San Francisco (Business 2.0) - Like many 20-somethings during the dotcom boom, Eric Ryan and Adam Lowry ditched their day jobs to start a business.
But instead of taking the Internet route, the pair headed somewhere decidedly less glamorous: the grocery store. In search of a bright idea, they walked the aisles looking for a consumer product in need of a makeover.
|Method's 25 oz bottle of dish soap -- hmmm, minty.
Their eureka moment? Shelves of dish soap and household cleaning supplies were not only dominated by dinosaurs like Procter & Gamble and Colgate-Palmolive but also plagued by uniformity -- endless rows of identically shaped bottles, distinguished only by their labels.
Just a year later, Ryan and Lowry launched Method, a line of nontoxic cleaning products so sleekly packaged you want to store them next to the sink instead of under it.
What began with the then-roommates mixing cleaning solutions in their kitchen has since bubbled into an 18-person San Francisco startup that reaps more than $10 million in annual revenue and goes head-to-head with the heavy hitters in 10,000 stores nationwide.
While specialty retailers like Williams-Sonoma and Sur La Table sell naturally derived, but expensive, cleaning products, Method differentiates itself by offering cool packaging and scents like lavender, mandarin, and cucumber at affordable prices.
And by recruiting hotshot industrial designer Karim Rashid, Method capitalized on the Target-led trend of bringing cutting-edge style to mass-market products.
Head to head
So how do Ryan, 30, and Lowry, 29, battle it out with big-name brands? It helps that they both hail from entrepreneurial families and boast highly relevant resumes.
Ryan's advertising and branding experience included stints at Fallon and other agencies, working with clients like Saturn, Gap, and Colgate, for which he helped launch a new toothpaste.
Lowry, meanwhile, worked as a chemical engineer, developing biodegradable trash bags and paint that bonds to plastic.
Neither had much management savvy, so before Method products even hit stores, they hired consumer-goods veteran Alastair Dorward -- who had served for six years as a consultant for Bain & Co. and had launched a soup brand in the United States called Covent Garden -- to be the fledgling company's CEO.
But Method was still largely a do-it-yourself operation. Ryan came up with a transparent bottle design, and they contracted with local manufacturers to make the solution and containers.
At first, the pair filled the bottles themselves with 5-gallon pails and funnels; for the labels, they took their own photos featuring Lowry's hands next to a sink.
To get the first products -- glass, kitchen, shower, and bathroom sprays -- on shelves, the duo took prototypes door-to-door to San Francisco-area stores.
But when they made the first sale -- to local grocer Mollie Stone's in February 2001 -- Method had only a prototype, and the retailer wanted its first shipment in a matter of hours.
The pair began frantically calling friends and family who'd been testing samples of Method's spray cleaners. "We wiped down half-used bottles, topped them off, and drove to the store," Lowry recalls.
Crisis averted, Lowry then visited Mollie Stone's each week to restock shelves and count the number of bottles sold. Using that data, he persuaded more local stores to carry Method.
And though venture capitalists had scoffed at Method's business plan during the dotcom boom ("They said, 'Will it be sold online?'" Ryan remembers), the local sales data also hooked investors, led by an affiliate of the Simon Property Group, a retail real estate firm.
On to the big leagues
With 20 stores onboard, Lowry and Ryan took their self-collected sales figures to national chains. Despite Method's small scale, major retailers agreed to give the products a shot.
Method first scored shelf space at Albertsons, later expanding to Safeway and regional retailers Wegmans and Ralphs. To meet national demand but minimize shipping and distribution costs, Method contracted in every region of the country with manufacturers that could speedily bring the products to market.
Method wanted to keep a low profile and a low budget, so the company avoided advertising and let the packaging sell the product.
But to get into Target, Method wanted a big-name designer. Ryan and Lowry had an idea for an upside-down dish soap, complete with a one-way valve like those used in ketchup and salad dressing containers.
So they approached Rashid, an industrial designer who'd worked with Prada and Armani. Ryan says, "We sent him an e-mail and said, 'Here's a great opportunity to reinvent this iconic shape that sits on every sink across America.'"
Rashid accepted the challenge, creating a 25-ounce bottle resembling an oversize fluorescent chess pawn, plus a smaller teardrop-shaped container.
With only Rashid's sketches to make the sale, Method pitched to a roomful of Target execs in April 2002.
The company scored a trial run, but the product had to be ready in just nine weeks. "We sold it before it was designed, and we shipped it before they even saw it," Lowry says. To get the bottle ready fast, Method purchased a one-way valve from a bottle-cap and closure manufacturer called Seaquist. (Later the design was improved, with a new valve from Zeller Plastik built into the base of the bottle.)
Last February the line was extended to 1,100 Target stores nationwide. Method soon realized that the soap -- which sells for just $2 to $3 -- was doing something unheard of in the cleaning space: prompting impulse buys.
In May, Method began selling a line of hand wash, also packaged in Rashid-designed bottles, at Target and other outlets, and it will soon launch a floor-care line and cleaning wipes.
Because of its small scale and national manufacturing network, Method can release products more rapidly than corporate giants. But Lowry and Ryan worry that big brands could eventually launch copycat designs. Though P&G -- maker of Dawn -- won't reveal how or if it plans to respond, spokeswoman Lachelle Lewis says the company views Method as a competitor.
In the meantime, Method hopes to stay under the radar until its brand loyalty is so strong that ripoffs won't have much effect. Already, the company has a following; customers have started writing in to request new products. And with double the number of offerings set for release next year, Method could really start to clean up.