THEIR SUCCESS IS IN THE BAG.
Baby's dirty diapers inspire couple to deliver fast-growing product line; ' It's not going to be a hobby '

The Daily News
PHYLLIS FURMAN

When Ellen Diamant couldn't find a practical diaper bag for her son, she looked past her frustration - and saw a business opportunity.
After her son Spencer was born, the Upper West Side art director went hunting for a bag that fit her urban style. The best she could find was a quilted navy sack that looked ugly hanging from Spencer's stroller.
Diamant was sure she could do better. She told her husband, ex-Internet exec Michael Diamant, they should design their own sleek, unisex, messenger-style bag that would move easily from stroller to shoulder.
"I wanted to do it and sell it to my friends," Ellen Diamant, 42, recalled. "Michael said, 'If we're going to do it, it's not going to be a hobby, it's going to be a business.' "
The couple not only made the bag, they launched a product line that's bringing baby chic to style-starved parents.
Launched in 2003, their company, Skip Hop, is growing faster than a toddler can smear chocolate across his face, taking in $10 million last year, double the total of 2006, and expanding its payroll to 22 people out of its W. 29th St. offices.
Skipping far beyond their original cool bag, dubbed the Skip Hop Duo, the Diamants now sell an array of streamlined items for parents and their babies, such as striped bottle bags, denim diaper changers and an industrial-looking plastic bottle drying rack created by award-winning product designer Scott Henderson.
There's not a tacky pink bunny or clown face in the bunch.
The line can be found at large chains like Buy Buy Baby and Babies "R" Us, and in smaller upscale specialty stores like Giggle. The preschool-aged company even scored a deal with Target, which sells a lower-priced, scaled-down line of Skip Hop products called Spark.
"There's a real change in what parents expect," said Michael Diamant, 40. "Demand for that today is being picked up by companies like Skip Hop."
Just five years ago, the couple knew nothing about the baby business. But Michael Diamant, who has an M.B.A. from Columbia Business School, had experience building companies from scratch.
An entrepreneur during the go-go Internet era of the late '90s, he pocketed several million dollars from the sale of T3 Media, a Web design company. But his next Internet venture, a YouTube precursor called iClips, went bust in 2002.
"For eight to nine months, I was floundering around," he said. "The babysitter thought I was a bum."
He got busy again pursuing his wife's diaper bag idea. The couple paid a designer $5,000 to create a prototype, then asked friends to test drive the bag on their strollers.
After getting multiple thumbs up, they found a manufacturer in El Salvador to make a first run, spending more than $10,000 to produce about 400 bags. They set the retail price for the Duo at $50, wedging it into the market in between designer and mass market bags.
Skip Hop debuted at a trade show in 2003. Soon after, orders from retailers starting flowing in. First year sales hit $1.2 million.
"You can't go past a stroller without seeing a Skip Hop stroller bag," said Upper East Side mom-to-be Nicole Arslanian, who owns accessories company Talene Reilly.
The Diamants said they've put little of their own money - less than $100,000 - into the business. Early on, they secured a $200,000 loan from Citibank and favorable credit terms from suppliers.
Last year, Skip Hop raised $1.6 million from investors, including showbiz exec David Friedensohn. The Diamants still own 70% of the company.
The new money, which they are investing in top-of-the-line manufacturing equipment, will allow the Diamants to keep adding new twists to old-line baby products. A recent example is a foam play mat with removable geometric shapes, rather than letters of the alphabet.
"Nobody had innovated them for years," Giggle founder Ali Wing said. "They said, 'Let's make it cool and make it more aesthetically pleasing.' "
The Diamants don't always have the magic touch - the company has turned out some clunkers, too.
One idea that didn't work was a sippy cup designed to be attached to strollers. But the cup kept slipping off, and the project was scrapped.
Will they try again? Probably not, Ellen Diamant said.

Synthesis: In todays society mom's want to look "chic" due to a fast growing generation of celebrity mothers and high fashion leaders. Due to this an outgrowth of new products and innovative ideas are being created to help deal with this new growth.