Greg Koch, CEO of Stone Brewing Co.
How Greg Koch and Steve Wagner Turned Artistic Integrity into a Business Strategy
Greg Koch doesn’t care if you don’t like Stone Brewing’s Co.’s beer. Case in point, the label on a bottle of Arrogant Bastard Ale:
This is an aggressive beer. You probably won’t like it. It is quite doubtful that you have the taste or sophistication to be able to appreciate an ale of this quality and depth. We would suggest that you stick to safer and more familiar territory…
Koch, Stone’s CEO and co-founder, insists that when he wrote that caption back in 1997 when they first released the beer, it wasn’t a marketing gimmick. He really didn’t want people who prefer “fizzy yellow beer” to buy this hoppy, high-alcohol monster without fair warning. Of course, he did have some fun with it, reveling in the mocking tone of the Arrogant Bastard.
“That’s a tone of voice that I attribute to the beer and not to myself. Although maybe there is a little bit of me in there,” says Koch, who with partner Steve Wagner started in 1996 what would become one of the largest and most beloved craft breweries in the United States.
That little bit of arrogance — although you might swap that descriptor out with optimism, passion, or persistence — is in large part what has made Stone the giant success it is today.
Stone Brewing started early in the craft beer revolution, when the market had little interest in bitter, heavy brews, but Koch and Wagner had strong and unwavering opinions about good beer. When they decided to start their own brewery they knew they had to stick stubbornly to their ideals, and accept that some set of people would like it … or they wouldn’t.
But they did, and as Americans came around to more aggressive flavor profiles in their beer (with Stone and other small breweries leading the charge), the Southern California-based operation grew rapidly, averaging 50 percent annual growth and ranking consistently as one of the country’s fastest-growing companies and best-reviewed breweries.
“We started off with some strong feelings about what made great beer. We liked big, bold character beer,” Koch says of the early days. “I recognized that I was either going to do something different when it came to beer, or I was just going to stay home. I didn’t want to do the same old stuff. I just wasn’t interested in brewing what you could say most people thought that they wanted.”
While brewing a hoppy IPA doesn’t seem like a big gamble today, when they started, craft brewing was a small niche of mostly hobbyists. So making beers that knocked people out with aroma and flavor wasn’t going to be inherently well received.
“At the time, in 1996, if a lot of people thought our beer tasted good, that meant that we were brewing mediocre beer. Because that’s what most people thought beer was supposed to taste like, was mediocre beer.”
If it sounds like an odd business strategy to alienate the vast majority of consumers, that may be because Koch considers brewing to be more art than business. He likes to use the analogy of a band putting together a great record, working to stick to an artistic vision instead of just cranking out number one hits that appeal to a mass audience.
“It’s going to be our version of great, not somebody else’s version. And those who agree with us, they’re going to love what we do. And those who don’t agree with us, maybe they won’t like what we do. And our loyalty and our efforts should go and be for the people who do like what we do,” Koch says.
It’s a little defiant, sure, but it’s also a smart business strategy. If they had made a style of beer that tasted similar to what was popular on a mass scale at the time, how could they dream of possibly competing with massive industrial operations that produce the fizzy yellow stuff (the people at Stone really don’t like fizzy yellow stuff)? Instead, if they could make something different, and get just enough beer nerds to try Stone beers and enjoy them, well that might be enough to keep the doors open.
That concept of making something they strongly believe to be the best, and letting the public come to them, might fit thematically with an idealistic rock band, but it’s also reminiscent of say, Apple. Remember, when the iPad came out, many ridiculed it. Now, just as there are IPAs clutched lovingly in hands all over America, so are there iPads.
Of course, the big difference is that in 1996, Greg Koch wasn’t Steve Jobs, and he didn’t have millions of adoring fans. He had to claw his way into the market with grunt work. After all, he and Wagner had uncompromising ideas about their beer, but they still needed some people to buy it.
“We started off draft only, so that required me to go to bar and restaurant owners, and talk to them about our beer,” Koch says. “And that was tough, because mostly they weren’t interested. Mostly they just wanted me to go away. They would say whatever they could say just so that I would leave.”
His strategy was often sheer persistence, eventually getting some people to cave, if for no other reason than he kept coming back and back and they felt like he was at least working for it. The early days were a slog, with 16-hour days, six-and-a-half-day weeks. It took about a year and a half for Stone to hit its first break-even month. But their stubborn devotion held out.
“If I have any entrepreneurial trait, it’s what I call being unrealistically positive about our chances for success,” Koch said.
As bars did start pouring Stone’s early beers, people started responding. They gained a reputation and beer drinkers started asking for more. People even responded to what Koch sincerely thought was an unlikely candidate for success — the Arrogant Bastard Ale.
What some now call an American strong ale, the beer has a velvety, reddish-brown body, is aggressively bitter but also a bit sweet, and has alcohol content of 7.2 percent that leaves a warm afterglow. Again, these traits in some combination are common in beer these days, but when Stone first released it in 1997, there wasn’t much like it on the shelves. In fact, while Wagner and Koch had lovingly home-brewed the recipe since 1995, they only made 100 cases when they first tried to sell it two years later.
Koch said he wasn’t sure they’d ever brew another batch for sale, because it was just too much for where the market was. His biggest concern was that people would pick it up, take a sip, and pour it down the drain. Hence the idea for the “You’re Not Worthy” packaging.
They had fun with it, mocking domestic beer and its consumers. “But it was still very sincere. I did not want people buying the beer without being warned in advance.”
We’ll take Koch’s word for it that he was sincerely warning people away, but whether he meant it to be or not, the label is just plain brilliant marketing copy.
It’s irresistibly intriguing, provocative, and a little irreverent. It sarcastically ridicules consumers where other marketing panders to them. If you buy it, and you like it, you’re not like the rest of them. You too, can be an arrogant bastard. It’s become one of Stone’s two flagship beers, along with Stone IPA, and has gained a devoted following over the years.
Arrogant Bastard’s approach is indicative of Stone’s overall business model. They accept that most people won’t like their product, and reinforce the devotion of those who do, creating sort of a cult of appreciation.
“People that like what we do, that’s great,” Koch says. “But I really want people who love what we do to really love what we do. I want them to be passionate about it.”
They’ve come to rely on that devotion to drive sales. Their packaging often includes long blocks of text in which they share their philosophies on beer and the world. But they don’t do any traditional advertising. And all communications the company conducts follow an internal policy of never making a call to action.
“We don’t say, We’re releasing a new beer, pick one up today, try it now, get it before it’s too late,” he says. They deliberately never encourage or ask people to buy their product, a violation of basic advertising wisdom. They’d rather have that call to action come from a friend, or from within consumers themselves.
“If we come out with a special release and it’s on the shelves, and people recognize Stone and they know our reputation and what it’s about, and they know it’s a special limited release, they’re telling themselves: I better get this while it’s still here.”
So if you’re following along at home, the recipe for success at Stone starts with having a strong devotion to your own way of creating something, and letting that passion drive the work. Disregard the bulk of the consumer audience, in fact, flat out discourage them from buying your thing. Don’t even ask people to buy it. Make it so good and unique that some percentage of aficionados out there will prioritize your product for you. And then, just maybe, the big numbers will follow.
In Stone’s case, they now distribute in 40 states. In 2013, they brewed 213,000 barrels (6.6 million gallons) of beer, making them the 10th biggest craft brewery in the U.S. They have two “Bistro & Garden” facilities where they try out new recipes. They’ve opened a 19-acre “Stone Farms” facility, and they’re currently building a brewery in Berlin. The company receives regular accolades from authorities in the business and beer worlds.
This level of growth certainly won’t be every entrepreneur’s story, and these tactics won’t work for every business. But Koch’s advice for new business owners is pretty fundamental.
“Follow your heart, follow your own muse, ignore everybody. Do it the way you think it should be done. Not the way that other people think that it should be done.”
Find something you love and that you’re good at (“If you suck, then well, never mind“), and whether it’s a great beer or a piece of software, make whatever you do your art form. Craft that product or service like a great band recording a masterpiece in the studio.
“You can be artistic in business. I think art isn’t just relegated to music and painting and sculpture. There’s more forms of art in this world. And you can be artful with the things that you do.”
And most importantly, don’t dumb down what you do to please a perceived audience. Don’t pander to the masses. “That’s a recipe for mediocrity, not greatness.”
If they like it, great. If they don’t, to hell with them, they’re not worthy.
- Why Greg has never had to ever pay for advertisement for Stone Brewing Co.
- How to develop a cult following.
- Creating something that people truly want
- What it means to follow your heart and create true art
- Marketing copy 101
Full Transcript of the Podcast with Greg Koch
Nathan: Hello and welcome to the Foundr Podcast. My name is Nathan Chan and I am your host coming to you live from Melbourne, Australia. I hope you’re all having a fantastic day, thank you for sharing your earbuds with me. I know I’ve been a bit quiet and we’re not pumping out as many episodes as we were. I’m just trying to slow the production down because, you know, I’ve got so many cool, so many very interesting and fascinating episodes and interviews coming to you guys and I really want to keep the quality high now, now that we’ve gone through and flushed out all our best stuff.
So today’s episode is with a fellow named Greg Koch, and he is one of the founders of Stone Brewing Company. So if you’re listening in from America, you probably are familiar with this beer. They don’t bring it here in Australia unfortunately, but, you know, when I go to the States I can’t wait to try it.
A little bit about Stone Brewing Company. They’re one of the largest breweries in Southern California. And it was the 10th largest craft brewery in the United States and the 17th largest overall, based on sales volume. They have a cult following. You know, people trade their beers, they collect them. They’re like collectors’ items. It’s crazy how much of a cult following they’ve created, they’re community. And they have this one beer, and I can’t wait to taste it, it’s called the Arrogant Bastard Ale. And their slogan on it is, “Hated by many, loved by few. You’re not worthy.” How cool is that? Like, why wouldn’t you want to try it?
Now Greg is a fascinating guy and I really, really enjoyed our conversation, I think you’ll get a lot from it. It’s really, really interesting what they’re doing and how he started this massive brewery, and just from humble beginnings. You know, how he started it from scratch, you know, what he did to get it where it is today. So, yeah, you’re in for an absolute treat.
So that’s it from me, guys. If you are enjoying these podcasts, please do leave us a review. And, also, you know, I’d love to hear from you. Send me an e-mail, [email protected] And, yeah, as always, check out the magazine. I’ve got to plug my own stuff. So let’s jump into the show.
First of all, I just wanted to say thank you for taking the time to speak with me.
Nathan: So how did you get your job?
Greg: I built it.
Nathan: Can you start by telling us how Stone Brewing Company started?
Greg: Sure. So basically it was born out of a passion for, discovered at the time, a discovered passion for craft beer. You know, I had grown up, like most people of my era, having now idea that there was anything other than the fizzy yellow stuff of the television commercials. And when I discovered it, I kind of went down that rabbit hole. And eventually I started home brewing with my business partner, Steve. Well, that was before we were business partners. But Steve Wagner and I, we’d home brew together. And eventually we really felt that we just had to start our own brewery.
Nathan: And how did that get started? Like, it’s something that a lot of people would think from the outside, “Wow, that seems very hard to achieve.” So can you tell us how it all got started and some interesting stories? And, yeah, can you take us back to 1996?
Greg: Sure. Well, it was enormously hard to achieve, to be honest with you. You know, back in the early days I was working 14, 16 hours a day, sometimes more. Six and a half days a week. I would give myself…religiously I would… Well, not “religiously,” I guess that’s the wrong word to use for Sunday for me. But I would regularly give myself a half a day off on Sundays. When we started, you know, craft beer wasn’t popular like it is today. Both Steven and I felt that we needed to be a part of the equation that helped show people that there was something else out there that was an alternative to the industrialized version of beer. And we became very passionate about it.
So we started off in a very inauspicious industrial warehouse and we started making beers that we knew most people wouldn’t like. But eventually their taste changed. So we started off with some strong feelings about what we thought made great beer. We like big, bold character beer. You know, I recognized that I just wasn’t interested to brew what, I guess you could say, most people thought they wanted. But instead we wanted to brew the beer styles that really inspired us. And those tended to be, you know, bigger character, stronger, more hoppy beers that inspired Steve and I. So that’s the path we went down.
And I knew that most people wouldn’t like our beer. In fact, I, you know, recognized that if… You know, at the time, in 1996, if a lot of people thought that our beer tasted good, that meant we were being…you know, brewing mediocre beer.
Nathan: Oh wow.
Greg: Because that’s what most people thought beer was supposed to taste like, was mediocre beer.
Nathan: Fast-forward to now. You guys are running one of the largest breweries in Southern California. I’d like to unpack a lot of, I guess, the entrepreneurial insight that has allowed to get you there. Now I haven’t tasted your beer. I hear a lot about it, and when I come to the States I’m super excited to try it. But I understand you’re very, very strict in the way you guys produce it, handle it. A ridiculous amount of effort goes into taking care of your beers before they get to the person that drinks them. Is that correct?
Greg: That’s absolutely correct. And you said you’re in Australia or New Zealand? Sorry.
Greg: Yeah, Australia is an example of some of the challenges that we face as a brewery because there’s some gray market, unapproved gray market import that happens in the country. So we don’t officially import our beer into Australia at this time, but I hear that our beer is showing up on store shelves. Which is a shame because people are getting a compromised version of our beer. When you brew a big character beer like we do, which is uncompromising in its flavor and aromatics, it’s going to require stewardship along the way to ensure that people are having it in the way that we intend when we brew the beer. Which is fresh and aromatic and very flavorful.
So as a result we have to very carefully steward the entire journey of the beer all the way from our brewery to people’s hands. And this sets the stage for a lot of, you know, parameters that we have to follow. And it is difficult and it’s something that we constantly have to work on. You know, when we hear about people gray marketing our beer, for example, we do our best to contact the people responsible and ask them to stop. Sometimes they do, a lot of times they don’t.
Nathan: And that’s not something that you can physically stop, like from laws or anything?
Greg: No, it’s not. Unfortunately in Australia, for example, gray market is sort of ignored by the law.
Greg: That they don’t have permission to import our beer. In the United States this can be shut down rather easily because people have to have permissions to be able to distribute a beer brand. But in Australia evidently they don’t. Which unfortunately it’s bad for the consumer because the consumer is being charged a high price for what is a compromised result.
Nathan: Well, yeah, look, I know what you mean in regards to… I don’t know, I tried a Heineken in Amsterdam and it tasted so much better than if you tasted it here in Australia. So I can understand the difference with the importing. And, yeah, look, if I saw one here in Australia, I probably wouldn’t try it. Because, yeah, I did listen to a few of your interviews and did a little bit of research around how you guys take care of the quality of your beers.
Greg: Right. Yes. I’m still struggling with the idea that you would bring up a fizzy yellow beer in our conversation.
Nathan: Sorry, I wasn’t aware of these ethics. But let’s get back to the business stuff because I’m really curious because it feels like you’re a little bit playing it down, Greg. But in this space you’ve essentially disrupted an industry. And I’m curious to go back to how it all started, you know, what fueled that. You talked about how you just wanted to make great beers and you wanted to challenge the status quo. Was there anything else that drove that? Obviously, from the sounds of it, you didn’t care about how much money you were making, you just wanted to make great beers.
Greg: Right. Well, we had to make enough money to be able to have a successful business. Because if we didn’t make enough money, eventually we would have to close our doors. And then, you know, we couldn’t, you know… The goal was, of course, to be a part of the craft beer revolution. But, you know, we’ve had a no-advertising policy for our 18 years, and so we’ve actually, you know, been growing at an approximate rate of 50% a year for 18 years, on an average annual growth basis.
And the basic philosophy we have is to brew the beers that we feel we should brew and not to brew the beers that people think that maybe they want. And this is very important because if you look at any art in the world… And I consider what we do art. You know, beer is the brewer’s art. If you leave it to the public to curate the art, they will gravitate towards the lowest common denominator. And if you, instead, curate the experience for them and you create things that you truly believe in, then you’re going to get a better result.
And we can look for an analogy. The best bands in history. You know, the best bands in history were ones that followed their own muse, were very good at what they did, but went their own way and didn’t necessarily try and create the popular style of the day, or regurgitate it. And it’s a lot of times, you know, who was asking for, you know, U2 or Metallica or The Rolling Stones before The Rolling Stones or U2 or Metallica even existed. Right? They each sort if created their own genre, they created their own niche just by being who they were.
I’ve actually always loved a Metallica quote that I saw on a music magazine in 1991 just after the Black Album was released. And I love the quote they put on the front cover, which was, “Metallica didn’t go to number one, number one came to them.” And that really spoke to me. You know, this philosophy that, “Let’s just be who we are at Stone.” Let’s work on being great. It’s going to be our version of great, not somebody else’s version. And those who agree with us, they’re going to love what we do. And those who don’t agree with us, maybe they won’t like what we do. And that our loyalty in our efforts should go and be for the people who do like what we do, not to try and please the people who don’t like what we do.
Nathan: And how did you come up with these philosophies? Were these philosophies that you and Steve came up with when you first started just straight off? Or, like, what influenced this?
Greg: Well, so essentially we did have these philosophies from the beginning, although I don’t know if I would have phrased it exactly the same way. I’ve had, you know, 18 years to think about how to, you know, describe it. But we did start off at the very beginning thinking, look, Steve and I had been home brewing for many years, I’d been a beer geek for many years, I’d become quite educated about beer, and I realized that I could either use that education that I gained and use my own personal tastes and beliefs when it came to beer or I could throw that all out the window and we could make stuff that was what people thought they wanted. And I thought, well, if I’m going to throw all that out the window, I’m just going to stay home because I’m not interested in brewing generic beer. So I’m not interesting brewing mass homogenized, you know, no-character beers. Like fizzy yellow beer in green bottles from a European country, for example.
Nathan: Got you.
Greg: And so we decided right from the very beginning that we had to follow our own muse and do it our own way and accept it if people didn’t like it. As long as we knew that the result was a result that we were proud of.
Nathan: So you said it was you need to make money, but at the same stage you didn’t brew beers to please anyone else but yourself.
Greg: True. If you go back to the music analogy, like, think of…you know, try and put yourself in the mindset of your favorite band, you know, recording their seminal album. Probably they are really focused on making a great album and creating great art and not focused on trying to manipulate their art to try and gain mass acceptance. Right? But while they’re doing that, what’s the hope when you’re finished with your album and somebody listens? You hope somebody is going to like it. I mean you want them to like it. Right?
Greg: But you don’t want to compromise your art to try and capture everybody. Like Metallica, I’ll just use Metallica. It’s really easy to, you know, kind of wrap your head around these analogies with a band like Metallica. Metallica loves its fans. I mean Metallica honors their fans at the concerts and, you know, they do things for… You know, they love their fans. But if you’re not a Metallica fan, they don’t care. Why would they care? If somebody doesn’t like Metallica, the worst thing they could ever do is try and make that person happy. Because all of their fans would be disappointed in that. Right?
So this is actually a path to success. And I realized it, you know, early on. I actually believed it from both a philosophical, personal standpoint, like the standpoint of our art and what we wanted to do and what it meant to me. You know, this emotional side of me. But I also realized it from a business perspective. If we were going to do something different, unique, special, but really great, then we’d have a chance to do something relevant in the world. However, if we were going to follow along the same path as everybody else, I wouldn’t be that excited about it. And, by the way, it might be tough for us to ever make a mark or become anything special.
You know, there’s a lot of philosophy these days, which I would agree, is if you want to be successful, I mean, like, really successful, you have to combine something that you love, feel personally passionate about, that you’re good at. I mean you have to be good at it. If you suck, then, well, never mind. Right? There’s lots of garage bands out there that suck that will never go anywhere, but at least they’re having a good time. And you have to just follow that down with, you know, rigorous focus and passion and not giving up on this ideal that you’ve set for yourself. And then if you’re lucky, other people will appreciate and love what you do. In fact, people that like what we do, that’s great. But I really want people that love what we do to really love what we do. I want them to be passionate about it.
And not everybody is going to be passionate about it. And every once in a while somebody feels like they need to go out of their way to tell me that they don’t like our beer, for whatever reason. And I comfort them and tell them it’s okay. And they’ve got safety in numbers, as they’re one of probably seven-plus billion people on this planet that don’t know or don’t care about what we do. And that’s okay. Some many people getting into business sometimes feel like they need to make seven billion-plus people happy. But that’s a recipe for mediocrity, not greatness.
Nathan: How did you, like, keep raising the bar and have these such high standards? Because your standards for when you first started for brewing may have not been…they may have been a lot higher than someone else’s. And how did you gauge that, of what was, like, a quality beer and, you know, what was really high quality that people, like, you didn’t care whether people loved it or not, but you were really proud of?
Greg: Well, you know, quality is a tough word to use. If you go back to Metallica and music, you know, what’s better quality? Is a Metallica album better quality than a U2 album and a Grateful Dead album? I think, you know, you’d have people with opinions on all of those, right? And you’d have people that would, you know, argue fiercely for their favorite band. But I think we can step back and say, you know, Metallica makes the best quality Metallica and Grateful Dead makes the best quality Grateful Dead, and so on.
So it’s not really…quality is a little bit of a term that is thrown around a lot in the beer industry. You know, “We use nothing but the finest quality hops and the, you know, purest water and the best barley,” and all that. And, you know, probably by and large that’s true. But it’s what you do with it. And, again, you know, you can have a pop band that’s, you know, creating throwaway music, you can have a seminal rock band, you can, you know, have folk rock, you can have all these different styles. And mostly it’s guitar-based and drums, and vocals. Mostly. Same with brewing. Barley, hops, water, yeast. Mostly.
So you can take your art with these very simple ingredients. And it’s not just the quality of the ingredients, because everybody can get themselves a good quality guitar, everybody can get themselves a good quality amplifier. And today you can even get really good quality recording equipment quite cheap, it’s quite democratized. But it’s what you do with it that really matters. And it’s not just the quality, although that’s very important. Right?
So our beer, yes, I like to think it’s very high quality, we set very high standards. But we also set standards for ourselves in terms of the character, the kinds of beers, the flavor profiles, the aroma profiles, all of these characteristics. And these were more aggressive than what most people were used to. By “most people” I mean at that time almost anybody. There were very, very few people… Our hardest core fans tended to be home brewers because they knew what was possible in the world of beer and they loved that we didn’t pull back. Today people understand a lot more widely, you know, this character and aroma and flavor profile that’s available in the world of craft beer, and frankly how much better I think it is than, you know, industrial beer.
Nathan: So how do you create this cult following? You said you haven’t done any marketing since you’ve started.
Greg: Well, to be straight, we haven’t done any advertising. Like, you know, is our Facebook or Twitter account or our website, is that marketing? I think you could argue that maybe that’s marketing.
Nathan: Yeah, okay.
Greg: I’ve got a coaster on my hand for one of our beers, you know. It’s a coaster, is that marketing? I would say that’s marketing. But we haven’t done any paid advertising in broadcast or print and such, no billboards or anything.
Nathan: Okay. Can you tell us about, yeah, the early days? Like how did you get your first hundred customers? How did you get your first, yeah, 1,000 customers?
Greg: Well, we started off draft-only. So that required me to go out to bar and restaurant owners and talk to them about our beer. You know, that was tough because mostly they weren’t interested. You know, mostly they just wanted me to go away. They would say whatever they could say just so I would leave. But you had to be tenacious.
So in the early days our success was based primarily on shoe leather, just going, continuing going up and down the sidewalk. Beating the streets, as they say. Tenacity. A lot of bars and restaurants in the early days put our beer on because I would go back week after week after week asking. And finally they would say, “Okay, you know, kid, you’re certainly working hard. I suppose you deserve it just from how many times you’ve heard me say ‘no’ and kick you out the door. So we’ll give you a chance.”
And most of it came… As people started to discover our beer, most of it then started coming from pull. Right? You know, push is pushing your product out into the marketplace, pull is the consumers’ demand for it. And consumer demand started to rise as we developed…you know, began developing a reputation. People really enjoyed our beer and would ask for it. But even still it was tough.
I mean I would go to bars and I would have, you know, bar owners or bar managers tell me, “Nobody is asking for your beer.” Knowing that that was an incorrect statement because I know that people had been in that bar asking for our beer and they would tell me, “I’ve been in Joe’s Bar & Grill asking for your beer.” But, you know, mostly Joe just didn’t want to bother with this, you know, young company and he thought our beer tasted weird or too bitter or whatever. But eventually enough of Joe’s customers… And this is, of course, a proverbial Joe. But if enough of Joe’s customers would be asking, and so Joe would put us on tap. So a very, you know, grassroots, very organic, very one foot in front of the other.
Nathan: And at what point did you feel like, “I’m onto something, I’ve made it and this is going to work”?
Greg: From the beginning I felt we were onto something because I was very proud of our beer, I was very happy with, you know, my own judgment about the quality and the character of the beer. And then when we finally had our first break-even month, which was March of 1998, about a year and a half into it, that was when I felt like, “Okay, maybe we’re actually going to survive.”
Nathan: And did you ever feel like giving up?
Greg: No. That’s not in my DNA. You know? That just makes you fight harder. You know, if I have any entrepreneurial trait, it’s what I call being unrealistically positive about our chances for success. I was certain, even though I recognized and accepted, and even was, you know, perfectly good with the knowledge that most people wouldn’t like our beer, I also was certain that lots of people would still love our beer. You know, it doesn’t take a very large percentage of the world. In the United States we’re less than 0.1% of the beer market, I’m sure. Right? So it’s still a very, very, very small, tiny percentage of people that drink our beer. But it doesn’t take much, it just takes people to be passionate about what you’re doing so that they become loyal customers.
Nathan: Are you able to tell us any marketing tactics that you used in the very early days, and what worked and what didn’t?
Greg: You know, most of our marketing tactics were really simple and straightforward. I’ve always been focused on communication. So whether it’s, you know, the newer stuff of the social media and whatnot to early things that we could do, like printing up coasters. Or on our bottles, I don’t know if you’ve ever seen one of our bottles, but I write quite a bit on the back of them.
So there’s always communication going on from our brewery about our beers. It seemed obvious to me to… We were the first brewery to put a lot of text on a bottle of beer. Nobody else did. They would put on, you know, where it was brewed and bottled. Hopefully they would tell the truth about that. They put on the government requirement information. They might have a small, you know, one or two-sentence statement about the brewery. And we put paragraphs, literally paragraphs, on bottles of beers that went into our philosophical take on the world and what the flavor profile they could expect was and why we were doing things the way we were doing.
And that was an early way to communicate to people that, one, they could expect something different; two, that they could, you know, understand a little bit about where we were coming from and what our philosophies were, which I was excited to be able to share with people. And it was just a fun way to communicate.
So we’ve always been focused on communicating. Even today, you know, we actually have an internal policy on not using calls to action. We can communicate to people, I love telling them about our beer, but what we don’t do is we don’t say, “We’re releasing a new beer, pick one up today. Try it now. Get it before it’s too late.” Right? We don’t do those things. Well, instead we say, “Here’s a new beer we’re releasing, and we’d like to tell you a little bit about it.”
Nathan: Because in the marketing, from a conversion standpoint, it’s like proven copywriting to say, “Get your free beer today,” or, “Get it now.” Why are you choosing against that, out of curiosity?
Greg: You know, we just take in a different tack as, “Well, why not make our beer consistently awesome and use that as the reason why people…” So, you know, I think it’s even better if somebody tells their friend, “You’ve got to get one of these today. You’ve got to get, you know, some before it’s too late.” If we come out with a special release and it’s on the shelves and people recognize Stone and they know our reputation and what it’s about and they know that it’s a special limited release, they’re telling themselves, “I better get this while it’s still here.”
Nathan: I was going to say one thing in terms of your marketing that I think speaks for itself is, like, just an example of what you call some of your beers. Like the Arrogant Bastard, “Hated by many, loved by few. You’re not worthy.” That just invokes so much curiosity. Did you come up with that?
Greg: Yeah, yeah. So I was the guy that wrote those phrases and wrote the text on the back of the bottle. You’ve got to remember when I wrote that in 1997, it was a very different time for beer in the world. And it was quite straightforward. And still today it is loved by fewer people than it’s hated by. It is an aggressive beer and most people don’t like it, most people aren’t worthy of the beer. And so, you know, so that was a combination of being very straightforward and also having fun at the same time.
Nathan: Like, that is very, very good copywriting.
Greg: Well, I’ve been complimented many times in the past about, you know, the reverse psychology or whatever on the bottle label. It wasn’t written from that perspective. I was being honest and straightforward. I was also letting the beer channel through me in the tone of voice. And that’s a tone of voice that I attribute to the beer, not to myself. Although maybe there is a little bit of me in there.
Nathan: This is something I’d like to unpack because I think it’s brilliant. And even if it wasn’t strategic in that sense from a marketing standpoint, like, “Oh, you know, let’s come up with a really amazing slogan which would, you know, invoke curiosity and, you know, reverse psychology,” or whatever, how long did it take you? I’m just curious around your thinking. And how long did it take you to come up with that slogan? Like, let’s unpack the process behind such a brilliant slogan that really, yeah, like you said, in 1997 was quite, and still today, quite out there. What was the… Yeah, what was the processes? Did it take you months to think about? Was it something that you were sitting with and you had, like, you know, 20, 30 different slogans? Or it just came to you one day? Like, how did that come to you?
Greg: Boy. One, it’s requiring me to, you know, go back a little ways to come up with the answers to this. But I can tell you that my partner, Steve Wagner, and I had home brewed the first recipe for Arrogant Bastard Ale in 1995. And so we didn’t release it until a year and a half almost after we opened. Because it is a big character, strong beer. And while today it’s not as out there as it used to be, it was, you know, way out there at the time. Much stronger, much more bitter than anything else on the market.
So I really felt it important to let the beer kind of talk for itself. And when we were first going to brew a batch of this, we calculated out that we’d have about 100 cases, that we’d be making about 100 cases of beer. And I wasn’t certain that we’ve ever brew it again because I didn’t know…I didn’t think people would be buying it. I thought it was going to be much, much too strong. Because, again, there was nothing like it out there.
So I partially wrote the label from the perspective of not wanting people to just pick it up out of curiosity, take it home, open it up, taste it, and then pour out the rest because they couldn’t handle it. I wanted to warn them. And it was a sincere warning. Now, again, sincere warning coupled with some, you know, a wink and a nod and, you know, an elbow in the ribs. Right? But it was still very sincere. I did not want people to buy the beer without being warned in advance. And I figured if I give them a very hardy warning, then maybe they’ll be dissuaded. And for those who aren’t dissuaded, there’s probably going to be a higher percentage chance that they’re going to be the kind of person who would be able to appreciate a beer like that.
And so we released 100 cases and they sold out. So we brewed some more and it sold out. And we brewed some more and it sold out. And we brewed more and more and more. And then we became…eventually we became a going concern. And that’s along with that and Stone IPA, which is our flagship beer. Stone IPA is the one we sell the most of.
Nathan: So you test it?
Greg: No, we didn’t test. We’ve never tested, we’ve just done. So when we brewed 100 cases, we didn’t brew 100 cases to test, we brewed 100 cases because that plus a few kegs, that was the batch size. We’ve never really been ones to do a lot of testing, but it depends exactly how you identify it. We have a small restaurant brewery now and we brew new recipes on that all the time. And is that a test or is it just brewing because we like being creative?
Nathan: Yeah, okay. Let’s switch gears. Do you have any amazing customer stories that you’d like to share?
Greg: Amazing customer stories? You know, it’s much more about the ones that didn’t buy our beer than the ones who have bought our beer. You know, it’s more about the chain store that only bought on discount and we refuse to discount. So for, you know, for 14 years they never bought our beer. Until they finally came and they’re buying our beer and they’re selling quite a lot of it now 14 years later at full price because we refuse to discount. It’s about the wholesaler who patted me on the head in 2000 saying, “Sorry, son, I hate to be the one to tell you, but this craft beer thing is dead and it’s not going anywhere and, no, we’re not going to carry your beer.” But he did it in a very nice way. And that wholesaler is out of business and we’ve grown.
Nathan: What advice would you give to entrepreneurs? Do you have some actionable items, the core actionable items that you would give for someone that’s just starting out their entrepreneurial journey?
Greg: So it’s very fundamental. Which is follow your heart, follow your own muse, ignore everybody. Do it the way that you think it should be done, not the way that other people think that it should be done. And watch out for this trap because most people won’t give you their opinion, they’ll give you what they think somebody else’s opinion might be. You know, everybody is quick with advice on how something that you want to do will be accepted or not accepted in the marketplace.
And I’m sure you’ve seen that. You know, we can see it in our own lives all the time. Go, “Oh, people will never like this. Oh, people wouldn’t do that. People wouldn’t do that, they wouldn’t buy something like that.” Etc., etc. And at some point you just have to say to yourself, “This product or service that I’m getting into, is this something that I believe in? And I’m going to do it for the people who do like it. I’m going to do it for the people who do or would appreciate what I’m going for.”
And, Nathan, between you and me, most of the stuff that I am enthusiastic about in this world is a result of somebody having that kind of a mindset. Now they may express it a little bit different or in their own way, but most of the stuff that I have discovered in this world that I love is a result of somebody that’s followed their own muse, who’s gone their own path, that’s ignored the naysayers or charged through anyways, and they’ve done something remarkable. And it’s given somebody like me a chance to discover this remarkable thing that they’ve done and become an enthusiast and a fan of their product or service. And that’s cool.
So I just hope that, you know, somebody who’s starting out today will give me the chance, or give me the credit, for being able to appreciate the real version, and that they won’t feel like they need to dumb it down for me because I won’t appreciate it otherwise. And you know what? If I can’t appreciate it, still they shouldn’t dumb it down for me.
Nathan: Yeah. It comes back a little bit how you said to me at the start, like, for you and you guys that are brewing it, for you it’s like art.
Greg: Very much. And I think we can look today at almost any entrepreneurial endeavor and say that it’s a form of art. Because art is curated, art is created, art is seeing things, the world or what you do, through a particular set of lenses, your own lenses. Right? And so you can be artistic in business. I think art isn’t just relegated to music and painting and sculpture. Right? There’s more forms of art in this world. And you can be artful with the things that you do. In fact, my definition of art is simply bringing your best work every day and only bringing that. That’s art. You know this is as a writer. I mean we see it every day, right? Is, you know, tabloid journalism, yellow journalism that’s all designed to just get, you know, click-throughs, is that art? I suppose that’s one form of art. But, you know, is it art that anybody is really proud of?
Greg: And then there’s, you know, a really well-crafted, you know, article. And, you know, conscientious journalism is actually trying to communicate interesting things and so on, and then that’s a different kind of art. And so there’s always all kinds available and it’s up to us to make our own choices.
Nathan: Yeah, that was great. Really, really interesting. We have to work towards wrapping up and I have two more questions for you. One, what did you have to sacrifice to get where you are today, what did you have to give up?
Greg: My life for a period of time. I mean I did… Like I said, I did 14, 16, even 18-hour days. But it was a willing sacrifice, I mean I was very engaged. It’s like that old saying of, you know, “love what you do and you don’t have to work a day in your life,” you know, kind of mentality. I mean it was real work and it was hard work, and many times it was scary work because it was questions of our survival as a company. But still, you know, it gave me a lot of energy and I had a lot of drive for it because I believed in it and I really wanted to do it. But that’s the primary thing, you know, I had to sort of give up. It wasn’t such a sacrifice because it’s what I wanted to do.
Nathan: Last question. And that was around business disasters, how to avoid them in the future. Any particular failures that you guys have had or roadblocks that you’d like to mention? Because it wasn’t all just smooth sailing, right, to get where you guys are now today? Like, how many beers do you create a year, out of curiosity?
Greg: Well, last year we brewed 74 different beers. But we do have a small system at one of our restaurants that brewed about 50 of those, and then about 25 of those were from our larger brewery. But, you know, we’re just a company with a lot of creativity. Right? So, you know, not all of those were released in the same way. Some of them are just small batches available maybe only at our restaurants on draft, some just go to a local area, and so on.
But as far as mistakes go. You know, and so even if we sort of make a mistake and we brew a beer that we may think to ourselves, “Okay, we won’t brew that again because it didn’t turn out that great,” it’s hardly a very big mistake, right? You know, we haven’t really made any big mistakes at Stone, which is scary because I know that our biggest mistake is still ahead of us.
Nathan: Why do you say that?
Greg: Because we haven’t even made a big mistake. And nobody gets to go through life, especially not business life, without some major mistakes along the way. So we’re trying not to make any, you know, big stupid mistakes, right? But we’re human and humans make mistakes. And then we’ve made plenty of mistakes, so I’m not going to suggest for one second we haven’t ever made mistakes. But we’ve never made any really big ones, not any big hairy mistakes.
Now the size of our mistakes sometimes get bigger and bigger, but as we’re a little bit larger company we can absorb them. Like if we make a mistake and, you know, get the wrong piece of equipment to handle a piece of…you know, to handle a specific function in the brewery and that equipment ends up not being the right one for the job, that would be a mistake, right? But, yeah, that’s why, you know, we’re building a brewery in Berlin right now. Some people think it will be a mistake, some people think it will be a great success. I think it will be a great success, but, hey, you know, you’ve got to risk it, I’ve got to risk making a big mistake, too.
Nathan: Yeah. Well, look, I’m mindful of your time, Greg, and we’ll wrap things up now. Just, yeah, was there anything that you’d like to finish off on for this conversation? I’ve really enjoyed speaking with you, it’s been an absolute pleasure.
Greg: Well, thank you very much. Likewise, Nathan. No, I think we’ve covered things very well, you know. As an entrepreneur, I mean, not every day is fun. Right? And not every day is filled with fun. There’s a lot of very, very real work there. But, you know, try and have fun, try and really approach life from that perspective, and business life. And that can happen a lot better when you believe in what you’re doing and you really care about it and, you know, approach it with passion. And that’s what I do. That’s what we all do here at Stone. And that’s actually a lot of the strength of the company itself, is that we work to inspire and bring in people with that level of passion, because they feel the same way about it.
Nathan: Fantastic. Well, look, thank you so much for taking the time to speak with me, Greg. Yeah, that was a really cool interview, I really had a lot of fun speaking with you.
Greg: Sure, pleasure, pleasure.
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