It's hard to fathom, looking at the endless racks of bagged chips, crackers and tortillas in today's supermarket, but in 1982 snack food consisted mainly of pretzels, potato chips and neon orange bagged popcorn. PepsiCo's Frito-Lay division dominated the first two markets, but popcorn was a snack ripe for the picking.
Andrew Martin came up with what seemed like a revolutionary idea. At age 27, he founded Smartfood, a "healthy" popcorn that used real cheese and none of the bright orange coloring.
Four years later, Smartfood, based in Hampton, Conn., would become a case study at Harvard Business School on the early process of raising capital. "Smartfood was an improbable success given how little the founders actually knew about the snack food business," says Harvard's William Sahlman, who authored the study. In 1989, Martin sold Smartfood to Pepsi, then went on to co-found Annie's Inc., which specialized in "healthy" mac and cheese.
Annie's Inc. was sold to Solera Capital in 2002, and Martin has since founded numerous non-profit programs for the homeless, women, children, education, and the environment. Among other things, he is chairman and strategic director for Kea Corp. Ltd., a New Zealand-based international management company, and chairman of Tauroa Organic Education Trust, a 750-acre, horticulture, sheep and cattle farm, wildlife preserve, and education center in New Zealand.
Three decades after launching Smartfood, Martin is back in the start-up game. He's focusing on coupons as founding chairman of CommonKindness.com, a site that allows consumers to donate a portion of coupon revenue to their favorite charity.
Martin, 57, talked to FINS about his career as a serial entrepreneur and the importance of keeping a sense of humor.
Elizabeth Garone: It seems like the entrepreneur bug hit you early. Why?
Andrew Martin: Nobody would give me a job. I was an economics major and there were no jobs at the time that would let me lay around and ponder the economy.
EG: What was your impetus for starting Smartfood?
AM: At the time, cheese popcorn was 59 cents and bright orange. The health trend was just starting, and it was obvious cheese popcorn was ripe. Same logic was used to create Annie's. Both had high quality white cheese, both are more expensive than belly stuffer competition like Kraft mac and cheese.
EG: How did the sale to Frito-Lay happen?
AM: Smartfood was becoming a meaningful competitor to the other major snack companies so it was time to see if there were buyers. There were several and Frito-Lay won.
EG: Do you have to be willing to let go of an idea if a better one comes along? For example, whatever happened to your idea for a plastic bag with a tear-off top?
AM: Alas a great idea. It was launched by Birdseye in New Zealand and didn't make much of a splash so [it] faded away.
EG: Is that typical in a start-up environment? You have a great idea but then another one takes over? Doesn't that take a certain type of person to be okay with it?
AM: [You] need to be able to dust yourself off, smile and roll on.
EG: What other traits does someone immersed in the start-up world need?
AM: A sense of humor, commitment, and determination. There will always be new and unusual challenges so you need to roll with the punches and keep moving forward wherever it may take you.
EG: Why is a sense of humor so important?
AM: Thoreau said if he had life to live over he would make more mistakes. Humor allows you to laugh at your mistakes.
EG: What are the biggest challenges you have faced in the start-up world?
AM: The biggest challenge Smartfood, Annie's, CommonKindness.com, tauroa.com, or any of my prior companies has had was the skepticism. Nearly everyone said Smartfood – twice the price, white cheese not orange, black bag, funny name – would fail. Same with all my other companies.
So I guess the other thing you need to succeed is the courage of your conviction in the face of relentless skeptics. Commonkindness has just become the second largest online coupon site in the U.S. Nearly everyone said it was not possible.
EG: Your endeavors always seem to involve consumers and packaged foods. Why?
AM: It's a great fun industry with real products, real sales and real satisfaction of customers.
EG: How did you come up with the concept for CommonKindness?
AM: [There were a] bunch of successful brand guys sitting around drinking beer and asking, "Why, after 17 years, are there fewer than 180 coupons online when there are more than 60,000 products that could be?" The answer was that the current online coupon sites are antiquated and don't address the needs of either the public or brands.
EG: What is the most exciting part of a career in start-ups?
AM: The thrill and risk of failure.
EG: Are buyouts inevitable in the start-up world?
AM: A lot of super-successful startups that become large companies are headed by the founders. I personally like getting them to profitability and then turning them over to someone who knows how to manage a large company. I have started successful companies in food, finance, sheep and cattle farms, Internet, and so on. Variety is the spice of life.
EG: What do you think of today's current start-up frenzy? Are most of them solid, or is there a lot of froth out there?
AM: Some might say Facebook is a superfluous start-up in that it doesn't seem to generate real revenue relative to its share value and seems to be valued on its hype. One day the investment community may see that many Internet companies have no clothes and no real revenue model and the hype investments will evaporate again.
Coupons Inc., which owns Coupons.com, is a great example. It has been valued at $1 billion and just raised more than $200 million. It has less than $100 million in revenues. It may do an IPO for $1 billion or more. Alternatively, CommonKindness.com is a startup that launched a month ago and already is the second largest online coupon site in the U.S. as measured by number of coupons. It will likely overtake Coupons.com in a few months. Yes, I think there are many start-up opportunities especially when competing with much older technology companies like Coupons.com.
EG: Is crowdfunding the future?
I also believe the crowd funding initiative signed by Congress and President Obama last month will revolutionize the startup community and break the VC stranglehold on start-up funding. I believe this will unleash the greatest economic engine the U.S. has, and that is the creative entrepreneurial resource of the American people. It is a brilliant program and unites entrepreneurs with small investors through the Internet.
I have founded several successful companies and one thing I know for sure. There is absolutely nothing more powerful for the future success and growth of the U.S. and U.S. jobs than a healthy startup environment. New companies create jobs. Period. This is the greatest country in the world because of the American spirit of entrepreneurial achievement by ordinary people. We are all immigrants and we made one hell of a country.
Write to Liz Garone at liz@garone.com
