I’m sitting here on spring break, coffee in hand, looking out over the water from my hotel in Clearwater Beach. I should probably be enjoying a mimosa, but instead I’m reading a multi-sector inflationary dynamic paper from the Brookings Institution. I know—I’m a real blast at parties.

But when you’re an owner, you have to keep an eye on the horizon. The “macro” is just a fancy word for the truck that will eventually back up with your delivery. And right now, the indicators are starting to flash.

The Rocket and the Feather

We’ve all seen the headlines. Conflict in the Middle East kicks off, and gas prices go vertical. It’s what economists call the “Rocket.” Prices shoot up because refiners are panicking. A recent piece in the Wall Street Journal highlights a massive disconnect in the market right now: while “paper” futures for crude are bouncing around the high $90s, the “physical” market is in a total frenzy. Refiners are actually shelling out as much as $145 a barrel on the spot market just to guarantee they have actual product to refine.

But then, a tentative cease-fire is announced. You’d think the price would crater, right? Wrong. That’s where the “Feather” comes in. Retail prices float down slowly—if they come down at all. Gas station operators and the big corporate suppliers above us are in no rush to pass those savings along. They’ve just spent weeks with their margins getting absolutely crushed by that $145 wholesale spike, so when costs finally dip, they hold the line to expand their margins and recoup their losses.

While I haven’t seen the invoices jump at the brewery yet due to the situation with Iran, this cycle usually means it’s only a matter of time before those “fuel surcharges” start appearing on the bottom of my supply orders.

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The Ripple Effect: Why Diesel is the Real Killer

It’s easy to look at a gas station sign and think, “Well, I don’t drive that much.” But in the world of illiquid assets, every single thing you touch is moved by diesel. And diesel right now is a nightmare—hitting astronomical levels in places like California.

I’ve seen this movie before. We saw it with COVID. A shock hits the system, and suddenly every invoice has a “shipping surcharge” or a “logistics fee” tacked onto it. Those fees are like a guest who shows up to your party, drinks all your beer, and then decides to move into your guest room permanently. They don’t go away.

Take grain. In our industry, grain is a commodity. When the brewing industry shrinks—which it is—demand destruction usually keeps those prices somewhat under control. But even if the price of the grain itself stays flat, the cost of farming it, harvesting it, and trucking it to my door is tied to the price of fuel.

When the oil shock recedes, the big multi-national suppliers aren’t always quick to send out “we’re lowering your rates” emails. They often pocket the difference as margin. Meanwhile, I’m the one eventually standing in the taproom having to explain to a regular why their favorite IPA just went up another dollar.

The Brookings Reality Check

This is exactly what Afrouzi and Bhattarai were talking about in the paper I’m currently reading. They talk about a “multi-sector” economy where some sectors are “flexible” (like energy) and others are “sticky” (like us).

When a productivity shock hits an upstream sector—like a war-induced energy spike—it forces a realignment of relative prices across the whole economy. Even if the Fed manages a “soft landing” and unemployment stays low, inflation can stay elevated because the “downstream” sectors—that’s us—are still trying to adjust to the new reality of our input costs.

Inflation isn’t just about “too much money chasing too few goods.” Sometimes it’s just the visible footprint of an economy trying to figure out how to function when the cost of moving things from point A to point B has fundamentally shifted.

The Death Warrant

There are those in my industry that are not going to want to hear this. Eating all of these hikes and protecting your price point isn’t the solution.

There are breweries all over the country right now that are terrified. They see the shrinking market and the rising costs, and they react by trying to be the “value” play. They keep their prices at 2019 levels, despite post-COVID inflation and now this next price shock, thinking that volume will save them.

It won’t. It’s a death warrant.

When you keep your prices artificially low while your suppliers are expanding their margins at your expense, you aren’t being a “friend to the consumer.” You’re just subsidizing your own bankruptcy. You are signing your own death warrant with margins that are too thin to sustain a single equipment failure, let alone a prolonged economic shift.

Worse, you’re often confusing the customer. When a struggling brewery nearby sells a dumbed down IPA for $5 made with closeout hops from the 2021 crop year because they are a “steal” at $3 per lb, it’s bad for everyone. This super “mid” product impacts not only that brewery’s reputation, but makes the customer question why my IPA is $7. It might have something to do with higher quantities of $18 per lb specialty hops from the 2025 crop year we are using. But to the casual customer who isn’t a beer geek (80% of our customers), we look expensive.

Ownership is About Hard Choices

Being an owner means you don’t get to live in the “paper” world of futures markets and economic theories. You live in the “physical” world of real-world shipments and bank balances.

The ripple of an oil shock isn’t always a one-time event; it can be a structural change to your cost of goods sold. You can either adjust your prices to reflect that reality, or you can watch your equity evaporate while you wait for “things to get back to normal.”

Spoiler alert: they rarely go back to exactly where they were.

Now, if you’ll excuse me, my coffee is getting cold and I have more “riveting” reading to do here in paradise.

Macro Views, Micro Brews. And this morning, Beautiful Views.

Dave

My guy Josh Brown over at Ritholtz Wealth Management has been on CNBC since February banging the desk about something he calls the HALO trade.

If you haven’t heard the term yet, it stands for Heavy Assets, Low Obsolescence. For the last fifteen years on Wall Street, “Asset Light” was the only strategy that mattered. If you owned a factory, a fleet of trucks, or a warehouse full of inventory, the Ivy League analysts looked at you like you were wearing a powdered wig. The goal was to own nothing but code. Software was the king because it was infinitely scalable and cost nothing to distribute.

But then the AI surge hit.

Suddenly, the market is realizing that software is actually quite fragile. Bits are easy to copy; atoms are not. If your entire business is built on code, AI can probably be taught to rewrite that code by next Tuesday. If you provide a non-tangible service—legal research, basic accounting, data entry—AI is coming for your lunch.

The “Software Slaughterhouse” is real. But for those of us living in the physical world? It turns out the “HALO” might be shining brightest on Main Street.

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The Final Mile of Reality

Wall Street is currently scrambling to find HALO stocks. They’re buying power grids, data centers, and pipelines. They want “Atoms” because they’re realizing that in an AI world, the only thing that isn’t a commodity is something you can actually touch.

But while the big firms are fighting over utility stocks, here on mainstreet we are living deep in the HALO world.

Specifically, small businesses that deal directly with the customer in the physical world.

Is there a time, way in the future, when your 3:00 AM plumbing emergency will be answered by an autonomous robot showing up in a self-driving van? Maybe. But we’ve been hearing about self-driving cars for thirty years, and we don’t seem much closer to that reality today than we were five years ago. Reports still abound of Waymos and Teslas doing all kinds of stupid things because that final mile is so impossible to program.

The “final mile” of physical service is incredibly hard to automate. Taking a wrench to a leaky pipe in a cramped basement or troubleshooting a customized HVAC system requires a level of physical dexterity and human problem-solving that a server farm can’t replace.

The Human Pushback

We’ve talked about this before: the more the world goes digital, the more people crave the analog.

There is a growing pushback against the “Data Center-ification” of our lives. People are getting tired of not being able to talk to a human. They’re tired of “Support Bots” that don’t understand their problem.

Small business stands on the front line of that pushback. We don’t have the option of being an “unreachable” tech giant. We have to look the customer in the eye. That face-to-face interaction isn’t a bug; in an AI world, it’s the ultimate feature.

Brewers Don’t Panic

AI is not going to make your local craft beer pint.

Sure, we’re going to use AI on the office side. We already are. It handles the boring stuff—accounting, social media copy, bookkeeping—and it allows us to stick around longer by increasing our efficiency. Like any other industry, the businesses that don’t adapt and use these tools will disappear.

But the physical part of brewing? The smells, the temperature control, the actual manual labor of moving grain and cleaning tanks? That’s here to stay.

I’ve seen plenty of reels on Instagram of brewers making the joke: “When is AI going to take my job?” Usually, they’re asking with a smile while they’re elbow-deep in a mash tun. They aren’t panicking.

Compare that to your average SaaS (Software as a Service) company. Those guys are sweating. Wall Street seems to agree, thinking many of these software businesses are totally cooked because their barrier to entry just dropped to near zero.

But I don’t talk to any small business owners who are losing sleep over Gemini. Maybe some of that is naivete, but most of it is a realistic understanding of what we do. Interacting with customers and providing a physical good is not something an LLM can do, or at least not in the way that we do it.

The Margin Expander

Here is the secret: AI is actually a gift for the “Atoms” business.

In the software world, AI is a disruptor. It lowers the barrier of entry, meaning any kid with a laptop can now compete with a firm that has 500 engineers.

In the Small/Mid-sized Business (SMB) world, AI is a margin expander.

It handles the “boring crap” we don’t want to deal with anyway. It makes our processes smoother, our marketing more professional, and our scheduling more efficient. It does all of that without threatening our core service.

We keep the physical moat, but we get the “Asset Light” efficiency on the backend. That is a recipe for profit growth.

The Last Man Standing

The Lindy Effect: The longer something has existed, the longer it is likely to exist.

Plumbing has been around forever. Heating and cooling have been around for a century. Drinking alcohol with your friends? That’s been around since we crawled out of the caves.

I know, the brewing industry has its headwinds right now (believe me, I know), and maybe I should take the “permanence” of the bar business with a grain of salt. But people are going to keep drinking, just like they’re going to keep needing their toilets fixed.

These things are not going to be disrupted by AI. While Wall Street is freaking out about which software company is going to be “Amazoned” by OpenAI, Main Street is quietly focusing on its HALO.

A local HVAC company has a much clearer line of sight for what 2035 looks like than some “revolutionary” AI startup has for 2027. That clarity is an advantage that is finally being priced into the public markets for companies that have it and do not. On the small business side, it’s not an advantage that is talked about often, but it definitely exists.

The Bottom Line

The HALO trade isn’t just for Mega-cap stocks or utility conglomerates. It belongs to the entrepreneurs who own the physical infrastructure we live in every day.

It belongs to the people who provide the face-to-face services we need to exist as a society.

Don’t chase the bits; own the atoms. Looking around the brewery right now, I see a hell of a lot of atoms.

I think we’re going to be all right.

It had been a minute since my wife and I had been out for dinner. We were enjoying a cocktail on our way to a 6:30 reservation next door. I was halfway through a unique twist on a Negroni—the kind of drink you’re supposed to sip slowly and appreciate—when my phone lit up.

It was the babysitter.

She sounded out of breath. Exasperated. “There is a fire. I called 911. Everybody’s out of the house. The Fire Department is on the way.”

Hoping I was misinterpreting her, I ran outside to the sidewalk where it was quiet, trying to make the words make sense in my head. I called 911. Everybody is out. It clicked. This wasn’t a false alarm. This wasn’t a burnt piece of toast. There was a real, legitimate fire in my house.

I ran back inside, looked at my wife, and told her we had to go right now. I slapped a fifty on the bar and we flew for the door. Still inside the bar, she asked, “Is it Des?”

“No.”

“Is it the dogs?”

“No.”

Now officially outside, I told her the house was on fire. Panic set in.

The fifteen-minute drive home felt like three hours. You know that feeling when you’re racing against a reality you can’t see yet? Your mind populates the void with the worst-case scenarios. We rounded the corner approaching our house and it looked like a movie set—eight fire trucks blocking the road, one of them parked directly in my driveway. I told my wife to go straight to the EMS truck where our son, Des, and the babysitter were waiting.

I ran up the driveway and the visual hit me like a physical blow: thick, black smoke pouring out of every eave, every soffit, and the attic vents. You hear the cacophony of it—the sirens of more trucks coming, the alarms, and the sound of glass shattering inside as the heat does its work. They cracked a garage door and a solid wall of black smoke erupted into the air. Firefighters in full gear emerged, immediately ripping down the ceiling in the garage looking for signs of it spreading through the attic.

Our babysitter was a rockstar. Hannah—the daughter of my buddy Andy—had managed to get our eight-year-old out front and the dogs out back before things got too bad to do so. She saved more than just lives; she saved the chance for us to have anything left to return to.

The only one missing was the cat. We found him later after the flames were out, hiding in the lowest spot of the basement—the best place he could’ve been. He was fine, beyond being terrified.

Once the place was ventilated enough to breathe, I went inside with the fire captain. It was shocking. My entire home was black. Not “charred in spots,” but fundamentally transformed. The bathroom and the closet where the fire started were basically gone—non-existent. The light fixtures had gotten so hot they melted, hanging four feet down from the ceiling like a Salvador Dali painting. The mini-split air conditioner 35 feet from the fire got so hot it also had started a slow crawl down the wall. The shattered remains of the skylight litter the hallway due to the rising heat looking for an escape route.

Firefighters were still hunting hot spots with infrared thermometers, ripping down the dining room ceiling. I headed for the basement to check on the cat and stepped directly into a half-inch of standing water. Everything we owned was either charred, melted, covered in toxic soot or soaked. In twenty minutes, the “stuff” was screwed. Reality had officially shifted.

The hoses eventually get rolled up. The firefighters spray the soot off their gear and head for the trucks. The captain shakes my hand, his face weary but professional. “It’s all insurance stuff from here,” he says. “I’m sorry for the loss.”

He isn’t just being polite—those guys did a hell of a job. If they hadn’t knocked it down when they did, five more minutes would have turned the whole structure into a pile of ashes at the bottom of the basement.

Then the trucks pull away, the sirens fade, and the silence hits like a freight train.

I was left standing alone in the smoky remains of my life. My feet were soaked, and my clothes were smeared black with soot from crawling around the floor searching for the cat. It was just me and the quiet in this black shell of a home. I looked at the wall and my heart sank. There were six custom-painted portraits of our past dogs—painted by a great friend. They were blackened, faded, and ruined. It was the one thing in the entire house I couldn’t replace with something better from a catalog.

The “what ifs” started to loop. The “why us” creeps in, followed by the mental checklist of anything that could have been done differently. That was the first of several nights where sleep wouldn’t even be an option. When the adrenaline leaves, the reality of the void settles in. You realize that “home” is a concept that requires a place to stay, and suddenly, you don’t have one.

I called my parents. I texted the staff at the brewery to let them know the damage. My buddy Andy, who I’ve known since the fifth grade, was the first to arrive on-site and see this mess. He and Hannah came out that night to help me board up broken windows and purge the refrigerator—a grim but necessary task to keep the scent of rotting food from joining the “campfire air freshener” that now permeates every square inch of the house.

In a small town, bad news travels at the speed of light. I didn’t want any fish stories hitting the streets, so I took a few photos and posted the reality to my beer group—300 of my closest beer buddies—and the brewery’s business page. I asked for patience; the time I’m about to spend on this mess is going to hit my ability to produce beer. Lastly I asked people to just support the business and my staff.

What followed was a humbling, phone-melting experience.

Literally hundreds of comments, DMs, texts, and calls flooded in. I’m getting messages from finance friends in Manhattan and Toronto, and from my former athletes I coached. It feels like every person I’ve ever crossed paths with is reaching out. On zero hours of sleep, ten hours of phone time and scheduling is an absolute sensory overload.

No less than ten people offered us their homes. Andy took the cat while we moved from his basement into a dog-friendly hotel. Des returned to school to find a new backpack waiting for him, fully loaded with supplies. The PTO was already organizing clothes and essentials. Things just keep showing up. The brewery has had one of our biggest weeks ever due to people coming out to support us. We were—and are—in great shape because we have the financial means to bridge the gap until insurance checks start coming. But seeing our community mobilize was something else entirely.

The adjuster gave us the ballpark: 9 to 10 months for a full interior gut, remediation, and reconstruction. This isn’t a sprint; it’s a marathon through a charred landscape and it’s going to be miserable.

For 14 years, I stood on the sidelines of high school basketball courts, harping on teenagers about many things but often two specifically: their attitude and their body language. As a lifelong Cubs fan, I quickly adopted Joe Maddon’s 2015 mantra: “Attitude is a decision.” Back in Illiquid Assets #4, I discussed the “Vaccine of Difficulty”—the idea that doing hard things makes hard things easier. Marathons, health struggles, the brewery stress, the MBA—all at once. These are the voluntary hard things that make real hard things, like this, more tolerable. Like all of them, it’s not pleasant, but you know you will get through it due to that experience with toughness.

Despite the hundred-plus phone calls and the sleepless nights, I feel oddly locked in. My main objective is protection. I want to keep the weight of this burden off my son and my wife, Erin. I want them to feel as normal as possible, even if “normal” means a hotel pool.

Erin is a total boss. She makes three times my income, and I’m secure enough to say it. My role is often about flexibility—adapting to her unplanned work travel and keeping the balls in the air as a solo parent in those moments. But as a man, there are times you wish you could do more. This is that time when I actually can. I have this under control. Des can be excited about the pool at the hotel; Erin can be excited about redesigning the house. This isn’t masculine bravado; this is what I trained for.

I talked to my uncle, who went through this a few years back. He told me, “This is going to be the worst for a year, and then when it’s all done, it may be the best thing that has ever happened to you.”

He’s right. We have an opportunity for a fresh start. 20 years of house projects that we would like to tackle but don’t want to “pull the Band-Aid” that would lead to 10 other projects. The “Band-Aid” is officially off. Time to do it all.

But the real story here is that most people are good. The Golden Rule all comes back around. When you take care of others, they take care of you. And that is one of many things I am very thankful for this week.

Thank you to everyone who reached out. Your kindness isn’t lost on us. We’re going to be fine. I promise we have what we need, and the ability to get anything that we don’t. For those that gave us much-needed space to process and do what has to be done, you are also appreciated and it feels great to know you are all behind us and understand how busy something like this can be.

This episode is dedicated to every one of you who sent a text, made a call, or offered positive vibes from afar.. We feel the love. It is the most valuable asset we own, and it’s the one thing the fire couldn’t touch.

Be good to each other.

— Dave

It’s 8:20 PM on a Friday. In the civilian world, this is the “relaxing” part of the week. My wife is out for a rare girls’ night, and I’m home with the kid, finally leaning into the couch and watching March Madness. The stakes for my evening were supposed to be limited to Minecraft assistance and bedtime stories.

Then my phone buzzes. It’s Casey, my Friday night bartender and assistant brewer.

In this industry, a text from your staff at 8:20 PM on a Friday is never a “just checking in” message. It’s a flare sent up from the trenches. The text contains a suggestion for a new beer name. At Brewery 4 Two 4, that’s our shorthand for “something incredibly dumb just happened.” Most of our tap list names are essentially monuments to human absurdity. This time, the absurdity had a name which we will call “Mr. Pascal” for the purposes of this story.

Casey informs me that Mr. Pascal is officially 86’d. This guy—a first-timer—had spent the last two hours physically working his way down the bar like a slow-moving social virus. He’d start at the far end, talk way too loud and way too close to a stranger until they finished their pint in record time just to escape, and then he’d slide one stool over to the next victim. He was a one-man churn machine for my customer base.

Casey, being a pro, cut him off politely. No scene. Just the “it’s time to go, man” talk. I’m watching the security feed on my phone from my living room, watching the replay of the guy walking out, thinking, “Okay, crisis averted. Back to the couch.”

Ten minutes later: “He’s back. Looking for a backpack he never had.”

Then: “He’s come back four times. Go ahead and call the cops.”

I’m now 911-dispatching from my house while watching a live-streamed psychodrama on a four-inch screen. Casey tells the guy he texted the boss to check the cameras to see if he had a backpack when he came in and to wait on the patio until we figure it out, a smart move to keep the floor clear, while I’m scrubbing through footage of the last two hours like a low-budget detective. Spoiler: There was no backpack. There was never a backpack.

The police arrive, they trespass him, and they give him the “if you set foot here again, you’re going to jail” speech. From my phone feed of the parking lot camera, I see this going down and when done with the officer, he wanders off into the night. We call it a win. In the alcohol business, this isn’t exactly “common,” but it’s a known line item on the emotional balance sheet. You sell the social lubricant; occasionally, the gears slip.

Twenty minutes pass. My stress level is coming back down.

Then Brooke, another one of our bartenders, heads out to the garage for supplies. She hears a hissing sound. She looks over, and there’s Mr. Pascal, crouched down by Casey’s truck in the dark, manually letting the air out of the tires.

Now, Brooke is a professional, but is not one to be crossed and is capable of a vocabulary that would make Samuel L. Jackson take notes. She unleashes a tirade that probably echoed halfway to Lake Michigan and bolts back inside to call the police for round two. Pascal vanishes into the shadows again.

Now the manhunt is on. We have at least two police cruisers circling the block, shining their spotlights into the dark corners of the neighborhood.

At this point, the “Regulars’ Militia” assembles. We have guys who have been sitting at that bar for years; they see Casey and Brooke as family. They’re out by the truck, checking for damage, playing sentry. Good news is there is nothing missing other than air pressure.

I tell Casey to go change the battery on one of the security cameras just in case this clown comes back for a second round of brain-dead vengeance.

Casey is walking around front to perform the battery swap. And then, like a villain in a movie who forgot the script, Mr. Pascal just... walks by. Right down the sidewalk in front of the brewery. Casey runs back inside and tells Brooke to call the cops back as he is right in front and runs back out with the regulars to keep an eye on where he is headed.

The cops, who were already circling the block, come flying back and find him at the building right next to ours. Manhunt over. Mr. Pascal is given silver bracelets and is hauled off for a restful night on a concrete bed.

Later, the officer calls me for the full rundown from my end and asks for the security camera clips to build the case. The kicker? The guy only had two beers over two hours at our place. This wasn’t a “he had one too many IPAs” situation. No signs of being drunk.He was either just very unstable or more likely, he was as high as giraffe balls on something else entirely before he ever stepped through our door.

After uploading my clips to the Sheriff’s Department portal and discussing all this stupidity with Casey, I finally crack a beer of my own and go back to the couch to resume March Madness while searching the recesses of my brain for how to prevent the next round of stupidity whenever it may pop up.

Just another relaxing Friday night in the alcohol industry.

This is the first installment of Unfiltered Ownership, a new recurring special series here at Illiquid Assets. It’s an occasional departure from our usual Macro Views to focus on the Micro Brews—and the messy, chaotic, often absurd world of alcohol entrepreneurship. Subscribe now and don’t miss future stories from behind the bar.

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There is a widening chasm between Washington D.C. and Main Street. In one world, the Federal Reserve is obsessing over “neutral rates” and a “dot plot” that looks more like a Rorschach test than a roadmap. In the other—the one where we actually live and work—the economy feels like a high-performance engine that has been making strange noises, and now the “Check Engine” light just flashed red.

On Wednesday, Jerome Powell and the FOMC did exactly what the market expected: they stood perfectly still. The federal funds rate remains parked at 3.5% to 3.75%. It’s the second consecutive pause of 2026. While the loudmouths on Twitter debate whether we’ve landed the plane or just stalled the engine, those of us running small businesses are feeling the turbulence in real-time. But the scary part is that the turbulence isn’t coming from the things the Fed actually controls.

Jerome Powell likes to talk about his “tools.” But as we’re finding out, the Fed’s toolbox is remarkably sparse. It all comes down to a fundamental mismatch of scale. They are essentially trying to perform acupuncture with a pitchfork. The pitchfork isn’t necessarily the wrong tool for the job—it has tines, and if you’re incredibly lucky, you might hit the right pressure points. But the instrument is too heavy, the points are too large, and the stakes are too high. Push just a millimeter too hard, and the patient doesn’t find relief; the patient bleeds to death.

The “Hiking” Whisperers

Leading up to this meeting, there was a growing hum in the financial press that “higher for longer” wasn’t enough. There was actually talk that the Fed needed to raise rates again.

TheStreet and other outlets recently noted that interest-rate futures were pricing in a non-negligible probability of a rate hike in 2026—a scenario that seemed laughable just six months ago. The logic is that inflation is “sticky,” the conflict in Iran has sent energy prices into a vertical climb, and the “last mile” of getting inflation back to 2% is proving to be a marathon through deep mud. High Frequency Economics Chief Economist Carl Weinberg even suggested the Fed might need to get ahead of an inflation rate that could hit 3.5% by summer.

Think about the absurdity of that for a second. We just lost 92,000 jobs in February, the housing market is essentially a frozen tundra, and there are serious voices calling for tighter money. It feels like watching a doctor lean into that pitchfork because the patient still has a headache, ignoring the fact that the skin is already starting to tear.

The “Zero Job” Warning & The AI Freeze

It isn’t just the hawks making noise; the recession-watchers are sounding a much darker alarm. Economist Claudia Sahm, creator of the famed Sahm Rule, recently published a sobering update titled “A Year With No Jobs—But No Recession.” Sahm points out that after the massive 2025 benchmark revisions—which effectively erased over one million jobs from the previous year’s totals—the U.S. has essentially seen zero net job growth over the last year.

Sahm describes a “low hire, low fire” environment where the labor market has effectively frozen. This aligns perfectly with what we’ve been outlining here for weeks: the AI-driven white-collar freeze. While we aren’t seeing a mass “AI apocalypse” in the headlines, we are seeing the “invisible layoff.” Companies aren’t firing everyone today; they’re just using AI to justify a total halt on entry-level hiring and junior knowledge work.

When you combine Sahm’s “zero job” reality with the AI-driven headcount reductions, you get an economy with zero “buffer.” We are incredibly vulnerable to shocks—like $110 oil—because there’s no hiring momentum left to absorb the blow. If no one is getting hired, there’s no safety net when the layoffs finally do start.

The Ghost in the Machine: Sticky Shelter

Perhaps the most frustrating part of this “pause” is that the Fed is being held hostage by a statistical ghost: Owners’ Equivalent Rent (OER).

Despite the housing market being almost completely stalled—with 30-year mortgage rates hovering above 6% and existing home sales stuck at a floor—the Fed’s preferred housing metric keeps climbing. Recent BLS data shows OER rising 3.2% year-over-year, even as actual market rents in the real world have begun to drop.

Why the disconnect? Because OER isn’t a measure of what people actually pay; it’s a survey of what homeowners think they could rent their houses for. It’s a lagged, theoretical metric that typically runs 18 to 24 months behind the actual market. The Fed is essentially looking at a Polaroid of 2024’s housing market and using it as a reason to keep the pitchfork pressed against the patient’s neck in 2026. This “sticky shelter” inflation accounts for over a third of the CPI. It is single-handedly keeping the “Headline” numbers high, giving the Fed the cover they need to keep rates restrictive while the real-world housing market is frozen solid.

The Discretionary Drain: Gas vs. Everything Else

There is a specific “playbook” for what happens to consumer behavior in the first 90 days of an energy shock, and we are currently on day 30. Recent data from Wells Fargo analysts led by Ike Boruchow suggests that sustained $4+ gasoline siphons roughly 180 to 240 basis points away from consumer discretionary spending almost immediately.

For every $10 increase in the price of crude, another 24 cents is added to the pump, which translates to a massive redirection of household spending. This is effectively a “regressive tax” that consumers cannot avoid. As Raymond James recently noted, these rising energy prices act as a direct squeeze on both individuals and businesses. You can’t interest-rate-hike your way to cheaper gasoline when the problem is a supply chain broken by war. Instead, households do the only thing they can: they preserve the “Staples” (groceries, utilities, rent) and sacrifice the “Discretionary.”

The View from the Taproom

From where I sit, the Fed has a fundamental mismatch between the “illness” and the “medication.”

As a business owner, I see the squeeze from every angle. My labor costs aren’t going down, and my raw inputs—everything from grain to CO2—are getting hit by the “Everything is More Expensive to Ship” or the “tractors run on diesel” tax. But the real kicker is the shrinking customer wallet.

Consumer discretionary spending survives on “disposable” cash. But when gas hits $4 a gallon, that extra pint at the end of the week becomes a “maybe next time.” When it hits $5? That “maybe” becomes “we have (shitty) beer at home.”

In a tourist destination like Holland, Michigan, this is existential. We depend on people having the discretionary urge to take a road trip, stay in a hotel, and visit a brewery. When $4 gas filters through to the grocery store, the consumer doesn’t just “cool off”—they shut down. Raising rates, or even holding them steady for that matter, to combat an oil shock induced by a war in the Middle East isn’t just a mismatch; it’s a mistake. You can’t interest-rate your way to more oil production in a war zone.

The “Anecdata” of Inflation

On the flip side, I understand why the Fed is paralyzed. If they cut too fast, they risk reigniting the fire.

Call it “anecdata,” but I know my own behavior. If rates dropped to zero tomorrow, I’d be the first person emailing my mortgage guy to do another cash-out refi to do major projects on the house that was a stretch for us 18 years ago and is well below our means now. I’d probably also be looking at financing a couple of new pieces of brewery equipment that I currently have no interest in paying business loan rates for.

I am the demographic that drives inflation when money is free. This is the impossible task: The Fed has to ease the pressure enough to save the person whose job was lost in the February slump, without pulling back so far that the person (like me) starts using cheap debt to drive prices higher.

The Bottom Line

The biggest issue with “Data Dependency” is that the Fed is driving a car at 80 mph while looking exclusively in the rearview mirror. By the time the “data” shows we are in a massive stagflationary ditch, we’ll have been there for months.

In my opinion, the Fed needs to stop worrying about the ghost of 1970s inflation for a moment and start looking at the very real stagflation of 2026. They best get back to cutting—and quickly—or the “soft landing” is going to look a lot more like a crater.

Micro Brews, Macro Views

Dave

If you read that post and felt like we were headed for a Wall-E style existence where we all float around in chairs staring at screens while robots bring us nutrient shakes, I don’t blame you.

But there’s a funny thing about humans: we are terrible at staying in one place. Whether it’s a stock market bubble or a cultural trend, we have a biological inability to avoid overcorrecting.

Today, we’re making the counter-argument. We’re going “Long Humanity.”

Because if there’s one thing we know about markets, it’s that the most crowded trade is usually the one that’s about to break. And right now, everyone is “Short Fellowship.”

It’s time for the Mean Reversion of the Soul.

The Pendulum and the Pivot

Most markets, driven by human behavior, spend 90% of their time swinging toward extremes and only 10% of their time in the “rational” middle. Human behavior itself is no different.

For the last decade, the extreme has been “Efficiency.” We wanted our groceries delivered without talking to a clerk. We wanted our meetings on Zoom so we could wear pajama bottoms. We wanted AI to write our emails so we didn’t have to think.

We got exactly what we asked for. We removed the friction. But in doing so, we removed the “social lubricant” that makes life worth living.

The “Great Social Atrophy” was the swing to the far left. But the snap-back could be a coiling spring. You can’t yet see it in the data. But anecdotally, you see it with the pushback and NIMBYism of data centers. Most people are somewhere between indifferent and hating the growth of AI. It’s not often we see society shift in a way that a majority of people hate—at least not without power-hungry rabble-rousing political leaders taking us there. People are realizing that “efficiency” is a great way to run a warehouse, but a miserable way to run a life.

We are genetically programmed for interaction. You can’t patch out 200,000 years of tribal evolution with a few software updates. At some point, the “Covid Kids” we discussed in IA #8 are going to wake up and realize they are starving for something a screen can’t provide. They are going to come out to play. I have regrets about not being social enough in my younger years… and I could tell ridiculous stories about my younger exploits long enough to drink a brewery dry.

Brewery Nostalgia Of The Future

There’s a specific brand of nostalgia that hits when you reach your 30s and 40’s. You start looking back at the places where you felt safe and connected.

For the Gen X crowd, it was the mall. For Millennials, it was probably the coffee shop or the dive bar. But for the generation currently entering the workforce, their childhood “Third Place” was often a brewery. Not as a drinker, but as the generation of children that grew up during the great brewery boom.

Think about it. These are the kids who were dragged to taprooms on Saturday afternoons while their parents shared a flight of IPAs. They played LEGOs on wooden benches and watched the world go by while their parents talked to neighbors. At the time, they probably had their heads buried in a tablet or a coloring book.

But nostalgia is a hell of a drug.

As these kids grow up in an increasingly digital, sterile world, they aren’t going to crave more “digital-first” spaces. According to recent reporting from CNBC regarding the “Analog” shift, Gen Z is already showing a massive desire to get offline, trading their smartphones for “dumb phones” and seeking out physical, small-business hubs. They are going to crave the smell of boiling hops, the sound of a heavy keg hitting a concrete floor, and the sight of people actually laughing in person.

The breweries again could become the “Public House”—a term that has existed for centuries for a reason. It’s the secular church. It’s the community center that doesn’t require a membership. It’s the place where you go to be “among” people, even if you aren’t “with” them. I still see my customers doing something that I have done dozens of times: sit at the bar and make a new connection that may become a new friend. I have hundreds of “beer friends,” and most of my closest friends developed directly from that connection.

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Presence as “Proof of Work”

This is where the AI pushback vs. dystopian future gets interesting.

In the crypto world, “Proof of Work” is what gives a token value—it’s the literal energy expended to prove something is real. In a world dominated by AI and remote work, Physical Presence is the new Proof of Work.

When an AI can generate a perfect video of a sunset, the actual sunset becomes more valuable. When an AI can write a heartfelt letter, the hand-written note becomes a luxury good. And when AI can simulate a “conversation,” sitting across a table from a human being and seeing their pupils dilate when they laugh becomes the ultimate status symbol.

AI makes digital content infinite and, therefore, worthless. It commoditizes “connection.”

But you can’t digitize the “vibe” of a Friday night at a local spot. You can’t download the feeling of a cold pint glass or the ambient noise of a crowd. That friction—the very thing we tried to eliminate for a decade—is now the “moat.”

If you want to prove you’re actually living, you have to show up. You have to put skin in the game.

The WFH Backlash and the Search for a “Second Place”

The Work-From-Home movement was sold as the ultimate freedom. No commute! No “forced” socialization at the watercooler!

But for many, it turned out to be a gilded cage. Without a “Second Place” (the office), the boundary between “Rest” and “Work” evaporated. People are now working in the same place they sleep, eating lunch at the same desk they use for Zoom calls, and realizing that they actually missed the “forced” interactions of the office.

This has created a massive vacancy in the human psyche. I see it in my wife, who generally works remote. When she gets the call for a work happy hour in person, the excitement is real. You can only vent so much over Slack. It’s not the same as bitching about some idiot you all deal with in person where there isn’t a trail for your IT guy to read later.

Since the office is no longer the “Second Place” for millions of people, they are over-indexing on the “Third Place” to fill the void. The brewery or bar isn’t just a place to get a drink anymore; it’s the place where the “Work-From-Home” tribe can go to remember they are part of a society.

We are seeing a mass existential crisis where people are realizing that “Independence” is just a polite word for “Isolation.” The snap-back is the realization that we don’t want to be independent; we want to be interdependent. And it’s coming. Over-indexing and mean reversion is what we do.

The Bottom Line: Only the Real Survive

Not every business is going to survive this shift. The “commodity” bars—the ones that offer nothing but over-priced booze, backless steel stools, and super-mid super-expensive tacos—might still continue to shrink.

But the physical spaces that lean into community, fellowship, and face-to-face interaction are building a moat that Big Tech can’t touch (other than Google Maps changing our listed hours every other week for no reason).

As much as the Silicon Valley crowd wants us to live in our headsets and use data centers for every human need, they are fighting against our DNA. You can’t undo millennia of genetic programming with a Vision Pro or whatever the next stupid wearable is.

We aren’t headed for a dystopian mess where we all forget how to talk to each other. We’re just in the middle of a massive mean reversion. The “Great Social Atrophy” was a warning, but the “Great Social Snap-Back” is the opportunity.

Only the strong will survive in the hospitality business. But those who do will be the keepers of the one thing AI can’t replicate: the human spirit.

Long Fellowship. Short Isolation.

Dave

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The usual response from someone who has worked a corporate desk job their entire life is incredibly predictable. They usually lean back, sigh, and say, “Man, that’s awesome. I would love to do that someday. You’re living the dream.”

Here’s the thing they don’t tell you about living the dream: Nightmares are dreams, too.

The Treadmill of Success

In business, every step forward, every accomplishment, and every metric you hit doesn’t mean you get to coast. It just becomes a newly raised bar that you now have to clear again and again.

You brew a smash-hit IPA? Great, now your customers expect three more just like it next week. You hit your revenue target for the quarter? Fantastic. Now, do we reinvest that income? Which means you need more space, which means you need more staff. Sometimes you’re raising that bar for your customers, sometimes you’re raising it for your staff, and sometimes you’re just sadistically doing it to yourself.

That treadmill can be absolutely exhausting. You never really arrive; you just unlock the next, more complicated level of the game. To be clear, my business is super small. The model isn’t all that complicated. But that also means I am the “Director of Everything.”

Because I grew up in a family-owned business, I went into this with my eyes wide open. I knew most of the downsides of striking out on your own. People love the idea of “being your own boss.” Let me disabuse you of that notion right now. True, you might not have an actual human manager breathing down your neck, but make no mistake—you absolutely have a boss.

The business itself is your boss. Your customers are your boss. The inevitable reality of things breaking at the most inopportune times? That is the ultimate boss.

Don’t get me wrong. Probably 80% of the time, I absolutely love what I do. I love the flexibility it provides. Yes, the to-do list is a mile long and never truly finished, but in theory, I can usually tackle it when it works best for me and my family.

But it’s that other 20%—the dark, grueling, soul-sucking 20%—that the hustle-culture gurus conveniently leave out of their inspirational social media threads on entrepreneurship.

Risk, Ruin, and Rooftop HVACs

First, let’s talk about the risk. Pretty much anyone you’ve ever met who built a physical, brick-and-mortar business took a massive, stomach-churning financial risk at some point. You can study finance, analyze balance sheets, and model out cash flow projections until your eyes bleed, but a spreadsheet can’t prepare you for the reality of putting everything on the line.

There is a specific, metallic taste in your mouth when you realize your mortgage is directly tied to how much beer you sell on a rainy Tuesday in November. Personally, we essentially leveraged every single dollar we’ve ever made—including the equity in our home—just to get the brewery doors open. It was the ultimate illiquid bet.

And naturally, because the universe has a sick sense of humor, we found out my wife was pregnant exactly one month later. We’ll save the full panic attack of those specific stories for future episodes, but it’s crazy. It’s stupid. It is absolutely wrought with risk. Aside from a handful of second-generation, hand-me-down business owners (and frankly, even most of them), every single founder you know took that burden on in some form or fashion.

The next part of that shitty 20% is the mechanical failures. And let me tell you a secret about commercial equipment: it rarely breaks when you’re actually in the building. It’s as if these machines wait in the bushes, watching through the windows for you to drive away.

Currently, as I write this dispatch, one of my countertop canners is down, and my keg washer is refusing to cycle properly. Neither is a quick fix I can magically figure out with a wrench and a prayer. Both will require a trip somewhere else for specialized maintenance after I have already spent hours trying to be the shade tree mechanic. That trip has to be carved out of my already fully scheduled week. So, just as I thought I was finally coming up for air after drowning in end-of-the-year paperwork, I’m getting pounded right back below the surf by another wave of broken metal.

But that’s just a standard Tuesday. I once spent four agonizing months trying to run down a leak in one of our rooftop HVAC units that the actual professional repair guys—both roofers and HVAC technicians—could not figure out. Just me, a ladder, a flashlight, and a creeping sense of madness as water dripped onto the floor no matter what we patched.

The Unmodelable Human Element

You can build the most robust financial models in the world. You can forecast yeast attenuation and grain needs with pinpoint accuracy. But you cannot model the general public. There is no spreadsheet cell for the sheer, unadulterated chaos of human behavior.

There is no line item for the busy Friday night when a bartender accidentally hands a customer someone else’s credit card, letting them walk right out the door while the taproom is packed shoulder-to-shoulder. You can’t project the ROI of waking up to a deranged one-star review and a string of unhinged messages from someone promising to “end our business” when we had barely gotten off the ground. The vulnerability of pouring your heart into a business, only to have a complete stranger try to destroy it online for sport, is a uniquely modern kind of torture.

And then there are the phone calls. The “hey, sorry to bother you” texts that make your blood run cold. Like the time my bartender called to say they weren’t 100% sure, but they were pretty confident the guy at the end of the bar was casually doing cocaine. Or the time I was trying to sit down and eat a peaceful dinner, only to get interrupted because a regular customer suddenly lost their marbles and started screaming obscenities at the staff.

These are all real stories. I could go on literally forever.

The Panda Express Epiphany

There are millions of us out there who feel compelled—by a million different, irrational reasons—to build something for ourselves rather than clocking in for someone else. But being successful at it requires a level of white-knuckle intensity where you often kind of forget about yourself.

It can be incredibly lonely. It can be depressing. It is relentlessly hard.

Ironically, as I was scratching down notes for this piece, I was scarfing down my very first meal of the day. It was 3:15 PM. I was shoving lukewarm Chinese takeout into my face after racing out the door to go sit in the chaos of the school pickup line to get my son. And the fortune cookie at the bottom of the bag? It read:

“Make time for your passions.”

Like, thanks a ton, Panda Express.

It’s bad enough that this mediocre takeout is my first real sustenance of the day, but for dessert, I get a side of existential crisis. A passion? Other than work? I’d be thrilled just having enough time to get the “passion” of my business done, much less cultivating a hobby that didn’t just involve trying not to be a walking mound of goo by the time I turn 60, or finding ways to actually retire someday. Those are my hobbies now.

But that’s what we do. This is our passion. The grind, the risk, the broken keg washers, the unhinged Yelp reviews, the 3:15 PM lunches—it’s all part of the package.

If you own a business, good on you. I see you, and I feel your pain. If you’ve never had to experience that specific brand of joy, take a second and think about a friend of yours who has. They’ve probably been through the exact same wringer, waking up in the middle of the night wondering if the cooler is going to fail.

This shit ain’t easy. But it is the lifeblood of our economy and our local communities. These are the crazy people who sponsor your kid’s Little League team rather than spending that money on a nice weekend away. These are the businesses that happily donate gift cards for the high school drama club raffle, even when the canner is broken, the roof is leaking, and the margins are tight.

We all need to support them more.

Myself included.

Micro Brews, Macro Views

Dave

In my very first piece, we touched on the “graying of the taproom.” The core demographic—the people actually keeping the lights on—is getting older. The 20-somethings who used to pack the place on a Thursday night are increasingly absent.

It’s easy to blame shifting tastes, the rise of mocktails, or the mainstreaming of cannabis. But if you look at the macroeconomic data and the shifting structure of the modern workplace, a much darker reality emerges. The young, newly employed professional with disposable income—the exact demographic that underwrote the entire craft beer boom—is being systematically dismantled.

Here is how the great social atrophy is playing out, and why the traditional “happy hour” is on the endangered species list.

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The Disappearing Ground Floor

For decades, the path into the white-collar middle class was remarkably consistent. You graduated from college, moved to a tier-one or tier-two city, and took a job doing the grunt work. You were a junior equity researcher, a data entry clerk, a spreadsheet jockey, or a low-level CRM manager.

The pay wasn’t incredible, but you were young, single, and you had disposable income. Crucially, you were in an office. At 5:15 PM, you and four other co-workers walked out of the building, headed to the corner pub, bellied up to the bar, and spent three hours drinking IPAs and bitching about your managing director.

That was the ecosystem. That ritual was the foundational unit of the hospitality industry’s most profitable daypart.

Today, that entire ecosystem is collapsing, starting with the job itself. AI just broke the corporate pyramid.

According to recent analysis from the Stanford Digital Economy Lab, early-career workers (ages 22-25) in AI-exposed fields have already seen a 13% relative decline in employment. By the first quarter of 2025, the share of jobs listed globally as “entry-level” plummeted 45% below the five-year average. As of late 2025, the U.S. unemployment rate for young college graduates hit 9.5%—nearly double the general adult rate.

This trend is only going to accelerate as public companies face the music: massive, multi-billion-dollar capital expenditures in AI must eventually translate into higher profit margins and lower headcount.

The math for corporate America is simple: why hire five 22-year-olds to clean up data when a single senior analyst with an enterprise AI Copilot license can do the same work in half the time? The foot-in-the-door jobs are vaporizing.

Earlier this week, Citrini Research published a piece of pure macroeconomic nightmare fuel—a thought exercise projecting a full-blown economic meltdown by 2028, driven entirely by the AI automation cycle kicking off right now. The dystopian roadmap they laid out went predictably viral across the financial web, and for good reason: the entire scenario is terrifyingly plausible.

The Ghost Town Office

Now, suppose you are the lucky 22-year-old who manages to land one of these increasingly scarce entry-level gigs. Where are you actually working?

Probably from your childhood bedroom, or a cramped apartment you share with three roommates.

Return-to-office mandates generate a lot of financial press headlines, but the boots-on-the-ground data tells a completely different story. According to late 2025 Gallup polling data, among U.S. employees with remote-capable jobs, a staggering 78% are either fully remote (26%) or hybrid (52%). Only 22% are on-site full-time.

This means the physical on-ramp to corporate culture has been severed. You aren’t learning by osmosis, you aren’t grabbing coffee with the senior VP in the breakroom, and you definitely aren’t organically organizing a post-work pub run with colleagues you only know as floating heads on a Zoom grid.

When you combine fewer entry-level jobs with sky-high housing costs, disposable income evaporates. The modern craft beer industry, and specifically the $9 pint of hazy IPA, was built on the backs of Millennials who enjoyed entry-level corporate salaries and pre-inflation, pre-2020 rent. Gen Z is facing the exact opposite: runaway housing costs where median rent eats up an unprecedented share of early-career take-home pay. You can’t drop $40 on a Tuesday tab when you’re terrified of being automated out of your hybrid job and your landlord is bleeding you dry.

The Galloway Principle: Get Out and Drink

NYU Professor and market commentator Scott Galloway has been aggressively pounding the table on this exact dynamic. He argues that remote work, while a fantastic “unlock” for a 45-year-old caregiver, is an absolute disaster for young professionals.

According to Galloway, the office isn’t just a place to format Excel models; it is a feature, not a bug, of adult social development. It’s the ultimate “mating and dating” ground. Historically, one in three relationships began at work. It is where you find friends, mentors, and mates.

But Galloway goes a step further, pointing out that the push toward remote work has collided with a broader anti-socializing movement. His blunt advice to 20-somethings? The long-term medical risks to your liver from having a few beers are entirely dwarfed by the catastrophic mental and professional risks of social isolation. His prescription is literal: get out of the house, go to a bar, drink more, and make a few mistakes. Because the alternative is sitting in a 600-square-foot apartment, alone, while your social and professional skills completely atrophy.

The Kicker: The COVID Cohort Comes of Age

Here is where the demographic tidal wave truly hits the shore.

Think about the kids graduating from college right now, entering this exact economic meatgrinder. These are the exact same kids who were in high school during the 2020 and 2021 lockdowns.

We took their formative social years and replaced them with screens. We actively discouraged them from gathering in physical spaces. Now, they are graduating into a white-collar economy where the entry-level jobs are scarce, the ones that exist are remote, and the cost of living is punishing.

The social muscle memory simply isn’t there. A study comparing generations found that today’s 15-to-24-year-olds spend barely half the amount of time socializing in person as Millennials did at that exact same age.

This is an existential threat to breweries and bars. Beer is fundamentally an acquired taste, and that taste has historically been acquired through forced social repetition. You drank it because that’s what everyone else was drinking at the table while you blew off steam about the commute. Without the physical office to force the proximity, and without the entry-level income to fund the outing, that repetition never happens. The result? Craft beer’s rate of sale has recently fallen by over 10% year-over-year, with a sharp drop-off in adoption among 21-to-34-year-olds.

The Takeaway

As the older generation of craft beer drinkers ages out of the taproom, the replacement rate isn’t just slowing down—it’s falling off a cliff.

The traditional happy hour was never really about the alcohol. It was a physical “third place” subsidized by corporate friction and entry-level disposable income. It was the necessary decompression chamber between the physical office and the physical home.

When you eliminate the friction with AI, eliminate the office with remote work, and price the young worker out of the neighborhood, you don’t just change the labor market. You eliminate the happy hour. For the hospitality and real estate sectors relying on that 5:00 PM to 7:00 PM pop, the writing isn’t just on the wall. The wall has already been automated.

This is bleak. But it’s anything but certain. In the coming weeks, I’ll take a look at the counterpoints to this dystopian picture of the future of the industry. Stay tuned.

Micro Brews, Macro Views,

Dave

I’ve spent the last couple months trying to figure out exactly what Illiquid Assets is supposed to be. Is it a brewery operations manual? A macro-economics deep dive? A finance guy’s diary?

The answer is: Yes.

I used to worry that not having a “lane” was a bug. But looking back at my career, I’ve realized it’s actually the feature. My entire professional life has been a series of pivots, humbled egos, and “one foot out the door” moments that somehow landed me exactly where I need to be.

The Small Pond Fallacy

I was raised in East Jordan, Michigan. In a graduating class of 83 kids, if you can solve for X, they tell you you’re an engineer. I believed them. Then I got to Grand Valley State and realized that every other high school in Michigan had sent their own “Math and Science Guy”. Or more likely, 20 of them.

When the guys in the front row are doing differential loops around you in Calculus, you have two choices: stay and drown, or pivot. I pivoted. I liked the outdoors. I liked science. I moved to Natural Resources Management.

I liked the classes, but I didn’t want to work for the government—which was lucky, because the state was on a hiring freeze anyway. I was moving forward, but I had no idea where the destination was.

The 100-Hour Grind

While finishing my degree at GVSU, I found I really liked the “science of the surface” while working at The Meadows golf course. I decided to double down. I finished my Bachelor’s while simultaneously grinding through a two-year Turfgrass Management program at Penn State.

I became an Assistant Superintendent at Cedar Chase. If you want to know what “illiquid” feels like, try working 100+ hours a week in the summer for terrible pay, chasing a “dream” course of your own. It’s the kind of job that works when you’re young and hungry, but I could eventually see that the path didn’t lead where I wanted to go. But, it taught me how to grind in a way that would serve me very well later as a business owner.

The Eight-Year Wait

I moved to athletic turf at a local high school, thinking I’d found the “forever” spot where I’d eventually take over. I spent eight years waiting for the man in charge to retire. He had one foot out the door for nearly a decade... but he never actually stepped through it.

Lesson learned: You can’t build your future on someone else’s timeline. Seeing the writing on the wall, I went back to my environmental science roots and joined the Ottawa County Department of Public Health.

The Pivot and the Hedge

I excelled in public health, but the “fumble” continued—I started the brewery while I was there. One foot in the office, one foot in the mash tun.

Then 2020 happened. COVID hit, the world locked down, and suddenly my “liquid” business (the brewery) felt very fragile. I didn’t know if we were going to make it, and I wanted options if I was forced to do something else. That’s when I began working on my MBA.

Today, the MBA is done, and I still have one foot in that finance/economic lane and one foot in the brewery. I think I’m just built to fumble my way through things until I find what works.

The Advice from “Mount Rushmore”

As I was fumbling through the launch of this blog, I reached out to my personal “Mount Rushmore” of finance bloggers—guys who started as voices on the internet and have since become friends, Ben Carlson (of A Wealth of Common Sense), Michael Batnick (of The Irrelevant Investor), and Josh Brown (of The Reformed Broker).

**Give me a second to pick up those names I just dropped.

Ben’s take on what this should look like definitely resonated with me:

“...documenting what it’s like to be a small business owner and what it’s like to run a brewery would be really fun to learn about. I think the real-life stories and examples resonate with people.”

That’s the mandate. This blog isn’t about being a “guru.” It’s about being a practitioner.

The Case for Sucking at Something

If there is a takeaway message in all this career-hopping and blog-fumbling, it’s this: Try things you’ve never done.

If you’re fortunate enough to be in a place in your life where you’ve already checked off a lot of the things you have to do, and you haven’t tried anything new in a while... try something. Try something you might actually suck at.

Like writing a blog.

You never know what you might find when you’re willing to be a beginner again. For me, it’s a way to organize my own thoughts and stretch my wings on bigger issues than the ones directly in front of me. It’s about being authentic, even when it’s unpolished.

What’s Next?

So, look for a mix. Some days it’s economics. Some days it’s brewery updates. And, coming soon, I’m going to start a mini-series on the absolute chaos of opening the brewery. People have told me I should write a book on it; for now, you’re getting the “Director’s Cut” right here.

Thanks for coming along while I find my voice. It might be a fumble, but those are usually the plays where the most interesting things happen.

Micro Brews, Macro Views

Dave

Total sales for the day? $130. For a business with the overhead of a production brewery, that is a sobering number. It was our worst weather-affected day in recent memory. But the silence wasn’t a mystery; it was the result of a successful experiment coming to an end.

For the last several months, we hosted a local dart league on Wednesday nights. We did it because Wednesday—once our strongest “Mug Club” night—had softened. We needed to inject new energy and find new regulars. In that regard, the league was a win. We met great people, some of whom have become consistent faces in the taproom even when they aren’t throwing.

But the league was too successful. It physically dominated the space. If you weren’t on a team, finding a seat was a gamble, and the energy in the room was dialed up to a level that made a “quiet pint” impossible. Without a doubt, these are good problems for a nine-year-old business that has been forced to reinvent itself again and again.

We solved the Wednesday problem in the short term, but in doing so, we inadvertently “trained” our non-dart regulars to stay home. We broke their habit. Now that the league has wrapped up for the season, we are left with the void: the dart folks are taking a well-earned break, and the “old” regulars are still operating on the assumption that Wednesday is “Darts Night.” I already have plans on how to get the room full again on Wednesday, but this is the dance.

Welcome to the Experience Treadmill.

The Death of “Good Enough”

In the early days of the craft beer boom, the business model was simple: Make good beer, turn the lights on, and wait.

Those days are over. In a world of infinite options and inflationary pressure, “good product” is no longer a differentiator; it is the entry fee. To get people off their couches and into your seats, you have to offer an experience. Trivia, live music, dart leagues, fundraisers, euchre—we’ve done it all.

But there is a hidden cost to this innovation. When you move from being a “Product” business to an “Entertainment” business, you stop being a part of someone’s daily habit and start being an “event” on their calendar.

The Macro View: Tentpole Churn

This isn’t just a brewery problem. It’s a structural challenge for almost every modern business, even huge corporations.

Look at Netflix. The streaming giant spends billions on “tentpole” content—shows like Stranger Things or The Mandalorian (for Disney+). These events drive massive spikes in new subscriptions. Wall Street cheers the growth.

But the moment the season finale airs, the “Experience Treadmill” kicks in. A significant percentage of those new users cancel. They weren’t loyal to the platform; they were loyal to the event. This forces the streamers into a “Red Queen” race: they have to run faster and spend more every year just to keep their subscriber count from shrinking. They’ve trained their customers to “binge and bolt” rather than stay for the library.

On a smaller scale, look at Boutique Fitness Studios. A local yoga studio might bring in a “Star Instructor” for a specialized 6:00 PM Wednesday class. The room is packed, and the revenue per hour is at an all-time high.

But the “logistics of success” kick in. The regular members who used to come at 6:00 PM for a quiet, general workout find the room too crowded. They can’t get their favorite spot. After three weeks of feeling “dislocated,” they find a new gym. When the Star Instructor eventually moves on or the class ends, the studio owner looks around and realizes they didn’t just lose the class; they lost the “background” members who were the foundation of the business.

The “Responsive Tax” on Habits

In my previous post, I talked about the “Responsive Tax”—how small businesses are held to a higher standard because we have a face. The same applies to habits.

In economics, we talk about Switching Costs. Usually, this refers to something like the difficulty of moving your data from an iPhone to an Android. In the world of small business, the switching cost is mental. A regular’s “habit” is a moat. It protects your business from the competition. But that moat is fragile. It takes months to build a Wednesday night habit and only one or two “inconvenient” experiences to break it. If a regular drives to the brewery, sees a full parking lot or a taproom taken over by a league, and keeps driving—they’ve just lowered their switching cost to zero.

By solving our Wednesday revenue problem with an event, we unintentionally lowered the switching cost for our “Mug Club” regulars. We gave them a reason to try the brewery down the street or, more likely, stay home and save the $20.

Re-training the Room

Before I go further, I want to be clear: we appreciate every single person who joins us for a night. Whether you are here to throw a high-ton in darts, spin a record on vinyl night, battle it out at trivia, or just sit quietly with a pint of your favorite IPA—you are the reason we do this. Every customer brings a different energy to the taproom, and we need all of it to keep this community engine running.

Innovation is mandatory. We will continue to host leagues and try new events. To ignore “programming” in 2026 is to choose a slow death.

But the lesson of the $130 Wednesday is that we have to be more tactical about how we innovate. We have to find ways to attract new regulars without “dislocating” the ones we already have and are therefore more sustainable. We have to ensure that our outreach events are sustainable.

This week, we are back to work “re-training” the room. We’re reaching out to those Wednesday regulars, reminding them that their favorite seats are open again. It’s harder to restart a habit than it is to keep one, but in this economy, the “habit” is the only thing that survives the treadmill.

Life, like a taproom, is about balance. You need the noise of the league to find new blood, but you need the quiet of the “Mug Clubber” to keep the lights on.

Micro Brews. Macro Views.

Dave

At Brewery 4 Two 4, we recently started using AI-generated images for some of our social media announcements. For a small business, it felt like a superpower—a way to bridge the gap between our humble budget and the glossy, high-production marketing of national brands. Suddenly, we had the professional capacity of a Fortune 500 company. We could create high-fidelity visuals for events that would have previously cost us thousands in photography and graphic design. That is money we’d rather spend on grain, hops, and our local payroll. But, I could see the problem coming. Weeks ago I began the blog notes for this very issue. Like everything AI, it got here faster than I expected.

The response? Initially, it was great. Engagement was up, and the posts looked sharp. But then the “Your AI images are destroying the world” comments arrived. I removed all of our posts featuring AI. I woke up this morning to brewery friends experiencing the exact same thing.

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The irony of these comments is thick enough to chew on. They were posted on Facebook and Instagram—platforms where you cannot scroll for fifteen seconds without being prompted to “Try Meta AI.” They were delivered via an algorithm that is entirely AI-driven, typed on a device that uses machine learning to predict every word, while the users likely spent their day being “nudged” by AI-driven recommendations from Netflix and Amazon.

But because we are a small business that actually responds to its customers, we are the ones who get the lecture. Welcome to the Double Standard of AI.

The Invisible Machine

The average consumer interacts with a massive, invisible AI apparatus before they even finish their first cup of coffee. But because it isn’t “visible” like a generated image, it doesn’t trigger the same moral outrage.

Consider your daily “Invisible AI” footprint:

• The Grocery Store: Your rewards account isn’t just a way to save fifty cents on eggs. It’s an AI-driven data harvester that analyzes your buying habits to generate “dynamic pricing” and personalized coupons.

• The Logistics: Large corporations like UPS and Amazon use AI to set efficient routes and warehouse staffing. This isn’t for your convenience; it’s to identify exactly how many human jobs can be eliminated to increase the quarterly free cash flow.

• The Financial Nudge: Your credit card fraud detection, your mortgage approval, and the high-frequency trades that dictate the value of your 401(k) are all managed by black-box AI algorithms.

Large corporations use AI in ways that are massive, invisible, and focused entirely on increasing shareholder value. Because you can’t “see” the megawatts being burned in a server farm in Virginia to predict your toothpaste brand, there is no public outrage.

But when a local brewery uses an AI image to tell you about a new beer? That’s where the line is drawn.

NIMBYism and the Inevitable

Locally, the pushback against data centers has reached a fever pitch. It’s on the news every night: packed planning commission meetings, heated public hearings, and a clear message of “Not In My Back Yard.”

I don’t think these people are being insincere. Most of them truly don’t want to live in an AI-driven world. They see the physical footprint of these data centers and they want to opt-out. But the reality is that the technological toothpaste is out of the tube.

Nvidia isn’t a $4 trillion company because this is a passing fad. This is the structural reorganization of the global economy. NIMBY may keep the server farms out of our specific township, but the infrastructure is going to be built somewhere. We aren’t going back to a world of paper ledgers and analog logistics. We are living in the cloud whether we like the view of the data center or not.

The disconnect is that the same people rallying against the infrastructure are still using the tools. They organize their protests on Facebook. They coordinate via Gmail. They use the very products they are trying to keep out of their backyards. They aren’t hypocrites; they are just caught in a transition where the tech is everywhere, yet they hope if they don’t see the building, they aren’t part of the machine.

The “Responsive Tax”

Small businesses are held to a higher moral standard because we have a face. This is what I call the “Responsive Tax.”

When you yell at a multi-billion dollar tech giant, you’re screaming into a hurricane. Nothing changes. When you yell at us, you’re yelling at the person who might be pouring your beer or sponsoring your kid’s Little League team.

Because we are responsible to our community, we have to adapt. We’ve pulled back on the “visible” AI images because the “distraction” isn’t worth the engagement. We’d rather have a quiet comment section than a moral crusade over a picture of a pint glass.

Behind the Curtain: The Choice That Isn’t One

But here is the hard truth: To stay competitive as a business, we have to use AI. In most cases, it’s not even a choice we make—it’s the water we swim in.

I use QuickBooks for our accounting. Every single day, AI algorithms are categorizing our expenses, identifying trends, and predicting our cash flow. I use Square for our Point of Sale. It uses AI for data analysis, sales records, and searching. If you have an issue with a transaction from a month ago, I can find it and fix it in under a minute thanks to Square AI, which allows me to tell the system exactly what I am looking for without a filtered search or manual hunting.

I didn’t “install” an AI to do these things. They are baked into the services I pay for just to keep the doors open. I literally have no choice but to use them.

And frankly, it feels a little gross that every business you touch uses it—and they might not even know it. But it’s here. Unless you are sitting in a yurt most of your day, there is a good chance that almost everything you interact with that is web-enabled is using some sort of AI.

It feels like we are being forced to hide the very tools that allow us to survive, while the giants use them openly to replace human labor with code. We are using AI to try and drive business that supports local jobs, while the massive corporations are using it to eliminate them.

The Coming Rationalization

We are currently at the tip of the spear. AI will change the landscape for all businesses—small and large—massively over the next 24 months.

I don’t know if most small business owners see the “rationalization” that is coming. The transition is going to be ugly. Large corporations will continue to use it to optimize their margins and “efficiently” replace human labor. Meanwhile, small business owners are being shamed for using it to simply look professional on a Facebook page.

To survive, we have to be smarter, faster, and more efficient than the giants. We have to use the tech. But if the double standard holds, the small business of the future will be a paradox: A facade of “artisan” hand-crafted simplicity on the outside, and a highly-optimized, AI-driven machine on the inside.

We’ll be using the tech to keep the lights on—just like every other business, whether they know it or not—we just won’t be talking about it in the comment section.

Micro Brews. Macro Views.

Dave

That’s the standard post-marathon tax. After 26.2 miles, your body doesn’t just ask “why?”—it demands an itemized receipt for the damage. Every staircase is a mountain; every chair is a trap.

Invariably, someone who hasn’t caught the endurance bug asks the obvious question: “Why do you do this to yourself?”

They see the soreness as a bug. I see it as a feature.

Because a marathon isn’t just a race; it’s a controlled, voluntary drawdown. It’s a way to train the mental reflexes you’ll need when life decides to throw a “hard thing” at you that you didn’t sign up for.

The Reflex Arc: From Mile 22 to March 2020

The same mental muscles you rely on to finish a 20-mile long run in the rain are the exact same ones you need to keep from panic-selling your portfolio when you’re down 30% going into a global pandemic.

When the world looks like it’s ending and the charts are bleeding red, the uninitiated react with their lizard brains. They see the “suck” and they want to escape it immediately. But the person who has spent months training for a race knows that the suck is temporary. Whether it’s a market crash, a 500-page textbook that feels impossible to finish, or a blow-up with a customer on one of my bartenders, the reflex is the same:

Acknowledge the pain.

Breathe through the panic.

Keep moving forward.

In finance, we call this “low time preference.” It’s the ability to withstand a temporary drawdown for a long-term gain. If you haven’t exercised that muscle in your personal life, don’t expect it to show up when your business is on the line.

The Macro Reality: Why Small Businesses Fail

The statistics are cold. According to the Bureau of Labor Statistics, roughly 20% of small businesses fail in their first year. By year five, that number is 50%.

Most assume these businesses fail because of bad math. And while the spreadsheet matters, a lot of those failures are actually endurance problems. Business is hard, and it’s not supposed to be easy. If it were, the “Alpha”—the outsized reward of ownership—wouldn’t exist. You are paid, in part, for the amount of difficulty you can stomach.

If you haven’t built up your “mental antibodies” to hardship, the first time you hit a real pothole, you’re going to fold.

18 Months of Hell

Before we ever poured a pint at Brewery 4 Two 4, we hit every pothole in the book. Funding issues, liquor control delays, construction nightmares—if it could go wrong, it went wrong at the worst possible time.

We had already signed the lease when our funding fell through. For eight straight months, my entire day job paycheck went to paying rent and keeping the lights on in a cold, empty shell of a building where nothing was happening.

When we finally got rolling, the “double life” began. From February to July, my schedule was a relentless grind:

8:00 AM – 4:00 PM: Day Job (Environmental Health Supervisor)

4:00 PM – Midnight: Brewery Build-out

Weekends: 16-hour days of manual labor.

In the middle of this chaos, my wife became pregnant with our son (which wasn’t supposed to be possible). When we finally opened the doors in July, I didn’t get a vacation. I had a newborn on the way in 6 months, a day job I still needed, and a brewery that required me to do all the brewing myself.

That schedule—the 100-hour weeks, the sleep deprivation, the two-job hell + newborn—stayed in place for an entire year after we opened.

Was it harder than a marathon? Absolutely. But the skills I used to survive that year and a half were the exact same “stick-to-it” reflexes I developed during years of training. Giving up Friday night fun for 5:00 AM Saturday long runs wasn’t just about fitness; it was a vaccine for the “startup suck.”

The Modern Grind: School and the Home Front

The struggle doesn’t end once the business is stable; it just changes shape.

This past December, I finally finished my MBA. It was the end of a three-year odyssey where I was juggling course load and case studies while simultaneously acting as the head brewer and managing the brewery’s operations—a workload that is traditionally a two-person job.

In the middle of that professional grind, life requires a high degree of tactical flexibility. My wife’s career in food safety has been incredibly successful, but it requires her to travel extensively. That means when she’s on the road, I am the “boots on the ground” for our eight-year-old.

It’s a different kind of endurance test. It’s the ability to pivot from a grain inventory and orders to school pickups and swim lessons, all while maintaining a steady supply of mac and cheese. It’s not “balanced,” and it’s certainly not easy. But I’ve realized that the mental endurance built in the brewery and on the pavement is what allows me to hold that line at home.

Working hard at things that aren’t your business—like training for a race or grinding through a three-year degree—is the vaccine for the difficulties you’ll run into inside your business. …calm down RFK it’s a metaphor.

Seek the Struggle

If you are an operator or an investor, waiting for things to get “easy,” you are waiting for a market that doesn’t exist.

Difficulty doesn’t just happen to you; difficulty increases your ability. But here is the secret: it doesn’t have to be a marathon. You don’t need to sign up for 26.2 miles to build these mental antibodies.

Maybe it’s getting to the gym to lift weights on the days you’d rather stay on the couch. Maybe it’s forcing yourself to sit down and finish three pages of your book every single morning before the world wakes up. Maybe it’s the quiet, daily discipline of sticking to a healthy diet when everyone around you is taking the easy route.

It doesn’t matter what the “thing” is; it just has to be challenging. It has to require you to tell the lazy part of your brain to shut up and get to work.

The most successful people I know voluntarily seek out the suck in some form. They do this because they want to be stress-inoculated. When the “real” problems show up—the lawsuit, the supply chain break, the economic downturn—they don’t panic. They just look at the situation and think: “I’ve felt worse than this at 5:00 AM on a cold Tuesday. Let’s get to work.”

Micro Brews. Macro Views. (And some Epsom salts).

Dave

In my younger years, I wasn’t exactly operating with a long-term time horizon. In fact, I did plenty of dumb things. Perhaps a plethora of dumb things if I am being honest.

Like most people in their early years, I lacked the perspective to see that the world didn’t revolve around my immediate needs. I was a good kid at heart, but I hadn’t yet realized that the most valuable asset you can own isn’t on a balance sheet—it’s the impact you have on the people around you.

The shift didn’t happen in a classroom or an office. It happened on a basketball court.

I spent 14 seasons coaching high school basketball. If you want to see the unvarnished reality of human development, go coach teenagers for a decade and a half. You see exactly what works and what doesn’t. You see how character compounds over time—or how a lack of it often leads to a total collapse.

It was sometime during those years that I fumbled my way to a principle that I’ve since carried with me. I can’t put my finger on where I first heard it; I definitely wasn’t reading Marcus Aurelius, who famously said, “Always do the right thing. The rest doesn’t matter.” Hell, I wasn’t reading much of anything in those days. Which might be why I tend to recite a version that sounds less like a Roman Emperor and more like something Richie Cunningham would say to the Fonz: Doing the right thing is always the right thing.

The Compounding Miles

This coming Sunday, I’m lacing up for my sixth marathon.

My first was back in 2007. I wasn’t running to set land speed records; I was running to raise money for the A-T Children’s Project, a charity searching for a cure for a rare childhood disease called Ataxia-Telangiectasia.

There is a specific kind of “lift” you get when you use your able body to support those who aren’t as fortunate. It was my first real lesson in the fact that physical capital (my health) could be converted into social capital (funding for a cure).

But the road between that first race and this coming Sunday wasn’t a straight line. In 2021, I hit a massive pothole. I developed an autoimmune issue that essentially froze my ability to run long distances or train at high intensities. For a few years, my “able body” wasn’t so able.

In the world of finance, we talk about “asset impairment”—when something you rely on suddenly loses its utility. When your health is impaired, you realize very quickly that you don’t know what a blessing it is until it’s gone. It was only early this year that the issue resolved enough for me to start stretching my distances again.

That period of being sidelined reinforced the principle for me: You don’t wait until things are perfect to do the right thing. You put your able body to work when you have the ability to do so. Because that ability is a gift, and it can be revoked without notice.

That is why this Sunday isn’t just about 26.2 miles of pavement; it’s the culmination of our Miles for Meals fundraiser at the brewery. By lacing up while I can, and leveraging our platform at Brewery 4 Two 4, we’ve been able to raise over $6,000 so far, for Kids Food Basket. You would be awesome if you added to that total by making a tax deductible donation here.

Character, much like a well-managed index fund, has a way of compounding if you just keep showing up. One race in 2007 becomes a habit; a holiday fundraiser with close friends eventually raises nearly $50,000 all-time; and a brewery promotion turns a Sunday morning run into thousands of meals for local kids with food insecurity. By staying consistent and rallying a network of like-minded people, the ROI moves from a “runner’s high” to a measurable community impact.

Every year I do this, I’m reminded that the sense of purpose you get from moving the needle for someone else is a high that no sales record can match.

But then, I became a business owner. And the math changed.

The Startup Trap: “I Can’t Afford to Give”

When you launch a business with six figures in debt and a negative net worth, “doing the right thing” feels like a luxury you can’t afford.

The internal voice tells you that every dollar should stay in the register. It tells you that you’re in survival mode, and survival mode is a zero-sum game. If you give a dollar to someone else, that’s a dollar less for the light bill.

But that is exactly when the philosophy has to take over.

Over nearly nine years at Brewery 4 Two 4, we’ve hosted more fundraisers than I can count. Like any local business, we get hundreds of requests a year. We could say no to all of them and save a few bucks on the margins. Instead, we’ve found a way to move the needle by recruiting our customers into the process.

From the local Humane Society and the Alzheimer’s Association to this week’s push for Kids Food Basket, we’ve tried to turn the taproom into a community engine.

The Win-Win-Win

In finance, we look for “Alpha”—that extra edge that beats the market. In small business, “doing the right thing” is the ultimate Alpha. It creates a Win-Win-Win scenario that a corporate algorithm can’t replicate:

1. The Charity Wins: They get a financial bump and a platform to tell their story.

2. The Customer Wins: They get to feel good about spending their hard-earned money at a place that shares their values and supports their community.

3. The Business Wins: We get exposure to new networks, build deeper trust, and create a culture that people actually want to be a part of.

This is the “Network Effect” of character. It’s not just “giving back”; it’s building a moat around your business made of community loyalty.

The Small Business Advantage

This is why supporting small business is a necessity.

Can a massive, publicly traded company support a community? Sure. But they have a fiduciary duty to maximize shareholder value. When a global conglomerate writes a check to a local charity, it’s almost always filtered through a PR firm and a marketing budget designed to drive a specific KPI. It’s a transaction.

For a small business, it’s not a transaction; it’s a testament.

When we support the local GoFundMe for a neighbor in trouble, we aren’t doing it for the “reach.” We’re doing it because we live here. We’re doing it because doing the right thing is always the right thing.

If you’re waiting until your balance sheet is perfect to start doing the right thing, you’re looking at the wrong chart. Character, like interest, compounds. Start early, do it often, and ignore the rest. You may end up wealthy in ways you didn’t know you needed.

Micro Brews. Macro Views. (And a Pint for a Good Cause).

Dave

If you have clicked on any hacky local news reports about the beer industry, you probably walked away convinced that the beer industry is currently being loaded into a dumpster and set ablaze.

The headlines are relentless. They’ll tell you that Gen Z has abandoned the pint glass for legal cannabis and canned espresso martinis. They’ll show you data on the “Great Craft Shakeout”—the stories of regional pioneers selling off their shiny 30-barrel brewhouses for pennies on the dollar to satisfy a bank that stopped believing in the “craft dream”, and called their loan, somewhere around 2021.

When you’re standing in the trenches, or in the cold room as it were, it’s easy to catch the contagion. It feels like the “Gold Rush” isn’t just over; it feels like the mines have collapsed.

To see why the panic is so high, you only have to look at the “industry proxy.” In the world of finance, we look for a stock that represents the “mood” of a sector. For beer, that’s often $STZ Constellation Brands. The company that gobbled up craft breweries that were proudly independent, including the face melting acquisition of Ballast Point Brewing in 2015 for 1 billion freaking dollars. The sale that was was the spark that became the inferno of every mid-major craft brewer dreaming of a 10 figure buy out. Constellation sold Ballast Point for a mere 41 million only 4 years later.

Take a look at the five-year chart. It’s rough.

If you bought STZ in 2021 thinking the post-pandemic “Roaring Twenties” would last forever, you’re currently nursing a world-class hangover. From that perspective, the sky is absolutely falling. The growth has stalled, the “easy money” is gone, and the “vibes” are at an all-time low.

In the brewery world, this chart represents the “pothole” I talked about in my last post. It’s the sound of the door not swinging open as often as it used to. It’s the realization that the days of opening 1,000 breweries a year—a pace that defied every law of economic gravity—are officially dead and buried.

But there is a rule in the world of asset management that every small business owner should get to know:

When in doubt, zoom out.

When you stop looking at the last five years of “market noise” and look at the last twenty years of “market reality,” the narrative changes instantly. I suppose you could call it lost decade… if you ignore the nearly 10x you got in the 4 years preceding that.

What we are witnessing isn’t an extinction event. It’s the brutal, necessary process of a market finding equilibrium.

Recency Bias is a Hell of a Drug

Financial often talks about (and then throws out the window) “Recency Bias”—the human tendency to believe that whatever happened lately is going to keep happening forever.

When the craft beer industry was growing at 15% a year and Constellation was minting money with the Modelo acquisition, everyone assumed the line would go to the moon. When the pullback hit, the bias flipped: now everyone assumes the line goes to zero.

But look at that 20-year chart again.

In 2005, there were roughly 1,400 breweries in the United States. Craft beer was a niche interest for people who liked to talk about IBUs and wear cargo shorts. Constellation Brands was trading at a split-adjusted price of around $15.

Fast forward to today. Even with the “shakeout” and the “dumpster fire” headlines, there are over 9,000 breweries. STZ is trading at nearly 15x its 2005 value.

The industry isn’t “dying.” It’s just no longer a startup.

If you bought a house in 2005 and it tripled in value, but then dropped 15% this year, you wouldn’t say your house is a “dumpster fire.” You’d say you’re still up significantly on your original investment and the market is cooling off.

The problem is that the “Micro” view of the brewery—the day-to-day grind of sales reports and ingredient costs—makes us hyper-sensitive to the 15% drop. We forget that the foundation of the industry is actually 10x stronger than it was when the revolution started.

We are suffering from a collective case of forgetting where we came from. We’ve had it so good for so long that a return to “level” feels like a catastrophe. But “level” is where the sustainable businesses are actually built.

The sky isn’t falling. The ceiling is just lower than it used to be.

The Gold Rush Fallacy

In the world of investing, there’s an old saying: “A rising tide lifts all boats.” Between 2012 and 2018, the tide in the craft beer world wasn’t just rising; it was a goddamn tsunami.

During that window, you didn’t need to be a financial wizard to run a successful brewery. You didn’t even necessarily need to be a great brewer. You just needed to be there. The demand was so ravenous that the “Gold Rush” felt permanent. We were opening 1,000 new breweries a year because the consumer’s appetite for “new” and “local” felt infinite.

But as Warren Buffett famously said, “Only when the tide goes out do you discover who has been swimming naked.”

The current “shakeout” isn’t a sign that the product is bad, or that customers all at once gave up on craft beer. It’s a sign that the business model of the Gold Rush era—the idea that you can scale indefinitely on hype alone—was a fallacy.

A lot of the breweries closing today aren’t victims of a dying market; they are victims of a maturing one. They are the businesses that over-leveraged when rates were near zero, or the ones that never learned how to manage a P&L because they never had to when the growth was 20% a year.

In finance, we call this “mean reversion.” After a period of extreme, unsustainable growth, things eventually return to the long-term average. It feels like a crash because we got used to the “too easy” era. But if you zoom out, this is just the industry professionalizing.

The “hobbyists” are being weeded out, and the “operators” are taking their place. Those who can survive this equilibrium—the ones with the sharp pencils and a long-term view—are going to inherit an industry that is still massively larger and more influential than anyone would have dreamed possible back in 2005.

The Gold Rush is over. The real work has finally started. The ones who were conservative during the boom and had a long-term sustainable plan will survive. Those that got stuck in the “dying middle” won’t.

Finding Our Level

It’s easy to get lost in the noise of a five-year correction. It’s a lot harder—but much more productive—to look at the twenty-year transformation of an entire culture.

The craft beer industry isn’t disappearing; it’s finally growing up. The era of “accidental success” has been replaced by an era that rewards discipline, data, and actually knowing your numbers. If you’re feeling the squeeze right now, it doesn’t mean the sky is falling. It means the floor has finally been set.

I belong to a Facebook beer group where the news of another brewery closing has become a weekly ritual. Every time it happens, my contribution to the thread is usually a GIF of Homer Simpson wearing an “The End is Near” sandwich board. It’s (mostly) tongue-in-cheek. But the next time you see a headline predicting the collapse of the industry, take a breath and look at the long-term trend. The market is finding its level, and for the operators who are paying attention, the foundation is stronger than it’s ever been. Not to say that can’t and won’t change. But for now, the big picture of the past 20 years looks pretty good.

Micro Brews and Macro Views,

Dave

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Welcome to Illiquid Assets

This is a space dedicated to the intersection of markets, macroeconomics, and the challenging reality of running a small business. It’s about bridging the gap between the ticker and the taproom. This is why I’m doing it.

The Graying of the Taproom

Far be it from me to throw shade at the “silver foxes” out there—the folks sporting that distinguished salt-and-pepper look, leaning into the George Clooney phase of life. I’m right there with you. But as a brewery owner, I’ve realized there are profound economic insights to be gleaned from the amount of “snow on the peaks” of my patrons.

If you want to know what the American economy is actually doing, stop looking at the Bureau of Labor Statistics jobs report for five minutes. Put down the FRED chart. Instead, come stand behind my bar on a Saturday afternoon at Brewery 4 Two 4.

The air is thick with the smell of boiling wort and the sound of 90s alternative rock, but the real data is in the demographic shift. The craft beer industry was grown on the backs of millennials in skinny jeans and hipsters with meticulously groomed beards. Ten years ago, the “taproom vibe” was a sea of twenty-somethings looking for the latest triple-hopped hazy IPA.

Today? That sea is looking a lot more like a retirement community happy hour… which frankly sounds better than an army of dudes in ironic suspenders and handlebar moustaches.

This isn’t just a shift in musical taste or a trend in facial hair; it’s a glaring, real-time indicator of the “K-shaped” economy we’re living in. In the MBA textbooks I just finished, they talk about “Consumer Sentiment” as if it’s a monolithic force—a single line on a graph that dictates the fate of the S&P 500. But from where I’m standing, the consumer isn’t a monolith.

Behind the bar, I see two distinct worlds.

On one side, you have the younger customer who used to be the beating heart of this industry. And yes, there is a laundry list of reasons young people are moving away from beer—which we will get into in future posts—health concerns, lingering pandemic pattern changes, and legal cannabis being just a few of them. Long story short, that demographic is shrinking… quickly.

I think one less-discussed issue in our industry is the shrinking amount of discretionary spending younger people have. Nowhere do rampant inflation, skyrocketing housing prices, and higher interest rates hit harder than those just getting started. For those customers, trying the newest dumb pastry stout I put out at $7 for 8 ounces probably doesn’t seem like a great use of scarce resources. For this demographic, they have been living in the “recession” the headlines have been predicting for three years.

On the other side, you have the Silver Foxes. These are the folks whose homes are either paid off or refinanced with a 3% mortgage, whose 401(k)s have been riding the longest bull market in history, and whose “safe” money has been yielding 5% in a money market account for the first time in their lives. To them, the price of a beer doesn’t move the needle. Their assets are doing the heavy lifting, and their “wealth effect” is my most reliable sales indicator.

One group is watching the windshield; the other is enjoying the view. Trying to make sense of that friction from my perspective—with one foot in the world of finance and the other firmly behind the bar—is exactly why I’m starting Illiquid Assets.

The Windshield vs The Rearview Mirror

I just finished my MBA with a Finance specialization. I have the diploma and a head full of formulas, but there is a massive gap between a finance lecture and the reality of standing in the cold room of a brewery on a Monday morning.

In academia, you spend most of your time looking in the rearview mirror. You analyze case studies of companies that failed a decade ago. You look at economic data—GDP, CPI, Unemployment—that is already weeks or months old by the time it hits the headlines. It’s safe. It’s detached. It’s clinical.

But when you own a small business in a struggling, high-stakes industry like craft beer, you don’t have the luxury of the rearview. If you spend too much time looking back, you’re going to hit a pothole. And like our roads during the current freeze-thaw cycle here in the Midwest, those potholes are everywhere.

Running Brewery 4 Two 4 requires looking through the windshield.

Out here, the “rubber meets the road” every single day. One misstep—a bad equipment purchase, a failure to see a shift in consumer taste, or misjudging the “vibe” of the local economy—might be your last. I’m not just processing sales reports; I’m trying to skate to where the puck is going out of pure, unadulterated necessity.

I’m starting this blog because I realized that the most interesting insights aren’t found in the stale data of the past. They’re found in the “windshield” view: the real-time decisions that small business owners make while the “macro” guys are still arguing about last month’s numbers.

Why Illiquid

In the finance world, “liquidity” is king. If you don’t like a stock, you click a button and it’s gone. You can pivot your entire portfolio in the time it takes to brew a pot of coffee.

But my business is built on Illiquid Assets.

When you own a small business, there is no “sell” button. When a global pandemic hits or the craft beer industry starts to feel the squeeze, you can’t just exit the position. You have to figure out how to pivot, how to grind, and how to keep the liquid flowing when the macro environment is trying to slam the tap shut.

I started my MBA during the height of COVID because, frankly, I wasn’t sure the brewery was going to make it. I wanted to choose a new career path rather than being forced into one by a failing business. We went through a few dark years, but we are starting to thrive again. It’s just a different sort of thriving. Gone are the days when you could just “make great beer” and expect a line out the door. Success now requires a much sharper pencil and some real creativity to get folks through the door. Not to mention the math doesn’t math on a small brewery like it once did.

For the last three years, I have had the amazing opportunity to attend the Future Proof Wealth Festival in Huntington Beach—the largest gathering of financial professionals in the country. I’m definitely an “outsider” there. I’m the guy who isn’t a portfolio manager or an RIA; I’m the guy stacking grain bags while listening to finance podcasts. I expected people to ignore me; instead, I found a sea of professionals who were excited to discuss the “real” economy with a small business owner. Being in a “fun” industry helps open the door, but the conversations were always substantive and thought-provoking. I thrive when I can stretch those intellectual muscles—and it gives me a place to do it without boring my wife to tears.

This blog is my outlet for those conversations.

Illiquid Assets is my way of thinking out loud. Sometimes it will be thoughts on the macro economy and how it impacts small business. Sometimes it will be stories from the trenches and our early days (and there are plenty of those). It’s a space where I hope to interview other business thinkers—owners, brewers, and financial professionals—to see what they see through their own windshields.

I’m not here to give you more stale data. I’m here for the Micro Brews and the Macro Views.

Cheers,

Dave

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