Business Plan Contests: Where Are the Women?

February 10, 2011, 11:46AM EST
Business Plan Contests: Where Are the Women?
Many groups are trying to increase female participation in competitions for promising ventures
By Karen E. Klein

SPECIAL REPORT. Focus On Entrepreneurs, February 2011

Something bothered Jane Pak when she served as a judge for a regional competition of the Global Student Entrepreneur Awards (GSEA) at the University of Southern California last summer: All the contestants were male. "Where are the girls?" she asked the two other female judges. "It was so obvious to us that this was a problem," says Pak, chief executive officer of the Los Angeles chapter of the National Association of Women Business Owners. "No one else seemed to notice."

Women often go missing from the 100-plus entrepreneurial competitions held annually in the U.S., where winners take home prizes ranging from cash and trophies to contacts that can lead to opportunities. In the GSEA's 2010 contest, just 25 of the 145 competitors were women and the winners and runners-up were all male. Since 2007 only 13 percent of the event's 117 finalists have been female. The scant presence of women in such events "makes me want to put my head down and weep," says J. Janelle Shubert, director of the Center for Women's Leadership at Babson College.

While no formal statistics are kept, several people connected with business plan and entrepreneurship competitions say women represent at most 20 ercent of entrants. That's even though they launch 40 percent of all private companies, according to the Kauffman Foundation, which promotes entrepreneurship. "Fewer women are still finding their way into spearheading their own idea," says Sara Gragnolati, 33, the first solo woman to win the top prize in Babson's MBA business plan contest, launched more than two decades ago. She took home $20,000 for her company, Cocomama Foods, which sells gluten-free breakfast cereals. "I felt kind of honored," Gragnolati says, "but I found it surprising and sad" that it had taken so long for a woman to win.

Experts in entrepreneurship—both women and men—say a lack of confidence and bluster, an aversion to risk, and a continued scarcity of women in engineering programs may explain the shortage. Pak believes the problem starts in childhood. "Even the most progressive parents don't assume their daughters are going to be primary breadwinners," she says. Babson's Shubert says women are less likely to belong to organizations that sponsor contests. Although more than half of graduate students are female, women "are not driving to positions of influence," says Sharon Vosmek, CEO of Astia, a nonprofit that supports women-owned companies. "You have to be ready to toot your own horn in a way that we're not seeing women doing."

More practical considerations may also contribute. Elif Hanna, an MBA student at the University of California, Irvine, was the only mother to enter her school's annual business plan competition. "It was very hard for me to participate," she says. "Most of the meetings were after seven." Rejected in the first round, Hanna started an online wedding invitations company, funding it herself.

Efforts are under way to boost participation by women. Ernst & Young set up its annual Entrepreneurial Winning Women contest in 2008 to strengthen promising female-led businesses by connecting them with potential partners and investors. This year, Kauffman Foundation and Astia are sponsoring the first Women in Science and Engineering Business Idea Competition.

Tech networking group Women 2.0 says its annual pitchfest—in which teams presenting ideas to potential investors must include at least one woman—is attracting more venture capitalists. A 2010 participant pitched technology that lets immigrants send money home via mobile phones, says Women 2.0 CEO Shaherose Charania. It's "something that a Sand Hill Road [VC] guy is never going to use," she says, "but it solves a real problem instead of just making rich peoples' lives more cushy."

The bottom line: Few women entrepreneurs participate in business plan contests. Now many groups are trying to boost their numbers.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

Women Top Men at Earning Bachelor's Degrees, U.S. Data Show

Women Top Men at Earning Bachelor's Degrees, U.S. Data Show
By John Hechinger - Feb 10, 2011 9:38 AM PT

Women in the U.S. are almost twice as likely as men to earn a bachelor’s degree by age 23, underscoring decades of gains by females in schools and the workforce, according to a government survey.

By that age, almost one in four women earned the college degree compared with one in seven men, the federal Bureau of Labor Statistics said in a report released today in Washington. The research comes from a study that annually follows the lives of the same 9,000 people, born from 1980 to 1984, according to an agency release.

Women’s outperformance coincided with their increasing opportunities in the workforce as jobs shifted from male- dominated factories to offices open to female employees, Jay Meisenheimer, a bureau economist and one of the study’s authors, said in a telephone interview.

“We’ve seen this great transformation in the workforce away from manufacturing toward more of a service economy,” Meisenheimer said. “Now that there are more opportunities for women to work, we’re seeing a growing number completing high school and college and going on to graduate and professional programs.”

This year’s results mark the first time the study had a big enough sample of students old enough to have finished college to make a meaningful comparison between men and women, Meisenheimer said. Participants’ responses have been tracked annually since the survey began in 1997.

To contact the reporter on this story: John Hechinger in Boston at jhechinger@bloomberg.net.

To contact the editor responsible for this story: Jonathan Kaufman at Jkaufman17@bloomberg.net

Merkel Asks Why No Women on Boards as Ackermann Prompts Howls

Bloomberg
Merkel Asks Why No Women on Boards as Ackermann Prompts Howls
By Angela Cullen - Feb 11, 2011 3:10 AM PT

German Chancellor Angela Merkel has filled one third of her ministerial positions with women. Deutsche Bank AG Chief Executive Officer Josef Ackermann doesn’t have a single female on the 12-member group executive committee that oversees the nation’s biggest bank.

Fresh from a scrap over making bond investors help cover the costs of bailing out European banks, Ackermann angered Merkel’s ministers by saying last week that his board “will be more colorful and prettier” with a woman. Consumer minister Ilse Aigner responded by telling Handelsblatt newspaper that “if it’s more color or beauty you want, you should go to a flower garden or a museum.”

At Germany’s 30 largest companies, just four of 186 management board positions are held by women, according to data compiled by Bloomberg. Barbara Kux, 56, Siemens AG’s head of global supply chain management, became the first woman in 12 years to sit on a board when she was appointed in 2008. The lack of women in top management is a “scandal,” Merkel said at a Feb. 8 conference in Berlin.

“We should do much better than that,” said Barbara Bierach, author of the 2002 book “Das Daemliche Geschlecht,” or The Stupid Sex, which attempts to explain why there are few female managers in Germany.

The nation lags behind in Europe, where some governments have set quotas to improve the balance of female representation in corporate management. Norway was first, in 2003, to enforce female minimums. Spain followed in 2007 with its own legislation, and France plans to impose a 20 percent quota by 2012 and 40 percent by 2016 for its 2,500 biggest companies.

Waiting and Watching

Merkel, who has opposed quotas, said at the Berlin conference that she’ll give German companies “one last chance” to confront the issue before her government enforces change.

At the European Union’s biggest publicly traded companies, one of every 10 board members is a woman, the European Commission said in a gender equality report published last March. In Norway, 42 percent of board members at the country’s largest companies are women.

Women account for about 12 percent of board members at France’s benchmark CAC 40 Index companies, according to a study published last October by Ernst & Young and France Proxy. By contrast, only 3.2 percent of women hold management board positions at Germany’s 200 biggest companies, according to a Jan. 18 study by the Berlin-based DIW economic institute. The proportion is 2.9 percent at the country’s largest banks, up just half a percentage point since 2006, the report said.

Euro Peripherals

“The problem is that in certain areas, like banks and insurers, they like to recruit terribly nice young ladies,” said Sybille Busch, who has run an executive consulting firm in Hamburg since the mid-1980s. “If you recruit lambs, they stay lambs, and you can’t make wolves out of them.”

Merkel, 56, and Ackermann, 63, have disagreed publicly over how to fix the sovereign-debt crisis that has already led to the financial rescues of Greece and Ireland. Merkel has called on bond investors to shoulder the cost of future sovereign bailouts, prompting Ackermann in November to say the chancellor’s remarks were roiling markets and raising borrowing costs.

German lenders hold more than 112 billion euros ($152 billion) of debt issued by the governments of Greece, Ireland, Portugal, Spain and Italy, according to Bloomberg data.

The spat over how to save peripheral Europe comes less than three years since Merkel and Ackermann worked together to help stave off the collapse of commercial-property lender Hypo Real Estate Holding AG in what would have been the country’s biggest bank failure since 1931.

Ackermann Initiative

Ackermann started a campaign two years ago to promote women at Frankfurt-based Deutsche Bank, according to company spokesman Christoph Blumenthal. Eileen Taylor, the bank’s global head of diversity, said in an e-mail that Ackermann’s support has boosted diversity programs at the company.

“Joe knows that diversity is a business imperative and that diverse teams are smarter teams and lead to stronger business results,” Taylor wrote in the e-mail.

Deutsche Bank didn’t have a woman executive to send to the World Economic Forum conference in Davos last month, even after organizers offered the company an extra slot. Ackermann’s “prettier” comment was made Feb. 3 after the bank reported 2010 earnings. He also said during the presentation that “it’s unbelievably important that we succeed in bringing more women into management positions.”

Deutsche Bank

Ellen Ruth Schneider-Lenne was a member of Deutsche Bank’s management board from 1988 until her death in 1996. Schneider- Lenne, who was responsible for risk, also was the first female to become a top executive at a major German bank.

About 44 percent of Deutsche Bank’s employees are women, and 16 percent hold managing director or director positions, according to Deutsche Bank’s latest figures.

Ackermann initiated a program entitled Atlas, which selects 20 women each year from Deutsche Bank’s business units and geographical regions “to groom suitable candidates for the bank’s top management,” the company said in its 2009 corporate sustainability report.

Merkel has rejected calls by her labor minister, Ursula von der Leyen, to impose a 30 percent quota, saying German companies should do more to promote women from within. Family minister Kristina Schroeder said she would force companies above a certain size to set and publish quotas for women on management and supervisory boards as a first step.

Germany’s half-day school system and its affluence relative to other countries make it difficult for women to juggle motherhood and a career, and mean it’s “much easier to stay at home,” Bierach said in a telephone interview from Sydney where she now lives.

DAX 30

Deutsche Telekom AG introduced a quota a year ago for women in management positions, becoming the first DAX 30 company to do so. The former German telecommunications monopoly, based in Bonn, aims to increase the proportion of women in upper and mid-level executive posts to 30 percent by the end of 2015, it said in a March 15 statement.

Siemens, based in Munich, has two female executives on its eight-member board. Software company SAP AG and power company E.ON AG each have one. Stuttgart-based Daimler AG plans to appoint constitutional judge Christine Hohmann-Dennhardt to its management board to head compliance as early as next week, according to people familiar with the situation.

Merck KGaA in Darmstadt said yesterday it will increase the proportion of women in management to as much as 30 percent by 2016 from 22 percent.

Raven Mother

Female leadership is more common among family-owned German enterprises, where women run 25 percent of the companies, a report by the Bonn-based Intes Academy for Family-Owned Companies said.

German women “who dare to have a career” are often criticized by their peers, said Bierach, the author of the Stupid Sex. The German term “Rabenmutter,” or raven mother, is a derogative word used to describe women who leave the nest to go to work. There is no male equivalent. The Nazi regime used to award a Mothers Cross as part of Adolf Hitler’s plan to encourage Aryan population growth.

“There’s a terrible legacy from the Nazi period,” Bierach said. “It’s a deep-seated culture problem. You’re a raven mother if you don’t make the spaghetti yourself.”

Germany has slipped to 13th place in the World Economic Forum’s latest Global Gender Gap report, which ranks 134 countries on 14 measures of treatment of and opportunities for men and women, published in October. It ranked sixth in 2006.

Iceland had the highest score last year, while the U.S. made the top 20 for the first time, at 19th place. Yemen was in last place.

To contact the reporter on this story: Angela Cullen in Frankfurt at acullen8@bloomberg.net;

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net

Japan’s ‘Camera Girls’: Behind the Lens

Wall Street Journal / Japan Real Time
FEBRUARY 10, 2011, 8:02 PM JST
Japan’s ‘Camera Girls’: Behind the Lens
By Yuri Tomikawa

There’s long been a mutual love-in between the Japanese photographic industry and the country’s younger women. But having graduated from Puri Kura photobooth stickers, cellphone snaps and sleek and shiny compact digital cameras, growing numbers of Japanese women have taken to more serious camera technology in recent years to create their own art for personal blogs featuring “yurukawa” images —a term that combines the words “yurui” meaning loose and “kawaii” for cute — and for other social media like Mixi and Twitter.

And now, on top of specialist magazines like “Joshi Camera” catering to what are becoming known as “Camera Gaaru (girls),” camera makers are turning out sophisticated single lens reflex, or mirrorless interchangeable lens cameras specifically targeted at women. With good reason: According to the country’s Camera and Imaging Products Association, women’s use of single-lens reflex cameras with interchangeable lenses has increased from 2.3% of the total Japanese market in 2004 to 11% in 2009, increasing by 3% between 2008 and 2009.

This week Fujifilm Holdings Corp. introduced a new but vintage-look camera, the FinePix X100, combining the retro feel of a more serious camera with the functionality of a modern digital compact. Retailing at 130,000 yen ($1,580), Fujifilm says an unexpected amount of the buzz on micro-blogging service Twitter, a wildfire success in Japan, is coming from young female amateur photographers.

It’s a path well trod by Japanese camera maker Olympus Corp. with its Olympus Pen series. According to company spokeswoman Natsuki Takada, while female customers usually make up about 10% of most of Olympus’s mirrorless camera products, they have made up at least 30% of the new Olympus Pen Series. The company says it specifically targeted women by producing white and red-bodied models, rather than solely the big black types that previously dominated shelves. The camera’s website and TV commercials clearly target women, using a full cast of female models.

At camera giant Canon Inc. it’s a similar story: “Women have been increasingly becoming our main target for the single-lens reflex cameras,” says spokesman Yoshinobu Shoshi, explaining the company’s collaboration with magazine “Joshi Camera” in creating cuter camera straps and developing a flowery website for its Kiss series cameras. And Bic Camera, one of the largest electronics store chains in Japan, holds a “Girls’ Camera Section” where it sells women-targeted professional cameras and accessories.

Photography classes specifically held for women are also in growing demand. Nadar, a school located in Shibuya, has over 100 students on its books today for its women-only classes with most of the 15 student classes full, compared to the 20 to 30 students it attracted per year several years ago.

Why exactly are women turning to more professional cameras? Kazumi Hayashi, who wrote the textbook used at Nadar, explains that for many women, blogs are the gateway to photography. “When they see nice photos on other people’s blogs, they find out that they were taken with single-lens reflex cameras and think, ‘I’d like to try that too.’”

For others, it’s a more simple case of outgrowing easy-to-use, but very basic compact cameras for photos of their travels, hobbies or children. “The photos I took with my digital (compact) camera weren’t so great,” says Shoko Shibata, a mother of a one-year-old in her 30s who recently began photography classes at Nadar. “I go out on walks more now that I have a child so I take many photos then.”

UN Women – catchy name, shame about the budget

UN Women – catchy name, shame about the budget
February 10, 2011 — London
Writer: Sophie Arie

The UN’s new agency – UN Women – is slowly cranking into gear. But while it has a dynamic leader, a shiny new logo – a pictorial blend of a female gender symbol and the UN’s global map – and a launch party scheduled for later this month, it still lacks proper funding.

There’s a lot of hope and quite a bit of fanfare surrounding this mission. It is widely agreed by UN member countries that the organisation has done little for women and gender equality in the developing world, and that a high-profile agency with real clout and global impact is long overdue. 

UN Women aims to help formulate new policies and global standards on equality and women’s rights and to monitor and support member countries in their efforts to meet those standards.

A lot of thought has gone into the image of the new agency, which brings together four smaller units – UNIFEM, CEDAW, INSTRAW, OSAGI – all of which have been targeting women’s issues for years but are not widely known.

The UN has broken from its tradition of naming organisations with acronyms. Technically this is the UN Entity for Gender Equality and the Empowerment of Women. “UN Women”, however, states its purpose much more powerfully, and will probably register with more people than “UNEGEEW”.  

The head of this new entity, former Chilean president Michelle Bachelet, is widely respected in the international community and has the rank of under-secretary general, meaning she will have a seat at the highest UN tables.

“This is about leadership. And about articulating what we do much more clearly,” says Moez Doraid, UN Women’s interim head of operations.

It is also about making the UN more efficient. “In this era of financial crisis, this is as much about consolidation as it is about creating something new,” he says.

The agency was created with the unanimous support of UN member countries after decades of debate, and it has a $500m (€366m) budget for its inaugural year.

Only three per cent of that comes from the UN – the rest has been pledged voluntarily by 100 countries, with Spain, Norway the UK, US, Canada and Sweden being the most generous.

Much of the funding is yet to arrive but when it does, $500m looks rather measly. UN Women will still be tiny compared to the major UN agencies such as Unicef (which had a budget of $3.25bn/€2.3bn in 2009) and UNDP (which had $4.77bn/€3.50bn the same year).

It remains to be seen if the rebrand we’ve seen so far can produce the desired results without a bigger injection of cash. 

Sophie Arie is a Monocle contributing editor based in London

Private equity is a man's world... seriously

Fortune
Term Sheet. The latest on private equity, M&A, deals and movements — from Wall Street to Silicon Valley
Private equity is a man's world... seriously
Posted by Dan Primack
February 8, 2011 4:50 pm

Are you a woman who wants to succeed in private equity? Here's some free advice: Learn about sports. And don't get pregnant. In fact, it might be best to project an active antagonism toward motherhood.

Those are the depressing findings of a new study by Catherine Turco, titled: Cultural Foundations of Tokenism : Evidence from the Leveraged Buyout Industry.

Turco was a Baker Scholar at Harvard Business School, and currently is a graduate student in the university's sociology department (the study was published by the American Sociological Review).

Her original goal was to examine occupational structure and workplace dynamics in the private equity industry, but she soon changed gears to focus specifically on the experiences of women and African-American men. Both are severe minorities in private equity, which each representing less than 10% of the total professional workforce (a lower figure than in corporate law or investment banking).

What Turco found was that while both groups face serious structural barriers at the outset (i.e., getting a foot in the door), women face far greater cultural challenges.

Before continuing, I cringed a bit at the thesis (our oppression is worse than your oppression). And Turco explicitly acknowledges the prospect for her own biases, being a white female. She notes, however, that African-American women she interviewed also felt that their gender was more relevant than their race within private equity firms. Moreover, Turco says that many African-American men openly discussed personal experiences of racism within their professional lives, thus making Turco more confident that she wasn't only getting one side of the story.

So what is it about being a women that's so problematic within private equity firms?

Turco identifies two primary factors: The first is a knowledge and love of sports. Take a look at the following two quotes from people Turco interviewed -- the first is an African-American man, the second is a woman:

''Sports was the sieve through which I could connect and bond. They had firm sports teams like baseball and basketball. . . . It was really like a locker room. It had that sort of camaraderie. At night in the office, a senior guy would come out and yell 'Stop working. Let's arm wrestle.' and people would start placing bets. . . . You'd get all these goofy competitive things going.''

''There are guys at the firm who play basketball together, and I'm never invited. I know they do serious bonding and then they talk about it on Monday at work. . . . I don't play basketball so if they asked I wouldn't go. But I hate it because I'm missing an opportunity to connect.''

Turco also mentioned that "women who never followed sports before entering [private equity] reported watching SportsCenter or checking ESPN.com regularly now."

There obviously is an implicit assumption here -- that men are into sports and women aren't. There obviously are exceptions to both, which is why Turco's second cultural factor is much more compelling: Motherhood (or the potential for motherhood).

Turco argues that the private equity ideal is someone who puts work above all else, and that most male private equity pros find that to be inherently incompatible with motherhood (even if the mother has multiple paid caregivers or a stay-at-home husband). This is despite the fact, she says, that private equity pros travel less and work shorter days than do their peers in the investment banking, law or consulting worlds. In other words, it's the idea of motherhood that offends, rather than its actual demands.

Some troubling excerpts:

One pregnant respondent described a recent incident with her boss: ''He turned to me and lashed out and said, 'Are you even going to come back? I guess you won't even tell us if you're not. You're probably going to stay home and play with the baby.' He was angry. . . . He had asked me three or four times before if I was coming back to work and I always said, 'I'm definitely working.'. . . For him to ask again, to say it like he made up his mind already, I just know that now he doesn't view me as being as valuable as someone who doesn't have kids.''

Several described incidents in which women were fired or involuntarily transferred to non-deal roles after announcing they were pregnant. One woman said, ''I call each of my kids my 'million dollar babies' because of how much each of them has cost me.''

Statements by recruiters and male LBO investors corroborate women's accounts. One recruiter admitted that up to 20 percent of LBO firms direct her not to send female applicants because ''they'll get pregnant andthey don't want to have to deal with it.'' Of the eight African American men who stated that gender was a bigger obstacle than race in LBO, six mentioned motherhood in their explanations.

Private equity firms, for the most part, are small partnerships. Often they are born of existing relationships, and it's difficult to join if you aren't already "in the club." I get it, and there isn't necessarily anything wrong with that.

But private equity has a serious problem if it cannot adequately incorporate "others" when it comes time to expand. Women obviously should not be second-class citizens within their own firms or, even worse, be excluded from the hiring process altogether. Private equity firms may have come a long way from the days in which it was literally impossible to find a female partner, but it has not come nearly far enough. The core culture must evolve, not just the payroll demographics.

Baby Gear Maker Skip Hop Pushes Beyond Target and Pottery Barn

Bloomberg
Baby Gear Maker Skip Hop Pushes Beyond Target and Pottery Barn
By Karen E. Klein - Feb 8, 2011 7:23 AM PT

A few months after her first baby was born in 2000, Ellen Diamant had a business idea that might seem obvious to any parent who has ever struggled to carry a diaper bag while maneuvering infant, stroller, and packages: a new design that would attach to the stroller, making the bag’s contents easily accessible.

Over the next year, Diamant, an art director and graphic designer who had worked in the fashion and publishing industries, began sketching a new kind of bag, one with special stroller attachment clips and a contemporary look that was miles from what she calls “Winnie-the-Pooh styling.”

By 2002, Ellen had a prototype she dubbed the Duo Diaper Bag that she tested with friends and colleagues. By the next year the bag was popular with local mothers clubs and play groups Ellen visited. The product’s success persuaded Ellen and her husband, Michael, a serial entrepreneur who built his first successful Web design company in the early 1990s, to launch Skip Hop in the fall of 2003 to design, manufacture, and sell an expanded line of products for parents, from diaper bags to toys and nursery bedding.

The couple invested $50,000 to get the company started -- despite having lost $500,000 on Michael’s second business venture, iClips, a year earlier. The failure of that company -- an early video-sharing site -- was difficult. “You feel like you don’t know what’s going to happen, you can’t pay your vendors, you’re laying people off,” Michael recalls. Along with their own investment, iClips lost more than $6.5 million in venture capital and money from friends and family. “It’s awkward at dinner, at least for a few years,” he says.

Today Skip Hop employs 31 and sells a range of product types to specialty, chain, and online retailers in the U.S. and overseas, including branded lines at Target and co- branded toys and bags at Pottery Barn Kids. Ellen says the New York City company had $20 million in revenue in 2010 and projects $25 million this year, a quarter from international sales.

MORE IMPACT THAN YOU’D EXPECT

Small, nimble innovators such as Skip Hop have had an outsize impact on the juvenile market, says Ali Wing, the founder of baby products retailer Giggle. For years, the baby industry was dominated by huge corporate players and tiny neighborhood boutiques. “To have designers who can bring innovations to market, with the greater scale and replication Skip Hop has achieved, has forced change on the larger market,” she says.

Gartner analyst Janet Suleski sees this juvenile products market growing, particularly in “emerging economies such as China, Brazil, India, and some smaller markets, such as Turkey.” She notes that smaller competitors can be more nimble than larger competitors, bringing products to market more quickly. “What smaller companies lack, however, is supply chain power to mass-produce large numbers of those innovative items quickly, so it may not be possible to meet the full demand,” she says.

Early on, the Diamants introduced the $49.99 Duo at a New York City trade show. It was an immediate hit, with a dozen retailers signing on to carry it. Michael didn’t take long to realize that baby products had gone global via the Internet: “You bring a new product to market, and moms get excited about it, and the whole world knows about it tomorrow.” The company spent at least $100,000 for a high-quality online presence, including photography, advertising, branding, and a Web store. Ellen says she drew on her publishing background to put a professional face on the company’s look and feel. “We wanted to be trendsetters,” she says. “We didn’t want to look like a mom-and-pop, which does not inspire confidence.”

Other than establishing a robust online presence, Michael Diamant says driving Skip Hop’s overseas sales is about finding strong distributors, vetting them, and granting them exclusive sales rights. “A good distributor for us has other lines we respect and is already selling to retailers we like. When we research a market, we find out what the big four retailers are, what brands they carry, whether the distributor sells there, and what kind of volume they’re doing,” he says. He adds that setting up yearly minimum sales is an important spur for distributors to invest in the Skip Hop brand. “The distributor has to spend money to promote you, and you have to give them time to build the business. If you become known as a good supplier, the word spreads.”

KEY STEP: DISTRIBUTION IN CHINA

Pricing is also crucial to Skip Hop’s overseas sales, especially since many of its products are subject to duty rates as high as 18 percent. A few years ago, Skip Hop opened a distribution center in China, where its products are manufactured. That allows distributors to retrieve product in China rather than having it shipped to the U.S. and then back overseas again. “I used to have to charge 20 percent more to cover shipping and U.S. duties, and the price of the bag went up to $90 in Europe. You don’t want to be an expensive import. You want to be competitive,” Michael says.

Of course, selling overseas is as frustrating as it is lucrative for Skip Hop. “We exceed the safety laws in the U.S., but some markets don’t have laws, and retailers set their own rules that don’t meet any known standards,” he says. “These retailers want you to do specialized tests, which get very expensive.” Brand knockoffs are a particular problem in China, where copy-cat Skip Hop products hit the streets before the real thing hits the shelves. The company hires shoppers to purchase the knockoffs from “shady characters,” Michael says, and they bring the evidence to local authorities, who will usually shut counterfeiters down.

Selling in 54 countries means having to use dynamic tactics to stanch intellectual property theft, Ellen says. The company applies for international patents and uses technology available through such online retailers as eBay and Alibaba.com to foil thieves. It relies on its overseas distributors to report knockoffs, but they are still common. “It happens all the time. All we can do is hope that our branding is what people really want,” Ellen says. The company’s top overseas markets are in the U.K., Spain, and Japan, but its products are sold in such far-flung places as Dubai and Poland.

Although many small business owners grumble about government regulation and business laws, Michael says selling overseas has made him grateful for countries with strong protections and legal remedies. “If a New Zealand Costco is carrying counterfeits, we can send them a letter, and they’ll pull them off the shelves the next day,” he says. “I want the rules. They work for me.”

In the long term, the Diamants hope to maintain the 40 percent growth they’ve achieved in recent years. They plan to localize websites better for their top international markets, and Ellen is working on designs for products that may not sell well in the U.S. but are big sellers overseas. For instance, a European distributor recently asked for Skip Hop “reins,” the kind of leash attachments for wayward toddlers that are not terribly popular in the U.S. but are used widely in Europe. Skip Hop is also working on bedding that matches international mattress and crib sizes that differ from American standards. “We want to round out our categories to offer overall solutions for parents, so we’re a one- stop solution for bath, bedding, toys, and on-the-go categories,” Ellen says.

To contact the reporter on this story: Karen E. Klein at karen@kareneklein.com

To contact the editor responsible for this story: Nick Leiber at nleiber@bloomberg.net