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  • today.

  • I want to talk about why Blue bottle was worth $700 million to nestle.

  • Never get answer in just one word that would would be Amazon.

  • I should probably explain.

  • Amazon owns product search right when you look for something online, if you're buying it, you probably gotta Tamsin 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 service is 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's are cheap, have this incredible customer experience.

  • 64% of U.

  • S households have Amazon prime, and they're picking up about Ford every $10 spent online.

  • This terrifies the bigger companies because right now, if I go to amazon dot 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 Amazons recommendation, which happens to be especially parts, a big step for them to start selling on the platform now, at some point, any point really?

  • I'm losing Consejo.

  • Hey, we know loads of people want to buy pods.

  • You 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 gonna meet Amazons phone 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 part over the Nespresso pods?

  • Well, the answer's brand.

  • And this is where we come back to Blue bottle.

  • Now, I should say I have no inside knowledge here.

  • I met James Freeman once, Emmett, Brian me and a couple of times haven't met anyone from Leslie.

  • Blue Bottle is a kind of fascinating brand.

  • They paid $700 million for it.

  • They paid the equivalent off about $14 million 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.

  • Blue bottles 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 A B and B on.

  • Like most people, I answered the questions that told the host what I did for a living.

  • 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 U.

  • S specialty coffee darlings the same way that, say, Intelligence Year or Stumptown counterculture were they kind of sat off to the side.

  • They didn't play well with other Children in the early days that that has changed a little bit.

  • Now there tone their language.

  • This style was a little bit different, and in some ways it was kind of rejected by the 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 I underestimated in value by the rest of specialty coffee.

  • Blue Bottle had a different style of communication.

  • They talked about buying a $20,000 halogen siphoned brewing setup.

  • Not especially that just seemed insane, like 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 can have evoked that kind of stereotypical Japanese obsession with Kraft.

  • They were speaking a language 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 pronounce.

  • We were speaking just a whole other language.

  • Blue bottle 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 talks, his subscription or perfect grind again looking at ways to sort of break down the customer barrier and being more approachable.

  • That brand that consumer attachment people have, and people I met who were just normal people that drank coffee, a 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 hits the demographic going there.

  • It's people from their twenties through the fifties, 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 brand, so that, from my point of view, is why I think Nestle.

  • I thought the blue bottle was worth 700 1,000,000 dollars.

  • There you go.

  • Just a quick video.

  • For now, there will be more videos coming.

  • The basics of this place coming together gonna 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 on.

  • I'll see you soon.

today.

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