Building an Empire: Jim Koch of Sam Adams

Jim Koch talks with OPEN about reigniting the family beer business, leadership and helping other entrepreneurs.
September 07, 2012

If it had been up to Jim Koch’s father, his son would have never gotten into the beer business. It was an industry the family had been involved in since the 1800s. In the mid-20th century, beer was turning mass market, forcing the family business to slip into obscurity.

By the time Koch was interested in the business it was 1984 and craft beers were largely non-existent, presenting a tremendous opportunity. Koch was a 34-year-old consultant at a top Boston firm and getting tired of corporate life, so on a trip back to his childhood home in Cincinnati, he asked his father for his great-grandfather’s beer recipes.

“After my Dad got over his initial disgust, he went up into the attic and opened a trunk full of stuff from the family’s brewing career,” Koch says.

With his great-grandfather’s recipe in hand, Koch got to work in his parent’s kitchen and after several tries, had a product he would soon take to market.

The Start of Samuel Adams

Koch quit his consulting job and in 1985, with $150,000 of his own money and another $150,000 from an SBA loan, he launched The Boston Beer Company. Samuel Adams Boston Lager was his only offering.

He started his company with a modest goal: to grow the business to 5,000 barrels and $1.2 million in revenue by its fifth anniversary.

“It took us five months to reach that goal,” Koch says. “We’ve kept growing from there. It’s now 28 years later and we are still growing. Right now we are producing more than 2.5 million barrels a year.”

Koch attributes the company’s rapid growth to a market primed for his product. Back in the mid-80s and early 90s, rich, flavorful, fresh American beer wasn’t available, he says. Mainstream beers had been lightened up and watered down. Sam Adams presented an alternative to the consumer, something they craved.

Startup Challenges

Koch operated the business without an office for the first six months, took meetings in bars and used stationary pads and shoe boxes to write and store accounting receipts. Instead of a phone, he retrieved messages from an answering service.

Once he could afford an employee, he hired the secretary from his former consulting firm and paid her with personal checks.

“I had an MBA from Harvard, but still didn’t know everything about how to run a business,” he says. “It took me a while to realize there were people who you could employ to do payroll for you.”

When it comes to leadership, Koch says, “It is demanding to be a good leader. You have to set a really high standard. If you want people to follow you, you need to be the kind of leader you yourself would want to follow.”

Never ask people to do things that you wouldn’t do yourself, Koch adds. Leaders should lead by example and stick to a stringent set of values.

Success and Giving Back

Today, The Boston Beer Company employs more than 750 people and is known as a pioneer in the craft beer movement, a movement, which is in its golden age, says Koch.

“The U.S. is like the Silicon Valley of the world’s beer industry right now,” he says. “There is this explosion of creativity and innovation in brewing that the world has never seen before.”

Is Koch afraid of the competition?

“No, I think it is pretty cool,” he says. “When we had no competition, it was a lot harder because we had to blaze the trail ourselves.”

Koch is now blazing that trail for entrepreneurs with his Brewing the American Dream Program, which provides loans and coaching to early food and beverage entrepreneurs. Since its 2008 launch, the program has dispensed loans (averaging around $8,000 each) to more than 130 small businesses, coached more than 3,000 entrepreneurs and saved nearly 1,000 jobs.

Enjoying the Good Life

Sitting in his Boston office, Koch talks next steps. “I’m 63 years old; my succession plan is very simple: don’t die,” he says with a laugh.

When asked if he takes a swig of beer each day, he is quick to reply.

“I have a beer in front of me right now. Here, listen,” he says, swishing a glass of beer next to the phone receiver. “I’m sampling our Sam Adams Octoberfest and it is a nice batch this year.

“In my opinion, a day without a beer is a day less than fully lived.”

Read about other successful business models here.

Photo courtesy of The Boston Beer Company