068: Tom King - Tales of An Entrepreneur: Never Give Up, Never Surrender

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Never give up. Never surrender. That is the message of our show today. Today's show is a tale from the frontline, a war story of growing a business with an entrepreneur sharing his personal journey. And I think we'll all find some lessons for ourself in this Scaling Up Foreign. Welcome again to the Scaling Up Business podcast. I'm your host and Gazelle's business growth coach, Bill Gallagher. On the show today with us is Tom King, CEO and founder of Staviva Brands, Nikon Foods. He's from Portland, Oregon. He's an all around outdoor kind of guy. Welcome to the show, Tom.

Thanks Bill. I appreciate you having me having me on your podcast. It's a true honor.

Well thanks for coming on and and being willing to share your story. I think we have experts and gurus on and authors and speakers and captains of industry. But then we also like to have people who've shared real life stories of the mid market companies and their especially from founder through stages of growth. It's great. And yours is a very real company. So Staviva Brands makes sugar replacement products.

Yeah, I mean we make a line of all natural sweeteners. We're at maybe 3,500 different retail locations across the US and while 95% of our business is actually supplying food manufacturers with clean label sugar reduction, well lots.

Of us would benefit from reducing the sugar in our lives or eliminating the the sugar in our lives. And my grandfather, both grandfathers and one grandmother were diabetics and my niece was diabetic that I took care of for a couple of years. And so there's a lot of that around in my world of sensitivity to sugar.

Yeah. I mean diabesity, which I call it, which is diabetes and obesity. Yeah. It affects almost 50% of the US population in one way or another and responsible for 75% of all of our healthcare costs. So it's definitely a pandemic.

We're going to tell your story and some of the decisions along the way and reveal the growth challenges that you've had to deal with. Why don't you take us back to the beginning? How did you get started? Where's your passion in this? Why did you begin this business? And take us back to the beginning?

Well, I was living in Phoenix, Arizona, and working for a radio station, doing radio sales, and ran into a person who I thought was going to be a prospective customer and started a conversation with him. And he had just returned from Paraguay, where he was looking for different types of herbs and supplements that he could give to one of his kids who was suffering from a condition called phenylketonuria, which is intolerance to phenylane, which is part of the component in aspartame. And he showed me these leaves that were ground up into this paste, and he asked me to try them. And I tried them, and I'm like, wow, that's incredibly sweet. Didn't have any calories or carbohydrates. And a light bulb went off in my head, and I thought, if there was a way that we could get those sweet constituents from the leaves, this would make an excellent sugar substitute. And I had battled with my weight going up and down and being hypoglycemic, and I thought this would be a great solution for me and it might be a great solution for the public.

So you tasted it, you saw a business there, and were other people doing this kind of thing at the time? Who's this guy? Is that the stevia plant?

Yeah. I mean, the guy that I ran into, his name is Jim maybe. And he started a company called Sweet Leaf, which is still around today. Jim passed away about six months ago. And for me, we sort of went different directions. I found, hired a chemist who was able to find a way to use a natural water extract process that was able to get the sweet constituents out of the leaf and make it, you know, a sweetener that actually tasted good.

So you launched the company. You go, how does it go? What do you encounter along the way? Where do you go?

I officially launched the company in 1999 after finding a chemist that can come up with the process. But stevia was not allowed to be used in the United States as a sweetener. It was only allowed to be used as a dietary supplement. So most of the sales were through. Were through health food stores. And then in 2008, a company called Cargill actually lobbied the FDA. And the FDA approved Stevia as a, you know, as a sweetener. And that sort of paved the way for us to really enjoy a lot of success.

And so at that point, you're selling.

Where we were selling to Whole Foods and lots of co ops and smaller health food stores. But after 2008, that's when we really tried to parlay our consumer brand equity into going after B2B. So we really wanted to be the sweetener system that manufacturers, food manufacturers would be using in consumer goods products.

So going into that, rather than trying to create a consumer brand.

Well, we had already created a consumer brand. We were already in 2,500 stores at that point. And we had already started to build that consumer brand equity. It just the demand from, the demand from the, from food manufacturers just sort of creeped up on us. So we jumped in on it and, you know, and capitalized on it. But I'd also like to add between 2008 and, you know, and 1999, basically it was a real struggle, a real struggle.

So tell us about that. What was that like? What did you do? Share some of that journey with us?

Well, basically it was me working out of my garage and I would go to a variety of different stores convincing them to take the product. It wasn't my primary job. This was my side hustle. So I just chipped away at it and chipped away. And I started in California, but then decided to move it to Portland, Oregon. And at that point that's, you know, with the expense of moving and the, you know, the pretty slow movement through the stores, that's when I started to run out of capital.

So you start the business as a side hustle in California and then you move it up to Oregon. At what point did you bring on employees?

I started bringing on employees about 2007. In 2007, I started to really run out of money. So I had an infusion of capital from my father, which was a very difficult conversation to have with my dad because I'm a fifth generation entrepreneur, so the bar is set pretty high for me. But you know, I did make that call to my dad. It was a difficult conversation. Asked him for, you know, for a loan and he sent me a check and I was able to bring on some employees. This was in 2007. And then in 2008, the FDA approved Stevia to be a sweetener. And then I started bringing on more employees and we started scaling up.

Nice. So you had a regulatory kind of a Breakthrough that occurred there in the environment. So there was an environmental factor or market condition that changed that let you scale up. But what was the. So first of all, what was the first employee that you brought on or the first couple? What category? What roles?

Yeah, the first employee I brought on was. Her name was Lisa and she actually was a production tech. So she helped us, you know, helped me actually make the product and package the product. So it was all production.

So were you making your own?

We were.

Okay.

Yeah.

So you were out selling it and you were making it like in a home kitchen kind of thing or a commercial?

We had a commercial. Well, we had a commercial space that we had converted over to an FDA approved food facility. It wasn't very big. We started off in under 1200 square feet. And I would, yeah, I would just go in every day and make the product and package it and, you know, and get it out to the stores. And eventually we got distributors and, you know, we started to scale up from there.

So you're. You're selling the product, you're making the product, and your first hire hires are in production?

Yep.

Okay.

Probably my first 10 hires were all production.

That makes perfect sense. And what was your pitch to your dad?

My pitch to my dad was. That's a good question. I told him that I'd fallen behind on my mortgage payments and that I was no banks would loan me money. Because oddly enough, when you have plenty of money, banks are willing to just throw money at you when you really need money the most, that is when banks will be least likely to loan you money. So I had maxed out my credit cards. You know, no banks were willing to, you know, were willing to loan me money. I basically told my dad what my situation was, and I told him what the potential downside would be that, you know, I would end up losing my house and having to get an apartment and ultimately find a job. I asked him if I could borrow, you know, $175,000, that I would pay a fair interest rate on it and that I would have him paid back within five years. I presented the plan of what I was, you know, what I intended on doing, you know, in scaling up my business. You know, being an entrepreneur himself, he looked at it and he said, I'll, you know, I'll take the risk on you.

Interesting. So dad bet. So friends and family funded the next bit through a note.

Through a note, Yep. Yeah.

And did you have a business plan at that point? Did you?

Yeah, I've always had a business plan. I. That's kind of my background. So I've always had a business, a business plan. I've always had, you know, something in writing that sort of, you know, gave me direction because I've always lived by the fact of, you know, if you don't have your goals written down, they're simply good intentions. So I've always been very, very good about having goals written down, having a plan built and, you know, and yeah, I presented my business plan to him and he evidently liked it.

What had you persist at that point? You're out of cash, you're chugging along, you've got to hire people and you're behind in your mortgage, you go to dad. But what has you not give up even before that?

Well, I really believed in the idea. I mean, I, I'm a big data collector, so I was looking at doing data collection in regard to what was going on with consumers. And you had a rising rate of diabetes and a rising rate of obesity. And I really felt like our product could be a solution for that. So I believed that, you know, we could build a business that did well and also did good. And I saw the opportunity and I just was not willing to let go of it.

Interesting. So then, so you do that, you start to hire people, you start to scale up and then there's this breakthrough in 2008. The regulatory environment changes. Now what does that make possible?

Well, we started seeing, you know, exponential growth and demand in our, you know, in our product. So we, we were in 1200 square square feet facility and we then moved into 7600 square feet. I started buying like 52 foot commercial trailers to, you know, to store additional product in. We moved from the 7,500 square feet into a 16,000 square foot building. And within five years or four years, we outgrew that and moved into a 26,000 square foot facility about almost two years ago. And next month we're closing on another facility that's 58,000 square feet.

That's a lot of space. And how has the staff changed over that time?

Well, we've had a lot of turnover because when you have a business that grows, you know, at a rate of 3 to 400% per year, a lot of people can't really keep up. So we've had a lot of turnover, we've added a lot of employees. We've done, we've actually promoted a lot of our employees, you know, from within and moved them from production roles into management roles. And, you know, which has been beautiful because they've taken real ownership of what they do.

Mm, interesting. And did you have to change the funding? Did you get other kinds of bank or other investment after 2008?

No, I actually. So I borrowed the money from my dad in 2007 and I had him paid back at the beginning of 2009 plus all of the interest. And at that point, you know, revenue was coming in at, you know, at a rate where we really didn't need additional funding. Once we were able to start moving a lot of, a lot of product, we were able to get on terms with our suppliers for our raw goods. And so when we were on terms, that really helped us as well. And you know, within, you know, within the next year, we had a couple million dollars of cash in the bank. So we were pretty, we were pretty solid at that point.

So you've been self funding since that initial note. You haven't had to go get.

No, I haven't had to borrow any money because once we started to hit our stride, cash flow was not an issue. And now we're even incubating other businesses. So we look for businesses that, food businesses that are in the same situation that, you know, that I was in in 2007 and we're helping incubate and fund those businesses.

And what kinds of businesses are they, Are they related? You're putting them in your, your own what, you're giving them support, space, cash?

Yeah, all of the above. We take a look at each, you know, each business that, you know, that we're going to incubate. We take a look at, you know, what stage they're in and what they need. Like some of them just need, you know, support in getting into distributors and getting into stores. Some of them need, you know, support in actually getting product, you know, manufactured, getting them set up with co packers. Some of them, we supply ingredients in trade for, you know, a position with their company. So each situation is a little different.

But are they all related then to.

They're all food businesses.

Food businesses. So you've grown considerably in space, I guess, equipment and processing, but not that much in terms of, of people. You don't have hundreds of people at this point, do you?

No, we don't. I think like in house we've got 22 employees now and then we've got, you know, sales staff, you know, and brokers that represent us, probably 30 outside of the company. You know, one of the things I think that, you know, that helps us stay lean and agile is our automation process. So we try to automate a lot of our mixing, you know, Blending and packaging and create systems that are designed for efficiency.

Most of our biggest clients have highly, highly automated, efficient systems that are continually tuned. And there's a whole process of tuning and improving things. In fact, we were just visiting one in, in up in the Arctic part of Norway and it's fascinating to see very, very high tech operation there for refining omega 3s, right. From fish oils.

Sure.

So you develop systems and processes. Then talk to us a little bit about what you've seen in creating the scalability of refining the systems and getting that growing in that way.

Well, as far as refining our systems, I mean, because we have certification, you know, for quality, like a third party audit. So I mean our facility is, you know, runs under GMP and SQF level too. So the only higher certification that we could have at this point would be pharmaceutical.

Tell our listeners about GMP and sqf.

I mean, SQF is sure quality foods. SQF is an organization that, that will do, you know, that does a third party audit on your standard operating procedures both front of house and back of house. So just to make sure that all of your food safety and, you know, all of your paperwork makes sense in case you need to do a recall or if you're selling to, you know, you're selling to a food manufacturer and they need to do a recall and what type of procedures you have for food safety. And GMP is good manufacturing practices. So we do follow a fairly strict, not even fairly very strict sort of system that's been that we've created and also, you know, with the help of third party auditors and consultants, procedures that do follow good manufacturing processes. Which means that the products and food that we produce meet and often exceed any standard that's out there.

We advocate and have had on the show before sort of simplified lean implementation in particular, two second lien with Paul Akers, who's just built a fantastic business and he studied with and works with Toyota ongoingly. But you've been a fully follower of Deming and applying that as well. And it sounds like a complement to these formalized process.

Well, definitely. I mean, Dr. Edwards Deming, you know, he's been a massive, massive influence in my business. I mean, his moniker is Quality Always Costs Less, which we found to be very true because we've had clients that have, you know, that have left us because they could find product, you know, ingredients cheaper elsewhere. And then we've seen those clients actually go into an FDA recall. And an FDA recall can be far, far, far more expensive than, you know, than it would be for the additional 3 to 4 cents per pound that you'd end up paying for your ingredients. So, I mean, I've followed those principles and.

And.

We run this company based on that. And so our company, Icon Foods, our logo actually incorporates the five principles of Kaizen, which coincides with Six Sigma. So from our logo down to our corporate philosophy is all about food safety and quality.

So we've got systems, we've got the people, we've got the funding, we've got the business model itself that's evolved. How has your leadership style been challenged? How have you been challenged and what have you had to confront along the way in terms of your presence, your communication, your inspirational style, your execution habits like that?

Well, I followed stoicism for the past three years. So, I mean, every single day I start my day with reading a page out of the Daily Stoic that was written by Ryan Holiday. And it's the writings of Epictetus, Marcus Aurelius, Seneca. I found that reading chapters of that book. And following stoicism has really helped form and shape my. My leadership skills, of which I believe are even tempered and support collaboration. So when we bring in new employees, we basically will look for their strengths, will play to those strengths. And we like to think of us being the catalyst or basically providing them with the matches in gasoline to ignite themselves and we just sit back and watch them burn. So in a good way.

In a good way, right?

In a good way, yeah.

Take fire.

Yeah.

We love to see people come in and just start themselves on fire.

It's funny how we have these associate. Like, being on fire has a good connotation. Burn sounds like being exhausted, right?

It does. I mean, I've seen people come in here and grow at such an exponential rate that it's just. I would say that. I mean, the financial gain that I'm enjoying from the business is so secondary to being able to bring in an employee who is at one place in their life and after a year see them in a completely different space, completely energized, completely charged, completely on fire. And. Yeah, I mean, it's such a. I get such a level of satisfaction and joy out of just seeing people burn like that.

So that's. There's that great quote, right, that. Well, I'm going to bastardize it right now, but I am of the opinion that my life is a sort of splendid torch that I've got a hold of and I want it to burn as brightly as I can for as long as I can while I've got a Hold of it, right?

Yeah, absolutely. And I also believe that if you're the person holding the torch and that torch is burning brightly, that you have an obligation to pay that forward and to help other people carry a torch as well.

Right. Pass it, share it. Yeah, absolutely. So since talking about the inspiration of fire is a common thing for us, is there a place that you go to when you need to sort of tend your fire, keep your fire alive, relight your fire? Are there practices that you have as a human being, as a leader in doing that?

Yeah, absolutely. I think that having a work life balance, I mean, I really shouldn't even say work because to me this isn't work. It's my passion. But being able to keep yourself grounded and balanced is critical. So I try to get up every morning at 4:30. I start my day off with journaling. I journal every single day. I never miss a day of journaling. After I'm done journaling, I actually will go for a three and a half mile run. Once I've got my run done, I cycle, I work out with weights, I do yoga, and then I also meditate for a minimum of 20 minutes every single day. And that sort of sets the stage for how I'll be approaching my day. And it also keeps me very grounded.

It's a really rigorous approach. We hear similar kinds of self discipline and things like the surrender experiment. And we see in learning from the habits in the life of John D. Rockefeller and the Rockefeller habits is of course the original inspiration for the scaling up work that we do. We see some similar personal rigor in all of that. You do that every single day, do you?

Every single day? Yep. I travel with my journal. If wherever I am I'll be up and on the road running, you know, if I'm in a hotel room, I, you know, I have an exercise routine that I can actually knock out in a hotel room, you know, and it's easy to find a place to get, you know, 20 minutes just to, you know, get yourself grounded, take some deep breaths, you know, move into, you know, move into a meditative state and, and recharge your batteries.

So a mix of physical and mental, spiritual, all kind of going on there. Then you begin your day fully sort of present and engaged?

Yeah, yeah, absolutely. I think that working with that convergence of mind, body and spirit is like super important. So I try to feed those on a daily basis.

And then how does that then flow into the day? And how do you end your day?

I usually end my day with another run, particularly it's summer now so I can take advantage of the sunlight. So I'll end my day usually around 7 or 7:30. I'll go for another run with my dog. I'll come home, eat a late dinner. I don't watch a lot of tv. I don't want to, you know, pollute my brain. I want to keep it in a, you know, in a peak state. And then I try to go to bed by 9 or 9:30.

I should take up the TV right away and stop making us all feel bad. Let me tell you, binge watch some shows. I just watched multiple seasons of the Americans. Right?

Oh, I love that. Well, okay, so I'm not perfect. I, I'm, I'm a Game of Thrones addict.

Yeah.

My wife's like, oh, you got to watch the Game of Thrones now. So I watched like two episodes. But there's certainly a lot of material there.

Yes sir.

That's fantastic. So don't give up. Never surrender. You're not alone. The struggles that you've shared and the personal things I think are things that we all share. The stuff that we deal with as entrepreneurs in running and growing a business. The problems that you have are not ones your problems sound like bragging to other people, but they're real problems. I think that's true for many of our listeners as well. You will go through multiple changes if you are clever and if you are thinking about it and creating a business plan and thinking through putting your ideas down on paper, you can create a growing self funding, highly profitable business. Of course we always advocate the one page strategic plan, keeping it simple and evolving in all of the growth tools that we've got. We do these public workshops on scaling up all the time. We've got a couple coming up usually every quarter. You can find information on that free download of all kinds of worksheets for the growth tools including the one page strategic plan and a guide on how to lead your team through Scaling Up Lead quarterly and annual planning sessions is all for free on our website. You can find out about the workshops right there. Scalingupbusiness.com is the address where you can get all that stuff in addition to these podcasts every week. And for more information and to see about Tom King, you'll find him@stiviva.com and we'll put that link in the show notes as well. And if you go and you want to try out some of the products, either you're making something or you just want to use it in your household and cut out the sugar intake of your family. Then you can use his coupon code that he's generally offered for 15% off industry angel and we'll put that also in the show. Notes Tom, it's been so helpful. Thanks for sharing your story with us and a little bit about your company, your passion, your purpose, personal disciplines and all that. I think it's really helpful to hear the real stories of real entrepreneurs growing mid market companies.

Thanks Bill. I feel super privileged that you invited me on as a guest and now I am a brand surrogate. So I've got your growth kit in front of me and rolled through it and I am going to put that into practice definitely. So thank you for the honor of having me on your podcast.

Awesome. Thanks everyone for tuning in. See us next time. Scalingupbusiness.com the website. Talk to you soon.

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