Scott Lerner is proving you don’t need big bucks to muscle a new beverage onto the crowded natural-foods shelves.
Lerner, a former new product executive at Pepsico who worked on Naked Juice after the giant acquired the niche natural beverage company, is banking on his management background and entrepreneurial spirit as he bootstraps Sol Elixirs LLC, maker of Solixir all-natural sparkling botanical beverages. While many said he was crazy to launch a business in late 2008 just as the economy was tanking, Lerner said starting in a slow period had advantages. “Suppliers were willing to talk to me, work with me, give me the time to get it going,” he said.
Most startups have some element of bootstrapping, where every dollar saved through resourcefulness is invested in the business. But the strategy has become even more necessary with both credit and venture capital scarce.
As a former officer in the Marine Corps, Lerner knows how to work with less. At Solixir, he strives to take a dollar and make it work like $10, he said. When he travels to trade shows, he often stays at a friend’s house to save money on lodging, then crams in multiple in-store demonstrations at area retailers before and after the trade show, accomplishing several missions on one trip. His attitude is, “Work as hard as possible now and we’ll reap the benefits later.”
Lerner has kept overhead to a minimum. The year-old start up is largely a virtual business, with just Lerner and an assistant working out of a borrowed office in Glenview and others joining the team remotely from out of state. Yet in the first nine months, it achieved national distribution for its line of Solixir all-natural sparkling waters in Whole Foods stores, something many new products never realize.
Hitting national distribution so soon surprised even Lerner. “I thought, `We’ll be lucky to get the Midwest,” he said. “When Whole Foods wanted it nationally, it changed our business model.” In a matter of weeks, Lerner had to raise about $600,000 to support the product, on top of $150,000 he had spent on the initial launch. Again, he found ways to cut costs. “Instead of shipping one pallet, I thought, `How can I ship three pallets and then distribute it from there,'” he said.
His personal budget had already been cut, by moving from California a year ago into his in-law’s home in Glenview with his wife and two young children. Instead of drawing a salary, Lerner is re-investing profits in the business.
An entrepreneur who’s willing to make personal sacrifices can be inspiring to others. He said he nabbed investment dollars from individuals who believed in him. Starting with his father and best friends, Lerner said about half the people he called agreed to hear his business plan pitch and half of those ultimately invested.
Investor James Urhausen III, who had known Lerner for 10 years, tasted the product and liked it, while also recognizing Lerner’s plan as conservative given his track record and his energy. “I knew he was throwing his life into this. He’s going to do everything he can to make it successful,” Urhausen said.
Design firms and other partners also responded. “A lot of people were willing to give me a reduced cost to get on board with the project,” Lerner said.
Lerner wanted an expert team, but couldn’t afford to hire them full-time, so he offered equity in the company to sports nutritionist Susan Kleiner, author of Power Eating, and herbalist Amanda McQuade Crawford , who worked with Lerner to develop the formulation. “I wanted the two experts to have skin in the game,” he said.
Crawford appreciated Lerner’s solid business plan, belief in fair trade practices and long-term view of sustainability, while Kleiner recognized the market readiness for the product. “The time for botanicals has come. They’ve gone out of the really weird, unknown Chinese arena and have become much more mainstream,” he said.
Lerner’s knowledge of the natural beverage category helped the team come up with an original all-natural functional drink without too much sugar. The product is made from sparkling spring water, fruit juice and botanicals, such as Yerba Mate, chamomile and ginger. It’s available in three flavors, Blackberry Chamomile, Orange Mate and Pomegranate Ginger, each with less than 60 calories. It retails at $1.99 per 12-ounce can.
While Lerner had the entrepreneurial bug since college, it was his wife who convinced him to take the plunge. “She said, `Just do it. It’s going to work and if it doesn’t, we’ll deal with it.’ ”
From Lerner’s perspective, leaving a six-figure job for one with no salary was “very scary.” But he committed to giving it his best shot. “Once you’re in it, it’s self preservation. You have to keep going,” he said. In the next five years, Lerner’s goal is to have built a company with $15 million in annual sales.
While hitting a home run with a new product is a long shot, Lerner’s odds increased dramatically when he achieved national distribution, said Ben Brenton, chief innovation officer at Snap-On Inc. in Kenosha, and Lerner’s former boss at Pepsico. “If you can get into Whole Foods, that lends tremendous credibility to the product,” he said.
Still, winning the consumer is the ultimate test. “It’s got to taste pretty good,” Brenton said, “or people won’t pick it up again.
A verstion of this article first appeared in the Chicago Tribune on Sept. 15, 2009.