Cigar Subscription Box Delivers Smoking Returns

This transcript was generated from the episode audio and may contain minor errors.

[Music]

Let's talk today about a cigar subscription box that delivers smoking returns. A subscription box service, in fact, can be one of the most reliably profitable business models, at least once you build it to a fundamental level of sustainability. They can be challenging to build at first. You're always worried about churn, people signing up and leaving. People don't like paying subscriptions for a long period of time.

So there are some obstacles compared to selling products on a one-off basis. But if you can make it work, then you have more sustainability because you know how many customers you have each month and so on. We have seen this before with all sorts of topics from Korean face masks, comic books, natural hair care, low carb, low sugar snacks, what else, candles, a Dutch personal shopping service, tea, coffee, just to name a few. Like we've seen some really successful subscription box services. In fact, I think I have in my notes here, I should start an offshoot subscription school just for all those stories.

So as I said, it's an attractive model. It has some challenges, but also some major benefits. So in today's story, a software engineer creates a premium subscription box service for savvy cigar smokers. He actually works for Google during the day. He operates the cigar business at night, but he started it while he was still in college.

It's bringing in thousands of dollars a month with room to grow. There's a lot we can learn from this one detailed story coming up, stay tuned. [Music]

Michael Archiola is a curious person with a great interest in learning. He actually double majored in computer science in business. And while in the throes of the academic pursuits, he stumbled upon an interesting observation.

Computer science students seem to actively use their knowledge and newfound skills to build things while the business students never seem to exercise their skills at all. In fact, the business school seemed to be rooted more in theory than doing. And Michael found this odd. Why wouldn't you reinforce what you were learning by applying it to the real world? So he decided to put his education to the test and build a real business.

His approach would be different. It wasn't following his passion. It was coming from his deep curiosity to understand how the process of building a business worked. And it would be an experiment in learning. His idea needed to meet certain criteria and be viable on its own.

So for months, he considered different options and possibilities. And then during his junior year on a visit to New Orleans, he was struck with a smoldering idea. He was relaxing by the hotel pool and saw a man smoking a cigar. A humidor went off in Michael's head, or at least a light bulb, you know, he got an idea. That's the point.

He was already familiar with the subscription box model from his brainstorming sessions, and he had an appreciation for cigars. So he decided to do some research. What he liked about the cigar niche was that it's well-known. It has a loyal following, and not much has changed about cigars over the years, as opposed to software engineering, where he would eventually begin his other career. While conducting further research, Michael observed the limited selection of cigar boxes sold by e-commerce shops.

Most were low quality. None of those shops at the time were offering unique selections, categorized by flavor, size, shape, strength, origin, or manufacturer. And so his idea, what if he were to launch a premium subscription box service focusing on quality cigars? Michael pitched the idea to his roommate, a fellow cigar aficionado. They decided to go for it, and they called the business Southern Cigar Company.

Moving forward with the subscription box model, Michael chose Crate Joy, saying their platform helped tremendously on the management and logistics side. Starting out, he worked with a local cigar store to handle his curated stogies. Later, as his business grew and the order size increased, he started buying wholesale directly from manufacturers. All shipments are handled out of the apartment. That's right, Michael doesn't work with fulfillment centers because they either massively overcharge or simply refuse to work with him.

And that's because the humidor included with his orders needs to be properly maintained. He also said he can't rely on advertising to attract customers because of his type of business. A lot of advertisers and platforms won't run tobacco-related ads, even though cigars are fundamentally different from cigarettes or vapes still. He has that obstacle to overcome, so he just doesn't do any ads. Instead, his customers come primarily from word of mouth, referrals, and the media.

The business has been featured in Maxim, Buzzfeed, The Distilled Man, and InStyle Magazine. This media coverage has helped generate a ton of traffic from search engines on top of the traffic from Crate Joy's marketplace. Startup costs were about $7,000, and since the launch, Southern Cigar Company reached a sustainable recurring income of $4,500 a month. The subscription boxes have a few different payment options. You can pay month to month.

You can pay for a three-month subscription. Get a little bit of a discount if you pay for six months. First-time subscribers get a triple torch lighter, a double guillotine cutter, and four new cigars with a humidity pack for freshness. Now, Michael has since moved on from his college days at Florida State. He moved out west, currently holds a job with Google as a software engineer.

He wants to continue the steady growth achieved with Southern Cigar Company while tending to a new business venture called Formal Founder. That's his second side hustle, in addition to the full-time job. So it's not just in computer science where doing is better than theory. Michael's glad he didn't let his idea go up in smoke. [Music]

All right, friends.

Well, as always, inspiration is good, but inspiration with action is so much better. There's a business out there that you can start. There's an idea you can pursue. And by the way, when I was looking over the notes for this story, we first worked on it a long time ago, but his business, Michael's business, is still up and running, southerncigarco.com. Looks like there's a variety of different options, packs, orders you can place, or at least check it out.

And here's a fun fact also. In the early days, he's running this business out of his apartment, and so he had a tobacco license to sell cigars, and this license comes from the Bureau of Alcohol, Tobacco, and Firearms, ATF. So one day, he's like studying for his final exams, and the ATF decides to pay him a visit because they just do these spot checks. So they actually come to his apartment, and they're surprised because that's not normally where they're going. Apparently, the apartment passed the test or passed the inspection except for one minor detail.

He was missing, and employees must wash their hands to sign in the bathroom. So he had to add that to his personal apartment. Just thought that was funny. Listeners, thank you for being out there. I'm so excited to make the show for you every day.

We are still going after nine-plus years, sidehustleschool.com for some resources, notes pages for every episode. Of course, new episodes out every day, seven days a week. My name's Chris Guillebeau. You are listening to Side Hustle School. [Music]

From the Onward Project.