COVID-19 Transforms Hudson Valley Manufacturer into a Lean Startup
Mike Esposito is a manufacturer and entrepreneur who runs a 70-year-old manufacturing family business started by his grandfather.
Located in Newburgh, Orange Packaging was originally a die-cut shop for handbags made there, (Newburgh was once a northeastern manufacturing powerhouse).
The company has undergone many changes over the years, as it has worked to stay current.
In the most recent years it has become nationally known for fabricated and machined POP displays, thermoformed commercial Food Packaging, and custom made product molds.
In a promotional video about Orange Packaging, Mike politely explains he and his team are constantly moving, adapting, and ready to go.
That said, he’s probably the last guy who’d claim he’s a Lean Startup guru.
And yet when COVID-19 roared into the Hudson Valley Mike embraced some of the basic methods identified with the Lean Startup methodology.
What’s a Lean Startup?
According to Wikipedia, The lean startup methodology originates from a combination of ideas such as lean manufacturing, and seeks to increase value-creating practices and eliminate wasteful practices.
It also embraces Steve Blank‘s customer development methodology.
Zappos was a lean startup
“The idea of the Lean Startup was built on top of the rubble of the 2000 Dot-Com crash,” says Blank.
After the Dot-Com crash, new ventures couldn’t secure funding.
As a result, they had to be lean and they had to learn to work in a new, iterative way.
Zappos may be worth billions now, but it can look back to early days when it embraced Lean Startup principles.
Blank emphasizes that talking to customers to find out what they need and how it should work will, correctly, result in a customer-led product, an underlying tenet of the Lean Startup approach.
It flips old enterprise on its head by putting the customer in the driver’s seat.
Lean in the Age of Covid
In a recent blog post dated April 7, Blank has modified his customer development methodology in light of COVID-19:
- There are no facts inside the building so get the heck outside
- All you have are a series of untested hypotheses
- You can test your hypotheses with a series of experiments with potential customers
- In-person interviews are not the only way to test your hypotheses
Before we get back to Mike in Newburgh, let’s also take a look at some Lean Startup fundamentals.
Basics for a Lean Startup
- FIND a Business Idea
- FIND Your Audience
- EXECUTE on the Business Idea as a Minimally Viable Product
- VALIDATE the Business idea
Back to Mike.
Although he’s not a startup, Mike and his company identified a problem and identified a solution, what for them would be a new product. In the process of identifying the product, his audience more or less announced itself via social media. By sharing a post, he unwittingly growth hacked his audience.
How Mike Found his Business Idea
Like others across the country, Mike watched as the United States entered crisis mode.
The local news was reporting unconventional solutions for PPE being used by local hospitals, things like plastic garbage bags for gowns and plastic water bottle cutouts for eye protection.
The news was filled with ways government and industry were coming up with plans for resupplying PPE’s through the repurposing of industrial capacity and outreach to U.S. Manufacturers, which has since occurred.
But Mike wasn’t waiting around.
Find Your Audience
As the owner of a manufacturing plant in the city he grew up in, which like most cities has a large urban hospital, Mike knew a lot of people in the medical field both casually and professionally.
Furthermore, business contacts had dealings in the medical field.
Proximity drove the problem home.
He knew St. Luke’s Hospital, Newburgh, like every hospital in the country had a struggle on their hands trying to get PPEs, and he knew people in his city, people he knew from sporting events, the parents of the kids his children attended school with, and friends of friends, would in some way or another be impacted by the need for this equipment.
The Social Network: Facebook helps build an audience
“I got an image from a friend on Facebook saying: ‘ hey look there’s a face shield somebody made,’ and my brother got the same image, and we both had the same idea.
My brother began designing it and prototyping it. (Mike works in the business with his brother Anthony aka (JR), and together, they make things happen).
48 hours later we were filling orders. From that Facebook post it just blew up with friends of friends sharing it.
From that Facebook post is how all this grew.
We showed what we had to friends and then everybody started sharing it and it just basically blew up!” Mike said.
“To date, we are over 100,000 shield orders within two weeks, and we have orders flowing in.”
A Company With The Necessary Resources: Executing on the Minimally Viable Product
Mike’s company has grown into one that today is an independent business with a team of over 60 innovative employees including master craftsmen, skilled fabricators, and machine operators.
The company is set up with CNC machines and has prototyping capabilities, such as the CAD 3D prototyping software, Solidworks.
They fabricate in a wide variety of materials, frequently plastics at the high end, such as lucite, and make many products for a wide variety of markets, from small businesses to Fortune 500 companies, including:
- Discount retailers
- Food service companies
- Grocery stores
- Original equipment manufacturers
- Visual merchandising/trade Show
Customers turn to them for store fixtures, custom signs, food service parts, packaging, and know they can count on a quality product.
So when it came time to execute on the “Minimally Viable Product,” (MVP) everybody on the team was in their comfort zone.
Because of their onsite prototypers, Mike’s team has not only been able to continuously iterate improvements to the facemasks, he’s even been able expand his offerings to a new product, patient protective body shields.
Validating the MVP
In a few short weeks, word spread to hospitals in New Jersey, Connecticut, as well as locally.
Orders poured in, and Mike and his crew are now shipping hundreds of thousands of orders weekly.
Hospitals in Danbury, Ct., Nyack, N.Y., and area nonprofits with clients with special needs have all become customers.
A new business model
Because the venture has been so successful, Mike is now going to offer a permanent line of PPE with various products within the line.
For instance, an ICU Doctor asked them to create the previously mentioned safety shield which allows medical staff to intubate a patient by putting their arms through a large plastic shield with holes cut out.
It protects the workers from an aerosole spray of COVID-19 emitting from the patient.
More Customers: A bigger Audience
Word is spreading beyond hospitals and healthcare facilities, too.
“We just signed on with Verizon to supply them with their shields. and we have orders coming from them.
Why a new product line in a time of Pandemic?
“We did it because with everything going on we were afraid. We were still busy but we were concerned about our backlog drying up.
So, we decided to do this pivot to find a way that would:
a. keep our employees employed
b. help our medical community by manufacturing the stuff that is needed.
“We’ve probably over the last 70 years reinvented ourselves five times, and we feel like, with this, we may be entering the sixth time.
“I may be off a decade or two or a number or two, but there’s a constant: reinvention approximately every eight to 10 years.
“My brother and I are realizing you literally have to utilize your base and your talent of people and the machines that you have and totally start from scratch and shift and do another industry in another direction to try to keep everyone employed and keep the business open.”