Everyone has great business ideas. Each time you think, "why can't I?", or "wouldn't it be cool if..." you might be pregnant with a good product or business idea. Fifteen years ago, I thought, "wouldn't it be easier if I squeeze my cigar cutter closed with my palm rather than my finger tips? And if that cutter had a pivot point, wouldn't that leverage make the cut even more powerful? Those questions defined a problem, which our Xi cutter solved. Fortunately, many others agreed with the solution, even if they didn't know they had a problem (thank you)!
It's best if the solution is unique, even patentable, since those lend immediate market interest and protection. When the product isn't unique, it must at least have a unique meaning, or "position" in the consumers mind. For example, think about pocket knives, which have been around for hundreds of years. Yet the new position created by tactical knives like Spyderco reinvigorated the entire category.
But the road to success is littered with good, unique solutions. In today's competitive marketplace, products must carry competitive protection, a suit of armor. Great service is one such protection (low price is another). That, and because "do unto others" is part of our essence, is why we have a lifetime warranty. Entrepreneurs should solve the "why" of buy - and not just the "what".
In order for an idea to become a business, the solution it provides must have appeal others are willing to pay for. The great show, "Shark Tank" explores exactly that, and in my opinion, does a great service to inventors participating and watching - because it dramatically demonstrates the tough judgement of the market. Many inventors fall in love with an idea, never stopping to consider whether others might be equally attracted. They ought to ask themselves and others, "would this make it on Shark Tank?"
XIKAR is fortunate to receive product inventors' ideas, and some, like our Ashtray Can, have obvious appeal. This product quickly passed our review process, an accelerated launch, and now provides the inventor a
nice royalty (if you have a new product idea, please send me an email). Others like the "Monica" cutter, didn't pass. If you are old enough to remember Monica Lewinsky, you can imagine why!
The key to understanding the market for your solution is to test it. The test should be unbiased, as close to the marketplace as possible. If you don't have a product, discuss the "problem" with friends, acquaintances, even strangers. (I don't suggest discussing your solution at this stage. While very very few people have the ability or low morals to steal your idea, this phase is still young enough that, if that happens, they could potentially get it to market before you). Record their responses, and mold the solution to them in a way that feels logical to you.
We did exactly this when in 2003 we decided to enter the lighter market. Specifically, we asked questions surrounding problems with lighters and with lighter warranties. XIKAR already had a solution - in our lifetime warranty, but needed to know if our solution was also unique - turned out it was! XIKAR for Life is the position that gave our first lighters unique meaning.
And in the meantime, we learned how to make interesting lighters with great function. The first thing we found with lighters was that they are just like a car: moving parts, with an engine, that burns fuel. It didn't take long to realize that the single most important item in a lighter's function is the fuel -- just like a car. Bad butane affects the engine just like diesel in a gas car, and good fuel gives a hot, clean burn. So we introduced our own ultra refined fuel. We also realized that like cars, the individual components impact not only immediate performance, but also longevity. So at this point, we design the lighter, engineer the mechanisms, source the parts and oversee and inspect the production.
Even with very positive responses, the test isn't over. Simply put, the marketplace is by far the best test. It is the shark tank. Show your first prototype to a group of your target consumer. What do they think of it? How much would they pay for it? Feel free to describe the features of it, but be careful to stay clear of selling the advantages and benefits - you can't be there to make every sale! And since you can't, you want unbiased feedback before investing any more funds.
Early in our business life, we would take a product to market at this stage. On receipt of positive feedback, we would then go into full production, because demand during the cigar boom was so high, and we were very anxious to get the sales. Fortunately, we didn't make many mistakes. But I can surely say that our endeavor into pocketknives lead to some beautiful product, and taught us volumes about blade and handle materials, edge grinds, and even introduced us to some current vendors. However, deeper research would have revealed that gentlemen's knives were on the wane, particularly after 9/11. Deeper serious study might have gained the same knowledge without the financial side track.
Today, we take one further test step - we order a "sample run" of sufficient units to test in a dozen stores around the country. This real, live test takes place with our standard retail package and in-store advertising. It therefore tells us all we need to know - whether a consumer sees the same solution we envision. Our Ashtray Can and more recently our Vitara lighter passed the test. Importantly, a lighter and a cutter didn't.
Congratulations! Your solution, then an invention, is now a product. The market responded and demands the product. Are you in business? Maybe... read next month's newsletter to find out.
Kurt Van Keppel