How We Began From burgers to beer to Berthas, nine innovators tell their tales of grit, luck, and inspiration.
(FORTUNE Small Business) – Sometimes a great notion is only that--an idea. But truly great ideas are more. Just ask anyone who has implemented one successfully. We did, and we discovered that making a real business out of an insight is at the core of what becomes known as inspiration. Most entrepreneurs, when asked how they got their great idea, will sigh first, then tell a tale of years of scrambling, ingenuity, and often a little luck. And if you listen closely to the very beginning of their stories, you'll hear them describe their ideas as deep-seated passions.
WENDY'S: Made to Order
The fast-food chain, based in Dublin, Ohio, is No. 3 in its industry, with $5.5 billion in sales in 1998. Its image is strongly tied to its folksy founder, Dave Thomas, who has done more than 700 Wendy's TV ads.
By 1969, Dave Thomas knew there was a niche in the hamburger business. A fast-food battle was raging between Burger King and McDonald's. Thomas had even been a foot soldier in the fast-food wars, first while running a Kentucky Fried Chicken franchise, and then while working for Arthur Treacher's Fish & Chips. But it wasn't his service in the fast-food trenches that inspired him. Quite the contrary, it was his time spent in the 1950s as a short-order cook--whipping up hamburgers, eggs, and pancakes on demand--that helped him see an opening in the hamburger front. "I thought McDonald's wasn't doing it right," explains Thomas, 66. "And I thought Burger King wasn't really doing it right either. I just didn't understand how you could take hamburgers and batch-cook them, and batch-wrap them, and put them under a heat lamp. So that was my motivation: to make hamburgers to order."
Thomas' battle to win a toehold in the hamburger hostilities brought an unexpected victory. Wendy's, named after his youngest daughter, was profitable within two months of its November 1969 opening in Columbus, Ohio. So Thomas started up a second Wendy's with a new feature--a drive-through window--which he added because the dining space was small. But "I thought I never wanted a franchise," Thomas maintains. "I didn't want to do it." Having owned a franchise, Thomas knew firsthand the responsibilities the franchisor has. He just wanted to make "hamburgers to order." But success has its own burdens. In 1973, as more and more people (including several competitors who owned fast-food eateries) "bombarded" Thomas with requests for Wendy's franchises, he gave in. His niche is now 5,500 restaurants strong worldwide--and 80% are franchised.
STONYFIELD FARM: A Dairy Epiphany
Stonyfield Farm, in Londonderry, N.H., is the fastest-growing yogurt maker, with $60 million in sales last year.
It was a harsh winter's eve in 1980 as Gary Hirshberg and friends gathered close to the wood stove, ruminating over ways to scrape up money to salvage Stonyfield Farm, an organic farm and education center on the brink of bankruptcy. They could sell pickles or beer. They could sell "shares" in their dairy herd. It wasn't clear during the brainstorming session what to do, until Samuel Kaymen, the center's guru, dished up yogurt made from his cows' milk. "This stuff's incredible," someone said. Kaymen asked: "Why don't we sell it? It could be a home run."
Stonyfield Farm might have remained no more than a font of organic farming notions had it not been for an epiphany that Hirshberg had during a trip to Disney World's Epcot Center. At Epcot, Hirshberg found himself in a giant Kraft Foods pavilion. Here was the antithesis of Hirshberg's organic agricultural views, and yet 25,000 people a day paid to tour it. "I realized if I was going to make a difference, I needed to embrace business," he says. By the spring of 1983, Hirshberg, now 45, had given up his job at an ecological think tank to join Kaymen, 64, in milking cows and selling yogurt. Stonyfield didn't make money for eight years. Along the way, the duo borrowed, hustled, turned down a buyout from a major dairy corporation, and learned a lot. Stonyfield also got a boost from some true believers. The Sisters of Mercy--one nun had volunteered in the farm office--loaned Stonyfield $25,000. "I used to talk to the nuns every day," Hirshberg says. They got their money back and eventually a $30,000 gift for a community center. "Not bad for two Jewish boys. We may go to heaven yet."
CALLAWAY GOLF: Big Bertha and Friends
The Carlsbad, Calif., company sells more than $700 million worth of golf clubs and balls a year.
Big Bertha, the sweet-striking driver that has captured the golf world, wasn't born from a gleam in Ely Callaway's eye. The 79-year-old Callaway insists that creating Bertha was a process of trial and error, of innovation, and of having a good friend in the right place. And some luck. In 1991, Callaway's R&D people spotted a driver in Japan with a club head that was 25% to 35% bigger than normal drivers. It was a club that Callaway thought could transform the sport of golf--and along with it, his company. But first there were a couple of problems to overcome. "One was the way it sounded on impact," Callaway relates, "and the other was the feel at impact--mushy." The answer from the R&D group was a steel head with strong walls thin enough not to add weight and one that made a pleasant "ping" sound on contact. To fashion the head, Callaway says, he turned to a friend and investor, Jack Welch, CEO of General Electric. "Mr. Welch is a great golfer," says Callaway, "and I knew he'd be interested in having his vast empire help with this little problem." And he was. GE's aircraft division used its thin-walls casting technology (used in making jet engines) to shape the driver's head and spawn Bertha. And how did this remarkable driver get her name? Callaway, a self-professed World War I buff, thought the new driver had all the firepower of the mighty German cannon, the Big Bertha.
WILLIAMS-SONOMA: The Accidental Retailer
San Francisco's Williams-Sonoma, the specialty store and catalog merchant (Hold Everything, Pottery Barn, Williams-Sonoma), produces more than $1 billion in sales.
Chuck Williams modestly describes his first Williams-Sonoma store in 1956 as almost an afterthought. But in truth, it was the result of a real fascination. A veteran of World War II, Williams had settled in Sonoma, Calif., as a contractor, building homes. An avid cook since childhood, he had recently been to Paris and become enamored with the heavier brands of European cookware. "When I returned," says the 85-year-old Williams, "I bought an old building that happened to have a hardware store in it. And I bought it with the idea of dividing it into small shops. I was doing it for the income. It was easy for me to keep one of the stores and do a little store for myself, because I could do all the cabinetwork. It wasn't a major thing. And I thought, why not? Just a little kitchenware store filled with French pots and pans and knives." Within a few years, sales were $32,000 annually, about what one Williams-Sonoma store now does in a day.
BOSTON BEER: All In the Family
Boston Beer sells more than $200 million worth of beverages a year, including its flagship brand, Samuel Adams.
Jim Koch was slouched over a bar in Cambridge, Mass., in 1982 listening to an Aussie friend whine about the quality of beer available in the U.S. "You've got watery American beer or stale beer imported from all over," he complained. But Koch knew better. He hailed from five generations of professional brewmasters who had made flavorful beers at local breweries for more than a century. So Koch took up the gauntlet thrown down by his Australian pal and started plotting his new company while plugging away at his day job as a manufacturing consultant. In 1984, with $140,000 in savings and $100,000 from friends (including the Aussie), Koch brewed up a beer from a recipe handed down by his great-great-great-grandfather, who had been a brewmaster in St. Louis. Samuel Adams Boston Lager, brewed from the Koch family recipe, won best beer in the U.S. four years running. "That put us on the map," says Koch, 49. As for his Australian friend, he says, "He loves the beer."
CELESTIAL SEASONINGS: Serendipity Happens
Celestial Seasonings, of Boulder, Colo., sells more than $100 million of herb teas in the U.S. and 40 other countries.
Imagine going away on an extended trip and coming back to find a new business waiting for you. It happened to Mo Siegel. Siegel had spent the summer of 1970 combing the Colorado mountains, harvesting 19 bales of herb tea, which he left for sale at a local health-food store in Aspen. It was a way to raise a little cash for his winterlong trek through Latin America, Siegel explains.
Much to his surprise, he returned to find that his herb mix was being sold around the state as "Mo's 36-herb tea." What had essentially been a hobby for the then 19-year-old had become an enterprise. "I came back to find it was selling in a lot of stores and had a following," he says. "I was more surprised than anybody." A business was born. Siegel, an avid hiker, headed back into the Rockies with a partner, John Hay, to pick more leaves for his nascent enterprise. But Siegel had another revelation. "I'd spend all day in the woods picking, and after I had laid everything out and dried it, I'd have [just] four or five pounds of blossoms and leaves," he explains. "I was quite surprised to find a source in Bulgaria that sold it for [only] 65 cents a pound." A businessman was born. Siegel made one more change. He dropped the "Mo's 36-herb tea" and adopted a friend's nickname, "Celestial Seasonings" (yes, this was the early 1970s), for the brand. By the mid-1970s, Celestial Seasonings was selling more than half a million dollars in herbal teas.
And success had its suitors. In the mid-1980s, Siegel sold the company to Kraft for $36 million. He then had seller's remorse, bought back the company, and took over the helm in the early 1990s. But wait! In March, Siegel, 49, got that selling feeling again. This time, natural-food giant Hain Food Group was the lucky mate, acquiring Celestial Seasonings for $390 million in Hain stock. The sale will give Siegel more time to hike. Last summer, he conquered 14 Colorado peaks over 14,000 feet high.
BURTON SNOWBOARDS: Snurf's Up
Burton, based in Burlington, Vt., is the dominant manufacturer in the $325 million snowboard market.
First of all, Jake Burton was a snurfer. At age 14, he was heading down ski trails on a fat board with a rope rein--yes, the snurfer--and wondering why this wild-riding snowboard hadn't caught on. "I felt, gosh, there's a sport here," Burton says. Flash-forward a few years to 1977, and Burton, a recent college grad, is manning a desk at a small investment-banking firm and champing at the bit to get out. Burton's mind wanders to the slopes and the snurfer, which was made by Brunswick. "I just couldn't believe that nobody had done anything with it," he explains. "I decided to go for it."
Burton started his overhaul of the snurfer, which through many of his redesigns emerged as a sleek snowboard with bindings. But he found the business side to be an uphill experience. Seeing so many successful companies trot through his investment firm had given Burton a "sort of false sense of security about starting a manufacturing company," he says. "I thought it would be a piece of cake. I hired two relatives and a friend. Big mistake." Burton made lots of boards and sold only 300. "After several months, I shut it down to just me. I had to lay everybody off, because I had just burned through so much dough."
At the bottom, Burton was $100,000 in the hole, and he retreated to New York City to tend bar, teach tennis, and send money to suppliers. "I was petrified," the 46-year-old recalls. "But by the time I had gotten [in debt], the thing was growing, from 300 to 700 to 1,500 boards." Burton Snowboards is now the backbone of a multimillion-dollar sport that consumes riders of all ages. But the lesson of Burton's startup stays with him: "A huge mistake I made was that I wanted to make money and be rich. I think that if you get too obsessed with profitability in the early stages, you can end up losing your shirt. If you resign yourself to having a loss, and you try to manage to operate on a smaller scale and keep future options open, I think you'll do a lot better."
MALDEN MILLS: Inventing Your Way Out of Chapter 11
Malden Mills, located in Lawrence, Mass., has more than $500 million in sales of high-end polyester fleece, a fabric that has transformed the outerwear clothing market.
In 1981, Aaron Feuerstein knew he had to make a radical move to rescue his family-owned mill from Chapter 11. Malden Mills, founded in 1906 by Feuerstein's grandfather, had been reduced to churning out fake fur and other fleecelike materials. The answer was "revolutionary," according to Feuerstein. "We were thinking about how we could come up with a new product that would in itself be excellent, the best in the marketplace. We were intentionally focusing on how to make something that would give more warmth than ever before," explains the 74-year-old. Malden's researchers reworked their fleece-making technology and found a method of making two-sided, wool-like polyester fleeces that "didn't shrink, didn't stink," says Doug Lumb, a Malden researcher.
Polarfleece was a real breakthrough, but it would have remained only a great idea in a vacuum if Malden hadn't put the next piece of the puzzle in place, Lumb maintains. Malden always had a close, collaborative relationship with its customers, so the mill turned to Yvon Chouinard, owner and founder of Patagonia clothing, to move the product forward. "We had a 'What if?' relationship with Patagonia," says Lumb. "What if Polarfleece got lighter, stretchier, and windproof?" The answer: Patagonia, which had used Malden's products as linings, began to use Polarfleece to make a whole range of high-tech outerwear. And a new market--about $3 billion worth--for polyester fleece fabrics was created from Malden's efforts to reinvent itself. Malden Mills was out of Chapter 11 by 1983.
THE COMPUTER MOUSE: No Fame, No Fortune
Stanford Research Institute took out a patent on the mouse in 1967. But the mouse didn't really start to propagate until the mid-'80s, when PCs--especially the Macintosh--reached the mass market. By then the patent had expired.
Not every great idea makes money--not even successful ones. Just ask Doug Engelbart, the inventor of the computer mouse. To the 75-year-old academic, the mouse is a device that's just a byte in the gigabyte universe of the collective intellectual potential of computers. In fact, once upon a time, the mouse was no more than a doodle, according to Engelbart. "I was totally bored at a conference one time, and I took out a little notebook and sketched what I thought the mouse would be," he says. That was around 1960. A few years later, Engelbart was at Stanford Research Institute conducting a government-financed study to determine the most effective method of selecting screens on a computer, when he remembered his drawing.
The mouse prototype for the study resembled a small brick, with wheels on the bottom, one button on top, and a wire coming out like a tail, according to Engelbart. "It won all the tests, and we kept building better replicas," he says. But the mouse wasn't an instant hit. "Everyone said, 'You're on the wrong path, Engelbart,' " the mouse inventor says now. So much for popular wisdom.