Spinbrush: John Osher. The Electric Toothbrush That Sold for $475M

Hey, just a quick message. If you're building a business right now, imagine getting advice from the founder of Tarte Cosmetics or Airbnb or Mark Cuban. Well, you can get that advice. Every Thursday, we drop an episode of the How I Built This Advice line. It's where I bring back a previous founder we featured on a past episode. And together, we help real entrepreneurs, people selling skincare, dog toys, pottery, food, whatever. We help them work through the challenges they're facing right now. And the best part, this kind of advice, world-class battle tested, is completely free. All you have to do is call 1-800-433-1298. Tell us what you're building in under a minute, and you might be the next guest on the advice line. So give us a call or send us a voice memo to hibt at id.wondery.com. And tell us how we can help you. Our first 100,000 pieces were defective that we shipped. Were defective. effective. The water would run right through the toothbrush and out the bottom. It would break in a month. I went back to my partners and I said, if I continue to sell this, it will die. But the decision to throw those out was a hard decision, especially for a new company. And we had 400,000 of them in our warehouse. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how John Osher went from selling spinning lollipops to inventing the world's cheapest electric toothbrush, the Spin Brush, and sold it for hundreds of millions of dollars. Many founders, including ones we've had on this show, consider themselves lucky if they can eventually sell their idea or their business to a larger business and walk away with a nice pile of cash. My guest today pulled that off not once, not twice, but three times. He sold his first company to the baby brand Gerber. His second one, a toy business, was sold to Hasbro. And the third he sold to Procter & Gamble. John Osher isn't just a serial entrepreneur. He designed or invented several iconic products. For example, the first Rainbow Mobile. You lie a baby down on its back, and they can reach up and play with the different toys hanging right over them. John also came up with a bedroom basketball hoop with a digital scoreboard. He discovered and then marketed a battery-powered lollipop that spun around at the press of a button. And finally, in 1999, John introduced what's probably his best-known invention, an electric toothbrush called SpinBrush. It's a product that had such an insane meteoric rise, it became a case study at Harvard Business School. And it was inspired by those spinning lollipops he sold years before. When it came out, sales took off almost immediately. And two years after launch, John sold SpinBrush to Procter & Gamble for $475 million. A year after that sale, Well, SpinBrush became the best-selling toothbrush in the country. Now, as I mentioned, prior to that P&G sale, John sold two previous businesses to two other major companies. And before that, he had even more businesses, even more ideas and inventions. Too many to get into in this conversation today. But each step along the way, all the way back to when John was a teenager, each step led to the eventual spectacular success of SpinBrush. John O'Shury was born in the mid-1940s and grew up in Cincinnati, where his dad was a neurosurgeon and his mom was a writer. He attended the University of Wisconsin for a few years, but in the mid-1960s, he transferred to the University of Cincinnati and decided, of all things, to go into the earring business. It started in the probably 63 or 64 with the hippie movement, and they all started getting their ears pierced. It became very quickly a fad and a hip thing to do. Wow. And my thinking was the hip schools are all doing these. Everyone's getting their ears pierced. It'll come to Cincinnati. So when I transferred there, I decided to open an earring store. Now, I knew nothing about earrings myself, but I found a little tiny shoeshine parlor on the perimeter of the University of Cincinnati. It was probably 10 feet by 18 feet. and I rented it and I went to New York with my mother and we went to these stores, these distributors like on the second floors of these buildings and I would buy all these earrings for 19 cents. So I bought a whole bunch and I took the, I went to this store I rented. I put black velvet on the walls and I hung the earrings up and it's an interesting thing because I charged $4.99 for my 19 cent earrings. Now, next door to me was a store called Stop and Shop, and they had very much of the same earrings I had. And they bought them also for 19 cents, but they sold them for 39 cents, you know, doubling their money. They sold nothing. Everyone bought my earrings at $4.99. First of all, people didn't believe you could get safe wires for 39 cents to put in your ears. But the reason I bring it up is it was a great lesson that I used for the rest of my whole business career. And that is that you set your price on what the market will pay. What's the optimum price for a market as opposed to what you paid for it. Yeah. So you have this earring store. You're selling earrings and you're a student and it sounds like it's doing pretty well. Yeah. So I only had the store probably for six months and then I sold it to a friend of mine. the excitement of it wore off. But I took the money and I went to Europe for the summer, bought an MGB at the factory, bought a bunch of bell-bottom pants. This was the summer. Do you remember what year that was? Probably 67, I'm guessing. Nice. So you took the money from selling that shop and you go to Europe for the summer. Maybe I had $6,000, but that was a ton of money for a 19 or 20-year-old. You lived like a king in 1968. So one of the things I tried to do with every business was to become rich within the context of my life. So $6,000 as a college student at that point in my life, I was wealthy and that I was able to do things I wanted to do that I couldn't do otherwise. I read that you actually did not – you kind of dropped out of the University of Cincinnati early when you were taking that trip. So you did not graduate, but you did eventually somehow, and a year later, I guess, 1969, end up in Boston and you continued your studies at Boston University. And while you're in Boston, you open another business. You had an earring business, of course, in Cincinnati. This is actually amazing to me that you opened another business, another store that you could actually do that. Like I'm thinking about because I want to ask you about the store in a moment. But I'm thinking about today, if you're a student at Boston University and you're just a middle class kid, there's no way in hell you could you could get a lease in Boston to open a shop. You need to like sign a lease, 10 year term. The rent cost would be astronomical. Like nobody, no mortal could afford to do that. But this was realistically possible. Clearly, in 1969, you opened a secondhand clothes shop in Boston. And how did you do that? Yeah. You know, this was before everything became so expensive in life. It almost would seem as if I'm a courageous person because I'm so willing to open businesses and this and that. And it really does come back to the value of starting my first business at five years old and having businesses successful all through high school. And it became natural for one. And two is that by doing things, little things successfully, I had confidence. I never thought about how can I do this as opposed to somebody who's got a wife and family, has been working at Procter & Gamble at a big company and they see some opportunity and they get mortgages they got to worry about and all of this. It was really natural. I'd go to flea markets and I'd go all over New England and I'd find these things for nothing and be able to sell them for quite a bit. This store – yeah, so you're selling vintage clothing, the secondhand clothing. And you run this shop, I think, for, again, like not that long, maybe a year or so. Maybe a year. I can't remember something like that. And you graduate. You sort of close the shop up. And now this is where sort of the very eccentric part of your life begins. From what I read, and I really want to dive into this, for roughly six years, you moved to a commune. in upstate New York. And tell me this story. What was it? How did that happen? What's going on? Well, since I was younger and in the hippie days from the LSD and that type of lifestyle, we started to develop an interest in something greater, more than meets the eye. And I got involved with the teachings of a spiritual philosopher named Gurdjieff. This is George Ivanovich Gurdjieff. What does he teach? The basic concept was that we as humans are asleep. We're basically given a name. We're trained. I mean, I became a Democrat or a liberal because my parents voted for Adlai Stevenson. The neighbors across the street voted for Ike and they became Republicans. You know, that we become basically trained and we live our lives and we wake up and we go do things. And his philosophy was more about waking up, about waking up to a deeper truth about ourselves. OK. So you joined this group and you're part of this group for five or six years. And what were you doing for work, for a living? Well, so that became interesting and an important part of my life. And that is that when I grew up as a doctor's son and, you know, for the light bulb breaks, you hire somebody to screw it in. And so I grew up with virtually no skills or thoughts that I would have any aptitude for things like this. But the group there had to make a living. So a lot of the people came in were PhD, you know, all different walks of life, joined this community. And to make a living, we either generally got involved with some form of construction or we got into the arts and pottery and the likes. So I did a lot of the trades. I mean, I forget. I think the first thing I started off with was a record player replayerman. That's when they had record players. And then I became a landscaper. I got a job for a builder as a carpenter's helper. and eventually the group's construction company needed a plumber. So I went to become the new plumber. It turned out I was good at this stuff. All right. So this is like a pretty long period of your life, five or six years. And you had spent a bunch of years learning how to do plumbing and carpentry, and which is super, which would prove to be very handy and useful, but you were not settled in what you were going to do with the rest of your life at this point. Absolutely not. And I never ever was to this day. Yeah. I think a lot of young people get really stressed out about not, you know, having achieved something of notable by the time they're 30 and that's nonsense. and it was just never the case even when i was a plumber in this gurjeef group i was rich you know within the context of my life right i you know i had a house and a car and a wife and i made much more money than everyone else in the group because i was in a business that you could charge a lot of money for i never took a second to fear what am i going to do next or how am i going to make a living and say i can look back at it and say well why didn't i should have been afraid, but I just didn't. Yeah. Okay. So you were part of this group, and then you wind up moving back to Cincinnati, I think right around 1978, which is also around the time of the energy crisis in the US. And I guess you had this, obviously you had this background in plumbing and construction. So you actually started a business that made, I guess, like what, energy saving devices like for for homes? Yeah. So I remember staying up all night, one night, and this was my beginning of a career as a semi-inventor and inventing products and coming up with a list of products. Hot water heater insulation jacket was one. We made special fans. A lot of people were getting kerosene heaters and heating up one room to 120 while the rest of the house was cold. So I made these fans that would hang in a doorway to bring the heat from one room to the other, things like that. And it showed me that I could be an inventor. You know, it's hard to believe you can do that until you actually do it successfully and sell a product. I guess, you know, by the early 80s, this is now the Reagan era, energy prices start to drop significantly. And I imagine it's having an impact on your business because it's designed to save people money. And I read that around this time, you start to think about pivoting into a new category, which has nothing to do with these energy conservation products. Right. I saw that the energy prices were dropping, which were not ever expected. We thought it was going to forever grow. And I saw that the products were slowing down And at the same time I was in this apartment and I had a six son who would crawl around the kitchen and bang his head against the kitchen cabinets and this and that And I came up with an idea called Crawl Space, which was a little portable corral. It opened up any eight-sided configuration. And it was at a time when the wooden scissors gates and corrals were being outlawed because of danger. And so I went back to my partners, and I had investors, and I said, I think I want to start this baby product business. And I remember one of them was really furious. And he said, now we've committed to this energy. And I said, no, and I stuck by my guns. And so while we still had the energy, diminishing energy business, I developed this baby product called Crawl Space. And this was a, just to clarify, this was a playpen, but it was mobile. You could move it around. No, it was portable. It weighed eight pounds. It folded up like a suitcase in two seconds. It had ratcheted hinges, no bottom, and you could make it into any eight-sided configuration. It was an octagon-shaped playpen, but it was literally on the ground, right? And a baby, even a crawling baby, couldn't push it? It wasn't able to push it forward? No, it had rubber feet on the bottom, so it made it very hard to slide. And it wouldn't be necessarily an octagon. It might be many angles. You could angle it and the ratchet would hold it in whatever shape, configuration. Ah, I see. It was a cool idea. But the name really helped a lot. Crawl Space was a terrific name for that. And where did you – you sold the product to like Toys R Us? Where were they sold? Oh, we sold it, yeah, Toys R Us, Child World. And that product, I think, led to another thing that you created called the Rainbow Toy Bar? It was called Rainbow Toy Bars. Now, there's two products in my life that were a difference maker in the world. The first one was the Rainbow Toy Bars. Back then, when my baby was, I figured it was probably the same baby, between zero and six months old, we'd put him in a little seat that he'd sit on the floor, or we'd put on a blanket on the floor. And in five minutes, he'd start to cry. And if I gave him a rattle, he'd play with it for a few seconds, but then he would drop it because he was too young to hold on to it. So I came up with the idea. I said, why don't I create a little swing that I could hang the toys down to the baby over his blanket, and he could have visual stimulation, and he could play with them, and he lets go, they're still there. And I bought a bunch of white PVC tubing, and we actually made special fittings that would fit the angle, And we made it so you'd push it together, and it came with little plastic rings and hang rattles and toys like that. So this is the first thing of its kind? I mean, this is a very common toy. You put a baby on a blanket. Every baby in the world uses some form of this now. But back then, it did not exist. And it's like an arch that sits over the baby with toys that hang, and the baby can just, you know, grab them. How did the crawl space in the Rainbow Toy Bar do? Well, they both sold well, really well. Yeah, and I read that pretty soon after you introduced those. You got on the radar of Gerber, the baby company. Yeah. And they came to you with an acquisition offer, I think, of like $2 million. Right. And you sold it, the company. And I guess you worked there for a little while, but then pretty soon after you left to start a new company. and this time it was going to be toys for older kids. It was called Cap Toys. Tell me about that company and what you were going to make. So most of the toy industry back then was toys came from inventors, toy inventors. So I went to look at a bunch of toy inventions, and I found two inventions from a guy named Howard Wexler in New York, and he was famous for inventing Connect Four. And I developed what's called Blooming Dolls, which was a doll that was a flower pot, and it would turn into a puppet and then into a full doll. And it was really cute. And a ball called Crunch Balls, which had little foam pellets in that tent material, and it was in between a balloon and a ball. I'm just trying to picture the Blooming Doll was a doll that was growing like a plant from a pot. It started off, it starts off as a plant with leaves and flowers. It's all fabric. You put your hand in it and the head pops up and has arms and it works as a puppet. And what happened was that our first year, Toys R Us was buying it and they ordered a nice amount. And before we shipped it, before I could ship it, they canceled the order because they were overstocked that year. Because this item wasn't selling, right? This just wasn't taking off. nobody was buying them. It didn't really have time to. The season was just starting. Right. And any pre-sales were okay. They were not terrible, but basically we were going to be put out of business. I had all this inventory and they canceled and did the same with the crunch balls. And I really had no preparation for this type of thing. And I went through the toughest few months of my life. So what do you do? Well, first thing I want to do, and this is called entrepreneurial terror. And I think most successful ones included have gone through this at some point because the buck completely stops with you. There's no group or committee or meeting to get together with others. It's all in your head. And I remember I spent two or three days, I just wanted to hide under the bed. I mean, I didn't want to get out of bed. And I was getting divorced at the time. And I was living in a city, Cleveland, where I moved with the baby company, where I didn't really know many people. So I didn't have a big support network. My investors, by the way, all quit investing. The bank dropped me. Everything happened all at once. And after three days of this, I just got up and said, I better do something. And I got up and I put down a piece of paper what I have to do. Got to get a new bank. I got to get more money in the company. I have to deal with Toys R Us. And once I started that and I got over the fear, I went to work. And I got my rep, my sales rep in New York, and we got an appointment with the boss in Toys R Us, with my buyer's boss. And I said, you're basically putting us out of business. And I wanted to find out if there's anything you can do to help me. And he looked at me and he says, you know, this was when Toys R Us was in their heyday. I mean, they were really powerful. And he said, you know, we need new toy companies and we don't want you to fail. And he said, let's see if we can make an arrangement, a deal, you know, I'll give them something and we'll buy your inventory. For the rest of my life, all through the toy industry, every time I see him, I practically break into tears because it was so kind of him. And I got a second chance. And then I went back to my investors and I said I got Toys R Us to take these. I had already developed a product for the next year too. And the new toy I had was called Arcade Basketball. And it was when Papa Shot was real popular where you pay 50 cents at carnivals and bars and everywhere to see how many baskets. And I made a home version of it that hung on a door with a net. I've seen it. I remember it actually because I was a kid at the time. It was a little backdoor basketball hoop, but it had an electronic scoreboard. And I guess every time the ball went into the hoop, it would click the sensor or something, and then you would get a point. It would show up on the scoreboard. Right. And it scored it, and it even would have two people playing against each other. By the way, this was in the early 90s. Were these being made in China at the time or not yet? Yes. Yes. They were okay. That was made in China. So our budget, our next year, we got this chance and everyone bought arcade basketball. We did $6 million and made a million and a half dollar profit. And we were on our way. And you were able to do that because you got this order on those flowerpot dolls. Because he took the deal. But I was also able to because as a result of that order, my investors agreed to stay in the business. And as a result of that, we were able to get a new bank. So that product, the arcade basketball hoop, really saved the company. saved the, I saved you guys. And it all started with me getting out of bed. Yeah. When I didn't want to. When we come back in just a moment, John gets into the battery-powered candy business, followed by its opposite, the battery-powered toothbrush business. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1993, and John's business, Cap Toys, is back on its feet. And he's looking around for another good idea, which actually turns out to be a lollipop. I got into, somebody went to an inventor show in Pittsburgh and found a lollipop that lit up. You press a button, it was like a sword that would lit up. And I ended up bringing the inventors in. There were four male men, two couples. And shortly after this light, they had come up with another idea, which looked like a right-angle drill where you press a button and a lollipop would spin. And I looked at that and I said, now that's an idea. because I always spun a lollipop with my fingers in my mouth. I said, but this right angle thing's crazy. I just wanted to come straight up. So let's just back up a little bit. You know, in the early 90s, you had a representative from your toy company at a trade show. And the story I read was there was these two couples from Virginia. Well, they basically had a lighted lollipop. It was a spear. And my guy calls me and tells me about it. And I said, that's great. I'm looking for a category. And so I said, I want to fly them in. I want them here tomorrow. I flew them in from Pittsburgh, and I bought the rights to it. And the one person of the four was the inventor, and he had started inventing a whole lot of other candy items. Right. And one I was interested in was this one that spun, which was maybe six months later. And I bought this thing thinking that if I'm ever going to sell this company, I'm going to need a category that Hasbro or Mattel or one of these companies need. because they buy categories. That's what they, they don't need a product unless it's a lifelong product. They need a category. So I decided to get into this category of interactive candy. And so like candy that was, had like a battery operated feature. Right. So you acquire the rights to these spin candies and I mean, you, presumably you knew that they could be made pretty cheaply Because you'd already been making products in China. Yes. I knew we could make this very inexpensively. And I knew a lollipop. We went to all the lollipop factories, dum-dums and all this, and that we could buy lollipops very inexpensively. All right. These were released in 1993. And they were a massive hit. They would go on to sell $100 million in the first three years. That's incredible. How did that happen? Did you have a huge marketing campaign? No, it's just sometimes you get an item like a popular song that's an instant. Everyone recognizes an instant hit. You know, when you have something on the shelf in a store where you have many products that will sell one piece a week per store and you sell eight a day or something, it becomes a hit so quickly that everybody wants to buy it. And the Spin Pop became one of the largest. We sold millions of them. all over the world. I told millions in Japan, and we were probably in the interactive candy back then. We're probably doing $40, $50 million of the candy. That's crazy. $50 million. Yeah. All right. So these Spin Pops take off, obviously. And once again, you get onto the radar of a bigger company. And this time it's Hasbro, which I think is one of the biggest toy companies in the world. And basically in 1997, Captoys, your company, is sold to Hasbro for like over $160 million. So obviously a very nice exit. Yeah. So I negotiated a good deal and I retired. I was about 50 and I retired and moved to Florida for a year or something or so. But that didn't suit you? Well, it didn't sue me. I took up golf, and I did that for a year or two. And once I got bad at golf, I had to go do something else. What do you mean once you got bad? Did you start good and then get bad? At golf, yeah. Very few people get good at golf. But after being so-called retired for a year, maybe two, I don't remember, I had an idea. And so I got together with guys that had done design work for me in Cleveland and who had done a lot of great designs for products. And I had a list of 100 ideas, the first one being the spin battery operated toothbrush. I knew we had made millions of these spinning lollipops and that we became experts in small batteries, motors and gears in China. And I said, well, I wonder if it's possible that I can make an electric toothbrush that would sell at Walmart for $5. Just to put this in context, it makes sense because you had experience with a spinning lollipop. This is 1998. And from what I understand, I mean, like electric toothbrushes existed, Oral-B and they had Sonicares, whatever. They were around, but they were very expensive. How did you start to think about a toothbrush? I mean, because you knew you wanted to start a new business. Tell me what you did to get the idea for tooth. Did you like go to grocery stores? Did you look at what was on the aisles? What did you do to get an idea for what you wanted to make? Well, first of all, I always went to stores and looked on aisles all the time. It's just part of a product idea process. But the joke is that everyone says you sold all these lollipops and ruined all these kids' teeth, and then you felt guilty and invented a toothbrush But that wasn really the story No it wasn I not that altruistic But the reality is is that we ended up buying such large quantities of little motors batteries, and gears, where we're buying in the millions of batteries from EverReady, alkaline batteries, where we're paying 12 cents a battery rather than 78 cents or 39 cents for high volume. And same with the motors that cost 90 cents and we're paying 8 cents or something because I was buying a million at a time. And because of that, I thought that it's possible that we could take what we've learned and we have factories that have been making these lollipops that they would be great resources to make a battery operated toothbrushes if we could actually achieve it. And we wanted to sell it for $5 or less at Walmart. And you saw the opportunity there. Basically, there was the super high-end electric toothbrushes. This was a growing segment of the toothbrush market, and you saw an opportunity to make a really low-cost version for people who maybe wanted to try electric but didn't want to spend $80. Well, we really never considered or worried or competed with the high-end, which some of them were $50. We basically saw the manual market. That's where the numbers were. So your competition was just the standard manual, like Oral-B toothbrush that was selling for $3. And you figured, hey, if we can make an electric version, like a battery-powered version for $5 or $6, people would see that and say, wait a minute, I get more for just a couple bucks more. Yes, but the best thing about it was everything I've ever been involved with up to that point, from energy products, it was still limited to a certain size. The toys, even toys you're dealing with, boys that are 3 to 8, that's really a small market. But I love the idea that toothbrushes was everybody, everybody in the world, man, woman, kid, age, it made no difference. There was never a bigger market to go after. All right. So now the if these existing models are selling for 50 or 80 dollars, I know that wasn't your competition. You were trying to make a toothbrush for five or six dollars. There's it couldn't have the same features as the 80 dollar brush. Right. So what was the difference that you were creating that would make it possible to create these for $2 or $3 in China? First of all, they copy and work off themselves. So the most expensive electric tooth thrust was $110 owned by Philips. And, you know, they practically use a Volkswagen motor and the thing, you know. And we had been used to motors that are much smaller. and that if they would work, we didn't need to have what they had. They also had to have a quality for the price they were selling at. You couldn't have it just break because everyone would take them back. We didn't need that. We actually went out and said, this lasts the last six months. So by using a less powerful motor, you knew that you could probably make a cheaper, a less expensive, much less expensive version. I didn't know. I knew that if we could, it would be so big. I did not know if we could achieve it. And after six months, I almost quit because we just couldn't get it the way I wanted it. What was the challenge? Because, I mean, what were some of the challenges? I've seen the design schemes and blueprints. What were the challenges you guys had in trying to create this thing? Well, it had to include batteries. I didn't want anyone to buy this and have to go buy batteries. Well, I had to give them good batteries because if I gave them cheap, non-alcoholic batteries, they would die in a month. And if they're going to have to buy batteries every month, it's not ultimately a good deal. So I had defined it that the batteries had to last three months. So we had to design a product, and it had to actually work using two minutes of brushing, I think twice a day. and we ran all kinds of tests, not quite like P&G would, but we ran all kinds of tests to make sure that we got the battery life we needed. Then even more important is we needed the torque. Then when you brush your teeth, it's really working and it's working great. So it had to satisfy that. And it took us a year before we got a product that I thought was well beyond the threshold of a far better product than any manual brush. and at first we actually came up with a rounded head and it worked very well. The problem was after two weeks it was splayed and real ugly and I said you can't do that. It's ugly, you know, nobody wants this after two weeks. It's too ugly and so we decided to make it oscillate rather than rotate. So the name spin brush actually came when it was still spinning. We never changed the name because it was a good name but then I realized that I like to brush my teeth in the morning. I don't like to do what Oral-B does where you walk around your mouth differently and have to learn a new method. So I said, well, why don't we take the oscillating round part and put bristles below it and make it look like a regular brush so you can brush your teeth normally and get the oscillation at the same time. And that not only gave us a major advantage, but it opened the door for a great patent. because we say, okay, we're going to make a toothbrush that moves. Part of it moves and part of it's fixed. Well, nobody ever thought of doing that because there's no reason to think that. In the few years that followed, we made even much better ones than that. But at the time, that's what we need to – we needed to get to a point that we were offering a product that was much better than they could get manually. One of the things that is interesting to me about this is as you're working on it, But because you had come from the toy business and you had some experience with candy, you want to focus on the packaging of this, right? Because if it was packaged right, then it would pop out of the shelves. And one of the things that I guess was critical, even before you had the first product done, was that it had a try me button. Like it was packaged in such a way where on the shelves you could push the button in the store and see the bristles oscillate. That was critical to what we were doing for a few reasons. One, we'd sold them just like we did spin pops in a 12-pack, them sticking in a case and that had a button that you could press and you could see that it worked. You sold a 12-pack to the retailer, not to the consumer. To the retailer, yes. Yeah. But what was so important is that when you're selling a toothbrush, electric toothbrush for $4.95 or $4.89, whatever Walmart price was, it's almost not credible. So if a consumer looks at it, is it a toy? I don't believe this. So having the Try Me where you could press the button and it does feel like you're running a Volkswagen motor. I mean, it really looked great when you press the button on the shelf. So we took that from our toy experience and we made them in 12 packs that everything we did to start this business was to get them on end caps at a retailer. That means at the end of the aisle. If I had just stuck two of these on the long wall that had 80 manual brushes, we would have sold some, but it would have been much more difficult. But our products sold so well so quickly, we were able to get on the end of the aisle at Walmart where they put in 140 of them rather than six. but the try me was a very important thing that we learned that was never in the health and beauty department it was a new thing for that department but we learned it from the toy industry how how useful it is and people love to press buttons yeah so all right so you finally after a year of working on this you get and you patent this right you you you file for patent protection which makes sense because you know you're onto something. Two patents, okay. And you got the prototypes in 1999. And I read that you attend a trade show and because of your track record and your connections, I'm sure you already had some interest. And I think you initially had deals with Myers, which is mainly in the upper Michigan area and Albertsons. With these sort of trial runs, how were you able to measure how well they were doing? Well, with Meyers, I happened to be, from my other businesses, friends with one of the owners of one of the Meyers. And so he agreed, because we were so new and nobody knew we were, and it was hard to get appointments and didn't know this. But he agreed to do a test, 24-pack test for us in a bunch of stores. and we were five of us at the time working for the company and we all and they didn't have any Meijer stores in Cleveland so we all left went wonder I went to Detroit somebody went to Toledo Columbus setting them up putting them out on that as the test was supposed to be and then going back each day and that's when we found out that we'd put them out and we were selling seven a day per store, which was just in a different realm of any other toothbrush in the world. You knew they were selling the store how? Back then, we counted them. Each of us went to the areas, and we'd go to the stores, and we'd count them. Then we became friends with each of the store managers, and he'd look it up on his computer to make sure that they were actually sold and not stolen. And once we knew that, that's when I called my factory and quadrupled the tooling, even though we still had trouble getting appointments anywhere. So you could see right away that the, I mean, Oral-B was still the big, the manual toothbrush was still the big seller. But you could see that these spin brush brushes, at least at, you know, these individual Meijer stores you were going to, were actually selling quite a few per day. Oral-B was selling the best selling toothbrush in the world at the time was their cross-section, which was $3.95, expensive toothbrush, manual. And they were selling 12 a week per store. 12 toothbrushes a week per store. And we were selling. It doesn't sound like that much. We were selling seven per day. And the buyers, everyone involved knew right away what this was. But we did have, though, our first 100,000 pieces were defective that we shipped. Were defective. Defective. It was another great lesson. And so what, you just throw them away? So what happened was the first 100,000 pieces, we had the water, when you brush your teeth, the water would run right through the toothbrush and out the bottom, which we thought would be fine. But what happened was over a month, using it for about a month, electrolysis or whatever would cause it build up at the connections and it would stop working. It would break in a month. And we had 400,000 of them in our warehouse. And I had to make a decision. this is a consumable product and this is potentially so big and if I continue to sell this it will die and I went back to my partners in it my investors and I said I'm going to scrap these 400,000 we're all going to put in another half a million dollars or something and we're going to redesign it which we did working day and night with the factory online on the phone and in a week or two We redesigned it so the water, it was all handled different, became waterproof. But the decision to throw those out was a hard decision, especially for a new company. And if I didn't do it, it would have failed. Well, we come back in just a moment. John approaches one of the biggest companies in the world to orchestrate a buyout. And it starts with a major bluff. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's the year 2000 and Spinbrush is rolling out in selected stores like Albertsons and Walmart. And already the numbers are looking really good, like almost surprisingly good. And in the first year, we did $44 million with a $21 million profit. $40 million in sales. It wasn't even a full year. It was probably closer to eight months. And as I said, we made a $21 million profit. But we did that on purpose. We really wanted to make the profit. That was so important because I wanted, from day one, we wanted to sell the company to Procter & Gamble. Procter & Gamble was your target from the beginning, you thought. But you had no idea that they were, whether or not they were working on their own electric toothbrush. We didn't, but I've known that they're a chemical company. Yeah. They were not particularly a strong company in China. They were not particularly strong in mechanical. You know, they had Swiffer, but for the most part, they were a food and chemical company. They were the company that needed this product. They didn't have an electric toothbrush. Their toothbrush business was way down, and their stock was down. Their whole company was in a down mode. So they were our target when we started the company. This is an interesting time for Procter & Gamble because, as you say, Crest had lost market share and P&G stock price had fallen by 50%. There's something else. This is a totally different story, but what would turn it around, Spinbrush was part of it, but eventually we'll get there, but what were Crest Whitestrips, which they had invented internally, right? That turned into a massive multi-million, hundreds of dollars worth of business within a year or two. And that would also turn the company around. But it's interesting. They were – Procter & Gamble was not on the ropes, but they were definitely taking their lumps at this time. And you thought that they might be an acquirer of this product that you guys had put out. Well, I knew that they needed us. It didn't mean that I would meet somebody who recognized that. How did you approach them? I mean, did you go to Procter & Gamble and say, hey, we're for sale? Never. because anytime you try to sell something you get about one of what you get when they want to buy you If you go to them and you say hey we want to sell you saying the price would have been lower Way lower In fact they might not even have been interested What I did instead, and this was all part of the plan, I went to their licensing department with this crazy idea, which I didn't think in a million years they'd agreed to, to license the Crest name for our product. Well, even when I went there, they never heard of us. You wanted to slap Crest onto the spin brush. Yeah, we wanted to license their thing, which I didn't think they would do. Which you really didn't want to do. I didn't want to do, but I just wanted to show them who we were. And I wanted to use that as a door. So anyway, I passed out toothbrushes to everyone in the office, and they agreed to do a test. So you pitch them, basically, you show them the product, you pitch them the product without really pitching it. Just, it's a ruse. Yeah, we wanted to sell the company to them, but I had to find a door, and I wanted them to want to buy it. And so the other way. So they brought the brand people in from Crest and everybody, and they agreed to test it. So we sent them a bunch of pieces, and they tested it. A month goes by. Two months goes by. Three months. Not a word. So, you know, that's usually not a good sign. Yeah. So I finally got to find it. I said, well, I might as well call them because I got nothing to lose at this time. And you guys were selling tons of toothbrushes. Yeah, we're doing great. We're doing great. You're going to do $44 million in that first year. And the next year, we probably would have done $80 to $100 with a great profit. So I finally called the guy and I said, well, I never heard from you guys. He says, heard from us? I thought you guys were going to call us back. I don't worry. And it turned out, and we didn't know this until later, that it was the highest testing product they ever did in the history of Procter & Gamble with consumers. but I didn't know that until actually a few years later. But so they came back and they said, you know, we decided we'll license you the name. I don't want their name. He said, we'll license you the Crest name. Oh, I said, that's so exciting. But I just want you to know that we can't pay more than 3%. You know, most companies like that, would that brand want 12% or 15%. I said, we have to keep, this has to stay at this price point at retail and we can't do that. And so he says, well, let me check. He calls me back a couple days later and says, yeah, that's okay. 3% is okay. We'll do it. And then I said, well, I'm so honored. I don't know what to say. This is such a great thing. I have to bring this to my board. You know, back in those days, you always claimed to have a board. Right. And I got to bring it to my board. And then I called him back a few days later and I said, I hate to say this, but I said the board was so enamored with this that you made this offer. But they said if we do this licensing, the board, investors all did this to eventually sell. And they said that they would never be able to sell it to anybody but Procter & Damo & Creston. You would have all the leverage because we couldn't do anything else. So despite that this is such an opportunity we're going to have to pass. And he says, well, why don't we buy the company? And I said, shit, what an idea. Yeah, that's something we'd think about. And then it went from there. And usually things don't work that well as this. This was one of these things where Murphy did not come into the business. Everything worked to clockwork. But I needed them to want to buy the company. And I say this because, as I say, when I do speak at different schools on entrepreneurship, it's such a difference when you're trying to sell something and when somebody wants to buy it. And anytime you can get in a situation where they want to buy it, you'll get way more money. So you start to hold talks on an acquisition. And I think in January of 2001, they formally offered to buy it. And it was going to be $165 million up front and then earn out over three years. And you would get a percentage of that earn out. And you would join Procter & Gamble. You would basically continue to run spin brush. Okay, so you guys agreed to this. And now you're a Procter, which is amazing, right? One year in, you get $165 million plus in earn out. So you can make more. Tell me what, like now that it's a Procter & Gamble brand, I imagine they could supercharge this thing. They could get it. It can make it even bigger. But more likely what they would do, would have done was screw it up. That's more often than not what happens. but the president of the company, he met with me and he says, you know, we have bought three companies like yours in the last four years and we've ruined them all. And we want you guys, you have a three-year deal. We want you to run it and we'll give you the people and we'll give all this stuff and we'll even let you override some of our rules. And so we did that and we got on the phone and we started doing it. The first thing that the lawyers wanted to do was have us stop selling the product. And I said, why? And he said, because we have a rule in our company that you have to have enough goods in all our warehouses before you can sell the product. And you're selling as fast as you can make it. And we need to build the warehouses up. Stop what you're doing. And I went back to the president and I told him, he says, no, you've got the right to override it. You keep doing what you're doing. So we, and they were hoping to open it up to two different, two or three different countries that same year and expand the production. And we ran it and we got our production up from 88,000 to 400 something thousand a day manufacturing. We were buying close to a million batteries from EverReady a day. We were second only to Walmart and battery purchases at the time. And we got it into something like 40 countries. I flew around. I did presentations in Japan. I mean, they were all good stories. But after a year, so they had told their board that they thought they could do as much as $110 or $120 million with this product. and I think after a year they were doing over 300 million with the product and but what they didn't pay attention to is when they made the earn out arrangement they did it based on it being a maximum of 120 million dollars they had no concept of it going to three or four hundred million dollars or five hundred and the head of the department I forget who he was maybe it was the vice president of the company I remember he called me and says we're going to have to stop advertising. We're going to have to pull the product for a while and let it cool off. And I said, why? He says, the earn out is going to kill us. We just can't. Because of the earn out, they would have to pay you much more than they anticipated. They'd have to pay us probably five or six times that. I mean, it would have been unmanageable. So I said, you know, you're right. I said, you guys didn't expect it to be this big. I did, but you didn't because I said for you guys to stop this is insane because when they also came out with our product they came out almost simultaneously with the white strips right so the addition of the spin brush and the white strips just supercharged procter and gamble yeah crest toothpaste became number one again their stock went up so I said you know somewhere between zero and infinite, there's a number that we can both live with. And we went back and forth, really, might say on the phone for a period of a week or two, I don't remember, and came up with a settlement number. It was supposed to be a three-year earnout, but they basically, I think you negotiated an agreement 21 months early, and they ended up paying $310 million. So the total amount of money they spent on the spin brush would be $475 million. This is amazing. I mean, you get this just a few years after you release this product. And it became, I mean, they managed to also turn into the biggest selling toothbrush in the United States. I think even outsold. It was the biggest selling in the world for a period of time. Wow. For a window. So it was a wonderful Grand Slam experience that everything went right only once in a lifetime. But you know they ended up having to sell it three years later. Right. They sold it to Church and Wright. I think it was who owns it now. Church and Dwight. Yeah. But they sold it. Do you know why they sold it? Well, what happened is three years into it, they were trying to buy Gillette. And Gillette owned Oral-B and Braun. and the deal was being held up because the oral B and the spin brush were a monopoly. It was well over 50% of all the toothbrushes, and so they decided they have to sell the spin brush off. So they called me and asked if I was interested in buying it back, and I said, I would, but I'm not willing to pay much money. I'll give you $10 million for the whole thing, but I'll close next week. And, you know, everything else was, they were always waiting six months, you know, and then there would be due diligence. I said, I'll close next week. But they took, they went back to Church and Dwight, who they had been negotiating with, and they said, Osher's made a big offer and you guys, and they forced them into closing the deal, you know, for about $75 million plus inventory. Wow. They had bought it for $475 million. They sold it for $75 million. Yeah. Yeah. What happened? Were the sales just tanking or they just need to get rid of it quickly? No, they had to get rid of it. And they had the Crest name, so they had to make a deal somehow. And well, Procter & Gamble did eventually acquire Gillette, which I made them. Right. So yeah, once they got rid of the Spinbrush, they closed the deal. $55 billion deal. And they transitioned for three years with Church and Dwight to use the Crest name. And then it had to be just a Spinbrush. Right. But Church and Dwight has done and did and has still done a terrible job. They didn't really do anything with it and everyone else is in it. So when you go to the store, there's 15 different variations of Spin Brush on the shelves now. Like knockoffs? Yeah, including their own. Oral-B has got tremendous – they're probably the leader in it. And when did you decide to, I don't know, I mean, to kind of retire, so to speak? Well, in a way, I retired after each venture because the project was over. And I lived in a mode of looking for ideas. That was my mode. I'm not so much anymore. As I'm older and retired, I still get ideas. But when I was in that mode, I would attract ideas, whether they came in my own head or people walked in the door with them or I get calls or the universities that I would speak at, people had ideas. So after I sell a company or a project, I was open to do something else. Financially, I didn't need to, but I love the creative challenge. To this day, I do. I don't want to do it at this age, but I get just as excited over a new idea. When you think about the journey you took, right, and, you know, you spent six years and this group was studying the philosophy of this Armenian monk. And, you know, and then you went and started the conservation products business and got into toys. And it led to the next thing and the next thing. And eventually, you know, some of these huge products. how much of where you got to and how much of this journey do you attribute to the work and the hard work you put in and how much do you think had to do with luck and timing and good fortune? Well, first of all, luck enters into everybody's success. And I don't think I had a business that didn't have a crossroad point. It could have gone either way and they all went my way. I live in a really much more of a state of gratitude than pride because so many things could have gone the other way. On the other hand, Gary Player says the reason he putts so well and that he's so lucky when he putts is that he practices six hours a day. And he says somehow he gets luckier that way. And I do think that, you know, the more businesses, the fact that I have had a lot of businesses, a lot of experience, failures within the successes, that you do get luckier. Yeah. But there were many cases when I'd run into problems that were beyond my experience and intelligence, both, and don't know what to do. And as an entrepreneur, you're really on your own. You might find people who work for you who are very good. You can get their input, but you're really on your own. And I learned to basically sit, I always had a couch in my office, and I sit on the couch, and I would just ask the universe. And it's not about asking God, asking self and Buddhism, asking a higher part of my brain. I had no idea. I would just say, what do I do? And then I'd be quiet. And 100% of the time, I always got the answer. 100% I got the answer and was right, to the point that I started calling it the magic. And when we'd have a serious problem, people would work for me and tell me to go in my office and ask the magic. And what's wonderful about it is that anybody can do the same. That's serial entrepreneur John Osher, creator of The Spin Brush. By the way, over the years, John has had a pretty interesting side hustle backing Broadway musicals. He's actually been listed as a producer on some pretty big hits, including at least two Tony winners for Best Musical, Jersey Boys and Hairspray. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of this show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at gyros.com or on Substack. This episode was produced by Catherine Seifer with music composed by Ramteen Arablui. It was edited by Neva Grant with research help from Rommel Wood. Our engineers were Patrick Murray and Kwasi Lee. Our production staff also includes Casey Herman, Chris Massini, John Isabella, Sam Paulson, Alex Chung, Carrie Thompson, Nora Gill, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.