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A successful, prolific inventor reveals how not to create a new product

Wednesday, Apr 11 2001

Page 4 of 4


"I didn't know what the margins were -- I could've found that out in a minute," Kanbar laments. "I thought Coca-Cola makes a dollar a case! Sell a 24-pack, and they make a dollar! So, fine, I'll make 50 cents! That's a hell of a business! I didn't know it was a dime!"

Actually, as Jason May recalls, the profit margin on sodas is closer to a penny a case. Making 80/20 Cola profitable would mean selling in mass volume. Selling in mass volume would mean a nationwide or large regional rollout -- not just Houston. A large rollout would mean mass advertising. Mass advertising would mean a huge financial outlay -- not to mention competing against Coke and Pepsi for ad space, bottling, distribution, and other mechanics of the soda industry that Coke and Pepsi have a lock on. "I think what happened was that it was put to rest before the investment was too heavy," says May. "It was a big learning experience for everyone, and what everyone realized was that a one-penny-per-case margin is not something you want to work on, unless you have the volume that Coke and Pepsi have, and this particular product wasn't going to get to that level."

"Cola's so cheap that unless you're Coke or Pepsi, and you have your own distribution network, you can't distribute a cola," says Weiner. "It doesn't work."

"Don't go into a business where you don't know the margins!" says Kanbar. "Sometimes," he adds, "you get a little cocky."

By July, Kanbar had pulled the plug and Weiner had left to pursue his own company. Kanbar kept a few cases of 80/20 Cola for himself and donated a few pallets to the San Francisco Food Bank. The rest of the supply was shipped to surplus goods stores and sold at a loss.

Shortly after the 80/20 Cola project was scrapped, Russ Weiner left to create Rockstar, an energy drink that he's begun to sell on the West Coast. While Weiner was the ostensible president of 80/20 Cola, Rockstar was his passion; he'd seen how well nutrient-packed "energy" drinks like Red Bull were selling in clubs and decided to get in by making a drink that tastes just like Red Bull, but sells at the same price in a larger can -- which Weiner argues is a better value for club owners. Weiner had also seen how the big soft drink companies were muscling into energy drink territory. PepsiCo recently purchased Gatorade and South Beach Beverages' SoBe line of teas; Coca-Cola, which failed in its attempt to buy both those companies, is now test-marketing KMX, an energy drink set to compete directly against Red Bull.

\rIt's the same cola war. Only the flavors have changed.

Weiner believes in Rockstar the way he never believed in 80/20 Cola. While 80/20 was flopping, he was trying to convince Maurice Kanbar to get behind Rockstar instead, but Kanbar demurred. "He's very intelligent and has done a lot of amazing things, but energy drinks are just not his thing," says Weiner.

Weiner harbors no resentment toward Kanbar; indeed, he cites Kanbar as a genius, a true mentor, and an inspiration for the way he wants to handle his drink. About six months ago, he pushed Kanbar one last time to get involved in Rockstar, and Kanbar responded with what Weiner now recalls as the best advice he's ever gotten: "If you're really passionate about something, and you really want it to succeed, you need to invest your own money in it."

Kanbar employee Jason May remembers talking to Weiner the day after he wrote a large check to get Rockstar's production moving. "We were talking, and Russ said, "Fuck, Maurice is so right. I know what he means now. I just sent the biggest check I ever wrote in my life, and I can't stop thinking about this thing, no matter what I do.'"

Maurice Kanbar moved on as well. There are a lot of things at Rex Products to move on with, after all. First is the Bajaj scooter line, which he hopes will be available this summer. "Importing the Bajaj scooter, I want to tell you, it's fun," he exclaims. "I can't wait for the EPA to approve the bloody thing so I can buy one and throw away my Yamaha! I love this machine. I love this machine!"

The projects continue: the LED stoplight idea, the Wagel, the board meetings with the San Francisco International Film Festival, which Skyy helps sponsor, and which will screen the film One of the Hollywood Ten, in which Kanbar has a cameo as a Hollywood producer. "All my friends say, "You were great, you were great,' but I don't know," Kanbar says. "I think I did a reasonably good job. I was playing myself."

And he's taking another crack at the beverage market. This month, Skyy Spirits will begin selling Vermeer Dutch Chocolate Cream Liqueur. The drink exists simply because Maurice Kanbar likes chocolate. And it's called Vermeer because Maurice Kanbar enjoys going to the Frick Museum in New York City, where he can see its collection of works by the 17th-century Dutch painter Jan Vermeer. So now when Kanbar goes to a cocktail party, he can continue to tell the same half-truth he always does when people ask him how he makes a living. "I don't say I'm an inventor," says Kanbar. ""Inventor' always leads to lots of questions -- people want to know what you invented. I actually tell them that I'm in the spirits business. That makes it very easy."

About The Author

Mark Athitakis


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