Too Hot To Handle: Going Under

"The whole thing collapsed on us."

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"Once you get a taste of creating big demand," says Alan Canfield, "you want to keep fueling the fire." To do that, companies with one hot product often try to capitalize on their new-found popularity by rushing another into the market as soon as they can.

For some companies, it is a rush to disaster. In 1979, Joseph DeKama started Nature's Organics Plus Inc. to launch a line of hair-care products that contained some natural ingredients. Within a few years, he had the shampoo industry in a lather -- and annual sales of $23 million.

DeKama figured he could leverage his company's name recognition into another hit product. In 1982, Nature's Organics launched a 100% natural shampoo and conditioner. DeKama spent about $3 million on television ads featuring Stefanie Powers, then the star of the popular series "Hart to Hart." He threw lavish parties for retailers, who annointed him "Broadway Joe" in return. They also bought $11 million worth of Natural's shampoo and conditioner during its introduction.

Hardly had the celebration of this new hit ended when "the whole thing collapsed on us," says DeKama. He had hurried the products onto store shelves without fully testing them. Without added preservatives, the products self-destructed on retail shelves, turning a sickening yellow-green color. DeKama had to buy back almost all that he'd initially sold. To avoid bankruptcy, he sold the company's assets in 1984, personally losing more than $1 million.

DeKama has held up better than the shampoo. Several months after the collapse, he started a cosmetics company. "We love excitement, but we're careful about coming out with products so quickly," says the chastened 47-year-old. "You've always got to step back a little bit and make sure production and manufacturing are under control."