Running Through the Legs of Goliath

Getting into Target, of course, meant that their small-time ways of filling orders would have to change. Lowry went to Trifinity Partners, a filler in Lake Forest, Ill., gave it the bowling-pin bottle, and asked CEO Jim Merlo if he could fill it. Merlo, who had been in the business 20 years, had a policy against taking on start-ups. He made his first exception for Method, partly because Lowry reminded him of himself at a younger age but mostly because he liked the product. "We're a contract packager, and we see a lot of me-too products from several Fortune 500 companies we do business with, and his was truly, truly unique," he says. "It was one of the first arguments my partner and I ever had: 'What are we doing this for? Are we ever gonna get paid?' I said, 'You know, we're gonna take a flier on this kid.'"

But the same product that got Target and Merlo to sign on would have Lowry and Ryan freaking out in a matter of weeks. The bowling pin was on shelves at Target when Lowry, who'd taken to watching his products in the Target aisles, noticed a problem. Consumers were fiddling with the pin's unusual closure, leaving threads of soap on the shelves. The valves were leaking. While the Method employees assembled rags and sponges and drove around to Bay Area Targets to wipe up the soap, Lowry jumped on a redeye to Chicago, where Jim Merlo had, to his own bemusement, found himself doing the same. "My people were so excited about the product," he says, "we went to the stores and took the leakers off the shelves and merchandised on weekends at no charge." Realizing the closure was the problem, Lowry and Merlo added a secondary cap and a sticker. Watching Lowry fiddle with solutions, Merlo was impressed. "This product was gonna work no matter what," Merlo says.

In the end, the dramatic design was Method's first big win. "Clawing your way up into raw consumer awareness is an interesting thing," says Tim Koogle, the former Yahoo CEO who joined Method's board in 2002. "It takes something pretty radical to do that, and that package served them really well, leaks and all. Consumers, if they fall in love with you, will forgive you at an early stage in life as long as it's clear you're doing something about it."

And as long as you don't do it again. "There was a time when we could get away with a couple of leakers," says CEO Dorward. "That type of miss now is unacceptable." With that bottle, though, the boys figured out something else: If a design wasn't working, they could fix it quickly. Seven months after the Bay Area and Chicago trial, Target rolled out Method's products nationwide.

Method's system of trial and error would become a hallmark of how it did business--and a key way of defending itself against the giants. In 2004, for example, Lowry and Ryan launched a laundry line--and pushed the design a little too far. As with the dish soap, they were trying to be disruptive, this time with a triple-concentrated detergent Ryan had spotted in Japan. For Method's version, Rashid came up with a figure-eight bottle--small and tidy, with a nip at the waist. To amp that up, he added a self-dosing, squeeze-and-pour cap. The idea, says Sangita Forth, who heads the laundry line, "was you could have a child in one hand and do a load with another just by flipping the bottle and pouring it into the wash."

It made perfect sense--except that consumers didn't want the new cap. "The process of doing detergent is engrained in peoples' minds," says Forth. "They don't mind having to pick up a heavy 100-ounce bottle, and they're used to the leakage you get because they've been doing it for so long." Method also learned that consumers like controlling how much detergent they use, so they can add extra if clothes are particularly dirty or hold back if the load is light. "The mass market wasn't quite getting it," says Ryan. "It's hard to reeducate people." Ultimately, Method tossed its beloved cap, switching to a traditional one that hit stores in May 2005.

The triple-concentrated detergent itself, though, proved a success. According to IRI, it moved $4.7 million between October '04 and October '05. While the overall market share is tiny, the growth got noticed. Last summer, All launched its own triple-concentrate detergent; early this year, Tide and Gain are expected to do the same. "In a category like this," says Productscan's Vierhile, "there was no reason why a P&G couldn't have been the first one to do this....But sometimes it takes a competitor."

Since Method's arrival, Colgate's Palmolive and P&G's Joy have both launched scented dish-soap lines featuring scents like lavender-ylang-ylang and pink grapefruit. Rashid says he's had four companies approach him to do Method knockoffs, and Jim Merlo of Trifinity reports that seven or eight companies have asked him to knock off Method products.

One Method defense is its speed, its ability to change on the fly. Another is its quirky marketing ploys, which would be a little risky for a publicly owned company. Two years in a row, Method has run 20-page booklets in magazines such as Real Simple, Organic Style, and Lucky. The booklets explain Method's approach and offer a starter kit for sale. It's nothing too revolutionary--but for the naked man on the cover, clutching a strategically placed bucket. The campaign cost $2 million to print and run, which is perhaps more than Method can really afford. "Everyone told us we were crazy to dedicate a 20-page book to the subject of cleaning," says Ryan. "I came from advertising and kept warning the board, do not expect to see sales lift. But we saw an incredibly sizable [10% to 15%] sales lift instantly."

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