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Hot and Spicy Lemonade

My first entrepreneurial venture, back in 1993, was a barbecue sauce company. The backstory is that my grandfather, before World War II, had a barbecue restaurant on the west side of Chicago. As a kid I would constantly hear from his contemporaries how great his barbecue sauce was. Over the years different people in my family made the sauce (my grandfather was still alive at the time), and every time they did, friends, family and other people would always ask for the sauce and frequently said things like, “This stuff is great. You should bottle it and sell it.”  Every family has a story like this.

So when I got out of graduate school and was searching for things to do (the job market was pretty terrible then), I saw a bottle of the sauce on the shelf that my uncle had made and I thought, “Why not?” So I started a business to make and sell the sauce. I started by making it at home, which was probably illegal, and that quickly turned out to be a painful experience because it was way too labor intensive to be practical. My next step was to rent out a commercial kitchen, where I and a staff made several hundred jars at a time (but I still had to put each label on by hand…not fun and not good for my metacarpals). Finally I realized that the way to go was to hire a contract food manufacturer (called a co-packer). I’d give them the recipe and the labels, and they’d give me as many finished cases of sauce as I ordered…in jars with labels on ready to ship. I was blissful thinking about the freedom this would give me.

But first I had to turn my grandfather’s home brew recipe into an industrial recipe because the co-packer was buying tomato paste by the 55 gallon drum and spices by the pound. I found a food chemist who deconstructed the grocery-store bought ingredients into their industrial components. And I scaled up the recipe. And the co-packer made the first batch. For reasons I no longer recall, I wasn’t able to be there to witness the first run. When I went to pick up the hundred or so cases they made for me, the sauce tasted rancid. It was unpleasantly spicy and lost all the notes of the original spice blend.

Naturally I accused the co-packer of screwing it up. How could I possibly be wrong? He assured me that he had followed the recipe correctly. So I again accused him of screwing it up. And he again assured me he followed the recipe correctly. So I double checked the recipe and again accused him of screwing it up. By this time he said that if I didn’t take the shipment, he would sell it to a wholesaler who would dump it on some discount house. My brand would be ruined (the labels were already on the jar), and I’d effectively be out of business. But I also couldn’t afford to pay several thousand dollars for the inventory and trash it. Either way I was screwed…and probably out of business. So I checked the recipe for the third time…and discovered that I had screwed up. I misplaced a decimal, and there was ten times the normal amount of cayenne pepper in the batch. 

If I paid for the inventory and threw it away, I was out of business. And if I didn’t pay for it, I was out of business. Plus now I knew that it was my fault. So I paid for the inventory, but clearly I had a big problem on my hands. I remembered the adage, “If life hands you lemons, make lemonade.” I decided to make lemonade.

I went to a local printer and made up some star-shaped sticky labels, about an inch in diameter, that said, “The Chicago Fire. Hot and Spicy Version.” And I put a sticker on each jar. Now I had two varieties of sauce…the original and The Chicago Fire. And I went back out to sell them (I still had some inventory of the original version left to sell).

The Chicago Fire outsold the original version three to one. So I had new labels made up only I changed the name to “Killer Kane’s Hot and Spicy.” Now I had two products instead of one.

As this was my first time starting a business, I learned two important lessons in the school of hard knocks. First, I was adamant, and then eventually humbled, about the source of the error that caused all the problems. It was my fault, no question about it. I’ve since learned to temper my finger pointing although it’s still my first instinct. I learned a valuable lesson in taking responsibility for my actions, and fortunately the tuition wasn’t too high.

I also learned the importance of optimizing with what you’ve got–the true entrepreneurs creed. If all you’ve got are lemons, make lemonade. Instead of wishing the world were different, your job as an entrepreneur is to figure out how to make the most of the situation at hand. I’ve been witness since then to many businesses that get frozen in place when their well laid plans don’t work out as they had intended. Being nimble and learning how to pivot (an overused term methinks) are essential attributes that entrepreneurs today must master.

After that I went on to get my product into about 75 stores, selling it mostly out of the trunk of my car. Then what happened? That’s a good topic for a future post…with more valuable lessons learned.

4 Comments
  1. Interesting story! very curious to hear the end. I also liked the comparison example of apprenticeship to new business you mentioned the other day, it would great to hear you expand on that further on that. Thanks.

  2. Damned good sauce, I’ll add.

  3. Great story! Do you know any co-packers in the Chicagoland area? I have a small hot sauce business and I’m struggling to find any co-packers in the area.

    Thanks,
    Paul

    • I don’t offhand. The outfit I worked with nearly 20 years ago was called Dorina Foods in Union, Illinois. You’ll have to look and see if they’re still around.

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1212 S. Naper Blvd. Suite 119-200 Naperville, IL 60540

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I'm Neil Kane - a serial entrepreneur who specializes in commercializing complex technologies that come out of academic research labs or federal laboratories.
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