06 Apr 2016
Raising a Glass to Life-Long Entrepreneurship
Twenty years of success (and failure) from Jim Koch and the Boston Beer CompanyTopics:
Courtesy of Flatiron Books
When Jim Koch (JD/MBA 1978) sat down to write Quench Your Own Thirst, published this month, he realized he had told these stories many times before—usually over a beer, preferably a Sam Adams. The founder and chairman of the Boston Beer Company, Koch first brewed the now-well known beer in his kitchen, long before the term “craft beer” was coined. In his entertaining new book, he shares 20-plus years of lessons learned since the first batch of beer—“the long arc of an entrepreneur’s journey,” Koch says.
Do you still consider yourself an entrepreneur?
Yes. It’s really at the heart of our success. Our very harsh reality is that we are in a business that is dominated by enormous global brewing conglomerates, with some of the best managers in the world, people like Anheuser-Busch InBev and SAB MillerCoors. I mean these are huge global companies that are very well run and have been very financially successful. In the US beer business we have a little bit less than 2 percent market share. So, we have to keep the heart and passion of a small business. Otherwise, the guys who are 100 times our size will eat us for lunch.
Is there one thing that you really wish you had known as a small business owner?
A lot. When you start a small business, your title says CEO and people think that means “chief executive officer.” But that’s not what it means. There is just you. So, CEO really means “chief everything officer,” and you find yourself doing things that you’ve never done before and never had any education on.
I have a JD and an MBA. I had almost seven years at Boston Consulting Group. But there are all of these things that you have to do when you start a business that I had no clue how to do. I didn’t know how to make a sales call. I didn’t know how to negotiate a real estate lease. I didn’t know how to set up a payroll. I had no idea how to interview and hire the right people. These are all really important business skills.
Photo courtesy of Boston Beer Company
When you first started with Samuel Adams, did you foresee the growth of the whole craft beer industry?
Yes and no. No, in that my original business plan with which I raised $240,000 was that in five years we would grow to a little over $1 million in sales, about 5,000 barrels of beer, and about eight employees, and then it would level off. But about six weeks after Sam Adams hit the market, it got picked as the best beer in America, and the whole company was two people. So, I thought, all right, this is going to be bigger than I thought.
But, yes, somewhere in my wildest dreams I did have this dream that Sam Adams the beer would help start an American beer revolution in the same way that Sam Adams the patriot started a political revolution.
Finally, the question I’m sure you get all the time: So many people dream of opening their own breweries. Does it make sense to? Is this still a sector that’s growing?
I hope so. Through our Brewing the American Dream Program, we have made over 30 loans to startup or growing craft brewers. It’s always very startling to people that we are actually helping our “competition.” But I talk about it in the book that what your conventional business wisdom says is your competition may be, in fact, important to your success. I’ve seen craft brewing grow from a handful of crazies back in the first part of the ‘80s and it was hard. Nobody knew what Sam Adams was. People were skeptical about American beer.
Fast forward to today and there are 4,000 craft breweries and 1,000 opening every year, and we’re selling 1,000 times a much beer as we were back when we were one of the very few. One of the things I realized and I think many of my fellow craft brewers realized was that we would succeed together or we would not succeed at all.
Class of MBA 1978, Section J