Small Business: NZ Innovators Awards - Rackstuds

Peter Stothers, managing director of Rackstuds.

Small business editor Caitlin Sykes this week interviews a handful of small business owners involved in last year's NZ Innovators Awards about their innovations and bringing them to market.

Peter Stothers was a finalist in two categories of last year's NZ Innovators Awards - Innovation in Design and Engineering, and Emerging New Zealand Innovator. His Rackstuds invention is a nut and bolt solution that's used to mount IT, AV, security and telecommunications equipment into 19-inch racks.

How did you come up with the idea for Rackstuds?

I conceptualised Rackstuds 15 years ago, when I was out on a job installing security equipment. That kind of equipment - like servers, and a lot of other hardware - gets mounted in racks and at the time I was using the incumbent mounting hardware, which are called cage nuts, to secure the equipment in the rack. But it was a nigh on impossible task to do on my own, because with one hand I had to hold up 15kg of gear, and with the other hand try to secure it using these cage nuts, which really require two hands on their own.

I just had the simple thought 'why doesn't someone just turn the nut and bolt around to make the job so much simpler, and then I could do that kind of job easily on my own?'

That was 15 years ago. What's been the journey to get it to market from that point?

When I first had the idea I ran it past a friend of mine, who's a brilliant engineer, but we couldn't really solve an underlying engineering problem of getting it to work. But the idea was always in the back of my mind. Then one day I was in the gym and the idea of how to solve that problem just hit me, and with the advent of modern prototyping technology, like 3D printing, I was actually then able to quite quickly conceptualise and prototype the idea - and it worked.

About eight years ago I also conceptualised another invention - an anti-theft device, called ScanCam - which I managed to bring to market before Rackstuds. That meant I'd already had the experience of taking a product to market and had investors behind me. Having already been through that process was a huge advantage.

Where is the business at now?

Rackstuds has been going for about 18 months and in that time we've made over a million Rackstuds. We've got distributors all around the world. It's a hard thing to generate media buzz when you don't have a marketing budget, but we now probably get two emails a week from people around the world who want to be resellers of the product.

The incumbent technology in this area has been around for 30 years, but we want to change that so Rackstuds becomes the incumbent technology. The clothespeg had been around for decades before someone thought to put a spring in it; we want to be like the spring-loaded clothespeg in our particular niche.

What have been the primary challenges for you bringing this innovation to market?

I've got two basic problems: one is I'm essentially producing a plastic nut and bolt, and we're asking people to pay twice as much for what we're offering versus the incumbent. Also, the installers - the actual end users of the product - love the Rackstuds, but predominantly they don't purchase the mounting hardware; that's done by the procurement departments of the big companies that have these big technology installations.

So, one of my strategies has been to find distributors who have some existing relationships with some very big supply chains. Another thing we've been doing this year is targeting the makers of rack cabinets.

When people buy a $2,000-odd rack cabinet to put their gear in it will often come supplied with a bag of cage nuts, so we're now directly approaching the rack manufacturers and asking them if they'll buy Rackstuds from us and include them with their racks instead of cage nuts. From that we get a natural endorsement from those rack manufacturers, and also exposure every time they have their product at a trade show, where people will see their gear with our product in it.

What advice would you have for other aspiring innovators?

Don't give up and don't listen to what anyone else tells you, especially if they tell you it can't be done. However, you do need to be realistic about whether your invention is going to make any money. You can have the best invention in the world, but it may still not be commercially viable to produce. That's where investors can be a huge help, because those are the questions they'll ask you: what does it cost to make, how much can you sell it for, and how many can you sell?

And you do need that financial assistance. I think you've got to be prepared to give up the majority shareholding in your idea to private equity, but it's still much better to have 40 per cent of something, than 100 per cent of nothing.