Jones Soda's Secret

Peter van Stolk is getting people jonesin' for his soda by turning the brand over to them.

Every great product has a secret formula. Coca-Cola's legendary recipe includes "essence of coca leaf" -- stripped of cocaine, of course. KFC mixes different parts of its 11 herbs and spices at three separate facilities to safeguard the Colonel's secret blend. And McDonald's hunted down its original special-sauce mix for Big Macs last June as part of its turnaround effort.

Jones Soda Co. founder and CEO Peter van Stolk has his own secret ingredient. It has created buzz, produced 30% yearly revenue growth in a flat beverage market, drawn major distribution partners such as Starbucks and Target, and brought in $30 million in annual revenue. That ingredient: you. Virtually everything about a Jones Soda, from labels to flavors, comes from customers. That's important because "the reality is that consumers don't need our s -- -," van Stolk says unapologetically. The world wasn't necessarily clamoring for another soda, even if it tastes like blue bubble gum. So how do you sell an unnecessary product? If you're van Stolk, a 41-year-old former ski instructor who started Jones eight years ago, you hand the product over to customers. Strategy guru C.K. Prahalad might call that a good example of how to "cocreate unique value." Van Stolk has a more down-to-earth, but no less profound, way to describe it: "People get fired up about Jones because it's theirs."

It all started with the Web site Jones Soda launched in 1997. Hundreds of comments poured in from customers, and van Stolk quickly took up their suggestions and online votes for offbeat flavors (including chocolate fudge and green apple), wacky names (Whoop Ass and MF Grape), and neon colors. Even the "Deep Thoughts"-like quotes found underneath the bottle caps ("76.4% of all statistics are meaningless") come straight from Jones enthusiasts. Van Stolk also encouraged customers to submit photos, and the eccentric and strangely captivating images on Jones's stark black-and-white bottle labels have come largely from fans. And as the site became flooded with hundreds of thousands of cute, but useless, baby snapshots, he launched myJones to offer customers 12-packs of soda with custom-made labels for $34.95. MyJones has since blossomed into one of the cornerstones of the Jones Soda brand.

Jones also stays close to its 12- to 24-year-old demographic with a pair of roving RVs. The two flame-festooned vehicles spend nine months out of the year visiting Jones-friendly venues, from small skate parks in the middle of nowhere to major extreme-games competitions such as the X Games. They also turn up in places where they're less welcome, such as high schools to which they weren't invited. "The more deviant you can be, the better," says RV driver Chris King, 32, on a crackling cell phone. "Kids love to see you get kicked out of places. I, personally, am banned from Nassau County in New York." The idea is simple. Kids come in and grab a bunch of Jones Soda stuff -- buttons, stickers, key chains -- while King, who despite his rebel persona has worked in marketing for a company that ultimately became part of WebMD, studies them for a mental inventory of what's hot and what's not.

King's marketing background suggests that Jones Soda hasn't completely surrendered itself to the whims of its customers. As only van Stolk can put it, "The customer's not always right. F -- - that. If you're always trying to cater to everyone, you have no soul." To van Stolk, the Web site, the labels, the RVs, and the various stunts just add up to being in sync with his audience. "It's the difference between being real and saying you're real," van Stolk says, making a subtle swipe at a certain "Real Thing" rival.

So while customers may feel as if they own the brand, it's van Stolk who clearly runs it. "If you're able to listen to customers from their perspective," he says, "not everything they say will make sense. Not everything they do will be right. But you'll know more about what you have to do because of it."

Staying so close to customers will become more of a challenge as Jones grows and its customers start buying its soda at the likes of Panera Bread and Target instead of the local skate shop. And the company's growth hasn't come without hiccups: In 2001, three of Jones's top five distributors went bankrupt, and it had a bad second quarter in 2004, when sales came in lower than expected, the weak U.S. dollar affected Jones's important Canadian sales, and cash was dwindling.

But van Stolk had much happier news about the third quarter, announcing higher-than-expected sales, lots more cash, and strong initial reports of sales at Target (Wall Street predictions are now that Jones will grow to $100 million in revenue by 2008). With the stock analysts mollified and the rest of that corporate stuff out of the way, van Stolk celebrated by treating the Seattle-based staff to a different kind of drink: shots of Jaegermeister.

Ryan Underwood is a Fast Company staff writer.

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