How I Built This with Guy Raz - Samuel Adams: Jim Koch

Episode Date: October 31, 2016

In 1984, Jim Koch felt suffocated by his cushy but boring corporate job. So he left, dusted off an old family beer recipe, started Sam Adams, and helped kickstart the craft beer movement in America. 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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Dad, guess what? I'm joining the family business. I'm going to make beer. I was worse. I went home. And was he excited? Oh, not really. When I told him, I was kind of hoping that he 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 stupid. from NPR, it's how I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

I'm Guy Raz, and on today's show how Jim Cook started brewing an old family beer recipe called it Samuel Adams bottled it up and then helped kickstart the craft beer movement in America. So at some point last year, the number of breweries in America passed the 4,000 mark. And most of those breweries make craft beers, things like IPAs, porters, stouts, loggers, you name it. And this is beer that wins awards all over the world. And a lot of it even gets exported to places like Germany and Holland and Belgium, where beer brewing is practically a religion. But if somehow you went back in time to like 1980 and someone handed you a cold bottle of American beer, you might not recognize it.

Because, and Monty Python fans might remember this, American beer used to be a joke. This is frankly over here. We find your American beer is a little like making love in a canoe. It's fucking close to water. So that was what it was like when Jim Cook was a young man, but he knew a lot about beer because he happened to come from a family of beer makers. My dad was a brewmaster, and it's like being the chef. in a kitchen. He was responsible for the recipe and the quality of the beer. He wasn't the owner. So he got out of brewmaster school in 1948, and there were a thousand breweries all over the U.S.

36 years later, when I started Sam Adams, that thousand had dwindled down to 50. And my dad had to move from brewery to brewery as the breweries closed. Did you have any intention, like as a kid or as a kid? a teen of doing this, doing the same thing your dad did? No. My dad told me that it was a miserable way to make a living, and he eventually left the brewing industry entirely. The last thing that he wanted for me to do was to go back into brewing. And this is a little bit crazy because they were like, it wasn't just your dad who was a brewer, like his dad was a brewer, too. Yes. Every oldest son for six generations

has been a brewer. I believe I'm the only six-generation brewer in the United States. So what did you want to be? Honestly, I really didn't know. You know, I had this wonderful educational opportunity that nobody in my family had ever had. After I graduated from college, I started a JD MBA program, and I could just feel this pressure behind me, pushing me towards some career decision. So I dropped out. So what would you do then?

Well, at the time I was involved in a lot of outdoor activities, rock climbing, kayaking, backpacking, things like that. And my climbing partner, he got me involved in Outward Bound. I was able to do that during the summers. And then I had learned that you don't need that much to live on. if you're really enjoying what you're doing. And so how many years did you do that for? I did it on and off for three and a half years. At the end of that three and a half years, I thought, okay, I think I'm ready to go back

and got my MBA and my JD. And I started working as a management consultant for a company called Boston Consulting Group. And, you know, we flew first class, you know, you consulted with CEOs, everybody treated you really well. It was a great job for a while. Yeah, sounds pretty good. So why did you leave it? Well, I had this epiphany, I guess. After six years at BCG, I asked myself, do I want to do this the rest of my life?

And the answer came back, no. And the next sort of corollary to that was, well, if I don't want to do it for the rest of my life, I probably don't want to do it tomorrow. So how did that, like that decision lead to you thinking about beer? That's a good question. And, you know, I knew I didn't want to work in the corporate world. So I thought, I'm going to start my own business. I don't know what it's going to be. But my dad had given me actually a copy of ink magazine, and there was an article in there about Anchor Steam.

This small brewery in California, it was owned by a great guy named Fritz Maytag, and Fritz had a viable small brewery. It was an outlier. And when I was a consultant, what always fascinated me were the outliers, because that's where the real. learning was like there was obviously the potential to find a market for a really high quality beard and I started to think about it and I developed a different business model for what is now called craft brewing. Yeah. So this is in the mid-80s, right? Yeah, 1984. So you, you call up your dad and you're like, Dad, guess what? I'm joining the family business. I'm going to make beer. I was worse. I went home. And 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 to yet another generation. No. He looked at me, he said, Jim, you've done some really stupid things in your life. This is the stupidest. Okay, Jim, I just want to pause for a second and ask you, because I can kind of understand your dad's point, right? I mean, you have this great job, and then you just left it.

Yes, and I left it because staying there was very risky. Leaving it was not risky. And it's the difference in life between things that are scary and things that are dangerous. And there are plenty of things that are scary but aren't dangerous. And there are things that are dangerous but not scary. Yeah. And those are the things that get you. I can give you a climbing analogy from outward bound. Like, one of the things we taught people to do was repel off a cliff. And they're really, it's a very scary thing to do.

But you're also held by a belay rope, and that rope will hold a car. So walking off the cliff backwards is scary but not dangerous. Yeah. Okay. walking across, you know, a 35-degree angle snowfield on a beautiful, you know, late May afternoon with this bright blue sky. It's not scary at all, but it's very dangerous because the snow is melting. Eventually it's going to find a layer of ice. The water will lubricate that and you have an avalanche.

That is dangerous, but not scary. And in my situation, staying at BCG was dangerous but not scary. And the danger there, the risk of it was continuing to do something that didn't make me happy. And getting to, you know, 65 and looking back and go, oh, my God, I wasted my life. That is risk. That is danger. So is that what you said to your dad? I mean, did you convince him that this was worth trying?

He eventually did come around. You know, I sat down with him. And the thing that convinced him, I think, because all the American brewers were basically making the same kind of beer. Yeah. You know, very light, very easy to drink. And I said, Dad, I'm not going to compete with Bud and Miller and Coo. Everybody in the U.S. who wants good beer is drinking the imports. So at that time it was like Heineken?

Heineken, Bex, St. Pauley Girl. Those were considered the great beers of the world. And what I did know from my brewing background is they were not the great beers of the world, that there was the possibility of making beer with a lot of flavor but balanced. And there's a particular flavor structure of good beer. When you taste it, you will get that structure. And I could give it to people fresh because beer is perishable. Beer has about a four to five months shelf life.

And the imported beers were almost always stale. They were typically in green and clear bottles and visible light isomerized as a compound in hops. That's why you get skunky beer. So how did you come up with the recipe that, you know, you thought, okay, this is going to reeducate American beer drinkers. They're going to want to drink this beer instead of what they're used to. That was easy. After about an hour and a half when my dad was beginning to get it, he was like, oh, you know, you're right. Nobody's making great beer. Yeah, maybe somebody should do that. Then he took me up into the attic. He had that there was a trunk and there were family recipes.

And he took out one of the recipes and said, this is the recipe. It was from my great, great grandfather's brewery. My dad had made a version of this beer at Wooden Shoe Brewery in Minster, Ohio, where he was brewmaster, because the brewery was kind of going down the tubes, and he thought, maybe we can turn the brewery around by making big American lager. And the owner tasted it and told my day, he said, Charlie, nobody is going to drink this. People want water with foam on it. So make water with foam on it. So you just took this recipe and started to experiment with it? Yeah, I took the recipe. I started making it in my kitchen. It's extremely difficult beer to make. You can't really do this as a home brewer. It requires much more precise control. But I brewed it and I could tell

this is going to be a good beer. If I can make this right, this would be a really good beer. Okay, so you make a beer, but how did you, like, how did you even know how to begin to start a beer company? Well, the first thing I realized I had to find the best brewmaster in America to help me. He was a man named Dr. Joseph Awadis, and he was the first American brewmaster to combine high-level scientific understanding because he was a Ph.D. in microbiology with, decades of practical experience. How did you even convince him to get involved in your fly-by-night startup? He turned me down at first. He thought this is really crazy and you don't have enough money to pay me, which was true.

And I said, well, Dr. Owaites, I'm not some idiot kid just making beer in their kitchen. My dad was a brewmaster, my grandfather, and he remembered my dad a little bit. And I said, well, I'll tell you what. I'll give you 2% of the company. And that piqued his interest. He signed on and he helped me adapt a 19th century recipe to a 20th century brewery. So did you have to go out and raise money to build a brewery? Well, I realized there are breweries out there.

And my dad was the one who gave me this insight. What we did is we rented space. Dr. Awadies and I showed up, brewed the beer, and then they packaged it, and I didn't have to have my own brewery for several years. When we started, we didn't have things that you think you need for business. We didn't have an office. We didn't have a telephone. I just asked myself, am I spending money on things that are going to make the beer better, or am I spending money on things just because that's what you're supposed to spend it on? By the way, how did you come up with a name, Sam Adams, for the beer?

Well, it came from my history teacher when I was a junior in high school. When she taught the revolution, she highlighted the role of Samuel Adams. Depending on what books you read, he was a brewer. You know, I wanted a name that was assertively American that reflected America's history and brewing tradition, et cetera, et cetera. So on the label, there it is, brewer, patriot. Yeah. And I wanted to do what Sam Adams had done only in my little way. Yeah. I wanted to create a beer revolution and declare beer independence for the United States.

In just a minute, we'll be back with Jim Cook, and he'll explain how he actually convinced people to like his beer. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR. It's How I Built This from NPR. I'm Guy Raz. So after experimenting for a few months with a family recipe, Jim Cook finally got it down to exactly the way he wanted it. And at this point, he had to figure out how to sell it. So my dad had told me, you know, you're going to start a business, Jim. It's lonely.

It's going to have its ups and downs. See if you can find a partner. So I looked around BCG. It was full of like the best and the brightest from the top business schools. But somehow I couldn't see. them being my partner because they had all the same skills I had. Yeah. But then I realized, wait a minute, there is a person here who is energetic, talented, resourceful, great people person, has all the skills that I don't really have.

She was my secretary. So it was just me and Rhonda. She was 23 years old, no college degree, bartended at night. We were the perfect compliment. So how did you guys convince bars and shops to take your beer? Well, I was hoping that I would get a distributor. Well, there were five beer distributors in Boston. I went to each one of them.

They all turned me down. Because? Because to them, it looked like a stupid idea. This was a beer that had a lot of color, had a lot of flavor, had a lot of taste. This was in the heyday of light beer. and, you know, they'd ask me, okay, so what's your marketing plan? Well, don't really have a marketing plan. Yeah.

What's your advertising budget? I don't have any money for advertising. Well, tell me about the company. It's me and my 23-year-old ex-secretary. So it wasn't very confidence-inspiring as a business. And the only way that I could get my beer out there was I would put cold beer in my briefcase every morning. I could fit seven beers. and I had these two blue cool packs and a sleeve of cups.

And I went from bar to bar, cold calling. Just going and talking to managers and... Yeah, trying to get to them. And I'd never sold anything in my life. Was that hard for you? Yes, I remember to this day doing my first sales call and hit the streets in Boston. And I remember I was like, okay, I'm just going to call on the first bar

that I come to. Yeah. And I came to a bar. And I didn't know what I was doing. And I had my consultant suit on. So I started talking to the guy behind the bar. And he was nodding. And I thought, that's a good sign.

But he wasn't saying anything. And luckily, in the back was the manager. Because the guy I was talking to was what's called the bar back. Uh-huh. The bar back is the guy who, like, stocks the glasses. And this guy didn't speak English. So he was just nodding away. managing the back thinking, oh my gosh, there's a guy in a suit here. He's talking to my barback.

He's either IRS or he's Immigration and Naturalization Service, and neither one of those is good. So he rushed up and, you know, I kind of had my 30-second drill. Hi, I'm Jim Cook. I'm starting a small brewery here in Boston to make a new beer. I'm going to call it, it's called Sam Adams. And my real end point was to get them to try the beer. So, you know, I build up to this and said, and would you like to try it? Yeah. He said, sure, leave me a bottle. I said, oh, it's cold. And I have some cups here. Let me pour you one. Yeah. Before he could say no. And, of course, in the bar business, if you pour a beer, you can't just throw it out. You've got to drink it. Yeah. So we tried it together. He said, kid, you know, I didn't think the beer was going to be this good. I'll take it. Wow.

And I was so excited. And, of course, I went. went back and actually Rhonda was taking some time off before we started. I called her. I was so excited. Rhonda, you know, we got our first customer. And Rhonda was very practical. He said, how many cases did he order? Oh, I forgot to ask him. So I had to go back the next day and apologize.

And I was scared again that he would have like changed his mind or anything. But he gave me a 10 case order. So this is like 1985 and you launch and you start to get some attention. Six weeks after Sam Adams came out, it got picked as the best beer in America. How did that happen? It happened out in Denver, Colorado. It was at the Great American Beer Festival, which had pretty much beers from every brewer.

And they went around over two nights, tasted the beers. Everybody got to vote for the best beer. And they did this countdown, you know, 10, 9, 8. I thought we'd finish in the top 10, but they, you know, they kept getting lower and lower. And you're like, oh, man. Oh, and then they announced, you know, and there's number two. The second best beer in America is this. And it's like, well, you know, maybe next year.

Yeah. And then the best beer in America is Samuel Adams, Boston Lager. And the whole company was two people. You and Rhonda. Yeah. So did that mean you were profitable from the start? Yes. we were profitable from the first full month because going back to what I was talking about earlier,

you know, it was the ultimate lean startup. Like I said, we had no office. We didn't even have a telephone. We did all our business from pay phones. You know, I knew where all the good pay phones in Boston were the ones that were warm in the winter, the ones where you actually had a little shelf where you could put stuff on. So I was very clear when I started. It was just very clear to me. There were only two things that we needed to do really well. We needed to make great beer consistently. And we needed to work our butts off to sell it.

And at the beginning, this was like a regional thing, like just in Boston and New England. Yeah. So how did you get it to spread across the country? It happened very slowly. You know, it's basically I started in Boston. I sort of grew a little bit out of Boston and went to Worcester. I was doing a lot of the selling myself. So one bar at a time and a lot of work, a lot of shoe leather, a lot of motel sixes.

So I think the first city out of New England was Washington. So I would go down to Washington Mondays and Tuesdays. Yep. Down here, I mean, I said. still know a lot of the bar owners here. I said a bar before I came over here, the Irish Times. Yeah, famous bar on your union station. Yeah, one of my first accounts. And I was talking to Brendan, the current owner, but his dad put Sam Adams in there almost 30 years ago. So, you know, it was very hard in the beginning getting places to carry it. It had probably got, you know,

95% rejection. So I'd make 20 calls to get one account. And then we got picked as a best beer in America. We got a bunch of publicity around that. People magazine did a story, which was good and bad because all that publicity boosted the sales and we ran out of beer. You could not make it fast enough. Well, it takes six weeks to make Sam Adams and we weren't expecting it. So we were out of beer for three weeks. We lost a bunch of accounts, pissed people off, but it was clear that this idea was a bigger idea than I had realized, that this wasn't going to you know, take five years to get to a million dollars and then level off. You thought five years, we'll get to a million bucks.

That'll be great. I'll be happy. Yes, exactly. And I remember. How long did it take to hit a million, by the way? Five months. I remember sitting down at a bar with Rhonda. And Rhonda, we had a business plan, but something's telling me this is bigger than we thought it was going to be.

that we are climbing a mountain here, and nobody climbs a mountain to get to the middle. We're going to climb this mountain to get to the top. And it may take 30 years, it may take 50 years. And our mountain is, I want Sam Adams to be the largest and most respected of the high-end beers in the United States. That's our mountain. So I remember, like, part of your strategy, it seems, was, like, attacking those imported beers.

Like, I remember hearing radio ads that you would do in the 90s where you would say, you know, declare your independence from foreign beer. The radio spots came about because there was radio station in Boston that won a beer for a party. And so we traded them beer for airtime. Now, they gave us airtime at two in the morning thinking, who would want that? To me, I thought that was great because that's when the servers and the bartenders get off their ship. That's when they're listening to the radio. So they gave me all this airtime. And I at first was going to get radio talent to record it.

And then I found out, well, you can hire that, but there's all these union rules and you have to pay residuals. You've got to track it. And I was like, I can't do that. I'll do the spots myself. So my spot was, when America asked for Europe's tired and poor, we didn't mean their beer. Yeah. But the beer they send us is hardly their best. They send us Heineken that's outlawed in Germany because of Germany's strict beer purity law.

And the becks they send us isn't the same becks they have in Germany. They add forbidden adjuncts to it. That was a bet the company thing. Were you threatened with litigation? Oh, yes. But I knew I was right. You know, having a brewing background, I knew it. And you could also tell it on analysis.

So my feeling has always been, if you're right about something important, push it. So after, I guess, like about a decade after you launched, you decided to go public. Tell me what happened. Why did you decide to do that? Well, I thought it was time to do something to reward my investors because at that. that time, I think a dollar invested was probably worth $400. So I went to a couple investment banks. They described the IPO process. But when they describe it to you, you realize that there's nothing public at all about it. It's all for their buddies. It is all for their buddies at the big institutions

to buy the shares and make a bunch of money. And that bothered me. And I thought, I've got to find a way around that. So I started thinking about it, and I came up with this idea. So we put coupons on the six packs that allowed you to buy 33 shares of Boston Beer Company at $15 a share. So it was $495. You just had to send in a check. And the investment banks freaked out about it. They told me you can't do it. It'll never work. They gave me all these reasons not to. But I stood my ground. I was insistent, and I knew that the investment banks are going to make money on this. So they will let me do it if I refuse to compromise. So I refused to compromise. Eventually, they all came around, and we got 130 some thousand people who sent in their checks. We got $65 million. And that was the first time

something like that had been done, and other people have continued to do it, followed up on it. So earlier you said that you want Sam Adams to be the largest and most respected of the quote-unquote high-end beers in the U.S. Do you think you've achieved that? This may sound surprising, but I still don't feel like we're there. But I've got to give you some perspective. What do you think our market share in the United States is? I don't know, 10, 15 percent. Yeah, that's what everybody thinks. A little over 1%.

Wow. So the big brewers spill more beer than I make all year long. 90% of the U.S. beer market is in the hands of two big global brewing conglomerates. But, I mean, you're not like a small company. I mean, how many employees do you guys have now? We've got a little over 1,400 people. And that's, to me, also really gratifying because the average W-2 compensation is $70,000. So they're, you know, they're good jobs at our breweries.

Those are manufacturing jobs. Yeah. Good paying manufacturing jobs in communities all across the United States. So, Jim, when you think about how you built the company and Sam Adams and like, how much of it do you think was like your skills and your intelligence and talent and how much of it was just luck. Guy, I'll take the luck. So in all humility, a lot of it was luck. I look back and things could have gone wrong. You know, the brew kettle could have exploded or, you know, that first guy could have told me, this is a really stupid idea.

Go back to your job. You know, a lot of things didn't go wrong that could have. Did you or could you have ever imagined that craft beer in America would become what it has become? I never imagined the success that we've been able to have, and I never imagined that there would be 4,500 other craft brewers, you know, many of them enjoying their own success. Today, American beer has gone from the laughing stock that it was when I started to the best place in the world to be a beer drinker. And when the rest of the world, they're looking at the U.S. going, I wish we could do in our country what Americans have done with beer. I wish we had the beer culture that America has. You know, it makes me feel good every time I have a beer.

That's Jim Cook. He has a new memoir out called Quench Your Own Thirst, Business Lessons Learned Over a Beer or Two. Cheers. Jim, by the way, says he personally tastes every batch of Sam Adams that they brew. He estimates that's 24,000 beers of the past 30 years that he was required to drink as part of his job, which sounds like not such a bad job. Hey, thanks for listening to the show this week. If you want to find out more or listen to previous episodes, you go to how I built this. npr.org.

You can also subscribe to our show on iTunes and please do us a favor and write a review. Let us know what you think. You can also write to us at H-I-B-T at npr.org. And if you want to send a tweet, it's at How I Built This. Our show is produced this week by Casey Herman

with music composed by Rumteen Arablewe. Thanks also to Neva Grant, Sanaz Meshkenpour, and Jeff Rogers. I'm Guy Raz, and you're listening to How I Built This from NPR. Hey, thanks for staying with us because this is the part of the show where you get to tell us about the stuff you're building. Hi, my name's Chandra Arthur. I'm the CEO and founder of Friendish. Friendish is an app that Chandra designed for people who want to, you know, make new friends but don't necessarily want to hook up.

They don't want like Tinder. They just kind of want to, you know, hang out. You know, sometimes you meet somebody and it's a little bit awkward because you're kind of like, so, do you like steak? You know, you're asking these kinds of weird questions. So I just thought that there had to be a better way to really connect with people and find friends based on shared interests. So with this app, you don't swipe left or right on someone's picture. You swipe on things that you're interested in. Everything from sushi to Donald Trump to tennis shoes, you know, whatever it is. The moment there are users that have things in common with you, you'll get a notification that you have friends waiting.

Friendish is already up on the app store. It's still in beta mode, so it's got a few bugs, but they're working on them. Chandra and her partner are, of course, trying to get funding for the app. And by the way, they're doing all of this in Orlando, Florida. So I know that's not a place most people think, oh, tech hub. But there is actually a tech scene here, and it's growing. And it's really important for us to kind of put ourselves on the map in the southeast that there is tech interest and great ideas and innovation.

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