The Great Ganesha

This is Part Two of a three-part interview. This part continues from Part One, and continues on to Part Three.

I continue to interview Nikhil Roychowdhury, Founder-CEO and President of The Simple Leaf, an online start-up that sells loose-leaf tea. Incidentally, he has his own tea-specific blog where he regularly writes all kinds of interesting things about tea.

In this part, we talk about his business, its vision, the marketing strategies, using Web 2.0, funding and his business philosophy, in general. If you’re thinking of starting something up, be sure to read on. There’s tons of useful gems in there.

I guess the first thing that people think about is funding. What are you doing for funding?
We’re funding this with personal savings and a small amount of cash from angel investors (read: family). We’re doing it old-school – thinking really big thoughts, and trying to build a sustainable business, one customer at a time!

Once we can scale the business to the point where investing in additional infrastructure is no longer a luxury, I plan on seeking external funding. If all goes according to plan, this should be sooner, rather than later.

There are plenty of good options for people who want funding. The US Small Business Administration provides some loans for startups. Other options are commercial bank loans and venture capital funds. Investors will want to see a solid business model, and even better, solid financial results and reliable future growth projections.

Will it be easy to get funding? Probably not. I’ll find out soon enough.

And for the complete newbies reading this, let me ask how does one even go about starting a business? Where do they begin?
I’m hardly qualified to give people advice, considering that I’m just starting out myself. But since you asked….

Procedurally, it’s actually not that difficult to incorporate a business in the United States. It takes some research (for which there are plenty of resources online), and a few forms, and you’ve got yourself a company. Lest I make it sound too easy, I want to stress that getting good legal and financial advice is critical. Make sure you talk to reputable lawyers and accountants about the correct structure for your business – C-Corp, LLC, S-Corp, etc. This may not seem that important now, but it will be in the future. The legal entity you choose will have ramifications on ownership, should you decide to take on additional partners or shareholders, or even if you want to sell the business.

There’s also a wealth of information on the internet so you can educate yourself on the process. Places like the Small Business Administration, startupjournal.com and entrpreneur.com have lots of good information and are a god place to start. That’s the relatively easy bit.

Ok, so how about the hard bit?
Trying to figure out what your company is all about is the hard part. This will take time – lots and lots of it. And sleepless nights. And moments when you rush out in the middle of a shower to jot down an idea! It’s a continuously evolving process, and if you have a good concept, it will probably be very frustrating as you refine it. My journey is only just beginning, but I did learn a couple of things here and there.

Obviously, I’m very interested in what you learned. But before we get into that, talk a little bit about The Simple Leaf. What’s the fundamental idea behind it?
I think our brand name really underscores what we’re all about. Simply put, we want to make really good tea a lot more “user friendly”.

Many companies selling ”premium” tea in the US today are marketing tea like a fine wine – an ultra-luxury product that only true connoisseurs can enjoy. They are often over-delivering on prestige and emotional appeal, and under-delivering on freshness and quality. I don’t know why – perhaps there’s a faulty assumption that consumers don’t know any better? Well, I think they do.

After all, tea, despite all its complexities, is an every day drink for millions of people around the world. But it doesn’t mean you have to drink awful tea every day. I want to provide my customers with a fresh, great tasting product without skimping on quality.

We can do this because we know where the tea comes from and who grows it (in many cases, personally). We don’t buy our from a bulk distributor or a wholesaler in Germany (interestingly, a lot of tea consumed in the US comes from distributors in Germany!). And we won’t carry a million average teas, just a handful of what we think are some of the finest. After that, we want to step out of the way and let our customers be the judge of quality. After all, the true tea experts are our customers, not us.

So you’re trying to bring good tea to the masses, as it were?
Well, I don’t want to refer to my customers as the “masses”, because they’re definitely not! We’re not trying to be a commodity play in the sense of a mass-produced, mass-distributed product that’s going to end up on every grocery store shelf in the US.

We’re catering to a much smaller cross-section of the market. I think our customers range from serious tea connoisseurs to people who may drink tea occasionally but have a hard time picking an excellent tea from the thousands of choices available. So rather than have them purchase a mass-produced box of tea bags from their grocery store, we want to step in and fulfill their need for a quality drink.

And clearly, your use of Web 2.0 reflects that. Anything to say about that?
Personally, I’m very excited about Web 2.0. Incidentally, my wife thinks I’m a total geek because of it, and there’s probably some truth to that. All these new Web 2.0 sites are taking something that used to be in the realm of techies and putting it in everyone’s hands (by the way, I like to think I’m doing the same thing with tea!). Web 2.0 is not something to think about in the future, it’s here right now. We’re always excited to test drive new technologies that make some aspect of life easier. When we find a tool or site we like, or see a business application for it, we’ll use it. We’re using sites like our blog, Squidoo and Fanpop to share our thoughts with fellow tea drinkers. It’s not so much about getting them to buy our tea as it is about engaging with a community of people who are interested in the same things we are.

Apart from using Web 2.0, what else are you doing in terms of marketing?
I think the best way to describe our (rather low budget) marketing approach is “grassroots”. We rely heavily on word of mouth to help spread the word about our tea.

Since the web is a core part of our marketing strategy, we’re working hard on building our online presence, and on getting decent page rankings from some of the major search engines. We’ve also made a few targeted Google adwords buys that have paid for themselves already, so we’re quite pleased with that. I tend to be very impatient sometimes, so I am constantly reminding myself that marketing requires a great deal of patience.

On the wholesale side, we’re trying to create compelling product/ service offerings that we think can add a lot of value for specific verticals. Ok, that was the consultant in me rearing its ugly head! Let me try that again, in English. Let’s say we’re talking to a restaurant, we might want to put together a package for them that includes not just tea, but also training their staff on how to present a tableside tea service, or teaching them about the origin of the tea, it’s flavor profile and how it’s grown, so they can engage in intelligent conversation and make recommendations to their customers. If it’s a retail food store, merchandise displays and training sales staff is incredibly important. I think it’s important to get the sales folks excited about the product, because if they’re not, the customer is probably not going to buy it.

So that’s what I spend a lot of my time thinking about. Now if only I had 20 million dollars…!

So where does the company stand right now? Any plans for the long-term?
Well, we’re executing Phase 1 of our strategy (our beta release, if you will), which was rolling out our online presence – the web store and the blog. We’ll continue to enhance the web experience for our customers with all sorts of cool new features and compelling content we have planned.

But we’re also hard at work on Phase 2 of our strategy – developing retail distribution channels so our product can get into retail stores. And let me tell you, it isn’t easy! Sales cycles are long in this business. It takes a lot of hard work, a thick skin, and the ability to handle rejection.

As far as future marketing, we plan on hosting more local events so that we can get as many people to taste our tea as possible. Also, we just like talking to customers face-to-face. In addition to the distribution plans I mentioned earlier, we’ve also vaguely toyed around with the idea of a branded tea room in the future. But don’t expect to see one on your block anytime soon – it’s just an idea at this point! In the short term, we’re going to stick to the basics and keep telling people about our tea, and getting them to tell their friends about it. Connecting with our customers one-on-one just makes us feel good, and isn’t that what it’s all about?

Hey, you got me into it, right? But I have to say, I wouldn’t do it if it weren’t for a quality product.
You have no idea how good it makes us feel whenever we hear from a customer telling us they liked our tea. That’s why we exist, so we sincerely appreciate it.

And what about employees? Do you have any or is it just a one-man show? Also, any partners?
No employees yet. My wife Cara and I are partners in the business.

But if you mean “Who does most of the day to day grunt work?”, then I’m guilty as charged. For all the other stuff that goes into running a business – sales support, marketing ideas, financial backing, and supply-chain strategy, credit goes, first and foremost to my family and friends. Since I definitely don’t have the budget to support all these important functions with a paycheck, they are all happy to serve as (unpaid) volunteers and advisors! And for that I’m eternally grateful. Especially to my wife who believed in me enough to let me quit my job (and still does, I hope!).

On the supply side, my dad is the main guy. He’s a trained tea taster with tons of knowledge about the ins and outs of everything related to tea. He’s worked in several capacities for large corporations like Brooke Bond (now part of Unilever) and Duncans, before starting his own successful tea blending and export packaging unit. During his career, he’s been able to build many long-lasting relationships with several excellent tea growers all over India and abroad. Now that he’s our buyer, his excellent tea tasting and sourcing skills are being put to good use by me. It’s been a tremendous learning experience, and I hope some of his expertise rubs off on me.

Concludes in Part Three.

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