No Experience Necessary -- Just Midwestern Charm
James Freeman was a burned out clarinet player when he decided to become a coffee entrepreneur. He knew nothing about coffee (other than that he was obsessed with it) and even less about business. So he set up shop roasting coffee beans in a space that was all of 186 square feet in Oakland, California.
Eight and half years later Blue Bottle Coffee Company, which is known for selling beans within 48 hours of roasting and making each cup by hand, has one hundred employees, six cafes on two coasts, and plans to carve out a bigger footprint in New York. The secrets to his success? A superior product and a loyal crew that's big on Midwestern niceness.
He spoke with BNET recently about how he got started.
BNET: Your only qualification before you started was your coffee obsession.
Freeman: I would roast coffee on a baking sheet at home. When I was traveling, I had this hand grinder and a French press. I would grind my coffee on the plane and I'd ask the stewardess for hot water, fill up my French press and have a nice coffee on the plane. There are even TSA-compliant grinders.
(Hear James in the video below talk about why it felt like his business was in an "alternate universe" during the recession.)
BNET: How did you get the capital to get started?
Freeman: Had I known more about business, I wouldn't have done it because I didn't have enough money to start. But I had a couple of credit cards. I had maybe $15,000 in the bank and it seemed like a lot of money. The rent for my first production facility was $600/month and we built out this roastery in 186 square feet. It was the smallest health-certified facility in the county.
BNET: Sounds like you had to do it on the cheap.
Freeman: I remember looking at plastic scoops, which I needed to get the roasted beans into the bags. They were $27 dollars, which I thought was crazy. I tried using a milk jug but it didn't work, so I finally bought the damn scoop. I sweated every penny. In a way, that's good training because we're a lot bigger but I sign every check and I know everybody who receives those checks and we spend less money that we make.
BNET: How did you expand beyond the 186-square foot roastery?
Freeman: I started selling bags of beans on a table at a farmers market for a few months until I could figure out how to buy an espresso cart. Then I bought the cart and that was great because I could be in charge of the drinks and people are much more likely to spend $2 or $3 on a drink than $8 or $9 on a bag of coffee. I learned a ton about customer service -- what customers expected, how to please people when possible, and when to give up if it isn't working out. Then we got into other farmers' markets.
BNET: Making a cup of Blue Bottle coffee isn't exactly speedy, right?
Freeman: We make everything to order. We'll grind the beans, put it in the filter, and pour hot water over it. It's not as unusual now, fortunately. But at the time, it was either fantastic or infuriating, depending on your perspective.
BNET: How did you get from the cart to a physical shop?
Freeman: We opened a kiosk in a garage on Linden Street [in San Francisco] in a dead-end alleyway that smelled like pee. Brilliant! A pee-smelling alleyway. For the first few months, it was slow and people thought it was somewhere between crazy and a really bad idea. But then it became improbably busy.
BNET: How have you financed your growth?
Freeman: In 2008 we opened a café with the help of an SBA loan, which was so annoying but necessary. All the paperwork, ugh, I remember the checks would be promised and they'd never come. Later that year, I really didn't want to get another SBA loan so we took on an investor that owns a minority of Blue Bottle. That helped us get into the Ferry Building in San Francisco and move into our roastery in Oakland. Now we're working with a bank and hopefully (knock on wood) that loan is going to fund a couple of shops in Manhattan.
BNET: What's the best lesson you've stumbled upon?
Freeman: A lot of business people especially in the food world, which now has this cache, talk about their brand and positioning and press. It's a mistake to think about anything other than your product first and foremost. Is it really good? Is it delicious? Are you excited about it?
BNET: What else is critical?
Freeman: Then when you get to the point where you have to hire people, that has to be a really high priority -- not over product but it's second. You have to have a crew that you believe in. Basically the people five or six years ago that I was shoulder to shoulder with at the espresso cart for the most part are running the company now. The first barista I ever trained is our director of operations.
BNET: What kind of hiring mistakes have you made?
Freeman: The mistakes we've made have been hiring people based on their past experience rather than attitude and how it feels to sit in the same room with them and have a conversation. This is a customer service business. Even employees not directly involved in making coffee for customers, they have other customers -- bean baggers, delivery drivers, etc.
BNET: So you don't care if they know nothing about coffee?
Freeman: Coffee is teachable. It's more important to find a person you want to have a conversation with, someone who's really engaged, enthusiastic and pleasant. We have gradations of nice: There's nice, and there's Midwestern nice and Minnesota nice. We have a lot of people from Kansas working for us. Show up with a resume that has a Kansas college or high school and shows you've spent time in the Midwest, and it's like whoa, let's give this person a look.
BNET: Are you from the Midwest?
Freeman: No, rural Northern California. I'm a Midwesterner by aspiration only.