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Breaking the Molds
By Sean Roth
Real Estate Editor
Through a twist of fate, you are given a specialty coating more effective than others on the market. Do you build a business around the coating, sell it off or ignore it?
Bill Cooke, a Sarasota businessman, faced that very question. The result is the 14-month-old startup, UniqueShield Products LLC, which has one product: Unique Shield, a specialty coating.
Like duct tape, the possible uses for Unique Shield are mind boggling. The nontoxic adhesive can be applied to any solid product in about 15 minutes, sealing the product with a clear waterproof plastic coating. The coating prevents rust, mold, dry rot and corrosion and significantly reduces ultraviolet damage. Even more uses are being researched and tested, such as its ability to reduce tire damage.
Except for two small niche companies in the Midwest and on the West Coast, Unique Shield is unique. None of the big guys in the coating industry, including Sherwin-Williams and Benjamin Moore & Co., offer a nontoxic product for such a wide range of uses. So for the moment the market appears wide open.
iThey all have products that do compete with us, but not in its entirety,i says Bill McKinlay, chief operating officer of UniqueShield. iThey have rust and water inhibitors and mold inhibitors, but they canit offer the total package.i
Cookeis friend Stan Gleeson created the product. Gleeson, described by friends as an eccentric inventor, discovered the original formula for Unique Shield, which he named Flexi-Gloss, in 1974. Gleeson had been trying to find a substance to stop the proliferation of graffiti.
Although Gleesonis product offers some graffiti protection, Gleeson decided to use it on boats and upholstery. He used the product for almost 19 years in his vinyl/leather repair business. Incidentally while Gleeson was working on a process to change the end look of the Flexi-Gloss, he discovered a method for producing under-water high-density charge clusters, a method, which among other things, holds promise for possibly reducing nuclear waste.
Cooke met Gleeson when Cooke was international director of Ohio for the Christian organization Full Gospel Businessman Fellowship International.
iI was one of his only friends who saw his vision of the product,i Cooke says. iIt grasped me and never let go.i
In 1997, Gleeson entered discussions to license the Flexi-Gloss, and as part of a preliminary agreement, he gave Cooke a sealed envelope containing instructions for the secret process.
Then in 1999, without warning, Gleeson died. iThe licensing agreement at the time just fell apart,i Cooke says.
So it was Cookeis turn to sell the adhesive. But Cooke had his own company, Architectural Identification Inc., which builds business signs. Plus Cooke, a civil engineer, knew he didnit have the marketing know-how to promote the adhesive.
All that changed when Cooke moved to Sarasota and met retired U.S. Army pilot and Northwest Airlines 747 captain Joe Fouraker. The two met at church, and it quickly became apparent that Fouraker was not content to stay in retirement. Fouraker also had the capital to get the new company started. The two partners reached an agreement where Fouraker would be CEO and Cooke a silent partner.
Fouraker in turn went out and hired McKinlay, and Ray Reher (chief financial officer), who were running separate startup consulting businesses. Eventually, both were made employees of the company, but they continue their consulting businesses.
Company offices, initially, were at Lakewood Ranch, and eventually were relocated to Apex Road in Sarasota.
One of the first and most important decisions of the startup was the need to narrow the productis focus.
iIt is really hard to keep everyone focused,i McKinlay says. iSomeone will come in and say. eHey, I just put it on my tires, and you should see the shine.i Thatis great, but thatis not the market we have to go after now. There are just a ton of different players that we could get involved with.i
Unique Shieldis immediate market is focused on mold prevention and general application for construction products. The companyis target customers are commercial and residential builders.
iWe are not in a position yet to go direct to the consumer,i McKinlay says. iRetail comes later. We need to get a name and reputation in the marketplace first.i
The specialty coating industry, McKinlay says, is a $10 billion industry. And itis the mold-prevention market that has the owners of UniqueShield Products most excited.
iIt was really the high profile of mold O that made (Cooke) want to start marketing it commercially,i Reher says. iThe time was right.i
A spat of toxic mold lawsuits nationally have made the issue a growing concern among contractors, architects and other construction professionals. Although specific data on new lawsuits is hard to find, outside observers such as Harrison Yoss, a partner with the Dallas law firm of Thompson Coe Cousins & Irons LLP, say toxic mold injury complaints have exploded since the 1990s.
Several high profile lawsuits and verdicts have been recorded such as a $7 million award to Ed McMahon for the death of his dog from mold.
Toxic mold has been referred to as ithe next asbestos.i Asbestos litigation is reported to have resulted in estimated payouts of about $275 billion. While experts on both sides debate the accuracy of the asbestos statement (see sidebar), the lawsuit concern has led to an increase in mold inhibiting products.
An advantage that UniqueShield Products touts is the adhesiveis ability to prevent mold rather than inhibit its growth.
iMold wonit grow on the plastic coating,i Cooke says. citing an eight-year test by Holloman & Associates in Cincinnati and a 2004 study by Universal Engineering Services.
It was mold prevention that interested Alan Zirkelbach, owner of Zirkelbach Construction Inc. and one of the companyis first customers.
iThey drove out to show me the product,i Zirkelbach says. iThey asked if I had any jobs where mold had been a problem? I told them that I had a balcony, and they suggested testing it out there. It worked. You can tell that it is there; it has just a touch more sheen, but other than that you really canit notice it.i
Zirkelbach uses Unique Shield on his concrete reinforcing bars. iIt is not necessarily that you donit want to have rust on rebar,i he says, ibut anytime itis exposed to the elements it starts to break down. It no longer gives the concrete the same type of support.i
The company continues to spend a considerable portion of its operating capital on research showing benefits of the sealant.
On the advice of their attorney at Williams Parker Harrison Dietz & Getzen, UniqueShield Products and Cooke have never attempted to patent the formula for Unique Shield.
iOur patent attorney says we canit patent the process,i Cooke says. iYou canit patent any of the ingredients, like water. A patent also is for a limited period. You have maybe 18 months then it becomes public information. If you keep it a secret process then there is no time limit.i
The company instead trademarked the name and description in connection with Unique Shield. iAt this point, speed to market is much more important,i Reher says.
With an idea as multilayered as Unique Shield why would the partners decide to develop a capital-intensive business rather than just selling the product outright while retaining royalties?
iIt was the inventors dream to use the process to help out (Christian) ministries,i Fouraker says. iThat was his vision and the founders decided it will be worth more as a company.i
There is also the middle ground of the two.
iFrom a pure business perspective we see more value in securing the marketing,i McKinlay says. iIf we penetrate even a 30% share of the market then it gives us multiple options for a buyout later on. We would be of more value to them if they were also buying back market share.i
Theyire also concerned the market will remain open for a finite time before one of the larger companies introduces a similar product. In anticipation of that, the company is also spending operating capital on research and development for new products using Unique Shield and refining the recipe.
For the moment, the majority of the companyis day-to-day expenses is funded by the two partners.
iI refinanced my home to invest in the company,i Fouraker says. The company is also looking for investors from friends and family.
iWe feel that for now, that will be sufficient to get us out into the market until we get a customer stream and can kick the company up to the next level,i Reher says. iWe had considered all the typical startup sources, the SBA and mezzanine loans, but it turned out to be more cost effective to use this capital instead.i
The startupis expansion plans are fairly fluid at the moment, but focus on three main areas.
iFirst developing core relationships with key players like Alan Zirkelbach in the Florida market,i McKinlay says. iOvertime we will expand in the Southeast and then nationwide. Second, we are working on a PR and media campaign trying to get the name out and establish relationships. Third, we are taking the show on the road going to a series of nationally prominent trade shows starting with the Painting and Coatings Expo in Las Vegas in the end January.i
Unique Shield is now manufactured through a contact of Cookeis in Cincinnati, but once the new manufacturing facility is completed in the companyis new office, the company will be able to produce 1,000 gallons a day. The facility is slated for completion Jan. 1.
iOnce we exceed that, we will be seriously looking at outsourcing some of our production,i Fouraker says. In three years, the six-person company is slated to grow to 25 employees.
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