Taking On Goliath

On Common Grounds

The lattes at Michael d'Addio's Stonewall Gourmet Coffee Co. must pack a wallop. Maybe it's the caffeine; maybe it's some kind of super-fortified milk--something gave d'Addio the fortitude to take on the two (count 'em, two) Starbucks that share his West Hollywood, California, neighborhood.

"I've got Starbucks coming and going," jokes d'Addio, 55. "There's one down the block and across the street. One had a 5-year head start, and people in this business know habits are hard to change." Yet d'Addio isn't obsessed with competition: In fact, he's committed to further expansion. Although it's only been two years since he started the first location, he opened a second Stonewall in Hollywood last October.

Here's why: D'Addio isn't trying to be all things to all people. He's meeting the needs of his community, in this case, a city with a large gay population.

But this isn't a simple case of niche marketing. Nor marginalizing a business in the name of local flavor--you don't have to be gay to enjoy Stonewall's killer mochas. But if you are, and live in the neighborhood, you can't miss the company's marquee name (Stonewall refers to a famous gay uprising) and its charitable sponsorships, donations and on-site fund-raisers.

"We've practically bankrupted ourselves [with community projects]," which range from donating coffee and water at various AIDS-related events to hosting a weekly comedy night at both cafes to benefit the neighborhood gay and lesbian center, d'Addio reports. "It's taken time and money, but it's paid off: People know who we are." Which is a company more distinctive than any house blend and more intense than even mud-thick espresso. What Starbucks is to global expansion, Stonewall is to community marketing.

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This article was originally published in the June 1999 print edition of Entrepreneur with the headline: Taking On Goliath.

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