ºù«ÍÞÊÓƵ

Jeff YorkÌý 0:00 Ìý
I'm coming to you live from upslope Brewing Company in lovely ºù«ÍÞÊÓƵ, Colorado. This is creative distillation where we distill entrepreneurial research into actionable insights. My name is Jeff York, research director at the Deming Center for Entrepreneurship at the Leeds School of Business at the University of Colorado in ºù«ÍÞÊÓƵ, as always joined by my co host. Hi, I'm

Brad WernerÌý 0:34 Ìý
Brad Warner. I am an entrepreneur. But I'm also the teaching director at the Deming center. And I am thrilled to be here tonight.

Jeff YorkÌý 0:41 Ìý
I am too this is a first for crib distillation. We have a live audience and just to prove it, let's hear from them. Yeah, that's a boy, I was not nervous until just now Brett. Now I'm really nervous time

Brad WernerÌý 0:54 Ìý
is gonna love this.

Jeff YorkÌý 0:57 Ìý
Well, then they'll double our listenership because my mom will listen to and it'll be great. So we're really excited about tonight. We actually our live audience tonight is the inaugural class of the elite school of business executive MBA program. So being the clever people Brad and I are we figured, why not take a group of like really experienced really smart, young executives and managers and say, Hey, ask us any question you want live with no free clewd? And we'll just answer it because we're just that damn clever. Damn right. Great idea, Brad. And because we're both really competitive guys, we have a little competition tonight. We have an applause a meter. And whoever gets the most applause is going to win a point. We're going to play the three points, I think something like that. The loser has to drink, of course, because we're here in a brewery. And then the loser also has to buy the winner. Their favorite piece of swag here from upslope Brewing Company to have amazing swag out there. Lovely hats, T shirts, all sorts of great stuff. Just to be clear, though.

Brad WernerÌý 1:54 Ìý
The winner wants to drink too. Yeah, well, the

Jeff YorkÌý 1:56 Ìý
winner gets to drink too. Of course, they're not gonna do that. All right, cool. So as always, we have our guest host here tonight. Matt Cutter. Matt is the founder and the CEO. Do you have a title like

Unknown SpeakerÌý 2:08 Ìý
President founder president not CEO worthy? Yeah,

Jeff YorkÌý 2:11 Ìý
I think you are. I mean, you could you could just call yourself the CEO. That's what a lot of people so

Brad WernerÌý 2:14 Ìý
you know, what's great about Matt is he's the first repeat entrepreneur we've had on the podcast.

Jeff YorkÌý 2:18 Ìý
Is that true? I think it is. Yeah. We'll talk to you last week. Talk to you, Matt. I think you were the first person we had on right when COVID-19 started. Is that correct? I recall. Yeah. Those were dark night. I was I was so excited because you guys had done a Valentine's Day gift. If you remember that. It was like in a fancy tool. It was and I found something I could get for my wife. Right? It was amazing. You were partnering with like a flower shop to deliver a bouquet in like a tool of UPS. I never seemed like a lifetime ago. We thought it was a really creative way to actually well not embrace but to pivot into what the pandemic was doing to small businesses and figure out so obviously, you guys have done just fine that made it

Unknown SpeakerÌý 2:59 Ìý
through. Here we are. Well, here's to that.

Brad WernerÌý 3:04 Ìý
The other reason Matt is on for a second time as we love his beer.

Jeff YorkÌý 3:10 Ìý
So are we We're gonna taste some beers. So first of all, we're at the tasting room. I forgot I know. We're, what is the address here, man, I

Unknown SpeakerÌý 3:16 Ìý
forgot it. 1898 South flat iron court.

Jeff YorkÌý 3:19 Ìý
Okay, so there's two upslope tasting rooms. This one is the more Eastern one and the larger one. I think you have the same amount of beers on tap in North boulder though correct

Unknown SpeakerÌý 3:27 Ìý
14 beers on tap at our Lee Hill tap room and this flatiron Park tap room. We have 24 beers.

Jeff YorkÌý 3:34 Ìý
So both locations are awesome. I spend more time at the hill because it's walking distance to my house. But this one is great, awesome outdoor space. If you're in ºù«ÍÞÊÓƵ, definitely come check out upslope. And we're going to find out about some of their amazing beers. Matt has been a huge friend elite school business. I and I don't think you were here when this happened. I know you were you weren't here on physical and process. Matt agreed to sponsor the finals for my MBA class on multiple occasions by providing beer. And I came in here and as a cold snowy like December night, we're getting rid of the files. And I was like, Hey, Matt told me to come pick up some beer. And I was thinking they were gonna give me like, you know, two cases of beer maybe and I'd be like sweet two cases of beer. They came out with a hand truck stacked. I guess it was like eight cases of beers with fits on a hand truck, something like that. The guy comes out. He's like Matt said to give you all this. I'm just like, What the? Yeah, awesome. I loaded it into my truck came back. He's like, hold on, he comes out and does it again. Yeah, it's like 16 cases of beer to this class of like 40 MBA students. It was insane. It was an ugly night, but a lot of fun. And they gave out the faculty course evaluations right after that. And

Brad WernerÌý 4:40 Ìý
it was great. Setting expectations,

Jeff YorkÌý 4:43 Ìý
setting high expectations for these folks. So. So anyway, thank you for all you do from Leeds School. Matt. I really appreciate the years it's been a great year.

Brad WernerÌý 4:51 Ìý
We all do and the students do too. And I hopefully these podcasts help actually drive business for you as well.

Jeff YorkÌý 4:56 Ìý
I don't know they need the help but hopefully, hopefully a better offer people to find absolute because they do amazing beers. What are we? What are we tasting tonight,

Unknown SpeakerÌý 5:03 Ìý
Matt? All right, so we have three beers in front of us. The lightest one is our German Pilsner. Ah, yes. And the slightly deeper more golden beer is our New Zealand style IPA. And then that that reddish colored one is a wild Christmas ale with tropical fruit.

Brad WernerÌý 5:35 Ìý
Nothing pumpkin, no, I can do this.

Unknown SpeakerÌý 5:39 Ìý
So we're trying to decide what to give. Everybody wanted something, you know, definitely we we excel at lagers. So, this German Pilsner is a lager and it is a great, great example of what we're capable of. In the lager world. West Coast IPA is a brand new beer for us. And it actually just made it into a can a couple of weeks ago, and then the wild Christmas sale with tropical fruit is a story in and of itself. Something that we do every single year, the fourth quarter of every year.

Jeff YorkÌý 6:10 Ìý
Awesome. Alright, so everybody grab your German pills. Cheers. Cheers. Cheers, roast. Man, that is like a clean clean pills to get a little hint of sweetness perfectly balanced with the amount of hops. So it's like a super clean fish. How entire hops maybe? I don't know. Yeah, it would be one of the noble hops noble hops. Okay. Yeah, so no sauce like I don't pick up on.

Unknown SpeakerÌý 6:37 Ìý
We have sasmar craft lager, but not not in this beer.

Jeff YorkÌý 6:39 Ìý
This one's awesome. Yeah,

Brad WernerÌý 6:41 Ìý
I told Matt actually, before we started recording, this is my favorite beer. This could be an everyday drinker. And I just found out if you drink everyday, but I do. But but I just found out that it's actually a limited release. Is that correct? Bet?

Unknown SpeakerÌý 6:54 Ìý
Yeah. So we have a whole limited release series. As a matter of fact, this year, we've started a lager series. We started out the beginning of the year with a Mexican style dark lager. And this is the next iteration and that locker series. It is. It's it's an amazing beer we get German malts from a Maltster up in Bamberg, Germany called them firemen. Yep. And it is amazing and, and not cheap. It's it's about double, double and a half what our traditional base malt costs us. So it's definitely not a moneymaker for us. But as we look at all of our skews on a regular basis, you know, some schools are just like, Yeah, we don't make a ton of money. And that's okay. We love that.

Jeff YorkÌý 7:43 Ìý
Yeah, any thoughts from the audience on the beer? Anybody want to step to the mic and offer their observations on this one? Don't be shy. Drink more if you're shy. Hey, Matt.

Brad WernerÌý 7:51 Ìý
Is this only found in the tap room? Are you kidding? This

Unknown SpeakerÌý 7:54 Ìý
is no so I as part of our limited release series, it's our second canned offering of that lager series. Oh, great.

Jeff YorkÌý 8:01 Ìý
Okay, this is awesome. Oh, we haven't we have some of us. Yes. Welcome, sir.

Unknown SpeakerÌý 8:05 Ìý
Oh, Chris, Callie and Ben here in the boulder area for the past 20 years. I work for a FinTech SAS company in San Francisco. And we do supply chain financing. So Matt, two questions for you. How did you get started? Did you draft a business plan and do or had you've worked in the industry? Or you know, that's number one. And then given them the question about your ingredients. I'd love to know what the supply chain is looking like these days. So if you could comment on that as number two, that would be great.

Unknown SpeakerÌý 8:33 Ìý
Yeah, you bet. Yeah. It's the craziest thing I've ever done in my life. times 100. I started out in project management, moved to ºù«ÍÞÊÓƵ in 1991 discovered craft beer here, put a business plan together back in 96. Started talking with a couple of folks about getting some gone realized we didn't have any money, didn't know where we get any money. So we, we shelved it. I continued project management mostly in high tech, a company called high tech manufacturing, which is printed circuit board assemblies contract manufacturer, cut my teeth in the startup world and in a manufacturing environment. Realizing that I loved both of those and wanted them to be a part of my career, then into Seagate technology, which disk drives in r&d, program management there and then project management at IBM printing systems where I went through a long curriculum, got a certificate in from George Washington University, a master's Certificate in Project Management and then PMI certification. And then up to the pinnacle for me at that time was IBM Certified project manager. So while I'm doing all that, I'm still homebrewing. That plan is still kind of knocking around the back of my head so 2007 in that summer, rewrote it it really wasn't a hero I go it was let's just update it. Let's see what the industry is doing now and what would, what would the financials look like? What about the concept? How's it different now from back then? And I really wanted to build a brewery that gave greats easy drinking ales and lagers to the active outdoor enthusiast. And the best vessel in my mind for all of that was the Forever recyclable portable crushable lightweight aluminum can. And when we started out liquor stores especially we're super excited to have some canned craft offerings, and very few at that point. So yeah, we we started, wrote that plan in 2007. reached out and very common industry website called Pro Brewer, there was this guy from Argentina that had started a brewery down Wushu, I Argentina, which is on Tierra del Fuego, southernmost city in the world. And he followed a girl up to Colorado.

Unknown SpeakerÌý 11:09 Ìý
Isn't it always about a girl? And yeah, so Leslie was from Aurora. He made it up here, January 2008, was looking to team up with somebody. And we started looking at space, he had to go back. I signed a one year lease for 2700 square feet in North boulder. emailed him back, Danny, let's do this thing. And he's like, I bought my plane ticket. I'll be there in two weeks. We started the brewery, it was extremely underfunded, funded by a second mortgage on my house, God bless my wife. Not really sure. Why is he she signed that piece of paper. I kept my day job at IBM for three years, while starting the brewery could never do that, again in this lifetime. Talk about stress and lack of sleep. And I remember vividly thinking that I was doing a half assed job at everything. Being a daytime employee, being a startup person, being a husband, a father, a friend, all those things. There just wasn't enough time in the day. Yeah, we, we went for it. Henry Henry wood came on as our Director of Sales and Marketing about six months later. And it was the three of us and we were all canning beer selling beer. Going through I did, you know, licensing and I was the accountant for the first several months and still very involved with cash flow to this day. And then, you know, things things started happening. And it was, it was great. We we grew fast, which is great. But it's not great for cash, especially when you're in a very capital intensive industry. So we almost ran out of money. February 2009, a buddy of mine was a mortgage broker. He said, Why don't I limit take a look at that second mortgage? I could pull more money out of your house if you want. I'm like, Hey, let's do it. And then my wife signed that paper also for some reason. And I mean, it was happy. The three of us we had all burn the ships at the beach. Yep. plowed through those difficult years did it the hard way, which is still how we do it today. It's what we prefer to kind of a sixth sense. But we grew very quickly. We kept doubling about every year. And it was in 2012. We were doing 5600 barrels on a seven barrel system. So quick math. Yeah, we brewed 800 times that year. So we were basically brewing nonstop every single day of the week, and had a little canning line that could do could package the beer, five cans a minute. And we were self distributing. And then we there wasn't any more room in that space for any more fermentation or packaging or anything. So started looking at space found this space that we're sitting in here. It was an empty warehouse and a vintage 1980s office space here. We were all sitting in the tap room. And that was a scary leap. You know, you don't want to bite off more than you can chew. It was a leap of faith. But that year, we went from 5600 barrels to about 11,000 barrels, which is a big jump at that size. There was some synergy that happened with our distribution at that time. We weren't expanding to other states very quickly. In our world. It's state by state. That's because of the three tier system that came out of prohibition. And we can At self distribute outside of the state of Colorado, we have to go through a distributor. And in order to do that, right, you have to spend a lot of money and hire a sales rep and do a lot of advertising everything. So we're like, alright. Also, you know, with our quality control, you know, when we started out, we didn't have a lot of money for for QC equipment. And so we relied on the process a lot for high quality. And you didn't want the beer to get too far from home. Because you lose control of it. It is an unpatched, or it's like a banana, it's like an apple, it's gonna go bad. So we want to stay close to home and go deep before we went wide. So it was North ºù«ÍÞÊÓƵ, and then it was central ºù«ÍÞÊÓƵ, and then it was all a boulder. And that was ºù«ÍÞÊÓƵ County. And then at some point, we made the big leap to Denver, 30 minutes down the road.

Unknown SpeakerÌý 15:55 Ìý
And it was it was very, very intentional the way we went about our growth, so that we can manage the growth. We hadn't no outside investors. So that's part of the equation also. And the fact that we had a product that spoils in 120 days. So controlling and controlling it. Yeah. And then that's not long after that we we handed our baby off to a Colorado distributor. That was an interesting time. And then now we're in the top, depending on how you count it, the Brewers Association has a certain definition of a craft brewer. That does not it has to do with ownership. It has to do with using ingredients to enhance flavors, not cheap adjuncts and the way that you run your business. So if you go by that definition, I guess we're in the top four or five in the state of Colorado, in terms of size 50,000 Barrels we produce every year. We got some big dogs in in Colorado and the craft beer world New Belgium, Oskar Blues of dal, many what I call first tier craft brewers. And they're in the top 50 in the country with over 9000 craft breweries. So I love the fact that we started in Colorado because the bar is high in Colorado. If you make average beer in Colorado, you'll be around for about six months. So you can get away with that a lot of other places in the country. Not not in Colorado. So yeah, so from that, you know, here we are somehow.

Brad WernerÌý 17:49 Ìý
Amazing story. I talk to entrepreneurs all the time about timing, and I'm looking at and listening to your story. 2008 What the fuck did that not kill

Unknown SpeakerÌý 18:03 Ìý
you? Yeah, seems like a so we actually we started things rolling. Let me see the first second mortgage I think was February 2008. Danny, Danny came here. We started things April, April 1, started carving out that space and buying used equipment and stuff to to start brewing. And then, you know, September, was not a great month in 2008. And what propelled us forward is that I was already writing checks on my second mortgage. So it was, hey, we're going I don't care what the economy's doing. Right. We're

Jeff YorkÌý 18:44 Ìý
still selling. So Bill, you're actually does well, when the economy goes down, as

Unknown SpeakerÌý 18:49 Ìý
I've heard you recession resistant. I heard that term for beer. Yeah. But it was know that that helped propel us forward. And we almost ran out of money a bunch of times and I finally got a loan from a bank in September 2009. I got a $30,000 line of credit from a bank in September 2009. That was one of the former bankers that worked for another bank that I presented to back in February. They all turned me down Sure. All five of them, community banks, national banks, regional banks, you know every flavor. So then Shelly MacLeod move to Vectra bank, she called me up and I'm like, listen, Shelly, my p&l looks as bad now as it did six months ago. She's like, why don't you come in here? So I got a $30,000 line of credit if I put $20,000 in a savings account didn't touch it. Whoa. And then, four months later, you know we need more tanks. We need more equipment and everything and I always say the banks like the tanks and they He wanted to do the next deal on the tanks. And he said, if we do the loan on that, we'll release that $20,000 You have in savings for your use and will increase your line of credit from 30,000 up to 50,000. And every six months or so will be more equipment school. And you know, my dad is an entrepreneur and as he told me always ask for money when you don't need money. And so every time we go back to the bank, I'm like, I want to increase my line of credit. So why do you need to do that I just want I want to increase it, I can sleep better if I have a nice line of credit. And so now we have a million and a half dollar line of credit and with the same bank 1009 flat irons community bank here and that's awesome. Yeah,

Brad WernerÌý 20:41 Ìý
that is a great story. relationships matter.

Unknown SpeakerÌý 20:44 Ìý
You really do right? And and as my dad taught me, you show them the good, the bad, you throw them information when things are not going great. And here's where we're at you build that trust over time. And we haven't always followed in the DSCR guidelines and all that and but they're like yeah, that's that's a guideline. We'll we'll work through that. Nice you know, it's

Brad WernerÌý 21:04 Ìý
been amazing. When times are tough, and they call you you call them back. Exactly right. You don't avoid them you can never hide absolutely right.

Jeff YorkÌý 21:12 Ìý
What's this? What's the second beer random this said New Zealand night

Unknown SpeakerÌý 21:16 Ìý
yeah, so this this second beer is brand new to us. Although we've been working on it for about nine months. Brand new and it can very hoppy. Not so much bitter. But hoppy. The difference being in hoppiness, you get the flavor of the hops. New Zealand Hops are sought after worldwide. In particular, this one has Nelson sovereign hops in it. Little town in Nelson, New Zealand, as well as Motueka. And there's a third hop I can't recall. But very, there's no there's no juice in this beer. However, it tastes juicy. That's from the house.

Brad WernerÌý 21:57 Ìý
A great finish though.

Jeff YorkÌý 21:58 Ìý
Right. So Brad, you were just saying how you prefer the German pills. What do you think about this? I like a pretty approachable IPA. It's not like actually burning my throat. The bitterness finishes good. Yeah, man. It's crystal clear. I mean, when you think of madness isn't hazy. I mean, you

Unknown SpeakerÌý 22:15 Ìý
know, we'd like our beer pretty filtered here. And we do have hazy Zhan. And of course, if it's, you know, style appropriate, like some Belgian beers, right? Well, we'll loosely filter that. We like most of our viewers, right.

Jeff YorkÌý 22:28 Ìý
I think we have a question from it. A question from aliens.

Unknown SpeakerÌý 22:31 Ìý
All right, Matt. My name is Ryan Spangler. I'm part of the MBA program here as well. I've been living in Colorado since 2016. I work in energy out in Brighton, Colorado, so fell in love with Colorado a lot. Because the mountains and the beers thank you for that. I do have a quest. I have two questions for you as well. One is about your business. And one is more about beer. First question, how did your background and pm and project management over the years really help you start out in entrepreneurship? Obviously, you've worked for some big name companies. And I'm sure that added a lot of value just to how you look at business. And the second question, how do you pick the beers that you end up brewing? I've always wondered that. Great, great questions.

Unknown SpeakerÌý 23:10 Ìý
Yeah, project management, I still use what I've learned in project management to this day, man, I think it's just the perfect background. To start a company. I am a planner, I look at what our risks are. I look at risk mitigation plans, change management, its dollars and resources and target dates and tasks. It's everything we do here is matter of fact, we're looking to put a project management curriculum in here at an upslope from several people that would benefit from it. And it's the way I manage at the same time. That came from being a project manager. Nobody works for Project Manager. No, no people work for their managers. They're resource managers. So as a project manager, you go in there with Will you start with honey and, and give them a little bit, you know, hey,

Jeff YorkÌý 24:13 Ìý
Dave, favor? Was my project. I just want to do favors for people at a time because the only way they're going to do anything I asked him for, like, hey, this whole thing's gonna collapse if you don't like quit what you're supposed to be doing for your boss and come do this for me instead. Yeah, I did that for years. Exactly. I

Unknown SpeakerÌý 24:29 Ìý
know you have that other project manager in your ear. Remember, here's why mine is more important than his. So a lot of that is still how I manage our 73 employees. We don't micromanage here. We have kind of a sink or swim, kind of philosophy. When it comes to bringing new employees in and you know, either either that's your, the way you can operate or it's not. A lot of people can't work in And I would consider still very entrepreneurial. Yeah. And rolling with the punches and adaptable. And that's not for everybody. But for the right people, man, it's gold people who can operate in what I call controlled chaos. Yeah.

Jeff YorkÌý 25:16 Ìý
Well, they get a chance to exert their autonomy and like, create something new, and they thrive in that environment. And other people are just completely we have the same thing with PhD students, quite honestly, they come in expecting us, we're gonna, that's gonna be like, No, I'm serious. Like, you bring a PhD soon. They sometimes people think it's gonna be like MBA part two, like, now you just take some classes and start writing papers, and they're just like, What do I write about? I'm, uh, you got to figure that out.

Brad WernerÌý 25:40 Ìý
That question, though, actually leaves a question to the audience. I know, you're all getting your MBAs, but are you thinking a side hustle a new business something in your future? There's a there's a bunch of them.

Jeff YorkÌý 25:52 Ìý
I bring those. Bring those to our class, because our class is actually designed for you to explore that and get class credit for it.

Brad WernerÌý 25:58 Ìý
Yeah, we can help we can help you. That. That's great.

Jeff YorkÌý 26:02 Ìý
Yeah, absolutely. How do you pick what beers

Unknown SpeakerÌý 26:04 Ìý
so yeah, picking the beers? I used to be? Great question. I used to have more control over that. We have six burgers here on staff, plus a head brewer. We have a dedicated lead Brewer over at Lee Hill. So we've been really fortunate in that when we were moving here to flatiron Park. So the bank gave me 80% of the money I needed. We didn't have the 20%. So So actually, my buddy Dave came forward with some mezzanine financing that we've since paid off his note and everything. But he's like, Well, what if you know what if we did it this way? I'm like, okay, all right. So I actually credit him with our ability to keep Lee Hill where we started. Start at 2700 square feet, and we took the unit next to it 4500 square feet. And that has made all the difference. It became very vivid to me early on when over at Lee Hill when I had Henry yelling at us because we made a dunkel fights and what would it be wrong with that? He needs more he needed more parallel, he needs more India Pale Ale. And you guys are screwing around, you know, you know, inventing new beers, like Oh, cool. modulations This is what pays the bills anymore this stuff? Sure. So then it became you know, it's like, it's like the clouds party, um, like demand for for sales and production will always trump innovation. So you got to separate the two. And that has made all the difference is our next new beer coming from flatiron Park? No, it's coming from Lee Hill. Lee Hill is r&d. It's what I call the playground. This is the factory. So there's a handoff that happens and we scale it up the recipes here to flatter in part. Explain. So this was always weird

Jeff YorkÌý 28:07 Ìý
beers over there. Like yeah, that's I love that place. My wife has always I won't know because they got they got like this crazy as beer that was aged in a barrel for four years. And I'm all excited. Mostly calm. And anyway, I love that this customer discovery. Yeah, no. Yeah, right? Well, it's perfect to for a by a little bit of a bifurcation of your customer base here in ºù«ÍÞÊÓƵ. Because like people that want like a space and a vibe, I find this to be the more vibrant kind of scene like place. But that location is a little quieter a little more. Sometimes. Maybe just while I'm there. I probably go on like late nights with

Unknown SpeakerÌý 28:44 Ìý
the laser. No, it's kind of a taprooms kind of like our cheers environment.

Jeff YorkÌý 28:47 Ìý
Yeah, it's like, very small. Yeah, exactly. But

Unknown SpeakerÌý 28:51 Ìý
man, what's happening in the back is the real magic. I think over at Lee Hill. Like for instance, this past winter, we came out with our grand reserve, which was a whole different projects fantastic. Sometimes unbeknownst to me, you know, the Brewers will so good have a secret project going and you know, sometimes I'm not even privy to it and we went in there and they had been, they put this barley wine into I guess you call it barley wine into barrels, and we're feeding it different sugars, honey, turbinado, sugar, Belgian candy, sugar, all kinds of things over and we ended up with a 21% ABV beer. It tasted more like a port wine. Yeah, it's good. We sold out the brewery here we had and we sold what we sell. It was like 450 bottles of it in a day. We had a lion out Friday. It was awesome. We'd like to flex those muscles as well. But largely our brewing staff they'll shift brew here flattering part work they're making craft lager they're making Citra, pale and all this stuff, and then they'll get a shift over at Lee Hill. And it's always like, what do you want to brew? Well, and that's how we get a lot of our recipes. It's cool. And we get ideas from adjuncts. We want to use different fruits, different spices. We've made Psaki beers we've made crazy sours the beauty of beers. There are no limits to your imagination. The poor Germans, they have to you know, German purity laws, they have to adhere very happy.

Jeff YorkÌý 30:32 Ìý
They're very, that's terrible German for

Unknown SpeakerÌý 30:37 Ìý
it like we do in America. We'd like to Americanize it and do whatever we want it. So we're making pumpkin beers and

Jeff YorkÌý 30:48 Ìý
as your audience does everyone out there low pumpkin beer. Two people clapping their hands. Ever running

Unknown SpeakerÌý 30:57 Ìý
our pumpkin ale is a gold metal metal Winter Festival. It's

Jeff YorkÌý 31:01 Ìý
fantastic. And we

Unknown SpeakerÌý 31:03 Ìý
still make to this day, and we make it with these little baby bear pumpkin pie farms. A five minute drive from here.

Jeff YorkÌý 31:11 Ìý
We're going back here for our Halloween episode. Maybe we'll find a pumpkin beer. Brad likes eventually.

Brad WernerÌý 31:17 Ìý
A couple more questions. Well, well, hold on. Let's

Jeff YorkÌý 31:18 Ìý
let's get to the next beer.

Unknown SpeakerÌý 31:21 Ìý
All right, so talking about Lee Hill. Oh, sour program. Yeah, so this is a sour beer. There are different ways to sour beers. This one is growth, pretending biases, and lactobacillus and PDF caucus, all bacteria that you normally try to keep out of beer, I get the big O and get a room of this. This kind of style goes way way back to the Belgian days when they had an open fermenters Yep. And they would make this sweet Wort from malted barley and water and they boil it and they put these open fermenters and then the magic would happen open

Jeff YorkÌý 31:56 Ìý
slots in the roof of the breweries like I've been I've been there in Brussels they they pump it all up into the cool chips like these big flat things. And then they just open the roof up and whatever dirt and grind is the exact opposite of what you normally do. And they just sort of let sit there for like hope it gets imbibed with the magical yeast and it does that it's always different

Unknown SpeakerÌý 32:16 Ìý
here it's the opposite what we're all sanitation is you'll see these stainless steel fermenters are completely enclosed as you're making this year doesn't even see the light of day until it's packaged. So keeps it very very sterile. Our lab I mean we have we we swab for bacteria and you know we spend more time sanitizing than brewing and fermenting so but this is the opposite of that. It's actually based on a an old recipe homebrew recipe of mine I had a Christmas ale recipe modeled after Great Lakes Christmas sale. I grew up Yeah. It's a great beer gardens and and then we sold that in cancer a couple years and then we discontinued it and the birds like it's pretty cool beer. Why don't we sour it? So they did that? And so I don't know maybe 1010 years or so. We've been doing a soured version for a while Christmas ale sometimes we'll put it on Valentin cherries. This one is with tropical fruit. We've been cinnamon and vanilla but we change it up every year. And we have it's all barrel aged and soured so we already have it in the in the fooders and the barrels right now for for q4 2022. So this is delicious. Not everybody's gonna like this, but I love it. I love making people try sour beers.

Jeff YorkÌý 33:40 Ìý
I love it. I mean, it's I have

Brad WernerÌý 33:43 Ìý
to say it's fucking brutal.

Jeff YorkÌý 33:47 Ìý
Doesn't like any server listens for hours hours.

Brad WernerÌý 33:51 Ìý
I don't know how somebody tested.

Jeff YorkÌý 33:53 Ìý
It's an acquired site. It's an acquired taste. So it's, you have to learn to like it. It's like,

Brad WernerÌý 34:01 Ìý
I want to learn to like anything.

Jeff YorkÌý 34:05 Ìý
But you know, I get that, you know, you have a shallow appreciation for beer and that's alright. I love it, man. I think it's fantastic. Cheers. Thank you for sharing with us. Question. All right, so this is really sour, though. I mean, that's like,

Unknown SpeakerÌý 34:21 Ìý
that's like that's like even so it's got some pretending

Jeff YorkÌý 34:25 Ìý
Yeah, the bread and the bread and the lactobacillus Ami. So where are they? Okay, so we really Okay, one more question for Joel

Unknown SpeakerÌý 34:34 Ìý
Hey guys. My name is ro into the Executive MBA Program as well. I grew up in a family business so packaging and plastics manufacturing and have dabbled in entrepreneurship myself currently in supply chain operations while I get my degree till the next venture. Matt, would you have your second mortgage tied into the business and like you have a why? How do you know when to start paying yourself? And what's that balance between paying yourself or Are you putting reinvesting back into the business? Because you want it to grow? Because either way your question session question just because of the contract manufacturing nerd. Now that you have scaled up, did you keep packaging in house? Or did you guys use somebody outside?

Unknown SpeakerÌý 35:16 Ìý
Yeah. Yeah, you bet. That was tough. The tipping point. Okay, so I've mitigated my risks as project managers do. And in one of the, one of the things I had under my control is that I could not pay myself for three years. Well, I got a first mortgage, I got a second mortgage, I got two kids, a wife, teacher working, which we have relied on her income throughout. In the second year, we were tiptoeing dipping her toes periodically into profitability. And then and then we go back, we've been back in the red, and then we're in the black again. And then I actually remember talking to my dad and him saying, you know, at some point, the breweries gonna lose, because you're not, you're not in there. 100%. No, but it you know, when is that, you know, how do I know when is that going to happen? So almost to the day, three years after, I was feeling it, and quit, quit my day job. And I think that year, I paid myself $3,000 a month. But ever since that time, when I quit, we've been profitable. So I think those first three years, that's what is it 80% of all startups fail in the first three years or something like that. I get it. Every single day, there was 100 new reasons why we would not make it to the next day. And the dynamic of partners and supply chain issues and costs and sales in capital equipment and financing and cash flow and all that stuff. One of those could go south in your audit business. So I think it was feeling enough control of the way things were rolling along. And that that was the time to make a leap. Turn around the second question.

Unknown SpeakerÌý 37:20 Ìý
Was that a GS kind of stuff here now?

Unknown SpeakerÌý 37:22 Ìý
Yeah, packaging. Yeah. So we started off, we started off packaging, on a manual canning line, I think, to remember, I think it cost $18,000 It was a two head filler, a single station seamer and a manual six Packer. So we did that over at Lee Hill, you get three people on it. And if you're humming, you can do about five cans a minute, we had a sink that we throw the cans into once they were filled and seemed that would rinse the cans, any residual beer that was on it. And if it if it Bob too high on the water, it was a load. So we wouldn't sell it that would be so evolving from that we couldn't afford to Calum at that time. 2008 2009. They didn't have packaging equipment for little startup craft brewers. So we knocked on the door of the unit next to us, which is now the second unit as part of upslope and wild goose engineering was in there. And they were doing all kinds of stuff that's fancy CNC equipment and all this stuff. And we're like, hey, we need to do canning line. And so they took they took good old RAF frame from whitewater raft also and our seamer and a filler from this company called Niagra dispensing that had intended on making dispensers to fill cups in stadiums in three seconds. So the cobbled all that together and did some logic and stuff. And we started canning at 18 cans a minute, and then 24 cans a minute and then 26 cans a minute. So that was so now they're you know, now that is their primary business is canning lines. And we moved over to flatiron park, you know, it was kind of the big leagues. So we're like, what are we gonna do now? You know, that cane line is going to cut it anymore. So we are with a guy working your part. It's like, Hey, Jeremy over to Oskar Blues. They're getting rid of their old their oil canning line. So we went over there and this thing, you know, filled more than our brewery space over at Lee Hill. Oh my god, what are we gonna do? We can't afford this is way too big. It's way too complicated. So Oskar Blues made it very easy for us. We did payments I think over two years with no interest. We took it apart Scott, Bart and Danny and I piece by piece over daska Blue stuck in a in a trailer, a semi trailer. And then when it was time we brought it out piece by piece. And we took a lot of pictures when I was together, and somehow we got the thing back together. And so that canning line got us going and it had its issues they call it the china doll because it was fragile. And it was one of three Chinese knockoffs of a Swiss filler and seamer. So there were no parts. And Danny came into my office one day. He's like, we're gonna go out of business because there's Candyland. I'm like, What are you talking about? He's like, how long can we not can beer and stay in business and I'm like, I don't like 30 days. And he's like, that's what I'm talking about. So we ended up buying a filler seamer out of auction at a Coca Cola plant in Rapid City, South Dakota, drove up there, checked it out, shipped it here, and since then cobbled it together, and we have an awesome canning line that I think over the years has cost us about 350 or $400,000. It does 350 Cans per minute. Like it's standing still. And it has made has made all the difference. So no, we've always packaged in house. We've never sent it elsewhere.

Jeff YorkÌý 41:01 Ìý
It's awesome. Yeah. Cheers, man.

Brad WernerÌý 41:03 Ìý
That's a great story.

Jeff YorkÌý 41:06 Ìý
I was trying to think this be reminds me of Kitty on the compliment, right? I mean, yeah. This has got the same intensity of sourness and the lactobacillus flavors. Okay, so one more. Okay.

Unknown SpeakerÌý 41:23 Ìý
Hi, I'm Deborah Russell. I am a business coach out of Las Vegas, Nevada. And my question is about your business. As it stands, you're really running two businesses, your distillery and you're a restaurant, bar restaurant? And can you talk a little bit about the juggle between, you know, managing very different needs? And requirements of those two businesses? Yeah,

Unknown SpeakerÌý 41:57 Ìý
absolutely. Yeah, great question. They are two completely different businesses. It's perfect at the beginning, I really want to do two separate p&l is for the two businesses. In the end, they're so intertwined, that you'd be making stuff up in terms of where the costs are and where the revenues come from, and where the benefits come from. When we started out Lee Hill, I actually didn't know you were allowed to have a tap room. So we had a tasting room, and we're handing out free tasters. And then I remember calling up Adam Avery and just being like, Hey, man, how do you do your Taproom? He's like, I think it's a part of my wholesale license. And so found out that we could actually serve pints. So that's, that's huge. That's part of the beauty of Colorado. Not every, not every state has that. Right? I have a manufacturer's license for malt liquor. And if I wholesale wholesale liquor license from the state of Colorado, that wholesale license allows me to self distribute, which is contrary to the three tier system. It allows me to serve pints, it allows me to sell six packs, sell kegs of beer out of my Taproom. And that's all because the state of Colorado and its licensing many states have that now. Not allowed the beginning. I loved that aspect of the business because it helped us grow our brand. Intrinsically talk about what we talked about earlier, going deep before going wide. That is that's as good as it gets. So managing those two types of types of business has been interesting. The taproom, manager General Manager taprooms. Now Chad Piper, he reports directly to me. And it is it is his business that he manages. It is the most profitable part of our business. When you think about it, we're in the industrial space here, right? I'm not on Pearl Street. And yet I can have this retail environment that the state of Colorado allows me to have because it is attached to my manufacturing space. So huge benefit there. And so I'm paying well, I'm paying industrial rent. Sorry, that's the agar we might be mashing in. Starting the next group, I'm not paying retail rent. I have nobody in between the beer comes from Lee Hill. The beer comes from there. It does not go through our distributor. It goes right here. So great margins, very, very important part of our business. And then the wholesale business is its own animal and very, very labor intensive. I think we have nine sales reps running around Colorado and we have one in Utah right now. And it is marketing and social media and It's a whole different animal in terms of how it's how it's done. Very, very competitive. But yeah, the vast majority of our business. Last I checked, the tap rooms were 14% of our revenue. It's smaller than that. Now.

Jeff YorkÌý 45:15 Ìý
This is awesome. Like, for those of you that obviously can't see what's going on, there's like green beans. I assume there's a green silo out there. That's been ground up and going straight into the go into the

Unknown SpeakerÌý 45:27 Ìý
master. So it's coming straight from our silo. there that is our base malt. We have a truck that comes about once a week. It's 48,000 pounds of our base, Pilsner malt in there, and it's just being transported to the mill right now. Our Brewer at Fred who's Bruin nights this week, but he is controlling all that it's gonna go to our mill, the mill will crack open that malted barley for the brew the brewing process

Jeff YorkÌý 45:56 Ìý
straight into mash. It's so cool. All right, folks. So please join me in thanking Matt Cutter for hosting and joining us here tonight. Matt, thank you again, like we just you had been such a friend of the lead school of business over the years, and we were just talking, we go back how many years now?

Unknown SpeakerÌý 46:15 Ìý
I think we were saying since 2012. Oh,

Jeff YorkÌý 46:17 Ìý
god, that's 10 years. Dude. We're not that old. That can't be possible. It's awesome to see you. Thank you for having us here. I think the students were so interested what you just said we're going to cut this into two episodes. So out there in podcast land check back. Whenever we get this posted. We'll be back with episode two where I shellac bread and a competition of answering complex questions about entrepreneurship. I'm sure it's gonna happen once again on Jeff York, research director at Deming center for Leeds School of Business at the ºù«ÍÞÊÓƵ, joined by Brad

Brad WernerÌý 46:45 Ìý
Warner. Jeff, great talking to you tonight. Matt, thank you very much. Yes. One more plug for where people can come to this location.

Unknown SpeakerÌý 46:52 Ìý
Yeah, so we're sitting at Flatiron Park location for upslope Brewing Company at 98. South planter cord for coming here. This

Jeff YorkÌý 47:02 Ìý
is just a great time. And if you'd like sours check out this group while Chris skip the sour note you know check it out if you like sour just great. It says right up there the best. All right, thanks a lot. Make sure you hit like if you liked the podcast. If you don't like it, then you know give us a negative review. That'd be helpful. And remember to email Brad at CDW podcast if you want to raise money, right? Anytime you're back in Nigeria, the

Brad WernerÌý 47:25 Ìý
Nigerian guy replied to him or her back home was

Jeff YorkÌý 47:27 Ìý
shocking. All right. We'll see you next time.

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