already gone down that road?
I’ll leave it with this. I have another client going through my mentorship program. He’s wildly successful on Amazon. For him to take his products to retail, he needed a lower price on this product. This person was referred to me from Steven. I referred him back to Steven to help him go find a different factory that could hit our new target price. That happened. Steven helped him get that factory audited. He received his first samples from that factory. It looks to me like we’re going to be able to interview a multitude of retailers and that he’s going to be successful. That’s a real-world example happening now. Steven, as always, I know we talk almost every week. Big Boxers, I hope that you get a chance to check out the Product Development Academy, check out Steven’s book. It’s not going to set you back $29.
The book is $29. The Kindle is $9.99. It’s free if you’ve got Kindle Unlimited and join the Facebook group because we also have occasional free download days, which is a way that Kindle does promotions.
You should get the book because you’re going to want to write in it, write on it, highlight it. It’s going to end up being your guide. You should get both. Get it ten times. That’s what I think. Steven, thanks for coming on.
Steven, thank you for coming on and sharing your knowledge in what you’re doing and all the work that you’re putting in to make sure that people who have a dream, people that have a goal, I want to build a product. I want to make the world is a better place. I have this idea, but I don’t know how to get it out of my head, get it made, get it produced, get it on the shelf. Thank you for taking all of your knowledge, putting it into a book for people to be able to use. Not only that but putting a course online that you do live so that they can participate with you and you can help them step-by-step. What you’re doing is amazing and my hat is off to you. I’m proud and honored to be part of a thing that is going on the retail side. When you need help with your people on the retail aspect of things, I’m glad to be there for you. I appreciate that we have that collaboration. Thank you for being here and sharing your information with the Big Boxers. Don’t forget to connect with us. TLBConsulting.com is the hub for everything to get your product on the shelf.
You want to access the show. You want to access our training. You want to book a coaching call. You want to get your product evaluated, whatever it is that you want, you want to join the VIP Facebook Group, TLBConsulting.com is where you go to do that. You can check with us on Facebook. We still have our regular closed Facebook group, On The Shelf Now. You can still join that. There are lots of great things going on there. You can find us on Twitter. You can go directly to the show OnTheShelfNow.com. A lot of ways to get ahold of us, reach out to us, comment on the show, let us know what you think. I appreciate you. I appreciate everything that you bring to the table. Thank you. I look forward to seeing you and talking to you next time. Until then, I look forward to seeing your products On The Shelf.
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About Steven Selikoff
Hello, I’m Steven.
I have been selling to retailers since 2001. I have been developing products in China since 2005. I have successfully launched numerous products and brands, focusing on unique products sold through large and small retailers. I have lectured and taught all over the globe on successful negotiation, product development, and doing business with Chinese suppliers.
I am surrounded by a great team! Combined we have over fifty years of experience.
All of us are eager to teach you, to help you, and see you succeed.
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