The bootstrap entrepreneur taking on Google & Apple
He spent his life savings to launch a tech company rivaling Apple. Although 200 investors told him to give up, here’s why he didn’t.
And I go back to them, I say, “That’s just not right.”
– Brad Johnston spent his life savings
to make this compact computer.
– Education today, if you’re wealthy,
you can get the best education ever.
There are over 300,000 educational apps out there.
If you have a high-end computer and high-speed internet
and everything else, right?
But if you don’t have that stuff,
you are being pushed further down the chain
than ever before.
– So Brad founded Tanoshi,
a computer company that aims to help close
the digital divide.
– We wanna give underserved communities
exposure to coding.
– But will they reach profitability
when investors don’t buy into their mission?
– I really believe it can.
I think we’re gonna be a hundred times-return company,
but we’re gonna be double bottom line,
which is profit and purpose.
We’re not giving up on the mission.
– You just started your dream business.
How much profit will you need
to pay your basic living expenses like rent and ramen?
This is a show about the economics of entrepreneurship
and founders making their dreams a reality.
This is “Ramen Profitable.”
– Brad Johnston risked a lot
in order to start his company, Tanoshi.
They make affordable tablet computers for kids.
But in order to understand why he did it,
we need to go backwards in his story.
In 2014, Brad had an eye-opening conversation
with his mom and sister; both were teachers
at low-income grade schools.
– This is one of the first years
the nation started implementing standardized tests
on computers instead of by hand.
And what my sister and my mom both discovered was,
there was a lot of really smart kids in their class
who were struggling on these tests.
The majority of those students were low-income.
There was no computer in their home.
– At that time,
Brad was an analyst for consumer electronics,
and he was starting to notice a really strong trend
within the grade school demographic.
– The use of technology was growing
year over year over year.
And so often, that led to developing technology
that was built for the more affluent
because they could afford those products.
So a lot of great learning technology,
at first when it comes to market, it’s pretty expensive,
and, unfortunately, poor kids get left behind.
So, in the back of my mind, I said, “Okay, this is an
opportunity for a business,
and it’s also an opportunity to close learning gaps.”
At that point, I think I had about $150,000 to my name,
and I spent it all launching this company.
I mean, I bootstrapped the company
the first three years
all out of my own pocket,
multiple trips to Taiwan, did a lot of prototypes.
– It took three years,
but he finally landed on a quality product
he could sell for under $200.
– It’s basically a 10-inch tablet with a detachable keyboard—
does everything a Chromebook can do,
but really the benefit to it is
we only preload educational content.
All the third-party educational content
we preload with partners,
there is nothing in there capturing any information
about the child.
Then we have age-appropriate parental controls.
– But getting a factory
to produce his first round of computers to take to market
was almost near impossible.
– The minimum order for most of these factories
turned out to be about 3,000 units.
Average cost per unit let’s say, you know, $120.
And I said, “Well, okay, that’s gonna be a challenge.”
But finally going after factory to factory to factory,
I met one partner, sold my story,
and he said, “You know what Brad,
how much can you commit to?”
And I said, you know, “Maybe up to 500 units to launch
based on what we have available.”
And he said, “I’ll make that happen.”
When we finally launched on the market, we sold out fast.
– Selling out just launching a product,
it’s such a great feeling,
’cause we knew that we had a demand for our product.
– But they had a problem.
They didn’t have enough money to place another order
of computers until after they had sold out
of that first round.
– We kept having months and months of no income
as a company waiting for the next supply to come in,
and then once we sold that, then we could reinvest it.
– And they did that, over and over again.
– Today, we’re gonna teach a coding class
at Franklin Elementary in east Oakland.
The reason we’re here is we’ve actually taught
coding classes both in Oakland
as well as in Silicon Valley, right around the corner.
But huge disparity in access and opportunity
to things like digital learning.
– Hello everyone!
We are very, very excited to be here with you today.
Who knows what coding is?
– We’re very close from being profitable.
We just need a little bit more on the investment side.
We’ve tapped out our friends and family,
we can’t go back there.
– We’re gonna code this.
So let’s get going.
– Because we’re a startup business,
we don’t really have that business history
that banks could look at,
and so all they look at is, ‘Okay, what about
how much personal collateral can you put up on a loan?’
I’d already spent my life savings
bootstrapping this company, so when you go down to zero
there’s not much left in the bank.
And that’s really what’s throttled us since day one.
To date, we’ve raised $250,000 total.
We’ve made $4,000,000 in revenue.
We know how to make money; from a little, make a lot!
And unfortunately, we’re yet to find
that investment community and that banking community
that will support what we’re doing.
It’s just, the sky’s the limit
once you get the right people behind you.
Start over at the beginning.
– Today, they’ve sold over 17,000 computers
and they keep selling out.
And numerous private equity firms have offered
to acquire their company-
– For a very small amount of money.
Our goal is: yes, eventually, we’d like to sell the company,
but, number one, we wanna make sure when we sell it
it goes to someone who carries on the mission.
There’s gaps taking place in our public education system
that are not going to fix themselves.
– Oh look, you did it!
– Whenever we hear back from parents about their child
is motivated to learn, having fun learning.
– Yeah, you outsmarted me!
It’s cool to hear that.
And we’re like, “Okay, we’re on the right path.”
And so we’re gonna continue to do tech for good,
do tech the right way.