John Jantsch: Let’s say you have this idea for a product that nobody has ever heard of before. Nobody else has created. This innovation now has blue sky opportunity for you, but at the same time, now you’ve got the immense job of educating people about an entire new category of business, both treacherous and intriguing, at the same time.
You’re going to hear from Jonah Lupton, who did just that. He created a company called SoundGuard, which is producing soundproof paint, something nobody else offers, and we talk about his journey.
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Hello, and welcome to another episode of the Duct Tape Marketing podcast. This is John Jantsch, and my guest today is Jonah Lupton. He is an entrepreneur, advisor, and also a podcaster, who has started numerous companies and he admits that some were a success and some were failures. He’s currently the founder of a company called SoundGuard.
So, Jonah. Thanks for joining me.
Jonah Lupton: Thank you, John. Appreciate it.
John Jantsch: Give me a little bit about your background. I’m always intrigued. This is from your bio. Started numerous companies. So, tell us I guess the two or three minute version of your entrepreneurial journey.
Jonah Lupton: Absolutely. I actually spend nine years after college working for the Wall Street investment banks, the Morgan Stanleys, the Smith Barneys, managing money for wealthy individuals and non-profits and foundations. Halfway through that, I realized that I wanted to be an entrepreneur, but I couldn’t give up my salary. So, I started figuring out how to launch some projects on the side. My first venture was back in 2007, failed miserably, and I did a couple more while I was still employed, all failed miserably. Then I realized, the only way I’m going to be able to be a successful entrepreneur is if I do it full-time. I can’t do nights and weekends.
So, in 2011, I walked away from the investment business, started another company, and over the last … I guess it’s six years, I started a few different companies. Some were successful. Some were not. Some were in the, let’s see, nutritional supplement space. I did a couple payment startups or fundraising startups like Crowdfunding. Then a couple years ago, when I was just trying to find a solution to my own problem, which was noisy neighbors in an apartment building, and I could not find anything out there that really solved my needs at an affordable price point, that’s when I came up with the idea for soundproof paint, hired some chemists, and for the last two and a half years, we … Well, spent about a year and a half doing product development and testing. Then, we filed all the patents, and now we’ve been live in the market for a few months.
John Jantsch: This is a silly question because it sounds like one of those things that seems obvious enough that someone would’ve tackled it before. Why has nobody tackled soundproof paint?
Jonah Lupton: It’s a good question, and it’s usually the first question I get when I tell someone what I’ve been doing. They all say, “Why isn’t Sherwin-Williams doing this? Or, why isn’t Benjamin Moore? Or PPG? These 30, 40, 50 billion dollar companies, why haven’t they done it?”
I don’t have a good answer. I’d like to think that they’ve tried, and maybe they couldn’t figure it out. Maybe it was just too difficult. I know a lot of those companies … The Silicon Valley … The saying is, “If you want to beat the big boys early on, do things that don’t scale.” I heard that five or six years ago, and that always stuck with me. I think there’s some truth to that ’cause these big paint companies, they want to develop a product, they want to put it on their shelf in their own retail-branded stores, or they want to put it on the shelf at Home Depot and Lowe’s, and they want you to come in and buy it and put it on yourself, so it’s all D.I.Y. That’s not our product. Our product will never be D.I.Y, ’cause it has to be sprayed on by a high-pressure sprayer.
So, maybe that’s one reason, is that they just saw too many headwinds going into this market, but to be honest, I just don’t know. I mean, it was very difficult coming up with a formulation. My guess is we probably tried 20 or 25 different formulations with all types of different pigments and resins and fillers. I don’t come from an engineering background or a chemistry background, so I barely understand half of this stuff. I can’t even pronounce half the things that are in the product. Luckily, I partnered with some really good chemists early on. We figured out after these 20 or 25 formulations that there was a combination of three or four ingredients that, when put together, blocked out the most sound. We put all of those ingredients into this product, of course, meaning I don’t think any other company out there could come up with a product that was as effective as ours without using one of those ingredients and impeding on our patent.
John Jantsch: Well, yeah. When you go out and tell somebody in more of a sales conversation rather than a chemistry conversation, how does this work?
Jonah Lupton: We are blocking or deflecting sound. We are absorbing a little bit of sound. It’s hard to know exactly how much sound is being absorbed, but the majority is certainly being blocked or deflected. Where we see the best use cases for our product are on walls that are separating two spaces. So, you’re blocking the sound from passing through the wall. So, hotel rooms, apartments, condos, town houses, offices, dorms and student housing, those are all the markets that we’re starting off with. So, we’re starting off B2B. We’re selling through our sales reps, through distributors, going directly to the end customer. So, the ownership group of the hotel, the ownership group of the apartment complex. We’re going right to the facilities managers at the universities. I’m talking to two or three very, very large universities about doing all of their dorms in student housing when summer comes along.
John Jantsch: Right now, you are doing … do we call this installing? Or, the application of the … You’re actually doing it with your own people?
Jonah Lupton: No. Right now, and I don’t know if this will be the case in three or four years. It’s hard to know, but at least for now, we are only selling the products. We’re manufacturing and selling the product, and then we partner with contractors to actually install it. We have a training process. Any painting contractor in the country right now that handles commercial projects can fill out our application. We have to do a little bit of due diligence on them. I want to know who are the employees, they all have to go through background checks. I refuse to let some painter go into a hotel with key cards and cause a problem that we could have found if we had just done the appropriate background check. They have to have the right equipment. They have to have the right insurance coverage, and they just have to watch some videos, so they know how this is sprayed and, most importantly, how it’s measured. It’s very important that we get 90 wet mils of product onto the wall.
John Jantsch: I’m just going to ask you, what’s your measurement of success? So, when you go up to somebody and you say, “We’re going to make it soundproof.” Clearly, the wall’s so thick, it’s got so much on it today, it’s got a sound rating of some sort today, so what’s the measure of success for how you make it soundproof?
Jonah Lupton: We do a sound test up-front. That’s part of our … We have a two or three step process before we can even sell them any product. Obviously, we have a lot of leads that come into our website. Sales reps are out there generating leads. We’re going into a lot of different marketing channels to all generate leads. Once we get interest from the property, then we have to diagnose the problem. Is it something that we can help with? Is it a wall problem? Is it room-to-room? If there’s noise … If they’re on a busy intersection in downtown Boston and there’s street noise, that’s a window problem. That’s nothing that we can really help them with. Same thing if people are running up and down the hallways or slamming doors. We can help a little bit with that, but that’s more of a door problem.
So, as long as we diagnose that it’s a wall problem, we need them to send us some pictures. If we think that it’s an appropriate wall, meaning there’s no weird vents or something going from one room to the next, which you see once in a while, but assuming that it’s a project that we want to take on, I would say to one of my sales reps … I have 65 sales reps around the country in every major market. They’d go to the property, take some pictures, make a video, shakes some hands, et cetera, and then they’re going to run their own little amateurish sound test. Each sales rep has a portable speaker system with a built-in amp and Bluetooth and all that. Then they have a class 1 sound level meter, so they can essentially run their own sound test from room to room to determine, at least, how much sound we think is coming through the wall.
From that, I can sort of predict, if we put our product on the wall, how much sound we can essentially take out. In most cases … Well, I should say in all cases, it’s somewhere between 80 and 100%. It averages out around 90% just depending on the loudness of the noise, of course, and then the frequency range. Mid-frequency, we’re the best. We obviously do a great job on the high-end and the low-end, but the higher the frequency, the better we do. The lower stuff is a little bit harder to work with, but we still do.
So, I’d say we’re blocking out 60 to 70% on the low end, and 80, 90, 100% on the high-end.
John Jantsch: Many of the listeners of my show are small business owners and marketers. I know that one of the things that I’m guessing some of them might be thinking is, are their extra challenges in essentially creating a category? I mean, you would think, okay, this is blue sky opportunity out there, but there’s also challenges because nobody’s ever bought soundproof paint before.
Jonah Lupton: Exactly. That is one of the challenges, and that’s why we’re spending a lot of money on PR and brand-awareness and educating the market, and a lot of cold email outreach. I know a lot of people want to call it spam, but at the end of the day, I mean, we really did create a product that solves a problem for the hotels and the apartment buildings. I do believe that some of them want to hear from us, and we can’t get to all of them through conventional Facebook ads and PR and SEO and all that stuff. So, sometimes, we do have to buy some lists of general managers and blast out a cold email, and we actually get some really good response rates. We get great open rates. We get good click-through rates because I think people in these markets are genuinely intrigued by what we can offer them.
Now, and then the challenge is, of course, no one’s ever heard of soundproof paint. No one’s ever used it. There’s very few searches every month for soundproof paint. So, I can’t just create a bunch of content and have a nice website and put it out there and expect people to find us because it’ll take too long. We really have to be aggressive and proactive and go find them, bring them to the website, educate them, engage with them. It is a learning process, especially as we start going into the architect and the interior designers. I mean, we can’t drop them an email and expect to see us spec’d into a project two weeks later. We really have to nurture those relationships for a while, build up their confidence before they feel they can use us on a job, and it’s not going to come back and bite them.
John Jantsch: How much skepticism do you encounter? In other words, somebody saying, “Oh, yeah. Great. No way that works.”
Jonah Lupton: I think there was definitely a lot of skepticism in the last couple years as i was developing the product before I knew or anyone knew if I could actually pull this off. Once we did a project in Connecticut this past summer, and we hired independent acoustical engineers to come on site and do all the testing before and after the treatment, as well as having employees from the hotel in there before and after, it was like … The quote that I actually … I don’t think I put it on the website, but one of the housekeepers actually said to me, “When you start selling this and you start making your millions and you buy your mansion on the beach, can I come be your housekeeper?”
I was blown away. I really was speechless because that was our first real, real-world test. I had no idea how good it was going to do, how good is perform, and the way the acoustical engineer performs the test is similar to what my sales reps do. They bring in their portable amps and speakers. They hook it up. They play white noise at 95 to 100 decibels in one room. Then they go into the next room and they take readings, and this is before we put any product on the wall. So, 95 to 100 decibels in one room was translating to about 75 decibels in the next room. 75 decibels is still very obnoxious. So, if someone was in that room trying to sleep, they would have been very, very annoyed.
Then, we put our product on the wall, three coats, 30 wet mils each, let it dry. We do all that in less than a day. Then the next day, the acoustical engineer came back, and did the same test. We had dropped the decibels from 75 down to 55. At 55 decibels, you almost can’t hear anything unless you get really, really, really close to the wall.
That’s where you do have the perceptions of a soundproofed room.
John Jantsch: What did some of your previous businesses, and you may have not thought about this, but you may have an opinion. What have some of your previous business successes and failures been able to inform you on this venture?
Jonah Lupton: I actually posted about this a couple days ago. I guess it was last week on LinkedIn. I talked about my first failure, which was a company called Social Track back in 2007, when I … I mean, this is the early days of the internet, I guess, for guys like me that are non-technical, and in 2007, I was trying to find a couple co-founders. I knew I had this idea of … I wanted to create a dashboard that aggregated all of your social media feeds into one place. So, you’re Facebook feed, your LinkedIn, your Twitter, your YouTube, all in one pretty, nice-to-read dashboard. You could see all your activity, your connections, and messages, et cetera.
I was bootstrapping it because I was working full-time in the investment business, so I was making 100 grand, 120 grand a year and paying for rent and everything else. At the end of the month, whatever I had left over, I tried to put into Social Track. I found two co-founders literally off of Craigslist. We split up the equity one-third each. I had no idea what a vesting schedule was, so we didn’t do one of those, and quickly realized that neither one of these guys was going to be a good co-founder. They were both working full-time jobs. They were both married. They both had kids. One was getting read to move from Boston to New York, so he wouldn’t be very involved. He still owned a third of the company, and I had no way to really get it back.
I learned a lot of hard, hard lessons, where if you have a great idea and you realize it’s going to take a lot of capital to take that idea to the market and grow it, you have to go out and fundraise. I mean, as much as it sucks giving up equity and the company, that was not the kind of company that I should’ve been trying to bootstrap from the beginning.
Basically, a year after I shut the company down, Hootsuite launched, with essentially the same setup, the same idea, and they’re now a billion and a half dollar company. Not that I necessarily could have grown a Hootsuite. I mean, they’ve executed incredibly well. They have great investors, great employees and everything, but it was just a lesson that, I mean, if you don’t have the right co-founders and you’re not well capitalized, it is very, very, very difficult to scale a company in the technology space.
John Jantsch: I suspect that SoundGuard has been a bit capital intensive.
Jonah Lupton: It was. Yeah. Certainly developing the formula, all the testing. I did not appreciate how expensive all the testing would be, from lab testing to field testing, hiring acoustical engineers, doing fire testing, testing on the ingredients to make sure that we could pass all the EPA standards. We’re considered an environmentally friendly and low VOC product. We’re about 105 grams of hazardous material per liter, and the EPA says you have to be below 250. So, we are well, well below the EPA standards for eco-friendliness, which is good. I mean, that was obviously one of my goals from the beginning. It’s a water-based product.
So, coming up with a environmentally-friendly, water-based product that could block sound that didn’t infringe on any other patents out there, that could be sprayed onto a wall, could dry within two hours, that didn’t sag, that didn’t bubble … I mean, it was not easy, and it was expensive. I mean, in the last year and a half, I’ve probably spent 50 or 60,000 dollars just on legal work. Filing all the patents, having a manufacturing agreement set up and sales rep agreement and warrantees and all that stuff. Probably 50, 60,000 in legal work, 50, 60,000 on testing, 50, 60,000 on product development, maybe more than that, probably more than a 100. It has been expensive. I bootstrapped it with just my personal capital and business loans, more business loans than personal capital. My last couple starters basically wiped out my personal capital.
I went to a couple friends that are not even high net worth, but they just believed in what I was doing and they were willing to take a chance on this before we even had the product. I just did the classic Kevin O’Leary from Shark Tank, like, “Hey, give me $50,000. If this thing actually works and we start producing revenue, I’ll pay you back double your money.” Because a banker’s not going to give me any money. That was my only option. Then once we had the product, we did the test in Connecticut, we knew this stuff actually worked, I went back to them and I said, “Give me another $50,000, but now I’ll pay you 75% return on your money.” Then the last chunk of $50,000 was, “I’ll pay you 50% return on your money.”
Because as we took risk out of the company, obviously I was not willing to pay him the same terms that I was up front.
John Jantsch: What do you ultimately see your team looking like?
Jonah Lupton: I’m in the process of hiring right now. I would say of all the things that we are trying to tackle, hiring is the one that scares me the most. From running my own podcast for a couple years and doing 200 interviews, almost across the board, when I asked the founder, “What’s been the most critical aspect to your success in growth?” And it’s always the people. First, it’s people. Second is focus. So, those are the two things that I’m really, really honing in on is one, don’t get distracted by other meaningless ventures and projects that are going to come my way and two, I have to get the right people in place. I’ve never had to hire at scale before, and that’s what really scares me.
So, I don’t know if I should be trying to do it all myself or if I should try to bring in a part-time recruiter. There’s a couple companies out there that are trying to invest in us or form strategic partnerships. If I did something like that, one of the reasons would be so I could plug in to their HR staff and have their HR team help me hire the right people. We have 65 sales reps across the country, commission only guys, great people, but it’s very hard to get production from them unless you’re right in their face all the time. You’ve got to stay top of mind. I can’t manage 65 sales reps and then we’re probably bringing on another 50 distributors. That’s too many people and relationships for me to manage by myself. I need to hire at least a couple sales manager. I need to hire an operations manager, at least one or two, to help me go around the country and act as a project manager once things are up and running.
Right now, I’m outsourcing everything else. So, bookkeeping’s outsourced, obviously the legal work. I’m currently working with a digital marketing agency. Although, I’m getting ready to hire someone a little bit bigger and better. I’m quarter-backing a lot of things. I’m trying not … I can’t micromanage every little aspect of the company, so I really need to get the right people in place and then act as a manager of managers.
John Jantsch: Do you have, and again, maybe premature to be asking this question, but do you have an end-game in mind, or do you just want to see where this can go?
Jonah Lupton: Yeah. I mean, a little bit of both. I mean, I’ve certainly thought about it. I mean, I’ve put together spreadsheets of projects and everything else that may or may not come to fruition. Right now, with B2B market, like I said, so the hotels, the apartments, et cetera. In five months, we go B2C, so the homeowners, the small business owners, et cetera. I think this year, we can do at least 15 million in revenue, two-thirds of that coming B2B, one-third of that B2C. I think 15 is actually a little bit conservative, and we bring on the right distributors. Right now, I have a couple $250 million companies from Canada, Europe, and Australia asking to be the exclusive distributors in those areas. There’s so many good things that can happen over the next few months that could take that $15 million number up to 20 or 30 million.
I’ll say right now, I mean, I’ve already declined offers for $10 million for the company. It took me all of three seconds to say, “No thanks,” but each of those companies that wants to buy us would also be a great partner for us. Whether they make a strategic investment or whether we put together some sort of a joint venture partnership … I mean, all that stuff’s on the table. I’ll be in Boston all week meeting with a couple companies to discuss those things. VC firms are starting to call me, but right now, I’m just not ready to go down that VC channel. I don’t think it’s every going to make sense for us. I’d rather focus on strategic partnerships and strategic investments from big, big paint companies.
One thing to mention. We are not the finish coat on the wall. We’re a base coat or primer. So, that customer still needs to buy the blue paint, the purple paint, whatever’s going on the wall. Sherwin-Williams and Benjamin Moore and Valspar are really not our competitors because they don’t have a product in this space, and the customer still needs to go buy the product from them. I mean, it’s very easy to see the path of acquisition some day from one of them. If we’re able to prove that there’s a valid market for product like this and we can grow our revenues to 20, 30, 40, 50 million dollars over the next couple years, then there’s no reason to think that they wouldn’t want to buy us for four or five times that and plug it into their ecosystem and put it in their stores and turn it into a billion dollar product.
John Jantsch: So, Jonah, where can people find out more about SoundGuard and your journey with SoundGuard, if they want to check in?
Jonah Lupton: If anybody wants to email me, I’m always happy to talk to anybody or go back and forth. My email is Jonah, J-O-N-A-H, @SoundGuard.IO. The website is SoundGuard.IO. Obviously, we’re on Facebook and LinkedIn and Twitter and Instagram, too, under different handles, but certainly, come to the website, sign up for the newsletter. Right now, over the next six weeks, if you sign up for the newsletter, you’ll be entering into a drawing for $3,000 of free soundproof paint. It doesn’t cost you anything. Just have to sign up for the newsletter and put up with our content.
John Jantsch: Thanks, Jonah, for joining us today, and I’m going to continue to follow your journey. I always find it really intriguing when people have an idea and an innovation and they bring it to the world. Hopefully, we’ll see that thing take off for you.
Jonah Lupton: Awesome. Thanks, John. I appreciate your time today. Thanks for having me.