During my Enterprise and Venture Initiation class at UCLA Anderson, we heard a really "delicious" story of the founding and sale of Larabar. The founder Lara Merriken came to speak to us, and it didn't hurt that she brought free samples.
Here are some of the most memorable takeaways and key points from her story. On inspiration Lara got the idea for her product in the spring of 2000 while hiking. She calls it her "intuitive moment" when she hungered for a healthy and delicious snack bar made of all natural ingredients. The rest is history. On starting Lara set out on a mission to create her signature bar with only six ingredients with household names: real fruit, nuts, and spices -- raw, vegan, and gluten-free. She was able to strike the perfect balance between health and taste and sustain it to reaching $20 million in sales in 2006. The day after she got the idea, she bought a Cuisinart and started experimenting at home. She even did some "customer development" from the beginning: she brought test batches to her friends and got great feedback; people starting asking her to buy them from her when they didn't get enough samples. When she made her first packaging, she realized she needed a name. No one could come up with a good name, and her friends already identified the bars with her personality, so they just said she should name it after herself. That's when Larabar was born. The first 500 bars were all made by hand. By 2003, they got the bars into a few Colorado stores and were delivering each batch themselves, handmade in Lara's kitchen by her staff of friends. Her first hire was her dad as COO, and she hired others whose titles were "do anything" (from shipping to answering phones to baking). Lara raised $150,000 from friends and family by word of mouth. She sent a simple business plan to people who helped her test the product, and she cared about having investors who believed in the idea for the long run. On expansion As they expanded to selling 40-50 million bars per year, they established numerous manufacturing partnerships and networks. In doing this, quality were her top priority. There was even a time when one batch of their bars got contaminated and a customer complained of finding something non-edible inside the bar. Lara talked to the customer personally, admitted fault, and pulled an entire batch from the shelves, being upfront with her customers and working hard to prevent this from occurring again. When Lara started selling at Whole Foods and other larger retailers, she personally did the sales in the aisles and got feedback from real shoppers. She found it critical to negotiate with Whole Foods so that she could control the distribution of her product for quality purposes, and she managed to do this as her bar was the only one of its kind at the time and selling out continuously. On perseverance Her biggest challenges at the start were finding manufacturers and persuading suppliers that her business was viable. She explained how it took tremendous faith and luck to get through some of those tough times when deals fell through or quality issues came up. Her advice to entrepreneurs is to "stay true to your vision, surround yourself with people who support you, don’t fear risks, and persevere because anything is possible and you can make it happen.” On selling Lara was approached numerous times about selling her business. When she decided she would entertain the idea, she flew out to meet with two companies. One company treated her almost disrespectfully, showing little hospitality and not giving her a sense of trustworthiness and passion for her business. This company, though, was offering her more money than the other company's offer. The other company -- General Mills -- took a different approach. They showered her with lavish hospitality, including an entire banquet table of healthy foods upon her arrival and a lot of passion for her business and her vision. She immediately felt at home and understood -- that this company "got" her essence and was on board to take it to the next level. She ended up selling of course to General Mills in 2008, which has allowed her to continue to be involved with shaping the product's trajectory but has taken care of expanding distribution and running day to day operations. Conclusion Overall, I greatly enjoyed hearing Lara's story, and I liked how she stayed true to her ideals and ethics throughout the growth of her business.
2 Comments
At the recommendation of a friend, I read Enterprise 2.0: New Collaborative Tools for Your Organization's Toughest Challenges by Andrew McAfee. As someone deep in technology, I had already been a regular user and fan of many of the technologies presented in the book. I found it helpful hearing stories, though, of many small and large companies grapple with incorporating new IT tools into their workflows and hearing some theory around why certain things worked better than others.
The book presented an overview and description of several new technologies, focusing on the similarities among them and how companies have been applying them to be more successful. The author was originally a skeptic of the term "Web 2.0" but through research and direct case studies realized there was much value in the new technologies and a clear shift in how people were working because of them. The author got so deep into them that he was the original person who coined the term "Enterprise 2.0" and went on to write many articles for general managers to learn how to incorporate these tools. Part 1: The Power of Collaborative Technology in Business This part first went through four case studies and presented the "problem" they were facing (solution described later). 1. VistaPrint As VistaPrint's team grew rapidly, their engineering team need a way to bring new hires up to speed quickly, and so they desperately needed a thorough knowledge base. 2. Serena Software Serena had a majority of its workforce telecommuting, and it was struggling in unifying its team and meeting aggressive goals that required cohesive team effort and creativity, all while operating from a distance. 3. 9/11 Commission The Commission found that the biggest reason for failing to thwart the 9/11 attacks was the lack of information sharing across agencies. A new initiative driven by technology and more guided sharing won the intelligence community's Galileo Award and promises to help in this regard in the future. 4. Google An engineer at Google was inspired by the book The Wisdom of Crowds and various electronic prediction markets like Iowa's Markets and the Hollywood Stock Exchange. These exchanges that aggregated many opinions were found to be more accurate than experts. This engineer created an internal betting system within Google that ended up producing internal product and engineering forecasts even more accurate than those of its senior staff. Computer Supported Collaborative Software (CSCW) In the beginning, there were two fairly unpopular approaches to collaborative software. The first was groupware, mainly in the form of Lotus Notes, and the second was over-generalized knowledge management systems, which aimed to create highly structured and overly controlled databases of knowledge. Then came Web 2.0. The key to success of the new wave of technologies was network effects. The platforms were free and easy, and the structure was not defined in advance. This was evident in the Nupedia to Wikipedia transition, Yahoo's initial classification/taxonomy going away, and the advent of Delicious's freeform tagging model. The concept these systems used was to let structure emerge naturally, like Google's PageRank algorithm and tag cloud "Folksonomies" (taxonomies generated by folks). These used the concept called "emergence" as defined by research that studied swarm intelligence and ant colony substructure. The key to success of any such system is to have some adequate minimal set of rules and provide fast, full feedback to users. This is what allows these new systems, called "emergent social software platforms" (ESSPs) to grow. Other characteristics of CSCWs are that they're optional (not imposed on people) and inherently free of imposed structure. They feel egalitarian and are accepting of different types of data. The key capabilities in the systems are search, links, authoring, tags, extensions/smart recommendations/suggestions, and signals for new content. Enterprise 2.0, thus, is defined as the use of emergent social software in organizations in pursuit of their goals. New approaches to old problems
Part 2: Succeeding with Enterprise 2.0 Red Herring Concerns
|
Archives
February 2023
Categories
All
Subscribe |