From Incubator to CVS in Three Years' Time

From Incubator to CVS in Three Years' Time

Jim Moscou is the CEO of Sir Richard’s, a manufacturer of chemical-free condoms. The company launched with the help of TDA_Boulder in 2010 and now stands on the brink of mass distribution through major drug store and grocery chains. NBJ spoke with Moscou at a coffeeshop in Boulder.

nbj: How did you become the CEO of a condom company?
Jim Moscou: I was a journalist for 18 years, and then two things happened. At Newsweek, I was almost killed on assignment after I had just had children. That set me off a bit. Children kind of do that. I never thought I would go into advertising, but then I met a guy named Alex Bogusky and his team at Crispin, Porter + Bogusky. I just thought, man, these guys are smart and they understand something about brand and the impact a brand can have in the world. I worked on Microsoft and Al Gore’s climate project while I was there, which was fantastic. Then I left to become managing director at TDA, who has worked on brands like Crocs, Izze, Chipotle and Justin’s Nut Butter. TDA had their fingers on some amazing brands, and while I was there we helped launch Sir Richard’s. One thing led to another. I was asked to step in as interim CEO, then CEO, and my four-year career in advertising was over.

nbj: So Sir Richard’s began inside TDA?
JM: TDA is a special boutique agency. The creative directors and owners pulled together about nine people who became the co-founders of the company. We were all just crazy enough to think we should start a condom company from the Rocky Mountains and go after these major brands that have been dominant for decades.

nbj: Tell me about the investors.
JM: They come from every corner of a wide range of industries. Some are in it purely for the social impact, and there are others who hadn’t even thought about the social impact beyond the marketing and business opportunity. But across the spectrum, all of the investors have contributed to the company moving forward in some way. What unites us is the desire for success, because if Sir Richard’s succeeds, we can change the world. That’s a big, audacious thing to say, but there is a huge condom shortage right now. We know that when condoms are available, key health metrics like STDs, HIV and unwanted pregnancies drop. Just recently, I saw an AP wire that South Sudan is completely out of condoms. You cannot get a condom in South Sudan, and HIV is very prevalent there.

nbj: How big is the condom market?
JM: The U.S. market wholesale is roughly $600 million, and $3 billion globally. So it’s not a huge market, but it is significant considering there are just three players and a lot of room for competitive growth.

nbj: Just three?
JM: There are three major brands—Church & Dwight has Trojan, Reckitt Benkiser owns Durex, and there’s also Lifestyle. Together they own about 94% of the global market. People wonder how we will compete against these brands that have been around for decades, and I say we won’t. We’re doing something different. Thirty years ago, this would have been a very difficult business to get into. There was only one place you bought condoms—a pharmacy—and the conversation was culturally different. It was a time of more fear around sex, especially with HIV in the ‘80s. Today, we have a younger generation who didn’t experience that. These kids come to sex and to condoms with a different mindset. It’s almost like the seatbelt conversation—they’ve all been raised to wear a seatbelt. I had to learn to put my seatbelt on in the ‘80s. You get the analogy. Sex today is more about an empowerment message.

nbj: Are there competitors within the natural channel?
JM: I can think of one—Kimono, out of Berkeley, California—but there is growing interest, for sure.

nbj: How do you approach distribution and sales channels?
JM: We’ve been in Whole Foods and the natural channel for two successful years. Whole Foods has been a tremendous supporter for us. They see the vision, as do the other retailers in that channel. But the reality is that condoms are sold en masse through more conventional channels. We are very happy to announce that we’ll be coast-to-coast in CVS by the end of May and Kroger by mid-June. CVS is the second largest seller of condoms, after Walmart, so we’re pretty excited.

nbj: How will Sir Richard’s compare on the shelf?
JM: We’ll be a dollar or two more than the conventional brands, but we’ve seen no push back on that slight premium. We’re a chemical-free condom. Imagine you are a 25-year-old female of a generation that has thought a lot about consumer products. It’s not that this generation doesn’t like advertising or branding. They just want to see a reflection of their values in the products and companies they support. Plus, our product is so intimate. The World Health Organization says people should actually not use spermicides. It’s a toxin that acts like an irritant inside the woman that can create lesions and leave you more susceptible to an STD or HIV infection later on.

nbj: Do you target a male or female consumer?
JM: We did a campaign called ‘Vagina Rules’ that just really worked for us. It gets the chemical-free message out there, but even more importantly, it goes after a growing market—women buying condoms. Young women are more empowered than they have ever been, which, as the father of a young daughter, is wonderful to see. Six years ago, 25% of buyers were women. Today, it’s about 50%. I love that campaign we did through TDA. It’s not about fear, it’s about empowerment. It’s not about function, it’s about emotion. That’s where we are betting our future.
I see Sir Richard’s as a very asexual brand. We've seen no push back from any of the relevant demographics—from the gay community to fraternities to 20-something women to recently divorced 50-year-olds. It's just pervasive, this hunger in culture for a new conversation about sex.

nbj: Talk about the cause marketing approach.
JM: We believe the power of branding can be used to accelerate positive social impact. For instance, when you go to Haiti, the vast majority of condoms are in these silver foils with literally no branding at all. Yet these well-intentioned NGOs are asking people to use condoms with no relevancy. When branded condoms are available, they’re printed in a foreign language. For our one-to-one model—buy a Sir Richard’s condom, we give one away in a developing country—we used Haitian artists and musicians and health workers to design the first Haitian Creole brand. We did it in Haitian Creole, we tested it on the streets and we came up with KORE, our brand now in distribution through Partners in Health.

Tom’s and Warby Parker are sister companies for us in that one-for-one model, but we want to apply brand insights with the same strength in Port-au-Prince as you would find inside a Fortune 100 company. One thing that I learned in my short stint in advertising is that when you go to market with a message, there is a ton of work behind it that gives you a good shot of moving the needle in a positive way.

nbj: Are you giving anywhere else?
JM: No, Haiti is our first stop. We made a conscious decision to stick with a country until the shortfall is filled. There’s a massive global shortage of condoms. Haiti alone needs about 40 million condoms a year. If all goes as planned and we continue to grow, Sir Richard’s can meet that need by 2016 or 2017.

nbj: How fast are you growing?
JM: We’ve seen double-digit growth, year over year, for almost three years now. By the end of this year, we will be in more than 10,000 stores across the country. We’ve launched in the United Kingdom, where we are very excited about the growth potential and ultimately expanding throughout the EU market. Keep in mind that we’re an FDA-approved medical device, so you can’t just ship product to a new market without a lot of regulatory legwork.

nbj: What are the strategic goals for 2013?
JM: With CVS and Kroger, we’ve got to make a lot more condoms. We’ll meet that challenge. Our manufacturing happens in Malaysia near the supply of latex trees, and we feel good about our capabilities there.
In terms of expansion, we will be focusing on the UK and the US for the next twelve months. It’s really about awareness at this point. It’s about getting the message out. You have to be true with your message, you have to be transparent, and you have to get it right. If you go to our website now and buy a twelve-pack of condoms, you will see that condom tracker tick up. That’s your actual contribution to the final number that we will contribute to Haiti this year. When Sir Richard’s hits those shelves at CVS, you’ll see a huge flip in the counter.

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