Industry Disruption with Shea Gerhardt

eorge grombacher 0:00
Hey what’s up this is George G and A time is right welcome today’s guest strong and powerful che Gerhardt. Che Are you ready to do this?

Unknown Speaker 0:22
I’m ready as I can be, I guess.

george grombacher 0:26
Well, let’s go. She is the founder and CEO of butterflies technology. They are a company making an earbud that is so comfortable. You can binge content all day long. She’s a patented investor entrepreneur, she I’m excited to have you on tell us a little about your personal lives more about your work, why you do what you do.

Unknown Speaker 0:48
Well, thanks for having me on. I appreciate it. So we’re in Colorado, we have I have three boys, three little boys. And I actually grew up in Colorado I didn’t I grew up in Boulder, Colorado, I’ve lived in I’ve lived in, you know both coasts, and worked on both coasts. And we would we decided to start butterflies, we decided to come back here or hide it. But it’s an awesome place the weather’s, here’s the best I think weather around and so we love it and we love being it taking advantage of everything Colorado has to offer skiing, hiking, fishing, being outdoors, not a hunter that

george grombacher 1:35
and tell us a little bit more about butterflies and and why it is that you devoted so much time and attention and resources to, to to the endeavor.

Unknown Speaker 1:45
So we So prior to this, I was in the music and mobile and gaming space, mostly on the new innovative entrepreneurial side but also worked for huge companies. But when when new content in the in the space like podcasts and audiobooks started coming out, the use case for for earbuds started changing dramatically. People started using them. I mean, the the earbud, as it is, was designed, the form factor was designed 1415 years ago with the iPod meant for 20 minutes of music listening, when we started noticing a huge shift in user habits, but the technology hadn’t changed besides the fact that they’d gone wireless. You know, this looks like an interesting business opportunity. Anecdotally, and on a personal note, I was good. Like I said, you know, I had three little kids. We live in the Front Range. It’s called the Front Range to like Denver area when my husband was like a powder day in the mountains, and my husband was like, Hey, why don’t you go skiing by yourself tomorrow, which is just awesome, especially when you have three little guys eat a whole day. And I love them. And so that night, I was nervous that I was going to miss that traffic window and not get up early enough. So I ended up falling asleep with the wired Apple air pods. And that which is the same design as today, but woke up with crazy aching pain in my ears and I so that morning, all earbuds in the market are made with what’s called a plastic clamshell design. It’s a hard inflexible design. Some of them come with that little rubber foam ear tip on the end, but it does nothing to help with fit or comfort. So that morning, I split open that seam on that plastic clamshell design, put them in my kids swimmers wax and wore them underneath my ski helmet all day and it was super comfortable. The sound environment environment was so much cleaner because of the near perfect seal in my ear. So when we started doing a deep dive into this space, we understood that the human ear is constantly moving when you talk and chew and exercise and that constant movement against that hard plastic material of today’s earbuds causes that your fatigue, soreness, pain, friction. It also has because it’s plastic, the plastic, the vibrations of sound that come through that plastic design, create what’s called Sound fatigue in your cartilage. So that causes it to ache as well. And then the last reason is because your ear is constantly moving, it will push out that hard material. So that’s why they fall out all the time, which is a really good business model for the other airbag companies because on average, people are replacing their earbuds every six months, which seems crazy because they’re super expensive, but they fall out. You send them to the washing machine your dog eats them they live on when they are playing, that kind of stuff. So we created an earbud that continually flexes with your ear as it moves. And it’s super comfortable. And the longer you wear it, the more comfortable it becomes. It took us almost four years to invent, develop patent this, but we did it and we created an earbud that people are loving. So that’s phase since that’s our first, you know, entry point into the market is to solve and this comfort issue is the number one complaint in the industry. And so that is we’re going after that in a big way.

george grombacher 5:36
Nice. Have you always been somebody who’s comfortable taking something apart?

Unknown Speaker 5:42
Well, a lot of times I make my husband do it, which he was like, you know, I have to get involved in this again,

george grombacher 5:48
yes. Like,

Unknown Speaker 5:51
I have invented a few things. But this one has the best market opportunity. And it’s something I’m I’m completely interested in and passionate about. In that I think it’s a conduit to all, you know, learning from other people’s voices like yourself like that is that you know, that moment when you get like 20 minutes to yourself, and you get to listen to content that feeds your curiosity. And like makes you think differently or inspires you to do something gives you clarity, or whatever it is. Those moments throughout the day are such a personal experience with your earbuds. I wanted that to be comfortable as it should be. So that’s really where the passion behind it comes from. And so we are going wholeheartedly after those knowledge seekers, because those are the people who are wearing earbuds for the longest period of time.

george grombacher 6:45
That makes a ton of sense. Yeah. I wrote down. Obviously, it’s interesting that the original sort of headphones or earbuds were just were only designed for 20 minutes. Um, so I’m surprised about that. Was that just original market research? And like, are they just sort of assumed people aren’t going to want to wear these all day?

Unknown Speaker 7:08
Yeah, well, it was, I mean, the iPad was such ground breaking technology, but all they could get was 20 minutes music off on an iPad at for iPod at first. And so and so all that. And prior to doesn’t 15, earbuds came free with your devices, right. So whatever device you were using, it came free with that. So it was also meant for not to be like super sophisticated didn’t need to be at the time. But it the market is growing like crazy. And where they’re predicting it to the adoption to be much like that of like the cell phone growth, seeing cell phone growth. And it’s become a pretty important part of people’s lives today. Where people leave home without their don’t leave home without their wallet, their cell phone and now their earbuds.

george grombacher 8:05
Yeah, I can I can tell you anecdotally that yesterday, I brought, I bring mine with me everywhere. And I had a moment of legitimate panic when I thought that I had left them in one location, which is very far away from my home. And I was equally upset and then angry at myself. Thankfully, I found them. But I can speak to that. Yes. And I’m sure everybody who’s listening also does consider it to be, you know, essential stuff to bring with you. So I get it. The market has has to what you’ve been talking about growing like crazy. And so I’m sure that that is bringing in lots of new companies who are interested in that. Your premise is that yours are way more comfortable. And the more you wear them because it becomes more and more comfortable.

Unknown Speaker 8:55
Yes, because they work with your body temperature. So they never have a heart state. So there’s some era because this is a big, this is sort of the golden ticket in the space. Like I was talking to the ex head of Philips headphone and earbuds yesterday. And he said he was like, listen, Phillips we spent millions and millions and millions of dollars and over a decade trying to solve this fit issue because everyone knows it’s the biggest issue in the space. And we could never do it and he’s like I am so blown away that this tiny little company out of Colorado is solve this issue that we that we had the smartest people in the world trying to solve for. And I think that any category is up for grabs. I think that that is most disruption has come from someone from the outside of that industry, identifying a major need so you think about like Airbnb or Uber I mean, that is just like just, you know, crazy concepts to add, you get into someone else’s car and call them on an app or you don’t even talk to them, right. But they saw that need or all that available space for Airbnb, I mean, essentially has re designed that hospitality industry. And those things came, those people came from outside the industries and saw a incredibly important need and consumer in a way to solve consumers issues. And so that’s essentially what we’re after in this space as well.

george grombacher 10:38
Yeah, that makes sense. So the biggest players in this space currently, I imagine it’s it’s air pods, I imagine beats are which is, which is what I currently use probably large player, who am I leaving out? And how do you think about your position there? How will you get more? Where, where where do you fit?

Unknown Speaker 11:01
That is a great question. And I think it’s one of the most important questions when you’re talking about building a business, right? So in our industry right now, today, is it $32 billion industry, Apple is the biggest, has the biggest share, which includes beats, Apple AirPods beats, and that they only own 34% of the market, which is huge, because then the next biggest I think is like 11% biggest brand in the market, and that is Samsung. So no two brands own more than 50 own more than 30% or even own 50% of the market. Right? So when you’re going into a marketplace, you want to make sure, well, first, is there a path to growth, because it’s noisy, there’s no doubt about it. But is there a room for innovation and so essentially, there’s like 66% of the space is up for innovation. However, if we had 1% of that market, we’d be a billion dollar company. And the market is projected to grow from what it is today to $152 billion in the next few years. And that’s just earbuds, not cans or headphones. And that’s because the industry experts are projecting that the earbud industry will become the most dominant platform for communication and computing device. So over the glasses over the watch, mostly because of adoption, but also because of the power of the proximity to your voice of voice assistants has had, you know, order this book, this console. And so take this note, you know, that can send you emails, you know, you can do everything through your voice assistants. And so that is pretty exciting space, that can’t be realized unless we have a comfortable earbud that can be worn, worn for long periods of time. The other thing we’re doing is building in and we built most of it but a it’s essentially a AI platform on the earbud that’s a productivity tool. So that it’s a nominal productivity tool. So your bike your you know, bike riding listening to a podcast and you hear a cool quote or an interesting fact, we’ll record the last 20 seconds, the next 20 seconds translated to text and add the metadata. So who the podcaster is author with the platform is Spotify audible and then we will in then you can voice tag it. So this is my paper on Ganga ISKCON or whatever I love history and and then we’ll save it to your butterflies account. So you can either use that to share it with your Evernote account or whatever productivity tool you use, or you can use it it within the butterflies environment. And this is where, again that for heavier read users who you know, when we did the research, they love music but they’re not necessarily using their earbuds for music, they’re using their in home speakers in their in their car stereos for music. The heavy usage for earbuds is audiobooks, podcasts, streaming video, phone calls, and that we’ve are creating essentially a new category within the space around this knowledge seeker spoken word vertical. And that’s really resonating with with people. And so it’s been pretty easy for us to sort of cut through that clutter and grow.

george grombacher 14:37
Super exciting. Excellent Pong that you referred to the industry as noisy. So kudos to you on that one.

Unknown Speaker 14:45
I didn’t even mean to thank you. Yeah, certainly. The clicker about that stuff.

george grombacher 14:49
Yeah, definitely. Lots of lots of lots of room for for that kind of thing. Super cool on the eighth in the on the AI productivity tool. And I’m sure that you all are working on all kinds of cool innovations like that on top of it. And that will make sense. If you don’t mind, you can just tell me know what, how, how are you working? Aside from having conversations on podcasts? How else are you thinking that that that, what are you thinking the best way for you to market and start getting some of that market share is.

Unknown Speaker 15:23
So again, we’re going after this vertical that no one else is going after. So everyone in the and that’s really important when you’re entering a market that’s noisy and has a lot of like chatter in it. Again, keep using puns for my throughputs. But that you need to have some a rub, right? So you need to stand for something and be against something and that you can’t be everything to everyone. Even though 87% of this market is affected by comfort and fit, we’re only going after a slice of it, in order to break into the industry. And that is heavily focused on this knowledge, seeker and spoken word vertical. So things like going on podcast and saying, hey, you know, that achy feeling you have right now we’ve solved that for you. You don’t have to put up with that anymore. And, and so addressing it in that way. And then also, just like we were talking about earlier, that moment, you have that it’s like that little those few minutes you get on your commute, or whatever it is to listen to content. And even if it’s a podcast that makes you laugh out loud, or when you’re cooking, you know, and you get to listen to like, true crime or whatever it is that those moments are so nice to have, where you just give us sort of indulge in your curiosity. And so we built our whole brand around it. And that’s why we named it actually butterflies because well the site’s upon, because it’s bu D like your bed. Beauty tea. So one day notice. But we did it because of the butterfly effect. So much like the Apple, much like the flap of a butterfly’s wings can affect the weather patterns on the other side of the world. So to can knowledge and a growth mindset and all everything you can get from the voices of other people like you, right, like, there’s, it’s so important to, to continue to grow your mind and, and here for how other people present things and do things and advice that they have. And one of the reasons I love your podcasts because you are, you’ve just perfectly captured that. And so that is what our whole brand essence is about. And so like for instance, we on a weekly basis, we send out our favorite recommendations on audiobooks and podcasts only because we were doing it already in our weekly meetings, that has now just on its own, that service that we provide has grown is way bigger than our ear buds side of things. And people love that recommendation. So it’s, you know, it’s just three recommendations a week, we’d say, you know, we put a little tap a lot of time into why we liked him and why we think, you know, we’re into it. And so people get a different understanding rather than just like a summary, like, here’s what it’s about from the production company. Um, and that is doing really well that to the point where we have 90% of our users are now giving us recommendations back. So it’s sort of like created this like marketplace or ecosystem where people are engaging in it so much and, and as a result, we have people writing us, like, I came in because I needed a comfortable earbud and you guys saw that for me. But now I’m with you guys for life because of your brand, which is just the coolest experience in the world when you you know, like I said it took us four years to to invent and develop this product. And then when you get it onto the market and people love it, oh my goodness, there’s nothing better. Yes, that’s like your kids hugs. Right? But professionally, there’s nothing better.

george grombacher 19:07
I love it makes a ton of sense. And you know, kudos to y’all for for branching out and doing that and working to create community and just laying the groundwork and and allowing space for it to happen. And it sounds like it’s growing organically. And what better way than that. So awesome.

Unknown Speaker 19:27
Thank you. I appreciate it. That’s

george grombacher 19:30
yeah, thank you so much for coming on. Where can people learn more about you? How can they learn more about butterflies? Where can they get a set a pair

Unknown Speaker 19:40
there, you can get a pair from butterflies.com So no T’s one D bu D rflys.com. If you want if you’re thinking about starting your own business and you just want to chat with someone feel free to hit me up on LinkedIn at shake Earhart. But as your career

george grombacher 20:00
Epson are awesome. Perfect. Well, if you enjoyed this as much as I did Sure, show your appreciation and share today’s show with a friend that also appreciates good ideas just like Shay and the folks at butterflies do. Go to butterflies.com It’s B udrflys.com. And check out this innovative and revolutionary new product and then you can find che on LinkedIn. I’ll link all of those in the notes of the show. Thanks. Good check.

Unknown Speaker 20:27
Yeah, thank you so much for having me. I appreciate it.

george grombacher 20:30
And until next time, remember, do your part by doing your best