Too Hot To Handle: Selling Out

"We got out with out skin."

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A hot product can crush a company that is thin on resources. "It gor hard for us to keep the company fueled financially," says Ann Moore, who cofounded Snugli Inc. "Now it has all the resources it needs."

But it doesn't have Ann or her husband, Mike, anymore. The couple had to sell the company in July 1985 to a subsidiary of Huffy Corp., the giant maker of baby products and bicycles. "It became utterly chaotic," says Ann. "We didn't know how to run that kind of business."

In 1964, following Ann's Peace Corps service in Togo, West Africa, she designed an infant carrier that she hoped would contribute to people's "emotional well-being." It wasn't until almost 20 years later that the baby product got so hot that it started to threaten her well-being. Year after year, the tiny company grew at 40% or more. Each corduroy pouch was handmade by Ann's mother and an army of cottage workers. By 1972, when Mike joined the effort full-time, Snugli was selling 300 carriers a month through the mail, with annual sales of about $100,000.

With a favorable review in Consumer Reports magazine, sales grew faster than an infant. By 1978, the company's sales reached $1 million. The Moores hired a sales staff and designed a cheaper carrier for big retailers. The company was hand-sewing 8,000 pieces a month, an impossible pace to maintain. So the Moores decided to start mass-producing.

Armed with a $500,000 loan, in 1983 they built a factory in Lakewood, Colo., and hired 50 workers. But running a factory created a new set of problems. In 1984, a union organized disgruntled workers, who staged a slowdown to protest their heavy workload. Back orders skyrocketed, as did defective products. The Moores, with sales nearing $5 million, desperately needed capital.

Then came the buyout offer. "It enabled us to get out of it with our skin," says Mike. But the couple weren't totally happy about it. "When we signed the papers, I cried all night and the next day," Ann recalls. "It was very traumatic at the time. Now, it feels perfect."