In a new episode of the DealMakers Podcast I interviewed Eric Ryan who has launched two very successful ventures. Together they’ve already raised more than $34 million in funding. One sold to SC Johnson. The other is doing 9 figures a year in sales. Following are a few of the ingredients to his formula for a healthy and flourishing startup venture (listen to the full episode here).
The Hardest Part of Starting a Business
Eric Ryan had the great fortune to grow up in an entrepreneurial family. His grandfather dropped out of pharmacy school to work for Henry Ford in Detroit, for $5 a day, before launching an automobile machining company. Between grade school and building offices out of Lego bricks Eric had the pleasure of running around those factory plants.
Still, despite the entrepreneurial DNA and knowing he wanted to build a company of his own since being in third grade, Eric is familiar with the hardest part of starting a company. The one that all entrepreneurs face. That is beating the head games.
After you’ve started a company or two the mechanics of it are pretty easy. It’s just a matter of repeating the same corporate steps. Yet, most entrepreneurs still seem to battle the lizard brain at the beginning of every new venture. No matter how great the idea and your past resume, it still requires some level of bullish confidence, and willingness to put your personal credibility on the line.
Eric told our listeners on the DealMakers Podcast that he learned to apply the process of de-risking a new business by breaking it into little steps.
The Dirty Business of Cleaning Products
Once childhood friends, Adam Lowry and Eric Ryan ran into each other after moving into the same block in San Francisco. The flat at 1731 Pine Street that squeezed in six guys, soon became the unwitting birthplace of a cleaning product revolution.=
Taking Richard Branson’s approach to finding a really big category ripe for a cultural shift, the founding duo stumbled on the dish soap sector. Which at the time was a bland sea of unattractive bottles that would be hidden under the kitchen sink. That was probably the best place for the cleaning products of those days that contributed to so many childhood poisonings.
With a little elbow grease Method Products was born at the apex of high design and green sustainable products.
De-Risking Your Startup
The first step Method’s co-founders took to de-risking their startup business idea was to write up the concept and send it to the 20 smartest people they knew. They invited criticism and asked every recipient to give them three reasons they thought it could fail.
They started bootstrapping. They went to all the independent grocery stores they could in the Bay Area and pitched it. They landed 30 stores.
Then they raised an angel round of $300,000 and landed Target. Then they raised $1 million.
There aren’t many entrepreneurs who at least wouldn’t secretly like to have a virally successful product or raise millions of dollars for their startup business. The media makes it sound pretty common today. Though what if the capital market and economy changes? What if you don’t have a technology product? What if none of your founders have an MBA from an Ivy League school?