I am writing this post because I get an e-mail or a phone call almost every single day from a person asking me how to do this and so this is partly to help people and partly to slow the deluge of e-mail and phone calls.
As anybody who has viewed this blog for any length of time is probably aware, I am the guy behind Mystery Brewing Company. I originally launched the brewery as a Kickstarter campaign. The original idea was to do alternating proprietorship – a form of contract brewing – but that idea fell through and we now operate a fully functioning brick-and-mortar brewery. I won’t go through that whole story right now, because I already have. Read it here. We’re not a nano, but we’re not huge. We are, however, having a blast.
I don’t think I was the first to try, but I’m pretty sure I was the first to get funded, the largest funded (so far), and I might be the first operational Kickstarter brewery. I make no promises that those claims are true, but I think they are.
So, because of this success, I am asked often for advice by other budding entrepreneurs about how to start a brewery using Kickstarter. Let me give you this bullet list:
1. It can’t be done
Okay. That’s kind of glib. But consider this: I raised ~$44,000 via Kickstarter, which seems like a lot of money, right? I mean.. it is. It’s like median yearly income for an American family right now or something silly like that.
For a 7bbl brewery that doesn’t even pay for kegs. It certainly doesn’t pay for a brewhouse. It’s 6 fermenters. It’s the cost of plumbing and glycol piping. You get the idea.
Okay, now remember: You owe taxes on that money. You’re a business now and you need to pay taxes on any income that you make. So that $44,000, after the cut that Amazon and Kickstarter take is closer to $40,000, and then closer to $35,000 after you pay even the most modest of income taxes on it. Then you have to pay for those prizes that you’re sending out to people plus postage (postage is expensive – one Priority Mail package to 250 people = $1,000 minimum), so now you’re down to $30,000 or so, maybe lower. That’s more like 4 fermenters.
The point is this: You need, need, NEED alternate sources of funding. Don’t count on the SBA. Regardless of what they tell you they are not interested in funding startups unless there is absolutely no risk involved (ie – you are putting in an enormous amount of capital already), same goes for banks. You need to have a lot of your own money in the bank, ready to go, or a few angel investors willing to put up at least $150,000, probably more. The total cost to starting up a 7bbl brewery, right now, with the prices of stainless and the dearth of decent used equipment, is just north of $500,000.
2. Go big or go home.
For a blog that gets more hits on an article about nanobreweries, than pretty much anything else, I am still not convinced that they are a completely viable business model. If you’re planning on starting a nanobrewery, you NEED a taproom if you want the business to be completely self-sustaining. There just aren’t enough hours in the day to brew enough beer, otherwise. If you don’t have a way to sell per pint, you need to find an alternate form of income.
If you’re still interested in going the Kickstarter route:
3. You need a pre-established community to support you.
I hate to say this, but if you don’t have a local community that’s ready to see you start a brewery, you’re going to have a difficult time finding that funding. When I started my Kickstarter campaign, I was the only brewery that had a “currently funding” project. Today there are 12 in funding and I know of at many MANY more who are looking at it, so you need some way to make yours stand out. It’s going to be YOU. That’s it. You and your local community. Use it. That community is your friends, your parents, their friends, their friends of friends, etc. I knew 50% of the people that backed me on Kickstarter personally. Of the rest, most of those knew one of my other backers. That network is even more important now that it used to be, because you’re not the only person trying to do this.
4. Have decent rewards.
People are going to back you for more reasons than just helping you start a brewery, and it’s not because they want another crappy shaker pint. It’s about the experience. They want something that’s going to make them feel special. They also want something that seems like it’s worth their while. $100 for a t-shirt is shitty. $100 for a t-shirt, a sticker, a pint glass, and a bottle opener is less shitty, but throw in a personalized beer recipe and you’re starting to talk business. Don’t skimp on prizes, people will skimp on contributing. They’re nice people, but they want a reward.
5. You need to work on it EVERY DAY.
That means you need to go bother people every day. You need to write press releases and contact every network you’ve ever been a part of. Go give a talk to your grandparents’ retirement home and contact your college alumni magazine. Call your hometown newspaper and get your mom to talk about it at her bridge club. Call people you used to work with and old friends from elementary school. If you aren’t pushing it as hard as you can and being excited about it, then why should anybody else? Making that campaign work is a full time job. It won’t come to you, you need to go get it.
6. Don’t forget where you came from.
After you’ve made it and you’re successful, make sure you don’t forget where you came from. I will be sending out Kickstarter prizes for years. No shit. Half of my donors probably think I’ve completely forgotten about them. I haven’t. These people are the reason I had the balls to start my brewery and I have so, so many plans for ways to thank them that go above and beyond what I originally planned in the Kickstarter campaign. And you might ask yourself – why? What do I owe them now? They are the original community around my business. Any and every small business is about people. It’s about the community, and these are your starter community. They are your early evangelists. Take care of them and they will continue to take care of you.
7. Stop asking me for help.
Okay, that’s a little glib, too. But I can’t tell you how to make you successful. It’s your business, make it your own and come up with your own cool ideas and tactics. I can give you all of the advice in the world, but ultimately you won’t be successful by using my model, because it’s mine and, like I said, small business is about the people. You’re not me (I hope), and so you need to go find what works for you.
Good luck! It’s a shitload of work, but the reward of having all of those people believe in your idea is worth every hour you spend on it, and worth far, FAR more than the amount of money that you might raise.
I’m going to diverge from beer for a moment because everybody on the internet needs to hear – read… whatever – this. This tweet, or Facebook posting. I see it every day:
OMG! Just 10 more followers and we have 1,000! We’re like totally going to give away a SOMETHING AWESOME to our 1,000th follower! Tell your friends! Will you be the lucky one!?!?!?11?3FCtrl-H
No. I won’t. You know why? Because I already follow you. And thank you so much for acknowledging that by giving a SOMETHING AWESOME away to somebody who doesn’t currently follow you. Why should I tell my friends? That doesn’t reward me at all. That rewards them. What I should really do is stop following you and watch your total to see when you get close to 1,000 and then just unfollow you and refollow you again and again until I’m the 1,000th. That’s stupid.
Give a SOMETHING AWESOME away to a random follower at that round number. Give a few. Give everybody who currently follows you a link to a free download that’s only available for a short amount of time – but they know about because they follow you! Go hold some sort public media whatsit at that round number. Send out a thank you message to all of those people wasting their time by following you. Do something to acknowledge the fact that a lot of people have decided that you’re interesting enough to listen to. Rewarding somebody who doesn’t currently pay attention to you is insulting to all of the people that do.
This article is a followup to The Long Winding Path to Startup; call it part of the Mystery Brewing startup series, if you will.
So, here it comes. We’re entering the last month before we finally, finally, should be opening our doors. In the next 2 – 3 weeks, according to every vendor and government agent that I’ve spoken to, we’re going to see all of our equipment arrive AND our federal licensing. From there, I’m hoping that the rest of installation is a snap and that state and local licensing is a breeze. We’d like to have beer in tanks by Christmas, and we’d like to launch the New Year with some Mystery Brewing Company beer.
This is by no means a guarantee, but it’s what I sincerely and deeply hope will happen.
Let me share with you, like in the last article, the phrase that’s been driving me nuts, lately:
“While Mystery has yet to announce an opening date…”
It’s not a terrible phrase. It’s normally surrounded by other nice phrases and words like “highly anticipated” or “exciting.” But, deep inside it makes me feel like there’s somehow the suggestion that we’re being lazy about getting open or that we just don’t know, and it’s far from the case. If it was my choice, I would have been open months ago. Keeping a manufacturing business moving toward market without having the ability to create any sort of income is, to put it succinctly, terrifying. At the same time, as I said before, I’m sensitive to creating too much buzz before we know when things are going to shake out.
So, before I start cranking up the hype machine, let me share the continuing saga. When we left off back in July, I had just received word from the bank that, yes, indeed, they were going to be able to fund the equipment in the brewery. I was pretty excited, as was probably evident from that article, and hopeful that it meant that, given the 18 – 24 weeks that companies need to put equipment together and get it to you, that we’d be up and running in the fall. You can see now, in December, that it hasn’t happened quite like that.
Part of that is because we didn’t actually sign on that bank loan until October.
I’m not one for throwing out figures or naming names, but I will write this as a warning to other startups: I have spent tens of thousands of dollars waiting for banks and loan programs to get paperwork across their collective desks. My aggregate total waiting time for the SBA to turn me down (twice) has been 6 months. Had I known all of this, I would have asked the bank for money to cover the amount of capital that I spent just waiting. Now, it’s lost, unrecoverable, startup cost. It’s money that I can’t spend on equipment or upfit or other useful startup items. It’s money gone to lease, utilities, and enough money for me to pay my mortgage and eat while I was waiting for other people to shuffle papers across their collective desks. I’m not bitter (well, okay, a little), but it should be a warning: Calculate the amount of money you’ll need to not get anything done, because there will be a lot of not getting things done.
In the meantime, though, we tried to keep ourselves busy.
First of all, I say we because in September, when things were getting too busy for me to really handle on my own, I brought a friend on staff to help me. Chris and I met via Twitter, and he and his lovely wife Jen have been great friends ever since. It has been just an incredible boon to have him on my side and helping me out. In fact, I am sure that without him we would be much farther from opening than we are now.
So, together, Chris and I have worked toward getting Mystery going as best as we can without the ability to a) make any sort of large amount of beer (y’know – we can homebrew) and b) make any sort of income. We’ve been getting involved in events where we can, pouring casks when possible (so long as money doesn’t change hands), and trying to be as up front and visible as we can without building up too much insane hype ahead of schedule. We might have failed that last goal by pouring at the World Beer Festival in Durham this fall, where we had a line all day. It was pretty awesome to be there, but not so great to have to tell people that there was no place to find our beer. Soon, people! Soon!
Over the course of the fall I wrote a book and had the fantastic opportunity to visit almost every brewery in the state of North Carolina. Recently, as a companion business to Mystery and with the help of Derrick Smith of Hillsborough’s Wooden Nickel Pub, we opened Nash Street Homebrew, a homebrew shop that seeks to fill a niche in the Western Triangle and far Eastern Triad.
They’re both opportunities that sort of fell into my lap. The book – and I’ve mentioned this in another blog post months ago – came to me, rather than me looking for a place to publish, and while I’m glad I did it, I don’t think I could have chosen a worse time to attempt to write a book. Starting a brewery takes a lot of your time, even when there’s no brewery there. Throw a few dozen road trips and hours and hours and hours and hours of research, writing, and editing on top of that and.. well.. let’s just say that I haven’t slept much in the last few months. I had originally wanted to chronicle my entire trip via the blog, but it became apparent to me very quickly that I had enough writing to do to put the book together. Writing a second book online while I was doing the first was just foolhardy.
You can see a all of the photos that I took, many of which will be in the book (and don’t you dare re-use these without permission) over on Flickr.
The homebrew shop was very much the same way. Without getting into boring specifics, the opportunity and the idea were presented to me together and it seemed too good an opportunity to pass up. It helps that I have Derrick and Chris to help in the setup and management of the shop. All I basically need to do is manage the business end of things. It’s a great thing to have good partners.
All in all, things are coming together nicely and I’m optimistic for the future. We’ve had some rough times over the past few years, and the opportunity for rough times still exists. If we don’t see TTB licensing this month, things are going to get dodgy really fast, so we’re looking at a couple of ways to make it less dodgy for us as our final pre-opening month comes to a close.
I won’t go all NPR pledge drive on you (I’ve done that here on this post at Mystery), but this week we’ll be launching our Irregulars program, named after the Baker Street Irregulars of Sherlock Holmes fame.* It will be a comprehensive Mystery membership club that includes all kinds of fun swag (a membership kit!), opportunities to get unique Mystery beers, early admission into Mystery events, chances to brew with us at the brewery, and a way to always be a long term part of the brewery. I urge you to check it out, because I think it will be fun (and maybe even a great Christmas gift!), but it’s also a way for people to help Mystery make the final push over the finish line. We can make it at a sputter or we can take air and fly. With people behind us, we can soar into the New Year and bring all of our backers with us.
We’re also planning a New Years Eve soiree at the brewery; a way to see the new brewery first hand before the first beers even get released. What better place to spend New Years Eve than at a brewery? I’ll be there no matter what, party or no. Keep an eye out for more details on that within the next few days, and if you’re in Central North Carolina keep your New Years Eve open and available.
At the end of this all, I just want to take a moment to say thanks. People across the internet, from good friends here in North Carolina (and especially in the NC Craft Beer community), to people I’ve never met before across the country and around the world have been incredibly supportive of me and Mystery over the past year and a half while the entire startup process has been dragging on. This page – the full list of Kickstarters – just makes my jaw drop every time I look at it, and those are just the (awesome, amazing) Kickstarters. It doesn’t even list the dozens and dozens of people who have given of their time, intellect, and advice. I can’t wait to justify your trust and good will with great beer, and I sincerely hope to share a pint (or maybe a half-pint) with each and every one of you.
*The Baker Street Irregulars are a band of street urchins employed by Holmes to help him investigate crimes and track criminals. They first appeared in the first Holmes novel A Study in Scarlet.
Microbrewery: A brewery that produces less than 15,000 barrels (17,600 hectoliters) of beer per year with 75% or more of its beer sold off site.
Regional Brewery: A brewery with an annual beer production of between 15,000 and 6,000,000 barrels.
As a small brewer who will, with any luck, make 500 – 1000 bbls of beer next year, I could not fathom writing down that last number. Just to put this in perspective, I downloaded the 2010 craft beer statistics to take a quick look at them. Bear in mind, now, that 60 or so breweries didn’t report data, so I may be off from reality by a few decimal points here or there. The 2010 data lists 1415 breweries with barrelage data, which is about 300 short of our current number, since so many have opened recently.
Of these, 1334 fell under 15,000 barrels. That’s mindboggling. Up from there, only the top 18 make over 100,000 barrels/year, and only the top 4 make over 500,000 barrels per year. If you take the average from the top 10 craft producers in the country (in 2010), the number is 487,528. If you average all 1415, the number is 6,961, and if you leave out the top 18 it drops to 2,919.
Why am I bringing this up? Well, for two reasons. One, I think we need more than two categorizations for breweries, because I fail to see what anybody that’s operating at 1,000 bbls/year has in common with someone who is producing 500,000 bbls/year aside from the actual end product. I don’t think you could find two more different companies, and I wonder if the majority of the breweries (ie – the small ones) are actually having their needs met from a professional organization standpoint.
The BA Board is primarily comprised of people from the largest breweries who don’t know what it’s like to be a small brewer in today’s market, only yesterday’s where they didn’t have to compete with.. well.. themselves. Kim Jordan has no idea what it’s like to have New Belgium expand aggressively into her state, Sam Calagione has no idea what it’s like to have to compete with his innovation. They’ve never had to do so. Their success has changed the market for small breweries in ways that they’ve never dealt with. Can they accurately consider and respond to issues and concerns of breweries significantly smaller than them? Maybe they can. I don’t know.
I would like to see a more tiered breakdown of breweries, and maybe see the BA address them as separate segments from an organizational standpoint:
Artisanal brewery: 0 – 10,000 bbls (1311 breweries in 2010)
Microbrewery: 10,000 – 50,000 bbls (71 breweries in 2010)
Regional brewery: 50,000 bbls – 100,000 bbls (15 breweries in 2010)
Super-regional brewery: 100,000 bbls – 1,000,000 bbls (17 breweries in 2010)
Premium craft brewery: 1,000,000 bbls – 6,000,000 bbls (1 brewery in 2010)
I’d also just like to pose the question: Would a brewery that makes 6,000,000 bbls/year really have the same interests as the 1300+ that make fewer than 10,000 bbls year? The size difference there is just staggering. In no way is that still a small business in any way shape or form. I’m not advocating culling the BA membership or anything, but given the large numbers of very small breweries, wouldn’t it make sense to treat each of these tiers differently from an organizational level, especially since the small breweries are less likely to have the resources to advocate for anything other than making their own sales goals to stay open?
Maybe the BA could feature different sized small brewer committees to deal with issues that come up within each successive tier. They’re going to be different, from supplier needs to distribution needs – what is relevant to a small brewery will be laughable to a large one and vice versa. Each tier could have advisory members from larger tiers to offer advice on problems that arise for these small guys that they’ve already conquered, or to act as a liaison to the larger tiers if there are intra-industry issues that pop up where small brewers are having a hard time getting their voice heard.
Just food for thought.
I’m a little late off the mark on this, since the article that I’m responding to was actually written days ago, and really had a fair amount of buzz over the weekend. Still, since through some fluke of internettery or bad programming I’m unable to post my feelings in the comments of article, you get to read my thoughts here.
This is in response to the article posted on Bon Appetit‘s website named (le sigh) Why Beer Growlers are Bad for your Brew
The first thing I’d like to point out is that the URL to the article is actually “Garrett Oliver Thinks Growlers…” and I bet the next work is “Suck”, but that apparently didn’t meet the “sweeping generalization in order to get as many eyes as possible” criteria. Good job. It worked. I wish it wouldn’t have.
It’s raised a bit of ire around beer blogs and on Beer Advocate, and one of the commenters on the article itself poses the interesting question of “Why would anyone ever be so emotionally committed to growlers that it would ever induce such outrage?”
I can’t say it’s outrage, but it definitely makes me feel a bit.. well.. exasperated. Garrett Oliver really did write the book on beer. Well… he edited it, anyway, despite numerous errors, and his opinion carries weight, even when it seems like a quick one-off bullshit answer to some guy who he’s drinking with. Because after you’ve written the book on beer, your slightest opinions get repeated like this:
“Oh, well, Garrett Oliver says [poorly translated version of what Garrett Oliver actually said taken immediately as the holy fucking gospel].”
It’s especially bad when it’s repeated by a magazine like Bon Appetit, even if it is a bullshit one-off name-dropping blog post by some guy who was probably just desperate to meet an editing deadline, because people who trust Bon Appetit (who are likely people who buy good, craft beer) are likely to come away with:
“Oh, well, I read in Bon Appetit that Garrett Oliver says [something incredibly inaccurate which will be taken as an unbreakable law that only a basilisk’s tooth dipped in unicorn tears could possibly destroy].”
So, let’s hear it for journalistic integrity on the internet in 2011!
I can tell you why people would get emotional about it – for some small breweries, growlers can be a life saver. Packaging lines (bottles, cans) are expensive, and growlers can be a great way for new and/or small breweries to get product into locations, like grocery stores, or maybe even people’s homes, in a way that kegs just can’t do on a large scale basis. It’s not emotional, it’s defensive.
At Mystery, we’re counting on growler sales to help us through our startup, and I’m hoping that they constitute a large portion of our sales. That said, we’re planning using a counter-pressure growler filler to make sure that they’re packaged correctly instead of urinating directly into each one, as Garrett Oliver would have Andrew Knowlton have you believe. And I would never, EVER fill a dirty growler. Dirty growlers should be traded out for clean ones. I have the tools to clean growlers in ways that most people do not in their homes, and ultimately, I am represented best by giving you excellent beer.
But to address a big issue in the article of “the pros hate growlers”. Ugh. Are growlers ideal ways to package beer? No. But I don’t hate them.
Here’s what I hate: I hate it when bottle shops have beer sitting warm on shelves. I hate it when they have beer sitting near fluorescent lights. I hate it when they don’t pull beer off of the shelves after 90 days. I hate it when bars don’t clean their tap lines, or when they serve beer in frosted mugs, or shove a faucet into a beer while it’s being poured, or don’t give me a new glass when I order a new beer. I hate it when bars don’t have dishwashers that get hot enough to clean lipstick off of glassware, or wash their glassware in the same dishwasher as their food dishes.
All of those things can have a detrimental effect on the flavor and presentation of a beer and all of those are way, way, WAY more common than someone filling a dirty growler or filling one so incorrectly that the consumer will notice a difference, assuming they consume it while it’s still fresh.
But I can’t control those other things. I can, as a brewer, control the quality of the growlers that leave my establishment. I can make sure they’re clean and they’re filled properly – just like any packaging brewer would do for ANY packaged beer product.
I’d like to see an actual well-researched, well-considered followup article by Bon Appetit about this, but I’m sure it just won’t happen.
This piece of pseudo-journalism will go on misinforming in droves. It might seem silly, but these little one-off things coming from a source that people trust can be very damaging to small businesses. It’s already being repeated, and all it takes is one more journalist who doesn’t know how to research (which I’m starting to believe is most of them) to make this opinion law by referencing it in some wider reaching periodical.
Come on Bon Appetit, do what’s right and fix your crappy journalism by actually doing some work on the story. I’m issuing you a challenge. Write a good story on beer packaging. Your readership deserves it.