1. BIZfact
BY SARAH TAN
Special to Newsday
When most entrepreneurs
start businesses, one of their
primary goals is to make as
much money as they can.
Brian McHale and Morgan
Fuchs want to make money,
but they plan to give it all
away.
The two surfing buddies
started their company, Hive
Lip Balm, in 2008 as a hobby
and a way to give back to the
community. Like Paul New-
man’s “Newman’s Own”
brand, the company plans to
donate all of its profits to
charity.
Their product is sold in 500
stores in 23 states, and Fuchs
said they have given almost
$16,000 to environmental char-
ities such as the Nature Con-
servancy and the Ocean Con-
servancy during their four
years of operation.
“You get a little desensi-
tized working in the corporate
world, and that was part of the
reason why we wanted to start
the business,” said Fuchs, 37,
of Medford, who previously
did public relations at a tech
company. “Business has a tre-
mendous ability to generate
revenue and we wondered if
we could do the same model
Newman did but do it in a dif-
ferent industry.”
“Social entrepreneurship” is
a growing trend, said Jim Free-
ley, a professor of manage-
ment at Long Island Universi-
ty who teaches a class on how
to start businesses that will
benefit society.
A plan for successful giving
He cautioned that social en-
trepreneurs must be careful
when creating their business
models.
Giving profits to charity can
help in the marketing of prod-
ucts, Freeley said, but it can be
an impractical business model.
Entrepreneurs need to have a
viable business plan, indepen-
dent of their altruistic mission.
McHale and Fuchs said mar-
keting their lip balm on the
“all profits to charity” feature
initially helps, but they’ve
learned that it won’t generate
repeat customers.
“The fact that we donate
100 percent of profits to chari-
ty, it gets our foot in the
door, but what has people re-
turning is the quality of the
product,” Fuchs said. “If you
have a good message but a
bad product, people don’t
come back for that.”
McHale and Fuchs hit upon
lip balm after first selling an or-
ganic surf wax. Surf store own-
ers suggested they try lip balm
instead to expand their mar-
ket. The company’s first ac-
count for Hive was with Hamp-
ton Coffee Company on the
East End, and they expanded
to beach stores and resort
towns from there.
Fuchs is the company’s only
employee, and he has been on
the payroll for only a year.
McHale, 34, also of Medford, is
still working a full-time job as
an engineer and volunteers his
time to the company. The two,
who used their own money to
start the business, said they are
happy to nurture the enter-
prise as it grows slowly.
To create their lip balm,
they experimented in Fuchs’
backyard. They needed to
hold costs down, but also want-
ed to use mostly organic ingre-
dients, in keeping with their
“green” mission.
“It took many hours sitting
in front of a hot pot,” McHale
said. “We made a lot more
trips to Michael’s [craft store]
than two guys in their late 20s
should have.”
They contract with a com-
pany in the Midwest to pro-
duce the lip balm, which
comes in six flavors. It retails
for about $3. Once the prod-
uct was developed, “the chal-
lenge is creating a brand out
of nowhere,” McHale said.
“We’re doing things very
grassroots. I’m actually im-
pressed with what we’ve been
able to do in four years.”
Looking ahead for charity
The company is expanding
into the sunscreen market;
they’ve started selling Hive
Sunscreen in some locations.
While the pair say that get-
ting accounts has not been dif-
ficult, they have had to consid-
er travel costs. They started
by visiting each store in per-
son, but now try to keep over-
head costs to a minimum, set-
ting up accounts over the
phone whenever possible.
Most of the day-to-day opera-
tions are conducted over the
phone from Fuchs’ home.
“The first couple of years
we definitely realized how
quickly you can spend money,
especially when it’s coming
out of your own pocket,”
Fuchs said.
The BUZZ on social
WASHINGTON — Several
Federal Reserve officials made
clear last week that Chairman
Ben Bernanke commands broad
support for the Fed’s plan to
continue stimulating the econo-
my if hiring doesn’t pick up.
As Federal Reserve Bank of
New York president William
Dudley put it in a speech: “If
you’re trying to get a car mov-
ing that is stuck in the mud,
you don’t stop pushing the mo-
ment the wheels start turning
— you keep pushing until the
car is rolling and clearly free.”
Two weeks ago, the Fed said
it would spend $40 billion a
month to buy mortgage bonds to
try to make home buying more
affordable, and it left open the
possibility of taking other steps.
On Friday, Dennis Lockhart,
president of the Atlanta Feder-
al Reserve Bank, stressed that
the new round of bond purchas-
es would continue until the job
market improves, and “if we do
not see improvement, more ac-
tion may be taken.”
But some Fed officials have ex-
pressed concern that continued
stimulative action by the Fed ele-
vates the risk of high inflation.
Last week, in a significant
shift, Narayana Kocherlakota,
president of the Minneapolis
Fed and long regarded as an “in-
flation hawk,” signaled that he
has grown more concerned
about economic growth.
Kocherlakota said the Fed
should fight high unemploy-
ment with an even more aggres-
sive approach than it an-
nounced last week. — AP
Get business
updates and sign up
for the daily business
newsletter.
newsday.com/biz
FEDOFFICIALS
BACKBERNANKE
Number of
manufacturing jobs on LI
in August, down 1,400
from a year earlier.
Source: New York State
Departmentof Labor
PHOTOBYJACQUELINECONNOR
LI BUSINESS
Name
Hive Lip Balm
Founders/owners
Brian McHale
and Morgan Fuchs
Established
2008
Employees
One
Profits donated
to date
About $16,000
AT A
GLANCE
72,100
Brian McHale and Morgan Fuchs, posing for a portrait with their Hive lip balms in Fuchs’ backyard
in Medford, say they spent a lot of time experimenting in the yard while developing their product.
Ⅲ Medford buddies make
profit just to give it all away
Ⅲ Hive Lip Balm emulates
model of Newman’s Own
entrepreneurs
A39
LIBUSINESSnewsday.comNEWSDAY,MONDAY,SEPTEMBER24,2012
Monday, September 24, 2012
www.hivelipbalm.com