Degree’s Tilted Nursing Bottles Offer New Angle on Baby Market
James Stephenson used to be in the car business, but he wanted something more resistant to recessions and decided to get into the baby products business. Now his Degree Baby Products in Chatsworth is having trouble filling orders from hospitals and big chains, including Toys R Us and Walgreen.
His magic product? A different baby bottle.
The problem, he says, with conventional baby bottles is that they’re too straight. Stephenson’s bottle has a 35-degree tilt near the top that allows infants to sit straight while feeding and minimizes the amount of air they take in.
The company has sold about half a million bottles so far to hospitals and chain stores such as Toys R Us and Walgreen. The 33-year-old entrepreneur hopes to eventually expand into other juvenile products.
Since filling its first order two years ago, Degree has sold more than $350,000 worth of the angled nursers, which come in 8-ounce and 5-ounce sizes and are priced under $4, Stephenson said.
Stephenson hopes that the company will break even by the middle of next year. In the meantime, he said, baby bottles will keep selling even in a slumping economy. “Babies are always born, so the market . . . is recession-proof,” he said.
Ironically, neither Stephenson nor his five co-workers are parents. Stephenson said he tested the nurser on his infant niece and observed other babies’ feeding habits during the bottle’s early development stages.
The principle behind the bottle is simple: gravity. Milk stays near the nipple while air rises to the bottle’s upraised bottom. That means parents don’t have to tilt back their baby’s head to get the last drops of milk out of the bottle. It also keeps out air that might cause a variety of digestive problems, including colic, Stephenson said.
The bottle hasn’t put a dent in a market dominated by Playtex, Gerber and Evenflo, but it’s getting favorable reviews from new moms and dads as well as from physicians and hospital workers.
Ellen O’Shea, a buyer for Childrens Hospital of Los Angeles, said the hospital switched from using Gerber baby bottles to Degree bottles about a year ago. She said the hospital expects to use about 35,000 bottles this year. “It’s been wonderful for babies who for medical reasons have to remain in a prone position,” O’Shea said. Before, many such babies had to be fed through a tube inserted in their noses, but now babies can be bottle-fed even while lying on their stomachs, she said.
O’Shea cautioned, however, that the hospital has not performed clinical tests to prove whether the bottle prevents digestive problems as claimed. Dr. Mark N. Bruckner, a Simi Valley pediatrician who has given samples of the bottle to new mothers, said the nurser’s design makes sense, but he doubts that it can entirely prevent air ingestion, let alone colic.
Stephenson started Degree after 12 years in the auto business, running a car customizing business with his father and converting vans for use by the handicapped. Both businesses failed, in large part because of liability risks and the high cost of insurance, he said. He quit his job as a service adviser at a Canoga Park auto dealership in 1986 to start his own business.
The idea for a bent baby bottle, Stephenson said, came from a former associate, an auto service manager named Paul Donner, who turned up the flame a little too high one day while boiling a baby bottle on the stove, causing the nurser to melt slightly. The resulting curved bottle proved ideal for feeding, and Donner’s wife held on to it until their child outgrew it, Stephenson said.
Donner and Stephenson are listed as co-inventors on the bottle’s patent, which Degree obtained in 1989. Stephenson has since lost contact with Donner.
Stephenson said he immediately saw the market potential for bent nursers and initially put up $10,000 of his own to pay for bottle prototypes, patent searches, incorporation costs and other expenses.
The problem was to find someone to make the unusually shaped product, Stephenson said. He sent letters to about 200 plastics companies but got only one response. That firm put him in touch with a sister company in Taiwan, which said it could make the bottle.
Stephenson settled on the Taiwanese firm after two friends put up an initial $10,000 in seed money. An Alabama company now makes the bottles for Degree.
The next problem was spreading the word about his new nurser. Stephenson’s first big break came in October, 1988, while he was displaying the bottle at an inventors’ convention in Pasadena. There he met Lowell Selvin, who had come to the convention looking for investment ideas. A month later, Selvin became vice president of Degree. Selvin introduced Stephenson to Stephen P. Brown, a businessman who is now Degree’s chief financial officer.
Together, they embarked on an advertising campaign and displayed the bottles at trade shows. They also raised $350,000 from the company’s 32 shareholders--mainly friends and family members who invested between $10,000 and $15,000 each.
Starting with its first retail order in December, 1988 (Degree’s buyers were mostly small stores specializing in baby products), Stephenson said Degree landed its first big account, with Toys R Us, about a year ago, after the product had been exhibited at juvenile products conventions. Orders from Peoples Drug, based in Virginia, Walgreen, Osco Drug and other large chains followed.
Orders were coming in fast but Degree needed more cash to fill those orders. Last May, Degree secured $700,000 from two venture capital firms, Harmony Gold Capital in Hollywood and City Ventures Inc., a subsidiary of City National Corp. in Beverly Hills, each of which invested $350,000.
Harmony Gold Chairman Frank Agrama said he was impressed with the men who ran the company and with their product. “They had a very good plan,” he said. “The baby bottle is good.”
Orders are now coming from Taiwan, Australia, New Zealand, Jamaica, Mexico and Sweden, Selvin said. Degree is trying to raise an additional $1.3 million needed to boost production, but like most fledgling companies, it’s having trouble finding investors, Brown said.
Buyers often have several months to pay for their orders, Stephenson said, so Degree might not have enough money on hand to pay its own suppliers if sales continue to increase. If another $1.3 million cannot be raised, he said, the company will be forced to grow at a slower pace.
Agrama of Harmony Gold said he is considering investing more money in the company. Jim Bandler, president of City Ventures, said he would like to invest more, but can’t because his initial investment was close to the limit that his company can invest in small businesses.
Meanwhile, Stephenson said, the company is looking for other baby products to market. Degree has plans for a stroller, lotions for diaper rash and baby foods, he said. It’s also looking into marketing a staircase handrail designed for children, he said.
For the time being, Degree’s plans remain modest. Stephenson, Selvin and Brown are drawing just half the salaries that they planned to receive when they drafted their business plan. Instead of buying an expensive phone system and paying someone to install it, Stephenson salvaged an AT&T; system from a trash bin behind an auto dealership that had gone out of business.
“Every measure that can be taken to cut costs, we’re taking,” Stephenson said.
