How I Built This with Guy Raz - La Colombe Coffee Roasters: Todd Carmichael and J.P. Iberti

Episode Date: July 20, 2020

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

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It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.com slash host. Hey there, it's Guy here. And really quick before we start this brand new episode of the show, how I built this isn't just a podcast, but also a book. A book filled with stories and lessons from some of the world.

greatest entrepreneurs about the gift of failure, the beauty of ideas, and the path to building something meaningful. You can pre-order the book right now wherever you get your books or by visiting gairoz.com. Just a quick heads up before we start the show, there are a couple of swear words in this episode, so you may want to keep that in mind if you're listening with kids. Okay, on to the show. We started the old investor discussions, and we landed on one. We did the deal. 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 Colom needs to be the father of it.

And they said, nah, we don't want to do that. What they wanted to do? They wanted us to build 200 cafes. So I just, I said, we're out of here. We're going to buy you out. From NPR, it's how I built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements

they built. I'm Guy Raz, and on the show today, how two part-time baristas in Seattle became best friends, moved to Philadelphia, and went on to pioneer the specialty coffee movement in the U.S. by founding La Cologne 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 in their apartment, or at a dive bar. And then one of you says, hey, you and I, we should totally start something together because we are an awesome team, like a record store or a beer bar or a podcast company. Whatever it is, you both get really excited and start coming up with all kinds of ideas. The type of beer you'll serve, the kinds of records you'll play in the store, the podcasts you'll make.

You can't stop thinking about it. But then, a few months later, reality tends to. 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 J.P. E. Bertie. Except in their case, it didn't fade away. Back in the late 1980s, Todd and J.P. dreamed of starting a specialty coffee shop. Well, It took a while, but eventually they opened it up and called the shop La Cologne. Now, this happened to be around the same time that two other coffee companies were starting up,

one in Chicago called Intelligensia, the other in North Carolina called Counterculture. And along with La Cologne, these three coffee brands came to be known as pioneers in the so-called third wave coffee movement in the U.S. The first wave was instant coffee and diner coffee, basically coffee that was cheap and generic that people drank a lot of after World War II. 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 espressoes and lattes. And the third wave? Well, it basically defines what? most high-end coffee shops are today. Places that source high-quality beans directly from farms, often roast the beans themselves, and have highly trained baristas pulling your espresso drinks.

La Colombe started out as one shop in a rundown part of Philadelphia. Today, you can find its cold brew cans in tons of convenience stores across the U.S., and the company is now valued at around a billion dollars. But to get there was a long, slow grind, as you will hear them explain. J.P. Iberty, the JP stands for Jean-Philippe, was born in southern France. His dad ran a business supplying fresh meat and produce to restaurants. But Todd grew up literally and figuratively a world away in eastern Washington State. And at home, a lot of times, his mom struggled to put food on the table.

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 what 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 I guess they call that food insecure.

We just called it kind of hungry back then. And I had three sisters as well. And so we kind of took care of each other. And I knew I needed to leave my hometown. I just didn't know how to do it. I had a globe that my grandfather gave me and I studied it and studied 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? How did you, 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. 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 lawnmowers 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 distance running, 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 in 5,000. And then I got a full scholarship to the University of Washington. Wow.

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

really actually applied 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 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 had this deep fear of being in a trailer. And it was real to me. So in 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. And this is Seattle before, like, Sub Pop and Starbucks and Microsoft. I mean, they were sort of there, but it's still like early 80s, Seattle, totally different place in it is today.

And 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 could totally do grain work.

I could hump sacks all day long. So I got the gig, and when I went inside, you know, the names on the bags were way different than I expected. You know, there 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 name.

that's the world that I had dreamt of. That these bags actually came from those places was just mesmerizing to me. All right, so you get a job at this warehouse, moving sax 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, I cut my own hair. You know, it was just, I probably didn't present as well as they'd like. And so 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 did you learn how to roast coffee? Not, I mean, I did, but not. to a degree that I would call it skillful. Got it. Not like JP.

I mean, JP is the master of that, you know. All right. So this is 1982, 83. You're working on the coffee place. Your student at the University of Washington. J.P., tell me about where you grew up. 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 a business and became pretty soon. successful. And my mom was a homemaker. So I had a good uprising. I have two older sisters that basically were out of the house when I was growing up. And I think my parents were over having children when I was growing up. I guess as a kid you were interested in aviation flight. 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 I read that you basically, after high school, went to Seattle 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 Torrefacion Italia, which was in Pioneer Square. First generation, Italian family, and basically we became really friend. And one day, they offered me the job. And I took it. I became a barista. Okay, so you are in flight school and get this job at this coffee shop, this coffee bar in Pioneer Square in Seattle. And Todd, how did you, 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, 25th of the Italian's TI. And how did you hear, why would you have even heard that rumor? Because you got to 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, it was like being like a DJ. You know, you were known. Yeah. And so, T.I 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.

Wow. That little shop in Pioneer Square. Oh my God. Yeah. Umberto was a very famous roaster in Italy, in Umbria, before he even started roasting in Seattle. So he came in with like top shelf knowledge that no one really had access to. And so there was this rumor, this French guy is around. And there was this new sound that was happening at the time, right, that they called was called Grunge, right? Yeah. 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 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 didn't serve like beer in a glass. They served 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 Jean-Pierre guy? And he goes, Jean-Philippe. And I was like, okay, Jean-Filippe, you rose for Tia? He goes, yeah. And then the next question is, he goes, do you have a stove? I said, yeah, have a stove.

And he goes, can I use it? And I'm, you know, I'm still, I have very little money. And I go, you could use it at 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, J.P., you, is that your recollection of what happened?

Yeah, I'm not sure about the gold vest. You know, I'm looking back 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 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 it was an electric stove. Oh, I see. stove so it wasn't that great and um you know until i left france i didn't realize how food was important to me you know and uh 87 was a different time in america i mean coffee was getting here and getting

good but you know things like bread we're not we're not where we are today you know it was a different world back then so food was important and i wanted i wanted to eat so we you know we probably talked about food and you know back and forth But then the question was, yeah, you have gas stove. And that's really the kind of the beginning of your friendship. Yeah, and then from there 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 start to hang out and you start to say, hey, we should maybe one day open our own place. Yeah, 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 I was working from a farm that if you take the time to come to our farm, you would get the best stuff. So we would talk about this whole concept that later on became coffee sourcing or farm to table. And then later on, we just made it. But meantime, JP, you were still studying 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 at this time. You know, for me, it was still just a dream. Yeah, you were just kind of spitballing ideas. People, yeah, two young guys just hanging out talking about, you know, wouldn't it be cool if we did this, wouldn't be cool if we did this? Wouldn't be cool if they did with that?

Meantime, I'm Todd, 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'd applied for and got in the business school. And so then I got a job as a tax consultant for a company called Ernst & Winnie at the time. It was one of the big eight accounting firms. I was wearing a suit. I had a leather lunchbox and everything. And you do that job for a year from what I understand. And then you took off. You left the U.S. Yeah. Tell me the story. Why did you leave the U.S.? Where did you go and why? Well, I mean, the why is multifaceted. You know, part of it was it was becoming clear. to me that I have a furnace in my brain, right? So that I inherited certain traits from my parents

and that that sort of environment wasn't safe for me. The environment of working in an office? Yeah. I had a lot of confidence in my skill set. I had a lot of confidence in myself. It's not that. It's just that I needed to go and find a place that I could fit. Right. I knew I needed to put together $95,000 so I could start this coffee company with my best friend. Wait, so you were totally committed to this idea. You really wanted to start a coffee company with JP. And JP, when Todd said, hey, I'm going to go overseas because he went to Europe, and then I'm going to come back and we're going to start this business.

Did you take that seriously? Or did you think, okay, have fun? Yeah, I mean, you know, this is closer to 89.90. At that point, I moved in working in the afternoon in a production warehouse. So, you know, I was really learning the old 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. Sure.

But, yeah, and Todd ended up going to the south of France, which, where I'm from. So, you know, I connected them with all my friend, people I grew up with. And it was... And I remember, JP, you took that flight. We flew it together, remember? Yeah. You both flew to Europe together that first time you went, Todd? Yeah, he 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 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 and I interviewed and got jobs. I mean, accounting jobs right away. Because most of them were like shipping companies, a lot of companies that are there to avoid tax. So they're not really part of the culture. And so, you know, the operating language is English. Sure.

And I did a lot of odd jobs. That's for sure. Consulting, tax work, accounting. No job too big, too small kind of thing. 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, J.P., 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 opening more stores, getting busy and busier, and the business was really blooming. So I was becoming a big part of Torre Fasian in Italia.

And it really became my center. Coffee, my coffee profession just took over. It's when I realized, hey, this is going to be my career. You know, my center was the university in flying for a long time, and then it shifted. So, Todd, while you were in Europe, I guess you actually wrote down a business plan while you were there, right, for this idea of a coffee company that you'd been dreaming about. Yes, by hand with a pen. So, okay, so you sat down, and what was 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 comfortable being purveyors. And we wanted purvey to the very best of the best of the best. We had a deep, deep belief that there would be this restaurant, renaissance in America. There was going to be this huge inflow of French and Italian high-level cuisine and that the coffee in America wasn't going to accommodate it. Coffee in America was just dedicated to, you know, fast-to-go business, Starbucks style, that they weren't bringing it to the culinary level.

And we 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 it would be, we'd give it a name, a place, an identity. In your mind, JP, do you think this guy's going to go? 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 right you know I knew a lot about the kitchens I knew a lot about chefs I knew a lot about coffee and Todd had the business and the coffee experience as well and it was just clear it was was you know I that once we both said, hey, let's do this, it was going to be a success. Huh. 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, was he ready to jump right back in with you? So I, 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, for me to lay in. And I told him, I wasn't going to leave until he agreed. Although I did respect how hard that would be on him. We had a long conversation. I could feel that he was leaning. Because let's get real. You know, there could be no La Cologne without J.P. There could be no Todd without J.P.

And I don't think there could be a J.P. You know, it's like these are the key ingredients. And so J.P., it took you some convincing. How long do you think it took you before you said, all right, I'm in? Well, I think it was a process. It probably took me all three years to get there. The three years while Todd was away. Yeah, and really seeing, you know,

and something happened with Torre Fasion, Italia in 1993. It all came to a crossroad. And Tori Fasian, Italy was sold. And it was a strange time. You know, I was like, oh, man, this is the end. You know, Umberto is going to be gone. All the people that, you know, are like family to me are going to be gone. So then at that moment, I knew that he was.

If I wanted to stay in coffee, I had to do something. Right. And that's something. It was clear to me, too, that I was not going to do something on my own. I mean, her friendship was already, you know, a brotherhood, you know. And it was clear that that was the way for me to stay in coffee. And it's, it was just there, you know. I had to do it.

And by the way, did you have a name at that point for your business? Well, it's, we had like multiple names, but JP, you threw it out there. And it was just so clear to us. So I come from a little town called Saint-Paul-DeVans 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 artists used to stay there and instead of paying women bored, they just left sketches. Yes. And it's called La Colomador. 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 that were friends. And, you know, I ended up having a summer job there when I was 13, 14, you know, washing dishes. And, you know, so I think the inspiration of the name is connected to the place. But it's also the symbol of what La Colombe is, you know, internationally. Because Colombe means, it means dove, right? The dog, yeah. Yeah, and so that sort of evoking that kind of idea, the La Colombe, was the idea behind it. Wow.

So here's the amazing thing. This is 1993. You're back in Seattle. Seattle is the epicenter of U.S. coffee culture at this point. I mean, this 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 looking at cities on the East Coast and you

end up in Philadelphia. Why Philadelphia? So Philly was a different place then. But we ended up walking the city and it's a beautiful city architecturally. The way it's laid out is an amazing city. And being European and walking and cycling everywhere. I still use my bicycle to go to work. It just, you know, for me, the fact that we could walk anywhere was just like, this is definitely making the top of the chart right now. And there was 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. They were pretty much closed down. There were no cafes in the city. you know, it's a city of a million some people, and there wasn't one cup of coffee. And so, JP and I went and I said, hey, let's, remember JP? We sat and we had some beers together. And I chose to interpret everything that we'd seen this way, that if you were going to take

an elevator ride and you were looking to get altitude, you want to get in on the ground floor. And that Philadelphia was displaying that it is here on the ground floor and it can't stay this way and it will not stay this way. This was, had you either of you ever been to Philadelphia at that point? Never. 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 fine for what we wanted to do, that the city, especially after Sandown, there was nobody in the streets. But, you know, it didn't really matter because her idea was to be purveyors and to serve the kitchen. So it didn't really matter. Yeah. You know, and what thing that was important is at the time, the Bec Fine was voted, which is the Philadelphia restaurant, was voted number one restaurant in the country. George Perrier was the chef at the place, right?

Chef owner, yeah. And also the proximity to New York City. Yeah. And also, presumably Philadelphia was cheap. Very. Insanely so. So you find a location on Rittenhouse Square, which is probably the most famous place in Philadelphia today, one of them. What was it?

It was like a small storefront that you? found? It was actually two. You know, this area of the town was really suffering. Businesses would calm 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, 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. 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. Hand-painted ceramic, grinders. Everything that we needed. Hand-panied ceramic, because you served your coffee, I think you still do. I've been to that location of Rittenhouse Square. And I remember. 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 served coffee there. Yeah.

We were traveling all the way through Italy. I 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 went, okay, we'd like those two espresso machines. We'd 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. Wow. And we found the roaster in northern Italy, paid for it, strapped it to a pallet, and watched it ship. So this is 1994. You've got a small location, Off Rittenhouse Square. You're roasting beans there.

And by the way, I live in the Bay Area. So I've passed by several roasters on a given week, and you can smell that smell. It is really strong. Like when you were 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 had 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 ventilator. 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 ready to open. I mean, we had now 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 weren't 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 the outside of the building.

And I think it's about 20 stories high. Yeah. And I piped the, then cemented the piping into the garbage suit and told JP to fire it up. And now it takes. It makes 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 chute. The garbage chute was your chimney.

Yep. I'm assuming you did not ask for permission to do this. No, no, no. In fact, we built the cafe by, like, with no permits. Like, I did all the wiring, all the plumbing. Like, we asked forgiveness rather than permission on pretty much anything. But the big deal was 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 Jamie to dislodge 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. Yeah. And did the fire department cite 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 roasted in the middle of the night, which helped, but it made the life just really, really, really rough. Yeah. How did you, in that initial batch of coffee, where did you get it from? Where did you, was there like a distributor in the U.S. 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, we bought 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, right? I mean, 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 colander, and you use some kind of cool, 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. And we were hand-grinding it and cupping it and hand-grinding it, cupping it,

and 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 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, it 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 it, too, is it's usually. 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 introduced this to some of the best palates in the world, and they like it. You're good. I think it's really hard to make food and beverage for everybody. It's like Kurt Vonnegut wrote for his sister. He wrote for one person. And I think that when I make food and beverage, I have like one or two people I think about. How did you find the restaurant? How did you get into them? How did you, did you just kind of pound the pavement and start to call and, and...

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, La Becfant. 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 in the interview. So we went and we tore the grinder down, cleaned it, tore the espresso machine, cleaned that, put our coffee into it, made a beautiful, beautiful coffee, and I said, we're chef. We went upstairs. He was screaming as, you know, he was a screamer. It was the 90s, right? Wanted to know, and we said, we're here to make coffee for you. And we just put it in front of them and you just step back. And so that's how we got the Becfah, 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. Wow. You know, it's like, in other words, bring your stuff now. It's like, it's the truth. Yeah. And you thought, all right, we got to start with Lebeckfant because that is the best French restaurant in the United States.

And if we're in there, then other French restaurants or other high-end restaurants are going to want our stuff. Well, the second one was the same day was Jean-Marie La Croix, extraordinary show. Also in Philadelphia, I think he was the four seasons, right? Yeah. 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, which is just Kofia, one to three. It was all the Frenches. Yeah. And, you know, the media were not what it is today, obviously. And back then, chef would only talk to chef. You know, they would. don't buy things because they saw an ad somewhere.

But once somebody finds something, they're 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. And ours was the mid-7s. So weren't some restaurants? Like, are you out of your mind? No.

They weren't. No, because we explained to them, I go, chef, coffee is a spice. And that's all I had to say. because you could buy saffron for nothing, and you'd have to use like a bird's nest amount in your dish to make it taste anything like saffron. Or you get this stuff from Pakistan or Afghanistan where 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 were serving, the level was so high. The food was so good. And where the coffee was in their dining room was such a void. It was so clear. Yeah. And, you know, we got one, two, three, and it started. We got no.

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

So it's 1994 in Philadelphia and Todd and JP are selling wholesale, specialty coffee to more and more high-end restaurants, but the idea of premium and expensive coffee still isn't mainstream. And Todd and JP find that it's a challenge just to describe to consumers what's different about the coffee they're making. Because espresso in America up to that point was an abrasive liquid. It was not to be consumed without tons of sugar or milk on it. 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, a sweet finish because we felt like the American consumer, the public at this time needed to be intruders to better coffee, but also not to scare them away. So we felt, It was important that the coffee were really clean. And this is something that we focused on. And we had a rule. It was three words. That's right. 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 creed. Yeah. Street creed, street creed. 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 sort of the northeast and the Mid-Atlantic? Were you distributing to places beyond that? Yeah. Yeah, it's a funny thing with kitchen. You know, a lot of people go into a kitchen and then move away to San Francisco, L.A., 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 when these started, then it went a lot faster. Meanwhile, in the 1990s, were you still buying your coffee from brokers? 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 roosters started to come online. Yeah. The demand started picking up. And then it 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 guy's name? Orse. Oars, yeah. And you met him. You met him. Where did you meet him?

Oh, God, how did we meet him? We met him through 19th Street, with a Nels Cafe. He came in. Oh, that's right. So I think we met him through, like, chocolate. We were playing around with chocolate. He's got a farm.

We go to the farm. And once you do that, then you become hungry for it. So you go to visit this guy's farm. He has a coffee plantation in Brazil? Yeah. 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 processes 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 was literally, because the coffee business is very, very, I think complex is 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 sells it to somebody in the bigger city. And the bigger city person is they're the ones who are selling it to a distributor in the U.S. 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 jell you nothing. Nothing. Very little. Yeah. 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 they'd say 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 of 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 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 in numbers. Once you get the faith and confidence of farmers, then you can do pretty much what you want. The problem is in places like Haiti or in Africa or even El Salvador, there are loads of gringoes that show up making promises and they 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 a blanc, a white gay. But now I'm called Leblanc, I'm the white gay. Like, they know I'll come back. So then they can buck the system. And traders that are trading over borders or they're, you know, taking big line share and it ends up in some Maxwell House blend, they're looking for giant volumes. We're not disrupting that. We're looking for this crem to la crem. 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, 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 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, 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. Just total 24-7 anxiety mania. I just couldn't sleep. I couldn't, you know,

It's just really, my furnace was just burning really hot. But I just got in a 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 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. Yeah. And when I get that way, I stop eating, so I wasn't eating. I wasn't sleeping.

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, 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 surf my brains out. And then I wrote a book. And it was a piece of junk. Let me just tell you. It was trashy. I just, you would not make it past the first chapter, but I think I did that like chopping wood. You know, it was therapeutic, and I wanted to prove to myself that I could write something, right? So I did.

And so there was a lot of stuff from my past that I'd never dealt with. And it was, it helped a lot. This was three months, or almost three months, on this remote island, no Wi-Fi, but this is 2000, so don't internet. And JP, you were not in touch with him that whole time? Yeah. Yeah. And were you not worried? Were you not like, you were just like, yeah, okay, go.

and I'll figure it out. And you just ran the business 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 La Colombe has had over the years, it's very low. So we just had that core of people from the beginning.

So three months felt like two weeks. I mean, it was just not much to handle. It wasn't like impossible. So when he comes back, how did he see him to you? Much better in a different place completely. I mean, I was just like a 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, Offerton House Square in Philadelphia, to open a new location outside of Philadelphia for the first time.

Because I think at that point you had like two locations in Philadelphia maybe or three. Was it two? Yeah, no, Dilworth had just started. We had 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 because. 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. It was a 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. 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. Like we devolved in isolation that we've got to this point that we're going to turn this thing into a true business. We could become the reference coffee roasting company in the world if we start right now.

And if you look at the top line revenue of La Colom, it is an intense hockey stick that started in 2008, where he 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, 2008, you were shifting away from the wholesale side? Or did you continue that? Oh, we continue that. No. They're called categories, right? So you never, you never abandon the energy that you're giving to one category because you've added a second.

And we have five now. And you 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 this. I mean, presumably you had to go seek out outside investment, right? Which was going to be the first time you were going to get outside money into the business, right? 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 ready to drink coffee, so we had that, we had the cafes. So we looked at each other and went, man. Yeah. So we started the old investor discussions, and it was so awful because we have different blood types to such a degree that it just, it was so difficult. And we landed on one. We did the deal, and that lasted 52 days to the first board meeting.

I said, okay, I believe that cold brew is going to be a thing, and La Colom needs to be the father of it. We also need to create ready to drink drinks that include milk. and hopefully one if I can invent it, one that's frothy. 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 new 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.

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 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. Yep. And so I thought of, hey, there's that Hamdi-Lakaya guy. From Chibani. From Chibani.

I'd 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 a can, I put a volleyball valve in it, I put coffee, I put milk, I seam the can, and I jack the contents up with nitrous oxides to make it self-foaming, and I bring it up to New York. And I said, this is going to be the most expensive coffee you've ever tasted. And yeah, he loved it. 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. Yeah, 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 that I'd still say I would do it again

and this the 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 in like one out of three US grocery stores I'd say, yeah, it's probably higher than that now. I'd say we're getting like two out of three. Wow. It's 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 we can't get to a big number of location, but there's a balance of things.

Right. I'm really, really, really happy that we kept growing the business in different channels than just retail. I mean, how many great concept have we 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 example. And it's, you know, I think we were a little naive. to think that that was a solid plan. And we learn and, you know, thank God, Hamdi is with us.

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

getting hit right now. Clobbered, yeah. The way I like to think of it is, you know, the day before COVID hit, we had three big motors on this plane, right? So we had the cafes and hospitality, wholesale. And we had the ready to drink and grocery. And then we had e-com, a little motor on the back. Whatever storm took two of those engines out. Which is the cafes and the wholesale. And those are the real, they really provide a lot of cash. Yeah. Those are the big engines on the plane.

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

We went to the executive crew. We cut everyone 50%. We say, we're going to sacrifice from the top. Yeah. And, you know, we've been really busy in reorganizing the next phase, which is the opening of the stores and making sure that everybody is safe. and well served and still trying to maintain efficiency and speed. So it's been a really busy couple months. And it's been making, you know, getting us really close to our team, really close to our people

and realize really the amount of talent that we have on this team. You know, it's, I can say that, you know, it's brought us really close as a company. Yeah. This business has made both of you rich. And I know that Todd, you grew up in like serious insecurity, food and financial insecurity. What does it mean to you to have money? What does it enable you to do now? 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 could fund programs. I can do things like that. And I could 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, and I'm walking in front of the cart, 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 well. wealthy. Yeah, you know, and this is one of the things I respect the most about the U.S., 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, Sal 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, we'd probably call it close to 50-50. I mean, if you call luck, you also talk about timing. Well, the 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, 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. They've broken pieces of lock-alone ceramic, you know, that they've put together to make this mosaic top. So I would say that the grout is luck.

It's what holds all those broken pieces together. Whatever percentage that is. Because obviously they would mean nothing if it weren't for the grout, right? They wouldn't hold together. So I would say, I guess, 35% of its luck or good fortune or destiny or, you know, the gods. Because it's true, man. That luck begins with Green River. and whether he was wearing a gold vest or not, I'm not sure, is meeting JP.

Huge pizza luck. Had I not gone that night, there would be no La Colombe. That's Todd Carmichael and J.P. Iberty, co-founders of La Cologne Coffee Roasters. By the way, in addition to founding La Cologne, 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 South Pole. the bottom of the earth that aired on the National Geographic Channel. Hey, thanks so much for listening to the show this week.

You can subscribe wherever you get your podcasts. You can also write to us at hibt at npr.org. And if you want to tweet at us, it's at How I Built This or at Guy Raz. Our show was produced this week by Casey Herman with music composed by Rumtina Arablewe. Thanks also to Julia Carney, Candice Lem, Neba Grant, Sarah Sarison, and Jeff Rogers. I'm Guy Raz, and you've been listening to How I. I built this.