How I Built This with Guy Raz - Advice Line with Jim Koch of Boston Beer Company

Episode Date: August 8, 2024

Boston Beer Company founder Jim Koch joins Guy on the Advice Line, where they answer questions from three founders about finding product-market fit.Today, we meet Kim, whose tropical-inspired apparel company in Florida is venturing into the rum market. Then Llance from Washington, who is taking his tea-bag-soup-broth business national. And Ami, who wants potential customers to know that her Ontario-based electrical contracting company has some of the best service out there.If you’d like to be featured on a future Advice Line episode, leave us a one-minute message that tells us about your business and a specific question you’d like answered. Send a voice memo to [e-mail] or call 1-800-433-1298.And be sure to listen to Boston Beer Company’s founding story as told by Jim on the show in 2017.This episode was produced by Chris Maccini with music by Ramtin Arablouei. It was edited by John Isabella. Our audio engineer was Gilly Moon.You can follow HIBT on X & Instagram and sign up for Guy's free newsletter at guyraz.com.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place, your place. with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.ca. slash host. Hello and welcome to the advice line on how I built this lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show who will attempt with me,

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It's full of insights and ideas from the world's greatest entrepreneurs. You can sign up for free at gairoze.com. And we'll put all this info in the podcast description. All right. Let's get to it. My guest today is Jim Cook, founder of Boston Beer Company, the American Brewery best known for Samuel Adams Beer. Jim, welcome to the show. Welcome back to the show, I should say.

It's always a pleasure having a beer with you. It is always a pleasure. If I enjoy myself here. I think that's perfect. Jim, if I had a drinking buddy, you would be my top choice. You're probably a lot of people's top choice to be a drinking buddy. So thank you for being here. And yes, please, let's all enjoy a Sam Adams beer.

Jim, you were, just to remind our listeners, you were first on the show back in 2017 to tell the story of how you created the Boston Beer Company and Sam Adams Beer, and it's just such an inspiring story because at the time, when you started this brand in the 80s, you were on the fast track to sort of financial stability. You were working at a consulting firm, but you were feeling suffocated. You were feeling like this wasn't the life you wanted to live,

so you left, and you decided to start a beer brand, and you actually are widely credited as sort of the godfather of the craft beer revolution that really kicked off with Sam Adams beer. You are still with the Boston Beer Company, but not no longer running the day-to-day. You're the chairman. And I'm super excited to have you on the show to help us with these entrepreneurs. But before we get to them, let me start by asking you, Jim, about product market fit for a moment.

Because this is going to come up in our conversation today, right? I mean, you were essentially creating a new kind of beer in the U.S. This is a flavor profile that most beer drinkers weren't used to. They were used drinking Coors and Budweiser. How did you get ordinary beer drinkers in the mid-80s, you know, the guys at the corner bar, to start drinking Sam Adams beer? Well, you know, I have to say I didn't try to do that. And I think that'll come up with a lot of the folks we're going to be speaking to today.

You know, when you're at the leading edge of a product that is very unfamiliar to people, even a category that is unfamiliar, you don't want to go where all the volume is in the mainstream. You know, you want to just find a handful of people who will get what you're trying to do. And so 99% of the beer drinkers out there, I wasn't trying to reach them. I was really trying to reach the 1% that was interested in flavor that drank. beer for the taste that knew a little bit about the ingredients, way more than trying to convert a bud light drinker to Sam Adams. That was a shock to their palate, to their system.

You know, it might have even harmed them to have that much flavor in their mouth at one time. Yeah, I mean, this is a classic example of finding product market fit. You engage with early adopters. I wrote a blog post about this a little while ago in my newsletter, and it's interesting because in most cases, you start with early adopters. You sort of give them the product. You get their feedback. You really kind of cultivate their passion, right?

And soon enough, it's those people who become your biggest evangelists. That's exactly right. Our whole market, when I started, was a list of 100 bars. In the whole world, that was what we cared about, was those 100 bars that were in the right pockets in Boston. We only had one truck to deliver the beer, so we couldn't go all over creation. But we focused on them. And eventually we got every one of them to carry Samuel Adams. It took about a year to do those 100 bars.

But that was where we focused, and it grew from there. I remember vividly the story you told about using the payphones in Boston as your office because you didn't have an office. You didn't have a phone line. You were using pay phones and you did this because you were taking any money you had and using it to improve the quality and the flavor of the beer. Like you were really skrimping on the other thing. So I'm curious when you, you know, when early stage founders might ask you or. talk to you about where they are. How should they think about allocating resources in the early and, you know, early stages of the business? Well, I'll give them some simple advice. Don't play company. You start out and you think, well, I'm starting a company. I need to have the things that a company has, you know, I need to have an office. I need to have, you know, a computer. I need to have, you know, an executive assistant. Well, be as. You know, You don't need those things.

They suck up money and they distract you. And, you know, when you do have an office, you tend to want to go there and avoid all your real challenges because it's a safe place. Well, I didn't have that. All I had were those hundred bars. Yeah. We could, I could just talk about this forever. But we got to bring in some callers. So, Jim, what do you say?

Yeah. Should we bring in our first caller? You sound like really great people. So I'm anxious to talk to them. All right. I think we got our first caller online. Please introduce yourself. Tell us your name where you're calling from. Hi, I'm Kim Jones, the CEO and co-founder of Tropical Vibes. We're based in Pona Vidaida, and we are a lifestyle brand that focuses on tropically inspired products. So we started about

three years ago with branded apparel and home goods and are very excited to be expanding into the spirits market with a new rum that is. set to launch in a few weeks. So thanks for having me. Amazing. Okay. And what, what's your question today, Kim? So my question is, as I'm sure you've heard, everybody is talking about brand story. And that seems to really be the buzzword. And so as we're growing our brand, how do you suggest we create a compelling brand story that spans across all of our product lines and is not based on our, our founders' story. Got it. Okay. Well, let's break this down a little bit first, Kim. Tell me about how you started this brand.

How did you start Tropical Vibes? Yeah. So my husband and I decided to start a travel agency a few years back as a side hustle. And we named it Tropical Vibes Travel. And one of the things we did was to create hats and shirts and things for the legions of customers that we anticipated coming to a travel agency, and we were awful travel agents, but everybody wanted the hats and the shirts. And so we pivoted and started selling the branded apparel. Actually, throughout the country, we ended up in about 120 stores across the U.S. and Canada with our branded apparel. And it says tropical vibes on it. Tropical vibes. Like a palm tree. Yeah. And so, okay, so the idea was, originally, it was, I love this, it was a travel agency to, presumably to help get people to

tropical areas, right? Like Caribbean and that didn't work out, but the swag and maybe the swag that you were going to give away turned into the company, turned into the business. Yes. And so that, and today you've got, what do you do? Hats and shirts.

Yep, hats and shirts and some items for the home, but we always wanted to do a rum, and so we are really excited to be expanding the product line by launching this rum line. All right. And so right now you're trying to figure out what is the story we tell, right?

Jim, I want to start with this idea. And you might have some questions for Kim even before you answer it. But, I mean, obviously the Sam Adams brand is in the story, just even in the label, even in the name, even in looking at Sam Adams on that, everybody listening can picture what that label looks like. And it tells them a story that even if it's not the exact story you thought of, it's enough of a story that we can all gather around it, right? And so how do you think about storytelling with a product or with a brand? To me, it has to start with a founder. And I know you're a little skittish about that, Kim. But to me, a brand has to come from somewhere.

And generally, that somewhere is the heart. and the passion of a human being. I mean, with my beer, you know, Samuel Adams, the historical figure, the Patriot, had a passion for American independence. And I wanted, with my beer, to create beer independence for the United States. I didn't want to be dependent on, you know,

imported beer from other countries. So you've got to start with your own passion. and what do the tropics mean to you? Because essentially, you started with a business where you were going to take people to the tropics. Well, that didn't work. But now you're continuing that mission because you're bringing the tropics to people. Yes. Because, you know, to you, the tropics are this unique place where you put your feet in the water and your ass in the sand.

and you breathe out, you're relaxed me. What is it about the tropics that you want to bring to people? Tell that story. I think that's a great point and trying to separate the two, the founder from the brand, because we have done well with the apparel. And I always joke that our biggest retail customer is in a very small town in Idaho, right? So clearly, the tropical vibes brand really resonates with people that aren't in South Florida or aren't living the dream in the tropics. And I want to capitalize on that, but I would love to make our customers sort of the hero of the story.

I don't want to be the hero of the story. And I'm trying to figure out how do you tell a brand story that puts the customer front and center? I'm not sure you have to sort of separate the two, right? Like, in other words, I don't necessarily think that the story you have to tell is exactly your story, like Kim Jones. Why did I want to do this? But I think that the question, why did I want to do this should inform how you think about the brand story in general, right? And so it sounds like there was, from what I understand, you did not grow up in Florida, right? You grew up somewhere cold?

Seattle. Okay. So rainy and cold. And so did you, presumably, you would dream about, I mean, now you live in Florida. Florida, would you dream about the, like, what do the tropics mean to you? Why, why were you drawn to that world and that culture and lifestyle? It's just, it's our happy place. It's just everything Jim said, right, our toes in the water, our butt in the sand. And really just that, we always joke, it's that first day of vacation feeling, right? It's just relaxed. It's calming. It's soothing.

It's fun. You know, we did our research when we started the business. And, you know, you know, know, about 26 million travelers go to the Caribbean every year. I think it's almost human nature to be drawn to that type of environment. You're selling that feeling that you described. So, you have to have, you know, some layers to your brand. I mean, with the rum, there's going to be layers around the product, how it's made, who makes it, that ladder up to. You know, that ladder up to why is this better? Why is tropic vibes the rum that I should buy instead of, you know, Malibu or Captain Morgan or Sailor Jerry? Because you're going to be on a crowded shelf.

Right. So what is unique special different about that rum? And some of it has to be the story. The consumers are looking at the bottle, they can't taste the rum. You know, so you've got to create the taste experience. It's aged in this kind of barrel. We sample it and we don't bottle it until it's ready. Our rum maker has been making rum in the tropics and the cool nights and the warm days,

bring the rum in and out of the wood that extracts vanillins from the wood that you wouldn't otherwise get. I mean, it just has to be many layers to your store. Kim, I'm curious how much, what percentage of your business is direct-to-consumer online through your website and what is through the boutiques? We are about 80-20. So 80% to the boutiques and about 20% online. So that 20% right, those direct-to-consumer sales, I mean, that's really where you can start to develop a community. And I know if I'm looking at your website, you've got a blog and you've got some recipes for cocktails. And that's a great start. And I would really lean into that and really try and cultivate. That 20 percent, you know, Jim earlier talked about taking Sam Adams initially to those early adopters

and really leaning into that group to validate this proposition, this idea that this beer and flavor profile he was producing was going to work, right? And those people would become the evangelist. Those were the ones who would turn Sam Adams beer into what it is. To me, I feel like you have an opportunity with that 20 percent, right? The people that you can gather data from, the people who you can ask for feedback, who you can offer incentives if they answer, you know, a survey. I mean, I think one of the things you can also do with your existing inventory, you know, is put a tag on the inventory with a QR code. Let people scan that QR code that takes them to a Spotify playlist that you guys have curated of great music, of tropical vibes. I mean, there are little things I think you can do to start building.

out that community, because eventually you want to see if you can shift that 80-20 around, right, where it's 80 people going directly to you and 20% of that business coming to the boutiques. Jim, what do you think? Yeah, I love that idea. I actually wrote it down, a Spotify playlist because we have a hard tea that's vodka-based called Suncruiser, and I wrote that down for our product guy, so I'm getting some value. Okay. I have to compete against Jim?

Oh, boy. No. No, I think Guy is absolutely right. You're only one person. If you can create acolytes and promoters out there who also get your vision, I'll build on Guy's comment. What if you create like a scrapbook where people can post pictures of themselves in the tropics or enjoying tropic? rums, you need things that people can put themselves, situations people can put themselves in. That's what you're trying to do with your product.

So allow your drinkers to post their pictures. Yeah. And doing that, right, that having those, like, user-generated photos, you can incentivize people with, you know, free pair of sunglasses. Maybe you just make cheap sunglasses, you know, that are just swag, you know, that says tropical vibes on it that people will get if they, you know, if they post or if they, you know, post a photo of themselves with a, you know, a glass of rum or holding the bottle, something like that. I just think there's so many opportunities that you, little things you can do now to really start to build a community, which will, these will be your force multipliers.

They use that term a lot. It's a military term, but it's the people who will go out there and evangelize for your product. Absolutely. Excellent. Well, thank you both. I appreciate it. Yeah. And super helpful.

Thanks for having me. Kim, thank you so much. Good luck with Tropical vibes. We'll be following your progress. Yeah. Fantastic. Thank you. You know, I wonder, I wonder when you think about, Jim, just building a brand today.

It's just, it, I mean, is it, do you think that it's harder because just the, there, there's more things out there? Or do you think that it's not necessarily harder today than it was in 1985 or 86? I think it's the latter. It's never been easy. I mean, it's building a brand is just, it's hard work and it's a miracle when it happens. I mean, you're creating something out of nothing. It's, you know, the 21st century version of alchemy. And that was always tough. But you need to be a storyteller to create a brand.

Yeah. All right, Jim, we're going to take a quick break. But when we come back, what if you're going to be a storyteller? If you could get soup broth from a tea bag. That's coming up in just a moment. Stay with us. I'm Guy Raz, and you're listening to the advice line right here on how I built this lab. Welcome back to the advice line on how I built this lab.

I guess today is Jim Cook, founder of the Boston Beer Company. All right, Jim, let's bring in our next caller. Tell us your name where you're calling from and just a quick line about your business. Hi, my name is Lance Kessner, and I'm from Bellevue, Washington, near Seattle. My wife, Lori, and I created Millie's Sipping Broth. And Millies is actually the first ever soup broth in a tea bag. It's gluten-free, keto, vegan, and kosher. Wow. Okay.

And so this is a broth, like vegetable broth or chicken broth, but it's in a tea bag? It's all vegetable. You make it in a tea bag. You steep it like tea. and it makes a fresh cup of broth. I love it. This is a super innovative idea. And what's your question for us today?

My question is, this coming fall, we're rolling out our product nationally at Walmart. And we're really excited about this and are financially prepared. However, what keeps me up at night is thinking about how we'll be able to fund our continued growth beyond that. So what are some of your ideas about raising capital? to support a new brand that is getting national traction in retail. Okay, we'll get to your question a moment. Just a couple quick questions about Millie. So tell me a little bit about how this started.

So my wife, Lori, she used to be a teacher. She was a lifelong Weight Watchers member. And the break room was always filled with all kinds of cakes and cookies that were left over from the weekend. and she wanted something healthier. So she used to take a bullion cube with her to school because she wanted something savory and hot. There was nothing out there. And I said to her, let me make something that is healthier for you.

And so I formulated something that didn't have all the preservatives and everything like that. And she said, put it in a tea bag so I can make it really quick because I only have a couple of minutes. So I, you know, ripped open, lipped in tea bags in our kitchen. put the ingredients in. I made 10 of them. She took them to school and had one. And by the time she came back, they were all gone because all the other teachers had taken them. Wow. Okay. So right now, you are in how many stores? We're roughly about 700 stores. And how many people do you have working? So the founding team is just my wife and myself. And then we have a partner company that

does the operations and sales. So we work together with them. And so how, tell me a little bit about how you're doing so far. I mean, are you, have you broken half a million dollars in sales yet or not quite yet? We're, you know, under two million. Oh, wow. Okay. So you guys are well on your way. So with just such a small team. Yes. And so now that you're going into Walmart, your good question is, do you, you know, should you approach, potentially approach investors? Jim, let me pass this over to you. Maybe you've got some questions for Lance before you kind of launch into his question or answering his question.

Yeah. What are you going to use the capital for? What do you need money for? Well, basically, I think the most important thing is having inventory and having the capacity for inventory. Now, we would never make inventory. ahead of having commitments or purchase orders from a customer. But to be able to tap into it when it's needed is critical. Yep.

And when do you get paid? Well, usually with Walmart, it's, you know, 45, 60 days, something like that. So that's typical retailer, you know, payment schedules. And you sell directly to Walmart? Yeah, it's a direct sale. Okay. I mean, one question to ask. ask Walmart. And, you know, Walmart wants you to succeed. You know, sometimes they have this

reputation of being like really cutthroat and predatory and so forth. But they're nice to little guys. You know, so a question I would ask is, can you guys pay me in 15 days? Good question. And if they can, you know, that solves a lot of your problem because you probably don't have to pay your, you know, your producer's suppliers in 15 days. So now you've got a positive float. And the issue that you face, you know, trying to raise capital at what is still a fairly early stage is people want a lot. Yeah. You know, if they give you a half a million dollars, they may want half of your company. I mean, really think through your cash flow.

And, you know, hoard cash to the extent that you can delay your payables and accelerate your receivables, that's as good. as investments. I mean, I think back on when I started my company, and I don't have a lot of regrets, but I realized I started my company with $240,000, $100,000 of it was mine, and then I raised another $140,000, and that represented like 35% of the company. I never needed it. Because I, like you, was producing through a contract producer, and I was selling to a distributor, and I thought I needed to give them 30-day terms. And I didn't. They liked me.

They wanted to see me succeed. If I'd gone to them and said, you want me to succeed, I'm struggling. Can you pay me cash two days after delivery? I mean, I'm not asking you to finance me. You've got the product in your warehouse. But you're a successful, big distributor with lots of money. I got nothing. Why do I need to be your bank?

You don't need to finance Walmarts. business, they've got the product, you know, can the EFT you the money five days after they've signed a bill of lading and the invoice? So that's where I would start. I think that's great advice, Jim. I mean, essentially what you're saying is at this point, Lance needs to be cautious about approaching investors. Yeah. Don't take anything more than what you really need. Early stage investor, money is the most expensive money out there. So you hoard your cash and then also look at any money that you're spending that is not directly related to making the product or selling the product.

Well, you know, we started this business in 2012 with those fundamentals in place, you know, working out of our house, not spending on things that weren't necessary. And so I think that everything you just said just really rings true. And I really like your idea of, you know, widening that gap when cash is available to be able to do that. I think at the end of the day, we just really will be careful about taking on anything bigger than what we can actually support. Yeah, don't grow beyond the consumer demand. I mean, you should probably be thankful that Walmart's not putting you in 5,000 stores. You'd rather be in 500 stores and be successful

than be in 5,000 stores and not. You know, you can go from 500 to 5,000 over time. I mean, we started with Walmart maybe 10 years in, and they put me in 200 stores, and I was very excited by that. And if they'd said, I want to put you in 1,000, I would have said, I don't think so because, you know, if 600 of those fail, you're going to take me out everywhere.

But if I'm in 200 and it succeeds, I'll be in 500 next year. So don't try to, you know, go faster than the consumer pull will allow you. I also think, Lance, you're, you are operating in a really interesting space because you're really not competing against anybody. I mean, you've got the bone broth companies and the bullion companies, but I think that you're, you can operate under the radar and grow really steadily for a long time before the sort of the players, the big players notice you, which I think is an advantage. I think about an episode we did a couple months ago on nut pods, you know, the creamer, the non-dairy creamer that had an amazing exit. And, you know, a Madeline who built that brand, I mean, she really operated under the radar for a long time, even though there were other. companies that were making nut milks and things like that nobody was really thinking about coffee creamers in the way that she was and so to me there's a there's a parallel with this brand which

which it allows you to to sort of grow more slowly and and focus on brand building more slowly yeah we we were very fortunate to have weight watchers discover us during COVID and they put us on their website to their four and a half million subscribers talk about, you know, your 1% who really looking for you. So those types of opportunities have always been our first priority. Yeah.

And I would, a couple other things that occur to me as we're talking. And Guy emphasized you, you're creating a category. You're different and you are creating it as a kind of as a wellness

category. And it's in mental health kind of space. And I would not be bashful about pricing. You know, with Walmart, you've got to deal with them and so forth. And you're going to sell it outside of Walmart. You know, you can get more money for it than you're asking. Right now, you're selling it for basically the price of a K-cup. But you're much more valuable than that. It's a premium product. Yeah. Yeah. Yeah. We believe, we want people to drink it every day. day and think of it that way. And so, yeah, I agree with you. I mean, at 30% more, people can still

drink it every day. You're appealing to the early adapters to whom this is meaningful. Instead of whatever it is now, a dollar, it can be $1.30. I mean, people can afford that. And that extra price probably doubles your margin. Yeah. And, Lance, one question for you. I mean, obviously Walmart is a huge coup much more sort of, you know, significant than Whole Foods or Trader Joe simply because of volume. But are you looking at Whole Foods? Are you talking to buyers from Whole Foods? Yeah. So this is, it's all happening simultaneously. So we got the Walmart opportunity because we won Golden Tickets at their open call for American-made products. And in parallel, we had been having these conversations with the other large, you know, notable

organizations and all of the sudden everyone wants to talk to us at the same time. And so that's why that question, it's like, how do we support outside of Walmart without drowning ourselves, really? And be cautious. If you don't think your product is going to pull through and generate the sales that meets their hurdles, you don't want to be in that store. It's 10. It's 10.000. It's tempting, but you only want to be in the stores where you have an 80% confidence level that you're going to meet their hurdles to stay on that shelf next year. I always tell people that, you know, getting on the shelf is one thing, but getting people to come back over and over again is the hardest part of, and, you know, a lot of people

don't realize that, but you do. Yeah, obviously. The brand is called Millie's Sipping Broth, Lance Kessner. Good luck. I'm excited to see this out in the world. Thank you. It's been a pleasure talking to both of you. Thank you very much.

Thanks, Lance. Sounds delicious, actually. Yeah, I think it's a great idea. They literally are creating a category. You know, I keep thinking. You mentioned something interesting because you said wellness, and I thought, wow, that's right. I mean, you said mental wellness. And I thought, that's interesting because that's right.

It's not just a sort of a physical health kind of lifestyle brand, but it's about, you know, just taking the time to sit down and to kind of meditate about the day or whatever and, you know, or read a book and you're sipping the broth, you know, like you'd have some tea. Yeah. And sometimes that reframing can make all the difference. I never forget a story that a guy told me it was the billion dollar cup of coffee. So this guy was the first importer into the... the U.S. for Red Bull. And Red Bull, you know, came out of Austria. This was 25, almost 30 years ago.

And they were coming to the U.S. and Red Bull wanted to price that seven and a half ounce can at a $1.49. And he, having all this great experience in the soft drink industry, he said, no, there's nothing in that door that costs more than 99 cents. And he was driving up to meet with the Austrians in Chicago. And he was getting a little tired. And he went up and had a Starbucks up there. And he bought a cup of coffee and it was $1.99. And he got back in his car and drove the meeting.

Then he realized, wait a minute, I just paid $1.99 for the exact same thing that Red Bull is selling. I'm not buying a cup of coffee. I'm buying energy to get me. through. And I just paid $1.99. Of course I'd pay $1.49 for that experience. And that 49 cents difference per serving in the first two years was a billion dollars in revenue. So that's the billion dollar cup of coffee. It's amazing. It reframed what people were buying. You're not selling them a soft drink. You're selling them energy. So think big.

No question about it. All right, Jim, we're going to take another quick break, but just ahead, an electrician who actually answers their phone and shows up when they say they will. Stay with us. You're listening to the advice line right here on how I built this lab. Hey, welcome back to the device line on how I built this lab. I'm Guy Raz, and I'm taking calls today with Jim Cook, founder of the Boston Beer Company. All right, Jim, let's bring in our next caller. Hello, hi, Jim. Hi, hi, Guy. Hello, please introduce yourself. Tell us your name and where you're calling from, and just a quick bit about your business. So my name is Amy Dana, and I live in Guelph, Ontario, which is about an hour outside of Toronto.

And I co-own an electrical contracting company with my husband Patrick called Blay Electric. And our mission is to make a positive impact in the trades for both our employees and our customers. Nice. And what's your question? So the question that I have is, how do we effectively convey our unique value proposition to expand our company.

Okay. So tell us a little bit about the business. I mean, presumably you do all kinds of electrical work and homes and maybe you even install like electrical chargers for people's cars and things like that. Exactly. How did you, how did you guys start the business? Presumably you and your husband or one of you are electricians. Yeah.

So my husband's the electrician. We started it 13 years ago. And we really started out of a reaction to how the trades were really run. And Patrick was working for a lot of companies that were unhealthy, didn't treat him so great. So we built us out of a reaction to that. And we really wanted something where we could have a good lifestyle for ourselves and also for the people that started working for us.

And we cared a lot about the clients that were starting to hire us. We noticed that they were asking us lots of questions about, like, when are you going to show up and are you going to actually answer your phone? And we started to do that really well. our company started growing as a result of that. Isn't that amazing, Jim, that just the fact that this is an electrician that answers her phone and actually arrives when they say they're going to arrive, like, that is actually kind of a revolution now, right?

It's brilliant. Because usually you get like, well, the window's going to be from 7 a.m. to midnight the next day. So just wait for us at home and we might show up. So you basically say to people, look, we're going to show. up at this time, we're going to answer the phone, and we're going to, you know, we're going to do a good job. We're going to give you an honest service. Yeah.

And we're going to, like, bring our humanness to this. Like, we are human beings, and so are you. And we really care a lot about relationships. Hmm. And so your question was about this, like, conveying your value proposition, presumably your customer service, and the fact that you're basically saying, look, we're going to, you know, we're going to give you great service. but we're a little bit more expensive. Is that fair to say?

Yeah, exactly. Like, we've put into place in our operations, somebody that is incredible at giving customer service. We have some of the answers the phone that returns the phone calls. A lot of electrical companies don't have that. We have an estimator. So we have, like, a lot of operations in the back end that gives good customer service.

But that comes at a cost. And so when our customers are calling us and they're comparing our estimate next to Joe's estimate, and they're just looking at the bottom line. What we are offering is actually more because you're getting a really awesome service and we have a really good reputation. But to convey that to them in a 10-second phone call

or in an email quote, it doesn't always land. And I'm curious about how can we start to build our business while keeping the integrity of the thing that matters most to us. Yeah. Jim, you want to tackle this one first? Sure. I looked at your website. I really like what you're doing. It feels like an upscale product. It felt like a family. I felt like I was looking at people who care. So is it worth 25% more? Well, probably to some fraction of the customers. You only want that fraction. So start with that. To me, be on. up front, we are not going to be the cheapest quote. We will be the best experience. Yes. And here's what makes us different. Because, you know, the most expensive job out there

is not in a price. If it's, if the work has to be redone, if they, you know, mess up the furniture in your house, if they make you wait six hours, what is your time worth? That's what makes a really expensive job. It's not the quote. And then you've got a, you know, and you've got, I mean, kind of rehearse it in the sales training. They would call it your 30 second drill. You know, we're not the cheapest, but you get what you pay for. Our electricians have been with us for several years. My husband is one of them. And, you know, you're going to get their cell phone number and you're going to get an estimate that we stand behind. We will come back if you're not satisfied. And by the way, we have 500, five-star reviews that are on our website

and you can scroll through them. And if you want to be the 501st of those, then we would be happy to do the job. I mean, so rehearse it and test it. And you know, and you'll learn some people respond and they'll respond to certain things and use the same pitch over and over and just refine it. Jim, I think that's such a great idea. And, Amy, I'm going to double down on that. I think that you've got to put that out front from the beginning, that message this idea that, hey, we're going to be a little bit more expensive, but you're going to get the best service that you've ever had from electrician. You're not going to have to call up 10 other people to fix the job. You know, reminds me, Jim, you mentioned, you know, you talked about your early pitches.

I mean, Sam Adams beer was going to cost more money than a Budweiser. It was going to cost more than a course. But the value proposition is where you're getting better quality. We're getting better ingredients. And it was going to be a better experience. And I think that that's the argument that you make here from the get-go. I mean, one of the things you can think about is literally building a brand Bible for your business, okay? Because your expenses are higher, right?

You mentioned that you've got an estimator, you've got an operations manager, you've got a bunch of electricians. and you've got a customer service person who's answering the phone. Many electricians work with answering services. Yeah, exactly. And it's a couple people with trucks, and the answering service takes a message. They can't really answer any technical questions. They can't give you any information over the phone. To me, there's an argument to be made here that you build a brand Bible.

It doesn't have to be long. It would be 10 or 15 pages where everybody on the team is on the same page. They know that when your customer service person's on the phone, they know that they're going to say, hey, just heads up, we're probably going to be 5% maybe even 10% higher than other quotes you get. But here's what, here's why. Here's what you get with us. It's a white glove service. That's the way you message it because it's up front.

It's transparent. And I think customers will appreciate that. There'll be some people who say, no, thank you. But I think there'll be a lot of people who say, okay, let me try it. I really love that. I love not hiding because before I felt like we had to kind of hide behind the fact that we were. were, you know, more expensive. We didn't really, like, put that forward. And I love just, like, naming that from the very beginning. Yeah. And weeding out the people that aren't interested in

actually working for a company like ours in the first place. You very much want to weed them out at the beginning because you are investing some of that money up front in the relationship with them because you're going to come in and do an estimate. And you'd rather have a customer that says, no thank you right away. You'd rather have a quick no than a slow maybe. Yes. I think, Amy, there's one thing that you can also do very quickly in addition is you have got to gather testimonials, and I know you've got five-star reviews, but I think that what you want to do with your existing customers is say, hey, look, would you be willing to offer a testimonial or even hop on a call with a prospective client? We'll give you 10% off your next visit or we'll give you a free diagnostic or

free checkup because word of mouth is critical in your business and especially if you're looking for people who are willing to pay a premium for a better service. You know, I'm asked all the time when a contractor comes and works with me or does, if I'd be willing to hop on and if they're good, I'm always willing to do it. Yeah, that's really, that's really helpful feedback. Thank you for that. Jim, any final words of advice? Yeah, I would sit down and, you know, write down off the top of your head, all the reasons that your experience is better. And don't stop until you have like a dozen. And you'll settle on like the three or four ones that people bite on and the ones they just ignore. But start with a long list. And the other thing that you can say is we will also, we are on the

business of educating consumers. So one of my favorite repair guys who fixes our appliances, is he actually failed to fix our refrigerator. He came five or six times, and eventually we had to buy a new fridge, but he couldn't fix it. He tried. But the thing I really appreciate about him and why I keep bringing him back is he explains in very clear and simple language what he's doing and why and how he's approaching the problem and trying to solve it. And so in the course of that relationship, I've come to understand how these appliances work better. And I've come to understand what the pain points are, what the challenges are. And so I'm actually more educated about the technical specifications of some of these appliances, which is actually amazing.

And so if that's something that you can also do or you offer where your electricians literally talk to the customers and say, let me explain what's going on here and why we're doing what we're doing, that's a big bonus as well. Yeah, I really like that piece too because that also further builds that relationship that also so parents. amount to so many of us at work for the company. You know, our electricians, we have very little turnover. We've been in operations for 10 years, and we have not many people ever quit or leave because it's just such a different experience. So I really love that idea of another way of building the relationships with our clients. Amy Dana, Blay Electric, thank you so much for calling.

Thank you so much, Guy. Thank you, Jim. Have a great day. It's our pleasure. Jim, before I let you go, I mean, first of all, thank you for helping me and for all the great advice you eat at the callers. When you think about, when you were in their position, you know, it's a different business and different, you know, a category, but the same kind of place, right, where you're on your own and you're trying to convince people to pay attention to what you're making. What do you wish you knew?

What advice would you now would you've given to your 34-year-old self? That's a really good question. And I can't specifically answer it, but I'll give you a perspective on it. You know, I started Boston Beer Company from nothing. It was in my kitchen, but I did have a business plan. And my business plan was that in five years, I would grow all the way up to being a million dollars in sales. That was about 5,000 barrels of beer, eight people.

and, you know, I was this management consultant. I was traveling all the time. I never got to see my kids. You know, I was on the road. It kind of sucked. So I thought, I'll have this little business in Boston, and I won't have to travel. It won't be that stressful.

We'll never get that big, because at the time, the idea of starting a brewery in your kitchen and growing it to anything of any size was completely ludicrous. And I looked back on that, like, 35. years later, boy, was I wrong. It wasn't 5,000 barrels. It was actually 8 million. And it wasn't, you know, eight people. It was 3,000. And it wasn't 1 million. It was like 2 billion. So I was totally off. But I realized from this vantage point, I can't tell whether I would have been just as happy or happier had I had the intended outcome instead of the unexpected outcome.

So what I might sort of tell myself is, you know, you're launching into this big, wide ocean, and there's no telling, you know, where you're going to go, but it's a wide range, and they're all good. So both of those outcomes, at those extremes, would have led to a happy life. And isn't that what we really want when we start a business is a happy life? The legendary Jim Cook, founder of Boston Beer Company, Jim, always a pleasure. Thank you so much for coming on the show.

This was a pleasure for me, and I got to finish my first beer, but I'm halfway through the second. All right, and Jim, I hope to see you soon in Boston. elsewhere. Wherever, guy. This was great. Thank you. And by the way, if you haven't heard Jim's original How I Built This episode, you have to go back and check it out. You can find a link to it in the podcast description, and here's one of my favorite moments from that interview. So you call up your dad and you're like, Dad, guess what? I'm joining the family business. I'm going to make beer. Was he excited? Oh, not really. When I told him, I was kind of hoping that he'd put his arm around me, because this 150-year-old family tradition was going to be carried on.

Yeah. No. He looked at me. He said, Jim, you've done some really stupid things in your life. This is the stupidest. Thanks so much for listening to the show this week. Please make sure to check out my newsletter. You can sign up for it for free at gairoes.com.

Each week, it's packed with tons of insights from entrepreneurs and my own observations and experiences interviewing some of the greatest entrepreneurs ever. And if you're working on a business and you'd like to be on this show, send us a one-minute message that tells us about your business, the issues or questions you'd like help with, and hopefully we can help you with them. And make sure to tell us how to reach you. You can send us a voice memo at hibt at ID.wondry.com or call us at 1-800-433-129. 8 and leave a message there. And we'll put all this in the podcast description as well.

This episode was produced by Chris Messini with music composed by Ramtin Arableu. It was edited by John Isabella. Our audio engineer was Gilly Moon. Our production team also includes Alex Chung, Carla Estevez, Casey Herman, Elaine Coates, J.C. Howard, Catherine Seifer, Carrie Thompson, Sam Paulson, and Neba Grant. I'm Guy Raz, and you've been listening to The Device Line on how I built this lab.