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MARKETING

Changing Diapers
 

The second try for a diaper start-up company is proving more successful.
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A second marriage, it is said, represents the triumph of hope over experience. Unfortunately, the same can be said of some second companies -- including, perhaps, one recently started by David Pitassi and Wally Klemp.

You may remember their first company, a manufacturer of disposable diapers in Vancouver, Wash. Launched with partner Tim Wagner, it was so successful that all three entrepreneurs found themselves victims of an investor-led coup ("Locked Out," April 1987). Wagner took a job in Wisconsin, but Pitassi and Klemp began scouring the country for an opportunity to do it all over again.

Specifically, they were looking for a regional market where they could introduce a high-quality, brand-name diaper priced just below Pampers and Huggies. They settled on Houston, whose officials promised tax abatements and other help. They then lined up suppliers and distributors, assembled a $6-million equity-and-debt financing package, and took on a new partner, an industrial engineer who had produced disposables for Procter & Gamble for nine years. Last August The Veragon Corp. began shipping its new brand, Drypers, from a plant on Houston's Loop 610. And we do mean "shipping." In a scant six weeks, sales reached $1 million; by November Drypers had been accepted by every major chain in Houston. "I'd say it's the most exciting new product we've taken on in years and years," says Aubrey Wolf, president of the city's largest food brokerage.

So did Pitassi and Klemp structure the deal so they can't be kicked out this time? Pitassi declines to discuss the details. "I won't tell you today that [we have] a total guarantee of absolute control," he says. So what's different? "The quality and integrity of the people we're dealing with."

Oh, well, plenty of second marriages do work out. Maybe this will be one of them. -- John Case

Last updated: Jan 1, 1989




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