Entrepreneurs are usually seen as “big idea” people. But as they used to say in the Michigan towns where I grew up, a great idea and a dime will get you a ride on the streetcar.
The “Eureka moment” — when you get that inspiration that will somehow change life as we know it — is a prerequisite for entrepreneurial success, but no guarantee. Avoiding the business boneyard requires a keen awareness of new opportunities and the savvy to capitalize on them.
For example, clay is as critical for my Kitty Litter and Tidy Cat products as silicon is for computer chips. If my supply line dries up, so does my livelihood. So when my business expanded west of the Mississippi, I needed to find suitable mineral deposits near my new markets.
I started in St. Louis by calling on distributors of industrial grease and oil absorbents, which contained the same Fuller’s Earth I used for cat-box filler. I learned that they got their material from Oran, a little town 150 miles to the south. I made a fast trip to Oran and began snooping around.
I discovered that a mining company had just set up an operation there, getting into the absorbent business for the first time. They normally manufactured highly specialized bricks used in steel furnaces and were accustomed to getting $10,000 a carload for their merchandise. Clay oil absorbent then sold for about $600 a carload. They were pouring bushels of money into the operation, and my geologist, Jack Rand, concurred with my hunch that they would soon be bailing out.
As luck would have it, we were discussing the subject at a local establishment, when talk of another new mining venture drifted over. We introduced ourselves and discovered that our new friends represented a New York mining company; they were in Oran to extract clay to use as a binder for iron-ore pellets at their huge operation in Missouri. “It won’t work,” Jack whispered as soon as we left. “It’s the wrong type of clay.”
Armed with an impressive technical analysis from Jack, I went to New York to convince the owners. Though unwilling to accept my claims, they gave me an option to buy their tract if they ever decided to sell. I bided my time and made occasional trips to Oran to observe each company’s demise.
After about a year and a half, both companies had dug themselves in so deep that dickering with them was like bidding on deck chairs as the Titanic sank. I bought the local mineral assets of both companies for about 10 cents on the dollar and used my savings to help build the most modern clay-processing plant of its type in the world.
I’ve had only one stroke of inspiration as big as Kitty Litter, but I’ve enjoyed hundreds of these intuitive exercises in hunting business prey. It requires not the genius of Albert Einstein, but the purposeful ingenuity of a mountain man. An indispensable associate like Jack Rand doesn’t hurt either.
This column is one in a series that will explore the thoughts, ideas and unadorned advice of an entrepreneur who made it, Edward Lowe. When he “brought the cat indoors” with a revolutionary cat-box filler, Kitty Litter, he created an industry that changed the lives of millions of cat lovers, not to mention cats. During his life, Ed Lowe used “plain talk” to speak about the bottom line from the bottom of his heart. We believe these writings, revised and updated after his death, offer value, not only for your business but also for your entrepreneurial soul.
