La Colombe Coffee Roasters: Todd Carmichael and J.P. Iberti. A Brotherhood Built on Coffee (2020)

Wondery Plus subscribers can listen to how I built this early and add-free right now. Join Wondery Plus in the Wondery app or on Apple Podcasts. Hey everyone, and Happy New Year! So this week we're running one of our favorite episodes. It's the story of La Colombe Coffee, and this episode is special because you'll hear a bit of an H-I-B-T crossover. When the company's investors wanted to take the brand in a different direction, La Colombe was saved by Hamdi Ulequaya of Chabani, who was also a past guest on the show. We first aired this episode back in 2020, and since then, the story has kept evolving. Chabanibe has gone on to acquire La Colombe outright, and today you can find their coffee, cold brew, and canned lattes in grocery stores all over the country. Anyway, it's a great episode, and I hope you enjoy it. We started the old investor discussions, and we landed on one, we did the deal, and that lasted 52 days. To the first board meeting, I said, "Okay, 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. What they want to do." They wanted us to build 200 cafes, so I just said, "We're out of here. We're going to buy you out." Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raaz, 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 U.S. by founding La Colombe Coffee Roasters. 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, and 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. 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 Bertie. Except in their case, it didn't fade away. 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 like a loan. Now, this happened to be around the same time that two other coffee companies were starting up, one in Chicago called Intelligencia, the other in North Carolina called Counterculture. And along with La Calomb, 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 dire coffee, basically coffee that was cheap and generic, that people drank a lot of after World War II. 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 mspressos 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 Calomb 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, 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. J.P. Bertie, the J.P. 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. 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. What kind of jobs did your mom do to support the family? 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. So you were mainly raised by just your mom and presumably not a whole lot of financial security as a kid. 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. But 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. What did you do for money to pay for your own, like your car and whatever? Like what did you do? Did you have like side businesses as a kid? 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 lawnmores, 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. You got into disintering like cross country, I guess, in high school. And I guess you must have been a pretty good runner. Is that right? Yeah, it was a state champion team. We won two or three years in a row. I was in top 10 and in 5,000. And then I got a full scholarship to the University of Washington, wow. And bear in mind, I mean the. So poor kids don't really get great educations for lots of reasons. One is that you just keep moving a lot, right? 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 University of Washington. But it sounds like you were like really interested in learning. I mean, maybe school is difficult for you, but it sounds like you really actually applied to yourself. Oh yeah. So bipolar disorder really takes hold of you in your early 20s, right? And, you know, I've seen it in my family and so I was against a ticking time bomb. You thought you, it was just a matter of time before you were diagnosed. Yeah, I was afraid it was coming. Yeah. 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 in 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. Yeah. I just deep fear of being a trailer. And it was real to me. So 1982, you are in Seattle, starting 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 Subpop and Starbucks and Microsoft. I mean, they were sort of there, but it's still like early 80s Seattle, totally different place. And it is today. And you got, you actually got a job at Starbucks, right? 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. And I looked into a warehouse, you know, just right off the bus line that would take me to school. 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 can 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. And you probably knew nothing about coffee I'm assuming. 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 dreamt of that these bags actually came from those places was just mesmerizing to me. Alright, so you get a job at this warehouse moving sacks and 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? 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, 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. And, and did you learn how to roast coffee? Not, I mean, I did, but not to a degree that I would call it skillful. Like not like JP, I mean, JP is the master of that, you know. Alright, so this is 1982, 83. You're working in the coffee place. You're a student of the University of Washington. JP, tell me about where you grew up. You, you are originally from France. That's right. I grew up in Nice, in the south of France. My dad was a purveyor of fruit and vegetable. He started the business and became pretty successful. And my mom was a homemaker. So I had the, I had the good uprising. My, I have two older sisters that basically were out of the house when, when I was growing up. And I think my parents were over, I think, children when I, when I was growing up. I guess as a kid, you were interested in aviation flight. Is that, is that true? I mean, is that? Yeah, yeah, that's from, you know, I wanted to be a pilot. I 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. Oh, God. So that, so you knew about Seattle from him. And then, and I, I breathed, you basically, after I so went to Seattle to, to go to flight school, right? That's right. I did a lot of my flying out of Boeing field in Seattle. And I went to a little cafe called Tofession Italia, which was in Pioneer Square. First generation Italian family. And basically we became really friend. And one day they, they offered me the job. And I took it and I became a barista. Okay. So you are in flight school and get this job at this, this coffee shop, this coffee bar in Pioneer Square in Seattle. And Todd, how did you, like, how did you meet JP? Was it through the coffee shop somehow? So first, I'm hearing these rumors that this French guy is working for TI, we called it, Tofession Italia's TI. And how did you, how did you hear? How, why would you have even heard that rumor? Because you gotta imagine that there's maybe six cafes in all of Seattle. Oh, I see. Okay. And to be a barista by then and to be in coffee was like being like a DJ, you know, you were known. 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. That little shop in Pioneer Square. Oh my God. Yeah. Umberto was a very famous roaster in Italy, Numbria, 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, is around. And there's this new sound that was happening at the time, right? That they called, was called Grunge, right? And there was a band called Green River that later would become Pearl Jam, right? Sure. So there was this little venue called Oxford. And they put up the stage and this band called Green River was going to come on. And so you can imagine the crowd. And they, they didn't serve like beer in a glass. They serve, serve rainier beer in a can. Yeah. 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 jumpier guy? And he goes, Jean Philippe. And I was like, okay, Jean Philippe, you were roast for TI. He goes, yeah. And then the next question is, he goes, do you have a stove? I said, yeah, I have a stove. And he goes, can I use it? And I'm, you know, I still have very little money. And I go, nah, you can use it any time as long as you cook for two. I thought I could get some free food out of this. And that's how we met. And literally Thursday, Friday, Saturday night, every week for the next three years, he cooked dinner at my house. So, so JP, you, is, is your recollection of what happened? Yeah, I'm not sure about the gold vest. You know, I'm looking back in, in, yeah, I'm not sure I ever owned one of these, but it might have had some, yeah. I'm not sure about the gold vest. So 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? Well, I lived on campus and, and it was an electric. No, I see 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 87 was a different time in America. I mean, coffee was getting here and getting good. But, you know, things like bread were not, you know, we're not where we are today. You know, it was a different world back then. So food was important. And, and I wanted, I wanted to eat. So, you know, we probably talked about food and, you know, back and forth. And the question was, yeah, you have gas stove. And that's really the kind of beginning of your friendship. Yeah. And then from there, we would, we would eat and we would play cards. We would drink whiskey sometimes. Remember the JP or like really cheap wine. And then we began dreaming about the world's best coffee company. Both of you guys started hang out and you start to say, hey, we should maybe one day open our own place. 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 is working from a farm that if you take the time to come to our farm, you would get the best stuff. We would talk about this whole concept that later on became coffee sourcing or farm the table. And then later on, we just made it. But meantime, JP, you are still starting to be a pilot. I was, but it was, you know, it was a good escape to dream. Yeah. You know, about, about starting a business. And I was not committed this time. You know, for me, it was still just a dream. 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 one be cool with that meantime, I'm tired. You have graduated from the University of Washington. You were, was that what you were doing working at the coffee place? Was that how you were making your living? No. So I graduated. I applied for and got in the business school. And so then I got a job as a tax consultant for a company called Ernst and Winnie at the time. I was at one of the big eight accounting firms. I was wearing a suit. I had a leather lunch box and everything. And you do that job for a year from what I understand. And then you took off. You left the US. Yeah. Tell me the story. Why did you leave the US? Where did you go and why? Well, I mean, the wise is multi-faceted. 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. And that, that sort of environment wasn't safe for me. It was the environment of working in an office. Yeah. I had a lot of confidence in my skillset. 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. Right. I knew I needed to put together $95,000 so I could start this coffee company with my best friend. 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? Yeah. I mean, you know, this is closer to $89.90. At that point, I moved in working in the afternoon in the 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. But, yeah, and Todd ended up going to the South of France, which where I'm from. So, you know, I connected in with all my friends, people I grew up with. And I remember, JP, you took that fly. We flew together, remember? Yeah. You both flew to Europe together that first time you went to. Yeah, you accompanied me and then he spent a week or two with his family and then he flew back and I stayed. 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? Well, right away, it was pretty simple. I took a train into Monte Carlo when 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. Sure. And I did a lot of our jobs. That's for sure. Consulting, tax work, accounting, no job too big, too small, kind of thing. Yeah. 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? And JP, what did you do for those three years? Just continue to work at the coffee place and study aviation? 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 Toei Fashion, Italy. And that was really, it really became my center. Coffee, my coffee profession just took over. This one 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. So, Todd, while you were in Europe, I guess, you actually wrote down a business plan while you were there, right? This idea of a coffee company that you'd been dreaming about. Yes, by hand, with a pen. 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? What was it? A coffee shop that sells coffee? And what else? Well, the idea, and it was both JP and I's really just written down, is that we were comparable 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 were that company. We wanted to be those people. And we would work directly with the farms, we would work directly with the chefs, that we would bring coffee to a whole new level. That it's not just like salt and pepper on the table, but we give it a name, a place, an identity. 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? I knew you were serious, you know, but I didn't say yes and I didn't say no. 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. I knew that once we both said, hey, let's do this, it was going to be a success. All right, so Todd, after three years, you've saved enough money, did you just like move back to Seattle and say to JP, hey, let's do this, like was he ready to jump right back in with you? So I didn't move back to Seattle. I flew there and I squatted in his closet. In JP's closet? Yeah, I had a closet that was big enough 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 lack alone 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 these are the key ingredients. And so JP, it took you some convincing, how long do you think it took you before you said, all right, I mean, I think it was a process, you know, it probably took me the all three years to get there. The thread as well, Todd was away. Yeah, and really seeing, you know, and something happened with Toy Fasion Italia in 1993, it all came to a crossroad. And Toy Fasion Italia was sold. And it was a strange time, you know, I was like, oh man, this is the end. You know, Alberto is going to be gone. All the people that, you know, like family do me are going to be gone. So then at that moment, I knew that if I wanted to stay in coffee, I had to do something. I mean, our friendship was already, you know, a brotherhood, you know, and it was clear that I was not going to do something on my own. When we come back in just a moment, Todd and JP walk into one of the top restaurants in the country, uninvited, and walk out with their first account. Stay with us. I'm Guy Ross, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Ross. So it's 1993, and JP and Todd have decided to start their own coffee business. But the first thing they need is a name. And JP finds inspiration in his hometown. I come from a Leo town called Simple Devance, 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's a little bed and breakfast that became really famous because the artist used to stay there, and instead of paying women board, they just left sketches. And it's called La Coulomb d'Or. And I have a connection to it because, you know, it was one of my father's account, you know, he served fruit and vegetable there. But we also knew the family very well. The family that founded it were France. 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 the name is connected to the place, but it's also the symbol of what La Coulomb is, you know, internationally. Because Coulomb means it means dove, right? The dove, yeah. And so that sort of evoking that kind of idea, the La Coulomb was the idea behind it well. So here's the amazing thing. This is 1993, your 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, we 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. Why Philadelphia? So, Philly was a different place than, but we ended up walking the city and it's a beautiful city architecturally. The way it's laid out is an amazing city, you know, and being European and walking and cycling everywhere. I still use my bicycle to go to work. 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 a huge opportunity in terms of getting production space, warehouse space, just because the city was probably at the bottom. So the two main beautiful, you know, roads in the city right now is Walnut and Chestnut. 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're going to take an elevator ride and you're 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. This was a, had you either, have you ever been to Philadelphia at that point? No, never. You'd never been there. Never. I mean, we saw great opportunities in Philadelphia, you know, 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. Yeah. And what's thing that was important is at the time, Le Beck van was voted, which is a Philadelphia restaurant, was voted number one, restaurant in the country. George Perry was the chef at the place right now. Chefon, right? Yeah. And also the proximity of the New York City. Yeah. And also presumably filled up, it was cheap. Very. Insanely so. So you find a location on written house square, which is probably the most famous place in that in Philadelphia today, one of them. What was it? It was like a small storefront that you found? 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. Wow. 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. And where did 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 save that money. So you used all this capital to buy roasting, like roasting machines. Yeah. 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, yeah. And pandate ceramics, grinders, grinders, everything that we needed. And pandate ceramics, you served your coffee. I think you still do. I've been to that location of written house 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 in the little plates, little saucers that they came on. And that was from the beginning. That's how you serve coffee there. Yep. We were traveling all the way through Italy. I'll always remember it because we had an envelope. We had travelers checks. And we would go directly into a factory and begin negotiating, like on the floor. And we want, okay, we'd like those two espresso machines. We want, we negotiate, negotiate and we go, all right, take the box off. How about if we don't take the box? And we would hump these machines into his dad's car. Well, I like it. And we found the roaster in northern Italy, paid for it, strapped it to a pallet and watched it ship. So this is 1994 and you've got a small location off written house 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. Well, we ran our first load and it was clear that with that environment and that part of town, you couldn't roast in that cafe. You owed all this equipment in there. You realized you actually cannot roast in there. You presumably didn't have the ventilation for it. We didn't have the, it was not going to work. The way the building is formed, the way the wind comes down and the barometric pressure, it was that moment where I thought, like we were, we were ready to open. I mean, we had, now it's spend 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. Everything was ready to fire up. The green was the coffee beans, right? 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 shoot that runs outside of the building. And I think it's about 20 stories high. And I piped, then cemented the piping into the garbage suit and till JP to fire it up. And now it takes forever to get that whole shoot heated up. But once you get hot air to rise, it just sucks it like a syringe. Up the garbage shoot, the garbage shoot was your chimney. I'm assuming you did not ask for permission to do this. No, no, no. In fact, we built the cafe 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 big deal was if someone would force a giant bag into that shoot 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, this lodged the trash. Didn't anybody complain in the building? Yeah, we did get a lot of complaints. We got the fire department in, you know, about two, three times a week. Because somebody was like, something's burning. Yeah, exactly. And did the fire department site you or anything? Or did they? No. We would turn the lights off and hide behind the bar. We would hide, totally hide. And then we rose to it in the middle of the night, which helped, but it made the life just really, really, really rough. How did you, in that initial batch of coffee, where did you get it from? Was there like a distributor in the US that you went to and said we want, you know, a hundred bags of this and a hundred bags of that? That would have bankrupted us. Yeah, but only a few bags. And where did you buy it from? I think the broker was, I think they're still around. I think it's called the Paragon Coffee out of New York. And how did you know which coffee to buy? Like, which one was going to be good coffee? We sampled a lot of coffee rate. Oh, hundreds. Hundreds. 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 calendar 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. Right. And we were hand grinding it and copying it and hand grinding it, copying it. We built up our first blends there. And in 1994, right, even though Starbucks was starting to kind of grow, it was in San Francisco and Los Angeles and people were sort of starting to develop a taste for that Starbucks darker roast, which is a lot of people for a long time hated. They thought it would taste it burnt or bitter. How did you know what people would want to drink at that point? I mean, that was still, you know, our coffee palette wasn't that sophisticated in 1994. Yeah, but you see, we had the best audience. You know, we had chefs because you were going to restaurants. You were focused on really trying to appeal to chefs. Oh, yeah. That was it. That was it. And part of the two 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. And then you introduce this to some of the best palettes 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. How did you find the restaurants? How did you get into them? How did you just kind of pound the pavement and start to call and end? 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, the Big Fah. 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. So we went. We tore the grinder down, cleaned it, tore the espresso machine, cleaned that, put our coffee into it, made a beautiful, beautiful coffee, and then said, "Where's chef?" We went upstairs. He was screaming as he was a screamer. It was the '90s, right? We said, "We're here to make coffee for you." And we just put it in front of him and just step back. And so that's how we got the Big Fah, that day. You mean he said right then and there, "Okay, you can be my coffee supplier for my restaurant." He actually picked the grinder up with the old stuff and threw it all in the trash and said, "Go get your shit." Well, you know, it's like, in other words, "Bring your stuff now." It's the truth. And you thought, "All right, we got to start with Le Bechleum 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 gonna want our stuff." Well, the second one was the same day. It was Jean-Marie Lacroix, extraordinary chef. Also in Philadelphia, I think this is the four seasons, right? Yeah. Yeah. 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 you 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, "What does this coffee I want to try?" It was all the Frenchies. Yeah. And you know, the media were not what it is today, obviously. And by then, chef would only talk to chef. You know, they wouldn't buy things because they saw nuts somewhere. But once somebody finds something, they eager to talk about it. And by the way, what was your price point higher? I mean, was it more expensive to buy your coffee? When we arrived in Philly, coffee wholesale to restaurants was at about $1.50 a pound. Mm-hmm. And ours was the mid-sevens. So weren't some restaurants like, "Are you out of your mind?" No. They weren't. No, because what 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 tasty things like saffron. Or you get this stuff from Pakistan or Afghanistan, or you use a pinch. But it's going to cost you. Yeah. And they understood that. And 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? Yep. Do you remember JP? 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 was serving, the level was so high. The food was so good. And where the coffee was in their dining room was such a void. They were so clear. Yeah. And, you know, we got one, two, three, and it started. We got no. I just burned. I just burned. 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 Ross and you're listening to How I Built This. I'm Guy Ross. 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. Because espresso in America, at that point, was an abrasive liquid. It was not to be consumed without tons of sugar or milk on it. 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. Yeah, I mean the word I remember using describing the first coffee we did was balanced. We really wanted to achieve a soft, 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 role. It was three words. I remember it was three words per blend to describe them. And I played a really important role in creating those first three, four blends that we made. I'm just curious why you were so focused on the cafe. I mean the ceramic cups and the service in that cafe, if you never intended to open cafes, if that was not your business plan. Street cred, 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. And did you get beyond the North East and the Middle Atlantic? Were you distributing to places beyond that? Yeah, it's a funny thing with kitchen. 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 handed up taking us with them when they moved. So we did move from kitchen to kitchen, you know, and it went, when these started, then it went a lot faster. Meanwhile, in the 1990s, were you still buying your coffee from brokers or were you starting to buy it directly from farms? Yeah. As 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, everything was easy to get, easy to get. No one else wanted it. And you could pick whatever coffee you wanted at the beginning, but then it became harder as high-end roaster started to come online. Yeah, the demand started picking up. And then it was, that was clear that we, our timing was right. So it dovetailed right into, let's go look for ourselves, right? How did you do that? 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? Horse. Horse. Yeah. And you met him, we met him, where, where did you meet him? Oh God, how did we meet him? We met him through 19th street, we don't know his cafe, you came in? Oh, that's right. So I think we met him through, like, chocolate, we're 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. So you go to visit this guy's farm in, he's a coffee plantation in Brazil. Yeah. Okay, so you go there and what do you see? Well, then, you know, you spend time on the farms and we start 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 process is that it has to go through. So that is the real big first to step. It's like figuring out how to do that, how to put a supply chain together. And once you get that, then you go, all right. Then you feel confident walking into Haiti, going up in the mountains and saying, all right, let's look for some farms. So it's literally, because the coffee business is very, very, I think, complex as an understatement, right? There are so many middlemen. And 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 sell 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 there's a lot of hands that goes through before it comes to the roaster and the people at the bottom of that chain get, tell you nothing. Nothing, very little. 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. 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? 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. You can go directly to a farmer and say, I want to buy your beans and it's fine. But you say El Salvador. Oh, indeed, Haiti. Oh my God. Haiti, there were times that I felt, yeah, this could be it. I'm probably going to not make it out here alive. 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 that income too and who are going to be threatened by you going around them? Well, I mean, first let's use Haiti for an example. What you realize is that there is strength and 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 green goes 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 Amblanc, a white guy. But now I'm called Le Blanc. I'm the white guy. They know I'll come back. So then they can buck the system and traders that are trading over borders or they're taking big lion's share 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 crème de la crème and often they leave you alone. 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. Yeah. 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? I, 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, oh, it's so I actually went to JP and I felt really bad. I said, you know, I was going to end up like my father, right? I thought I was going to go mad. It's 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 into space where I didn't think I was going to be okay. And, you know, there was a lot of problems back home with my, my mother and my sisters and my dad, you know, my dad had killed himself. And it was just like, and it was just loads of pressure. And then I got involved in bad relationships and 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. Wow, 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. And when I get that way, I stop eating. So I wasn't eating. I was asleep being so I just drove myself into this really, really tough place. JP, when he said to you, hey, I'm going to leave the business. You got it. Can you handle it? Were you like, wait, what? 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 say, listen, don't make any decision now. And, you know, it was clear. It was like, you know, you're going to help somebody that you love and not going to take anything from you. You're going to go get better and come back and we'll talk. So you went off for three months and you picked some tiny remote island to just live there. And what did you do for three months there? 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. 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 for my past that I'd never dealt with. And it was, it helped a lot. This was three months, or almost two months, on this remote island to no Wi-Fi or just 2000. So don't internet. And JP, you were not in touch with him that whole time. Yeah. And were you not worried? Were you not like, you were just like, okay, go and I'll figure it out. And you just ran the business for while he was gone? No, I mean, I was worried that he was not going to go for a while, you know, which would have been bad. So once he went, I knew that was the start of him getting better. Wow. And the business, you know, we work. We always had such a group of very tight people. You know, if we look at the turnover that like 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 end all. It wasn't like, impossible. So when he comes back, was he had these into you much better in a 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, you decide 13 years after you open your first location, offered in how Square and 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. Was it two? Yeah, no, deal with it. We deal with it just started. We have two. 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. Oh, it changed big time. The cafe wasn't really the point. But now you're opening a cafe in New York. So why? 2007 and 2008 was the major fault line in the company was the massive shift in everything. See, we thought for a long time that the 19th Street Cafe was just an anomaly. Yeah, 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 everyone that the first one was just an anomaly. Yeah. So, be honest with you, we were scared. Yeah. Because what if it were a failure? And so we finally decided to face our fears and we opened one in New York. We like we devolved in isolation that we've got 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. And if you look at the top line revenue of Locke-Lome, it is intense hockey stick that started in 2008. We just completely decided that we were going to dominate in this area. So clearly, you are shifting now at this point to cafes. And does that mean that at this point, 2007 and 2008, you were shifting away from the wholesale side? Or did you continue that though? Oh, we continue that. They're called categories, right? So you never you never abandoned the energy that you're giving to one category because you've added a second. And we have five now. And you realize that you don't have to leave your first child because you're having a second one. So, so you guys are now fully onto this new path of cafes. And tell me about how you were able to do is and you have presumably you had to go seek out outside investment, right? Which is going to be the first time you were going to get outside money into the business, right? Yeah. I mean, there's a couple 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 went man. Yeah. So we started the old investor discussions. And it was so awful because we have different blood types to such degree that it was so difficult. And we landed on one. We did the deal. And that lasted 52 days to the first board meeting. I said, OK, I believe that cold brew is going to be a thing and lock along 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 when that's frothy. And they said, nah, we don't want to do that. What they want to do. They wanted us to build 200 cafes. And this is your board. This is your board because 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? 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. But in order to buy them out, presumably that you'd have to find like another investor to get the money to do that. 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. Yeah. And so I thought of, hey, there's that Hamdiyulakaya guy from Chabani from Chabani. I met him months earlier. He as well as JP and I are concerned about the refugees coming across the border from Syria into Turkey. Yeah. He's a craft man. So you make things you understand, right? Yeah. 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 can seam the can and I jack the contents up with nitrous oxides to make itself 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. And then what? You say, hey, I need a favor from you or hey, would you be interested in investing? What's your pitch to him? What do you say to him? That's exactly how I said. 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. And he said, great, let's meet him. And we met him. And he did. And they had no problem with it. They were like, sure, we'll sell. That's fine. They doubled their money in a couple months. Right. That's pretty good. Yeah. So it did cost quite a bit to get out of that bad decision that I guess you guys took. 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. I'd still say, I would do it again. And this draft latte cans, I mean, they became an incredible hit. Like they're distributed all over the country, I've read something like they're like one out of three US grocery stores. I'd say it's probably higher than that now. I'd say we're getting like two out of three is close. 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 private equity company, hey, you know, we don't want to open 200 locations. We're going to go in this different direction. 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. I'm really, really, really happy that 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 pushed it too hard. I mean, there's a dozen of examples. And it's, you know, I think we were really all naive to think that that was a solid plan. And then we learn and, you know, thank God, Hamdi is with us. And this is a different path. Yeah. This business has made both of you rich and another 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? 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. Yeah. It lets me make a change. If I see things I don't like, I can fund programs. I can do things like that. And I can do more than just bitch about things now. I can actually go and move the needle and food and food food food. I still, I'm 56 years old and I can go to a store with my wife. I'm walking in front of the car and I'll spin around and I say to her, I can buy anything in this store. Yeah. 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 most important one is that, you know, I have a safe home with my kids in it and I like that a lot. 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. Yeah. You know, and this is one of the things 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 amazing. It's not that way in Europe. And this country is amazing. You know, not just us at La Colombe. It's amazing. You know, it's pretty cool. So being part of that, doing your share. Yeah, it's great. 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 of those? 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 going to work hard. If I were going to give you a percentage, I would probably call it close to 50/50. I mean, if you call luck, you also talk about timing. It was a fact that the two of you met in the first place. Yeah. And people you meet along the way and, you know, the opportunity that create all that, you know, I put in the same bag, you know, for me, that's luck. How about you, Todd? 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 that broken pieces of La Colombe ceramic, you know, that they 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, they would, they would meet 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 or because it's true, man. And that luck begins with green river and whether he was wearing a gold vaster, not I'm not sure is meeting JP, huge piece of luck. Had I not gone that night, there would be no La Colombe. 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. 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 please sign up for my newsletter at gyros.com or on Substack. This episode was produced by Casey Herman with music composed by Rumpti Narablui. It was edited by Sarah Sarasen with research help from Derek Gales. Our production staff also includes Neva Grant, Katherine Cipher, JC Howard, Sam Paulson, Chris Messini, Alex Chung, Carrie Thompson, John Isabella, Andrea Bruce, Ramell Wood and Elaine Coates. I'm Guy Raaz and you've been listening to How I Built This and don't stop the podcast just yet. Because right now, you're about to hear an amazing small business story that you don't want to miss. This segment is presented by American Express with a business platinum membership. The best just got even better. And this week's story starts back in 2009 when a former Dell engineer named Peter Mann set out to solve a very personal problem. My son struggled with asthma when he was an infant. He would have an asthma attack to where he would change colors and not breathe. And it was really distressing. Not being able to do much for him. I see, you know, it was a little bit older, more middle school age. He would have an asthma attack just sitting on the couch. Peter learned that one of the big triggers for those asthma attacks were allergens and other particles in the air. So he started looking into air purifiers and he was pretty underwhelmed at what he found. It's almost like bulletin board looking terrible websites and some of them are selling these same products with just different logos on their products. Peter came from the world of tech. So he knew how to develop a product and market it online. And he thought, why not just do this myself? So he hopped a flight to Hong Kong, negotiated a deal with a manufacturer, tested some samples, and about six months later, Peter's own air purifier, which he called Aronzi, arrived at his door. I remember opening it and flagging it in and turning it on. And within about 15 or 20 minutes, the air just felt different. In his son's scary middle of the night asthma attacks, they went away. It wasn't waking him up, which wasn't waking us up. It was just a huge win-win. Customers loved the product too. And Aronzi's sales grew steadily over the next decade. When COVID hit, demand for Peter's air purifier skyrocketed. But so did competition. It just got to the point where it was oversaturated. So Peter decided to pivot and focus instead on the technology inside the device, specifically the electric motor. He merged with a partner, bought a huge factory in Virginia and built an air purifier in-house from scratch as a way to validate the technology. Now, Peter's setting his sights on a much bigger market with a seemingly endless demand for cool, clean air, AI data centers. Now, around the same time he made that pivot, something happened in Peter's personal life that completely changed how he looked at his business and himself. In 2022, my wife was watching CBS Morning Show in April. They do profiles of people that are autistic. And she's like, "Oh, you need to see this." And I watched it. And I was like, "Oh my gosh, I didn't know it." Like, now so many things make sense. Peter thought, "That's me." The hyperfocus, the ability to build systems, and some of the social challenges he'd experienced as well. Sure enough, at age 55, he was diagnosed with autism. I did a LinkedIn post, and I said, "Hey, I recently diagnosed. If anyone that's autistic that's going through interviews or navigating the workplace wants to talk, I'd be happy to talk." And, "Wow." I had video calls with dozens of autistic adults. Probably 75% of them were just struggling with the interview process. So he's spending more time thinking about ways his company can set people up like him for success. This kind of hit me like my son's asthma did. By the way, the son whose asthma attacks inspired Oronsi to begin with? Peter says, "He's doing great." "He seems to have largely outgrown it. He still has an air purifier." "I'll see you years later." That's Peter Mann, the founder and CEO of the air purifier and now electric motor company, Oronsi. His small business spotlight was presented by American Express. To build a business like no other, you need a card like no other. There's nothing like business platinum. 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