Michael Luchies, Yahoo! Contributor Network

Mar 11, 2013

Michael Houlihan and Bonnie Harvey are two of the nicest people I have had the pleasure of talking with, and they just so happen to be incredibly successful and world renowned entrepreneurs. Michael and Bonnie founded and grew the Barefoot Wine brand, which is now the #1 wine brand in the US and one of the best selling and most recognizable wine brands in the world. Did the dynamic duo start their highly successful wine brand because they had millions to invest and an abundance of knowledge and experience in the industry? Not exactly.Michael and Bonnie started the brand in their laundry room in 1985 with practically no money and no experience. Their journey is an entrepreneurial success story that reminds us that the American dream is still alive and well.

I was invited into their beautiful California home via Skype not long after I had the privilege to hear Michael give a keynote address at the 2013 USASBE National Conference in San Francisco. Although I was not able to meet Michael at the conference, I took his business card off of the dinner table and tossed it into my briefcase. It wouldn’t hurt just to reach out to him right? Much to my surprise, this successful entrepreneur immediately responded and after one email he was asking what time would work for me to meet!

There is a lot that young entrepreneurs can learn from this founding couple and their struggles and success. The following is an interview I conducted with Michael Houlihan about his entrepreneurial journey, his upcoming book, tips and advice for young entrepreneurs, and more.

Michael Luchies: Did you have any entrepreneurial endeavors before Barefoot Cellars?

Michael Houlihan: Yes

Bonnie had a company called “In Care Of” [c/o] where she paid bills for people who had the money, but not the time. She also had an office management consulting practice where she did everything for small businesses from office organization and collections, to oversight of outsourced vendors.

I had several businesses including the first men and women’s hair cutting shop [Great Lengths], a stainless steel storage tank rental business, and a small business consulting company focused on relations with government entities.

ML: Wow! I guess it is safe to say that Barefoot Cellars was not your first rodeo. What failures have you faced as an entrepreneur and how did you recover and learn from these failures?

MH: When we started Barefoot Cellars, we thought that if we had gold medal winning wine at an unbelievable price, it would sell itself so we expanded out of California into Washington and Hawaii, but we soon found out that we had to physically be in every store to keep the product in stock. We thought the distributor and the retailer would take care of it.

On the contrary, they were not familiar with the brand and it didn’t have a selling history in their store, so they let it run out and get replaced with a competitor’s product. It cost us more than what we were making to make periodic trips to Washington and Hawaii just to get the reorders and to basically do what we thought was the distributors’ and the retailers’ job. We pulled out of Washington and Hawaii for 2 years and didn’t go back until we could afford to hire a representative of each one of those territories. We learned that we needed to have representatives in every market to maintain constant vigilance over our products at retail so that they stayed in the stores long enough to establish a track record of sales.

ML: You were able to create an incredibly successful business with your wife. What advice would you have for someone considering going into business with a family member or loved one?

MH: Respect the other party for their skill set. Do not try to micromanage them. Realize that their opinions, which may be contrary to yours, are in your own and your companies’ best interest. Have a separate place where you conduct business, even if it’s a laundry room, garage, or small in home office. It’s best to work in separate spaces. Don’t talk business in the bedroom. Plan several non-business related vacations every year in advance and buy the tickets in January.

ML: Thank you for that, really good advice. If there is one thing you could change about your entrepreneurial journey, what would it be?

MH: We should have gotten started much sooner, like when we were in school. Just conducting business is such an education. The sooner that you get the hard knocks over with, the better. Unfortunately, they weren’t teaching entrepreneurship when we were in school.

ML: Your book is titled “The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand.” Explain how heart and hustle are important for an entrepreneur:

MH: Heart is several things. First and foremost, it’s the belief that you have in your success. That belief is the foundation of the tenacity that is required to keep on going, even though you take some hits. Heart is also the way you treat people. By putting yourself in the other guys shoes whether they are employees, creditors, vendors, or customers, your empathy with their needs and concerns is transmitted through your products and service. Lastly, Heart is the causes you hold dear as an individual and how you use your business to forward those causes through public statements, corporate behavior, and the support for non profits.

Hustle is all about how fast you move to take advantage of opportunities, dodge adversity, and solve challenges. When you are an entrepreneur, you have to look for, and surround yourself with other team members who have hustle. They are determined, directed, and light on their feet. You and your companies’ ability to make quick changes and adjustments is the key to survival in the first few years.

ML: How did hardship help build your company?

MH: Probably our greatest asset was being undercapitalized. It forced us to be resourceful and creative. When you start a business with a large investment, you tend to throw money at every problem because you can. When you’re undercapitalized, you must solve problems in new ways, many of which are truly revolutionary and can actually reform your very industry. We discovered concepts like Worthy Cause Marketing because we simply didn’t have enough money for conventional advertising. By supporting non profits in the hope that their members would have a social reason to buy our products, we discovered a more efficient way of getting the word out and creating customer loyalty. Even when we had funds for commercial advertising, we decided to forego it in favor of supporting worthy causes.

ML: What is your most important piece of advice to young entrepreneurs?

MH: Research and understand how your end-user gains access to your product. Understand every job along the distribution system and be prepared to do it yourself before you finalize your product design, packaging, marketing program or budget. It’s not about your product. It’s about whether or not it can be purchased. Be sure to have, raise, or earn enough money to pay for vigilant sales representatives in every market.

ML: How did you come up with the decision to sell Barefoot Spirits? Was that decision a hard one to make?

MH: Of course it was difficult to say goodbye to a brand that was “our baby.” However, when you go into business, you have to decide why you are going into business. Is it to just create a job? If so, you give up a 9-5 for a 5-9. You go into debt to expand it and you can become your own worse boss. If you go into business to leave a legacy, then you are assuming that your children will run it with the same care and devotion that you put into building it. You run the risk that they would rather have the money than continue to operate the business. Or worse, run it into the ground. If you go into business as we did, to create and monetize brand equity, then you are building a value, which one day will be sufficient to attract an acquirer. The challenge for us, in the case of Barefoot Cellars, was to find a company that would keep The Barefoot Spirit alive and grow the brand beyond where we took it. We were fortunate to have found a family-owned company who could actually execute a 5 year plan. Barefoot’s success or failure would reflect heavily on us and our reputation. As speakers, writers, and consultants, Barefoot’s success since the acquisition has increased our credibility.

ML: What is next for you and Bonnie?

MH: We are traveling throughout the country visiting the various Schools of Entrepreneurship. Through our blogs at www.thebrandauthority.net and www.barefootwinefounders.com, we are offering free advice to especially young people who are starting or growing their own businesses and brands. We are using our considerable experience and credentials to teach what we call The Barefoot Spirit. These are the foundational guiding principles that one must subscribe to as basic business standards to make the right decisions and be successful in the long run. We will be guests on TV, print, radio, and podcasts across the country promoting our book, The Barefoot Spirit. We help start-ups and small businesses as consultants and advisors. We also work with large corporations who want to benefit by the entrepreneurial spirit. Look for more books, webinars, speaking, and blogs from us in the future.

Summary
I want to personally thank Michael Houlihan and Bonnie Harvey for meeting with me on Skype, and to Michael for doing this great and insightful interview. Little did I know that Entrepreneur magazine would soon be featuring Michael and Bonnie in their magazine. He didn’t tell me “Sorry kid, I don’t have time for this little interview.” He graciously accepted my invitation and could not have been nicer. I already had a lot of respect for what Bonnie and Michael have been able to do as the entrepreneurs that built such a dominant brand. After speaking with them, I now have a deep appreciation for them as both entrepreneurs and as genuine and selfless individuals, both of who truly represent The Barefoot Spirit.