Nurses team up with Utah company to launch lucrative head-lice treatment

Sep 9 2011 - 12:13am

Images

(DAVID JOLES/Minneapolis Star Tribune) A Ladibugs employee uses a LouseBuster to remove lice nits from a young client’s hair.
(DAVID JOLES/Minneapolis Star Tribune) Lisa Rudquist (left) and Rachel Knutson parlayed their unfortunate experience with head lice into a business called Ladibugs.
(DAVID JOLES/Minneapolis Star Tribune) A Ladibugs employee uses a LouseBuster to remove lice nits from a young client’s hair.
(DAVID JOLES/Minneapolis Star Tribune) Lisa Rudquist (left) and Rachel Knutson parlayed their unfortunate experience with head lice into a business called Ladibugs.

In a little more than a year, Lisa Rudquist and Rachel Knutson have gone from grade-school moms with active nursing careers to fledgling entrepreneurs about to become players on the potentially lucrative national hair-care stage.

It's all because of head lice, nature's icky little curveball that knows no demographic bounds and considers everyone a potential victim.

After their own daughters were infested with the parasite early last year, they commiserated in the school parking lot about the lack of effective treatments. "Rachel, are you thinking what I'm thinking?" Rudquist asked Knutson.

The two nurses in the Twin Cities of Minnesota drew on their health care experience to start a business to help others recover from and avoid the dreaded nit.

They called their business Ladibugs.

Working with a chemist and a manufacturer of hair care supplies in Alabama, the two came up with a line of all-natural products that act as lice repellents.

They contracted with a Utah firm to use its proprietary "LouseBuster" treatment system that resembles a hair dryer and uses warm air to delouse the head and hair.

They hired their first employee in January (there now are four) and opened a small, two-room, appointment-only clinic in a commercial office center in July. They did 600 head treatments in their first year.

"It's been like going from 0 to 100," said Knutson, 39, of Prior Lake, Minn.

To day care provider Rebekah Clark, who watches up to 10 kids at a time, Ladibugs was a godsend because preventing head lice is a must in her business.

Clark found Ladibugs on a Google search last year after her daughter developed a second lice attack in less than six months.

"I treated her myself the first time. I wasn't going to do it again. It was painful to do and painful to watch," Clark said. "Now I won't use anything but Ladibugs products."

Ladibugs began with $2,000 in seed money -- $1,000 apiece from the two founders. Today, they expect sales this year to reach the low six figures.

Health insurance does not cover Ladibugs' services but the LouseBuster treatment is reimbursable through Health Spending Accounts and Flexible Spending Accounts.

The niche Rudquist and Knutson found appears to be real and grounded in considerable consumer need. The market for lice products is $300 million a year.

Many existing over-the-counter lice treatments contain pesticides or other chemicals designed to kill the lice.

Ladibugs hopes to capitalize on the fact that its products have all-natural ingredients.

"We have not met a mother yet who is happy when they open a bottle (of lice shampoo) and get that toxic smell," Rudquist said.

Earlier this summer Knutson and Rudquist entered into a marketing agreement with Minneapolis-based Kids' Hair with 11 salons in the Twin Cities and one each in St. Cloud and the Chicago area. Ladibugs products now account for 25 percent of sales at the Kids' Hair stores.

"It's a great relationship. It's one of our better-selling products," said Kids' Hair chief operating officer Scott Burtness. "We've been in the hair business for 20 years, and we pride ourselves as being experts in kids' hair. Our stylists are experts at detecting lice. What Ladibugs does for us is gives stylists all kinds of options to recommend. That puts parents at ease."

Burtness said the all-natural content is a plus for Ladibugs products. "Parents don't like using chemicals on their children's hair," he said.

Ladibugs' next big challenge is a national rollout. That got a lot easier recently when Ladibugs signed on with the Kirschner Group, a sales organization that caters to the professional beauty industry. The affiliation instantly gives Ladibugs a national sales force of 35 to sell Ladibugs products.

"We think this is a very important niche," said Jane Caris, the Minneapolis-based vice president of sales and marketing for Kirschner. "Lisa and Rachel are very passionate about this area and very qualified. It's a great story."

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