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Lessons From a Coffee Entrepreneur
- redrussak 15y agoThe Seattle tech community rocks!
- sib1013 15y agoGood story about the power of experimenting an making decisions quickly.
- deleted 15y ago[deleted]
- railsjedi 15y agoNice post that reminds us that customer development techniques are not new to the tech community, and we can learn a lot from watching traditional brick and mortar stores use these same techniques to enhance their business.
- kirillzubovsky 15y agoIndeed, isn't that great! We read all these popular books on how to make startups better, while sometimes all we need to do is open our eyes and watch others.
- mikeleeorg 15y agoSome of the most memorable business advice I've gotten is from a restaurant owner. He told me stories about how he's had to declare bankruptcy twice (he's not proud of it and tried to avoid it, but ultimately had little choice); how he's had partners who nearly ruined the business; how he's had to deal with changes in accounting practices; how he's had to deal with "local issues" (such as police officers, nearby merchants, etc); how he's had to manage relatively uneducated employees to build them into an efficient team, etc.
- kirillzubovsky 15y agoI have no doubt. We, in tech community, take a lot of things for granted. It's easy to sit at home, in underwear, and write code. Yes, the code might be hard, but it is not the same experience as the one would get at a kitchen table, chopping potato all day. Props to all the hardworking folks!
- aviel 15y agoHis deck is also the best place to work in the Summer in Seattle IMHO.
- JackDanger 15y agoAgreed. If you visit Seattle on a sunny day this is where you need to set up work for the day. I think I'll head over right now, actually.
- kirillzubovsky 15y agoIf you do, let John know that he's becoming a local superstar!
- jonnathanson 15y agoAn important side lesson here is not to take common industry practices at face value. (In this case, it was the conventional wisdom that 'All coffee shops are expected to have baked goods, and they sell baked goods at a loss'). In any business, big or small, tech or otherwise, there are hundreds of strategic and tactical levers we can pull on a daily basis. Many of these levers we don't even realize exist, because we're so used to thinking of them as fixed in place.
- true_religion 15y ago> An important side lesson here is not to take common industry practices at face value. What do you mean? He still sound donuts and sold them at a small loss.
- jonnathanson 15y agoI'm going off of this line in the article: "With the bread, cookies and donuts, John was now operating with virtually no loss on the baked goods." Seems to me like a pretty significant turnaround from what his situation had been prior to the switch on sourcing methods.
- adaniali 15y agoI like to have an IOU iphone app.
- ctdonath 15y agoYcombinator, get busy.
- kirillzubovsky 15y agoMight work, but most likely wouldn't. IOU isn't about the transaction, it's about the human connection between the buyer and the seller. People don't trust technology, they trust people. my 2c.
- gregpilling 15y agoan IOU app that integrates with Facebook then?
- thebooktocome 15y agoFacebook makes a shitty web of trust.
- jpadvo 15y ago> To fix the conversion rates, John moved the "cash only" sign inside, and on top of that started accepting checks, foreign currency, and even the I.O.U's. In my mind, this is the highlight of the article. If you carry out your business in a friendly and unique way you can win customers and do things that are very difficult to pull off otherwise.
- kirillzubovsky 15y agoThat's why i suppose best businesses aren't the ones that were built to sell (like about.me), but rather the ones built to solve a problem and become a really good product (heroku).
- Androsynth 15y agonot to mention thinking outside the box.
- clarebear 15y agoWhen I read this, I wondered if it was about offering consumers the right number of choices. Cash Only sounds restrictive, while a laundry list of types of currency seems like you have options.
- jpadvo 15y ago"When I read this, I wondered if it was about offering consumers the right number of choices. Cash Only sounds restrictive, while a laundry list of types of currency seems like you have options." (Why did this comment from clarebear get killed? Anyway...) I agree. Even though the vast majority of customers will never use any of those choices except cash and iou, simply having them sends the message that the shop is very open and flexible.
- dot 15y agoThat's where I was expecting this story to turn in to an ad for Square.
- earl 15y agoI miss NYC so much; SF is just such a disappointment as a city. My bodega 2 doors down in the upper east side was a full deli with fresh chicken, turkey, and pork everyday; $6 huge sandwiches made fresh; coffee; and they were open 24 hours a day. Plus they took credit -- once the people at the register recognized you, you could could run a tab up to a couple hundred dollars and pay on the first of the month. It was wonderful to go downstairs with just the keys in my pocket and have someone who remembered what I wanted for breakfast, that I like my eggs fried (unlike SF where they normally microwave in a plastic bowl), and that I take coffee with just a hint of cream and no sugar. Plus, from their perspective, I paid the tab every month in cash so no fees. I've never found anything like this in SF. I mean, Andy at Que Tal recognizes me, but it's not the same :(
- vnorby 15y agoAre we sure these are lessons we want to take? Forcing a user to pay with currency (let alone foreign) makes accounting harder, and renders their shop useless to compete with other shops that do have card readers for a very large percentage of people. Then he moved the cash only sign inside instead of realizing that customers want to pay with their cards and adapting to his customers' needs. Lastly, he decided on taking the easy, low-quality route with his baked goods. Is that really future proof? I don't think he's acquiring any new customers by reselling boxed donuts - and his margins are very low. Why is he getting into the competitive baked goods market in the first place? Why not partner with a local bakery that produces high quality food stuffs as a barter?
- mattmanser 15y agoBelieve it or not, the donuts were sold out. In fact, locals started to come in just to get these donuts, while of course also buying coffee, beer, and whatever else was available. Nobody could turn down 25-cent pastry! Article says it all really. Don't assume.
- vnorby 15y agoIt doesn't say much without knowing how many were sold. Maybe he sold only the 6 or 10 from the box. Why assume either way?
- thasmin 15y agoAccepting credit cards is done almost everywhere, but I wouldn't say that it's so assumed that not advertising that you don't take them is "tricking" customers. He offers a 100% interest free no collateral loan as an alternative.
- steve-howard 15y agoI check for the Visa/MC stickers on my way into every establishment I visit. People tend to ignore them, but there's a vanishingly small percentage of stores that take credit cards and don't have the stickers.
- 15y ago
- languagehacker 15y agoBeing a cash-only business is an annoying disservice to your customers. It's a sign that you're not interested in the value of convenience. It's a regressive attitude to lean on cash, and oftentimes a sign that you're not interested in keeping honest books. If you're not willing to pay what is almost universally accepted as an operating cost in modern society, you're setting yourself up to be left in the dust, and quickly. People are about to start paying for everyday transactions using their phones! If you have a problem with payment processors biting into your margins, then pass the buck onto your customers (even as a credit card usage fee), but never take away a payment option.
- furyg3 15y agoCredit card usage fees are a good way to a) make your customers mad and b) be blacklisted by your CC processor (possibly sued). Nearly every processor agreement stipulates that this is a no-no.
- nokcha 15y agoIndeed, although giving a discount for paying with cash is often allowed. (Customers generally hate hidden fees more than they hate missing out on a discount.)
- seabee 15y agoIt's not a way to cheat the system though, since you still have to advertise the higher price. Even if you also say "5% discount for cash transactions".
- lsc 15y agoit's fairly common around here at the 'independent' gas stations to advertise two prices; one for cash, and one slightly higher for credit cards. It seems very fair to everyone I know who has ever had a merchant account; people who have not, on the other hand, sometimes think it's unfair.
- scottporad 15y ago"accepting...I.O.U.'s" One of the coffee shops I frequent also accepts IOUs, plus they do one other thing: you pay as you leave, not when you get your coffee. Now, this has two benefits: First, means that the barista has to keep track of things...they have to actually have a relationship and interaction with the customer. That's very positive. Second, it means that I often go get a second cup, or a pastry, because I haven't closed out my bill yet.
- zem 15y agoone consequence of labour being so much cheaper here in india is that even some of the large chain coffee shops have waiters and a pay-as-you-leave policy.
- haberman 15y agoI have bought these donuts before, and definitely did not care that they came from Fred Meyer (I remember him mentioning it, slightly apologetically).
- napierzaza 15y agoSounds like his business is dying as he cuts parts away. If he could get the right amount of pastries ordered, why would he not make money? You sell half, so order half. It just sounds like he wasn't paying much attention when he wasn't in financial trouble. Sounds like a pretty reactionary guy. I might agree that credit companies exploit small businesses, but a bakery too? Everyone is out to get this guy. I just hope he doesn't get his own ATM in his business instead of taking credit cards.
- michaelbuckbee 15y agoI think it was more he changed the product mix to something that his customers wanted. He replaced a variety of custom/daily baked goods (cookies, muffins, croissants and whatever else), that he was struggling to sell out every day at likely a buck or two with 25 cent store bought donuts that led to more sales of his higher margin items.
- jpadvo 15y agoIt is probably more subtle than that. You have to have a surplus of goods so there is selection. There needs to be enough pastries on display so that people will be able to find something they want. And when money was flowing, he could afford to sell pastries at a loss to keep his customers happy. When he couldn't afford it anymore he was forced to change. Perfectly normal. What is out of the ordinary is how he reexamined his assumptions and created a better solution -- instead of hamhandedly cutting pastries altogether.
- kirillzubovsky 15y agoExactly what the guys above said and more. With a coffee shop, you can't order just-in-time, rather you are forced to order a surplus by the baker. They don't want to deliver 2 donuts and a bagel, rather they make you order a bucket of stuff... every day! Now John doesn't have to do any of it; all he needs is to wake up 20 minutes earlier and put the bread in the oven!
- wyclif 15y agoThere's a typo: "Steady" not "stead" under Lesson 1. EDIT: Actually, this piece has quite a few spelling errors and typos in it. This needs a once-over by an editor.
- kirillzubovsky 15y agoI absolutely agree (the Editor) ;)
- bluekite2000 15y agoMy lesson as a coffee entrepreneur: hire cute asian waitresses with big boobs (working exclusively on tips) and have them wear nothing but pasties http://www.ocregister.com/articles/says-126730-nguyen-coffee.html http://www.ocregister.com/articles/says-126730-nguyen-coffee...
- colson04 15y agoGood article, but the most interesting part of the story (for me) was casually summarized in one sentence. What amazes me is that he decided to start his first business at the age of 61 - wow! Major kudos to this guy for finally deciding to take a leap at an age when others are merely contemplating if their savings will be enough to fund retirement - that takes serious balls. Sure, John made some great changes and saved his business, but that's what good entrepreneurs do - adapt and move on. He certainly deserves the credit for that, no doubt.