Acquisitions often fail. So what makes Method founders Eric Ryan and Adam Lowry believe the sale to Ecover could buck the trend?
When I first heard the news--that Ecover had acquired Method--I felt a twinge of sadness.
I've been following and writing about Eric Ryan and Adam Lowry almost since they started Method in 2000. The company's positioning has always demonstrated textbook clarity--cleaning products that are gorgeous, smell great, and are good for the planet--and I've admired the ingenuity that has allowed the company to take on mighty competitors and win. That Method was started in the middle of a recession just made the story more inspiring.
Mergers and acquisitions have a startlingly high failure rate--50% to 80%--depending on which research you choose to believe. But Ryan and Lowry have always been smart. So what made them think this deal could buck the trend?
"Usually a business like ours gets gobbled up by the mother ship and the corners get sanded off really fast," Ryan conceded. "But we had a chance to do something different because both companies are small, disruptive, and totally aligned in our mission."
Both Method and Ecover are green and clean. They focus on supplying cleaning products that work without using toxic, environmentally dangerous ingredients. While Ecover is the dominant brand in Europe, Method is in North America. Ryan and Lowry both know that blending an American and a Belgian company implies multiple cultural challenges; the deeper truth may be that their approach to products and the environment lays a deeper cultural foundation than any single nationality might provide. Together the companies see the opportunity of becoming the single biggest green-clean brand in the world. In other words: this merger isn't just about liquidity. It is also about chemistry.
"Our approach has always been to redesign cleaning from the bottom up," Ryan told me. "To do that, you need a different lens on formulation and the technology you put into it. Instead of saying 'solvents are bad so don't use them,' we said: 'Why not create a good one?' We have that. It's our core capability. Now we can do that across all functionalities with a much bigger team and a bigger platform. We aren’t translating from an old technology but building scale around green technology which both companies have developed."
That isn't to say there aren't differences. Ecover products are distinctively dull, ascetic in their plainness. Method's, by contrast, are gorgeous. The company first won its coveted spot in Target stores with its beautiful bottles designed by Karim Rashid. But, as Ryan is keen to point out, the green market is so huge that it can support different products and different brands.
"Laundry alone--just in North America--is a $5 billion business," he says. "P&G markets multiple brands just in that one category. So what's important for us is to leverage our know-how, supply chain, and distribution networks to give green consumers the same rich mix."
What's most striking about this deal is that it isn't like the ones done by the Body Shop, Green & Black, or Innocent, in which a small green company gets swallowed up by an ungreen behemoth that wants to buy eco-credentials. Both Ecover and Method started green, have stayed green, and there are probably no two companies who understand that market---and that chemistry--as well as these two. If they can avoid the pitfalls of all mergers--politics, ego, and bureaucracy--they stand a good chance of cleaning up (in an environmentally friendly way, of course).
"We are currently now the world's largest green cleaning company," Lowry pointed out. "But we are still small. We're looking forward to the day when there's no distinction between being the biggest green cleaning company and the biggest cleaning company."