Wednesday, April 11, 2012

Create The Conditions For Your Business To Thrive: Che Guevara Offers Business Advice

One thing that I find a useful concept in business is an idea that I first encountered from a rather unlikely source, an individual who is best known for his anti-capitalist views: Che Guevara.

This post aims to address those sorts of tough business problems like:

  • I want to sell traditional Chinese or Japanese teas in the U.S. but what little tea culture there is seems to be focused on British-style black teas and flavored teas.
  • I want to start a tea business but I have no source of funding.
  • I want to start a locally-oriented tea room or tea shop, but there does not seem to be much local demand.
  • My business is not doing well because of external conditions beyond my control. (such as an ecoonmic downturn)

I claim that Che can help you out on all these points.

Who exactly is Che Guevara?

Che Guevara was a key figure in the Cuban Revolution, and is a bit of an icon or symbol in certain subcultures. There are a lot of things that I don't like about Che Guevara: he advocated for the use of violence to achieve his goals, and he advocated for a political system (socialism/communism) that I am not fully on board with. But there is a lot about him that I do like. And while I do not like all the results of this revolution, in which Cuba became a Communist country, I think it is important to remember that the revolution overthrew an oppressive government, run by Fulgencio Batista, who had seized power through military force after he was set up to lose a democratic election.

My thoughts on the history of Cuba and its interactions with the U.S. during the cold war:

As an aside, I'm sometimes irritated that I never learned any of this stuff when growing up, not in school, and certainly not in the mainstream news media; the popular media in the U.S. presented a one-sided view of things, painting a picture of Cuba as the "bad guys", and I think it is eye-opening to get a fuller picture of the history of Communist countries. Part of me wonders if Cuba wouldn't have had a freer society, and if the Cuban Missile Crisis wouldn't have happened, if the U.S. had discouraged Batista from seizing power or had cut off ties with him, and if the U.S. had not made an unprovoked attack on Cuba during the failed Bay of Pigs Invasion.

Back to Che Guevara's advice:

But, returning to the point of this post, I think Che Guevara offers some interesting advice in his famous 1961 manual on guerilla warfare. If there is one key idea that I would take from this book, it is the following (this is my own paraphrase, not a quote, as I do not have the book on hand currently):

Do not wait for the conditions to be right for revolution to succeed; make your revolution create these conditions.

Translated into the business world, this advice becomes:

Do not wait for the conditions to be right for your business to thrive, make your business create these conditions.

What conditions what Che Guevara talking about?

In this idea, Che Guevara was demonstrating systems thinking, which I recently wrote about. A person thinking in a rigid or linear fashion might say--the conditions aren't right for me to accomplish this task, so I need to wait. But the right conditions never come. Your country continues to suffer under an oppressive dictatorship, or your business languishes, or perhaps you never start your business at all, and instead keep working in a mindless, dead-end job.

The above diagram shows a way of thinking about achieving goals that leaves you unempowered. When you think in this way, it seems like there is no way for you to move towards your goals. The problem with this viewpoint is that most goals in life and in business are not one-time events, they are ongoing processes. A revolution, a business, a job, an organization, are all systems. There may be key events, such as the overthrow of a dictator in a revolution, or the founding of a business, which get the goal going, but without a coherent system, it will all be for nothing. A revolution that replaces one dictator with another, or with a dysfunctional governing system, does not solve the problems it set out to solve. Similarly, if a business does not have a sound business model or if it is not run effectively, it will fail.

It makes more sense to think about goals as a system, pictured below:

Initially, you may not feel like you have the power to influence the conditions that affect your business (or revolution, or whatever other system you're trying to create), but if you brainstorm, specifically, about the things pictured in the yellow box above, you may get ideas of how to influence them. I want to provide an example that I think is particularly compelling.

In this example, and also for any sort of retail business, especially tea ones, part of those conditions are loyal customers, recognition of your name, and momentum of the daily functioning of your business. This momentum includes cash flow.

An example from a business:

When I was in high school, I worked for a bakery, Ric's Bread, located in Lancaster, PA. The bakery was founded by Ric Tribble, the father of my friend Max, whom I met in second grade. Ric was an important role model in my life, from whom I learned many things about business. Ric has since sold the bakery, but it is still operating.

Ric has started and run many businesses over the course of his life, including the bakery, at least one restaurant, and all sorts of odds and ends of things (including his own brand of Barbecue sauce, which was very good). He has also sold clothing, and real estate; recently, he returned to real estate, where he and his wife Mary (who was also instrumental in running the bakery) currently work for Puffer Morris Real Estate in Lancaster, PA. What I found particularly interesting about Ric is how he was able to create businesses seemingly out of thin air, requiring far fewer financial resources than most people talk about needing. How he did it with the bakery is particularly illuminating.

How Ric started Ric's Bread:

The first ingredient in the bakery was that Ric knew how to bake good bread, and people in town knew that Ric knew not only how to bake, but how to cook. Ric and Mary frequently had people over for dinner, and Ric was respected as an impressive chef in his circle of friends. To generalize this advice, Ric used a skill he had as a starting point for his business. Ric being a really friendly person and knowing a lot of people also helped a lot.

Ric partnered up with a coffee shop, Fred and Mary's (which is now closed), which had its own kitchen, with an oven suitable for baking bread, and started baking bread in the kitchen in the wee hours of the morning. Ric would bake bread for the coffee shop, in exchange for use of the kitchen. Because he was using the kitchen at a time when the coffee shop was not open and the kitchen was not being used, this deal cost the coffee shop much less than they gained from it.

Ric would then deliver the bread to subscribers, which included local restaurants and individuals. Soon, Ric had rented a small market stand at the Lancaster Central Market. It wasn't long before the business had grown to the point of renting a full-sized bakery and storefront. But by the time Ric wanted the storefront, the business already had a loyal customer base, including restaurants and subscribers to bread delivery. The bakery expanded into selling cinnamon buns, coffee cakes, muffins, foccacia, and all sorts of other baked goods. Early on, when Fred and Mary's was still around, the bakery used the relationship with the coffee shop to benefit both parties, with the signature loaves that they used to bake for the coffee shop called "Fred and Mary's Bread", both helping to draw in customers of the coffee shop to buy bread, and to advertise the coffee shop to customers of the bakery.

Back to tea:

Whether you're running a tea company, or thinking of starting one, you may find it helpful to use the sort of thinking described here. You don't need a lot of funding to start a tea business. People frequently start businesses out of their homes. Most tea companies have started out very small. Stash Tea started as a small business operated out of a house; Twinings started as a single tea room.

On starting a business:

Just like Ric had the momentum of being a skilled baker and chef, and having people know about his culinary skills, if you are a tea enthusiast, you likely have some momentum of your own, in that you know how to select and brew high-quality tea, and you serve it to others, who recognize you as someone knowledgeable about tea.

Stay tuned for future posts:

You may think that some of the points I mentioned at the beginning of this post are still beyond your control. How can you deal with an economic downturn? Isn't that beyond your control? Not at all. But this post is already too long. Stay tuned for future posts, in which I will explain how similar advice can help you protect your business against an economic downturn.


  1. Thank you. I've been thinking about this very thing, in regards to starting some sort of tea business, and when exactly to do it..

  2. "You don't need a lot of funding to start a tea business." That's my philosophy too. But I believe a lot of people don't agree with it, to varied degrees.

    I don't know about Che Guevara's life very well, but somehow always think he is adorable. I have Che t-shirt and Che notebook. If only I could afford the puerh brick produced by San He Tang that has Che's portrait on the wrap :-p

  3. Very cool. Are you thinking of starting a tea business yourself? I mean besides, which I guess sort of is one.

    I sometimes idly fantasize about starting a tea place, but know I don't have the skills and knowledge to pull it off just yet.

    1. No, not at this point. Right now, I'm too busy starting a new religion, see Why This Way. And of course I want to focus on RateTea.

      I think a lot of people don't realize how extensive RateTea is and how much work I put into it. I'm working on it almost full-time now, and I would really like it to become a self-sustaining entity. It's been growing rapidly, which is exciting. A lot of people see only one facet of it, like the ratings, or the informational articles, and they don't understand quite how much there is there...any one part of the site isn't particularly impressive, but I think that when you take it as a whole, it's like a giant encyclopedia of tea info that doesn't really have anything else like it. At least, that's what I'd like to think, and I hope people start recognizing it and giving some support to the site through talking about it or participating more!

      We'll see!


      Maybe some day I could start a small tea business, or perhaps, just start or work with a business that serves tea or sells tea, and help advise them on what teas to carry. I don't think I have a good skill set yet to run a brick-and-mortar business. But I think I already know enough that I could probably make better purchasing decisions than 90% of coffee shops and restaurants, in terms of locating high-quality teas at low cost. But then again, the bar is set pretty low in the U.S.

    2. Alex, Why this way sounds interesting! But I don't understand why it's defined as a religion, as it seems more of a caucus to me. I saw the explanation on your wiki page, but there is still a gap of understanding for me. But I have to admit the definition of religion is very hard for me to understand too. I have a close friend who is in Unitarian Universalism. She told me her church is a "philosophical church" and I have difficulty understanding her congregation as a religion either. But I thought it's probably a "church" that I would consider joining after I figure out "what am I not allowed to do?" (always an important question for me haha...)

      About tea business, I feel a lot of intelligent tea lovers have potential to start tea business on part-time basis - I say part-time basis because I think it's hard to make a living out of it, and it's often hard to making a living out of a retail business running it the way you want instead of the way the market wants. I have been thinking of this for a while and will write something about the amateur/moonlight tea sellers that I know of. I myself is an amateur/moonlight tea seller and I guess (and hope!) I will remain this way for the years to come.

    3. It's been interesting to me how one of the most common responses we've gotten to the group so far is skepticism about the idea that it is a religion. Any definition of religion is problematic. Many religions, such as Shinto, do not necessarily identify members.

      In the end, we're presenting it as a religion because it's a complete belief system that encompasses all aspects of life, and because we believe that calling it a religion gives it greater transformative power. We also believe that as the group evolves and takes form, it will begin to look more and more like what most people think of as a religion.

      About your business, I will say, I hope you stay in business because I consistently like your teas! I've been enjoying the current batch of samples you sent very much and will keep posting reviews as I try more!

  4. 'fess up Alex,
    You're writing this cos you want more guys to bring in quality Chinese & Japanese teas to US so you can drive prices downwards.
    There is a definite self-serving motivation there!

    Jokes aside, this is a great read, definitely reinforced my decision.
    Cheers and keep it up

    1. Haha...although my blog has been growing in subscribers a lot over the past year, I still don't think I could make quite enough of a splash. Nor do I think that the market can necessarily sustain more tea businesses, especially ones run by people who may not know what they're doing as well as existing businesses.

      Since starting work on RateTea a little less than three years ago, I have been surprised at how many tea companies I have seen go out of business. What is perhaps disturbing is how many I've seen start up and launch, only to go out of business less than a year later. I think that's sad. I've been told (and my personal experience reinforces it) that businesses nearly always struggle at first...and that it's safe to expect a full 2 years with very little income, even in a business that later becomes very lucrative.

      It seems a bit of a waste for people to start something without the commitment or resources to carry through on it long enough for it to become successful. As an example, there was a tea room in Newark, Delaware that was hardly open six months, and I've seen restaurants and small retail stores open and close in this time-frame too. Perhaps this is a topic for a future post, if I decide to keep writing about small tea businesses.

    2. I remember once hearing from NPR that according to a business research, 90% of Manhattan's new restaurants close up in 1-2 years. There must be some factors unique to restaurant business. But overall from what I've observed, a lot of modern retain businesses spend more budget (probably 80%) on fringing matters (such as upholstering of a store, printing promotion flyers, paying for ads., etc.) and only a small fraction of the budget on the "real" thing (whatever being sold). I think that leads the business to a big gamble and make it susceptible to market climates. On the other hand, I believe that's the way people make "big" money too. I like the traditional way of "low risk, low fringing cost" style of business, but I have to admit that if I were in great need of money, I would have to opt to spend my time on something else.

    3. I don't think this is unique to restaurants; most businesses close in their first couple years.

      As to New York City in particular, I'll say one thing, I don't think restaurants in New York City, particularly in Manhattan, are all that good. My theory is that the big, anonymous nature of the city makes it so that traffic and location dominate the factors causing businesses to thrive or fail, rather than lower-traffic areas where a business really has to offer a quality product and survive by word-of-mouth. Cleveland, to use an interesting example lending support to my theory, has some of the best (and cheapest) restaurants of any city I've been in.

    4. The best and most diverse palate of foods of any place I've ever been in is still San Francisco, much of them quite affordable, and let me tell you, you have to be pretty on top of it to stay in business there, as far as I can's just a place where people care about quality. (And have the money to spend on it, in some cases).

  5. As some one who has gone part way down this road I can tell you it requires a good deal of money. It depends on which you would rather open. A Tea House/Cafe or just a Tea Shop that sells loose tea, the second being the much cheaper option. I spent months negotiating a lease only to have it fall apart due to the amount of risk of first year failure. On a conservative budget I figured 70-80k for opening a Tea House with 6 months of operating capital vs 40-50k for just a Tea shop.

    1. I agree that starting any sort of brick-and-mortar business requires a good deal of money.

      What I'm getting at in this post though is that a business is a system, and that system has many different components. Starting the whole business may take a great deal of money, but you can start parts of that system going without requiring such a large up-front financial investment.

      The example of the bakery I find particularly compelling because a bakery is a business which is much more complex and involved than a typical tea room, yet I give a real-world example of a business that was started in a non-traditional way that required much less initial funding.

      For a tea shop, getting this sort of momentum is, I think, easier than it is for a bakery. Most successful tea businesses which I know the history of have started in this sort of gradual way, gaining momentum and creating the conditions for their business to thrive either before they open a physical location, or before they expand in some key way. That's what I'm going for with this post.

    2. Sometimes I think that if some day I move to a large city (most likely Toronto), I will consider opening a Saturday tea store, hopefully using some space with cheap rent. Then people could come over to pick up orders and sample teas. That's the most ambitious plan I have in mind about brick and mortar store :-p I can imagine a normal brick and mortar tea store or any kind of store could bring a lot of stress on the owner.
      I think a lot of such stress is also directly related to modern life, such as the super high rent in large cities nowadays.

    3. One thing that particularly troubles me about our current business climate is that the combination of state, federal, and local taxes can be crippling for small businesses.

      For example, in Philadelphia, there is a flat tax on wages, just under 4%, with no deductions. The state tax is over 3% and there are no deductions unless your annual income is very low (under $8000, nowhere near enough for even one person to live on). Even if you manage to pay no federal income tax, the FICA tax (which has no deductions) adds up to over 15%.

      So it is possible for a person to have a very low income, not enough to live off of, not enough to pay any federal tax, and still be paying over 22% of their profit in tax. I think this is a terrible injustice. To use a more realistic figure, say your after tax net profit in business was $30,000. In 2012 then you would pay about 13.5% in tax. Total tax rate? Over 35%.

      This means that someone who is barely earning enough to support themselves in Philadelphia would.

      You know how I feel about this? It enrages me. You know why our society is so screwed up? You know why there is so much inner-city poverty in Philadelphia? It's because the government is siphoning money off from the poorest people, the people who are working so hard just to make ends meet.

      It's because we've created a tax system in which people who are not even earning enough to get by are paying a hefty tax rate.

      Now, if I were to earn $1M, in investment income, I wouldn't even pay anywhere near that tax rate. Where is the justice in that?

      I personally feel very passionately about this. I think that American society is going to continue to fall into ruin unless we fix the horribly backwards incentives that our tax system sets up.

      Running a business does not need to be so hard. I can imagine a tax incentive in which struggling businesses, and working people who are not earning enough to reasonably support themselves, pay NO tax. Then, they're able to work themselves into a better situation financially, and they start paying tax only when they're able to afford to do so. People who have enough earnings to live comfortably, they can pay more tax.

      That's how I feel about things.