How Tile went from crowdfunding to 2M units sold in two years

Tile makes a deceptively simple gadget: a rounded square of white plastic, about the size of a poker chip, that you can clip to your key ring, slip into a backpack, or stick onto any other object you want to keep track of.

Today the company is releasing a new version of its gadget and updating its app. Tile is also saying that it has shipped 2 million of the $25 gadgets since it launched a year ago — a remarkable milestone for a product that started life as a crowdfunding campaign.

The inspiration: just being able to use technology to solve one of life’s persistent problems.

“We were shocked that you could go on your phone and find out anything, but you couldn’t find your keys,” Tile cofounder and chief executive Mike Farley told me in a recent interview at Tile’s San Mateo, California headquarters.

Here’s the basic idea of the gadget: If you lose track of anything connected to a Tile device, the Tile app on your phone can help you locate it. It uses Bluetooth to connect with the Tile, so the app can tell you the last place it “saw” the device – and when you get close enough, it can make the device beep so you can hear where it is.

The new version of Tile, being announced today, is three times louder than the old one, so its beeps are noticeably easier to hear behind a flowerpot or under a pile of mail.

A Tile in every block

Anyone with the Tile app can help you find your stuff, too: As their phone walks past any Tile device that has been marked as “lost,” it silently connects to the Tile via Bluetooth, then anonymously uploads the location to Tile’s cloud servers, which then ping the owner with the location. That comes in handy if you left your keys on a park bench, or in a coffee shop, and didn’t have your phone with you to keep track of the Tile at that time.

You might think that for this to work, it would depend on a pretty high critical mass of Tile users, and you’d be right. But the company says that’s already happening: In Manhattan and San Francisco, you don’t have to walk more than an average of one block to pass a Tile user.

Next step: getting even more people to use Tile. One way is through a real-world retail partnership – the company’s first – with T-Mobile. Previously, Tile was only available through online retailers; now it will also be for sale in 3,300 T-Mobile stores around the U.S.

The other is through an improved app, for Android or iOS, that turns the phone it’s running on into a virtual Tile device. If you can’t find your phone, you can sign in to Tile’s web site and look for it, just as you’d look for any Tile you own.

So how did Tile go from idea to launch in one year, and from launch to 2 million sold one year after that? A smart crowdfunding decision early on played a key role. Lucky timing helped. And an assist from a major contract manufacturer also made a big difference.

“It’s amazing how much work goes into that little piece of plastic there – it’s insane,” Farley said.

Smart timing

The release of Bluetooth 4.0, which included a “low energy” specification, was key. The spec has been around since 2010, but the iPhone 4S was the first smartphone to implement Bluetooth 4.0, in 2011, with other devices following in 2012. Farley had been noodling around with the idea for a while with cofounder Nick Evans, but “Bluetooth 4.0 becoming ubiquitous is what made it all possible.”

In November of 2012, Farley quit his job and began to work on the project full time. By February 2013, the duo had raised a $200,000 seed investment from Tandem Capital, a seed-stage venture firm with an interest in hardware startups.

In June 2013, they had launched a crowdfunding campaign. A month later it had exceeded all expectations, netting them 200,000 pre-sales and $2.7 million in working capital.

DIY crowdfunding

Notably, the company did not use Kickstarter or Indiegogo for its campaign: It built its crowdfunding campaign using Selfstarter and ran it on its own website. That was harder, but it had a lasting benefit for the company.

“We weren’t relying on people who went to Kickstarter – we had to figure out how to get people to our website,” Farley said. Ultimately, that made Tile a much better direct-sales company, because once sales started, it already had the necessary marketing expertise — and a killer list.

Partnering up

Going into the crowdfunding campaign, Tile had planned to make 20,000 units, and had lined up some local contract manufacturers.

“But once we hit it out of the park, we had to find a high-volume, top-tier manufacturer,” Farley said. Candidates included Foxconn, one of the world’s biggest electronics manufacturers, not just for Apple but for many companies; Flex, formerly known as Flextronics; and Jabil, a gigantic company that has mostly stayed out of the limelight for the past five decades. (It has 180,000 employees around the world, is publicly traded, and has $15.8 billion in annual revenue, but for some reason Jabil doesn’t hit the tech industry headlines the way its competitors tend to.) Jabil won the business, starting work with Tile in August 2013.

The crowdfunding campaign, and the cash it raised, were critical.

“Getting to that point was what it took to get someone like Jabil to pay attention,” Farley said. That’s because manufacturers are taking a big risk when they take on a new client: They have to invest in manufacturing tools, customizing a production line, and so forth. They want to be sure that the client has the ability to pay.

Manufacturing

Turns out that it’s not so easy to move from the prototype phase to high-volume production, a theme I’ve heard from many other hardware entrepreneurs. Tile’s team spent months flying to China and back, testing out production samples, learning about injection molding and ultrasonic welding (it’s what bonds the two halves of the Tile’s plastic body to one another), and fixing a weird problem where bits of the welded plastic were sticking out of the finished product. It was an involved, iterative process.

Eventually, they ironed out all the kinks. In May 2014, an assembly line in China started producing Tiles and shipping them back to the U.S. From there, sales seem to have really taken off — both directly on Tile’s website and on online retailers like Amazon.

Farley says that none of this would have been possible without crowdfunding.

“Hardware is so dangerous, and VCs stay away from it, because it is so easy to screw up,” he told me. “Crowdfunding is one of the best things to happen to hardware, ever.”