Daniel Lee, founder of Odin Brewery, spoke at the September Lunch Buzz. Daniel proclaimed his presentation a success even before he started, as he didn’t show a Power Point and he brought his own beer. The beer was delicious and Daniel’s presentation was great!
Daniel was born in Korea, but grew up in Canada. His first corporate position was with SC Johnson. His business philosophies stem from his experience there. He next worked at Miller, where he worked closely with the brewmaster. Sonicare recruited him to come to the Northwest. He left Sonicare to found the startup, Odin Brewery, in early 2009.
Daniel named his brewery “Odin” after the god of wisdom in Norse mythology. Odin gave the gift of fermentation to mankind.
Daniel generously shared with us the emotional things he was going through as his startup progressed and what he wasn’t ready for. He said that in corporate life, the breadth of emotion is narrow. In the world of entrepreneurs, the range of emotion is so wide that it’s off the charts. Just when he thought that he was as low as he could get, he discovered that there were several floors beneath him.
Daniel emphasized the importance of his network. He said that his network was more important to him than his financial backing. Without trying to be corny about it, he revealed that his startup story is a love story. It’s love for the company and the brand, for his wife, for his family and for his wife’s family. He had people that he could call in the middle of the night, tell them he needed $5,000 in two hours and they would come through for him, no questions asked. The experience has been so much more than building a company. It’s been a journey of getting closer to his family members.
Daniel and his wife have only been married two and one-half years. During the darkest days, he would come home and describe his day to his wife. She tried to help him by giving him ideas, which felt like criticism to him. They had many conversations on how to give and receive feedback. Daniel finally realized that he didn’t need more ideas – he needed solutions. Once they passed that point, they were able to more effectively communicate and his wife actively participated in making things happen.
Daniel chose beer as a startup because he had experience in the beer industry and because he likes beer. He thought he could bring something to the beer market, even though it’s a crowded market. He thought about building a winery, but there are more wineries than breweries in Washington State. With beer, once you get the equipment in place, you can produce beer in 30 days. Wine takes longer. Beer is asset heavy, but it’s a huge cash generator. Daniel wants to use beer as a jumping off point for creating other products. Beer equipment can be used to process sugar water, for example.
In early 2009, Daniel was in a wonderful space emotionally. The stock market tanked in October 2008, which allowed Daniel to become a net purchaser. He bought his equipment for pennies on the dollar.
From January to June, Daniel worked on the planning, regulatory requirements and getting a building. On July 1, construction started on the building. Around that time, he hired a professional brewer. The next few months were spent building the brewery. For the first 6 months, Daniel had so much fun that he wished he had done it 5 years earlier!
Around September or October 2009, they started brewing their first batches of beer. Daniel got the brewery’s name out by making a number of contacts in the local beer industry, including bloggers. In the second week of November, he received an unsolicited call from an account in Redmond. The account wanted to buy a keg. Even though the beer was not finished and was “green” beer, this guy insisted on buying beer because he wanted to be the first to have Odin beer on tap. Daniel still had money in the bank at that point and he was on Cloud 9!
That was the only unsolicited call Daniel received for a while. Daniel hit within 2% of his original three year forecast. The curve to get there was not what he had planned. It took 18 to 20 months to get the cash flow to neutral. He budgeted for 6 months. From the 6 month to the 18 month period, he daily expected for the doors to be closed on his business or for his employees to leave. Daniel referred to those as “the dark days.”
There were a number of things that Daniel didn’t know he didn’t know. His ego is both his best friend and his worst enemy. He thought that he had it down because it was on an Excel spreadsheet. One of the things he didn’t know is that when you have a company that is made up of 3 people, if one of those people has a bad day, everyone in the company has a bad day. It was a disproportionate impact that he was not prepared for.
One of Daniel’s key points is that entrepreneurs need to be aware of the kind of people they should surround themselves with. When people enter a startup, they don’t think about the down side. The fact is, most startups fail. Daniel made a mistake in hiring the brewmaster he initially hired. The brewmaster he initially hired was the sole wage earner for his family and had a wife and daughter with significant medical needs. That man could not afford to be paid even one day late. Daniel’s relationship with that brewmaster eroded and they split on very poor terms.
Some personal issues cannot be explored during job interviews, but personal issues can have a huge impact on the success or failure of the startup.
Prior to the split with his initial brewmaster, Daniel built up contacts with local brewers. He started “building a bench.” He was able to hire the head brewer from Mac & Jacks. That guy needed a month to leave his previous employment. In the meantime, word got out and bloggers wrote posts about it. Daniel’s initial brewer found out before Daniel planned to tell him and it was not a good situation.
Daniel was able to hire the head brewer from Mac & Jacks because Odin is much closer to the head brewer’s home than Mac & Jacks is and because the Odin job offered a greater opportunity to create more diverse products.
Daniel dug out of the dark days by making a couple of key additions: 1) he hired the new head brewer and 2) he brought his brother in to act as CFO. The initial brewer had issues with the equipment and thought that Daniel failed to support him by not buying the proper equipment. The brewery was not set up correctly and they kept buying more equipment, trying to get work arounds in place. At the end of his first week, the new head brewer told Daniel not to buy any more equipment or hire anyone else and to stay out of his face. If Daniel did that, the new head brewer told Daniel that he could double production in a month. After the new head brewer reorganized the brewery, the production was more than doubled in that month.
Bringing Daniel’s brother onboard gave the company a structure guy, but it also gave Daniel a person to tell things Daniel couldn’t say to other people in the company. It gave Daniel a sounding board that he needed.
Where is Odin Brewery now? The company just had 2 straight quarters of profitability. A year ago, Daniel’s horizon for survival was 24 hours. It was highly stressful. Today, there are just as many problems, but he is looking at 3, 6 and 12 month horizons.
Thank you, Daniel, for taking us on your emotional rollercoaster and for sharing your beer!