Mike Dresher, the founder of JogAlong Stroller, LLC, is a recent recipient of a Kansas Department of Commerce Proof of Concept (POC) grant, which provides funding from $5,000 to $25,000 to support technology-based entrepreneurial ventures in the state of Kansas. We spoke with Dresher about the POC grant, why he applied for it, and how he plans to use the funds to get JogAlong Strollers into the hands of consumers. Below is our lightly edited conversation.
How did you learn about the Proof of Concept Grant?
Mike: Groover Labs had recently been approved as a partner for the POC program, so Tracy emailed to let me know about it, and she provided some general info about the program and how to apply.
And you thought this sounded like an interesting opportunity?
Yes, I did. I’d been looking at different ways to manufacture some parts for the JogAlong Stroller that would lower the capital required for production tooling, one of our biggest hurdles to get to market. But building another prototype with major design changes is expensive. When I heard from Tracy, I saw an opportunity.
Why? Tell us more.
This is the kind of program we need in Kansas. I’m thrilled with it. The Department of Commerce is providing amounts significant enough for entrepreneurs to act. These types of grants will advance projects in major ways. They help entrepreneurs keep moving without losing time trying to find investors or capital at a critical stage.
For many entrepreneurs, the early stage is tough, so you may not be far enough along to attract investor interest (revenue generating in many cases), though your platform and progress is solid. You may have exhausted personal finances or the collateral to secure loans but can now advance your concept. This type of grant can be a bridge to either revenue generation, investor interest or both.
Starting a company involves a lot of risk. This program reduces the risk?
It does. But it does more than that. Being announced as a recipient provides the founder with two things: funds to advance your project; but, also, it provides an opportunity for the founder and project to earn credibility. Someone has looked into them, they’ve been vetted. And at the end of the program the results will be visible. If you complete what you said you would do, that will give confidence to investors at the next stage, if that’s the route you take.
In a general way, how do you plan to use the funds?
Our original business plan was to raise capital upfront to pay for the production tooling required for manufacturing. One caveat for us is the certification requirement for a baby product. Certification can only be done on production parts, so a production design has to be completed and tooled up before you can be certified. We planned to use injection molding for several parts, which comes with high tooling costs but generates (in most cases) the lowest manufacturing cost.
Most of the manufacturing work is done overseas where the supplies are more readily available. But we have many local partners for accounting, web design, prototyping, video production, legal services. We have plans for a local parts center postproduction as well.
With a high upfront cost and the complications that have emerged from Covid-19 around the supply chain and labor shortages, we wanted to see if we could find new ways - ways outside injection molding - that would reduce the capital required for production tooling and enable us to proceed to the certification process and then on to production. If we can do that, then we can get the JogAlong Stroller into the hands of consumers faster.
By going this route, we may lose some of the manufacturing efficiencies we prepared for in the original plan, but I’ve got an email list of over 12,000 subscribers that are waiting for updates. A lower volume run will be more expensive, but the quality will still be very high, and it will allow us to finance growth as we go.
But to get there, first, you needed to identify ways to lower the capital requirements needed to manufacture the stroller without losing any quality.
That’s right. That’s how we’re using the POC grant money. We’re testing part styles that are more in-line with traditional metal manufacturing methods - aluminum castings, sheet metal forms, CNC machining, and die casting to name a few - that can replace as many injection-molded style parts as make sense for us.
We steered away from sheet metal mainly because customers are used to seeing those smooth, free-flowing lines and soft corners in their products, in their strollers. And, of course, we want to deliver a product whose aesthetic matches its cost.
What did you discover?
So, we looked at machining, die casting, extrusion, and machined extrusion. Of these, die casting, extrusions, and light machining show the most potential. Again, in a traditional model, you invest in the kind of tools that build the lowest-priced part and spread out the cost of the tooling over time. But what we’re doing now is finding a balance between how much we spend on tooling to keep the overall early capital requirement down while also bringing the JogAlong to market.
In numerical terms, our original model spread the cost of tooling out over thousands of units. A common approach, and one I’m familiar with because I’ve been part of design teams that have produced products that are sold all over the world. But our initial fundraising campaign didn’t generate enough capital to advance that program, so that capital was returned because we couldn’t deploy it in a way that would get JogAlong to production.
So instead of spending more time trying to attract investors, this approach gets us a step closer to production with lower upfront capital costs. It’s a tradeoff; our manufacturing cost will be higher, but we have to get something to market.
How far along are you?
We’re about 50 percent of the way through the process. One of our biggest challenges has been trying to find domestic partners for machining and extrusion. I thought I would just assemble them here since the first production order would be lower. But our early low-volume production runs are not attractive to a domestic supply chain that is facing challenges to fill the orders they already have on the books.
We also have to stay cost competitive with our competitor’s products. We will focus our efforts on finding partners already involved in supply chains similar to ours, most of which are overseas. Once we’re producing thousands or tens of thousands of units, we’ll revisit a blend of supply chains that may result in a U.S. final assembly.
One of the reasons we’ve been working overseas is because of the bicycle supply chain. Some manufacturing and assembling of a JogAlong Stroller aren’t much different than a bike. And, since there are so many factories producing bikes overseas, that’s where the supplies are. Here, we have to get the supplies to the location, and then we have to cover the cost of production for lower runs.
Most firms we’ve spoken with won’t take us because they’re getting larger orders from bigger customers - and that’s if they have staff. Most manufacturing service providers are struggling to maintain or increase their staffing due to wage pressure and the challenges we have all faced with Covid.
Overseas, they have the product, the expertise, and the material - they’ll take it and run with it. For example, fabrics typical for our sewn goods, brake cables, tires, brakes, wheels, grips and more already have mature supply chains. And we can leverage those to our advantage the closer we are to them. So many of the parts and materials for bikes crossover to the JogAlong - it just makes the most sense.
What’s next?
We like what we’ve seen with extrusion and machined extrusion in combination with some die casting. We think we can convert as many as half of the injection-molded parts using these processes.
And from there?
We get the JogAlong certified and then into the hands of the consumers who’ve been waiting for it. We get it on the street. We get it into races. We listen to what users say, we adjust where we need to, and hopefully, by getting the product on the market, we’ll have the revenue to show investors as well as cover the cost of a more complex manufacturing process. Revenue will also help us bring other new innovative products to market that are already on the drawing board.
What was the spark for JogAlong? How did you uncover the need?
I saw someone who was running literally push a baby stroller ahead of them and then run to catch up to it. That’s how they did it. Our elliptical stroller does several things: it’s about comfort, it’s about moving naturally; and it’s about safety - the default operation is with both hands on the stroller. Jogging with the JogAlong creates a sense of freedom and balance for your body. And the natural movement of the vehicle means you don’t have to push it forward and catch up to it. You run with it, not behind it.