Beer School: Bottling Success at the Brooklyn Brewery by Hindy Steve;Potter Tom;Bloomberg Michael R

Author:Hindy, Steve;Potter, Tom;Bloomberg, Michael R. [Hindy, Steve;Potter, Tom;Bloomberg, Michael R.]
Language: eng
Format: mobi
Tags: Technology & Engineering, Brooklyn (New York, Beer industry - New York (State) - New York - History, Corporate & Business History, Brewing industry - New York (State) - New York - History, Food Science, Entrepreneurship, Brooklyn Brewery - History, New York, Brewing industry, N.Y.) - History, New York (State), N.Y.), Beer industry, Business & Economics, History
ISBN: 0471735124
Publisher: John Wiley & Sons, Inc.
Published: 2005-09-21T05:00:00+00:00

In the economic bubble of 1996, we avoided the mistakes that some of our colleagues made. Did we learn from them? Just four years later we made a series of our own mistakes, most of them avoidable. I’d have to say that lessons learned from making mistakes burn deeper than lessons learned from avoiding mistakes, unfortunately. At any rate, out of the entirety of our experience, good and bad, some important points stick out.

We survived our money mistakes in 2000 and 2001 for a fundamental reason. Though we were chasing money in the form of future VC financing (mistake), we raised enough money beforehand to survive when the VC money didn’t come through (saving grace). We never risked the company on outcomes we couldn’t control. While TotalBeer.com wasted our time and our shareholders’ money, it didn’t put the company in jeopardy. I don’t believe in “betting the ranch.” In any situation I always want at least a couple of options available to me. I’ll take a risk—business is all about risk—and sometimes one has to bet heavily on a potential winning hand. But business is not table stakes poker. I’d never want my business to be out of the game if one hand comes up a bust.

The Verdict on VC and the End of an Idea

I’m humbler now about seeking VC financing. It is a wonderful financing option for large-scale ideas. I think the VC funds, in their willingness and ability to finance high-risk, high-return ideas, are a major reason why the United States has been so innovative in the past 15 years. But trying to shape an idea to attract VC financing (beer company transforms itself into techno-beer company!) is backward. The business strategy itself—its internal logic and demands—should dictate the appropriate financing. If it’s a fast-growth idea that needs major, agile financing now and wants to go public in a few years, VC funding is right. But there are a lot of good ideas and a lot of good businesses for which VC financing is wrong. Trying to turn a German shepherd into a greyhound is a mistake. In retrospect, I’m not even sure I wish we had received venture financing for TotalBeer.com. Getting our hands on the money would have been just the beginning of the struggle, not the end. In hindsight, it might have been better to have wasted only $1 million, not $15 million.

The demise of TotalBeer.com also would lead to the end of our distribution division. When it became clear that we were not going to be an acquirer of beer distributors—that we were not going to be getting bigger—we began to think about becoming a seller instead. Being a medium-size distributor holding on to a couple of brands (such as Brooklyn Brewery and Sierra Nevada) that wanted to get big was a tough prospect. The TotalBeer.com fiasco didn’t mean that our distributorship wasn’t valuable, but it was beginning to become clear that it would be more valuable to someone else than to us.

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