Money Rehab with Nicole Lapin - Confession$ of Selling on HSN

Episode Date: April 7, 2022

Once upon a time, Nicole had an idea for a financial smartwatch. And she even made it to the Holy Grail of product launches: the Home Shopping Network, the network that launched a bajillion products, including Money Rehab alum Joy Mangano’s Miracle Mop. But to make it through a night at HSN, you need exactly that: a miracle. Today, Nicole spills it all in a special Confession$ episode.  See omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. Yesterday, I promised you a confessions episode,

all about how I hustled to try and get a product off the ground and made it all the way to HSN. It started like this. I had a genius idea, if I don't say so myself. I mean, at least that's what I thought, and so did the closest people around me. The idea was to create a smartwatch that tracked your spending throughout the day in the same way as a Fitbit tracks your steps. I saw the trend of wearables taking off with the popularity of fitness trackers and the upcoming, at the time, launch of the Apple Watch.

And I wanted to get in on the action. There were wearables for sleep. There were ones for steps. But nothing for your money. I saw a massive opportunity to be the first one to do that. And the watch as another screen to reach my audience in a unique way. I came up with the idea for a product and ran through a few names and trademarks. The first was Watch It, like a watch that helps you watch your money, get it? After some starts

and stops, I ended up going with Cash. It was smart. It was simple and not too cutesy where you have to explain what the name actually means. It said what the watch was intended to do. Help you track the cash that you spend that often goes unnoticed or unaccounted for because it's in cash. People told me it should have been an app instead of hardware, but at the time, I was adamant that an actual watch was a physical reminder that you're on a financial diet just by wearing it. Now, I had been in business long enough to know that this wasn't a product that would go straight to the shelf of Best Buy. But I figured that if I could find a way to tell my story and why budgeting like this was so important that customers would come on board, the best way to

do that, I decided, was to go on the Home Shopping Network, or HSN, where I could describe the product to an actual audience. So after going through the ranks at HSN, I flew down to their headquarters in St. Petersburg, Florida, to pitch it with a slide presentation I created. The room really liked it. And after a couple more meetings and calls, they gave me the green light. Woohoo! Okay, so I had buy-in for my idea.

But then I had to make it a reality. The thing I failed to keep in mind was that I wasn't just getting into the hardware business, but also the software business. I mean, you can't track the money on a watch and then just leave it there. You then have to plug it into your computer to sync and then have your data analyzed. Now, the software and hardware businesses are two of the hardest kinds of businesses to get into, and I knew approximately zero about both. I mean, I was just trying to invent the world's first ever financial smartwatch. NBD, totally casual, right? But

with my great idea and a big buyer on board, I was determined to do it. I hired a small staff, someone to design and manufacture the product, and another to deal with shipping, customer service, and other logistics that I had also forgotten about. I didn't take outside money, so I deficit financed it, which means that I put my own money in with hopes to make it back and then some. The two guys I hired had a ton of experience in this area and were confident-ish we could get this ready for our air date in a few months, which is unheard of for a product like this. And without stopping to think it through, we were on a mission of speed and cost effectiveness. Needless to say, I was a victim of having too much speed but not enough direction. So I was just going nowhere fast.

Before I knew it, my team was in China looking at samples for the casing and for the straps. There are literally millions of options. By the way, I picked out gray stingray, white crocodile, and black rubber to make them interchangeable for all looks and outfits, plus a stylus and a box and then the lining for the box and a little pillow in the box. I mean, every detail I could think of. Then I worked with a software team to come up with an interface for when the watch is plugged in via USB to your computer. I customized a saying for each permutation in my voice. So for example, if you were over budget on transportation, I would say something like, girl, you have to quit Uber or take the bus, bitch. All of this took hours and

hours and the bills kept mounting and mounting. Despite all of the challenges, most of the launch plans seemed to be coming together. I shot promotional videos and went on a press tour in the lead up to the big day. But beyond the buzz, the product itself almost fizzled the night before. HSN has a super strict QA, or quality assurance policy, of inspecting everything that goes on air. Hours before launch, the HSN team didn't approve of the wall charger. And I was at the brink of my $250,000 investment going in the shitter because of that damn charger, which was already in each box. I was not about to let that happen. So my team went through 5,000 boxes we had in the warehouse. We were going to do drop ship to customers,

which means we just ship it ourselves and took out every single charger. I mean, it was take it out or get out. So we did what we needed to do. At that time, I had been on TV for 15 years, literally thousands of hours, and I have never had a more terrifying experience on the air than being live on HSN. It's a network that makes $3,000 per minute. And if they aren't making that when you're on the air, they simply take you off and replace you with someone who will. Plus, I was on in the evening, not that 2 a.m. graveyard slot that they start a lot of products on. So there was even more pressure in prime time.

If that wasn't bad enough, there are crazy intimidating graphs and charts on large flat screen TVs blasting the real-time sales data on set. I don't even remember what I was saying while I was on camera. I just wanted to hear the host say, we've sold out. But he didn't. I got off the air and wanted to throw up. I asked immediately, how many did we sell? My massive investment and my team were dependent upon what had happened in the last 10, no, actually 8 minutes. I didn't even make it the full 10. A bad sign. They said, well, you didn't sell out, and we need to calculate the web sales and the rest of the numbers before we can tell you for sure. Oh, and P.S., everyone on the show that night sold out, except for me. Don't get me wrong. I sold a good number of cash smartwatches that night, but it wasn't the blowout I was expecting. I flew home and my adrenaline high totally crashed and left me feeling absolutely

bummed. In the weeks that followed, we sent out all the orders and started brainstorming what to do with the rest. And then came the most devastating blow of all. The returns started coming in. Before you can calculate real sales in any business, you have to account for returns. And my return rates were higher than I had predicted. What is going on, my team and I wondered as we figured out how to proceed. And the answer became so shockingly clear, it was embarrassing that I didn't know it before. We didn't test it. We moved so quickly to make our deadline that we never put the product in the hands of a test group to work out all the kinks. It was buggy. Of course it was. There were a million things in launching that

product that I needed to juggle, and misstepping with almost any one of them could have ruined the product at different stages. But not testing crushed the product in the end. I ended up using the first round of real customers as my test group, which you should never do with the people who actually pay for your product. Remember yesterday when we talked about the importance of feedback? My customers' feedback was spot on, and it helped me and my team iterate the website and the watch itself enormously. We focused on getting the product to a good place before even thinking about reordering anything. In hindsight, my idea should have been an app instead of an ambitious foray into the crazy hardware and software worlds. But of course, that's not my

ambitious style. But that time did come when I needed to strategize for the future of the company and the inventory we held. It was time to either throw more money at it to make it more user friendly to a mainstream audience or service the customers we already had and close it down. It was one of the harder decisions I've ever made. But I needed to say, no more. We're done. For today's tip, you can take straight to the bank. Yes, yes, we are all Monday morning quarterbacks with what we should have done differently. But instead of replaying the game over and over again, I just wanted to admit that I fumbled and move on. I failed with the endeavor, but at least I didn't fail at knowing when it was time to quit. So take it from me, pulling the plug doesn't mean

you're not a savvy business person. A truly savvy business person will know when it's time to walk away from the ROI that's not paying off. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team Michelle Lanz for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together

and get it all.