Philz Coffee CEO Spills the Beans

Philipp Stauffer of the Wharton Club of Northern California hosted an incredibly intimate evening with Jacob Jaber, the CEO of Philz Coffee, at the new Philz Palo Alto location (picture above is of Jacob at that store).

Jacob talked about his and his father's success expanding Philz from a single grocery store in the Mission district of San Francisco into the 10 store Philz Coffee experience most San Franciscans know and love today. Jacob said his goal is to have 14 stores by year's end, 40 stores within a few years, and to be "all over the world" after that, all while maintaining the One Cup at a Time culture that distinguishes Philz from other coffee shops like Starbucks & Peets.

And here's the thing -- it seems possible that he could pull it off.

Explosive Growth

The thing that kept going through my mind as he gave his talk to the Wharton Club was that back in the 1970's, Starbucks was also just a single coffee shop, and that the values that Jacob holds dear -- providing an incredible customer experience and brewing the best cup of coffee -- must have once been important to the founders of Starbucks too. And yet as any company expands, it almost always loses the character traits that make it special when it's small and intimate.  Starbucks has traits that make it great today, but "intimate" isn't one of them.

I've already seen danger signs of this happening with Philz, and Jacob mentioned them in his talk below. For example, Philz coffee is offered on Virgin America flights, but it "doesn't taste as good" according to Jacob -- and he's right. The Virgin coffee experience doesn't come close to the experience at a Philz location. To mitigate, Jacob only put the Philz logo on the Virgin seat-back ordering screen. Jacob's point was that although it may not be the same experience as having a cup of coffee in a Philz store, it's still "way better" than any other coffee you can get on an airplane. Brand dilution or clever brand extension? I'm not sure, but what I do know is that he didn't push the branding as far as he could have because he recognized the danger of the former happening.

The careful and deliberate thought that Jacob has put into expanding the Philz brand intrigued me. His perspective is that Philz isn't in the coffee business, but rather it's in the people business. He sees his job as making sure the retail reps behind the counter -- the ones interacting with customers -- are having a great day, so they can impart their happiness on customers. And he really seems to believe it -- a big sign in the Palo Alto store states that the Philz mission is to "Better People's Day". He spends a lot of his time figuring out how to inculcate the Philz culture in the company as it grows. He's not afraid to ask a lot of questions.  His focus on maintaining a tight company culture as Philz expands past 200 employees made me think of the company manifesto we created at Socialize -- 30 points that guide our company as it grows.  We both believe in the value of strong company cultures.

You Decide

Jacob  says the most important management technique he's learned consists of two words: "You Decide." He uses these words to empower employees to make decisions and relieve him from having to micro manage the company as it grows. And what's funny is that after the event was over, as I sat on a couch at Philz writing this blog post up (with everyone else long gone), I overheard Jacob interacting with an employee. There were trays of untouched sandwiches left over from the event, and an employee asked Jacob what to do with it. And no joke, I heard him tell the employe "you decide," and that he'd like to get what was left to a homeless shelter if nobody else wanted it that evening. Not 10 minutes later a customer sat down near me and completely unprompted, I heard that employee offer the customer a free sandwich from the tray of food, and the customer was incredibly grateful. Imagine it from the customer's perspective -- you come in for a cup of coffee, and suddenly you're offered a free sandwich. And it stemmed from Jacob's "you decide" mantra.

It's all About the Product

Another thing that really stood out was how having an amazing product has driven much of the success of Philz and makes Jacob's job way easier. This may sound obvious, but there's something really special about a cup of Philz coffee. If you live in San Francisco or you've ever had one, you'll know what I'm talking about. It really is amazing coffee, and the way it's made -- by servers who really care -- completes the experience (brewed at "somewhere between" 190 to 200 degrees, Jacob says -- and his favorite blend is Tesora). Here are some examples of how actually brewing an amazing cup of coffee has impacted Jacob's job as a CEO:

• Jacob has never had to scout space for his Philz locations. Landlords come to him and ask him to open a Philz location in their buildings (even in the prime Palo Alto location) because the shops are so popular
• Jacob has been able to hire an amazing senior management team -- supply chain manager from Nabisco, HR manager from Macy's -- because they knew and understood his coffee, and by extension, his vision for the growth of Philz was clear
• The corporate buyer for Virgin America lives across the street from a Philz location. In the video, Jacob describes how the Virgin buyer said "of course" when approached about carrying Philz coffee on Virgin flights, because he'd had Philz coffee many times and loved the coffee
• Jacob has been able to assemble a dream team of advisors -- including a Harvard Business School professor who's writing a case study for Harvard MBAs about the Philz story -- because of the quality of his product

Watch the video and leave a comment -- tell me if you think Jacob can pull off an expansion of Philz while maintaining the philosophy and culture that makes Philz unique. I'm not sure what makes Philz special will translate to a global brand, but I'm also not ready to count Jacob out after meeting him, and  I'd love to know what you think.

Video of Jacob Jarvis spilling the beans on Philz's success:

More killer panos of the Wharton alums at the event:

PS -- for a blog on brewing the perfect cup of coffee at home, read my post on Burr Grinder coffee adventures.