A $200k deal on shark tank then a major lawsuit, with GOVERRE’s Regan Kelaher & Shannon Zappala
Joining me on today's show are the two co-founders of Goverre, Regan Kelaher and Shannon Zappala.
Shannon and Regan, began collaborating on all things ‘wine’ in 2015. Their passion for great wine, dislike of plastic glasses and a love for Southern California’s outdoor lifestyle led to the birth of GOVERRE. GOVERRE is a portable wine glass tumbler with silicone sleeve and a drink-through lid.
In this episode you’ll hear their lesson learned after a first failed attempt at a kickstarter, what happened after they went on shark tank and were hit with a major lawsuit, and what they wish they did differently if they had their time over.
Please note, this transcript has been copy pasted without the lovely touch of a human editor. Please expect some typos!
I am Shannon and I am the co founder of Goverre and Goverre is a portable glass wine glass with a silicone sleeve and a drink through lid. Goverre The wine glasses kind of are hero product or started as our hero product and now we have transitioned into champagne flutes, cocktail glasses and have a few more things in the works. Fun. Reagan over to you, pass the mic.
00:04:34Edit Hey, I'm Regan Kelaher is based out of SAN Diego and we started as Shannon said as a single consumer product and we've branched and other things that make any hostesses life easier and to really enjoy the outdoors. I love that. Perfect for a picnic. So tell me, let's go back before you started, go there to talk about what you're up to in life and what was getting you interested in starting a business together. So Shannon and I met, we actually met at one of our kids pumpkin patch field trips when they were in kindergarten and you know, we were moms, we were hanging out, I had a background in finance and I was working at a large hospital system here in California, and Shannon had a background in marketing and she was at home with her daughter. So we got to be friends, you know, organically or drinking wine hanging out and then, I don't know, maybe like five years later his life was moving on. We, I think it was like 2013, I was really bored in my job, I had been there for 13 years, it was like, what am I going to do with my life?
00:05:42Edit And Shannon was kind of saying the same thing, you know, it's ready to get back to work and what are we going to do? And we were already having these happy hours anyways and watching our kids play and we're like, why don't we turn some of these happy hours into, you know, brainstorming sessions and we started brainstorming business ideas. So we kind of went about it backwards, we didn't have, you know, a great idea that we just had to do, we just knew that we wanted to do something and we did what that was. So at our brainstorming meetings, we slowly, we gathered a ton of ideas. No idea was a bad idea. And we were reading at the time, this book, it's Guy Kawasaki's Art of the start. And we held ourselves to ideas. We are two principles. We wanted to either create a new product or service that added value or make an existing product or service better. So we had that in our mind and at the same time, all of this was happening. We were at a concert in the park, one of our, with our families and everybody was drinking nice wine and pouring it in red plastic cups and we're like, it was kind of a ah ha moment paired with our brainstorming.
00:06:58Edit And it's like, why don't we try to find a nice portable wine glass that we can take with us? And there really wasn't anything on the market. It was all plastic or stainless or people were using, you know, regular wine glasses that could easily break with kids and pets. And so that was our a ha moment. It's like, well let's explore this idea and see what we can do with it. And I'd say it's snowballed and we had a lot of, you know, things to do, but that is where we got started. Oh, I love that. That's so cool. I'm interested to know what people were saying in those early days when you started telling them about this idea you had and what you wanted to do together. I would say that people, I mean, we tried to go, you know, beyond our family and friends, you know, because we felt like that was definitely a biased reaction. We thought that for sure, you know, my mom would be like, oh that's a wonderful idea. Or you know, our friends like, you know, this is great. So we did a lot of proof of concept.
00:08:03Edit We would, you know, set ourselves up at a local winery that a friend of ours worked at and sent out in the wine shop sent out an invitation to people that there was, you know, a group here doing a wine tasting and whatnot. So we were able to show off our product and get, you know, really unbiased feedback. We went to a wine tasting one year in cinema the very beginning, it was probably 2014 Maybe. And there was a wine tour bus and we handed out we wrote up a little survey and it was I mean it was very, very do you like wine, what do you drink your wine out of, where do you drink your wine, that type of thing. And we handed out the survey asked everyone if they would fill it out, collected the surveys and went back. So we we tried to get as unbiased information as possible and what was the overwhelming feedback that you got? Was there anything unexpected?
00:09:05Edit No, I don't think there was anything unexpected other than I think maybe the price of it, you know, like why would I pay? Because I think at the time we were looking to pay or ask for retail at like $20 a glass I want to say. So that was that kind of, I think threw people off a little bit because they felt like they could just drink it out of a, you know, a plastic cup or anything like that. So I would say probably the price initially. Right? So you do this customer proof of concept kind of feedback and surveys and asking the wider community of people what were the next steps to actually getting the business up and running and how long did that process take? I'd say it took us probably a good year um because I was still working and again we had little kids, so it's, we created a checklist and it was super detailed, but you wouldn't really need a checklist for it, but it was like, you know, develop a logo, get business cards, open a bank account, It was all the little things that you don't think of file for, you know, your inc So we did that and then we quickly realized that we needed um money that we didn't have and so we're like that's where the were like, what are we going to do?
00:10:26Edit And that's when we came up with the idea to create a Kickstarter campaign Which also served as a good proof of concept, but so we spent quite a bit of time maybe two or three months creating a Kickstarter. which also served as our business plan and proof of concept, how we're going to get this out to the masses. Are people going to like it? We created a marketing video. That was a great introduction to the business, was creating that campaign. Mm And what was the goal of the Kickstarter? How much did you want to raise? So we actually failed our first Kickstarter campaign, which we've had a lot of failures in this, you know, in starting this business, but also a lot of success. But yeah, so we failed our first Kickstarter campaign. We asked for 100,000 and I think we've raised, if I remember right, $40,000. So it was tough. And that was one of the things that we had to learn from is like, you know, do we want to keep going or do we want to basically be defeated? And um you know, we cried for quite a bit and then it was, you know, well let's pick ourselves up and let's try again.
00:11:31Edit And we almost didn't try again. But I'm obviously so glad that we did. And then our second campaign, We asked for believe $25,000 and we raised 63. So that was successful. And that's what we used to launch our business. Do you think the learning from the first time around was just the basic of you set it too high and you needed to set it lower and kind of like over, over fund or was there more to it? I think there was a little bit more to it, definitely setting the goal. We figured that we would probably need about $100,000 to get our product from start to finish. But I think that it was such a high goal that people probably saw it and thought, well this is, this might not happen. And so then we're not Going to pledge to the campaign. But then also, I don't feel like initially we did a very good job of educating people that we were marketing to about Kickstarter because this was in 2014 and yes, Kickstarter had been around for a while, but it still wasn't so known as it is today.
00:12:42Edit So we had to do a better job of, of educating the people that we were, you know, advertising too. So that we did a lot of tweaks to our campaign and it ended up being a success. Were you targeting the same people who already invested the first time or, or pledged rather the first time. Did you have sort of an email database or something that you were able to say, hey, we're doing this again or was it a completely new audience the second time around? No, we did use that email list, which was great. That was a great start for us. But then we used that to build momentum. And then we had another with that momentum on the first day we were able to reach out to more press and to our list. But we definitely used those people to start and we still use those people, you know, with our marketing, they've been lifelong fans and they've watched us grow, I love that power of community. So you raised the money, had you sort of figured out your factory and all the bits and bobs that come with it by that point?
00:13:49Edit Or were you then at a position to be like, okay, now what let's go? No, we hadn't figured anything out really. And Shannon night, we don't really have a technical background or engineering or marketing. So we just hit the ground running? You know, we found a local engineer to work with us to create a prototype and then we took a trip to china, We went and found a factory and we just learn as we go. And it was again, not having the background made it up, but also we had to get really creative and found that the engineer, we found the manufacturer and then we had to start with our website and all the other details that we needed to do. Right, and how long did it take you to get the sample of what you wanted kind of to life and in a position where you were ready to sell that on the shelves kind of thing, put it online. So our first thing that we created was a mock up and we took a glass just from, you know, stainless wine glass. We painted it white.
00:14:52Edit It was like an arts and craft project. We put a cupcake topper for a lid in a random silicone sleeve on it and we took that to our engineer and then they came up with a three D printed version and it probably took, I would say three months Chanin to get a full of working prototype. And then we took that prototype to our manufacturer and that probably took another I'd say three months. So maybe six months from mock up to prototype. Mm hmm. Yeah, wow. So it is quite a long time then until you can take that vision and bring it into reality and be ready to place that first order during all of this. Were you doing further marketing to build a community or were you starting essentially a community from the day of launch? And how did your launch go? I think that we had with the Kickstarter campaign, we did have that already existing community. So that was great because we had probably, I mean it doesn't sound like a lot right now, but we had probably about 750 backers to the campaign.
00:15:59Edit So to us, that was huge. You know, having almost 1000 people like our product amazing, you know, so we had that and then from there, like Reagan said, we were, you know, building our website and we had the final product, so we were able to start pounding the pavement and going store to store, you know, we look online and go into cities that, you know, we like their shops and whatnot. And so it was, you know, it was like cold calling, just going in and showing our product and hopefully getting a meeting with the buyers and whatnot. And Because our, our line initially started, we were heavy wholesale and less online, you know, direct to consumer. So I think in the beginning our business was probably 60% wholesale and 40% online. So we built a big following through retail as well, wow, okay. And so what were you doing at what point did you start thinking, hey, we need to focus more on direct to consumer and build this side of the business?
00:17:05Edit I would say, once we had our product, I mean, we started once we got into stores and we got into, you know, we started attending trade shows and whatnot. So again, that's more wholesale. But as far as online, we started doing, you know, email marketing campaigns with our list, what else would you say? Reagan? It happened pretty organically. So yeah, we, again, Shannon said we were More heavily into retail, small independent boutiques is like 60% of our business, 40% was online. And then when it online really exploded was when we were on shark tank and that drove our sales through the roof. And that's when we decided to that. We really liked obviously the margins from our website. But we're always balancing wholesale and retail, you know, to make all of our customers happy, our website customers and our wholesalers. So it's a constant balance and it's constantly shifting. So pre covid, you know, we're more heavily wholesale. But now a lot of our stores are temporarily closed and we've really focused more on our website through Shannon said, email marketing and really heavily focusing on our social media and facebook and instagram ads and trying to drive those customers because we don't have the sales with our stores right now.
00:18:21Edit Mm And also also, even before we did shark tank to we we would try to in order to increase our website direct to consumer. We would apply for every type of contest we could. And one of the big ones we applied for, I think that it was in 2016, I want to say in the Today Show was doing a segment called the Next big thing. So we were like, okay, this is brand new to market. You know, there's not anything else they're out there like it. So why don't we apply for this and see if we can get it. And fortunately we did, we didn't win the contest, but at least we got on the show. And so, you know, we got probably several 100 orders from that and you know, added those people to our database and whatnot. So we were just, we were actively just trying to get any sort of press or promotion that we possibly could. Mm I'm eager to talk about the shark tank experience and how that came about and you know what the impact was for you
00:19:23Edit Yes. So we, you know, whenever we attended trade shows, especially the big gifting shows, everyone who came to our booth was sought and was like, oh my gosh, this is amazing. Have you guys ever thought of shark tank? And it was always kind of in the back of our mind, it was like our pie in the sky that yes, eventually we would want to apply for it. But you know, we needed to bring up our sales and all of that. We don't want to go on the show and look like idiots and have them not. You know, I think we were established enough or whatnot. And then one afternoon Reagan decided to email the casting email address for shark tank. It was in the summer. What year was that? I think 2016, Yep, it was 2016 in the summer and just, hey, this is our product, we think you guys would really love it. It's the first on the market, you know, portable wine glass, that's actually glass. And we didn't hear anything for probably a few months. And then we were working one day and all of a sudden there was a phone call coming in from a 31 oh culverts city.
00:20:29Edit So Reagan answered it and sure enough it was the producers from shark tank, we got your email and we'd like to talk to you. So we were dying. Obviously we were, oh my gosh, this is amazing. We had almost kind of forgot about it because it was such just like on the whim email that we had sent. So they called us and we started working with them immediately on a paperwork to fill out a lot of back and forth, working with the producers on our pitch and all of that. So that was probably, I would say three months back and forth with the producers and then we filmed in September of 2016 and then it was terrifying. But it worked out really well for us. We ended up getting three sharks. We got Mark Cuban, Lori Greiner and robert Herjavec. They all went in together and invested in our product and we were over the moon, absolutely over the moon. But we couldn't say anything because that was September of 2016 and the show didn't actually air until April of 2017.
00:21:38Edit So we had several months of actually not even knowing if we were going to air because they don't actually tell you until about two weeks before your air date. So we kinda had to keep everything under wraps for a while and couldn't really go into any detail at all. But it was it was an amazing experience and it helped launch our product even further. Mm I think I read you did a deal for $200,000. I didn't see what the percentage of the company was in exchange for, What did that $200,000 help you do and and more. So what did that mentor ship from the sharks help you with? So the $200,000 was basically we just used it for inventory. That's all we used it for. But the downside like I said we've had some failures of that. As soon as we aired on shark tank we were I think seven days after that we were served with a lawsuit, a frivolous lawsuit. And so we basically used all that money ted cover the lawsuit costs.
00:22:44Edit So that was really tough. We have had lots of highs and lots of lows and but that was what happened. What was the lawsuit for? It was a trademark infringement lawsuit. Damon dang wow, expensive. Yeah we settled it um we settled it favorably in our favor after I think it was 606 176 days and just a ton of money. So that was a big blow to our business. But we survived and you know, we're doing well. So mm and what was the mentor ship side of things? Like after the show aired and having those sharks involved in the business, They've been really amazing. I mean, we work probably closest with Mark Cuban's team. His whole team is just, I mean they just want to see you succeed. So they're available to you at any time with any sort of, any type of business question that you have and they're, they're really just to help you develop your business.
00:23:47Edit They want to, like I said, they want to see you succeed. So they are, you know, anytime email us call us will be there. We've been out to Dallas a couple of times to meet with the team roberts team is well, they're really great about, you know, social media and marketing and then Laurie definitely on the product side, the consumer side. So it's definitely been a positive experience for us. Mm I bet How exciting. Looking back you said that you had a few challenges and struggles that you've had to go through. Is there anything that you wish you did differently or sooner or in a different way? I would say, I wish we didn't worry so much when the bad things happen. You know, we take it so personally when we failed at our first Kickstarter and when we were served with the lawsuit, it was every little thing was really devastating to Shannon and I and I think I wish I would have trusted that everything would be fine and just to keep moving along and just to keep, because we're thriving now and we wasted a lot of time, I think worrying about the outcome and just know that we're going to be fine and there's a quote, I forget who said it, but its business is only failed because the entrepreneur gives up and I love that we're just not going to give up.
00:25:07Edit And I think that is my takeaway. Mm That's a really good one. I love that. Where is the business today? And what does the future look like say over the next 12 months, what can you shout about and get us excited for? Uh, well, like I said earlier, we're working on a handful of new products which were really excited about, as Reagan had mentioned earlier when we were tied up in this lawsuit. We, you know, we lost a couple of years of not being able to innovate and to create new products. So now that we're free from all of that, we, I mean obviously our brainstorming was going on while all of that lawsuit was going on. So we were ready to go as soon as we could. So we're working on new products, we've on boarded a brand new pr team, which has been amazing. You know, they've been really helpful and getting our brand out there. So we're definitely gonna, you know, jump more into pr and just were heavy on social media too. And we're great on social media right now with our followers and whatnot.
00:26:12Edit But it's a lot of it is product based showing, you know, the wine glass and the champagne flutes and all of that. But Reagan and I really want to get more in front of the camera, which is sometimes kind of hard for us because we think like, well people probably don't really care about what we have to say, I guess like, you know, our followers, I think do, so we're going to get more into doing like instagram lives and just getting in front of the camera and doing more of the instagram reels and just, you know, just showing our, you know, and just presenting like our day to day and are, you know, how it, what it takes to run a business and whatnot. And like Reagan had mentioned earlier, we did hit, you know, hit kind of a low with with Covid because a lot of our wholesale, our stores and whatnot had shut down so that we did suffer from that. But we came back with our online sales increasing mm What do you think in terms of channels, what's performing really wealthy right now of your social media channels, instagram is probably the one that we use the most and that we see the best results from, Well, I'll be excited to watch you on the reels there on the I.
00:27:20Edit G lives, you should do Wine Club. Yeah, no kidding. Happy hours, love that. Amazing. I have a question for you both now. So we'll start with you, Shannon, what advice do you have for women who have a big idea and want to start their own business? I would say to do it, absolutely do it. I mean, Reagan and I didn't do it the traditional way to, whereas we had this big idea, we just knew that we wanted to do something on our own. So it's okay if you don't have this grand idea, but you have that passion to build something of your own just to, you know, do one thing every day too, project that idea or that business further, you know, because it can get overwhelming if you look at the big picture and you think like, oh my gosh, I could never get to this level, There's so many things to do in between. But if you just take it day by day and make sure that you do something every day to move it ahead, you'll be fine and you'll succeed.
00:28:25Edit So do it absolutely totally. The compound effect is so real, it's so important. Yes. What about you, Reagan? What's your key piece of advice for women who have a big idea? One thing every single day, it's like don't let a week go by is pick one small thing and do it and if I have the second key piece of advice is to look for other women in your community. There's so many people that you can talk to and just when you think that you can't do something, there's so many people doing it and it's really inspirational to stay in that community of women that are you know making great businesses. Mhm. Yeah, absolutely. We are up to the six quick questions part of the episode I ask every woman on the show so we'll run through both of you separately individually rather so we'll go back to you Shannon question number one, what's your why? Why do you do what you do? Yeah, I would say my wife is you know the freedom and the life balance. I you know like I came from corporate America where it was pretty intense and I feel like having your own thing, you you're able to make your own rules, you're able to make your own schedule and then second I think is just I have a 14 year old daughter.
00:29:41Edit Just showing her that you know women can do anything and anything is possible if you put your heart and your mind to it. Gosh, ain't that the truth question number two is what do you think has been the number one marketing moment that made your business Pope might be an obvious one. Yes, definitely shark tank was our number one marketing moment that really put our business on the map and gave it that, you know, that stamp of approval that we absolutely needed. You know, I wanted to ask you before, I actually forgot to say it. You said that you were waiting before you contacted shark tank to reach a certain level or get to a certain place of being established. Are you able to share kind of where your business was perhaps revenue wise and like the size of your business or your team and that kind of thing before you reached out. Yeah. So when we first launched in 2015, we, because of Kickstarter, we had like $135,000 in sales that year, 2015, that was just our website and Shannon and I, you know, going to local stores.
00:30:51Edit And then the next year we started doing trade shows and we had I think 500,000 in sales, something like that. And so we were, you know, we had a great pace going and then shark tank hit and that year I believe we did. I think it was like close to 2, 2 million in sales. And then it just kept growing from there, wowser. That's a pretty serious, pretty serious growth right there. Love that for you. Thank you. Okay, back to question # three Shannon, where do you hang out to get smarter? What are you reading or listening to or subscribing to that? Others would benefit from hearing as well. Yes, I other than this podcast, obviously we love listening to this podcast. Yeah. Thanks. Yeah. The other podcast that I like to listen to is how I built this by guy raz. That one is really inspirational. So I love listening to that one. And then just following also other female founders, like I'm a big fan of sara blakely from Spanx, so I'm constantly watching what she does and just you know, just trying to gather inspiration from her as well and then just talking with other female founders at trade shows, we meet a lot of people at our trade shows and it's just great to get inspiration from them as well.
00:32:17Edit Again of course, what are the key trade shows for your industry that you go to? Yes, there are three trade shows that we go to typically uh one of them is called new york now and the other one is America's mart which is in Atlanta and then the I. H. A. Show which is in Chicago. So the first to Atlanta and new york are big gifting type trade shows and then I. H. A. Is a like a housewares type show. So those are like the three big ones in the industry. So they happen twice a year. Reagan and I try to go to each one at least you know once a year. But we're going to start ramping more of that. We actually miss them so much because obviously with Covid we can't attend these shows and they're trying to do digital ones and what not to make up for the in person, but the in person ones are just, I mean you can't, you can't beat it. Mm that connection for sure. Yes, absolutely. Question number four is how do you win the day? What are your am or PM rituals that keep you feeling happy and motivated and successful?
00:33:23Edit Yeah, I would say well my am routine. I start my day off with a London fog tea from Starbucks every morning that it's my favorite drink. So I stopped by there every day on the way to work. I would say to exercise. Just getting outdoors is huge for me. We actually have a trainer, come to governor's office twice a week. So we work out before work. So that is just so important mentally and physically. So, and then just going on walks and listening to podcasts and whatnot. So being outdoors is huge for me. Mm I'm looking forward to London's weather changing so I can spend more time outside in this lockdown. That is seemingly never ending. Question number five is if you only had $1000 left in your business bank account, where would you spend it? Well, we have with some of our failures. We have less than that in the bank at times to be honest. But if we only had $1,000 left, I think we would definitely put it towards social media posts and content just to you know, remain visible and relevant.
00:34:40Edit And question # six, last question is how do you deal with failure? What's your mindset and approach we with failure? We just keep on going. You know, you just got to get up and brush it off and it's, it's hard. It's it's easier said than done. But that's the only way you can do it is you just, you have to keep on going. You have to swallow your pride. You have to wipe your tears away. You have to just keep doing that in business and in life. So you got to just keep moving forward. Love it. Thank you so much, Shannon. Yes, Reagan your turn. Here we go. Question number one. What's your why? Why do you do what you do? Definitely independence. I've always, you know, I come from my mom and grandmother, both really strong, hardworking women and I've always wanted to be independent and be able to take care of myself and my family. Mm That's so nice to mention your mom and your grandma. Love that question. Number two is what do you think's been the number one marketing moment that made your business pop?
00:35:44Edit I would have to say New York now our very first trade show. We went in there. Really uncertain and we came out feeling really confident. We I think for us a huge show. We think did $20,000, which is not that much. But looking back, it was a pivotal moment for us? Mm Yeah, I imagine like doing your first trade show like that and getting that vote of confidence from retailers and wholesalers and things like that would have just been so profound. A crazy feeling. Yes. Yeah. Question # three is where do you hang out to get smarter? What are you reading or listening to? I love to read. I love Guy Kawasaki's are to the start. I constantly go back to that. Use that as a reference book. And to get, I love the master class with sara blakely on entrepreneurship that I love all of those master classes. Yeah, I love that one too. It's really good. I've just been watching actually the Jeff Koons series. You know, just to enjoy something a bit different outside of the typical, you know, day to day business focused content that we can find ourselves consuming a lot of these days.
00:36:57Edit Question number four is how do you win the day? What are your am or PM rituals? Well, I'm still working on trying to win the day. I feel like my morning rituals are off because I have two teenagers and with Covid and distance learning, but I'm getting better and evenings I am a little bit better. I'd like to cook a nice dinner and have a glass of wine. Mm hmm. Did a very much so in your cup. In your go back up. Question number five is if you only had $1000 left in your business bank account, where would you spend it? Oh, that's such a tough one. We, I think may do a or I would do a Kickstarter or some sort of campaign to where we could raise a little bit, you know, use what we have and raise a little bit more money. Nice, love that. And last question question # six is how do you deal with failure? Well, we're actually really good at that because we've had quite a bit of failures and it really helps if you could all have a partner because when Shannon's feeling down, I know I can kind of carry the load and saying when I'm feeling, you know, really upset, like there's no way out of this reminds me that we've always gotten out of it.
00:38:10Edit So I think just keep going and having a business partner really help. Uh, love that. How nice. Thank you so much for taking the time to be on the show today and share the governor's story and what you've been building and creating Absolutely love chatting with you.