He recognized early on that to be successful, the journey will come with mistakes – potentially million dollar mistakes. Drawing upon both past feats and failures, Jim Koch offers up a collection of lessons and tips he’s used throughout his journey to make Samuel Adams one of the leading independent American craft breweries and a successful business.
* Better and cheaper
One of the first valuable lessons Koch learned was that if you’re going to bring out a new product, it has to be better or cheaper than the competition. If your product is neither better nor cheaper, you are not adding value for customers; and you probably don’t have a business. Once Koch decided to start a beer company, he believed that by using quality ingredients and a traditional brewing process, he could make a better beer than anything that was on the market during the 1980s.
* Think big, start small
Koch admits that early on, he occasionally forgot the simple truth that a business really starts when a customer buys your product. Luckily, his uncle reminded him of that one morning just before the first batch of beer was ready. Jim recalls, “My uncle called and asked what I had been working on. I told him that I planned to buy a computer to track sales. He pointed out that I didn’t have any sales to track and suggested instead that I spend my time actually getting sales. Immediately, I got it. It all starts with your first customer.” From that day forward, Koch followed the adage, “Have a big idea but start small.”
* We’re all salesmen
When Koch was a student, Harvard Business School offered about 22 courses on marketing and not a single course in sales. Therefore, there was nothing that prepared students for the abject terror of a sales call. It was March 1985 when he walked into a local restaurant and delivered an ill-prepared pitch to a man behind the bar, who stood silently throughout. In that humbling moment, Koch gained instant respect for all sales people, and vowed to acquire selling skills. Great salesmen are sometimes born, but they can also be made. Today’s business culture doesn’t always pay adequate respect to the job of selling. Koch urges all young entrepreneurs to never look down at salesmen, because if you start a company, you become your first and most important salesperson.
* The string theory
In the middle of graduate school, Koch decided to take a break and became a mountaineering teacher at Outward Bound. The program teaches participants self-reliance, teamwork, creativity and how to handle challenges. Through his teaching, Koch developed something he likes to call the “string theory.” At the beginning of each four-week course, participants were given a supply of alpine cord (heavy nylon string) for lashing gear, pitching tarps, etc. Consistently, if participants received plenty of string, they would run out and need more. But, when they were given less and told they had only two-thirds of what they really needed, they would get incredibly creative and make the cords last.
* Company values
In the beginning, when local distributors declined to carry Samuel Adams, Koch had to become his own distributor and sales force. He carried chilled bottles of Boston Lager to bartenders around Boston. They admired the fact that Koch was so hands-on, opting to brew small batches, rather than trying to compete with the larger brewers mass-producing mainstream beers. These early practices are the same ones Koch uses today. When you start your own company, be sure to instill a solid foundation of operations and processes throughout every step of the journey, to ensure that your business stays true to your philosophy and values.
* Getting rich is life’s great booby prize
Although the promise of financial success is what motivates some people to start their own businesses, the fact is money is nothing if you’re not happy. Often, when young entrepreneurs embark on the journey of starting a business, they do it with the goal of getting rich. The unfortunate fact is that about 90 percent of businesses fail within the first five years. And, most of the businesses that do survive don’t create great wealth for the owners. If your objective is to accumulate wealth, starting a business may not be the wisest path. On the other hand, if you get into business doing something you love, you have a very high chance of being happy. Ask any person: would you rather be rich, or would you rather be happy?
Koch knew he had to focus on the activities that provide the best return on time invested. To this day, he still tastes a sample from every batch, keeping an obsessive eye on quality and flavor. From the people to the product, Koch is as involved in the company’s day-to-day operations as he was when Samuel Adams started. He makes decisions based on what’s best for the beer, not the bottom line.