David Santillán Giles

Avoiding Death by a Thousand Cuts: How a Young Social Enterprise Weathered a Series of Microfailures

When I founded Agua Piedra Mezcal, I was 25, weighed 26 pounds less, and had more hair and no bags under my eyes. The life of a social entrepreneur isn’t always an easy one…

I got the idea for the company while visiting the rural area of San Bartolo Yautepec, Oaxaca, where I saw, firsthand, how mezcal (a distilled alcoholic beverage made from agave) is produced. I developed the brand concept while watching agave hearts cooking on stones, a very important step in the artisanal production process.

A week later, I was in Mexico City with a test batch, no customers and zero industry knowledge. I didn’t know the market. I had no business experience. I just wanted to make a living off a drink I admire: Mezcal is my passion, and I hoped to produce it in a manner that had a positive social and environmental impact, while folding in other social projects. Along with mezcal production, Agua Piedra runs initiatives like Manos que Hilan Sueños (Hands Spinning Dreams, which supports weavers in Oaxaca) and CineMezcal (which brings the art and entertainment of cinema to marginalized communities in the mountains of Oaxaca.)

Since I founded the company as a social enterprise, I knew I’d need to manage it in a different way than if it were a more traditional business. I needed advice, but I didn’t know where to head. So in January 2014, I sought help from the Oaxaca and Mexico City branches of the international Impact Hub network of community innovation labs/business incubators. After I joined Impact Hub Oaxaca, I tweaked our branding, legally registered the company, did some accounting, perfected the product, created our artisanal bottles (blown and fused with 80 percent clean energy), ironed out our handmade paper labels, and addressed other pending issues. By April of that year, after taking stock of our finances, I started imagining how, after a few years, I would be able to settle down and drink piña coladas somewhere in the Caribbean. But I soon found myself dealing with a string of very basic mistakes that would put our young company in jeopardy.

One of the ways Agua Piedra promotes and markets our products is by supplying mezcal to cultural and entertainment events, and in June of last year, we were invited to an electronic music event in Toluca, near Mexico City. A friend had recommended us, and trusting in that recommendation, I failed to request more information and headed to the event, roughly nine hours away. I was hoping to make some valuable contacts with potential customers, investors and distributors, but I hadn’t realized it was to be an “alternative” event. So I ended up at a party teeming with rockers and goth girls, one of whom confided to me (before passing out) that Agua Piedra tasted like cheap mezcal. That’s when I realized that this was not my market at all. It was no surprise that I returned home empty-handed after three days, after investing considerable time and expense.

Unfortunately, our next event brought a different kind of failure. Most of Agua Piedra’s customers are located in Mexico City, a 500-mile roundtrip from our plant in San Bartolo Yautepec, and logistics have always been an issue for us. This problem intensified when we partnered with the Short Shorts Film Festival, which hired us to supply mezcal for six simultaneous parties in Mexico City. We seemed to have plenty of time, and I trusted in the prompt arrival of the batches of mezcal. However, it turned out to be a rainy week and landslides delayed our deliveries. Two days before the event, there was still no mezcal. After borrowing a jeep from my girlfriend’s mom and driving all night in the low visibility of the sierra in the rain, were we able to pick up the shipment and arrive (barely) on time on the morning of the festival.

After this lesson on the value of contingency planning, I thought I had everything under control the first time we scheduled a CineMezcal event. We had programmed the films we would show and hired an inflatable screen and high-power projector. I got confirmation that the town had a 30-foot high open space available for the screen, and that the power was on. On the day of the event, we arrived at the small town where the films would be shown, and readied everything. The audience took their seats to watch, but when we tried to fire up the projector, the screen stayed black. It turned out that the electricity was actually on, but the power lines were half a mile away and the current was too low to run our equipment. There was no way to reschedule because our screening rights were good only for that night. So we moved the projector, the seats and the 100 spectators to an alternate venue. We pulled it off, but by the end of the night we were bleeding tears. The following morning, we were on our way back to Mexico City with barely enough time to make it to our next event. Our schedule was off and we arrived to the venue still tucking in our shirts.

History repeated itself during my last trip to the U.S., where we attended the Chicago Innovation Awards ceremony, for which we had been nominated – the first Mexican company to have that honor. Though I was determined to get the logistics right, the company from which we now get our batches of mezcal screwed up and was late with the product. After sleepless nights, changed flights, wasted money and a 3 a.m. connection, I finally made it to the event – only to be forced to postpone a dinner party with potential investors due to my lack of effective planning.

But as hard as these logistical snafus have been, they pale in comparison to my biggest failure to date: I made the huge mistake of refusing the services of an accountant. “How difficult could it be?” I thought, as I played “multiplication of the loaves” with our accounting. Then one fine morning last August, I received a love letter from the Mexican IRS. I had failed to fill in an “informative statement of operations with third parties.” The fine was hefty enough to crush my dreams of piña coladas. I used all my personal savings to pay up.

After readjusting my plans, transferring the accounting to a knowledgeable friend and losing weight (I barely had enough money for salad and maybe tuna every third day), things have been looking up. In spite of these mistakes, our company has persevered, and we now produce other specialty products, like chocolate, coffee, fruit preserves and other artisanal foods, the sale of which helps support our social programs. And to calm my nerves, I’m taking remedies my father-in-law whips up for me – he wanted to be a homeopath and ended up being an accountant, both of which would be helpful services for me these days.

All of these failures have a silver lining – they’ve left me with some valuable advice for you: Be coherent with your market and your strategy. Do your homework and assess the real potential benefit of partnerships before committing your time (and brand) to them. Spend extra time on logistics and planning – and always have a backup plan for when the unexpected strikes. Don’t skimp on vital services like accounting, and pay your taxes … even if you hate to. And don’t take failure so seriously – it’s actually quite common, and it can be enlightening, if you take responsibility for your mistakes and try to learn from them.

David Santillán Giles is founder and director of Agua Piedra Mezcal, and chief brand strategist at DUCO Design Lab.

Social Enterprise
business development, failure, social enterprise