They Took Good Idea and Learned With It
Scott Oshry and Sean Brosmith were classmates at the Art Center College of Design in Pasadena when they decided to take their innovative CD storage system and build a company around it. Without experience or business education, the pair and their partners, Mark Chatow and Howard Sherman, learned the hard way how to package, expand their product line and set prices. The company’s success--it was ranked 25th on Inc. Magazine’s list of the 500 fastest-growing, privately held companies in 1998--proves that it is possible to overcome early missteps. Scott Oshry was interviewed by freelance writer Karen E. Klein.
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Sean and I had this idea for a CD storage sleeve in 1990. We got some investors and put together a prototype in late 1992 that we took to trade shows in 1993. We met with buyers from places like Sam Goody’s and Wherehouse. We got good reviews and people started placing orders. We worked out of my parents’ house and garage.
We had a lot to learn. For one thing, we used plain cardboard packaging. Buyers told us right away that we needed pictures, logos and UPC codes.
Once we improved the packaging and got our first orders, we had to learn about shipping. We got these big boxes that held 60 pieces or 30 pieces and they weighed about 100 pounds. It was just crazy. We found out later that master containers are supposed to contain only six or 12 pieces.
We also did not understand the concept of pricing. We just took our cost and doubled it. Then distributors and mom-and-pop stores started asking for discounts and we didn’t know what to do. Again, the buyers and sales reps we worked with taught us a lot.
We learned that there are “magic” price points, prices that the buyer wants to see and the consumer understands. For instance, if the standard price for a product is $9.99, or $14.99, or $21.99, our product has to be there. If we miss that price by even a dollar, we see a huge difference in sales. Even if our product is better, higher quality--it could be made out of gold and covered in diamonds--if other 24-CD holders are selling for $9.99, ours won’t sell unless it is $9.99.
What we do is use good design principles to change the texture, the look and the performance of our product without making it more expensive. Our packaging is well-designed and looks expensive, even though it doesn’t cost us a lot.
We watch every penny. We even build our own trade show booths and crates, so we can put all the money back into our products. That is how we have become successful.
Another important lesson was that you can’t get anywhere with just one product. People think they can dream up a million-dollar idea and have it made. But sales representatives will not rep your single product, for the most part, and to get any real placement at the retail level, you have to have a full line of products.
Retailers have very tightly controlled shelf space and even if you can get on the shelf, your single product will get lost among all the brand names. It will look like one little schlock item or a close-out item to consumers. You have to have a whole presence, with a message and a logo and a variety of products that the consumer can relate to.
We took the CD storage line and developed variations on home units and carrying cases. Now we have more than 90 products, all for storing electronics and media products, like laptop computers, zip drives, cell phones and cameras. We use innovative materials, which is crucial to getting retail placement because we provide a contrast to the typical nylon products already out there.
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If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or send e-mail to kklein6349@aol.com.
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AT A GLANCE
Company: Roundhouse Inc.
Owners: Scott Oshry, Sean Brosmith, Mark Chatow, Howard Sherman
Nature of business: Manufactures storage cases, insulated coolers
Location: 18700 Laurel Park Road, Rancho Dominguez, CA 90220
Web pages: https://www.cdprojects.com and https://www.glaciergear.com
E-mail address: customer@roundhse.com
Founded: 1990
Employees: 80
Annual revenue: $17 million
