The Entrepreneurs: Colin Roche, 33, and Bobby Ronsse, 33, co-founders of Pacific Writing Instruments in Pacifica, California
Product Description: The PenAgain is a writing tool shaped like a wishbone. The user's forefinger goes through the wishbone and rests on top of the pen, which lets the weight of the finger hold the pen to the paper. Users don't need to squeeze the pen, which is a great feature for older users. But function isn't the pen's only selling point. Its sleek, futuristic look appeals to teenagers and young adults as well as high-tech-gadget lovers.
Startup: About $15,000 to produce the first 5,000 units in 2002. The investment paid for patent costs, temporary tooling and the initial production cost. Some of the temporary tooling and initial production costs were borne by the manufacturer, who then received a commission on every PenAgain sold.
Sales: expected to exceed $3 million in 2004
The Challenge: introducing a radically different product to a market of prospects who don't realize that existing products in the category aren't already meeting their needs
Colin Roche and Bobby Ronsse developed an innovative ergonomic pen-but before the product could succeed, they had to persuade a market of traditional-pen users why they needed a better writing instrument. By taking these steps, such as focusing on an eye-catching design and getting the word out, they've been able to build a million-dollar business:
Steps to Success
1. Get people's attention. Roche knew from the start that "if the product didn't look cool, nobody would buy," he says. "We didn't want to limit the product's appeal to older users, and even then, people with arthritis don't want to call attention to their problems. Style was all-important [for] the product to succeed in a big way." They decided early on that the product had to have a high "AGM (attention-getting mechanism) factor" to generate the curiosity that would spark word-of-mouth advertising.
2. Latch on to a trend in the market. While the PenAgain is radically different from other pens, it was introduced at a time when pens were changing in the market. According to Roche, "Pens are wider in the grip area, and now many pens have a soft area just above the tip for users' comfort. The PenAgain is the first truly ergonomically designed pen on the market. Many buyers know there is a shift toward comfort and design in writing instruments." The partners had a big break right before their first School, Home & Office Products Association (SHOPA) trade show convention in 2003 in Atlanta. Says Roche, "SHOPA put out a report on the U.S. writing products industry that stated the industry was changing, and the report listed the PenAgain as an example of an innovative ergonomic product carving a niche in the industry."
3. Proceed carefully. The partners knew they might need to make changes to get the right look. Roche explains why they didn't immediately move to overseas production: "We knew we would eventually need to produce the product in Asia to get our costs down. But we felt we would need to make initial product changes, so we went to a small U.S. manufacturer and ordered 5,000 pens. Our costs were high, and we didn't make much money, but we were able to do our market test and flush out any major design issues in real time."
Roche took the same care with their sales strategy: "We started selling just to 12 stores in the [San Francisco] Bay Area where we could offer support. We limited our sales to about 50 stores when we still had U.S. production-because the cost of production was high and the product from the temporary tool wasn't as polished as a product from a permanent mold. We wanted to sell only our best product to the broad market."
4. Never stop networking. When you have a new product, you need to find sales groups willing to promote a dramatically different product. Roche explains how they set up their current distribution chain, which has 40 distributors and about 200 manufacturers' reps working through 30 manufacturers' sales groups. "Basically, we just kept networking like crazy," he says. "I'd talk to the first stores I sold to, looking for reps that were willing to go out and sell a new idea. I didn't want a rep group that just carried our product. We wanted reps [who] were passionate about our product. We also talked to people at shows to get their ideas on how to sell our product and to find out who I could use as a distribution outlet." Roche sums up the spirit of persistence needed for networking: "You have to keep working hard enough to create your own luck and to generate opportunities for success."
1. Experiment with the packaging. Products that sell for less than $10 (such as the PenAgain) often fail or succeed based on a momentary glance from a potential customer. You can up your chances by packaging a product in a display rack or box so prospects get a better, and slightly longer, look. You should experiment with packaging and product design until you can create that immediate impact. Inventors tend to put too much emphasis on function. Sure, the product needs to provide a benefit, but no one will notice it unless the product and packaging are eye-catching.
2. Be careful with your initial distribution. Inventors expect that distributors or rep groups will be off and running promoting their products, but that's often not the case. Distributors and reps who include your product in their lines may not necessarily push it. You'll need an aggressive sales group that will promote, not just carry, your product. Interview potential sellers carefully. Ask them about their introduction plans and what shows they plan to attend. Be willing to go on sales calls with the reps to get them off to a successful start. You may find you need to try several reps before you find one who can sell your product. If a rep group isn't working out, let them go, and get someone else.
3. Don't be afraid to lose money when testing. Inventors have a dilemma when starting to sell products: If you go local with small volume production, you'll sell your product at little or no profit and might even lose money. If you invest in a large production run, you'll have a big investment but won't be able to fine-tune the product to maximize sales. Almost every product needs adjustment, even products from large companies. The safest course is to go with a small production run, even if you lose money initially. That way, you'll know you have the right product when you launch it across a big market.
4. Be flexible. Roche and Ronsse originally wanted to go after mass merchants and big office-supply chains but ended up promoting to smaller stores. Every inventor has at least four or five introduction options, and in many cases, they have at least a dozen options. The right direction depends on what key contacts you can pick up and where you get early sales success. Inventors can't always know where early success will come from since they can't know who will respond positively to their products. Create a plan for your introduction, but don't be afraid to switch gears in order to keep up with whatever market momentum you're able to create.