Hey, Iâm Casey. Thanks for reading our newsletter, sharing the startup journey of Kamui Whisky K.K. Weâve been busy, but when we arenât overwhelmed, weâll share a story as we craft up a whisky distillery on a remote, volcanic island in the most northern part of Japan.
This post was originally written in February. More time-specific posts took precedence and were published first, plus we had a big problem in May1 that stopped production for a while, causing serious stress on the business, which also contributed to this post being pushed back until now.
In the more honest startup stories you hear about how the founder almost ran out of money, or was so anxious not knowing how they would make payday, or had months or years of stomach problems because of the financial stress and uncertainty. Iâve had those worries here.
Rishiri is romantic. But it has very hard to start a new business. More level-headed people not caught up in my visionary hallucinations could project the financial troubles from logistics and sourcing a mile off. Several people tried to warn me off the project. Our construction ran long and over cost. About 40 - 50% over cost. The importing of distillation equipment was slow and troubled with custom and storage issues. Sourcing of ingredients came with a surprising âRishiri shipping taxâ due to the last leg of the logistics. Then it took much longer to get our license than we had planned, which meant revenue creation was delayed until we could receive it.
All this added up to a cash crunch early last summer (2022). It was scary. There were moments when I pile of big new bills came in. We were at the penny end of our startup funding. I didnât know how we were going to pay them all. I remember having an honestly scary talk with my 20 year old.
But, we got through that initial startup valley of financial death. All our bills are paid, we are fully up-to-date2. And, while it might be an obvious thing that you have to pay your bills, now I have an unexpected feeling. Itâs a deeply satisfied feeling. Paying bills makes me happy. We are surviving, starting to thrive in multiple areas, and we are making a positive impact on our community. We are sending money to people and small businesses that will help them. Trying an outlandish, and honestly very hard, idea to build a whisky distillery on Japanâs northernmost, very remotely island, is coming good. We will make it.
We donât, and wonât, produce gin or any of the other instantly ready spirits that many startup distilleries make to get cash. We only make whisky. Which means we will be unprofitable for some time; likely until 2026 when we have a first significant3 release of Japanese Whisky4. Until then, thanks to the belief of our Ownerâs Barrel buyers5, and the strong reception of our çĽĺą ĺé , and the Japanese governmentâs supportive subsidies for startups, we will survive.
I want to say a big, public âThank Youâ to a couple of our vendors, who kindly allowed us more time and flexibility to pay some of those first really big bills. Thank you. There was a few weeks there when we had to call around and ask for more flexibility and grace to be able to settle accounts. We appreciate the kindness granted to us in that vulnerable startup moments.
From here, we will settle bills on time, if not quickly. And, in some cases very fast!
My Key Learning from an Executive MBA
Iâve forgotten nearly every thing I learned in my two years taking an Executive MBA at IE. At least, nearly every specific piece of information.
But, there is one specific line that still rings loud in my brain to this day. That line helps guide the way I run the company.
Surprisingly, to me, the learning came in an accounting course. Surprising because I didnât enjoy accounting, often struggling with all the technical steps required when solving accounting homework problems.
We were discussing a case study. The case study was about a business in trouble, some combination of supply chain problems and cash flow problems topped by a problem with the bank relationship. The professor had asked the class what the business owner should do. For the next hour the class had a bunch of recommendations from technical cash management strategies to communication strategies with the bank manager. The professor patiently listened, asked questions throughout, but at the end said something along the lines of âNo, those ideas are not what the business owner should do.â
âThe business owner should pay all of the vendors faster. Much faster.â
This blew my mind đ¤Ż. I sat in class quietly, but I was completely stunned that a conservative seeming accounting professor would recommend spending money faster when a company was in a very tight financial situation.
The gap in what I expected to hear and learn in an MBA accounting class and what this professor recommended was so large that the shock imprinted deeply in my brain.
The logic was that if the business owner paid their vendors faster there wouldnât be as many supply chain problems, they could manufacture quicker, and then turn that into revenues faster. By taking care of vendors they would be able to get to a better revenue situation, cash, much quicker.
It totally made sense. Particularly as my natural viewpoint on these type things is from the human aspect rather than a cold financial one.
Record Time to Pay an Invoice
Our current record time to pay an invoice is 4 minutes.
Iâm proud of this.
It took us just 4 minutes to pay an invoice from the time the pdf hit our inbox. It was an individual contractorâs invoice. Iâm guessing they felt special and loved because of the speed with which we paid.
Thereâs been other cases of 6 minutes, 40 minutes. Paying our invoices within minutes is not a rare thing here at Kamui Whisky K.K. We regularly settle invoices within a couple or hours, within a day, within a week.
Once in a while we are still a bit slow to pay an invoice6, but generally we try to pay as quickly as possible.
The Speed Hierarchy to Pay Invoices
Itâs not a hard rule, but I try to have individualâs invoices paid the fastest. It means more to them. Then the small businesses that support us. Then larger, more anonymous vendors. Then Assholes7.
Itâs Good to Pay on Time
Weâll probably have other financial pinches as we continue to build this whisky company in remote Rishiri. Itâs part of life for a startup. Itâs part of life for a growing business. At some moments we will take risks, and I know that the VUCA world wonât treat our risk taking with kid gloves. We might get caught out. Then there will be the whisky glut that is likely to come in the next 5 years. A lot, lot of whisky is being made in Japan now. The market might get saturated in the next 5 - 7 years. Prices may come down.
We have financial challenges ahead, but we will pay invoices on time8. We'll pay invoices fast whenever we are able. Paying our bills is not just the required thing to do, not just the responsibility of running a company, but itâs a satisfying thing to do.
I plan to write about it after some more time has passed. The trauma is still sensitive.
There is a flower đĽ bill that we still need to settle. Somehow the invoice from the florist got lost in the piles of paperwork. (Editorâs note: since the original writing of the post in February Iâm happy to report this has been paid đ)
âSignificantâ for us. It will be only a couple of thousand bottles. I expect it will sell out very quick.
Aged 3 years. There is a 3 year aging requirement to be called Japanese Whisky.
Our first 2 seasons of Ownerâs Barrels have been fully sold out. In our First Season, 2022 / 2023, we sold 22 Ownerâs Barrels. In our Second Season, 2023 / 2024, we have sold 20 (5 more than we planned). This upcoming year, our Third Season, we will reduce it further to 10 Ownerâs Barrels as we need to start producing more of our own Kamui Whisky K.K. owned barrels. Our waitlist is very long. The price continuing to go up hasnât seemed to effect the desire to be on the waitlist.
Iâm still the one settling every invoice, and once in a while I get into batch processing, or get bogged down by a stack of paperwork that slows down invoice settlements.
At Kamui Whisky K.K. we try not to have any relationship with Assholes. Even if they offer cheaper prices or might make things easier. We donât want anything to do with Assholes.
Of course, if we can :))
Quite a journey Casey. Itâs hard even for locals, and youâve seemingly tackled them graciously than most of us. With 2023 coming to an end in a few months time, I am still anxiously peering into my calendar and imagining what to do with our first bottle fresh from the barrel. I do need to pay a visit before that, I know. Keep the stories coming, youâre building a strong fan base undoubtedly ;)
Your whisky might find a market here in India, if you need some help with that, do ask.
https://www.indianwineacademy.com/articles/item_1_925/