'Max' Brenner Was Pushed Out of His Own Company, Financially Destroyed, and Banned From Making Chocolate For Five Years. But He Learned: 'Hell Has Benefits.'
After a crushing legal battle, the founder was ousted from Max Brenner: Chocolate by the Bald Man, and forbidden from any new ventures for five years. Now he sees the darkest time in his life as a gift.
Opinions expressed by Entrepreneur contributors are their own.
As an ambitious young man looking to leave his mark on the world, Oded Brenner never planned to make chocolate. He probably didn't plan to be bald, either, but when we spoke on the phone, the 52-year-old founder of Max Brenner: Chocolate by the Bald Man suggested that plans are often a detour from the main event. He quoted John Lennon: "Life is what happens when you're busy making other plans."
Growing up in Israel, Brenner wanted to be a writer. But he needed money to finance his writing, and it turned out he had a knack for making pastries. So he went to Paris to study under the chocolatier Michel Chaudun, and in 1996, when he was 25, he returned to Israel to open a chocolate shop in the small town of Ra'anana.
"The things I was doing in my shop were very out of the box, different from classic European chocolate stores," he says. "I felt there was a big gap between the way people talk and think about chocolate and the way they experience it in the retail world. Traditional chocolate stores treat chocolate almost like jewelry, in these beautiful boxes — don't touch it! But when I talked to my customers, they were talking about Charlie and the Chocolate Factory, sexy gifts, romantic childhood memories, the emotional connotations of chocolate. So this was the beginning of Max Brenner. I said: Charlie and the Chocolate Factory? Let's create chocolate pipes that go all around the restaurant. Let's create a "hug mug,' so you can hug your mug close and feel like you are in a chalet on a ski vacation. You say, "I'm addicted to chocolate, I want a chocolate fix.' So I created a big syringe full of chocolate so you can shoot it into your mouth. And so on. I really turned it into a chocolate amusement park."
Word of the chocolate amusement spread, and Max Brenner (a hat-tip to Brenner and his original partner, Max Fichtman) quickly became a household name in Israel. In 2001, the company was acquired by Israeli food conglomerate Strauss Group. And while the brand continued to grow, moving its headquarters to New York and opening 50-plus international locations, Brenner began to feel the loss of control more acutely. With Strauss's blessing, he opened a separate cafe chain, Little Brown Chocolate Bakery & Coffee, in 2011. But when the new concept started to find success, Strauss sued him for violating his non-compete. Brenner fought down to his last penny, but still lost both Little Brown and his place at Max Brenner. And he was banned from creating anything chocolate-related or putting his name or face on any brand for five years (Entrepreneur reached out to Strauss for comment but didn't receive a response prior to publication).
Brenner says those five years were the darkest of his life; he moved his family, struggled financially, called up friends to ask for help finding work. His whole sense of self changed. But when the exile was over, he returned with a new venture. In 2018, the Blue Stripes: Urban Cacao shop opened just a block and a half from the Max Brenner flagship in Union Square. Brenner had discovered the myriad uses of cacao — a football-shaped fruit with white, somewhat ghostly-looking "pods" inside — on a trip to a Blue Mountain Coffee plantation in Jamaica. He was aghast to learn that chocolatiers only use 30 percent of the whole "superfood," and trash the rest. "I was shocked that I had dealt with chocolate for 20 years and was so unaware of the potential," Brenner says. "I was like, wow, this is cacao the way I want to talk about it. The purity and the cultural origins of it."
Blue Stripes uses all parts (shell, fruit and pods) of the cacao to make impressively healthy products — from cacao water and dried fruit, to cookies, energy bars and protein balls, keto dessert bites, granola, hazelnut butter, and pastry flour.
"I think Max Brenner was a phenomenal brand," Brenner says. "But what I'm doing today with Blue Stripes is much more beautiful in terms of both creativity and meaningful message. When you see what's going on around the world — climate change, pollution, the gap between the rich and other countries — it feels like finally here is a small way that I, with my 25 years of experience, can do something to make a change. And all of this came about because of those five years of hell."
In a candid conversation, Brenner opened up about what he learned while going through his own personal hell. He talked about his initial fateful decision to sell Max Brenner, trying to work in a corporate environment as an entrepreneur, the bitterness that came with losing control of his own creation, being banned from doing what he was best at, and how he came to view those five years in the emotional and financial wilderness as an once-in-a-lifetime opportunity. His perspective is valuable to entrepreneurs considering selling equity in their business, those in the midst of a nasty split with business partners, or anyone simply figuring out how to start again after a staggering loss.
What were the factors that led up to you deciding to sell Max Brenner?
Max Brenner was a big success from the beginning, but the success had nothing to do with making money. I had a lot of fame, I was participating in many TV shows, and everybody knew about the brand. But maybe three years in, if I was making money, it was for sure not enough to continue. So I had to bring on a partner. Strauss was the largest food corporation in Israel, and they basically took over the company. They gave me a very nice salary, bonuses here and there, consulting fees and a little bit of royalties, but left me with a very small percentage in the brand — 3.5% equity. I became a very minor shareholder.
What was your mindset at that time?
I was exhausted, I didn't want to let this dream die completely, and I didn't have the money to continue. So I had no other choice. I wanted to believe that we would grow this thing together, and I would still benefit from it. I was convincing myself that it would eventually be a billion dollar company, and my 3.5% could be $35 million. But to be honest with you, I was also so in love with my own creation that I wasn't thinking rationally from any business angle. I couldn't stand to think of the stores closing down. I couldn't stop getting the love from my customers. I was addicted — in a good way — to the food, to the love, to the applause. I didn't want it to stop. And I didn't really think about what it meant that I had just a 3.5% vote on anything. I thought that three, four, five years later I would look back and say, "I saved the brand."
Did Strauss give you the impression that you would retain creative control?
Yes, they gave me the impression that, "You're Max, you're the bald man! You're this amazing guy, you're the creator!" Today I'm less naive than I was then, and I think experienced people do a lot of these things intentionally. I don't say intentionally in such a bad way, but they are looking at it as pure, cruel business. So yes, they gave me the impression that there was no brand without me, even though they didn't actually share the same vision as me.
What was it like going from running your company to being part of a corporation?
Many people told me that an entrepreneur cannot work in a corporate environment. It's almost like an impossible marriage. I don't want to generalize, but usually, an entrepreneur is a very impulsive, gut-instinct person. He has crazy passion, like a fire. He wants to do things, he wants to see them happen right now. The corporate process is extremely different. It's, "Let's think about it, analytics, who told you this is true? Why this packaging? Why these colors? Why are you changing the brand language?" It's endless. When you say, "Let's try to sell in Japan," it's, "Why Japan? Who told you it's a market?" But the Japanese love dark chocolate! "How do you know, show us research. Why do you think this is the way?" The entrepreneur usually doesn't think, he knows. He's pushing and he makes mistakes. But he just says, "Okay, so this was a mistake. Doesn't matter." This is almost his nature to push forward and make things happen. And the corporate is mostly people who are running an already existing business. It's not good or bad, but they are thinking and analyzing and slowly, "Let's bring in a consultant." An entrepreneur and a consultant, they are like oil and water. I mean, they cannot work together.
How did your relationship with the corporate Max Brenner team start to sour?
For a very long time, bitterness and frustration were building up. At some point, I started to show up less to meetings, and I think they were relieved because they didn't want to see me there. I was showing up for PR, events, interviews, whatever, here and there, and I was making new recipes sometimes. But in general, I wanted to be involved less and less. And eventually I decided that I wanted to start a new concept, like a Starbucks of chocolate — smaller stores, self-service, quick serve. It was called Little Brown. I pitched it to Max Brenner and they weren't interested, so I told them, "I think it's not in competition with Max Brenner, and I want to open a store like this under a different brand name." They said no problem. So I opened one on the upper East side, and then I had a franchise in Russia and one in Dubai, and I leased another store in Chelsea… they never told me I was doing anything bad. But one day the chairman of Max Brenner came to me and told me, "Listen, I don't think it's working between us, we should split." I told him no problem. But then he said, "You need to stop doing this and this and this in Little Brown." I said, "I cannot, I already have franchisees, and you know you're jeopardizing my concept." Well he didn't say anything much, and then one day on a Friday afternoon, somebody knocked on the door and said, "You're being served."
What was the legal battle like?
I was extremely emotional, like, "I'm going to show you and fight." You just don't think that a $3 billion corporate company is going to smash you, but that's what happened. It was a very short and aggressive fight. Then we went to court, and right when we started the discussion the judge said, "You should settle." I had not a drop of energy to continue fighting, not a dime left in my pocket. So I gave up on everything. The five year non-compete was always part of the settlement. But I just wanted it to finish, I didn't care. I'm lucky because at some point they even said 10 years and I was ready to sign.
You had to really change your lifestyle after losing the court battle. What was that like?
I lived a very comfortable life in Manhattan, and I moved my family to a very small house in Jersey. We had one car, we didn't go out to restaurants. No vacations, no nothing. I had to call friends and ask for help. It's not pleasant when you were the big shot who gave job interviews, and now you need to do job interviews or ask friends to hire you for consulting work. And consulting is very unstable work. You never know when you'll get the next job. Sometimes I had a little more money, sometimes I didn't have any. And I was very surprised how much people don't want me as a consultant. I thought, "I'm the bald man, Max Brenner, everybody needs my advice!" It was not that easy. Nobody was waiting for the bald man. But eventually I started to fill up a CV, which I'd never had before. For a self-made man who was the boss, becoming an employee is devastating. But I said, this is another stage in the journey I need to go though.
What advice do you have for entrepreneurs who need to bring on partners for their company to survive?
Don't give up control. Be extremely tough in the negotiation. If people really want your brand, they will give in eventually. If not, they're not the right partners. They will negotiate hard because they are more experienced than you. Sometimes they will be mentally stronger because you're in a very tough spot, and you are tired and exhausted. But don't give up on equity because equity is the most important thing. And I'm not talking here about a huge, mature brand. Then you can give up on control and it's a different situation. But when a brand is in the earliest stages of entrepreneurship, you need to have control in the decision-making. Even if you are kind of diluted in your financial equity of the company, because sometimes somebody's putting a lot of money in and yeah, the company is not in a great situation. I understand this, but if you're not going to have the control, it's not going to be your company.
What did you learn from the emotional journey?
At a certain point, you just want to collapse. You're angry at the world, angry at God, angry at everyone. This is hell. You ask: How could this happen to me? Even though you know that part of it is probably your fault. But hopefully — and this is what I told myself — you're not going to go through hell many times. So this is a one-time experience. I would say it even stronger: This is a one-time opportunity. Hell has benefits. It has benefits on your ego, and ego is a very destructive element in our personalities. Hell has benefits on the way you talk to other people and how you think about business. Mostly, hell makes you think a lot. It can change your personality. It is not there coincidentally, and this may sound maybe a little bit too spiritual and mystical, but I would say listen to it carefully. Give it all the room and time it needs. Feel sorry for yourself, be angry. But use this period to build you for the next stage in your life, which can be unbelievable. If you are creative, if you are a true entrepreneur, you will be able to come back and do it again, and the next thing will be better.
Related: This Entrepreneur Sells $355 Bars of Chocolate. Is He Crazy or a ...