Leaving Wall Street to Brew New Profits
Kevin Selvy used to trade securities for Barclays. "I didn't like it."
Tom Scozzafava worked at Lehman Brothers and then Prudential. "I wanted to do something that utilized a broader set of skills."
Dan Alger did two tours of duty in Iraq with the Navy, went to Wharton, and ended up at Goldman Sachs investing in urban real estate. "At some point I just decided I needed to pursue my lifelong dream."
All three left Wall Street to brew up a better life and, maybe, better profits. They're all starting up craft breweries, and they attended the 29th annual Craft Brewers Conference in San Diego.
Selvy, at the ripe old age of 28, runs Crazy Mountain Brewing Co. out of Vail Colorado, a two-year-old company that has grown from about 1,200 barrels last year to ten times that. It's beer will soon be in Whole Foods. "We'll do about $2 million this year, and next year we'll do about $6 million."
The hardest part was financing the start up. Selvy says he got an SBA loan after a very difficult application process. "The bank we actually ended up getting the SBA loan from, it was their first loan they'd done in two years. We were over 1,000 percent collateralized, it was a horrible process, it was really challenging."
He's convinced the gamble will pay off.
The craft brewing industry has broken past 5 percent market share by volume and 9 percent by sales in the $90 billion U.S. beer market, according to the Brewers Association. "There's a lot of people out there that think we're in a bubble, and it's going to burst," says association president Charlie Papazian, "but we're not in a bubble. We're knee-deep in foam and it's rising all around us."
Tom Scozzafava recognizes the competition is stiff, but says craft brewers still think of themselves as a community rather than an industry. "There's a lot of 'coopetition' they call it, that goes on," he says.
Scozzafava left Wall Street in 2009 to buy Sackets Harbor Brewing Company near Syracuse, N.Y., at a distressed price and has been turning the brewery around. They buy a lot of their beer on contract, but hope to eventually build and brew their own. He says some of his old buddies on Wall Street envy him. Scozzafava tells them, "You give me your bonus and then you can come work at the brewery for a year, gratis, you know, drink for free."
Dan Alger left Goldman just last year and hopes to open Hudson Craft Brewing Company in Hoboken, N.J., this fall. Right now he's signing a lease and lining up funding, which is around $1 million. "We have a target of 50 percent of our staff being veterans."
Do they miss Wall Street? "I haven't had to wear dress shoes in a few years, which has been nice," says Kevin Selvy, as he stands in flip flops. Tom Scozzafava can't remember the last time he wore a tie. As for Dan Alger — "I miss a steady paycheck," he laughs. "Honestly, I'm at a beer conference for my job, how can you beat that?"