Brand Analysis: Noodlers Ink

Anyone who has been involved with the online FP community has heard of Noodlers Ink and will have some idea of just how different they are to most businesses. Even the most basic assumption about a firm – that they are profit-maximising – has to be suspended here. Some users swear by their products while others, including some prominent nibmeisters and reviewers, have concerns about product quality and warn against their use. More so than any other brand, Noodlers inspires passionate debate and today – in the first post of two on Noodlers – we’ll have a look at the business and their place in the market.

Noodlers is known primarily for its enormous range of inks, offering more than 100 different colours, more than any other ink manufacturer in the market (even Diamine). Some of these inks have special qualities that are particularly useful to some users: archival, fadeproof, waterproof, forge-resistant, etc. If there’s a specific quality you need, Noodlers have it. They are also known for their low-cost, piston-filling fountain pens. Retailing from $20, the pens come with flexible steel nibs and are designed for modification, making them hugely popular amongst advanced users who want to tinker, experiment, and even learn how to grind their own nibs.

The popularity of these products is partly due to their uniquity in the market: I don’t know of any other brand that offers ink which glows in the dark or that won’t freeze in frigid winter temperatures, let alone available for less than US$15: well below the price of many standard inks from other brands. Similarly, the Neponset fountain pen is the only modern, flexible music nib that I know of, and is quite reasonably priced at $75. This low-price approach has won Noodlers a lot of loyal fans.

Such innovativeness benefits us all, even those of us who don’t use Noodlers products. On the one hand, it’s showing other brands that there is a market for new and imaginative products; on the other hand, it forces brands to justify high prices to users. It’s not a problem to charge $20 or $25 for a bottle of ink, but it has to offer something more when Noodlers is potentially available for half of that price.

The creativity (and, indeed, the disruptive attitude) and is entirely due to the founder, Nathan Tardif, who seems to be at least as controversial as the brand – perhaps unsurprisingly, given that they are apparently inseparable entities. Tardif’s creativity and determination to push the boundaries of what is possible in the market is why I included the firm as one of the two most disruptive forces in the marketearlier this year.

Part of the controversy stems from Tardif’s strongly-held political views and his tendency to use Noodlers as a platform to communicate and advocate those views. You can get a sense of the views from some of the product names: the Bernanke ink, named after Ben Bernanke for the program of qualitative easing and featuring fast-drying ink, or Brown 41, an ink named for a US senator in Tardif’s home state whose election gave a majority to the Republican party. Another interesting example are the Baystate inks, in which the bottle design features a catfish spitting on the statehouse (state congress/parliament). While many of the products are named for historical events or broad principles, the small minority of inks that are antagonistic – those fiercely promote libertarianism or agitate against government rule, whether US or Chinese – are the ones that get people’s attention and become the centre of debates.

While some users obviously respect Tardif’s willingness to put his beliefs on the line, other users – even those who share his politics – are understandably put off by their overt nature. And some users, like one commenter on reddit, simply aren’t willing to support a business that has a particular set of beliefs. It brings up the question of whether it’s a good idea to mix business and politics; Tardif obviously feels that the success of his business is secondary to the promotion of his beliefs. It’s an interesting position to hold, and one of the reasons why Noodlers is so unconventional.

It’s not the only controversial part of the business. Quality has become a major concern in recent years, particularly as some nibmeisters and a major reviewer have warned against the use of Noodlers ink in vintage pens. The problem seems to be that some inks, in some circumstances, seems to be melting the ink sacs inside the pens. Other nibmeisters have pushed back against the claim but it is obviously something that affects some people’s willingness to use Noodlers products.

Quality control of the pens is another common concern. Despite the all-American patriot branding of Noodlers, pen production seems to be outsourced to India and it’s perhaps not surprising that QC seems to be lacking. In my experience, all Indian (and Chinese) FP production seems to suffer from these problems. Although a couple of retailers told me that they felt the concerns expressed online don’t match the frequency of problems they see, another told me they no longer carry Noodlers because of the number of headaches. Another still carries the line, but said they had considered whether it was worthwhile. While it’s unclear how bad the QC problems are, retailers and users are obviously aware that problems exist and are perhaps more wary of Noodlers pens than other brands.

Perhaps the most consistent problem is production, both of pens and ink. Certain products can be unavailable for weeks or months at a time (particularly internationally) with little communication about when they will become available or in what quantity. Stories abound of retailers finally receiving a shipment of a particular product after waiting for months, only to learn that it’s not even enough to cover their backorders. Concerningly, Noodlers (or its distributor, Luxury Brands USA) appears to play a game of favourites with retailers, a dangerous thing for any brand.

These production issues have an easy explanation: I’m told that all of the ink is made by Tardif himself, all 100+ colours. I’m not sure what is his production capacity but I’m stunned that he can produce as much ink as he does, let alone sustain it for years while also making time to develop new colours, new ink features, and products like the Neponset. No doubt, it’s a huge job and consequently, the delays aren’t surprising.

What is surprising is that he doesn’t take on additional staff. I’ve heard and read various explanations for this – the cost and burden of taking on staff in his jurisdiction is too high, it’s a political stance, it’s to protect trade secrets, that Tardif is paranoid, etc. – but whatever the reason, it’s costing Noodlers a huge amount in forgone revenue. And that is causing harm to his business, it’s reputation, retailers, and users who cannot access products they want to buy.

To me, it also shows that Noodlers’ greatest asset – Tardif himself – is also its biggest liability. His creativity and innovation is what makes the company so popular but the blurred lines between the man and the business is what is holding it back from becoming a great company.

Tardif has the same issue that comes up in many small businesses: the owner is an expert – perhaps an artist in this case – in a technical field, but simply lacks the knowledge, ability, or willingness to run the business as a business. That is, as a profit-maximising endeavour and not a personal hobby. Everything I’ve heard and read tells me that Tardif is in this group of small businesspeople who are at their best in their vocation: experimenting and pursuing the innovation that established Noodlers rather than handling the routine tasks that sustain the business.

My big worry in a situation like this isn’t that the business is missing out on sales and profits (though it is), nor that the community is missing out on potential innovations from a more focussed Tardif (though it is) but burnout: the risk that Tardif reaches a point where he is psychologically exhausted, and is unwilling to carry on. Taking on too much work, too much stress, for too long – particularly when the money is not that great – makes a business unsustainable. At some point, it just becomes too much – and then what?

The best-case scenario is that the business and the ink recipes are sold to someone else or another company, and production is resumed after a short break. Personally, I’m not sure if I could see Tardif doing this: surrendering control doesn’t seem his style. The worst-case scenario is that he retires and so does Noodlers; for many in the community, that is an unthinkable outcome. But the longer Noodlers goes on as a one-man operation, working long hours and carrying a heavy load of stress, the more likely burnout becomes.

In this analysis, I’ve tried to give my assessment of Noodlers strengths, its weaknesses, and a possible (though not necessarily likely) scenario for its future. In the second part of this post (to be published in a week’s time), we’ll look at one potential strategy for how to build the business up and set it on a sustainable footing. 

Part 2

Last week’s post on Noodlers Ink spurred an interesting discussion on reddit and several commenters made an important point: there’s no requirement for Noodlers to be run as a profit-maximising firm. I completely agree with this; the owner of Noodlers, Nathan Tardif, is free to run the business as he pleases. The intention of that post wasn’t to be critical of those choices but to explore their implications. Today, however, I do want to get critical.

One of the most powerful things I’ve learned from economics and philosophy is that it isn’t enough to say something is good or bad on its own. Rather, we need to map out all of the costs and benefits – all of the pros and cons – and compare those to the most appealing, realistic alternative. For example, we can probably all agreement that democracy has some serious flaws, but its still a good system of governance because the benefits are greater and the costs lower than an alternative system.

I hope that my previous post didn’t come across as pushing a particular view, because the intention was to map out the pros and cons of running Noodlers in that particular way. There are some good features (cheap inks, huge range) and some bad features (quality and supply issues), but overall we can’t make a judgement about whether it’s preferable without looking at an alternative. In today’s post, we’ll explore what an alternative might look like, and use that as a foundation to compare the two and to consider who would benefit and who would lose out if Noodlers were to be run competitively.

To ensure that our comparison is somewhat realistic (and take that particular claim with a grain of salt), we’ll start by considering an alternative strategy for the business. The foundation of this strategy is my claim in Part 1 that Tardif’s real strength is innovation rather than business management. That’s no criticism of him, either: there are a lot of qualified business managers in the world but I don’t know of anyone else with his skills and expertise. With that in mind, the core of the strategy is replacing Tardif with someone who can take over the day-to-day management of the business, enabling Tardif to move away from management and ink production to focus entirely on indulging his creativity.

Of course, running that business is going to be a challenge, even if Tardif did take an entirely hands-off approach: there’s a truly humungous product range, quality concerns (whether justified or not, the concerns exist), supply issues, and retailers who struggle with the brand. Most challenging of all is that Noodlers probably comes close to breaking even, and it’s been said that the business runs at a loss for some products. The upside is that most consumers are extremely loyal to the brand and there isn’t a great deal of competition in the market; in other words, there’s breathing space in which changes can be made.

Breathing space is important because the business is trying to do too much with too little. I don’t think anyone is surprised that a business with one employee and 100+ inks is struggling to maintain a consistent supply. Noodlers needs to focus on doing less but doing it well. Insanely well.

To do that, I’d start out by identifying a small range of products that are popular and have high margins – a selection of inks, maybe eight in total – and stop producing everything else. Once Noodlers isn’t trying to do as much, isn’t trying to do more than it can possibly manage, there is time and energy to focus on the intensive, behind-the-scenes work of building a business.

To build the business, to make it large enough to survive Tardif’s retirement (or burnout), it needs to grow. The past approach put a lot of emphasis on growing the number of product lines, but this hasn’t led to sustainable growth. It’s just left Tardif overworked and led to the supply issues. The alternative is to have a small number of product lines and produce as many identical products as possible. To achieve this means focusing on three key areas: capacity, distribution, quality.

To increase capacity, the business needs staff and it needs a large facility. Finding staff – good staff, who can trusted and will stay with the business – is hard and it’s slow. Once they’re found, it takes time to train them up and start developing the skills and nous that can only come with experience. Alongside that, the business needs to find new premises: a facility that can handle a much higher workload that Noodlers has previously experienced, with space for production, product despatch, a lab/workshop, and some offices. Finding a good space and having it fitted out is another time-consuming task, after which staff will take a while to adjust and get familiar with things. While this stage can be frustratingly slow, it is the necessary building blocks of growing the business.

As production capacity grows, the business needs to reconsider its approach to distribution. Playing favourites with retailers – providing a full range of stock to some retailers, partial or intermittent supply to others, and leaving a few with the scraps (if anything) – is a terrible way to treat people that actually want to sell your product. Much less encourage them to promote the product over the other inks that they keep in stock. There need to be discussions with retailers, one at a time, to develop and grow relationships: to learn their businesses, their customers, and their needs. This is probably easier than it sounds, even when a relationship has been bad in the past: both parties want to make things work and retailers are usually pretty happy to be honest and open with manufacturers. They’ll happily talk about their customers, their products, how much inventory they can carry, how quickly they need restocking, how much notice they like to have for new products. These conversations can take place as production capacity is growing, retailers can be given assurances about a reliable supply, and a solid distribution network can be established and gradually grown.

Capacity and distribution need to be grown in parallel to ensure that production levels are equal to demand. A gradual approach also works because it enables staff to gradually become more experienced, the systems to be tweaked, and minimises the operational loss that the business is running. Growing sales means the business starts to enjoy some economies of scale, where the average cost of making each bottle of ink falls further and further and increasing the business’ profits more and more.

Once the business is in a position where everything is humming along nicely, it’s time to scale up further and start looking to international distributors. Right now, very few retailers outside the US are able to get any supply, which limits the potential size of the business and the potential benefits from economies of scale. Building the international business means costs can be pushed down even further, increasing profits and strengthening the business without raising prices or making consumers any worse off.

Once the international business is on a solid footing, I would begin thinking about bringing back some of the old products. The first step for me would be finding a reputable chemical laboratory, asking them to test the ink quality and publishing the results online. If the results are good, it will silence the brand’s critics and if the results are bad, it’s a sign that the ink formulation needs to change: something users deserve to know. Once the ink is reformulated, it’s back to the lab. An independent, transparent report goes a long way towards building up and reinforcing the trust of customers. At this point, I’d also consider rebranding the business: same name, but a new logo and ‘design identity’, as the marketing folks say.

From that point, inks can be gradually brought back to market in a way that ensures a reliable supply. An eye should be kept on the profitability of each ink, ensuring that the production facilities are being used to maximise the business’ revenue, and that no new ink is simply cannibalising sales of other inks.

A turnaround like this is a slow process; I expect it would take at least two years to get to the point where the old inks could be brought back. The company would be very different: it would be selling a lot more bottles of ink but offer fewer colours, it would almost certainly be a quite profitable venture and therefore a sustainable business, and it would undoubtedly be more innovative once Tardif was liberated from having his energy drained by business management. Prices for consumers might be higher, but the business would still focus on a high-volume/low-cost strategy so the products would still be quite cheap.

So the real question is whether this competitive scenario is preferable to the current business model. For Tardif, the overall answer seems likely to be yes: he gives up operational management but retains overall control, and has more time and resources available for creation and innovation. He also gives up political expression through his products, but instead receives profits that he can channel into other forms of political expression – ones that may be more effective. Importantly, his quality of life and wellbeing improves as the business becomes more profitable and the stress starts to fall on others.

For the distributors and retailers, the competitive scenario is undoubtedly better in the long run: improved relationships, improved supply, and a product that’s easier to shift. For consumers, there is some pain: the loss of many product lines for a year or two (or longer), then a reduced range. On the flipside, however, there is greater availability and a secure, long-term supply, but also the potential benefits of Tardif’s innovation. Imagine the Neponset if it had arrived after a year or two, instead of five: what else could have been produced? Finally, there are the staff whose jobs are created when the business grows. These people are undoubtedly better off in the competitive scenario.

So, it is obvious that a competitive business is my preference. Of course, it would not be easy to build and transform a business: it would require substantial investment, and there would be many challenges and setbacks along the way. But I think that there are substantial long-term benefits to everyone in the community and while the costs are real, they are comparatively minor. And so I hope that this – or some version of it – comes to fruition.

Tags: