Burn the Business Plan

by Carl J Schramm

  I met Michelle Brooke-Marciniak and Susan Walvius in 2010, when a mutual friend asked if I would talk with them about their business concept. Both were well known in the world of women’s basketball, Brooke-Marciniak having played on the University of Tennessee team that won the Final Four in 1996, when she was named MVP, and Walvius as one of the best-known coaches in the country.

  One afternoon, when coaching together at the University of South Carolina, Brooke-Marciniak casually remarked that today’s high-tech fabrics had made uniforms—and playing—much more comfortable than the poly-based mesh that they’d worn when they’d been on the court. Walvius agreed, observing that it was too bad that people couldn’t sleep on the same kind of performance fabrics. Instead of Walvius’ observation being just a part of casual courtside banter, Brooke-Marciniak and Walvius followed up. Should someone try to make sheets out of similar material? Should they be the ones to try? They soon found themselves in the university’s chemistry department, where a professor agreed to help.

  The two didn’t know it at the time, but they were kicking off a process of materials engineering that produced a new fabric and a new product. They raised money from friends and family and contracted with a mill in China to make samples of their new fabric. This was no easy task for novices to the notoriously complex fabric production business. A local seamstress made prototypes of several dozen sheets that they asked friends to try. The response was more than enthusiastic; everyone wanted to buy them. With these findings, their entrepreneurial decision point was at hand.

  Both Brooke-Marciniak and Walvius loved their coaching jobs. Basketball had been their recreation and their professions. They knew nothing about business, were in midcareer, and had secure employment. The idea of starting a business that would require them to manage manufacturing, supply chains, and sales through retail channels was daunting. They were certain, however, that people would want what they had to offer. When, early on in their journey, I asked them to describe the future of Sheex, their answer reflected the determination of championship competitors and passionate entrepreneurs: “In ten years, we want to see a Sheex ad during the Super Bowl.”

  Both knew that their new game was to make a market for their innovative sheets, and both understood that sales and sales alone would determine if Sheex had a future. They caught a huge break when a friend of a friend arranged an introduction to Bed Bath & Beyond. The chain, one of the nation’s largest home-goods outlets, agreed to place their sheets in a few test-market stores. Would their sheets be worth BB&B’s shelf space, every retailer’s most valuable asset? The response was overwhelming and, in only a few months, Sheex was in every BB&B store. Today, Sheex bedding and sleepwear also is sold in specialized athletic retailers, like Dick’s Sporting Goods, and several large retailers like Target and Walmart. Seven years after Sheex launched, sales were up one-hundred percent over the previous year.

  When I asked how their lives as players and coaches had prepared them for the competition of business, Walvius offered an interesting insight. “Running Sheex is nothing like a basketball game. In business, the court is always changing dimensions; one corner is higher now and lower a minute later. There is a hole in the middle of the floor, there are three hoops one minute and five the next. Each player on the other team is wearing a different uniform, the ball is constantly changing size, there is no clock, and the refs are blind.” Basketball, she continued, was easy by comparison; “You practiced, played, and either won or lost.” As an entrepreneur, she said, the game just keeps going with no ending buzzer. “There’s no just getting through forty minutes.” Success requires nonstop, persistent innovations, and discipline, measured in years.

  Please Let Me Know if There’s Anything I Can Do to Help

  Who hasn’t said these words to an ill or injured family member or friend, or to an exhausted caregiver? The words feel hollow when we speak or write them, and we are left with the option of sending flowers or some silly token to try to express our concern, or turning into a nag who repeatedly calls to ask the same question. When you live within reasonable driving distance from your loved one in need, providing support by delivering lasagna or taking a carpool shift can be easy, but what if you don’t? Susan Bratton thought about this conundrum in a new way.

  Bratton grew up in rural Colorado, studied political science at Duke, and earned her MBA at the University of Virginia. For twenty years, Bratton worked in New York City as an investment banker specializing in health care; she was involved in financing major corporate acquisitions and mergers involving drug companies, hospital systems, HMOs, and nursing homes. Bratton also assisted many fledgling biotech firms in obtaining initial financing and saw many of them through their public offering. She was fascinated by the continuously changing intersection of medicine and business and was regarded as one of the best bankers in the field.

  In 2012, Bratton’s close friend was diagnosed with brain cancer. Throughout her friend’s long illness, Bratton was surprised at how little attention the medical team paid to his nutrition: What could make him feel better, what would not conflict or interfere with the efficacy of medications, what would simply comfort him? She researched the issue and discovered that very little attention had been devoted to individualized nutritional support for people fighting certain diseases. Meals to Heal was born. As Bratton told me, “I decided that something had to be done, and if I didn’t take up the challenge, no one else would.”

  Bratton invested most of her personal savings and, using just a few slides to demonstrate her idea, was able to persuade several investors to help fund her startup. Her initial marketing strategy was to convince local New York City hospital nutrition counselors to suggest Meals to Heal to international patients who were temporarily residing in the city while receiving outpatient cancer treatments. Bratton found a commercial kitchen in Los Angeles that would prepare customized meals consistent with the dietary protocols recommended for each patient. The meals were individually prepared, frozen, and shipped to the hotels or apartments where the patients were staying. A few minutes in the microwave yielded a hot and nutritious meal.

  Although Bratton received an enthusiastic reception from a cadre of wealthy international patients, scaling a customer base proved very difficult. Acquiring each customer required multiple conversations with physicians or nutritionists to persuade them to recommend the company’s product. Even so, word of mouth spread the company’s mission in the hospital-nutrition community, and Bratton began to hear from nutritionists across the country asking how their patients could access the service. Still, the volume of business wasn’t enough to sustain the company, and Bratton concluded that her sales approach and supply chain would have to change.

  Bratton did what many entrepreneurs find very hard to do: She threw her business model overboard and started again. Because she had seen other companies take similarly radical steps as a banker, she knew that sometimes it was necessary to reshape a business from the ground up in order to survive. As a part of her reboot, Bratton jettisoned the name Meals to Heal, and gave her company a new brand, Savor Health.

  Harkening back to the roots of her entrepreneurial inspiration—wanting to help her friend, but not knowing what to do—Bratton wondered if supportive family and friends were the new customers that her company needed to most effectively deliver her service. She experimented with using the Internet to sell gift cards for specially formulated meals that could be purchased and sent as expressions of caring and love. The market responded almost immediately. Now, Bratton can sell a gift card to a customer in Houston who wants to do something meaningful for a sick friend in Seattle. Thanks to the new phenomenon of last-mile delivery, something that didn’t exist when Bratton founded her company, Savor Health can get meals to homes all over the country, often within a matter of hours.

  As a banker, Bratton had a ringside seat as failing companies tried to remake their businesses. She was like a general who had studied historic battles; she knew that every startup f
aces an unpredictable market and that, if her objective was to be achieved, a new strategy was needed. Bratton also knew that, had she solicited investors based on a detailed written plan, she might have found those funders reluctant to endorse such a profound shift in her target market, sales strategy, and production methods. Now on a new path, Bratton is pioneering a new business by the marriage of the old and the new: The desire to be of true assistance to those in need is as old as human civilization. Savor Health is seeking to help by offering products that emphasize the new and important role of nutrition in patient recovery and comfort and, using new superfast delivery capacities, new food preparation, and freezing techniques, with the new capacity to reach customers far and wide via Internet marketing and sales.

  * * *

  What inspires or motivates anyone to become an entrepreneur? The stories here suggest two ingredients go into the decision to start a company. Someone sees herself filling a need for others with a new product or service. Making something new to which the market responds, being the first to do so, entering into an unknown world by starting a company that could fail or make her wealthy, all suggest challenges that excite every entrepreneur. All these entrepreneurs were at moments in their careers at which they could consider new life plans and take on the challenges of starting companies. All implicitly weighed their circumstances, and the possibilities that awaited them if they let the entrepreneurial moment pass. Some had secure employment, mortgages, family obligations, or pending job offers. While such considerations hold others back, entrepreneurs choose the path of adventure. They set out to make the new, and in the process to make a different life for themselves. Some, as we will see shortly, can’t help themselves.

  CHAPTER 5

  Can You Survive the Entrepreneur’s Curse?

  When successful entrepreneurs reminisce, many wryly reflect that the good old days were anything but, and that their successes were anything but likely. Most startups, even those that are built on great ideas and successful execution, take a long time to bloom. The “entrepreneur’s curse” is being possessed with a consuming focus—sometimes described as an obsession—on their innovation, while at the same time living with uncertainty, doubt, and even fear during an indeterminate period, waiting to see if their vision is something that the market will value.

  James Dyson grew up in rural England. His father taught Latin and Greek in a private boys school, and his family expected Dyson to follow in that tradition, to go to university and take a degree in classics. How did Dyson end up designing a revolutionary vacuum cleaner and founding a company that has an unparalleled reputation for engineering and design innovation?

  It started with a revolt against his family’s plan for his career. At nineteen, Dyson enrolled in art school in London. Through a chance meeting, he was hired by an engineer, Jeremy Fry, who was devising a new utility boat that he came to call the Sea Truck. Dyson became fascinated with the intersection of design and engineering and helped as Fry started his new company, successfully selling his Sea Trucks as workboats and military landing craft.

  Perhaps it was because Dyson had participated in a union of design and engineering that he noticed how one of our most common and necessary home appliances worked so badly. One day, while “hoovering,” he noticed that his machine continuously lost more and more suction power as its bag filled. He borrowed a few friends’ vacuum cleaners and found that the problem was endemic. Seeking the source of the design flaw, he examined the paper bags used to collect dirt and realized that the pores that allowed air to pass through while capturing debris were clogging up quickly with fine particles.

  How could it be, he wondered, that the vacuum cleaner, a household appliance that had become a necessity in the developed world and had a phenomenal market penetration, could perform so badly? Why hadn’t someone made a better machine? After a little study, Dyson came upon the obvious: Every machine periodically required replacement bags. The vacuum industry’s business model was akin to Gillette’s: Make the razor to sell the blades. Dyson decided that he could make a better machine, whose improved suction would clean better and would eliminate the continually recurring expense of bag replacement.

  Dyson’s interest in making a new kind of vacuum cleaner grew serious. For the next decade, he devoted himself to his vacuum cleaner project, exhausting his savings and relying on his wife’s income as an art teacher to support their family of five. Much like Thomas Edison and his light bulb, Dyson built over five thousand prototypes of vacuum cleaners, observing how each could be improved. Slowly, his experiments began to point to a design that required sucking air into the vacuum at over nine hundred miles per hour, then separating the airstream into two opposing directions. The idea was prompted by seeing how sawmills gathered up sawdust as they cut lumber. The gap of calm air in between the facing airstreams let the dirt carried by each fall into a bagless chamber. Dyson was so proud of his “dual cyclonic” innovation that he decided to make the machine mostly of clear plastic, so that users could have the satisfaction of seeing dirt accumulate in the chamber as they cleaned their floors.

  In 1983, when Dyson was satisfied with his design, he approached several manufacturers with the certain belief that they would license his idea. What he hadn’t realized was the depth of the industry’s commitment to its existing business model; the manufacturers had no interest in disrupting their replacement paper-bag business, much less in retooling to a completely new manufacturing process. Every U.S. and British manufacturer rejected his proposals.

  Eventually, a Japanese company decided to produce his machine, and the bagless cleaner met with great success. Next, a Canadian company licensed his design; its dual cyclonic models created skyrocketing demand. Sales were so strong that Dyson found himself having to vigorously defend his patents against some of the same American and British companies that previously had shown him the door.

  * * *

  In 1993, using profits from his global licensing agreements, Dyson founded his own manufacturing and development company. Its objective was to supply his improved vacuum design to both the British and American markets. He was forty-six years old, and vacuum cleaners had been his life for nearly twenty years.

  Along the path to vacuum cleaner perfection, however, Dyson had developed increasing confidence in his abilities to meld the insights of design and engineering, and he was eager to apply those ideas to other problems. He had built his company, and its facilities, as creative hybrids, a combination of design studio and factory, and he was determined to continue on that path.

  In his new environment, Dyson could spend time on innovative designs and test their feasibility as production models at the same time. He began to work on other consumer needs. Soon, in addition to manufacturing new generations of vacuums, each more efficient than the last, Dyson was making other products that many of us encounter every day, including cyclonic hand dryers, and his noise-free, bladeless fan, the Air Multiplier. His improved and beautiful designs for other products, including washing machines and water heaters, continue to emerge.

  Reimagining Skis

  Dyson is an innovator-entrepreneur, one of a relatively small group who have both invented new products and then started and managed successful manufacturing companies. While many innovator-entrepreneurs combine existing state-of-the-art technologies and apply them to new, unforeseen uses to meet human needs, Dyson went full-bore at a fundamental reinvention of aging, inadequate technology.

  Howard Head was a like spirit. In 1947, when Head was working as an aircraft engineer in Baltimore, he spent a week’s vacation taking skiing lessons in Mt. Mansfield in Vermont, home to one of the nation’s first ski schools. Head was not a born athlete. He was six feet four, very thin, and awkward. On skis, a friend once observed, “Howard looked like a skinny gorilla whose knees wouldn’t bend.”

  Head was very frustrated after his first few lessons. His heavy skis, which were made from solid wood—much as they had been for five thousand years—refused
to go where he directed. He badly wanted to be able to ski like his instructors, effortlessly slaloming down the slopes and experiencing an exhilaration that Head could practically taste. On his train back home, Head had a brainstorm. Maybe he could ski better if his skis were more user friendly—if they somehow worked for him, not against him.

  Perhaps this insight derived from his day job as an aeronautical engineer, where he engaged in a continual process of making airplanes fly faster while, at the same time, being more responsive to the pilot. Maybe if skis were constructed of something lighter than hickory, then the preferred wood, they’d be easier to steer and maybe even faster. Head told me that he remembered doodling on a napkin in the bar car, drawing cross sections of a new ski made from aircraft aluminum and plastic, and said that he’d talked about his idea with a soldier who sat across the table. The soldier urged Head to give it a try: “After designing bombers, making better skis should be a cinch.”

  Back in Baltimore at the Glenn L. Martin Aircraft Company, Head began to gather bits of scrap materials. At night and on weekends, he began to experiment. Because skis were so long, he had to rent several old adjoining garages in the alley behind his apartment. That dim and unheated site was the workshop from which the modern snow ski would emerge. But, like Dyson’s ingenious vacuum cleaner, Head’s improvement would take some time.