The Profile Dossier: Jim Koch, the Self-Made Beer Billionaire

“When you make a decision to climb a mountain, you either aim to reach the top or do not climb at all."

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Boston Beer Company co-founder Jim Koch has been called "the Steve Jobs of Beer," and he's been categorized as "one of the most cannily successful entrepreneurs of our time."

In 1984, Koch left his cushy $250,000-a-year consulting job at Boston Consulting Group to take a risk and start his own brewery using his great-great-grandfather's recipe that he found in the family's attic.

The Kochs came to the United States in the 1840s from Germany, and the eldest son in each generation had run a brewery. Jim's own father was a brewer in Ohio. When he was younger, though, Jim had little interest in continuing this tradition, and he thought he would be the one to break the thread that ran through the Koch lineage.

“I watched my dad lose his job every year or two, as the small breweries got driven out of business first by regional and then by national breweries,” Koch said. “I was going to go a different way.”

But in his mid-30s, Koch became dissatisfied and bored with consulting, and he began exploring his family's entrepreneurial roots. When he left his job to start brewing beer in his kitchen, his father told him "this was about the dumbest f---ing idea he’d ever heard."

Koch had a mission: He wanted to make an American beer that tasted good. At that time, American beers were largely mocked for tasting like water. “It was just embarrassing to be an American when everybody laughed at our beers,” Koch said. So he used his German great-great-grandfather's recipe to create a new taste.

He co-founded the Boston Beer Company and produced Samuel Adams beer, which helped kickstart the craft-beer movement.

Here's how Koch built a billion-dollar beer empire.

READ.

On his top business lessons: People rave about Quench Your Own Thirst, Koch's engaging memoir of turning his passion for good beer into a billion-dollar beer empire. In it, he offers insights into what it takes to build a scrappy start-up into a thriving public company. His business model and frank stories offer counterintuitive lessons that you can apply to business and to life.

On launching a craft-beer renaissance: Like Steve Jobs, Koch has made a very successful business out of satisfying a demand people didn’t know they had. In this profile, Koch describes the process that in a generation has changed America from the country with the worst selection of good beers to the one with the best.

LISTEN.

On his entrepreneurial journey: In this 'How I Built This' episode, Koch details his journey from the beginning. He explains how he mustered up the courage to leave his cushy consulting job, why he settled on the name "Samuel Adams," and why he wanted the business to stay hyper-lean until it achieved profitability.

On his leadership style: Koch has learned a leadership lesson or two along the way. Knowing what you're good at is just as important as knowing what you're not good at. "I can say I'm not a good CEO," he says. "I'm not really a good manager. I've never claimed to be a good manager." Here's how he learned to focus on the things he was best at — the quality of the product and the culture of the company.

On taking bold risks: To innovate, Koch had to experiment with some wild flavors before he landed on a taste that worked. He made a cranberry lambic. Then he played with various chocolate flavors. Another time he attempted to make a brown ale with a bizarre ingredient: grilled beef hearts. Some obviously flopped, but others were a hit. Disruption, he notes, requires constant experimentation.

WATCH.

On getting a business idea: When Koch was a young professional, entrepreneurship wasn't glamorized and celebrated in the same way it is today. But once he quit his job, he says, the ideas began to flood his mind. "Ideas for businesses are like radio frequencies," he says. "It's not a matter of finding them, it's about tuning in. And once you tune in, there are a lot of stations playing." Get out of the status quo, Koch says, because "the status quo sucks."

On believing in your product: Koch believes that the best entrepreneurs deeply believe in what they're selling. "Authenticity does matter," he says. "If you're trying to sell something you don't believe in, people sense it and it's not really a lot of fun." Here's how that framework helped inform the way Koch approaches philanthropy.

TECHNIQUES TO TRY.

Recognize the difference between 'scary' and 'dangerous:' When Koch felt suffocated by his cushy but boring corporate job at BCG, he had a choice: Does he stay in his safe role at BCG or does he start a beer company with no money or experience? So he began thinking about two words: "scary" and "dangerous." Leaving BCG would be the scariest decision of his life, but staying would be dangerous because he wasn't happy and he would live a life of regrets. There are plenty of things in life that are scary but not dangerous and vice versa. He took the risk, left his job, and founded Samuel Adams beer. Looking at your life through this framework can help you make some big decisions.

You are always your first salesman: Koch spent eight years at Harvard University and collected three degrees — a BA, JD, and MBA. After he started Boston Beer, he realized that in order to get his beer to market he needed to learn how to sell, but that wasn't a skill he learned at Harvard. Koch walked into a bookstore and picked up the first relevant book he could find. It was ″How to Master the Art of Selling″ by Tom Hopkins. Even though the book had "some sleazy parts," he credits it for changing his life, adding that learning how to sell "turned out to be the most intellectually challenging thing that I had encountered in business.”

Aim for a low overhead: When Koch first started his company, he didn't have an office. He didn't have a telephone. Hell, he didn't even have his own brewery. He asked himself: "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 I'm supposed to spend it on?" This is an invaluable question to consider no matter what industry you're in. Stay lean, and focus on profitability, he says.

Remember Koch's 'String Theory:' In the 1970s, Koch worked as an instructor for Outward Bound, a provider of experience-based outdoor learning & leadership programs. 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. When no distributor would carry Koch's beer, he became his own distributor. He went out, sold, and delivered the beer every single day. Capital efficiency is the most important factor when growing a business from the ground up.

Aim to be better or cheaper than your competitors: Here's a quick tip from Koch: "When you start a business, you can really only succeed in two ways. You have a viable business if your product is either better or cheaper." In brewing, for instance, the big breweries can always offer cheaper products, so craft brewers have to be better and more innovative.

Hire people who will raise the average: Koch has a simple rule of hiring: "Never hire someone unless they will raise the average for that position," he said. In other words, you want to find an employee who's significantly better than the average person doing that job. Otherwise, you run the risk of ending up with all average people, and "average sucks." He adds, "Don’t hire until employees will pay for themselves, either in more sales or cost savings on day one.”

Remember that Monday may never come: One Friday morning, Koch's friend left a message with his secretary that he would call him on Monday. The friend died of a heart attack on Sunday. Koch framed and hung that message in his office as a reminder that Monday isn't always guaranteed. Whatever it is you want to do, the best time to do it is now.

QUOTES TO REMEMBER.

“When you make a decision to climb a mountain, you either aim to reach the top or do not climb at all."

"Whatever you do, don't quench someone else's thirst. Quench your own."

“Getting rich is life’s biggest booby trap. It comes down to what would you rather be, happy or rich? I say do what’s gonna make you happy.”


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