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Definitely HN newsworthy, especially since YC has backed coffee startups. I personally think Philz is going to give third-wave coffee a run for their money. De

Definitely HN newsworthy, especially since YC has backed coffee startups. I personally think Philz is going to give third-wave coffee a run for their money. Definitely as approachable as Starbucks and easily replicable. The problem with third-wave is that the total applicable clientele for a company like Blue Bottle is far and few between. Even after saturating every corner of SF, NYC, LA, Chicago, it's going to be hard for BB to come up with hundreds of millions of revenue and retain quality (Blue Bottle raised $100M in cash). Blue Bottle has a "luxury good" perception. Philz is unpretentious, reliable, and love in a 600-calorie cup of coffee, cream, and sugar. It's a formula that so far has proven to work in America. Third-wave coffee is excellent, but isn't as accessible as Starbucks. Philz, on the other hand, doesn't attempt to sell the virtues of high-brow single-origin coffee. They, however, make a really good cup of coffee, and reliably do at each location. I definitely believe it is repeatable even at scale because many Philz drinks rely on mint leaves, cream, and sugar--flavors that are the "MSG" of coffee. User experience is inclusive and welcoming--although some locations are more fun than others (visit the 24th if you haven't and it will become abundantly clear why there are Philz phanatics). I love coffee shops like Four Barrel, the Mill, Saint Frank's--but those shops exude refinement and appear a little out of reach, even if priced similarly to Starbucks. I would hypothesize you could put a Philz in the Midwest and it would do well. As of right now, every coffee shop compared to Starbucks pales in comparison. Starbucks boasts $70B in market cap. If anyone has a good shot of picking a fight with Starbucks, it just might be Philz.

Tiktaalik 12y ago
> 600-calorie cup of coffee, cream, and sugar Yikes you're not selling me on the company with that statement. I don't know, I think third wave coffee houses are doing a pretty good job of training people that sugary, creamy coffees are crap. In the long run I think that people are trending toward healthy, high quality, authentic experiences in many areas, but especially food. I'm not sure where 600 calorie coffees fit into that.
- jasonjei 12y ago
  I was just being blunt about the caloric intake :) Starbucks and Philz probably won't advertise their calories. In fact, the barista that I attempted to prod for calorie count pointed to his belly and exclaimed jokingly, "Do I look like I count my calories?" They might not sell to you, but they'll sell to the rest of America that just want something over the top to make a Monday morning better. #fatmeansflavor Starbucks creamy drinks are also roughly the same amount. And the reason Philz will do well in America is that Americans gravitate towards the creamy and sugary and carby (Anheuser Busch, Nestle, Hershey). They even got sustainable San Franciscans on board! While some Americans care about eating and drinking healthy, most Americans will happily continue ordering a 600-calorie cup of morning joe, contributing to Starbucks' $15B revenue. American dollars always go to the fat and sugary flavors. While a lot of fine dining artist-chefs will disagree with the data, burgers and fries sell.
  - Tiktaalik 12y ago
    Ok I'm sold on the idea that Philz has the means to compete against Starbucks in malls across America, but I'm less convinced that third-wave coffee is going to be impacted in its core urban market. When you said that Philz would give "third-wave coffee a run for their money" did you more mean that you're skeptical that Blue Bottle will be able to take their brand national? I agree with that, that that could be hard. I think their best bet for non-urban areas would probably be to closely follow areas where Whole Foods has made inroads. Regarding expansion to urban areas, I wonder if too much good real estate for third wave coffee places is already taken up by local independents. From what I've seen SF has surprisingly few third wave coffee shops. In Vancouver there are often several Blue Bottle quality independent coffee shops in each neighbourhood. When I saw that Blue Bottle got funding I wondered how successful they'd be in expanding to areas with well established locals. There's really not that much that they do different from others.
    - jasonjei 12y ago
      Yeah--I think it'll be hard for third-wave coffee shops to scale. The last number I heard about Blue Bottle was that they were making about $20M. That's a drop in the bucket compared to Starbucks' $15B, and Blue Bottle is very well known. Truth be told, Blue Bottle's coffee and espresso quality has suffered from expansion. I think big cities contribute to plenty of revenue, but Starbucks has built itself as common as a convenience store. That's really hard to compete, even with third-wave and Philz types. Even Tim Horton's revenue is $3B! Hit me up next time you're in San Francisco--I don't think you got a very good tour of coffee here :) Aron Tzimas documents latte art around SF on his Instagram.
- archemike_ 12y ago
  There is no need to sell the milky, creamy, calorie shotgun of a drink, the majority of demand is for these. In fact Starbucks built an empire off of it(well validated) and whoever competes with Starbucks should have a comparable product. I also agree with your trending statement with support from the rise of things like BulletProof Coffee(with grass fed butter) and high end pure coffee options which are growing in popularity versus the espresso + tons of sugar/cream/etc toppings.
mulligan 12y ago
What is that you see as unwelcoming about Blue Bottle?
- jasonjei 12y ago
  I don't think I said Blue Bottle was unwelcoming. I just think it will be hard for them to scale like Starbucks without becoming Starbucks. Philz has a formula that is different from Starbucks but just might take massive market share from Starbucks.

Tiktaalik 12y ago

> 600-calorie cup of coffee, cream, and sugar Yikes you're not selling me on the company with that statement. I don't know, I think third wave coffee houses are doing a pretty good job of training people that sugary, creamy coffees are crap. In the long run I think that people are trending toward healthy, high quality, authentic experiences in many areas, but especially food. I'm not sure where 600 calorie coffees fit into that.

jasonjei 12y ago
I was just being blunt about the caloric intake :) Starbucks and Philz probably won't advertise their calories. In fact, the barista that I attempted to prod for calorie count pointed to his belly and exclaimed jokingly, "Do I look like I count my calories?" They might not sell to you, but they'll sell to the rest of America that just want something over the top to make a Monday morning better. #fatmeansflavor Starbucks creamy drinks are also roughly the same amount. And the reason Philz will do well in America is that Americans gravitate towards the creamy and sugary and carby (Anheuser Busch, Nestle, Hershey). They even got sustainable San Franciscans on board! While some Americans care about eating and drinking healthy, most Americans will happily continue ordering a 600-calorie cup of morning joe, contributing to Starbucks' $15B revenue. American dollars always go to the fat and sugary flavors. While a lot of fine dining artist-chefs will disagree with the data, burgers and fries sell.
- Tiktaalik 12y ago
  Ok I'm sold on the idea that Philz has the means to compete against Starbucks in malls across America, but I'm less convinced that third-wave coffee is going to be impacted in its core urban market. When you said that Philz would give "third-wave coffee a run for their money" did you more mean that you're skeptical that Blue Bottle will be able to take their brand national? I agree with that, that that could be hard. I think their best bet for non-urban areas would probably be to closely follow areas where Whole Foods has made inroads. Regarding expansion to urban areas, I wonder if too much good real estate for third wave coffee places is already taken up by local independents. From what I've seen SF has surprisingly few third wave coffee shops. In Vancouver there are often several Blue Bottle quality independent coffee shops in each neighbourhood. When I saw that Blue Bottle got funding I wondered how successful they'd be in expanding to areas with well established locals. There's really not that much that they do different from others.
  - jasonjei 12y ago
    Yeah--I think it'll be hard for third-wave coffee shops to scale. The last number I heard about Blue Bottle was that they were making about $20M. That's a drop in the bucket compared to Starbucks' $15B, and Blue Bottle is very well known. Truth be told, Blue Bottle's coffee and espresso quality has suffered from expansion. I think big cities contribute to plenty of revenue, but Starbucks has built itself as common as a convenience store. That's really hard to compete, even with third-wave and Philz types. Even Tim Horton's revenue is $3B! Hit me up next time you're in San Francisco--I don't think you got a very good tour of coffee here :) Aron Tzimas documents latte art around SF on his Instagram.
archemike_ 12y ago
There is no need to sell the milky, creamy, calorie shotgun of a drink, the majority of demand is for these. In fact Starbucks built an empire off of it(well validated) and whoever competes with Starbucks should have a comparable product. I also agree with your trending statement with support from the rise of things like BulletProof Coffee(with grass fed butter) and high end pure coffee options which are growing in popularity versus the espresso + tons of sugar/cream/etc toppings.

mulligan 12y ago

What is that you see as unwelcoming about Blue Bottle?

jasonjei 12y ago
I don't think I said Blue Bottle was unwelcoming. I just think it will be hard for them to scale like Starbucks without becoming Starbucks. Philz has a formula that is different from Starbucks but just might take massive market share from Starbucks.