5 Things I Wish Someone Told Me Before I Founded my Company, with Tom Lix and Chaya Weiner
Surround yourself with extraordinary people. Make sure they are people you like and respect, irrespective of what job they have in the organization. I’m also a big believer in something I call “productive argument.” With a team of smart people, and people who respect each other, you can have passionate arguments and strong disagreement that can often result in the construction of new and better ideas. I think the process is energizing and it helps get you through the daily hurdles which simply can’t be avoided.
I had the pleasure of interviewing serial entrepreneur Tom Lix, Cleveland Whiskey’s founder and CEO. He was the President and Chairman of application services provider Public Interactive® which he founded in 1995 (acquired by National Public Radio® http://digitalservices.npr.org) and the former President of Market Pulse™, a Cambridge-based database software company and subsidiary of Computer Corporation of America. Previously, he was President/Chief Operating Officer of Connecticut based Yankelovich Partners where he consulted for leading food, beverage, hospitality and entertainment companies including Guinness PLC, Proctor & Gamble, H. J. Heinz Company, Unilever, PepsiCo, The Clorox Company, Burger King, Harrah’s Entertainment and the InterContinental Hotel Group. In addition, Lix has consulted to leading media companies and brands such as HBO®, Time magazine, and MTV Networks; travel and transportation companies including American Airlines, Amtrak and Northwest Airlines (now Delta); as well as service delivery and technology innovators that included American Express, FedEx® and Visa. Lix spent some formative years in the US Navy, where in addition to some early bootleg distilling, he was cross-trained in nuclear physics and thermodynamics along with seawater/freshwater distillation. A young Tom fought forest fires in Alaska at the age of 17, was a college dropout who hitchhiked across the country, and founded the first University sponsored Motorcycle Club in America. He later earned his Doctorate in Business from Boston University.
Thank you so much for joining us! Can you tell us a story about what brought you to this specific career path?
Wow, I’ve had way more than a single career path and strongly suspect I’ll have a few more before I’m done. There isn’t a single story that started me on the path to building a distillery, especially one based on a framework of new and disruptive technology but let me tell you one of them.
A number of years ago I was reading an article about the growing middle-class population in China. One of the points they made was that as people entered the middle-class for the first time they were buying “affordable luxuries.” That made perfect sense to me, but I also thought it was really about “conspicuous” affordable luxuries, things that they could share with their friends and family and in the process show off a little bit.
So, I looked into it a little more and it turned out that as the middle-class population in China grew, so did their purchasing of imported Scotch and Bourbon. Definitely “conspicuous affordable luxuries.”
Importantly, at least to me, was the fact that the whiskey industry was stuck with production processes that required extremely long-term planning. Remember that to make a whiskey it might have to age in a barrel for 10 or 12 years. With middle-class populations growing not only in China but also India, Africa and South America it seemed as though there could be a tsunami of demand that the industry simply wouldn’t be able to manage.
That was the opportunity. The answer, at least to my way of thinking, was the development of technologies that minimized the aging process. So that’s what I did.
Can you share your story of Grit and Success? First can you tell us a story about the hard times that you faced when you first started your journey?
We’re a technology company in a space that’s dominated by multi-billion-dollar distillers, virtually all of whom follow production processes that haven’t changed in generations. Not only that but they’ve convinced the market, after decades and millions of dollars in advertising, that it’s age that matters and that you can’t make a good whiskey without it sitting patiently in a barrel for years and years.
So, for us, where we’ve applied some innovative technology and produced whiskies much more aggressively, and heaven forbid, with woods other than oak, we’ve been labeled heretics. The all too typical “traditionalist” pretty much decided in advance that we simply can’t be making good whiskey unless we make it in the same way that everyone else does. We don’t and we won’t.
Breaking into the market has been both difficult and expensive. At the same time, we’ve won more than our fair share of gold medals in spirit competitions and in blind taste tests we do pretty damn well.
Where did you get the drive to continue even though things were so hard?
First, we embraced the term “heretics”. I knew that it was far better to create controversy, especially in an industry steeped in tradition. Next we built a team that continually experiments, that looks for innovation and never accepts the “status-quo”. Now we’re talked about, argued over, criticized, at times dismissed and often debated. The conversation intrigues consumers and that leads to having them try our whiskies. Importantly they try them at rates far better than if we were simply another me-too distillery. That’s working for us.
So, how are things going today? How did Grit lead to your eventual success?
We’re distributed in 16 States and have sold in Germany, France, Belgium, Switzerland and the Netherlands. We’ve also started shipping a few bottles to both Japan and China and expect that to be a big part of our business going forward.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
We made more than our share of mistakes but most of them probably weren’t and still aren’t funny, especially at the time they occurred.
I do remember however when I was doing some of the original work on developing the early technology. I was working in my basement and it involved pressure application and rapid cooling. Each and every day I was exploding dozens of mason jars full of experimental whiskies. I’d tried to minimize the noise, but I knew that if you were anywhere near my house you heard each mini-explosion.
It was right at the time that the television show “Breaking Bad” was getting traction and my wife Anita was convinced that one of neighbors would call the police and tell them to come and investigate.
My wife and our neighbors were likely thrilled when I moved all of the equipment into a small commercial laboratory space.
What do you think makes your company stand out? Can you share a story?
I’ve talked earlier about experimentation and innovation. We purposely look for places where change can have purpose, where it can be disruptive and result in something new, different and better.
An obvious place, at least for us, was to focus on barrels. They’ve been a critical part of whiskey production for almost two thousand years, and for the most part, they’ve always been made with oak. It’s simple, they can hold liquid. A barrel made with woods like black cherry or hickory would leak like a sieve.
Because of our technology we’re able to use a series of transformative woods like apple, sugar maple, hickory and black cherry that provide some extraordinary and unique flavor profiles. No sugar, no syrup, no artificial flavor or color. Just the wood.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
Surround yourself with extraordinary people. Make sure they are people you like and respect, irrespective of what job they have in the organization. I’m also a big believer in something I call “productive argument.” With a team of smart people, and people who respect each other, you can have passionate arguments and strong disagreement that can often result in the construction of new and better ideas. I think the process is energizing and it helps get you through the daily hurdles which simply can’t be avoided.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I hated school, even grade school. I hated the structure, the homework, the boring recitation and busy work. But I loved reading.
I’m grateful to the teachers and my Mom who encouraged me to learn at a faster pace, to pick subjects outside the norm and importantly, to understand the importance of perseverance.
In fifth grade, I had a teacher who gave me a stack of books to read over the summer. There were copies of Don Quixote, Atlas Shrugged, Moby Dick, Nineteen Eighty-Four and The Old Man and the Sea. She told me it was time for me to break out of the pack. Thank you, Mrs. Anderson, and thank you as well to Hemingway, Melville, Orwell, Rand and Cervantes.
I read each of those books that summer but also worked my way through the first dozen volumes or so of the Tom Swift Jr. series which were books of invention, science and discovery. Early and, in my opinion, underappreciated science fiction by Appleton.
How have you used your success to bring goodness to the world?
That’s a great question and for better or worse it makes me reflect on how much more I can and should be doing. Part of the business plan for Cleveland Whiskey is the creation of a non-profit called Cleveland Bread. The idea is to take the fermented grain we use in production, as well as diverting some of the heat from the distilling process, to bake bread for the food banks in our region.
I’ve made less progress on this than planned but it’s still in the works and remains a priority. Putting this question to me helps make sure I get it done.
What are your “5 things I wish someone told me before I started my company” and why. Please share a story or example for each.
1. Pay Attention to Cash Flow. This is the most important thing you need to manage in your business. It’s not the same as profit and you can have cash flow issues even when everything looks good and you’re growing. When you run out of cash you’re finished. It’s really that simple.
2. Keep Only the Best People. We’ve all heard the expression “hire slow, fire fast” but I still think the timing of firing is often overlooked. If you have someone who isn’t performing it brings down the entire group. Force yourself to do it sooner rather than later.
3. Have the Right Legal Team. You don’t need to use a lawyer for everything but find a good one. Get recommendations from other business owners. Interview them and be selective. A good one can save you, a bad one or even a mediocre one just costs you money. Also don’t expect one lawyer to able to handle everything.
4. Focus. Understand what’s important to accomplish. Every day, every week, every month. Be ruthless with e-mail, keep meetings short and focused, don’t waste time with the things that simply aren’t critical to your business. This isn’t one of my strengths which means I have to pay attention and remind myself regularly to focus on what is really important to the business.
5. Be Smart about Spending. There’s nothing wrong with “dumpster diving” for desks and office chairs. I’ve found white boards, computer printers, filing cabinets and all sorts of things to help outfit an office or workspace at little to no cost. On the other hand, don’t scrimp on the important things like hiring the right people and giving them the right tools.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
Let’s start with a name, maybe something like Food Without Politics or Balancing Food.
There is substantial imbalance between geographies which can grow and raise their own foods, and areas that can’t. Within geographies there’s also imbalance between economic groups with those who can readily afford and often waste their food while other groups go hungry.
How do we insure that no one goes hungry? Borders shouldn’t matter, economics shouldn’t matter, politics shouldn’t matter. So how do we make that happen? What can we do as people, as individuals, as groups, as governments? How can science and technology play a factor?
Crazy idea. If we created a technology that could re-process both spoiled or unused food waste and (this is where it gets very controversial) human waste into an edible protein/fiber product, we could significantly balance both geographic and economic imbalance. So why can’t we?
We could and should do the same thing with water and fresh air.
How can our readers follow you on social media?
Twitter @tomlix
LinkedIn https://www.linkedin.com/in/tomlix/
You can also follow my company, Cleveland Whiskey in all the usual places.
Facebook.com/clevelandwhiskey
Twitter.com/clevewhiskey
Instagram.com/clevelandwhiskey
This was very inspiring. Thank you so much for joining us!
