Meet Todd Holmes: Founder of Goose Island Brewery

Jackie Seaberg

February 22, 2012 · 10 minutes read

Uncategorized

­­CUE BACK TO 1991. George H.W. Bush was president, the Gulf War was wrapping up, future Hall-of-Famer Andre Dawson was in right field for the Cubs, and you could count the number of sites on the World Wide Web on your fingers.

Two years after graduating from the University of Kansas, Todd was working in real estate—the career he thought he wanted in college—but he wasn’t quite happy.

Todd and his soon-to-be partner Louis Amoroso, then an associate at Andersen Consulting, were hanging out a lot, and Louis happened to mention one night that a friend of his had joined a wine-of-the-month club with 20,000 members. Could the same thing be done with beer? They decided to find out.

“It was the perfect time. The draft brewing industry was really starting to evolve. We said, ‘Why don’t we try this with beer?,’ not knowing anything about the marketing business or anything about the alcoholic beverage business and how complicated it was.”

Todd and Louis dubbed their new start-up Beer Across America. The idea was simple: Each month they’d send their customers two six-packs from different microbreweries.

“WE POOLED TOGETHER OUR LIFE SAVINGS, WHICH AT THE TIME WAS $2,000 OR $3,000. We went out and got a liquor license and told the city of Barrington what we were doing. I was living in the city at the time, so it seemed like a logical place to start the business off. We were working like mad men. We both had day jobs, so we would both come at night and work until midnight.”

“We started off as a beer club and took out some ads in Chicago Magazine. It was great for cash-strapped start-up entrepreneurs because we were getting all this money up front. We were able to grow the business in three years to about $22 or $23 million in top-line revenue. We thought we were the kings of the world. It was crazy. We went from a 1,000-square-foot warehouse to 5,000, and 10,000 to 80,000.”

Beer Across America was the first of several new ventures for Todd, and he knew from a young age that he liked working hard and making money. The high energy and entrepreneurial drive that inspired him to start his first company at 24 became apparent a decade and a half earlier when he was growing up in his hometown of Barrington, Illinois.

“I had twelve to fifteen different lawns I was cutting when I was ten years old. My business partner, whom I’ve known forever, lived three doors down from me, so the two of us kind of did it together, and then I did it on my own.”

Not one to sit still, Todd kept working through high school. But growing up wasn’t all hard work. Barrington was still rural for horseback riding and snowmobiling, and during high school, he’d go waterskiing down the Fox River before class.

“I was in between a troublemaker and a good kid. I was always having fun, probably a little too much fun, and at the same time I was senior class president. I was on the football team, the basketball team, and having a great time. I had lots of friends and really made the most out of high school.”

“I’LL NEVER FORGET THIS, I HEAR OVER THE SCHOOL’S PA SYSTEM: ‘TODD HOLMES COME TO DR. DEYOUNG’S OFFICE.’ I was like, ‘Oh my God, what did I do now?’ I go to his office, and he sits me down and says, ’Todd, you’ve done a lot here.’ He looks at me and says, ‘I want to make sure that this isn’t your be-all-end-all existence.’ He thought I fell into one of these categories, that high school is as good as it’s going to get for me. I just started laughing and said, ‘Are you kidding me?’”

The next step was college. Not wanting to stick around Barrington indefinitely, Todd went down to the University of Kansas and tried out for their football team.

“I went in as a walk-on, and they were recruiting me and some other guys from my high school. When I got down there, I just fell in love with the school—I just didn’t fall in love with football.  I was like ‘I gotta get out of here,’ so I joined a fraternity.”

He continued to hold down jobs through college and interned at his father’s real estate company. Although his post-collegiate real estate career was short-lived, starting Beer Across America kept him close to his entrepreneurial roots.

The next big opportunity came at Christmas 1993, when Todd got a call from an investment banking group that was looking to take a public brewery private. They introduced Todd and Louis to John Hall, founder of the Goose Island Brewpub on Clybourn, who wanted to buy a facility to make and bottle his beers.

“John is my dad’s age, a super nice guy. We started working together because we thought that if we had a big enough facility we could contract brew the beer. If it was in Chicago, we wouldn’t have to truck the beer across the country, and we could help offset some of the fixed costs we had in terms of building a much bigger brewery.”

“It was really a nice tradeoff. Myself; my partner, Louis; and then our chief operations officer, Bob Beaubien, ended up building it out. We owned half the equity in Goose Island, and John and his partners owned the other half.”

But investing in a Goose Island wasn’t the only change brewing at Beer Across America.

“Over the course of the first couple of years, we ended up developing wine clubs, which eventually became our biggest seller. Because we could charge more for the wine, we had better margins, and we were going after customers who were sticking around. When we looked back on it after a couple of years, we took our lifetime value from people sticking around for seven months to twenty-two or twenty-three months.”

“I WAS DOING DOUBLE DUTY. My expertise was running marketing on both sides of the equation. I was doing all the customer-acquisition stuff and everything from Beer Across America and International Wine Cellars, and I was helping to develop the brand for Goose Island as it relates to retail trade.”

“I stayed really actively involved with Goose Island for about three or four years, and I was on the board until we sold it to Budweiser in 2011. I really got into the weeds in terms of how we ended up growing that business.”

By the late nineties, the business had grown to the point where they could hire a sales and marketing team, freeing Todd to chase the next big thing. Dot-coms were booming, and online retailers were offering more selection to their customers than a traditional brick-and-mortar store or a drink-of-the-month operation. Todd wanted to get in on the action.

“We created the world’s largest liquor store. It was called Drinks.com, and we went out and raised $22.5 million. It was crazy. The liquor business is so daunting because you have different products that are available for sale in a bunch of different markets. We weren’t just selling one product; we were selling everything.”

“We were becoming friends with the distributors because we were buying products directly from them. You want to talk about bad margins, the margins went from okay to really crappy. So we looked at how this business was going to grow and it is going to be an advertising model. We are going to get money from Budweiser and Smirnoff and Absolut and you name it, and they are going to advertise on our website in order to sell their products direct to our consumers.”

“It was a dot-com model to the point where we had an SAP backend. It was such a strange period of time. We were probably processing 150 to 200 orders a day. What the heck do we need a SAP backend to run these kinds of numbers? All our venture capitalists were Harvard grads telling us this is what we need to do, and I’m thinking to myself, ‘I’m thirty-one. I’ve already done this. We’ve already processed a lot more than this on systems that we built. You don’t need to spend this kind of money. Let’s figure out how to grow into it.’ … And long story short, we blew through all the money.”

BY LATE 2001, WITH NO MORE CASH TO KEEP DRINKS.COM AFLOAT, IT WAS TIME TO START SOMETHING NEW. The beer and wine clubs were still going strong, but Todd and Louis couldn’t grow that business without bringing in more capital. Todd decided to go off on his own and started Liquidus with Chris Carlton.

“How I got to Liquidus was myself and my partner who worked for me at Drinks.com were going on a lot of sales calls to huge ad agencies. I was like, ‘Oh my God, I can do such a better job than these people.’”

“I thought we would be the booze kings of the Internet.  Our first client was Heineken. We built micro-sites for these guys and different types of online marketing programs.  We got clients right out of the gate. I would sell it, he built it, and we started bringing on more people.”

Fast forward to 2004. Comcast called looking to build a classified advertising business using video on demand. Todd’s company won the project, but it quickly evolved into something much bigger.

“Comcast quickly realized that everything from developing the technology to on-ramping the clients to the maintenance and support of this product were all things that needed to be resourced over to us. They couldn’t internalize a lot of the things we were doing so we started building a team around it, and it grew really rapidly in 2006, 2007. It took us really through 2005 to develop all the different portals and in verticals. It was a lot of work. We went out and got some outside investment to help the business grow.”

“Internally, we built this product, and externally, within Comcast, they are having a hard time selling it. The Comcast sales force is great, but they weren’t necessarily great at selling this product. It’s not like selling a thirty-second spot. It becomes a very, very different type of offering, and one that local sales teams at the time were not necessarily really equipped to sell. Comcast came back to us and said, ‘Would you guys be interested in starting to sell this stuff on more of a national basis?’ So, we worked very closely with them to help grow out… We built the technology and we owned it.”

“I started going out on a lot of sales calls with our local teams and the first words, out of a lot of the car dealers’ mouths were, ‘I kind of like the Video on Demand (for TV) piece, but what I really need is video for my website.’ So, we started building out that product, , and we ended up building out a product that became better, cheaper, and faster than anything that was available.”

“IN AT LEAST THE AUTOMOTIVE SPACE, OUR VIDEOING PRODUCT IS REALLY THE 800-POUND GORILLA IN TERMS OF VIDEO PRODUCTION. Then we said, ‘God, could do this with individual videos so when you click to see a video of a car on Cars.com it is all powered by us? All the General Motors Certified stuff like that. And what if we took and compiled all of these pieces of inventory into a rich-media banner?’ So, we created a product called BannerLink and started selling it to other re-sellers, like Comcast, ABC, CBS, stuff like that. It really kind of expanded the way we went to market. It wasn’t until the late 2000s, like 2009, that we are really able to do a good job of taking our products, productizing them, pricing them out into the marketplace, and then getting them into the sales force with the right information, the right sales sheets, and everything else.”

Although beer and food have been an undercurrent of his work, Todd sees himself as more of a marketing and technology guy. He and Louis sold their beer and wine clubs in 2006 to a UK-based company called Direct Wines, but recently Todd invested in an organic farm in Wisconsin. Still, having one foot in technology and the other in the food and beverage industry can reap rewards of its own.

“I entertain a lot of people for Liquidus, and we got great season Cubs tickets. I’ll take people up to the Goose Island Brewpub before going to the game. It’s interesting how few people really want to talk about technology when they really want to talk about the brewery. For us, it has been a great thing to leverage. It has been really cool and something I will look back on and my kids will look back on, and they will think, ‘Oh my God, my dad was part of that.’”

A self-described ten-year guy, Todd’s career has been marked by a series of transitions from one business to the next, but leaving Chicago isn’t part of his plans.

“WE ARE IN CHICAGO FOR TWO REASONS—THE PEOPLE AND THE CUBS. Wrigley on Friday afternoon with the sun shining down, to me, is enough reason to stay in Chicago for the rest of my life and die here.”

“I love the people. I love the energy. I travel all the time: I’m in New York, I’m in San Francisco, I’m in LA. You just meet people in Chicago, and granted, there are scumbags here, too, but you get what you pay for and you get guys who work hard.”

“Chicago is unbelievably prideful for me. It’s the greatest city in the world. It’s truly the most American of all cities. I think to be able to make it here and give back to the community and be involved in charities here is really prideful for me.”

“I’m on the board of directors of the Starlight Foundation, and I’m working towards getting on some more boards where I can end up giving back. I think it’s important for anyone who has been successful in business to do that. It’s good and it’s good for business. I think Chicago has a lot of people who have made a lot of money here and who I think are doing a really good job of giving back to the community in a variety of ways.”

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