Patrón Chairman Offers Tips for Business Success
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What is the main topic discussed in this episode?
This is Your Money Matters from The Wall Street Journal.
Welcome to Your Money Matters. I'm J.R. Whalen in New York. In one of the biggest acquisitions in the liquor business, Bacardi will buy Patron Tequila in a deal that values Patron at $5.1 billion. So what can business owners, large and small, learn from this mammoth deal? Patron Chairman of the Board John Paul DiGiorio joins us to discuss the transaction, as well as offer some tips on how business owners can make money starting and potentially selling their business. John Paul, first of all, congratulations. Thank you. The road to selling Patron has not been a straight line for you. You've had numerous stops and starts along the way, and I'm sure there were plenty of moments when some might have just given up and moved on to something else.
Oh, yeah. What kept you in the game all these years?
What’s the deal that values Patrón at $5.1 billion and who’s involved?
Good question, JR. We knew that we had... The finest product available, whether it was Paul Mitchell, whether it's Patron, I've always gone for make sure your product is so good you are not in the selling business. You're in the reorder business.
So you co-created Paul Mitchell Hair Systems in 1980. Correct.
$700 and a love of hairdressers. So anyways, with Patron, we started it, by the way, maintained it the old-fashioned way. We started by going door-to-door, bar-to-bar, because it was a very high-end tequila. We were the first to ever introduce ultra-premium tequila, where the average one when we introduced in 1989, I think it was around $5 for the average bottle of tequila. The really good ones were like $14, $15.
That is astonishing how inexpensive it is compared to today.
We had to start at $37.95 a bottle then. And very few people wanted to touch it until they drank it. So we had to go around and sample a whole lot of people. And you talk about ups and downs. We had one distributor, a pretty good-sized one. We went from a wine distributor who only did a couple thousand cases to one of the great big ones for the United States. And we said, well, guys, you should be doing 15, 20, 30,000 cases a year. They said, no, no, no, guys, hold on. You have the best tequila. There's no question about that. But it's too expensive. The most you'll ever do is 20,000 cases a year. Well, we didn't believe that, so we dropped that distributor and moved on with somebody else. Well, of course, today we were right on what we thought.
We had that much confidence in our product that no matter what happened, that was just one incident.
You know, not every business is going to see the level of success that Patron has seen. That is the value swelling to more than $5 billion. But in terms of business at its core, what would you consider best practices in terms of business owners and how they can make money and develop their business to the point of being lucky enough to someday find a buyer?
We combine not only a darn good product... But with our culture of giving back, Paul Mitchell's known for it and Patron's known for it. So not only do we have a great product, but most people know we do so many charitable events at Patron. And whether it's directed by Dave in Switzerland, our international VP. or our local people here, Pam, we do a lot of charitable events. So when a business gets involved, having a first-class product, no matter how big you are, and philanthropic, if you don't have the money, take your time. Let your customers know what you're doing to make the planet a better place to live. These are some of the things. I'm going to also give you two very, very good tips. One, obviously, is have the best product or service you can have.
Then you're in the rear of your business. The other one is be prepared, JR, for a lot of rejection, especially small businesses. You'll be rejected all the time. Like we were even trying to grow Patron. Now you'll never do more than this. You'll never do more than that. And I had a success pattern behind me with Paul Mitchell alone. In other words, be prepared for rejection. It means this. If you knock on 100 doors and all doors are closed in your face or you're all rejected, you're prepared for it.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:02–0:54
2
What’s the deal that values Patrón at $5.1 billion and who’s involved?
0:54–4:44
3
How did John Paul DeJoria describe the early grassroots launch strategy for Patrón?
4:44–5:09
4
Why did Patrón price itself as an ultra‑premium tequila when most bottles were much cheaper?
5:09–8:36
5
What lessons does DeJoria say entrepreneurs should learn about product quality and persistence?
8:36–9:23
6
How does philanthropy and company culture factor into building a sellable business?
9:23–10:55
Speakers
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