The sales and marketing organization, meanwhile, expanded to play on Optiva's strength: the high regard it was winning among dentists. The company built an inside staff of customer-service representatives who phoned dentists to follow up on field sales calls. To keep its reputation as a clinically savvy company polished, Optiva poured 5% of its revenues back into research and development, not only setting up its own labs but also funding dental research at Harvard, Northwestern, Tufts, and elsewhere. Some 47 papers on Sonicare's effectiveness were published in dental journals, which bundled together would make a satisfying whump when dropped by a salesperson on a dentist's desk. "Our goal was always to get the dentists to try the Sonicare," says Giuliani. "If we got that, we'd win their recommendation."
On the retail front, Optiva added some 50 manufacturers' reps on pure commission to represent Sonicare to mass merchandisers like Wal-Mart, pharmacy chains like Walgreens, buying clubs like Price Costco, and specialty stores like Brookstone. By the end of 1995, about a third of the 160,000 dentists in the country were recommending Sonicare to their patients, and some 25,000 retail stores stocked the product.
Optiva had also started to pick up accolades for its employment practices. Among the benefits available to both full- and part-time employees: interest-free loans for home PC purchases, computer training classes, English-as-a-second-language classes, 24-hour personal-problem and nurse-consulting hot lines, and stock options after one year of employment. Those policies were cited by the White House when it invited Giuliani to join President Clinton and other business leaders for a breakfast meeting in May 1996.
To top off what seemed to be Optiva's extended run of success, the company settled its lawsuit with Teledyne Water Pik in September 1996. Teledyne agreed to acknowledge the patent's validity and pay Optiva an undisclosed sum plus royalties on future net sales of SenSonic units.
The next month, the sense of triumph ended abruptly. Eric Meyer received a phone call from John Tubbs. Tubbs gave Meyer the news: "We've got a problem with one of the units we shipped. I'd better come over and show you." Meyer waited, trying to keep his imagination from running wild. "I kept thinking to myself, 'Please let it be a brush head," he recalls. "Then John walked in holding a charger, and I thought, 'Oh God, no, not the part that can shock people."
A dentist had phoned complaining that his charging unit seemed poorly constructed. Fortunately, the customer-service rep who took the call instructed the dentist to send it right back to the company before trying to plug it in. Tubbs recognized the problem right away: the charger was missing the insulation that separated the wiring from the rest of the world. In the wet environment of a bathroom, such exposed wiring could deliver a fatal jolt of current to anyone unlucky enough to be standing nearby.
Within a day, Optiva was transformed from a manufacturer to a collector of sonic toothbrushes. All manufacturing operations were shut down, and employees pored over the 80,000 units in inventory. Five more defective chargers turned up. Just as Optiva was facing the Christmas season, the marketing department sent out 120,000 mailings announcing the complete recall of all units manufactured from the beginning of September to the end of October 1996; to spur the return rate, the company promised to make a donation to a feed-the-homeless organization for every unit sent in. The customer-service department hit the phones to alert dentists. After going through more than 100,000 returned units, at a total cost of nearly $3 million, only three more defective units were found.
Giuliani says he's never bothered to calculate exactly how much harm was done by the scare, nor how much goodwill might have been earned by the all-out response. "None of us was prepared to live with our product hurting or killing someone," he says. If anything, the entire experience seems to have added to his sense of Sonicare's manifest destiny.
Optiva has been riding high ever since. Having grabbed 33% of the $184-million electric-toothbrush market in the United States, the company has surpassed Interplak and trails only Braun, which holds 37% of the market. When it comes to electric toothbrushes sold directly from dental practices, Optiva holds 50% of the market, compared with number-two Braun, which has 25%. Last June, Giuliani was dragged to Washington, D.C., a second time, to receive the Small Business Administration's Small Business Person of the Year award.
Can the company turn up the heat on competitors even higher? "These companies aren't leaving us a lot of holes to exploit," says Meyer. A bigger opportunity may lie overseas, where electric toothbrushes are more accepted--they're in 25% of all households in Germany, for example, and a whopping 40% in Finland. Japan is a particularly attractive target, notes Meyer, because of a heavy concentration of dentists and an affinity for technology. Best of all, sonic toothbrushes are still fairly new to these markets.
As the number of Sonicare owners grows, more and more of Optiva's revenues will come from replacement brush heads, which last about six months and go for $15 apiece; Interplak actually derives more revenue from replacement heads than from toothbrushes.
But the company also wants to reduce its dependency on Sonicare. "We've gone four years without a viable competitor in sonic toothbrushes," says Meyer. "We know the clock is ticking." Giuliani insists that a handful of new products waiting in the wings will do the trick. "All products become obsolete," he says. "It's important for a company to be the supplier of its product's successor, not its victim." One product on the horizon, says Engel, is a device that monitors how long users of removable orthodontic appliances actually wear them--information that orthodontists can apparently use to better treat teenagers and other reluctant patients.
The suggestion that there isn't an established need for other types of home dental devices elicits a smile from Giuliani. He recounts how when he was at Hewlett-Packard, a group decided to abandon a project to develop an electronic tool for engineers, claiming that there wasn't an established need for any new engineering tools. Bill Hewlett overruled them, though, and the first handheld electronic calculator was born.
