Case study covered in the book We Are Smarter
"Back in the Aussie summer of 2002, Liam Mulhall was ready to abandon the
high-stress, high-tech business. He had put in his time at the local office
of Red Hat, the big U.S.-based provider of open sourcing solutions, and now
he and his two buddies had a new Plan A. They wanted to buy a pub in Sydney.
The problem was, the price was more than the lads could afford. So they fell
back on Plan B, which, in this case, was Plan Brew. With a nothing-to-lose
attitude -- "It was our money and not a lot of it," Mulhall allows -- they
would make beer, but with a twist; they were going to tap the power of
Mulhall had stumbled onto the story of PK-35, a Finnish soccer club. The
team's coach invited fans to determine its recruiting, training, and even
game tactics by allowing them to vote using their cell phones. The idea put
the fizz in Mulhall's lager. As he would later write, he had found "the best
way to run a business -- give the customers the reins."
Luckily, Mulhall and his two friends didn't know that the 2002 soccer season
would be so disastrous that PK-35 would fire its coach and scrap its
fan-driven ways. So they went ahead with their scheme, setting up a Web
site, Brewtopia.com.au, and inviting 140 of their friends to describe their
ideal beer. Within weeks, the community had built up a head of more than
10,000 people in 20 countries, and their votes determined everything from
the beer's style (lager), color (pale amber), and alcohol content (4.5
percent) to the shape of the bottle and the colors printed on the label.
The founders, however, were -- and are -- solely responsible for the beer's
name. For reasons comprehensible only to an Australian (let's just say it
has to do with sheep), they called it Blowfly.
Chief executive and "spokesmodel" Mulhall and pals, Greg Bunt and Larry
Hedges, contracted with a brewery to make and bottle their concoction. But
how to sell it? As the Brewtopia site explains, "In Australia there is a
'brewing duopoly,' two major brewers who have contracts with most outlets
and bars that restrict the smaller boutique beers. If you don't have the
bucks to throw at retailers, you just don't get exposure." The solution:
Blowfly would be sold in direct shipments through the Web site, beginning
with the people who helped design the beer, and, thus, would have what
Mulhall calls "viral equity" (a.k.a. shares in the company) and a
predilection to try the brew. And in line with the company's crowdsourcing
origins, the site would enable members of the Blowfly community to customize
the label on the bottle, choosing a template from among a dozen offered,
typing in their own text, and uploading their own photos or artwork.
Four years later, in 2007, with, as Mulhall would have it, "no brewing
experience, no industry experience, no marketing experience, no money, and
no idea what [they] were doing," Brewtopia had 50,000 customers in 46
nations. Having already branched out to wine and bottled water, soft drinks
were on the way, Mulhall told London-based marketing consultant Johnnie
Moore. Brewtopia also sells brand-promoting T-shirts and caps.
Mulhall and his buddies give Brewtopia a wisecracking zest that appeals to
their young customers, further reinforcing the sense of community. "Some
people think this is a cheap publicity stunt," the Web site proclaims.
"Well, there's nothing cheap about it!" If customers don't like the beer,
the message adds, "you're in desperate need of a taste bud transplant -- but
we'd rather not foot the bill for that -- instead we'll gladly refund your
money in return for the unused beer as long as you give us your feedback on
what didn't 'work for you.'"
In his telephone interview with Moore, conducted, fittingly enough, via
Skype, Mulhall declared that a business has to constantly keep moving,
reinventing itself "like Madonna." For Brewtopia, which is now flush with
cash from its initial public offering on Australia's National Stock
Exchange, the next move is into retail. "Unless you drop your stuff in a
shop, people don't believe you are a real company," he said. As for Mulhall
himself, he just might have a go at the financial industry, specifically
community banking, where giving customers a voice in how the business is run
could be a differentiating feature with great appeal (more on this topic
later in the book).