Scaling retail businesses take a very special type of focus and leadership. Philz CEO Jacob Jaber shares what it’s taken for his company to grow beyond their local footprint.
Hunter Walk: When we spoke in January of last year, you said Philz was in the “people serving” business and you had 14 Philz locations. You’re still serving people with love (and great coffee) but have opened quite a few new stores since then. Update us on how many and what expansion plans are for 2016?
Jacob Jaber: It’s been a productive and exciting year.
This year, we will be opening 10 stores bringing us to a total of 30 stores in both NorCal and SoCal. Early next year we hope to do another dozen or so stores, a few of them being our first few stores on the east coast. We will be starting in a few lovely communities in Washington DC which is a great milestone for us. Our goal is 1 store 1000 times. More important than the actual message is the spirit of it. What it means is that we have large ambitions to grow and change the way the world drinks and thinks about coffee.
On the other hand, we care deeply about our people and quality is a priority for us not only to preserve what makes us special and different but also continue improving ourselves in every way possible. In other words we want to get better and bigger. This is something the team and I are very committed to. I’m confident we will execute because we care deeply and possess the necessary core competencies.
HW: How have you needed to change/evolve as a leader given this growth? Were there any practices that just didn’t scale?
JJ: I used to work as a Barista with my dad (Phil) behind the counter. Now we have approximately 1000 team members. The most challenging transition for me has been switching from a “do” mindset to a “Cultural and Organizational Effectiveness” mindset. What that means is these days I spend more time thinking more about how decisions are made compared to just thinking about the actual decisions we’re making.
Fortunately, I LOVE learning and can usually adapt pretty quickly. Additionally, we have a phenomenal team that’s passionate, diverse and extremely impressive on many dimensions. We have a culture of embracing a learners mind-set so we are efficient at getting to the right solutions without hurting each others feelings – that helps. I will never forget where I came from and will always be involved in the most important details because it’s the details that make us who we are however it is my goal to make myself irrelevant at the same time. It all comes back to handing over the handmade cup of coffee for each customer in a way Grandma used to serve you food at her house. It’s a challenging and exciting time for me personally and professionally.
HW: I know you’re also very interested in Philz locations not just making money, but making an impact in their local neighborhoods. What sort of community outreach occurs when you open a store?
JJ: Fundamentally our concept is beneficial to communities. We offer a great comfortable space that welcomes everyone, we brighten peoples days with a personalized coffee and service experience that really uplifts them in a positive way. We offer free wi-fi, strive to put community tables in all of our stores to encourage serendipitous moments between strangers. People have met at Philz and are now married. People have built their companies in our stores. It’s really inspiring to hear these stories. Life happens at Philz.
In addition, at an organizational level we have a wonderful Sourcing Commitment program that gives back to wonderful organizations supporting a healthy lifestyle for farmers. At a store level we leave a lot to our store leaders and they support the community in a way they feel is best. That autonomy results in wonderful things happening in a way that’s most meaningful to that local community.
HW: Lots of capital – both venture and private equity – have moved into the coffee retail space in recent years. How have you approached capitalization? Why do you think the industry in general has started to take on investment?
JJ: People are looking for something special. Millennials in particular crave quality, convenience, sustainability and authenticity. This translates into a big opportunity for the right coffee player. Possessing these traits that I mention while being accessible gives the opportunity to serve the masses. There are no large coffee companies that do this really well. We believe we have a lot of this criteria but are striving to get better so we are excited about the future. I think investors realize this trend along with the larger folks who are trying to be as agile and progressive as possible to keep up. At the end of the day, I think the success of one doesn’t necessarily mean the failure of another.
HW: Presciently, in our 2014 discussion you asked for startups to help make parking your car easier. Since that time we’ve seen Luxe, Zirx and others launch. Have you invested in any of these companies or tried them out yet? Are they delivering what you envisioned?
JJ: It’s funny, I actually Uber to places I know have challenging parking situations. Of course I bring along my Philz with me 🙂