Alex Klein, CEO at Kano: Computer Design As Simple As Lego
Today our guest is Alex Klein, the co-founder and CEO of Kano Computing.
He invented a computer for kids to assemble when he was challenged by a 6 year old cousin who wanted to make his own computer, but to be as simple and fun as Lego. Although the idea appeals to kids, it’s not the exclusive target of their products. The spirit of the design process is the beginner’s mind.
The goal of Kano is to tell a story that could be comprehensible to any culture, language, and geography. However, the products are particularly caught on in the US.
Alex caught the opportunity and expanded business in the US, from London where the company was set up. Although that was a very successful move for him, he has a lot of advice on how to be careful when deciding to make that kind of move.
“If you see an opportunity to do any business in the US, the one that could even be 20-25% of your annual run rate, then take it, because it may expand well beyond that, as it did for us.”
Time stamps:
1:30 What Kano does
3:10 Where the idea came from and how it developed further
5:40 Why they set up in London
9:00 How conquered the US market
10:20 What type of a person their product should appeal to
11:23 When is the right moment to go to the US with the business and why do it
15:57 How they chose the person for running the US office
18:15 Why the product is more popular in the US than in Europe
18:55 How they funded the expansion
19:47 What kind of state you should be in when you want to raise money
20:25 What are the do’s and dont’s if you want your company to expand
23:30 How the US customer is different from the rest of the world
25:10 How things in London were done after the expansion
Send us questions you want answered to info@mtbonnell.com
Resources:
Kano Computing
Mount Bonnell Advisors
Connect with Alex Klein: LinkedIn profile
Connect with Sebastian Sauerborn: Linkedin
Connect with Nastaran Tavakoli-Far: LinkedIn
Episode Transcript
I’m Alex Klein, I’m the cofounder and CEO of Kano.
Nas: Kano make build your own computer kits for kids. That’s their cofounder and CEO Alex Klein, and this is Move Your Business to the United States, the podcast from Mount Bonnell Advisors, the consultants who help you expand your business stateside, I’m Nastaran Tavakoli-Far and we’re talking to companies who’ve made the leap to find out more about their journey and any advice for those following in their footsteps into the US.
Mount Bonnell CEO Sebastian Sauerborn will also be answering your questions, so send them over to info@mtbonnell.com you can also find that in the show notes. Now, if you have kids, and you love computers you may know Kano. They make beautiful computer kits for kids to assemble.
The company was founded in 2012 after cofounder and CEO Alex Klein was set a challenge by his six-year old cousin, saying that he wanted to make his own computer but wanted it to be as simple and fun as LEGO.
Fast forward to today and they have a range of products including the Harry Potter coding kit which involves the use of a wand and Frozen coding kit, which incorporates sensors. We caught up with Alex Klein to find out more about their expansion into the US and to delve into the unique retail market stateside.
Nas: Can you tell us a little bit about what Kano does?
Alex: Sure, Kano is a technology company, the difference between Kano and most technology companies in the world is that you actually make our technology yourself, you make your own computers, you make your own applications and games and music, it starts with a simple kit, you put the pieces together step by step, a computer comes to life, a magic wand from Harry Potter comes to life, a greatest sensors comes to life, and they use our software which guides all the way like a game to make interesting new things.
Nas: And so Kano is for kids?
Alex: Kano is for beginners of all ages, and you know we’re living in a great generational divide and so I feel that a lot of under thirteen-s resonate with what we do, and of course seeing that we’ve been really strong with kids, we’re targeted Amazon Best Buy and its parents picking up our products, but the spirit of the design process is the beginner’s mind but there are 20 billion connected devices in the world, less than 50 million people can code, so this isn’t a question of kids and adults having different skill sets, this is a question of a small technological elite, a 1% of 1% being able to speak the language that moves the minds of the masses and the rest of us simply swiping on the screens, so the fact that it appeals to kids is beneficial like Pixar or Fable but it’s not necessarily the exclusive target of our products.
Nas: Can you tell about how the idea came about cause that’s an interesting story.
Alex: Sure, speaking of kids [smiling] so the idea came about thankfully, not from me, it was from my little cousin Micah who is six years old, me and his dad Saul who is the cofounder, also my first cousin, we discovered Raspberry Pi this little chip set in the lab in Cambridge, I used to be a reporter at Newsweek, I was reporting on a story on Raspberry Pi, this brain that hackers were sending in the space and into the ocean, and making all sorts of interesting inventions which Micah picked it up, started to look at it, we introduced it to him and his idea was simple, he wrote it in his little notebook, I wanna make my own computer but it has to be a simple and fun and as LEGO, so no one teaches me how to do it.
So that was the product we’ve basically from a six years old, make my own computer, as simple and fun as LEGO, put that together, put it online, record a breaking crowd funding campaign, Steve Wozniak backed it, a year later, Boris Johnson, it’s the elections today, now prime minister, well now straightened prime minister, Boris Johnson, at the time mayor, he competed to build the products with Mike Bloomberg in a race during the tech week.
Sebastian: And who won?
Alex: It was Boris’s team.
Sebastian: [smiling]
Alex: [smiling] Yeah, Boris’s team won.
Sebastian: Yeah, he’s a bit younger than Michael Bloomberg so, there we go, the- age division, yeah [smiling]
Alex: Yeah, he got it done, and then, yeah, prime minister Theresa May picked it up, we ended up in US retail which is a subject to this podcast and spiraled out from there, and you know, sensors that you build yourself, screens that you build yourself, a magic wand with Warner Brothers, that lets you cast spells on a screen and then code your own spells, and this year we did kits with Star Wars and Frozen that let you use the force and use magic and then make your own power from those franchises, so, the whole idea comes from Micah, making technology so simple and fun no one has to teach me.
Nas: So you guys are founded in London in 2012, I think -?
Alex: Yes, yeah.
Nas: Okay, cool, so I’m wondering, and you a half-American, right?
Alex: Well, my mum is English and my dad is South African, I was born in the UK and I moved to the US when I was nine, so, then I moved back, so I spent about half my life in each place.
Nas: Okay, cool, so I’m wondering why did you set up in London?
Alex: It was consequence of circumstances, really, I was at Cambridge, I was doing my Master’s degree, I was still reporting for Newsweek as a freelancer, I met Eben Upton who is the inventor of Pi, the Pi was growing, open source hardware was growing, Saul, my cousin was working at a London, his son Micah was there, I met my cofounder Jonatan, and his raily guy in London as well, we met this amazing dude from the Playstation fourteen we brought him over, this ingenious designer, Swedish guy, from a town called Westeros, interestingly enough, Westeros, so he joined the team, so it’s like a, just a mélange, like a heady brew of European oddballs and misfits who had been kind of kicked out of, or laughed at out of other professions, and we all just happened to be at the right place at the right time with the right backers and we put the campaign online and it flew, so, we’re still here today, although most of our sales are in the US. Most of our sales are not in the UK even though we are, yeah.
Nas: So you guys opened another office in the US two years ago, can you tell us a little bit about that?
Alex: Sure. So our first physical retailer was Toys R Us and yeah, so-
Sebastian: Good old Toys R Us [smiling]
Alex: Yeah, and they’ve been resurrected now interestingly enough-
Sebastian: Really? Didn’t know-
Alex: Yeah, the brand has been bought by some other retailer, I think it’s called Bata, so we were in Toys R Us, with our original computer kit, it looked on the shelves of Toys R Us like some kind of art project, it was like the super minimalist like orange box with this, like punchy graphical components set and just, said two words on it, like, three actually, Kano Computer Kit. And it did well, there was a screen kit there as well, all around it was this like, and you know, brage your hair with electricity, all these crazy stuff, and there was just this simple statement, so it did well, we ended up getting it into the target at Walmart best buy, and in 2017 we’ve really, anywhere physical products are distributed for a kind of, you know, young, or middle class demographic in the US. And, at that point we’ve set up a small office in Boston, we’ve since decided to put the office in Austin, and we have a great team there.
Nas: And why Austin?
Alex: Austin kind of comes down to our leader in the US, a guy called Alexander Mitchell, beautiful soul, amazing professional, genius mind, came from Amazon, still famous at Amazon for what he did there, he set up their first physical bookstores, super cool and interesting and dynamic leader, and so when he moved from Boston to Austin, we’ve set up in Austin.
Sebastian: How many people do you have in Austin right now?
Alex: It’ll be about four people, yeah.
Nas: And so you’ve talked about this kit being on the shelves of Toys R Us and doing very well, so how did that end up, were people from US demanding, Kano kits, did you kind of set out to conquer the US so to speak, how did that, or it makes out both of them?
Alex: Well the original campaign was, got a lot of attraction, like a press coverage and went sort of viral, and it was supported by a lots of people, so we were known in the US, had the US investors after that, we raised and you know, I think the American culture is that of the tinkerer and the experimenter and the garage startup and you know the idea of computing that you make, like really, people really got that in the US, so I think that even in the beginning we were in the US through our ecommerce platform and kick starter and we- yeah, that’s all I have to say on that.
Nas:** So this is an interesting point because I feel, stem in general I fell like a bit more of a thing in the US, compared to the UK, so I’m wondering how does that affected the way you market your product, or the way you kind of get the word out there with Kano?
Alex: I think that customer who goes for Kano tends to do their research and look into the features and I think it’s never really been a goal of ours to appeal to, like a specific type of person even if that type is American you know, and maybe that’s like contra business gospel but I feel that the spirit of what we’re doing, just inherently is like, anyone can make and so we worked a, tell a story that could be comprehensible in any culture and language and geography and I would prefer, again wrong all the time of course, like, you know, always making mistakes, but I think in America in particular, like, everything is cultured, everything is conditioned, everything has its sort of biases, so the fact that I moved from England to the US when I was young and fell in love with the US and the freedom of expression and constitution and history and founding moment and Alexander Hamilton and that whole dynamic, maybe has something to do with the reason that good products are caught on in the US, that’s a good question.
Sebastian: And let me just add one thing, there’s a lot of conversations about, or debate, when is the right time to go to the US, you know, some people say, don’t go too early because it will gonna kind of bankrupt you, other people are saying you can also go too late, often it’s better to go early, I mean, I think it depends on what you’re selling really and what the product is, so what is your thought on that?
Alex: So, I think we went when there was a genuine need to, I think that was helpful because we live in this moment where no matter where you live in the world you can find out about almost any product or service almost immediately, and so, you don’t actually have to be physically in the region to sell there, now, if you’ve already have customers, if you’ve already have interest you should then go fish where the fish are and develop that channel but it’s almost like you need that seed of interest and you can probably do that online first, which is what we did, so, that may not be true of any business, if you are maybe more of a services business, you want to be there so people can get a taste of what you can only do in person.
But, I mean our experience was really one of, just scaling up, knowing that we needed some really strong people in the region to be in conversation with the retail partners to support customers over Christmas because we have a huge spike of an activity over Christmas as you know that, yeah, and we have a great person set up an office there, Greg Stein and from there we continue to grow, you know we’re still in, every target we work with Amazon in Seattle, we have different sales reps in different regions, but I think just on the experience it was very surreal, the first time I walked into that office in- and was just outside of Boston, and it was an office that haven’t been set up by me, right, but it was beautiful, like it was like really light and airy, and it was in this old sole mill and it had been nicely decorated and the team there had their own cultural identity which was similar to ours back in London but not exactly the same and it was definitely a, “we’ve arrived” moment, you know, that’s when I really felt we have arrived.
And you know, we keep arriving and to any entrepreneur who is looking at expanding into the US, if there’s a real need for it, yeah, definitely do it, because despite the poor reputation that American politics has, fairly, American culture is still the world’s primary influencer.
Sebastian: Definitely, I agree with you.
The American maker works for tomorrow as well as today, and it has a host of new products in store for us, some of them ready for immediate viewing, some of them are visible in the nearer distance, while others yet remain a dream of the future, but all of them on their way to us, on coming attractive useful products. Automatic highways with cars and buses that drive themselves battery powered transistorized TV that is really portable.
Canal TV to hang on the wall like a picture, all these and more and more, we Americans have always been makers and in the beginning, we had to be, when America was young we learned how to make the things we needed because there was no other way to get them.
We worked with our hands and our hands served us well, at the blacksmiths forged and the potter’s wheel, we learned honest craftsmanship at the spinning wheel and the loom, we studied patience, and the greatest patience most of us learned, was the patience to see to it that what we were making was good. Then looking again to make sure what we have made would serve, and serve well.
Nas: So you talked about walking into the office so the person who had set up Greg Stein I think, was he part of the team in London or was he a local and how did you make that decision?
Alex: We met Greg, he was working at another London based kind of creative company and you know, he’d been doing, I’ll just Greg now if anyone’s been listening, you know, Greg is great, like, he’s no longer with us, but [smiling] if you wanna go to the US he’s the guy that to work with, and with that, Greg we’ve started working with him and he said, listen I can, I know the right people at target, like, let’s go talk to them now, I can help you, Toys R Us, and we had tons of adventures together, you know, flying around, visiting different distributors, different retailers, visiting different schools and even governments, sending up a CES you know, we did great CES last year, so yeah, you got to find someone you really trust and enjoy with limitless reserves of energy to do that, cause it is a lot of travelling, US is a big country.
Nas: And so how important is this “boots on the ground” to, for expanding?
Alex: I mean, it’s probably less important than it was in the past, but the world is growing far more “winner take all” and bipolar in terms of the distribution of outcome, so, if you see an opportunity to do any business at all in the US like business that could even be 20, 25% of your annual run rate, then take it because it may expand well beyond that as it did for us, and make you the prime mover in your category.
The UK- and it will introduce you to other, like, investors and potential partners, the Harry Potter wand that we ended up making last year which is a record breaking product, top electronic toy of the year on Amazon, that product came about because one of our American retailers introduced us to Warner Brothers, so, you never know where the things are gonna lead, you know, if have the opportunity to go west, young man or woman as they say you should, for sure.
Sebastian: I think you said it before, the product is doing better in the US than in the UK, in Europe, is that, why is that you think?
Alex: We’re in English so Europe is not open to us yet, although we do have a lot of interest, in the UK we do sell, but the US is just so much bigger-
Sebastian: It’s just the size-
Alex: Yeah, it’s just a much bigger market, we’re also a more physical retailer in the US, doing the fact that our product has this beautiful design and you know, you’re going to the store, you pick it up, you touch it, you feel it, it’s that helpful.
Nas: And how did you fund the expansion?
Alex: Oh we raised venture capital.
Nas: Can you tell us a bit about that?
Alex: Yes, I mean, with any fund raising process you explain your thinking to the investor, you make clear what their funds are gonna be used for and I think in our case, especially 2017, 2018, we’d such clear demand online, people wanted us in store, it was kind of a no brainer, we ended up doubling our revenue that year.
Sebastian: Is that where it comes often when you raise funds to expand, did you guys basically once they see that you have traction in the US, it becomes a lot easier?
Alex: Yes.
Sebastian: So basically you should demonstrate kind of “can do it” and it’s just about economies at scale. More fund to scale up.
Alex: Yeah, we brought our materials down as we scaled the volume up as well so we were able to get more margin out of the products, but raising money is always something that you should do on the back of momentum and the back of some achievement but with a new achievement in the cross which is kind of counter intuitive because people have a tendency I think everyone to settling a bit and get complacent after something strong is been achieved whereas in the money raising process you have to keep your hunger up, as you build momentum, so you have to be endlessly hungry.
Nas: So Alex I wanted to know, what is your advice or your dos and don’ts for companies who want to expand?
Alex: I would say, if you want to expand still in your planning and forecasting adopt the personality of one who is not as interested in expanding, like, because, it’s very risky to set a massive target or goal for yourself on the back of a bet or a hypothesis and then, you know, find yourself falling short, which can happen to companies that go to the US.
So we, you know, we actually, the year, we doubled revenue we have forecasted going even beyond that, so what should’ve been a great moment of victory felt like not that, you know, it’s the tyranny of high expectations, so I think that’s a really important one.
If your business is in a place where you have an opportunity to expand don’t necessarily bake it into your financial forecast right away, like, go for the expansion operationally, but in your financial forecast assume a sort of steady run rate. And then you can blow everyone out of the water [smiling] right?
Sebastian: Keep a low profile, yeah [smiling]
Alex: Yeah.
Nas: But I’m wondering around the time that you were expanding, did you seek any advice from people who’ve done the expansion or who had some experience, cause I’m wondering what pearls of wisdom or any kind of caution they gave to you?
Alex: Greg was always really good on this, which was, you know, you’ve gotta speak to, and I was always resistant to do this and I probably still am, but, like, you’ve got to remember that the American retail consumer, but there is just a treat to it, which is like, when you’re acquiring a client online and you’re speaking to people through your own website where you can control your message one hundred percent, it’s just a different conversation to when you are on a retail shelve and you have other boxes around you or other inputs and influences, and the American customer is different, we can’t neglect that there are some cultural differences that should be taken into account and that was good advice I was given at the time, that we implemented in some ways like on the packaging, I think the first round of retail packaging we did for the computer kit went from hyper minimalist Toys R Us, with the three words on it, to one that was slightly more descriptive but still beautiful, and I thought that was a nice blend of like, artistic desire and purity with mainstream commercial requirements and you got to walk that blend in the right way because if you go too far down in either direction or either you just have like a really pretty thing that can sustain itself or you have something that also can’t sustain itself because it’s artistically hollow, so you’ve got to be walking that path very carefully and retaining your independence even as you scale.
Nas: How is the US customer different?
Alex: I think the US customer is faster to decide, more optimistic and futuristic, more- yeah, I think I will stop there, you get fast decisions, you get- people are much more willing to buy into an idea, I think, in the US, like it’s- you know it’s the frontier, it’s the joy of scientific discovery, it’s the revolutionary spirit, it’s, you know, the harsh political arena, it’s a place of productive turmoil, and I think people are slightly less cynical when somebody comes with like a, a wild new idea in the US. But I think that’s changing, I think that’s evening out around the world.
Nas: And what would be your biggest pearl of advice to someone who is thinking if they should make that expansion?
Alex: Expand if it’s right for you, I mean, bigger is always better in business, I mean sometimes it’s better to stay in a steady state, and talk to your team, you know, don’t just make the decision alone, you know, talk to everyone in your team, and make sure everyone is clear on the plan because it will create, you know, operational stresses and strains and I think, you know, we were fortunate that we have a good blend of creative entrepreneurial beginners and also experienced folks, and we’ve really talked to everyone and we succeeded in expanding. But it’s not always gonna be easy so make sure everyone is one the same page, wants to do it with you.
Nas: Just on that point I just wanted to ask, did the expansion change how you are doing things back in HQ here in London?
Alex: Oh yes, for sure, because we were now thinking about the retail buyers point of view on our products, or the Hollywood studio’s point of view on our products and you know in some, I mean it’s like a taller all this time, I mean how do you retain your autonomy and independence and spirit while reaching larger and larger numbers of people and when you go to America all of a sudden you are in a much bigger pond and so, I think in a lot of ways it created a desire for the company to prove itself which is very productive and healthy and I think it also created a pressure on the company which was the question of, well what would the retailer think, what would the studios think, and as we’ve come through that phase we’re in a period where because we’ve faced down and negotiated with and introduced our staff through some of the biggest corporates in the world and it’s worked and we’re still here, and innovating, I think we can be even bigger while being even purer to the original vision.
Sebastian: Well you know, now I need to get one for one of my kids for Christmas, I think it sounds awesome, great-
Alex: Kano, deal is on right now [smiling]
Sebastian: [smiling]
Alex: Get it right now, ship it almost cuts off
Sebastian: [smiling]
Alex: Buy, buy, buy, consume, consume, consume [smiling]
You’ve just heard from Kano Alex Klein on this edition for Move Your Business to the United States from Mount Bonnell Advisors, I’m Nastaran Tavakoli-Far and you can find out more about Kano at kano.me we’ve also put that in the show notes. Our sound engineer is Emmett Glynn and Nevena Paunovic is our podcast manager, we use some samples from the Prelinger Archives who have some really cool historical material from the US. We’ll be back in two weeks with more from another company who’ve made the move. Send us your questions to info@mtbonnell.com okay we’ll speak to you soon
Listen to the full Episode 29: Alex Klein, CEO at KANO: Computer Design As Simple As Lego
