February 28, 2012 / ORIGINAL THINKING IS HARD
February 28, 2012
By definition, “craft” is an art or occupation requiring special skill and, if my taste buds have any say in the matter, the craft beer industry exemplifies the word. Jim Koch was one of one of the pioneers of the craft beer movement, which has arguably swept the nation as of late. In April 1985, he debuted his Samuel Adams Boston Lager in about 25 bars and restaurants in Boston. While it didn’t have the trappings of a company that was about to change the industry, Samuel Adams had two key qualities in its favor: a full flavored quality beer, and an incredible passion.
Today, the company has a team of about 750 people with breweries in Boston, Cincinnati, and Pennsylvania. The family of beers has expanded to include over 30 different beer styles that are ever-changing. Samuel Adams beers are now available in all 50 states and more than 20 foreign countries.
So, naturally, when given the opportunity to interview Jim, I wanted to find out just what makes this passionate founder tick:
What’s the best advice you’ve ever been given?
Early on in the business, I made mistakes, like not keeping a close eye on accounts payable. But I also received advice and made choices that panned out, like the decision to pay extra for high-quality ingredients.
My uncle, Jim Kautz, was a terrific advisor to me. He called one morning in March of 1985, before we had even received our first shipment of beer, and asked what I was planning to do that day. I said that I was planning to go buy a computer, he asked why, and I told him it was to track sales. He pointed out that I didn’t have any sales and suggested that I spend my time making sales calls, so I’d have something to track. In an instant, I got it. It’s related to the reason I didn’t spend money on office space; I can’t sell beer from a desk.
When you start a business, you have to do everything and it’s important to focus on the activities that provide the best return on time invested. Yes, our bookkeeping was a mess in our first year, but I decided that if we failed, the IRS wouldn’t care about us, and if we succeeded, we would be able to afford lawyers and accountants to straighten things out. So we focused on the things that did matter, making great beer and working hard to sell it.
Where does your love for beer stem from?
It’s in my blood and I am a sixth generation brewer. All the first sons in the Koch family, going back to the mid-1850s, have been brewers in the U.S. I actually found the recipe for Boston Lager on an old piece of paper in my father’s attic and took it as a sign to follow my dreams.
There is an entire generation of drinkers who are now too young to remember the beer world in the U.S. before Sam Adams, but in a word, it was a wasteland. Sam Adams was so drastically different from every other beer and it was amazing to see people’s faces when they tasted beer with flavor for the first time. I decided to go into the beer business with the passion for creating a better beer. Sam Adams was in my blood.
If you could share anything about Samuel Adams Beer to the world, what would it be?
I think it’s the best beer I’ve ever tasted. Of course, I’m biased, but it’s a beautiful beer that is well-balanced and complex. One of my favorite activities is taking people through an educational tasting of Samuel Adams and talking about the color, the clarity, the complexity, and the flavor. When I see someone appreciate the beauty of Samuel Adams the same way I do, it makes my day.
How is innovation managed at Samuel Adams?
Innovation and experimentation are key at our Boston Brewery. We’re an independent, American-owned craft brewer. We love what we do and believe in quality, creativity, and innovation.
We empower and challenge our brewers to find new beers, new ways to brew, and unique ingredients. I enjoy pushing boundaries with extreme beers, interesting ingredients, as well as the brewing and aging processes. It’s my life’s work, to elevate people’s thinking about beer and push the boundaries of traditional brewing to offer beer lovers an inspired drinking experience.
When I first brewed Triple Bock in 1993, it was the first “extreme beer” and the first beer to really stretch the definition of beer altogether. In 2002, I brewed the first batch of Utopias, which was definitely a beer in its structure, but its flavor profile resembled a fine port wine or Cognac. Since then, we’ve brewed several limited release batches of Utopias and with each batch we’ve continued to push for more complexity and strength, producing astonishing brews with alcohol levels reaching 27 percent alcohol by volume.
We experiment, we have fun, and often the outcome is a truly great beer.
Can you tell us what values you operate by as a company?
In the beginning, when local distributors declined to carry Sam Adams, I became my own distributor and carried chilled bottles of Boston Lager to bartenders around Boston. The beer was unlike any other they’d tasted. They admired the fact that I brewed small batches and kept an obsessive eye on quality and flavor, rather than trying to compete with the larger brewers mass-producing mainstream beers.
And to this day, I taste a sample from every batch of Boston Lager and meet every Sam Adams employee. You’ll never see me on “Undercover Boss,” because at some point during the year, I work directly with just about everyone in the company. From the people to the product, I am as involved in the company’s day-to-day operations as I was when Samuel Adams started.
Samuel Adams is now a public company, and the dedication to creating a high-quality, flavorful American beer is still the same—I make decisions based on the beer, not the bottom line. I have instilled operations and practices throughout every step of our business to ensure that Samuel Adams has stayed true to my philosophy of changing people’s perceptions of beer.
What influenced you to start the Samuel Adams Brewing the American Dream philanthropic program?
It really came out of my experience with starting Sam Adams and thinking about the areas that the small business owner trying to grow their business doesn’t have access to, mainly loans.
When I was starting The Boston Beer Company, I applied for numerous bank loans so I could build a brewery, but each bank turned me down. The bankers wanted me to demonstrate that people would buy the beer before they would give me the money to build a brewery. They were right, so I rented space in a great old brewery and launched my company.
I haven’t forgotten how hard it is for the “little guys” to get started. Samuel Adams Brewing the American Dream stems from this kind of innovative business spirit, and it is designed to give assistance and good advice to small business owners who want to pursue a similar passion and their American dream. I want to give them the means to succeed.
We launched in partnership with ACCION USA and provide loans ranging from $500 to $25,000, to be used for a variety of business purposes including expansion, equipment, and marketing. In addition to loans, the program offers valuable exposure to business counseling and networking opportunities. To date, we’ve provided coaching to nearly 2,000 current and aspiring small business owners and over $750,000 in loans to more than 90 small businesses in select markets across the country. The program has helped save or create approximately 800 jobs by supporting these small businesses.
We initially launched the program in 2008 to food, beverage, and hospitality small business owners in New England. This year, we’ve expanded regionally to New York, Lehigh Valley, Pennsylvania, Ohio, and most recently, to Chicago. This past spring, we also expanded the program to include craft brewers nationwide.
What is your end goal with the program?
My main goal is to help fellow entrepreneurs get a leg up. Our commitment to the community goes beyond the walls of our brewery. Brewing the American Dream is intended to support business owners by providing them with the ingredients to become financially independent and see their American dreams come true. Our goal with the craft brewing component is to support small business owners in our industry who are facing the same hurdles around starting or expanding their nano- or microbreweries that I faced when I started brewing Samuel Adams.
We know that small businesses are the primary driving force of job creation in our economy. But when you’re very small, there’s a funding gap. Banks don’t want to make small loans. They’re not setup to do that, they don’t want to administer them, they lose money giving small loans, and even the Small Business Administration doesn’t make loans below $25,000. So for a small business, there are really no sources of the kind of loans that they need to grow. But there are a lot of small businesses that can do a lot with a $5,000 or $10,000 loan, or even a $2,000 loan. We’re working to help in this area by providing the tools and support that small to mid-sized companies need for job creation. Businesses use the loaned money to grow and create jobs, and ultimately pay it back so we can lend that money again.
I wish I knew of this type of program when I started out, it would have made life a lot easier. Both, access to capital and access to coaching and counseling are invaluable to small businesses. They don’t just need capital, they also need expertise.
What impact has the program had on your business?
This program isn’t intended to impact our bottom line. I believe that it’s every company’s responsibility to give back. Brewing the American Dream is our way of giving back, but it’s also something that we believe in and have passion for.
One of the great things about Brewing the American Dream is how it draws in our employees. They love coming to the coaching sessions and mentoring businesses on topics ranging from procurement, to marketing, to finance, and brewing. We’re all invested in helping small businesses succeed. It’s a hands-on approach for us, more meaningful to our employees and to me than just writing a check.
How has the program impacted your life personally?
My job can be pretty absorbing, and it’s been really delightful to meet so many inspirational people who are eager to set out on a path of business ownership. It’s fun and rewarding, and if these are some of the people who are going to be the engine of small business in the future, it bodes well for the American economy.
What reaction and impact has the program received from communities?
Through our partnership with ACCION USA, we’ve been able to launch the program in multiple cities across the U.S. We’ve received a warm welcome from up-and-coming entrepreneurs in each of the communities in which we are active.
One entrepreneur that sticks out in my mind, and who is very close to home, is a woman named Linda. Linda works here in Boston and she’s the owner of the Boston Pretzel Bakery in Faneuil Hall. Recently, an ACCION loan officer named Elizabeth, shared the story of Linda taking the time to walk her around the Marketplace. While there, Linda introduced Elizabeth to other entrepreneurs and told them about Brewing the American Dream. Linda went up to each person saying, “You know how I told you about the loan I got from Samuel Adams and ACCION? I think this is something that could help you. This program is meant to help us little guys!” In retelling the story, it was clear that everyone there, and I mean EVERYONE, knew about Linda’s loan.
Our team is proud of how we are fostering a community of entrepreneurs and proud to be a part of a program that not only provides access to needed capital, but is also part of something special and unique.
What is the most meaningful story you’ve heard along the way?
Over the years we’ve helped coffee roasters, caterers, barbecue stands, pastry chefs, you name it. One story that stands out in particular is Lucy Valena, an extremely passionate coffee brewer who opened her own café in Kendall Square in Cambridge, Massachusetts.
Lucy previously worked at a local café and before that as a barista in San Francisco. She saw a unique opportunity to amplify the “coffee culture” on the East Coast, as she felt that even the high-end coffee chains were failing to do two things: 1. Deliver really high quality coffee and 2. Create a community around the love of the bean.
Lucy launched a high-end coffee catering company with the idea of providing coffee for special events, dinner parties for coffee aficionados, and businesses that serve clientele who appreciate better coffee, like art galleries. Her loan from the Samuel Adams Brewing the American Dream program went to pay for equipment such as commercial coffee grinders, an espresso machine, etc. Almost two years later, Lucy opened her own café.
Entrepreneurs are essentially artists of their craft. Lucy’s challenge was to stop thinking solely like an artist and start adding in the business mindset. Once she folded these two thoughts together she was able to expand and grow her business and still pursue her passion. In fact, since she’s been with the program she’s voiced to us that she believes the training and technical support we’ve offered were invaluable in changing the way she thinks when it comes to her business.
Has the program impacted Samuel Adams as a company, and if so, how?
This program allows us to speak directly to small business owners and passionate up-and-coming brewers in a direct way that is helpful and impactful to them. It’s a program we value as a company. We help other small businesses keeps our company in the mindset of a start-up and close to our entrepreneurial roots.
What would you say to other CEOs to encourage them to do the same in their business category?
I would say that writing a check is the easiest way to “give back,” but it’s a momentary act, sign the check and it’s over. I urge CEOs to find ways to do good on an ongoing basis and involve employees and others.
I remember when I started Sam Adams, it was very lonely. I wished I had known someone who had “been there and done that” and could give me basic advice. I would loved to have had skilled people give me guidance about things that I didn’t know about, like what the label should look like or how to do payroll, or even how to get the word out. Through Brewing the American Dream, the entire company is involved and invested. With our Speed Coaching sessions, we bring people in from all around the Boston Beer Co., from finance, to sales, to the person who buys our ingredients.
In addition to helping small businesses, the program has in turn helped us. Being able to give back makes the Boston Beer employees, or team, feel good. Having done a lot of these coaching sessions, I can tell you that the entrepreneurs are very energizing to be around. The program helps everyone at Boston Beer stay close to our entrepreneurial roots.
This program has been immensely successful, in that we’ve helped other small businesses in our community, and beyond, while also boosting our own team morale. I think that working within a similar program, or developing something new that works for your business, is a win-win for everyone involved. That would be my best philanthropic advice.
How effective do you think microfinance is for business in the U.S.?
Well first and foremost, I’m a brewer, not a finance expert, but I do know that I wish programs like this had been available to me when I launched Samuel Adams in the mid-‘80s. Microfinance empowers individuals, and through them, the communities in which they live and work.
That said, I also think that access to capital is not the only requirement for success. Micro-entrepreneurs often lack formal business training, access to experienced mentors, and the networking resources that help make their more advantaged counterparts succeed. That’s why we also look to methods like the Brewing the American Dream Speed Coaching sessions.
Where do you think we are heading with microfinance in this country?
To me, microfinance is most often recognized as a means for helping small business owners in developing countries move out of poverty. I’m happy to see that microloans have also become widely recognized as an important financial resource in the United States, and I think (and hope) that trend will continue. I know we’ve seen great results firsthand through our program.