Mo Siegel

With only a high school education and a dream to make his first million dollars by his 25th birthday, Mo Siegel started Celestial Seasonings in 1971. He was only 20 then. Today, at 33, his sales are approaching $30 million and he is confidently expecting to reach the $100 million mark by 1990 without giving up his unique values and principles described in this exclusive interview with PSP.

PSP: You made your first million dollars at age 26. How do you explain that?

Mo Siegel: I had an objective since about the age of six that by the age of 25 I would have made my first million. I think it was the first week after I turned 26 that I reached it on paper.

PSP: How old were you when you started Celestial Seasonings?

Mo Siegel: Twenty.

PSP: When you started, what kind of goals and dreams did you pursue?

Mo Siegel: From the very beginning, I would tell bankers, “I am out to build a $100 million company, and I am going to start with selling herb tea.” They thought I had lost my mind.

PSP: What made you decide to enter the herbal tea business?

Mo Siegel: Part of me wanted to go into an art oriented field like the movies or greeting cards, and another part of me was very health driven. I knew as a child that I was going to be a businessman, and I’ve always had an inclination from a very young age for being philosophical. I finally decided that I could be much more useful as a person by being dedicated to health.

PSP: It seems like you had a good understanding of that market.

Mo Seigel; I think I am fairly strategic when I look at a business. I saw the health opportunity very early. I looked at the European tea market and noticed that herb teas sold well, but Americans hadn’t used them yet. I saw that more and more people were getting interested in health. They began to exercise, they took vitamins and became more health conscious.

PSP: When you started Celestial Seasonings back in 1971, how did people feel about herb teas?

Mo Siegel: When I started, people still thought that herb teas were weird. In the consumer’s mind herb tea didn’t taste very good and you only drank it when you were sick. I wanted to make herb tea that tasted good and sell people on drinking it all the time.

PSP: You must have faced a number of challenges.

Mo Siegel: I remember when I went with my gunnysack collecting herbs in the mountains, many thought of me as an odd guy. But that’s the price you pay when you introduce a new idea. Dr. Ken Cooper, the father of aerobics, told me once that when he went to Dallas to promote his fitness program, they thought he had lost his marbles. When I was out picking tea, I was the butt of countless Euell Gibbons jokes.

PSP: They thought you were a health nut?

Mo Siegel: No, I was a fanatic then; I am a health nut now.

PSP: You have mellowed.

Mo Siegel: Yes. In Fact, I jokingly say these days that the reason I exercise, take my vitamins, eat my alfalfa sprouts and drink my herb tea is for one simple reason: to be able to eat as much Haagen-Daaz ice cream as I want.

PSP: How did you sell your herb teas back when you started?

Mo Siegel: I made cold calls on health foot stores in my old Datsun. I love selling. I feel that I am doing something good for other people just by selling our product.

PSP: But are you only motivated by being good to other people?

Mo Siegel: There is a battle that I go through sometimes. There is part of me that clearly wants to make money, big money and fairly fast. This part of me is motivated by achievement and ambition. The other part is altruistic: it’s motivated by the need to do good.

PSP: What would you consider to be the best approach in selling?

Mo Siegel: I think it’s not hard to sell if you are benefit oriented. I believe that nobody buys anything if there isn’t a benefit. I always say to our people, “If you can’t give your customer a WIFM–the what’s in it for me–don’t show up.” To make your sales calls meaningful, there should be a specific reason for the call besides the WIFM. Like something new, something different. I also have a rule in selling, that you should always make a friend.

PSP: Build relationships.

Mo Siegel: Yes, make a friend, because if you don’t get the sale, at least you’ve got a friend. Be close to your customers, care about them, service their needs.

PSP: To what do you attribute your success?

Mo Siegel: I think that you either follow the basic principles or you are going to get nailed. There are some rules that work almost all the time. If you don’t set goals, you don’t get anywhere. That’s so basic. The thing that I enjoy in my business is figuring out the overall mission; then establishing goals, developing the strategies; then the action plans and the calendar by which they must be completed. Another basic principle would be to be persistent in higher work. To work smarter. Follow your priorities. Do number one, two and three earliest in the day. I go as far as putting time percentages next to the tasks. For example, I may decide to invest 40% of the working day in priority #1. At the end of the day I score how I’ve done for the day.

PSP: So you know how well you’ve performed.

Mo Siegel: I do the same with our business. I use the computer to measure our performance and compare it to that of other businesses. We are members of the Strategic Planning Institute. According to their data, we rank in the upper 98% for productivity of all 2,000 companies that have been plugged into that model.

PSP: Let’s go back to your initial goal to build a $100 million company. Where are you today?

Mo Seigel: We’re approaching $30 million.

PSP: You said in a recent interview that you expect to reach $100 million by 1990.

Mo Siegel: We are working on it.

PSP: What was your first major obstacle after you got your business started? Your first doubt that you’d ever reach your goals?

Mo Seigel: I never thought that. Never. But we sure had a lot of obstacles. Although I finally concluded that the greatest affliction in life is to never have been afflicted. I give talks ever so often on what I call the ten principles of success. One of them is the acceptance of failure and persistence toward success. If you use a clear set of goals, you will reach about 85% of them, and 15% will be disappointments.

PSP: How about your first major disappointment?

Mo Siegel: Well, we once contracted a peppermint crop in Wisconsin because we were dissatisfied with our European imports. We bought the field standing and it rained for two weeks in August. Then a frost hit and we lost most of the crop. We almost went broke. That was our first major business failure. Nobody enjoys failing, but we can learn from what we do wrong, and in the process we find out how to get better.

PSP: You use lemons to make lemonade.

Mo Siegel: There are a lot of people who don’t understand this principle. When they fail, they give up and seek shelter. For example, we worked over two years on developing a Chamomile shampoo. We went through seven chemists to get the product that we wanted. We could have given up, but we persisted and asked, “What did we learn from the last failure? How can we do better?”

PSP: What quality standards were you trying to reach?

Mo Siegel: Very simple. We said that we wouldn’t market our new product unless we could beat our competition in a blind test.

PSP: Speaking of competition. Not too long ago you canceled a fully developed advertising campaign that compared your new tea against Lipton’s. According to a New York Times article, the tests showed that you could beat competition in the blind tests, but you decided against the entire campaign.

Mo Siegel: Yes, our ad agency and our marketing people had all the research and said it was the right thing to do. It was very tempting because our key competitor sells black tea. That’s a $900 million market. The herb tea market is only about $90 million. So there was an element of greed. It took a lot of soul searching to clarify what our real values were. Finally, I decided that I did not want to make a fortune by bad-mouthing anybody. There were so many good things about our products we could say. I could not take it any longer and canceled the program. I realized that it was a very good decision that led me to grow further.

PSP: It made you question your values.

Mo Siegel: Yes, I see that competitive pressures bring more and more challenges to basic values. There are very simple reasons for this. The Gross National Product in the decade of the 70’s grew only about 1.7% in real dollars. From the best projections I have seen, the growth in the decade of the 80’s will be even lower, about 1.3%. These trends show that we are dealing with a basically flat economy. All we are doing is changing and reshuffling. In our business we are trying to change the market from coffee and black tea to herb tea. The pressure on business giants is growing and the competitive nature of American business is increasing rapidly. I think that things will get very odd for a while until we learn how to be a little more cooperative.

PSP: How do you react when a competitor like Lipton’s introduces a new line of herb teas? I see you as fairly competitive.

Mo Siegel: I can’t stand it, and I won’t stop improving ours until we beat them. You’re right, I am competitive. But I am only concerned with two areas: Customer and Product. I ask, “Is the customer happy?” and “Are we making the best product?” That’s all I care about.

PSP: So instead of attacking the competition, you focus your energies on serving your customers better.

Mo Siegel: Absolutely.

PSP: What is it that you like most about your business?

Mo Siegel: I want to establish a value system in our organization so that if I got hit on my bike someday the value system would stay and that they company would do well based on these values.

PSP: What components would you include in this system?

Mo Siegel: We’ve already developed a very detailed belief statement. You could compare it to four legs on a stool. The first leg is our love of our product. We are a product-driven company, we want to develop the best products. We are improving three of our four top sellers this year. Improving–and they weren’t bad. People around here often ask, “If it isn’t broken–why fix it?” To me, what counts is not how good our products are, but how good they can be. We constantly test our teas with thousands of people a year. We will not let anyone make a better cup of tea.

PSP: What’s your second leg?

Mo Siegel: Our love of our customers and consumers. Our customers are the distributors. The consumer is the end user. We feel that if we can’t sell benefits to the consumer, we shouldn’t be in the business. We love to fill consumers’ needs and benefit people. We are getting over two hundred letters from consumers per week telling us that we’re on the right track.

PSP: If you don’t serve a need, you won’t be needed.

Mo Siegel: If you’re not filling needs, then you’re tricking people. I’d rather die broke and be useful than make all the money in the world seeking useless things. Our third leg is love of art and beauty. For example, we’ve just developed this new package for restaurants and its probably the most beautiful tea package anybody has ever done. Four-color artwork on each packet. We use some of the best artists in the world for our packaging. The fourth leg is based on the dignity of the individual. If you develop work systems that dignify work and dignify individuals, life will certainly become more pleasant and also more productive. I guess some of my biggest disappointments have been in this area during my entrepreneur years. I’ve learned since that, as a manager, you should ride on people’s shoulders, not around their necks.

PSP: You don’t have a business school education.

Mo Siegel: No, I have only a high school education, but I think that if you want to have a good life, you have to learn from birth to the grave. One of my 10 rules of success is that you’ve got to learn and grow. I won’t ride my bike to work without listening to educational tapes. I read all the time. I take classes. I just got into the Young Presidents Organization.

PSP: What tapes do you listen to?

Mo Siegel: I love Dr. Norman Vincent Peale. I have over thirty of his cassettes. I enjoy Peter Drucker and Newstrack and executive cassette service.

PSP: The best education is an open mind.

Mo Siegel: Yes, and to be able to use other people’s minds. I have many heroes who have inspired me to grow in my business. For example, next week I will send out postcards to some 1,500 customers thanking them for their efforts. I hope by this summer I will have 10,000 customers on my postcard mailing list. I thought of it after I read Joe Girard and Mary Kay.

PSP: Your employees receive a great deal of training.

Mo Siegel: Yes, I want my managers to have at least thirty hours of training per year. Salespeople should probably have more. I keep suggesting that they all should have cassette players in their cars, so that when they are stuck in traffic, they are getting smart.

PSP: You developed a comprehensive value system for your company. How about your values as a person?

Mo Siegel: I think the greatest danger a person can have in his or her life is to become “I”-important. The greatest satisfaction a person can have is to become selfless. People who give are the happiest people in the world, not the people who take.

PSP: How would money fit into this philosophy?

Mo Siegel: I had this thought about my own values and I pictured that I had died and gone to heaven. The ancients of days pulled out the record books and they asked what I had done with my life. I said that I made a lot of money. They thumbed through the books and said that they didn’t see that. I said that I sold more herb teas than anybody else, but they couldn’t see that either. Then I said that I dedicated my life to making people healthy; I dedicated my life to being a true friend to people, a giving person; I dedicated my life to my family, and they said that they saw that. When I went through this experience, I realized that you should check your values very carefully and do what is worthwhile to the world and not just worthwhile to you. A selfish life is a life not worth having.

PSP: Meaning comes before money.

Mo Siegel: I think so.

PSP: What’s your definition of success?

Mo Siegel: As a corporation, measure it in sales, profits and dignity of the individual. As a person, of all the greatest human achievements, the raising of a good family is the greatest achievement. You could build any size corporation you could ever imagine and it would not equal the success of raising good children. That’s the highest task a person could do in life.

PSP: You have been raised by an older sister?

Mo Siegel: Yes, my mother died when I was two years old.

PSP: How large was your family?

Mo Siegel: Four kids; two older sisters and one younger sister.

PSP: What did your father do?

Mo Siegel: He owned a pre-KMart kind of store. He was an auctioneer. He did pretty well. He was a real driver. He worked like crazy all the time. He always thought that I was lazy. I do like to say that I never got one penny from him to build Celestial Seasonings.

PSP: You had a tough childhood.

Mo Siegel: I think I did. My father was such a driver. He was very hard for me to get along with. He had his set of views of the world. Anything that was different from those was not tolerated.

PSP: He sounds like a father I know.

Mo Siegel: When I turned 17, there was no further financial aid or anything else, because my father and I had such diametric opposite views of religion. I ended up having such a deep Christian faith, while he’s Jewish.

PSP: You have dealt with a number of big disappointment and had to grow up very fast.

Mo Siegel: Yes, I have a painting of Abraham Lincoln in my office. He probably had about as many disappointments as anybody. But I believe that the disappointment hardest to bear are those which never come. It’s never as bad as you anticipate it to be. I have always believed that you have to accept disappointments and failures in life. It’s just part of the formula if you want to succeed. You’ve got to understand it and work with it.

PSP: How did you learn to accept disappointments?

Mo Siegel: I am basically religious. My views are very similar to Dr. Peale’s. The foundation of his faith is not in materialism, it’s not faith in people, but faith in God. I believe that people become greater by being more God-like rather than by becoming themselves. I don’t believe that the self is everything or that by fulfilling yourself you can be this great individual.

PSP: How would you apply this faith to the reality of business?

Mo Siegel: We’ll, take IBM as an example. Thomas Watson Sr. said, “We will serve our customers better than any other corporation in the world.” He made a philosophical statement that rallied the troops. He didn’t say we are going to do really well and get rich. Or, it’s going to be fun and you are all going to drive great cars. The point is, when an organization of people can attach themselves to something greater than themselves, the greater good comes of it. They perform much better, they go the extra mile because it’s more fulfilling and happier.

PSP: It sets up a new perspective. You won’t grow taller if you become the measure of all things. Are you saying that Abraham Maslow’s theory of self-actualization is not necessarily motivating?

Mo Siegel: I do like Maslow. What we need to learn is to balance ego-driven motivation and service motivation. When Watson said that he wanted to service his customers better, he revealed a lot of human ambition. He was able to reconcile his strong ambition to succeed with the desire to do something useful and valuable to other people. My goal is to achieve a balance between the two conflicting forces–a balance of which the giving is the greater force.

PSP: Thank you for giving us this interview.