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#020: Burt’s Bees – The accountant was only?!?

They needed to become more professional.  So, what does a hippie do?  They hired a 14-year-old to manage the books.  This was before Clorox bought them for $925 million dollars.  Today, there is a Burt’s Bees Lip balm sold every second.  This is a story that starts off the grid in Maine.

Dave Young:

Welcome to The Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from Mom-and-Pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I’m Stephen’s sidekick and business partner, Dave Young.

Dave Young:

Before we get into today’s episode, a word from our sponsor which is, well it’s us. But, we’re highlight ads we’ve written and produced for our clients, so here’s one of those.

[Aurora Pro Services Ad]

Dave Young:

Stephen, I’m driving across West Texas a couple weeks ago, as one does. You’re driving, the air is dry, my lips are getting chapped. So the next time I pull over to get gas, I’m wandering around looking at all the different … There’s Carmex, and there’s Blistex. I don’t know, I’m just bored of all of that stuff, it tastes like medicine. So I grabbed one called Burt’s Bees. It worked, I liked it. I think it’s the only thing I’ve ever bought that was Burt’s Bees.

Stephen Semple:

Yeah, they have a lot of products today and that’s who we’re going to talk about. But, I want to give you an idea of how popular Burt’s Bees lip balm is.

Stephen Semple:

There’s a Burt’s Bees lip balm sold every second. I’m not kidding. So by the time we’re done this podcast, 500 Burt’s Bees lip balms would have been sold. Crazy, eh?

Dave Young:

That’s crazy. Yeah. My office that I’m recording this in would fill up with lip balm, by the time we were done.

Stephen Semple:

By the time we were done, right. Even though they’re all little, it would still fill up.

Dave Young:

Wow, that’s amazing.

Stephen Semple:

It is and it has a crazy history behind it. It was started by Burt Shavitz, Burt’s, and Roxanne Quimby in Bangor, Maine in the mid-80s. But, she’s been the main driving force behind the business, a real counter-culture, arts student, hippy homesteader.

Stephen Semple:

I’ll give you an idea of how much they were hippies, because they were basically the poster children for being hippies.

Dave Young:

Yeah.

Stephen Semple:

They started this business in the mid-80s, they incorporated in 1991. In 2004, 80% of the business was sold for $173 million. And then in late 2007, Clorox bought the company for $925 million, so just shy of $1 billion. She still had 20% of the business, so that was another 200 million in her pocket.

Dave Young:

She’s doing okay.

Stephen Semple:

She’s doing okay. But again, this is a crazy story about two hippies, who frankly had no interest in business, or money or things.

Stephen Semple:

So in the 1970s, Roxanne moves from New England to the West coast to attend art school, and she discovers the counter-culture. She meets a boyfriend, George Sinclair, at that time. They buy a van, and they fix it up and they head back East. They’ve got $3000 and they’re going to buy some land. They go to Vermont, and they meet with a real estate out of Vermont who says, “This is Vermont, $3000 will get you nothing. Try Maine.”

Stephen Semple:

So they go to Maine, for $3000 in Maine, they buy 30 acres of land in the fricking middle of nowhere and they build this simple house. No running water, no electricity, heated by a wood stove in fricking Maine.

Dave Young:

They’re living the dream.

Stephen Semple:

Living the dream. They wanted to be part of this back to the land movement. They wanted to leave civilization. They wanted to have this idea where they needed very little money to live, they just needed money on food. At that point, they were living on $4000 a year.

Dave Young:

Okay.

Stephen Semple:

She waitressed a day or two a week and George worked at the radio station. They lived there for seven years. They had kids there, they had babies there. Hippies. Hippy babies.

Stephen Semple:

She separated from George in 1983, and she moved out of this cabin and into another cabin in the middle of the woods that was even more remote. One day, she’s hitchhiking home and she meets Burt. Who, at the time, sold honey at the side of the road from the back of a truck. It was honey from bees he raised. But, he was doing the same thing, he was homesteading.

Dave Young:

Yeah.

Stephen Semple:

He actually lived … He was very proud of this. He actually lived in an old turkey coop that he had pulled over from another piece of land. So Burt picks up Roxanne, who’s hitchhiking, she offers to start helping him with the bees. She follows him around as a helper.

Stephen Semple:

At the time, Burt is selling honey from his bees in one gallon jars. Do you know how much fricking honey that is?

Dave Young:

That’s a lot of honey.

Stephen Semple:

The first evolution of their business is she suggests, “Why don’t we get smaller, nice jars and start selling them in farmers markets,” and things along that line. So they got these little plastic honey bears that were 12 ounces, labeled them and made them giftable, and went to Christmas craft fairs and farmers markets.

Dave Young:

Yeah.

Stephen Semple:

To give you an idea, one of the shows that stood out to them in the early days was one at a local junior high school, where they sold $200 in a show. That was, “Oh my God, $200!”

Stephen Semple:

The next evolution of the business happened, she looked at all this wax and said, “Well, what can we do with this excess wax?” They started to sell candles and sold them in the same place. Her original goal was, “Wouldn’t it be amazing if, in a year, we sold $20,000 worth of product,” and they moved through that. Next thing you know, it was $1 million worth of sales was the goal.

Stephen Semple:

And then in 1989, Zona, which was a small boutique, came along and started to buy their little teddy bear candles and literally sold hundreds of them. And now, it got to the stage where Roxanne and Burt needed to start hiring people to make these candles. And in fact, they started to have to buy wax from others because they couldn’t make enough to keep up with demand. In 1991, they hit $1.5 million in sales.

Dave Young:

Okay.

Stephen Semple:

They decide, at that point, they needed to hire an accountant. So what do hippies do, who know nothing about business? They called up their local high school and they said, “Hey, do you got a kid in high school that’s good at math?” And they sent over this 14 year old, who became the company accountant.

Dave Young:

Nice.

Stephen Semple:

Roxanne tells this story of the days when this kid would go do the bank deposit, he would dress up in a suit. So this 14 year old would dress up in a suit to go to the bank, to do the bank deposits.

Stephen Semple:

They added lip balm, they had a boot balm, they had furniture polish and they were focusing a lot on skin care. And also, during this time, they started improving packaging on these things. They eventually moved out of candles because what they found was candles were not really scalable. All these skin products, you could automate. You could automate the filling and you could automate all of these things.

Stephen Semple:

In 1994, they left Maine and moved to North Carolina. Part of the reason why they did that is it’s a more centralized location, easier for shipping. There was other cosmetic companies there, so it was easier, cheaper. But also, they could hire experienced people because all of a sudden, there was these people who worked in these cosmetic companies. And really, if you think about it … And, they got computerized, they’re running this little factory.

Stephen Semple:

But, you know what, they were still bootstrapping things because they were buying used equipment. One of the pieces of equipment they had used to be used for market mashed potatoes, Burt figured out a way to adapt it for filling lip balm and things along that line.

Dave Young:

Oh my gosh.

Stephen Semple:

At this time, they were selling in small, independent gift shops. But, here’s where things started getting really brilliant. They marketed, not through advertising, they marketed by giving away small samples of the product to people and to companies. They believed they had a superior product, and if they could get it in people’s hands people would buy, and that’s what they did. They also created a gift catalog, but that gift catalog was full of stories about Burt, his bees and their dog.

Stephen Semple:

And again, what do we tell people? It’s not about your product, it’s the stories you tell.

Dave Young:

Yeah.

Stephen Semple:

It was the stories about Burt, it was stories about the bees, it was stories about the dog.

Dave Young:

Entertainment is the currency of attention.

Stephen Semple:

It is. So we go back to, it was 1991, $1.5 million in sales. Now we hit 1998, they’re starting this now marketing plan, sales hit $8 million and they’re selling 100 products in 4000 locations. 1999, for a bunch of personal reasons, Roxanne buys out Burt.

Stephen Semple:

Here’s where things get interesting. 1998, eight million in sales. 1999, 13.8 million in sales. 2000, 30 million in sales. 2001, 60 million in sales. I want to remind you there was a time where a $200 sale was …

Dave Young:

You know where my mind is, is this 14 year old kid still looking [inaudible 00:09:54]?

Stephen Semple:

I have no idea. That would be a great question.

Dave Young:

Is he the CFO of this $30 million company now?

Stephen Semple:

I have no idea.

Stephen Semple:

There was a point where they were doing everything they could to get people to know about them and then all of a sudden, they hit this tipping where it seemed like everyone knew about them. And suddenly, they were being approached by big box retailers. That’s when she decided to sell out because she was bored, going to meeting with big box retailers and something else was needed.

Stephen Semple:

So AEA Investors came along and bought 80% of the company. And then in 2007, Clorox, for almost a billion, where she pocketed $200 million, came along and purchased it. And then, she was completely out of the business.

Stephen Semple:

But what’s interesting here, and this is the lesson that I think comes from Burt’s Bees …

Dave Young:

Stay tuned, we’re going to wrap up this story and tell you how to apply this lesson to your business right after this.

Speaker 6:

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[Empire Builders Program Ad]

Dave Young:

Let’s pick up our story where we left off, and trust me, you haven’t missed a thing.

Stephen Semple:

This is the lesson that I think comes from Burt’s Bees, is they did a pull strategy in their marketing. It was not just get stuff in stores, but by giving these free samples, it got people asking for the product. What Roxanne knew is, if somebody walked into a boutique and said, “Have you got any Burt’s Bees,” that boutique will want to carry Burt’s Bees. It was very much that pull strategy. Market to the consumer, get the consumer liking your product, tell stories that the consumer relates to and the consumer will go to the store and say, “Hey, have you got any of,” and a smart retailer will stock it. And if they have it, the customer will buy it and they’ll restock it.

Stephen Semple:

It was very much that pull strategy and not just going, “Hey, it’s just enough to get the product in the door.” It’s the same but different as what we saw with Spanx, where the founder of Spanx worked sometimes, at those stores, to make sure people were buying the product.

Dave Young:

Yeah.

Stephen Semple:

That pull strategy is very powerful. I think way too many businesses go, “Okay, I got it listed in Costco, I got it listed in Walmart, I don’t need to do anything now.” No! No, you’re not done at that point, you’ve only just started.

Dave Young:

Yeah. Even keeping that name, Burt’s Bees, it’s so different. It’s like what’s the different between Carmex and Blistex? Who cares? What about Chapstick? Well, it’s the same thing in a different tube. Burt’s Bees says something about the person that would use it. Even if Clorox owns it, I bought it, I didn’t know that, but it says yeah, maybe I’ve got that hippy dippy outlook.

Stephen Semple:

Well, you do have the ponytail.

Dave Young:

Yeah, exactly.

Stephen Semple:

It’s even funny how they came up with the name Burt’s Bees, is that Burt would have these beehives and he would move them around. What did he paint on the side of the beehives to mark that it was his beehives? Burt’s Bees.

Dave Young:

Yeah, those are my bees.

Stephen Semple:

Those are my bees.

Dave Young:

Stay away from my bees.

Dave Young:

What a great story. I’m sitting here, very happy for her.

Stephen Semple:

Yeah. She’s gone on, she’s got foundations that she’s doing for conservation and things along that line. She really is a very interesting lady. If you ever have a chance to hear an interview with her, it’ll be entertaining. She’s got some hilarious stories from the homesteading days.

Dave Young:

Still a hippy.

Stephen Semple:

Still a hippy.

Dave Young:

Just a very wealthy hippy.

Stephen Semple:

Just a very wealthy hippy, that’s right.

Dave Young:

Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app and leave us a big, fat, juicy 5-star rating and review at Apple Podcasts.

Dave Young:

And if you’d like to schedule your own 90 minute Empire Building session, you can do it at empirebuildingprogram.com.

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