As a child, Sahar Saidi was teased for her curls. She implored her mother to help straighten her hair—which included conditioning and detangling, two hours under the blow dryer, and sometimes a clothes iron. When she later embraced her curls, hair care still took 90 minutes a day, and three to six different products.
Four years ago, following a decade in sales and marketing, Saidi, 39, decided to fix this problem: “My mission was to find an all-in-one product that would help people with curly hair feel they have normal hair.” She started out by begging cosmetic manufacturing labs* to work with her; today she heads her company, LUS Brands, with three must-have products and sales of over 100,000 units a month.*
There’s a saying in business: you’ll go broke selling products and services customers want. The best businesses offer products that customers need.
But how do you distinguish needs from wants? That’s the challenge facing every new venture. As four of our Startup List companies demonstrate, you have to live and breathe your customers’ problems, embrace rigorous testing and reduce your risks—before taking that leap of faith.
Sahar Saidi, LUS Brands
TAKEAWAY: THE OBSTACLE IS THE PATH
Saidi approached 40 cosmetic manufacturing labs across North America. Her offer? Finding the right formula would entitle them to supply LUS Brands (No. 16 on the Startup List).
Most said no, but Saidi eventually engaged four firms that agreed to test new formulas and ingredients (moringa oil and shea butter were in, sulfates and paraffin were out). After more than a year of formulating, and following tests with Saidi’s family and friends, a lab in Toronto nailed the problem. In early 2017, LUS released a three-step solution: Love Ur Curls. Each US$45 kit includes three products: a shampoo, a conditioner and one of three styling products* (for wavy, curly or “kinky-coily” hair).
“It was important to get turned down,” says Saidi. “I learned a lot about the industry. There are no shortcuts.”
Saidi was disappointed when her dream products initially failed to sell themselves. The first month, she sold 125 three-bottle packages. The second month, just 300. So Saidi adjusted her messaging, hiring a social media marketer to tell her story through short, scrappy videos on Facebook and Instagram. The marketer also encouraged clients to talk back. “People love our products,” says Saidi. “They do their own videos, and we use them in our ads.”
“Woke up today and my hair was perfect, which never happens,” says one happy customer. “I went from ‘hot mess’ to ‘heck yes’ in just one use,” crows another. “With social media, says Saidi, “an entrepreneur can make it with less capital than they used to need.”
LUS now has close to 40 employees and is starting to work with international partners to supply customers in Europe and other foreign markets.
Ricardo Evangelho, Hit Point Press
TAKEAWAY: REDUCE RISK WITH PRE-SALES
The Ottawa-based graphic designer Ricardo Evangelho, 34, started out creating web-based games, but found it a shaky, hit-based line of work. So he focused on e-commerce, designing digital accessories for the fantasy card game Magic: The Gathering.
Magic’s owner, Wizards of the Coast, guards its intellectual property closely. They weren’t keen on Evangelho stepping on their MTG territory. So he shifted to a more accessible Wizards property, Dungeons & Dragons. “Many players spend more than $1,000 a year on the game and its accessories,” says Evangelho of the still wildly popular game with nine million players in North America alone.
Evangelho’s business strategy? He launches new products through the crowdfunding site Kickstarter. By using Kickstarter to debut new products before they’re ready—such as a deck of new D&D “reference cards” that help players sort out characters, monsters and weapons—he can evaluate the demand for each product and make smart production decisions. In 2017, Hit Point Press (“hit points” measure how much damage characters can withstand in fantasy fighting games) set a modest target for its first Kickstarter campaign—and ended up with $63,000 in donations to underwrite its launch. Today, Hit Point ranks No. 29 on the Startup List.
Kickstarter also helps Evanghelo “gamify” launches by offering ever more enticing promotions and incentives to his fans as each campaign progresses. The formula works. “Kickstarter makes a fancy pre-order,” says Evangelho. “It reduces your risk and transforms any new product or idea you want to build into an event.” This year’s campaign set a goal of $800,000—and raised $1.3 million.
Daniel Yang, DJ Bikes
TAKEAWAY: SCRUTINIZE YOUR MARKET
Growing up in outdoorsy Calgary, Daniel Yang loved bicycle rides with his family, and dreamed of opening his own bike business. But when he decided to make that dream come true in January 2017—quitting his job as a technology consultant—the pressure couldn’t have been higher.
Yang decided to sell e-bikes—compact bicycles with emission-free motors designed mainly for commuters and never-say-quit seniors. E-bikes were a hit in China and Europe, even at a price of $1,500 and up. But the category was new to North America, and Yang and his wife, Jolin, had a newborn son. He had just one chance to get this right.
The market was too new for Yang, 41, to do consumer testing, so he went with his gut. He knew e-bikes would be most popular among active seniors (who appreciate cycling but need help with pedalling) and ecology-minded commuters. Knowing that cycling is a seasonal sport in Canada, he built an e-commerce website targeting the U.S. market. Yang felt he had honed his instinct and judgment through his consulting work. “I learned to analyze situations, listen carefully to my clients and solve problems.”
The Taiwan-born Yang contacted Asian e-bike companies to vet suppliers, insisting on brand-name components such as Shimano gears. He kept costs low by offering just two models at first—a commuter cruiser and a mountain bike. He built his own sales website and contracted out distribution to Amazon warehouses, saving on logistics costs.
Three months after launching DJ Bikes in February 2017, Yang wrote a $100,000 cheque to finance his first container-load of 90 e-bikes—the minimum possible order. It took 45 days to sell all 90 units, and he quickly ordered another shipment—he was already making more money selling e-bikes than he had as a full-time consultant. Today, DJ Bikes is No. 27 on the Startup List. With COVID-19 spurring sales, Yang expects revenues will double this year, and again in 2021.
Beau Standish, 7D Surgical
TAKEAWAY: TEST FOR CUSTOMER PASSION
Computer-assisted back surgery is a recent medical breakthrough. But every minute patients spend on operating tables increases their risk of infection, and the X-rays that guide surgeons to the patient’s spine expose patients and staff to radiation. In 2012, three doctors of medical physics and a neurosurgeon joined forces to solve this problem.
Led by Victor Yang, a neurosurgeon at Sunnybrook Health Sciences Centre in Toronto, the team developed Flash, a machine-vision system that replaces X-rays with visible light patterns projected onto the patient’s body. It reduces the time needed to “register” a patient (align their position with the surgeon’s 3D model) from 30 minutes to less than 30 seconds, which reduces risk and costs less than half of competitive solutions.
Success took its sweet time. But CEO Beau Standish knew the product would succeed when the partners offered their first product demos—and time-pressed surgeons stayed for hours, impressed enough to witness procedure after procedure. Buoyed by such commitment, the partners, friends and families invested more than $20 million to develop the system. Says Standish, 41, who has a degree in engineering physics and a Ph.D. in medical biophysics, “We have a lot of people betting on us.”
Since launching sales in 2017, 7D Surgical (No. 23 on the Startup List) has sold its US$480,000 platform to more than 30 hospitals in Canada, Australia, New Zealand and the U.S., including Stanford and the Cleveland Clinic. But funds are notoriously tight in medicine, and scrutiny is high. Even 7D’s handful of Canadian clients required hefty government incentives before buying in. Standish and his fellow co-founders are optimistic. Sales doubled in 2018 and in 2019, and the company has received approvals to sell in Europe (one-third of the global market) and Singapore.
CORRECTION, Oct. 16, 2020: An earlier version of this story misstated the monthly sales of LUS Brands, and included incorrect information about the company’s styling products and the manufacturing labs that produced those products.