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Matt Phillips is the founder and CEO of Phillips Brewing and Malting Co. in Victoria, British Columbia. After years of working for other brewers, Matt decided to start up his own brand as craft brewers across the industry were shutting shop in the early 2000s.
Almost two decades later, Phillips is not only still standing, but thriving as BC’s Biggest Little Brewery.
The Ivey Entrepreneur Podcast is sponsored by Connie Clerici, QS ’08, and Closing the Gap Healthcare Group, Inc.
Transcript
You're listening to the Ivey entrepreneur podcast from the Pierre L. Morrissette Institute for Entrepreneurship at the Ivey Business School. My name is Eric Morse and I will be your host for this episode. Matt Phillips is the founder and CEO of Philips brewing and malting company in Victoria, British Columbia. After years of working for other brewers, Matt decided to start up his own brand. Just as craft brewers across the industry were shutting shop in the early 2000s. almost two decades later, Philips is not only still standing, but thriving. Today, I'm going to talk with Matt largely about searching for opportunity, though, we'll cover some other ground. Now, here's Matt Phillips, and the story of bcws biggest little brewery.
Matt Phillips
I started my brewery 18 years ago, I'd worked for a few breweries at that time. And I guess I've been working for various four or five years at that point. And really, you know, kind of saw an opportunity early on that this industry was going to grow and had some experiences working for others, it realized that to kind of take the direction I wanted to go in my brewery autonomy was going to be important. So in the late 90s, a lot of breweries were closing, there's a boom in craft breweries through the through the early 90s and mid 90s. And a lot of them didn't make it. And so there was a lot of gear floating around turn of the century that that was going for a pretty significant discount. And it was this idea that I really wanted to be able to start my own brewery and not have to answer to anyone, I really saw the opportunity there that if I was going to start it was now because it was starting to get snapped up. The availability of equipment wasn't quite there. Like it was a year or two before that. And so I thought if I'm gonna do this, this is the right time I gotta jump. And and so I did I put a business plan together, I ran around all the banks, and dropped them off, and typically got a pretty quick now. So I just grabbed credit card applications on the way out and sent them all in and they all got approved for various amounts from you know, two to $10,000. And I kind of pulled them all up and had a high interest start to to my business. But that's kind of how that goes.
Eric Morse
I have a friend that says that's VC funded.
Matt Phillips
Yeah.
Eric Morse
You know, cool. So when you were thinking about it, the environment you were looking at, obviously, in terms of their equipment ready. Had you had entrepreneurial experience before that or always been working within other breweries?
Matt Phillips
Yeah, yeah, exactly. So no, I worked for a few breweries, ran one. But rec. She ran to I guess, but no, I'd never never had an entrepreneurial experience.
Eric Morse
You mentioned that you wanted to kind of do it your own way. What What was the gap that you saw in the market that that you didn't feel was really being hit?
Matt Phillips
Yeah, well, I guess, maybe slightly different things. So what really inspired me to want to do it my way was my second job, I was given the task of taking a really well made lager and, and watering it down into a particularly unsatisfying light lager. And wasn't keen about it, voiced my opinion, but it was kind of pushed in that direction. So you know, that that was kind of the reality is, I realized that if I wanted to make beers I was proud of that was gonna be challenged unless I had a little more control than that, okay. But the opportunity in the market was one where every brews pretty much making the same thing. Not that it was a big market, but there was a niche market for interesting one off kind of beers. And so that's what I kind of went down the road of making just big format bottles, kind of single sale units of, you know, IPAs, and espresso stouts. And those kinds of things that really didn't require there was no brand loyalty to overcome. It was it was the kind of consumer that was interested in that was going to be interested in that. And it was, it was so few on the market, I knew I would have a pretty good chance of of being able to kind of get initial sales pretty quickly.
Eric Morse
Okay. You know, you were relatively early on the craft beer, not not right at the beginning, but kind of as it started to boom, you were there pretty early on, is that right?
Matt Phillips
Well, yeah, you know, I kind of think of it as kind of two waves. So there was there was a NBC at least there was a group that started in the mid 80s. And kind of mid 80s through mid 90s. Yes, there were, you know, a fair number of breweries that started number close as well. And then the next real wave kind of started in around 2007 2008. And so I was 2001. So I was right in the the trough between the two, I guess.
Eric Morse
Yeah. Okay. Interesting. I heard you talk about the quality of the beer and you know what the lager being watered down and I love your beer, so the quality is there. It's funny though, because when I think of your brand, I probably think of the art, the marketing the connection to the customer in that messaging kind of way, as much as I think about the beer itself, it was that an obviously conscious decision on your part to be different, and how you reach out to customers.
Matt Phillips
It was an evolutionary process. You know, when I began, it was fact, one of these days, I'll show you my original labels. And you'll know, there's this graphic evidence for the fact that it didn't begin this way. But we began where I began as a one man show, and very product centered it was, these are the kind of beers that I know are gonna resonate with customers. And I was very fortunate early on to choose a graphic artist, that is just an amazing, it's just amazing. He his cultural understanding is phenomenal. His ability to work in almost any style is phenomenal. And he's the coolest guy I know. And so, I've been really fortunate to have him as part of the creative team. Yeah, and, and to be honest, we've hired creative people along the way. With that, that in mind, so it's really kind of part of the DNA of the company. But it didn't start that way. It kind of evolved that way. And quite early on, we started making beers that weren't just designed to be, you know, we need to tell people what's in the bottle. You know, once we got past that, hey, this is the very basic level of communication we need to give customers. And we, you know, we've got a little more bandwidth, let's have some fun with it. Right. That's when the real character of the brand began?
Eric Morse
Well, it's interesting, and I don't think there's another beer out there that I actually read the whole label, because there's something you know, all the way around the can. That's, that's interesting. You obviously had a foundation before that in terms of some success and local success. Do you think that's what really took you to that next level? Was it that because it's a differentiated? You know, product? That way? For sure.
Matt Phillips
Yeah. You know, it's a good question. I, you know, like anything, yeah, we spent a lot of time navel gazing, trying to figure out what it is that worked about brands that worked, right, and what it is what brands that didn't work, and the inevitable reality is, we come up with a million reasons for both and quite often there's overlap, you know, that you can't really tease them out. But, I think we being a Victoria based brewery, Victoria had a really strong craft following and was really open to those kind of novel beers. And, and so that kind of leaked out. And I think, I think partly because of the kind of beers we're making and the quality that we were making them in, we were able to kind of get wrapped followings in areas that were more distant to the brewery early on. But yeah, you can, if you have a great label, people will will try it. Right. And if it's good, they'll try twice. And cool comment about the copy. Yeah, I mean, every little piece, every detail matters, right? So we actually have a separate group that writes our copy to the group that does the graphics to the group that does the name. So we, we tease them apart, because it's if you if you break them down into little bits, you can put a lot of focus on each individual bit. Whereas if it's one big project, sometimes the details don't have as much resonance. So yeah, I think they're important. I think all of those things are important. We put that much care into making the beer, we got to put that much love and effort into making the labor. The label, sorry.
Eric Morse
You know, my, my wife loves your beer as well, but very specifically, you know, a couple of beers, and she's not a beer drinker. So I think you've somehow done something magical. As far as I can tell. You're one of the biggest, if not the biggest, regional kind of Brewer now in Canada, is that is that something you aspired to? Or did it just happen? You know, when you think back to that original business? Yeah, yeah, it was a plan.
Matt Phillips
The original business plan was very modest, which is part of what the banks all kind of looked at, they thought, you cannot start a brewery this, this small, known, like it just it, it's not the model. It's not the paradigm of what a brewery would look like to them. So, no, it was really modest. I think we topped out, I think it was a five year plan, we topped out at five people I think. And it was really specialized in these unique one off beers and a wider geographic distribution. And I guess I started as a one person game, and the first two years were incredible in terms of the work requirements. So I would typically be working I was building my own machinery at the same time. Welding tanks, fabricating equipment.
Eric Morse
I used to manage a talent.
Matt Phillips
Yeah, well. You haven't seen these tanks. But I would, I would build two tanks and sell one and and the labor would pay for the material in the other. So that's how I was able to build up the tank farm. So I'd be you know, typically I'd get up in the morning and I do my bottling run. And then I'd go out and I do sales and deliveries and then I come home and I brew at night and sleep for a couple hours and get up and do it again. And after a few years, I was two years I was pretty done. I was pretty burnt out. And very early on, I started the brewery and there was a it was very tight timeline. I think I signed the lease in June. And I needed to have sales in August to make sure that I would get paid in September from the liquor branch, which is a minor miracle that they will pull license off and all that. But it was the ignorance sometimes pays off. And so So in any case, I pulled it off. And I called up my traditional bottle supplier for the people that I've been working for it for other breweries, and we're working for and I said, I need some I need a few pallets and they said, Oh, well, we're out. What do you mean, we're at? Well, the whole industry is out. They haven't because they only run this bottle every three months. And they're out. And the next scheduled run is in October. So we should have them in November. How's that great. And I said, well, I need them next week are on bankrupt. So that doesn't worry, I'm not gonna make rent next month. So. So anyway, I was able to sweet talk somebody in the glass plant down in Portland into selling me a couple off of the dock. And so I drove down on a five ton truck. And I got this huge dock, 40 5018 wheelers lined up. And my my truck was six inches too short for the dock. And I went in to talk to the guy and he said, Yeah, well, we'll figure it out. We'll sort you know, but you got to know you are the last guy I care about today. So just make yourself at home, we'll get you loaded by the time we close the night at five, but it's not gonna be till then. And I said, and this is just before 911 off security slack. I said, Do you mind if I walk around in this huge warehouse? And I did. I went for a hike. And it felt like it was a long walk. And in the very back corner were these old stubby bottles. I said, What's the story with these? Can I buy those? And they said, No, no, no, those are, those are spoken for whatever we're, we're holding them. You can't use them. Or whatever. And, you know, try it again with some bottle brokers and no one could get ahold of them. So I kind of stopped thinking put it out there. I got it. Anyway, fast forward two years later, I you know, is up 20% for the previous year, I was paying my bills, but I wasn't getting ahead. It was and I was worried. I wasn't yet at a point where I could hire anybody that's just punishing work. And I kind of hit that breakpoint. And you know, I think a lot of people hit that breakpoint. And, it actually for me, it came down to a box of shrink wrap. So I'd go through, I'd build a pallet, I'd have to shrink wrap it and then I'd drive it over to Vancouver and deliver it and typically a box of shrink wrap Costco 40 bucks, it lasts me maybe three, four months. Yep. Anyway, I got to the end of the box and I thought do I gonna buy another box? This is another three or four months and I I kind of had that plan. No, you know what this is? This is the point it's it does not it does recognize I recognize and I this is this is killing me. I'm not going further. I kind of made the decision. I'm done. And I call it my dad packing it in. And he was very supportive. But I slept on it. I woke up in the morning and I can't give up this far in the I just can't quit after one try. Right. So I called up the bottle supplier and I said those bottles a chance those are for sale yet and why she's funny she call yeah, we've just had a meeting about that they're for sale. So I said okay, and so set about designing a beer that would suit that that okay, the bottle and came up with. She's funny. We named it after an old brewery that was in the interior of BC called Phoenix, the town called Phoenix and they had the biggest gold mine in a copper mine sorry, in the British Commonwealth. And then they had a strike and they closed it. And then during the Second World War, they needed copper again. So they started as an open pit mine and just wiped out the town. And that's kind of a cool story. And you know, no trademark issues with that or they're gone. So called this beer Phoenix made a lager built some tanks that worked for loggers and kind of doubled down on it. And it really hit and it started to take off and started to be able to hire people and all of a sudden has momentum. So but of course, this was totally contrary to the original business plan. So that's that was kind of when the departure happened. This is where we're going. And that was the first label that was graphically a little more interesting. That was the first foray into that world. And it worked pretty well. Interestingly, it turned out that there was another Phoenix brewery, and it it was actually in Victoria and actually kitty corner to our current location. So anytime we open the ground, dig a hole to put new tank in or something, we always come across this Phoenix bottle that's buried in the ground there. So research, research is a key thing.
Eric Morse
But from there, you took off?
Matt Phillips
Yeah, well, I mean, I'm sure there's lots of ups and downs and brands that hit and didn't but, but that was kind of, I think, a real inflection point for the business.
Eric Morse
Okay. And am I right and saying you're the one of the largest craft brewers in the country?
Matt Phillips
Yeah, you know, numbers aren't really published. So we're but we're definitely on the larger side of things. Yeah.
Eric Morse
Fantastic. Congratulations. When you think about that growth, and you know, a lot of perseverance pushing through anything that comes to you in terms of that you'd want to share the lessons learned that just kind of you look back and go, wow, you know that that was key. You talked about one moment, but any other lessons that just wow, I wish I would have known that 10 years earlier.
Matt Phillips
There's so many moments that he kind of go, oh, man, I wish I could have learned that the easier way. I think when I look back, understanding the value of culture earlier would have would have been a really wonderful asset. And for me, it was something that I didn't really understand until it was shaky, and it's so much more difficult to, to rebuild, than it is to maintain a force. And so, really understanding what it is about your culture that is special, and what drives it would have been something that, I would just recommend everybody kind of spend some time thinking about, how to communicate within your organization's that you maintain it. Pretty basic stuff, but I didn't know it.
Eric Morse
Well, you wouldn't know it today. I mean, you've got a fun workplace. You know, you say you you hired the coolest guy. I'm not sure it's not you though, man. You know, I've really enjoyed getting to know you over the years. And thanks so much for meeting with us today.
Matt Phillips
Pleasure. Thanks, cheers.
Introduction/Outro
thanks again, Matt. You know that what a lot of fun he is. And to get the chance to talk with him about his startup and some of the things that he went through as he got his business to where it is today. I just wanted to cover a couple of points around opportunity. We talk a lot about being in the flow. And I think Matt is a great example of that he was in the industry, he'd worked for a number of different players, he was watching what was happening. And he saw his opportunity in a couple of ways. One, there was spare equipment still out there that he could pick up for cheap to get his ideas off the ground. And to he saw a need around the product, that the product that was out there was really quite generic, he thought he could make a much better product as we move forward. The thing that's really interesting to me, and that I hope you picked up on is that that product, and his company itself really evolved over time to meet the customers more where they were and where they were going. So he had a great idea. But it was changed a number of times to really get where he is today. And that's typical of all ideas. So one of the things about being in the flow that I wanted to point out is that lots of people are there. We all you know many of us go to work every day. It but it's those that are searching and looking and open to ideas that, frankly, spot opportunity. So how open to our new new ideas. Are you searching for those new ideas and searching for those opportunities as they come along? Sometimes it's inspiration, but it's just as much perspiration of Oh, I see that's different. How might I work that and change that into something that really could be interesting in terms of a business opportunity. Something else I hope you picked up through this particular podcast is just perseverance and resilience. You know, there's a lot of ups and downs as you get a business up and going and it's in, it's staying open to those new opportunities and the stub bottles with Matt. But it's that real persistence to stay with it to keep going. That made a difference for Matt in this case. Lastly, Matt talked a little bit about growth and how important culture was as he got up and going. And we're going to use that as a bit of a jumping off point. The next podcast I'll be talking to Don Bell, who talks an awful lot about culture. Thanks.
Conclusion
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