James Nuttall, one of four original founders of the Indian beverage company, Hector Beverages, initially sought out to compete against RedBull by creating a lower cost, yet premium quality energy drink called Tzinga (pronounced Zeen-ga) which originally debuted as a natural lemon mint flavor. After repeated momentum shifts and failed attempts to significantly break into the market, the partners took a different direction and created "functional drinks" made of traditional flavors of cultural favorites that promote immunity, digestion, health restoration, relaxation and the like under the brand name: PaperBoat Drinks. Their idea took off and just last year, PaperBoat Drinks sold and distributed over 12,000,000 drink pouches.
James explains how after graduating from Wharton Business School with his MBA and having a Bachelors of Science in Chemical Engineering from BYU, he turned down an employment offer from Bain and Company and moved his young family to India to pursue an opportunity to create a national beverage brand in India.
In this episode, James shares almost play-by-play events as he recounts his entrepreneurial journey including his most heart breaking failure and finally triumphant success with PaperBoat Drinks.
LISTEN TO JAMES RETELL HIS STORY OF LAUNCHING Hector BEVERAGES IN INDIA, A NATIONAL BEVERAGE PROCESSING, MARKETING AND DISTRIBUTOR OF TZINGA (AN ENERGY DRKINK) aND later BEVERAGES under the brand name of PaperBoat [03:45]
James retells his story of turning down a secure offer from Bain & Company after receiving his MBA from Wharton Business School and moving his family to India to start Hector Beverages and compete against Redbull.
JAMES EXPLAINS HOW HE AND HIS PARTNERS HAD TO CHANGE THE BUSINESS FROM ITS ORIGINAL BUSINESS PLAN [11:39]
James and his partners soon found that it was more realistic to create a function beverage which is good for something other than just refreshment (vitamin water, energy drinks to increase alertness, etc.)
JAMES EXPLAINS HOW THEY INITIALLY RAISED CAPITAL [14:16]
James shares that they had to raise a significant amount of capital to incorporate unique packaging through a variety of sources including family and friends, Indian investors, angel investors and venture capitalists.
JAMES TAKES YOU ON AN AUDIO TOUR OF THE EQUIPMENT HOUSED WITHIN HIS MANUFACTURING PLANT [19:00]
James shares how a syrup is first created and tested and then water is added. Hector Beverages did the creation, mixing and bottling all in one plant to begin with.
JAMES EXPLAINS HOW A REALLY FUN PART OF THE BEVERAGE DEVELOPMENT WAS EXPERIMENTING WITH ALL OF THE POSSIBLE FLAVORS [20:57]
James enjoyed testing all of the different varieties of fruit pulp and flavors until they got it just right. He goes on to explain how they finally settled on the flavor that they went to market with. The very first flavor was lemon mint.
JAMES EXPLAINS THEIR PROCRESS IN ARRIVING AT THE NAME: TZINGA [22:23]
They wanted the brand to connote an action meaning that when a person drinks it or says the brand name, it actually does something to you e.g. "Tzinga" gives you Zing.
JAMES SHARES HOW THEY ORIGINALLY CAME UP WITH THEIR PRICING STRATEGY [25:58]
Hector Beverages initial strategy was to market Tzinga as a premium drink for a low cost.
James explains how he and his partners unfortunately had to wind down the Tzinga Brand and change the focus and direction of his company [26:25]
As partners, they discovered that in order for their company to succeed, they had to change their strategy according to the desires of the market. Whether it was cultural aversions to energy drinks or overall pricing strategy, Tzinga did not take off like they intended it to, even despite an enormous amount of effort and marketing.
at what point as an entrepreneur did you think that i've got to go in a different direction? [28:22]
After experiencing many periods of momentum shifts, Neeraj Kakkar identified that the original idea for Hector Beverages was entirely about creating "functional drinks" for Indians meaning drinks that had a specific cause for aid in digestion, relaxation, alertness, physical well being, etc.
What is that moment as an entrepreneur that you realize that if you continue in a certain direction, the path is going to be pretty bumpy? [31:03]
You need to do your best to...put something out there in the market that is representative of the concept that you are proposing to the market. The market's going to tell you whether its great or whether its bad. You can fiddle with it, but ultimately its not up to you. The market is correct...
James shares his "ah-hah" moment [32:44]
Sometimes we proceed as if "we just work a little harder then I can make this happen" and you get into a point and a rhythm where it feels like where every little bit of effort could be the thing that makes it happen or the thing that if you don't do it then success is not going to happen and that's just a miserable place to be and its not useful...
James shares how Hector Beverages pivoted to offer the PaperBoat Line of drinks [34:21]
James explains that it was ultimately market data that caused them to completely change their product focus by getting results from in-store sales. PaperBoat drinks offer a variety of functional beverages specific to the cultural beliefs and traditions of Indians. Drink flavors include:
- Chilled Rasam for digestion
- Sattu Drink for protein
- Ginger Lemon Tea to reduce inflammation,
- Tulsi Tea to boost immunity
- Aamras a sweet flavor and national pastime
- Jaljeera to replace electrolytes
- Kokum to lower cholesterol among other properties
- Jamun Khala Khatta a great source of essential minerals
- Aam Panna to fight gastro intestinal disorders and restore digestion
- Golgappe ka pani an awesome immunity booster and potent digestive aid
How do you view failure as an entrepreneur? [36:37]
It's really hard. Entrepreneurship is driven and fed by optimism and excitement. As much as people say: "you gotta fail, you gotta fail" it's really hard in the moment, but its also very true. I think...this idea that you have to build something and the market will tell you, that's really the concept behind this "Lean StartUp" book...and he's not the only one to say it but you want to go as fast as you can to build the minimum viable product...
What is it about entrepreneurship that perhaps the books don't say? [39:25]
I do see that books definitely tell you the stats. You are far more likely to fail than to succeed and all of that is true. I think one of the challenges that I had and it may not be related to a book was [that] I started to...become part of this hyper-growth start-up culture and when you're in those circles and when talking to people in those circles it is socially awkward to not project this image of ... that you're killing it all the time, 24/7...
What was some of the self-talk in the more challenging moments? [42:44]
So reading this book, The Founder's Dilemma, when you read it and you see printed on the page that it's really important for a founder to have a strong support network, you know family and friends and so on... it's just so black and white on the page but if you're thinking about jumping off, think about what that implies? There are books that you're gonna read that say that you are going to have hard times but feeling the hard times is different than reading a book and saying, "yea yea, I'm going to have hard times."
You know not to get too mushy on you here and everything but I'm so lucky. My wife is so great and such a key enabler in this whole thing and I just knew that things were going to be okay whether things went great with the company or not.
if you could go back to the day that you told Bain that you wre not going to accept their offer, what advice would you give yourself? [48:55]
So as much as I was ready for a crazy ride at that moment, I'd go back and say "Buckle up man!" You're not as tough as you think you are. I expected it to be hard I expected it to be worth it actually going through those experiences... you know we all have in our regular jobs good days and bad days and you know good months and bad months but the frequency and amplitude of those swings in my experience and I'm sure in the experience of many entrepreneurs is much higher.
what advice do you have for aspiring entrepreneurs? [50:14]
To all those of you thinking of taking the plunge...if you really want to do it you gotta decide - do you want this kind of experience? And if you want this kind of experience then you just gotta do it. The only caveat to that is for those that for those of us with family we have to take them into consideration...
Lean Start Up by Eric Ries
The Four Hour Work Week by Tim Ferris
No Exit - One Start Up's Struggle to Survive the Silicon Valley Gold Rush - An article published in Wired Magazine in April 2014 by Gideon Lewis-Kraus. This was the article that James mentioned specifically that greatly helped him out.