Mark Kolier’s Blog

Archive for August, 2010

I just had breakfast at the local diner and as usual I asked for Tabasco for my eggs. (Ok egg white omelet on the off chance my doctor might read this). Tabasco has been made by the McIlhenny Company out of Avery Island, La., since 1868. The company is still family-run and privately held and doesn’t disclose its financials, but estimates are that Tabasco found just about everywhere I go, owns about 20%-25% of the market.

McIlhenny, which grows its peppers all over the western hemisphere (apparently they are all handpicked); sells six flavors of Tabasco, but none come close the numbers of its bestseller, the original red. International business comprises 40% of the company’s overall sales. I can’t think of another brand that would be found in so many homes around the United States – and perhaps outside the U.S. as well – can you?

Everyone seems to have a bottle of Tabasco somewhere in the spice cabinet or refrigerator. Many of us have no idea as to the actual age of that bottle. (Can Tabasco go bad? Has that ever happened to anyone?) I have a number of women friends that carry a small bottle of Tabasco around in their purse.
Tabasco even has a relationship with a franchise style marketing (but not a franchise business yet it has a buy in of slightly under $ 15K) company http://specmarksystems.com/ that allows you to re-sell Tabasco brand product. By the way they claim it’s not a get rich quickly program.

Sold in more than 160 countries and packaged in 22 languages and dialects (at least according to Wikipedia), as many as 720,000 two-ounce (57 ml) bottles of Tabasco are produced daily in Louisiana. The U.S. military has included Tabasco sauce in MRE’s since the 1980’s. I had first-hand evidence of this last summer when I did a two day USMC executive session which included lunching on MRE’s (in case you are interested http://bit.ly/dr7UdL.)

What strikes me more than anything else is that Tabasco only owns about 20%-25% of the market. Is that the market for hot sauces? Quick can you name #2? I am at a loss to come up with any brand that even comes close in this – or for that matter just about any other space.

Got any ideas on other brands that are as ubiquitous as Tabasco?

Even before I read the article in today’s New York Times (http://nyti.ms/aQ9oKV) I had some knowledge of Tumblr – www.tumblr.com. Yes I signed up. No I’m not exactly sure why.

A blogging service based in NYC, Tumblr claims to want to (in the words of journalist Mark Coatney) occupy ‘a space in between Twitter and Facebook’.

Personally I have difficulty seeing how big that space might be. The 24 year old founder David Karp notes that Tumblr is not all about followers (well that’s a relief). What I like about Tumblr is that it offers a like for publications to truly interact with their readers in a way that Facebook and Twitter do not. Tumblr requires publishers to add commentary in order to gain favor with its ‘community’.

Here’s what is even more interesting. Somehow Tumblr – which still does not have a business model, recently raised $ 5 million from Spark Capital and Union Square Ventures. This apparently (according to President John Maloney) offers some validation. Ya think?

As the American and world business climate today remains choppy and challenging it’s more than difficult for companies, even like ours, to obtain adequate financing for expansion, hiring and working capital. That VC firms would throw up a combined $ 5 million to a firm without a business revenue is evidence that despite all the talk of fiscal prudence, as long as there is the chance to make a fast buck, caution can and will be thrown to the wind and the speculators will continue to do what they have always done.

I am all for on the edge new ideas and new businesses. But Twitter still has not shown the ability to make any money (in contrast to Facebook) and much more money has gone into Twitter than $ 5 million. Maybe Twitter will get there but the jury is still way out as far as I am concerned.

Do you think you would get financing for coming up with an idea that had no decided revenue model?