In Starbucks’ own backyard, a family-built startup has taken hold and assembled one of the largest networks of independent U.S. coffee shops.
Launched in 2014, Seattle-based Joe Coffee has created a platform that allows customers of local coffee shops to pre-order and pay for their drinks on mobile devices. The service also tracks purchase and rewards frequent caffeinators with free drinks, just like a paper punch cards do. The business has 300 independent coffee shop partners using its service, with 150 participants in Seattle. Last fall, Joe raised $1 million in its first round of funding, led by Flying Fish Partners.
The idea for Joe was sparked by a road trip. More than four years ago, brothers Nick and Brenden Martin were driving from Eastern Washington to Seattle and made what should have been a quick pit stop for java. The two started talking about the long waits at coffee shops and drive-thrus and began percolating ideas for a solution, ultimately landing on the notion of a mobile ordering system.
Between the two of them, they had experience in marketing, startups and product management. And as kids, they’d had front-row seats to entrepreneurship when their dad started a company in Central Washington building and selling lawn-and-garden storage sheds.
They saw firsthand that “you have to pour your heart and soul into that thing to make it work,” Nick said. And even then, it isn’t always enough. After running his company for about 10 years, the national brand Tuff Shed squeezed out their dad’s local business.
Not long after Joe got its start, Starbucks launched a pilot of its mobile ordering app. That made Joe’s product key not only to speeding up coffee purchases, but also to competing with international purveyors.
A main driver for Joe’s founders is “empowering small businesses in the coffee space,” Nick said.
To round out their team’s skill set, Brenden enrolled in a coding school so that he could lead the development of their minimal viable product (MVP). It was there that he met Lenny Urbanowski, who would become their third co-founder and chief technology officer.
Joe’s business model charges a small “convenience fee” for consumers of 35 cents per transaction, and charges coffee shops an 8 percent fee on purchases made through its system. Some of that money is used to cover the cost of the rewards program for loyal coffee drinkers, essentially a buy-10-drinks-get-one-free sort of deal, which can be redeemed at any shop using the Joe platform. Coffee shops manage the Joe-enabled orders through a tablet provided by the startup.
The eight-person company expects to triple in size in the near future and in August is moving to larger offices in Seattle. They have plans to expand into a second market soon, saying it will be another large, West Coast city.
Competitors in the space include Cups, which has offices in Brooklyn and San Francisco, and Vancouver, B.C.-based JoJo.
Growth is still challenging for Joe. Every coffee shop has a different menu, a different work and customer flow, a different physical setup. For the company to succeed, partnering businesses need to ensure that freshly-made drinks are ready to go as quickly and smoothly as possible for their customers.
Despite that challenge, the Joe founders have venti-sized dreams.
“Our goal,” said Nick, “is building a network that meets and beats what you can get at a Starbucks.”
We caught up with Nick, who is Joe’s CEO; Brenden, software developer and product manager; and Urbanowski for this Startup Spotlight, a regular GeekWire feature. Continue reading for their answers to our questionnaire.
Explain what you do so our parents can understand it: Joe is a mobile order and rewards app for local and independent coffee retailers that empowers them to compete with the “shop on every corner convenience” of national chains and allows coffee consumers to quickly and easily order directly from their phone.
Inspiration hit us when: Initially, it was while waiting in the drive-thru — a process that is designed for speed and efficiency that was clearly failing. When people pass up the experience they prefer for one that is more convenient, it hurts the relationships that our partners work so hard to cultivate. Ultimately, it also affects their bottom line. We started thinking about a way to level the playing field on convenience while enhancing the things that make local coffee so special to begin with.
VC, Angel or Bootstrap: We’ve done all three now. We bootstrapped it ourselves in the beginning because we had to: cashing in 401Ks, putting expenses on credit cards, taking on multiple freelance jobs and driving for Lyft. We didn’t have access to the right network of people, but eventually, we did make the right connections. Our first round was a mix of angles and VC. Initially, we were targeting angels because we weren’t sure that VCs would be interested in us. As it turns out, they were. The feedback and guidance we’ve gotten from both Flying Fish and our angel investors have been invaluable to our development.
Our ‘secret sauce’ is: We have a significant lack of ego and a real focus on outcomes. We have an intense focus on doing whatever it takes to empower our partners and relying on data to create value around coffee-specific behavior on both sides of the transaction. We believe that our coffee-specific focus creates a comparative advantage that allows us to deliver higher value faster for partners and our users.
The smartest move we’ve made so far: We started working closely with our partners to refine the experience. We needed to think beyond just the technical experience and more on providing real, tangible value to their customers. Through that learning, we’ve built a better experience for everyone in a way that fits seamlessly into our customers’ existing processes at a cost structure that equals in-person orders.
The biggest mistake we’ve made so far: The biggest mistake we’ve made is basically the inverse of our smartest move. We thought that if something didn’t scale right away, it wasn’t worth building from a product and process perspective. In the early phase, it’s more about learning than anything else. Once we took a step back and focused on learning about the unique needs of different segments of our audience, we could move faster and find a model that would scale.
Which entrepreneur or executive would you want working in your corner?
Nick: I have great respect for the leadership team from my time at Zillow. The way that Spencer Rascoff and Amy Bohutinsky represented themselves as leaders — they were authentic and approachable. To me, you empower your team to move faster and take risks when they know you trust them and that everyone has a shared mission of moving the business forward.
Brenden: I would love to spend time with the leadership team at GrubHub. The way they’ve been able to scale in the food space, there’s a lot of things we can learn from them. Also, the Lyft team. They way they’ve gamified the experience is awesome. They know what makes a great end-user experience and they truly empower their partners and make them feel valued.
Lenny: While at Microsoft I had the pleasure to work under Nick Caldwell (now chief product officer at Looker). He is truly one of the most inspirational engineering leaders I’ve ever encountered. He continuously fought to empower and elevate those who reported to him, and his example largely guides my management style today.
Our favorite team-building activity is: Every Friday we do what we call an “unwinder.” We get a few cocktails and we debrief on the week as a team. We talk through what’s going on with partners and the end users. We try to bubble up as many insights as possible, and we talk about wins and opportunities.
The biggest thing we look for when hiring is: We are looking for people who are ambitious, eager and want to stretch and contribute in big ways. We are still testing and learning, so we need people who are OK trying new things and can come with solutions. They also need to be able to speak their truth while also leaving their ego at the door. We have a culture of always speaking up, and assuming any criticism comes from a place of good intention. Ultimately, we all want to grow and improve so this has been critical to the quality of the Joe experience.
What’s the one piece of advice you’d give to other entrepreneurs just starting out: First of all, startup life can be overly glorified — it’s not always as sexy as you might think. You go through serious ups and downs and some extremely challenging times so you have to believe in what you’re doing and be in it for the right reasons.
To us, we couldn’t NOT work on Joe. We almost didn’t have a choice — that’s how hot the fire was burning to get it done and it’s taken every bit of that to get this far.
Similarly, ideas are worthless without the right execution and as a startup, you’re already facing an uphill battle. Make execution and relentless improvement your core competencies.
Lastly, spend time really developing your network. Regardless of the merit of your ideas, the right advisers can create an incredible amount of value in keeping you on track and connecting you to people and investors. For three founders from a working-class background, getting access to those networks was imperative.