Description The instruction is below and the doc is also below UNFORMATTED ATTACHMENT PREVIEW Case ...
Description The instruction is below and the doc is also below UNFORMATTED ATTACHMENT PREVIEW Case: Raising a Cleanbeebaby The students are required to answer the following questions based on the case analysis: 1. Who are CleanBeeBaby’s target customers, and what is the value proposition that CleanBeeBaby offers? What problem is Beall solving? 2. Why does it matter that smaller retailers are experiencing much higher sales on days when Beall visits? 3. Why, if CleanBeeBaby’s service is so excellent, aren’t others doing it? 4. Does franchising appear to be a good growth strategy for this business? Why or why not? 5. Of the many options available to Beall at the end of the case, which should she pursue in the short term? Why? How? 6. Is CleanBeeBaby the right name for the business? Note: 1. Begin by writing an overview of the case 2. Answer each question succinctly (number each question for clarification) 3. Check for proper grammar/errors 4. Minimum of 2 pages, not more than 3 Sitting in CleanBeeBaby’s brand new loft space in Venice, California, Jennifer Beall took a few minutes to pause and reflect on her company’s first few years of life. In 2010, her idea for a mobile stroller and car seat cleaning service won the top prize in her school’s MBA business plan competition, surprising many people. She also was surprised—shocked—to have won. “I was concerned,” she said, “that investors wouldn’t be excited about it, because most investors are not my customers.” More generally, the idea was one whose growth potential many had questioned. Drive a van fully stocked with cleaning supplies and equipment to places where moms can drop off dirty seats and strollers for one- or two-hour eco-friendly cleaning? Make it a different place each day? It was a concept that many deemed too simple and too insignificant to merit attention. When people discussed entrepreneurship, they sought growth and scalability. CleanBeeBaby seemed more mom-and-pop (or mom-and-poop) than gazelle. Now, more than three years after the company’s official launch and more than five years after she had begun work on the idea, Beall was looking at a company whose potential seemed huge. She had a van operating all day, every day, in Los Angeles—plus additional vans operating in Orange County and San Diego, California. She also had a courier service (pickup, cleaning, and delivery back) operating in New York City. She was overseeing a staff of 22 individuals, including five full-time employees. Stores like Nordstrom’s and Babies “R” Us had asked if she might work with them to provide in-store cleaning services for their customers. Hundreds of inquiries, both domestic and international, had come in from individuals seeking to franchise the operation. She couldn’t even keep pace with local demand, as the owners of boutiques in her existing cities wanted more van visits than a regular schedule could accommodate. And that was just the beginning. Beall was also receiving an increasing number of questions from retailers and parents seeking advice on safe cleaning supplies and related products. With so many questions coming at Beall from so many different directions, she was left to ponder an ageold parental question: How might she help her baby—CleanBeeBaby—grow up? An Idea is Born When Jennifer Beall steps in front of a group and shares the CleanBeeBaby story, she almost immediately explains that she does not yet have children of her own. She says it unapologetically and with a grin— knowing that her audience often presumes parenthood for those at the helm of baby businesses. In fact, it is the first indication that Beall has never been all that interested in building a small company. Raised in Austin, Texas, Beall attended Duke University and then the Kellogg School of Management at Northwestern University. Although she initially thought she would become an engineer, she ultimately chose to pursue a degree in mathematics. Thereafter, she accepted a position in management consulting. Eventually, she began working at Roll International, a privately held company with global holdings that include Fiji Water and its in-house consulting group, where she was employed. It was Roll that partially bankrolled her MBA degree and, thus, Roll to which she had to return upon graduating. Nonetheless, her graduate school focus involved entrepreneurship. I spent my entire first year of business school searching for a business idea, and I decided that my thesis would focus on helping improve work-life balance for busy mothers. I compiled 50 ideas into a spreadsheet. One idea was a clip that would attach a portable DVD player to your stroller or a restaurant table. (Of course, this was pre-iPad.) Another was a co-working space for new mothers, with daycare facilities located nearby. That way, you could work but still have access to breastfeeding every few hours. I spent my second year narrowing down the list. This idea about cleaning car seats quickly rose to the top because every mom we spoke to wanted it, and we couldn’t find anyone else who was doing it. That Beall was not a mom was, in her view, irrelevant to the underlying inspiration or the business itself. What mattered was that she might someday want the sort of work-life balance that she did not see those around her finding. At her first management consulting job, for example, Beall noticed that her female colleagues often tried to start a family and make partner simultaneously; she also observed that, ultimately, none had chosen to stay on the partner track. I thought to myself, “I want to have a career and a family. Maybe this isn’t the right career for me.” I started paying attention to the blogs and magazines. I decided I needed to figure out the macro trend. Millennials care about work-life balance in their 20s. They want to work at Google so they can play ping pong. I decided, “I think this issue is going to balloon for them.” Beall’s belief in this insight guided her MBA choices. She recruited more than 40 classmates across five or six different classes, allowing their project work to explore various aspects of her idea—either directly or indirectly. I took a market research class where we surveyed over 1,500 parents nationwide. I took an entrepreneurial finance class, a business law class, and a service operations class. I took service in marketing. And I took a class called “New Venture Formation.” All of the classes were useful—even when they didn’t allow us to work on our own business ideas. In my service operations class, for example, I had my team do a Stanley Steemer project. We visited their vans and trucks, learning how a mobile business operates and how they function as part of a franchise system—everything built upon itself. As a student, I could get anyone’s time. A buyer at Target might give me a half-hour interview when I was in school; out of school, I’d have trouble reaching that same person. Concerns about potential competitors ran a distant second to fact-finding for Beall, who shared her concept with anyone she hoped might offer insight. She observed, with a laugh, “I’ve never been worried about people copying my idea because, as they tell us in business school, ideas are worth nothing. Additionally, no serious businessperson was attacking this as a big opportunity. Nobody else was passionate about cleaning baby poop the way I was!” Beall believed that her business plan competition victory was driven less by the idea itself than by the depth and breadth of the research she had completed. The win secured her sufficient credibility to raise, in 2010, a first round of funding—a friends and family round that provided $80,000 in convertible debt. Despite those funds, she was committed to returning to the employer who had supported her degree. Cleaning Up by Getting One’s Hands Dirty Upon receiving her MBA, Beall returned to Roll, where she continued her full-time job as a consultant for 18 months. At the same time, “flying under the radar,” she began to pursue the launch of her own company proactively. Many work days ended at 3 a.m., a schedule that took a toll on her energy and her relationships (“my boyfriend dumped me”). Those costs aside, her entrepreneurial efforts began paying off quickly and quite literally. She used the seed funds to purchase a van, initial supplies, and the necessary equipment to start a Los Angeles operation. Within four months of hitting the road, her business was cash flow positive. In school, we tried to figure out where moms would want to use this service—at the park, at the grocery store, at the baby stores, at the car wash. Where? It turned out that not all of these places were good. We tried parks, for example, and kept getting kicked out—no permits, no generators for things like a vacuum. So, I got in my car and drove to 10 baby stores, asking, ‘Can I do free cleanings here?’ Everyone said yes. That’s how we got started. It cost me the cost of providing the cleaners, but nothing else. And they promoted the heck out of it—social media, whatever. The goal was to go viral, meaning people would forward it to their friends. We had long waitlists from those events. Over time, retailers began telling us that their daily revenues increased on days when we were present. Beall started realizing that the value of her service was so great to retailers, who told her their sales tripled or quadrupled on days when she visited, that she did not need to pay them for “placement.” With this insight in hand, she began to barter for free space at baby expos and trade shows. The event organizer would get more sales, while CleanBeeBaby would get free marketing to a large group of prospective and targeted customers. She would also trade free cleaning services for attention from mommy bloggers. She observed, “The few times I’ve spent money on marketing, I’ve felt that I’ve not gotten my money’s worth.” In addition to bartering for space, she eliminated what would otherwise be the second-largest cost for her company (after labor) by convincing cleaning product manufacturers to sponsor CleanBeeBaby. At different points in time, both BabyGanics and The Honest Company provided free cleaning supplies to Beall, which helped them market their own products. By July 2012, when Beall felt ready to leave the safety net of her “regular” day job, she also began noticing some of the challenges of growth. Among her discoveries: in the same way that her classmates had little passion for baby poop, those cleaning it (and other baby-related “stuff”) weren’t all that passionate either. They also didn’t love having to drive to a different location every day. Good and committed cleaning technicians were challenging to find—and, in the early days, almost impossible to retain. Beall spent four months driving her own van, cleaning a seemingly endless supply of seats and strollers, and meeting her customers. At the same time, she attempted to expand the business beyond its initial launch location. When Beall started the New York branch, she initially did it without local staff—instead moving there for a summer to build the business herself. Launching in New York was a twofold challenge, in that, in addition to expanding, I had to figure out the operational aspects. How does it work in bad weather? When is there no space in retail stores? When are there no parking spaces available for a van? It is the second biggest market, but you need your own space in Midtown. We now have a courier who makes pickups from retailers between 10:00 and 11:00 each morning, dropping off for customer pick-up by 6:00 p.m. In the fall of 2013, after returning to Los Angeles from New York, Beall turned her attention to developing systems for more effective hiring and retention. She brought on a senior director of operations, a regional manager for Southern California, and two full-time field supervisors. She brought in part-time consultants to serve as CFO and to provide marketing support. She also began to be more proactive about hiring for fit—working closely with her senior managers to identify and carefully train a large team of technicians who were likely to remain with the company for the long term. Freed by her senior staff to turn away from the minutiae and focus on higher-level strategy, she began exploring her options. As a first step, she started conducting extensive research on whether and how CleanBeeBaby might be turned into a franchise operation. Beall had long believed that there might be a massive upside in franchising; residential cleaning franchisor Merry Maids had 1,432 operating units globally (2014 data), for example, while Molly Maids had 632 (2010 data). When she factored in the numerous unsolicited inquiries she received from prospective franchisees worldwide, her confidence increased. She initiated the legal paperwork and process to become a franchisor. On the heels of taking this step, she closed an angel funding round for $500,000 (with an expressed investor interest in a subsequent investment for the same amount). She also began to pursue work with Nordstrom after a buyer contacted her to explore the possibility of a partnership on an in-store promotion. They proposed, specifically, a test in which they would offer a fixed number of complimentary cleanings with the purchase of strollers. In October, the pilot program ran successfully in three branches of Southern California. Four additional events took place in May 2014. On the heels of this second success, Nordstrom asked Beall to scale her efforts to encompass 17 stores in Southern California. They also expressed a desire, over the longer term, to expand the program nationally. In parallel with this, Beall began communicating with Babies “R” Us about other in-store concepts. Decisions, Decisions As the summer of 2014 drew to a close, Beall found herself confronted with several significant growth options. Which to choose and how to prioritize those options were foremost in her mind, always to retain her own work-life balance. Her vision clearly included the formal establishment of a franchise offering. However, creating that offer involved numerous executional decisions. How much should they charge? What sort of person constituted a high-potential franchisee? Should she start by pursuing the hundreds of unsolicited franchisee inquiries already received, or by targeting marketing to candidates? Which geographic regions, if any, should she choose to assign to franchisees? Which might she keep corporateowned? How should those locations be selected? She hoped to sell two or three franchises by the end of 2014—and to have between 10 and 15 by the end of 2015. Not content to stop there, she wondered how she might develop other revenue streams to make the business more robust and sustainable. She had begun, in Los Angeles, experimenting with stroller repair as well as cleaning; she had also started to clean other items. Maybe it was time to launch her own cleaning product line—one that was eco-friendly and organic like the others, but whose profits would fuel her own business. If not that, or maybe at the same time, her growing profile as a baby expert (she had received significant press coverage in outlets such as Entrepreneur magazine and MSNBC) suggested that she might be able to start charging for items previously secured through barter—including long-term product sponsorships and retail relationships. She began to wonder, for example, if she could stop providing her services to boutiques for free and instead request a commission on sales achieved on CleanBeeBaby days. For retailers like Nordstrom and Babies “R” Us, she wondered if she should start exploring the possibility of dedicated in-store service centers. She also asked if her email list, now comprising many thousands of people, could be used to advertise others’ products. Beall commented, What I’d really like, at some point, is to be the Geek Squad of the baby industry. In the same way that the Geek Squad spends time solving all sorts of technology problems, which include both mobile and in-store components, we could be the go-to source for parents—offering car seats, strollers, cleaning products, and other essentials as well. That’s where I’d like to head. Tending to a Growing (CleanBee)Baby As much as Beall could envision a promising CleanBeeBaby future and felt ready to get there immediately, she also recognized that a misstep in the present could derail her plans. And CleanBeeBaby’s present—as a very active, very young company—required a great deal of founder attention. Requests for appointments and cleaning advice, as well as reports from the field, seemed to arrive on her cell phone every few minutes. She was also kept occupied by her legal team, which was hard at work on the franchising opportunity, as well as managing her team and ongoing business operations. A few minutes of pause and reflection were all that Beall would allow herself in the midst of yet another crowded day. Her phone buzzed, bringing her back to reality. It was a cleaning technician in New York texting her that a vacuum had broken. As she reached to text back, a mom walked in the door to drop off a baby seat. That week, Beall had started offering drop-off cleanings at the new Los Angeles headquarters. Through the door of her office, Beall waved to the customer, shouting, “Just leave your seat on the table. We’ll get to it right away!” Epilogue When we left Jennifer Beall Saxton in 2014, she had hopes of selling 2 to 3 franchises that year and 15 by the end of 2015. At that time, she had also rebranded the company as Tot Squad, a more marketingfriendly name. As it turned out, Saxton didn’t begin offering franchise licenses until 2015. As of 2018, she had three company-owned stores and one franchise in Washington, D.C. She has also established partnerships with buy BABY, Whole Foods, and Babies “R” Us to provide services in their locations. Her dream of becoming the Geek Squad of the baby industry seems to be stalled. Tot Squad is not listed among the Top 500 franchises as reported by Entrepreneur Magazine. In fact, the 500th franchise is Air Serv LLC, which has 168 U.S. franchises and 19 outside the U.S. Clearly, Tot Squad has a way to go
