Entrepreneurs Who Thrive on Risky BusinessAmy S. Choi
We all know that entrepreneurs find opportunity where others see only roadblocks. Sometimes those roadblocks are legal in nature. But from Prohibition to today's ban on the sale of raw milk, enterprising small business owners have found a way to operate on the periphery—and some are even inspired by it. Lou Waddle uses his Chicago bar's illicit history as a speakeasy as a marketing tool. Leon Rainbow sells his graffiti, an art form defined by its illegality, to corporate and government clients. And Kevin Mitnick used his skills as a hacker to transform himself from a jailbird into an international security consultant. These entrepreneurs have emerged from the underground to flourish in the mainstream.
A Dairy Farm Built on Raw MilkThe Lubbers' first business, a 35-employee waste reduction and recycling business, was conventional enough. But when their six-year-old daughter, Jamie, was diagnosed with brain cancer in 1993, "It just pulled the rug out from under us," says Karen. The couple sold the business and started studying cancer. "I became more and more alarmed about what was in our food, and then what was not in our food," Karen says. "My daughter was dying. She lost 40% of her body weight." Nervously, they began feeding Jamie raw milk. They believe raw milk to be more nutritious, but because it's unpasteurized, it's illegal to distribute in most states.
Jamie turns 23 this summer. The Lubbers won't tell you that raw milk saved her life, but the experience was enough to turn them into farmers. Today, their 120-acre sustainable farm, on which all five of their children work part-time, earns about $100,000 a year. More than half of that comes from the sale of raw milk. To stay legal, the Lubbers sell shares in their cows, making their customers "owners" and so, by law, licensed to drink the raw milk produced by their animals. For $200, a mix of health nuts, environmentalists, and foodies get a tenth of a cow, which amounts to two gallons of raw milk a week and a share of the beef when the cow is eventually slaughtered. "It's a living, breathing, wild food product," says Karen. "Of course there's a danger to it. But pasteurization is a coverup. Until we can look in the eye of the guy whose food made us sick, we're going to continue to have food safety problems."
Behind the Green Door (Tavern)During Prohibition, those who enjoyed a stiff drink devised their own language. "Having a green door at your restaurant meant you served booze," explains Lou Waddle, a real estate developer who bought the Green Door Tavern, a former speakeasy, with two partners in 2001. "The name, and the entrance, stuck after the place became legitimate."
As did a few other features. The wooden building, one of the oldest in downtown Chicago, was built right after the fire as a temporary structure. It famously leans almost 18 inches from the ground to the roof. A twisted, tilting staircase leads to the basement, where the original owners, the Giacomo family, tucked the speakeasy. It's also where they hosted a cast of colorful characters, including legendary Chicago bosses. Today the bar promotes the space as a glamorous site for private parties, events, and concerts. The bar, with 20 employees and $1.5 million in annual sales, is also benefiting from a surge in nostalgia liquor brands and Prohibition-era drinks. "It's like walking into a fun house," Waddle says. "But we're never changing it. The Green Door is timeless."
From Hacker to Security ConsultantIf there had been an opportunity to do it all legally, says Kevin Mitnick, he would have. But the world-famous hacker, who was arrested by the FBI in the mid-1990s and eventually served five years in prison for myriad computer crimes, just didn't have the proper outlet for his inquisitiveness, he says, tongue lodged firmly in cheek. "Hackers back in my day were all old school," says Mitnick. "There was no Internet. There were no security regulations. We were just doing it for the intellectual challenge and curiosity."
Today, Mitnick earns some $750,000 a year with Mitnick Security Consulting, a two-person company. He's also in demand globally as a speaker and has an autobiography coming out. "What I was doing illegally as a hacker I am basically doing today, just with the person's permission," he says. "It's taking a dark activity, making a little change, and going legit. The lifestyle of an entrepreneur is not so different from that of a hacker. The only thing lacking is the sneakiness, the seduction of adventure."
But Mitnick says trading adventure for legitimacy—and freedom—has been well worth it. "Dealing with the feds is no way to live your life," he says. "At my age, I want to be grown-up and do other things."
How to be a Growing Magazine: Be About MarijuanaMagazines may be folding across the country, but Kush L.A., a 10-employee magazine aimed at users of medical marijuana, expects to take in $1 million in sales after just seven months in business. Kush has already launched its first local edition, Kush Colorado. Orange County (Calif.) and San Diego editions are scheduled for the beginning of January.
It's not a bunch of stereotypical stoners running the magazine, though the four founders do all have doctors' recommendations for marijuana use. Before co-founding Kush, Michael Lerner was a patient frustrated with the lack of information on dispensaries and the quality of the marijuana he received in Los Angeles; Randy Malinoff was an online marketer for Universal Studios; Bob Selan is an attorney. And JT Wiegman is a former venture investor whose mother opened her own dispensary after she found that marijuana helped with her chemotherapy treatments. Kush also considers itself a lifestyle magazine, and as marijuana use and its subculture become more mainstream, it is running as fast as it can. It's putting together an advisory board of oncologists; trying to draw up standards for the testing and distribution of marijuana; and, on the lifestyle side of business, working on marketing agreements with record companies. "People have wanted legitimacy for a long time," says Wiegman. "Eventually we're going to have herb tastings, the way we have wine tastings."
Helping Graffiti Go LegitimateIn Trenton, N.J., authorities have an unusual approach to controlling graffiti: They call in a professional—a professional street artist, whose work is unlikely to be marred by amateur tags. One of them is Leon Rainbow, a 33-year-old artist with New Jersey-based Vicious Styles Crew. "I started writing when I was 13," says Rainbow. "Now I just get paid for it."
Rainbow, who says he spent his youth doing "stupid, crazy" things like stealing art supplies and jumping off moving buses he was tagging, now paints pavilions in Trenton and creates logos and custom designs for fashion clients. He hopes to build his $40,000 business with licensing deals and by selling fine art prints. Vicious Styles also paints warehouses for clients such as TerraCycle.
Even though internationally famous crews such as Tats Cru and Os Gêmeos have proven that graffiti can be big business, Rainbow is ambivalent about graffiti's rising place in the mainstream. "A lot of graffiti now really walks the line between murals and advertising," he says. "Graffiti has come to the forefront again, but the same thing happened in the early '90s, and then the mainstream audiences lost interest. So the underground will always exist. People will always do graffiti for graffiti's sake."
Return to the BWSmallBiz December 2009/January 2010 Table of Contents