[Music]
today I want to talk about why blue
bottle was worth 700 million dollars to
Nestle if I could answer it in just one
word that word would be Amazon I should
probably explain Anderson owns product
search right when you look for something
online if you're buying it you probably
go to Amazon first they are the
gatekeepers of online shopping and
they're doing an incredible job in fact
for years Amazon have used a hugely
profitable business their Web Services
that host sites all over the internet to
prop up the retail platform that they've
been building that's how they've been
able to grow so quickly do everything so
cheap have this incredible customer
experience 64% of US households have
Amazon Prime and they're picking up
about four and every ten dollars spent
online this terrifies the bigger
companies because right now if I go to
amazon.com and I search for let's say
Nespresso pods well sure I get a few ads
first but then after that yeah I get
Amazon's recommendation which happens to
be a Nespresso pods
a big step for them to start selling on
the platform now at some point any point
really Amazon can say hey we know loads
of people want to buy pods we know what
they'll pay for them why don't we just
do Amazon pods right and then the first
thing in any search is going to eat
Amazon's own product they bought Whole
Foods Coffee is a growing category you
can't help but think that this is where
they're gonna go and this is a problem
so how do you stop someone buying the
Amazon pod over the Nespresso pod well
the answer's brand and this is where we
come back to blue bottle now I should
say I have no insider knowledge here I
met James Freeman one-seventh Brian
Meehan a couple of times I haven't met
anyone from Nestle Blue Bottle is a kind
of fascinating brand they paid seven
hundred million dollars for it they paid
the equivalent of about fourteen million
dollars per cafe they clearly weren't
buying a business this probably wasn't a
deal based on
how much profit the company made this
was another kind of valuation
bluebottles interesting to me and has
been for a long time and to go back to
why I'll tell you a quick story about
the first time I stayed in New York in
an eye B&B and like most people I
answered the questions I told the hosts
what I did for a living and when I got
there she was incredibly excited because
she had brought for me some blue bottle
blue bottle had come to represent in her
mind and in a lot of people's minds good
taste
blue bottle weren't really the US
specialty coffee darlings the same way
that say intelligentsia or stun town or
counterculture were they kind of sat off
to the side they didn't play well with
other children in the early days though
that has changed a little bit now their
tone their language their style was a
little bit different and in some ways it
was kind of rejected by this sort of
elite of specialty coffee because it
wasn't really serious enough but what
they did a fantastic job of doing was
making themselves that expression of
taste if you look at their cafes they
build beautiful cafes James Freeman is
clearly very thoughtful about how a cafe
comes together and walking into any one
of them it's clearly an expression of
someone's aesthetic it resonates
strongly with a lot of people that's
incredibly impressive and I think
underestimated in value by the rest of
specialty coffee Blue Bottle had a
different style of communication they
talked about buying a twenty thousand
dollar halogen siphon brewing setup now
des specially that just seemed insane
right that was ridiculous but that was a
really smart piece of communication to
lots of people they understood two
things one this company spends a lot of
money on its coffee in a way that they
can kind of understand and then they
kind of evoked that kind of
stereotypical Japanese obsession with
crafts they were speaking a language and
most people could understand and at the
same time specialty coffee where we were
speaking a whole other language we were
talking about variety and processing and
we talked about farm names that were
almost impossible for people to burn out
we were speaking just a whole other
language bluebottle weren't and didn't
for a long time and I think this allowed
them to build a brand by communicating
better than most of us sure they got a
lot of investment they were able to grow
they were able to acquire companies like
toms his subscription or perfect grind
again looking at ways to sort of break
down the customer barrier and be more
approachable that brand that consumer
attachment that people have and people I
met who were just normal people that
drank coffee at Blue Bottle really felt
this defined them in a very positive way
they produce very viral consumers of
their stuff and I've seen them described
as like a hipster cafe but having been
to a bunch of them and sat in them
that's not the traditional kind of
hipster demographic going there it's
people from their 20s through to their
50s by and large pretty affluent by a
large interested in a better product
perfect as a kind of growing demographic
of huge huge value to a company like
Nestle so how do you retain that
consumer relationship and I think that
has to be through a brand so that from
my point of view is why I think Nestle
thought the blue bottle was worth 700
million dollars there you go just a
quick video for now there will be more
videos coming the basics of this place
are coming together going to be shooting
some more stuff very soon if you
disagree tell me in the comments below
I'm open to a conversation about this
sort of stuff it's something I think
about quite a lot so I want to talk more
thanks for watching and I'll see you
soon