REFLECTING ON THE LAST 8 YEARS OF OUR BEER JOURNEY SOMETIMES LEAVES ME WITH AN OVERWHELMING URGE TO LAUGH OUT LOUD LIKE A 2-YEAR-OLD SEEING A KANGAROO FOR THE FIRST TIME.
This weird feeling comes from sporadic memories of the milestones that we have achieved with Your Mates paired with the lack of celebration McGarry and I regretfully allow ourselves to soak in.
In the last 3 years, Your Mates has evolved from an amateur 2-man beer dream into one of Australia's most popular independent beer brands. As I have said, that feeling of uncontrollable joy comes unexpectedly, and when my senses are flooded with these emotions, I try to simmer in the moment for as long as possible.
Something that I am still working on is learning how to celebrate these wins. McGarry and I did not start this business to build it up and sell it. We have always had the urge to work for ourselves. We dreamed of waking up in the mornings to build and work on something that we are passionate about. We obviously talk frequently about new beers and upcoming parties, but that extravagant aspect of the business no longer brings with it the excitement that it once did. Sure, it’s great testing a new batch of our limited release sour at 10 o’clock on a Tuesday morning, but this kind of novelty has slowly worn off over time. I honestly get more kicks out of seeing our business develop and mature. More so, I love watching our team of mates professionally grow and develop themselves as our company expands with new problems to tackle on a daily basis.
Now, I am passionate about creating an amazing culture at Your Mates and making it an awesome place to work. It’s hard to find the time to undertake such a complex task but who wants to work in a stiff corporation with shaved faces and button up shirts? I know I didn’t sign up for that (unless they are Hawaiian shirts, of course). I have been spending a lot of time recently reflecting on our vision and what Your Mates Brewing Co.’ stands for. I think it’s sometimes easy to create a vision and write a mission statement on paper, but the real challenge is in executing these ideas when you have pressing responsibilities as a director of a medium sized business. Managing 50 employees in an extremely volatile industry in the current economic climate definitely has its challenges.
The Exit Strategy
When we started this rollercoaster journey, I was only 23 years old. The dream was real, but in reality, I had no idea of what I was getting myself into. Before you can crawl, our goal for years was to not sink, this was extremely tough. As time went on and our beer dream was coming to fruition, a question kept popping up - what's your exit strategy, boys?
The first time McGarry and I were asked that question, we were in a room full of 100 business VCs at a Sunshine Coast Pitch day. We had created a brand and had proven track sales which were growing at over 150% each year, but still with no profit to show for it. We needed capital to invest in our own manufacturing equipment in order to take our business to the next level. We had executed the presentation surprisingly well with our innovative solution to the beer consumer’s problem. That was until the Q&A segment...
Why would we have an exit strategy when we hadn't even built our own brewery yet? That question didn't make sense to me back then and honestly, it doesn't make sense to me now. Don't get me wrong, we fully understand the concept of building up businesses to sell. Drive revenue at all costs, limit expenses to build profit, negotiate and sell to the highest bidder without a thought of any repercussions to the future of the business and its workers, in order to receive the largest return on your investment possible. But why would we exit out of a business for which we have grinded out years of 90+ hour weeks? We had literally missed Christmases, family milestones, mates’ birthdays and even funerals to somehow juggle invoices and other business responsibilities to make ends meet.
We always pushed back on the questioning VC’s regarding our non-existent exit strategy with a reiteration of the Your Mates vision and a descriptive painting of our beer dream. Most of the time, this was replied with a silent dismissal or an arrogant smirk, like they were telling us, you boys don’t know what you’re doing.
After 6 months of this intense capital raising process, McGarry and I swore we would never partner with a venture capitalist to build our dream brewery. Those suited peanuts don’t appreciate or understand what Your Mates stand for. But were we joking ourselves to build a business out of passion with no real end game? The barriers to entering the FMCG beer industry are enormous and the competition just as brutal. How were we going to pull this off? This question was always thrown back into the dark abyss of my brain, pushed aside by a new daily business dilemma or a potential bankruptcy issue. Head down, bum up, McGarry.
A Shift in Perspective
In 2017, we aired on the Channel 10 episode of Shark Tank Blood, Sweat and Beers. If you haven’t watched the episode, you can check it out here. We didn't go on the show expecting to receive investment capital but it was awesome free publicity for our small Sunshine Coast beer brand. Here is a blog with 6 lessons we learned from pitching on the show.
After our episode on Shark Tank, we caught up with Steve Baxter and Glen Richards for a one hour mentorship session that they had promised us throughout the pitch. I treat everyone I meet with the same respect I’d expect to be treated with, and those two gentlemen were both extremely humbling and honest with their time. After 30 minutes of overlooking our business plan, the two agreed that the numbers stacked up and advised us to go as hard as possible. Don’t look back and don’t bloody discount the valuation for anyone.
We had another 30 minutes of Q&A and the question was itching away at me. Steve, how do you know when it’s the right time to exit?
The advice we received from Steve is something that has made a huge impact on the Your Mates direction and is something I repeat constantly to my peers, mentee groups and my employees. Steve asked me, “Mate, if you sell out for $10 million, what would you do?”
Now, if you personally know me, you know I am an adventureholic with a touch of ADHD (self diagnosed), and the answer was easy. I would buy the ultimate adventure boat, a Landcruiser and caravan and travel around Australia with my family. “Yup,” Steve replied, “treat yourself to a yacht as well and a couple of holiday houses, maybe. Reap the rewards of your hard work. But what will you do after that?”
I had never thought about life on the other side of the grind, let alone successfully selling out and being a multimillionaire. What would you do after you have everything you’ve ever wanted? I answered, “Well I’d probably start another business.”
“Exactly! You're an entrepreneur and it’s now in your DNA,” Steve agreed. “You will throw in a large chunk of your money into another startup business, spend months or years going over business plans and scrutinizing the financial viability of the project, a further couple of years building up a gun team to solve the consumer problem with your innovative product or service that you will have to cleverly market in whatever established or non-established industry is relevant. Pretty much, you will be starting over the exact same grinding process with a little bit of extra seed money, but no less risk than what was present in the first startup. Meanwhile, the successful business you sold 3 years earlier has continued to steadily grow by 10%-20% per annum and is producing some chunky little dividends for its shareholders.”
Steve has built up and sold a number of large telecommunication businesses including his sale of Pipe Networks to TPG Group for $373 million. His advice was to find a successful business idea that you are passionate about and employ a solid management team that you can trust to steer the ship in your absence.
It is one thing to have an instinctive feeling to grow a business from passion, and it is another thing to be given this advice from a fully flexed businessman like Steve Baxter. This statement from Steve literally cemented the Your Mates pathway for the future. Passion is why we started this business and passion is why we are going to continue it. The day I don’t love what I do will be the day I consider changing my direction. The statement rings as clearly as the day I heard it – make money doing what you love. It just makes sense.
Fulfilling the Vision
What is the Your Mates vision though? Well, it is defined by a multitude of things. It is a combination of goodwill gestures, fundamental principles, old school morals and a combination of Australian personality traits. We wanted to build a manufacturing business that is more than the process of brewing and selling beer. We wanted to build a brand that encapsulated what beer meant to the consumer and the positive impacts that beer has made in our lives. We wanted to make people feel the same way I did when I first drank good craft beer in my early 20's. The same feeling it gives me when I'm drinking it now in my early 30's as a family man. It’s the unexplainable feeling that tethers all beer drinkers together without any biased intentions. For myself and McGarry, this feeling is summed up in one word: mateship.
Ask yourself this, and I want you to really think about it. How would you personally define mateship and what experience first pops into your head? I hope that question took you to a few weird places. I know I get butterfly feelings in my stomach when I think deep about it, but also I find it hard not to chuckle thinking about the stupid memories of me and my mates and the weird sh*t we get up whilst celebrating life together, mostly after a couple of beers. That is what we wanted to create, a brand that inspires mateship.
Like I said, writing the vision is the easy bit. But how are two young, broke Queenslanders going to inspire the masses of macro beer drinkers to purchase our high-end premium product and engage with our brand? Honestly, it always came pretty naturally to us. We didn’t like to get caught up in what other beer brands were doing or trying to psychoanalyse ourselves and how our brand was fitting into the market. We just put the blinkers on and made the simple decision to be ourselves. If it didn't work out, well we had a blood crack. In 2013 at the beginning of it all, we wrote down what drinking beer meant to us – ‘We believe in the social element of drinking beer.’ It only took a few beers and some note scratchings to figure this out. Without realising how much this statement would mean to our business nearly a decade later, we have held this drunk scratching as a fundamental principle of our business.
Commandment 1: Your Mates exist to brew good beer for good mates and have a good time.
We believe in the social element of drinking beer. This statement is literally why we exist and is our guiding light through the hazards of the corporate world. I think it is vital to understand your personal principles and tie them into your business as soon as possible. It’s extremely easy to get caught up in the minefield of expert advice or misguided recommendations from peers. You can easily lose track of your vision and the reason you began the startup journey in the first place. It’s difficult for my longtime partner who has been with me since the beginning to fully understand the concept of my vision, let alone an external bystander. In the end, the whole point of starting a business is to produce profit. Brew beer, sell beer, and make profit – a pretty simple business model. But I believe the people who have that soulless business plan are the people who will fail over and over again, no matter what industry they are in. They may get lucky down the track, but at what cost or at whose expense? Now, when people approach me about the concept of opening a brewery business, I shout them a beer and tell them why they shouldn't. If you don’t absolutely love brewing beer or don’t have the capacity to grind out 80 hour weeks, I can guarantee you there are plenty of other ways you can go and invest $3 million to try and get a return on your investment.
We have come a long way since our inception as naive home brewers slapping up pool table competitions and garage parties with our mates. This year, I wrote down four founder goals for myself and McGarry to reflect on. These goals are the first things we read out at the beginning of our weekly Monday meeting – a little cringey but it helps.
- Good beer, good mates and good times: Make time for passion projects.
- Work life balance: Ensure we take 4 weeks of holidays and minimise working over 50 hours a week.
- Improve our Resources: Employ a management team and ensure every teammate has the tools they need to complete and improve their job duties.
- De-risk ourselves: Begin to treat ourselves as employees and pay ourselves appropriately.
You’d be shocked at how hard it has been to satisfy all four of these goals this year. From the outside, it probably looks like it’s all glitz and glamour, beers and fishing trips and good times. Don’t get me wrong. A lot of the time, that’s what it is. But as most startup business owners know, the state of flux is constant! The hardest thing I've found, and I know it is the same for McGarry, is to make time for passion projects. Sure, people always comment on how much I go camping, fishing or that I’m out and about all of the time. My reply is that I have the same weekends that most people have, I just love spending my time outside and being around people.
So what are our passion projects? When you’re passionate about your entire business and how it operates, it’s hard to not step back out of the trenches and distinguish the difference between these projects. As I said, I’m passionate about culture and I have been trying to remind myself lately that I can’t build culture sitting behind my desk all day. Last month, as McGarry and I quietly said cheers to our modest achievement of rolling our beer Larry into every Dan Murphy store in Australia, I had a sudden feeling of resentment towards our heads down, bum up ways. F*ck it mate! I'm taking Friday off and going up the beach, and whoever wants to come with me, I'm keen. So that was it, we posted it on our staff Facebook page and we soon had 26 confirmed teammates booked in for a trip up to Double Island Point, my favourite spot in the world.
That’s the type of staff we’ve hired, the kind who say yup, I’m keen on that, full of passion! Families and friends, beer trailers full of beer, beef briskets full of beef, fishing success and cricket regrets, tall yarns and short drinks through sunrises and sunsets - that’s the definition of good beers with good mates and good times. Check out the full video below. This was what I have decided I want my passion projects to be – travelling around our amazing backyard and inspiring mates to participate in life’s awesome moments. In the end, beer is always better enjoyed at the end of a fun-filled day in an epic location surrounded by mates.
I am more passionate now than I have ever been running a business. We are trying our hardest to marinate in as many celebratory wins as I can as well as working on our founder goals. I don't always wake up frothing with a crazy swing and jig in my stride. But every day, I am guaranteed that I will chat with at least one of my staff who is frothing on a marketing project or beer recipe they are working on and have just smashed their expectations out of the park. There is no doubt that come knock off time, I am leaving on a natural high like a proud dad gets when his son scores his first footy try. It's irresistible. That sh*t gets those butterflies going.
It’s barely been 3 years since we raised our capital and have established a solid business and we have been approached by a number of the VC’s that we pitched to asking if the offer is still on the table, when we would be exiting the company and for what value. I find it extremely hard to not smirk and chuckle in front of them. My common reply to these unknowingly naive businessmen usually leaves them a bit bewildered, “Why the f*ck would I sell my business? I own a bloody brewery mate!”
Passion before profit, always.
- Matt Hepburn