Free to Choose
t the Anchor Brewery on Mariposa Street in San Francisco, the air
was thick with the sweet aroma of fermenting beer and the buzz of
a tour group sampling the finished product in the oak-paneled taproom,
but Fritz Maytag was oblivious to it all as he stood in his cluttered office,
thumbing through a small, turquoise hardback book that had just arrived
in the mail. There was a look of utter joy on his face. Dressed in a
light blue shirt and dark blue vest, khaki pants, and scuffed brown shoes,
his glasses pushed back on his forehead, he had the aura of a prospector
who had just struck gold. The book, he explained, was the latest edition
of the Lakeside Classics, a series of first-person narratives of American
history—primarily pioneer Western history—that the printer R. R.
Donnelley put out once a year at Christmas, “to show the trade what can
be done without much money.” Maytag had collected all of them back
to 1912. He noted that the color of the cover changed every twenty
years. “When you see eighty of them on a shelf, one color and then
another—oh, killer,” he said. “It just knocks me dead.”
Maytag may be the great-grandson of the giant appliance company’s
founder, but he has an unabashed fondness for small, beautiful things, in
business as elsewhere. At sixty-five, he could look back on forty years as
the owner and CEO of the premier microbrewery in the country and
forty-three years as a partner in the famous gourmet cheese company
that bore his family name. While he was obviously pleased with both
businesses, he admitted there were moments when the future of the
brewery, at least, was very much in doubt. In the early 1990s, it had
reached a crossroads, and Maytag had been forced to make a choice—
the same choice that all successful entrepreneurs are faced with sooner
or later, although most don’t realize that there even is a choice until it’s
too late. To his great relief, Maytag had recognized his choice in time
and made the one that was right for him. But it had been a close call.
The issue arose in the early 1990s, at what many people would have
considered the pinnacle of business success. For some twenty-seven
years, Maytag had owned and run Anchor Brewing, a company that
traced its ancestry back more than a century to California’s Gold Rush
days. It had been on the verge of extinction when he had taken the
helm, hoping to save the company and its sole product, Anchor Steam
Beer. He’d succeeded spectacularly on both counts. In the process, he
had launched a revolution in beer making. His were the first nationally
recognized microbrews: high-quality, handcrafted beers and ales, made
with the finest ingredients available, using traditional recipes and brewing
But success had turned out to be a mixed blessing. Anchor Steam
Beer and the brews that followed—Anchor Porter, Liberty Ale, Old
Foghorn, and Christmas Ale—had become so popular by the mid-1970s
that Maytag couldn’t come close to meeting the demand. From six hundred
barrels in 1965 when he came in, production had soared to twelve
thousand barrels in 1973, maxing out the brewery’s capacity just as its
fame was beginning to spread.
Maytag recalled the next few years as pure agony. With customers
beating down his wholesalers’ doors, he’d had to start rationing beer.
Everyone had pleaded with him for more product. The best he could do
was to promise that he would allocate his supply as fairly as possible,
which hardly satisfied the distributors, restaurant owners, and beer retailers
who had to go without. The low point had come on a day that
most companies would have celebrated. Anchor’s Nevada distributor
had called to say he’d been contacted by the general manager of the new
MGM Grand Casino in Reno, whose CEO turned out to be a big fan of
Anchor Steam and wanted to serve it on tap in every bar in the house.
It was an enormous order, and it would have to keep being refilled for an
indefinite period of time. “What did you tell him?” Maytag asked.
“Are you crazy?” said the distributor. “I told him yes, of course.”
“Well, the answer is no,” Maytag said.
“You can’t do that to me,” said the distributor.
“I’m sorry, but I told you no new draft accounts,” said Maytag. “What
do you expect me to do? Short everyone else?”
“Well, I’m not going to tell him,” said the distributor. “You’ll have to
come and tell him yourself.”
Maytag had had to fly to Reno and explain in person why Anchor
couldn’t accept the order. The general manager was not happy. Then
again neither was Maytag.
To be sure, there had been alternatives. For one thing, Maytag could
have hired an out-of-town brewery to do additional brewing for him.
That’s how many other microbrewers later got started, but he never
even considered the possibility. It would have meant sacrificing something
so fundamental as to have violated his entire purpose for getting
into the business to begin with—namely, the authenticity of the products.
Instead he had sweated it out, torn between the urgent pleas of his
customers and his own insistence on selling only the highest quality
beer he could make.
Maytag never forgot the experience, and, after Anchor Brewing fi-
nally moved into its new building in 1979, he had vowed not to let it
happen again. There would be no more rationing while he was around.
For the next twelve years or so, he hadn’t had any trouble living up to
that commitment. Meanwhile, the demand for Anchor Brewing’s various
beers and ales continued to grow, spurred on by the great American
food renaissance of the 1980s. By the end of the decade, it began to
dawn on Maytag that, like it or not, another capacity crisis might lie
ahead. As a precaution, he bought land across the street, thinking he
might put up a building there for storage and packaging, creating more
room in the brewery for beer making. Then, in 1992, he started looking
into the possibility of doing an initial public offering to raise the capital
he would need to finance such an expansion.
His idea was to do a so-called direct public offering, wherein a company
sells its stock directly to the public, rather than going through an
underwriter. A local man named Drew Field had done a few such deals
and written a book on the subject. Field was highly critical of the atmosphere
around IPOs—the money wasted on dog-and-pony shows, the
practice of flipping stocks, the inside deals—not to mention the end result:
a company winding up with a bunch of strangers as shareholders.
He thought business owners could save themselves time, money, and
grief by going the direct offering route.
And Maytag liked the concept. It looked like his salvation. He figured
the brewery could handle another 10 to 15 percent in sales before
it ran out of capacity. As long as he expanded by then, he could avoid
the problems he’d experienced in the 1970s. Besides, the company
would eventually have to move up to the next level anyway. It was the
natural order of things. Every business has to grow or die, right? So he
thought he might as well expand sooner rather than later. To finance
the expansion, he would need outside capital. The direct public offering
sounded to him like the best way to get it.
Still, something about the plan bothered him, and as he talked to his
employees, he began to have second thoughts. Maytag and his three top
people spent hours trying to figure out the implications of going public.
What would the new investors expect? How would their demands
change the business? Why are we in business anyway? What do we enjoy
doing? What are our goals in life? They considered the various possible
outcomes and realized they all had reservations. They weren’t sure they
wanted the company to get much bigger. They loved it as it was. They
had no particular desire to “take it to the moon,” as Maytag put it. If it
got too big, moreover, they might have to give up the parts of it they
“I realized we were doing the IPO out of desperation—because we
thought we had to grow,” Maytag recalled. “It occurred to me that you
could have a small, prestigious, profitable business, and it would be all
right. Like a restaurant. Just because it’s the best around doesn’t mean
you have to franchise or even expand. You can stay as you are and have
a business that’s profitable and rewarding and a source of great pride. So
we made a decision not to grow. I was still very nervous about the
prospect of having to ration again, but I decided we’d just face it if we
had to. This was not going to be a giant company—not on my watch.”
He never regretted the decision. Of course, it helped that the capacity
crisis didn’t materialize. By the early 1990s, the revolution Anchor
Brewing had ignited was sweeping the country, and scores of other microbreweries
were springing up to meet the demand. Although Maytag
sometimes chafed at competitors’ tactics, overall he viewed the increased
competition with relief. Rather than resist them, he helped
fledgling rivals develop their brewing skills. Their presence in the market
left him free to build a company that he enjoyed and was proud of,
that would give him the sense of accomplishment and fulfillment he
sought, and that would allow him to lead the kind of life he wanted.
And, after all, isn’t that the purpose of going into business in the first
he companies in this book have a message for every person who sets
out to build a business, and it’s an important one: If the business survives,
you will sooner or later have a choice about how far and how fast
to grow. No one is going to warn you about it, or prepare you for it, or tell
you when the moment arrives. Chances are, your banker, your lawyer,
your accountant, or whomever else you turn to for business advice will
be encouraging you to grow as fast and as far as you can. The bigger your
company becomes, the better their advice looks, and the more business
you’re going to do with them in the future.
The outside world will be sending you similar signals. We all want to
be successful, after all, and our visions of success are inevitably shaped
to a large extent by examples in the media, by the spirit of the times,
and by the common wisdom about what’s possible. If you constantly
hear about the need to grow or die, if everybody seems to be trying to get
to the next level, if the only companies being celebrated—or even
taken seriously—are the biggest, or the fastest-growing, you may never
even think to ask about options other than growing your business as
much as you can and as quickly as you can.
Nor can you necessarily count on your friends and family—those
who really do have your best interests at heart—to point out that you
might find more happiness by choosing another path. They’re probably
not aware of any alternative. Like most people, they assume that getting
big is the whole idea. Then if things don’t go the way they want, if they
don’t like what the company is doing to you—or to them—they’ll blame
the business rather than your choice about what to do with it. For that
matter, you, too, will probably blame the business—or your competitors,
or the economy, or your employees, or the government, or whatever—if
you get in trouble later on; and you may not be completely wrong.
But you won’t be completely right either. As the companies in this
book demonstrate, there is a choice; and the payoff for choosing the
less-traveled path can be huge. It can affect every aspect of your
business—from your relationships with the people you work with to the
control you have over your time and your destiny, to the impact you
have on the world around you, and to the satisfaction and fulfillment
you get out of your professional life.
Unfortunately, many people have to pass...
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