In the Trenches with Chocolatier Jerry Swain
Sometimes the ingredients for a great business idea are accidental, explained the founder of Jer’s Chocolates to a class of business undergraduates enrolled in an inventive new course that invites students to learn from entrepreneurs who have been "in the trenches" of starting a new company.“It wasn’t my plan to be an entrepreneur, and I certainly never thought I would own a chocolate candy-making company,” said Jerry Swain, the founder of Jer’s Chocolates, which is headquartered in Solana Beach and last year sold more than 120,000 pounds of gourmet chocolates worldwide. “What I did know was that I liked creating something new; I’d rather build the building, than lease the space.”Sharing his experience along with the challenges he faced in launching Jer’s Chocolates, Swain’s recent visit to campus was part of a new upper-division business course titled, In the Trenches with Entrepreneurs. Modeled after CSUSM’s popular series, In the Executive’s Chair, Entrepreneurship 423 is designed to immerse students into the entrepreneurship experience through hands-on coursework, guest lectures and real-world assignments.Throughout the semester, In the Trenches brings 10 entrepreneurs with a broad range of business experience to campus. Some guest speakers are serial entrepreneurs that have successfully launched multiple companies, while others are nascent entrepreneurs still within the first three years of their business venture.“When I first started out, I didn’t know what I didn’t know, but being an entrepreneur means taking calculated risks and learning from the experiences of others,” he told the class. “So many unknowns can come up during those early years that a textbook just can’t prepare you for and it’s important to have a network of mentors who you can call upon for advice.”The former top sales manager for IBM admits his itch for entrepreneurship came as a surprise, although the recipe for his business was something much more familiar. Nearly 15 years earlier as a college student, Swain created what would later become his signature confection – a gourmet chocolate-covered peanut butter ball. His tasty, original treat, which was aptly named Jer’s balls by his fraternity, eventually evolved into an annual holiday event that raised support and awareness for a local food bank.In 2000, he traded in his corporate career to become an entrepreneur and launch his hobby into a business. But edging into the United States’ $17 billion chocolate industry wasn’t easy, especially since Swain wasn’t interested in competing with established companies. Instead, he wanted to create his own unique niche. Analyzing the market, Swain found that 84 percent of commercial candies contained his key ingredient – peanut butter or peanuts – but less than one percent of premium chocolates featured the sweet and salty flavor combination. Using high quality, natural ingredients, Swain pioneered a new niche in the market with his peanut butter and chocolate gourmet candies.His first big break came in 2004 when he landed a contract to sell his product at Nordstrom. It wasn’t long thereafter that the industry began to take notice of Swain and his business. In fact, two of the nation’s largest chocolate-making companies, Lindt and Ghirardelli, attempted to capitalize on Swain’s new market, launching their version of a premium peanut butter candy. The competition didn’t faze Swain, but rather further validated that his product was gaining momentum in the market. Despite the million-dollar budgets that Lindt and Ghirardelli poured into launching the new candy line, their products fizzled while Jer’s thrived.“We’re still on the shelves, and our competition isn’t,” he said, speculating that his competitors failed to differentiate their premium candies, which sold for a premium price, from a common Reese’s peanut butter cup. “We’ve been able to create a product that has staying power and something that our customers love and continue to buy.”Staying power is the one of the biggest hurdles that startup businesses experience. Swain shared that out of every 1,000 companies than began 10 years ago, less than four are still in business today. Part of the success of Jer’s has been Swain’s ability to balance long-term strategies with short-term needs, something he stressed was important for aspiring entrepreneurs to learn early in their career.One tradition, along with the original recipe, that hasn’t changed is Swain’s commitment to his community. In addition to serving on the board of directors at the San Diego Food Bank, Swain supports several local charities including the Susan G. Komen Breast Cancer Foundation, the Boys & Girls Club and the Leukemia Lymphoma Society.“Locally, we’re more about giving back than marketing our product,” he added.His award-winning handmade chocolates, which have been featured on the Food Network and the Rachael Ray Show, are primarily sold in natural food stores in the United States, Mexico, Canada and Taiwan. Since the introduction of the original Incrediball, Jer’s has expanded its collection to include Bars, Brittle Bites, Jer’s Squares and coming-soon Groupies, which are gourmet candy clusters. Among Swain’s upcoming projects is a new retail shop, which will open inside San Diego International Airport in 2012. Jer’s beat out Ghirardelli, Godiva and See’s Candies for the coveted space that will offer a local taste of San Diego.In the Trenches guest lectures are free and open to the campus and community to attend, held on select Wednesdays in Markstein Hall room 102 from 1 to 3 p.m. Upcoming presenters include: Chanelle Nager, founder of beautyartist.biz on Oct. 19; Rick Gessner, chief technology officer of Bridgepoint Education on Oct. 26; Erik Groset, cofounder and CEO of Zipbuds on Nov. 9; and Jody Couglin and Stephanie Burns, founders of Chic-CEO.com on Nov. 16.For more information, visit In the Trenches online.