From SpinPop to SpinBrush: Entrepreneurial Lessons from John Osher
At a panel discussion on entrepreneurship, professor William A. Sahlman and several successful start-up veterans discussed the case of John Osher, father of Dr. John's Products, Ltd., and the wildly popular battery-powered toothbrush, the SpinBrush. Key concepts include:
- Look for gaps in the existing market or product lines to exploit.
- Anticipate product knockoffs and plan accordingly.
- Raise money when you don't need it, so you'll have it when you do.
- Be quick to market with the initial product and improve as you go along.
John Osher is one of those casually and spectacularly successful people who make serial entrepreneurship look like a cakewalk. He began racking up wins at an early age—starting and selling both a vintage clothing store and an earring outlet before he was out of college—and then embarked on one of the more eclectic business careers of the last few decades.
His entrepreneurial journey culminated (at least temporarily) in the sale of his electric toothbrush company to Procter & Gamble for almost a half-billion dollars. Not bad for a former plumber, cabdriver, and carpenter who took seven years to finish college.
"We want to play offense, we want to innovate, pilot, template it, build for scale, and go." —Mark Norman, Zipcar
The meandering and seemingly random path that Osher took in his career and the lessons it holds for other executives and entrepreneurs looking to succeed in today's difficult economic climate was the subject of a panel discussion at Harvard Business School recently. The discussion, part of a one-night event called "Entrepreneurship During an Uncertain Time," featured four highly successful executives. The event was hosted by HBS and The Economist.
HBS professor William Sahlman, who studied Osher's career and wrote the case study on his company, Dr. John's Products, Ltd., said in an introduction that while much of Osher's success might look from the outside to have been the result of a series of happy accidents or lucky breaks, it was in fact the product of a sharp intellect and dozens of lessons learned over the course of a long career.
"He's a street-smart guy, and he has this observational power. He had in mind designing the perfect company, which included the lesson of, 'Don't make the same mistakes I did,' " Sahlman told the audience of HBS alumni and Executive Education participants. "He hated having to manage employees, so he built a big company with very few employees."
Dr. John's was the third major venture that Osher built from the ground up and brought to a successful and lucrative exit. ConServ was his foray into energy conservation and baby products in the 1970s and '80s, followed by Cap Toys, offering toys and candy, in the 1980s and '90s. The latter venture, which produced the uniquely American and insanely popular SpinPop battery-powered lollipop, would later serve as the blueprint and inspiration for Dr. John's huge hit, the SpinBrush
After his successes with SpinPop and various baby products, Osher discovered that one of the keys to building a successful company and creating a product that people love is to find and exploit a gap in the existing market. The SpinBrush was designed from the beginning to sit in the enormous space between cheap manual toothbrushes and ultra-high-end electrics produced by companies such as Gillette and Johnson & Johnson. Osher wanted his offering to sell for about six dollars, work for three months on the included batteries, and clean teeth as well as the premium models.
It was a simple plan, but one that would be quite difficult to execute with Osher's limited budget and small team. But, as several of the panelists acknowledged, the small, agile nature of Dr. John's in fact may have been an advantage in the end.
Small is good
"Big companies get stuck on analysis paralysis, and they look for the perfect answer. In my company, we iterate very quickly," said Sheila Lirio Marcelo (HBS MBA 1998), founder and CEO of Care.com a website for providers and users of child care, senior care, and other related services. "Large companies look for the perfect solution [and] analyze everything to a T, as opposed to putting something in production, getting it going, and analyzing off of that."
"He found a gap that was the size of the Grand Canyon." —William A. Sahlman
That's the template that Osher followed with Dr. John's, basing the idea for the SpinBrush on the proven design of the SpinPop, getting an early product on the shelves, and then improving it from there. The first iteration of the product was a success right from the beginning, selling as many as 6,000 units a day in grocery stores, drugstores, and large retailers including Walmart and Target.
Osher had taken for granted from the start that SpinBrush would be copied quickly by other companies. As a result of that planning he had designed Dr. John's to work on a short product cycle, able to respond very quickly to shifts in the market.
The SpinBrush had its problems, though. It had a tendency not to last as long as Osher and his team had planned, and there was an issue with the way the spinning bristles worked with the stationary bristles. But consumers were so taken with the SpinBrush's design and value for the price that sales didn't suffer while the Dr. John's team worked out the kinks. The company didn't have a huge war chest, but Osher had raised additional capital after the company's launch in order to pay for additional inventory once the product took off. There's a clear lesson there for today's business leaders.
"A lot of companies spend a lot of resources playing defense. We want to play offense, we want to innovate, pilot, template it, build for scale, and go," said Mark Norman (HBS MBA 1994), president and COO of Zipcar, the time-sharing car service. "Raise money when you don't need it, while you're figuring things out."
As SpinBrush continued to gain market share, Osher's little company began to attract the attention of big players in the market: P&G, Colgate, Johnson & Johnson, to name a few. Osher held discussions with P&G about licensing the Crest brand for the SpinBrush.
"He knew it would be knocked off, so he had a two- to three-year product plan," Sahlman said. "He built this company to flip, not to last. It was organized to be sold."
The SpinBrush became a huge success for P&G, helping revive the Crest brand, while Osher and his team pocketed $475 million.
While the number of huge opportunities like the one that Osher exploited may be limited, the lessons he learned over the years and the methods he employed still can be applied in a wide variety of situations and industries.
"He found a gap that was the size of the Grand Canyon," Sahlman said. "But you have to be realistic. Sometimes you can confuse a rising tide with genius."
Operating in a downturn
The panelists and Sahlman agreed that today's economic climate is not only a challenging one for entrepreneurs interested in launching new companies, but also for those who already are in business and looking for ways to keep their heads above water and preparing for the turnaround.
"During periods of randomization, make it so that you do something different going forward," Sahlman said.
Don Young (HBS MBA 1984), president and CEO of Aspen Aerogels, observed that downturns can be opportunities for the well prepared. "Those economic disruptions, as long as you have money in the bank, can be opportunities to succeed," he said.
For example, during good times it can be difficult for small companies to get into large accounts where the vendors are established and the corporate focus is on growth. But when the economy begins to slow down, he said, companies start looking for ways to streamline operations and save money, and that can be a way in.
For more on the discussion around entrepreneurs and the economy see this report in the Harvard Gazette.