Adam Lowry, a chemical engineer, and Eric Ryan, a designer, are childhood friends who, a decade ago, took on the laundry and household cleaners sector with cool design and green products. Their company, Method, has become a force within that industry -- not because of its size, which, at roughly $100 million annual revenue, is a rounding error in a multi-billion-dollar sector -- but through innovation and ingenuity. Along the way, they've helped redefine green marketing -- largely, by not really doing it.
On the occasion of the publication of their new book,The Method Method: Seven Obsessions That Helped Our Scrappy Start-Up Turn an Industry Upside Down, I spoke with Lowry (pictured on the right) and Ryan to learn what they've learned -- about small companies in big markets, about innovation, and about the green marketplace.
Joel Makower: You guys risked your life savings to go into the staid, highly commoditized business of household cleaners and laundry detergent. What were you smoking? Why did you choose that product category and would you choose differently next time?
Adam Lowry: Would I choose this industry again? There are challenges when you launch into categories with a low margin, as our categories are. They're dominated by really big companies because the only way to compete in low-margin commodity spaces is to have tons and tons of scale. That's also one of the reasons it's so ripe for innovation -- because people haven't invested into making the product more sustainable and more beautiful. There's just not a lot of chips to go around, if you will. Sure, I romanticize about being in a higher-margin category because it would make life a little easier, but being a low-margin category in some ways actually created the opportunities that we're exploring.
Eric Ryan: What's attractive about this space is that the margins may not be the most beautiful in the world, but it is a big category. Liquid laundry detergent in the U.S. is a $4 billion category, so it's exciting to play on such a big playing field. We were definitely a bit naïve in believing that we would go in and shake things up.
Makower: Clearly, you've learned a lot about starting and building a small business, but what have you learned about big business along the way?
Lowry: I learned that big businesses are often successful because they have a way of doing things that is very difficult for them to change. And it gives you an opportunity to use those legacies against your competitors by doing something unique and different. So as long as Method continues to get better every day and improve the way we're doing business in our business model, then I am 100 percent confident that we can continue to compete with our competitors because they have a way of doing things that's really, really, really hard for them to change.
Makower: Are you saying that Method could never exist as part of a large company, if it was acquired at some point?
Lowry: In our book, we talk a lot about culture, and "Creating a culture club" is our little phrase. That culture allows us to vertically integrate all of the parts of the product experience that we design in one building and then continually build one innovation into the next innovation. That is the way that we're able to stay ahead. So, regardless of the ownership structure of Method, I think you'd need to preserve that way of working in order to keep Method innovative.
Ryan: What I've learned about big business is they move slower than what I expected. But I've learned when they do they can have such a bigger impact on the world.
Makower: Let's stick with that for a minute. What have you learned about what it takes for a small business to dance with the big guys?
Ryan: Really good big businesses are a bit of fast follower, so they can see a trend and get on it a big way. But for them to move on it, they need to see some sort of proof of commercial success. So, for us to be successful, we've got to have the ability to sniff out a trend at its earlier stages and be able to capitalize on it.