How does a guy who left IBM end up running a chocolate company that does millions in revenue?
Jerry Swain is the founder of Jer’s Chocolates, which offers unique gourmet chocolate gifts.
I’ve invited him on here to tell the story of how he built up the company. And how he went from being a guy who basically knew nothing about the industry to where he is today.
Jerry Swain, Jer's Chocolates
Jerry Swain is the founder of Jer’s Chocolates, which offers unique gourmet chocolate gifts.
Andrew: Coming up if you ask your father for advice on what company you
should launch what would he tell you? Listen to the advice today’s dad gave
him. I think it just might help you. Also, I can’t tell you the name that
today’s guest picked for one of his products because I think I’m going to
make it sound bad, but when you hear it I’m curious to hear your feedback
on it and what you think of that name. Also, wait till you hear about the
email that was like a knife to the heart of today’s guest. If you’re an
entrepreneur I bet that if it hasn’t happened to you yet, something like
this will happen to you in the future. I want you to draw power from that
story and that part of this interview. Stay tuned for all that and so much
more coming up.
Three messages before we get started first, do you need web design work? Go
to LaunchTower.com; it’s run by Alex Champagne who has helped me with a lot
of last minute projects at Mixergy. Now second, do you need a lawyer who
actually understands the start-up world that you live in? Go to
WalkerCorporateLaw.com I’ve known Scott Edward Walker for years. So tell
him you’re a friend of mine when you go to WalkerCorporateLaw.com. Finally,
what are the big challenges that you have as a founder? Go to
MixergyPremimum.com and take courses taught by proven entrepreneurs who
want to help you get through your toughest challenges, MixergyPremimum.com.
Let’s get started.
Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of
Mixergy.com, home of the ambitious upstart. How does a guy who left IBM end
up running a chocolate company that does millions in revenue? Jerry Swain
is the founder of Jer’s Chocolates, which offers unique gourmet gifts. I’ve
invited him on here to tell the story of how he built up the company. How
he went from being a guy who basically knew nothing about the industry to
where he is today. Jerry, welcome.
Jerry: Thanks. Andrew. I appreciate it.
Andrew: So, millions in revenues is what our research says, what are the
numbers? How much in revenue did you guys do last year?
Jerry: We’re a private company. We actually have a gag order on us right
now so I can’t share that with you, but it’s significant enough to have a
nice staff, growing company, and it’s taken us awhile to get here. I will
say we’re under $10 million, I can tell you that.
Andrew: Okay. Our research here said up to $10 million as of 2011. I know
you’re not going to say anymore than what you’ve said already, but I’ll let
my research stand and what you’ve said stand. So, like I said in the intro,
came a long way let’s find out how you got here. You were at IBM and when
you got to IBM you discovered a territory that was, that was what? What was
Jerry: It was very interesting. I was very fortunate to come into IBM right
out of college. And our branch manager said, “Listen, I know you’re new,
but there is a territory out in the desert that hasn’t produced for 18
years, to be honest with you, you’re low net man on the totem pole and
that’s the territory you’re going to get.” So, it was an interesting
challenge that came up. Everybody else that was on my team really didn’t
have a desire for this particular territory. It had 18 years of failure and
he put me out there. So I looked at it as a challenge, and it was one of
the first times that I felt that I had really liked the challenge of
building something. And so I’d gone out and it was in the desert and I was
actually commuting a little over 200 miles per day, if you can believe it?
I was going back and forth to the territory getting up early. And I had
come into a territory that had just been dormant. It had a very interesting
feel to it. There wasn’t a lot of big business out there. So I had to reach
into our bag of tricks at IBM to see what potentially would work. I was
able to bring in a lot of consultants into the territory, really cut my
teeth learning about lots of things down there, but with a good support
from folks in IBM and business partners was able to turn the territory into
a very profitable territory. And it became a sought after territory after
about a year or two.
Andrew: All right. You know what? If this was like a (?) biography or
Discovery, or even CNBC they would just leave it at that and there would be
this great aura about you. This is a guy that turned around a dying or just
stagnant market. What I want to understand here at Mixergy is how you did
it. In fact, let’s go back and understand the psychology of IBM. Wouldn’t
they, if they had a new sales person, say let’s give him something that he
can accomplish? Sales that he can really warm up with and feel his
confidence grow and then take that confidence and unleash it on a new
territory. Why did they decide to send you out and almost let you fail?
Encourage you to fail?
Jerry: I can’t speak exactly, but being in the IBM culture, the one thing
that was wonderful about them is they gave you incredible training. Went
through a good 6 to 12 months of training with great folks, great
instructors and they tried to prepare you as best they could to go out
Andrew: How? What did they do that prepares you in those months?
Jerry: We had sales training school back in Atlanta, and what we had was
anywhere from two to three weeks of pre-intense structured material. A lot
of it was learning how to call on a Fortune 500 company, being a
consultative sales person, doing a lot of role playing. Failing there. They
wanted us to fail as much as we could there so we could learn from that
experience, not throw us out without any training, into the world, per se.
Andrew: Can you tell me about one or two of the techniques that they taught
you that stuck with you and that you role played a little bit so that you
could get comfortable with?
Jerry: It’s engrained in my head. We have something called a customer
tailored sales call, and it was a six step process from establishing
rapport to somebody to closing a sale, whether it be a sale, or a meeting.
Obviously, some sales are within a day and some of them can take a couple
of years, and it took you through each of those processes and dissected
every single piece of it, knowing that you’re not going to follow a script
when you go on a sale, but to at least know in your head what the compass
was, what the agenda was, as far as following a sale.
Andrew: How do you build rapport with someone? I face that everyday. You
and I never met each other. We’re on camera. I want you to feel comfortable
with me, so that you deliver the goods and I deliver the goods for you and
the audience. I don’t know how to do it in a second. I think I’m learning
it. I’m getting better, but what did you learn? I want to be able to use
Jerry: The techniques that they shared, that don’t always work, of course.
The one thing about humans is we’re not logical, we’re emotional beings, so
there’s a little bit different play in there, but they taught you things as
far as comfort. There’s the non-verbals. There’s the smiling. There’s the
eye contact. There’s your posture. All those types of things of the neuro-
linguistic part of it. Then there’s the open ended questions that you can
ask. “How was your day” is a close ended question. “Tell me what you did
today,” is an open ended question. To get the persons talking about
themselves typically would establish better rapport than, in a sense, going
in as another sales person might and just talking about themselves right
off the bat.
Andrew: Past guests here have told me that they do that in sales calls, of
course. They get to know the person, and I called myself out, in past
interviews, for, as soon as I get on, I’m all business, whether it’s a
phone call with a client, or a phone call with an interviewee, or just
getting ready here to do an interview. I just get right into the business,
and I learned. “You got to ask people about their day. You want to warm
them up before you get into business.” I did the same thing that you
learned not to do, which is I asked you as soon as we got on, “How’s your
day going?” Then you said, “It’s going well,” and then you took a little
initiative and you went beyond it and you shared some of what you were up
to, but I should have said, “What were you up to today?” That’s what I
should have done to get you to open up and tell me the story of the last
few hours of your life.
Jerry: I’m a little bit easier subject than most, but when you go out there
and you make a sales call, I think there’s an automatic posturing going on,
stereotypically, between a buyer and a seller. The buyer, in many cases,
will say, “It feels like they’re on the pedestal,” like, “I command this
meeting. I’m going to make the decisions and you’re going to have to earn
it from me.” A real good partnership, a good customer/vendor relationship
is more collaborative. I try to go into it that way and not put myself
lower or higher than the buyer, but try to get on the same playing field
with them. Trying to understand their business, what the needs are.
Even coming into the chocolate business, I’ve had some comments back and
people that are shocked. I’ll say, “Our product isn’t for everybody and it
may not be a fit for you, but I’d like to understand a little bit more
about your business and, if it is a fit, I’ll tell you a little bit more
about it.” That takes some people a little bit because they’re used to
somebody putting a box of chocolates, or a bottle of beer in their face and
trying to sell something. That’s what I think IBM did to help prepare their
folks to go out into the field. Then they want you to earn it. There’s
folks that I was peers with that had worked very hard to earn their way up
to one of the more elaborate territories, one of the more high yielding
territories. I think that’s what they want to do. They want you to earn it
and they’re OK. They want you to succeed, but if you fail, I think they
have always had a good pipeline of people that are willing to step in.
Andrew: They trained you and they said, “We’re going to send this guy out
there and he’s going to prove himself, or we’ll find somebody else who
can.” Months of training, you go out there, what do you do? Can you be more
specific about how you took this desert that wasn’t producing sales, that
for 18 years, as I understand it, didn’t produce? What did you do? Be as
specific as you can.
Jerry: When I went out there, I just tried to find out what was going on in
the territory. We had a systems engineer out there, which is your technical
support person that worked out in the desert. He was there all those years
and I tried to understand what worked. What didn’t work? Who the customer
base was. The opportunity he thought was out there. At the time, he didn’t
have a whole heck of a lot to say. He was really just doing maintenance on
current accounts. I started researching who were the larger businesses in
that area, and I started to try to get appointments with them to find out
what their needs were as a business. A lot of people may think IBM sells
hardware, but they do a lot more than that. They create solutions for
companies, and even today, more so than when I was there, they’re really
about a services company. I would try to go in, find what those customers’
needs are, and what I found out is that the size of the companies didn’t
warrant the big mainframe computers and even some of the mid range
computers. Maybe some of the entry level, mid range, more PC network based
type of solutions with software solutions.
As I qualified and tried to find out budgets, I think the reason it failed
down there is because in our New Business Unit at IBM, everything was
focused on this mid range to large computer network and it was trying to
shoe horn a solution in that didn’t work in that territory. The more I
learned, the more I realized that this is a bigger networking opportunity,
smaller profile software, and I had to go out through my IBM resources and
find out who those were. If I was dealing with construction, or healthcare,
or transportation, or any of these industries, there were solutions for
them out there, but these aren’t customers that were going to buy a half
million dollar software solution, they were looking for a $50,000 software
Andrew: This is really interesting for me to hear. I’ve heard this from
past entrepreneurs who’ve said, “To figure out what my business is, I have
to call up potential customers and hear where their frustrations were. Hear
what was bothering them and was so painful that I could solve it.” Then
they built the solutions. You did the same thing at IBM. I’m wondering how
you got in the door. You told me that you look for the biggest clients, the
biggest opportunities. How’d you get in the door, and then how’d you get
them to tell you that this is what they needed?
Jerry: That’s a great question. Some of them were very open. The nice thing
about having an IBM badge is there’s some credibility there and it’s a
little bit easier to get in the door than, perhaps, some other places. I
think I had that going for me. The other thing is I created a relationship
with the publisher of the Desert Business Journal down there, became
friends with them, as I was looking to get our name out there and create a
presence. The team that created the Desert Business Journal knew all the
players in the industry and, through a warm connection, I was able to
connect with a lot of these other companies.
Andrew: I’ve also asked past guests, “How do you figure out what pain your
customers are having?” because if you ask them what pain they’re having,
they’re going to give you all kinds of random issues, or they’re going to
start giving you solutions, and that’s not their job. They give you
convoluted solutions instead of letting you come up with ones that really
address the problem. How did you pull that information out of them?
Jerry: It wasn’t easy. At the time, I was fairly young and I was doing my
best to extract that from them, but again through the questioning
techniques, you’re right. Depending on the particular person, they may give
you different types of feedback, but what I always used to do, if I
couldn’t get out what their pains were, like you referenced, I always tried
to use the same questions, like, “If you could wave a magic wand, what
would you want to happen?” Put it in that high level perspective. Pull away
all the details out of their head, a little bit, and say, “Create the
landscape of what you would want right now and what that would be. Don’t
think about your budget. Don’t think about all these other things.” A lot
of times it would open up and you would find things out and I think
sometimes they would find some things out that they didn’t realize were
some of [??] pains.
Andrew: For example, what kind of answer would you get to the magic wand
question? By the way, for anyone who tuned in just because they want to
hear the story of chocolates, I promise you, I’m going to show you how Jers
built up with this kind of level of detail. If you’re just into the sweet
part of this, and you’re just into quick, fun conversation, maybe what you
could do is, as we’re having this in depth conversation, just go to
jers.com and look at the chocolate and see where we’re going with this
interview. I can’t let go of the details. I can’t make this a quick
conversation where everything sounds like it all happened easily. What was
one of the answers to the magic wand question that led you to understand
Jerry: It’s funny because a lot of times when you ask that question you get
some interesting feedback that is completely unrelated to the business.
One, in particular, I shouldn’t mention the customer, but the individual
was opting for a new position at the company. They were trying to move to
another department and what they wanted to do is leave the legacy where
they went to help them politically, internally. They didn’t say this
directly, but I found out that they were trying to create some type of
solution, but show an under budget number going into the end of the year.
As you start talking about solutions for the company, what was best for the
company, although that was important, their personal focus seemed to be,
“I’ve got to show in the black. I’ve got to show some type of solution.” My
solution, that I was presenting, didn’t really work with that, so it helped
us talk more about budget, what that number was, what we could do in the
interim to help this person through. Interesting things like that, that you
just would never think would be part of the buying process.
Andrew: We always say entrepreneurs are like rock stars, but meanwhile, we
don’t treat them like rock stars. We don’t really go into how they did it
with the level of detail that, say, a Rolling Stone would go into a rock
star’s. I heard Joe Walsh talk about “Rocky Mountain Way” on Howard Stern
with a level of detail that was like a scientist. Exploring where the idea
came from. How it became a song and so on. I want that for entrepreneurs
here. More importantly, if you hear how “Rocky Mountain Way” happened, how
that song came about, you’re not going to go and write the next rock song,
but here, you listen to an entrepreneur tell you how he made a sale.
I bet you, if you’re in any kind of business, you’re going to be able to
use this and you’re going to be able to come back and say, ‘You know what?
It’s that guy Jerry Swain. I heard him talk about it and I used it. It
worked.’ That’s what I care about in my audience’s life, not some strange
musician’s life, or a stranger who happens to be a musician. I see what
happened. You went through this mindset to where you said, ‘I’m going to
think about this like an entrepreneur,’ because?
Jerry: I had to. The support mechanism where I was at, IBM, was really
focused on the mid range to the large computer systems, and to get that
support for the smaller solutions, was a lot more challenging, and I had to
dig through it. Obviously, I wanted to prove myself at IBM, but the energy
that was instilled in me going through a building process for this
territory not only was challenging, but was fun. I liked it. I can
reference a few things even when I was younger that gave me those creative
juices that I would have never thought of, but after doing something when I
was ten years old and then 17 years old and now 22 or 23 years old, this
was the map that was creating for me that I would be an entrepreneur some
day, or desire to be an entrepreneur.
Andrew: What was it? Can you give me an example of something you did at
ten, or 17, or back when you were young, that led to this?
Jerry: When I was ten, I was really into baseball. I played the Little
League, and all that. I loved collecting baseball cards. At the time,
baseball cards started to become tradable and there was some value to it,
and this is when the big upswing of trading cards started to come together.
There were really Topps Baseball Trading Cards and a couple of other folks
came into the business because they wanted to get into the action. I
started researching that, and I used to trade with my friends and I
remember having a paper route and meeting more friends and we’d do trades
and then I would put an ad in the newspaper, obviously, way pre-internet
here, but put a little ad in the newspaper, spend $7 on that and sell some
of my cards. Cards that I was able to trade for a nickel or .10 cents or
.20 cents, I was able to sell them for $10 and $15 and I realized, as a
young boy, that I could make a little extra money, although my parents
tried to help me out with stuff, I had to buy a bike.
I had to do a lot of different things for myself, so I really enjoyed
creating that little system of building a small little teeny, teeny
baseball card empire on my three block neighborhood. Even a little bit
later, we had fundraisers at school. We were selling posters. We were
selling wrapping paper, the typical fundraisers for school. I remember
going out there and the big prize was this little boom box stereo and I
wanted that. So I tried to get creative so one of the posters had a parrot
on it for whatever reason, so I was thinking creatively and I realized that
one of the big country clubs in the area there mascot was a parrot. So I
went over there and I sold a ton of these wrapping paper and calendars and
posters and stuff and ended up winning this little boom box. So, but those
are the types of things that I’ve always, I didn’t think about it at the
time, but when I look backwards the things, the adrenaline that I got was
from creating something or building something. I think this IBM thing,
credit to them for putting me in a territory that got those juices flowing
Andrew: All right. You turned to your dad as you were looking for the next
business. What did you tell him and what was his advice?
Jerry: Well, this was fast forwarding a little bit. I was home at Christmas
time with my folks and my sister, dad, and I were talking and I said, I’ve
been through a big business. I’ve been through a medium-sized business and
I really feel the desire to try something on my own for a variety of
reasons. He said, “What is it that you (?) do?” And I started talking a
little bit more.
Andrew: I’m sorry, he said what? We lost the connection for a moment.
Jerry: Yeah, he says, “Well, what is it that you like to do?” And as I
started speaking a little bit longer, he says, “Let me stop you there.
You’re telling me what you want to do. Tell me what is it you like to do.”
And that made me stop for a moment and think about it because I was, I was
telling him my ideas of what I thought would be a good business versus what
he was trying to focus me on, what is it that I like to do as a person
whether it be work, fun, whatever it may be. And as I started speaking to
it I said I like to be closer to the customer. In a lot of ways as I grew
at IBM I became further away from the customer and more involved with
management. I said, I love consumer products. I love the fascination of the
marketing and the branding behind it. I think it would be really fun to do
something like that. I do a lot of philanthropy. I was doing a lot of
volunteer work. I would love to incorporate that into business.
As I started speaking to this, he’s the one who said, “Have you thought
about chocolates?” And I said, not really, maybe it’s crossed my mind a few
times, but it’s not something I have experienced it. And as we talked a
little bit further and we talked about what it is that I enjoy doing versus
what I wanted to do, the seed was stuck in my head there for awhile and it
was, I would go to sleep with it and it would bug me. Like maybe, I should
look into this because it (?) a lot of the things that perhaps I like to
do. But the fear was, my experience wasn’t high tech for such a long time
to start all over again was very fearful for me.
Andrew: I want to find out how you did when you started all over, but just
to make sure this is the part I got out of what your dad said. I would do
what you did, which is to say, what I like to do is run a software company
and then build it up to, and just talk about where the software would
start, who would service it, and so on. But if someone were to stop me the
way your dad stopped you and said, “What do you like to do?” I would of
said, all I want to do — this is years ago before Mixergy — I would of
said, all I want to do is read biographies of successful people. See how
they did it. Find a way to understand the key ideas there and then maybe,
definitely talk about it with someone over drinks but maybe find more than
just one person at a time to talk bout. And that distinction of what do you
like to do? What really fascinates you versus where would you like to be
and all that is huge for me. So I wanted to make sure to spend some time
and point that out to people. All right, he helped you recognize, hey you
know what, maybe this chocolate thing is, and this chocolate thing had been
in you for awhile. Where did it start and how did it develop?
Jerry: Yeah. Well, it’s very interesting. It’s all in a sense by accident.
The first time I ever made a chocolate-peanut butter ball was back in
college. I was assistant director of the dorm so I had a bunch of the
resident assistants, RA’s, working for me and it was right before finals in
December, before Christmas break, and we had a meeting at my apartment and
I decided to have a potluck. Well, I love sugar and I love deserts so I
certainly assigned myself for desert. So when I was at Thanksgiving with my
folks for no particular reason, I opened up a recipe book and I made a
chocolate-peanut butter ball and I brought them back to my staff. Well, as
you can imagine, you can’t make a yield of 15 of these, you have to make
about 80 to 100 peanut-butter balls in a batch. So, I made a bunch and I
brought them back and it doesn’t take much for people to like something
sweet, of course, and everybody really enjoyed the peanut butter balls and
with the other peanut butter balls, I took them to other areas of campus I
was involved with, one of them being my fraternity.
The funny pun that all my friends go back to is, my fraternity brothers
coined them “Jers Balls.” It was a campus of 10,000 people, was UC
Riverside, that was the thing. They would go around campus and say, “Hey.
Have you had Jers Balls?” It was a really funny, funny thing. It actually
happened over a three year period, so the following year, my friends, at
Christmastime, said, “Are you going to make the Jers Balls?” That’s really
how the chocolates actually started. After that, I didn’t think anything
else of them. I [??] for IBM and a couple of my friends said, “Are you
going to make the Jers Balls again?” I said, “I will. Let’s have a party.”
The second Saturday of that December, we had a party. The party was so fun
that for over the next nine years, the party grew to about 200 people.
People were flying in from all over the United [??] States for the party. I
had to move it out of my residence to a hotel, so there was dinner and
dancing and around 10:00, 10:30 in the evening, we would bring out the
chocolate peanut butter balls. My friends called the party Jers Ball. We
played about it a lot.
The nice thing is with my philanthropy, the last several years of the
party, I made the party into a fundraiser for the food bank. It was great.
It was great friends, great fun. It was for a great cause and it ran a ten
year course. That’s really how the whole idea of enjoying making something,
sharing it with friends, doing a little philanthropy in there, came to be,
but I never, during those years, thought of it as being a consumer product.
For me, it was a way I was giving back to my friends and getting people
Andrew: The name is still there. I was on your website up to a second ago
when I had to turn it off because I was worried Chrome was stealing
bandwidth from our Skype connection. It’s right there on the left margin.
It’s stuck, and it’s still fun, and what I’m wondering is, how did you get
so many people to come to your event?
Jerry: I don’t know. I think it’s a post-college type of thing. You’ve got
friends and you ask them to come and they bring a date, or whatever it may
be. It started off, probably about 70, 80 people because it was close to
college. I think because the party was so fun, it was at the right time of
the year and it was pre-family. We’re in our early to mid 20s. I think it
elicited a lot of response to the party for people to come out. It really
built on itself. People had such a good time, they told everybody else and
the network started getting out there, and one of the reasons it lasted ten
years is because it was at the right time and people were willing to do it.
I started traveling a lot. People started having families and then it ran a
Andrew: When it was time to launch a business based on this passion that
started out back when you were in school, what’s the first thing that you
did to do that?
Jerry: I started going to some trade shows. I wanted to go to some
chocolate and gourmet food trade shows. I didn’t even know they existed,
but they do.
Andrew: Before you even launched a business, incorporated, you said, ‘I
want to go to trade shows.’ Why?
Jerry: I wanted to learn from people that are in the industry. There was
only so much research I could gather from online, or from other research
areas, at the time. I didn’t know what I didn’t know and going to a
chocolate show is [??] the first thing I’d gone to and I remember like
yesterday. I went to one of the booths and one of the chocolate reps there
said, I told him I was thinking about starting a company and he says, “Are
you looking at using compound chocolate or [??]?” I’m like, “I have no idea
what you’re talking about.” It was the most basic of questions, if you’re
in the industry, to know, but I realized how much I didn’t know and how
much I needed to learn. I spent a lot of time trying to learn, trying to
[??] a little bit.
Andrew: Trying to find what out? Apologize, but we missed it. Trying to
Jerry: Trying to find out more information about the industry. How to
launch a consumer product. All the differences between going to a retail
versus wholesale. All those different angles.
Andrew: What I’m wondering is, when you saw all those people at the show
who had established businesses, that alone would be intimidating, but then
when you heard what you didn’t know, the basics of chocolate making, the
basics of the business, why didn’t you say, ‘You know what? They’re so far
ahead of me right now that I can’t enter this space. I’ve got to go and
find something brand new.’ Why’d you stick with it?
Jerry: A lot of things. Probably [??] discover is part of it, but I wanted
to do something that was different. I didn’t want to be a me . . .
—- 7 of 13 —-
Jerry: I wanted to do something that was different. I didn’t want to be a
me-too product. I wanted to find a niche product. The chocolate peanut
butter ball that we created was a niche because there was nothing gourmet
in the industry on the peanut butter and chocolate list, was primarily [??]
the lower end [??] chocolate. The [??]. I think I would have been [??] more
intimidated going out there and seeing a lot of people that had the same
product that I did. A lot of the industry is established businesses that
are third and fourth generation family, over 80, 100 years old. They’re
established, that are good businesses with good product, and the fact that
I was able to go in with a non-competing product and to try it to see if it
worked, allowed people to have a more open conversation with me. I think
also allowed me not to get so sidetracked on what other people were doing,
that ‘They’re bigger and they’re going to squash me,’ at the time.
Andrew: Then you had to create your own product and get it out to
customers. How tough was it to create your own product?
Jerry: It’s very difficult. You start utilizing industry ingredients, which
are different from what you buy at the grocery store. Much better
ingredients, but from the fact of securing [??] and getting it to have
shelf life. We do an all natural product, so we wanted to keep the
integrity there and then finding the packaging component of it, again, was
all new to me. I don’t know how many mistakes I made a day and, looking
back, what it took me three years to, I could probably do in three months
now, but it was the [??] that went through it, especially on packaging
because packaging is such a huge component of the product.
Andrew: It was three years of researching the equipment, the ingredients,
the ability to keep it on the shelf for longer than a few hours. It was all
that stuff. What about customers? How much time did you spend talking to
Jerry: The first couple of years I was in with one toe, or one foot, I
should say. It wasn’t until 2004 when I jumped in with both feet. I can
share a little bit about that, but for me, it was, I built a website, so
there was someplace to purchase the product. We had a couple of local
stores that had picked us up, but nothing in significant volume. We also
had one product that was a gift box, so we were very seasonal. I was doing
some consulting work to feed the company and feed myself during the time
frame and then it wasn’t until we landed one or two bigger customers in
2004 when I jumped in with both feet. It was several years of just poking
around at it. Not wanting to crash and burn.
Andrew: Is that when that email came from your friend? The one that you
still have a copy of?
Andrew: What did that email say?
Jerry: It was interesting. It was a little bit before ’04. I had just sent
out an email to a bunch of friends and said that I had left the high tech
industry to explore a chocolate company and the website was up, so I wanted
to send a link to all my friends. Then I got an email back where it was to
me and probably about 30 other people, mutual friends, from a person that I
knew in college, and it said something to the effect of, “Hey guys. I once
knew this guy that was a super star at IBM and was this and that.” He
listed a bunch of nice things. He goes, “Now look what he’s doing.” It was
just one of those things that was so derogatory, and it was so obvious what
his message was, it’s like, “This guy is a fool.” [??] the way it came
across to me, but the way it came across, it was crushing. As you try to
surround yourself with folks that are supporting you, here’s a guy that
just had to broadcast out there saying, “This guy’s a fool for doing what
Andrew: I’ve seen people get stuff like that and it just works at their
brains. They can’t let it go. It starts to define them. It starts to build
up into this big questioning monster in their head that they can’t out
think. For you, it didn’t do that. Why not?
Jerry: I thought about it. Believe me. It did wear on me because as you
probably know, Andrew, being an entrepreneur and starting a business is a
very humbling experience. Especially when you’re coming from, perhaps,
something that you were very knowledgeable and people revered you as an
expert at. [??]. I just tried to focus myself on hanging out with people
that were supportive to distract myself from that. You find out fairly
quickly that the people that want you to succeed, that want to be there for
you, that want to support, whether it’s words or actions or whatever it is,
those are the folks I tried to hang out with as much as I could. That
helped me distract from that scarring email that came across.
Andrew: For me, I had a couple of people, there’s one right now that’s
coming to mind, who said something similar and I used it to just fire me
up, to say I’m going to prove this person wrong. I can’t even think of the
guy’s name right now. I’d love to look him up on Facebook, but I can’t
think of his last name. But it fired me up. It kind of helped. Did that
happen to you, too?
Jerry: Absolutely. Sure. You want to prove somebody wrong. I mean, going
back to IBM, I remember every month they would come out with the top rep
and the bottom rep, and their attainment as far as new business, and it was
just a harsh reality. The funny thing was, let’s say there was 300 reps on
there for that territory, everybody always looked at the top 5 and the
bottom 5. If you’re in the middle, nobody saw your name. I remember the
first report that ever came out, I was at the very bottom. I remember
keeping that report and I posted it up in my cubicle because I wanted to
see that I was all the way at the bottom. Obviously by the end of the year
I made my way up to the top, but I used it as a tool to fire me up as well
when I looked at that. So I didn’t necessarily paste this email as much as
it stuck with me. Yeah, it does, you want to prove the people wrong that
don’t think you’re going to make it.
Andrew: I remember reading a biography of Ted Turner and how back when he
was going after the America’s Cup, which I think he won, he refused to say
anything that could potentially be used by a competitor as an insult that
they could then pin up on their wall and say this is that he says about us?
Ted Turner? We’re going to prove him wrong, you know. So Turner stayed
quiet so he wouldn’t do that, and those of us who have statements like
that, it’s good to use it as a firing up mechanism. As I’m going to prove
this person wrong. You eventually did. We don’t know what his intention
was. For all we know he could have just been kidding around, but it clearly
came at a bad point, and it was hurtful, or could have been. You didn’t
allow it to really slow you down. I’m looking now here at my notes to see
where I want to go next with this. You package it, you take it out to
stores, you said that there was, is this where the Food Network helped you
go to the next level? Is that the next milestone?
Jerry: Yeah, well I think the next milestone is probably, that made me jump
in with both feet, is I got a call from the buyer at Nordstrom, and she had
called and said I was just at a party and somebody brought some of your
chocolates to the party and I’d like you to come see me. Bring your
products. So I brought my products to her. Her name is Dawn. I’ll never
forget the meeting. Fairly intimidating type of person. Very nice. I went
in there and showed her the product and she said, you know, I’ve been here
17 years and every year, I get handed beautiful packaging with a really
mediocre product inside. I didn’t know where she was going. She said you
have an outstanding product and a really mediocre package.
I mean, it just highlighted one of the learnings that I had to come over an
obstacle that was in front of me. She said, this is the type of product
that we’d like to have at Nordstrom but I can’t have it in this package.
She showed me other packages. She said you need to, if you have a good
product, you have to showcase it. I learned a lot from her. From there we
went back and changed the packaging, and were able to get our product into
Nordstrom and into some Whole Foods stores and that’s really when I jumped
in with both feet. When I realized that, OK, I’ve got to make a decision. I
can’t do this part time anymore. There’s a need and a demand and
something’s going to suffer. So I threw in the towel in my consulting
business, which where I was making money, to jump in with both feet and go
Andrew: What did you do to change the packaging? You’re not a guy with an
artistic background. Where did you get this nicer package that Nordstrom
approved of and was excited to sell?
Jerry: I just went out to hire a graphic artist. Initially we had done some
artwork through some folks and I was just looking for the least expensive
way to go and the further I got along, graphic artists have all different
types of specialties, and I needed to find somebody who had a specialty in
consumer products and food. Very, very different, and a very interesting
niche, and so that’s what I went out to find and had to, in a sense, the
person that designs my collateral is different from the person who designs
my packing now, and I had to do that back then.
Andrew: OK. You jump in both feet. You said you got Whole Foods. How did
you get Whole Foods as a customer?
Jerry: Through a little bit of press here locally. We’ve always been
philanthropic. We did a chocolate party downtown and raised money for a non-
profit organization. They read about it. They like it. They called us up
and you know a lot of the first sales are reactive as I was trying to get
the foundation of the company set up.
Andrew: We were introduced by a mutual friend, Tim Berkwin, who by the way
guys in the audience, if you’re a Mixergy Premium Members go look for the
Tim Berkwin interview. He was so good and he refused to let me give the
interview away for free because he does not believe in this everything
needs to be free online. He made a statement about how we need to charge
for our stuff as online entrepreneurs and man was that interview good. It
took a long time for it to really sink in with me, but I’m glad that I
listened to him. Great interview. Go look up Tim Berkwin and listen to him.
But Jerry when Tim introduced us he said, “Andrew, you’ve got to ask him
about the days of giving out samples at Costco to get exposure for first
product.” So, I’m asking. What happened there?
Jerry: Well, there are lots of things. Initially that was the grass roots
way we started marketing. I would go out to different trunk shows. Costco
had trunk shows. Nordstrom had trunk shows.
Andrew: What’s a trunk show that Costco would have?
Jerry: They actually call it a road show. So, if you ever walk into a
Costco and they’re doing sampling, they’re might be some brands that you
sample and you have an opportunity to buy a brand that’s perhaps not on the
shelf there. A road show or a trunk show at Nordstrom for example, is when
you come there, it’s almost like a trunk of clothes. They call it a trunk
show. We would go there with out products. The same type of thing. Sample
it. Tell the story. Try to help them sell some boxes. So I was doing this
at a variety of our customers . . .
Andrew: I’m sorry and is this before you’re on their shelves, they have you
come in there with your product to see if you can sell it? You’re not
fully, you’re not in the shelves, you’re not fully part of their store.
They just say, let’s see if this guy has a product that our people would be
excited about it?
Jerry: That’s exactly right.
Andrew: And why would they do that? I understand that they’d want to test
it out to see if people buy your product, but it’s a completely skewed test
if you’re there talking about the product, telling your story. Is it really
an indication of how the product will do when you’re not there to tell your
story and to share it?
Jerry: Yeah. Absolutely. For Costco and it’s a little bit different for
Nordstrom or Whole Foods for example, because typically at Nordstrom and
Whole Foods will bring your product in and then you will do the shows for
them. So we were doing a lot of different specialty, natural food stores
including Whole Foods and Nordstrom. Costco was another one that we’d gone
to. Now the difference between Costco and perhaps some of those other ones
that I mentioned is the volume of traffic is a lot higher. For Costco it is
a way to test the product to see if it has legs, but it’s also for us a way
to get immediate feedback on our product.
Seeing that many people in a days period, you really can’t do that in many
other places where people taste the product, give you feedback, whether it
be on the price, the product, or the packaging, or whatever it may be and
it’s reflective of sales. Why are people buying it? Why are they not buying
it? So in a sense there is some (?) in it for us and we look at it as a
marketing play. And it’s a way to get it in people’s mouths. Again, I could
probably pop up a sign at our retail store and say, free chocolate today
and I still am not going to get the traffic I’m going to get from the
number of people walking . . .
Andrew: And the feedback. What kind of feedback did you get by the way when
you were there?
Jerry: All different types of feedback. I think we’ve been real fortunate
that the flavor profiles of our products have always been at the top. I
mean I’m very proud of that. That we’ve really focused on flavor and making
sure that we’re using great products and ingredients with good integrity.
But some people say, “Oh, it’s too expensive” or “This chocolate is this
much why is yours this much?” or you start seeing whose buying them, female
buyers or male buyers. Do kids like it? Do older people like it? Do middle
aged people like it?
Andrew: How did you adjust the product base or the way that you positioned
it based on the feedback that you got from one of these trunk shows? And
I’m going to get to Tim’s question because I’m curious about once you did
once you got into Costco, but what did you do with the feedback that you
got that made the product or the presentation or anything better?
Jerry: Yeah. We listen all the time. That’s how we get better is, you know,
I’m not an expert in this industry and we go back to customers and say what
is it that they look for? What is it that they want? And so they may say,
do you have this, I wish you had more dark chocolate or do you have any
white chocolate pieces, or saltier pieces or whatever it may be. And from
there we’d come back and do different types of products. We’d come up with
new flavors. From a packaging standpoint, we had the time of year where
people wanted a gift ready package. They would say, “Do you have something
with ribbon?” When it’s a non-seasonal time, people said, “Do you have
something that doesn’t have ribbon?” They wanted it for themselves. So,
those are the types of things where we had to have seasonal packaging and
non-seasonal packaging. We ended up doing an all dark chocolate box. You
know, dark chocolate has had some nice press over the last couple of years.
So, we’ve created a dark chocolate box, internally, externally, to give you
things like that. So, yeah, we listened and we just tried to adjust from
Andrew: All right, and when you were in Costco, giving out samples, what
was that like? What is Tim talking about here?
Jerry: It was a dream because when I was first doing it, I did everything
myself. What that means is the first day you get up in the morning and
you’re at the warehouse by 6:00, you have to have all your product there,
you have to unload the product, you have to set the booth up, and when
you’re at the booth and the store’s open from, let’s say 9:30 in the
morning to 8:30 at night, you’re not allowed to leave. So, there’s a no
eat, no pee, no nothing during that time frame that you’re on your feet and
you’re selling your product and sharing information about your product. So
that’s not too bad if you’re doing it a day or two but there was one time
during the stretch where it went, I went 63 straight days doing a different
road show and it was exhausting. It was completely draining on the body.
And so, going through the monotony of it, I love people, I love being out
there in front of people, but I lost a lot of weight, I became achy, you
become conditioned. I’ll never forget it was on Christmas Day, the last day
I did it was on Christmas Eve, I woke up, it was probably 3:45 in the
morning, I was getting up out of bed and my wife said, “Honey, it’s
Christmas.” I just didn’t connect it because I’d become so robotic in the
whole thing that I was ready to go out and go someplace and start working
again that morning.
Andrew: I can’t imagine doing it even one day. I would just be so fed up
with everything at that point.
Jerry: It’s funny because, like every place, you get all types of people.
People that are very polite with manners and some people that are not, and
you create a shell to it sometimes. So I always say to people if you’re
ever at a store and somebody gives you a sample, whether it’s Costco or any
place else, always say thank you and look them in the eye because it is a
long day and it’s amazing how many times they’ll say, wow, nobody has said
thank you to me for a long time. I always make sure that I’m very pleasant
to those people.
Andrew: Yeah, you do kind of just take it for granted. You feel like, huh,
you want to give me something for free, give it to me already, you know.
Either I deserve it or stop getting in my way. It’s not until I did
interviews here that I realize a lot if times it’s the owner. It’s the
person behind the company who is there, who is trying to get some
recognition for his product, who is trying to get, as you just taught me,
Jerry: Yeah, there’s [??] some entitlement there sometimes for that, but,
you know I personally every time I see a smaller company that has a decent
product, I always, I’ll buy it. I mean, I just, I know the feeling being on
the other side of that table when somebody buys the product and how good it
feels. I remember the first time I ever did a show, I had nightmares the
night before that I was there for 8 or 9 hours, I didn’t sell one thing.
So, selling the first one was the big thing, but every time you sell one it
gives you a boost of energy, so I always try to support the little guys
when I see them.
Andrew: And they are looking at sales numbers, right? They want to see that
you put up some sales on the board.
Jerry: Absolutely, absolutely.
Andrew: Wow, the pressure of it. You had an issue with an intern from
Brazil you told Jeremy Weisz, our producer. Can you tell the audience about
it? And me, I’m not really clear on what’s going on here in the notes, to
Jerry: He was a wonderful intern, it was just one of the 3,012 different
hiccups we’ve had in the company over the years. We were outsourcing a
catering department, they had a kitchen, so we were doing a lot of product
development there, we were doing a lot of our packaging there, we were
storing stuff there. It was wonderful because as a catering and baking
company, his staff would come it about 3 in the morning and they’d be
wrapped up around 11 or 12. So when I met this gentleman I said I would
love to sublease the place and I’d be able to help you with your rent, so
it was great for him, it was great for me. I didn’t have to pick up a
lease. I was able to pay him a fraction of what I would get, and he was
making a little extra money.
Well, I remember Daniel was my intern from Brazil and he and I, I was
working out of my home office, and all of the product was over at the
storage facility. I wake up in the morning and I get an email and the title
of it, I still have this email, too, was big problems. I opened the e-mail
and it was from Bruce, who was the owner. He said, “Jerry, I hate to dump
this on you, but I’ve been having some really challenging financial
problems, the long and short of it is that they’re coming over to seize my
assets today. Whatever is behind my locked door, they’re going to take. So
if you want your stuff, you need to come get it today.”
So, I remember Daniel came in at 8:30 and I go, “All right. I’m glad you’re
dressed casual because we’re going to go get some stuff.” I had to go rent
a truck, we moved everything over. It was the middle of summer, and so we
had to carefully figure out to get an air-conditioned truck, make a bunch
Where I live, it’s San Diego [???], obviously, it has a nice climate. A lot
of people don’t have air conditioning, we don’t have air conditioning, so I
went out and bought a portable air conditioner, and changed my entire
dining and living room into a storage facility for the company – on a
temporary basis. These little hiccups that came up are things I try to
forget, but when I remember them, I remember how I should be a little more
Andrew: Today, I’m looking at you, you’re telling this with pride, but at
the time this happens to us, we feel like: this is it. And I don’t think
the rest of the world feels this. They feel their own pain, no question
about it, but the sense that as an entrepreneur, something could go wrong
at any moment and take it all away unless you solve it and come up with a
quick solution that no one had ever thought of – because no one faces that
exact problem and had your situation. Unless you come up with that quick
solution: it’s devastating.
Andrew: And, we have to do it, and the fact that it comes it doesn’t mean
there’s anything wrong with us, it just means that it’s part of life, and
later on hopefully we solve it. Often we do. Hopefully we end up with the
kind of pride you have, telling this story. This is now a point of pride;
you’ve earned your position here as an entrepreneur.
Jerry: Thank you.
Andrew: What else, what else, there’s so much that I want to know, and I
heard the alarm go off. Do you have a few more minutes to talk to us?
Jerry: Sure, absolutely.
Andrew: Great. So, let’s see what else I want to know about. How about the
time that a product came back with a fingerprint on it?
Jerry: Oh, gosh. We started growing and were outsourcing our production to
a plant. And every time we would meet with the plant, they did the product
really well, but unless I was there, there always seemed to be some
challenges. And one of the challenges was: weight. Obviously, we were
selling our product by weight, and we had a pound box. We were asking them
to come in with plus or minus 24 pieces per pound. When you start doing 18
or 19 pieces a pound, and they become bigger, you don’t need to be a
financial or accounting wizard to figure out you’re giving a lot of product
away, and it’s not meeting the pricing model we’ve come up with. So, I kept
having to go back there, and we continued to have challenges with this, and
it was really stalling the momentum that we were trying to create with the
For me, everything seems to happen in waves. It’s not one bad thing that
happens, it’s multiple bad things that happen that bring you down to a low
point. A lot of things were going on, and all of a sudden we get this
order, and we start doing our quality assurance of it, and we see some of
the product has fingerprints. The choc has fingerprints. Of course you know
when it’s dry, or cooled down, there’s an impression in the chocolate. We
always tell our folks that we make a handmade product, but that’s going a
little bit over the edge.
Andrew: You don’t have to prove it that way.
Jerry: Who did that piece? We have fingerprinting. But those types of
things happened, and we had to make a change. A lot of entrepreneurs that
are listening to this know that it stalls the business, and it’s not
something that you have in your business plan at all. But, when it
happened, it’s like you said, Andrew, you have to come up with a quick
Andrew: What was the solution? How did you change that?
Jerry: It was very fortunate. At the time this happened, I had gone to the
National Confectioner’s Association, their annual meeting. I remember going
out there because I had used airline miles to fly, and I stayed on a
friend’s couch – I was trying to conserve money at the time. We had put one
of our pieces into a big contest called the Candy Clinic. And there’s
different types of best new piece, best packaging, all these different
types of awards they give out. And we were very fortunate that we ended up
winning Best of Show for our piece of chocolate, which was a “Wow!” for us.
But I remember getting on the plane on the way back, I called my fiancÈ who
is now my wife, and Paul, who has been with me for a long time and helps
with the product development. And I told them the news and they were so
excited. I remember flying on the plane back going, “Wow, we just won this
great international award, now what the heck do we do?”Because I don’t have
anybody to help us make the product.
Well, a couple of days later, because of the award, we had a company that
called us and says, “Wow we really like what you’re doing, would like me to
come up and take a look at the plant and see if we’d like to sublet some of
the plant and use our equipment.” So that’s how we came to our [??] today.
Andrew: One more challenge was when you guys came out with a new kind of
Jerry: Yeah. Yeah.
Andrew: What was it? What’d you call it?
Jerry: Oh gosh. We come out with this peanut butter pretzel
combination which, through our focus groups, just did wonderfully. And so,
for our different flavors and such, we tried to come up with creative or
fun names with each of the products. So Brian, who was doing our design at
the time, I said, “Let’s put our heads together, what do you think?” And he
came out with “Pretzel Bomb”. And the slogan was, “It’ll blow you away.”
And we were like, “Oh that sounds like a lot of fun.” And the logo was a
really creative pretzel with like a little fuse coming out of it, like it
was a bomb. So, Pretzel Bomb was the name.
So, what we did is we created a campaign around this to our email customers
and on our website and everything, and we sent out a snail mail piece on
it. We did a lot of different things to promote it. Well, this all went out
on September 10th 2001, and of course the next day was September 11th, when
the world stopped. And as you can imagine, our hearts stopped when all this
happened because all of this went out.
I guess the fortunate/unfortunate thing is we didn’t have a tremendous
mailing list at the time, where it went out to so many people, but it went
out to enough people where we got comments back. Most of the people who
were warm were friends of our, so they knew it was an honest unfortunate
situation. But we had some people that didn’t know us as well and they were
like, ‘How insensitive is this.’ So anyway, we were able to explain our way
through it and everybody understood it, but we ending up changing the name
of the product, “Pretzo Change-O”, which I think is apropos to what we had
Andrew: [laughter] Yeah. Yeah, now that you mentioned it. What’s the best
part of all this? Now that you’ve done it, now that you’re here, what’s the
best part? Where do you feel like, boy, this was all worth it because . . .
Jerry: Making a difference when we meet the consumer. When people walk
into our store, when we see people at trade shows, the reaction of people
when they eat the product or they’re able to give the product away as a
Our mission is to create happy experiences. And we do that by trying to
create something that gives that emotion to people, and when we see that,
it makes it all worthwhile. And in part of that is just having a good team
here at Jer’s Chocolates. Trying to do good in the community. Enjoying
getting up every day and being challenged every day.
And as you know, Andrew, having your company, there are challenges all the
time, every day that people don’t see. But I’m trying to focus more of my
attention on that experience that the people have. Celebrating that
experience, when people say, “Wow, this is great,” or “Gosh, we just drove
35 minutes to get the product.” Or getting a nice letter online and such.
So that makes it exciting for us, it makes us feel good.
Andrew: All right. I’m going to ask you one other question. I just looked
at my notes to see is there anything that I missed, and yes, I think the
answer to your first question brought up another question, that I didn’t
follow up with, and I want to make sure to bring that up.
But first, let me say this. If you’re watching this interview and you want
more, the way to get more, the way to get more depth, the way to get more
specifics, the way to get more specific instruction is to go to
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on here–there are issues that you guys are all going to face, like, ‘How
do I get traffic? How do I market this thing? How do I get anyone to know
that the product that I worked on exists?’
Well, the way to do it is . . . Well the usual way to do it is to Google
and then you end up with a bunch of blog posts that are all link baiting,
they’re all 10 points that are supposed to solve every problem or
supposedly. But really what they’re there to do is to help the site that
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MixergyPremium.com So, Jerry, here is what I wrote down, you said, “I can’t
tell you the revenue because there’s a gag order.” Then it occurred to me
later on, gag order? What kind of gag order could there be?
Jerry: Oh, we’re just talking to some different types of partners at
the moment. As far as some potential partners coming into the business, us
looking at maybe bringing in some more types of product lines and vice
versa. So, right now, there are lots of discussions going on with that.
Andrew: I think I hear what you’re saying. All right, so we won’t say that,
instead, here’s what I want to say. At the beginning, when I said the name
of this company, it probably just went in one ear and out the other, you
know I don’t care about the company, until I care about the company. So, I
don’t remember the name until I care about the company. So, if after you’ve
heard this story and you said, “Who is this guy?” I’m going to say it
again, Jers.com, got a great domain, J-E-R-S, dot com. You’ve heard the
whole story here, go check out the products that we’ve been talking about.
I obviously don’t get a commission off of promoting this, I’m not promoting
this. I just want you to, now that you’ve gotten to know the entrepreneur,
go and get to know the product.
Maybe, when you’re looking to buy something for Christmas, for birthday or
just for yourself or a friend, you’ll go to Jers.com. But, what I care
about is, go to Jers.com right now, just to get a sense of what we’ve been
talking about, so that you have a deeper understanding of what this
business is about. Anything else that I missed in this interview? Jerry . .
Jerry: No, I think you did a great job, Andrew, I love what you’re
doing for your customers there and I hope they benefit from it. And, I wish
everybody a lot of luck and I appreciate your support on everything.
Andrew: You bet. Thank you and as always, if you’ve gotten anything
valuable out of this interview, don’t thank me. Find a way to connect with
Jerry and send a thank you note. Great things happen when you say thank
you, when you learn from someone and I’m going to do it right now. Jerry,
thanks for doing this interview.
Jerry: Thank you, Andrew.
Andrew: Thank you all for watching.
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