Million Dollar Monday

Disrupting the Status Quo & Building a Proven Business Model

• Greg Muzzillo

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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

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Resource Links
Steve Schulze LinkedIn  |   Steve Schulze Instagram
Nekter Juice Bar LinkedIn  |   Nektar Juice Bar Facebook
https://nekterfranchising.com/             


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Greg Muzzillo:

Hello and welcome to Million Dollar Monday. I'm your host, Greg Muzzillo, bringing you real successful people with real useful advice for people with big dreams. I understand big dreams. I turned an investment of$200 and a lot of great advice from some really successful people into my big dream Proforma. That today is a half billion dollar company. Well, hello and welcome. Today, I'm joined by a fascinating guy who has really taken the entrepreneurial journey to several different levels and into several different areas. And I'm gonna just let him tell his story about how he got into the tanning bed business, the tanning oil business, the infomercial business, and today the Nekter Juice Bar business with a business approaching 200 locations with another, almost a hundred in development in over 110 million in sales. Welcome Steve Schultz, Steve. Thanks for joining me.

Steve Schulze:

Hey, Greg. Great to be here and looking forward to our conversation.

Greg Muzzillo:

So for a while, while you were, you were, uh, starting the first suntan bed location, you kept your job and you were sort of straddling both getting the business up and running and keeping your job.

Steve Schulze:

I did. And a lot of times, even in the, the Nekter business, we've had so many people, which it ends up working 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 the most prudent advice in the world. So I think you've gotta help grow your business first and do some, have some confidence and proof.

Greg Muzzillo:

Right. Right. All right. So you see an ad for a tanning bed. You turn that into a tanning bed business with a couple of locations. What came next?

Steve Schulze:

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 the first year, I think there were nine, prices plummeted, uh, guest counts, plummeted, uh, but there were still just as many or more people tanning. Um, and at that particular time there wasn't a Suntan lotion made specifically for sun tanning beds. You know, people were still using Coppertone and I won't go into the boring details of how it clouds the acrylic, but there was a re I was basically trying to solve a problem, which is not having sun tan owners having to, you know, replace the acrylic that often I contracted out with a, uh, with a chemist, we developed a dry oil that provided sheen and reflection and, sold the salons to fund that business. And, uh, within about nine months, I think we were in about about 10,000 salons nationwide. Give or take

Greg Muzzillo:

Amazing, amazing. Is that product just still out there in the business?

Steve Schulze:

No, it finally, the, it lasted probably another five or six years like anything, it became a big business and some of the big manufacturers came in, you know, similar to how the outdoor suntan world happens 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:

Okay. So the tanning bed business got commoditized, drove down exactly pricing and profits. How'd you get into the infomercial space? I think that's what came next for you.

Steve Schulze:

Uh, the, you know, after selling a couple of these businesses, Franklin Covey, I don't know if you know, Stephen Covey and the seven habits and all that kind stuff. Of course, Franklin Franklin planner. They invited me to do some public speaking, uh, for a while. And I did that for about a year, year and a half. Um, and not long after I ended up being in Palm Springs and was gonna play golf, but Indian Wells and was looking for a group to play with. And somebody put me in a group with Greg Renker who was, you know, half the principal of Guthy Renker from proactive and Tony Robbins and most successful commercials you see out there. And he said, Hey, I find your story interesting. You know, if you see some products out there that are of interest, why don't we go ahead and do a joint venture and we'll go ahead and fund it. We'll do it 50 50. Um, and so, uh, one thing led to another and, and this is I think, somewhat interest. So we did that for a number of years and proved to be quite successful yet. Uh, then they got to the point where they, it was really became an annuity company in the sense that you buy proactive. You get month after month after month, you know, or Tony, whatever the product beauty products are. Right. And so he said, Hey, Steve, we turned into an annuity company. Um, and we do have some one off products, but we're looking for shows that do X numbers. And so I was sitting in Bill Guthy's office. And I said, how many shows for each show you produce, how many are successful? And he said about one in 10, and we considered a successful show, a hundred million in sales or more. And I said, so I had pitched an idea, but he thought the was about 30 million. And I said, so what do you do with all these, you know, shows that you don't like that aren't successful? Cuz we just put'em up with a shelf we're done with them. And I said, tell you what, how about this? I said, what if I go ahead and get a first look at'em? So the shows that you think are, you know, not very good that might do$30 million. I said, I don't have much overhead. It's just me and you know, my office and team and whatnot. I said, if you give me first look at those shows, I'll pay you a 7% royalty on it. So maybe you get some of your investment back, I'll buy the products and move forward. And so for the next, uh, number of years, when they had a show that they didn't like, they'd send it to me, I'd maybe have somebody make a few edits on it. If I'd like the show and then we'd put it on. And so therefore I had a, you know, a million dollar show that didn't cost me anything. And sometimes they were very successful sometimes, you know, they were right and it wasn't successful at all.

Greg Muzzillo:

I love the idea though, of trying to turn somebody else's discards into a successful business yourself was brilliant. But anyhow, at the end of the day, um, that kind of wound down what next, I think one of the things you decided to do was a cleanse.

Steve Schulze:

Yes.

Greg Muzzillo:

And that whole cleansing experience, eventually you started cleansing without any idea was gonna turn into a business, but somehow along the way, it turned into a business. Tell us how that evolved from just kind of cleansing while you were in a pause mode, looking for your next opportunity and how you found that opportunity through cleansing.

Steve Schulze:

There's a company outta New York selling cleanses and uh, I ordered one and I tried it and sure enough, I lost weight. I felt good. I had all this energy and, and I sort of had a pulse on the market and people and trends. And they said, Hey, this, you know, this has got some legs. And so I thought it would just be a huge success with an infomercial. But the problem that I had was, you know, 20, uh, 18, 20 bottles of juice, uh, is very heavy. And when we did test shipments to 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, it wasn't a viable infomercials, so I, but I was still passionate about the idea and the product. So then what happened? I was right down the street, there was a natural grocery called Mother's Market. And I was going in there every day to grab a juice for most days anyway. And, uh, you know, a couple things, uh, crossed my mind when I was going at one is I started asking the guys behind the counter, cause there's always busy and always the line. And it was, you know, how many people you're serving a day? And they said, oh, we're serving, two to 300 people a 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 you were having, you were choking down, it's like, I don't know about you, but I don't like carrot juice just straight. But people drinking it. Yeah. And so, but mother subsequently moved about three blocks out the market. And I said to myself, you know, God, God forbid I drive another three blocks. You know how that is, it gets outta 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 prior businesses, meaning the sun business, what I was trying to do is solve a problem with the acrylic. Um, with this, you know, I started then looking at the legacy brands, the Jamba Juices of the world and such, and they frankly had become, and still are sort of glorified, you know, Dairy Queens, you know, the sugar counts I was working out and I was going to gym afterwards. And after three months I hadn't lost any weight. I looked at nutritional panel and sure enough, I was having more sugar and more calories than my workout was burning was actually gaining weight while I was working out. And so to me, the space was right to be reinvented. And so what I wanted to do was disrupt the space and when I was going to Mother's, what I found out was, I didn't find out. I just thought this on my own is that the carrot juice didn't taste very good. Now, what if we could make juices that tasted good, that were affordable, they're accessible. Uh, the people enjoyed and simultaneously by having the cleanse, I then have almost a built in catering aspect of it, of a high end. I sell it for a hundred, 150 bucks. Okay. So I was like, Hey, we sell two to 300 juices at five bucks a day. We sell a handful of, you know, cleanses, whatever. Uh, as things turned out about three blocks down the street, there was an old, Starbucks, location from the early days of when, uh, Howard Schultz had that third place. You know, and at that time, people were, you know, had their laptops, their hard back books and newspapers and all that energy that I remember going there, the space had been, uh, vacated and Starbucks had moved down the street to a drive through. And I said to myself, Hey, what if I go ahead and try and reinvent the juice space, similar to Starbucks, reinventing the coffee experience and might as well go ahead and do it at the same place Starbucks did. So I called the landlord up and signed a lease August 5th and opened for business October 10th, 2010. And you know, here we are with, and there was never an intent, frankly, with, I think it was about$50,000 to open and there was never an intent of a second or a third or a fourth location, but, you know, fast forward to today and we're bearing down on, you know, nearly a couple hundred locations and a hundred million bucks in revenue. And so things turned out okay.

Greg Muzzillo:

When did you start franchising the business?

Steve Schulze:

Um, so this is a, uh, yeah, I'm glad you asked that question because I'm very opinion on this topic. Um, you and I have seen a million franchise out there. We see press releases. We see, you know, uh, a hundred, two, 300 stores. Ironically, I was reading nation's restaurant news and a new food concept came out. They have yet to open yet. They've signed 150 franchises. And so for us, we opened 2010. Uh, we had about 11 or 12 locations in 2012, we got, we had received probably, you know, three to five inquiries, you know, a day from the day we opened. Um, so I probably could have sold a ton of franchises, made several million dollars, but I'd be bankrupt today and back at back at work, so to speak. Right. And so, but my idea was all right, we got 2012, do we franchise, I was worried about whether franchisees could carry the brand standards, you know, uh, whether they could carry the culture, how they would represent Nekter, how we would support them. And so, uh, while I was getting a lot of pressure to franchise, I said, tell you what we're gonna do all award six franchises, and then gonna sit on it for two years. I'm not gonna award a single other franchise regardless. That's my compromise, which we did. And I thought during that time, I thought it was incumbent upon us to do a few things. One was learn what the relationship was about. It was a very iterative relationship, what we were doing, right, what we were doing wrong, how we can, you know, serve the franchisee. Secondly, I thought proof of concept 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, all over the place. Uh, and my point to that is, is that, you know, just like that food concept, I mentioned a second ago, where a lot of concepts out there have, you know, zero or one location, the way I looked at is, you know, people are paying me a royalty and they're buying a, basically the reducing the risk by buying a proven system, right. If I don't even have my store open or only have one store, what the hell can I learn to share to really earn that money. Absolutely. And drives me crazy when I see these people that have, you know, none one or very few locations. And so for us, we sat on for two years, it was a very good, uh, relationship sales actually were ever better represented by the franchise partners. And, uh, then in 14 we set up the systems and started releasing franchises in late 14, early 15th.

Greg Muzzillo:

I respect that a lot, Steve, and you and I are bothered by the same thing. It bothers me to see people come up with an idea and sometimes even try to franchise it before they have a location, almost looking to franchise owners in franchising as their venture capital. And that's just wrong. People are looking to franchising for a proven concept, proven operations and proven methodology. And you did it right. You, you prove things out, you slowly experimented with franchising and, and you know, what you're being rewarded for it now in spades with your success.

Steve Schulze:

Yeah. Yeah. I think you're right about that in the sense that it was a smart decision I made. Um, I'm not saying that by myself on the background like that, I just think that, you know, the more that we learn, the more that we can share with the franchisees. So there's very little, you know, we still own a lot of locations. Um, and there is, there's very little that we haven't been through. And one other thing that I'll say about franchise that I find fascinating going back to using as their, you know, financial, going back to their funding, their private equity, so to speak is that, you know, there's two ways to grow, basically a speed to market, you know, or a centric model. And I chose a centric model. What I mean by that is I put three in orange county, three in San Diego, three in Scottsdale. And my opinion was I wanted to see how they did if they did well, then I wanted to infill the area as, as quick as I could so that I could then own that area and keep basically competitors out. Yeah. And I refused, I had inquiries from, you know, from, uh, you could imagine from the Midwest to the east coast all over the place. Um, and I see other brands that, even in our space, that all of a sudden they have one location in Boise, one in Denver, one in Phoenix, one in some like California and from a franchisor's perspective. Could you imagine the cost for me to fly up? Not may my team to fly up there just to one location, the brand awareness, the supply chain is crazy. Yeah.

Greg Muzzillo:

Fred DeLuca the guy that started a subway. Uh, God rest, his soul he's passed from some time ago. He, he said, similarly that, uh, they would put in a subway. And then, he would say that the subway was actually a training experience. People would come in, they'd learn how to stand over here and then walk through the line and then get whatever the things you wanted then get to the end and then pay. And he said, those were just training centers for customers, customer training centers that eventually enabled him to continue to expand in that market. We all know what's happened to subway today, but, uh, anyhow, it was all genius at the time. And I think what you're doing is right. Having multiple units in a geographical area, make a lot of sense for a whole bunch of reasons, marketing wise and, attention wise, uh, cetera. So, all right. Share with our customers one or two of the biggest mistakes you've made and what lessons you learned from them. And then we'll close out with a couple of the biggest successes and the lessons from those successes,

Steve Schulze:

A couple things. One is I think that, you know, life is about solving problems. And I think that, uh, and I've always looked at solving problems as a challenge. It's never intimidated me. I've actually enjoyed problems because I like reading, you know, mysteries and watching the British series and things of that nature, trying to figure it out. And I think that's how, how life is, whether it be a relationship, personal relationship or a business. And when I looked at Nekter, what I looked at was I saw an industry that had gone wayward had gone sideways, that they had, you know, basically started on that slippery slope. And next thing you know, it was all sugars and fillers. And I said, Hey, that industry needs to be fixed. Um, now when I went to fix it, going back to one of these lessons is that, you know, in life too many people listen to other people's opinions and that white noise, you know, I go home with this great idea about the juice thing. And as you can imagine, everybody, it's a fad, you're crazy, stupid, you know, whatever it is. And so, yeah. Uh, you know, whether it be what I told you earlier, the suntan business, you know, was the same thing, what's wrong with you? Why are you doing it? So I think people have to really be very disciplined to block out the white noise, if they believe an idea, if they have the fortitude to do it, the perseverance to do it, stick to it, keep going, uh, if you fail. So what, you know, I mean, I failed probably more. I'm sure still a lot more than I've been successful. So, um, uh, but never stopped me and never crossed my mind that I would ever long term I'd never fail. I never got down. When I, when I company lost money, I screwed up. I just got back up and started again.

Greg Muzzillo:

Amen.

Steve Schulze:

Yeah.

Greg Muzzillo:

All right. So not listening to others is really wise advice for a whole bunch of reasons. Number one, some people have no clue what they're talking about. Uh, some people don't even wish other people, well, like some people I tell some people when I talk, you know, be careful when you listen to naysayers, cuz some people like your next door neighbor, they might not wanna see you be uncomfortable. Cuz if you pull in the driveway with a big new Mercedes that might just challenge them. And so you have to be really careful about who's giving you advice and who's giving you feedback because sometimes it could be for all the wrong reasons, share your biggest success and the biggest lesson that you wanna share with our listeners.

Steve Schulze:

Depends on what you mean by success. I think that Nekter clearly has been, you know, for me anyway, you know, the biggest success to take it from little$50,000 investment to, you know, a hundred million company. Um, I think, is time out. 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, our goal is to be the first billion dollar brand in this space. Um, and we've got a lot of new product and new categories and companies that we're starting that will, I think, assist in getting that. I think that obviously you hear the stories about, uh, you know, people doing it for the wrong reasons, which is money. You know, people do something for money. And, and I think the problem with that is that meaning that when I give the advice, Hey, don't do it for money. They say, oh, it's easy for you to say because you have money or it's, you know, but it really is true because money is not a tangible thing. You know, it's, uh, you lose the passion, you like what it buys, but you know, are you gonna give up your Friday night and your weekends and whatever, if it's money related when I started Nekter and even to this day, 10 years, I've never crossed my mind. If I've gotta go in at seven or eight o'clock in the morning and buy coconut water or work the register, I look at it as a part of who I am, part of life. And so I think that, uh, which goes back to the last thing I'll say, which goes back to the passion and the passion. I think people have to reevaluate, you know, how they interpret that, uh, you know, that term and, uh, that passion question, because it's not necessarily, I'm passionate about X or Y or Z is more passionate about the process and stuff. So

Greg Muzzillo:

There's a lot of wisdom in that. And I think Steve part of the lesson is when people aren't passionate about something, not only are they not necessarily willing to go in at seven o'clock at night or whatever it takes if it has to happen. But I think you and I share a lot of the same philosophies. I think about things morning, noon, and night, because I'm passionate about it. And I'm ever increasingly wanna learn more and improve more. And in that passion forever learning 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 gonna reach that billion dollar goal and more thanks for your time.

Steve Schulze:

Greg, appreciate it. Been a joy and look forward to talking to you soon.

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