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Comment by bruce511 | Hacker News Reader

I hope they succeed in taking it over, and I hope that they follow through on the idea of documenting the process as TV.

While making good TV will inevitably require editing to emphasise drama, I expect the editor won't have to look far.

I think the evolution of union employees from the point of "brewing beer" to the point of "running a profitable business" (complete with functions like sales, marketing, purchasing, quality control, and yes, labor management) will be both fascinating and informative. It would help other transitions to co-ops go a lot smoother.

I have no doubts it would be a success, but the process would be just as valuable as a learning tool.

Plus the TV would act as marketing (tick).

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"I think the evolution of union employees from the point of "brewing beer" to the point of "running a profitable business" (complete with functions like sales, marketing, purchasing, quality control, and yes, labor management) will be both fascinating and informative."

Or an unmitigated disaster. That would also make good TV...

It's dramatically easier to run a business when you merely need to be sustainably profitable rather than wildly profitable.

So much of the business world is contaminated by MBA-think that must squeeze every single penny out of a going concern.

Not sure I agree with that, but you also have to consider the interest rate environment we are in, along with the potential for an economic slowdown.

To buy the brewery, they will more than likely be taking on a ton of debt at higher than normal interest rates...this would put them under a lot of pressure from the start...

How about they take on no debt because otherwise Sapporo is going to shut this down and simply take a big loss?

When did "market clearing price" quit being a thing? When did we forget that market forces also work downward?

This is like the "labor shortage"--there is no "labor shortage". There are simply companies unwilling to pay market rates.

The real problem here, however, is political, not economic. If a Sapporo exec signs off on ... say, a $10 million deal ... and suddenly Anchor Steam suddenly starts pulling good profits it will make some Sapporo executives look really bad. And that is really bad for your career.

"How about they take on no debt because otherwise Sapporo is going to shut this down and simply take a big loss?"

Yea, taking a big loss will help with their taxes.

But they could just give it away...

The debt will be with suppliers. Sapporo will either need to pay that, or Anchor will, if the business carries on. Otherwise suppliers will either choose to not supply, make every deal cash up front, increase prices to absorb past losses or a combination of all 3. This includes production suppliers, but also things like leases, rent etc.

By contrast, shuttering it completely, selling off the barrels, makes the balance of the debt just go away. The landlord gets to simply write off owed rent.

Obviously prior owners will often take on debt to keep the business afloat. That might be financed debt, or credit lines. Or just non payments (rent etc). Resurrecting the business is hard because those suppliers have to be made whole. That's usually the killer in saving a failing business.

Are breweries typically insanely profitable? My understanding is they are like a commodity/staples business with tight margins.

Certainly taking it private makes some aspects easier, but makes financing harder too.

> Are breweries typically insanely profitable? My understanding is they are like a commodity/staples business with tight margins.

I own a bit of a brewery and have learned a bit about the business in the past 7 years.

No, breweries are not insanely profitable. You might think that they are if you simply look at grain to glass and forget about everything in between.

Those in between parts are real estate/rent, equipment, chemicals, packaging costs (equipment, labor, consumables), employees, taproom expenses, marketing, and finally, the worst, distribution expenses.

It's been a fun ride and I'm glad I'm involved, but insanely profitable just isn't the case.

Absolutely correct. Also fractional owner of a local brewer for a decade or so. Defintely not insanely profitable. As stated above distribution costs/complications and associated laws are often overlooked. Merchants and bars are a finicky bunch. Taproom sales can fluctuate a lot.

To be honest, to me it sounds like there isn't even that much profit even if we just consider grain to glass. I'm totally uneducated about the subject but it seems like you need quite a lot of grain for beer, and beer is quite cheap... Larger brewers make sense but for smaller ones, either their beer is super expensive or I'm missing something!

I don't drink alcohol so to be fair my knowledge is mostly coming from friends getting trashed on cheap Pabst Blue ribbon lol.

Yes, you're right. It's also easier to run a business where payroll is the last supplier, and if there's no cash we all just get short paid, instead of the case where employees are paid first.

And I get the MBA effect especially as we see that segment in the business news all the time.

But most businesses aren't big. Most don't have so MBA. Most don't make wild profits. Most are happy if they make it through the month, build up sufficient reserves, grow production over time and so on.

Profit is not just "extra money for owners", its also the part that provides income security in tough times, that buys new machines, that covers over the slow seasons, that secures cheaper supply lines and a million other things.

It creates resilience against the ever changing nature of the world. A business that runs at break-even are one tiny event away from closing their doors.

Squeezing every penny is not always about wild profits. Sometimes it's just keeping the lights on.

> But most businesses aren't big.

Careful there. While it may be true that there are more than 10 tech companies (MAANG x2) that doesn't actually reveal a lot about the skew of the landscape, as 'most' in this case means by absolute number and not weight.

Beer is no different. There's better than a 9/10 chance that microbrew you're holding is owned by one of two companies - Miller Coors or AB Inbev (and of the two it's far more likely to be Inbev). At least, this was the case a few years ago when I was still paying attention.

If you were to count by market share or even heads employed, I think you might find that "most business" is goliaths, not davids, and in this story, david loses.

Perhaps if we had kept antitrust solid it wouldn't be so hard to keep the lights on.

There are certainly market segments (like say cars) which have consolidated to the point where there are a handful of players, and they're all big.

Not yet mention that "big" has a different definition everywhere - I'm going to suggest an arbitrary limit of > 500 employees.

Again, it depends where upu live but if you look gard you'll see most businesses are small. Corner stores. Factories. Plumbers, electricians, car repair, and so on. Franchises.

There are not just "more than 10" tech companies, there are tens of thousands of them. I have 3000 tech customers and they are 99% small (by this definition) and I operate in a market so niche it would make you eyes water.

The vast majority of businesses are tiny. They are not on any stock exchange. They have < 10 employees. You will never read about any of them anywhere.

Beer brewing is very consolidated, but even there micro-breweries are gaining traction. Chances are though that if you bought your beer in a national chain its not a micro brewery.

> Profit is not just "extra money for owners", its also the part that provides income security in tough times, that buys new machines, that covers over the slow seasons, that secures cheaper supply lines and a million other things.

This seems like an old-fashioned view on the nature of business. It may have been true 50 or 60 years ago (at least) but I think it's the exception rather than the rule today. Cutting loose your employees is what provides income security in tough times (for the employees not cut loose). Loans buy new machines. If you have a couple slow seasons you'll simply be bought by some private equity firm, loaded up with debt, then driven into the dirt along with any pension obligations etc., the firm may have had.

I see your viewpoint posted a lot. There's certainly a cynicism that comes from following the news, or seeing listed-company-news as applying to all companies.

Your view is likely biased towards the US though - most countries don't have a PE industry. Also most businesses aren't attractive to PE in the first place.

You need to look past the headlines, past the news. As you drive consider each building you pass. That mom-and-pop store. That corner franchise. That Indian take-aways.

Most businesses aren't Apple or Google. Those are the exceptions, and despite their vast numbers they are a drop in the bucket of the n billion people employed world-wide.

Yes it's an old fashioned view on the nature of business. But it's also the reality for millions of small businesses today.

Late stage capitalism is eating the heart of the US yes, but fortunately it hasn't spread to most places yet. And even in the US good businesses do well, if you care to see them.

My view is biased toward to the US because that's where I live, yes, but also I think as the epicenter of global capitalism it sets the pace for the other, lesser, capitalisms around the world.

You're right that, by the numbers, there are a lot more small companies than large companies. But it's the large companies that steer our political and economic institutions. And, in many or most cases those smaller companies will have to compete with the larger ones, and certainly rely on at least some of them for their operations.

While the MBA-think might be too focused on profit maximization, on the other side of that coin there’s a flawed, perhaps romantic notion that a business with more modest ambitious always has the right and/or ability to survive. In reality, all businesses are a part of a constantly evolving environment that isn’t always kind to stagnation and inefficiency.

Businesses aren’t insulated from exterior forces like competitors. If you aren’t squeezing for pennies and your competitors are, they’re going to be offering your same solution at a better price.

Any small business owner will tell you its always a fight to survive, much less grow. There's no right to survive and most don't.

But they survive by focusing on more they just profit. They survive by understanding long-term value over short-term profit. They embed into a community. They treat employees well, they treat customers well, they care about environment (inside and outside), fairness and do on.

The stereotypical "MBA" gets a hard time because they only care about short-term profit. This quarter results. They sell the soul of the business and all they get is money. They refusecs refund, but lose a customer forever.

Of course this is a caricature, and most MBAs - certainly the good ones - know where to press, but at the same time understand that the business needs balance. That being around next year is more important than this months targets.

I've worked at a lot of large tech companies.

At one the sales in our division fell and we were losing money so there were layoffs, more people left, and eventually they shut the division down. That wasn't fun but people understood.

At another we had increasing sales, were profitable, but they laid off people, and then sold our division. The reason was that our return on investment was 11% while other divisions were 25% or even 40%. We made something much more specialized but lower volume and harder to sell. It was frustrating knowing that the company is making money but it's not enough money for them to care about.

They cared, but nobody could find a way to get from 11% to 25% and the overall market might have been shrinking.

IMO it was the right decision. Does it make sense for a company to continue keeping folks who fail to meet an objective of getting from 11 to 20-25%? Is it fair if other departments are able to pull off similar feats and one department isn't?

Seems like layoffs were probably restructuring to keep best of the talent and a last ditch effort to try to get the talent to make it possible. When that failed the company realized the best way to achieve that was to exit the division and double down on the ones that could.

The situation was far more complex.

We sold semiconductor IP blocks. There might be a product that sold for $500K and they might sell 50 licenses a quarter for $25M. For our product our direct competitors sold it for around $4M

But at the end of the quarter the division that we were lumped in with would be short of their target by $2M. Then the VP of sales would go through the list of customers we were currently negotiating with and instead of selling for $4M would offer a big discount at half price in order to hit the quarterly revenue target.

This went on for 3 years and then they say you need to increase your ROI numbers. Our plan was to not give huge discounts and sell at the same price as our competitors but we got sabotaged by that VP of sales every quarter.

After we were at other companies our former customers told us that it was widespread industry knowledge that you could just wait until the last day of the quarter to get huge discounts from us.

> IMO it was the right decision. Does it make sense for a company to continue keeping folks who fail to meet an objective of getting from 11 to 20-25%? Is it fair if other departments are able to pull off similar feats and one department isn't?

Yes, because your most heavily optimized cash cows are also your least resilient when the market shifts.

A long-term business needs to have a mix of optimized growing cash flow products, legacy cash flow products that are declining, and new cash flow products that don't quite meet the bar yet. Otherwise, as soon as your cash cow gets hit, your business is dead.

I don’t think anyone is expecting a 10x return from a brewery.

Sure, they could fail. Turns out running a business is hard, and carving out a niche against behemoths in the brewing industry can't be easy.

But novelty, especially if there's free marketing etc, will help to make it a success.

I have always liked the idea of co-op business, but I've also been apprehensive about the viability of genuine co-ops where multiple (competing?) sections have to work together to forge a path forward.

What do we do when we have multiple possible actions on the table, but no concensus? Do we fo nothing?

I think more examples of (hopefully successful) transitions will help in more of this model being (successfully) adopted.

But sure, crash and burn would make for great TV.

I think it makes sense to appoint a CEO who can be dismissed or have their policies dismissed by a simple majority vote and who can be nominated and voted on by anyone during an election. That would help resolve disputes where different sections of the company can’t come to an agreement or similar. As a check on their power, they report to the shareholders and can be voted out at any time and unpopular policies can be voted out without ejecting the CEO so the shareholders still have full power over the company but they don’t need to vote on every single day to day action and there is someone to do a coin flip or arbitrate if there’s a disagreement.

With that said if your company is large enough this is necessary it may be too large to be a co op

The John Lewis Partnership is a workers cooperative and in 2022 had revenues of 10.84 billion GBP.

What size do you think is "too large to be a co-op"?

That’s pretty neat, I didn’t realize there were any that large.

Also Mondragon, with 12 Billion Eur revenue, and ~82,000 employees

https://en.m.wikipedia.org/wiki/Mondragon_Corporation

Its not the first time this has been done though. Left Hand Brewing is an employee own brewery that has been around awhile.

https://lefthandbrewing.com/our-story/about-us

They have sales people now, surely they wouldn't fire them.

They already have the thing that is the hardest to obtain and it takes a long time to do so - the brand.

I posted this company as reply to another comment. But if your interest, Left Hand Brewing has been employee owned for 26 years I believe?

https://lefthandbrewing.com/our-story/about-us

No, it's only been (majority) employee owned since 2015 [0].

[0] https://www.brewbound.com/news/left-hand-brewing-announces-e...

Gotcha. The about page doesn't give as much details as I would like and from how some of the pages it is worded, its sounded like it has been employee owned for a lot longer, based on their website.

Even employee owned companies can do misleading marketing. :)

It's also no guarantee of anything - New Belgium did a similar employee stock program in 2013, but they still sold to Lion in 2019, and now they're doing weird stuff like making 18 bajillion variants of Voodoo Ranger and rebranding Fat Tire.

You may be thinking of Great Lakes Brewing

Great documentary indeed.

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