The Case of the Devil-May-Care Snowboarders
An opportunity to enter an adjacent market attracted Bob … but, it might be an investment trap.
His company (specialty-corp) makes impact-resistant polyurethane foams for the industrial market. Should he invest to help a startup in the athletic apparel market?
Bob is Director of Corporate Development of the company. A month ago a startup based in Great Britain, presented their pitch deck to him
Startup disclosed that they:
- Have strong, nature-of-matter patents on H-IM, their namesake material.
- Under impact, H-IM changes from a high viscosity foam to a solid.1
- A component of H-IM is a polyurethane foam produced by Bob’s company.
- Inserted an H-IM layer in an experimental snowboarding jacket
- Testers say the jacket is too heavy and cumbersome.
- Believe specialty-corp’s trade-secret process can lower the weight of H-IM.
Before investing in the startup’s belief, Bob needs answers to major concerns:
- Does the athletic apparel market meet specialty-corp’s guidelines for profit margin?
- What do properties do snowboarders really want in a jacket … and why?
- Reassigning development assets to invest in startup’s belief, weakens on-going projects. These projects reinforce footholds in the electronic device market.
Bob was familiar with my customer research work. He engaged me for a project that would provide answers to his concerns.
Understanding Athletic Apparel Market and H-IM’s Role: Executive Summary
My first task was to build a list of 220 knowledgable individuals in the athletic apparel market. Then following the Rule of 30 method,2 I called people on the list. Each respondents heard that the client had invented an impact-absorbing material.
Fourteen respondents identified lightweight as athletes’ top priority for an impact-absorbing material
“We’re working on protective vest. Now you might want to use Sorbothane ® (polyurethane foam). in my mind it’s one of the best impact-absorbing foams. Yet, it weighs a ton and you can’t get athletes to use it if it weighs too much.”
Impact-Protection Expert — Dynamic Research Inc.
“Protective athletic apparel has become a commodity strategy business. To be successful I need a leading athlete’s endorsement of our apparel to give my brands an edge. Athletes want lightweight apparel.”
Dir. of Marketing — Warrior Sports
Nineteen respondents requested samples of the client’s material
“In our industry we don’t do materials development. I subscribe to services that alert me when a prototype of a new specialty materials is available. Best test of an impact-absorbing material is to put it into a garment and have an athlete use it.”
Lead Designer — Axo Sport America
Six respondents have evaluated or are evaluating samples of H-IM
“H-IM doesn’t provide what we are looking for. H-IM also presents major problems in their licensing approach. They only license for a specific equipment use. If it hits then there is no way you can use it in other lines.”
Head, Engineering Team, Advanced Products — New Balance
Snowboarding athletes are heedless of impact’s consequences
“A lot of snowboarding’s apparel marketing is driven by having one of the “heroes” of the sport use the apparel. Heroes to my team, are athletes who invent the next death-defying trick. Our team members are young and fearless.”
Coach, Snowboard Team — Steamboat Springs Winter Sports Club
Bob and the Polyurethane Foam Division’s VP reviewed the report.
- Impact-resistant materials used in athletic apparel are commodities . They don’t meet specialty-corp’s guidelines for product margin
- Snowboarders want lightweight jackets.
They can take lessons on how to fall without injury. But, they can’t do good tricks in heavyweight jackets.
- Growth in the footholds that specialty-corp has in the electronic device market is steady. The athletic apparel market is seasonal and grows in fits and spurts.
Three years after H-IM’s pitch to Bob
H-IM announced opening of a plant to produce H-IM for use in military and security markets.
Fourteen years after H-IM’s pitch to Bob
- Nike announced they were withdrawing from the snowboarding market. This market was not able to meet Nike’s guidelines for profit and growth.
- Specialty-corp’s footholds in the electronic device market have grown 480-fold
- Non-Newtonian fluid is a fluid that does not follow Newton’s law of viscosity, i.e., constant viscosity independent o stress. In non-Newtonian fluids, viscosity can change when under force to more solid. Wikipedia, Non-Newtonian fluid accessed 1/20/2020
- My work followed the Rule of 30 method .
- Blind study
- Gathered intelligence through 30 elicitation conversations with experts in the athletic apparel industry. They were from a random sample of 220 knowledgeable individuals.