UTR in Alberta Venture
Vol. 10 Issue 08
How a Calgary couple went from a eureka moment to shelf space beside high-end housewares. (And it only took 10 years.) A small-business odyssey
By Anthony A. Davis
Were he alive today, Leonardo Da Vinci, medieval inventor ( if only on paper) of the helicopter and the airplane and a master painter, may well have looked at Liette Tousignant's creation, the Hang & Level, and thought:"Now why didn't I think of that?"History records that Da Vinci, inventive as he was, usually failed ( unlike Tousignant and her husband, Kelly Krake )to get his inventions off the drawing board. But if Tousignant and her husband had foreseen the gruelling, nearly 10-year struggle they'd endure to recently get their simple, plastic $19.95 product into stores such as Home Outfitters, they might have joined Leonardo on the quitter's bench.
One thing history does not record about Da Vinci was whether, brilliant as he was, he struggled to hang his and his students' paintings on the walls of his pads in Florence or Milan. Most people ( five centuries later and in an age of space shuttles and computers ) still tussle with this seemingly simple task, leaving constellations of holes all over walls as they try to bang nails into the proper spot for the hanging wire, D-ring or keyhole at the back of a photograph or painting. Still, that velvet Elvis just doesn't quite look like it's in the right spot.
If neccesity is the mother of invention, frustration, as Tousignant discovered from her days as a Calgary interior decorator hanging other people's artwork, can be its father. In 1996 Tousignant started Under the Roof Decorating, a small interior design business specializing in economically overhauling a home's look with, more or less, what furniture, art and home accessories were already on hand.
Calgarians eagerly adopted Tousignant's premise and she happily set about redecorating hundreds of homes, helping owners find each room's true focus. But "one of my biggest frustrations was hanging the art," recalls the 44-year-old, who especially loved going at the walls of homes, creating groupings of art or family portraits."œWe would say to owners,"˜Come back in four or five hours, and we will have the room completely rearranged for you.' But sometimes they came home and Tousignant was still nudging pictures a little left, a little right, a bit more up "It's very time consuming,"she says."I remember coming back home one day and saying to Kelly there must be some sort of tool out there to help me hang pictures. I'm using up so much of my time doing that."hat was in 1998.
After an exhaustive search of major retail outlets like Wal-Mart, Zellers, Canadian Tire and home decorating stores such as Michael's and Walls Alive, the couple discovered that, no, there was no tool on the market to ease and improve picture hanging. Says Krake,"Even back then we searched the Web but there was nothing out there. So we both went to the garage and came up with our own tool"
That first tool was a simple, flat, rectangular piece of wood about 35 centimetres long with a white knob on one end and two screws on the other."This was primitive," says Krake, pulling the first protoype from a vase full of about a dozen protoypes Tousignant keeps as an homage to the couple's tough journey as inventors."You hang the picture on the screws, take it to the wall where you want to put it, press on it and it makes two marks where the screws or nails should go. But the screws could scratch the walls" says Krake.
Neanderthal as that first tool was, Tousignant's Under the Roof clients often marvelled at it and asked her where they could buy the yet unnamed device. In 1999 that got the couple, married 24 years, thinking they could improve the design and start manufacturing and selling it. First, they talked to the National Research Council and got a small amount of design assistance and funding, and, spending $1,000 of their own money, had computer-aided design drawings done and a "rapid protoype" made in California. Tousignant reaches into a vase and pulls out an opaque plastic prototype with a slender plastic gripping handle and three buttons that can be depressed to mark a nail-point on a wall once a tool and painting have been properly positioned on a wall.
More protoypes would follow, each one pointing to weaknesses in its predecessors. Each one costing the couple more money and more sleepless nights, says Krake, who was a business consulting partner with Deloitte & Touche for 20 years until he quit his job in October 2004 to work on Hang & Level full-time. After that first rapid prototype, Tousignant and Krake realized that if they were serious about mass-marketing their product, they were at the point where they needed to have an injection mould made to produce some samples or "one offs" as they are called. That would cost the couple, who still had two teenaged daughters to raise, $30,000."that was a big step," says Krake, sitting in the kitchen of their Calgary home that also serves as Under the Roof headquarters."So we bit the bullet and cobbled our savings together, so to speak, and had the mould made."
The offs from that mould only served to highlight improvements still needed with the design. For instance, the plastic points used to indent the wall and mark where nails or hooks should go would wear quickly. Tousignant and Krake decided to go with better metal pins, but that would entail a more expensive two-step manufacturing process.
In 2001, Under the Roof came close to signing a manufacturing and distribution deal with a company in the United States. But the deal fell through when that company was bought out. "There were tears" recalls Tousignant. Burnt out from developing their tool while working 60- to 80-hour work weeks at their regular jobs and raising two children, the couple shelved their invention for three years. But Tousignant could not let it rest."We couldn't bear the idea of seeing someone else come to the market with a similar product" she explains. â€œWhen we shelved our tool for a few years ( while we were mourning our loss ( I kept using it ) And people kept asking where they could get one."œWe just couldn't bury the idea altogether. We didn't want to live through our life and say,"˜What would have happened if we would have gone all the way?"
Late in 2003 Tousignant and Krake pulled their invention back off the shelf and devoted themselves to it full-time. As one prototype in Tousignant's vase shows, Hang & Level was originally called Spot On, a name a marketing agency came up with. Now reinvigorated, the couple decided that, before they sank more tens of thousands of dollars into a new production moulds, a market survey would be wise. Krake developed a web questionnaire asking about 80 quality-related questions, and the most recent prototype was given to about 100 friends and acquaintances to try out. The test group was instructed to be brutally honest.
Among the things the survey pointed out was that the tool needed some curves to make it "sexier" and the name Spot On "sounded like a stain remover," remarks Tousignant. As well, the beige colour of the tool at that point was seen as blah. So Tousignant went out to her backyard and spray-painted some offs black, red, lime green, blue and yellow, then asked people which colour was appealing for a tool. Yellow won hands down. The name was also rethought over glasses of wine and beer by the couple and the staff of three now working with them. One name, Well Hung, got votes and laughs, but was deemed too risque. (It survives on promotional T-shirts the couple sometimes give away.)
Now, with the bugs worked out, it was time to find a manufacturer. Under the Roof hoped to produce Hang & Level in North America, but Krake's research revealed that would be three to four times as expensive as manufacturing in China, putting the price point of the finished product in the unreasonable $40 to $60 range. But finding a trustworthy Chinese manufacturer proved tricky."so called expert" as Krake diplomatically puts it, recommended one Chinese firm. The couple went with his suggestion only to discover that the first offs shipped to them were so poorly made they had to jettison the manufacturer. The setback postponed Under the Roof's intended spring 2005 product launch by a year. Meanwhile, they continued to incur development costs and pay their small staff."The amount of stress involved was unbelievable" the couple says in near unison.
By May 2005 Tousignant and Krake recognized they didn't have the financial resources themselves to get Hang & Level to the market. After talking to about 80 people, mainly friends and business acquaintances, they got a dozen people to invest in a private equity offering totalling $750,000, with the option for another $250,000. They had to tell a convincing story, says the couple, who each carry around a hand-sized video iPod to show people an infomercial they had made about Hang & Level."There may be a lot of well-off people in Calgary," says Tousignant,"but it's an oil and gas town. Investing in plastics, and a consumer product, and in a couple? Well, that's another story."
Eventually Krake, relying on his own acumen as a former business consultant, began researching North American and Chinese manufacturers and soon found a Chinese firm with an established reputation for manufacturing products for brand-name companies. Krake visited the company in southern China ( the couple declines to name it, saying they fear knock-offs and losing a competitive advantage if they do ( and though the company is located in a grimy, ramshackle area, Krake found the plant itself a clean, high-tech marvel.
Under the Roof paid half the up-front $15,000 cost to have a two-cavity mould produced that could stamp out two Hang & Levels at a time. In January 2006 they received their first offs and the quality was just what they were hoping for."œWe were all high-fiving and saying,"Oh my God, this is actually going to work," says Krake, still jittery after his first Chinese experience. Their first order, a 20-foot shipping container with just over 13,000 units, arrived last May.
Since then the couple and their sales team have been busy trying to convince retailers to stock Hang & Level. They began with a few small independent hardware and art stores around Calgary, but recently scored their first major chain when Home Outfitters, a Hudson's Bay company, agreed after a successful test-run in Calgary to stock the product in the company's 56 stores across Canada.
Since last spring Under the Roof has been focusing on marketing strategy. The first short infomercial they used was made by Kevin Seel, the company's marketing and supply chain director, who has dabbled in amateur production making extreme skiing videos. Later, spending less than $10,000, the company had City TV shoot a more professional infomercial showing how Hang & Level is used. Seel says the iPods "are a great front-line sales/educational tool for us" and have proven a catch way to convince retail chain buyers why they should stock Hang & Level. (The infomercial is also downloadable as a podcast from the company's website, www.utrdecorating.com, where a trickle of consumers have begun purchasing Hang & Level online.)
"We plan on creating a series of little, what we're calling 'demomercials.' So we'll take, for example, a picture-hanging problem, we'll shoot maybe a 30-second or one-minute video on how to deal with that problem using our tool, and we'll deploy them to our website as a podcast." Eventually, says Seel, Under the Roof hopes to have an online decorating show comprised of short, downloadable podcasts, with 10 or 20 episodes that people can store on their cellphones or iPods to use as quick reference for the company's decorating tips."The thinking here is that when they are hanging pictures or whatever, they can look at their iPod for how-to information and go ahead and do that themselves."
Being small, Under the Roof will likely have to piggyback on the television advertising of any chains stocking their tool."TV is a bit more of a surgical approach" says Seel. It gets you to a specific audience. But the Internet gives Under the Roof a global reach with a low to moderate investment."I think to get the most out of your marketing effort and investment, you need to have multiple channels and they all need to be tied together with a consistent message. But the Web is hugely powerful."
With or without new-fangled technology such as video iPods, getting to a chain store buyer can be harder than getting to a Hollywood agent (see sidebar, p.50). Even the manufacturing agents commissioned by Under the Roof have had a tough time getting a face-to-face meeting to push new products, so the Home Outfitters deal represents an early coup. But Krake and Tousignant have a long way to go before they recoup the sweat, tears and time they've invested, not to mention make money for their investors. â€œIf another inventor or wannabe inventor reads this story,â€ advises Tousignant, they should know â€œit is not a walk in the park. It is stressful. You have to be 150% committed to your invention and to your team in order to keep going forward.
"You'll cry over things. How many times did I say, 'This is it. I'm done with it. I'm going to find a nice job where I don't have to deal with this.'" But perhaps invention, once embarked upon, is addictive. Krake and Tousignant have another 30-odd new product ideas in development. After nearly 10 years bringing their first invention to market, they are just getting started.