Authentic Energy
Jacob Jaber describes how a remarkable focus on community and hospitality helped Philz Coffee grow from a small bodega in San Francisco to over 70 locations nationwide.
Episode Notes
Jacob Jaber describes Philz Coffee, the company he co-founded with his father, as a ‘people company serving coffee, not a coffee company serving people.’ This distinctively human approach is not just the engine driving the company’s remarkable growth; it’s also deeply reflected in Jacob’s perspectives on leadership, product experience, and brand strategy.
In his talk with Jesse, Jacob reflects on formative years with his father and describes how their efforts to build community through hospitality came to define the Philz experience for customers and employees. He breaks down the tenets of his own personal growth, including what he learned about leadership while serving as CEO during Philz’ expansion. Throughout, he lays out a blueprint for any leader looking to create and scale a more human business.
(2:18) Jacob describes the early days of working with his father
(5:41) On character, competence, and the mountains we choose to climb
(11:55) The makings of an authentic and energizing experience
(18:40) Why ‘good hospitality is often inconvenient to the giver’
(20:19) Leading humbly, but with a fresh outlook
(23:40) Bringing the Philz mantra of hustle and hospitality to new markets
Guest Bio
Jacob Jaber is Co-Founder and Chairman at Philz Coffee. Jacob and his father, Phil, built the business together. Jacob was most recently CEO of Philz successfully growing the business from one store and two employees to over 70 stores and 1,500 employees before transitioning to Chairman. Jacob is passionate about consumer experiences, community, people, product and business. In addition to Philz, Jacob is a renowned investor, advisor, and was listed on the Forbes 30 under 30 list in 2016.
Helpful Links
Peninsula Press: The Origin Story of Philz
+ Episode Transcript
[00:00:00] Jacob Jaber: Good is not always specific. Excellence is always specific. Whenever there's an excellent experience that a customer has, they always describe a person. One of the things I've learned about hospitality is really, really good hospitality is often inconvenient to the giver. If the giver ever looks at it as an inconvenience, they're probably not the best at hospitality. It's inherent. And I think that extends way beyond retail. Even if you have an online business, you should just go above and beyond for the customer.
[00:00:42] Jesse Purewal: From Qualtrics Studios, this is Breakthrough Builders, a series of conversations with people whose passions, perspectives, instincts and ideas fuel some of the world's most amazing products, brands and experiences.
Hey, builders, today's a special day because it gave me the privilege of connecting with somebody who helped build an absolutely incredible product experience that so many of us don't want to imagine living without that. That someone is Jacob Jaber, co-founder of Philz Coffee. Jacob's been in the coffee game most of his life. As the son of Palestinian immigrants, Jacob began working alongside his dad. That's the Phil in Philz Coffee, around the age of 10 in a small bodega that his dad got started in San Francisco's Mission District. Today, Philz is 70 locations and growing and for its fans, it's a ritual of outstanding coffee and authentic connection that's always worth the wait.
But what might be less appreciated is that Jacob himself is a deeply reflective person and a very empathetic leader who has grown Philz as a people company serving coffee, not a coffee company serving people. I wanted to talk to him about his values, his leadership style, his beliefs about community and hospitality, how he's used deep empathy to scale the business and brand and the importance of putting in the work to craft an incredibly human experience for Philz employees and customers. We had a far ranging conversation on those topics that I think you'll deeply appreciate. And we got started with Jacob reflecting on the experience of his early years and where he felt he really got his education.
[00:02:18] Jacob Jaber: Early on I was working with my dad and used to be at Bodega. The first Philz used to be a bodega. Very early on when I was like eight years old, nine years old, I would actually go and help my dad out at the store, ring people up at the register. I'd stand on top of milk crates because I couldn't reach it and I would stock inventory and I would talk to customers. I would learn so much. And I found that very enriching and exciting and it was kind of cool because I kind of felt like an adult when I would go and work and help out. Then when I went to school I just didn't really find most of what I was learning super interesting. I think part of the reason why my view developed the way it did is because I would work at a really young age helping my dad out as well as hearing the stories that he would share coming from a very different place.
But the other part of that is because I don't want to give myself too much credit. I had this philosophical point of view like five years old, that's not the case at all. I just didn't find it fun. I found it was hard for me to sit in the class and listen to something I wasn't super interested in. But education doesn't equal school. Education comes in many forms, school just happens to be one way and I think it's a great way for many people, but everybody's different. I developed that pretty early on and I think part of that is just spending a lot of time with my dad working.
[00:03:45] Jesse Purewal: And do you have to be persuasive with your parents or other members of your family or your community around that? On one hand I could imagine two people come to this country and it's ostensibly in search of better opportunity and sometimes that gets correlated with a certain type of education. It's like, "No, no, no Jacob, you got to see it through." Or was it honestly just so organically the right thing for you and your family and for your own definition of the American dream that it was like, "No, this is just like I'm following my heart and my mind here and it just makes sense not just to me but everyone around me?"
[00:04:16] Jacob Jaber: Well, I would say it made it a lot easier that if I wasn't spending time at school, I could spend time working with my dad. If that wasn't the case, maybe the story would be a little bit different. Although when I was 15 or 16 I worked at Abercrombie and Fitch for like six months. That was my first job outside of the family business. And I wanted to do that because working with your parents in the family business is a wonderful thing, but it's also stressful because you're at home with them all the time and you kind of wanted a place of independence. I did that and then I left that after six months. I said, "This is not so fun."
I went back and helped my dad out. But I would say if the family business wasn't there, I probably would still have the same view in terms of I'm not sure I love school so much, but I loved business, I loved people, I love experience, I love hospitality. And those were the values that we grew up in our household. It was all about hospitality, love, being kind, treating people well, making something out of nothing, being creative. I can't say what I would be doing if it wasn't for the family business, but I don't know that my views on school for me personally would change that dramatically. But I love learning, which is very different.
[00:05:33] Jesse Purewal: And as a lover of learning, what have you found to be some of the sources of information and inspiration that stick with you the most?
[00:05:41] Jacob Jaber: I've kind of categorized it into two main themes. One is character and one is competence. And I was very fortunate enough to stumble across some really good books that taught me a lot about character. There's a lot of mountains to climb, and when you fast forward in life, the worst thing is to be on top of the wrong mountain. You want to be on top of the right mountain. The more time you can really spend on thinking what's right for you, how do you develop your character and the way that you desire, it starts to put you on the better road to the mountain and then you can work on your competencies over time to climb that mountain. But I stumbled across a couple of books that helped me. One was The Laws Of Success and I think there's 16 principles, I could get the number wrong here, but something like that.
There's a fair amount of principles and it was written by Napoleon Hill and he also wrote the book, Think And Grow Rich, and don't be fooled by the title. There are a lot of good life principles in there, a lot of attitudinal stuff, positive mindset. Do more than what you're asked for. Just basic simple principles that are great. Then the other book that helped me develop my people skills a little bit was How To Win Friends And Influence People, which is a popular book by Dale Carnegie, and that helped me a ton too. Those two books really helped shape my character along with my upbringing and my family and I think it put me on a pathway to make sure I'm climbing up the right mountain.
The other piece is competencies, right? And what are competencies? They're skills. I want to be really good at archery. What do you do? You read about it, you talk to people about it, but you just have to do it. You have to go there and practice and you got to do it and you got to keep practicing. You got to keep practicing. I would say my competencies develop very naturally without much intention in the early days. But later on I got more directive with it. Just being in the family business, you learn so much just dealing with people. Starting with character I think is really, really important.
[00:07:48] Jesse Purewal: Jacob, whenever I've talked to an entrepreneur or someone who is entrepreneurial on this show, which I think most people qualify for one of those two things and I ask a question that's something like, "Oh, well when was the moment that you kind of made it? Or when was the moment you sort of felt like cruising altitude set in post turbulence?" They're always sort of like, "What do you mean? We got tomorrow to look after and then we got next week and then we got next month," no matter how successful they are. The two-part question off of this is number one, how do you study yourself mentally, cognitively, psychologically, around the idea that it's day one or it's early days and there's so much more to do but you got to stay focused on getting to tomorrow? Then the flip side of it is how do you think forward and reason back to make the kinds of decisions that will set you up for success in the short term and in the long term?
[00:08:46] Jacob Jaber: That's a really good question. I think fun is important. Your fuel gets depleted quite quickly. You can fake it for a while but your fuel gets depleted if you're not getting ... What in this world is giving you energy and what in this world is eating your energy? And you always want to try to spend time on things and with people who are giving you energy, not eating your energy and work is the same. If you're fortunate enough to find things and find people that give you energy, whenever you interact with it, you leave fulfilled, you leave with fuel in your tank and you keep going. I think that is the most important thing because if it doesn't feel good and you're having fun and you're enjoying it, it doesn't mean there's not going to be any pain or boring.
There's always going to be aspects of that. But overall it hits you in the nose without any kind of hesitancy. You can say, "This gives me energy. It feels right." That's a great thing. That's number one. Because if you don't have that, it's too hard to go on. You could come up with all the fancy dreams and vision statements you want. The other thing is the challenges of scaling, they don't end. They're always in motion. And what you got to be really good at as a leader or a founder or a CEO is just having good senses and the ability to see where you are in that rhythm, so you can correct. But when we hired our first executive team a while back, one of the frameworks we use is where are we going to be in the next three or so years? And let's hire people who can do that.
That works. That works pretty well. Then three years passes, you're closer to where you are, maybe better than where you want it to be, everything's good. Then you got to ask yourself, "All right, who here can take us to the next three years?" A lot can't, some can, it depends. And sometimes you got to bring in new folks so you just kind of keep going through that. This is very simplistic, but you just keep going through the three year exercise, recognizing that you will make mishires from a cultural standpoint. That is very dangerous if you don't course correct that quickly. Today we have a management team who without me having to do much like they can scale the business and we can get to over a hundred stores and 150 stores. We'll just have to keep going through that exercise as time goes on.
[00:11:07] Jesse Purewal: I really resonate with the answer you gave around finding that which gives you energy versus that which might deplete or take away energy. I think that's all too important, especially now where we're oftentimes working a little more remotely than we might like. We're oftentimes maybe distracted in ways that we hadn't been before. The advent of all this technology and to be able to be focused and to derive energy and then be able to go and amortize that energy in good ways is definitely the hallmark of an astute leader. What are the things about the experience that you have in your stores, both on the customer side and employee side that you just feel great about in terms of it's giving you the energy but you also know that when you take that energy you'll be able to take what you're learning and take feedback and take ideas and as a leader help scale some of those good ideas across the company?
[00:11:55] Jacob Jaber: Before Philz officially started, my dad did some research and he went on and he visited almost 1100 coffee shops. Crazy, a lot of coffee shops. And it took time and what he noticed was two major things. The first thing he noticed was that the employees were stressed, kind of don't seem super happy or engaged, pumping stuff out. "Hey, can I help you? What can I get you?" Very fast paced, stressful, not ... Didn't seem fully enjoyable for them. The other thing he noticed was the customer experience is very transactional. When the employees felt like that, that energy passed on to the customers. There's just, "What do you want here? Have a good day." And that's fine, that's not a bad thing, but it could be so much better. It could be so much better because when you're in retail and when you're in stores, it's a real experience, it's a physical experience, it's a lively experience.
There's humans connecting and interacting and you can really make an impact on someone's day. And it really starts with making sure your employees don't feel like employees, but like family in some ways, empowered and inspired to wanting to give a great experience to the customers. We obsessed like crazy in the early days and we still do on who we hire, how we hire, how we train, how we lead. Then on the customer side, my dad and I would jump up and down when somebody walked into the store. We weren't very busy in the earlies, we were just so excited. We got to know our customers, we got to know their kids, we got to know where they worked, we knew their kids' birthdays, we wrote it down on a notepad. We surprised them with a cupcake when they came in with their little one. We sung happy birthday to customers and turned off the music in the store and the whole store would sing along.
We did everything we can to make you feel like you're going to grandma's house. That was my experience. Whenever you go to grandma's house, there's no judgment, there's all love. She welcomes you with open arms, she'll feed you and then feed you more. In America, you can't go to a lot of places that have that authentic feeling of love and hospitality and welcoming and belonging. My dad and I did that because intrinsically that's who we are and we've developed very enthusiastic customers and that's how we grew. Obviously the coffee was good because the coffee wasn't good, people wouldn't come, but you know can really make a remarkable customer experience if you love it.
And that's what we did and that's what we figured out. And that's why we say we're not in the coffee business serving people, we're in the people business serving coffee. Because the hard part isn't the coffee. The very difficult part is how do you build a people engine that is just absolutely great and there's a lot of pieces to it, but if you can get that right, you can begin to grow and build this consistent experience that just delights people, make them feel like they're going to grandma's house.
[00:14:56] Jesse Purewal: How do you think about the employee experience as you look ahead? Let's say it's one of those three year planning cycles, knowing what we learned during the pandemic, which is that things can always be turned upside down in a moment's notice. How do you think about, let's call it a balance between flexibility, autonomy on one side and community and connection on the other If I'm signing up to work within your team, within your company? And how have you thought about refactoring the employee experience both within the stores where folks are interacting with the community day in and day out in a physical eye to eye, hand to hand way as well as folks that might sit behind a laptop or a mobile or in a warehouse?
[00:15:36] Jacob Jaber: The first thing you got to think about is what work do you need done? Obviously for us, you got to be in the stores and you got to make coffee and you got to help people out. In terms of people working remote, I guess it really just depends on the work and I think every organization will have its own taste and preferences. I think it is important to think about your workforce like a community supporting your mission that are together with you on solving this thing, whatever it may be. You might start thinking about how you work a little bit differently. If you're a really strong community, sometimes you want to get together, if there's a really important project, sometimes the community needs to meet up and hang out, have dinner, talk, brainstorm, do all that sorts of stuff. If you're a really strong community, you should be able to work really effectively remotely.
I don't think it's a one size fits all. I think we are blessed. This is a blessing that we have all of these options available. But I think it's the founder's job to define the culture that they want and it's the responsibility to nourish the community needed to fulfill that culture and that mission. Sometimes I'll see founders who can't decide what's right for that community and maybe the employees decide for them and sometimes that works and sometimes that doesn't. If it doesn't work, it's the founder's fault or the CEO's fault. If you think about your workforce like a community of people with this diverse set of talent, personalities, it's like how do you leverage that community to do the best work possible? People need to be inspired, people need to feel respected, people need to feel cared for. But people also need to be challenged.
Sometimes, and it feels in some ways this is there's too much softness. Whatever happened to hard work? Don't be afraid of hard work. We can't be entitled. We have to work. One of the great quote I love is from Charlie Munger, who's Warren Buffet's partner and he says, and I'm not saying this exactly right, but something along the lines of deserve what you want, you should deserve it. If you want something, you should deserve it. I believe in respect, I believe in treating people like humans first, employees second, I believe in merit. The best ideas need to win. You want to avoid as much politics as possible. You need hierarchy. Because as you're scaling you need structure. I think you just got to treat people well and not like an employee or a number. And it doesn't matter what their role or their title is. And when you treat people well and you sincerely mean it, they feel it and they're going to enjoy it and they're going to do better.
[00:18:10] Jesse Purewal: What are the kinds of words that if you are overhearing to customers talk about their experience at Philz or you're in a conversation with a customer or you're reading reviews that just delight you to hear and you're like, "Ah, we nailed it because this is the sentiment I'm hearing, these are the things I'm hearing?" How do you describe what good looks like or sounds like or feels like when it hits your senses?
[00:18:36] Jacob Jaber: Good is not always specific. Excellence is always specific. Whenever there's an excellent experience that a customer has, they always describe a person. "Wow, John was so delightful, I was running short on change and he covered me and he made my day and he walked my coffee to the car," whatever it may be. An excellent customer experience usually has some good level of specificity. And in our business we love that because we can go and we can celebrate that moment and share the story with others and try to inspire more of those behaviors. One of the things I've learned about hospitality is really, really good hospitality is often inconvenient to the giver. If the giver ever looks at it as an inconvenience, they're probably not the best at hospitality. It's inherent.
And I think that extends way beyond retail. Even if you have an online business, you should just go above and beyond for the customer, do everything you can and make it even if they're wrong, you just do it anyways because you start getting to the habit of the rhythm of, "This is our MO. This is how we do it." I have probably a thousand customers' numbers in my phone and I talk to them a lot because I've built so many relationships and I get text messages all the time like, "Hey, this person did XYZ for me, this was amazing." That's what we look for and when it's not good, we resolve it. We got to resolve it with as much urgency as we can.
[00:19:57] Jesse Purewal: One of the things I've heard you say, Jacob, in reference to some of those earlier years is that everything was hard and easy at the same time. I'd love if you could talk about what you meant by that as well as the extent to which that becomes more or less true over time as the business scales and as new opportunities and challenges present themselves.
[00:20:19] Jacob Jaber: I had no experience going into the business in terms of growing this coffee company and it was a blessing and a curse at the same time. It was hard because you have blind spots, you don't know what you don't know. If you are aware that you have blind spots, even if you don't know what they are, that's great. Now you just have to be very conscious and humble and when your gut's scratching you or you're unsure, you go try to find the right help. The great part about it is when you don't have experience and in some ways you're ignorant, sometimes that can work in your favor because you start to think about things from a first principle standpoint and really think about why is it done this way? I'll give you a small example.
We were starting out, we hired our first HR person. Instead of one or two, we had to start hiring dozens of folks at a time and we needed kind of an employee application. And our HR person came and created one and it was like 12 pages or 10 pages. And I was just like, "Well. what the hell is this? Why is it this long?" It wasn't his fault, but it wasn't a great answer. That's just what really matters? What's the purpose of an application? Why do we need it and what do we use it for? And we ended up with a couple questions and a one pager. It's just things like that. Well, why? Why do you need to do it that way? How do we do it? And over time, what you learn is that sometimes it makes sense to reinvent and sometimes it makes sense to copy, but do it in your own way.
You have to, as you get larger and larger, you have to decide, are you going to be a fast follower, are you going to be a leader? And you have to be able to distinguish what are the right pieces and activities of the business that are important enough where you need to lead and design from within versus follow. If customer experience is really, really important to you, a lot of activities that touch the customer need to be designed from within. If supply chain is not the most important thing to you, just follow, follow the best. Maybe there's a couple things you do uniquely, but you follow the best. Yeah, I think you got to just think about it like that. It's like what's truly important? And it's usually only one or two things. What's truly important? That's the stuff you got to really invest in.
[00:22:42] Jesse Purewal: If you're a people company that just happens to be in the business of serving coffee, you're probably going to want to lead out on and shake the trees a little bit on some of those HRIS processes, right? Versus trying to refactor some best practices from Six Sigma, right? I could totally see that. With the learning orientation and the learning posture that you have, how do you set the organization up for learning in particular as you go into new markets, new urban markets, new suburban markets, places that have all kinds of different makeups in terms of the local industries, the types of people that live in certain cities? Once you hit 70, homogeneity is just no longer the coin of the realm. You can't just take city A and apply it to city D. How do you learn from the time that you spend in these new markets and port some of those learnings back into the system? So that sort of scale feels like it's built on empathy within the business.
[00:23:38] Jacob Jaber: I think distance exaggerates differences. In general, people are more alike than they are different. That's important. The good news is a lot of people drink coffee, so that's good. That helps. That makes it a little easier. In terms of us growing up in San Francisco market, California, now we're in LA, we're across all the California, it kind of feels like the home market, right? We're very high levels of brand awareness. When we started entering new markets, we sort of had to do a lot of the same things. We had to really take our time to understand the local market so we could find the right location. Because location matters a lot. We had to take the same careful approach in hiring. And in many ways the new market experience usually performs better than the home market if you do it right. The reason is because you have a lot of battle scars and learnings from your home market, what worked, what didn't work.
You're able to enter the new market much more sharply from all the activities that don't necessarily touch the unique local aspects of that community that you're opening and that you still have to learn about. But making sure we hire the right people, making sure we invest in training. For an example, we would bring all the managers of a new store in a new market, we'd fly them down to our home market and they'd spend time with us. They'd spend a few weeks with us, they'd hang out, they'd go visit stores, the original store.
I'd meet with them, I'd talk with them, we train. We just put a lot of time and energy into management and we just applied the same hiring approach. And that scales really nicely for us. It's hard, but it scales really nicely. Now people's tastes and preferences are in a different place when you're in a new market. A lot of it's around education and hospitality and outreach even becomes more important because you got to build awareness, you got to let people know what you're doing, why you do it, and just build it. From day one in the early days and we were slow, we had to work hard. We had to bring that same mantra of hustle and hospitality to the new stores and the new markets.
[00:25:43] Jesse Purewal: There is sort of a wonderful slowing down of life for a second that if you say, "I'm going to go to a place where the craft is the number one thing and the attention to detail and the customization for me" because we don't get a lot of in this world, right? If you think about the rest of the experiences you have, but that's worth waiting for. If you can have a kindred spirit on the other side of that table in that conversation, who agrees with you, then you have a multiplier effect. Because then you're enjoying that experience maybe in a more modern context than something you or your dad ever saw in the late '90s or early 2000s. But that in some ways is actually a wonderful confirmation of what we're looking for as a species, which is more authentic connection and belonging and just a chance to slow down the pace a little bit.
[00:26:32] Jacob Jaber: Yeah. These days we have to make a very conscious effort. It's not natural. What's natural to us these days is just looking at the screens and seeing what's going on. And I think you always feel better after you connect with someone in person. And talking with a stranger is really great too. Not someone you know, but having a serendipitous, just random conversation with a stranger you come across with is actually very good. My dad, whenever he would go to a store and he would see people working on laptops, we have these community tables, they'd be sitting next ... They're like sitting seven inches away, six inches away, and they don't even look at each other.
He'd go in and he, he'd look at them and say, "Hey, I'm Phil from Philz Coffee. You guys know each other? Why are you sitting like a statue, like a plant? Talk to one another." It'd be very uncomfortable, but very exciting at the same time. They'd start meeting, they'd talk. He'd go and try to just build these connections with the customers. And people have gotten married over that honestly. People have built companies, people have met friends. Just talk to the person next to you. Yeah, you never know. You never know who you come across.
[00:27:37] Jesse Purewal: Let me wrap up with one final question, Jacob, which would just be what's got you most excited, most fired up as you look ahead into 2023 for the business and the brand?
[00:27:47] Jacob Jaber: Bringing Philz to more communities. We have a couple new stores opening this year, and then we're going to open some more next year. Whenever we open a new community and make Philz more accessible to more people, that's always really exciting, and making sure the experience is even better. I think growth is a big thing. I think product is a great thing. How do we come and how do we develop more products for our customers is really exciting. But really just making sure we're doing things right. I always tell people we don't want to just be bigger, we want to be better and bigger. We want to keep getting better and bigger. If we can keep creating great customer experiences and product, that's what we care about the most. Then growth will come along with that.
[00:28:33] Jesse Purewal: I love it. Well, as you said a bit earlier, good is not always specific, but excellence is always highly specific. I think it was an excellent conversation. You gave us a lot of specifics for our listeners here to think about and chew on. Thank you for the time, the energy and the specificity and everything you share today, Jacob. It was great to have you on the show.
[00:28:52] Jacob Jaber: Yeah, thanks for having me. I really appreciate it.
[00:28:54] Jesse Purewal: Thanks for listening to Breakthrough Builders. If you're enjoying the show, please subscribe and leave a rating and a review and tell a friend. Breakthrough Builders is a Qualtrics Studio's original, hosted an executive produced by me, Jesse Purewal. An awesome team of people puts this show together, including our show writer, Todd Bagnull, and our head of social media, Chelsea Hunersen. From StudioPod Media in San Francisco, our show coordinator is Nicole Genova. Editing and music are by producer Sterling Shore and executive producer Katie Sunku Wood, with sound engineering by Ryan Crowther. At Vayner Talent in New York, Samantha Heapps, Hannah Park and Yvonna Lynn provide publicity and promotional support. The show's designers are Baron Santiago and Vansuka Chindavijak. Our website is by Gregory Heydon, photography by Christy Hemm Klok. Special thanks to the entire Breakthrough Builders crew at Qualtrics, including Ali Rohani, Ben Hawken, John Johnson, and Kylan Lundeen.