Hernando Salazar is a co-founder of Fábrica Maravillas , which is a brew pub located in the center of Madrid, Spain. Certainly, it has been so successful that they have been currently under the pressure to increase the capacity of production even after a couple of times of capacity increment. Masaaki Hasegawa, from Master in Visual Media, class of 2013, had a chance to explore the key factors that have made them successful.
MH: First of all, let me know more about you. You are IE alumni?
HS: I am an IE alumni of International MBA, class of 2005. I am originally from Colombia, and used to work for the marketing department in Diageo, which is one of the biggest spirits and wine producers in the world, before taking master. Then I came to Spain in 2004 to take MBA in IE. After graduation, I worked for BBVA in Switzerland as a relationship manager in the private banking sector for almost 3 years. After that, I decided to do business on my own and came back to Spain to find an opportunity to achieve it. From then, I have been in several entrepreneurial projects. Since then, I have been working as an entrepreneur last 3 years.
MH: And how did you come up with this great idea of having a craft brewery in the center of Madrid?
HS: It was like an accident. At the time I got involved this business, I was doing my other entrepreneurship project, called Housie, which helps International young people, including IE students, find accommodation and information in Madrid. One of master brewers that I knew then had the original idea and business plan but they did not have any specific financial plan and know-how to embody it, and I started working with them to help them develop the financial plan and provided advice from the viewpoint of business, gradually started giving some ideas about vision, and ended up being part of this project.
MH: Why did you decide to take a responsibility to manage the company instead of just consulting or investing money into the business?
HS: First of all, this project, craft brewery, was novelty in Madrid, and people in the project had passion with it. Initially, I just provided some advices but the time when they actually needed to raise money to launch business, it was not easy for them to find an investor to raise the amount of capital that they needed. I sort of rose my hand to be an investor as well because I already had tasted the beer they brewed and felt this would be successful. Then, we became a partner and I started being in the project in depth because I love their passion for this business.
MH: What was the first step to make your business realized?
HS: The first step was somewhat related to mentality. It was like facing the fact that “From now on, there is no way back”. It is easy to invest money into the existing business that is already structured that you simply need to observe management and numbers. But, as for the business that is just started, it is like just crossing your fingers that consumer would like your product and service. In fact, it was required to spend almost 2 years to get the business started due to procedure and preparation such as doing paper works, building machines to brew beer, and getting the license. So the first step was making our mind to take the whole risk that you would spend your time and capital asset for this project.
MH: Why you chose Madrid, Spain to launch your business?
HS: I particularly like Madrid, Spain and this neighbor Malasaña. People often argue that Spain is now in the crisis and is not currently a proper location to do business. But, I have grown up in the country with crisis all the time, and so for me this is not crisis. Beside, if you start your business in the difficult condition like that of in Spain now, the condition surrounding your business just can be better in the future. In fact our business has never been in red, so the current situation is normal for us and we think we could have cultivated survival skills. Whatever happens next in the economy, it can be positive factor for us.
MH: Did you have any specific difficulties when you launched your business?
HS: At the time when launched this business, no one had experienced this business model before in Madrid. For example, even for brewing machine and tanks, we needed to customize its size to be placed in this location, center of Madrid, meeting the local requirements and regulation, and it was hard to find someone who would be able to deliver it. Also, we had complicated issues in terms of the operating license because beside it is not easy to gain the license, the concept of our business was novel at that moment here that is difficult to be explained well to the authority.
MH: You mentioned that the concept of this business was novel in Madrid, Spain, when you get it started. How did you market it?
HS: We did not market that is a part of the strategy we have. We spent 2 years to develop and improve our business model that we went over it, including concept and numbers, many times. We presented our business model to many different kinds of people and they often input their experience and ideas. So at the time when we launched the business, our business model was already well thought and sophisticated that is part of initial success. And location, having brewpub in the center of Madrid, itself is already marketing. The whole concept of business that people can see brewer and tanks is our best marketing structure. Mass media are always around the center that is easy to have them come to here, and also our customer themselves promote our place, putting picture on Facebook and all those kinds of SNS, to share their experience here with their friends.
MH: After 8 month of success, what is your current challenge?
HS: The current challenge is the next step what we are going to do next. For example, our initial plan was not just serving craft beer inside the bar but also producing beer for abroad. However, the consumption of beer here easily exceeded our initial expectation that we are unable to sell beer to other places. We have already increased the capacity and we are planning an additional capacity increment this year, but then it would reach the maximum manufacturing capacity at this location. Thus our next challenge is how we can put Fábrica Maravillas to the next stage of growth. Needless to say, we would be bigger. The question is how. So we have been currently discussing about what options we can take like, franchising, licensing, join venture, and how that strategy would influence on our brand value. We are supposed to set on next step after this summer. Compared to the potential size of the craft beer industry in Spain, our current distribution capacity is quite small. To make it bigger, we need to contemplate the measure to enlarge it.
MH: Do you have some future vision?
HS: We would like to make people know beer as they know about wine. People living here know a lot about wine that is part of culture, but people seldom select and order specific kind of beer and just say “caña” instead. By educating consumer to have more knowledge on beer, we believe that it would be able to generate additional demand of craft beer and we see the potential to expand our business further. Here Fábrica Maravillas provides people with an opportunity to discover craft beer, which is completely different from mass manufactured one, that is designed for customer to learn beer every time they come here. It is a great challenge to change consumer behavior in the market through providing a distinct customer experience.
MH: What you have learned in International MBA helps you manage your business now?
HS: Yes exactly. Especially at the beginning stage of the business, it helped me a lot. For example, when we were developing the business plan, I definitely translated what I learned in IE into our business model development and improved from an idea to the sophisticated business model, including financial model. Initially, whereas the idea and business plan was unique, it lacked a well-developed financial strategy and plan, and what I have learned in IE is absorbed into this business. It was the first as well as direct input from MBA.
MH: Give us a message for future entrepreneurs.
HS: First of all, do not think you cannot do good business as long as you do not have a completely new idea. Even if you do not have any idea, just keep looking for it. It does not have to be sophisticated one but can be basic one. It is understandable because media are eager to take up some interesting novel idea to get an attention. But you can even do business with basic concept like selling bread. Once you get an idea, tell it to everybody. Don’t worry about copying. If somebody can copy it quickly, chances are someone has already done it. A lot of first stage entrepreneurs protect their idea and are less likely to share their idea with people for the fear of being stolen by someone. But no one would actually quit his or her job to copy your idea. People love to help you, and so share your idea with others.