LAP-Coffee-Gründer: „Wir wollen größer sein als das, was Starbucks war”

Willkommen bei Business Class. Ich bin Leo Ginzburg um mein heutiger Gast Esralf Hage, der Gründer von LabCoffee. Lab ist die derzeit meistest gutierte Kaffee-Marke Deutschlands, bekannt für ihre blauen Becher, niedrigen Preise und viel Aufmächsamkeit. Wir sprechen über das Geschäftsmodell hinter günstigem Kaffee, darüber, wie man in kurzer Zeit eine starke Marke aufbaut und über die Kritiker nehmen starte. Und weil Ralf Englisch spricht, switschen wir direkt auf Englisch. Disclaimer, die Inhalte dieses Podcasts beinhalten keine Kaufempfehlung der Redaktion. Aktien, Kriptowährungen und Investments sind grundsätzlich mit Risiko verbunden. Hi, Ralf. Hi, Leo. Let's talk about LabCoffee. What do you think? What is the real power of Lab? Is this the brand, the coffee itself, or the cheap price? Great question. And I think it's the combination of all three. I think it's the ability to build a product that matches the modern times, built for customer expectation in the ecosystem that we live in today. And I think all these three parts and components are essential in order to build the love brand. And today we're such a big part of the culture and the subculture of Germany, specifically in Berlin, where we started, that those are the three things that actually we focus on. And if you have to decide, if one of these things had to disappear tomorrow, what do you think? What would kill the business or plan? I think price is an essential part of the proposition because it is what we are known for. But without a brand, I think we can't exist. Because at the end of the day, the brand is the mission, is the pillars of what we're building, and is also the assets of what we offer to the customer at the end of the day. So price is simply a product of the system that we have created, but it is not the product itself. The product is the brand, the community, and what we serve to the customer at the end of the day. So ultimately, the brand is the most essential part of this equation. You said before a love brand word, what is like the brand of of lab coffee? What do we want? User to feel the first seconds when they enter a lab coffee store. We were very intentional about the brand from day one. So since we started from the color to the name, to the mission of what we were building, it's a very personal story on one side, but also it's very much connected to Germany and where we are today. Not only did we want to build a brand that mimics German values, which is efficiency affordability, but also it's a brand that is very much tied to my origins and to my background. So if you think about the color blue today, it's the color of the Mediterranean. I was born in Lebanon. It's a small country in the Middle East by the Mediterranean with a very rich culture and history. Blue is the backdrop of my entire childhood. It's the color that you see on the street. It's something that I remember every day. And this is where the color comes from. The name life among people is actually about community and about bringing people together. So as an immigrant and as someone who has lived in different places, I value community a lot. And anyone who has lived in places where they're not from, I think they really value the concept of community. And this is what we wanted to tailor the products around is the ability to create a shared platform for like-minded people to share the same experiences. And this is what we do today. The letter A in lap is also about the average and the average of everyday people. So we're building an everyday product for the modern time for everyday people. Something that everyone can afford that we can create a ritual around and a sense of belonging of the brand. So from the get-go, we were very thoughtful about what the brand should represent. And beyond the identity, I think brand happens layer by layer and you start by creating attention. Creating attention for the brand requires a few things. One is a reason to exist. The values that the brand stand on. A funnel to structure how you communicate to the customer and then the stories that you want to communicate. So what we are essentially is a lifestyle brand with a coffee shop at heart. Build for everyday people with taste. We're fast, cultural and designed for connection. And this is what lap represents the day from a brand marketing perspective. Our values are community, quality and accessibility. And the assets that we serve the customer are effectively what you mentioned, the coffee, the brand but also the stores. So it's people, product and places. And this is how we communicate our story through these different assets. And all three need to be communicated cohesively, promoted and maintained. And in order to deliver that to the customer, we've created a brand marketing funnel that starts with providing awareness to the customer of what the brand represents. Awareness today is eyeballs. Do customers know that we exist? Do they see us? Do they know us? The second is product interest. Product interest is actually creating a need for that product, explaining what the product is for someone to actually want to have it in their daily life. Three is consideration. Am I willing to stand in line? Do I want a coffee or a matcha? Do I want a classic or special? And I can explain later what that means in the menu. And then conversion is buying the product and loyalty is signing up and coming back. And if you treat all of these as a separate journey and tackle them within a strategy, what we call brand marketing, you get incrementally better at communicating what you are as a brand to the customer. And this is what we try to do every single day. We exist to tell customers these stories and we communicate in different ways offline and online. And ultimately this is what builds the connection with the customer. In addition to educating about the prices and about the menu and about what we offer. You said that a lab is like a lifestyle brand with a coffee. Is it possible that in a few days you have also like different products, not just coffee? If you think about the menu that we offer today and if you think about generally what lab offers and what it represents to people today, it's definitely many things beyond coffee. I think coffee has always been the connector. Even in my life growing up, coffee has been in my culture. There's something that accompanied me in my childhood, something that is part of my everyday. I drink a lot of coffee. It's also something that in my culture brings people together, family and friends and so on. And I see it also in Europe today as a connector for people, for experiences and so on. But the brand itself is a platform that is designed as a lifestyle brand. From the modern branding side of what lab is, to the way we basically live our values on a day-to-day basis, we had 250 plus events in Germany last year. What kind of events? All sorts of events that bring people together over coffee. So creating these moments for people to belong. And I think some people don't understand how we can do that with small stores. But ultimately, you're not defined as a community by the number of seats in the store. You're defined by the occasions and the moments that you create to bring people together. It's running clubs, it's ceramic workshops, it's dog events, it is parties, it is all sorts of activities that enable people to find the reason to come together and exchange a moment. What's like your goal? What should lab become in five years? When you say it's like a lifestyle brand. Should people think in five years? Okay, lab is a coffee chain. Or should people think in five years? Okay, lab is like a lifestyle brand and they have like so many things to offer. Today we are a modern society and a modern population. If you think back 30 years ago, maybe for our parents, they still live, work, hang out in the same neighborhood. Today we are a mobile generation. We commute in the same day to different parts of the city. Whether it's the gym or the office or to meet a friend or to go out. We want to accompany customers as a brand on different parts of their journey. Whether it's going to work or whether it's commuting to different places. That's why we try to be in terms of availability where the customers need us. At the end of the day, this enables us to be a ritualistic brand to create a product that can be available to customers when they need it. This can be in the form of a coffee in the morning, which is what we are today. It could also be a CPG product that you consume at home down the line because we've identified what customers love and were able to offer it to them outside of a brick and mortar and a retail store directly to their home. Or it could be a form of a subscription program or something that gives you access to merch or the ability to basically take part in different events. So today we're not simply defined by the coffee or the matcha that we serve. We're defined by that at the core in terms of a product that we offer, but also the extension that comes with that and what that represents ultimately is who we are. So my question is now, so right now, it's lab like a coffee chain and people who look like maybe negative on the brand, they could say, okay, it's like, I don't like back factory, but in like static order, like blue colors, it looks like cool, minimalistic stylish. But will you say, okay, the future is like more like lifestyle brand, not with just coffee. What would you say right now or in the future, you think like small like coffees or big global chains like Starbucks are this like the like dangerous for lap or you don't think about the coffee chains, you think like bigger, okay, the dangerous companies for lap are not like coffee chains like lifestyle brands. Yeah. If you think about Starbucks and McAfee today, there are two of the largest coffee players in Germany. So Starbucks has 180 stores, McAfee has over a thousand. Both are successful businesses that have done a lot of things right and we take, we were inspired a lot by many of the things that they've done because there's a lot of learnings, important things they've done right inspired. So I think if you look at McDonald's as an example, its efficiency at scale is the ability to offer a very consistent product wherever you are and be able to serve it fast to the customer at affordable prices. And I think this is something that this brand has achieved at a global level, which is a very difficult thing to do, especially in FMB, which is not an easy business. Then if you look at Starbucks, it's what they were in the past creating a third place, this place where people can actually connect and belong. And have Wi-Fi. I knew this was the reason why I went to Starbucks. Oh, my friends like 10 years ago because it's like was the only place in our city, you have Wi-Fi when you're doing it. And it was the product of the time, right? Back then, this is what was important for people to connect. It's access to Wi-Fi. Today, you have it everywhere on your phones. You need different reasons to connect, right? You need this occasion that we are creating differently today. And I think what they did, maybe a bit of backstory on coffee, coffee was called wine of Arabia. It comes from Yemen. It was first consumed there as a beverage before it was only chewed as a bean. And people were consuming it in these courtyard over conversation and it created the spiritual of getting together to consume coffee. And then it was transported through the port of Alexandria to Europe where the first coffee chain was created in the UK. It's a store that is actually still open until today. And then continue to the modern world all the way up to Seattle where Starbucks was created. What Starbucks did is modernize and democratize coffee for the rest of the world. And this is an incredible story. You cannot negate what Starbucks did for the world. They offered us what coffee is today and they created what coffee is today, which is a product that is consumed by millions and millions of people. And the scale that they have all over the world is an impressive achievement. Nevertheless, it was a product of the time. And today, both companies, Starbucks and McGowls have lost touch with the culture, especially in the culture injury. Why? I think what we need today as consumers is very different than what we needed 20 years ago, 15 years ago, when I was growing up in Starbucks, when I was living in New York, when I was going to Starbucks every day. It was at every corner. And today, they're shutting down most of these stores. Because what customers are looking for is no longer necessarily this massive space where you can sit and linger for hours alone on your laptop. Your lifestyle has changed and adapted. You're much more mobile. Your life is faster. You do a lot more things on your phone. You don't need to sit down to get things done. And it's no longer tailored, as I mentioned, for that shopping journey that the customer needs. Today, you can consume your coffee on the go. And in fact, 70 percent of coffee in Germany is consumed on the go, 80 percent in France. So this is a much different way of consuming coffee than sitting down and being served by someone in a store. That's on one side. On the other hand, I think the brand itself is a bit outdated. It doesn't speak to the younger generation. The younger generation are looking for connection to a brand they believe in with values that they understand, whether it's community, whether it's affordability in our case, or whether it's innovation. The products that we bring to the customers today are things that they consume with their eyes on social media. It's things that they are interested in because they want more functional drinks in their lives that they cannot find in the store next door. So the combination of all of these different things, position you as a much more valuable brand in people's daily lives, then a Starbucks today. Do you want to become the Starbucks of our generation? I wouldn't necessarily say it that way. Why? Because I think we want to become a bit more than what Starbucks was. I think the experience is that we want to create. We're launching a mobile app in a few months today. We want to connect the run club that you join on a Saturday morning to the way you consume your coffee. We're building a loyalty program today. In fact, 55% of all of our transactions and all of our customers are in that loyalty product, which is massive for an F&B business. Because most F&B businesses today, which is the biggest problem in the industry, don't know who their customers are. So we know who the customer is and we have this great relationship with our customers and we constantly communicate to understand their needs and their likes in order to offer them what they want. We can individualize and tailor that loyalty product around what they like. So if I am someone that comes to lab twice a week, we know exactly what are the products that they love. We create an occasion for them to come a third time, whether it's for a running club or whether it's for a different event. And depending on the number of times that they come, depending on the share of wallet that they decide to spend with us on coffee on much on different products, we might offer them free products. We might offer them a different types of experiences, maybe access to events that not everyone has access to, even though most of our events are open to the public. So the ability to take in what you like and do as a young modern, young professional, individual in society today, at Lab or elsewhere, we try to become a part of that journey. And I think that's not something that Starbucks can do. If you get a Wi-Fi today and you sit at Starbucks, you know, you're sitting alone in the corner doing your own thing and it's not community driven and you're not engaging with the rest of the people around you. If you consume today, if you come as a run club, if it's 20 people and you're all consuming together, we're tailoring the product and the offering in that moment on that particular day to the 20 people that are there. So we might give them special drinks that don't actually exist on the menu and we might offer them the store so they can use it for different occasions. Today, no one at Starbucks is going to give me the key, which we do to many of our loyal customers and give them access to the store so they can host their own events and they become the community themselves. And I think that's a really different approach to how we think about businesses and it's much more relationship driven than transactional because we believe if we turn our stores into these platforms, give access to customers to use them, take advantage of the infrastructure that we have, they become the community and we become a part of it. And that's simply a very different mentality and approach. So if you're saying like you give them the keys to the stores, I think it's a little bit like an offline Facebook group. Maybe I'll just see you build like, you know, Facebook groups or WhatsApp groups, but you say, okay, there's like our stores or your WhatsApp group. Absolutely. Because back in the day, this is what Facebook was. It was something that connected people in the same neighborhood. And you could do that in a physical format. And post-COVID, it became so much more important to do that in a physical format, right? And again, going always back to how we created the brand. It was very intentional because we came at a moment where we had a tough market, inflation, very high prices or increasing prices. We came post-COVID where people were craving connection, wanted shared experiences, and where everyday things became much more important. And we wanted to position ourselves because I needed that. The people around me needed that. Exactly at that center and designed this platform for customers. So if our neighbor asks if they can use the store to host a birthday for their kids, why would we say no? The place is there. The rent is paid. This is a customer that comes to the store every time. They're friends with the Burstans. We know who they are. We give them the rules. We give them the guidelines. And we have trusted. They will treat the place as their home. To questions you said, a app will come. Why a lifestyle when you need an app or what will the app be about? So we always internally, with the team, we always talk about three things. We call them the three A's. It's availability, accessibility, and affordability. Accessibility is, I thought app will be one of the words, as the fourth A. And when you think about availability, it's what we talked about earlier is being where the customer needs us, accompanying the customer on their journey, enabling them to get their everyday product when they need it. That's where affordability comes in. It's not only enabling them to have access to that daily ritual, but also enabling them to have access to it at affordable price and high quality because this is how we want the brand to be. We want to be inclusive. And that inclusivity enables customers to enrich their lives with the product that they want. And then ultimately is accessibility. What accessibility means is bringing online experiences into an offline world. So the ability to have fast checkouts, the ability to have limited menus, the ability to do brand collaborations, which we do a lot, or limited drops, and the ability to earn loyalty and then connect with similar people on that app. And this is why we believe that having an app today is crucial and important because it allows us to communicate better with our customers. It allows our customers to be more educated faster on our offering in our menu. So we launch a new menu every three months. It's so much easier to tell the customer that the menu has launched if we exist in their pocket and on their phone. And it allows them to have a better customer experience because they can get their product faster. They don't need to queue and wait. And they can collect loyalty as they go. So I think that today we talk a lot about the platform that we have created online. The app becomes the mirror of that in an online world. You also said if someone wants to have a party there, the rent is paid. It's like your model always, like the stores, you're renting them or you're buying the real estate, like McDonald's strategy. Yeah. We rent the real estate. I mean, we're still obviously a small business with limited resources and also renting the space makes sense because you have an abundance and availability of retail spaces today in the market that are extremely affordable. And this is what we go for. So what we are ultimately is a grab and go coffee chain operating in a micro retail model. What that micro retail represents is three things. Small footprint, small size locations of 50 square meters on average, very efficient operations digitized with different equipment, with a very efficient workflow and a very smart back-of-house technology and infrastructure. And then three is a focused and innovative menu split between what we talked about, which is the classics and the specials. The classics are your very high quality specialty coffee, which is the Campagino, the Americano, also the ceremonial matcha, like the matcha latte. And you have the specials. The specials are innovative drinks that you don't find anywhere outside of lap. And these could be functionals like protein coffee or it could be a special latte, tiramisu coffee was a special that we launched in Christmas extremely popular. These are drinks that are usually harder to make, right? So it takes a little bit longer to prepare them, but they're very exciting for the customers, they're innovative, they're untrend, they exactly match the expectation of our audience and our consumer. And they're also slightly more expensive than your average drink. And in fact, 40% of our sales is the special products today. So they're a big and important factor of our business model, but also of what the brand represents, which is innovation. The spaces that we've designed today going back into the small footprint enabled us to offer this high quality and profitable unit economics. You said before that when we talked about the logo that the blue color is a symbol of your heritage and something like that when did you first have the idea of lap? Yeah. So looking a little bit at my background, if you take a step back, for the last 20 years, I've lived and worked in over 12 cities for a time or a period of time. I was in the banking industry and I did that and I really enjoyed it for a long time until I realized that it wasn't necessarily me. I wanted to build. I wanted to create and then left my job and started working in tech, both on the founding side, but also worked with some of the larger unicorns here in Germany. This is how I got to Berlin and this is how I got closer to the ecosystem here. And I was lucky enough to see company building at different stages, from early stage to growth, to IPO, working with some of the best companies here. And after a long time in tech and in hyper growth, I decided to go back to what I really loved, which is food, hospitality, FNB and people. That connection to the product is basically what got me here today. And how different is the was the idea for lap back then and to lap today or was like your first, your thought, okay, I want to build like a lifestyle brand and this is like continuously. It felt like a natural transition because as an immigrant, life doesn't translate easily and home doesn't translate easily. So the chair platform for connection was a very natural idea that came to me. And this is the transition from building consumer tech businesses into creating something in the real world that has access to people. And this has been a very core part of the start of the lap journey. At the same time, you also have, of course, the business side. From a business perspective, my last business that I founded here in Germany was called the Ababa, it's a grocery business for international products tailored for immigrants, for food from home, for products that you can't find from home. So I've always had the longing to meet that need of creating something that brings home closer to you. And looking at a business, from a business perspective at what we built, we had quite a good journey, quite a good product, quite a healthy consumer base. But due to the market crash, due to inflation, we ended up having to shut down the company. And one of the biggest learnings that we had at the time is to build a product that can be profitable and can survive in any market conditions. So bringing that brand connection and that feeling of belonging, of creating life among people into a more realistic business world has a direct connection to what lap became, which is high quality affordability and the ability to get a product to the customers that can be profitable in any occasion. So we mirrored this connection to what the brand represents into the economics of how we actually build it. This is why the size of the store is a smaller, because the cost of setting up the store today is 50k versus 150k for Starbucks. It takes us four weeks to build it, which is much faster than what it takes an average F&B business. It takes us seven to nine months to pay back the cost of the store. And if we can keep our rent at below 10% of share of the P&L and our labor cost between 20 and 25%, we're able to make the economics of this business work. So you see how the brand side and the business side are very much interconnected. How many stores do you have right now with Lab? Today we have 27 stores. We close the year with 25 in three different cities. We served over 2.1 million drinks last year to a big customer base and very happy customers. And the goal for us this year is to continue expansion where customers want us. So at the end of the day again, we always go back to this idea of customer need. And today in my inbox, there's a large amount of requests from customers directly asking us to go to their neighborhoods to their cities, not only in Germany, but also in other places. And this is what we intend to do this year. The focus is on continuing to reach more customers that want our product and be as close as possible to the customers that want us. Build best-in-class training program for our staff, for their work environment to become safer, better, more enjoyable and easier, but also to build the career and offer these career opportunities and ultimately make the customer experience and the store blueprint better every day. How many stores do we want to have in the end of the year? So what we're looking at today is depending on the number of cities that we expand to, but we think we can open another 20 to 30 stores this year, depending on like every two weeks one store. So last year, we opened 19 stores, so 19, so one store every 19 days. So the ability to actually open the store, find the real estate and so on is not a challenge for us. We have a strong team. We've built very efficient operations with a very small team and we're able to do it. I think the question is whether we find the right locations or not. And this is what ultimately depends because a lot of people ask as you know, do you want 100 stores or do you want three? I think it's ultimately the formula is really dependent on the strict guidelines that we've designed. We want profitable stores, profitable products from day one and in order to do that, we have these really strict guardways from the size of the store, the cost of the rent and the cost to operate it and we have a very strict selection process. If we find enough stores that match this criteria, we would like to open 20 plus stores next year. And what's like your goal? You want to have like one day like 1000 stores or unlimited? Geographical expansion is only a part of what we think a lifestyle brand represents. So what this type of expansion, right? Geographical, the brick and mortar store openings in different cities is enabling us to do as a business, is be closer to the customer and build a relationship with the customer at profit because we don't spend on marketing. So the store becomes our marketing tool and the relationship and the experience in the store becomes one of the products that the customers consume. And this has a lot of value down the line. But the mission doesn't necessarily need to be thousands of these stores in order to reach the rest of Germany because we can do that differently. On one side, this is an option is to continue store expansion in as many cities as possible in Germany. Today, our plan is to target the top seven to eight tier one cities in Germany. Later on, in addition to that, student cities where we believe we have a product fit as well, the other way we can reach customers is through CPG is by creating or piloting products that customers want and need at home at the office that they can buy from a supermarket. And that also enables us to extend our product, extend our reach and also offer new options to customers outside of brick and mortar and outside of the stores. So this is another alternative. The third is more on the strategic side, vertical integration into coffee and pastries. So today, we work with incredible suppliers on both coffee and the bakery side. We source products to them, we work with them on the selection, on the volume procurement and on the taste of the product. And we can continue working with them in order to improve the efficiency, improve the availability, improve the selection, but also improve the margins. So we can source and roast through them over time and become a much bigger part of their operations. We can do the same on the bakery side, create our own products with our own bakery and so on. So this enables you to extend the offering and improve the offering for the customer. So this is also part of the focus that we have. And then ultimately, as I mentioned, is creating a mobile app that can accompany you on a daily basis. You talked about pastries. Will there be more food in the next time at the lab coffees? Limited and only tailored for what works with our menu. So today, we offer a selection of high-end or high-quality pastries that please the masses, but also we offer bagels. And every season, we bring a new product to the mix. So we're launching now different options for breakfast, healthy breakfast like granola and so on because our customers have demanded it. It usually takes us a bit of time to nail the product, because what we focus on is two things. One is the taste and the quality of the product, which is really central to get it as high as possible for super affordable prices. And it needs to be profitable from day one. We take our time to find the central suppliers and the providers or the central kitchens that can create this product with us. And then ultimately get it to the consumer at a price that they can afford it. So we're not in a rush to expand our food menu, but we also listen to the customer and understand what they need. And we try to tailor our offering to their daily consumer. It would nice if you bring the classic New York bagels to Berlin, but not like, like, I mean, we have like bagels stores here, but I don't like them, they're like boring, but like they're like lax and cream cheese. This would be great. Funny enough, I'm a really big fan of bagels. And when when we started lap, it was one of the first thing that we wanted to launch, but we realized in Germany, one, the bagel culture is not as big, maybe in Berlin, maybe in some parts, you know, of Mitter. But if you think at mass, I think mass consumers today don't have this very Americanized taste for food. And at the same time, getting the same quality that you get in New York is really hard. And I think that's the preparation process. Also like the traditional stores in New York with that. Exactly. And the case of history. We have bagels at lap and we work with with a great local supplier. And I think we want to continue innovating on the quality of the product and the offering there. So we talked about like the number of stores, but we have like a dream in your mind. Like you say, a one day when lap is like thousand stores, I will be really, really happy. It's less than number of stores, but it's more than happy customers. So if we can reach a larger number of customers with less stores, then our mission is accomplished. It's less about the number of stores, but it's really about being able to reach consumers where they want us. So from a numbers perspective, we're also looking at expansion in other countries, neighboring countries outside of Germany. You know, you have an opportunity in Austria today. You have an opportunity in Switzerland today. You have an opportunity in Paris. I think there is the ability to go beyond Germany. Obviously expansion is very challenging. Are you aware of enough to go to Italy? The good thing about Italy is that, you know, unlike Germany, where you have one out of every coffee consumed out of home. So nine of ten coffees are usually consumed at home or at the office. In Italy, it's the other way around. You have five coffees out of ten consumed out of home. And the price is affordable. So you're in a market where the taste is very different. You know, the taste is not necessarily tailored for specialty coffee. It's darker roast. It's a very different types of blends, but consumers consume coffee in masses. And it's not only served in coffee shops. It's also served in bars. It's also served in restaurants. It's also served in many different ways. I think ultimately at the end of the day, the focus for us is on the German market because we are here. We think there is an opportunity, but also we like the market here. And also we think that, you know, in the last decade, there hasn't been any innovation in coffee in Germany, which is, so the biggest market today, in terms of consumption in Europe, consumption per capita. And it's, you know, 50% of consumers drink at least one coffee per day. So you have access to a lot of consumers and you have access to a large market. But there hasn't been much innovation happening. And I think we should continue focusing on Germany. We should not be distracted with opportunities elsewhere. And there's a lot of opportunities. But in terms of sheer number of stores that we can open today, I think looking at Germany and beyond of neighboring countries, we have the possibility of reaching multiple hundreds of stores if we wanted to. But would you like to open one day and let coffee in Manhattan? You know, I lived in New York for a long time. It was a very exciting part of my, yeah, my journey and my profession and also personal experience. And I really miss it every day. It's a special city for me. But I also think that I have, you know, changed as a person. My values have changed. The way I want to live my life has changed. And that's why I'm still in Berlin and not building businesses in the US. I think I can connect a lot more to what Germany has to offer today. And, you know, it's been as my host country for the last eight years. It's been a great place to be. It's been a great place to build as an entrepreneur, as an immigrant, as someone who's not from here. And I would like to bring the experiences that I had there here rather than going back to New York and build businesses there. I'd rather bring the things that I liked from a broad into a society that I love being in at the moment. And also, how do you manage, like, the scale of so many stores like every two weeks and keep a cool head? It's a highly operational business that comes with a lot of challenges, right? You have to be very present, you have to be available, and you have to also provide a great customer experience and put customers first. And this is what we try to do as a team. It's definitely not easy. F&B is a complicated business, but at the end of the day, it's ingrained in the values, right? One of our values is unreasonable hospitality. It's what we strive to do every single day is to offer the best experience to every customer that walks onto the store. And this is where it starts. If our team today, which is an incredible team of 140 people in headquarters and then the rest are in the stores. And we're known for friendly staff. We're known for nice customer service. Of course, as, you know, any business and also any business F&B, I'm sure we make mistakes. And I'm sure not everyone has had the best experience at lab, but at least what we try to do is correct it. If someone comes to us and tells us that, you know, they had a subpar experience or they had an issue, we always jump on it. I still read every single customer service email. And I still remember every single email arrives to my inbox. And you're not crazy. Yes, that's what most people say. But you're crazy. I think it's important to be crazy as a founder. I think it's important to be committed as a founder. I think it's important to care about your customer and listen to the customer, whatever they say, whether it's positive or negative. This is the pulse of what the market is, of what your brand is, of what your service is, of what your value is at the end of the day. And this is why I read these emails. And I reply to most of them and I like to be part of it. I think it becomes very difficult over time. And as we grow, as you said, you know, how do you manage so many stores? We have, you know, a lot of customers, thousands and thousands of customers that come into our stores every day. So it's really hard to manage. But if I'm doing this, it sets the example for the rest of my team, their team, and then the store team, and then the Burstas and ultimately that gets translated to how much we care about the customer. And that's why unreasonable hospitality and customer service is an essential part of what we do. And that makes it easier for us to manage so many stores and so many customers. And we try to break down regionally the responsibilities. You know, our responsibilities, we basically pass them along to the regional teams. And they operate at a very hyper local level. So they have a lot of ownership in the way they run their stores and the way they manage their operations. And we give them centrally the tools to enable them to become their own founders of the store, their own entrepreneurs, and the own CEO of the store. And in that moment, right, they are the operator, not the company. We also think about a franchise system. We thought about it in the past. And again, going back to your expansion question and the number of stores that we can open, we can open a lot of stores by expanding to the front markets ourselves or even faster through the franchise. It's not yet the time for us to franchise the business, even though we get a lot of requests from large operators in Europe and also in the Middle East as well. We don't feel that we are ready because we're still trying to control what the brand represents, build the playbooks for it, and be able to offer the same service and consistency in different products. And we need to get better at that. And we're not there yet. But this could be a model in the future. It could be a model in the future. There's always a possibility to do it. As long as we are able again to offer the right experience to the customer. And how many hours per day you are working? Too many, but never enough. I think this is what it's like to be entrepreneur and to be a founder. You're always working and it's constantly what you're doing. When I have free time, I visit the stores and I check on the team and I see how everyone's doing. Or I think about what are the things that we didn't do well last week and how we can do them better. Or I'm talking to my friends about new ideas and opportunities that I have. So lap today and work today is such an essential part of my life. And I think it's quite important to also try to find that balance, try to find the time to get people. I'm trying to. I think it's not easy when I'm 37 years old today and work has been such a big part of my life. It's what got me to where I am today. It's been a central part of my growth as a foreigner because I've had to earn every step of the way, moving to different places, moving to different jobs, earning your mark socially and professionally. This requires a very high work ethic. It's a lot of hard work and it's having to prove yourself day in and day out. Again, especially if you're not from here, you really have to get there by being very consistent and by working a lot. And I think the cost of that is losing the balance. The cost of that is not spending enough time with the people that matter in your life, not spending enough time with your family. I didn't see my family for one and a half years. And it's only a three hour flight away. Where did they live? In Beirut, where I come from. And yeah, I think it's never easy to find that balance. And I think you will shift the priorities depending on different stages in your life. But when you're in the midst of it, when you're at the peak of building a business, especially a profitable one that people like and want to have in their lives. When there's a big opportunity that you want to really focus on, I think being consistent and being very focused is essential. And therefore, you work a lot more than the average person. And that's what creates this incremental value over time. The faster you create that value, the bigger the business is, and the bigger of a part you play in people's lives. And honestly, I can't tell you how incredible of an opportunity. It's been to see people walking around with a lap cup, and to be able to touch so many people with our products, happy customers, that like what we do, that we've built a relationship with over time. And I think this is extremely rewarding. So the hard work ultimately is, this is the reason why we do it. And lap is not only like a coffee brand, because it's like in the last months, my feelings that it's changed to like a cultural thing, because there are also many critics. They're saying like lap is destroying small independent coffee shops, and they've also been vandalism and color attacks on a lap store. I mean, you're like coffee shop, and now you're like a political company. You because lap is like your baby, you work, there are so many hours a week. How did that affect you personally when you see like people coming at night and like have like color attacks at your store? Yeah. I think the why it happened, and what you read in the news is one thing, and the impact that it has on you is another. I think, you know, again, being a founder is can be a thankless job and can be a very lonely one. And I think when tough times come and they always do the hardest part is not the challenge itself, but it's the impact and the cost that it has on you, right? It's the cost of enduring it. It's the sacrifice, the toll on your health, the relationships you lose along the way. And we had a tough period when all of this happened. It took a toll on us, right? It took a toll not only on me, but also on the team. What we go through, you know, these are things that we go through in private ultimately, but then in public, what you see is fake news, is misinformation, is, you know, a media that is repeating everything they hear and see without validating it. It's being mischaracterized by people that don't know who you are, never experience your product or brand. And it's challenging, right? You need to find a system to cope with it and you need to figure out how to keep your team and your values afloat. And I think ultimately at the end of the day, you have to set the narrative and you have to course correct and you have to go in the public eye and then correct the story and make sure that people understand the brand more, right? And you have to become more visible and that has a cost. Becoming more visible takes a very big toll on you, but it's essential because this is the kind of leadership that you need to have to protect your brand and to protect your team. And ultimately, we got through it. So at the end of the day, you control what you can and you have to always say the truth and always be authentic and always stand behind your values. And I think customers are deciding what to believe and customers ultimately decide what their feet, they come to the store, they buy the product, they see who we are, they see our values and they see that we live it every day. And yeah, ultimately this is what wins. And what did you feel? I mean, I imagine you're sitting like at home, you have like your lab coffees in the year, like news or from a store. Remember, they write you a, they're like color, text, journalism. Like what do you feel? You feel like anger, sadness, not understanding, or what's like in your mind at this time? Yeah, I think you go through all the motions, but at the end of the day, none of this matters because it's not about you, right? First of all, what's happening is not about you. It is political. It says more about the people that are doing it, the struggles in their lives, their inability to cope with the society they live in. Then it's about you, but more importantly, it's not about me, it's about my team. It's about showing up, being the first, whenever a problem happens, to one support my team and show them that we are one, to be there for them, to protect them and also to clean with them. And it wasn't only me, it was neighbors, it was the community, it was everyone that saw us. It's crazy to see. I mean, it was a tough, it was a very, very tough morning and now we're talking about the big vandalism that happened, but we had 25 cases reported to the cops of vandalism before that happened. It was happening for a very long time before they vandalized all of our store. I mean, it was pretty organized and you can see that this is manufactured. It's not something that is organic, it's not someone that had a bad coffee and then threw it at the window. These are people that wanted to do harm. These are people that were breaking the law on purpose and these are people that have no intention of doing anything productive or having a productive conversation or adding any value whatsoever. And therefore, we have to think about the people that we have. Like I said, we have over a hundred people, many of them foreigners, many of them young, many of them not from here, great people that show up every day to make customers happy, to serve authentically and with all their energy with a smile to have to wish people a good day and then you get someone walking into your store, wearing Adidas shoes, holding an iPhone and preaching them about gentrification as if gentrification or high rents started two years ago when lap was created. And I think there is this misconception, misconceptions in the market today and the inability of people to think for themselves that creates these issues that we see and we're not the first consumer business in Germany to fall for this trap. And unfortunately, this is something you see often here. This is why in my opinion, you're not seeing so many consumer businesses coming out of Germany today, which is a shame because you have a massive population of 80 million. You have some of the smartest people. You are the number one economy in Europe. You have everything you need. You're extremely privileged and people don't appreciate that sometimes. You have free health care, you have free education, you have transportation, you have access to Wi-Fi. You have social security. If you're unemployed, you don't have that in the US. You don't have that where I come from. You have the possibility of one doing whatever you want, creating businesses or adding value or even being part of the decisions made in your city. Instead of politicizing and attacking businesses, you should be part of the decision and be part of building the city and the society that you're in. And that's why I look at things very differently today. Being from the external eye, someone who's not from here, I really appreciate my host country. I love being here. And that's why I am still here. That's why I'm building a business here because I want to add value every day where I am. And obviously it's not great to be attacked. But at the end of the day, it's a very, very, very small part of society. It's a very unique group of people. And you have to take that with a grain of salt. Make sure that your team is happy that your values are authentic and you live them every day. And I think the truth will always win. Before I started lab or in the beginning of thinking about lab, do you ever thought about the possibility that this will happen that critics will like have like color attacks on your startup? Never, never. We're a small business. Young people, locally either from Berlin or have lived in Berlin for a long time, are passionate about what we do, passionate about coffee, about matcha, about the product, about customer service, about hospitality, about events. We just want to do cool shit. And at the end of the day, we were so small, so early in the journey that we obviously never expected that something like that would happen. We were compared to Amazon. People were saying that Peter Thiel is behind lab. There was a lot of bullshit out there. No, I never met him and he's not behind lab. And neither is Elon Musk and neither am I a billionaire as some of these blogs say, nor are we here to like the VC money you use to undercut competitors. Obviously not true, right? So the price as we discussed is a product of the system that we have built. You don't use capital or loan from banks in order to subsidize prices. This doesn't work. No business can survive like that. The capital that we raised is simply to expand the business to buy equipment and to open more stores because customers were asking for it. If customers were not asking for it, we were never needed to raise. We would have never needed to expand. We had a good product fit. We had a successful launch. People really loved what we were doing and we're asking for it. And this is the reason why we raised capital. Initially we went to the banks. Banks turned us down multiple times. We're still trying until today and we're not successful raising, sorry, getting loans from from banks. And this is why we raised from private individuals, friends of mine, entrepreneurs in Germany and then ultimately from the VC ecosystem. And we should be proud that a local business is able to attract big local investors but also foreign investors. And this is something that we shouldn't demonize because at the end of the day, how else would you build a business at scale? All businesses, including many of the coffee chains that we both know admitted today that have multiple stores, also have investors. So it's really not about the capital that we raised. I think it's just about this David and Goliath story that is very typical of the German ecosystem. We always try to create this demon and we're so small that it just doesn't even make sense. What must be like two and five years for you to say I was successful and leaps great. Happy customers would love to see lab become a national brand that becomes part of people's everyday life and everyday ritual. Either in our stores or at home, I would love to see lab products. I've growing up, I've always had this passion for food and for physical products. It's something that I've been really connected to. Whether it's olive oil, whether it's wine, whether it's coffee, these have been a really big part of my culture and upbringing. This is what I love to do is create products that make people happy. To me, this is what ultimately is a sign of success, if customers want the products that we build. In what is your favorite coffee at lab? Cold brew. I drink on average for cold brews a day. Of course, I like a lot of our menu and I'm heavily involved still in the creation of many of these products. I appreciate it. It's such a big part of what we do and it's a great team effort and many people on the team really enjoy the creation of these drinks. How do we promote them? How do we market them to the customers? I think we take a lot of pride in what we do. Ultimately, for me, I've always loved cold brews. Having lived in the US was what I was drinking every day. That's what I have at lab. Thank you for your time. Thank you Leo. Thank you for having me. If you liked the episode, leave a like, follow us on Instagram, subscribe to our kostenlose newsletter. I'm Leo Ginsburg, see you next time.