Live from Business of Software 2011 - Peldi from Balsamiq (@balsamiq) interviews John Nese (@JohnNesePop) about building a successful small business based on strong values and serious customer care. Outstanding transcript captured by Justin Goeres (@justingoeres).
Peldi: How'd you get started?
John Nese: We were an Italian grocery, and we were going broke. Supermarkets bought the distribution channels for the smaller markets and closed them down. That was in about 1985-1990. Everybody went to the cheaper alternative.
It was around '95 we started thinking that '97 would be ONE HUNDRED years, and nothing to be ashamed of. So we worked to that goal :). If we could make it to the year 2001, we would have survived to A NEW MILLENIUM. So we worked to that! Big soda companies (Pepsi) sold soda to us but not at a level we could make a profit at, so we sent our customers to the grocery down the street. Why not??
Decided we could sell ANYTHING we want, it's OUR STORE. Went out and found old, small bottlers and sold those.
My daughter is very bright. She said that this is great but if people don't know about it it's no good. I'm going to send a letter to Western(?) Magazine and tell them. Also I'm going to write to Huell Howser (http://www.calgold.com). On Monday we got a call from Huell, they wanted to do a show.
Filmed in two weeks, and two more weeks it was broadcast.
So then the Times called. They brought Charles Perry in and did an interview. Then they wanted a photoshoot. That column went into syndication and ran for nine months around the world.
One day a man walks in with a newspaper with a photo in it, from a newspaper he found in Tokyo!
P: So your daughter's in marketing
JN: She's a chiropractor!
P: Speaking of doing your job, how did you learn? You started at 5. How did you learn to be the business owner and get good at it?
JN: Oh, all my life! I started early and had good models. My father owned the store before me. My father said you have to go broke 3 times before you make it. That's been the while thing in this conference: DON'T BE AFRAID TO FAIL.
P: Do you have people you look up to still to this day, that inspire you? Who do you want to be when you grow up?'
JN: I read a lot. And the person I got the most knowledge out of is Cincinnatus (http://en.wikipedia.org/wiki/Cincinnatus) He was a farmer who joined the army to fight for Rome, then put down his sword and went back to the fields.
P: So it's about doing the work. There's a job to be done. So how much do you work?
JN: I never do work! I just go in and play! I started going to work with my father, and I'd dust the shelves. And what I really liked the jelly rolls on the bottom shelf and I wanted to know how the jelly got in there. Or how the cheese was made.
Eventually my father said I guess you'll go to work for a big company now. But I didn't want to. He said, "You're a damn fool. Go for the money." But I knew I wouldn't be happy and I would have a new challenge and something new every single day in the store.
(applause)
P: I knew the audience wouldn't like you ;). So you've been very successful.
JN: I'm just doing what I always do. There's pressure to grow, and that's a really big problem. I wanted to develop a buying co-op. But then the bean counters got involved and they said I couldn't do that. Then I remembered what happened when the chain stores bought the distribution channels and shut them down. So the co-op didn't happen.
I'm not interested in The Pyramid -- the franchise model where the only ones who make it are on the top. That's exactly what's happening with soda pop stores now. $100k investment to get started then they force you to buy everything from the people you paid for the franchise!
P: So people are knocking this off and copying it?
JN: Oh yeah, and everything in there is private label and it's not authentic. And it's OK that they do that, and they're making a lot of money but it's not real.
P: How many people do you have?
JN: We have about 8 or 9 people, and my health is getting better! I've had employees who are dedicated people. When we were going broke she didn't take any money for THREE YEARS. Another lady's been there 20 years. So we've had very long-term employees. It's like a family.
What I see today in the US is young people have a hard time working :). They want to start at the top, and with me that's not going to happen. Then they have an appreciation for the people who stock the shelves, mop the floors, etc.
P: So suppose I wanted to work for you…
JN: I probably couldn't afford you!
Here's an example: we just hired a lady. She had a job, and I went and told her current employer DON'T EVER LOSE HER. Well, they lost her, and I hired her.
I didn't steal her, I just said, "I like the way you work, I would like very much for you to come and work for me." And she did. She has a lot more to learn, but everything she does is meticulous and she knows what she's doing.
P: Will you retire?
JN: No. I talked to the doctor about it.
I have grandchildren, and they play on the pallets and they come to me and say, "You're the boss, right? Does that make me a boss, too!"
P: So he's the one!
JN: They're twins, and he puts on his Soda Pop Stop Trainee shirt when I go see him.
P: In the video you look very hands-on.
JN: Well, I'm the CEO. That's just three letters!
P: How do you keep doing what you love with 9 people to manage? This is my problem.
JN: You have to work into a solution and every solution is different.
P: OK that doesn't help me :D. OK, well… So what kind of metrics do you look at?
JN: What kind of what?
P: Thank you so much for that!
JN: Well you know, you asked about retiring. I've known my doctor for 40 years. He says work as long as you can. My parents did, both of them.
P: Do you have any company policies on vacation/salary/bonus?
JN: The older ones, yes. The new ones, the laws have been changed. The politicians shouldn't talk about how many jobs they've created, but they should talk about how many PART TIME jobs they've created. We should be creating WEALTH. What good are part-time jobs?
P: So you're creating wealth with these smaller bottlers.
JN: Early on these bottlers said, "We can't compete." I said, "Remember, you have to make a profit. If you don't make a profit I can't buy your stuff. Don't worry about the other little bottler because you'll help each other sell your products. Worry about Coke & Pepsi because they want to put you out of business.
P: I have an idea. Give the soda away but put ADS on the bottle. Not eyeballs, but throats! Let's talk about doing business with businesses your own size. I like businesses my size.
JN: Yeah! You can call the CEO and talk to him and he'll talk back, etc. A few years ago I was doing business with their family. This candy company registered the name Soda Pop Shop (not "Stop"). So my lawyer got involved and it was expensive. So I said, "Look, they're bigger than me. I can't do this." So I called them, and they were in the wine/beer business. And we worked it out in about 3 minutes. So what do I need an attorney for there? And it works!
P: I read somewhere you're giving back to the local community. Tell me about that.
JN: We've been at this location since 1955(?). There's a Indian museum in LA. And there's another museum stealing their collection. They promised to keep the Southwest Museum open, but they picked up the collection and put it away and closed it. The politicians in LA are taking the dollars. And the museum is sitting on a religious site for the Native Americans, and they're whitewashing it.
P: So what are you doing?
JN: We had a fundraiser soda tasting. And it was really successful even though the LA Times won't write about it. And I was very happy and I'll do another one.
And by the way I never wanted to do that soda sampling. I think people should do their own samplings. But this was the fastest way to open a line of communication with people.
P: So we heard about pricing. How much freedom do you have in pricing?
JN: We have to make a profit, but I put all the corn syrup on the lower shelves. I tell people you can get those anywhere, so don't buy them here. Buy the other ones.
We have a Red Ribbon line here today. They're the second-oldest family owned bottling line in the US. Their products are completely unique.
P: What about the in-house soda bottler gadget? I like mine.
JN: (laughs) When you drink mineral water does it taste the same?
P: Well, to me, yes. I fell when I was a child :).
JN: Every water has its own flavor. Every manufacturer has a different hand. With those bubblers you can buy a syrup and put it in but you won't have that individuality. If you're happy then it's OK but you won't get that individuality of taste. Bubblers are like contract bottlers.
P: How many repeat customers, etc. do you have? Do you know?
JN: Not really.
P: What about memorable customers?
JN: One couple came from Michigan. And they ran a little store. And she said when her father retired, her engineer husband took it over. And the reason they did it was for the quality of life. Every time her kids wanted to see her, they knew she was in the store. And that struck a chord with me.
Audience Q: What about Groupon?
JN: I don't like it because you pay a percentage of what you earn. What we're going to do is we're going to the nonprofits in the area and do benefits with them. It's important for businesses to be involved in their community. Politicians will sell you out and your community. And they have, by the way.
Q: Do you use FourSquare for promotion?
P: Do you know what that is?
JN: You're talking to the wrong person :).
P: What's your website?
JN: http://sodapopstop.com And in all fairness that site was done 15 years ago. Nobody's hacked it!
P: Who would like to help him with his website? His assistant told me to say this.
Q: Where does your business come from?
JN: Mostly walk-in but substantial mail order too. One time we got a call from Tennessee, but it cost more to ship than the product itself. And the guy said he was going to the Grand Canyon and said he'd swing by. So I told my daughter to take care of it. My daughter is very good at marketing.
Q: I love that you told the big guy to go to hell.
JN: You have to! Or they'll own you! When they sell to you they're not giving the same price as to the big guy. So your price goes to pay for shelf space in the big stores, so you're funding your own problem!
Q: When you were fist thinking about this, what were your fears?
JN: You know, it's easy to make decisions when you're going broke. (applause) We were in a controlled collapse, and that's when I thought about making it to 1997, then 2000, then BOOM it hit. And if you quit, you defeat yourself.
Q: In the video you talked about different products you want to see. Have you thought about making your own soda?
JN: It's interesting you brought that up. We're in the Highland Park area of LA and we had a number of small bottlers like White Rose. They bottled through the 60s and 70s, and we wanted to do something for the Southwest Museum, so we brought it back. And the community members found the old label and redrew it and we came out with White Rose. And people that remember the old one tell us we're really close to the old formula. And all the proceeds go to the museum.
Q: There's a trend for some people where they like really nice cocktails. Are you helping bring good sodas back in style?
JN: That's true, we are. It was really interesting. Fortune Magazine did a page on us a couple years back, and Pepsi called. And Pepsi said if we sell Pepsi coming from Mexico they'd sue me. And I didn't realize I was such a pain in the ass to Pepsi. So I said, "OK, send me a letter." And I framed it and I hung it on the wall. And I don't sell Pepsi!
Q: Can you explain some good and bad anecdotes about dealing with so many small companies?
JN: When you're dealing with little people your size, you understand each other and their attitude is going to be the same thing. And they need to make a profit. The larger the vendor becomes the harder it is because they try to control you, and your flexibility is really important.
There's a problem called "control." The big guys want to control and your creativity is giving them fits because they can't control you and THAT'S YOUR EDGE OVER EVERYBODY.
Q: 1997 and 2001 were goals. What are you goals now?
JN: I can't unveil it :). We're going to do things the pyramid schemes (franchises) can't follow. Because all they can do is sell. In these franchises, the employees and managers don't know anything about what's going on. And one place, the manager is sending customers to me. If you're going to make it your own, you have to be there. And if you invest in somebody else, you won't have that. Invest in yourself.
Q: Do you always drink your soda straight or do you make cocktails?
JN: Oh no no, I like soda. By itself. I'm very happy with it.
P: Alright, with that…
(gigantic round of applause)
SodaPopStop.com
