It is common knowledge that before investing significant resources into a startup, one must conduct a thorough risk assessment. And as any shrewd counsel will tell you, market study is a must. Is it realistic to expect that anyone would pay for what you’re selling? There are several professionals who can advise you on how to formally implement a product/market fit framework with your researchers.
And yet, what if you take a chance and launch a company? A presumption or intuitive understanding that there will be buyers. Is this an unwise way to go about things, especially if you’re trying to sell something that isn’t really a household name?
No, actually, it’s not. A few weeks ago, I had the opportunity to chat with Becca and Jess Stern, the sisters behind the successful furniture startup Mustard Made.
The two sisters don’t appear to have made things simple for themselves. Without much in the way of market research, the company’s founders gambled that people would like the idea of using brightly painted metal lockers as home or trendy office furniture. The fact that Jess was in London and Becca was in Australia only added another layer of difficulty for the Sterns. In addition, there was no company bank account set up at the outset. Despite this, it was featured in the Sunday Times 100 list of Britain’s fastest-growing firms just last week.
I was curious to hear how they had gotten their family business off the ground with so little money and an idea that seemed a little far-fetched when I called them.
Grayscale to Colour
Becca proposed the innovative concept of lockers. Lockers have become commonplace recently. They tend to be drab and unseen, tucked away in dusty nooks of offices, factories, and the like. These variations can also be found in classrooms and locker rooms. Locks and slits give them spooky air. They started to become an obsession for Becca. I knew their backstory because of me. She also saw an opportunity in the market for fashionable furniture in bold hues to create a startup.
She explains that their intended market is homes, schools, and shared office spaces. It was a theory, not something supported by data on demand.
And in England, Jess was even more dubious. Her initial reaction was, “Who would want to buy lockers?” She gave in to her sister’s enthusiasm and their shared desire to manage a business after years of resisting the idea. And, “Within six months we were looking at samples in China,” she explains.
However, the situation was very uncertain. Since opening a business bank account would also require initial capital, the sisters used their life savings of A$25,000 (Australian) to rent a booth at a trade exhibition. “We could take orders but not money,” Becca explains. However, demand was high enough to warrant importing some from China. The company’s approach was similar in the United Kingdom.
It may be argued that this situation exemplified the concept of “bootstrapping.” Becca admits that launching an unproven product with a loan of AU$ 25,000 was risky, but not an enormous risk. After receiving orders, the startup could invest more money to place an order with China. That much is needed to fund the following advertising and trade show campaign. “And that led us to the following storage unit.”
It was difficult all the same. “I came from a buying background,” Jess explains, noting that she previously worked as a buyer for the British clothing chain Primark. It was rather different to order furniture in containers, though.
In addition, the supply was spotty, arriving in discrete shipments rather than as a continuous stream. For example, “We sold out of certain models and colors,” Jess adds. That, however, created a sense of scarcity, which served to pique people’s attention.
Things are different now. The sisters have engaged a merchandiser to handle the influx of orders after getting their products into major retailers in the United Kingdom and Australia. The next market to be targeted is the United States.
Problems Aside From Brexit
However, there have been persistent problems. Supply systems were interrupted by Covid, and unforeseen difficulties arose, including ships getting trapped in the Suez Canal. The aftermath of Brexit, which increased red tape in business dealings between Britain and the rest of Europe, dampened efforts to win over European citizens. There was a serious issue with European clients having to pay unexpected customs and taxes. For a period of six months, we were unable to resume exports to Europe. By establishing a storage facility in the EU, this issue has been resolved. The time difference between Australia and the United Kingdom has made working together difficult.
Still, the business has seen fairly steady expansion, increasing its revenue to £6.4 million in 2022 from £5.5 million in 2021 and £2.7 million in 2020.
Should we, then, throw out all we’ve learned about the market? Should you just run with it if you come up with a great idea? We probably won’t do it. In fact, one could argue that simply attending a trade show is a form of primary research, with resulting sales serving as proof of product market fit.
However, that occurred sometime after the first “aha!” moment. An innovative idea in which one has faith can serve as the cornerstone of a successful enterprise.