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Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Andrew Tellijohn
April 2007

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Second chances


Second chances

by Liz Wolf   MINNEAPOLIS-BASED The Thymes Ltd., the maker of scented bath, body and home care products, had a corner on the giftable bath-and-body market for years.

Founder Leslie Ross Lentz launched the business in the basement of her Minneapolis home in 1982, making it one of the founding brands of what later would become the lucrative bath-and-body category.

Lentz’s best friend Stephanie Shopa joined her in the startup. They were two divorced, single mothers on limited budgets, each scraping together $1,500 to put into the fledgling business.

They experimented with herbs and flowers from Lentz’s garden and concocted fragrant products, including bath salts, soaps and potpourri. Thymes hit an untapped market and quickly grew after showcasing products at national gift shows and selling to specialty shops around the country.

An abundance of competitors would later enter the marketplace, as more mainstream consumers began using these products. Although Thymes continued to expand with perfumes, lotions and candles, their packaging remained virtually unchanged for two decades.

Thymes’ loyal customer was aging, and younger shoppers were attracted to newer, hipper-looking brands. Thymes was positioned as “your mother’s brand,” and sales stagnated.

By 2000, Lentz was considering stepping down as CEO and Shopa was gearing up to take over. Shopa realized she needed to bring in a new generation of leaders to take the company to the next level.

She also recognized that in order to prosper they needed to reinvent the company and look outside for help in repositioning. These were unsettling changes for Shopa; she would upend what had worked for years.

Thymes began with small changes, but a complete new brand was launched in 2006 and became one of its most successful. Under Shopa’s leadership, Thymes’ rebranding helped it achieve double-digit growth and revenue of $46 million last year.

Shopa says Thymes can never stop evolving. “The fact that we’ve reinvented ourselves doesn’t mean we’ve completed something,” she says. “In fact, we now know that reinvention will be a constant pursuit.”

When Leslie Ross Lentz divorced in the early 1980s, she looked for ways to support herself and her son. She and her ex-husband had run their own frame store/art gallery in Minneapolis for years.

“Leslie had never worked for anyone but herself,” says Stephanie Shopa, now 57, Lentz’s best friend, who worked in real estate development but later became Lentz’s business partner.

“She could not imagine working for someone else and didn’t know what she was going to do. She and her ex-husband split up the business and the artwork, so Leslie had Jim Dines hanging in her house, but virtually no money to live on.”

Lentz came across books on using herbs for body treatment, sparking her interest in a naturally based skin-care business.

“That summer we grew herb gardens and visited farmers’ markets,” says Shopa, who helped out her friend. The first product that took off for Lentz was bath salts. “We purchased essential oils at specialty shops and mixed them with our bath salts and felt how it changed the water and we were hooked,” Shopa says.

Lentz officially launched the Thymes in the basement of her home in 1982. She also made handmade scented soaps, sachets and potpourris, Shopa says.

Lentz declined to be interviewed, saying through a spokesperson she doesn’t give interviews about the company any more now that she’s stepped down as CEO. The two talk every week, but these days it’s only briefly about business and then on to other topics, Shopa say.

Shopa says the two were first. “We started looking for other naturally based products in the marketplace,” Shopa says. “This was the '80s. There was no Bath & Body Works. We literally couldn’t find any. We had no idea that we had stumbled upon an unfulfilled market niche.”

Since Lentz had been an art dealer and was an artist herself, she wrapped each product in handmade gift wrap. Although Shopa was still doing real estate, she helped Lentz make and wrap products and invested in the company.

“Each of us put in $1,500. That was my life savings,” Shopa says. “It was scary. It was one foot in front of the next. It was very much not: ‘Here’s a business plan, here’s how we’re going to make this work, here’s how we’re going to raise money.’ None of those things even occurred to us.”

Lentz converted her former gallery space into a showroom and invited former gallery clients to a sale in December 1982, selling $3,000 in products. After two years of gallery sales, Lentz looked for additional venues and approached retailers.

“She knocked on doors with her basket of products. Talk about a cottage industry,” Shopa says.

Thymes’ big break came when a manufacturer’s representative told Lentz that she could take Thymes’ products to gift shows.

“Oh, there was a light. Gift shows? We had no idea how people got their products into the marketplace,” Shopa says. “We didn’t know a thing other than we loved fragrances and making products for women.”

The products were taken to the New York City Gift Show in January 1985, and Lentz received $30,000 worth of orders.

“Leslie had not sold $30,000 worth of products in two years,” Shopa says. “She got those orders and A, didn’t have any inventory built. B, didn’t have the money to buy inventory. And C, didn’t have anyone to help her make the inventory.

“At that point, she told me, 'You’ve got to quit your job and come and work with me.’ I was at a point in my life where I thought if I don’t take this risk now, when will I?”

Soon after, they hired their first two employees and moved out of Lentz’s basement to commercial space in Minneapolis. They were financing the business with bank notes.

“We’d get a note for $10,000, which allowed us to buy our inventory,” Shopa says. “We’d make the product, ship it out, collect the money and pay the bank back. Once we paid it off, they’d give us another note. We did that for several years.”

Thymes grew quickly selling products at national gift shows. The business grew 100 percent a year the first two years and then 50 percent a year. “This was without knowing anything about wholesale, retail, chemistry. We were learning as fast as we could,” Shopa says.

Lentz was in charge of creating products, and Shopa handled operations and finance. Together, they took their startup from a basement business to one of the largest 25 women-owned businesses in Minnesota.

Because sales were growing exponentially, Shopa realized by the early 1990s that she needed to hire someone to handle operations.

“Even though at the time I almost felt that if I don’t do operations, what am I going to do?” Shopa says. “I think a lot of people who’ve founded a company go through this. It’s like ‘this is what I do.’ You don’t know what the next thing is, especially when approaching things like we did.

“For us it was a learning continuum. I didn’t know the next step, but I knew I had to bring in an operations person. Things were getting complex. By this time, we also had body lotions and candles and sometimes there were production issues.” She brought in a quality control manager, formerly with Aveda.

“It was one of those lessons where you always hire people who know more than you do,” Shopa says. They also hired an accountant.

Thymes established an in-house laboratory with five chemists, who created their scents. They grew their sales department and added marketing, customer service, IT, operations, production, warehousing and creative services.

“When I started eight years ago, it was primarily Leslie and Stephanie doing all new product development,” says Christiana Kippels, Thymes’ vice president of strategic business development. “Once a week, they’d meet in a closed conference room. Today, it’s so different.

“There’s a large team from different disciplines contributing expertise and collaboratively working together. It went from the owners of the company in a closed conference room to a multi-faceted, multi-disciplined approach.” Kippels credits Shopa for bringing in this next generation of leaders.

By 2000, Thymes grew to well over 100 employees. “Leslie is a true entrepreneur — hands-on, a one-person show — all of those things you think about with classic entrepreneurs,” Shopa explains. “She couldn’t have been happier that it was growing, but it meant more people, meetings, people’s opinions, lines of authority. It just wasn’t her.

“That’s when we first had a meeting about exit strategies, and it was like a light bulb going on. She’d never thought about the fact that she could leave at some point. But she realized, ‘I created this. My fingers are in every pie. I could actually leave.’ We had our attorney there because he’s like a friend to us and knew us through our baby steps. We discussed a five-year exit plan.”

The five-year plan, however, became a five-month plan when Lentz decided to move back to her home state of California. She’d create the packaging design, but step back from developing new lines.

“OK, we were ready for this,” Shopa says. “It wasn’t like we hadn’t been moving with her through this the past few years.”

Lentz was in California a year and Shopa became CEO in 2001. Lentz later had second thoughts. She still wanted to be involved in new product development and decision-making — long-distance, Shopa says.

“There are literally thousands of decisions in every line,” Shopa says. “It was a difficult time where we really ended up focusing more on the process of new product development than on what we were developing. Sales became stagnant. We had grown by 20 percent a year from 1990 though 2000. Starting in 2001, we didn’t grow.

“We hit a plateau. We were so used to growing and making plans for growth and hiring and strategizing for growth, and when it didn’t happen the first year it was difficult.”

They thought it was a blip, especially with the Sept. 11 terrorist attacks. But they didn't grow in 2002 or 2003. They had to do something differently.

Simultaneously, competition was heating up. Although Thymes had been an early leader in the category, countless new competitors entered the marketplace. Thymes’ loyal customer was getting older and younger shoppers were drawn to fresher brands.

“We weren’t reaching a younger audience,” Shopa says. “And because our products all looked similar — there was a certain soft palette to each — stores were starting to ‘trade out’ when we launched new lines. That’s part of where we got into this plateau in sales. There wasn’t something different-enough looking with each new line.”

Thymes was in a holding pattern. “You only get so long on a plateau and then it’s downhill,” Shopa says. “There were things we did right — we built a structurally sound business. We ship well. We have great customer service. Monetarily, we minded our Ps and Qs.

“We spent the 1990s developing the business part. We got all of our R&D chemists. This was all very important, because if we had not been good at all of those things we would have fallen apart pretty quickly when we reached that plateau.

“But people believed in us because we’d grown for so long. Stores kept buying. We did lose some stores, but mainly we lost shelf space and needed a way to take it back.”

Thymes considered launching a men’s line and expanding into other areas. Lentz decided this was out of her purview, Shopa says, and decided to step down. Thymes would partner with an outside company to help rebrand.

“It was extremely difficult. It was Leslie’s baby,” Shopa says. “But she wanted her baby to thrive, and it was time we looked outside for help.”

It’s not unusual for entrepreneurs to have difficulty letting go of a business they founded, nurtured and grew.

“There are a lot of emotional ties,” says Duane Thompson, senior tax manager at the Bloomington accounting firm Eide Bailly. He doesn’t work with Thymes specifically, but rather offers general advice about succession. “One key factor to consider is bringing in an outside, unbiased adviser.

“Sit down with your banker, attorney, accountant or business consultant. Hiring trusted advisers that the founder and successor feel comfortable with can help remove some of the emotion.”

You’ll also have someone who can ask the tough questions, Thompson says. Advisers can help define the founder’s perceived involvement and role in the business along with timeframes.

What are key indicators each party would be looking for to call the transfer of leadership a success? Set out job descriptions for key individuals, including the founder. How do the objectives of the individuals compare to the business plan? Then review financial issues to reconcile the success of the company with the needs of the individuals.

“Sometimes you have to pry to get to the issues,” he says. “Advisers can coach them along.”

In 2004, Thymes hired Joe Duffy, principal/chairman of Minneapolis-based Duffy & Partners, to help with brand identity, working across Thymes’ complete product line and in all segments of selling and marketing the brand.

“We wanted to reach younger people. We wanted to stop cannibalizing our sales. We wanted be able to create lines that would appeal to different kinds of people,” Shopa says.

“With our fragrances, we’d been doing that for years, but our packaging was always the same look. People attracted to it would come to it over and over, but for those who weren’t, we didn’t have an offering.”

A whole new brand was unsettling, Shopa says. “Because we had been known so long for one look, will something else be accepted by our stores? Will they even recognize us? But most stores thought it was time. One said, We love Thymes, but we think it’s time you got a new haircut.”

Duffy’s first step was redesigning Thymes’ logo. “We showed it to people and asked, ‘What does it make you think of?’ They said ‘healthy, herbal and natural,' ” Shopa says. “I was like, ‘OK, I can give up a little of the fear now.’ ”

Duffy redesigned everything from the Web site to the packaging for a rejuvenated brand image. Duffy’s first strategy was to give Thymes a younger feel by redesigning the company’s logo.  Duffy then integrated more eclectic designs to infuse a younger, cooler aesthetic into the brand and packaging, and each line today has its own distinct look.

Their look was much more "expected" before, Duffy says. "It was nice with hand details, but if you looked at a shelf with 12 of their product lines, it was predictable. What's happened in the past decade is people have more eclectic tastes and a better understanding of design. People want to be delighted and surprised."

Also, in Thymes’ Kimono Rose launch, one marketing strategy was placing the product at celebrity events, including in gift bags at the 2005 Oscar Awards and at an Emmy Awards gift event in 2006. That celebrity connection, Shopa says, helps Thymes reach a younger audience, “a key strategy for the new product/packaging.

“The goal was to stay connected to the existing customer base, who grew up with the product, yet also reach a younger demographic,” Kippels says. “When we embarked on it, it was scary. You’re making decisions and tinkering with a formula that had been successful for years. But there was almost a feeling of change or die.”

In 2005, Thymes started slowly by rebranding four of its best-selling fragrance lines. Then it launched Kimono Rose, the first product line it worked on with Duffy from start to finish, and became their most successful launch.

After Kimono Rose, Thymes was back on its growth path. The company grew 15 percent in 2006. Retail sales were $46 million. Shopa anticipates 15 percent growth in 2007. Products are sold in 4,500 specialty stores around the world. Three new lines were launched in January.

“Rebranding gives a company like Thymes new life,” Duffy says. “Just because they’re 25 years old doesn’t mean they can’t be the cool new kid on the block.

“Many companies tend to pull back. They want business to be better, but not at the expense of losing what has gotten them to this point. But if you do an analysis properly — of what branding is working and what’s not — rather than scare a company, it will reassure them that they’re moving in the right direction.”

Bob Freytag, co-founder/president of Minnetonka-based Introworks Branding and Marketing Communications, says that companies in general tend to wait to make changes.

“Change is hard for companies, so typically you don’t see changes in branding until sales start to flatten or decline —when companies start feeling pain,” he says.

Freytag says apparently Thymes had little competition for a long time. “We see this a lot. We call it ‘competitive turbulence,’ ” he says. “You’re going along great. You have a great product. There’s little competition. It’s easy to sell.

“Then competition comes into the field and it gets cluttered, and all of a sudden the market changes. That’s when brand becomes most important. You have to go back and identify who your target audience is, so you can communicate and bring clarity. As the marketplace becomes more crowded, you have to decide where to put your stake in the ground.”

Beth Leonard, partner at Minneapolis-based Lurie Besikof Lapidus & Co. LLP, is impressed with Thymes’ revitalization. She is Thymes’ accountant and business consultant.

“Not only has Stephanie done a great job as a leader, but she has identified the next group of leaders both within the company and outside by partnering with Duffy,” Leonard says.

“Despite a ton of competition, they have an elevated place in the marketplace because they’ve done an excellent job recognizing trends and implementing strategies.”

Shopa realizes that Thymes must continue to evolve in order to remain at the top of its game.

“Businesses have a life cycle, and at certain points you have to reinvent the business or it will ultimately go into decline,” she says. “For us, it meant going back to an entrepreneurial phase where you keep trying different things until you find the opportunities that stick.”

Joe Duffy, Duffy & Partners: 612.548.2333; info@duffy.com; www.duffy.com. Bob Freytag, Introworks Branding and Marketing Communications: 952.593.1900; bfreytag@introworks.net; www.introworks.net. Christiana Kippels, Thymes: 612.338.4471; cs@thymes.com; www.thymes.com. Beth Leonard, Lurie Besikof Lapidus & Co. LLP: 612.377.4404; bleonard@lblco.com; www.lblco.com. Stephanie Shopa, Thymes: 612.338.4471; cs@thymes.com; www.thymes.com. Duane Thompson, Eide Bailly: 952.918.3508; dthompson@eidebailly.com; www.eidebailly.com