67: Blue Ocean Strategy; Starting A Business No One Else Is Doing with Robert Kandell
There are two types of people in the business world: those who hustle and like the hustle, and those who would rather go to the bar and chill. Robert Kandell was a hustler in corporate America and was excited to roll out to work every day. The space he was in needed a lot of leadership and management skills which he was well equipped for, but this cost him to be disconnected from his wife to the point that they were just passing by each other. He looked for help and found it, and this led him to start his own business, One Taste, in 2004. Like most startups, it looked great in concept but didn’t do well in marketing. Thanks to the Blue Ocean Strategy, Robert came up with a business plan to gain the attention he needed for his business. Learn why writing these powerful ideas down first before launching is important to help others see the pathway to success that you are seeing.
Blue Ocean Strategy; Starting A Business No One Else Is Doing with Robert Kandell
My guest is a business expert who has taken a little different route to success than many. His last business success as the co-founder of OneTaste in 2004 led him into the intimacy and conscious sexuality space, which became a high seven-figure corporation. Today, he’s involved in some amazing projects, which we will no doubt learn more about. Welcome, Robert Kandell, to the show.
Thank you, Mitch. It’s a pleasure to be here.
I was intrigued by the work that you’ve been doing and certainly the space that you’re in. Let’s start from the beginning, Robert. Tell me a little bit about how you got into business?
I’ve always had a business-like mind. My dad was an entrepreneur, had an accounting firm, helped small business, a really brilliant man. I’ve always just been interested in business. My first memory of business was having a paper out as a kid. Back in the old days, we used to ride on our bikes and threw newspapers and they’d be at your front door every day. I was really interested in how to improve my business, so I ran a survey to find out what time they want the paper by, where they wanted it, and when was the best time to collect the fees. I just went into customer service instinctively without even knowing that I should do customer service and the dividends paid off because I was one of the highest paid paper-out kids that I knew.
How old were you when you started figuring all this stuff out?
I think I was thirteen, fourteen years old at the time.
You and I have a similar path in that regard. I grew up in Brooklyn, New York. As kids, we did just about anything. We washed cars, sold cards door-to-door. I never delivered newspapers because my gut feeling was that they’d mostly end up in the sprinkler if I did it, so I avoided that. Apparently, you mastered that art, which is great to hear. Tell me what happened as you grew up and as you had this sense that you knew you’re destined to be in business. How did it go from there?
I avoided it. That’s probably the best way to say it. I went to college and I got engineering degrees. I got my undergraduate at USC for Biomedical Engineering and then got my graduate degree from Drexel University in Philadelphia also in Biomedical Engineering. I was heading down that path pretty severely. About a year into my Master’s degree I just said, “I don’t know if engineering is right for me. I don’t want to be stuck in the lab or vying for grants.” At the same time, I was working as a bartender in a Philadelphia bar. In that bar I saw the potential for who I wanted to be because I love the technology, I love the science and I love the math, but I also love the interaction with people and I was good at it. I said, “There has to be a role where I was good at people and good at technology.” I have learned about project managers and that was the veer off the engineering path into the business path.
Being a project manager for a project at a corporation or independently?
After graduate school, I moved to San Francisco. I was really willing to take on any job that paid and looks interesting. I was so naïve at the time. I knew I didn’t want to do Biomedical Engineering because of my schooling, but I have these two advanced degrees in Biomedical Engineering. I ended up working at this rinky-dink computer integration firm, South of Market, San Francisco in 1994 right before the start of all the personal PCs. I was tasked with customer service and I was tasked with building machines and basically doing whatever it took to take care of the customers.
How old were you then?
I was 24 at the time.
The way I understand my audience is that a lot of our listeners are in a place where they are still either working at a job or they’re doing the 9 to 5 and then they’re doing the 5 to 9 to build their companies. I see a lot and I remember this with my own life, is that there were two types of people. There were the types of people who were hustlers and who would be thrilled and couldn’t wait to get to work after work. Then there would be the type that would rather go to the bar and hang out. Clearly, you were the former not the latter, right?
Indeed. I started down on this little firm and then I moved to corporate America when I was 26. By 27, I was running two divisions as an application developer. I went from a computer tech to an application developer manager in a year. I was responsible for about 400 people, $300 million per year in gross in the two departments I handled. I ended up in this space of a lot of leadership and a lot of management. I did Corporate America for about two years, totally burnt out and went to a different firm. Then I started building my own solo practice of being a computer consultant in 1999 when I was 29.
I see a path and I see it clearly. When was it that you decided to start a company?
When I was working in this really intense Corporate America, it was a brokerage firm. It was a cell site firm: brokers, traders and private clients bringing IPOs. It was monstrous. It was really a 70 to 80-hour per week job. Then I burnt out and moved to what’s called a buy side, which is a mutual fund company. All of a sudden, I went from 70 to 80 hours to 50 hours, which still seems like a lot but to me, I had all this free time. Then I started hanging out with buddies who were interested in starting a firm with a software called taking brokerage reports and building them into packets. I knew the packet side, the database side and they knew this. We were four guys sitting around and hacking and building a company. We built a six-figure business almost immediately.
The four of you had to go out and find customers. You sound like you’re all engineers. Who was the one who went out there and found actual buyers?
The one guy who knew the Advent side. Advent was a portfolio management software. He was one of the best consultants in the business. He was wired everywhere. He actually got hired by Advent to build this process. He built the data side, I bought the presentation side and we built this really incredible product. We charged six figures in the first year. We didn’t know what we were doing. We had no idea. We just thought it was fun. It was a way to hang out with buddies and we were getting paid. It was really exciting.
What was the resolution of that company?
We did that for about a year and a half. Two of the guys went to startups and then Larry and I were still working for a while. What happened was his pipeline dried up. Then he went and got a second job and I just kept consulting. I never stopped after that point but I went solo. I went from a team of four to myself.
Lead us up to the OneTaste experience. How did you get there and how did that take place?
I just want to say that I’ve had a very interesting life and it just really has been bizarre when I think about it in retrospect. I was working in Corporate America, I was also married at the time and I was really disconnected from my wife. It was a pretty typical modern Western relationship, very intimate and hot in the beginning and then as time went on, we started drifting away from each other. She went to massage school at night and I was working during the day. We really were passing each other and we knew it. We were not really heading towards divorce but heading towards a really mediocre relationship. One day she asked if I wanted to take a course on relationships and I said, “Yes.” That was like the rabbit hole to this incredible pathway. I took this course. I found out different parts of myself that I didn’t even know existed. I just got really intrigued with internal work and self-development work. That led to meeting people and meeting this woman named Nicole Daedone who eventually became my partner at OneTaste. We spent five years researching what we wanted to do and started some other companies that were running self-help work. Then in 2004 she said, “It’s time to start OneTaste.” I was like, “What?” She’s like, “No, it’s time to start OneTaste.” We opened our doors in San Francisco in July of 2004. We had rented a 4,000-square foot, beautiful two-story brick building in South of Market. We had beautiful ideas and concepts. We threw an opening party that had 500 or 600 people. All the luminaries of San Francisco came. We thought we had made it and then on day two, nothing. It was quiet. It was like tumbleweeds were passing through the place.
What was the product that you were offering?
When we first opened OneTaste, we were offering seven different divisions running out of this 4,000-square foot space. We had a health food café, we had yoga, meditation. We had massage. We had a store where you could buy books, jewels and different things. We ran private and public events and we were teaching our relationship classes. It was all these different things. The idea was it to be a destination place where people could come and have their body be a pleasurable place to be. That was our tagline.
Out of curiosity, it sounds like it was an expensive proposition just to open those doors. Where did the two of you get the money?
I had the money. I had a house in San Francisco that I sold right before we opened. I took the revenue from that house and seeded it. I eventually put in probably around $800,000 into the company, but I initially seeded it with my own money probably about $250,000 to$300,000 to start.
Did your partner bring money to the table or was she more expertise?
She was more expertise. She had the concept, she was the vision, and she had the material for the classes, so she brought the expertise.
The doors opened, the tumbleweeds start rolling in but no customers. What did you do?
First, we had to check our arrogance. You talk about in your introduction of, “Don’t make the same mistakes.” The first mistake we made was we were arrogant. We thought if we just opened the doors without really doing the market research, without really understanding what it would take to market to bring this to the forefront, we didn’t know. There’s red ocean strategy and I’m not sure if you’ve read that book but the concept is Blue Ocean, you create a business that no one else is doing and you’re not fighting other people for the sharks where the blood comes. We did that. We created a Blue Ocean Strategy and unfortunately, we didn’t know how to market it. The first six months was really challenging because while we had runway in terms of cashflow, we didn’t have a lot. Then we just started really getting inventive. We started looking at low cost ways. We build up a community around it. We threw a lot of free events to get a lot of people. We attracted a lot of young people. They were called Gen Y back then. We attracted a lot of Generation Y people to come and hang out. There was a lively excitement about the place. We did free yoga classes. It was just anything we could do to get more attention, and we did especially in our first year.
Listeners, this is exactly what we talk about. Learning from other people’s mistakes and gaining the wisdom that Robert had to earn the hard way so that you don’t have to. What would you say to people who have this great idea? They are absolutely on fire about their vision for their future and they go head strong into building it and making it real. What advise specifically would you give that person who is about to launch this brand new product?
I’m a business consultant, so I’m asked this question quite a bit. My main advice is always the same. Write a business plan. Business plans of the past whether you write for a bank or write for a loan is a different animal. Today, business plans can be really short and in layman’s terms. You need to have the language. The idea of writing a business plan is it gets all these incredible, powerful ideas you have in your head and gets it down on paper. The components for my business plan that I recommend is an introduction, a list of products. How are you going to make your money? What’s it going to cost to produce those products? How are you going to market them, your forecast, a real life look at how long it’s going to take to go from concept to making profit? How is that going to support you or not support you? How much runway do you need so you won’t be starving and living under a bridge? The last is exit strategy. You want to do this for three years. You want to do this for five years. You want to do this for ten years. What’s your concept of what you want do and how do you want to get out of it? If you’re working with one or more partners, it’s really important to get all these ideas down and agree upon the business plan because it will give you the pathway for your success.
Like you, I’m a coach and I work with businesses all the time. I don’t use the same vernacular you do. I usually talk about markets, market research and testing the market. To me the most important thing is knowing exactly who your customer is before you even create a product. Having done the exact opposite of that and speaking from that kind of experience, I could tell you that when you figure out exactly who your customer is, it makes it a whole lot easier to create the product or the service that that customer, that person, that avatar needs. Let’s go back to the OneTaste story. You finally got it going and now it’s running. What happened in years two, three and further?
We started in 2004 and we were not profitable until 2012, which was a long eight years. We had an incredible community of several hundred people. We got inventive. We opened up a residence so our staff and our close community could live. We had Angel investor, a man who’s a VC who fell in love with our product and came in and gave us a $1,000,000 over the time. We just kept trying to find how to market what our viewpoints and what our technology was in a way. It was an incredibly long eight years.
What was the turning point?
It really came down to a change of attitude with the business. We went and said, “We’re not making it. We’re not going to make it.” There are two main turning points. The first was in 2009. We’re actually ready to quit in December of 2008. We’re just like, “We’ve done everything we can. We’ve got to let this go.” My partner went on a meditation retreat and I was sitting minding the store. When she got out of her meditation retreat, there was a message from a reporter from the New York Times saying, “It’s time to write your story.” This is someone we have met years before. The universe sent a message, “Not yet.” We ended up on the front page of the style section on a Sunday that wrote an article about our business. Then from that things exploded. Nicole got a book deal. There were over 300 blogs written about us in places like Glamour and Huffington Post, Time. All these were people interested in us. CNN did an article on us. All these interest got perked, created, sparked by that New York Times article.
While we weren’t profitable for another three years, it did add a level of credibility. Tim Ferriss, who wrote , came in and studied with us and wrote about us in The 4-Hour Body. All these motions started happening. That was the first thing. The second thing is we said to ourselves, “We need to turn it into a sales organization.” Whereas sales were important, they weren’t the top of our business. We then decided to say, “We need to make sure that we’re selling our product.” Not only we switched our products to more profitable, we also opened up in seven cities in the States and London. We sent people out to gather and build those sales organizations and that was the turning point. In 2012, we made around $700,000 in profit. In 2013, I think it was $1.7 million. By 2014, it was $4.1 million and then in 2015, it was $12 million gross. These are all gross numbers in profit. It was probably more profitable. The point was that we just swift. We said, “Where can we change?” and the area we need to change was we had the wrong energy, attitude, intention around sales.
You’re not alone and you made a mistake I think that many of us make in business where you focus too much on the product and not enough on revenue generation. A very common mistake to make and this is why I love doing this show. If there’s one person out there who hears what you have to say, Robert, and really re-thinks their entire business model around, “How do I sell what I’m creating?” not, “How do I create more?” It’s, “How do I sell more?” Many years ago we moved to Dallas, Texas because I had sold my software company. My wife said, “I’d like to go into this network marketing business. What do you think?” I said, “What I would do is I would try it out. There’s no big obligation, just try it out. See if you like it and see if you can sell some stuff.” What she does is she goes to Office Depot and she buys a desk, chair, a computer and a phone. I said, “Honey, what are you doing?” She goes, “You thought it was a good idea to try out the business.” I said, “Go out and sell some stuff first then worry about the office, the chair and the desk.” It turned out that she was great at it. She went out and she literally was able to do quite well doing that. The idea here, Robert, from what I’m hearing is you got into what I would call a soft business, an emotion-based business. I think people who start those types of businesses, unless there’s a solid MBA-type or a solid business-type as part of the company, most of those folks do have the types of problems that you’ve experienced. What would you say to somebody who sees themselves as that massage therapist who wants to open up a business or someone in the spiritual space or the meditation space? Where would you send them to either find the right partner or get the right experience?
The first is I had a couple of friends who wanted to open up a club in Los Angeles. They had this idea, this concept and then I asked them, “Have you ever worked in a club?” They were like, “Yeah, when we were younger we worked as waitresses.” I was like, “Go get a job. Even volunteer at a club. Just spend time or see if you can talk to the manager about being a shadow or just do an informational interview with them. Get some real life experience.” Without it, this is all a theory. You don’t know really what it takes. Getting practical experience is really the most powerful thing. When you’re creating a Blue Ocean business that doesn’t exist, it’s hard to get that but you can get likeminded or similar or different ideas from other businesses, which really leads to my second thing. I think competitive analysis is one of the most important things. Competitor has a negative connotation to it but in my world, in my experience, they actually can be your best friends. Most people I’ve met if you ask them, “I want to start a company just like yours. Would you be open to having lunch or can I buy you a cup of coffee to pick your brain? Can I come to your shop and just talk to you for 30 minutes or 45 minutes?” Pretty much everyone is going to say yes. Do your homework, go out there, look and check out the competitors and see how they’re doing it. My own personal experience now is I’m working on a book. I’m reading as many books as I can on a similar topic to get what they do and to “steal” concepts and ideas because they have done it. You only need to reinvent the wheel. Go out there and look.
Great advice, Robert, and I really appreciate what you’re saying. When I started my software company, I actually called it Lotus Development Corporation, which doesn’t exist anymore. I called and asked to speak to Mitch Kapor, the CEO. At first they were, “No. Nobody speaks to Mitch.” I said, “Would you give him a message? Tell him it’s another Mitch calling.” She said, “That’s very cute,” and she took my number. Bottom line is I ended up spending some time with Mitch Kapor. He introduced me to his senior vice president at the company. I did exactly what you said, Robert. I went and I took that person to lunch. In fact, they wouldn’t even let me buy lunch, which was even better. At the time, I could hardly afford it. We sat for hours and talked about it.
What was great about the conversation was this individual was actually encouraging me not do what I wanted to do, which actually made me even more convinced that I should. You’re absolutely right. It’s great to go out there and speak to people who are already in the business. I think you’re right about people being friendly enough to want to share. We all had someone come into our lives at a moment in time that boosted us, that helped us, that mentored us even if it was just for a few hours. I think people know that instinctively. That’s why what you just suggested will work really, really well, so I love the idea. Let’s go one step further here. I also want to talk about the Blue Ocean Strategy. Let’s go back to how OneTaste resolved. What happened at the end of your involvement with the company?
I started the company in 2004. I worked two years before that prepping on some level. Then around 2013, I just had this flash, this download, this idea that I didn’t want to spend the rest of my life doing this. While I loved the company, I loved the product, it was all consuming. I working 70, 80-hour weeks. I was travelling nonstop. I would teach in one city, spend a whole day there, jump on a plane and run to another city. For two or three years, I was traveling. My homebase moved from Los Angeles to San Francisco to London to New York. There was an unsettling and unhealthy aspect for it. My health started to suffer. I made a decision in 2013 to do what I had to ensure that when I left that the company would be well-handled. I was the COO, CFO and CTO. All the systems were in my head where I was tied to all of them. I empowered others. I wrote down procedure after procedure and made sure that people were well-taken care of. Also I wanted to have a good runway. When I sold my shares, I have a really good set up for the next phase of my life. That happened about a year later. I left on great terms, sold my shares and ended up in Venice Beach, California, a 44-year-old man just thinking what to do next. That was the start of this current phase of my life.
Amazingly, I was exactly 44 years old when I finished up my earn-out at Sage and moved back to Massachusetts with a pot full of money, no job and no future plans at all. We were exactly at the same time in our lives and it took me a bit to figure myself out here. Sounds like you’ve gotten a little further along than I did at the time. Tell us what you’re doing now.
I had an idea that year in between concept and leaving. I really mocked-up and planned my life. I’m a planner, I’m a strategist, so it was very easy. It was fun for me to figure out. I had this thought that there are always companies out there who were un-potentiated. Tony Robbins has this axiom that says, “Every company needs three different types of players. The first is the vision or the artist. The second is the manager. The third is the entrepreneur.” The manager ensures that the visionary’s ideas are implemented. The entrepreneur is the one who spreads it. He’s the networker. I’m a manager down to my core so I created Kandell Consulting, which is helping small businesses. Mostly women run businesses who don’t know how to do the books or don’t know how to set up their chart of accounts, run payroll, don’t know about the legal aspects or the set up or the licensing. I am a small business consultant helping these companies with not only their logistical, I also have twenty years of entrepreneurial service so I can help people, “This is where they’re getting stuck,” or look at their psychology and see whether they’re shooting themselves on the foot or creating glass ceilings. I help small businesses expand. That’s one part of my business. The second is I’m a life coach. I’m helping individuals, couples. I have my podcast which is called , which I do weekly and I’m writing a book called Unhidden: A Book for Men. I’m pretty diverse and each day is really unique and different.
I’m going to make an assumption here. In fact, I bet it’s an observation and not an assumption. I think you’re enjoying your life right now more than you may have ever done before.
This is the best my life has ever been every day. It’s amazing.
This is the goal. The goal is to be in control of your own life, to be at a place where there’s some money in the bank. There are some choices you get to make where you wake up in the morning and you know that you have some great clients you’re going to talk to, some great projects to work on and you’re going to enrich the lives of others, which is what Robert is doing everyday and that’s what I try to do every day as well. I really love what you’re doing. Do you accept clients from anywhere in the country or do they need to be in your local area?
No, anywhere in the country. My business is done via Zoom. The amazement of video technology sharing screens. I also use Google Drives pretty extensively. I’m an international firm. I can help anyone. When there are places outside of my expertise I’m willing to be like, “This isn’t really good for me but all in all I’m really here to serve and help.”
This is one of my favorite questions to ask. I believe it helps me understand my guests even better. Who, in all of space and time, would you like to have one hour to enjoy a walk in the park, a quick lunch or an intense conversation with?
Who really popped up was strange to me, but I’ll just say it and maybe embarrass myself, but Jim Morrison of The Doors. I have this thought of how cool it would be to really get the straight scoop of this visionary man who died so young, just really hear his perspective. I would love to have a walk in the park with the Lizard King.
You’ve named one of my favorite rock stars. More importantly like you, I always feel cheated by his death. I felt cheated by Jimi Hendrix’s death as well. I made it personal and to me I felt cheated. I thought that individual had a gift so unique and so different than anybody else that it was just such a shame that he was taken from us. I totally agree with you. I’m going to try and set that up for us. You and I will go for a walk in the park with Jim. Now the grand finale, the change the world question. What is it that you’re doing or would like to do that truly has the potential to literally change the world?
I truly believe that my podcast and my writing have the ability to change the world. My hope is to build a big enough platform and have a solid enough podcast and help people. The main thing I want to get across is that we live in a society of disapproval. We’re taught from day one that we’re doing it wrong. We’re too slow, we’re not smart enough, we’re not working hard enough, we work too hard, too many hours. My coaching and my viewpoint is, “You’re doing it right and that means you can do it better.” I want to view the world with my approval and let people know that they’re doing it right and there’s room to do it better.
I was gifted to have a mom who encouraged me in everything I did all my life. In fact, she not only encouraged me, she enabled me using exactly the way that you described. Your viewpoint is very, very powerful. One last thing is a way that people can find you on the web. What is the name of your website?
I understand that you have a special gift for our listeners, you have a free guide that you want to talk about?
I have five ways you can change your communication to have better relations without even telling your partners. There’s a free giveaway; email me and I’ll send these five simple ways, pragmatic ways, so that you can have better relationships.
Robert Kandell, what a pleasure to talk with you. I really enjoyed our conversation. I really think you’re doing something valuable and different. I hope a lot of people find you through our talk and discussion. Thank you, Robert.
Thank you so much. I’m grateful for the time.
Resources Mentioned in This Episode:
- Robert Kandell
- Blue Ocean Strategy
- The 4-Hour Body
- Kandell Consulting
- Tuff Love iTunes
- Robert Kandell YouTube videos
- Tuff Love
- Rob’s email
- Nicole Daedone
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