A cutting-edge music star who deftly blends art with commerce is brewing a new business venture. How many lumps will he take?
Sitting across a table from the man known as Moby, you wonder if perhaps your eyes are playing tricks on you. Wearing glasses, he's referring to his chief operating officer, discussing the finer points of corporate brand extension, and carrying on about irresponsible young rock stars(!) between sips of loose-leaf tea (you know, the kind your grandma drinks). How can a man with such a sublimely round orb of a head, you wonder, sound so...square?
"I was looking at this article called 'Stars and Their Cars," he's saying softly, his voice tinged with disbelief. "It was 20 musicians and their various fancy cars. And if you look at the shelf life of most musicians' careers, there are two or three years where they're profitable. Suppose a musician sells two million records. They're like, 'Wow, I must be rich.' But what they're not thinking of is, there are four other people in the band, there's a manager, lawyers, music video costs, promotion costs, touring costs, and taxes. And I wanted to call up each musician and just say, 'Haven't you done your research? Look at the numbers!"
Meet Moby the CEO, the fiscally conservative alter ego of the politically liberal, multiple-platinum-selling pop star who packs concert halls, scoops up MTV awards, and has been virtually anointed the coolest mainstream act in America. It's this Moby that forged an extraordinary relationship with the business world a few years ago when companies around the globe -- from Nordstrom to American Express to Nissan -- fell over one another to license all 18 songs from his 1999 album, Play, for use in commercials, films, and television shows. In the end, it's estimated that the songs were licensed a staggering 800 times. And a rock-star businessman was born.
Moby the man was actually born 39 years ago as Richard Melville Hall, great-great-grandnephew of Herman Melville, author of Moby Dick. His parents nicknamed him Moby early on and it stuck. In his 20s he became one of the top club DJs and dance-music artists in New York City, spinning electronica in a way that would eventually cross over to mainstream pop audiences with Play.
And now with lessons in branding, licensing, and publicity under his belt, he's venturing into the business world again. His own label? A recording studio, perhaps? A high-end fashion label? Nope. Try a tea cafe. On the Lower East Side of Manhattan. That's right. Tea.
On the surface, it hardly seems ambitious. The place is small. Ten tables or so. It's cute. And there are 97 different kinds of tea on the menu (because drinks have much higher margins than food, Moby points out). The food is strictly vegetarian, and it also caters to a vegan crowd since Moby happens to be one himself. And it's very popular, with an overflow crowd that even sent Moby himself to another cafe down the street on a recent rainy day.
He started the cafe, called Teany (pronounced "teeny"), in the summer of 2002 with his ex-girlfriend Kelly Tisdale, who remains his business partner. Unbeknownst to them both, they had each harbored a desire to open a tea cafe for many years, and discovered each other's secret dream soon after September 11, 2001. Downtown residents both, they were shell-shocked from that day (which happens to be Moby's birthday) and thought such a cafe might bring comfort to those in their neighborhood. And they thought there was a niche to be filled; they felt as if all the teahouses in New York City had either an English or an Asian twist to them. "You just don't really have any plain old American teahouses," says Tisdale. "We don't treat it like some sacred ceremony, and we don't charge $9 for a tiny pot that you're supposed to chant over before you drink. It's very unintimidating."
But she soon realized they'd made their first mistake. They opened the cafe with 93 steaming hot teas on the menu at the beginning of a steaming hot summer in the city. "It was really stupid of us," says Tisdale, who opened the cafe while Moby was on tour. "We didn't even think of iced drinks."
Tisdale quickly whipped up a few iced tea flavors for parched customers, but it wasn't until Moby returned from tour a few months later that the seeds of a larger idea were planted. Moby had remembered trying a tea juice drink at a Los Angeles restaurant and began mixing some of Teany's teas with juices and spices. "No one's going to want that," Tisdale told Moby at the time. But she humored him. And Moby turned out, perhaps not surprisingly, to be a mix master, fusing flavors like pomegranate juice and white tea as if they were backbeats and blues samples. After dozens of duds, they came up with a handful of flavors they liked. More importantly, the flavors proved to be big hits with customers. And Moby began to see a bigger picture emerging.
He sensed that the bottled tea drinks on the market were either too sweet (Snapple) or too purist (Honest Tea); there was nothing that was slightly sweet, healthy, and fun. Before long, the cafe wasn't just a cafe anymore. "The restaurant exists as a restaurant but also as a brand-development laboratory," Moby says. He and Tisdale tried out creations like the Antioxidant cooler and the Vanilla Berry Hibiscus cooler on customers while hatching plans for an ambitious bottled tea line, as well as future projects like bagged teas, loose leaf teas, and even a cookbook (due out in April). "If you just open a restaurant, it's going to be frustrating," he says, citing the low margins on food. "But if you see it as a way of developing the brand and developing product as well, I think it makes it more viable, more interesting, more exciting, and with less pressure on the restaurant."
Even when developing the name and logo, Moby looked for something that could lend itself to other products. He wanted a unique name and a simple, clean logo that would stand out regardless of the product. "If you're going to start a business," he says, "don't box yourself in as far as your development potential."
"One of my goals is to start businesses that make things that can't be downloaded. And basically, you can't download a bottle of tea."
And for the musician in him, there was a huge upside to the food and beverage segment. "With what's happening to the music business and film business with downloading," he says, "one of my goals is to start businesses that make things that can't be downloaded. And basically, you can't download a bottle of tea -- at least not yet."
And so in June of this year, Moby, along with consultant Barney Stacher, who also helped launch the cultish Dirty Girl brand of soaps, introduced Teany Bottled Tea in the New York metropolitan area. It's already in 200 stores, and has just expanded to Paris, where it's now carried in the department store Galleries Lafayette. There are discussions with Whole Foods, which carries Teany tea in its Manhattan stores, to carry the product nationally. One especially effective strategy was mixing the teas with alcohol -- birthing the Teany Bellini and the MarTeany, to name two -- at trendy New York parties, opening up whole new marketing channels.
Dane Neller, CEO and president of Dean & Deluca, a high-end specialty food retailer that's primarily in the Northeast, says the bottled tea line has been received "incredibly well." He attributes the success to the product's quality and to the eye-catching label that Moby created. He also says it's a savvy move on Moby's part not to push his involvement with it. "You want to sell the product, not the hype," he says. His only concern is that the company may try to grow too quickly.
It's a concern Moby shares. He says he's not inclined to sell the brand off to a large company like Coke or Pepsi, or even to partner with big-money investors who would expect fast results. "It seems like doing it ourselves, and financing it myself, we can keep it very small," he says. "And I don't know, this might be the dumbest thing in the world, but I just thought in launching, in developing the brand, I want to understand it before it expands. I want to be able to walk into almost every store that sells Teany and make sure it's being positioned well and also see how people respond to it. You want to start small because it seems like, ironically, starting small hopefully gives you the best chance of survival because then your mistakes are small mistakes."
And launching in the summer wasn't the only one. The first nine months, the cafe lost money hand over fist. "We had a really complicated menu at first," says Tisdale, who had worked in several restaurants before but never as a manager. They were using expensive ingredients, some of which spoiled very quickly. "We were basically paying people a dollar to eat our sandwiches. I had a cook who was very smart, and she told me, 'You're never going to make money like this. You don't need me here five days a week, you only need me here two. Simplify your menu and you'll be fine."
"Most people's best day would be on the beach at St. Bart's or driving a motorcycle above St. Tropez. Me, it was being at the bottling plant."
They broke even in year two. And Moby, who was barely visible in the opening months, now treats it as a second home. He lives six blocks away and eats there every day, sometimes twice a day. But there are no signs -- except for his frequent presence -- that he is affiliated with the cafe. They don't play his music, and there are no pictures of him (in part because Moby, while popular, is a polarizing artist, especially given his strong anti-Bush viewpoint). Many of the patrons don't recognize him, though some occasionally approach him for an autograph, and he happily indulges them. He is, however, very aware of his customers.
Tisdale says Moby is flat-out obsessed with customer service. "He'll be in the middle of a lunch meeting with four people," she says. "But if our staff doesn't greet customers who walk in within the first five seconds, Moby is up, running to get them menus and greeting them. I'd bet if someone walked in here and said, 'I really, really, really want to eat for free,' and if Moby was standing there he'd probably say to me, 'Well, it's just this once. Think of the markup on these things, you can just do one, can't you?' I'm almost sure of it." He regularly jumps up and clears his own table if a customer walks in and there are no tables available. He shovels snow from the front sidewalk. He adjusts the awnings so the glare of the sun doesn't hit diners in their eyes. "I don't think he expected that he was going to like Teany so much," says Tisdale. "But he adores it. He's so proud of it."
Moby says that one of his favorite days this year was the day the Teany bottles started rolling off the assembly line. "Most people's best day would be on the beach at St. Bart's or driving a motorcycle above St. Tropez," says Moby. "Me, it was being in Union, N.J., at the bottling plant. You feel like a queen bee giving birth to a few hundred thousand babies. You see the bottles come off and you're like, 'Wow, it exists now.' And I guess that's what's most exciting about starting this or making music -- creating something that didn't exist beforehand."
But despite the huge time commitment to his new album, coming out in March, he says he finds his mind drifting back to Teany, perhaps more than it should. "It's fun, but it gets very stressful," he says. "I find myself losing sleep because there's a health food store on University Place that isn't carrying Teany. I need to learn to take a step back."
Still, his plans for the company are anything but teeny. He'd love to franchise, a la Starbucks (which happens to be named for the character Starbuck in Moby Dick, a favorite book of Starbucks' founders). "I have this theory," Moby says, "and I'll probably end up being wrong, but I really think that in the next 25 years, tea will not replace coffee, but green tea consumption is going to go through the roof. Green tea is, pound for pound, one of the healthiest foodstuffs on the planet. And it's a good vehicle for delivering caffeine, tastes nice, and has an incredible diversity of flavors." He says he doesn't know enough about franchising yet, but he does know it's a real estate game, and that profit margins on franchising aren't particularly meaty.
Meanwhile, Moby's next start-ups are Little Idiot Collective (Little Idiot is the name of a character he draws compulsively), a maker of apparel and merchandise, and Blab Co., a group of illustrators -- including himself -- that he's helping organize in the hopes of licensing their work not only for publications and companies but also for Little Idiot's products. "For some reason, I have this almost pathological need to throw myself into things that I know nothing about," he says. "It's so exciting. A year ago, I knew nothing about the bottled beverage business."
But his COO, David Ronick, who oversees all the entities under the umbrella of Moby Entertainment, says Moby's a quick study and actually has some natural advantages. "In the traditional sense of marketing you think about who's our customer, what are their needs and wants, and how do we create a product or service that meets those needs and wants in a way that we can scale off of," he says. "But Moby kind of flips those things on their head, in that he looks at things as 'What would my friends want? What should people want that maybe they don't know about yet?' I think he needs to be ahead of the curve."
That, of course, is Moby's specialty.
This is Elyssa Lee's and Rob Turner's first story for Inc.