Every year about 600,000 new businesses open in the United States. Only about half make it past the five-year mark. But of course, that doesn’t stop people from trying.
In the early 2000s, Jim Picariello was confident that he had the next great natural foods idea. Just a couple of years before, he and his wife, Jill Day, had moved to a tiny town in Maine. They had just survived the dot come crash and wanted a more peaceful and sustainable lifestyle in rural Blue Hill, Maine. They even built their own home.
After a year of decompressing, Jim woke in the middle of the night with his new product epiphany: Frozen tea pops.
While sitting at his dining room table, he would always make himself a mason jar full of green tea, sweetened with honey, that he would drink while he worked on his laptop. He invariably made too much tea, and would pour the leftovers into a popsicle mold, to freeze and enjoy later. The tea pops were delicious and maybe, profitable.
Picariello quickly raised $25,000 to test recipes and develop his product idea. Before he and his family even realized it, they were starting a new business: Wise Acre Inc.
“When I said go ahead I really didn’t feel like we are starting a business,” recalls Picariello’s wife, Jill Day. “I think that’s probably one of the reasons why it even happened, is that I wasn’t really aware that that’s what we were doing.”
The timing was not ideal for the young family: they had a young daughter and a second on the way. But once Picariello began product development, there was great enthusiasm for his idea, and a series of opportunities unfurled in front of him.
In 2007, he took his “Frosteas” and “Frostbites” to the influential Natural Products Expo East trade and was awarded Most Innovative Product, and walked away with a substantial distribution deal.
Quickly he went from making his tea pops in tiny saucepans in his kitchen to needing his own factory and employees. For a while his tea pops were in about 800 stores up and down the East Coast. But it wasn’t sustainable, because at that point there weren’t enough consumers and his products were languishing in the frozen food aisles. Picariello needed assistance with marketing and advertising, as well as a way to fund production with shrinking resources.
Picariello looked for and found a potential investor, who agreed to a million-dollar deal. The backer advised him to expand quickly and to invest in both production and promotion.
“‘Get ready, your first summer is about to kick off,'” Picariello says he was advised. “‘Go buy some equipment, cause you’re going to make this stuff faster.’ So that’s exactly what I did. Like an idiot.”
Jim immediately invested in some large items, including a pricey blast freezer. He quickly went through money he didn’t have and after two weeks there was still no check from the billionaire.
“Turns out a couple days after our meeting, the billionaire, tasted our product and said, “oh I can’t imagine why kids would like these.” And of course it’s not a product for kids, it’s a product for adults, and kids do like them.”
The prospector investor backed out of the agreement.
“And so at this point I’m sort of doing the math in my head over and over,” Picariello recalls. “I have this much money, we have this much payroll, we have this much rent, we have this much electricity. All that over and over and over again.”
To keep the business afloat, the family went so far as to start putting payroll on their personal credit card. Without an influx of cash, Wise Acre Inc. couldn’t last.
“It was just like, I now have no more money, I have to lay all you people off. And it was very sad.”
The bank seized the equipment and the factory closed. Their debts went unpaid, and Picariello declared bankruptcy, of somewhere around half a million dollars.
“We’re still dealing with the ramifications,” Jill Day laments. “To have the kind of significant debt now that we have because of the business tanking is just like the worst thing that could have happened.”
Today, the couple has paid off some of their debts, and Picariello now has a steady full time job. Despite what happened with Wise Acre Inc., Picariello says he might still have one more new product idea to try, but promises it will be much less risky.