Advice Line with Jim Koch of Boston Beer Company (August 2024)

0:04 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 I hope you enjoy it. Hello, and welcome to the advice line on how I built this lab. I'm Guy Roz. 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 hibt at id.wondery.com, and make sure to tell us how to reach you. And also don't forget to sign up for my newsletter. It's full of insights and ideas from the world's greatest entrepreneurs. You can sign up for free at gyros.com. And we'll put all this info in the podcast description.

1:12 Alright. 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. Welcome to the show, welcome back to the show I should say. It's always a pleasure having a beer with you.

1:30 Uh always always a pleasure. If I enjoy myself here, I'm not sure. Perfect. Jim, if I had a drinking buddy, you would be my num my top choice. You're probably a lot of people's top choice to be a drinking buddy. So thank you for for being here. And yes, please. Let's and let's uh let's all enjoy a uh Sam Adams beer. Um, Jim, you were uh just to remind our listeners, you were first on the show back in 2017, um, to tell the story of how you created the Boston Beer Company and Sam Adams Beer and It's

2:03 just such an inspiring story because at the time when you started this brand in the in the eighties, You were uh on the fast track to sort of financial stability. You were working at a consulting firm, but you you were feeling suffocated. You were feeling like this wasn't the life you wanted to to live, 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 be a revolution that really kicked off with Sam Adams beer. Um

2:33 You are still with the Boston Beer Company, but not no longer running the Day to Day, you're the chairman. Yeah. 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 gonna come up in our conversation today, right? You 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 and Budweiser. Um, how did you get ordinary beer drinkers in the mid eighties, you know the guys at the corner bar.

3:07 To start drinking Sam Adams beer. Well, Yeah. I have to say I didn't try to do that. Um and I think that'll come up with uh a lot of the the folks we're gonna be speaking to today. You know, when you're at the leading edge of a product that is very unfamiliar to people, even a category.

3:28 that is unfamiliar. You don't want to go where all the volume is in the mainstream. You know, you wanna just Find a handful of people who will get what you're trying to do. And so ninety nine percent of the beer drinkers out there, I wasn't trying to reach them. I was really trying to reach The one percent that was interested in flavor, that drank beer for the taste, that knew a little bit about the ingredients

4:03 uh way more than trying to convert, you know A Bud Light drinker to Sam Adams. That was would was a shock to their palate, to their system. You know, I it might have even harmed them. Uh to ha have that much flavor in their mouth at one time. Yeah. Yeah, I mean this is a classic example of of finding product market fit, right? You engage with early adopters. I wrote a blog post about this uh a little while ago.

4:31 And my newsletter, and it's interesting because in most cases you start with early adopters. You you sort of Give them the product, you get their feedback, you you really kind of cultivate their passion, right? And soon enough, it's those people who become Your biggest evangelists. That's exactly right. We our whole market when I started was a list of one hundred bars. In the whole world.

4:57 That was what we cared about was those one hundred bars that were in the right pockets in Boston. We only had one truck. the beer so we couldn't go all over creation, but we focused on them. And eventually we got Every one of them.

5:16 to carry Samuel Adams. It took about a year. But that was where we focused and it grew. From there.

5:26 I I remember vividly the story you told about going using payphones in Boston 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. I'm curious when when when you you know when early stage founders may might ask you or or talk to you about where they are.

5:58 How should they think about allocating resources at the in the early and you know, early stages of of the business? Well I'll give him some simple advice. Don't play company. You start out and you think Well I'm starting a company.

6:13 I need to have the things that A company has, you know. 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 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'cause it's a safe place. Well, I didn't have that.

6:39 All I had were were those hundred bars. 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 yeah, should we bring in our first caller? All right, I think we got our first caller online. Please introduce yourself, tell us your name, where you're calling from. Hi, I'm Kim Jones, the CEO and co-founder of Tropical Vibes. We're based in Cana Vidra 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

7:18 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. Amazing. Okay. And what what what's your question today, Kim? So my question is, as um sure you've 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? Got it. Okay. Well let's let's break this down a a little bit first, Kim. Tell me about how you started this this brand. How you started Tropical Vibes. Yeah, so uh my husband and I decided to uh start a travel agency a few years back as a a side hustle. And uh we named it Tropical Vibes Travel. And one of the things we did was to create hats and shirts and things for

8:21 the 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 uh started selling the branded apparel. Actually throughout the country, we ended up in about a hundred and twenty stores across the US and Canada with our branded apparel. And it says tropical vibes on it. Like a palm tree, yeah. And so okay, so the idea was originally it was I love this, it was a travel agency to uh presumably to help get people to tropical areas, right? The Caribbean and and that that didn't work out. But the the swag and maybe the swag that you were gonna give away turned into the company, turned into the business. Yes.

9:04 And so that and and today you've got what What do you do? Hats and shirts Yep, hats and shirts. And um 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 uh launching this this rum line.

9:27 All right, and so right now you're trying to figure out all right, what is the story we tell, right? Jim, I wanna start with this idea. But I mean Obviously the Sam Adams brand is in the story, just even in the label, even in the name, even in in in looking at Sam Adams on that everybody listening can picture what that label looks like and 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

10:00 About storytelling with a product or with a brand. To me, it has to start. With A founder. And I know you're a little skittish about that, Kim. Um But to me

10:14 A brand has to come from Somewhere. And generally that somewhere is The heart.

10:23 And the passion. Of A human being. I mean with my beer, you know, Samuel Adams The historical figure, the patriot

10:32 Had a passion for American інdeпendence. And I wanted with my beer to create Beer independent. for the United States. I didn't want to be dependent on you know import of beer from other countries

10:49 So You gotta start with your own passion. And what what do the tropics mean to you? Because essentially you know, you started with a business where you were gonna take people To the tropics. Well that didn't work.

11:04 But now you're continuing that mission because you're bringing the tropics To people. Yes. Because you know, to you the tropic are this unique place where you put your feet in the water and your ass in the sand and you breathe out, you're relaxed. About The tropics that you want to bring.

11:28 to people. Tell that story. I think that's a a great point and trying to separate the two, the the founder from the brand, because we have done well with the apparel and 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

11:56 in South Florida or aren't living the dream in the tropics. And I wanna 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 story that puts the customer front and center. I'm not sure th 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 the question why did I want to do this should inform how you think about The brand story in general, right? And so it sounds like there was from what I understand, you you did not grow up in Florida, right? You grew up somewhere cold? Uh Seattle. Okay. So so rainy and cold. And so did you presumably you would dream about I mean, now you live in Florida, would you dream about the like what do the tropics mean to you? Why why were you drawn to that world and that culture and lifestyle?

12:55 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 we did our research when we started the business and you know about twenty six million travelers go to the Caribbean every year. I think it's almost human nature to be drawn to that type of environment. You're selling

13:29 That feeling. That you described. So You have to Have

13:36 You know, some layers to your brand. 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?

13:50 Why is Tropic Vibes the rum that I should buy instead of you know, m Malibu or Captain Morgan or Sailor Jerry. 'Cause you're gonna be on a crowd shelf. Right.

14:04 So What is it Unique, special, different About That rum.

14:11 And some of it has to be the story. The consumers there looking at the bottle, they can't taste the rum. You know, so you've got to create the taste experience. It's it's aged in this kind of barrel. We sample it and we don't bottle it till it's ready. Uh uh Rummaker. uh has been making rum in the tropics and uh the the cool nights and the warm days bring the the rum in and out of the wood that you know extracts vanilla from the wood that you wouldn't otherwise get I mean it just has to be many layers to your story.

14:47 Kim, I'm curious how much what percentage of your business is direct to consumer online through your website and what is is through the boutiques? We are about eighty twenty. So eighty percent to the boutiques and about twenty percent online. So that twenty percent, right, those direct to consumer um 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 for for cocktails, and that's a great start. And I would really lean into that and really try and cultivate That twenty percent. You know, Jim earlier talked about

15:19 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 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 twenty percent, right? The people that you can gather data from, the people who you can ask for feedback, who you can offer incentives if they answer um uh you know, a a 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.

16:03 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 I think you can do to start building out that community. Because eventually you want to see if you can shift that eighty twenty around, right? Where it's eighty people going directly to you. Yeah. Jim, what what do you think? Yeah, I love that idea. I actually wrote it down, a Spotify playlist,'cause uh we have a hard T's vodka based called Sun Cruiser and

16:40 I'm I wrote that down for our product guy. So I'm going to get value to compete against Jim? Oh boy. No. No, I think it's 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 I would I'll build on on Guy's comment. You know, what if you create like a a scrapbook where people can post pictures Yeah. In the tropics or enjoying uh tropic vibes rum. You need things that people

17:18 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. Yeah.

17:28 And and doing that, right, that having those like user generated photos, you can incentivise people with, you know free pair of sunglasses, maybe you just make cheap sunglasses you know that are just that's just swag, you know, that says trop tropical vibes on it that people will get if they if they post or if they, you know, post a a photo of themselves with a with a you know a a glass of rum or or holding the bottle. Something like that. Um, I just think there's so many opportunities that you you s little things you can do now. to really start to build.

18:01 community which 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. Absolutely. Excellent. Well, thank you both. I appreciate it and uh super helpful. Um thanks for having me. Kim, thank you so much. Good luck with Tropical Vibes. We'll be we'll be following your progress. Yeah. Fantastic. Thank you. You know, I wonder I wonder when you think about um Jim, just

18:28 building a brand today. It's just it's har I mean Is it do you think that it's harder because just the the there m there's more things out there, or do you think that it it's not necessarily harder today than it was in nineteen eighty five or eighty six? I mean it's Building a brand is just Uh

18:50 It's 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 twenty first century version of alchemy. And that was always tough. But you need to be a storyteller to create a brand. Yeah.

19:09 Alright Jim, we're gonna take a quick break, but when we come back, what if you could get soup broth? From a tea bag. That's coming up in just a moment. Stay with us. I'm Guy Roz, and you're listening to the advice line right here on how I built this lab. Welcome back to the advice line on how I built this lab. My guest today is Jim Cook, founder of the Boston Beer Company. Alright, Jim, let's bring in our next collar.

19:46 Tell us your name, where you're calling from and just a quick Line about your business. Hi, my name is Lance Kesner and I'm from Bellevue, Washington, near Seattle. Uh my wife Lori and I created Millie's sipping broth. And Millie's is actually the first ever soup broth in a tea bag.

20:06 It's gluten free keto. Vegan and kosher. Wow, okay. And and so this is a Ross. Like

20:18 Vegetable broth or chicken broth, but it's in a tea bag? It's all vegetable. You make it in the tea bag, you steep it like tea and it makes a fresh cup of broth. I love it. This is a super innovative idea. And and what's your what's your question for us today? My question is um This coming fall, we're rolling out our product nationally at Walmart.

20:40 And uh 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 a a new brand? That is getting national traction in retail. Okay, we'll get to your question in a moment. Um just a couple uh quick questions about

21:06 About Millie. So Tell me the b a little bit about how this started. So my wife Uh Lori, she used to be a teacher. She was a a a lifelong Weight Watchers member.

21:18 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 bullion cube with her to school because she wanted a savory Something savory and hot. There was nothing out there. Um, 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.

21:50 So I You know, ripped open lip in tea bags in our kitchen. put the ingredients in. I made ten of them. She took'em to school and had one and by the time she came back they were all gone'cause all the other teachers had had Taking that. Wow.

22:07 Okay, so Right now, um you are in how many stores? We're uh roughly about 700 stores. And and how many people do you have working? So uh the founding team is just my wife and myself. And then we have a partner company that does the operations and sales. uh so we we work together with with them

22:31 And um and so how tell me a little bit about how you're doing so far. I mean, are you have you broken uh half a million dollars in sales yet, or not quite yet? Uh we're we're you know under two million. Oh wow, okay, so you guys are are well on your way. So with just a such a small team. Yes. And so now that you're going into Walmart Your question is do you you know, should you approach

22:55 potentially approach uh investors. Jim, let me let me t pass this over to you. Maybe you've you got some questions for Lance before you kind of launch into his his question or answering his question. Yeah. Um What are you gonna use the capital for? What do you need money for? Well

23:14 Basically I think the 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 is critical. Yep. And when do you get paid? Well usually with Walmart it's you know forty five, sixty days, something like that. So Uh that's typical retailer um you know payment schedules.

23:44 And you sell directly to Walmart. Yeah, it's a direct sale. Okay. I mean one question to Ask.

23:53 Walmart and you know, Walmart wants you to succeed. Yeah, sometimes they have this. reputation of being like really cutthroat and predatory and so forth. But they're nice to little guys. Um you know so a question I would ask is

24:06 Can you guys pay me in fifteen days? Good question. And if they can, you know. That solves a lot of your problem because you probably don't have to pay your suppl you know, your producers' suppliers in fifteen days. So now you've got a positive float. And

24:23 the issue that you face, you know, trying to raise capital at at what is still a fairly early stage is people want a lot. Yeah. Half of your company. I mean Really think through uh your cash flow.

24:43 And You know Hard cash. To the extent that you can Delay your payables and accelerate your receivables.

24:51 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 start my company with Two hundred forty thousand dollars, a hundred thousand if it was mine, and I then I raised another one hundred and forty thousand and that represented like thirty five percent of the company. I never needed it. Because I like you was producing through a contract producer and and I was selling to a distributor and and I thought I needed to give'em thirty day terms.

25:22 And I didn't. Uh 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. I Can you pay me?

25:33 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 know, you're a successful big distributor with lots of money. I got nothing. Why do I need to be your bank?

25:48 You don't need to finance Walmart's business. They've got the product. You know, Can the EFT you the money Five days.

25:57 after they've signed uh Bill of Lading and the invoice. So that's where I would start. I think that's great. advice, Jim. I mean essentially What you're saying is at this point

26:09 Lance needs to be cautious about approaching investors. 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

26:28 Any money that you're spending that is not directly related to Making the product. Or selling the product.

26:37 Well, uh you know, we started this business uh in twenty twelve with um Those fundamentals in place, uh you know, working out of our house, um not spending on things that weren't necessary. And so I think that everything you just said just really rings true. Um

26:56 And I I I really like your idea of of you know widening that gap uh uh when cash is available. to to be able to do that. I think at the at the end of the day we just really will be careful about taking on anything bigger than what we can actually support. Yeah, don't Grow beyond the consumer demand. I mean

27:18 You probably be thankful that Walmart's not putting you in five thousand stores. You'd rather be in five hundred stores and be successful. Than be in five thousand stores. And not. You know, you can go from Five hundred. to

27:35 five thousand over time. I mean we started with Walmart maybe ten years in, and they put me in two hundred stores. And I was very excited by that. And if they'd said I wanna put you in a thousand, I would have said I don't think so. because you know if six hundred of those fail

27:54 You're gonna take me out everywhere. But if I'm in two hundred and it succeeds I'll be in five hundred next year. So don't try to you know go faster than the consumer pull.

28:08 Will allow you. I I also think, Lance, you're you are operating in a a really interesting space because You y you're really not competing against anybody. But you've got the bone broth companies and the bouillon companies, but I think that you're You can operate under the radar and grow really um 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, like the the creamer, the non-dairy creamer that had an amazing exit.

28:40 And you know, uh 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 and things like that. Nobody was really thinking about coffee creamers in the way that she was. And so To me there's a uh uh there's a parallel with this brand which which it allows you to

29:03 to sort of grow more slowly and and focus on brand building more slowly. Yeah, we we were very fortunate to have uh 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 one percent uh uh who who really looking for you. So those types of opportunities have always been our first priority. Yeah. And I would a couple of other things that occur to me as we were talking, um and uh guy emphasized y you're creating a category. You're you're different.

29:39 And you are you're creating it as a kind of as a wellness Category Uh a in in it's in the mental health Kind of space. And I would not be bashful about pricing.

29:54 You know, with Walmart you have you gotta deal with them and so forth, but and you're gonna 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 uh m you're much more valuable. Than that. It's a premium product. Yeah.

30:15 Yeah. Yeah, we we believe we want people to drink it every day. And think of it that way. And so yeah, I I agree with you. people can still drink it every day. You're 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 thirty.

30:35 I mean people can afford that and that extra Price. Probably doubles your margin. Yeah. And and Lance, one one question for you. I mean I obviously Walmart is a huge coup

30:47 Um, much more sort of, you know, significant than uh Whole Foods or or Trader Joe simply because of volume. But are you looking at Whole Foods? Are you talking to buyers from Whole Foods? Yeah, so this is the 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 um 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.

31:23 And and so that that's why that question, it's like how do we support outside of of Walmart without Drowning ourselves, really. And be cautious. If you don't think your product is gonna pull through Uh and generate the sales

31:40 That meets their hurdles. You don't wanna be in that store. It's tempting. But you only wanna be in the stores where you have an eighty percent confidence level

31:52 That you're gonna meet their hurdles to stay on that shelf next year. I always tell people that, you know, getting on the shelf is w is one thing. But getting people to come back over and over again is the hardest part of and you know, a lot of people don't realize that, but you do, yeah, obviously. The brand is called Millie's Sipping Broth.

32:13 Lance Kisner. Good luck. We're I'm excited to to to to see this out in the world. Thank you. It's been a pleasure talking to both of you. Thank you very much. Thanks for calling. Sounds delicious, actually. Yeah. Yeah, I think it's a great idea. They've literally are creating a category.

32:29 You know, I I I keep thinking you you mentioned something interesting because you said wellness and I thought, wow, that's right. I mean you said mental h wellness. And I thought that's interesting because that's right. It's not just a a sort of a physical health kind of lifestyle brand but it's about You know, just taking the time to sit down and uh kinda meditate about the day or whatever and you know, or read a book and and you're sipping you're sipping the broth, you know, like you'd have some tea. Yeah. And sometimes that reframing

32:58 um can make all the difference. Uh that A guy told me it was the the billion dollar cup of coffee. So This guy was the first importer into the US for Red Bull.

33:16 And Red Bull, you know, came out of Austria, this was twenty five, almost thirty years ago and coming to the US And Red Bull Wanted to Price that that seven and a half ounce can't be a little bit more. Uh

33:30 A dollar forty nine. And he having all this great experience in the soft drink industry said no Um there's nothing in that door. That costs more than ninety nine cents.

33:42 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.

33:57 And he got back in his car and drove to me and then he realized Wait a minute. I just paid a dollar ninety nine. For the exact Same.

34:07 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.

34:18 Of course I'd pay a dollar forty nine, but for that experience. And that forty nine cents per serving in the first two years was a billion dollars in revenue.

34:31 So that's the billion dollar cup of coffee. It reframed what people were buying. You're not selling them a soft drink. You're selling them energy. So think big. 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 just 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. Uh Hey, welcome back to the advice line on how I built this lab. I'm Guy Roz, and I'm taking calls today with Jim Cook, founder of the Boston Beer Company. Alright, Jim, let's uh let's bring in our next caller. Hello, hi Jim, hi guy. Hello, please um introduce yourself, tell us your name and where you're calling from and just a quick

35:31 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. Nice. And um what's your question? So the question that I have is how do we effectively convey our unique value proposition to expand our company? Okay.

35:58 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 uh chargers for people's cars or things like that. Exactly. How did you How did you guys start the business? And pr presumably you and and and your husband or one of you are electricians. Yeah, so my husband's the electrician, we started it thirteen years ago. And we really started out of a reaction to how the trades were really run. And you know, Patrick was um working for a lot of companies that were just uh unhealthy, didn't treat him so great. So we we built this out of a reaction to that.

36:35 and uh 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 that were starting to hire us. We noticed that they were asking us lots of questions about like, when are you gonna show up and are you gonna um actually answer your phone. And we started to do that really well. And our company started growing as a result of that. This is an electrician that answers her phone. And actually arrives when they say they're gonna arrive. Like that is actually kind of a revolution now, right? It's brilliant.'Cause usually you get like well the window's gonna be from uh seven AM to uh midnight the next day. So just wait for us at home and uh show up.

37:22 So so you basically say to people, look, we're gonna show up at this time. We're gonna answer the phone. And uh and we're gonna you know

37:32 We're gonna do a good job. We're gonna give you an honest Service. Yeah. And we're gonna like bring our humanness to this. Like we are human beings and so are you, and we really care a lot about relationships. Hm. And so your your question was about This like conveying your value proposition, presumably your customer service and the fact that you're basically saying, look, we're gonna

37:54 Yeah, we're gonna give you great service. But we're a little bit more expensive, is that fair to say? Yeah, exactly. Like we We've put into place um in our operations um s somebody that is incredible at giving customer service. We have someone that answers the phone that returns the phone calls. A lot of electric electrical companies don't have that. We have um an estimator, so we have like a lot of operations in the back end that gives good customer service, but that comes at a cost. And so When 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 you're we we have a really good reputation. But to convey that to them in a 10 second phone call or in an email quote.

38:42 It doesn't always land, 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. Yeah. Jim, you want to tackle this one first? Um Yeah. Um I th I

38:59 I really like what you're doing. It feels like an upscale product. Um it felt like a family. I felt like I was looking at people who care. So y you know, is it worth twenty five percent more? Well, Probably to

39:17 you know, some fraction of the customers. You only want that fraction. So start with that. To me, you know, be up front. We are not gonna be The cheapest quote. We will be the best experience. Yes. And here's what makes

39:32 Us different. Um because you know the most ex Expensive job out there is not uh in the price. It's i if it's if the work has to be redone, if they, you know, uh 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

39:55 The quote. And then you've got a You know and you've got I mean kinda rehears it. uh in the sales training they would call it your thirty second drill.

40:05 You know uh cheapest But you get what you pay for. Uh our electricians have been with us. for for several years. My husband is one of them. Um and you know, you're gonna get their cell phone number and you're gonna get an estimate that we stand behind. We will come back if you're not satisfied. And by the way, we have five hundred five star reviews that are on our website and you can scroll Through them and if you want to be the five hundred and first of those, then we would be happy

40:39 I mean so Rehearse it. And test it. Yeah. And you know, and you and you'll learn some people will respond and they'll respond to certain things and use the same pitch over and over and just refine it.

40:52 Jim, I think that's such a great idea. And and Amy, I I'm gonna double down on that. I think that you've gotta put that out out front from the beginning. message this idea that hey we're gonna be a little bit more expensive, but you're gonna get the best service that you've ever had from electrician. You're not gonna have to call up ten other people to fix the job. You know, reminds me, Jim, you mentioned, you know, you talked about your early pitches. I mean Sam Adams beer c was gonna cost more money than a Budweiser. It was gonna cost more than a course. But the the value proposition is we're getting better quality, we're getting better ingredients, and it was gonna be a better experience. And I think that That's the argument that you you make here from the get-go. I mean one of the things you can think about is literally building a brand Bible for your business, okay? Because you your expenses are higher, right? You mentioned that you've got an estimator, you've got an operations manager, you've got a bunch of electricians.

41:47 Um and you've got a customer service person who's answering the phone. Many electricians W work with answering services. Yeah, I think it's a it's a couple 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 can be ten or fifteen pages. Where everybody on the team is on the same page. They know that w when your customer service person's on the phone, they know that they're gonna say, Hey, Just heads up, we're probably gonna be five percent, maybe even ten percent 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.

42:27 That's the way you message it'cause it's upfront, it's transparent and I think customers will appreciate that. There'll be some people who say, No, thank you, but I think there'll be a lot of people who say, Okay Let me try it. I really love that. I love not hiding because before I felt like we had to kinda hide behind the facts. That we were you know more expensive.

42:47 put that forward and I love just like naming that from the very beginning um and weeding out the people that aren't interested in actually working for a company like ours in the first place. You very much want to weed them out at the beginning. Because You are investing some of that money up front. In the relationship.

43:07 with them'cause you're gonna come in and do an estimate. And You'd rather have a customer that says no thank you right away. Uh you'd rather have a quick no than a slow maybe. Yes.

43:20 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 ten percent 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 uh if I'd be willing to hop on and if they're good, I I'm always willing to do it.

44:00 Yeah, that's really that's really helpful feedback. Thank you for that. Jim, any final words of advice? Yeah, I would sit down and, you know, write down off the top of your head all the reasons that you're Experience is better.

44:16 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. 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

44:38 He he actually failed to fix our refrigerator. He came five or six times, and w 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

45:07 what the pain points are, what the challenges are. And so I'm actually more educated about the the 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 and what why we're doing what we're doing. That's a Big Bonus as well. Yeah, I really like that piece too,'cause that it that also furthers builds that relationship that also is so paramount to so many of us that work for the company. You know, our we our electricians have we have very little turnover. We've been in operations for ten years and we've have not many people ever quit or leave because it's just such a different experience. So I I really love

45:47 I love that idea of of uh Another way of building the relationships with our clients. Amy Dana of Blay Electric. Thank you so much for calling. Thank you so much, Guy. Thank you, Jim. Have a great day.

46:00 It's our pleasure. Jim, before I I let you go, um I mean first of all, thank you for for helping me um and for all the great advice you gave to the callers. W when you think about When you were in their position, you know, it's a different business and different, you know, category. 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

46:25 You n you knew, what advice would you now would you've given to your thirty four year old self. Um That's a really good question. And I I can't specifically answer it, but I'll give you a perspective.

46:40 On it. You know, I I 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

46:51 I would grow all the way up to being A million dollars in sales. Uh that was about five thousand barrels. Of beer. Eight.

47:03 People. And you know, I'd 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. So I thought I'd have this little business in Boston. and I won't have to travel. It won't be that stressful.

47:20 We'll never get that big,'cause at the time the idea of uh starting a brewery in your kitchen and growing it to anything of any size was completely ludicrous. And I look back on that like thirty five years later. Boy was I wrong. Uh it wasn't five thousand barrels. It was actually

47:40 eight million and it wasn't, you know, eight people, it was three thousand And it wasn't one million, it was like Two billion. So I was totally off. But I realized

47:55 From this vantage point. I can't Tell you. Whether I would have been just as happy or happier. Had I

48:04 had the intended outcome. Instead of the unexpected outcome. So what I might sort of tell myself is You know

48:15 You're launching into this big wide ocean and there's no telling You know, where you're gonna go. But it's a wide range and they're all good. So uh

48:29 All both of those outcomes at those extremes. would have bled to a happy life. And isn't that What We really

48:38 What? When we start A business. is A happy life.

48:44 The legendary Jim Cook, founder of Boston Beer Company. Jim Always a pleasure. Thank you so much for coming on the show. This was a pleasure for me.

48:54 And I got to finish my first beer, but I'm halfway through the second. Ha ha Alright, and Jim, hope to see you soon in Boston. Or or or elsewhere. Wherever, guy. This was great. Thank you. 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

49:14 Here's one of my favorite moments from that interview. So you uh you called your dad and like Dad, guess what? I'm joining the family business, I'm gonna make beer. Was he excited? Oh. Um Not really.

49:27 When I told him, I was kinda hoping that he'd put his arm around me and'cause this hundred and fifty year old family tradition was gonna be carried on. Yeah. No. He looked at me, said Jim. You've done some really stupid things in your life. This is the stupidest. 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 guyroz.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.

50:17 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 hibt at id.wondery dot com. or call us at 1-800-433-3. One two nine eight. and leave a message there, and we'll put all this in the podcast description as well.

50:37 This episode was produced by Chris Massini with music composed by Ramteen Araboui. It was edited by John Isabella. Our audio engineer was Gilly Moon. Our production team also includes Alex Chung, Carla Esteves, Casey Herman, Elaine Coates, JC Howard, Catherine Cypher, Carrie Thompson, Sam Paulson, Andrea Bruce, and Niva Grant. I'm Guy Raz, and you've been listening to the advice line.

51:01 How I built this lab.

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