What they do: Toymail is building a toy for kids to send and receive voice messages with friends and family. Their toys will deliver messages in your voice or a funny one. And kids can reply right back! Toymail entertains, educates, and keeps children connected to those they love, without putting them behind another screen. Why it’s a big deal: Family messaging is just the start. Toymail is building a platform that empowers developers to create apps for all kinds of connected toys. Think teaching new languages, reading stories, or playing songs. In the best-case scenario, Toymail will be the first device that all kids in America own, becoming the dominant platform that connects them all to the world safely. Amazon invested in Toymail because they need to reach an entire generation - 40M kids who don't own phones.
15,000 units sold with zero marketing during soft launch.
Amazon's first investment in a toy company.
Founder's previous co. sold over 1 million units (Clocky).
97.5% of kids under ten do not own a phone.
Price $80. Margins ~75%.
Founder is an MIT and Apple alum.
Targeted distribution partners: Apple, Amazon, AT&T.
Why investors us
$1,229,900 since our founding
Because this founding duo have proven they can build a viral company. They bootstrapped their first product, Clocky, to over one million units sold. Now they’ve turned their focus to a completely neglected market - parents who need a better way to stay connected with their kids and keep them entertained. Toymail has already sold 15,000 beta units with zero funding and zero marketing. Amazon has signed on as an investor to help them launch this winter and help Toymail transition from a communication device to the content marketplace for kids.
Amazon is a believer. That’s why they made their first ever toy company investment in Toymail. Young kids need a way to connect - it’s inevitable - and Amazon knows this. The brand that owns this experience will be the portal through which every child accesses their favorite content. When Toymail integrates with Amazon’s Alexa voice software, kids will able to listen to stories, lessons and songs all directly from their Toymail.
A critical mass of customers (kids) is key to winning this under-served market. Toymail has chosen the right wedge to get their devices in the hands of every child. Messaging is perfect because every family member has a reason to love and gift Toymail - mom at work, grandma across the country, or friends down the street can all safely keep in touch with their young loved ones via Toymail’s free app.
Competitors like cell phone providers have failed because clunky phones adapted for children are boring. Toymail’s strategy is unique: combine connectivity with the loveable nature of toys so kids actually engage. The numbers say it works. With Toymail children send 4 messages for each one received and 70% of beta toys are still regularly active.
Toymail has tested the hardware with 15,000 sales. They’ve perfected the product and are lining up partners like Amazon, Apple, Kids Bop, and AT&T who can’t wait to provide content and help distribute the Toymail. Toymail needs their first funding to expand the team and launch successfully this winter.
Co-Founder Gauri Nanda, Apple and MIT Alum, created Clocky, the alarm clock that runs away, which has sold over 1 Million units worldwide. University of Michigan alum and mother of three, Audry Hill worked with Gauri on Ticky, Tocky, and Clocky, and is the creative force behind Toymail. They founded Toymail in December of 2013. Their newest creation, Pop Clocky, launched to Bed Bath and Beyond during the 2013 holiday season and sold over 36k units. Projected sales expected over 1 Million by 2016.
Why we're doing this:
Whether you are a parent, grandparent, aunt or uncle, you probably spend way more time apart from the kids you love than you'd like. Getting a phone conversations going with a child is nearly impossible. Skype requires adult facilitation and movies/games are a click away. We use a medium for messaging that makes sense for kids: their toys. With only 2.5% of kids under 10 years of age owning smartphones and an $84B worldwide spend on toys, this is a large untapped market.
Most impressive accomplishments:
Gauri Nanda brought Clocky, the alarm clock that runs away to market, with sales of over 1M units, for which she was featured on the cover of Inc. magazine. Gauri bootstrapped Clocky, which was cash flow positive after only two months of sales.
Audry Hill is our resident mom with a background in all things creative and worked together with Gauri on the various lines of Nanda Home Clocky alarm clocks. She has also co-founded Toymail while raising three children.
What’s the problem you’re solving? Why should children have messaging in their toys?
Messaging exists for all of us while children have been left behind because there’s no device for them to use. Children should be able to connect remotely with parents at work, or grandparents across the country, or even a friend down the street. Our mission is to create something as big as email for kids, a way for them to communicate with everyone in their lives remotely.
Messaging is just the start. We are building the first WiFi enabled toys giving kids access to the all the learning and communication benefits of the internet for the first time. Soon, toys will be able to read to kids, guide them through lessons, provide answers to questions, and track their whereabouts with GPS.
Why is messaging the right first step to bring internet to kids?
Kids currently have no means to communicate with loved ones remotely. This is a completely untapped market. Parents want to be able to connect with their children at home while at work or traveling. Before Toymail there was no way to do this.
We’re already offering a number of cool features beyond messaging, like funny voices for kids to use. Additionally, we are closing a number of large content partnerships right now which will enable us to send all sorts of stories, songs, and lessons directly to kids.
How does it work? How do kids choose the recipient of their message?
Essentially all our toys are wifi enabled phones, each with a microphone and speaker. We’ll soon have four buttons on the toys: “forward”, “send”, “play”, and “content”. Parents approve every one of their child’s contacts from the app and the names are stored on the toy for the child to access. Children just scroll through the names to find the contact whom they wish to message.
Can you describe the larger vision of the company?
On one hand, we’re a toy company building the first connected toys and the technology for other toy companies to connect their toys. On the other, we’re a platform for kids and the content they love.
First we have to build our brand and sell toys - get Toymail into the hands of thousands of kids. But the real revenue opportunity is becoming the platform to serve kids content. Our vision is to become the portal through which kids access the outside world. Just like the iPhone became the vehicle for adults to access content, Toymail will be the best way for kids to access the content they love and in turn the best way for brands to reach kids.
Why build your own brand as opposed to just licensing the technology?
Because we can own this entire new market, this is huge opportunity and we’re going to take it. There are companies that make toys and others that build connected devices but none that do both. We’ll be the first brand building the inevitable: connected toys. And because we’re building the entire experience, from toy to app, we’ll be able to provide the best experience for kids and parents alike.
Can you talk about the economics of the business?
Our cost of production has fallen to $21 per toy, by next year those costs will fall even further. Right now we sell them for $80 for something close to a 75% margin.
Our first content subscriptions are going for $0.99 - $4.99 per month.
Can you describe the competitive landscape?
Cell providers sell a few phone-like products meant to connect children with parents. They’re priced like cell phones: $130+ up front plus a monthly subscription of $30 for the data. But more importantly they’re not fun and emotional for kids. Kids just don’t use them.
We don’t charge a monthly fee, our toys are much cheaper than cellphones, and kids love the product. It’s a loveable character they can hold and hug, plus all their loved ones are stored right there in the toy whenever they want to reach out. Toymail becomes a very emotional part of kids daily lives in ways cell phone providers just haven’t figured out because they don’t understand the toy aspect that is so critical.
The one similar competitor is Cloud Pets - a Bluetooth version of Toymail. We think Bluetooth is the wrong approach because you need a phone or laptop nearby to connect the device. Not only that, the product just doesn’t work very well, there are plenty of reviews of malfunction.
Why toys as opposed to a more ‘ever-present’ device like a kids connected watch?
First of all, connected devices of any sort are expensive. Even the most basic data plans cost $30 per month which is prohibitive for many parents.
The real reason we think toys will win is that kids actually love their toys. No child has ever hugged a watch or found real value in a small communication device. We’ve disguised the tech in loveable characters kids can attach themselves to. They’re not going to ask a watch to read them a story, they’re not going to sing to a watch, they’re not going to hug a watch after listening to grandma’s message. Kids befriend Toymail, they’re happy to learn from Toymail, listen to their Toymail, and communicate via Toymail to their family and friends. Toymail is a companion not just a watch.
How have sales gone so far? And engagement?
While we’re still in beta, we’ve already shipped 15,000 units since our soft launch 1 year ago. The engagement rates on our first toys is incredible, 70% are still connected and regularly active. For every toy we sell we get four app downloads. Kids are also sending 4 messages out for everyone they receive – which is huge, they’re incredibly engaged.
We’ve tempered our sales channels until we received enough feedback on our beta version. Next year we’ll go to mass market with a perfected Toymail and a major launch.
How will you increase usage and in turn Toymail’s importance for communication and learning?
We’re going to add a bunch of really exciting features to encourage usage. For example, when a child picks up their toy, it’ll turn on. It’ll also alert the parent or whoever is connected to the child that the child is engaging with the toy. We’re also adding content like short stories, audible emojis, and other sorts of fun messages that parents can send their kids with a click of a button.
A reward system is also in development. We’ll reward kids with prizes like songs, audio snippets, or words of affirmation from their toy. Kids are incentivized to communicate more and parents love it because they hear from their kids more often.
How do you plan to scale distribution and marketing when you launch?
Toy distribution is still old school – TV commercials and brick and mortar stores. We’re unique because our target audience isn’t just the children which means we can advertise and distribute Toymail in many more ways than our competitors.
Toymail is as valuable to the parents and other family as it is to the kids. Which means we can advertise directly to the purchaser using a variety of low-cost channels like Facebook and Google that traditional toy-sellers just can’t use because 7 year-olds aren’t online.
The fact that we use technology and have an app gives us a distinct advantage over other toy companies and the cell phone providers selling phones for kids. None of these competitors can send potential buyers directly to an app download to learn more about the product and order.
We’re Amazon’s first and only investment in a toy company. They’ll be a huge distribution platform for us. Apple retail stores are another immediate distribution channel, and a perfect fit for our target market. Inbound partnership interest has also picked up as more of our toys are out in the world. Cable providers want to include Toymail as part of their monthly service package because it means one more connected device.
Toymail is ideal for both parents and kids, which means we can market to both parties. It’s also the first internet access for the youngest generation and many different companies want to partner for access to this new young customer.
Why did Amazon invest?
We are Amazon’s first and only investment in a toy company. They chose us as one of ten companies for their Alexa fund. They want to integrate their Alexa voice recognition services right into our toys. Kids will be able to request content like stories, audio books, and songs from their Toymail--and Amazon wants to provide all this content. It’s a win-win for us: a huge distribution channel, an invaluable advising staff, and all the content we could ever hope for.
What other partnerships do you have planned?
We are speaking with Rosetta Stone and Kidz Bop. Kidz Bop is a large distributor of children’s music. They are always looking for new channels to get their content out, and this would be the first time that they do this with a physical toy. Pretty much every kid under the age of ten loves Kidz Bop.
How big is the market?
The total addressable market is $19 billion. Toymail is not just a toy, it’s the first mobile communication device that kids actually want to use. So our market is calculated by measuring demand for toys, consumer electronics, and mobile carriers.
In beta how much did it cost to acquire each customer?
We didn’t spend any money on marketing for our first 15,000 units – it was all viral. We ran a small Kickstarter campaign (2,000 units in two weeks), drummed up some press and then relied on word-of-mouth to get us enough sales to learn how we need to improve Toymail for our real launch this winter.
Tell us about the team and what makes you uniquely qualified for this?
My cofounder Audrey and I started Clocky prior to Toymail. Clocky is an alarm clock that runs away so you have to get out of bed to turn off the alarm. We sold over a million units worldwide.
We have a lead engineer on the team who has several years of experience in backend and mobile space development. We have an iOS apps engineer that will be starting soon. We have more help in customer support and marketing. A big part of this raise is about staffing up. Hiring a couple more engineers, hiring for marketing and sales.
What are the biggest challenges you’ll need to tackle to successfully raise your next round?
We’ve figured out the form factor to get in front of as many young kids as possible with a device kids and parents both love to use. This is the first time anyone is connecting this age demographic and once we’re distributed to as many of these kids as possible there are a variety of other ways to monetize the business. E.g. pushing content, licensing the toys, different types of toys using our technology, etc.
So our biggest challenge is hitting this critical mass of kids so we become the platform for anyone to reach this demographic. The right marketing tactics and retail strategy are crucial. We plan to use our experience with Clocky, surround ourselves with an excellent team and better advisors and get the word out as much as possible. The market obviously wants this, we’ve proven that with such high beta demand and zero marketing spend. Now we just need to tell everyone what we’re building.
Why are you raising money now?
I bootstrapped my first company and we’ve bootstrapped Toymail up till now. But this is a much more complicated business than one alarm clock – we’re building a brand and now that we’ve built a first iteration of the product it’s time to raise some money and really grow. We want to hire a stellar team and have a budget to market with when we launch this winter.
This market is a race. We may be the first to realize young kids need a connection to the internet but we won’t be the last. We have a big head start and now we need to pour some fuel on the fire and really widen our lead.
Toymail is conducting a Regulation D offering via Wefunder Advisors LLC. CRD Number: #167803.
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