Jonesing for Soda

In an energetic, enormously candid interview, Jones Soda's founder shares some stories about the building blocks of his business.

Juice Guise

I was thrown into the beverage industry without any aspirations to be in the beverage industry. I didn't wake up one morning and say I want to be in the beverage industry. What happened was, I was in the ski industry. I was fairly young at the time. My father was a psychiatrist and he was, like, "You've got to go to school." And I'm, like, "Dude, I get paid to go to ski right now. I've got a sweet car. You're on drugs if you think I'm giving this up. I've got my own credit card. I'm paid to ski. What are you thinking?" This was in Edmonton, Alberta.

I basically blew him off, and when I realized that I wasn't good enough [at skiing], and that school was probably the right option, I was so stubborn that I couldn't do it. I couldn't go to school because I told him I didn't need it. But I also realized I wasn't good enough to be a professional skier of any great magnitude. I was 22, 23 at the time. I had traveled Europe and done all the things you do after high school. To make a long story short, I started a fruit stand. The ski industry pays you for 12 months, but you only work nine, so you have these paid summer vacations.

The guy I was buying my fruit from said, "You've got to look at this orange juice from Florida." I did the due diligence on the OJ market in Canada. And it's 55% of a $365-millon industry. There's no premium fresh-squeezed frozen OJ, yadda, yadda, yadda. So I sold my car and brought this OJ up from Florida to Canada. And that's how I got into the beverage industry.

I got US $14,400 for my car. It was a Chiraco. It was a sweet Chiraco. But it wasn't too gooey. Just the right amount of goo on it. It was a beautiful car. I sold the car to buy the OJ. It was a product called Just Picked. The guy who sold it to me was from New York and the company was from Florida. And the first batch he sold to me was the extra-thick stuff. So I had 1,440 cases. And this stuff was so thick you could stick a spoon in. So I was going to restaurants to sell it with champagne. The solids would separate. So you'd have a clump of crap. And I'm, like, "Oh my god, I've got all this OJ. What am I going to do?" So I'm walking up and down the street, telling people it'll lower their cholesterol, it's got fiber, you can eat it with a spoon. It was horrible. It tasted really good, but it was absolutely horrible in quality. It actually caught on. The next year the sales were $12,500 for the entire company. I was able to fight through that.

The Jones Soda story is really one of determination and fighting through challenges that most companies would never have to. No one's given us anything. Everything we've done, we've had to fight for, probably harder than we should have. The fighting is getting less and less now.

After the OJ started to take off, I started to import other beverages and built a distribution company, a beverage distribution company, in Vancouver. We sold Snapple, Arizona Ice Tea, Pepsi, Coke, we were selling tons of different beverages. We were the largest independent beverage distributor in western Canada. That was by 1994, 1995. We built the business to about $6.9 million in sales. One of the problems was, I didn't like dealing with the suppliers and I wanted to create my own brand. Because I had seen all these companies come to me and say, hey sell my crap in Canada.

If someone asked me at 18, is this what you dreamt to do? I would say no. The reality is that it's been a weird game to get to where I'm at now. But at the age of 41, I'm very qualified to do what I do. I understand the consumers better than a lot of people do.

Not Necessarily Needed

Around this time, we started to import concentrated root beer. We were bottling a root beer. So I started to understand how to make soda. So we started Urban Juice and Soda and by 1994, we were flying. Sales were going through the roof. Snapple sold to Gatorade for $1.6 billion, 432 new ice teas are coming out. I'm saying, this is crazy. I'm seeing this stuff come flying at me. People are knocking on the door everyday trying to get me to sell their stuff. Then I said, I don't want to sell other people's stuff anymore. That's horrible. It's not fun. It's not yours.

But the world doesn't need any more of this stuff. Because nobody cares when this stuff goes off the market. If Jones Soda fell off the face of the earth today — or if I got hit by a bus and the company got closed down, nobody would lose any sleep over it. And that's the attitude you have to take today. That's the attitude we took in 1995-96. It's more relevant today because of consolidation in the biz world. It's more relevant today because of the Internet and the number of channels. But it's still relevant and was relevant in 1995. The reality is that consumers don't need our stuff. I don't mean to say that. But when you start thinking that way — a lot of time, business people, marketers convince themselves that people need their stuff. They're passionate about how you need my new widget. You need it!

The fact is, you don't need it! And as soon as you get off the fact that you don't need it you become, in my opinion, you become a better marketer, you get a better understanding of your customer. You're not listening to your customer when you tell them, "You need me." You listen to you customers when you say, "You really don't need me." Coca-Cola sold 500 million cans of soda yesterday. I think a consumer can find a cold beverage somewhere if they really need to. Let's just get this stuff clear. Clearly, let's call an ace an ace. Nobody's going to lose any sleep, no one's going to get dehydrated. That's a fundamental difference, I believe, between marketers and brand builders. Brand builders realize that brands need to be accepted by the consumer and that it's a privilege and honor for someone to pay $1.70 for a bottle of Jones Soda. I'm very honored by that.

The Rules

I came to that insight pretty early on in the game because when you're selling so many widgets — here I had a distribution warehouse, where I have 600 different beverages and I realized that all I'm doing is moving one to the other and nobody really gives a rat's ass. But I wasn't inundated with the culture of a big company. I didn't have the three or four years of big-time corporation. And by not going to business school — and I wish I had gone to biz school in order to learn the game — but I'm so glad I didn't learn to believe in the rules. That's a key component of what I do: I'm not convinced that I don't have to play by anybody's rules. We'll, that's not true. We have three. A. The world doesn't need another soda. B. We don't believe people need our soda. C. We can't play by anybody's rules. If we adhere to those three things, then we're going to create an emotional connection with our consumers, we're going to be bigger than a lot of companies think we can get because we're doing the right thing, and we're going to have a lot of fun doing it.

Passionate Brands

Great brands are built because people are passionate about them. The very first case of Jones Soda went to the founder of Nike, Phil Knight. He got the first case of Jones Soda. I don't know if he ever saw it. But he sent a letter — I don't know if he signed it or if his secretary signed it. I don't care; it's framed in the boardroom. I just really like what he was doing. One of the things about Jones Soda, I always viewed Jones as an accessory. So when we looked at companies to emulate, we never looked at beverage companies. It doesn't make any sense. If I'm trying to be a leader in a category, why look at the big guys because I'm just going to try and follow what they're doing. So the approach has always been to say I don't care what anybody does in the beverage industry. I really don't. They're going to do what they're going to do, so who gives a rat's ass. We've got to do what we've got to do. You have to know what they're doing, but you don't have to follow what they're doing.

If you don't like Jones Soda, if you're not into it, I don't give a rat's ass. I'm not going to change my formula to please you. That's a very profound statement because if you talk to companies today, they say the customer's always right. Well, no. Forget that. The customer's not always right. If you are always trying to cater to all of the customers you have, you have no soul. You have to define yourself.

You're always going to piss people off. We had people pissed off that we had a salt and pepper shaker on our label, because they said it was promoting "racial commingling." You are an idiot. It's a salt and pepper shaker. There was a cue ball, and that was promoting cocaine. There was a Zippo lighter and that was promoting "smoking and weed." The point is, fine, have a nice day. But I'm not going to pull those off. Now do I have a kid being beaten? No. I had a salt and pepper shaker.

A great brand is going to evoke passion. You're going to love it or hate it. And I'm good with that. I'm good with people loving us. And I'm good with people hating us.

On Health and Humor

My daughter drinks one Jones a week. And I'm good with that. We don't sell two liters. It's a treat. And everybody wigs out on it, saying it causes obesity. It's the fact that you drink 44 fluid ounces of this stuff. 10 years ago the average size of a soda was 12 ounces. Now, the average size is 43 ounces. Well, you don't have to be a rocket scientist to do the math, you morons. So we sell in 12-ounce. That's it. Have a nice soda. If you're going to drink a gallon of soda, you better figure out that that's a lot of sugar. The reality is that Jones can be a powerful brand. We can be a powerful brand by — we're selling 12-packs in Target now. That's going to show me how we stack up against Coke and Pepsi. And so far, we're doing better than they thought we would do. And we're doing better than I thought we would do. And the reality is that we haven't advertised it. Nobody knows about it. But then, you're going to see our turkey and gravy holiday pack. That stuff is outrageous. No one's going to come up with mashed potato flavor, green bean, and fried onions. Fruitcake, which is disgusting, and cranberry sauce.

I can't drink a case of the stuff. No, it's more about having fun. What I really wanted to do with the turkey and gravy, I wanted to say we're not afraid to do it. And now what we're making fun of is the whole carb thing. Now you can have a carb-free turkey and gravy dinner. We're just going to hammer away and make it a big, big parody.

One year on April Fool's Day we sent a press release saying we were acquired by John Deere. That was hilarious. You sold out man! It was a joke, dude. We spelled Deere wrong. It was one of the funniest things we've ever done. We said they wanted their own weed-flavored soda. We came up with that stuff and people went ballistic. We were getting phone calls: "I can't believe you sold out. You sold out to the big guy." Dude, it was a tractor company. It's really very harmless. I mean we live in a society today where there's a lot of stuff going on. We've got wars, we've got terrorism, we've got fuel prices, we've got elections, we've got a very divided country right now. And if Jones can throw some realistic humor, that's harmless.

Patently Personalized

I don't want to be a soda company. I have no desire to say Jones is just a soda company. I have a desire to say Jones is a lifestyle company. Look at what we did with myjonesmusic.com.

In 1997, Ernest von Rosen [developer of Jones' Web site] and I were in Vancouver, he was saying, Dude we're getting a ton of baby photos. I'm like, yeah, we are. He's like how many baby photos do you really want to see on a bottle of Jones soda? But these people love their baby photos — of course they do, and we're fired up about it. So he said I've got this guy by the name of Vaclav — and Vaclav is from Eastern Europe. He doesn't speak any English. He speaks in white board. You know these guys, they just have a white board and they talk in white board? So this is 1997, we're now thinking about people emailing photos. In 2004, this is no big deal. Photos are flying across email. But in 1997, nobody's talking about this stuff. So we're talking about it. So Vaclav creates myjones and myjones, we get the patent for. So we own the patent for customizing branded merchandising over a computer network. Our value is not so much as a soda company. Our value is as a company that can create ideas like myjones, myjonesmusic, and create the stuff that's truly in tune with our consumers in a positive way.

Getting Real

Look at somebody like Jon Stewart. Why is he so funny and so in synch with people? Because he's real. And Coke says it's real. But saying it and being it are two different things. So if you say it, you better be it. My daughter, she couldn't give a rat's ass about Coke. And her friends — she's 10, they're 10 — they don't care because it's everywhere. It's nothing new, it's nothing special. That's what big companies have forgotten. The most important thing is not about money.

If somebody said to me, Peter I want to give you $100 million, and I want you to launch a successful brand tomorrow, I'd say take your money and walk away. You want to give me $10 million and five years to do it, I'll knock the ball out of the park. It's not about money, it's about time.

We have people who come up to our door — they've traveled from, say, Utah — to go to the Jones mecca. And they cry when they're here. It's soda, dude. But I totally get it. People get fired up about Jones because it's theirs. It's not my soda. When you buy a bottle of Jones Soda there is a person's name on the bottle who took the photo. That is their soda. And when you go to a Target and buy a 12-pack of Jones, there are seven peoples' names on this. Seven people are saying, "This is my stuff" The most important thing is that whenever you do something with real people, it gets real. And that's the difference between saying you're real and being real.

Now I'm scamming. Companies are paying me to give talks. I think it's a pretty good gig. They'll pay me 10 grand to come talk to them. Maybe if I write a book, I get can that up there more. I do a good job and all the money goes to charity — so it's not a total scam. So far we've built two schools.

Our customers, they can spot BS. And that's totally kosher. If you don't live up to what you say you're going to do, like being real, they throw you under the bus. You just feed their existing perception of companies. Right or wrong, that's the way it is.

And a Child Shall Lead Them

We're going to invoke an advisory board of kids. We're going to do it online. It's going to be like a reality TV show. One is actually going to be a board member. Somebody, 16-17 years old, is actually going to be a director of the company. Now that's absolutely insane. But it's not. It's totally sane. You know, I'm reading Barron's about having directors approve their advertising. These guys are 70 years old! How the heck can he approve anything about anything? How can they approve it? I'm just saying, I couldn't approve advertising for golfing or something. And I shouldn't approve it.

The way marketing has taught us to talk about demographics is BS. Let's look at the 35-40 year olds. That's where their income is. But if you're going to be their aspirational brand, then you really have to look lower than the 35 year old. There's not a 35-year-old woman looking to a 45-year-old woman to see how she dresses. They're looking at a 25 year old. And they're finding the balance between a 25 year old and a 35 year old. So the aspiration always goes down. Everybody knocks Jones, says you're a kid's soda. Sweet, if I'm a 12- to 24-year-old brand. It's not the actual demographic you're aiming for, it's the aspirational demographic.

I'd like for people to talk about Jones the same way they talk about brands such as Diesel Jeans. Puma, Diesel, Nike. I want to be in that category. I don't want to be Coke or Pepsi. I like Puma because they created a category in a category. Diesel because they're always relevant, always fresh, always on target.

Listen and Learn

If you're able to give your customers the ability to give you info and you listen to them from their perspective, not everything they say will make sense. Not everything they do will be right. But you will know more about what you have to do based on the info you have. Because it's one component, but very critical component.

Focus groups are toilet paper: They're only used to cover your ass. You can get a focus group to tell you anything you want. When we do focus groups, tastings really, we have two choices: Does it taste good, or does it taste like crap? Yummy or crappy? Good or bad? It's not rocket science. And you get really good information. You have to be careful to make a distinction between getting the answers you want and honest answers.

People get cash-it is — meaning they have cash and they think they have to spend it to drive revenues, etc. You've got cash, and you've got to do the right thing with it. Corporations think they can buy these kids and the kids are saying, screw you, you're a loser. That's the simple math. You have to have time to allow kids to discover you.

Built to Spill (Over)

Execution is where we need to improve. That's where we can get better. If you judge our company, for the last seven years we've been playing in the minors. And then last year, we got called up to the majors with Panera, Barnes and Noble. And we were sitting on the bench. This year we got to the plate once. With Target. In 2004 we got called up to the plate. From a baseball analogy, we've been in the minors for a long time. Now we've got something to prove. So obviously execution is something we have to improve. And if we're hitting in all aspects, this thing is going to go.

First thing is you change the rules. The Target deal is rule-breaker that is unbelievable. For the beverage industry, we took their game and shoved it up their ass. I watched Richard Branson try to do it by playing by the rules. He couldn't do it. It's so easy to scale this up by not playing by the rules. It's so hard to scale by playing by rules.

To steal a line from Sam Cook from Boston Beer, we don't sell as much as Coke or Pepsi spill in a day. There's so much room to grow — Coke and Pepsi are so big — we've got a long way to go before anyone notices. I'm more interested in growing geographically — both domestic and international — than by volume, to boost brand equity.

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