Dutch Bros. Coffee: Travis Boersma

From a coffee cart parked uneasily in a grocery parking lot, Travis and Dane Boersma grew Dutch Bros into a sprawling chain of 700-plus beverage restaurants. Before they got started in Grants Pass, Oregon, in 1992, Dane had never tried espresso, and neither brother knew how to make it. But with the help of nearby experts, they learned the craft—and even improvised their own recipes, like mocha made with chocolate milk from a local dairy. Eventually, Dutch Bros would go from pushcarts to drive-throughs, and from small-town Oregon to Wall Street—with a nearly $500-million IPO in 2021. Along the way, the brothers’ special connection carried them through good times and bad, until an unexpected family tragedy shook the business to its core. This episode was produced by Alex Cheng, with music by Ramtin Arablouei Edited by Neva Grant, with research help from Katherine Sypher. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

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• 2:16Guy Raz?

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• 3:00Guy Raz?

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• 3:45Guy Raz?

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• 4:27Guy Raz?

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• 5:10Guy Raz?

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• 5:55Guy Raz?

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• 6:01Guy Raz?

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• 6:46Guy Raz?

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• 7:08Guy Raz?

  You know, we talk a lot about hustle on How I Built This. And recently, I spoke to Jason Sudeikis, who shared some amazing stories about starting out in comedy. He put in a lot of reps. He played small houses in Vegas. He played in Amsterdam night after night for years. But during that grind, he got an idea for a character who would go on to become one of the greatest leading men on TV, Tatalasso. Check out my conversation with Jason Sudeikis on my other podcast. It's called The Great Creators. Just search for The Great Creators with Guy Raz wherever you listen to podcasts or go to thegreatcreators.com. And now, on to today's show.

• 7:53Speaker 01

  We opened our first day downtown Grants Pass next to the post office. And Dane was like, I don't know if I could do it, man. He's kind of hiding out in the back.

• 8:03Guy Raz?

  What do you mean he couldn't do it? Why?

• 8:05Speaker 01

  He just, I think, all of a sudden, it just kind of all like... Oh my God, this is real. We're doing it.

• 8:12Guy Raz?

  Yeah.

• 8:12Speaker 01

  And I'm like, hang on, dude. I'm gonna go make you a little eight ounce mocha.

• 8:18Guy Raz?

  Yeah.

• 8:18Speaker 01

  And I'm gonna put some tunes on.

• 8:20Guy Raz?

  Yeah.

• 8:21Speaker 01

  And so I put on some Led Zeppelin, Going to California. And I got him a coffee and I said, hey, man,

• 8:32Speaker 01

  it's on.

• 8:40Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 8:52Guy Raz?

  I'm Guy Raz and on the show today, how two brothers sold espresso drinks out of a push cart in Grants Pass, Oregon, and built Dutch Bros into a billion-dollar business with over 700 stores.

• 9:10Guy Raz?

  I'm sure you found yourself in a situation like this. It's late at night, you're with a close friend, and you start talking about all the things you could do together. And you ask, what if we try that one thing and just go for it? And sometimes that conversation can power you to do great things together. Travis Boersma had that special connection with his older brother Dane. They would often talk about all sorts of crazy business ideas. But the one that really worked started out as an espresso cart in a grocery store parking lot. They called it Dutch Brothers, or rather, Dutch Bros. And today, that former coffee cart is a billion-dollar beverage business with more

• 9:54Guy Raz?

  than 700 locations across the United States. To get there was a wild ride, often joyful, but also at times painful and even tragic. And what is now a hugely popular brand started in the small town of Grants Pass in Oregon. Travis grew up in the 70s on his family's dairy farm in Grants Pass. And he spent a lot of time with his brother Dane, even though Dane was 17 years older than Travis.

• 10:24Speaker 01

  Yeah, so, you know, I mean, I remember being two, three, four years old and going on dates with Dane.

• 10:30Guy Raz?

  Tagging along on his dates?

• 10:32Speaker 01

  Yeah.

• 10:33Guy Raz?

  Yeah.

• 10:33Speaker 01

  And he was, he was like a second father, but, but he treated me like a brother. And we had such a great relationship. We were really family oriented, being on a, on a dairy farm and, and growing up in a, in a small community was a really cool way of life.

• 10:52Guy Raz?

  So you grew up basically working on the farm?

• 10:54Speaker 01

  Yeah, I did, you know, and, I mean, have a motorcycle to rip around on and, and a dog to chase you around and herd cattle and, and go into the creek and fish and, and all sorts of stuff. And back then, we had hop yards next to us. And that was an incredible playground for me.

• 11:16Guy Raz?

  And hop yards like growing hops?

• 11:18Speaker 01

  Yeah.

• 11:19Guy Raz?

  Which was fed to the cattle?

• 11:20Speaker 01

  No, fed to the beer drinkers.

• 11:24Guy Raz?

  Okay, so, yeah, I got you. So, so did you, I mean, that's a tough, it's a tough business, even harder arguably today because fewer people are drinking milk than ever in the United States. And so your dad, he had this dairy farm. What did that mean for, for money? I mean, was money tight or did you not really have a sense of that? Or was, you know, was it, he did okay with, with the dairy farm?

• 11:50Speaker 01

  Well, you know, I think it is a tough way of life and, and you learn a lot about work ethic. And, you know, we were third generation dairy farmers as far as Dane and I go. And my dad was second generation. And quite honestly, I, I think my dad had a desire and ended up opening an RV business in the 80s because he, he always wanted to do something different than the grind.

• 12:15Guy Raz?

  All right. So you, you grew up and you go to college, eventually you wind up at Southern Oregon University. And meanwhile, Dane, who's way older than you, he's already married and raising a family. And I think both of you are pretty entrepreneurial, right? Like, you would talk a lot about business ideas.

• 12:32Speaker 01

  Yeah. I would have a lot of dialogue with my brother while he was milking cows. I'd go down, hang out. We'd talk about life.

• 12:39Guy Raz?

  Yeah.

• 12:39Speaker 01

  And we'd talk about businesses and we'd talk about possibilities. And he would cast a vision with the dairy farm that was incredible. He was like, man, if we had like purebred whole steens and we fed them really well and we had, and we're really mindful of the quality and...

• 12:58Guy Raz?

  He wanted to turn it into like a high-end, like organic dairy or something like that?

• 13:02Speaker 01

  Yeah. And it was organic before organic was organic.

• 13:06Guy Raz?

  Yeah.

• 13:06Speaker 01

  And so, we could dream about that and have some fun with it. And then we could go down different paths of like, well, maybe we should think about opening like baseball batting cages or like, you know, we would talk about business a lot.

• 13:21Guy Raz?

  Yeah.

• 13:21Speaker 01

  And I think one thing that's noteworthy is Dane had a Dairy Queen franchise at the age of 22.

• 13:29Guy Raz?

  Wow, he bought a franchise?

• 13:31Speaker 01

  Yeah. And at that time, I think Dairy Queen, it was still in its younger years. I mean, they had, it was before the Blizzard.

• 13:38Guy Raz?

  Yep.

• 13:39Speaker 01

  And so, he was doing well with it and having a ton of fun and making a lot of money. And he ended up selling it and taking a $60,000 profit. And I think he reinvested that money in cows on the dairy farm and began to take the lead role and run the farm.

• 13:59Guy Raz?

  Wow.

• 13:59Speaker 01

  As my dad transitioned into the RV business.

• 14:04Guy Raz?

  So, there's something that happened on the farm in the, in the early 90s. I guess it started to struggle a bit. And you guys had to let go a lot of the people who worked on the farm because you couldn't afford to pay. What was, what was going on? Why, why did the farm run into trouble?

• 14:20Speaker 01

  Well, you know, as we had this creek running through the property, there were some environmental regulations with the DEQ and they gave us a certain timeline to become compliant with it.

• 14:31Guy Raz?

  Yeah.

• 14:32Speaker 01

  And if you didn't adhere to that timeline, you'd have a fine monthly that you'd have to pay. And, and we couldn't afford that. And we got to the place, we had very little confidence in our ability to do that. So we made the decision that we needed to sell the cows.

• 14:44Guy Raz?

  Wow.

• 14:45Speaker 01

  And my dad was well off. My mom was well off, but you know, this was Dan's way of life more so than anything else. And he had three kids at the time.

• 14:53Guy Raz?

  Hmm. All right. So it sounds like in the early nineties, this was the beginning of the end of transitioning out of the dairy business.

• 15:02Speaker 01

  Yeah. So as Dan assessed his situation, he was kind of like, wow, man, I need to go get a job.

• 15:10Guy Raz?

  Hmm.

• 15:10Speaker 01

  And maybe I need to go to Walmart or I need to go Fred Meyer, get a job and be able to provide for the family. And I was like, hold up, dude, timeout. We've talked about all these different business ideas. You and I have gambled on football games. We've taken risks. We do all this crazy stuff at the horse races. Like, why don't we pursue one of the business ventures that we've talked about?

• 15:33Guy Raz?

  Hmm.

• 15:34Speaker 01

  And he's like, what are you thinking? And I said, yo, when I was over at SOC, I was, you know, sometimes a late night with too much beer or too many parties and need a little pick me up in the morning and a hangover recovery. I was drinking espresso and mokas and lattes. And, and I said, you know, I think we could maybe delve into something like an espresso business. And he goes, I don't, I don't even know what espresso is.

• 15:59Guy Raz?

  Yeah.

• 15:59Speaker 01

  You know, and I said, well, dude, you gotta, you gotta check it out. And we kind of left the conversation and, and he went to a local restaurant that night called The Bistro. It was an Italian restaurant here in Grants Pass. And they had espresso on the menu, so we ordered it after dinner and they brought it out in a little short demetasse cup with a layer of crème on it.

• 16:20Guy Raz?

  Yeah.

• 16:20Speaker 01

  And he took a nip off it and he was like, holy, this is so bitter and strong and it tastes terrible. Like

• 16:26Guy Raz?

  Yeah.

• 16:26Speaker 01

  Nobody would buy that.

• 16:28Guy Raz?

  Yeah.

• 16:28Speaker 01

  And I said, okay, hold up. Get in the car. I'm taking you down to this little place that I've been frequenting and I'm gonna get you a vanilla latte. So we head down, uh, this little drive-through here in Grants Pass, believe it or not, at that time in 1990. And it was called Western Espresso with an X.

• 16:48Guy Raz?

  Espresso.

• 16:48Speaker 01

  Yeah. And this little lady named Bonnie worked there and she was probably the coolest, most friendly person in Grants Pass. She was kinda oaky, barefoot, kind of a hippie lady. And I pulled up, she goes, hey Trav, how are you? So I'm great. Yeah, actually, I need two vanilla lattes today. I got my brother Dane with me. Oh, hey Dane, you know? And it was a single head, little Electra machine. So, and it was organic Peruvian coffee, which was like, I didn't even know what that was, but it sounded cool. And, and so I handed it over to Dane and I start to pull away and I look over and Dane had taken the lid

• 17:27Speaker 01

  off of the cup and he's licking the milk foam and he's like, this is unbelievable, man.

• 17:35Guy Raz?

  You were like roughly 21, he was about 38.

• 17:38Speaker 01

  Yep.

• 17:39Guy Raz?

  Around this time. And you have this idea, cause you'd seen espresso carts, like you saw them in Portland, right?

• 17:46Speaker 01

  Yeah. Yeah, I remember being a kid and, and being up there in Pioneer Square and seeing this cart with these colorful bottles and steam rising up in the air. And, and I remember saying to my mom, hey, we should go over there and check the, and she'd be like, that's coffee, it'll stunk your growth, don't worry about it. And I'm like, okay. And then being at school, you know, that's where I, I really started to consume coffee for the first time in my life.

• 18:15Guy Raz?

  So, I mean, coffee culture in America, this is still like, still the so-called first wave, right? It's like before

• 18:21Speaker 01

  Yeah.

• 18:22Guy Raz?

  the sort of Starbucks kind of revolution happens.

• 18:25Speaker 01

  Yeah.

• 18:25Guy Raz?

  But you were starting to drink some of these drinks and you liked them. And you thought, hey, why don't we do a, a coffee cart, like make espresso drinks from a cart? And you pitched this to your brother after you get him to try a vanilla latte.

• 18:39Speaker 01

  Yep.

• 18:39Guy Raz?

  And he says what?

• 18:41Speaker 01

  Well, he's kind of like, well, this is really good. This is kind of a mind blow. He goes, what, how do we find more out about it? And I said, well, I remember up in Valley River Mall in Eugene, they used to have a cart at Nordstrom's and Nordstrom's would serve up these coffees in the mall. And I said, I don't know what they ever did with the cart, but you know, maybe I should give them a call and, and see if I can chase it down. And, and so I ended up making a phone call and they said, oh yeah, you know, we still have that cart, believe it or not. And since storage. And I asked them if they had it, you know, if they had any interest in selling it. And they said, you know, yeah, we do. And, and if you want to come take a look at it, you're more than welcome.

• 19:22Guy Raz?

  Wow.

• 19:22Speaker 01

  You know, I had, I had, you know, friends that were going up to school in Eugene and they're in a fraternity. So I, it gave me a great reason to go up and party and go check this, this cart out. And I was excited about it. I got there and they pulled it out of storage and it was just a lappetated beat to hell. And, and they said they wanted $5,000 for it and I wouldn't have given them 500 for it.

• 19:44Guy Raz?

  Okay. So, uh, so you knew that you wanted to get into an espresso cart. This was not going to be the one. So did you go, did, what'd you do next?

• 19:53Speaker 01

  So I came home, told Dan, I said, look, man, that's not it. We got to figure out a new path. And he goes, you know what? One of the guys that I graduated high school with works up at Boyd's Coffee up in Portland and his name was Larry Winkler. And Larry told Dan, he goes, we sell espresso machines, we sell carts, we've, we've got packages and, you know, we wholesale coffee to a number of different restaurants and, and we provide coffee to different people who have push carts, believe it or not. And he goes, you know, you guys should come up, check it out. So we did. We made a trip. We decided to, to not just go to Boyd's, but to hit any coffee establishment that we could through the I-5 corridor, all the way up to Seattle and back.

• 20:38Guy Raz?

  So you, you would just basically, you've located different coffee.

• 20:43Guy Raz?

  Roasters along the I-5 corridor, which is obviously the main sort of north-south highway that connects Canada to Mexico. And you, what, you got off the freeway and we just stop and pop in and just ask like how they do it?

• 20:56Speaker 01

  Yeah, and think about this, man. We didn't have Google Maps or anything like that. We had Maps.

• 21:02Guy Raz?

  Yeah.

• 21:02Speaker 01

  I mean, we didn't, we didn't have cell phones. We had to go like to a payphone.

• 21:06Guy Raz?

  Yeah.

• 21:06Speaker 01

  And so there was three different places in Eugene that we went to. One was the Coffee Corner in the Fifth Street Public Market, and we had a great experience there. And so, you know, then we, we made the trek up to Boyd's and we sat down with Larry and he introduced us to a guy named Gary Jacobs. And Gary came over and he said, well, this would be perfect for you. And he shows us, they have this fancy showroom floor and, and they have this little tiny cart with like an ice chest and an umbrella and a single head espresso machine and...

• 21:38Guy Raz?

  And I'm just curious, so Boyd's not only roasted coffee, but they also sold coffee carts?

• 21:44Speaker 01

  Yeah.

• 21:45Guy Raz?

  That's just weird. That's unbelievable. That was their business?

• 21:48Speaker 01

  Well, they were, you know, they were selling coffee carts because there was a lot of people at that time doing these carts and putting them in like Fred Meyer or...

• 22:00Guy Raz?

  It's a grocery store in the Pacific Northwest.

• 22:02Speaker 01

  Yeah, or going to different fairs or different events and festivals and serving coffee.

• 22:09Guy Raz?

  Wow.

• 22:10Speaker 01

  It was in its infancy and Boyd's was ahead of the game.

• 22:15Guy Raz?

  It just blows my mind that you could like go to there and like, yeah, here's, here's model, the X-500. It's the, it's the state of the art coffee cart. Or you might want to do the X-750. Like, it's amazing to me that there was a company that had off-the-shelf coffee carts that you could buy.

• 22:33Speaker 01

  Yeah, and, and, but that experience was a turnoff for us at that stage. We, we felt like we were being sold, like here's, here's your bundle and this is what you should do. And, and we were looking for something a little bit higher end, a little bit better equipped, and we really anticipated doing, we wanted to be able to handle volume.

• 22:56Guy Raz?

  What did that mean? You needed like multiple espresso, like you need to be able to make like three espressos at the same time? I mean...

• 23:02Speaker 01

  Yeah, we, we knew that, I knew that we needed to be able to do two at the same time rather than one. Because of the time that it would take and for customers, if you had five people that came up and wanted to get a beverage apiece, then the timing would double if you only had one.

• 23:23Guy Raz?

  Yeah. What, what was the idea? Where were we gonna put the cart? Did you have like a vision like, oh, we'll just put it here and then we'll haul it on a trailer here? Or was it like, it'll be in a permanent spot? Like, what was the idea you guys had in mind?

• 23:38Speaker 01

  You know, the idea that we had in mind to begin with was, let's put it at Fred Meyer. We knew that in the Portland market, there had been carts placed at Fred Meyer's and they were doing well.

• 23:49Guy Raz?

  Inside the store or outside?

• 23:50Speaker 01

  Either one.

• 23:52Guy Raz?

  All right, let me ask you a dumb question, because we're still a couple of months before you're gonna actually do this. I can make an espresso now because there are commercially available machines, are affordable, I know how to do it. But in 1992, this was a different proposition. Espresso machine was like hugely expensive, learning how to pull an espresso, proper espresso, like you didn't know how to do any of that. Was that a barrier in any way? Was, was this gonna be a problem?

• 24:20Speaker 01

  That was part of our, our thing. Like, how are we gonna learn how to do this? I mean, what do we? And what we knew was, is that we weren't gonna open unless we had it dialed.

• 24:31Guy Raz?

  Yeah.

• 24:31Speaker 01

  And so when we talked to these roaster wholesalers, that would be part of our questions, like, how can you help us to learn what we need to do here? And we ended up finding a place called Nice Wager, and we thought that that was the one. They had a La Pavoni espresso machine. They had these fancy carts that were better than what Boyd sold.

• 24:54Guy Raz?

  Yeah.

• 24:54Speaker 01

  And we could buy a package from them for like $15,000. And we were like, all right, I think we got it.

• 25:01Guy Raz?

  Yeah.

• 25:02Speaker 01

  The only part about it was, it felt like we were buying a new car off a lot. And we didn't feel like we had somebody that could help us and teach us. And so we made the trip back down the, and the common bond that Dana and I had that was so cool is music. You know, so we were rocking Beatles, Led Zeppelin, Jimmy, CCR, I mean Cat Stevens, Chicago, the list went on and on and.

• 25:30Guy Raz?

  You were on the road to find out.

• 25:32Speaker 01

  Yeah.

• 25:32Guy Raz?

  With Cat Stevens.

• 25:33Speaker 01

  Oh, man.

• 25:34Guy Raz?

  Yeah.

• 25:34Speaker 01

  You know, and, and I listened to that music with Dan from when I was two years old on.

• 25:39Guy Raz?

  Great, great music. I mean, I'm, I'm just imagining you on the road. Well, I left my happy home to see what I could find out. And you guys are driving down the I-5.

• 25:50Guy Raz?

  Right?

• 25:53Speaker 01

  Yeah.

• 25:53Guy Raz?

  Yeah, right? Okay. I'm with you. I'm in the car with you. Okay.

• 25:56Speaker 01

  Yeah. You know, I mean, at this stage, we're like, we're asking ourselves, how are we gonna make this work? What do we need? How do we, you know, and while we're kind of cruising, I mean, we're high as hell on coffee. I mean, we've had more caffeine than you could ever imagine in a day. You know, so we're on our way back down. I said, you know what? Let's pop back into that Fifth Street Public Marketplace.

• 26:15Guy Raz?

  In Eugene.

• 26:15Speaker 01

  That we liked. That was so cool. It had the good vibes, man.

• 26:18Guy Raz?

  Okay.

• 26:19Speaker 01

  Like, we didn't go see the roasting plant or, or talk to the guy who owns it. Let's see if we can connect with him. And so on our way down, we called, we found out where it was. It was right across the street.

• 26:30Guy Raz?

  What was it called?

• 26:31Speaker 01

  It was called The Coffee Corner.

• 26:33Guy Raz?

  Okay.

• 26:33Speaker 01

  Yeah, and they have all these locations and all these varietals. And from what we can see, it looks like they're like crushing it. They got, they've got like this great energy that's real hospitable about them.

• 26:46Guy Raz?

  Yeah.

• 26:47Speaker 01

  But the magic for us was meeting Paul Layton, who was the owner and he was the roaster. And when we went into the little roasting area that they had, and it was small. I want to say it was 1,500 square feet, but he had burlap sacks of green coffee everywhere throughout it. And it was like a mad scientist lab.

• 27:10Guy Raz?

  And that was, was that the first time you saw green coffee beans?

• 27:13Speaker 01

  Yeah.

• 27:13Guy Raz?

  So cool. Yeah.

• 27:14Speaker 01

  Yeah. And this guy's like. Hey, come on in. Let me get you a cup. I knew you were coming, so I brewed some Kenya Double A. And this is a really spicy kind of coffee that's got a nuttiness to it. And Dana and I are looking at each other like, what the hell did we just walk into here? Because, you know, Cat Stevens was cool, but this guy's like, he's got this big beard. He's wearing Birkenstocks. So he goes, this is the thing, man. I can help you out with everything you need and I can teach you how to pull shots and steam milk and make a cappuccino. And this is a passion of mine and I cared deeply about the quality.

• 27:56Speaker 01

  I'm pursuing the perfect cup. And I'm like, what the? I didn't even know to the extent what all these varietals were. It reminded me of like wine and all the different areas where you grow these, you know, different. I mean, I was like, this is just a unique, wild endeavor that has more depth than I could have ever imagined.

• 28:22Guy Raz?

  So his idea, so the idea was he would teach you how to do this, but of course with the hope that you would buy his coffee. That was the idea.

• 28:29Speaker 01

  Yeah, yeah.

• 28:30Guy Raz?

  And does he also have things to sell you? Coffee cart equipment?

• 28:35Speaker 01

  He had it all. In fact, he asked us a bunch of questions. He was like, so give me a real idea of what you want to do here.

• 28:42Guy Raz?

  Yeah.

• 28:42Speaker 01

  And so Dana and I were like, well, you know, we want to do this mobile push cart. And we do have a fixed location that we want to do at Fred Meyer. And he was like, okay, yeah, in order to do that, he goes, you should do like a manual pull machine because there's some art to pulling shots manually rather than like a push button. You want to, you want to be able to show people and talk to people about what you're doing and how that's important to you. And yeah.

• 29:11Guy Raz?

  All right, so you, so he basically says, I've got everything you need. How much, I mean, your brother was, he was in his late 30s at that point and had already run a Dairy Queen, so he's coming to the table with some, you know, some experience and you were a young guy, but how much money did you guys have to invest? You know, a machine was going to cost money, the cart was going to cost money. What did you guys have to put into this?

• 29:36Speaker 01

  Oh, man, so I had very little and Dane had, you know, Dane was frugal, man. I mean, I think he had maybe $60,000, but our first cart all in was 12 grand.

• 29:48Guy Raz?

  All right, and you made an agreement with Paul that you would buy beans from him?

• 29:52Speaker 01

  Well, so when we left from that experience with Paul, we were ecstatic. We were like, we found our guy. This is it, man. We're over the moon. And when we got back to Grant's Pass, it was like, within a week, he was down with the equipment, the cart was being built, and we set it up on an old living room table and we were in our old milk house and, you know, we brought our stereo in with a couch and, and he brought with him 10, 10-pound bags of coffee. And he said, you know what? I think the best thing for you guys to do is, once I teach you how to pull these shots and steam milk, is just have fun with it and try to come up with what you think would

• 30:37Speaker 01

  be best. I mean, it was back to, let's, let's throw some, some music on and let's, I remember making a hazelnut latte and sipping that thing, man, and going, dude, this is unbelievable, man. Well, now let's try it with that mocha java bean and let's try it with the Colombian bean and what about that blend that he had that was dark and what about that French roast stuff, man? That's, yeah.

• 31:03Guy Raz?

  Yeah. And between the time that you took delivery of this push cart and the time that you actually set up and started to sell coffee, do you remember how long that took?

• 31:12Speaker 01

  I want to say it took us about three months before we finally were open. And there's a little story to tell there.

• 31:21Guy Raz?

  Okay.

• 31:22Speaker 01

  So we kind of got to this place where we had made our simple menu. The mocha, we both knew was going to be our top seller and the thing that was most popular because there was going to be a learning curve, especially in Grants Pass for people that had never had an espresso coffee before, never had a latte before. So we tried all sorts of different stuff, like Mrs. Richard Todd Fudge to Nestle's Quick, to Hershey's syrup, to Gierdeli's. And we were just pulling our hair out because you'd have challenges with either powdery or syrupy and settlement, and it just wasn't meeting our expectation. And so Dane finally looked at me and he goes, I'm going to go down the street to Valerode

• 32:05Speaker 01

  Dairy, who the Zottola family had been doing this for years. And they had a chocolate milk that was so rich and creamy. He goes, I'm going to go pick up a couple of quarts of that and bring it back and let's steam it up and see how it holds up. And he did. And we both looked at each other and we're like, that's it, man.

• 32:24Guy Raz?

  Wow, steaming the chocolate milk and putting it in a steamer, yeah.

• 32:27Speaker 01

  It was already blended, it already held true. And when we steamed, it was faster, it was more consistent. It was amazing. So we got our menu dialed, we had our logo, we had our name.

• 32:40Guy Raz?

  And your name, you came up with a name?

• 32:42Speaker 01

  We came up with the name Dutch Bros because we're brothers and we're Dutch.

• 32:45Guy Raz?

  Dutch Bros, you're like third generation, like your great grandparents came from the old, grandparents came from the old country.

• 32:51Speaker 01

  Yeah.

• 32:52Guy Raz?

  Okay, and you can say Dutch Bros, you don't say Dutch Brothers.

• 32:54Speaker 01

  I say Dutch Bros, yeah.

• 32:56Guy Raz?

  Like, what's that coffee brand? It was like an old coffee brand, it was like...

• 33:01Speaker 01

  Hills Brothers.

• 33:02Guy Raz?

  Hills Brothers, yeah.

• 33:03Speaker 01

  Yeah, I think everybody else went brothers and we were like, you know what? Fuck tradition, we're going bros.

• 33:08Guy Raz?

  You guys are bros.

• 33:10Speaker 01

  Yeah.

• 33:11Guy Raz?

  Yeah. So, all right, so when you were ready to actually put this out there and start selling coffee, where did you, where did you go? Where was it? Where'd you put it?

• 33:19Speaker 01

  So, we drew up this nice proposal and had visited with the Fred Meyer store manager and we sent it in and, and they said, yeah, you know, we got your application and it looks great, but we haven't got to it yet and, you know, hang in there and we'll get back to you.

• 33:35Guy Raz?

  Huh.

• 33:36Speaker 01

  And another week passes. And Dane says, you know, he says, I wonder if we shouldn't maybe look for a second location. Maybe, maybe there's a better location for us to go to.

• 33:48Guy Raz?

  Yeah.

• 33:49Speaker 01

  And then all of a sudden, there was like this flash and I was like, there used to be a shaved ice place right next to the post office, next to the railroad tracks, downtown Grants Pass.

• 33:59Guy Raz?

  Was there foot traffic there? I mean, was there a lot of people who would pass by?

• 34:05Speaker 01

  So, it's a main thoroughfare that goes to the coast, so you have a ton of cars that drive by and then you have a lot of people that park and walk over to the post office to get their mail.

• 34:18Guy Raz?

  Right. Got it.

• 34:20Speaker 01

  And Dane said, well, Bill Rosnick, one of my buddies, is the manager for that whole shopping complex. Let me give him a call. So, we showed him what we'd give to Fred Meyer and, and he looked at it and he said, I'm completely down. If you guys want to put it here, it's 150 bucks a month. There's power on this billboard sign there that you can probably use. That's what they used and, and we got everything ready and we said, well, we need a little storage shed to build, to put the card in, to leave it there overnight and...

• 34:53Guy Raz?

  Yeah, because it was outdoors. You were going to be outdoors, yeah.

• 34:55Speaker 01

  Outdoors, man. And we opened our first day downtown Grants Pass next to the post office and Dane was like, I don't know if I could do it, man. He's kind of hiding out in the back and...

• 35:07Guy Raz?

  What do you mean he couldn't do it? Why?

• 35:09Speaker 01

  He just, I think all of a sudden, it just came, it just kind of all like, oh my God, this is real, we're doing it.

• 35:16Guy Raz?

  Yeah.

• 35:16Speaker 01

  And I'm like, hang on dude, I'm going to go make you a, a little eight ounce mocha.

• 35:22Guy Raz?

  Yeah.

• 35:23Speaker 01

  And I'm going to put some tunes on.

• 35:25Guy Raz?

  Yeah.

• 35:25Speaker 01

  And so, I put on some Led Zeppelin, Going to California. And I got him a coffee and I said, hey, man, it's on.

• 35:39Guy Raz?

  When we come back in just a moment, Travis and Dane realize that push carts can only go so far. And the real business isn't drive-throughs. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 35:59Guy Raz?

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• 36:42Guy Raz?

  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. 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.

• 37:24Speaker 02

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• 38:09Speaker 03

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• 38:24Speaker 04

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• 38:55Guy Raz?

  One more thing before we get back to the show. Please make sure to click the follow button on your podcast app. So you never miss a new episode of the show and it's totally free.

• 39:09Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1992 and Travis and Dane are officially in business, selling espresso drinks from a push cart outside a shopping center in Grants Pass, Oregon.

• 39:23Speaker 01

  And the very first day, we ran into a real problem. The owner of the grocery store, who was the anchor tenant in the shopping center, came out and he basically said, what in the fuck are you doing in my parking lot? And Dane and I are like, we talked to Bill Ross. He goes, I don't care who you talk to. This is my parking lot. I leased this. I want you gone now. So one thing led to another man and I end up heading over to his office. And his wife was sitting there in a desk next to him. She goes, Dave, at least be polite and hear him out.

• 40:08Speaker 01

  And I was like, oh, okay. And he had put chains up on these entrances that would come off a sixth street to access his parking lot because he wanted to restrict people from going to the post office, parking in his lot. So I said, well, I can help maybe with informing people that you'd rather not have them park here. And, and he said, I, I don't care. I want you gone. And his wife said, well, Dave, let me, I'm going to go talk to he and his brother for a moment and, you know, I'll be back.

• 40:40Guy Raz?

  Yeah, I'm, I'm just curious why he was so mad.

• 40:43Speaker 01

  Yeah, I think what the deal was is, is he felt like he should have, we should have asked him for permission.

• 40:49Guy Raz?

  Yeah.

• 40:49Speaker 01

  So his wife, she goes, look, you know, we've been under a lot of stress. This market is brand new for us. It's our whole life. We've invested our money into it and we have people that own grocery outlet. They're like the brass and, and you know, we've got an answer to them. And I said, listen, I, I get it and I'm sorry. And if we could be of benefit, we'd be happy to furnish you guys, your crew, everybody who works for you. We can give you free coffees. All we ask is that you give us an opportunity to stay here for the month. We, we paid the rent.

• 41:22Guy Raz?

  Right.

• 41:22Speaker 01

  And so the next day she came in and she said, okay, this is a deal. It's a month. And then once that month's up, you're well on your way. Said, deal, done deal. We're cool. Very first day, we did $65.

• 41:38Guy Raz?

  It's not bad.

• 41:39Speaker 01

  And we were slapping high fives, man. I mean, we profited, we figured like 30 bucks.

• 41:44Guy Raz?

  Yeah.

• 41:45Speaker 01

  And, and that was more than we were doing on the dairy farm in the darkest days.

• 41:49Guy Raz?

  Yeah. I mean, the beauty of that cart was, I mean, you knew there was a price you paid for it and then you could measure how quickly it would take to pay to sort of recover the cost of the cart. And then after that, everything's gravy. I mean, obviously you've got the expense of getting, bringing the coffee in, but like, that was the big initial investment.

• 42:08Speaker 01

  Yeah, I mean, we had low overhead and we knew what we had to make to pay the bills. And from that point, we started earning customers one at a time and it was word of mouth. And it was us promoting the product. And now customers were starting to walk by and get their mail and they're kind of looking at us like, what the hell is that? And so I started to just say, hey, uh, if you're going to get your mail, I'll make you up a coffee and I'll have it ready when you come back by. You can check it out and they'd be like, what? Oh, no, I, I'm not interested. And I'm like, no, no, it's okay. I'm just gonna give it to you. And they go get their mail and they come back by and I'd, I'd hand them one and they're like, oh, wow, this is, this is really good.

• 42:51Guy Raz?

  All right, so you're out there running this coffee push cart outside this grocery store, this grocery outlet. And when your one month agreement was up, did a couple who had the store parking lot let you guys stay there?

• 43:05Speaker 01

  Yeah. So as we're cruising through, two, three weeks into the gig, there's this SUV that pulls up into the parking lot of grocery outlet. Guys with suits hop out of it, couple of them light up a cigarette and start strolling over to the push cart. And Dana and I see him coming and I'm like, I think that's the brass for grocery outlet. You know, we're kind of like on pins and needles. And so they come over and one of them orders a cappuccino, which let me know like, you know, okay, these guys are sophisticated coffee drinkers. And they look over to us and they're like, wow, this is really good, you know, nice job.

• 43:48Speaker 01

  They left a $5 tip and they were on their way over to grocery outlet then to talk to Dave and Jill. And they complimented Dave and Jill on us being there and how that made it a more welcoming environment for customers to come to grocery outlet.

• 44:06Guy Raz?

  Cause grocery outlet, like for people who don't know, it's like a, like a discount grocery store.

• 44:11Speaker 01

  Yeah, it is.

• 44:12Guy Raz?

  Yeah.

• 44:12Speaker 01

  And, and it changed the trajectory for us. So then, you know, now we're clipping along and as long as we stayed in good graces with grocery outlet, we knew that we were there for as long as we wanted to be there.

• 44:23Guy Raz?

  Yeah.

• 44:24Speaker 01

  From there. Fred Meyer calls and they say, hey, man, you're approved.

• 44:31Guy Raz?

  Huh.

• 44:31Speaker 01

  And we're like, oh, my God. What do we do? And Dane said, well, maybe we should do the second location. Maybe we should buy another cart. And I said, yep, let's do it.

• 44:42Guy Raz?

  So you guys basically took whatever cash, mostly it was his cash, probably.

• 44:47Speaker 01

  Yep.

• 44:48Guy Raz?

  And bought a second cart from that same guy from Paul and Eugene?

• 44:51Speaker 01

  Yep, and it was exactly the same.

• 44:53Guy Raz?

  Did that mean you have to hire somebody or did, would you man one and he manned the other?

• 44:57Speaker 01

  That's how we started is I manned one and he manned the other and we'd rotate. However, Fred Meyer wasn't doing nearly the volume of our downtown location and it never would.

• 45:09Guy Raz?

  Now, I guess one of the things that your brother was into were, were books by Tony Robbins, The Life Coach. And

• 45:17Speaker 01

  Yeah.

• 45:18Guy Raz?

  One of the things he was into is this idea of like unlimited, limitless possibilities, right? Like thinking about what you could possibly do. And I guess the two of you, you and Dane, even in those early days, would sit down and then like map out what you wanted the business to be like in a year, five years, 10 years. Tell me what you wrote down. I mean, what did you envision?

• 45:43Speaker 01

  Oh, my gosh.

• 45:43Guy Raz?

  Dutch Bros being in five years at that point. This is 1993. So what, what did you think it was going to be 98 and then in 2003?

• 45:53Speaker 01

  And Well, the process was, I mean, it was really incredible. I mean, it was like Dane, when we sat down on the living room floor of his mobile home and did this goal setting workshop and the process in itself is like, I mean, I'm writing like, become a helicopter pilot, build a, a home on the river above Savage Rapids Dam.

• 46:15Guy Raz?

  Oh, these are, these are like personal goals. These are not goals for the company.

• 46:19Speaker 01

  It's anything. It's

• 46:20Guy Raz?

  Okay.

• 46:20Speaker 01

  It's personal, it's professional, it's everything. It's open locations of Dutch Bros within the state of Oregon. And the 11 Western United States have locations.

• 46:31Guy Raz?

  Yep.

• 46:31Speaker 01

  It's have a drive through, it's build a coffee house, it's roast our own coffee. It's just anything you could ever think of.

• 46:41Guy Raz?

  Yeah. And what did that do for you? I mean, lots of people write goals down, but how, how was that? I don't know. How was that actually? Useful in this case, what did it do for you?

• 46:52Speaker 01

  Well, the crazy thing is, once you write all these goals down, it's almost like inventory your dreams. And after you did that, then we exchanged them with each other and we read them out loud and we laughed because so many of them seemed so far fetched. But the amazing thing is, it was like they were in our subconscious. It wasn't like we went and got tattoos of these goals.

• 47:16Guy Raz?

  Right.

• 47:16Speaker 01

  Wrote them on a mirror to look at every day, but we started to drive toward them.

• 47:21Guy Raz?

  So you were basically trying to manifest these things that you'd written down. And meantime, you are, you've got these push carts and, and I think like, what, a good day would be what, like 200 bucks?

• 47:32Speaker 01

  Yeah. So, you know, I guess second year in, our downtown location's doing, you know, between two and $300 a day. And Fred Meyer tips around the 80 to 100 dollar mark every day. And, and we, we opened three more push carts and we ended up going to Walmart in Grants Pass, RCC in Grants Pass, and then Walmart in Medford. And we have employees now and trying to figure out like, how do we get those other locations to perform like our downtown one? We never really could and we kind of finally landed on the ultimate success formula that we learned in this Tony Robbins book. And it was know your specific outcome, take massive action toward it. Ask yourself if the actions working that you're taking, and if it's not changing until it does.

• 48:18Speaker 01

  And we started to look at the push cart gig and we said, you know what? I think we need to change it. I think we need to have our own environment. Bonnie, who had Western Espresso had moved on and she'd given it to her kids and they kind of ran it into the ground and they were, it was dead and gone. And we said, you know, that may be the best location for it. Let's pull these carts out of Walmarts. That environment is not for us. They wanted us to monitor people smoking. It was just a weird environment. You couldn't play music. It just wasn't us.

• 48:50Guy Raz?

  You wanted your own permanent location?

• 48:53Speaker 01

  Yeah.

• 48:54Guy Raz?

  And Bonnie's place was, it was basically available?

• 48:57Speaker 01

  Yeah, she had a little trailer there and they had packed it up and they had vacated the premises and it sat there for a year. And, and so we ended up contacting the property owner and we decided that our customers that come downtown, a lot of moms and dads with kids, and sometimes it's rainy and sometimes it's not the, the best weather conditions. What if we did a drive-through?

• 49:21Guy Raz?

  Was it already a drive-through?

• 49:23Speaker 01

  Bonnie had had a drive-through. So Bonnie had a trailer there.

• 49:30Guy Raz?

  Okay.

• 49:31Speaker 01

  When Bonnie left, she took her trailer that had the espresso machine in it with her. So it was just a pad site.

• 49:39Guy Raz?

  Got it.

• 49:39Speaker 01

  So Dana and I decided to build our own custom trailer outfitted with the coffee equipment in it.

• 49:46Guy Raz?

  Inside?

• 49:47Speaker 01

  A unique custom trailer, like a Wells Cargo trailer, and put the pushcart in it and we were able to have it all enclosed and have a drive-through where it was, you could drive through and we could serve you from a window or just an open air space, just like any, any drive-through would serve anybody. But it was a mobile unit.

• 50:09Guy Raz?

  Got it. So, but like drive-through coff- I don't think there were drive-through Starbucks. I mean, there were drive-through McDonald's, you'd get coffee there, but

• 50:16Speaker 01

  Right.

• 50:16Guy Raz?

  Drive-through espresso places, it was not, it was not a thing?

• 50:21Speaker 01

  No, it wasn't a thing. And I think, you know, for us, when we figured out that that was going to be the niche for us, it was a game changer.

• 50:31Guy Raz?

  How did you, once you converted this trailer into a, you know, A drive-through espresso bar, how did you, was it just clear right away? It was obvious right away that that was how you were gonna sell coffee in the future?

• 50:45Speaker 01

  So when we opened and we had that drive-through experience, we also had our old-school walk-up experience that you could park your car, walk up, sit on a bench underneath a tent, have a cup of coffee, warm your hands by a Mr. Heater if you want to talk with us. But the drive-through line that started to form was incredible. And once we had the, the location open for maybe a couple of months, we realized like, this is just where it's at, this is our niche. And it started to exceed volumes of $300 to $400 a day.

• 51:21Guy Raz?

  All right, so you've got this, this drive-through location. And I guess there was, there was like a, a customer who, who was going to the location, a guy named Marty McKenna.

• 51:30Speaker 01

  Yeah.

• 51:31Guy Raz?

  Who, who loved it and was like, hey, can I like do a version of this in Medford, which is, which is like 30 miles away? And you guys agreed to work with him. Tell me how that happened.

• 51:40Speaker 01

  Yeah, so Marty was coming in and Marty was like, man, this is so unbelievable. I would love to take this concept to Medford and, and do it myself. Would you guys be interested in, in sitting down and talking about it? And legitimately, he said, look, I'd be willing to give you $500 a month to use your name and I'd sign a business license agreement if you want. And if you guys teach me how to make everything, I'll use all the products and buy them through you and let's take the plunge and, and see what pans out.

• 52:12Guy Raz?

  And how did it do?

• 52:13Speaker 01

  He started rocking.

• 52:15Guy Raz?

  Wow.

• 52:15Speaker 01

  He got to a point, you know, we sent our best barista with him because...

• 52:21Guy Raz?

  This is what you call baristas, broista.

• 52:24Speaker 01

  Yeah. And the volume started to really build.

• 52:28Guy Raz?

  So the, the idea of kind of what was sort of a version of franchising really began with this guy just saying, hey, can I open the location? Like you guys, this was not something you were looking to do, but it, because he, he sort of approached you about it, it sort of, I guess, triggered some thoughts about, well, maybe we can open more locations beyond Grants Pass.

• 52:47Speaker 01

  Correct.

• 52:48Guy Raz?

  And did he become a partner in this, in a sense?

• 52:51Speaker 01

  Yeah, I think, you know, it wasn't too long into the gig, maybe it was six months to a year into the gig. We all sat down and talked about this idea of partnering up and growing both Medford and Grants Pass, and we were all in like a third, a third, a third.

• 53:07Guy Raz?

  Yeah. Now, this seems kind of crazy to do, like this guy Marty, who I'm sure is a great guy, but like you barely knew him and he opens his location, then he becomes a partner, a third partner-owner. Did that turn out to be a mistake, or did that work out well?

• 53:25Speaker 01

  You know, when you have partners, there's always compromises.

• 53:27Guy Raz?

  Yeah, because it was you and your brother and your family, and so, you know, that's different.

• 53:32Speaker 01

  Yeah, it really was.

• 53:33Guy Raz?

  Yeah.

• 53:34Speaker 01

  You know, we cared so deeply about the product and how we did it, and so Marty was kind of in a different place. I mean, he didn't have the commitment, the way of living real frugal. You know, he wanted to take more money, and we wanted to roll the money back into the organization, so there was some challenges in those years. And we got to a place where like, okay, we've got to grow here. We want to invest. We want to go buy a coffee roaster, and we talked to Marty, and, you know, he didn't have the money to continue with expansion, let alone grow and invest into a roasting operation. So we decided, well, you know, if we just do the roaster on our own, we can sell coffee

• 54:18Speaker 01

  to the business that the three of us are partnered in still. And then that created a little bit of a rub.

• 54:25Guy Raz?

  Hmm. I mean, in a nutshell, you and Dane were disagreeing with Marty about some pretty fundamental things. I mean, clearly, you guys wanted to use your revenue to grow the business, and he didn't. And I guess all of that, all that got so challenging that you started talking about ending, ending the partnership, right?

• 54:44Speaker 01

  Yeah. You know, Dane and I looked at each other and we said, you know what? This is a long play, and we're going to grow, and I think we can do it better if Marty wasn't here, and maybe we should be buying Marty out. So finally, we just said, you know what? Let's talk about that real number of what it would take. And he finally threw out, I'd do it for 1.2.

• 55:07Speaker 01

  And had we had a financial advisor at that time, they would have said, no way, don't do it. It's, I mean, how many years is that going to take to get your money back?

• 55:16Guy Raz?

  Yeah.

• 55:16Speaker 01

  But we took the plunge and we give him, he carried the paper, 1.2 million at 7%.

• 55:22Guy Raz?

  So you bought him out for 1.2 million. Obviously, you could not pay that off right away. So you did 7% interest. And that was, I mean, this is 1999. I think at that point, you had 10 total locations.

• 55:36Speaker 01

  Yeah.

• 55:36Guy Raz?

  And eight of them that you guys owned and then two that were licensed. So you were a small business. I mean, I mean, your revenue, I can't imagine what your revenue might have been, maybe 5 million at most a year, 10, maybe 10 million? I don't know.

• 55:50Speaker 01

  Oh, man. Yeah, it was, it wasn't even that.

• 55:52Guy Raz?

  But a million dollars, a big amount of money and.

• 55:56Speaker 01

  Well, let's put it this way. It was, we wrote him a $12,000 check every month.

• 56:01Guy Raz?

  Wow.

• 56:01Speaker 01

  And Dane and I were taking home, just to live on, I think it was like three grand.

• 56:07Guy Raz?

  Wow.

• 56:08Speaker 01

  But, you know, we had kind of formed a belief, like if you're not growing, you're dying.

• 56:12Guy Raz?

  So he's out of the picture in 99. And what I'm trying to figure out is, so now it's back to you and your brother, and you've got these 10 locations total. And now you know you want to expand. But over the next four years, you would open 40 more locations, drive-through locations. So help me understand how you did that. Did you, did you guys finance all these? Was it franchisees? Was it, was it the same model, a trailer converted into a, into a coffee place?

• 56:47Speaker 01

  Well, so we had these really cool buildings that Dane designed. And as we continued to grow, the demand for wanting to franchise the business was there with friends and family and customers that.

• 57:02Guy Raz?

  They wanted their own location.

• 57:04Speaker 01

  They were like, man, how can, can we get in? Can we take this over to Roseburg? Can we take it to Clima Falls?

• 57:09Guy Raz?

  Yeah.

• 57:10Speaker 01

  And so Dane wrote the first franchise agreement, and I wrote the operations manual.

• 57:15Guy Raz?

  Wow.

• 57:16Speaker 01

  And, you know, franchise owners would take all of their own money invested into a fully equipped mobile unit. And that didn't require any capital from us. And we would get a franchise fee of, say, like 30 grand.

• 57:34Speaker 01

  And then we'd get royalties and they'd buy the beans from us that had a profit margin built into them.

• 57:40Guy Raz?

  Because you were roasting your own beans.

• 57:41Speaker 01

  We were roasting our own beans. And so that really became a cash cow for us and it became the lifeblood of the company for our own growth, our own investments and paying Marty off.

• 57:57Guy Raz?

  All right, 2004, you've got a lot of growth ahead of you and it's a good place to be. You're 34-ish, Dane's a little over 50. And this is going to prove to be a really challenging time, actually. It's challenging is an understatement. This is going to be a rough few years ahead, which you did not yet know. But I guess around that time, you started to notice that your brother was slurring a speech. What do you remember?

• 58:28Speaker 01

  Well, I remember the first time that it was brought to our attention. We were in this local Mexican restaurant that we love called Taqueria in Grants Pass. And we were just having lunch and Dane's wife Sandy came in and we were talking and she goes, "How much have you had to drink?" And he goes, "Nothing." And she goes, "Well, why are you slurring your speech?" And I was like, "Well, that's weird. He is kind of slurring his speech." That was the beginning of something that we had no idea of what to imagine.

• 59:04Guy Raz?

  Meantime, that same year, there was a fire at your warehouse.

• 59:12Speaker 01

  Yeah.

• 59:12Guy Raz?

  And I think it destroyed everything inside, like your inventory. Like what, what happened?

• 59:18Speaker 01

  Well, it was August 8th. It was 108 degrees out that day. And I'm over at my sister's house, Carly's house, with her husband, Brian, who works with us at the stage. And we're swimming in their pool and we're literally, you know, maybe a half a mile away from where our headquarters is located. And, and my mom comes driving up the driveway at a pace like that looked dangerous. And she slams the brakes on and jumps out. She's like, "There's a fire. We need to go." And we literally jumped out of the pool in board shorts and headed down to the warehouse.

• 1:00:00Speaker 01

  And when we got there, what I saw was this giant trash dumpster that we had that's made out of plastic melted against the wall on fire. All of a sudden, here came the fire department pulling in and they, the one chief came over to me and he was like, hey, listen, you know, we're going to do the best we can. Is there anything that we need to know? And I said, well, the number one thing is to save the coffee roaster out of there. If that's the only thing that made it out, that'd be the thing that's really important for us. And I said, I'd like to go in and get that. And he goes, you cannot go in here. You're not allowed. If you do, your insurance could be voided.

• 1:00:43Speaker 01

  Trust me, do not even, I know it's tempting, sit here, let us do our job. And I said, okay. And so I ultimately still had confidence that they're just going to put the fire out and everything would be cool. And the smoke was so dense and so much in there, they couldn't get a hold on it. And it just got away from them. And we literally lost everything, including the roasters.

• 1:01:09Guy Raz?

  Wow.

• 1:01:10Speaker 01

  All of it.

• 1:01:12Guy Raz?

  When we come back in just a moment, Travis and Dane get through the fire and then face an even bigger blow. Stay with us. I'm Guy Raz and you're listening to How I Built This. Hey, welcome back to How I Built This. So it's 2004 and the beginning of what Travis calls the dark years for Dutch bros. For starters, something is up with his brother Dane. He's not doing well and he's slurring his speech. And around the same time, a fire at the warehouse destroys everything, including

• 1:01:57Guy Raz?

  the coffee roasters.

• 1:01:58Speaker 01

  I'm just sitting there and I'm like, once I realized that it was gone, gone.

• 1:02:05Speaker 01

  I called Paul. Paul had been our green bean boker and buyer. I said, hey, man, I don't know what to do here. And so he called me back and he said, I talked to David Boyd up at Boyd's and they're willing to roast coffee and, and keep your guys' product going. Oh, wow. So, you know. Wow. I said, that's amazing. Thank you. And literally the next, the next morning, I was like, we got to figure out what we're gonna do. And people were coming up that were community members and saying, you know, you may want to consider, uh, antidepressives at some point because this is going to be a long road and, and these were people that had actually had fires themselves. And I'm like,

• 1:02:50Speaker 01

  listen, man, all I want to do is get it behind me and make sure that our stores are not impacted. Wow. So, um, that's going on. And eventually, your brother Dane gets a diagnosis.

• 1:03:10Speaker 01

  Well, the diagnosis didn't come so easy. And with ALS or Lou Gehrig's, it doesn't. And that's of course what, what he was diagnosed with, ALS. Yeah. And, and you can't diagnose it until you're well into it. What happens is you go through a process to rule out, you know, a tumor, cancer. Parkinson's or something else. Yeah. Parkinson's. You, you rule out all these things through testing and time. You know, when this fire happened, I was so concerned about him. I thought, oh my gosh, he's so stressed out. I kept thinking, maybe he's just overwhelmed and, you know, we're growing at a, a rate that's, you know, maybe excessive. And, and so I just, I mean,

• 1:03:54Speaker 01

  my heart hurt for him because I knew something was wrong. I just didn't know to what extent. And it took us a good year and a half to figure out that he could have ALS. And that was brutal news to even entertain because we knew it was a death sentence.

• 1:04:14Guy Raz?

  Wow. And I think normally when people are diagnosed ALS, they live usually for another three, maybe up to five years, depending on

• 1:04:24Speaker 01

  Yeah.

• 1:04:24Guy Raz?

  the symptoms.

• 1:04:25Speaker 01

  Yeah. And the hard part is, is you, you think, how do we beat it? What can we do?

• 1:04:33Guy Raz?

  Yeah.

• 1:04:33Speaker 01

  You know, maybe there's a way, maybe we're the miracle. And, and then you're thinking, well, maybe it's something else still.

• 1:04:40Guy Raz?

  Yeah.

• 1:04:41Speaker 01

  And so, you know, we thought maybe it's Lyme's disease and he was getting treated and try flying to Colorado Springs, had a port inserted in his heart for Lyme's disease. And you're like, well, you know, it could be that and maybe this will, you know, and, and he didn't really want to do that, but he asked me, he goes, hey, man, what do you think? And I said, I go, Dan, man, I, I think you should turn over every rock, man.

• 1:05:03Guy Raz?

  Hmm.

• 1:05:06Guy Raz?

  Tell me how you coped with, I mean, you were, you know, now you had to run this thing and he had to focus on his health, on getting better or at the very least surviving. Tell me about your just like mental, emotional state, you know, trying to be the leader and a boss and this happening.

• 1:05:29Speaker 01

  You know, not only was Dan my business partner, he was my, my brother, he was my best friend.

• 1:05:36Guy Raz?

  Yeah.

• 1:05:36Speaker 01

  And what I now know is he was my mentor. And for him to be going through this thing, it was horrific. And I was like loaded all on my back. I'll do everything that I possibly can to make sure that the business stays afloat and that it's working and that we go through this, these storms. And, and literally I was killing pain with booze and dope and it was tough, you know, and, and I was not healthy. The business was doing okay, but I wasn't handling it well. And it took its toll. It really, truly did.

• 1:06:19Speaker 01

  And I think that there was a pivotal moment in time and it's when, when he finally, this is the deal with ALS, you either get a limb onset, or it starts with your speech and it goes to swallowing, and then it goes to your breathing diaphragm. So it had gotten to the place where his breathing diaphragm, he was really having a hard time breathing and he was on oxygen, which is the worst thing you could do because he wasn't having a hard time getting oxygen in, he was having a hard time getting the carbons out. So at some point, he couldn't do it anymore and he had to go to the hospital and, and at that stage, he had the choice to be put on a ventilator and the family chose to go

• 1:07:04Speaker 01

  down that path. And from there, he's probably one of the few people that was able to still walk.

• 1:07:09Guy Raz?

  Yeah.

• 1:07:10Speaker 01

  With a ventilator, but it doesn't adapt to your heart rate, man. I mean, it's air in, air out, air in, air out. And so, you know, you can maybe take a few steps and pause. And his quality of life for the next two years, seeing grandkids born and those kinds of things and going over to visit with them and watch music videos and, and football games and that kind of stuff was, was still there, but, but it was, it was brutal.

• 1:07:41Guy Raz?

  I want to, I want to get a sense of your internal world because obviously what he was going through is just unimaginable.

• 1:07:48Speaker 01

  Yeah.

• 1:07:48Guy Raz?

  How did you, you, you said you were self-medicating, right? Alcohol, smoking pot, or whatever you were using to dull your pain. How did you manage the business while you were also suffering? How did you do that?

• 1:08:06Speaker 01

  You know, the business was a huge priority. I felt compelled for Dane and his family to continue to perform well.

• 1:08:17Guy Raz?

  Right.

• 1:08:18Speaker 01

  And make sure that we continue to grow and scale and that if we were going to go down this road and Dane wasn't going to be here, I was going to make sure that I was able to provide for them.

• 1:08:30Guy Raz?

  Yeah. So that was also driving you?

• 1:08:32Speaker 01

  Yeah, sure was. You know, and so I had the wherewithal and I had the leverage. To perform to the best of my ability and I had to ratchet it up. And there came a time in 2008 where we had grown into some markets. The brand wasn't well known. It needed to be pioneered in those markets and we had franchise owners that were willing and able, but it was a challenge. And we were growing with people that maybe had business experience, but they didn't necessarily grow up in the company.

• 1:09:05Guy Raz?

  Yeah.

• 1:09:05Speaker 01

  They maybe didn't have the principles or values all the way that we did. And you know, the real estate bubble is, was about ready to burst if it hadn't already.

• 1:09:15Guy Raz?

  Cause this is 2008 now.

• 1:09:16Speaker 01

  Yeah.

• 1:09:17Guy Raz?

  Yeah.

• 1:09:17Speaker 01

  2008 was probably the time where we made the heaviest, I made the heaviest decisions that I ever made in my life with the company. And we decided to draw a line in the sand and stop our, our growth with franchising and evaluate how we best should grow. And, and that's like stopping a train because

• 1:09:37Guy Raz?

  Yeah.

• 1:09:37Speaker 01

  You've got a year and a half of locations to go still open that you're committed to with franchise owners that are growing.

• 1:09:43Guy Raz?

  But I'm not, I'm just, I'm confused. If, I mean, 2008, you're growing, the franchise is growing.

• 1:09:50Speaker 01

  Yes.

• 1:09:51Guy Raz?

  When people said, hey Travis, I want to open a location. You said, no, we're, we're freezing it right now. And they said, well, why? Why are you freezing it? You're doing so great. What was your answer?

• 1:10:02Speaker 01

  I think when, when we got to 2008 and we were struggling in these new markets with Boise, with Fresno, with Tempe, Arizona, that there was, the stores were not performing to the level where they were profitable. When you buy a franchise, I think there's an expectation that you're going to get a brand name with a system to execute by and it's going to profit.

• 1:10:27Guy Raz?

  Yeah. Yeah. Right.

• 1:10:28Speaker 01

  And so when you don't profit, people start to come up with creative ideas that they think are going to help them to get the result.

• 1:10:39Guy Raz?

  Right.

• 1:10:39Speaker 01

  And so our team was trying to teach culture to people at Business Acumen. And we knew that we really didn't want to sell franchises anymore to people who just had business acumen. We had people that wanted to open 30 locations in a state and give us millions of dollars. And we're like, no, that's really not what we want to do.

• 1:11:01Guy Raz?

  So what did you guys do? Like, how did you start to change things?

• 1:11:05Speaker 01

  So I remember going in and talking to Dane and I was like, man, I don't know. And at this stage, Dane couldn't ride anymore. He had lost his mobility. He was bedridden. And our communication was him smiling.

• 1:11:23Guy Raz?

  Yeah.

• 1:11:23Speaker 01

  Or his eyes.

• 1:11:25Guy Raz?

  Wow.

• 1:11:25Speaker 01

  And I said to him, I said, hey, man, I'm burning the candle at both ends here. I don't know if I should sell the company or if I need to like go work on me or, you know, what I should do. And maybe I should go to one of those Tony Robbins seminars. And he smiled and his smile in his eyes said a thousand words to me. And I went to Tony's Life Mastery, his Wealth Mastery, The Date with Destiny, the UPW, all of it. And the thing that happened that was really unbelievable is he had developed

• 1:12:07Speaker 01

  this thing and it was, it was a test and it was called Business Mastery. And we went to the first one and it was like 75 people and I brought our team and I think I was only supposed to bring two of us. And it was ideas around like where you at in the life cycle that you're in of, of the company and where is the industry and its life cycle? And what business are you really in? And I'm thinking to myself, we're in the coffee business. It's pretty self-explanatory. I mean, we're, we're selling beverages.

• 1:12:33Guy Raz?

  Yeah.

• 1:12:33Speaker 01

  And one of my team members that, that is like a brother to me, Dave looked at me and goes, you know what, man? Maybe, maybe we're in the relationship business. We see customers that come in day in, day out. We have franchise owners who are running these businesses. We're trying to make sure everybody's beaten to the drum the same way. We're kind of ruling with an iron fist right now. But he goes, and maybe the product is love. And I was kinda like, maybe, but what the hell are you saying? And the five of us sat down and reflected heavily and kinda got to this place of like, you know what?

• 1:13:17Speaker 01

  That's exactly what it is and who we are. And we gotta grow from within and from within only with the people who understand the culture, that have the fire in their belly. And it was game changer.

• 1:13:31Guy Raz?

  So you made a decision that year that you would only sell franchises to people from the system. So people who essentially, the prerequisite to start a franchise was you had to have worked as a barista.

• 1:13:45Speaker 01

  Yep.

• 1:13:45Guy Raz?

  Or a manager at a Dutch Brothers location.

• 1:13:48Speaker 01

  Yeah, and then they didn't have the money.

• 1:13:51Guy Raz?

  Yeah, so you had to finance that.

• 1:13:53Speaker 01

  Well, no, we didn't have to finance them and we didn't. They, you know, a lot of people would magically, I mean, when you, when you have that burning desire, you find a way to get the money.

• 1:14:01Guy Raz?

  Yeah.

• 1:14:01Speaker 01

  And a lot of them had a mom or a dad or an uncle or an aunt or a customer for that matter that were willing to take the risk and put the money up. And then we kinda got to the place later where we looked at it differently. We said, you know what? We gotta bring the barrier to entry down and we've gotta really, I mean, we'd never closed a store because it didn't perform.

• 1:14:23Guy Raz?

  Yeah.

• 1:14:24Speaker 01

  But I'll tell you, it was a whole new approach and all of a sudden we started building momentum and those markets started flourishing and, and it wasn't, shortly thereafter in 2009, I lost Dane.

• 1:14:38Guy Raz?

  2009, your brother passed away from ALS. He was 55 years old. And you now, I mean, you'd already pretty much been running the business by yourself, but you didn't have him as your guide and mentor anymore. It was like, it was all you now.

• 1:15:00Speaker 01

  Yeah, but Dane's wisdom and Dane's guidance and the values and the principles and the culture, those were things that were established throughout our partnership and the time that we had together. And man, had I not had him there, you know, he was, he was the catalyst as a leader and he led by example. He was the most selfless, tolerant man that I've ever known.

• 1:15:29Guy Raz?

  All right, so now, at this point, you're trying to go forward, running this company without Dane. And you have this new approach on franchising. So what did you do in terms of like growth? Did you also have a different view of what that was gonna be? I mean, that year, I think that the year he passed away, you had something like 135 stores in seven states. Did you still feel like, you know, let's slow this down, let's not go so fast?

• 1:16:00Speaker 01

  No, I think when we stopped the train, if you will, it didn't take effect until 2010. We only opened two locations in 2010 as a result of hitting the brakes in 2008. In 2009, we turned growth back on, but it was with our own people only. And so we opened, I want to say, 20 locations in 2011.

• 1:16:28Guy Raz?

  Tell me about the people who are coming into the stores. I mean, did you notice, like, because it's not a bar, there's no alcohol, it's a safer place to hang out, especially for younger people, did you just notice certain groups of people hanging out at the stores?

• 1:16:47Speaker 01

  Yeah, I think that high school and college students predominantly. Part of that was the service and part of that was the music and part of that was Rebel.

• 1:16:58Guy Raz?

  Rebel, which is this energy drink that you, basically, you guys just created. Because, you know, what started out as a coffee, hot coffee beverage place, really morphed into a cold beverage place. And one of those things was the Rebel energy drink, which, let's talk about that for a moment, because that really began earlier, right? You guys were serving Red Bull over ice.

• 1:17:24Speaker 01

  Yeah.

• 1:17:25Guy Raz?

  And that was a popular option for some people.

• 1:17:27Speaker 01

  Yeah, it's it's hard to believe how the market in the industry has changed over the course of time, but we ended up doing a product that was a frozen beverage like a granita, but better. Mm hmm. We called it Brain Freeze in the early days, and this was kind of the segue to colder beverages, blended beverages, and really something that played a critical role in our growth. And as we grew into Northern California, our franchisee down there, Chris Rezner, he, we were offering Red Bull, and he started taking Red Bull and putting different flavors

• 1:18:10Speaker 01

  from Torani syrups in the Red Bull and poured them over ice. And that was absolutely a game changer for our organization. And back in the time that that we were serving Red Bull, they were adamant about their can. They wanted their product in their can to be served. And, you know, at bars, if you were to go get a vodka Red Bull, bars would make you the drink, and then they'd hand you the can with it to chase it. Of Red Bull? Yeah. And that was like a requirement from Red Bull? Yeah, I mean, they were so, I mean, they were like, we don't like the idea that you're just serving it in a cup. Yeah. And, you know, we're almost hesitant to continue to go forward with you guys,

• 1:18:55Speaker 01

  but you're doing so much volume. And we're really interested in the volume that you're doing. So we went round and round, and we were like, well, if we can't come to a better agreement to where you guys give us a better price point, we do promos together, we figure out ways to work together here, then we're gonna probably need to do our own. Hmm. And so we did, and we were nervous about it, and we didn't want it to be the same as as Red Bull. We wanted to to have its own identity. Mm hmm. And then when we we implemented it, it was Dutch Bros Blue Rebel, and, I mean, we just started to explode.

• 1:19:32Guy Raz?

  Did that become your biggest seller or one of your biggest sellers?

• 1:19:35Speaker 01

  It's one of our biggest sellers, yes.

• 1:19:37Guy Raz?

  Yeah. If you go to the to the menu today, right? It's definitely different from where it began on that card. I mean, it's like the drinks are very colorful. There's some coffee drinks, but there's mainly non-coffee drinks. sodas, lemonade, smoothies, energy drinks, mango nata. Really, your business is like sweet, cold drinks.

• 1:20:01Speaker 01

  Well, we have a nice blend. And so, you know, coffee is still the backbone of our business. I think our number one drink as far as hot beverages goes is like a golden eagle.

• 1:20:13Guy Raz?

  Is that the, is that the, a latte like a?

• 1:20:15Speaker 01

  It's a, like a vanilla caramel mocha.

• 1:20:18Guy Raz?

  Oh, OK, I got you right.

• 1:20:20Speaker 01

  And, I mean, we serve a lot of iced, blended, frozen concoctions with coffee.

• 1:20:27Guy Raz?

  Yeah. What, you made a second sort of transition or pivot around franchising. I think around 2015 or 2016. By that time, you had about 265 locations. You were in seven states, still mainly on the West Coast. I mean, I think your revenue was about $280 million by 2015. But, but you decided to stop franchising, actually, at that point. That the existing franchisees would be grandfathered in. They would still run their businesses. But that from that point forward, all new locations would be corporate owned, right?

• 1:21:03Speaker 01

  Well, Dan and I, from the early stages, always wrestled with, is it better to franchise? Is it better to be company owned?

• 1:21:13Guy Raz?

  Yeah.

• 1:21:13Speaker 01

  But eventually, it just made better sense to morph into company-owned stores and provide these regional operator opportunities to the farm league or the bench that we have that's developed. We've got 320 qualified operators that aren't in those capacities yet that have more than four and a half years of experience today.

• 1:21:35Guy Raz?

  Yeah. I mean, it's amazing because you started the business in, you know, what? 1990.

• 1:21:42Speaker 01

  92, yeah.

• 1:21:43Guy Raz?

  92. And it was only in 2018 when you brought in an outside investor, TSG, which is a huge, they've got stakes in big food brands. And they bought a minority stake in Dutch Bros in 2018.

• 1:22:01Speaker 01

  Correct.

• 1:22:02Guy Raz?

  So they, you know, once you bring on an outside investor, obviously, there's an end game, right? And it's either you sell it or you go public. And in your case, I mean, you eventually stepped down as a CEO in 2021, and the company went public later that year. And, you know, you raised $500 million in that IPO. I mean, it was a hugely successful IPO. That also turned you into a very, very rich person. I mean, probably far beyond what you wrote down on a Tony Robbins, you know, imagining your limitless future when you were, when you were 25 or whatever, with your brother.

• 1:22:47Guy Raz?

  I mean, it is kind of crazy, right? I mean, that you, what started out as a coffee cart, turned into a billion dollar business.

• 1:22:59Speaker 01

  And I still feel like we're small.

• 1:23:01Guy Raz?

  Yeah.

• 1:23:02Speaker 01

  And for me, well, yes, there's this wealth and there's all this money and all that stuff. You know, I'm just a regular dude, man. And I believe that you never arrive until you depart.

• 1:23:16Guy Raz?

  Yeah. But the ambition, from what I understand, is to grow to more than 4,000 stores? That's like Starbucks level.

• 1:23:25Speaker 01

  Yeah, and it comes back to providing opportunities for the people. I mean, you can earn six digits on just one store when you get to a given community, drive your stake in the ground. And, you know, so I love that we can have those opportunities for people to climb into those seats. And we have an infrastructure to support them with. It's really us doing the best we can with what we have, where we are with everybody.

• 1:23:52Guy Raz?

  Travis, when you think about this journey and where you got to, I mean, this is the biggest IPO in the history of any Oregon company, which includes Nike, which is the biggest apparel brand in the world. Like, you guys did pretty well. How much of where you are now do you attribute to the grind, to the work, to your skill? And how much do you think has to do with getting lucky?

• 1:24:16Speaker 01

  Let's put it this way, the struggle is real for all of us, no matter where you are and what you do. And so the grind is part of it. But when opportunity and being prepared meet, that's where luck lives. And, you know, this life isn't fair. And, you know, the loss of my brother, I probably learned the greatest lesson out of, and realizing that, you know, I don't get to control everything. You know, I use this idea of like, life has a destination, the river has a destination, it's the ocean. And if you look at it, you can get a kayak and a helmet and an oar and navigate your way, or you can be a log and

• 1:24:57Speaker 01

  let it take you where it may, or you can fight it and swim upstream and exhaust yourself. And if you're able to use the resources that you've been given, and you can step outside, walk downstream, see what lies ahead, and try to plan for it at the best of your ability, that's how I like to look at this life that we get to live. And hell, I'm the luckiest guy to ever live, I feel like.

• 1:25:20Guy Raz?

  That's Travis Bozema, co-founder, along with his late brother Dane, of Dutch Bros.

• 1:25:27Guy Raz?

  This is like a thought experiment, and I know there are going to be people who might hunt me down for this, but could you make the argument that America is now a better espresso country, like better at espresso drinks than Italy?

• 1:25:42Speaker 01

  Ooh.

• 1:25:43Guy Raz?

  I know. I know. I'm gonna get, I know.

• 1:25:47Speaker 01

  I'm just gonna say no to that.

• 1:25:51Speaker 01

  And you know what? I'm gonna go ahead and sit on the Italy side of it.

• 1:25:55Guy Raz?

  Yeah, fair enough. Very safe. Very safe and diplomatic answer. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show, and it's totally free. This episode was produced by Alex Cheng with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Katherine Seifer and technical assistance from Gilly Moon. Our production staff also includes J.C. Howard, Casey Herman, Sam Paulson, Liz Metzger, Kerry Thompson, Elaine Coats, John Isabella, Chris Messini, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.