Cigar Hustler Special Episode with Steve Saka
Transcript
1. 234.
So you'll be good to go.
Yeah.
All right.
So hey.
Should I just open a cigar that
isn't lit?
If it's in your hand and it's
emotion, it's shadow band.
Really.
Yep, doesn't matter.
Crazy, right?
Fucked up.
It's absolutely insane, but hey,
we're about to get started here.
We just finished our steak
dinners at the Private Lounge
event with the one and only the
The Legend.
Wah wah wah.
Sounds so weird.
Are we actually going to use
this part that we're talking
right now?
I think so.
OK.
What do you think?
I'll tell you.
I'll tell you what I find really
weird about this.
All right, so when I think of
the people that are referred to
as legends, yes, that means the
clock is ticking.
That means I basically have 10
to maybe 15 years back.
Well, how long you?
Before I'm in the grade.
How long you been in this
industry?
Man, I've, I, I, I've been in
there for a long time, but I
gotta tell you, the term is a
rather creepy term.
It's not not good.
There's not good connotation on
the word legend.
It really isn't, because
everybody that's called a legend
ends up dead pretty soon.
All right, so so the legend
Steve Sakos is in the house.
So I want to talk about a couple
simple things.
Going to keep it short and
sweet.
I know you just had a hell of a
dinner here.
You hanging out?
About liquored up.
I know, I know.
You should abuse the hell out of
my brain.
OK, well, I'm going to keep it
light to start.
I know you're a patriot guy.
Yeah, Bill Belichick recently
signed the UNC.
Yeah, good choice for him.
I think it's a good move.
I I think that look, Belichick
coming back to the NFL, how are
you hoping to you're never going
to re accomplish what you did
right while you were in the NFL?
Oh, man.
I think him being such a he
loves to educate, he likes to
teach.
And I think him dealing with the
next generation of NFL players,
I think that I think it's
perfect for him.
And honestly, I think any kid,
if it's lucky enough to go to
UNC, in fact, I think it's going
to really change your recruiting
at UNC because think of how many
kids are going to want to play
there to be coached by Bill
Belichick.
I mean, so I, I think it's AI
think it's a good move.
Do you think he has something to
prove still?
Is it the whole?
Brady controversy.
Brady made him you.
Know, I mean, come on, look, you
can't, you can't chase after
something like that.
Look, I was a New England
Patriots fan all the way back
from like 8283.
So I went through some really,
really sucky years.
Almost a decade, right?
More than a decade, yeah.
It was pretty bad.
And and then and then we had
that whole Belichick Brady era,
which was which was yeah, well,
Jets fans are just that's that's
masochism at a different.
Level, You guys are very
special.
Jets fans are very special.
So we had that amazing 2
decades, which are like just
unreal.
And then look, and then the team
was just, the team has been
horrifically bad for the last
five years, right?
Right.
And look, and here's the funny
part.
I think that, you know, outside
view is that Patriots fans were
obnoxious and there are some
obnoxious Patriots fans, but
there's obnoxious fans anywhere,
right?
And let's get real.
The the Eagles fans have the
Glock on the most fans.
It's not even close.
But I think that we were all
very realistic that we knew the
time was coming, right?
I have to admit, the last two
previous seasons we're really,
really painful to watch.
Because look, when you're, when
you're a fan of a team, even
when you don't win, you want
your team to play well.
Of course you want to see
progress.
You want to see something that
gives you that glimpse of hope.
And two years prior to this
season, there was nothing there
was of any redeeming value
whatsoever.
No, now this year, it's an ugly
year.
Frontline's a mess, OK Wide
receivers aren't quite clicking
still.
Defense has been up and down,
had flashes of brilliance and
flashes of just stupidity.
But Drake May, he's been very
impressive.
He really has for sure.
And I think that I think that we
in New England as fans, I think
we're feeling optimistic that we
have a future to come back now.
Are we going to have a repeat of
20 years of dominance?
That's just so freaky that I
don't think that that's a
realistic expectation.
But you want to be a playoff
contention team, right?
You want to have the hope of
going.
And I and I think that I think
under the current regime and
what we currently are working
with, I think that I think, you
know, another couple years we
can be back in the mix.
So, you know, I'm, I'm feeling
pretty good today as a Patriots
fan compared to where I was.
I mean, they could suck for the
next decade we, you know.
Oh of course, absolutely.
Or if you're a Jets fan, you
could suck for the next 40.
Years.
And you're right, Right.
I mean.
And you.
Yeah.
I mean, yeah. 4:40 what are we
talking about 440 years?
Come on what?
What was what was Nathan?
What what year was the C9?
Oh my God, that's.
Incredible, man.
All right, let me get into some
of the other questions I have
for you.
So, all right, so I watched like
your last three podcasts.
Oh my God, yeah.
Make me want to eat a gun.
I mean, I never.
Watch any of those podcasts.
Yeah, yeah.
And I'll tell you why I don't
watch them because if you, First
off, I obviously repeat myself a
lot.
And the second thing is you, you
watch yourself on video and you
realize what a moron you are.
And then it makes you kind of
like try to change the way you
talk and the things that you
say.
And then you become very
guarded.
So a long time ago I decided
that I I never, I never ever
watch or listen to any podcast
I've ever been on, so I I won't
see this one either.
Well, let's well listen.
I think that I think there are a
lot of opportunities that you
say things in these podcasts and
people don't really pick up on
it and they just kind of Mull it
over and just kind of move on to
the next thing.
So one of the things that you
were covering was when you're
purchasing on a growing level,
when you go and buy tobacco that
the media and general consumers
have a different take on that
sort of that that side of
things.
And and it was just kind of let
go.
And I had no idea what exactly
you meant by that.
Do you think that people will
give it a different light?
I think part of it is, so
obviously the factory portion is
the part that's romanticized, of
course, right?
But the reality is the actual
manufacturer of a cigar is a 3
minute process, right?
It's very short.
So actually cigars are good
before they ever get to the
Bonchero.
OK, the factory is actually the
place where they take perfectly
good tobacco and just fuck it up
100%.
That's what they do.
OK, So I I think the part, the
factory part that is so well
covered and so romanticized is
actually nowhere near as
important as the selection of
the materials and the sorting
and the pre industry where we're
bulking and fermenting and then
aging and then the subsequent
sort that comes after the fact.
And then the the way that we put
together the decks for the
individual blends, those are
actually the most critical
components.
And the factory portion is
really very simplistic.
It's really a standard of just
having standards, having
methods, having practices, and
then just enforcing those
practices on a repeat basis.
That really good cigars are made
long before they get to the
factory and the factory is the
part where they can ultimately
just screw up the work.
Same way as when you think of a
chef, you look at a restaurant,
I mean, they can have perfect
ingredients, but if they hammer
the if they hammer the steak,
they hammer the steak and they
can ruin the most beautiful
piece of Wagyu beef in the
world, right?
So I think that's one of the
things that I don't think is
really covered very much.
And part of that has to do with
the fact that it isn't very
sexy, it's rather tedious and
it's rather labor intensive.
And the people that are involved
in that end of the business,
they're really not the the focal
point.
So they don't get talked much
about, right?
Like how many people here can
name one person that's in charge
of a pre industry, right?
Nobody can, right?
But reality is, those are
actually the most critical
people in the operation of
making what I would consider to
be great handmade cigars.
I think that's fair.
I mean, you know, as a consumer,
you go down, it's kind of the
show me the baby, right?
Like bam, here's the baby.
Now, when you were when you're
talking about this, they asked
you about specifically growers
screwing you over and you said
that would never happen because
you're looking to build a, you
know, your legacy and brand.
It's a, it's a, it's a, it's a,
it's a, it's a, it's a
relationship that has rapprocity
in it, right?
So look, you, you have bad
seasons, you have bad crops and
you can't really abandoned your
farmers in those situations.
But at the same time, they can't
take gross advantage of you when
it's a good season because there
will be a bad season.
So it's one of these things
where there has to be some
equilibrium between the two of
you that you help one and out
one and each other out whenever
the tides are turned because the
reality is they're always
turning.
So because in the end, we both
need one another, but we need
the materials and they need to
sell the materials.
So you, you try to, you try to,
there's anybody that it's like
all good.
It's not even a, a tobacco
thing.
It's just a general business
thing.
In order to have good business,
everybody has to win.
If there's somebody that's
ultimately being taken gross
advantage of on a continual
basis, then that's not good
business because it's
unsustainable.
Sure.
But now in this industry, we
know that there have been
smaller brands that have gone to
not necessarily pre industry
level, but just the the the
factory level where they've kind
of been taken, right.
Part of it is, but here's the
dilemma that you have, and I
feel really bad for most small
brand owners and even for some
of the mid size guys that if you
don't actually understand what
your factory is doing and why
they're doing it, how do you
actually ensure that you're
getting a product at a fair
price?
I, I think one of the things
that most consumers don't
realize that they could also be
brand owners just as easily as
many of the, as the other brand
owners that there's almost,
there's always factories that
are out there that are willing
to make you what we call job
cigars, right?
Hey, we'd love to have your
business come make cigars with
us.
The other thing though, and on
the flip side is you have to
understand where those cigars
fit into the scheme of how a
factory operates.
So if you have a factory, let's
say you're Drew Estate, for
example, when I was at Drew
Estate, I don't know where they
are now, but when I was at Drew
Estate, we're making 120,000
cigars a day.
So when you have this small
brand owner that wants you to
basically make a hundred boxes
of this, 100 boxes of that, 100
boxes of that, Let's say you're
making 500 boxes, 700 boxes that
are initial order.
You're talking about 14,000
cigars.
Maybe 14,000 cigars is about an
hour and a half work on the
factory floor on any given day,
This concept that you're going
to get special this and special
that and blah, blah, blah.
It's just not the reality of
this situation because you're
essentially a rounding error for
those factories.
So it's so critical to not only
pick the right factory partners,
but it's even better if you
actually understand what they're
doing, why they're doing it,
what the tobaccos are.
The more knowledge you have, the
better you are as a customer to
the factory.
And the reality is most brands
don't have that.
Brand owners don't have that
expertise to be able to even
judge that.
Essentially what they're doing
is they're getting samples that
are given to them and they're
saying, hey, I like the one out
of bag C, but I wish it was a
little stronger.
I wish it was this, I wish it
was that.
And the factory goes back and
adjusts it and eventually the
guy goes, oh, voila, this is the
one.
And here you go, here's a brand.
And I'm not saying that you
can't be successful at that, but
the only way you can be
successful is if you have a
factory partner who is really
looking out for your absolute
best interest.
And the reality is commercially
they have no reason to do so.
So it takes a very personal
relationship in order to make
that work or you have to
actually understand what they're
doing and why they're doing it.
And that that's a real challenge
because there's very few people
that really understand the
materials or understand how a
factory operates or understands
all the particulars that are
involved.
So I, I for small brand owners,
the deck is really stacked
against you.
It's a, it's a, it's a really
tough, tough road to hoe.
And that's separate of the
commercial issue of then selling
and distributing the cigars.
That's a, that's an entirely
different conversation.
But just getting a really high
quality product made, it's, it's
quite difficult to get it done
consistently.
And the other thing too is when
you're making things in batches,
that's never good.
It sounds sexy, small batch
production, but the reality is
the way you get the best cigars
that are the most consistent is
when you're making something
continually all the time.
Where that pair that comes in
and rolls whatever sober Mesa
Brule Robusto, that that is
their sole focus every day, 200
work days a year.
That's all they do and they end
up ultimately making better
cigars.
But when you're a small brand,
you can't make that type of
commitment because what you're
looking at is you're looking at
that pair banging out three
hundred 350 a day.
End of the week they got 1500,
you got it going into a 10 count
box.
You'd start doing the math.
You got to move a lot of boxes
to be able to get that type of
consistent production.
But ultimately it's that
consistent production that
actually makes a higher quality
product.
So even when you're working with
someone really good, you have
this dilemma of where you have
these gaps of stopping and
going.
Because I can tell you whenever
we start anything new, the first
four weeks are not as good as
they should be, you know,
because it takes a little bit of
time to, to kind of get them
into the groove and to get them
tuned up.
So it's, it's everything is
stacked against the smaller
manufacturer, the smaller brand
owner, separate of the whole
commercial side of the US
industry and distribution.
But even at the factory level,
that's a, it's a, it's a tough
gig, right?
So, but now we've kind of
established that factories could
screw over smaller brands,
right?
I.
Don't think they do it
intentionally.
Well, it's just, it's kind of,
it's just kind of the way it is.
It's just such a yeah.
And I'm all part of the day.
No matter how we get there, we
get there right now on a growing
level.
Obviously, you know, you said
that they wouldn't, you know,
you're pretty reputable in this
industry, right?
But if you were a guy that was
just kind of getting into it and
you didn't have the knowledge or
the know how, but you wanted to
start purchasing your own crops
or purchasing your own tobacco,
do you think that possibly some
of those growers would take
advantage of those people?
Absolutely right.
Look, even the serious gross
look, everything that everything
that deals with tobacco is
always a negotiation, right?
OK.
So always your grower or your
broker, whether you're dealing
directly with a farmer, whether
you're dealing with an
intermediary, a broker is always
a bit of a, it's a, it's an
ongoing intentional dance, a bit
of a battle that you know,
they're always going to say it's
X and you're going to say it's
Y.
But in order for you to even
begin to have that conversation,
you have to have a really firm
understanding of how yields
work, how indexes work, how
you're going to ultimately cream
that particular crop, how you're
going to allocate it out to all
of it.
Because there's no such thing as
great tobacco.
It doesn't exist.
It's like any agricultural crop.
Think of it like tomatoes.
When you go to the grocery store
and you go into the and you go
into the veggie aisle, there's
that absolutely beautiful
pyramid of round ripe tomatoes.
The tomatoes don't all look that
way.
They don't all taste that way.
In order for that pyramid of
perfectly round ripe tomatoes to
exist, there's an entire aisle
of ketchup and salsa and
spaghetti sauce.
And those are not any different
tomatoes than the ones that end
up in the veggie aisle.
But there's only so many that
can end up in the veggie aisle.
So you as a buyer of tobacco,
you have to look at that crop
and go, OK, how am I going to
utilize this crop?
How much of it is going to be
worth this?
How much of it's going to be
worth that?
Where am I going to put it?
What product lines do I have to
put it into?
Which again, ends up as a real
problem when you're a small
manufacturer, you can't really
get into crop purchases until
you have the ability to actually
segment out that all those
various grades of tobacco
because it's like a cow.
There's only so much tenderloin
in the cow and there's only so
much sirloin in the cow, and in
the end you get down to where
you got rump roast and you got
to make hot dogs and you got to
do all these other things.
And so it becomes a real big
challenge and you know, and you
can only cherry pick so much out
of a factory where they're going
to only give you so much of
their great materials because
they also have their own brands
and they would rather use their
great materials in their own
brands than they would rather
use them in your brands.
So it's always a bit of a, it's
a bit of a dance.
It's a bit of a problem.
And that's why I think it's
really, really difficult for the
small starting brand owner to
really begin.
I think it's a bit of an uphill
challenge.
And and look, you see it, I mean
every year we have 300 plus
introductions into the
marketplace.
So look, we have pretty much had
since 2001, we've had somewhere
between 300 to 500 introductions
in the marketplace pretty much
every year with one exception,
2009, I think it was like 275,
right.
So when you think about that,
think about it as you as a
consumer, what do you actually
find memorable from 2023?
Because in 2023, there were over
500.
So of those 500 things that
enter the marketplace, can you
as a consumer even name 10 of
them?
Can you name 20 of them?
I'm in the business and I don't
think I can name 20 of them off
the top of my head.
No.
But there was somebody that
created it, somebody that
branded it, somebody that put
the effort into trying to market
it and sell it for it to
ultimately not go anywhere.
And I I, I think it's a, it's a,
it's a real, real challenge.
I mean, look, you have plus 20,
right?
Am I saying that correctly?
Post Tonia.
Post Tonia.
Thank you.
Yeah, I'm going to blame the
Scotch.
That's fine.
But I mean, you, you know what a
grind it is.
Yeah, man, you know how
difficult it is, of course.
And I would argue that you're
probably one of the better known
of the smaller brands.
I mean, there are literally
there's a hundred other people
that are beneath where you're
at, right?
That like, can you name 3 or 4
the average consumer you might
be because you're looking at
them as direct competitors
maybe, but the average consumer
doesn't.
And then you're trying to get
retail space for that product.
You're trying to get consumers
interested in smoking that
product.
It's a it's, it's really, it's
the whole way the deck is
stacked is really towards the
big companies with the legacy
brands, the ones with the big
budgets.
They, they are the ones that
have the most hope.
But even in their case, they've
punched so many things that
ultimately fail.
Even having all the advantages
on their side, they ultimately
aren't successful.
It's, it's, it's, it's arguably
one of the most competitive
businesses out there.
It really is.
It's, it's a very competitive
business that's really, really
difficult.
And that's why so few people.
I mean, during the cigar boom,
there were over 2000 new
companies of the 2000 who made
it to the other side.
Alec Bradley, Rocky Patel drew a
state.
I mean, we can name maybe Lido
Gomez.
We can name probably maybe 15.
Yeah, but there were 2000 of
them.
Yeah, and when they've never,
they didn't blow up, they just
kind of slowly faded away.
You just realize one day that
they were gone.
You.
Know what ends up happening is
brands die all the time.
Consumers didn't even know they
existed before they die, right?
Because there's so many of them,
right?
It's like most, most of them
just die a silent death.
Well.
That kind of brings me to my
next question because you know
Dunbarton Tobacco, obviously you
started with your estate, you
know, as far as being on that
side of.
Town, is it true?
Right.
And you know, one of your things
that you like to always say is
that, hey, you know, I have to
swag and all this stuff.
I make 10 bucks, you know, like
that's kind of your line, right?
It's the reality.
I could tell you flat out we
make about a.
So originally we started making
about a 3% net profit in the
beginning.
Today we're pushing like right
close to 7% net profit.
So what that means is if you're
a consumer and you buy a box for
$200.00 and then I got my
wholesale price on it, that
means that basically I make
$7.00 net profit at the end of
the rainbow.
It's always, it's the margins
aren't as big as consumers
assume they are.
For sure.
They think the profits are much,
much larger.
And look on some of the higher
priced products they're better.
But the reality is on the higher
priced products you sell a very
limited number of them.
So they, they don't really
offset and in the end in our
industry and look, I come from
the big side, I come from being
exec consultant at Jr. and then,
you know, president and CEO of
Drew Estate.
I'm telling you, even if you do
everything perfect, you're going
to get maybe 1112% net profit at
the absolute most.
I mean that that is ultimately
what's going to end up
happening.
And then once you pay taxes on
that and whatnot, you know,
it's, it's, it's, it's not the
type of business that most
people think it is.
And I think that's one of the
things that does a disservice
for the small guys is because
they don't know that when they
go into it, think, OK, I'm going
to make this for whatever.
I'm going to make it for $3.
I'm going to sell it for $6.
And therefore I'm going to make
$3 and every cigar.
But they don't realize that, no,
what you're going to hopefully
make is if you sell it for $6,
you're going to make somewhere
right around what does that come
out to be $0.42?
That's what you're going to
make.
And that's if the business is
running like super good and
super clean and you know what
you're doing, because there's a
lot of things that you, you end
up eating in business.
And look, it's the same thing
from supper to the brand side.
But you think about as a
retailer, sure.
Think of how many cigars you buy
that ultimately don't turn
right.
And then you have to sell those
cigars out at a deep discount or
to move them along.
And you're not making any money
on that.
No, you're, you're hoping to
cash recover, right?
And that's a hope that you cash
recover.
A lot of times you sell some
stuff at a loss, right?
That's what you have to you do,
of course.
And then you you actually lose
money on that thing.
And I think that's the part
where I think that it becomes a
very it becomes a it becomes a
bit of a wake up call.
And The thing is, when you're
that small brand and you're
churning and burning, you're
really just chasing those top
line sales to cash flow the
company and you're not really
thinking about how much is this
actually making?
You're just thinking about, Oh
my God, how do I make the very
next sale?
And that's very detrimental too,
when you're in that position of
where you have to make that next
sale or you're essentially out
of business.
And, and that's why most small
companies, there's a wide
reason, but the biggest reason
why in the end they fail is just
economically, it just isn't
there.
It's, it's something that if
you, it's really a game for the
more experienced people, it
really, really is.
And, and when you look at it, in
the end, very few brands
ultimately end up surviving.
And the other problem that you
also have is when you're that
small brand, you're in that
niche and you're attracting that
cigar geek consumer.
There's only so many of them and
those cigar geek consumers,
they're the most fickle of all
the consumers, of course,
because they're always going to
find some girl with a better set
on her that they're going to end
up moving on to.
That's something newer, that's
something more shiny.
So the problem that you have is
even when you're that hot young
running brand and it's the
thing, you can only be the IT
thing for so long.
You have to figure out a way to
how do I get the average
consumer that's never going to
care about Dunbarton Tobacco and
trust is never going to care
about Steve Saka's Pedigree, is
never going to care about
whatever dog and pony nonsense
that I'm pitching that they just
like the cigar and they bike,
buy the cigar and they add it to
their rotation.
And that's a really, really hard
leap for a company to make when
they're when they're that small
company that doesn't really even
have any comprehension of that
consumer, how to attract that
consumer, how to deal with the
retailers to actually make that
consumer work.
It's a challenge.
And that's why we look, I'm not
going to name brands, but I
think if we all sit here and we
say, OK, what we're like the
Super buzzy, super hot brands,
you know, 10 years ago, I don't
think any of them have made the
leap, you know what I mean?
They almost always end up
somewhat retracting.
Now, if you have a really good
product and you can fight your
way through it, then you have a
potential to live longer.
And there's a few companies that
are in that category right now.
But no, it's, it's, it's, it's,
it's a brutal, brutal world.
It just, it's, it's tough.
It's tough business.
So you've been running Dunbar
and Tobacco for over 10 years
now, right?
No, this will be our 10th year
next summer.
OK.
So you're going to be at a
decade.
Yep, OK, next summer.
So now if you can go back 10
years now that you've kind of
had the knowledge and the
experience of seeing everything
on this side.
And like one of the big sayings
as far as companies are
concerned is, hey, listen, if
I'm the number one guy, I'm not
making as much money as the
number 2, right?
So, so shout out to David
Lafferty, but if you could go
back in time.
Actually get a bigger salary.
Well, that's the same, right?
The number two guy always makes
more money than the number one
guy in any business.
That's true.
In any.
In any successful.
You're running the business
well, right?
The idea is not to suck the
business, drive the cash because
the business needs the cash to
grow.
Right, exactly so now, but if
you can go back 10 years, would
you have tried to stay with a
big company or would you still
take that leap I.
Would look the thing for to me
is so I've been very blessed.
You know, I, I, I got bought out
of my situation at the last two
previous companies.
So that's a rather unique
scenario.
I I wanted to do something that
was wholly independent.
I wanted to do something where I
didn't have any partners.
I wanted to do something where I
didn't have any bankers involved
in my life.
So no, I, I would do what I'm
doing.
I mean, this is a, this is a,
this is pain by choice, you
know.
So for me, this is right.
And even just the way we've
operated the company.
I mean we're not, we're not in
that many stores we're in maybe
not after you'll correct me on
this, but I think we're in maybe
450 total accounts.
Most of our territories we don't
have any sales representation
and whatsoever we don't really
do a lot of active solicitation
because what am I going to say,
my cigars are great and they
sell well.
That's really the pitch that
99.999% of the people.
So we've kind of done the Field
of Dreams build it and they will
come kind of thing.
But I had enough Personal
Capital to take that position
and to be that way about it.
And also I don't have dreams of
grandeur that I want to make
this into $100 million a year
company.
So that's significantly
different too, because you know,
at our stage you would really
just pour a lot of gasoline on
the fire, start spending a lot
of money on the sales force.
You would start spending a lot
of money on marketing, you would
start doing all of those things.
But one of the ugly things about
our business is there's this
like really weird scenario where
you get to about a certain
number of units and it's really,
really profitable and it's the
most profit you will ever make.
So to just put it in money
terms, it's right around
fourteen $15 million a year
gross.
And when you're doing about
fourteen $15 million a year
gross, the profit never gets
better than that.
So to go to the next stage, you
have to get to a point where
you're pretty much producing and
selling like 40 to 45,000 Cigars
a day.
So that period is really just
brutally ugly.
The amount of investment that
you have to make, because now
you're making products that
aren't necessarily what you want
to make.
You're having to make them to
utilize tobaccos that you
wouldn't necessarily want to buy
because to get what you want to
buy, you have to buy these other
things.
It becomes really, really ugly.
So what ends up happening is
it's a phase where you are
basically going to go through
this really ugly growth curve
for a period of about three to
four years if everything goes
well to get back to the profits
that you used to be at when you
did 15,000,000.
So you got to get to like fifty
$52 million a year to get back
to where you were at 151617
million a year.
And the only reason why you go
through the pain is because you
want to get to that point so
that you can then go to 7580 a
hundred 10120 and start
competing with the big
companies, the Drew estate slash
swishers, the altitis, the STG,
the you know, the my father.
But being Garcia people, those
are the people that you want to
compete at And, and personally,
I don't really want to go there
and look, and you, you look at a
company like Lito Gomez and as a
retailer, one of the major
complaints is I can't get what I
had need.
I can't get the product I need.
You know, I always have these
back orders with Lito Gomez,
yadda, yadda, yeah, blah, blah,
blah.
If I had so much more of it, I
could sell it.
I don't have a personal
relationship with Lito, but just
understand how the business
works.
I think Lito's hit that point
and he's like, I, I don't want
to go through the pain to go to
that next step to just get back
to even because I'm going to go
into so much debt and so much
grief through that period to get
there.
And I don't think that I want to
go to that crazy, crazy number.
And look, we're, we're very
closely kind of approaching that
threshold ourselves.
So there's going to be a point
somewhere, maybe next year,
maybe the year after, where I'm
going to have to say to myself,
OK, what are we doing here,
right?
Are we going to keep going this
way?
Or are we going to say, OK, what
we have is what we have and
we're going to be happy.
And given my age and given just
my general, like I'm a super fat
dude, how many years am I going
to live?
Well, you're down some L BS
though.
I appreciate that.
But in the end, we're not close
to healthy by any stretch.
So I mean, I'm, I'm starting to
get to the point where, you know
what, maybe I'm content.
Maybe this is.
Maybe this is where it's at.
So, OK, so let's say
hypothetically like you know
that you're going to there's
going to be an ending period for
you, but you don't know exactly
what you want the shape of the
company to look like.
Is this, is the company
something that you're looking to
make generational?
Or is it something that you
know, hey, listen, if the number
comes along, the number is good
enough, I'm done.
I'm out.
Look, I'm I am old enough to
know to never say never.
I don't have a current interest
in selling the company.
I've been approached three
times.
Yeah, 3 * 2 times.
Legitimate one time.
Kind of like just sniffing the
ass of a dog.
So I mean the potential is
there, but here's the problem.
If you sell the company, it then
makes me instantly an employee,
right for some other company.
But what do you go and do?
The dog and pony for four years,
right?
And.
What do you want?
Did you?
I mean, originally your son was
involved in the company.
Right now, he's not.
Right.
He's not right.
And the reason he's not involved
anymore is just look, it's a
very challenging business and
you have to be extremely
entrepreneurial.
And he's not an entrepreneurial
guy, right?
There's nothing wrong with that.
No, you know what I mean?
But not, not everybody is cut
out to be that kind of person.
So people like to have a good
job and earn a good living and,
and support their family and
have their vacations and, and
not the misery.
And The thing is, until you, my
business on the part that I'm
in, it's very confrontational.
I mean slightly because I'm not
on the, I'm not, you know, I'm
not so much on the sales side of
thing.
I'm on the operational tobacco
side of thing.
So I mean, you got to be a
little bit of a bull in a China
shop in order to be effective.
And that's not a very easy thing
for someone that grew up as an
American to operate in that type
of environment.
So it's, it's not normal.
I think that, you know, best
case scenario, I think probably,
you know, grow the company to a
certain point.
You know, you never want to not
grow, but at the same time not
chase the growth, but make it to
the point where maybe it doesn't
require as much personal time
and dedication so that I can
just kind of have a little bit
more of a regular life.
Like I was just looking at my
phone earlier tonight.
I I haven't slept in my home bed
this night. 250 odd years.
Days, days.
Yeah.
I mean, it's a lot.
And, you know, and it's, it's
crazy.
And so maybe there's a way to
find a way where the company can
do well, generate cash without
me constantly charging to the
horizon.
And then I can enjoy just being
the cigar tobacco guy and smile
a little bit more and, you know,
get a little bit of fun stuff
here and there, you know, but
not actually stop running the
company because if the company
can cast off so much a year in
profit, then that's enough
profit.
Right.
But let me bring you back to the
question like ideally you, OK,
so you launched this company,
right and you want, do you want
to get your son involved and you
want it to be a legacy thing
that passes down from generation
to generation.
Was that your original vision or
was it, hey, I can build this, I
can make some money?
More of it, more of it wasn't so
much I could make some money.
But you have to understand that
I have made a lot of people very
wealthy, of course, using my
skills and my talent.
So it was more of a, hey, why am
I doing this for other people,
right?
I should do this for myself, OK.
And even if it didn't make me
nearly as wealthy, because the
reality is, look made a ton more
money at Drew Estate, you know,
not today.
I'm doing better than I was
then.
But but it was a long run.
It took us, took me a good, you
know, almost eight years to get
back to.
Where I was, we've come a long
way from you testing people to
eat bugs for boxes.
I mean, that was like that was
out of the gate.
You know, so I mean, but it's
really more more of a self
thing, more of let me do this
for myself, let me do this
without Also, I don't man, no
offense to my former partners,
but and having partners suck.
Yeah, partners can be difficult.
For sure.
And I I think that's true for
anyone.
Yeah.
So also having that liberty and
having that flexibility to kind
of do what you want to do is
very rewarding.
Your your failures are entirely
yours.
Your successes are entirely
yours.
Your trials and tribulations are
entirely yours.
And there's, there's something
that's very redeeming from a
soulful perspective on that.
And, and that was part of what I
wanted to do.
And I wanted to, I wanted to, I
wanted to do things without
having any outside influence.
And, and that's the way you
look.
Everything Dunbarton is me.
If you, if you don't like our
cigars, if you don't like like
if you try sober Mesa, Miki,
Adidas, Sincom for miso, you
don't like any of those 3
cigars, don't even bother
smoking the rest because you're
probably not going to like
anything in the line.
OK now those may not be your
three favorites.
We have a lot of very different
cigars but look, everything is
based on my palate, what I like,
what I like tobacco wise, what I
think makes a good cigar versus
a great cigar.
It's it's entirely me because.
You know, nobody in the company
gets an opinion.
Nobody gets to test any test
blends or sample blends.
In the end, it ends up as a
finished product in a box with a
name with a price.
Here it is.
Let's see what it does in the
marketplace.
It's going to sink or it's going
to swim.
But in the end, whether when it
sinks, it's entirely my fault
and when it swims, it's because
I was the guy that said this I
think is going to swim so.
Originally.
I like that.
I like the I like the fact that
I don't have anyone else to
take.
I don't have anyone else that
can take credit, but I don't
have anyone else to pass the
blame on E to either.
It's all my fault.
All accountable for you.
So at the end of the day, the
reason why you kind of got into
it wasn't so much to have.
You didn't have an end game in
mind when it comes to a legacy
or it comes to the sale of the
brand.
It was more of a you were driven
on the aspect of, hey, I can do
this myself and I'm going to
show you how much of A badass I
can be when I do this.
You're hoping, you're hoping you
can show that you're you're a
bad ass.
Yeah, well, I mean, you're still
here 10 years later, almost 10
years.
Look, there's a lot of people
that have been around for 10
years that aren't doing
particularly well, so being
around 10 years.
Duration means nothing.
Yeah, it doesn't add up to
anything.
Right, of course.
I mean, you know, being in over
400 stores is definitely
actually.
A very small number.
Or it's still impressive.
Whether you like it or not, I.
Mean look, but we've never been
the company that went and really
we kind of the way we work it is
we kind of wait until a store
asks us, they come into their
store and the reality is most of
our customers become our
customers because they get tired
of consumers asking for our
cigars.
So they kind of get badgered
into it, of course, by their
customers and not because of
actually us badgering them.
That's the right way to do it,
right?
Yeah.
I think it's the right way to do
it, but that's a very long burn
kind of scenario that I think a
lot of companies don't have the
luxury of doing.
The problem is you, you get, I
don't think that.
So like there's so many small
brand owners that like they
think they get into cigars
International or they think they
get into a smoke in or they
think they get into a Corona or
they get into wherever.
I think, Oh my God, I made it.
And the reality is those are
sometimes the worst places you
could possibly be.
You're probably get so lost in
the mix.
So like, it's no secret.
I I do a lot of business right
now with smoke in.
He has a lot of promotion.
I heard about it, right.
Yeah, I'm going to tell you flat
out, my cigars didn't sell for
shit and smoke in for the first
four years.
Like they just didn't sell.
They were literally like boat
anchors on his shelf.
I literally, he kept them on the
shelf because I have a personal
relationship with him and he was
doing me a favor is what he was
doing.
But in the end, those that
probably did not turn, I think
that for a lot of small brand
owners, they think that getting
into these big accounts is going
to be like a win.
And it's not a win at all,
right?
You know the thing that I always
tell that small brand owner is
don't try to go national, work
your region.
Right, which is smart.
Wherever you can if you can't
drive there in a day and not
spend a night in a hotel room,
start building those personal
relationships one-on-one
individual stores get to know
their consumers.
Do this learn small because the
pain that you're going to go
through, the amount of money
you're going to burn trying to
be be successful in a national
level is just mind boggling.
And that's why ultimately so
many fail.
And if you're going to, if
you're going to learn, you're
going to learn what you're
fucking up because you're
fucking up something all the
time learning on a smaller
scale.
It's the same thing with like
people that tell me that, oh, I
want to open a retail shop.
And my first advice to anyone
that wants to open a retail shop
is go get a job working as a
clerk in a local retail shop for
a minimum of a year.
And always there was most always
responses.
I mean, I can't afford to work
for $14.00 an hour.
I'm like, dude, if you can't
afford to work for $14.00 an
hour then you should not be
opening a cigar store because
you're not going to make $14.00
an hour.
For the first.
Year for the first year, maybe
two years that you got that
store.
So it's better that you go and
deal day in, day out with
consumers in a retail
environment and learn the
lessons that need to be learned
on somebody else's dime because
you doing yourself is a huge
mistake.
So if you're not willing to do
that, then you should have, no,
you should not be thinking about
opening a retail store, period.
Absolutely.
All right.
I got one more question and then
we're going to let you set you
free and let you go amongst your
people.
And this one's an easy one.
All right, So PCA has four board
members coming up for retail and
two manufacturers.
I wasn't even aware of that.
Who are the four retailers that
you think off the top of your
head that should be on the PCA
board?
I.
Have no idea who's on the PCA
board?
Well, just who do you think that
should be there as it regardless
of who's on there now?
I mean, I could tell you who it
is, you know, by looking at it.
I have a photo of it.
You're going to get me in
trouble on this.
Why it doesn't matter?
This is a.
Funny part, I don't even know
that I'm the right person to ask
because I'm so disconnected from
our retailers.
You got Emerson's on there?
I got ZT cigars, Metro Cigars in
Wisconsin, smoker friendly, ex
officio, obviously Jay Davis,
Blue Smoke Dallas, the cigar
shop in North Carolina in Casa
Grande, AZ.
Those are the ones that I see
here.
I know that just for him was on
there.
I don't know if they were.
Maybe they're one of the members
that are about to expire, but
who do you think?
I mean, what do you think it
should be like?
You're the ones that are just
pop on my head.
Again, I don't deal with the
retail stores.
So this is.
A But you know the people.
No, I really don't.
You don't know the retailers.
No, I, I don't.
It's a, it's a, it's, it's
always been a blind spot for me.
You have to understand that.
So I was executive Junior Cigar
didn't deal with retailers.
I was president.
Drew State didn't deal with
retailers.
And when I dealt with retailers,
somebody would whisper in my ear
and say this is so and so from
such and such.
And they do $100,000 with this
year.
They're a good customer and I
say, oh, I really thank you for
your business so.
Well, so you know, some of those
guys good there, you know,
Ronnie Secreto, I mean, yeah.
I know I.
I you have at this point, let.
Me, let me tell you what I
think.
I think that.
So I'm going to ask this in a
more.
I'm going to answer this in a
more general way, OK, I think
that you need someone that's on
the forefront of the social
media Internet side interaction
wise.
So off the top of my head,
that's like an Abe Debabna from
Smoke in, that's like a Tim
Swanson from Cigars Daily.
That's maybe in a MAR from small
batch.
I think someone that's really
interesting.
I think that Neptune has a very
interesting approach in the way
that they capture customers.
So I mean, I, I think you need
to look at the people that are
like actively taking market
share and growing, right, right.
So that would be 1 segment.
Then I think you also need to
start looking at those in the
trench kind of Internet
grinders.
I put you in that category.
You're one of those guys that's
kind of trying to do that hand
to hand combat.
You know what I mean?
On on the Internet side, you
mentioned Ronnie earlier, you
know, trying to do hand to hand
combat.
I I think that's like a, a
totally different segment that
those retailers are showing
growth cycles.
And then you also need to kind
of have that more that more
traditional.
So you kind of want to have more
of a mix of the retailers on the
board that represent kind of
different segments.
And look, I think it's, I think
it's foolish not to have someone
that's really in that bar model
because the bar model has become
so critical to how many of these
smaller stores are successful.
So I think you need to kind of
have someone that's engaged in
that more kind of bar model
environment because their needs
are very different than what the
average brick and mortar needs
are.
And the cigars that they want to
stock are different than the
cigars that, for example, that
box selling kind of retailer is.
So I, I think you need to have a
like a better mix of retailers
than what's currently in that
current makeup.
And you know, so that's number
one.
But here's the problem.
Those guys are all busy, sure,
you know what I mean?
And they're really grinding
really hard to grow their
businesses and they are
typically not the ones that want
to be on boards.
So it's kind of one of those
weird things where the people
that want to be on boards are
almost always not the right
people to be on boards.
You know what I mean?
I don't mean to say that in a
negative way, of course not, or
on the boards, but that is kind
of the way this works.
Right, you need a more.
Diverse 'cause you're going to
ask me the next question.
I would never entertain being on
a board.
Why not PCA?
I I just feel like why do I want
to beat my head against the
wall?
I mean, you should have thought
about that 10 years ago when he
got in the cigar industry,
right?
Yeah, but it's at least I'm
beating the head against the
wall of my choosing.
Yeah.
I, I, I don't know, I think
it's.
But at the end of the day, like
we have an industry that's
constantly under fire, right, as
far as culturally unaccepted,
right, demonized just because
the fact that we're launched
into the tobacco category when
it comes to.
Leasing and all these everything
very bad.
People right we're you know 100%
evil, however I promise you I
mean we can pull blood work
right now and mine's all all
good right and I smoked it was.
Really weird.
Yeah, I had my last blood work.
I actually asked them to do a
nicotine panel, right, because I
was curious where my nicotine
numbers would show up.
Yeah, they showed me as an
occasional smoker.
I believe that.
And I've been smoking 8 to 10
handmade cigars for three
decades.
Isn't that interesting?
A day eight to 10 for three
decades, right?
And I show up as an occasional
smoker.
Every once in a while.
Yeah, crazy.
That's insane.
Yeah.
So, you know, I mean, you see
that these things that were, you
know, like I hope to see within
the next 10 years, cigars become
more acceptable on a cultural
level.
I mean, like there are guys that
smoke cigars that even friends
of mine like, hey, why don't you
come over to the house and we're
having a party or whatever.
Is it OK?
What?
You know, you want me to bring
some cigars?
Oh, no, no, no.
Why not?
You like cigars?
I like cigars.
Cigar, right?
Like, Oh well, it's not that
kind of party.
Or like, what kind of party is
it?
You know an UN enjoyable.
One yeah, so I'm so now, so now
I have to.
So now we're going to just sit
and stare at each other or like,
I hope there's a college game on
or football something, you know,
but like we don't even get to
enjoy that aspect of things
because of, you know, how it
appears with the perception is
to something that might not be.
In our swing, we go through
these swings right.
So I actually, and maybe this is
part of weed becoming so much
more acceptable.
I think there's a little bit
more of a libertarian kind of
viewpoint that many people
individually are adopting.
So I think that I think that we
are probably going to fare
better than we have in the past.
Now granted in the short term.
I mean, you just saw what some
town in Massachusetts try to
pass a generational ban and
maybe they have or they haven't.
I, I didn't read the article
very closely.
So I mean, you're, you're always
going to have the anti segment.
But I don't know, I feel feel as
though more and more people are
getting much more like live and
let live.
If it doesn't impact me, I don't
really, it's really none of my
business.
And I, it feels like it's
swinging a little more that way.
Maybe I'm just being a little
Pollyannish about this, but it,
I don't know, I, I feel like
it's better.
Doesn't mean we're going to get
to start smoking cigars in
restaurants again, anything like
that.
But I, I think, I think there's
more cultural acceptance.
I think one of the interesting
things for us in our business, I
know that the more educated the
consumer is, the more engaged
they are on the product.
So like when I'm on a plane and
I tell somebody what I do for a
living and they actually engage
with me in the conversation and
they start to understand the
amount of time and labor and the
effort and the process.
They actually become really
genuinely intrigued by it.
It's fascinating.
And I, I, I think that, so I
think that as the Internet is
making information so much more
widely available, I think it's
something that actually benefits
us in the cigar industry.
Because I, I think that's one of
these things that really
captures the imagination of a
lot of people that wouldn't
typically be intrigued.
And that once you start
introducing them to what
handmade cigars are and what the
process is, it becomes something
that's rather quite enchanting.
And I, I think that that kind of
opens things up.
And the other thing that I think
is really important about the
aspect of handmade cigars is in
our world that's so fast moving
and so not personal.
Cigars are very personal.
Cigars make you slow down.
Cigars make you pause.
Cigars make you spend more time
with your significant other on
the back deck, even if your
significant other doesn't smoke.
But the fact that you do and it
takes an hour, an hour and 1520
minutes, it provides an
opportunity for you to talk.
And I think that people are
starting to come out of this.
I want everything to be on my
phone.
I don't want to talk with
anybody.
I want blah, blah, blah.
I, I'm getting this general
sense that we as humans are
beginning to say, wow, we're
really missing out on this
personal connection.
And because cigars force you to
slow down, they kind of forced
the personal connection to
happen.
And I, I think that's AI think
that's one of the things that's
a really great benefit to us.
So I'm actually quite optimistic
about the future of that part of
the industry.
I'm a little bit more negative
on the where is the corporate
industrial side of it going?
That's a totally different
conversation.
But as a consumer and more
people being accepting of
handmade cigar smoking, I
actually think we're, I think
we're actually, I think we're
coming out of the ugliest part.
I think it's going to actually
get a little bit better.
Well, I hope, I hope you're
right 100%.
On that note, I think we're
going to end this.
Steve, thank you so much for
coming out.
I appreciate you for driving all
the way over here, flying all
the way out here, being a part
of this experience.
What how do you do guys?
What do you think?
Yeah, Yeah.
All right.
You've never done this before.
No live audience.
It's the first time ever that
we've done this, so I hope it
recorded.
Why?
I don't know.
We're just, you know, it's just
something that we've just kind
of naturally progressed over
time.
You know, we are all about
customer service and customer
experience here, right?
So, you know, we started these
last year.
We've done a couple of them
like, OK, how do we make it
better, right?
What, what can we do?
How do we add more value to, you
know, to make it a little more
intimate, to make it a little
more personal.
And you know, I was like, hey,
why don't we just put this out
and do an interesting.
Part because it gives it gives
you a chance to have a dialogue.
Yeah, absolutely.
Because one of the things I find
when I go to is like cigar
events, consumers are like
almost afraid to ask questions.
And the reality is that's the
part that I'm the best at.
I'm not really good at this.
The let me stand up and give you
a dog and pony.
I can't give the beautiful
speech where I'm going to have a
tear coming out of my eye.
So for me, the Q&A part is
actually the best part of it.
So it always works out well for
me personally when I'm in a, in
a group environment when
somebody asks me a question,
because then I can give an
answer whether that question be
an industry question or whether
it be a tobacco question or a
cigar manufacturing question.
So for me, I, I actually like
it.
You know what, now that I'm
going to do events, I'm just
bring you to everyone.
No problem.
Do this whole mic thing, Hey?
Listen, I can be your #2 we can
put Dave down 1.
You know, he'd be the number
three.
He's grossly overpaid.
Yeah, just just cut me in, you
know, give me half his pay and
then, you know, a little more.
We'll be good to go.
Perfect.
Love that.
You're fired laughing.
Let's not get crazy.
Let's just, you know, hey, you
know, there's.
You'll never watch since you
won't even.
Make a pay cut or something.
I mean I could clip this and tag
him if you want.
Please do.
No problem.
You're done, Dave.
That's it.
It's over.
It's over, buddy.
You're out.
All right, brother.
Well, again, thank you so much
for doing this and absolutely
appreciate you coming up, man.
All right.
Thanks guys.
Show Notes
This week Mikey sits down for an intimate talk during a special in store experience event with Steve Saka