A year ago today, our team had just completed three significant milestones: we completed shipping every pre-order from 2015, we announced our Smart Filter product, and we completed a successful CES 2016 where we not only had our own booth, but were represented by Lowe’s and SmartThings as well. We were on cloud nine then, but it was just the beginning of a huge year for our company and for the thousands of homeowners throughout the U.S. and Canada who looked to us to make their homes smarter, more comfortable, and more energy efficient. With 2017 well underway, we wanted to share some of the highlights of what we accomplished in 2016.
Selling Out, In a Good Way
Back in June 2016 we published a blog post about what it means to “sell out” as a hardware startup less than one year into shipping our first product. At the time, we had just shipped the last of our initial 30,000 unit production run and had opened a fresh batch of pre-orders in anticipation of our next run. For those who aren’t immersed in the hardware startup world, it’s commonly said that the first 10,000 units are the hardest to sell. We were by no means the exception to this rule, though we were certainly fortunate to cross this threshold as quickly as we did. It was through a combination of retail interest, great marketing and media coverage, incredibly hard work by our team, and the fact that the Smart Vent System solves a real customer problem that we reached this milestone.
An Upward Trend
While an incredible milestone, selling out and needing to go back into pre-order isn’t always a good thing, especially if a company isn’t able to restock quickly. A lot of companies freeze sales entirely at this point so they can spool up new inventory ahead of a fresh marketing push to avoid creating a backlog of orders. We did this at first, but within a week we were receiving so much inbound interest for our Smart Vent System that we decided to open pre-orders again. Our team made the decision to pare back marketing and PR expenditures to conserve cash in anticipation of lower sales numbers than we had during Q1 and Q2 of 2016 when we were actively shipping new units. To our surprise, Q3 and Q4 '16 revenue numbers were on par with the previous two quarters, despite us being back in pre-order and spending 30% less on marketing compared to the previous period! We sold 18% more units during the second half of 2016 compared to the first half and average order value increased by 30%.
Smart Filters, Trim Kits, and Bundles, oh my!
2016 was a year of new additions for us. In late 2015, our CEO suggested that a home’s air vents are the perfect places to incorporate air filtration and purification. So we started work on the Smart Filter, which we announced at CES 2016. The Smart Filter was an immediate hit and has continued to be one of our top selling items, contributing to the aforementioned 30% increase in cart size.
Shortly after making the Smart Filter available for pre-order, in August 2016 we introduced Trim Kits; adapters that make it possible to use Smart Vents in seven previously unsupported duct sizes: 4"x14", 6"x14", 8"x10", 8"x12", 8"x14", 10"x10", and 12"x12". Trim Kits are our response to the steady number of requests we receive every week for additional Smart Vent sizes and give many more homeowners access to Smart Vents than was previously possible.
Our latest additions to our product offering are still being tested, but so far have seen great results. Our Black Friday deal was Whole Home Bundle of eight Smart Vents and two Smart Bridges. People loved them and bought them up in droves, validating our long held hypothesis that bundles around specific use cases are what people want. We closed out 2016 with a Total Control Bundle, which included six Smart Vents, one Smart Bridge, and a Nest Learning Thermostat.
Exploring Community Equity
2016 saw the start of something monumental: crowdsourced financing for privately owned companies. The Jumpstart Our Business Startups (JOBS) Act was signed into law by President Obama in 2012, and on May 16, 2016, Title III of the act–allowing for equity crowdfunding–went into effect. A month before Title III’s enactment, we launched a Testing The Waters (TTW) campaign with our platform partner SeedInvest, timing the launch with our Shark Tank company update. Our TTW campaign lasted for five months and generated more than $23 million in indicated investment interest from thousands of people eager to share in the success of our company. On December 1, 2016, we launched the next step in our crowdfunded equity campaign and began accepting reservations for investment.
Since December, our co-founders have hosted three webinars to acquaint investors with Keen Home. The first in the series was a company overview given by our Co-Founder and CEO Nayeem Hussain, the second was about our product strategy and was presented by our Co-Founder and Chief Product Officer Will McLeod, and the most recent webinar was about distribution and partnership strategy, presented by our Co-Founder and COO, Ryan Fant. You can find replays of all three webinars here.
Shipping Arbor and Round One Pre-orders
One of the chief design elements of the Smart Vent is the ability to interchange faceplates, which not only makes cleaning them easy, but also allows for unique customization to complement a homeowner’s aesthetic. Throughout 2015 we accepted pre-orders for our wooden faceplate, Arbor, alongside orders for our standard white Herringbone faceplate. Building Arbor was a sophisticated labor of love and took a bit longer than expected, but by the end of 2016 we had finally taken delivery of our first large batch of the premium faceplates at our warehouse in Denver. As you read this, Arbor faceplates are being delivered to customers throughout the U.S. and Canada.
In addition to receiving Arbor stateside, we began fulfilling the first round of new pre-orders in late Fall of 2016. Our Quality Assurance team flagged quality issues with new 4"x10" and 6"x10" Smart Vents that prevented us from fulfilling orders for those sizes, but orders for 4"x12" and 6"x12" Smart Vents and for Smart Bridges have been mostly fulfilled. We're on track to ship the majority of the remaining orders placed in 2016 in late February/early March, followed by any remaining 2016 orders and those placed after January 1st in the spring. If you are still waiting for your order, expect a more detailed shipping update in your inbox by the end of the week.
Certainly, 2016 was a huge year for us--full of milestones and new initiatives. The new year is shaping up to be even more momentous, with our official equity investment round scheduled to open very soon, complete fulfillment of all new pre-orders on track for spring, and the launch of exciting new products and features (such as ecobee3 integration and the Keen Home Air Care subscription for Smart Filters).
It’s an exciting time at Keen Home and we look forward to sharing our developments with our community. Happy New Year and thank you for your support!