Channel Pacific has had the good fortune of working with Sena Cases through the major growth phase of their company in helping them with business development, channel marketing and sales. Recently, as reported through media outlets like all things digital, Sena Cases was acquired by Targus Inc., a $500M accessories company. This begs a question: why would an accessories company with over $500M in revenue need to acquire a small case company with $20M in revenue? What could have Sena Cases have created that was so valuable to an industry behemoth? Lets take a closer look.
What lead to Sena Cases success?
1. They took care to always position their brand as premium and built premium products. No compromises.
2. They built high quality leather products that considered the use case needs and style of a mobile accessories consumer. Function and fashion.
3. They focused on developing only premium channels like Apple retail. Leveraged the “Apple halo effect”.
4. They cut strategic licensing agreements with premium fashion labels like Michael Kors to drive revenue and add premium product lines to their portfolio, making them a more valuable vendor to retail partners.
5. They built a flexible infrastructure to be fast to market in everything they did. Focused on customer service.
A Lesson Learned
Sena had the ability to craft wonderful cases and bring them to market fast to support premium channels but really had very little intellectual property. This a lesson for early stage companies – competitive differentiation is important (Intellectual Property is optimal) but this is not the only motive in acquiring a company, expansion into hard to access channels or targeting new market segments can also be significant reasons for acquisition.
Nice to see all the hard work has paid off – congratulations Sena!
I have a great friend that has incredible experience in getting small companies funded with a track record of raising somewhere near $1B (Craigster, you know who you are). I have had the pleasure of being through a significant number of VC meetings on Sand Hill with him living the process in getting multiple companies funded.
Here is his checklist on what makes an early stage company fundable.
2. Customer traction.
3. Sustainable differentiation
4. Serviceable market size
Keep this in mind as you develop your company and you will be much more interesting to any investor and better position your company for long term success.
I believe that human beings are drawn to beautiful design. I also believe that every early stage company should be sure to use design as a critical differentiator.
One of my favorite books on design is The Design of Everyday Things by Donald Norman. Design is a process but great design is an absolute art. Great design is the bridge that allows new technologies to be useful to the consumer.
Because of companies like Apple, more than ever consumers expect better designed products – they are no longer happy with a subpar products that are not integrated well from a hardware, software and user interface perspective. (Apple took this a step further than most companies – they actually thought through the entire ecosystem solution as well!)
Early stage companies often have to make many compromises but one thing I always stress is not to lose focus on the industrial design of a product, if your company does not have a strong designer then hire one. The benefits of great design transcend the device itself, making it easier to get PR coverage, placement into retail and overall consumer awareness through social media and other mechanisms.
Bringing consumer products to market is difficult as can be seen by the high failure rates of start-ups in this market space, leveraging great design is a major factor in making any early stage company a success.