A Eureka Moment: What to Do Next
The Art and Science of the Dry Test
Vol. 7, Issue No. 3 | February 8, 2011 By Denny Hatch
|
IN THE NEWS
Milton M. Levine, 97, Inventor of Ant Farm, DiesMilton Levine's Eureka moment came in 1956, when he spotted a mound of ants during a Fourth of July picnic at his sister's poolside in Southern California.
Recalling how as a boy he had collected ants in jars at his uncle's farm in Pennsylvania, he told his brother-in-law and business partner, E. J. Cossman, “We should make an antarium.”
The resulting product—Uncle Milton's Ant Farm—has been a staple in children's bedrooms ever since. It offers a bucolic panorama of a farmhouse beside a winding path to a barn and windmill above a warren of ant tunnels, all encased in plastic. More than 20 million have been sold.
—Dennis Hevesi
The New York Times, Jan. 29, 2011
When I came across the obituary of Milton Levine, it struck a chord deep within me.
Here was a 43-year-old salesman of toys and novelties watching some ants at a July 4, 1956 picnic when he suddenly saw his future—the ant farm—a 6” x 9” two-sided plastic frame with sand, tunnels and live ants busily doing their thing as mesmerized kids watch and learn.
A half-century later, kids are still enthralled with ant farms. The basic model sells for $10.99.
Last year, Levine sold his business for $20 million. His website, UncleMilton.com has a slew of wonderful scientific gadgets for kids.
Milton Levine—described by one magazine writer as “anty-establishment”―gave pleasure (and inspiration) to millions of kids, made pots of money, obviously had great fun and went to the great beyond at 97.
Life doesn’t get any better than that!
So what does a fledgling entrepreneur do following a “eureka moment?”
How do you translate an idea into a profitable business?
My suggestion: go the dry test route.
I spent 15 years creating dry tests for clients and my own little business—the WHO’S MAILING WHAT! newsletter and archive service—started out life as a dry test.
Technically the dry test is illegal, but many years ago I discovered a possible loophole.
Start-ups
A number of famous businesses were launched with one product and small test ads in magazines and newspapers that were read by likely prospects:
• In 1951, Lillian Katz took $2,000 of wedding gift money and placed a small ad in Seventeen magazine for $495 offering a purse and belt with free monogramming. Her investment in ad space generated 6,450 orders and $32,000 in sales. The Lillian Vernon catalog was born.
• In 1977, Richard Thalheimer, then a young office supplies salesman and occasional lawyer, used to jog in San Francisco and keep track of his progress on a wristwatch that had been specially designed for runners. All who jog should have this item, Thalheimer reasoned. So he cut a deal with the manufacturer and had designer Steve Sugar craft an ad offering the watch for $69 in Runner’s World under the corporate moniker The Sharper Image. The ad generated $300,000 the first year, and the rest is history.
Takeaways to Consider
- Creating a new product or service is exciting and fun. Marketing is a tough, long and exacting slog.
- Just because you are a whiz-bang entrepreneur doesn’t necessarily mean you are a marketer. My suggestion: hire a professional.
- "If you think it's expensive to hire a professional to do the job, wait until you hire an amateur." —Red Adair (1915-2004), Oil well firefighter
- "The most important word in the vocabulary of advertising is test. If you pretest your product with consumers, and pretest your advertising, you will do well in the marketplace." —David Ogilvy
- When going after investment capital to launch a new product or service, it’s helpful if you have some evidence that a market exists—harder data than the results of a survey or focus groups.
- Beware of venture capitalists. During the years I was working for fledgling magazine publishers, the VCs would generally pony up enough money for one or more dry tests.
- However, if the tests brought in a response that was within a predetermined budget, the VCs would frequently put up just enough money to get the first issue out. The nascent publisher was generally thrilled.
- With a magazine launch, full funding for at least three years is essential. For example, it took Sports Illustrated 10 years to become profitable after Henry Luce founded it in 1954. Many of the magazines that Paul Goldberg and I helped launch, were just on the cusp of viability when the VCs called in their markers, fired the founders and sold the properties to big publishers for a fat profit—sending many talented, committed people on the cusp of success into the street, their dreams shattered.
- A VC is not interested in an entrepreneur coming back, hat in hand, asking for additional money, because of unforeseen problems.
- In war and business, the thing to avoid at all costs is surprises.
Websites Related to Today's Edition
Milton Levine ObituaryUncle Milton
King of the Hill—Milton Levine Fortune Profile
Steve’s Ant Farm Cam | The Web's longest running Webcam
Bob Doscher, master of product research
Lillian Vernon and Sharper Image Crash. Why?
J. Peterman Company
Richard Thalheimer Redux
Bill Bonner’s Agora Inc.
Bill Bonner’s 30-year-old copy for International Living still going strong
Mel and Patricia Zeigler’s Banana Republic: a History
Companies Mentioned:
 |
|
|
|||
|
|
|
