For Dave Holt, chewing tobacco was a 45-year habit. While teaching agriculture in Montana, Mr. Holt recalls never having to buy chew as his students chewed in class and he would often use theirs. Over the years he tried various approaches to quitting but nothing worked.
According to the Center for Disease Control and Prevention 7.1 per cent of North American adult men use chewing tobacco. In young adult males the number is even higher with 10.5 per cent chewing. Chewing or dipping tobacco is a type of smokeless tobacco consumed by placing a portion of the product between the cheek and the gum. This habit leads to nicotine addiction, and may cause cancer of the mouth, esophagus and pancreas. It also results in diseases of the mouth and may increase the risk of death from heart disease and stroke.
After five heart operations and an inability to kick his highly addictive chewing habit, Mr. Holt decided he was going to make a healthy chewing alternative, but with what and how?
In 2006, Mr. Holt developed Leukoplakia or lesions in the mouth that increase the risk of cancer. Trying various 'quit smokeless tobacco' products, he realized that the alternatives attempted to duplicate the taste of chew, but did little for improving health. After discovering a cancerous lump under his jaw and undergoing several rounds of chemotherapy, Mr. Holt developed a renewed passion for quitting chew and helping others who also struggled with the habit.
Bricolage is the process of creating something from a diverse range of things that are available to an entrepreneur. Using his agriculture knowledge and the local resources available in Montana, Mr. Holt started grinding up and chewing anything he could find. The key driver for his product was that it had to help him quit tobacco while improving his health at the same time.
While at the health food store, Mr. Holt picked up a handful of dried alfalfa. Ground up and moistened with Peppermint Schnapps, this mixture became the "aha moment" for the creation of Holt Montana-Grown Tobaccoless Chew. It took six years to perfect the formula, including removing the Peppermint Schnapps (it needed to be healthy, and not leak in his pocket).
Using his connections and available means, Mr. Holt reached out to different universities across the North Western United States to help him develop the product. He worked closely with the University of Nebraska's food division, creating a stable product that had health benefits while mimicking the behavior of tobacco chewing identically. The recipe was local; pesticide-free alfalfa, honey, peppermint, cayenne pepper and vitamin C. Alfalfa is rich in minerals and nutrients including calcium, magnesium, potassium and carotene. It contains eight essential amino acids and aids in bladder and prostate disorders while detoxifying the liver.
With help from a friend, Mr. Holt developed a logo and label for the cans of chew, had the product FDA approved and built a certified manufacturing kitchen. But now the challenge was, how was he going to sell this product?
According to Amar Bhide's article on bootstrapping, when launching a new company with personal funds this financing strategy often reveals hidden problems in the business model that otherwise would not be discovered with a large capital investment. While the idea of pitch investors can be exciting and alluring, the reality is that the majority of startups are self-funded.
Mr. Holt bootstrapped his new venture on a tiny budget. With no large investment, Mr. Holt could not afford to hire a branding specialist or a marketing firm to develop a fancy national launch campaign. Rather, he had to be creative when it came to an advertising campaign.
With the help of his wife Colleen and their two sons, Chase and Cotton, they decided to go beyond passing out cans to friends and acquaintances and tell their story and promote the product through the local media. Newspaper and TV articles shared Mr. Holt's journey and the steps he had taken to achieve his mission of finding a healthy alternative to chew. Positive media coverage and word of mouth eventually led to a distributor that would help the Holt family to sell their product nationally. At the same time that they were receiving great free publicity, the Holt's developed a website that allowed them to sell directly to customers who had heard about the family and the product.
Through this viral marketing campaign, word began to spread quickly about Holt Tobacco-Free Herbal Snuff. A long-time favourite product in the game of baseball, Mr. Holt began receiving calls from Major League Baseball coaches to help their player's quit chewing tobacco. As well, Mr. Holt received a recent call from the Commander of Health in North Folk Virginia about the use of chewing tobacco in the military and sent samples for them to try.
It took six years but the Montana-based family business with four employees, Mr. Holt, his wife and two sons, has developed a healthy alternative to chewing tobacco and has sold over 50,000 cans to date. As with all great entrepreneurs, they are never satisfied with what they have accomplished and are always looking to push the innovation further. Mr. Holt is now focused on his discovery of a plant that acts as a natural pain reliever. He is currently developing a recipe and working to establish a herbal pain treatment in the form of his herbal snuff.
The company is mission driven, with a clear vision of finding a healthy alternative to chewing tobacco. With this focus, Mr. Holt was able to develop a scalable business model with the potential to expand into other products and customer segments.
Mr. Holt saw a problem, developed a solution that has become a successful small business that has a strong social impact across North America. It took true cowboy grit, something that all successful entrepreneurs exhibit!
Houston Peschl (@houstonpeschl) is an entrepreneurship instructor at the University of Calgary's Haskayne School of Business (@haskayneschool).
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They now appear every Tuesday on the Report on Small Business website.