Hero of American Capitalism: Jim Koch

I've long been biased in favor of Jim Koch, founder of the Boston Beer Company, at right in a picture from today's NYT.

  -- Two percent of the reason: he was a college classmate of my wife's -- along with Frank Rich, Chuck Schumer, Bonnie Raitt, Katha Pollitt, and other worthies. Those were the days (although I didn't meet Koch then and haven't since).

  -- Ninety-eight percent of the reason: founder of the Boston Beer Company, and as such not just the creator of the Samuel Adams line but also the man who, as much as any other one person, deserves credit for leading America into its current Golden Age of Beer. When a Beer Mt. Rushmore is built, he'll certainly be there, along with Ken Grossman of Sierra Nevada. Some other time I'll fill out the full Beer Rushmore lineup, or maybe instead a Hall of Beer Heroes. For now, here's Grossman, below, in a pose nicely similar to Koch's. Come to think of it, all pictures of happy brewers tend to be posed this way.

Today I learn of a new reason to hold Koch in high esteem. In the NYT's Sunday business section, Jeff Sommer explains how Koch went out of his way in the mid-1990s to structure the Boston Beer Company's IPO so that it advanced the interests he cared about in the long run, rather than wringing out absolutely maximum capital or returning most of its riches to those with the most extensive inside connections.

The heart of his idea was giving actual customers -- people who loved his beer -- a favored place in line for IPO shares, and a bargain price. The story says:

As Mr. Koch saw it, when an I.P.O. is controlled by investment banks, it is structured "to reward the banks and their favored institutional investors" and not the fledgling business or its customers. He realized that he "wasn't comfortable letting Wall Street underwriters control the process, set the price and allocate the shares to their favored clients at a favorable price."

Instead, he said: "I wanted to take care of my Sam Adams drinkers. They were the people who were really important to me and who were going to continue to be."...

"The laws and regulations were set up to make this kind of thing very difficult," he says. "But I had a strong feeling that we should do this." 

The story goes on to explain how he did so, what he learned, and how some companies -- though not enough, and notably not including Facebook with its splashy new IPO -- have followed his example. The most depressing aspect of today's globalized, maxi-connected, financially-minded market-industrial system is the way that short-term profit is pushed to the absolute maximum, at the expense not just of unpriced "externalities" (pollution, community dislocation, inequalities, and so on) but also of the long-term welfare of the firm itself. Very nice to see this real-world example of someone putting his own company's money behind a different approach.

BONUS: For a view of the world that Jim Koch helped create, you can see this slideshow on the top-selling 20 craft brands during the current Golden Age of Beer. Yes, I hate slideshows too, but this is interesting. Koch's Boston Brewing is #1, and Grossman's Sierra Nevada is right behind him; I recognize, fondly, the others on the list, with a sole exception I have not yet tried.