Rags To Riches Chad Scales turned his idea for a frozen confection into $7 million.

You have to have a few screws loose to think you can competeagainst the multibillion-dollar food giants. What's more, ittakes chutzpah to do it with little money.

But to the dismay of major food companies and naysayers alike,32-year-old Chad Scales did it--all by himself. He jumped smackinto the healthy eating craze by launching Boston Brands Inc., aBoston-based company that makes RealFruit, a dairy-, fat- andcholesterol-free frozen dessert.

By 1986, when Scales enrolled in the marketing M.B.A. program atMichigan State University in Lansing, he knew he wanted to start afood company. It didn't matter that he had no idea what kind orhow to do it. He wasn't thinking about those minor details. Allhe knew was he needed to get some experience and learn the foodbusiness. What better way to do so than to work for a big foodcompany?

"My philosophy was to learn on their time," saysScales. "I figured I'd spend a few years working for majorfood companies, learning the fine points of productmanagement," he says, "then I'd go off and do my ownthing."

His first job was assistant product manager for Pillsbury'sHungry Jack pancake brand. He stayed at Pillsbury for three yearsbefore going to Colombo Inc. in Andover, Massachusetts, in 1989, tobuild a line of frozen desserts. By then, Scales knew he wanted toown a company that made a dessert product. All he had to do wasfind the right one.

"It was an opportunity to build a brand and get my handsdirty," Scales says. "Colombo had a soft-serve ice creamcompany. Now they wanted a frozen grocery product and they hired meto help get them into the market."

Scales jumped at the opportunity to test his wings and executeall the critical steps of taking a product from drawing board tomarketplace. He found manufacturing plants to lease and built anational infrastructure of distributors and salespeople.

"It was a priceless experience," Scales says."You don't learn this stuff in school. By the time I left,I knew enough about the food industry, especially the productdevelopment end of it, to start my own company." Scales hadalso made friends at every critical level of the food productionindustry.

In 1992, having built a $27 million frozen yogurt line forColombo, Scales left the company to launch Boston Brands. Havingseen how successful Colombo's frozen yogurt was, he felt themarket was ready for a new frozen yogurt-type product.

"I decided to develop a fruit sorbet," says Scales.But not just any sorbet. Scales' grand plan was to create afat- and sugar-free sorbet, full of chunky pieces of fruit, forcalorie- and fitness-conscious consumers. "By then, I thoughtI knew what consumers liked and wanted," he says. "I feltI could compete with the frozen yogurt category with a product thatnot only tasted good but was actually good for you."

In 1992, with $20,000 of savings, Scales launched Boston Brandsout of his three-room apartment. He liked the name because hethought it sounded like a big company. He also cajoled a telephonecompany salesperson into giving him an impressive,corporate-sounding number that ended in two zeros. "Image isimportant," Scales says.

Big food companies invest millions of dollars in laboratory-likekitchens, staffed by squadrons of food scientists and brandmanagers who will spend years developing new lines of products.Scales developed his product in his kitchen. "My mission wasto keep costs down," he explains.

Scales' neighbors, however, didn't know what to make ofthe 18-wheelers that delivered the 50-pound tubs of fresh fruitsamples provided by Dole, Chiquita and Sunkist. Because they weretoo big to be stored in the refrigerator, Scales kept the tubs in asnowbank outside his apartment house.

"I don't know what I would have done if it wasn'twinter," says Scales, who rented a batch ice cream freezer tostore the finished sorbet.

Then, working practically around the clock, Scales experimentedto find that winning combination of fruit flavors. Adding fruitjuices to mixed whole fruit, he searched for that special taste.Every few nights, he recruited friends to stop over for sorbetparties.

"I needed guinea pigs to taste the formulas so I could getdifferent reactions," Scales chuckles. "Every time Ithought I had the formula, something wasn't right. It wouldcome out frozen when it was supposed to be soft, or it was toosweet, too tart or too bland. One of my friends complained that thefirst batch tasted like Lemon Pledge."

Six months later, Scales had perfected five fat- andcholesterol-free sorbet flavors--lemon, strawberry, raspberry, wildberries and mandarin orange. Then the real work began. Scales wassatisfied with his sorbet formula, but the ultimate test would beto have a batch mass-produced and packed in a commercial plant. Hecalled in a favor from a contact he had made during his stint atColombo. Since he parceled out plenty of work to the plant, hewasn't skittish about asking for a payback.

"I asked for 90-day payment terms," says Scales,"which would give me enough time to comfortably pay for thework."

Scales knew he had a hit when workers at the food plant weretaking samples off the line and eating them. All he had to do nextwas find a home for the 48,000 pints he was turning out eachday.

Once again, Scales tapped his network of industry contacts. Hehad samples of the sorbet packed in dry ice and mailed tohalf-a-dozen buyers. "I enclosed a short note to eachdistributor that said something like, `Here is the product. Willyou carry it? I'll call you later.'" Luckily,distributors in Washington, DC and New England said they'd giveit a try. One Boston distributor put $48,000 worth of sorbet intosupermarket and specialty store freezers throughout the city.

By the beginning of 1993, Scales was moving his product, yet hisbalance sheet was nothing to rave about. He was $98,000 in debtfrom delaying payments on packaging, design and research bills,which he considered pretty good for a shoe-string start-up. But heneeded cash to keep himself going until the orders started pouringin. Rather than take out a bank loan, he borrowed $30,000 from hisparents.

"I wanted to avoid investors if I could, so I could keepcontrol and not have to answer to anyone," says Scales."I needed just enough money to get me into my secondyear."

By spring of 1993, RealFruit sales were picking up and consumerswere coming back for more. Scales finished 1993 with sales of$600,000, motivation enough to expand. First, he took an office andhired his brother full-time to help build the business. Then, hebooked flights to cities around the United States, in a campaign toentice distributors to take his product. Scales felt that receptionin two major markets, Boston and Washington, DC, would pave an easypath to success. Once again, he was in for a rude awakening.

"Most people said, `Get the hell out of here,'"laughs Scales. "They just didn't get it. They thoughtsorbet was something served in fancy restaurants, between courses.They said `Regular folks don't eat sorbet.'"

Scales wouldn't give up. He knew he had a great product andthat the resistance he was encountering was just part of thesong-and-dance entrepreneurs have to endure to get their productson the shelves. A few weeks later, he again called on the samedistributors. This time, to get Scales off their backs, they agreedto try the product.

Scales also hired a public relations person to help him promoteRealFruit nationwide. Scales was unstoppable, promoting his productevery chance he could. He passed out samples of his product torunners at the Boston Marathon and, through sheer persistence, gothimself on "The Today Show." Host Bryant Gumbel keptshoveling spoonfuls of RealFruit into his mouth, and salesmiraculously jumped.

Boston Brands finished 1994 with sales of $1.6 million. By then,RealFruit was also selling briskly in Philadelphia, Chicago, SanFrancisco, Seattle, Phoenix and Houston. Scales attributesimmediate acceptance of his product to lack of competition.

When RealFruit was introduced into the market, there was onlyone similar product in circulation that Scales considered to beeven remotely competitive with his own. Scales claims his productcaused the other manufacturer's business to drop by 30 percentin one year.

At the end of 1994, Haägen Daaz launched its own sorbetline. But by the time they got their product to market, RealFruitwas well entrenched. The tasty product now sells in 25 states.

Last year, Boston Brands made great inroads. Sales leapt to $7million with RealFruit selling in 60 percent of the country. Byspring of 1995, Scales had introduced fruit bars and iced tea bars,and he's in the process of introducing yet another dessertline. If all goes according to plan, sales could top $11 million in1996, he says.

All the while, Scales has been having the time of his life."I can't say it hasn't been interesting," hesays. "This sure beats working for someone else."

Scales also concedes it's been a tough, nerve-rackingbattle. "The biggest obstacle preventing fast growth was alack of cash," he says. "I was lucky; my product scoredin a couple of good markets. If I had had more working capital, Icould have extended my reach when I launched the product."

Although it has been a tough three years, Scales says he'ddo it all over again. "It's a great feeling buildingsomething from nothing. You're constantly learning and it'snever dull. Every day is different."

Scales has fulfilled his dream. "I've always wanted torun my own company that competes with household namecompanies," he says. "Now I'm doing it and it feelsgreat."

What is Scales' secret to success? Undauntingpersistence.

"Rely on yourself and your instincts," he advises."No amount of market research or pointless pontification isgoing to help you determine whether or not people will buy theproduct. Produce a great product and then do everything humanlypossible to get it into the consumers' hands."

Bob Weinstein is a frequent contributor to nationalmagazines.

Company:

Boston Brands Inc.

Founder: Chad Scales

Type of Business:

Manufactures sorbet

Location: Boston, MA

Year Started: 1992

Start-Up Cost: $20,000

Source of Start-Up Capital: Personal Savings

Advertising: None

Recent Sales: $7 Million Chad Scales turned his idea for afrozen confection into $7 million.