A 2017 study by professional accounting firm Deloitte challenged much of the conventional belief that family firms are slow to change and fettered by traditional, conservative thinking that usually favours risk aversion. The study also highlighted one of the contributing factors that will likely fuel the success of family businesses well into the future: the willingness of next-generation business owners to adapt with the times.
Deloitte surveyed 268 future leaders of family-owned companies and found that 63 per cent had incorporated disruption into their strategic plan, while 81 per cent felt that the culture of a family business encourages innovation and idea generation. According to the study, the next generation of family business owners appeared ready to lead and prosper in tomorrow’s uncertain and exciting business landscape.
Here are five family businesses that are disrupting markets through innovation. Some are family start-ups taking full advantage of social media, e-commerce and the online shopping revolution, while one has been at the forefront of market disruption for decades.
Revenue (2018): $50 million
Sector: Feminine Care Products
THINX offers a line of women’s underwear that can complement or even replace traditional feminine hygiene applications. The company looks to take on health multinationals like Procter & Gamble and disrupt an industry that is expected to be worth over $33 billion by 2025. THINX was launched in 2011 by Canadian twin sisters, Miki Agrawal and Radha Agrawal, along with co-founder Antonia Dunbar. The company’s innovative ways extend to social advertising, where its marketing content is direct, provocative and often controversial.
Now headquartered in New York City, the company’s initial growth came on the heels of a 2013 Kickstarter campaign that raised $65,000. In 2018, THINX’s yearly revenue topped $50 million. In addition to online retailers, THINX products are featured in 51 locations in the US, Canada, the UK, Iceland, Germany, Switzerland and Ireland. Miki Agrawal stepped down as the company’s CEO in 2017. Entrepreneur Maria Molland is THINX’s current CEO.
Revenue (2018): $286 million
Sector: Mattress Manufacturing and Sales
Rather than selling their mattresses in big-name retail locations, the brothers behind Purple adopted a revolutionary direct-to-consumer model that eliminates the costs associated with middlemen. Terry and Tony Pearce founded Purple in 2015, initially raising funds through a Kickstarter campaign. Since then, a number of other mattress companies have followed the brothers’ disruptive marketing and distribution approach. However, Purple’s innovations also extend to its mattresses.
Both engineers, the Pearce brothers originally partnered in 1989, combining their aerospace and high-tech materials experience to develop sporting equipment and wheelchairs. By the 1990s, the team had turned their attention to creating the world’s lightest fluid foam and found high-profile customers for their product in Nike, Johnson & Johnson and Top-Flite. They went on to design an advanced elastic polymer which was used globally for Stryker Medical beds, Svane by Ekornes consumer mattresses in Europe, Sleepmaker mattresses in Australia, Dr. Scholl’s Massaging Gels and Japan’s Francebed products. In 2013, the brothers began developing the product that would set in motion their philosophy of selling high-quality mattresses at one-fourth the usual cost.
In 2017, Purple became the first mattress start-up to go public through their merger with a publicly traded investment shell company. The valuation at the time of the transaction was $1.1 billion.
Revenue (2018): $4 billion
Sector: Home Design
Founded in 2009 by husband and wife team, Adi Tatarko and Alon Cohen, Houzz’s website provides a place for homeowners to collect DIY inspiration through photographs, artificial intelligence and augmented reality. Houzz’s platform also connects design professionals and other home design enthusiasts, innovating the industry’s traditional models.
Originally a side project for the couple, who faced difficulty finding ideas when remodelling their home, today the California-based company boasts over 40 million monthly users and 1.5 million improvement professionals. Since its inception, Houzz has raised over $600 million from notable venture capital investors that include DST Global, Kleiner Perkins and GGV Capital. Tatarko and Cohen are estimated to own roughly a controlling one-fourth of the company and act as Houzz’s CEO and President, respectively. Tatarko has been featured on the Forbes list of America’s Self-Made Women and has a net worth of approximately $430 million.
Revenue (2018): $849 million
Sector: Grocery, Food and Health Food
Margaret Isely and her husband Philip Isely founded Natural Grocers in 1955 after the couple credited natural, wholesome foods and dietary supplements for helping Margaret defeat a chronic illness. The Isely family steadily grew their business and spread their message about the benefits of health food for more than half a century. Their success led to an IPO in 2013 which generated $91 million for the Colorado-based company.
Today, Natural Grocers is led by the family’s second generation: Heather, Zephyr and Kemper Isely. The company operates through its 149 locations across 19 US states but still tries to convey its original small-town, local feel. By selling entirely organic products and produce, Natural Grocers has helped develop and expand the health-conscious consumer market in North America and compelled many in the traditional grocery sector to respond. Additionally, the company’s forward-thinking employee benefits, such as providing a staff nutritionist, have further challenged existing human resource policies.
Despite e-commerce giant Amazon’s purchase of Whole Foods in 2017, family-owned Natural Grocers has continued to thrive, with the opening of new locations and a 10 per cent increase in sales from the previous year.
Revenue (2018): $20 billion
Sector: Credit Cards and Online Payments
Irish brothers John Collison and Patrick Collison dropped out of college to found their online payment solution in 2010. Just two years earlier, the young software coders sold their first company Auctomatic, which simplified the process of price management for auctioneers on websites like eBay, for $5 million. Experiencing first-hand the limitations of online payment staple PayPal, the brothers set out to create a simpler, less restrictive online payment vehicle. John and Patrick legendarily built their now ubiquitous payment system on just seven lines of code.
With $2 millions of funding from venture capital firms Andreessen Horowitz and Sequoia Capital, Stripe’s early success was spirited by word of mouth between developers, new e-commerce companies and businesses competing in the sharing-economy marketplace. Today, Stripe processes billions of dollars in payment transactions for companies in over 120 countries, such as Lyft, Facebook, DoorDash, Salesforce, Shopify, Indiegogo, Booking.com and Amazon. An estimated 65 per cent of Internet users in the UK and 80 per cent of users in the US have made a purchase through a business using Stripe’s payment process. Patrick Collison serves as the private company’s CEO, which has over 1500 employees and continues to shake up the arena of digital payments.