Thursday, May 28, 2009

How We Started a Liquor Brand

Link of the day - Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else

The Entrepreneurs: Courtney Reum, 29, and Carter Reum, 28

Background: Six years ago, Courtney and his brother, Carter, then both Goldman Sachs (GS) investment bankers, took a surfing trip to Brazil. While there the Chicago natives drank smoothies made with the açaí berry, known locally as "purple gold" because of its health properties. Four years later, Reum, who was working in Goldman's consumer-products division, decided it was time to stop observing businesses from the outside and start his own liquor company.

The Company: In May 2007, Reum launched VeeV, an açaí-infused wheat based grain alcohol liquor, positioning it as an alternative to vodka. Initially sold in high-end bars and clubs in Los Angeles, VeeV is now available in cities across the country—as well as on Virgin America flights.

Revenues: Estimated $5 million since 2007.

Their Story: During the five years I worked at Goldman Sachs, I participated in deals involving large multinationals such as Procter & Gamble (PG), but I also cut my teeth on much smaller deals—at least by Goldman's standards—working with the likes of Vitaminwater and Under Armour (UA). While there, I met people who didn't seem that much older than I was who had good ideas and had just decided to take the leap. I decided if they can do it—I don't know if I can—but I'm sure going to give it a try.

Having worked on one large alcohol merger in the spring of 2005 between Allied Domecq (ALYZF.PK) and Pernod Ricard, I was really struck by the lack of innovation in the alcohol space. When you really get down to it, there aren't many industries that have evolved less in the last 100 years than alcohol.

On the flip side, I considered myself a pretty normal consumer and was bored with my normal drink, Grey Goose and soda—or more often Grey Goose and Redbull because I was exhausted from my 100-hour workweeks. I felt like there had to be others like me who were looking for a unique drink that could serve as a badge of who they were and what they stood for.

That was the starting point for VeeV. We came up with its name because it sounds like the word for life in many of the Romance languages and we wanted the brand to signify "life/vitality/natural." We began the business the way every business book tells you not to: by using a tagline, essentially 'back-solving' our way into creating a product. We came up with the line: "A Better Way to Drink" because that was the goal, both in terms of the product and the company as a whole. We wanted to produce a beverage that had an interesting taste and was better quality than existing alternatives.
The Google School of Business

To that end we thought back to our surf trip and realized we could be out in front of the açaí trend. Açaí is often promoted as the healthiest food on the planet, since it has 57% more antioxidants than pomegranate, as well as plenty of protein, fiber, and essential fatty acids. Aware of the success of POM Wonderful with the pomegranate, we hoped we could turn the Brazilian berry into a similar story.

I put up the initial $250,000 in seed capital to get the first bottle on the shelf. I was confident I had a good idea and plenty of business experience. But I soon found that my time at Goldman was little help when it came to starting a brand from scratch. At a loss and in a bit of panic because I quickly realized I had no real beverage experience in what was going to be my new job, I just started doing what seemed logical at the time: I googled for answers. I found out the who, what, when, where, and why of how I might go about sourcing açaí. My online searches ultimately led me to brothers Ryan and Jeremy Black, from a company called Sambazon, who were the açaí pioneers in the U.S. Eventually they became VeeV's trusted advisers on all matters relating to açaí. (We also became friends.) Thanks to them, we found a way to harvest the berries and turn them into an extract that was shelf-stable for alcohol.

I also googled to find a domestic distillery that was capable of producing a product like VeeV, with an ingredient that had never been infused in alcohol. After numerous cold calls, I finally found a distillery in Rigby, Idaho, that had actually heard of açaí and had done some pretty innovative work, including putting caffeine into vodka.

Despite the distillery's experience with boutique brands, we still went through more than 100 iterations of the formula before settling on one. It's tricky to gauge consumers' reactions to alcohol because you'll never be all things to all people. We experimented on trusted friends who were in our target demographic as well as mixologists and food and spirit critics before ultimately settling on our current VeeV formula.

We came up with our unique bottle (frosted glass with a squared off shape) after noticing a small, similarly shaped bottle at the Fancy Food Show in New York. I furiously snapped pictures and sent them off to our consultants on a Friday. By Monday we decided to go with it. It has since made our brand stand out from others on store shelves.
a dollar per bottle supports rainforest protection

There were plenty more ups and downs. We learned that it's tough to be first to market with something unique. When we launched we were lucky if one out of 10 people was familiar with açaí, even in cosmopolitan, health-conscious cities. To get the word out, we drove around Los Angeles hot spots with a picture of açaí berries and the phonetic spelling (ah-sigh-EE) on our Prius.

We also wanted our business to be green. I was sick of greenwashing and false cause marketing, which usually consisted of companies making vague claims about donating "a portion of the proceeds" to charity. From the beginning we made a commitment to donate $1 from every bottle sold back to help fund Sambazon's nonprofit sustainable-farming project meant to protect the Brazilian rainforest. We did this despite the fact we weren't going to see any profits for a while. This was a first for an alcohol company. A dollar might not sounds like a lot until you realize how many bottles we could potentially sell—$1 per bottle is over 10% of our profits per bottle.

My biggest takeaway from all this: Don't try to do everything at once. It's admirable but often not feasible. After initially being overwhelmed by everything we wanted to be as a brand, we took a step back and realized that you don't have to be everything from Day One. Consumers tend to give you credit for "progress" as long as your efforts are genuine. So will investors—we've now raised a total of more than $5 million from angels.

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Monday, May 25, 2009

Guitars for rock gods

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

In Jimmy Brown's business, he never knows who - or what - is going to walk through the door. He fondly remembers many of the instruments that have found their way to his Louisville store, Guitar Emporium, over the years: a 1929 acoustic Martin 00-45, a 1954 sunburst Fender Stratocaster with a rare form-fitting case, a 1958 Gibson ES-355 with an original stop tailpiece and a 1959 Cherry Sunburst Gibson Les Paul, to name just a few.

"I may not always be able to remember who bought what," he says. "But I never forget the guitars."

Brown, 54, also remembers how he got his start. Already a guitarist with a talent for repair work at 15, he saved money from cutting lawns - $3 a yard - and bought a Gibson Les Paul SG Junior. That same day he showed his purchase to a friend, who offered him $150 for it.

"I made $75 in an afternoon. That was a valuable lesson for me as a businessman," he says.

But he got his real start after a buddy called with a special request: Neil Young was performing in town and needed an early-'60s Gibson. Unfortunately, Brown didn't have what Young wanted, but that brush with fame gave him an idea. He could buy vintage guitars at yard sales and local stores, then restore and sell them to rock stars passing through Louisville. "It was a totally different world before the Internet," he says. "I could find great deals, because the average person might have an old guitar but no idea how to connect with a rock band to sell it."

Still a teen, he had a pretty savvy business plan: After he acquired a few quality guitars that could fetch several thousand dollars, his mother would drive him to concert halls during sound check. He'd knock on the loading dock entrance and ask to show his wares to the road manager; more often than not he'd get invited backstage to sell his instruments to such guitar gods as Keith Richards (a pair of Gibson acoustics: a 1940s L-5 Archtop and an L-1 flattop from the '20s), Eric Clapton (a 1959 Epiphone Coronet electric) and Pete Townshend (a 1960s Epiphone Texan flattop acoustic).

"I've been in business since 1975," he says. "You name them, I probably met them."

That same year Brown became a partner at Guitar Emporium, which a friend had recently opened. Instead of injecting capital, he provided the inventory and customers. A year later he borrowed money from his father and bought his partner out. He played nights in a band, worked days at the store and attended the University of Louisville in between. By the late '70s the business was thriving, but Brown admits he nearly lost it all because of his "rock 'n' roll lifestyle."

"I saw that movie Almost Famous and I thought, 'That was my life story,' " he says. "I could tell you stories from those days that would make your hair curl."

By 1986 Brown had cleaned up his act, dedicated himself to Guitar Emporium and graduated from the University of Louisville with a degree in business. "I always thought guitars were something to do until I finished school," he says. "But college taught me that all I wanted to do was what I was already doing."

Today his business has grown into a 5,000-square-foot store with eight employees, annual revenues that range from $1 million to $3 million and a full array of instruments, including basses, mandolins, banjos and ukuleles. Though sales of high-end collectible guitars have slowed as a result of the downturn, Brown isn't worried. He's been through highs and lows before.

"People may not have money to buy the collectibles right now, but we're selling other guitars," he says. "You hold on to the investment pieces until people have the money for those purchases again."

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Saturday, May 23, 2009

Joke review boosts T-shirt sales 2300% on Amazon.Com

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

A T-shirt has become one of the most popular items sold by online retailer Amazon in the past few weeks.

Sales of the kitsch Three Wolf Moon T-shirt shot up 2,300% after a spate of ironic reviews went viral.

The first review gave the shirt five stars, saying it "Fits my girthy frame, has wolves on it, attracts women" but "cannot see wolves with arms crossed".

That prompted hundreds of others to post frivolous reviews, turning the page into an internet phenomenon.

"When I put this T-shirt on for the first time, my wife left me! Thank you, Three Wolf Moon T-Shirt," wrote one wag, while another said that "the Three Wolf Moon T-Shirt gave me a +10 resistance to energy attacks, +8 Strength... and I have successfully solved 7 crimes in my city".

Amazon's senior manager of community content, Russell Dicker, said the T-shirt was currently the top selling item in their clothing store.

"The Three Wolf Moon T-Shirt recently moved up 2,300% in sales rank," he said. "We are grateful that our reviewers are so passionate."

Publicity shy

However, the firm which actually makes the T-shirt appeared less than pleased at some of the comments.

"The Mountain is a wholesale company and does not sell shirts on Amazon, so this viral assault went under our radar until the shirt made it into the top 10 in the Amazon apparel section," they said in a posting on the Amazon site.

"We appreciate humour as much as the next company, but we don't approve of some of the remarks.

"Not everyone can start out at the top and not everyone from our neck of the woods lives in a trailer or cruises Walmart to hook up."

However, speaking on Radio Five Live, the firms art director - Michael McGloin - said the firm were actually rather pleased with the publicity.

"We'll take ironic fashion any day.... and we're printing another 400,000 more's just a fantastic thing," he said.

This is not the first time comedy reviews on Amazon have gone viral. In 2006, there were more than a thousand reviews for Tuscan Whole Milk.

They ranged from soap opera-style script - "That was when I knew. He was tired of this life with me, tired of bringing home the Tuscan Whole Milk, 1 Gallon, 128 fl oz" - to stating the obvious: "Has anyone else tried pouring this stuff over dry cereal? A-W-E-S-O-M-E!"

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Tuesday, May 19, 2009

How To Make Money With Used IKEA Furniture

Link of the day - Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else

Based—where else?—in Sweden, I LOVE IKEA is a new online marketplace for consumers looking to buy and sell secondhand IKEA furniture.

Buyers can search by region and city to find items nearby, or by category: bathroom, kitchen, office, etc. Product descriptions include the usual: photo, price and contact details, but are generally brief—after all, buyers can easily find more information in IKEA's catalogue. Placing ads is free until August 1st. After that, the site will charge sellers a small fee per ad.

On every general classifieds site, from Craigslist to, there's an abundance of secondhand IKEA goods on offer. According to I LOVE IKEA, they're included in over 20,000 ads per month in newspapers and online marketplaces. And that's just in Sweden. So it makes sense to create a marketplace dedicated to IKEA's wares, making it easier for consumers to locate items by name or type. I LOVE IKEA isn't affiliated with the object of their affection; as they put it, they're "a tribute to IKEA's amazing range, and a response to recent developments towards a more sustainable society." Following its launch in Sweden, I LOVE IKEA aims to expand to the rest of Europe soon.

Enduringly popular around the world, IKEA will no doubt continue to spawn businesses that offer complementary goods and services. Need more inspiration to start an IKEA 'feeder business' of your own? Check out slip covers for sofas by Bemz, delivery to Nasheville by ModerNash, decorative adhesives by Grippiks and add-ons by Parts of Sweden, all of which have built successful companies on an IKEA foundation.

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Friday, May 15, 2009

SweetRiot.Com Success Story

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

Sweetriot produces chocolate treats for the health conscious and fair-trade fanatics - "rioters," as CEO Sarah Endline calls them.

You may have seen the bite-sized tasties in Whole Foods, where Endline has seen 100% sales growth each year since 2005. Lately, the brightly colored tins designed by local artists have started popping up in other outlets as well. "In the last six months we saw more and newer opportunities unfolding. We're ready for this growth," Endline says of her product's recent debut in Lifetime Fitness and Vitamin Shop stores, as well as in Nordstrom's cafes and at smoothie chain Robeks. Sales have literally gone through the roof: Sweetriot is now an in-flight snack on Virgin America airlines.

The company launched a new product for its chocoholic rioters in January: a portion-controlled dark chocolate bar called the UnBar.

Endline attributes Sweetriot's success to its progressive ideals. "Our message isn't that we're a low calorie chocolate. It's that we're saving the world," she says. "It's an optimistic message that you're not sacrificing anything. You're getting a cool and fun and whimsical product."

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Saturday, May 09, 2009

America's Most Promising Startups - NewForBaby.Com

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

In 2005, when Leigh Rubio, a Portland (Ore.) stay-at-home mother of two, saw her infant daughter accidentally scratching her face, she wished for a simple solution that she couldn’t find: baby shirts with fold-over sleeves. That only added to what she disliked about the little kid clothes on the market. Baby pants were too high so their waistbands pressed into tender, healing belly buttons. Some shirts lacked neckline snaps and were painful to stretch over soft heads. And cloying pastels and duck patterns were everywhere. So Rubio, now 34, and women’s apparel designer Lyn Huffman, 32, teamed up to design a fitted and stylish layette. Targeting newborns also helped them carve out a niche in the crowded children’s apparel market. They scraped together $75,000 in savings, a $50,000 bank loan, and, says Rubio, “supportive husbands who never second-guessed us” to create their first line. Since August, they've expanded to offer clothing made in the U.S. for toddlers up to 24 months old. Within a year they turned a profit and now bring in $5,000 to $10,000 monthly through their online store,

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Thursday, May 07, 2009

What's The Point?

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

The Internet has become the podium for rants. But Andrew Mason hopes his Web site will spur actions, not just more hot air. invites people to create or join a campaign on anything, from winter-proofing Chicago with a dome to pressuring Pfizer to cut drug prices in developing countries.

Signing up is free, and site users are not required to follow through on promises to act or contribute money until the campaign has reached what its creator has deemed the “tipping point”—the minimum number of members or funds needed to make a change. In the case of the Chicago Winter Dome, the tipping point is $10 billion. (So far, $233,085 has been pledged.) Mason, 27, dropped out of the master’s program in public policy at the University of Chicago to start the site last October.

He raised $1 million from angel investors and $4.8 million from New Enterprise Associates, a venture capital firm in Chevy Chase, Md. The site may soon reach a tipping point of its own: Mason plans to start posting ads. “If the campaign is trying to stop late fees at Hollywood Video,” he notes, “it makes a great advertising venue for Blockbuster or Netflix.”

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Sunday, May 03, 2009

How To Make Money With Alternative Media

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

Rachel Sterne, 25
New York, N.Y.

An internship at the U.S. Mission to the U.N. in 2005 convinced Sterne that there was a huge gap in the West's international news coverage and awareness in the West of what was actually happening on the ground. "I thought there must be a better way for people to share stories, create emotional engagements about the world, as well as break the barriers of censorship and media bias," she says. Her answer: democratize news publishing.

In 2007, with seed money pulled from savings and family, Sterne launched Ground Report, a Web site that enables anyone to publish news and opinion stories, as well as streaming video reports. Ad revenue and partnership fees cover operations costs and pay its 4,000 global contributors (their fees are based on story traffic; they can earn anywhere from a few cents to $250 per story). A group of 30 volunteer editors help shape about 75 to 100 stories a day, including stories on Zimbabwe's cholera epidemic and exclusive live video of Tibetan protests in Tiananmen Square during the Beijing Olympics. "We are not trying to replace the mainstream media," she says, "but complement it with a slightly different perspective." The company earned $75,000 in revenue last year and Sterne estimates it will bring in $225,000 in 2009.

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Friday, May 01, 2009

Crazy Business Ideas - WeShootBottles.Com

Link of the day - The Survivors Club: The Secrets and Science that Could Save Your Life

The pro photography scene might be in for a revival, thanks to a Yorkshire-based studio with a razor-sharp focus and web-based approach. Their name says it all: We Shoot Bottles. The studio takes photos of everything from gin to fabric softener. As long as it’s a bottle, they’ll take a professional shot of it for GBP 30 or less.

It’s all done remotely: clients send bottles to We Shoot Bottles' office, where they're shot at high resolution by a professional photographer. After a bit of re-touching to get rid of scrapes and scratches, a cut-out path is created for the client to either use in print or web design, allowing for professional-looking white or coloured backgrounds. Finally, the images are uploaded to the Bottle Bank, where clients or their designers can access them. Or, if preferred, a cd-rom can be sent through the post.

Everything on offer is straightforward and to-the-point, from the studio’s process and copy–a single-page site says everything in around 150 words—to pricing. In contrast to most traditional studios, prices are disclosed upfront—appealing to time- and money-strapped solopreneurs who need professional services at start-up prices, and saving the studio the hassle of preparing individual quotes. We Shoot Bottles was launched earlier this year as a side project for Red Photography Ltd. One to expand on in other regions, and for other product categories?

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