Nine lessons from Jim Koch of Sam Adams
DAYTON, Ohio "Life is a lot better when you don't live every minute of it sober," Jim Koch joked to a packed room of beermakers inside the Dayton Convention Center Wednesday morning.
The founder of Samuel Adams and craft beer pioneer was addressing attendees at the second annual Ohio Craft Brewers Conference, hosted by the Ohio Craft Brewers Association.
Though that was just one of many times he had his audience laughing, the Cincinnati native had plenty of advice to give. He spent much of his presentation sharing the wisdom he's gained during the 32 years since he first brewed Sam Adams Boston Lager in his kitchen. ("It's all on one slide, so I guess I haven't learned that much," he joked.)
Here are his nine lessons "learned through beer," as he called them.
1. Strive to be happy, not rich. "If you're going to start a business, the chances that it's going to make you fabulously wealthy or even really wealthy or even generally garden-variety rich are really pretty small," he said. "Start a business that you think will make you happy."
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When Koch started, back in 1984, the smallest breweries weren't called craft breweries, they were called microbreweries, a term borrowed from the computer business. Red Hook was the largest, putting out 2,300 barrels a year, Koch said. His five-year business plan for Sam Adams was to grow to 5,000 barrels and eight employees. He expected to be a local brewery in Boston and to draw on his family's six-generation brewing history, which he thought would make him happy. But he never expected to get rich. (His holdings in Boston Beer Co. alone are worth roughly $38 million, based on Bloomberg data.)
2. Be better or cheaper. "When you start a business, you can really only succeed in two ways," Koch said. "You have a viable business if your product is either better or cheaper."
In brewing, the macro breweries can always be cheaper, he figures, so craft brewers have to be better, innovating to make new beers. "I've been doing this for 32 years, and I still get up every morning excited to think about all of the great beers that can be made." Currently, he's excited about his company's new nitro beer in cans.
3. Good ideas can be powerful. Koch started with just one employee, but the two of them "helped create a whole industry here in the United States, a movement which is now transforming how beer is made all over the world." (Craft beer is growing worldwide, even in countries such as Germany that have strong brewing traditions.)
"We have taught the rest of the world that beer doesn't need to come from huge industrial, global, intergalactic brewing conglomerates," he said.
4. Talent comes in all packages. Koch addressed how few women he saw in the room, and in the craft brewing industry in general. "When you're looking for talent, when you're looking for energetic, passionate, creative, resourceful, intelligent people, God made about half of them women, near as I can tell," he said.
5. Raise the average of employees. "We have a simple rule of hiring: Never hire someone unless they will raise the average for that position," he said. In other words, you want an employee who's better than the average person doing that job. Otherwise, he said, you end up with all average people, and "average sucks."
6. Focus on two or three things, even when you're being pulled in all different directions. "Every day, I get up and I think about, 'what are the two or three things I need to do to have a successful day?' " Koch said.
When he first started out, Koch told his sole employee "we need to make great beer every time and give it to people fresh, and we need to work our asses off to sell it."
7. Selling, then, is key. Koch always thought of selling as distasteful – after all, no one aspires to be Willy Loman (from "Death of a Salesman"), as he puts it. He's since learned its importance: It's about finding a way to help your customer improve their business and accomplish their objectives, he said. He cited working with Kroger 20 years ago to get the grocery chain to carry more craft beer. Not only did it help him sell his product, it also helped the chain make more money.
8. Use Koch's "string theory," aka "don't play company." Koch came up with his own string theory while working as an Outward Bound instructor in the '70s. He noticed that if he gave people plenty of Alpine cord, they'd run out before the end of their 28 days. So he started giving them half. "By the end of the course, they had plenty, because they learned to use it efficiently, " he said.
In business, culture and values can often substitute for money and resources, he said. For brewers, passion for the industry, concern for their communities and spending on the "need-to-haves" and not the "nice-to-haves" is key. When he started Boston Beer, for example, the business didn't have an office or a phone for the first year. He knew where all of the good pay phones were in Boston. (And when he eventually got a desk, after two years, it was a piece of plywood over a claw-footed bathtub.)
9. Everything comes down to people. "At the end of the day, everything happens with, by and through people," Koch said. "How they work together determines their success."
That can be extrapolated to the entire craft brewing industry, he said, because "big brewers are going to try to put us all out of business. They want what we have.
"In the next five or 10 years, at some point, starting and running a craft brewery is going to get hard again," he added. "These waves don't last forever. I've been through them," he noted, referring to 1996-2004 when craft beer went flat.
But Koch believes craft brewers can win.
"We will succeed together or not at all," he said of craft breweries. "We will all be successful if we stay together as a team, if we do our jobs and we run our asses off."
This year's Ohio Craft Brewers Conference, which continues Thursday, attracted 330 speakers, trade show vendors and attendees, up from 150 last year, according to Mary MacDonald, executive director of the conference.