BrewTopia

Case study covered in the book We Are Smarter

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"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

community.

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).