Firestone Walker Co-Founder David Walker on Growing a Legendary Craft Brewing Brand

0:00John Busby:If you like craft beer, you've almost certainly had 805, which is the flagship beer of Firestone Walker. I speak today with co-founder David Walker about his 30 plus year journey as one of the definers of the craft beer movement. We discussed the beginnings of the business, how they approach marketing as the business evolved, and how it will continue to evolve for generations to come.

0:25Hi, David.

0:25John Busby:How are you? Good to see you. Good to see you, too. I was thinking in advance of this conversation when I started drinking beer, you know, in college or whatever. There are a lot of the brands that sort of the national brands that we know today, your Buds, your Millers, etc. And there were a few kind of craft beers that I could get. Sierra Nevada was one of them. Pyramid was one of them. You know, Sam Adams had a few different kinds of beer. But there weren't tons of choices. When you started your first brew house, Firestone Walker, what was the motivation for doing it? And what was your experience with beer up until that point?

1:08Well, you know, our motivation came from a slightly different direction, probably to most others. You know, Adam Firestone and myself are brothers-in-law. We were sort of a family and we were both sort of in the wine business. He was running a third generation family winery and I was growing grapes and running a small tech business in the Bay Area. But, you know, we both sort of had sort of exposure to it and artisanal bias, but we both love beer. And so and also, you know, Adam had sat in the bleachers as a kid through the American modern American wine movement from the sort of 70s to where it was in the 90s.

1:45where it went from the number one selling wine being Ripple to several hundred wines available in most communities from great American winemakers. So there was a little sense that this same evolution could happen to beer. And because we love beer so much, we just decided to start making it. And neither of us were a brewer, but we sort of felt that we had enough chops in the area to be able to pull it off. And so that's really where it started. And in terms of So, you know, my love for beer is that, you know, I'm English. So, you know, I drank a lot of Cask ales in the UK, a lot of regional beers.

2:21And, you know, I love the English pale ales. But when I came here, you know, obviously I couldn't, I mean, you could find things like bass, but they'd sort of been sitting around in containers for three months and it was not the same beer. But, you know, over here I was drawn to actually probably the beer I was drawn to originally was Paul Shipman's, Red Hook up in when it was brewed up in in Ballard and it was delightful beer I mean it was it was you know you ask any any beer judge and they'll tell you it was flawed it was sort of jam full of what people like to call dacetil which is gave it a bit of a buttery taste but I loved it I loved the beer it was it was it was the beer that I that was in my fridge when I first came to the U.S.

3:07Sierra Nevada obviously fabulous but there were you know a bunch of other breweries up in the north like um our north coast was making a great beer called red seal ale which sort of filled you know ticked all the boxes for me but um you know there was enough breweries out there maybe three or four hundred breweries in america at the time when we started there were enough breweries over there to to inspire our palates did you know that builders

3:31John Busby:is sponsored by business.com i'd love to tell you about a new free membership from business.com for small business decision makers. It's called business.com plus, and it's designed to address the pain in selecting new products and services. What is the pain you might ask? It's things like knowing which vendor is best for your specific business, negotiating pricing, having access to someone who can answer questions for you. The new membership business.com plus handles all of that with a dedicated advisor, pre-negotiated pricing, and solutions tested and reviewed by experts. Check it out at business.com slash plus.

4:11That's business.com slash P-L-U-S.

4:15John Busby:You mentioned before we hit the go button here, I mentioned I was in Italy. Prior to that, I was in London for a few days with my son, 18 years old, hadn't been able to go to a bar in the U.S. and have something, but he was able to go to a pub and have a beer. And that culture there, it feels like actually is similar to some of the brew houses that you have. I know there's one in Venice, maybe, and other places. But how much did you inject your European influence into the California craft scene? Well, I mean, obviously, I'm European, so there's going to be some influence. But, you know, the California craft journey was so compelling and so innovative and so interesting.

5:08You know, I wanted to be part of that. We weren't looking back. We were looking forward. And, you know, without question, because beer is such a sort of traditional, artisanal, or at least well-made beer, is that, you know, you can't help but sort of lean on history. But, you know, we were American craft brewers. And, you know, I've said this many times, American craft brewers changed the world of beer. I mean, we brought full-flavored, hop-forward, locally-made beers back into a point where they were actually sexy. Now you can go anywhere in the world, including Germany, and find small independent brewers making beers that fall outside of tradition and bring sort of modern ideas to beer.

5:58So I was so attractive to that. It was like punk rock. That's where you wanted to be. I love the Beatles, but I'm going to head in that direction. So really, I mean, influence, yes, but really we were all about building the future in America, I think.

6:19John Busby:Well, your most popular beer, I think, unless you correct me, is 805. Was that a hit out of the gate or were there were there some misses along the way to really find the beer that would become your signature? Well, there was no misses. We love all our children, but 805 hit. so you were right there and actually we didn't develop 805 until 15 years after we started the brewery um and i mean we'd made this beer it was a honey blonde ale we made it as a session beer for the brewers um so that when they get off their session um you know it's traditional to have a have a beer in the pub and um it needed to be sort of um sort of drinkable, you know, obviously not heavily ABV, but just a great session beer.

7:07And that's how it started. And it was probably the least complex in some ways of the beers that came out of the brewery at the time. And, you know, we made it and we also, you know, we christened it 805 as sort of a, you you know, an ode to where we were from, which is on the central coast of California. And, you know, we believe that the whole sort of vibe in that area helps to define the brewery. And, you know, clearly we were, you know, we're a brewery of the central coast and we were proud of it. So, you know, it was a sort of a mystery name given to the local area. And little did we know is that everybody else was sort of part of the secret.

7:54So it very quickly became very popular. And then it started to get bootlegged out of the county. And obviously, it's become really quite successful in California. I think there's a sense, you know, Californians love everything the 805 stands for, which is the terroir. It's about, you know, the mountains and surfing. And, you know, it can take you from, you know, we like to say that people in our area are either sort of closet cowboys or surfers. we touched both sides of that you know it was a pleasant surprise it ended up obviously defining

8:30John Busby:us as a brewery because it's 65 of our production um and we don't have any other brand that's even close to any other beer that's even close to that um so yeah i mean it's that that piece is is definitely um defines who we are how do you think about marketing now versus 15 years ago i I mean, maybe like when did you hire your first person who actually had a job that was marketing? When did you, I'm trying to think of like an inflection point where went from cult to bigger, you know what I mean? Yeah, absolutely. I mean, it's a really great question. I think about it often. You know, our first head of marketing was a sort of, was an ex-stockbroker.

9:20and and you know uh and he did i mean he had a degree in marketing and loved beer and actually he ended up sort of making the foundational um steps needed for our brewery but from an ownership standpoint you know marketing was sort of like a graphics and pr department you know concept that we could actually bend the consumer to our will with um wrapping wrapping our beers and interesting stories was really not something that we were leaning into. And, you know, for many years, we believed it was just good enough that we were a proprietor enterprise, we stood behind what we did. We made these beautiful beers that were getting recognized on the international stage.

10:01And if you were interested in beers, you'd find us. I mean, that was really our... But when Adafi was born, we saw that there was a little bit of magic there that had nothing to do with the beer and that basically um sort of a light went off all around the brewery like okay um you know let's let's see if we can really lean into this idea of building entangling folks in a brand and um that's all marketing um and we we ended up hiring um you know ended up hiring a brand manager from volcom who had never been in the beer business and he told stories the way welcome to old stories um and then eventually we hired a um our cmo who we have today who came out of the music business and um you know obviously he's he was telling stories to a different community and um and so what we found is that yeah marketing is a i mean is is an extraordinary piece of what we do um you know i suppose all brewers eventually do it at some point You know, as small brewers, we always used to joke that the big brewers have diluted beer down to sort of frogs and bikinis and sports.

11:12And there was no discussion of, you know, there's no discussion of tradition and raw materials and all the things that we labor over. And, you know, here we are with 805 where we're talking about lifestyle and good times and so forth. And, you know, you know, you could argue that we sort of found ourselves in the same room they did. But we're a long way off that. I mean, just to let you know, I mean, we were still a very small enterprise in comparison. But telling stories to consumers ultimately is a very important part of what anybody does in the consumer world.

11:48John Busby:When you're talking about the frogs and bikinis and stuff like that, I remember one of these characters called Spuds McKenzie. Do you remember that character? A dog. I think there was a dog that sold Miller Lite, I think, to kids, I guess, because I was the one wearing the T-shirt. But I think at some point when 805 took off, there might have been this situation where you had more orders than you could actually produce. I don't know if that's true or not. You had to scale your operation. No, it is. I like to call it the power of unobtainium. You know, the minute something actually is remotely unobtainable, for some reason, the human condition becomes like, I need that, even if they don't.

12:33And it took on that. It took on a little bit of that. So, I mean, we ramped. I mean, as an enterprise, we grew extraordinarily fast over a very extraordinary short period of time. um and you know because we're a proprietor brewer we insisted on brewing every batch we could in order to try and fulfill orders and we did our best to do that and so but at the same time we had to build the brewery and um it was a little bit like sort of changing out an engine in a car as you're racing it um and um and actually if you go visit the brewery um you know a brewing engineer would look at the brewery and say, well, that's really an interesting design and it works, but I wouldn't have designed it that way from the ground up.

13:24Parts of the brewery are sort of concentric circles around other parts of the brewery. And it's because we were building the brewery around the brewery that was trying to keep up with orders. And yeah, I mean, it's an extraordinarily capital intensive labor intensive enterprise and that riddle became for 10 years our number one riddle which was how do we fill orders um and we'd spent 15 years prior to that point saying how do we persuade indifferent consumers that this is something that they should try and then all of a sudden you know a light goes off and we're all running around And, you know, yeah, it was an interesting inflection point.

14:08John Busby:You mentioned Red Hook brewed in Ballard, which is a neighborhood in Seattle. I live in Seattle, maybe five miles south of that. There was, you know, there was Starbucks. And, you know, I think there's, I'm not trying to say anything good or bad about Starbucks, but the larger you become, the more you need to compromise. And I think that Starbucks became as large as it possibly could. I guess I have two questions here. One is, did you make any conscious decision to stay smaller, even in your area of rapid growth? And then what was the biggest maybe conflict, internal conflict you might have around, you know, should I compromise and grow faster or should I stay smaller?

15:04John Busby:Or was there any sort of dynamic like that for you? No, I mean, we were never conflicted with this idea of, you know, if we grow, we're going to lose our culture. and we felt that we were going to grow as big and as fast as we could grow. I also think that was important to the 400 people who worked with us. I mean, you know, there's an extraordinary sense of pride there and I don't think if you go up to any one of them, they would have said, you know, we need to be smaller. I know when we hit a certain point, Adam and I sort of said, you know, if we could just freeze things right now, that would be fabulous.

15:45but that was more a sort of a sense of it just felt really cool to be who we were at that point. But we knew that we had to grow in order to be relevant and it's hard to actively stop momentum. In some ways, it's such an unnatural thing but it's also contrived a little bit. A little bit like Rolls-Royce only makes 500 cars. I mean, they probably could make 5 ,000 but it would change their model. And the thing about 805, it was an affordable beer that a large swath of people were interested in drinking. And I mean, we make beers on a limited basis. I mean, we make beers that we age in bourbon barrels for two, three years.

16:32We only make a thousand cases of them. You can only buy them if you're a member of our club or you're part of some sort of, you know, you have access to them. And but we didn't want to do that with the brewery. We also wanted to be large enough to be able to compete with the big brewers because the big brewers saw what everybody was doing. And, you know, large multinational companies are Vulcans. I mean, they're sharks. I mean, they get up every day and start biting things. And they see that we were taking a large chunk of the market in a certain area. And they just sort of say, well, we need that back, please.

17:12And our shareholders are insisting on it. So, you know, you can't expect competition to sit by and applaud. They're going to come and take what you have. So, I mean, in a good spirited way. And that's the, you know, that's the wonder of competition and innovation. It's good for consumers and so forth. So, I don't know whether that answers your question. You know, obviously, we're not Starbucks. and I'm sure Howard Schultz had no, when he started out, didn't think he was going to end up being sort of a coffee meme. But, and, you know,

17:50John Busby:hey, I go to Starbucks a lot, you know. And there was no conscious effort for us to sort of contrive an outcome. We were enjoying it. We loved the beer. We wanted as many people to try the beer as we possibly could. and we went for it. So your business partner, maybe your, I don't know if your co-CEOs, also your brother-in-law, as you mentioned, what's your leadership style? What's Adam's leadership style? How have you structured your roles over the last several decades to ensure that your partnership is healthy, both in work life and family life? Well, we started out as a family business and because of that, you know that sort of drove a lot of the um civility in a partnership um and because ultimately the family is far more important than what you're working on um and i i think that's a really good thing i mean it's helpful that we're both sort of right brain left brain there's some things that um he's much better at doing something i'm much better at doing i mean i think that's super helpful so you're not reaching over each other you know trust is a big deal you know you got to trust that that person is actually going to be able to um hold down you know their their end of the task i think there was some there was some luck in that um but maybe there was just sort of an unconscious sense like you'd be a good person to be in partnership with because you got skills i don't i have skills you don't um fascinating i mean of no i mean just updating you i mean neither of us a CEO at the moment.

19:27My nephew, Adam's son is the CEO. And, you know, both of us have sort of stepped to the side a little bit. And a lot of that has to do with the fact that we're trying to build or we are building a generational long term brewery and, you know, bringing in other generations and more importantly, giving them the wheel, giving them the hell, super important. and Nick Firestone's now the CEO. And, you know, he's perfectly formed. He's in his late 30s. He's had a great sort of career in a bunch of different areas and was at the brewery for three to four years in a sort of leadership role.

20:12John Busby:That's where we are today. And, look, you know, it's sort of fascinating. We have a lion and a bear as sort of the icons of our brewery. And they were dreamed up by our first stockbroker forward slash marketing manager, long-suffering guy. And he got fed up sitting in a room with Adam and I arguing over the names of beers and fonts and what we wanted to do. And so he actually created these characters, the lion and the bear, and they're actually dueling with each other. The lion obviously represents the British tradition. The bear is the California tradition. It got to a point where we actually, you know, people in the brewery would be, you know, they'd be a sort of they'd be on the bear side or the lion side.

20:56We ended up, you know, consumers would wander in with a lion tattooed or a bear tattooed on their arms. And so we sort of developed this sort of rivalry. But it ended up being a little bit of a culture. And as much as, you know, there is really no inevitably, you know, two minds tend to come up with a better result than one. and as long as you're able to make a decision. And that we sort of encourage vigorous debate, robust discussion and disagreement. And out of that, we feel is born a better outcome.

21:36John Busby:You mentioned long-term thinking, a generational business, and you have something that I think is called the building, or not building, the brewing for tomorrow initiative. Yeah. And that, to me, that strikes me as something that's very long-term thinking. As a brewer, what type of environmental impact do you have? And then what green initiatives are you doing to make sustainability a pillar of your long-term future? This is another good question. I mean, Brewing Tomorrow came out of an internal discussion that we've had for a long time about being efficient. And, you know, brewers from the beginning of time have always had to be very, very careful with raw materials, energy, water, extraordinarily parsimonious with their use of it.

22:30And there's all sorts of systems from an engineering point that have been developed over hundreds of years that actually do that, you know, how you manage heat and exchange of heat. how you manage water and the recycling of it and so forth. You know, brewers are probably one of the most resource-attentive industries out there for that reason, because you have to deliver beer at an affordable price. And so we took that notion and rolled it into a broader sustainability notion. um and you know we have um by the end of the year we'll have i think close to uh 13 acres of solar um on on the property that's generating i don't know 70 to 80 percent of our uh electrical needs and um you know that's that's the sort of thing brewers do i mean it's like if i can find free energy i'm going to get it or at least if i can lock in my my energy costs um you know we we have a CO2 capture system that captures about 5 million pounds of CO2 that would normally just sort of dissipate into the atmosphere.

23:40We actually, in broad brushstrokes, we sort of bring it back into the brewery, we clean it up, we change its form, and then we repurpose it again when we need it. Because on the other side, we're actually using 4 to 5 million pounds of CO2 a year. So whenever we can cheat the system, we're going to do it. And if we don't have to waste energy and money and time and resources on doing something by doing something more efficiently, then we're going to do that. And so that is that's the brewing for tomorrow mantra. And it's a very practical one. And it's born out of this idea that the brewery has to be sustainable.

24:22Likewise, we really struggle selling our beer in markets where we can't sell it. And I know that sounds obvious, but beer is heavy. And if you ship it halfway across the world and it ends up being twice the price it should be and not tasting great, then why are you doing it? We tend to work in spaces where we belong. We make a lot of beer for a small craft brewer. and I like to think that every bottle of beer that's drunk is a bottle of beer that's not drunk that's shipped in from Holland or from China or anywhere else or Mexico for that matter. You know if you can drink a beer that's made an hour two hours away from where you live and it doesn't have to be sat in a truck for several days refrigerated then you're reducing the use of energy and that energy can be used in other other ways so yeah I mean carbon footprints a big issue for us I mean we you know we we have very firm goals that relate to that and especially on water usage I mean we measure our water usage per output pretty carefully.

25:42John Busby:David, let me close with this. Back when you started 30 some odd years ago, we would call the craft beer market immature. How mature is it now? And what are your feelings on the state of craft beer and what's next for your business? I would say at the moment, craft beer is it's plateaued to down. It's been down over the last two, three years, but then beer in general has been down. Wine's been down. Spirits have been down. Lots of reasons for that. We came out of post-COVID. Moderation is more of a lifestyle nowadays. Affordability is a big deal. There are other lubricants, social lubricants out there that people are experimenting with.

26:25So there are some forces that are having some impact on it. Listen, I'm a great believer in beer. I mean, in the beginning, there was beer and bread. You know, it basically helped form civilization. It made us creative, communicative, social. I mean, beer is part of our future. You know, craft beer has sort of mapped out a little bit as sort of topped out a little bit in terms of its share of total beer. I see it continuing to sort of organically hold its ground and maybe grow. you know i think that the idea of there being 9 000 breweries in america i think that stays um i think people understand just like having a local bakery or a local butcher or local coffee shop that having a local brewer isn't a bad thing um and there's a place place there's an occasion for those beers on their palate i think the future of craft is is um is assured um growth who knows um i mean consumers you know i heard a statistic the other day that 40 to 50 percent of beverages drunk now are functional um 40 to 50 percent of sorry of beers total volume are beverages that are drunk that are functional so if you've got the beer business there's a functional business out here that's 50 percent of the size of it and that's energy drinks drinks to make you calm to make you focused to make it so i mean there's there's just massive shifts going on in all of all of these areas.

27:55And I think beer holds on. I think craft beer holds on as a premium, interesting, sort of complex part of that world. Likewise, I think, you know, American wines and so forth. So I'm a believer in the future. I'm, you know, it's, you know, call me the village idiot. You know, I love beer. I mean, I absolutely love beer. I know a lot of people who love it too. So David, thanks so much for joining me today. Really enjoyed our conversation. Yeah. Welcome back, John.

28:33John Busby:Did you know that more than 20 million professionals and business owners visit business.com and business news daily? Why is the best place for resources, advice, and information about how to grow your business. And if your goal is to reach our audience, you should become one of our lead partners, sponsor a section of the site, or sponsor even this podcast. Reach us at business.com slash connect. That's business.com slash connect.