Three-Thousand Percent Revenue Growth Put OtterBox on the Global Map

May 18, 2012

The guys in OtterBox’s Product Innovation group are having way too much fun breaking things. Or, more accurately, trying to. Over and over, they are dropping a $600 smartphone, protected by an OtterBox-made case of polycarbonate and silicone, through a trap door in a three-foot platform they have hauled onto the sidewalk outside their office.

Alan Morine, a mechanical engineer at OtterBox headquarters in Fort Collins, Colo., grins slyly as he picks the phone up from the concrete and inspects it. “The intent is to drop the phone in a controlled fashion, five times for every face, from a variety of heights,” he says.

This kind of rigorous testing has earned OtterBox a special place in the hearts of consumers, even in the booming but ridiculously crowded market for cases to protect smartphones and other electronics. Just listen to some of the messages that come streaming in: “I just dropped my BlackBerry. Don’t feel sorry for me; feel sorry for the concrete,” a construction foreman told the company. A mom called to say: “My 3-year old son just tried to feed my iPhone to our dog. Thanks for the protection, OtterBox.” A soldier in Afghanistan wrote: “My OtterBox Defender Series case has kept my iPhone safe through bumps, drops, bouncing Hummers, and dust finer than talcum powder. Thank you for a great product.”

OtterBox’s tough cases earn more than rave reviews. In September 2011, Inc. magazine named OtterBox No. 70 in its annual list of the 500 fastest-growing businesses, specifically citing the company’s 3,179-percent growth from 2007 to 2010, when revenues rose from $5 million to $168.9 million. Output has increased from 10,000 cases per week to 500,000 per week in the past three years. And last year, Entrepreneur magazine called OtterBox one of the 25 best medium businesses to work for. Curt Richardson, the CEO and founder, tells employees his business philosophy is simple: “If you do the right things, the right things will happen.”

By all conventional measures, OtterBox is a success story of the highest order.

Richardson’s company, which in classic entrepreneurial fashion was started in his garage, now accesses the global marketplace. It is mastering the global supply chains of modern manufacturing, with plants in North America and in Asia. But another goal is every bit as critical to OtterBox’s leaders: How can the company bring home to Fort Collins the benefits of its global success?

“Sure, we make protective cases for mobile devices,” says Brian Thomas, OtterBox’s President. “But deep down, we really want to create jobs and give people opportunities that they otherwise wouldn’t have. That really is the core of what everybody is doing here.” OtterBox may be a model for a new breed of businesses, one dedicated to bringing the effects of global Access back home for reinvestment. For evidence, look no farther than downtown Fort Collins, where Morine is still out on the sidewalk, trying to break a smartphone.

Drop. (Thud.) Inspect.

Global Splash, Local Ripples

OtterBox recently transformed an old motorcycle showroom on the outskirts of town into an assembly and distribution center, where some 300 different models — and the parts needed to make them — make their way into and out of Fort Collins, part of a supply chain that connects to the company’s other manufacturing sites in Minnesota, Mexico, Korea, China, and Singapore. Additionally, OtterBox has developed a global sales organization to make sure that the investment in distribution services pays off. It has opened a sales office in Cork, Ireland (for the Europe, Middle East, and Africa markets), and one in Hong Kong (for the Asia-Pacific Rim market).

But the real effects of the company’s success are best seen in downtown Fort Collins, known to locals as Old Town. Local officials credit OtterBox with keeping the city’s unemployment rate under the state and national averages. In its lifetime, OtterBox has created more than 500 jobs in Fort Collins.

“They are a homegrown success,” says Josh Birks, an economic advisor to the city of 140,000, where the economy traditionally has been based on technology (Hewlett-Packard Co. has made chips here since the 1960s) and education (it’s the home of Colorado State University). In the last five years, Birks has worked with Richardson to find additional workspace in downtown Fort Collins.

OtterBox now owns 10 buildings within a four-block area, with its headquarters on Meldrum Street as the anchor. “Our vision is to eventually see as many as 1,500 jobs here along Meldrum Street, whether it’s OtterBox or spinoffs of Otter,” Richardson says. That’s a big number, but talking to Richardson, it’s easy to believe he and OtterBox can make it happen. First, Richardson believes his investments in Fort Collins should not be confined to reinvestments in OtterBox. Second, Richardson has built a company culture so distinctive that it helps make Fort Collins one of the most attractive work environments in Colorado. No wonder OtterBox is making the “best places to work” lists.

Spinoffs And Slidedowns

When Richardson says he wants OtterBox or its spinoffs to create more jobs in Fort Collins, he’s not referring to spinoffs in the classic sense. He isn’t talking about OtterBox divesting itself of businesses it doesn’t need. He’s talking about empowering people to create their own businesses, some of which could be parts of the larger OtterBox ecosystem. “We’ve started a small incubator to be able to take other innovative ideas or help other entrepreneurs that may have an idea, but don’t have the infrastructure,” Richardson says. “We want to help them be successful in our community and grow jobs.”

In other words, he would like OtterBox, over time, to be able to grow its own suppliers, right at home in Fort Collins. Thomas puts it this way: “We come from an entrepreneurial background with Curt, and we’ve extended that out to several employees, who have now left the company, by helping them start their own businesses. It’s a kind of proliferating entrepreneurism
out in the market and growing a better economy here and elsewhere, wherever we choose to do business.”

Visit OtterBox’s headquarters on Meldrum Street, and you’ll see people who genuinely seem to be having fun. Employees chat at a beautiful espresso bar. Conference rooms with frosted glass walls bear the names of Richardson’s favorite authors. Staffers help each other fix flat bicycle tires in a basement bike room. Even a broom and dustpan are the precise bold yellow of all OtterBox packaging. And right in the middle of it is a slide.

That’s right: a curving, put-your-fannydown-and-take-a-ride slide. It’s the fastest route from the second-f loor offices to the espresso bar in the main lobby. The only things that differentiate the slide from one you would see on a playground are the sculptor-crafted bronze otters that adorn its underside. So school-yard shrieks of delight are every bit as much a part of the OtterBox DNA as the spontaneous conversations at the espresso bar about topics like how to craft the right strategy for the Asia-Pacific market. If incubating spinoffs and giving downtown Fort Collins its most amazing workplace aren’t enough, Nancy Richardson, Curt’s wife, recently started a not-for-profit affiliate dedicated to helping local youth.

OtterCares began its work by offering every OtterBox employee $200 to give to a favorite local nonprofit, but not before trying to “grow” the money by getting matching funds from friends and family members. After three weeks, the money had almost doubled.

One Tough Case

OtterBox’s cases win favor in the global marketplace because they are extremely tough but still make it easy for people to use their devices. So over the years, its cases have gained a strong, loyal following among two extremely different groups — outdoors enthusiasts and high-tech nerds — attracted, respectively, by practicality and technology. But in Fort Collins, everybody — not just the outdoorsy folks and nerds — has reason to be an OtterBox fan.

Birks, the city’s economic advisor, credits OtterBox with helping Fort Collins through the recession with a lower-than-average unemployment rate of 6.5 percent. “I think one of the greatest things about the OtterBox story is they have been zooming in growth during a very tumultuous time,” explains Birks.

Of course, dramatic growth creates challenges. Dan O’Toole, a FedEx Account Director who works with OtterBox, says businesses that start as “garage companies” often face problems when rapid global growth begins. “They start out shipping out of their garage, four packages a day. Nineteen months later, they’ve got $400 million in sales, and they’re trying as rapidly as they can to build a 250,000-square-foot warehouse.” When such a crunch comes, O’Toole says, it’s the job of FedEx to compensate as the company builds its infrastructure. With OtterBox, he adds, “FedEx has been able to pull this lever or pull that string in our portfolio [of services] to allow them to keep the focus on getting products manufactured, getting the orders out, and meeting customer demand.”

OtterBox’s need to build infrastructure to handle its growth, though, has been another boon for Fort Collins. “In the midst of the Great Recession, they were buying up property in downtown, hiring dozens of employees a month, and all of that has had a very stabilizing effect on our economy — both from the real estate market in terms of those transactions, the building market with the contractors doing the renovation, and bringing new residents to town as well,” Birks says. And the ripples travel farther. “We know from research that a downtown worker spends about $65 a week in the downtown area and that translates into $3,400 a year,” Birks says. “If you’ve got the number of employees that OtterBox has downtown, that’s almost $1 million annually in contributions to retail sales. Second, those transactions then create jobs at retail shops and restaurants.” That OtterBox has had such dramatic effect in Fort Collins isn’t so surprising if you consider Richardson’s history. He is the son of a minister, and giving back, he says, has always been part of his life.

For Nancy Richardson, the ability to help the community has become a mission. “Curt and I have a strong belief in the idea that to whom much is given, much is expected,” says Nancy. “For OtterBox, I want us to stand for so much more than just a case,” Curt adds. “It’s how do we give back, how do we treat each other, and not only how do we treat our customers, but how do we treat our communities? I think that many of our customers understand that. And that’s important to us.”

Richardson refers once again to his business mantra: “You know how we say, ‘Do the right things, and the right things will happen’? That’s a big part of how we want to act every day. Do we always do that? No. Do we try? Yeah.”

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