What We Can Learn From A Hot Sauce Company About Business
How one hot sauce company sparked a growing industry
Over the past five years, the hot sauce industry has grown by 4.1% to reach the revenue of $2 billion dollars this year. And at the same time, the number of businesses selling hot sauce has grown as well as the number of employees by 8.6% and 7.9% respectively.
It was predicted in 2013 that the hot sauce industry was a breakthrough industry and that prediction came true. But what really sparked this massive industry to grow this much?
Part of it I believe came down to a single company. An unusual one, but still a very significant one.
Huy Fong Foods.
While many of us may not be familiar at all with the company name, a lot of us would surely recognize the bottle that the Siracha sauce comes in.
A simple clear glass bottle with the logo of a rooster and a green cap.
Sometimes it’s plastic (at least in Canada we have that option), but it’s still quite distinct.
The company was founded in 1980 when it’s CEO, David Tran moved to LA with no job and no hot sauce. He was looking around at the stores and realized that none of them sold any kind of hot sauce that could really satisfy him, having just moved from Vietnam. From there he took matters into his own hands.
He started to make his own sauce with hybrid jalapeño peppers, salt, vinegar, sugar, and garlic and began distributing it to the local market. People loved it so much that his business started growing and he was soon distributing these bottles to many locations and making millions of dollars from it.
But Tran’s attitude is quite interesting on a business perspective. Despite numerous cookbooks, iPhone covers, t-shirts, and even a documentary in the works of Tran, there is not much publicity directed to Tran. He has never been that big into publicity. And it’s from how he acts and how he treats his business that we could learn a thing or two from this CEO.
Placing Products Before Profits
In an interview with Quartz in 2013, Tran stated his dreams and desires for this company:
“I was never in it to be a millionaire.”
“All I wanted to do was to make enough fresh chilli sauce so that everyone who wants Huy Fong can have it. Nothing more.”
This is an interesting perspective especially from an owner in the 1980s where the economy is booming and many people were in it for the money. To see an owner from around that time take a more humble stance then and continue to do so now goes to show something very important.
A product is far more valuable than the profits that can come from it.
Tran was more dedicated to ensuring people had a good chilli sauce as opposed to leveraging the economy at that time and growing his business.
Sure it grew on its own, but it wasn’t due to mass marketing.
In fact, Tran has never spent a cent on advertising.
He simply created a really good product that people love and continue to buy.
This may be one of the earliest examples of what business should be like today. Instead of focusing so much on making as much money as possible, instead, focus on making a good experience.
Create a product or a service that people will be able to talk about and enjoy. Let something that you created be part of someone’s story and life.
In the end, Tran wanted to create experiences as opposed to a product. This goes beyond the simple customer service and etiquette that’s taught.
Worry About Your Own Work
Another interesting aspect of how David Tran runs his business is that he always runs it with his “eyes closed.” Meaning that he’s only focused on his overall vision and pays little regard to how his business affects the world and even his competition.
Over the years, there have been many hot sauce companies who have competed with Hoy Fong. However, David Tran can’t even list any of the copycat sauces or what companies they belong to.
Furthermore, Tran is also oblivious to where his hot sauce is going. To this day he’s only got 10 distributors of his hot sauce and that it. It was through one of them where he learned that his sauce is now commonly used in spicy sushi rolls.
Tran has been very hands-off with his business despite the fact that it’s grown so much on its own. This is an important lesson for all of us as it shows that the business is far more important than what others are trying to do.
So many of us are paying attention to every single move that a company does. Everyone is on the reactive side as opposed to the active.
Apple has been regarded as a revolutionary company because they don’t focus on what Microsoft, Android, or Samsung is doing. Instead, they focus on making things.
This all comes back to the experiences and the storytelling aspect.
Companies that’ll flourish more are companies that’ll focus on that aspect of another person sharing a good story with others.
This gets people talking and it encourages people to take action and lift a business into a whole other level.
Never Skimp On Quality
But one of the biggest distinctions is Tran’s dedication to quality. Both in the product and it’s business. For years he has always been cautious about investment opportunities. He’s admitted before that he’s had some investors approach him with loads of money and even offering to buy the company out. He’s refused every time.
He also doesn’t want to share many numbers for fear that he gets more of those offers he’s not interested in.
His loyalty towards a quality business like this is unheard of in a world today where we have “Merger Mondays” due to how many mergers and buy-outs that occur from day to day.
But that loyalty also feeds into the business as the Siracha sauce that Tran bottles and produces have always been from fresh peppers. Many other companies who have produced far more use dried peppers, like Tabasco. This difference is what gives Siracha an edge over competition. But it also further solidifies Tran’s belief in a good quality product.
This is further emphasized in his pricing as well. Since opening in 1980, Trans has kept the price at the wholesale price at the time and has never changed it. Even though food has inflated in price three times over the past 38 years.
Tran’s dedication to quality goes above and beyond what many businesses would do today and we can learn from that too. I’m not saying we should never change prices or avoid mergers, but take some time to truly understand your business.
Go back and look at your vision and goals and really question them.
Tran has a close relationship with his business and we can see that through his behaviour. Even if he is reluctant to tell us much about the business, it’s still very clear where his heart is and where he stands with his business.
This sort of connection is a lesson that we should never forget.