Building on Friday’s post about the four different classes of competition in the FP market, today we’re going to have a detailed look at the first two and explore how these firms are changing the market and improving the welfare of consumers. On Friday, we’ll have a closer look at the competitive firms and next Monday we’ll finish with the uncompetitive class.
To recap, disruption is when a new product changes the marketplace: its value proposition is so compelling that other products – products that once seemed like a good deal – become much less appealing to consumers. This generally involves a technological advance that allows a particular feature to be mass-produced at a lower cost than what was previously possible. Twsbi’s piston and vacuum filling systems and Noodlers flexible music nibs are great advances in reducing costs and making features more affordable for consumers. Consumers shift their spending to the better-value product, and the other firms in the market see sales fall, and have to react. So disruption is generally a case of winners and losers: the disruptive firm and consumers end up better off, but the rest of the market is worse off and forced to improve.
The nature of competition generally means that this advance is not confined to one firm for long: soon enough, other firms figure out the technological advance and are able to imitate, even improve on the advance. But their refinements are only a marginal (not transformative) advance and the original product remains competitive; this is the process of innovation, where features are improved and refine to become more appealing, more useful, or less costly.
I also want to note here that there is a difference between invention and innovation: invention is creating or discovering something new; innovation is the process of refining it an invention, making it useful, and bringing it to market. My focus is on innovation because companies can take the same invention and develop it in different ways, which consumers will value differently. Swapping a waxed thread for an o-ring might not seem like innovation, but if it better prevents leakage and enhances the user experience, it’s increasing the pen’s usefulness and is therefore increasing its value to the consumer. Minor, incremental improvements can have a huge effect on satisfaction and we shouldn’t dismiss this work because its innovative rather than inventive.
A lot of people are passionate about Noodlers but I am pretty underwhelmed by them from a business perspective. Their development of low-cost flex nib fountain pens (Creaper, $14; Ahab, $20; Konrad, $40) has been one of the most transformative changes in the market over the past decade, and last year’s release of the flex music nib (Neponset, $75) continued that work. All of these products have been dogged by serious product quality issues, with some users (myself included) choosing to avoid them until its possible to buy a pen have some certainty that it’ll work out of the box.
Noodlers is also one of the only ink manufacturers investing in genuinely innovative products, particularly in the development of permanent inks (which is particularly important in the US, where cheques – bizarrely – are still a common form of payment) and other specialty features. The inks have also been dogged by quality concerns, with some pen restorers claiming that they can destroy vintage pen sacs.
But while they are undoubtedly a creative and innovative force in the industry, everything else about the business (such as their production, quality control, distribution and marketing) leaves much to be desired. From an outsider’s perspective, I can’t see any clear strategy for how to develop the business and it certainly seems like the man behind Noodlers, Nathan Tardif, could use an effective business manager to sort out these issues – and give Nathan more time to focus on what he does best. Unfortunately, these issues mean that Noodlers struggles to get by and to keep up with demand, so the impact that the company has had on the market has been much more limited than it might otherwise have been.
As I’ve said before, I think Twsbi is the most interesting and innovative brand in the FP market and definitely a force for improving consumer welfare. They are the market leaders in the intermediate product tier, with the 580 ($50-60) and 700 ($65) series pens bringing piston- and vacuum-fillers down from the advanced and premium tiers to well below $100. These pens are excellent value for money and the much-anticipated Eco is likely to have a similar effect, bringing pistons down to the entry-level tier and hopefully giving Twsbi the cash to invest in even more R&D and innovation.
Twsbi has struggled in the past with quality control on their products; I understand that the Eco’s development has been longer than usual because of the brand’s desire to ensure that it doesn’t suffer from those same problems. If they can achieve this, Twsbi seems well placed to remain as one of the market leaders for years to come.
Together, Noodlers and Twsbi have managed to reinvigorate competition in a part of the market that is often overlooked by the bigger brands. My hope is that their success demonstrates to other brands that latent (unmet) demand exists for innovative products at lower price points, and that it’s worth exploring the potential for developing new products to compete in this space.
Edison might be the least well-known of the five brands but they might also be the most creative. There are quite a few custom pen makers in the market, offering a range of acrylic- and wood-based designs, but Edison appears to be the only one to have thought about the functionality of their products as writing instruments, and not simply the visual appeal. Edison nibs are certainly well regarded but their real strength in innovation is the range of filling systems. To my knowledge, they are the only modern pen manufacturer offering a choice of bulb, pump and eyedroppers.
Unfortunately, those unique filling systems don’t come cheap: with a gold nib, these pens cost around $450 and this places them in the same range as brands like Delta, Graf von Faber-Castell, Omas, and Visconti. That’s a hard sell, and probably limits their market to users who probably already have several of these pens and have started searching for something different.
While they are a company with an excellent reputation and growing volume, my main worry about Edison is that I don’t get the sense that there is a goal or a clear sense of direction for where the company is going. They are in an enviable position now, but sustaining that – even developing into a disruptive firm that can really dominate a particular space in the market – is going to require more of a strategy and direction. (This is something that I will expand on in a future post.)
If nothing else, Edison has demonstrated that there is interest and demand for unique filling systems in the community – a fact that might be missed amongst all of the converters and pistons.
Perhaps more surprising than the emergence of new products at the cheaper end of the market is the niche that Nakaya has filled with premium, hand-made pens. I can’t imagine how brave it was for the guys behind Nakaya to look at the premium space – dominated as it was by the Montblanc special editions and luxury maisons like Hermes and Louis Vuitton – and decide that there was enough latent demand to justify an investment. And yet, they were certainly right: Nakaya’s urushi pens start around $500 and escalate well into the four-figure range, with the company barely able to keep up with demand.
Nakaya’s success has demonstrated that the recent increase in demand for FPs extends to both ends of the pricing spectrum, and it’s possible to build a successful business on slowly producing high-quality and extremely artistic products.
Finally, the brand for which I have a sentimental weakness. As I mentioned in my review of the Visconti Homo Sapiens, Visconti’s quality control is not excellent. I’ve had problems with nibs, problems with clips, problems with piston knobs; and yet, it doesn’t really diminish how I feel about the brand. The strength of their innovation can be seen both through the design of their products and the choice of materials.
For anyone who has seen the Visconti Divina Elegance, Opera Master demonstrator or the Wall Street, it’s clear that Visconti make products with a design aesthetic unlike anything else in the market. Comparing the Visconti range to other brands in the premium space – particularly Pelikan and Montblanc, the other dominant European manufacturers – and the competition starts to look really rather conservative, even plain. And the cap locking mechanism is, hands down, the absolute best of any pen in the market. Visconti’s choice of materials is also innovative: the lava-based material that is used on the Homo Sapiens quite rightly inspires lust and devotion across the community, and the decision to use palladium has led to nibs that soft, wet, and perhaps the most pleasing available today.
They are far from a perfect company – with product quality a persistent concern, and a price range that makes it difficult for many users to access the brand – but they have demonstrated a flair for product design and an innovative use of materials that provides enormous value to consumers, and has won them a committed and enthusiastic customer base.
What do these firms have in common? With the exception of Visconti (at 27 years), they are all relatively young and can’t rest on their reputation like many of the longer-established brands. Instead, they have to go out and win business by providing value to consumers, they have to stand out by doing something differently: cheaper production, unique materials, filling systems, design aesthetic, etc. These companies have proven to be market leaders by offering more value to consumers than the other products that are available and by filling the empty niches of the market. And quite rightly, each one of them is beloved by their core customer base.
Every other FP manufacturer ought to be looking at these brands and trying to understand the value that they provide to consumers, and how they too can develop innovative products. My sincere hope is that the success of these brands demonstrates that the opportunities in this market are greater than has been assumed in the past, and that investments in new products are more likely to pay off than at any time in the last few decades. And the simple commercial reality is that, unless you innovate, you’re going to lose market share to those who do.
If you want to have a conversation about your business and the challenges you’re facing, you’re more than welcome to get in touch.