From Maine to Mainstream Small was beautiful to Roxanne Quimby until she caught the entrepreneurial bug--and a wave of orders from the likes of Zona and Bloomingdale's.
(FORTUNE Magazine) – Back in 1984, Roxanne Quimby was hitchhiking into town from her home in rural Maine when a yellow pickup, driven by a somber-looking man with a scraggly beard, rolled to a stop. She'd heard the gossip. Burt Shavitz was a 49-year-old beekeeping hermit who lived in a turkey coop. Like Quimby, he'd dropped out of society to live a pioneer's life by working the land. Intrigued, the 34-year-old waitress and divorced mother of two hopped in. Romance was in the air. So was something even more improbable: an extraordinarily successful company that would defy every rule in the book. Today Burt's Bees is a $14-million-a-year manufacturer of lotions, creams, and other personal-care products sold in boutiques and health-food stores. Onetime lovers and longtime friends, Burt and Roxanne decided to try their luck at making candles, considering that beeswax was in large supply in his honey house. Soon the two were cooking up furniture polish and lip balm atop her wood stove. Funding? None. Who would loan money to two woodland creatures without electricity or indoor plumbing? Business experience? None. Capital equipment? Wood stove, snow shovel, kerosene lamp. Customers? Well, they came by the swarm.
Roxanne and Burt began selling their all-natural products at crafts fairs in New England. Orders poured in. Soon they moved the factory from her kitchen to an abandoned schoolhouse and then to three trailers on her front lawn. Workers shivered in the winter and sweltered in the summer. "I'd be on the phone with Bloomingdale's taking orders in my mittens," Quimby recalls. When sales hit $3 million in 1993, the pair realized Burt's Bees had outgrown Maine, where growth was hampered by high taxes and unskilled labor. They chose Raleigh, a hub of cosmetics manufacturing.
After the move Quimby got serious. (Burt's wolfish face may be on the packaging, but the brains of the business has always been Roxanne.) She automated manufacturing and began recruiting a seasoned management team. Sales have tripled in the past three years. Last year she bought out Burt. He still lives in the turkey coop, and the two never married. She has made a fortune but hasn't drifted that far from her old ways. FSB's Julie Sloane tracked down Quimby in Winter Harbor, Me., where she manages the business in a house with no number, on a road with no name. Edited excerpts:
What does a backwoods pioneer know about running a business?
Not much. But living off the land was great training for running a business, especially a startup. You're always undercapitalized. Even though I grew my own vegetables and hauled my own water, there were certain things--grains, clothing, taxes--that still needed to be bought or paid. I saw Burt's Bees as a way for me to quit waitressing. I just wanted to make $10,000 in sales, enough for me and my kids.
How did the business get started?
Burt asked me to do something with the beeswax, make candles or something. So I got a book on candlemaking. Candles were trendy, but every product has its limits, so we were always looking for new products to make. I found a lot of recipes in old farm journals. We made stove polish, shoe polish. We produced everything from my kitchen. It was like making a big meal with lots of courses. We started out selling our stuff at crafts fairs in Maine and Massachusetts. I would set out at midnight in my old pickup and arrive in the morning because I didn't want to pay for a hotel room. Financially, I always kept things really simple.
What was Burt's role in Burt's Bees?
We split the ownership: 30% for him, 70% for me. I needed more money because I had two children, and I was more committed. Burt's also got a lazy streak, and he didn't see the point in the business. He thought we had a perfectly fine, simple life and that we were asking for trouble. He supplied the beeswax and helped in any way he could--driving to crafts fairs and fixing things. We put his picture on the packaging because people see him and they think alternative, earthy, natural. So we created this big hype around Burt.
What was your first big break?
Zona is a trendsetting boutique in New York City that was so innovative people would line up to get in the store. In the early 1990s the owner saw our teddy bear candles at a crafts fair and bought a couple dozen. They sold so well that every week he would call and order another 200. Buyers from the big retail stores and catalogs would stop in to see what was hot at Zona. That's how we got some great customers: Gardener's Eden, Smith & Hawken, Smithsonian Museum Store. I never called stores cold and pitched my products. They would come to us at the trade shows. Our sales doubled every year.
Your goal was to make $10,000, and you made twice that in the first year. Whatever happened to living simple?
Burt's Bees tapped something in me that I didn't know was there. Once I got a measure of success, I was captivated. I had a tiger by the tail. It was incredibly challenging. And it was a gradual transition. One day I realized, "Hey, I'm not cutting my own firewood anymore." I felt nostalgic about leaving that simplicity behind. But it's all an evolution.
Was there a turning point for Burt's Bees?
When we hit $3 million in sales, we decided to move out of Maine, which was an incredibly expensive place to do business. We chose North Carolina. But the move was badly planned and poorly organized. We just loaded our stuff into nine vans and drove south. We had to stop shipping for six weeks. That cut off our cash flow. As a result, we were fighting for survival that year.
How did you make your way through that crisis?
I cut half the product line right away. I took a million and a half dollars in business and discontinued it. All the handmade stuff was eliminated--the candles, the honey, the organic cotton baby clothes. I kept the products whose production could be automated, the lip balms and moisturizing creams. We'd been doing everything by hand, and that was pretty primitive. Now we're fully automated. But there was one pleasant surprise in that move. The Raleigh area is home to several major cosmetics factories: Almay, the Body Shop, Pond's, and Revlon. We were able to hire managers with experience in manufacturing, shipping, marketing, and finance. Our director of operations came from Revlon, where he was responsible for its four manufacturing plants. I didn't have the interest or background to be running our plant.
Who are your biggest buyers?
Health food stores. They're growing at 25% a year. There's a niche for us in this market. We're trying to build ourselves as the all-natural brand. We aren't in the big retail chains because we're just too small. They beat the heck out of small vendors. I consider their practices abusive. Some 10% of every invoice doesn't get paid because of slotting fees and chargebacks for supposed "infractions." That's their way of getting an un-negotiated discount. We cannot do business like that. We ship to people who are sure bets to pay promptly--L.L. Bean, for example. We do have some large customers, but we choose them carefully. We're very, very strict. It helps us keep our pretax profit margin at about 25%.
A few. Pet products, for one. We made dog biscuits and stuff like that, but we had no credibility with the buyers. If a product doesn't have the potential to sell $1 million a year, it's out. We didn't have a lot of success in retail either. A few years ago we opened three stores in college towns. They broke even, but they were hard to manage and difficult to staff. So we closed them. If I am going to sell directly to the consumer, it will be on the Internet. In fact, 5% of our sales come off the Web.
What's the future for Burt's Bees?
I see us at $50 million in two to three years. Makeup is our new thing, though doing a cosmetics venture was problematic for me personally because I feel like makeup is a mask. But I made peace with the idea when I realized cosmetics could be playful and fun. We debuted our lipstick line this year under the name Wings of Love, and it has done great. People really like our lip balm, so if we use the same base and add natural pigments, then we've got a lipstick. It doesn't cost a whole lot more to make a lipstick, but you can charge five times more for it because it is a beauty product. In January we'll introduce a tinted moisturizer, concealer, and blush. As for the competition from the big companies, I'm not nervous at all. They are in trouble: Annual sales growth is 2%. They haven't a clue what to do. The bigger they are, the harder they fall.