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Blue Bottle Coffee Gets Caffeinated With $25.75 Million in Funding
- state 13y agoBlue Bottle does seem to be a great company. I have (and have had) may friends who have worked there over the years. It isn't quite clear to me how they're going to bring in VC-needed returns on this kind of investment. Anyone else care to comment? It just doesn't intuitively make sense to me.
- arfrank 13y agoMy gut reaction is that if you could get in early enough on the next Starbucks it could return a large enough payoff to be worth the risk.
- bnejad 13y agoWith a bunch of big investors they certainly have enough hype to give it a shot.
- arfrank 13y agoAlso what % return are mutual fund and mutual fund-like investors looking for over the next decade? If 5-year average is (5-25)% loosely then you're either looking at an investment that blows that return out of the water, or doesn't really impact your overall fund at all.
- deleted 13y ago[deleted]
- rubiquity 13y agoThey already have real revenue. It could be a lot worse.
- SDGT 13y agoI don't see how they would even be able to break out of SF in general. I'm on the other side of the country, and our small town has 3 independent coffee shops, multiple local roasters, and a Starbucks. This is your average college town, and there isn't an icebergs chance in hell you'd be able to get market penetration here.
- IceyEC 13y agoThe article says they have locations in New York as well.
- alxndr 13y agoThey have five locations in NY, opened a couple years ago IIRC.
- apaprocki 13y agoI live down the street from one in BK and it is always packed. There is also another 3 other "local" brands within a few blocks that also have very good coffee. I'm not quite sure that BB will harm the local market unless they somehow magically sprout a gazillion stores like Starbucks. Even though they are all relatively close to one another, you usually go to the one that is on your frequent walking path, and walking 5 extra blocks in 10F wind chill might dissuade you from going out of your way :) edit: typo
- angersock 13y agoOh, well, if it's in SV and NYC, then it's clearly ready for the rest of us!
- chevas 13y agoI can see the company growing slowly into something large. Starbucks has left behind the craft and replaced it with automation and burnt coffee that can be tasted through 20 ounces of milk. Yet, the people still want craft coffee. This gave rise to lots of independents, but you never know what you're getting from one independent to the next. Just because you're an independent does not automatically make your coffee any good. Blue Bottle has worked really hard to develop a reputation of really really caring about coffee, from farm to cup (and good ingredients in all food products). There are very few large independents who have a similar reputation (Stumptown comes to mind and Intelligentsia come to mind). The last time I saw explosive growth in Coffee, which was cut way too short by a buyout from Starbucks for millions, was the Coffee Equipment company who manufactured the Clover machine. The Clover essentially elevated drip coffee to espresso status. The machine made drip coffee that tasted good, one cup at a time, and within 60 seconds. Blue Bottle isn't manufacturing anything, so my opinion is that it's going to be a long road to get to big growth.
- k-mcgrady 13y ago>> "Blue Bottle has worked really hard to develop a reputation of really really caring about coffee, from farm to cup" That's great but how many people (apart from people trying to seem hip) really care? To the vast majority of people (those who get coffee at home/Starbucks/local cafés) it's a cup of coffee. Nothing more. They couldn't tell the difference between a $1.50 cup and a $6 cup and even if they could they'd still go with the $1.50 cup.
- yanowitz 13y agoI'm very interested in seeing how they can scale their training when opening new cafes. It's some of the best coffee I've had in SF/NYC.
- antr 13y agoI'm trying to figure out why a VC, who has a very high cost of equity, invests in this type of business rather than the more "traditional" PE growth fund... or if revenue/cash flow growth is so high... why not go the debt financing route. Anybody has any insight?
- bhousel 13y agofrom TFA: (For more, here is a blog post on the whole shebang by True Venture’s Tony Conrad — who is, IMHO, the coffee hipster poster boy — in which he notes loftily: “What we saw and why we got involved is that James and his team are part of a handful of people who are founding a movement around coffee … We believe Blue Bottle Coffee is at the forefront of a ‘consumer movement’ or mega-trend in which consumers are moving to higher quality, artisanal micro-roasters of coffee, where quality, attention to detail, beauty and a distinctive experience are being sought over more mainstream alternatives.” Viva la siphon, apparently!)
- deleted 13y ago[deleted]
- dakrisht 13y ago"We believe Blue Bottle Coffee is at the forefront of a ‘consumer movement’ or mega-trend in which consumers are moving to higher quality, artisanal micro-roasters of coffee, where quality, attention to detail, beauty and a distinctive experience are being sought over more mainstream alternatives.” Yeah, maybe on Market Street, Tony. The majority of the country (and the world) isn't going to pay $6 for a cup of coffee. That's reality. Seems like a purely hype driven VC play to invest in BB. They make a great product, yes, but the SF micro-niche coffee clientele will have a very tough time scaling to profit in a country where Dunkin Donuts is considered great coffee - and Starbucks. Also, not sure why BB would raise this cash from VC vs. debt financing. Whole thing is hilarious.
- awwstn 13y agoThe majority of the country (and the world) isn't going to pay $6 for a cup of coffee. That's reality. That may be reality, but it's entirely irrelevant as a cup of coffee at Blue Bottle costs less than $3. Edit: photo: http://cl.ly/image/1l3b0F243S2d http://cl.ly/image/1l3b0F243S2d
- adamio 13y ago"... part of a handful of people who are founding a movement around coffee … We believe Blue Bottle Coffee is at the forefront of a ‘consumer movement’ or mega-trend in which consumers are moving to higher quality, artisanal micro-roasters of coffee" Mega-Trend? I'm assuming their exit is via Starbucks
- antr 13y agoI think an offline retail business like this one is a perfect LBO candidate.
- ratscabies 13y agoIt'll never play in the UK. http://en.wikipedia.org/wiki/Calliphoridae http://en.wikipedia.org/wiki/Calliphoridae
- k-mcgrady 13y agoIt won't play anywhere but small pockets of a few cities where people have a lot of money and want to pay crazy amounts of money for a cup of coffee. I really don't understand why people are investing so much money in this and why it needs that much investment. I see very nice coffee shops open all the time, sell perfectly fine coffee for a quarter the price and they don't need millions in investment.
- scrumper 13y agoI don't agree with that. Bluebottles, while hardly cute, aren't reviled in the UK at all, and they are the only commonly-seen fly that one might regard as even slightly attractive. For many they are simply a memory of childhood, watching insects buzzing against a window on a hot summer's day.
- dasil003 13y agoWell it's more appetizing than ratscabies on either side of the pond, gotta give 'em that.
- jowiar 13y agoI remember reading something a while ago that there aren't actually enough coffee beans produced of a high enough quality to produce Starbucks-level quantity at current Blue Bottle-level quality. I'm curious whether this is the problem Blue Bottle intends to solve, or if they plan to be "Yet Another Starbucks".
- dasil003 13y agoI don't know too much about raw coffee quality, but what I do know is that roasted coffee goes stale very quickly. If you freeze it you can preserve some flavor for a time, but generally the best thing is to grind directly before brewing and finish the beans within a week or two of roasting. The reason starbucks is bad is because they let their coffee sit around for months in the supply chain, and they over-roast in order to compensate for the lost flavor as well as the tremendous amount of cream and sugar they put in every drink. Again, I don't know how much good quality beans there are out there or even how you grade raw beans, but I suspect that average quality beans if roasted locally and brewed quickly (which was sort of the hallmark of Blue Bottle if I recall) will be an order of magnitude better than Starbucks right off the bat. If they organize their logistics around that I think they can scale a much better quality coffee than Starbucks.
- redwood 13y agoI can't stand this kind of thing. Why? Because artisanal at scale is no longer artisanal. Not in food and beverages, anyway. Sure fancy electronics are made at scale and we consider some of them to be best of breed. But in food and beverages, best of breed is never, can never, should never be at scale. Thus this just means another chain of coffee. Great. Even if it's an improvement on existing chains: it's bad for independent artisanals (just like Blue Bottle was) everywhere it goes. Which is bad for all of us. I guess I just don't like "selling" the uniquely artisanal concept when it's no longer uniquely artisanal. It feels hollow and deceptive.
- rubiquity 13y agoWell said. I'd also like to add that anyone that hasn't already noticed the quality of both their coffee beans and baristas declining in the last 3 years probably doesn't own taste buds, or maybe Starbucks is just that awful. Kudos to Blue Bottle though. They're probably going to make a ton of money by being marginally (but still noticably) better than Starbucks.
- adamio 13y agoI agree, its a coffee chain. It has to be hype and marketing. Does this coffee company have patents on a new roasting method that scales, or some breakthrough technique to save on logistics? It seems like it's only a play on perception and hype. From 2012 http://www.trueventures.com/2012/10/10/welcoming-blue-bottle-coffee/ http://www.trueventures.com/2012/10/10/welcoming-blue-bottle... "We’re also pleased to announce that Bryan Meehan, a good friend and an accomplished entrepreneur, has joined Blue Bottle full-time as Executive Chairman, contributing his significant expertise to all areas of strategy, marketing and operations. Bryan previously founded, grew and sold two premium specialty retail chains that share key similarities with Blue Bottle: 1) Fresh & Wild, an organic supermarket chain acquired by Whole Foods in 2004; and 2) Nude Skincare, a luxury natural skincare company acquired by LVMH in 2011."
- mmagin 13y agoWell, good for them, but I hope it doesn't ruin the product the same way Hershey's ruined Scharffen Berger chocolate.
- spikels 13y agoBlue Bottle's secret to success is great PR and a lighter roast than most of their competitors which results in a milder, sweeter cup of coffee. Otherwise they buy their green coffee from the same sources and use the same equipment and techniques (however they were an early cold brew adopter). And I think their service is subpar - slow and not particularly friendly - but people put up with it. $26 million seems like a lot but perhaps this is enough to build a brand/business around. Both Starbucks and Peets had similar origins and are now worth $55 billion and $1 billion, respectively. And it always helps when your product is addictive.