Marathon-man-turned-entrepreneur Brian Maxwell's powerful snack creations give
athletes the energy they need to endure.
Patience, persistence and hard work are common
characteristics of entrepreneurs and professional athletes alike. Brian Maxwell
had no prior business experience when he started his quest for a performance
nutrition food, but as a world-class runner he was used to jumping hurdles,
both physical and implied.
In 1977, the English-born marathon man ranked third
internationally, and his career continued to thrive into the '80s when he was
selected to the Canadian Olympic Team. Maxwell was burning up the competition,
but the four-time Canadian national champion would develop stomach problems
during the final stretch of a 1983 race in England. "I was leading the
race, but I just started falling apart," Maxwell recalls. He says he
experienced all the classic symptoms of low blood sugar and actually stopped to
ask spectators for something to eat. "Of course, once I did that I lost
momentum and several people passed me," he explains. And after winning 14
marathons in his career, he finished seventh in the competition.
Maxwell's defeat, however, would eventually lead him to
victory in a different competitive arena: corporate America. The road was long
and the skeptics many, but Maxwell's training as a marathon man provided him
with the endurance he would need to find the winning ingredients for a
breakthrough energy-food product.
Maxwell's energy problem is shared by many other athletes,
especially runners, most of whom face a difficult choice between pre-contest
fasting or running on a full stomach and risking performance-crippling
digestive difficulties. Maxwell had tried both strategies, but after his
disappointing exhibition in England, these choices were no longer acceptable,
and he was determined to find a remedy.
Upon returning from England, Maxwell began surveying the
research literature on human-performance nutrition with the help of a chemist
from the University of California, Berkeley, where Maxwell was coach of the
distance-running team. Maxwell's future wife, Jennifer Biddulph, also an
accomplished runner studying nutrition and food science at the college, joined
the team, and the trio began their pursuit of a sustained-energy food.
"We really first started with the idea, and then we
spent the first six or eight months with the belief that if we just came up
with the right recipe, someone would make it for us," explains Maxwell.
In 1984, Maxwell and his team discovered that the ideal
combination of ingredients for optimizing human performance called for a
mixture of complex and simple carbohydrates, along with 17 key vitamins and
minerals that directly relate to energy, metabolism and performance. Maxwell's
goal was to blend these natural performance-enhancing ingredients to create a
delicious tasting, easily digestible, conveniently packaged food.
"We also learned that fat is slow energy, it's hard to
digest and is not the preferred fuel of the muscles. You are not going to
perform as well if you are metabolically burning fat," insists Maxwell.
"That led into a guideline that we wanted a product that was very low in
fat."
Understanding their mission, Maxwell and Biddulph began
experimenting in their Berkeley kitchen and spent the next three years
concocting and tasting hundreds of different formulas. As their recipe evolved,
the couple sought feedback on their product from friends who were competing in
major sporting events. The results were improved performance, and word quickly
spread in the athletic community. People began asking if they could buy
"those powerful bars" (hence, the name) for training and competition.
To meet this new demand, Maxwell would have to move production from his kitchen
to a manufacturing plant.
"There
were lots of challenges in going from a 16-bar batch in a KitchenAid mixer in
our kitchen to making a 300-bar batch as a test run of the line, and then
making 50,000 bars at a time," explains Maxwell. The transition from the
kitchen to the plant was not his first obstacle with PowerBar, but it was one of the most
significant. Finding a co-packer to do a trial run proved difficult, as his
recipe was so low in fat that it did not provide enough lubrication for the
machinery to move the ingredients through the production line. Plant managers
told him he would have to start with a base of lard or palm kernel oil and add
sugar to form a matrix before incorporating his own health-conscious recipe
into the mix. But Maxwell wouldn't take "no" for an answer and
continued searching for an alternate solution to fat.
"I proceeded to mix up a dreadful concoction of orange
juice and some oats, breakfast cereal, milk powder and vitamin pills, and
thought, 'How about this?' and of course, it was a horrible mess," recalls
Maxwell. "So we were not just developing a recipe; we were also developing
the process." He discovered the only way to get the material through the
food-processing equipment was to have very precise control over both the
temperature and the timing of the mixing.
After inventing both the recipe and the formula, Maxwell's
next hurdle was financing. He first tried to license the product. "We had
written to various large food companies like Quaker Oats and General Mills and
just got back polite rejection letters from them," he explains. "So
in 1986, I wrote a business plan, and we went out and talked to some venture
capitalists and wealthy individuals." Maxwell was attempting to sell about
one-third of his company for $250,000. His assets were a formulation, a
trademark and 1,000 consumer surveys indicating interest in his product.
"We, unfortunately, or in some ways fortunately, found
that while people thought it was kind of fun, and we had good meetings with
people, nobody really wanted to write a check," says Maxwell. People told
him $250,000 was just not enough capital to start a packaged-food company. So
he did it with less. Maxwell tapped his savings account, using funds he had
received for starring in a television campaign for Xerox Marathon copiers in
the early 1980s. "I had about a $55,000 nest egg and just decided to see
what we could do with that," he explains. "And it was actually enough
to print our wrappers and get our first 35,000 PowerBars manufactured."
Having spent most of his resources on producing the bars,
there was little remaining for a marketing campaign or distribution efforts.
Maxwell says his business plan called for PowerBar to be a mail-order company.
"Initially, we were selling out of the basement of our triplex. We started
off by sending packets of free bars to all the people who filled out our
survey, inviting them to actually try the product and allowing them to buy
direct from us by mail order if they liked it," explains Maxwell. The
response, he says, was "solid" and PowerBar was on its way.
A few months later, in the summer of 1987, PowerBar would
reach its turning point to success. "Our big break was getting on national
television, courtesy of the American 7-11 bike team at the Tour de France. They
were the first American team that was competing in this event, and they asked
us for 1,200 PowerBars," explains Maxwell. In exchange, PowerBar received
free national television exposure and found a whole new niche.
"We were able to really sort of focus on this little
world of cycling. We would go to cycling events, talk to cyclists, read
cyclists magazines and begin to advertise in some of those," says Maxwell.
By the next year, PowerBar was distributing nationally to about 3,000 bike
shops.
Today, the PowerBar distribution system is a bit more
complicated, selling through health food and grocery distributors, independent
sales representatives, sports gyms and military resale systems. Additionally,
PowerBar has 30 distributors in various other countries around the world.
However, as difficult as manufacturing and distribution were, Maxwell says his
biggest challenge has been finding the right employees to grow the company.
"It's really about the people, so that's where the
challenges are. Jennifer and I realized that we wanted people who would give
the same level of service and the same level of care as we had, and that the
way to do that was to make every employee an entrepreneur," he explains.
PowerBar employees take part in a profit-sharing program and are empowered to
make decisions that affect the bottom line. However, facing challenges can
often lead to making mistakes, and Maxwell admits that, at times, he may have
been slow to recognize when people were in a position that they just couldn't
handle.
"We expect the best out of people, but the reality is
you don't always get it," he explains. "But to me that's still the
best way to approach it."
With this strategy, PowerBar has grown from a trio in a
Berkeley, Calif., to a $100 million dollar company with two warehouses, two
manufacturing plants and about 250 employees. This growth has spawned another
challenge for the energetic company: logistics.
"You have to be able to deliver your product, not just
on a certain day, but at a certain dock at a certain time of day, in a certain
configuration. We've made a big investment in information technology, and when
you put in a very sophisticated system like we have, there are
challenges," says Maxwell. He says although this is the right decision for
the long-term future of the company, it does give smaller competitors somewhat
of an advantage.
"When you're small, you can kind of make deals with
people. You can sell to one customer at one price and another customer at
another price, and nobody really knows the difference," explains Maxwell. "When
you get to be bigger, if you try to do those things, you're really going to get
yourself into trouble. So that's sort of our challenge — how to maintain an
entrepreneurial spirit, but also be a professionally managed company and be
dealing with these larger logistical issues."
PowerBar is the leader in its industry, bar none. Still,
competition always represents a challenge, and Maxwell has plenty of it.
Smaller companies are working on their own sustained-energy foods, and powerhouse
brands like Gatorade, M&M Mars and even Quaker Oats already have their own
versions. However, PowerBar continues to outperform the competition by focusing
on what they do best.
"We have to have an understanding of who we are and who
we're not," explains Maxwell. "We're not going to be competing in
every area. What PowerBar really is about is health, nutrition and performance.
It's really having a very focused understanding of who we are, what the brand
represents and who our customers are."
At the core of the company's marketing strategy is a
relationship with athletes and sponsorship of events. What started as a product
for runners and cyclists has spread into other sports like basketball,
swimming, football, golf and tennis, and has even attracted non-athletes who
are interested in a tasty source of long-lasting energy. "We go wherever
there's people who are active, and we can find people who need energy and get a
PowerBar product into their mouths," says Maxwell.
Maxwell
and Biddulph married in 1988, and the two continue to remain involved in the
company. Brian is president and CEO of PowerBar and runs the company through
his executive team. Besides being mother to the couple's four children,
Jennifer has several roles in the company, including a position on the board of
directors and the role of company spokesperson.
"And
just as she did originally, she continues to work on projects for new products,
and flavors, and textures and different kinds of things that we think will be
appropriate to the PowerBar brand," explains Maxwell. In addition to the
original eight bar flavors, which include Apple Cinnamon, Oatmeal Raisin and
Wild Berry, PowerBar recently introduced a new "harvest" variety, as
well as a quick-acting PowerGel, with a sports energy drink to be launched
soon. And the packaging recently got a makeover when the company introduced an
easier-to-open package for athletes who don't have time to fuss with foil during
a workout. Furthermore, the company's online store now peddles PowerBar gear, a
line of casual, running, cycling and mountain-biking apparel.
With continued excellence in an expanding product line,
Maxwell has raised the bar for companies that hope to compete in this growing
industry. But Maxwell still has his running shoes on and says the race is far
from over.
"When you get to $100 million, they don't just hand you
the gold watch and shake your hand, and that's it," Maxwell jests.
"There are newer challenges. Now we're thinking about how to become a $500
million or a billion-dollar company."
To reach that goal, PowerBar is working toward an initial
public offering in a few years. However Maxwell insists this will not be the
end, but rather a new beginning. "I think the outlook for the future is
very positive because these are products that are convenient, they're
nutritious, they're healthy and they're all about performing at your best. We
think those are things that are important to a widening group of consumers, and
we want to continue to be the leader in those kinds of products, and we're
working on doing that."
Company: PowerBar
URL: www.powerbar.com
Founders: Brian and Jennifer Maxwell
Industry: energy foods
Location: Berkeley, Calif.
Founded: 1986
Employees: 250
Revenues: $100 million (expected for 1998)
Copyright © 2000 by Virtual Advisor, Inc. All rights reserved.