Narrator: Speakers, publishers, consultants, coaches and infomarketers unite. The Speaking of Wealth Show is your roadmap to success and significance. Learn the latest tools, technologies and tactics to get more bookings, sell more products and attract more clients. If you’re looking to increase your direct response sales, create a big time personal brand and become the go-to guru, the Speaking of Wealth Show is for you. Here’s your host, Jason Hartman.
Jason Hartman: Welcome to the Speaking of Wealth Show. This is your host, Jason Hartman, where we discuss profit strategies for speakers, publishers, authors, consultant, coaches, infomarketers, and just go over a whole bunch of exciting things that you can use to increase your business, to make your business more successful and more and more passive and more and more automated and more and more scalable. And we will be back with a great interview. Be sure to visit us at SpeakingofWealth.com. You can take advantage of our blog, subscribe to the RSS feed and many other resources for free at SpeakingofWealth.com. And we will be back with a great interview for you in less than 60 seconds.
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Start of Interview with Michael Houlihan and Bonnie Harvey
Jason Hartman: My pleasure to welcome Michael Houlihan and Bonnie Harvey to the show. They got their start in the wine business and it was quite a successful start, starting with basically nothing in a laundry room and building one of the bestselling wine brands in the country. So you’ll hear all about that. Their new book is entitled The Barefoot Spirit: How Hardship, Hustle and Heart Built a Bestselling Wine. But you might be asking yourself what does that have to do with business? Well, it has a lot to do with business, and especially how they’re applying it to their speaking and publishing business. So Michael and Bonnie, welcome. How are you?
Bonnie Harvey: We’re doing great. Glad to be here, Jason.
Michael Houlihan: Nice to be with you, Jason.
Jason Hartman: Good. So you’re located in Northern California, the wine country, beautiful area. And tell us about the start and give us a little background on Barefoot Wines. It’s quite an amazing success story, really a rags to riches story if you will. And then let’s transition into what people can learn about branding, about marketing and especially as it applies to the publishing and authoring world.
Michael Houlihan: Well, we didn’t want to get into the wine business. We kind of fell over backwards into it. Bonnie had a client who was owed several years’ worth of income from grape crops that he was selling to a winery that then filed bankruptcy. And Bonnie knew that I was a business consultant and so she asked me if I would be good enough to talk to the winery. Well, when I talked to the winery, I found out that the board of directors was made up of mostly the secured creditors and they were in the business of selling off the winery and everything else. So it didn’t look like there was much chance of us getting the money that we needed to pay our client who was a grape grower. However, we were able to negotiate a trade deal with the winery. We traded wine and bottling services for the debt. And then we took that and decided we were one inch closer to the money but we weren’t a foot closer to the money as Bonnie likes to say. So we had to come up with an entire marketing program for how we were gonna change the wine and bottling services into cash. And so that’s how Barefoot Wines were born. And the story is really the story of us knowing nothing about what we were doing, and so doing things that they don’t teach in school like asking questions of people and jobs that were close to the ground about what we needed to do, what it should look like, how it should be packaged, all those kinds of things, and we got tremendous insight. And so we designed a brand that satisfied the requirements of the people who were in the distribution system, in the wine distribution system, so that was less than number 1.
Jason Hartman: Amazing story, yeah. That’s really an amazing start to the business. So, I mean, you started in your laundry room?
Bonnie Harvey: Yes. Actually, we couldn’t afford our washer and dryer, so we had plenty of room in there. And we took a table that we found in the old barn outside and put a couple sawhorses underneath it and we took a door that we found and turned it into a table.
Jason Hartman: Amazing story. Talk about as the company – as you started to move beyond how you got your sort of backwards start in it – what happened next? I mean what were some of the milestones in the growth and the success of the company?
Michael Houlihan: Well, we did everything that the people in the distribution system asked for. And we had award winning wine, and we had a pretty compelling label. It was cute and a great slogan, “Get barefoot and have a great time” and we thought that that’s all it would take. Boy were we wrong. We found out that we had to do everything at every part of the distribution channel ourselves and we wonder how people who approach business any other way could ever succeed.
When you have a product, you think that your product is what’s happening. You think that somehow the quality or the price of your product is gonna win the day. But it isn’t. What wins the day is that your product is for sale at all. And it can be not for sale if at some point in the distribution system something goes wrong. And everything goes wrong when you’re brand new because the people in your distribution system have no knowledge of your history. They don’t know who you are.
Bonnie Harvey: And when you knew, you’ve got no knowledge of the industry. So it was the perfect storm.
Michael Houlihan: So we actually expanded into a few states right off the bat like Washington State and Hawaii and Bonnie would come to me and say, you know, it costs you more to go to Washington and Hawaii just to get reorders from every retail than we’re making on the product there. And so that’s when you realize that we had to do everybody’s job for them and that we had to have representatives in every town where Barefoot was sold just to make sure it stayed on the shelf in those places. So we had to retrench and start small.
Jason Hartman: So thinking small, that was one of the keys?
Michael Houlihan: Oh, absolutely. I think that was the big wakeup call was to think a lot smaller than we had to. I mean, we built it up to a $600,000 case brand at 50 states and 28 foreign countries, but we did it step by step and we did it with representatives at every market who were checking every day at every store to make sure our product was still there, it was still on the shelf, it got reordered when it ran out and it was quite an incredible amount of labor that we hadn’t planned on.
Jason Hartman: Yeah, it’s quite a thing to do this. But it was a labor of love I assume. You sold it in 2005 and in what year did you start?
Bonnie Harvey: We started with the idea in our attempt to collect the debt in summer of 1985.
Jason Hartman: And let’s move into the speaking and publishing business and kind of make the transition from some of the things – we’re gonna learn more about Barefoot Wines as you talk about it but what are some of the things that can really transition into that business and how have you applied them?
Michael Houlihan: Well, first of all there’s content. When we were in business, we mentored our people quite a bit. And, as a result, they said you guys really have to write a book about this. You have to teach the principles that you’re teaching us and put it in writing for everybody to read. So that was one part of it and that’s what the content is with Barefoot Spirit. The other thing that we did that has to do with style is that Barefoot Spirit is really about the American entrepreneurial spirit west coast style. And so it’s not written as a prescriptive text, you know, here’s the 5 things you gotta do, 8 things to never do and the 28 things your customer always wants.
Those kinds of books will put you to sleep in two chapters. We decided to write a story, an adventure story where the reader can ride along on a CD behind the scenes of the wine industry which everybody thinks is romantic which turns out to be pretty brutal, and get your comeuppance along with Michael and Bonnie. Make the same wrong assumptions they make and get the same wakeup calls and pick yourself up and get back to work. So we decided to write the book in that fashion. So it’s a fashion that is what we consider to be a popular fashion like Barefoot is a popular wine. So we’re out trying to give business principles to the average person like we were trying to bring good wine to the average person.
Bonnie Harvey: And it’s all done in a very humorous way where we tell the stories that we went to. It’s a lot of fun. You will laugh while you learn.
Michael Houlihan: Yeah, if you can’t laugh at yourself with a name like Barefoot you’re in trouble.
Jason Hartman: Right. That’s true, that’s true. In the wine business, were you in every part of it? Were you manufacturing, distributing, bottling, I mean there are different parts of the industry – did Barefoot do the whole thing?
Michael Houlihan: Yes, Barefoot did the whole thing. The way we did it was rather unique. As a matter of fact, there’s been case studies written that are used in the entrepreneurial schools about how we did it. We outsourced a lot of the production and the reason we did is because we realized, as I said earlier, that the whole game was about distribution. It was about getting it out there, keeping it out there, making sure it’s for sale. And that took so much money and so much energy that we said, you know, we don’t really need bricks and mortar. There’s enough wineries. We don’t really need to have our own vineyards – there’s enough vineyards.
So we bought grapes from growers on contract, we had wine made for us to our specs and we were very blessed to get a wonderful winemaker Jennifer Wall, and Jennifer was able to tell people exactly how these wines had to be made and our contracts with them were so specific if they didn’t make it exactly the way we wanted, we didn’t have to pay for it. So that was an advantage over having your own winery because if you produce the wine, for instance, that’s not up to snuff, you still have to sell it because you’ve got a big investment in it. But if you’re contracting to have it made, you don’t have to buy it. So we were able to keep our quality up and our cost down basically because we were undercapitalized when we discovered that this was a better way of doing business and we advise a lot of young people who want to get into business today not to go out and buy all this equipment. What they should do is study the distribution system and find out about the marketing system and what is really required to make it a success and then go back and subcontract out of the parts that you can and have good contracts that specify your quality control standards so you don’t have to pay if it’s not up to snuff.
Jason Hartman: Yeah, I agree. I think that’s a very good model. So you were outsourcing a lot of the risk of the business because I assume a lot of the risk is in the growing of the grapes and will there be a frost and will you lose your crop and will you harvest at the right time and all of that stuff. You just bought the grapes from somebody else. Did you have the grower make the wine to your specs too? Was the same part or were those two different parts?
Michael Houlihan: In some cases, the grower was a winery. So they did have a winery and they did have a crushing facility and they could make wine. In those cases, we would have them make wine for us to our specs. In other cases, we would buy the grapes and we would ship them to a facility that was a winery and had them crush the grapes for us.
Jason Hartman: But I would assume that you couldn’t completely outsource all that risk. I mean you’d probably have to pay a huge premium to get someone else to take that risk for you like the frost risk and all that stuff I mentioned before. They wouldn’t require you to put a deposit down or something. You have to have some risk and I can’t imagine you could just get all that benefit risk free.
Bonnie Harvey: Well, we did this over a period of 20 years. So when we first started, we were buying bulk wines and we had an excellent winemaker that would blend them according to our specs. And so that was the beginning with growers. Eventually, we got into 3 year contracts that are evergreen contracts that kind of renew with each year for a period of 3 years. Another thing is we always had part of our wine that we were buying on the bulk wine market so we could have certain flavor profiles that we had already set up ahead of time to make sure that the product tasted the same year after year which was another part of our marketing strategy – we felt that the consumers wanted something that was the same they could rely on. It was a staple. It was something they bought from the grocery store day after day, week after week, etcetera. That didn’t change in its labor. Like, a lot of wineries of course changed the taste of their wines depending on what the harvest brings in.
Jason Hartman: Yeah, makes sense. So translate that into – I mean the outsourcing thing. You tell people starting out in business don’t go out and buy a bunch of equipment. See where you can really make that supply chain efficient. In the speaking and publishing business, give us an example of that if you would.
Michael Houlihan: Well, what we’re doing right now is we are going to entrepreneurial colleges and universities across The United States. And we’re speaking to those students. Now, those students all think that they are going to go into business for themselves. There wasn’t even an entrepreneurial school 20 years ago. This is a recent development, so we are going out and giving these young people the benefit of our experience – the hard knocks that we learned. And in the process, we are making them aware that we’re available to them as mentors, as advisors, and when they get into business they will come back and they will think about us to be on their board of advisors.
We’re also out there writing blogs and every week we have two posts. One is on www.TheBarefootWineFounders.com and that’s about general business. And we’re using that to demonstrate we have something really valuable to offer that is not taught in school. We also have another site which is called www.TheBrandAuthority.net and it’s about all things brand. It’s like what we learned about branding. And it’s not what most people think. And so that again is a way for us to get the word out about our book and about what we’re doing. So in both cases, in the cases of the wine and in the cases of the speaking and writing, we’re creating a market – we’re defining the market first of all. In the wine business, we define the market as “the personal house wine business”. There is no such term as “the personal house wine business”.
Jason Hartman: What does that mean? The personal house…
Michael Houlihan: It means that when I go to your house and I open your refrigerator, I see a bottle of wine that’s the same bottle, same brand that was there when I was there two months ago because it’s the brand that you buy. It’s your Tuesday night wine. It’s not your Saturday night wine. It’s your Tuesday night wine. It’s also your Wednesday, Thursday and Friday night wine. Well, maybe not Friday, but certainly Monday. And the idea is it’s your everyday drinking wine, and so what we’re doing with the speaking business is we are offering a set of basic principles because we believe that we are right now on the edge of the entrepreneurial age. We know that 1 out of 2 college grads can’t find a job. They need to have basic information, not hifalutin information but basic information that’s gonna help them start their own businesses.
Jason Hartman: Yeah. So, I’m surprised you say on the edge of the entrepreneurial age. You don’t think we’re totally in it now? I mean it seems like we’re there.
Michael Houlihan: I don’t think you’ve seen anything yet.
Jason Hartman: Really? Okay.
Michael Houlihan: I think what we’re looking at is the beginning of a new way of providing food, clothing and shelter. I think we’re gonna see more and more people because of the information revolution and because of the communications revolution. People aren’t gonna be able to communicate their value to the world and offer it for a price.
Jason Hartman: Yeah. Well, one of the great things about the world today is that there’s not some executive in New York that gets to decide who becomes famous or not. People can go direct to the consumer and if the consumer and the marketplace judges them to have value, then heck, they will be well known and probably prosperous from it. That’s a great thing. Talk to us a little bit if you would about worthy cause marketing.
Bonnie Harvey: Well, we kind of stumbled into that as well. Not having any fun to market it through paid advertising, we had to come up with a way to get customers into the stores to buy our product. So we relied on donating our product to community fundraisers and local nonprofits and talking to their membership about why we were supporting the cause and showing them the stores that we were supporting their cause by putting up shelf talkers and point of sale signs, discussing their cause and asking that other people join in their event. So we have an opportunity to really express what’s in our hearts and how we like to give to the community and it was good for business too.
Michael Houlihan: The other thing is that when you sell a product like wine or a hammer or a screwdriver or anything that is not downloadable, if you sell a product that has to go through distribution, has to be transported by a truck to a retail store, that retail store winds up being in a neighborhood. The question is do the people in that neighborhood know about your project? Now, the person who puts it in in the retail store is going to tell you well I’ll put your product in but it had better sell here in 30 days or I’m going to discontinue it and you’ll never come back into this store again. So the question is how do you get that initial order to sell out in 30 days, get reordered and then get reordered? Are you gonna go out into the neighborhood and handcuff people and drag them into the store and make them buy it? I don’t think so. But you can do something sort of like that. You can go into the neighborhood – and we found this out by accident – we actually were asked in our early days to donate some wine to a group in China Town in San Francisco that was trying to raise money for a park. And so we donated the wine to them. About two weeks later we noticed that our wines were selling through the roof at a local store in China Town in San Francisco. And we said, wow, that’s interesting. We just did that fundraiser. I wonder if there’s any relationship. And then fast forward 25 years, we’re now supporting the Surfrider Foundation and several others that resonate with our label which is Barefoot. You wouldn’t want to step on a piece of glass on the beach, so you support the people who clean the beach and that’s the Surfrider Foundation and they’re cleaning the ocean. And, as a result, the membership of the Surfrider Foundation for instance has a social reason to buy Barefoot wine because we’re members, because we’re active in their group. And so that’s how we discovered and utilized worthy cause marketing.
And, by the way, when we did get to a point where we had enough money to afford commercial advertising, we decided against it. We decided to just beef up our efforts and worthy cause marketing because it was creating loyal customers at a much faster pace than any form of advertising.
Jason Hartman: Good stuff. Well, what else would you like people to know before we wrap up?
Michael Houlihan: Well, we’d like them to know that they can go download the book today at TheBarefootSpirit.com and the book is in download form and is available for free if you buy the paper book from us. And we’ll ship the paper book to you for free anywhere in The United States. So that’s one thing. The other thing we’d like to let everybody know is that if they go to TheBarefootWineFounders.com website, they can go on the events and see where we’re speaking around the country. Our book will be published in all the retail outlets. It will be available on May 21st, so that’s not pretty far. But, like I say, if you want a sneak peek, you can go ahead and get it at TheBarefootSpirit.com.
Jason Hartman: Fantastic. Well, Michael Houlihan and Bonnie Harvey, thanks for joining us today.
Michael Houlihan: Thank you for having us.
Bonnie Harvey: Yes, thanks, Jason. This has been a lot of fun.
Narrator: This show is produced by The Hartman Media Company, all rights reserved. For distribution or publication rights and media interview, please visit www.HartmanMedia.com or email media@HartmanMedia.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network, Inc. exclusively.
(Image: Flickr | theilr)
Transcribed by Ralph
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