You've never heard of Innocent Drinks, but the London company thinks it can be the world's favorite healthy food and drink brand.
Once upon a time as students at Cambridge University in the early '90s, Adam Balon, Richard Reed and Jon Wright ran a business organizing club nights. Now the three run Innocent Drinks, the U.K.'s favorite smoothie company (they also sell in more than a dozen European countries), with revenue of more than $150 million a year. The company's mission is as simple as its all-natural ingredients: To make it easy for people to do themselves some good – and that doing so should taste good, too.
Besides its pure-fruit smoothies, the company is nearly as well-known for its cheekiness (one label reads: "separation occurs, but mummy still loves daddy") and its ethical business practices (the partners insist that fruit growers look after workers' rights, and 10 percent of annual profits go to the Innocent Foundation, which funds projects in countries where suppliers are based). But in 2009, the company sold a 20 percent stake to Coca-Cola, raising the equivilant of more than $45 million to fund a global expansion. "We want to be the Earth's favorite healthy food and drink company," says Reed, now 37.
Innocent has also expanded its product line, by offering "veg pots" (three servings of vegetables, plus whole grains and sauce), thickies (yogurt-based drinks), and more. Despite the 12-year-old company's success, Reed says it wasn't until about three years ago that he stopped questioning whether their initial idea would work. "Every time something good happened I still didn't believe – it was just temporary respite from the paranoia that it was destined to fail," he says with a laugh. He told his story to Inc.com's Courtney Rubin. What follows is an edited transcript.
In February 1998 we were three 26-year-old friends living together and working in London, and we'd always wanted to set up a business together and we'd try to think up ideas. We were drinking too much beer and eating too much pizza and we thought we'd solve the riddle of healthy eating – everyone knows the benefits of it, but modern life conspires against it. So we thought totally natural fruit smoothies would be a great little healthy habit and would make it easy for people to do themselves some good.
After about six months we had this orange, banana, and pineapple recipe, and we needed to test it on people other than our friends and family, who of course all said it was good. So we bought £500 of fruit and set up a stall at the Jazz on the Green festival in Parsons Green, which we thought would be full of the type of people who'd buy our product. Originally we had a three-page market research form for people to fill out, but when it's a lovely sunny day you don't want to fill out a form. And it felt too corporate. And so someone said: "Don't you just want to know if people will buy them or not?" So we had a sign that said: "Do you think we should give up our jobs to make these smoothies?” and we had a "yes" bin and a "no" bin, and we committed to each other that if the yes bin was full we'd quit our jobs the next day. And the yes bin was full, but still we weren't sure. So we went back to our house in Barons Court and flipped a coin, and it came up three times in a row tails. So we all went in Monday morning and resigned.
We were innocent in name and innocent in nature because we'd only left with our last paychecks. We had no brand or packaging, we'd only ever made the smoothies in our kitchen, not on a grand scale, and we thought we'd be out to market in three to four weeks!
It turned into nine months, as we applied to 20 different banks and got turned down 20 times. We applied to every venture capital firm, and they all turned us down. One investor told us we scored a zero out of five in the investors' handbook: that we were friends, we'd never set up a business, we had no experience in food and drink, and we were going up against huge companies. And that was representative feedback. We went to one of these events that puts entrepreneurs in front of business angels and we gave it the pitch of our lives, and at the end I said: "If anyone's interested to find out more, could you put your hand up?" And no one did. It was a soul destroying experience.
And we sat on our sofa – this blue Ikea sofa – and it was "Well, that's it, we've got to call it a day because everyone's said no." And a mate of our said: "You will know someone who knows someone who knows someone who's rich – it's like the Kevin Bacon game." So we sent out an email to literally everyone we knew. I nicked a load of addresses from my old workplace and we spammed half of London asking: "Do you know anyone rich?" And we got two e-mails back, one of which was from a friend of Jon's from school who'd done work experience with an American guy called Maurice Pinto who he'd heard sometimes made investments. So we had a meeting with him and he said it was a dumb idea but that he sort of believed in the team. We were trying to raise £250,000, and he said he'd put in £50,000 and committed to raise the rest for us. But the other six investors he usually worked with all said no, so he put in the extra 200 grand himself, entirely out of obligation. It's the single best investment he's ever made, and he loves telling that story.
Equally as hard as trying to raise funds was finding a manufacturing partner, and again, we got our break from meeting someone very senior near the end of his career. We always knew we couldn't build our own factories – that we'd develop the recipes and find someone else to make them. Everyone in manufacturing also said our idea wouldn't work, but they're not as brutal as investors – they'd say no but in a helpful way, suggesting someone who might say yes. So we finally met Mike Lord, who had started by importing fresh oranges to make fresh-squeezed orange juice. It's not a huge leap from there to smoothies, and we told him we'd put in the extra kit required. He said, "I don't think it's going to work, but there's something in your eyes that reminds me of myself when I was your age, so I'll do it."
