Brewing Up a Business

Adventures in Beer from the Founder of Dogfish Head Craft Brewery

Sam Calagione

• Publisher: Wiley
• Year: 2011
• ISBN:
  9781118061879
• Edition: 2
• Topic: Betriebswirtschaft
• Subtopic: Unternehmertum

Updated business wisdom from the founder of Dogfish Head, the nation's fastest growing independent craft brewery

Starting with nothing more than a home brewing kit, Sam Calagione turned his entrepreneurial dream into a foamy reality in the form of Dogfish Head Craft Brewery, one of America's best and fastest growing craft breweries.

In this newly updated Second Edition, Calagione offers a deeper real-world look at entrepreneurship and what it takes to operate and grow a successful business. In several new chapters, he discusses Dogfish's most innovative marketing ideas, including how social media has become an integral part of the business model and how other small businesses can use it to catch up with bigger competitors. Calagione also presents a compelling argument for choosing to keep his business small and artisanal, despite growing demand for his products.

• Updated to offer a more complete look at what it takes to keep a small business booming
• An inspiring story of renegade entrepreneurialism and the rewards of dreaming big, working hard, and thinking unconventionally
• Shows how to use social media to reach new customers and grow a business

For any entrepreneur with a dream, Brewing Up a Business, Second Edition presents an enlightening, in-depth look at what it takes to succeed on their own terms.

CHAPTER 1

THE UNCONVENTIONAL BEGINNINGS OF AN ENTREPRENEUR

My dad backed our red pickup truck beneath the second-story window of my dormitory bedroom. My schoolmates in the next dorm room initiated a grand send-off by blasting Frank Sinatra’s “That’s Life” out their windows as we threw green garbage bags filled with clothes, cassettes, and books into the back of the truck below. I received this rousing tribute partly in acknowledgment of my proud Italian-American heritage, but mostly because I had just been kicked out of prep school a mere two months before graduation. My father drove me home in silence. When we reached the driveway of our house, he said simply, “Sammy, sometimes you’re a tough kid to love.”

I was so disappointed in myself at that moment. Yes, I was disappointed because I had let my father, my biggest supporter in the world, down to a cosmic degree. But I was mostly disappointed in myself because I had just lost the connection to the place where I had learned who I was and who I wanted to be—the place where, I would later realize, I decided to be an entrepreneur. For better or worse, I had figured out who I was and who I wanted to be while I was attending Northfield Mt. Hermon School (NMH)—the high school started by the world-renowned evangelist D. L. Moody—the school I never graduated from.

Not that I didn’t deserve to be kicked out. The administrators there finally sealed my fate under the blurry and all-encompassing “Accumulation of Offenses” section of the student handbook. I can recount a number of said offenses accumulated in my three-plus years there, and I think I should recount them again now. Looking back, I believe these offenses were indicative of the entrepreneurial fire I had burning within me.

I came right out of the gate with a willingness to embrace risk. I set the record for the earliest point in the school year when a student was placed on disciplinary probation. I had grown up in the town next to the school, and I wanted to show my two best friends the beauty of my new school as well as the beauty of the girls at my new school.

We snuck out my parents’ station wagon in the middle of the night and headed to campus, just three sophisticated 16-year-olds, smoking cigars and listening to Journey. We approached the school in a covert fashion that we thought would surely allow us to elude campus security. Instead of using the road, we drove up the football field, through the quad, and straight into a motion-detecting light. Not into the shaft of light, mind you, but into the pole that was holding the light itself. It detected our motion. We were greeted by a dorm parent who soon invited campus security to the party, and the rest was history.

My next year marked the second phase of my delinquent entrepreneurial development in which I exhibited ambition and an ability to organize coworkers toward a common objective. Our objective at this juncture was not getting kicked out.

In my junior year, I was not permitted to attend the prom. So another junior classmate and I designed a foolproof plan. We would act as chaperones for a bunch of senior friends who would be attending the prom. We decided to do this in style: A Winnebago was rented, beers were procured, bow ties were straightened. We headed off to the prom but never reached our destination, as much beer drinking, pool hopping, and roof surfing ensued. Though going down the highway at 60 miles per hour sitting Indian style on top of a Winnebago seemed like a good idea at the time, I can now see that it probably was not. The local authorities felt similarly, and we received a two-cruiser escort back to campus.

“You’re not going to get out of this one.” I believe those were the actual words used by the teacher whom the authorities handed us over to. We were all separated into different rooms so as not to be able to corroborate each other’s stories as we awaited our morning tribunal. The Winnebago was locked safely on campus, nearly overflowing with the various and sundry contraband. But this is where it turns into a story of uncommon valor and the creation of a united front committed to reaching a shared goal: beating the man. Walkie-talkies were employed, as were bicycles and door-opening coat hangers. We even used the sheets-tied-together-to-rappel-out-the-window motif celebrated in nearly every prison-break movie.

The following morning we were called to meet outside the Winnebago. There was a short, self-congratulatory speech by the teacher that mostly revolved around our foolishness for actually thinking we could get away with it. The door swung open and revealed . . . nothing but a very clean and contraband-free recreation vehicle. We were set free for lack of evidence. In the middle of the night we had successfully executed Project-Break-Back-In-and-Throw-It-All-Out. We had even made sure there was a vase of fresh-cut flowers on the dining table in the camper.

By senior year my entrepreneurial spirit knew no bounds. After the Winnebago incident, the powers that be decided to keep an eye on me. They said I could come back but only on the grounds that I live on campus in a dormitory. They didn’t realize that my friends had formed a juvenile-delinquent all-star team by signing up to live in the same dorm. We had diverse talents but shared a common love of partying and rule breaking. This would be the setting of my first endeavor into the beer business. I would visit my parents on the weekends, borrow the car, and cruise liquor stores for sympathetic western Massachusetts libertarian hippies willing to buy me beer as I waited in the shadows. I would return to school with an inordinately heavy hockey bag and parcel out the booty. There would always be an extra six-pack in it for me—the businessman. This proceeded throughout the year without a hitch. Yes, our beer-addled behavior sometimes raised suspicion—like when a faculty member opened the door to the recreation room only to find us playing two-on-two Ping-Pong wearing nothing but tube socks and ski goggles. But my luck couldn’t last, and I tempted fate. The businessman got caught and was put out of business.

YOUR CALLING: FINDING YOUR PASSION

There are a number of reasons why my time at Northfield Mt. Hermon was so crucial to my development as a creative person. The most important is that it was the place where I met and began to date my future wife, Mariah. At that time, aside from reading and writing, being with Mariah was one of the few things I was good at. I actually met Mariah’s mom, Rachel, first. She was friends with my favorite teacher, Bill Batty, and was at his house visiting his family for the weekend. Some friends and I were there that evening hanging out with Bill and his son John, who was a classmate of ours. Mariah’s mom made brownies for us that I was sure were the best I had ever tasted. She told me her daughter had just started her first term at NMH, and I told her that if her daughter could cook anything like her mom I was going to marry her someday. Within a couple of months I was dating Mariah, and we’ve been together ever since.

We began dating when we were all of 16 years old, so we’ve pretty much grown up together. Our personalities evolved to complement one another’s strengths and weaknesses. We attended different colleges in different parts of the country, spent separate semesters abroad in Australia, and still worked hard to see each other every chance we got. So much time and distance apart is not easy on a relationship, but through it all I got my first taste of how, if you want something bad enough and are willing to do anything necessary to make it happen, you can make it happen. This lesson has served me well in love and in life. Mariah was always the first person I went to for support and advice on the challenges we faced in the early years at Dogfish Head. She became my true partner in the company in our third year in business, and we’ve worked side by side to grow Dogfish Head since then. She is much more focused and practical than I am and has been as committed to guiding Dogfish Head toward where we are today as I have been. There are a million reasons why I love Mariah, one of which is that she is undoubtedly the only person in the world who has higher expectations of me than I have of myself. She is never surprised when we achieve great things; she would expect nothing less. I sensed that the first time I met her at NMH, and even more so after I was kindly asked to leave the school. In those first few weeks apart, our relationship became more difficult but also more rewarding as I saw she was willing to stand by me.

What sounds like a sad ending to a high school career was actually a pretty revelatory beginning. As I mentioned, getting kicked out of high school was one of the worst things to happen to me because that was where I learned who I was. The day I got kicked out, I also came to realize the person I wanted to be. I wanted to create. I wanted to make something that was a reflection of who I was. After getting kicked out of high school, I decided I wanted to be a writer, so I went off to college as an English major with hopes of being just that. Yes, I’m one of the elite fraternity of people in the country who graduated from college without ever actually receiving a high school degree. . . . We aren’t exactly Mensa.

RECOGNIZING YOUR STRENGTHS

Because beer has always played an important role in my life, I continued to hone my creativity with and passion for beer while at college. I modified an all-weather, thrift-store reclining chair to include a covert compartment that could hold a keg. When security showed up to bust a party, we’d sit on the chair and ask, “Keg, what keg?” I proudly contributed toward the invention of a drinking game called Biff that involved squeegees, milk crates, a Ping-Pong ball, and four contestants dressed only in tube socks and ski goggles (if it ain’t broke, don’t fix it). I graduated from college and realized I was more passionate about beer than a career in writing. So I started making my own beer and decided I wanted to open a brewery.

As an entrepreneur—as a person—you have to ask yourself what your defining inmost thought is. And then you have to do everything you can to express this belief to the people around you. I learned to love to read and write and express my creativity at Northfield Mt. Hermon. My inmost thought when I was first enrolled there was: “Rebel against authority in order to express yourself.” This is pretty much the same defining instinct that drives me today, but I’ve been fortunate enough to find a constructive outlet for this angst. I’ve created a company that subverts the definition of beer put forth by the so-called authorities at Anheuser-Busch and Coors.

If you are like me and did not earn a business degree or follow a clear and common path to create your business, you know there is no prescribed method to ensure success. I’m sure that majoring in business or getting an MBA gives you more tools and familiarity with the mechanics of business. But tools are useless unless you are able to use them. You could have the best set of tools in the world, but if you are not ready and capable of working with them they are useless to you. If you believe in your idea enough to make it happen, it must be a powerful idea. The way you harness the power of that idea is to believe you are the only person capable of making that idea a reality. Once you have this mind-set, you will see that a set of tools is not what builds a strong company—it’s the builder.

Opening a brewery—opening any business—seems like an impossible feat from a distance. But it starts with a faith in yourself—a belief that just because something hasn’t been done before doesn’t mean it shouldn’t be done at all. If anything, the more impossible your business idea seems to the world at large, the more opportunity there might be for you to succeed. Thomas Edison didn’t invent the lightbulb from scratch, but he was the first to imagine an entire country illuminated and powered by electricity. He set to work not just to create a durable lightbulb but to create an entire industry while naysayers around him predicted his failure. If you are going into business, the core of your strength lies in your ability to picture a world in which your idea makes a difference. However big or small that difference may be, however many people’s lives your idea ends up affecting, you need to recognize and celebrate your opportunity to make a difference. The lightbulb that went off above Edison’s head was not so much an actual physical lightbulb as it was a vision of a world in which he could make a difference.

TAKING RISKS: BEING A BUSINESS PIONEER

One of my earliest and fondest childhood memories is being “shot” in the back with a real arrow by my father as I rode a horse. He loaded the car with me, a camera, a bow, an arrow, and some ridiculous kiddie Western clothes he bought on a business trip to Texas. We drove to a farm that didn’t belong to anyone we knew but had a very old horse that he felt confident wouldn’t run away if he placed me on its back. He stuffed a flat piece of lumber under my shirt and jammed an arrow through the shirt into the wood. He placed me on a horse and “shot” me as I was doing my best wounded-cowboy impression. He was putting together a slide show for a group of fellow oral surgeons. He planned to end his lecture about a new, unorthodox tooth-implant system he had created with that picture of me on a horse with an arrow in my back. The message revolved around the perception of risk that comes with trying something new. The pioneers were the ones who risked their lives in order to create a new community in a new land. All small businesspeople are pioneers, and their companies are the hearts of their communities.

Of course there is risk that comes with being a pioneer, but the risk is minimized if the community is built on an impressive set of values—impressive in that they make an impression on the lives of the people who come in contact with them. These values start at home and shouldn’t be separate from your professional values if you are going to succeed. I think I sensed this idea emanating from my father even then, at the moment he was “shooting” me with an arrow.

The only predictable thing in the world of business is that the future cannot be predicted. Going into business is about embracing the unknown. You recognize very quickly that there is no safety net to catch your fall. While you cannot recover what could be lost by taking those risks, even many failed entrepreneurs agree that those risks are well worth taking. You have to believe in yourself and the integrity of your idea to really make a go of it. Business integrity is a combination of your values and work ethic and the value of your product or service to potential customers. To connect your personal values with a product that reflects those same values takes education. First you have to educate yourself on how to get into business and how to apply your own values to those of your business. Then you have to educate your coworkers and customers on what that business is all about. Unwavering faith and devotion to seeing your idea through are critical. This faith will come through your values and your education. No matter how much the daily unknowns of business push and pull you out of your comfort zone, you can execute your ideas if you are anchored by strong values.

VALUES

There are as many different reasons, motivations, methods, and models for starting a business as there are businesses. The one major characteristic consistent in every successful business that survives long past its inception is an adherence to core values.

The values you choose to focus on and emulate in your business create the backbone of your company more than your business plan, management team, marketing plan, budget, or product line will. Your values determine the quality of your product or service, how you treat your customers, the culture of your business, and how you interact with coworkers. The values essential to being a successful entrepreneur are not learned in a classroom or from a book. Values are acquired daily by interacting with people. In business, values are maintained through relationships with coworkers, colleagues, and customers. Having good business values starts with a single, all-important idea—either you treat people with love and respect or you don’t. It may sound naive and simplistic, but the execution can be quite complex. The manifestation of this respect is reflected in your business offering—either it represents a good value or it doesn’t. Before creating a valuable product or service, one must take inventory of personal values. In business it is easy to be conflicted between making a large profit and consistently satisfying customers and coworkers, thereby gaining their trust and loyalty.

Whether you are an MBA graduate running a publicly traded company or a one-person home-based entrepreneur, too often we measure our individual success by our paychecks. We focus on the monetary value attributed to our labor. For a business owner, this translates to your business’s profit margin. A large profit margin may feel like success for a short while, but a company focused entirely on increasing profits will not experience sustained success. To really know success in business is to have your personal values and those of your company be perfectly aligned.

FITTING THE PIECES TOGETHER

After graduating from Muhlenberg College in 1992, I moved to New York City because English was the only subject I had excelled in and I had a vague notion that I wanted to either teach or write. I also had a pretty strong notion that I wanted to move to the biggest city in the United States, go out all night, and revel in my youth. I moved in with a friend and enrolled in some writing courses at Columbia University. To pay the bills I worked as a waiter at a restaurant called Nacho Mama’s Burritos. There, I quickly became friends with Joshua Mandel, one of the owners. While the decor and the fare bespoke a Mexican restaurant, Joshua was so passionate about beer that serving unique and high-quality beers became a specialty of the restaurant.

Joshua was one of the first restaurateurs in New York City to seek out not only the obscure import beers but the beers made at small American microbreweries that were just starting to gain favor in a few corners of the world. The restaurant was serving beers like Sierra Nevada Bigfoot, Anchor Liberty, and Chimay Red. We noticed that many of the patrons shared our excitement about these innovative brews. I slowly began to realize that my work in the restaurant in general, and selecting, recommending, and serving beer in particular, was very rewarding. There was definitely a pivotal moment when I saw that a core of regular customers at Nacho Mama’s actually cared about and trusted my opinion on the unusual, exotic beers we were selling. These were people I admired simply for taking the risk of trying something new. Like me, they were ready and willing to experiment. They trusted my understanding of what they were looking for. They trusted themselves enough to make up their own minds about the quality of the beers we served. I remember taking great pride in earning their trust, and I continued to educate myself further about the world of good beer in an effort to protect and enhance that trust.

Joshua and I wanted to take our love of beer to the next level, so we decided to brew our own. We located the one shop in all of New York City that sold beer-making equipment and ingredients and began what would be my first of many batches of beer.

For this first batch, I began by sterilizing two dozen large beer bottles by baking them in the oven for 20 minutes. Then I took them out, piping hot, and placed them on a cheap rug, which promptly melted, permanently affixing the 24 bottles to it. I filled the bottles (still attached to the rug) with beer, capped them, and dragged the whole thing into a dark corner. After the requisite week had passed, I cut each bottle out of the rug and placed it in the refrigerator. Other than the odd packaging—a small chunk of area rug melted to the bottom of each bottle—the beer looked pretty good. It was a pale ale made with cherries. I called it Cherry Brew since it was my virgin batch and all.

We threw a party for the inaugural tasting, assembling a motley crew of taste testers to sample the batch. In addition to my two roommates, Mariah drove down from college and, oddly enough, Ricki Lake, of talk show fame, joined us for the festivities. I had been subsidizing my Nacho Mama’s income with infrequent acting gigs and had just done a spot on her show.

I pulled the chilled bottles from the refrigerator and opened them to share with roommates and friends. As I...