Quench Your Own Thirst: Business Lessons Learned Over a Beer or Two by Jim Koch
Date read: 2/18/23. Recommendation: 7/10.
Jim Koch’s inspiring story of founding the Boston Beer Company (Samuel Adams) and lessons learned in building a meaningful business along the way. Koch has great sections on risks, the difference between what’s scary and what’s dangerous, charting your own path, and doing the right thing.
See my notes below or Amazon for details and reviews.
My Notes:
Taking risks:
Spring of 1984 decided he was going to leave his job as a management consultant at Boston Consulting Group (BCG) to start his own beer company (the Boston Beer Company, famous for Samuel Adams). His family had a legacy of brewing beer (five generations on his father’s side were brewmasters). His dad thought he was an idiot, leaving a high-paying job. Jim’s response was that he can make a living, but not the living he was currently making. And that was enough, and he’d be happier running his own small brewery than constantly traveling across the country and working for someone else like he was in his consulting role.
People were perplexed as to why he was leaving a great consulting job for a new unexpected path as a brewer-entrepreneur. He was supporting his wife and two small children. What if he blew up his life? What if it failed? But it wasn’t as scary as it looked from the outside.
“Most risks aren’t really risky. Isn’t the biggest risk of all that you’ll waste your life doing what you don’t really enjoy doing, making compromise after compromise?”
“By the time I reached my mid-thirties, starting a company didn’t seem fundamentally different from any other practical task I’d attempted. I wasn’t terrified at the prospect of leaving stability and familiarity behind, because I knew things would work out. Even if the solution to a problem didn’t come to me immediately, I knew that if I hung in there, I would find it. I just needed to be in the right frame of mind to see it.”
Scary versus dangerous:
“At Outward Bound, we taught people to rappel off a cliff—you literally walk off a cliff backward into empty space. That scares the bejesus out of most people trying it, or even watching it, for the first time. In truth, that rope is strong enough to hold a car. But the first time you do it, it’s pretty scary. It’s just not very risky.”
“Other kinds of situations, however, really are dangerous even if they don’t seem like it. Let’s say it’s a really beautiful early spring day. You’re on the side of a mountain or glacier, walking across a sunlit slope that isn’t too flat or too steep. You think everything is fine, but you’re wrong. The sun is hitting the top layer of snow, causing some of it to melt. The water is trickling down into layers of the snow and ice below. When enough water hits a layer of less-dense snow that had fallen on top of an icy layer months ago, the entire layer begins to slide, and the snow breaks free. All of a sudden, you have an avalanche. Not just an avalanche—AN AVALANCHE! These things can be hideously dangerous. People caught in avalanches tend not to survive. This is real danger, despite the bright sunlight and the sparkling snow.”
Chart your own path:
When Jim was 24 (1973), he was enrolled in graduate school (a dual J.D./M.B.A. program at Harvard). He felt trapped and decided to drop out. Went to work at Outward Bound, an intensive outdoor program designed to foster mental toughness. Gave him a chance to open his mind and build perspective away from Harvard. Cast aside the weight of people's expectations and came to grips with his true self.
“It may have seemed like I was a ‘dropout,’ and in a literal sense I was. I was moving in no particular direction, toward no particular goal. To my Harvard classmates, I looked like a loser. But I was also laying the foundation for life as an entrepreneur. I thought of myself as gathering my forces.”
“When I launched the Boston Beer Company, I knew what I wanted: freedom, personal growth, connectedness with others, and the opportunity to do something that mattered, at least to me. I got all of those benefits long before I realized any financial returns. I have enjoyed the freedom of being my own boss, waking up every morning to decide what I need to do that day, stretching myself to learn new lessons or to find new capabilities.”
Focus on meaningful work:
“If you’re going to work hard, you should find it satisfying and meaningful. Work is too much a part of your life and identity not to.”
Loved the intellectual challenge of consulting, but not the travel and being away from his young family. “I wanted to see more of my family while doing something I enjoyed, something that was meaningful.”
My idea boiled down to: Make great beer. Give it to people fresh. Find customers.
Ignorance:
“Ignorance can actually be a huge asset, giving you the best vantage point. When I started the Boston Beer Company, I had no serious beer industry experience on my side—only ignorance…”
Clear goals:
After launching the company, the goal was to get their beer into 100 bars in Boston that they handpicked. They got every single one of them.
Do whatever it takes:
Late summer afternoon in 1985, Jim walked into a Boston bar that he wanted to carry Samuel Adams after the lunch rush. He asked the bartender to see the manager. The bartender said that he wasn’t there during the day, he was only there on Thursday nights. Jim replied he would come back then and asked when a good time would be. The bartender said after 10pm—that was his way of screening out salespeople from a regular beer distributor who wouldn’t ever show up that late after work hours. But Jim did. Because that was his livelihood.
The right thing is the hard thing:
Beer needs to be fresh to taste its best. After 4-5 months in a can or bottle, the character degrades and it starts to taste stale. But unsold beer sits in distributors warehouses for months. And breweries rarely took beer out of circulation to replace it. In 1988 bottles came with a freshness dating system made up of a series of little notches that corresponded to a secret code and could only be deciphered with a code card. Created an opportunity for the Boston Beer Company (BBC). They decided to print an expiration date in plain English on bottles and cans. And they created an amnesty program for distributors—if they returned expired beer, BBC would reimburse them. Practice of buying back beer was unprecedented. They were destroying about $100k worth of beer (now over $6m).
Sunk costs and avoiding catastrophic decisions: In 1986, decided it was time to build their own brewery. They didn’t technically need one, they had a contract brewing arrangement that was working well for them. Spent two years designing the new brewery and buying some of the equipment. They raised outside capital ($11m) and estimated the brewery would cost $8m. But the formal bids came back at $15m. Jim was tempted to bet the farm to make it happen, because that’s what entrepreneurs are supposed to do right? A mentor told him “don’t risk what you don’t have to get what you don’t need.” He ended up backing out, selling the equipment they had already purchased at a nearly total loss (roughly $2.5m).