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Fail Fast? No, Start Slow! Secrets from Building (and Exiting) the World’s Biggest Wine Brand

The BiggerPockets Business Podcast
41 min read
Fail Fast? No, Start Slow! Secrets from Building (and Exiting) the World’s Biggest Wine Brand

How would you run your business differently if you started with the end in mind?

Today’s show is all about forming your exit strategy up front… and there’s no one more qualified to talk about that than the co-founders of Barefoot Wine.

Bonnie Harvey and Michael Houlihan weren’t even “wine people” when they went into business. Yet they found a way to outsell everyone else and eventually had giant companies competing to buy THEM. (They happily sold to Gallo in 2005.)

In this episode, you’ll learn the strategies that drove their explosive growth and the way in which you can apply them—no matter your experience level.

From the simple question that launched their business, to the pitfalls of “falling in love with your product,” to why every entrepreneur should meet business brokers for lunch once a month, this show is packed with practical, hard-won wisdom you can immediately implement.

Download this one, subscribe to the BiggerPockets Business Podcast, and share this episode with just one person who you think you would get value out of it!

Click here to listen on iTunes.

Listen to the Podcast Here

Read the Transcript Here

J: Let’s welcome to the show, Michael and Bonnie. How you guys doing today?

Bonnie: Hey, we’re excellent. How about you guys?

Carol: Great. Go ahead.

J: We are doing awesome. Awesome, awesome. We are so thrilled to have you here. We were talking before the show started that Carol and I first heard your story, probably about six months ago on another podcast. And for the last six months, we’ve been saying we have to, have to, have to have you guys on the show, so we are thrilled to have you here. Thank you for being here.

Michael: It’s good to be here.

Carol: Thank you so much. So, Michael, Bonnie, we want to dig into all aspects of your journey. You have such an amazing story to share, I mean you’ve built this leading, global wine brand from the ground up. You’ve written a New York Times bestseller, you’ve mentored, and you’ve consulted with, and coached, and spoken at some of the most influential companies and universities around the world. You’ve incorporated social awareness along the way. You’ve launched another business venture just recently. So many amazing things there that we want to unpack

Carol: But before we get into that, we would love for you to give our listeners some context. So we’d love for you to talk a little about what the Barefoot spirit is, and what that means to you. What that brand is all about today.

Bonnie: Well, the Barefoot spirit started when we had Barefoot wines. And we kind of realized what it meant as the one product evolved, and what it came to mean was basically, that it’s all inclusive. So when you’re walking down a beach, and you see bare feet, footprints in the sand, you don’t know if it’s male, female, black or white. You don’t know if they’re gay or straight, you don’t know the age, Muslim or Jew, you don’t know. It’s all inclusive. And that’s a big part of the Barefoot spirit. It’s friendly, it’s easy to embrace, and it’s just really having fun. That’s a big part of it. There’s more though Michael, go ahead.

Michael: Well yeah, there’s a lot more. The Barefoot spirit is really a style of doing business, and it’s an attitude, and it involves certain values. Probably one of the biggest over-arching values is one you’ve heard a thousand times, but at the Barefoot spirit, we break it down into practicality. But it is, put yourself in the other guys shoes-

Bonnie: Yes.

Michael: And you might say, “Oh, well that’s the golden rule. I’ve heard that before.” Well, what does that mean in term of your relationships with you employees? What does that mean in terms of your relationship with your vendors, and the people that have loaned you money? What does that mean in terms of the relationship that you have with your customers? So when you start getting tactile about it, and practical, then you start to develop actual procedures for how you handle these people. And that is really a big part of the Barefoot spirit, it’s building a team where everybody on the team knows that you have their best interest at heart.

J: I absolutely love that. Okay, so I’m familiar with the Barefoot story, because I’ve listen to you before. I know Carol has as well, but I know our listeners are going to love this story. Can you take us back, where did Barefoot Wine come from? How did you guys come to take over this brand, sort of take over, sort of start, and grow this brand? Can you tell us the Barefoot story?

Bonnie: Well, Michael and I were living here in Sonoma County, beautiful wine country. But not because we were wine drinkers or lovers, but because we loved the country and the ocean. And this is where we met. I had a client, we were both business consultants. I had a client who was a grape grower, who hadn’t sold, well hadn’t been paid for his grapes in three years. He sold them, but there’s no money coming in from that. So I realized that he was owed $300,000, and I thought, “Well, let me take a look at the contract. Let’s see what we can do.” And my client said, “Well, there’s no contract. I don’t have anything in writing.”

Bonnie: And well that’s a bit above my head, so I gave the challenge of collecting $300,000 for my client to my new boyfriend over here. I said, “You go out and collect the money, okay?”

Michael: And I just met this girl, at this rock and roll night club, and less than a year later, she’s got me out collecting 300 large.

Carol: Bonnie, you know what you want, and you just make it happen. You’re like, “Michael, I got a job-”

J: Got to go for it.

Michael: So the day I got the winery, the guard stops me, and he says, “I hope you’re not here to collect any money, because this morning we’ve filed a Chapter 11. You’re just going to have to take your ticket and wait your turn with the rest of us.”

Bonnie: That’s bankruptcy, you know?

Carol: Wow.

J: That’s bankruptcy in California, Chapter 11. And so, I thought for a minute, “Gee, should I turn around and go back or…?” So I went ahead with the meeting, and I was sitting there with these guys, and I didn’t have much to say because I knew they didn’t have any money. So I thought I’d make some small talk, and I said, “Hey, what’s going on with those tanks out there?” And they said, “Oh well, they’re filled with bulk wine, cabernet sauvignon blanc.” And I was I thinking to myself, “Isn’t that funny, those are the same two varietals of wine, cab and sauvignon blanc that you owe our client for, and haven’t paid him.”

J: So I look out this other window, and I’m looking down into this room that’s below the meeting room where we are, through these glass windows. And it looks like a big handball court, and in the middle of it is this chrome machine. It’s polished, it’s got tracks on both sides of it, so I say, “Hey, what’s with the chrome locomotive and the handball court?” And they laughed, and they said, “Oh no, it’s a bottling wine, and it’s in a clean room, and that’s where we do our bottling. And then it hit me like a chrome locomotive, and I said, “Hey guys, what do you think of this idea? What if we take some of that wine you’ve got in those tanks over there, and run it through the chrome locomotive down here. And instead of paying us in money, you pay us in bottled wine. And we’ll come up with a label and a marketing program, a distribution program, and everything else. How hard could that be?”

Carol: How long could that take? Easy-

J: So basically, you started out on a mission to basically make yourselves, or your client whole. Just get the $300,000 you’re owed, and you walk out with a business. With potentially a new venture, so-

Michael: Exactly. People say, “Follow your passion.” Some of us follow our opportunity.

Bonnie: Mm-hmm (affirmative)-

Michael: But we followed our opportunity passionately, so we never gave up on our passions, and we actually imbued them into our business. And that gets back to the Barefoot Spirit, “What are your values? What would make your tail wag?” Well then, offer that to the other dog, you know? So this is the kind of attitude that we had, and we didn’t know what we were doing. And when I told Bonnie, I said, “Hey, we got all this wine. We got all this bottling services, It’s better than a stick in the eye.” And what did you say? You said-

Bonnie: Well, I said, “Well, that’s not going to pay any bills. Now we’ve got to get a license, we’ve got to find out what the market wants. We’ve got to create the label, we’ve got to sell this stuff. Where do we, I guess we better get going.”

Carol: “I guess we have some work to do.” So you were a business consultant at the time, Bonnie? So you just intuitively knew that those were all the steps that were necessary or, I mean it sounds like-

Bonnie: I’d been working with small businesses long enough, that I understood there were many steps. I understood that a lot businesses that are producing a great product, just aren’t really doing well because they don’t know how to manage the inside of the office, or even manage their own inventory, so that’s what I was doing previously. Michael was also a business consultant, more working with government, and land splits, and contracts, and things like that.

J: So a large part of starting a successful business is the branding, is the logo, is the customer and outside face of the business. So can you tell us a little bit about how you came up with the name Barefoot? How you came up with the logo? I’m leading you here a little bit, because I know answer to the question, but I’d love to hear more about, or I’d love for our listeners to hear more about how you came up with the name, and the specific logo that you now have?

Bonnie: Well, we set about asking a lot of questions of a lot of people, anybody that would possibly touch our product along the line. And we asked the bottling line manager what the label should look like, and he gave us advice saying it should look clean, the font should really show, and it should have a little white edge around the outside, so if the label gets scuffed, it won’t look like damaged product. Things like this, that was all priceless.

Bonnie: We asked a lot of people out in the market, the stock boys, forklift drivers at warehouses. We used it all, but the best information we got was from Don Brown, who was a chain store buyer here in California. See Plan A was to bottle it all up, and sell it to a chain store, so we went to the largest chain store, which was Lucky’s at the time, here in California. And Michael went in there, and he asked the largest buyer of wine in the State of California, “What do you want?” And the buyer said, “Well, nobody’s ever asked me that before.”

Carol: Oh, ah-ha moment. What a new concept, right?

Bonnie: Ah-ha big time. And we’d been asking oodles of questions ever since, but he gave us some real gems.

Michael: Well, he was the imperfect Buddha type of a guy, he’s very snarky and grumpy kind of guy. And he wanted to get me out of his office as fast as he could, and so he said, “Listen.” He says, “You got to make it a salt and pepper act. You got to put it in the pig. You got to make it better than Bob and cheaper than Bob.” And I’m writing this down, he says, “You got that?” And I said, “Yeah.” He says, “Can you do that?” I said, “Yes, we could do-”

Carol: “Of course, of course we can do that.”

Michael: “No, no problem.” So I’m halfway down the hall, and he says, “Hey Holahan.” He says, “One more thing”, he says, “on that label”, he says, “don’t make a tree, don’t make it a leaf, don’t make it castle. Don’t put it in French, put it in plain English. Make sure the logo is the same as the name. And make sure it’s visible from four feet away.” And I mean, talk about unpacking. And I’m sitting there going, “Uh-huh (affiramtive)- Okay, I got that.” So I had to go translate that, so I went to my friend who was in the industry, and I said, “Hey, what the salt and pepper act?” He says, “Oh well that’s easy”, he says, “that’s the same brand, with two varietals. Like pepper would be a cabarnet sauvignon, red-

Carol: A red wine.

Michael: “A red wine, and the salt would be like sauvignon blanc, a white wine.” And I said, “Oh, okay.” I said, “Well, tell me, who’s Bob anyway?” He says, “Oh, that’s Robert Mondavi.” And I said, “You got to be kidding me.”

Carol: Oh my gosh, wow.

Michael: “I got to be better and cheaper than Robert, huh?” And so I said, “Pray tell me one last thing”, I said, “What is a pig?” He said, “Oh, a pig”, he says, “that’s the big 1.5 liter magnum, that’s not the 750 that everybody thinks about as a standard wine bottle. This is the big fat one, the pig.” I said, “Oh.” And it dawned on me that he had given us the keys to the kingdom. Snarky as he was, on my way out the door in 37 seconds, he just rattled it off. “Look guy, if you want to do this, this is what you got to do. And this is coming from years of experience.”

Michael: But if we were in the wine industry, we would have made all decisions, and then gone down to a Don Brown, or whoever buyer. And said, “Here’s our product. Buy it, and then given him the features and benefits.” So we did it in reverse, and that’s also part of the Barefoot Spirit. Which is find a market for what you’re selling before what you decide what you’re selling.

Carol: That’s huge. So I have a question, what year was this?

Michael: Well, that was ’86.

Carol: Okay, great. So this is ’86, and that’s what’s so fascinating to me, is that right now obviously, as you know, you go into every store that sells wine, and it’s doing all of those things that you’re describing. There’s the 1.5 liter magnums everywhere. There are all of the names that match the logo, there are the different varietals of those type of things, but that was not standard in 1986, so it sounds like the wine industry was substantially different when you’re talking about castles, and trees, and things in French so-

Michael: Yeah, basically.

Carol: Back in the day, it was a whole different aura about wine, right?

Michael: Well, With Americans, we’re kind of embarrassed and apologizing that they weren’t French enough. And it was a very mysoginist business, it was men making wine for other men. And it was Saturday night wine, where the men would sit around and they would talk about things like appellations and midnotes, and that sort of thing. But it turned out that the majority of the wine buyers was a 37 year old mom with 2 1/2 kids, pushing her cart down the supermarket aisle. And she wanted a Tuesday night wine that tasted the same from year to year, that she could depend on like a staple. And so, that’s what we did. We produced Barefoot as a staple, and it was profiled for this 37 year old mom.

J: That’s great. And I it’s funny. I’m in my 40s. And I remember growing up and the idea was French wines are wines and everybody wants to be like the French when it comes to wines and I didn’t know much about wines, but everybody that’s what you talked about French wines with the wines. Then 30 years later, I moved to California, and I’m near Napa on near Sonoma. And everybody’s talking about how American wines are now taking over and they’re the, the wines. I mean, everybody wants American wines. And it’s funny because as somebody who’s never into wine, I didn’t see that transition. But it sounds like you guys and Barefoot Wine was actually part of that transition. You guys drove the growth of American wines and a lot of that was strictly by accident, not just accident, you were in the right place at the right time. But you asked the right questions. You listened. You worked hard.

J: And I mean literally, we can credit, the two of you for making to a large extent American wines what they are today.

Bonnie: Thank you.

Michael: Thank you. It’s really interesting because when we started they said, well you’re cheapening wine, you’re taking away the mystery, you’re going to wreck our margins. Because we’re there’s mystery, there’s margin. And we said, No, I said, we’re going after beer drinkers, Martini drinkers, and especially women who don’t like wine. So what we’re doing is we’re expanding the wine envelope. 10 years later, fast forward, they’re calling us up from their tasting rooms, and they’re saying, we’ve got a bunch of people in here that got started on Barefoot Wine and now they’re buying our $90 bottles. Thank you.

Bonnie: [crosstalk 00:16:42]. You see Barefoot was non intimidating at the time, wine was so snobby people couldn’t pronounce the words on the label. They didn’t know what varietals go with what food and they just didn’t feel that they were educated enough to enjoy a glass of wine. But Barefoot made them feel comfortable. You could pronounce every word. It was Barefoot Cab, Barefoot Blanc, Barefoot Blush, Barefoot Shard, easy to pronounce, very friendly. And you didn’t have to know a lot about wine. You just get Barefoot and have a great time. That was our mission statement. That was our motto.

Carol: I love that and go ahead, I’m sorry Bonnie.

Bonnie: And there wasn’t any other friendly labels on the market at the time. And Barefoot was friendly. It was approachable. So that really opened up a lot of people to the idea of well, I’ll give it a try. And many people came up to us because we did tastings all over and they came up and said this is the first wine I ever tried. That’s awesome.

J: You basically you made wine accessible to the masses. And if you want to make money in business focus on the masses, not the classes as some people like to say. So I have a question. Michael, you said, where there’s mystery, there’s margin. I love that saying. Can you expand on that a little bit?

Michael: Well, there’s a term called sophomoric, which really means that you know enough to get in trouble. So you know enough French to embarrass yourself or you know enough about wine to embarrass yourself. So the wine industry was deliberately cloaking the whole thing and mystery. Because they knew that if people had that kind of mystery, confusion going that they would pay more, because it was kind of a magic to it. There was this place in wine where you really couldn’t understand what it was or how it got there. Or maybe you didn’t know how to describe it properly. Or maybe there would be a sommelier who would correct you. You’d sit down at dinner and you’d see all the wines, you wouldn’t know what to choose. And you’d be afraid if you chose the wrong one.

Michael: So that added to the mystery. And we have a very good friend, Larry Martin, who’s in the travel business. In fact, he does food and wine travels all over Europe. And he’s the guy who coined that expression. He said, Michael, he says, You got to remember where there is mystery, there is margin. Because I was complaining to him about how the industry would they wouldn’t let us join the wine Institute. They really had a problem with us. They thought we were just killing the industry. And here we were blowing it up.

Carol: That’s awesome. You totally turned it on its head. Here, you’re just taking away the mystery. Just taking this all down so that more people would try to expand the whole concept of wine. How did the name barefoot become the name and where did that amazing label come from?

Bonnie: Well, we did have a friend we thought about this for a very long time and we continue to ask a lot of questions. Well, we had a friend who made a product called Barefoot Bynum. And it had been off the market for about 12 years. And it was jug wine when it was produced in Berkeley in the 70s. And we said, well, bare feet, that’s the way grapes were originally crushed to make wine. So that relates to the wine and we called it Barefoot as he had done barefoot, then we could use the logo and the name would be the same. So we made arrangements to use that name. We couldn’t use the label though, because the label was really outdated. The foot was at the bottom, it was just kind of flat and didn’t have any life to it. You could just put a tag on the toe and send it back to the morgue.

Carol: That’s appealing.

Bonnie: So I said what we have to do is we’ve got to step it up, we’ve got to make it look like it’s action. So it’s an italicized exclamation point. So it looks like it’s really on the move. And I just saw one night in my head, it all kind of came together and I demanded that Michael go and draw it on the chalkboard when I saw it. And I said, I know what the label looks like. So he went to the chalkboard and he drew it and the next morning, we put it on the piece of paper and send it off to the artist. And she came back with some funny square looking feet and it just didn’t quite look right.

Carol: So like human.

Bonnie: Yeah. She says, I can draw anything, just give me a picture. I said, Well, where am I going to find a long thin foot like I want on the label. “Oh, I’ve got one of those right here on the end of my leg.” So I put my foot in the biggest ink pad that we could find and put it on some artist paper and sent that off. That’s how my foot ended up on the largest wine brand in the World.

Carol: How awesome is that? Talk about resourcefulness.

J: I love that. Okay, so now you have a plan. You have a label you have a logo you even have a buyer at Lucky’s what was the next step? How did you grow? How did you scale? How did you turn this accidental business into the largest wine brand in the planet?

Bonnie: We didn’t really have a buyer at Lucky’s first but… go ahead, Michael.

Michael: So we bottled it. And we were so proud of ourselves because it was everything he asked for, the name Barefoot was the same as a logo a barefoot, it was in a pig. It was about the same price as Robert Mondavi red and white in 1.5 liter bottles. You could see it from four feet away. It was everything he asked for. It was a salt and pepper act. And so we put the two bottles down on his desk and we said There you go. How many truckloads do you want? And we thought this plan A, we’ll just sell this will make some money pay off the debt, we’ll be down the road. And he looks at us and he says, “Are you crazy?” He says, “I can’t buy this.” He says, “You put a foot on it. And nobody’s ever heard of this. You got to be out of your mind, and you’re going to spend a million dollars on advertising.”

Michael: I said a million. I said, We don’t even have $ 500. So no, I said, “we can’t.” He says,” Well, he says, I can’t take it. Nobody’s going to take it. No box stores going to take it. No chain stores going to take it because nobody’s ever heard of it.” And I said, “Well, we bought a little for you. What are we going to do?” He says, “I guess you got to sell to every mom-and-pop in every independent and every corner liquor store because the chains won’t take it.” And I said, “Well, that’ll take years.” He said, “That’s right, you better get started.” And so here we are, out on the street, selling it to the mama, papas and they got the same problem that the big buyer had.

Michael: They said, “Well, you’re going to advertise this, you put a foot on the label.” It’s kind of crazy. Nobody’s ever heard of this. And I’ll tell you what, if it doesn’t sell in 90 days, you’re out of here. So, 30 days went by, and we got three reports, there was no sales.

Bonnie: No reorders in the 10 accounts we had.

Michael: Yeah, first 10 accounts in San Francisco, no orders, for 30 days. And so then the next 30 days come by no orders, and we’re starting to panic. We’re sweating bullets. We’re going oh, this is the end of Barefoot because if you’re non starter, all your competition tells all the buyers immediately. Don’t even try that one. They tried it in San Francisco and it failed. And so we get a call out of the clear blue from a guy who is a community fundraising kind of guy. He’s trying to raise money for kids after school park in Chinatown in San Francisco. And he’s looking for $50,000. And I asked him if he’s got the right phone number, because we don’t have anything like that to give away. But I told him-

Bonnie: We didn’t have $50 to spare.

Michael: But I but I said, you know what I said, we’ll give you some wine. You can use it at your fundraiser, maybe to loosen some people up to write a bigger check, or maybe auction it off. And buy some slides and swings in a sandbox. What I mean We can’t give you any money. We can only give you wine. He said, okay, took the wine grudgingly. About 30 days later, we get the reports and there’s zero sales in the other six accounts, but the four accounts that are near Chinatown are through the roof, the sales are really good. And we said what is going on here? And we thought, I wonder if the people who were the members of the nonprofit who attended that fundraiser and drank our product with dinner and looked at it for two hours during all the boring speeches. Went out and bought it at the nearest store when they saw it.

Michael: And so we said, let’s try this in another neighborhood. So we went to this upscale neighborhood Twin Peaks, and we help them clean up a creek up there that they were worried about. And we gave them the money for their fundraiser. And sure enough sales took off in their neighborhood. And so we thought, this is a really interesting idea, because it’s not like advertising. We’re shotgun blasting. This is a very targeted form of advertising, if you will, where we’re really trying to get the members of the nonprofit to have a social reason to buy our product, which is stronger, of course the[inaudible 00:26:41]. And now they go, they become customers, they become advocates. So that’s the technique that we use to build Barefoot across the country. And in 28 other countries.

Bonnie: By supporting the small neighborhood fundraisers and nonprofits all around the markets that had our wine.

Michael: We call it worthy cause marketing. Cause marketing hadn’t been defined yet by some smart professor at Princeton. But we call it worthy cause marketing because these were worthy causes, and we were marketing to them.

J: So it’s interesting because it almost sounds like the reason you weren’t selling wasn’t because customers tried your product as it were not interested in this. It was, unfortunately, wine back then was a very snobby business. And it was you were either a known brand or you’re an unknown brand. If you were unknown, you couldn’t get the customers to try you out. And once you kind of put your product in front of customers that here it’s free, try it and put them in a situation where not they weren’t forced to try it, but where they have no reason not to try it. They did and they’re like, this is really good. And so it turns out, it sounds like that the problem again, wasn’t the product. It wasn’t the brand name, it wasn’t anything. It was just that you needed to actually get potential customers the opportunity to try and your product. And once they did, they were converted.

Michael: And you know, this is the thing with most people who get into business, they fall in love with their product or service, so much so that they can’t imagine that the world isn’t going to knock down windows and kick out doors to get to them to buy their product. The fact is that they have to go through some kind of a distribution system. I don’t care whether it’s all on software, or if it’s bricks and mortar, you’ve got to get through to your customer. And access to market is the key to success. We knew that we had the right formula, the guy wouldn’t take it because we were advertised, we weren’t known. And we went out and it didn’t take about two years for us to do that to become a household word. And finally we went in and we said, You’ve got to put it in now you’re losing money, the broad market, which is what they call the mama, papas is going wild with it and you don’t have it.

Michael: But yes, your point is really well taken. This is a situation where entrepreneurs have got to realize that even if they like, if their mom likes and all their friends like it, they still got to get it to market.

Carol: Great. So talk to us more about that distribution system. You’re saying it took two years, and you expanded in a similar method across the country into this whole, this grassroots method of getting into people’s hands through the nonprofits and so on. Was it the two of you, what was your distribution network? What did that look like?

Bonnie: Well, it started off being the two of us. But very shortly, we had to hire people, of course. And the people that we hired originally in California and then throughout different states as we expanded, it was their responsibility to work with the distributor, to work with the retailer, and to also work with the community to find out what it was they were interested in. And they made those decisions of what nonprofit to support in their own territory. And they would go to these fundraisers and they would talk with the people they’d help set up, they’d help break down. They’d asked the fund raising committee for things that costs the fundraiser nothing, such as to display our product, don’t put it behind the bar and not show the label and to allow us to show on the tables or make flyers available of where the product was available within five or 10 miles around where that fundraiser was taking place.

Bonnie: And also to announce us in their newsletter, thank us from the podium, all these things that didn’t cost them anything. And that way we were able to support their cause, which primarily had to do with environmental issues and protecting the rights of others and education, music and the arts. And that way, we were able to endear ourselves to this group that already existed. So, So many people in the starting business, they’re trying to get followers. But we took other people’s followers and supported the same things that they were supporting. And that worked very well for us. It was much better than trying to grab one or two here and there on our own and create our own following. But eventually those people were following Barefoot Wines. And in addition to the nonprofit’s they were supporting.

J: Love it. Okay. I could ask another two hours worth of questions about Barefoot Wine. I love the story, but I know there is so much more to your story after Barefoot Wine. So I want to get to that because I want our listeners to hear what came next. But before we do that I’d like to wrap this up a little bit more. Can you tell us a little bit about how big did Barefoot Wine and to grow and what was your exit strategy and just wrap the story up for us so then we can jump into the next chapter.

Michael: So we Wanted to exit from day one. Okay. And we take on clients now and advise them. And one of the questions we ask is, “Have you given any thought to your exit strategy?” And if they haven’t, we really can’t help them. But people say, Oh, well, I don’t want to sell this business, I have no intention of selling. Well, that might be what you tell your employees. But the fact of the matter is that the day is going to come when you’re going to want to monetize on the value of your brand. And so what we’re really talking about here is all businesses are brand building businesses. And ultimately, the brand gets large enough that it gets the attention of somebody who’s collecting brands. And so that’s what Barefoot was really designed to do. But the issue is, how do you get your peanut in front of that elephant.

Michael: And so we deliberately placed Our brand in distributors that had the acquirer that we wanted to acquire us represented in those distributors ships, so that those distributors ships would tell them, “Hey, this stuff is on fire, you guys better take a look at it. Or better yet, if you don’t buy it, somebody else is going to buy it.” So that was one thing. The other thing we did is, and we recommend this is a good takeaway for your audience is take a broker to lunch. It’s really important to do it every year. Not just any broker, but a broker who deals with the sale or the acquisition of your kind of business in your particular category of business, whatever you’re doing. And ask them a few questions. We have a list of 30 questions you should ask, but here’s a few. What businesses do you know that are like ours that sold in the last year? How much did they sell for? How many units were they producing? What was their market share, how fast are they growing?

Michael: And what this does is it gives you a profile of what your goals really need to look like. You can’t just sit there and say, “Well, I think we’ll have this goal this year or I think we’ll have that goal.” Now the goals are already written. The question is, have you discovered them? So you say, Okay, well, this business sold, it had these metrics, and it sold, it was 10 years in business, and it sold for this much money had these metrics, okay? If I want to do that, or anything close to that, I have to get there. Here’s where I am now. Okay, halfway there, maybe I’ll do half of the business. So you start to set metrics for yourself, based on what you’re going to do this year, what you’re going to do in six months, what you’re going to do at a quarter.

J: So instead of just letting things roll out naturally, start with the end in mind and create a plan that gets you from where you are today to that end goal that you’ve defined up front. And I love the fact that you said when you talk to entrepreneurs today, you start with the question, what’s your exit strategy? And if they haven’t thought about that, you literally say, I can’t help you. It’s that important?

Bonnie: Well, actually, we can because we can help them build their exit strategy. But they do have to have one before we can really get going. It’s really important, we feel that the best time to start your exit strategies before you even produce your product or service. Because you really have to know what the goal is, and what’s at the end of that big, dark, scary tunnel. And that’s the way to do it. So we help companies plan for their exit strategy from day one, or from whatever day they’re on.

Carol: Day, whatever. So you had your exit strategy, which was to sell to who?

Michael: Well, we wanted to sell to Ian J. Gallo because we respected them. And the reason we respected them is because we were outsiders in the industry. And when somebody would call us from [inaudible 00:36:01] and say, Well, your products just not selling in this particular store, we’d fly out there to see why. Now most producers would not do that. They just take the excuse.

Bonnie: And the distributor says, send more samples, lower your price, we want more point-of-sale material.

Michael: So we would go out there physically, and when we did, we’d see that potato chips were in front of the Barefoot Wine?

Bonnie: That’s why they didn’t sell.

Michael: Yeah, that’s why it wasn’t selling.

Bonnie: Those merchandisers where the Gallo reps were out there. They were out in the stores, they had a lot of products, they have good shelf space, they were put in the cold box. And as Michael was traveling around and more stores, he saw them out there more and more. And he said, Well, merchandising is really key to success, and look how big they’ve grown. And we feel that it’s due to really strong merchandising. So that’s why we felt if our product continued to be merchandised properly, it would just skyrocket. So we brought our sales up to 600,000 cases a year. And we ran all the states, all the military bases, US military bases, 28 foreign countries. And we did it all with only 40 people on our staff. 20 sales people, and 20 people that were sales support.

Michael: See another another principle of the Barefoot Spirit is resourcefulness. And so you really have to ask yourself, what do I need to own? And what do I need to buy? And that’s where-

Bonnie: The contract services.

Michael: -a lot of people try to own production or they tried to own a factory or they tried to own a truck or they tried to own an office. And guess what? They those are bills that are hungry for bucks. They’re hanging around your neck every month pulling you down. And if you don’t have sales, those bills are still there. And so this is what kills most businesses is they simply don’t break even. And so what we advise our clients today is to outsource everything except for quality control, sales and accounting.

J: That’s great. And I want to step back because there was an important point you made, and I just want to highlight it. You talked about controlling your own Merchandising, and not putting the stake of your company, the future of your company in the hands of your resellers or distributors are merchandisers, your end sellers. Basically, when they told you things weren’t selling, you didn’t just say, oh, okay, tell us what we have to do differently. You actually took control and said, I’m going to go see why things aren’t selling. And so too many business owners in that situation. It’s easy to say, Well, I trust my resell. I just trust my distributor. I trust the stores to tell me that, oh, I just need a different label or I need a different pricing.

J: And you’re turning over control of your business of your future to people that don’t necessarily have your best interest in mind and may not be smart enough, may not know enough about your business. So keep control and don’t trust other people when it comes to your brand and your business and your future.

Bonnie: Yes, that’s very well put. Nobody is concerned about your product or your service as you are. And they’ve got a lot of other products in their book to deal with. And the only way you’re going to get attention is by working with them by giving them what they want, put yourself in their shoes, find out what it is that they need. Well, they need help selling the product. They need a little financial support little they’re all coin operated. The retailer’s what they want is they want a decorated area of their stores we put in colorful point of sale material. What our end user are consumer wanted is they wanted something that was easy to find on the shelf, they wanted something that they could rely on that would taste the same year after year. They wanted something was friendly, where they could pronounce all the words on the label.

Bonnie: So everyone had something different that they were looking for. And we eventually learned how to find out what that was to give it to them.

Carol: That is so great.

Bonnie: The spirit again, right?

Carol: There it is. It’s just woven throughout every aspect of the story, every aspect of the way you do business on a daily basis, and it just continues all the way through. So you exit or you sell the Gallo, in what year?

Bonnie: 2005.

Carol: 2005 you sold to Gallo, after you’d built this amazing international brand, and you’d already been in the business for almost 20 years at that point. I don’t know if I’m doing math correctly, 20 years. But you were done. You’re like Well, we did this we built this amazing thing. But now we have so much more to offer. So tell us more. What’s was your next chapter. What’s Bonnie and Michael say was their calling after they already accomplished this amazing thing. What do you do?

Bonnie: Well, I couldn’t say it was our calling. But we were called. Our staff originally said, you guys have to write a book. We’ve never worked for a company before since Barefoot. And it was a team that worked so well together. They all loved working together. It was productive. It was fun. And because of your company culture and because of the success and you did things so differently than what was going on in the industry. You really have to put it in a book and share it with others. So the first thing we did is we wrote the book called The Barefoot Spirit, how hardship hustle and heart built America’s number one wine brand.

Carol: Very cool. Go ahead Michael.

Michael: And then what happens is, it becomes a New York Times bestseller and we’re thrilled. And so we start speaking, we start speaking all over the world we speak in 60 schools and teach entrepreneurship. Students are like in their 30s their master’s degree, or they’re coming back into school. And we start to realize because times are changing quickly, technologically right now, things are changing very fast. One day, people show up at our lecture, they all got earbuds on. And we thought, “What do you guys listen to? Is it rap? Is it rock and roll? Is it hip hop? What is it?” They said, “No, we’re listening to a podcast on how to improve our business.” Where no kidding, and this is interesting, and another person said, when I’m listening to a business book. And so we got excited about audio because with podcasts with mp3 format, you can listen to it when you want.

Michael: In the old days, you had to listen to it when it was broadcasted and then we went to cassettes and whatnot, you could buy cassettes and put them in your dashboard and listen to them on a long drive. But now you can buy a book that’s broken up into segments and listen to a segment at a time, kind of like a series, which is really cool. So we said, Well, why don’t we do an audio book.

Bonnie: We wanted to get our message out to the greatest number of people. Because we really did learn things the hard way. It took a lot of time, a lot of money, a lot of anguish and pain. And we want to help entrepreneurs to succeed faster. And if they see the trials and tribulations that we went through, and the challenges and how we approach them, then that’s going to help them succeed faster. We wanted to reach a greater number of people. When we saw the earbuds we said well, we’re going to do an audio book out of the Barefoot Spirit. They’ll love this.

Michael: So, what we did was we got it, we got some audio books. We started listening to them. And what we found was that they were basically being read to you by a narrator or maybe the narrator was a movie actor or some great sports person, but it was still a narrator. And we thought, this isn’t as much fun as like Prairie Home Companion, where you got going to our private eye, and you can hear these actors and the sound effects and the music and all that. And it’s more of a cinematic performance for your ears. And we thought, well, let’s do that with a business book. And it hadn’t really been done. There’s one site out there that we really love called Business Wars, that does something like this. But we wanted to do a business bio that took you into the office, it took you into the buyers desk, it took you into the warehouse, it took you to the parking lot or all the places where business takes place, and you would hear the characters talking to each other.

Michael: And as a result of that, dialogue, you would draw out the conclusions. So it’s the opposite of prescription. We’re not saying here’s the three things to five things in the 12 things. We’re just saying, here’s the story. And you draw your own conclusions. So that’s what we did. And we’re really excited about it. We just released it on the third right of September. And yeah.

Bonnie: We have about 20 different actors that are playing the various parts of slots of dialogue in the book and so they’re speaking them out. And it’s really well Oh, we’ve got sound effects, original music score. It’s very fun.

J: So it’s business learning through narrative. I love that and I know a lot of people they don’t like textbooks they don’t like “Business books” but this is narrative form. So it’s basically it’s a story and people can learn using real stories and real life examples. I love that.

Bonnie: Yeah, exactly.

Michael: We wanted to bring fun to the wind instance now we’re trying to bring fun to the business education business.

J: And what’s the name?

Michael: It’s called The Barefoot Spirit.

J: Okay, the Barefoot spirit and I know we’ll talk about it later but for anybody’s interested Where can they get it?

Michael: Everywhere?

J: Okay.

Michael: Wherever you pick up your audio books it’s for sale all over the world.

Carol: It’s really cool. And I just love the whole evolution of the Bonnie and Mike story together. Where you are business consultants, you found this need, you created this global product, this amazing leading brands, you took that to the next step, and you decided to start coaching and speaking and mentoring and teaching and then you realize there was another greater need. Like you said, you really realized everyone had earbuds. Audio is a whole new medium. You just don’t stop you just don’t rest on your laurels. You just keep evolving, keep spreading that message. Keep teaching that people keep helping and empowering and inspiring people. And I think I have listened to a bunch of excerpts from the audio book. And it’s awesome for anyone who hasn’t listened to yet highly recommend it. It is absolutely awesome.

Carol: And it’s really spinning again, everything on its head just like you did with the wine brand. Where before wines were stuffy, wines were French wines were a mystery. A lot of business education has been not necessarily a mystery, but there’s like you said, it’s done very formally. It’s done through group leadership exercises and so on. But you’ve realized this way to bring it more to the masses to make it more fun to make it more engaging. So I think that’s just a really important point as part of the Barefoot Spirit. You’re constantly evolving. You’re constantly changing. You’re constantly looking to see what needs and opportunities are out there, what people are looking for and how you can help bring them value.

Michael: Thank you very much Carol.

Bonnie: Yes, thank you. And you can hear samples of the book, where do they go Michael? The samples?

Michael: They can go to if they just want to hear samples and they can also buy it at the site it’s called barefootaudiobook.com.

Carol: Barefoot.audiobook.com.

Michael: Barefoot audio book. And you’ll hear samples and you can buy it if you want. We wanted to make it like a business adventure story, a city last ride where you’re pulling for these people, but they make these huge mistakes. And boy, it really cost a lot of money. And they waste a lot of time, and then they have to pick themselves up and get going again. And throughout this whole thing, the thing that keeps them going is this Barefoot Spirit, which is, hey, after all, let’s have some fun with this, let’s learn from this. We believe that if we make the other guy happy that we’re going to succeed.

J: Love it. Okay, so we have a lot of entrepreneurs out there. And I’m sure if I asked you to summarize your advice for new entrepreneurs, you probably spend the next six or 10 hours, because this is what you do for a living. But if I said, just give us a couple really great tips, I’m a new entrepreneur, let’s say I’m trying to get my business off the ground. What are some of the things you’ve learned that you would love to relate to the next generation of entrepreneurs who are trying to accomplish the same thing you guys did?

Bonnie: Well, one thing is you can fall in love with your product, and everybody can love it. But that doesn’t mean it’s going to sell. You really have to have a good marketing plan. You’ve got to make people aware of your product. You’ve got to get it out there. And you have to manage the distribution system, the retail system and the expectations of your end user.

Michael: And I would add to that, another sound bite which is start slow. Make your mistakes in a small place. We like to say, don’t sell your product any further from your house that you can drive, apologize and get home in one day. Because you really want to know what’s wrong with your product. You really want to know what’s wrong with the system. And you really want to know what the real work is that you’ll be asked to do to be a success. It may not be as our case it wasn’t at all. We never thought we’d be pricing items in Tallahassee, Florida, on our knees on the linoleum, in a public store, but it was 87 degrees outside 90% humidity. We didn’t think that that was going to happen. But that happened a lot. And if we didn’t do it, nobody did it. And there was no sales. So you can’t have this attitude, I’m the CEO, this is my business. I’m the boss. No, you have to be humble and pretty much say what do I have to do to be a success?

Michael: What is going on with this marketplace before I got there, that makes it necessary for us to negotiate it in a certain way. Those rules are already set, what are those rules? So that would be my advice to people starting out is to really understand the marketplace. Don’t listen to the VC and say scale fast and fail fast. That’s easy for them to say they got the money, but you’ll be failed. How about start slow and never lose it?

J: Love that and I just want to go back because this is probably one of the best quotes that I’ve heard in a long, long time. Don’t sell your product any further from your home that you can drive, apologize, and get home on the same day. I love that.

Michael: That’s huge. Such a huge nugget.

J: It’s be involved in Your Business take control of your business and don’t rely on others. That’s awesome.

Carol: Yes. So awesome.

J: Michael, Bonnie.

Carol: Yes. I think it’s about time we move to four more.

J: What do you think I was just about to say that?

Carol: What a coincidence. Okay, Bonnie, Michael, we’re going to go to this segment of our show. Now before we wrap up that we call four more. Therefore kind of rapid fire style questions that we ask each of our guests. Okay, so we’re going to ask you four and then at the end, you’re going to tell us a little bit more about where we can find out more about you. Are you ready?

Bonnie: Okay, fair enough.

Carol: Okay, awesome. Bonnie, I’d like the first one to go to you. Okay.

Bonnie: Okay.

Carol: What was your first or your worst job? And what lessons did you learn from it?

Bonnie: Well, my first job was Arthur Murray dance studio. I got to call up people cold call them on the phone and offer them free dance lessons. You do enjoy dancing, don’t you? What I learned from that was to keep people on the positive side, set up a question where they would answer yes. And also to use humor to get them engaged.

Carol: Love it.

J: Okay, second question. We’ll make this one for you, Michael, what was the defining moment where you realize that you had the entrepreneurial itch that you really wanted to be an entrepreneur?

Michael: Well, I was working for the federal government, I had a bureaucratic job. I was making lots of money. I had a future ahead of me. Lots of security. And I realized that I was totally ineffectual. And I was not going to get a promotion unless my boss keeled over. And so I had to wait for that to happen. And I also realized that for a guy like me, who wanted to really make change happen, that, that wasn’t the environment for me. And it wasn’t just the job, it was the idea of having a job. So that’s when I had a revolution in my brain. I said, I got to get out of here. I gotta get out of the workplace. I’m not really a Johnny paycheck kind of a guy. I’ll take the risk and that’s when I knew.

Carol: Excellent. Okay, the third one, I would like you each to answer, Bonnie first. Okay. Third question is, what is something that you know, now that you wish you would have known back when you started Barefoot a long, long time ago?

Bonnie: Well, we started listening to self improvement tapes and business tapes and how to communicate with people. And when we started off, we thought, okay, we’ve got an excellent gold medal winning wine at a low price with a really cute foot on the label. And if you don’t want to buy it, well, what’s wrong with you? Well, that was not the right attitude. So after listening to some of these tapes, we realize you’ve got to find out what it is that that person wants. And they’re not interested in any of those things. What they’re interested in is bringing people into their store, making their job easier by color coding the boxes, bringing in the community by supporting their causes. So it’s all about the other guy. It’s not about you at all.

Carol: It’s not about you. What a thought? And what about you, Michael, do you have one to add to that?

Michael: Well, I would just say, it’s on the same vein, I wish that I had realized that it wasn’t features and benefits that was going to sell the product. And I wish that somebody had told me, Look, the distribution system has more important than your product. If somebody told me that I probably wouldn’t have believed them. But you go to Ace Hardware and you see all these lackluster products, guess what? They have excellent distribution. So this is the thing. It’s not about quality. It’s about whether or not you can manage the system. And I didn’t know that. I thought it was all about quality and price.

Carol: Getting in people’s hands.

J: Now that’s great. If a worst sales person, worst product can outsell a better product if it has good distribution.

Bonnie: That’s absolutely correct. Yes.

J: That’s fantastic. Okay, last question. I’d love for both of you to answer this. This is Carol’s favorite question. But what is something you splurge on either in your personal life or your professional life? That was totally worth it?

Bonnie: Well, we set up a trip a whole month that we went to Chile and we bought the tickets and I made sure one things I’d learned before. You’ve got to make the tickets non refundable. So you got to go as business owners, things come up all the time to cancel your trip. So it was really worth it. We went to Chile for a full month and just had a blast and that was outside of our budget at the time. However, coincidentally because we bought the tickets so much in advance, it happened to take place really coincidentally, right after we sold our business so suddenly we did have the money to go and spend a whole month Yeah.

Carol: That is an awesome celebration. I think you had a really good tip in there too for business owners and honey why haven’t we thought of this. Make your trips non refundable. That way you make yourself take time off because you need that, you need the reenergizing time.

J: We’d have to steal that one, love it.

Carol: Totally stolen, consider it stolen.

J: Michael Bonnie. Let’s jump into the more part of Four more, can you tell our listeners where they can find out more about you more about your current mentoring and business, your current book? And I know you don’t own Barefoot Wines anymore, but where can people find out more about Barefoot Wines?

Michael: Well, if they want to find out about us, we really are the Barefoot Spirit. That’s our brand, the Barefoot Spirit. And so, we have the barefootspirit.com. Our book is called the Barefoot Spirit. And you can go to barefoot audio book. So we’re easy to find. And we’re also Michael and Bonnie. We’re on all social media. You’ll find us-

Bonnie: And LinkedIn.

Michael: -as far as the wine is concerned, it’s in every store, and they’re doing a fantastic job. You can just go to barefoot.wine.com and I’m sure that they’ll be very happy to hear from you.

J: Awesome. Michael, Bonnie, this has been absolutely awesome. I’m sitting here taking notes. And that’s why I’m like a few seconds behind here because there’s so much great stuff here. Thank you so much for being with us. We were so excited about talking to you. You didn’t let us down. And we look forward to hearing about the next chapter and bringing you back in a couple years when you jump into your next entrepreneurial venture.

Bonnie: Thank you.

Michael: Thank you.

Bonnie: This has been a blast.

Michael: Yeah, it’s been great guys.

Carol: Thank you so much. This has been great. Thank you.

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In This Episode We Cover:

  • Barefoot’s (crazy!) origin story
  • The one-sentence piece of advice that guided their launch
  • Identifying a hidden opportunity in a competitive market
  • How to design an iconic logo
  • Why your market is more crucial than your product
  • Avoiding the unnecessary expenses that kill most businesses
  • How “worthy cause marketing” transformed their customers into advocates
  • How to take other brands’ followers
  • The importance of ensuring your product display is correct
  • How to think about what retailers want
  • Preparing to sell a business
  • Using narrative storytelling to teach entrepreneurship
  • And SO much more!

Links from the Show

Tweetable Topics:

  • “If you want to make money in the business, focus on the masses not the classes.” (Tweet This!)
  • “Find a market for what you’re selling before you decide what you’re selling.” (Tweet This!)
  • “Where there is mystery there is margin.” (Tweet This!)
  • “Outsource everything except quality control, sales, and accounting.” (Tweet This!)
  • “A worse product can outsell a good product if it has good distribution.” (Tweet This!)

Books Mentioned in this Show

Connect with Michael & Bonnie

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.