Beach Towel Startup
Sandcloud validates its products with customers
The 3 co-founders of Sand Cloud created a company selling thin cotton beach towels by following a Lean methodolgy. They started the company in 2016 when they were students sharing a 2 bed appartment that became their office. The company is now ranked 308 on the US Inc 5000 list and the co-founders have all got their own houses now!
Their key sales strategies followed the Lean methodolgy :
- - They made a small batch of each product and tested it with customers before they produced large quantities of the wrong product. Sand Cloud originally created a beach towel with a pillow attached but when they tried it out by walking down the beach they found out that no one was interested in it. Their final product was a thin cotton towel that customers could fit in their bag or wear as a scarf. - When they knew they had a viable product, they scaled. This was the point when they quit their jobs and sold their belongings and cars to raise money and make more space in their appartment which became their office. One of the founders kept their car so they could continue to drive for Uber to keep some regular money coming in.
In their first year their sales were $30k, which rose to $430k in year 2. After an appearance on Shark Tank, a US version of Dragons’ Den, their revenue grew by almost 1,500 % with sales rising to $6.8m in 2018.
Their Shark Tank appearance was a great success for 3 reasons :
- - Their pitch started well by showing the sharks photoshoped onto beach photos holding their towels. This made the sharks laugh and got them onside. -
They then countered their concerns (that they weren’t big, fluffy, luxurious towels) by explaining they can fit in a bag or be worn as a lifestyle item.
- - They didn’t handle the negotiations well but they did get a deal. If they had analysed the sharks’ behaviour on previous shows they would have known how to counter their offers better - but they did get a deal with one of the sharks, Rober Herjavec, who offered $200,000 for 15% equity.
After Shark Tank between 2015 and
Sand Cloud have now added more items to their product line - water bottles, metal straws and jewellery. The co-founders test every new product with customers before they roll it out. “Shoppers are smart,” Leibel says. “They can smell fakeness.”
