The Upsize Growth Challenge,presented by Winthrop & Weinstine, was created by Upsize magazine to match two business owners with expert advice they need to reach their goals.
Two companies were selected based on the ambition of the growth goal and the quality of the work already completed to meet it.
They participated in a workshop this summer with expert advisers supplied by the sponsoring companies. NoSweat’s plans are featured in this issue of Upsize. The journey being undertaken by Foreverence will be covered in the November/December issue. The two companies will tell their stories at a public event in October and experts will give advice applicable to all growing firms.
GROWTH CHALLENGE
NoSweat Co. exploring construction market, staffing models as expansion efforts increase.
People sweat. And those who wear hats, helmets and hard hats — whether recreationally or occupationally — have long lacked a good way to control the burning eyes, sweat stains, fogged up glasses and acne that accompanies it.
But Minnetonka-based NoSweat Co. has created a peel-and-stick liner that attaches to headwear to wick away that sweat and those associated problems.
“People hate sweating through their hat,” Chief Sales Officer Collin Iacarella told a panel of experts assembled for the 2018 Growth Challenge meeting at Winthrop & Weinstine’s downtown Minneapolis office in early September.
The idea came about while brothers Justin and J.T. Johnson were students at Gustavus Adolphus College in St. Peter. Justin was taking a class focused on writing business plans and he sat around the table one weekend with family members pondering ideas. The idea for a superabsorbent helmet or hat-liner that eliminates forehead moisture initially came from his stepfather, Chad Sulheim.
“In the middle of the class we started filing patents,” Justin Johnson says. “It made too much sense. We went all in from the get go. Ten years later, here we are.”
It did take a couple years to actually build the initial product and there were some improvements to be made after that initial release. They rewrote their business plan, raised capital and spent some time looking for the right people to manufacture the product.
But as a result of the efforts, NoSweat officials believe the company has created something superior to skull caps, sweatbands and other products marketed as sweat absorbent.
“There is a gap in sweat technology,” Iacarella says. “That’s why we created NoSweat.”
So, what’s next?
The market slowly seems to be taking notice.
The product has been popular on Amazon and it became a hit in sports, particularly with hockey players and other athletes, many of whom have endorsed the product. Golden Tate from the Detroit Lions and T.J. Oshie from the Washington Capitals are just two among several celebrity brand ambassadors.
And the company is looking to build on its momentum in sports by expanding into other areas, namely construction.
“Sports is great for the marketing,” he says. “Construction is the wider market.”
NoSweat recently unveiled a heavier-duty product tailored to that market. The company is exploring the best way to reach those customers, whether it’s partnering with a large player in the market, going directly to the largest companies in construction or some combination of those and other strategies.
NoSweat recently added two experienced professionals to its senior executive team in Damian Topousis, who has been in sales, and Tom Rolando, who has worked in the adhesives industry. Both of them have worked with small businesses previously and they arrive with a wealth of experience and contacts.
“We’re all 30 or younger,” Iacarella says. “We needed a little more gray hair in the conversations and their networks as well.”
And what’s the challenge?
There is unity among company executives about entering the construction business. But should that be its main focus going forward or should it try to tap into a number of additional markets in which sweat-removing technology would seem applicable?
Furthermore, there is still consumer education to be done. Despite strong usage in high-visibility sports, the company is still a relative unknown.
“Nobody knows what the product is yet,” Iacarella says. “If you could see our product we would be big by now. We have every NHL player wearing it. But it’s inside their helmet.”
And as these plans develop, what’s the best way to structure a sales team or approach potential financiers in making those plans?
“Finding the best way to get into that — is it just ‘let’s go to Grainger and Fastenal and try to go top-down? But there is no one demanding the product yet, so how do you get enough small companies or medium-sized construction companies to push it up chain?”
Distributors or direct?
Another tough call. “The best sale for a company like ours,” Iacarella says, “is the hockey type sale. ‘Okay, we need 1,000 liners in bulk and we just ship them to them bulk. That’s the easiest thing for us. It’s got the best margin.”
The company has been testing some different strategies but hasn’t come up with the best answer just yet.
But he adds that as the company grows, it’s looking into various approaches that could include adding sales staff or finding a partner already well-known in construction to help get the product in front of more people faster.
“That’s another thing that changes how you build a sales team,” he says
What the experts say
Growth Challenge experts indicated that while there may be many opportunities for NoSweat to grow, the company should focus its resources on expanding into the construction industry and attempt to tailor its growth around establishing business-to-business connections.
Dan Moshe, co-founder and CEO of TechGuru, says the company should focus on growth in the market that can produce the largest return on investment.
“There are so many things you could be doing, but you only have so many resources,” he says. “Of those hundreds of things you could be doing, where are you getting pulled? Where is the most energy? Where is the biggest ROI?”
Winthrop & Weinstine officials say the strategy makes marketing easier.
““Being able to market to a specific focus is what is going to have to be done,” says Gretchen Milbrath, director of business development and marketing. “You are doing a great job, but focus on construction and figure out how to get into that market.”
Adds Noreen Sedgeman, a shareholder: “To the extent you can figure out how to break into the business-to-business market, that’s where the gold mine is. If you can get the big companies to buy hundreds of thousands of hat liners for all their employees, that seems to be where the opportunity lies.”
Jon Cassens, a director with DS+B | CPA’s + Business Advisors, agreed with the B2B approach.
“The best customers for you are the big customers, not necessarily the direct-to-consumers who are buying a three-pack every month,” he says.
He also suggested that much as it has done with finding hockey and football players to act as ambassadors, NoSweat should find some similarly popular ambassadors that might speak to the construction industry.
NoSweat’s Johnson indicated that many of the sports stars would have crossover appeal to construction workers.
“You can use the sexiness of the sports to market to every other demographic,” he says. “We’re going to try it and we’ll see what happens.”
But he and Iacarella agree that they “are totally open” to branching out its cachet of celebrity ambassadors. “It’ll take time, but I think we should do that,” Iacarella says.
As far as fundraising, because NoSweat already is breaking even, the company might benefit from a bigger picture approach, says Rick Brimacomb, CEO of Brimacomb Capital.
He says rather than seeking a smaller offering, the company should pursue a substantial investment with entities willing to provide more capital. It’s an approach that might slow short-term growth, he acknowledges, but could pay off in future years with the ability to ramp up growth more quickly.
“You have time to go raise the money,” he says. “It is a little bit more of a serious effort … in who you are talking to. I’d be in favor of them trying to take the time to chase a larger dollar amount knowing the business is self-sustaining.
Maybe next year doesn’t go as fast as you want, but maybe year two and year three goes five times faster.”
CONTACT THE EXPERTS:
RICK BRIMACOMB,Brimacomb Capital: 612.803.3169; rick@brimacomb.com; www.brimacombcapital.com.
JON CASSENS, DS+B | CPA + Business Advisors: 612.630.5071; jcassens@dsb-cpa.com; www.dsb-cpa.com.
COLLIN IACARELLA, NoSweat: 615.697.9328;
collin@nosweatco.com; www.nosweatco.com.
JUSTIN JOHNSON, NoSweat: 952.412.6906;
justin@nosweatco.com; www.nosweatco.com.
GRETCHEN MILBRATH, Winthrop & Weinstine: 612.604.6640; gmilbrath@winthrop.com; www.winthrop.com.
DAN MOSHE,Tech Guru: 612.235.4895; dan@techguruit.com; www.techguruit.com.
NOREEN SEDGEMAN, Winthrop & Weinstine: 612.604.6617; nsedgeman@winthrop.com; www.winthrop.com.
Editor’s Note: Foreverence, the second company selected for the 2018 Growth Challenge, was profiled in the November/December issue of Upsize
