Dogfish Head Craft Brewery: Sam and Mariah Calagione (2022)

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27:24Hey, welcome back to How I Built This. I'm Guy Raz. So it's the early 1990s, and Sam has just taste-tested his cherry-infused beer for a group of friends. And everyone's kind of surprised at how much they like it. So when Sam wakes up the next day, he's still buzzing. I remember that the next morning I didn't have to work at Nacho Mama's till the dinner shift. So I literally got up and, with a hangover, walked to the biggest unit of the New York City Library and started doing Lexus and Nexus searches about starting to write a business plan. So you thought right then and there, I'm going to start, I'm going to write a business plan.

28:03Before we get to the business plan, you had not yet understood the science of beer at this point. Now, of course, you do. But then you were kind of just throwing things into a bucket and mixing it and hoping it worked out at that point, right? To some extent, but at that little shop of hops, I bought the book that I first read in the library called The Joy of Homebrewing. And Charlie Papazian wrote that book, and it's considered sort of the Bible. And so Charlie did a really great job in The Joy of Homebrewing of putting into layman terms the science of fermentation. So by reading that, I had some level of confidence because his rallying cry throughout the book was, don't worry, relax, have a homebrew, which is basically, yep, there's some serious science going on in your kitchen right now with these little single-cell animals called yeast, but don't freak out.

28:50this has been happening for thousands of years, trust the process, and you'll make good beer. So you're learning about beer, but at this point, you know you want to make a business out of this. And I guess you decide that you're going to start out by opening a brew pub, right? Like a restaurant somewhere. Yeah. But why go in that direction with your business instead of just making a brand that would bottle beer and sell it to stores or something like that? Well, like I said, I came up in this big Italian family, both sides of my family. My mom's famous for her shrimp scampi and my grandmother on my Jacobelli Caligoni side for these crazy chicken cutlets.

29:33And so I grew up with food and wine being central to bringing people together. And that was kind of the lens that I started doing the search. How can I blend my love of food with my newfound love of brewing? Yeah. You know, and it was a fairly unique business plan in that era, because the whole concept, like in the first page of the business plan, I wrote Dogfish Head will be the first commercial brewing America committed to brewing the majority of our beers outside the Reinheitsgebot. And the Reinheitsgebot is like four ingredients, German purity laws can only use like four ingredients, right?

30:06Exactly. It basically says, why are you used tops barley? That's all you got to choose from. And you were saying, I am not going to adhere to that. yeah you know and i i even said we're committed to brewing the majority of our beers using unexpected culinary ingredients like our first beers for example out of the gates were beers like chicory stout made with organic mexican coffee and chicory and licorice root immorale made with maple syrup from my family's farm up in massachusetts juniper berries and aged on oak raisonne detra made with raisins and beet sugars so right out of the gates we were brewing these beers that were not referencing modern beer styles.

30:47Because, right, I mean, like Sam Adams, for example, prided itself on the Reinheitsgebot, that it was a beer that could be sold in Germany because it did adhere to those standards. Like that was a point of pride for a lot of the smaller craft brewers. Yeah, and rightfully so. I mean, the first folks out of the gates, the Jim Cooks and the Ken Grossman from Sierra, they're brewing these beautiful, fresh, local interpretations of modern European beer styles. And that was amazing. But Mariah and I, I mean, I knew we weren't going to have a big marketing budget even to stand out in that first round of brewers.

31:26So that's why I was like, what can we do to really stand out? And reading about people like Alice Waters and James Beard, who had very similar message, which is America has an amazing agricultural base. Let's stop genuflecting towards European food traditions. Let's create our own American traditions with our own ingredients. And that was sort of the epiphany moment that led me to kind of say, I want to go on this journey that really is about culinary inspiration for beverage recipes. The restaurant business is like one of the riskiest enterprises you can get into. It is like very labor intensive and overhead intensive and food spoils.

32:07Like it is the riskiest, craziest business to go into? Like, didn't anybody say that to you about the restaurant business? I know they did because banks wouldn't give me any money and that's what they would say. But where I think I was lucky is, you know, Mariah and I worked our asses off in our summer jobs. And so when I was raising that money, like it was my dad believed in us. Mariah's dad believed in us. My orthodontist put in money. He believed in us. A guy built stone walls for my summer job on golf courses believed in us and his wife put in money. So, you know, sharing our passion and the business plan and the concept with a number of people in our lives helped us get on our way.

32:51And these are friends and family, right? Because I think you raised about 200 ,000 bucks, right? To do this. Yep. Yep. It cost 220 ,000. Yeah. And it was really, I did it. I structured his personal loans out of the gate. So it wasn't that initially that, you know, they had equity in the company. So that also helped Mariah and I keep control of the company as we were getting our feet under us. Yeah. And I mean, you clearly have both of you now have amazing beer palates. Right. And but and there are people who have natural palates like you meet like wine sommeliers who are just like blind tasters.

33:26But then there are people who train their palates. But still, that takes time. How did you know at this moment, at this time, that what you were making was good? Did you have people around you who could kind of, I don't know, stress test it? Well, I mean, certainly our friends getting free beer liked it. That is not the stress test I was expecting. I'd say one of the cool moments was, while I was trying to raise the money, Mariah and I went to this regional festival called Pumpkin Chunkin, where a bunch of farmers and, you know, homespun engineers create these, these like Rube Goldberg-esque machines that huck pumpkins in a field.

34:09And a sort of sideshow of that competition is the, a baking competition. Right. I took my homebrew pumpkin beer there and kind of muscled the grannies and aunts out of the way that had their cakes and pies in the competition. And our dogfish had pumpkin ale, won the food competition. Wait, you hijacked a baking competition of old women grannies with your beer, which is not even a part of a baking competition, and you won? That's amazing, but that's not fair. Don't hate the player, hate the game. It didn't say it wasn't for beer. That's true. Yeah, I do remember there was a few judges, and they're like, it just says it's something that you can ingest that's made with pumpkins.

34:50That's all you need to do to enter this. So we got to let him in. And you won. You won this comp. I mean, it wasn't like a massive national, but it was a local little comp. But still, that's kind of cool. You won. It didn't lead to like an SBA loan or anything.

35:08And what was in your pumpkin ale? Same as dogfish had pumpkin ale today. So it was fresh pumpkin meat, fresh crushed allspice, cinnamon nutmeg. And then instead of fermenting it with, you know, regular sugar, I ferment it with brown, you know, organic brown sugar. And we still use brown sugar in the pumpkin ale today. So, wow. All right. So while you're writing this business plan, Mariah, while Sam is writing this plan, what were you thinking? I mean, you were coming out of this august, you know, Ivy League institution. And, you know, you had lots of options to do many different things. And I wonder, did you immediately think, yes, this is it.

35:46This is a great business idea. Or were you thinking, you know, maybe Sam will move on. Like maybe this will be interesting to him for a couple of months and then he'll figure something else out. No, I mean, I love the idea of opening the Peru Pub, particularly, like as you said, as a restaurant. Because I had worked in restaurants every summer during high school and college. So I was familiar with that whole world of waiting tables. And so the original plan was, yeah, he'll move to Providence and start looking for restaurant real estate while I was working in local TV news up there. Okay. And I guess you guys go ahead with that plan.

36:23But from what I understand, you sort of get cold feet when you find out that there's another brew pub about to open in Providence. You guys were presumably, I think you were hoping to be the first ones there. So at that point, do you start to look elsewhere, like at another city? Yeah, yeah. So, you know, Mariah and I talked it through, and we were kind of like, well, let's see, what's another state close to New England where we are right now that has yet to have a brewery opening post-prohibition? And it happened to be Mariah's home state of Delaware where we worked in the summers of our college years.

36:59And at the same time, my dad called and he said, hey, there was a group that was trying to open a brew pub in Rehoboth Beach, Delaware, but they're not opening. So we said, okay, let's control, I'll delete all the providences in this business plan and replace with Rehoboth Beach, Delaware. Yeah. And I also knew that beautiful coastal Delaware is, pretty much two hours from DC, Baltimore, Philly, three and a half from Manhattan. so it would actually be like an ideal hub to eventually distribute beer to major metro markets. So you get down to Delaware, and what's available there? And this is Rehoboth Beach, Delaware?

37:41Yeah, yeah, Mariah and I found a building that was just a few blocks off the beach in Rehoboth where it was called, like, I don't remember, Mariah, do you remember what they used to call that part of town? The part of town where businesses went to die. we like the sound of that so that's for us it was just far enough from the beach that everyone said well why do you want to be that far off which i mean it's it's literally laughable now because it's only four blocks away yeah all right so okay you guys find this place and and you come up with a name for it dogfish head brewings and eats and and by the way how did you come up with that name So my folks had a little summer place on an island that was in mid-coast Maine, and it looked out at a jut of land called Dogfish Head.

38:29And I liked how that name kind of meant a place to me, a rustic, woodsy place, kind of like the rustic, woodsy beers. But I also liked how it just sounded like three kind of whimsical words put together in a creative way so that it wouldn't reek of geography if we ever distributed our beer coast to coast. Right. So you didn't want to call like a - Delaware Brewing Company, yeah. Or like the First State Brewing or something like that. Exactly. Or Delaware. Classic. Right? You could get that t-shirt on the boardwalk, guy. Exactly. All right. So you find this location in Rehoboth Beach to open up.

39:12How many seats was it going to have? I feel like it was like 120 and then plus the deck. So that's a big, decent-sized restaurant. Yeah, it was two stories. I mean, it had a lot of space. Yeah. And we rented it from a woman, a wonderful woman, who her family had had a crab place that they ran there for like decades. And then they started just renting it out to tenants. And it had this reputation of not being a well-run place. But literally the day I got the wooden sign made that said Dogfish had Brewings and Eats, I said, hey, Mariah, stand across the road so you can get a full view of me taking off the old restaurant sign from the facade of the building and putting our sign up on the building.

39:55And so the first surreal moment was I unscrew their sign and I take it off and there's a sign of another failed restaurant behind that. Underneath. So this is a really good, good omen. Like one fail, two fail, and now here you go. It gets worse. It gets worse, guys. Cause then I'm like, okay. And so I screw the Dogfish Brewings and Eat's sign. And Mariah's taking the old school analog photos of this whole hot mess. And literally some guy walks by and goes, Brewings and Eats, you know, it's illegal to open a brewery in Delaware, right? And if you remember, Mariah's dad said, Oh, some other entrepreneurs are going to open a brewery in Delaware and they couldn't raise their money.

40:35Well, that person walking by, of course, I should have done my homework, let us know brewing was not legal because he had some connection to the other brewery that failed. And so he proceeded to tell me, oh, yeah, yeah, the statutes in Delaware law still say it's illegal to open a brewery in this in the state. Wow. This is an old law probably goes back to prohibition. It seems like it was just a technicality. But even to like deal with that just sounds like a headache with all the things you're already dealing with, you know, just the regulatory stuff and the filings and finding the employees and building out the kitchen and the space and then brewing the beer and you know so what did you do so literally that same day that we ripped two old restaurant signs off a wall put ours up on the wall i drove up to dover and literally i was like hey maria what do i do when i get to dover and she's like oh go left on the lockerman blah blah blah so i found the right road and i rolled down my windows and i was kind of like all right which one of these is the house of representatives this is the state capitol building yeah i guess that's what it would be and uh i walked through the little security thing and I get on the other side, they're like, can we help you?

41:39And I'm like, yeah, I'm under construction on a brewery and somebody told me it's illegal. Who do I talk to about that? And they were really sweet. I mean, they were like, well, son, you're going to have to write a bill. And they opened their doors. And I think that's something that I want to give shouts to the state of Delaware. It's a super business friendly state. And when you think of its history from DuPont to Gore to agricultural. Shell companies, yeah. Yeah, well, maybe that too. Maybe that too, but they were super cool. Like, they're helping me. They're like, all right, so write this up, get a lawyer who can stand with you and massage the language.

42:17And literally, guy, within a month, we were on the floor getting a bill that we wrote, brought forward, and then Governor Carper, who's now - The senator. You know, signed that bill. And it actually turned into this just kismet moment because all of a sudden our state's biggest newspapers are writing, 24-year-old kid foolishly rents a restaurant to open a brewery. It's illegal, and he has to go to Dover. To change the law. Yeah, so people were kind of rooting for us to get this. I'm sure. I mean, you couldn't have bought better publicity around that. And then subsequently after that, we became really friendly with those good folks in Dover through the years.

42:54All right, so you get this law passed, brewing is legal in the state of Delaware. Yeah, that was an amazing moment. And I remember calling Mariah from a payphone, like, let the faucets open. It was kind of like one of those post-prohibition moments of, wow, we made this happen. Yeah. June 23, 1995. You open the restaurant. It's now fully open, right? How was business that first summer? It was good. I mean, people came in. People wanted to explore. We had a lot of people ordering their standard beers. and we'd explain that we didn't sell those beers. We made our own beers. So every customer was a teaching opportunity, I guess.

43:38I mean, most people's palates at that time was like, you know, your standard Coors and Miller Lite and maybe Sam Adams, which is a great beer, but was not as radical as what you guys were doing. Were there people who were like, not for me? Yeah, I mean, especially once we opened, you know, Necessity is the mother of invention. And the fact that we couldn't afford a full scale, you know, commercial brewing system and had to start with tiny little pots and pans, you know, making 12 gallons of beer in the corner of our restaurant. It was actually a blessing in disguise because I would brew two or three batches per day.

44:19And let's say I was brewing raison d 'etre, Belgian brown ale with raisins and beet sugars. in the three brews that day, I would tweak one variable in that recipe three times. And that was our first like de facto focus groups. I would ask the customers who cared enough to visit this crazy little brewery. Hey, did you like the Bachelorette more raisins, less raisins? And we kind of developed the recipes in concert with our original fans. And that's kind of how our brand grew. And they actually paid us to do that, which was kind of helpful. and uh back then i would hand out like file cards when we'd hand people beers and ask them what do you think of these and i i wish that we kept them i remember we had one beer on tap called high alpha wheat that was made with lavender buds and one of the comic cards came back and says this beer tastes like tongue kissing laura ashley like i don't know if it's a good thing or a bad thing but probably fair point.

45:18One of the things about what you were doing was that it was expensive, right? You were using a higher volume of grains and expensive, you know, dried fruits and sugars. And so you had to sell your beer for more money. You know, a pint of beer might be like double the price of a pint of Budweiser or Miller Lite. Did you have to educate people around that? Yeah, to a degree, but that's the education we were doing anyway to explain to them what the different beer was in the first place. So I think it kind of worked hand in hand. You know, I think in the bigger context, you know, beer is pretty much an affordable thing to splurge on.

45:58So that worked in our benefit. And yes, it was more expensive than, you know, the regular beer that you would buy down the street, but you could only get our beer at our place. And I think people appreciated that it was going to cost more because they knew why. They saw it being made. Right. So from what I understand, initially, maybe in the first at least year, you were brewing all of the beer for this restaurant in 15-gallon kegs on propane burners. That's not a lot of beer for a restaurant that has 150 seats every night. So just help me understand how you were brewing enough beer. What were you doing?

46:41Yeah. So I had a mattress in the cellar of the pub. So I would only go home to our house maybe three or four nights a week and then stay in the basement of the cellar. And we would shut at midnight or one and then I'd start brewing, you know, before the day would get hot, you'd want to start brewing by, you know, eight in the morning or so. So five or six days a week, I would triple brew, you know, 12 gallon batches. It worked fine. I would use the hose before people got there in the brewery for my showers. And Mariah had a real job because we needed insurance. What were you doing, Mariah? What was your real job?

47:17I was working in local TV news in Salisbury, Maryland. On camera? Mostly off camera. I prefer that. But you were doing that in the daytime and coming in the restaurant at night? Yeah, I would come in and bust tables or work at the front door, do some dishes, whatever needed to be done. And Sam, you were doing, you were brewing the beer and doing payroll and doing the shifts and the schedules and stuff like that. Oh, he wasn't doing payroll. They don't trust me with the math. Let's be clear. No one trusts me with a math guy. I was more, I was doing the front of house, basically talking about the beer and the food and how they work together with the customers.

47:57I'd be getting ready to get the bands on stage. Oh, you would do live music? yeah like the holy trinity was original beer original food original music we also refused to have any cover artists which you know 93 percent of the bands that played back then were jimmy buffett cover bands so we were like finding all these indie rock bands from across the country you know so that was a big part of kind of the brand building as well and then like trying to foster relationships with other entrepreneurs knowing that in the winter the tourists were going to go away and try to get other sort of entrepreneurs to choose us as their preferred watering hole.

48:32Those were the kinds of work I was doing as well as brewing. All right. So you've got the restaurant going, but it's very rare for any business, let alone a restaurant, to break even or become profitable in the first year. I'm assuming that you were not profitable in your first year. The restaurant actually did pretty darn well, like right out of the gates, bringing people in. But what did become challenging is I knew that our recipes were unique nationally by that focus on the culinary. I knew that if I could start distributing the beers to cities like DC, Baltimore, Philly, Manhattan, and I could get the Washington Post to write about a beer made with raisins or the Philly Inquired or write about a beer made with chicory or that would help our brand grow disproportionate to our tiny scale down in coastal Delaware.

49:27Right. Because you could not do that with just that Delaware market. You had to go to those huge media markets and consumer markets like Philadelphia, DC. Yes. And that kind of drove us to get our bottling line going in our building and buy a little box truck and get on the road. And I would drop off two pallets at a distributor in New York or Philly, but then take a bucket of beers to Art Forum magazine or Interview or Food and Wine. And, you know, usually people would let us in their door and say, hey, we want to throw an impromptu happy hour for your editorial staff or your writers. And that really helped us start getting national attention.

50:08So, Mariah, what gave you the confidence to leave your job in television to go full-time? because I think full-time, 1997, you joined the company full-time. So right before I left my full-time job to come to Dogfish, we opened a separate production brewery to brew and package beer that we could then distribute to these markets around us. My last job in TV news, I was managing the assignment desk for the news department. So I was like the receiver of all of the press releases and media alerts. And, you know, so I naively assumed that that meant, oh, I know how to do the opposite of that and put out all this information.

50:50And I'm, of course, I know how to do marketing. But quickly, I realized that I was not needed as much to do marketing as I was all of these other things that we needed to be able to do. Like accounting? Accounting and HR and TTB or tobacco tax bureau, excise tax forms twice a month. But I learned, I learned a lot. And while this is happening, we also went headfirst into starting a family. So it was definitely an intense time for us as a couple and as entrepreneurs. You know, it's remarkable to me when I meet people who met when they were teenagers or kids because that is so rare, right? Like your judgment as a kid or teenager is just so different from your judgment.

51:36And even our judgment as adults is, you know, people, marriages don't last or whatever it is, right? But, I mean, part of it is luck that the two of you guys happened to be compatible and liked each other. But I'm just curious, Sam, from your perspective, because you married very well, right? Like you married somebody very smart and who was like the brains of the operation, a dogfish head, right? In Mariah, did you see somebody who could be like, you know, not just life partner, but like a business partner? Yeah, yeah. So I often use that analogy of like a comic book universe as an entrepreneurial universe where there's all these mutants with complementary superpowers that take on the big bad guy, you know, a giant corporation or some monolithic industry.

52:21And so, you know, to use the Marvel universe, you know, I'd say I was a lot like Cyclops, where I just was like spraying, you know, creative energy in a million directions out of my brain and eyes and sometimes for good and sometimes recklessly and destroying stuff. And Mariah has definitely always been more like the Professor X, like she could read my mind and could kind of see the lay of the whole land, you know, cultivating and nurturing creative ideas that I have into a direction that's, you know, positive for Dogfish, but, you know, just also for us as a family. All right. So at this point, both of you are working at Dogfish Head full time.

53:03And you're starting to take your beer outside of Delaware, trying to get some national attention. And so how exactly were you doing that? Like, were you marketing mostly to small bars? Or were you also trying to get into like some big stores or like some of the big restaurant chains? So we knew as we were growing, making these really exotic beers, it's not like the biggest chain Applebee's or chain Costco's was going to take a chance on a beer made with raisins or a beer made with apricots. so our goal at first was to find these you know much like and I know you did a great story with Merge Records and if you look at how much the indie music movement in America essentially in the same era when craft beer was coming up late 70s early 80s that whole concept of getting a van as a band and you go across the country and you find this grassroots networks of other people who venue to venue yeah yeah other people that give a shit in every city about this art movement that you're involved in.

54:03So really, I found that grassroots network of hardcore craft beer bars and restaurants that prided themselves on exotic lists. And that's where I would drive to when I go to Pittsburgh or Hartford or wherever. And I try to do a beer dinner and talk to the local newspaper. And really, it was like this sonic youth, you know, model of growing a brewing company. Yeah. I read a story about a beer event that you were at, Sam, in 97. So you're still in your late 20s, 28 maybe around then. And this was an august crowd of beer makers. And you stood up to talk about this new beer you were making with apricot puree.

54:49What happened? Yeah, I was at the Brickskeller, which was a mecca of craft beer. Oh, in D.C. Yeah, you remember that, don't you? Famous bar. So cool. It had like the most beers available under one roof. Yeah. So I'm there. And they were like one of the first places to host these brewers dinners. Like we'd all get our five minutes at the microphone. There'd be a room of 100 people. And you'd get up there and describe your beer. And then you'd go back to the brewers table. And I remember very proudly saying, you know, getting up on the stage and being like as a homage to like the fruit aromatics of Northwest American hops, I've decided to infuse the beer while it's fermenting with fresh pureed apricots and kind of made my passion plea to describe the beer.

55:32And I sit back down and a little older brewer than me gets up on the stage and quiets the audience with a spoon on his pint. And he says, I believe that fruit belongs in your salad, not in your beer. I was like, okay, all right. But at that moment, did you feel kind of like upset or were you confident that you were onto something? Mariah and I were, I think, scared because we had bill collectors calling us. And I'd come home and we'd both be beat up and tired. But I'd be like, hey, I dropped off that beer in Pittsburgh. And you remember how last time nine people showed up for my beer dinner? Guess what?

56:10Eleven people showed up this time. You know, she was supportive and was not like, this is crazy. We're not making money. Let's just shut this down. but there were some challenging years there where we thought we were going to go bankrupt like late 90s right mariah yeah i got really good at disguising my voice when our grain purveyor would call and ask for money and i'd be like oh no they're not here you know what was it was it just you were running the business inefficiently or you just weren't selling enough beer or what was going on well anytime you want to make more beer you need more capital because it's such a capital intensive process it's like you can't just make more beer without investing in more tanks and a more right bottling lines and more so so we were living hand to mouth and any money that we got in we were putting right back whether it was into our people our ingredients or our equipment and i'd add to that you know it was all crappy used we had a bottling line that came from east germany that i think made soda over there in the 1950s and was sent to America as part of a Cold War initiative to screw up American manufacturing.

57:20And we literally paid a guy who was very skittish and wore ski goggles to just stand behind the bottom line and push valve number seven down as his job because the machine didn't work. And literally, I think one fifth of the beer that came off that bottom line wasn't even a full bottle, and we couldn't sell it. Not a very sustainable business model. And then that was really around the time that Mariah's dad, Tom Draper, could see that we needed some help. He's like, you know what? All right. I want to put in this amount of money. And I don't know if it was a hundred thousand or it was some meaningful amount, but I do want a minority equity stake and we're going to form a board of directors.

57:58And we were like, oh, okay, let's do that. And that was awesome. But to your point of what was the cashflow like, one of our first board meetings where Tom Draper, I stood up and showed him like some magazine article about our beer that got national coverage. And he was quiet for a minute. And then he just said, Sam, cash is king and you have no cash, which is true. When we come back in just a moment, how Sam and Mariah begin to turn things around with help from a famous beer journalist, a retro children's toy and King Midas. Stick around. I'm Guy Raz and you're listening to How I Built This.

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1:01:03Hey, welcome back to How I Built This. I'm Guy Raz. So it's the late 1990s and Dogfish Head has a strong cult following, but it also has cash flow problems and it needs to start growing faster. Fortunately, the famous beer journalist Michael Jackson, yes, a different Michael Jackson, starts saying some really nice things about the brand. Yeah, and telling people that were making fun of us or laughing at us, he said, hey, wait a second, Dogfish is a very traditional brewery. If you look thousands of years back, every culture in every region of the world was using local indigenous ingredients to make beer.

1:01:42And in the beer world, that gave us, you know, we were always thinking beyond beer. How can we recontextualize beer? And moments like that were impactful. I should mention that Michael Jackson to beer is like Robert Parker to wine, right? He's that important. Yeah, that's great. Meantime, I think another pretty pivotal moment was around this time, sort of the turn of the millennium, around 2000, when you launch the 90-minute IPA and then eventually the 60-minute IPA. This would become signature beers for you. First, can you explain what is the 90-minute IPA? Yeah, sure. So IPA is a many centuries old English beer style.

1:02:25And basically it was India pale ale, right? India pale ale. And it was basically an elimination. The English would send beer to the troops in India and just learned through different shipments. If they sent regular mild or regular pale ale, the beer would be spoiled when it got there. So they kind of amplified the alcohol. They added extra hops, very hoppy, more bitter. so those two factors made this more durable more intense beer style called ipa so that was already in existence but what we did is kind of took our culinary inspiration into that ipa space so one morning i think it was 99 i was heating up water to brew and a chef show came on the television above the bar and they were talking about if they added little pinches of cracked pepper to a soup the whole time the soup was simmering, that the flavor, the complexity, the nuances of the pepper would be woven into that soup more gracefully.

1:03:21Wait, hold on. I'll just say because I do a lot of cooking. You're saying if you add grinds of pepper throughout the simmering process, it has a different effect than if you just add it all at once? Yeah, I distinctly remember them saying if I took the same volume of pepper in one handful and added it, it would taste all dislocated and bitter. But by adding little tiny doses, it can give more nuance and complexity. So I'm watching this chef talk about this. And I literally, I just had an epiphany. I shut off the gas burner on my brewery. And I drove out to the highway to Salvation Army store. Because I remembered this is a place where you get used jeans and flannel shirts and cool stuff like that.

1:04:02And they had one of those old vibrating football games from the 60s or 70s that the little guys would be on the field. And it had a vibrating motor under it. and I bought the football game. I drove back to the brewery. I took a five gallon bucket and I perforated holes into it with a hand drill. And then I duct taped the bucket on some two by fours to the vibrating football game and then filled the bucket with pelletized hops and just put a stepladder over my boil kettle. And just changing the angle of the football game, I could vibrate the hops out of the bucket, down the vibrating football game, into the boiling beer with a goal of could I make one pellet hit the boiling beer for the whole 90 minutes of the boil, one stream of pellets.

1:04:46So it's just like one giant hop addition. This sounds like a very complicated experiment. Yeah. But by doing this little tiny continual hopping method, it made our beers really intensely, aromatically, beautifully hoppy without being crushingly bitter. Like if we added that same volume of hops all at once, the beers would have an unpalatable lingering bitterness by that volume. Because IPAs can be prohibitively, it's like an obstacle for a lot of people. Because there are people who do not like hoppy beer. A lot of people, especially when it's bitter. But this was a way to get people into the hops door without the bitterness.

1:05:26Yeah, exactly. And to start with, everyone's like, you're the one and done brewing company. No one's going to drink more than one of these super strong, super hoppy beers. But when people tried it, they would buy it again. I remember like being in our house and Mariah like coming outside and being like, hey, these guys own a website called Beer Advocate. And 90 Minutes, the best, you know, reviewed the highest rated beer on their website. They want to do an interview. And I remember being simultaneously stunned that a 90 minute was the best selling or the highest rated beer on their website. And really surprised that there were people that had a website that rated beer.

1:06:05That's a little I knew about the Internet, you know, back then. Yeah. There's something about beer, especially craft beer, that just like attracts a certain cult following. And we know we know from this show that when you create a niche product that attracts a cult following, it eventually becomes a mass product. Well, like we also started as the anti-mass product, right? Like our whole craft industry started that way. but we were at the right time coming up in that industry and there was a shakeout in the late 90s that we navigated and the shakeout meant that a lot of small brew pubs closed they did not survive i mean i think a lot of people got into it who weren't like all about the beer they were more like you know i read about this microbrewery trend in the wall street journal and i'm gonna to make a lot of money.

1:06:55And it's like podcasts. Yeah, a lot like podcasts. Yeah. But yeah, so so that so, you know, from a branding perspective, what you did, I don't think this was like a cynical marketing move at all. It was really just a passion. You carved out your niche by like, not just experimenting with with different ingredients and weird, but doing collaborations like one of the first unusual collaboration you did was with a professor at Penn to resurrect like an ancient Egyptian or Middle Eastern brewing method because they were brewing beer 3 ,000 years ago. Yeah, and that, as fate would have it, there was a beer festival at the University of Pennsylvania.

1:07:34The guest speaker was Michael Jackson, who we've already talked about. And Michael Jackson got a tap on his shoulder by this guy, Dr. Pat McGovern, who said, hey, I'm a molecular archaeologist, and I basically can reverse engineer what they were drinking you know, the night they buried King Midas and, uh, and Michael Jackson rest in peace, put us together with Dr. Pat and it formed this awesome relationship where we've, you know, we've reversed engineered and kind of these liquid time capsules from ancient China, ancient Italy, ancient Turkey. And, uh, that's been a big, big part of our journey.

1:08:12Wow. I mean, amazing. And, And I wish I mentioned Michael Jackson. I think he passed away in 2007. But, I mean, what an incredible chance. Because, you know, I remember when this beer came out. Because it was just a natural media story. The beer King Midas drank is now being brewed by this company in Delaware. Yeah, and it's funny because it ended up with Sam on a full-page spread of People magazine wearing a crown on his head. But we would have never thought People Magazine would be interested in our beer, but that's something that afforded us a new audience. And it could have been a fly-by-night sort of, oh, this is just a little gimmick.

1:08:55And I'm sure there were some Snickers in the industry where people probably were like, oh, just a gimmick. But it wasn't actually. It started to sell. People started to buy it. Yeah. I think by 2004, I read Dogfish was doing like$7 million in revenue,$800 ,000 in earnings. So you turned it around by then. You guys were definitely doing pretty well at that point. I will say by that era, one of the things that was fortunate for us, we were always really transparent with our customers and said, you know, this beer had three times the ingredients in it as a normal light lager, and we have to charge three times as much for it.

1:09:30So we did reap the benefit of that pricing premium we were able to command. And that did help a lot with cash flow. So in general, we enjoyed at least a decade of double digit annual growth. And so that really helped us get our sort of financial feed under us. So as you grow, there was an article that came out in 2008 in the New Yorker, which in the New Yorker, right? That's a pretty awesome place to be. That article, it talked about how you, by that point, you had quadrupled in size from 2004. So you were doing like 40 million revenue, but you still could only meet four fifths of demand. Like a fifth of your orders would go unfilled.

1:10:14I mean, that's great to have such a high demand, but it's also a problem, right? Because you don't want to not fill those orders. What was happening? We just didn't have the capacity to meet demand? Yeah, we called our sales team at the time the sales prevention team. You were telling to stop selling? Well, at one point we pulled out of a number of states. We found like we couldn't supply as many states as we had opened up. So we retracted a bit. We didn't want to get too far out over our skis. That growth was great, but we didn't want to outgrow our people and our processes all at the same time.

1:10:51So we kind of intentionally slowed things down a little bit. Yeah. How about your relationship, the two of you? I mean, now you're really growing. You've got probably by 2008, at least 100, maybe 200 employees. You've got distribution channels, you're working with distributors, and you're also raising children. Did you guys ever sort of have any tension between the two of you over how to run the business? Or was it just very clearly demarcated what Mariah did, what Sam did? Well, I think we definitely had different focus areas. And that also meant we had natural time apart, which was probably a great thing too.

1:11:32Our desks at the brewery are literally next to each other. So it's great when we're there together. But it's also great when either one of us is on the road and we get a little space there. We joke the window between our two cubicles is actually bulletproof glass. no i mean i i did want to say though it it did put an interesting dynamic on our family as we're as we're raising sammy our son and greer our daughter for family time because we do get to travel a lot to do collaborations with breweries around the world we would choose you know what trips we could bring sammy and greer on yeah so that they could see you know what we were doing was not just about making a living, but we were trying to build this community and giving back to our community.

1:12:17So having our kids be part of that instead of feeling guilty about the challenges of quote-unquote work-life balance, I think was something we had to learn along the way. Yeah, no, I mean, there isn't a work-life balance because there's no demarcation between work and not work, really. I mean, we go out to dinner at night where it's at an account. Like we go somewhere on the weekend, like pretty much everywhere sells beer, right? So we're traveling and there is no like, okay, at this moment, we're not going to talk about work anymore. It's just it doesn't happen. It's not possible. Yeah. I want to ask you about something that happened in 2010, which sounds amazing.

1:12:59You were approached by 0.0, an amazing production company. I know they made famously Anthony Bourdain's shows. They approached you because they wanted to do a show with you, which they did. You eventually did a deal to make a show called Brewmaster. Sam, you were the face of the show. It began airing on Discovery and didn't last for more than five or six episodes. What happened? It was a pretty good show. Right. You want to go? No, you go. You're the face of that show. Thanks. You're right. Right, 0.0, beautiful storytellers and Anthony Bourdain, an amazing inspiration. And so they did an amazing job, and we were really proud of the show that we made, kind of celebrating this blossoming global craft brewing movement.

1:13:46And then the show started airing, and Discovery's offices are actually right down the road from us in D.C., and they came and watched it with us. And I'll be careful here, and I won't say the name of one of the international brewing conglomerates, decided they were going to make custom ads to run during our show. And Mariah, our queen of social media, and I said, well, I guess we can't stop you from having them as advertisers. But when our fans talk about that, we're going to have a normal conversation about how we feel about that and how they feel about that. And sure enough, after that first episode, the interwebs was a chatter.

1:14:23And we said, yep, that's not an indie craft brewery. It's trying to look like one. And then like within two weeks, the executives at the network are saying, oh, a major beer brand is pulling their advertising unless we stop running your show. And to Anthony Bourdain's credit, he jumped on his own social and let people know. He started talking about this. Yeah. Yeah. He was like big beer killed this show. But kind of, I mean, I'm not trying to take their side, but big beer companies saw that the craft beer revolution was well underway. And so they were making all these, they would just throw Brooklyn or some cool word into a beer, but it was really made by like Budweiser and by Anheuser-Busch and Coors, right?

1:15:04Yeah, there was a good amount of that going on. Hey, nothing wrong with it. They're trying to make money too. And if the beer's not bad and well-branded, okay, more power to them. And that when I mentioned that we're living in this great moment where this community of sort of misfits found each other, we actually do have a real home, which is we have a trade group called the Brewers Association. And so as craft beer became this movement that left the margins and came towards the center, we saw these international breweries making beers and selling them as if they came from small local indie breweries.

1:15:41So our trade group came together and I was on the board along with Jim Cook and Ken Grossman and Kim Jordan. Now you're talking about everyone's been on How I Built This, all the beer brewers. You got good taste, guy. You got good taste. And so a bunch of us, you know, recognize that we needed to come up with a definition of a true independent American craft brewery. So essentially it means if you're over 3 million barrels or more than 25 % owned by a brewery that's over 3 million barrels, you can't use our trade group's seal that says you're an indie craft brewery. And 3 million barrels sounds like a lot until you put it in the context of market share.

1:16:19And that means, you know, you're less than, you know, like a 5 % or 4 % or even less. Hey, Sam, you said 3 million a couple of times, but isn't it actually 6? Yeah, I think it is. Just fact checking you. Thank you for fact checking me, honey. But it's very European, right? Like obviously champagne. You can't must come from champagne. Parma, ham, Parmesan. And so this is a version of that. It's like saying, hey, if you want to call yourself a craft brewery, but there's no real legislation backing that, right? Like a big multinational company can brew something and call it craft beer. They may not have your seal of approval on it, but they can still call it craft beer.

1:17:01Right. And we're up against these international conglomerates. So that's why these smaller businesses really need this definition of what our businesses are like. And then really beers, you know, the beauty's in the eye of the beer holder. And I guess it's up to the consumer to say, I give a shit about that definition or I don't. All right. You get to, I mean, I think at a certain point, you were like within the top 10 craft brewers in the US, probably by 2018. So is that about right? Sound about right? It does. And May 9th, 2019, announcement comes out, you're being acquired as described as a merger with the Boston Beer Company, makers of Sam Adams, that you would become part of this bigger company.

1:17:52Help me understand why this was a good decision. I mean, there was going to be money involved, but you were doing great on your own. Why did you feel like it was a better decision to merge with the biggest force in craft beer? So I was on the board with Jim Cook at the Brewers Association for over a decade, and I would see Jim at his booth at the Great American Beer Fest, working his ass off serving the beer or listen to him on a radio commercial talking about the Reinheitsgebot and the purity of the brewing. So I've always admired him before we were friends. And then around 10 or 12 years ago, we did our first collaborative beer with Sam Adams.

1:18:36And I remember calling down to Delaware and talking to Mariah. I was like, oh my God, now I've met other people from Sam Adams. And they remind me a lot of our coworkers. They're fun, they're passionate, they're creative. They want to win in the marketplace. And so at some point in our journey, we just started looking at our companies and our values and saw that our values were very complementary, but also our portfolios. Because Boston Beer Company, as Jim and the co-workers built it, yes, it had Sam Adams, the number one craft lager in America, but it also had Angry Orchard, the number one cider in America.

1:19:11It had tea, it had seltzer, whereas Dogfish had hoppy ales, it had sours, it had distilled spirits, our canned cocktails as well, which is now, you know, the fastest growing category and the fastest growing part of Dogfish Head's business. And the values and sort of that portfolio drove Mariah and I's decision to do the merger. Well, let me ask you about, because this is important. A lot of people listening, right, they have companies, they get to a point where they have to decide, we take this fork or that fork. And one fork could be, we stay independent, like Gary and Kit Erickson, Cliff Bar, they stayed independent, they continued to grow.

1:19:47But you could also take that fork and it could be a bad decision, right? The market changes, things happen, it can be scary. Yeah. And what we were also seeing as an independent craft brewery is that we looked around and we were one of the few independent midsize craft breweries left. A lot of the big multinational breweries had been buying up a lot of our peers. So we were like, okay, well, we can be independent, but we're at this really awkward, almost teenage size where we're not fully national, like really deep nationally. And we're too big to be just local, you know, and we're independent.

1:20:27And all of our peers are now not independent. Not all of them, I would say the majority, maybe 80%. But it is incredible that this thing that you really didn't need that much money to start out with turned into a deal that went for$300 million to Boston Beer Company. I mean, I'm sure that had you thought about that in 1995, you would have thought that's going to be an amazing outcome. But you couldn't have imagined that you would build a brand worth$300 million. That was not part of the original business plan. And like, honestly, if we pulled into our brewery like I did yesterday in Milton, Delaware, and the big tanks that hold 10 ,000 cases of beer were just filled with 60-minute, I would feel like we failed in our - Is this still your best seller, by the way?

1:21:1260-minute IPA? 60-minute IPA is still our best seller, but what I'm most proud of is we come into this brewery that has some national scale and the tanks are still filled mostly with beers that have sea salt and limes and monk fruit and pumpkin. We're just brewing them at scale. So the community that we built, like from the smallest brewery in the country in Delaware, that's the most rewarding part of it. All right. There was pushback. Okay. Anybody who's seen Portlandia knows what that means. Right. Anytime the band goes from playing the indie club to the stadium, they're sellouts. What? You're collaborating with Elton John and Coldplay?

1:21:53How could you do that? You're not cool anymore. especially because you know you guys were you know you got this punk rock aesthetic you have a brand called pumpkin ale it's a punk pumpkins on the thing and there's an aesthetic you know kind of fighting against the man the big guys and now you're part of a big company and there were people who were like you guys sold out did you care when you heard that did that sting or were you like no those people just don't understand oh of course we cared but we also expected it And we hoped that over time they would see that the way we're operating, the partners that we're choosing, do still fit into the dogfish that they know and loved.

1:22:34And for those who that merger was a problem with, we had to earn it back. And I hope that we've done that. But the drinkers have to say. And thankfully now in the world of social media, a lot of that sentiment is quantifiable. Also, as we went into the merger, we knew, of course, the smaller of the entities that merges is always going to take, you know, more of the arrows for the bigger. And so we knew monitoring our social channels that the sentiment would be more negative for us. But it was up to us to continue that real dialogue with our fans to say, no, you know, we're still doing what we're doing in Delaware.

1:23:10We're adding jobs, not taking jobs away, investing in the community and had those conversations. conversations. And soon enough, we could see that sort of uptick in positive sentiment back into our world. So it takes time and it kind of, you have to put your money where your mouth is and never really let the tail of inspiration be wagged, you know, by the dog of money, if that's how you say it. So, all right, now you are working as part of this bigger company. And I'm going to make you uncomfortable here. This is the uncomfortable part of the show. There are a few others, but you both, I mean, this made you very rich.

1:23:48You have a lot of money. Does that mean anything practically to your life? Does it change anything about the way you live your life? I would say no. And I mean, you know, pre-merger, thanks to the hard work that we've put in and our coworkers have put in and a fair amount of luck, we were already, we made a good living. so nothing really about the merger moment other than the scale of the dollars has changed how we live our lives and we know how lucky we are to be able to say that but we also know that we love to get up and do the work we've done for 27 years today just as much as we did when we were fighting to be one of the smallest breweries and not just the smallest brewery in the country all right so sam you answered my luck or skill question thank you for preempting it I appreciate it.

1:24:40Can you tell we're avid listeners? Mariah, what do you think? I mean, I have my take on your story because, I mean, the fact that you met in the cafeteria when you were 15 or something, you know, and that you're still together takes hard work, too. But I think there's an element of luck there. I don't know. What do you think? What do you attribute the success of this business to? Oh, I don't think it can be either. Or I think there was a lot of hard work, different hard work along the way. But there's so much that we've talked about today that is like, and then we had this amazing opportunity.

1:25:11And then this really cool thing happened. So I think the luck kind of came to us because we were looking for it. You know, we didn't pass by opportunities that in hindsight were really amazing, lucky opportunities that we had. I'll say, you know, I go for a paddleboard or a bike ride pretty much every morning to earn my beer calories. And when I get all the way out, whether it's on water or on a bike trail, I always kind of say the same mantra, which is thank you for this beautiful day. Thank you for this beautiful place. Thank you for my beautiful life. And thank you for my beautiful wife. And that is from my days of being a pretty, you know, rebellious teenager, not knowing where things would go.

1:25:56The biggest part of luck for me was meeting Mariah. That's Sam and Mariah Calagione Founders of Dogfish Head Craft Brewery Is there anything like totally off limits When it comes to flavoring beers? Like I don't know like would you use like raw tuna Or I don't know like Well we've used human saliva guy You gotta come back the next time we do our chicha beer We chewed the corn and that was a good one I don't think I could drink human saliva beer I just don't think I could do it It's sold out It's sold out, wow We boil it. We boil it. Spit happens.

1:26:59Neva Grant with research help from Catherine Seifer. Our production staff also includes Carla Estevez, JC Howard, John Isabella, Chris Messini, Sam Paulson, Carrie Thompson, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This. If you like How I Built This, you can listen early and ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Prime members can listen ad-free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey. No one knows your business better than you. So who better to create your website than, well, you?

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