Kindle Notes & Highlights
It was a good, long, and therapeutic fall down the stairs. Be careful if your kids claim Jack Kerouac, Quincy Jones, Wallace Stevens, and Hunter Thompson as heroes.
Good long therapeutic fall
At one point I was actually attracted to the idea of starting a chain of dry cleaners. I think a girl I liked worked in one; I can’t remember.
I was fired from every job I landed. Sometimes it appeared that I quit, but I knew the difference. I guess if you say “The boss is a jerk” enough times, then you need to prove it by being the boss yourself,
Mr. Turner had a sign on his door: “Lead, follow, or get out of the way.”
For what it’s worth, my wife and I watched the 2009 stock-market meltdown as you might casually watch animals jostling in a zoo. We congratulated ourselves every morning over coffee on our wisdom of
never having had any cash. We are like farmers. We have a big note to the bank, a big healthy crop still in the field, and a forecast for fair weather ahead.
I could think of to get some idea of how much beer I would have to make to break even. My wife and I were $38,000 behind on taxes by then, and at that point I aspired merely to break even. But before I had any idea what I was going to do or what it was going to take to get ’er done, I rented a space in a nearby building, applied for a license, bought and installed a three-tier home-brewing setup, and began plans to install a real commercial brewery … while also still learning how to make beer. By December of that same year, all of these things actually happened.
Ask your favorite local brewery owners how many of their early brewers and employees are still with them. The answer will almost uniformly be zero.
“Well, you need to raise more capital.” This is the basic truth, but capital—specifically equity capital—is the most expensive financing you’ll ever take, if you can even find it. The grad student meant that I should sell stock, and he was correct, but that share that you might sell on that one day for $50 will be worth $5,000 someday if you succeed. That means the $50 will eventually cost you $4,950!
I needed to raise money. I got it from some old friends and from some new friends, and in 1998 I traded about half ownership of the
brewery for $650,000. At the time I couldn’t borrow it from anywhere, so I had to raise it by selling stock. It seemed like a lot of money in 1998, but later, in 2011, I easily borrowed more than $9 million from a local bank with just a couple months of phone conversations and some routine paperwork.
So let’s return to late 1994, when, after only nine months in our little brewing home in West Marin’s
tiny hamlet of Forest Knolls, I got a call from our septic tank. In putrid tones, it told me we had to leave, and quickly. The septic tank also called the neighbors.
The move and the new space were both expensive, and so (by now you know what’s coming) we would have to sell more beer.
That money was later repaid in full, but never the debt.
It’s like being part of a big family where everyone is allowed to be who they are, as long as they bring something tasty to the potluck dinner.
Ever since that first batch rolled off the bottling line in ’95, our IPA has been my favorite. It has a flavor that I just can’t get tired of … no matter how hard I try!
pilsner. The Pils is hard and inconvenient to make, but it represents the highest art of brewing and earns us more than a little respect
The crunch concluded in the unimaginable: we did not have enough cash for payroll. In all the years of tough financial times, we had never, ever missed a payroll.
I called a company meeting and tried—badly, as it turned out—to explain the inventory/receivables/cash thing to the crew. I say “badly” because my
little speech became a sort of standing joke among the brewers and bottlers (and my bookkeeper) for several years afterward.
I did not know why at the time, but my bank seemed more than willing to continuously refinance my house if I fixed up parts of it enough to move the needle on the appraisal even slightly. Once I got the hang of it, I would purloin a few thousand dollars from the brewery to fix up a bathroom, have it reappraised, slip the appraiser a couple of cases of beer, yuck it up a bit with him, get the appraisal up by $50,000, borrow back the revised maximum loan to value metric, and—presto!—$3,000 in diverted cash flow became $40,000 in new working capital for the brewery.
In fact, when we finally sold the house in 2002, we sold it for $100,000 less than the most recent appraisal.
From 1992 until 1997 I had paid my personal income taxes one year late every single year.
So over the course of 1993 I opened a dozen different bank accounts so that the money would be harder to find, and as the net grew tighter, I began moving checks around daily. Something like this: I’d deposit a check for X dollars in Bank A, then I’d walk down the street to Bank B and deposit a check from Bank A for the same uncollected and freshly deposited X dollars.
Finally, one of the banks detected the “unusual movement,” closed my account, and notified the other banks too. It was pretty crazy.
Forty-five days later they will send you a letter demanding the dough. Take the letter and smoke it. Don’t answer! If you do, you will end up talking to very menial 1-800–type attendants who will push a little button on their screen and start a sinister timer running. There will be no negotiating. Instead, if you can stand it, wait until you get the fifth letter around September. It will come via certified mail. Answer that one right away. That letter will have a different phone number on it that rings into a Seattle office called the ACS (Automated Collection Service, but it is not automated
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were funding my growing brewery, but it seems like they might have agreed to it if they had been disposed to consider it. The interest rate they charge on unpaid taxes is better than any bank would have offered me, and the “loan” helped support the brewery’s cash flow and ultimately helped to generate the remittance of millions of dollars of my current and future employees’ income taxes as well as many, many more millions in future excise-tax payments. It was a classic win-win.
our little brewery was still a sole proprietorship, and so our total revenue appeared on my own household Schedule C return. It looked pretty impressive to file (my alleged gross income was something like $1.3 million!),
the plan we set in motion included forward commitments to buy equipment, lease space, engage contractors, and put every piece in place without any way to pay for all of those promises if I did not manage to raise the money.
slack. I had meant to conclude the meeting by pissing on his desk, but his response confused me, and I forgot.
If you walked into Lagunitas, you would never know who the owner was. He might be talking
to you but you would never know it, he would never tell you. I guess that’s the part I like, and I think the world feels the same way.
We were becoming profitable on paper, but we were still using more cash than we were generating.
His family could not afford it, and of course the soulless ass-wipes at the insurance company told him to die in Texas. We were in financially desperate straits
ourselves, but it was that handshake thing again. You make a promise when someone works hard for you, and so we enlisted a private jet company and said, “Fly him home.” I called the supplier to whom I already owed so much and told him I needed a mulligan on that week’s payment, and I told him why. He immediately said, “Yes, pay me later.” Like I said earlier, he was actually a very good guy. In the end, the jet company never sent us a bill for the trip, and I don’t think it was an oversight.
(First, though, I would go into the computer’s system folder and turn off the rental timer clock. I’m still ashamed. Every dollar mattered back then.)
exception. In seventeen years, our growth has always exceeded 22 percent.
Wow
I am proud that the brewery’s founder (me) wrote (and still does) all the recipes while also designing and producing all the labels. That is important, and I think it is also uncommon. A brewery can hire out those functions and guide them with an intimate hand, but there is always a gap between the vision and the execution, and there are committee-like inputs and compromises that enter the formula. It can’t be helped.
“Who writes all that stuff on the labels?” When we are introduced, I can always sense the subtle disappointment, but I am not bummed out about that. I’m a middle-class suburban white guy from Nowheresville, Illinois, and there is something cool about having a more interesting alter ego.
“We brewed this Special Ale to celebrate the darkness and depression that mar the holiday landscape.”
The first name that appeared in my mind was Hair of the Dog Ball, but that lasted about two minutes before the female office contingent united in opposition. It really is a good thing to have a woman’s touch in the office.
Beer labels and the point-of-sale material produced are all under the oversight of the Alcohol and Tobacco Tax and Trade Bureau (TTB), and the TTB does not have much of a sense of humor.
Nowhere in the USA can you call a beer Kronik, but after it is rejected, you can call it Censored.
Most strangely, I learned that the word romance is verboten because it suggests a health effect. What?
I asked the nice lady on the phone who signed the rejection if she had ever been in a romance. They are not healthy, and you might do a lot of crazier things under the influence of romance than you might do under the influence of alcohol! No matter, the answer was no. So I changed it to “the third [sip] is for knowing”
Making a mondo ultra mega super premium barleywine is a lot like having a kid. The first part is fun and messy, it takes a while to ferment, and a while longer to mature, and you worry whether or not you’ll still be friends when it grows up. Eventually it stays out all night and wrecks the car …
edges. When things go well, you learn almost nothing. In failure there is learning.
continuity, we were having some stability issues due
As Max Ehrmann wrote, “Gracefully surrender … the things of youth.” Although,
