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Stefani H  0:07  
Welcome to another episode of creative distillation. Your hosts Jeff and Brad from the University of Colorado boulders lead School of Business, discuss entrepreneurship research while enjoying fine craft beverages. Previously on creative distillation, Brad and Jeff took a drive up to Fort Collins to speak with Katie Wallace, head of environmental, social and governance at New Belgium Brewing. They discuss the history and impact of this historic microbrewery while sampling some of their fine brews, including the updated recipe for the iconic Fat Tire ale. They were joined by Thomas J. Dean, Timberg business for a better world university professor at Colorado State University in Fort Collins, who's a big fan and friend of New Belgium, as well as our guest for this episode. Katie stays with us for a little bit for a fascinating discussion about selling out versus selling in something New Belgium knows a lot about it's also the topic of Toms paper, last battles Trojan horses, open gates, and wars one how entrepreneurial firms co create structures to expand and infuse their sustainability missions in the acquisition process. Enjoy and cheers.

Thomas J. Dean  1:33  
Welcome where we distill entrepreneurship research into actionable insights. I am your host, Jeff York, research director at the Deming Center for Entrepreneurship at the elite School of Business at the Â鶹ÊÓƵ. I'm joined by my co host. Okay,

Brad  1:50  
Jeff, it's Brad. This is awesome. Katie's Papin corks times duck. This is like, you know, I wasn't in the best spirits coming up here today. And like you guys are awesome. We just locked the door and keep this team we

Thomas J. Dean  2:08  
are here to do that.

Katie Wallace  2:09  
Electronics on that one.

Thomas J. Dean  2:11  
Oh, are we doing okay for you, sir. All right.

Brad  2:15  
George, get a glass though. We got okay. And then guess

Thomas J. Dean  2:20  
producer George today?

Brad  2:21  
What the hell was that?

Katie Wallace  2:24  
Well, it's technically called that's that. Sounded like that too. Right? We have this. In addition to some of these beers that we make at a larger scale. We have the largest food or forest we call it but food or cellar would cellar for beer and North America. And so our team is able to brew all kinds of fun stuff. And it's a little bit more like artistry, right? Like blending wines might be because it's a sourdough of beer we say.

Thomas J. Dean  2:55  
And it is it is a lavender sour ale. Is that correct?

Katie Wallace  3:00  
This is a sour Saison Oh, yeah, well, oil that

Brad  3:05  
I don't believe erupt. Because this is a new episode. I'd like to reintroduce you.

Thomas J. Dean  3:09  
Oh, cool. Yeah, we should do that at some point. Folks, we

Brad  3:13  
are here with Katie Wallace, the lead ESG person at New Belgium Brewing and we are also here a time Dean, Local of the bar.

Thomas J. Dean  3:25  
fairy story is Yeah, but actually, Tom is the timber business for a better world university professor at the Colorado State University. And we are still at New Belgium Brewing in lovely Fort Collins, Colorado. Katie is generously provisioned us for the second half of this podcast. If you didn't listen, the first half rewind, go back, listen to it. And then you know, give it a five star review. Why not? I mean, you know, you've got nothing better to do. You might as well do that. And we are trying several beers right now. Okay, I'm I have to set aside my I have the holiday ale of the 1554. And now I'm trying that's that. That's

that's that's that. That's that. Here's today. Cheers. Cheers.

That's uh oh, wow. That's awesome.

Katie Wallace  4:12  
This is why I never get tired of our beers here.

Thomas J. Dean  4:16  
We at CSU we had a student named my mood. And my mood was from Afghanistan. Right. And they were working on importing saffron from Afghanistan to help the local tribal, economic development. Right. And the first I think their first sale was to New Belgium, really New Belgium did a saffron beer awesome. Based on the beer that was important. That is so from my mood. And my mood was later stuck in the whole mess in Afghanistan. And the program at CSU helped him get out to some of the contexts in our program. That's amazing. Yeah, that's a great story.

Brad  4:55  
Katie, what are we drinking? What is that? It reminds me a little bit about champagne, right? I mean with the way the top came off, but also what was exciting. The party the flavor profile, though. Um,

Katie Wallace  5:06  
so this is when I, I would love to speak to this, but I didn't even see it until today and so, so I can't tell you as much but I can usually

Brad  5:15  
you can read the bottle. Yes, I can.

Katie Wallace  5:18  
I can tell you. along the western slopes of Colorado, the aromatic lavender varietals royal velvet thrives. This fragrance has a honeyed herbal signature that harmonizes perfectly with the peppery citrus notes of our wet aged sour Saison. Yeah,

Thomas J. Dean  5:32  
so Jeff, what is this sign is like a rustic Farmhouse Ale brewed in Belgium and they're generally not as strong as say a strong golden ale like a Duval or something like that. Or, and then the Belgian beers, you know, I mean, the traditional Belgian beers, you have the strong golden ale and then you have like, triple which is stronger yet the tradition of candy sugar, and that's white candy sugar, and then the doodles are not as strong but they're made with brown candy sugar, say sounds are made with like a yeast that generates this, people will talk about as horse blanket. Does it sound like the most appealing thing, but it's this kind of wild farmy aroma, as well as what Katie mentioned, the black pepper refinish. And I think this one with like the the lavender brood is I mean, it's just fantastic. Normally,

Brad  6:19  
I will stay far away from everything. Because it's just yeah, it's just not my style. But this is actually pretty good.

Thomas J. Dean  6:27  
I like it a lot. It

Brad  6:29  
feels like a celebratory drink.

Thomas J. Dean  6:30  
Well, we are still cast. Yeah. So and we're also celebrating the publication of Tom's paper. All right. So production. Tom, I talked about a little bit but Brad doesn't know about our relationship, Tom. So I met Tom when I was an MBA student at the University of Tennessee, Knoxville. And there was me and I think maybe three other people that signed up for the sustainability class. It was early days. Yeah, there was like three of us and there was Tom. And he's like, Yeah, we're gonna do some study. And it was Halloween. And I remember we had a case of beer and you know me at Halloween, Brad. I had a Halloween mask. I managed to terrify a bunch of people by coming out. I think Tom had gone to bed or at least gone away from us at that point. But I wouldn't be doing this without Tom's mentorship over

the Yeah, took me taking because I had started kayaking in Tennessee, right. So Jeff's like, Oh, you're your kayak or I'm like, Yeah, I'm kind of a kayaker. But he was a really good kayaker. So he's like, God will come with me. We'll go down Pigeon River. So we go down Pigeon River. And then afterwards, he says, I know this place. And we go off in some back road in North Carolina and go to this basically walk down into a trailer and they're like, well, he went through special stuff, or do you want the normal? And there might have been a little bit moonshine in there.

Yeah, Fort marks that there was a trailer down a dirt road. And there was a red light out by the road at the red light was on you could come up the driveway and go at the red light was off. You just were supposed to drive by and obviously get a permit, because they did have a letter from the governor of Tennessee from like two, two governors before the colonel and I said, this is a fun establishment. And my favorite quote from footmarks ever I took my mom there, and they would do the same. They take Marschner cherries, and they soak them in moonshine. And we were we were drinking cherry Cokes. I just love these cherry cokes that she needed some help leave anyway, Tom didn't write their

first moonshine ever had in my life, I believe. 

So Tom really introduced me to like a life's academic. He talked to me about being a professor. I said, it sounds awful. Something dirty like that. And then he went Capital One. And the Capital One said, Oh my god, this is really terrible. I started thinking about that. And you've you've helped me and been a great mentor to me, Tom, I really appreciate that to know that Tom is one of the first people that you know, the reason I the reason I met Tom unlike was because he was like one of I mean different at the time. There are two people I think in the world you and Andy Larsen navy. Yeah, that's right, that were well in America, there were probably a few people in Europe true. Writing about the idea that entrepreneurship and sustainability could be related in some way other than entrepreneurship causing environmental degradation. So you really blazed a trail in that area and the people we're going to talk about today, so it continues down that

I gotta give a shout out to North Korea, and that's true. Yeah, we

gotta get north north on the podcast. Oh, my God.

Brad  9:42  
one more shout out though time is also known Katie for quite well. Yes. So tell us about how you two have become acquainted.

Thomas J. Dean  9:50  
Well, MCC has a great relationship with New Belgium they help us out all the time and they called your business especially in New Belgium with gender VA for I was on a board with the case Center at in the impact of VA, at CSU. And then over the time, I also get to know Katie and I said seven years, but maybe it was 15. I don't

Katie Wallace  10:12  
know, somewhere way back there. And I was just the tour jockey, talking to your students about sustainability and brewing. Way back. That's

Thomas J. Dean  10:19  
awesome. Yeah. So every once awhile, I'll call Katie. And oh, can I bring some students over you? Can you tell them all the sustainability stuff? Having a new building? So

Katie Wallace  10:27  
Professor, bring people to the brewery? Yeah,

Thomas J. Dean  10:30  
you get extra straw bale house.

for that? Sorry, I have to mention this. One of the core values of New Belgium has always been have fun. Yeah. So we'll bring the students in. They have a spiral slide. Yeah. So then I have a whole class of students going down this. And that's worth extra bonus points, too. Yeah.

It really changes their idea of what business can mean. I mean, you did that in our class, like, I mean, I was doing my MBA, because I'd been running a whitewater rafting company and not making any money. And I was just like, Man, why don't we make any money and like, I didn't understand margin or anything like that. But then like your class really was eye opening. It's like, wow, that did that business could actually do something good. Like, not just benefit the people running it. I mean, it's a really, it's a big time. Now. It's kind of like we're all sitting here in this amazing place is a shining example, in my opinion of business doing good as well as doing well. But we didn't have those examples back then.

Yeah. Oh, no, we didn't. And now we do. And certainly when I was growing up, it all looks kind of bad, because it's sort of post Vietnam and all this talk of the military, industrial, complex and environmental, you know, all the environmental problems, and the Cuyahoga River catching on fire, like, there was no examples of business for good.

Brad  11:52  
Yeah. And I actually think he talked about Milton Friedman, and about just direct shareholder returns. But now I when I put that through ks lens, shareholder returns is not just money. Right, right. And that's, I think that's the new

Katie Wallace  12:06  
I was in New York last week at investor meetings having to answer questions about how we impact society and the environment and what risk that provides. And

Brad  12:14  
what a return really means. What is the true return?

Thomas J. Dean  12:16  
There's also a time horizon, right? Think about like, I mean, as long as your shareholder returns means the next quarterly earnings report. And that's the numbers to make it make it look like we hit our prediction, regardless of whether we did or not, we all know, that's not creating long term value. That's

Brad  12:31  
a waste of time for the executive team. It's a waste of time for employees, anyone even having to assemble that there's actually

Thomas J. Dean  12:37  
really cool research now coming out a lot of it done by a wonderful professor at Ontario, Western Ontario named to ban it's all about like shareholder returns and long term ism and having a long term perspective, rather than a short term perspective. Both she and Carolyn flammer, who is not Columbia believed, Carolyn's awesome. They're doing some really cool stuff, where they empirically show using statistical evidence that a more long term perspective, not only boosts shareholder returns, and long term but actually increases employee retention, that actually, ironically, also helps you in your short term earnings. But you have to communicate about it is the catch, like, and that's what they find is that companies that actually communicate about it actually benefit from Oh, talking helps, really? Yeah, well, but any company, or companies, you've probably all been part of organizations, or it's like, well, we don't want to talk about like, you know, that like, you know, people won't be the market won't reward us for like saying we're doing a good thing. I think that's changing, or maybe it's always been that way, and we just didn't realize, well,

there's multiple drivers, right. So part of its the market, part of its impact investors, right? If your investors care, yeah, that's part of the solution

Brad  13:46  
of investors, especially can also leaders need to lead, right? I mean, it's really important to have a vision and articulate your vision, and you need to be bold and in that as well. But you have to talk about it. Right.

Thomas J. Dean  13:58  
And that's why it's great to be sitting here in New Belgium, where it sure they've actually done that.

You got it. Okay. So Tom, tell us about this paper. I seen this paper presented in Prague. I've seen this paper, I think was it. That was Munich. I can't remember. I know, I saw it somewhere in Europe. I saw it in New York City. I saw it for you. And Yolanda really presented this paper for a long time. It was it was a tough paper. Yeah.

For you guys. I was listening your last podcast with Ted Waldron. And you said that paper took 10 years? Yes. I

Jeff York  14:27  
don't know that's 10 years competent?

Thomas J. Dean  14:31  
Well, based on earlier drafts of this paper, perhaps over

your project, that's always amazed by it.

Brad  14:37  
I mean, it really blows my

Thomas J. Dean  14:38  
mind. It's been a long time, but it's so hard to get things published. So if you're a PhD student out there listening, it takes sometimes it just takes a long time. And you get rejections and sometimes you just write it wrong. And I have to credit also Gideon Markman. Gideon Martin was the editor ANP accepted this. Then he came back at us and he's The top editor, right? Yeah,

yeah. Gideon as an editor, that's a lot. Where's this? Tom?

Where's the theory here? And then I was just talking to him one day, he says it's like a Trojan horse. This is like a Trojan horse. Okay,

the selling out versus selling it? Yeah. And I'd say What are you selling out selling? So So what is the actual title?

So just some credit to Gideon, that that moment was the impetus for me figuring out how we could frame this in a way that was interesting theoretically, and had was clear to see from practical and the papers in

Academy management perspectives will have a link to it in the in the podcast. So now

I'm gonna back up. It started from actually Yolanda started this and Don, the team was actually on it at the start. And Yolanda kind of came to me and say, we're working on this, please like, that's really interesting. And the question is, what happens if you're a social or sustainable venture, and you get acquired, and then there was all these stories, like, if you look at the body shop story, Body Shop was Anita Roddick was the founder. But they didn't know animal cruelty. They basically one of the early sustainable business. There are bought led by L'Oreal. And Anita Roddick was pilloried in the press for selling out. This is a terrible thing. And turns out is probably an example of what we would call loss battles where a lot of their really strong orientations to social and environmental sustainability were questionable in the long term. And so this assumption, and then you hear stuff like oh, well, who bought Burt's Bees? Right? Well, it's Clorox. No. Oh, yeah. And, and if you're a Burt's Bees customer don't sleep very well.

It's, it's fine. They don't put Clorox underneath. No, no more. Very politician. Like they don't put clocks any any more anymore. So

Yolanda approached me and Dawn was at at the at the time, and then

I wanted to Saracen your Ilana saris as a co author on this paper co

author at Colorado State University. We worked on it for years. And it was really hard to get published, because it is not really an empirical paper, right? And it's also not really a theoretical, because

you're I remember the paper, you're like you're giving examples. And I mean, so let's distill it down. Like what would you say is the actual insights on paper, like what

the actual mean, is selling a social sustainable enterprise is not necessarily selling out?

Yeah, it can actually have positive implications for the equity acquiring company, as well as the acquiree. And perhaps maybe even magnify their impact, because you know, the impact of a Coca Cola versus a tiny startup. So

just at the start, you think about, companies reach a stage where if they don't have capital, if they don't have shelf space, if they don't have access to resources, they can't grow, especially in retail, not only might they not grow, they might fail, right, like you can be the market leader as a medium sized business. Right? And then have a fact second come in and kick you out of there. Yeah. So there's, there may even be a competitive imperative where they have to choice even if you take that venture, which is has some sustainable practices are right. And then you double its revenues, triples revenues, using the resources require having you doubled or triple the impact, assuming you came in maintain. Yeah, there is

Brad  18:49  
there a tangential impact to with when a company a Clorox sees this, and they say wait a second, these practices actually work that we're not sacrificing eggs return, right. That's

Thomas J. Dean  19:01  
probably essentially the idea of open gates. So last battles, Trojan horses, and open gates. And so at some point in this natural organic product industry, the company started realizing there was something there they wanted. They're not just buying sales, right? They're not just buying margin, they're buying something different that these companies are doing that they want to learn how to do. Right? And so rather than what you would normally assume here is right, that it would be selling out that you go into a large company, and that all that social sustainable stuff just is gonna go away, right? And that's normally what institutional isomorphism inertia momentum of organizations bureaucracies, is going to wipe all that stuff out after we're not saying that doesn't happen, because that happens. But there's also another side of the story doesn't always happen. And from an entrepreneurs perspective, there's the potential to rather than sell out To sell in, magnify your impact through growth, and even impact your acquiring firm in a way that you sell in

Brad  20:09  
order. That's why we're faced with that decision, though, when you have three potential buyers. Yeah. What's your process?

Thomas J. Dean  20:16  
You better figure out which ones actually aligning with your culture.

Brad  20:20  
I mean, if Justin's peanut butter and Hormel I mean, what an example, right? Let's take this really healthy peanut butter, and we're going spam.

Thomas J. Dean  20:33  
We didn't look, we didn't look closely at Justin right. After that, well, but we looked at some other. I mean, you look at a similar case, if you look at Burt's Bees, and Clorox, Clorox, in 2013 did a centennial strategy, where they said, where are our growth markets? And one of them was kind of around this issue of sustainability, health and wellness. And so they bought intentionally, because they wanted to create a new strategy. Right? And that's why it was an open gate. Yeah, right. Interesting.

Okay, cool. So, so we talked about last battles, that's pretty clear. And we talked about Trojan horses like so. We've talked about open gates. That's interesting. So sometimes, an acquiring firm is actually has pretty good intent here. Like, yes, of course, they're trying to acquire birds for us, because it's a brand that's gained a certain amount of volume. It looks like it's profitable. It's not a problem to have. But actually, we want to learn from it.

Brad  21:27  
Karen, in this specific case in time, you would you would know, Karen's values were 100% aligned with the business here. I mean, we're as much as they could be. Yeah. As an acquirer. Is that luck? I mean, did they work? Did they never did they get lucky? Or tell me what you saw in the

Thomas J. Dean  21:45  
cases? I think they chose well, I mean, she she just said that here. Like we had lots of suitors. But they were they would have all been lost battles. Except for one. Yes. One we went with. So they chose wars one is the kind of the next level. Yeah,

that's like very cool. Like kind of matrix going on here. I like this. This is you teach this in class? I'm curious. I do. So this would work. Well, in the class, this article

was really special to me, because I literally have people coming up at conferences and telling me, I use that article in class. And I love that article. I'm like, How do you even know about that article? It

was before it was? No, no, this is after laughter. I mean, how they know why would they? You know, I think a lot of times we publish these things, and nobody, you know, like, somebody comes up to you like a year later, I read your paper, you're like, Wow, really?

Well, they say that use in class, and I use it in class.

I think company can use this too. And I'm very approachable. I use it at

the end of the class in my students say to me, oftentimes, they're like, this is the article that brought it all together. That's cool. I kind of get it now. And because of the because of the structuration aspect of it, so the structure so so the the wars one refers to that over time, the natural organic products, entrepreneurs and other associated people built a new institutional structure. Okay. A bunch of them, including, but the most one we talked about is B Corporations. Yeah. And benefit corporations. Right. So

voluntary certifications or some other institution that creates a tangible right to crack these positive business practices. Yes. Not just saying we do something, right. This is actually I mean, Katie actually talks about this quite a lot. Right. The B Corp certification mattered a cure. Yes. They probably wouldn't have been interested in well, I'm cheating. But I'm conjecturing. Maybe they wouldn't have been as interested or giving them such a price out

Brad  23:46  
all these it, but it certainly provided value for the business.

Thomas J. Dean  23:49  
Just imagine that like imagine you create a business. And you got people that drive forklifts do a hard damn job, don't have like advanced education, but are doing the best they can provide their community, their family and their work, get this beer company and they believe in it. And then one day, all of a sudden, they realize they have more money than they ever possibly could hope to have that ever because these people stuck with us. I think you want to cry. Yeah, this is great. How it works. It's pretty amazing. That's cool. Anyway, I'm sorry. It's a side job. That's great. I mean, to me, that's a war.

So the whole wars one really the whole industry, changing the whole industry. If you look at Ben and Jerry's people were really upset. Oh, you didn't know we know today that Ben and Jerry's under the guidance of Unilever is probably still one still has strong social and sustainable aspects. Right. And

thankfully, MC fish food ice cream and they make fish food which

is hard not to love. It me.

I mean, yeah, it's got Phish's picture on

that too. Yeah. So Ben and Jerry's is bought by Unilever. People are upset right this is they had to sell out because maximizing shareholder value. So the board, the highest offer was from Unilever. Right? And so the board felt we have to take it because that's our fiduciary responsibility. The

board's not that we gotta be clear about this because a lot of times our students think like, managers have a fiduciary responsibility to always make the short term wealth maximizing choice for shareholders. And that is not correct. There's a great book called the shareholder myth by Lynn Stroud, a Cornell Professor really good book that explains that is a misunderstanding. Now, the board made that decision. They didn't have to make that decision. But they did. That doesn't mean the board can't make a decision to have a company acquired against the CEO or founders. To be clear, that is what happened here. But this is often used as justification for things that are not necessarily going to get them now. Now, if they made some crazy decision, like, hey, from now on, we're not going to sell ice cream, we're going to sell recycled tires. Yes. Now you have a fiduciary responsibility. You are making irresponsible goofy decisions.

Brad  26:10  
Tesla buying SolarCity? Yes, yeah.

Jeff York  26:13  
So say more about that. Right? 

Brad  26:15  
Well, I mean, so the the point is, is that common perception of what you see what's going on and acquisitions, there's a lot more nuance that happens there. Right? That's right. And it's just not as simple as saying, Here's three on our board, drawing board, when we pick these guys like that, it doesn't work like that. So

Thomas J. Dean  26:35  
sorry, a rookie, I just I tell him I have so many times. And all these, my MBA students are like, well, we have a fiduciary responsibility to our shareholders that we have to make the wealth maximizing choice no matter what. And then the question is always a wealth maximizing over what time horizon?

Brad  26:52  
That's right. And I've hired 100 managers, and we've never had a shareholder maximization, fiduciary conversation ever.

Thomas J. Dean  27:01  
Well, I have worked at a company that did and is disturbing.

There's strategic judgment involved, right? Yes. So you would have to prove that it was a poor strategic decision, which is very hard to prove, right? Well, on the other.

Board is, like, I think a lot of times people also are like, oh, yeah, no, it's fine. I had I own the majority shares and the VCs, like, yeah, I owe the majority of the board. Right. Well, good luck with everything. Enjoy your shares. We're gonna make you rich. Your company. That's right. And so I think it's a really important lesson. That's a whole nother podcast. Yeah, but I see that a lot. You ask a roomful of students, how do you keep control your company? Oh, I keep the majority of the shares. I'm like, no, no, you can't do that already.

Anyway, so yeah, sorry. I can talk more on that. But yeah, sure. So Ben, and Jerry's was sold that injury? I think if you look at most of them, they were pretty unhappy. Oh, yes. Whether they were technically forced, or they just thought they were forced to take is offer, they took the highest offer a lot of dissatisfaction out there. And long come the founders of B Lab, right. They had gone through a similar experience, where they build a sustainable, I think athletic apparel company, and sold it and everything was what all the social sustainable aspects were wiped out. And so that we have to change this. So all that was gestating in multiple parties, right? Like you've got the former entrepreneurs, you got all these other folks. And they go out and they build the lab, the lab creates two things, he creates certified B Corporation, and they create benefit corporation legislation, or they help it happen, right. And then, and then that changed everything, right? That was a fundamental structural, institutional, whatever we would call it change, that has changed the world in significant ways. Really, we can argue against it, whether it was needed, right?

It reminds me very much like the federal organic certification or the LEED certification, where you know, LEED certification is the worst green building certification, other than all the other ones that didn't make any difference whatsoever, right, that were very, very more rigid and less flexible. And it's like, I think a lot of times when we teach our students and when we talk about sustainability for business perspective, we think about this idea. I think the perfect is often the enemy of the good, yes. And then you and I probably go out, it has to be better. But it's like you got to make progress somehow in a way that's pragmatic and realistic. And I think that's what B Corp did. They gave you a lot of pathways to getting there. But I can assure you having many students that tried to VT companies, the B Corp certification is not given to you by any means it is it requires for us some rigorous things you have to do Fact, you know why my students I'm Michael conga have written papers about people that failed. And their attempt to get court certification and the psychological damage that did to them as founders, they thought they were really great, sustainable entrepreneurs and all of a sudden they're like, Oh, we kind of suck. That hurts me. So for so what else should we take away from this paper? Tom? I think I think I love the point of like, hey, this isn't so simple as black and white. There's there's different ways this happens. And I just love being here at New Belgium. I mean, besides back, they're giving us these lovely free beers. By the way I'm having to do with ale. That's what you had before. It's fantastic.

Brad  30:35  
All I have to tell you drinking. I'm drinking the oak spire for roses collaboration.

Thomas J. Dean  30:41  
I'm a bourbon barrel. I got to try the high. Yeah, I'm

loving this. Yeah. Is

it really good? Is Bourbon Barrel collaborations tend to be dangerous? Yeah. All right.

So you guys like what do you call them? Insights? What are the actionable insight, actionable insights I need to hear?

Hold on, let me get the sound effect up. Because I'm gonna have an actual insight, we got to have the official sound effect of it.

So if you're an entrepreneur, right, and you're building a business, and you have goals other than financial, and you care about your social sustainable mission, yes, right. Right. Yes. The first thing you should realize is you may actually be able to have bigger impact if you sell your company.

That's, so that's kind of crazy. I

Brad  31:28  
said, Why don't you just say, Brad, I love that. But the word is May?

Thomas J. Dean  31:33  
Yes. Yes, it may. Right. And if you think about Patagonia, that they decide not to do that. Yes, right. So I say me, but it's not necessarily a fait accompli that you're if you sell yourself out?

Brad  31:45  
Yeah. And so it's customer education and stakeholder education as well is really important. It's back to the conversation needs to be open. Yes. But the knee jerk reaction is these guys sold out. They were great. They were great. Now they suck. Right? That's not accurate, either. Yeah.

Thomas J. Dean  32:01  
So if as an observer, it's not really fair to just assume that it's more complex. That's right. Yeah,

can even be a bigger benefit than you would have had. If

Brad  32:08  
you're right. I mean, right, multiplied.

Thomas J. Dean  32:10  
So then the question is, if you are that if you are that entrepreneur or entrepreneurial team, and you want to accomplish that, how do you do that? Right. From what we learned, there's a number of ways to do that one we call governance for impact, which is getting your contract ways that you can ensure this is going to continue to future Ben and Jerry's has an independent board of directors, really, that board of directors went to battle with Unilever at some point. And the Ben and Jerry's board kind of won. So

Brad  32:41  
what's going on with open AI? Boy,

Thomas J. Dean  32:42  
you got me there?

Brad  32:45  
Do you think that there's an independent board of directors for a benefits and there's CEO issues? I mean, this is just recently, so I don't I don't know the details. But there's something big going on in regards to exactly what you're talking about.

Thomas J. Dean  32:56  
Yeah, this is amazing. This is good stuff. I mean, your paper is good. This oak spire Bourbon Barrel Ale,

you should definitely, yes. Good. Wow. You should definitely put a picture that on the way yeah,

that's terrible. Yeah, that's something Have you had that before? Jeff? No, it's kind of unique. I've never had anything quite so

the other way is, you need to prepare your company, right. So you need to say, you know, to get some sort of contract in writing at the time of acquisition, that could be an independent board of directors. It could be the CEOs, tenure with the company, Gary Hirshberg was CEO for life. I think CEO for life for yogurt. And then the other thing Steve do most from LightWave said, You need to bake it in sustainability, social impact, you need to be such a part of the brand that you would never sit you would be stupid. Destroying

by getting rid of it. Yeah, it'd

be destroying value by getting rid of fantastic. That's really cool. Let's let Katie talk about your paper and the transition. Absolutely. Because New Belgium sold a little line, of course, which is part of Kieran. So how was that transition? Were you able to you know, are you lost battle? Are you in a Trojan horse? Yeah, right. Were there open gates? I

Katie Wallace  34:18  
do. Yes. It was a really fascinating experience. And there's definitely moments where the market was changing pretty quickly for craft beer. And we were in a situation where this was the best step forward, potentially, and a fiscal responsibility for our shareholders, which were people who worked here for decades and consider this their retirement. So there were some there were some loss battles that we evaluated as potential buyers throughout the process, pretty much. Most of everybody minus Karen, I would say here is more of an open gate. Yeah, there are leaders in this space too. It's been a part of who they are for a very long time. And, you know, we there is we do get to influence them a little bit and they influence us a little bit and it's been very reciprocal in that in that way. And and they they really came in and it was this question of like, do we like each other? What's the next step here and it was a dinner at Kim Jordan's house, where she told the story about the culture and why things mattered to her and talked about B Corp certification. And the Karen, people said, that's when we knew. So with that, you know, we got we had a really great proposition from those folks. And as far as like the share value, the share price goes as it relates to the broader hole and then propose that opportunity to our employee owners who voted very strongly in favor of it. It's awesome. So yeah, so I think that overall, we're more of an open gate supplemented maybe if I'm using the terminology well, like by wars one, because investors are and these broader systems for mandatory disclosures are also I think, you know, B Corp certification, like definitely been a big part of changing the landscape in a way that Kieran really wanted to be leaders on. They've been very involved in tcfd, 10 t and FD early adopter, as part of the initial beta team that was giving feedback on the initial frameworks and, and so in a way, it's been really cool to help us go see the bigger world that way. And, and they'd love to take learnings from how we've succeeded over the years here. And

Thomas J. Dean  36:10  
you're very involved in advocacy to right, so actively trying to change the systems for better outcomes for all? Yes,

Katie Wallace  36:18  
like, we have a government affairs position when one government affairs position at the entire company and it sits on our team, because about 90% of the political advocacy that we do is on the environmental and social front. We're members of business for innovative Climate and Energy Policy, out of Ceres. And, and they actually helped us to learn how to use a business case voice. And that really, like distinguish the difference between activism and advocacy, I see this as like more of a ecosystem of a movement, right, where we all play a different role. And you need the activist out there. Like, you know, we've talked earlier about the shame and how productive that is, it's productive, but only in one area, right? You don't want to all adopt that rhetoric. And we've we've seen ourselves, it's happened to us where we've been brushed off with the activist rhetoric because we joined them. And so now we come at it from like, you know, biodiversity, like coming in with a different voice and saying the same thing and wanting the same end, just like we can sit next to a professional skier and say, our business needs this. So we can employ people and buy barley and whatnot and protect our water sources. And a skier can say this matters to me because of skiing, right and have a lot of different reasons why we come to the same end, and, and help to get things like the inflation Reduction Act passed, or 100% renewable electricity commitments in our local utility here. I will do want to say like, I love this paper, I think that one when you are working for an impact driven business, there is an idea that selling is selling out Yeah, and there are so many examples of selling in and I love that there are many of them are highlighted in here. And I think that those examples really inspired us over the years to know what was possible in this way. And personally give me hope to like that those stories that we you know, read over the years that you mentioned in your in your paper. And and I love you it's very strategic and mechanical, there are things that you can do to help that turn out better at the end, right and studying those mechanisms. So that folks who want to preserve impact and leave a legacy are able to do that and a different more scaled up sphere is a really really cool handbook to have handy with you.

Thomas J. Dean  38:17  
I love it. Draft the mind is a podcast.

I don't think he's ever achieved. Distillation. a businessperson loving well of our paper.

Brad  38:31  
Oh, it's amazing. Amazing.

Thomas J. Dean  38:36  
LIKE it if he read it at night,

so thank you so much again. Best podcast ever. Awesome. So the title. Okay, last battles, Trojan horses, open gates and wars. One, how entrepreneurial firms create structures to expand and infuse their sustainability missions and the acquisition process. It's really cool. Thanks a lot, Tom. Awesome. Have you on the podcast and honor really, I'm so glad to get you guys. There are two people that I really admire. I thought we'd get along well, and gosh, Katie was just amazing. The whole podcast. It was fabulous. Very, very important. And I think we should go enjoy an expired. So again, that's the paper look up. It's an Academy of Management perspectives. We'll have a link down below. Tom being joining us from Colorado State University. I am Jeff York, Research Director of the Deming Center for Entrepreneurship at the Leeds School of Business. We appreciate you joining us.

Brad  39:32  
I'm Brad Warner. Jeff Tom, thank you very much, George. This has been a great day, George. Cheers to all of you

Thomas J. Dean  39:38  
and I are honored to be here.

Awesome. Thank you guys. Thanks. Cheers.

Stefani H  39:44  
We hope you enjoyed this episode of creative distillation recorded on location at New Belgium Brewing in Fort Collins, Colorado. Learn more and order merch at New belgium.com Learn more about Thomas G. A Dean on his faculty page at Colorado State University's College of Business. Find Thomas's paper in the Academy of Management Journal, check the show notes were link. We'd love to hear your feedback and ideas email us at CD podcast@colorado.edu. And please be sure to Subscribe to Creative distillation wherever you get your podcasts. The creative distillation podcast is made possible by the Deming Center for Entrepreneurship at the University of Colorado boulders lead School of Business. For more information, please visit deming.colorado.edu. That's D M. ing and click the creative distillation link. Creative distillation is produced by Joel Davis at analog digital arts. Our theme music is whiskey before breakfast performed by your humble hosts, Brad and Jeff. Thanks for listening. We'll see you back here for another episode of creative distillation.