Saturday, September 08, 2007

Feed Granola Success Story

BusinessWeek chats with two young entrepreneurs who aim to 'Feed' the masses quality organic granola

How many times have you come up with an idea that causes your friends to say: "Hey, that could be a business!" How many times have you agreed with them? But how many times have you actually gone out and transformed that idea into a real business? Well, that's exactly what former models turned business partners Jason Osborn and Jason Wright ended up doing. In 2005, the pair turned the granola that they made as a snack in their New York City apartment into a three-flavor organic line they named Feed Granola.

Now sold in eight states at stores including Whole Foods Market (WFMI) and Wegmans Food Markets, Feed Granola earned $110,000 in sales in 2006, and is projected to make $2 million over the next 12 months, according to Osborn and Wright.

Recently,'s Stacy Perman spoke with Osborn and Wright about making the leap from a home kitchen hobby to a full-time company. Edited excerpts of the conversation follow.

How did you come to turn a homemade snack into a business?
Osborn: In 2003, our modeling agency put us together and we were living as roommates in the West Village. We started making granola as a healthy snack for ourselves. We would pass it out to friends, and it kind of caught on in the neighborhood. We gave it to a local restaurant to sample, and they ended up putting it on their menu. We realized that we had something special at that point, and we talked about making it into a serious product. So we took the granola to a dietician and gave her the formula. She said we had a really healthy product here and that there was a real need in the marketplace. So we put our heads together to make it a business in 2004.

Wright: And we formed a business corporation in December of 2005.

Did either of you have any prior business experience?
Osborn: After I moved to New York, I worked for an ad agency for three years. And in college I majored in business management and advertising.

Wright: I went to the University of South Carolina and majored in hotel, restaurant, and tourism management, and minored in business. But in college they don't teach you to be an entrepreneur. When I graduated I had no idea that I would have a granola company one day. But I did want to own my own business and to work for myself. I didn't know what I wanted to do, and I got into modeling because it got me to travel. I was managing an Abercrombie & Fitch (ANF) store and that led me to modeling, which led me to New York.

How did you initially finance Feed?
Osborn: In the beginning we financed it ourselves.

Wright: We spent about $10,000 between us from 2004 to January of 2006.

Were you still making the granola in your kitchen?
Osborn: Yes, at first we were making it in our sixth floor walk-up. And we'd go around the neighborhood offering it as samples at gyms to get feedback from people who weren't our friends. That's how we hooked up with a local natural-foods store that put us on their shelves. But at that point we'd gotten too big for our kitchen, so we partnered with a meal delivery service in the city and bartered (BusinessWeek, 7/18/07) to use their kitchen space. We'd bake our granola during the night when they weren't using it and we paid for the usage in granola. That's how we paid rent on our first facility.

Wright: We did that for a year until the end of 2005, and then we outgrew that facility and moved to a cooking company in the Bronx. We trained their staff and worked with them until August of 2006.

Since you were growing, what did you do for capital?
Osborn: We approached the U.S. Small Business Administration and applied for a small-business loan. We were approved for a $75,000 loan, and the money got us to the point where we could launch the product at Natural Products Expo East, a national trade show in Baltimore. We made a plan to spend the next 10 months working on the brand and packaging in order to launch it at the trade show. We came up with the brand name and hired a designer friend of ours to execute the vision we had put down on paper.

Did you have a business plan or did this just evolve? Did you seek advice?
Osborn: In the beginning, we were just flying by the seat of our pants. Early on we sought out SCORE and spoke to them literally via e-mail. They helped us with questions about incorporating and starting a business plan. Then we created the business plan ourselves. It was really just cursory. It laid out how we'd run the business and outlined some of our market and financial milestones. We used that plan to secure our loan from the SBA.

What was the best piece of advice you received?
Osborn: Before we actually launched at the trade show, we attended a few other trade shows and we went to the educational programs and seminars that they had on how to take a product to market. We were able to ask people firsthand how they did it. They helped explain how to go to the next level from where we were. It was very helpful to attend those seminars.

Also, going to the trade shows allowed us to introduce ourselves to markets and distributors and chains. They could see that we were a viable company and became attracted to our brand.

Were there any blunders along the way?
Osborn: Yeah, of course. I think our biggest challenge was finding a facility that fit our needs. If you are constantly growing and changing, you need a manufacturer that allows you to do so. Also, I think our lack of experience allowed us to be more innovative, but I think if we had more experience we could have answered a lot of questions that came up.

Wright: When you are a small, growing company, cash flow is always a problem. Trying to balance receivables vs. payables is always a big challenge.

Many people have an idea but not everybody turns it into a business. What would you say makes that leap possible?
Osborn: In our case, we had a very good partnership. We both bring different things to the table. But I'd also say that you have to go with your instincts and vision and guts and stay true to them. Everyone has their own opinion and advice and it's always different. I say, stay focused.

What's next?
Wright: We'd like to go national by mid-to-late 2008.

Osborn: We also want to expand our product line once we've established it as a quality product. And we want to enter into brand extensions.

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