How Sam Adams founder crushed his sales goal of $1 million and hit $1 billion instead
by Catherine Clifford
When Jim Koch left his cushy consulting job in downtown Boston to launch a craft beer brewery, he didn’t expect to get rich. He just wanted to be happy.
“When I go back and look at my original business plan from starting Sam Adams, it’s embarrassing because I was so wrong,” Koch said in an interview with CNBC at the Iconic conference in Boston last week.
“When I first started, my goal was to grow Sam Adams in five years to 5,000 barrels of beer. That was a little over a million dollars of revenue, eight employees and I thought it would plateau.”
“That was OK,” said Koch (pronounced “cook”), “because when I looked at that outcome I thought, ‘This is great!’ I’m going to support myself, I am going to be able to support my family, and I’m going to be able to do what I love. I am not going to get rich, I might not make the money I made as a consultant, but I want to be happy. So that was my goal.”
Koch may have been right about the happy part, but he was light years off on the financial projections.
Today, The Boston Beer Co., which is the brewhouse behind Sam Adams beer, is selling 4 million barrels of beer, or about $1 billion in revenue, each year. The publicly traded company has a market capitalization of around $2 billion.
Koch said he totally underestimated the market for craft beer in the U.S. because it was hard to imagine the demand for such a new product.
“If you’re giving consumers something really cool and wonderful, you don’t know how big it’s going to be,” said Koch, who, despite reaching billionaire status himself in 2014 and 2015, is nearly always dressed in khakis and a denim shirt emblazoned with the Sam Adams logo.
When Koch started brewing Sam Adams in his kitchen in 1984, beer drinkers in the U.S. weren’t used to the fresh, full-flavored taste of a craft beer.
“It’s really hard when you start something truly innovative and unique to have a good idea of what the demand is going to be,” he said. “I’m sure when Steve Jobs and Steve Wozniak were wiring up the Apple One in their garage, they had no idea that they were creating the most valuable company in the world.”
“The sky is the limit,” he added. “You really can dream big if you’re offering something that’s really cool.”
Of course, it wasn’t only the new, delicious brew that catapulted The Boston Beer Co. to a multibillion-dollar company. In the early days, Koch focused intently on selling his products.
“What I did do that I think was very important when I started is try to do only two things: I was very focused on making great beer consistently and getting it to people fresh and on working my tail off to sell it,” he said. “I ignored a lot of other stuff.”
He figured that if the business never got off the ground, he would have the resources to go back and clean up some messes, but if he spent his time worrying about the details, the business wouldn’t stand a chance.
And on top of all that, Koch said, he was lucky.
If so, being lucky and making great beer is a billion-dollar recipe.
Read more @