Interview: Gerrit Lewis and Beejay Olson of Pipeworks Brewery

Pipeworks is the one of Mash Tun Journal's local heroes. Based in the Wicker Park neighborhood of Chicago, the Pipeworks opened in January 2012 after a successful and unusual Kickstarter campaign that would become a model for other startup breweries. Pipeworks also has the distinction of being voted the best new brewery in America by Ratebeer.com. These guys make big beers and each release is a great addition to the line-up of Chicago's craft beer scene. We hooked up during a typical busy day at the brewery in between bottling, labeling and brewing up the good stuff.

Ed: Did you think the brewery was even going to happen?

Beejay Olson: Pipeworks in general? It better have happened. We really put everything into this it so if it didn't work...

Q: You would shoot yourselves?

BO: Yeah, it was pretty much the end of the road. This was the plan. This is what needed to happen. I think the whole process took me and Gerrit so long I mean it was really 3½ years from the point where we said, "Hey baby! We should open a brewery!" to the point where we were moving into a space. Each segment was like this new giant project and there were many times that it felt nearly impossible. But once you've already put three years on a project like this you have to move forwar.

Ed: Did you think you would be rated as the number one best new brewery of the year by Ratebeer.com ?

Gerrit Lewis: That was the goal. If we didn't get it that would be fine, but that was our goal, to be in consideration for it.

BO: I think the first year that Ratebeer created the best new brewery of the year was 2010. That is what really kept us on a path of doing things the way we do because we really wanted that– we wanted to make beer that was capable of getting us to that point. Even being within the top five would have been great. But getting that number one was amazing.

Ed: So lets' talk about the beginning of Pipeworks Brewery. You guys were working over at West Lakeview Liquors together…

BO: We would work shifts together. It really just started through us becoming friends and hanging out. We would home brew together and drink together. Then it was Dark Lord 2008 and we were in line and we were kinda like "Hey man! Let's open a brewery!" Gerrit had a background in business and I had been a homebrewer so the two things perfectly meshed. He knew the fundamentals of opening a business, I knew the fundamentals of brewing brew at 5 gallons at a time, so it seemed like we could make beer on a large scale. Ha.

Ed: And the first barrier was raising capital, right?

GL: Absolutely.

Ed: Many people have written about your Kickstarter campaign as a great crowd-sourcing fund raising strategy. Do you recommend that people do this?

BO: Absolutely. It's generating legitimate startup capital, especially for younger people. Gerritt and I are still pretty young and it's we don't have equity, and we have student loans. We don't have houses. There is no collateral. So many young people who have great ideas are in that same boat.

GL: I think what's happened over the past 20 years, is that if you have a dream like this you basically had to give the entire company up to make it happen. You had to be like, "Alright it's my company, it's my dream, it's my idea, I'm gonna run it… and I get 5 percent.” And the investors get everything else. Money isn’t why we did this, but it seems awkward when you work so hard and someone else is reaping the benefit of your labor and ideas.

BO: People usually start a business so you don't have to work for someone else. So the idea of giving most of your company away to get equity is tough.

Q: Well that is the beauty of crowdsourcing your funding. Where did that idea come from?

Gerrit: I had a buddy that I went to high school with, a really smart guy, named David Chen. He's a programmer. And one of his best friends made it on the cover of the business section of the NYT or the Wall Street Journal, don't remember which, and it was for this new project; it was basically a Facebook-type site, but with added privacy. They had raised like $150,000 through Kickstarter to compete with Facebook. I don't think this thing ever launched, but it's what got Kickstarter on the map. I saw it because my friend David was mentioned in the article. Kickstarter was still in beta -- there were only a couple thousand projects on there.

BO: It seemed crazy not to do it.

Ed: So, you has the cash. What were the most important things for you to get?

BO: The first thing we bought were the fermenters. We knew the lead time was ridiculous. We didn't even have a location. We were worried about opening a business and not having fermenters – the brewhouse would have to come next.

GL: I got this idea to do a nano-brewery thing with Blichmann fermenters while I was supposed to be studying for a final. I spent the two hours I had in the library, texting Beejay and crunching all these numbers. I came to the conclusion that we can do this if we brew beer in a nano-brewery, we could do it commercially.

BO: We were originally talking about doing it with one hundred carboys!

GL: Not exactly but might as well have been. So we came back to the Kickstarter concept and we rearranged it a little bit. We kept the brewhouse about the same. We use this thing that’s been advertised on pro-brewer called the Psycho Brew. At first Beejay said, "No way, it's too much work." But after we tinkered with the plan, we got to a point it could work. We decided to keep the brewhouse and use larger fermenters and quadruple batch to fill them.

BO: That was the most important thing - to make a legitimate batch of beer - a seven-barrel batch of beer, and not 1½ barrels. Because when we looked at the idea of buying these micro fermenters they cost almost as much as a full seven-barrel fermenter. The idea of cleaning seven one-barrel fermenters was nuts.

GL: There is a brewery that did that, Bier Brewery in Indianapolis, and they were succesful. I think they had fifteen one-barrel fermenters and they won best new brewery in Indy a few years back.

Q: Are they still operating?

GL: Yeah and they are just now getting their bigger system going. They were able to do it because their whole facility was about 800 sq. ft. They just sold directly to the public in growlers in Indianapolis. That's why it was possible – they didn’t have packaging or bottling costs. And that was our original idea, too, which is why we have thebottle shop. We were just going to sell them directly out our front door.

Q: Why didn't you guys do that?

GL: Well, in this city you have to have all of the correct licensing and zoning…

Ed: Oh yeah, the Doing Business in Chicago Sucks issue. But it would be delightful to have a nice bottle shop here you know?

BO: It's still in the works. We will have a bottle shop here.

GL: But because we're at much bigger volume a bottle shop wasn't necessary just to survive.

Ed: You know we are trying to open our own place and we went through various scenarios, various fantasy projects: fifteen-barrel, ten-barrel, twenty-five-barrel brewhouses and it all basically funnels down to that you have to start small. You can't blow hundreds of thousands of dollars, like some people do, unless you give away all your equity and raise all this money that may or may not be made back for your investors. And if you look at all these other breweries in town, they're probably getting financing and loans from a bunch of rich people right?

GL: I'm not really sure how everyone does their financing.

Ed: But do you think it's best to start small like this? If you could have done it over again would you?

GL: Every situation is unique. I think what is really cool is you're seeing like a lot of these guys that might not have the background that we have, but they are going to give it a shot, maybe out in the suburbs where your holding costs aren't as much.

BO: There’s certainly less risk. I mean I would say our business model worked in Chicago -- but it is a Chicago-specific business model. We have an expanding beer culture that was in need of more breweries and more quality fresh beer. We got here just at the right time.

GL: Having a distributor model also works in Chicago.

Ed: Yeah, and also changing the laws that allow self-distribution.

GL: Well, when you are selling out of the front door that will work anywhere, but to be a packaging brewery is a different thing.

BO: A lot of people are trying to open nano-breweries in smaller towns. I think it actually makes it more difficult because their distribution radius is very large even if they self-distribute. If you have to drive 100 miles to deliver four cases of beer you have to ask yourself if it was really worth your time and effort. Here in Chicago, we drive a couple miles in any direction and we've sold all our beer.

Ed: I think neighborhood in Chicago should have a brewery or a brewpub.

GL: Yeah that’s the way it used to be. And you know, that’s not necessarily competing for shelf space with a retailer. A very local brewery where I go get a growler on the weekend or whatever gives the market more variety, more ideas, and freserh beer.

Ed: And you bring up a good point, which the competition for shelf space. Chicago is developing as a market for craft beer. And youu've seen all the changes with the distributors, where everyone is buying up everyone's stuff. Do you have any thought about that, how everything is shaking out with the market?

GL: Yeah I mean its going to be interesting. You are already seeing some players starting to exit, mostly guys out of state that have been imported in. Its gonna be interesting, we will see what happens.

Ed: You mean local competition is effecting their sales?

QL: Oh yeah, absolutely.

BO: I think we are going to stop seeing so many California IPAs coming in because now we are making fresher IPAs locally.

GL: You have 30-50 different people making an IPA six pack. How many of those are good? People know which ones they want and they are going to buy that one.

BO: And when you are distributing to the rest of the country the quality degrades by the time it gets to us. A beer might be amazing when I am sitting in a bar in San Diego, but by the time it gets to me here its like, "Well that’s oxidized and the hops are fading."

GL: I think people are going after places like Tennessee and Indiana, some of those non-traditional markets.

BO: Where people are still kind of beer starved.

Ed: One thing I like most about you guys is that you like to help out other brewers. What you are doing right now with 18th Street Brewery is one of the most beautiful things I have seen in any business. I don't know if I would call it a partnership, collaboration, mentoring, training, apprenticeship --

GL: We are actually planting our hooks in them so that a couple years later we can totally sabotage them.

BO: I think mentoring is definitely part of it. So many breweries opened their doors to Gerrit and I when we were starting this project that we feel obligated to pass it on. Half Acre opened their doors to do a collaboration with us. We got to hang out and pick their brains about the whole process of everything from going through TTB paperwork to actual brewing systems. It's guys like that that make the brewing industry a very great, collaboartive environment. That environment is what originally what drew me into this industry -- I love the fact that even though we have all this beer that is technically competing each other, we are still all buddies and we are still into sharing ideas. As Pipeworks grows we will continue to help new brewers enter the market and give them a place to hang out and learn things.

Ed: Talk to me about what's going to happen next with your brewery.

GL: We want to bottle shop open and do some more session beers, stuff that comes in around 4-5% ABV. We can do those in growler fills, so you can come in and get a fill for a reasonable price. Then, we will be doing special releases of the barrel-aged stuff in bottles.

Q: I always ask this to cholos, brewers, owners: Any advice for the budding brewery owner starting their own action?

GL: My step-dad always says that if you want to do something well find the best person in that field and go learn from them first. We kind of did that over at Half Acre, thanks to Gabe and Matt. Now Drew and Brad have been over here doing what they're doing. That’s really it. Don't be too prideful to go up to someone and ask if they could teach you something.

BO: It turns out guys in this industry like to talk about what they do all the time. We spend a lot of time working to gain the knowledge base and there is a sense of pride in knowing what you do. My other advice is to take home-brewing seriously.

GL: Absolutely. It's not worth your time if you are not going to do that.

BO: If you are serious about brewing don't look at home-brewing as a hobby. Look at it as training yourself. Spend a little bit of money to give yourself the best chance of making the best beer. I would say the most important thing for all home-brewers is to get some fermentation control of some sort. Get a refrigerator with a heat belt in a temperature controlled area. Take fermentation control seriously because I think that is the flaw that I see in 99% of home-brewed beer.

GL: Home-brewers think that [when they get an off batch] it's a mistake in their brewing or something, but it’s not the recipe, it's the execution.

BO: You will never know what’s wrong with your beer until you ferment it correctly.

Conducted by Ed Marszewski in April , 2013.