When You Reach Higher You Cannot Lose
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When You Reach Higher You Cannot Lose

After the 2009 announcement of Coke’s investment, some of my friends and relatives assumed that we’d simply start loading blue cases onto those ubiquitous red trucks and suddenly Zico would appear in the beverage aisle in every store in the country and beyond. Both Coke's Venturing and Emerging Brands team and I believed that Zico was still much too small to survive in the Coke distribution system, let alone thrive. We agreed on a revenue target, assuming it was good quality revenue (focused on limited markets and channels) that would be the right point to begin to integrate Zico into the Coke system.

Until then our team would be completely in the driver’s seat, which was a good thing. We were in a street fight with our coconut water competitors—an all-out battle for the hearts and minds of retailers and customers alike. Coke’s conventional weapons, including their infrastructure, traditional advertising and distribution system, was more cumbersome than the largest of battle ships. It could not be turned on a dime to focus on little Zico. Our objective became clear: to grow the brand mostly through non-Coke channels over the next 3-4 years as we learned how Zico might plug into the Coke system when the time was right.

Jesse Itzler, a co-founder of Marquis Jet who had become a sort of center of gravity for the celebrity and sports world in New York, and his team soon began to kick into gear. Kelly Ripa showed up in gossip pages with a Zico in hand. Amare Stoudamire was drinking Zico at a press conference to announce he was signing a $100 million dollar deal to play for the Knicks. Then Lauren Conrad was at an outdoor cafe in LA, Courteney Cox on a movie set, Ellen Pompeo getting into an SUV after a work out—all holding Zicos. Boston Celtics Kevin Garnett was quoted saying how critical Zico was to his performance. I never exactly knew whether Jesse was responsible for these seemingly unintentional celebrity endorsements but I was always happy with the buzz and excitement they brought. My favorite photo of the bunch may have been Gisele Bundchen valiantly fending off the intrusion of a paparazzi’s camera by shielding her face with a bottle of Zico in hand—label facing the camera of course.

Jesse was able to get living legend Walt Frazier to pay a visit to the Big Geyser annual distributor meeting and leveraged his Marquis Jet connections to help us charter a private jet to fly some top-selling distributors to a Patriots vs. Jets game in Boston. That got their attention. If nothing else, Jesse was making everything at Zico even more fun.

I had heard through the grapevine that Alex Rodriguez was an avid Zico fan a few years earlier, so was not surprised to learn that he was part of the group that invested with Jesse. Jesse got him to do a little video talking about how much he loved Zico, encouraging the Big Geyser sales reps to sell it everywhere.

Jesse said A-Rod and his agent wanted to discuss him becoming an official spokesperson for Zico—a service which certainly would come with a big price tag in cash or equity in the company. A-Rod was handsome, a great ball player and one of the most famous athletes in the country. In 2009, however, he had tarnished his on-field heroics by admitting to steroid use and around the same time his marriage was destroyed when he was connected romantically with Madonna. The guy was a hot mess and not exactly a poster-child for the all-natural image we were trying to portray. I told Jesse, that while I was happy to have A-Rod as a customer and investor, I wasn’t going to give him extra money or equity to publically endorse our brand.

My mistake was that I thought I could take the benefits of Rodriguez without much risk. I accepted his investment in Zico and was pleased when rumors got around that we were delivering cases of Zico to Yankee stadium at the request of the team’s biggest star.

But then things got a little crazy. Madonna, it turns out, was an investor in Vita Coco and an active public endorser of the product. And Madonna’s business partner Guy Oseary also happened to be A-Rod’s manager. Of course, I’m not sure what sort of conversation happened between Madonna and A-Rod or in what situation, but suddenly Rodriguez was publically endorsing Vita Coco.

The press had a field day. “Alex Rodriguez looked like a nut yesterday after backing two rival coconut water brands,” wrote the New York Post. “Error on the Play: A-Rod Endorses Vita Coco While Investing in Its Biggest Competitor,” said Sports Business Daily. USA Today had the most insightful take, pointing to the dangers inherent in having celebrities as investors. “The coconut water craziness shows what can go amiss when a growing business takes money from a “celebrity” investor. . . . Typically, only company insiders know the details when a problem arises with low-profile investors. But when a famous name is involved, it can quickly become public fodder.”

That USA Today reporter had it right but the truth was that the A-Rod dust-up was only a minor setback. For the most part, the celebrities who embraced our brand were very much aligned with our own motivations and intentions. Nearly all were interested in putting their names and influence behind products that they both believed in and moved the dial toward health, sustainability and social good. With few exceptions, they weren’t just out to make a buck but to make the world a better place by degrees.

Scaling the Heights

The next two years were a whirlwind. Sales continued to grow at a strong clip through Big Geyser in New York and with the help of broker Presence Marketing in natural foods. We built out our team to replicate the powerful New York model in other markets across the country. We also closed a deal with Trader Joe’s that boosted our volume significantly. Our team and sales consultants LA Libations got Zico into select regions of Target, Costco and 7-Eleven and other major chains. Our test of Zico in Coke’s Los Angeles market showed that the brand could work within their system with the right focus, attention and alignment. Our sales skyrocketed past everyone’s expectation.

As this happened, I traveled around the world to shore up our supply lines to insure that we’d never be at the mercy of a single supplier. I made deals in Thailand, Indonesia and the Philippines. Once again, in choosing who to work with, I relied less on external certifications than I did on my own assessment of the working conditions and the owners values. I make no claim that this was a fool-proof process, but I believe I developed an increasingly keen instinct for assessing the ethics of other businesspeople and their organizations.

Sharing the bounty of the growing American market for coconut water in communities where it had a meaningful impact on the population’s standard of living was a great feeling. I remember a woman named Khun Nam in Thailand who ran a multi-generational coconut farm at the time I met her. Within a year, our contract allowed her to hire fifty additional workers at good wages and upgrade her processing plant so that it could pass Coke’s stringent quality standards.

In October of 2011, I was back in Hermosa Beach in a meeting with the sales staff when Candace Crawford, our CFO, knocked on the door.

“I have some news you’re going to want to hear right now,” she said. I excused myself and went to her office.

“The sales numbers for October are in,” she said. Her expression was all business but I could tell that she was either going to tell me really good new or really bad news. “Last month we did over $6 million in sales. That brings our total for the last 12 months to almost $40 million.”

Then she smiled and gave me a high five. That number was critical because it was well above the figure that opened up the possibility Coke would increase its stake in Zico and we would begin discussions about full distribution in their system. I had predicted that it would take us 3 to 4 years from signing the Coke deal to reach this point. We had done in it in less than two.

A few months later, I made my annual pilgrimage to the Natural Product Expo West Show in Anaheim, California. I had attended the show with Zico each year since 2005, our first full year in business. It had always been a critical place to meet buyers and industry leaders, to show new products and sign up new retailers. We had, as usual, a beautiful booth with a gorgeous blue background, white floor and countertop all reminiscent of a tropical spa. We had a team of sales, marketing and office staff manning the booth and there was more excitement and energy than ever.

Only a few weeks earlier, industry veteran reporter Gerry Khermouch had written a story speculating that Coke was finalizing a deal to purchase a controlling interest in Zico. That was followed by a Wall Street Journal article that stated the same. As the rumor circulated, I found that I had become a minor celebrity at the trade show—even beyond the typical beverage set. I was getting congratulated and high-fived by people I’m pretty sure I’d never met. Others cornered me at every opportunity to ask how I had done it. Sticking to the confidentiality agreement, I demurred but I’m sure my face gave it all away. It was a big deal and everyone including myself now expected Coke to put its real muscle behind the Zico brand and eventually scale fast, become the number one brand and buy all of our remaining stake. The finish line was in sight. I’d have happy employees, ecstatic investors and a relieved wife.

I still enjoyed working the Zico booth, but I also took the time to walk the showroom floor. I remembered being awed by the creativity on display at the Fancy Food Show in New York when I first joined this industry. Now, eight years later, the spirit of entrepreneurship in the beverage and food sector of the American economy was only growing. I loved the passion and potential displayed on this tradeshow floor.

“So now you’re working for big red,” a Coke person I vaguely knew said, slapping me on the back and startling me out of my revery. “Welcome to the big league!” I’m sure he meant it as a compliment but I wasn’t sure I liked the sound of it. Being a smaller player in this dynamic world had been challenging and exciting, and I wasn’t sure I wanted to give that up.

Big Red and Little Blue

Once the Coke ownership of the majority of Zico had become official, we could plan for a national rollout. Coke’s eventual 100 percent purchase of Zico wasn’t guaranteed but seemed all but inevitable. Now that we were going to put the full force of the Coke system behind us we believed the brand would scale even faster. But no one expected it to be an easy transition and it certainly wasn’t.

But we were not alone. Coke took a few years to get it right with Smartwater, which is now a massively successful brand. Same with Honest Tea, which was now in 100,000 outlets and growing by leaps and bounds. Big companies move slowly and the efficiencies that they offer can’t be turned on like a switch, which is one of the reasons why it is difficult to introduce small brands into any large corporate structure.

Though we had our challenges, I was impressed that nearly everyone I worked with at Coke seemed truly thrilled to be working on a product that they knew was healthy and good for the world. I knew they were as committed to figure out how to make it work as the Zico team. Over the next year Coke would help us increase our store count from roughly 15,000 to more than 30,000, continuing to add more every year. The Zico operations team figured out how to scale production in a massive way and develop an impressive pipeline of innovations. The Zico and VEB marketing teams would launch the amazing new “Crack Life Open” marketing campaigned anchored around Jessica Alba. Our field sales and marketing teams would figure out how to build the Zico brand in markets across the country.

By the Fall of 2013 I realized that if we were going to fully capitalize on the massive opportunity in front of us, we needed to solidify our relationship. Coke needed to make a decision: would they buy ZICO or not? Though contractually they had the option to do so in another year or two, I worried that if we waited that long we would miss out on the full potential of the brand. As a semi-independent company, we just wouldn’t be able to continue to invest the amount of money required.

I decided it was time to bring this to a head and have a serious conversation about what to do next. In a meeting in Atlanta I told the Coke team that in order to stay competitive with other brands, Zico will require more investment and a more aggressive strategy than the cash available from our current deal with Coke would allow.

I spelled out three scenarios to deal with the situation. I would either get the autonomy and the resources to swing for the fences in a fast-moving market or Coke could buy us now and get the full benefit from their additional investment in the brand. If Coke really didn’t believe in ZICO then I was prepared to raise the money to buy them out. All the scenarios would benefit the brand we had worked so hard to build.

The Coke team agreed with my assessment and needed a few weeks to consider all their options. I presented no bluffs. I was ready to make good on any of the options. What I was not willing to do was see the Zico brand unable to realize its true potential. What would Coke choose? I had done my part. I had spent been nine years to get to this point. From here forward it was providence and I was ready to accept whatever laid in front of me.

Did We Win Yet?

Business books, like history books, are written by the winners. But what does it mean to win in this day and age? When and how do you know you’ve won? Here’s the conventional story of how we won: it happened the evening of November 20, 2013, when I received word that Coke had officially bought Zico.

A little after six on a warm evening in Southern California I was driving past the office buildings and small shopping complexes on Aviation Blvd on the way from Zico’s offices to my family home in Redondo Beach. The dashboard monitor on my high-tech little Toyota Prius announced the call from my CFO/COO Candace and although I already suspected what she had to tell me, I could feel my heart rate jump. After a tense and difficult negotiation, Coke had opted to accelerate their full buyout of Zico. Never had I played for higher stakes. My palms sweat to recall critical moments, but a deal had been agreed to that I felt was fair to us, our investors and our mission. All that was left was for a very large amount of money to be wired into the Zico bank account.

“Hello,” I said in a voice that I hoped sounded calm and optimistic.

“It’s done,” Candace told me with no preamble. “Just got confirmation from our bank that the wire left their bank already. It will be in our account in the morning.”

Fearing that the gods of irony might be in a mischievous mood, I found a safe place to pull over. That a fortune the size of a multi-state lottery was hovering somewhere in cyberspace on the way to Zico’s account was big news for me but also, I knew, for Candace and so many others. “All I can say right now is thank you for helping me navigate through this,” I said after a pause. “Go have some fun and I’ll see you in the morning. I’d really like you to be there in person for the conference call tomorrow.” She and I both understood that we still had a lot to do. We had to tell the Zico staff and begin the integration process. I was looking forward to the substantial checks I was going to get to sign for every employee and all the patient and supportive investors who included many family members and friends. No doubt about it, big changes were coming to a lot of people, myself included.

After disconnecting the call, I sat there on the side of the road and thought about the journey we had been on. Over the last ten years we had been through so much: the adrenaline rush of our launch; the dark times teetering near bankruptcy; massive swings in fortune as we struggled to create a stable supply chain in developing countries.

Money is our culture’s most common metric for success. But it’s too simple a scorecard. Money may make for a compelling story but it certainly does not guarantee a fulfilling life. Sitting on the side of the road as the sun settled down on the Pacific Ocean, I knew already that I had a different story I wanted to tell.

The honest truth is that I had never only measured my success creating Zico solely by the numbers, whatever they might be: growth rate, market capitalization, market share, IPO valuation, sale price or even the size of my personal bank account. Of course, I did pay attention to the numbers and was more than happy to know my bank account would include a few more zeros at the end. For those who become addicted to that game, however, no number is high enough. The sale to Coke was a case in point. Even though I had landed a significant fortune—enough to provide my family with financial independence indefinitely—I knew others would wonder if I should have gone bigger. Should I have held onto the company, angled for an IPO, gone for billions?

Let me give you a thought experiment: Let’s say you are at the beginning of starting a business and you suddenly have the power to see the future. What you can see down the road, say after ten years of hard work, is the business does just okay—nothing close to the rip-roaring success you had dreamed of. The question is this: Would you still invest your passion in that business?

The idea that you might answer that question with an enthusiastic “yes!” might puzzle many old-school business thinkers. Certainly, with your magical foreknowledge, you’d place a more promising bet with your time and energy. But what this sort of thinking ignores is the value inherent in the journey—the experiences, personal growth and happiness that happen along the way. The impact you can make on other people’s lives. I believe that if you pick the right product or service that’s aligned with your highest and best use and imbue your business with your personal philosophy—those ten years will represent one of the best decades of your life regardless of the zero or zeros in your bank statement.

The flipside to this thought experiment is suppose again that you can see the future of your business and a true pot of gold awaits you ten years down the road. But to get there you learn that you’d have to sacrifice your marriage, give up a meaningful relationship with your children, betray devoted employees, take advantage of impoverished populations and damage the environment. Very few of us are sociopathic enough to make that sort of deal up front. The sad truth is that in retrospect, this is the bargain that many businesspeople end up making. Let me state the obvious: It’s a bad deal. No amount of money is worth a decade of incrementally losing your soul.

So how did I know I had won? Let me tell you another story that happened on the same day I got the phone call that the deal with Coke was done. It took place just a half hour later when I got home to my family. Maura was cooking a simple but typical dinner of black beans, rice and salad and our younger daughter, Lexi, was finishing her homework at the kitchen table. Our older daughter, Ciara, would still need to be picked up from gymnastics in an hour and it was my turn to do so. Of course, I told Maura the news and she threw her arms around my neck enthusiastically.

I’ll remember that evening mostly for our simple family dinner together. Not all business entrepreneurs are so lucky on the day they cash out. Some go out to thousand dollar meals with expensive wine but come home alone to large empty houses. The fact that I had my family beside me for the entire journey and that we were eating the same meal we’ve had a hundred times, was certainly an indication that I had won and, in fact, had been winning all along.

So had we sold out? If our goal was to run Zico independently forever and pass it on to our kids, then perhaps. But that was never our goal. Had we sold too soon? If our goal was to be centa-millionaires or billionaires then again, perhaps.

After dinner, Maura and I cleaned up as we finished a bottle of wine and talked through the last ten years. We toasted to this big milestone and breathed a sigh of relief. We also discussed regrets—both the ones we already had and those that we might have in the future. Our learning curve had been so steep along the way that mistakes were inevitable and we made many. And we had so many ideas yet to implement.

Letting go of Zico was hard and trusting Coke with the brand that we had cultivated and nurtured was certainly a gamble. Would they know how to maintain and grow it? Our dream was that in selling Zico to Coke we’d begun a change for that company—that they would use their massive production, distribution and marketing power to begin to deliver a healthy beverage to populations around the world. That would be a public health coup of major proportions but it remained to be seen if they would pull it off. How would they treat employees and suppliers down to the farmers and what would happen to them? Would they continue to factor in the environmental impact of Zico? It was all uncertain. But what I believed was that fundamentally the people at Coke wanted to do the right thing and that the Zico brand and team that would continue to run it were strong enough to survive and thrive in that environment and keep the brand values intact.

Putting the what-ifs aside, we talked about the lessons we learned about starting a business and creating a brand in a rapidly changing business climate. In a decade we had established Zico as an icon-in-the-making brand and been first to market in what was on its way to be a multi-billion dollar new global category. We had helped spark a revolution in the beverage industry that had for over a century relied on selling caffeinated sugar-water in endless varieties and flavors. We had made a positive contribution to the health of millions and spurred massive and sustainable economic development in numerous poor countries. We had given ourselves and our team of employees the opportunity to learn, contribute and grow. We created a brand that stood for something good in the world and delivered authentic value by looking within our own lives to discover what was important to us. As our reward, we now had the knowhow and financial resources to help other entrepreneurs on their quests and many of them were taking the concept of reaching higher to a whole new level.

Standing in front of a piece of fine craftsmanship or a piece of art, you can sense the human passion and joy that went into the creation. I believe that businesses and brands today should be no different. Like many other entrepreneurs, I discovered that consumers respond enthusiastically to products and brands when the passion, personality and enthusiasm of another person shine through. If you reach higher and pursue a venture that is deeply personal, bigger than just you, and is as close to your highest and best self, you cannot lose and the world will be better for your having done so. That is reaching higher and that is revolutionary.

This post has been adapted from HIGH-HANGING FRUIT: Build Something Great By Going Where No One Else Will, on sale now from Portfolio.

Karen Sepahmansour

Self-Employed Broker; Author

7y

Thanks for weaving in the values along with the numbers in your achievement.

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Madeline Haydon

Founder / CEO / Inc 5000 Awardee & Female Founder 200 / Amazon Small Business of the Year / Entrepreneur of the Year / Speaker

7y

I'm enjoying your book. Thanks for putting your heart out there along with sharing the lessons learned. Now weave your magic at HM!

Timothy Diorio

Operations Specialist at Vanguard

7y

Wonderfully written; congrats on your brand growing up and leaving home. Love Zico!

Ari C.

Defense | Health tech | Augmented Reality

7y

Thank you for this article. It creates a huge motivation to not quit or question your ability to be great! Your family is amazing for trusting you in securing their future.

Mike Rosen

Chief Marketing Officer @ Guide Dog Foundation for the Blind and America's VetDogs | Marketing Communications

7y

I remember meeting with you, Mark, when I was still at my old agency, Bratskeir & Company. You were just getting started with ZICO. I had a sense you were going to succeed...not because I thought you were smart -- that was clear -- but because you were authentic and grounded. Congratulations.

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