82. From Online Success to Award-winning Craft Beer With Dan Norris

 
 
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What do you do after you sell your online business with an annual run rate of over $1m AUD to GoDaddy? Dive into a whole new business world as Dan Norris did!

In Episode 82 of the Bean Ninjas Podcast, Bean Ninjas CEO Meryl Johnston talks to Dan Norris about moving from a successful exit of an online venture to growing a more traditional bricks and mortar business.

Image

Source: Blackhops

Episode Highlights

Need advice on how to pick a scalable business model? Today Dan Norris shares his wisdom. #entrepreneur Click To Tweet

 

00:00 – Intro into Bean Ninjas’ business model, inspired by Dan Norris and WP Curve
05:30 – The difference in business models of online business (WP Curve) and a physical business (Black Hops Brewery)
09:08 – Switching business roles – going from marketing to HR
13:30 – From no sales to managing a sales team
18:46 – Getting involved in the day-to-day operations of the brewery
22:12 – Long-term co-foundership
25:16 – Different forms of capital
32:13 – Dan Norris’ 5-year goals for Black Hops
34:39 – Tips on choosing your first business

 

Learn the foundations of financial literacy and using Xero with Meryl.

 

 

Transcription

 

 

From Online Success to Award-Winning Craft Beer With Dan Norris

Intro into Bean Ninjas’ business model, inspired by Dan Norris and WP Curve  

 

Meryl Johnston:

Hi everyone. Welcome back to another episode of the Bean Ninjas Podcast. I’ve got a special guest on the show today. Some of you, if you’ve been listening to the Bean Ninjas Podcast for a while, you might recall our origin story. And the business model for Bean Ninjas was inspired by WP Curve, which was started by a guy called Dan Norris and also by his co-founder, Alex McClafferty. 

And when we were thinking about starting Bean Ninjas, one of our inspirations was Dan and WP Curve. And Dan Norris is also the author of The 7 Day Startup, which was the method that we used to launch Bean Ninjas. 

So on today’s podcast, we’ve got Dan Norris here to chat all things business. He’s done a ton of podcast interviews, so this interview isn’t so much about his backstory or WP Curve.

It’s about what he’s up to now, which is running a brewery. And even though we share an office; the Bean Ninjas team share an office with Dan above the brewery in Burleigh Heads, but I’ve been really curious about what it’s like running a brick and mortar business like a brewery compared to his other businesses like WP Curve.

We have a really interesting chat. Dan’s always on the talk, too, and as usual, he shares great insights around the comparisons between the different businesses, and then, some of the things that he’s been learning as he’s been growing the brewery.

Black Hops Team

(Source: facebook.com/blackhopsbeer)

 

Dan Norris:

Hi.

 

Meryl Johnston:

Hi, Dan. Great to have you on the show. 

 

Dan Norris:

Thank you for having me. 

 

Meryl Johnston:

It’s funny. I think we were sitting here a couple of years ago in this same room, with the same setup, but you were interviewing me on your 7 Day Startup Podcast

 

Dan Norris:

Yeah. That sounds right. I do feel those episodes. It was fun.

 

Meryl Johnston:

And now, it’s funny, it’s been a couple of years and we’re back; same room, but now, I’m interviewing you. Although I must say, you did help me with the texts right before we got started. 

 

Dan Norris:

Yeah. 

 

Meryl Johnston:

I only do interviews remotely. But it’s great actually, sitting in the same room.

 

Dan Norris:

Yeah. I think in-person ones are good because you can just kind of talk normally and not like having awkward wait between questions like, “Did he not hear me?” then ask it again. They’re always better if you can do it.

 

Meryl Johnston:

So can you tell me a little bit about Black Hops and where you’re at now; maybe the scale of the business, revenue or team size?

 

Dan Norris:

Yeah. So the scale; so we’re probably going to do about 450 grand this month, so that’s kind of the size of the business is at. A lot of that is excise; so it’s a different business than other business I’ve been in; like it’s an expensive product, it’s complicated to make, it requires a lot of people, it requires a huge amount of money, a lot of equipment; so it kind of has to be a big business.

It either has to be like a really nice local sort of place or it has to be big; it’s this kind of nothing in between. So that feels pretty big at the moment, but really, we have to be a lot bigger than that before it’s really going to get to where we want to get to.

But, yeah. So we’ve got 21 full-time people; all the 3 founders are full-time and have been for probably two years, and I think maybe 10 casuals. Then I have some; this is coming up, so this would be our busy period; we’ll probably hire 4 or 5 more casuals. We’re hiring more production people; well, probably 20 to 30, I guess, FTE staff over the summer period.

Are you a new entrepreneur? Learn how to kickstart your career today with Dan Norris! #thisistheANSWER Click To Tweet

Meryl Johnston:

And how did you decide to; you gave those two options of being a nice local business or something much bigger. Was it just natural for you to want to grow something?

 

Dan Norris:

Yeah. I think so. I was never really, well, actually, the backstory was Eddie originally wanted to start a bar and he was working in government, I was working on my own businesses, with WP Curve and the rest of it. And we were mates; we’re talking about it, but it just wasn’t something I was interested in.

It was like, “It’s kind of something you do when you’re 21, and then you’d fail when you’re 22.” And you’re like, “Oh, what’s this sh*t that I did. Let’s go back to corporate life.”

But I was already 30. I already had a business, it was like, it wasn’t that exciting to me. But then, when the idea of doing a brewery came up, I thought, well, at least with that, I could use some of my; like, I’m interested in growing businesses, not just creating them. So with the brewery, it can kind of grow as big as we want it to grow. 

There’s breweries in Australia doing more than $100 million dollars that are small craft breweries that are starting in the last 10 or so years. So it’s a big opportunity; so that was interesting to me. Doing something small here was kind of fun, but then, once I realized it could actually be like my full-time business and be like a decent growing thing, that was always interesting to me.

I think Eddie and Govs were the same though; I think they wanted to really start a small brewpub; it was always like, “Let’s see how far we can take this.”

Black Hops Staff

(Source: facebook.com/blackhopsbeer)

Meryl Johnston:

And so, I think at the beginning, you weren’t working full-time in Black Hops.

 

Dan Norris:

Yeah. I wasn’t really working at all. When it started, I was pretty much doing my other businesses and just doing like the occasional blog posts for Black Hops and helped a little bit with raising money at the start, helped with the branding. But I didn’t really see it as something; I remember, we were talking about doing something after WP Curve because I was thinking, when I sold that, I didn’t have anything to do, but that changed pretty quick. 

 

 

The difference in business models of online business (WP Curve) and a physical business  (Black Hops Brewery)

Meryl Johnston:

And so, I remember reading one of your blog posts years ago, where you’re looking or you’re comparing all of these different kinds of business models and that was where you’re talking about the productized service business models and the advantages of that compared to memberships and products. 

And so, where did you see Black Hops fitting in with these business models? And what made you; you talked about the scale potential, how did you decide or what point did you decide, “Okay, I want to go into this full-time and this is actually got growth potential.” And how were you looking at that compared to all of the other business models and options that you have?

 

Dan Norris:

Yeah. Well, it’s not the most appealing business model. Like those things were all like, “What’s the best way you can possibly make money out of a business?” And it was like, “Well, if you can build software and you can scale it infinitely and you can do it with a small team, then you can be profitable, you can be scalable; it’s a really, really good business model.” 

Services were harder because, as you know, services are quite hard, but productized service is a bit more scale in that the normal services. There are benefits because you can start them easily and you can do them without investment and that kind of stuff. A physical manufacturing business is not on that list, but also, I’ve always been, I mean, I’ve started lots of things, but most of them haven’t worked. 

And when I start something and it does work, that’s a better thing for me than something hypothetical that may or may not work; probably won’t. So that was more of the case with this; it was a lot of fun, it was a challenge, but also, it was getting a huge amount of traction, so this was working.

And also, kind of surprised myself; I really enjoy working in a physical business, and honestly, I don’t think I could, I definitely wouldn’t want to go back to working purely online by myself.

But even managing a remote team or working remotely, I have no interest in doing that. Now that I’m back working in a physical business, it’s much better. But having said that, with your situation, where you’ve got both, that’s still an option. 

But I definitely surprised myself with starting a physical business and realized, actually, this is a lot more fun than sitting at a desk by myself in my undies. As appealing as that may sound when people talk about it, I did it for seven years and it really wasn’t all that much fun. 

 

Meryl Johnston:

Given that we work in the same office, I can see the kind of team environment that you can create when you’ve got people all in one room and the events that you can go to together, the drinks that you can have of drinking at a brewery.

 

Dan Norris:

Yeah. Well, that has pros and cons.

 

Meryl Johnston:

So, I’d like to talk about that a little bit more and compare what it was like running WP Curve and what your role was there, and then, how it’s different from Black Hops and what your role is in Black Hops.

 

Dan Norris:

Yeah. Well, WP Curve, like I started it and it sort of took off and that was; it was an amazing time for me because I’d never really started anything before that had gone well. And there were a lot of people around that; mostly online people were kind of reading about it and learning about it and excited about it; the fact that this was working, it was a little bit different.

That was overexciting, but the actual running of the business didn’t actually really interest me at all. Like, I had Alex, which was really lucky, which I think he’s still doing stuff in productized services. Did you tell me that the other day?

“It’s kind of something you do when you’re 21, and then you’d fail when you’re 22. And you’re like, ‘Oh, what’s this shit that I did. Let’s go back to corporate life.”

 

Meryl Johnston:

Yeah.

 

Dan Norris:

Yeah, so that’s cool. But he was basically running the team and he enjoyed doing that. I didn’t really; it was a remote team. I like doing the content, but even the content, after a while, sort of just became a little bit; you’re kind of just sitting there writing blog posts. So I didn’t actually really enjoy it all that much. 

I enjoyed the fact that it was going well, and the process of selling it was really interesting and something that I’m really fortunate to be part of because a lot of entrepreneurs don’t get to experience that. But running this business is like my whole life now. I’ve been lucky. This is just like a whole new thing; it’s like, it’s all-encompassing and it’s just nonstop.

 

Switching business roles – going  from marketing to HR

Meryl Johnston:

And I’m interested in the team side of things. So I didn’t know exactly what your role was with WP Curve. I knew you did a lot of content and I knew Alex was mainly looking after the team. And I see at Black Hops that you’re managing a whole lot of different people; there’s a lot going on. And so, have you managed people before; so prior to WP Curve? What are your views on building a team that’s fun and is effective?

wp-curve

(Source: wpcurve.com)

Dan Norris:

Yeah. Well, actually my degree that I did at university was HR, which was only just a bit of a fluke because I did; I’ve told the story before, but I enjoy telling it because I did marketing and I failed the first subject. I was enrolled in marketing; I failed the first subject. At uni, they have a thing where if you fail but you don’t fail too bad, you can cancel it if that’s not your major. So I changed majors; so that counted so I didn’t have to do that subject again. 

Anyway, I changed to HR purely because in that first year of uni, I got like 2’s for everything and I got a 7 for HR just because it was easy. Just like you read the book, and this is how to hire people; it doesn’t seem that complicated. I was doing like master ones that were really hard and HR was, it’s just so easy.

So I was not a people person; it was a stupid move to do HR. But anyway, I finished the degree somehow. So I did have some sort of background in HR. My first job was in HR, I worked in HR for various sort of ways for three or four years. Basically, my career was HR until I turned it into IT. I had, yeah; I hadn’t managed that many people.

In my agency, I had a designer that worked for me, a developer that worked for me, ad work; just trying to thin; not really, like I didn’t really have people. When I worked for the government, I kind of did my own thing. But yeah, I think we’re in a good position at Black Hops where we’ve got just an amazing team. We’re very lucky like we could say that it’s because of our brilliance. But there’s a lot of luck.

Like, our first hire was Railo who just turned out to be an absolute gun. He hired Ali who just completely changed the face of our business. We have people like Leah just rack up to work casuals just out of the blue who ends up like basically running the whole place. So we’re very, very lucky. 

We’re an industry that’s a really fun industry to be part of. It’s a really rare sort of industry; like everyone is really close and everyone is having a lot of fun. It’s competitive, but a lot of people want to work here. It’s something we’re conscious of, but I don’t think it’s necessarily purely by design. I think there’s a bit of luck there and we want to make it a great place to work.

There’s a lot of hard decisions definitely made as well, but I think it’s just a fun industry and business to work for, it’s a growing business, it’s an exciting brand. That all helps enormously like that’s not something you can write in a policy. It’s just by design. It’s a good place to work.

But, yeah, there’s a lot of stuff; a lot of stuff you can do. I think getting rid of people who aren’t part of the culture is definitely a huge one because one person can completely f**k up a culture.

 

Meryl Johnston:

Have you had any experience like that? And is it hard?

 

Dan Norris:

Yeah.

 

Meryl Johnston:

So do you; the book said everything that we got to cut it off early, but it can be hard sometimes, straight away. But have you had anywhere it’s kind of in the middle; so were you not quite sure? 

 

Dan Norris:

Plenty. Yeah. We have lots of those things happening. And it’s normally me that has to deal with it. So, yeah, those decisions are really hard. Because it’s someone’s livelihood, but at the same time, it’s everyone else’s livelihood that’s there if they’re not being a good part of the team, and they’re dragging it down for everyone else. So those things are hard, but you just know they’re necessary.

And once you have a brand that’s employing sort of 20/30 people and it’s got 500 investors and that board in at a certain valuation; like you have to change the way you do things. You can’t just hire dickheads and behave like a dickhead. We’ve had a lot of hard lessons like that. But once some things become serious enough and valuable enough; like, we’ve got an advisory board now. Like, I rack up these board meetings now and like present to them. 

Like, it’s just so much different back in the day. I still wear my undies, but that stuff can be really challenging; just constantly trying to think of ways to keep staff happy. We do things like a staff-costumed beer after a year where we get like something designed, and I do all that. Like, work with the designer to do that myself. Sometimes it doesn’t go very well, but generally, people like it. 

We do like staff retreats where we’ll have the team go off to other breweries and do tours and stuff like that. Also, and it’s not related to brewing, we do like Christmas parties and things like that. We try to be flexible, but it’s just a crazy business. There’s so much work to do. All of those things, we try to do. But I think the biggest thing is just to have a fun brand to work for and it’s an exciting place to be.

 

From no sales to managing a sales team

 

Meryl Johnston:

So there’s a couple of things I want to ask related to that. So one is building a sales team because I think with WP Curve, it was more around content.

 

Dan Norris:

Yeah. I’ve never had to sell anything in my life. So, yeah. 

 

Meryl Johnston:

And are you the manager of the sales team at the moment?

 

Dan Norris:

Yeah. 

 

Meryl Johnston:

So how did you go from not having done sales before leading a team of salespeople?

Sales Team
(Source: www.pexels.com)

Dan Norris:

Yeah. Actually, that is a lie. I have done sales before. My first job was door-to-door sales and I lasted about six months. It was horrendous. That’s been really hard. I mean, I guess like, with a business like this, you’ve got three founders, all of these sorts of areas have to go through to somebody and it’s sort of who makes the most sense. It’s not who’s awesome at this, it’s who’s the least bad at it. 

So in our case, when I was sort of part-time, Eddie; well, actually, when we started it, Eddie would do sales and I would do sort of online content and marketing, and Govs would do the making of the beer. And I would do like businessy sort of stuff, which I thought wouldn’t be all that much because it was just a fun thing. But it turns out, after three years, there’s a hell of a lot of businessy stuff. 

And so, a year ago, we changed our roles. I took up the role of CEO, Govs just head brewer; he was obvious; and Eddie, into operations. And I also look after the sales and marketing, which at some point, we just figured out; like at the start, Eddie was doing sales, we hired a sales guy. And he was doing social media, and I was just basically writing blog posts. 

But it got to the point where it was like, actually, Eddie’s skills are really; I wouldn’t really even know this when we started, but it turns out he’s really, really good at operations. Like, he’s really, really good at just knowing everything that’s happening all the time. And me and Govs are not really that way as much. So it turns out he was really good at ops, so he just fit into that really, really well. And production, he’s pretty hands-on with production, scheduling and recipe ideas and all that kind of stuff.

And I was just like, “Well, I will just be CEO because I know neither of you guys wants to do it, so I’ll just do it.” And the sales team, I was looking after marketing; Eddie didn’t really want to have anything to do with sales and we employed sales guys, but I’ve been working on the right structure to; we’ve kind of employed, we had Railo, who was our sales manager, and we had Kearnsy who came on as an experienced sales manager. And we’ve just been working on the right structure to get that going. 

We also have one of our investors, Simpo, our first investor, who runs sales teams as his job; like call centre type, like full hardcore sales teams. So he’s helped me a lot; we’ve just done heaps of work to try to work out a little process in the CRM to use the targets and the incentives and the deals. 

And there’s just so much that goes into it; like, in this business, it’s making good beer and it’s selling the beer. And just like everything else is kind of just catching up to that; it’s so important. But, yeah. There have been lots I’ve had to learn for that. 

 

Meryl Johnston:

And so, when you’re learning something new like that, where do you go? Are you talking to people? Are you reading books? Are you; how do you go about going from, okay, you’ve had a bit of sales experience, so now you’ve got a full sales team and you need to create those commission structures and figure out how to make that work well.

 

Dan Norris:

Yeah. Kearnsy has been in sales forever, so he’s been a huge helper in terms of learning how all this stuff works. Like, I didn’t know anything about this kind of sales before, like, all these words that he used. I was like, “I’ve no idea what you’re talking about.” Like, on-prem and in-trade, and I was like, “What does that? I didn’t know what that means,” and I would go, “I need to know these words.” So talking to him; he’s been with us a couple of years, so I’ve learned a lot from him. 

Railo used to be in hospo line, I knew nothing of hospo, and it’s half of their business. So Railo used to manage bars. So all the stuff, I’m still learning from Railo. Like, we went to a bar the other day, and like the guy gave a shot because that’s what they do and I said, “Jesus Christ, I’m driving, just don’t,” and like, Railo’s like, “You didn’t hit the shot down on the bar before you had it.” I’m like, “How the f**k am I supposed to know you’re supposed to do that?” And he said, “It’s just a hospo thing.” “Alright.”

So I’m still learning all that kind of stuff you need to know. Also, our investor, Simpo, I sit down with him all the time, and I’m just like, “Man, this isn’t working. How do I do this? How do you do it?” And the good thing about those conversations is his sales team is really just like a black and white. Like, a day called sales advertising.

So he has like ten guys in a room, he knows exactly how many calls they have to make to sell a certain amount of ads. If someone’s not selling, he knows how to incentivize him, he knows when to fire them, he knows when to get someone else. It’s just, it sounds perfect. 

In our team, there’s a lot more nuance to it. So there are personalities and there’s relationships and there’s some; Kearnsy, he has a whole range of amazing skills that Railo doesn’t have and vice versa. Someone’s got to manage that; you got to incentivize it, but it can’t be as black and white as that because these guys are hard to find. Like, sales rep who are really good at selling beer are hard to find.

And they are also not just selling the beer; they’re upholding the brand, which is more important to me than anything. So there’s a lot a conversation you can have where you can be like, “Okay, well, I can’t do that, but I can learn a little bit from that and we can try.” And there’s a lot of trial and error.

Books; not really. Like, I’m not actually generally doing the selling. So I think if I was; like I would probably dig into the sales books and see what we can do. But these days, it’s more just about; like we’ve got sort of a small budget to pay people to do stuff for us.

Like online sales for example; I’m doing some stuff with that. And these days, it’s just finding someone who can do it and they can convince me that they’re good at it. I’m not going to read a book on that; I don’t have time. And plus, I don’t really read books.

 

Getting involved in the day-to-day operations of the brewery

Meryl Johnston:

So related to that, what does your day-to-day look like? Because even though you’ve got the two co-founders, there are still so many different elements to your role. There’s a sales team, but there are finances, looking after investors. How do you know each day what you’re working on and where to focus?

 

Dan Norris:

Oh, God. That’s a good question. When we started, we put $2000 in, me and Eddie, and Govs put a bunch of equipment, and we’re like, “Okay, sweet. This is a three-way partnership.” We’re like, “We’re good to go.” Since then, we’ve had to raise over 4 million dollars.

We’ve had, I think six funding rounds and equity crowdfunding around asset finance with the bank, invoice finance with the bank. I’ve had to manage all of that. So for the most part, my time is spent making sure we’ve got enough money, which she’s been really, really hard.

But once, in those brief moments where we feel like we do have enough money, I can spend time doing some of the other stuff. A lot of it is, a lot of the sales, a lot of meetings now, a lot of sales meetings; marketing, like preparing for sales launches. I still spend probably too much time in graphic design apps because I can do it. I’ve trained Leah up to do some of it, but I can do a lot more and…

 

Meryl Johnston:

And you’re quite specific about the design.

 

Dan Norris:

I’m quite specific about what I want. So we do have designers, but sometimes, just like we need something today, and so, I’ll do it. Oh, God. There’s just so much; I don’t know. I wish I could tell you I was really organized and I had some hacks to get organized, but there’s not. 

Like, I mean, I often work pretty late at night. I will sort of work during the day because I have kids as well. If I have kids that week, all the afternoon is just; I’ll ride off and then I come back in later at night and just work out; do anything from writing articles or planning launches or thinking about the design of labels that we’re going to do, events were going to do. 

Basically, I have to see all the designs with excel design as mostly, but do some myself, too. So there’s a whole lot that goes in that. We’re doing a beer or two every single week and ideally, with a nice full wrap canned design. We’re trying to do more of it to make it more appealing for people. So there’s always lots of work to do. 

 

Meryl Johnston:

And it’s so funny comparing that to WP Curve where I’m sure, you were gradually reducing your hours there as you systemize things and as had someone looking after content. So it seems quite different in terms of what’s involved in running the business. But it seems like you loved it. 

#Trivia:Bean Ninjas’ business model was started by ___________(entrepreneur, business) ? We’ll retweet the winning answer. Click To Tweet

Dan Norris:

Yeah, I do. It’s really good. Like, I’m sort of; I’m able to do some of the stuff I really like, which is like the design and marketing stuff. The CEO stuff, the business side is really good, too. I kind of feel like back in the day, I was sort of making up stuff for me to do. Like, this business needs certain sh*t done and if we don’t have the people to do, like, I have to do it. 

And then, it’s exactly the same as in other parts of the business. Like, if Govs has something to do with production, some kind of beer; like we’re doing an avocado beer at the moment. He’s never brewed a beer with avocado, but there’s no one else around here who’s going to help him do it. He just has to figure out how to do it.

And same as Eddie, like we’ve got to power the beer that needs to go into town tomorrow. If he asks me, I wouldn’t have a clue. I don’t know how to get beer in towns. So no one else here does. Like, no one else here was in distribution and operations, so he has to figure out how to do it. 

And that’s part of the fun, especially if you’re fortunate enough to be in an area where what you’re figuring is actually fun for you. Like, if it’s not if you happen to figure out sales and you hate sales, that’s what I didn’t like about working for yourself, you had to do a lot of sh*ts that you don’t enjoy. But once you get to a certain size, you can sort of focus more on the stuff that you do enjoy.

 

Long-term co-foundership

Meryl Johnston:

Yeah. So you work with a co-founder at WP Curve, and you’ve got co-founders at Black Hops as well.

 

Dan Norris:

Yeah.

 

Meryl Johnston:

And it looks like in both cases, these relationships have worked well. You went through an exit with Alex, and you, Eddie and Govs; you’ve been in business together for a number of years now. And again, it looks like it’s going well. What are some of the things you do to make sure those relationships do work well for the long term?

 

Dan Norris:

Yeah. Alex and I definitely had our ups and downs, but like, we didn’t really know each other that well and we didn’t actually work physically together. So that’s really, really difficult. I don’t really know how; I don’t think we could have kept doing it for that long, and I don’t really know how other people do it in that example. 

Because you need to be around each other; like online communication can just turn nasty really quick. Like we had it with Slack with Black Hops, that will be in the founders’ channel and we’ll be sending messages and it’s like, “This is actually not that useful. Let’s just talk in person.” When you talk in person, you sort it all out, so good. So you got to be careful how much you communicate online. I think it can be really detrimental to relationships. 

What else do we do to keep it good? It’s got a lot to do with the personalities. I think we kind of respect each other skills, try not to overstep the mark, but also, call each other out if we think we could be better. 

 

Meryl Johnston:

That’s fine; that’s quite a balance between, especially if you’ve got different areas of responsibility and then there’s kind of gaps, maybe, where it wasn’t clear where something beats you or those responsibilities. Or if someone; it’s not your area of responsibility but you’ve got a different opinion about what would be done. How do you; have you got any examples of situations like that?

 

Dan Norris:

Yeah. I think so. I mean, like the other night, we had a meeting about whether we should brew this particular beer for this customer, and we sort of sat around, and me and Govs said, “Yeah, let’s do it,” and Eddie kind of said, kind of nod his head.

That sort of happens, and then, afterward, Eddie sort of thought, “No, actually, I don’t want to do this.” And he let us know on Slack, and I was like, “Well, you should have let us know at the meeting.” And then, he was like, “Well, I need more time to think about it.”

And so, that stuff happens all the time. It happens to me, too. I change my mind all the time because I’ll do the opposite of that. Eddie will do the, “Okay, fine. Let’s do that.” But then, think about it, and think, “No, actually, my opinion is different.” Whereas, I’ll be like, “Yeah, let’s f*cking do it,” like all the time. I was like [Inaudible 00:24:23] and then, I’ll be like, “Wait, let’s do this.”

So it’s good. I think it’s good to have; it’s not just the founders either. It’s a lot of; the staff has a big role in that, too. Like Leah keeps me in line quite a bit, which is not on her job description, but that’s important because otherwise, it wouldn’t really work. I think the balance of the individual people matters a lot, too.

I think we’re probably a little bit lucky in that we do not sort of; like, we’re all mates, but we’re not kind of hanging out all the time away from work. We just, we kind of come and do our thing, but yeah. 

I think we’re also very different; like the very different skills, which is useful. I think if we’re all kinds of brewers, all business people, all marketing people, it would probably get really messy. It’s worked out. It’s challenging. So far, there hasn’t been anything major in that regard. I’d say, other parts of the business have been more challenging. But choosing the right people is a huge part of it. 

Different forms of capital

Meryl Johnston:

And you talked a little bit earlier about all of the different forms of capital or in financing in different ways. 

 

Dan Norris:

I’ve talked about some of them, not all of them. We’ve done all of them.

 

Meryl Johnston:

So do you have any insights to share, say someone else is wanting to go about raising capital; what if it would be different if they’re not in a physical business, some of the other forms of financing that you talked about. Because I think crowdfunding is quite interesting and maybe you could talk through some of what you’ve learned there; some of the challenges related to that; how it all went?

 

Dan Norris:

Yeah. It’s interesting because Pulkit who does our beer software has got a company called 5th Ingredient that does Beer30, which is a production software. He messaged me last night after listening to a podcast I did and asked if we’d ever thought about raising money at WP Curve. And I didn’t even know how to.

Like, I was working in a co-working space around the startup, sort of ecosystem, I would have not had any clue how to raise money. I still don’t, really.

 

Meryl Johnston:

But you raised 4 million dollars.

 

Dan Norris:

Yeah, I just don’t; I still don’t fully understand how it works, but I know in this case, we needed to. Like, the business would not be here if we didn’t; so that’s just a no-brainer. With WP Curve, we never needed to, so it was kind of like, “Oh, it might be cool to raise money.” And then, by the end, as the growth started tapering off, we sort of thought maybe we needed to raise money to do something like a marketplace site; something we couldn’t actually afford to build ourselves and get like really into that startup ecosystem. 

But that’s hard on the Gold Coast; there’s just not. I would have had to go over to America and spend a lot of time over there I think, because it’s just not; I don’t see any evidence of that kind of existing here. Like, there’s a lot of people talking about startups, but I don’t know.

I don’t see a whole lot of evidence of actual real startup ecosystem with investors and rounds and incubators. Like, I try to be a part of all that, and I just didn’t see anything that looked legit to me.

But with Black Hops, we needed a lot of money. There’s just no; well, actually, we could have brewed at another site; that’s how you can do it without a lot of money. But there’s a downside to that, we want to build a brewery, so once we decided to do that, we needed to raise money. 

So we’ve done everything from just normal crowdfunding; equity crowdfunding, credit cards, overdrafts, bank guarantees for leases, which isn’t really financed, but that’s another banking thing that I’ve learned about.

Friends and family investment rounds, founders putting money in, asset finance through a big bank, invoice finance through a big bank, convertible notes for some of our investors, equity crowdfunding; I don’t know if I said that one. Probably, other things I can’t even think of right now; like pre-selling is another form of finance. Like, pre-selling merch because we couldn’t afford to buy it.

Black Hops Brewery

(Source: logopond.com)

Meryl Johnston:

And you said that you did this because you had to, and the business wouldn’t be here. So what does that feel like from a stress level point of view?

 

Dan Norris:

Not good. 

 

Meryl Johnston:

Knowing that you have to raise this money.

 

Dan Norris:

Awful. Like, there’s so many times, like we did what was just stupidly risky. Like, I’ve written about this in my book. Like, maybe you can do this without taking these kinds of risks, but I don’t know how to. Like, I don’t know how you get two dudes with $2,000 to build a 4 million dollar enterprise without taking risks. 

Because you have to sell the story, too. Like, you can’t just go, in all these realms, when we’ve really needed the money, but we didn’t have a good story to tell, that had been the hardest ones. I feel like we’ve been lucky so many times and just got to the end of it. Somehow, I found an investor, somehow I convinced them to invest and we’ve gotten over the line.

But the times when we had a really good story to tell, the raising money was much easier. The example I can think of is, so we got two breweries. The first one that we’re sitting at right now was getting to capacity at the end of last year. And the plan was to always build a bigger one, but it was like, “Well, how big and how are we going to afford it?”

So we found another warehouse 35 minutes up the road that was probably five times as big as this one. The rent is like, I don’t know, $200,000 a year and it was 5 plus 5 plus 5-year lease. So you’re signing up to, at the very least a million dollars. But then, we needed 2 million dollars’ worth of equipment. 

So like when we signed our lease, we had no money, the business wasn’t profitable. We knew we needed 3 million dollars, and then it was my job to get that money. So yeah, it was f**king stressful. But yeah, I don’t know how I should do it because we have a cool story to tell at that point.

 

Meryl Johnston:

What story did you tell? And so, was that when you had a good story or you didn’t have a good story?

 

Dan Norris:

Yeah, well, because we’re committed by that point. And it was like, “We’re in, we’re doing this, come along with us or not. But if you’re not in, I’m going to move on. I’m going to find someone else. Soon, we’re going to find enough people to back us to do this.” And people like that; like people like the fact that “You guys are going big.

This is a big brewery you’re building.” I think the new brewery has the potential to do like 10 times, 10 or more times the capacity of this one. One of the biggest in Queensland as far as independent breweries go. 

It was a cool story to tell and that helped a lot with selling to investors, selling to the banks, even just selling beer to some of the major retailers, to crowdfunding. Like the crowdfunding was like, “We’re going to be the first company in Australia to raise money to build a brewery on crowdfunding.

We’re going to be the first to hit our maximum target out of anyone in Australia, and we’re going to use the funds to build one of the biggest independent breweries in Queensland. And the site is what it looks like; it’s empty. We’re doing this, you can come in or not?” 

That was really powerful, so we were able to get; I think we needed 3 million dollars and we end up getting 1.7 from investors in about a week or two, or about a month, I think. We got the 400K in crowdfunding in six days when we did that. And then, the day before we open, where we just had bills piling up and piling up because we were like $800,000 short. We got $800,000 equipment financed from the bank.

And the idea of that finance is you use that to buy equipment, but we had the equipment sitting there, ready to be turned on. We used the investors’ money to buy and we needed that money just to pay the remaining invoices on the project. And that was the day before we did our soft launch. So, I mean, it’s; I don’t know. Don’t write this in your business book. Yeah, there’s a lot of sleepless nights.

But there’s a lot of times where I thought, “We’re going to lose everything.” A lot of times. Yeah. At the moment, I feel pretty good, we’ve had a pretty good run, the growth has been really strong this year.

Like, we had to basically double; like, if we didn’t double the business this year, we’d be out of business. That was our challenge. And double the business without a huge amount of extra stuff, we’re on track to do that. So that was a nice feeling. 

 

Meryl Johnston:

That’s setting challenges for yourself.

 

Dan Norris:

So just on that one, the downside is if we didn’t go really big, we’d just get caught in the situation again not too far from here. So we would end up with two breweries, we’d be hitting paid production, and then we’d have to somehow figure out how to build a bigger one and a bigger one in the second one, we’ll probably be a 10 million dollar brewery.

A lot of companies get into that problem and can’t get that money, and they end up having to sell. And we figured, if we can get this one jump to this big site now, we can grow there for a lot of years and build something super, super valuable. And if we can make it work, if we do end up selling, it will be worth way more than a three road company that’s not quite hitting scale.

 

Dan Norris’ 5-year goals for Black Hops

Meryl Johnston:

Yeah. And so, how do you look at the next, say, five years? So it sounds like you keep scaling and it becomes profitable when you get to a certain size.

 

Dan Norris:

Yeah.

 

Meryl Johnston:

And at some point, there might be an exit. But how do you plan for that or how do you look at the next five years?

 

Dan Norris:

Well, I don’t particularly want there to be an exit in terms of like selling the business, but I’m only one of 500 shareholders of Black Hops now. So it might be purely my choice. While the founders have the majority; it’ll sort of be our choice, but I like the idea of working here for as long as we can and building something valuable over time. And if we can do it profitably and pay ourselves a decent wage and have a good living, that’s perfect for me. 

I’m not particularly excited about selling, getting a bunch of money, and then, again, try to start from scratch, “What do I do then?” So that’s me personally. But at the same time, I always think you’ve got to build something valuable and that’s something that doesn’t get talked about enough in the online space. It’s always about how to make money. But there are so many benefits of building something valuable. 

Like, the only reason that I’ve been able to build something more valuable is that what we have is valuable to start with. That’s why people want to invest in it, that’s why people want to work for us, that’s why brands want to stalk us because they see our brand and they value it.

If one day, the business is worth a lot of money, then that can’t be a bad thing. To me, if someone wants to buy it for sh*t loads of money, and we have to sell and I don’t want to, I mean, that’s not the worst problem to have, is it? But yeah, personally, I would prefer to keep it and keep growing it.

It’s really hard to do that. There are not many companies in Australia who’ve been able to build a brewery and hold on to it. Most of them get to our size to probably twice as big as what we are and either have to sell or just want to sell for various reasons. There’s not too many I can think of who’d gotten much bigger than that that haven’t sold. 

Stone & Wood is a great example; they’re very independent. Cupitt has been around for a million years; I mean, their story is amazing, but it’s not really relevant to us in terms of the current craft beer boom.

They even start and would have; they best started 10 years ago. It was very different back then and they’re not a result of the craft beer boom. They’re just sort of like a company making great products, but they have been of an inspiration having that 10-year life cycle, still profitable, still growing, very, very big for a craft brewery and haven’t had to sell yet.

[Inaudible 00:34:29] of the stock exchange, which is something that’s interesting to me. But there are not too many others who are independent who are sort of getting towards anywhere near that size who haven’t had to sell.

Image result for micro brewing blackhops

Source: Blackhops

Tips on choosing your first business

Meryl Johnston:

So one final question before we wrap up. If you were talking to someone that was just about to start down the path of their first business.

 

Dan Norris:

I don’t talk to those anymore, I’m too important. I’d tell them to get in line. Book an appointment with my secretary. 

 

Meryl Johnston:

What kind of business would you recommend? Because you’ve seen all kinds of different business models now.

 

Dan Norris:

Yeah.

 

Meryl Johnston:

What kind of business or how would you recommend they think about deciding what their first business should be?

 

Dan Norris:

Your first business I think always should be something where you’re going to get immediate feedback from the customer on whether or not they want to pay for what you’re doing; I think for a first business. Like, I think service is a no-brainer.

 

Meryl Johnston:

Would you recommend a brewery for a first business? Or do you need some experience first?

 

Dan Norris:

No, I don’t think I’d recommend a brewery for any business. I think service is a great way to get into the business. You know, I’d quit my job and I hadn’t built websites before, and the day I started, I put up a website saying, “I know how to build websites, who wants one?” And from day one, I was selling something and someone was paying for it and I was learning and that was perfect. 

After that point, it becomes about what are your ambitions. I sort of think back to when I had WP Curve, towards the end, it was a really good business. We’re paying ourselves really nicely; we don’t have to do a whole lot of work. I almost look back on that and think, like I was earning way more money then. It was nice. 

But I’ve always wanted to build something bigger; I don’t really know why; I don’t really know what purpose. It’s not; I don’t think it’s really at selling and making all the money, because I don’t particularly think there’s anything out there that I want to spend money on that I don’t really, really have to, to be honest. But I always wanted to build something bigger and valuable and I’m prepared to take the risk to do that.

But not everyone wants to do that. So I think if you do want to do that, you’ve got to build something that can potentially be a big company. Software is good if you can do it, but it’s just a nightmare.

I’ve never been able to do it, it’s just so difficult. Manufacturing is just so hard; I don’t know. It’s just tough. But I’ve always sort of more like not thinking about the business model that much. At least these days, I more thought about what’s getting traction.

Like I really didn’t think of Black Hops as, “This is a good business model.” It was just like, “Well, this is worth exploring, so that’ll be part of it.” But yeah, I think service is good if you can somehow productize them, it’s good. But there are compromises with that, too, like if you want to focus on only recurring revenue, you’re leaving a lot of revenue on your table, you’d be adding in some consistency. 

It makes some things a lot easier, but it makes probably profit’s a bit lower and it changes a lot about what you do. This means you have to say no to a lot of stuff. I think you need to be more focused on sales because selling something recurring is quite difficult. And if you don’t want to do that, that might not suit you. So I think it’s more about what suits you and more about what you want to do.

I would say be careful doing business by yourself always, even if it’s your first one. Probably, especially if it’s your first one. It’s just so hard, just the whole headspace you have to be and just the burden you have to take on, even if it’s a small business.

Like, in my first business when I was just at services, that was when I was probably the most stressed because I wasn’t making enough money, I’ve kind of felt like a failure. We end up having kids and trying to raise kids with not enough money. It was a f**king nightmare.

So even then, I think it just would have been easier to have someone, another business partner. It wouldn’t be easier if you have the wrong business partner though. But yeah, I think that kind of stuff, I’d be thinking about more than the actual business model, I think. 

 

Meryl Johnston:

Yeah. I also think that services are a great way to start out. When I had been involved with the startup community, sometimes people, with their first business are trying to build a really hard kind of business, like software. 

 

Dan Norris:

Yeah.

 

Meryl Johnston:

Really scale it without a network, without money, and without experience.

 

Dan Norris:

Yeah. It’s just not going to happen. It’s just not.

 

Meryl Johnston:

I think maybe your fifth business model or your fifth business or your third business. But building some of those skills, that’s been my own experience in doing consulting first and just learning how to sell and learning how to manage people. I’m learning how to build a brand first and then trying somewhere money is coming in immediately.

 

Dan Norris:

Yeah. You get that immediate real feedback, not just the bullsh*t of, “Oh, this is a cool idea.” But the software is just; I think what a lot of people don’t understand is most software companies have started in an area where they’ve got an ecosystem designed to build software companies.

They started with a number of founders; normally, one is a genius coder, normally, one is a genius marketer. If not, they’ve got the budget in the investment to give up equity and good salaries to designers and marketers and coders. 

And normally, that’s done-for-you businesses that have basically filed loads of money. These things tend not to get started by just like individuals racking up the startup weekend.

It’s just doesn’t happen, so like that, I think that can be just such an enormous distraction and I was really pulling to that as well because I love the idea of having a software company. I always wanted to build a software app because I could just see, as a business model, it was so appealing.

But I think it’s really rare for software companies to be built by people like me in those situations. So you kind of just end up getting distracted with all the startup and it’s just not good for anybody. I don’t think; not to say it’s impossible; I mean, building any business is very difficult. But the service is good because you can get off or get rejected or get accepted. You just know straight away.

Like people paying you or not paying you or referring you was perfect feedback. But someone giving you feedback on your pitch and telling you what logo to use and that is not useful. It’s just not. 

 

Meryl Johnston:

Well, Dan. It’s been awesome. Thanks so much for coming on. 

 

Dan Norris:

No worries. We should do this more often.

 

Meryl Johnston:

Yeah.

 

Dan Norris:

Every week. We can just talk about stuff.

 

Meryl Johnston:

Sounds good. 

 

Dan Norris:

Thanks, Meryl.

 

Meryl Johnston:

Thanks.

Thanks for listening to the Bean Ninjas podcast. Here are three ways to grow your freedom business faster. Number one, download our free Xero Small Business Toolkit. Go to beanninjas.com/podcastgift and use our cash flow forecasting template as well as the other resources available.

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