Written by Jim Koch, the founder of the Boston Beer Company, “Quench Your Own Thirst” is a good book about beer brewing and business.
Charles James Koch, also known as Jim Koch, was born in Cincinnati in 1949 to German descendants and a family with a long history in beer brewing. Jim attended Harvard University and worked as a consultant at Boston Consulting Group. In 1984, using his great-great grandfather’s recipe, Jim sourced funding from friends and family to found the Boston Beer Company. Shortly after that, he created the famous Samuel Adams beer; which was the soul of the company in the early days. In 1995, he took the company public as Chairman of the Board and CEO. He retained the double duty till 2018, when he gave up the CEO seat to David Burwick. In 2022, The Boston Beer Company’s revenue crossed the $2 billion, making it one of the largest brewers in the US. That’s a long way from its humble beginning 40 years ago in Boston.
The book chronicled the journey of Jim Koch and the Boston Beer Company from the start. I don’t know much about the beer business, so I am happy to learn a bit more about it through Jim’s stories. I love that he broke the content into short chapters, each of which is dedicated to a certain topic. Jim discussed not only his successes, but also his failures candidly. In such reflection, he shared excellent nuggets of wisdom about life and business. No beating around the bush, no long winded stories, no bullshit. And I love that. The bonus point is that because I want to find “hidden gems”, books that don’t garner as much publicity as some others by celebrities, “Quench your own thirst” seems to fit the bill.
All in all, I like the book. If you want something refreshing and easy to read, this will be a good choice.
“To many, “decoction mash” might sound like an unpleasant form of surgery or maybe a dance you’d do at a heavy metal concert. Let me break it down for you: The first step of brewing is to take barley that has been germinated and dried (called “malt”), grind it up, and put it in a big vessel with warm water to create mash. We do this because the hot water in the mash triggers enzymes in the malt to break the grain’s complex starches down into simpler sugars. These sugars then become food for the yeast to work on during fermentation”
“To obtain a richer, sweeter, fuller-bodied beer like Americans drank in the nineteenth century, you want more sugars to stay in the beer to provide body rather than getting eaten up by the yeast. The sugar molecules have to be small and simple enough for our taste buds to perceive them as sweet, but large and complex enough that the yeast has trouble digesting them. Then you can add the hops and balance out the sweetness with bitterness.”
“I looked at this student and said, “I’ll tell you the difference. The difference between marketing and sales is the difference between masturbation and sex.” I think I heard a couple of gasps. Good! I wanted people’s attention. So I kept going: “One you can do all by yourself in a dark room and fool yourself into thinking you’re accomplishing something. The other requires real human skills and all the fury and muck and mire of real human-to-human contact.”
Entrepreneurs need to focus on what’s real. You shouldn’t worry so much about the image or hype that exists around the product or service. You should focus on the product, and on selling it. A great sales force can’t sell without a great product—it’s like a race car running off crappy gasoline. Great salespeople are only effective when they know they’re selling something worth buying.”
“He asked if I would give him seventy-five cents a case off that price if he ordered fifty cases.”
“I then asked him why the seventy-five cents a case was so important, especially since he was selling a case for an eight-dollar profit. He smiled, as if he had been waiting for that question. “You don’t understand my business. I have the best prices and expensive rent, but I still make more money than my competition. Young man, I don’t make my money when I sell the goods, I make my profit when I buy the goods. That seventy-five cents is my profit.”
“I decided to look at every place we spent money. I found money everywhere! It was like opening all the drawers in your house and finding a pile of cash in every one. Occasionally, it was as simple as asking for a lower price. Usually, it required that I be a better customer. For example, I had sixty-day terms with our contract brewery because I needed the extra time to pay, but once we were profitable, I asked for and got a 5 percent lower price by paying in five days. I found a way to use lighter-weight bottles of equal strength, and that saved 15 percent on bottles. We got our wholesalers to contribute twenty-five cents a case to help support the salespeople we put in their market.”
“If you want to run a successful business, you have to stay connected with people even as the business grows.”
“One day, I was talking to a guy who was a die-hard Heineken drinker. I was trying to get him to drink Samuel Adams and he wasn’t having it. “How can your beer be any good?” he asked. “It’s American. Everything in America is mass-produced by robots.”
“When he heard the words, “the beer is handcrafted in small batches,” he was persuaded. He now understood why Samuel Adams stood apart from the imports and the mass-produced American beers. An American beer that was handcrafted in small batches just felt good, evoking honest labor and a craftsperson who put his heart into the beer. “Sounds like it’s almost handmade,” he said. And he ordered a Sam Adams.”
“In 1986, two years after starting up, we changed our table tents to read “handcrafted in small batches,” putting that phrase both on our labels and on materials delivered at the point-of-sale. It was the first time the term “craft” had been applied to what was then called “microbrewing.” Eventually, we would become known as a leader of the “craft beer movement.” All from listening to a guy in a bar.”
“I tolerated the giant turds, the near disasters, and the unsteady sales because I had committed myself wholeheartedly to my new venture. I advise that you do the same. Don’t second-guess yourself. Don’t panic. Just stay the course.
In rock climbing, when you start out on a certain route, you say that you’re “committed.” You’re far enough off the ground that it’s easier to keep climbing up than to try to climb back down. All that matters is what’s ahead of you, so you don’t worry, and you don’t look down. Nothing good happens from looking down. Look up and find the next handhold and the next foothold and the one after that. You keep going. You trust yourself, even when you can’t see the whole path in front of you. If I could survive my own embarrassing screw-ups and keep going, then you can, too.”
“All of this might sound mundane, maybe even a little too high-minded, but every small thing that leaders do sets the tone and increases team members’ commitment to the common cause. People are always sensitive to hypocrisy or compromises from managers, and the behavior of senior leaders is scrutinized, magnified, and commented on by everyone. Leadership is a privilege, but in the immortal words of Spider-Man, “With great power comes great responsibility”—the responsibility to be a good role model and to practice what you preach.”
“When we sat down to negotiate the offering, I said to the investment banks, “I want my drinkers to be able to buy shares at a discount. Maybe it’s never been done before, but there has to be a way.”
“In the end, I prevailed. With the help of legendary venture capitalist Bill Hambrecht, who understood what we wanted to do and worked hard to help, we put a carefully worded press release (to comply with federal securities law) inside our six-packs announcing the offering of public stock. Consumers would mail in the press release to get a copy of our prospectus. They could then decide whether or not they wanted to participate in the initial offering. If they did, they had to mail in funds to purchase stock during a designated time period. Any investor could purchase a block of thirty-three of our shares for $495 dollars, or $15 a share—which turned out to be a 25 percent discount from the $20 a share that institutional investors got. The drinkers would do better than the big guys. Pretty cool.”