Video By Mary Engels
July 23, 2013- By Steven E. Greer
We have exclusively learned that the Blue Bottle coffee shop in struggling “All Good Things” market is leaving Tribeca, heading for a new market to open in Hell’s Kitchen. The bakery next to Blue Bottle recently closed as well. All Good Things seems to be in a strange location and not filling an unmet need that other sources, such as Whole Foods, are not currently doing.
The Wall Street Journal By EVELYN M. RUSLI
Tech Cash Pours Into Food Start-Ups
There is a frothy new deal in Silicon Valley, and it gives a taste of where some investors are pouring money these days. A group of well-known technology investors has bought a $20 million controlling stake in Blue Bottle Coffee, a specialty coffee retailer that is gaining fame among the Bay Area’s hipsters. Among the group: Tony Conrad, a partner at True Ventures, Google Ventures, Twitter Inc. co-founder Evan Williams, and Kevin Rose, the founder of the Digg website.
“It’s the Apple of coffee,” says Mr. Conrad, who will be the company’s largest investor, through his firm. Blue Bottle, based in Oakland, Calif., is a tiny chain with locations in San Francisco and Manhattan. It is part of what coffee aficionados call the “third wave” of coffee, defined by premium micro-roasters like Stumptown Coffee Roasters.
These boutique labels have drawn plenty of investor dollars. Private-equity firm TSG Consumer Partners, a former backer of Vitamin Water, bought a large stake in Stumptown last year. Jack Dorsey, Twitter’s other founder, recently made an investment in Sightglass Coffee, a San Francisco-based coffee brand.
The new Blue Bottle investment, which values the company at less than $30 million, also comes as other tech investors—having changed the world with the social-networking revolution—are eagerly embracing food through a string of investments and new start-ups
In some ways, Blue Bottle’s slow-drip approach seems to run counter to Silicon Valley’s high octane culture. At Blue Bottle cafes, each cup of Joe can take several minutes to make. Coffee doesn’t spew out of a pot. Instead, the beans are freshly ground for each serving and dropped into thin filters. Hot water is then carefully poured over the top of the grounds, which eventually flow to an awaiting mug.
And unlike many of the start-ups of its new investor group, the company was never designed to scale fast. At the heart of the operation is James Freeman, the bespectacled and detail-oriented founder of Blue Bottle, who started the company a decade ago at a farmers market. Mr. Freeman, who will stay on as chief executive and maintain a minority stake, is near militant when it comes to quality control, which puts a natural limitation on how fast the brand can grow.
The coffee bags that are sold in its stores, for instance, have to be roasted within 48 hours, which means a Blue Bottle roastery must be located near every retail outlet. And when it comes to location, Mr. Freeman is especially selective, taking into account the neighborhood and the architecture of prospective sites. “Things like leverage and scale are struck from my vocabulary,” Mr. Freeman says.
Mr. Freeman is also more cautious in harnessing the power of the Web. He only joined Facebook FB -0.34% a few yeas ago because of his wife and his profile says, “I am ambivalent about Facebook, or maybe I just think I am.”
Blue Bottle’s investors don’t seem to mind. Several said Mr. Freeman was a big factor for them. “I see James as an Ev Williams or Caterina Fake,” said Mr. Conrad, referring to the Twitter founder and Ms. Fake, another new Blue Bottle investor and a co-founder of the Flickr photo site.
“If anything we need to be more like him,” said Mr. Rose. “Sometimes we need to slow down.”
Located in Tribeca’s gourmet food market “All Good Things”
On Church and Franklin Streets
(full story soon)