Flow Hive has all the signs of becoming a classic icon of “Aussie ingenuity”.
A couple of blokes tinkering in their shed, simply trying to build a better mousetrap, knock out a product that could one day be spoken about in the same breath as the Hills Hoist, Victa lawnmower and the stump-jump plough.
Only things are a whole lot different this time around. In 1945, South Australian Lance Hill built a cheap version of the fancy rotary clothesline his wife wanted. She liked it so much, he built a few more and started selling them.
In 2015, Australia, there’s a better way – sell it first, then figure out the building bit.
They call it “crowdfunding”, Lance, and it’s turning innovation on its head.
There’s been some notable Australian crowdfunding success stories already. The makers of KoalaSafe – a wifi controller which lets parents monitor their kids’ online time – launched the project on Kickstarter in March, met their $100,000 goal a month later, and began shipping units by August.
In August last year, three Sydney mates invented a butter knife that grates and spreads butter easily, straight from the fridge. Within a month, their modest $35,000 goal had swollen to $360,000 in pledges after “ButterUp” caught the imagination of the world’s media.
But nothing in Australia comes close to what happened when Stu and Cedar Anderson unleashed Flow Hive on the crowdfunding community. In fact, nothing in the world came close.
First of all, in case you’re not familiar with the story, you need to know that Flow Hive has turned the ancient art of beekeeping on its head, simply by adding a tap to beehives.
Except it’s not that simple, or else it would have been done hundreds of years ago. It took the father-son duo from Byron Bay 10 years to figure out a way to break the frames inside the box, get the honey running out, and rejoin the frames without disturbing the bees.
It’s a kind of magic. Watch this and you’ll understand exactly why everyone else who watched this went crazy for it:
Here’s a quick breakdown of how the campaign unfolded:
- They wanted $US70,000 in a month of crowdfunding on Indiegogo. They got it in eight minutes.
- In the 24 hours that followed, they had $US2 million pledged – the most ever pledged in that time frame on any crowdfunding site.
- By the time the campaign had ended, they had $US12.2 million – 17,386% of their original goal.
- One month later, they raffled the first Flow Hive for $97,300 – $27,300 more for a single unit than the total they originally sought to get going
The Andersons obviously had a lot of instant thinking to do about the kind of stuff Lance Hill knew he might get to eventually, if demand for his “Hills Hoist” gracefully curved upwards over time as word spread.
They planned on having to piece together and box maybe 100 or so beehives, but the final order was in the vicinity of 20,000. So, some expansion needed, and fast.
In recent years,their combined experience amounted to Stu managing a community agency in Lismore, and Cedar having had some experience “selling stuff online”.
The plastic flow frames from the prototype hives were 3D printed, but Stuart says there’s no way 3D printing can keep production up and costs down on the scale they needed.
“It’s pretty limited, and expensive,” Stu says. “And it’s not nearly as clean.”
So while injection moulding was always the plan once everything was working, “injection moulding” inevitably translates to “China”, right?
“That’s been the inherited wisdom, but we’ve found Australian companies competitive in their quotes and their approach,” Stuart says.
“We got frustrated with one of the companies we’d been working with and at that moment this Brisbane company came to us and told us they’d been looking at us … and had for some time been looking into how they could make some products that were more meaningful in terms of making a difference in the world.”
The Brisbane partner – Evolve Group – makes the frames from food-grade plastic.
“And of course, a big factor in choosing a Brisbane factory is that they’re nearby,” Stuart says. “They’re making the flow frames themselves and that’s the essence of our company, so we need to be there sometimes daily as they work on producing them.”
“That would have been pretty clunky, working with a factory in China like that, although we have worked with companies in China, when we were developing.”
To VC or not to VC?
Given the scale of what they eventually took on, it was fortunate for the Andersons that they chose Indiegogo over Kickstarter, as enough of a portion of the funds were released on reaching their goal that they could get a running start on filling orders.
“We didn’t ever have to go into debt,” Stuart says.
So why did they chose not to pitch to a VC?
“Because we would have had to have given up a lot of equity or a high interest rate,” Stuart says. “Crowdfunding not only offers the potential to raise the money, but also for us to say ‘This is our invention’ to the world, we’ve done this.
“If it goes well it creates an interest all round the world. With a VC, you’re still back thinking, ‘Well, how am I going to promote that, how am I going to let people know’, whereas crowdfunding does a lot at once.”
But for every crowdfunding success, several thousand campaigns fall flat. And of those that don’t, meeting your funding goal is just the first step. Ask the ButterUp team, who, more than a year out from going into production are still managing complaints from around the world about missing deliveries.
“Yeah, we’re pretty pleased we’ve hit the benchmarks in terms of delivering when we said we would,” Stuart says. (Keep in mind their order numbers grew by 17,000%.) “Only about 25% of crowdfunded projects manage that.”
He puts a lot of that down to “Cedar’s drive and vision” and being fortunate enough to have a network of good people to call upon, being available and the enthusiasm of the two factories to help them meet their deadline and quality requirements.
Business, but not as you know it
Also, communication. In 1945, the only feedback Lance Hill had from his customers came in two forms – how many Hills Hoists they bought and how many got sent back to be fixed.
Now, you have an entire global community to manage, before you’ve even picked up a screwdriver. Your shopfront is the laptop on your desk – in this case, on a farm in northern NSW a world away from Sydney – and your customers are peering in the window 24 hours a day.
“Again, I’ve left that to skilled people who have come on board,” Stuart says. “I’ve learnt a lot about it, being on the sideline watching, but I wouldn’t call myself skilled at social media in any way!
“But it’s a big part of it, that communication with our audience. We’ve kept releasing little videos and sending emails to keep people informed…
“Although our invention makes honey harvesting really easy, there’s still all the other part to take care of, regarding the health of your bees, so messages like that keep going out.”
So far, so good. The Andersons are keeping up with the huge demand and have a smooth, large operation up and running in Australia within six months of unleashing their idea on the public. The hoop pine boxes are shaped and packaged in Brisbane.
They’ve made just one offshore concession. Contracting a factory in the US was all but inevitable given the amount of orders coming from America and the need to save customers some shipping costs. (Although DHL has worked with the company to get shipping rates down as low as possible.)
So anyone who bought a hive up to this week, bought a western red cedar hive that was made in Portland, Oregon on the US West Coast.
“We feel like we’ve landed on our feet in finding both those (factories) because they’ve been like-minded in wanting to produce an excellent quality product,” Stuart says. “But also in terms of for the broader environment and the world… the bees being in trouble indicates we’ve got some big things to look at in the way we run our agricultural systems and the companies we happened to have linked with, in a broad way, share those concerns.
“60 per cent or more of our orders for the full box were from the US, so it made shipping sense, but we had tried to get something happening via New Zealand and Australia but … those companies were a little bit slow to respond and didn’t catch on, whereas this Oregon company seemed to get it very quickly.
“They had a customer service model that we really liked and they gave us an amazing price, too. It all fitted together in terms of their enthusiasm and willingness to work with us.”
Stuart just returned from his first look at the Oregon operation, where a single Flow Hive flat pack is being laid down every 20 seconds:
The trouble with China
In these times of multimillion-dollar VC deals and acquisitions, it seems the only success anyone has is instant success. The flipside comes when you enter the global market so quickly – instantly – you’re just as quickly finding yourself fighting the imitators.
They come thick and fast, especially out of China, where individual IP barely exists. They even have a name for knocking off other people’s ideas – shanzai – and it’s actually a moniker worn proudly, signifying entrepreneurial spirit.
“We have already had injection moulded copies made, in China, and of course that sort of thing will happen,” Stuart says. Yes, complete “Flow Hives” have already been on the market and sold, complete with the Andersons’ branding.
“They’re just awful,” Stuart says. “What they produced was awful. They’ve looked at our videos and looked at our patents and so on and cobbled it together but made a lot of mistakes. We don’t even think they would work.
“They used awful quality plastic, they smelt bad and the mechanism didn’t seem to work either.”
Stu says he knows people bought them, perhaps tricked by the fact they were sold under Flow Hive branding, even using the Andersons’ photos and videos.
Fortunately, the pretender’s efforts quickly slowed to all but a halt as the dodgy hives started coming back and PayPal and credit card providers forced them to refund customers.
But that’s one of the pitfalls of having a very visible online success story. There’s more than 200,000 people tuned into updates from Flow’s Facebook page, and no doubt from amongst them will come more imitators watching and plotting ways to ride on the coattails of Flow’s success.
All the Andersons can do is make sure they stay one, or several, steps ahead of the rest.
“We’re certainly not the first company that’s had rip-offs,” Stu says. “We just have to be the best, have good customer service and continual innovation so we’ll always be improving and adding more to it.”
The Flow Hive team has three goals they hope will keep them ahead of the game:
- Ensure staff are happy and motivated and excited about their work
- Staying on top of the patent and copyright side of the business, and
- Ensure that the product is “not only good quality, but seen to be good quality”
In particular, they’ll be getting ready to help their customers through the moment when they realise there’s still a significant element of beekeeping knowledge required. The Flow Hive honey might look after itself, but the bees don’t.
There’s no shortage of knockers among the ranks of traditional beekeepers online who are findings reasons to hate the Flow Hive. It “separates humans from bees” is a common grievance, as are concerns novices might be endangering other colonies by not properly monitoring disease.
Again, facing such rapid growing demand means building out all the other parts of the business has to come at an equal rate.
“Yeah, a lot of it’s not up on our site yet, but we’ve been preparing a lot of material on bee disease and what you do about them,” Stuart says.
“We have a good team of people working on what will become customer service, and most of them are getting beehives this week, as it turns out, so they’ll be come more aware of the in and outs of beekeeping.
“And our standard response is you must connect with beekepers in your local area – clubs and individuals – because we can’t answer the questions for bees in Alaska or even for over the hill from here.
“It’s often a different scene because the flora is different and the climate is different.”
Is it a new era of innovation in Australia?
Flow Hive has been 10 years in development. Ironically, it could be seen as owing its huge success to the stagnant nature of Australian support for new industries.
Stuart says they’ve generally found the export advice people to have been “great people on the ground to work with” and will chase up some of the export incentives on offer.
“But before the crowdfunding, a few years before that, we’d gone for what was then called Commercialisation Australia – grants for innovation – and I found that a very frustrating process,” he says.
“We got through Stage One and maybe in just happened that the person who was in contact with us for Stage Two… didn’t help us at all, didn’t seem interested at all in what we were doing and sort of just dumped a whole lot of forms on us for us to fill in and never made contact to see how we were going – for months and months and months.
“I think in Australia we could put some more effort into supporting innovation in various ways. At the moment it does still feel like lip service. I just haven’t come across anyone in various travels that said yep, yep it was the government support that made it happen.”
So here they are in 2015 and the world is throwing money at Flow Hive. Stuart stills laughs when thinking about the day his life changed forever.
“That was extraordinary,” he says. While he was being interviewed at the time by a TV crew, Cedar switched on his phone to watch the Indiegogo campaign launch and everything suddenly got put on hold.
“Cedar interrupted me mid-interview and said ‘We’ve hit the target, we’ve hit the target! And Michelle rushed in and kissed me and it was all a bit crazy.”
“It was so exciting, incredible. There was an air of unreality about it because it’s all happening on screen, there must be some mistake…”
“I feel very very fortunate in so many ways. To have worked so closely with Cedar, my son, and to have invented something that really, so many people around the world are appreciating is making a difference for them. And then to suddenly be – it looks like – be financially secure.
“There’s plenty of opportunities for us to make a mess of that, but it looks like things are going to go well.”
And while he’s aware the current government is starting to look at the possibility of changing the laws so entrepreneurs can raise equity through crowdfunding, Stuart said he still wouldn’t go down that road.
“I’m really happy with what we chose to do. There was a range of pledges that people could make and …we could have made some big mistakes, we didn’t know how well it could go.
“At one stage we were thinking ‘Well, we’ll offer $3000 pledges and for that we’ll fly to wherever they are and help them set up their own beehive. Well, I’m glad we didn’t include that one.”
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