Coffee, Rumor and Innuendo

Last Friday, I posted a link to what I said was a sign of the impending rapture—that Stumptown Coffee was in negotiations to be bought out by Starbucks. There was absolutely no truth to the rumor whatsoever, so you can imagine the surprise I felt today when I went online to read the latest coffee news and one of the first things to come up was a story claiming that Stumptown had been sold (though not to Starbucks).

Todd Carmichael, the founder of LaCombe Torrefaction, an East Coast-based coffee company, wrote an article for Esquire that Stumptown’s Duane Sorenson had “sold his life’s work to the highest bidder.” Needless to say, this caused quite a stir in the coffee blogosphere and Twittersphere. Could it really be that Stumptown, Portland’s most famous coffee company who seemed to be everything but corporate, could be ‘selling out?’ What would that mean for Portlanders who cannot stand the idea of supporting a “corporate” coffee company? The idea seemed an anathema to many people.

There were several reasons to be skeptical about the article’s accuracy. Carmichael likes to make fun of the hipster coffee culture, as evidenced by this article, so it is not surprising that he took a shot at Stumptown. Also, the tone of the article and lack of evidence in it, lead one to believe that Carmichael, whose company is a direct competitor to Stumptown, does not like the fact that Stumptown is expanding on the East Coast and was looking for a way to give his rival some bad publicity among the anti-corporate crowd.

In response to the news, Willamette Weekly dug up a document showing that Stumptown Coffee Corporation, which is a separate entity from Stumptown Coffee Roasters, did apply for an  amendment to authority with the Oregon Secretary of State at the end of April. The new agent for the company is Alexander Panos, a managing director at TSG Consumer Partners, a private equity firm based in New York. In other words, there was a small bit of evidence behind the rumors.

However, the document does not address any questions about any relationship between Stumptown and TSG. It is impossible to tell from that document what Stumptown’s plans are, and Carmichael’s speculation is premature, unless he has other information. Esquire, if it wants to be taken seriously, needs to make sure there is more evidence before an article like this is published, especially when the author has a financial stake in a rival company.

Update: In the latest news this afternoon, also from the Willamette Weekly, Stumptown responded to the article, saying that it did open itself up to some outside investment to help fund its expansion, but that Duane Sorenson, Stumptown’s founder, is still in charge. Therefore, Portlanders can relax—Stumptown has not sold out. You do not have to worry about losing another local chain to corporate America.

Update 2 (June 2): Stumptown did allow for some investment by Panos (Sorenson still controls the company) and the plan is to expand into Chicago and San Francisco. The NY Times has the story here.

Update 3 (June 6): Willamette Weekly is today reporting that Stumptown sold 90% of the company to TSG, though it seems like the source is Carmichael. It's hard to know what to believe. . . You can read the story here.

My question is, if Stumptown had sold out, so what? It is Sorenson’s company, after all, and the last time I checked, we still live in the USA, where capitalism is the economic system. If someone wants to build a company and sell it so that he or she can fulfill other dreams, that should be his or her right. There is nothing especially noble about starting a company and staying with it until you die. Times and people change—we have to accept it. Unless, of course, the news is just a rumor or a blogger’s attempt to be funny.

Kobos Coffee (Part 2) - How Kobos came to PDX

 

[Part 1 of this history can be found here]

Originally from Massachusetts, David Kobos spent many of his years growing up in New York. The pursuit of higher education eventually led him out West, and he spent four years getting a master’s degree from Reed College. After graduating, he taught in Milwaukie for a couple years. During this time, Kobos used to stop in and get coffee from Boyd’s Little Red Wagon.

“That's how I got started drinking real coffee," he said.

After his time in Milwaukie, Kobos moved back to New York, where he got a job as a teacher at a school in the Lower East Side (of Manhattan). In his free time, he began exploring restaurants in Chinatown and Little Italy, which were both nearby the school. He became fascinated with the city’s food and coffee culture and began visiting the shops of the Lower West Side too, where the Shapiro Brothers and the McNulty family were famous for roasting coffee.

At some point during his culinary explorations, Kobos met his future wife and got married. The couple went on a honeymoon to the Pacific Northwest and then returned to the Big Apple. Together, they really got into exploring restaurants. His wife was a good cook, he said, so they began to shop at higher-quality markets, trying to duplicate at home what they had been tasting in restaurants. The couple also drank plenty of coffee and visited all of New York’s famous cafés.

Kobos recalled some of the smells in the neighborhoods where the stores roasted their own coffee:

"There was this one little Italian roaster, down in Little Italy, who used to take one kind of coffee and just burn the hell out of it. You could smell it if you went anywhere near that place,” he said, laughing.

Eventually, the Kobos and his wife decided they needed a change of scenery. Remembering the beauty of the Pacific Northwest, they decided to move across the country to Portland, where they would indulge their love of food and coffee by starting a cookware and coffee retail store (and a family). It was a lot of change in a short amount of time, and their friends were skeptical.

“’You’re doing what?’—that’s what they asked us. They thought we were crazy,” Kobos said, recalling the reactions of his friends and family. “You’ve got a job already. Why would you want to do that?”

Undeterred, the couple moved forward with their plans. However, plans soon changed. The original plan was to ask Boyd’s Coffee to roast coffee beans for Kobos to sell in the store, but when David asked them, they turned him down. It was a pivotal moment for the Kobos story.

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Selling Frappuccinos in the UK

Below, I have embedded an ad from a campaign that Unruly Media is running in the UK for Starbucks. I would like to hear your opinion. Beneath the video, I have given mine.

One of the challenges for any company is to decide if it wants to go for fast growth and large profits, sacrificing a few of its values along the way, or if it wants to remain true to its roots, even if it has to sacrifice some economic gains. For most businesses, profits come first. This is especially true for public companies, where there is tremendous pressure put on management by the shareholders to go for growth and profits. I think you can guess which path Starbucks chose.

Starbucks began as a place that wanted to be true to the coffee and the café experience. Now it boldly sells milkshakes, with whipped cream and caramel sauce.

To be honest, I like the graphics, the bright colors and the crisp audio of the spot. It has a sharp feel to it. The business school-trained part of me thinks it’s a fine ad, and I know that Frappuccinos have some of the best profit margins at Starbucks, so I understand the reasons for the campaign. At the end, however, watching this ad reminds me why Starbucks took the “Coffee” out of its new logo. How about you?

[Disclosure: Unruly Media, an advertising company, asked me to write an editorial about the ad. Feel free to pass it on to anyone you know in the UK]

Sustainable Harvest - Changing the way coffee business gets done

Whenever you buy something, it is easy to forget that your transaction goes beyond the store where you purchased it. Whether you think about it or not, what you choose to buy affects other peoples’ lives, and these purchase decisions have economic, social and environmental consequences.

The coffee we buy, for example, is at the end of a long and complicated supply chain that begins in some very remote places. There are over 25 million coffee growers in the world, many of whom have very small plots of coffee trees. Trying to make a living off a small coffee farm is very difficult, especially if the companies purchasing the coffee are solely motivated by profits.

To learn more about how the system works, I visited Sustainable Harvest, a green coffee importer based in Portland. Dane Loraas, a Quality Control Manager for the company and Katie Gilmer, a Relationship Coffee Manager, were my hosts when I visited the company at its Pearl District headquarters. They spent an hour with me explaining the company’s business model and answering my questions.

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Tired of paper transit tickets? (updated)

Today, I want to step away from coffee for just a moment. One of my favorite things to talk about is entrepreneurship, and I have something I would like to share with you.

When I’m out traveling around the city, I prefer to walk or take public transportation. Walking around, you really get the feel of a place, and on the bus or the train, you don’t have to stress about traffic.

Since I take the bus and the train pretty regularly, I can say with confidence that it would be nice to be able to pay for tickets using an app on my phone, especially when riding the bus. Even better, the phone would serve as a ticket itself.

Tri-Met (Portland’s public transit agency) doesn’t have a system like that yet. However, a couple of my classmates from Portland State’s MIM program are trying change that. Nat Parker and Michael Gray have started a company called GlobeSherpa to develop mobile phone apps, and their most promising app at this time is called TransitSherpa, an app that acts as an electronic ticket management system for Tri-Met. I’ll let Nat explain:

Their company is currently in negotiations with Tri-Met to make the system a reality, but they need some funding to speed things up. Tomorrow evening, at 5:30pm, Nat and Michael will be at the Backspace café/pub competing in the second-to-last round of the Oregon Entrepreneurs Network’s Seed Oregon competition, a competition that helps start-up companies with funding and guidance. The winner is determined by popular vote of the audience, so the more supporters TransitSherpa has, the better chance it has to win. The winning company gets to present at the Angel Oregon conference in March, where it could acquire the funding it is looking for.

If you think that a Tri-Met ticket app is something that you would rather have sooner than later, come by Backspace tomorrow evening at 5:30 and support TransitSherpa. It costs $25, which I know is kind of steep, but it’s supposed to include some kind of food and drink spread. In addition, Nat has promised me that he’s going to be especially entertaining during his presentation.

You might wonder if I get anything out of this advertisement for them. Nope. I’m just spreading the word for them and trying to speed up the process of creating a Tri-Met ticket app. It’s 2011, and the time for e-tickets is here. Let’s help TransitSherpa make it happen.

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Update: GlobeSherpa won by two votes! Congratulations and good luck at the next round.