This week, I sat down with Kerry Staite from kLite to talk about how he developed his product, a dynamo powered light and charging system for bicycles and appearing on Shark Tank Australia.
In the interview, we discuss:
- the challenges he’s faced with producing products while running as a lean, bootstrapped company
- redesigning the product from being battery powered to dynamo powered because of restrictions imposed by Australia Post
- dealing with copycat products
- the reasons for his decision to keep manufacturing his product in Australia
- his experience with appearing on Shark Tank Australia
- being a self taught electrical engineer with no formal training
I hope you enjoy the episode!
Sites and Resources Mentioned:
Kevin Graham: Hey guys, Kevin Graham here, and today on the podcast I have Kerry Staite. Kerry's an inventor from Newcastle in Australia who invented the brightest dynamo powered bicycle light in the world. He appeared on the first season of Shark Tank, where he was trying to get an investment to bring this product to market. To tell you a bit more about the product and his story, please welcome Kerry Staite.
Kerry Staite: Hey, I'm Kerry From K-Lite, and thank you so much Kevin for having me on. It's a pleasure to be here, and I'm really excited to tell you all about my story.
Kevin Graham: Awesome. For the listeners who might not know about you and your current business, can you give us a brief rundown on who you are and what your company does?
Kerry Staite: I was, for about 25 years, a professional bicycle mechanic. Part of the bicycle mechanic-ness-ship is servicing every aspect of the bike, and lot of guys ride quite far, and I got into building my own lights. Long story short, they really took off, so I started building them for friends. It got so busy I needed to start K-Lite. K-Lite got heaps busy, and I was getting so busy that I couldn't actually keep up. So I thought, hey, Shark Tank is what I should be doing.
Kerry Staite: Long story short, I make dynamo lights for bicycles, and USB recharge systems now, and these guys ride across the country in big bike races, and I went onto Shark Tank to seek investment to move to the next step. It was a pretty amazing thing to do, a pretty amazing experience. But that's basically my quick story.
Kevin Graham: Cool. Now, I understand what dynamo is, but maybe not all of our listeners do, so can you explain what a dynamo is and why this is an important component of this lighting and USB charging system?
Kerry Staite: Sure. Correctly called a magneto, to be technically correct, a dynamo is in a car as well and it simply charges a battery as you move along, or as the motor moves. It is unfeasible to carry the amount of storage that we need to run our devices on a bicycle, and also on a car, so these dynamos or magnetos use the power of forward movement, or the power of your motor turning, to create power for the systems. In our case, we hide the dynamo or magento in the front hub of the bicycle. Most people wouldn't actually know it's there. It provides unlimited power, as long as you're moving, to run your lights and USB recharge.
Kevin Graham: Right, so it's generating electricity off of the movement of the bike?
Kerry Staite: Yeah, that's exactly right. It's quite green and quite efficient, and the systems will generally last about 10 to 20 years in life before they need to be serviced or have bearings replaced.
Kevin Graham: Right. Now, the type of dynamo I'd only ever seen before you appeared on Shark Tank were the little ones that attach to the tire, and they really seem to suck a bunch of power out of the bike.
Kerry Staite: Oh, I know, right? Yeah. I mean, we've always seen that Simpson cartoon when he's trying to peddle. Yeah, certainly, the old granddad bike and the old dynamo. Those days are gone, technology has shrunk it all down to a tiny little thing, and you cannot even feel it's there. It's really a no-brainer for people that commute, people that do long events, or really anyone that lives on a bicycle, and that was my goal. My goal was to remove the excuses for people to ride a bike so they're not there, and they jump on their bike and they've got everything they need, and then everyone's happy and the world's a better place.
Kevin Graham: That whole cycling more movement is increasing movement not just in Australia but also Europe. It's increasingly popular as well.
Kerry Staite: What you're finding is the governments realizing that the old age and the healthcare and the amount of money they need to spend on it is growing. We have an aging population, and what they're finding is if they build infrastructure for cycling, people are more active and more healthy into their older years, and that has amazing health benefits. Exercise is shown to be 50% as effective as chemo therapy for cancer patients. So getting fit, staying fit as you're getting older, is certainly the thing to do.
Kevin Graham: You mentioned briefly about being a bicycle mechanic as a little bit of the how you got started in this. Can you explain a bit more around how you went from a bicycle mechanic to some pretty technical electrical engineer work and developing the K-Lite product?
Kerry Staite: I think it's going to be easy if I start a little bit earlier. Here is me going to be a scientist, okay, so memorized every science book and was already to go, and I left a town that didn't have a high enough science faculty to another town. I was a young man, I think I was about 16, and it was tough. I moved town, I lived by myself, I had zero money and I was going to be a scientist and I was going to save the world. Okay, so here we go. I know it sounds a bit naive, but that's what I was doing. Now, on the very last year I got hit by a car and I was in hospital, and I was unable to complete the exams. I got basically bell curved, if that makes sense. All my exam results were set at the average mean normal, or the average of everyone at the school.
Kerry Staite: I didn't get the university entrance that I wanted. Now, I got a small payout of a few thousand dollars and I was into cycling, so I brought a nice bike. Through buying a bike and meeting a very unique, crazy individual who was one of the best bicycle mechanics in the country in Canberra, I became a junior bicycle mechanic and was thrust into the world of bicycle racing and bicycle racing mechanics.
Kevin Graham: That sounds like a pretty small niche. Mechanics for cyclists who compete in races.
Kerry Staite: Yeah, so there's two sorts of things you can do, and as you said, it's very small. I can leap out of the back of a vehicle with some wheels and then give the rider a good push up the road, or they can go round and round in circles and I can be in a tent and I can service their needs at the tent.
Kerry Staite: Just so happens, my understanding of electronics/bicycle mechanics was what they wanted in these big 24 hour races. I ended up working with a lot of the world's top pros, even world champions, Olympic teams, New Zealand National Team, the Australia National Team, ended up going really good and I made a little bit of a name for myself in pro bicycle mechanics. When I started building my lights, that was just an extension of the bicycle mechanics really. I'd already made a name for myself, so all the pro riders then tried my lights, and of course they were really good, and that's where it took off. That's where it got so busy that I needed to start an actual company, because it was just like, "Hey, I'm building lights all day every night. I've got to make it pay. I've got to stop just doing it for fun." That's where I had to cross over.
Kevin Graham: That leads perfectly into my next question of when did you start K-Lite, and what was the reason that you decided to start it?
Kerry Staite: I was a successful bicycle mechanic living in Canberra and I felt like no one could ever see me as anything else in that city, so I moved. Me and my wife, we moved to Newcastle and started again. 2006 is when K-Lite first started, and K-Lite started with a battery light product. Now, Australia Post in their infinite wisdom banned the shipping of all lithium products from Australia. Essentially, it put a bit of a nail in the coffin of K-Lite battery lighting systems. I just had to be adaptable, and that's when I moved to the dynamo, and I keep developing the product and kept pushing the brand and managed to exclusively sell dynamo products. But yeah, 13 years, 2006 is when I started. It's been a really hard slog, I'll be honest.
Kevin Graham: Yeah, business is a constant battle of different things. When you were on Shark Tank, one of the things that was highlighted there was the margins on that product, and they seemed to be pretty attractive margins. In a way, it seemed maybe unnecessary to get an investment. Can you talk a bit more about that?
Kerry Staite: The margins are just normal. The factory pay X, then the factory makes 30-40%, then the distributor, he has to put 30% on it, and then the next guy's got to make 30%. The margins are all kind of normal if you're talking about raw cost of actual parts. Parts are cheap, parts don't cost you anything. It's actually the labor that costs you everything, especially in Australia.
Kerry Staite: The markups are all normal. I don't know why they didn't understand it, but yeah, everyone needs to make money, so there's a markup on everyone. What I was told at the early days is you must price it for tomorrow, because there is going to be, you know, in my case there's a factory, then the factory sell to me and then I sell to dealers or distributors around the world, and then they sell to bike shops and then the bike shop makes a markup. We've got four people that have to get a chunk.
Kerry Staite: That's pretty standard these days. Certainly I make a fraction compared to the guy at the other end not doing much, and yeah, that hurts, but that's business. That's how it works. The factory make even less than me, and they actually have to make the things. The markup is just standard. I don't know why they misunderstood or misunderstood what I said. Maybe I said it wrong.
Kevin Graham: One of the other interesting parts that you mentioned before the call is that you're making these in Australia. Now, for a lot of the other entrepreneurs that I speak to who are manufacturing products these days, they've taken that manufacturing to China. Can you explain to me a bit more of the reasoning why you've kept manufacturing in Australia, a place where the costs of manufacturing are a lot higher than they are in China?
Kerry Staite: I've been doing electrical engineering for a while, and one of the common knowledge is the 100% China copy, the 100% China part clone. They'll clone your parts out with non-correct branded parts, and your IP is not safe at all.
Kerry Staite: If you've got 100k to do your patent, by all means, off you go to China and you pay your 100k and you get your little mini-factory set up and chunka, chunka, chunka, the product comes out the other side. Oh, for sure, I'd love to do that. But look, I did this with zero money. I needed to basically be adaptable. I have zero bits of paper, I had never been to school to be an engineer or do anything at all. I can't even get a job at a cafe. Like, I have no bits of paper, let alone any money. I just had to take any opportunity I could, and this was the only opportunity that came to me, and I just had to make the best of that situation.
Kerry Staite: Now, I'll be honest, it's taken about five years longer than we all thought, or I was told, or whatever, and it's cost lots and lots of money just to get rolling. But I think at the end of the day, you've got to stick by your guns and you've got to try and live the dream. I had no money anyway, I had nothing to lose, so I wasn't really too worried. I just was rolling with it, rolling every single cent back into the company and going as far as I could. I assumed that I would have been tackled out or crashed out, or whatever. I've had a copy already out and they've made millions of dollars more than me, you know, they could try and sue me, they could try and patent my idea then sue me for it, and that's normal, you know?
Kerry Staite: Definitely keeping the IP safe was the number one reason I stayed in Australia. Keeping the QC on track, so I'm down there every single day and going, "Oi, what'd you do that for? Don't do that. You've got to do this," or whatever. Just making sure the QC is all great. IP, QC, and couldn't afford to go overseas all the time. They're my reasons.
Kevin Graham: I have heard things before of when you send your product to China, it's highly likely you're going to get knocked off and there'll be shortcuts taken and things like that. So it makes sense as to why you've kept it in Australia, especially with an item so highly technical that you do need to make sure that everything's done right to keep your customers happy. But it is slightly less common, and that's why I was keen to hear your thoughts on why.
Kerry Staite: Well, there's this new thing that we've caught up to now in the industry called lean engineering, and so we're going on the lean. We count seconds and we count cents, and it is absolutely agonizing. I'll tell you, it's like, oh my God. For two and a half years we were on the lean for this new design and we did absolutely amazing. By going through the lean process, we've actually made the design better, which is the weirdest, I guess, trio of dips that you'd never get to taste. You never get to make it faster, cheaper and better. Generally, there's always a compromise.
Kerry Staite: I was so adamant to keep the engineering and not have it watered down by the bean counters or the secondary engineers. It was super hard to do that, but I've managed to bend the laws of electricity only slightly, and so it's super efficient. So yeah, super happy with the product.
Kevin Graham: Now obviously you mentioned before that you were kind of a famous mechanic in the cycling racing industry, plus also you appeared on Shark Tank. Can you tell me about the point in the business where you started to get initial traction with K-Lite, and what do you attribute that success to?
Kerry Staite: I must admit, I went for the celebrity athlete approach, so I thought, what can I have for free? These athletes, they're generally starving themselves, you know what I mean? Like if someone's going to give them something, they're super happy. I targeted the toughest mountain bike events in the world, and these are the events that you can't carry batteries. There's an event on at the moment and it's so epic. They race from Canada to Mexico via The Great Divide. At this stage, at this very second, they're blocked by snow, they can't get over the pass. Some guy tried to get over, he almost died and he got scared and went back to the hut, and then four people have waited until it's frozen and gotten over. Now, four people that got over the pass, two of them, or three of them, are K-Lite riders.
Kerry Staite: Basically, I just stack the field with as many K-Lite pros as I can. Now that I'm so popular, there's a lot of, I actually have the most lighting systems in that event because I'm very popular in that event, because my stuff is super reliable. Long story short, I went for athletes in the hardest races in the world and I marketed it that way. That race, that Tour Divide, that Canada Mexico event where K-Lite wins and they see it, I guess that was a turning point because once people started to see me in that event and see me at the front end, and to see me in all the magazines, because of course the winner gets in the magazine, the winner gets on telly, the winner has all the accolade. And of course, I'm dragged along for the ride. I'm basking in their reflected glory, you know?
Kerry Staite: That's really good for K-Lite. That one Tour Divide race was the turning point, and winning that race and then winning it after that was the turning point to people going, "Wow, that stuff must be tough." And then the orders came in, and then I got so busy I couldn't handle the emails, and so then I'm pushing aside to dealers that can handle the emails and I'm just shipping boxes, and then I couldn't make them enough, and then I get the factory. Anyway, you see how it goes.
Kevin Graham: It must also, in addition to being a great marketing channel, using those sponsored athletes or influencers in the industry, it must also be super rewarding to see your products be battle tested in tough races like that and come out still working.
Kerry Staite: Yeah, totally. I was obsessed with the moon landings and all that sort of stuff when I was a kid, and what I realized is I needed to make product that was going to the moon. Essentially, you're in the middle of nowhere. No one's going to save you, you're going to die. And so it has to be incredibly reliable and incredibly adaptable. You know that thing where they had to recycle the air and the air tank blew up and they had to do all these MacGyver things to make all that work, right? That story, I was like, "Whoa, I've got to have my light be the super MacGyver of everything."
Kerry Staite: I've actually combined two lights in one. Mine's a helmet light and a bar light, and it charges your phone and it charges your GPS, and it can charge your emergency beacon. I just thought it's got to be the most reliable product in the world, and these athletes have seen that, and God bless them. They're the reason why I'm here.
Kevin Graham: We alluded to a couple of things earlier, but one of the questions I always like to ask the guests on my show is about the more difficult side of business. Can you tell me about an unexpected crisis that happened in the business and how you handled it?
Kerry Staite: There was nothing but problems. There was only problems. That's it. You have just got billion problems stacked against you every day, and it's your job. Financially, you try and set up production with no money and you're so busy working for the company that you don't have time to have a second job, so you've got no money. That's a huge hurdle. You've got to do everything different. You've got to figure out all the smart ways around, all the free ways around. So that's really hard. Now everything goes wrong, so you think something's going to be, "Oh no, that didn't work." Then we have to rejig it or redesign it.
Kerry Staite: When we first went to production, we couldn't achieve it and we failed. We then had to rejig a certain way and I got tricky and went, "Oh, we'll do this, and oh, that managed us to keep going." We had to buy better, bigger, chunkier over-molding or mold injection machine. The machine got four times bigger and then everything got bigger. Production is a constant, constant issue to get right, and it's a balance between not watering down the engineering for the sake of production, but also not spending $1 billion because you're never going to actually get to be there. I guess at the moment, it is super tough because all the money's getting spent and we're re-launching I guess with all the new machines and all the factory production.
Kerry Staite: Previously it was partial factory production and a lot of hand-built stuff. Now it's bigger machines, more tooled up, everything look sexier. We've got a big launch coming up, and look, it costs money. Everything costs money. Financial, not having an investor, I think is the hardest thing for me, because I've had to become super creative and basically do pretty much everything myself.
Kevin Graham: You just mentioned there, you've got this big re-launch coming up. It might be that, it might be something else, but what's one thing about your business that makes you excited today?
Kerry Staite: I think the fact that probably, and I'm guessing here, less than 1% of people get to make it to production without investors. Now, that excites me because if I can pull it off, and I don't know if I can, but if I can actually do it and get over the line and get to production, and get it all sorted and come out the other side, and the machines are chunk and chunk and chunking the parts out. Oh my God, that's so exciting. It's like the unobtanium dream that you go for, but you don't expect to get there. You think you're going to get cut down halfway through or whatever.
Kerry Staite: But that's what excites me, is if I can actually pull it off, if I can actually do it, it's going to be amazing, because the product is absolutely stunning. I have done an amazing job. I have pulled out every single trick in the book, so the product is amazing, which is rare. Normally you get brands that have great marketing but the product is a bit so-so, but the marketing is better. But in my case, it's just going to be huge. If this actually gets out, it is going to take over the world. No more batteries, eh? It's just going to be stunning and the world's going to be happy. So that's what I'm excited about, making the world a better kick-ass place.
Kevin Graham: When is that big launch date then?
Kerry Staite: October. Now, it's a bit of a rebrand professionally and it's a bit of a re-wrap of the product. At the moment, I've got the 3D printers chugging away in my bedroom 24/7, and they make the shell of the product. The big machine is going to allow me to increase production by 10 to 20 fold, which will allow me to keep up with demand. At the moment, I do what they call anti-advertising, like push people away so I can have time to get up to speed. Which sounds crazy, I know. I've never advertised, yet I'm constantly out of stock. Anyway, the new machines and the new production are in October, and that's going to allow me to turn professional really in every aspect, I guess like a normal business can do when they put in 200-300k from the investor.
Kerry Staite: That's what the launch is about, getting to that fully production, or the start line as I call it.
Kevin Graham: Yeah. So, 13 years to get to the start line.
Kerry Staite: Yeah, great. Yeah, yeah, yeah. If you had have asked me would I do it again? Well, I don't know. Maybe I should have had a life, you know? I honestly feel I've been trapped in a cage. I went out recently and the world was different. It was very different and I realized that I have just been pushing it way too much, and just being a little bit obsessive about getting the job done. You've got to get the job done before you fall over, and I'll be honest, I have fallen over four times officially and needed to recover.
Kevin Graham: Right. We've got the big launch coming up in October. After that, where do you see the future of the business?
Kerry Staite: Okay, so it's not about the money for me, it's about buying my life back and then creating a life that I would like, and what I would like is to go visit all my dealers and do video media sort of stories, short-film stuff about what they do and how they give back to the community. It might be they help young kids, or they help disenfranchised people without money or facilities get going. It might be in Russia, might be in South Korea, it might be in England or France, or all these many places.
Kerry Staite: I hope to travel and see the world before it's gone, and enjoy the world, and at the same time make a little bit of movie magic about what I do and how I've helped people and how other people have helped people become more healthier and reduce their footprint on the world by reducing the need for batteries. That's what I see for myself in the future.
Kevin Graham: Awesome. That sounds like a really exciting project to take on and go and do.
Kerry Staite: Yeah, K-Lite Media. K-Lite Media is the next step.
Kevin Graham: Nice. Moving onto the next little segment here, what books do you think had the biggest impact on you in deciding to become an entrepreneur?
Kerry Staite: I found that reading stuff, now I don't read anyway, I can barely spell and so I can barely read and write. Well I can, but I never went to school sort of thing, so books are not my thing and books color the way I thought. For me, it's about knowing about myself, creating my own reality truth tables, because reality is the only thing that's going to slap you in the face.
Kerry Staite: To that degree, I've probably taken cues from people like Elon Musk, I guess, didn't go to school. Taking cues from Richard Branson, didn't go to school, and kind of looked at what they've done. But yes, to answer the question, I haven't read any books about it and there's no books that have influenced me in that respect.
Kevin Graham: Cool. Well that's an interesting different take on it. Obviously, still sort of leaning on the ideas from guys like Richard Branson and Elon and all of those, but without necessarily reading the autobiographies or doing all that. So yeah, that's an interesting response, and I do appreciate different versions of that answer.
Kerry Staite: Yeah, yeah.
Kevin Graham: Well, just to wrap up the interview and bring it home. If people want to buy a K-Lite or discover more about the product, where can they go to find out about that, and also where can they go to get in touch with you?
Kerry Staite: Okay. Thank you so much, Kevin. This has been one of the best podcasts I've done, so I definitely thank you for that, and I hope your listeners are enjoying that.
Kerry Staite: Klite.com.au. K-Lite has distributors worldwide and it's all about no more batteries to reduce the impact of the world, and to promote healthy avenues like cycling and for people to get out and about and enjoy the world before it's gone. They can contact me at [email protected], or they can contact me through the email link on my website.
Kevin Graham: Awesome. I'll include links to the website in the show notes, and do you ship worldwide, or is it if someone was in a different country they'd contact a local dealer?
Kerry Staite: Oh look, if you've got a local dealer, please use them. They have quicker shipping and they do understand the area that you're in, but we also do direct should you be in Kazakhstan where we have no dealers.
Kevin Graham: All right, well, thanks again for your time today, Kerry. It's been great having you on the show. I've really enjoyed it. I hope our listeners have as well.
Kerry Staite: Absolute pleasure, Kevin, and once again, thank you, and all the best to your listeners.