By surrounding herself with experts, can this business owner write a success story with her obscure tea drink?
By surrounding herself with experts, can novice founder Heather Howitt hook coffee fanatics on an obscure East Indian drink before the Starbucks of the world do?
| Executive Summary
COMPANY: Oregon Chai Inc., Portland, Oreg.
CONCEPT: Introduce a tea-based beverage into the rapidly growing specialty-coffee market
PROJECTIONS: Revenues will grow from $190,150 in 1995 to $5.4 million in 1998
COMPETITIVE ADVANTAGE: Savvy advisory board experienced in national product rollouts
HURDLES: Familiarizing consumers with chai; overcoming company management's inexperience
The Founder
NAME: Heather Howitt
AGE: 29
PERSONAL FUNDS INVESTED: $3,000
EQUITY HELD: 22%
SALARY: $30,000
FORMER LIFE: Graduated from University of California at Santa Cruz in 1992; discovered chai by stumbling upon a shack where it was served while she was skiing through fog in the Himalayas. Pursued an environmental career in recycling and a graduate degree in urban studies until her mother persuaded her to drop everything to launch a chai company |
On a sparkling fall morning in downtown portland, Oreg., the eight employees of Oregon Chai Inc. sit around a table at a prominent law firm, contemplating the difference between "efficiency" and "effectiveness." To illustrate the distinction, Oregon Chai's chairman, Rex Bird, shares a parable about two people sawing wood. The first saws furiously, never taking a break. The second pauses every 10 minutes or so to sharpen his blade. "If we don't take time out to sharpen the saw, we can't cut as much wood," observes Bird. The young Oregon Chai team listens, rapt. Then its members spend two hours in an exercise to determine their respective personality types (controller, persuader, analyzer, or organizer). Finally, they soak up a pep talk from Bird, which he peppers liberally with quotes from sources as varied as W. Edwards Deming, Carl Jung, F. Scott Fitzgerald, and Bob Dylan.
The team-building exercise is one facet of Oregon Chai's chief advantage over competitors in this still-tiny niche market. The company's founder and president, Heather Howitt, and her colleagues are eager to draw from others' experience and expertise--specifically, from people who have been down the company-building road before. "Strategically, they're one of the strongest groups I've seen for a small company," observes Dwight Sinclair, an Oregon Chai investor and board member, who puts his 11-year food-service background to work advising the company.
Because they harbor no illusions about their business sagacity, Howitt and company always have their feelers out. Howitt recalls that the local paper ran a story about Rex Bird's departure from a Mexican-food chain, which he'd helped take public. "We've got to get this guy," she told her colleagues. And they did.
Howitt and her eight employees possess a rare quality. "We know what we don't know," she observes, "and we're not afraid to ask for help." Since its inception, in October 1994, Oregon Chai has assembled a board of directors that any corporation could covet. Joel Lewis, the advertising exec who was responsible for putting Lipton iced tea into a can, and who currently counts Nestlé and Carnation as clients, handles branding and advises Oregon Chai's marketing director. Sinclair, a broker responsible for the California rollout of Wholesome and Hearty's Gardenburger, oversees sales and distribution. Bird, a 21-year food-service-industry vet, directs operations. A partner at a prominent Portland law firm handles the start-up's legal affairs. A boutique investment firm arranges its financing.
THE PRODUCT. The Pacific Northwest spawns trends. First it was coffee. Next came Microsoft and microbreweries. Then grunge. The next trend?
Chai.
Chai? Well, maybe.
Chai rhymes with high, and the ch is pronounced like the ch in chair. Chai is the generic word for tea throughout parts of the Middle East, Asia, and Africa. In this country it refers to a sweet, spicy, milky beverage that combines black tea, honey, vanilla, and spices such as cinnamon, cardamom, ginger, and even pepper. Though it's been sipped hot and cold for centuries in India and Nepal, chai first appeared here during the 1960s and survived as a local phenomenon in crunchy communities like Boulder and Portland. Now Howitt and company intend to make the drink as ubiquitous as caffè latte.
THE MARKET. "Every year there's a product of the show. A couple of years ago it was syrups, in 1995 it was baked goods, and in 1996 it was chai." Colin Campbell, editor of the trade magazine World Coffee & Tea, was making the rounds at the annual trade klatch known as Coffee Fest, in Seattle. Four chai companies bought booths here in 1996, and they spent most of their time defining the product for quizzical visitors. "We don't consider ourselves a tea or a coffee. But we do contain tea, and we're kind of like a latte," explains Oregon Chai chief operating officer Brian Ross for the umpteenth time.
