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Lee Frankel
interviewed by Emma Taylor on February 8, 1996
". . . we brainstorm on new ways to market the product, new angles to take, evaluate why something didn't work, or why it did work."
Lee Frankel, 24, is a co-founder of World Beer Direct, a mail-order company for microbrewed beers. The company opened three months ago in Chicopee, Massachusetts, and beer lovers across the country can now call up and have their favorite microbrews delivered within a few days.
Tripod: When did you decide you wanted to start your own business?
LF: Good question. I guess people had always told me, when I was growing up, that I'd be better off running my own business, because I was independent, and didn't like working for other people. Then, when I actually graduated, and was working for a company in New York City, I just couldn't stand it, and came up with the idea for this business. Slowly but surely we started putting the pieces together in order to figure out if it was a business worth operating. A year and a half later, we were ready to go.
Tripod: What was the first step in making your idea a business?
LF: The first step was actually getting motivated to do it. It's very difficult to have a full-time job, and research how to open a company like this. Arun [co-founder] was working as a consultant, so he had some spare time, here and there. He was really the one who started researching it, and did a lot of the legwork in the beginning. He was really the one who convinced me that it was worth quitting my full-time job, and really spending a few months putting a good business plan together.
But there were a million questions in the beginning. The initial step was researching our competitors, to see who they were, what they were all about, if they were making any money. Once we had that, we could take the next step, which was to come up with a name for the business, really map out what the concept was going to be, exactly, and then start to formulate a business plan.
Tripod: What were the biggest obstacles you faced in getting backing for this business?
LF: In getting financial backing?
Tripod: Financial, yes, and also general support. Did you face a lot of skepticism?
LF: I think initially, when we came up with the idea, the biggest obstacle was our age. People felt like we didn't really have our feet wet yet in the business world. That two guys who lacking experience in management couldn't possibly open a business and make it successful. So we had a lot of doubters there. Once we put the business together and finished it, I think we turned a lot of people around, because they saw how much energy and how much thought went into the plan. I think they were really surprised at how detailed it was, and how much we really knew and understood the type of business we were going to get into.
Tripod: Did your choice of product make it harder to be taken seriously? Two recent college grads wanting to sell beer ...
LF: Yeah. Well, on the one hand, people sort of laughed about that thing, sort of, "Oh well, you sure picked the right business to go into, because I'm sure you have a lot of experience." However, the business that we were proposing was so unique to most people, that I think they took a step back, and said, "Hey wait a second. These guys aren't looking to open a brewery. They're not planning to sit around all day brewing beer. What they're really coming up with is a marketing idea." And that's all this business is, really nothing more than the marketing strategy. Because without the marketing behind this, the business fails. Instantly.
Our biggest job, I'd say, for a few hours every single day, we brainstorm on new ways to market the product, new angles to take, evaluate why something didn't work, or why it did work. And really trying to fine-tune our marketing skills.
Tripod: Your business is very dependent on the microbrewery craze. Are you afraid it might just be a fad?
LF: No, I'm not afraid that it's a fad. What I'm more afraid of is people coming into the microbrewery business who are making bad beers. The number of microbreweries right now is unbelievable, there are so many. They're not all good, and what I'm afraid of it that people are going to start to get frustrated, and they're going to say, "Wait a second." Back in 1993, any beer that was microbrewed was really good, but now people are starting to try some here and there, and they're saying, "Well, I'm not real happy with it."
Arun and I try hundreds of beers. Any new beer we hear about, we get, and we try. I'll tell you right up front, there are a lot of breweries who send us beer that we would never use, and if they call, and say, "Hey, are you going to feature my beer?" we just tell them no, it really didn't meet up to our standards. We also are constantly watching to see what the beer judges in different magazines are writing about, which beers they like, which beers are winning awards.
So, I'm not worried that people are ever going to go back to drinking mass-produced beers, because I think that the microbrewed beers now are very reasonably priced. It's not like drinking wine, where you can drink an okay bottle of wine for ten dollars, or you can drink a great bottle of wine for a thousand dollars. In beer, you're talking a fantastic bottle of beer for five dollars, which is great. Most microbrews are priced at about two dollars a bottle.
Tripod: Who are your customers -- a lot of students?
LF: No, in fact, we don't market to students, and I would say that less than one tenth of one percent are college students. I'd say the only times we've ever gotten orders from college students was when it was someone's 21st birthday, and I think that's happened maybe five times. Most of our customers are women, they're calling and they're ordering this for their boyfriend or their husband. It's mostly at holidays -- this Valentine's Day was huge. We did a gift basket that had chocolate and beer and a beer mug. That flew out the door, we had to re-order inventory. We had really underestimated how much of it we would sell, it was incredibly popular!
Tripod: Was there a lot of red tape in getting your business off the ground? Especially as you are selling alcohol.
LF: There's red tape no matter what type of business you're going to get into with alcohol. What we had to was convince everyone that minors weren't going to be able to get the beer. And I think, when you first look at a business like this, your knee-jerk instinct is to say, "Wait a second. All they have to do is pick up the phone to get beer delivered?" But when you really sit back and you look at how our business operates, you begin to see that it's much more difficult for a minor to get beer from us than it is from a package store. If you're a kid, you don't want to wait for your beer.
Tripod: Yeah, you want it there and then. Well, what about red tape in general? I've hard that there's so much, that it really discourages younger people from starting their own company.
LF: I guess, on the one hand, we did run into a lot of red tape, but on the other hand, we are open, so I can't complain too much! We did get through most of it. ... But that's just part of opening a business. Yes, we were frustrated, at many times we felt like we were banging our head against a wall. But, in the end, it all worked out.
Tripod: Do you think colleges do enough to encourage the entrepreneurial spirit among students?
LF: I think they're awful.
Tripod: It seems that career counselors are more concerned with getting you into a secure job, investment banking or consulting. They want you to wait before you start taking risks.
LF: Yeah. I can't think of too many undergraduate programs that even have classes in -- I guess the word is entrepreneurism. I know of graduate programs that do, but I don't think that too many schools really encourage kids to get out there and be creative. I think, like you said, they want to push you into a desk job and they want you to pay your dues.
I did get that from people. They would say, "It's not fair. You're going to go open your business, and I had to spend five years in a suit and tie, paying my dues. It's just not fair." I got that from my parents. My father has been in corporate America his whole life, and I think, in the beginning, he was frustrated, because he never had the guts to go out and do this.
Tripod: What advice would you give someone who wants to start their own business?
LF: I guess my advice would be, it's sort of like getting into a relationship. When you first come up with the idea, you're going to be gung-ho about it, and you're going to think it's the best thing in the world. But you need to step back and really look at, is this something that I can make work? Do I have enough confidence in myself to make this work? Do I feel like it's feasible? And if you feel like it's feasible, and if you feel like it's going to work, move very slowly, and don't jump into anything. But if all the signs are telling you to do it, then go for it.
Tripod: Do you have to be an eternal optimist?
LF: No.
Tripod: I thought that was a qualification for an entrepreneur, to be a pathological optimist ...
LF: I think you need to be able to look at negative situations and find the positive in them. Arun, my business partner, gets on my back sometimes, when I say, "Arun, we have a problem." He says, "No, no, no. We don't have a problem. We have a solution." And he's right. I think that if you spend your whole time looking at the problems and harping on the problems, you're not going to get anywhere. If you look at situations that come up that may be difficult, and you get something positive out of it, then you're definitely going to get a lot further.
Tripod: So is there a certain type of person that can do that? Could you pick out a student and say, "Yes, he's the entrepreneur type"?
LF: Yeah, I think so. It's kind of funny, because a lot of people say to us, "How did you know where to start? Where did you know where to begin?" And it's not like either of us was born with this gene that told us how to start a company. We just went to all the obvious places, to libraries and books, and just read a lot on how to open a company and where to turn. We just talked to anyone who would listen to us. We called every lead we could get, and we continue to do that. We go out of our way, sometimes, to meet people, and to pass out a business card. Nine times out of ten, it pays off somehow. Something positive will come out of it.
I think there are certain people who just can't schmooze. They're just not comfortable negotiating, and you do have to be firm. There's a lot at stake, and you can't let people walk over you. There are a lot of people who will try and take advantage of you. You need to be able to recognize those people and say no. Because you're going to get a million sales people calling you, and they're all going to come to you, telling you that they know how to make your business take off. You need to be able to evaluate which ones can really help you, and which ones are only going to waste your money. So you do need negotiating skills, and you need to sometimes put your personal feelings about someone aside. You may really like somebody, but the fact that you like them isn't going to help the business at all.
So, I think it does take a certain type of person, though I'm certainly not convinced that it's a one-in-a-million person. I think if this is something you want to go after, you'll teach yourself how to do this.
Tripod: What's the best thing about working for yourself?
LF: Well, it's not the hours, I'll tell you that! You work twice as many hours as you would if you worked for somebody else. But the advantage to working for yourself is that you really see the rewards a lot more. When you work for someone else, it's nice to get a pat on the back, and it's a good feeling when they say, "Hey, good job." But when you spend as much time as we did, putting a business plan together, and then to actually get the financing you need, it's a fantastic feeling. To spend four months battling to get a liquor license, and to finally get approved, is a real sense of accomplishment. And we get to see the rewards of that. Whereas, if I was working for another company, and spend months on a proposal, and the company got the job, my pocket certainly wouldn't feel it. Maybe you get a raise, chances are you don't. It's just part of your job.
Tripod: Do you think you'll ever be able to work for someone else?
LF:No, I don't think I could. I hope I never have to go back to working for someone else ... I'd have to go through years of therapy before I could ever work for someone else! It'd be tough.
Tripod: What if your company becomes a huge success? Will you want to start something new?
LF: I'm not sure. You get a lot of people who say to you, "Well the best way to make money in business is to sell your business." Build it up and dump it, and make a fortune. I guess because this is my first business, I feel like it's my baby. I'd like to say I'll stick with this forever, but even in this office, we're always looking for new opportunities. We have already expanded our product line and we've only been open three months. From the beginning, we were looking at new ways to expand, creative ways to make the company ...
Tripod: Is money a big motivation?
LF: No, it's really not, actually. The biggest motivation is actually being able to pay our bills every month. As far as making ourselves rich, that's not really a motivation. We're not in this, and we never were in this, to become millionaires. There are plenty of other businesses we could have gone into, and taken that route. I could have been an investment banker. We'd like to make money, that's the whole purpose of business. But if this business thrives, it'll make me feel a lot better than if I get rich at it.
Tripod: By the way, what's your favorite microbrew?
LF: [laughs] The million dollar question. It's a tough one, and the reason it's a tough question is because there's so many different styles of beer, and in each style, we have our favorites.
Tripod: Well, what's a good winter beer?
LF: The Longfellow Winter Ale, which was put out by the Shipyard Brewing Company in Maine, is a very good winter beer. Abita, from Louisiana, they have a winter ale which is fantastic. What else do I like ... God, we go through so many beers! We've literally tried in excess of two hundred beers in the last year. There were so many I liked, I hate to pull favorites.
Tripod: Okay, no more questions.
LF: Yeah, I don't have just one beer that I keep stocked in my fridge. We always have anywhere between ten and twenty different brands of beer in our fridge at any time.
Tripod: One of the perks of the job.
LF: Yeah, that is one of the perks, absolutely.
To order from World Beer Direct, call 1-800-609-ALES.
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