Business models

There are a lot of ways to run a business; probably almost as many as there are businesses. Broadly speaking, I tend to think of them as falling into two main categories: (i) Focus on maximizing profit and (ii) Focus on the product.

The Focus On Profit model is most common, I think. You may have worked for such a company, with constant reminders to cut costs, produce larger quantities, increasing revenue, etc. The metrics touted at company meetings and/or for which employees are recognized all center around saving $X or generating Y new [revenue producing] users/customers or creating $Z in new revenue directly. It’s common knowledge that “you can’t stay in business if you don’t make a profit” and, since staying in business is an important part of being in business, everything centers around increasing revenue and decreasing costs — sometimes for the long term but, more typically, in time for the next to-be-shown-to-important-people reporting cycle (ex: quarterly earnings reports). Sell a billion more widgets, make a billion more nickels: Profit!!!

Somewhere in my youth, I became enamored with the “quality over quantity” concept. This affects a lot of areas of my life but, in business, it means that I tend to think in terms of “make the best possible product — don’t cut corners and don’t settle for less than the best, even if that’s inconvenient in the moment — and a reasonable, sustainable, profitable-enough business will naturally fall out of that”.

DISCLAIMER: I’ve never been a particularly “successful”, in traditional terms, businessman. Neither particularly horrid, but just never “wildly profitable”. I used to joke to my friends “never take business/career advice from a guy who spent half of his life unemployed” (which doesn’t paint an entirely accurate picture, but it’s close enough for the adage to work 🙂 ).

That said, after many score of partial-successes and lessons-learned, I remain steadfastly convinced and optimistic that this principle can be applied to my current endeavor (the brewery) with a positive outcome.

I’ve been thinking about this a lot, lately, because I frequently hear people suggest “you could make a lot more money if you <did some lowest-common-denominator thing>”. And they’re probably right. I probably could seriously skyrocket revenue if I were willing to slap together some “good enough” product/event/whatever, and mass-market it far & wide. Thing is, I’m not really interested in being the guy who also makes another pretty-good beer that sits along side a zillion other plenty-decent beers that you can get anywhere in the Western United States (or however widely distributed each particular product is). “Hey Ted, I saw your beer on the shelf next to <other popular brand name>” is just not particularly interesting to me.

A while back, someone asked me what my specialty was — a lot of breweries have specialties; they focus on IPAs, or just make Sours, or everything is Trappist Monk style, or all their beers use a specific yeast or hops, etc. I said I didn’t really think I had a specialty; it is my intention to Make All The Beers, over time. Two of my regulars sitting at the counter corrected me: “Ted’s specialty is that, whatever style he makes, that beer is an excellent representation of that style.” I was both honored and humbled to have such words come, unsolicited, from customers. But also — not to brag too much — but “yeah…!”, that’s pretty-much what I’m trying to do. I often say “there are 1000 different styles of beer and, over time, I intend to make them all” but, also, when I’ve tried to make a style and it didn’t come out right, I toss it (or, more commonly, I use that batch in some form of cooking at home; I haven’t-yet made a beer that was too-horrible for cooking! 🙂 ) and try again. If I’m going to make an XYZ-style beer, I want it to be one of the best — maybe the best — XYZ you’ve ever had; certainly an excellent example of what XYZ can be.

By the way, I don’t claim any particular super-powers here. I’m not the world’s best brewer; I’m not the most knowledgable about all the various hops, grains, yeasts, water chemistry, etc. Perhaps I have better-than-average skill and/or knowledge, but only from practicing and studying and having made a lot of mistakes; but there are certainly many home-brewers — certainly many professionals! — with far more experience, knowledge and innate skill than I have. Perhaps the only real super-skill that I have is that, if I make something and it’s not excellent, I don’t feel a need to to “recover my losses” and pass it off as some new trendy thing that you should buy. It goes down the drain (or into my future lunches & dinners, depending) and I try again. I consider failed batches “the cost of education” and “cheaper than going to college to learn this stuff”, not to mention “…and I probably learned more doing it this way”. Fortunately for me, my lessons are coming less frequent and further in between. 🙃

Story time…

A few months ago, a lot of customers were after me to make a wheat beer. I’m not a big fan of wheat beers — I’ll drink it if you give me one, but I’ve stopped ordering them hoping to find one I like — and so I kind of delayed a bit, but finally knuckled-down and made one. I was very excited to post on our website, social media, etc., that it was in the fermentor with an expected release date. Come cold-crash day, I take a taste and, even accounting for the fact I don’t like wheats, I knew that it wasn’t very good. I carbed it over the weekend and asked a few trusted friends to taste it. They agreed: it was “ok”, “drinkable”, but “not really a great beer” and “I’d likely not order a second one”. I decided to let it condition for a couple of weeks; sometimes beers start-off not-great and improve with a little tank-time. This one didn’t. In the end, I wound-up dumping 100+ gallons of beer down the drain. Then I took what I learned from that and made a batch of quite-good Hefeweizen (German style), and that’s what we have on tap now. People like it a lot, and I’m quite glad to have yet-another excellent example of the style in our line up.

When I tell this story at the brewery, most people follow my thinking but, invariably, there’ll be someone who asks why I just didn’t offer it up at half price, or sell it off to a tap room or some such. I try to explain that I don’t want to be a place with a menu full of exceptional beers and one not-so-good on tap, but they just look at me like I’m throwing money away.

And I guess that’s my business model: I throw money away. Ideally, not very much money and not very often but, when push comes to shove, if it’s not an excellent example of that particular style of beer, then it doesn’t get to go in our taps. I briefly considered a separate brand — Train Wreck Craft Beers or similar — but decided that I didn’t have any interest in owning or operating such a business. This probably goes back to the thing I said at the beginning about how my world-view centers around focusing on product-excellence and allowing the revenue/profit chips fall where they may. So far, it seems to be working out for us.

(Heh. Now if I can just manage to meet a couple of candidates for hiring-excellence so we can grow into the next stages, that’d be awesome! Topic for another post, though…)

We make very-small batch (3.5bbl ~=108 gallons) beers in a manner intended to showcase what each style of beer can be, what it’s potential is. We have extremely limited distribution (more-or-less, “you have to come here to drink it”, you won’t find us in stores and at very few bars/restaurants). In addition to great beers, we’re keen on forming new and excellent relationships and creating a space for others to do the same. Not just in our tasting room, but “out in the real world”, as well.

“Ramble, ramble, ramble…” That’s my post for today.

Be excellent to each other!

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