Four years ago, this is where Benny Fischer hoped he'd be right now: sitting in the lush offices of the Fischer Brewing Co., a profitable, publicly traded company turning out millions of cases of Redneck Beer and other specialty brews that Fischer created.
Instead, this is where he is: sitting with his lawyer in a windowless conference room in a small downtown office, explaining the whole sordid story of how he lost his business over a dispute with a financial adviser--a dispute mired in litigation that continues today.
Fischer is quick to point out that he still has not spent as much money on legal bills as he earned from his fledgling beer business. At least not yet. But that is about the only good news from this affair. It is otherwise an ugly tale that Fischer can hardly talk about, or hear his lawyer talk about, without wincing.
It is a disappointment more bitter than any aftertaste he could have imagined.
But first, the success.
It was 1990 when Fischer--a creative if hyper entrepreneur who has flitted from one business opportunity to another in his 44 years--came up with the idea for Redneck Beer. The term was just starting to be seen as a lighthearted cultural phenomenon and not as a disparaging joke about West Virginia. And microbrews were gaining in popularity. The combination seemed auspicious.
From the downtown office of his real estate brokerage, Fischer began sketching out the concept. He came up with a look for the bottle, identified a target audience, researched a pricing plan, developed a recipe, found a brewery, wrote a business plan and hired a former Miller executive to help him roll out the concept.
It took a ton of work, between real estate deals, but it was fun, and things seemed to go right at every turn. When Redneck first hit the market in August 1995, distributors reacted strongly to the beer, which Fischer had priced as an alternative to mass-market brews such as Miller and Budweiser. With posters, coasters and table tents extending the theme, Redneck sold extremely well, and by March, Fischer had sent 375,000 cases of beer to distributors in 34 states. The buzz and the media coverage were truly an entrepreneur's dream.
"I look back on it, and I'm extremely satisfied with what I was able to accomplish without any real experience in that business," Fischer says now, trying to portray some sense of perspective. "I created a brand and a product that pretty much covered the nation with a little office, one guy helping me and two secretaries."
In sum: "Up until the debacle, it was a gas."
"The debacle" had a specific starting point that Fischer remembers well. If the excitement of his initial success is what all entrepreneurs live for, what followed was the moment they all dread.
Fischer put his name to a contract he never should have approved, one that had not been reviewed by a lawyer, that signed away 15 percent of his company if it was ever sold or went public--and that would eventually cause his whole venture to fail. Even as he hit the button on the fax machine to send the contract back, he says he had a little voice in his head saying he should get a second opinion.
But he did not.
"Blunder of a lifetime," he calls it.
What Fischer had done was give 15 percent of his company to his good friend at the time, Howard Flax, if the company was ever sold or went public as the result of a connection provided by Flax. The need for this incentive was simple: Selling beer is almost entirely a function of marketing, and Fischer didn't have much of a marketing budget beyond his initial blitz. Distributors were demanding national advertising, and Fischer needed a quick infusion of cash to make that happen. He asked Flax--as well some other people--to help him find financing, and agreed to reward him handsomely if his efforts led to a deal.
Flax sent out background packages on Redneck Beer to dozens of potential investors and underwriters. Eventually, he got a call from Laidlaw Securities in New York, which was interested in Redneck. Fischer and Flax went to Manhattan to meet with Laidlaw, and they heard exactly what they wanted: Laidlaw thought the business could be taken public. Fischer's stake could have been worth more than $10 million.
But there was one problem. Securities rules would not allow anyone associated with the offering--including the underwriters and Flax--to take as big a chunk of stock in the company as Fischer had pledged to Flax. The contract that stood between the two men was, in short, a deal-killer for any initial public offering.
All of this is undisputed. But what happened next would be argued over in mountains of legal documents, in a court fight so bitter and internecine that it would make the script writers of "The Practice" marvel.
Fischer interrupts his lawyer, Howard Goldschmidt, as he recites the history of the case since the business imploded. "This whole thing to me is just so depressing," he says. "The bottom line is I keep hearing it would've happened if Flax hadn't been in the way."
After the problem of the contract was discovered, Flax's lawyers argue that Fischer tried to go ahead with the Laidlaw deal anyway. Fischer's lawyers argue that Flax had said, in essence, "Do the deal, we'll work it out."
But of course they never did. The two sides fought for several months over whether the contract was binding and how much Flax should get paid--until Laidlaw finally pulled out in June 1996. The IPO market for beer stocks had turned south, the underwriters said, and the window of opportunity was gone.
Flax's lawyers stand firm behind their position. "The contract that Mr. Fischer and Mr. Flax entered into was a valid and legal binding contract . . . even if it prevented certain types of financing from taking place," said David Schertler, the lawyer arguing Flax's case.
Fischer says he tried briefly to "make the company go somewhere," but gave up. He had made several hundred thousand dollars in profit, and he decided to just move on.
"I was numb for a while," he recalls. Then he filed suit. Flax countersued.
"It was not the money driving me," Fischer says. "It was that I've always been able to come up with creative ideas. Taking this to market and making it successful was as much what was driving me as making the money."
Describing what he feels now, Fischer could be standing in front of a victim's support group. "A lot of anger," he says. "It's like having your hand on the brass ring, and then losing your grasp."
It is almost irrelevant to the case that Flax died of cancer in 1998. The litigation rages on, on behalf of his estate. There have been claims and counterclaims, judgments and appeals.
There was a trial last October, but Fischer didn't put on a defense because of a variety of disputes between Fischer and the court. Even though Flax's lawyers were unopposed, the judge threw out most of Flax's case--including the breach of contract claim. A jury did decide in Flax's favor on the remaining piece of his case--finding that he should be paid for the amount of work he did--but Fischer has appealed. There will likely be another trial. Fischer has more lawsuits planned. It will likely go on for years more.
But for all the disagreements, there is one clear consensus between the two sides: Fischer never should have signed that document with Flax.
"That is the moral of this story," said Schertler, Flax's attorney. "If you're going to get into business agreements, you need to know the ramifications."
Fischer learned that lesson, and others, he says. That's the value of a business that fails--you learn from it. His office is full of plans and paraphernalia from other ventures, some successful, some not. He recently bought the local franchise for pizza chain Papa John's, and sold it quickly for a profit. But nothing he's done can compare to the promise of Redneck Beer.
"I just wish I could live to be 200 years old," he says, laughing. "Because the longer I live, the more I learn, and eventually it will all come together."
If you know about an interesting entrepreneur or small business, send your suggestions to email@example.com. And tune in to Margaret Webb Pressler's business report weekday mornings on "News 4 Today."