Russ: This is the BusinessMakers Show heard here and seen online at TheBusinessMakers.com. It's guest time on the show and I'm very pleased to have with me Stewart Skloss, founder and chairman of Pura Vida Tequila Company.

Stewart: Correct.

Russ: Stewart, welcome to the Businessmakers -

Stewart: Thanks. Glad to be here, Russ.

Russ: You bet. Well let's start by you telling us about Pura Vida.

Stewart: Pura Vida is a company that is more than just tequila company. We also have sangrita. We have a margarita mix coming out here in about, oh, a month or so.

Russ: Okay.

Stewart: I founded Pura Vida in 2009 after a business associate of mine, a guy by the name of John Paul DeJoria, the owner of Petron Tequila and Paul Mitchell hair care products -

Russ: Patron, yes, yes.

Stewart: He came to invest in an environmental company we had and we were discussing his tequila. When I was 20 I decided to start a tequila company that lasted a few weeks because I had the attention span of a Mexican jumping bean at that time. So we were talking about it and he had just told me that he had sold 20 percent of Patron for $800 million.

Russ: That sounds like a good deal.

Stewart: I said, "How much?"

Russ: Maybe on both sides; buyer and seller. Who knows?

Stewart: Well ya' know he coulda' kept it all, but being the standup guy that he is, he gave the other half to his former partner's foundation.

Russ: Wow, cool.

Stewart: And just a neat guy and we discussed it more. I had talked about my love for tequila when I was living in Guadalajara, Mexico. Went to school through the University of Texas exchange program at the Universidad __________ down there in Guadalajara. Went for one semester and stayed for two years.

Russ: Alright.

Stewart: So, I said alright. It was at that point where I was tired of traveling to Iraq, Afghanistan, Azerbaijan, Russia.

Russ: Now let me make sure I got this right. You said you started an environmental company to a tequila company, is that right?

Stewart: Well yes. I was -

Russ: And that's what you were traveling for?

Stewart: That's what I was traveling for.

Russ: Okay. Alright.

Stewart: So all the garden spots.

Russ: Alright. You bet.

Stewart: And so I wanted to get back close to my roots and I'm from south Texas and wanted to get back to Mexico. So I went down and I decided I was gonna visit 20 distilleries. So I contacted the Tequila Regulatory Commission and CRT in Spanish and said, "What are 20 distilleries?" So I visited 20 distilleries. I narrowed them to ten on my own.

Russ: Ten that you would actually buy your product from.

Stewart: Correct, correct.

Russ: Perhaps. You were looking for -

Stewart: Or possibly buy the distilleries.

Russ: Okay, alright. There ya' go.

Stewart: So we discussed private label and acquisitions, things like that. Then so I put together a panel of tequila aficionados, restaurateurs, bartenders, waiters, anybody that would come and sample the ten different distilleries. We narrowed it down to three and from those three I went out on my own to go narrow it down. The one that I fell in love with was the Bivancos and the Highlands of Halisco.

Russ: Bivanco?

Stewart: Bivanco.

Russ: Bivanco.

Stewart: Right. Feliciano Bivanco is the patriarch of the family. When I met him he was 87 years old 3 years ago. He was in the fields of Arondus. He rakes his fields almost like when you go to Los Cabos, Mexico to one of the resorts, Los Vantanas and you see how the gravel and the sand is raked so nice. That's how his fields are. Can't find trash in his fields and it's just a clean, clean operation. Their story was interesting is that they have been in the agave business since 1923. They got in the tequila business in '93 because of a fluctuation of agave pricing. They needed to have a more steady income that they could count on. So they did that and now they've become very successful at doing private labels and also doing their own label. So we made a deal where we acquired part of their distillery and they acquired part of our company. We off and running.

Russ: Okay. Alright. So Pura Vida is a premium tequila I would gather.

Stewart: Pura Vida Tequila is an ultra-premium tequila -

Russ: Ultra premium.

Stewart: Yes. At less than $30.00. The only one that's less than $30.00 on the silver. The gold -

Russ: What qualifies one to be ultra premium?

Stewart: Ultra premium is really the price point and the quality. It's more from a price point standpoint, but we refer to ourselves from an ultra premium tequila. We're in the categories of the Don Julios and the Jose Cuervo familia. Some of the higher end tequilas, but we're at under $30.00. I figured that we wanted to become the crown royal of tequila so that anybody, whether it's Bill Gates or the guy that's formin' curb out on 10 on the concrete that they can afford a bottle of crown royal and everybody likes to walk into the party with the purple bag, the purple sack. So that's what we created. A beautiful blue, cobalt blue bottle with a silver top and it's something that anybody can afford, but it's the finest tequila you'll ever try.

Russ: Okay. Now how long has it been out there on the market?

Stewart: We did a soft launch in December. Started in December 15th in San Antonio. Then we came into Houston in January. We did the launch at a place called TQLA, pronounced tequila, over on Washington. Then we went into Austin and Dallas in February. So let's just call it four months state wide now. Our sales are about four times what we had projected.

Russ: That's a nice problem.

Stewart: It is -

Russ: But that's part of your problem.

Stewart: It is a problem. It is a problem. We'll get into that with one of the other guys that's here in the room right now, Modesto Nunez. Everything's made by hand. It's handcrafted and the tops person promised us that they could make 5,000 tops a week. Well, they haven't been able to make 5,000 tops a month.

Russ: Uh-oh, uh-oh. Wow.

Stewart: Yeah. When you need eight times that amount it can become a problem. So we interviewed a couple of people that were retired or still the top of the top in the tequila industry and we were very fortunate to find Modesto Nunez Del Toro, who was the former number two at Patron for eight years.

Russ: Whoa.

Stewart: Yeah, it was a great find. We pulled him out of retirement. He retired two years ago, but he took Patron from 400 boxes a day to 8,500 boxes.

Russ: Okay. And so he's here to perhaps resolve this supply problem.

Stewart: He has. He's already resolved it. This is his first trip to Houston ever and the first trip with us here to really forecast for the next five years. We got an e-mail this morning from the largest distributor and the largest retailer in New Zealand.

Russ: Wow.

Stewart: Asking to bring our tequila into 18 stores and displays and all this.

Russ: What do you attribute the sales success to?

Stewart: Well, the internet and our chief marketing officer, Chris Novased, came to us from the Houston Opera and he was, before that was Live Nation and Sunset Station and really understands the internet and how to use the internet. So we just started our Facebook program and we're pretty excited. One of our investors is Billy Gibbons from ZZ Top.

Russ: Oh yeah. He's a guitar _______ from way back -

Stewart: Oh, there's none better, none better and havin' a rock and roll hall of famer on your side doesn't suck.

Russ: No, that's right. Now from what I understand, too, doing a little research, you've launched an internet radio station?

Stewart: We have. We just launched Pura Vida Radio. It's the only radio station that we say is fueled by tequila and blessed by the Reverend Billy Gibbons 'cause he is a reverend.

Russ: Alright. And is Billy Gibbons actually on the air?

Stewart: He is and it's really neat. Our internet station, the apps. We're waiting for our Apple app and our Blackberry and our Droid app just like everybody else. So many people have gotten in this business the wait of two weeks or four weeks is now two months or four months. So the app will soon be available. You can still go to our website at www.puravida.mx for Mexico and you can listen there. It'll be able to be downloaded soon, but it's a great mix. It's on a 15 song format from Texas rock and roll to international global rock and roll that a lot of people have never heard.

Russ: Now does Billy Gibbons play a role in selecting -

Stewart: Billy does. Billy's played a lot. Billy's got songs that we pulled off of personal recordings with the Rolling Stones singing I Can't Get No Satisfaction in Spanish.

Russ: Wow.

Stewart: Oh yeah.

Russ: And Billy Gibbons played it with ya'?

Stewart: Well Billy's got stuff that he's put on there that you'll never hear anywhere else. He's got the Billy Gibbons hour that's being developed right now with Pat Fant and Cruise.

Russ: Oh yeah. Well now we know Pat's been on the show.

Stewart: Yeah.

Russ: Yeah.

Stewart: Oh, they're fabulous.

Russ: That is really cool. It doesn't sound to me, Stewart, like you've had any typical startup problems other than producing enough product. Has it been just a piece of cake the whole way?

Stewart: Oh hell no.

Russ: Alright. Reality sets in.

Stewart: Ya' know it's all great. We've got a little over a million dollars in orders from our distributor, best distributor we could ever ask for, Republic, but the problem is you can't fill 'em. So those orders are so big that when you do fill it you still gotta wait till you get your check before you can start on the next one.

Russ: That's right.

Stewart: So we had a first round capital raise that was for a million and a half dollars and I cut it off at less than a million 'cause we figured we didn't need any more of the money, but then once we launched it, well all of a sudden our sales are four times as much. So you need four times as much cash. So those are some of the problems. We've been discussing with a couple of banks. Prosperity Bank has been fabulous. Ned Holmes, the owner there, has offered to step in and help us and we've got some good businessmen here that have invested with us. J.P. Bryan, the former chairman of Gulf Oil, Gulf Oil Canada and Tom Wood, Steve Beagle, just a great group of people.

Russ: Okay. Well let's say we've got somebody listening or watching right now. All they wanna do is taste Pura Vida. Can you just go to a bar? Do you go to a liquor store or what?

Stewart: From a retail standpoint we're in all the Specs, Richard's Liquor Stores. Many of the independents now are just getting there. We just hired our Houston area manager. He's our regional director. Mike Curtain came to us from Republic and he started three weeks ago. So he's out there beating the streets getting in two to three new accounts per day. From a restaurant standpoint, we're in everything from the high end, Tony's and LaGrillia and Moe's Steakhouse down to all the Mexican restaurants, the El Tiempos, Escalantes, _________, Armando's, you name it.

Russ: What's the vision beyond Texas? You mentioned lots of Texas cities. Are you just gonna stop in Texas?

Stewart: Well we wanted to crawl before we walked and thank God we did and we didn't go out there and try and go into all 23 states that Republic's in. We would have had a little bit of a problem. Our marketing approach is completely different than anybody else's. It's all consumer based taste tests. That's all we do is taste tests all day long. So we will be going to California in 2012. We actually launch our Mexico market, which is primarily the hotel and convention industry there. We'll be launching that in November. So, we do California through the end of this next year and then we do Florida, New York, Louisiana, Nevada, Colorado, Georgia and Washington, D.C. in 2013. We only have 12 states on the map right now because those 12 states make up almost 70 percent of the market, which is 70 percent of the U.S. market, but it's 35 percent of the global market. We're gonna focus on that right now, but like I said, we've already gotten some inquiries from New Zealand and Australia and others. So we may be doing things a little bit sooner than we had planned.

Russ: Real cool. Alright. We'll be back with more with Stewart Skloss, founder and chairman of Pura Vida Tequila Companies after this. We're also gonna be joined by your new partner that you brought in from El Patron.

Stewart: Correct. Modesto Nunez Del Toro.

Russ: Modesto Nunez Del Toro.

Stewart: Toro.

Russ: Alright. You're listening to the Businessmakers Show heard here and seen online at thebusinessmakers.com. This is the Businessmakers Show heard here and seen online at thebusinessmakers.com and continuing on with Stewart Skloss, founder and chairman of Pura Vida Tequila Companies and now we are joined by Modesto Nunez Del Toro, director of operations. Modesto, welcome to the Businessmakers Show.

Modesto Nunez: Thank you.

Russ: Now tell us a little bit about your past.

Modesto Nunez: Yes. I have an experience in the tequila business around 10 years -

Russ: How many? Ten years?

Modesto Nunez: Say six years with Patron Spirits Company. I start with them. Change another companies to advisor to help different kind of problems and staying this time with Stewart starting _________ build a team of Pura Vida Tequila Company.

Russ: Do you live in Mexico?

Modesto Nunez: Yes, I live in Mexico, Guadalajara specifically.

Russ: In Guadalajara, okay. So it must be amazing over your ten years to see how the tequila business has become so popular, at least in the United States.

Modesto Nunez: Yes, yes. They have a lot of popular Patron that start with this, but in this moment at another better good companies. At this moment I think it's taking a very nice project because it's a very high quality tequila.

Russ: Great. Well Stewart, how in the world did you even find Modesto and know that he might be available?

Stewart: We contacted the CRT and asked for some help with some people, some industry experts. Modesto's background is in engineering, bottling, things like that. So it was everything that we were having problems with. That's what we needed. So we got the name from the CRT of people like Modesto and then also Modesto came to us through our shipping company, which is they actually ship all of Patron's tequila, one of them and they said, "You've got to interview Modesto. He's a consultant. Retired now." And that he would be a great, great fit. So we went down and we interviewed three people and took him to lunch a couple more times and convinced him to come out of retirement and come on board.

Russ: I'm curious. Do you guys drink tequila over lunch when you meet like that?

Stewart: Yes.

Russ: Alright. Great. So Modesto, your expertise is in understanding how to get the production up?

Modesto Nunez: Yes. Yes. It's my first goal with tequila because I try to do everything in good way the first time. First _______ and they use the common sense. They use the engineer tools. We increase little by little the production. All the time work thinking in the customer, the final customer and thinking in the people to work with us to be proud about their job, to be proud about the product, to know what is our market, what is our goals. We involve all the team in the production. We don't have really secrets. It's only hard work thinking of the customer all the time.

Russ: Alright. That sounds like a good recipe for success. In fact, I'm curious. You've been in the tequila world for ten years. What did you do before you worked with tequila?

Modesto Nunez: Oh, I work for other companies, lubricant oils, vegetable oils, Frito-Lay and other companies, even electronic companies. I have a lot of experience to improve the quality, improve the quantity, improve the productivity of the people because it's very important for the companies to be competitive.

Russ: Sure. Absolutely.

Modesto Nunez: All the time. The first is the quality. So first you keep the quality. You be success in the companies and the business.

Russ: So did you have training and education in this area?

Modesto Nunez: Yes, I come with a master's degree in business administration.

Russ: Okay. From where?

Modesto Nunez: Universidad __________. It's a very famous university in Mexico.

Russ: In Guadalajara _________ --

Modesto Nunez: In Guadalajara. It's around older Mexico, ________ Mexico. They come from Monterey.

Russ: Okay. Alright. Now how long has this sort of new team been together?

Stewart: Modesto came, his first day was at the beginning of May and has been with us. We had met him on a trip before. So we've been trying to find somebody for the last, say eight weeks to really help us improve on our quality controls and on our process and product optimization.

Russ: Well it sounds to me, Stewart, like you're just sort of tackling these major areas one at a time and with Modesto in production and then you've got Chris in marketing and you've started your radio station for marketing and teamed up somehow with - Billy Gibbons is part of your marketing program and an investor in the company.

Stewart: Yeah, he is. He's an investor and he's just a natural marketer. He's a born marketer. Billy loves to watch things happen. It's really interesting. He's a real hands-on and we couldn't ask for better investors. We had decided to go after a lot of investors to put a little bit of money in instead of one or two investors 'cause then we had a Facebook per se of investors out there promoting the liquor.

Russ: Really cool. Well I really appreciate you sharing this story of Pura Vida with us today and I wish you good luck and keep us posted on the success.

Stewart: Thank you. ________ _______ appreciate it -

Russ: Alright. That's Stewart Skloss and Modesto Nunez Del Toro, both with Pura Vida Tequila Company. You've been listening to the Businessmakers Show heard here and seen online at thebusinessmakers.com.