Elissa Hagopian Hambrecht of Napa Valley Fumé: Five Things You Need To Create A Highly Successful Startup
An Interview With Candice Georgiadis
Be present and celebrate the highs. Aim to learn from the lows, because what doesn’t kill you will make you stronger. Until you run out of money and have to un-wind it isn’t over! And when you do have a game-over moment, while it will feel terrible, like your boyfriend breaking up with you only to date your archenemy; try to get to the other side, where only new opportunities await.
Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.
Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?
In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.
I had the pleasure of interviewing Elissa Hagopian Hambrecht currently serves as the Managing Member and Head of Compliance for Napa Valley Fumé, LLC, a vertically integrated startup in the legal cannabis space. Elissa served as themfounding Chief Operating Officer at fumé.
Elissa is a self-proclaimed start-up junkie and has over twenty-five years of experience launching and operating both proprietary businesses and partnerships.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
My first job out of college was in the corporate/Special Events planning world. In my interview I was asked: “what would you describe as a failure?”. I went on to describe how I failed Spanish not once but twice in college, only to finally pass, but that I still didn’t speak Spanish. My boss, who was my first mentor and later a business partner made sure that I took Spanish classes and took the time to travel to Spain, because she was on a mission to get me to move to Barcelona in time to get a job during the 1992 Olympics. She went as far as discouraging me from taking a promotion from our company in Hawaii! In the end I did move to Barcelona and had an almost yearlong job with NBC. It was in that role that I started cooking Mexican food for the Americans who didn’t get why they got “an egg thing” when they ordered a tortilla, and why nothing was spicy (!!). I attracted the attention of my boss at NBC who said “write a business plan for opening up your Mexican restaurant here and I’ll invest”. That was my very first start up! After that experience I never looked back, and never worked at a “punch the time clock” or straight salaried position again. I’ve had equity and/or a leadership role with 11 startups since the Mexican restaurant in Barcelona, with tours of duty in the wine industry, marketing/events and now cannabis.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
My partner Eric Sklar and I are both “recovered vintners and recovered restaurateurs”. Before Prop 64 passed in 2015 we were riffing on the prospect of what this new recreational cannabis industry would look like, where the most value would lie, and how it would all work. Even though we had no real answers given the timing of this conversation, we both agreed that like the wine industry, we thought the biggest value and most fun we could have would be in building brands. Napa Valley Fumé, LLC officially got off the ground in August of 2017, and the point of our spear has always been focused on building the best-in-class portfolio of cannabis brands, products and experiences.
Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?
See above, Louise Glasgow was my first “real job” boss, and later we became partners of Chispa, a platform we both used for our consulting projects. Louise inspired me to “keep it real” and lead with action. I’m a big believer in the value of rolling up your sleeves and doing any and all work, right alongside your team. The this builds comradery and also makes whatever work at hand more fun, not to mention getting it done faster. Louise taught me these lessons early in my career and also pushed me out of my comfort zone, out of corporate America, which led me to becoming the “startup junky” that I still am today.
What do you think makes your company stand out? Can you share a story?
Employees and partners often say that fumé feels like a family. This is not an accident, as we very intentionally built company culture from the ground up. We made sure to pay better wages than the average in our county. We made sure to set expectations clearly. We communicated our company values at every company interview, training session, and at all celebrations. We finally have reasonable health insurance, including dental! Covid took a bite out of our cadence of hosting quarterly companywide events and an annual larger gathering, where we included investors, vendors and partners, but our intention is to get back to that as soon as it is safe. I think the article written by the Cannabis Business Times, when we won best company to work for last year, also includes lots of these details and stories, including the open mic nights at the local bar, etc.
How have you used your success to bring goodness to the world?
Our mission statement is “Planting Trees for Future Generations”. This is a nice double entrada, because we plant big trees in the form of our outdoor cannabis plants each year! But the intent is that our company will give back, leaving the planet a better place than where it is now. We live this mission with our give back programs, which include partnerships with One Tree Planted and Last Prisoner Project.
You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?
I think transparency/honesty is #1, empathy and understanding is #2 and 3rd would be leading with hard work. Transparency can have a downside, that I want to be honest about ☺. I lost a key employee because I was being a bit too honest about our fundraising challenges at the time. But if you know me, I pretty much wear it on my sleeve, and you won’t have too hard of a time knowing what is up with me. So this character trait is both a positive and a cross that I bear. Empathy and understanding is so important for any leader, and sometimes it is the work you do to support team members when they are sick, or having a hard time. I found an ER doctor who worked in our county who took the time to speak directly with one of our employees, who was having health issues and who was getting the run around from doctors and insurance. #3: Hard Work. How can you expect everyone on the team to give their all if you are phoning it in!? As we launched our first operational business, the delivery depot, I was there at the beginning for all hours of operations, which meant 12 hour days, 7 days a week. We were all working hard! It was a new for all of us and the learnings of how this business needed to work came from all those long hours.
Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?
It wasn’t advice that someone gave me, but I learned the hard way that the worst thing you can do in making a key business decision is to rush. I was in a HUGE hurry to get my first US restaurant off the ground and picked the wrong location. If I had just slowed down and pitched a tent and hung out at this place for a week or so I would have known that it was a doomed location. And you know what they say in the restaurant business… “location, location LOCATION”. This place had bad feng shui, no natural light, no ability to put even a basic amount of signage out front, and the key assumption I had: that all the upstairs residents would come in and be our best customers was just wrong, because as it turned out, the building had a whole lot of cold beds and absent owners. Slow down and really think through the important stuff.
Can you tell us a story about the hard times that you faced when you first started your journey?
The Mexican Restaurant in Barcelona had MANY crazy and very hard time stories. We hired a guy who was laying down the tile floor and he turned out to be a junkie. We sensed that there was something crazy about this guy, but one morning we came in to find all the tools from other workers and all the materials were gone, and only half the floor was completed. He had skipped town and was gone. Thankfully we found another two guys to pick up where the junkie had left off, and in the end, they became two of our cooks in the kitchen once we were ready to open. The life of a startup entrepreneur means that you can not quit, you must figure out a plan when your current plan isn’t working, or something goes wrong! Hopefully whatever goes wrong is not a game-over moment, but 90% of startups fail for a reason!
Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?
Once you are the “owner”, founder, partner… equity holder, there is no turning back. You have no choice but to put in the hours, whatever it takes, to make things work. Or: unwind time.
The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?
Be present and celebrate the highs. Aim to learn from the lows, because what doesn’t kill you will make you stronger. Until you run out of money and have to un-wind it isn’t over! And when you do have a game-over moment, while it will feel terrible, like your boyfriend breaking up with you only to date your archenemy; try to get to the other side, where only new opportunities await.
Let’s imagine that a young founder comes to you and asks for your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?
There are more questions than answers on this one. For example: what is the burn currently, and how much time will you need before you can get to breakeven? If you can bootstrap it and do it without taking on other investors, you’ll end up with all of or at least more of the pie, which means that when you exit you get more of the money! The answer to this question changes dramatically depending on what type of business, how many people on the payroll and the current sales channels and “velocity”. Even if you have a breakeven or a profitable company, you may decide that VC or other institutional capital maybe important down the road so that you can get to scale quickly.
Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”? If you can, please share a story or an example for each.
- NEVER run out of money! I think it goes without saying, once you are back against the wall, it is hard to raise money, so try to not get close to running out. Game Over and unwinding sucks!
Story: At TastingRoom.com I was not the principal, but the guy who was, raised all of the money, with no support from institutional investors. He announced one day that he was stepping off the fundraising treadmill, as he had had enough. He anointed another guy who was very keen to be CEO and was very bullish on his ability to raise “lots of money”. We were all a bit dubious and sure enough, it didn’t take long for this guy to fail. Game Over. - Start with your mission/vision and values, quickly building to what your product is and who is the addressable audience. These are the basics and before you start spending any money, you and your partners should sort this stuff out on your own time. This should be FUN and full of alignment.
Story: At Napa Valley Fumé me and the two co-founders had lots of ideas and we knew we were focused on building brands in the new legal cannabis space here in CA. When we sat down to formalize our mission/vision and key values it came together in about a two-hour meeting. This is the only startup in my 11 that has not pivoted along the way (or died!), and I think it is because we always were so clear on our mission and vision. - After #2, but before hiring, get your start up Biz Ops in order: establish your entity in your state, get your EIN, your seller’s permit (if needed) and any other legal licenses required for your industry. Set up your bank account(s) and figure out how you are going to run your finances. After that you need to dial in all the HR related items: Employee Handbook, payroll provider, onboarding process dialed (ideally make it digital). Don’t forget insurance too, even if at first you are just researching it for when you’ll need it. But most importantly: have a really solid agreement between you and your partners which your lawyer reviews and confirms. This agreement is there when things get hard, which you never think will happen when you are starting up. Make sure it includes how it will work if a partner leaves or is asked to leave.
Story: Back to my first start up, the Mexican Restaurant (“Mex & Cal”) in Barcelona. My operational partner and I were in charge of the build out and were also to be in charge of running the business. Our investment partner was meant to be the money guy, but not operational. We were young and didn’t exactly have investors growing on trees, we didn’t even have the legal right to work in Spain at the time! Needless to say, it was all very hap-hazard, and when he took us to the business formation meetings with his lawyer all we could think of was “how much time is this going to take?”. MISTAKE! We thought 45% of the equity to his 55% felt “fair” and signed on the dotted line… only to find out that this gave him 100% of the power. As soon as the restaurant was up, running, and successful he pushed us out and there was basically nothing we could do. Biz Ops and Agreements are your backbone! Make them count and get them right! - Make hires AFTER you have brought in your first capital (and after completing everything in #3 above), even if this capital comes from you and your partners. Once you have hires this is a cash burn that happens every two weeks, so “mind the gap”!
Story: My daughter works at a startup and recently she didn’t get paid. She was told there were “administrative errors” that were getting worked out. It seemed to me that really, they had run out of cash. Transparency and honesty, two important values, basically go out the window when you can’t make payroll and it hurts! You can probably survive this situation the first time this happens, but your employees will lose total faith if they are not getting paid, unless they are equity holders and have the sustenance to defer, which is also common in startup-landia. - Make sure you and your partners are having fun and set the tone for productive enjoyment. This will lead straight into a great company culture, on top of your company values (see #2).
Story: it is impossible to always be stress free and having fun, but if you make a point to carve out times when you can all go out drinking or sing some songs, this will be awesome for company culture. At fumé we opened up a tab and ordered pizzas at the local watering hole and had open mic night. People still talk about that night, and having the team see you let down your hair a bit is all part of it.
What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?
Basically, the opposite of everything listed in points 1–5 above! Running out of money, not having solid agreements in place, so that when there are fights or misunderstandings, your governance can guide you through those times… all of these things are the most common mistakes I believe happen when a start up fails.
Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?
GREAT QUESTION! As one who doesn’t really buy “work-life balance”, and instead believes in “work-life blend”, it is VERY important to have physical releases from the stress of your start up. For me it is skiing, hiking, biking, swimming, hearing live music, cooking, eating, family time (but ask my kids, startup stories at the dinner table are common!). I also think that once you can, taking 1–2 “light work” days a week is key. I never stop thinking about work, and sometimes the best solutions to problems are when I’m on a hike and just thinking about work, but not actually working. I LOVE being able to carve out Friday afternoons for outdoor exercise and fun time, and it is these moments that sustain you for those long hours and burning the candle at both ends.
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. :-)
If every new company was required to give back, and started out with this kind of philosophy, I think this would do an enormous amount of good, both for your team, but also for the larger local community and your industry. Salesforce started Pledge 1%, which is a good model for big companies. Even tiny startups, if they start out with the plan of giving back, perhaps in the form of paying team members to volunteer in the organization of their choice, this would be very impactful.
We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.
I am a huge Beatles fan, and would love to meet Paul McCartney. I wish I could have met either Prince or Tom Petty too. I would also love to smoke a joint with Matthew McConaughey, just so I can ask him about politics and if he really might make a run in that direction!
How can our readers further follow your work online?
My personal LinkedIN profile: https://www.linkedin.com/in/elissa-hambrecht-7b3b54/
Company LinkedIN: https://www.linkedin.com/company/fume-brands
Company Instagram/LAKE GRADE brand: https://www.instagram.com/lakegrade
Company Instagram/fumé brand: https://www.instagram.com/enjoyfume/
And here are the two websites for our brands:
Enjoyfume.com
LAKEGRADE.com
This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!
