Jim Koch, who launched Boston Beer Co., from his kitchen 30-some years ago with a 19th-century family recipe, said he had no idea that his Samuel Adams beer was name-checked in Broadway’s cross-cultural megahit “Hamilton.”
His eyes lit up when played the playful allusion to the signature brew (named for a patriot) in a pub scene set in 1776: “I’m John Laurens in the place to be! Two pints o’ Sam Adams, but I’m workin’ on three, uh!”
“Love it! Love it! Love it!” Koch said. “You know, somebody probably said, ‘You can’t have the founding fathers as black actors doing rap,’ and look at what they did. That’s kind of the story of Sam Adams. People saying you can’t do it. You shouldn’t do it. But I said I’m going to do it anyway.”
Koch, 67, has three degrees from Harvard, including an MBA and law degree. He ditched a thriving career advising manufacturers for Boston Consulting Group (where colleagues included Mitt Romney, who later left to join Bain & Co.) to belatedly extend a family tradition in brewing beer to a sixth generation.
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His Sam Adams beer is credited with powering the craft beer movement, though some in that class today view him and his company’s size warily. Boston Beer’s market cap is about $2 billion.
Koch recently authored the book, “Quench Your Own Thirst: Business Lessons Learned Over a Beer or Two.”
The interview has been edited for length and clarity.
Q: You didn’t set out to be this. You flirted with the idea of being an environmental lawyer, then joined Boston Consulting.
A: One of my first clients was International Paper, and they had 5 1/2 million acres of timberlands. The new CEO brought us in and said: “Are we managing this right? It’s our biggest asset.” Long story short, they weren’t.
Q: You found a way to up their company’s yield while simultaneously preserving old growth in national forests, which — unlike national parks — aren’t protected by the Department of the Interior but managed by the Department of Agriculture, which you say had viewed them as tree farms.
A: These agricultural practices then became the norm in the forest products industry. So now there’s no argument about farming national forests because they don’t need the wood. By doing that, I and the other people who helped me did way more than I ever could as a lawyer, way more than the Sierra Club had done to protect national forests. What that taught me is, wow, business can actually create an enormous amount of good by doing smart things.
Q: I imagine it was lucrative, too.
A: I worked in all these basic manufacturing businesses, foundries, steel mills, paper mills, plastics, chemicals, big capital-intensive, process-oriented stuff.
Jack Welch was my client at General Electric before he became the icon, back when he was Neutron Jack. They called him Neutron Jack because the people would all be gone but the buildings stayed. GE had just way too much overhead, all these layers.
Q: Were those kinds of cuts your idea?
A: No, that was Jack.
Q: Is that sort of thing why you left?
A: It was the career progression, the way it is at any firm. You start by doing the work and the work I liked. Then you get promoted to managing a group of people doing the work but you’re also still very involved in it, and I liked that. But six years in, the next promotion was to being a vice president, where you’re doing much more selling, and you’re managing managers. That was my future, and I didn’t want to manage a consultancy. So I got off the train.
Q: It was just you and your former secretary trying to make a go of it in the beginning. She didn’t have a background in business, and you didn’t take a salary to start.
A: I told her we only have to worry about two things. We’re going to make great beer every time and we’re going to work our butts off to sell it. So we had no office, we didn’t even have a telephone. Remember those answering services with old ladies in a basement, where you’d call in? That’s how we got our messages. If we had to have a meeting, we did it in a bar, because they were our customers.
Q: Not everything in the book is a success story.
A: There are minor mistakes, major mistakes and a couple of colossal screw-ups. I wanted it to be authentic because a lot of business books are a little bit, you know, everything goes from good to better.
Q: But your story is still pretty good.
A: Our success as we grew from my kitchen to helping start this whole craft beer revolution largely came from sticking to the core values of the company. That doesn’t mean we didn’t have difficult times. There’s a whole chapter about when Anheuser-Busch tried to put me out of business.
Q: You’re not a big fan of the bigger brewers.
A: They just have a different business model. They are financially driven and motivated. They’re private equity companies that happen to make beer. There’s nothing wrong with that. That is an important goal of business, to produce returns for the owner, and that is what drives them.
Q: And you?
A: In orientation, when people start working for us, I tell them we have four constituencies. The most important is our customers. The second most important is our people. The third is our investors, and the fourth is our community. I happen to be incorporated in Massachusetts. Corporation laws there are different than Delaware, and they allow a Massachusetts business, within its fiduciary responsibilities, to take into account those other constituencies.
Q: You do what you want.
A: A guy who worked with us for many years had this nice phrase. He said at Boston Beer Co. there’s a restless dissatisfaction with the status quo, and that has been kind of one of our values. The status quo sucks. The status quo exists because we haven’t figured out yet how to make it better, but we will. We’re constantly innovating, not listening to people who say you can’t do that.