"There is more money chasing good ideas than there are good ideas, so if you have a good idea, it's a beautiful time," serial entrepreneur Tom Potter explains one afternoon in April. Fortunately for Potter, good ideas have a way of seeking him out.
Sitting on a barstool at The Shanty, a bar connected to the distillery Potter opened with Alan Katz in 2011, Potter is as close as you might come to the Bard of the Brooklyn artisanal food movement. Last year, Time Out New York made it official, naming him and Katz 2012 "Artisan of the Year." In fewer than three decades, Potter launched not one but two successful ventures including the Brooklyn Brewery and, more recently, the New York Distilling Company.
Well-known in Brooklyn, Potter's ascent was anything but certain. When Potter graduated from Yale University, he was far more interested in poetry than enterprise.
"I was deciding I was never going to make money anyway, but I was going to live an adventurous life," Potter said, mentioning a childhood admiration for the career of Western writer Louis L’Amour.
Then, his priorities changed. "I fell in love, got married, had a kid, and all of a sudden making money was really important to me," he said.
Shortly thereafter, Potter enrolled in Columbia Business School, studying marketing and finance, before taking a job in commercial banking. But the position, he said, left him feeling bored.
"This was at the peak of the 1986 real estate bubble, which shortly after burst," he said, recalling his time at Chemical Bank in New York. "I went six months as a real estate banker and didn't make a single loan. Everything I saw looked way overpriced. They were all being flipped. It had nothing to do with inherent value."
Brewing Up Ideas
Great entrepreneurial ideas aren't always obvious. "At first I thought it was a stupid idea," Potter said of the kernel that would later become the Brooklyn Brewery.
Still a banker, Potter spent the summer of 1986 watching Mets games with his upstairs neighbor Steve Hindy. Between bottles of Hindy's homebrew and watching Darryl Strawberry’s home runs on a black-and-white backyard TV, the pair tossed around the idea of opening a brewery. "It started off as kind of social and bullshitting. You know, you say, 'Oh, we've got to start a business,'" Potter said.
A trip to the microbrewers conference in Portland, Ore., however, changed his mind. "Either the owner or the brewer from every brewery was there. They all could fit in a space the size of this room," he said. At the time, there were just a few dozen small breweries in the United States.
Potter realized the opportunity. "It was clear the picture of the overall industry didn't really eliminate [the microbrew] niche," he said. "It was obviously going to grow, and it seemed to me that it was highly geographic. It was about local pride and local history. I just kept thinking that Brooklyn was the right home, that Brooklyn would work."
Potter drew inspiration, in part, from Sophia Collier, another Brooklyn resident. In 1977, Collier started Soho Soda in her Brooklyn apartment. Her success offered evidence that the brewery could work. "She had the idea of a niche product that was more authentic, with natural ingredients, and she was going to distribute it herself," he said. (Collier later sold Soho Soda to Joseph E. Seagram & Sons for close to $15 million.)
The Brooklyn Brewery
In 1987, Potter quit his job at Chemical Bank and founded the Brooklyn Brewery. After a few different locations, the Brewery settled in Williamsburg in 1990. "I liked Williamsburg. I thought it was really cool, even then," he said. "There were a few squatters and artists, but not hipsters. They were really artists who were living without heat."
Like Collier before them, the pair made an early commitment to self-distribution. "Distribution is a very unattractive part of the business," Hindy told SmartPlanet. "It really is the key to success. You've got to have a great product, you've got to have great packaging, but you've got to have great distribution to really succeed. We took that on right from the beginning."
The early years were thrilling and frightening, Potter said. "We were constantly broke. We were technically insolvent probably for the first seven years," he said. In the years that followed, the company grew, but slowly.
"I think Tom is really good at building the conceptual framework for a business," said Hindy, who is also an investor in the distillery. "Once we got into it, Tom was incredibly persistent and dogged and committed to the project. We both were. That was critical to our success."
In the years that followed, their persistence paid off. By 2004, Brewery revenues were more than $20 million. That same year, the pair sold the distribution arm for $12 million, allowing the company to pay off initial investors and expand. "Selling the distribution company enabled us to focus 100 percent on the Brooklyn brand," Hindy said. This year, the company revenues are on track to exceed $50 million.
The same year that the Brooklyn Brewery sold its distribution business, Potter decided to retire and to sell his voting shares. "I got more exercise. I did more kayaking. I wrote the book with Steve," he said. He also took the helm of the American Institute of Wine and Food, an organization founded by Julia Child and Robert Mondavi. "It was the first American foodie group," Potter said.
In 2008, Potter’s wife retired and the pair decided to take a year off to travel around the world. "We went to the South Pacific for three months, we went to Montana for five months. I have a cabin in Yellowstone, so I just based myself in Montana. It felt big to actually be gone from New York for almost all of that time," he said.
Potter, an avid kayaker, spent much of the year paddling America's rivers. It was on these journeys that he found inspiration for his next venture. "What was a fortunate accident was that the same places that there was great kayaking there were also were distilleries," he said. "These new distilleries were popping up mostly in the northwest, which was the same as the brewing industry had been 25 years earlier."
Crafting a New Cocktail
Brooklyn has a long tradition of craft spirits harkening back beyond the Jazz Age, but by 2008, there hadn't been a new distillery in Brooklyn for years. That year, Potter teamed up with distilled spirits expert Alan Katz and his own son, Bill Potter, to found the New York Distilling Company. The distillery now produces rye whisky (the "Dorothy Parker") and gin ("Perry's Tot," named for a commandant of the Brooklyn Navy Yard).
Of these spirits, gin is the more curious choice. "If you just talk to a man on the street and ask, 'What do you think about gin?' He might say, 'Does anyone drink that anymore?' It's on remarkable upswing now, particularly at the high end. I believe it has a decade of growth in front of it," he said.
Potter's timing was fortuitous. In April, when Inc. magazine ranked the eight best industries for starting a business, "artisanal alcohol and boutique beer" came in second only to "wearable computing." And according to AnythingResearch, micro-distillery revenue grew 32 percent in 2012. Evidence of this trend is palpable. A half dozen Brooklyn distilleries now compete with the New York Distilling Company for attention.
"In America, and in New York, there is a lot of money available for good ideas. There are literally millions and millions of dollars sitting on the sidelines waiting," Potter said.
Raising money, however, is very different from managing a successful business. Doing so, Potter explained, requires a unique ability to reflect. "You have to look at in the mirror and say, 'I'm really bad at this or I really made a mistake or I really messed up.' It's not a common quality. There are a lot of people who recognize their mistakes, but they're not particularly confident. They say, 'I'm a fuck up.' There are a lot of people who are really confident, but they just don't see their mistakes. It's always somebody else's fault. If you're in business for yourself, it's all your fault," he said.
Fortunately, with the New York Distilling Company, Potter has moved well beyond sophomoric errors. "In some ways, it's been even more fun this time around because I'm less anxious about everything," he said. "I feel like I've already make so many mistakes that I'm not going to make those particular mistakes again."
Photo of Tom Potter by David Laoiza.