fastest-growing DISTRIBUTOR

Touchstone (asi/345631)

Derek Block, front, and Steve
Paradiso run Touchstone, the
fastest-growing distributor in
the industry today.
The honchos at Touchstone (asi/345631) have a plan.

Figuring out that fact isn’t a matter of intuition, considering that Derek Block (president and CEO) and Steve Paradiso (COO) say the word 57 times in the span of an hour-long conversation. “You’re probably sick of hearing us talk about sticking to the business plan,” Paradiso wryly says at the end.

Others at Touchstone certainly aren’t. Not when the Mason, OH-based company has jumped from $5.5 million in revenue in 2006 to $20.5 million in 2008 to become the industry’s fastest-growing distributor. And in a time when the excesses of unchecked expansion and overly ambitious designs have ravaged even the most successful, the plan for Touchstone is worth its weight in gold. “We know exactly where we’re headed,” says Block. “We know what unit of measure we take of ourselves every day.”

Indeed, “The Plan” (no truth to the rumor it’s framed and hung up in the Touchstone offices like the Constitution) was borne out of necessity. Block, 37, started the company in 1996, growing the business slowly but steadily, cultivating a team atmosphere and aiming for a higher level of professionalism along the way.

The circumstances changed in 2005 when Block sold the majority of Touchstone to Larry Sheakley, a Cincinnati businessman with no prior ad specialty involvement. Having stayed free of debt and now boasting a vast reservoir of financing to work with, Block, who still to this day paints himself as an industry outsider, knew that a plan with the industry in mind was crucial. He reached out to Paradiso, 53, an industry veteran of 20 years, and the two went about setting up a structure the company could grow with.
“We really needed to put together the right plan,” Block states. “It wasn’t a startup, it wasn’t like we were going to assemble the team and divide up responsibilities and then work the plan. We’ve always been an organization where the dog wags the tail, and when Steve and I started putting this plan together, we wanted to do the same thing.”

The results? They compiled an executive team long on industry experience and heavily involved in the company’s day-to-day activities. They devised a financial plan that measures growth not just in revenue, but also “credits” that are earned when sales reps or programs meet certain benchmarks. They’ve harped on technology and world-class support as a means of attracting talented industry salespeople. And because they’ve accrued momentum during a difficult time, they are ahead of where they planned to be. But not too far ahead, mind you. Acknowledges Block, “We’re relatively still under the radar, but we’ve grown ourselves into a good-sized industry company.”

"Everything we do internally will fail if we don’t have the
right people representing us."

Steve Paradiso, Touchstone (ASI/345631)

Top 10 DistributorsOf course, Touchstone could be even bigger. It could take on even more clients if it wanted. But in a time when most distributors can’t afford to say no to anybody, Touchstone maintains that its smartest move is avoiding clients who aren’t consistent in their ideas and don’t share the company’s vision. “Today, so much of business is going to be focused on purchasing initiatives – that is just a low-margin deal,” Paradiso says. “We will not take those kinds of customers on. That’s a critical element to our success.”

It helps that Touchstone boasts a very diverse client base and offers a laundry list of services and solutions – event marketing, trend analysis, custom product development, in-house decoration and everything in between. “We’re not the company that’s ‘Your Logo Here.’ It’s the easiest way for me to explain it,” says Block.

But what really sets Touchstone apart is its total reliance on and investment in technology, a hallmark of Block’s when he first founded the company on a $30,000 private loan. “He’s a propeller head,” jokes Paradiso about his compatriot, also noting that Block is “one of the few people I know who can sell and understand technology.”

That “propeller head” developed an internal portal complete with tools, industry links, lead resources, preferred supplier databases and more. Touchstone also acquired ProProcure, a proprietary London-based online platform that basically allows end-users direct access to supplier pricing and allows for cheaper costs with less overhead. “It’s important for us that we don’t look at it and say it’s something we can outsource,” Block says about technology, stressing that the mindset was adopted in the company’s early days when money wasn’t so abundant.

What’s clear is that Touchstone strives to hold itself to a higher standard – and uses it as a means of attracting sales reps to grow the business. “We start with our people,” Block declares. The company has put its tools and an extensive support system in place to allow reps (30 of them in the company, along with 80 total employees) to focus on working with clients, often face-to-face. The plan calls for more than adding “a bunch of salespeople,” but rather a selective weeding of top-flight professionals who can hit their credit benchmarks and fall in line with Touchstone’s ethos. “Everything we do internally will fail if we don’t have the right people representing us,” Paradiso says.

In fact, Touchstone’s greatest accomplishment may be sidestepping the typical preconceptions of a burgeoning distributor. What company can boast such explosive growth yet paint itself as a model of restraint? It’s like a sports car that refuses to shift from third to fifth gear by skipping the step in between. “If we’re going to exceed our plan,” Paradiso states, “it’s going to be 10%. It’s not going to be by 50%. We don’t start throwing some long bombs now because we are ahead of the game. We want to stick to that game plan.” – CJM

Top Supplier 2009
The three partners who head up eGrips, the fastest-growing supplier in the industry right now (left to right): Matt Malone, Cheryl Marshall and Fred Antonini.

fastest-growing SUPPLIER

eGrips Technology (asi/54596)

Great inventions can often sell themselves. The principals behind eGrips Technology (asi/54596), however, will certainly tell you different.

It wasn’t enough that Fred Antonini hatched a unique idea early in the decade: a silicone non-slip strip that attached to cell phones and could adhere to most surfaces. After considerable effort ushering it from perception to reality – perfecting the design, finding a manufacturer, stabilizing the production process – the Fort Worth, TX-based supplier had a product that worked and people loved. Except it wasn’t selling well in retail.

The rise of eGrips Technology as the fastest-growing industry supplier can be traced to one common business strategy: branding.

“The problem that we ran into was that people did not know what the eGrips brand was,” says Matt Malone, one of three partners at the five-person company. “People didn’t know what the material was. So when we initially went into retail, people saw it, but it was a hard sell.”

Top Supplier 2009
Right product, right time: eGrips Technology devised a perfectly-timed item for the boom in mobile technology.

Four years later, the rise of eGrips Technology (formerly known as Flexible Innovations) as the fastest-growing industry supplier – skyrocketing from just $200,000 in sales in 2006 to over $4 million in 2008 – can be traced to one common business strategy: branding. And not just the branding of the eGrips name, but branding other companies’ products by becoming part of the ad specialty industry. “It’s really been the gift to our company, being in the promotional product world,” says Antonini, who worked as an electronics parts manufacturer before starting the company with Cheryl Marshall in 2003. “It’s gotten our product out in the hands of millions of people. It’s given it brand recognition. And we’ve been making money while we’ve done it.”

It’s a gift they were reluctant to accept initially. eGrips Technology didn’t regard itself as an ad specialty company when Samsung and the state of Texas contacted them with separate promotional ideas – placing a logoed card underneath the ubiquitous eGrips strip. “We were like, ‘Why would you want to do that?’” remembers founding partner Cheryl Marshall, echoing the sentiments of the company at the time. Outside suggestions, along with one substantial order and quick payment later, turned that skepticism into belief.

Top 10 DistributorsIn a matter of a couple years, eGrips Technology went from doing 20% of its sales in advertising to over 90%. And while the partners recognize trade shows and promotional products as major factors in generating awareness, it may have all been for naught had they decided to back down and remove their eGrips logo from the strips, as some end-users wanted. Indeed, each of the 12 million to 15 million strips in use features the company’s modest logo and name. “In order to capture what we created, it was essential to brand our products,” Antonini says, “like 3M would brand a post-it, or Bic would brand a pen. We realized we wanted people to be asking for our product by name. And I think that has been the key to our success.”

Shifting from retail to ad specialties, however, provided its own distinct set of challenges. A company that was used to standard products for retail had to shift gears and work with very specific custom orders, all the while managing explosive growth in orders and sales. “When we really got into promotional products,” says Malone, whose do-it-all responsibilities include everything IT along with sales and occasional trade show duty, “that’s when we had to change how we were managing our business.”

That meant building computer systems and databases that could handle the growth and automate the process – essential for a company determined to remain lean with few employees. eGrips Technology remains, in Malone’s words, “a virtual manufacturer” that has licensed a publicly traded company to manufacture the material and local converters to produce its products. The company also remains steadfast in keeping production in the U.S., since most of the costs come from material and not labor.

“In order to capture what we created, it was essential to brand our products. We wanted people to be asking for our product by name. And I think that has been the key to our success.”

Fred Antonini, eGrips technology (ASI/54596)

The set up has not been without difficulties – one supply change forced an eight-month stoppage to figure out why the strips were falling apart – but Marshall regards it as a necessity, particularly when the manufacturing equipment alone would cost $1 million. “If you’re not diversified enough,” she says, “you just want to outsource, because you don’t have personnel headaches, HR headaches. My opinion, for our type of business, it’s just a beautiful model.”

It doesn’t mean that the eGrips Technology folks have life on easy street. Antonini has been known to go two days without sleep. “He wears out laptops like nobody you’ve ever seen,” Malone says. The company has made inroads globally in over 10 countries, constituting 15% of their business, but there’s a downside to that. Says Antonini: “Because we sell all around the world, you can always pick up the phone. There’s always somebody on the other end of the phone. That’s either the good part or the bad part.”

And even the fastest-growing supplier isn’t immune to the economy’s downturn. eGrips Technology’s number of orders has grown a bit this year, but order sizes in the first quarter are down 75% – a double-whammy of corporations freezing their marketing budgets and a collections clog-up as part of the industry’s snowball effect. Despite the swift change, the eGrips Technology partners are encouraged because their product is still in high demand. “We’re not saturated in the market,” Marshall says. “It’s still growing in the market. We still have people calling us saying ‘I saw this somewhere, what is it? Can I get it? What do I have to do?’ But they’re wanting lower quantities.”
Most importantly, the potential remains great with a growing product. The company is exploring a multitude of uses, including laptops, health care and even motorcycle road racing. It’s evaluating a possible move back into retail. In the promotions industry, eGrips Technology is focusing its usage on sweepstakes, coupons and loyalty programs – a McDonald’s customer could flash the eGrips non-slip strip on his or her phone and get a discount, for example.

“We’re not saturated in the market. It’s still growing in the market. We still have people calling us saying ‘I saw this somewhere, what is it? Can I get it?’”

Cheryl Marshall, eGrips technology (ASI/54596)

Malone is also spearheading a marketing push into social networking with Facebook, Twitter and a blog that will share tips on how best to sell and utilize the company’s product. And Marshall talks about the possibilities of embedding an RFID chip that could carry credit card info or more. “This is one chance that we have where the hardware is ahead of the software,” she says, noting that laptops and stores already carry the technology.

Now, eGrips Technology has almost reached that marketing nirvana, where its unique product – like Scotch tape, Kleenex or Velcro – is known by its brand name. “Our primary focus is to find ways to commercialize the material itself,” Malone says. With a little brand awareness, millions of people now know where to get a grip. – CJM

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