Lessons - From Innovative Idea to Multi-Million Dollar Acquisition | Dan Cohen - Exit Strategy Expert

In this lessons episode, discover the high stakes launch strategy that made a brand new nasal strip a runaway success learn why trusting a felt sense of the market can outpace conventional research learn how targeted press and athlete endorsements created instant credibility for an unheard of product and learn how unconventional distribution tactics forced retail gatekeepers to give shelf space against all odds how did you know that this was going to be so I mean you're in the sleep space but how did you know that this particular product which would force someone to slightly modify their behavior to actually adopt this product I mean because nobody's using it at this point already it's not like you're you know you're not like bringing a different type of coffee to market when somebody's already drinking coffee every day no one knows what this is nobody has any experience it's a very weird experience the first time you put it on it's like it's like literally nothing else that you're using your day today so how did you know looking at this product this was going to be a hit you know sometimes you just got to go with your gut all right and I think too many people don't do that you know they don't have a belief in themselves they don't have faith in their ability to get something done even though they don't know how they're going to do it and they're you know they're low on the scale of risk taking I mean when you're an entrepreneur you are a risk take after all and one of the things I think most people don't understand is thinking versus feeling okay I mean you know you just asked the right question how do you how did you know knowing is a felt sense it doesn't come from up here everybody thinks knowing comes here comes from the gut it's like oh I just know this is going to be successful I mean when when Bruce handed me that knows bandaid immediately in my head I I saw football players wearing it I I I I saw the design of it I I saw the stock market chart climbing in my head I mean there was an immediate knowledge and so that's why you just went with it so okay so your board is not super happy but you don't care you're going to figure it out anyways right so how do you take this to market I literally conceived of a plan that I thought we could implement okay and the plan was ultimately get it on football players but before you get it on football players I don't remember this is pre-internet yeah you can't go on a podcast and expose this to a million people right you know you had radio interviews that you know I I felt like I was talking to the cows in Montana in some of those yeah and also radio doesn't work so well and you're trying to describe something that nobody's ever experienced before like a a bandaid on your nose that helps you breathe it's a little that's right so so the key was all right I need the press ultimately to get behind this and so and we had done the medical studies you know we were getting it through the FDA and we had to file a denoval application because the FDA said what you just said no there's nothing like this so even though it's just a nose bandaid it became it became a class two medical device you know yeah I had to do this testing and prove it so essentially what what I needed to do was get the press on my side so my partner called she got 700 reporters for newspapers in the business business writers medical writers sports writers to agree to take our press kit and not file it in the trash can okay and I read to all them said look you know this fall football players are gonna wear this you're gonna need access to this so you can write articles about it and they agreed you know they didn't know we didn't know that football players are gonna wear it we had to make that happen and so so we got that seeded we had to get distribution which was really tough for a new company because the pharmacies wouldn't take it because the wholesalers didn't have it the wholesalers wouldn't take it because no no pharmacy was requesting it so we literally had to close loops between the customer the pharmacist and the wholesaler so I did 400 radio interviews to get 3000 pharmacies on board you know so that we could get all the 10 wholesalers to take it and then I went to Walgreens and I said this product's gonna be a success on the head of the cough cold you know section says how much business you're gonna do in the first year I said 23 million and he goes you're full of shit I said probably that's a though you know you didn't take it of course and I eat and he goes no I'm not taking the product I'm not giving you a shelf space I said oh you're gonna take it I said you'll see and so when I left his office the first person I called was the regional manager of the Walgreens stores in between cities I took him out to lunch I said how do we get this into your stores he says oh he says I have control over the counter space I said really I said and it doesn't need a perk to be approved by headquarters he goes nope that's my domain I as I showed him the product I said what do you think he goes I love it I'll put it on the counter and so it sold you know anything sells on the counter right by the cash register and so it sold really well he called four of his buddies that were regional managers another parts of the country and they took it and they was doing well then I get a call from the cloth cold buyer and he goes get your ass in here he totally went around him totally ignore him whatever it's in your stores anyway right and so he you know I got in there and I said so it's selling really well isn't it he goes you can sell shit at the counter he says I said so why do you want to take the product now he says because you're a pain in my ass I have to process all those waters from those regional you know stores separately by hand let's take it up my whole day I'm taking this product just to get rid of you that's so funny that's so funny so again it's not it is not by the way anybody who's never put out a CPG brand a consumer goods brand into the market like what you're doing is exceptionally hard to do yeah because now it's so like I don't I don't think that you can just do that same playbook in 2024 I have no idea but probably that seems ridiculously hard to do to go unless you have the relationships I guess that is an X factor that you can lean on but if you don't have those relationships it is very hard to get that kind of distribution without the sales traction or the revenue traction right if you're at the stage you were at well and then to get the distribution I mean I had some independence with it and then I finally got Walgreens I took their first water their first water was 200,000 to stock the shelves and the first thing I did was that with that is I went down to the best regional broker firm in the country because they were all regional there were no national firms and it was the Pan Calber others and they were known as sort of the premier you know group you know they were based in Chicago so Walgreens you know it was headquartered in Chicago so they took care of the Walgreens account I walked in there and and then and there were two proper gentlemen and three pea suits and they said well Dr. Cohen what can we do for you and I said I've got a check for you and they kind of looked at each other go well wait a minute we're supposed to like write you checks or you write us checks on this of that what do you mean you have a check for us and I said well look I got an order here for 200,000 dollars you know from Walgreens I want you to take over that account and I'll give you this as a starter and they said well that means you have to pass commission on that I said yeah and they go well okay why are you doing this I said I need a favor from you I want you to call the best you know eight other regional firms that are brokers and get them to meet with me and they said done that's so this will be up tick distribution in no time and we were in 40,000 stores you know I don't want to take you well you know I'd say the whole process took about seven months it's very good but I need to get it there for football season I was gonna say if you if you didn't have it if yeah if you didn't have it in the stores then none of the strategy would work so I mean I'm assuming if you wanted the football players to wear it you needed to have proof that there was them there it was like adopted by the market well actually we it wasn't adopted yet because it was just going on the shelves I needed proof from the head trainers the head NFL trainers so we started to badger them you know at a guy that was literally calling every NFL head trainer every week at saying have you used them yet on your players have you used them and finally one of them did he put it on Herschel Walker and Herschel Walker scored a couple touchdowns and there was a a photographer right behind the the goal you know the goalposts and he had a nice picture of Herschel wearing it and a beat reporter they would have turned up on page six on Monday you know the sports section in the Philadelphia Inquire beat reporter then called us up you know she saw it on Wednesday and she says what's the story about this and so then she wrote an article and she entitled the article bandage to beaks breathing better and it was back in those days color prints on in newspapers were rare and there was a six by nine inch on the front page of the sports section of the Inquire so we made color reprints of that we sent it back to all the other trainers and we said hey other players are wearing this your players are behind you know and I said post this in your locker room and then Jerry Rice saw it and said hey I got a nasal breathing problem and he went into Lindsey McClain the head trainer and says I'm gonna I'm gonna try one of those he put it on he loved it he said he worked Monday nights football at this point like I mean you're still like but you're still running the two companies you still have this pub co that's like now running both of these companies but I'm assuming that there's a point where where breathe right starts to outpace like all the traditional medical tech that you built out yeah exactly and so we ended up selling it so did you sell the whole pub co no we just sold them just sold the sleep part how do you how do you do that how do you package out a piece of a public company and then sell it what's this do what's the the strategy to do that it was really easy because you know you the the patents were so different the IP you know could be split um you know companies back then they they tended to just buy technology and and incorporated into their their stuff so it was really providing them all the engineering material you know our sales history uh the intellectual property you know and so it was a transaction that you know it didn't didn't take much and this was so I mean when you're when you sold to you sold the Glaxo Smith Klein in what was the 2006 correct yeah that was breathe right okay um obviously an amazing exit so that was for five hundred sixty six million dollars that you sold the IP for breathe right and and all the sort of and the business I mean there was an and there was another product fiber choice we launched fiber choice chewable fiber tablets to compete with metamusel so and that business was doing well so we at that point we had about a hundred and forty million dollar business but it was generating a lot of profit even for a consumer goods brand oh well the margin basically I mean a breathe right nasal strip you know we were making them in the billions and and you know a strip cost at that point two and three quarter cents oh geez right okay so you're good I mean you know you're at ninety percent margin thanks for tuning in if you found this valuable don't forget to hit that subscribe button so you never miss an episode and if you want to dive deeper into this conversation check out the links 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