Jim Simpson acknowledges that his decision to leave a solid, well-paying government position to test the economic possibilities of his own creativity wasn't very practical, but he felt he had to make a change.
"When I got into government service I didn't intend to make a career of it," said Simpson, 44, who spent half a dozen years trying to balance the federal budget as an analyst at the Office of Management and Budget. "Six years is enough to kill anybody except maybe masochists and other crazy individuals."
So, in 1993, he quit. After leaving his job, Simpson knew he had six months to come up with a money-making idea before he would exceed the limit on his credit cards. Within three months he had his idea -- Wondermugs.
At first glance, Wondermugs, which retail for $12.95, appear to be everyday coffee mugs, but in this case looks are deceiving. Like most mugs, Wondermugs have designs on the sides, but unlike others, when a hot drink is poured into the cup, the design changes. For example, when cold, the Christmas mug has a tree with pine cones on it. When a hot liquid is poured into the mug, however, the pine cones change to a string of Christmas tree lights.
"I got the idea for Wondermugs when I saw a company's advertisement for color-changing ink," the entrepreneur said. "I always had creative ideas, and this was a chance to see if my ideas had any commercial viability."
Arlington-based Wondermugs barely kept Simpson afloat in 1994, the company's first full year, with revenue of just more than $50,000. That figure nearly quadrupled the following year, though, with the company grossing $196,000, and Simpson projects that this year's figure will top off around $288,000. Simpson said he has not calculated net earnings for Wondermugs, but over the past two years he said the company cleared a "small profit."
Exactly how the mugs change color is a mystery to everyone, including Simpson -- the Pennsylvania factory that manufactures them will not reveal how the process works. Simpson's best guess is that the designs use liquid crystal technology, where crystals reflect light at a certain angle when cold and another angle when hot.
Simpson employed the "unwitting venture capitalists of the '90s" -- credit cards -- to finance Wondermugs initially. The first mug was the Christmas tree design, and Simpson had his sister, Lucretia Juckett of Great Falls, draw the pattern. He took the mug to a sales show and a buyer promised a 3,000-piece order if he could come up with a design for a second one. Simpson went back to Juckett and together they conceived the "country town" mug.
With both mugs proudly in hand, Simpson marched back to the buyer only to learn that she no longer was interested. But no matter, it was too late to deter Simpson.
"That spurred us to put together a presentable package," Simpson said. "We started to work on more themes, and soon after the Belk stores bought about 5,000 pieces."
The order from Belk Store Services Inc., an Atlanta-based department store chain, soon was joined by a deal with Strawbridge and Clothier, a Philadelphia-based department store chain that has since been sold, a contract with the Army-Air Force exchange service and a not-so-successful run on QVC.
While the original designs were bringing in money, Simpson continued to dream up new patterns. After conceiving a potentially profitable design, he would enlist the services of local artists, such as Eric Mohn of Gaithersburg, to draw them. Simpson also secured permission to use scenes by nationally renowned photographer Art Wolfe for five mugs. Each new mug design costs from $3,000 to $4,000 to produce, Simpson said.
"Quality and attractiveness of the mugs is the key. The color-changing idea is not new," said Simpson, whose company is one of two in the United States that sell the mugs. "A company tried this 15 years ago, but they didn't sell because they weren't made well."
Yet, while the Wondermugs sold reasonably well in department stores, Simpson recognized that he would have to increase the product's exposure if the company was to survive.
"The problem was how to convey the color-changing concept to the consumer," Simpson said. "When I did counter displays that showed how the mugs changed color, they would really sell." Thus, Simpson determined that the best marketing tool would be to set up Wondermug kiosks in malls where he could continually demonstrate their lure. Simpson established his own stands at local malls Potomac Mills, Crystal City Center and Tysons Corner Mall, and to increase revenue he sold dealerships around the country through ads in the Mall Street Journal, an industry publication. This resulted in 11 kiosks, including the three Simpson owns and others in malls as far away as Mississippi and Texas.
With 20 mug designs in stores around the country and revenue on the rise, Simpson's move is looking better all the time. "It was an out of the frying pan and into the fire thing," Simpson said, "but I just wasn't going to let the downside deter me." WONDERMUGS Headquarters: Arlington Owner: Jim Simpson, 44 Product: Coffee mugs with designs that change according to hot and cold temperatures. Price: $12.95 Area outlets: Potomac Mills, Tysons Corner Mall, Crystal City Center CAPTION: Jim Simpson left his federal job and started designing mugs that change color with hot or cold beverages. Page 14. CAPTION: Jim Simpson, right, gives a demonstration of his Wondermugs at his kiosk at Tysons Corner Mall. CAPTION: The Wondermug sunrise pattern changes with temperatures. The mug on the left is cold while the mug on the right contains a hot liquid.