In 1998, Ethan Nyholm, then aged 28, and Adina Jacobs, then 23, left positions in the fashion industry to pitch a product they thought could be a hit.
They were right. Today, the company they founded, STM Bags, makes over $10 million a year selling the bags and gadget cases they design and then have manufactured in China. It employs 29 people across five countries, and is set to grow its gross revenues by around 50% this year.
The pair spoke to SmartCompany from their Sydney office about their inspiration, their first big break, and their ambitious plans for growth.
Ethan and I were both working for fashion companies in the late 1990s. He bought a laptop and couldn’t find a bag for it that suited his lifestyle. He wanted a backpack. So he bought a padded envelope from the post office, put his laptop in it, and would carry that around in a backpack.
So we thought, wouldn’t it be great to have that already in a backpack?
We came up with two solutions – a shoulder bag and a back pack. We thought, ‘it’s brilliant, everyone will want one’. We started walking the streets of Sydney, going into every luggage or computer store.
We realised a lot of the PC companies were giving away the laptop case with the laptop. So a lot of people in typical consumer electronics stores couldn’t buy a bag for their laptop.
But there was a gap for Apple users. We came in carrying a solution that aesthetically suited the product. And they were willing to spend more.
Our big break was PricewaterhouseCoopers. We approached them, but the person who got back to us wasn’t the IT person – it was their OH&S department. Turned out their people were walking long distances and having to carry a heavy shoulder-bag. It wasn’t helping them. So they ended up with back problems.
We sold them our bags, and all of a sudden, we had all these people walking around the CBD with our backpacks. That really helped us a lot.
Now, we make bags as well as moulded and fitted cases specifically designed for various devices. The bags have a longer lead time – they last longer in the market and take a long time to make. With cases, everything happens a lot quicker.
The industry changes so quickly that the second you put a barrier to communications, the moment you put up hierarchy, you limit the ability of people to make decisions and contribute. We allow everyone to participate in the decision-making process and in developing our products. We don’t want to create disconnect. We allow our people to take ownership.
People are our best asset at the end of the day. So when we interview for new roles, the first thing we do is take a gut read on whether the person will fit in or not. We ask them questions about their sense of humour, what they like to eat – different things to get a feel for them as a person.
That flat structure allows people from logistics to sales to provide feedback and that goes into the cases we develop. When we started, we only worked around Apple devices and laptops. But someone here started using Samsung. And he was in a fantastic position to help us out.
We’re trying to separate ourselves from the pure technology brands to being a lifestyle brand. In the beginning, bags were accessories to devices. Now that everyone carries multiple devices, it’s important to have carrying solutions that allow you to use your devices while protecting them. We want to be recognised as the solution to make digital life easier.
That’s our biggest challenge over the next 12-18 months – communicating ourselves so we’re not just another bag-maker. It’s a super-competitive market. But we believe we have really great product. We believe it enhances the use of the device, and makes your life easier. But that’s why we’re talking about separating ourselves from the crowd – about creating a brand.
Myriam Robin is a media reporter at Crikey. She’s an economics graduate who previously reported on business for LeadingCompany and SmartCompany.
