After a successful Kickstarter crowdfunding campaign that brought in $250,000 with more than 4,000 backers, the San Francisco company's co-founders met their next challenge with some trepidation. They needed to dispatch 12,000 self-cleaning aquariums, but the company's manufacturer was reporting some kind of freak delay.
Their troubles didn't end there. Reports soon came in that the aquarium pumps were failing--flooring the UC Berkeley grads and Inc. 30 Under 30 alums who broke into self-sustainable products with their grow-it-yourself mushroom kit in 2009. Adding to the anxiety, negative reviews on Amazon began to proliferate, as many of the original backers of the aquarium had received broken kits.
It's been two years since those hand-wringing days, which the co-founders report still feeling unnerved by. Yet with distance, they now affirm the steps they took to handle the mishap at the time. They also see where they went wrong. Here's a recap of a recent Live Chat with Inc. magazine Senior Editor Maria Aspan, where the Back to the Roots founders describe their strategy for overcoming the business crisis.
It all starts with transparency. Throughout the delays, Arora and Velez updated customers on the manufacturing process, even including a picture of the broken machine part.
When they learned of the pump failures, they came to a critical question of whether or not to refund backers for the broken kits. Ultimately, they did--but it forced them to have to make other tough, potentially business crippling decisions. The cost of the refund bit into employee payrolls. Naturally, that led to a difficult time at the company. But in hindsight it was the right move, as BTTR regained the confidence of customers and even engendered more loyalty. Some aggrieved customers, for instance, changed their product reviews from negative to positive.
"It was a costly decision," Velez said. "At the time you talk about do you potentially put payroll at risk or stick to the things I believe in."
In crowdfunding sites like Indiegogo and Kickstarter, entrepreneurs find a fast-track to a successful product launch, but they must withstand heavy scrutiny from consumers. Arora says being honest with buyers helped them weather the delays and pump failures. Crowdfunding also helped the pair incorporate design feedback even though doing so pushed the launch date back three months.
"Looking back now if we're going to do it... I think we were naive in that [we] way over promised the timeline," Arora said.
Although the aquarium farming market has grown quite crowded since the co-founders entered, Arora and Velez say it pays to be open in doing business. The pair came out with Organic Stone Ground Flakes, a cereal made from three ingredients, which is sold in Whole Foods and other retailers.
"It was a really tough time for us as a company that almost put us under." However, Velez added: "We're in this for the long run."