Cigar maven Peter Modeste and his wife Pamela..

Hello again faithful readers.  I’ve been a bit sparse in posting lately, as I’ve been traveling quite a bit for my day job.  The upshot is that I’ve been been on numerous flights where I’ve actually gotten to meet some interesting people.  It seems like most of the time that I fly that most people just want to keep to themselves and not be bothered to have a conversation (if there are any of you in my readership, could you please explain this to me in the comments?).

On one of my recent flights, I had the privilege of being entertained by the wit and wisdom of Peter Modeste, founder and cigar-smoker in chief for the recent startup Don Pedro Cigars.  In addition to our plane conversation, the Don was willing to answer some questions for the blog.

A former innovator and business success in the bio-tech industry, Don Pedro is one smart and savvy guy.  As you might gather from his responses, he’s incredibly passionate about what he does, which is the hallmark of any successful entrepreneur.  Like my earlier interview with Patrick Smith, I’ve asked Peter about the role of interactive and social technologies in his new business, and I think you’ll find his responses both insightful and entertaining.  And if you’re anything like me, there’s something fascinating about the “finer” things in life, and the connoisseurs of said things, as it seems that the more your know about what you’re experiencing, the better the experience.  So enjoy.

[Full disclosure: I do smoke the occasional cigar, but know little about how to truly enjoy it.  This page on Don Pedro's website really helped me out, and I look forward to feeling a little more like James Bond at the next Bachelor party I attend.  Also, I don't receive any kickbacks from these small businesses - I do this because I'm interested in what makes them tick and I love to provide some exposure to other industries that the readers may know little about.]

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Tell the readers a bit about your business. What do you sell?  How are you selling it? (please insert shameless plug here.)
We started Don Pedro Cigars as a way to perpetuate the lifestyle and heritage of fine cigar enjoyment. Our brand, a selection of hand-rolled cigars from Puerto Rico, is quite simply, among the best premium cigars available in the market today. The mixture of the famed filler tobaccos from Puerto Rico, which is grown at higher altitudes in rich soil that is devoid of chlorine (giving the tobacco an aromatic and free-burning quality), are custom blended with selected Cuban-seed tobaccos grown in other countries to produce a unique and exotic cigar with a perfect balance of flavor, subtle complexities, and richness.

Since we launched website in June of 2008, we have penetrated the market and establish our cigars as an exotic alternative to mainstream brands, and have grown to be the Internet’s #1 source for hand-made cigars from Puerto Rico. The geographic range of our customer base now spans from coast to coast in the United States, Iraq, Afghanistan, Japan, and the US Virgin Islands.

Currently our cigars are sold exclusively through our e-commerce website at www.donpedrocigars.com, and plans are underway to launch a very upscale “Brick and Mortar” social lounge facility in 2010.

What impact has the recent Big Tobacco legislation, lawsuits, etc., had on the cigar business?  What makes cigars different?
That’s a great question and a comprehensive answer might be a bit lengthy, but if you indulge me I’ll do my best to be brief. We recently discussed this topic in the last issue of our quarterly newsletter called “The Cigar Buzz”. Basically the new [from Andy:this link is to a PDF] Family Smoking Prevention and Tobacco Control Act, signed into law on Monday June 22, 2009 by President Barack Obama, gives the Food and Drug Administration oversight over tobacco products. So for enthusiasts and business owners alike, the potential impact is of great concern throughout the country.

Well, there appears to be some relief in the law for cigar smokers, since cigars appear not to have been included under the legislation’s umbrella. As such, preliminary indications from industry experts suggest they do not expect the law to have a direct impact on the cigar industry; at least not in the near-term.

Many people incorrectly try to group all tobacco products in the same category, which on its face is clearly absurd. The differences between cigars and cigarettes are as plain as night and day. They are manufactured, processed, and consumed differently. One is an addiction, the other is a hobby. Have you ever know anyone that needed to use a patch to quit smoking cigars? Treating cigars the same as other tobacco products simply because they are both made of tobacco makes about as much sense as treating a car and an airplane the same because they both have wheels and carry passengers.  Fortunately, our lawmakers had the intelligence and presence of mind to understand the distinctions, and as a result cigarettes are the focal point of the new legislation.

However, even though the focus is not cigars, the language and regulatory authority that it grants the FDA is somewhat ambiguous in places, which to me is a bit disconcerting. For example, SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS, states that it applies to “all cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco and to any other tobacco products…” It is the use of the phrases like “any other tobacco product” that I find most troublesome. Understand however, I’m not suggesting the legislation is disingenuous or unscrupulous with regard to its true intent, only that the vague terminology leaves room for the FDA to broaden its scope in the future, which could eventually impact cigars.

Forgive me for this, but when I think of cigars, I typically think of two things: old men playing cards and young men at bachelor parties.  And yet I hear that the number of women cigar smokers and up-and-coming socialites is on the rise.  Have you seen this trend?  Why?
Actually yes, I have seen this trend. You know what; there was a time when the old conservative gentleman was indeed the perception of cigars smokers, but really all that has changed now. When the “Cigar Boom” (the period from late 1992 to 1998, when cigar demand was much, much greater than cigar supply) swept the nation, it ushered in new generation of smokers. Today, the general feeling is that cigars have recaptured its traditional symbol of success, celebration, achievement and good fortune, they are appealing to a much more diverse and group – among this group are young professional adults and women.

There are various explanations for the market expansion of premium cigars, which undoubtedly include among other things, product placement in movies, of highly visible women smoking cigars, that fact that more women feel empowered and view cigars as a very public statement that they want to freely enjoy one of life’s great pleasures.

How important are social media channels to your developing business vs. more traditional marketing?  Why?
I think many businesses are beginning to understand that in today’s fast moving marketplace it is essential to integrate social media into their marketing plan and branding strategy. For Don Pedro Cigars, we plan to utilize technology better than any of our competitors, and social media is definitely vital component of our broader strategy.  The thing that we are currently working on is figuring out the best way to leverage the reach and power of social media channels while achieving balance with our traditional efforts.

Social media marketing has a lot of very attractive feature for a business owner. For instance, its relatively lower costs, its interactivity, and the ability of a well-executed campaign to reach and influence a very targeted audience are just a few. But since we view almost every strategic decision as problem solving and risk mitigation opportunity, we have taken a cautious, systematic, and methodical approach in assessing how we incorporate this important tool. Information, whether true or false, accurate or misleading, positive or negative, can propagate throughout the social web like a runaway train, and if negative it can be very harmful to our brand and counterproductive to our goals.

So while we consider social media channels to be a necessity, we also believe in pursuing a prudent, well-balanced marketing approach.

I know your expertise is in business, and not necessarily social media trends, but how do you see the social media market developing over the next few years, and how do you plan to engage it?
First, let me thank you for acknowledging that I am no “Rocket Scientist“ when it comes to my level of competency in the social media arena.  Having said that, I think that for anyone with a pulse, even a slight one, the rapid spread of the use of social media is no secret, and it is showing no signs of slowing down.

One key aspect of social media that I believe will be improving over the next few years is that we will see improvement toward more innovative measurement techniques. The old management adage that “You can’t manage what you don’t measure” is as relevant among social media channels as it has always been among traditional marketing. So I think that in the years to come we will see more accountability (i.e., calculating ROI) in marketing through social media.

If this develops as I expect, then it would allow us to make great strides in reducing the inherent risk in our overall marketing strategy. The improved measurements will guide our decisions by letting us know if a particular initiative is working or not, or if things are getting better or worse.

What are the things that social channels can’t help a small business with?
Really there is no substitute for quality products and outstanding service. And although a comprehensive marketing strategy is essential for a small business to survive, the core product/service offering, which is typically developed internally, is the foundation for building a successful organization.

Who should quit their day job and start their own business?
Ha ha! Let’s put it this way, running a business is not for the faint of heart. But seriously, not everyone is cut out to be a business owner. Notice that I said “business owner” and not “self employment”. There is a distinction between someone merely creating a job for themselves and someone building an organization that is organic and will grow with or without their daily presence.

With that said, I’ll leave out all of the obvious and perhaps generic stuff like finding something you enjoy, and having a plan, etc., and I’ll mention what I think are some of the more general things that is important for success. Anyone planning to enter into the world of entrepreneurship should do several things: 1) understand their personality and their appetite for risk, 2) be truthful with themselves about their level of business skill and acuity and know have a plan to fill any gaps, 3) evaluate their financial resources, 4) maintain a courageous problem-solving mind set, and 4) have patience.

Have you ever thought about lighting up a $50 bill instead of an expensive cigar?  Just kidding (sort of).  How do you see your business fairing in the Great Recession?
No I haven’t, but I doubt the experience of smoking cash would be as pleasurable as relaxing with one of our fine cigars your favorite beverage. As for the “Great Recession” the global economic downturn affected just about everyone. However in spite of the recession, Don Pedro Cigars has seen moderate growth. I guess in times like these, when people are measuring their success by who lost the least, any growth is a good thing. We are just grateful that our customers have responded so well to our exotic brand of cigars and are returning for more.

What is the best cigar smoking experience you’ve ever had?
I guess you saved the most difficult question for last, huh? Like most enthusiasts, I have many special cigar “moments”, and they are all special for a wide variety of reasons. At times it’s the camaraderie, at time it’s the quiet solitude or a host of other reasons. Anyway one special experience occurred about fifteen years ago. It was my first cigar smoking experience, but it left such an indelible impression in my mind, that I knew then and there I would never deprive myself the pleasure of partaking this affordable luxury.

I was going through the most difficult period in my life. I was distraught, overwhelmed, and my life was in shambles. That was when, as we walked through the streets of New York City, a lifelong friend and confidant suggested that we pick up some cigars at a local shop that hand-rolled their cigars right there on the spot. Going through the ritual of cutting and lighting the cigar seemed to take forever (there was no need to rush) and I instantly began to feel a soothing relaxation throughout my body and soul. Between the wonderfully fragrant aroma, the rich taste, and the utter euphoria, my mind became clear, more focused, and I was a peace. That single magical moment is special to me because it literally changed my life.

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I love the recurring theme of these interviews: there are no substitutes for product quality, passion, and excellent service.  I think as long as those principles remain the heart and soul of a business, rather than a brand’s identity being eroded by the need to answer to Wall Street, a true brand will always survive.

I’ve been writing a lot about social media lately, and I decided to have some Q&A time with a good friend that is actually using it to help power his business.  Patrick Smith is the co-founder of UTOPIAN Coffee Co., and an overall great guy.  He and business partner Brendon Maxwell (insert obligatory cheap coffee aside here) employ no full-time social media guru or consultant, and are bootstrapping most aspects of their business.  Social media presents a key marketing opportunity, and like most small business owners, it’s an avenue that they must navigate on their own.

As the coffee expert so astutely articulates, the very basics of product marketing (start with a genuinely good product) and relationships (be nice to people and they will be nice in return) are the foundations that are propelling UTOPIAN Coffee Co. forward. That and lots of caffeine.

The following is our exchange about social channels, the coffee business, and the ethics of underage coffee consumption.

Tell the readers a bit about your business.  What do you sell?  How are you selling it?
UTOPIAN Coffee Co. is a web-based quality-oriented specialty coffee micro-roaster.  That’s the official answer.  What does that mean to the average Joe/Jane?  We are uber-picky about the green/raw coffees we buy, meticulous in roasting, and we bag and ship straight out of the roaster.  This way the coffee arrives on your doorstep (anywhere in the contiguous 48) within 4 days of roasting.  Crazy fresh.

At a time when McDonald’s is undercutting more expensive coffee brands such as Starbucks, Seattle’s Best, etc., with the McCaffe versions, why do you believe your more upscale, niche product will be successful?
Great question, Andy.  I’ll answer anecdotally then more substantively.

When I was in college, I drank lots of coffee.  Knowing this, a buddy of mine bought me a freshly-roasted pound of Sumatra as a gift.  I noticed immediately that this was far superior to anything I’d ever had.  The curse came when poor, tuition-drained Patrick tried to revert to Chock-Full-o-Nuts.  NO WAY.  I literally skipped meals to ensure that from that point forward I would have good coffee around.

Driving through a coffee shop (or McDonald’s) on your way to work will cost you $2 to $5 each day five days a week.  That’s a monthly habit of $40 – $100 for 20 cups of coffee.  If you were on a myUTOPIA membership receiving 2 pounds a month you would save between $7 – $67, and it would yield 80 cups of coffee!  You’d have more money, more time, better coffee, less stress, heck I bet you’d even live longer!

On the objective end, Google Analytics allows us to simply track the sources of our traffic.  Additionally, any coupon codes we generate are always specific to the outlet through which they are disseminated.  This allows us to carefully track the effectiveness of any such campaign.

People are using social media for everything….obtaining news updates, getting shopping leads, and let’s not leave out socializing.  It leads to a smaller world, but also a smaller attention span.  In order to successfully utilize these channels, we need to remain specific, concise, and relevant.

Any plans to enter the brick and mortar retail market?
Not if I can help it!  The hours are rough, overhead is higher, & managing hourly employees is difficult.

What are the things that social channels can’t help a small business with?
Product quality.  It is one of the pillars of our business.  Social media can help with marketing, and if you’re really clever distribution, but never product quality.

Who should quit their day job and start their own business?
Anyone with a good, somehow original idea, the expertise to make it a reality, a high stress threshold, low sleep requirement, good marriage (or none at all), strong work ethic, optimistic outlook, and billionaire parents.

What advice do you have for closet tea drinkers like myself?
Switch to coffee.  It doesn’t stain your teeth as badly and is more readily accessible stateside.  No, honestly, I don’t know a load about tea.  Give some serious thought to the science of extraction when you’re tooling around with tea. You might have some fun results.  Play with variables like water purity (RO or tap), water temp, contact time, and agitation.

I know you have small children.  How early do you plan on letting them have their first cup of Utopian Coffee?
Been there. Done that. Calvin is almost a year.  He’s not super keen on coffee.

Hudson is 2 and a half.  He loves coffee.  If you ask him his favorite kind, he responds “mytopian.”  He apparently thinks that the first syllable of the word “UTOPIAN” is the pronoun “you” and than “-topian” is a separate word.  Naturally since he is referring to himself and not to you, he calls it “mytopian coffee.”  I have a photo somewhere with Hudson at 2 years old with a crema mustache from having a sip of my espresso.

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Thanks Patrick, and if you ever get a hold of some high quality imported teas, I’ll be first in line.

You can follow UTOPIAN Coffee Co. on Twitter at: http://twitter.com/UTOPIANcoffee

Let me start out by saying that I love being a “vendor” working for a “client” 99% of the time (a good vendor is usually called a “partner”).  If you are a good match for your client, you get to do great work, shake things up a bit, and everyone, vendor included, will see valuable returns on their investments.

But being on the agency side, you also get exposed to the occasional bad apple, the type that wants you to itemize every dollar spent on an inexpensive  project and then spend a half-day meeting nitpicking every detail to see if any individual item could be “done cheaper” (and yes, that was a very painful, personal experience).

Selling services is always a tough gig, because no matter what your industry you’re always selling ideas and time, rather than widgets.  At an interactive agency, the great ideas and time produce a deliverable, but if you are in the business of selling “websites” rather than creative, engaging experiences, your product is very easy to commoditize.

But I digress.  What I love about this video is that it pokes fun at what the bad (or let’s just say inexperienced?) client is prone to do – try to get something for nothing, or try to devalue the service after it’s rendered.  True negotiation, on the other hand, is an everyday part of doing business.