Throwing Stones: Greg Koch Responds to Stone’s Crowd Sourcing Criticism

It’s been a hectic week for Greg Koch. Over the weekend, the founder of Stone Brewing Co. announced his company’s massive Berlin, Germany expansion, a $25 million project that will make Stone the first American craft brewer to build a full-fledged expansion brewery in Europe. But what really caught people’s interest was the attached crowdfunding campaign on IndieGoGo, an initiative that is attempting to gather an additional $1 million from Stone Brewing Co. fans and customers.

This news was received with mixed emotions by beer geeks and writers, to say the least. Some discussions, such as the one on the craft beer subreddit known as r/beer or “beerit,” turned pretty nasty, with opinions best summed up by Reddit user “bunkerbuster338”: “It’s not even that they can necessarily ‘easily afford it,’ it’s that they have access to funding sources that a startup wouldn’t, like bank loans and venture capital investments. They want all the benefit of that while keeping all of their profits privatized and in their hands. It goes against the spirit of Kickstarter and IndieGoGo.”

This quickly emerged as the primary complaint—that a brewery the size of Stone, the 10th largest craft brewer in the country with stated revenue of $135 million last year, was crossing the line by stooping to crowd-funding for any portion of the Berlin facility’s budget. So argued Thursday’s Deadspin article by Will Gordon on the subject, where he pleaded with drinkers to “go spend $50 on good beer from local upstarts.” Satire wasn’t far behind, as San Antonio brewpub Freetail Brewing Co. started their own IndieGoGo campaign for a “delivery Lamborghini” priced at $97,991.

And so, it wasn’t surprising when Koch and Stone caught wind of the prevailing opinions and admitted a degree of fault, although it was surprising how fast they were able to course-correct. Wednesday evening, Koch posted a video (see below) where he essentially apologized for a number of misunderstandings in the meaning of the campaign, along with announcing increases in the IndieGoGo campaign’s reward structures, such as a lowering of 1.5 liter collaboration beer prices from $50 to $30, among other benefits. Thursday afternoon, Paste got Koch on the phone to see how the PR situation has been progressing.

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Paste: How did you conceive of the initial idea for the IndieGoGo campaign, and how did you want to sell Stone fans on the concept?

Koch: The basic concept was that this would be an interesting way to fund some unique beers in a reversal of the normal system of brew-market-sell, which is of course is a perfectly fine way to sell beer. It’s the way we normally sell beer.

Paste: Were you expecting there to be any backlash, or anyone angry Stone was asking for $1 million? Can a company be too large to do crowdfunding?

GK: Very large companies have asked for crowdfunding before, that’s not for me to say. If I had my druthers, I wouldn’t have put any dollar value or monetary goal on the campaign. I see now that it sends a really funky message, I get that. The million dollars is just a placeholder, you just have to put something in that space.

We look at the IndieGoGo format as a very interesting platform, but it’s not about donations. What it’s supposed to be is selling an interesting beer and only making it available during this campaign. As I’m seeing people reacting, I’m totally understanding the reaction and how I misstepped in communicating our true intent.

Paste: In the video, you talk about the donations “flipping the switch” to turn on the collaboration beers and pre-fund them, and say the beers couldn’t exist otherwise. Why is that? Doesn’t asking for the payment in advance transfer the burden of risk from the company to the customer?

GK: What we’re doing is looking at a different way of doing this stuff. When you brew a beer, you have to contemplate the marketability of it. We’ve never done a 1.5 liter bottle for instance; they’re not very market-viable in terms of packaging because they’re not what people are usually looking for.

We’re really talking about making sure these beers are quite out of the norm in cool, fun ways that we probably couldn’t justify with the normal “brew it, market it, sell it” model. We’re not looking at this as a new business model or anything. I can look back on it now and say we probably couched it in a way that didn’t successfully represent our goals. I have to own up to that. Clearly, we didn’t communicate very well what the real goal is, which is an experiment in making some unusual beers.

Paste: I think a lot of people miss another larger point of the IndieGoGo, which is its marketing intent. It’s not so much about the $1 million as it is continuing to build a network of supporters who are likely to support you even more in the future if they feel a sense of ownership in the company. Is that accurate?

GK: Well that’s definitely part of the goal, to bring folks along on the adventure with us. I just posted on a Beer Advocate thread that’s been going and said I thought this whole thing would be a fun way to engage folks in a new chapter of our adventure, but some just saw it as panhandling.

Paste: Is it a problem, though, that backers don’t have any traditional ownership? That they don’t own a percentage of the company? Once you give them a collaboration bottle or a tee shirt, that’s the end of the transaction.

GK: It’s actually not though, because when they come and pick up their bottles they’re getting a pretty insane perk, and being treated like a member of Team Stone for a day. The monetary benefits can now exceed the value of the contribution to begin with, which you can see in more detail on the updated IndieGoGo page.

Paste: When the criticism started, you guys reworked things very quickly. You called the new additions to the campaign “icing on the cake.”

GK: I think you’ve got to be aware of what’s happening with your message. If all of a sudden we decided to throw our 18 years of beer geekdom and being part of this revolution aside, saying “screw everybody, we’re just going to change our mentality,” that would be it for us. We’re still the same folks we’ve ever been, and we feel privileged to be part of the craft brewing movement and be one of the breweries leading the fight for interesting beer.

Paste: So when it’s done, what aspect of the Berlin facility are you looking forward to most?

GK: I struggle to give you any other answer than “all of it.” I’m really excited to bring American craft brewing culture and what would be considered our indigenous styles to Europe. The West Coast IPA, the American strong ale style that Arrogant Bastard helped define, or black IPAs, among others. I’m excited to share those styles with beer enthusiasts in Europe that are brewed in our own particular way.

I’ll tell you as well, some people believe I think we’re bringing craft beer to Europe, but that’s nonsense. They have a wonderful brewing scene there that we’re happy to join. We’re just going to be ourselves.