Selling Your Company For Millions – Interview with Tom Scott
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Episode Summary
Tom Scott emerged as an entrepreneur at a young age when he started selling provisions to people stuck at gas lines in Maryland. When Scott and his college pal, Tom First, tried mixing peach juice and water in a blender in 1989, they did not imagine their little experiment would result in the creation of a multi-million dollar company. Tom discusses his success with Nantucket Nectars and his latest project, The Nantucket Project.
Selling Your Company For Millions – Interview with Tom Scott
Today’s guest is Tom Scott who is the CEO and co-founder of the Nantucket Project and he was the CEO and co-founder of the Nantucket Nectars which started in 1989 and got sold to Cadbury Schweppes in 2002. He has gone on to do so many amazing things, including being a film and television creator that’s won awards at both the Cannes and Sundance Film Festival. He created something called The Apple Pushers with Ed Norton, a documentary on that. He’s an expert in storytelling, and knows all the secrets that go into making a great pitch. Tom, welcome to the show.
Thank you. I’m glad to be here. Thanks for having me.
It’s my pleasure. I want to first start with, if you don’t mind, because you’re such a successful entrepreneur, taking our listeners back to how you and your co-founder came up with the idea to create Nantucket Nectars and you’re competing against major brands like Snapple and all that good stuff.
Selling your company for millions doesn’t happen overnight.
How did we come about it? We had started a business many years ago that was a floating store. We were doing this in the summers in college. The notion was you had all these yachts that would come in to Nantucket Harbor. In order to get to the land, they’d have to take a launch and it was a pain in the neck. What if you could just bring a store to them? So we did. We started selling coffee and muffins to these yachts in Nantucket Harbor.
Among the things we started to make to sell was juice. I should say that, depending on how old a listener is, in those days, there was no such thing as Tropicana Pure Premium as an example. Generally speaking, not even generally speaking, maybe entirely speaking, if you got a juice off a shelf in a store, it was pretty crappy. What we were making at the time was a fresh juice. It was different and it was more refreshing and it was something special. That’s how we started with the path. Took a lot of different twists and turns, but that’s how we got in the juice business.
I love that the initial problem was that there weren’t good juices and you solved that by creating a floating store to take it out to people who would be willing to pay a premium price for something good.
Yeah. It’s so true. It just didn’t exist. Really what we were doing, and I just, I always feel this is so important, we were making it for ourselves. Simple as that. This was something we wanted.
The passion was authentic. You would drink this stuff. It’s not something you’re really trying to force on people. When you’re telling them about it, it comes from an authentic place. When you’re telling anybody, whether it’s a potential customer or potential investor, what have to offer, that you can’t fake that passion, right?
No. I’m one of those people, and you hear it more and more, if … I think it was Henry Ford. “If I had listened to my customer, I would have ended up making a faster horse.” I’ve always made things for myself. Every part of my career, I’ve been making something I want. I have to be honest, I stumbled into that. But one of the things I’ve come to know very clearly is I’m decent at making something for me, but if I have to imagine the attributes of what somebody else wants, it’s just not who I am. It’s not my makeup. It’s not how I think about business.
[Tweet “Make Your Product Something for Yourself So Your Passion Is Authentic”]
Right. The same thing is true of a lot of other innovators like Steve Jobs and the iPad. If he just waited for people to say, “I need an iPad in addition to my laptop and iPhone,” he probably wouldn’t do it. Just like the Henry Ford example. You guys were selling multiple things. What was it about the nectar, the juice, that made you guys think, “This is what we should focus on.” Because that’s a big challenge for a lot of entrepreneurs, is focus.
It’s true. I’m going to say most valuable to us at that time was naiveté. We didn’t know what we didn’t know. We had a whole lot of energy. Because we had so much energy, you can move mountains. You will aggressively try things that others might think foolish. Some of those things, you’re going to find out probably were foolish. But plenty of those things, you’re going to find out were not. It’s vital. It’s vital. I would tell you that we came to learn and practice incredible focus. But in the beginning, the idea of stepping into such a crazy and competitive field had much more to do with naiveté than it did with anything else.
I’m going to tweet that out from the episode. Energy gives you what it takes to try new things. That’s a great line of that. Of course if you’re drinking healthy nectar, I’m imagining that’s giving you good energy, right?
Mostly. Some of those things … Drinking too much juice is probably not a good idea either, but it’s probably true with most things.
[Tweet “Energy gives you courage to try new things.”]
There’s a happy medium. Yes. You started the business in 1989. You and your cofounder are going along, did you ever need any outside funding or was all the revenue coming in just from sales?
No. More than anything else, again, I’m sorry I’m being a bit of a broken record here, but I didn’t know what a venture capitalist was. In those days … When I was 24 years old, somebody called me an entrepreneur. I thought, what a jerk. This guy is calling me a shyster. I was a relatively well-educated guy. I’d gone to Brown University. I didn’t know exactly what the word entrepreneur meant when I was 24 years old.
The reason I tell that story is, it was a different time. It was a different time. The idea of series A, series B, venture capitalists, Angel rounds, all that stuff is new. None of that stuff existed in the collective conscience of pop culture. So many of those, the pieces of the puzzle that went in to growing the company, we were unaware of. I never would have thought, I wouldn’t have even known where to go to get money. In part because I didn’t even know you need money for cash flow. We didn’t even understand what cash flow was. We did wonder how or why we were always running out of money.
The long story short is, we were very frugal. We had other jobs at night. We did what we could to survive. We therefore ran a very efficient business. Now, I did have to take a loan from my father. In the history of the company, we raised approximately 2 million dollars, which is unheard of today. We borrowed … Eventually we were able to get a line of credit from a bank based on receivables and inventory. It was an asset backed loan. We grew the company into the many millions of dollars exactly that way, which is just very different than I think the way people think about these things today.
Before you’re able to think about selling your company, you need investors; angel or otherwise.
One of the things that’s probably not different is how to build a great team. Whether you are pitching an investor, Angel or otherwise, they all want to know who’s on your team. You’ve obviously created a great culture, not only at Nantucket Nectars but what you’re doing with The Nantucket Project. Can you tell us what you look for when you are deciding whether to hire somebody to join your team? Do you first decide what your culture is and then see if that person is a fit?
It’s funny. I was doing an interview this morning. I’m all about chemistry. I’m all about the chemistry with that person. Are they a good person? Can you riff with that person? Can you trust that person? Can that person place their trust in you? Etc. it’s huge for me. It’s huge. I don’t always get it right. I’ve got to say, nobody ever gets it right. Hiring people is not a, you don’t get 100% on that. Some of the people I’ve worked with at Nantucket Nectars started as truck drivers and ended up as the president of the company. That’s a literal example.
Wow.
There’s been many of those throughout my career. I’m okay with on the job training often. I really just believe the amount of energy and focus somebody puts into something, if they’re reasonably smart and they’re reasonably aggressive and they’re reasonably entrepreneurial, I think you can work with a lot of different kinds of people.
I love that. Energy and focus again. There it is. It just keeps coming back over and over as again, the key criteria for hiring the right people to fit your culture. You’re going along, obviously, you weren’t planning on selling your company for millions at that point. From 1989 to 2002, there was no strategic exit strategy for anybody. What made you decide to consider selling your company and ultimately selling it? Were you worried about what you were going to do after it sold?
Yeah. The answer is yes, I was worried about what I would do after I sold. Here’s the thing. We worked very hard. I think most people who start businesses do. Nothing unique about that. You spend a lot of years on the road, you spend a lot of years selling, staying in lousy hotels, always afraid of making payroll. It’s a tough thing. In particular, I think at our age and we were relatively naïve at the time, it’s fatiguing. I think we had 150 distributors around the country. You got to visit each of them about twice a year. Do the math. That’s a lot of travel, a lot of trips, a lot of sales, a lot of stuff. Because our names were on the label, it was very … People found it critical to meet with us as individuals, Tom and I.
The answer as to why we sold, we never tried to sell the company. We never hired investment bankers. There came a day when we were hotly pursued. In the end, there was probably 7 different companies talking to us. We wheedled it down and ended up making a decision to do what we did with, what was initially Ocean Spray became Cadbury Schweppes, based on the fact that we liked those people, based on the fact that we felt they could do good things with the company in the future, etc.
You asked also, was I afraid? I was a little bit afraid, but I should tell you that I had been so busy for so long. There came a day when I just decided it was time for me to leave. Because after selling the company, they wanted us to stick around. It wasn’t a match for me. I definitely freaked out. I felt like, what in the world am I going to do now? I never considered having to film my days.
You have the opposite problem at the time.
That’s right. That’s the story of how we ended up making that decision.
How long was it between selling your company for millions in 2002 and starting The Nantucket Project? Tell us, was it … and how did you come up with this great concept of having this annual conference? I’m going to let you describe the vision for it because you can do it much better than I can.
You said at some point earlier, I’m paraphrasing, but I’ve been successful in businesses first. I’ve also been unsuccessful. I’ve had a number of misses. Even at Nantucket Nectars, if you took snapshots at different periods along the way, you would wonder, when you looked at some of those snapshots, how in the world this company is ever going to make it? It’s just part of the gig.
I mention that because when we were at Nantucket Nectars, we made our own ads, we made our own radio ads, we made our own printed materials. We had a staff inside that we would do it with. We never used an ad agency. But I loved storytelling and I’ve always loved films. I went to the first ever Aspen Ideas Festival. I think that was 2003. I also was a big fan of TED way back. We used to have a designer who worked with us at Nantucket Nectars and he said, “Let’s go to TED.” I said, “Get us the tickets.” He said, “No problem.” Then he told me the price. I was like, “Forget it. We are not going to that.” We couldn’t afford it.
To me, I love discovery and I love people who go to the front-lines of anything and they come back and they share discoveries with us. I just think there’s something so beautiful about it. Particularly now, it’s like we have such availability of information, which is a good thing. But we also have a massive quantity of noise. There’s just so much noise in the world. When you can get a concise telling of interesting new things right from the horse’s mouth, to me it’s like mental cocaine. I just find it so exhilarating. I think when you mix it together, in other words, when you have a number of people passionate about the same things and sharing similar things, it’s a wood stock of ideas. It’s like a Grateful Dead show of information. That’s how I think about.
[Tweet “Pitch is a concise telling of new things.”]
Tom, you just defined what I like to define as the perfect pitch, which is a concise telling of new things. It triggers our lizard brain. “Ooh, something new, I’m learning.” As you said, mental cocaine. Because we crave that. If you have that when you’re pitching for a customer, a team member or an investor, you can tell a story that engages people, then you’re light years ahead of others who can’t. Correct?
Yeah. I think so. Look, yes, I think the answer is absolutely yes. I was watching the Golden Globes the other night. You’re looking and Jeff Bezos is sitting there and winning. NBC gets zero nominations. You’re thinking, “Oh my God, do we live in a different world!” A show called Mozart in the Jungle. I don’t even know what that is but I thought, “I want to see that.” Just the title feels new. It feels like a discovery.
Here’s the thing, I think oftentimes, if you’re starting something or you’re new in a business, you want to tell that story. Here’s the frustrating truth, if you’re making something, you have to make the thing. I don’t care if it’s a juice or a service or whatever it is. I’ve got to tell you, I think the odds of you making that thing well right away, really low odds. You need to become a master at making something. You can’t skip the time part. You can’t skip the commitment part. You can’t skip the trial and error part. You can’t.
Until you know what that product is because you’ve been on the battle front and you’ve been building it, only then will you know what it is or how it works or how it could be better or why it’s better than everybody else’s. Literally, you’re just not going to know. Only then can you package what it is you’re trying to do. I feel like so many people want to tell a story before they actually even made it and it gets in their way. It just gets in their way. They say, and I’m doing air quotes right now, they say “creative things.” I always say, be creative in your, making your product, then the telling the story would be easy. Just translate. Translate the thing you’re doing to someone so they can understand it. If A, they don’t understand it B, they’re not turned on by it, I’m guessing your thing ain’t all that interesting.
[Tweet “Can’t skip the trial and error time it takes to make something great.”]
I love, we’re going to tweet that out. You can’t skip the trial and error time needed to make something. That’s so important to remember because a lot of people go, “Why isn’t this an overnight success?” Rarely is anything an overnight success, something to keep in mind if you ever want to go about selling your company down the road. You decided to take your storytelling skills from making your own ads at Nantucket Nectars into creating The Nantucket Project, which is this annual conference, and just decided to become a television and film creator and producer.
An event during the Nantucket Project Conference.
That’s an amazing pivot, if you will, as an expansion of your skillset. But a lot of people have dreams of, I like movies, I like storytelling, but they don’t get to do what you did. What was it that allowed you to figure out your way into that world?
One of the things about The Nantucket Project, if you go to The Nantucket Project, you’re going to learn many things. Some of them, you may never hear about again for the rest of your life. Some of them, you may pursue them as a career. It’s not trite to say that Steve Jobs, Bill Gates and Mark Zuckerberg share … They probably share several things in common, but they share one really interesting thing in common, which is they’ve never graduated from college. All 3 of them, these 3 cultural business icons didn’t finish college. Now, well, how did they learn all the stuff they had to learn to do what they do? The answer is, they love what they do. They’re going to figure out how to learn the things they need to learn in order to do what they do. I think if you know that … You know that Bill Gates didn’t go to computer school. He didn’t. Neither did Steve Jobs. They didn’t go to computer school or iPad school or touchscreen school. There’s no such thing. They just learned.
I can promise you, they were bad at it at the beginning. I promise. The first day, they weren’t good at it. They didn’t even understand it, the first day. They went one day after one day after one day. I just believe that. It’s that whole thing of, how do you eat an elephant? One bite at a time. I think one of the things, and I’m going to turn 50 in a couple weeks, I’ve been around a little bit. I’ve been around. The older I get, the more I realize that those silly old things your grandfather said, they tend to be true. How do you eat an elephant? One bite at a time. That’s the answer. How do you learn how to do, you go from one thing to the next. One step at a time. How do I know for me or for anyone I think, where to go next? Where’s your inner being telling you you want to go next? What are you really in to?
It’s that whole follow your bliss, follow your passion. I definitely want to ask you about, you went from not being able to afford to go to a TED conference to co-directing and co-producing an amazing documentary on your ideal films, on Richard Saul Wurman, who created TED and he’s an architect. He has a line in there that, “Most information doesn’t inform,” which I just thought was great. Can you tell us about what it was like to interview him and what gave you the idea?
Yeah. You mean for the film with him?
Yes.
He is the master. This guy talked about information architecture, information anxiety before Steve Jobs graduated from high school. This goes way back. He’s had a crazy and interesting career but his design mind, and I don’t mean that in the way of just design meaning graphic design or artistic design, but computer design and thinking design and speaking design, he has a design mind.
You asked earlier about, how do you learn this or that? The number of things that he has learned and the way he goes about it and the way he treats the packaging of things he learned or other people learned, it’s just one of a kind. TED is a cultural prize. It’s a powerful brand and a powerful concept. This is the guy who started that. This is the guy who built that. Imagine some of the things he’s seen and done. To my knowledge, I’m going to guess you knew very little of him prior to reading, to seeing that film. Am I right?
You are absolutely right. I pride myself in being pretty up on architects. I have friends who work at Gensler, I saw the documentary on Frank Gehry. But he was somebody I never heard of and his story is just amazing. The fact that you co-directed and co-produced that was phenomenal.
Again, hopefully you see my passion for TED and for him in that film.
Definitely.
It’s a film of a certain kind. It’s probably not going to be next to the Avengers or The Force Awakens in terms of viewership. But for people who are curious about a certain kind of thing, I’m proud of the film.
Yes. What else are you working on now that you are excited about that we can look forward to seeing soon?
It’s funny, last week we had our first 2016 speaker meeting for The Nantucket Project this year. It’s back to the drawing board. What I would tell you is, when we do this, when we face another year and book another year of speakers, it’s more about learning than it is about knowing. What I mean is, you’ve got to stay open to the fact that whatever’s going to be interesting in September probably barely exists right now.
Right. Whether it’s robotics or 3D printing or virtual reality, whatever.
Yes. If you were going to ask me at the moment what am I into, I’m into figuring out what I’m into.
Great.
There will probably be a few films in development about those things that we’re preparing for next year. Listen, this should be a TV show. The Nantucket Project should be a TV show. The TV show is something like 60 Minutes. It has segments something like 60 Minutes, but it’s a show about ideas and each of the ideas are carried out in some form of a film that are really instructive, like the Richard Saul Wurman film that you saw. In success, that’s where this goes.
Also, I think what you’re saying Tom, is give yourself a little permission not to know everything all the time, during the creative process. I think that’s a valuable takeaway. Before I let you go, I just want to ask you a couple more questions. One is, what’s a book that you would like to recommend about business or life or philosophy or as you said, following your inner being? Anything at all, any topic. I would love to hear what inspires you author-wise.
The two best books I’ve read recently, one is Just Mercy by Bryan Stevenson. It’s about race in America. I saw him speak a few months back. He was incredible. He was as good as anyone I’ve seen in years. I’m watching him and I’m looking and I’m thinking, okay, the guy is smart, because he’s definitely smart. But his brilliance was in the fact that he’s gone to the front lines of death row and race in the south in America. He’s made observations that are his observations. He’s come back from that front line and he shares with us those observations. I bet it’s easy for him. I could be wrong and I’ve never spoken to him about it. I could be wrong. That’s what comes through in this book. Race is such an interesting topic that I’ve looked at it in a full variety of ways throughout my life. But if I’m honest, in the last several years, it’s been through the TV or through the newspaper. To hear something that you can really get your brain around from somebody like him, that was amazing.
The other one I would say is probably one you’ve heard a few times, is Ed Catmull book called Creativity Inc. on Pixar. I just love it. I love everything about Pixar. It’s really good storytelling. I think it’s interesting to hear, to read a creative book from a science guy because that is hard. He’s much more of an Xs … I say that, he has a science background. He has his Xs and O background, he has a technical background. But he speaks, he writes very well about creativity. I just love that book.
Finally Tom, how can people follow you in social media? What’s your Twitter account? Let’s give out the website for The Nantucket Project.
I am not a social media guy. It’s interesting. It’s not that I’m against it. I like our people to speak for themselves. Maybe I’ll have something to say sometime in the future, but now I let my company speak for it. It’s The Nantucket Project. You can follow The Nantucket Project on Facebook and Twitter and Instagram. I think we do a pretty good job. I am really focused on making this TV show I mentioned to you come to life and pray for that to work. Then I think we’ll be able to speak to lots of people in a powerful way.
Fantastic. Well, it’s been an honor. You’ve given us so many great insights on selling your company for millions. I’m very excited to see what comes up next considering your track record, which is always a good predictor of people’s passion and focus over and over again, figuring out how to make something new happen. I can’t wait to see what you bring to us. Thanks for being on the show.
Great. Thank you so much. It was great to meet you.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
Nantucket Project Website
Nantucket Project on Facebook
Nantucket Project on Twitter
Just Mercy by Bryan Stevenson
Creativity, Inc by Edwin Catmull
Crack The Funding Code!
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