Pod Insights How I Built This with Guy Raz Advice Line with Jim Koch of Boston Beer Company (August 2024) About this episode Boston Beer Company founder Jim Koch joins Guy on the Advice Line, where they answer questions from three founders about finding product-market fit.
Today, we meet Kim, whose tropical-inspired apparel company in Florida is venturing into the rum market. Then Llance from Washington, who is taking his tea-bag-soup-broth business national. And Ami, who wants potential customers to know that her Ontario-based electrical contracting company has some of the best service out there.
If you’d like to be featured on a future Advice Line episode, leave us a one-minute message that tells us about your business and a specific question you’d like answered. Send a voice memo to [email protected] mailto:[email protected] or call 1-800-433-1298.
And be sure to listen to Boston Beer Company’s founding story https://art19.com/shows/831bd173-0992-41b7-b1eb-112db904d947/episodes/0fae3366-c691-4ba4-9e22-cfd7f5fb578e/embed as told by Jim on the show in 2016.
This episode was produced by Chris Maccini with music by Ramtin Arablouei. It was edited by John Isabella. Our audio engineer was Gilly Moon.
You can follow HIBT on X https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis and sign up for Guy's free newsletter at guyraz.com http://guyraz.com/ or on Substack https://guyraz.substack.com/.
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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5:15 Guy Raz? Hey, everyone. Just want to let you know that this week, our team is taking a much-needed break. So we chose one of our favorite episodes from the archives. Here it is, and hope you enjoy it.
5:28 Guy Raz? 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 1-800-433-1298. Send us a one-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 memo at [email protected] . And make sure to tell us how to reach you. And also, don't forget to sign up for my newsletter.
6:12 Guy Raz? It's full of insights and ideas from the world's greatest entrepreneurs. You can sign up for free at guyraz.com. 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 Company, the American brewery best known for Samuel Adams beer. Jim, welcome to the show. Welcome back to the show, I should say.
6:38 Speaker 01 It's always a pleasure having a beer with you.
6:41 Guy Raz? It is always a pleasure.
6:44 Speaker 01 If I enjoy myself here.
6:46 Guy Raz? I think that's perfect. 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 buddy. 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 stability. 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.
7:29 Guy Raz? 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 not no longer running the day to day. You're the chairman.
7:48 Speaker 01 Yep.
7:48 Guy Raz? 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 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, the guys at the corner bar, to start drinking Sam Adams beer?
8:20 Speaker 01 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
9:01 Speaker 01 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.
9:32 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, right? And soon enough, it's those people who become your biggest evangelists.
9:59 Speaker 01 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 100 bars, but that was where we focused, and it grew from there.
10:36 Guy Raz? I remember vividly the story you told about going, using the payphones in Boston, you know, 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. Like, you were really scrimping on the other thing. So I'm curious, when, when you, you know, 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, you know, early stages of, of the business?
11:15 Speaker 01 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, you know?
11:27 Guy Raz? Yeah.
11:27 Speaker 01 I need to have an office. I need to have, you know, a computer. I need to have, you know, an executive assistant. Well, BS, you, 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, were those 100 bars.
11:54 Guy Raz? Yeah. We could, I could just talk about this forever, but we gotta bring in some callers. So Jim, what do you say? Let's, should we bring in our first caller?
12:01 Speaker 01 You sound like really great people, so I'm anxious to talk to them.
12:05 Guy Raz? All right. I think we got our first caller on the line. Please introduce yourself. Tell us your name, where you're calling from.
12:10 Speaker 02 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 rum that is set to launch in a few weeks. So, thanks for having me.
12:38 Guy Raz? Amazing. Okay, and what's your question today, Kim?
12:41 Speaker 02 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 our founder's story?
13:07 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.
13:15 Speaker 02 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.
13:54 Guy Raz? And it says Tropical Vibes on it?
13:56 Speaker 02 Tropical Vibes.
13:57 Guy Raz? With 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.
14:15 Speaker 02 Yes.
14:16 Guy Raz? And so, that, and today, you've got, what do you do? Hats and shirts?
14:21 Speaker 02 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.
14:37 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, and the story, just even in the label, even in the name, even 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, right? And so, how do you think about storytelling with a product or with a brand?
15:14 Speaker 01 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, with my beer, to create beer independence for the United States. I didn't want to be
15:54 Speaker 01 dependent on, you know, imported beer from other countries. So, you got to start with your own passion. And what do the tropics mean to you? Because essentially, you started with a business where you were going to 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.
16:21 Guy Raz? Yes.
16:21 Speaker 01 Because, you know, to you, the tropics are this unique place where you can put your feet in the water and your ass in the sand, and you breathe out, you're relaxed. I mean, what is it? About the tropics that you want to bring to people. Tell that story.
16:41 Speaker 02 Hmm. 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's story that puts the customer front and center?
17:25 Guy Raz? I'm not sure you have to sort of separate the two, right? Like, 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 about the brand's story in general, right? And so it sounds like there was, from what I understand, you did not grow up in Florida, right? You grew up somewhere cold?
17:50 Speaker 02 Uh, Seattle.
17:52 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, like, what do the tropics mean to you? Why were you drawn to that world and that culture and lifestyle?
18:06 Speaker 02 It's just, 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.
18:38 Speaker 01 You're selling that feeling.
18:41 Speaker 01 That you described. So you have to have, you know, some layers to your brand. I mean, with the rum, there's gonna 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 gonna be on a crowded shelf. Right. So what is unique, special, different about that rum? And some of it has to be the story.
19:23 Speaker 01 The consumers are 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. A rum maker 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, you know, extracts vanillins from the wood that you wouldn't otherwise get. I mean, it just has to be many layers to your story.
19:57 Guy Raz? Kim, I'm curious how much, what percentage of your business is direct to consumer online through your website and what is through the boutiques?
20:05 Speaker 02 We are about 80/20. So 80% to the boutiques and about 20% online.
20:11 Guy Raz? So that 20%, right, those direct to consumer sales, I mean, that's really where you can start to develop a community. And I know if 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%. You know, 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?
20:53 Guy Raz? The people that you can gather data from, the people who you can ask for feedback, who you can offer incentives if they answer, you know, a survey. I mean, I think one of the things you can also do with your existing inventory, you know, 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.
21:37 Guy Raz? Jim, what do you think?
21:39 Speaker 01 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 some value out of this.
21:55 Guy Raz? Great, let's do it. Do I have to compete against Jim? Oh, boy. Okay, well.
21:59 Speaker 01 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, you know, what if you create like a scrapbook where people can post pictures of themselves in the tropics or enjoying Tropic Vibes rum? 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.
22:38 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, you know, 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 will, 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.
23:20 Speaker 02 Absolutely. Excellent. Well, thank you both. I appreciate it.
23:24 Guy Raz? Yeah.
23:24 Speaker 02 And super helpful. Thanks for having me.
23:28 Guy Raz? Kim, thank you so much. Good luck with Tropical Vibes. We'll be following your progress. Yeah.
23:32 Speaker 02 Fantastic. Thank you.
23:35 Guy Raz? You know, I wonder, I wonder when you think about, Jim, just building a brand today. It's just, it's hard. 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?
23:53 Speaker 01 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, you know, the 21st century version of alchemy. And that was always tough. But you need to be a storyteller to create a brand.
24:18 Guy Raz? Yeah. All right, Jim, we're going to take a quick break. But when we come back, what if you could get soup broth from a teabag? 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.
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28:18 Guy Raz? Welcome back to the advice line on How I Built This Lab. I guess 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.
28:32 Speaker 05 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 teabag. It's gluten-free, keto, vegan, and kosher.
28:53 Guy Raz? Wow, okay. And so this is a broth, like vegetable broth or chicken broth, but it's in a teabag?
29:02 Speaker 05 It's all vegetable. You make it in a teabag, you steep it like tea, and it makes a fresh cup of broth.
29:10 Guy Raz? I love it. This is a super innovative idea. And what's your question for us today?
29:15 Speaker 05 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 what are some of your ideas about raising capital to support a new brand that is getting national traction in retail?
29:43 Guy Raz? Okay, we'll get to your question in a moment. I'm just a couple of quick questions about Millie. So tell me a little bit about how this started.
29:52 Speaker 05 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 bouillon 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.
30:32 Speaker 05 So I ripped open, lipped in tea bags 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.
30:47 Guy Raz? Wow. Okay, so right now you are in how many stores?
30:53 Speaker 05 We're roughly about 700 stores.
30:57 Guy Raz? And how many people do you have working?
31:00 Speaker 05 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.
31:13 Guy Raz? And so how, tell me a little bit about how you're doing so far. I mean, are you, have you broken a half a million dollars in sales yet or not quite yet?
31:23 Speaker 05 We're under 2 million.
31:25 Guy Raz? Oh, wow. Okay, so you guys are well on your way. So with just such a small team.
31:31 Speaker 05 Yes.
31:32 Guy Raz? And so now that you're going into Walmart, your good question is, do you, should you approach, potentially approach investors? Jim, let me pass this over to you. Maybe you've got some questions for Lance before you kind of launch into his question or answering his question.
31:47 Speaker 01 Yeah. What are you going to use the capital for? What do you need money for?
31:54 Speaker 05 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.
32:13 Speaker 01 Yep, and when do you get paid?
32:16 Speaker 05 Well, usually with Walmart, it's, you know, 45, 60 days, something like that. So, that's typical retailer, you know, payment schedules.
32:26 Speaker 01 And you sell directly to Walmart?
32:29 Speaker 05 Yeah, it's a direct sale.
32:30 Speaker 01 Okay, I mean, one question to ask Walmart, and, you know, Walmart wants you to succeed. You know, sometimes they have this reputation of being like really cutthroat and predatory and so forth, but they're nice to little guys. You know, so a question I would ask is, can you guys pay me in 15 days?
32:50 Speaker 05 Good question.
32:52 Speaker 01 And if they can, you know, that solves a lot of your problem because you probably don't have to pay your, you know, your producer suppliers in 15 days. So now you've got a positive float. And the issue that you face, you know, trying to raise capital at what is still a fairly early stage is people want a lot.
33:14 Speaker 05 Yeah.
33:15 Speaker 01 You know, if they give you a half a million dollars, they may want half of your company. I mean, really think through your cash flow and, you know, 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.
34:00 Speaker 01 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 them and said, "You want me to succeed, I'm struggling. Can you pay me, you know, 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.
34:45 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.
34:56 Speaker 01 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.
35:18 Speaker 05 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.
35:54 Speaker 01 Yeah, don't grow beyond...
35:57 Speaker 01 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 1,000, 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.
36:37 Speaker 01 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.
36:51 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 bouillon companies. But I think that you can operate under the radar and grow really steadily for a long time before the sort of the players, the big players notice you, which I think is an advantage. I think about an episode we did a couple of months ago on nut pods, you know, the creamer, the non-dairy creamer that had an amazing exit. And, you know, a 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
37:33 Guy Raz? that. Nobody was really thinking about coffee creamers in the way that she was. And so to me, there's a, there's a parallel with this brand, which, which allows you to, to sort of grow more slowly and, and focus on brand building more slowly.
37:51 Speaker 05 Yeah, 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 are really looking for you. So those types of opportunities have always been our first priority.
38:09 Speaker 01 Yeah, and I would, a couple of other things that occurred to me as we were talking, and Guy emphasized, you're creating a category. You're different and you are, 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've got to deal with them and so forth. But then you're going to sell it in, outside of Walmart. You know, you can get more money for it than you're asking. It's, right now, you're selling it for basically the price of a K-cup. But you're, you're much more valuable than that.
38:55 Guy Raz? It's a premium product, yeah.
38:57 Speaker 01 Yep.
38:57 Speaker 05 Yeah, we believe, we want people to drink it every day and think of it that way. And so, yeah, I agree with you.
39:04 Speaker 01 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 a dollar 30. I mean, people can afford that. And that extra price probably doubles your margin.
39:23 Guy Raz? Yeah. And Lance, one question for you. I mean, obviously Walmart is a huge coup, much more sort of, you know, 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?
39:38 Speaker 05 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, you know, 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?
40:14 Speaker 01 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 going to meet their hurdles to stay on that shelf next year.
40:38 Speaker 05 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.
40:47 Speaker 01 Exactly.
40:48 Speaker 05 And, you know, a lot of people don't realize that, but you do, yeah, obviously.
40:52 Guy Raz? The brand is called Milli's Sipping Broth. Lance Kesner, good luck. We're, I'm excited to see this out in the world.
40:59 Speaker 05 Thank you. It's been a pleasure talking to both of you. Thank you very much.
41:03 Guy Raz? Thanks for calling in.
41:04 Speaker 01 Thanks, Lance.
41:05 Guy Raz? Sounds delicious, actually.
41:06 Speaker 01 Yeah. Yeah, I think it's a great idea. They literally are creating a category.
41:10 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, you're sipping the broth, you know, like you'd have some tea.
41:36 Speaker 01 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, you know, came out of Austria, this was 25, almost 30 years ago, and they're coming to the US, and Red Bull wanted to price that, that seven and a half ounce can at A dollar forty-nine. And he, having all this great experience in the soft drink industry, said, "No.
42:19 Speaker 01 Um, there's nothing in that door that costs more than ninety-nine cents." And he was driving up to meet with the Austrians in Chicago. Uh, and he was getting a little tired. And he went up, uh, and they had a Starbucks up there. And he bought a cup of coffee and it was a dollar ninety-nine. And he got back in his car and drove to meet him. Then he realized, "Wait a minute. I just paid a dollar ninety-nine 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 a dollar ninety-nine. Of course I'd pay a dollar forty-nine for that experience.
43:04 Speaker 01 And that forty-nine cents difference per serving in the first two years was a billion dollars in revenue. So that's the billion-dollar cup of coffee."
43:15 Guy Raz? It's amazing.
43:16 Speaker 01 It reframed what people were buying. You're not selling them a soft drink. You're selling them energy.
43:23 Guy Raz? Hmm.
43:24 Speaker 01 So, think big.
43:25 Guy Raz? No question about it. All right, Jim, we're gonna take another quick break. But just ahead, an electrician who actually 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, uh, let's bring in our next caller.
44:05 Speaker 06 Hello. Hi, Jim. Hi, Guy.
44:08 Guy Raz? Hello. Please, um, introduce yourself. Tell us your name and where you're calling from, and just a quick bit about your, your business.
44:15 Speaker 06 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.
44:31 Guy Raz? Nice. And what's your question?
44:33 Speaker 06 So the question that I have is how do we effectively convey our unique value proposition to expand our company?
44:39 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.
44:51 Speaker 06 Exactly.
44:52 Guy Raz? How did you, how did you guys start the business? And presumably you and your husband or one of you are electricians.
44:59 Speaker 06 Yeah, so my husband's an electrician. We started it 13 years ago. And we really started out of a reaction to how the trades were really run. 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.
45:39 Guy Raz? Isn't that amazing, Jim? That just, just the fact that this is an electrician that answers her phone and actually arrives when they say they're going to arrive? Like, that is actually kind of a revolution now, right? It's brilliant. Because usually you get like, well, the window's going to be from 7:00 a.m. to midnight the next day. So just wait for us at home. And we might show up. And we'll show up. So you basically say to people, look, we're going to show up at this time. We're going to answer the phone. And, and we're going to, you know, we're going to do a good job. We're going to give you an honest service.
46:17 Speaker 06 Yeah. And we're going to like bring our humanness to this. Like, we are human beings and so are you. And we really care a lot about relationships.
46:25 Guy Raz? And so your question was about this conveying your value proposition, presumably your customer service, and the fact that you're basically saying, "Look, we're going to give you great service, but we're a little bit more expensive." Is that fair to say?
46:41 Speaker 06 Yeah, exactly. We have put into place in our operations, somebody that is incredible at giving customer service. We have someone that answers the 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 backend that gives good customer service, but that comes at a cost. And so 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.
47:25 Speaker 06 And I'm curious about how can we start to build our business while keeping the integrity of the thing that matters most to us?
47:32 Guy Raz? Yeah. Jim, you want to tackle this one first?
47:35 Speaker 01 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 upfront. We are not going to be the cheapest quote. We will be the best experience.
48:12 Guy Raz? Yes.
48:13 Speaker 01 And here's what makes us different. Because the most... Expensive job out there is not in the 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 a, 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 for several years. My husband is one of them.
48:58 Speaker 01 And, you know, 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 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. Yeah. And, you know, and you and you'll learn. Some people respond and they'll respond to certain things and use the same pitch over and over and just refine it.
49:33 Guy Raz? Jim, I think that's such a great idea. And and Amy, I I'm going to double down on that. I think that you've got to put that out 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 the value proposition is we'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.
50:14 Guy Raz? I mean, one of the things you can think about is literally building a brand bible for your business, okay? Because your expenses are higher, right? You mentioned that you've got an estimator, you've got an operations manager, you've got, you know, a bunch of electricians, and you've got a customer service person who's answering the phone. Many electricians work with answering services.
50:35 Speaker 06 Yeah.
50:36 Guy Raz? And it's a couple of 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 what, 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'll say, no, thank you. But I think there'll be a lot of people who say, okay, let me try it.
51:19 Speaker 06 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, you know, more expensive. We didn't really like put that forward. And I love just like naming that from the very beginning.
51:32 Guy Raz? Yeah.
51:33 Speaker 06 And weeding out the people that aren't interested in actually working for a company like ours in the first place.
51:39 Speaker 01 You very much want to weed them out at the beginning because you are investing some of that money upfront 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.
52:00 Guy Raz? Yes. 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 I'd be willing to hop on and they're good, I'm always willing to do it.
52:42 Speaker 06 Yeah, that's really, that's really helpful feedback. Thank you for that.
52:45 Guy Raz? Jim, any final words of advice?
52:47 Speaker 01 Yeah, I would sit down and, you know, 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 people bite on and the ones they just ignore, but start with a long list.
53:10 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, 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's doing and why and how he's approaching the problem and trying to solve it. And so in, 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 or what the challenges are. And so I'm actually more educated about the,
53:53 Guy Raz? 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, you know, let me explain what's going on here and, and what, why we're doing what we're doing, that's a big bonus as well.
54:11 Speaker 06 Yeah, I really liked that piece too, because that also furthers, builds that relationship that also so paramount to so many of us at work for the company. You know, our, we, 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, I love that idea of, of another way of building the relationships with our clients.
54:35 Guy Raz? Amy Dana, Blay Electric, thank you so much for calling.
54:39 Speaker 06 Thank you so much, Guy. Thank you, Jim. Have a great day.
54:42 Speaker 01 It's our pleasure.
54:43 Guy Raz? Jim, before I let you go, I mean, first of all, thank you for helping me and for all the great advice you gave to callers. When you think about, when you were in their position, you know, it's a different business and different, you know, category, but the same kind of place, right, 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 knew? What advice would you, now, would you have given to your 34-year-old self?
55:14 Speaker 01 That's a really good question, and I can't specifically answer it, but I'll give you a perspective on it. You know, 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, you know, I was this management consultant. I was traveling all the time. I never got to see my kids, you know, I was on the road. Kind of sucked. So I thought, I'll have this little business in Boston, and I won't have
55:58 Speaker 01 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 on that like 35 years later. Boy, was I wrong. It wasn't 5,000 barrels. It was actually 8 million, and it wasn't, you know, eight 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...
56:40 Speaker 01 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 know, you're launching into this big wide ocean and there's no telling, you know, where you're going to go, but it's a wide range and they're all good. So all, both of those outcomes, that 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?
57:24 Guy Raz? The legendary Jim Cook, founder of Boston Beer Company. Jim, always a pleasure. Thank you so much for coming on the show.
57:34 Speaker 01 This was a pleasure for me and I got to finish my first beer, but I'm halfway through the second.
57:39 Guy Raz? All right. And Jim, I hope to see you soon in Boston or, or, or elsewhere.
57:44 Speaker 01 Wherever, Guy. This was great. Thank you.
57:47 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, you call up your dad and you're like, Dad, guess what? I'm joining the family business. I'm going to make beer. Was he excited?
58:06 Speaker 01 Oh, um, not really. When I told him, I was kind of hoping that he'd put his arm around me and because this 150-year-old family tradition was going to be carried on.
58:19 Guy Raz? Yeah.
58:20 Speaker 01 No. He looked at me, he said, Jim, you've done some really stupid things in your life. This is the stupidest.
58:27 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 free at guyraz.com. 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 memo at [email protected]
59:09 Guy Raz? 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 Messini, with music composed by Ramtin Arablouei. It was edited by John Isabella. Our audio engineer was Gilly Moon. Our production team also includes Alex Chung, Carla Estevez, Casey Herman, Elaine Coats, J.C. Howard, Catherine Seifer, Kerry Thompson, Sam Paulson, Andrea Bruce, and Neva Grant. I'm Guy Raz, and you've been listening to the Device Line on How I Built This Lab.
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