Welcome to Illiquid Assets

Micro Brews, Macro Views

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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