More room for your coffee?
I've been in and out of Lubbock, Texas many times - it's a city known for Buddy Holly, Texas Tech, medicine, cotton fields, oil, Texas skies and syphillis (highest in the country). Standing in line at the airport's only Starbucks, I was thinking whether the city had more room for coffee shops - just like Starbucks offered more room for my coffee cup. A couple of nights before, my cousin who's at the brink of adulthood (!) took me to a place called Sugar Brown's or where all the cool people hang out.
It was a coffee shop. Minutes before, we had pretty decent stir-fry at a Japanese restaurant that attracted only us as customers on that weekend night. But Sugar Brown's is a different story. It's location is not much to speak of. The walls have a hand-painted sky decor. It's coffee - surprisingly funnier tasting than Starbucks - especially for a local coffee shop that did everything from scratch. That weekend night it had over 60 young people (my cousin kept pointing out to people he recognized from his school - that guy finished up last year...his girl friend...I don't get along with him..him...) humming to a live band and sipping funny tasting cap in cups with no logos. The local band played superb music - some country and some gospel. The place started 3 years ago and it's been the same story since - busy, hip and happenning. Why does Sugar Brown succeed? Why does any cult-place succeed in the first place? Why do customers keep going back? It's not just the music. It's not the just cool looking guy with the long beard who made my regular cap (and it felt good for not calling the smallest cup tall).
I don't have much of a point to make in this story - so if you are looking for one there isn't any. I just have questions. Long time ago, an old friend connected me with someone who wanted to get into the business I'm in. I love competition as it makes any growing pie bigger. So I agreed to talk to him. He asked me only macro-economic questions. So the conversation went like this: 'What's the size of the industry?', 'around $35B is spent every year in this space', 'But I read it's bigger','okay - what did you read?','by 2010...',I finally said, 'What if I told you it's $20B than $35B or $45B - would that completely change your objective of getting into this business?' He never asked me how we sell, how our operations are different, what our customers like and dislike - none of that. I'm sceptical of macro numbers in a number of ways - first of all, the guys who do it are other people (chances are a fresh bschool grad or intern) with their own set of assumptions and they may have limited perspective of my industry (I've sometimes easily disproved the very guys who have written these report - try it, it's fun - you just ask them a few simple, basic questions and you'll find that their answers are never simple - they rely on the crutches of buzzwords and complications and they flip). It's good to have a ballpark in mind to know that the industry allows for scale but to base your business decisions on something that seems as funny-tasting as Sugar Brown's coffee. The beauty of business is much more intangible than it seems on the outside. To know a customer's articulated and unarticulated needs deeply is far more critical than what the total size of the industry is. Size of the coffee bean industry in Brazil has lesser meaning for Sugar Brown than identifying which local bands are cool. Yes, one may argue about scale - I don't know if they want to or not - but you do know intuitively that the model itself is scaleable - we all like local music + funny coffee - particularly in 200K+ population cities like Lubbock with empty stir-fry places - don't we?
"Welcome to Starbucks! What can I get you?", the girl in the green-black garb with cool glasses shook me out of my mental escape. "A tall cap, skim, extra hot." "Room for cream?" "Nope" "Right on!" And my not-so-tall tall cappuccino was announced in about one minute...happy with the familiar taste of mediocre coffee, I walked on to the Continental gate.
It was a coffee shop. Minutes before, we had pretty decent stir-fry at a Japanese restaurant that attracted only us as customers on that weekend night. But Sugar Brown's is a different story. It's location is not much to speak of. The walls have a hand-painted sky decor. It's coffee - surprisingly funnier tasting than Starbucks - especially for a local coffee shop that did everything from scratch. That weekend night it had over 60 young people (my cousin kept pointing out to people he recognized from his school - that guy finished up last year...his girl friend...I don't get along with him..him...) humming to a live band and sipping funny tasting cap in cups with no logos. The local band played superb music - some country and some gospel. The place started 3 years ago and it's been the same story since - busy, hip and happenning. Why does Sugar Brown succeed? Why does any cult-place succeed in the first place? Why do customers keep going back? It's not just the music. It's not the just cool looking guy with the long beard who made my regular cap (and it felt good for not calling the smallest cup tall).
I don't have much of a point to make in this story - so if you are looking for one there isn't any. I just have questions. Long time ago, an old friend connected me with someone who wanted to get into the business I'm in. I love competition as it makes any growing pie bigger. So I agreed to talk to him. He asked me only macro-economic questions. So the conversation went like this: 'What's the size of the industry?', 'around $35B is spent every year in this space', 'But I read it's bigger','okay - what did you read?','by 2010...',I finally said, 'What if I told you it's $20B than $35B or $45B - would that completely change your objective of getting into this business?' He never asked me how we sell, how our operations are different, what our customers like and dislike - none of that. I'm sceptical of macro numbers in a number of ways - first of all, the guys who do it are other people (chances are a fresh bschool grad or intern) with their own set of assumptions and they may have limited perspective of my industry (I've sometimes easily disproved the very guys who have written these report - try it, it's fun - you just ask them a few simple, basic questions and you'll find that their answers are never simple - they rely on the crutches of buzzwords and complications and they flip). It's good to have a ballpark in mind to know that the industry allows for scale but to base your business decisions on something that seems as funny-tasting as Sugar Brown's coffee. The beauty of business is much more intangible than it seems on the outside. To know a customer's articulated and unarticulated needs deeply is far more critical than what the total size of the industry is. Size of the coffee bean industry in Brazil has lesser meaning for Sugar Brown than identifying which local bands are cool. Yes, one may argue about scale - I don't know if they want to or not - but you do know intuitively that the model itself is scaleable - we all like local music + funny coffee - particularly in 200K+ population cities like Lubbock with empty stir-fry places - don't we?
"Welcome to Starbucks! What can I get you?", the girl in the green-black garb with cool glasses shook me out of my mental escape. "A tall cap, skim, extra hot." "Room for cream?" "Nope" "Right on!" And my not-so-tall tall cappuccino was announced in about one minute...happy with the familiar taste of mediocre coffee, I walked on to the Continental gate.
posted by pravs at 8:23 AM
0 Comments:
Post a Comment
<< Home