In the world of startups and innovation, toilet paper isn’t typically the first thing that comes to mind. But sustainability increasingly is. And Tony Small spotted an opportunity for a better, much cooler toilet paper brand.
For Small, the journey started a few years ago with a reusable coffee cup company called Mo Cup.
“We had a successful Kickstarter campaign [in 2012], and we were exporting to Japan, the U.K., and Australia. We shipped to 27 countries. But after doing that for about two years, I realised that people buy these cups with incredible intentions, and then after eight or 12 weeks, they find themselves too busy to clean it, and it ends up at the back of the cupboard.”
He wanted to find a way to create real change so he set about “simplifying sustainability”.
“I came across compostable and plant-based packaging, and it just made so much sense to me … So we started producing coffee cups that instead of using plastic oils used plant-based plastics.”
Around the world, sustainability is becoming less of a nice to have and more of a must have and the circular economy is a concept that’s gaining steam. France, a country well-known for bannng things, has banned plastic cups and single use plastic straws (even better, it also has public drinking fountains that offer sparkling water). In the UK, politicians have called for a ‘latte levy’ on disposable, non-biodegradable cups. Some cities are also cracking down on waste and Auckland Council recently passed a rule saying events would not be given consent unless they used compostable packaging. So will this be normal in a few years?
“I think so. And that, to be honest, that makes me pretty nervous, because I think it's a really exciting industry to be in. I think that it's going to become mainstream very fast. As a company and a business, we really need to keep ahead of those trends … It’s huge. We're just over four, we're five in November. In the last nine months, it's been incredible to see the tipping point really. Everyone, especially big companies, are really getting involved now.”
That’s partly because sustainability has become a PR problem. Companies that aren’t changing or acting responsibly are being called out. And when an environmental issue becomes an economic issue, that’s when things tend to change.
“I think we've seen that this summer with straws. So you're seeing a lot of restaurants, a lot of franchises, discontinue them altogether or move to paper or plant-based. We actually sold out of straws, we couldn't keep up with the demand.”
Another developing trend is finding value in waste – and that’s exactly what Innocent is doing.
“We use a lot of waste materials. It's not just raw plants, we use waste plants as well. When they produce wheat, they take the grain, and then you’re left with straw, so we produce burger clams and take-away containers out of that.”
Smartass toilet paper, which the website says is “cushiony soft and strong”, is made using a combination of bagasse ( a waste product from sugarcane) and fast-growing bamboo. It’s also free of bleach, inks, dyes and perfume.
With plenty of success in the B2B space, Small decided to look for other opportunities. And, like many of the best business origin stories, serendipity played a big part in the creation of the Smartass brand and he says they “fell into the B2C business”.
“We supply about 800 cafes throughout New Zealand. Initially, we designed this product thinking that we would supply the bathrooms with toilet paper. And then people saw the product and started asking where they could buy it, and so we built a website and started offering subscription services. It's sort of just grown from that.”
While there is more potential revenue with the B2C model, it is also a different discipline and “it's been a big transition for how we deal with that demand”.
But it’s a transition worth making. He says Smartass is now about 10 percent of Innocent’s revenue, but it is the biggest selling product and, over the past 16 weeks, sales have tripled.
“It's just one SKU, so it's pretty simple. But what we do find is everyone wants to track and trace their parcel and even though all the information's there, they still want to know what it's made from. You get asked a million questions by a million customers.”
It wasn’t all smooth sailing, however. Small was confident the cafes would love the idea of Smartass and sales would grow quickly. But after they launched the product, nothing really happened.
“It took a good six months for it to get any traction.” And if it hadn’t picked up recently, he said they were considering flushing it.
While there are many companies offering similar products, Small sees a lot of potential overseas.
“We've just started supplying coffee cups into Norway. We get a lot of inquiry from Australia, and I'm heading to the U.S. and the U.K. next week to see what's going on overseas … Our goal over the next five years is to have a revenue of over $20 million.”
But there are some unexpected pitfalls of being in the toilet paper business.
“It is funny. When I stay in hotels overseas, and I'm meeting suppliers and stuff like that I've got all these samples, and I put them in my hotel room. I come back, and they've been chucked in the bin. I have to hide them now.”
From a marketing point of view, a lot of challenger brands perform well on social media, where they are able to show some personality. And Smartass does have a good story.
“You've still got to run a good business though. You can't just produce a sustainable product that looks good and hope that it works. Sustainability has been sold to us for such a long time now that I think people are starting to not trust it, because it's very easy to put a green leaf on a bag, and you think it's sustainable. We've tried to go in a different direction and bring elegance and design back to our products. Sustainability's the core of our business, but design and elegance and wit and humour are equally as important.”
It’s very hard to change people’s engrained behaviour. And while many people talk about being environmentally friendly, they don’t often act that way and their buying behaviour may be motivated by price or habit, especially for a commodity product like toilet paper.
“That's why we spend a lot of time, energy, and resource on design. It can't just be more sustainable than the next product, because you're only going to sell it to the 10 percent [who really care]. So we need to produce a product that people want to buy … You can buy a 20-pack of toilet paper out there for $10, and ours is going to be $4.50 for four. We've got to create desire. I believe the way that we do that is through design.”
Its smaller packs of toilet paper, as well as tissues and paper towels, are now in 13 Huckleberry supermarkets, and it is currently talking to a big supermarket chain about stocking the brand there.
“A big question we got when we launched the 48-pack online was ‘can we get it without any [plastic] wraps?’ And then, another question was, ‘can we buy smaller packs?’ We've looked into producing a smaller pack for about a year, and we wanted to avoid plastic. So it's taken us a lot of R&D to work out how to make it affordable but 100% plastic-free as well.”
Some of the world’s most innovative companies are aligned with Innocent’s ethos and are profiting from a more sustainable approach. He says he looks to Allbirds for inspiration (even though they're two years younger), and he also admires Patagonia and AS Colour.
“They're hugely inspiring … Our goal is to produce a brand and a company that people can trust. I don't think we all have the time to research whether products are sustainable or not. We do the R&D around that to make sure they are before we launch them.”
As a dyslexic, Small says he struggled at school because he couldn’t read the textbooks. But, despite that, or maybe because of it, he always wanted to make lots of money. Now, at 33, he says he’s had a few failures along the way (this is his fifth company) but he owns Innocent outright and hasn’t required any funding. But it’s not all about the money anymore. He also wants to give something back, not only through better products, but through charity.
“We partner with a charity in New Zealand called Million Metres. Our rivers and streams are pretty polluted in New Zealand and our biggest industry is tourism, yet we're extremely wasteful for a very small population. So we donate 10 percent of our profit to Million Metres to help them plant trees, to reduce the waste in our rivers.”
Australian social enterprise Thankyou, which is soon to launch in New Zealand, is another brand with a more sustainable, charitable approach. It has now moved into areas like nappies and is going gangbusters. So are the big global conglomerates that dominate the FMCG market worried about Smartass and its ilk?
“I don't think so yet. From what we have seen, the toilet paper industry is pretty competitive and pretty aggressive.”
Small says mentorship has been a big part of his success and a passion for business has got him through some tough times.
“One of the founders of Karma Cola, Chris Morrison, has been kind enough to give me his time and I work closely with Zac de Silva. And if I can give back and help younger or older entrepreneurs, I'm always happy to have a coffee. But the best advice I could probably give is, work hard, work really hard, but be mindful of your own health as well. Try and get to the gym. Try and find some time for yourself.”
“There are a lot of people who talk about working less and still being very successful, but from what I've seen, you've really got to put big hours in … You've got to love it. That's what you've got to do. If you try and do this and get into business without the passion, then I think you'd struggle, because it is the hardest thing I've done. It's lonely. It's stressful. There's no other way of wording it than it's very tough.”
And sometimes the difference between success and failure can be a stroke of luck.
“The toughest day was probably nine months in, when we had seen a lot of growth, and we were using a third party logistics company. We had to move away from them, because they weren't providing a very good service, and they wouldn't give us our stock unless we paid last month's invoices and this month's invoices. I gave them all the money I had, but still owed them five grand, and I didn't have five grand and didn't know what to do. Well, actually, we were not going to get our stock and that meant we could not give our stock to our customers. And then I got back to the office and checked my computer, and one of our customers had paid us just over 5K. That was hard.”
But now, in a company where pun usage is mandatory, he’s on a roll. And, as he wisely says, when you’re 80 and looking back on your life, will you regret starting a business, or will you regret the business that you didn’t start? For Small, the answer is obvious.
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