Bobblehead maker charms dragons with more than gifts
Each week, Financial Post contributor Mary Teresa Bitti revisits CBC’s previous week’s episode of Dragons’ Den. She captures what the cameras didn’t and in the process provides a case study for readers, zeroing in on what pitchers and dragons were thinking and what the challenges for the deal are going forward.
The pitch On the Holiday Edition of the Den, entrepreneur David Garneau of Lac St. Jean, Que. brought gifts: custom bobbleheads of each of the dragons and they were charmed. Garneau divides his time between Canada and China in support of his business: 1 MiniMe, a custom, handmade bobblehead manufacturer/retailer that sells its products in 52 countries.
A software engineer by training, Garneau and his wife moved to China in 2008. While she studied at university and began teaching English he started an online business. He found a small factory with three people making custom bobbleheads for the Chinese market. “I designed the website and started ordering from them,” Garneau said.
In 2011, after signing contracts with distributors in France, Britain and Australia, the business began to scale. To meet the demand, he opened his own factory and hasn’t looked back. After living in China for five years, Garneau felt the manufacturing end was established enough for them to returned to Quebec two years ago.
Customers can select from 500 styles and bodies on the site, and submit a photo. The heads are sculpted out of clay based on the image. Once a design is accepted, the sculpture is set in a mould, baked, dried and painted. Another photo is sent to the customer to ensure they are happy before it’s shipped. This process takes about eight hours.
If customers do not want any of the body shapes available, 1MiniMe can make a completely custom bobblehead.
Sales are all made either from the 1MiniMe e-commerce site or through other online retailers. Prices start at $60 and net margins sit at about 30 per cent.
At the time Garneau made his pitch, he had $ 900,000 in revenue. His objective was to land a partner to help him strengthen the business and protect his designs, which, he said, are being copied by competitors. “I want to take this to the next level.” The deal Garneau asked for $ 100,000 in exchange for a 15 per cent equity stake. Michael Wekerle and Jim Treliving made an offer for 20 per cent, while Michele Romanow and Joe Mimran asked for a 15-percent stake and a 10-per-cent royalty for two years. Garneau accepted the offer f rom Romanow and Mi mra n , which is still in due diligence.
“Groupon already sells a lot of my products and if Michele can enhance that relationship by helping me enter new markets that would be great,” Garneau said. “If Joe created a design for us, then it would be copyrighted and that would help protect my designs.” A dragon’s point of view “I understood the model and remembered the vendor when he was selling on Buytopia,” said Romanow. “Customization is a growing trend and he’s hit on some magic here with his price points. “The question is how do we integrate new technology, such as 3D printing, which can take the business into the future.” She thinks the business is ripe for partnerships with sports franchises, promotional companies and corporations. Romanow agrees going the legal route to protect the designs is too expensive. “Joe’s expertise in brand building could help address that challenge,” she said. An expert’s opinion John Cho, partner at KPMG Enterprise, likes the product and the business model but is concerned about the lack of barriers to entry. “As long as you have the right manufacturing process and graphics people, you can enter this space.”
Cho agreed Mimran would be a good business partner to help protect intellectual property, but he said marketing and raising awareness about the brand would also help address copyright issues by growing volumes.
“Rather t han f ocus on how to fend off the competition, he should be focused on growing. Partnering with corporations around employee recognition programs is one way to do that. I think the entrepreneur is limiting growth by not bringing in additional people so he can focus less on operations and more on strategic direction and where to
take it.”