Hey Friends & Fam!
This week we are dealing with a topic that is close to heart for me. And that topic is how to move from a life spent in prison... to a life spent running a good business.
John Krause of Big House Beans was incarcerated for over a decade – in and out. He went to the Big House (San Quentin) essentially for drugs, or the things that drugs made him do.
And since he's come out, he has regained custody of his children and raised money for not just one – but two businesses!
You can listen to the full episode here - or read on for a summary
John is perhaps the pinnacle example of overcoming obstacles in pursuit of goals.
We all face our insecurities - and our doubts. Sometimes we just don't believe we can make it over the next hill! So how do you get fired up to make sales, raise money ... and pursue your dreams when the going gets tough?
We will get into the nuts and bolts of his business success and struggles.
But first – I said this story was close to heart for me. That’s because I have a good friend who has been imprisoned since we were 21 years old. And for the past ten years as all of his friends have been growing emotionally, and gaining work experience, building careers and families – he has been… well, he’s been “sitting down” as they say.
Things have recently started to look a little bit better for him. It looks like he might be released in a couple years, which is a bit early. But just this week, out on the exercise yard, he was assaulted and stabbed five times, including twice in the face, near his temple.
Fortunately, he's OK for the time being.
Life in prison is not an easy path.
Incarceration rates in California are among the highest in the world. And recidivism rates are at 65%. That means if you are released from jail in California, there is a 65% chance that you will go back.
And this was certainly true for our guest today, John. He did not do his 12 years all at once. He was in and out, in and out of jails and prisons since he was a teenager.
I wanted to share that background so that you folks can reflect on all that you’ve done since you turned 21, or 19.
And taking that into consideration you can more fully appreciate the belief in self it takes that in the 7 years since he was released from prison he has successfully raised capital for two businesses, sold up to $50k per month and hired employees.
Where John Finds Inspiration
Every business owner needs to believe in themselves. And every person goes through hard times. John is not alone in either of those ways.
So – how does he gain the self-confidence and courage on a fundamental level, to believe that he was capable of raising money and starting a business? … And what path did he take to get to where he is today?
One of the ways John "feeds himself" is with events such as Tony Robbins. He recently went to a 3 1/2 day event down in Los Angeles called Unleash the Power Within.
Now, he will do odd things before sales meetings... like pull over to the side of the road, blast his music and get pumped up in the car. Might look a little strange, but hey it works!
The church has been another huge source of support for John.
When he got out of prison a good friend was attending AA - Alcoholics Anonymous - with him, and encouraged him to get involved with a Christian community of men in Danville CA called SOMA.
This community provided him with that family he lived with, the connections to that first job, business mentorship, and eventually ... individuals within the group would provide capital for his business ideas.
From Zero to Hero
John’s first job out of prison was in the waste oil business – collecting and disposing of restaurant’s waste oil – and he quickly moved his way up the food chain from waste collector to salesperson.
He found a mentor who gave him great advice and started making sales on his own time and gas money. He was able to close 200 sales in that first year, and began making more money in a day doing sales, then in a week of waste oil labor.
He basically developed a vision at that time – saw how instead of working FOR this company, he could be making these sales on behalf of … himself, really.
Fundraising & A New Business
But he needed resources so that he could get a truck of his own and set up this business.
So he raised the capital for the truck from members of his church community, and within a year he was making $50,000 worth of sales each month!
Partnership issues caused him to leave that business, but he just kept right on going. At that point in time he was already in love with the coffee business and jumped in feet first.
He was able to raise over $100k to get started, and recently closed another $200k round of funding.
This is a big vote of confidence these folks are placing in him!
Raising money is a very difficult thing to do. Those of you who have done it, know that.
Don’t get the idea that just because he is a part of this church community that people go around placing a hundred thousand dollars in everyone’s hands as soon as they turn to Jesus. They don’t. It is a big vote of confidence that these individuals are showing in his ability to repay debt.
You may have heard the phrase, invest in the person – not the idea.
That’s exactly what the mega hip hop producer turned tech investor Troy Carter said about the first time he met a guy named Travis – that this guy in front of him talking crazy about changing the world’s taxicab industry through a mobile app was worth investing in. And that’s how Troy got in on the ground floor of Uber.
Invest in the person – not the idea.
Pricing & Competitors
But John faces some big challenges in order to turn the corner and push his company into the black. Into profit territory. For example – his ultra high cost of production and what that does to his pricing.
Some customers want Fair Trade, they want Rainforest Alliance, they want Organic ... they want all the things! But they're only willing to pay $5 – or even $3 something – per pound.
It is interesting that John now recognizes that fighting for a seat at the table in the retail coffee business is an entirely different value proposition than asking a restaurant to switch their waste oil.
In the waste oil business, John was a big fish. There were very few people coming in the door, passionately urging a restaurateur to switch their waste oil provider. But in the coffee game, it is a harder sell.
It's not just the pricing, it's also that a choice of coffee says something to a restaurant's customers (or an office's employees) about their own product. You're selling a brand – not just a commodity.
The money he has raised is keeping oxygen in the tank, but it's still a long climb ahead until the coffee business sales are producing like he was in the waste oil game. Right now he's on track for $150k in sales this year, up from $100k last year.
Know What To Commit To
But when it comes to his new business baby, John isn’t giving up.
This is what burning the ships is all about.
I do think there is a time and a place to walk away from a business. You have to know the difference between a road block in a business that you love – and an unconquerable mountain that will ruin you.
For John, being completely financially wiped out and burnt out in his new business is just a hill. He knows how to go attend a Tony Robbins event, find some inspiration, and deal with that.
But his partnership issues from his first business. That mountain was too big to conquer.
One of the favorite sayings of a mentor of mine is that Entrepreneurs are Delusionally Optimistic. You have to be. But you have to be grounded in a sense of reality too. You have to know your limits.
Pressure’s on. But if you’re doing what you love to do – then dig deep inside yourself and see what you have left to give.
Friends & Family
We’ll see you next time, here on Working Sunday
P.S. John's coffee is delish. And you get 20% off a bag if you enter code 'Working Sunday' at checkout on his website.
For a much richer experience, listen to the full episode here on soundcloud
Or subscribe on iTunes