As CEO and co-founder of the Grommet, a site that has launched innovative products like Fitbit, GoldieBlox, and SodaStream, Jules Pieri has worked with hundreds of entrepreneurs to transform their brainchildren into businesses. Her book, How We Make Stuff Now: Turn Ideas Into Products That Build Successful Businesses, was published in April.

For the Inc. Founders Project, Pieri is mentoring Grace Hsiang and Andrew Park, the married co-founders of 7Till8, a custom wetsuit company, based in Torrance, California, that launched in 2016. Park, a former open-water lifeguard, knows the problems of poor wetsuit fit. Too loose and water seeps in. Too snug and you can't move easily. That's why swimmers submit 16 measurements to 7Till8, which then produces a custom wetsuit. The cost ranges from $580 to $750--two to three times the price of an off-the-rack model.

Hsiang: We named 7Till8 after what surfers call the glass-off hour, before sunset, when the conditions get glassy and the waves are really smooth. Our model has been pretty successful. Between 2017 and 2018, we doubled revenue. What we are really concerned about now is how to scale our manufacturing to align with our growth.

Pieri: There are two early metrics to judge whether you have a viable consumer products business. One is margin. You need to get production costs--including packaging and shipping to your warehouse--to 20 percent of the ultimate retail price. It will take about 30 percent of your price to run your operations. Then you need about 50 percent for retailer margins or direct-to-consumer marketing. Then, once you get beyond the early-adopter and friendly press stage, you have to pay to acquire customers. Start having conversations with your factory. Ask them: What would make this more efficient?

Hsiang: We have a reputation for being a premium, handcrafted product. How do we reduce costs without sacrificing quality? We are very concerned about product integrity. One of the reasons the material we use is so beloved is that it is made from limestone, while most commercial neoprene is petroleum-based.

Pieri: Do you imagine that this limestone neoprene has to be the core material in any future non-custom products?

You picked a great name, because it's intriguing, even without knowing what it means. It's important to name your company after your vision, and not your first product.Jules Pieri

Hsiang: I don't know. But we do want to make sure that whatever we are using is top-of-the-line in performance and durability. At the moment, we believe our material is the best on the market.

Pieri: So let's try to protect that material and look to reduce costs in other parts of the supply chain. I assume the 16 measurements you use translate into high production costs?

Park: The manual process to custom-design the wetsuits is a bottleneck.

Pieri: Is there something you could produce with, say, four measurements?

Hsiang: That's on our road map. Over the past few years, we have collected tons of measurement data from our customers, and we believe we can leverage it. We have a vision of a custom 2.0 experience, in which the user doesn't have to completely self-measure to achieve a tailored fit.

Pieri: You just identified your unfair advantage. No one else has that data. Remember, you shouldn't view standardization as a reduction in quality. When you standardize, you can have more predictable quality.

Park: We need to find a way to level our orders. Because we are a seasonal business, our production is sporadic.

Hsiang: Our peak time for sales is between Q4 and Q1. When the weather gets cold, a wetsuit is crucial.

Pieri: Down the road, you probably will start laying in inventory year-round so you can smooth those valleys and peaks and maintain quality.

Park: So when we are doing more of a standardized inventory, we should approach manufacturers in the off-season and negotiate better prices?

Pieri: You will get better pricing and you will be a better partner. One of the worst things to do with a factory is surprise them.

Hsiang: We've been thinking about retail distribution. Some customers don't want to measure themselves and submit that information. You have worked with so many people who have scaled. What are the most common mistakes those companies make?

Pieri: Foremost would be going after too small a market. You have to be a genius to hit a small market perfectly right out of the gate. I like to see a lot of potential customers and potential ways to serve them. You have been successful with direct-to-consumer. I expect you to stay there for quite a while. But I would do everything I could to achieve the scale to enable retail distribution. Because a lot of the direct-to-consumer companies are tapping out at $10 million, $20 million, or $30 million. That might sound large to you now. But it won't after a few years.

From the Winter 2019/2020 issue of Inc. Magazine