Hungry Start-up Strategy: Creating New Ventures with Limited Resources and Unlimited Vision - Softcover

Cohan, Peter S.

Softcover

ISBN 10: 160994528X ISBN 13: 9781609945282

Publisher: Berrett-Koehler Publishers, 2012

Synopsis

Entrepreneurs are hungry. But it’s not just because they’re living on ramen and adrenaline. Peter Cohan has found they’re driven by a hunger to create a working world in which they want to live—something they have to do without money or staff. No business strategy guide has addressed this unique combination of aspirations and challenges—until now.

Cohan focuses on six key start-up choices—setting goals, picking markets, raising capital, building teams, gaining market share, and adapting to change—explaining how and why start-ups must make very different choices than established companies. For each area, he provides a decision-making approach and lively case studies of what actual entrepreneurs have done to cook up a thriving business from scratch.

About this title

About the Author:

Peter S. Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm that has conducted 150 consulting projects and invested in six private companies, three of which were sold for $2 billion. He blogs on start-ups for Forbes and Entrepreneur magazines and teaches strategy at Babson College.

Excerpt. © Reprinted by permission. All rights reserved.:

INTRODUCTION
THERE ARE PLENTY of reasons not to start a company. Here are just four:
Odds are good that you will fail. As an investor in private companies, I have repeatedly been told that a venture capitalist is thought to have a successful track record with one big success out of ten bets. I was considered unusually successful because only half of the ones in which I invested went out of business.
If you, friends, family, or others invest money in the start-up, chances are that the money will be lost. A corollary of the high odds of start-up failure is that any money invested in the start-up is likely to be spent without generating a return for investors. Unless you do a good job of preparing investors for this, you may damage important relationships when your start-up goes down.
You may not have what it takes to be an entrepreneur. Considerable research has been conducted on the traits of a successful entrepreneur. But as a very small-scale entrepreneur myself, and one who has interviewed hundreds of others over the years—either for my research or to decide whether to invest—I have noticed that successful entrepreneurs seem to share several common characteristics (Chapter 9, Resources, offers more about that).
Your reason to start the company may not be good enough. Based on my investing experience, I have noticed that people sometimes can’t say why they are starting a company. In at least one case, a start-up failed because the CEO realized that he was not really very interested in the product the company was trying to build. As a result, the company floundered until it ran out of money. Given the long hours and low pay required to get a start-up off the ground, be sure to have a well-thought-out and deeply felt reason for starting your company.
What are some concrete reasons to start a company? Most commonly, people start companies to capture what they perceive as an irresistible opportunity or to solve a vexing problem; the entrepreneur often assumes that if he can come up with a workable product, then enough other people will buy it to make the company grow.
Once you figure out a good reason to start the company, you need to make six key choices to turn your vision into a viable business. To illustrate these choices, let’s look at the case of BrewDog.
James Watt and Martin Dickie, a pair of Fraserburgh, Scotland, twenty-somethings, liked to brew beer. There must be hundreds if not thousands of home beer brewers around the world. But Watt and Dickie were different. They thought it would be fun to try to turn their hobby into a real business.
By May 2012, BrewDog was a successful public company that provided a world in which the co-founders wanted to work, while also feeding customers, employees, suppliers, partners, and shareholders with custom-cooked meals that satisfied their distinctive cravings.
My interview with co-founder and captain, James Watt, reveals how.
Why did you and your co-founder start BrewDog?
BrewDog’s co-founders started the company because they were bored with their conventional jobs, disliked conventional beer and the conventional corporate cultures they represented, and wanted to do something they loved.
As Watt said, “The idea to start our own brewery certainly wasn’t something we consciously set out to do.7
“I guess like any good idea it just had this natural flow about it that … kept rolling and has never really stopped. BrewDog officially began in April 2007 but it was some months before that, when [Martin and I] were having a beer that BrewDog was ‘born.’ The subject of monotony and the fact that all supermarket or big brand beers taste the same was the topic of conversation.8
“[With Martin] having just finished a degree in brewing, beer often took precedence in our conversations, but this time words became actions and we decided to try and create our own beer as a means of remedying the stuffy ales and fizzy yellow lagers that had come to dominate the UK drinks market.9
“That evening we set up a makeshift and pretty sketchy looking brewery in Martin’s garage and created the first batch of what has now become known the world over as Punk IPA.”10
Their next move was to see if anyone in the world would like what they had brewed. Watt continued, “From here we took our pilot beer to a series of open tastings and—by chance—were discovered by the late beer guru Michael Jackson at an event in Glasgow. Upon tasting our beer, Michael told us to quit our jobs and go into brewing fulltime. This is exactly what we did.”11
Their next challenge, with very little money and difficult access to more, was to build a brewery big enough to meet that demand. As Watt explained, “Both only 24 years old, we leased a building, got some scary bank loans, and poured our heart, soul, and life savings into a fledgling business we weren’t even sure would take off.”12
“BrewDog started with only $48,000 [bank loan] so the first year involved living, eating, and sleeping at the brewery—a drafty warehouse on Fraserburgh’s coastline. Exposed to the elements and running short on funds, Martin and I often worked twenty-hour shifts, … to stay afloat but also to stay warm.”13
They were delighted to learn that through a combination of media savvy and brewing skill, they were generating a wave of popularity. Watt pointed out, “Within a year, there was already a buzz beginning to form around our beers, a media buzz that was starting to brand us as a scourge to society with our ‘reckless and irresponsible’ approach to brewing. The same buzz caused other people to see our beers as wildly innovative, contemporary, and making progressive changes and twists to long outmoded classic beer styles. Many people are still making their mind up over which brush to tar us with.”14
Had you previously worked for other companies?
Both BrewDog co-founders had earned university degrees and gone to work at conventional firms. But for different reasons, they did not feel that they fit.
Dickie seems to have gotten more benefit from his education than Watt. As Watt explained, “Martin and I had both been to university in the years before BrewDog’s conception and … studied very different subjects. I, for example, [became] bogged down in the rather tedious world of law while Martin … pursued brewing and consequently was working at a number of different breweries in England. After graduating [I] managed to get a place at a law firm but within two weeks [I] walked out.”15
If so, what did you like about working there? What frustrated you about it?
Watt’s revulsion with law was visceral and he quit his job quickly. He said, “Law—in a word—is dull and there was a big part of me that totally panicked thinking ‘f*ck is this it?’ The last thing I wanted to do with the next forty years of my life was to sit behind a desk, sorting out paperwork and other people’s problems, constrained by a nine-to-five and a smart casual wardrobe. When I quit I didn’t know what I would do, but literally a week later Martin and I started experimenting with beer, so I wasn’t stuck watching daytime TV for long.”16
What were the factors that led you to decide to turn your hobby—home brewing beer—into a business?
Watt and Dickie founded BrewDog because they were passionate about it and they thought the consequences of failure were minimal.
Watt said, “The opportunity to do something both Martin and I were genuinely passionate about was the main driving factor. Passion, drive, and determination are the key ingredients when starting any business, so it was just as well we felt that way about beer.17
“We also wanted to see if we could make a change. Martin and I were both in the perfect position to take that gamble—young enough and stupid enough to take big risks which—should they fail—wouldn’t change our lives too dramatically.”18
They found out in retrospect that there had been a big opportunity, but they did not have any idea it would be so significant when they decided to launch BrewDog. According to Watt, “Even now I’m surprised our business managed to stay afloat and [has] achieved some incredible things—exporting to over twenty-seven countries, being stocked in the UK’s largest supermarkets, and having 1,300 shareholders invest in our brewery because they share in our vision, to name but a few.”19
When you decided to start the company, what were the most important values you wanted to represent in your product and your relationships with others?
BrewDog is driven by a passion to create good-tasting beer in a very different way from its corporate brewer competitors.
As Watt explained, “Passion is the key value—we want people who drink our beer to get a sense that it’s been produced by people who genuinely love beer. As the old BrewDog adage goes—‘we’re selfish because we only create beers we like.’ If you aren’t 100 percent interested or committed to your product then you’re setting yourself up for a fall.”20
“BrewDog is also the antithesis of corporate culture. Our staff aren’t so much staff but more like family—dogs included—so it’s pretty difficult to implement any kind of regulation when your employees are friends and your office is essentially a 24/7 parlor of chaos.”21
Nevertheless, the founders needed procedures to help manage their growth. As Watt explained, “That said, it’s far from a frat party in a brewery. The business is growing so quickly that we can often barely keep up in terms of the number of people we need as well as the internal procedure and infrastructure that are key to keep the whole thing from falling down around us.22
“The growth of BrewDog means the rest of the team and I spend a lot of time putting out ...

About this edition

• Publisher: Berrett-Koehler Publishers
• Publication date: 2012
• ISBN 10: 160994528X
• ISBN 13: 9781609945282
• Binding: Paperback
• Edition number: 1
• Number of pages: 264