THE DAY THE BREWING STOOD STILL
In the days to come you will hear many COVID stories. This is ours.
March 16, 2020 was off in many ways... It was cloudy. It was on the colder side with highs of 53. It was windy. On windy days both our warehouse roll-up doors rattle, as if there actually was a zombie horde trying to get in. Their grotesque hands methodically slamming against the steel slats, eyes rolled back, tongues hanging out, slow but calculated movements. It would be an exaggeration at that point to say the apocalypse was upon us – but like the rest of the world, we had no idea what was coming.
The previous night, Sunday March 15th, Governor Newsom had ordered all bars, wineries, and nightclubs to close. He did not say breweries but without much information beyond that the details were up to everyone’s imagination. All around the SF Bay Area we already knew many businesses had scheduled emergency meetings Monday morning. We already met Mondays at 9:30am so we gathered as we always had. Within our network we were already hearing of mass layoffs following the announcement.
As a business we pride ourselves in being prepared so we can better handle the unexpected. Little did we know the culture we had worked so hard to build would be the determining factor in how well we weathered COVID.
CULTURE EATS STRATEGY FOR BREAKFAST
November 11, 2018 we had a staff meeting. There were various topics discussed. Among them were “Culture is #1.” It was about our results-oriented culture and the importance of open communication without judgement in able to drive results. We had to build an environment of trust to encourage open communication. We do things early, got it done to the best of our abilities, but also placed importance on employee happiness and empowerment. We encouraged thinking in numbers and setting algorithms. There were also topics about running lean, both in expense-related situations and as it relates to staff time (what it meant to save $10 dollars a day or to save 10 minutes a day). Among all the topics discussed that morning was one that would turn out to be the most important of all - "What is the company’s most important asset?" was shown on the slide deck on our giant projection screen. With a click the answered appeared right below:
July 8, 2019 at another staff meeting we started by watching video clips of Chef Christie of Marina Bay Sands in Singapore and a short piece on Eleven Madison Park in New York, one of the top-rated restaurants in the world. The discussion was what were the qualities these pros had that made them one of the best in their industries. We focused on their attention to detail, their matter-of-fact no blame/judgment style of communication. We talked about the qualities of a good leader, showing humility (being able to say I don’t know, owning up to mistakes etc), being a good listener, being exceptional at giving and receiving feedback. We talked about the 9 qualities that made a good team but they were actually qualities taken from an article called "9 Rules To A Happy Long Lasting Marriage.” Because in the end these were qualities important to any relationship. We talked about identifying superpowers and how you can't be courageous without being vulnerable (thank you Brene Brown). We also had a long segment on financial literacy. The owner of Sierra Nevada Ken Grossman has said in an article "I want our employees to think like owners". As owners, we wanted the same. And to achieve this we believed all employees should have financial literacy on their toolbelt. We discussed the differences of business finance vs personal finance and how that affects business decisions. Toward the end of the meeting it was revealed some amounts had already been set aside and continue to be set aside as a strategic reserve, or emergency fund.
DISASTER PLANNING DOESN’T HAPPEN BY ACCIDENT
These two meetings summed up the positioning of the business and almost predetermined our chances to handle the events that would start to unfold the morning of March 16th. We’d just come off a monster week. SF Beer Week had been one of our most successful event weeks since our opening day in 2016. After winning gold at the Best of Craft Beer awards the month before, we were moving our Lager At World’s End faster than we had tank space for (we would later win gold for this same beer at GABF Oct 2020, and at that point Lager At World’s End had won in the 2 largest commercial beer competitions in the US). We had just sold all of it, some as green lager as accounts prepared as they do every year for huge St Patrick’s Day celebrations. The taproom’s sales the previous weekend were 50% (!!!) higher than the same week the year before. Jan 1 to Mar 15 was a whirlwind that had zipped by with numbers that blew the previous year out of the water. But suddenly on Monday it all came to a halt. Normally on Mondays without the voices of customers the silence of our warehouse rages, without the thumping of music the occasional clicking of equipment dominates. Most Mondays we’re in good spirits, often telling jokes through meetings but there we were, in the silence, all seated together... quiet, somber... unsure of what was to come.
We went through the motions of our meeting, at that moment we weren’t quite sure whether the world was actually ending but we still had jobs to do. However, shortly after the meeting the news spread that California was officially putting in Shelter-In-Place for 3 weeks and all non-essential businesses were to cease operation until further notice. We heard of more layoffs.
It was as if the last trickle of sand squeezed through the hourglass and we had to hand in our tests. Suddenly we were being evaluated on what we’d done up to that point. Did we run lean enough? Was our expansion spending configured correctly? Did we invest enough in our relationship with our vendors, with other breweries, with customers? Did we build the right culture? If we needed to crank out projects to better our chances of surviving could we actually do it?
In that moment, the biggest question of all: So how long could we last with no revenue? These were numbers that were important for us to know but in this case and in that moment, our employees depended on us to know them. Luckily we knew this number by heart, pandemic or no pandemic at the end of each month this was a calculation that was done as part of disaster preparedness. The number was 3 ½ months.
Part of our ability to last that long at full operation was due to the emergency fund as well as some money set aside for capital projects, both of which our employees helped build. As owners it was an easy decision that afternoon of Monday March 16th to tell everyone their jobs were 100% safe through the 3 week Shelter-In-Place. We would pick up all tips and commissions as well so in essence everyone would be getting paid their expected wages. It was important financial stress was removed so they could concentrate on taking care of themselves.
HIRE PEOPLE SMARTER THAN YOU
If any business is unable to say their greatest asset is their employees, they're doing it wrong. The human spirit is one of the strongest and most unpredictable forces and the heartbeat of any business is intertwined with the heartbeat of its staff.
How do you start solving a problem that seems unsolvable? We went to our most important resource, our employees.
We’re constantly hammering in a set of values to our employees, things that are often easier said than done. These were things like being over prepared, getting tasks done early, having backup plans. What can go wrong and despite the low chance of it happening, what's the plan if it does? We're also always talking about watching margins and being curious about the numbers. If we try something new what's the risk or maximum loss and what’s the take or maximum gain if it succeeds? If it does well, how can we do it better? In a nutshell we already had a developed response to decisions and situations.
At times this cadence may have seemed excessive, however it's when a true disaster occurs suddenly we're relieved they were in place for us to tap into. On the surface, we brew beer and you drink it. But in reality under the hood was a perpetual chaos of change, constant maneuvering of each expense, each release, each project.
We floated this to staff and they were onboard as we knew they would be. They were now in the driver’s seat as it was up to them to save their own jobs. In an email between owners, a statement was made that "if there's one thing that has to come out of this, is our employees must have a job they can come back to when this is all over".
As soon as SIP was announced, we expected a 95% revenue loss, it turned out to be 92%. The only products we were selling at that point were cans, and obviously only to businesses that were allowed to stay open as essential businesses. We had to be both frugal and aggressive with our money at the same time. We adopted what some might see as an unorthodox strategy and we ended up spending more aggressively but in the right places. “Put that money to work”, we’d often say.
We like to do an exercise called what’s your superpower. We’re well aware each of our staff possess skills beyond what we’re capable of. Our own staff was a reflection of things we could not do and our job was to empower them to be their fullest. We started asking staff for new ideas and we took on as many new projects as we had capacity for. We've always been an incubator for new ideas so we were used to tapping into this pool.
It may seem counterintuitive to spend money at a time like this. The way it was presented to staff was to imagine being stuck on an island and you had 30 days of food. What if you knew of a way where you could invest 20 days of it and in 10 days it would come back as 25 days of food (for example, send out a hunting party). So after consuming 10 days of food, you would end up with 25 days instead of 20 had you done nothing. Then at the same time what if you found out how to consume less? Let's say in 10 days you only consumed 7 days of food. With this scenario after 10 days, you would end up with 28 days of food, so net you're really only down 2 days while doing nothing you would’ve been down 10 days.
Adversity does not build character. It reveals it. -James Lane Allen
And so we played this game of leapfrog, cut our consumption as much as reasonable while heavily investing in new projects we felt were low risk and would bring back profits. We did have many vendors to thank for their hand in this, and we took as much government assistance as we qualified for. Employees have always been our largest expense but we had committed to cutting staff only as a last resort. We are happy that a year after SIP, we still have yet to cut any staff. Not only that, due to COVID restrictions we ended up having to increase hours.
THE FUTURE IS UNCLEAR BUT OUR SPIRIT ISN’T
We’ve now been through multiple rounds of restrictions easing and then backpedaling. Shutdown restrictions had become the chorus of this song. Every few stanzas it repeated itself, but at least each time we knew the words better so we could sing along. Pretty soon we got pretty good at it, singing in unison, predicting when it would come up, knowing the financial effects of each flip-flop. What many don’t realize is each time there’s a restriction change, whether forwards or backwards, it costs the business money.
Constant change had become the new normal. Over this last year we’ve kept as many recurring items intact - so that our loyal customers could find solace that at least some routines remain unbroken and unchanged. We’ve tried numerous new things, we’ve had successes, we’ve had failures, there have been plenty of tears shed both good and bad.
To our employees that lived through this ordeal, who have worked tirelessly day in and day out - we applaud you for taking on this challenge and achieving the impossible, to not let hard times get you down, to trust that collectively you are stronger than the sum of your individual parts.
To our customers and all those that have supported us through this ordeal, we can’t thank you enough. You have been resilient in your efforts to ensure we make it through. It is because of this we stand on steady ground a year after Shelter-In-Place. And instead of looking down wary of our next step, we’re looking forward and ahead to what the future has in store for us.