High and dry
Our Small Business of the Year’s products seal tight, but it excels at hanging loose.
By Ken Otterbourg
Dry Corp LLC
CEO: Dr. Roy Archambault
Projected 2013 revenue: $2.5 million
Business: Medical supply and cases for electronics
Show up at the headquarters of Dry Corp LLC in Wilmington and you might think you’ve gone to the wrong place. The outside of the drab gray, boxy (read: remarkably ugly) building, once a Progress Energy truck-maintenance shop, is nearly bereft of ornamentation. No need to knock. The garage doors are wide open. Just walk right in. The interior décor is tiki bar meets frat house, with some ratty sofas and potted plants and a mannequin acting as sentry. It’s like you’ve stumbled into your favorite joint on the coast, the dive with a sketchy sanitation rating but killer shrimp and ice-cold beer. Everybody is dressed as if they’re headed to the beach, only a couple miles away. Shorts and sandals are the norm.
Don’t let the laid-back vibe fool you. The Dry Corp team plays hard — Friday cookouts, canoe and bike outings — but works harder. Over the past few years they’ve transformed the company from a one-product medical manufacturer into a diversified outfit that is booming as it caters to protecting from moisture what matters most: our injured body parts, our medical equipment and, yes, our electronic gadgets. All this while having a good time. That’s part of the reason Dry Corp is Business North Carolina’s Small Business of the Year.
“I am impressed with their creativity in product design and employee culture,” says David Johnson, one of the judges and president of Johnson Nursery Corp., the Willard company that was last year’s winner. “This is an extremely diverse product with lots of applications. It appears they have done an excellent job of marketing, and their potential for growth is huge.” The other judges were N.C. Small Business Commissioner Scott Daugherty and BNC Publisher Ben Kinney. Winston-Salem-based BB&T sponsored the competition, as it has since 2000. After the magazine’s editors selected eight finalists from the 60 entries, the judges picked the winner and three runners-up.
“We are serious and passionate,” says Corey Heim, Dry Corp’s chief operating officer, dressed in shorts and trail boots. “We want an atmosphere that is espresso and beer, both excited and loose.” It’s working. Dry Corp’s annual revenue of $2.5 million is more than double what it was just four years ago. And the company, which employs 24 at the Wilmington office and warehouse complex, now has two divisions: DryPro, the medical line, and DryCase, focused on outdoor, consumer-lifestyle products.
When Dry Corp started in 1998, its first offering was a waterproof cast protector. If you’ve ever broken your arm or leg and tried to keep the cast dry in the shower with a garbage bag and duct tape, it’s the solution you hoped for. Dry Corp’s technology was new: a latex-coated sleeve that sealed after a small hand pump sucked out the air. It was a big hit, particularly with parents whose kids had broken a limb. (DryPro’s website is littered with testimony from moms waxing ecstatic about how the device saved their child’s summer.) The inventor was Fred George, a podiatrist in California, and he licensed the product to Wilmington podiatrist Roy Archambault, Dry Corp’s CEO, known as Dr. Arch. In 2006, their business relationship collapsed, and Archambault sued George in U.S. District Court in Wilmington, contending that he and other partners had formed a competing company. George countersued, claiming that Archambault was shorting him on royalties.
In July 2007, while the litigation dragged on, a fire destroyed Dry Corp’s operations, housed at the time in an industrial neighborhood about a mile from its current location. The blaze started in the warehouse and burned so hot that it twisted the steel in the roof. Heim came to the smoldering remains and pulled a charred hard drive from a PC. He brought it to a computer shop, where workers were able to save the QuickBooks files. The fire was on a Sunday morning. Within two days, the Dry Corp team was up and running, working out of tents and filling orders. Today, a display case holds the salvaged hard drive, a reminder of the importance of quick response. “The fire was a wakeup,” Archambault says. “It pushed us. It rallied the troops, created a sense of urgency and changed the momentum.”
The lawsuit was settled that November, freeing Archambault from the licensing agreement. The whole ordeal convinced him and Heim that they needed to diversify. In short order, they expanded into other parts of the medical industry, including ostomy protectors and covers for peripherally inserted central catheters, known as PICC lines. Their products have also been used by National Football League teams to help players protect surgical stitches during water therapy.
The big breakthrough on the consumer end came four years ago, when Dry Corp released a protective pouch for smartphones and tablets. It uses the same vacuum-pump technology, but the case is clear plastic and seals tight enough that you can still use the touch screen and even the camera, which still produces remarkably good images. Heim says he takes his smartphone when he surfs and even sends the occasional text while waiting for the next wave. Whether texting while surfing is a good idea is a whole other issue, but the product has received rave reviews. “A must-have if you’re planning trips to the beach or on a boat this summer,” wrote Gadgetreview.com, which gave DryCase an “excellent” (5½ out of six stars) rating. “There is even a built-in floatable arm band for working out.”
Product development and testing tends to be an informal process at Dry Corp. For DryCase, Heim put a phone in the pouch, sealed it, then attached it to a fishing rod like a lure and spooled it into 100 feet of water. For a marketing spot, the team threw the contraption into the water from a dock. Then the tether broke, and the whole thing sank. Heim dove in to retrieve his phone off the bottom. The seal was still intact. At first, the pouches were sold online and through independent outdoor retailers and surf shops. The sales team is trying to get them into big-box stores. A trial run with Coraopolis, Penn.-based Dick’s Sporting Goods Inc., for example, will start this spring. Like many companies who started out with online retailers, Dry Corp is struggling with balancing e-tail with bricks-and-mortar stores. It has begun cracking down on those who sell the product below the suggested retail price ($39.99 for the phone case, for example), cutting them off if they persist. When the price is too low, the thinking goes, it creates the impression that the pouches aren’t well-made.
Price is important, but quality is critical. All the pouches are hand-tested in Wilmington. Workers seal each bag and leave them overnight, and only the ones that are still sealed the next morning get sold. The pass rate used to be 50%. Then Dry Corp went to a better sealing process, using radio waves rather than conventional heat. The pass rate is now higher than 90%, which means far less waste. Dry Corp markets its two lines in dramatically different ways. Protecting an iPhone is a want. Keeping a catheter dry is a need. “DryPro is not cool,” Heim says. “DryCase needs to be cool.” That means slicker graphics and packaging and more attention to advertising and displays. The competition is much more fierce than on the medical side.
At its first consumer trade show in 2009, DryCase was the only manufacturer in its niche. Now there are more than a dozen, including such well-known case companies as Fort Collins, Colo.-based Otter Products LLC, which makes OtterBox. Among Dry Corp’s two divisions, revenue is split almost evenly between DryPro and DryCase. DryCase had been doubling its growth every year, but that has leveled off some with the increased competition, to about 30% to 40%. That said, it still has the bigger upside. While the smartphone and tablet pouches are made in China, the medical equipment is made in the U.S. and assembled in Wilmington. The process underscores Dry Corp’s shade-tree mechanic’s approach to keeping production costs down. One of the parts for the valve assembly is a small plastic gasket. Rather than buy the part, Dry Corp makes its own by freezing a plastic tube and then running it through a jig attached to a food processor, which cuts the tube into uniform slices. And all the mismatched office chairs at the headquarters are byproducts of a lesson Heim learned as a business major at UNC Wilmington: Invest in people, not furniture.
That low-tech/high-tech balance across the company is evident at its Wilmington headquarters. Though everybody works on computers, the sales team keeps an old-fashioned dry-erase board with targets and counts, making it clear who is meeting or exceeding goals. The only room in the place without a window is the conference room on the warehouse’s second floor. Claustrophobia keeps meetings short and on-point. While Archambault, 60, is the creative force, Heim, 29, runs the day-to-day operations. He did an internship at Merrill Lynch (“I had to wear a tie,” he recalls) and was headed toward a traditional desk job after graduation when he met Archambault at a campus entrepreneur event. “We clicked,” Heim says. He hounded Dr. Arch, and a week before his 21st birthday, they were in a van barreling toward New Orleans for a medical-supply trade show.
Catering to consumer electronics can be a fickle business, and Dry Corp is trying to move beyond smartphones and tablets to offer protections for other outdoor products. It has begun selling waterproof daypacks based on the dry bags sailors and canoers use. They are made of heavy-duty rubber and can be stuffed full of gear and easily carried. You can also fill them with water and open a spigot at the base for use as a jerry-rigged shower. Archambault, Heim and the rest didn’t do much research before they introduced it. But as water-lovers, they saw a need. So they began selling the pack, then adjusted it based on customer reaction. One insight: The bags were too big for an important and growing market, the stand-up paddleboard crowd, which wanted something that could sit on the end of the board and not get in the way. “Our smaller backpack came from customers,” Heim says. The feedback loop creates loyalty because consumers believe their opinions are valued.
In the middle of the section of the garage that serves as the warehouse and shipping department, there’s a guy with a ponytail and a tank top named Michael Cahill. Everybody calls him Mook. He grew up with Archambault’s son and started filling orders at Dry Corp when he was in high school. Now he’s getting an MBA at UNC Wilmington and serves as the company’s logistics coordinator. As is the case with employees at most small companies, he has his fingers in a lot of pies. One of his projects: getting DryCase products approved for federal contracts, so that government employees can easily buy products for their electronic gadgets. He recently shipped 30 tablet protectors to the U.S. Geological Survey. “Medical is our bread and butter,” he says. “But it can’t be our only product.”
Next to Mook’s office is the kitchen, which is well-stocked with spices and condiments. Along with the open-air office and the lack of a dress code, the kitchen is a key part of Dry Corp’s culture. Every Friday, a different employee gets $100 and the morning off to cook lunch for the rest of the gang. Recent entrees: pulled pork, bacon-wrapped jalapeno poppers and burritos. It’s events like these, along with the ocean breeze blowing through the offices and warehouse, that earned DryCase a place on Outside magazine’s 2013 Best Places to Work list, one of only two North Carolina companies with that distinction. Besides providing a chance to enjoy a good meal, the Friday gathering is an opportunity for co-workers to bond and share ideas. Then it’s back to work for a few hours. Last person out, close the garage doors.