Brewing creativity with Jim Koch of Boston Beer Company

0:00Wondery Plus subscribers can listen to How I Built This Early Early and Ad Free right now. Join Wondery Plus in the Wondery app or on Apple Podcast. I love traveling with my family. We did an awesome trip this summer. And one of the things that made the trip so special were the Airbnb experiences we did. Immersive tours, cooking classes, a chance to get coffee with a world-class barista. I had so much fun on those experiences that I decided to host my own Airbnb original experience in San Francisco, designed to help you think about how to unlock your next big move in your career or even in your life.

0:41To learn more about my Airbnb original experience, head to Airbnb.com slash Guy. Listening on Audible helps your imagination soar. And no matter what you like, Audible's romance collection has something to make you swoon. Here's your invitation to have it all. Find a book boyfriend in the city and another on the hockey field. Or if nothing on this earth touches your heart, you can always find love in another realm. Hear modern rom-coms from authors like Lily Chu and Allie Hazelwood, the latest romantic-y series from Sarah J. Maas and Rebecca Yaros, and Regency favorites like Bridgerton and Outlander.

1:19And that's only the beginning. Audible has an incredible selection with over 1 million audiobooks, podcasts, and Audible originals all in one easy app. And you can enjoy Audible anytime while doing other things. Household chores, exercising, on the road, commuting, you name it. Audible makes it easy to drop into your fantasies during your everyday routine without needing to set aside extra time. There's more to imagine when you listen. Your first great love story is free when you sign up for a free 30-day Audible trial. Visit audible.com slash built. Now a quick break switching topics to one of our favorite sponsors, Vital Proteins.

1:58Vital Proteins is the number one brand of collagen peptides in the U.S. By taking collagen peptides every day, you can help support your hair, skin, nail, bone, and joint health. And now you can try Vital Proteins' new collagen and protein shake. It has all the benefits of collagen in a ready-to-drink chocolate protein shake. With 30 grams of protein, it's great for healthy hair, skin, nails, and joints. And it's perfect. When I'm on the go, I use it at the gym. I use it after a workout. It's delicious. And the chocolate flavor is awesome. I highly recommend it. Go to www.vitalproteins.com to learn more and where to buy.

2:42Get 20 % off your next order by entering promo code BUILT at checkout. Hello and welcome to How I Built This Lab. I'm Guy Raz. So back in 2016, one of our very earliest episodes was on the founding of the Boston Beer Company, makers of Sam Adams Beer. Our guest was its founder, Jim Cook. I know lots of you remember that episode because so many of you have come to talk to me about it when you meet me. It was really funny. It was full of great lessons. And Jim talked about a framework he came up with that gave him the courage to start the company. And that framework was pretty simple. He asked himself, what's worse, doing something scary or something dangerous?

3:27Well, for Jim, leaving his comfortable job as a consultant to start a beer company was certainly going to be scary. But not doing it, not taking the leap, and staying at a job he really didn't love, well, that was dangerous. Because one day, he might regret not trying and it would be too late to start. Fast forward to today and a lot has changed in the beer industry, even in the time since Jim first joined us. There's been a flood of craft beer brands that have started up, some have prospered, many of them have failed. and American drinking habits have changed as well, with more people opting for spirits or even non-alcoholic drinks.

4:10None of this has ruffled Jim Cook or stifled his creativity in any way. In fact, it's just made him more innovative, as you will hear. Jim no longer runs the day-to-day operations at Boston Beer Company, but he's still very much involved and a big part of product innovation there. A few weeks ago, I asked him to come back onto the show for an update, and when he sat down in the studio, he decided to celebrate our conversation with, well, a nice cold beer. And I actually, and you were talking about the last episode, it reminded me of actually the secret of why that came out so well. And if I may, I'm going to give you the key to that, which is I discovered long ago that I'm really boring when I'm dead sober.

5:03Back then, there were about 5 ,700 craft breweries in the U.S. Boston Beer Company, still considered a craft beer company. I think you make about eight and a half million barrels of beer a year. So you're still considered very small compared to the big guys. Not the biggest. I think Yangling is the biggest craft beer, beer number two. But at the time, there were about five, five and a half thousand. Today, there are almost 10 ,000 by 2022, almost 10 ,000 craft breweries in America. You, Jim, are widely considered to be like the guy who reinvigorated craft brewing in the U.S. Like you're like called the godfather of craft brewing.

5:45But I wonder whether you think that there's too many. I mean, is there market saturation now? You know, what do you think? You're asking a brewer. Is there too many beers? I mean, a brewer always wants another beer. Yeah. So I'm very happy that there are 10 ,000 craft brewers. And in all seriousness, this is sort of what success looks like. Yeah. When I started Sam Adams, it'll be 40 years ago, that was kind of what we dreamed about, that someday everybody was 10 minutes away from a craft brewer and that there would be great beer everywhere. And the downside to that is there is so much competition.

6:35Yes. Everybody's innovating. Everybody's trying to make the next new thing. But that's wonderful. Yes, it's a much harder business to be in, but on the other hand, it's stable. It's not going anywhere. It has totally changed the landscape of beer in the United States. And today, the place where brewers from all over the world look for inspiration and innovation is not Germany. It's not Belgium. It's not England. It's America. We are teaching the rest of the world how to make great beer. And when I started Sam Adams, American beer was a joke. And I come from a brewing family with a deep history of brewing in America, and it bothered me.

7:27And today nobody makes that joke anymore. Right, because things like IPAs really, which you see in Europe, and it's amazing. I mean, those are really influenced by American brewers. But I'm just curious because I've been reading things like craft brewing we know is more competitive. And the market share is slightly decreasing. I mean, the market share of spirits has really jumped from 2000 to today. And it's now a greater share of the overall alcohol market than beer, slightly. Beer is still big, 40%, 41%. But spirits now outselling beer a little bit. Do you think that it sort of foreshadows what is going to happen over time?

8:12It doesn't mean that, you know, Boston Beer Company and other companies won't come up with other products. But, I mean, do you think that in 20 years from now it's possible that, you know, beer consumption accounts for, let's say, 15 percent of all alcohol consumption in the U.S.? Well, lots of things are possible. And there's a country western song called The Hard Way. And one of the lines in there is we've got two lives, one we're given and the other one we make. And maybe 15 % is the life we're given, but it's not the one we make. I want a different future. And I'm willing to take the challenge of creating that different future.

8:55And to me, as a brewer, there are great beers that have not been made yet. Right. And they may take a form that we can't imagine today. And to me, that's the opportunity. That's what's exciting. You know, I've been making beer for 40 years, and I wake up excited every day by the possibilities. And we make things that are almost beyond imagination. We make a special beer. We release it every two years. It's called Samuel Adams Utopias. It weighs in at about 60 proof. It's the strongest naturally fermented beer in history. And we sell it for$250 a bottle and we sell out. We have to ration it. And to me, a beer like that easily stands next to, you know, a vintage port or a fine cognac, an old sherry.

10:01We've moved into a flavor space where beer has never been. And then on the other hand, we've made canned cocktails that are just flat out delicious. And it's not technically a beer, but it leverages our culinary skills, our flavor innovation. And it's in a can. You make it in a brewery. Go through beer wholesalers and so forth. Whether you call that spirits or beer, to me, it's just part of this wonderful universe of beautiful things you can do with the fermentation of grain. How do you begin to think about, you know, innovating? So you start as a beer company, right? And then you make different kinds of beers.

10:55But now Boston Beer Company makes hard ciders. It makes seltzers. It sells a hard iced tea. So let's kind of break this down. How do you decide what to do next? I mean, is it based on market research and looking at like where, you know, where younger consumers are going, what they're drinking? Do you sort of follow the consumer essentially? No, no. There are plenty of people who are very good at that. Big companies have lots of research and they buy reports and they get all this quantitative stuff and so forth. So we can't really compete with these big companies. They've got all these feelers out there.

11:38We have to be successful. We have to be different. And so for me, this starts with ideas that are, if you will, paradigm shifts. You know, we approach the world in paradigms. Yeah. And we are prisoners of those paradigms. And I've always tried to take those blinders and that structure away because it forces you to think in the same way that everybody else is. thinking. And so it inhibits innovation and new ways of adding value. For our whole time in alcohol, last few centuries, alcohol is basically divided into three realms. There's beer, there's wine, and there's hard liquor or spirits. And those are three lanes.

12:31And an insight about that is, you know, they're all acquired tastes. They all have a flavor structure that as human beings were not actually evolved to like. Wine is tannic and acidic. You know, beer is bitter and has that tongue sting of carbonic acid on the palate. And of course, hard liquor has that ferocious ethanol attack. Yeah, burn. Up front. Yeah. So they all are acquired tastes. Which is why kids don't like them. Kids, you know, drink a second beer, wine. No, no. You have to evolve your taste to like them. And that's fine. But you're fighting something. So the term I use is a fourth category.

13:21And that's kind of our blue ocean where we can innovate because nobody's really there. And the fourth category is, what do you call it? I call it the fourth category. The fourth category. I love it. Because it doesn't have a name, but it is the space of intersection of all of them. Things that are not traditional wine, traditional beer, traditional liquor. I mean, there's a place for all these wonderful things, but there was this unexplored territory of wonderful beverages that had not yet been made, but were, to me, I think of them, they exist. They're just unrecognized and lying dormant. And my job is to kind of dust them off and find them in this junkyard of bad ideas.

14:10We're going to take a quick break. But when we come back, how Boston Beer Company brought an alcoholic twist to some of our favorite non-alcoholic beverages. Stay with us. I'm Guy Raz. And you're listening to How I Built This Lab.

14:30If you've been listening to the show these last couple of episodes, you've probably heard me mention the Airbnb original experience that I'm hosting. And I'm so excited to have a chance to connect with listeners in a completely new way. It's called the Reinvention Lab, and it's designed to help you think about how to unlock your next big move in your career or even in your life. I'll help you discover your own story in ways I do on this show with my guests. and attendees will get a chance to take a deeper dive with me on so many lessons I've learned from this show. Lessons that have transformed how I work and think about the future.

15:08All proceeds from the event will go to support the Ronald McDonald houses that helps families stay near their children who are being treated at nearby hospitals. It's going to be really fun and I can't wait to meet you. So come join me in San Francisco and take your idea to the next level. To grab your spot, visit airbnb.com slash guy. It's going to be great. AI companies have unique business models, each with distinct billing needs. Stripe is the go-to choice for AI leaders, from early-stage startups to scaled enterprises. Whether it's OpenAI offering tiered plans based on user needs, or Cursor implementing flexible billing structures for code access, redefining the future requires sophisticated business models.

15:55With Stripe Billing, you can support any business model from credit-based to sales-negotiated contracts and easily align your monetization strategy with customer value. Join the ranks of 78 % of the Forbes AI 50 and millions of businesses worldwide that trust Stripe to help them build more profitable, scalable businesses. Discover more at Stripe.com. Shopping for eggs should be simple. A happy hen makes a happy egg. And that's why eggs from Happy Egg are so delicious. Happy Egg partners with family farms across the Midwest to raise happy hens outdoors. The proof is inside the shell. A tasty orange yolk.

16:43It's the difference you can see and taste. I just made an incredible omelet with eggs from Happy Egg. It was delicious and so fresh. Once you crack open a Happy Egg, you can see and taste the difference right away. It's obvious. Visit www.happyegg.com slash built to find Happy Egg near you.

17:15Welcome back to How I Built This Lab. I'm Guy Raz. So Jim Cook loves thinking outside traditional paradigms. A great drink doesn't need to be a beer or wine. It can be something totally different. So, for example, we've developed an ability to ferment grain and then clean it and take out a lot of the less pleasant notes. We're essentially making this beautiful, clean, clear, 20 % alcohol liquid that then can form a base for other flavors. It's like the pizza dough on the counter and you can put anything on it you want. And you can turn that into several other products? I can turn that into an unlimited number of products.

18:11One of the first things that we developed that was over 20 years ago was hard tea. And it was very appealing to me because tea has, you know, like beer and hops and so forth, tea has a couple of thousand years of tradition. It's got big flavor variations between different teas. You've got black teas, green tea, red tea, white tea. And, you know, it's a flavor I know that people are familiar with, but I can introduce it to them in a new way. And so we came out with a hard tea called Bodine's, chucked that one up. That was another failure. But I didn't do that well. And then there was a band that sued us.

18:55So that was a fiasco. So just to clarify, you're talking about is the Twisted Tea brand. And already 20 years ago, Bossomir Company released a hard tea, but that didn't work. It failed initially? Well, yeah, and then it failed again. So what happened? How did that turn around? Well, it failed the second time as Twisted Tea, but it had little pockets. Okay, and we're not a big company. Big companies, if something fails, they shoot it in the head and they move on. But this was like our baby, and it had these little pockets where it actually was doing reasonably well. What it was was states that start with M but weren't Mississippi.

19:42So it was doing well in Maine. It was doing well in Massachusetts. It was doing well in Maryland, in Montana, in Michigan. That does not explain anything, though. That explains nothing to me. There has to be a reason why people— Why? Well, that's the question you have to ask yourself. And that's part of this paradigm thinking. People focus on the paradigm and what works within the paradigm. And what you really have to do is focus on the aberrations, things that are outside the paradigm. That's how Copernicus works. That's how Einstein worked. A lot of great scientists, they look at the aberrations.

20:24So we went to these aberrations, and I started with Maine. And I just went to Maine, and I stood in convenience stores, which was the main place that it was selling. And I stood in one of them all day long, and there were like five people that came in and bought Twisted Tea. And I asked them why they were buying Twisted Tea. and what I was told, well, I like the way it tastes and it's not carbonated so I don't get bloated and it makes me feel good and it had a very familiar taste. It had the modicum of caffeine from the natural tea, not a lot, but enough to just kind of change the contours of the buzz that you got from it.

21:15and it was very flavorful, so you didn't chug it. You'd have one or two. And it tastes kind of like a regular iced tea, a little bit. Yeah, it's actually a bigger tea flavor profile because a lot of the non-alc teas, the snapples in Arizona, there's not much tea flavor. There's powder, right? They use powder. Yeah, and the tea isn't that – I mean, they're very successful. They sell a lot because the tea flavor is sort of recessive and the sweetness and the fruit, the lemon, and things that get added are essential elements to it. And it was very tea-forward, but it was very high-quality tea. And the core drinker was a blue-collar drinker, but a kind of educated blue-collar drinker because it wasn't cheap.

22:03You know, this was selling for basically craft beer pricing. I mean, the first guy I talked to in Maine, he was a mason, and he was building a stone wall. And the next guy was a sheet rocker. You know, he put up the plasterboard in a construction site. And these were people who were very sort of clever with doing odd things. And they started sending us pictures of them drinking Twisted Tea. The first one was this guy who looked like he was in a pool. But then when you open the aperture, he put a plastic sheet in the back of his pickup truck, filled it with water and was sitting there in his bathing suit having a twist of tea.

22:48And it made me smile. This is our drinker. This is great. So it started to get traction. Bikers adopted it. It's like the official drink of Sturgis, the big bike rally in North Dakota. And it's just grown over 20 some years. It started with that base. It's still the base for it. And then it sort of spread out. Now there's college campuses. I remember moving my daughter out from her dorm at Harvard and she was on the top floor. So I walked down all the five floors and on two of them, there was an empty case of twisted tea. Wow. All right. So let's dig into this a bit more because obviously the tea sort of gamble worked.

23:36One thing that you introduced, this is back in I think 2016, was hard seltzer. And initially hard seltzer also didn't take off. Like it was seen as a gimmick. Well, no, it was actually, I mean, I'll tell you a story of it. We misconceived it. You know, 25 years ago, we developed this clear malt base. This was before Coors released Zima? This, it was after Coors released Zima, but the base that Coors had was not clean. Okay. It had some off notes of sulfur that came out of the fermentation. They didn't know how to get those molecules out of there. So we had to, you know, it's a little complicated, but we had to develop this ion separation technology.

24:25And I'm not a scientist, but I know it tastes good. And we actually did that in partnership with Brown Fortin, with the people who make Jack Daniels. And they had some chemical engineers, and it was a very fruitful partnership. And out of that came this clear malt base that the Jack Daniels country cocktails are built on. And we kept thinking about, well, what else could we do with it? And that was, it took 20 years to come to this idea, which was hard seltzer, truly was the first hard seltzer here. And it just came from just thinking, pushing, what could we do with this? And it was a very simple idea.

25:04You know, LaCroix was taking off, seltzer water was taking off. And we said, you know, what if we made an alcoholic version of that? So you were paying attention to La Croix because La Croix really just exploded. I mean, even though it's been around for a long time, it really started to explode in the 2010s. Yeah. And, you know, to me, when I go into a store, you know, everybody stays in the beer aisle and they look and they try to copy other people's ideas. You know, I'm walking the rest of the store. I'm looking in the non-alc section. and just drawing stimulation from that. And so this idea of an alcoholic hard seltzer and the parameters, the framework for them was, what if we made something that had 100 calories?

25:57You know, we were going to do no sugar, no artificial sweeteners. So we put relatively complex fruit flavors. And, I mean, again, we were totally wrong. when we formulated it, we thought, who's going to drink this? Well, our drinker is going to be a white blouse woman who didn't want sugar and starches. And she's going to drink it after she plays tennis. And it's going to be a substitute for like Chardonnay on the rocks or vodka soda with a lime. This is going to be a better version of that. and we're going to sell a million cases a year, which is not a whole lot in a business, you know, with just like three billion cases or some huge number.

26:45And what we've learned is make a beautiful flavor profile, make a beautiful product, and it will find its way to the right drinkers. We learned that from Twisted Tea. We thought that was going to be for like urban, yuppies, Snapple drinkers, and we were totally wrong. So we put this out and we had it in market a couple of months and we had our wholesalers, our beer wholesalers, they got an incentive trip and we take them to the Caribbean. And one of the days is this booze cruise on a trawler. And these are beer wholesalers. They're like professional, world-class drinkers. Sure. Yeah. So, you know, this is a 10, 12-hour booze cruise.

27:31We go to some famous, you know, Caribbean bars, Foxies and Salty Dollar and things like that. But the boat is stocked with all of our things. And there were four of our wholesalers sitting on the back bench of this trawler boat. And they started drinking Truly. The hard seltzer designed for the white blouse women. And these are like big guys. Yeah. There probably was, there were four of them. There's probably 1 ,200 pounds of wholesaler on that bench. And I said, guys, do me a favor. Just count the Trulies because we're going to be on this boat for like 10 hours. I just am curious because I said I'm only going to drink Trulie because I want to understand what kind of buzz I get.

28:13Do I get a hangover? I'm like using my body to experiment. And at the end of the day, those wholesalers had like 64 of them. Wow. So 16 apiece. And I realized, oh, this is different. And I asked, why are you drinking all this truly? You're a beer drinker. And he said, well, Jim, I got to watch my girlish figure too. And this, it tastes great and it doesn't fill me up. And I thought, oh, that sounds like tastes great, less filling. So I realized, hmm, this is different than I anticipated. Let me explore that. And after that, we changed the packaging to make it less feminine. And a great product that's really delicious will find its way to its natural drinker.

29:07So I don't try to anticipate that. It's so interesting because you start out by sort of marketing and packaging it for a specific consumer, only to discover that actually, you know, it appeals to very different types of consumers. And I know lots of big, burly dudes who love Truly and prefer it, in part because they go to the gym and they don't want to consume all the carbs. So, all right. So, it's about sort of experimenting, but there are also failures, right? I mean, you come up with products that are going to fail. Dozens and dozens and dozens, guy. And that's part of it, right? Because any of these things, like the things we've talked about, you know, Twisted Tea or Truly, we haven't talked about Angry Orchard, which is a hard cider.

29:53But even those products have, by and large, been huge successes for the brand. But in order to have those successes, you have to take risks, right? And presumably, taking risks means you're going to have some dogs there that just fail. Oh, yeah. I mean, they were all birthed as failures. Angry Orchard Hard Cider began life as hardcore. In 1996, you know, we revived a very traditional beverage. Beer was not always the number one alcoholic beverage in the United States. Before the Civil War, the number one alcoholic beverage was hard cider. And beer displaced it, you know, after the Civil War for a bunch of reasons.