Why Google and Facebook Buy This Product for Their Employees

0:00If you make an amazing product and you have a strong brand and your team and your ethos is a good vibe. then I think it helps pave a lot of the path for you.

0:21Hello and welcome to Shopify On Location. I'm Shuang Esther Shan coming to you from our space in San Francisco. Having Google headquarters serve your coffee might sound like an impossible task. And Kobe Barr and Ryan O'Donovan didn't have that goal in mind when they started Verve Coffee in 2007. They just wanted to go surfing while running a fun cafe. Verve Coffee became the go-to fuel for many Silicon Valley tech giants by focusing on sourcing great tasting coffee while supporting farmers and the environment. Beyond companies like Facebook and Salesforce, Verve Coffee can also be found in thousands of stores such as Whole Foods and REI.

1:09Colby is here now to share how Verve Coffee grew from one cafe to being a key player in this new wave of coffee culture. Colby, welcome to the show. Thank you so much for being here. Thanks for having me. I think that dedication to just the quality of the end product is a big reason why Verve was selected by tech giants to use on their campuses like Google. So tell us how that relationship came to be. Yeah, the tech campus coffee integration, it's been a really fun journey because we were so early at what, again, is now referred to as third wave coffee. There were barely any cafes that did that, let alone hotels or grocery or restaurants or office coffee.

1:58But being situated where we are and having founded ourselves in Santa Cruz, California, just in 30 minutes over the hill from basically Silicon Valley in an hour south of San Francisco, we did always have this connection to Silicon Valley, both just geographically and then for the same reasons that we love Santa Cruz and its proximity, so do a lot of people that work in Silicon Valley. And so we ended up meeting people by living in Santa Cruz and having this connectivity to tech that really kind of started opening up doors for us to know people in that industry. And at the same time, the campuses and the tech giants wanting to have the best environment for their employees, they saw coffee as critical.

2:43And they're the exact clients that love third wave coffee. So they wanted to bring that to their campuses really early. In fact, they were, like Google was our very first account over the hill there in Silicon Valley. Really early. I mean, it was probably, gosh, 2010 or something, maybe three years into running our business. And they were really quite early, but they were just wanting to push the envelope of what could be brought to their people. So anyone offering business advice would say it's hard to run a profitable cafe. Why did Ryan and yourself want to start Verve Coffee? And back in 2007, when we first kind of had the idea of doing this project, it was because we both had loved coffee.

3:30And Ryan, my co-founder partner, had been kind of obsessed with coffee since he first went to college and had worked in all the, you know, the Starbuckses and the Pete's and weird drive-thrus and moved to Portland and really was just deep in the scene. And I had taken a different path and was working and doing some other business, but had always loved coffee and really wanted to start my own company. And so it's kind of like a lot of people, I think, get into coffee accidentally or through a cliche way of coffee houses are cool. Wouldn't this be fun? And I'm kind of no different.

4:12and so I was in a coffee shop one day and thought maybe this is like what I want to do I'm always in these places and I love them and how do you begin so I actually just called my coffee geek friend I knew from college which was Ryan we were both musicians and together and yeah one thing led to another and it kind of just quickly started from there and a lot of the beginning days you were focused on the taste and that translates to getting the best beans possible. So how did you first tackle finding the right farms and the right people to help you source the coffee beans? Yeah, that started pretty early.

4:52I mean, when we first started the company, I mean, we really had no idea, really no idea what we were doing. And we had no idea what it, definitely no idea what it would become. But also even just the form or path of the company. We really just wanted to start a coffee company to share coffee with the people based on this movement we were seeing happening that was kind of really coming out of Portland. Now people refer to it as like third wave coffee. First wave coffee being kind of grandparents canned coffees. Second wave coffee being espresso culture and sort of the Starbucks movement. And the third wave coffee is kind of what a lot of people now think of as coffee, where you see latte art, et cetera, that kind of category of coffee.

5:38So when we started, we just wanted to be part of that movement that was just barely starting. In San Francisco, Blue Bottle had one little roll-up door kiosk that Ryan's brother worked at. And there was one other shop just getting ready to start in the mission. So So we were really, really early. One of the first things you need to do as a coffee roaster is buy coffee. And so I ended up taking the lead on that because my family, I grew up in a farming family, pears and wine grapes up in Northern California. So as soon as I started looking at, well, where do you buy coffee and started talking to importers, I just sort of just fell down this rabbit hole.

6:24I became infatuated with where coffee comes from and sort of the sourcing of it and the differences between mildly okay coffee, good coffee, and exceptional coffee. And that began a multi-years long journey and sort of adventure around the world trying to find out where these coffees come from. When we travel to go look for coffees, ultimately what you're really trying to go find are coffees that taste amazing. And so the reason coffees taste amazing is because there are specific types of coffees that just taste amazing, especially if they're grown in particular areas on particular slopes by particular people, meaning specific farmers.

7:13The hand of the farmer is a big part of what I consider my extension of terroir. And so we really just need to get out there and go find those people, taste coffees, and get an understanding of what are the ingredients that come together to make the best coffees in the world. And that's sort of what we've put a lot of effort behind at Verve. Speaking about supporting farmers and their local economies and environment, Verve Coffee invested in growing seedlings four years ago in Colombia. and some of today's coffee actually comes from that farm. Tell us about that initiative. We had an idea a number of years ago about what would be like one thing you could do to help create a sustainable future for coffee or one thing Verve could do that would be kind of succinct to have either a give back and or just kind of contribute back to what we call farm level, back where coffee comes from.

8:09And at the end of the day, if you kind of think like into the first principles world, it's, you know, coffee's a fruit. A lot of people don't know that. They think it's a grain. We call it a bean. So that's our bad, but it's really actually a fruit. Hence all the nuanced flavors that we want to help showcase. But at the end of the day, that fruit grows on a plant. And a lot of these producers, we work with small producers, their sustainable future is not only the price that they can get paid, which is really determined based on the quality they produce, but also how much coffee they have to sell.

8:43So we thought, well, what if we could help a nursery get produced of high quality tasting coffee varieties that producers want to grow? And so we worked with a really small community up in Northern Columbia, and we planted 60 ,000 seedlings of an heirloom variety that happens to just taste amazing. And we just got our very first harvest of it this last year, and it's a phenomenal, phenomenal coffee. And these producers are actually utilizing these seedlings to not only enhance their own farm, but a lot of them are using them as the impetus to get their next generation involved. So much of the world is driven by work that comes out of Silicon Valley and to think you're actually fueling the people who are shaping so much of our lives with the technology that comes out of Silicon Valley.

9:42That's funny you mentioned that. I think about that all the time.

9:50Coffee is something that obviously, you know, you put in your body and it has a function and an effect and it's a ritual of how people start their day. I know for sure some of our biggest fans on these tech campuses are the engineers. They're like the ones that become the coffee geeks, and they're really all about it. I mean, broad statement, but we see a lot of that in the different buildings we go in. The engineering buildings go through a lot of coffee. And it's pretty cool to think of how much of society is kind of being altered through some of these tech concepts to know a lot of those people started their day drinking coffee.

10:26And, you know, you wake up, have a cup of coffee, kind of get motivated, kick off your day. And I do wonder what parts of technology have sort of been sparked on a cup of Verve coffee. Also on the flip side of that is you happened to be born in California. You had this affinity towards Santa Cruz and you decided to start Verve in that part of the world. Do you think Verve coffee could have existed anywhere else? I know a lot of people have created great coffee companies all around the United States and all around the world, Scandinavia to Melbourne to Asia, etc. But I do think Verve really was meant to be built where it was specifically.

11:10Even I wonder if we were built in San Francisco, how would it have been different? Would it have been better, not as good, faster, slower? You know, the one thing about being in California is it's, you know, one of the biggest economies in the world, fifth largest economy in the world. There are more people in California than even in Canada. So when we talk about being in California, we're really talking about in some ways being in a country. and also the fact that we are adjacent to Silicon Valley is really important. But at the same time, being in Santa Cruz allowed us to sort of do it our way.

11:46In a way, it created a bubble, which we've been careful to not be trapped within. But at the same time, using that sort of autonomy and space to develop our own brand, our own style, our own way of doing things without really being tethered to how everyone else is doing it. From my perspective, as someone who visits San Francisco and enjoys coffee, I think this local third wave is handcrafted beverages I can't make myself at home. And also the coffee roasteries is teaching me something about the farms they work with and bringing me more so into this coffee world. From your perspective, what is your view into this new wave of culture?

12:32Yeah, I think it's the new wave of coffee culture is you could say push and pull or chicken and egg. I mean, maybe we are as coffee companies delivering this different experience and stoking people to be more interested in where coffee comes from, the nuances of it, brewing, varieties, processing types, etc. But also, I do feel like the clients and the customers are evolving at that same pace and at times pushing us as well. So I think the coffee consumer is at large more sophisticated than ever across the board. I mean, you have coffee geeks on Discord channels that know as much as anyone about espresso puck preparation and brewing ratios as anyone out there.

13:21And you also have just the general public now just having a higher and higher, higher expectation of just, quote, normal coffee. So I do think that how you're talking about it is pretty accurate. And then also for me personally, how I came across Verve is I had to come up with new story ideas for Shopify. So I became very curious as to who were the first individuals that decided to use our platform in the early days. And so I did a data query and sure enough, Verve Coffee was amongst the earliest merchants. So back in 2009, why did the team want to start selling online? Even when we first started and we had one little thousand foot shop in Santa Cruz and a little 600 foot roastery next door, because my co-founder partner and I and our first couple employees sort of were out to prove it to the world, really to ourselves.

14:23But we wanted to share what we were doing with as many people as possible.

14:33because we thought it was so fun and fascinating. So we had had just a splash page, I think, with like a coffee tasting spoon on it and some kind of like snarky comment, probably. But when it became time to sort of think about, well, how can we even have people who don't live near our one store experience our brand? And we were getting people emailing us saying, hey, can you send me coffee, et cetera, et cetera. And people would come by because Santa Cruz being kind of more of a, at times in the summer, tourist place. A lot of people would say, oh, I live in New York. I live here or there. And I wish I could get your coffee.

15:11So it really got us thinking, well, how do we do that? And so we set out to create our own, not just a website, but a web store, which was at that time, people would make a website and then have a button somewhere on it that said store. But I told the team, no, I want our website to, when you land on it, it is the store.

15:33And so we had spent a lot of money with some developers in San Francisco to build that for us, and we didn't like any of it. And then one of the guys who, one of the people who worked in our marketing department, which was like two people, said, hey, I found this company, you should check it out. It's called Shopify, and we can just build our own website. And so we just scrapped the tens of thousands of money that we really didn't have to spend and scrapped it and then just built it ourselves with Shopify. Very excited to chat about how Verve is innovating with new product lines. I'm joined by Colby Barr, the CEO and co-founder of Verve Coffee.

16:14While you're listening to our show, do us a favor and give Shopify Masters a follow and let us know what you think of the episode with a review. Thank you. So Verve has been growing a lot and it's experimenting and innovating in different product lines. You have created cold brews and also entered into instant coffee. Tell us, how did you know that those were the right categories to experiment and enter into? Yeah, we've always loved innovation at Verve. In fact, my co-founder partner, who is innovation and category design kind of obsessed, we always are trying to think of how can we be doing something differently?

16:53So we had sold at the time what was cold brew coffee, you know, a lot in our stores, like a lot of companies. And we were actually one of the first companies really to be pushing nitrode kegs. We liked cold brew, but it never, we always wished it tasted more like our brewed coffee. And so when it came to cold coffee in our stores, we will do like an iced pour over. So you can really just get this fully enhanced, vibrant, cold coffee. And we thought, it's too bad that you can't just make cold brew taste like that. And then we realized, well, why don't we do that? And that was what actually kicked us off to develop what we call flash brew, which is hot brewed, flash chilled, oxygen-free environment coffee.

17:39So you get all the vibrancy and all the flavors that come. You can only get from coffee being brewed at around 200 degrees. And then we flash chill it so you can actually have that cold coffee experience. but you get all those vibrant flavors and all of those kind of nuanced aromatics of a hot brewed coffee, but in a cold coffee. Best of both worlds. Yeah, the best of both worlds. And really, the reason we even kept pursuing that and we have it canned now and now we're working with oat milk lattes or our instant was just wanting to, again, share our coffee experience and our coffee brand with people kind of no matter where they are or what they're doing.

18:20So Verve Coffee kind of on demand was the idea, but in a way that would never sacrifice any quality. So it took a little while to figure all these things out. But now we, through our Instant and through Flash Brew, we kind of really feel like we've figured out how to deliver that to people. On the Instant Coffee front, I feel like it's a category that no one has touched in decades. And it's very cool to hear how Verve has tackled this problem because it also goes hand in hand with your partnership with REI, where people who loves to be in the outdoors camping, they can actually experience Verve while they are on the go and have that great tasting coffee in an instant format.

19:07Yeah. And that's a great example of it. So actually, I had Instant this morning because I was driving up here from Santa Cruz to San Francisco. And yeah, it's a really, really an amazing, easy, simple form factor to just have a beautiful cup of coffee. Although Instant Coffee has been around for a long time, grandparent era, kind of first wave stuff. But the way we do it now is we work with a partner, but we brew the coffee to our exact specs and then we freeze dry it. So So we say we brewed it, just dilute it. But the idea is just that you don't have to worry about the brewing. You can add it to 10 ounces of water, hot or cold, or milk or oat milk, whatever, and you're off to the races.

19:51There's also a kind of mental hurdle or perception bias against instant coffee because it feels like as an established roastery, you would never even touch that category. So it's very cool to hear that Verve was willing to innovate in that category. Yeah, you know, I have to give a lot of credit to this part of the company's perspective to my co-founder partner, Ryan O'Donovan, who is kind of always anti-establishment. So if you say left, he says, maybe it should be right then. And so when everybody was trying to be too cool for school, you know, coffee geeks with twisted mustaches and all that out of a Portlandia episode, you know, Ryan was the first person to say, man, I think we should bring back batch brewers.

20:40And now, you know, a lot of the best cafes also run really nice batch brewers because they just make coffee so well. so with instant or these other formats where you would maybe get a little nervous and sort of wondering should we be doing this how's this going to affect the brand etc etc ryan would be one of the first people to say who cares what anyone else is doing like we're if it's great coffee we can do this and like let's just like let's just lead the way and so that's verb's been like that since day one that we always are trying to push things regardless of who's doing it or not doing it which is probably how we ended up being one of the first 100 or so Shopify accounts as well.

21:21Just we're not afraid to take the leap. And then on the wholesale front, that is something also roasteries might shy away from versus where Verve is actually expanding into wholesale. I think within the last year, it's grown 40 % and you can find Verve in Whole Foods and REI. So how did you go about establishing those relationships and nurturing them along the way? Yeah, our wholesale relationships, like all relationships, take time to develop and also require serendipity. So if you make an amazing product and you have a strong brand and your team and your kind of ethos is a good vibe, then I think it helps pave a lot of the path for you.

22:12And then also if you have something special and you have something working, word spreads. So in our world of working with distributors or people look at, you know, spins data like our like the Google analytics of the grocery world, you know, people really track this data and they see what's working and then they want to be part of that as well. So kind of momentum creates its own momentum. them. I also wanted to ask about global expansion. And I don't know if this is a link that a lot of people think about. But when I look at San Francisco or Bay Area born food and beverage brands, a lot of them expand outside of San Francisco, a few locations within California.

22:59And then they also all go to Japan. Tartine went to Japan. Dandelion Chocolate went to Japan. And of course, Verve Coffee also is in Japan. Is there some sort of pipeline where companies out of Bay Area experiment with international expansion by entering into Japan? I can't speak for other companies. And I do know like Dandelion is there and some of these other brands, which is cool. And I've seen their facilities. But for us, there's just a resonance. For Verve, that's how we got there. Before this opportunity ever came up and people would say, well, when are you going to the East Coast? And I used to jokingly say, I think we're going to keep going West.

23:42And then that actually is what happened.

23:47Japan is an amazing place and an amazing culture and they love West Coast brands in the United States and they have impeccable taste and really care about craft. And so I think it's also Japan acting as a magnet to pull, they're wanting to pull these best brands over there to have that craft experience shared.

24:21And I think Japan's coffee culture is also like on another level where there's extreme precision and just like really cool cafe settings as well. So the other side of the business that helped Verve grow is the subscription business, which definitely got a boost during COVID as well. Tell us about that side of the business. Yeah, the subscription part of our web business is really, really important because it's reoccurring revenue. But really for us, it's about having retention and really excited customers that it's sort of a proof point that people like you. They're willing to stick with you and they want your product and they like your service and they want to still be part of your brand.

25:06So for me, it's kind of a pulse check. But it is also an important part of our business. And yeah, it's almost half of our web sales is that. And it's been really, really fun to grow that as well. And we've been really organically. So we haven't leaned too hard into really how we go about to try to acquire customers. It's been a pretty natural growth plan, but it's worked well and we have really high retention. And that's the most important thing is to have our customers out there be really excited and in a way endorsing Verve by showing up and drinking it. Very cool to hear the stories behind Verve and looking forward to seeing how the team grows over the years.

25:50Thank you so much for being here. Thanks for having me. It's been a great experience. that's Colby Barr of Verve Coffee and thank you for joining us on Shopify Masters our show is produced by Megan Coyle and Gogo Zoger our engineers are Matt Schwartz and Miku Betlam Benjamin Gottlieb is our supervising producer and I'm Shuang Esther Shan come back next Thursday to hear another episode of Shopify on location from San Francisco

26:24Thank you.