Crowdfunding platform list as of Sept 3 2014

Hello readers,

There is a new page on this blogging website that contains a summary of popular crowdfunding platforms.
It is a work in progress and is definitely not perfect, but it does have a lot of data in one spot.
Let me know if you have any information to update the list.

Entrepreneurship at Santa Clara University - really

Yes, you can be entrepreneurial in a large (old) organization.  Santa Clara University (SCU) has developed a Master’s of Science in Entrepreneurship with an emphasis in Global Innovation (MSE-GI).  This isn’t the first time that SCU’s Leavey School of Business has been entrepreneurial.  In 2010, the school launched CAPE, an entrepreneurship education program for non-matriculating students.  The fifth cohort started this summer with 50 participants.  In 2013, the Master’s of Science in Finance and Master’s of Science in Entrepreneurship started.  The MSE-GI is an overhaul of last year’s MSE; however, this time the program is focused in both scope and market.

The MSE-GI program is a 12-month, full-time post baccalaureate degree program for international students in Silicon Valley. The program integrates course work and internships to equip students with business skills and practical experiences necessary for successful careers in a range of organizations from start-ups to established market leaders. International students will be immersed in the business landscape, culture, and network of Silicon Valley and study under prominent Silicon Valley scholars, gain experience with local firms and network with business leaders. Additionally, students will gain the skills and contacts to enable them to lead entrepreneurial projects and intrapreneurial opportunities.

SCU was founded in 1851 in the heart of Silicon Valley. The university now has over 8000 students across undergraduate and graduate degree programs. 

The first cohort will begin in June of 2015. 

You read it here first.

The website will be up in a couple of weeks.     

http://www.scu.edu/business/

Madame Kayoko Hosokawa – entrepreneur

On July 14th I was honored to attend a Salon hosted by the Japan Society of Northern California at the Consul General of Japan’s home in San Francisco.   At the Salon, Madame Kayoko Hosokawa, the former First Lady of Japan, spoke about her latest endeavors in support of musicians with special needs.  The day before, she had introduced the U.S. Japan Friendship Special (Family) Music Concert, which brought together musicians with autism from Japan and the U.S.  At the Salon, Madame Hosokawa passionately described how she was moved to start advocacy for those with disabilities over 30 years ago when she learned about a young woman who was a Special Olympian from Japan.  Since then, she has worked on several projects to promote equality.  Her efforts include co-foundering the Special Olympics of Nippon in 1994 and producing 4 movies about some of the extraordinary accomplishments of those special needs.

Why am I bringing this up on a blog about entrepreneurship?  Good question.  I do this because I would like to highlight Madame Hosokawa’s endeavors as examples of entrepreneurship that don’t fall into what people often define as entrepreneurship.  The Special Olympics of Nippon was not a brand new idea, but it took a lot of work to create this organization.  And what about films?  A film is not a new firm, but could be considered a new venture. 

What do you consider entrepreneurship? 

Pitching a Fit

Today, the F50 held a pitch fest for their first season of firms (http://f50.io/) at the Computer History Museum in Mountain View.  The founders of 25 companies presented their business ideas to over 200 investors along with a large room full of interested business founders and ecosystem participants (e.g. consultants, attorneys, and press).  F50 identified these firms as some of the “most fundable start-ups” and then matched them with investor mentors to help them raise capital.  Thus, it is no surprise that many of these firms have revenues and some have angel or VC funding already.  Many have been through Y-Combinator or (and) 500 StartUps Accelerator. Many founders are serial entrepreneurs.  This is not the typical start-up crowd.  They are experienced, savvy and ready to take on the world. 

“The best of the best of the best, Sir.”

It was a really interesting pitch fest with a wide range of ideas.  Some good, some excellent, some just plain bad. 

Trends:

Almost all of them had something to do with the internet.  If the firm wasn’t completely contained on the internet then they relied heavily on it for reaching customers.  Seven were “platforms”.  Seven were market places (think ebay).  Eight were social such as dating, networking, or photo sharing.  (There is some overlap in these categories.) Other start-ups ideas included on advertising, gaming, and sensors.

What not to do while pitching:

Oh yes – it is back - the list of what not to wear (see previous post).  This time I have included what not to do based on what I saw here and comments that I heard.  I got to sit up front with the investors and VIPs and listen to their comments.  It was hilarious. 

#1 – Don’t dress like a slob.  Seriously.

Holy Guacamole!!

For the love of ironing boards everywhere – get one.  Half of the presenters were dressed like “slobs”.  (Direct quote – I can’t make this stuff up.)  One VC said that he was so distracted by the presenter’s horrible clothes that he completely missed what the company did.  Face it, the dress down look is so 2001.  Actually, if you want to stand out, dress well. All of the investors dressed professionally.  If that is who you are targeting, take note. 

Rule of thumb – First Date Attire or Better.  Dress as least as well as you would on a first date.  That is what this is, your first date with someone with whom you will have a long intimate relationship – if it goes well.  Dirty athletic shoes do not impress.

And do us all a favor – take a shower and shave.

One of these things is not like the other...

#2 – Don’t wait until minute 3 out of 4 to tell us what the firm does. 

We really don’t care if the firm has backing if we don’t know what your product or service is.  Same goes for your pedigree.  Give me a clue of what you’re doing before telling me that you are from Ivy League University. 

#3 – Don’t take your phone.

You think that I am joking.  Nope.  It was probably to help keep time, but boy did it look bad.  How long have I been talking?  Wait, let me look at my phone.  Oh, and Mom called.  (By the way, there is someone in the front row with 1 minute and 30 second left signs.)

#4 – Don’t be mysterious about how you will use the money.

Far too few of the presenters discussed what they would do with an investment.  Just because the firm has traction doesn’t mean that you know how to scale.  For all we know, you will spend all of the next round of funding on t-shirts for marketing.

#5 – Don’t read the slides.

Many venues have the technology that displays your slides in front of you in addition to the larger screen for the audience in back of you.  Unfortunately, some presenters now think that just because the display is in front of them, they can read it like a teleprompter.  Not so much.  And the audience might not know that there is a display on the floor in front of the presenter, so it just looks like he or she is staring at the ground. 

#6 – Don’t go over the time limit.

This is really difficult since the time is so very short.  However, you don’t want to be the one where the organizer walks on stage to usher you off.  The audience understands that you don’t have much time.  The audience is also watching another two dozen presenters (or so).  Don’t be rude.  Share the podium. Play nice. 

Crossing the Valley of Death

Research update here.  

In addition to chocolate and social entrepreneurship, I also study technology start-ups.  Recently, I have been examining how technology firms cross the valley of death with some pretty interesting results.  Without getting into the statistical model, this blog post shares some of the findings. 

So what is this “valley of death”?  Basically, it is the lack of funding between the invention of technology and launch of commercial product.  Government and private investments have emerged to help firms commercialize nascent technologies.  Government programs in the United States include Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. 

The SBIR and STTR programs are two of the latest and biggest programs that the U.S. government has enacted to support small business development (Bonvillian and Van Atta, 2011).  The SBIR program was implemented in 1982 to support innovation in small, often nascent organizations (Audretsch, Link, & Scott, 2002).  The STTR program was started in 1992 and focuses on supporting innovation collaborations between firms and public organizations such as universities and government labs. The primary objective of these programs is to support innovation in small business.  The secondary objective of these programs is to help organizations cross the valley of death. Through 2012, SBIR and STTR have cumulatively provided over $34 billion in funding (Small Business Administration, 2013). 

Nanotechnology is the control and manipulation of matter between one and 100 nanometers.  One nanometer is about three to six atoms across, so nanotechnology is incredibly small and difficult. And expensive.  A complicating factor is that matter at the nanoscale acts differently than the same matter at larger scales.  Nanotechnology is used across industries including cosmetics, packaging, optics, and semiconductors. 

So if any technology firm is going to risk the treacherous valley of death, it is a nanotechnology firms.  They must endure the trifecta of burdens: the firm's liability of newness, the industry's lack of legitimacy and cohesive structure, and the technology's inherent uncertainty (see Woolley article in Entrepreneurship Theory and Practice). 

I analyzed all nanotechnology firms started before the year 2002 and it turns out that 60% obtained SBIR or STTR grants and 25% were award at least one of each type.  In comparison, that is a lot.  Overall, the acceptance rate of the SBIR and STTR programs is about 20%.   More interestingly, firms that obtained SBIR or STTR funding were more likely to patent than those that did not received funding and were less likely to cease operations.  These firms were also more likely to receive VC funding.

Go nanotech!

And you may contribute a verse...

Last night, the Center for Science, Technology, and Society (CSTS) at Santa Clara University held their first MAGIS Dinner to celebrate leaders in social enterprise development.  The two awards were presented to Graham Macmillan of VisionSpring and the Citi Foundation and Sally Osberg of the Skoll Foundation.  Founders and employees of other social enterprises were also in attendance, as well as dozens of supporters and sponsors.  Some of the amazing social enterprises on hand were Angaza Design, Anudip Foundation, Artisan Connect, Givve Collection, Global Women’s Water Initiative, Good World Solutions, Not for Sale Campaign, Nokero, Sankara, Smart Voter, Twothirds Water, World Wide Hearing, and Nazava Water Filters.

What is social enterprise?  People argue about the definition all the time, but it basically comes down to organizations using traditional business practices to solve problems of social welfare.  That means that social enterprises and the people in them are changing the world to be a better place. 

Seeing the work that these people do is both inspiring and humbling.  Most of the time, I sit at my desk overwhelmed by the evil in the world.  Reading the paper and online news gets more difficult each day with the sheer volume of violence and cruelty reported both locally and worldwide.  Heck, I can’t even drive down the street without getting cut off by someone who must be more important than me and is in a very big hurry (I picture that he has to go to the bathroom… and hope that he doesn't make it).  I admit that I vacillate between feeling helpless to why bother.

So, sitting in a room of people who make it their life’s work to make a difference is astonishing. It reminds me that there are good people and the world need more of them.  And when I think that one person can’t make a difference, I can think about this – if Dr. Stanley Zlotkin hadn't started Sprinkles Global Health Initiative, millions of children would be malnourished. If Joseph Adelegan hadn't started Cows to Kilowatts, thousands would be suffering the ill effects of water contamination by slaughterhouse waste.  If Jordan Kassalow and Scott Berrie hadn't started VisionSpring, there would be almost 2 million people who can’t see.  One person matters.

I couldn't help but reflect on my own contribution to society when listening to the stories and feeling rather guilty.  But then, my husband reminded me, we all can contribute in our own ways.  And no, we might not be the next contender for the Nobel Peace Prize or MAGIS Award, but that isn't the point. 

As Ol’ Walt said, “the powerful play goes on, and you may contribute a verse.”   

-----

FYI - The CSTS has the Global Social Benefit Institute (GSBI) that helps social enterprises develop and grow.  They estimate that the over 200 organizations that have completed the program in the last 11 years have reached over 100 million people at the base of the pyramid.  The GSBI is the cornerstone of the CSTS.  Graham Macmillan is a graduate of the GSBI.  Other exemplary organizations in his cohort include Kiva, Sprinkles Global Health, Cows to Kilowatts, and Whirlwind Wheelchair.  Sally Osberg is the President and CEO of the Skoll Foundation, which invests directly in social enterprises such as Girls Not Brides, B-Labs, Global Witness, Medic Mobil, Kiva, One World Health and VisionSpring. They also support organizational development through programs and partnerships.  They have a new film that summarizes their mission at skollworldforum.org.

Shout out to TestaRossa Wines, REBBL Tonic, and Pisco Porton for their generous donation of terrific libations. 

The World of Entrepreneurship

Over the last couple of months I have been catching up on some travelling, flying to Tel Aviv and Paris to continue my adventures.  No matter where I went, I couldn't help but be struck by the entrepreneurship in every location.  This is no surprise being someone who studies entrepreneurship for a living. But even after all of these years, I couldn't help but be intrigued by the similarities and differences of new ventures around the world.

Take Tel Aviv for example.  What an amazing city of history and innovation!  In the same block that you have a historic site of biblical importance there is a start-up working on the latest technology.  It was inspiring to see a government that promoted not only entrepreneurship, but also the vital infrastructure necessary for start-ups to survive.  They are working to attract funding sources from around the world including venture capitalists and large financial organizations.  Unfortunately, the World Bank ranks the country in the lower half of all countries for registering property, getting electricity, and dealing with construction permits.  And it was obvious that some parts of the country are more developed than others, but by and large - infrastructure was great.  And Israel ranks highly in investor protection, international trade and ease of starting a firm.   (http://www.doingbusiness.org/data/exploreeconomies/israel).  Corporate tax rates are 25% and firms only pay about 5% in social security contributions. The US corporate tax rate tops out at 34% and the social security contributions are only slightly higher at 6.2%. 

In contrast, people that I spoke to in France said that it is very difficult to start a company there.  It is not the red tape, although the counties is ranked low for the ease of registering property.  This biggest complaint was the cost of hiring and paying employees.  Employer paid social security contributions are about 40% of one's salary.  40%! On top of that, firms pay a payroll tax of 5.45%.  Then, the corporate tax rate is 33.33%.  Think of the implications - a firm hires someone at $50K, but ends up paying $72.5K before being hit by corporate taxes.  Even with the strong infrastructure, education, and technology (and pastries), the cost of running a company is high.  Many companies choose to remain small to survive. 

So the next time you take a trip, look at the local companies.  Start-up success is as much influenced by the people who start and run firms as the infrastructure on which it relies.  

Building Product and Infrastructure from Scratch

Original Hawaiian Chocolate Factory

 

Pam and Bob Cooper moved to the Big Island of Hawaii in 1997 after Bob left a career in country club management in North Carolina.  Their philosophy was that bad things happen everywhere in life.  Where is a better place to experience the good and bad than in Hawaii?  Terrific point.  What happened next was a little less obvious.  With little experience in agriculture, the couple bought a small farm with coffee, macadamia nut and cacao trees in Keauhou, Hawaii (near Kona).  Originally, they had planned to cultivate the existing macadamia nuts and build a business; however a family member’s allergy to the product dampened the enthusiasm.  They turned to the cacao trees and in 1999 founded the Original Hawaiian Chocolate Factory.  Their first batch of chocolate was sold in 2000.    

In the last 14 years, the Coopers have grown OHCF to sell over 10,000 pounds of chocolate a year.  That is 5 tons of chocolate all made in small batches on site!  When they opened, few companies made chocolate in Hawaii and most used cacao from around the world.  The infrastructure for the chocolate industry did not exist in Hawaii. Attempts had been made, but there was little success. In fact, no testing facilities existed nearby to rate the beans, so the Coopers sent them to Spain.  They brought in the processing equipment from around the world.

As a specialty item, no retailers carried 100% Hawaiian chocolate.  (The only other company was Hawaiian Vintage Chocolate founded by Jim Walsh in 1986.)  The Coopers set up their distribution and retail sales network from scratch.  Several plantations grow cacao in Hawaii, but they do not process or manufacture the chocolate themselves.  In addition to their six acres of cacao, OHCF purchases cacao from over 30 local farms. The closest competitor is the Dole Plantation that grows 20 acres of cacao in Waialua, Hawaii (Oahu), which is processed and sold by Guittard Chocolate Company.  Currently, no other company has the entire chocolate making process from growing the beans to sales (“tree to bar”) in the country.  This was not by design, but necessity.  The process did not exist, so the Coopers had to make it.  Also, the company did not have a pool of experienced industry mentors on the island.  They worked with farmers and retailers to create a viable value chain in one place.  Thus, a lot of their initial work wasn't just making prototypes of a sellable product, but also included building the market.

The company is a family affair.  Much of the harvesting and processing is still done by the Coopers.  Currently, OHCF sells only single-origin chocolate and cacao nibs.  They do not produce truffles or other chocolate items and do not sell wholesale. Unlike Dandelion Chocolate, OHCF does add cocoa butter, sugar, vanilla powder and/or milk powder to their cacao for taste and stability.  The final product is a smooth and consistent chocolate. 

www.ohcf.us

New crowdfunding page here

Crowdfunding is one of the latest buzzwords to hit mainstream America.  In the broadest sense, crowdfunding is a process by which people with ideas can get money (funding) from others (the crowd) to pursue those ideas.  More subtly, crowdfunding can a unique mechanism for sophisticated entrepreneurs to market their products.  However, crowdfunding is not for everyone. 

The new Crowdfunding page (tab above) of this blog is a three part article detailing the ins and outs of this phenomenon.  Part 1 of this article defines crowdfunding and discusses the participants involved.  Part 2 describes campaigns and their components used by innovators to solicit funding.  Part 3 discusses the advantages and disadvantages of crowdfunding and potential pitfalls. 

From Technology to Tea

Onomea Tea

Rob Nunally and Mike Longo started Onomea Tea Company in 2003.  This was a second, if not third career for both of them.  Rob and Mike started Onomea Tea after realizing that their initial crop of choice, daylilies, would not grow as consistently as needed for cultivation.   Considering their options while drinking tea, they thought – “Why not grow tea?”  Having green thumbs and plenty of available property on Hawaii’s Big Island, they jumped in.  A new career was born.

Before Onomea, Rob lived in California.  He attended CA State University and received a BA in Business with an emphasis in Information System. This was perfect for Silicon Valley and he started in with a software support job and ultimately his own technology business. Since most of the technology was sold internationally, this business could be run from most anywhere.  In 2010 the political climate for the business changed and the business income dropped substantially, since that time he has been more focused on tea.

Mike was born and raised on the East Coast.  He grew up working in his father’s nursery and garden business and studied Biology and Chemistry at Marquette University.  After teaching high school biology, Mike’s path led him to the National College of Chiropractic and a career as a Chiropractic Physician and Natural Health Practitioner.  Mike lived in Fiji for a short time and eventually moved to Hawaii Island in 1977. He began hybridizing daylilies in the late 80's. In the mid 90's he moved to California and owned a retail nursery and a daylilies garden.  His interest in daylilies led to the creation of an online auction website for daylilies, which he still runs.

After a few years in California Mike began to feel the pull back to Hawaii. He convinced Rob to accompany him on a trip there. Rob became attached to the big island overnight. They began to look for a residence there in 1999. In a short time they discovered available land overlooking Onomea Bay that was breathtaking. They both packed up and moved to Hawaii in 2000 and began building their house. Their first tea plants were planted in 2003.

It has only been 10 years, but Rob and Mike are tea experts.  They have certifications galore and have trained with world renowned authorities.  Set on a nine acre plantation above Onomea Bay, Onomea Tea grows, cultivates, and processes some of the finest tea available.  Impressively, Onomea Tea is completely organic.  As Mike pointed out, tea isn’t washed before it is processed, so whatever is on when it is picked is on it when you drink it.  Pesticides – out, sea spray and Hawaiian sunshine – in.  Beautiful. 

The tea is picked and processed by hand on site.  They have been cultivating new hybrids of their tea plants after painstakingly selecting the best from their existing stock.  Currently, they produce and sell white, green, oolong, and black tea. Onomea does not add flavors and uses only their own crops. Recently, they produced an aged black tea “Koko Ki” that had subtle hints of cocoa.  (Yes – with no additives or flavorings they brought tea and chocolate together in one luscious cup.) Unfortunately, the demand is so high that they often sell out quickly. 

This second career seems to be working out quite nicely. 

If you are on the Big Island, contact them for a tour of the plantation and afternoon tea tasting!  You won’t regret it.

www.onotea.com

Second or Third Career as an Entrepreneur

Entrepreneurship often occurs when someone is dissatisfied, and people are not satisfied with a lot of things.  Noticeably, we use products that don’t do what we need them to do, we work at jobs that are not fulfilling, we endure poor service both at home and work.  In my recent adventures talking with entrepreneurs and small business owners, I have talked with many people who started their companies after leaving other, often successful, careers.  The next series of entries focuses on these companies. 

What Not to Wear

There seems to be a few interesting myths floating around about start-up styles.  I was reminded of this at a pitchfest recently.  Pitchfests are short events, usually a couple of hours, at which about a dozen companies have three to ten minutes each to convince the audience and sometimes judges that their companies are wonderful businesses and that they should be funded.  Pitchfests can be terrific for refining your story or connecting with potential investors, mentors, and customers.  There are very few opportunities where a company founder can talk to a room full of people who actually want to hear about the idea.  However, before a word comes out, you better believe that an impression has already been made.  Many people forget that clothing and body language speak volumes.  No, you don’t have to be the best dressed or have the perfect stage presence, but you do have to look like you care.  Here are a few tips about what not to wear.

1.   Backwards baseball hat, or any hat for that matter.  Even in Silicon Valley, a backwards baseball hat is sure to make audience members snicker and roll their eyes.  It doesn’t matter if it has the company’s name on it, it doesn’t look good.  It is very difficult to listen to a CEO when you are wondering if they just woke up.  And if someone can’t wake up in time for a mid-afternoon presentation, how do they run a company?

2. Sweatpants.  ‘nough said.

3. The hoodie.  That is so 2007.  Do you really expect us to believe that you are the next Facebook?  Even if you are, we don’t care. 

4. Sunglasses.  See hat.

5. College paraphernalia.  I love my alma mater, but wearing my favorite college sweatshirt to talk with investors is a flag of insecurity.  “Really, I went to this school and you should be impressed.”  Or not.  Save this one for grocery shopping. 

6. Haute couture or expensive designer wear.  If you are talking to potential investors you are asking for money.  You are asking for money to pay your salary.  Why should they pay you to wear better clothing than most actors unless you are starting a fashion company? 

7. Gum.  Warning.  Don’t sit in the first row. You may get hit by projectile gum during the presentation.  It happens. 

8. Shorts or skinny jeans.  Whoa nelly.  This distraction just makes one wonder which season it is. Is this pitch for a resort?  Leg hair removal?  Liposuction?  Plus, not many people can wear these and look professional. 

9. Gimmicks. It is one thing to dress in clothes that reflect the nature of the market in which you do business.  There is a fine line between looking cute and looking stupid.  Even if your app is the must have for skateboarders, dressing like Hawk or White mid-tre flip is not going to show others that you can run a company.  Just don’t go there. 

10. Goggles – No, I am not kidding.  And it wasn’t even a gimmick. 

11. Dirt.  Unconsciously, people connect cleanliness and competence.  This means, don’t eat spaghetti before talking with others.  Since I am prone to spills, I shy away from wearing white.  It is sure to end poorly. 

12. Like any teenager you know, even if you are a teenager.  You are not, nor will you ever be, the coolest person in the room.  Stop trying to be.   

And last, but certainly not least…

13. Smug smile.  Why are you here?

As in any situation, it is your job to convince the audience of your story.  Part of this is how you dress. If you were trusting a stranger with thousands, if not millions, of dollars, how would you want them to look?  Be respectful.  

   

The Upside of Managed Growth for a Start-Up

The upside of managed growth for a start-up

In a world where fast business growth is applauded, it is easy to forget that it is not the norm. Not that there is anything wrong with fast growth, but what about everyone else?  How many times have you seen companies that grow really fast and then fall flat?  I sometimes save magazine articles, add them to my stack of things to reread, only to find them years later when I am cleaning off my desk. (I know that I am not alone.) What is interesting is the number of companies mentioned that are no longer around. They had a great idea, but couldn’t survive.  There are many reasons for that, but business cessation is a whole other topic that could go on for some time. The obvious tortoise-hare analogy aside, there is something to be applauded about managed growth.  

You may have noticed that the previous blog posts here discuss entrepreneurs who have carefully managed the growth of their companies. Oscar from Landau Confections emphasizes innovation in both product and production, ensuring that the results are truly hand-crafted and original. Cristina from Kika’s Treats was given the opportunity to accelerate growth by mass producing her products, but didn’t want to compromise the quality.  Dandelion Chocolate’s business model specifically focuses on small batch chocolate, isolating the sources to bring out the individual flavors hidden in each harvest.  Robin at Bequet Caramels described her strategy as focusing, “on one niche and make the best product we possibly can in that niche.  We were often asked why we don’t make chocolates, too.  The answer has always been that our goal is to make the best caramel anyone has ever had (period).” 

These companies were chosen not because it is interesting to try new candy, but because each demonstrates a dedication to high-quality products.  Also, each company was given the opportunity to grow quickly, but the owners concentrated on the quality of the product, staying true to their existing customers, and continuing the practices that had succeeded for them. These owners decided early on what mattered to them in the creation and development of their companies.  Individually, they chose a strategy and stayed true to the course. 

Entrepreneurs are often faced with two extreme scenarios – too few options (such as early financing) and too many options (like an overwhelming number of potential suppliers).  Knowing ahead of time what you want your company to represent helps with both situations.  When you don’t have many options, your dedication to your strategy can help spur you to innovate new solutions.  When too many options exist, your knowledge of yourself and the company can help eliminate those choices that don’t align with your long term goals. This is not to say that sometimes compromises aren’t necessary.  However, knowing what you stand for makes decision making during these situations much easier.   

On a side note - Public companies often don’t have the option to manage growth in these ways when shareholders and the SEC require the optimization of shareholder wealth (aka stock prices).  When your business centers on driving down costs to increase profit, it is hard to choose the more expensive route.  Some companies are expected to make compromises that detract from the initial goal since higher quality raw materials, labor intensive production, and higher ethical standards for sourcing often cost more.  When a company targets the mass market who is increasingly concerned about price, executives often believe that they do not have the option to increase prices to off-set higher production costs.  Few companies have been able to do this.  In fact, one of the critiques of the Western business environment is just that, too much emphasis on meeting the quarterly expectations so that the stock price doesn’t drop. 

In turn, costs are minimized to help maximize profit. 

And we buy it.

So, what is the right formula?  You decide.  Every dollar that you spend is your vote.

Get to know the products that you buy and who makes them.  

Cocoa + Sugar = Heaven (aka Dandelion Chocolate)

Cocoa + Sugar = Heaven (aka Dandelion Chocolate)

Simplicity really is best.

Dandelion Chocolate combines cocoa beans and sugar to produce bars of extraordinary character and complexity.

Simple and Pure.

And when I write cocoa beans and sugar, I mean ONLY cocoa beans and sugar.  No preservatives, stabilizers, or other unpronounceable additives.  That is what makes it so great.  I love the fact that their chocolate is so simple.  The founders, Todd and Cam, go old school on this recipe and it pays off.  In fact, in less than three years they have moved from their personal garage shop to their Mission District Factory and Café.  And just walking into their new café in the Mission District of San Francisco is ethereal.  You are hit with a wave of chocolate air that carries you past the chairs and tables to a small counter filled with rich pastries and luxurious beverages.  Three types of hot cocoa can’t be bad.

Let’s start with the chocolate.

Everything about Dandelion Chocolate says quality and care.  The company purchases the raw cocoa beans directly from the farmer.  In many cases, team members have visited the farm and met the workers. They ensure that the farmers are getting a fair price for their beans and that the farms are up to Dandelion’s quality standards. Once back at the factory, they keep the beans from different farms separated because the flavor of the beans varies widely.  Todd explained that chocolate can differ for many reasons even within one farm. 

The beans are cleaned, roasted, and sorted in-house. Dandelion Chocolates are made in small batches, variant on the location and farm from which the beans originated. The labels reflect specific information about the origin and flavor of the chocolate, which is unique to each batch. Each bar is made by hand.

Just like wine, if you find a harvest that you love, buy a lot.  Unfortunately, the shelf-life of chocolate is not as long as wine, so you will just have to enjoy it.  (Darn.)

Recipe for success: perseverance

Obviously, this labor intensive process in difficult and expensive. As such, Dandelion Chocolate is one of the few bean-to-bar chocolate companies in the Bay Area.  The company was created by two friends, Todd Masonis and Cameron Ring, who founded and sold Plaxo, a personal online address book and forerunner to social networking in 2008. Afterwards, they decided to explore the world of chocolate.  They started by experimenting in a garage and building their own equipment when off-the-shelf wouldn’t work (so Silicon Valley).  A year later, they decided to make a company out of their experimentation.  Growth has been steady and they have learned a lot along the way.  When they opened their café last year, the incredibly fast growth was difficult to manage.  The owners did not have experience running a café.  When the WSJ ran an article near the holidays in 2012, sales skyrocketed.  They had just launched their café and basically sold out. 

The founders now balance economies of scale and their small product line.  For instance, large quantities of pre-printed labels are not feasible since batch sizes vary depending on the raw materials provided directly from the farmers.  Thus, they buy in bulk when feasible and then move production and finishing in house.  They also try to use sustainable materials from high quality sources.  For example, Dandelion has the wrappers made in India from recycled shirts!  The simple, elegant designs are perfectly fitting for the products. 

A recent development: the café invites local guest pastry chefs to transform the chocolate into decadent desserts.

Yum.

Dandelion Chocolate  740 Valencia Street SF CA