Why bigger is not always better. Adventures in DTC and retail at Sugru.
“The solution only presented itself when a friend pointed out to me, that my business did not have to be big, maybe it would be one day, but why don’t you try and start small”
When you start to build a business, we’re all thinking about our long term ambition, what size we want our business to become, and what is its true purpose. This ambition is influenced by the stories we are told. Everyone loves a success story, and we are drowning in stories of how little idea and insights quickly scale into a multi-million-pound venture. All this trumpeted success makes you feel that to succeed you need to grow rapidly and that you have not really made it until you are big. A get big fast strategy is one way of doing business and is great when it works. However, this strategy can also blow you way off your course if you are not careful and the cards you are dealt do not fall your way. Sugru is an example of a company that started small, found success, got bigger, and suffered some nasty growing pains which left it scrabbling for survival. Spoiler alert: there is a happy ending and this is that story.
Sugru. For all the fixers, hackers and makers in every home.
Like many of the brands I have recently interviewed, Sugru is a company that probably would not have happened if it was not for a DTC platform. It is also a company that almost died because it tried to be more than DTC and found that life beyond the internet was not all that it was it cracked up to be.
I am proud to admit that Sugru is one of my favourite DTC brands. They have a wonderfully innovative, useful product and have built an inclusive, and useful community. I have used their products, bought them as gifts and admired their website and marketing for a long time. Hence, I was chuffed to get invited to Sugru HQ, deep in hipsterville, East London, to hear their story from its product inventor and company founder Jane Ní Dhulchaointigh.
In case you have not come across it already, Sugru makes “Mouldable Glue”. It is a flexible silicon rubber-like material which you can mould like play-dough. However, once it is out of the packet it starts to react with the environment to become a more solid, strong, flexible, waterproof material. What is the use of that? Answer: Sooooo many things. This video will give you a few ideas to start.
Beginnings
The other thing which makes this invention more fascinating is this remarkable product was not discovered by a bunch of chemical engineers but was the result of an art project on a Masters in Design Degree at the Royal College of Art.
Jane’s epic tale begins back in Ireland where she was brought up on a farm and taught to fix and make rather than to throw and buy. As a fine art student in London in the early 2000s, she found herself in a culture clash. Surrounded by the talent at the RCA there was plenty of creativity but to Jane, it seemed mostly like art was being created just for art's sake which did not sit well with her more practical and resourceful nature. It was only when she was challenged to be more experimental and design something which would be useful to people that she found her groove. “Happy Play” was how Jane described this time. One of the things she started to play with was a mouldable silicon that was fun to sculpt and also set hard overnight. But was it useful? The utility was a problem admitted Jane, “At the start, there was no single application for what I had created. I could not find any single thing that would be useful for the material, but I was using the leftovers to fix all sorts of things around the house. It was my now-husband, then-boyfriend, James who was watching me do this who first had the vision of every granny, kid or whoever using this stuff to adapt, improve and mend things like I was doing. I was like, yes, that is just brilliant and set off on a mission to get this product into everyone's kitchen drawer”.
Initially, Jane’s idea was to develop the product that she would licence to other manufacturers. Easier said than done. First, she had to get the product right. It took an eye-watering six years working on the material to make it practically useable. In this time, Jane managed to secure a tiny bit of investment and also recruited the help of some bona fide material scientists to refine the product. When I asked how and why she kept going her response was she was used to being a poor student so used to not having any money, besides she knew that this thing really could be unique, so she just kept going.
Once the product was fully developed, Jane had another problem. Her mouldable glue was so innovative that those companies she was thought like to licence and commercialise it, turned her down as they just could not see how it would fit in with their current product mix. It was just too radical.
Jane Ní Dhulchaointigh, artist, inventor, founder and chief fixer at Sugru.
What to do now? Jane takes up the story, “I had this vision of this product being in everyone's kitchen drawer. However, none of the manufacturers out there saw the opportunity. We were also pre-revenue, so raising any more cash was incredibly hard. We had this vision that we could be a big company, but there was not an obvious way to get there. The solution only presented itself when a friend pointed out to me that my business did not have to be big, maybe it would be one day, but why don't you try and start small”. It was 2009, and the idea of being able to sell online and connecting with customers through platforms like twitter was just starting to emerge. The DTC revolution had begun. They saw their chance.
Using their last bit of money, Jane and her team turned their testing lab into the most basic manufacturing plant, cobbled together a website, produced an explainer video (starring Jane’s husband, James) and made 1000 packs. Those 1000 packs sold out in 6 hours and were enough to generate all kinds of excitement. The business was up and running.
Things quickly started to gain momentum. The company received some stellar pieces of PR including being number 22 in Time Magazine’s 50 most useful inventions in 2010, high praise considering the iPad was number 34. The other incredible thing which almost happened by accident was a community of hackers and fixers organically started doing the marketing for the company. Not only were Sugru’s customers telling their friends about it, they were also inspiring others by sharing how they were finding all sorts of new uses for the product. It was from this community the product became famous for everything, from fixing your laptop cable to giving a one-legged chicken a prosthetic limb. Over time this community culture became embedded in all aspects of the brand’s marketing. Even today, new ways of using the product are posted continuously onto community boards such as Pinterest as well as being shared via the main website.
The business that started small was ready to become bigger. The question was how big could they go? Having established a following in the hacker community, Sugru was now in that enviable position of having the retailers starting to knock on the door asking for their product. The interested parties included the UK’s largest DIY retailer, B&Q . How could Jane and her team refuse their offer to put them on shelf? A listing with them was the chance to reach so many more people and get them to join their community of hackers and fixers. Sugru launched into 300 B&Q stores, and the team was able to tell the world they were more than just a DTC company.
The problem with retail
It was at this point that the story becomes less of a fairy tale and more of a grind. DTC is brilliant for connecting directly with the audience who understand and want your product. The dynamic is such that your customers often find you rather than you trying to find them. In old fashioned retail things are very different. The on-shelf real estate is expensive and on top of this you are trying to change the shopping habits of people in store, the majority of whom are never likely to have to have heard of you. Being in retail means that you have to significantly ramp up your marketing efforts to have any real chance of attracting enough customers to justify your place in-store. Maintaining a listing is always tough and even harder when you are first to market with a brand new product and an unknown brand.
Sugru quickly found out they had to increase their internal resources, including more specialist retail sales and marketing people, and have a much bigger marketing budget. To achieve this, it meant more external investment and more borrowed cash. Getting access to more money is a shrewd move if the increased revenue arrives. More money can also cause a lot of pain if the sales do not develop as planned. Unfortunately for the business, the retail experiment did not work out that well. After years of effort and a lot of cash, the company concluded they were better suited to stick with DTC as their primary sales channel. It is worth saying, retail was not all bad for Sugru, and they still generate significant revenue (around 10% of total sales) via retailers including Target in the US and Robert Dyas in the UK. What the retail experiment taught the business was that mainstream retail was not quite ready for them, and they were not prepared for it.
The adventures in retail were nearly the undoing of the whole business. Jane explained “We took some big investment decisions around the potential of retail that turned out not to pan out in the long run. This turned out to be really risky for a business of our size. We got into a very precarious position as we were dependent on a certain sales pipeline coming through within retail. When these listings come in they are chunky, offering a big step up in growth. However if they don't come in it is very, very risky.”
Pushing hard into retail meant the business became overstretched financially, and this came to a head when their bank reduced their debt funding facility. All of a sudden, the company was fighting for survival.
Fortunately, there is a happy ending. In 2018 the German adhesive company, Tesa, bought the company and in turn has allowed Jane and her team to continue to grow the business. As part of Tesa, Sugru has been able to retain its independence with Jane remaining at the helm. This makes sense as it is a new product for the Tesa family, and one which has a very different customer base. For these reasons, they have left Jane and her crew to carry on building the business with DTC the main focus.
In 2018 Sugru teamed up with the adhesives giant, Tesa
Wisdom and the Future
While Jane was unsurprisingly disappointed at the way the retail experiment did not work out, she remains as enthusiastic as ever about the brand, product, and it’s future. Today the repair movement is starting to gather pace with more and more people buying less and prolonging the life of the things they have. This repair and reuse mindset is at the heart of Sugru’s DNA. As Jane sagely reminded me when talking about the repairability of Fairphones, “The most environmentally friendly phone you can have is the one in your pocket”. Sugru’s new owners have also allowed Jane and her team to introduce new products, like a kid-friendly version of the original Sugru and is supporting their growth into other countries with a French and German language version of their DTC website.
“Starting small is definitely a good way to go, and as you grow, you need to keep the stakes as low as possible. High costs and investment meant the stakes got very high for us. If you can keep the costs low, the more freedom you will have”
Considering her journey so far, Jane offered the following advice “starting small is definitely a good way to go, and as you grow, you need to keep the stakes as low as possible. High costs and investment meant the stakes got very high for us. If you can keep the costs low, the more freedom you will have.”
Sugru remains an inspiring brand and product. It is a beacon of how you can start small and grow a fab business with a loving community of customers. It is also a warning about how much risk you are willing to take to make your small business big. I don't think Jane and her team played their cards badly; however, as it is often, pioneers like Sugru end up taking more arrows than the brands following in their footsteps. The Sugru journey is a useful case study for any new DTC brand and left me extraordinarily grateful that Jane was willing to share her story. I am also pleased she has the chance to keep making more of this fantastic product. If it were not for Sugru, my house would be a lot less colourful, my things more broken and it would mean I spend more time threading my laptop cable through my desk. Eurgh.
