The head of a fast-growing coffee company points to the business and tech challenges of expanding nationwide.
By Andrea Coombes
We’re all familiar with coffee’s caffeine buzz. But how often does a coffee company generate buzz? Say hello to Philz Coffee, the San Francisco-based retail company that brews each cup of coffee individually at its 23 stores and popups, including a counter at Facebook’s headquarters.
Even though the one-cup-at-a-time essence of Philz Coffee is old-school and almost anti-tech, that hasn’t stopped it from attracting tech-company-like investment capital, most recently a $15 million infusion of Series B funding from a range of high-profile investors.
From big-name, tech-focused venture capitalists such as Summit Partners and Sherpa Capital, to rapper Snoop Dogg, actor Jonah Hill, and movie producer Lawrence Bender (the man behind many Quentin Tarantino films, among other movies), a diverse group of investors have seen fit to put their money into Philz Coffee.
That funding is helping Philz Coffee stores expand nationwide—the 12-year-old company has another seven stores on the way, including an upcoming opening in Washington, D.C. But like any company in expansion mode, Philz has had its share of technology headaches.
We recently talked with Jacob Jaber, the 28-year-old chief executive of Philz Coffee, to find out about the challenges he’s faced in the 10 years he’s been with the company. (His father, Phil Jaber, is the original Phil and the company’s founder.) In the following Q&A, Jacob Jaber shared with us some of the tech and business lessons he’s learned along the way.
Lesson: Know what you want—and hold true to that vision
Q: What’s the biggest tech challenge the company had to overcome as it has grown from one store to many stores?
A: It always starts with the people and the experiences we want to provide for our customers and our team members. Technology is a tool, so we never start with technology. We need technology to run our business effectively and efficiently and consistently.
One of the challenges is that we have desires and things that we want to be, but sometimes the technology doesn’t do it, because you have to partner with vendors and they’re building a business for a lot of other businesses. They have their own ideas and strategies. Sometimes what we want to do doesn’t fit, or what they can do doesn’t fit…It’s just a mismatch. It always comes back to us asking ourselves how far we’re willing to go to make something work. It comes down to flexibility and customization.
Lesson: Understand technology’s limits—and your own
Q: For example?
A: Our point-of-sale system. I don’t know if we want to bring it in-house right now. …We’re pretty happy with what we have but [we face challenges] with back-end operational processes—administrative functions, like menu management by location and by district.
Q: Do you mean managing your extensive and very long menu?
A: No, that’s easy. That’s just more things you add to the list. It’s more about the functionality and what the technology can or can’t do…If all of our stores want to make a change in a menu item, the POS that we were using in the past didn’t allow us to do that easily. It was a headache. It’s a headache whenever technology doesn’t do what you want to do, but then you have to settle for it, because do I hire a $150,000 a year engineer? What do I do, just to make it my own?
Lesson: Buy tech that will grow with your business
Q: As the company was growing, did you make any technology purchases that you later regretted?
A: Well, no, I haven’t regretted anything…My philosophy has been to get the technology that will support us now and be able to grow with us. We’ve actually gone with more robust systems in the early days that are still with us today, because of the customization and flexibility. Those are key words: customization and flexibility—really important words when choosing your technology…If the vendors you’re working with aren’t able to adapt and give you good service and listen to what you want and deliver on it, then you’re going to have to settle. You just don’t want a lot of ‘settling’ scenarios.
Lesson: Consider the cloud
Q: What’s the biggest challenge you’ve faced in finding and choosing tech tools, either software or hardware?
A: We don’t have much hardware. We really like the cloud. It makes it easier. Really the only hardware we have is iPads. It comes back to flexibility and customization and service; it comes down to the functionality.
[Jaber added that the customer-facing side of his business relies heavily on cloud-based solutions. The company uses Square, Netsuite, and GoogleDocs, among other services.]
Lesson: Passion plus business acumen—if you don’t have both, find a partner
Q: Any thoughts you can share about technology strategies for other small-business owners hoping to go national one day?
A: First and foremost, you want passion and business to be married. Like a lot of folks who start companies out of passion and love, that’s great but what they need is the ability to adapt and have good business acumen and grow and learn. If they don’t have that, they need to be smart enough to admit it and find someone who can share the deep appreciation for [their business], the passion, but help take them to the next level…
So it always starts with their goals and desires and are they willing to do what it takes to make that happen? Can they be vulnerable? You have these people who are really passionate about their craft but if they’re unable to step back and look at the bigger picture and think about it strategically [then it’s important to] find someone who loves what I’m doing, who is good at that and can be a partner with me. It’s when passion and business smarts marry and have a lot of kids. But the business-smarts person needs to have a deep and authentic appreciation for the craft.
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