Griffon | Incubating New Ventures

	The Art of the Start Business Incubation is a process of transforming a ‘fledgling’ idea into a fully–defined business by simultaneously enhancing three dimensions of your new venture: — building technical competency — leveraging marketing force — enhancing business profitability Though the specific challenge is always different, Griffon has developed a set of processes to facilitate this complex endeavour.

	Case Study: ESTEEM Electronic Cigarettes Having incubated a venture for GlaxoSmithKline in 2004, James was captivated by this challenge. That particular venture was designed to help people stop smoking using the NiQuitin range of nicotine replacement products. He was also struck by the difficulty of quitting, and formed the view that “Smokers crave an alternative!”. On learning about electronic cigarettes in 2011, James was convinced that this was just the solution that ‘trapped smokers’ desired, since Ecigs provide the nicotine on which they depend without the harmful effects of burned tobacco smoke. Griffon helped incubate a venture called SwissVapour SA with the goal of commercialising ESTEEM electronic cigarettes. Building Technical Competency Ecigs had been produced in Shenzhen since 2005, so this was where the knowledge and expertise was richest. Having identified the most reliable producer in the region, we entered into an Original Design Manufacturing contract with them, whereby we leveraged their patents, but the overall design was ours — thanks to almost 600 parameters that we felt were essential for a premium product. These defined the physical dimensions, hardware specs, flavour profiles, liquid blends, branding features, colour pantones, packaging materials, quality assurance and in-process safety checks. Leveraging Marketing Force ESTEEM was designed to answer the need for an easy switch from cigarettes to vapour, and much of this thinking was embedded in our brand identity, which was based on the axes of personal freedom and social belonging. This was encapsulated by our tag line ESTEEM Your life. Your way. Since the Ecig industry gained initial visibility through social media, ESTEEM had to be part of the discussion. In addition to a twitter feed (over 25,000 followers) and a facebook page (over 65,000 fans) ESTEEM sought to shape the ‘mindspace’ of the category through a series of blogs, the occasional video, and a strong inbound marketing campaign, based on the Hubspot platform. Enhancing Business Profitability What weighed heavily on our business model was the fact that ESTEEM could not produce in Switzerland, as was our original intention, on account of a conservative legislative stance adopted in 2010 when ecigs were still relatively unknown. This required us to have our headquarters in Luxembourg and our warehouse in neighbouring France. Despite this, and to enhance return on equity, ESTEEM deployed a lean supply chain business model, which outsourced production, warehousing and logistics to trusted partners. We used independent laboratories to verify the pureness of each batch, so that quality always came first. All sales were online, using an e-commerce website which was powered by Shopify. While preserving the premium stance of the brand, we offered an attractively price starter set, competitive shipping rates and a discount for subscriptions.

	Afterpiece: ESTEEM Today With the introduction of the 2014 Tobacco Products Directive, it became clear that SwissVapour would not be able to stay the course in this industry, since the regulatory compliance costs were projected to run into the millions, and that made the ecig business far too uncertain for prudent investors. The company retains ESTEEM – one of the most versatile brand names in this segment – as part of it‘s portfolio of investments.