When I was asked to share my feelings about the past five years, my initial tendency was to be generically nostalgic and fairly concise. I have never really posted anything on social media or anywhere else online. But I have been encouraged by my team to say much more; the story from behind the green curtain, if you will. Maybe the origin story would offer some inspiration to someone else trying to start a business.
I also would like to highlight 2012, our inaugural year, as the best full year of my life. It will always be The Year for me, and if nothing else, I think about that entire year as I reflect on our anniversary. In summary, I had a ridiculous double bachelor party in Las Vegas shared with the ever-handsome bridegroom Dr. Adam Buhalog. I married my beautiful wife, Laura. Three of my best friends moved back to Madison – Ryan and Alex to start K4, and my college buddy Joe came back from the Marine Corps to work with me at Findorff. Laura started her doctoral program in nursing. I completed construction of a high-rise building downtown Milwaukee. A project that had a long story and blazed the path for the neighborhood that houses the new Bucks arena. We started demolition of the Ale Asylum taproom on October 1st and our soft opening for Karben4 was December 28th. This is the only year of my life where I can say there was zero wasted time. What a wonderful feeling it is to learn that your limitations are only a figment of your imagination. I still have to remind myself of this lesson whenever times get tough these days… As Christopher Robbin told Pooh, “You are braver than you believe, stronger than you seem, and smarter than you think…”
The Origin Story
2012 is forever ago and yesterday all at the same time…and really the K4 story starts long before that… I can remember so many vivid details and feelings about our entire start-up journey all the way back to when this brewery was a pipe-dream for Ryan. Our family (including me) was very doubtful. People see a semi-finished product when a business opens and it is very hard to understand the agony and work, and love, and the time – the time – that it took to get to that opening day.
Our story starts in 2004 with Ryan heading to Montana for graduate school, while really not wanting to head to Montana for graduate school. It was not his first choice, but he had chosen his path and he was going to attack it with gusto – a defining trait for Ryan. He got a part-time job at Yellowstone Valley Brewing Company in Billings, MT and he fell in love with craft beer. He very quickly rose through the ranks at YVBC and by the end of his graduate studies he was faced with a choice to follow the career path of his education or to follow his passion for craft beer. This was no small matter within the Koga family. We are a family of dutiful workaholics; intrapreneurs by nature. To go against a comprehensive and developing career path…well…(robot voice) ‘does not compute’.
Ryan and I had many, many hours-long conversations while he was navigating his time in Montana. He was always so torn about what his place was in the world and within our family. He has always been the class-clown but he was also the most highly educated person in our family at the time. He hated the idea of being the starving artist crippled by student debt. Especially when the real story is that he was a very talented head brewer that only needed a chance to prove the level of his talent. Things got very real when he met his wife Samantha and he started to think about how he would be able to provide for his future family. We would talk through scenarios about him getting back into sports medicine or obtaining a PA degree. He even went as far as meeting with folks at UW-Madison when he was in town for his bachelor party. During all of his time brewing in Montana he was never more than a few weeks away from forcing himself to walk away from brewing because it would be the responsible thing to do… Ryan, thank God you didn’t give in to all of the bullshit pressure!
In May 2011, Ryan was to be married in Montana. I flew out several days ahead of time to hang out and help setup the wedding. He picked up Laura and I from the airport and brought us straight to the brewery for a beer. He slid his latest seasonal APA down the bar to me and said, “Try that.” At this point Ryan was always trying to brew the perfect APA when I was traveling to Montana because he knew it was my favorite style. This is the kind of big brother he is… I was always deeply critical of his beers because that is the type of younger brother I am… I took one drink, set down the glass and said, “We’re doing this!” It was the best APA I had drank to that point. We got through the wedding weekend and by the 4th of July Ryan was feverishly building out the ‘fact book’ and starting to outline the business plan. I remember our oldest brother, our dad, Ryan and I were sitting in a circle at my cousin’s backyard 4th of July cookout talking about the business plan. We were reviewing Ryan’s fact book and talking about the beer market. The family in general thought it was a ‘cute’ idea and that we were basically idiots.
The budding business plan started to take shape through the rest of the summer when Ryan cold-called Otto Dilba, co-founder of Ale Asylum. We knew that AA was going to build a new brewery and Ryan had the brilliant realization that we could try to buy their existing equipment in-place. Otto gracefully took the call, liked the idea, and we set a meeting just before Halloween to meet with them. Most of our immediate family came down to Madison and essentially interrogated Dean Coffey, brewmaster/co-founder of Ale Asylum, about their space and equipment. Dean sat there for almost three hours and answered every question. — Dean, I am forever indebted to you. Otto, you could have told Ryan to pound sand, but you didn’t. That decision forged our future and I am forever grateful. — Following our meeting with Dean, we met with the landlord to discuss our potential tenancy and we instantly formed a relationship. That night I worked fast to update the pro forma with all of the new information from the day of meetings at Ale Asylum. The next day, Ryan and I drove out to Middleton to meet with our first potential investor. We walked into his office, nervous as hell, and talked at him for about a half hour. We hardly took a breath and he had not said a word… After a short moment of silence, he looked at us and asked, “So this is you two, you’re the guys?” We answered, “Yes.” He said, “I’m in for $50 to $100 grand, and we can talk about more if need be.” It was everything we could do to keep our composure. We were like dogs chasing cars. We had no idea what to do after we caught one. We went straight back to talking with our family and got much more serious about who within the family would put up money as well. At the time I thought we needed to raise at least $150k in capital before we could approach a bank.
A few weeks later in November 2011 Alex was driving across country from LA to Wisconsin for the holidays. Per usual, he would stop and stay with Laura and I in Madison whenever he was back from LA. It was some of our favorite times together. He and I were deep into our habit of scheming various business plans with all of our spare time. We were convinced that we were destined for something more, and Alex’s blind faith in that dream was what always kept it alive for me. This time he burst through our front door and said, “I got it!” Laura rolled her eyes as she had listened to dozens of ideas from us over the years. He continued after some laughing, “Cheese Guys! A grilled-cheese food truck called Cheese Guys!” Food trucks are a great small business but anyone that knows Alex knows instantly that he would not last ten minutes operating a food truck. It is not about being physically able, it is just not a fit (and he knew that). It was a desperate ploy. He had been in between things for a few years now and the pressure was on to start a new career. The food truck represented something that was tangible because our other ideas were usually fairly large hence our ‘failure to launch’ over the years.
Here I was in the middle of a business plan with my brother that had just become real, but was a long way from being ‘real’. We might actually have a chance for Ryan to prove his talents to the world and provide for his future! While at the same time my best friend and entrepreneurial spirit-animal, Alex, was coming to the end of his rope. Alex was going to present Cheese Guys to his dad. I did not hold back my opinion. We laughed long and hard about envisioning the scene of him presenting this idea to his dad. He would never be happy working in some corporate setting and we both knew the food truck idea was a distraction. I sat there imagining my life moving on. Maybe the brewery would work, maybe the start-up effort would crumble. Ryan might work for his father-in-law or find another brewing job. Alex would end up at some corporation earning a living but being absolutely miserable. I would get married, have kids, and continue my career, but would any of us feel like we were doing what we were meant to do? Would we get to our death beds and lie there with crippling regret? I made a call: “Guy, you’re not doing the food truck. I’ve been working on this brewery thing with Ryan and our first investor said yes! Dude, if you came in to this it’s a slam dunk. It would really happen.” There was a lot more said, but that summarizes it. I showed Alex my pro forma and the business plan Ryan had been writing. We agreed it would be a good idea to get his dad, Steve, to look at my numbers to help validate my early work. Steve is a very successful businessman and investor that I have always admired. His input and blessing were crucial for me. The next day I presented Steve the pro forma and he made a few suggestions. One of his main points of feedback was to limit the scope of investors (which was the end for the first guy that said “yes”.) Then he closed by saying, “I have made it a point to never invest in food or beverage businesses. If you’ll excuse me, Mary and I are late for our dinner date. Good luck!” I sat there a bit stunned. Alex watched him leave the kitchen and when the coast was clear he looked at me with huge excited eyes and whisper-yelled, “He’s in!” …I was so confused. It was not meant to be a pitch and he still rejected it like the plague. How was he ‘in’?
Now that we had introduced Alex and his family to the concept of a brewery, much less Alex’s involvement in it, we had to get my family on board with the idea of a new partner. I began a campaign with Ryan and my dad to convince them that this trifecta would guarantee our success. It took some time and some real force from me at first. This was Ryan’s baby. Who was I to dictate who the partners should be? Luckily pragmatism was on our side. This really was the strongest partnership we could create. Together we had everything we would need to make this brewery a reality, including a major X-factor: Alex could move back to Madison whenever necessary to get boots on the ground. 2012 was underway and our partnership was now solidified as the three of us and our two dads. We put together the lease, an asset purchase agreement with Ale Asylum and our financing. The bank financing was particularly difficult to obtain. While our story and plan was solid, it was not enough to execute without Steve’s help. Ultimately we only got the bank financing across the finish line because the bank president trusted Steve and his investment in our business. Cash is king; relationships are gold! Steve we absolutely would not exist as we do today without your belief in us – thank you! And JEds and Steve together, we are so incredibly blessed to have two dads that believe in us enough to provide capital and then trust us unequivocally to operate the business. My desperate hope is that a paper investment can be made a reality for you guys soon!
Heading into May 2012 Alex sold all of his belongings in LA, packed his Tahoe and drove to Montana. He spent a week or so getting his hands dirty at Ryan’s brewery in Montana. Then he made his way to Wisconsin to find an apartment in Madison. Almost every single night of the spring and summer of 2012 was spent, in some way, talking about the brewery. We would conference call while I was driving home from Milwaukee. What would it be called? What equipment do we need? Who are we? Seriously, who the fuck are we? That was the hardest thing to figure out… Modeling revenue, budgeting equipment and estimating construction costs were easy for me. The hardest thing we ever did was create a brand, and we could not have done it without another best friend, Tom Kowalke. Tom was our first employee and our creative force in helping to formulate the Karben4 brand and the early beer brands. He is most known today for all of his impulsist paintings in the taproom and in his personal portfolio.
In July 2012 I got married. Laura was the single most beautiful bride on the planet. The party was great and the excitement for life was through the roof. Ryan moved to Madison in August and work on the start-up really took off. I remember being overwhelmed but loving every second of it. I would get up and drive to Milwaukee most weekdays. At night, I would roll straight into brewery stuff and I was trying to balance my brand new marriage. I am still not sure if Laura knew what she was getting into, but 5 years later and we are more deeply in love and have two incredible daughters. Thank you for dealing with me Laura, I love you!
October 1, 2012 was the first day of our lease and we celebrated by demolishing nearly the entire Ale Asylum taproom in one day. It was awesome! All weekend we smashed stuff and on Monday shit got real for me. All of the sudden, I had to go back to my “real job” and we had an active business underway. Dollars were being spent and I had not yet set up our accounting system. Construction planning and coordination was needed constantly and I was the only one who had any knowledge of that stuff at the time. I felt like I was leaving my brothers in the trenches every morning when I went to work… Three months of 100 hr-weeks later, we opened the taproom to the public. Day after day we stayed open, released new beers, hired help, but that feeling always nagged me. Throughout 2013 I would work at night on accounting, inventory, production reporting, excise taxes, sales taxes, our taproom POS, IT, etc. 2-3 nights per week I would eat dinner at home and then when Laura was heading to bed I would head into the brewery until as late as I could stand… I would end up tearing apart the taproom with our manager, Ben, late at night after they closed. We would re-arrange things and talk about the flow of their work. Ryan would usually be there late as well and he and I would catch up about production things. It was a tough year. We needed to do more but we just did not have the resources to drive us forward as fast as we needed to go.
In August 2013 we signed with General Beer to take over our distribution efforts in Madison. This was a big improvement and helped move us forward in the fall of 2013 but rolling into early 2014 our keg sales had very much plateaued. We were always sitting on way too much of the wrong inventory. We were intentionally waiting to bottle our first beer until we established our keg sales at a certain level, but we also had no ability to get beer in to bottles. Our bottling line had seized and we had no packaging design. In February 2014, when my daughter Sloane was born, in almost the very first moment of her life, it became clear to me that the risk of missing nights with this girl, and the risk of this business not growing like it needed, were all so much greater than the risk of leaving my day job. Within a few weeks of Sloane’s birth I put in my two weeks notice at Findorff and made my transition into working during the day at K4. I immediately got to work fixing our ordering system and streamlined our entire supply chain. That saved us tens of thousands of dollars per month in cash flow. I drove the plan to expand our distribution to Milwaukee which setup the rest of our state expansion. Most importantly I helped Ryan attack our bottling line and get our packaging design finished so that we could offer the world Fantasy Factory in bottles. From the moment I got to focus on K4 entirely, it has been a dream. I love the risk/reward of the daily grind in leading a small business. In a single day you can fix things for people that have been plaguing them for weeks. In a single day you can make decisions to completely shift the strategy and timeline of the business and create results that we personally feel. In a single day, you can do jack-shit and you feel the pain.
There are all sorts of issues and mistakes, details and hard work, plans for this year and strategies for the next five…But this is where it all began. Three normal guys, dealing with normal problems made an abnormal decision to go for it! Cheers boys!