Jules Pieri is the godmother of startup manufacturers. A former industrial designer, she and her business partner Joanne Domeniconi launched The Grommet 10 years ago to introduce novel consumer products to a community of quality- and values-minded consumers. The company evaluates 300 submissions a week, chooses the top 3 percent, and launches them into the market with videos about their origin stories and long chats between makers and customers. Products receiving early visibility from The Grommet include Fitbit, GoldieBlox, and SodaStream. The company also advises entrepreneurs on subjects like packaging and helps them develop distribution.
Speaking recently from an Ace Hardware trade show in Orlando, Pieri discussed the challenges facing makers and her new DIY book, How We Make Stuff Now: Turn Ideas Into Products That Build Successful Businesses.
How are makers different from entrepreneurs who build digital companies or software businesses, which have received the lion's share of attention the past couple of decades?
What makes them similar to software entrepreneurs is they are using technology tools to do their businesses. What is different is that the competencies required to pull together a physical product are broader and deeper, and you are competing with the big guys awfully quickly. You need to nail down a supply chain. You need packaging. Probably one of the toughest things is getting distribution from retailers. These are especially complex businesses to pull off. I have never seen it happen that if you build it, they will come.
You say makers quickly find themselves up against large companies. How can they compete?
Three ways. One is, large companies have legacy product lines that inhibit innovation. If they invent something new, it will push one of their profitable existing products off the shelf. They have such high hurdles that most innovations die on the vine. Two is that consumers, especially Millennials, have almost an aversion to established brands. They are looking for brands that reflect their values, and they don't trust the big guys to be sincere about that. Three is that on Instagram and other social platforms, makers can grab attention in ways that big brands can't. These companies are newsworthy, and they can be cheeky and bold. A founder alone in their office, they can post anything they want.
What are some things makers don't pay enough attention to?
One is packaging. You can sell a product online and put it in a plastic bag. It is not ideal but it is acceptable. But retail is a whole different ballgame. Your product is naked and defenseless, so the packaging has to be powerful and telegraphic. Intellectual property is another one that bites them. They are so surprised by the nefarious activity in that area. They have trademarks and patents in place, but you still have to defend them. If something is going to disillusion or dissuade a maker from continuing, an IP battle is sometimes the straw that breaks the camel's back.
It sounds like for most makers prototypes are the make-or-break.
Prototypes are like truth serum. You can get misled by two-dimensional images, like a really elaborate CAD drawing. You can talk yourself into the virtues of your product. But when you give people the chance to interact with a prototype they tell you what you might not have wanted to know or couldn't have imagined.
How important is being "Made in America" these days?
It is something our consumers cared about before our makers had their arms around it. The flashpoint is China, and there is a mildly racist tone to that. If you say something is made in Australia or France or even Vietnam, it doesn't provoke the emotional reaction of China. But that reaction is so knee-jerk. Sometimes it's a product we no longer make in the U.S.A and China is really, really good at it. Or maybe from China you get the best quality. There is no nuance in this conversation.
When makers start by outsourcing overseas, how often do they end up bringing manufacturing back home?
It goes both ways, but we actually see makers starting domestic more often. Then, either the supply chain isn't here or the tools are too expensive or the costs are just too high overall, so they reluctantly go overseas. But there are good reasons besides social value to start here. Product development is so much smoother when you work with a domestic partner and can frequently visit the factory. IP protection is not rock solid, but it is stronger. You won't have your factory producing your brand out the front door and shipping counterfeit out the back door, which can happen in China. And as Chinese society becomes more affluent, some of the cost gap is narrowing. There is hope that some domestic manufacturers can compete when you look at the all-in costs: things like brand benefit and speed of innovation. Although never on a per-hour labor cost evaluation.
What do you tell makers about selling on Amazon?
I tell them to try not to. You will have a more sustainable long-term business if you work with other retailers. They are all extremely aware that 50 percent of online searches start on Amazon, and the Prime customer base is growing by leaps and bounds. So if your product is available on Amazon, it is probably going to be the primary outlet. And then you are going to have three problems. One: It is not healthy to have one dominant customer in any business. Two: If you sell directly to Amazon you give up control of your pricing. And three: It opens up a neon-lit superhighway to counterfeiters and copycats. Having said that, if you choose to open up on Amazon, open your own marketplace. Never sell directly to Amazon.
Whole Foods has traditionally been good about sourcing from local startups, although the acquisition by Amazon seems to have affected that. What other retailers are friendly to makers?
Nordstrom's is good. Wegman's. Ace Hardware is locally owned, so they have a huge advantage in buying locally. Williams Sonoma has been doing this for a really long time and has a great platform for emerging companies.
You folks review 300 products a week and choose three to feature. What makes the cut?
When someone is solving a problem in a fresh way and there is something about the company story that people will relate to. My personal favorites are underrepresented entrepreneurs--for example, a veteran or a person of color. We do a double and triple look at a company that has a founder in that category. Or some kind of heroic story behind the product's birth. Our role is to bring humanity to all of this.
What kinds of submissions disappoint you?
Something that is imitative. Sometimes when we do the research we realize this is the lesser version or a copycat of an existing product. Also, people who cut corners on design or materials. It doesn't usually cost more to get the help of a designer. But there they go and produce something that is butt ugly. Or--this is really bad--they will get a deal with their factory for the packaging to be provided along with the product. Factories have no business doing packaging design.
Does your personal experience as a product designer influence your judgment?
Don't get me wrong--that I'm looking for high-end materials or purely aesthetics-driven solutions. Just whatever the product is, make it the best it can be. At this trade show, I am standing across from a man who has a product called Orange Screw. It is the most functional product possible: a giant augur type screw that you use to hold down a tent. It is also a gorgeous piece of art. He made it orange. Why not? You don't have to make it charcoal gray. You won't trip on it or lose it if it is orange. That is a smart design choice.