September 5, 2022 • 20 mins
Steve Schulze started Nekter Juice Bar out of a desire to live a healthy lifestyle. His passion quickly turned into a business opportunity that he has grown from one store location to more than 200 locations and over $100 million in sales. Tune in to hear more about overcoming failures, valuable advice about franchising, and how to ensure long-term success.
In this episode, you will hear more about:
- Achieving success and not allowing your failures to hold you back
- Blocking out the white noise around you
- Paying attention to process and building a business
- Turning a passion into more than just an idea
- Innovation and reinventing a concept to create massive business success
- Franchising: Developing a strategy and proving out the business model
Chapters
- 00:00:41 - Introducing Steve Schulz
- 00:01:24 - Business Ventures
- 00:06:18 - Starting Nektar
- 00:10:27 - Franchising the Business
- 00:15:56 - Staying Focused
- 00:18:17 - Passion
Resource Links
Steve Schulze LinkedIn | Steve Schulze Instagram
Nekter Juice Bar LinkedIn | Nektar Juice Bar Facebook
https://nekterfranchising.com/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Greg Muzzillo (00:06):
Hello and welcome to Million Dollar Monday.
I'm your host, Greg Muzzillo,bringing you real successful
people with real useful advicefor people with big dreams.
I understand big dreams.
I turned an investment of$200and a lot of great advice from
some really successful peopleinto my big dream Proforma.
(00:31):
That today is a half billiondollar company.
Well, hello and welcome.
Today, I'm joined by afascinating guy who has really
taken the entrepreneurialjourney to several different
levels and into severaldifferent areas.
(00:52):
And I'm gonna just let him tellhis story about how he got into
the tanning bed business, thetanning oil business, the
infomercial business, and todaythe Nekter Juice Bar business
with a business approaching 200locations with another, almost a
hundred in development in over110 million in sales.
(01:16):
Welcome Steve Schultz, Steve.
Thanks for joining me.
Steve Schulze (01:20):
Hey, Greg.
Great to be here and lookingforward to our conversation.
Greg Muzzillo (01:24):
So for a while, while you were, you were, uh,
starting the first suntan bedlocation, you kept your job and
you were sort of straddling bothgetting the business up and
running and keeping your job.
Steve Schulze (01:37):
I did.
And a lot of times, even in the,the Nekter business, we've had
so many people, which it ends upworking out quite well, but a
lot of times they'll start the,start the business and then quit
their job immediately.
Um, I'm not so sure that's themost prudent advice in the
world.
So I think you've gotta helpgrow your business first and do
some, have some confidence andproof.
Greg Muzzillo (01:56):
Right.
Right.
All right.
So you see an ad for a tanningbed.
You turn that into a tanning bedbusiness with a couple of
locations.
What came next?
Steve Schulze (02:07):
Um, to me, the barrier, you know, within the
first year I was the first one,you know, first or second one in
Newport beach by the end of thefirst year, I think there were
nine, prices plummeted, uh,guest counts, plummeted, uh, but
there were still just as many ormore people tanning.
Um, and at that particular timethere wasn't a Suntan lotion
(02:29):
made specifically for suntanning beds.
You know, people were stillusing Coppertone and I won't go
into the boring details of howit clouds the acrylic, but there
was a re I was basically tryingto solve a problem, which is not
having sun tan owners having to,you know, replace the acrylic
that often I contracted out witha, uh, with a chemist, we
(02:49):
developed a dry oil thatprovided sheen and reflection
and, sold the salons to fundthat business.
And, uh, within about ninemonths, I think we were in about
about 10,000 salons nationwide.
Give or take
Greg Muzzillo (03:03):
Amazing, amazing.
Is that product just still outthere in the business?
Steve Schulze (03:09):
No, it finally, the, it lasted probably another
five or six years like anything,it became a big business and
some of the big manufacturerscame in, you know, similar to
how the outdoor suntan worldhappens with Coppertone and
such.
It's a, you know, a different,unless you really have those
deep pockets to maintain it,it's very problematic.
Greg Muzzillo (03:28):
Okay.
So the tanning bed business gotcommoditized, drove down exactly
pricing and profits.
How'd you get into theinfomercial space?
I think that's what came nextfor you.
Steve Schulze (03:38):
Uh, the, you know, after selling a couple of
these businesses, FranklinCovey, I don't know if you know,
Stephen Covey and the sevenhabits and all that kind stuff.
Of course, Franklin Franklinplanner.
They invited me to do somepublic speaking, uh, for a while
.
And I did that for about a year,year and a half.
Um, and not long after I endedup being in Palm Springs and was
gonna play golf, but IndianWells and was looking for a
(04:01):
group to play with.
And somebody put me in a groupwith Greg Renker who was, you
know, half the principal ofGuthy Renker from proactive and
Tony Robbins and most successfulcommercials you see out there.
And he said, Hey, I find yourstory interesting.
You know, if you see someproducts out there that are of
interest, why don't we go aheadand do a joint venture and we'll
go ahead and fund it.
(04:21):
We'll do it 50 50.
Um, and so, uh, one thing led toanother and, and this is I
think, somewhat interest.
So we did that for a number ofyears and proved to be quite
successful yet.
Uh, then they got to the pointwhere they, it was really became
an annuity company in the sensethat you buy proactive.
You get month after month aftermonth, you know, or Tony,
(04:44):
whatever the product beautyproducts are.
Right.
And so he said, Hey, Steve, weturned into an annuity company.
Um, and we do have some one offproducts, but we're looking for
shows that do X numbers.
And so I was sitting in BillGuthy's office.
And I said, how many shows foreach show you produce, how many
are successful?
And he said about one in 10, andwe considered a successful show,
(05:05):
a hundred million in sales ormore.
And I said, so I had pitched anidea, but he thought the was
about 30 million.
And I said, so what do you dowith all these, you know, shows
that you don't like that aren'tsuccessful?
Cuz we just put'em up with ashelf we're done with them.
And I said, tell you what, howabout this?
I said, what if I go ahead andget a first look at'em?
(05:26):
So the shows that you think are,you know, not very good that
might do$30 million.
I said, I don't have muchoverhead.
It's just me and you know, myoffice and team and whatnot.
I said, if you give me firstlook at those shows, I'll pay
you a 7% royalty on it.
So maybe you get some of yourinvestment back, I'll buy the
products and move forward.
And so for the next, uh, numberof years, when they had a show
that they didn't like, they'dsend it to me, I'd maybe have
(05:49):
somebody make a few edits on it.
If I'd like the show and thenwe'd put it on.
And so therefore I had a, youknow, a million dollar show that
didn't cost me anything.
And sometimes they were verysuccessful sometimes, you know,
they were right and it wasn'tsuccessful at all.
Greg Muzzillo (06:03):
I love the idea though, of trying to turn
somebody else's discards into asuccessful business yourself was
brilliant.
But anyhow, at the end of theday, um, that kind of wound down
what next, I think one of thethings you decided to do was a
cleanse.
Steve Schulze (06:19):
Yes.
Greg Muzzillo (06:19):
And that whole cleansing experience, eventually
you started cleansing withoutany idea was gonna turn into a
business, but somehow along theway, it turned into a business.
Tell us how that evolved fromjust kind of cleansing while you
were in a pause mode, lookingfor your next opportunity and
how you found that opportunitythrough cleansing.
Steve Schulze (06:40):
There's a company outta New York selling cleanses
and uh, I ordered one and Itried it and sure enough, I lost
weight.
I felt good.
I had all this energy and, and Isort of had a pulse on the
market and people and trends.
And they said, Hey, this, youknow, this has got some legs.
And so I thought it would justbe a huge success with an
infomercial.
But the problem that I had was,you know, 20, uh, 18, 20 bottles
(07:03):
of juice, uh, is very heavy.
And when we did test shipmentsto New York, it was, you know, a
hundred dollars to ship.
And then if it sits outside, it,uh, you know, it just doesn't
last.
And so I was stuck.
I couldn't really, you know, itwasn't a viable infomercials, so
I, but I was still passionateabout the idea and the product.
So then what happened?
I was right down the street,there was a natural grocery
(07:27):
called Mother's Market.
And I was going in there everyday to grab a juice for most
days anyway.
And, uh, you know, a couplethings, uh, crossed my mind when
I was going at one is I startedasking the guys behind the
counter, cause there's alwaysbusy and always the line.
And it was, you know, how manypeople you're serving a day?
And they said, oh, we'reserving, two to 300 people a
(07:48):
day, two to 300 people a day,two to 300 people.
I'm like that's a lot of people.
I'm like, some of the stuff youwere having, you were choking
down, it's like, I don't knowabout you, but I don't like
carrot juice just straight.
But people drinking it.
Yeah.
And so, but mother subsequentlymoved about three blocks out the
market.
And I said to myself, you know,God, God forbid I drive another
(08:10):
three blocks.
You know how that is, it getsoutta my routine and how I drive
and whatever.
And at the same time, again,going back to the, uh, you know,
going back to some of the priorbusinesses, meaning the sun
business, what I was trying todo is solve a problem with the
acrylic.
Um, with this, you know, Istarted then looking at the
legacy brands, the Jamba Juicesof the world and such, and they
(08:31):
frankly had become, and stillare sort of glorified, you know,
Dairy Queens, you know, thesugar counts I was working out
and I was going to gymafterwards.
And after three months I hadn'tlost any weight.
I looked at nutritional paneland sure enough, I was having
more sugar and more caloriesthan my workout was burning was
actually gaining weight while Iwas working out.
And so to me, the space wasright to be reinvented.
(08:54):
And so what I wanted to do wasdisrupt the space and when I was
going to Mother's, what I foundout was, I didn't find out.
I just thought this on my own isthat the carrot juice didn't
taste very good.
Now, what if we could makejuices that tasted good, that
were affordable, they'reaccessible.
Uh, the people enjoyed andsimultaneously by having the
cleanse, I then have almost abuilt in catering aspect of it,
(09:16):
of a high end.
I sell it for a hundred, 150bucks.
Okay.
So I was like, Hey, we sell twoto 300 juices at five bucks a
day.
We sell a handful of, you know,cleanses, whatever.
Uh, as things turned out aboutthree blocks down the street,
there was an old, Starbucks,location from the early days of
when, uh, Howard Schultz hadthat third place.
(09:37):
You know, and at that time,people were, you know, had their
laptops, their hard back booksand newspapers and all that
energy that I remember goingthere, the space had been, uh,
vacated and Starbucks had moveddown the street to a drive
through.
And I said to myself, Hey, whatif I go ahead and try and
reinvent the juice space,similar to Starbucks,
reinventing the coffeeexperience and might as well go
ahead and do it at the sameplace Starbucks did.
(10:00):
So I called the landlord up andsigned a lease August 5th and
opened for business October10th, 2010.
And you know, here we are with,and there was never an intent,
frankly, with, I think it wasabout$50,000 to open and there
was never an intent of a secondor a third or a fourth location,
but, you know, fast forward totoday and we're bearing down on,
(10:22):
you know, nearly a couplehundred locations and a hundred
million bucks in revenue.
And so things turned out okay.
Greg Muzzillo (10:28):
When did you start franchising the business?
Steve Schulze (10:32):
Um, so this is a, uh, yeah, I'm glad you asked
that question because I'm veryopinion on this topic.
Um, you and I have seen amillion franchise out there.
We see press releases.
We see, you know, uh, a hundred,two, 300 stores.
Ironically, I was readingnation's restaurant news and a
new food concept came out.
They have yet to open yet.
(10:52):
They've signed 150 franchises.
And so for us, we opened 2010.
Uh, we had about 11 or 12locations in 2012, we got, we
had received probably, you know,three to five inquiries, you
know, a day from the day weopened.
Um, so I probably could havesold a ton of franchises, made
several million dollars, but I'dbe bankrupt today and back at
(11:15):
back at work, so to speak.
Right.
And so, but my idea was allright, we got 2012, do we
franchise, I was worried aboutwhether franchisees could carry
the brand standards, you know,uh, whether they could carry the
culture, how they wouldrepresent Nekter, how we would
support them.
And so, uh, while I was gettinga lot of pressure to franchise,
I said, tell you what we'regonna do all award six
(11:35):
franchises, and then gonna siton it for two years.
I'm not gonna award a singleother franchise regardless.
That's my compromise, which wedid.
And I thought during that time,I thought it was incumbent upon
us to do a few things.
One was learn what therelationship was about.
It was a very iterativerelationship, what we were
doing, right, what we were doingwrong, how we can, you know,
(11:56):
serve the franchisee.
Secondly, I thought proof ofconcept was very important and
in the sense of proof.
We went to different climates,such as Denver and Houston and
Dallas and, uh, you know, allover the place.
Uh, and my point to that is, isthat, you know, just like that
food concept, I mentioned asecond ago, where a lot of
concepts out there have, youknow, zero or one location, the
(12:20):
way I looked at is, you know,people are paying me a royalty
and they're buying a, basicallythe reducing the risk by buying
a proven system, right.
If I don't even have my storeopen or only have one store,
what the hell can I learn toshare to really earn that money.
Absolutely.
And drives me crazy when I seethese people that have, you know
, none one or very fewlocations.
(12:40):
And so for us, we sat on for twoyears, it was a very good, uh,
relationship sales actually wereever better represented by the
franchise partners.
And, uh, then in 14 we set upthe systems and started
releasing franchises in late 14,early 15th.
Greg Muzzillo (12:55):
I respect that a lot, Steve, and you and I are
bothered by the same thing.
It bothers me to see people comeup with an idea and sometimes
even try to franchise it beforethey have a location, almost
looking to franchise owners infranchising as their venture
capital.
And that's just wrong.
People are looking tofranchising for a proven
concept, proven operations andproven methodology.
(13:18):
And you did it right.
You, you prove things out, youslowly experimented with
franchising and, and you know,what you're being rewarded for
it now in spades with yoursuccess.
Steve Schulze (13:31):
Yeah.
Yeah.
I think you're right about thatin the sense that it was a smart
decision I made.
Um, I'm not saying that bymyself on the background like
that, I just think that, youknow, the more that we learn,
the more that we can share withthe franchisees.
So there's very little, youknow, we still own a lot of
locations.
Um, and there is, there's verylittle that we haven't been
through.
And one other thing that I'llsay about franchise that I find
(13:54):
fascinating going back to usingas their, you know, financial,
going back to their funding,their private equity, so to
speak is that, you know, there'stwo ways to grow, basically a
speed to market, you know, or acentric model.
And I chose a centric model.
What I mean by that is I putthree in orange county, three in
San Diego, three in Scottsdale.
And my opinion was I wanted tosee how they did if they did
(14:15):
well, then I wanted to infillthe area as, as quick as I could
so that I could then own thatarea and keep basically
competitors out.
Yeah.
And I refused, I had inquiriesfrom, you know, from, uh, you
could imagine from the Midwestto the east coast all over the
place.
Um, and I see other brands that,even in our space, that all of a
(14:37):
sudden they have one location inBoise, one in Denver, one in
Phoenix, one in some likeCalifornia and from a
franchisor's perspective.
Could you imagine the cost forme to fly up?
Not may my team to fly up therejust to one location, the brand
awareness, the supply chain iscrazy.
Yeah.
Greg Muzzillo (14:51):
Fred DeLuca the guy that started a subway.
Uh, God rest, his soul he'spassed from some time ago.
He, he said, similarly that, uh,they would put in a subway.
And then, he would say that thesubway was actually a training
experience.
People would come in, they'dlearn how to stand over here and
then walk through the line andthen get whatever the things you
(15:14):
wanted then get to the end andthen pay.
And he said, those were justtraining centers for customers,
customer training centers thateventually enabled him to
continue to expand in thatmarket.
We all know what's happened tosubway today, but, uh, anyhow,
it was all genius at the time.
And I think what you're doing isright.
Having multiple units in ageographical area, make a lot of
(15:36):
sense for a whole bunch ofreasons, marketing wise and,
attention wise, uh, cetera.
So, all right.
Share with our customers one ortwo of the biggest mistakes
you've made and what lessons youlearned from them.
And then we'll close out with acouple of the biggest successes
and the lessons from thosesuccesses,
Steve Schulze (15:57):
A couple things.
One is I think that, you know,life is about solving problems.
And I think that, uh, and I'vealways looked at solving
problems as a challenge.
It's never intimidated me.
I've actually enjoyed problemsbecause I like reading, you
know, mysteries and watching theBritish series and things of
(16:17):
that nature, trying to figure itout.
And I think that's how, how lifeis, whether it be a
relationship, personalrelationship or a business.
And when I looked at Nekter,what I looked at was I saw an
industry that had gone waywardhad gone sideways, that they
had, you know, basically startedon that slippery slope.
And next thing you know, it wasall sugars and fillers.
And I said, Hey, that industryneeds to be fixed.
(16:39):
Um, now when I went to fix it,going back to one of these
lessons is that, you know, inlife too many people listen to
other people's opinions and thatwhite noise, you know, I go home
with this great idea about thejuice thing.
And as you can imagine,everybody, it's a fad, you're
crazy, stupid, you know,whatever it is.
And so, yeah.
(17:00):
Uh, you know, whether it be whatI told you earlier, the suntan
business, you know, was the samething, what's wrong with you?
Why are you doing it?
So I think people have to reallybe very disciplined to block out
the white noise, if they believean idea, if they have the
fortitude to do it, theperseverance to do it, stick to
it, keep going, uh, if you fail.
(17:21):
So what, you know, I mean, Ifailed probably more.
I'm sure still a lot more thanI've been successful.
So, um, uh, but never stopped meand never crossed my mind that I
would ever long term I'd neverfail.
I never got down.
When I, when I company lostmoney, I screwed up.
I just got back up and startedagain.
Greg Muzzillo (17:39):
Amen.
Steve Schulze (17:40):
Yeah.
Greg Muzzillo (17:42):
All right.
So not listening to others isreally wise advice for a whole
bunch of reasons.
Number one, some people have noclue what they're talking about.
Uh, some people don't even wishother people, well, like some
people I tell some people when Italk, you know, be careful when
you listen to naysayers, cuzsome people like your next door
(18:02):
neighbor, they might not wannasee you be uncomfortable.
Cuz if you pull in the drivewaywith a big new Mercedes that
might just challenge them.
And so you have to be reallycareful about who's giving you
advice and who's giving youfeedback because sometimes it
could be for all the wrongreasons, share your biggest
success and the biggest lessonthat you wanna share with our
(18:23):
listeners.
Steve Schulze (18:25):
Depends on what you mean by success.
I think that Nekter clearly hasbeen, you know, for me anyway,
you know, the biggest success totake it from little$50,000
investment to, you know, ahundred million company.
Um, I think, is time out.
(18:46):
I never look back on it, say, oh, that's, that's good.
And, and I'm not resting for it.
Uh, and as far as our goal, ourgoal is to be the first billion
dollar brand in this space.
Um, and we've got a lot of newproduct and new categories and
companies that we're startingthat will, I think, assist in
getting that.
I think that obviously you hearthe stories about, uh, you know,
(19:07):
people doing it for the wrongreasons, which is money.
You know, people do somethingfor money.
And, and I think the problemwith that is that meaning that
when I give the advice, Hey,don't do it for money.
They say, oh, it's easy for youto say because you have money or
it's, you know, but it really istrue because money is not a
tangible thing.
You know, it's, uh, you lose thepassion, you like what it buys,
(19:28):
but you know, are you gonna giveup your Friday night and your
weekends and whatever, if it'smoney related when I started
Nekter and even to this day, 10years, I've never crossed my
mind.
If I've gotta go in at seven oreight o'clock in the morning and
buy coconut water or work theregister, I look at it as a part
of who I am, part of life.
(19:48):
And so I think that, uh, whichgoes back to the last thing I'll
say, which goes back to thepassion and the passion.
I think people have toreevaluate, you know, how they
interpret that, uh, you know,that term and, uh, that passion
question, because it's notnecessarily, I'm passionate
about X or Y or Z is morepassionate about the process and
stuff.
So
Greg Muzzillo (20:09):
There's a lot of wisdom in that.
And I think Steve part of thelesson is when people aren't
passionate about something, notonly are they not necessarily
willing to go in at seveno'clock at night or whatever it
takes if it has to happen.
But I think you and I share alot of the same philosophies.
I think about things morning,noon, and night, because I'm
(20:30):
passionate about it.
And I'm ever increasingly wannalearn more and improve more.
And in that passion foreverlearning and ever improving
continues to build a business,Steve and spent a lot of fun
spending time with you.
I have no doubt you're gonnareach that billion dollar goal
and more thanks for your time.
Steve Schulze (20:49):
Greg, appreciate it.
Been a joy and look forward totalking to you soon.
Hello and welcome to Million Dollar Monday.
I'm your host, Greg Muzzillo,bringing you real successful
people with real useful advicefor people with big dreams.
I understand big dreams.
I turned an investment of$200and a lot of great advice from
some really successful peopleinto my big dream Proforma.
(00:31):
That today is a half billiondollar company.
Well, hello and welcome.
Today, I'm joined by afascinating guy who has really
taken the entrepreneurialjourney to several different
levels and into severaldifferent areas.
(00:52):
And I'm gonna just let him tellhis story about how he got into
the tanning bed business, thetanning oil business, the
infomercial business, and todaythe Nekter Juice Bar business
with a business approaching 200locations with another, almost a
hundred in development in over110 million in sales.
(01:16):
Welcome Steve Schultz, Steve.
Thanks for joining me.
Steve Schulze (01:20):
Hey, Greg.
Great to be here and lookingforward to our conversation.
Greg Muzzillo (01:24):
So for a while, while you were, you were, uh,
starting the first suntan bedlocation, you kept your job and
you were sort of straddling bothgetting the business up and
running and keeping your job.
Steve Schulze (01:37):
I did.
And a lot of times, even in the,the Nekter business, we've had
so many people, which it ends upworking out quite well, but a
lot of times they'll start the,start the business and then quit
their job immediately.
Um, I'm not so sure that's themost prudent advice in the
world.
So I think you've gotta helpgrow your business first and do
some, have some confidence andproof.
Greg Muzzillo (01:56):
Right.
Right.
All right.
So you see an ad for a tanningbed.
You turn that into a tanning bedbusiness with a couple of
locations.
What came next?
Steve Schulze (02:07):
Um, to me, the barrier, you know, within the
first year I was the first one,you know, first or second one in
Newport beach by the end of thefirst year, I think there were
nine, prices plummeted, uh,guest counts, plummeted, uh, but
there were still just as many ormore people tanning.
Um, and at that particular timethere wasn't a Suntan lotion
(02:29):
made specifically for suntanning beds.
You know, people were stillusing Coppertone and I won't go
into the boring details of howit clouds the acrylic, but there
was a re I was basically tryingto solve a problem, which is not
having sun tan owners having to,you know, replace the acrylic
that often I contracted out witha, uh, with a chemist, we
(02:49):
developed a dry oil thatprovided sheen and reflection
and, sold the salons to fundthat business.
And, uh, within about ninemonths, I think we were in about
about 10,000 salons nationwide.
Give or take
Greg Muzzillo (03:03):
Amazing, amazing.
Is that product just still outthere in the business?
Steve Schulze (03:09):
No, it finally, the, it lasted probably another
five or six years like anything,it became a big business and
some of the big manufacturerscame in, you know, similar to
how the outdoor suntan worldhappens with Coppertone and
such.
It's a, you know, a different,unless you really have those
deep pockets to maintain it,it's very problematic.
Greg Muzzillo (03:28):
Okay.
So the tanning bed business gotcommoditized, drove down exactly
pricing and profits.
How'd you get into theinfomercial space?
I think that's what came nextfor you.
Steve Schulze (03:38):
Uh, the, you know, after selling a couple of
these businesses, FranklinCovey, I don't know if you know,
Stephen Covey and the sevenhabits and all that kind stuff.
Of course, Franklin Franklinplanner.
They invited me to do somepublic speaking, uh, for a while
.
And I did that for about a year,year and a half.
Um, and not long after I endedup being in Palm Springs and was
gonna play golf, but IndianWells and was looking for a
(04:01):
group to play with.
And somebody put me in a groupwith Greg Renker who was, you
know, half the principal ofGuthy Renker from proactive and
Tony Robbins and most successfulcommercials you see out there.
And he said, Hey, I find yourstory interesting.
You know, if you see someproducts out there that are of
interest, why don't we go aheadand do a joint venture and we'll
go ahead and fund it.
(04:21):
We'll do it 50 50.
Um, and so, uh, one thing led toanother and, and this is I
think, somewhat interest.
So we did that for a number ofyears and proved to be quite
successful yet.
Uh, then they got to the pointwhere they, it was really became
an annuity company in the sensethat you buy proactive.
You get month after month aftermonth, you know, or Tony,
(04:44):
whatever the product beautyproducts are.
Right.
And so he said, Hey, Steve, weturned into an annuity company.
Um, and we do have some one offproducts, but we're looking for
shows that do X numbers.
And so I was sitting in BillGuthy's office.
And I said, how many shows foreach show you produce, how many
are successful?
And he said about one in 10, andwe considered a successful show,
(05:05):
a hundred million in sales ormore.
And I said, so I had pitched anidea, but he thought the was
about 30 million.
And I said, so what do you dowith all these, you know, shows
that you don't like that aren'tsuccessful?
Cuz we just put'em up with ashelf we're done with them.
And I said, tell you what, howabout this?
I said, what if I go ahead andget a first look at'em?
(05:26):
So the shows that you think are,you know, not very good that
might do$30 million.
I said, I don't have muchoverhead.
It's just me and you know, myoffice and team and whatnot.
I said, if you give me firstlook at those shows, I'll pay
you a 7% royalty on it.
So maybe you get some of yourinvestment back, I'll buy the
products and move forward.
And so for the next, uh, numberof years, when they had a show
that they didn't like, they'dsend it to me, I'd maybe have
(05:49):
somebody make a few edits on it.
If I'd like the show and thenwe'd put it on.
And so therefore I had a, youknow, a million dollar show that
didn't cost me anything.
And sometimes they were verysuccessful sometimes, you know,
they were right and it wasn'tsuccessful at all.
Greg Muzzillo (06:03):
I love the idea though, of trying to turn
somebody else's discards into asuccessful business yourself was
brilliant.
But anyhow, at the end of theday, um, that kind of wound down
what next, I think one of thethings you decided to do was a
cleanse.
Steve Schulze (06:19):
Yes.
Greg Muzzillo (06:19):
And that whole cleansing experience, eventually
you started cleansing withoutany idea was gonna turn into a
business, but somehow along theway, it turned into a business.
Tell us how that evolved fromjust kind of cleansing while you
were in a pause mode, lookingfor your next opportunity and
how you found that opportunitythrough cleansing.
Steve Schulze (06:40):
There's a company outta New York selling cleanses
and uh, I ordered one and Itried it and sure enough, I lost
weight.
I felt good.
I had all this energy and, and Isort of had a pulse on the
market and people and trends.
And they said, Hey, this, youknow, this has got some legs.
And so I thought it would justbe a huge success with an
infomercial.
But the problem that I had was,you know, 20, uh, 18, 20 bottles
(07:03):
of juice, uh, is very heavy.
And when we did test shipmentsto New York, it was, you know, a
hundred dollars to ship.
And then if it sits outside, it,uh, you know, it just doesn't
last.
And so I was stuck.
I couldn't really, you know, itwasn't a viable infomercials, so
I, but I was still passionateabout the idea and the product.
So then what happened?
I was right down the street,there was a natural grocery
(07:27):
called Mother's Market.
And I was going in there everyday to grab a juice for most
days anyway.
And, uh, you know, a couplethings, uh, crossed my mind when
I was going at one is I startedasking the guys behind the
counter, cause there's alwaysbusy and always the line.
And it was, you know, how manypeople you're serving a day?
And they said, oh, we'reserving, two to 300 people a
(07:48):
day, two to 300 people a day,two to 300 people.
I'm like that's a lot of people.
I'm like, some of the stuff youwere having, you were choking
down, it's like, I don't knowabout you, but I don't like
carrot juice just straight.
But people drinking it.
Yeah.
And so, but mother subsequentlymoved about three blocks out the
market.
And I said to myself, you know,God, God forbid I drive another
(08:10):
three blocks.
You know how that is, it getsoutta my routine and how I drive
and whatever.
And at the same time, again,going back to the, uh, you know,
going back to some of the priorbusinesses, meaning the sun
business, what I was trying todo is solve a problem with the
acrylic.
Um, with this, you know, Istarted then looking at the
legacy brands, the Jamba Juicesof the world and such, and they
(08:31):
frankly had become, and stillare sort of glorified, you know,
Dairy Queens, you know, thesugar counts I was working out
and I was going to gymafterwards.
And after three months I hadn'tlost any weight.
I looked at nutritional paneland sure enough, I was having
more sugar and more caloriesthan my workout was burning was
actually gaining weight while Iwas working out.
And so to me, the space wasright to be reinvented.
(08:54):
And so what I wanted to do wasdisrupt the space and when I was
going to Mother's, what I foundout was, I didn't find out.
I just thought this on my own isthat the carrot juice didn't
taste very good.
Now, what if we could makejuices that tasted good, that
were affordable, they'reaccessible.
Uh, the people enjoyed andsimultaneously by having the
cleanse, I then have almost abuilt in catering aspect of it,
(09:16):
of a high end.
I sell it for a hundred, 150bucks.
Okay.
So I was like, Hey, we sell twoto 300 juices at five bucks a
day.
We sell a handful of, you know,cleanses, whatever.
Uh, as things turned out aboutthree blocks down the street,
there was an old, Starbucks,location from the early days of
when, uh, Howard Schultz hadthat third place.
(09:37):
You know, and at that time,people were, you know, had their
laptops, their hard back booksand newspapers and all that
energy that I remember goingthere, the space had been, uh,
vacated and Starbucks had moveddown the street to a drive
through.
And I said to myself, Hey, whatif I go ahead and try and
reinvent the juice space,similar to Starbucks,
reinventing the coffeeexperience and might as well go
ahead and do it at the sameplace Starbucks did.
(10:00):
So I called the landlord up andsigned a lease August 5th and
opened for business October10th, 2010.
And you know, here we are with,and there was never an intent,
frankly, with, I think it wasabout$50,000 to open and there
was never an intent of a secondor a third or a fourth location,
but, you know, fast forward totoday and we're bearing down on,
(10:22):
you know, nearly a couplehundred locations and a hundred
million bucks in revenue.
And so things turned out okay.
Greg Muzzillo (10:28):
When did you start franchising the business?
Steve Schulze (10:32):
Um, so this is a, uh, yeah, I'm glad you asked
that question because I'm veryopinion on this topic.
Um, you and I have seen amillion franchise out there.
We see press releases.
We see, you know, uh, a hundred,two, 300 stores.
Ironically, I was readingnation's restaurant news and a
new food concept came out.
They have yet to open yet.
(10:52):
They've signed 150 franchises.
And so for us, we opened 2010.
Uh, we had about 11 or 12locations in 2012, we got, we
had received probably, you know,three to five inquiries, you
know, a day from the day weopened.
Um, so I probably could havesold a ton of franchises, made
several million dollars, but I'dbe bankrupt today and back at
(11:15):
back at work, so to speak.
Right.
And so, but my idea was allright, we got 2012, do we
franchise, I was worried aboutwhether franchisees could carry
the brand standards, you know,uh, whether they could carry the
culture, how they wouldrepresent Nekter, how we would
support them.
And so, uh, while I was gettinga lot of pressure to franchise,
I said, tell you what we'regonna do all award six
(11:35):
franchises, and then gonna siton it for two years.
I'm not gonna award a singleother franchise regardless.
That's my compromise, which wedid.
And I thought during that time,I thought it was incumbent upon
us to do a few things.
One was learn what therelationship was about.
It was a very iterativerelationship, what we were
doing, right, what we were doingwrong, how we can, you know,
(11:56):
serve the franchisee.
Secondly, I thought proof ofconcept was very important and
in the sense of proof.
We went to different climates,such as Denver and Houston and
Dallas and, uh, you know, allover the place.
Uh, and my point to that is, isthat, you know, just like that
food concept, I mentioned asecond ago, where a lot of
concepts out there have, youknow, zero or one location, the
(12:20):
way I looked at is, you know,people are paying me a royalty
and they're buying a, basicallythe reducing the risk by buying
a proven system, right.
If I don't even have my storeopen or only have one store,
what the hell can I learn toshare to really earn that money.
Absolutely.
And drives me crazy when I seethese people that have, you know
, none one or very fewlocations.
(12:40):
And so for us, we sat on for twoyears, it was a very good, uh,
relationship sales actually wereever better represented by the
franchise partners.
And, uh, then in 14 we set upthe systems and started
releasing franchises in late 14,early 15th.
Greg Muzzillo (12:55):
I respect that a lot, Steve, and you and I are
bothered by the same thing.
It bothers me to see people comeup with an idea and sometimes
even try to franchise it beforethey have a location, almost
looking to franchise owners infranchising as their venture
capital.
And that's just wrong.
People are looking tofranchising for a proven
concept, proven operations andproven methodology.
(13:18):
And you did it right.
You, you prove things out, youslowly experimented with
franchising and, and you know,what you're being rewarded for
it now in spades with yoursuccess.
Steve Schulze (13:31):
Yeah.
Yeah.
I think you're right about thatin the sense that it was a smart
decision I made.
Um, I'm not saying that bymyself on the background like
that, I just think that, youknow, the more that we learn,
the more that we can share withthe franchisees.
So there's very little, youknow, we still own a lot of
locations.
Um, and there is, there's verylittle that we haven't been
through.
And one other thing that I'llsay about franchise that I find
(13:54):
fascinating going back to usingas their, you know, financial,
going back to their funding,their private equity, so to
speak is that, you know, there'stwo ways to grow, basically a
speed to market, you know, or acentric model.
And I chose a centric model.
What I mean by that is I putthree in orange county, three in
San Diego, three in Scottsdale.
And my opinion was I wanted tosee how they did if they did
(14:15):
well, then I wanted to infillthe area as, as quick as I could
so that I could then own thatarea and keep basically
competitors out.
Yeah.
And I refused, I had inquiriesfrom, you know, from, uh, you
could imagine from the Midwestto the east coast all over the
place.
Um, and I see other brands that,even in our space, that all of a
(14:37):
sudden they have one location inBoise, one in Denver, one in
Phoenix, one in some likeCalifornia and from a
franchisor's perspective.
Could you imagine the cost forme to fly up?
Not may my team to fly up therejust to one location, the brand
awareness, the supply chain iscrazy.
Yeah.
Greg Muzzillo (14:51):
Fred DeLuca the guy that started a subway.
Uh, God rest, his soul he'spassed from some time ago.
He, he said, similarly that, uh,they would put in a subway.
And then, he would say that thesubway was actually a training
experience.
People would come in, they'dlearn how to stand over here and
then walk through the line andthen get whatever the things you
(15:14):
wanted then get to the end andthen pay.
And he said, those were justtraining centers for customers,
customer training centers thateventually enabled him to
continue to expand in thatmarket.
We all know what's happened tosubway today, but, uh, anyhow,
it was all genius at the time.
And I think what you're doing isright.
Having multiple units in ageographical area, make a lot of
(15:36):
sense for a whole bunch ofreasons, marketing wise and,
attention wise, uh, cetera.
So, all right.
Share with our customers one ortwo of the biggest mistakes
you've made and what lessons youlearned from them.
And then we'll close out with acouple of the biggest successes
and the lessons from thosesuccesses,
Steve Schulze (15:57):
A couple things.
One is I think that, you know,life is about solving problems.
And I think that, uh, and I'vealways looked at solving
problems as a challenge.
It's never intimidated me.
I've actually enjoyed problemsbecause I like reading, you
know, mysteries and watching theBritish series and things of
(16:17):
that nature, trying to figure itout.
And I think that's how, how lifeis, whether it be a
relationship, personalrelationship or a business.
And when I looked at Nekter,what I looked at was I saw an
industry that had gone waywardhad gone sideways, that they
had, you know, basically startedon that slippery slope.
And next thing you know, it wasall sugars and fillers.
And I said, Hey, that industryneeds to be fixed.
(16:39):
Um, now when I went to fix it,going back to one of these
lessons is that, you know, inlife too many people listen to
other people's opinions and thatwhite noise, you know, I go home
with this great idea about thejuice thing.
And as you can imagine,everybody, it's a fad, you're
crazy, stupid, you know,whatever it is.
And so, yeah.
(17:00):
Uh, you know, whether it be whatI told you earlier, the suntan
business, you know, was the samething, what's wrong with you?
Why are you doing it?
So I think people have to reallybe very disciplined to block out
the white noise, if they believean idea, if they have the
fortitude to do it, theperseverance to do it, stick to
it, keep going, uh, if you fail.
(17:21):
So what, you know, I mean, Ifailed probably more.
I'm sure still a lot more thanI've been successful.
So, um, uh, but never stopped meand never crossed my mind that I
would ever long term I'd neverfail.
I never got down.
When I, when I company lostmoney, I screwed up.
I just got back up and startedagain.
Greg Muzzillo (17:39):
Amen.
Steve Schulze (17:40):
Yeah.
Greg Muzzillo (17:42):
All right.
So not listening to others isreally wise advice for a whole
bunch of reasons.
Number one, some people have noclue what they're talking about.
Uh, some people don't even wishother people, well, like some
people I tell some people when Italk, you know, be careful when
you listen to naysayers, cuzsome people like your next door
(18:02):
neighbor, they might not wannasee you be uncomfortable.
Cuz if you pull in the drivewaywith a big new Mercedes that
might just challenge them.
And so you have to be reallycareful about who's giving you
advice and who's giving youfeedback because sometimes it
could be for all the wrongreasons, share your biggest
success and the biggest lessonthat you wanna share with our
(18:23):
listeners.
Steve Schulze (18:25):
Depends on what you mean by success.
I think that Nekter clearly hasbeen, you know, for me anyway,
you know, the biggest success totake it from little$50,000
investment to, you know, ahundred million company.
Um, I think, is time out.
(18:46):
I never look back on it, say, oh, that's, that's good.
And, and I'm not resting for it.
Uh, and as far as our goal, ourgoal is to be the first billion
dollar brand in this space.
Um, and we've got a lot of newproduct and new categories and
companies that we're startingthat will, I think, assist in
getting that.
I think that obviously you hearthe stories about, uh, you know,
(19:07):
people doing it for the wrongreasons, which is money.
You know, people do somethingfor money.
And, and I think the problemwith that is that meaning that
when I give the advice, Hey,don't do it for money.
They say, oh, it's easy for youto say because you have money or
it's, you know, but it really istrue because money is not a
tangible thing.
You know, it's, uh, you lose thepassion, you like what it buys,
(19:28):
but you know, are you gonna giveup your Friday night and your
weekends and whatever, if it'smoney related when I started
Nekter and even to this day, 10years, I've never crossed my
mind.
If I've gotta go in at seven oreight o'clock in the morning and
buy coconut water or work theregister, I look at it as a part
of who I am, part of life.
(19:48):
And so I think that, uh, whichgoes back to the last thing I'll
say, which goes back to thepassion and the passion.
I think people have toreevaluate, you know, how they
interpret that, uh, you know,that term and, uh, that passion
question, because it's notnecessarily, I'm passionate
about X or Y or Z is morepassionate about the process and
stuff.
So
Greg Muzzillo (20:09):
There's a lot of wisdom in that.
And I think Steve part of thelesson is when people aren't
passionate about something, notonly are they not necessarily
willing to go in at seveno'clock at night or whatever it
takes if it has to happen.
But I think you and I share alot of the same philosophies.
I think about things morning,noon, and night, because I'm
(20:30):
passionate about it.
And I'm ever increasingly wannalearn more and improve more.
And in that passion foreverlearning and ever improving
continues to build a business,Steve and spent a lot of fun
spending time with you.
I have no doubt you're gonnareach that billion dollar goal
and more thanks for your time.
Steve Schulze (20:49):
Greg, appreciate it.
Been a joy and look forward totalking to you soon.
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