In today’s start-up environment, we see constant reporting on apps and digital players. The logic makes sense, scaling is a lot simpler and the pockets of acquirers are deep and open. A year ago my friends and I did something a little different, we started a cocktails bitter company in DC, called Embitterment. We had been playing with the product for fun almost two years before, when we realized this big market had no local brand. The downside to entering is that 70% or more of people who have been exposed to bitters have no idea what they are, or understand their application. The short answer is that they are a flavor extract and you put a few drops in most drinks. So we were forced to not only produce the product, but also discover what the market would be in the few hours we had each week to work between our full-time gigs.
The nice thing about going product first was that we didn’t have to decide on what our product should look like based on market research, but simply what market existed for what we made. This did mean that scaling would be longer as we had to find clients via trial and error, yet we found that even those who choose not to buy often talk about us to their friends. Some of these friends became customers and our sample bottles were being pooled and collected in a few cases. As the sample volume dropped, the customers began to emerge. Our marketing guru, Eric had done a lot of work over the first six months to help with this emergence, the drinks community loves Instagram and Facebook so posting nice pictures of someone else’s product being used with ours often got their attention. The costs are low in that type of marketing, and you get a nice cocktail out of it. I should probably mention that R&D is by far the biggest perk for me, since it entails that we all just gather and test cocktails. That makes me more excited than any start-up I’ve seen so far, we always remember to relax here and that we are there as friends. Stresses can build and there is no HR to mediate, so be prepared to get upset but don’t hold on to anger. Most companies fail, forget about trying to avoid failure and start enjoying your successful moments.
A note on funding, I would estimate that we have put less than ten thousand dollars in the company. When you can control your own growth, something many digital applications can’t, you can avoid building up excess capacity early and instead fund with reinvested earnings. While I can calculate the benefits of leveraging, I can tell you that not worrying about bank loans is more than worth it early on. Being flexible with a products roll out and growth gives us time to focus on balancing a part-time endeavor with our full-time lives.
By Russell Garing
Russell is a 2nd year MBA student at the Smith School of Business. He is working as a Graduate Assistant at the Dingman Center for Entrepreneurship. Beyond working on his startup, Russ is interested in Finance, Analytics and Supply Chain Management.