How does an aspiring pro surfer turn into a seven-figure startup founder? He learns from his mistakes as a product-based entrepreneur.
Max Baumann developed Basemakers to increase sales at his beverage business, Just Chill. Early on, he struggled to get his relaxation drink on shelves in Whole Foods and other retailers. And hiring individual sales managers to merchandise his brand put a huge dent in his expenses.
Now, Basemakers supplies consumer product goods (CPG) businesses with dedicated sales experts for a fraction of the price. These experts promote sales by improving shelf visibility, building brand-based displays, and increasing sales at the store level. All merchandising is consolidated under Basemakers’ roof, allowing CPGs to save precious time and dollars.
Read on to see how Max learned valuable lessons from his work on Just Chill to turn Basemakers into an invaluable sales service.
How an Aspiring Pro Surfer Caught the Entrepreneurial Wave
When the University of California, Santa Barbara (UCSB), sent Max an offer letter before he’d even applied, the then 17-year-old crumpled it up and threw it in the trash. In a few years, he would regret that decision. But at the time, Max dreamed of becoming a professional surfer.
He learned how to surf at age nine when his family moved to Cabo San Lucas, Mexico. Surfing was the only way he could meet kids his age and bond with them, so he dedicated himself to the sport. His passion for surfing grew as the years (and waves) passed. After graduating high school, he moved to Australia to go pro.
Unfortunately, Max spent more time surfing couches than waves. Going pro required a bit more skill than he possessed at the time. When he returned to the US, the first thing he did was enroll at UCSB.
After a year and a half of community college, Max joined UCSB’s surf team and started studying. During a trip for a surf competition, he noticed several nervous travelers and high tensions at the airport. An idea struck him for a relaxation drink to calm people’s nerves, and when he returned to California, he pitched the idea to his friends.
Max pictured Just Chill as the “yin” to Red Bull’s “yang” during the rise of energy drinks. His friends loved the idea, and after taste-testing a few formulas, they hired a manufacturer to produce them.
“I just had the drive and ambition to go out and start something. To see how it would do and risk failure.”
“I had a pickup truck at the time, and we loaded cases in the back and went door to door, selling it to any place that would take it,” Max says. “We knocked on taco shops and said, ‘Hey, here’s our deal. Can you get it going?’ We wanted to saturate the market.”
When Just Chill launched in 2010, Max didn’t have any formal business training.
“I just had the drive and ambition to go out and start something,” he says. “To see how it would do and risk failure.”
From Pickup Trucks to Grocery Store Shelves
Max and his friends quickly learned that running a CPG business isn’t a get-rich-quick scheme. You must invest in inventory and dedicated marketing strategies to convince stores to stock your product. Distribution is also difficult from the back of a pickup truck.
Max completed an executive education program at The Wharton School at the University of Pennsylvania to learn how to expand his business. The program taught him about operations, marketing, leadership, and strategic persuasion (sales). It took a year for Max to apply those lessons and shelve Just Chill at a local Whole Foods.
With one store on board, others followed, until Just Chill was in several grocery chains across the country. Money poured in, allowing Max to reinvest in the business. He hired business advisors, who then told the founder that if he wanted to keep growing, he’d have to hire area sales managers or field sales representatives to handle merchandising.
Max started small, hiring managers and representatives to oversee Whole Foods stores in Southern California, Nevada, and Hawaii. He also visited stores to build displays, optimize shelf space, and work on other merchandising tactics.
“Sales increased when we had managers in place. Not just when a display was up, but even after,” Max says. “But it burned a big hole in our profit and loss statement. Suddenly, we’re spending tens of thousands of dollars per month on these managers.”
Hiring individual area managers was too costly for many CPG businesses, not just Max’s. When he attended the Coca-Cola Venturing & Emerging Brands (VEB) Founders’ Forum in 2014, Max met several other small business owners who faced similar sales velocity issues.
“That was the moment – between expanding into new states, burning capital, and hearing other entrepreneurs share that same problem – where Basemakers was born,” Max says. “How do we build a network of area sales managers to merchandise, sell, and provide services for several brands for a fraction of the cost?”
Product vs. Service
When Max launched Basemakers in 2015, he thought it would benefit Just Chill and maybe a few other companies. But by the end of the first year, nine regular clients wanted Basemakers’ reps to merchandise their brands.
He soon learned that running a service-based business differs wildly from a product-based one. As the Just Chill CEO, Max recalls spending endless hours meeting with potential investors to keep pace with inventory demands.
But after investing $4,000 of his savings, Max earned enough revenue to reinvest in a new sales campaign. He targeted more brand partners and hired more sales managers to cover stores in California. Soon, Basemakers expanded into Western and Southwestern states as well.
Running a service-oriented business also allowed Max to develop close relationships with the clients he served. Time spent schmoozing investors for more funds went to understanding his target audience. He connected with clients at trade shows and on LinkedIn to learn how Basemakers could improve its service and earn their trust.
“We spent marketing funds on meeting people face to face,” Max says. “We’ll ask our different brand partners for referrals. Our marketing strategy follows sales and connections that we’ve built within the industry. We haven’t spent a dollar on advertisements yet.”
Nor do they plan on it just yet. Basemakers earns plenty from brand partners who need help merchandising in grocery stores. They pay per store visit, so no brand is tied down to a certain region or chain if a retailer suddenly discontinues a brand’s line of products.
“Recognizing the differences between services and product would help me scale Basemakers.”
This flexibility appealed to potential clients and caused a wave of new contracts to flood in.
“The first year was the polar opposite result of Just Chill. In the first year, Basemakers was profitable,” Max says. “I had to invest a lot of money in Just Chill before achieving that profitability. There’s a longer timeline between manufacturing the products, payroll, and this delayed cycle with using cash to expand the business.”
He adds, “Recognizing these factors and the differences between services and product would help me scale Basemakers.”
Just when Max was about to implement those scaling plans, however, COVID-19 descended on the world.
When a Global Pandemic Slices Your Workforce in Half
Thousands of startups continued operating from employees’ homes when the global pandemic hit in March 2020. Basemakers didn’t have that option. Those workers needed to be in the stores, checking the shelves and displays to ensure brand partners sold products.
And while grocery stores remained open during the pandemic, it still wasn’t safe for Basemakers’ employees to mingle with the public. Rather than force them out into the stores, Max offered to furlough them temporarily. Either way, he would continue paying for their medical expenses and other benefits.
“I wrote checks to everyone too, just to make sure they were good,” Max says. “We had about half of our staff out, so we lost a significant amount of money over those months. Eventually, I gave everyone handwritten notes that said, ‘Hey, team, thanks for everything you’ve contributed. You can come back in June if you want. If not, no hard feelings.’”
Over 90 percent of Max’s team accepted his offer. With proper safety procedures in place based on CDC guidelines, Basemakers began its uphill slog toward profitability.
While several product-based businesses benefited from increased online sales during the pandemic, Max accepted that the months following March 2020 would be “the worst decline” in Basemakers’ history.
“In that period, we were unprofitable, so it was tough. Losing tens of thousands of dollars without investor support is scary.” Max says.
Despite these low-income months, Max maintained his relationships with brand partners and saw an opportunity for both parties’ growth.
“From July on, brands quickly realized that people flocked to ecommerce and grocery stores. It was the convenience stores that went down,” Max says. “When clients realized that, our phones rang off the hook – even during the months when we were understaffed.”
As these brand partners pestered Max to help them restock and boost sales, he told them that he was understaffed because he wanted to respect his employees’ decisions about the pandemic. When almost everyone returned in June, Max called it a “great moment.” Not only were Basemakers’ sales managers back, but they had plenty of work to do.
As momentum built throughout late 2020 and early 2021, Max could finally return his attention to scaling.
Chill Out, Basemakers Isn’t Looking to Sell
After eight years of building his first business, Max sold Just Chill in 2018. Although the beverage business was doing well, he felt it was time to focus on Basemakers’ growing success. He sold it to Life on Earth, who unfortunately pivoted from products to software shortly after the acquisition. No more Just Chill beverages to be found at your local grocery store.
Max is glad he sold Just Chill, but he has no such plans for Basemakers. Despite already receiving acquisition offers, the founder turned them all down because he wants to execute a long-term vision.
For the short term, Max hopes to keep expanding Basemakers in new regions and hiring dedicated sales managers.
“I want to help build world-class brands through world-class sales capability,” Max says of his long-term plan.
The kid who just wanted to be a pro surfer has come a long way since the late 2000s. While Max doesn’t have any regrets, he still can’t believe that he’s reached this point as an entrepreneur.
“Entrepreneurship isn’t just professional growth but personal growth.”
“It’s wild to look back and remember the 20-year-old who couldn’t drink that went to his first beverage conference. He was looking at this big, vast world and thinking, ‘Wow, this is incredible. Maybe one day I’ll have a company that can create something of value,’” Max says. “Now, looking back at it, I’ve since spoken at many of those same conferences and shared the wisdom that I’ve learned over the last decade or so.”
He adds, “This journey is personal. Entrepreneurship isn’t just professional growth. It involves a lot of personal growth, learning about yourself, and building resilience.”
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