Wyck Hay’s first entrepreneurial initiative was an unqualified success: He was the cofounder of herbal tea maker Celestial Seasonings, and he helped sell the company to Kraft Foods for $40 million in 1984. His experience, substantial resources, and track record suggest that it’s worth taking note of how he chose to set up his new business venture.

In 2002, Hay launched KaBoom Beverages Inc. (www.KaBoomBev.com), which produces a high-energy juice drink for health-conscious consumers. A friend offered Hay a taste of Red Bull, an imported energy-boosting drink. Hay says, “ I woke up the next morning, and said, ‘I can make the product ten times better at a reduced cost and with added value for consumers who don’t like carbonation, fructose, refined sugars, and high levels of caffeine and artificial this and that.’”

Hay determined that the most effective way to build the business was to outsource absolutely everything. He assembled outside contractors to handle all of the operational aspects— from manufacturing to label design—of a business that will exceed $2 million. Hay is the firm’s sole employee.

He believes that extreme outsourcing has benefited Kaboom in multiple ways. Hay estimates that his expenses are at least 30% below what he would be paying for the same activities in-house. The reasons behind why such savings are discussed at length later in this chapter (see “The Evolution of the Plug-and-Play Economy,” pages 58–69). It’s worth noting, however, that they reflect the economics of outsourcing, not offshoring. “All of my providers do their work in this country [the United States],” Hay says.

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