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Taking Advantage of a Neglected Niche

Find out how smart partnering transformed this lone inventor into a market force to be reckoned with.

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The Entrepreneur: Michael Karyo, 35, founder of SiliconeZone USA in New York City

Product Description: Karyo's company produces a line of silicone bakeware cooking tools with superior heat transfer and nonstick properties. The odor-resistant products, priced from $15 to $25 apiece, let users bake more efficiently, thanks to such features as even cooling and heat distribution. Silicone products had been used in commercial kitchens previously, but Karyo was the first to create a consumer line.

Startup: $70,000 to $80,000 from Karyo, before the product was formally introduced in 2002; tooling costs of $70,000 to $80,000, from his engineering partner/manufacturer

Sales: $6.2 million in 2003; $9 million to $12 million projected for 2004

The Challenge: Introducing a product into a crowded category like kitchenware, and obtaining a significant market position

Michael Karyo didn't invent the silicone technology behind his line of bakeware products-but he did bring to the masses what had previously only been available to commercial kitchens. And today, his KitchenZone Commercial Quality Silicone Bakeware and Kitchen Tools products are sold nationwide in stores like Bed Bath & Beyond, Crate and Barrel, Macy's and Marshall Field's. Despite a category saturated with large, well-established competitors, Karyo was able to hit the ground running and stay in a leading market position-a tough challenge for any inventor.

Steps to Success

1. Find a void in the market. "I was working as a consultant to develop a kitchenware [line] for a company that primarily sold silicone products to the medical industry," says Karyo of how he uncovered this market opportunity. "I found that, while several European companies were selling silicone products to the commercial market, no one had a true consumer product. I felt that consumers and home bakers could benefit from silicone technology. I verified [this] with buyers for kitchen stores." But by that time, the company he consulted for had changed its mind about entering the market, so Karyo went out on his own to develop a silicone line.

The typical drawback to filling a market void is that you have to create a market for your product. Fortunately, Karyo didn't have to deal with this obstacle-the existing popularity of silicone in commercial kitchen markets convinced buyers to give Karyo's products a try.

2. Determine how to stay in a leading market position. Karyo knew that being first to market wouldn't be enough for him to remain a market leader. "I felt from the beginning that the key to staying on top in the market was to have 'better than them' product quality, unique designs and moderate prices that would give us a competitive advantage over much bigger housewares companies," he says. So Karyo expanded his vision to include features that would differentiate his product from competitors: "The surface of SiliconeZone products is high gloss, not matte, and the product comes in vibrant colors that competitors can't duplicate."

3. If necessary, find a partner. Karyo is a sales and person-not a manufacturer. The high quality he was after called for manufacturing expertise and a willingness to help develop the product. Karyo knew he couldn't afford to pay someone for development, nor could he afford to buy from a factory as a customer and keep prices down. "I knew I needed a partner company experienced in silicone," says Karyo. "I talked to my father, Maurice, who had done in the Far East for 40 years. He [found] a company in Hong Kong that made silicone products for the electronics industry. We formed a 50/50 joint venture with the owners, Ken and Ricky Yeung, where [they paid] development and tooling costs, while I paid for sales and marketing. Then we split the profits." If you don't have a connection to find a source you need, go online or to your local library to check out the Thomas Register of American Manufacturers, which lists manufacturers you can talk to about potentially setting up a partnership.

4. Sell the market on why your product is the clear choice. With some products, customers can tell right away which product is best based on visual clues, such as fit and finish, expensive materials or packaging. But in Karyo's case, buyers didn't understand that his product was of higher quality. So Karyo gave them a straightforward pitch: "I showed buyers the factors that determined a quality product." He pushed three main differentiating factors: the high quality of his proprietary silicone formula, a denser and heavier product that provides better heat conductivity; the high-gloss finish, which calls for a slower production process and hand-polished tooling; and the vibrancy of the color, which results from using high-quality silicone material and pigments.

5. Strengthen your brand. Karyo ran an ad campaign to get the word out about his business. "We didn't have any sales, but I wanted buyers of independent stores and major retailers to know and remember that we were the first ones in the market," he says. "I took out ads in key trade magazines like HFN (Home Furnishing News), HomeWorld Business and Kitchenware News." He says people still remark to him at shows, "I remember you being the first in the market."

Lessons Learned

1. Establish clear goals. Typically, an inventor will start developing a product without a clear idea of what factors will keep it selling in the market. The result is that he or she ends up with a product without enough differentiation to succeed. You should develop a clear product specification, compare your product with competitive products, and state why yours will sell over the competition-before you start spending money.

2. Get feedback before you move ahead. The toughest sale in any new product introduction campaign is to buyers at sales outlets, such as distributors, retailers, catalog houses or other intermediaries between you and the final customer. They know which products have the potential to sell well in the market, and the best time to face them is at the beginning, before you spend too much money. The buyers can verify if there's a market need and if they'll carry the product, as well as offer suggestions regarding changes that would improve the product's sales potential.

3. Be willing to share. Inventors traditionally like to be lone wolves, going it alone in the market to reap the most profits and keep total control of their product. However, you're far better off teaming up with one or more partners to keep costs down, spread the risk, and, more important, take advantage of other people's expertise. A smaller share of significant profits is far better than no profits at all.

4. Keep innovating. Just because you're first to market doesn't mean you'll stay there forever. You must keep new products flowing into the market. One way to do this is to work with a partner company that has the expertise and funding to support an ever-expanding product line.

Don Debelak is author of Entrepreneur magazine's Start-Up Guide #1813, Bringing Your Product to Market, and host of inventor-help website

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