Web Bonus: Interview with A.J. Khubani

Telebrands has had a string of best selling products. In this continuation of New York Enterprise Report’s editor-in-chief Robert Levin’s interview with A.J. Khubani, Khubani discusses the genesis and development of Doggie Steps, one of the company’s current hit products, how the Internet is changing the company’s business, how Chapter 11 strengthened his management team and more. 

AK: One of our best sellers right now is a product called the Doggie Steps. I have a 14 year old Bichon Frise. When I come home from work, I sit on the sofa and watch TV, and the dog likes to sit up and jump in my lap. The dog’s getting old now. I thought, “I should come up with something so the dog can get up on the sofa without me picking it up.”

I found an old set of encyclopedias at home no one was using and I built a little set of steps for the dog. I thought there must be something like this on the market. So I did a little research on the Internet. Sure enough, there are dog steps on the market, but they sell for $100, and they’re wooden, bulky and hard to ship. So I looked around at our customers, Wal-Mart, Target, Walgreens, CVS. I even went to Petco and to Pet Smart. There were no dog steps. They had ramps, which were $150 to $200, and are good for your car, but they’re really not good for the sofa. So I realized there was a void in the marketplace for this thing.

Then I did more research on trends in the pet market. It turns out the hot trend right now is that people are buying small dogs. Products to spoil your dogs have also increased dramatically, like premium dog foods, dog vitamins and clothing for dogs. People want to spend money on their dogs. The growth in the pet industry has been dramatic. Every major retailer has given pet items more and more space. With all that research, I said, OK, let’s see if there’s a market for pet steps.        

RL: What is that process of testing like?

AK: I had the idea, and then I did the research to validate the idea. If I had gone to a Wal-Mart and seen half a dozen sets of dog steps there that cost between $20 and $50, I would have walked away from the idea. I’m not going to jump into a crowded marketplace. We thought there was a void for a device like this at a reasonable price, and we figured something under $30 was a reasonable price.

The next step was to test the idea. We built a prototype, shot a TV commercial, and put it on the air to see how many people called in. The response was great.

So we went to the next step and put the thing on a fast track for development. I worked with a friend who is a professor in the Department of Mechanical and Aerospace Engineering at Princeton University. There were certain things that we wanted to achieve. We wanted to achieve a cost to the retailer for under $30. We wanted to make the product a knockdown [designed to be easily assembled or disassembled] for the shipping and to minimize the amount of space it would take up on the store shelves. We wanted to have some sort of carpet or cover on the steps. We wanted it to be stable and to be able to hold a lot of weight — at least 100 pounds. So we worked on it, combined my marketing ideas and his mechanical ideas, and came up with the product. We put it out there on the market and it’s been a tremendous success. We’ll sell a minimum of 2 million pieces this year.

RL: Did you run the commercial on particular stations that you like to use for tests?

AK: We have our favorite national cable stations that we are able to read and extrapolate the response. That is scalable to other stations and eventually to retail.

RL: It sounds like there’s a bit of a formula you follow for testing. You know what stations you want to use and how much airtime you want to buy, and you essentially use the direct response to that as a test for the retail market.

AK: Yes. And the retail market is tested before the international market. Our products are available in 90 countries around the world. So it starts with that one little test. We spend $10,000 in media and we can tell.

RL: That’s it? Just $10,000 in media? That’s incredible.

AK: I’ve been doing this for 23 years. If you test $10,000 in media, that can turn into $100 million in sales, based on the response rate. It works almost every time.

RL: Is it an art or a science to figure out the price of a product? 

AK: It’s a lot of science and it’s a lot of groundwork. Before we even invested in the first production of the TV commercial, it cost $25,000 to produce this type of test. With the $10,000 of media, that’s $35,000 spent. Usually it ends up being a little bit more because there’s some legal work that has to be done, and minimal design work and other things. And, of course, executive time. So, we probably spend $100,000 by the time we go out and test a product. But before we even get to that point, we do a lot of research.