In a facility in Enumclaw, Wash.—near Mount Rainier and the Crystal Mountain ski area—a pair of next-generation entrepreneurs are distilling their ideas for a new business venture. Literally.
Brothers-in-law Sam Agnew and Tyler Teeple have spent 2 1/2 years building a craft distillery. Their custom-fabricated equipment is now up and running; whiskey, vodka, gin and flavored white whiskey are currently in production.
Sam, 36, and Tyler, 37, are fourth-generation members of The Agnew Company family enterprise, which invests in natural resources, commercial real estate and other business opportunities. But the family firm is not an investor in Agnew and Teeple's company, Pursuit Distilling Co.
"When you come from wealth," Sam says, "you want to have your own identity. And so it's kind of nice to be independent and have this be our own separate business and entity," apart from the family office.
Tyler is married to Sam's sister Ashley, who is a director of the Agnew Family Foundation. Sam is a director of The Agnew Company and chair of the Agnew family council. The family is no stranger to the alcoholic beverage business; in fact, some of their liquid assets came from the industry.
The third generation—Sam's father, Dan Agnew, along with Dan's brother-in-law, Dick Lytle, and sister, Zan Peat—founded an Oregon beer distributorship, Mt. Hood Beverage, in 1990; Sam joined Mt. Hood in 2005. In 2008, Mt. Hood and Gold River Distributing, an Oregon beer and wine distributor that the Lytle and Agnew families had established in 1977, merged with another family-owned beverage company to form Columbia Distributing, which became the largest beverage distributor on the West Coast. In 2012, the family received a lucrative offer and sold Columbia Distributing.
Although Sam had worked in the family's alcoholic beverage distributorship, it was Tyler who had the vision to start a spirits business. "It was an up-and-coming industry that was, for me, really interesting, and was in line with my passion for whiskey," Tyler says. "For me, personally, along the same lines as Sam, I wanted something of my own."
Tyler worked as a pilot for Horizon Airlines and then worked in his family's business—HiStrength Bolt Co., with locations in Lakewood and Kent, Wash.—before starting the process of opening a distillery; he also serves on the Agnew family council. He says he became interested in whiskey during his college years. His interest heightened between 2008, when Washington state passed a law allowing small craft distilleries to sell liquor directly to the public and open tasting rooms, and 2012, when citizens voted to take the state out of the liquor business and allow the private sector to sell and distribute spirits. The new laws opened the door for the emergence of craft distilleries in the state, such as Dry Fly Distillery in Spokane and Batch 206 Distillery in Seattle.
"I remember reading a lot of different stories about these small distilleries popping up after the law change," Tyler says. In 2014—the year the Seattle Seahawks won the Super Bowl—"we decided to dive into it a little bit," Tyler says. He joined with a couple of partners to form a company, White River Distillers, and created a label inspired by the football team's success. The brand, 12 Spirits, played off the reference to Seahawks fans as the "12th man" on the field.
The whiskey scored with local drinkers. "It was kind of crazy; I mean, we sold a lot of product," Tyler says. "It was a lot of fun." White River didn't make its own whiskey; another company manufactured the product for sale under the 12 Spirits brand name.
During this time, Sam was trying out a new skill: leadership development coaching. He had become a Gallup-Certified Strengths Coach and was honing his proficiency with the Gallup StrengthsFinder assessment tool. After about a decade working with his family, "I had a desire to branch out on my own and go do something on my own," Sam says. He planned to establish a practice geared toward young adults from family businesses.
Tyler was an early StrengthsFinder guinea pig. "He just got me so fired up about the booze business, as I was working with him, that I just kept asking more questions and digging a little deeper," Sam recalls.
Sam's questions centered on the finance side of the business. He and Tyler realized that the key to making good money in the spirits industry was to manufacture the product. "It was more of a hobby with 12 Spirits," Sam says. The brand name was also experiencing some trademark issues, which provided further motivation to move in a different direction.
In the course of their conversations, Sam and Tyler gravitated toward bigger-picture thinking: They would manufacture their own product under a brand name that would appeal to customers beyond the Pacific Northwest.
That involved rebranding the company as well as the products. White River Distillers, named after a body of water that runs through Enumclaw, is now a holding company. Pursuit Distilling Co., the name of the new venture, is a DBA ("doing business as") name.
Leveraging human capital
Sam and Tyler together own about 75% of the company; they serve as co-CEOs. Sam oversees management, and Tyler is in charge of operations.
Jonathan Thomas, one of Tyler's partners in the original venture, is a co-owner and chief engineer. Thomas owns a welding and fabricating company and contributed his expertise in the construction of Pursuit's distilling equipment. The other partners are Chris Werner, who has a background in financial planning and investment; Andres Gonzales, a pro golfer; and Chris Greene, an investment banker.
Dan Agnew, father of Sam Agnew and Ashley Teeple, says he wanted to invest in his son and son-in-law's venture, but he was constrained by a five-year non-compete covenant signed when the family's alcoholic beverage distribution business was sold in 2012. "I know other family investors, certainly including myself, would have been happy to help them financially," Dan says. Sam and his siblings were not affected by the non-compete covenant because their ownership of Columbia was through a trust.
Sam says that although the family isn't investing in Pursuit, he and Tyler are turning to family members, including his father and his cousin Steve Lytle, for advice; they view Dan and Steve as their advisory board. "I would say they've helped navigate us through some decisions," Sam says.
"Our return as a family is financial capital, human capital and social capital," says Lytle, who had run the family's distribution business and is now an investor and a family business consultant. "Entrepreneurship outside of the family system by family members absolutely enhances their human capital. It also enhances their social capital, not in the philanthropic sense but in a networking sense. They're developing a network of resources that might be beneficial to either individual households or back to the family system, eventually. They're improving their own competency and skill set, from a human capital perspective, and they're—Lord willing, with business success—developing financial independence from the family.
"I have come to believe that in complex multigenerational families, individual independence promotes positive interdependence," Steve says. "It actually affirms our family's ability to own well together when we have our own individual assets and passions and investments. There's a dynamic interplay that enhances the entire system's financial, human and social capital."
"They've called me with a lot of questions along the way," Dan says. "What I've really tried to do is not tell them what I would do—I've tried to set out some thoughts and ideas for some options and really let them make the decisions."
Dan says he developed this approach based on his experience with his own father. "If I asked him for advice, and he gave it to me, there was an expectation that I had to do exactly what he said," Dan says, laughing. "I didn't want to do that with Sam and Tyler. I wanted them to see the alternatives and make the decision themselves—which they've done, and they've done very, very well."
Dan, a retired lawyer, helped the two entrepreneurs work through issues with their landlord; he's also reviewed their contracts and answered their questions on topics such as licensing requirements. "I was able to point them in the right direction in most of those areas—where they [could] go and source the information they needed," the patriarch says. "I'm certainly aware of who the local alcohol beverage distributors in their area are. . .the ones that I believe would give them the best help and support. So I've made some introductions there for them. But they've done all the follow-up on that themselves and made those decisions themselves."
Sam and Tyler asked Steve for help making connections and advice on matters such as budgeting and strategic planning. "That's human capital I've accumulated that I'm now redistributing to Sam—because he's asking," Steve says.
For more than two years, the partners have been immersed in start-up tasks such as finding a location, building a commercial-size still, filing paperwork with regulatory authorities, ordering bottles, researching prospective distribution partners and beginning the manufacturing process. The nascent company receives no administrative assistance from the family office, Sam notes.
The partners built the facility with their eyes on the long-term possibilities, Sam says. "We built the infrastructure to produce a lot of product," he says. "We could potentially be one of the largest distilleries in the state of Washington if our still works the way it's supposed to work, because it's a continuous still. We were pretty mindful in [designing] the equipment, because we knew the efficiency was going to be really important."
The start-up phase has been capital-intensive. With products not yet on the market, the company hasn't received any revenue. Sam and Tyler are not drawing paychecks from the business, and they realize they might not be able to do so for three years, Sam says.
"Tyler and I are penny-pinchers," Sam says. "We've been pretty mindful with how we're spending the money. We're trying to be stewards of the resources that were given to us. Those are Great-grandpa Sam's dollars that we're putting to work."
Sam says he and Tyler recognize the potential downside. "We might not make any money, and I think the great thing is that we talk about that," Sam says. Planning ahead and taking steps to keep the burn rate low will help mitigate potential losses, he says. The upside, he notes, is that "we are very motivated to get some money coming into the company."
The brothers-in-law are upbeat about their prospects and enjoying the startup phase; their conversations are laced with quotes from the film Dumb and Dumber.
While Sam and Tyler are working closely together, they are not always in the same place at the same time. Tyler works out of the company's Enumclaw headquarters, along with production manager Rebecca Hovey, the company's first employee. Pursuit is in the process of hiring a new head distiller, who will also work in Enumclaw. Jonathan Thomas, the head engineer, runs his own fabrication shop, located next to the distillery; he spends half his time at Pursuit.
Sam lives in Kansas City, Mo., the hometown of his wife, Jenny. The couple met at the University of Kansas. Jenny is a director of the Agnew Family Foundation.
Sam travels to Washington every two or three weeks, and he and Tyler interact multiple times a day even when they're in separate cities, the partners say. "I never thought I would have a business back in the Northwest, so it's definitely been a challenge," Sam says. "I like to be present—I'm a touchy-feely guy—so it's a little tough to not be there. But what a blessing to be in a position where we can live in Kansas City, close to my wife's family."
Some of the other business partners are also based out of town; one lives in Portland, Ore., and one lives in Jackson, Wyo. All of the partners participate in a weekly phone call.
Sam has put his StrengthsFinder coaching aspirations aside to concentrate on Pursuit and his family council duties. "I do it [provide coaching services] for friends and family for free, but I'm not active" as a professional coach, he says. "This takes up all of my time."
The happiness of Pursuit
Pursuit's signature product, a flavored white whiskey branded as Suspect Whiskey, is set to debut by year's end. A marketing firm is helping Pursuit create a website and launch the brand.
Pursuit's marketing plans include the launch of a private barrel program. Each Pursuit Barrel Club member will select the proof, taste and flavor profile for whiskey to be filled in a 5-gallon barrel reserved for the member. After an aging period of six to 12 months, Pursuit will bottle the whiskey especially for the member, who will receive 24 to 36 custom-labeled bottles. Among the other benefits of membership are a discount on all items from the distillery and a "Pursuit swag kit" including a T-shirt, hat, flask and wooden box.
"They've done some great marketing research," says Dan. "They've run by me all of their different ideas for packaging, branding, naming, and I've always given them my input and advice—which they've followed sometimes, and other times they haven't."
Sam says Tyler's passion and vision were what inspired him to partner with his brother-in-law. "He would just get me super excited about booze, and I wasn't even a big drinker. It was really just the business, and then knowing that we had experience in it, that gave me the confidence to partner with Tyler and the other guys." Sam says. He notes "all the resources we have, with distributors and family members that have actually been in the space and know the space, and have connections."
"I think that's just a neat manifestation of where our family is, in the sense that you have two independent family members who—because our cohesion and our credibility with each other is high enough—choose to co-invest," says Steve Lytle. "That's a pretty cool result, from our perspective."
"Everybody in the family's very supportive and is, I think, really excited" about Tyler and Sam's new venture, Dan says. "It's pretty inspiring to me that they've chosen to do this."
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