How I Reinvented My Business
Like many fabled company founders, Curt Richardson launched his first business in his garage. He channeled his love of tinkering into a series of businesses that custom-manufactured plastics for automotive, medical, and industrial companies. But by the mid-1990s, Richardson had grown weary of having his fortunes tightly hitched to the financial returns of his clients. So, as he had done several times before, he went back to his garage to develop his own product line. "We wanted to take our destiny into our own hands," he says.
Since water sports such as surfing and scuba diving were gaining in popularity, Richardson decided to create a product to target that market. In 1995, he developed the first prototype of a waterproof electronics case. His wife, Nancy, dubbed it the OtterBox, in reference to the animal's waterproof fur. Over the next couple of years, Richardson built up a modest revenue stream with the new product, and in 1998, he launched a separate company around the line.
That move turned out to be prescient. Although Richardson had anticipated a steady decline in his industry's fortune, the one-two punch of the dot-com crash and the 9/11 terrorist attacks severely hastened the fall. In 2002, he decided to outsource OtterBox's manufacturing in order to devote the company's resources to design and marketing. "We were not in the hub of manufacturing, and it affected us finding talent," he says. "That definitely limited our scalability." The demise of many of his former competitors has since confirmed his decision; whereas once there had been hundreds of molding shops in Colorado, Richardson says, now there are only a few dozen.
OtterBox, conversely, has blossomed into a nearly $170 million business. Much of the company's success stems from its ability to pinpoint technology trends. In the beginning, though, OtterBox's business was far from the cutting edge. For the first few years of its existence, the company sold travel cases for cigar humidors in addition to its namesake waterproof cases. It wasn't until a retail customer asked if the company could make a case for PDAs that OtterBox got into mobile technology. When the iPod made its debut in the fall of 2001, the company quickly moved to develop a new line for the device, and its sales soon shot up.
Although OtterBox's fortunes are no longer tied to the health of domestic manufacturing, its success is dependent on another, notoriously fickle industry. But Richardson isn't worried. "If one device drops off, one will pick up," he says. "We don't really care who it is." Richardson's confidence in his company's success is particularly evident in his willingness to make bets on changing tides in the market. He decided, for instance, to produce accessories for tablets even when market observers were skeptical about whether the iPad would sell. And, last year, he made the move to stop selling OtterBox's line of iPod cases, which were still one of the company's top sellers, in favor of focusing on mobile accessories. "We looked at the market, and there was a lot of noise, a red ocean there," he says. "We knew fairly quickly we had made a good strategic move."
That said, plenty of market intelligence factors into OtterBox's decisions to develop or discontinue product lines. The company maintains strong relationships with mobile manufacturers, and it often receives information about new devices well in advance. Often, manufacturers' own investments offer valuable clues as to which products will be most successful. In addition to keeping close contact with those companies, OtterBox has made substantive investments in research and development over the past few years. This year, the company hired a director of R&D, and it has since expanded the department to 16 employees.
In addition to its continuous investments in market prediction, the company is eyeing global expansion. OtterBox has regional offices in Cork, Ireland, for the European market and Hong Kong for the Asia-Pacific Rim market, as well as a small sales office in Dubai. The latter region has had particularly explosive growth, Richardson says. The company now has three sales representatives in Australia and plans to hire additional reps based in Singapore, Korea, and Taiwan. OtterBox's sales have also picked up significantly in the Middle East and Africa, particularly South Africa. "Globally, if we could see 3 percent of the market," Richardson says, "I would be ecstatic."
Ultimately, Richardson credits as much of the company's success to its internal processes as the products it ships out to the public. He places particular emphasis on consistently being prepared for change—a necessity given the rapidly changing consumer market. Richardson requires each department and account manager to submit a new plan every six to eight weeks in order to take stock of current trends and resources. One area he doesn't focus on, however, is the competition. "I don't know what competitors are doing with their systems, prices, or infrastructure," he says. "To me, it doesn't really matter. We're our own worst enemy here."