How I did it: Don GauvreauPharmaFreak Technologies hits $10 million in sales in just four years
Business in Vancouver's "How I Did It" feature asks business leaders to explain in their own words how they achieved a business goal in the face of significant entrepreneurial challenges. In this week's issue, body-builder Don Gauvreau talks about PharmaFreak Technologies Inc., the dietary supplement maker he co-founded, and some of the pitfalls he faced in building annual company sales to $10 million in just four years.
"I worked in the industry with a bunch of different companies and was really always interested in the industry but got disheartened, so I decided to go back to school, and I became a teacher.
"I used to compete in body-building. I'm also a certified strength and conditioning specialist, and I have a lot of nutrition certifications. I did my undergraduate degree in kinesiology and I did my master's in science and education.
"I worked with [co-founder Alex Savva] when I got my first job in a supplement company. We always talked about starting our own company and doing our own product line. While I was teaching, I started to develop this product [a fat-burner].
"We launched our first product in January 2009 called Ripped Freak, a weight-loss product. Most of the startup money came from Alex. He had opened a fitness studio in Toronto. He had just finished paying off all his business loans but still had those lines of credit open, so we used those and we maxed out all the credit cards we had available to us.
"That was why it was so criti-cal in the beginning that we got paid on our sales. The biggest challenge has been finding the right distribution business partners. It's hard to find good, honest distributors.
"We had a distributor that sold product of ours that we weren't paid for. They owed us $270,000. We weren't happy with their service, so we terminated our contract with them, so they didn't think they had to pay us for the product they had already sold and that they continued to sell. They sued us first, for breaking a contract, so we counter-sued them. A year later, we won the claim and got a judgment for the full amount in 2011.
"Another challenge in the dietary supplement industry operating in the U.S is you get a lot of lawyers chasing after companies. When we were first starting out, we got a letter from a really prominent law firm in California stating that our product had caused their client to fail a drug test.
"They said methylsynephrine was in our product. They said, 'We're going to file a claim against you guys, unless you would like to make a settlement offer right now.' Really strong-arm tactics.
"We got pretty nervous, so we got an independent lab to test [the product] for that compound. All the tests came back negative. Our lawyer that we had to retain in California sent over the drug analysis and the other lawyer just replied and said, 'Oh it must have been a misunderstanding.'
"We have 25 to 30 products now. In terms of our sales, our first year we were at $250,000. Our second year we were at about $900,000. In our third year, we were at about $3.3 million. This most recent year we are right up around $10 million in sales." •