Justin Gagnon quit a secure IT job, moved in with his parents, and turned their catering business into a $4 million provider of healthy school lunches.

Entrepreneur: Justin Gagnon, 31

Background: After graduating from the University of Notre Dame in 2000 with a bachelor’s degree in business administration, Gagnon worked for Level 3 Communications (LVLT) in Broomfield, Colo., building order-entry systems. During a short visit home to Danville, Calif., in 2003, to help his father build a Web site for the family catering business, Gagnon came up with the idea of transforming it into a full-time provider of healthy lunches delivered to local schools. He quit his job, moved home, and recruited two college buddies to help him build the business.

The Company: Gagnon and his friends, Ryan Mariotti and Keith Cosbey, each invested $6,250 into launching Children’s Choice; Gagnon’s parents put in an additional $6,250 and took a 25% ownership stake. In 2003, its first year, the fledgling business served about 550 lunches a day to eight schools in the San Francisco Bay Area and took in $400,000 in revenue. Today, its 90 employees prepare an average of 10,000 lunches a day for 122 schools throughout California.

Revenue: $3.9 million in 2008

His journal: If it wasn’t for my dad continually pestering me to come to California with a couple of friends and “build a Web site” for his school lunch business, I might have never taken the leap. But it was his pushing that made me curious about what was going on in his industry. I found that there was no one really focusing on school lunch. Everyone in foodservice did something else first—a restaurant, a deli, a caterer—and none of them had the resources or the dedication to truly focus on school lunch the way I thought it needed to be done.

When it comes to school lunches there are three distinct stakeholders: schools, parents, and kids. Schools want hands-off administration, no capital investment, and happy parents. Parents want convenient ordering, nutritional meals at a relative value, and happy kids. Kids are happy when they are given a say in what they’re eating and when what they’re eating flat-out tastes good. I knew that building a company positioned to exceed all of these expectations would be a huge undertaking. I also knew I couldn’t do it by myself.

I asked Ryan Mariotti and Keith Cosbey, two of my best friends from college, to help me refine the idea. In 2003 we flew to California and pitched my parents on spinning off the school lunch portion of their small catering company into an enterprise focused on serving healthful, kid-friendly lunches to schools that lacked the infrastructure and expertise to do it themselves. After sitting speechless for two straight hours during our pitch, my parents eventually realized we were serious about leaving our secure jobs as IT professionals to learn kid catering from the ground up. They agreed to teach us everything they knew.

We started off with eight schools that my parents already serviced but the cash flow didn’t even come close to sustaining three new partners, let alone retaining earnings for future growth. We all moved in with my parents and spent the first couple of years barely paying ourselves enough to warrant the paper the checks were printed on. We would drag ourselves into the kitchen at 5 a.m. to prep and cook food, visit school sites during the lunch hour, and eventually end our days in our “office” [a room that adjoined Keith's bedroom]. There we built our IT systems and discussed every aspect of the business until midnight or later. The next day we got up and did it all over again.

As a startup, we experienced one of our most deflating lessons after discovering that no matter how hard we tried to build accurate assumptions into our business model, the truth always seemed to be far from our speculations. For starters, we thought that with greater volume came more purchasing power, and with more purchasing power came lower prices.

What we failed to factor in, however, was that my parents were procuring many of their ingredients from Costco (COST) and similar restaurant supply houses that already offered rock-bottom prices. As our volume grew, the daily task of going to Costco together to buy product for the following day became unsustainable, and we knew we had to look to food-service distributors. We were shocked to find out how much more our products cost through these channels—and how well Costco and others had negotiated their pricing. Not only did we not save any money, we spent quite a bit more through these distribution channels. It took years of substantial growth to even come close to big-box pricing.

One advantage we did have was that our collective expertise was in IT and we were able to realize efficiencies by streamlining many manual processes in the business. We built an IT system that would scale and grow with our business; it was far more sophisticated than would be expected of a company our size. That was the easy part. The hard part was figuring out how to scale the operation to match the sophistication of our technology.

When we first came on board, the distribution model for the meals was based on parents from our schools working for us part-time. They would pick up the lunches from our central kitchen and deliver them to the schools in thermal bags. As we added more schools, we realized there were a whole host of issues around scaling with this delivery model—not least, finding replacement drivers to accommodate the field trip schedules of our employees and finding a place to park all of those SUVs. Developing a model to distribute our meals in customized, heated transport ovens and utilizing truck distribution was costly. As sophisticated as our systems are, we haven’t yet found a way to automate our trucks to drive themselves.

Our business plan also had major flaws in our growth projections. While we were lucky to have some level of historical financials from the years my parents ran their program, we were too inexperienced as entrepreneurs to understand that profitability does not scale linearly. We knew that we would have to take on additional overhead as we grew, but we vastly underestimated just how much the timing of the overhead would impact profitability at different stages of the business. It turns out that the profitability of an independent operator is actually quite good if the individual keeps busy, as the business rests almost solely on his or her shoulders. But eventually, it’s not just you in your business. It’s you managing people. And then you are managing people who manage people. And then you are directing people who manage people who manage people.

At each stage of the game, you are most profitable the moment before your volume pushes you into needing the next rung of management—at which time your profitability dips yet again. The key is deciding how large you really want your business to become, and how to maximize all of your resources at that stage without overburdening them. We haven’t targeted a revenue figure for our optimal size yet, but we envision this being the point at which we all can focus on the job functions we love most, day in and day out. I would strategize on new ways to engage kids in their relationship with food, Keith would assess new markets for our services and roll our program out, and Ryan would spend his days focusing on building IT systems that better support our customers and the company’s daily work. We would leave the rest to everyone else. Until that day comes, what keeps us going is the fact that we all love our jobs, we’re used to wearing many hats, and we have a fairly high threshold for pain.

As I think back on our story, I almost wonder how in the heck we survived with so little experience in the industry and with a business plan that, quite frankly, was fundamentally flawed in so many ways. A smarter person than I might have foreseen all of these shortcomings on paper and pulled the plug on the idea before it even got off the ground. And that would have been a tragic mistake. Don’t misunderstand me on this point—business plans have value in helping you work through your ideas in the concept stage and keeping you on track toward your goals once you’re up and going. But while a business plan may win you a competition, it’s not going to run your business for you, and it certainly won’t be the final determining factor in your success. That, ladies and gentlemen, is up to you.

—Edited by Stacy Perman

[via: BusinessWeek]

Just as luxury resort group Six Senses was ahead of the curve with its sexy castaway fantasy resort in the Maldives, Soneva Fushi, Six Senses Destination Spa Phuket is a spa fantasy that lasts for days, even weeks, depending how long you want to stay. We only had four days but that was enough time to understand why this destination spa is so popular, it goes way beyond pampering. The experience starts as soon as you arrive of the private island of Naka Yai, just of the north-east coast of Phuket in Phang Nga Bay. There’s no lobby, no queues, just walk up the postcard perfect jetty and head straight for the spa for an extensive assessment.

A daily programme is worked out that must include at least two treatments each day. From there, a personal butler takes you to your beach villa that comes with private pool, steamroom, indoor/outdoor show, sea views and a luxe bed that ended up providing the best sleep in memory. This is heaven for spa trekkers. No stress, complete relaxation, super healthy organic food and not one but four spas – Thai, Indian, Indonesian and Chinese – to experience.

What to wear is yet another thing that you don’t have to worry about here. Everyone wears organic cotton pyjamas so save the Pucci and Gucci for Mykonos. These PJs are perfect in the tropical heat. Six Senses is very good at shedding away all the chaos of modern life.

There’s no internet, no news channels (just movies from their library), moving from spa appointment, to meals and back to the villa. The place makes you so aware of how you live, what you put into your body, stress levels and what is really feels to be relaxed.

It would be easy to spend the whole stay holed up in the villa. The aesthetic is Fred Flintstone meets very stylish designer, no sharp edges, nothing overly processed. it’s all about beautiful organic forms and a connection to the natural world.

The rooms feature signs made with coconut husks, sugar palm leaf thatching, earthy tones, textured walls and natural light. There are 61 villas and two ubervillas – the Enclave and the Retreat on the Hill that regularly house royalty and megawatt celebrities in their palatial compounds.

Here, most of the food is grown on the island or sourced locally. Meal options include a “fishetarian” diet or raw foods (think raw vegan food -nothing over 46 degrees Celsius). Buffet breakfast includes a line up of fresh juices for every cure and every day the menu changes. Fat content and calories are noted. Days quickly fall into a rhythm of treatments, organic food, workout sessions and alternative therapies from iridology to blood analysis. The day is followed by perfect rest and deep, deep sleep. Be warned, it can be hard to get to early morning yoga or kayaking because the bed is so comfortable.

Each spa its own little universe, with a gateway into sublime interiors, with surrounding outdoor spaces perfectly complementing the experience. It is so far removed from the concept of the spa with a fountain out front, rows of treatment rooms out the back. Six Senses has gone all out – the ground level Thai-style massage beds, an Indian colonics chambre, the perfect Chinese bamboo garden and pavilion for the post-treatment cup of tea. It would take weeks to try every treatment and to add to the top therapists on staff, internationally recognised trainers and practitioners jet in for guest residencies too.

By day three, there is no such thing as stress, just complete relaxation. I only had four days here, many extend their stay and cancel other plans and it’s easy to see why. The destination spa has an incredible future for travellers looking for a total escape, no tweets, no email, no junk food. Six Senses also understands that a spa doesn’t have to mean one ‘flavor’ of treatment. At Naka Yai, recent visiting practitioners include triathletes, pilates, reiki masters and top personal trainers. This fresh approach to spas is also happening at other Six Senses spas including a new Paris property opening on the rue de Castiglione next month. The brand is continuing on from success at resorts in Doha, Barcelona, Portugal, Jordan, Oman and the Maldives. The Six Senses brand is set to conquer the spa world again with a palatial spa opening in Marrakech in Morocco that opens in 2011. Can’t wait. – Bill Tikos

[via: TheCoolHunter]

Things were going so well for Ron Grover in his piece about MGM’s slow plunge toward insolvency. There was the news that the studio’s creditors declined an equity stake in the company as part of its restructuring, and then, once again, there were those mind-blowing figures we’re so used to reading in any discussion of MGM’s flagging fortunes: $3.7 billion in debt, with the creditors balking at another $1.2 billion in new debt to help get the studio’s production slate going. Instead, they want a buyer — and they’re not above selling the Lion for parts, including The Hobbit, the vast film library and the James Bond franchise. Which is where it gets a little tricky.

According to Grover’s report, recently installed studio CEO Stephen Cooper expressed doubt that he could “get more than $1.5 billion for the studio, which is roughly what MGM’s rights to the James Bond franchise alone might be worth.” That stat isn’t attributed to any specific valuation data or comparables, but let’s just say the number, like its source, is probably high.

Not that you can’t appreciate a little modest inflation in the press to help get the bidding started behind the scenes. Still: $1.5 billion? The last five Bond films grossed a combined $2.3 billion globally, which sounds great until you realize it took 11 years to generate it and MGM only keeps roughly half of it. Add on maybe another $50-$80 million annually going forward based on when a new DVD is released (and whatever other reissues you’ve got), and you’re still waiting almost a generation to turn a actual profit — by which time you’ve recast the role at least twice, and who knows if a 60-year-old franchise can even work. Nothing’s come close. Of course, this all would also imply that the studio — which was valued at $5 billion in 2004 — has lost all of its value outside the Bond franchise, which seems like more than a stretch for an institution with more than 4,000 movies sitting in its vault.

So what’s Bond really worth? Who knows? $500 million? $600 million? As suggested last week with another high-gloss Hollywood franchise on the block, throw it on eBay and find out. Anything that preserves MGM’s magnificent Hot Tub Time Machine for a timely January release is worth it.

[via: http://www.movieline.com/2009/11/hilarious-exaggeration-of-the-day-the-james-bond-franchise-is-worth-15-billion.php#mce_temp_url#]

With congress set to raise the limit on the national debt, let’s take a look at just how much money that is.
With a total statutory debt limit of $12.1 trillion ($12,100,000,000,000) and the U.S. population at 304 million (304,000,000), the debt per American is $39,800.

The U.S. debt is the total amount of money the government has borrowed (from its people and foreigners) in order to pay for past government spending. Some of the money has been invested in infrastructure like roads and education, while the rest has gone into political pork barrel projects, subsidies or social causes.

One way to think about the $39,000 is that it is the amount that the U.S. government has been charged on its credit card. If it is able to make more than the minimum payments with increased tax revenue and thus reduce its overall debt, then borrowing can be a good thing. But if it is unable, then the payments become a heavy burden on the government and the next generation.

Are you ready to pay your portion off?

In Food, Inc., filmmaker Robert Kenner lifts the veil on our nation’s food industry, exposing the highly mechanized underbelly that has been hidden from the American consumer with the consent of our government’s regulatory agencies, USDA and FDA. Our nation’s food supply is now controlled by a handful of corporations that often put profit ahead of consumer health, the livelihood of the American farmer, the safety of workers and our own environment. We have bigger-breasted chickens, the perfect pork chop, herbicide-resistant soybean seeds, even tomatoes that won’t go bad, but we also have new strains of E. coli—the harmful bacteria that causes illness for an estimated 73,000 Americans annually. We are riddled with widespread obesity, particularly among children, and an epidemic level of diabetes among adults.

Featuring interviews with such experts as Eric Schlosser (Fast Food Nation), Michael Pollan (The Omnivore’s Dilemma, In Defense of Food: An Eater’s Manifesto) along with forward thinking social entrepreneurs like Stonyfield’s Gary Hirshberg and Polyface Farms’ Joel Salatin, Food, Inc. reveals surprising—and often shocking truths—about what we eat, how it’s produced, who we have become as a nation and where we are going from here.

If celebrity patrons are an indicator of a hotel’s popularity, the Maldives super-lux Huvafen Fushi is about as hot as it gets. George Clooney popped in for lunch last month, Kate Moss partied in her Ocean Villa, Tom Cruise and Katie Holmes booked in a massage during their honeymoon, Alexander McQueen had left when I arrived and when I left the island, Stefano Gabbana of Dolce & Gabbana and John Galliano were set to arrive (separately).

Trendsetting Huvafen Fushi has been raising the benchmark since its first inception two years ago. Opening its doors to feature the world’s first underwater spa, Huvafen Fushi has since earned its spot on the coveted Conde Nast Traveller MagazinesUK and US Hot List.

This discreetly luxurious, contemporary retreat is located on its own lagoon on a tiny island in North Male Atoll. I arrived late into the night direct from Singapore, the flight doesn’t get in until 10pm (note: book Emirates instead to arrive during the day).

When I was escorted into my over-water bungalow, I felt like I’d walked into an Apple store/Armani showroom, with a bed in the middle surrounded by all my favorite gadgets. Surround sound Bose indoor/outdoor music system, Plasma TV screens, Bang & Olufsen phones, iPod Nano with an incredible selection of music that had already been installed, a separate massive bath which overlooks the ocean, my own private plunge pool, oversized king size bed, Frette linen, designer furniture (including pieces by Frank Gehry) electronic curtains, waterfall shower, the list goes on and on.

Waking up in the Maldives is something everyone should experience before they die. The view from the bed in my room overlooked the plunge pool which overlooks the Ocean. It’s an incredible sight, serious postcard material.

The day at Huvafen Fushi starts off with a buffet breakfast in Celcius, luxe-but-laid-back dining on a white sand floored deck branching out over the lagoon. Next it’s off snorkeling where you’ll see the most amazing colored coral and sea life including sting rays. It takes approximately 3 hours before you realize you have a tan, the sun is extremely bright and even with 30+ sunblock, you tan quite fast and you notice tan lines by the time you’ve finished breakfast.

My day was busy, yet I did nothing. I snorkeled, I tanned, I read, I snorkeled again, I read more, I walked over to the over-water gym, and walked back out (are you kidding, who can face the gym on holidays) and before I knew it, the sun was already setting.  So I headed to Umbar to order a cocktail and sit back in the seriously comfy lounge chairs and watch the sunset while the chill band played, very Cafe Del Mar. The music, the sunset, the people, the atmosphere  – it’s an amazing vibe. Dinner at Salt restaurant (barefoot) is a highlight. The food was fine dining at its best, as good as anything you’ll find in the world’s best restaurants.

Famously, the highest point in the Maldives is only four meters above sea level, so perhaps its not surprising that the Huvafen spa is underwater, something totally exclusive to this resort.  It’s like entering a glamorous fishbowl where you are the main attraction to the fish. It’s the perfect environment for a massage. I chose the Maldivian monsoon ritual massage and it defies description. All I can say is that I don’t think I will ever be able to top the experience. Incredible is an understatement.

[via: TheCoolHunter]

Reporting from Las Vegas - What would appear to be a natural — a Manny Pacquiao-Floyd Mayweather Jr. super fight — might not be. Egos, greed and grudges could get in the way.

“It’s a simple negotiation,” Ross Greenburg, HBO Sports president, said minutes after Pacquiao knocked down welterweight world champion Miguel Cotto twice en route to a 12th-round technical knockout Saturday.

“There’s so much money to be made. If it doesn’t happen, there’ll be a revolt. Nothing else is acceptable, and I’m speaking on behalf of the American public and the sport itself.”

But obstacles exist. Will the rich rivals fight over who gets more than a 50% cut of the purse? Of course. Can Mayweather and Bob Arum, Pacquiao’s promoter, set aside their deep personal dislike? Perhaps.

Richard Schaefer, the Golden Boy Promotions chief executive who has promoted Mayweather’s last three fights, expressed confidence that he’d be able to work with Arum to make a Mayweather-Pacquiao fight.

Schaefer told The Times he planned to speak today with Mayweather and Arum. Pacquiao said, “It’s my job to fight. It’s my promoter’s job to pick the fight.”

Said Schaefer: “Bob and me — how often have we failed to make a big fight?”

Yet, that deal is expected to require a diplomatic effort on a scale usually reserved for the State Department.

Mayweather (40-0, 25 knockouts) formerly fought for Arum’s promotional company Top Rank after being an Olympian but left, saying he felt obscured by the popularity of former stablemate Oscar De La Hoya. The mega paydays that followed, against De La Hoya, Ricky Hatton and Juan Manuel Marquez, have emboldened the unbeaten star’s public statements that Arum shorts his fighters, including Pacquiao (50-3-2, 38 KOs).

Arum bluntly said this week that a deal will not hinge on whether he likes Mayweather — “and I don’t,” he said.

Pacquiao, usually polite, this month directed some verbal blows at Mayweather, saying he doesn’t think the fight will happen because of Mayweather’s attitude.

“I’m sure he doesn’t want to fight me,” Pacquiao said. “With Floyd, boxing is like a business. He doesn’t care about the people around him watching. He doesn’t care if the fight is boring. As long as the fight is over and he gets the money, it’s good. I want the people to be happy. If I was in the audience, I’m going to watch the boxing because it’s a good fight.”

Mayweather hasn’t launched back, but he does strongly believe he’s the world’s best fighter and has made it pretty clear he deserves the larger purse. He was considered the world’s top pound-for-pound fighter before retiring for more than a year and watching Pacquiao seize the title with the battering of De La Hoya, Hatton and Cotto.

Cotto went to the hospital after suffering facial cuts in the loss but said he planned to fight again, with possible foes being Shane Mosley or Antonio Margarito.

As for Pacquiao-Mayweather. . . .

“All we can do is try to encourage both sides to sit at a table and hammer out a deal,” said Greenburg, who likened the situation to the 1971 deal between Muhammad Ali and Joe Frazier, when Ali returned from boxing exile to face the champion Frazier. They settled on a 50-50 purse split of $5 million, Greenburg said.

Why not 50-50 again, with so much cash available?

Mayweather and Pacquiao have displayed tremendous greed. Pacquiao kept asking for more money to fight Hatton in May until the Hatton camp nearly walked.

Now, Pacquiao probably will be able to say his fight with Cotto easily surpassed Mayweather’s million-seller against Juan Manuel Marquez in September. But Schaefer already has a reply.

“How did Pacquiao-Marquez do versus Mayweather-Marquez? How did Pacquiao-Oscar do versus Floyd-Oscar?” Schaefer said, well aware of the disparity.

Greenburg made it clear: “Floyd’s calling the shots for this fight to happen.”

And Arum’s matchmaker at Top Rank, Bruce Trampler, said it’s naive to believe intangibles like “the good of boxing” will influence the deal.

“This has nothing to do with that,” Trampler said. “These are two businessmen who are going to do what’s best for themselves.”

Said Schaefer: “Getting them together is a mega-fight that has to be made. We’d all have to be morons to not let this happen.”

[via: LA Times]

It seems as if not even Hollywood is exempt from the fact that life has a tendency to come full circle. Nicolas Cage saw his finances crumble this year, leaving the actor currently facing a tax bill of over $5 million as previously reported here. While Cage is in the process of suing his former financial advisor for mismanaging his funds, it looks like his dire financial straits may be temporarily fixed, and by none other than fellow A-lister Johnny Depp.

In a true “that’s what friends are for” move, the Public Enemies star has reportedly called his old friend to let him know that he will front “whatever he needs” to get him out of this crisis. Depp is generous in his financial and emotional support, possibly seeing the move as a way to pay Cage back for launching Depp’s stellar career: It was Nic who arranged for Depp, then an unknown musician, to meet with his agent, which led him to A Nightmare on Elm Street.

[Via: StyleCaster.com]

The Air Jordan legacy goes the revolutionary route with next year’s Air Jordan 2010. The most obvious distinction is a massive transparent window through the middle of the shoe as a representation of Michael Jordan’s on-court prowess of “seeing through opponents”. The shoe’s collar is also cut disproportionately with the medial side being higher up. The Air Jordan 2010 will release on February 13th, 2010.

JORDAN BRAND LAUNCHES THE AIR JORDAN 2010
Celebrating 25 Years of Excellence

BEAVERTON, OR (November 11, 2009) – Today, Jordan Brand, a division of NIKE, Inc., announced the upcoming launch of its 25th anniversary AIR JORDAN 2010 shoe. Celebrating a quarter-century of innovative design and genre-inspiring style, Jordan Brand created the AIR JORDAN 2010 to pay respect to the legacy of Michael Jordan in basketball while passing on the heritage of the sport to the talented Team Jordan athletes, such as Dwyane Wade, who will be the first to debut the AIR JORDAN 2010.

“The celebration of the AIR JORDAN 2010 and our 25th anniversary are the pinnacle of a year full of milestones for me,” said Michael Jordan. “With each shoe, consumers have pushed me to take the next AIR JORDAN beyond their wildest imagination. The AIR JORDAN 2010 marks the future of Jordan Brand and proves there are no limits to what this Brand is capable of creating.”

Acclaimed shoe designers Tinker Hatfield, Vice President of Special Projects/Design for NIKE and Mark Smith, Creative Director for Jordan Brand, collaborated with Michael Jordan on the AIR JORDAN 2010, taking the literal interpretation of Jordan’s ability to see through his opponents by creating the Brand’s first see-through performance basketball shoe featuring a unique transparent thermoplastic urethane (TPU) window.

“The AIR JORDAN 2010 pays homage to Jordan’s ability to know his opponents next move while only giving hints of his ability and allowing the players to only see what he wanted them to see on the court,” said Tinker Hatfield. “His keen instinct for anticipating his challengers’ next move and disguising his own techniques are just a few of the attributes that led to him being named the greatest basketball player ever to play the game.”

To assist all basketball players’ game while wearing the shoe, Hatfield and Smith also designed the AIR JORDAN 2010 with a revolutionary new concept to performance basketball footwear – a layered toe construction that has an independent forefoot support cover. This innovative design technique allows the AIR JORDAN 2010 to mimic an actual foot’s flexibility and movement without being restricted by the shoe’s structures, assisting in a player’s ability to be more agile in the game.

Since 1984 when Jordan wore the first AIR JORDAN sneaker, AIR JORDAN has become one of the world’s most recognizable franchises known for its signature Jumpman logo, innovative performance technology and fashion-forward style memorializing the sneakers into popular culture history. Jordan Brand has adapted the AIR JORDAN to the changing fashion landscape in its 25 years, utilizing the importance of green technology by making the AIR JORDAN XX3, AIR JORDAN 2009 and now the AIR JORDAN 2010 under Nike’s Considered Design ethos of combining sustainability with performance and innovation.

Jordan Brand launches the AIR JORDAN 2010 nationwide on Saturday, February 13, 2010 for a suggested retail price of $170. Retailer information can be found at www.Jumpman23.com.