Maximuscle: Zef Eisenberg
The powerhouse entrepreneur on his bodybuilding product empire
“I should have started The Black Company,” says Zef Eisenberg, referring to the simplicity of Chrissie Rucker's retail concept The White Company, which graced the cover of Growing Business back in June.
The founder of premier UK sports nutrition brand Maximuscle, which may sound as American as Eisenberg's own name, but is headquartered in reassuringly unexotic Watford, is reflecting on his path to success. “Instead, I chose the most challenging and regulated industry around,” he says. The company has certainly been through more than most. But more of that shortly.
First, some background. Maximuscle is the only major sports nutrition supplier based in the UK. Somewhat unsurprisingly, the rest are American. Yet it's the British brand that's far and away the leader in its field here, with a 43% market share. Not only that, it's galvanised a nascent market and brought it to within touching distance of the mainstream. All in little more than a decade.
Elite athletes, such as rugby stars Josh Lewsey MBE and Gavin Henson, as well as marathon runners, cyclists, climbers and martial artists happily credit the company's products with enhancing their performance.
But it's roots – and Eisenberg's – lie in bodybuilding. As a successful competitor himself, Eisenberg shook the market when in 1993 he wrote and self-published an exposé on which products would help build muscle and burn fat and which were a waste of money.
His unbiased revelations of “what science was false and what actually did the job” won a cult following and encouraged him to start offering specifi c products he trusted, which he did in 1995. The book's fi rst print-run of 24,000 sold out and fi nanced the business.
Eisenberg's combined knowledge of gym instruction, herbalism, nutrition and marketing immediately paid dividends. Continuing where he left off with the book, he took a new approach, providing extensive educational tools, with copy-heavy catalogues for direct mail customers. The early sales performance funded the trade side, led by Kevin Peters, now Maximuscles's operations director.
Building the brand
Success there, in turn, financed expansion through retail outlets. With thriving internet and trade sales, it seemed an obvious thing to do. However, it proved a distraction as the company spent too much time on staff, stock control and dealing with theft for Eisenberg's liking. Recognising the error, the shops were closed leaving Maximuscle focusing once again on its core.
Understandably, it's a source of pride that the company has never borrowed nor had any debt. Much like most start-ups, this was largely down to Eisenberg's entrepreneurial commitment. He designed and laid-out the catalogues, working nights and weekends, and combining his career as a personal trainer, while continuing to publish revelatory books. “I worked stupid hours,” he says now.
The company also formed a partnership with key manufacturers to create own-brand products to an exact specification. “It was unique in the industry at the time and led to the creation of the brand. The products were not formulated on price, but on quality and scientific research,” he says. The choice of supplier was key. From running a small health food chain in north London, Eisenberg knew all the suppliers and manufacturers, what sold and what didn't.
Building trust in a now more sceptical market, Eisenberg offered a money-back promise for unhappy customers. Returns were few and far between. “I got the best food technologists, the best protein houses and doctors. I told them exactly what I wanted and what I wanted was very expensive,” he recalls. “This was the first time they'd met someone who asked for something that worked, tasted and looked good as opposed to cost, cost, cost. We are known as a premium brand and the point is that if people enjoy the taste they'll use it again and again.”
The average Maximuscle product sold for £50 at the time. The products are cheaper now that orders are made on a much larger scale – there's not one that costs that much today.
Aside from price, the other main issue was that athletes had to be sure that what the company said was in the bottle, was actually in the bottle – and nothing else. Growth was smooth and steady until a select few track and fi eld athletes started blaming their tests on the sports nutrition market. In addition, its Creatine product, used by Arsenal and England, became another high-profi le media target.
This negative attention soon saw the industry and Maximuscle engulfed in a media circus amid allegations that supplements were the cause of positive tests. The fact is that Maximuscle spends around £200,000 each year putting all of its products through a stringent WADA (World Anti-Doping Agency)-approved Drugs screening lab.
It remains the only company in the world to have each and every batch of its products independently drug-screened, providing a guarantee of safety to the elite athletes and clubs that use the brand. The company regularly explains its research to UK Sport and testing is ISO17025-compliant as well as UKAS (United Kingdom Accreditation Service)-approved.
It's admittedly hard to see how the issue could be taken any more seriously, a point Eisenberg is understandably keen to stress.
Publicity like this would break many businesses, but Eisenberg came out ready to battle to safeguard the company's credibility and created a platform for sports nutrition. “I have a reputation for standing up and fighting,” he says. “I will not tolerate people talking untruths and falsehoods. I'll defend it.”
Rather than hire an expensive public relations agency with a reputation for damage limitation and spin, he went on the front foot, opened the doors to the company's Watford base and gathered around 40 national newspaper journalists.
It's hard to argue with someone boasting an armoury of black and white, irrefutable proof. “I produced the certificates and catalogues and talked about the industry, and the fact that these products contained the same natural ingredients as found in regular foods within the supermarkets,” explains Eisenberg. “If it was true that all these ingredients were filled with drugs, the whole country would be failing drug tests, as opposed to a select bunch of track-and-fi eld athletes.” The upshot was countless column inches of positive coverage – “several million pounds worth of free advertising”.
The News of the World, read by around 8.5m, even stuck the front page of a Maximuscle catalogue on a double-page spread with the company phone number. “You can imagine that lots of people wanted the product everyone was talking about,” he says. “We went from a small, niche, sports nutrition brand to one that everyone wanted. And as 90% of customers are not tested – they only care about putting on some muscle or losing fat – they don't share the concerns of elite athletes. Our phones didn't stop ringing. The only negative was we didn't have enough in stock.”
Could a similar controversy blow up again? Eisenberg says it's less likely. “Most of the public are used to athletes trying to find scapegoats for their positive tests,” he says. “But it was a testing time for the company and one that could have damaged it had we not been able to prove the quality of its products and handle the media successfully.”
Ready for exit
The turbulent period set the company up for the next stage of growth, boosting sales by 20% against the usual 10-12%, and leaving Eisenberg eager to flex its muscle in the marketplace. “The business started to get much bigger. We were pushing £8m sales back then,” he says.
But with growth came added frustrations. “I loved talking with elite athletes, training them, writing and educating,” he recalls. “I found I was doing that less and less and was spending more time in board meetings and with advisers, reviewing and setting objectives.”
It's a phase most fast-growth companies experience and can store up problems as existing skill sets undergo intense examination. The desire to retain equity only magnifies the effect as entrepreneurs hold on stubbornly to their lot while no longer spending their time channelling energies into stronger areas.
To Eisenberg's credit he recognised the threat. “While we were profi table and the growth rate was great, we needed to find an excellent calibre of senior management,” he says. “By doing that I'd be able to reduce my day-to-day time in the business.”
By 2002, Eisenberg had a management buy-out in mind and started the process in earnest, appointing advisers Cavendish Corporate Finance. “The important point with any exit or taking of chips off the table is you've got to prepare and groom the business. I was well aware we had to make sure the right team was in place and get the books in good health.”
The search for a suitable buy-in chairman and managing director was fruitful, and in 2003 Paul Hick and Ivor Harrison joined. Hick arrived from Lee Cooper, the jeans company, where he was chief executive, while Harrison left the position of group marketing director at Premier Foods to become Maximuscle's managing director in 2004, after working around a year as commercial director
Less fruitful was the search to find a private equity backer, prepared to finance the BIMBO. While Maximuscle came close to closing a deal with 3i, negotiations ultimately came to a standstill. Unsurprisingly, finding a happy middle ground was at the heart of it. “I didn't need the money and didn't need to do a deal. I wanted a suitable partnership that could add value to take the business forward and was in a position to pick the investment house I went with,” he says.
Striking the deal
In many ways it was a waste of four months' management time. Nevertheless, such experiences help bring about a steelier sense of purpose and a knowledge of what makes a suitable partner. It also provided Hick and Harrison with time to learn the business and build the management team, allowing Eisenberg the opportunity to make the desired changes to his role.
“When I was comfortable with the relationship, we approached a shortlist of venture capitalists,” remembers Eisenberg. Piper Private Equity stood out. “What I liked about Piper was that it was a small venture capital boutique with a reputation for only investing in brands,” he says. “It had a background in direct mail and building brands. The founders had already set up their own business – the Pitcher & Piano bar chain – and sold it. It struck me that they were genuine business people as opposed to just investors. They were interested in organic growth and building brands. But it was critical they brought something to the table, otherwise I would have chosen the highest bidder.”
In all, the deal, which was valued at £10m and fi nalised in 2004, took around six months to complete. And it wasn't long before the company felt the effect. “I realised the business needed to take a gentle shift in a different direction,” says Eisenberg. The main goals – physique nutrition and sporting performance – remained the same, but the target was to take the market leader to the mainstream.
“To do this we had to simplify and normalise the brand,” he explains. “We needed to make it easier to understand while not taking out the scientific element.” The first key change was redesigning the labels, adding more food references and toning down some of the techy scientifi c stuff. “If you're a very serious, obsessive trainer, you like that. But if you're in the mainstream it will go over people's heads.”
The second thing was to do more brand advertising. The company had not made full use of its GB elite client base – sports stars that were historically happy to recommend the brand without prompting, despite the company not paying them a penny. “We had a lot of assets in terms of high-quality endorsements and decided to really tell people that these athletes had been using our products for years,” says Eisenberg. “We also had a lot of sponsorship assets we weren't promoting. The idea was to shout about all the things we were doing behind the scenes.”
Given that it now boasts more than 300 elite athletes, numerous rugby clubs, the army and the SAS on its database, it's not hard to see the marketing potential. Interestingly, though not surprisingly, elite athletes have become more aware of their own potential brand value and expect their endorsement to be rewarded, typically in free supply.
The third key shift was to forge stronger relationships with national chains. “We were already in Argos, Tesco as a trial arrangement, and Asda in a small way,” says Eisenberg. “The objective was to promote the category and the brand as more of a mainstream product. There's a lot of work involved in educating the general food buyer.” It's a message that's fi ltering through, but alongside such tweaks, the company remains committed to managed growth.
Easy does It
The danger for any business is to get carried away with pursuing too many ideas, says Eisenberg. “For us it's about staying focused,” he adds. “There are five million gym users in the UK. We haven't even scratched the surface of that market yet.”
Nor is the company desperate to. With 41 products and 200,000 customers, Eisenberg and Maximuscle's team are determined service levels will not slip or that stock will run dry in key retail channels. “The risk is over-trading and being too ambitious,” he says. “It's much better to grow carefully and slowly.”
Unlike an internet company that can grow as fast as you can buy hosting space, Eisenberg stresses that Maximuscle makes a specialised product and the unique ingredients used have to be reserved in advance, with careful attention given to forecasts and managed growth. Eisenberg's team also works closely with its manufacturing plants and partners to ensure that they are investing at the correct levels to fulfil future demand and storage.
“Basically, we run a food business,” he says, “With protein being our biggest seller, cows and the milk they produce is the only real limit to our growth.
“The frustrating thing is we realise there's opportunities in other countries and the US, but just can't do it yet. In a way it's a nice position to be in.”
Name: Zef Eisenberg Age: 33
Company: Maximuscle Position: Founder and President
Proposition: Sports nutrition supplier
Turnover: ?34m to April 2007 forecast