One Mic Stand: Honeycomb Credit and Digital Dream Labs Team Up

This is Jonathan Kersting with the Pittsburgh Technology Council and Techvibe Radio bringing you the tech live radio, one mic stand, I get to have the best conversations with the coolest companies in Pittsburgh. And today I'm just particularly tickled because I got to two companies here that I think you're just really defining some of the cool stuff happening in Pittsburgh. We have no stranger to tech by we have George Cook from Honeycomb Credit, George, it's so good to see you again. Great to see it, Jonathan. And George, as I said, before we hit the record button. I'm like, I think this might be the third or fourth time I've talked to you in the past four months, because honeycomb is always doing new stuff. And when I heard how you guys are working with digital dream labs here, I got pretty fired up and I was like, man, I can't wait to have you guys stop. We have Jacob Hanchar here from Digital Dream Labs. Jacob, welcome to the show. This is your first time on tech via radio. I'm so glad to have you here.

Thanks for having me.

Absolutely. So let's start some introductions. Jacob. First and foremost, digital dream Labs is one of these companies. I've seen I've seen you guys evolve over the years when there's just a few folks back in alpha lab putting this thing together to you guys right now just out there kicking butt. What is digital dream labs give our listeners and our viewers here just a little taste of what digital dream lab is all about.

Yeah, sure. Thank you for that kind introduction. The main purpose of digital dream Labs is to be the fun introduction to any topic, and we're expanding those topics. We started off as a museum display that then like you mentioned, when it's alpha lab, and then we shrunk down the product. And then in 2015, we launched a product called puzzle. It's, which is tangible learning to just Coding Math, and we've designed a lot of video games for that platform, right. Then in 2017, we formed a partnership with wonder workshop, and we had our board control their robot, and so we had the ability not to remove the screen entirely. And with the screen, the screen list interaction now early learners are pretty readers can learn how to code with robotics. So then, with the success of that, I started thinking, you know what, we should probably do our own robot. And just as I was thinking that onkey went out of business, and I bid on the assets thinking that there was no way and there was just no way it was going to get the assets I just try and what ended up happening? It's a very long story, okay, but I ended up being the last man standing quote, unquote, wow, it was like a bidding war going on there.

There also there was But what happened is that everyone who bid a lot higher than me they insulted so they just the people who were bidding a lot more than me, they said, No, it's not even near enough. It's to the point where they actually chased everybody away. Really? Wow. Okay. Yeah, that's that's kind of that in a nutshell. So got the assets would transfer the assets and one that happened. We rolled everything in and stuff Did revamping a lot of things, the robots there are three major assets inside of Anki. overdrive, Cosmo, and vector. So cosmic vector are two robots. I can get into more depth if you want to there. Sure. One thing really focusing on here with George on honeycomb is overdrive. overdrive. It's, again, it's another long history. But overdrive was one of the toughest things to bring back because the prices had eroded on Amazon because they miss the deadline for the universal launch. So they did a partnership with fast and furious. They missed the deadline and then at that point, universal wash their hands, and that was kind of the beginning of the end for onkey from my perspective, and they had this huge amount of inventory and then couldn't move this inventory so the pricing decreased. So it's still selling But there's very little inventory left out there, overdrive and a lot of the customers are coming to us even though we didn't manufacture it. A lot of the customers are saying, Hey, could you help us, you know what's going on here. So we have a little repair center in alley 26, and a hardware shop that we're replacing batteries for people, we're fixing their cars. And as we were doing that, we discovered the biggest thing that most people wanted was uninterrupted gameplay, even when the the cars are functioning properly. And even if the game is is at, let's say performing at 100%. Regardless, the car you'll get interrupted after 20 or 30 minutes, you just you just will. So what we've done is we've built a little clip that goes underneath the track that current customers can use and they put a clip on their car and now you can race indefinitely. So you put this so yes, we call it infinity. Right? Very good. Yes. So now you You can play because most people when they play games play from an hour to two hours.

That's that 20 minute barrier was kind of messing things up and taking the fun out of it, right? That's exactly it. It drives parents crazy. Because they figure Okay, I've set you up, okay, it's Christmas Day or Thanksgiving or whatever. It's a holiday and we're all together. And I thought I was going to have you entertain for about a half an hour, and or no for like, a couple hours. And here I am constantly having to jump in and reset everything because you're nagging me, Dan, it

is so well, because the thing is, is that the key thing about toys is that you want a high level of interaction. So when you take a look at like online games, you take a look at mobile games, on average, a lot of youngsters, they engage about two hours, that's that's kind of like, okay, that's the standard. And so you need to be able to hit that standard because that's about the attention span of a child or a teenager playing with an online I guess it should be the same thing in real life. Okay, so we've solved that problem in theory. I mean, we've let the truck run and run and run overnight. We've turned off the lights come back the next morning and it's the cars are still running so that he is constantly charging. So in theory, it goes on forever.

The key thing is where the wheels fall off, right?

Until the wheels fall off, it just was fall off. Yes. And actually we even do that at the repair center. We give you new wheels. repair center you have going I didn't realize is a repair center and alley 26. Yeah, so so in tower one, if you go to the basement, the tower one they call it the hardware center, and then we're in the back at the track setup, and we have all that stuff. So Oh, when we're back in the offices, because we're over and over and over and right next to you guys, I cannot wait to see this. I'm just saying yeah, just like myself. Just go past federal galley ran down. Just go downstairs and it's our one and you'll be there. So So, so what there are millions of customers out there who have this issue, right? So right there, we have an enormous base that we can immediately go to. And we have a waiting list just just to give you an idea of how popular the repair center is. We have a waitlist of 10,000 people, oh my goodness, 10,000 people 10,000 people are waiting and even willing to prepay in order to get their car service. That's how much they love. Yes, that's how much they love this product. So can you imagine and we have imagined, we studied this, whenever we have the clips come out and have the ability for uninterrupted gameplay, how many orders we're going to get as a result of that. So we are we're ready. We'll be shipping out December 3, that's our ship date. So we'll be we'll be in time for Christmas. And this is the serve. This is the first step this is the serve the existing customers that are out there. Then next year, we'll have these things built in the tracks so that then in moving forward now you can buy infinity drive as a whole set. You don't have to buy the clips, retrofitted.

Yeah. Just coming out. We're ready to roll.

Right, exactly. So that's that's, that's it and that and so when I talked to the guys over at honeycomb, I was thinking you know, it'd be really nice to make this a Pittsburgh deal to keep it cool. Pittsburgh loves Pittsburgh, involve local investors and then do something a little different this time. So we're kind of capped out with the reg CF, we did a republic raise. Okay, that really well we raised more than a million dollars. That that was that was very helpful for the company. So with the regulations, we wouldn't be able to get any much more from a reg CF standpoint. So with a reg D, it's, it allows as long as you're an accredited investor, you can invest in the company and I kind of liked it because it's more like acts like a bond, right? So right, earning 12% interest, that's it's basically guaranteed that money's rolling in you're not you're not it's not You're not taking a huge long shot, like a lot of people want the upside, but there are a lot of other people, and especially retirees who just want the steady income, say, Okay, look, I'm going to write this write this as a note, invest in the company revenue share, so percentage of our revenues paying you back. And then of course, the faster we're paying you back, which is kind of my goal, the higher the rate of return.

Exactly right, the faster the better. Right,

exactly. Right. So like worst case, you're earning 12%. Like if we took a full five years to pay it back, but really like to pay everyone back a lot sooner. So it's, it's a nice vehicle. The key thing, though, is that it number one, it's relatively new. So there's a lot of education and I know George can talk about that there's a lot of Asia, how it involves or what's involved. And then the other the other thing is you have to be accredited. So those two barriers kind of make it a little bit more tricky from a race standpoint. But now we're seeing good results. And I'm very confident that this campaign will be successful and And then we're launching the product, whether it happens or not. That's the other thing of Absolutely. You know, we're full speed ahead. And we're going to have this in time for Christmas.

This is exciting. I just love it when two Pittsburgh companies come together, unique product, unique financing solution. So George, tell us about how this works. otzi gives you a little a little spin up on honeycomb, because what you guys do is pretty unique. Maybe not everyone out there knows what honeycomb does. It goes a little overview of honeycomb and jump into this really cool way of helping you know, digital dream labs, you know, raise some money to get this stuff on the market.

Yeah, for sure. So honeycomb is an investment crowdfunding platform. So we like we like growing businesses access capital from their own customers and fans and community members. So this obviously has the benefit of unlocking fair capital for businesses that are in growth mode. But at the same time, it's this really exciting way to level up your customers to not only have them sitting on the sidelines and buying your product and supporting you But to literally have financial and emotional skin in the game, if you will, while all at the same time creating this whole new investment opportunity for everyday people who want to help out businesses that they love. So that's what we've been doing. And you know, historically, most of the businesses we've worked with have been Main Street, small businesses, you know, folks a little bit more brick and mortar. And when Jacob came to us, we said, This is such an exciting opportunity, because if you're a leader in the edtech community, we have a leader in the Pittsburgh technology community, we know this is something that's going to resonate with everyone that's an oncue follower, everyone is a digital dream labs follower. Everyone that's a honeycomb follower. And so this is just, you know, so many cool concentric circles that we can kind of put together here, right, and really prove that, you know, the honeycomb model can can expand into different use cases and to larger deals. And at the same time, as Jacob alluded to, this is the first time we're doing this revenue. Share note. And this this is really exciting because it's it's sort of a hybrid model. Historically, we've done three to five year term loans with a fixed interest rate. This is this is a really exciting way where Jacob and digital dream labs can raise money without necessarily getting more equity dilution. But at the same time giving investors a little bit of that equity upside, because the faster that digital dream labs grows, the more that the higher that rate of return is, as we as we just talked about, it's such a cool way to do things. I'm like, Man, this is, this is like a new way that people can pursue to raise money for their company now, like, I just think it's just such a cool thing.

Yeah, we're super excited about it.

And so how long did it take to set this thing up and get it out and rolling with it? Was it a complicated thing to get up and going? I mean, obviously, it's something new that Nico has done. I think it's just amazing because I think during this this pandemic, you guys have spun up so many new ways to help companies raise the capital that they need everything from the gift card angle thing. I mean, it's just been amazing to watch these new products come out, you guys.

Yeah, you know, it's really interesting kind of coming into COVID in many ways we kind of flex downstream a little bit, right? We realize that a lot of businesses were battening down the hatches, we're trying to get some capital to weather the storm. And then in the past eight weeks or so, we're really starting to see really exciting growth opportunities. Again, we're seeing businesses that that are back out in the market and and aggressively growing and and that's kind of right when Jacob came to us and had this really exciting proposition and you know, kind of fully in growth mode. And for us, we said okay, now now the pendulum is we're seeing the pendulum swing back. And I think Jacob probably from first conversation to the campaign being live was probably about a month we were able to move pretty quickly get everything set up and and kind of get everything buttoned up and put together pretty fast.

Very cool. So Jake, how did you link up with honeycomb? How'd you know those guys are out there? thought this would be a cool project to explore in honeycomb?

So Good question. I've seen them a number of times in a number of places. It just never seemed like there was a Fed. Then I, I actually don't remember whether I think I reached out to them. And then they got back to me. And I said, Hey, I'm interested in taking a look at other crowd raising things that you're working on. And then they suggested this reg D Avenue. I think that's that's kind of how it all came together. Okay. Um, yeah. And like George said, you know, this is this is not our first rodeo when it comes to crowdfunding. We've done a successful Kickstarter, and we've done a successful Republic raise now. And, you know, we have film crew on standby. And we all know what we're doing at this point. Yeah. Yeah. So we were able to put it together and wrap it up. I think

that is just so interesting. I absolutely love it. loving these, these things kind of come together. So at the end of the day like like, Can people still invest right now? Like, do a good old Andy Cohen credit and search for digital dream labs and then locking on this thing?

Yeah hundred percent the campaign is up and running right now honeycomb credit.com backslash DDL. Okay, um, and you'll find the campaign there.

Very cool. And it is there like a minimum barrier to entry to to be part of the action on this.

So as Jacob alluded to, this is the first regulation D campaign and kind of all the legal leaves aside, what that means is that this is the first campaign that's a little bit more exclusive. It's for accredited investors only. Okay. And therefore, the minimum investment is $1,000. So still still pretty accessible. Yeah, very excited to have folks calm and check out the campaign page.

Very cool. And so George, now that you guys have kind of spun this up for the first time, this is one more thing you can now offer to people in the community, especially now. I think we're seeing businesses, usually the pendulum is swinging back. And it's the smaller businesses that have been impacted the most it feels like to me, and now that they have these types of solutions in honeycomb, I think it's just really powerful stuff. Anything else new you guys are working on? I mean, I'm assuming you guys are always turning over every stone to find a way to help a small business.

Yeah, you know, I think this is giving us confidence to look at other types of financing options as a revenue share is something that is really interesting to us. And, and, you know, there's a little bit of education there, people aren't used to seeing a revenue share note. And so we're getting feedback from our investors, we're learning from it. And we're gonna keep innovating and coming up with cool ways to get capital to exciting growing small businesses. I love it, man. Just finding the intricate ways around stuff in order to make stuff happen and especially for a cool thing like digital dream Labs is doing and do that December 3, like stop shipping, man, that's pretty excited to pick up. I'm really I'm really pumped for you guys.

Yeah, thanks it's a it's a, it's going to change the way people think about like stock car racing, I'm confident in that at a certain point then you can extend this to other toys and the ideas of having to change the batteries to go all over again or whatever the toy breaks down. And everyone's going to have this in their this tech in their devices. And so you'll be able to have uninterrupted gameplay in real life now.

Right versus just just on the screen. Absolutely. And I tell you what, I can't be more impressed. You have a repair shop with a 10,000 car cue for battery packs and tires. So I think that's pretty awesome. Yeah,

we get we get a shipment actually a 50,000 tires today.

Oh my goodness. Wow. That's a lot of cardboard boxes coming your way.

It's one gigantic one with a huge bag. Oh my goodness.

Oh, little tired.

A little tired. Doesn't matter. Throw it up on your social channels. I want to check that out, man.

Yeah, you know, that's a really good idea. I'll do it. Yeah, it's one. So in restoring all the manufacturing from onkey we've done one mold at a time. Okay, and you know, so you know soon we're going to have the cubes next for the vendor in Cosmo. And step by step we are slowly making everything that they made. We did some redesigns and things like that and essentially started from scratch, which is one of the reasons why it's taken us a little bit longer than you'd think to come back onto the market. But these improvements people are just gonna love them but yeah, tires tires are first.

It's where the rubber meets the road man simple.

I had to say. I felt it coming.

Oh my goodness. What a joy talking to you guys today. So much fun knowing that digital dream labs and honeycomb credit coming together to make some really cool stuff happen. George and Jake You guys are the best. Thanks for hanging out with me on the one Mike Stan with Huntington bank. Just love it.

Thanks, Jonathan.

Transcribed by https://otter.ai