At the recent NY Times Small Business Summit David Schnurman sat down with Julie Aigner-Clark, founder of Baby Einstein and The Safe Side. Anyone who has had a baby in the past 10 years is certainly no stranger to the company's line of baby videos. Julie sold her company to Disney 5 years ago which is now worth an estimated one billion dollars. During our interview, Julie discussed starting her company, she explains how it grew to over $20 million in sales, and what her reasons were for selling it. In addition, she discusses her most recent venture, The Safe Side, where she has partnered with John Walsh to create videos on stranger safety for pre-teens.
Below is a summary of their interview
1. How did you start Baby Einstein?
Before Baby Einstein, I was an English major in college and after that I was a teacher in high school and left when I had my first baby. At that time, there was nothing that existed that was fun educational videos for babies. That is when I realized that there was a need in the market place and best of all I was my own customer. I had no production experience and I shot my first video in my basement. My initial investment in it was $15,000.
2. Tell me about the name of the company?
It was something that I just came up with on my own. However, I believe the name of our company was incredibly important to our success. When I first created it, I didn't think I was creating a company just the name of a video. However, the name Baby Einstein caught on very fast and became the generic name for baby videos.
3. How did you get your first distribution deal?
After we made the first video one of my friends recommended we attend a trade show to try and acquire a distribution deal. For the first two days of the show I walked around and memorized everyone's name tags. At one point I saw a buyer and chased her down, and pretty much scared her to buy the video. Seriously though, I think it was clear to her that I had a great passion for my product. She agreed to try the video in 10 stores with 5 videos each store. I was ecstatic that I sold 50 videos. In 3 days they were sold out!
4. How many different videos did you produce?
In the 5 years that I owned Baby Einstein, we made 10 videos. I also signed a publishing deal with Disney. I felt we were exposing babies to poetry.
5. What was your growth from year 1 to when you sold your company to Disney in year 5?
# In Gross Sales:
Year 1 -- $100,000
Year 2 -- $1,000,000
Year 3 -- $4,000,000
Year 4 -- $10,000,000
Year 5 -- $23,000,000
I sold it in year 5, which was 5 years ago. It is now reported that The Baby Einstein is worth one billion dollars.
6. Why did you sell your company? Any regrets?
When the company was doing $23 million in sales, it was beginning to consume all my time. In order to take the company to the next level, it would have required much more of my time and commitment. It was more important for me to spend more time with my family and be with my children. So my husband and I sat down and came up with a number that we would be happy selling the company. The first company we approached was Disney because we already had a publishing deal with them and it just made sense. Disney normally does not buy companies, they make their own. However, they agreed to our number without any negotiations what so ever.
In terms of regrets, I do not really have any. We sold the company the year of 9/11. In addition, I have been able to be with my family much more than I ever could have for the past 5 years. While the company is worth one billion today, I do not think we could have brought it to that level alone. We sold the company for a lot of money and I am happy with that.
7. What are you working on now?
I have partnered with John Walsh from American's Most Wanted to create a video series called, The Safe Side, it focuses on children's safety with strangers. It is targeted to children ages 9 to 13. We are donating our proceeds to charitable organizations.
8. How is the venture going?
Much tougher then I originally anticipated. While we have sold a large number of videos, we are no where near where I expected to be. However, in October we are releasing a much wider distribution all over the country.
You would have thought if you combined my credibility in video production for children and John Walsh's credibility for safety it would have been a winning combination. However, I am already personally almost $2 million into this projection and we have donated $200,000 of proceeds to charity.
Looking back it would probably have been a wiser decision to reinvest the proceeds to make it easier on allowing the company to grow. In addition, after we started The Safe Side, I went through a lot of personal hardship when I was diagnosed with breast cancer. If the company hadn't been started yet, I do not know if it ever would have happened. When ever you go through something like that, you looking at your priorities in an entirely different light.
I started this company because my children are at the age when you start to worry that they know about stranger safety, especially when they are on the Internet. I wanted a video that would be fun for them to watch as well as teach them. I am passionate about this and I am optimistic in its success.
8. Going back to Baby Einstein how did you market your company to lead to such growth?
At that time we didn't have any budget for PR. So what I did was send out the videos to all publications to review it. There was a reporter from People Magazine who loved it and wrote a piece on it. Then there was a producer on Oprah that also loved it and they fit it into a segment. At the end of the day word of mouth is your most important means to get the word out and we had a great group. Mothers!
9. How did you expand your distribution to earn $23 million in sales the year you sold it?
Initially we signed an exclusive deal with The Right Stuff to be distributed in 34 of their stores. Our first market was college educated moms. In addition, we went with The Right Stuff because their sales people educate the mothers on the product. If it was in Wal-Mart from day one, the sales people wouldn't have been as helpful to our customers. I think it is important to focus on the specialty shops before trying to get large distribution deals because if your product fails in the beginning, you will never be allowed back in larger stores. However, the problem today is a lot of these specialty shops have been run over by Wal-Mart. It wasn't until year three that we went into Wal-Mart. In order to do that we had to go with a large distributor. For Baby Einstein we went with Artist Entertainment and most recently with The Safe Side we are using Sony Wonder.