Product Release + Crowdfunding Campaign + Capital Expansion + Crisis Management + Bitcoin???
A Good Problem to Have
Seven Stills had all the trappings of early start-up success. The young company had a great product it couldn’t make enough of, growing demand that it couldn’t fulfill, and consumer buzz that it couldn’t capitalize on.
It had to expand quickly, and would do so via an ambitious 18,000 sq ft facility within an innovative public-private partnership aimed at bringing affordable manufacturing space to an otherwise unaffordable city.
To make this expansion a reality, we were going to need a lot of money. The idea was to raise $3.5 million via a combination of accredited investors and a public crowdfunding campaign.
It was going to take some clever recruitment to attract those investors.
Craft Beer Cans Are the New Album Cover
Seven Stills only had one “core” beer that it produced on a consistent schedule. Everything else — as many as 6 products per month — were one-off releases. We were constantly repeating a process of new product development, an entire ecosystem of new recipes, new branding, new packaging, new promotion, new sales cycle. The concept of major CPG companies spending years on R&D for a single new product release was just bizarre to us.
The advantage of these rapid-fire product releases was that each can or bottle could become a messenger. Branding could convey a seasonal essence or a timely news/pop culture satire. We could boost performance of a release by tying packaging into live experiences.
Now here was the chance to create a kind of reflective synergy — the can would promote the fundraising, which would promote the can, which would promote the new location, which would promote the can.
The “Initial Can Offering”
Though Seven Stills was in an analog industry, it was also a start-up in 21st century San Francisco. We would never avoid the trends and culture of the tech community. In the 2017-18 timeframe, there was no greater chatter than that around cryptocurrency.
Good ideas often start as something utterly ridiculous, and then are whittled down to something realistic. Here the fantasy was “let’s make our own crypto coin!” Maybe it was only slightly ridiculous, given that everyone from a bankrupt Kodak to Long Island ice tea companies were trying to suckle on the crypto teat. But no…no…c’mon…let’s do something manageable.
So after whittling away, I thought, “Yeah, ICO, ‘Initial Can Offering!’” It’s an interactive can, that launches the initial offering of a crowdfunding sale. We play on the crypto buzz and brand it like a bitcoin, Each can label includes a peel-off token that would grant purchasers bonus shares if they invest in the company. Most cans awarded 2 free shares upon a minimum investment of $503, but one jackpot token delivered 100 shares. In practice, it executed more like a McDonald’s Monopoly game, but with all the crypto promise of an appreciating asset. (No one ever claimed the big winner.)
Blockbuster Promo Meets Crisis Management
The promo was an enormous success. We sold 75% of our inventory within the first week. The community buzz was deafening, with Instagram blowing up and press hits coming from places far beyond our typical brewing coverage.
But slowly a crisis emerged. The beer was terrible. An errant Belgian yeast strain had infiltrated the brew and over time was taking what should have been a dank, floral IPA and transforming it into a bubblegummy saison. More specifically, it was a well-made beer with high-quality ingredients, and was actually loved and lauded by many casual beer drinkers. But it wasn’t what it was supposed to be, and was painfully flamed by the loudest community out there: craft beer geeks.
I was faced with that odd conundrum that many marketers experience at some point. While there’s a silent majority of bandwagon fans who love your product, a vocal minority of outraged affinity group extremists are coming at your throat. And if you don’t placate them, eventually their message will permeate the mainstream and convince your bandwagon as well. So we delicately balanced that tightrope — letting those who loved us continue to do so, while addressing the complaints of others, swapping out beer where necessary, and pulling any remaining cans from retail shelves. (An upside of also being a distillery…we can turn any bad product into spirits.)
Mission Accomplished (Nonetheless)
Despite the trouble, the release worked wonders. We raised $100,000 in the first day of our crowdfunding campaign, and for several weeks were the leading campaign on the WeFunder platform. And as they say in sports, “winning solves everything.” With new releases coming every two weeks, it wasn’t long before we had chased a bad beer with several good ones, and won back the love of our core beer geeks.
When we were brainstorming the ICO can, a competing idea was to mimic a lottery scratcher rather than a crypto token. After we had squeezed all the juice we could out of early investors, our fundraising campaign had hit its lull and needed a boost. So we resurrected that earlier idea into the form of “Beer Money,” a follow up sweepstakes can designed with an actual scratch-off film that revealed winnings. And this time the beer inside was excellent.
An author named Benjamin Hoff wrote a series of pithy little books where he reimagined Winnie the Pooh as a teacher of Taoism. In his “The Te of Piglet” he examined the “virtue of the small.” This experience reinforced my belief in staying small and simple. Be nimble and quick. Work on short schedules. Stay reaction-able. I’ve never been a fan of steadfast planning followed by missed opportunities or worse — wrong turns — solely because you’re committed to sticking with the plan. I’ve seen the overdoing-it that drive the product releases of larger companies, and I’ll take the move-now mentality of the start-up.