Entrepreneurs

Learn from my $2M beer bath: Sam Adams creator

The best way for an entrepreneur to learn how to grow their business is by making mistakes and learning from the missteps of others, said Jim Koch, co-founder and chairman of the Boston Beer Company, maker of Sam Adams lager.

Koch, who turned his great-great grandfather's beer recipe into a craft brewing juggernaut, appeared on CNBC's "Squawk Box" on Tuesday and shared one of the early business disasters he detailed in his new book, "Quench Your Own Thirst: Business Lessons Learned Over a Beer or Two."

"One of the reasons that I put in the mistakes is because that's where a lot of your learning is," he said. "It's a book about my 32 years starting Sam Adams in my kitchen and growing it and growing this whole craft beer revolution."

"I wanted to build this big brewery in Boston way before we were ready for it." -Jim Koch, Boston Beer co-founder and chairman

"I wanted to build this big brewery in Boston way before we were ready for it" in the company's early days, Koch explained, calling it his "edifice complex."

The original bid for the brewery came in at $8 million and quickly swelled to $15 million, he said, recalling how the project was threatening to jeopardize the business.

In the end, Koch said he had to make the difficult decision to write down $2 million, taking a near term hit to safeguard his future. "So here I [was] almost 40; economically I'm net negative. But I grew from there," he reflected.

Koch founded Boston Beer in 1984, and the company went public on the New York Stock Exchange in 1995.

Trading under the ticker symbol "SAM," Boston Beer stock currently has a market value of about $2.3 billion. The company commands about 1 percent of the U.S. beer market.

Last year, craft brewers overall saw a 13 percent increase in volume. This marked the eighth consecutive year of double-digit growth, according to an industry trade group. The Brewers Association said retail sales of craft beer rose 16 percent to an estimated $22.3 billion last year, representing 12 percent market share of the overall beer industry.

Counting himself among the 4,500 craft brewers in the U.S., Koch said the secret to his success has been "continuing to innovate and bring new tastes."