How We Created A Product Based On A Meme and Made $100K

Hello! Who are you and what business did you start?

We’re Davis Harari and James Reina and we’re the co-founders of The Nut Button.

So, what is The Nut Button?

Our core product is a push button toy based off of the popular “NUT” meme. Our success is largely due to the inherently viral nature of the product – when people see a funny meme, they want to share it with their friends.

Likewise, when customers purchase our button, they take pictures/videos of it and show it off to their friends. This makes advertising extremely simple for us — up until recently, we spent close to nothing on marketing, as our customers were our built-in marketing team.

We know that this is a “dumb” product – however, our approach to the company is anything but. We’re currently operating at a 65% profit margin and are on pace to do a little over $200,000 in sales in 2019, 75% of which is passively through Amazon FBA.

What’s your backstory and how did you come up with the idea?

Davis:

I thought of this product while interning before my senior year of college. I was in a meme group chat with some friends – and everyone thought the nut meme was hysterical.

If you want to learn about the history of the meme, you can read about its origin here.

I thought it was funny too, and I thought it’d be amazing to buy a real life nut button. After doing some research online, I realized that nobody had manufactured a nut button yet. I called James, and after a 10-minute call, we decided we had to try to make the meme a reality.

Prior to The Nut Button, neither James or I had any Amazon FBA or e-Commerce experience. I’ve been reselling concert tickets and sneakers since I was 13, so I was confident in my entrepreneurial abilities.

James had opened a pop-up coffee shop in Williamsburg, Brooklyn that summer, so I thought he would have a similar mindset in regards to a “get-it-done” execution on the concept.

Take us through the process of designing, prototyping, and manufacturing your first product.

James:

We knew Alibaba was going to be the place to source something like this, so we started scouting a “sound button manufacturer” (that was the verbatim search term), and sent an inquiry to basically every vendor there.

It’s such a simple product that we weren’t super worried about quality — we valued communication and price over all else, with the intention of building a lasting relationship with our supplier.

We weeded out 80% of vendors on that criteria alone since there was a massive language barrier with most Chinese suppliers.

With the few remaining, we negotiated a price in broken English, closed a good deal, and 1,000 nut buttons were at my doorstep about a month later. I still remember cutting into the first box, and feeling a mix of excitement and extreme self-doubt (I think that mix means you’re on to something).

We weren’t 100% confident that this was going to work, but we broke down the pros and cons like this

Here’s why we thought it might work:

The marketing was already done, but the product wasn’t there. By that, I mean there were millions of shares/views of our soon-to-be-product by way of the meme, and brand recognition was there.

Also, the risk was only $1,250 each for first 1,000 units (minimum order quantity). And our upside was about $4,000 each.

Here’s why we thought it might NOT work:

The fact that it’s an outdated//irrelevant meme. And we have zero eCommerce experience

The juice was worth the squeeze, we figured — and if we failed, we could just hand them out on the street or at school for fun.

Legal Protection

We also realized that this product would be super easy for a big fish to produce themselves and undercut us. So we spent a good amount in the beginning on legal fees, trademarks, and IP protection to protect us down the road.

Spending about a thousand bucks on LegalZoom for years of trademark protection was definitely worth it.

Describe the process of launching the business.

Davis:

James had some experience with designing websites so we purchased our website URL and began working on our site with Squarespace. The below photo is a screengrab from our redesigned site, hosted with Shopify.

From there, we began running Facebook and Instagram ads with a $10 per day budget… Which failed miserably in the beginning because we had no idea what we were doing with Facebook ads at the time. Our conversions were under 1% but hey, it was a learning experience.

In terms of creating an online presence – our plan was established from the start. The product is inherently viral – people send funny memes to their friends. We planned to rely on our customers in order to build and maintain our online presence.

In order to fund the first few batches, we both dipped into our personal savings. We had decent liquidity/starting capital for college students, as I was very active with buying and reselling concert tickets and James opened up a pop-up coffee shop called Devil Spit Coffee in Brooklyn that summer.

In the first month of going live, we had sold a whopping 8 units. We looked into opening other distribution channels, and decided to ship out a few hundred units into Amazon FBA.

We started selling 4-5 a day, but we knew that we had barely scratched the surface of The Nut Button’s potential. Out of the blue, our sales suddenly spiked to 30-40 per day.

James and I found that someone had posted a video of a dog playing with a Nut Button on their Tumblr account, and it had garnered hundreds of thousands of notes. That was just the beginning though – that video then got reposted by Barstool Sports, which exposed the Nut Button to millions of people. The day that it was posted, we sold well over 100 units, and rode that momentum straight through the holiday season.

Since launch, what has worked to attract and retain customers?

James:

So one of the most beautiful things about The Nut Button is that it’s inherently viral. In fact, most of the marketing and brand recognition was done before we even made the product.

In the first year of our products life, we spent a meager $100 dollars on marketing and advertising (which maybe was a mistake, but we’ll touch on that later) — yet brought in over $100,000 in sales.

Our customers are our marketing team. Almost everyone who buys The Nut Button will post it on their SnapChat, Instagram, Facebook, bring it to class, show their friends, etc… They’re doing it all for us — so to any Nut Button owner reading this now, thanks for that :).

In terms of customer retention, we expanded our SKU line through Print on Demand services like Printify and Printful, which allow us to offer Nut merch at zero risk to us.

Armed with MailChimp and an email list of a few thousand subscribers, we were able to squeeze some revenue out of existing customers, and are positioned for more merch sales down the road.

One thing that I haven’t spent too much time talking about is Amazon FBA: where we see 75% of our total revenue. FBA has been a godsend and is what makes our business passive income. We send most of our inventory directly from China to Amazon warehouses, and they uncrate, repack, and fulfill every order from their site. Last month we did about $11,000 in sales from Amazon, and around $3,000 from our Website. Around the holiday season, we’ve seen our Amazon sales boost to a peak $45,000 within a 30-day period — crazy.

Around four months ago I thought it would be fun to do a writeup on r/entrepreneur, — a subreddit with over 537k subscribers, and one that inspired me early on. The post (which you can read here) was well received within the community and is currently the 4th most popular post of the year, and 12th most popular post of all time. About a month later, I got a message from a CNBC reporter who read the article and he asked to interview us for CNBC’s Make It column. This was our “mama we made it moment” and it was super legitimizing to see ourselves getting real recognition — not to mention it made our parents a bit more OK with us not having “real” jobs. We didn’t see the CNBC article affect our sales too much (their readers don’t align with our target audience), but it was a proud moment for both of us.

How are you doing today and what does the future look like?

Davis:

There are a few things to note about our business today, and what we can see ahead.

1. We’ve increased our profit margins from around ~40% to over 60% This is due to utilizing economies of scale (placing larger orders from our supplier), and Amazon accepting us to their Small and Light program, which reduced our overall FBA fees by 18.5%.
2. Our sales from our website have exponentially increased since switching from SquareSpace to Shopify. In the past 30 days, we have done $2657.28 in sales through our Shopify store, which almost matches our total sales for Q1 + Q2 of 2018.
3. The Nut Button is still experiencing growth. Shopify has enabled us to ship worldwide, we’ve entered 5 more countries through Amazon FBA EU, and our domestic FBA revenue has increased when compared to Q1 2018, and our profit margins are still growing.
4. We are open to selling equity in the company for the right price. Feel free to reach out with any questions!

Through starting the business, have you learned anything particularly helpful or advantageous?

James:

Oh man there is so much to answer here. As my old man always says, “once you’re done with a job, you know how to do it.”

Every step in building The Nut Button has been a learning experience (and still is), and there are a thousand things I wish we did right off the bat. For starters, we built our store on SquareSpace — which is such a less robust eCommerce platform vs. Shopify. We migrated only a few months ago, but have seen a substantial increase in revenue, customer retention, and ability to track our site analytics for marketing efforts. The extra tools and apps available via Shopify turned our simple little site into a proper storefront.

Email and SMS abandoned cart recovery automation alone have reclaimed 6% of lost sales. The ability to use POD integrations like Printify and Printful have allowed us to expand our SKUs to shirts, hats, mugs, and even a $250 bean bag (eloquently dubbed “the Nut Sack) — at essentially zero risk to us. Allowing user reviews for our products have helped add social proof, and some pretty comical reviews have come out of it.

I could go on and on about things we’ve learned — but to list a few more.

Testing different product prices

We found The Nut Button demand to be inelastic; when we raised our price to $14.99 (from $11.99) our unit sales stayed roughly the same while overall revenue increased 25%.

Continued negotiation with our suppliers

Our landed product cost is down over 100% since our first order of 1,000 units because we have maintained an excellent relationship with our suppliers, and are not afraid to continue negotiating with them. In fact, we just visited the factory in China earlier this year!

Start social media engagement early on.

We basically ignored all forms of social media management for the first year and a half, because it was a daunting task. However, in the past few weeks, we’ve grown an Instagram to around 7,000 followers and have gotten tons of free advertising and engagement via shares of our posts.

From left to right, James, Davis, Rosie the factory boss, Jack (our Intern at the time)

Here’s a screenshot of our Amazon FBA store from this past holiday season! We peaked at $41,500 (at a 62% margin) in a 30 day period.

What platform/tools do you use for your business?

What have been the most influential books, podcasts, or other resources?

Davis:

My biggest inspiration for The Nut Button are the people who initially told me that it was the dumbest idea that they had ever heard and that we wouldn’t sell any of them. Thankfully, over 20,000 customers (and counting) beg to differ.

Advice for other entrepreneurs who want to get started or are just starting out?

Davis:

The most important thing is to start working. Obviously, have a game plan for your proposed business, but talking about an idea only goes so far. As an entrepreneur, you’re not going to know how to do everything perfectly at first, but trial and error is necessary.

We’re living in 2019. The amount of resources online that you can utilize is unfamothable. Stay on top of market trends and figure out how you can apply them to your business.

Before we placed our first order, I asked some friends what they thought of the product/concept. It was generally received positively – however, there were more than a few people who told us to our face that it was the dumbest idea ever. Self doubt is healthy and normal, however the ability to tune out negative energy is an essential trait for anyone looking to be an entrepreneur.

Are you looking to hire for certain positions right now?

Right now we aren’t looking to hire. However, if you think you can add value to The Nut Button, feel free to reach out to us! We’re always down to toss a free nut button or gear to someone with a large social media following.

Where can we go to learn more?

In the news:

If you have any questions or comments, drop a comment below!

The Nut Button has provided an update on their business!

6 months ago, we followed up with The Nut Button to see
how they’ve been doing
since we published this article.

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