11-Hour Lines for a New Ale? Fans Wait, Breweries Worry

 

Shortly before 11 on a Friday night in January, Justin Saurer parked his car on a gritty Brooklyn street that was best known for its McDonald’s and proximity to the toxic Gowanus Canal until Other Half Brewing Company opened in 2014.

Mr. Saurer craved a first crack at the special India pale ale that Other Half had created to celebrate its third anniversary. But the cans wouldn’t go on sale until the brewery opened at 10 a.m.

What was 11 hours, given his plum perch?

“When you’re the first one here, you don’t have to worry about parking,” Mr. Saurer, 38, said the next morning. A firefighter and a father of an infant daughter at home, he drove in from Amityville, on Long Island, with a sleeping bag. “I have the best sleep in the car,” he said. “There are no kids screaming.”

The frigid daybreak had revealed a high-spirited line hundreds of beer lovers deep, snaking around several blocks. Among those waiting, many of them drinking cans from coolers, were Michael Roulhac and his wife, Kim Roulhac, who had left Richmond, Va., at 1 a.m. and driven straight to Brooklyn. “We’re road warriors,” said Mr. Roulhac, 40, who regularly makes the round trip to Other Half.

Scenes like this play out nearly every day across the country as supplicants (“kind of like a beer brotherhood,” Mr. Saurer said) queue up outside breweries for new releases of I.P.A.s — in particular, a cloudy, unfiltered New England style that is loved for its flavors of citrus and tropical fruit.

“People are fanatical about it, to the point they don’t want to drink anything else,” said Sam Richardson, the brew master and a founder of Other Half. “Everyone has this expectation of getting hazy I.P.A.s in a can directly from a brewery.”

The fan base for these special-edition ales has been growing since the early 2010s, creating excitement and a new revenue stream for the craft-beer business. But the waiting lines for each new release have become so unwieldy that many brewers are taking steps to contain or manage them.

Modern Times Beer in San Diego and Threes Brewing in Brooklyn presell cans online and provide pickup windows for the beer. Maine Beer Company and Hoof Hearted Brewing in Marengo, Ohio, sell advance tickets to limit crowds.

“There were a couple times where we thought we’d have a riot,” said Trevor Williams, the brewer and an owner of Hoof Hearted.

Monkish Brewing Company in Torrance, Calif., resisted the pale-ale madness for its first four years, specializing in Belgian-inspired beers and even posting a sign declaring, “No MSG, No I.P.A.” But last year it caved to popular demand and started canning fruity I.P.A.s like its Sip the Juice.

The owner and brewer, Henry Nguyen, expected a line but not a crowd of more than 300 enthusiasts in his parking lot at 3 a.m. “People were camping out,” Mr. Nguyen said.

With each new release, fans would arrive earlier and earlier, when the brewery was still open. “They would set up chairs, go inside and drink and come back out and spend the night in the parking lot,” he said. “It was about 15 hours of waiting, sometimes for only six cans.”

To curb that behavior, Monkish began in September to release ales at unpredictable times, announcing them on social media with only a few hours’ notice. All the same, he said, he spots cars of people lurking outside, waiting for word, every day. “People just show up,” he said.

Tree House Brewing Company in Monson, Mass., posts daily Twitter updates on which brews are available and their quantities, but it sometimes maintains silence to dampen demand. Most small brewers, after all, would rather sell to a broad audience than to see supplies swallowed up by a few zealous shoppers.

“You have this beer that you’ve busted your butt for, had steam in your face, gotten blasted with hops, and everybody at the brewery is jazzed — and you can’t tell anybody,” said Nate Lanier, a founder and the head brewer. “It’s the weirdest thing.”

Still, on most days, more than 2,000 people visit Tree House, which makes a transaction every seven seconds during the most hectic days. When the brewery announces on Twitter that the day’s stock is running low, Mr. Lanier said, “all walks of nature pop out of their car and sprint across the parking lot.” From men in suits to older women, he said, “it touches all facets of life.”

As the breweries have become more creative at managing waiting lines, so have the customers.

The line at Tired Hands Brewing Company in Ardmore, Pa., is notable for what’s lacking: people. The hordes leave chairs as placeholders, then go inside to drink until sales begin, an arrangement that grew organically. “We don’t encourage or discourage chairs,” said the brewer and owner, Jean Broillet IV.

But the brewery forbids chairs before noon and polices the lines, 800-strong during the frenzy for its Milkshake I.P.A.s. “It’s a phenomenon, and if you want to work with it,” it will work for you, Mr. Broillet said, adding that a local hairstylist and employees of a sushi restaurant hit the line to drum up business.

Some beer fans prefer not to wait, hiring professional line sitters like Same Ole Line Dudes, several of whom were stationed at Other Half’s recent release in Brooklyn.

The prize is not just beer. There are bragging rights for those who post photos of their haul on Instagram. Others trade the ales with fellow beer lovers.

Brewers put up with the fuss because the lines are economic lifelines. On-premises sales cut out the middleman distributors and increase profits, letting a beer maker control its path in a crowded field. “This is the best thing that’s happened to breweries in the 30-plus years of the craft-beer revolution,” Mr. Richardson said.

But the long lines can be a migraine as well as a boon.

In November, the Longmont, Colo., outpost of the Oskar Blues Brewery peddled cans of Ten FIDY Imperial Stout aged in bourbon barrels. They sold out within two and a half hours because the brewery had failed to limit sales per person.

“We had some people drop, like, $3,200 on beer,” said Chad Melis, its marketing director.

A 12-can limit was in place for a release at the brewery in December. “It was negative 5 degrees here in Colorado, and we had up to 400 people outside,” Mr. Melis said. “We had a meeting the night before, and we were like: ‘Hey, this is not good. There are serious health risks.’” (Customers congregated inside before the orderly sales began.)

An often-suggested solution — make more beer — is usually unfeasible. “It’s all we can package,” said Mr. Nguyen of Monkish. “Our goal is not to be a big brewery.”

To make waiting for its in-demand Swish double I.P.A. less onerous, the Bissell Brothers brewery in Portland., Me., upgraded its internet speeds to trim seconds off transactions, and it serves free doughnuts and coffee. “If people are going to wait in the cold, we need to do something for them,” said Peter Jensen Bissell, the business director and an owner.

As the clock inched toward the start of sales at Other Half in Brooklyn, Kevin Weinisch was tailgating around his station wagon, drinking a beer. “You party in the morning, then dad in the afternoon,” said Mr. Weinisch, 36, a traffic engineer who planned to drive home later to Patchogue, N.Y., to be with his two children.

The first in line, Mr. Saurer, was ready to buy his cans and leave. “After waiting here all night, all I want to do is go home,” he said. “I’m broken.”

Hangover Series: "Ruh-Ro!"...... Legal Weed Is Hurting the Beer Business

Major brewers like MillerCoors have seen the largest drops in sales.

In states that have legalized recreational marijuana, more people are looking to take a bong hit than sip on a hoppy brew.

Research firm Cowen & Company analyzed the state of the beer industry in Colorado, Oregon and Washington—states where both recreational weed is legal and craft beer has become popular. In those states, beer markets have “collectively underperformed” over the last two years, trailing behind beer sales around the country, industry websiteBrewbound reported.

“With all three of these states now having fully implemented a [marijuana] retail infrastructure, the underperformance of beer in these markets has worsened over the course of 2016,” the researchers wrote.

Domestic brewers like Anheuser Busch-InBev and MilllerCoors have seen the largest drops. Sales volume of premium brews like Coors Light and Bud Light dipped by 4.4%, while economy brews—the regular forms of mainstream beers like Budweiser or Coors—dipped by 2.4%.

Craft beer also took a hit: Though it continues to grow, smaller breweries aren’t performing as well as their counterparts around the nation. Weed’s popularity has also started to affect breweries’ bottom lines: Individual yearly spending on legal weed has outpaced that of alcohol, a survey found in July.

The shift is most prominent in Denver, where total beer volumes plummeted by 6.4%. The gravitation toward legal weed particularly noticeable in 18 to 25 year-olds, who are using more cannabis yet have also stopped drinking as much alcohol, according to government data.

Hangover Series: Rise of Artificial Intelligence (what will all the people do?)

Marc Benioff: We're on the cusp of an AI revolution 

published in World Economic Forum

Over the last 30 years, consumers have reaped the benefits of dramatic technological advances. In many countries, most people now have in their pockets a personal computer more powerful than the mainframes of the 1980s. The Atari 800XL computer that I developed games on when I was in high school was powered by a microprocessor with 3,500 transistors; the computer running on my iPhone today has two billion transistors. Back then, a gigabyte of storage cost $100,000 and was the size of a refrigerator; today it’s basically free and is measured in millimeters.

Even with these massive gains, we can expect still faster progress as the entire planet – people and things – becomes connected. Already, five billion peoplehave access to a mobile device, and more than three billion people can access the Internet. In the coming years, 50 billion things – from light bulbs to refrigerators, roads, clothing, and more – will be connected to the Internet as well.

Every generation or so, emerging technologies converge, and something revolutionary occurs. For example, a maturing Internet, affordable bandwidth and file-compression, and Apple’s iconic iPhone enabled companies such as Uber, Airbnb, YouTube, Facebook, and Twitter to redefine the mobile-customer experience.

Now we are on the cusp of another major convergence: big data, machine learning, and increased computing power will soon make artificial intelligence, or AI, ubiquitous.

AI follows Albert Einstein’s dictum that genius renders simplicity from complexity. So, as the world itself becomes more complex, AI will become the defining technology of the twenty-first century, just as the microprocessor was in the twentieth century.

Consumers already encounter AI on a daily basis. Google uses machine learning to autocomplete search queries and often accurately predicts what someone is looking for. Facebook and Amazon use predictive algorithms to make recommendations based on a user’s reading or purchasing history. AI is the central component in self-driving cars – which can now avoid collisions and traffic congestion – and in game-playing systems like Google DeepMind’s AlphaGo, a computer that beat South Korean Go master Lee Sedol in a five-game match earlier this year.

Given AI’s wide applications, all companies today face an imperative to integrate it into their products and services; otherwise, they will not be able to compete with companies that are using data-collection networks to improve customer experiences and inform business decisions. The next generation of consumers will have grown up with digital technologies and will expect companies to anticipate their needs and provide instant, personalized responses to any query.

So far, AI has been too costly or complex for many businesses to make optimal use of it. It can be difficult to integrate into a business’s existing operations, and historically it has required highly skilled data scientists. As a result, many businesses still make important decisions based on instinct instead of information.

This will change in the next few years, as AI becomes more pervasive, potentially making every company and every employee smarter, faster, and more productive. Machine learning algorithms can analyze billions of signals to route customer service calls automatically to the most appropriate agent or determine which customers are most likely to purchase a particular product.

And AI’s applications extend beyond online retail: Brick-and-mortar stores still account for 90% of retail sales, according to the consultancy A.T. Kearney. Soon, when customers enter a physical store, they will be greeted by interactive chat-bots that can recommend products based on shopping history, offer special discounts, and handle customer-service issues.

Advances in so-called “deep learning,” a branch of AI modeled after the brain’s neural network, could enable intelligent digital assistants to help plan vacations with the acumen of a human assistant, or determine consumer sentiments toward a particular brand, based on millions of signals from social networks and other data sources. In health care, deep-learning algorithms could help doctors identify cancer-cell types or intracranial abnormalities from anywhere in the world in real time.

To deploy AI effectively, companies will need to keep privacy and security in mind. Because AI is fueled by data, the more data the machine gains about an individual, the better it can predict their needs and act on their behalf. But, of course, that massive flow of personal data could be appropriated in ways that breach trust. Companies will have to be transparent about how they use people’s personal data. AI can also detect and defend against digital security breaches, and will play a critical role in protecting user privacy and building trust.

As in past periods of economic transformation, AI will unleash new levels of productivity, augment our personal and professional lives, and pose existential questions about the age-old relationship between man and machine. It will disrupt industries and dislocate workers as it automates more tasks. But just as the Internet did 20 years ago, AI will also improve existing jobs and spawn new ones. We should expect this and adapt accordingly by providing training for the jobs of tomorrow, as well as safety nets for those who fall behind.

AI is still a long way from surpassing human intelligence. It has been 60 years since John McCarthy, a computer scientist and nominal father of AI, first introduced the term during a conference at Dartmouth College, and computers have only recently been able to detect cats in YouTube videos or determine the best route to the airport.

We can count on technological innovation to continue at an even more rapid pace than in previous generations. AI will become like electrical current – invisible and augmenting almost every part of our lives. Thirty years from now, we will wonder how we ever got along without our seemingly telepathic digital assistants, just as today it’s already hard to imagine going more than a few minutes without checking the 1980s mainframe in one’s pocket.

Brewery Builds a Pipeline, Sending Beer Lovers Into a Froth

Belgian project will carry 1,500 gallons an hour; requests for home taps fall flat.

BRUGES, Belgium— Xavier Vanneste, heir to a dynasty of beer brewers in this medieval city, had a pipe dream.

When he woke up and looked out of his window one spring morning, he saw workers on the street laying underground utility cables in front of his house, situated on the same ancient square as the brewery he runs.

“I immediately realized this was the solution,” Mr. Vanneste said.

Beer pipeline 

The brewery’s truck fleet had been bottling up the city’s narrow, cobblestone streets. Matters had been getting worse since 2010, when the brewery moved its bottling facility out of town.

His brain wave? A beer pipeline.

“It all started as a joke,” said Mr. Vanneste. “Nobody believed it was going to work.”

Four years later, the pipeline is just weeks away from completion. It stretches 2 miles from the brewery, De Halve Maan, or The Half Moon, in the city center to the bottling plant in an industrial area. It will be able to carry 1,500 gallons of beer an hour at 12 mph. Hundreds of truck trips a year will no longer be necessary.

Not long after the project was announced, the burghers of Bruges started dreaming of siphoning off personal supplies.

A local satirical TV show tricked people living near the route into believing that beer taps could be installed in their houses. Mr. Vanneste said it would be impossible to illegally tap into the polyethylene tubes, which he said are stronger than steel.

The citywide attention gave Mr. Vanneste another idea. He’d partly fund the €4 million ($4.5 million) investment by offering lifetime supplies of beer. Attracted by the liquid returns, brew-lovers sank some €300,000 into the project.

They were offered three options. The most expensive “gold” membership, which costs €7,500, entitles the holder to an 11-ounce bottle of Brugse Zot beer (retail price, €1.70) every day for life, along with 18 personalized glasses.

One of the 21 people who signed up for that was Philippe Le Loup, who runs a restaurant on the scenic Simon Stevin square, a few hundred yards from the pipeline. Mr. Le Loup, whose establishment serves about 1,850 gallons of Brugse Zot a year, said he would have preferred a direct tap into the pipeline. “It would have saved me a lot of keg-dragging,” he said.

Mr. Le Loup also bought bronze memberships, at €220 apiece, for each of his 12 employees, entitling them to a 25-ounce bottle of beer every year for life. “In total, I invested over €10,000,” said Mr. Le Loup, 35 years old, who was born in the city. “I calculated that if I pick up my free beers for 15 years, my investment will be paid back.” He said he plans to drink most of the beer himself.

A local satirical TV show tricked people living near the route into believing that beer taps could be installed in their houses. Mr. Vanneste said it would be impossible to illegally tap into the polyethylene tubes, which he said are stronger than steel.

The citywide attention gave Mr. Vanneste another idea. He’d partly fund the €4 million ($4.5 million) investment by offering lifetime supplies of beer. Attracted by the liquid returns, brew-lovers sank some €300,000 into the project.

They were offered three options. The most expensive “gold” membership, which costs €7,500, entitles the holder to an 11-ounce bottle of Brugse Zot beer (retail price, €1.70) every day for life, along with 18 personalized glasses.

One of the 21 people who signed up for that was Philippe Le Loup, who runs a restaurant on the scenic Simon Stevin square, a few hundred yards from the pipeline. Mr. Le Loup, whose establishment serves about 1,850 gallons of Brugse Zot a year, said he would have preferred a direct tap into the pipeline. “It would have saved me a lot of keg-dragging,” he said.

Mr. Le Loup also bought bronze memberships, at €220 apiece, for each of his 12 employees, entitling them to a 25-ounce bottle of beer every year for life. “In total, I invested over €10,000,” said Mr. Le Loup, 35 years old, who was born in the city. “I calculated that if I pick up my free beers for 15 years, my investment will be paid back.” He said he plans to drink most of the beer himself.

“When I’m 50, I will make profit,” he said.

Last year, De Halve Maan exported about 200,000 liters of its most popular beers, Brugse Zot and Straffe Hendrik, to the U.S., double the 2014 figure.

Ronald Martin, a music teacher, home brewer and De Halve Maan fan in Buffalo, N.Y., was one of 76 foreigners to pitch in.

When he visited Bruges, he was convinced the pipeline was happening. He wanted to be the first American to take part. “When I walked into the brewery, the secretary had a phone call from another American,” Mr. Martin recalled. He immediately went to get cash and signed up.

“When you talk about a beer pipeline, everyone thinks you’re joking,” he said. “But it’s a serious thing.”

A few European sports arenas have aboveground pipelines. In Randers, Denmark, a pipeline under a street carries beer to some bars. The annual Oktoberfest beer festival in Munich, Germany, pipes beer to some tents. In Cleveland, Ohio, the Great Lakes Brewing Company moves beer through a pipe from its brewery to a bar across the street.

The city of Bruges, which last year attracted 6.6 million tourists, has long been looking for solutions to reduce traffic in its historic center—a Unesco World Heritage site known for its canals and medieval architecture.

“The pipeline is a breakthrough,” said Renaat Landuyt, mayor of Bruges, which was the economic capital of Northern Europe between 1200 and 1400.

Mr. Landuyt said he would even consider constructing pipelines for other goods, including chocolate, one of Belgium’s other precious commodities. “Everyone who proposes alternative means of transport is welcome here,” he said.

The centuries-old brewing company, the last one remaining in the city center, said its new pipeline wouldn’t affect the taste of its award-winning beers.

Most of the pipe runs about 6 feet underground, but in some spots it goes about 100 feet under. On a recent day, workers were digging holes, connecting tubes and replacing cobblestones on Zonnekemeers, a street near De Halve Maan, attracting the attention of many bystanders.

“The beer pipeline has become a sight,” said Alain De Pré, who oversees the construction of the pipeline. “People are taking more pictures of this than of the monuments around us.”

Sylvie Melkenbeek, a 78-year-old retiree, was enjoying her espresso on a sunlit terrace in front of De Halve Maan as horse carriages rolled by carrying tourists. Ms. Melkenbeek, whose last name literally translates as “stream of milk,” said she would much prefer a pipeline filled with coffee.

“I don’t like beer,” she said.

 

Pabst Raids Dad’s Beer Fridge as It Looks to the Future

I read this article in the NYT and was left with more questions than the article answered. Curious....

LOS ANGELES — Eugene Kashper looks the part of someone who likes to throw back a few P.B.R.s from time to time — hipster glasses, scruffy facial hair, faded T-shirts and jeans and well-worn sneakers.

Talk to him for a few minutes in his office here, though, and you hear a shrewd businessman who blithely weaves in discussion about market shares, stock keeping units and distribution channels.

The talk is not all talk, either. Mr. Kashper, 46, is a millionaire many times over, having made a fortune reviving several all-but-moribund Eastern European breweries.

Now he’s focused on a beer project on another continent. The project is Pabst Brewing Company, which declares itself the largest American brewery. He bought Pabst in 2014 with the private equity firm TSG Consumer Partners for a reported $700 million, a deal that instantly made him one of the most-watched figures in the beer industry.

It also made people wonder: What in the world was he doing?

Pabst Blue Ribbon, far and away the company’s top-selling beer, had a loyal following among skate punks and ski bums, and some currency in hipster enclaves. But it was still classified in the industry as a “sub-premium” beer and business was not booming. The company’s share of the beer market hovered in the low single digits.

“Eugene has a million ideas and a lot of energy, and he’s very engaging,” said Benj Steinman, publisher of Beer Marketer’s Insights, a trade publication, and a longtime observer of the beer market. “But I did wonder what he saw in Pabst.”

Mr. Kashper says he saw a big opportunity. “Beer, you know, it’s just fun,” he said. Now chief executive, he is pushing an aggressive effort to leverage the company’s distribution network, a part of the business that had been built up under previous owners, and dusting off old beer recipes and brands to capitalize on consumer desire for local products.

“We’re ideally suited for the whole locavore thing,” he said.

Whether he can pull it off is another question. After decades of consolidation, two big players, Anheuser-Busch InBev and Molson Coors, last year controlled roughly 70 percent of the American market. Pabst was in fifth place, with 2.6 percent.

But Mr. Kashper offers no hint of doubt, and his partners say he has already put the company on the right path.

Brian Krumrei, a managing director at TSG, said profitability at Pabst increased by 50 percent in the first year of the firm’s ownership, though he would not disclose dollar figures.

“Eugene is a pretty passionate guy, and that has permeated the culture — the 400 people who work at Pabst today are pretty passionate about it,” Mr. Krumrei said. “We view that as a huge positive for the business and its potential.”

Born in Russia, Mr. Kashper grew up in New Jersey speaking Russian and English at home. After graduating from Columbia University in 1992 with a degree in East Asian studies, Mr. Kashper, an American citizen, went to work for Ernst & Young, which quickly capitalized on his language skills by sending him to Moscow.

Soon after that move, he left Ernst & Young and moved into the beer industry, getting a job as the lead salesman in Eastern Europe for Stroh’s, an old beer brand coincidentally now under the Pabst umbrella. He then joined forces with two Russian brothers, Alexander and Arkady Lifshits, and in 1998 they co-founded the Ivan Taranov Breweries.

After a series of deals in Russia and Eastern Europe that netted the partners hundreds of millions of dollars, the three men created Oasis Beverages, a brewer and distributor based in Cyprus. Oasis also serves as an umbrella for other offshore investment vehicles they control.

In September 2014, Oasis was announced as the buyer of Pabst, together with TSG. News outlets had a field day, portraying the deal as a Russian takeover of a quintessential if somewhat down-market American beer.

But a couple of months later, a different news release went out, saying that Oasis had never been the buyer of Pabst. Mr. Kashper, it said, was the buyer.

Why the mistake occurred in the first place and why it took two months to set the record straight remain mysteries. But in so many ways, it matched the history of Pabst, which is also filled with unusual twists and turns.

 

Founded in Milwaukee in 1844 by Jacob Best Sr., the brewery had a pretty good run for more than a century. But in the 1980s, sales began sliding, and in 1985 Pabst landed in the hands of Paul Kalmanovitz, a beer entrepreneur from California. He died shortly after acquiring the brewery — but not before he had taken a hacksaw to costs.

Mr. Kalmanovitz left his money to his pets and his breweries to a charitable foundation, which sold the company to the billionaire investor C. Dean Metropoulos in 2010, when it had roughly $500 million in sales. By that time, Pabst had contracted production of its beers to MillerCoors and spent virtually nothing on marketing. Mr. Metropoulos also moved the company from Chicago to Los Angeles.

The lack of marketing became a sort of renegade promotion in and of itself, increasing Pabst’s appeal among consumers who were turned off by advertising and looking for beer that was more “authentic” — even though Pabst no longer made its own beer. Sales rose, at least slightly.

“Forty years on, many brands had ground to a halt in terms of increasing market share, and that’s where the business stands today — the biggest beer companies aren’t selling more beer,” Mr. Kashper said. “Pabst was.”

The trick now will be to take advantage of those strengths. For one thing, the company is opening a microbrewery and tasting room at the site of the former Pabst brewing complex in Milwaukee, where it will serve up special selections.

Mr. Kashper is also looking to sell more of the 77 beer brands and the recipes it owns — many of which have not been brewed in decades — and ride the coattails of the craft beer craze. Pabst will soon start producing Rainier Pale Mountain Ale at a brewery in Washington State, for example, using a recipe derived from the one for a Rainier beer that was last brewed in the 1930s and 1940s. Other brands include Lone Star, Schlitz, Olympia, National Bohemian, Colt 45, Schmidt and Pearl.

“We can take advantage of the heritage embedded in our brands,” Mr. Kashper said. “We don’t have to spend money convincing consumers our brands are authentic — they already know they are.”

Stephen Rannekleiv, an investment analyst at Rabobank, said these old brands might put Pabst in a good position.

“Pabst in the past has been able to buck trends by playing up its retro feel and being a little offbeat, and those same things are helpful today,” he said.

The company is also putting more energy into leveraging its distribution system, which had been nurtured and honed by Mr. Metropoulos.

Serendipitously, he found one hit to pump through the system right after buying Pabst, in Not Your Father’s Root Beer, a “hard” or alcoholic soda made by Small Town Brewery that became the beer industry’s sleeper success story of 2015. The product helped raise Pabst’s overall sales in 2015 by 20 percent and pushed its market share up by a percentage point — even as sales of its main brand declined.

But Mr. Kashper, with his faded Pabst Blue Ribbon logo T-shirts and dilapidated sneakers, says he’s not going to forget about the company’s primary brand, either.

“We’ve become an affordable, lighter beer that appeals to people who like craft beer,” Mr. Kashper said. “And, look, selling sub-premium beer is a very profitable business for us, no matter what else we may be doing.”

BeerShop's Hangover Thoughts Series: Silicon Valley’s Unchecked Arrogance

In its mind, Silicon Valley creates the future, while the rest of the world will soon become the “idle class.” What if they instead helped people build wealth for themselves?

By Ross Baird and Lenny Mendonca

 

Last month, Y-Combinator, Silicon Valley’s blue-chip startup fund, announced a request for proposal to study a universal basic income. Sam Altman, the President of Y-Combinator, wrote in a separate essay that in the future, we will have a “smaller and smaller number of people creating more and more of the wealth. And we need a new solution for the people not creating most of the wealth — many of the minimum wage jobs are going to get innovated away anyway.”

The people without jobs will be an “idle class” — and the obvious conclusion, to Altman, “is that the government will just have to give these people money.” (Emphasis ours.)

And you wonder why political candidates on both sides are tapping into anti-elitist anger with great success.

Silicon Valley is, with good reason, the envy of the entrepreneurial world. Brilliant people have created transformative companies — and have earned a great living in the process. Facebook and Twitter have given people the ability to express themselves in authoritarian governments; the inventors of the mobile phones have brought information and services to billions; and Google makes the world’s information available to everyone.

But Silicon Valley’s view towards the rest of the world is often one of unchecked arrogance.

In the universal basic income proposal, the Y-Combinator team posits that Silicon Valley’s wonderful creations will create an incredible amount of wealth, but will put a lot of people out of work. Silicon Valley frequently worries, for example, that if self-driving cars are commercialized, truck and taxi drivers will be out of work. As such, a universal basic income will ensure that they’ll be happy and society will be successful. It’s a seductive idea, but they are asking the wrong questions.

The idea here is borne from an underlying assumption that capitalism has winners and losers, and the victors have a responsibility to take care of the rest. Instead, we’d posit that many of the “winners” in Silicon Valley are part of a faux meritocracy — being born into the right city or social network.

Silicon Valley seems to be worried that the rest of the world won’t find its way. A recent podcast from venture firm Andreessen Horowitz described how a few “Alpha Cities” are going to drive the future, while other metropolises will struggle to find their meaning. When India didn’t go for a Silicon Valley-led internet proposal, Marc Andreessen gained global denunciation (including from Silicon Valley CEOs such as Mark Zuckerberg) for a tweet that said, “Anti-colonialism has been economically catastrophic for the Indian people for decades. Why stop now?” And Y-Combinator themselves say that for startups to be successful, they have to move to Silicon Valley. “We would not be doing a startup a favor by not making them move,” their website reads.

So Silicon Valley, in its own mind, creates the future, while the rest of the world (by virtue of zip code or differing world view) should follow suit or risk being left behind.
One could take this to its logical (and cynical) conclusion and say that the rest of the world will eventually be out of work and become a burden on the enlightened few. They’ll storm the gates of Silicon Valley’s kingdom, and the resulting social unrest will be an unfortunate distraction to the wonders of artificial intelligence, research into extending life past the age of 120, and other great wonders of modern technology.
The universal basic income will keep “these people” at bay.

YCombinator and their Silicon Valley counterparts often talk about the value of geography. The best ideas, we are led to believe, come from a small stretch of earth close to San Francisco.

James Fallows in a recent Atlantic essay describes how most of America’s elite believe in “The Big Sort” — that to be successful, one must be sorted into a few metro areas: San Francisco, New York, Boston, perhaps Seattle or Washington D.C. When it comes to people investing in new ideas, this is absolutely true. 78% of investment in startups goes to three states (New York, Massachusetts, California). While in the past 20 years startup investing has increased 300% in those states, it has actually declined in the other 47 across the country.

Silicon Valley has become a “monocrop” culture where entrepreneurs are well-educated, have frictionless access to capital, and have their basic needs taken care of. The majority of resources today are going to entrepreneurs whose lived experience is in well-off, well-connected cities.

Successful startups are born at places like Y-Combinator and go through the venture capital gauntlet frictionlessly — the same way big factory farms across America churn out cheap corn and beef.

Yet there is a problem with monocrop culture: ultimately, you deplete the soil. In a recent podcast with Kleiner Perkins partner Randy Komisar and legendary Silicon Valley “coach” Bill Campbell — mentor to Steve Jobs and Larry Page — Randy asked whether, over time, entrepreneurs were solving increasingly frivolous problems. Campbell responded, tellingly, that entrepreneurs solve problems that they can understand.

“While you and I might think Snapchat is frivolous,” Campbell said, “my grandchildren find it a great solution for how better to communicate with their friends.”

Snapchat may be solving an important problem for well-connected young people in America who don’t have to worry about basic needs. But whether it’s unemployed young people in St. Louis looking for their next paycheck or a family in Flint, Michigan worried about clean water, many Americans have more immediate problems.

But the entrepreneurs there — “those people” —often don’t have access to resources or opportunities to solve their problems. And Silicon Valley can’t foresee a future where St. Louis or Flint could create the jobs of the future.

Because most of today’s entrepreneurs have their basic needs taken care of, their problem-solving often seems frivolous to the rest of the country.

Take Uber, for example. Uber’s great at solving how people with smartphones and disposable income can get around major cities — a small fraction of the global population. Uber is less good at helping the drivers, whose income is much lower than the riders, benefit from this new paradigm. Uber has hailed their impact as letting people work flexibly and use assets more productively, but strategically is investing hugely in driverless cars.

And we don’t blame Travis Kalanick (actually we do, but that’s not the point of this story). Uber’s founders’ experiences are as riders, not drivers. But imagine an ownership structure in which, for example, drivers could earn fractional equity in the company for each ride they gave. What if a percentage of the $50B valuation were shared among the drivers, based on a merit-based system?

We’re not saying that Uber should do this (they can’t at this stage); we are saying that if Uber’s leadership had different lived experiences, the company might look different.

The universal basic income (UBI) is not a new idea. Richard Nixon originally proposed it in the early 1970s. Manitoba, Canada and Uganda have tried it, as have European countries like the Netherlands and Sweden, and political parties in India and Brazil. Andy Stern has a book coming out shortly about how to make it work in the United States. Done well, it could smooth volatility and provide some base stability for those who need it most, and even encourage risk-taking and help better deploy outdated, government-run welfare approaches.

And Y-Combinator’s thesis isn’t misguided. There is definitely a conversation worth having about what happens to society after software has eaten the world. But the conclusion — that the automation of these jobs will create a lot of wealth for a few people (of course the brilliant ones in Silicon Valley) but leave most out of work (the rest of us) — is reflective of Silicon Valley’s arrogance.

It seems like noblesse oblige for Silicon Valley to throw coins at the 90% of the population that will no longer have a job, thanks to their inventions. But the reality is most people don’t want just a universal basic income.

We need to figure out how to make the system work for everyone in the face of technological changes. We need policymakers to incentivize regional and industry diversity in our innovation, and entrepreneurs to focus on the larger, thornier questions related to building businesses that share the wealth better among those who create them — not design a system to spread the crumbs a little better.

How do we change ownership structures to prevent Snapchat, Instagram, and Whatsapp from distributing billion-dollar windfalls among only a couple dozen people? How can we enable great people, regardless of zip code, to solve messy societal problems? To us, these feel like much more constructive approaches than calculating the minimum income required to eliminate “the fear of not being able to eat.”

So there’s the problem. How do we change this? We have some ideas, but would love to hear from you as well. And you can contribute to the conversation on social media with #ReinventVC!

When a Craft Beer Is Released, Beer Geeks Go Crazy

FRENZY

02.15.16 7:01 PM ET

When a Craft Beer Is Released, Beer Geeks Go Crazy

If you thought the world of craft beer would be more civilized than the frenzied shoppers of Black Friday, think again. The furious mobs descend when a new beer comes out.

This most recent Black Friday saw the annual release of Goose Island’s Bourbon County Brand Stout, a highly touted offering that sends people scrambling to find bottles--and, in turn, acting just as childishly as what’s seen in those viral videos of Wal-Mart customers pursuing discounted televisions.

Unfortunately, the pushing, shoving, line-cutting, and fights are not surprising because, as of late, the rise of limited craft beers has led to a similar rise of beer geeks behaving badly.  

Firestone Walker Brewing did a special release on Black Friday for Parabajava, a highly anticipated coffee version of the California brewery’s acclaimed Parabola imperial stout.

It was sold at only three locations, at none of which one could purchase more than four bottles. But, as Jemma Wilson, Firestone Walker’s marketing specialist tells me, “Never underestimate a beer geek.”

At 10 p.m. that night, Wilson got a text from a fellow employee telling her someone was bragging online about having somehow scored 54 bottles of Parabajava.

Comments on Firestone Walker’s Facebook page derided the man, before turning on the brewery itself for allowing such a great tragedy like this to occur.

Relaxing at home, Wilson opened her computer to find an avalanche of nasty comments and hate emails.

Even worse, she soon learned the man was now trying to re-sell his 54 bottles—something technically illegal—for $80 each (they had retailed for around $20). 

Wilson issued an apology to Firestone Walker’s angry fans, but it was too late. Someone had figured out Mr. 54 Bottles’ home address and posted it online.

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Now still-seething beer geeks were making threats toward him and his wife. By the next morning the man had deleted his Facebook account and was threatening legal action against the brewery.

“I think the entitlement that comes with beer geeks is that they’re able to hide behind their computers and spew hate comments as though there are no repercussions,” Wilson tells me. “But many forget we are real people who sit there being verbally abused by complete strangers all the time.”

It’s not just some once-a-year, Black Friday phenomenon. This crude behavior occurs with just about every beer release, something that happens most weekends in some city or another. It would be completely hilarious, if it weren’t so pathetic.

There’s a YouTube video that shows just what this looks like in the flesh. The brief clip open on what sounds like a mob scene.

The camera is pointed toward a nearly empty, somewhat ransacked warehouse where a man in a logo-ed work shirt holds his palms up, trying to calm the angry mob.

Tampa police officers step in to help, but that just stokes the flames. Eventually, the men have no choice but to pull down a steel garage door and block themselves, and the warehouse, from the throbbing masses.

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As the door lowers, men in beards start pounding on it and chanting: “Cigar City sucks! Cigar City sucks!”

A protest? A demonstration? 

Nope, just angry beer geeks.

This was the 2014 release of Cigar City Brewing’s Hunahpu’s, yet another acclaimed imperial stout. And these frothing hoards had simply not gotten to purchase some of it. 

To get into Hunahpu’s Day required a $50 ticket with attendance capped at 3,500. Attendees would be allowed to buy up to three bottles of Hunahpu’s. While sales were going on, ticket-goers could enjoy other beers on tap in the brewery parking lot.

The problem? Some beer geeks created counterfeit tickets.

With no way to know which tickets were real and which weren’t—and with the line to get inside stretching a half-mile long—Cigar City made the impromptu decision to leteveryone in the doors. With far more than 3,500 people inside, bottles sold out quickly and many legitimate customers were shut out before getting access to their three guaranteed bottles.

That’s when the YouTube video picks up.

“I am acknowledging defeat. That was the last Hunahpu’s Day,” Joey Redner, Cigar City founder—and that man in the YouTube video with his palms held up—said in a statement the next day. (It returned for a sixth year in 2015, nevertheless.)

Jester King in Texas is another brewery that has had to spend far too much time trying to figure out how to get their coveted beer to customers without the subsequent shenanigans. This acclaimed Hill Country farmhouse brewery has been beset with countless beer geeks behaving badly.

“Limited beer releases do inevitably bring about ugliness and silliness,” Jester King founder Jeffrey Stuffings tells me.

On the silliness level was 2014’s infamous Montmorency vs Balaton Blend 2 release.

So few bottles were produced they were restricted to one per customer. That didn’t stop industrious beer geeks from finding ways to subvert that.

“Our staff recounted stories of patrons going to their cars to change their clothes, as well as putting on hats and sunglasses to disguise themselves,” Stuffings tells. “One guy tried speaking in a fake Irish accent to try and fool us into thinking he was a new customer who had not yet purchased his allocation. When caught, he simply said, ‘A guy’s gotta try.’”

Stuffings also shared with me an amusing photo he snapped during a recent release of Atrial Rubicite, perhaps Jester King’s finest beer.

In the photo, a young man holds the hand of a feeble-looking elderly woman, one we can only assume is his grandma, perhaps even great-grandmother—and who we likewise can assume he’s only brought along in order to help him “mule” extra bottles of another one-per-person beer.

Similarly, a beer fan on Instragram caught another elderly woman hauling away limited cans from Tree House Brewing. He comically dubbed her the “Grandmule.”

On an uglier level, Stuffings tells of customers buying bottles and then immediately setting up black market booths out of their car trunks in his brewery’s parking lot.

He was also aghast to find a man who devised a scheme in which 40 out-of-towners would give him $20, after which he would raffle off his single bottle of Sherry Barrel Atrial Rubicite to one winner, thus netting himself $788 (the beer costs $12). 

“In other words, people apparently paid $20 for a 1-in-40 chance of winning the beer,” Stuffings laments. 

As beers’ perceived secondary market value only soars higher and higher, bad behavior just seems inevitable.

I’ve grown tired of the madness of beer releases. Still, when my local brewery Other Half announced they were releasing a special collaboration IPA they had made with Trillium—a well-regarded Boston brewery—I knew I had to attend.

Others clearly felt likewise.

“We don’t really spend time looking at social media so we were kinda caught off-guard with how crazy that release would be,” Matthew Monahan, a co-founder of Other Half, told me.

While waiting in that snaking line I was approached by a man who handed me a card that read Same Ole Line Dudes, “professional line sitting/management services.”

He was offering to sit in line for me for a small fee. Some people actually took him up on that offer. TaskRabbit also reportedly had several “employees” at the release, acting as line proxies for beer geeks with money but no desire to actually wait in line.

These professional line-sitters raised the queue’s ire once discovered, but as Monahan told me, what could he do? It’s perfectly legal and he was far too busy worrying about getting his beer sold and out the doors in an efficient manner.

Still, those people who paid for line-waiters were onto something. A much-larger crowd than expected showed up and many people, myself included, found themselves waiting upwards of five hours for a mere eight cans of Street Green.

Soon, a devil-may-care attitude overtook the bored crowd, and people starting cracking beers and lighting up joints within the brewery’s residential neighborhood. Eventually the police arrived.

“We now have to notify the local precinct when we do these releases,” Monahan tells me. “They are certainly aware of what goes on.” 

Other Half releases are some of the best-behaved in the business from what I’ve seen. At least I didn’t witness any fights, something that can’t be said for a release that same month courtesy of Hill Farmstead.

Perhaps the best brewery in the world, and set on a bucolic family farm in Greensboro Bend, Vermont, Hill Farmstead is not exactly the easiest brewery in the country to access.

If any brewery could remain somewhat removed and immune from beer geeks behaving badly, it would surely be this one. But at the release of a farmhouse ale called--I swear--Civil Disobedience, a fight almost erupted when one man was kicked out for trying to mule more bottles than allowed.

Reportedly the man even tried to fight brewery owner Shaun Hill before, yes, the cops had to be called.

Even so, the beer geeks behaving badly coup de grace surely occurred at Iowa’s Toppling Goliath late in 2014.

In this case, one local resident was caught snapping up bottles of the brewery’s sought-after stout Assassin, drinking the limited beer himself, and then refilling empty bottles with something else.

He’d then add his own shoddy wax-dipping job and trade these counterfeits for other highly-coveted offerings.

Not surprisingly, Toppling Goliath founder Clark Lewey doesn’t have much interest in revisiting such a sordid incident, telling me, “Long story short, the beer community, not us, outed the guy and hopefully put an end to his foolishness. Of course, there is nothing we can do as a brewery. Just like any product, once it is sold it is out of our hands and control.”

The fact is, nowadays if you produce great beer in limited quantities, it seems to assure the ugly side of human nature will eventually rear its head. Everyone feels entitled to these beers, it’s the “everyman’s drink,” right?

Jester King has had to resort to marking forearms with invisible ink to prevent people from re-entering the line (fake Irish accents be damned!) and are considering swiping driver’s licenses in the future.

Other places, like Other Half and Hill Farmstead, wait until almost the last minute to publicly announce releases, hoping to limit crowds.

Cory King of Side Project Brewing has a strategy that also seems to work. He under-promises the amount of bottles that will be available, then over-delivers on release days, something that made for a much more positive YouTube video of beer geek behavior.

Unfortunately, releases free of bad behavior are more the exception than the rule. With craft beer only getting hotter and more and more geeks joining the hobby every day, the whole scene is surely only going to get worse.

“I just want to scream ‘IT’S JUST BEER!!!’” Wilson tells me, “but they act like it’s the cure to cancer.”