Move over R2-D2. Don’t let the Millennium Falcon’s door hit you in the ass on the way out. You’ve been replaced by another robot that’s not only much cuter but also more cuddly. And it can speak English and Spanish. Its name is TROBO the Storytelling Robot, created to teach kids ages two to five about STEM, aka science, technology, engineering, and math.
TROBO works with an iOS app for iPhones and iPads only and so far not available for Android. TROBO reads aloud interactive stories about what sharks eat, how honey is made and other stories, which cost $0.99 to $4.99 in the iTunes store. Parents can customize the app to use their child’s name and create an avatar in their likeness similar to the Nintendo Wii. TROBO is made in China and sold only through MyTROBO.com and on Amazon (AMZN).
Jeremy Scheinberg and Chris Harden, the creators of TROBO the Storytelling Robot, introduced the toy in a 2014 Kickstarter campaign. They pulled in $61,060 from 471 backers. An in an April 2016 Shark Tank episode, they got an on-air deal from Robert Herjavec, who bid $166,000 for 33.3% of the company, contingent upon getting a licensing deal from DreamWorks. All of the other sharks passed because they didn’t like the idea and thought their original price of $69.99 was too high. TROBO sold out after Shark Tank but the deal with Herjavec didn’t go through.
Scheinberg, the company’s CEO, and Harden, chief product officer, explain why they left the security and comfort of their six-figure jobs to make big bets on a talking robot.
Ky Trang Ho: Tell us about your background. What were you doing before you started your business?
Jeremy Scheinberg: We had both worked together years ago at a small engineering company named Alcorn McBride that designed and manufactured audio/video products for the theme park industry. Basically, if you have been to a theme park, you have heard a sound or seen video coming off of equipment that our company designed.
Our wives’ jobs both led us away from the company at different times, and we lost touch. Immediately before starting TROBO, Chris was working as a development director at Electronic Arts (ERTS) and Jeremy had returned to Alcorn McBride as the chief operating officer.
Toying With an Idea to Teach STEM
Ho: How did you come up with the idea for your business?
Chris Harden: When we each decided separately to attend a Startup Weekend event, we were both essentially at the same point in our lives. We had great jobs, and we both had kids. We saw the toys and apps that our kids played with, and it drove us nuts.
Chris’ two-year-old son Asher was busy slamming toy cars together, and Jeremy’s five-year-old daughter Sophia was either playing Candy Crush or building virtual cake pops on an iPad. As working parents, we were all busy. As much as we wanted to spend every waking moment with our kids, it just wasn’t practical.
We either had work to do, dinner to make or any of the millions of other distractions working parents face every day. We were mortified with the toys and apps that our kids had to play with. We saw some great options for older kids. But for the ages that our kids were at –- before they could read –- the options were lousy.
We knew there would be other parents who felt like we did, wondering “Why aren’t there better options for toys and apps for my kids to learn something?” and “Why are many of the options violent to some degree?”
Ho: What made you think it could be a successful product especially when there are so many competing products?
Scheinberg: When we looked at the market, there weren’t a lot of products out there that provided a tangible experience beyond a tablet’s screen. When we started, everything was one-dimensional. It was a game on a screen and usually a mindless one at that.
We also looked at the content, and while there were some great shows on PBS for kids, most of the STEM (science, technology, engineering, and math) content was targeted at older kids, ages 7+. Then, we simply listened to our kids. Jeremy’s daughter Sophia was constantly asking questions about science or engineering concepts she would encounter every day such as “What causes lightning? Why is the moon out during the day?”
Of course, Sophia’s younger brother Jake, wanting to copy everything his older sister was doing, would ask questions too. Chris saw the same thing with Asher. When we started talking to other parents, we saw that it wasn’t just our kids. Every kid is curious about the world around them. When you pair that up with just a total absence of toys/apps that could answer those questions, it seemed like there was an opportunity there. The trick was to make it engaging.
From our theme park backgrounds, we felt that if we could create engaging characters and give kids something that leapt off the screen, a character that they could have, hold and connect with emotionally, we could get kids to fall in love with science and engineering.
Ho: How much did you invest in your business? How did you get the money to start your business initially?
Scheinberg: We both decided to go all-in early. Jeremy left his job in December of 2013 and Chris worked evening and weekends until going full time in July of 2014. We have very, very, very supportive wives. But they were all-in with us on this adventure because they had the same feelings as we did. We had to give kids and parents better play options.
We successfully funded a Kickstarter campaign that brought in $61,000 first. In addition to that, we each invested around $30,000 in our business and left six-figure salaries behind.
Ho: How many hours did you work on your startup per day?
Harden: We were working on TROBO full-time. Since our wives were supporting us, we both played the role of Mr. Mom: taking the kids to school, picking them up, cooking the occasional dinner. Then it was back to work. One of the biggest challenges has always been making sure we were not taken away from our children.
If we were building this great product to make kids’ lives better, but we were neglecting our children, that would be missing the point. Any free hour that was not committed to the family was TROBOs, including many sleep hours. We have slightly different schedules. But 1 AM to 5 AM has been the sleep hours, with the rest going to TROBO and family.
Engineering Sales and Buzz
Ho: How much does it cost? What are your guarantees or assurances?
Scheinberg: TROBOs cost $69.99. However based on the advice of the Sharks, we are trying a deeply discounted promotional price right now on Amazon (AMZN) and our site to see if demand for TROBO is as elastic as they predicted. The TROBOs include the talking plush toy and a code to unlock all stories and games in our app.
The decision to unlock all the stories was another choice we made since the airing of the show. The stories are not only entertaining but also age appropriate and scientifically accurate. We guarantee that people will enjoy their TROBO and feel like they received fair value for their investment. Or they will get their money back. We want a family of happy customers, and that means solving problems quickly or being understanding when we don’t meet their expectations.
Ho: What were your annual sales and profits before your Shark Tank appearance?
Scheinberg: Before we taped our Shark Tank appearance, we hadn’t shipped product yet. Our sales consisted of our Kickstarter, where we raised $61,000. We had also received a Phase I SBIR (Small Business Innovation Research) grant from the National Science Foundation. Between those funds, our Kickstarter proceeds and the money that we had invested we were able to purchase 2,000 units (600 of which were reserved for our Kickstarter backers) and fund the development of our app and stories.
Tooling a Prototype
Ho: How did you go about making a prototype, sourcing the materials and finding a manufacturer?
Harden: We were fortunate enough to find a manufacturer when we attended our first New York International Toy Fair in February of 2014. We went to do research on the toy industry and to try and find a prototype manufacturer. We were lucky enough to find a manufacturer who would not only do multiple rounds of prototyping knowing that we were going to be doing a crowdfunding campaign, but who would work with us on production. Since we weren’t “Toy Guys” this partnership helped us get TROBO to market successfully.
Ho: What hardships did you encounter in developing and launching it?
Scheinberg: The biggest hardship was our limited size and capital. We were forced to operate very leanly with part-time artists and developers (who were awesome). Being largely a two-person company, we constantly had to shift our attention from marketing to execution and back again.
We didn’t have the luxury of putting our marketing team on a full channel strategy, public relations and social media campaign while our development team focused on content development and coding. We were the marketing team and the execution team.
Along the way, we had some awesome distractions — case competitions and the SBIR grant -– that allowed us to continue on our journey. These forced us to divert our attention away from execution and marketing, which slowed us down from time to time.
Playing in the Shark Tank
Ho: When and where did you first audition and appear on Shark Tank?
Harden: We were first contacted by producers from the show in March of 2015. We worked with them over the next several months and didn’t air until April 2016. Like all show applicants, we received no favoritism and went through the entire process like any other candidate who is invited to audition.
Ho: How long between when you taped the show and when it aired? What was that time in between like?
Harden: There were nine months between when we taped and when we aired. When we first taped – despite the producers’ assurances that just because we taped in June didn’t mean we would air early (or ever) – we prayed that we would air when the season launched in September, so we planned for that.
September rolled around and nothing. Then October and we figured “Oh, they’re probably saving us for the holidays (November).” November and December passed and still nothing. Once we got to March, we started to be concerned that we would never air. We had to start planning for the worst. When we got the email saying that we were going to air, we were initially more relieved than excited. As we started to execute our “Shark Tank Air” plan that had been sitting on the shelf since July, the reality started to sink in, and we were excited.
Ho: How did you value your company when you appeared on Shark Tank? What did you ask for?
Scheinberg: We started at what we thought the company would be worth based on our Kickstarter pre-sales, the grant money and the amount that we had invested. We felt that – at that time (pre-sales) – $1 million seemed like a realistic valuation. We asked for $100,000 for 10% of the company.
Ho: How did you prepare for your appearance?
Scheinberg: Chris watched every episode of the show, read every Shark’s book and listened to a lot of Zig Ziglar books. Together, we worked with the producers on our pitch and how to distill our story down to one minute. Then we practiced, practiced, practiced.
We thought of every possible objection we had heard to TROBO (we had done almost 1,000 demos by that point) and how the Sharks would potentially react to the product, the market and the potential. We had been warned to minimize the pause between one shark going out and other Sharks talking, as that could lead to a domino effect. So we role-played the Sharks going out with us thanking them and immediately directing our attention to the other Sharks with fresh questions designed to allow us to provide new information the Sharks hadn’t previously heard. Leading with questions is a pretty common sales technique, and we practiced using them as pivot points to keep the momentum from dying.
Ho: What about being in the Tank (or whatever happened before or after) surprised you the most?
Harden: There’s a lot of sitting around and waiting. You get anxious because you are sitting on the lot and you can feel the energy of the production. But because you don’t know when you are going to go on, it’s hard to keep that energy level up the entire day.
Once you get the “it’s your turn” from the production assistant, your heart shifts into overdrive. From that point on, it’s a blur. You get out of the tank, you have no idea how long you were in there or what happened, and you are just drained.
It’s crazy. The other surprise was just how large and organized the production staff was. Even with coordinating tons of companies, some with animals and children, the production team seemed to move like clockwork.
Ho: What misconceptions do you think viewers have about the show?
Scheinberg: There are a few. Some people think that it’s live. When we first told people that we were going to air, many people thought we were going out to do the show live. The other big misconception is how long the production process is. Since a segment is around eight minutes on the show, they think that the entire taping was 8 minutes. They have no idea that it could be 30 minutes or it could be four hours.
Many have also told us they didn’t know the scenes from one show were organized as a set of different shoots. The common joke is “why do they keep wearing the same clothes from episode to episode?”
Ho: What can you teach others about your Shark Tank experience? What are the secrets of a successful audition and appearance?
Harden: It’s all about story and passion. We were told very early on that Shark Tank is – at its essence – a venture capital pitch that happens to be taped. The producers are responsible for what is going to air. You could have the greatest product in the world, but if your pitch is boring (or if you are boring), you aren’t going to get on the show (or air if you do tape).
On the contrary, if your product isn’t the most exciting, but you are the most amazing storyteller in the world with an incredible personality to boot, you will get on the show. It’s all about crafting an exciting, personal story that resonates with people. That’s what the producers want to see because – ultimately – that’s what their audience wants to see.
The producers are ultimately relating to their audiences through real people showing their passion to the world and trying to make it down a tough path. That’s why the show is commonly said to inspire children and families to pursue the American dream. If your passion comes out on camera, that’s a huge step towards a compelling episode and getting aired.
Algorithm for Business Growth
Ho: What are you doing now to move your business forward and expand?
Scheinberg: We are building our website and our systems to grow quickly. We are building more inventory and – most importantly – we are expanding our product line. TROBO is a character and a brand that can help inspire kids around the world to learn about science and engineering.
While we are starting with the youngest kids – because that’s where our kids were in age and that’s where we saw the greatest need – we are constantly hearing from older siblings that they want to learn more about TROBOs and science. So we are building an entire ecosystem around TROBOs: Connected toys and stories for ages two to five, print books and cartoons for kids ages five to 10.
Ultimately, we want TROBO to be a Bill Nye for the youngest generation: an icon for early childhood STEM education that starts kids on a path to lifelong learning about all of the amazing science and engineering that is all around them. Unlike Bill Nye or Mr. Wizard, we want TROBOs to last well past when we are done, much like any of the major story properties we have grown up with all our lives. Why can’t TROBOs be as successful inspiring children 30 years from now to enjoy STEM topics as Thomas The Train is at inspiring hard work?
Ho: What are your goals for your business over the next year and five years?
Harden: Over the next year, we are expanding our sales of TROBOs as well as taking the next step in licensing “TROBO Platforms.” For the direct sales of “TROBO branded products,” we are enjoying a wonderful relationship with Amazon Exclusives, and we believe we will get a large number of pre-orders from the airing, and that larger retailers will seize the opportunity to join us in promoting STEM.
With Shark Tank, we believe TROBOs will take their first steps toward being a household name. We also have some wonderful packaging changes and books that are going to introduce a new aspect of TROBOs’ universe and add even more enjoyable playtime with the robots. Over the next five years, we will build out the brand and the backstory to reinforce our mission of early childhood science education: books, science kits, museum exhibits, etc. and reach the five to seven age group. Jeremy’s daughter Sophia wants us to build a TROBO World that will highlight science and engineering; we might need some help with that one.
For the TROBO Platforms, we have patent-pending technology that is very expensive to build but adds some amazing functionality into the connected toy space. We are actively pursuing large investment to fund this development. The goal is to partner with tier 1 and two content companies — Dreamworks Animation (DWA), Universal, etc. — and with tier 1 and two toy manufacturers — Hasbro (HAS), Mattel (MAT), Spin Master — to bring a next-generation connected app store and toy combination to the market.
Ho: What is your media and marketing strategy? How do you acquire new customers and what are your customer acquisition costs?
Scheinberg: Before the show, we did a lot of content and social media marketing, some Adwords and retargeting. Our partnership with Amazon Exclusives has been amazing for us. They have done an awesome job at featuring TROBO, and it has driven a lot of sales.
Our conversion rate on our website tends to be around 2%, sometimes up to 4% so it is all about creating new content (blogs, articles, media mentions) that will drive people to our site or Amazon. Acquisition costs vary among platforms of course, but our most successful advertising campaigns have been with Facebook ads.
We’ve found our best campaigns have a cost per click (CPC) rate of about 25 cents. During the holidays we got down to 17 cents on some campaigns, and of course, we invested more in those. The campaigns that sat at 32 cents or above, we’d terminate and pour those funds into the more successful campaigns. We haven’t invested enough in PR or direct sales calls (besides conventions) to consider those as a part of our acquisition costs.
Our directly-tracked sales have come from search-engine optimization and heavily from content marketing campaigns. Converting the customer once they arrive costs us nothing more. However, we are now investing in nurturing campaigns, which will be pennies to reach out multiple times to those who sign up for our newsletter. We’ll have a stronger sense of that as well as other second-sale campaigns after the show airs.
Ho: What was the most effective thing you did to get more exposure for your business before going on Shark Tank?
Scheinberg: We had a couple of prominent media mentions that helped to drive traffic. We would like to believe that we have a pretty relatable story (two dads who wanted something better for their kids and then crazily quit their jobs to do it).
That has led to some really good newspaper/magazine articles both locally and nationally. Plus, we were featured on Xploration Station, a syndicated science show on Fox stations and that drove a lot of traffic. We also were blessed to gain exposure from TechCrunch, USA Today, and we were even named Best of Toy Fair by Popular Science in 2015. Those articles (and over 50 others) have given us lots of coverage over the life of the company.
Ho: How do you find business partners, instructors, salespeople, etc.? What qualities do you look for?
Harden: If you don’t believe in what we are trying to do, there’s no point in even talking. We are looking for people who feel as passionate about science/engineering education as we do. We are looking for people who want better toys and products for kids. That is what drives us every day.
The great news is that those people are out there. Shark Tank will hopefully help to tell them our story. We hope that they will reach out to us so we can build TROBO to be even bigger and to reach more kids.
Ho: Have you gotten other investors to invest in your business? Who? How much?
Scheinberg: We are now trying to raise money for the first time. Although we were invited to pitch Y-Combinator, we did not get into that program. We are now actively looking for further investment – especially partners in the content and large toy manufacturing industries.
If an investor truly believes in education for youth or believes in tech platforms and the future growth of the already $3 billion connected toy industry, we want to talk with them. We’re a platform company that can reskin the app and advances the hardware to a spectacular experience with the right investment.
Ho: What other products do you have in the works? When are they set to launch?
Harden: We have a new Mars story that just launched the week of our Shark Tank episode. Plus, we are working on a new series of books for slightly older kids (ages 5-8) that use the TROBO mythology to build the characters even more and teach kids slightly more complicated STEM topics. We are looking to launch those starting this summer. We are also discussing an Android port, which has been the biggest question by new customers and limiter on sales.
Ho: What business books do you recommend people read and why?
Harden: We read a lot of books about , and .
By far one of the best sales training series we like is Zig Ziglar’s “.” When we read those books, they helped to provide some useful information, but we found it difficult to find books targeted at entrepreneurs that told the whole story.
We felt we had learned so much over the past 2.5 years, that we could share that information with others. So we wrote a book “” that shares our lessons learned from the beginning all the way to Shark Tank. We couldn’t write about what happened on the show in the book so we created a secret chapter which tells the rest of the story, which we’ll post after the show.
Ho: What are your favorite business websites, tools or resources that you love and why?
Harden: We found one of the hardest things to do while executing on the company was keeping our antennas raised. We use Google’s Alerts, which was phenomenal in helping us become aware of competitors efforts, our press, and industry events.
We both listen to podcasts. Two that have been insanely instrumental in our self-education are “Funding the Dream” by Richard Bliss and “The Shark Tank Podcast” by TJ Hale. If you are planning to do either of these things, these are a MUST in your entrepreneurial toolbelt, and they’re free.
We also use Asana, Shopify, Google Calendar, Hootsuite, Quickbooks Online, and JIRA, among other tools on a daily basis and have found them to be critical to smooth execution. And lastly, being in a co-working space (ours’ is Canvs) catapulted us into the local tech network in Orlando.
If you are starting a tech business, and you can afford to do so, get out of the house and get to a co-working space. It will bring you closer to people who know things you don’t and who are willing to share their knowledge.
Ho: What’s the worst mistake you’ve ever made in business and how can others learn from it?
Scheinberg: Acting too slowly. Whether it is waiting to let, someone goes who should have gone a long time ago or held back product until it is perfect. When you have limited resources, you have to get something out there and start to get money for it.
When we would show people what we were working on, they were always amazed at how fast we were moving. We both thought we weren’t moving quickly enough. When we talk to late adopters (like large retailers), they often want a little more of this feature, or that option to tweak. At first, you can get disappointed that you don’t have the perfect product. But what you soon begin to realize is that you don’t need the perfect product for everyone. You need it for the early adopters. Once you “get going” on your concept and deliver value to early adopters, the revenues you generate can go into the features that the late adopters are asking for. Action and Iteration are 10 times more powerful than delay and perfection.
Ho: What is the best advice you’ve ever received?
Scheinberg: Don’t lose sight of your mission. Since the beginning, we have created TROBO to inspire young kids to learn about science and engineering. We had some diversions along the way where we were looking at other markets to try to find where the money would come from first. Seasoned entrepreneurs told us regularly “focus on one thing, be the best at that.” But we had to learn that hard lesson for ourselves.
We were seeking revenues anywhere we could and thought that we could get to them faster in multiple markets. It’s something that everyone entrepreneur probably has to go through once to understand. But in the end, we had to focus on our core mission in one market because, ultimately, that’s where the passion was (and is). And when we see our kids playing and learning, that’s where we were meant to be.