I know people love the aroma of coffee. I know people love the experience of going to a coffeehouse and spending hours sipping freshly brewed coffee while poring over the paper or hanging out and catching up.
Let’s be clear: I am not one of those people. I like drip coffee served black that’s made quickly and efficiently. I exclusively drink decaf because I’m allergic to caffeine. And I don’t have time or patience for the whole coffee “experience.” In another LinkedIn post I wrote about “Why I don’t do coffee” as my best “productivity hack.” [That productivity tip didn’t go over so well on a networking site! (duh.)]
Given my preferences, and how I can be set in my ways, I understand that my recent investment in Philz—a coffee company and my only non-tech private investment—may be pretty surprising. Of course while I may be an unexpected coffee backer, I’m hardly alone in seeing an opportunity. After water, coffee is one of the most consumed beverages in the world. I’ve long been a fan of Starbucks and Howard Schultz who started the revolution in the way the world consumes coffee. We’re now seeing an evolution in coffee culture and in modern day coffee companies. Blue Bottle has attracted the attention of Tony Hawk and just opened to massive excitement (and long waits) in Japan. Philz just raised another $15 million and has a list of cool investors from Summit Partners to angels like Facebook’s CTO Mike Schroepfer, former Apple exec Ron Johnson, and rapper Snoop Dogg.
I was first introduced to Philz about 18 months ago when my son Kevin brought me a cup to try. “This has cream in it,” I said, thinking that my coffee was prepared incorrectly. “No, it doesn’t,” he said. I didn’t believe him so I took off the lid. He was right. I couldn’t believe how great it tasted!
That inspired me to check out the Palo Alto store. I found it filled with engineering people and artists. Everyone was very hip and deeply into their coffee. There was a strong cult-like enthusiasm for the place that had quickly become a Silicon Valley institution. It reminded me of the way people felt about Apple in the early days. And it had a compelling story.
As I learned more about the company, I became more intrigued. It was founded by Phil Jaber, a coffee aficionado who’s spent the past 25 years combining beans and perfecting blends to make a coffee that’s rich, smooth and low in acidity. Phil started selling his coffee door-to-door and then in his Folsom St. grocery store. His son Jacob grew up in the business, working there since he was a kid, when he had to stand on top of a milk crate to reach the cash register and ring up customers’ products. Though Jacob was an avid reader with voracious curiosity and a crack salesman, he never liked school. He left college after two weeks. That’s when his dad gave him the opportunity to build the coffee business from the ground up. He hustled, working 15 hours a day, giving out samples to everyone, even people stopped in their cars at red lights. The father/son team and the painstakingly perfected coffee created a loyal following.
Today Jacob is the CEO of Philz and tasked with scaling it as it opens up in new cities. (Philz just opened in LA and will next go to Washington, D.C.) He’s an energetic leader and rare visionary and approaching expansion right, first proving relevancy and then broadening out to other cities.
When it comes to scaling a company that handcrafts a cup of coffee one at a time without any machinery, expanding could be a recipe for disaster. But with the right approach and the right innovation Philz is on its way to the 10X return I expect from the tech companies I invest in—and it’s a lot less risky.
And, they already solved my impatience problem. Combining a dedication to customer service and an appreciation of technology Philz has a pre-order/pre-pay app that allows customers to order ahead from anywhere so they don’t have to wait in line. I can now an order from my phone and then just pop in to the store to find my coffee cup with my name on it waiting for me on the counter. My speed concern was resolved and the coffee was as stellar as always. With that, I think Philz also helped me upgrade my best productivity hack.