Skip to content
Subscriber Only

Blue Bottle Coffee and the Next Wave of Artisanal Coffee Shops

Blue Bottle Coffee and the next wave of ultra-finicky java joints
Blue Bottle Coffee and the Next Wave of Artisanal Coffee Shops
Photo illustration by Justin Metz; Latte: Farhad J Parsa/Getty Images

This is going to be pleasant. We are going to talk about philosophy and classical music. We are going to appreciate things. I know this before I even see Blue Bottle Coffee founder James Freeman approach in his cardigan, tie, and glasses, a neat puff of gray hair bobbing professorially, looking like the guy PBS producers would have sent in to calm Mr. Rogers down. I anticipated the civility simply by looking around his new cafe in Oakland, Calif. Everything is tidy. Calm. Simple. Exact. You cannot order your espresso to go, choose a beverage size, or get your bag of coffee beans pre-ground. Oh no. This is not because Freeman wants to inform you of his superior ways but because he can’t bear to be responsible for an imperfect experience. Because he so deeply cares.

Which makes Blue Bottle’s expansion difficult. The Oakland-based, 13-store coffee chain has no problem with financing. Its biggest tech play may be using iPads to ring up customers’ orders, yet it has proven irresistible to Silicon Valley investors, including Google Ventures, True Ventures, Instagram co-founder Kevin Systrom, Twitter co-founder Evan Williams, Flickr co-founder Caterina Fake, WordPress founder Matt Mullenweg, and former Google executive Chris Sacca. Blue Bottle got $19.7 million in venture funding at the end of 2012; it received an additional $25.75 million in January (led by Morgan Stanley) before Freeman figured out how to use the first round. Even after earmarking $5 million to expand to Japan, plus more to draw up plans for a roastery and stores in Los Angeles and buy out the stake Kohlberg & Co. purchased in 2008, Blue Bottle was still sitting on $29 million in March—more than the company’s annual revenue. It spent some of that money in April, buying L.A.’s Handsome Coffee Roasters and the coffee subscription service Tonx, but it’s still spending the money slowly.