Business concept paints a pretty picture
TORONTO (Reuters) - When they ran out of space writing ideas on giant sheets of paper stuck to their dorm room wall, a trio of Babson College students really started brainstorming.
John Goscha, Morgen Newman and Jeff Avallon set to work to develop a paint that would turn any surface into a dry-erase whiteboard. The next hurdle was making it a reality. Five years later, after a lengthy testing period and more than a few flops, a sellable product emerged and IdeaPaint (www.ideapaint.com) was launched in 2008.
"It didn't take us five years to develop a working product; it took us five years to develop a safe product," said Avallon, who came onboard with Newman in 2006, shortly after Goscha - IdeaPaint's original architect, who has since left the company - had been told by a paint test lab his concept was impossible.
"At that moment it was kind of heartbreaking because we were in debt by quite a bit," said Avallon, who admitted the trio never wavered in their belief in the product. "Our party line was you can land a man on the moon, we're just trying to make a paint you can wipe markers off."
Their initial foray produced a paint that Avallon said worked "beautifully", but was "extremely toxic" when applied to a wall. So the next step was to take their concept to the country's top paint lab and see if they could get a better result. Avallon said they had some very stringent criteria for IdeaPaint from the get-go: it had to be useable by everyone, from professional contractors to students; it had to work with every dry-erase marker sold and the writing had to be able to be erasable a full year after it was made.
"We weren't the only people to think of this idea, we were just the only people to commercialize it and make it marketable," confessed Avallon, who added it had to compare with the "gold standard" of dry-erase surfaces, which is the porcelain-on-steel- whiteboards that are prevalent in most universities. "There are lots of complaints about whiteboards out there and we wanted to fix all those."
Avallon said the Boston-area startup financed itself in the early stages with four rounds of angel financing of roughly $1 million that came primarily from family, friends, professors and classmates at Babson who were excited by the product.
IdeaPaint debuted in the spring of 2008 at NeoCon - the largest commercial interiors show in the nation. The buzz from that appearance helped them land their first contract with global paint distributor MDC Wall Coverings, who sell it under their co-branded Tabrasa line of paints.
IdeaPaint also went viral; giving away free product to as many as 1,000 customers with the lone stipulation that they had to use it to paint an entire wall. They also hired 25 muralists to sketch on walls covered with IdeaPaint.
"We said once they get it, they'll end up re-ordering," said Avallon, noting the company had 25,000 installs in 2009, mostly in large-scale commercial office spaces and schools. Unlike traditional paint, the product is sold in 50-square foot batches that retails from $175 to $200. "The one thing about IdeaPaint that we can really rely on is the wow factor when people see a wall and that the concept itself is extremely viral."
The U.S. house paint and coatings market is expected to be a $23-billion industry by 2012 and global revenues are anticipated to be $50 billion by 2013, according to a 2008 report by Cleveland-based industry research firm The Freedonia Group.
Since launching, IdeaPaint has received two more rounds of financing: a $5 million Series A round from Boston-based venture capital firm Breakaway Ventures and a $3.25 million round from a large group of angel investors last March
. Avallon said the money will be used to hire between 5-10 employees by the end of the year and to make a larger marketing push to increase IdeaPaint's usage in smaller office spaces and homes.
In addition to MDC, IdeaPaint has struck partnerships with Glidden, Staples and Lowe's and is now distributed in more than 20 countries.
Avallon said the company's main challenge over the next year is to raise awareness for the brand and continue to grow sales in a sustainable way.
"It hasn't been that difficult for us to go and find interested customers. It's been difficult for us to manage them and manage them in a scalable fashion," he said. "We're creating a market here and we think IdeaPaint has the potential to be a mass-market consumer brand at some point."