The savvy schoolboy has already secured thousands of dollars to fund his growing business, without access to traditional funding types because of his age.
Tune in to hear Michael's insights on:
- Funding a business without loans, credit cards or cash savings
- Being taken seriously in a new business channel
- Sourcing suppliers, manufacturers, distributors and even customers for a new-to-market concept
- Why age is just a number, not a determinant of your abilities
And much more!
Adam Zuchetti: Welcome to this week's episode of the My Business podcast. Adam Zuchetti here, and I've got my usual co-host, Andy Scott with me. We've got a very interesting business owner in the mix today. He's based in Wagga Wagga in New South Wales. We've got him on the phone rather than in studio. Bringing a brand new product to market that he has designed himself and is being manufactured in China, but the real clincher is that he's just 14 years old. Michael Nixon of EduKits. Thank you for joining us, Michael.
Michael Nixon: That's alright.
Adam Zuchetti: Talk to us about the whole concept of the Amazing Annoyatron and how you came up with the idea.
Michael Nixon: The Amazing Annoyatron is an electronics kit that's designed to teach kids about electronics and coding, but with a new twist or approach of sorts that hasn't really been seen before in the market. The idea to the Annoyatron came to me as a result of some of the frustrations I'd experienced with my own journey with electronics and coding.
When I was first getting started with coding, and this is a story that I tell people quite a lot, I went to the [tech 00:01:15] library and I had to borrow books because there weren't any resources out there online or available through stores that I could actually get that would teach me what I wanted to learn. I wanted to make the experience a lot more accessible and easy for kids so that they could get a hold of these technologies and tinker with them, which I think is something we should be encouraging, and that's why the Annoyatron was created.
The idea is that kids build 20 plus different pranks, and they actually have to learn about electronics and coding to be able to put them together then code them. Basically, the Annoyatron is just Lego, but with a USB cable that you need to code to be able to get it to work, and that's the beauty of it.
Adam Zuchetti: Okay, so as anybody in business would know, taking a new idea and taking it to market, to fruition, making it a reality, is quite a difficult journey, but for someone of your age, I suppose that's an even heightened journey. How did you actually really go from taking that first idea as a preliminary concept to bringing it to market?
Michael Nixon: The journey that I've taken to bring the Annoyatron to market has been quite an interesting one. I initially went from a concept, which was using some electronics parts that I had at home. I decided what I wanted in the kit, and then I slowly began to figure out the projects. I began to design the box and then I got in contact with a Chinese manufacturer who I'm now getting the boxes and the components made with, and then I had to order them in from China.
There was definitely quite a bit of learning involved. I needed to learn about a few new technologies to be able to manufacture the products correctly and successfully, and there was definitely a lot of learning about manufacturing and getting a product to market, but I think it's been a really great learning experience.
Adam Zuchetti: You said talking ... You said you got in touch with a Chinese manufacturer. Sorry. How did you actually get in touch? What kind of research? How was that connection actually established?
Michael Nixon: Well, the connection was established via me looking at some electronics parts on Alibaba. I found a Chinese factory that seemed to have quite a lot of the parts that I was looking for available, so I then got in contact with them. We didn't actually go through Alibaba after that. We actually got in contact with them through their website, and then it just went from there.
We managed to get on Skype messenger, which made it really easy to communicate with them, and they sorted everything out from there. They were really good about it, actually. They spoke, well, typed very good English, which made is super easy to communicate what we wanted done, and get it made, basically.
Andy Scott: Michael, it's Andy here. I'm really interested to know what point you thought ... You, I suppose, moved from, "This is something that I would like," to, "This is something that lots of people would like, and I'd actually be able to sell." Tell us about how that occurred.
Michael Nixon: Well, originally, the Annoyatron was meant to be EduKits' first product, so I've been involved in the Australia First Regional Pitchfest, which is where I launched the Annoyatron, since it's inaugural Pitchfest, which was in August 2016, and that's where I won my first pitching competition, and that was just a local Wagga competition before it got taken up by Australian Post. That's where I first ... Well, I launched my EduKits business, and at the point of the Annoyatron, I hadn't actually made any products yet. I'd only been selling other people's, so that was something to sell from the beginning. It was a product that came to address my own difficulties, but it was always definitely something that I wanted to sell, and it was engineered in a way that was attractive to kids of all ages. It was just a lot of engineering and talking to people to find out what they wanted, and then building that into a product.
Andy Scott: You mentioned the Pitchfest that you first did, the inaugural one, and obviously you went on to the National one after that very successfully. Did you find you were a natural presenter, or did you find you had to learn how to do it?
Michael Nixon: I can't really say whether I'm a natural presenter or I know how to do it because I do a lot of public speaking outside of our business and pitching. I'm part of the school debating team. I do a lot of speaking in front of crowds. I do a lot of talks for primary school kids and whatnot, so it's definitely something that was helped by those experiences, and that definitely made it a lot easier to pitch on stage. I know that I was definitely having a lot less trouble than quite a few people that were there.
Andy Scott: I was going to say, do you think with your experience of not necessarily your intention that was going to happen, but the ability to have confidence to pitch and present, and really convey your ideas effectively is an essential skill for any sort of entrepreneur?
Michael Nixon: Yes. I definitely think that being able to share your ideas in a way that's logic and makes sense to people other than yourself is really important for anyone that's running a business or has a big idea that they want to sell. One of the biggest problems I see when I look at entrepreneurs is quite often they have a really amazing product, and it could take you weeks to understand that value in it, but no one's ever going to be able to buy that product unless they can properly share with other people why it's so important, because otherwise there's no real reason for that.
I think the great part about a business pitching competition, it's not necessarily about the ideas because I've seen pitching competitions where the best idea doesn't necessarily win. It's the person who best explains their idea who wins.
Adam Zuchetti: Speaking of problems, Michael, what are the main problems that you've had to address in getting your product to market?
Michael Nixon: Are you talking about with the market, or the product?
Adam Zuchetti: Well, both, actually. Bringing the whole concept to fruition, and then generating sales from it.
Michael Nixon: Well, one of the biggest problems I had initially with the Annoyatron was the box. Now, I wanted to get a fancy-shmancy Annoyatron branded box to start off with. Now, the only problem was I didn't initially know how to go about it. My first batch of Annoyatrons was actually ordered quite a while ago, I think before the [inaudible 00:08:16] Pitchfest, which was in around June. Now, at that point in time, I'd only ordered, I think, 100 Annoyatrons, and I actually had to fold the boxes for those. I had to put the components in the bag. It was a lot of hard work, and I think that was probably the most problematic thing that has happened with this product. I think just the fact that I had to put those together by hand, I don't think people really realised how much hard work had gone into them when they bought them.
Right now, though, we've ordered in 1,000 of the Annoyatrons, and they come in the nice Annoyatron box, but now it's come to, "Well, let's try and sell a thousand," and I don't think you really realise how many 1,000 electronics kits really is. We've got a whole wall of our house lined with Annoyatrons, so I've got to take those to retail now.
One of the things I decided with the product was that the recommended retail price has got to go up. I wanted to create a larger margin for profit than I already had, but I also wanted to put it into retail rather than my own website to get them sold faster, and to get in the market around more of the people that I wanted to sell to. Now I've got my product in one of our local Australia Post retail outlets, and I'm looking to get them put into toy stores, and I'm having conversations with a few, so it's quite early on in the selling stages, but I think there'll be quite a few places selling this product before Christmas.
Andy Scott: You spoke in there about retail, Michael, and you've clearly got a bricks and mortar approach to getting these products into shops. You've also, I'm assuming, are these available online as well?
Michael Nixon: Yes, these are available online for the same retail price as in store, so we're not competing.
Andy Scott: Do you see one channel as being more important than the other, or do you just think ... Are you just getting them in as many places as you can, and then seeing which performs best for you?
Michael Nixon: Well, I do think at this point retail is a really good outlet for my product and my business because it gets exposure to lots of different people in a way that you can't with the web. Quite often with the web, for early stage startups or businesses, it's not very effective or helpful unless people actually know what your product is. I know that a lot of my sales through the web have come from people that watched me pitch at Pitchfest, or who I know and have explained the product to. A lot of the sales in retail will be from people going, "Oh, wait. I remember seeing that product on the news," or reading the colourful posters that we'll have up, and going, "Okay, well, this sounds like me." What retail really provides is the opportunity for you to engage new customers that otherwise wouldn't have looked on your website or found you on social media, and then get them into your ecosystem.
What I'm looking to do in the future is focus more on web because I think that's where I've seen most of my sales. I'm going to be looking towards running a subscription-based service rather than doing lots of products because it allows me to reach more people, and there's also lower costs, but of course you need people that are using your products to be able to create a market for that basically. Retail and web, I think, are both really, really important in business. It just depends what stage you're at and who your customer base is.
Adam Zuchetti: I want to come to finance in particular, and you mentioned a little bit ago about setting the retail price. That's one element to it. How have you really gone about setting that, given that this is something new that you're bringing to market? You can't just copy the pricing off something else.
Michael Nixon: Well, I ... The price was originally set at $35, and that was the recommended retail price. We were selling that for that price on our website. The original recommended retail price was $35, and we were selling it on our website for that price, and that was with the 100 old kits that we had. We've now got 1,000 of the new kits with the new boxes, but they've also got new components, and from some of the judges' feedback for the value that the product offered, the price was just way too cheap. We looked at some of the other electronics learning kits out there in toy stores, and they were priced at $200 or more, so I thought if we raised the price to something like $69.95, which is what it's at, people would actually ... The price would actually better suit the product, especially seeing as we've updated the kit from some of the feedback we've had from the older model. That's what happened with pricing.
Adam Zuchetti: Now on the flip side, though, is actually funding the business, and you've gone from 100 kits a thousand. That's obviously a big jump in price. How have you actually funded this?
Michael Nixon: Well, the funding for EduKits and the Annoyatron has come from multiple sorts of avenues. The first has been regional Pitchfest. Last year, I won $7,500 from the Wagga Regional Pitchfest. This year, at state finals, you get $5,000 from winning first place, and $1,500 from winning community choice, and at the national finals this year, we didn't have community choice, but first place was $7,500, so that's quite a bit of money right there to be able to fund those Annoyatrons, and that basically covered those 1,000 Annoyatrons for me, but there's also things like sales in other areas, because the Annoyatron isn't the only thing that EduKits does. We've done 3D printing holiday workshops for kids. We also sell 3D printers and other electronics kits from other manufacturers and retailers. There's also the money coming in from the sales of the previous batch of the Annoyatrons.
Adam Zuchetti: Has it been a deliberate choice to go after the monetary prizes at these Pitchfests, because someone of your age obviously can't get a bank loan, can't get a credit card, and those kinds of facilities that are open to a lot of business owners, so has this been a deliberate choice for you to try and raise some of that much-needed capital?
Michael Nixon: The pitching competitions, while they are quite a bit about the connections you make, and building up your profile in the business world, I think there's definitely, for someone of my age, that element of trying to raise capital and getting funding behind you to be able to do what you want to do. It's very hard for someone like me to cut down on their grocery bills so they can buy prototypes for their products, or move into a smaller house to rent to be able to afford the latest model of whatever they're testing. I don't have any money, and it would be super hard for me to get a job on top of what I'm already doing, so Pitchfest was definitely a fantastic way for me to generate some funds so that I have some backing on what I'm doing.
I know that a lot of people who probably aren't that familiar with the startup world have been like, "Oh, why don't you go onto Shark Tank, or why don't you get some investments?" That's also something that's extremely hard for someone at my age, because not only is there the problem with credibility, but there's the problem of ownership and logistics within running a company under 18 because you can't be the director, so there's all of that you have to deal with.
Andy Scott: I think that touches into something that I'm quite interested in. With the Amazing Annoyatron, and the other products that you've worked on and done before, is your personal brand involved in that? Is it the Amazing Annoyatron by Michael, or is your face completely removed from that product all together?
Michael Nixon: Well, my face ... Well, I don't really like seeing printed pictures of my face on boxes, but I definitely don't advertise it as something that's been created by me.
Andy Scott: Okay.
Michael Nixon: I know that while I am the face of the EduKits brand, the Annoyatron is actually branded with basically just the Annoyatron. There's only, I think, one point on the box where it says EduKits, and that's just on the back, and also in the copyright description on the bottom of the box.
Andy Scott: Was that conscious choice because you don't like pictures of your face, or was there a more business reasoning behind that?
Michael Nixon: No, I think that it's better for a business to be associated with a product rather than a person. If I had a choice to associate me or the business with the particular things that I think would market the Annoyatron, my choice would be the business. That's purely because if I want to possibly offload some of my workload to someone else, or if I had ... If I sold the business for whatever reason, then I wouldn't still be tied to it, if that makes sense.
Andy Scott: Yeah, no, that makes perfect sense. I was just thinking specifically, Michael, of Aussie Home Loans, which before my time in Australia, probably before your time as well, mate, but that was very much set up by John Simons, and he was the face of the brand, and it did very successfully, but it took them an awful long time to transition that brand from being associated with John Simons into being associated with the brand itself.
Michael Nixon: Yeah, and that's definitely something I want to push. While it does sometimes help sell the products if I'm associated with them, not enough people know who I am, or have heard me pitch, which makes it quite ineffective as well.
Adam Zuchetti: On the topic of ...
Michael Nixon: The product is definitely something who's ... I'm sorry, something that's going to be reaching people definitely far outside the business world who haven't seen me pitch and haven't heard about me before.
Adam Zuchetti: On the topic of branding, Michael, I'm just curious to ask about Annoyatron as a name, and whether you've heard positive or negative feedback from that.
Michael Nixon: All of the feedback I've had about the Annoyatron has been positive. I haven't had any negative comments about the name. I know that some of the people I was speaking to at the start of the product design process were telling me that no one would buy it, that parents wouldn't buy something for their kids if they knew it was going to intentionally annoy them, and that was the intention behind it, but I've had heaps of parents telling me that that's a great name for the product, and they think that would really excite their kids and get them to help ... I'm sorry, help them learn to code.
I've also spoken to teachers. I didn't initially think of schools as a market for the Annoyatron because I thought, well, the name will completely wreck it, but the teachers are like, "This sounds fantastic. It will disguise coding for our school kids. They'll think they're getting a really good deal," but the teachers were also telling me how they would actually consider buying one of them and learning to code so that they could prank their colleagues or their principal. The uptakes been quite interesting, and I haven had any problems with the branding at all.
Adam Zuchetti: Alright, just to finish this off, Michael, can you tell us what's the biggest worry that you have for the business going forward?
Michael Nixon: Well, I definitely think that my biggest worry would be content. One of the biggest things with EduKits is pumping out new content that's high-quality and relevant to the customer audience. I'm basically a one-person team at the moment, so I need to maintain the 20 plus projects for all the kits, but what I also want to do is start making free videos for YouTube that anyone can access to improve their coding skills, and I guess I'm worried that I'm only one person, and it's going to be quite hard to maintain and continue with. I guess, looking to the future, I might expand my team.
Adam Zuchetti: Alright. Very good. I think you've got some valuable insights, and particularly for your young age. I think you're wise beyond your years.
Michael Nixon: Yeah. It's quite interesting. I don't think when I'm speaking on the phone to people that I'm trying to buy stuff off, I don't think they really realise how young I am, and I think that's possibly a positive and negative as well.
Adam Zuchetti: Alright. Any last questions from you, Andy?
Andy Scott: Yeah, there is. We sort of touched on it right there anyway, Michael, but I'm interested to know how annoying it is people going on about your age, because I'm guessing you don't see yourself as a 14-year-old boy who's trying to do stuff. You see yourself as an entrepreneur that's trying to build a business, and do you find it annoying that people like Adam and others continually are siting your age? Is that good for you or bad for you?
Michael Nixon: I think that my age is something that's good and bad. For the media, it's really great, because if I was a 53-year-old guy with grey hairs, that was trying to advertise the Annoyatron, then that would not go at all well with the media. I'd be able to get no coverage, no publicity, Sunrise wouldn't want me, whereas right now my age is probably one of the biggest selling points for the media. I think it's quite useful, I guess, to have my age as a business person, or to even have an ambassador for the brand that's my age, because it helps sell the product. TV people love the idea of, "14-year-old entrepreneur talks about his latest product," or something like that, as opposed to, "53-year-old man makes coding invention for kids." It's a lot more exciting, but ...
Adam Zuchetti: Do you think it's more because you are so young yourself, or is it more because your age is quite related to the product that you're selling?
Michael Nixon: It's actually both things. For the media, they get quite excited about someone young actually doing something that's not schoolwork, I guess. Not sitting and writing an English essay. On the other hand, it also makes it quite relatable for kids because it's being built by someone that's quite close to the target age group, which is 9 to 15, and I'm 14, which places me right in there. However, it does sometimes get quite annoying when people are continually asking me questions about my age, and how I feel being a young person doing something. The answer to those questions is really I don't think twice about my age. I just do stuff. Yes, it definitely does get annoying when the media continually asks me about my age.
Andy Scott: I apologise on Adam's behalf for that, Michael.
Adam Zuchetti: Yeah, go away.
Michael Nixon: Oh, no. That's fine.
Adam Zuchetti: I think it's a good lesson for someone of any age, is that you just get in there and do it, regardless. You don't let that number that's associated with you tie you down.
Andy Scott: Age is just a number.
Adam Zuchetti: It is.
Michael Nixon: Yeah. With a competition like Pitchfest, I think it was a really great platform because I'm in there with people that are 50, for example, that it's their first time starting a business as well, and we're all on the same learning journey. We're all on the same page of our business book. It's really quite nice to have that experience with people who are on the same experience as you, I guess.
Andy Scott: Yeah, I got you.
Adam Zuchetti: Alright. Well, it sounds like you've got another call coming in, Michael, but we were going to leave it there anyway.
Michael Nixon: Awesome. It's been nice speaking to you guys.
Adam Zuchetti: Alright. Thanks so much, Michael. Best ...
Andy Scott: Alright. Really appreciate your time today, Michael.
Adam Zuchetti: Best of luck with it.
Michael Nixon: Thanks.
Adam Zuchetti: Alright.
Michael Nixon: See you later.
Adam Zuchetti: Cheers.
Andy Scott: All the best, mate.