By: Geri Stengel
Susan Pieper noticed that snow and gardening shovels broke when her son, a backcountry skier, snowboarder and mountaineer, used them on his adventures in Jackson Hole, Wyoming, an outdoor wonderland. Pieper decided to develop a shovel that was durable, big enough for real work, portable (fits on a snowmobile) and innovative — such as teeth to break through ice.
DMOS Collective launched in April, 2015, with the vision of reimagining the shovel from a tool your grandmother uses in her garden to a tool an outdoor adventurer could stake his life on (even if he didn’t have to). When you’re disrupting a category and expecting to scale big time, you need to have agile processes — iterative and incremental development to collaboration between cross-functional teams. It doesn’t matter if you’re working with artificial intelligence or shovels.
Subcontractors Can Be A Crucial Alliance
In 2017, creating agility in DMOS’ product development and manufacturing process was one of Pieper’s greatest challenges. Originally, DMOS manufactured its shovels in China. That’s great when you need low-cost manufacturing for huge volumes, like 2 million units. However, when working with China, you need two years lead time from product design to market launch. “I knew if we were going to innovate developing shovels for different vertical markets, we needed smaller unit runs and shorter production cycles,” she said.
Her manufacturing team is a valued strategic business partner, advising on all issues related to how a design was going to be produced in volume. Pieper was looking for a manufacturer who could produce 50,000 to 100,000 units cost-efficiently and in a timely fashion — bringing a new design to market in 4 to 6 months. The manufacturer needed to be an expert in robotics and automation.
In 2017, Pieper made a strategic decision to manufacture in the U.S. She wanted her manufacturing partner nearby — no more than a quick plane ride away. “If I needed to discuss something, I wanted them to be on the same schedule as me so I could pick up the phone and get an immediate response,” she said. It was also incredibly helpful that the entire manufacturing team spoke English, she added.
Others are also recognizing the benefits of manufacturing in the U.S. The number of middle market manufacturing companies more than doubled between 2011 and 2017, according to The Middle Market Power Index series of reports from American Express and Dun & Bradstreet. DMOS chose Lit Workshop, owned by Wayne Watson, a manufacturer in Portland, Oregon. Portland ranks 4th in middle market dominance. This metric measures overall importance of middle market firms, defined as $10 million to $1 billion, to a city’s economy. An advantage of middle market manufacturers is that they are large enough to grow with a company that subcontracts to them and nimble enough to to go from design to market in 6 months.
“You always want to be the smallest customer of a manufacturer so when your production needs surge, you know they have the capacity to ramp up quickly,” said Sharon Vosmek, CEO of Astia and one of the Astia Angels who recently invested in DMOS. “Reality is, as a startup, you don’t often have the choice of who will work with you. Because Pieper is so senior and has such an exciting product, she has been successful in attracting a manufacturing partner with the capacity to scale with her.”
From Niche To Mass Market
DMOS started as a product for outdoor enthusiasts. The market quickly expanded to their dads, to farmers, to the guy who drives a snowcat and to highway patrolmen. Next up, the military, which Pieper believes needs high-quality, durable and portable tools, too
The original go-to-market strategy was direct to the consumer but now DMOS is pursuing a multi-channel approach, embracing both selling direct and through wholesalers. DMOS is now sold through Hammacher Schlemmer, Duluth Trading Company, Backcountry.com, Campsaver, Moosejaw, and Zumiez.
What’s A Nice Girl Like You Doing Making Shovels?
Some investors thought a woman leading a company with more than a 90% male target market was out of her league. Boy, are they wrong! Pieper knows male markets. She has sailed 10,000 ocean miles, 3,000 of them as a captain. She’s been rigging and outfitting sailboats for 20 years. In addition, she has an MBA from Harvard and been a management consultant at McKinsey and PricewaterhouseCoopers, among other places.
Despite her own adventures, finding funding was the hardest thing Pieper ever did. Less than 1% of all companies raise venture capital and women CEOs received only 7% of venture capital in 2017, according to Pitchbook.
Pieper, like many other entrepreneurs, tested interest in her product and raised money through Kickstarter. The first campaign raised $36,624 — exceeding its goal by more than 80%. The second raised $177,496 — exceeding its goal by more than 1,000%.
With an impressive market opportunity, growth to date, agile processes, top notch management team and intellectual property, DMOS was able to close a Series A round in January 2018. Investors included Astia Angels, a global investment community of men and women who invest exclusively in women-led ventures.
What are your biggest challenges in 2018 and how will you solve them?