Advice Line with Jim Koch of Boston Beer Company (August 2024)

Summary

How I Built This with Guy Raz: Advice Line Episode Featuring Jim Koch of Boston Beer Company

Release Date: July 3, 2025

In this engaging episode of How I Built This with Guy Raz, host Guy Raz reconnects with Jim Koch, the visionary founder of the Boston Beer Company, best known for pioneering the craft beer revolution with Samuel Adams Beer. The episode, titled "Advice Line with Jim Koch of Boston Beer Company," delves deep into entrepreneurial challenges, strategic decision-making, and the essence of building a lasting brand. Through real-time advice to budding entrepreneurs, Jim shares invaluable insights from his journey of transforming a kitchen-brewed beer into a multi-billion-dollar enterprise.

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Introduction and Reintroduction

[03:43] Jim Cook: "I should say it's always a pleasure having a beer with you."

Guy Raz warmly welcomes Jim Koch back, highlighting his foundational role in the craft beer movement and his current position as the chairman of the Boston Beer Company. Raz recalls Jim's original 2017 appearance, emphasizing the inspirational trajectory from consulting to founding a revolutionary beer brand.

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Navigating Product-Market Fit

A significant portion of the discussion centers on achieving product-market fit, especially when introducing an unconventional product to a market dominated by established brands like Coors and Budweiser.

[05:26] Jim Cook: “I didn't try to reach the 99% of beer drinkers. I focused on the 1% interested in flavor, who drank beer for the taste and knew about ingredients.”

Jim emphasizes targeting niche early adopters rather than attempting to convert mainstream consumers immediately. This strategy aligns with Guy’s earlier discussions on leveraging passionate early users as brand evangelists.

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Resource Allocation in Early-Stage Businesses

Jim shares his philosophy on prudent resource management during the nascent stages of a business.

[08:21] Jim Cook: “Don’t play company. You don’t need an office or an executive assistant early on. Focus on what truly matters.”

He advocates for minimizing overheads to concentrate resources on product quality and market penetration. This approach mirrors his own early days when he operated without a formal office, using payphones and dedicating funds to enhance beer quality.

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Caller Insights and Real-Time Advice

The heart of the episode lies in assisting two entrepreneurs seeking guidance.

Caller 1: Kim Jones of Tropical Vibes

Kim, CEO and co-founder of Tropical Vibes, a lifestyle brand expanding into the spirits market, seeks advice on crafting a compelling brand story that centers on customers rather than the founder.

[12:20] Jim Cook: “A brand has to come from the heart and passion of a human being. What do the tropics mean to you?”

Jim advises Kim to root her brand story in the genuine passion and essence of what the tropics represent, encouraging her to highlight the unique sensory experiences her product offers.

Notable Quote: [21:03] Jim Cook: “Building a brand is hard work and a miracle when it happens. You need to be a storyteller.”

Caller 2: Lance Kesner of Millie's Sipping Broth

Lance, co-owner of Millie's Sipping Broth, an innovative product offering soup broth in tea bags, seeks strategies for funding continued growth post-national retail launch.

Jim provides practical financial advice, emphasizing the importance of cash flow management over seeking early-stage investments.

[28:06] Jim Cook: “Don’t take anything more than what you really need. Early-stage investor money is the most expensive money out there.”

Notable Quote: [34:32] Jim Cook: “If you don’t think your product is going to pull through and generate the sales, don’t put it in that store.”

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Strategic Branding and Customer Engagement

Both callers benefit from Jim’s emphasis on authentic branding and building a loyal customer base. For Kim, integrating customer-generated content and creating community engagement platforms like Spotify playlists can amplify brand presence. For Lance, maintaining product quality and selectively expanding retail presence ensures sustainable growth.

[39:35] Jim Cook: “Think big. Reframe what you’re selling to align with the value you provide.”

Jim underscores the importance of understanding and communicating the deeper value proposition of a product, using his "billion-dollar cup of coffee" anecdote to illustrate how reframing product value can lead to exponential growth.

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Final Insights and Reflections

As the episode concludes, Jim reflects on his entrepreneurial journey, offering a philosophical perspective on growth and personal happiness.

[51:58] Jim Cook: “I can’t tell whether I would have been just as happy or happier had I had the intended outcome instead of the unexpected outcome. Launch into the big ocean; all outcomes are good.”

This sentiment encapsulates the unpredictable yet fulfilling nature of entrepreneurship, encouraging listeners to embrace the journey's uncertainties.

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Key Takeaways

1. Target Early Adopters: Focus on passionate niche markets to build a dedicated customer base before scaling.
2. Prudent Resource Management: Prioritize product quality and essential operations over unnecessary expenditures in early stages.
3. Authentic Storytelling: Develop brand stories rooted in genuine passion and the core values of the founders.
4. Strategic Financial Planning: Manage cash flow meticulously and consider alternative funding strategies before seeking investor capital.
5. Customer-Centric Branding: Engage with customers to build a community and encourage brand evangelism through user-generated content and personalized experiences.

Jim Koch’s participation in this episode offers a masterclass in strategic entrepreneurship, blending practical advice with inspirational narratives. Aspiring entrepreneurs can draw from his experiences to navigate their own business challenges, emphasizing the importance of authenticity, strategic focus, and resilience.

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Notable Quotes:

• Jim Cook [05:26]: “I focused on the 1% interested in flavor, who drank beer for the taste and knew about ingredients.”
• Jim Cook [08:21]: “Don’t play company. Focus on what truly matters.”
• Jim Cook [21:03]: “Building a brand is hard work and a miracle when it happens. You need to be a storyteller.”
• Jim Cook [28:06]: “Don’t take anything more than what you really need. Early-stage investor money is the most expensive money out there.”
• Jim Cook [39:35]: “Think big. Reframe what you’re selling to align with the value you provide.”

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Conclusion

This episode serves as a treasure trove of entrepreneurial wisdom, blending Jim Koch’s personal experiences with actionable strategies for today’s business landscape. Whether you're launching a lifestyle brand, an innovative food product, or an essential service, the insights shared by Jim and Guy Raz provide a roadmap for building a resilient and impactful brand.

Transcript

[Guy Raz]

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[Jim Cook]

Built this early and ad free right now.

[Guy Raz]

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[Jim Cook]

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[Guy Raz]

Hey everyone, just want to let you know that this week our team.

[Jim Cook]

Is taking a much needed break. So we chose one of our favorite episodes from from the archives.

[Guy Raz]

Here it is and hope you enjoy it. Hello and welcome to the advice line on how I built this Lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week I'm joined by a legendary founder, a former guest on the show who will attempt with me to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433. Send us a 1 minute message that tells us about your business and the issues or questions that you'd like help with. You can also send us a voice [e-mail] and make sure to tell us how to reach you. And also, don't forget to sign up for my newsletter. It's full of insights and ideas from the world's greatest entrepreneurs. You can sign up for [e-mail] and we'll put all this info in the podcast description. All right, let's get to it. My guest today is Jim Cook, founder of Boston Beer Co. The American Brewery best known for Samuel Adams Beer. Jim, welcome to the show. Welcome back to the show.

[Jim Cook]

I should say it's always a pleasure having a beer with you.

[Guy Raz]

It is always okay, always a pleasure.

[Jim Cook]

If I enjoy myself here, I think that's perfect.

[Guy Raz]

Jim, if I had a drinking buddy, you would be my top choice. You're probably a lot of people's top choice to be a drinking place. So thank you for being here. And yes, please, let's all enjoy a Sam Adams beer. Jim, you were just to remind our listeners you were first on the show back in 2017 to tell the story of how you created the Boston Beer Company and Sam Adams Beer. And it's just such an inspiring story because at the time when you started this brand in the 80s, you were on the fast track to sort of financial. You were working at a consulting firm, but you were feeling suffocated. You were feeling like this wasn't the life you wanted to live. So you left and you decided to start a beer brand. And you actually are widely credited as sort of the godfather of the craft beer revolution that really kicked off with Sam Adams Beer. You are still with the Boston Beer Company, but no longer running the day to day. You're the chairman and I'm super excited to have you on the show to help us with these entrepreneurs. But before we get to them, let me start by asking you, Jim, about product market fit for a moment, because this is going to come up in our conversation today, right? I mean, you, you were essentially creating a new kind of beer in the US this is a flavor profile that most beer drinkers weren't used to. They were used to drinking Coors and Budweiser. How did you get ordinary beer drinkers in the mid-80s, you know, the guys at the corner bar, to start drinking Sam Adams beer?

[Jim Cook]

Well, I have to say I didn't try to do that. And I think that'll come up with a lot of the folks we're going to be speaking to today. When you're at the leading edge of a product that is very unfamiliar to people, even a category that is unfamiliar. You don't want to go where all the volume is in the mainstream. You want to just find a handful of people who will get what you're trying to do. So 99% of the beer drinkers out there, I wasn't trying to reach them. I was really trying to reach the 1% that was interested in flavor, that drank beer for the taste, that knew a little bit about the ingredients.

Way more than trying to convert a Bud Light drinker to Sam Adams. That was a shock to their palate, to their system. It might have even harmed them to.

Have that much flavor in their mouth at one time.

[Guy Raz]

Yeah, I mean, this is a classic example of finding product market fit. Right. You engage with early adopters. I wrote a blog post about this a little while ago in my newsletter. And it's interesting because in most cases, you start with early adopters, you sort of give them the product, you get their feedback, you really kind of cultivate their passion.

[Jim Cook]

Right.

[Guy Raz]

And soon enough, it's those people who become your biggest evangelists.

[Jim Cook]

That's exactly right. Our whole market when I started was a list of 100 bars in the whole world. That was what we cared about, was those 100 bars that were in the right pockets. In Boston. We only had one truck to deliver the beer, so we couldn't go all over creation.

But we focused on them, and eventually.

We got every one of them to carry Samuel Adams. It took about a year to do those hundred bars, but that was where we focused, and it grew from there.

[Guy Raz]

I remember vividly the story you told about using payphones in Boston as your office, because you didn't have an office. You didn't have a phone line. You were using payphones. And you did this because you were taking any money you had and using it to improve the quality and the flavor of the beer. You were really scrimping on the other thing. So I'm curious, when early stage founders might ask you or talk to you about where they are, how should they think about allocating resources in the early stages of the business?

[Jim Cook]

Well, I'll give them some simple advice. Don't play company. You start out and you think, well, I'm starting a company. I need to have the things that a company has. I need to have an office. I need to have, you know, a computer. I need to have, you know, an executive assistant. Well, B.S. you don't need those things. They suck up money and they distract you. And, you know, when you do have an office, you tend to want to go there and avoid all your real challenges because it's a safe place. Well, I didn't have that. All I had were those hundred bars.

[Guy Raz]

Yeah, I could just talk about this forever, but we gotta bring in some callers. So, Jim, what do you say? Let's.

[Jim Cook]

Yeah.

[Guy Raz]

Should we bring in our first caller?

[Jim Cook]

They sound like really great people, so.

I'm anxious to talk to them.

[Guy Raz]

All right, I think we got our first caller online. Please introduce yourself. Tell us your name, where you're calling from.

[Kim Jones]

Hi, I'm Kim Jones, the CEO and co founder of Tropical Vibes. We're based in Ponte Vedra Beach, Florida, and we are a lifestyle brand that focuses on tropically inspired products. So we started about three years ago with branded apparel and home goods and are very excited to be expanding into the spirits market with a new rhyme that is set to launch in a few weeks. So thanks for having me.

[Guy Raz]

Amazing. Okay, and what's your question today, Kim?

[Kim Jones]

So my question is, as I'm sure you've heard, everybody is talking about brand story, and that seems to really be the buzzword. And so, as we're growing our brand, how do you suggest we create a compelling brand story that spans across all of our product lines and is not based on. On our founder's story?

[Guy Raz]

Got it. Okay, well, let's break this down a little bit first, Kim, tell me about how you started this brand, how you started Tropical Vibes.

[Kim Jones]

Yeah, so my husband and I decided to start a travel agency a few years back as a side hustle, and we named it Tropical Vibes Travel. And one of the things we did was to create hats and shirts and things for the legions of customers that we anticipated coming to our travel agency. And we were awful travel agents, but everybody wanted the hats and the shirts. And so we pivoted and started selling the branded apparel, actually throughout the country. We ended up in about 120 stores across the US and Canada with our branded apparel.

[Guy Raz]

And it says Tropical Vibes on it. Like a palm tree. Yeah. And so, okay, so the idea was originally it was. I love this. It was a travel agency, presumably to help get people to tropical areas. Right. Like Caribbean. And that didn't work out, but the swag. And maybe the swag that you were going to give away turned into the company, turned into the business. Yes. And so that. And today you've got what. What do you do? Hats and shirts.

[Kim Jones]

Yep, hats and shirts and some items for the home. But we always wanted to do a Rum. And so we are really excited to be expanding the product line by launching this rum line.

[Guy Raz]

All right, and so right now, you're trying to figure out what is the story we tell. Right, Jim, I want to start with this idea. And you might have some questions for Kim even before you answer it. But, I mean, obviously, the Sam Adams brand is in the story, just even in the label, even in the name, even in. In looking at Sam Adams on that, everybody listening can picture what that label looks like, and it tells them a story that even if it's not the exact story you thought of, it's enough of a story that we can all gather around it.

[Jim Cook]

Right.

[Guy Raz]

And so how do you think about storytelling with a product or with a brand?

[Jim Cook]

You know, to me, it has to start with a founder. And I know you're a little skittish about that, Kim, but to me, a brand has to come from somewhere. And generally, that somewhere is the heart and the passion of a human being. I mean, with my beer, Samuel Adams, the historical figure, the patriot, had a passion for American independence. And I wanted to. With my beer to create beer independence for the United States. I didn't want to be dependent on imported beer from other countries. So you gotta start with your own passion. And what do the tropics mean to you? Because essentially, you started with a business where you were gonna take people to the tropics. Well, that didn't work, but now you're continuing that mission because you're bringing the tropics to people. Yes, because, you know, to you, the tropics are this unique place where you put your feet in the water and your ass in the sand and you breathe out, you're relaxed. What is it about the tropics that you want to bring to people? Tell that story.

[Kim Jones]

I think that's a great point. And trying to separate the two, the founder from the brand, because we have done well with the apparel, and I always joke that our biggest retail customer is in a very small town in Idaho. Right. So clearly, the Tropical vibes brand really resonates with people that aren't in South Florida or aren't living the dream in the tropics. And I want to capitalize on that. But I would love to make our customers sort of the hero of the story. I don't want to be the hero of the story. And I'm trying to figure out, how do you tell a brand story that puts the customer front and center?

[Guy Raz]

I'm not sure. You have to sort of separate the two. Right. In other words, I Don't necessarily think that the story you have to tell is exactly your story. Like Kim Jones, why did I want to do this? But I think that the question why did I want to do this? Should inform how you think of about the brand story in general. It sounds like there was. From what I understand, you did not grow up in Florida. You grew up somewhere cold.

[Kim Jones]

Seattle.

[Guy Raz]

Okay? So rainy and cold. And so presumably you would dream about. I mean, now you live in Florida. Would you dream about what did the tropics mean to you? Why were you drawn to that world and that culture and lifestyle?

[Kim Jones]

It's our happy place. It's just everything Jim said, right? Our toes in the water, our butt in the sand. And really just that we always joke it's that first day of vacation feeling, right? It's just relaxed, it's calming, it's soothing, it's fun. You know, we did our research when we started the business, and, you know, about 26 million travelers go to the Caribbean every year. I think it's almost human nature to be drawn to that type of environment.

[Jim Cook]

You'Re selling, that feeling that you described. So you have to have some layers to your brand. With the rum, there's going to be layers around the product, how it's made, who makes it. That ladder up to, why is this better? Why is Tropic Vibes the rum that I should buy instead of, you know, Malibu or Captain Morgan or Sailor Jerry? Because you're going to be on a crowded shelf, right? So what is unique, special, different about that rum? And some of it has to be the story. The consumers there looking at the bottle, they can't taste the rum, you know, so you've got to create the taste experience. It's aged in this kind of barrel. We sample it and we don't bottle it till it's ready. Our rummaker has been making rum in the tropics, and the cool nights and the warm days bring the rum in and out of the wood that extracts vanillins from the wood that you wouldn't otherwise get. I mean, it just has to be many layers to your story.

[Guy Raz]

Kim, I'm curious, what percentage of your business is direct to consumer online through your website? And what is through the boutiques?

[Kim Jones]

We are about 80, 20. So 80% to the boutiques and about 20% online.

[Guy Raz]

So that 20%, right. Those direct to consumer sales, that's really where you can start to develop a community. And I know I'm looking at your website. You've got a blog and you've got some Recipes for cocktails. And that's a great start. And I would really lean into that and really try and cultivate that 20%. Jim earlier talked about taking Sam Adams initially to those early adopters and really leaning into that group to validate this proposition, this idea that this beer and flavor profile he was producing was going to work. Right. And those people would become the evangelists. Those were the ones who would turn Sam Adams beer into what it is. To me, I feel like you have an opportunity with that 20%. Right. The people that you can gather data from, the people who you can ask for feedback, who you can offer incentives if they answer a survey. I mean, I think one of the things you can also do with your existing inventory is put a tag on the inventory with a QR code, let people scan that QR code that takes them to a Spotify playlist that you guys have curated of great music of tropical vibes. I mean, there are little things I think you can do to start building out that community because eventually you want to see if you can shift that 80, 20 around. Right. Where it's 80 people going directly to you and 20% of that business coming to the boutiques. Jim, what do you think?

[Jim Cook]

Yeah, I love that idea. I actually wrote it down, a Spotify playlist because we have a hard tea that's vodka based called Sun Cruiser and I wrote that down for our product, Guy. So I'm getting value.

[Guy Raz]

Okay.

[Kim Jones]

To compete against Jim.

[Jim Cook]

Oh boy. Okay. Well, no, I think Guy is absolutely right. You're only one person. If you can create acolytes and promoters out there who also get your vision. I'll build on Guy's comment. What if you create a scrapbook where people can post pictures of themselves in the tropics or enjoying tropic vibes. Rumors. You need things that people can put themselves, situations people can put themselves in. That's what you're trying to do with your product. So allow your drinkers to post their pictures.

[Guy Raz]

Yeah, and doing that, right. That having those like user generated photos you can incentivize people with, you know, free pair of sunglasses. Maybe you just make cheap sunglasses, you know, that are just swag, you know, that says tropical vibes on it that people will get if they post or if they, you know, post a photo of themselves with a glass of rum or holding the bottle, something like that. I just think there's so many opportunities that you little things you can do now to really start to build a community, which these will be your force multipliers. I use that term a lot. It's a military term, but it's the people who will go out there and evangelize for your product.

[Kim Jones]

Absolutely. Excellent. Well, thank you both. I appreciate it and super helpful. Thanks for having me.

[Guy Raz]

Kim. Thank you so much. Good luck with Tropical Vibes. We'll be following your progress.

[Kim Jones]

Yeah, fantastic. Thank you.

[Guy Raz]

You know, I wonder when you think about Jim just building a brand today, it's just, I mean, is it. Do you think that it's harder because just there's more things out there, or do you think that it's not necessarily harder today than it was in 1985 or 86?

[Jim Cook]

I think it's the latter. It's never been easy.

I mean, it's.

Building a brand is just, it's hard work and it's a miracle when it happens. I mean, you're creating something out of Nothing. It's the 21st century version of alchemy, and that was always tough. But you need to be a storyteller to create a brand.

[Guy Raz]

Yeah. All right, Jim, we're going to take a quick break, but when we come.

[Jim Cook]

Back, we'll what if you could get.

[Guy Raz]

Soup broth from a tea bag? That's coming up in just a moment. Stay with us. I'm Guy Raz, and you're listening to the advice line right here on how I built this lab. If you run a small business, you.

[Jim Cook]

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[Guy Raz]

Welcome back to the advice line on how I built this lab. My guest today is Jim Cook, founder of the Boston Beer Company. All right, Jim, let's bring in our next caller. Tell us your name, where you're calling from, and just a quick line about your business.

[Lance Kesner]

Hi, my name is Lance Kesner and I'm from Bellevue, Washington, near Seattle. My wife Lori and I created Millie's Sipping Broth. And Millie's is actually the first ever soup broth in a tea bag. It's gluten free keto, vegan and kosher.

[Jim Cook]

Wow.

[Guy Raz]

Okay. And so this is a broth, like vegetable broth or chicken broth, but it's in a tea bag.

[Lance Kesner]

It's all vegetable. You make it in a tea bag, you steep it like tea and it makes a fresh cup of broth.

[Guy Raz]

I love it. This is a super innovative idea. And what's your question for us today?

[Lance Kesner]

My question is this coming fall, we're rolling out our product nationally at Walmart and we're really excited about this and are financially prepared. However, what keeps me up at night is thinking about how we'll be able to fund our continued growth beyond that. So, yeah, what are some of your ideas about raising capital to support a new brand that is getting national traction in retail?

[Guy Raz]

Okay, we'll get to your question in a moment. Just a couple quick questions about Millie. So tell me a little bit about how this started.

[Lance Kesner]

So my wife Lori, she used to be a teacher. She was a lifelong Weight Watchers member. And the Break room was always filled with all kinds of cakes and cookies that were left over from the weekend. And she wanted something healthier, so she used to take a bullion cube with her to school because she wanted a savory. Something savory and hot. There was nothing out there. And I said to her, let me make something that is healthier for you. And so I formulated something that didn't have all the preservatives and everything like that. And she said, put it in a tea bag so I can make it really quick because I only have a couple of minutes. So I ripped open Lipton teabags in our kitchen, put the ingredients in. I made 10 of them. She took them to school and had one, and by the time she came back, they were all gone because all the other teachers had taken them.

[Guy Raz]

Wow. Okay, so right now you are in how many stores?

[Lance Kesner]

We're roughly about 700 stores.

[Guy Raz]

And how many people do you have working?

[Lance Kesner]

So the founding team is just my wife and myself, and then we have a partner company that does the operations and sales, so we work together with them.

[Guy Raz]

Tell me a little bit about how you're doing so far. Have you broken half a million dollars in sales yet or not quite yet?

[Lance Kesner]

We're under 2 million.

[Guy Raz]

Oh, wow. Okay. So you guys are well on your way with just such a small team.

[Lance Kesner]

Yes.

[Guy Raz]

Now that you're going into Walmart, your question is, should you potentially approach investors? Jim, let me pass this over to you. Maybe you've got some questions for Lance before you launch into his question or answering his question.

[Jim Cook]

Yeah. What are you going to use the capital for? What do you need money for?

[Lance Kesner]

Well, basically, I think the most important thing is having inventory and having the capacity for inventory. Now, we would never make inventory ahead of having commitments or purchase orders from a customer, but to be able to tap into it when it's needed is critical.

[Jim Cook]

Yep. And when do you get paid?

[Lance Kesner]

Well, usually with Walmart, it's, you know, 45, 60 days, something like that. So that's typical retailer payment schedules.

[Jim Cook]

And you sell directly to Walmart?

[Lance Kesner]

Yeah, it's a direct sale.

[Jim Cook]

Okay. I mean, one question to ask. Walmart, and Walmart wants you to succeed. Sometimes they have this reputation of being really cutthroat and predatory and so forth, but they're nice to little guys. So a question I would ask is, can you guys pay me in 15 days?

[Lance Kesner]

Good question.

[Jim Cook]

And if they can, that solves a lot of your problem because you probably don't have to pay your producer suppliers in 15 days. So now You've got a positive float. And the issue that you face trying to raise capital at what is still a fairly early stage is people want a lot of. If they give you half a million dollars, they may want half of your company. I mean, really think through your cash flow and hoard cash to the extent that you can delay your payables and accelerate your receivables, that's as good as investments. I mean, I think back on when I started my company and I don't have a lot of regrets, but I realized I started my company with $240,000, $100,000 of it was mine. And then I raised another $140,000 and that represented like 35% of the company. I never needed it because I, like you, was producing through a contract producer and I was selling to a distributor and I thought I needed to give them 30 day terms and I didn't. They liked me. They wanted to see me succeed. If I'd gone to him and said, you want me to succeed? I'm struggling. Can you pay me cash two days after delivery? I mean, I'm not asking you to finance me. You've got the product in your warehouse, but you're a successful big distributor with lots of money. I got nothing. Why do I need to be your bank? You don't need to finance Walmart's business. They've got the product. You know, can they eft you the money five days after they've signed a bill of lading and the invoice? So that's where I would start.

[Guy Raz]

I think that's great advice, Jim. I mean, essentially what you're saying is at this point, Lance needs to be cautious about approaching investors.

[Jim Cook]

Yeah, don't take anything more than what you really need. Early stage investor money is the most expensive money out there. So you hoard your cash and then also look at any money that you're spending that is not directly related to making the product or selling the product.

[Lance Kesner]

Well, you know, we started this business in 2012 with those fundamentals in place. You know, working out of our house, not spending on things that weren't necessary. And so I think that everything you said just really rings true. And I really like your idea of widening that gap when cash is available to be able to do that. I think at the end of the day, we just really will be careful about taking on anything bigger than what we can actually support.

[Jim Cook]

Yeah, don't grow beyond the consumer demand. I mean, you should probably be thankful that Walmart's not putting you in 5,000 stores. You'd rather be in 500 stores and be successful than be in 5,000 stores and not, you know, you can go from 500 to 5,000 over time. I mean, we started with Walmart maybe 10 years in, and they put me in 200 stores. And I was very excited by that. And if they'd said, I want to put you in 1000, I would have said, I don't think so. Because, you know, if 600 of those fail, you're going to take me out everywhere. But if I'm in 200 and it succeeds, I'll be in 500 next year. So don't try to, you know, go faster than the consumer pull will allow you.

[Guy Raz]

I also think, Lance, you are operating in a really interesting space because you're really not competing against anybody. You've got the bone broth companies and the bullion companies. But I think that you can operate under the radar and grow really steadily for a long time before the players, the big players notice you, which I think is an advantage. I think about an episode we did a couple months ago on Nut Pods, the creamer, the non dairy creamer that had an amaz exit. And you know, Madeline, who built that brand, I mean, she really operated under the radar for a long time. Even though there were other companies that were making nut milks and things like that, nobody was really thinking about coffee creamers in the way that she was. And so to me, there's a parallel with this brand which allows you to sort of grow more slowly and focus on brand building more slowly.

[Lance Kesner]

Yeah, we, we were very fortunate to have Weight Watchers discover us during COVID and they put us on their website to their four and a half million subscribers. Talk about, you know, your 1% who, who really looking for you. So those types of opportunities have always been our first priority.

[Jim Cook]

Yeah, and I would a couple other things that occur to me as we're.

Talking and Guy emphasizes, you're creating a category. You're different and you're creating it as a kind of, as a wellness category. And it's in the mental health kind of space. And I would not be bashful about pricing. You know, with Walmart, you got to deal with them and so forth. But then you're going to sell it outside of Walmart. You know, you can get more money for it than you're asking right now. You're selling it for basically the price of a K cup, but you're much more valuable than that.

[Guy Raz]

It's a premium product.

[Lance Kesner]

Yeah, yeah, yeah, we believe we want People to drink it every day and think of it that way. And so, yeah, I agree with you.

[Jim Cook]

I mean, at 30%, more people can still drink it every day. You're appealing to the early adapters to whom this is meaningful instead of whatever it is now a dollar, it can be $1.30. People can afford that. And that extra price probably doubles your margin.

[Guy Raz]

Yeah. Lance, one question for you. Obviously, Walmart is a huge coup, much more significant than Whole Foods or Trader Joe's simply because of volume. But are you looking at Whole Foods? Are you talking to buyers from Whole Foods?

[Lance Kesner]

Yeah. So this is. It's all happening simultaneously. So we got the Walmart opportunity because we won golden tickets at their open call for American Made products. And in parallel, we had been having these conversations with the other large, notable organizations. And all of a sudden, everyone wants to talk to us at the same time. And so that's why that question. It's like, how do we support outside of Walmart without drowning ourselves, really?

[Jim Cook]

And be cautious.

If you don't think your product is.

Going to pull through and generate the sales that meets their hurdles.

You don't want to be in that store. It's tempting, but you only want to be in the stores where you have.

An 80% confidence level that you're gonna meet their hurdles to stay on that shelf next year.

[Lance Kesner]

I always tell people that, you know, getting on the shelf is one thing, but getting people to come back over and over again is the hardest part.

[Jim Cook]

Exactly.

[Lance Kesner]

And, you know, a lot of people don't realize that, but you do. Yeah. Obviously.

[Guy Raz]

The brand is called Millie's Sipping Broth. Lance Kesner, good luck.

[Jim Cook]

We're.

[Guy Raz]

I'm excited to, to, to, to see this out in the world.

[Lance Kesner]

Thank you. It's been a pleasure talking to both of you. Thank you very much.

[Guy Raz]

Thanks for calling in.

[Jim Cook]

Thanks, Lance.

[Guy Raz]

Sounds delicious, actually.

[Jim Cook]

Yeah.

[Guy Raz]

Yeah.

[Jim Cook]

I think it's a great idea. They literally are creating a category.

[Guy Raz]

You know, I keep thinking you mentioned something interesting because you said wellness, and I thought, wow, that's right. I mean, you said mental wellness, and I thought that's interesting because. That's right. It's not just a sort of a physical health kind of lifestyle brand, but it's about, you know, just taking the time to sit down and to kind of meditate about the day or whatever and, you know, or read a book and you're sipping the broth, you know, like you'd have some tea.

[Jim Cook]

Yeah. And sometimes that reframing can make all the difference. I never forget a story That a guy told me it was the billion dollar cup of coffee. So this guy was the first importer into the US For Red Bull. And Red Bull came out of Austria. This was 25, almost 30 years ago. And they were coming to the U.S. and Red Bull wanted to price that seven and a half ounce can at $1.49. And he, having all this great experience in the soft drink industry, said, no, there's nothing in that door that costs more than 99 cents. And he was driving up to meet with the Austrians in Chicago and he was getting a little tired. And he went up and they had a Starbucks up there and he bought a cup of coffee and it was $1.99. And he got back in his car and drove to meeting. Then he realized, wait a minute, I just paid $1.99 for the exact same thing that Red Bull is selling. I'm not buying a cup of coffee. I'm buying energy to get me through. And I just paid $1.99. Of course, I'd pay $1.49 for that experience. And that $0.49 difference per serving in the first two years was a billion dollars in revenue. So that's the billion dollar cup of coffee.

[Guy Raz]

Amazing.

[Jim Cook]

It reframed what people were buying. You're not selling them a soft drink, you're selling them energy. So think big.

[Guy Raz]

No question about it. All right, Jim, we're going to take another quick break.

[Jim Cook]

But just ahead, an electrician who actually.

[Guy Raz]

Answers their phone and shows up when they say they will stay with us. You're listening to the advice line right here on how I built this lab. Hey, welcome back to the advice line on how I built this lab. I'm Guy Raz and I'm taking calls today with Jim Cook, founder of the Boston Beer Company. All right, Jim, let's, let's bring in our next caller. Hello.

[Amy Dana]

Hi, Jim. Hi, Guy.

[Guy Raz]

Hello. Please introduce yourself, tell us your name and where you're calling from and just a quick bit about your business.

[Amy Dana]

So my name is Amy Dana and I live in Guelph, Ontario, which is about an hour outside of Toronto. And I co own an electrical contracting company with my husband Patrick called Blay Electric. And our mission is to make a positive impact in the trades for both our employees and our customers.

[Guy Raz]

Nice. And what's your question?

[Amy Dana]

So the question that I have is how do we effectively convey our unique value proposition to expand our company?

[Guy Raz]

Okay, so tell us a little bit about the business. I mean, presumably you do all kinds of electrical work in homes and maybe you even install like electrical chargers for people's cars and things like that.

[Amy Dana]

Exactly.

[Guy Raz]

How did you guys start the business? And presumably you and your husband or one of you are electricians.

[Amy Dana]

Yeah, so my husband's the electrician. We started it 13 years ago, and we really started out of a reaction to how the trades were really running. And, you know, Patrick was working for a lot of companies that were unhealthy, didn't treat him so great. So we built this out of a reaction to that. And we really wanted something where we could have a good lifestyle for ourselves and also for the people that started working for us. And we cared a lot about the clients that were starting to hire us. We noticed that they were asking us lots of questions about, like, when are you going to show up and are you going to actually answer your phone? And we started to do that really well and our company started growing as a result of that.

[Guy Raz]

Isn't that amazing, Jim? That just the fact that this is an electrician that answers her phone and actually arrives when they say they're gonna arrive, like that is actually kind of a revolution now. Right? It's brilliant because usually you get like, well, the window's gonna be from 7am to midnight the next day, so just wait for us at home and we might show up. We'll show up. So you basically say to people, look, we're gonna show up at this time, we're gonna answer the phone and we're gonna, you know, we're gonna do a good job. We're gonna give you an honest service. Yeah.

[Amy Dana]

And we're gonna bring our humanness to this. Like, we are human beings and so are you, and we really care a lot about relationships.

[Guy Raz]

And so your question was about this conveying your value proposition, presumably your customer service, and the fact that, look, we're going to give you great service, but we're a little bit more expensive. Is that fair to say?

[Amy Dana]

Yeah, exactly. We've put into place in our operations somebody that is incredible at giving customer service. We have some of the answers of phone that returns the phone calls. A lot of electrical companies don't have that. We have an estimator. So we have a lot of operations in the back end that gives good customer service, but that comes at a cost when. When our customers are calling us and they're comparing our estimate next to Joe's estimate, and they're just looking at the bottom line. What we are offering is actually more. Because you're getting a really awesome service and we have a really good Reputation. But to convey that to them in a 10 second phone call or in an email quote doesn't always land. And I'm curious about how can we start to build our business while keeping the integrity of the. The thing that matters most to us?

[Guy Raz]

Yeah. Jim, you want to tackle this one first?

[Jim Cook]

Sure. I looked at your website.

I really like what you're doing. It feels like an upscale product. It felt like a family. I felt like I was looking at people who care. So is it worth 25% more? Well, probably to some fraction of the customers. You only want that fraction. So start with that. To me, be up front. We are not going to be the cheapest quote. We will be the best experience. And here's what makes us different. Because the most expensive job out there is not in a price, it's if. It's if the work has to be redone. If they, you know, mess up the furniture in your house, if they make you wait six hours, what is your time worth? That's what makes a really expensive job. It's not the quote. And then you've got to, you know, and you've got, I mean, kind of rehearse it. In the sales training, they would call it your 30 second drill. You know, we're not the cheapest, but you get what you pay for. Our electricians have been with us for several years. My husband is one of them. And you're going to get their cell phone number and you're going to get an estimate that we stand behind. We will come back if you're not satisfied. And by the way, we have 500 five star reviews that are on our website and you can scroll down through them and if you want to be the 501st of those, then we would be happy to do the job. I mean, so rehearse it and test it and you know, and you'll learn some people respond and they'll respond to certain things and use the same pitch over and over. Just refine it.

[Guy Raz]

Jim, I think that's such a great idea. And Amy, I'm going to double down on that. I think that you've got to put that out front from the beginning. That message, this idea that, hey, we're going to be a little bit more expensive but you're going to get the best service that you've ever had from an electrician. You're not going to have to call up 10 other people to fix the job. You know, it reminds me, Jim, you mentioned, you know, you talked about your early pitches. I mean, Sam Adams Beer was going to cost more money than a Budweiser. It was going to cost more than a Coors. But the value proposition here is you're getting better quality, we're getting better ingredients, and it was going to be a better experience. And I think that that's the argument that you make here. From the get go, one of the things you can think about is literally building a brand bible for your business because your expenses are higher. You mentioned that you've got an estimator, you've got an operations manager, you've got a bunch of electricians, and you've got a customer service person who's answering the phone. Many electricians work with answering services. It's a couple people with trucks and the answering service takes a message. They can't really answer any technical questions. They can't give you any information over the phone. To me, there's an argument to be made here that you build a brand bible. It doesn't have to be long. It could be 10 or 15 pages where everybody on the team is on the same page. They know that when your customer service person's on the phone, they know that they're going to say, hey, just heads up. We're probably going to be 5%, maybe even 10% higher than other quotes you get. But here's why. Here's what you get with us. It's a white glove service. That's the way you message it because it's upfront, it's transparent, and I think customers will appreciate that. There'll be some people who say, no, thank you, but I think there'll be a lot of people who say, okay, let me try it.

[Amy Dana]

I really love that. I love not hiding because before I felt like we had to kind of hide behind the fact that we were more expensive. We didn't really put that forward. And I love just naming that from the very beginning and weeding out the people that aren't interested in actually working for a company like ours in the first place.

[Jim Cook]

You very much want to weed them out at the beginning because you are investing some of that money up front in the relationship with them. Because you're going to come in and do an estimate and you'd rather have a customer that says no, thank you right away. You'd rather have a quick no than a slow maybe, yes.

[Guy Raz]

I think, Amy, there's one thing that you can also do very quickly, in addition is you have got to gather testimonials. And I know you've got five star reviews, but I think that what you want to do with your existing customers is say, hey, look, would you be willing to offer a testimonial or even hop on a call with a prospective client? We'll give you 10% off your next visit, or we'll give you a free diagnostic or free checkup. Because word of mouth is critical in your business, and especially if you're looking for people who are willing to pay a premium for a better service. You know, I'm asked all the time when a contractor comes and works with me or does if. If I'd be willing to hop on, and if they're good, I'm always willing to do it.

[Amy Dana]

Yeah, that's really helpful feedback. Thank you for that.

[Guy Raz]

Jim, any final words of advice?

[Jim Cook]

Yeah, I would sit down and write down off the top of your head all the reasons that your experience is better and don't stop till you have like a dozen. And you'll settle on, like, the three or four ones that, that people bite on and the ones they just ignore. But start with a long list.

[Guy Raz]

And the other thing that you can say is, we will also. We are in the business of educating consumers. So one of my favorite repair guys who fixes our appliances, he actually failed to fix our refrigerator. He came five or six times, and eventually we had to buy a new fridge, but he couldn't fix it. He tried. But the thing I really appreciate about him and why I keep bringing him back is he explains in very clear and simple language what he doing and why and how he's approaching the problem and trying to solve it. And so in the course of that relationship, I've come to understand how these appliances work better, and I've come to understand what the pain points are, what the challenges are. And so I'm actually more educated about the technical specifications of some of these appliances, which is actually amazing. And so if that's something that you can also do or you offer, where your electricians literally talk to the customers and say, let me explain what's going on here and what. Why we're doing what we're doing, that's a big bonus as well.

[Amy Dana]

Yeah, I really like that piece too, because that also further builds that relationship that also is so paramount to so many of us that work for the company. Our electricians, we have very little turnover. We've been in operations for 10 years, and we have. Not many people ever quit or leave because it's just such a different experience. So I really love that idea of another way of building those relationships with our clients.

[Guy Raz]

Amy Dana of Blay Electric. Thank you so much for calling.

[Amy Dana]

Thank you so much, guy. Thank you, Jim. Have a great day.

[Jim Cook]

It's our pleasure.

[Guy Raz]

Jim, before I let you go, first of all, thank you for helping me and for all the great advice you gave to the callers. When you think about when you were in their position, it's a different business and different category, but the same kind of place where you're on your own and you're trying to convince people to pay attention to what you're making. What do you wish you. What advice now would you have given to your 34 year old self?

[Jim Cook]

That's a really good question, and I can't specifically answer it, but I'll give you a perspective on it. I started Boston Beer Company from nothing. It was in my kitchen. But I did have a business plan. And my business plan was that in five years I would grow all the way up to being a million dollars in sales.

That was about 5,000 barrels of beer, eight people. And I was this management consultant. I was traveling all the time. I never got to see my kids. I was on the road, kind of sucked. So I thought, I'll have this little business in Boston and I won't have to travel. It won't be that stressful. We'll never get that big. Because at the time, the idea of starting a brewery in your kitchen and growing it to anything of any size was completely ludicrous. And I look back that like 35 years later, boy, was I wrong. It wasn't 5,000 barrels. It was actually 8 million. And it wasn't 8 people, it was 3,000. And it wasn't 1 million. It was like 2 billion. So I was totally off. But I realized from this vantage point, I can't tell whether I would have been just as happy or happier had I had the intended outcome instead of the unexpected outcome. So what I might sort of tell myself is you're launching into this big, wide ocean and there's no telling where you're going to go, but it's a wide range and they're all good. So both of those outcomes at those extremes would have led to a happy life. And isn't that what we really want when we start a business is a happy life?

[Guy Raz]

The legendary Jim Cook, founder of Boston Beer Company. Jim, always a pleasure. Thank you so much for coming on the show.

[Jim Cook]

This was a pleasure for me. And I got to finish my first beer when I'm halfway through the second.

[Guy Raz]

All right. And Jim, hope to see you soon in Boston or elsewhere.

[Jim Cook]

Wherever. Guy, this was great. Thank you.

[Guy Raz]

And by the way, if you haven't heard Jim's original How I Built this episode, you have to go back and check it out. You can find a link to it in the podcast description. And here's one of my favorite moments from that interview. So you call up your dad and you're like, dad, guess what? I'm joining the family business. I'm gonna make beer. Was he excited?

[Jim Cook]

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. No, he looked at me and said, jim, you've done some really stupid things in your life. This is the stupidest.

[Guy Raz]

Thanks so much for listening to the show this week. Please make sure to check out my newsletter. You can sign up for it for [e-mail] each week. It's packed with tons of insights from entrepreneurs and my own observations and experiences interviewing some of the greatest entrepreneurs ever. And if you're working on a business and you'd like to be on this show, send us a one minute message that tells us about your business, the issues or questions you'd like help with, and hopefully we can help you with them. And make sure to tell us how to reach you. You can send us a voice [e-mail] or call us at 1-800-433-1298 and leave a message there. And we'll put all this in the podcast description as well. This episode was produced by Chris Masini with music composed by Ramtin Arablouei. It was edited by John Isabella. Our audio engineer here was Gilly Moon. Our production team also includes Alex Chung, Karla Estevez, Casey Herman, Elaine Coates, J.C. howard, Kathryn Cipher, Kerry Thompson, Sam Paulson, Andrea Bruce, and Neva Grant. I'm Guy Raz and you've been listening to the advice line on How I built this lab. If you like how I built this, you can listen early and ad free.

[Jim Cook]

Right now by joining Wondery plus in.

[Guy Raz]

The Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short [e-mail] survey.