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GUY RAZ, HOST:
I read at one point, Eric, that to prove that this really was non-toxic, you actually drank it.
ERIC RYAN: Yeah. So I was in London. You know, I love the British press. They're so skeptical. And she said, is it, you know, safe enough to drink? I was like, sure. So we both took a shot of the toilet bowl cleaner.
RYAN: And then I immediately text Adam. Finally, he got back to me. I was like, hey, just drank the toilet bowl cleaner. I'm going to be OK, right?
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RAZ: From NPR, it's HOW I BUILT THIS, a show about innovators, entrepreneurs, idealists and the stories behind the movements they built.
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RAZ: I'm Guy Raz. And on today's show, how two friends in their mid-20s mixed up some household ingredients to make soap and detergent and then took on, and eventually outmaneuvered, some of the biggest companies in the world.
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RAZ: If you were looking to start a business in the late 1990s, you probably didn't have to spend a lot of time convincing friends and family that it was a good time to go into tech. This was the height of the dot-com bubble. And it seemed like the future was literally being written by companies like Google and Yahoo and eBay and Amazon. So it can be kind of hard to imagine why two 20-somethings who lived in San Francisco in the 1990s would survey this promising landscape and say, you know what the world really needs right now? Soap - soap that will do a good job cleaning your kitchen counter or your toilet but that won't destroy the planet in the process.
And that is exactly what Adam Lowry and Eric Ryan set out to sell in 2000, the very year the dot-com bubble burst. And the company they founded, Method, with its sleek bottles and products smelling like cucumber or bamboo, it actually went on to compete with some of the biggest soap companies in the world. But before they went into business together, Adam and Eric were actually childhood friends. They met when they were kids, maybe 12 or 13 years old, because they were both super into sailing. And both of their families worked in the auto industry, which Adam says was pretty much what everyone did where they grew up in Grosse Pointe, Mich.
ADAM LOWRY: Almost everyone that I can remember, their families were involved in - I think, Eric, your family...
RYAN: Yeah. So my great-grandfather dropped out of pharmacy school and moved to Detroit to work for Henry for $5 a day. And then ultimately...
RYAN: Henry Ford.
RYAN: We have some - I have some Ford stock that was bought when Henry was still running the company by my...
RYAN: ...Great-grandfather. Then my great-grandfather and grandfather together started a machine in stamping - if you ever see, like, "8 Mile," those giant presses that come down. So they would make a lot of the parts that went on the automobiles. And so I kind of grew up in the shadows of my great-grandfather and grandfather being these entrepreneurs who created something from nothing.
RAZ: Adam and Eric both went off to college. This was in the early '90s. Adam went to the West Coast. He studied chemical engineering at Stanford. And Eric went to the East Coast and studied business at the University of Rhode Island. Both of them were actually recruited by the universities sailing teams. They were serious sailors. And to be clear, in college Adam and Eric didn't really keep in touch.
They were the kind of friends who were happy to hang out and catch up, just whenever they were back in Michigan. So after graduating, Adam stayed in the Bay Area to work for the Carnegie Institute of Science. He was doing research on climate change. And Eric got a job in advertising. And eventually he made his way out to San Francisco as well. And shortly after that, they both just happened to run into each other on a flight.
LOWRY: I think it was Thanksgiving, if I'm not mistaken, one year - maybe '97, '98. I walk onto the plane, and I see Eric. And I didn't know that he was living in San Francisco. He'd - you'd only moved there...
RYAN: A couple of weeks ago.
LOWRY: ...A couple of weeks...
LOWRY: And so there was an open seat. I ended up sitting next to him on the plane. We, for five hours, got all caught up. It turned out we were living on the exact same block, just out of pure coincidence. And I was living in a flat with four other guys from Stanford. And Eric was living by himself in a one-bedroom. And so when one of those guys rotated out, we invited Eric to move into the apartment. And then we were roommates.
RAZ: This is when you could actually live in San Francisco for a reasonably low amount of rent.
LOWRY: I paid $600 a month in rent.
RAZ: Oh, my God. This is 1997, '98, amazing. So you move into this group house doing what you do in your early 20s or whatever. And the house was just, like, a - six guys and presumably not super clean?
LOWRY: It was exactly as clean as you would expect it to be. (Laughter).
RAZ: Got it, all right. And I mean, did either of you, at that time - in your minds, were either of you thinking business? Or were you just kind of grinding away doing your day-to-day jobs?
RYAN: I mean, for me personally, I knew since the third grade I wanted to be an entrepreneur. I was the annoying neighborhood kid who was constantly selling buttons or anything else I could. So I just - I always knew I wanted to start a company. And I loved - I fell in love with advertising and branding.
But I knew it's pretty uncommon, as an entrepreneur, your first company will be successful. So I kind of wanted to build a little bit of a safety net of a career. But I was constantly noodling on ideas - for me, personally, just coming up with the right one that I would eventually take a leap for.
LOWRY: For me, you know, the journey to entrepreneurship was less predestined. My parents are both entrepreneurs. They started their business in 1981.
RAZ: What's their business?
LOWRY: It's an automotive sales rep business, representing parts suppliers in the automotive industry. But when I was 6, 7 years old, mom's making chili for the week for myself and my older brother and my older sister. And I watched them build the business and do it in a way that was much higher risk than the risk that Eric and I eventually...
RAZ: 'Cause you were so young.
LOWRY: We were young. We didn't have families. We didn't have mortgages - any of that. So while Eric kind of always knew, I'm going entrepreneur as soon as I can, for me, I'm motivated by creating some sort of good change in the world. And I'm a big believer in that you don't need to figure out what you need to do with your life. You just need to figure out what you want to do next.
RAZ: So what were you noticing in 1999 that eventually would lead to cleaning products? What was going on around you?
RYAN: I was working on a project for Colgate. So I was spending a lot of time in the grocery store. And I just started looking at the cleaning aisle and saw that it was such a big category, but a sea of sameness. Like, everything looked and smelled the same. The brands were pretty dated, and so that was kind of a clue of, dig here.
RAZ: But, I mean, you're 25.
RAZ: And I get it. You're working on an ad campaign for Colgate. So that makes sense. You start to get some exposure to that industry. But, like, it could have been anything. I mean, it could have been chewing gum. Like, you could have - what was it that made you think, wait a minute - cleaning supplies?
RYAN: Well, we're really - like, I think with any idea, you start off from this absolute place of insecurity. Like, when I mentioned this to my mom, she's like, I've never seen you make your bed. Are you sure you're the right person to start a cleaning products business?
So I hid the products underneath my bed because I didn't - it was pretty dorky. I didn't want anybody to know I was even thinking about this category. And Adam and I were both back in Michigan. And we were driving up north early morning to go skiing. And, being close friends, I felt like Adam was somebody I could share an idea with.
RAZ: This is the winter of '99, presumably, if you're going skiing. I didn't even know there was skiing in Michigan. But keep going.
LOWRY: It is technically...
RAZ: OK. Yes.
RYAN: And I mentioned that, hey, I think there may be an opportunity in this space. And I remember Adam looks over at me as he's driving and goes, you know I have a degree in chemical engineering.
RYAN: And I was like, that would be useful.
LOWRY: And then we just - it was sort of one thing leading to another that - and I said, well, you know, not only are these products really ugly; but did you know they're super toxic as well, right?
LOWRY: And that was kind of where one idea gets added to another. And it kind of goes from there.
RYAN: But - the one point I remember is we got there to go skiing. And we went up the first chairlift, and we did a couple runs. And we realized we were more excited to go work on this idea than we were to keep skiing.
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RAZ: So paint the picture for, like, cleaning supplies and products in '99. Like, if I'm going into Safeway in 1999, I'm going to get 409. I'm going to get...
LOWRY: Mr. Clean.
RAZ: Mr. Clean, right?
RYAN: Really strong scents. There was kind of, like, you know, if your eyes weren't watering it, it means it wasn't clean. You know, it was - it was a pretty toxic category. And to Adam's point, that was a thing that he brought that really opened my eyes. I was like, you mean, like, you actually pollute when you clean? And you use poison to make your home healthier?
RAZ: And at this point, Adam - and this is like the winter of 1999 - were you still working at the Carnegie Institute?
LOWRY: I stepped down from Carnegie...
RAZ: You just quit?
LOWRY: I did. There is an important detail here. I quit my job in September. And October was the Olympic trials for the 2000 Olympics...
RAZ: And you wanted...
LOWRY: ...In sailing.
RAZ: ...And you wanted to go?
LOWRY: Yeah. And I had been training with the U.S. sailing team. I was on the U.S. sailing team for seven years. We did not win the Olympic trials. We got third in the Olympic trials. And so that period of time, for a couple of months there, I'd just finished the Olympic trials. I was doing a bunch of interviews with product design firms and...
RAZ: Looking for a job.
LOWRY: ...Engineering firms - yeah - in the Bay Area.
RAZ: So right then and there, at that moment, you both - I mean, it was almost a perfect storm for you, Adam, because you were kind of in this transition phase. Eric, you were still working at the ad agency, which actually was giving you this incredible experience. It was, like, sort of opening your eyes to this entire world that you hadn't been exposed to, right?
RYAN: Yeah - and really understanding, like - understanding consumers, and this was really kind of driven by - so you go back to 1999. IKEA was just arriving in America.
RYAN: Home and Garden Television was just taking off. So it was a time where people were starting to think more about their homes as a reflection of themselves. And so the thought was, well, what if we designed these products so they were like pieces of decor? And hey, if a spray cleaner was beautiful enough to leave on the counter, versus hidden underneath the sink - out of sight out of mind - you might actually use it more. And I love the phrase, like, there's no such thing as low-interest categories, just low-interest brands. So our thought was, how do we take boring cleaning and not make it boring?
RAZ: So what happened after that Christmas trip to Michigan? You come back to San Francisco, and you do what?
LOWRY: So, you know, I was in the middle of a job search. And I said, hey, you know, I'm going to look for some jobs. But I'm going to start doing some research and trying to figure out these categories and do some of the digging that - Eric had a full-time job at his ad firm and didn't have a ton of time to do. And I said, I'll start to do this.
And so I actually, at one point, had a desk in Eric's bedroom where I would work on some of this stuff while I was kind of continuing my job search. And we were writing the business plan together. I was doing a lot of the research. And then at night we'd kind of put the pieces together.
RAZ: So you already decide, let's make a go at this.
RYAN: Well, it was really - I think, you know, the hardest thing with starting a company is we were really insecure about this idea.
RAZ: Well, you're 25. I mean, sure.
RYAN: Twenty-five. And we're going to take on not only some of the largest multinationals, but the world's first multinationals in the form of Procter and Unilever, who have a 150-year head start and have really, you know, owned distribution.
RAZ: But was that your vision in 1999? Or did you just think, let's just make this and see who buys it?
RYAN: That - I mean, we said from the beginning, like, go big or go home...
LOWRY: Yeah, go big or go home.
RYAN: ...We want to disrupt an industry. But we didn't feel very secure getting there. So one of the first things we did was we created what we called the concept book. And so we brought to life the idea, gave it to the 20 smartest people we knew and asked them, shoot holes in this.
RAZ: And these were - what? - professors, friends, family.
RYAN: Oh, God, everything from, you know, people who - actually, we found some former Clorox employees, lawyers, people from a finance background, advertising. Just, like, tell us why it's going to fail. And nobody could come back with a reason other than, if it's so good, why has nobody done this before?
LOWRY: Yeah. Or they'd say, the reason it's going to fail is because they're big, and you're small, which we didn't - that's not a reason.
RAZ: So just let me understand this. This is still the - before the dot-com crash, OK. This is the dot-com...
LOWRY: Almost right on top of it. That was in April. I remember it well.
RAZ: But this is a time when most people your age, at that time, were moving to this area to get involved in a tech company. Did anybody say, so...
LOWRY: What are you doing?
RYAN: Oh, my God, we had...
LOWRY: (Laughter). Everybody said that.
RAZ: Like, why aren't you going into tech?
LOWRY: Everybody said that.
RYAN: We had friends who were raising $40 million on 40-page business plans and bragging about $1 million per page for a raise or doing these lavish launch parties, which seems so ridiculous now, to spend funds on a launch party. But yeah, this was San Francisco at the turn of the century. And money was being thrown around in tech. And here we were, showing up pitching soap, an idea that was hot 120 years ago.
RAZ: So when do you actually mix stuff together and get, like, a - was it hand soap? Was it dish soap? Was it cleaner? What was the first thing that you decided to work on?
LOWRY: So yeah, it was right around that time, sort of mid-2000. It was mostly me mixing those things out of...
RAZ: Like, what were you mixing?
LOWRY: Well, you can make cleaning products out of very standard things that you can buy in the grocery store. You know, things like...
RAZ: Like, water...
LOWRY: Yeah, of course water, vinegar, baking soda. These are relatively simple chemicals that don't require a professional lab in order to mix them together. And...
RYAN: The best part was I came home one day, and Adam was mixing things in beer pitchers, which - I'm like, we're going to kill one of our roommates here. (Laughter) Luckily this stuff's non-toxic.
RAZ: What do you remember mixing?
LOWRY: Well, I think - there's different soaps and different detergents. You know, you can make soap from basically a base and an oil, so vegetable oil and a base. You can bring those together to make a soap. For solvency, you can use things like vinegar or some of the acids that are present in things like orange juice, very common, everyday, mild chemicals that you formulate in different ways to achieve a certain cleaning function. And you mentioned, you know, dish soaps, hard-surface cleaners, that kind of thing.
RAZ: And were you - like, I'm trying to imagine. Were you, like, in your room or in the kitchen of this group house, like...
LOWRY: In the kitchen.
RAZ: ...With a bucket, like pouring in...
LOWRY: Imagine sort of 16-ounce jars, maybe of plastic or glass containers of orange oils and baking soda. And then I would just experiment. I would try different formulations. And I would make experiments the way that a scientist does, so that you - you know, you kind of have a control and an experiment and, you - you know, it was just an iterative process to getting to something that worked really well.
RAZ: So Eric, while Adam was sort of looking into the category and looking at potential ingredients and stuff, what were - what were you doing?
RYAN: So our plan was to create our first four products, which were the surface cleaners, and get them in the local stores. So Adam was working on basically doing everything in the bottle. And I was doing everything kind of around the bottle. And this - our joke was style and substance. And so what I started doing was - we didn't have a lot of, you know, money to do custom tooling.
And so I started looking for stock bottles, couldn't find anything I really liked. So I had this camping water bottle from Norway that I had found, just a really simple kind of bullet design with these nice, elegant shoulders. It had - it is very utilitarian but at the same time would look almost like a vase sitting in someone's home. So we used that as the basis for the first bottle.
RAZ: And how are you paying for the cleaning - you know, the oils, all the stuff? I guess it wasn't that expensive, right?
LOWRY: No. It wasn't very expensive but out of pocket. We paid - we ran the business out of pocket for about two years.
RAZ: How much money did you have at the beginning to - how much money did each of you put in?
LOWRY: We each put in $45,000.
RAZ: And that was all the money each of you had.
RYAN: Yeah. My grandfather had passed away and left me with that money. And so we put it right into Method.
RAZ: And you split it 50-50 at the beginning...
RAZ: ...Put it down on paper. And you called it Method.
RYAN: At that time, yeah. We had...
LOWRY: Yeah. I think we had the name by then.
RYAN: We wanted a name that represented a technique, a new approach to doing things. And Adam and I were both brushing our teeth at the same time, which sounds very weird.
RAZ: Well, you lived in a group house. I mean, you probably had one or two bathrooms, right?
LOWRY: Yeah, basically one.
RYAN: Adam looks over. He goes, how about Method? I'm like, that's it.
RAZ: How did you come up with that name?
LOWRY: I don't know. I just thought of it.
RAZ: You mentioned you had these bottles that you really liked. Were you just buying these off the shelf somewhere?
RYAN: No. We did - I mean, design was so important. A big chunk of the dollars we had went into tooling. We just couldn't afford the actual design. But tooling...
RAZ: And you designed the bottle?
RYAN: No. We basically took inspiration from this bottle I found in Europe...
LOWRY: And then had a supplier kind of do the engineering of it...
LOWRY: ...And then build the bottle molds, which ate up most of the investment...
RAZ: Most of that 90,000 bucks.
LOWRY: Yeah. Yep. And then we had the bottles. And we were making product at home with, like, funnels and paper towels, right?
RAZ: You were filling the bottles yourselves.
LOWRY: Mmm hmm.
RAZ: You were bringing them to your apartment with a funnel and just pouring it in and closing it up.
RYAN: And we wanted to feel very different than everything else out there but also to really show it was, you know, safe to be around. You think about when most people would clean, they would put on that - you know, that old team-building exercise sweatshirt from 1998 and the rubber gloves 'cause you don't want the stuff touching your skin. So our first labels were very different. They actually showed people on the front of it. And of course we didn't have any money. So we would go to Home Depot and buy a sink and photograph Adam holding the sink (laughter), probably return the sink to get our money back (laughter).
LOWRY: If you fast-forward to late February of 2001, by now Eric and I have product prototypes. And we were taking these prototypes around, walking into grocery stores unannounced and cornering the store manager and trying to get them to buy our product. And so we got a grocery store at the end of February to say yeah.
LOWRY: Yeah. It was actually February 28, 2001. So we had bothered this store manager enough then he said, fine, guys. I'm going to give you space. But you have to get the product here today. This was in Burlingame in sort of the mid-peninsula of San Francisco Bay Area.
RAZ: What's the store called?
LOWRY: Mollie's Stones.
RYAN: Yeah. So essentially what we needed to do is get a proof of concept. So we decided the first step was to try to get into all the independent grocery stores in the Bay Area. These are the places where that manager can make the buying decision. So you got to show up at 6 a.m. This guy's always really grumpy. And I think essentially they just agree to take your product because they know you're going to keep coming back until they say yes.
RAZ: But were you going to the store in Burlingame? You went there multiple times?
RYAN: Mmm hmm.
RAZ: And the first time you went there, the manager was like, I'm not interested.
LOWRY: I mean, imagine doing this at 6 o'clock in the morning with a store manager. They are not interested. First of all, store managers don't take sales calls, right? So that was just - that's not how you get a product in grocery stores.
LOWRY: But it was the only way we knew how. So they weren't used to seeing that. And so there was a lot of...
RAZ: Explain. You drove up to the store in Burlingame, and you got out of the car, and you...
LOWRY: Bag of product.
RAZ: And you knock on the glass of the store. It's closed.
RYAN: You go in through the back door.
RAZ: Through the back door. And you said, can I talk to the manager?
LOWRY: We waited till they were open.
RYAN: Yeah. But they're stocking the shelves. So like, all the trucks are coming in, doing the delivery.
RAZ: And the manager's busy.
RYAN: And it was the best training 'cause we didn't know how to sell. And you had 30 seconds to pitch. And so it really helped you learn how to sell the product.
RAZ: How often were you rejected?
LOWRY: I mean, every time until that day (laughter).
RAZ: By multiple stores.
LOWRY: Oh, sure, dozens.
RAZ: I mean, after a full day of going around pitching this thing, using a lot of emotional energy, would you come home feeling, like, dejected that nobody bit?
LOWRY: Well, depending on the day (laughter).
RYAN: You - I remember sometimes, like, taking a shower in the morning, like, God, what am I doing? I'm selling cleaning products.
RAZ: Because it's a little bit humiliating, right?
LOWRY: Yeah. And it's hard. I mean, I can say for me personally, like, just the cold call was a hard thing to learn how to do. And, yeah, sometimes, you know, you get a bunch of rejections. It's a little bit demoralizing. But, you know, we got it going before we got so demoralized that we quit.
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RAZ: When we come back, how a long-shot email to a famous industrial designer and a big bet on dish soap landed Method on the shelves of Target. Stay with us. I'm Guy Raz, and you're listening to HOW I BUILT THIS from NPR.
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RAZ: Hey, welcome back to HOW I BUILT THIS from NPR. So it's 2001. And Adam and Eric get the first Method cleaning products into a grocery store in the Bay Area. And pretty quickly, they realized that they couldn't just make all the stuff in the kitchen of their San Francisco group house. So they start to think about building a supply chain to make more of the product. But meanwhile, day in, day out, they're showing up at different stores trying to convince customers to try out Method soap, one person at a time.
RYAN: We didn't have marketing dollars (ph), so what we had to do - we would offer demos. So we did that. And of course, we didn't have anybody do a demo, so that would be - would be me.
RAZ: You would go there - what? - into the grocery store, and, like...
RYAN: You set up a table. And I was wearing a lab coat, which is comical to look back years later. And it's kind of funny - I look at these photos. And I was standing in the wine aisle. And I think I just realized that people shopping for wine were way more interesting to talk to than people shopping for cleaning products.
But we were really big believers that the packaging would have to be the primary marketing vehicle. And you would see it on shelf because of the design. You would buy it because of the unique fragrances. You would get home, find out it works, turn the bottle over and realize it's good for you and good for the planet. And that would start to create a following.
And if you talked to most Americans at that time, they would say green doesn't clean. The only way we're going to make this work is we had to get the mainstream into a green product. And we thought a lot of it as, it's a Trojan horse for good. We had to put our green credentials on the back of the bottle and almost kind of hide them.
RAZ: So after you got into Mollie Stone's, what was the next step? How did you get into the next store? Same process, talk to the manager and...
LOWRY: And the first step was that - I believe there were 10 Mollie Stone's at that time. There's I think more than that now. Then there were other similar chains of premium, high-end, more gourmet-focused grocery stores that we went to in the Bay Area.
RYAN: But what we did - we built up these 30 stores. And we called it our paper route. So every morning, we'd take turns driving to each store, counting how many you sold, replenishing it, writing up an invoice. And it was a way for us to really understand the grocery business.
And I think the - a big moment of truth came through when, you know, we didn't have a customer service number, so my cell phone was on the back of every bottle. And I remember getting this first call from this person who just wanted to call to say how much they loved our cucumber bathroom cleaner. And of course, I thought it was a friend just playing a joke on us. But these calls started coming. And we realized, like, we really struck a bit of an emotional chord in a category that traditionally is so low-interest and so boring.
RAZ: And it's just 24/7 - you guys were just working all the time on this?
RYAN: Yeah, I mean, the challenge is - you know, with any startup, but particularly in this space, momentum is your friend. And then to raise capital, you need to show momentum. So yeah, you always felt this race against the clock to grow as fast as possible.
RAZ: And I guess pretty soon into this thing and - in 2001, it becomes clear that you've got to raise money. You've got to get - because 90,000 bucks is only going to take you so far. So how did you - what was the next step? How did you get the money?
RYAN: Friends and family.
LOWRY: Oh, wow. That was a saga. That was a saga. I mean, we're constantly running out of cash. And so we were getting 5 grand, 10 grand here from every friend, family, person that would give us money - and did that for about - almost two years to run the business. And all told, it was maybe a couple hundred thousand dollars that we got that way before we were able to raise our first professional money.
RYAN: There are people who believe in you more than they necessarily believe in your idea. And I also found it so motivating because it was one thing, like, for Adam and I to, you know, lose our own money or fail. But when you're taking money from people you really care about - our roommates, you know, grandma, my...
LOWRY: My parents.
RYAN: ...Siblings, parents, you don't want to let them down. And I always encourage entrepreneurs to take money from family because I think it's the best motivation to ensure that no matter how hard things get, you're going to find a path forward.
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RAZ: Yeah. So you are, you know, funding this any way you can. At what point are you able to - at what point do you decide, hey, we've got to go to, like, real money people, big money people and get an infusion of real investment?
LOWRY: Well, we decided that really early on, but it took a long time to get it done. So it was probably - I mean, even by mid-2000, we knew we were going to need to get capital to run the business. But it took another year, at least, before we were able to get a professional investors to sign on the bottom line.
RAZ: How much did you raise in that round?
LOWRY: The first round was a million dollars.
RAZ: And it was from one investor, this one firm?
RYAN: One investor. And we were scheduled to sign the term sheet on what turned out to be September 11.
RYAN: And so in the months that followed, we were stalled because, of course, nobody was doing deals with the uncertainty in the world, particularly in a premium-priced cleaning product. And I remember we finally closed in November. And you always have a closing dinner when you raise capital. And we went around the room to pay the bill afterwards between Adam and I. None of our credit cards worked. Luckily, we knew the person who owned the restaurant, and we asked them if we could pay them next week after we closed. And...
LOWRY: Because we had run out of money.
LOWRY: And so all the - you know, we had inventory and orders and stuff like that. And all of that was on credit cards. Eric and I...
RAZ: You were just maxing them out.
LOWRY: Yeah, just maxing them out on the faith that we would ultimately get this investment. That was a scary time for both of us.
RAZ: By the way, what was your pitch to these investors? Like, what did you think convinced them to give you their money?
RYAN: A big part of our pitch was showing what we had proven locally and regionally and the argument that we were going to go get Target next and that we needed capital to be able to close Target and start to scale nationally.
RAZ: But how did you even - how could you even say that? Were you talking to Target before you had any money to make this product?
RYAN: No, not at all because we wanted to be able to get the capital, but what we started doing is we were working with Karim Rashid, who is a very famous industrial designer. And we wanted to create a line of products working with Karim that would make a real statement in the marketplace.
RAZ: Just to pause for a sec, Karim Rashid is, like, a huge industrial designer. Like, he's made products for - he's designed Pepsi bottles and iconic furniture and, like, perfume bottles. Like, you guys are in your mid-20s. Like, how did you connect with this guy, and why would he even answer your call?
RYAN: We were huge believers in the power of design and great industrial design. So we put a list together of the top industrial designers. And Karim was at the top of that list.
RYAN: So I figured we'd just work down the list until we finally got somebody to agree to work with us. And I shot Karim an email.
RAZ: You just went to, like, Google and typed in his name and found his...
RYAN: Looked up the studio, shot email cold to him...
RYAN: ...And said, you know, here's our patch. We want to work with you to redesign the dish soap, an object that sits across every sink in the landscape of America. Will you work with us? And he wrote back within 20 minutes and said yes.
RYAN: I do remember, like, I think when he first met us for the briefing, he said to Josh Handy, who we worked with at the time - he's like, maybe try to get some of the payment upfront.
RAZ: Yeah. I mean, how did you - how were you even going to afford to pay him?
RYAN: Yeah, we were able to convince him to do it for a lower fee because he really believed in the project but also with equity. And gave - you know, got him to have skin in the game with us.
RAZ: So he agreed to do it.
RYAN: So he agreed to do it, which was absolutely amazing. And they - at the time, Target was working with Philippe Stark, and we knew they had an interest in working with Karim. And so what we did was, working with Karim, we were able to use kind of Karim as the carrot to get a meeting with Target marketing, who then invited the buying team. We did a big dog and pony show with Karim, kind of spent pretty much our last dollars.
LOWRY: We kind of went all in on this, yeah.
RYAN: And ultimately, none of this company would have ever went on to exist if it weren't for the risk we took on our dish soap. And Adam pulled miracles to get the first prototype of the dish soap. It arrived moments before the presentation.
RAZ: The actual soap.
LOWRY: Yeah, soap in the bottle.
LOWRY: And what was unique about this product that Karim had designed is that it was upside down. So the dish soap came out of the bottom. It was on this insight that everybody - you know, you always turn it over.
LOWRY: It's a weird experience. So it kind of shot out at the bottom, this beautiful sort of sculptural shape. Now, I - this is an important detail. I was not actually at the meeting because, as Eric mentioned, to the - literally the very last moment, we were putting together the product. I was in the factory doing that 24/7 for weeks in preparation for this meeting. So I was, like, sleeping on the factory floor and doing that whole thing. And then I FedExed this thing first overnight to Eric for the pitch.
RAZ: Were you nervous? I mean, this is, like, a make-or-break meeting.
RYAN: Oh, it was. I mean, I was starting to work on my business school applications just as backup because, like...
RAZ: Oh, really?
RYAN: Yeah. I mean, you knew that if we could not get a national retailer behind it, the economics weren't going to make sense. I mean, we're competing against people who - you know, they own their own plants. They've had 150 years to figure out efficiency. And we were charging, initially, like $5 a bottle. We had to keep bringing the price down to make it more competitive.
RAZ: So you were losing money on every bottle you were selling.
LOWRY: Oh, sure, yeah...
LOWRY: ...Early on.
RYAN: So we needed scale. And we needed it fast.
RAZ: So what happened at that meeting?
RYAN: They said, we'll do a test. Marketing stood up at the end and said, this is right for our guests. It's, you know, designed forward on trend. And so Target gave us a 90-store test to basically prove ourself out.
RAZ: To sell dish soap and...
LOWRY: Surface cleaners.
RAZ: And surface cleaners. And do you remember how many units they bought?
LOWRY: Oh, they bought initially about 25,000.
RAZ: That's a lot of soap.
RYAN: Oh, it was (laughter).
LOWRY: Yeah, yeah.
RAZ: Did you - were you, like, jumping up and down? Did you call Adam and say, we made it - we're in Target?
RYAN: Not really - because we knew if we failed that test, we were out of business. It was make or break.
LOWRY: There was - I mean, to be fair, there was...
RYAN: That's when I got nervous.
LOWRY: There was a triumphant like, yeah, we've got this test, which was great. But, I mean, I remember that moment vividly because my heart sank because, you know, I had to then make sure that we could get 25,000 units made with perfect quality and all of this.
RAZ: In how long? How many days?
LOWRY: It was only about eight weeks. And that includes things like long lead times for making bottles and, you know, all of this type of stuff that - it never should have been able to be done in eight weeks. I still to this day don't exactly know how we got it done. But we - you know, there's a theme that always ran through our business that when you hit a roadblock, you know, you get out the paperclip and the chewing gum and the rubber band, and you figure out another way around. And, you know, making 25,000 units was just another sort of MacGyver moment. You know, if you're going to build a business - any business - it's hard. And you've got to be incredibly resourceful. And for us, that was very real because it was born from all of these times where we went the path you were supposed to go, and a door got slammed in our face, and we had to figure out another way.
RAZ: So mid-2002, you are in 90 Target stores. And you've got to hit a certain target for them to expand out further. How'd you do that? How did you create awareness around the product?
LOWRY: Well, we didn't hit that target, as it turns out (laughter).
RYAN: Yeah. The first thing we did was - there was a set date. And so we had to make sure we got on shelf as fast as possible. So we started driving store to store, go in. If it's not set up, you go the back room. You pull it out yourself. You take whatever's on shelf off. And you get your product on shelf quickly. But we started, you know, first week, looking at the numbers. We're missing the number. And then we had a problem, which was the dish soap that we did, which was the first ever inverted dispenser - so it comes out of the bottom.
RAZ: Yeah, I remember that.
RYAN: Consumers would go to smell it because the fragrances were really unique at that time. And they would pull off the bottom in a way it wasn't supposed to really come off. So it meant it didn't really go back on. And, thinking we were great merchants, we put that on the top shelf. So we would walk into stores, and there's just dish soap raining down our entire display.
LOWRY: It was horrifying.
RYAN: It's hard to sell a product when it's covered in dish soap.
RYAN: And it's really hard to clean up dish soap in the aisle of a store.
RAZ: But how were you - I mean, you had to hit this target, and you didn't. So what happened? Why did Target keep carrying it?
LOWRY: Ultimately, it was - while we weren't hitting the number of units of sell-through that they gave us for a well-known brand on promotion and all of that, we were doing reasonably well. And fortunately, a buyer at Target realized that it wasn't just the number of units that we were selling but the type of people that were buying our products and the other types of products that they were buying in the store.
RAZ: Who were they?
LOWRY: You know, they were people that were sort of the millennial equivalents of the day, right? There were young. They were more dynamic, more - slightly more urban, a higher-end audience. These were exactly the types of shoppers - Target calls them guests - that they wanted to get in their store. They knew that that was a highly valuable shopper for them.
RYAN: I think that's the paradigm we really broke. And I guess we'll take credit for it because we haven't found anybody that did it before us. But eco-chic. And traditionally, green products didn't look beautiful, and beautiful products weren't necessarily green. And I think a lot of it is just coming down to our own dumb luck of Adam's passion for sustainability, mine for design. That's why Target made so much sense - because we just needed that bigger platform to drive change.
RAZ: So after Target, at that point, did it become easier to get into other big box stores and other retailers?
LOWRY: You know, I wouldn't call it easy. But what I would say is every next retailer, every next financing around gets incrementally easier. And that's really - that's momentum, right? If you build - really, at the end of the day, I believe that business is about starting with a really small - that's a small success and building it into a slightly larger one. And if you do that a couple of times, whether it's going from direct-store delivery at Mollie Stone's to some regional grocers to a test at Target, you only have to do that a number of times, and you can build a pretty big business. It's not easy. But the more you do it, it gets easier to get bigger and bigger wins.
RAZ: It's interesting that you started, really, with Target because we've had John Mackey on the show. And we've had other products that really started out at Whole Foods that were nontoxic and environmentally friendly and organic and so on. I read that, actually, you had a hard time getting into Whole Foods at the beginning. Is that true?
LOWRY: Yeah. I mean, you know, oddly, they didn't like that we were already in a mainstream retailer. And we were just very upfront and said, listen. We think that we've got a product that your shopper is really going to enjoy.
RYAN: We just didn't look like a green product.
RYAN: We didn't...
RYAN: We didn't wear the uniform of green. We wanted to change that because - those weren't the people we want - we wanted people to buy our product who would never consider buying a green product.
LOWRY: Yeah. It's important to note here, like, I think it's totally pointless to make a green product for green people, right? Only about 5 percent of products in the U.S. market that are sold are green products. And so if all you're doing is preaching to the converted and the 5 percent, like, what are you doing? We want to create a product that that appeals to everyone...
LOWRY: ...Right? - and not just people that are only going to shop on their environmental credentials.
RAZ: I read at one point, Eric, that, to prove that this really was nontoxic, you actually drank it. Like, you drank - what did you - what did you drink? Which one did you drink?
RYAN: So I was in London. And, you know, I love the British press. They're so skeptical. And I was talking about our products - that they're, you know, nontoxic and safe. And she said, is it, you know, safe enough to drink? I was like, sure. And it was a toilet bowl cleaner. And so we both took a shot of the toilet bowl cleaner, and then I immediately text Adam. It was still - you know, he was still sleeping here. Finally, he got back to me. I was like, hey. Just drank the toilet bowl cleaner. I'm going to be OK, right? He writes back, well, it wouldn't have been my first choice.
RYAN: Thank you, Captain Obvious.
LOWRY: We've both had to - I've ended up on Japanese television a number of times, drinking a lot of Methods...
LOWRY: ...And I'm still here.
RAZ: So how quickly - when did you actually become profitable? When did...
LOWRY: It was about five years in.
LOWRY: In 2005, we became profitable.
RAZ: But this is after you're in Targets all over the country, and it still takes some time before you turn a profit.
LOWRY: And that's actually relatively fast for a consumer products business to go from nothing to profitable in about five years - pretty quick.
RAZ: How much money did you have to raise before you could stop raising money and just fund the company?
LOWRY: About $25 million.
RAZ: Twenty-five million dollars.
RYAN: We felt we had to grow fast, both to keep startup competitors away. But also, all the legacy brands were starting to copy us.
RAZ: I'm sure, right? Because you guys had this - people were like, oh, I love this product, right?
LOWRY: They did try to crush us, and there were a number of brands that were launched by large CPG...
RAZ: Like Clorox and...
LOWRY: All of those guys. But what was interesting is it was so funny - and Eric predicted this, to his credit. He predicted that they wouldn't be able to get it right. And what they launched, you know, invariably was sort of the same old, like, pistol-grip bottle with the finger grooves in it that happens to run down their lines already with like...
LOWRY: ...A different label on it. And then they slap a flower on it with some sort of, like, name. It just was like, come on, you know? And they did throw a lot of money at that stuff. Believe me, it was really scary for us.
RAZ: Did it cut into your...
RAZ: ...Your business?
LOWRY: In the short term, it did. But because, you know, they weren't authentic products, they weren't interesting products, they were just sort of - you know, people would try them once, and they got promoted. So they'd capture shoppers that way, but then it just - the product didn't perform.
RAZ: These are like Procter and Gamble, like, the big companies.
LOWRY: All of them...
RAZ: All of them.
LOWRY: ...Did some version of it.
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RAZ: So I guess around 2008, you decide to branch out into personal care products. So what was the name of the label?
LOWRY: Block (ph).
RAZ: And you say that in a very matter-of-fact way. This was a shower gel and hair shampoo and stuff like that?
RYAN: The original idea was actually this really kind of beautiful, organic shape, but it didn't stand up.
RAZ: Shape of the bottle?
RYAN: Yeah. Almost imagine, like, a seed. We wanted to still keep that kind of object approach, and we ended up with square, and then it's like a plane crash. It's not one thing that goes wrong. It's, like, 10 things that go wrong. And...
RAZ: So what went wrong?
RYAN: ...That's exactly what we did there. From kind of walking away from our core vision of it to not getting the tooling right. And one of it is we were always a little bit more conservative of - you know, we believed in fail fast, right? So you get products out there - limited number of retailers. Make sure it works, adjust. Launch and learn. And everybody loved the design of it, so we went really broad.
RAZ: Everyone said this is going to - everyone's going to have this in their bathtub, in the shower.
RYAN: Costco loved it. Grocery - everybody got behind it. And essentially, it was nailed to the shelf and did not move. And it's expensive to launch a new product. It's really expensive to discontinue because when you see something on shelf that's being discounted for the store to get rid of it, the manufacturer is funding it.
RAZ: Oh, man. Were you - so you just got rid of all this stuff. Like, what happened to the excess stuff, inventory?
LOWRY: Yeah. I mean, mean we ended up actually just recycling a whole bunch of bottles that never got sold.
RAZ: Do you still have it in your garage?
RYAN: It's a great product.
LOWRY: Still have some.
RYAN: We did hear some of it was sold to prisons.
RAZ: Wow. So how big of a hit did you guys take on that - did Method take?
LOWRY: You know, I don't remember exactly in dollar terms. But it was, you know, in the low millions of, you know, an investment that - basically, an amount of money we lit on fire. But the bigger thing, though, is just product failures or reputational risk. And it's something that you need to recover from. The customers, meaning - for us, a customer was a retailer. Yeah, they were not excited about that. You know, something that you have to dig yourself out of.
RAZ: So I'm curious because, at this point, you've had - obviously had lots of success with Method cleaning products, right? The company is profitable. And then you had this failure with Block, right?
RAZ: I mean, was there any tension between the two of you around that? Like, how was your relationship going?
RYAN: It's like a marriage.
LOWRY: Yeah. Yeah, it is like a marriage. I mean, I think Eric and I are super good friends. You know, we obviously know each other incredibly well because we've been in the trenches together. There was a time for a couple of years where we were at each other's throats.
LOWRY: You know, Eric and I approach problems from very different angles. And that is a huge asset. But it also can be a huge rub when, you know, I see a problem from this direction, and you see the problem from another direction. And you can butt heads about that. And, you know, that - what it requires is it requires a lot of open-mindedness. It requires a lot of self-awareness. It requires a lot of listening. These are all skills that I'd say that we've learned.
LOWRY: But early on - you know, I don't know a lot of 25-year-olds that have that level of sort of experience and maturity to have those skills. And we didn't.
RAZ: Well, I mean, many, many partnerships break down. It's unusual for partners to create a company, to scale it and then to stay friends after, you know - and good friends. I mean, how did you guys get through that - those tense times?
RYAN: Well, I think we just - over time, you know, we knew how to be friends, but we didn't know how to be colleagues and partners together. And we started to learn each other's different styles professionally. My instincts is to just engage and run at it. Adam needs a little bit more space to kind of think it through.
LOWRY: He's an extrovert. I'm an introvert.
RYAN: And we really learned each other's working styles. And we were able to find a better rhythm together. And at the end of the day, that was the glue.
LOWRY: I mean, it was a very, very conscious effort to say, like, screech on the record - like, we've got to work on this - right? - or this is going to end badly. I mean, at the end of the day, it was mostly about us doing it individually and working with one another to figure out, you know, when Eric says X, Y Z, and I feel like it means this, actually, that's not what he means. He means something else. And I can separate the two.
RAZ: You guys sold this company, Method, to Ecover in 2013. Why did you decide to do that? You built this from the ground up. Was it a point where you kind of had had to do this, had to sell it?
RYAN: Yeah. I mean, we were approached by a private family out of the U.K. And they had owned the Ecover brand, which was really the pioneers from the '70s of green cleaning. And so the pitch to us was it was an opportunity to really allow all of our investors, who've been in it for a long time, to see a nice return.
LOWRY: We're big believers that you build businesses sort of for posterity - to endure. And businesses change ownership. And so the question isn't, will it? It's, if it does, will the business be better afterwards? And in this case of selling the business to Ecover, actually, the greatest example of that is we were able to build what's probably the most sustainable manufacturing facility in the whole world in the inner city of Chicago immediately after we sold the business. So there was an example of, like, deepening and enhancing the mission and building something that helped us grow the business much better rather than what other people fear would happen.
RAZ: So you - both of you moved on around 2015?
RYAN: Yeah. We're still involved with the company at a light touch.
RAZ: But you have no ownership at all anymore over Method.
LOWRY: That's correct.
RAZ: So I ask this question to pretty much everyone who comes on the show. I'll just start with you, Adam. How much of the success of Method do you think has to do with, you know, your intelligence and your skill and how much with luck?
LOWRY: I think there's other factors other than just those two. I think that it certainly isn't all because of me. I'd like to think that I contributed an amount to a group of people working together to create something really awesome. I think perseverance was a huge, huge key to the, quote, unquote, "luck" that Method had. And yeah, you know, was there 20 percent luck in there? Absolutely.
RAZ: Eric, what do you think?
RYAN: I always say an entrepreneur can never have an ego because luck is always a factor. And I agree with Adam. With enough persistence, luck always shows up. Yeah, I mean, we made so many stupid mistakes and kind of had near-death moments - that, luckily, ball just bounced the right way to keep us alive. It's just been a real pleasure.
RAZ: Is it strange to go into a Target or a Whole Foods and see this bottle you designed, this soap you designed, this thing that you were making in a San Francisco group house - call it whenever you want - and it's not yours anymore?
LOWRY: (Laughter) It's still ours.
RYAN: It is.
LOWRY: It's still ours.
RYAN: But the emotional attachment. And every time I see - you know, you walk into a random restaurant bathroom, and there's our teardrop hand wash sitting there. And you see it, and you can think of, like, the stories and the creation of it and...
LOWRY: It's so much a part of our identity. Like, whether or not we own a couple shares or not has nothing to do with it. It's still ours.
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RAZ: That's Adam Lowry and Eric Ryan, the two co-founders of Method. By the way, each of them have now launched their own new ventures. Adam founded a company called Ripple Foods, which makes plant milk and other dairy-free products from vegetable proteins, mostly from yellow peas. And Eric's new startup Olly sells nutritional supplements, protein bars and smoothies. And even though they're not professional partners anymore, Adam and Eric and their families still hang out quite a bit - around once a month.
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RAZ: And please do stick around because in just a moment, we're going to hear from you about the things you're building.
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RAZ: Hey. Thanks so much for sticking around because it's time now for How You Built That. And today's story comes from Marin County, Calif. And it actually starts more than 120 years ago.
LOREN PONCIA: Yeah. My great-grandfather immigrated from Italy in 1897. And we have been farming or ranching here since then.
RAZ: That's Loren Poncia from Tomales, Calif., where he runs Stemple Creek Cattle Ranch.
LOREN PONCIA: Oh, yeah. You can see cows all over our ranch. We have a few with white faces or speckled faces. But most of them are all-black.
RAZ: All-black angus beef cattle, the same kind his parents raised when Loren was growing up. And even though he loved the ranch, he eventually moved to Sacramento to work in pharmaceutical sales. But about 13 years ago, Loren realized he wanted to get back to those cows in Marin.
LOREN PONCIA: I felt like, it's either now or never. I'm 30. You know, it's totally OK if we try and fail. But if I don't even try, I'm not going to be fulfilled as a person.
RAZ: So Loren talked about it with his wife, Lisa.
LISA PONCIA: I mean, I knew, obviously, since I met him how passionate Loren was about agriculture. And I was up for the adventure.
RAZ: So Lisa quit a good-paying job at a law firm. And they moved back to Marin to join Loren's parents on the ranch.
LOREN PONCIA: But we were still ranching the way that my great-grandfather had ranched at the time. And we needed to change some things up and actually make it a profitable business. Otherwise, we weren't going to be able to survive.
LISA PONCIA: And we essentially asked Loren's parents if we could take over the running of the ranch. Thankfully, they had the vision, and they were brave enough to say OK.
RAZ: So Lisa and Loren started to make some changes. For starters, they no longer wanted to auction off their cattle to a feedlot. They wanted to raise them until they were slaughtered and then sell the beef directly to customers. And because they saw that more people were demanding healthier food, they decided to raise the cows organically - on grass instead of grain. But all of that took a lot of time and a lot of money.
LISA PONCIA: We invested a lot of our, you know, personal assets in the business. Like, we didn't have an investor. We didn't have, you know, seed money. We were the seed.
LOREN PONCIA: I remember having this conversation with Lisa multiple times and Lisa saying, well, when are we actually going to pay ourselves to do this?
RAZ: Both Loren and Lisa kept day jobs that paid the bills while they certified the pasture and the cattle.
LISA PONCIA: There was many people in our lives that just thought we were completely insane because we had two children during these years, and we were running around, you know, seven days a week, juggling all of these balls.
RAZ: It took them three years to fully convert to being an organic ranch and to build up a base of customers - first at farmers markets, then at local stores. And they kept working on different ways to go easier on the environment. In fact, they'd become one of the first farms in the U.S. to actually measure their carbon levels. And now they're not only carbon neutral. They are actually what's known as carbon positive.
LOREN PONCIA: Managing the operation on the property the way that we do - applying compost and rotational grazing, we're actually sequestering more carbon than we're emitting. It's just incredible.
RAZ: Anyway, a few years ago, Loren was able to quit his day job in sales to work full time on the ranch. Now, while profit margins in ranching are slim, their gross revenue this year is over $3 million, which comes from meat sales, plus tours, events and an Airbnb - all on the ranch started by his great-grandfather.
LOREN PONCIA: I think my parents are, like, totally proud to see us back and our business thriving. And they're always talking about us. And they're always - they're our biggest fans.
RAZ: The business is called Stemple Creek Ranch. And if you want to find out more about it or hear previous episodes of this show, head to our podcast page, howibuiltthis.npr.org. And, of course, if you want to tell us your story, go to build.npr.org. You can subscribe wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at email@example.com. And if you want to send a tweet, it's @HowIBuiltThis. Our show was produced this week by Casey Herman, with music composed by Ramtin Arablouei. Thanks also to J.C. Howard, Nour Coudsi, Neva Grant, Sanaz Meshkinpour and Jeff Rogers. Our intern is Mia Venkat (ph). I'm Guy Raz, and you've been listening to HOW I BUILT THIS from NPR.
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