I entered the meeting room in Harvard Square and was surprised to see more than 80 people ready to learn about this unique business start-up story. A “conversation” with Larry Slotnick and Alex Whitmore, the co-founders of Taza Chocolate, was was facilitated by the CCAE with the intent, in part, of educating people in socially-responsible entrepreneurship. As tiny pieces of chocolate samples waited for us on stage, we listened to a meandering series of anecdotes about this young company.
For those of you who are not already familiar with Taza, they are a bean-to-bar maker of organic, stone-ground chocolate who practice fair-trade. Their philosophy goes a little beyond that, in that they are trying to minimize the complexity of the supply chain and the process that the cocoa goes through before it hits the consumer. This approach is consistent with the slow foods movement that promotes better understanding of where our food comes from and how its cultivation, transport and processing affects people and the environment. In other words, Taza are working to deal directly with the people who source their raw materials (i.e. cacao) establishing fair relationships with them and encouraging sustainable cultivation and supply. Larry told the story of how he made their first cacao buy – getting on the plane to fly to Mexico (or was it Central America? Sorry I don’t recall the country now) with $2,500 cash in his pocket. He meets the farmer that grew the cacao and makes the decision on the spot to buy 14 bags. They then drive to the airport with the cacao in a pick-up truck and ship the goods back to Boston by air freight. This is being intimately familiar with the source of your food!
Taza was borne out of an idea Alex had when both Larry and Alex worked at Zipcar. Zipcar is famous as a disruptive innovator – someone who disrupts the status quo in an industry by bringing in new ideas – often simpler, less expensive ways of doing business that the existing industry players can’t see or can’t execute without giving up on their whole business model (I’m not sure if Taza’s business model is results in lower costs than other options – my guess is probably not, but it does achieve a certain amount of simplicity and in my opinion, that is beautiful). To say that Zipcar was somehow an inspiration for their business would be entirely inaccurate, but it appeared to shape how they thought about business and how to differentiate themselves from other chocolate makers. So when Alex originally proposed a different chocolate business concept to his then-boss Larry, he rejected the idea. Eventually, they massaged the idea over a year or so until the came up with the Taza stone-ground concept.
The concept involved making chocolate in the traditional Mexican fashion using a stone mill rather than using European methods that involve additional steps such as conching. Conching creates a smoother texture and mellower, less bitter flavor while the traditional Mexican method produces a more rustic, grittier product that some feel preserves more of the fruity complexity of the original cacao.
Although I wasn’t able to ask any of my questions due to the size of the group, some of them were asked for me:
What were some of the biggest difficulties in getting your business started? Like most small businesses, they started on a shoe-string budget and had to be pretty frugal about how they used cash. It’s not like they had any venture capital infusion – they used Alex’s life-savings and some cash he was able to “painstakingly” secure from his father plus, of course, lots of sweat equity. For Instance, Alex had “rescued” a large winnowing machine from a factory in the Dominican Republic and had it painstakingly disassembled (this took several men five days), shipped to their factory and reassembled. So it went with most of their equipment purchases – at first finding used equipment and then updating some machines as they required more capacity. In the end, Alex says that they didn’t regret any of their equipment purchases.
They also cited some tribulations in getting their packing design done. At Zipcar, it wasn’t uncommon to hire outsiders or consultants to handle parts of the business outside of their core skills. Taza decided to hire someone to do their packaging design – paying them an upfront deposit as well as some additional payments along the way. At some point it became apparent that the design just wasn’t going to work. They finally decided to go with their original plan which was to have Alex’s then girlfriend, a graphic artist, design the packaging and that approach proved successful. The lesson: you know your business better than anyone.
Why don’t you source your beans from Mexico if you are making chocolate in the Mexican tradition? It turns out that chocolate is an important part of the Mexican culture and they consume essentially all of the cacao that they grow. (This reminds me of trying to buy Japanese sushi rice outside of Japan. You can’t. They are a net importer of rice). Mexico is a net importer of chocolate, so it’s not the best place to try to source beans. They also have some issues with their crop like fungus that limits output.
Where does the name Taza come from? In Spanish – “Taza de chocolate” = cup of chocolate.
How do you get people to come to your open houses? Alex: “I think it’s pretty easy to get people to come to a so-called chocolate factory.”
You seem to be pretty open and transparent about your business. Have you had problems with other companies trying to spy or copy what you are doing? A buyer from retail market chain called ostensibly to buy their product. This chain (that I won’t name) is known for copying other products and selling them under their own name. She asked Larry if she could come out for a factory tour and see what they are doing. Larry astutely never called her back.
Other than that they are not too paranoid. Rather, they seem to be having a whole lot of fun.
By the time we were able to sample the chocolates, I was pretty tired and the pieces were so small that I couldn’t form a decent impression. So I’m going to buy some full-sized bars and do a proper tasting. Stay tuned for my tasting notes to be posted within a week!
 For more on disruptive innovation see this summary of the ideas of Clayton Christensen.