TPR Podcast Episode #1: I Had No Idea How Hard It Would Be

After years of trying to launch a proper podcast with proper professional help…a milestone unlocked for me! The first episode is titled “I Had No Idea How Hard It Would Be” and I think that is also a good description of me, over the past few years, trying to make this happen.

I am super pleased this show with Texas Public Radio has finally launched.

You can listen (you should listen!) here.

But also, you know, subscribe on Apple Podcast or Spotify or wherever, so you won’t miss an episode.

If you’d like to see a quick YouTube preview of the episode, check that out here:

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UpCycled Entrepreneur

If food entrepreneurship were a series of races for prizes, Grain4Grain has proved itself a thoroughbred. They took third prize in the HEB Quest for Texas Best contest, winning $10,000 in 2019. In 2020 Grain4Grain won first prize and $50,000 in the Tech Fuel contest, sponsored by the City of San Antonio and Tech Block, a San Antonio-based technology advocacy group. In May of 2021 grocery-store giant Kroger’s Zero Waste Foundation selected them for funding and inclusion in a program for food innovators. This included a $100,000 grant, plus the chance for an additional $100,00 funding based on milestones achieved.

Their big idea, I have to admit, is pretty cool. The founders Yoni Medhin and Matthew Mechtly collect a waste product from local brewers – spent barley used for making beer – and apply a patent-pending drying process to produce flour and flour-based products like pancake and waffle mix. 

Grain4Grain also checks off a lot boxes that are current “in the moment” consumer trends. 

Medhin calls their specific form of organic recycling “upcycling,” a term I hadn’t heard before but which means turning a food waste product into a higher-end consumer food product. I’ve since learned there’s a whole upcycling mini-industry for turning waste products into highly processed foods, and it’s a big 2021 trendy food concept.

Upcycled
UpCycled Food Foundation certifies companies in the space

Following the brewing process, the spent grains are naturally high in protein and fiber and low in carbohydrates, which allows Grain4Grain to market their flour for folks who seek a “low carb” or “keto” diet, so they’ve got that diet trend covered. They also advertise donating a pound of their pancake mix to food banks for every pound sold to customers, so they do good as they do well. 

That’s a lot of different ways to appeal to folks.

Ryan Salts, the director of Launch SA, a small business and entrepreneurship center, recalls being impressed with the Grain4Grain founders and pushed them to enter the Tech Fuel contest. When he heard about the contest, “The first person I thought of was Yoni,” says Salts.

“Grain4Grain fits a diet requirement that is really popular, in the last five years, there’s been an uptick in healthier brands. And having a product that does really good things, it’s helpful,” adds Salts.

More important than prizes and a cool idea, of course, is having supermarket megastores like HEB and Kroger interested in your brand and willing to put your product on their shelves. There is no higher prize than that. In January 2021, the company announced its upcycled grain flour would be featured and used in HEB’s 140 bakeries throughout the state.

Eugen Simor runs Alamo Brewery, which along with local San Antonio breweries Freetail and Real Ale, supplies Grain4Grain’s spent barley product. Simor’s company allows Grain4Grain to pick it up for free, since it’s otherwise a cost to dispose of. 

As Simor told me “They’re taking what would normally be a waste product for so many breweries. It would normally be hauled off to a rancher to feed cattle, or end up in a landfill.” The majority of Alamo’s grain still goes toward a local rancher who picks it up for free. But he was happy to find Grain4Grain developing another use for it. 

“We did an Earth day for sustainability at Alamo Brewery and his product was one of the ones we featured. Yoni’s a really cool guy and I wanted to be part of it,” Simor says. “I was excited about having a low carb flour, and my kids like it too.”

Alamo_brewery
Remember the Alamo Beer

Salts’ particular passion is food-oriented startups, which he champions with his “Break Fast and Launch” program through Launch SA. In the food startup space, many companies struggle with trying to do both the production side and the marketing side. Many choose just one or the other. 

Medhin has managed to partner with other packagers to solve most of his manufacturing problems, to get to the scale he needs to provide upcycled flour to HEB, large-scale bakeries, and hopefully someday soon, Kroger. 

Like many entrepreneurs, Mehdin has already run the equivalent of many marathons to get this far. But in many ways his journey is still in its early days. The struggle to both sell a consumer-oriented retail product while at the same time building a manufacturing business to provide wholesale product at scale is really, really hard. He estimates they need another 6 months to solve their problem of getting to a large enough scale where he and his investors can start making money. His strategy in the future will depend more on providing bulk flour to the biggest food companies rather than direct-to-consumer sales. “Check back with me in June 2022,” he says.

I have a fascination with organic recycling. (My kids would call it an obsession, but what do kids know, anyway?)

Being eco friendly, low-carb friendly, and foodbank friendly are all amazing attributes. But Mehdin is more realist than idealist, when it comes to the needs of the consumer.

As Mehdin says, “customers don’t purchase altruistically. They say they do. But in reality for food products they purchase for taste, price, availability, texture, and health factors. You have to meet their immediate needs and you have to bring the product to the level of the traditional food products in the marketplace.”

Grain4Grain

This morning before writing this column I cooked up Grain4Grain pancakes based on their low-carb pancake and waffle mix. I can hereby certify: they were delicious. But it left me wondering whether pancakes slathered in butter, syrup, and blueberries still qualified as low-carb? I’m asking for a friend.

A version of this post ran in the San Antonio Express-News and Houston Chronicle.

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How’s Your Small Business Going Lately?

What do you do when your business is forcibly shut down from one week to the next, as has happened to first every bar and restaurant owner, and then every other so-called “non-essential” business?

I gathered anecdotal data from Bryan Potts, a San Antonio-based CPA and the owner of CFO2Go, who primarily serves restaurants with consulting and accounting services. It’s been rough. Potts says he lost 75% of his client base in March. 

With doors forcibly shut, many of his clients simply can’t pay him. Of his restaurant clients, Potts estimates that 10% are hanging on to their employees in the shutdown, while 40% have cut back as much as possible to just a few essential employees. About 50% of his clients have simply laid off all of their employees.

CFO2GO

To begin to get a sense for the scale of the hit to employment numbers this month: The Texas Restaurant Association counts 50,000 restaurants in the state, and counts 1.4 million Texans in the restaurant industry.

In a related story, US weekly jobless claims have hit catastrophic levels every week since late March.

Back in the good old days, in December 2019 – which feels like a decade and a half ago – I sat down with Ryan Salts of the small-business resource center Launch SA.

Salts’ passion and profession is to support entrepreneurs and would-be entrepreneurs as they launch, survive, and then hopefully thrive as business owners. 

This Spring, however, is not at all like the good old days. Salts invited me to listen in, as he gathered together entrepreneurs online on Zoom in a part advice-giving session, part therapy session. Potts was not on this call, although he is part of Salts’ mentoring network. 

A different mentor on the call – who asked not be named – described the process of filing with the Texas Workforce Commission for a “full company” claim of unemployment. This would streamline the process for her employees, all of whom she assumed would need to apply for unemployment benefits. 

A question among the group arose: Is it time – as the classic entrepreneurial wisdom says – to “pivot” your business model? Not necessarily.

Many restaurant owners, for example, have opened up grocery stores, or boosted their take-out and delivery businesses. Customers want this and encourage this, and employees may feel grateful for the ongoing work. But this could be – in fact it probably is – a money loser for restaurant owners. And the result of operating a money-losing pivot over the next few months could be further debt for the owner down the line when normalcy returns.

One of the Zoom participants was Jeni Spring, from The Center For Barefoot Massage. She said a widely suggested pivot runs counter to her business. She runs a San Antonio-based continuing education center to train massage therapists in deep tissue technique. In this lockdown, she’s received advice and pressure to move to an online training model for massage therapists nationwide. But that, fundamentally, is not something she believes in. 

barefoot_massage
I hadn’t ever heard of them either!

“We can’t become something we are not. It doesn’t work to move to online training, since our entire reason for being is that you have to learn massage in person. You simply can’t learn the sense of touch needed to give professional massages online.” 

So, the “pivot” is a mixed bag.

What about the other solutions business owners bandied about following the lockdown – such as offering gift cards, as a kind of down-payment on future business that would help finance the present? 

Salts offered a cautionary tale.

“I have a downtown friend. He won’t make it through this. His normal traffic is foot traffic. of the first things I thought last week was “’why don’t you do gift cards?’” 

“But everything is changing so fast that recommendations from earlier in the week change day to day.” His friend didn’t feel gift cards were ethical, Salts explained, “given that he was of the mindset that he had a 70% chance of not surviving the downturn.” 

In December, Salts and I had talked about how hard it is, even in the best of times, for food service businesses to survive. I was curious about a spate of high profile restaurant closures in my neighborhood at the end of last year. 

Salts was philosophical and realistic, based on his work with Launch SA: “Are food people good business people? On average? No,” he’d said then. “They’re really good at what they do. They’re creative. They can put together a good menu. But can they run their accounting? Can they cost things out?” That was December.

Now, of course, none of that matters. The best restaurant owner in the world cannot stay open against the COVID-19 lockdown orders.

About the restaurant businesses now shuttered, Salts has an extremely dire prediction. 

lift_fund

“Probably 50% of the places that close their doors right now are not going to reopen when this thing is over. Every single person I work with is in a dire situation of triage.”

And with those shut-downs, we are learning, painfully, how essential these small businesses are. Everything is interconnected. As Potts explained: “It shows how far small business employers contribute to the economy. It’s everything from people who clean out the grease traps to lawyers and accountants. I don’t think there’s anybody that’s not been affected by restaurants shutting down.”

Disclosure: I do occasional consulting projects for the non-profit small business lender LiftFund, which partners with the City of San Antonio to run Launch SA.

A version of this post ran in the San Antonio Express-News.

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The Entrepreneurial Mindset

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Maverick Whiskey – Small Business as a Legacy

At first glance, sure, Maverick Whiskey – it’s a small startup. Founded by a couple of San Antonio physicians with three children under age 14. In 2017, they bought a building two blocks north of the Alamo, and invested heavily in distilling and brewing and kitchen equipment. They hired food and alcohol experts. They are busy building their business’ brand with the tagline: “Unbranded since 1836.” 

Maverick_Whiskey
Unbranded since 1836

That’s a clever slogan, because we remember 19th Century land baron Sam Maverick famously didn’t brand his cattle, inspiring the word we still use today for a person unbounded by convention.

Doctors Ken and Amy Maverick celebrated their business’ official opening in July 23rd, the 216th birthday of Sam Maverick. Ken is the great great great grandson of Sam.

And so upon closer inspection, no, this is no small startup business. This is a family legacy project.

What is a legacy?

To quote my family’s favorite musical1 a legacy is “planting seeds in a garden you never get to see.”

To receive a legacy from a family member who preceded you is to have your identity shaped in ways you didn’t necessarily choose, at least initially. 

Ken received a collection of old diaries and letters from his grandmother and father. Long after becoming an ophthalmologist, he became immersed in the 18th and 19th Century stories contained there.

Says Ken, “I felt compelled to preserve and help tell some of these stories and aim to pass them on to my children.  Some are filled with murder, separations, and drama (like all families).  Some we will keep private (per my grandmother) and some we will tell.”

Ken and Amy Maverick transformed a largely empty bank building into a distillery, brewery, high-end restaurant, and historic tour-destination, all in the service of the legacy of Sam Maverick. The walls of Maverick Whiskey are covered with the official announcements, historic pictures, documents and maps from Ken’s family legacy, as well as his research.

Alamo in 1854

Texas History

Quick refresher on 19th Century Texas history: Sam Maverick left the siege of the Alamo in March 1836 to join the Texas independence convention, urging the convention to send reinforcements. We all know how that turned out. He later signed the Texas Declaration of Independence, served as mayor of San Antonio twice, then as a Texas legislator, and in the meantime accumulated vast land holdings in Texas. Those holdings were once estimated between 300,000 and a million acres. Ken says that Sam’s stated goal was to be able to ride from San Antonio to El Paso, all without leaving his own private property.

The Maverick family name continued to dominate the San Antonio scene long after Sam. His sons Sam Jr, Albert, William, and George were involved in real estate development, especially downtown on Houston Street. During the 20th Century, Maury Maverick, son of Albert and grandson of Sam Sr., served two terms in Congress and one term as mayor, as a staunch Roosevelt New Deal-supporter of the 1930s.

His son, Maury Maverick Jr. in turn, was a Texas state representative, and then became Sunday newspaper columnist for the San Antonio Express-News. Many people in the best social circles believe the latter to be the most honorable of all professions. (But I digress.)

Ken and Amy built Maverick Whiskey to answer the following question: “For adults interested in 19th Century Texas history, what’s the most fun and historic way to spend a few hours in San Antonio?”

Maverick_Bottles

Fun, because whiskey and beer and food. All of them very good.

I purchased and sampled bottles of their Maverick Whiskey, Maverick Light Whiskey, and Maverick Gin. I have further sampled four of their brewed beers. Plus dinner. (All of this strictly for research purposes because, you know, journalism). Rum and Tequila-style spirits are planned at the distillery as well.

Palimpsest Set In Stone

Historic, because like a palimpsest set in stone, 115 Broadway offers layer upon layer of history lessons, starting from the underground up. 

The building sits in a corner of the original Sam Maverick homestead, within site of the Alamo ruins. Later 115 Broadway was the location of the Lockwood Bank, formed in 1865, which in the early 20th Century built a massive classical Greek-Revival structure that implied the bank would last forever. It lasted just a few years.

Inside, on the walls, Maverick Whiskey has preserved the optimistic bank announcements of 1929, as well as the more sobering announcements of re-opening during the Great Depression, a few years later. 

The Mavericks now store and age their newly distilled whiskey in barrels in the old Lockwood bank vault underground. Underground, below the dirt of Sam Maverick’s homestead – this is where symbolism and word play converge. 

Ken_Maverick

Ken and Amy have literally sunk their liquid assets into an old bank vault, in the hopes that it will, over time, compound in value. Ken told me his legacy to his children may someday be that aged whiskey and his great great great grandfather’s recipe. Alcohol is one of the few physical assets – unlike cars or jewelry or even gold – which may increase in quality over time.

For physicians to take on such a huge legacy project raised questions in my mind about expected return on assets. From the seeds they have planted underground in their garden, all in the service of Sam’s legacy, how will the Mavericks realize a return on their investment?

Whiskey takes time, after all, to age.

Some new businesses decide to do one small thing. That is not at all what Ken and Amy Maverick have taken on with Maverick Whiskey. This is a historic building telling the story of a historic family that profoundly shaped early Texas and San Antonio history. It’s also part food and drink place, part event space, part tourist destination. I bought the t-shirt too.

A version of this post ran in the San Antonio Express-News.

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  1. Lin-Manuel Miranda’s “Hamilton.” Duh

Education for Entrepreneurship

testing

testingI wonder about the following question: are entrepreneurship and traditional education totally at odds? Can practical business skills only be learned on the job? Or can we teach this at school? And if at a school, how do we teach the key skills of launching, running and succeeding in business in a school setting?

In early March, I attended my first Pitch-A-Kid competition, which struck me as a highly plausible learning tool for school age students to gain insight into startups.

Equally important to this plausible experiment in business skills-building was the setting, the open presentation space within CAST Tech, a project-based learning school founded in 2017 to address precisely my questions above.

Amir Samandi, Mentor Coordinator and Partnerships Director for CAST Tech, the in-district charter school in San Antonio ISD focused on business, tech, and design, invited me to this Pitch-A-Kid competition.

pitch-a-kidI sat directly behind Timiera Jackson and MaryJo Armas, aged 15 and sophomores at CAST Tech. They, along with four others from their tenth grade class in Entrepreneurship, formed the judges for Pitch-A-Kid.

Pitch-A-Kid takes the traditional venture capital model – young startup founders pitching to older capitalists – and flips it on its head.

Instead, seven startup founders – adult entrepreneurs in their first few years of business – compete to win over the high-school age judges. Like most startups, these seven businesses still seek the right mix of concise pitch, customer experience, staffing, and of course capital and a steady path to profitability. These startup founders don’t have it all figured out yet. But that’s ok. They are pitching to the high school kids – the judges in the contest – to develop their own skills.

We heard pitches from:

Some pitches I understood the unique value proposition and potential path to profitability. Some pitches I just couldn’t see it. I was just happy none mentioned Cannabis or the Blockchain, the buzziest buzzwords of the 2018 startup scene. Thank goodness for 2019. I guess AI is still the third buzziest word.

The high school sophomore judges made their own evaluations and scored the pitches themselves, to determine the contest winner. Ideally, as well, they absorbed the importance of public speaking, organizing complex ideas while sticking to plain language, and the startup problem of metaphorically flying the plane while simultaneously building it at 30,000 feet.

Cast_TechThe questions and comments from high school judges echoed my own thoughts.

“Have you considered outsourcing, to bring costs down?” one judge asked the meditation-cushion manufacturer.

“What are your profits?” another judge asked the customer-service app founder. Great question.

“I don’t understand your business,” I heard one of the sophomores query the AI-driven lead-generation company. I had to agree with her.

Mike Millard, the founder of Pitch-A-Kid, kept the presenters to their strictly enforced 5-minute pitch, followed by another time-limited Q&A session afterwards.

Perhaps true to his mission and style, Millard’s chief timekeeper for the event was his primary-school age daughter Audrey, who he credits with inspiring the idea for Pitch-A-Kid through her own inquisitiveness around one of Millard’s own startup plans.

The benefits flow in both directions from Pitch-A-Kid. Startup founders get a chance to hone their pitch for a critical audience. They get to learn, directly through questions from teens, which part of their story is the weakest, and which part resonates.

CAST Tech

The fact CAST Tech brought in Pitch-A-Kid is no accident. Samandi described the challenge traditional schools face in teaching business and entrepreneurship. His mission, and that of his entire school, directly addresses that.

Says Samandi: “In my experience, I was in a classroom for 6 years.

testingThe public school environment can be a bit bureaucratic. For example, if a kid wants to sell a candy bar, that breaks the rules. That stifles creativity and entrepreneurship. It makes it hard in that environment for entrepreneurial thinking to thrive. The environment really promotes conformity.”

Samandi mentioned that many of the sophomores in the Entrepreneurship class judging at Pitch-A-Kid had participated in Startup Week in October, themselves pitching adults in the local tech scene. But as Samandi says, much of CAST Tech’s approach by necessity is to “flip the script” on traditional learning, to foster entrepreneurship.

Samandi told me: “CAST Tech reimagines school from the bottom up. We are asking – how do we make school an entrepreneurial environment? If we’re going to make business, tech, and design the focus, you’re really going to have to open up.”

It’s a cliché – that probably has some truth to it – that the traditional school process discourages entrepreneurship. Breaking the rules? Thinking outside the standardized test? Trying something that very likely will fail the first few times? Specifically disregarding received wisdom and undermining the old way? These are all keys to succeeding in entrepreneurship and fast-moving businesses, but these behaviors are total transcript-crushers in a traditional educational setting.

On the other hand, traditional schooling rewards skills that would be career-destroying in many businesses: Stay in neat rows, stick to your own lane. Remain silent. Work alone for long periods of time, quietly producing long-form texts based on classic ideas from 20, 50, or 150 years ago. What are doing – training kids for a monastic life?

You won’t learn the “move fast and break things” mantra of Silicon Valley in a traditional school.

A project-based learning school like CAST Tech trying to “flip the script” strikes me as a difficult and worthwhile, project.

A version of this post ran in the San Antonio Express-News and Houston Chronicle.

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Book Review: Getting To Plan B by John Mullins and Randy Komisar

Plan_B

Katy Aucoin’s original plan when she founded Dearduck  in 2015 seems exciting and profitable, to my untrained eyes. Three years later, following an investment by startup accelerator RealCo and a move from the City of Houston to San Antonio’s tech hub on Houston Street, Dearduck plans to make money in a very different way than when Aucoin started.

Shifting away from an original business plan isn’t unusual. It’s the norm. Venture capitalist Randy Komisar and business professor John Mullins wrote the now-classic Getting To Plan B: Breaking Through To A Better Business Model because entrepreneurs almost never succeed based on their first business plan.

As Komisar and Mullins describe it, a startup founder sets out with the first version of her business to test her business hypothesis. As data from those tests comes back, she hopefully figures out in time the need to develop a Plan B. Customers might not respond the way you expect. Your pricing model could be off. Any number of startup assumptions could turn out to be wrong and the data will let you know.

dear_duckWith Dearduck, Aucoin began with a passionate idea, and an assumption. Gift-buying for other people – a friend, a co-worker, a lover – is an opportunity to strengthen a relationship, or not. She set out to build a better way to buy gifts for other people, using easy and fun surveys and data analytics to aid in gift curation.

Before calling Aucoin, I took some online Dearduck surveys, which walked me through series of picture-based choices: one survey regarding pets, another regarding booze. With this data, Aucoin says, Dearduck begins to identify my “consumer DNA,” unique to me. Through the first Dearduck app, she has the consumer DNA of up to 50,000 unique buyers. It indicates what things I like and allows a gift-purchaser to select something that matches my preferences.

In her original business launched in 2017, Dearduck sought to make money by sharing in “affiliate commissions.” In other words, when her data targeting drove a successful online sale, the retailer would pay Dearduck a percentage of that sale.

Katy_aucoinHer business has since pivoted to Plan B, but the core idea remains.

With Aucoin, you can hear her zest for gift-buying.

“We want to give someone that happy feeling of finding the right thing. It’s very exciting to think that people could have that feeling all the time. You just feel closer to people as you learn more about them.” By contrast, she says, “when you find yourself saying ‘Oh, if you don’t like it, there’s a gift receipt,’ that’s a problem, you’ve already failed. You already feel defeated about giving a gift.”

But while that initial core idea remains, Aucoin had to reject Plan A for how the business would make money.

Komisar and Mullins’ book may be read as a critique of the idea that startups should build an extensive “business plan,” because that plan will inevitably go wrong. Plan A – as their title implies – isn’t actually going to work. What can substitute for a fixed business plan, according to the authors, is a series of business questions and hypotheses. Then, as data on those questions comes in, a startup founder needs to respond as quickly as possible.

Aucoin’s experience mirror’s this, as the data she collected after launch began to change her business. Retailers began to make requests that she hadn’t expected. Aucoin says she conducted over 100 interviews with retailers. In addition, some of her original data on purchases was messy. She tells a funny anecdote about her boyfriend purchasing gifts for her, only to have his “consumer DNA” suggest that he now regularly wants to buy yoga pants and lipstick. Which, she says, is not quite the right signal to retailers.

As far as we know. Anyway, I’m not judging either way.

With a retooled business model, Dearduck is a few weeks away from launching Plan B, with a large San Antonio retailer. The new plan is that Dearduck’s Consumer DNA data can be used to target relationships – again, between friends, co-workers, relatives, lovers – to aid in gift-buying email campaigns, often timed around an event like a birthday or important date on the calendar. The retailer will pay based on the targeted campaign to potential customers.

Plan_BThere’s nothing easy or straightforward about doing what Komisar and Mullins say is natural – the rejection of Plan A in favor of a Plan B. Komisar and Mullins don’t really address this in their book, but it’s hard.

About downsizing from 6 team members and then moving from Houston to San Antonio, Aucoin says “It’s extremely hard. It’s emotional. You have to be willing to make the right decisions for where the company is going, not where it has been. Your customers will tell you what the product is. ‘This is how I want to use it.’ And then the retailers saying ‘We think you can solve this in a different way’”

Michael Girdley, a founder of RealCo, the accelerator that helped attract Aucoin’s business to San Antonio, finds her business shift natural. He says,

“If you’re blazing a new trail, it’s completely normal and expected. Obviously, dentists or similar established business models don’t have that challenge.”

Girdley continues,

“In startups, it’s the norm rather than the exception to learn things about your market and shift directions after starting.”

Entrepreneurs reading this: I’m interested in your stories. Are you on Plan B? Or Plan Z? Or were you, unusually, correct in your business assumptions right from the beginning?

 

A version of this ran in the San Antonio Express News and Houston Chronicle.

 

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