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Fall 2017 - No Sweat?
Hardly. A Hopkins-based startup is securing a promising future because of an innovative product in an untapped market niche, but also because of the almost incomprehensible tenacity of Justin Johnson, its founder and CEO.
September 2017

Twenty-seven-year-old CEO Justin Johnson can be forgiven for his unabashed enthusiasm for his company. NoSweat is a Hopkins-based company, operated by three high school and college buddies, based on the very simple concept that people who wear helmets or hats for work or play tend to sweat under their lids. And they don’t want to. And, until NoSweat, there was no solution to that problem.

Starting out when they were still students at Gustavus Adolphus College in St. Peter, brothers Justin and JT Johnson adapted the technology around superabsorbent polymers (SAPs) to develop and patent a disposable helmet/hat-liner that absorbs and eliminates forehead moisture (through its Dri-LID™ Technology) and extinguishes most related odors (through its No Scent™ Technology). Beginning their business in 2011 with a laser focus on a hockey product, the business today appears to be on the verge of greatly expanding many markets: sports (baseball, football, golf, hockey, lacrosse, and cycling) and creating new b-to-b distribution channels with safety relevance (industrial, construction, manufacturing and transportation) and others, from farming to food service to the military.

Adding CFO Jon Marshalla and Chief Sales Officer Collin Iacarella along the way, the company is deploying an aggressive social media strategy based on thought-leader endorsements. The company has recently inked sports-centered deals with Golden Tate, a wide receiver with the Detroit Lions, and Brandon McManus, a placekicker with the Denver Broncos. For baseball, they scored Houston Astros’ pitcher Dallas Keuchel.  And in hockey, they recently secured an endorsement from T.J. Oshie, a right winger with the Washington Capitals. In hockey alone, NoSweat has already earned bulk sales agreements with 20 NHL teams, which it expects this year to grow to all 31 teams in the league. In addition, the company has a 20,000-product standing order with the NHL referee’s association.

NoSweat manufacturers disposable helmet/hat-liners that absorb and eliminate forehead moisture

Working gradually to expand beyond its retail presence with mom-and-pop sporting goods network, NoSweat has also developed a power presence on Amazon, making over 2,000 sales during a 30-day period. 

On its face, NoSweat’s litany of triumphs stand alone as an impressive record of entrepreneurial accomplishments for a company driven by young executives whose drive and discipline sometimes outpaced their limited experience. 

Beginning as college students with no real-world experience in business or product development, Justin Johnson led them with laser focus to develop and patent a product. The brothers conceived and developed a market with very disciplined and gradual distribution channels. They raised more than 1.8 million in capital, and demonstrated cool restraint in growth. 

While just a freshman at Gustavus, Justin Johnson pressured school officials to allow him to enroll in an upper division class on entrepreneurial business along with his brother, JT, then a senior. He thought it would be fun to collaborate with his brother to conceive and manufacture a product and then bring it to market. 

But what product. The brothers were kicking around some ideas over dinner at home in Hopkins one night when their stepfather, Chad Sulheim, gave them an idea. A hockey buff with 20 years of experience officiating high school hockey games, Sulheim explained that virtually anyone who played the game—from mites through the NHL—would be drawn to a product that absorbed sweat inside their helmets. The nonporous plastic construction of a hockey helmet generates an unstinting stream of forehead sweat that continually drips into a player’s face while skating. Players can’t merely wipe it away because face protectors—either the metal cage variety or clear plastic shields—impair easy access to their faces. Sweat bands might stop the moisture, but only temporarily and would likely worsen later leaks. Skull caps might wick the wetness, but still wouldn’t give it anywhere to go. In the end, many hockey players concocted makeshift liners by quietly cutting up maxipads and taping them inside the helmet.
Justin and JT liked the niche, a growing market of some 520,000 hockey players and officials who shared the same common problem with no common solution—at least not yet. They scoured the internet for products or registries and found none.

So, the brothers developed their own. Justin estimates they invested “10 times the hours” of other students assembling their plan. They consulted material suppliers and potential machine builders to conceive how to bring his product to market. In the process of finishing the class, they filed for two patents, a trademark, and created a stand-alone website. Filing for the patent about a product for which he had limited familiarity was, Justin said, “diving into the deep end of R&D. It wasn’t easy.” 

To test the market, they reshaped an existing product to fit a hockey helmet and tested with thousands of hockey players. “They loved it,” Justin says.

Not standing still, Justin founded an “entrepreneurs’ club” at Gustavus and started making frequent 45-minute trips from Gustavus to the Twin Cities to solicit input on his product and business from local entrepreneurs. “We had a product that works, had the patents in place, wrote a solid nondisclosure agreement, and met with everyone and anyone.” To date, he says, only one businessperson declined to meet with him. “That’s the nice thing about the community around here,” he says.

When Justin graduated, he and JT were ready to launch.

Left to right: NoSweat CFO Jon Marshalla, CEO Justin Johnson, and sales director Collin Iacarella 
Left to right: CFO Jon Marshalla, CEO Justin Johnson, and sales director Collin Iacarella

JT, although a new father and three years into building a business as a broker for Northwestern Mutual Insurance, joined his brother in their parents’ basement, working 18 months without a paycheck to perfect the elements of a business plan. They refined their product, plotted their markets, sharpened processes, and arranged some angel financing of about $583,000 between 2011 and 2012, with volunteer support from high school friend Jon Marshalla, a business technology consultant at Deloitte.

They thought they were on their way.

The brothers invested a large portion of their friends-and-family proceeds in a custom manufacturing contract to produce one million NoSweat hockey helmet inserts, with which they would begin marketing aggressively.

To their horror, the entire run was flawed. The manufacturing process used to seal the adhesive in the final product simply didn’t work. The inserts leaked.
“That’s when the uphill battle began,” Justin recalls. “They basically thought that the product just needed some glue and pressure and it would keep all the sweat inside. They had experts there that knew all about this stuff. They were completely wrong.”

This left the devastated young entrepreneurs with a depleted inventory and barely enough money to keep the lights on. With a young family to support, JT was forced to leave the company. 

But Justin persevered. “I was by myself for about two years,” Justin remembers. “Anyone else probably would have thrown in the towel,” he says. “I’m not one to give up. Can’t isn’t in my vocabulary.” He credits his girlfriend (now wife) Erica Ewald, his mother Colleen Aldritt, and Marshalla for seeing him through the crisis. 

Plowing ahead with single-minded determination, Justin developed what he calls a “bizarre” fix for the flawed products that required him to hand-seal each of them for reuse. (He says he fixed 700,000 of them over the next two years.)

He used his limited inventory to test markets and all the sales channels, assess marketing ideas, identify stores to sell it, and get a little bit of traction built up so that he could really tell “we had something here and we could sell it to get some investor capital,” he explained. 

As product became available, he started circulating helmet inserts to hockey thought leaders, beginning with local referees. With each sale, he’d staple a few free three packs and encourage the recipients to share. And he gradually developed a network of “mom and pop” retail sports operations to sell the inserts, often including a free three-pack with the sale of new helmets and the hope that people would experience the product first hand.  

His lack of inventory also enabled him to resist the temptation to prematurely expand his product line for a marketplace that was virtually endless. Everyone sweats, and most people wear hats or helmets who could benefit from the product. Sports alone would yield opportunities in football, baseball, even lacrosse. But he envisioned safety hard hats, food service, and the military.

He kept his focus on hockey. “I was advised over and over by successful people that focus is the only way anything will succeed, and that’s what we did. So, we focused on hockey, which we knew would work extremely well. 

By August 2015, NoSweat’s determined resurgence convinced Marshalla, still at Deloitte, that the company was ready to attempt a formal private placement memorandum. Over four months, he sensed investor hesitance when he got what he calls the “Shark Tank” questions. “Who are you guys? Who’s running the company? You’re still working at Deloitte, are you going to run with this?” 

That he’d come on full-time once the money was raised wasn’t enough. So, by January 2016 Marshalla formally joined the team as CFO. “Jon quit his job before actually trying the product himself,” Justin points out with pride.
Financing turned around. Marshalla says he received a new reaction. “Whoa, you left Deloitte to do this? There must be something here.

Hopkins, Minnesota-based startup NoSweat has a promising future because of an innovative product

 “It put more validity to the pitch, and my conviction that the company had some legs,” Marshalla says. “It was pretty cool to see. We definitely raised some money quicker after that point.”

NoSweat ultimately raised $650,000 in that round, earmarking the funds to scale manufacturing to meet potential demand. It began, Justin says, the “take this thing to the moon plan.”

“Justin was killing himself by trying to run all aspects of the company,” Marshalla says. “It definitely wasn’t viable to continue to hand-seal the product. The only way out was to develop a new manufacturing process, get some fresh product and take everything he had learned and start to implement it at a larger scale. 

The production component that still bedeviled them was integrating the adhesive. “We had to come up with a way to do it ourselves,” Justin says. The earlier “face plant” taught him that they would never again manufacture any product “without a really good test or at least a small production line in place that was flexible.”

Through “a lot of Googling” and about 50 phone calls to random equipment-and-part suppliers and manufacturers, Johnson and Marshalla located a machine in Pennsylvania they thought they could integrate into their high-speed production line to apply adhesive.  

“It was like trying to find a 1913 Model “T” transmission that still works. That’s what it felt like.”

The equipment acquisition enabled the company to go online in February.
Collin Iacarella joined NoSweat as national sales manager in 2016 after spending more than five years as a senior coronary sales rep at Medtronic. Now equipped with the high-speed production capacity to meet demand, he focused on finding high visibility endorsements for the helmet inserts that would drive sales, both to teams and at the retail level.
Local referees, and then NHL referees. They sponsored a suite at the NHL awards in Las Vegas and at the NHL All-Star game to inspire interest among players. 

Their first big break came when New York Rangers’ defenseman Marc Staal sustained a serious cut on his eyebrow during a playoff game. A trainer inserted a NoSweat insert into his helmet to keep sweat from dripping into the wound. “He absolutely loved it,” Justin says. The entire Rangers team quickly became NoSweat users; the next year five teams were using it. Now 20 teams are on board. They expect to have all NHL teams by next season.

Iacarella is emphasizing that NoSweat’s market growth will evolve from innovative nontraditional promotion and advertising. He’s using a “really hyper-targeted” Facebook campaign, an association with iHeart media, and a concerted effort at creating b-to-b distribution networks.

“At the end of the day, we’ve got a great product,” he says. “We’ve got a great brand. Ultimately we want to become a multi-product company. And down the road, the ultimate goal of any start up obviously is to generate a nice return for investors."

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