From idea to international product: Magic Mitten baby calmer licensed to become GroHush

The Idea

The sound of an infant crying is one of the only sounds that creates a physiological response in the human body – it literally cannot be ignored.

In the womb babies experience a very loud environment for 9 months – some say up to 90 decibels.

Babies emerge into a world that is comparatively quiet, but with an enormous amount of new stimulus, which can be unsettling and overwhelming for them.

For many years white noise has been used in nurseries to settle babies. White noise mimicks the SSHHHH sound that parents instinctively make to calm their babies.   The SSHHHH sound is thought to be something like the noise babies experience in the womb.

Parents around the world will have examples of their newborn falling asleep in cars, noisy cafes, to the sound of a vacuum cleaner and such like. These are all examples of white noise.

Many parents, rather than burn out their vacuum cleaner engines, purchased white noise CDs or used a white noise app on their mobile phone.

There also emerged cuddly toys that emit white noise.

Mark Hubble, the inventor of the Magic Mitten, was given one such toy by his friend and colleague Dean Smith. He found it worked fantastically well at calming his new baby Lily, but he was concerned that it could be dangerous if used close to her ears as it was very loud – and it was also very annoying for anyone in the vicinity.

Mark shared his idea to overcome these issues with white noise with Dean – a hand held device that you held up to the babies ear that was loud enough to be effective but couldn’t be heard by the user or others in the vicinity. Mark assumed someone must have made a product like this and searched Google in vain for it.

Dean then mocked up a crude prototype, using iPhone ear buds inserted into a sponge. Mark took this home and used it on Lily with great success.

This was the genesis of the Magic Mitten baby calming aid.

Mark recognised the fragility of his idea. He ran a successful recruitment agency, but had no experience in product manufacturing. As such, he saw licensing as a good business model.

I had a new baby girl and was in the same anti-natal class as Mark. Mark was aware of my experience in intellectual property protection and licensing.

Mark and Dean approached me to see if I thought the idea was good, and whether I could assist them with protection, licensing and other commercialisation issues.

I could totally relate to the market pain, as my daughter Aria had trouble with reflux and colic, making her difficult to settle. I’d felt that new parent desperation, that feeling that you’d try anything to get some respite from the crying.

First Steps

We agreed to form a company together to take the idea to market.

The first step we took was to conduct an international patent search to determine whether anyone had any rights that would prevent us from developing the product. The search also gave us insight as to what if anything might be patentable about the product.

We determined that there was scope to get patent protection for the concept of white noise that could be worn on the hand or arm that when in use was not noticeably audible to the user.

On that basis, we agreed to file a patent application for the idea.

Here is the first lesson on the conflict between product development and the patent system – the product development timeframe is usually longer than the patent filing timeframe.

The time from idea conception to having a product on the market and understanding the likely commercial success of the product is often far longer than three years.

The patent system requires you to invest in filing your first patent before you first offer the product for sale. That’s not a huge risk to take on because the cost of filing a provisional patent is usually around $5,000. Within 12 months, you have to decide whether to file a PCT application to preserve international rights – that is likely to cost you another $15,000. So by month 12 you’ve got around $20k at risk on the patents, often with no more than an educated hunch and unbridled entrepreneurial optimism that the product will be a success.

However, at month 30 you have to complete the international patents by filing national phase applications – and this is where costs can really start to mount up, often well before you have any hard evidence that the product will be a success, and often before you have sufficient track record to raise significant external capital.

Depending on the rate of innovation in your particular industry, and the “hotness” of the patent landscape in your particular technology field, it is probably better to delay your initial patent filing as long as possible, to extend your runway until the large international patent costs.   You take a risk that someone else happens to file a competing patent in the meantime, but you mitigate the perhaps larger risk that you will not have sufficient finance or confidence to undertake a broad international patent filing program.

Design and Prototyping

 We first went to speak to the audiology department at the University of Auckland, to see if they had any views on what was a safe decibel level for infants.

Patent literature on white noise suggested various levels around the 60-70 decibel level as being most effective. The human speaking voice is at about 65 decibels, while a rock concert is around 90 decibels.

We wanted to understand if we could prove that the level we thought was effective would also be considered safe.

We learned firstly, that it was impossible to 100% scientifically prove this, without getting into ethical problems because you’d be testing on babies!

However, it was generally accepted that 90 decibels and above became permanently damaging after an exposure period of several hours; and that there was no damage to ears after prolonged exposure below that level.

The levels we chose were between 65 and 70 decibels, which we considered totally safe on the basis that the human voice is at this level, the baby’s own crying is louder than this level, and the exposure time to the product in use would usually be less than 5 minutes and definitely less than 10 minutes (as we intended to integrate an automatic 10 minute cut out into the product).

We went to a couple of product design providers for cost estimates. One was a small two man outfit, which I had previously had a good experience with. The other was a large agency whose portfolio included some good work . The price difference was about 3x, and so we decided to opt for the cheaper known option.

However, this turned out to be a mistake, as the designer had become engaged in another large contract and was unable to deliver what we needed on time. We were probably too slow in pulling the plug on that relationship, so it set us back about 3 months. However, it did provide us with a rough rubber prototype that was adapted to receive a small off-the-shelf MP3 player.

Having the prototype in hand, we decided that it felt too cold and hard, and Mums wouldn’t want to put it against their baby’s head. This put us on the path of a stiff foam with a textile cover – which has an added benefit of requiring very little tooling to implement.

In the meantime, we had another validation point when we were made finalists in a European based baby products business plan competition, which Dean had entered us into. The only problem was that the judging was to happen in London. Fortunately, Mark’s brother lives in London – so we hurriedly gave him a huge download on all things white noise related, and the Magic Mitten – and we sent our rough prototype to him and asked him to step into the lion’s den!

We gained some very useful feedback – essentially that it was a great idea but that in the baby product market, sharp appearance was extremely important! Needless to say our prototype didn’t make the grade – but we had made it to a very short list in a significant industry competition, which we took as further validation of the idea.

We found a seamstress who had previous experience in baby products, and facilities capable of producing and packaging the final product at reasonable scale and we set about a long and arduous task of designing our prototype product. We signed an agreement with our seamstress which included an IP ownership clause.

Dean, Mark and I found ourselves discussing fabric, shape, and colour weekly at our directors meetings, which were held at a local pub.

The other challenging part of this initial prototype was sourcing an MP3 player from China, and communicating the adjustments we needed in English. We had to order 1000 units before they would make the adjustments we wanted, and they would send 10 samples over for us to approve.

What we realised in the course of this was that it was never going to be feasible to make this product even at scale in New Zealand. We had to secure a cheap foreign manufacturing option to give us the margins to enable the product to be sustainable.

Mark had a contact through another venture, so we went about the process of reproducing our current product through the new manufacturer. Without the IP clause in our manufacturing agreement, we may have run into some issues at this point.

More Validation

The next validation point for Magic Mitten was engaging the Mums Say group on kidspot.co.nz. This is a group of Mum’s who volunteer to receive and test new products and in return give frank public feedback on it.

We had 60 mums trialling the Magic Mitten, which resulted in a large base of very positive testimonials. This gave us comfort that the product did actually work as we believed it would. In fact, it was a real eye opener for us – while we considered the product would really only benefit first time mums with babies under 6 months, we learnt that it helped third time mothers and children beyond 1 year old. This was all extremely valuable information that we were able to pass on to our licensee.

First NZ distributor

We were together quite nervous about having no real strong baby industry or product distribution experience between the three of us. We happened upon a distributor of a range of baby products through Mark’s recruitment business. They had been in the business a long time, but were not huge and had a relatively limited product range.

We thought this may be a bonus for us, as they could focus more directly on Magic Mitten, and we wouldn’t be burning any significant bridges if we made mistakes along the way.

We learned that they didn’t have the right attitude or risk appetite for a brand new product launch. We learned a little about the typical margins expected in the industry, which was useful. But other than that I would say it was a failed experiment, and in future I would recommend opting for a stronger distributor for a new product like this.

While we were disappointed with their performance in the New Zealand market, so were they and they ultimately voluntarily bowed out.

Harrogate Trade Fair

During one director’s meeting we were discussing the merits of attending a large trade fair in the UK, or waiting for other larger trade fairs in Las Vegas or Cologne.

Mark rightly noted that this fair gave us a huge opportunity to get market validation a few months ahead of our next patent deadlines, which would involve significant investment.

So although it would cost us close to $20k to attend the UK trade fair, we thought this was a good spend to make prior to the very large patent filing costs we were facing. If we spent $20K and found out that no one in the industry was interested, then we could kill the project and save ourselves the patent costs.

So Dean and I travelled to Harrogate with a makeshift sign and physically stopped nearly every person that went past our stand. We came back armed with two possible distributors, a possible sales agent and logistics solution, about sixty prospects and one indication of a buying commitment from a leading UK store – we ultimately got ranged!

One major decision we had to make was whether to run with a distributor or a sales agent coupled with a pick and pack logistics solution. We met an NZ agent at the trade fair who had 20 years experience in the industry and was very connected. We figured that unless we were running a huge PR campaign alongside a distributor, we would be one of dozens or hundreds of products that their reps would be pushing, so may well get lost in the crowd. Whereas the agent had only a few products and deep connections, so was more motivated to push our product hard. In addition it let us retain a little more of the margin overall.

We believe this was a good move, although we didn’t have a lot of time to see whether we were right or not because inside 6 months we were approached to licence the product.

Manufacturing Risk

Following the trade fair we had to get product to the UK in time to meet the expected orders from JoJo’s.

So with a confirmed order of 30 units, we set about ordering 7500 units to be made and shipped direct to the UK logistics provider! Our manufacturer initially insisted on a minimum first order of 15000 units, but Mark managed to negotiate him down.

We all had to go and put our houses on the line to get a line of credit from the bank that would let us fund the purchase order. This was a very scary process, probably the worst stress of the whole project.

The units turned up in the UK and our agent compared them against the sample, and all was OK.

Licensing Approach

We sent Mark to the Cologne baby show Kind & Jugend and within 15 minutes of opening he was approached by a senior team from The Gro Company, who said outright that they wanted to license the product from us internationally.

They sent us an exclusive negotiation agreement, which we adjusted and signed – giving them comfort to invest the significant time in investigating and doing due diligence on the product and opportunity. They were aware we had spoken to several other manufacturers about possible licensing.

From there they did something interesting which I hadn’t seen before. Instead of presenting a terms sheet they presented the licence agreement absent the commercial terms, so that the respective lawyers could get the finer details nailed while they completed their due diligence.

Finally the time came for the negotiation proper, which was to happen by Skype one night. Mark Dean and I found ourselves around a table in the café at the foot of Mark’s building because we couldn’t connect to his internet for technical reasons!

With my background in IP licensing, we ended up with a strong licence agreement the exact terms of which are confidential. They intended to redesign the product and packaging and relaunch.

While they missed their intended launch date, the launch has been successful and we are now in 30 countries including stores like Mothercare and Boots.  You can see and read more about the product here: https://gro.co.uk/gro-hush

Learnings

• First and foremost getting to market takes far longer than you expect and costs a lot more than you expect
• Early validation before large expenses are incurred is crucial.
• Trade fairs are great for validation and finding distribution channels.
• It is usually difficult to meet the market if you are manufacturing in New Zealand.
• Ensure you have strong IP clauses in all your agreements, even if you think the product design is finished.
• Sales agents can be a good channel early on but you have a longer cashflow problem to fund, and there can be hooks in the agreements
• Experienced operators are critical for market penetration.
• Getting into the shop is half the battle, staying on the shelves requires ongoing strong sales
• Good PR when you are small and unknown works well, especially prior to a trade show
• The road to market is long, difficult and lonely, and having more heads engaged is a real asset.
• While patents were our foot in the door, for our licensee it is their brand, not the patents, the will determine their success in the market.
• Take care when timing your patent filings – the closer you are to market the better, subject to the patent “heat” in the industry.
• While we didn’t go outside our core shareholder group for investment, there was still reasonably serious money required to get us to the point we were at.
• When you are a small business, banks will almost always want to have some personal assets on the line.