Time Will Tell… "Clocky is very clever," says Gordon Segal of Crate and Barrel (left), seen here examining Gauri Nanda's signature invention. "But you can't build a company or a brand on a single product."
Related Content
- How to Launch a Cool, Profitable, Worth-All-The-Risk, Kick-Ass Start-Up (And Live To Brag About It)
Four legendary company founders tell four promising entrepreneurs a thing or two about running a business. - Case Study #2: The Inventor's Best Friend
- Case Study #3: The Taste Maker
- Case Study #4: The Enlightened M.B.A.
| Most Popular | Most E-mailed | |
|
|
||
Case Study #1: The Reluctant Entrepreneur
Published July 2007
EMAIL THIS ARTICLE
PRINTER FRIENDLY
COMMENT ON THIS ARTICLEThe Start-up: Nanda Home
The Founder: Gauri Nanda
Rochester Hills, Michigan
The business proposition: Part iRobot (NASDAQ:IRBT) and part Kate Spade, Nanda Home creates cute, clever products that are intended, in the words of its founder, to "humanize technology." The company already has one hit: Consumers have snapped up more than 9,000 units of a $50 plastic alarm clock. Set the alarm for 6 a.m. When the time comes, the clock wheels itself off your bedside table and rolls around the room, emitting R2D2-like squeaks. Dubbed Clocky, the little robot is manufactured in China and sold online and in design boutiques. The company also has a line of handbags designed to accommodate laptops.
The founder: Gauri Nanda designed Clocky as a graduate student in MIT's Media Lab. The daughter of entrepreneurs--her parents recently sold their small weekly newspaper in Detroit--she aspired to become a designer at a large technology company. "I was opposed to the idea of starting a company," says Nanda. "I saw the hours my parents worked."
After presenting Clocky to her class in the fall of 2004, she threw it in the back of her closet. She'd almost forgotten about it until the next spring, when several tech bloggers stumbled upon a photo of her invention online. Suddenly, Nanda was getting contacted by reporters and TV producers. Good Morning America called. She scrambled to fix the buggy prototype in time for its debut on network TV.
Nanda, now 27, left MIT with a master's degree that fall and began considering her options. Licensing the clock seemed like the easiest move, but she couldn't bring herself to give up control. "I had all these ideas about how it should look and behave," she says. After finding a manufacturer on AliBaba.com, a Chinese business-to-business website, she went to Hong Kong to oversee production. The first run of 500 clocks sold out almost immediately online.
No. of full-time employees: None. The company outsources manufacturing, fulfillment, and some design. In addition to one part-timer, Nanda's parents have been helping her run the company.
Capital raised to date: $80,000 from family
Market potential: The market for gadgetry is large, accounting for $145 billion in the U.S. last year, a 13 percent increase from 2005, according to the Consumer Electronics Association. The group estimates that the average American spends $1,200 on electronics annually. Meanwhile, consumers seem to be increasingly willing to pay a premium for design--witness the proliferation of iPods, Razr phones, and Design Within Reach stores.
Revenue projections:
2007: $1 million
2008: $3 million
2009: $4 million
Cash-flow picture: The company broke even in February, after only two months of sales, and Nanda expects to have cash flow of $650,000 this year. In 2008 she's projecting $2.1 million in cash flow and by 2009 $3 million.
Competition: Knockoffs are inevitable. Plus there are similar products, such as the Blowfly Alarm Clock, an invention that shoots a ball into the air when it's time to wake up. Fashionable laptop bags exist, but no company yet dominates the market. Seattle-based LaLa laptop offers a line of laptop handbags starting at $150. Nanda's bags cost $58.
Growth strategy: Right now, Nanda is trying to expand retail distribution. She's talking to Brookstone and Target (NYSE:TGT), and hopes to sell Clocky through these and other retailers by the end of the year. With the laptop bags, Nanda is focusing on small design stores. "The bag is about building a brand," she says--that is, she wants to communicate to consumers that she's more than just a funny alarm clock. To that end, she's hoping to add more colors and styles, including a men's bag.
Challenges: Is it a product, or is it a company? Nanda says she hopes to have a number of new products launched by 2009, but she's not saying what they will be. New versions of her current offerings are in the works, but with no full-time designers and no sales force it's impossible for Nanda to guarantee that she'll be able to duplicate Clocky's success.
Returns could be another challenge. So far, only a few defective clocks have been returned, but a run of shoddy product could overwhelm Nanda's paltry customer service operation. Finally, the ability of Nanda to juggle all aspects of running the company is reaching its limits. "You can pretty much outsource anything today," she says. "But I'm getting to the point where I'm micromanaging everything." She plans to hire a sales and marketing manager in the near future.
