Talking Traction and EOS with the CEO and Co-Founder of Sanitas Brewing Co.
Tune in as we chat with Michael Memsic, CEO and co-founder of Sanitas Brewing Co. in Boulder Colorado. They are a growing business using Traction and EOS to keep reaching, and breaking goals, and how they use custom labels to keep new brews coming out all the time.
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[00:00:49] Hamish: Hello, and welcome back to the Stickers on the Mic Podcast. My name is Hamish and I'll be your host for this episode. I'm very happy to introduce our guest, Michael Memsic, co-founder, and CEO of Sanitas Brewing located in Boulder Colorado.
Michael, welcome to the show. Please kick things off by just introducing yourself and Sanitas to our listeners.
[00:01:09] Memsic: Awesome. Thanks for having me today. As you've mentioned, my name is Michael Memsic, co-founder, and CEO of Sanitas Brewing Company, we're located here in Boulder Colorado, and I should say just down the road here in Boulder Colorado. What was my next question? Where I'm I going from here?
[00:01:30] Hamish: What's your background, how did you move into brewing, and what lead you to the point where you actually started Sanitas?
[00:01:37] Memsic: Awesome. For me, I fell into beer pretty early at least in my professional career. I was a student at CU here in Boulder. Earlier on, I had two, maybe three goals and focuses. One being beer, one being skiing and one being chasing girls. Turns out, I was pretty good at skiing and pretty good at beer. I will leave it at that for the moment.
Found this passion for craft beer, and drinking craft beer and was chasing a lot of it. When I was 19 years old, a buddy of mine and I went to the local home brew shop, which is no longer there. We were looking for the part for a kegerator. Guy who was running the home brew shop at that time said, "Hey, you guys ought to try brewing your own beer." It was one of those life epiphanies of like, "Wait a second, what do you mean, brew our own beer? Like machines do that and Budweiser does that, how can we do that?" Few hours later, we're at home brewing our first batch of beer.
From there, I cut the bug pretty hard and almost became a bit obsessed. By the time I was in my senior year, back talking with the same home brew shop owner and he told me that Oskar Blue is up in Lyons, which was an unheard of tiny little brew at that time, might be looking for a guy to work on the canning line. I went up there and then, by the end of the day, I had a job on the canning line at Oskar Blues. That was in 2002, and I was one of the first few people hired there to work on the canning line.
During that time period, every time I would brew beer and every time I'd be involved with that, my attitude was, someday, I'm going to own a brewery. I don't know how, I don't know why, I'm going to be a brewer, and I'm going to own a brewery someday. I never really lost sight of that, and that's remained a huge focus and goal. After a year at Oskar Blues, I did nine years with Boulder Beer and was able to transition through them and get to become a founder of Sanitas.
[00:04:01] Hamish: Awesome. That's just like a passion project that you-
[00:04:04] Memsic: From the beginning.
[00:04:04] Memsic: -got your first job, and then took it from working on the canning line, I guess maybe from a junior brewer at that point, and then worked your way up.
[00:04:12] Memsic: Exactly.
[00:04:12] Hamish: Great. You always had this idea to found Sanitas. How did you go about making that split from Boulder Beer, and setting up your own shop?
[00:04:23] Memsic: Beg, borrow, and steel. We raised money in every which way. My partner and I, Chris Coyne, was also a brewer at Boulder Beer. Although, to a lot of people, brewing is a really sexy industry. It is not a high paying industry. So, neither of us had huge savings accounts, or trust funds, or anything. No rich uncles or anything cool like that.
We sold equity in the business, took friends and family money. We got a loan with the Small Business Association, SBA, and through a local bank, both here in Boulder and in Longmont. I guess here in Longmont and in Boulder. Which is Flatirons Bank. We maxed out credit cards and did everything we could. It was to write a business plan, agree on some principles, get as much money together as humanly possible, and then just go for it.
[00:05:26] Hamish: Did you move straight into your current facility or you moved straight into where you are right now?
[00:05:32] Memsic: Our only location today.
[00:05:33] Hamish: Cool. Obviously, financing was that big challenge for you to begin with. Are there any other tips you might have for startups, for small businesses, when they get going, and that you maybe wish you'd known when you first started?
[00:05:48] Memsic: Cash flow is a nightmare. Cash flow is always a challenge, especially in the manufacturing industry. Equipment costs more than you think it's going to, or at least it did cost us more than we thought it was going to. Hitting payroll every month is a challenge. I would say, that in the beginning, and even still today, cash flow management is one of the biggest challenges that I don't think I was prepared for, and I've had to learn that, via hard knocks just making mistakes and getting better over and over again.
I would say, one of the coolest things that I really didn't expect at all is employees. I knew that we would have employees and we would have people that would work for us, but I had no idea that I would get the opportunity to create a micro-community within the Boulder community and that has a tremendous amount of reward back that, there are people whose livelihood is based on us continuing to be successful. It's a really cool thing for me.
[00:07:07] Hamish: Yes, I think it's definitely something I could relate to, being here at StickerGiant. Your co-workers, your employees very quickly become a family, and you're all in it together to make your business successful.
[00:07:17] Memsic: Unequivocally.
[00:07:19] Hamish: I think that's a really good segue to talk about Traction and EOS. If you could explain to our listeners a little bit about those two things, I'm sure they'll be very interested to hear that.
[00:07:31] Memsic: I first learned about or heard about Traction, maybe two and a half years ago. It was kind of a serendipitous time period when two or three, one was an investor, one was our attorney, and one was a mentor of mine, all brought up Traction. At the time, I was digging out really hard on any business book. If you recommended it, I would read it.
I was getting to a burnout phase. What I was really looking for was what to do. I'm reading all these books, I'm getting inspiration, I'm going back to my team, and doing a lot of rah-rah-rah, and trying to get people super psyched on where there was a new concept, a new strategy, or just being a business in and of itself. I wasn't getting the results or as I would change to call it traction from my drive.
From my perspective, on a very simple level, traction is just a toolbox to run a business. It's not that complicated, you don't have to be brilliant or a PhD. of business, to understand it. It simplifies the system, and it doesn't try to do outrageous things or use outrageous terms. It really just gives you a step by step system to what you're going to do. It starts with long-term goals, and it breaks it all the way down in, what do you do this week.
Other systems and other programs have talked about that, and I'm sure that there are other programs out there that work phenomenally for other companies. For us, it was really cool to have an implementer ask us, "Where do you want to be in 10 years?" It doesn't have to be specific, but on a big holistic level, where do you want to be in 10 years? We told him, and he is like, "Okay, great." "Now we back down all the way into what we do this week." I was like, "Yes, it's simple for you to say." He is like, "No, it is simple for me to say." With Traction, I know that there are some people who self-implement. We tried self-implementing for a little while. I feel very fortunate to have an implementer. We work with a guy, Richard Palmer Smith, he's a local Boulder guy as well, does a lot of work in Colorado and he's been a massive asset in just calming down and sticking to the basics. I highly encourage at least the first 90-minute session in checking out what an implementer can do and how it can affect a business.
[00:10:41] Hamish: I think so. It's something we've also experienced just taking the vision but then having somebody who's very practically orientated to really nail down that process and say, "This is a proven process. We've spent a lot of time talking about," just like that and then that enables you to teach your employees about the proven process. It's not you who always worrying about it because, everybody in the business knows the steps they have to take and knows their responsibilities.
[00:11:09] Michael: Yes, absolutely. The simplicity of some of these pieces and not trying to just simplifying things and not trying to overwork them or even try to oversimplify. For me, one of the things that I've absolutely loved is accountability. I think, for quite a few years and really the majority of our beginning, myself and then Chris, my co-founder, the two of us tried to be Superman and we're still guilty of it.
We still do it all the time but, as we continue to go down this path with traction and get better and better at it, we're able to pass a lot of these responsibilities off to our staff and our staff wants that, they like that, they want to do more, they want to work hard, they want to feel like they've done a good job at the end of the day. They don't want to do a boring remedial task and just go home and come back tomorrow while we bust our asses trying to get the job done. They want to bust their ass too.
Now, we're learning and continuing to learn how to give them systems so that they can work really hard and accomplish things and feel that they made a big impact on what our business does.
[00:12:35] Hamish: Yes, definitely. I think empower that responsibility and decision making onto your employees and then that's one less thing that you have to worry about.
[00:12:43] Michael: For sure, absolutely.
[00:12:45] Hamish: Great. I think another good topic I guess to touch on is maybe the scorecard concept and Level 10 meetings. I know that's something we've been wrapping our heads around in the last 12 to 15 months and we've found it's given us tremendous power to actually take those weekly tasks and turn them into monthly tasks and quarterly and then, obviously, hit your yearly and get to that 10-year plan.
[00:13:09] Michael: Absolutely. I think that the Level 10 is the easiest and the most important piece of traction, at least it has been for our business. I used to run and participate in a whole bunch of meetings every single week and I would come out of them with huge to-do lists and I would rant and rave and I didn't know that sometimes meetings should be 45 minutes, sometimes maybe four and a half hours long.
There was no consistency and I would come out of what I thought was a great meeting and the rest of the staff would come out feeling like they just got the crap kicked out of them. I don't know if I'm supposed to say that or not but, it's happening-
[00:14:00] Hamish: We can try and bleep it out.
[00:14:01] Michael: - it's happening. These guys would all be exhausted and feeling overwhelmed because, I would be doing this whole thing and basically, lecturing at the staff and I wasn't getting the results that I needed. Level 10 simplifies in a huge way. We're not the best at staying to 90 minutes but we sure as hell try. Having that scorecard is such an important and huge piece. We now have scorecards for each department, which is something that we've been implementing this quarter.
We had a company scorecard and now, we've trickled down into the departmental scorecards. I love the analogy of, you're on the island and you have no contact with your business but once a week the carrier pigeon's going to show up with one sheet of paper. What are the five to 10 values that you know if you see, you’re calm and you know that your business is okay from the last week and that things are going in the right direction for the next week?
It's a great, simple, clean way to measure the business. I think we're very aspirational in our first couple of rounds of scorecard and we've calmed that down and we've become more simplified with it and we're hitting our goals and we're accomplishing things and they are the goals that we need to keep driving us in the right direction. I'm a huge, huge fan of that.
[00:15:48] Hamish: I think for any of our-- for our business listeners out there who might be thinking about this, it's like find five things that are the real vital signs of your business-
[00:15:57] Michael: For sure.
[00:15:57] Hamish: - don't try and do too much. Like you said, you can over-complicate it and you get too caught up looking at the numbers. Find those five key metrics and be like, "We're going to measure this every week. Are we on or off track? Are we good? Great, if not, take it to a Level 10. Why are we off track? What are we doing wrong? How do we do things better?"
[00:16:14] Michael: It's really easy, at least it was for us to create these aspirational numbers. We have these big goals and, "Okay, massive goal and we're going to hit this huge revenue number. We're going to make a bazillion barrels of beer this week," and we weren't hitting our numbers. We go back to our implementer and we sit down with Richard or RPS as I call him. We sit down with RPS and I'm like, "We suck at the scorecard," and he's like, "No, you suck at making a scorecard. You don't suck at doing a scorecard. You set yourself up, that's why you couldn't be successful. You need to set yourself up to be successful and then you will be successful." He says things like that to me and I'm just like, "You make it sound so easy." As I think about it and simplify it, it can be that easy.
[00:17:10] Hamish: I think it's the classic, goals have to be achievable, otherwise they become demotivating and they don't actually help you because if you're not hitting stuff it's like, "This is a permanent disappointment"-
[00:17:20] Michael: Absolutely.
[00:17:20] Hamish: - I think we could probably rap about Traction for hours but let's keep things moving. Just for any of our listeners and stuff out there as well, so the book is called Traction by Gino Wickman. He also does a slightly simplified version which is called, What the Heck is EOS? There's also some really good YouTube videos on how to run a Level 10 meeting. We used to watch that at the beginning of our Level 10 meetings.
We would watch it every week for like seven weeks in a row until everybody was like, "Alright, sweet we've got the agenda, we understand why we're doing this." I would definitely invite anybody who is interested in this to check out YouTube as first port of call and then, those two as well.
[00:18:00] Michael: As another piece to chip in. If you're the typical visionary and you love the big ideas and to storm in with crazy ideas, Rocket Fuel is another one of Gino's books. It's awesome, that's my favorite of the books that I've read of his, not trying to undervalue either of the other two but, Rocket Fuel is a really cool book too.
[00:18:26] Hamish: Cool, yes. In terms of growth, how does something like Traction helped you as you've brought on more employees and you got a little bigger?
[00:18:35] Michael: I think that what Traction is doing or as we're continuing to move forward and progress, it's helping us pinpoint what we're doing and how we're going to get to the next phase. I don't know that traction has driven us to a place yet but what I feel more than anything is we had-- I love using the bus analogy from Jim Collins and right people, right seat and all that other shenanigans. I shouldn't say shenanigans but, shenanigans.
I was driving a bus with a dirty windshield and a bunch of kids jumping around in the back of the seat yelling and screaming at nothing. We didn't know what we were doing and I didn't even know what road we're going down. I had this, "Off in the distance, we are going to drive through the mountains," and I'm in the middle of Kansas and I have no idea where I'm going. What we really focused on over our last 12 months with Traction specifically is saying, "Okay, let's calm down. Let's organize and let's learn how to grow."
We got going. We opened and we sprinted to close to where we are today and landed there about two, two and a half years ago. I've spent a lot of time spinning wheels and not being entirely sure what were our strategies and how we were going to get to the next place. That's one of the big things that we've worked on is, "Okay, this is where we are, we can't change where we are, we can change where we're going." That's been huge for us, especially with the changes in craft beer over the last two-three years.
[00:20:30] Hamish: Great, now that's a really good tip there. Again, I think we have chatted about the business side of things and we can circle back to beer and marketing as well. I think because Colorado is just, it's like a big capital of America, so many craft breweries and things like that. How do you go about differentiating yourself from everything else that's out there?
[00:20:55] Michael: It's a massive challenge. When I got into this industry, it was a completely different game and then, in then in 2005-2008, we saw in that range and I am not going to pinpoint exactly when it was, we saw our craft beer explode. Some brewers who had been smaller brewers, who had been home brewers caught fire and they turned into big businesses and they went from getting beer out to their town and a little bit further from their town, like the doughnut effect of their brewery just like that circle around to shipping beer across the country and shipping beer across the world.
We're seeing local breweries send beer all over the world now and it's completely unchartered territory. With that, we're included in it, we had an explosion of breweries. Excuse me, we're just shy of 7,000, with 6,600-6,800 breweries now in the United States. I believe the last number I heard was 406 or so in Colorado and they are predominantly located here in the Front Range. It's really busy and it's changed and the consumer is continuing to drink a little bit more craft beer every year. But, we're opening breweries and we're creating more volume than they can keep up with or that their growth rates are keeping up with. It's a really challenging world.
Another component that has really, I feel like changed in the last couple of years is the new flavor of the week concept. We 5-10 years ago in this industry, we saw people gravitate towards one to two primary skews from a brand or from a brewery and, they would have a little bit of their seasonal but pretty much their-- your IPA drove your business or for a lot of people, amber ale or pale ale drove your business and you had a seasonal that would also add a little bit of flair. Maybe, you had one or two summer seasonals and one or two winter seasonals and that was all you needed.
Now, we've seen with this explosion of breweries, literally, there are breweries in Colorado that are releasing two to three new beers a week and it's insanity. People, a lot of consumers are going to the liquor store and every time they buy, they want to try something new and that old trusty -- I shouldn't say old but that, that skew that has been around for 10-20 plus years that they know is probably going to be about the same, they're like, "Yes, I've had that. I want to try something new." Our process for really driving that and trying to participate in that has been our partnership with you guys and with StickerGiant in particular.
We're buying blank cans, blank cans are faster for us to get in general, the price point is a little bit less and we don't have to buy full truckloads necessarily, or we're also doing some where we're able to share that cost with some other friend brewers. We're able to get stickers really quickly, and we're able to change out our labels. So, we can make somewhat of impulse decisions or fast business decisions to get new beers out and into the market and hopefully, catch that consumer with, "I never had that, I should try that," and get that flow going. That's how we're-- that's one of our big strategies right now and how we're partnering with StickerGiant to try and stay really creative.
[00:25:22] Hamish: Yes, I think that's a really interesting point actually, the ability to print labels quickly and change up your cans.
[00:25:29] Michael: Yes. Working with crown or ball on large orders, you end up with 200,000-300,000 cans per order and, it doesn't give you the flexibility, it doesn't give a brewery of our size and we're still really small. It doesn't give us the opportunity to be as flexible, we have to make a 12 to 24 month commitment to that skew and we can make commitments to you guys for 150 to 200 cases of a new skew. If it goes over really well, we can make more of it and if it doesn't hit a homerun for us, then we don't have to bring it back and we can react that quickly.
[00:26:13] Hamish: I'm sure your brewers love it, they get a little more freedom.
[00:26:17] Michael: They love it and they hate it. They hate it because it's like, new this, new that and they are like, "Man, just let me do what I'm good at." It's like, "Well, let's keep being creative--" It's almost like forcing creativity which I'm not supposed to say that but, it has been fun and, it's been cool to stay creative this year.
[00:26:39] Hamish: Yes, and I think like you said, from a business point of view, you can trial something, you're not committing to huge orders of inventory and spending loads of money. Then if it takes off, it is like, "All right, awesome, let's just make more of it."
[00:26:51] Michael: Right, and 48 hours for turn around on stickers which has been about where we're landing is way different than Crown right now who is our current can manufacturer, I think they are 16-18 weeks out, so it’s a totally different game.
[00:27:12] Hamish: I guess that’s probably quicker than even something like shrink sleeves, that may fall somewhere in the middle.
[00:27:19] Michael: Yep, shrink sleeves, we also use that product, and they’ve been a great product for us, and that is falling in the 5-10 week window. Especially lately, there’s been a little bit of an aluminum crisis. I don’t want to get political, but it’s been a challenge to plan accordingly and get aluminum lately, so those cans have slowed down significantly.
[00:27:44] Hamish: I can see that being a challenge as well.
[00:27:45] Michael: Yes.
[00:27:47] Hamish: Alright, so what’s next, we’re mid-summer 2018, what have you got planned? Any cool festivals? Things like that where people can find you?
[00:27:55] Michael: We just had our biggest party of the year. Two weeks ago we had Taco Fest, where we blow up our whole back yard, we had Luchadores wrestling and bands, stuff like that. I imagine it will come back again next year, and regardless of us or anything, if you get an opportunity to go see Luchadores wrestling, do it. It’s incredible, it’s hilarious, it’s wildly entertaining, I highly recommend it. It’s on my bucket list for the next time I go to Mexico.
Then our anniversary party is September 8. On September 8, we’ll be 5 years old, so we’re going to try to do some fun stuff, with some fun beers. Probably get a band or two together, and just try and have a good time. Then really we’re at the midpoint of the summer where we’re just trying to continue to execute our 2018 goals.
For us, I spend Q4 with a lot of energy put into what’s going to happen for 2019, and really try to look at the results of summer. One of the big ones obviously, with all of the new stickers and these new cans, is how did that work? Did it feel good, and the numbers were good, or were the numbers good and it was a nightmare? What do we really want to make of how our summer went? Because our bread and butter is the summertime. We make significantly more beer in the summer, and a significant portion of our revenue, and then it comes down to focusing on our tap room, having some great events going into winter, and partnerships that we want to work on for 2018 and into 2019, we already have a couple of those lined up right now. I’m super excited about beers and brands that we’re collaborating with. This year we did a collaboration with Las Portivos which is a neighbor of ours that we’ve been working with.
For the end of 2018 and into 2019 we’re going to be working with POW, or Protect Our Winters. They are a non-profit that’s really focused on climate change and becoming more political on encouraging people to vote for the climate. It’s something we are really passionate about as individuals and as a company. That’s a really fun thing that we get to do.
And continuing to push and to grow and see where we can find new gaps in the market and stay relevant.
[00:30:35] Hamish: That all sounds great, and yes, looking forward to your anniversary party.
[00:30:41] Michael: Yes, absolutely, that will be fun.
[00:30:45] Hamish: 5 years is a big milestone.
[00:30:49] Michael: I guess, a few people have mentioned that to me recently, and that’s cool and all. I’ve never been good at celebrating those types of accomplishments, for me I’m focused on next year and driving where we’re going to get to. I should probably spend some time in a corner, calm, looking at a wall, and going 5 years is cool, but I’m too antsy and get focused on what the next big cool thing we can accomplish is.
[00:31:27] Hamish: It’s your job as the visionary to constantly be looking forward. You can’t pause for too long to pat yourself on the back because business doesn’t stop.
[00:31:36] Michael: No, and no one really cares that we are 5 years old. I’m happy that we’re here, happy that we made it to this point, happy that we are in business and we’re strong and get to keep moving forward and chase after new challenges. And look forward to 10 more, or what the next milestone or hurdle looks like.
[00:32:04] Hamish: Now it’s “the you’ve done the 5 years, we’ve got to finish the 10 year plan and keep going to hit those goals” time.
[00:32:10] Michael: Right, 5 years has hit, great awesome, so what, we’ve got to keep moving.
[00:32:15] Hamish: Awesome. Well, I know we’re coming to the end of our time right now, so if you want to shout out your social handles, and tell people where they can find you, and keep in touch with your story, maybe come and have a beer sometime.
[00:32:30] Michael: Absolutely, we’re @sanitasbrewing on just about all of the social channels. Not sure if my social media team has us on MySpace or not, but you can definitely find us on Facebook, Instagram, and Twitter. You can come visit us in our taproom, we have a huge beautiful taproom with a big outdoor patio in Boulder at the corner of Pearl and Foothills Parkway. We’re open everyday from 11:30 to 10 or 11 o’clock at night. It’s a fun space to come and catch us there, and you can pick up our cans in most liquor stores up and down the front range.
[00:33:11] Hamish: Michael, thank you for joining us today and sharing your sticker story, it’s really fascinating to talk to another EOS and Traction company, and hear how you’ve grown over the last 5 years. To all of our listeners, if you’d like any more information on the topics we’ve covered, there will be links and information available on our website over at stickergiant.com/podcast, you can also download the episode there, and all of our other episodes, so there’s lots of great content from previous customers we’ve had on.
Thanks for tuning in today, and remember, every sticker has a story. What’s yours?
[00:33:50] Announcer: Thanks for listening to the Stickers on the Mic podcast, brought to you by StickerGiant.com. You can download us on iTunes, SoundCloud or wherever you get your podcasts. If you enjoyed, please leave us a review, it helps us reach new customers and share our customers’ sticker stories. Until next time, we’ll see you on Facebook, Instagram, and Twitter under the username @StickerGiant.