La Colombe Coffee Roasters: Todd Carmichael and J.P. Iberti

When Todd Carmichael and J. P. Iberti met at a grunge concert in Seattle in the 1980s, they were an unlikely pair. But they shared a love for great coffee, and the two friends began to dream about opening a cafe and premium roastery that would produce coffee at a higher quality than anything available in the U. S. at the time. A few years later, Todd and J. P. co-founded La Colombe Coffee Roasters in Philadelphia, and went on to play a leading role in the "third wave" of specialty coffee in the U. S. Today, their coffee drinks are widely available in grocery stores all over the country. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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• 0:00Guy Raz?

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• 0:45Guy Raz?

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• 1:30Guy Raz?

  based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2:00 AM kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one Hard question. How do we make sure AI goes well for people?

• 2:14Guy Raz?

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• 2:54Guy Raz?

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• 4:21Guy Raz?

  NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new, expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it.

• 5:06Guy Raz?

  If your revenues are at least in the seven figures, get NetSuite's free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/built. The guide is free to you at netsuite.com/built. netsuite.com/built. Hey there, it's Guy here. And really quick, before we start this brand-new episode of the show, How I Built This isn't just a podcast, but also a book. A book filled with stories and lessons from some of the world's greatest entrepreneurs about the gift of failure, the beauty of ideas, and the path to building something meaningful. You can preorder the book right now, wherever you get your books, or by visiting guyroz.com.

• 5:57Guy Raz?

  Just a quick heads up before we start the show. There are a couple of swear words in this episode, so you may want to keep that in mind if you're listening with kids. OK, on to the show.

• 6:09Speaker 01

  We started the old investor discussions. And we landed on one. We did the deal, and that lasted 52 days till the first board meeting. I said, OK, I believe that cold brew is going to be a thing, and La Colombe needs to be the father of it. And they said, nah, we don't want to do that.

• 6:30Guy Raz?

  What'd they want to do?

• 6:31Speaker 01

  They wanted us to build 200 cafes. So I just, I said, we're out of here. We're going to buy you out.

• 6:41Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:55Guy Raz?

  I'm Guy Raz, and on the show today, how two part-time baristas in Seattle became best friends, moved to Philadelphia, and went on to pioneer the specialty coffee movement in the US by founding La Colombe Coffee Roasters.

• 7:13Guy Raz?

  Tell me if this sounds familiar to you. You're in your early 20s, and you don't really know what you want to be when you grow up. And one day, you're hanging out with your best friend, maybe sharing a meal or a drink in their apartment or at a dive bar. And then one of you says, hey, you and I, we should totally start something together because we are an awesome team, like a record store, or a beer bar, or a podcast company. Whatever it is, you both get really excited and start coming up with all kinds of ideas. The type of beer you'll serve, the kinds of records you'll play in the store, the podcasts you'll make. You can't stop thinking about it. But then, a few months later, reality tends to kick in.

• 7:58Guy Raz?

  You get a job offer with health benefits. Your friend gets into a relationship with someone who wants to move across the country. And the whole idea fades away. Have you been there? I have. So have Todd Carmichael and JP Eberti. Except, in their case, it didn't fade away.

• 8:20Guy Raz?

  Back in the late 1980s, Todd and JP dreamed of starting a specialty coffee shop. Well, it took a while, but eventually, they opened it up and called the shop La Colombe. Now, this happened to be around the same time that two other coffee companies were starting up, one in Chicago called Intelligentsia, the other in North Carolina called Counterculture. And along with La Colombe, these three coffee brands came to be known as pioneers in the so-called "third-wave coffee movement" in the US. The first wave was instant coffee and diner coffee, basically coffee that was cheap and generic, that people drank a lot of after World War II.

• 9:04Guy Raz?

  Then, in the 1970s and 80s, places like Pete's Coffee and later Starbucks introduced Americans to the second wave, coffee with a more sophisticated flavor profile and European-style drinks like espressos and lattes. And the third wave? Well, it basically defines what most high-end coffee shops are today: places that source high-quality beans directly from farms, often roast the beans themselves, and have highly-trained baristas pulling your espresso drinks. La Colombe started out as one shop in a rundown part of Philadelphia. Today, you can find its cold-brew cans in tons of convenience stores across the US,

• 9:49Guy Raz?

  and the company is now valued at around $1 billion. But to get there was a long, slow grind, as you will hear them explain. JP Aberti, the JP stands for Jean-Philippe, was born in southern France. His dad ran a business supplying fresh meat and produce to restaurants. But Todd grew up, literally and figuratively, a world away, in eastern Washington State. And at home, a lot of times, his mom struggled to put food on the table.

• 10:22Speaker 01

  My father left just as I was born. My parents are both bipolar and so that kind of really dictated a lot of their lives. But my father did kind of come in and out as folks who struggle with their minds do. But my mother was really the constant.

• 10:41Guy Raz?

  What kind of jobs did your mom do to support the family?

• 10:45Speaker 01

  Well, first, she couldn't maintain an office job for very long. And what was left for her was either typing pool. But a typing pool is very difficult for a bipolar person because they're so inconsistent. You know, they could work for four straight days, but then they could not show up for two. Right. And so it became cocktail waitress. And usually not in the glamorous places. She was a cocktail waitress in like truck stop kind of places.

• 11:14Guy Raz?

  So you were mainly raised by just your mom and presumably not a whole lot of financial security as a kid?

• 11:21Speaker 01

  Yeah, yeah, yeah. I guess they call that food insecure. We just called it kind of hungry back then. And I had three sisters as well. And so we kind of took care of each other. And I knew I needed to leave my hometown. I just didn't know how to do it. I had a globe that my grandfather gave me and I studied it and studied it and studied it. And I started these dreams and they weren't monetary. It was more like I wanted to live. I wanted to live a life. And I knew it couldn't happen there.

• 11:49Guy Raz?

  What did you do for money to pay for your own, like your car and whatever? Like, what did you do? How'd you, did you have like side businesses as a kid?

• 11:57Speaker 01

  Yeah, I did lots of different things. So I had, one, my main gig was farming. And then I had side gigs. I'm really good with my hands. I can fix things. And so I started buying equipment and refurbishing it and selling it. It started with lawn mowers and it got all the way to large equipment. So there was always this side gig going on. And then the main job was harvest.

• 12:18Guy Raz?

  You got into distance running, like cross country, I guess, in high school. And I guess you must have been a pretty good runner. Is that right?

• 12:27Speaker 01

  Yeah, I was a state champion team. We won two or three years in a row. I was in top 10 in 5,000 and then I got a full scholarship to the University of Washington.

• 12:36Guy Raz?

  Wow.

• 12:37Speaker 01

  And bear in mind, I mean, so poor kids don't really get great educations for lots of reasons. One is that you just keep moving a lot, right?

• 12:44Guy Raz?

  Yeah.

• 12:44Speaker 01

  So by the time I got into the University of Washington, I still, I didn't know how to add fractions. I mean, I didn't know anything about the world. I didn't know nothing. And so there was this big piece of makeup that happened once I was able to leave and start real school. So I didn't really start school, school until I got into the University of Washington.

• 13:04Guy Raz?

  But it sounds like you were like really interested in learning. I mean, maybe school was difficult for you, but it sounds like you really actually applied yourself.

• 13:13Speaker 01

  Oh, yeah. So bipolar disorder really takes hold of you in your early twenties, right? And, you know, I've seen it in my family. And so I was against a ticking time bomb.

• 13:23Guy Raz?

  You thought you, it was just a matter of time before you were diagnosed?

• 13:26Speaker 01

  Yeah, I was afraid it was coming.

• 13:28Guy Raz?

  Yeah.

• 13:28Speaker 01

  So I wanted to get as much in my brain before that happened as possible. So I was under a time constraint, I thought. I remember thinking that. And then I think the desire to apply myself at school that way, too, was just absolute fear. Just the fear of failing and the fear of being the first to go and not being, making it through. Or I don't want to be poor.

• 13:50Guy Raz?

  Yeah.

• 13:51Speaker 01

  I had this deep fear of being in a trailer. And it was real to me.

• 13:57Guy Raz?

  So 1982, you are in Seattle studying at the University of Washington. And you also have a part-time job, right? I guess at the time, this is, this is Seattle before like Sub Pop and Starbucks and Microsoft. I mean, they were sort of there, but it's still like early eighties Seattle, totally different place than it is today. And you got, you actually got a job at Starbucks, right?

• 14:21Speaker 01

  That's right. So, you know, when I showed up, all I really knew how to do well is fix motors and harvest. I couldn't really work where other students were working.

• 14:33Speaker 01

  And I looked into a warehouse, you know, just right off the bus line that would take me to school.

• 14:38Guy Raz?

  Yep.

• 14:38Speaker 01

  And there were these guys dragging these grain sacks around. And I thought, I could, that's grain work. I can totally do grain work. I could hump sacks all day long. So I got the gig. And when I went inside, you know, the names on the bags were way different than I expected. You know, they were like Rwanda, Burundi, Uganda, Panama. And I realized that right then, this was raw coffee.

• 15:01Guy Raz?

  And you probably knew nothing about coffee, I'm assuming?

• 15:03Speaker 01

  I knew zero. You know, I knew that, you know, for my grandfather drank instant coffee. That's just about all, you know? And but what I liked about it was not only was it a gig, but the names. That's the world that I had dreamt of, that these bags actually came from those places, was just mesmerizing to me.

• 15:24Guy Raz?

  All right. So you get a job at this warehouse, moving sacks of beans, right? What happens? I mean, do you, like, I'm trying to figure out how you go from hauling bags of coffee at the warehouse to getting really interested in coffee?

• 15:38Speaker 01

  Well, what I really wanted to do, and this probably exposes the kid in me, but I wanted to be a barista. I wanted to be the cool kid, right? And Starbucks wouldn't let me do it. You know, come on. I mean, I was a flannel wearing farm boy, you know, I cut my own hair, you know, it's just, it was just, I probably didn't present as well as they'd like. And so I, I changed teams. I went over to a place called Espresso Roma, and they gave me a shot at it. Then I became this barista.

• 16:11Guy Raz?

  And, and did you learn how to roast coffee?

• 16:14Speaker 01

  Not, I mean, I did, but not to a degree that I would call it skillful.

• 16:18Guy Raz?

  Got it.

• 16:18Speaker 01

  Like, not like JP. I mean, JP's the master of that, you know?

• 16:21Guy Raz?

  All right. So this is 1982, 83. You're, you're working in the coffee place. You're a student at the University of Washington. JP. Tell me about where you grew up. You are originally from France.

• 16:34Speaker 02

  That's right. I grew up in Nice, in the south of France. My dad was a purveyor of fruit and vegetable. He started a business and became pretty successful. And my mom was a homemaker. So I had a good uprising. I have two older sisters that basically were out of the house when I was growing up. And I think my parents were over having children when I was growing up.

• 17:04Guy Raz?

  I guess as a kid, you were interested in aviation flight. Is that true?

• 17:08Speaker 02

  Yeah, that's from, you know, I wanted to be a pilot. It was fascinating by, you know, flying an airplane. And my sister married an American guy from Seattle. So that was the connection to the Northwest.

• 17:24Guy Raz?

  Oh, got. So you knew about Seattle from him. And then I read that you basically, after high school, went to Seattle to go to flight school, right?

• 17:34Speaker 02

  That's right. I did a lot of my flying out of Boeing Field in Seattle. And I went to a little cafe called Torre Fazione Italia, which was in Pioneer Square. First generation Italian family. And basically, we became really friends. And one day, they offered me the job. And I took it. I became a barista.

• 17:56Guy Raz?

  OK, so you are in flight school and get this job at this coffee shop, this coffee bar in Pioneer Square in Seattle. And Todd, how did you meet JP? Was it through the coffee shop somehow?

• 18:08Speaker 01

  So first, I'm hearing these rumors that this French guy is working for TI. We called it Torre Fazione Italia's TI.

• 18:16Guy Raz?

  And how did you hear? Why would you have even heard that rumor?

• 18:20Speaker 01

  Because you got to imagine that there's maybe six cafes in all of Seattle.

• 18:24Guy Raz?

  Oh, I see. OK.

• 18:25Speaker 01

  And to be a barista by then and to be in coffee was like being like a DJ. You know, you were known.

• 18:31Guy Raz?

  Yeah.

• 18:33Speaker 01

  And so TI was like, I have to say, it was at that time was the best coffee roasting company in the United States of America, hands down.

• 18:40Guy Raz?

  Wow, that little shop in Pioneer Square.

• 18:42Speaker 01

  Oh, my God, yeah. Umberto was a very famous roaster in Italy, in Umbria, before he even started roasting in Seattle. So he came in with like top shelf knowledge that no one really had access to. And so there was this rumor, this French guy is around. And there was this new sound that was happening at the time, right? That they called was called grunge, right?

• 19:03Guy Raz?

  Yeah.

• 19:04Speaker 01

  And there was a band called Green River that later would become Pearl Jam, right?

• 19:07Guy Raz?

  Sure.

• 19:08Speaker 01

  So there was this little venue called Oxford, and they put up this stage and this band called Green River was going to come on. And so you can imagine the crowd and they didn't serve like beer in a glass. They served reinier beer in a can.

• 19:22Guy Raz?

  Yeah.

• 19:23Speaker 01

  And I'm standing at the bar solo and this guy walks in. He's got a gold like looks, I think it's silk vest over a white puffy sleeve shirt. And it's this French guy and he actually reaches over the bar and says, may I have a champagne, please? So he orders the champagne. And I said, are you this Jean Pierre guy? And he goes, Jean Philippe. And I was like, okay, Jean Philippe, you roast for TI? He goes, yeah. And then the next question is, he goes, do you have a stove? And I said, yeah, I have a stove. And he goes, can I use it? And I'm, you know, I'm still, I have very little money and I go, no, you could use it anytime as long as you cook for two. I thought I could get some free food out of this. And that's how we met.

• 20:05Speaker 01

  And literally Thursday, Friday, Saturday night, every week for the next three years, he cooked dinner at my house.

• 20:11Guy Raz?

  So JP, is that your recollection of what happened?

• 20:14Speaker 02

  Yeah, I'm not sure about the gold vest. You know, I'm looking back and I'm not sure I ever owned one of these, but I might have had some. Yeah, I'm not sure about the gold vest.

• 20:27Guy Raz?

  So you you you met Todd and you asked him if he had a stove, like a cooking stove? Like, didn't you have an apartment where you lived that had a stove?

• 20:36Speaker 02

  Well, I lived on campus and it was an electric stove. So it wasn't that great. And, you know, until I left France, I didn't realize how food was important to me, you know? And eighty seven was a different time in America. I mean, coffee was getting here and getting good. But, you know, things like bread, we're not, we're not where we are today. You know, it was a different world back then. So food was important and I wanted to, I wanted to eat. So we, you know, we probably talked about food and, you know, back and forth. And the question was, yeah, you have gas stove?

• 21:12Guy Raz?

  And that's really the kind of beginning of your friendship?

• 21:15Speaker 01

  Yeah, and then from there, we would, we would eat and we would play cards. We would drink whiskey sometimes, remember JP? Or like really cheap wine. And then we began dreaming.

• 21:25Guy Raz?

  About?

• 21:27Speaker 01

  The world's best coffee company.

• 21:29Guy Raz?

  Both of you guys start to hang out and you start to say, hey, we should maybe one day open our own place.

• 21:36Speaker 01

  Yeah, it was, that's how it finished. How it started was with ideas, like, why don't we go directly to the farm? That's what your father did. And I know as working from a farm that if you take the time to come to our farm, you would get the best stuff. So we would talk about this whole concept that later on became coffee sourcing or farm to table. And then later on, we just made it.

• 22:01Guy Raz?

  But meantime, JP, you were still studying to be a pilot.

• 22:04Speaker 02

  I was, but it was, you know, it was a good escape to dream, you know, about, about starting a business. And I was not committed at this time, you know? For me, it was still just a dream.

• 22:17Guy Raz?

  Yeah, you were just kind of spitballing ideas. People, yeah, two, two young guys just hanging out, talking about, you know, wouldn't it be cool if we did this? Wouldn't it be cool if they did with that? Meantime, Todd, you have graduated from the University of Washington. You were, was, was that what you were doing, working at the coffee place? Was that how you were making your living?

• 22:34Speaker 01

  No, so I graduated, I'd applied for and got into business school. And so then I, I got a job as a tax consultant for a company called Ernst & Winnie at the time. It was one of the big eight accounting firms. I was wearing a suit and I had a leather lunchbox and everything.

• 22:51Guy Raz?

  And you do that job for a year, from what I understand, and then you took off. You left the US.

• 22:57Speaker 01

  Yeah.

• 22:57Guy Raz?

  Tell me the story. Why did you leave the US? Where'd you go and why?

• 23:02Speaker 01

  Well, I mean, the why is multifaceted. You know, part of it was it was becoming clear to me that I have a furnace in my brain. Right. So that I inherited certain traits from my parents.

• 23:17Speaker 01

  And that that sort of environment wasn't safe for me.

• 23:20Guy Raz?

  The environment of working in an office?

• 23:22Speaker 01

  Yeah, I had a lot of confidence in my skill set. I had a lot of confidence in myself. It's not that. It's just that I needed to go and find a place that I could fit.

• 23:32Guy Raz?

  Right.

• 23:33Speaker 01

  I knew I needed to put together $95,000 so I could start this coffee company with my best friend.

• 23:38Guy Raz?

  Wait, so you were totally committed to this idea. You really wanted to start a coffee company with JP. And JP, when Todd said, hey, I'm going to go overseas because he went to Europe. And then I'm going to come back and we're going to start this business. Did you take that seriously or did you think, okay, have fun?

• 23:58Speaker 02

  Yeah, I mean, you know, this is closer to 89, 90. At that point, I moved in, working in the afternoon in a production warehouse. So, you know, I was really learning the whole thing about, you know, producing coffee, but also serving coffee. And I really liked what I was doing. So, you know, I didn't mind the dream of starting our own place.

• 24:21Guy Raz?

  Sure.

• 24:21Speaker 02

  But, um, yeah, and Todd ended up going to the south of France, which where I'm from. So, you know, I connected him with all my friends, people I grew up with. And it was.

• 24:32Speaker 01

  And I remember JP, you took that flight. We flew together, remember?

• 24:36Speaker 02

  Yeah.

• 24:36Guy Raz?

  You both flew to Europe together that first time you went, Todd?

• 24:39Speaker 01

  Yeah, he accompanied me and then he spent a week or two with his family. And then he flew back and I stayed.

• 24:44Guy Raz?

  But when you were in France, you did not speak French going in there. You just like landed there and what did you start to do to earn a living?

• 24:52Speaker 01

  Well, right away, it was pretty simple. I took a train into Monte Carlo and I interviewed and got jobs. I mean, accounting jobs right away. Because most of them were like shipping companies, a lot of companies that are there to avoid tax. So they're not really part of the culture. And so, you know, the operating language is English.

• 25:09Guy Raz?

  Sure.

• 25:10Speaker 01

  And I did a lot of odd jobs, that's for sure. Consulting, tax work, accounting, no job too big, too small, kind of thing.

• 25:18Guy Raz?

  Yeah.

• 25:19Speaker 01

  I found a little boat, I reconditioned it and I lived on it. So basically, I always kind of embraced the idea that, you know, you could save money by living in poverty, so don't change that, right?

• 25:30Guy Raz?

  And JP, what did you do for those three years? Just continue to work at the coffee place and study aviation?

• 25:36Speaker 02

  Yeah, so I graduated in 1990, so I became a flight instructor. And I really, really worked a lot in coffee. I mean, we were getting, opening more stores, getting busier and busier, and the business was really blooming. So I was becoming a big part of Torre Fazione Italia. And that was really, it really became my center. Coffee, my coffee profession just took over. This is when I realized, hey, this is going to be my career. You know, my center was the university in flying for a long time, and then it shifted.

• 26:11Guy Raz?

  So Todd, while you were in Europe, I guess, you actually wrote down a business plan while you were there, right? For this idea of a coffee company that you'd been dreaming about?

• 26:22Speaker 01

  Yes, by hand, with a pen.

• 26:24Guy Raz?

  So, okay, so you sat down, and what was the sort of the rough outline of the business plan? Like, what was it going to be? Was it a coffee shop that sells coffee? And what else?

• 26:34Speaker 01

  Well, the idea, and it was both JP and I's really just written down, is that we were comfortable being purveyors. And we wanted purvey to the very best of the best of the best. We had a deep, deep belief that there would be this restaurant renaissance in America. There was going to be this huge inflow of French and Italian high-level cuisine, and that the coffee in America wasn't going to accommodate it. Coffee in America was just dedicated to, you know, fast to go business Starbucks style, that they weren't bringing it to the culinary level. And we, we were that company. We wanted to be those people. And we would work directly

• 27:16Speaker 01

  with the farms. We would work directly with the chefs, that we would bring coffee to a whole new level. And it's not just like salt and pepper on the table, but it'd be, we'd give it a name, a place, an identity.

• 27:29Guy Raz?

  In your mind, JP, do you think this guy's going to come back? Or was that, I'm just trying to, I'm trying to, because it sounds like Todd, you really had a very clear plan. Like you had this plan. You knew you were going to do this one day. Were you kind of, JP, were you just sort of waiting for this to happen?

• 27:44Speaker 02

  I knew you were serious, you know, but I didn't say yes, and I didn't say no.

• 27:48Guy Raz?

  Right.

• 27:48Speaker 02

  You know, I knew a lot about the kitchens. I knew a lot about chefs. I knew a lot about coffee. And Todd had the business and the coffee experience as well. And it was just clear. It was, you know, I knew that once we both said, hey, let's do this, it was going to be a success.

• 28:07Guy Raz?

  Huh. All right. So Todd, after three years, you've saved enough money. Did you just like move back to Seattle and, and say to JP, hey, let's do this? Like, was he, was he ready to, to jump right back in with you?

• 28:20Speaker 01

  So I, I didn't move back to Seattle. I flew there and I squatted in his closet.

• 28:25Guy Raz?

  In JP's closet?

• 28:26Speaker 01

  Yeah, I had a closet that was big enough for, for me to lay in. And I told him I wasn't going to leave until he agreed. Although I did respect how hard that would be on him. We had a long conversation. I could feel that he was leaning. Because, let's get real, you know, there could be no La Colombe without JP. There could be no Todd without JP. And I don't think there could be a JP without, you know, it's like, it, these are the, these are the key ingredients.

• 28:54Guy Raz?

  And so JP, it took you some convincing. How, how long do you think it took you before you said, all right, I'm in?

• 28:59Speaker 02

  Well, I think it was a process, you know, it probably took me the whole three years to get there.

• 29:04Guy Raz?

  The three years while Todd was away?

• 29:06Speaker 02

  Yeah. And really seeing, you know, and something happened with Torre Fashion Italia in 1993. It all came to a, a crossroad. And Torre Fashion Italia was sold. And,

• 29:19Speaker 02

  It was a strange time, you know, I was like, oh, man, this is the end. You know, Umberto is gonna be gone. All the people that, you know, are like family to me are gonna be gone. So then, at that moment, I knew that if I wanted to stay in coffee, I had to do something.

• 29:34Guy Raz?

  Right.

• 29:34Speaker 02

  And that's something, it was clear to me too, that I was not gonna do something on my own. I mean, our friendship was already, you know, a brotherhood, you know, and, and it was clear that that was the way for me to stay in coffee and it's, it was just there, you know, I had to do it.

• 29:51Guy Raz?

  And by the way, did you have a name at that point for your business?

• 29:54Speaker 01

  Well, it's, we had like multiple names, but JP, you threw it out there and it was just so clear to us.

• 30:01Speaker 02

  So I come from a little town called Saint Paul de Vence, who is very well known for the culture, that a lot of painters, a lot of writers spend time there, you know, big name Picasso, Matisse painted there and there, and there's a little bed and breakfast that became really famous because the artists used to stay there and instead of paying room and board, they just left sketches.

• 30:25Guy Raz?

  Yes.

• 30:26Speaker 02

  And it's called La Colombeuse and, and I have a connection to it because, you know, it was one of my father account, you know, we, he served fruit and vegetable there, but we also knew the family very well, the family that founded it were friends. And, you know, I ended up having a summer job there when I was 13, 14, you know, washing dishes and, you know, so I think the inspiration of, of the name is connected to the place, but it's also the symbol of what La Colombeuse, you know, internationally.

• 30:57Guy Raz?

  Because Colombe means, it means dove, right?

• 31:00Speaker 02

  The dove, yeah.

• 31:01Guy Raz?

  Yeah, and, and so that, that sort of evoking that kind of idea, the La Colombeuse was, was the idea behind it, wow.

• 31:12Guy Raz?

  So here's the amazing thing. This is 1993. You're back in Seattle. Seattle is the epicenter of US coffee culture at this point. I mean, this is, it is ground zero for the explosion of coffee in America. And you guys are in Seattle. I mean, it would make total, perfect business sense to open up in Seattle at that point. But instead, you start, you start looking at cities on the East Coast and you end up in Philadelphia. What, why Philadelphia?

• 31:45Speaker 02

  So Philly was a different place then. But we, we ended up walking the city and it's a beautiful city architecturally. The way it's laid out is, is an amazing city, you know? And being European and walking and cycling everywhere, I still use my bicycle to go to work. It just, you know, for me, the fact that we could walk anywhere was just like, this is definitely making the top of the chart right now. And there was huge opportunity in term of getting production space, warehouse space, just because the city was probably at the bottom.

• 32:19Speaker 01

  So the two main beautiful, you know, roads in the city right now is Walnut and Chestnut. They were pretty much closed down. There were no cafes in the city. You know, it's a city of a million some people and there wasn't one cup of coffee. And so JP and I, we went and I said, hey, let's, remember JP? We sat and we had some beers together. And I chose to interpret everything that we'd seen this way. That if you were going to take an elevator ride and you were looking to get altitude, you want to get in on the ground floor. And that Philadelphia was displaying that it is here on the ground floor and it can't stay this way and will not stay this way.

• 32:56Guy Raz?

  This was, had you, either of you ever been to Philadelphia at that point?

• 33:00Speaker 02

  No.

• 33:00Speaker 01

  Never.

• 33:01Guy Raz?

  You'd never been there?

• 33:02Speaker 02

  Never. I mean, we saw great opportunities in Philadelphia. You know, we saw, we saw a city with great bones. And it was, it was fine for what we wanted to do, that the city, especially after Sundown, there was nobody in the streets. But, you know, it didn't really matter because our idea was to be purveyors and to serve the kitchen. So it didn't really matter.

• 33:22Guy Raz?

  Yeah.

• 33:22Speaker 02

  You know, and what's thing that was important is at the time, Le Bec Fin was voted, which is a Philadelphia restaurant, was voted number one restaurant in the country.

• 33:32Guy Raz?

  George Perrier was the chef at the, at the place, right?

• 33:35Speaker 01

  Chef owner, yeah.

• 33:35Speaker 02

  That's correct, yeah. And also the proximity to New York City.

• 33:39Guy Raz?

  Yeah. And also presumably Philadelphia was cheap.

• 33:42Speaker 02

  Very.

• 33:43Speaker 01

  Insanely so.

• 33:45Guy Raz?

  So you find a location on Rittenhouse Square, which is probably the most famous place in Philadelphia today, one of them. What was it? It was like a small storefront that you found?

• 33:56Speaker 01

  Well, it was actually two. You know, this area of the town was really suffering. Businesses would come and go so quickly that there was spaces almost everywhere.

• 34:06Guy Raz?

  Wow.

• 34:06Speaker 01

  But they were all, you know, Philly spaces, so they're really narrow. So we found two side by side. So we took them both and we just smashed the wall between them and started working.

• 34:17Guy Raz?

  And where did you, you just, where did you source the equipment from? You just bought a bunch of, I mean, you had some money to start out with because you'd saved that money. So you used all this capital to buy roasting, like roasting machines?

• 34:29Speaker 02

  Yeah.

• 34:29Speaker 01

  Yeah.

• 34:30Speaker 02

  We took an epic trip during the summer. We traveled from Nice all through Italy. And we bought everything we needed. Roasting equipment, espresso machines.

• 34:41Guy Raz?

  Yep.

• 34:42Speaker 02

  And painted ceramic.

• 34:43Speaker 01

  Grinders.

• 34:44Speaker 02

  Grinders, everything that we needed.

• 34:46Guy Raz?

  Hand painted ceramic, because you served your coffee, and I think you still do. I've been to that location off Rittenhouse Square. And I remember the first time I went there, I was struck by the hand, like the painted earthenware ceramic mugs that you got and the little plates, little saucers that they came on. And that was from the beginning? That's how you served coffee there?

• 35:04Speaker 02

  Yep.

• 35:05Speaker 01

  We were traveling all the way through Italy. I'll always remember it because we had an envelope and we had traveler's checks. And we would go directly into a factory and begin negotiating, like on the floor. And we went, okay, we'd like those two espresso machines. We want X. We'd negotiate, negotiate, and we'd go, all right, take the box off. How about if we don't take the box? Like we were, and we would hump these machines into his dad's car.

• 35:29Guy Raz?

  Wow.

• 35:29Speaker 01

  Like, and we, we found the roaster in northern Italy, paid for it, strapped it to a pallet and watched it ship.

• 35:37Guy Raz?

  So this is 1994. You've got a small location off Rittenhouse Square. You're roasting beans there. And by the way, I live in, in the Bay Area, so I pass by several roasters on a given week and you can smell that smell. It is really strong. Like when you're by a roastery. I mean, were any of your neighbors and the other businesses like sort of, I don't know, complaining? It's a nice smell, but it can be overwhelming.

• 36:04Speaker 01

  Well, we ran our first load and it was clear that with that environment in that part of town, you couldn't roast in that cafe.

• 36:12Guy Raz?

  You had all this equipment in there. You realized you actually cannot roast in there. You presumably didn't have the ventilation for it.

• 36:19Speaker 01

  We didn't have the ventilation. It was not gonna work. The way the building is formed, the way the wind comes down and the barometer pressure, it was that moment where I thought, like, we were, we were ready to open. I mean, we had now spent all, I think we had maybe $500 left in the bank account. I mean, there wasn't anything left. We needed to go. And we had all the green there. We had, everything was ready to fire up.

• 36:44Guy Raz?

  The green was the coffee beans, right?

• 36:45Speaker 01

  Yeah. And it was really clear that we were not be able to open. I mean, it was just this, the nightmare scenario in my mind was like, oh, they came this close, right? So, I went and rented a jackhammer, and I jackhammered a hole into a garbage chute that runs the outside of the building, and I think it's about 20 stories high.

• 37:10Guy Raz?

  Yeah.

• 37:10Speaker 01

  And I piped, then cemented the piping into the garbage chute, and told JP to fire it up. And, you know, it takes forever to get that whole chute heated up, but once you get hot air to rise, it just sucks it like a syringe.

• 37:27Guy Raz?

  Up the garbage chute. The garbage chute was your chimney.

• 37:29Speaker 01

  Yep.

• 37:31Guy Raz?

  I'm assuming you did not ask for permission to do this?

• 37:33Speaker 01

  No, no, no. In fact, we built the cafe by, like, with no permits. Like, I did all the wiring, all the plumbing. Like, we asked forgiveness rather than permission on pretty much anything. But the, the big deal was, if someone would force a giant bag into that chute, and it would get lodged. And so, I would take the freight elevator up, go up on the roof, and we would drop bowling balls. Remember JP? To dislodge the trash?

• 38:02Guy Raz?

  Didn't anybody complain in the building?

• 38:04Speaker 01

  Yeah.

• 38:04Speaker 02

  We did get a lot of complaints. We got the fire department in, you know, about two, three times a week.

• 38:09Guy Raz?

  Oh, because somebody was like, something's burning?

• 38:11Speaker 01

  Yeah.

• 38:12Speaker 02

  Exactly.

• 38:13Speaker 01

  Yeah.

• 38:13Guy Raz?

  And did the fire department cite you or anything? Or did they?

• 38:17Speaker 02

  No.

• 38:17Speaker 01

  We would turn the lights off and hide behind the bar.

• 38:22Speaker 02

  We would hide, totally hide. And then we roasted in the middle of the night, which helped, but it made the life just really, really, really rough.

• 38:31Guy Raz?

  Yeah. How did you, in that initial batch of coffee, where did you get it from? Where did you, was there like a distributor in the US that you went to and said, we want, you know, 100 bags of this, 100 bags of that?

• 38:44Speaker 01

  That would have bankrupted us.

• 38:45Speaker 02

  Yeah, we bought only a few bags.

• 38:47Guy Raz?

  And where did you buy it from?

• 38:48Speaker 02

  I think the broker was, I think they're still around. I think it's called Paragon Coffee, out of New York.

• 38:55Guy Raz?

  And how did you know which coffee to buy? Like which one was gonna be good coffee?

• 39:00Speaker 02

  We sampled a lot of coffee.

• 39:01Guy Raz?

  Right.

• 39:02Speaker 02

  I mean, hundreds, hundreds.

• 39:03Speaker 01

  Hundreds. We have, just behind me, obviously the podcast folks can't see it, is the original roaster. It's a little cylinder. It holds about a half a pound of coffee and you put it on a gas stove. You put your green coffee into it and you turn it by hand. And then you dump it all out to a colander and you use some kind of cool air to cool it down. And if you would have gone to JP's apartment at the time up in Spruce Street, before we settled on all the buys we would make, we had hundreds of bowls of this coffee everywhere.

• 39:32Guy Raz?

  Right.

• 39:33Speaker 01

  And we were hand grinding it and cupping it and hand grinding it, cupping it. We built up our first blends there.

• 39:38Guy Raz?

  And in 1994, right? Even though Starbucks was starting to kind of grow, it was in San Francisco and Los Angeles and, and people were sort of starting to develop a taste for that Starbucks darker roast, which a lot of people for a long time hated. They thought it tasted burnt or bitter. How did you know what people would wanna drink at that point? I mean, it was still, you know, our coffee palate wasn't that sophisticated in 1994.

• 40:05Speaker 02

  Yeah, but you see, we had the best audience. You know, we are chefs.

• 40:09Guy Raz?

  Cause you were going to restaurants. You were focused on really trying to appeal to chefs.

• 40:14Speaker 01

  Oh, yeah, that's it.

• 40:15Speaker 02

  That was it.

• 40:16Speaker 01

  And part of it too is, it's you. If you love it, then that's the one you should stick with. You know, so first, we wanted to please ourselves.

• 40:27Speaker 01

  And then you introduce this to some of the best palates in the world and they like it, you're good. I think it's really hard to make food and beverage for everybody. It's like Kurt Vonnegut wrote for his sister. He wrote for one person. And I think that when I make food and beverage, I have like one or two people I think about.

• 40:46Guy Raz?

  How did you find the restaurants? How did you get into them? How did you, did you just kind of pound the pavement and start to call and?

• 40:54Speaker 01

  Well, I'll tell you about the first one and then that started the whole kind of process. So it was October 15th, we walked on the street, we went to the number one restaurant in the country at the time, Le Bécaf. We went into the back of the kitchen, someone stopped and asked us, what are you doing here? And we said, we're here to make coffee for chef. So they just assumed maybe that was an interview.

• 41:18Guy Raz?

  A thing, yeah.

• 41:19Speaker 01

  So we went, we tore the grinder down, cleaned it, tore the espresso machine out, cleaned that, put our coffee into it, made a beautiful, beautiful coffee. And it said, where's chef? We went upstairs, he was screaming as, you know, he was a screamer. It was the 90s, right? Wanted to know, and we said, we're here to make coffee for you. And we just put it in front of him and you just step back. And so that's how we got to Bécaf that day.

• 41:41Guy Raz?

  You mean, he said right then and there, okay, you can be my coffee supplier for my restaurant?

• 41:45Speaker 01

  He actually picked the grinder up with the old stuff and threw it all in the trash and said, go get your shit.

• 41:51Guy Raz?

  Wow.

• 41:52Speaker 01

  You know, it's like, in other words, bring your stuff now. It's the truth.

• 41:55Guy Raz?

  And you thought, all right, we got to start with Le Bécaf because that is the best French restaurant in the United States. And if we're in there, then other French restaurants or other high-end restaurants are going to want our stuff.

• 42:05Speaker 01

  Well, the second one was the same day, was Jean-Marie Lacroix, extraordinary chef.

• 42:11Guy Raz?

  Also in Philadelphia, I think he was at Four Seasons, right?

• 42:13Speaker 01

  Yeah.

• 42:14Guy Raz?

  Yeah.

• 42:15Speaker 01

  That's right. And we did the same deal. We just walked in the back. So we're here to make coffee for chef. And he said, bring it today. So that night, we were being brewed in two of the best restaurants in the country. And by the end of that week, we're getting calls from major players in New York. And everyone's saying, would you just coffee? I want to try. It was all the Frenchies.

• 42:36Speaker 02

  Yeah. And, you know, the media were not what it is today, obviously. And back then chef would only talk to chef, you know, they wouldn't buy things because they saw an ad somewhere. But once somebody finds something, they're eager to talk about it.

• 42:49Guy Raz?

  And by the way, was your price point higher? I mean, was it more expensive to buy your coffee?

• 42:54Speaker 01

  When we arrived in Philly, coffee wholesale to restaurants was about $1.50 a pound. And ours was the mid sevens.

• 43:02Guy Raz?

  So weren't some restaurants like, are you out of your mind?

• 43:05Speaker 01

  No.

• 43:06Guy Raz?

  They weren't?

• 43:07Speaker 01

  No, because we explained to them, I go chef, coffee is a spice. And that's all I had to say. Because you could buy saffron for nothing, and you'd have to use like a bird's nest amount in your dish to make it taste anything like saffron. Or you get the stuff from Pakistan or Afghanistan, where you use a pinch, but it's going to cost you.

• 43:26Guy Raz?

  Yeah.

• 43:27Speaker 01

  And they understood that.

• 43:29Guy Raz?

  And was it, was it pretty clear to both of you right away that you were going to have a sustainable business within the first six months, that you were going to turn a profit?

• 43:37Speaker 01

  Yep. Do you remember JP?

• 43:39Speaker 02

  Yeah. And I don't want to look at it and say it was destiny or whatever, but it was so clear because the space between the food that this restaurant were serving, the level was so high. The food was so good. And where the coffee was in their dining room was such a void. It was so clear.

• 43:59Guy Raz?

  Yeah.

• 43:59Speaker 02

  And, you know, we got one, two, three, and it started. We got no.

• 44:05Speaker 01

  It just burned.

• 44:06Speaker 02

  It just burned.

• 44:10Guy Raz?

  When we come back in just a moment, how Todd and JP started to explore sourcing coffee beans directly from farmers all around the world. And later on, how a big private equity investment in the company turned into a nightmare, and how Todd and JP managed to wrangle their way out of it. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 44:45Guy Raz?

  Hey, welcome back to How I Built This from NPR. So it's 1994 in Philadelphia, and Todd and JP are selling wholesale specialty coffee to more and more high-end restaurants. But the idea of premium and expensive coffee still isn't mainstream. And Todd and JP find that it's a challenge just to describe to consumers what's different about the coffee they're making.

• 45:13Speaker 01

  Because espresso in America, up to that point, was an abrasive liquid. It was not to be consumed without tons of sugar or milk on it.

• 45:20Guy Raz?

  Yep.

• 45:21Speaker 01

  And we wanted to break that mystique. So we were looking for something that was European, but like nine levels higher. We wanted something nutty, sweet, that was like molasses. So that's what really guided us.

• 45:32Speaker 02

  Yeah, I mean, the word I remember using describing the first coffee we did was balanced. We really wanted to achieve a soft, a sweet finish. Because we felt like the American consumer, the public at this time, needed to be intruders to better coffee, but also not to scare them away. So it was important that the coffee were really clean. And this is something that we focused on, and we had a rule. It was three words.

• 45:59Speaker 01

  That's right.

• 46:00Speaker 02

  Remember, it was three words per blend.

• 46:02Speaker 01

  Yeah.

• 46:02Speaker 02

  To describe them. And that played a really important role in creating those first three, four blends that we made.

• 46:10Guy Raz?

  I'm just curious why you were so focused on the café. I mean, the ceramic cups and the service in that café, if you never intended to open cafes, if that was not your business plan.

• 46:25Speaker 01

  Street cred.

• 46:26Guy Raz?

  Yeah.

• 46:27Speaker 01

  Street cred, street cred. We're serving some of the greatest chefs in the country, and if we were going to have a brick-and-mortar space, which we really felt we needed one to have some street presence. We needed to execute on a level that no one else could.

• 46:42Guy Raz?

  And did you get, did you get beyond sort of the northeast and the mid Atlantic? Were you distributing to places beyond that?

• 46:48Speaker 02

  Yeah, yeah, it's, it's, it's a funny thing with kitchen, you know, a lot of people go into a kitchen and then move away to San Francisco, LA, Denver, Miami. And we had such roots in the kitchen, we supplied, that people ended up taking us with them when they moved. So we, we did move from kitchen to kitchen, you know, and it, it went, when this started, then it went a lot faster.

• 47:16Guy Raz?

  Meanwhile, in the 1990s, were you still buying your coffee from brokers? Or were you starting to buy it directly from farms?

• 47:24Speaker 01

  Yeah, it was the 90s, we started weaning off that because it was clear that, you know, at first, we, you know, we were the only ones looking for that type of coffee. So we had, you know, the, everything was

• 47:36Guy Raz?

  Easy to get.

• 47:37Speaker 01

  Easy to get. No one else wanted it.

• 47:39Guy Raz?

  And you could pick whatever coffee you wanted at the beginning, but then it became harder as high-end roasters started to come online.

• 47:44Speaker 01

  Yeah, the demand started picking up. And then it was, it was clear that we, our timing was right. So it dovetailed right into, let's go look for ourselves, right?

• 47:53Guy Raz?

  How did you do that?

• 47:54Speaker 01

  Well, I mean, one of the first ones was, strangely enough, we met a Swiss guy who owned a farm in Brazil. Remember that? What was that Swiss guy's name?

• 48:04Speaker 02

  Ors.

• 48:04Speaker 01

  Ors, yeah.

• 48:06Guy Raz?

  And you met him, you met him where? Where'd you meet him?

• 48:08Speaker 01

  Oh, God, how did we meet him?

• 48:10Speaker 02

  We, we met him through 19th Street, with Anel's Cafe, he came in.

• 48:14Speaker 01

  Oh, that's right. So I think we met him through like chocolate. I think we were playing around with chocolate. He's got a farm, we go to the farm. And once you do that, then you become hungry for it.

• 48:27Guy Raz?

  So you go to visit this guy's farm and he has a coffee plantation in Brazil?

• 48:31Speaker 01

  Yeah.

• 48:32Guy Raz?

  Yeah. Okay, so you go there and what do you see?

• 48:35Speaker 01

  Well, then, you know, you spend time on the farms and we started figuring out right away exactly what's making the better coffee and what's making the inferior stuff, right? We start immediately getting interested in varieties and growing styles and all that, which is not a big giant leap. The real key is, how do you get all these boxes from, let's say, a mountain in Rwanda to Philly? This is the challenge and the processes that it has to go through. So that is the real big first step. It's like figuring out how to do that.

• 49:06Guy Raz?

  Yeah.

• 49:06Speaker 01

  How to put a supply chain together. And once you get that, then you go, all right. Then you feel confident walking into Haiti and going up in the mountains and saying, all right, let's look for some farms.

• 49:19Guy Raz?

  So it was literally, because the coffee business is very, very, I think, complex is an understatement, right? There are so many middlemen and the, when you go to the actual farmer, they're making pennies. They're not making anything. They're selling it to a middleman who has a couple of connections in the bigger city and then sells it to somebody in the bigger city. And the bigger city person is, they're the ones who are selling it to a distributor in the US. So.

• 49:44Speaker 01

  Yeah.

• 49:44Guy Raz?

  There's a lot of hands that goes through before it comes to the, the roaster. And the people at the bottom of that chain get, tell you nothing.

• 49:52Speaker 01

  Nothing, very little.

• 49:54Guy Raz?

  Yeah.

• 49:54Speaker 01

  And you have an idea that that's what's happening, but when you go and you visualize it, you see it and you see the eagerness that farmers have to work with you. Because that chain of events that you described can sometimes be 10 or more deeper than that.

• 50:08Guy Raz?

  Wouldn't there be middlemen who would feel threatened by this? Who would say, you know, who would threaten the farmer or maybe even threaten you guys? Or didn't that happen?

• 50:18Speaker 01

  Well, in the case of Brazil, no. Brazil is a very sophisticated country when it comes to farming. And you're not going to really run into it there.

• 50:27Guy Raz?

  You can go directly to a farmer and say, I want to buy your beans. And they'd say, fine.

• 50:30Speaker 01

  But you, you say El Salvador? Oh, indeed. Haiti? Oh, my God. And Haiti, there were times that I felt, yeah, this could be it. I'm, I'm probably going to not make it out of here alive.

• 50:42Guy Raz?

  How do you buy directly from farmers in places like Haiti? Or in a place like El Salvador? If there are middlemen who depend on, on that income too? And, and who are going to be threatened by you going around them?

• 50:56Speaker 01

  Well, I mean, first, let's use Haiti for an example. What you realize is that there is strength in numbers. Once you get the faith and confidence of farmers, then you can do pretty much what you want. The problem is, in places like Haiti, or in Africa, or even El Salvador, there are loads of gringos that show up making promises and then never come back. You have to show a resilience, that you're coming back time and time and time again. And once you've done that, again, Haiti, I was called un blanc, a white guy. But now I'm called le blanc, I'm the white guy. Like, they know I'll come back, so then they can buck the system. And traders that are trading over borders, or they're, you know, taking big lion's share

• 51:40Speaker 01

  and it ends up in some Maxwell House blend, they're looking for giant volumes. And we're not disrupting that, we're looking for this creme de la creme. And often, they leave you alone.

• 51:51Guy Raz?

  So, all right, so you've got this business going, you're doing well. And then in 2000, six years in, Todd, you decide to take a three-month sabbatical.

• 52:02Speaker 01

  Yeah.

• 52:02Guy Raz?

  Go to a tiny island in the South Pacific with, I guess, 100 people who live on it, and just kind of live there for three months. So first of all, Todd, what was going on in your life? Why did you feel like you needed to take a sabbatical?

• 52:14Speaker 01

  Uh, I think that I started to, well, I was suffering from my brain. You know, I was a hard-driving guy, and I was just, I was having difficult times. I just said, ugh. And so I actually went to JP and I felt really bad. I said, you know, I was gonna end up like my father, right? I thought I was gonna go mad. Just total 24/7 anxiety mania. I just couldn't sleep, I couldn't, you know, it's just really, my furnace was just burning really hot. But I just got in this space where I didn't think I was gonna be okay. And, you know, there was a lot of problems back home with my mother and my sisters and my dad, you know, my dad had killed himself, and it was just like, and there was just

• 52:59Speaker 01

  loads of pressure, and then I got involved in bad relationships, and it just like, I wasn't managing well, right? So, I went to JP and I said, "You can have my shares." I don't want to ruin this thing. You can have it all.

• 53:11Guy Raz?

  Wow.

• 53:12Speaker 01

  I was just, and this is the kind of brother this guy is. He could have easily, because I would, I mean, when I was saying it, my hands were shaking.

• 53:19Guy Raz?

  Yeah.

• 53:19Speaker 01

  And when I get that way, I stopped eating. So I wasn't eating. I wasn't sleeping. So I just drove myself into this really, really tough place.

• 53:26Guy Raz?

  JP, when he said to you, hey, I'm gonna leave the business, you got it. Can you handle it? Were you like, wait, what?

• 53:33Speaker 02

  Yeah, the story is, you know, he was, Todd was going through a hard time, you know, and he needed to hit reset. You know, I felt like, you know, being brothers, you know, I felt like, hey, listen, go take your time, you know, it was even to the point where it was like, you know what, I think I'm done. So I told, I said, listen, don't make any decision now. And, you know, it was clear. It was like, you know, you're gonna help somebody that you love, and I'm not gonna take anything from you. You're gonna go get better and come back and we'll talk.

• 54:08Guy Raz?

  So you went off for three months and you picked some tiny, remote island.

• 54:12Speaker 01

  Yeah.

• 54:13Guy Raz?

  To just live there. And what did you do for three months there?

• 54:16Speaker 01

  Well, okay, so I built my own little hut and I arrived with zero money and just a little backpack and a surfboard. There's a giant wave not too far away called King Kong. I fished and I surfed my brains out and then I wrote a book. And it was a piece of junk. Let me just tell you. It was trashy. I just, you would not make it past the first chapter. But I think I did that like chopping wood. You know, it was therapeutic and I wanted to prove to myself that I could write something, right? So I did. And so there was a lot of stuff from my past that I'd never dealt with. And it was, it helped a lot.

• 54:54Guy Raz?

  This was three months, or almost two months, on this remote island, no Wi-Fi, this is 2000, so don't internet. And JP, you were not in touch with him that whole time?

• 55:03Speaker 02

  Yeah.

• 55:03Speaker 01

  Yeah.

• 55:04Guy Raz?

  And were you not worried? Were you not like, you were just like, yeah, okay, go and I'll figure it out? And you just ran the business for, while he was gone?

• 55:10Speaker 02

  No, I mean, I was worried that he was not gonna go for a while, you know, which would have been bad. So once he went. I knew that was the start of of him getting better.

• 55:21Guy Raz?

  Wow.

• 55:21Speaker 02

  And the business, you know, we we work, we always had such a group of very tight people, you know, if we look at the turnover that La Columbus had over the years, it's very low. So we just had that core of people from the beginning, you know, so three months was, you know, felt like two weeks. I mean, it was just not much, you know, to handle. It wasn't like impossible.

• 55:49Guy Raz?

  So when he comes back, was he, had he seen to you?

• 55:52Speaker 02

  Much better and in different place completely. I mean, I was just like completely different person. And, you know, happy to see him, that's for sure, you know?

• 56:04Guy Raz?

  You decide, thirteen years after you opened your first location off Rittenhouse Square in Philadelphia, to open a new location outside of Philadelphia for the first time. Because I think at that point you had like two locations in Philadelphia, maybe, or three?

• 56:18Speaker 01

  Was it two? Yeah, no, Dilworth, Dilworth had just started. We had two.

• 56:22Guy Raz?

  Two in Philadelphia, and you decide to go to New York, to the most challenging market in the world, right? And by the way, it sounds like the business model at this point was starting to change because

• 56:33Speaker 01

  Oh, it changed big time.

• 56:34Guy Raz?

  The cafe wasn't really the point, but now you're opening a cafe in New York. So why?

• 56:40Speaker 01

  Two thousand and seven, two thousand and eight was the major fault line in the company. It was the massive shift in everything. See, we thought for a long time that the Nineteenth Street Cafe was just an anomaly.

• 56:56Guy Raz?

  Yeah.

• 56:57Speaker 01

  It wasn't due to the fact that we're any good at what we do. It's just that we got lucky. And we were really afraid of making a second one, because it would prove to everyone that the first one was just an anomaly.

• 57:09Guy Raz?

  Yeah.

• 57:09Speaker 01

  So, be honest with you, we were scared.

• 57:12Guy Raz?

  Yeah.

• 57:13Speaker 01

  Because what if it were a failure? And so we finally decided to face our fears and we opened one in New York. Like we'd evolved in isolation that we've got to this point that we're going to turn this thing into a true business. We could become the reference coffee roasting company in the world if we start right now. You know, and if you if you look at the top line revenue of La Colombe, it is intense hockey sticks that started in 2008. We just completely decided that we were going to dominate in this area.

• 57:43Guy Raz?

  So clearly you're you are shifting now at this point to cafes. And does that mean that at this point, 2007, 2008, you were shifting away from the wholesale side or did you continue that?

• 57:54Speaker 01

  Oh, we continued that. No, they're called categories, right? So you never you never abandon the energy that you're giving to one category because you've added a second. And we have five now. And you you realize that you don't have to leave your first child because you're having a second one.

• 58:13Guy Raz?

  So so you guys are now fully on to this new path of cafes. And tell me about how you were able to do this. I mean, you presumably you had to go seek out outside investment, right? Which was going to be the first time you were going to get outside money into the business, right?

• 58:31Speaker 01

  Yeah. I mean, there's a couple of things that were going on, too, is that I became fascinated with this thing that wasn't being done anywhere yet called Cold Brew. I had this idea that you could brew coffee, put it in a bottle and sell it to stores. So that was just starting. So I knew when GP and I believed in the ready to drink coffee, so we had that and we had the cafes. So we looked at each other and went, man.

• 58:55Guy Raz?

  Yeah.

• 58:56Speaker 01

  So we started the old investor discussions. And it was so awful because we have different blood types to such a degree that it just it was so difficult. And we landed on one, we did the deal, and that lasted 52 days till the first board meeting. I said, OK, I believe that Cold Brew is going to be a thing and La Colombe needs to be the father of it. We also need to create ready to drink drinks that include milk and hopefully one, if I can invent it, one that's frothy.

• 59:28Guy Raz?

  Yeah.

• 59:28Speaker 01

  And they said, nah, we don't want to do that.

• 59:31Guy Raz?

  What'd they want to do?

• 59:33Speaker 01

  They wanted us to build 200 cafes.

• 59:35Guy Raz?

  And this is your new board. This is your board because you, you had to have a board when you bring in outside investors. And of course, some of those board seats were held by that. Was there a private equity company?

• 59:45Speaker 01

  Yeah, so it was a private equity company, me and JP. So I just, I said, we're out of here. We're going to buy you out. I gave them a sum too, actually. I told them how much, double.

• 59:55Guy Raz?

  But in order to buy them out, presumably that you'd have to find like another investor to get the money to do that.

• 1:00:01Speaker 01

  That's true. You know, first we agreed that we would need an angel investor. It would have to be someone who's craft based, who believes in making, behaving themselves in the world and creating value for other people and participating in communities and being decent.

• 1:00:16Guy Raz?

  Yep.

• 1:00:16Speaker 01

  And so I thought of, hey, there's that Hamdi Yulakaya guy.

• 1:00:20Guy Raz?

  From Chobani.

• 1:00:21Speaker 01

  From Chobani. I'd met him months earlier. He, he as well as JP and I are concerned about the refugees coming across the border from Syria into Turkey.

• 1:00:31Guy Raz?

  Yeah.

• 1:00:32Speaker 01

  He's a craft man, so you make things, you understand, right?

• 1:00:35Guy Raz?

  Yeah.

• 1:00:35Speaker 01

  I mean, he understood, you know, the complexities of Greek yogurt and why that mouth feels so important. He understood the beauty of clean milk. He understood clean ingredients. So I go in my lab and I create the very first draft latte. Drill a hole in the can, I put a volleyball valve in it, I put coffee, I put milk, I seam the can and I jack the contents up with nitrous oxide to make it self foaming and I bring it up to New York. And I said, this is going to be the most expensive coffee you've ever tasted. And yeah, he loved it.

• 1:01:08Guy Raz?

  And then what? You say, hey, I need a favor from you or hey, would you be interested in investing? What, what's your pitch to him? What do you say to him?

• 1:01:15Speaker 01

  That's exactly how I said it. I, I don't know how smooth or awkward I was, but I said, I want to take coffee into the future and I want you to be a part of it. In order for that to happen, you need to take out this VC.

• 1:01:28Speaker 01

  And he said, great, let's meet him. And we met him and he did.

• 1:01:32Guy Raz?

  And they had no problem with it? They were like, sure, we'll sell. That's fine.

• 1:01:35Speaker 01

  Yeah, they doubled their money in a couple of months.

• 1:01:37Guy Raz?

  Right. That's pretty good.

• 1:01:39Speaker 01

  Yeah.

• 1:01:40Guy Raz?

  So it did cost quite a bit to get out of that bad decision that was, that I guess you guys took.

• 1:01:45Speaker 01

  It did, but you know what? In retrospect, it didn't. It was very helpful. We had to go to the next level of growing up. And we ended up getting a lot of really good executive people from it. And a real different way of looking at our business. So it was like, oh, there was a whole bunch of maturity that we got out of that deal. That I'd still say, I would do it again.

• 1:02:07Guy Raz?

  And this, the draft latte cans, I mean, they became an incredible hit. Like they're, I think they're distributed all over the country. I read something like they're in like one out of three US grocery stores.

• 1:02:18Speaker 01

  I'd say, yeah, it's probably higher than that now. I'd say we're getting like two out of three. It's close.

• 1:02:23Guy Raz?

  And JP, what do you think of the strategy now? I mean, it seems like you guys chose the right path back when you kind of told the, the private equity company, hey, you know, we don't want to open 200 locations. We're going to go in this different direction.

• 1:02:37Speaker 02

  Yeah. You know, I've seen so many good concept over the years being pushed to really roll out. I'm not saying that, you know, we can't get to a big number of location, but there's a balance of things.

• 1:02:51Guy Raz?

  Right.

• 1:02:52Speaker 02

  I'm really, really, really happy that we, we kept growing the business in different channels than just retail. I mean, how many great concept that we've seen over the years that, you know, just got crushed because VC money got in and, and pushed it too hard. I mean, there's dozen of example. And it's, you know, I think we were a little naive to think that that was a solid plan. And we, we learned and, you know, thank God Hamdi is with us. And this, we're in a different path.

• 1:03:24Guy Raz?

  Okay, we are now talking in the middle of the worst economic and health crisis in living memory. You guys are each holed up in your homes, and I'm in mine. I'm assuming you had to shut down virtually all of your locations. I'm assuming you had to lay off or furlough a significant number of employees. You do have the draft latte selling in stores, so that's available. People can still buy that. But, I mean, I have to assume like 99% of businesses in America, you guys are getting hit right now.

• 1:03:56Speaker 01

  Clobbered, yeah.

• 1:03:57Guy Raz?

  Yeah.

• 1:03:58Speaker 01

  The way I like to think of it is, you know, the day before COVID hit, we had three big motorists on this plane, right? So we had the cafes and hospitality wholesale, and we had the ready to drink and grocery, and then we had e-comm, a little motor on the back. Whatever storm took two of those engines out.

• 1:04:16Guy Raz?

  Which is the cafes and the wholesale.

• 1:04:19Speaker 01

  And those are the real, they really provide a lot of cash.

• 1:04:23Guy Raz?

  Yeah, those are the big engines on the plane.

• 1:04:25Speaker 01

  Big engines, yeah. So immediately, for part-time baristas, we furloughed them. Now, a great majority of them are in New York and Philadelphia, and they come from places that are not New York. They want to leave, they want to go home to mom and dad. But everyone else, from all production, marketing, customer service, technical service, everybody, all full-time employees, we haven't let anyone go. JP and I, we just, we cut our salaries to zero. We went to the executive crew, we cut everyone 50%. We say, we're going to sacrifice from the top.

• 1:05:00Guy Raz?

  Yeah.

• 1:05:01Speaker 02

  And, you know, we've been really busy in reorganizing the next phase, which is the opening of the stores and making sure that everybody is safe and well-served and still trying to maintain efficiency and speed. So it's been a really busy couple months, and it's been making, you know, getting us really close to our team, really close to our people, and realize really the amount of talent that we have on this team, you know. It's, I can see that, you know, it's brought us really close as a company.

• 1:05:40Guy Raz?

  This business has made both of you rich. And I know that Todd, you grew up in like serious insecurity, food and financial insecurity. What does it mean to you to have money? What does it enable you to do now?

• 1:05:59Speaker 01

  Well, I think that the first and foremost is, you know, I can guarantee the future of my children. And that was, that was a big thing for me. I always wanted to have a family and I wanted to be able to provide for them. What you learn though, is that there's no such thing as security ever. There's no amount that will make you secure. That's just something that you then have to live with.

• 1:06:20Guy Raz?

  Yeah.

• 1:06:21Speaker 01

  It lets me make a change. If I see things I don't like, I could fund programs. I can do things like that. And I, I could do more than just bitch about things now. I can actually go and move the needle. And food.

• 1:06:33Guy Raz?

  And food.

• 1:06:34Speaker 01

  Food, food. I could, I still, I'm 56 years old and I can go to a store with my wife and I walk into front of the cart and I'll spin around and I say to her, I can buy anything in this store.

• 1:06:46Guy Raz?

  Yeah.

• 1:06:47Speaker 01

  God damn it, that's awesome. I could buy anything in this store. And there was years and years and years that wasn't possible. But I guess the, the most important one is that, you know, I have a safe home with my kids in it and I like that a lot.

• 1:06:59Guy Raz?

  How about you JP? You grew up in different circumstances. You grew up comfortable, but I mean, obviously now you are, well, this made you very wealthy.

• 1:07:08Speaker 02

  Yeah, you know, and this is one of the thing I respect the most about, about the US, you know, it's how people become wealthy, give back. And that includes us, you know, and it's a great feeling. And it's, it's amazing. It's not that way in Europe. And this country is amazing. You know, not just us, à la Colombe. It's amazing, you know, it's pretty cool. So being part of that, doing your share, yeah, it's great.

• 1:07:36Guy Raz?

  JP, when you think about how much of your success has to do with your hard work and talent and how much has to do with luck, what do you think? What weight do you give to each, each of those?

• 1:07:47Speaker 02

  I think luck plays a really big part, really big part in the success of la Colombe. It's, yeah, luck plays, I mean, hard work is a given, right? You're gonna work hard. If I were gonna give you a percentage. We'd probably call it close to 50/50. I mean, if you call luck, you could also talk about timing.

• 1:08:10Guy Raz?

  Well, the fact that the two of you met in the first place.

• 1:08:12Speaker 02

  Yeah, and people you meet along the way and, you know, the opportunity that create all that, you know, are put in the same bag, you know? For me, that's luck.

• 1:08:22Guy Raz?

  How about you, Todd?

• 1:08:23Speaker 01

  Yeah, I just, I don't know. When he was talking, I got an image in my mind. It's like, we have these mosaic tables. They're broken pieces of La Colombe ceramic, you know, that they've put together to make this mosaic top. So I would say that the grout is luck. It's what holds all those broken pieces together. Whatever percentage that is. Because obviously, they would mean nothing if it weren't for the grout, right? They wouldn't hold together. So I would say, I guess, 35% of it's luck? Or good fortune, or destiny, or, you know, the gods? Because it's true, man. That luck begins with Green River.

• 1:09:06Speaker 01

  And whether he was wearing a gold vest or not, I'm not sure, is meeting JP. Huge piece of luck. Had I not gone that night, there would be no La Colombe.

• 1:09:18Guy Raz?

  That's Todd Carmichael and JP Iberti, co-founders of La Colombe Coffee Roasters. By the way, in addition to founding La Colombe, Todd also once held the world's speed record for trekking to the South Pole on foot, unassisted. There's a whole documentary about his trip called Race to the Bottom of the Earth that aired on the National Geographic Channel.

• 1:09:43Guy Raz?

  Hey, thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts. You can also write to us at [email protected]. And if you want to tweet at us, it's at HowIBuiltThis or at Guy Raz. Our show was produced this week by Casey Herman, with music composed by Ramtin Arablouei. Thanks also to Julia Carney, Candace Lim, Neva Grant, Sarah Saracen, and Jeff Rogers. I'm Guy Raz, and you've been listening to How I Built This.