Patron Founder John Paul DeJoria Knew Nothing About Alcohol At Launch, Company Sold For $5.1 Billion Years Later

Advice for entrepreneurs and investors often times calls for people to follow sectors and areas they have experience in or an interest in.

That advice didn't turn out to be true for one entrepreneur who became successful in a field he knew nothing about.

What Happened: The alcohol and beer sectors have plenty of companies that have launched products over the years. One of the people who launched a product in the sector was John Paul DeJoria.

DeJoria is known as the co-founder of Paul Mitchell, a hair care company that launched in 1980. Some may be surprised to learn that DeJoria is also the co-founder of Patron Spirits, owner of one of the biggest alcohol brands today.

DeJoria told CNBC he knew "nothing whatsoever" when he launched the company and started selling tequila. The entrepreneur invested "several million dollars" of his own money and knew there was a chance of defeat.

"It just felt like the thing to do," DeJoria told CNBC. "And, I did it."

While some may have doubted DeJoria on his new venture, the entrepreneur was convinced he could make a superior product and knew he would be able to sell it.

DeJoria got interested in the tequila business after a work trip to Mexico with his next business partner Martin Crowley where they tasted Mexican tequila.

"Smoother than anything we ever tasted before," DeJoria recalled.

The two co-founders commissioned Francisco Alcaraz, a Mexican distiller, to make 12,000 bottles of their new tequila. The bottles came with a production cost of around $20 and the duo looked to sell them for $37.95 each.

The problem was that no one was buying the bottles, which could have been because popular tequila brands at the time were charging $5 to $15 a bottle.

One of the strategies used by DeJoria was to sell small quantities to restaurants and bars and give free samples to celebrity friends like Clint Eastwood.

"They just loved it and just kept on reordering."

Fast forward to today and Patron is one of the bestselling tequila brands globally. In 2018, spirits company Bacardi Limited acquired the brand for $5.1 billion, netting a nice payday for DeJoria, who had a 70% stake in the company then.

Around three million cases of Patron are sold annually.

Related Link: Coca-Cola Dives Deeper Into Alcohol Sector

Why It's Important: DeJoria is a billionaire today, but his story of self-made wealth could be a story of inspiration for others. The entrepreneur previously sold encyclopedias door-to-door and was also a janitor. At one time before launching Paul Mitchell, the entrepreneur lived out of his car.

Paul Mitchell is a billion-dollar brand today, a huge success story that started from a $700 loan and an idea.

While he had already found success in the hair care sector, the launch of Patron came with risks and could have wiped away a portion of DeJoria's wealth.

"Let's just see how we go," DeJoria recalled thinking.

DeJoria said it took a few years to get Patron to gain traction, but he knew that once people tried it, the brand could grow.

"Anybody that tastes it won't use anything else. It's just a matter of time."

DeJoria offered advice to entrepreneurs who launch products in fields they're not familiar with. The key for DeJoria was to learn the vocabulary of the industry. The entrepreneur also looked at the distribution model for liquor to ensure the product would get to consumers.

Communicating the product to the customer was also important, which is why DeJoria would create posters and easels to put in bars and liquor stores that explained the product.

A big piece of advice from DeJoria comes from his days of selling encyclopedias door-to-door.

"Don't give up. Just keep knocking on doors until you get enough people to listen to you."

This story is part of a new series of features on the subject of success, Benzinga Inspire.