My Favorite Entrepreneur Story in a Long Time

Posted on Apr 21, 2013 | 41 comments


This article originally appeared on TechCrunch.

If you don’t like it hot, use less,” he said. “We don’t make mayonnaise here.” 

This morning I was reading my social media and came across an article that Christine Tsai had posted on Facebook.

Screen Shot 2013-04-21 at 8.07.30 AMIt was about the founder of Sriracha sauce, David Tran, displaced from Vietnam when the North’s communists took power.

As the son of an immigrant myself, I am a sucker for an immigrant story. Moving to the US with nothing but hard work and ambition. Having a strong sense of values. And wanting to build for the next generation.

It is of course why immigrants power so many successful businesses in the US and why we need to embrace them. They have nothing to lose. They bring new ideas, new cultures, new business practices. But they mostly want to be – AMERICAN. That’s all my dad ever wanted for us. Even while he clung to his native traditions and culture himself.

If you ever want to read the great American generational immigrant business story read American Pastoral by Philip Roth, which won the Pulitzer Prize and was voted by Time Magazine as one of the best 100 books of all time.

It also chronicles the forces behind the decline of the American city (which has been revived in the past 10-15 years) and the rise of global manufacturing.

My own fascination with hot sauces began a few years ago. I was never into spicy foods growing up but after living in the UK for nearly a decade and having so much great Indian food around me all of the time I developed more of a taste for it.

I moved back to the US and after a stint in Palo Alto moved to LA where I started to notice Cholula sauce at some of the best Mexican restaurants I visited.  I absolutely love the stuff.

So I started noticing hot sauces more and the more I looked the more I noticed this funny rooster bottle with a strange sounding name I couldn’t pronounce and that familiar green cap. Sriracha.

Screen Shot 2013-04-21 at 8.31.08 AM

Where was it from? What did it mean? What nationality was it? It seemed to be in every kind of ethnic restaurant.

The company name sounded Chinese – Huy Fong Foods. Was this the latest Chinese product to take off in the US?

Turns out it is a family-owned business started by a refugee from Vietnam and named after a small village in Thailand Si Racha. So grateful was David Tran for the people who provided safe passage from Vietnam for him that he named his company after the Taiwanese ship that carried him away.

Tran moved to Los Angeles and started his business in Chinatown with a need he personally had. He noticed that Americans didn’t have good hot sauce. So he made hand-made batches in a bucket and drove it to customers in his van.

But his goal wasn’t to make a billion dollars. He wasn’t driven by quick riches. He was driven by wanting to provide a great product. How much could the new generation of entrepreneurs learn from that?

I know it’s what I look for when I want to back companies.

“My American dream was never to become a billionaire,” Tran said. “We started this because we like fresh, spicy chili sauce.”

And build a great business he did. While still owning the business he now does $60 million in annual sales built from nothing.

Could he have grown faster with outside money? Or by selling to a big company and taking in International? Sure.

But it wasn’t his ambition.

You’ll absolutely love this quote

“This company, she is like a loved one to me, like family. Why would I share my loved one with someone else?”

How many of you could say that?

He didn’t want to compromise on product as he knew he would be forced to if he had to expand too quickly. He wanted to keep his prices low (apparently he has never raised his wholesale price in 30 years).

What I learned from the article? What touched me? What lessons could you learn from a Vietnam refugee who makes chili sauce? Quite a bit it turns out …

1. Extreme product passion. When his packaging suppliers tried to get him to change his product to make it less hot or more sweet for American customers he refused, “”Hot sauce must be hot. If you don’t like it hot, use less,” he said. “We don’t make mayonnaise here.”

2. Uncompromising product quality (he processes his chillies the same day they are harvested)

3. He had a guiding principle for the company

4. Focus on the customer and provide value - ”We just do our own thing and try to keep the price low. If our product is still welcomed by the customer, then we will keep growing.” He said this in response to the fact that several other companies are now stealing the Sriracha brand name. He can’t trademark it since it’s the name of a city. By the way, he has never spent a dollar on advertising

5. Provide something distinctive. What will you be known for? Given the brand dilution going on with the name Sriracha how can he still grow his business? The distinctive design of his packaging. That crazy rooster. All those freaking languages on the bottle – the mystery of it all! And the green caps.

But I have to say, despite it all, and it’s impossible to take away from the success of David Tran, I kept wondering if modern business practices couldn’t solidify this into a global product. Branding matters. Organic word-of-mouth worked until this point but I wonder as this becomes an international product line. I wonder how agressive they are with digital distribution. I wonder if they could trademark a broader name that Sriracha so that they can get some defensibility.

I hope the next generation Tran’s have some thoughts on these topics and more. I would love to see this company continue to succeed.

 

Here is the article from the LA Times.

  • http://arnoldwaldstein.com/ awaldstein

    I’ve been thinking about non-tech startups a lot lately.

    Lianna has started one here in NYC (www.lulitonix.com), a raw/blended greens company after a long-term passion for nutrition.

    As a tech guy, getting to know the food incubators, a whole group of food and health entrepreneurs has been inspiring.

  • http://jindoulee.com/ Jindou Lee

    Hot post Mark.
    Immigrant kids have a fire in the belly that can’t be taught. Sriracha is used in every single Vietnamese/Chinese/Thai restaurant I’ve been to around the world. As tech startups we need to remember there is a world outside of our bubble made up of businesses that sell tangible things.

  • http://twitter.com/NathanW_9 Nathan Wojtkiewicz

    Great to know that Sriracha is a brand I can cheer for given I put it on just about everything (add it to your lasagna recipe to add a nice little kick)! Just another example of a company focusing on simply creating value for their customer to build a successful product. I love it!

    And a great reminder on American Pastoral. I read it over 10 years ago and haven’t thought about it in quite some time. Given how much my life has changed over that time period, I would probably get a lot out of reading it again.

  • http://bothsidesofthetable.com msuster

    sounds like a growth area for sure. they need to fix this: http://lulitonix.com/pages/team-story

  • http://bothsidesofthetable.com msuster

    hallelujah

  • http://bothsidesofthetable.com msuster

    I want to re-read, too.

  • http://arnoldwaldstein.com/ awaldstein

    Yup.

  • Rachel Aubrey Morris

    It would make me upset if I learned that the Lays potato chip flavor didn’t work with the real company on the deal (yes, sriracha potato chips, a fan requested flavor, I believe). Hopefully he has indeed cornered this market, but I wonder the same thing – how else could be better protect his brand? It’s a favorite in our house, happy to know we support such a talented, driven guy!

  • http://byJess.net/ Jess Bachman

    As a kid growing up I went to Avery Island many times. Indeed, what riches hot sauce can produce.

  • LaVonne Reimer

    What a great reminder of the breadth of the concept we call entrepreneurship. Wonderful story. Thanks.

  • http://twitter.com/lbs_co LBS.CO

    It’s encouraging to see a food product linked to ideals and passion – so much of our food products have anti-social consequences.

  • http://hirethoughts.blogspot.com/ Donna Brewington White

    Congratulations to Lianna. Looks like a teriffic business. Another form of local sipping? ;)

  • http://twitter.com/joedavis4 Joseph (Joe) Davis

    I loved the quote of how he viewed HIS chili sauce… like family. He cared deeply about his product and based off of sales, it shows. I wish more companies cared about their product more than a cheaper way to produce/ store/ distribute/ etc.

  • http://hirethoughts.blogspot.com/ Donna Brewington White

    This bottle is so familiar. Great to know the story behind it and what a great story it is. Thank you.

    I can’t tell you how pleasantly surprising it was to begin reading this only to realize that this wasn’t a post about a tech entrepreneur and that you were drawing rich lessons from this unsexy (but hot) business that can be applied across industries including tech-related.

    Don’t get me wrong — I am fascinated by and love tech startups! But sometimes it is nice to hear about and learn from entrepreneurs in other arenas — which is part of promoting a more entrepreneurial culture in general.

  • http://hirethoughts.blogspot.com/ Donna Brewington White

    So true, LaVonne. Entrepreneurship is worth celebrating in all its forms.

  • Zlatko Turkalj

    What a lovely coincidence. I’m currently living in SF, building American dream of my own (originally from Croatia). I fell in love with Sriracha, and today was the first day I bumped into this one during regular shopping. I was so happy to find it and the first thing to see when I got back home was this post in my FB feeds. Love to know the whole story now, and will enjoy it even more. Long live David.

  • http://arnoldwaldstein.com/ awaldstein

    :)

    The product just rocks, taste wise and health wise.

  • jamesoliverjr

    Mark, I love the quote about the company feeling like family and not sharing it, but how does one reconcile that with the reality of needing capital to grow one’s business?

    For example, I just finished an accelerator for my startup, WeMontage. Before the accelerator I was out of money after sinking the last of my savings into the biz, and I had an interface consumers didn’t like (we’ve fixed this) prior to starting the accelerator. Capital raised post-accelerator will help me hire a few key employees and market the business.

    I also always read and hear that entrepreneurs shouldn’t be hung up holding on to all of the company.

    Love to hear your thoughts…

  • petermengo

    I’m not trying to spin the subject too much – but David is another strong argument for immigration reform. The next few weeks will be critical in this important legislative battle for “intelligent immigration” as new legislation is introduced that could dramatically impact our industry’s ability to compete in the coming decades on the world stage. Efforts like the March for Innovation (http://www.marchforinnovation.com) and FWD.US are battling to keep bright, belly-fired immigrants (who want to become Americans!) here in the US.

    My company recently lost a whip-smart co-founder back to China. He had to return kicking and screaming due to our antiquated and thoughtless policies. Our loss – China’s gain.

  • http://bothsidesofthetable.com msuster

    I presume it’s your wife? That’s what I was looking for when I clicked on the team page and got the 404.

  • http://bothsidesofthetable.com msuster

    I worried about that when I read the article. Family businesses often struggle with both generational and market change.

  • http://bothsidesofthetable.com msuster

    Funny when you read the history of the world and realize how many wars and how much territory was fought over spices. We take that for granted now. Along with the rest of everyday life like: salt, strawberries, freezers, chocolate and other luxury items.

  • http://bothsidesofthetable.com msuster

    True. I guess when I read the ingredients I was a tiny bit less heartened though ;-)

  • http://bothsidesofthetable.com msuster

    The investors of GRP have been behind many non-tech brands including: Costco, PJ Changs, Jamba Juice, ULTA Beauty & Cosmetics to name a few. Oh, and Starbucks & Caribou Coffee. So hearing about non tech is more familiar.

  • http://bothsidesofthetable.com msuster

    And welcome to the melting pot of the United States. We’re delighted to have you. May the US reform more quickly and welcome more immigrants.

  • http://bothsidesofthetable.com msuster

    It depends on the type of company. In tech companies I think it’s healthy to raise outside capital. Actually, in most businesses. But in family-run businesses where growth isn’t necessarily their primary objective I can see it both ways.

  • http://bothsidesofthetable.com msuster

    I agree wholeheartedly. I wrote the same in another comment before reading this. Amen.

  • Guest

    Hi Mark, really inspiring post – I love Sriracha sauce and knowing the story behind it will make it taste that little bit better/more intense!

    On a separate note – totally agree that immigrants seem to power a huge number of successful US companies – yet the current US Visa system makes it nearly impossible for any foreign entrepreneurs to stay! It’s madness! We are three British founders, and despite going through the TechStars accelerator program last year, we weren’t able to obtain the work visas we needed to stay in Seattle… so we’ve improvised and relocated to Morocco instead! (we wrote a post on Quora about the move here if you’re interested –> http://www.quora.com/Startups/What-are-the-coolest-startup-culture-hacks-youve-heard-of)

  • jamesoliverjr

    makes sense. thanks for the reply.

  • http://byJess.net/ Jess Bachman

    For sure! The spice trade is a fascinating thread of human history. Really blows my mind that people would setup and fund these journeys in the middle ages from Italy accross the Mediterranean over Egypt, through the Red Sea, then over to Italy… and back!.. to get some cinnamon. I suspect it was a bit of a currency proxy, either that or European food was really that flavorless.

  • http://twitter.com/SimondcSays Simon Christian

    Great story about Mr. Tran, Mark. Sriracha has such a cult following with the younger demographic through the placement in cheap, good eateries. Search #sriracha on instagram and it is endless. No shit you don’t advertise!

    I’m a sucker for immigrant success stories myself. I used to feel out of place when we would travel as a family and I was the only one with a US passport….now I appreciate the sacrifices made!

    Best line for sure – “We started this because we like fresh, spicy chili sauce.” If you ever want to see hard work and dedication to a product walk through china town in NYC early in the morning to watch the street vendors set up shop…amazing.

    oh and best hot sauce is Matouks from Trinidad!

    Simon

  • http://twitter.com/lbs_co LBS.CO

    Potassium sorbate, sodium bisulfite and xanthan gum are vaguely suggestive of collateralized debt obligation (harboring an inner poverty) but in small doses I’m ok with the tradeoff of great flavor & story for shelf life extension

  • http://arnoldwaldstein.com/ awaldstein
  • Sith

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  • http://www.bluecoastrecords.com/ Cookie Marenco

    Love your post, Mark. I am one of your small business followers and very much appreciate your support of what many of us do. Not everyone starting a business sees being a billionaire as the end goal. :)

    Some of us seek to do great work, have a passion, see a need to fill, love our customers and vendors and believe our products make the world a better place. When you can make yourself and others happy,and generate a profit there can be na incredible sense of fulfillment.

    Not having unlimited resources when we started our music business, it forced us into ‘lean startup’ practices. In 2009, quality music recordings were the last thing on anyone’s mind. Starting a new ecosystem for delivery of sound was even farther on the backburner list and met with rejection everywhere — except for music lovers disenchanted with mp3s. It forced us to build our own digital delivery systems to handle DSD and other files, some 40x the size of mp3s.

    When some people said “Why?” we said, “Why not?” so we did. We now have 26,000 registered users and 18,000 fans of our newsletter which is growing at a healthy pace. We’ve managed to get the attention of Sony and 100 other hardware and software manufacturers to build products for DSD audio. After Beats Headphones and others announcing Quality Matters, what’s left to fix but the source itself!

    We’re not under an illusion that super resolution audio is for everyone… just like Srirachi… if you want mayonnaise, buy mayonnaise (It happens I have 2 bottles of Srirachi in my frig and no mayo). Not everyone owns a Ferrari, but I’m sure the ones that do are passionate about it.

    If anyone wants to follow our adventures, you can start here… http://bluecoastrecords.com
    We won’t go away because we love what we do.

    Thank you, Mark, for your appreciation of small business owners.

  • Avram Rampersaud

    Great post Mark, I’m a hot sauce addict and entrepreneur (in that order) and never knew the back story behind Sriracha. It reminds me of the story behind Dr. Bronners Magic Soap. Sticking to core principles and quality is hard to beat.

    Couldn’t agree more that Sriracha seems to transcend all cuisines (from sushi, to Thai, to Mexican). Good for David! Now if you’ll excuse me I have to hit the fridge…

  • Zlatko Turkalj

    Thanks Mark.

  • http://www.mydepartmentplan.com/ MyDeptPlan

    Wow, this is the kind of story every businessman wishes he had behind his brand. This kind of devotion and pure love for your craft and product is how people gain attention.

  • http://chesmart.in ches

    On this subject, Schivelbusch’s “Tastes of Paradise” is some of the most enjoyable social history I’ve read.

  • henry

    Such an inspiring stories. It is true, not many people have the same ambitions as he did. Nowadays, people sometimes only cares about money. http://www.incube-8.com/

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