for setting limits
He invented what later became known as microbrewing. Without his Anchor Steam Beer and its brother brews, we beer lovers might have been consigned to choosing between Budweiser, Miller, and Coors.
Instead we have a cornucopia of the finest brews available anywhere in the world, except maybe Belgium. And Fritz Maytag led the way.
A young Stanford grad living in San Francisco in the mid-1960s, Maytag often enjoyed a glass of the 109-year-old local brew, Anchor Steam. One day he heard that the brewery was closing. He paid a visit, fell in love, and, in September 1965, bought a 51% stake in the business. Three years later, he bought the rest of the company. The whole shebang, he says, cost about as much as a used car.
At the time, Maytag -- an heir to the washing machine fortune -- knew nothing about beer-making or business. "You know books like So You Want to Have a Puppy?" he says. "I bought So You Want to Learn Accounting." Even to a novice, however, it was obvious that the company was sinking fast. Maytag soon learned why: Restaurant and bar owners complained that the beer frequently spoiled before they could sell it. So Maytag tinkered with the brewing process and the recipe, coming up with a new, improved Anchor Steam Beer that debuted in its bottled form in 1971. It was an instant success.
Within four years, the brewery had maxed out its production capacity. Soon thereafter, Maytag was forced to ration the number of cases distributors could buy. He remembers the next few years as a nightmare. Customers were beating down his door, and there was simply no way he could satisfy the demand. He desperately looked for a new site, but he limited himself to locations in San Francisco out of respect for the historical connection between the city and the beer. Finally he found an old coffee roastery, where the brewery moved in 1979. Maytag vowed he would never go through rationing again.
But the popularity of Anchor Brewing's beers continued to grow. By the early 1990s, Maytag was facing the real possibility of another capacity shortage. He considered going public to raise capital, but rejected the idea because he didn't want the kind of growth he would have to pursue if he took on investors. Size, he believed, was the enemy of quality. "This was not going to become a giant company -- not on my watch," he says.
In the end, oddly enough, Maytag was saved by his competitors. Microbrewing was gaining popularity, and hundreds of small breweries were springing up around the country. Rather than resist them, Maytag helped fledgling rivals develop their brewing skills. They wound up growing fast enough that Anchor Brewing was able to avoid a second capacity crisis altogether.
"It was a great relief," says Maytag, now 67. "It's not any fun when you can't produce enough to satisfy people. What if you had a pizza store with 100 customers outside waiting in line, getting angry, fighting, threatening? In business school they say, 'Raise your prices.' Not in the real world. You get a backlash if you raise prices too much. You lose your validity. Luckily, we didn't have to go through that again."
Rare is the entrepreneur who feels lucky that his competitors' sales have diminished the demand for his product. But perhaps rarer still is the entrepreneur who can resist the pressures and temptations of growth and focus instead on creating what he really wants: a gem of a business.