Last night I was treated to one of those great true stories about a real business that reminds me of the way some of the best possible businesses start and grow: organically, based on values, people doing something they like to do. This one is Luna and Larry’s Coconut Bliss.

It’s a simple story. In 2004 Larry Kaplowitz and Luna Marcus spent $1.50 on a used ice cream maker and started making ice cream from coconut milk. First they shared with friends. That led to neighborhood parties, and then supplying the shelves of a couple of neighborhood stores. People liked the product, word spread, and they expanded production to a small, licensed trailer. More people wanted it, and more stores wanted it, so they raised $75,000 from friends and family to move into a rented building with a better kitchen.

Demand continued to grow. To increase production again, they partnered with a local dairy. They visited coconut farms in Thailand to develop a relationship with the important supplier. They turned down offers to sell the growing company outright. They stuck to their values. Sales grew to more than $1 million annually. Instead of selling the business to competitors or an out-of-state larger company, as demand continued to grow and the needs of the business became a lot more about business than coconut ice cream, they recently locked in the partnership with the local dairy. That’s because, Larry said last night, it’s local and the people and values matched completely.

You can get the story in pictures, comic-book style, if you want: Click on the preview panels here to get the larger, readable version. Larry told this story last night to a full house at our Eugene, Oregon, startups group (smartups.org). He’s now an angel investor, a member of our local Willamette Angel Conference, and both he and Luna are happily still very involved with the Coconut Bliss line of the merged company, but are no longer in charge of the day-to-day business.

Two side notes I found interesting:

Somebody asked Larry if there were ever those dark days that entrepreneurs suffer through as the company grew. He answered, with a quick broad smile, “just about every day from one and a half years in through four years.” The group laughed. He explained: “We always thought we were in over our heads; that we needed more business knowledge and experience.”

My thought, at the time: not when you’re making something a lot of people want.

At another point, he shared that a lot of knowledgeable people told them their idea wouldn’t work because coconut ice cream costs a lot more than regular ice cream. Whether that worried them or not, Luna and Larry charged what they had to in order to cover costs. And people were happy to pay more.

My thought, at the time: Having the highest price and the highest value is often a good strategy. Make sure the values match. It’s hard to grow a small business based on a low price.

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Tim BerryTim Berry
Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.