And while we were passionate about our own health, we also shared a concern about health trends at large. From our expat perspective, we could easily observe how the relative wealth most Americans enjoyed guaranteed neither health nor happiness. In fact, in many ways you could make the case that America’s wealth was part of the problem. Like a junkie that had won the lottery, a large portion of the population appeared to be intent on literally killing itself with unhealthy food, lifestyle choices, and stress. Those choices, it was also clear, were being shaped by a food industry that promoted and glamorized the unhealthiest foods and beverages imaginable. Obesity rates were skyrocketing in America, growing from one quarter of the population in 1990 to nearly a third just over a decade later. That drastic rise was costing people their health, but it was costing the rest of us a great deal, too. The annual medical costs and impact on economic productivity of preventable conditions were running into the hundreds of billions of dollars.
Worse yet, these unhealthy lifestyle choices started gaining momentum in the rest of the world as the U.S. exported them through media, and big food. Globalizing the American style of overconsumption and poor health habits could lead the world into deep trouble, which deeply troubled us.
Maura and I also talked about our passion for travel and how we never wanted to lose our deep love for and connection with Latin America. We had learned from the remarkable generosity and community spirit of hundreds of people we had met across Central America. Despite having suffered civil wars, natural disasters, and years of unrest, these communities managed to stay focused on what was best about us as humans—maintaining strong social bonds and creating remarkable music, literature, visual art, and food. Our family’s diet had changed and been significantly enriched since moving south of the border. The local markets were filled with fresh, seasonal vegetables and fish. We became connoisseurs of fruits that we had never seen in the U.S. and knew only by their Spanish names. Our girls were reared on fresh-pressed juices and blended vegetables. Our immersion in Latin American culture enriched our lives immeasurably, and we loved sharing what we had learned with families and friends who visited us.
After a few weeks of dreaming and reflecting together, I was ready to revisit business ideation from quite a different starting point. Instead of brainstorming potential gaps in different industries, I made a list of screens, worded as questions, by which I could filter out business ideas that would not have a chance of passing what I started to call the “Maura test.”
First were personal screens, questions that rose out of the conversations we had had on our walks—our individual values, histories, and interests. Was a business idea consistent with our values and lifestyle, and did it contribute to our personal goals and dreams? Would it directly and positively affect lives beyond ours? Would the world be better off if we succeeded? Would we think the project was worth it even if we failed? Would it have a positive (or at least neutral) environmental impact? Would it keep us tied to Latin America? Could I commit to this for the long term? At thirty-four years old at the time, I realized I had never held one job or stayed in one place for more than about two years. From my research I knew that launching a business successfully was a minimum five-year process and that I’d better be prepared to commit for a decade. This project would very likely define my career and in meaningful ways become my identity, so I’d better pick carefully. What would the girls think about this business when they’re ten? Sixteen? Twenty-five? Forty? If we were successful (or not), would the girls be proud that we had started it? Would they be interested in working there someday? These screens wouldn’t apply to everyone but they were critical to us, informed by what we had reflected on and determined as most important to us. We were now taking ideation way beyond dairy and trucking.
The second set of screens were classic MBA-style ways to evaluate the potential and viability of a business. Is it audacious? Is it a big idea that captures our hearts and those of others? Could we attract top talent and rally employees, investors, and customers around it? Is it something we were excited to talk about? If I was going to dedicate a good part of my life to something, why not do something that’s a BHAG (Big, Hairy, Audacious Goal), as Jim Collins says. Does it have high gross and profit margins? I had run paper and packaging businesses with low margins, and I can tell you it’s tough! I wanted to be in a business that had higher margins to work with, which would allow us to pay people well and generate critical cash flow to fuel growth. Would it have strong growth potential? I knew we would start small, but why should it stay that way? It should be something that could grow continuously for years to come and potentially become a billion-dollar business. Could we differentiate? Is it new to the world or at least different from what’s out there today? I realized that the really exciting businesses were innovative, differentiated, disruptive.
With these two sets of screens, we now had a framework to evaluate the many ideas I was generating, which only stimulated more. I compiled all of my ideas in a spreadsheet, and then evaluated them individually against the screens, which gave us context and common ground to discuss them. These screens also helped me avoid suggesting ideas that would never pass the Maura test. Coconut water was on the list from the beginning, but only by developing and using these screens did it eventually rise to the top. How did it get there and what made it bubble up to the top?
WHY COCONUT WATER?
In his autobiography, Mark Twain wrote, “There is no such thing as a new idea. It is impossible. We simply take a lot of old ideas and put them into a sort of mental kaleidoscope. We give them a turn and they make new and curious combinations.” What we often think of as new ideas are actually combinations of pre-existing observations or a new connection between ideas that already exist. But at the same time, looking through the shifting colors and mirrored images of a kaleidoscope can make the world become amazing and new.
The idea of marketing coconut water, I’ll be the first to admit, was not a new one. As Maura and I discovered through our travels, in certain latitudes the product couldn’t be more ubiquitous. In El Salvador, we encountered it literally every day. And although it could already be found in steel cans in the ethnic aisles of some American supermarkets, in 2003 few seemed to see the billion-dollar market potential of importing the product as a mainstream drink for health-thirsty Americans.
That this opportunity escaped the notice of so many is worth pondering for a moment. How many millions of business leaders, executives, entrepreneurs, development workers, and travelers have vacationed in Latin America, the Caribbean, or the South Pacific and sipped out of a freshly cut coconut? How many more lived near the equator, where their jobs were to bring regional products to the North American market? A billion-dollar idea was resting in the palm of their hands or just overhead. Why didn’t they see it?
For a tourist, the coconut as a food, drink, and object is an interesting novelty happily experienced but easily forgotten. But for tropical cultures around the world, the many uses of the coconut run much deeper: so deep in fact that they are taken for granted.
I first experienced some of that cultural connection to coconut water during my Peace Corps years in Costa Rica beginning in 1991. Relying on it as a safe and clean source of hydration was actually written into the Peace Corps manual. In our training classes we learned that coconut water can often be the best source of clean water in remote locations and that it could be used as an oral rehydration solution when someone came down with the inevitable stomach illness.
In Costa Rica you’d always see the chest-high stacks of coconuts, with a little stand behind, along the sides of the beach roads. Often these coconuts were already partially dehusked and the vendor would just cut off a small flap of the soft shell at the top and pop in a straw. You could take the whole coconut, drink the water, and then scrape out and eat the tender white meat. Sometimes the coconuts were kept in a little ice chest and the vendor would pour the water into a plastic b
ag with the meat floating inside. Local kids made pocket money shinnying up trees to pick coconuts for tourists on the beach.
The taste of coconut water had to grow on me, as it does for many, but soon I came to love the smooth and refreshing flavor. I remember taking a coconut on a hike up a volcano, machete in hand to protect against snakes and for splitting coconuts. I was also familiar with, let’s say, less-health-conscious uses. Coconut water was a great mixer with local rum. Coincidentally, around this time, I also learned there was no better cure for a hangover.
During my backpacking through Central America post–Peace Corps I realized coconut water was not just a Costa Rican phenomenon but also a region-wide staple. Traveling through many parts of Central America pushes even the hardiest traveler’s intestinal resistance, and I was grateful for a fresh coconut as something I could keep down. While working in Mexico on a summer internship during graduate school, I saw it on beaches and roadside stands. I passed out once at work from dehydration while there due to a stomach illness and awoke to my co-workers holding a coconut in front of me ready to drink.
Since most of my customers at IP were juice or dairy companies, I usually had beverages on my mind. In the hopes of finding ideas to help them grow (so we could sell more packaging), my team and I would discuss ideas for potential innovation outside of the typical milk and orange juice most of our customers sold. Rarely did they take our advice (IP is a great company but not exactly known as a beverage innovation powerhouse) but the possibility of new beverages, whether made from hibiscus flower, mango, or guava juice, or coconut water, all made it on my new list.
As I began to dig into every idea on our list, my knowledge of coconut water grew. I learned that coconuts grow in eighty-five countries across the tropical world. Humans’ relationship with the drupe (as the coconut is technically categorized) likely goes as far as human existence itself. The uses are many: The meat is used in cooking, baking, and candies across the world, and the oil is also prized for both cooking and a variety of skincare remedies. The husk is used to make carpets, sandals, and as ground cover or mattress stuffing. The fronds serve as roofing material or are woven into baskets. The trunks are used for their flexible, dense wood. I learned that the magical water inside was so pure and in balance with the human body that there were well-documented accounts of it being used in place of plasma by doctors during World War II as drip IVs in the South Pacific and also in subterranean hospitals by the Vietcong during the Vietnam War.
Despite the fact that there were already millions of hectares of coconuts planted (or growing wild) across the world and a multimillion-dollar market from their oil, meat, and fiber, interestingly, the water was usually discarded as a by-product. Across the world, farmers were letting coconuts rot on the ground if prices weren’t high enough, while in the oil and coconut meat facilities they would literally let the water flow down the drains as waste. What did make its way to market as coconut water (or sometimes called juice) was mostly sold straight from the coconut on a small scale. The small volume canned and shipped to the U.S. or Europe was often of poor quality, with added sugar and preservatives and cooked in a crude and damaging processing system. The sales volume exported prior to 2004 was at most in the low tens of millions of dollars in the U.S. per year, so not a big market.
I began to assess whether coconut water could become a viable business. From keeping track of trends back in the U.S., I knew a multitude of new healthy beverages, including Vitaminwater, were getting lots of press and trying to go up against Gatorade or carbonated soft drinks. So, on a trip to New York, I tried Vitaminwater. The packaging and branding were unique, and the brand was definitely playing to an audience that wanted something healthier. But reading the label I realized that at its core, this drink was little more than sugar water, and though it had natural ingredients, it was still made by some guys in a lab. I expected (incorrectly for about ten years) that sophisticated consumers would also realize the health claims were questionable and reject the drink. I thought coconut water was better and realized that if we made it hip, cool, and tasty, the market opportunity might be enormous: we could market a wholly natural version of Gatorade.
Given all our connections to the product, coconut water ended up on the short list of ideas. The more I looked at it, the more appealing it became. But would it pass the Maura test?
Coconut water and the business we would build around it fit us personally: It was a natural product, from the tropics, and could be positioned around health, wellness, and sports. It would positively affect consumers’ lives by providing a healthier alternative to so many of the high-calorie, high-sugar, artificial beverages. If done correctly, we could also build a brand that would contribute to the growing cultural concern with health and active living.
Coconut water could also have a massive positive economic impact across the developing world; perhaps more and better than coffee someday given that the water wasn’t the easiest product to process or transport. With its low acidity level and high enzyme content, it spoils quickly after being exposed to the air. It would require higher-paying handling, processing, and packaging jobs locally, whereas most of the value added to coffee is in the roasting process done in the U.S. or Europe. The scale of existing coconut production was already massive—on the scale of oranges—so theoretically no additional land was needed to build a multibillion-dollar industry, so the environmental impact could be negligible. There might even be positive benefits of taking that water out of the waste stream and rivers. I could clearly imagine our girls thinking it was pretty cool that their parents launched a brand that catalyzed a whole coconut water industry and helped the developing world where it originated (and they were born).
Looked at in one way, going up against Gatorade, which was already a massive global brand, was certainly audacious. Owned by PepsiCo, Gatorade had been focus-grouped and test-marketed extensively over the years. But looked at another way, we were way ahead. We had a product that had been tested by humans around the globe for tens of thousands of years. We didn’t have to patent a new formula, make sure it was healthy, or even do the basic manufacturing. It was already being manufactured by nature just about everywhere you looked if you were anywhere near a tropical coast.
We could likely source high-quality, minimally processed coconut water and build our brand as a premium one so we had the right sort of margin structure. If we could capture a fraction of Gatorade’s market or even a portion of the size of soy milk or other categories, a coconut water brand could easily be a business over $100 million in sales in a reasonable number of years. Differentiating from Gatorade and the proliferation of other sports drinks would be relatively easy. We had a claim on a manifestly healthy and natural drink that they simply couldn’t match. The fact that this idea was grounded in our own personal experience and values would also give us a critical advantage, we believed.
As we got more excited about the idea, we began to get feedback from friends and family. On a visit back to the U.S. around this time, I remember a conversation I had with my father-in-law when he asked me what my hopes for the new business were. Without a beat, I told him my dream. “In twenty years I want to see kids everywhere drinking coconut water, regardless of the brand, instead of high-sugar, artificial junk and in general leading healthier, more active lives,” I said, rapid fire. “I want tens of thousands of people in developing countries to benefit from well-paying jobs in a healthy, sustainable, and growing coconut industry. I want our brand to live forever and stand for healthy, natural, active living, and I want everyone involved with the business to have the opportunity to learn, earn, contribute, and grow.”
Silence followed. “Wow, that’s ambitious,” he said finally. “I thought you were just going to tell me you wanted to make a pile of dough.”
I had to laugh. “To be honest,” I said, “I want that, too. I believe if we do all the things I just listed, we’re more likely to make that pile of d
ough. We’ll also have something to really celebrate if we achieve it all!”
Now that I’m no longer running Zico and have invested behind dozens of entrepreneurs after listening to countless pitches, I understand how important it is to base one’s business in personal passions, mission, history, and beliefs. My first questions to many entrepreneurs, after they’ve gone through their carefully prepared PowerPoints, often catches them off guard. Why, I ask them, create this particular business above all others? Why do you want to spend your life doing this? How will it make your life better? How will it make the world better? Very few expect these questions, much like I hadn’t when Maura first posed them to me, but I can honestly tell you that the entrepreneurs who have meaningful answers to these questions are the ones I get the most excited about. They’ve looked beyond profits and deeply within themselves, which I have found improves the probability of their success.
So now that coconut water looked like a viable idea to me, I knew I had to get buy-in from others. I figured I would test-drive my pitch with a friendly (though not weak) audience. Maura and I met my sister, Mary Beth, in the Bay Islands of Honduras for a weekend getaway. At some point sitting on the beach watching the sunset, I gave them each a freshly picked coconut, and pitched them the idea that coconut water was our breakout idea. We would develop and launch a coconut water brand and attempt to create a whole new category in the U.S. first, and then the rest of the world.
We discussed the potential impact and scale, how well it aligned with what we wanted to accomplish in life. At some point we started to get down to brass tacks. Maura asked, “So exactly where and how are we going to produce it and ensure high and consistent quality?” I admitted that I didn’t have a good answer to that yet. Mary Beth asked how we would go to market, what I knew about distribution and retailers, and how it would actually get on store shelves. More good questions. Maura asked what kind of marketing we would need to do and how much money we’d need to raise and where that would come from. I started taking notes.
High-Hanging Fruit Page 3
