Cigar Makers

The “Why of Buy” – a Problem for Problem Solvers

Reading Time: 5 minutes

Everyone has great business ideas. Each time you think, “Why can’t I?” or “Wouldn’t it be cool if?…” you might be pregnant with a good product or business idea. Fifteen years ago, I thought, “Wouldn’t it be easier if I squeeze my cigar cutter closed with my palm rather than my finger tips?” And if that cutter had a pivot point, wouldn’t that leverage make the cut even more powerful? Those questions defined a problem, which our Xi cutter solved. Fortunately, many others agreed with the solution, even if they didn’t know they had a problem (thank you)!

It’s best if the solution is unique, even patentable, since those lend immediate market interest and protection. When the product isn’t unique, it must at least have a unique meaning, or “position” in the consumer’s mind. For example, think about pocket knives, which have been around for hundreds of years. Yet the new position created by tactical knives like Spyderco reinvigorated the entire category.

But the road to success is littered with good, unique solutions. In today’s competitive marketplace, products must carry competitive protection, a suit of armor. Great service is one such protection (low price is another). That, and because “do unto others” is part of our essence, which is why we have a lifetime warranty on our products. Entrepreneurs should solve the “why” of buy – and not just the “what.”

In order for an idea to become a business, the solution it provides must have an appeal that others are willing to pay for. The great show, “Shark Tank” explores exactly that – and in my opinion, does a great service to inventors participating and watching – because it dramatically demonstrates the tough judgment of the market. Many inventors fall in love with an idea never stopping to consider whether others might be equally attracted. They ought to ask themselves and others, “Would this make it on Shark Tank?”

XIKAR is fortunate to receive product inventors’ ideas, and some, like our Ashtray Can, have obvious appeal. This product quickly passed our review process, then moved to an accelerated launch, and now provides the inventor a nice royalty (if you have a new product idea, please send me an email). Others like the “Monica” cutter didn’t pass. If you are old enough to remember Monica Lewinsky, you can imagine why!

The key to understandin the market for your solution is to test it.

The test should be unbiased, as close to the marketplace as possible. If you don’t have a product, discuss the “problem,” with friends, acquaintances, even strangers. (I don’t suggest discussing your solution at this stage. While very, very few people have the ability or low morals to seal steal your idea, this phase is still young enough that, if that happens, they could potentially get it to market before you). Record their responses, and mold your solution according to those responsible in a way that feels logical to you.

We did exactly this when in 2003 we decided to enter the lighter market. We made the assumption that lighters are just like cars: moving parts, with an engine that burns fuel. Cars also have a warranty. That warranty, however, is usually limited by certain terms and conditions, based upon the expected performance and longevity of its individual components. So we asked specific questions surrounding problems with lighters and their warranties. XIKAR already had a solution in our lifetime warranty, but needed to know if our solution was also unique – and as it turned out, it was! “XIKAR for Life” is the position that gave our first lighters unique meaning.

Even with very positive responses, the test isn’t over. Simply put, the marketplace is by far the best test. It is the shark tank. Show your first prototype to a group of your target consumer. What do they think of it? How much would they pay for it? Feel free to describe the features of it, but be careful to stay clear of selling the advantages and benefits – you can’t be there to make every sale! And since you can’t, you want unbiased feedback before investing any more funds.

Early in our business life, we would take a product to market at this stage. And if response was positive, we would then go into full production; since demand during the cigar boom was so high, we were very anxious to get the sales. Fortunately, we didn’t make many mistakes. For instance, I can surely say that our endeavor into pocketknives led to some beautiful product and taught us volumes about blade and handle materials, edge grinds, and even introduced us to some current vendors. However, deeper research would have revealed that gentlemen’s knives were on the wane, particularly after 9/11. Deeper serious study might have gained the same knowledge without the financial side track.

Today, we take one further test step – we order a “sample run” of sufficient units to test in a dozen stores around the country. This real, live test takes place with our standard retail package and in-store advertising. It therefore tells us all we need to know – whether a consumer sees the same solution we envision. Our Ashtray Can, and more recently, our Vitara lighter, passed the test. On the other hand, a lighter and a cutter we thought would pass didn’t.

Congratulations! Your solution (and invention) is now a product. The market responded and demands the product. Are you in business? Maybe. The answer really depends on your financial situation and skills related to running the business you want to be in. Prior to XIKAR, my career experience included sales and marketing management, and new product launches for several top consumer products companies. Scott’s [Scott Almsberger, XIKAR co-founder and Chief Design Officer] included sales, relationship management, factory management and of course a lot of product design. We were well suited to start and run XIKAR on our own.

Had we not been good candidates for our own jobs, I’m not sure that would have stopped us – so please heed this warning I have come to realize: inventing a product and running a business are completely different. Getting a new product to market carries both financial and business risk (a lot more on that in a later article). Inventors who are not prepared for both stand to lose their finances and their market space as the business overwhelms them, and the market competitors pass them by.

Business startups can be boot-strapped. We did it with a unique, patented product in a marketplace that was booming at the time. And, I gave up my salary and home (moved my wife, two young children and two beagles in with my mother in law) for two years. I like to say that not all entrepreneurs have to give everything up, but they have to be ready to!

Partnerships with existing brand marketers and distributors provide a great alternative for most entrepreneurs to launch their products and enjoy immediate market penetration. Sales and profits that correspond with that far outweigh the startup years of a solo effort. Sure, the inventor gives up a portion of the profit. But often the economics are still better for the speed of profits and the lack of risk.

We are constantly looking for new products, as are all the other distributors in our trade, and in every trade! Consumers walk into cigar shops and say, “What’s new?” I walk into a cigar shop, and the owner (always) says, “What’s new?” The Ashtray Can inventor is a great example of how well this can work. I recently saw an invention that will be perfectly suited for the checkout at Wal-Mart, grocery and other big chains. The inventor is a salesman in a tech company, and a mutual friend suggested him to me. So, I passed him to a buddy whose company sells to Wal-Mart, Target and grocery stores, and I think they are both going to make a lot of money on this deal!

In my case, I was compelled by a new product solution to take to market. I was compelled to start a business because I was “a good employee, but not very good at working for someone else.” If this sounds familiar, then you know exactly what I’m talking about. I hope you have a great product idea, and get it to market. Or, I hope you have a great solution, and let me, or another company know about it!

– Kurt van Keppel

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Kurt Van Keppel

Kurt Van Keppel

Kurt Van Keppel is the President and co-founder of XIKAR Inc. He grew up in Kansas City and received his history degree from the University of Kansas. He then continued on to earn his European Studies degree from Franklin College in Switzerland and his masters in International Management from Thunderbird (AGSIM). Kurt is proud to be in the cigar industry since it is truly based on camaraderie among wonderful people. Besides cigars of course, he enjoys art, fishing and a good bottle of wine.

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