Quitting your job to start a small business could be one of the most important and scary decisions you ever make. But if you’re Jim Koch, the founder and chairman of Boston Beer Company, it might be as easy as choosing to be happy.
Koch started the Samuel Adams beer brand in 1984. At that time, he was 34 years old, a Harvard graduate, and had quit a six-figure consulting job to make beer in his family’s kitchen using an old family recipe. Koch tells CNBC Make It, “You’re a sociopath if you’d rather be rich than happy.” “I wasn’t a sociopath, either. I chose with joy.”
Koch is worth $1.5 billion today, and his company makes more than $2 billion in sales every year. However, 38 years ago, the former employee of Boston Consulting Group wanted to establish himself as a small craft brewer in a beer market where big businesses, the majority of which were based overseas, dominated.
Koch says he didn’t see it as a big risk to give up a high-paying job and take that chance. Koch says that when he was working as a consultant, he would often tell clients to ask themselves one question before deciding whether or not to start a new business or product: “Is your product better or less expensive than those of your competitors? If neither, then you have no reason to be here.”
He says that all of a sudden, he asked himself the same question. Koch told CNBC in the past that his father thought starting a small brewery was “about the dumbest f—ing idea he’d ever heard.” Now, Koch says that he was sure of his plan for a simple reason: at the time, the bigger brewers were selling bad beer. He just thought he could make better beer.
“The fundamental insight was: “I can make the best glass of beer available to the beer drinker in the United States.” “There has to be a market for that,” he says.
Koch says his original business plan was to spend five years growing Sam Adams to produce 5,000 barrels of beer each year, or “1/40,000th of the U.S. beer market” at the time. By his calculations, the company would bring in $1.2 million in annual revenue. That was good enough for him. Making a decent living brewing beer he was proud of would be worth sacrificing a large chunk of his annual income, he says.
“I could pay myself $75,000 a year, which in today’s dollars is probably $150,000,” Koch says. “And I would be happy with $75,000 a year, which in today’s dollars is probably $150,000,” Koch says. “And I would be happy… I was smart enough to know that if I had to choose between rich and happy, I would choose happy every time.”
Ultimately, Sam Adams cruised past his financial goals, helping touch off a craft beer revolution in the U.S. Today, Boston Beer owns multiple brands, including Dogfish Head and Truly Seltzer, that produce 8.5 million barrels of adult beverages each year and generate billions in revenue.
As the company has grown, so has Koch’s compensation. In 2021, he received $463,332 in total compensation as chairman of Boston Beer, according to an April proxy statement filed with the U.S. Securities and Exchange Committee. Koch also owns an 18.5% stake in the company, which boasts a market value of $4.04 billion as of Tuesday afternoon.
It might sound like he wound up with the best of both worlds, but the Boston Beer chairman says he would be even happier if his initial vision for a more petite Sam Adams—a regional craft brewer with just a handful of employees—had come to pass.
For example, with Boston Beer, a multibillion-dollar company, Koch travels more than he’d like. In 2019, the last full year before the COVID-19 pandemic, he says he took roughly 190 flights for work. “Four flights a week,” he says. “I’m gone a lot, and travel is hard.”
It’s a difficult question to answer, and one that Koch says he’s still wrestling with. “Am I happier because of all this success than I would have been had it just unfolded as I contemplated?” he asks. “It’s a flip of the coin.”