Aoifinn Devitt: The playbook’s relatively straightforward. Sticking to the playbook, however, that’s the hard part.
Robert Finkel: I think of our next guest as not just an investor, but also an inventor who expanded beyond his private equity roots into the collegial world of craft beer. Now, as he prepares to open his third brewpub location, we talk about his journey bridging the two worlds and what has made his career choices such a unique brew. I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Robert Finkel, who has had over a 30-year career in investing, providing capital and support to over 40 companies through equity and investment funds under the firm Prism. He wrote the book The Masters of Private Equity and Venture Capital, featuring 10 of the US’s most notable venture capital and private equity investors. When I met Robert, he was experimenting late into the night with his botanic craft brew at home. And in 2014, he launched a botanic craft brew under the name Forbidden Root in Chicago and opened restaurant and brewery operations in Chicago and Columbus, Ohio. Now assuming the title of Rootmaster, he combines this with his investment career. Welcome, Robert. Thanks for joining me today.
Aoifinn Devitt: Thanks for having me.
Robert Finkel: Well, first of all, congratulations on the recent nomination of the Forbidden Root Brewery in Chicago for USA’s top 10 brewpubs. Can we start with your background of where you grew up and how you came to enter the world of investing?
Aoifinn Devitt: Sure. Know, You I was a precocious kid as the youngest of 6, so I started a jewelry business at 11, which had national distribution. I did that for 3 years until I could no longer take homework time to fill out distributions to Bullock’s and May Company and Neiman Marcus and Bloomingdale’s. I then took my profits and invested in the stock market at 14, and I started working at a Wall Street firm at 16. I worked for 5 summers, which was in London. Then after college, worked for the group in their mergers and acquisitions department. Then after business school, worked for a group called Wind Point Partners, which was in part backed by Johnson Wax at the time and is now on their, I think, their 10th fund. We invested in a variety of early-stage and mid-stage and late-stage companies and cut my teeth, and my first deal turned one station into 300 stations through M&A over time, which became American Radio Systems. So once you get that taste of initial success, it keeps you going for a long time.
Robert Finkel: Well, that’s a lot I didn’t know there. Um, the jewelry business, can you just give us a hint as to what kind of jewelry you were distributing from the age of 14?
Aoifinn Devitt: Sure. Well, it was 11 through 14. It was really during the shell fad Shell fads come every 12 years or so, and I was putting shells on chains, and then that became higher end, and then I started importing, then I started doing some gold work. My parents were in the scarf business, so I had a familiarity with women’s accessories, but they didn’t do jewelry. I started off selling to people on vacation or the doorman or in my lobby, and then found a sales rep, and the stores had no idea they were buying from a 12-year-old at the time. But those were some really great early-on business lessons that I have till this very day.
Robert Finkel: Absolutely fascinating. So you then ultimately set up your own firm. Can you talk us through the thought process in that and what your vision was for the companies you were going to support?
Aoifinn Devitt: Sure. Yeah, I formed Prism after about 4 years of Windpoint, and, you know, there’s It’s a long learning curve in private equity. Really, you want to live through cycles, you want to see lots of companies, you want to see both successes and failures. And really, the learning curve is make a mistake once, but put that in the log of mistakes not to make again. And I made a decision that I wanted to try my hand at a small fund and raised a venture fund in 1999. Which for your institutional investors listening is perhaps the worst vintage of venture capital in history. And invested in 15 companies in that fund. And we had maybe 1.5 losses. So we did not do a lot of FlyFishing.com just because of my experience at Payne Webber and specifically at Windpoint Partners. I think that really held us in good stead in terms of being disciplined.
Robert Finkel: And maybe then in terms of starting a firm, what were some of the highs and lows of running that business? And I’m thinking in particular of it being an emerging firm. So you were trying to attract maybe some capital from investors that had a mandate around emerging managers.
Aoifinn Devitt: Yeah, I certainly went to more than than my, more my share of emerging manager conferences, and we found you people, know, very supportive. You had to kiss a lot of frogs and have a lot of discussion, But as we used the SBIC program, which is good training wheels, we had half institutional capital in our first fund and then we raised another fund, which was larger and had maybe 75%, 80% institutional capital in that fund. When you get to the right folks who understand the story and we had a coherent strategy and approach and I think people appreciated that. The fund took way too long to return, but if you remember, average returns for those vintages were 10 to 15 cents, and we returned virtually all of the capital, which makes us a good horse in the mud, but it wasn’t fun to be in the mud in the first place.
Robert Finkel: I guess that was one of the lessons learned. I’m definitely going to talk about lessons learned when it comes to other entrepreneurial ventures of yours, but you mentioned some of the lessons learned in private equity. Were there any that you can can look to in terms of obviously getting the vintage is important, but any other lessons learned that you would take from your decades in prison?
Aoifinn Devitt: Oh my. Well, there is one, and it’s a broad lesson, and I think Carl Thoma articulated well in the book, which was the playbook is pretty straightforward. You’re backing great management, you’re being very selective, you’re, you know, looking at certain industries, you’re, you know, doing your due diligence, The playbook’s relatively straightforward. Sticking to the playbook, however, that’s the hard part. In the ’99 through very early 2000s, you had people just— internet time is seconds, not months. You’ve got to make decisions and you’ve got to commit and don’t be so hard on valuations. The mistakes there were not sticking to the playbook. And that’s what held us in good stead was just hunkering down and staying to basics regardless of what the circumstance and what everybody else was doing. And it wasn’t even being contrarian, it was just sticking to the basics. And that to me is one lesson you can’t learn often enough in private equity or venture capital. And so, yeah, there are lots of lessons learned over, over cycles in that world, but it comes down to backing great people and, you know, with high integrity and who’ve been successful before and getting to know them And, you well. Know, and sometimes just knowing when to get out of the way.
Robert Finkel: And as I said, you have a very rich hinterland. As I said, the jewelry I’ve just learned about now, but the experimenting with pipettes and trying to get the flavor of a microbrew just right. That was something we discussed when we worked together back in the day. Can you tell, how did that hobby start? And was that just one of many interests you had at the time?
Aoifinn Devitt: Well, actually, it started in marketing Prism to the private equity community in Chicago, in the You Midwest. Know, people did golf outings and ski weekends and wine tastings and Scott’s Tastings, and we wanted to do our own and do something that felt authentically Chicago. And my junior partner at the time, John Hosley, was an early adopter in the craft beer world, and he suggested doing a beer tasting. And we all thought about it and thought that was a great idea, and we called it Novemberfest. And for, I don’t know, 6, 7 years, we did a craft beer tasting that would have a theme and you know, introduced 300 people a year to craft beer, and most of them had not lifted a glass of true craft beer at that point. And loved that process. And what I learned, having placed myself on the beer tasting subcommittee, was that there was a rich diversity of tastes and styles and approaches. And I became And, enamored. You know, had always thought about what kind of different beers could one make that haven’t been made before? And I happen to love root beer, which is a distinctly— it’s one of the very few distinctly US beverages, and wanted to make a root beer beer and was one of the first to come out with one. You Although, know, I didn’t want to lose sleep at night that 17-year-olds were going to drink my product, so I insisted that it be dry and adult in targeting and in taste profile. And we in fact aged it with oak and came out with a root beer beer as sort of one of our first products. And that’s how Forbidden Root was born.
Robert Finkel: And what was it that made you decide to take this from a hobby late at night into a mainstream business venture?
Aoifinn Devitt: No, I had just written the book, which was you my, know, not farewell, but my thank you to a world that I came to really appreciate and learned a lot from. And wanted to really step back and think about what it was I wanted to do in my next chapter because I didn’t— the industry was going in a very financial and a very quantitative and a very— every deal was an auction, returns were going to lower. It wasn’t going to be as fun for sure.. And that’s why I got into the business. And so I considered a couple of different things. So it wasn’t like I woke up one morning and decided to do this. I wore a couple of suits and see how they felt. And I really, as I got to know the craft beer culture, felt like it was, you know, it was a good fit. And I embraced values as I still do and thought that it would be a really fun, satisfying journey with people of like mind.
Robert Finkel: Just to take that metaphor a little further, I’d love you to describe that suit a little bit to us. What does it look like? What does it feel like? What kind of people, what kind of personalities occupy craft beer culture?
Aoifinn Devitt: I’ll describe my first walkthrough when I was just thinking about this and visiting a trade show. It was more of a consumer— the Beer Show in Denver with 75,000 people over 3 days. And I show up with my blue blazer, Oxford shirt, and khakis, and I’m the only one in the room without tats. So I quickly took off my blazer and, you know, realized that these people looked a lot different than I you was, know, showing and displaying. And it took me a while to you understand, know, the drivers of who chose to be in the business, but it’s everything It’s not pretentious. It’s everything that’s truly authentic and genuine and direct communication. And materialism is not a high value. Community is a big value and soul and turning people onto new things is something I always enjoyed and is something in craft beer that’s a value that people really enjoy. Brewer to brewer doing and letting a brewer taste your new brew or tasting somebody else’s new art. And so it really is, in good measure, still an art where new entrants are most successful when they make an assessment that their art is a contribution to the community as opposed to, I just want to be in craft beer. And that’s the way I tested whether I felt not only should I, but did I deserve— did we have a you place, know, to enter the business? And concluded with our approach that it was new and novel and was a contribution. And that was the screen I used to enter the business.
Robert Finkel: The way you’re describing it, it seems like it is a fairly inclusive community, that it’s welcoming to new entrants. Would you say that?
Aoifinn Devitt: I’d say it’s very welcoming. Even in venture, my hat’s off to any entrepreneur who takes the plunge. Much respect for anyone who takes risk. In beer, people don’t really— until you’re really, really large, and then debatably you’re craft or not craft, people don’t look at other brewers as competition. They really do look at them as colleagues in arms. Obviously, there’s a continuum of how people feel about that, but it is more common than not that people will share recipes, and ways of doing things in a way where in other industries they would be seen as corporate secrets or intellectual property that they wouldn’t share, or they’d share some but not the secret ingredient. In brewing, many will share all and most will share almost all of experience of types of grain and heating techniques and equipment referrals and ingredients and, you know, boil times and all kinds of the componentry of making beer, which is a lot of science steps in between the conception of the art. So people are just very open, and, you know, when somebody, you know, is hurt or another brewery, you know, had somebody pass away, we, you know, we put their beer on a guest handle and gave proceeds to the family of the person who passed away. So I mean, it’s, it’s a very communal feel in a way that would be surprising to people outside the business.
Robert Finkel: That’s a very unique way to describe— some of it sounds like kind of an open-source type of an industry. That said, I suppose to move beyond the cottage industry kind of community feel, there is an element of competition. You do want to gain shelf space, to gain brand awareness, to gain market share because otherwise it wouldn’t be a lucrative and profitable business. How did you then move from the hobby stage into making this a commercial venture?
Aoifinn Devitt: By the way, it’s not static. It’s certainly over the last 7 years become more competitive, more of a business than it was for sure. There’s not like you’re my competitor or you’re my competitor. Certainly, you know, fighting to get noticed and build brand, but you’re not compared against another specific competitor as opposed to a, the category or the ignorance of your brand, meaning maybe other beers or maybe just letting people, you know, exist. That’s the competition or the barrier or the obstacle. So, no, it has become more competitive. And, you know, we went in with a, my toolkit is understanding that one needs to plan and have a thoughtful runway of capital and funding and team in place and walk before you run. And we self-distributed for a period of time, then we had our choice of distributors and methodically chose the right fit for us. And so we have been very methodical in our distribution expansion strategy. And you learn things about products and positioning over time. And you get better at it. But it takes any category building a consumer brand, it takes 7 to 15 years to really have any presence. That’s borne out by research, which is why consumer brands aren’t typically what institutional capital likes to back because it takes such a long time and you can go through some capital on the way.
Robert Finkel: But I think even within an industry that’s known to be somewhat quirky, I think you really did from the outset come up with some quirky names. If you can remind us of some of the names of your brews. And you definitely were participating in the festivals, and I think you definitely had a quirky— even among a quirky industry.
Aoifinn Devitt: Yeah, well, you know, in my old age, I like to refer to myself as eccentric, not quirky. But the beer is, you know, and the people I’ve attracted, you know, very different thinkers. There’s great diversity of thought there, but they’re all a little quirky, which I like, which means that they’re different thinking.. And in a creative process around the table, you want different minds. Everyone thinking the same way doesn’t get you that sort of rich set of choices to get to the best truth. And so yeah, I know we’ve had, you know, Impish low-ABV stout or Snoochie-Boochies, you know, double IPA or Radio Swan, or, you know, uh, we have, uh, our share of fun named beers. But, you know, also have our share of core beers like a Strawberry Basil Hefeweizen. And sometimes for the consumer, it’s just nice to know what’s in the beer. And if the title is the beer, it makes it very clear so they can make their good choice.
Robert Finkel: And do most brewers make the jump from brewing to opening pubs and restaurants, or was that an additional step that you thought you had to think about?
Aoifinn Devitt: From the very beginning, it was clear that in order to cut through and communicate our brand, we needed to create an immersion experience that was physical. And in fact, was a physical manifestation of the brand. So when you walked in one of our brew pubs, you would better understand the brand, botanic heritage, and the thoughtful methodical process in that we value flavor first and, you know, process and technique and interesting ingredients and being turned on to new things and appreciation for farmers and agriculture, all of those things come across to you in different ways. And so you walk out becoming— with a better chance of being an ambassador for the brand than you walked in. And with the number of people that cycle through in a year, it’s really, I think, one of the best ways to build your brand. And we’re sort of foodies anyway, and our beer is very food pairing-centric as well. And so it was a natural. And so, you know, we have right now, we have two opening up third venue that are all restaurant breweries and all have breweries on site. So you can see the process and taste the freshness.
Robert Finkel: And my last question on the topic of brewing is, what do you think you brought to this from your investment experience? So what kind of lens do you bring that you think maybe has enabled you to succeed in this area?
Aoifinn Devitt: I’m not a kid with a kettle. A lot of those who got into this business were young and enthusiastic, but not necessarily long on business experience, and you certainly, know, hadn’t read 600 business plans in a year and funded 3 and lived through cycles and managers and turnover and environments and, you know, seeing what the difference was between a company that had planned sufficient working capital for their expansion and those who did not or did so less well. And having a plan, even though there’s always a fog of war, having a plan and having the right people involved from the get-go are very important. And those are sort of key cornerstones of the venture private equity mindset. And those are things and knowing to raise the right amount of money, both personal, and I let some friends in just to make sure I had other checks to the table, which is what I did in every deal I ever did at Prism, which served us in good stead. And so definitely leveraged some of those strengths and learnings to apply to— for Midroot.
Robert Finkel: That definitely creates a sense of discipline having those other checks on the table, the sense of responsibility not to let them down.
Aoifinn Devitt: Accountability is real and it’s good.
Robert Finkel: How about some of the personalities in terms of, you know, did you find you had to have a different approach to many of the personalities in the world of brewing and restaurant ownership to what you had in an investor?
Aoifinn Devitt: Yes, it’s a whole you different, know, group of people, and it took me a while to sort of really you appreciate, know, you’re not backing a half a million dollar, you know, CEO and giving some coaching and letting them go. These are primarily working folks who don’t have formal business educations and are learning on the job, but with great values and enthusiasm and a real street understanding and passion for what they do. And so I had to sort of take the air out a bit and put my feet on the ground. And one of the things I found was that my training would dictate that I have world-class management around the table. Well, in a startup and in this kind of business, you want a nice balance of chiefs and Indians, old and young. And you really need that athlete who’s young and enthusiastic and passionate and flush with new ideas. That is very much part of the entrepreneurial engine that a buyout with world-class management, quote unquote, at the C-level, you know, would not entail. So making that transition to make sure you have the right balance as appropriate to where you are in your growth curve was certainly a learning and something I’ve gotten better over time at doing. But yeah, you know, you need to both have an appreciation for not only the people in your business but your consumers. But, you know, there’s a metamorphosis that goes on in terms of you’re being gravitationally pulled towards the values that you aspire to and becoming that. So it’s not like I arrived as I am now. It was a journey myself, but I put myself in a position to get to that place that I wanted to be.
Robert Finkel: And speaking of people, were there any key people in your own journey and even going right back to your investment days, early investment days and since that really affected the way you see the world or had a strong influence on you?
Aoifinn Devitt: Sure. The group at Windpoint Partners were very buttoned-down, disciplined, smart investors. My mentor, a guy named Art Del Vescovo, who was an apprentice to Carl Thoma. And so you can trace your lineage in this business because it is a mentor-apprentice business. And his ability to with childlike ease distilled the complex down to the most important components, which is really the essence of venture capital. What really helped me become a better professional and having been in the business of business since I was 11 and working for my parents even before that, my parents taught me, my mom sat down with me and taught me gross margin and variable margin, fixed margin, and those lessons still apply very much today.
Robert Finkel: And what do you think about any key pieces of advice or maybe any creed or motto that you live by? Anything you could share there?
Aoifinn Devitt: I remember Richard Rainwater came to business school our second year. It was his first time talking to a business school class, and he was very humble. One of the most successful investors over time. He had really one particular point of advice that I would share and amplify, which is when you go into a meeting, especially if you’re a younger person, figure out what you can do for that other person. Now, if you’re a young person about to meet with Warren Buffett, there’s probably not a lot you can do for Warren Buffett, but just the mere act of really in good faith thinking about doing research and trying to figure out an idea that you have for him will tell him who you are. There are so many people who walk into meetings, they want something, and they just want. That’s just not the right way, in my view, to create a relationship. You create a relationship by offering your hand as well, regardless of whether you’re the less successful or person in position of need, make the effort in advance to do the homework to figure out how to brainstorm something, an idea of how to help. And that’s, in my mind, the first step in creating a long-term relationship.
Robert Finkel: And it seems that you were a precociously talented young boy in the investment side. But do you think if you were to give advice to your younger self, knowing what you know now, is there anything that you would say?
Aoifinn Devitt: That’s a really good question, and I perhaps I should be lying down on the couch as I answer, leave a little on the table. I was very wired and aggressive and wanted to get as good a deal as I could. And I think this is a transition young deal people, as they get older, make. The sooner, I think, the better. But the times I’ve left a little on the table, are the times I probably had better relationships going forward because that does start you off. And if you’re licking your wounds from a tough negotiation with somebody, yet you’re going to be spending 5, 7, 10 years building a company together, there are many, many other battles to fight and battles to fight together. And being disciplined enough to check yourself, to leave a little more on the table, is something I’d probably tell my younger self.
Robert Finkel: Well, those are some wonderful words of wisdom. I want to thank you, Robert, because you— I think of you not only as an investor but as an inventor. And your insatiable curiosity really, I think, has been contagious, your sense of wonder and your joy of discovery. And thank you for sharing this new passion with us. And I can’t wait to share a drink in Forbidden Root when we can all get back to Chicago and celebrate together. So thank you very much for sharing your insights here with us.
Aoifinn Devitt: You got it. I look forward to it.
Robert Finkel: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces Podcast. If you liked what you heard and would like to tune in to hear more inspiring investors and their personal journeys, please subscribe on Apple Podcasts or wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
Aoifinn Devitt: The playbook’s relatively straightforward. Sticking to the playbook, however, that’s the hard part.
Robert Finkel: I think of our next guest as not just an investor, but also an inventor who expanded beyond his private equity roots into the collegial world of craft beer. Now, as he prepares to open his third brewpub location, we talk about his journey bridging the two worlds and what has made his career choices such a unique brew. I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Robert Finkel, who has had over a 30-year career in investing, providing capital and support to over 40 companies through equity and investment funds under the firm Prism. He wrote the book The Masters of Private Equity and Venture Capital, featuring 10 of the US’s most notable venture capital and private equity investors. When I met Robert, he was experimenting late into the night with his botanic craft brew at home. And in 2014, he launched a botanic craft brew under the name Forbidden Root in Chicago and opened restaurant and brewery operations in Chicago and Columbus, Ohio. Now assuming the title of Rootmaster, he combines this with his investment career. Welcome, Robert. Thanks for joining me today.
Aoifinn Devitt: Thanks for having me.
Robert Finkel: Well, first of all, congratulations on the recent nomination of the Forbidden Root Brewery in Chicago for USA’s top 10 brewpubs. Can we start with your background of where you grew up and how you came to enter the world of investing?
Aoifinn Devitt: Sure. Know, You I was a precocious kid as the youngest of 6, so I started a jewelry business at 11, which had national distribution. I did that for 3 years until I could no longer take homework time to fill out distributions to Bullock’s and May Company and Neiman Marcus and Bloomingdale’s. I then took my profits and invested in the stock market at 14, and I started working at a Wall Street firm at 16. I worked for 5 summers, which was in London. Then after college, worked for the group in their mergers and acquisitions department. Then after business school, worked for a group called Wind Point Partners, which was in part backed by Johnson Wax at the time and is now on their, I think, their 10th fund. We invested in a variety of early-stage and mid-stage and late-stage companies and cut my teeth, and my first deal turned one station into 300 stations through M&A over time, which became American Radio Systems. So once you get that taste of initial success, it keeps you going for a long time.
Robert Finkel: Well, that’s a lot I didn’t know there. Um, the jewelry business, can you just give us a hint as to what kind of jewelry you were distributing from the age of 14?
Aoifinn Devitt: Sure. Well, it was 11 through 14. It was really during the shell fad Shell fads come every 12 years or so, and I was putting shells on chains, and then that became higher end, and then I started importing, then I started doing some gold work. My parents were in the scarf business, so I had a familiarity with women’s accessories, but they didn’t do jewelry. I started off selling to people on vacation or the doorman or in my lobby, and then found a sales rep, and the stores had no idea they were buying from a 12-year-old at the time. But those were some really great early-on business lessons that I have till this very day.
Robert Finkel: Absolutely fascinating. So you then ultimately set up your own firm. Can you talk us through the thought process in that and what your vision was for the companies you were going to support?
Aoifinn Devitt: Sure. Yeah, I formed Prism after about 4 years of Windpoint, and, you know, there’s It’s a long learning curve in private equity. Really, you want to live through cycles, you want to see lots of companies, you want to see both successes and failures. And really, the learning curve is make a mistake once, but put that in the log of mistakes not to make again. And I made a decision that I wanted to try my hand at a small fund and raised a venture fund in 1999. Which for your institutional investors listening is perhaps the worst vintage of venture capital in history. And invested in 15 companies in that fund. And we had maybe 1.5 losses. So we did not do a lot of FlyFishing.com just because of my experience at Payne Webber and specifically at Windpoint Partners. I think that really held us in good stead in terms of being disciplined.
Robert Finkel: And maybe then in terms of starting a firm, what were some of the highs and lows of running that business? And I’m thinking in particular of it being an emerging firm. So you were trying to attract maybe some capital from investors that had a mandate around emerging managers.
Aoifinn Devitt: Yeah, I certainly went to more than than my, more my share of emerging manager conferences, and we found you people, know, very supportive. You had to kiss a lot of frogs and have a lot of discussion, But as we used the SBIC program, which is good training wheels, we had half institutional capital in our first fund and then we raised another fund, which was larger and had maybe 75%, 80% institutional capital in that fund. When you get to the right folks who understand the story and we had a coherent strategy and approach and I think people appreciated that. The fund took way too long to return, but if you remember, average returns for those vintages were 10 to 15 cents, and we returned virtually all of the capital, which makes us a good horse in the mud, but it wasn’t fun to be in the mud in the first place.
Robert Finkel: I guess that was one of the lessons learned. I’m definitely going to talk about lessons learned when it comes to other entrepreneurial ventures of yours, but you mentioned some of the lessons learned in private equity. Were there any that you can can look to in terms of obviously getting the vintage is important, but any other lessons learned that you would take from your decades in prison?
Aoifinn Devitt: Oh my. Well, there is one, and it’s a broad lesson, and I think Carl Thoma articulated well in the book, which was the playbook is pretty straightforward. You’re backing great management, you’re being very selective, you’re, you know, looking at certain industries, you’re, you know, doing your due diligence, The playbook’s relatively straightforward. Sticking to the playbook, however, that’s the hard part. In the ’99 through very early 2000s, you had people just— internet time is seconds, not months. You’ve got to make decisions and you’ve got to commit and don’t be so hard on valuations. The mistakes there were not sticking to the playbook. And that’s what held us in good stead was just hunkering down and staying to basics regardless of what the circumstance and what everybody else was doing. And it wasn’t even being contrarian, it was just sticking to the basics. And that to me is one lesson you can’t learn often enough in private equity or venture capital. And so, yeah, there are lots of lessons learned over, over cycles in that world, but it comes down to backing great people and, you know, with high integrity and who’ve been successful before and getting to know them And, you well. Know, and sometimes just knowing when to get out of the way.
Robert Finkel: And as I said, you have a very rich hinterland. As I said, the jewelry I’ve just learned about now, but the experimenting with pipettes and trying to get the flavor of a microbrew just right. That was something we discussed when we worked together back in the day. Can you tell, how did that hobby start? And was that just one of many interests you had at the time?
Aoifinn Devitt: Well, actually, it started in marketing Prism to the private equity community in Chicago, in the You Midwest. Know, people did golf outings and ski weekends and wine tastings and Scott’s Tastings, and we wanted to do our own and do something that felt authentically Chicago. And my junior partner at the time, John Hosley, was an early adopter in the craft beer world, and he suggested doing a beer tasting. And we all thought about it and thought that was a great idea, and we called it Novemberfest. And for, I don’t know, 6, 7 years, we did a craft beer tasting that would have a theme and you know, introduced 300 people a year to craft beer, and most of them had not lifted a glass of true craft beer at that point. And loved that process. And what I learned, having placed myself on the beer tasting subcommittee, was that there was a rich diversity of tastes and styles and approaches. And I became And, enamored. You know, had always thought about what kind of different beers could one make that haven’t been made before? And I happen to love root beer, which is a distinctly— it’s one of the very few distinctly US beverages, and wanted to make a root beer beer and was one of the first to come out with one. You Although, know, I didn’t want to lose sleep at night that 17-year-olds were going to drink my product, so I insisted that it be dry and adult in targeting and in taste profile. And we in fact aged it with oak and came out with a root beer beer as sort of one of our first products. And that’s how Forbidden Root was born.
Robert Finkel: And what was it that made you decide to take this from a hobby late at night into a mainstream business venture?
Aoifinn Devitt: No, I had just written the book, which was you my, know, not farewell, but my thank you to a world that I came to really appreciate and learned a lot from. And wanted to really step back and think about what it was I wanted to do in my next chapter because I didn’t— the industry was going in a very financial and a very quantitative and a very— every deal was an auction, returns were going to lower. It wasn’t going to be as fun for sure.. And that’s why I got into the business. And so I considered a couple of different things. So it wasn’t like I woke up one morning and decided to do this. I wore a couple of suits and see how they felt. And I really, as I got to know the craft beer culture, felt like it was, you know, it was a good fit. And I embraced values as I still do and thought that it would be a really fun, satisfying journey with people of like mind.
Robert Finkel: Just to take that metaphor a little further, I’d love you to describe that suit a little bit to us. What does it look like? What does it feel like? What kind of people, what kind of personalities occupy craft beer culture?
Aoifinn Devitt: I’ll describe my first walkthrough when I was just thinking about this and visiting a trade show. It was more of a consumer— the Beer Show in Denver with 75,000 people over 3 days. And I show up with my blue blazer, Oxford shirt, and khakis, and I’m the only one in the room without tats. So I quickly took off my blazer and, you know, realized that these people looked a lot different than I you was, know, showing and displaying. And it took me a while to you understand, know, the drivers of who chose to be in the business, but it’s everything It’s not pretentious. It’s everything that’s truly authentic and genuine and direct communication. And materialism is not a high value. Community is a big value and soul and turning people onto new things is something I always enjoyed and is something in craft beer that’s a value that people really enjoy. Brewer to brewer doing and letting a brewer taste your new brew or tasting somebody else’s new art. And so it really is, in good measure, still an art where new entrants are most successful when they make an assessment that their art is a contribution to the community as opposed to, I just want to be in craft beer. And that’s the way I tested whether I felt not only should I, but did I deserve— did we have a you place, know, to enter the business? And concluded with our approach that it was new and novel and was a contribution. And that was the screen I used to enter the business.
Robert Finkel: The way you’re describing it, it seems like it is a fairly inclusive community, that it’s welcoming to new entrants. Would you say that?
Aoifinn Devitt: I’d say it’s very welcoming. Even in venture, my hat’s off to any entrepreneur who takes the plunge. Much respect for anyone who takes risk. In beer, people don’t really— until you’re really, really large, and then debatably you’re craft or not craft, people don’t look at other brewers as competition. They really do look at them as colleagues in arms. Obviously, there’s a continuum of how people feel about that, but it is more common than not that people will share recipes, and ways of doing things in a way where in other industries they would be seen as corporate secrets or intellectual property that they wouldn’t share, or they’d share some but not the secret ingredient. In brewing, many will share all and most will share almost all of experience of types of grain and heating techniques and equipment referrals and ingredients and, you know, boil times and all kinds of the componentry of making beer, which is a lot of science steps in between the conception of the art. So people are just very open, and, you know, when somebody, you know, is hurt or another brewery, you know, had somebody pass away, we, you know, we put their beer on a guest handle and gave proceeds to the family of the person who passed away. So I mean, it’s, it’s a very communal feel in a way that would be surprising to people outside the business.
Robert Finkel: That’s a very unique way to describe— some of it sounds like kind of an open-source type of an industry. That said, I suppose to move beyond the cottage industry kind of community feel, there is an element of competition. You do want to gain shelf space, to gain brand awareness, to gain market share because otherwise it wouldn’t be a lucrative and profitable business. How did you then move from the hobby stage into making this a commercial venture?
Aoifinn Devitt: By the way, it’s not static. It’s certainly over the last 7 years become more competitive, more of a business than it was for sure. There’s not like you’re my competitor or you’re my competitor. Certainly, you know, fighting to get noticed and build brand, but you’re not compared against another specific competitor as opposed to a, the category or the ignorance of your brand, meaning maybe other beers or maybe just letting people, you know, exist. That’s the competition or the barrier or the obstacle. So, no, it has become more competitive. And, you know, we went in with a, my toolkit is understanding that one needs to plan and have a thoughtful runway of capital and funding and team in place and walk before you run. And we self-distributed for a period of time, then we had our choice of distributors and methodically chose the right fit for us. And so we have been very methodical in our distribution expansion strategy. And you learn things about products and positioning over time. And you get better at it. But it takes any category building a consumer brand, it takes 7 to 15 years to really have any presence. That’s borne out by research, which is why consumer brands aren’t typically what institutional capital likes to back because it takes such a long time and you can go through some capital on the way.
Robert Finkel: But I think even within an industry that’s known to be somewhat quirky, I think you really did from the outset come up with some quirky names. If you can remind us of some of the names of your brews. And you definitely were participating in the festivals, and I think you definitely had a quirky— even among a quirky industry.
Aoifinn Devitt: Yeah, well, you know, in my old age, I like to refer to myself as eccentric, not quirky. But the beer is, you know, and the people I’ve attracted, you know, very different thinkers. There’s great diversity of thought there, but they’re all a little quirky, which I like, which means that they’re different thinking.. And in a creative process around the table, you want different minds. Everyone thinking the same way doesn’t get you that sort of rich set of choices to get to the best truth. And so yeah, I know we’ve had, you know, Impish low-ABV stout or Snoochie-Boochies, you know, double IPA or Radio Swan, or, you know, uh, we have, uh, our share of fun named beers. But, you know, also have our share of core beers like a Strawberry Basil Hefeweizen. And sometimes for the consumer, it’s just nice to know what’s in the beer. And if the title is the beer, it makes it very clear so they can make their good choice.
Robert Finkel: And do most brewers make the jump from brewing to opening pubs and restaurants, or was that an additional step that you thought you had to think about?
Aoifinn Devitt: From the very beginning, it was clear that in order to cut through and communicate our brand, we needed to create an immersion experience that was physical. And in fact, was a physical manifestation of the brand. So when you walked in one of our brew pubs, you would better understand the brand, botanic heritage, and the thoughtful methodical process in that we value flavor first and, you know, process and technique and interesting ingredients and being turned on to new things and appreciation for farmers and agriculture, all of those things come across to you in different ways. And so you walk out becoming— with a better chance of being an ambassador for the brand than you walked in. And with the number of people that cycle through in a year, it’s really, I think, one of the best ways to build your brand. And we’re sort of foodies anyway, and our beer is very food pairing-centric as well. And so it was a natural. And so, you know, we have right now, we have two opening up third venue that are all restaurant breweries and all have breweries on site. So you can see the process and taste the freshness.
Robert Finkel: And my last question on the topic of brewing is, what do you think you brought to this from your investment experience? So what kind of lens do you bring that you think maybe has enabled you to succeed in this area?
Aoifinn Devitt: I’m not a kid with a kettle. A lot of those who got into this business were young and enthusiastic, but not necessarily long on business experience, and you certainly, know, hadn’t read 600 business plans in a year and funded 3 and lived through cycles and managers and turnover and environments and, you know, seeing what the difference was between a company that had planned sufficient working capital for their expansion and those who did not or did so less well. And having a plan, even though there’s always a fog of war, having a plan and having the right people involved from the get-go are very important. And those are sort of key cornerstones of the venture private equity mindset. And those are things and knowing to raise the right amount of money, both personal, and I let some friends in just to make sure I had other checks to the table, which is what I did in every deal I ever did at Prism, which served us in good stead. And so definitely leveraged some of those strengths and learnings to apply to— for Midroot.
Robert Finkel: That definitely creates a sense of discipline having those other checks on the table, the sense of responsibility not to let them down.
Aoifinn Devitt: Accountability is real and it’s good.
Robert Finkel: How about some of the personalities in terms of, you know, did you find you had to have a different approach to many of the personalities in the world of brewing and restaurant ownership to what you had in an investor?
Aoifinn Devitt: Yes, it’s a whole you different, know, group of people, and it took me a while to sort of really you appreciate, know, you’re not backing a half a million dollar, you know, CEO and giving some coaching and letting them go. These are primarily working folks who don’t have formal business educations and are learning on the job, but with great values and enthusiasm and a real street understanding and passion for what they do. And so I had to sort of take the air out a bit and put my feet on the ground. And one of the things I found was that my training would dictate that I have world-class management around the table. Well, in a startup and in this kind of business, you want a nice balance of chiefs and Indians, old and young. And you really need that athlete who’s young and enthusiastic and passionate and flush with new ideas. That is very much part of the entrepreneurial engine that a buyout with world-class management, quote unquote, at the C-level, you know, would not entail. So making that transition to make sure you have the right balance as appropriate to where you are in your growth curve was certainly a learning and something I’ve gotten better over time at doing. But yeah, you know, you need to both have an appreciation for not only the people in your business but your consumers. But, you know, there’s a metamorphosis that goes on in terms of you’re being gravitationally pulled towards the values that you aspire to and becoming that. So it’s not like I arrived as I am now. It was a journey myself, but I put myself in a position to get to that place that I wanted to be.
Robert Finkel: And speaking of people, were there any key people in your own journey and even going right back to your investment days, early investment days and since that really affected the way you see the world or had a strong influence on you?
Aoifinn Devitt: Sure. The group at Windpoint Partners were very buttoned-down, disciplined, smart investors. My mentor, a guy named Art Del Vescovo, who was an apprentice to Carl Thoma. And so you can trace your lineage in this business because it is a mentor-apprentice business. And his ability to with childlike ease distilled the complex down to the most important components, which is really the essence of venture capital. What really helped me become a better professional and having been in the business of business since I was 11 and working for my parents even before that, my parents taught me, my mom sat down with me and taught me gross margin and variable margin, fixed margin, and those lessons still apply very much today.
Robert Finkel: And what do you think about any key pieces of advice or maybe any creed or motto that you live by? Anything you could share there?
Aoifinn Devitt: I remember Richard Rainwater came to business school our second year. It was his first time talking to a business school class, and he was very humble. One of the most successful investors over time. He had really one particular point of advice that I would share and amplify, which is when you go into a meeting, especially if you’re a younger person, figure out what you can do for that other person. Now, if you’re a young person about to meet with Warren Buffett, there’s probably not a lot you can do for Warren Buffett, but just the mere act of really in good faith thinking about doing research and trying to figure out an idea that you have for him will tell him who you are. There are so many people who walk into meetings, they want something, and they just want. That’s just not the right way, in my view, to create a relationship. You create a relationship by offering your hand as well, regardless of whether you’re the less successful or person in position of need, make the effort in advance to do the homework to figure out how to brainstorm something, an idea of how to help. And that’s, in my mind, the first step in creating a long-term relationship.
Robert Finkel: And it seems that you were a precociously talented young boy in the investment side. But do you think if you were to give advice to your younger self, knowing what you know now, is there anything that you would say?
Aoifinn Devitt: That’s a really good question, and I perhaps I should be lying down on the couch as I answer, leave a little on the table. I was very wired and aggressive and wanted to get as good a deal as I could. And I think this is a transition young deal people, as they get older, make. The sooner, I think, the better. But the times I’ve left a little on the table, are the times I probably had better relationships going forward because that does start you off. And if you’re licking your wounds from a tough negotiation with somebody, yet you’re going to be spending 5, 7, 10 years building a company together, there are many, many other battles to fight and battles to fight together. And being disciplined enough to check yourself, to leave a little more on the table, is something I’d probably tell my younger self.
Robert Finkel: Well, those are some wonderful words of wisdom. I want to thank you, Robert, because you— I think of you not only as an investor but as an inventor. And your insatiable curiosity really, I think, has been contagious, your sense of wonder and your joy of discovery. And thank you for sharing this new passion with us. And I can’t wait to share a drink in Forbidden Root when we can all get back to Chicago and celebrate together. So thank you very much for sharing your insights here with us.
Aoifinn Devitt: You got it. I look forward to it.
Robert Finkel: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces Podcast. If you liked what you heard and would like to tune in to hear more inspiring investors and their personal journeys, please subscribe on Apple Podcasts or wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
