topps company

Case Study: Why the Founder of a Start-Up Chose to Give Up Control

Tina Fineberg for The New York TimesJacqui Rosshandler, founder of Eatwhatever: “I certainly didn’t get railroaded.”

Case Study

What would you do with this business?

Last week, we published a case study about a start-up founded by a young Australian expatriate who faced a difficult choice — just how difficult was revealed by the scores of conflicting reader comments that poured in to this blog. The choice belonged to Jacqui Rosshandler, who was about to run out of money: she could mothball her breath freshener business, Eatwhatever, and find a job, or she could accept the financial lifeline offered by Arthur Shorin, longtime owner of the Topps Company, who had sold his company and was nurturing start-ups.

It was Mr. Shorin’s terms that made the choice difficult. He wanted 75 percent of Ms. Rosshandler’s company, Jacquii L.L.C. In return, he offered a $250,000 infusion of capital; a job with his New York company, Artuitive; and the opportunity to earn back 15 percent of the business if certain financial goals were met — which would bring her to 40 percent ownership of a company that had been all hers.

In a recent interview, condensed and edited below, Ms. Rosshandler explained why she said yes to Mr. Shorin’s offer last February — and also responded to some of those reader comments.

Our readers seemed to be split on what you should do. Was it an agonizing decision for you?

It wasn’t agonizing. It was more about negotiating the terms of the deal that took quite a while. It wasn’t simply that he offered me a deal and I just said yes. There was a lot of back and forth. It took maybe six weeks to negotiate the terms. But I was very sure that I wanted him involved.

Why?

I immediately realized Arthur was very smart. I figured he knew the candy business. He grew up in those factories knowing every part of the business. But I think most important, when I met other people he worked with — his accountant, buyers — I discovered that they’d been working with him for 40 years. People who have a bad reputation in business generally don’t have the same people around them for many, many years. Plus, it was amazing how many of them said to me, “You are so lucky to work with Arthur. He’s going to make this product huge for you.”

What did you gain in those negotiations — to answer those who worried that you got railroaded?

I certainly didn’t get railroaded. I feel like a lot of people looked at this from a very strict venture capital standpoint, that I gave up control for $250,000. That’s not the case at all. I wanted to make sure that I would have a say in decision-making. I made some gains. Arthur made some gains in the negotiations. I’m a lawyer by trade and a bit skeptical of people — and I was suspicious to a point to begin with. But there was something about him that I just trusted. I think it had a lot to do with his personality. I went with my gut. I felt this was a guy I could trust. Now, I would trust him with anything.

Two of the commentators we quoted and many readers who advised you to turn down the offer had tough words for Mr. Shorin. What’s been his reaction?

He was more concerned with my reputation and the product’s reputation than his own. I think he feels that anybody who knows him knows that he would never take advantage of anybody. I understand it could look like that, without understanding the relationship we have. We’re really a partnership. It doesn’t feel at all like I’ve been belittled and I have to run his company according to how he wants it done. I basically get the final say on everything. We work together. We talk every single day. We go to some major meetings together, some I go to alone. But I’m basically running the company the same way that I did, but with the bonus of having this person who’s been involved in this industry for years.

What early input and advice did he offer?

Originally, you had to take two of the gel caps. At his suggestion, we reformulated them to make the gel caps stronger so you only need one gel cap and one mint. Great advice. We toned down the sexual innuendo when we did a complete repackaging. Sales before I met Arthur were low because the packaging was not great, the messaging wasn’t as clear. We fixed that. And he made sure we trademarked “2 Steps to Kissable Breath.”

Mr. Shorin pledged to invest at least $250,000 — and more, if justified, to help jump-start the business. How much did he invest in 2012?

He’s actually invested more money, around a half million dollars, so far.

Where did the money go?

Production of product and marketing. We do a lot of social media and sampling. We really want to build our reputation in New York, because it is so accessible for us and it is such a trend-setting city. We made a 30-second TV ad that ran locally for three weeks last November when Eatwhatever hit the shelves in 250 Duane Reade stores in New York City.

When I spoke with Mr. Shorin, he expected 2012 sales to reach $500,000. Did the business actually grow more than tenfold last year?

Yes, it has. He has made such a difference. That’s why when people say, Oh you can borrow money from family or friends, or get it from crowdsourcing, it’s just not the same. The doors that he has opened by being someone in the business his entire life — family money can’t buy that.

What doors did he open?

Duane Reade was very excited about the product, very happy to bring it on. The actual sale took about five minutes. But it took a year for me to get in to see them, and the only reason they saw me was I got to the right broker, who Arthur introduced me to.

What’s in store for 2013?

The margins and rate of sale on the breath freshener are fabulous. It’s certainly our focus, but we’d like to extend the brand name into other products. We’re looking at a few other products, all with the same sort of distribution model — all healthy, good-for-you products. What we’d like to do is sell confidence. And a whole lot of different products can fit into that category. I would like to see a second product release midway through this year.

Article source: http://boss.blogs.nytimes.com/2013/01/09/why-the-founder-of-a-start-up-chose-to-give-up-control/?partner=rss&emc=rss

Advertising: Bazooka Gum Overhauls Brand and Loses Comic Strips

Total domestic sales of bubble gum are projected to total $206.9 million in 2012, from $332.4 million in 2007, a drop of 38 percent, according to Euromonitor International, a market research firm.

Bazooka bubble gum, which was introduced in 1947, fell even more, from $17 million in 2007 to a projected $8.8 million in 2012, a drop of 48 percent.

Now, in what the brand is calling a reimagined Bazooka, it has overhauled its logo and packaging.

Gone is the red, white and blue color scheme and geometric design of the brand, replaced with more saturated hues like fuchsia and yellow, and with the splattered-paint look of graffiti.

The new packaging is by Goodwin Design Group, of Wallingford, Pa., which also undertook a less pronounced Bazooka package redesign in 2006. It will begin appearing in stores in January.

“What we’re trying to do with the relaunch is to make the brand relevant again to today’s kids,” said Anthony Trani, vice president of marketing at Bazooka Candy Brands, a division of the Topps Company.

Ken Carbone, a founder of the Carbone Smolan Agency, a Manhattan branding and design firm, reviewed the new Bazooka design, and said it “takes visual cues from comic books and skateboard culture and graffiti” and that it “feels right for today.”

But Mr. Carbone, the co-author with Leslie Smolan of “ ‘Dialog’: What Makes a Great Design Partnership,” questioned why the gum veered so far from its original design.

“I wonder if they couldn’t have taken more from what they had and re-energized it to make it look cool, like the Juicy Fruit model and Hershey’s model,” said Mr. Carbone, referring to the gum brand and chocolate bar that have tweaked their looks over the years but not metamorphosed. “I think this is a little bit of an overreach,” he said, “because they had some equity and authenticity” in their original design.

Bazooka, however, which has struggled to get shelf space in the last decade, said the bold approach was winning over retailers. Among those not carrying the brand now that will begin stocking it early in 2013 are Target, 7-Eleven and Kroger.

The gum originally sold for a penny in individual pieces on countertop displays in penny candy stores. The new standard package will feature 10 pieces of gum, five each of the original flavor and of a new flavor, blue raspberry.

A piece of the rectangular gum will increase in size to 6 grams from 4.5 grams, a mouthful compared with brands like Stride, with pieces at 1.9 grams, and Dentyne Ice, at 1.5 grams. (Along with being more elastic than typical gum, bubble gum generally comes in bigger pieces, giving chewers more to inflate.)

In recent years, sugarless gums have increasingly been marketed for functional benefits, like freshening breath, whitening teeth and strengthening teeth, with some brands even winning approval to carry the American Dental Association seal and a statement that chewing sugarless gum after eating helps reduce cavities.

But the draw for regular gum tends to be more indulgent, with 17.9 percent of those who chew regular gum doing so because they like the taste, in contrast to 15.1 percent of sugarless chewers, according to a 2010 report from the National Confectioners Association, an industry group.

The favorite flavor among consumers age 6 to 12, bubble gum drops to third place among those age 13 to 17 and to fifth for those 18 and older, according to the study. Frequency of gum chewing is highest among those age 13 to 17, who on average chew 314 times a year, in contrast to 234 times for those 18 to 24 and 211 times for those 25 to 34.

Bazooka is pitched to children from 10 to 13, according to the brand.

The brand, which said it had not advertised in more than five years, also will embark on a television and online advertising campaign. The campaign is by Flint Steel, a new agency in Manhattan, which also is redesigning the brand’s Web site. Commercials are expected to appear in March.

What adults may remember best about Bazooka, however, is disappearing. The tiny comic strip featuring the eyepatch-wearing brand mascot Bazooka Joe that has been wrapped around each piece of gum since 1953 is being replaced.

New inserts will feature brainteasers, like a challenge to list 10 comic book heroes named after animals, or activities, like instructions on folding the insert into an airplane. They also include codes that, when entered at BazookaJoe.com, will unlock content like videos and video games.

Bazooka Joe and his sidekick, Mort, who wears his turtleneck up over his mouth, will appear only occasionally as illustrations in the new inserts, but without the antics and corny jokes of the three-panel strips.

Only 7 percent of children age 6 to 12 are aware of the Bazooka Joe character, according to E-Poll Market Research, a brand and celebrity research firm that last collected data about the character in 2007. In contrast , an average 30 percent of children are aware of food product mascots, the firm said. Among children who are aware of Bazooka Joe, 41 percent liked the character, below the average likability for food characters, which is 54 percent.

Mr. Trani stressed that the brand was not discarding Bazooka Joe, who in the past has appeared not just in comics, but also on packaging, on store displays and in advertising.

“Instead of a cheesy joke,” Mr. Trani said, “we wanted to have a fun, engaging activity for kids, but the purpose wasn’t to not include Bazooka Joe.”

“To me it is all about doing one thing really well,” he said, “and that is refreshing the Bazooka brand.”

Article source: http://www.nytimes.com/2012/11/30/business/media/bazooka-gum-overhauls-brand-and-loses-comic-strips.html?partner=rss&emc=rss

Case Study: Why the Founder of a Start-Up Chose to Give Up Control

Case Study

Advertising: Bazooka Gum Overhauls Brand and Loses Comic Strips

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