20 February 2012

5 Hour Energy CEO Makes Sense

First appeared in the Detroit Free Press
Who needs a PhD when a double dose of common sense will do?

That question has been kicking around in my head ever since the hour I spent last week with Manoj Bhargava, listening to some of most plain-spoken unconventional wisdom I'd heard in a long time.

As I wrote a couple days ago in another article, Bhargava, 58, of Farmington Hills, is the largely unknown founder and CEO of a growing business empire anchored by the 5-Hour Energy brand of dietary supplements.

He's no dummy, that's for sure, but the Princeton dropout also has a healthy distrust of so-called experts.

What follows are several Bhargava anecdotes that stuck with me:

Hire salespeople older than 50: He has a core sales staff of 20 who peddle most of the 9 million bottles of 5-Hour Energy shots the company produces per week. "All but one guy," he said, "are over 50 years old. I don't hire kids for sales."

And why not? "You've got to train them, teach them, it takes too much time, and they don't work as hard most of the time," Bhargava said. The older folks "hit the ground running, they know what they're doing, they work their tails off. Yeah, they get a little more money but so what? They're cheaper by half than the kids. And they're also not valued by large companies, which is amazing. So we take the opposite approach.

"I tell people we don't hire executives. We hire staff sergeants and master sergeants. The military without officers can run for months -- but without sergeants, not even one day. So we hire people who actually do stuff."

Why sell 16 ounces when two will do?: When he first sampled an energy drink at a trade show in 2003 that gave him the idea for the 5-Hour Energy shots, Bhargava couldn't fathom why it was packaged in 16-ounce bottles. "It didn't make any sense. It would be like selling Tylenol in 16-ounce bottles. I thought, you have to drink this whole thing? I just want to drink a couple swallows and go.

"So I reduced it down to two ounces -- actually we tried to reduce it down to one ounce, but you couldn't see the label it was so small." Today the brand is valued at about $4 billion.

Why make the stuff in Wabash, Ind.? "Anybody can build a plant; that doesn't take brains. Running one does," Bhargava said. So when 5-Hour Energy needed a production plant, he called Ed Snyder, a former partner in an Indiana plastics firm, and tapped him to run it.

"He's a very smart guy," Bhargava said, "the best plant operator I've ever met. So I said, 'Look, if you're not moving, I'm putting the plant next to your house.' "

Ask where the wife's family is from: "I'm here in Detroit for the same reason most guys are where they live," he said, "because it's where the wife's family is. In fact one of my questions in the interview process, if it's a guy, is, 'Where's your wife's family from?' Because if they're from Louisiana, he's leaving at some point." Then Bhargava smiled: "I know I'm going to get a lot of flak about that remark," he said.

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