Maneesh Sethi has created a revolutionary product called Pavlok, which is a wearable device that helps break bad habits and trains your behavior through electric shock.
Pavlok is easily the most unique product that I have encountered in a very long time and it’s extremely interesting to finally hear the back story behind his business idea.
In fact, right after the interview I purchased the device and have been using it ever since to break some of my bad habits.
Enjoy the episode and if you want to buy a Pavlok, Maneesh has offered everyone 37 dollars off with coupon code: PAV15
What You’ll Learn
- How to use electric shock to break your bad habits and change your behavior
- What it takes to create a hardware/software product
- How Maneesh created a prototype of the bracelet with a 3D printer
- How Pavlok works and the principles behind behavorial change
- How to market such a complicated device to the public
- How to get the word out about your product
- How to get your product on television
- Why Maneesh decided to go with an incubator instead of going completely out on his own
- How to run a successful IndieGogo campaign.
- The difference between IndieGogo and Kickstarter
Other Resources And Books
Now if you enjoy this podcast please leave me a review on iTunes and enter my podcast contest where I’m giving away free one on one business consults every single month. For more information go to mywifequitherjob.com/contest, and if you are interested in starting your own online business, be sure to sign up for my free six day mini course, where I show you how my wife and I managed to make over 100k in profit in our first year of business. Go to www.mywifequitherjob.com for more information.
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Welcome to the, My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host Steve Chou.
Steve: Welcome to the My Wife Quit her Job podcast. Today I’m excited to have Maneesh Sethi on the show. Now Maneesh is a fellow Stanford grad, he’s published four books including an international best seller and he is a CEO of a company called Pavlok which is sells an extremely interesting product that we are going to talk about today. He is also runs a popular blog called Hackthesystem.com where he writes about his various hacks for everything in life. And here is what I like about Maneesh, he is a hardcore CS guy which makes a hardware engineer like myself smile, and he’s made enough with his various businesses that he does whatever the heck he wants.
Now he’s travelled over 30 countries, he knows five languages and he even became a famous DJ in Berlin. He’s actually done more already than most people do in a lifetime and with that welcome to the show Maneesh. How are you doing today man?
Maneesh: Hey, it’s a pleasure to finally chat with you.
Steve: You know it’s funny– I’ve met and hang out with your brother Rameet, and I was actually told that you guys have like the complete opposite personality. I’m actually not sure what that means, but I’m sure we’ll find out today.
Maneesh: Yeah. I got a lot of talk about on personalities if we want to go that route too.
Steve: Sorry go ahead.
Maneesh: No, it’s interesting. Let me tell you while we seem opposite in a lot of ways we are actually really similar, if you look at like the Myers-Briggs type. He and I are the same except for the last letter which is perceiver verses the P versus the J. And a J likes to finish stuff, so when they have an idea they want to execute it and make it perfect, and they hate opening new loops without closing the loops. And a perceiver on the other hand loves to start new things, but they have a lot of trouble finishing stuff.
And so what we found is that– it’s well known that ETNP and ENTJ together always mesh really well. It’s like Steve Jobs is a ENTP and Tim Kirk is a ENTJ. They act of having someone who is an idea guy followed by somebody who can execute upon those ideas is one of the things that I have been learning a lot over the last few years.
Steve: So which one are you?
Maneesh: I’m ENTP, Rameet is a ENTJ.
Steve: Interesting, okay. So it’s up to you to find the right team to execute then in your case?
Maneesh: Yeah. Like in my case it’s like identifying your weaknesses and instead of trying to see– instead of trying to optimize yourself to be some idealistic person, it’s recognizing your strengths and recognizing your weaknesses and then building a team that supports you.
Steve: There is a lot we can talk about today, but specifically I want to know more about Pavlok which is your baby. If you could just give a brief intro about Pavlok and how you came up with the idea, that would be great.
Maneesh: Sure. So Pavlok is a wearable device that uses vibration, beeps and electric shock, mild electric shock in order to help you break bad– it helps you break bad habits, improves your memory and trains your behavior. The idea of it started off with an experiment I used to run on my website called Hack the System. Basically I had a lot of trouble while travelling to get stuff done. It’s very hard to maintain a routine and execute it when you have to learn a new language every few months. So along the way I found that there is a lot of tasks that I knew I needed to finish, but they weren’t urgent so I just ended up never getting them done. Things like writing blog posts or filing paper work.
So I eventually started running experiments to see how to get this done. And one particular experiment I hired a girl to sit down next to me and every time I used Facebook I had her slap me in the face. I tracked my productivity during this time and you can see my score on productivity sky rocket from– it was like 28 or 38% on average, I sky rocketed to 98% when she sat down next to me. I said, “This is interesting.” I posted the video online, it went viral, crazy viral. There is over 150 different new sources in a 100 countries and I said, “Well if this is so viral, why am I paying her? I should just make a dog shock collar that shocks me every time I go on Facebook.”
So I did. I made a dog shock collar that shocked me every time I went on Facebook. I laughed about it, I made a video and right before I posted the video online I said to myself, “Wait, this is interesting. There are hundreds of devices out that there that are tracking what we do, but I think that we just made something that’s changing what I do.” There is something here. Maybe it’s more than just a viral blog post. So I took that idea, pitched it to some incubators. One incubator invested in my company, in the idea, and gave me some office space, and gave me a lot of mentorship and helped me bring it to reality. And that’s how it happened.
Steve: So let’s talk about this slap experiment real quick. So did you actually get slapped?
Maneesh: Yeah. If you Google Craigslist’s slapper, you’ll find my name at the top. There is a video of me getting slapped. And actually today I had a– and now I have a– at my office we have a lot of fun here. I have a giant tesla gun. It’s a tesla coil that shoots electricity up to six feet long and it’s held by a gun. You can– like a trigger based gun. So I have a new assistant now who about an hour day, she’ll sit down behind me while I do my email and if I get off task she’ll just start electrocuting the air, scaring me and I haven’t gotten to the point where I have to actually get electrocuted by it yet because I get back to work.
Steve: I know the last time we had spoken you gave me this log in to a website where I could actually send shocks remotely to you?
Maneesh: Oh gosh.
Steve: Are you still doing that?
Maneesh: No, I turned it down because I got electrocuted a lot one day, so I had to turn that off.
Steve: So I just want to make a distinction real quick for the people listening out there. It’s more of like a surprise than an actual electric shock. It’s not like a tesla gun or– not a tesla gun but one of those stun guns or anything like that.
Maneesh: This is actually a really interesting thing to say from a business perspective. I know we are not chatting about this too much so I’ll briefly say this. When we started off the thing that made us different and interesting was the word shock. So we found that when we started– like we got on Good Morning America, [inaudible] [0:08:40] on Steve Harvey show mostly because people were just so blown away by this word shock. How would you do that to yourself? When you start to show it to people, they understand that the word shock is not what the people’s idea of what shock is, is. It’s like shock is any sort of electrical current running through your body that causes any kind of stimulus.
So my electric shock is just like touching a door knob if you rub socks on the ground. It’s like a slight impulse that’s surprising. We’ve actually been changing our literature to use the word jolt or use the word like electric stimulus, and it has changed the way people think about the product from the get go.
Steve: So I was actually looking on your site earlier today. It says that Pavlok can help you with exercising, language learning, creative writing. So how does that actually work from a functional perspective? So for example you mentioned that whenever you went on Facebook you got a shock. Is there some code involved there or do you shock yourself? How does it work?
Maneesh: So we have two different [inaudible] [0:09:37] that we are releasing: one in which you shock yourself and one in which it shocks you. So the one in which you shock yourself is actually really powerful. This is a big breakthrough for our business as well, when we discovered the power of self administered shock. So for untrackable habits, things like smoking cigarettes, nail biting, eating sugar, gambling or like scratching, whatever it is, bad habits like that, it turns out that if you shock yourself while you do the action for about five days your brain starts to classically condition itself to associate the pain of the shock with that undesired action, and it sort of deletes the habit from your brain.
So I did a couple of examples. I used it on myself for tortilla chips. I used to eat like a bag of tortilla chips a day. And so I said, “All right, for five days I’m going to eat as many tortilla chips as I want. I just have to shock myself at every bite.” Day one, day two were terrible, I didn’t want to eat them anymore. Day three, it was really bad. Day four and day five it was really difficult to eat the chips, but at the end of the fifth day I completely still until this day– it’s been over six months now, cannot eat tortilla chips in my house, in particular blue totistos tortilla chips make me sick.
Steve: Because of the fact that you shocked yourself every time you ate one.
Maneesh: We did a test group at our university. So we did like a research report over at the University of Massachusetts at Boston, and we took a group of eight people who wanted to quit smoking. We had them smoke their cigarettes. They were a pack a day smokers. And just so you know, the average success rate on quitting smoking for anybody who wants to quit is about five percent per year, and for people who use nicorette patches it’s like seven point five percent effective.
Steve: It’s really low.
Maneesh: So what you’ll see on the nicorette boxes like 50% better than a placebo. But 50% better than five percent is not that high. So what we did is we took a group of eight smokers who wanted to quit smoking, and they agreed to for the first five days they shocked themselves with the first cigarette of the day. They pressed the shock button [inaudible] [0:11:41]. And for the second week they shocked themselves for every cigarette of the day. By day 10 six of the eight had completely quit smoking, four weeks later the seventh had completely quit smoking.
So we had in our test period a 75% success rate of smoking secession. Until today it’s been two months now and when they take a puff a couple of them tried, they spat out the cigarette saying it was disgusting.
Steve: That is crazy. So outside the self administered shocking though, like how does it work. Can you have someone else enforce it or can you make it automated somehow?
Maneesh: Sure. Then there is the other side of it, the version which shocks you and that’s done though our device which is Bluetooth connected to your phone and it has an open API. So when you– went to the old website that shocked me from across the internet. What it was doing is when you typed in that URL and hit shock, it was sending a push notification to my phone, and that phone received the push notification and translated it into a shock on my wrist. So what that means is that we are creating an open API. Sorry, for viewers who aren’t familiar with open API is think of it more like an app store, like a free app store.
So people are able to develop apps that vibrate, beep and shock with your permission. So a couple of good examples of stuff that we’ve already built are, there is one integration I have with my productivity tracker where it looks at my productivity over the last 30 minutes, and if I have less than 50% productive, it vibrates, less than 30% productive it shocks and greater than 80% it will give me a vibration like a good job positive reinforcement.
Then we have one that looks at your email and if there is important emails from your boss, if you haven’t responded to within forty five minutes you get a vibration, if you haven’t responded to it within 60 minutes it shocks you. And then stuff like that that are related to fitness. So if you haven’t stood up in the last 30 minutes it will start to vibrate, if you haven’t stood up in the last hour it will start to shock you, if you haven’t been to the gym on time etcetera, etcetera, etcetera.
Steve: I see. So there is a like a software app store type of component to this as well where you’ve developed apps that– or you’ve developed integrations with apps that do this.
Maneesh: Yeah. So we’ve developed our own app that is– our own app that has a lot of different courses within it. And those courses all have sister apps like– sort of the processes. You download the product, you buy the product, you install the app and the first five days the product only allows you to press the shock button. So you can only shock yourself. In those five days you have to listen to our five day audio course. It’s the introduction to habit formation audio course, where we take you through the process of will power breaking and then we actually identify your personality type, and we start to give you a self understanding of what affects your behavior.
Once you get to day five you’ve unlocked the Pavlok [inaudible] [0:14:30]. So now all these different app store integrations are available as well as our sister courses. So we have like a course on waking up earlier and we have an app that allows you to vibrate and/or shock yourself to wake yourself up. It’s the world’s best alarm clock. Then we have another app on fitness where we allow you to bet with your friends and create competition, and then we have flash card app for memory. The memory is actually fascinating with [inaudible] [0:14:55] shock plus remembering things– just you just don’t forget things. So that’s how we kind of build it up.
Additionally we have a full on integration with other people who want to develop their own apps and a few other things.
Steve: So just listening to what’ve you said it sounds like Pavlok requires a combination of a whole bunch of things including mechanical design, hardware design; user interface is on as well as software development, right? So how does one execute on such a complicated product from the very beginning? Were you by yourself when you started this?
Maneesh: Yeah. It’s actually really rare to have a startup, like a hardware startup by a sole non-hardware founder. So I got very lucky in the sense that– I got very lucky but I had a good idea and I put it forward to the right people. So this incubator in Boston called Bolts, B-O-L-T.io is the URL.
Steve: Is that just like a coincidence?
Maneesh: Super coincidence.
Maneesh: So they decided to– they are a hardware startup incubator. If you are familiar with Y Combinator, think of it like the Y Combinator for hardware. They decided to– their first class they offered seven slots. They had like a B to B slot and a B to C slot, and then they had a wild card slot and I was the wild card slot. And so what they were saying here was let’s take a good idea with like a guy who knows marketing, but he doesn’t know hardware and see if we can introduce him into the product.
Now I had to jump through a lot– like it took me forever. I would say the first six months of my one year at Bolt were basically lost– with the exception– the only thing that came out of those first six months was getting the Pavlok name, getting the logo and the tattoo. That’s what happened the first six months. Afterwards I finally found my cofounder who was– his name is Jim Winch. He is the original mentor of Lego Mindstorms.
Maneesh: And he helped me bring about the product into actual something that I could show people. And the process of that was to start off by building out the specks– you speck out exactly what you need, then we bought a lot of product that did the stuff already, then we split our product idea into the known and the unknown. So there was the shock which was the unknown and then everything else which was like a vibrating motor, Bluetooth’s, [inaudible] [0:17:24], that was the known.
And we basically had these two big boards on the table, and the unknown which was the shock; we decided to make it sexy, so we turned it into a business card. So I have these business cards that shock you. And then the known section, other stuff we just set it up, then we connected the two together and know we had a flat two dimensional prototype that worked great. The next step here was to design the industrial design. So what is it going to look like? And this actually took a long, long time. In fact we just basically finished it now.
Steve: You are talking about the mechanical design at this point, right?
Maneesh: Sort of. The industrial design is like what should it look like? The mechanical design is what actually can we manufacture? At least that’s how I define it. So you can 3D print things today in a way it were impossible before. We came up with a lot of designs that we started to 3D print on these printers and they came out great. And actually we assembled them, sold up a lot of these 3D printed Pavlok prototypes, but they are unable to manufacture it because the way the 3D printer process works doesn’t quit mesh up the manufactured tools.
So we had to redesign them as a DFM designed for manufacturing process. So step one– I’ll just reiterate this. Before step one, step two is to have the idea, speck out the document, know what you are going to do. Step one is to build it on flat two dimensional surface with just the electronics and no industrial law. Step three is to try to mesh that into something that you can actually print and wear, and then step four is to fix it so it actually works in the real life setting. And that’s the stage that we are at right now. We’ve just finalized our designs; it’s currently being tooled and produced in China while we sell our prototype versions.
Steve: You said a lot of stuff there. And I just want to break things down. Start from the beginning. First of all, why did you decide to go with an incubator as opposed to just finding a hardware cofounder?
Maneesh: Sure. I tried really hard to start the company before this incubator, I tried for six months. I did not have hardware context back then. And so one thing was I actually found some prototyping companies who offered to prototype the product for us for cash. Their rates were enormous, and they were out of my possible ability to spend. And so I actually had given up on the project before Bolts offered me this contract.
But even in retrospect, incubator gives you a lot of value more so than just the person who knows how to do hardware. They also gave us the office space with 3D printers. The culture of having people around you working on stuff that’s hardware related is– you can’t count the value there, just a culture shift of thinking in hardware. And lastly you can never just build a hardware product with one person. The worst part about hardware is also the best part about hardware, which is that it’s really hard.
So a software product can usually be copied by two dudes, two college kids in a garage over a month or a week again even, whereas a hardware product requires electrical engineers, industrial designers, mechanical engineers and then software designers, app developers and UI UX designers as well. After having a hardware incubator really helped us get– helped me get an understanding over a six months through a year period of the real size of this challenge.
Steve: Since I am hardware guy here, I was just kind of curious what the costs were involved. Did you feel like you needed funding just to produce the hardware itself?
Steve: Because I was just thinking to myself, I was just listening to you talk, the way I would have proceeded with Pavlok is I would just buy an off the shelf board with all the components that you had, kind of muck with the software a little bit. And then I would probably need a mechanical guy and to shrink all that stuff down into a very small PCB, and then all the logistics involved in packaging it for a wearable.
Maneesh: There is a lot of ways to approach the hardware problem. We actually started off by taking the dog shock collar approach, right? So we took the dog shock collar apart, we turned into something that we could use. Then we discovered that the shock from the dog shock collar was too large to fit into a consumer wearable, so we had to turn it into smaller one that required a whole new PCB design and then we started rolling our PCBs.
PCBs are actually the easier part of the product compared to the– well the mechanical and the hardware is hard enough. The PCBs are difficult as well, the firmware has its own thing, and then that doesn’t count anything that relates to software.
Steve: Right. I know, I can imagine all the pieces together would be a pain. I was just curious though I noticed on your site that you also did an Indiegogo campaign. Was that to raise money or awareness? What was the purpose of the campaign?
Maneesh: It was both, right?
Steve: It’s both.
Maneesh: Money and awareness. I’ll tell you like we sold $270,000 or so on Indiegogo and it was great, but we spent that since and we haven’t even bought the products yet. Like hardware costs alone, just tooling costs as well as mostly staff of course costs the most. But to raise awareness it was huge, and actually one of the biggest things that came out of it was understanding how little we knew about our customers.
So we framed this Indiegogo campaign as the best– you know when you live inside of a bubble, when you live inside of something all day you don’t think about– you can’t really see it from the outside view point. So we put up this Indiegogo campaign and there were– we sold really well, but we kept getting the same question of like, “Okay, I get little shocks you but how does it know? How does it know when to shock you?” And we explained that that wasn’t even the point of the sensors and also the stuff but that’s not the point.
The point is that you can use to spur forming habits. Along this process through this Indiegogo campaign made us really look at what we were actually building. And in fact there was one particular day in fact it was Halloween last year where our UI UX guy came. He flew in from San Francisco to hang out with us, and we were all looking at our product and we were like, “This is kind of confusing. We make a product that’s cool, that’s shocks you– cool. But how come all of our Indiegogo campaign question are relating to forming habits about like how do you get yourself to go to the gym and how do you get yourself to eat better.”
That isn’t really what our product does, right? We were all like, “This is interesting.” Let’s take a look at some of the science behind what we’ve been doing. And then we started to look out for what electrical shock has been used for in the past. And we stumbled on about 40 different peer reviewed clinical studies where electric shock was used between 1960 until 1994 to help cure bad habits. And we started to look deeply at these papers where it showed people who were using it to quit smoking within five days, using it to quit nail biting, over eating, sugar addiction, obsessive compulsive disorder, gambling, even heroin addiction in a matter of five to 10 days.
And they didn’t have apps back then; in fact they didn’t even have remote controls. They were just using self administered shock. When it was that month of Indiegogo and not knowing what we were selling before we stumbled upon the fact that we had been holding this world life changing device in our hands for eight months, not focusing on what we had but focusing more on what we should it make it work for what the people or expect the people wanted. I hope what I’m saying is making sense, but what I’m trying to get to you is that the purpose of the Indiegogo campaign was to help us really solidify what our product was more than anything else.
Steve: Interesting. So did you change it halfway through then as you got more information?
Maneesh: We changed it a little bit. We really simplified and clarified kind of what our product was, but even until the end of the campaign we didn’t realize how strong and effective the self shock was. It was kind of mind blowing. When we discovered also that like all the stuff we were selling this product has been tested and proved, and like it was the most common way to quit addictions until 1994 when it just disappeared from America in a matter of four weeks from every single clinic. It was a really fascinating experience to notice that I didn’t even know that until that point.
Steve: So the reason why I asked you those questions about Indiegogo it’s because I had another guest on the show. He did it mainly for the marketing and not necessarily for the money. And it sounds like you did a full combination of both. This first round did it– you kind of used this money to fund your first set of prototypes. Is that accurate?
Maneesh: No. We had already started selling prototypes beforehand.
Steve: You have, okay.
Maneesh: But they were like alpha prototypes. The truth is the amount of money you get from Indiegogo is never enough and Indiegogo is a big risk, because it was always costs more to produce something. We had to raise more money to get to this point and we wouldn’t have been able to do it had we just used Indiegogo money. It was more of a liability than it was anything else.
So I found out like the people who do an Indiegogo campaign and raise like 50K or whatever, I don’t know how they manage. A lot of them just never ship because if we had only made X amount of dollars and hadn’t been able– if we only made the amount we raised, the 250K and we didn’t have any ability to raise any more money, we would not have been able to get a finalized product.
Steve: Interesting. So you just said that it could have been a liability. What did you mean by that? Like if you couldn’t deliver…
Maneesh: It is a liability. Like literally on my balance sheet it’s a giant liability because we got to produce– so we sold like what– 3000ish units on this Indiegogo campaign, and so we got to actually pay to build those units, right? So the 270K we made is great, but the actual cost of good soul, the actual bomb cost of these products that build the materials, the actual cost to get the hardware preassembly is like a significant chunk of that, a very significant chunk of that.
Steve: I see.
Maneesh: The act of having– but the research and development that went in between November and today is higher than the cost– the entire amount of money we made from that Indiegogo campaign.
Steve: Now that makes sense, but these guys what you are basically saying is they are getting at a pretty big discount, because if you were to sell these in stores the margins would be a lot higher than your Indiegogo campaign.
Maneesh: Yes. The prices would be higher.
Steve: That’s what I meant. And I just had a curious– out of curiosity what’s the difference between Indiegogo and Kickstarter? How did you decide between the two?
Maneesh: Honest truth is that Indiegogo’s CEO called me and said, “Hey, here is why you should use it?” But they– I feel like Kickstarter is like the hot girl at the party who doesn’t care about you. Indiegogo when they like your project really supports you. So Indiegogo like took me to sun dancing, introduced me to dozens of celebrities who got shocked by me because they liked our product idea. They’ve really been there for us to help us throughout the process afterwards.
Steve: Interesting. And then when it comes to actually creating the campaign and you want to use it for marketing purposes, do you actually have to promote your Indiegogo campaign like crazy or does Indiegogo kind of bring their awareness to you. Do you kind of understand what I’m asking?
Maneesh: Yeah. Indiegogo does– I’ll say out of the 270K that we sold something like 70 or $80,000 came from Indiegogo users. So they did provide a significant amount of awareness and they also did it through– they added us to their emails, like they did email blast where they promoted us. But no, they would do like not like– no, it’s not enough. You got to do a lot of your own marketing. We had a very targeted goal of hitting our goal by the first 24 hours which is a big thing for long term sales, which we did. We hit our first goal within– we hit our first $50,000 within 24 hours.
Steve: Interesting, okay. Can you walk me through that?
Maneesh: Yeah. So we had a $50,000 minimum and we said, “We want to hit $50,000 by midnight tonight.” And how do we do that? So what we did is we had a bunch of people who were partners of us promised to tweet out and do like social media pushes for us. We had a bunch of– we released a press release and had different– we had already gotten a bunch of different big blogs to– and news reporters who promised to write for us on the day of launch. We set up a bunch of media to go out that day, and we did a couple like guest posts and such that went live that day to ensure that it would be a huge win.
Steve: In reaching out to these people, were they just friends of yours or did you establish contact with them like way in advance or I guess…
Maneesh: I established contact with them well in advance. Some are friends of course. But a lot of people– the thing is we had a product that’s pretty interesting.
Steve: That’s true.
Maneesh: Whether or not you like it or don’t like you can’t just ignore it. So with that in mind we started building out our press contacts and started building our people that we trusted quite early. And we started using that information to start– if they wanted to write stuff about us. And so we gave the people– like we had a systematized system for it. So we have like a press and media list and we have like to tier A, tier B and tier C people. And we got in contact in them in a pretty systematic way.
So tier A people knew like two months of time before they can promote something, tier B people like a couple weeks of time and then tier C people just tweet or Facebook share whatever you want. So we would get in contact with them, get them to agree– we built an affiliate contest, so we had– if you referred sales you would get x dollars per sale and if you got the most sales you would get an extra bonus. That was pretty effective in generating a lot of people helping us out. Does that make sense?
Steve: In terms of reaching out to the tier one people, what was your procedure? Did you coldl or email or did you find someone who knew that person and then get…
Maneesh: I found someone, I knew them or I had talked to them like months before.
Steve: Okay, got it. And then was that to just promote your Indiegogo campaign or is that kind of how you use– what you use today to kind of produce, to promote your website?
Maneesh: Right now we are starting to build our own packages that help them as much as it helps us. We have not been doing as much out boundary reach as we are focused on finishing the product right now. But our sales product is through partnerships. A lot of our sales products is through partnerships.
Steve: Interesting, so partnerships with what sort of companies?
Maneesh: So a lot of health is a big deal. So we had the spray that you spray on your tongue that makes sugar tastes like nothing. I should take a step back and say this. The product is called Pavlok, but that is not our company. Our company is behavioral technology group, and what we do is we focus on helping people improve their behavior and focus from a larger scale. Our core mission is on upgrading humanity, and there is three steps to upgrading humanity.
The first step is to break the bad habits of people who want to break them. The second is to improve the sensory input and the internal subconscious knowledge of people who want to improve themselves. And the third step is to move humanity from where we are to where we could be. So one of the first cores of this is in quitting bad habits and a lot of bad habits are really, really easy to break given electric shock. So one of those bad habits in particular is sugar addiction, which is a really big death sentence for Americans and everybody.
The three biggest killers in America are sugar, smoking and sanitary behavior. We wanted to attack all three of those with this first product. So with regards to sugar, we have a couple of partner products we’ve been working with. One is called knockout sugar which you spray on your tongue and it makes sugar taste like nothing. And so when you combine that knockout sugar with ice-cream or a sugary item for five days, if you eat ice-cream after you spray your tongue, the ice-cream just tastes like nothing. It tastes like yoghourt.
If you shocked yourself for those five days what happens is that your brain starts to see that this item it likes to eat that has no pleasure anymore, it’s only adding pain. It completely deletes the desire for sugar from your brain, no add needed.
Maneesh: So for a lot of like health bloggers who are creating these special packages where you get the sugar product plus the shock product and then resell them, then they get like an affiliate or wholesale commission.
Steve: Okay, got it. So it just seems like a huge component of the sales for your product depends on education, right?
Maneesh: To an extent, yeah for sure.
Steve: So is there a strategy then to just kind of reach out to these health providers and kind of sell your products alongside with their services?
Maneesh: That’s just a sales outlet. So one of our biggest sales outlets we are working on is retail. Retail can deliver a 20 million purchase in one [inaudible] [0:34:25] if you get the right team. So what you said first about education, that’s very true. Getting people to educate themselves on why they should shock themselves is a big deal. But once you start to see the results you’ll see something very interesting, which is that people who start using the shock directly have insane results. It’s mind blogging how good these results are.
Even I still can’t believe the fact that when I eat tortilla chips I get sick. I still can’t believe the fact that when I shock myself to remember someone’s name or their email address I don’t have to write it down anymore. I just remember it. The power of electric shock is insane, and it’s only been verified by the media since 1994 when it disappeared. So the first step is getting people who use it to actually use it, getting people who’ve already bought the product over 3000 people now to actually use it and then give us back testimonials which we’ve been doing.
I’ve noticed that the product itself sells itself. I can’t have a conversation not about shock anymore even when I try because when someone asks me what I do and I say, “I make a wearable device that uses electric shock.” Or they say, “What’s that on your wrist? And I say, “It’s a wearable device that shocks me to help me improve my memory.” The first thing they say is, “Wait, tell me more. Let me try it. I got to try this out. Holy shit, like let me get my friends over here. Hey come on, you guys want to try this out.” The product sells itself. So I think that our big marketing plan right now is honestly getting into people’s hands because everybody who I give it to sells more.
Steve: No, that makes sense given the nature of your device. Actually you have an advantage in that it has a great story, and it kind of does sell itself actually. That’s what mainly interests me to your product when I saw it.
Maneesh: I can tell you our retail strategy if that’s interesting to you.
Steve: Yeah. Let’s hear it.
Maneesh: So starting last year I was focused on getting our core early app users to do it. So I did this by taking my old email list and pre-selling them this product. Then we took it to Indiegogo in which we had this big launch. And we focused that time on really just detail in the story and getting enough money that we could move to the next step of actually delivering their product. In the mean time we built these prototypes out. And these prototypes we’ve been shipping to customers have gotten us a lot of good results on how users will use it, the user’s experience, how we can improve the product, etcetera.
From now– now our next goal is to get the Indiegogo users to have their product fulfilled. Those will be fulfilled by July, August and that’s a good and bad time. It’s a terrible time to launch a product. July and August is the worst two months you can possibly have, but it’s a fine time for us because we are just delivering a product we’ve already sold, getting it to more users’ hands, and see how they use it. In August and September we are focused on a couple things. The first step is proving that we can sell the product using television, home shopping television channels.
So we are doing a few– we are working right now on building up a couple of different TV channels that we sell sort of like QVC, HSN in order to– where you have enough time to sell your product. This product requires a little bit of education, so you get 20 minutes being able to actually sell it as an infomercial. Once you have that evidence of being able to sell a thousand or so units within a 28 minute session, then you take that proof and you go over to Best Buy or Target and you say, “Here is our product. We want to get it in your stores. We have evidence it sells. What do you think?” And then they make a big purchase order, and that’s where big profit comes for hardware companies.
Steve: And just curious to get on these QVC like type of shows, what are the terms and how do you reach out? How do you even know where to reach out and how do you reach out?
Maneesh: For you, you can just call me. I’ll get you an intro. I’d say that they are a bunch of people– once you start building hardware they start coming to you. The thing is they want to feature your product. They want to sell your stuff if it sells because then they make money. The terms, I can’t really tell you.
Steve: It’s fine.
Maneesh: But it’s typically– a typical deal is involved like a 35% ish cut. But the goal is– my point is understanding that they want your business because you are their customer. You are their client. If your product sells they make money. So the first step in making your product sell, secondly you find them or they find you, but there is a lot of ways. It’s usually intros and intros. And then lastly once you have that evidence then you go to the next step.
Steve: And one thing specifically about your product I would imagine like let’s say I see it on the show for Best Buy, I’m not going to know what to do with it. It almost requires some sort of huge setup to kind of educate the customer on how to buy it or how to use it.
Maneesh: Yeah. We are working through this a lot right now. So there is a couple of ways we are tackling that problem. The first thing is I really believe it’s revolutionary. Our long term vision of this product is to replace your smart phone. And so a lot of things that we are doing is– like if you ask someone like what does a smart phone do you in 1994? It doesn’t really make any sense. It makes calls and it texts, but it also lets you check your bank account and it also lets you do this and also lets you do that. It doesn’t quite make any sense? There is just too much you can do.
So condensing to the core of what it can do is one of our biggest– is what we are doing right now. So getting customers to buy that product alone– sorry, getting customers to buy the Pavlok, buy in to Pavlok, to believe in Pavlok is an education process. But then Pavlok has so many specific use cases that we’ve been testing out like niching down for particular different niches. Pavlok quit nail biting for example can be its own product and it’s just– our Pavlok [Inaudible] [00:40:19] little module that you put inside of a silicon band.
Steve: Like a Fitbit.
Maneesh: Yeah, something like a Fitbit. And also we’ve also created different integrations so it can go in your necklace, or can go into your watchband like in the strap. So we are spot testing like a nail biting product. So you go to Wal-Mart and you just see like “Quit nail biting forever,” and it comes with a wrist band and audio CD. Quit smoking program, quit sugar program that comes with a knockout sugar as well as the Pavlok. So we are testing out the right way to get into the right people’s hands.
Steve: Actually if you frame it that way it’s much more sellable, right? Then you are selling a solution as opposed to your product.
Maneesh: Yeah. And one of the biggest things that has really helped us grow is our coaching program. So we are not just a device. We are actually a coaching program. So everybody who buys a Pavlok get a call from our habit hackers and our habit hackers break down you– they help you understand what you want out of your life or who the dream version of you– what he would be doing in six months, what he’d be doing in three months, what he would be doing next week.
And then we created a poaching service in which we are able to use– whether or not you have a Pavlok actually. We are able to help you coach you through the process of improving yourself. And Pavlok acts as a nice conduit into that world of life. It’s not quite like coaching but something similar like coaching. So right now we offer that coaching program just to our buyers and that helps them even more than the hardware. We’ve found a lot of our– few of our best users have kept the Pavlok on mostly as a reminder of the coaches have really help them push through on their habit formation. So that has been really important, getting human beings to help coach you is a big deal for us.
Steve: When I first saw Pavlok I thought it was just a gadget. It sounds like you have an entire vision that kind of is built completely around Pavlok. Like a much higher level vision that you are trying to meet.
Maneesh: The vision is pretty insane. It gets bigger every day and it’s one of those ENTP things that I have to hire people to making sure [inaudible] [0:42:27] sometimes.
Steve: Hey, just a couple of random question. This is just mainly out of my own curiosity if I want to create my own device. How do you guys going to handle QA and stress testing and all that stuff once you start selling in mass?
Maneesh: Yeah. Right now we have a QA. At my old office in Bolt we have a testing machine so we can do hit and cool. And so we’ll use that for the beginning test and then as we scale really high I’m sure we’ll have a full QA and testing process assembly line.
Steve: For just an aspiring entrepreneur, who kind of wants to create some sort of hardware software device, would you recommend that they took your path or if and if not which path would you have taken ideally?
Maneesh: That’s a tough question. For a hardware entrepreneur?
Maneesh: I recommend getting into an incubator for sure, if you don’t have enough money of your own– hardware is like– when I used to be– like my old blog was all about entrepreneurship and building business and I would just be honest about it. And I’d be like it’s easy, just do it, like go start, write down a code, build it up. But with hardware it’s something that I really do want to caution people, because you can get in over your head and it can be– like software won’t lead to the same sort of credit card debt that hardware will.
So make sure that you have somebody on your team who knows what they are doing, who’s done it before because– or you raise some funding, or you just don’t want to be non hardware person jumping into the hardware world without some kind of experience whether it will be through an incubator, through a partner, through a cofounder. But if they were to have a great idea and a good prototype, then incubator is a really good way to go.
Steve: So just curious, why incubator as opposed to pitching an idea to a VC?
Maneesh: In our case, the incubator helped us build the product. A VC would have just given us money.
Steve: I see, okay.
Maneesh: So incubator really gave us literally 5000 square feet of 3D printers, laser cutters, CMC machines, mills, everything we needed to build the product and people to help us operate them, whereas VC would have just given us the money and said, “Figure it out.”
Steve: I see. And then the resources to actually create the electronics is all in-house as well, like layout guys and all those…?
Maneesh: They had helpful people, but we didn’t need our team to do that. I’d hire people to get that happen.
Steve: Interesting. Can you just briefly comment of kind of like the equity terms of the incubator as opposed to like going with the VC?
Maneesh: Yeah. Bolt in particular was nice. They gave us– what was it, 50K for 10%. And that was common stock whereas VC would have had– they had very few controls like a lot of it– money is cheap right now compared to anytime in the past. Money has never been cheaper meaning that you can get cash. If you supposed to be in Sans Francisco you can get VC terms, but there are two variables and control here. One is cash and one is control. Control is a lot about– we could have gotten, we can still go raise a ton of money if we want, but the terms on that money from VCs will involve a lot of board seats and liquidation preferences and all the stuff that gets us screwed in the long run, whereas Bolts terms were very cool.
They were common stock, like we are on equal terms and we just have to– from most incubators will give you a little bit of help and not kind of ruin you from– before you know what you are doing. It took me a year to figure out what all these venture deals mean, like what these venture terms mean. They can really screw you without you noticing, like really screw you without you having any idea. There is a good article last week about how– there is an article on Happy News I saw that was called, “How to build a billion dollar unicorn company and walk away with nothing.” And it had to do with like these things called liquidation preferences which are really common in VC deals.
What they’ll do is that they’ll say, “We invest $200 million into you out of one billion dollar valuation with a one x or two x liquidation preference.” So from the entrepreneur he’s like, “Holy crap, I just got $100 million at a billion dollar valuation, that’s only 10% of my company, right?” And then the VCs will be happy because they invested at this big amount, but it’s actually a company worth more or whatever.
And then the problem is the liquidation preference which is– the liquidation preference says, “Okay, you bought 20% of the company for however much money and for $100 million.” So you bought 20% of the company for $100 million, so when the company is sold or IPO, when the company exits the VC– first of all he gets his liquidation preference back. So his $200 million comes back to him and then owns 20% of the rest. And so– does that make sense? So he gets…
Steve: I see. So he gets that money in addition to 20% of the rest. He gets his give money guarantee basically.
Maneesh: He gives his money guaranteed and then 20% on top. And those when they start adding up round after round after round, can really screw you over. So I didn’t know that and I thank God because we have a lot of– we are doing some very interesting stuff with our company like from a legal corporate matter style. And if we had taken any VC funding, we would not be able to do the stuff we are doing.
Steve: Interesting, that’s good to know. So it sounds like your incubator is just common stock and they have not preferential treatment over just another regular investor. Is that kind of…
Maneesh: Yeah. It’s just like [inaudible] [0:48:08] invest in our company for example. So he did ask for free [inaudible] [0:48:05] cool people and they all have very similar terms.
Steve: Okay, cool. Hey, we’ve already been chatting for more time than I allotted for you actually. So if anyone wants to know more about Pavlok your company, where can they find you?
Maneesh: Yes. So head over to Pavlok.com P-A-V-L-O-K.com. It’s like Pavlaw but the last letter is a K. And if you want these cool discount credit we have, if you guys want to buy one there is preorders which are the final production units that will be shipping in July and August, and then there is prototypes which are shipping right now. And I’m actually kind of excited because we are going to be raising the price on the prototypes soon, because they are kind of like a collector’s item at this point. It’s only 250 of them left at this moment. And so those ship right now, and they are actually really cool. I’m like really proud of them.
Steve: I’m definitely going to pick one up and then maybe I’ll do a little blog post on my results. I got a couple of bad habits I want to break too.
Maneesh: Yeah. And if you strive for memory, it’s mind blowing dude.
Steve: For memory.
Maneesh: It’s like– I can talk about this a lot. Sorry, before I move onto that– and there is discount code for your readers P-A-V-1-5, PAV 15 is a 15% off discount code.
Steve: Sounds good. I’ll also put a link to your site along with that coupon code in the show notes as well.
Maneesh: But it’s pretty cool. So we discovered that– basically the way that your mind processes memory is through external senses. And so you know how you remember faces or like places that you walk into or like emotional events, but you don’t remember names and numbers because they are like pieces of data and they are not tied to any kind of incoming human sense. Turns out that electric shock is a sense, and so when you get shocked while you are thinking about someone’s name or while you are thinking about someone’s email address, your brain uses that shock as like glue to associate that moment with that memory, and it makes it so at least for the next 48 hours and often for a long term memory that memory is saved.
So I started using shock as like a file save for the brain. Someone is like, “Check out this website or here is my email address.” I don’t have to pull my phone and write it down anymore. I just focus on what he’s saying, press the shock button and when I get home I shock myself again and it comes back. It’s pretty cool.
Steve: One problem I have is when I meet someone I almost forget their name immediately. So you are saying that if I meet someone and I shock myself I’ll remember that guys’ name?
Maneesh: I did a lot of tests on this because I’m the same. I used to have like a 20% success rate of name recognition. So for the first basically six weeks of using the shock, the shock has a two second timer. So the guy would say– I’d say, “Hey my name is Maneesh.” And he’d say, “Hi, my name is Jack.” And then I would press the button as he said Jack, and then I would try to shake his hand and time it. So I said his name right when it hit me. And I found that for the first six weeks my memory shot up to 90%, like I would remember names forever whether or not I was drunk or sober when I met them, whether or not I was on a phone call or it was next to them, I would always remember their name.
I think that has dropped after about six weeks it drops to like 40 to 50%, but it’s still far higher than my two– 20% and we are adding a new memory, like a randomization of the shock to help improve that higher as well. So try that when you get it. It’s pretty cool.
Steve: I know this podcast wasn’t meant to like to sell your product and stuff, but you’re doing a pretty good job.
Maneesh: I’m not even trying to sell it…
Steve: I know, you are not even trying, yeah…
Maneesh: It’s like really cool. I know its crazy– yeah.
Steve: All right dude. Hey man I really appreciate you coming on and maybe one day when you are in the Bay area or something or if I’m out in Boston then we can meet up.
Maneesh: Sure. Let’s talk about that after– and it was a pleasure man. Thank you very much.
Steve: Thanks dude. What an awesome episode. What I like about Maneesh is that the guy always finds a way to do what he’s passionate about. And I simply love the concept of Pavlok. And in fact I just ordered one for myself and will be writing a blog post about it soon.
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