Daniel Lanigan, CEO, Lord Hobo Brewing Company | Talks at Google

Daniel Lanigan, CEO, Lord Hobo Brewing Company | Talks at Google


[MUSIC PLAYING] DANIEL LANIGAN: So my
name is Daniel Lanigan. I am the CEO and founder of
Lord Hobo Brewing Company, as well as a half
dozen other craft beer bars over the last 15 years. I’m titling this talk today
Lord Hobo Brewing Company and the fairytale towards the
first billion dollars, OK? I’m going to tell you a little
bit about my background. Then we’re going to dive
into the brewery itself and get into a little
bit of our culture and why we’re the fastest
growing brewery in the United States, I think. I have some ideas why we are. I’m open to other
interpretations. So briefly, I could speak about
beer and the state of craft beer and the nuances of
it and flavor profiles and the bubble
bursting and hops, and everything else that’s
happening in the industry. I’ve been doing this
for my whole adult life. I could talk about
this for days. We don’t have that time. So I’m going to try to
slam through a few stories and core principles, and
then give you guys some time to talk, answer some questions. But there’s a lot to cover,
and 15 years of my experience and trying to summarize
that in 27 minutes or less. So very quickly, 15 years ago,
I opened up a craft beer bar at a college town
at UMass Amherst. I was 26, and I
knew that I didn’t have any skills or
a college degree or rich parents
or anything, so I had to figure out a way to
develop some long-term income. And I didn’t want to be
a bartender in my 70s. No offense to
70-year-old bartenders, but I just wanted to
have a way to retire. And so I wanted to
open up my own place. I wanted to be my own boss. And so I raised up a few
bucks from friends and family, sold off all my poetry
books, literally, and I cobbled
together enough money to buy a crappy dive bar on the
outskirts of a college town. And I was determined to make
it into a craft beer bar. And in 2002, there
wasn’t a lot of those. There wasn’t a craft beer bar
around Amherst for 100 miles. You had to come all
the way to Boston. And even back then it
was Redbones and Sunset. A couple of other stalwarts. A place in Albany called
Maharas, which is now gone. So at the time, everyone
thought I was crazy, because if you know
at UMass Amherst, it’s a pitcher and shot
for a dollar kind of town. Every bar caters to
college students. And there was really nobody
there, fortunately for me, catering to adults
and grad students. And UMass Amherst area
has a ton of those people. So we opened up with $5
pints of 9% IPA and beers no one had ever heard of before. And fortunately for
me, we got crushed. Day 1, place was
packed, and day 2, place was packed, and kept
going like that. And we became sort of
an oasis for people. And I think I probably
could have sold Rumple Minze and Jagermeister, and we
still would have been packed. It’s just we were catered
to an older audience, a more sophisticated
audience, and there was just nobody else doing that. We just happened to sell
a lot of craft beer, and that really worked for us. So I was 26. I was making more
money than I would ever think I would ever
make in my life, and I decided to
open another place. And that was sort
of a trend I did where sort of a serial
entrepreneur at heart, and I like to think that
I make good decisions. And I say to people
all the time, like, the best deals you ever
do are the ones you say no to. But I still did some dumb deals. And so I opened up a place
Northampton, big restaurant, and I went from, like,
working 25 hours a week, making tons of money, to
working 80 hours a week and making just 10% more money. And so it wasn’t
a very good idea. And I did that for a few
years, and then sold them both. I wanted to go back to Boston
and play with the big boys and have the craft
beer bar in Boston. At the time, the Public
House was getting started, Deep Ellum was getting started. And I had a lot of
reverence for those places and I thought well
in 2006 we won Best Beer Bar in the country, But we
were in the middle of nowhere. So I sold them all, came
to Boston, determined to open up a place, and that’s
where we opened up Lord Hobo. And Lord Hobo turned eight
years old this week on Monday. So eight years in the
restaurant business, long time, so it’s pretty cool to
have that kind of legacy. And we actually
feel like we’re part of the old part of
Cambridge, because I feel like since I started
talking a few minutes ago, there’s probably been
two restaurants opening in Cambridge. So to be able to last that long
and to create sort of a legacy has been really important
and fortunate and even lucky. So from there, I
opened up a place in Baltimore called Alewife, a
place in Queens called Alewife. I’m part of a couple other
bars in New York City that are all craft beer-focused. I have invested in a bar in
Brussels called Moeder Lambic. It’s probably the
most important– arguably the most important
beer bar in all of Europe. And so craft beer has been
my dominant part of my life, for better or worse, you know? It’s a good lifestyle. It’s not great for your body. There are craft beer bar
owners who are thin, I think. But I don’t know any, you know. [LAUGHTER] AUDIENCE: Are you drinking that? DANIEL LANIGAN: What
the fuck’s going on? [LAUGHTER] Shit. I’m not supposed to swear. Sorry. There’s an office pool at
the office for how many times I say the F word today. So I’ve been paying attention
to the industry for a long time. I’ve been selling
things by hand, convincing people who are
curious and not convinced, and convincing people that craft
beer and the quality of craft beer is the way to go. And by doing it so passionately
for a really long time, and visiting breweries,
and taking staff to Europe, and really just pushing
the envelope as hard as I could to learn as
much as I could about, what is craft beer,
who drinks it, and why? And one of our core philosophies
of the brewery is to us, beer is the most affordable
luxury item on Earth. There’s no Saudi prince
that can buy a better beer than you and I can buy. The best beers in the world
are $6 or $8, or maybe $10. Maybe a rare Belgian
bottle is $25 bucks. But when you do down
on the street, when you pay $10 for a
pint at Lord Hobo, you’re getting a
world-class offering. You know, you can’t say that
about yachts or wine or even steaks or homes
or cars, whatever. There’s always somebody who
can buy a better one than you can buy, except for beer. So the difference between
a $4 pint and a $10 pint is astronomical in
the sense of value. And you can’t get that
in any other field. Even coffee, I think
you can buy coffee beans that, like, monkeys shit
through or something like that, and it’s like $200 a pound. So there is a coffee bean that
a Saudi prince can buy that you cannot buy. But with beer, it’s an
affordable luxury item. So we’ve been pushing that as
one of our core principles. So when I was sort of looking
at the landscape of things and saying, look, I’m kind
of tired of restaurants, the restaurants are not
a real growth industry, the problem with them is
once your building is full, there’s no room for growth. So if we’re slammed
seven nights a week, we can’t knock down
the walls or go outside or go down the street
or go to the next state. Unless you want to
open– unless you want to operate 40 restaurants,
which I don’t want to do. So I thought, I’ve got to
get into a growth industry. I’m watching my friends,
Sam from [INAUDIBLE],, Greg from Stone who I met very
early on in my career. They’ve worked as
hard as I have. Maybe 5% harder, maybe not. But they’re worth hundreds
of millions of dollars. I work just as
hard as those guys, and I am not worth a
fraction of 1% of that. And so I’m like, what
am I doing wrong here? So I looked at the landscape
and thought, at this point– this is four years ago
now, so the brewery’s two and a half years old. Four years ago I
said, the top 10 IPAs in New England that
everyone’s going crazy for are all commercially unavailable
on a day-to-day basis. You’ve got to know somebody,
wait in line, trade for it, paid too much for it on eBay. I thought, why is
nobody scaling this? If everybody’s waiting
in line two hours for a four-pack
that’s $20 bucks, why doesn’t someone
build a bigger brewery? And I thought about
that for a long time, and I thought, if somebody
could build world-class IPAs and stick them on every
shelf, we would crush it. And so that’s what
I set out to do. I raised a bunch of money. People like being
part of breweries more than they like being
part of restaurants. There’s something sort of
tactile and sexy and romantic about it. So it was much easier to
raise money for that reason. So I raised a bunch of
money, and I went out looking for a building. And I wanted to be
in Boston proper. I’m a Bostonian. I’m really proud of that. I love the city. I’ve been living
here for a long time. I’ll always have a home here. I couldn’t find a building
that suited my needs. So I went further afield
and ended up in Woburn. And it was my 24th or 25th
building in a 12-month period that I saw. And I walked in, and
I had to really keep a poker face, because I knew
immediately that this was it. It was 47,000 square feet,
had tons of infrastructure. It had cranes and vestibules,
bathrooms, fire sprinkler systems. Things that you
don’t think about that you end up
having to pay for. It just had all the
guts that were there. All we needed to do
was add equipment. The problem is the rent on
a 47,000-square-foot place– even that $7.25 a square foot,
which is a steal relative to Boston, I was looking at
$65 bucks a foot some places– was still $350,000 a year
before taxes and insurance. So you’re looking at
$40,000-plus a month in rent for a startup which
has no revenue. And on top of that, I
was interviewing a person who ended up who is now my COO. And he said, man. To do what you want to do with
this ambition, you need a team. I was like, you don’t know
what you’re talking about. I’ve been doing all
this stuff myself. Well, he was really correct. And so we’ve been carrying– you know, we as a startup
brewery, we had a CEO, we had a CFO, we had
a CMO, we had an CEO. Carrying a lot of
salary for a startup brewery that has zero revenue
and $40,000 a month rent due. And it took us 12 months
to build the place. So we had a half
million dollars of rent due before we even
opened, plus salaries. So it was an ambitious
project for sure, and it could have
been a disaster. Why wasn’t it a disaster? I think it’s mostly
because we understood what the opportunity was, what
the void in the marketplace was. We knew that people want
these New England IPAs. They want them on every shelf. They don’t really
want to wait in line. Some people like it. Some people are masochists. They like the ritual. They like to keep the kids in
the car for two hours crying so Dad can get his four-pack. [LAUGHTER] I see you out there. [LAUGHTER] And so we’ve just filled a void. And we opened June 19 of 2015. We In our first 12 months, we
sold 9,000 barrels of beer. And at that point– I think it’s still
true– no one’s ever sold that much beer
in their first year as an independent craft brewery. We did 3,000 in ’15 total
from June to January 1. We did 15,400 last year. We’ll do about 32,000 this year. So to put that in
perspective, there are roughly 6,000 breweries
in operation in the US, and we are just about 100th. 102, 99, something like that. So we leapfrogged
5,900 breweries in two and a half years,
which is remarkable. By anyone’s metric,
it’s a massive success. And we’re all– there’s a
bunch of us in the room here. So it’s extraordinary
what’s happened. And we only have four beers. And we only have– I mean, let me make
sure that’s true. [LAUGHTER] We are now sold in 14 states. We just launched
four in eight weeks. It was frantic. Pretty stupid, but there’s a
real sort of a blackout period for launching around here. Basically, November,
December, distributors don’t want to talk to you
because they’re all gearing up for Christmas. January is the slowest
part of the year. It’s when everyone kind
of catches their breath. We didn’t want to have
a blackout period. We needed to sell more beer. So we can do about 200,000
barrels in our building. I said that before, we’ll
do about 32,000 this year. We have room to grow 7x
from where we are right now. And at some point, you know,
if we approach that capacity, we will obviously find another
building, which we just did, actually. We just bought a building across
the street, 18,000 square feet, because it was available. I knew that when we
needed it in two years, it probably wouldn’t
be available, so we grabbed it now. So we’ve always
been trying to be aggressive with our
opportunity and our capacity. And so the typical
brewery constraint, we see it literally hundreds and
hundreds of times, is people– they don’t have enough cash. They don’t have
enough credibility. They don’t have
enough customers. But they always go too small. They go into 4,000 square feet. They have a five-barrel system. To put it in perspective,
we have a 40-barrel. So our pots are bigger than a
lot of other breweries’ pots. And they sell out their
beer, and they don’t have enough capital to grow. They probably still have debt. They probably are waiting
for their neighbor to go out of
business so they can grab another 3,000 square feet. So even if you have wild
success and make wonderful beer, if you can’t grow,
you can’t scale it. Well, that’s not our
motto, obviously. Our motto is to go national. It’s working so far. Whether or not– I have some doubts
about whether or not we’ll ever see another national
craft brewery, literally meaning 40-plus states. Because right now, there’s
two or three breweries opening a day, and the
hyperlocal movement is definitely a real thing. So the challenge for us–
and it’s a fun challenge– the challenge of growth,
the challenge of the future is, how do we become relevant
as a Boston-based brewery to Seattle, or to Portland,
Oregon, or to Vancouver? That’s the sort of unique
challenge of our future. I feel like we’ll comfortably
get to 100,000 barrels, which is so extraordinary. We’d still be the top, I think,
probably 50 or so breweries in the country. But to get to our
capacity and beyond, and to get to the
fairytale trail to the billion
dollar company, we’re going to have to
figure out a way to become relevant to
Seattle, as an example. And when they have 200
other breweries there that are all making– well,
most of them making great beer, that’s the challenge, right? How can I get someone
in Seattle to say, I’m going to bypass these
125 local breweries to buy this brewery from Boston? So it’s possible. I just haven’t
figured it out yet. So you guys are all smart. Let me know if you
have any ideas. We do have a
significant advantage over a lot of other
breweries nationally, which we weren’t
really expecting. This was not some
clever ploy that we’re smarter than everybody else. Just happens to be happening. So the New England IPA is a
real now national phenomena. In the craft beer
circles, everybody wants or is attempting to make
or is making New England IPA. What is New England IPA? If anyone in the room
knows that answer, you’ll probably
be a billionaire. What is New England IPA? I couldn’t tell you. It’s a pretty random– everyone makes them a
little bit differently, but they have some similar– there are some characters
that are pretty much involved. They tend to be hazy,
they tend to be juicy, they tend to not have a
lot of residual bitterness. They tend to be almost turbid. Very tropical, floral aroma. And they don’t have– I mentioned they don’t have
a lot of residual bitterness. So the West Coast IPA typically
has a lot of malt sweetness and a lot of strong bitterness. The New England IPA is
basically all the good part of hops without the sweetness. And so The Alchemist,
Hill Farmstead, Trillium, Tree House, Lawson’s,
Fiddlehead, Maine, et cetera, all those
folks make what I would consider New England-style IPA. They just don’t make them
to leave New England. They make them to stay
within sometimes 30 miles of their home brewery. Trillium sells 15,000 barrels
a year out their front door. It’s incredible. Tree House is on pace to
sell 25,000 barrels out of their new facility
at their front door. Crazy talk. So we didn’t have the benefit
of baking the pie that long. We couldn’t take seven years to
become Tree House or Trillium like they have. I think trillium’s
five years old. We had to do it in a hurry. But the benefit
of that for us is right now, California, Oregon,
Washington, UK, Australia, they want New England
IPA, and we are literally the only brewery that’s scaling
and can actually get the beer to them fresh and beautiful. And we get to be first and
we get to define the style, because there’s a lot
of other breweries– like, there’s a million
breweries in California now finally making
New England-style IPA. But they’re not the same
as what we’re doing here, because they’re
getting typically beers that have been traded or sold. Maybe they’re six weeks old. Maybe they’re 12 weeks old. Maybe they’re totally oxidized. Maybe they’re not
in great shape. And maybe they’re
having a hard time dealing with that yeast strain
that’s particular to our style, or whatever the reason is. There’s not a lot of
breweries on the West Coast doing New England-style
IPAs with great success. We kind of have that
market cornered. And yet we are the only ones to
be able to produce it at scale. So fortunately for
us, we’re first. Not only are we first,
but there’s really nobody on our heels. I can’t see anybody
in the market right now that’s about to
scale up significantly, and who will come into the
market and challenge us. So we have this really
interesting sweet spot of opportunity that I
couldn’t have predicted. So we are really
strong in that way. Any questions so far? AUDIENCE: Quick question. So I guess I just don’t have
kind of a good feel for what distinguishes [INAUDIBLE]. DANIEL LANIGAN: The question
was about this gentleman likes Green Flash West Coast
IPA and he drinks our beer and likes that as
well, but doesn’t notice a lot of difference. And I will say there’s
a lot of difference. And I think it has any
drunk side by side and not in a vacuum. Because to me, Green
Flash West Coast is incredibly bitter and very
malty and very sticky and sweet and almost cloyingly so. And so it’s still enjoyable. I’ve drank a million Green
Flash West Coast IPAs. I tend not to
drink them anymore, because I’ve gotten
tired of that sort of cloying sweetness and
that really harsh bitterness. I like the beer to be
softer, more elegant. So our beers are deliberately
lower carbonated, for example. You don’t get a lot of
carbonic bite up front. To me, carbonic bite gets
in the way of flavor. So the reason why you
can’t chug a Coca-Cola is because the
carbonation’s so high. But if you ever had
a flat Coca-Cola, you could crush it, right? Our beers are lower– not that you would
want to, really. [LAUGHTER] So our beers are– so most breweries, they
package their cans at 2.8 PSI. Our is 2.5, right? So it’s about a 12%,
a 13% difference. So I think that’s a
noticeable difference so that what you
get with our beer is just smooth
flavor right away. Elegant, subtle,
balanced flavor. Whereas Green Flash,
to me, I have that, I get tons of carbonation,
which blinds me from the flavor. I have to wait for it. I have to let my mouth kind of
get over the assault it just had and get into the flavor. So if you had 10 West
Coast IPAs that are famous and 10 East Coast
IPAs that are famous, you would really see
a huge difference. AUDIENCE: So in terms of sort
of craft beers that have scaled, you know, there’s some
sort of obvious analogies. You know, Boston Beer Company,
Anchor, maybe Dogfish, you know, behind that, how do
you compare those models? DANIEL LANIGAN: Well, Boston
Beer, they are geniuses. They’ve never owned their own
brewery until this little 10 brewery in Jamaica Plain. They have contract-brewed
their beer in Cincinnati for 30 years. He’s a marketing genius. They have 63 flavors. He’s a billionaire. They’re a multibillion
dollar company. They’re publicly traded. You know the story there. Absolute genius. He was on TV in the
’80s, telling us– you know, a kid cooking beer
on his kitchen stove, saying, the big guys spill more beer
today that I brew in a year. And that was true back then. And now he’s the big
guy, which is amazing. So good for him. Dogfish Head– so Sam Adams
does 2.7 million barrels a year. Dogfish Head does about 300,000. And so Stone does about
360,000, Bell’s is 400,00. So those are the big guys
in the craft world now. New Belgium does a million. Sierra Nevada does
just over a million. So it’s no guarantee for us
to get to 100,000 or 200,000 because we are then becoming
a big boy in a very real way. So Dogfish Head has
never before experienced non-double digit growth. It’s always been
greater than 10%. A lot of times, much bigger
than– greater than 10%. This is the first
year or last year where they were single digits. And Sierra Nevada took a
step back at 6% last year. First year ever they
lost some market share instead of growing. So I look at that
challenge earlier being relevant on a national
level when you’re in California and I’m drinking in Boston. That’s the challenge that
those guys are facing now and the challenges that I’m
concerned about in the future. AUDIENCE: As an entrepreneur and
as a leader for your company, what other business
people or other companies do you find to be inspiring
maybe outside of your industry? DANIEL LANIGAN: That’s
a great question. So I spend a lot of
time watching TED Talks, and I’d been to a bunch of
Tony Robbins conferences. He’s great at– he’s got
one called business mastery. I think he’s better
at business than he is at personal development,
which is saying a lot, because he’s pretty good
at personal development. So walking through,
taking a tour here and looking at our office
space versus your office space, for example, you know, if it
was Larry and Sergey’s brewing company all those
years ago, I’d be curious to see what their
office space would looks like. [LAUGHTER] AUDIENCE: It would look
like yours now probably. [LAUGH] DANIEL LANIGAN: So we operate at
sort of two trains running side by side, and one of them is
a relatively mature train, and one of them is
relatively a startup. You know, we’re two
and a half years old. Four years ago, I moved
into that massive facility with me and my dog and
a little broken desk and a crappy Wi-Fi signal,
and that was it, you know? And now we have 65 employees and
we’ll do $25 million of revenue next year. And we’re really just
getting started, right? So there’s so much
to learn, and there’s so many ways to do this, right? So the model that The
Alchemist uses or Trillium uses is wildly successful. You know, Trillium prints cash. They just don’t have a
scalable model, right? So they’re probably
making more money than they ever dreamed about,
and they’re probably really, really happy people. I wouldn’t– I’m just not
personally satisfied with that. We’re constantly trying to
innovate and be thoughtful, and we have a lot of
transparency and openness. And sometimes it’s a
little bit too democratic. Sometimes there just
needs to be someone calling the shots sometimes. But for the most part, we
lean on other companies and how they do things well. And we also learn from
a lot of companies, how they do things poorly. And I love to learn
from people’s mistakes. I don’t want to make any. And thus far as a
four-year-old company, I don’t think we’ve made
any glaring mistakes. And I’m sure I’ll bite– eat those words
soon, but so far, we have a lot of smart people. You know, we have a
lot of people that are good at things I’m not good at. I am pretty self-aware,
and I don’t like to mess around with things
I’m not good at. So if I’m not good
at something, I just hire somebody who’s
better than me at it, and let them take
the reins on that. So I used to wear 74 hats. Then it was 30,
and then it was 12. And now I’m just steering
the big battleship. I’ve got a lot of people
doing really important things, working side by side with me. AUDIENCE: Can I ask
you one more question? DANIEL LANIGAN: Sure. AUDIENCE: I think
you said that you started this when you were 26. DANIEL LANIGAN: I started
in the industry at 26. AUDIENCE: At 26. Yeah. And you didn’t
graduate from college? DANIEL LANIGAN: I did not. AUDIENCE: What were you going
through between 20 and 26, and how did you– what kind of gave you
the inspiration that– I mean– DANIEL LANIGAN: Piles
of cocaine, you know? [LAUGHTER] AUDIENCE: This is recorded. You understand that? [LAUGHTER] OK. What were you going through
physically on the table? DANIEL LANIGAN: I understand. I understand. Literally piles. [LAUGHTER] From 20 to 20– so I
dropped out of school. I went to Northeastern
for a year. I wasn’t ready for college. I dropped out. And I worked in Boston. I was a courier. I worked at cafes. And I was adamant
about traveling. And I’d had a day that
changed my life forever. I met Allen Ginsberg. I went to a reading at
the Boston Public Library when I was 19, and that changed
my life completely forever. And I was obsessed
with literature and reading and traveling, and I
got really into the beat stuff. And I ended up moving to Mexico. I lived in San Cristobal de
las Casas for eight months because I could afford to
live there and be an artist. I was writing and reading. I was literally, like,
reading Shakespeare all day and then going to the cafe,
and then drinking 17 beers, and then going back. So I was mostly just traveling
and working to travel, traveling to work. Working 80 hours a week and
then saving up $3,000 grand. Then going off for six months
and staying in hostels, and that sort of thing. It was an incredible lifestyle. Every day was vibrant and
alive and euphoric and super exciting and optimistic. And I got really
freaked out that I had no money and no income
and no skill set and no future and no one to pay for me. So I had to open a business. AUDIENCE: You mentioned
being relevant in Seattle. What about internationally? I feel like American beer is
probably the best in the world now, whereas like 20
years ago, it wasn’t. But if I go to Europe now,
the beer’s not as good. So are you thinking about sort
of international expansion? DANIEL LANIGAN: For sure. Why would I expand
in the US when there’s three different
breweries opening a day? Why wouldn’t I go somewhere
else where there’s not a lot of competition? So we’re looking
squarely at Australia. I’m going to
Australia in January with the goal of doing
some significant vetting and seeing if we can actually
physically open up a monster facility there and try to
become the American craft brewery of Australia. It’s English speaking and
there’s 22 million people. They drink a lot
of beer per capita. They spend a lot
of money on beer. A six-pack of Brooklyn
lager in Australia is $38. So we’re looking to ship beer
there as soon as possible. Get some testers in the market. And it’s halfway
around the world, and it’s expensive and
difficult logistically, but it’s an open terrain in a
way that the US market is not. AUDIENCE: I would imagine
that you are, especially with your business
model, you’re really dependent on distributors. And you know, alcohol
distributors in Massachusetts are legendarily powerful. We hear a lot about pay to
play and all kinds of problems people have had with them. Now you’re dealing
presumably with distributors in other states as well, so
you’re getting, I would assume, a really good perspective on
the whole distributor scene. I’m wondering what
you can tell us in public here about the
challenges, shall we say, of working with distributors. How do you do it? How do you get your space with
all the competition out there? What’s it like to do that? DANIEL LANIGAN: That’s
a loaded question. [LAUGHTER] How much time do we have? Distributors are a necessary
part of the growth process. The partnerships are
really important to us. We do a tremendous amount
of vetting and research, and we have a lot
of other friends who own breweries who have
distributed it with those folks previously. So it’s pretty easy these
days to find a good one. Or the best of the worst, if
you want to look at it that way. If you want to
make a whole bunch of bloodless money,
passionless money, you open up a distributor. It’s great. You’re just a glorified
delivery service, and the margins are
insane, you know? So good for them. And we have no
control over that. We have a few distributor
partners in the room right now. And– [LAUGHTER] Yeah, their faces went
white once I said that. And so they charge
a massive market, but they also have a lot
of costs that we don’t see. So they’re a necessary
part of growth for sure for us especially,
because we don’t have the luxury of waiting
to build a unicorn that sort of bakes long enough where
people want to come to our door and wait all day for beer. So we need to grow,
and so we need to make good decisions
about our partnerships. And we have great
partners, truly. We have some– like I said,
some in the room right now. We Today was our ABP, which
is our Annual Budget Planning, I think, with our
distributor in New York State. So we just beat each
other up for four hours, and now we’re going to have a
beer, and we’ll figure it out. And then we’re like, hey. Sell more beer. And they’re like, no. No, you– no, no. And then we fight about
margin and we fight about spend and investment. And the end of the day, the
real problem ultimately– you’re talking about the
power struggle– is that they have franchise
law in their favor. So in order for us to
leave them if we’re dissatisfied with their
service, it’s very prohibitive. And that’s really the
crux of that issue. But as far as pay
to play and whatnot, I feel strongly that
if you make great beer, you’re not going
to get replaced. The people that are
complaining about pay to play is because they
make shitty beer, and someone came in and
took their draft line, took their spot on the shelf. So if you do your
job right, like, we don’t really worry
about anybody else. There’s enough room in Mass
for all these breweries to triple in size and crush it
and for us to still do really well. Craft brewing in general is
13% of the overall consumption of domestic products in the
United States and only 17% of dollars. We’re 0.0001% of that 13%. So for us to double, there’s
enough room for 50 or 60 or 100 breweries of our size
to also double and to still crush it, because we’re such
a small piece of the big pie. So I don’t get too
caught up in that stuff, because we’re just focusing
on doing our job really well, and we want to be the best
partner that that distributor has, period. Our goal is, how do we get
Remarkable Liquids in New York State to love us 1%, 10%, 100%
more than they love anybody else in their portfolio? That’s our job. We want to be profitable. We want to be fresh. We want to say, when the
beer’s available for pickup, it’s actually there. These guys send trucks to
places, and it’s like, oops. We’re not ready for you. Simple stuff like that. So our job is we take
care of our own house. we’re going to be just fine. AUDIENCE: So you attribute
a lot of your early growth or quick growth to
picking a larger floor space than a normal new
craft brewer might do. So then why did you choose
to do that in Boston and not somewhere that
has much cheaper rent? DANIEL LANIGAN: I
didn’t say I was the smartest guy in the room. [LAUGHTER] Because I have a lot of
Boston pride, and that’s important to me. I think if it was
just a money play, it was just a growth
play, we could have done this many other places. But our location is wonderful. We’re right in the
corner of 93 and 95. It’s the busiest intersection
of cars in all the Northeast. We have several hundred
thousand cars driving within a mile of us every day. We have 100 parking spots. We had 50,000 square feet,
now 18,000 more square feet across the street. So strategically, location-wise
for truck access and access to the city and a
talent pool also, like, we want to
pull smart people. You know, if I’m in
the middle of Vermont because I want cheap rent,
maybe the talent pool isn’t as strong as it is here. There’s a whole
bunch of factors, but mostly its proximity
to where I live. I live in the Seaport. I have a reverse commute. I drive north when everyone else
is going south, and vise versa. So I’ve grown to love Woburn. And I love our location,
and I love our building, and I wouldn’t go anywhere else. AUDIENCE: Thanks. AUDIENCE: So you’ve said how
there’s so many breweries opening every day, and there’s
so much room for all of you to expand. Do you think that’s
a sustainable growth? And in your opinion,
like, where do you see the industry being
in, like, five, 10 years, given all this growth? DANIEL LANIGAN:
Well, the good news is that there’s a
sort of proliferation of people that like to put
good things in their body. You know, if you had
told me 25 years ago that Whole Foods would be
as big as Whole Foods is, I would have said you’re crazy. But I sort of
equate craft moving to sort of the Whole
Foods movement. This is not a perfect
analogy, but there’s plenty of room for lots
of people to succeed. As I said, we’re only
13% of the volume. So 13 out of 100 beers chosen
every day in the United States is craft beer. If For us to get
to 20%, let’s say, that would mean every one of the
6,000 breweries in the United States would have to grow by 50%
in one year just to get to 20%. So there’s a lot of
negative articles written about the bubble bursting
in the future of craft and it just slowing down. And I don’t buy into that,
and I don’t worry about that. If we do our jobs right– you know, we’re
selling a lifestyle. We’re selling happiness. And we’re not just selling beer. We’re selling the idea that beer
is the most affordable luxury item on Earth. There’s value in this. Spend the extra couple
bucks on that four-pack Stop being a cheap person and
enjoy the value of it. And you don’t get hung
over the next day. You feel better about yourself. You enjoy the experience
that much better. It’s an incredible thing
that we have right now. And the difference in price
between the 13% of beer in the world and the other 83%– I’m sorry, in the
United States– is not a lot of dough. I mean, we’re happy to spend
$5 on a latte whatever. I’d rather spend $5 on
a good beer, you know? But most of the people
in this room can do both. So I’m not
particularly concerned about the future of craft. I am concerned about–
there’s a lot of folks who are really
passionate about beer, they’re passionate
about brewing, but they’re not necessarily
passionate about business. And that’s probably
where things are going to get a little murky,
because a lot of breweries don’t have the right team, the
right advisors, the right tax people, the right accountants,
the right attorneys. They have bad leases. They don’t have good
financial advisement. They don’t have good
relationships with their banks. Like, that’s the
real important stuff. There’s a lot of
good beer out there. There’s a lot of
bad beer out there. But there aren’t a
lot of great teams. And that’s more concern to
me than the proliferation of the number of breweries. I would say, though, if you
are planning a brewery now, you might be too late. [LAUGHTER] AUDIENCE: Cool. Thank you. AUDIENCE: All right. So it seems like
you didn’t really have much brewing experience
before you started the brewery. So like, how do you go
about making a beer? And especially if you don’t have
experience, like, it seems– I don’t know. Was it the people
that you hired? Or how did you just go
about finding a recipe and starting a brewery? And in terms of the
brewing actual beer. DANIEL LANIGAN: Yeah, so I’ve
never brewed a beer in my life, and now I never will, right? It’s too late. I literally have never
home brewed a beer. I have, I think, a
relatively advanced palate. I taste everything
really thoughtfully and have really passionately
for many, many years, and written a lot of notes. And I would say I have a
relatively advanced palate, and that translates to wine
and food and coffee and all these other things. So I write the recipes a
little bit differently. I described the end result and
I hired really talented people. I had a couple of
idiot savants who are just geniuses when
it comes to brewing beer. And we were able to sit
down and talk about, what do we want this beer to be? And here’s the 84
qualities of this beer. And it’s sort of the backwards
way that most breweries do it, but it’s sort of
creating the challenge and giving them the
answers to the questions, and letting them figure
out what the questions are. And that has been really
successful for us. It’s been really rewarding to
sit down and write this stuff out and talk about it, and
two weeks later, have someone come to me and say, taste this. And to have 84% of it
be spot on and just have a couple of
tweaks to make, it’s really a rewarding experience. But that’s the way we do it. I went to brewing school. I got whatever
certificate you get for going to brewing school. But I never actually brewed. I have a general, basic idea
of the science behind it. But mostly, I’m just
talking about my vocabulary was in line with the
vocabulary of my brewers. AUDIENCE: How do you look at the
trade-offs of kind of scaling distribution versus variety? You said you only have,
like, four beers right now. There’s a lot of other
kind of hot areas that are growing
right now with sours and bourbon barrel-aged beers. So how do you look at that? DANIEL LANIGAN: Well, you
used the word growing. I’m not sure if
that’s totally true. But for us, it’s been
out of necessity. So we have a big facility. We have a limited
number of tanks. And every time we
ordered more tanks than we thought
we would need, we filled them with the same orders
from the same beers we had. So by design, we only have a
small amount of core beers, but we would have liked to
have had a couple more by now. We just didn’t have the tanks. So tanks take six
months to make. We were cash flow
constrained for a while. We’re not anymore,
which is great. But we’ve never had a
night in our whole history where we had a tank
that was empty. We fill them up and
then we sell them. And I would love to have
two or three more products. Not 10 or 12, but two
or three more by now. We just physically haven’t–
we’ve had to make that decision. Like, we can short somebody in
Florida for a truckload of Boom Sauce and then have a truckload
of another beer to then spread out to our other territories. Just didn’t think that was
a good business decision. And it’s also
seasonality, timing. There’s a lot of factors
that go into that. So ultimately, we’re brewing
four new beers for 2018, and they’ll broaden the
portfolio basically to eight. And then we have a
10-barrel system. So remember earlier I said that
we have a 40-barrel system, which is a monster. So it’s not an
experimental system. It’s just too much beer to
produce to be messing around with things. So we got a 10-barrel
system, which is for our taproom, which we’re
expanding after Christmas. We’re building a
300-seat beer hall. And the 10-barrel will produce
beers that are available only in the taproom,
which’ll give people more of a reason to go there. But that’ll be sort of
our experimental system. So we have planned
for four more beers, and that’ll bring us
to eight core beers. And then we’ll have
sort of a rotational– whatever of the five
or six or 10 beers we have in the taproom
that everyone loves, that’ll help guide the
what’s the next beer going to be question. But we’re never going to have 30
beers in the market or anything like that, probably
because for us to go big when we launch a California
early next year, that’s a very competitive market. It’s kind of insane to go there. But it would be more insane
if we went there and asked every store owner to clear
off these three shelves and give us 15 SKUs here. It’s a lot more appropriate and
approachable if we say, look. We have four beers. I just need this much space. Surely you can get rid of
your dog in the building and put four SKUs on the shelf. So again, it’s a little
bit by design as well. Thanks, guys. [APPLAUSE]

7 thoughts on “Daniel Lanigan, CEO, Lord Hobo Brewing Company | Talks at Google”

  1. I think he is bluffing when it comes to his under performance in education. He knows mathematics and literature far better than any high school graduate.

  2. "If you're thinking of starting a brewery now, you might be too late…" That goes against everything you said before that. I'm confused. If craft only makes up13% of the US volume of beer sold, there's a TON of room for growth by converting schwill drinkers to craft drinkers.

  3. Awesome, I just did a review of Lord Hobo Brewing's Hobo Life session IPA A New England Juice Bomb… Link: https://www.youtube.com/watch?v=lRRRkHkExLU   Check it out. I received it in a beer trade…

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