Thursday, November 29, 2007

Thirst For Profit

The first time Kara Goldin left her job as a vice-president at AOL was in 1996, the boom years. Kara's boss quickly persuaded her to return. The second time she left, the decision stuck. It was early 2001, and Kara figured her best days at AOL were behind her: She and her team had built an online shopping business, and now she was expected to maintain it. Then there was the matter of the Time Warner merger. She wasn't eager to work for an even more bureaucratic company. "I love the idea of creating a need, of building something new," she says.

So at 34 she cashed out and went home to her husband, Theo, two children--and a renovation on their San Francisco house. By then Theo, also 34, had left his job as an intellectual property lawyer at Netscape. "When we moved out here, I never in a million years thought I was going to work for a big company," he says.

The couple renovated their work lives, too. In May, 2005, the Goldins launched Hint, a naturally flavored bottled water made without sweeteners or preservatives. Kara is the chief executive; Theo the chief operating officer. This year they expect revenues of $3 million to $4 million, and next year three times as much. The water is sold in several grocery chains, including Whole Foods Market, Stop & Shop, and Ralphs, as well as small stores. And, because Cherise McVicar, Walt Disney's senior vice-president for national promotions, happened to try (and like) a sample of Hint, the Goldins now have an arrangement to put Disney' characters on their bottles.

For the Goldins, the years between leaving their familiar world and entering unknown terrain were filled with questioning, sussing out possibilities, then a moment of recognition followed by months of experimenting, gathering info, listening, cold-calling, and being called naive. Then they just plunged in.

They were among the many Silicon Valley exiles who departed ahead of the bust with their bank accounts and confidence intact, entrepreneurs in search of an idea. While their experience reflects a specific time and place, it also resonates more broadly. "It's clear that creative, ambitious people want choice, control, a greater sense of power in the world of careers," says Stewart Friedman, a Wharton School professor. A recent Harris Interactive Survey for found that three-quarters of working adults have already switched careers at least once, and more. More than one-third were interested in a career change.

Those numbers suggest a new way to think about careers. "These people aren't actually shifting careers, but building skill sets," says Penelope Trunk, the author of the Brazen Careerist. "It's a metaphor for the new American Dream. People who aren't moving around should ask themselves why they aren't. They think it's risky. But the more skills you have, the more stable your career is."

Kara did not begin to search for a new career right away. She spent the first few years caring for her young children (she had a third in 2002). Theo did some consulting while overseeing their home's makeover. Then Kara started to get itchy. She considered positions with nonprofits but couldn't find a place where she could use her business experience. "And I didn't have any great ideas of how to start one that could quickly make a difference," she says.

Kara began paying more attention to the concerns of health-conscious mothers. "I was looking for the low-hanging fruit," she says. Then there it was: the sugared-up juice box. "I always wondered why there wasn't another option." There is, of course. It's called water. But Kara figured kids (and everyone else) wanted a drink with flavor. At spas, she had been served water with fruit in it, and realized there was something to that: "I thought someone should put it in a bottle."

Kara began testing fruit combinations on her family and friends while trying to squeeze information from any people in the beverage business who would talk to her. They were pretty skeptical that someone without any experience could succeed with the most difficult of drinks to produce and sell: one that was unsweetened and made without preservatives.

When she put together a business plan in 2004, she started to see what the skeptics were getting at. "I had no resources for labels, bottles, bottlers," she says. "I had only halfway listened to their point about how hard it is to get shelf space [in stores]." The only thing that wasn't a problem was money: She and Theo financed the company themselves initially. Now, after additional investments from friends and family, they own more than 90%.

Theo began devoting more time to Hint about six months before the May, 2005, launch--in two stores, one in Marin County, Calif., and the other in Manhattan. They hadn't signed up any distributors yet, so they drove the first delivery to the local gourmet market (one case of each flavor--apple, cucumber, lime, and tangerine).

A few months later, they got their first big break. At the Fancy Food Show in New York, the San Francisco buyer for Whole Foods expressed interest in carrying Hint. He asked if the Goldins were with United Natural Foods. They had no idea what that was. Turns out it is the largest natural food distributor in the U.S. With the promise of Whole Foods as a customer, they worked out an agreement.

Getting distributors is what it's all about in the beverage business. And for those who work on other things besides health foods, an unsweetened drink retailing for $1.69-$3.00 is a hard sell. The Goldins did, though, just manage to get in with an important network of independent distributors. "They have surprised a lot of people," says Gerry Khermouch, the editor of Beverage Business Insights. "They're selling overpriced, unsweetened water with a slight hint of fruit. They're the niche of the niche."

Now the Goldins have begun to grapple with some of the compromises they made early on. They've improved the production process so that Hint has a shelf life of 12 months instead of four. They've changed their 16-ounce bottle, which was originally an inch shorter than others on the shelves and looked puny by comparison. Their new one is a standard eight inches tall.

They've also figured out a few things about the flavors. Apple and pear are too difficult to work with, so they're on hiatus. To develop mango grapefruit took 15 tries with three different consultants over an entire year. Peppermint, though, took only two attempts.

Next year they hope to raise $3 million from an investor who might help expand their distribution and sales. "We learned over and over again in the tech world that it's not really about the idea. It's about how well and how fast you execute the idea," says Theo.

If they do well with Hint, Theo might consider another job altogether--teaching sixth grade science. Kara says: "I'm sure there's at least one more career in my future."

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