Will Blue Bottle Coffee Take On Starbucks, Or Become It?
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When you hear about some company raising millions of dollars in Silicon Valley, it's often peddling something a little more high-tech than coffee.
But back in January, the high-tech and the old-school aligned when Instagram co-founder Kevin Systrom, Twitter co-founder Evan Williams and other Silicon Valley bigwigs invested $26 million in something entirely devoid of code: a coffee company.
Not just any coffee company, though. This funding round was for the San Francisco-based Blue Bottle Coffee Company (which had previously raised almost $20 million in October 2012), an artisanal supplier that takes the art of brewing very, very seriously. (Here's founder and CEO James Freeman's mission statement: “I will only sell coffee less than 48 hours out of the roaster to my customers, so they may enjoy coffee at its peak of flavor. I will only use the finest, most delicious and responsibly sourced beans.”)
The brand, which has developed something of a cultish following in San Francisco, positions itself as the anti-Starbucks. The company was started 12 years ago, its site reads, partially because Freeman was "weary of the grande eggnog latte and double skim pumpkin-pie macchiato."
But for a brand that sprang into existence by defining itself just as much by what it wasn't (a big mega-chain) as by what it was (a neighborhood joint that treated coffee as an art form) things may get a little tricky.
That's because, as Wired reports, Blue Bottle has acquired Tonx, an online coffee subscription service. It's a move that instantly beefs up the supplier's online presence while extending its reach beyond the company's limited number of physical locations (there are currently 13 -- seven stores in the Bay Area and five in New York City). The acquistion also indicates that Blue Bottle will follow the traditional playbook for any company that has just recieved a ton of cash: expand, expand, expand.
Tonx is simply one item on Blue Bottle's recent shopping spree; the coffee supplier also snapped up Handsome Roasters in Los Angeles, announced plans for a coffee bar and roaster in Tokyo, and has signed half-a-dozen leases for additional locations slated to open this year.
“The big picture is that we have this round of investment and money buys stuff,” Freeman told Wired.
While it's still early, could Blue Bottle eventually rival Starbucks for coffee domination? True Ventures thinks so: "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," said the venture capital firm in a blog post. True Ventures first invested in Blue Bottle in 2012.
Freeman seems less sure. He summed up the problem between expansion (more quality coffee for everyone!) and quality control pretty well himself in an interview with The New York Times shortly after Blue Bottle received its latest financing round. “Could we be the first 20-store chain, or 50- or 100-store chain that doesn’t suck?" he asked.
We may just find out.