Starbucks, Coffee, and Coworking(fool.com)
fool.com
Starbucks, Coffee, and Coworking
http://www.fool.com/investing/general/2009/06/17/starbucks-were-just-not-that-into-you-but-we-could.aspx
5 comments
Indeed, what's so curious about this article is that Starbucks was the poster child for selling the experience versus the coffee, and has been used in many case studies to demonstrate exactly that point.
I think the idea is that, basically, the Starbucks "experience" is what city life in general now feels like for these people. Starbucks is no longer differentiating on personality, because now everything else is just like Starbucks. they need a new schtick.
Exactly; and ironically enough, more indie coffeeshops have opened up recently precisely because Starbucks set their price point expectations so high that they get good margins out of it, versus $1 drip coffee.
I kind of think of Starbucks as that early innovator that did a lot of footwork, (massively) introducing something new to consumers, that was ultimately destroyed by new entrants in the market. Think what AOL did with home internet access.
Starbucks made coffee not just something for adults/people who work but really brought it to a broader group of people with things like Frappuccinos. As a result, they kind of did all the R&D for competitors like McD's and Dunkin Donuts (along with everyone else that is coming out with iced coffee/coffee flavored drinks).
These competitors are able to eat into Starbucks' moat and differentiate by supplying beverages at a lower cost and supplanting it with existing food options. It puts a company like SBUX in a tough bind and I'm not sure how they're going to regain the oomph they once had.
Starbucks made coffee not just something for adults/people who work but really brought it to a broader group of people with things like Frappuccinos. As a result, they kind of did all the R&D for competitors like McD's and Dunkin Donuts (along with everyone else that is coming out with iced coffee/coffee flavored drinks).
These competitors are able to eat into Starbucks' moat and differentiate by supplying beverages at a lower cost and supplanting it with existing food options. It puts a company like SBUX in a tough bind and I'm not sure how they're going to regain the oomph they once had.
They simply pretend to be a new startup. Think up a new name and a new image to compete/compliment starbucks and open stores nearby. Only the stock analysts need know they have the same owner.
Then all the kids who are too cool for starbucks can go to new-cool-bucks, dispising the people who go to starbucks - while putting money in their pocket. It's like people who are too rich to buy VW but will happily drive an Audi.
Then all the kids who are too cool for starbucks can go to new-cool-bucks, dispising the people who go to starbucks - while putting money in their pocket. It's like people who are too rich to buy VW but will happily drive an Audi.
Funny, I just wrote a blog post yesterday about our extreme bootstrapping ways at Starbucks titled "Two Guys One Cup". We have free wifi because one of us has AT&T DSL at home (and you can log in with multiple laptops at the same time) and we sometimes bring seat cushions to make the chairs more comfortable. http://grubwithus.blogspot.com
You can get free wifi at starbucks without any AT&T setup at home. The steps:
- buy a starbucks gift card ($5 minimum)
- register the giftcard online
- use the registration info when prompted when you connect to the network at SBUX.
- you must make at least one purchase each month on the giftcard, e.g. a tall coffee for $1.50.
- you can only use two MAC addresses on that card. Otherwise they'll lock your account, but you can call and get it unlocked.
- with said giftcard you also get free refills and free flavorings of some type too, even if you don't use the giftcard to buy the coffee in the first place.
I go to starbucks pretty much every day and that's how I get online there.
- buy a starbucks gift card ($5 minimum)
- register the giftcard online
- use the registration info when prompted when you connect to the network at SBUX.
- you must make at least one purchase each month on the giftcard, e.g. a tall coffee for $1.50.
- you can only use two MAC addresses on that card. Otherwise they'll lock your account, but you can call and get it unlocked.
- with said giftcard you also get free refills and free flavorings of some type too, even if you don't use the giftcard to buy the coffee in the first place.
I go to starbucks pretty much every day and that's how I get online there.
http://www.starbucks.com/retail/wireless.asp
On session per day, limited to 2 hours.
https://www.starbucks.com/cardrewards/default.asp
On session per day, limited to 2 hours.
https://www.starbucks.com/cardrewards/default.asp
That's the stated policy, but it hasn't been my experience. I've done many days at waaay over 2 hours.
Isn't there supposed to be a two hour limit? That's what AT&T/Starbucks claims, anyway...
You might find this entertaining, if you have not already seen it.
171 Starbucks
http://www.youtube.com/watch?v=CwYxuV2dVzw
171 Starbucks
http://www.youtube.com/watch?v=CwYxuV2dVzw
Speaking of K-cups and single serve coffee, I recently discovered the Italian moka pot. Wow! Simple, easy to clean, makes good coffee.
I loved my Moka for awhile, but in the end it lost out to the ease of the k-cup machine at work. Most days I just don't want to spend 8-10 minutes making a cup (between prep, brewing, and cleanup).
This is true. But, if you brew one really strong cup in the morning, you can cut it with boiling water several times during the day to make regular strength coffee.
I've been thinking about opening a cafe/coworking place in SF with some friends.
Which of the following would make you most want to work there?
- great coffee
- plentiful power outlets
- comfortable seating
- community (presence of other hackers/entrepreneurs)
Which of the following would make you most want to work there?
- great coffee
- plentiful power outlets
- comfortable seating
- community (presence of other hackers/entrepreneurs)
Coffee, power outlets, a price that isn't ridiculous like the current co-working spaces in SF. Maybe some sort of programming quiz to keep out the weird "social media consultant" crowd. Also 24 hour access. Most (all?) coffee shops in SF close too early.
a price that isn't ridiculous
I used to work in a (government-funded) technology incubator, and have heard some of the discussions behind pricing spacing.
It makes no difference to the incubator whether space costs $50 a month, $200 a month, or $1,000 a month. We didn't go with $1,000 because that would make us price-uncompetitive with other feasible options in the region. We didn't go with $50 because we thought our core client group does not want to be bothered by people who think $200 is a lot of money.
Looking at the diversity among people working in San Fransisco, have you perhaps considered that the ridiculous price is designed to keep out the weird startup crowd? From the perspective of, say, a civil engineering consultant, an unemployed 21 year old in jeans and a T-shirt who has had three consecutive all-nighters since his last shower might not be the ideal coworking companion.
I used to work in a (government-funded) technology incubator, and have heard some of the discussions behind pricing spacing.
It makes no difference to the incubator whether space costs $50 a month, $200 a month, or $1,000 a month. We didn't go with $1,000 because that would make us price-uncompetitive with other feasible options in the region. We didn't go with $50 because we thought our core client group does not want to be bothered by people who think $200 is a lot of money.
Looking at the diversity among people working in San Fransisco, have you perhaps considered that the ridiculous price is designed to keep out the weird startup crowd? From the perspective of, say, a civil engineering consultant, an unemployed 21 year old in jeans and a T-shirt who has had three consecutive all-nighters since his last shower might not be the ideal coworking companion.
The co-working spaces in SF are for the weird startup crowd. It turns out most of them are for the weird social media consultant crowd, because that is who runs them and they tend to be cliquey. They aren't business incubator spaces.
I'm pretty familiar with the spaces and people who run them here. One of them has to charge a lot because the space is really expensive. Another one has to charge a lot because they have trouble keeping it full, which I attribute to poor location. At yet another one, the guy is obviously making a profit because he's in a super cheap building.
I don't think the pricing is ridiculous from the perspective of the people running the space. They have to pass costs on. However, the people renting the space aren't getting a good deal unless they love the community. You're just renting a desk, which is free at the library, or a few coffee refills at any of the myriad coffee shops in the city... and you probably live somewhere, so you could just work at home, etc...
I'm pretty familiar with the spaces and people who run them here. One of them has to charge a lot because the space is really expensive. Another one has to charge a lot because they have trouble keeping it full, which I attribute to poor location. At yet another one, the guy is obviously making a profit because he's in a super cheap building.
I don't think the pricing is ridiculous from the perspective of the people running the space. They have to pass costs on. However, the people renting the space aren't getting a good deal unless they love the community. You're just renting a desk, which is free at the library, or a few coffee refills at any of the myriad coffee shops in the city... and you probably live somewhere, so you could just work at home, etc...
Yeah, the prices are hard to justify. I don't have $300 or $400 to spend every month on top of rent money. All the co-working spaces I've visited here seem like nice places to work, each with its own individual culture and network, but the price tag is unfeasible for unfunded bootstrappers.
$300 isn't very much when you look at the loaded costs of setting up and running a coop. Offices are expensive.
And if not an office, I'm not sure how one would ever create a 24 hour coffee shop. A typical Starbucks lives off of customers who spend $100/mo and take up no room -- $5/latte by 20 working days and five minutes in and out. How would some coffee shop ever survive by charging three times as much for someone who takes up 100 times more time lounging around in chairs?
And if not an office, I'm not sure how one would ever create a 24 hour coffee shop. A typical Starbucks lives off of customers who spend $100/mo and take up no room -- $5/latte by 20 working days and five minutes in and out. How would some coffee shop ever survive by charging three times as much for someone who takes up 100 times more time lounging around in chairs?
Someone occupying an otherwise empty chair has zero marginal cost. In fact to a restaurant, people at tables has a negative cost just before the busy period - would you pick an empty restaurant?
People in a starbucks at non-peak hours aren't a problem and may even attract other customers.
power from an outlet, higher electricity bills for cooling (more people, more heat) -- Hypothetically, this would be counteracted by people buying more drinks, but how much sugar can one consume, really?
Myself, I'd suggest some low calorie drinks people can drink to keep going.
Myself, I'd suggest some low calorie drinks people can drink to keep going.
This is totally wrong. In my opinion, Starbucks knows exactly what they stand for. They don't sell coffee, they sell a "lifestyle". If Starbucks were just a shop that sells coffee, it would've never become the giant it is today. People go to Starbucks to experience the hip, yuppie, modern ambiance. Not just for the coffee.