YC Backs Portable Coffee Stand Called Wheelys (YC S15) to Take on Starbucks
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I hope they are laser focused on their demographic and who their customer is rather than try to be the universal solution to coffee. A challenge will be how do you deliver the same exciting experience on a coffee stand without having the focus becoming operations and churning out coffee as quickly as possible. Most people can probably grab coffee at work for free if they wanted to but they choose to go to coffee shops for the "cool factor", and to feel like they are taking a break from their normal routine. If the person(s) running the stand need to be super friendly, engaging, fun, etc. if this is going to really take off, and experience shows us that is no leap of faith as you operationalize and expand locations so quickly.
On the other side, starbucks don't need that type of advertising now and a small\upcoming shop can't afford that kind of advertising.
This idea is also business specific. Can restaurants afford whole day sitting customers? No, I think
"You walk into a retail store, whatever it is, and if there's a sense of entertainment and excitement and electricity, you wanna be there."
“We’re not in the coffee business — we’re in the experience business”
If you consider that the largest cost is probably rent, then people sitting around probably add only a tiny amount more. It's only an issue if the shop happens to be be full and there are other customers who wanted a seat.
That person sitting there is probably doing Starbucks a favour. People are more inclined to go somewhere where there are other people.
As comments further down noted, there are two types of coffee customers: (1) get it and leave & (2) spend time in a coffee shop.
Where (1) breaks down is basically if you don't have access to a Starbucks on a commute. Which to me is a particular type of customer: lives in a city core, bikes or walks to work / uses mass transit. These are the type of customers Starbucks can't really afford to chase. They're designed as a stop when someone is commuting in from the suburbs via car.
Deliver a high-quality, dependable (key!!), possibly cheaper product right in front of a rail or transit stop? Bob's your uncle.
Good luck!
PS: Step 2: ? Step 3: (Get bought by Starbucks and profit!)
First, congratulations on your launch! I hope to try Wheelys out soon!
A bit of well-intentioned feedback regarding your positioning strategy: as I am often the customer you mention who sits at Starbucks (or other coffee shops) all day, I can assure you that the owners don't perceive me as a cost even though I don't buy much (I often speak with them and ask about life as a small business owner). In fact, at locations I often visit, it's very common (say 1 in 3 visits) for the managers to give me a tiny freebie. Maybe I'm just a likable guy, but I don't think I'm so charismatic as to completely warp their perception of me being a drain or a benefit.
I think one important point is that I make sure to buy something any time I'm taking up space and the place is crowded (say 70+% fill rate on seating space). But that's at most 2 hours per day (the morning pre-work rush and the lunch rush). In those peak hours I would agree that I am taking up valuable real estate and should contribute something to their upkeep.
Anyway, congratulations again and I hope to see one of your sites soon!
That is why the 'owner' doesn't care.
That doesn't change the fact, raised in a sibling comment, that given the fixed cost of rent, having someone in the shop during off-peak hours is in a sense "advertising" the desirability of the place. Trickle revenue + "advertising" using up slack capacity seems like a clear win for them, given the pre-existing real estate investment.
Interesting. Then how come there are so many non-corporate Starbucks outlets? The ones that don't get the same new products and don't take their gift cards -- like airports, for example.
Agreeing with you, I'm pretty sure there's no way for an individual to open their own Starbucks store; the licensed stores pretty much have to exist within a larger organization where it would be impossible to open a store independently (in the local cases, that'd be due to the food service unions).
In Canada at least, there's also instances where Starbucks has worked out some kind of cross-renting deal. Chapters/Indigo Books is a prime example. Every Indigo I've gone into has had a Starbucks, but those are staffed by Starbucks employees and not Indigo employees.
Presumably Starbucks has calculated this. There's new one near me on 53 and 3rd that has plenty of sitting space, and the food is arranged differently (more like Pret I guess). And there's a sign posted outside that anyone can come and sit without having to make a purchase. The coffee shop is, for many people - especially those starting a company or working on their own - their office.
The only reason I drink Starbuck's overpriced bitter coffee is because they have been kind to Anyone who walks through their door.
They have allowed anyone(including the homeles) to use their restrooms. Although I think that's starting to change? Watch it Starbucks--some of us notice those Managers who take their job too seriously, like its their bathroom.
I go to Starbucks because of the welcoming environment--period. I don't like anything they serve. I could go to the coffee shop across the street(the Coffee Something), but I remember the time they asked my friend to leave. (He looked homeless, but was worth a few million dollars.)
I will never forget that day, "You get outa here, you don't spend money!" He was actually one of their better customers, but this particular day, the owner was filling in for a employee. He never went back. My friend easily spent $4/ day, and he was there 4-5 days a week. RIP--RBB.
... I don't think this is the success story you want to paint it as. Who cares if he's a millionaire if he's only purchasing $4/day? If a retail shop is reliant on a customer worth a mere $4/day, then it has serious problems.
And if his presence discourages other patrons or consumes space that other paying patrons could have occupied, it's a drag on business. Sure, having an empty shop is a problem because it makes you look unpopular, but conversely, having a full shop of people who aren't purchasing anything is equally bad, because it blocks people who do want to purchase.
Why not back this company to, you know, sell good coffee and be a success on its own terms?
Actually we go for the coffee. But there is something to be said for the store experience of Starbucks, it is high-class and delightful, compared to something like Dunkin Donuts.
there is better and cheaper coffee elsewhere, even McDonalds
People who can't taste the difference between McDonalds' coffee and Starbucks, are not in Starbucks demographic. For the price, you can't get a better cup of coffee, unless you're willing to roast the beans yourself.
With that said, the key issues with Starbucks, are long lines, high prices and the wi-fi squatters. I seriously doubt that a cart based coffee stand can address all of these issues.
I, however, do go to Starbucks to be one of your problems: I'm a wi-fi squatter. I'll go in, get an Americano and sometimes a breakfast sandwich, and sit and work until lunch time. If it gets busy and there's no tables available, I'll leave early.
I get the impression that the organization doesn't see us as a problem though. The Starbucks closest to my house wired in extra outlets so that there's a row of tables with 2 outlets per table. I'm on a first-name basis with all of the staff, and we have deeper conversations beyond "how's your day? good. good."
There is lots of better coffee nearby in my town, but I go there pretty much 100% for the welcoming atmosphere. There's a place that's across the street from a Starbucks with little signs on the tables that say "If you're staying for longer than 45 minutes, please make another purchase." I don't go there very often; we obviously don't have compatible desires from the exchange.
The 'McCafe' or whatever they call it espresso-style drinks are pretty poor.
However, most McDonald's offer free wi-fi that's usually faster than Starbucks, usually don't have many people in them, and don't mind you sitting around for a couple hours working on stuff. Bonus, they have a better menu of stuff to snack on than Starbucks.
They also source their beans from Gaviña, a well considered supplier, who I believe does the roasting as well.
That said, I hate Starbucks coffee. I'm sure their fancy, sugary drinks are better (and the reason people prefer them to another coffee place) but as far as just black coffee goes, Starbucks is terrible.
Dunkin Donuts is better (particularly the dark roast) and I also enjoy the new McDonald's coffee (although it seems to depend on location, some McDonald's seem to be better than others).
This is a sweeping generalization. Coffee, like food, is a vastly subjective experience.
>> Most people can probably grab coffee at work for free if they wanted to but they choose to go to coffee shops for the "cool factor", and to feel like they are taking a break from their normal routine.
Who are these 'most people' are why are we making assumptions about where the get their coffee from without a research or a survey citation?
I'm sorry, I don't intend to be mean spirited here, just that I've been increasingly seeing seeing comments here that appear well thought out and well written on the surface but are peppered with logical and factual fallacies.
So how easy is it to ride one of those bikes? Do you have to be particularly strong, and what if you have say 50km to ride in a day to visit all the consuming destinations?
I think this could be popular in Australia. We hate Starbucks - it flopped in Australia and there are only a handful of them open in tourist hotspots. Aussies tend to be snobby about coffee and know the name and children's names of their barista. You may do well in AU if the coffee is top-notch. Although the market size is quite small here compared to the US of course.
And, presumably for power, space, and desire-to-be-low-carbon-footprint requirements, that's precisely the style Wheely's cannot provide. I'm doubtful whether this would be a viable business in Australia.
The coffee is top notch, and will hopefully suit the australians taste as well.
We can certainly support more coffee businesses, but you're not going to become huge doing it.
There are 1 or 2 coffee shops on every street near where I work in an otherwise very industrial area. They put a fair amount of effort into making themselves unique in style and differentiating themselves.
If that's the case, there's no honest way you can claim it's "powered only by the sun and your own body".
I came across Wheelys online a few weeks ago, and it literally spoke to me, because it combines so many great things: (a) bicycles (b) tech (c) environment (d) coffee
Anyway, how did you connect with YC? What do you plan to do with the funds you've raised?
* Would you consider your model a true franchise?
* Does a Wheelys 3 make drip coffee and espresso drinks?
* As you expand across the US and gain brand recognition, will there be a store locator app, gift cards, loyalty programs, etc.? (I live in a California tourist beach destination)
I am an American, home of the Yankees, the cronut, and truck balls.
* Does a Wheelys 3 make drip coffee and espresso drinks? Yes
* As you expand across the US and gain brand recognition, will there be a store locator app, gift cards, loyalty programs, etc.? (I live in a California tourist beach destination) Yes
Based on what I've read so far, it sounds like if I purchase a Wheely's cart, I almost a franchisee. What's different between Wheely's and the typical franchise model? Would I have to pay royalties for this? Also, would I have to source my own locations to place my cart and deal with the regulation within my local city?
I'll see if I can convince folks I know to bring this to Canada :)
Disclaimer: I'm the co-founder of a startup who's helping franchises find the perfect location for their store. We have done some analysis work on coffee store locations in Canada and the United States.
If so, have you filed franchise disclosure documents as required by law in the United States?
Last time I looked into growing coffee the summary was pretty much "yeah, right", so hearing that it's possible on a small scale is very exciting.
Wait what? Hasn't this common misconception been debunked, or at least to be shown to be very insignificant when controlling for obvious variables?
http://www.washingtonpost.com/blogs/fact-checker/wp/2014/01/...
http://www.consad.com/content/reports/Gender%20Wage%20Gap%20...
http://www.aauw.org/files/2013/02/graduating-to-a-pay-gap-th...
http://www.ne.su.se/polopoly_fs/1.99257.1346412310!/menu/sta...
https://www.med.upenn.edu/gastro/documents/Whogoestothebarga...
http://www.forbes.com/sites/realspin/2014/02/24/childless-wo...
The variable CONSAD is controlling for, at least from my reading, is "people who have interrupted their careers by temporarily withdrawing from the labor force or switching from full-time to part-time work" -- mostly women who take maternity leave or part-time jobs to raise children. The amount of money those women would make if they hadn't interrupted their career is an interesting data point to determine, but I would argue that by using that "adjusted" amount, CONSAD has moved the goalposts, because that's not the median gender wage gap as actually experienced. The various studies linked to by the WaPo and the AAUW study all seem to be in general agreement around the 14-19 cents range. Whether that's "significant" is subjective, I suppose, but it doesn't strike me as a small amount.
Are we supposed to just unfairly give people the same salaries when one worked part time instead for 4 years?
If the starting point is recognizing that people have kids and it takes time to care for them, and both parents have that right and obligation.
From there, one could devise policies that encourage BOTH men and women to take parental leave and invest in high-quality childcare for when that parental leave is over.
Obligation? yes, right? not really
We're supposed to fairly reward two people the same for doing the same job. If you have more experience then you should have more responsibilities - that is what should increase your wage, not simply "time served".
Are we supposed to just unfairly give people the same salaries when one worked part time instead for 4 years?
Let's dig into that a bit.
Suppose Bob and Agatha are both working full-time at the same company as, for the sake of example, sales engineers, and they're both making $100K. Agatha goes on maternity leave, and afterward the company agrees to keep her on as a part-time sales engineer, working 25 hours a week at $62.5K.
If, after four years, she and Bob both apply for full-time senior sales positions, is it "unfair" for Agatha to be offered the same salary as Bob?
I feel like the better option would have been to split the difference with a female co-worker?
Good luck!
What's the source of the butane? I can't seem to find more info on their site.
Also allowing people to charge their phones is a given really but that's got to be super fast charging otherwise it could get awkward... XD
There are several variations of these running around Australian cities, however they still don't compete directly with cafes, as they provide a different service.
Nope, pretty sure it's coffee.
I spend a lot of time at my local coffee shop. Been going there ten years now, know the owners pretty well. I see way, way more people come in, get their coffee, and leave, then I ever see sitting down with their drinks to enjoy the ambiance.
Having a bunch of regulars does add character to the place, but the volume of business they do directly likely doesn't even make a dent on the top line. On the other hand, I've seen plenty of intown coffee shops with maybe three tables do brisk business.
The real problem with the business model is, unless you can figure out how to give each of these stands a big enough parking lot where you can serve an area larger than your customers can walk to, you're stuck in downtown. Office parks big enough to have their own cafe generally already do, they're unlikely to take you rolling in to compete with them lightly. It's a niche market, which is probably why nobody's tried a franchise model already.
The stated goal of Starbucks is to provide the 'third space':
He had a vision to bring the Italian coffeehouse tradition back to the United States. A place for conversation and a sense of community. A third place between work and home.
The coffee is a mechanism for achieving that ( by making money ).
I don't use Starbucks because I don't like their coffee, but I understand what they're doing.
This is a techcrunch PR launch, and you know what they meant.
The Philz truck in San Francisco seems to handle this alright, but they have 3 people making the coffee and 1 person taking payments, and they're charging 4+ dollars per cup for a known/cult brand.
I want to know whether there are any in Seattle. It would be nice if there was a map of active Wheelys on their website.
>If buyers operate under the Wheelys brand, they need to ascribe to the product line, which is all fair-trade and organic.
This is a typical franchisee arrangement to ensure quality uniformity across the franchise [1]. Not following this would be a breach of contract with potentially grave consequences.
[1] This can seriously hamper a franchisee's ability to make profit / be creative, as is the case for Family Mart convenience store franchisees in Japan.
Example: My revenues are strong, yet my orders from Wheelys are suspiciously low relative to what sort of inventory you'd expect me to be turning. Red flag.
What I'm not clear on are the coffee/food costs and margins. The FAQ says you can make $250-600/day. I assume that's gross. It doesn't say what it costs to order the beans, etc. Hopefully the costs are exploitative.
Does anyone know what standard margins for coffee/casual food is?
I am quite interested in how the standardization will work. Maybe it is just like the "Chinese"-food places, where every menu is almost the same.
Casual food is usually marked up at 4-5x.
(Managed supply/sourcing/pricing for a chain)
Say 8 hours/day and you're looking at $25/hour, which I guess is pretty far above minimum wage, but is someone for whom $25/hour is an upgrade in a place to spend the $3k to buy in?
And if you're operating in a slower area you're not that far from making minimum wage. If I wanted to operate a fleet of them I don't see how I come out ahead after salary, overhead (increased loss from the minimum wage employee) and taxes. Even at $175/day your looking at $21/hour income after COGS, pay someone $12/hour plus taxes and overhead and you're profiting maybe $3/hour/bike.
I guess once you get to 30 or so you're starting to make real money. But at that point you have to wonder about saturation of the good spots.
One of my favourite cafes is run out of a re-purposed electrical closet in the CBD, with a few nearby tables. They have good coffee. You don't need much space.
Wheelys seems like a pretty reasonable idea. Good stuff!
[1] http://munchies.vice.com/articles/this-is-why-australians-ha...
I'd be really interested to see one of these in Toronto
Hardly. Many cities (essentially every city in the Bay Area, for example) either outright ban peddling on public property or thoroughfares or requires a license for it.
I actually found a reddit thread about it: https://www.reddit.com/r/bayarea/comments/1wcg6f/caltrain_tr... .
It baffles me sometimes that to many readers of Hacker News are so US centric.
If it wasn't for that, i'd be all over this. $3000 for the basic bike is a steal, and I could totally see me doing this for a couple of days a week over the warmer months.
But anyways, seems like an interesting idea and concept. But looks like no free Wi-Fi or a place to sit, which I know some people love that about Starbucks.
I was thinking of something like a two sided /\ sign on top would increase the amount of signage, and increase the height of the signage. A large sign on top that reads "COFFEE" or similar and can be read from a block away might be advantageous. And if need be, it could fold __ flat when not in use (or when local signage laws prohibit it).
Friend of mine bought an old caravan for under $1k and was selling homemade lemonade at street events for a while. Was making hundreds each night, then renting the caravan out for private functions on weekends.
Someone entrepreneurial could buy a few of these and set some keen uni kids to work running them for profit share.
This is shown to be a hit in European cities, where just based on a guess espresso and coffee is more popular. The majority of Starbucks customers are probably buying mixed specialty drinks.
Watching a Sbux barista make just a few drink, they probably go through a gallon jug of milk in minutes at peak times. How much fresh chilled milk can this cart hold? Not saying there's no market, but taking on Sbux seems a bit mis-targeted.
Woah! This is a pretty hardcore version of #4 here: http://www.paulgraham.com/founders.html
Does this startup rely on some technological development that meant it wasn't posible before? eg in making the whole thing small enough; "pour over" coffee (whatever that is); eff/cheapness of solar panels etc?
NB not necessarily a selling point itself, but something that enables one.
Lots of effort in sales but what about the end product, coffee? In my home town, Melbourne, where the locals are raised on expresso, Starbucks was run out of town. [0]
Wheely appears to be a trojan brand for expanding other products as well as coffee at the expense of existing franchises in fixed locations. An Uber for fast food products.
[0] http://www.abc.net.au/news/2008-08-07/32188, http://munchies.vice.com/articles/this-is-why-australians-ha...
Also, and unfortunately in my opinion, Starbucks survives in Melbourne. I think it lives because it stays open longer than most places, giving those who enjoy a late night coffee somewhere to go.
I'm not sure if this is the case currently, and it seems you're right. They want to push their own brand and eventually consolidate the different types of food cart businesses (hot dogs, pretzels are too easy but perhaps they steal some ideas from food trucks too).
Hrmmmmmmmmmm
If you're in a dense urban center like NYC there are already countless coffee stands that already do this (most have doughnuts and a wide range of pastries). But it's a really hard business to be parked in the street.
Also that sort of business can't really work in suburbia unless you use the ice cream truck model, which is also very tough. And unlike a food truck you won't do well in bad weather (do you want to drive on of these in the winter in Maine or the summer in Texas?).
The idea that this competes with Starbucks also misses the point that people go to Starbucks for a seat and to recharge their phone more maybe even more so than the coffee.
Of course this can be a successful business, but you're dead on about magnitude.
But you tell me: Do you see this company as game changer that can scale to be something more?
I wonder if most people realize that the "innovation" involved has to do with franchising and finances, rather than the fact that it's a cart that sells coffee.
Have these been used inside of enclosed shopping centers/malls? Is the kiosk size cost many of those charge worthwhile to a business such as this? How about at airports? How are small setups like this treated by cities with regards how some do not seem to care for food trucks?
Starbucks is popular because of other factors. For example, not shooshing students that go there to use their wifi (which is usually good)
Maybe the corporate aspect of it even improves this aspect. Nobody will give a f if I'm there (as opposed to a mom and pop shop)
Also the "you know what to expect" factor of chain places also plays a huge part. And as McD is probably beginning to notice, if I go there a couple of times and I have a bad experience, I'm not ever coming back.
Never the less, I think Wheelys can take on Coffee2Go companies without problems.
YC also backs the bike startups ViaCycle and Vanhawks, and Wheelys represents the use of bicycles in business. In a future with safe autonomous cars, does that make it safer for a bike culture to really take off? And YC can be at the center of a drastic shift to the next evolutional step of the bicycle.
I'd be fascinated to learn more about the tech behind this. Last time I looked into growing your own coffee, the summary was "don't".
Given a maximum yield of 30000 lbs/(acre*year) [1], and with an area of < 16 square feet, we get < 1 pound of coffee a year.
Maybe you could grow something else. Flowers, strawberries, herbs?
Don't get me wrong, I love seeing folks try to compete against entrenched businesses, but there isn't really any sort of major proprietary "moat" here.
While I generally agree that it's harder for big companies to innovate I think the key is to segregate the company into smaller units (Gladwell's "magic number 150"). There's plenty of innovation from huge companies that don't depend on takeovers. Bell Labs is probably the most common example.
I also agree about the "segregate the company" idea; for example Amazon silos its innovation units into separate companies with separate campuses to compensate for the natural organizational dynamic.
But I do not know about the history of Bell Labs (except its prestigious accomplishments) and what enabled it to be so effective. Perhaps there is a telling history book?
grow your own coffee beans on the cart? yea right, that cart will grow enough beans in a whole year to make a days worth of coffee, if you are lucky.
too many, new-agey buzz words for me in that article, along with a LOT of misleading info... building out a small cafe doesnt even cost 100k, let alone 800. and starbucks doesnt pay minimum wage, they offer college assistance and health care. so your own cart doesnt really compare straight across for an hourly wage comparison to be fair.
Here's what happened when Tom grew his own and had a celebrity cupper and Sweet Maria herself try it:
but as i said in my original post, good luck to them.
I don't go to Starbucks for the coffee, I go there to sit down and code.
Still think it's an amazing idea, because from what I gather, they give you all the tools to sell good coffee cheaply so you really have few competitors for that in countries like Sweden.
I take the train to work in Boston. On my way from the station to my office I pass 5 starbucks. Everyone has a line out the door. Those customers that come in once (or more) a day, grab a coffee, and then go are the key to their success.
But yeah, you're absolutely right, might not be the main source of customers as more leave than stay with their coffee :)