Zamzar was launched in October 2006 and in this special series of blog posts we look at some of the biggest startup successes who also launched in 2006 and how they came to be.
The next company to feature on our 2006 series isn’t a tech company but rather a company that specialises in craft beer. Whilst they’re not a tech company Brewdog is a classic example of a startup success as founders James Watt and Martin Dickie created the fastest-growing food and drinks company in the UK. How did they do it?
Watt and Dickie had been friends since school and lived together whilst in their late teens. Watt read law at University whilst Dickie studied brewing at Heriot-Watt and late 2006 the two of them decided they wanted to brew their own beer but wanted to do it a little differently. Their mission was “to make people as passionate about great craft beers as we are, and that remains our mission today and will be forever.” Their focus was on this new style ‘hoppy’, American style “craft” beer which they felt could find its way into the mainstream, but if they were to achieve that goal then they’d do it their way. For Watt and Dickie are the self acclaimed bad boys of business “For too long people have been sold a fizzy, insipid lie,” James Watt once said. He continued by saying “For too long consumers have been lied to by faceless, monolithic, generic mega-corporations.”
In 2007 Dickie and Watt, with their dog, began brewing beer in a small industrial unit in Aberdeenshire, Scotland. This brewery was hardly state of the art. Instead, it had been ‘cobbled together with whatever we could afford’ said Dickie. They’d consistently pull 20 hour days for seven days a week at their brewery. To even set up the company in the first place was no easy feat. They’d thrown in £50,000 of their own savings, got a loan of £30,000 from a bank and managed to get a grant of £5000 from the Prince’s Scottish Youth Business Trust. Success was two years away so this money had sustain them and grow the business and they almost went under, more than once.
Then, some good fortune. One of their first creations, a pale ale called Punk IPA, was sent off to a Tesco beer competition along with a couple of other BrewDog drinks. Punk IPA was named as the winner of the competition and their other two entries occupied second and third place. Good news but the best news was still to come. Tesco had been so impressed with Punk IPA that they wanted to list them nationwide. Tesco however didn’t realise that two men and their dog; literally, were making and bottling the beers by hand and were only capable of doing 180 bottles an hour. So the duo had a decision to make; get serious and get more money or stay as they were? The decision was an obvious one but the timing could not have been worse.
A financial crisis and the first stunt
Britian’s banks, gripped by a financial crisis, were unwilling to to give the pair more money. Watt got creative and “put on my best suit, went to a nearby branch of HSBC and blagged his way to £100,000 of asset finance” just how exactly he did that remains a bit of a mystery but fresh from this success Watt and Dickie decided to chance their arm again but this time they wanted to drum up press coverage for free and the way they’d do this would be to target Scottish politicians, the Portman Group – the alcohol industry’s regulatory body and Jack Law, head of Alcohol Focus Scotland who to this day has arguably done more than anyone, albeit unwittingly, to promote the BrewDog business.
In 2009 an outraged member of the public penned a letter to the Portman Group, complaining about Brewdog and its 18.2% Tokyo imperial stout. The writer said it was irresponsible of the Scottish brewer to promote a beer that was so strong. Jack Law then weighed in and agreed and the Portman Group went away to investigate. Three weeks later they announced Tokyo was banned from bars, clubs and shops. Satisfied with the outcome, the complainant decided to reveal himself. His name was James Watt, CEO of BrewDog. This story made it to page 4 of The Sun Newspaper and gave the guys the perfect PR for their latest product line which was a new drink called “Nanny State”.
The PR Machine
Now they’d got the taste for a PR stunt the founders ramped up their assault on Law and the Portman Group. They created the worlds strongest beer, a 55% abv, known as “The End of History” and to ensure maximum controversy the 12 bottles that were created and sent off to Law and co were stuffed into taxidermy roadkill. The stunts continued, they projected a naked image of themselves onto the House of Commons. They enlisted a dwarf to petition parliament for the introduction of a two-thirds pint glass and even created a pale ale laced with steroids to help Olympians “relax before a big event and at the same time increase their chances of winning”. Perhaps the most famous of all the stunts was when they drove a tank down Camden high stress. All of this was designed to create some noise around the brand and that brand was all about “a rebellious beer that could take on the status quo in UK beers”. They wanted to cause anarchy because they wanted to break into a notoriously difficult market and with no real money to spend on marketing they felt their best chance was to get people passionate about their drinks, so passionate in fact that they’d share their experiences of them on social media. This is exactly what happened. These social shares have led to foreign fans in around 40 markets who now account for over 60 per cent of all sales.
However, this social media explosion meant the business grew at a rate which they couldn’t keep up with. They considered VC funding “We spoke to a few and we thought we were selling our soul to the devil,” says Watt. Instead they decided to do something unique but ultimately ingenious. They would raise their money through crowdfunding “We spoke to five different law companies. The first three told us it was impossible, the fourth that it was going to cost us half a million,” but then they found a lawyer who agreed to take them providing that lawyer got a cut of what was raised “We dealt with a receiving agent who had to build a system based on her requirements and, as a PLC, it all had to be audited. It cost us £150,000,” says Watt. “We gambled the entire future of our company on making this a success.”.
So on October 20, 2009, Equity for Punks was launched. 10,000 shares were released which equated to 9% of the company. Each share would cost £230 which meant the company was valued at a whopping £23 million which was significantly more than their turnover! The 10,000 shares were released in four tranches over a period of time (for different sums) and ended up generating over £4M of funds which could be ploughed into the company to help it grow. As well as the funds, BrewDog now had 10,000 committed ambassadors who would push and promote the brand across the globe. Each year the 10,000 would come together for their AGM (Annual General Mayhem) which in truth is just an epic party complete with free beer and music.
In 2020, and in the middle of the Coronavirus pandemic, Brewdog stepped up to the plate as they begun making hand sanitiser at its distillery in Aberdeenshire amid shortages driven by coronavirus fears. The firm said it would be giving away the “punk sanitiser” for free to those that need it.
BrewDog’s founder, James Watt, announced on social media that the company had started producing sanitiser to help with shortages. “We are determined to do everything we can to try and help as many people as possible stay safe,” he said.
Today, BrewDog is a thriving company employing over 200 people. Its drinks are found worldwide and this edgy company had not only broken into a difficult industry but had disrupted it and they’d done it very much their way.