How to sell a physical product on a subscription basis – with Steve Schwartz

In all interviews that I’ve done, if I talk to an entrepreneur who has a subscription based business, it’s almost always a subscription that sells content or software on a monthly basis or something digital that you can’t touch. But today I’ve got something different. Today you’re going to meet the founder of a company that sells a physical product on a subscription basis.

His name is Steve Schwartz. He is the founder of Art of Tea, a boutique importer and wholesaler of organic and specialty teas. Art of Tea can be bought online via subscription and it’s available at high-end hotels like the Venetian and Four Seasons. I’m looking forward to hearing how he did it all.

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Steve Schwartz, Art of Tea

Steve Schwartz is the CEO of Art of Tea which is a boutique importer and wholesaler of organic and specialty teas.

 

Raw transcript

Mixergy's audio transcription is done by Speechpad

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I am the founder of Mixergy.com, home of the ambitious upstart. Home of over a thousand entrepreneurs who’ve come here to tell you their stories so that they can inspire you, teach you, guide you, and allow you to go out there and build a successful company yourself. And hopefully when you do, you’ll come back here and do an interview and teach and pass on to other people.

Now in these over a thousand interviews that I’ve done, if I talk to an entrepreneur who has a subscription based business, it’s almost always a subscription that sells content or software on a monthly basis or something digital that you can’t touch. But today I’ve got something different. Today you’re going to meet the founder of a company that sells a physical product on a subscription basis.

His name is Steve Schwartz. He is the founder of Art of Tea, a boutique importer and wholesaler of organic and specialty teas. Art of tea can be bought online via subscription and it’s available at high end hotels like the Venetian and Four Seasons. And Google headquarters has it and many top restaurants and so many more. I’m looking forward to hearing how he did it all.

And the whole interview is sponsors by Scott Edward Walker of Walker Corporate Law. But later on I’ll tell you why if you need a lawyer and you’re an entrepreneur, you should go check out WalkerCorporateLaw.com. First I got to say, hi, Steve.

Steve: Hi. How are you?

Andrew: Good.

Steve: Thanks for having me here.

Andrew: I’m glad you’re here. So before we started recording, you were telling me about that one moment when you realized, “We’re breaking through.” And it had to do with, who was it that was working with you?

Steve: He’s actually someone that went off and started his own Kombucha Company.

Andrew: Okay.

Steve: An offshoot of tea, so I have a tremendous amount of pride know that as he was my first employee and he’s off doing amazing things. Living, I’d say, the four hour work week as best as possible. But also continuing to work on his creative drive in this space.

Andrew: What was he doing for you?

Steve: He was, you know, when I was first starting out I was reading every book possible on business, on strategy and really trying to understand what could I do to take my business to the next level. When I was first starting out I was answering phones, doing AP, AR, sales, blending, customer service, everything. So I needed to hire someone. Was I going to hire someone that had the same strengths as myself or was I going to hire someone that could help me really work on my strengths? And to get me to continue to focus on my strengths and someone could help pick up my weaknesses. He was helping with delivering. He was helping with the packing process. That’s what he was doing initially.

Andrew: Okay. And then one day he makes this delivery. Where was it?

Steve: It was actually at a retirement home. He was doing some volunteer work and these people, he had such a great personality. He still does. They approached him and said, “You are so sweet. What do you do?” He said, “I work with this tea company.” And they said, “Really? What tea company?” And this is year one. He said, “Well, it’s this tea company that’s called Art of Tea.” And they said, “Oh, we love Art of Tea.” And by the way, Art of Tea has one of those names where it sounds like a number of other companies out there.

Andrew: Right.

Steve: So he just sort of brushed it off and was like, “Wow, that’s nice. Yeah. A lot of people say that they like the company. That’s great. What did you get from Art of Tea?” And they said, “We got this box.” And they described it. How it looked, the contents inside, the flavors. And because we do all our own blending and we come up with our own names of teas, he was really surprised. He was like, “Wow! This is so exciting. You actually have heard of us.”

Andrew: Wow. Yeah. He thought that they just confused your tea with one of the popular brands out there. Instead not only did they recognize it, but they recognized and remembered it right down to the presentation and the uniqueness of the blends and the names. It’s so cool when you get recognized for that. It took me many, many years with Mixergy. To actually have someone spot me and say, “Hey! You’re the guy who does those interviews.”

And frankly, for you, it was year one, but it was many, many years in the making. And before I even get into how you were blending tea at home, how you were knocking on doors and getting people to take you seriously in a world that frankly has a lot of tea already, I want to find out a little bit about your background. Because one of the things that I thought was interesting was you came from a well off family and then something happened. What happened?

Steve: My parents got a nasty divorce and they lost everything. You know, the lawyers…

Andrew: Because they were fighting so much.

Steve: Oh, yeah. They were fighting. And there’s nothing wrong with lawyers. There’s some really reputable lawyers out there. Just the way that the relationship was held at that point, our family suffered. So I ended up going to Tuscan, Arizona, living with my brother. Just him and I helping each other out. Taking care of each other. And I remember calling my dad and saying, “I need help.” I was only like 15 at the time. I was too young to go work. And he said, “Where are you living?” I said, “I’m living in an apartment complex.” And he said, “Are you next to a neighborhood of houses?” I said, “Yes.” He said, “Are there lawns? Are there windows in the houses?” I said, “Yeah.”

And by the way, I grew up going to private school, everything imaginable that a kid could have to nothing. And my dad said, “Well, go knock on their doors and go see if you can mow their lawn, clean their windows, do their drapes. Do whatever you can. Do whatever it takes.” And I was shocked. But when you’re shocked and hungry you’ll go out there. You’ll make it happen. I remember…

Andrew: And you did it?

Steve: Oh yeah.

Andrew: One of the first what?

Steve: One of the first houses I knocked on was just this beautiful girl that was my age. And just how embarrassing it was just to ask her, “Hey. Do you have anything I can clean or anything I can take care of in your house?” It was a very humbling experience.

Andrew: And you did it. You did talk to people. How do you get past the personal pride that comes from saying for a long time, I’m one of the better people? I’ve gone to private school. I don’t do this stuff. To suddenly feeling like you’re on the other side of that equation.

Steve: I think, gosh. I think every day it’s a challenge. I love being out there. I love being present. I love the interaction with people, but it’s also a challenge in terms of just getting over that hump of internal judgment. How am I sounding? How am I acting? How am I perceived? And breaking through that. I think that challenge is what gets me excited.

Andrew: How do you break through that?

Steve: How do you break through that?

Andrew: Yeah. That internal noise that says, “She’s going to not be interested. What happened to you? You’re not going anywhere.” What do you do?

Steve: You fight through it.

Andrew: How?

Steve: You just make it happen.

Andrew: Because you have to.

Steve: Well, at that point I didn’t have to. I could have walked away and said, “Oh, wrong house. I’m so sorry.” But it was the inner challenge and the inner drive because I had that fear inside of me. I had to face it. I had to challenge it and I had to make it happen.

Andrew: And the fear at the time was hunger. Later on in life was it still hunger that drove you to start this company? Was it still hunger? Like physical, real, no food hunger?

Steve: I think that with myself, I had to really latch onto a sense of purpose. And your why. Right? So my why I made really strong. My why was I was having my first kid. And when I started really honing in on Art of Tea and I realized that if I’m going to make this happen I have to latch onto that why and I have to make a really strong push. And if I ever have days where I think, “Gosh, you know what? I have to slow down a little bit. Or I have to take a step back and really question my, does this make sense? Is this the direction I want to go in?” And I have to continue to push because that why is what’s really driving me.

Andrew: When it was time for you to actually decide whether you wanted to do it or not, you actually wrote down a list of why’s. Right?

Steve: Yeah.

Andrew: What else was on the list? Beyond I have a kid on the way.

Steve: My background is in preventative medicine. And I got into that because my mom, she actually passed on from cancer about 17 years ago.

Andrew: Okay.

Steve: And it was a really powerful experience. A very humbling experience and a very powerful experience. Going back and helping to take care of her during the last ten months before she passed.

Andrew: And then it changed you. How did it change you that she passed? We’ll get back to the 21 reasons in a moment. How did it change you?

Steve: One of the things that it did was it got me to really appreciate the moments. It got me to really appreciate every opportunity that you have from the moment we wake up to the moment we go to sleep. So my why, a really strong why for me is because I can. Because I can make it happen regardless of the obstacles that are out there in this world.

Most of it I truly believe are just our own internal obstacles. And if we’re able to really hone in and break through those internal obstacles, if we peel back the layers, right? Peel back, this person said I couldn’t do this, I don’t have enough money, and I don’t have enough resources. I don’t have the technology and I don’t have the skill set. If we’re able to just take really small steps forward towards that long term goal and have that whatever it is, whatever it was for me and continues to be. I just have to remind myself on an ongoing basis just to take slow, small steps, but continue to move things forward in a big way.

Andrew: Here’s one of the things that I heard about you. When you saw that your mom was diagnosed with cancer and what it did to her you said, conventional medicine doesn’t have an answer for this. This has been going on for a long time and conventional medicine still doesn’t have a solution.

There should be another way. Is that what set you off on the path that helped you discover tea and tea significance beyond the beverage that it is?

Steve: Yeah. First of all, I have a doctor. I’ll gladly pay my doctor if I’m sick, if something’s wrong. I believe in allopathic medicine. My challenge with it, especially at that time, was the doctors didn’t know. We were relying on them as sort of our sages and what should we do?

They said, well, there’s this experimental treatment. We can try that. It’s working on lab animals. It’s working on this. You can try it out and see how it works. We were at that mercy. After she passed I woke up, in many ways, to really wanting to question how long has cancer been around?

Have we only recently labeled it as cancer? Is there something that we can do to help pull out some of this ancient wisdom that’s out there, in terms of, understanding the body. Understanding our own health, our wellness, mental, and physical, and emotional. . .

Andrew: I see.

Steve: . . . well-being. I found, Irabata [SP]. Through, Irabata, I found tea.

Andrew: The way that you learned to blend was kind of unique. You didn’t go into a physical school. How did you connect with the . . . how did you learn before the internet?

Steve: Sure. Well, actually, there was a school in New Mexico called the Irabatic [SP] Institute. It wasn’t text driven. It was through an oral tradition of sitting, listening to someone, seeing patients. Through that methodology, and this methodology has been passed down from generation to generation for over 5,000 years.

I got really into the alchemy of blending. So much so that I was chosen as the only student and advanced enough to work with the Masters at the school and how to blend, and how to source. I wanted to go meet the farmers. This was before the internet really took off. My terms of sourcing was contacting farmers in India, and China, and Guatemala through old phone books and faxing.

I wanted to go meet the farmers. I worked four different jobs. I saved up all my money. I got a backpack and I started traveling around the world to find the best teas and botanicals possible.

Andrew: Steve, was this because you were just interested in it, or was because you said, one day I’m going to start a company and the best way for me to really be . . . it’s not that. It’s just your personal interest in tea.

Steve: Yeah. I was just a huge tea nerd.

Andrew: That’s it. There’s no ending in it. There was no . . . it was just your passion for it.

Steve: Yeah. In fact, I was getting a lot of slack from my family and from my friends. Why are you studying this weird food medicine. How is diet and orbology, like, how does that relate to medicine? Two, why are going around the world trying to find this stuff? I was getting a lot of slack for it.

Andrew: What can tea do for us? Can you give me one example of something? You can’t cure cancer yet.

Steve: Sure. Well, first of all, I don’t want to sell snake oil. Okay. I want to be really mindful of . . . I think the internet has done a phenomenal job, in terms of, stating some of the health benefits of tea, but really to me the true benefit of tea is the ritual behind it. You look at cultures around the world and they have, sort of, their ceremony and . . .

Andrew: Yes.

Steve: . . . the ways of enjoying tea. The conversations, the business deals, the romance, all these stories have been told over a cup or a glass of tea. It’s really inspiring. Our world has totally transformed from . . .

Andrew: I see. It’s not like I suddenly drink tea and I could jump higher, run faster, and live longer necessarily just because of that one cup.

Steve: I think it’s the ritual. I really think that honing in on your senses, drawing in your sense of smell, your sense of taste. One of the things that we’re trying to promote at Artive [SP] Tea is an eight minute digital detox. This is something that you may have heard.

Andrew: No.

Steve: I love technology, but just taking eight minutes out of your normal work day, turning off your iPhone, turning off Facebook, turning off your computer and brewing a cup of tea and really being mindful of that process while you’re making it and hearing the water boil. By tapping out of technology and tapping into yourself, after those eight minutes you are able to be so much more present in your activities and have so much more drive than you had before those eight minutes started. It’s a really powerful movement.

Andrew: So you did though have this idea in the back of your head to start a business. When you were trying to figure out whether you should do it or not, you made a list of twenty-one reasons why it made sense to do it. One of them as I said earlier was that I had a kid on the way. What’s another? Give me a sense of where you were and what some of your motivation was.

Steve: Sure. The first thing you said when you were tarting off your show was that the word was freedom, right? As entrepreneurs, we tend to think that if we work for ourselves, we have all the free time in the world. It’s a myth in terms of time, but the freedom that owning your own company gives you is a deeper sense of responsibility that you can really sink your teeth into. It’s something that you can really care about.

So, the freedom that I was looking for is very different from the freedom that I have now. The freedom that I have now is a sense of responsibility to want to create the best product and the best concept possible. To be able to inspire my staff, inspire our customers, and really gain loyalty with the farmers that we work with.

Andrew: So it’s not the kind of freedom that comes from being able to go sit on a beach all day and expect the money to come pouring in and everything’s going to be great. It’s the kind of freedom that comes from being able to create something that is in your mind’s eye and seeing it come to life. All right.

Steve: Happiness and then it’s freedom. At the end of the day, it’s happiness that we’re all striving for in different forms whether it’s wanting to be loved or appreciated or recognized, but I truly believe in Dr Egchepmeyes [SP] philosophy of that flow of working and that flow of concentration and in turn responsibility is what really creates a deep sense of freedom and happiness.

Andrew: We asked you in the pre-interview what’s the first step you took and you didn’t say what we expected. You said that “I turned my car into a university.” What does it mean to turn your car into a university?

Steve: I live in LA, so commuting and driving is something that’s all around.

Andrew: Yeah.

Steve: It’s an opportunity for me to learn to turn off the radio and the stuff that’s on the radio. I don’t have access at my fingertips to some of these inspiring entrepreneurs that have helped to create the world that we’re living in today, but I can learn from them. I can read their autobiographies and I can read their biographies. I can read stories about them and what has inspired them and learn from their lessons.

Andrew: Do you remember some of the people who you listened to or books that you listened to?

Steve: Yeah, everything from Napoleon Hill to Deepak Chopra. On an ongoing basis, I have all of Jim Collins books. I’m reading about a book a week.

Andrew: Wow then.

Steve: I’m listening to rather a book a week.

Andrew: Still to this day?

Steve: Oh yeah. I think it’s really important. Your mind’s like a bucket with a small hole at the bottom and if you’re not filling it up with fresh content, even if its stuff that you think you’ve heard in the past, you have to keep it fresh. You’ve got to keep putting stuff in there. There’s little nuggets from each book that you can adapt and tweak and become a master at whatever it is that you’re learning whether it’s marketing or entrepreneurship or biz dev. There’s so many phenomenal books out there.

Andrew: So, it’s time now to actually create a product and get customers. Which came first, the blending or the finding a customer?

Steve: The blending. You know, I started blending stuff in my living room and passing stuff out to friends and family and soon we caught the attention of a chef and then a restaurant and a hotel and it sort of grew from there.

Andrew: How did you get the attention of a chef?

Steve: A friend of mine was a wine rep and she said: “You know, these teas are really good and have you ever spoke to this one chef?” I said: “No, I haven’t.” She said: “Why don’t I do an introduction?” That chef really like the teas but they tried persuading me not to go into the tea market. They said, “Why not open your own restaurant? Why not open your own cafe?” And I got to tell you, so many people, especially when you’re starting, will try to dissuade you from doing what you feel you need to do.

Andrew: What was their thinking behind telling you to open up your own place?

Steve: I think just like what I’m doing now. I’m sharing my experience and what’s worked and what hasn’t worked for me. So I think that most people that mean really well will share their experience in terms of what worked for them and what hasn’t worked for them.

Andrew: I see. So for the chef, opening up a place or running a physical location made sense for him. And so that’s what he passed on to you.

Steve: Yeah.

Andrew: Do you remember your first customer?

Steve: Yeah. My first customer, it’s a really quirky restaurant. I don’t want to speak negatively about them, but just a really quirky restaurateur. We did some fun, really funky blends. One of the things we do at Art of Tea is we specialize in custom blends. Everything from a hotel special blend to Vera Wang created a signature fragrance line asking us to create a tea that can help promote her fragrance.

Andrew: I see. Wow.

Steve: The first concept that I worked with was, I remember how quirky it was and I just thought to myself, “I’m going to learn from this. I’m going to grow from this. And I’m going to hopefully see this as a stepping stone.” My second restaurant, it’s amazing how it just takes one person. This is really a Seth Godin philosophy of it really just takes one person to really believe in who you are and what you’re doing. And that one person can be an advocate and help turn on another person.

That’s really what started to happen. I think people saw how passionate I was about tea and about helping other people and coming from that place. And more and more doors really started to open up. I wouldn’t say that we’ve reached our end all, be all, but we’ve definitely grown significantly over the past ten years. And we hope that the next ten years are equally, if not phenomenally more successful.

Andrew: But it was a lot of leg work, a lot of knocking on doors like your dad told me earlier when you were hungry. It’s going to farmer’s markets, for example, on a weekly basis. Was that a good source for you, by the way, farmer’s markets?

Steve: I’ve actually never sourced the farmer’s markets.

Andrew: Oh, I see. Here’s what I see in my notes, maybe I misread it. A chef at a high end boutique restaurant, oh, the chef was going to local farmer’s markets on a regular basis and then really like what you were doing. Were you at the farmer’s market?

Steve: No, he was at the farmer’s market.

Andrew: So how did you meet at the farmer’s market? What’s the connection there?

Steve: You know what I started doing was, because I was blending these things in my living room, taking my experience of knocking on doors when I was just 15 years old, I started going around to different restaurants. Taking my samples of different teas and just started knocking on doors. Sampling with then, tasting with them. And the response was really powerful. I was met with a lot of positive reception. Knowing the fact that the owners hear, “Wow. You’re making these products? You’re the owner and you’re here?”

I was met with a lot of respect. And I continue to go visit even though we have four sales reps across the country, work with brokers and distributors, I still go visit restaurants. Especially some of the restaurants that we’ve been partnered with a number of years. It’s important that I still have that hands on approach with those relationships.

Andrew: And Steve, in the early days, you would actually, literally go from restaurant to restaurant down a street saying, “I’m the owner of this tea company. It’s called Art of Tea. I blend it myself. I’d like to give you a sample and to share with you the experience of tea. And show you why this is so special.” That’s what you would do?

Steve: Yeah. I still do it today. And my team still does it today.

Andrew: But if you sell to a place, you’re talking about, it’s not a huge source of revenue. I imagine you knock on ten doors, nine are getting slammed in your face. Not literally. Right? One is saying yes. That one customer is worth not that much. Hundreds of dollars a year, maybe. Right?

Steve: Here’s where the real value is.

Andrew: Yeah.

Steve: When I’m able to take that one yes, that’s when I really move things forward.

Andrew: What’s next after the yes?

Steve: I knock on another door. And I pick up on that energy. It’s a lot like dating. Right? When you start dating someone all of a sudden other people start noticing you. Like, “Hey, that guy’s got something to him. What is it about him?” So I think that that’s what was happening, was I was trying to pick up on that ‘yes’ factor. When people were saying yes, I would pick up the phone, I’d go visit more people, and I’d drive on that. Rather than, celebrate on the ‘yes’ and stop.

Andrew: I see.

Steve: And go harder on the “no’s”. If I was met with multiple “no’s”, I’d stop, I’d take a look back and I’d think, OK, what do I need to do differently, and I would literally sit in my car, it was a little bit of a secret, I know that I’m speaking to probably thousands of people, but I would literally sit in my car before a meeting and I’d envision the whole process up to me walking back to my car with a smile on my face.

Andrew: And why did you envision the whole process? What’s the benefit of visualizing it like that?

Steve: The benefit from my car, to the handshake, to the signed deal, to price negotiations, the flavors that they’re choosing, to be asking for them at the hostess counter is, when I start walking back up to that front door to ask for the person that I’m going to be meeting with, I’ve already been there. I’ve already walked through the whole process. So now I’m just leading them down the same path I just took in my mind a few minutes ago.

Andrew: Do you happen to remember how you opened a conversation with them?

Steve: I think the one thing that’s helpful is, most people like to talk about themselves and I’m just a curious person in general, so I like to ask a lot of questions about them. So rather than selling the product, for the sake of selling the product, I ask about them, and ask how they got into it, and I ask what they’re interested in, and then I utilize that information to help build out a custom tea program based on their environment.

Andrew: As a reader, do you happen to have a book on sales that you recommend, that someone who’s listening to us right now says, “You know what? I should get out from behind my desk or my house, and go out and talk to potential customers and see if I can make sales one at a time.”

Steve: Yeah, “The Challenger Sale.”

Andrew: “The Challenger Sale?” I’ve never heard of this book.

Steve: Oh man. It’s awesome. These guys consulted for Granger. They consulted for a number of other companies. The whole concept really is built on, and if these guys are listening, congratulations, you put together an amazing book. The whole concept behind it really is going in, finding the problem, and being the solution. And if there isn’t a problem, letting them know what that potential problem might be in terms of who the competitors are, what they should be aware of, what’s trending, and then going in with a solution. At least that’s what resonated with me.

Andrew: What a great book. I never heard of it, but it’s the number one best seller in sales and selling on Amazon right now, by Matthew Dixon and Brent Adamson. And it’s available on Kindle, or Audible, everything CD. I’m going to send it to my Kindle right now. It sounds like the perfect thing for me.

Steve: Another one, it’s got a cheesy title, even the author didn’t like the title, is by Chet Holmes, The Ultimate Sales Machine. And what I like about that book is that you open it up thinking, oh, it’s going to tell me how I should go out and be really positive. But, no, what he does is, he says, the first thing you have to do is take a look at your organization. Look at the systems you have in place in order to support sales growth. And then, he very tactfully, puts sales processes in place that can fit across multiple mediums from publishing to selling software, to selling a product.

Andrew: All right. I sent a sample of that to my, actually I have that. I think, oh it didn’t tell me that I have it, but I’ve got that book. That’s a great one. I don’t know why I didn’t hear about the other one, but now I’ve got them both sent to my Kindle. I’m always looking for good books, and I keep getting back to sales. Speaking of sales, I want to do a quick plug here for Scott Edward Walker of Walker Corporate and Law.

Frankly, I don’t even think that he needs a hard sell. I just need to tell the audience, if you need a lawyer, and you’re an entrepreneur, you want a lawyer who deals with entrepreneurs. Why? Because he’s seen the same problems that you’re probably going to confront with your co-founder a thousand, billion times. Why? Because when it’s time for you to go raise money, you want to set yourself up early for that situation, instead of having to undo some other lawyer’s mess. Why? Because at some point you’re going to want to sell yourself, buy another company, go public, and all those things, when the legal part of them gets started earlier on.

And when you want to do it all later on, you need a lawyer who’s done it, who has experience, who has the connection and the reputation to get the job done for you. That lawyer is, of course, Scott Edward Walker, of Walker Corporate Law. But you know that Scott’s paying me. That’s why I’m talking about him. You want to make sure that he is a good lawyer, so I’ll suggest a couple of things.

First, talk to him, talk to his firm. Second, got to walkercorporatelaw.com and see the entrepreneurs on there who said good things about Scott. These people are not paid by him. I know one specifically is a client that I don’t think I’m allowed to say, at least one. I think others are too. You can call them up and ask them, say, “Hey, how is Scott?” What I’m telling you they’ll say is same thing I’m saying, “He is a great lawyer with good experience, a lot of credibility in this place at a reasonable price. If you’re looking for a lawyer, go to walkercorporatelaw.com.

I’m wondering how…This is the part that really intimidated me about talking to you. I’ll be open about that. When I saw the kinds of hotels that serve your tea, I thought, this is…There’s something next-level about it. How…I understand how you get the local restaurant to listen to you, the local chef to want to bring you in, but how do you get the Four Seasons, and the Venetian and others?

Steve: I think that a lot of big companies are still looking with working with smaller companies. You got to be able to deliver, right? All large companies, at some point, started at a small scale. If you’re knocking on their doors, you’re letting them know who you are, they’re not always out there in the market place looking.

They don’t always know who the big and the small players are. I went with my best foot forward, stood behind the logistics of our product and our pricing and our availability and the story behind our products, and I think that that’s where the customers really began to fall in love with who we are and what we’re about.

Andrew: If you know on the door of the Venetian, they’re going to say, “Come on in. Go play.” They’re not going to introduce you to the right person who’s going to bring you in. How do you get that door open? Do you just walk into the restaurant in there and say, “I’ve got this great tea? Or is there another way to break in?”

Steve: One way to…There’s several. One is…The technology out there is phenomenal in terms of finding…This isn’t how it worked with Venetian, but there is phenomenal technology out there in terms of finding the right purchasing agents. The other is personal referral. My gosh, I can’t tell you how valuable it is knowing that there is customers that we work with and just by simply asking them, “Is there someone that you think could also benefit from this program?”

They say, “You know what? There is. I know someone that has such and such venue or such and such restaurant and I’m going to do an email intro.” Or if they said, “Sure. I’ll send you their information.” Then I’d ask them, “Would you mind doing an email intro? If you think that they could really benefit from this, would you mind just…Nine times out of ten it’s, “Yes. I’m happy to.”

Andrew: That’s how you would get next-level restaurants to bring in Art of Tea? By going to a customer and saying, “Is there someone that you know who would also be interested in serving this tea who needs to hear about it?”

Steve: Yes. The secret is not asking right away. The secret is asking for it at the appropriate time. For me the appropriate time is when the customer knows that I’m really in it with them. The program is already up and running. They’re happy with it. We’re happy with the relationship with them. At that point, many months down the road, that’s when I would ask. Not at the close of the sale. Our relationship isn’t a one-time transaction. The relationship really is an on-going…on-going transactions, an on-going relationship.

Andrew: How systemized are you about your sales? For us here, you might have noticed, for Mixergy, getting guests in is a pretty systemized process. We send you the booking link. You book, and we automatically follow up with you then we automatically send you the…After the pre- interview process, the interview process. Then the back-end, we also have the same thing being done for research on you. Is it that systemized for you or is it much more…Is it different?

Steve: Our back end, in terms of how we blend our tea, is very old world style. We don’t blend the tea and pack the tea until someone orders it. Just like if you go to a great restaurant, you order a salad that’s made specifically for you. That’s how we are with our tea.

Andrew: Forgive me. I want to come back to the tea blending and how you do it now at this scale. For sales, is it that systemized?

Steve: Sure. The front end, in terms of our ERP system, how we work with our sales funnel. We use salesforce.com and it’s very systematic. We want to make sure that we have multiple touch points with our customers and solid fall through. So our website interacts with sales force and sales force interacts with our ERP system. So it’s very systems driven.

Andrew: I see. Okay, then back to the blending. You started out, as I understand, blending in your living room. Your wife, at some point, said, “This is getting to be too much. You need to find another space.” When it came time to go beyond you, how do you create something that doesn’t become a manufacturing plant? That keeps the essence of the original blending process that you started with?

Steve: Because we’re still hand blending and hand packing our teas, there’s an authenticity behind that. And that is the ethos of our company. We have a theme every year that we come up with. This year our theme is to create a delicious experience. So from how we’re blending and how we’re packing and how we’re dealing with customers on the phone, how a customer will interact with something on our website or if it’s interacting with our teas at a restaurant or a cafe or a hotel, we want to make sure that across multiple levels we’re creating a delicious experience.

Andrew: So how do you do that?

Steve: Oh, gosh.

Andrew: What’s the operation like? Is it a big warehouse with nothing but tea that’s sent directly from the farmer’s that you guys are…No you can’t blend it like that at mass.

Steve: We’re vertically integrated. So I go to Origin whenever possible. I bring the teas in. Within our warehouse we segregate between the different types of ingredients and teas. Then we blend. We have these large stainless steel bowls and these two half horse power mixers that we can blend anywhere from 50 pound batches at a time to 2 tons at a time within a day.

Andrew: I see.

Steve: We have an office environment in the front. We have a really fun warehouse environment in the back. We’re blasting music. We believe that tea is grown in this very special environment. The sun, the earth, the rain. And it’s sold from the farmer to us and we pay logistics for it to get here. We sell it to a restaurant. The restaurant sells it to a customer. So by playing music and by how we blend and how we pack, we believe that we’re adding some special sacredness back into that product. I know it sounds kind of foo-fooey [sp]. But it’s our way of kind of adding our ethos back into the product.

Andrew: I like the merging of that part of you and the part that listens to Jim Collins in the car looking for one more business idea.

Steve: I’m here to grow. And, you know what, as long as I’m learning and growing at the same time, I’m really happy.

Andrew: I feel the same way.

Steve: Awesome.

Andrew: I started out this interview talking about how unlike many other entrepreneurs who I’ve interviewed who sell subscriptions to software or content, for you it’s a subscription to tea. I’m wondering why did you start out with a subscription for tea instead of just saying online, “If you’d like to buy tea, we only sell it individually.” That’s the way most people do it.

Steve: The subscription piece actually came later. We just launched a subscription piece about maybe four or five months ago. What we were finding was that because the ritual is such an important part to the element of really enjoying the full tea experience, there’s people that have their go to tea. They have their tea that they want to drink at their break, at the office, in the morning, at night. So that subscription piece has been really important in terms of people being able to order that same tea. But then we also have these packages where people can get single source tea depending on the time of year. That keeps it fresh. People that change in variance and seasonality, that’s where those packages have really come into play. So the diversity of our subscription program is really a response to what our customers have been asking for.

Andrew: Subscription has been around for six months out of roughly ten years. What percentage of your sales comes from subscriptions?

Steve: About 20% of our business is B2C and we’re seeing an increase from 5% up to 12 % within that 20%. It launched with a very successful program. We did have tea of the month packages in the past, but our subscription program has a strong upward momentum. And as we continue to get through the summer months, we’ll see a dramatic increase. I predict that 50 percent of our retail sales, our online retail sales I should say, will be subscription based.

Andrew: Fifty percent.

Steve: Fifty percent. Based on our marketing efforts and based on the responsiveness that we’re getting from our customers right now.

Andrew: What’s worked for you as far as marketing for this?

Steve: We have our own internal marketing team. I love packaging and design so I’m pretty hands on with that process. My team of business analysts that’s working with KISSmetrics and a number of other great media out there in terms of analyzing the data. We’re working with retargeting campaigns.

Andrew: Here’s what I’ve seen that seems like it’s worked really well for you. By far, from what I’ve seen in my research, affiliate sales through some service that I didn’t hear of before called ShareASale.com.

Steve: Yeah, we do work with ShareASale. And we have an affiliate manager that helps coordinate that program with us.

Andrew: I never would have expected that affiliate sales for tea, especially at your price point. We’re not talking about thousand dollar tea or subscription that gives you free tea bag on day one and then charges you 60 bucks a month on your credit card every month after that. No, we’re talking about a reasonably priced. I never would have thought. How are you finding affiliates? Do you know that? Or is that your affiliate manager?

Steve: No, it’s our affiliate manager that’s helping, but we have different affiliates. The ones that are really pushing the craft beers and craft cigars and craft wines are also looking for craft teas and a great story. And then we’ll also find affiliates that are focused on the health aspect. And then just tea in general. Tea is one of those products that really does kind of fit in multiple categories.

Andrew: And it looks like there’s some smaller sites that also send you traffic, but I can’t tell if it’s through content marketing or relationships. Like The Food Babe, to give people an example.

Steve: Yeah, Food Babe was, I’m impressed with what you’re able to find. My understanding was that Food Babe is someone that wrote an article on us and then they were driving traffic back to our site from the article.

Andrew: Okay. So let’s see what else I need to dig in. Revenue, what kind of revenue are you guys doing?

Steve: Under ten million a year.

Andrew: Under ten million a year. Okay.

Steve: Yeah.

Andrew: You know, we were wondering what you’d be willing to say publicly. We knew that you weren’t going to say the actual number. I wonder why you’re saying under ten million. Why you felt comfortable sharing that? The cap as opposed to what most people do which is to say more than a million a year.

Steve: Yeah.

Andrew: Is there significance to that?

Steve: One of our goals initially was to drive and strive for that.

Andrew: Got you.

Steve: For that number.

Andrew: I see.

Steve: That’s been our goal.

Andrew: And so you’re saying, “I still haven’t gotten to that. That’s why that number is there in my head.”

Steve: Yes.

Andrew: One of the things that’s helping you get there is, where’s that program? The accelerator program. What is accelerator?

Steve: Accelerator is a program, I was one of the first people involved in the program. There’s a program called YPO, Young Presidents Organization. Then three others, EO. And then the miniature program for people that are just starting out or people that have even had businesses or five years and really want to take it to the next level. Accelerator is a phenomenal program. It’s sponsored by Mercedes Benz for a number of years. I was in the program for about a year and a half. It helped my business tremendously. We met quarterly.

Then I was on the board of Accelerator and got Microsoft and USC to help sponsor it. Now I’m an EO, which is the next level. And that’s for businesses over a million dollars that also want to help continue to elevate their business and have a strong sense of giving back to the entrepreneurship community.

Andrew: These are programs that Napoleon Hill would have called mastermind groups. They’re tons of mastermind groups. Some that waste your time, others that do exceptionally well. I’m wondering what is it about Accelerator specifically and the others that you’ve used that made them so effective?

Steve: I was never in a fraternity, but I would say that this is as close as I’ve gotten to fraternity.

Andrew: It’s the connection with the people.

Steve: It’s the connection with the people that can resonate with who you are and what you’re about. When you’re starting a company or when you’re running a company, it can be difficult to relate to somebody who clocks in and clocks out. When you’re running or starting your own company, being able to relate to some of the struggles and challenges.

If you’re selling paint and the other person is selling technology or law, it’s amazing how much you have in common with them. So the camaraderie and the like-mindedness is what really drew me. It wasn’t the networking aspect, even though that does tend to happen a bit. I was mostly interested in learning and sharing. And still am.

Andrew: That’s the part that I always underestimate about these groups. I forget what the name of the book was, but there was a book about a biography of the Gallo family that talked about how the founder’s son was in one of these groups and he would go riding motorcycles. Through the book I felt like, maybe that’s a big waste of time and why the company didn’t do better because the son was out riding motorcycles with other entrepreneurs.

Now through you I’m realizing no, the author missed the point of those things. It wasn’t about the motorcycle, it was about the camaraderie. And not in the sense of going and drinking together with people for the sake of having fun. But for a bond with people you can learn from. Okay. Oh, speaking of. You sometimes mentor people. I was almost reluctant to talk about this because I don’t want you flooded with other entrepreneurs who just need and want, want, want from you. But I do think it’s a great opportunity if someone can work with you. If someone can be mentored by you, I would love that to be someone from my audience. Someone who’s…

Steve: Some of the best, right now I’m mentoring someone that is coming up with a concept where he’s been working with people in the special needs community. I don’t want to say disabilities, but the special needs community. He’s creating a food product that can be produced, like very high quality foods that can be produced within this market and sold and given back to the special needs community. Especially focusing on just fun food products. So he’s been working in this space for a number of years, the special needs community. How can he take his concept to market?

So much of my work has just been just taking that quarter, meeting with him. Right now I’m meeting with him once a month. And setting clear goals and keeping him accountable to those goals. Say that if someone is ready and eager to keep accountable to their goals and to really drive things forward. Whether they’re starting out or they’re just sort of stuck. Sometimes it’s just me repeating what they already know.

Andrew: Alright. I want to end it. Usually I would ask for your email address for people to connect. No. I want a barrier. I would like them to work to get to you so that if they do contact you we know that we’re connecting the right person with you. Someone who’s done a little bit of work. Why don’t we end with this. April in the pre-interview asked you if someone was interested in creating products like yours and building a successful business like you did, what would you suggest to them? You said three things. The first is gratitude. Why is gratitude so important?

Steve: My friend Reza [sp] who I actually met in Neo [sp] is an amazing human being. Reza Bevar. He told me that, we were taking a walk and he said he realized that gratitude is the key to manifestation. I’ll repeat that one more time. Gratitude is the key to manifestation. I think that sometimes when we’re too stuck and really wanting to push things forward or we don’t feel like things can happen, just having a deep sense of gratitude. With, “Wow! Look where I’ve come. Look what I’ve overcome. Look where I’m going.” I think that the world can meet you there, or the universe or whatever you want to call it. Really can open up in a big way just by recognizing and appreciating where you’ve come so far in this life.

Andrew: You know, I know the power of it because over the last few years I’ve done it. Every night before going to sleep I think of three things that I’m grateful for. And what I found that it does for me is it makes me aware of what I have around me and keeps me from getting into these funks where I start to think that nothing is working and everything is against me and you know. And I start to spiral down or I start to lose focus on what I have and what can help me get where I want to go. Gratitude makes that stand out more. Is that what works for you or is it something different?

Steve: Yeah, I think you said it beautifully. There’s something about, especially as you begin to go to sleep, that’s very powerful. Just sort of recap everything that’s happened during the day. For me, my most powerful time really is in the morning. If I’m able to do the most challenging thing with exercise, physically, mentally, and emotionally by pushing gravity. Then the mental gravity and emotional gravity throughout the day just can’t compete. I’ve already knocked out the hardest thing in the day, so I’m ready to blast through whatever might be in front of me.

Andrew: Second thing was get out of your own way.

Steve: Yeah.

Andrew: What do you mean by that?

Steve: I don’t know how else to explain it. I think that…

Andrew: When you’re in your own way, what happens? What do you mean get in your own way? What does that look like?

Steve: Getting in your own way, I think, is questioning the same thing with multiple people. When you already know the answer, part of it is just scaring yourself. Just freak yourself out into what you could potentially do. So, if you’re able to get out of your own head, get out of your own way to just make it happen, I think you’ll be rewarded.

Andrew: Get out of my own way to me means, and tell me if I’m picking it up right … It’s before starting this interview, I was thinking “You know what he doesn’t need to do this interview. Steve’s not in the tech community. He probably doesn’t value this interview. He doesn’t know my work at all. He doesn’t want to be here.” You know, and because we had a little bit of tech issues getting started. That’s where… Usually it wouldn’t happen at all, but that’s where in my head I said: “He doesn’t even care. He doesn’t even want to be a part of this” and that’s where I get in my own way. Is that what you’re talking about, that kind of experience?

Steve: First of all, I’m so sorry that you felt that way. That was not my intention at all. So…

Andrew: Of course not, but it’s the stuff that…

Steve: I really wanted to be here.

Andrew: Thank you.

Steve: Yeah, I think it’s that. I think it’s also when you feel like you’re… There’s something creative that you want to try and there’s something creative that you want to get into, but you’re not quite sure how it’s going to be perceived. You’re not quite sure that it’s going to be successful. You’re not sure if you’re the right person for the job, so to speak.

Andrew: Yes.

Steve: But you feel this drive that’s just driving you crazy like you need to do it. You want to do it. That’s when I say get out of your own head in terms of what your own self-limiting beliefs might be. Just trust yourself, trust the universe. Just move forward. Make it happen because if you fail, that’s where that responsibility happens. That’s where you learn OK, you know what, I know what I did wrong and I know what I can do better next time. But you’ll never really know unless you take the bull by the horns and really make it happen.

Andrew: And the final thing you said is: “Make every decision within 48 hours. Don’t wait more than that.” Why 48 hours? Why not take more time? Why not really give it some thought? Why not?

Steve: I think that there’s serious decisions that we all have. Whether we pay a parking ticket now or we pay a parking ticket later. Whether we’ll wake up and start working on a report. Whether we call our family member that we haven’t spoken to in a long time. In terms of the 48 hour rule, I learned it from one of the prevalent generals or past generals of our country. I saw how effective that was for him. I’m not an army buff. This just stood out to me and I own it now. I take that on. The reason why 48 hours is because…

One I don’t like making decisions, serious decisions, right away. I will typically wait. I will sleep on it, wake up the next morning, and I’ll look for the answer. But if I haven’t made a decision within 48 hours, it’s just going to sit on my shoulders and it’s going to drive me nuts. There’s too many other things that I need to do to move things forward that, if I don’t make that decision within 48 hours, it’s going to impact me. It’s going to impact my business, my reputation, my employees, my staff, my loved ones. So that 48 hour rule, it just continues to help me to move things forward.

Andrew: All right. Well, thank you so very much for sharing that and your story. Anyone that wants to follow up, the website is artoftea.com. You can see everything we’ve talked about, get to know the story behind this tea on that site. Steve, thank you so much for doing this interview.

Steve: Thank you for your time. I really appreciate it.

Andrew: Thank you.

Steve: … your time.

Andrew: Thank you for being a part of it. Bye guys.

Steve: Thanks.

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  • chodogwu

    Great interview Andrew& Steve. Thank you Steve for such an inspiring story. You really provided a lot of valuable insight and wisdom nuggets that are invaluable. Best of luck on your future endeavors .

  • WIlliam Santos-Powell

    Great interview. I can really see Steve passion about his tea. I love how calm he is and I love the advice he had to offer. I completely agree with your methods and how you need to just put your self out there and stay positive and do it. Never get caught up on 1 win use that to motivate you to go harder and if you get set backs use that to motivate you to double the hustle! Thanks for the killer interview! Appreciate it.

  • Michael Eveleigh

    Loved the interview ! This is the first interview i have seen on mixergy and it wont be the last ! Thanks for all the insight !

  • andrewjmead

    “As entrepreneurs, we tend to think that if we work for ourselves, we have all the free time in the world. It’s a myth in terms of time, but the freedom that owning your own company gives you is a deeper sense of responsibility that you can really sink your teeth into. It’s something that you can really care about”

    This really hit home. Before I started freelancing, all I wanted was more time. I don’t need more time anymore, because I get to spend my whole day creating/doing what I want.

    Thaks for stopping by Steve!

  • the_rosenthall

    This is a great interview. You can definitely tell this guy is authentic and passionate about his business and product. Great listen.

  • kathrynddaniels

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    few hours. go right here M­o­n­e­y­d­u­t­i­e­s­.­C­O­M­