The Secret Sauce of 3 Beloved Local Businesses
Quite literally at Land’s End, San Francisco is a place that seems to have always attracted folks looking to experiment and create new things, a place notorious for having a population of people originally from somewhere else who’ve made the City their home. These days, the many tech entrepreneurs in the City are usually the face of that creative spirit. Yet, so much of what has made San Francisco, and the larger Bay Area, feel like home to entrepreneurial spirits is its neighborhoods. Each neighborhood has its own dynamic, created in part by the small businesses that set up shop there and become an integral part of the community. But, what’s the secret to Bay Area small business success?
Given the attractions of the region, perhaps it’s not surprising that the Bay Area small business success stories that have taken root here have more in common than their robust bottom lines. Phil Jaber of Philz Coffee, Robyn Sue Fisher of Smitten, and Seth Sundberg of Prison Bars have wildly different stories, but these three local successes have found that a passion for keeping people at the heart of what they do has made all the difference. From three perspectives, here’s the story of Bay Area small business success.
From Phil to Philz
Philz is perhaps the most recognizable Bay Area small business success. Though there was a detour running a corner grocery for over 25 years, Phil Jaber’s first enterprise was selling coffee to passersby from his front yard in Ramallah—when he was 8. And it’s clear that coffee is a passion. A local profile describes Jaber “hand-counting beans in order to ascertain which measurements yielded which flavors.” While still running the market, he began selling some of the personalized blends that resulted from all this bean-counting, which he made at the counter. That coffee acquired a loyal following, a sign of things to come.
Philz Coffee is a central part of the “third-wave” of America’s increasing obsession with coffee, a progression that starts with coffee products like Folgers and ends (so far) with hand-poured brews like those at Blue Bottle. Or Philz. The beans are carefully sourced, and customers are invited to learn about exactly what they’re drinking. (Philz roasts its own coffees at their Oakland plant, specializing in blends that combine anywhere from “two to as many as seven different beans from around the world.”) Unlike other fancy coffeemongers, though, there’s no espresso at Philz. No lattes, no macchiatos. All drip, all the time.
Phil grew the market for his coffee from 24th and Folsom in the Mission to 32 stores from the South Bay to Sausalito, San Francisco to the East—even one in D.C. And there are four more Philz on the way. But the popularity of Philz isn’t only the great coffee; Phil wanted his shops to encourage coffee lovers to talk with each other, and to “interact directly with the barista making their coffee.” The original Philz was a coffee house, replete with overstuffed chairs, comfortably battered furniture, the occasional plant. And it fit right in to that first neighborhood in the Mission.
But in spreading the gospel of Philz coffee, Phil and his son, Jacob, now CEO of the company, wanted to fit into their new communities, not replicate the original Mission outlet. According to Jacob, “The team and community complete the design of each store, and it’s never ending. Our people have autonomy. We believe that’s locally relevant.”
That concern for the experience of each customer and employee, and not just the personalized cup of coffee, underlies every decision that the Jabers make about Philz. Jacob explains, “I don’t believe we’re in the coffee business. I believe we are in the people business, serving coffee.” And coffee drinkers from both ends of the country are pretty happy with that system.
Smitten Makes Ice Cream Nerdy (and Extra Creamy)
Smitten Ice Cream’s origin story is very different from Philz’s—it involves a lot more of the tech innovation we now expect from any Bay Area small business success—but Smitten’s founder, Robyn Sue Fisher, talks about her ice cream shops as though she, too, is in the people business. A transplant from Boston, Fisher had quit her consulting job, whose high point often seemed to be the ice cream she would reward herself with on late nights. She took herself to Stanford’s Graduate Business School, in the hopes that in such fertile ground, she’d find the germ of another career path. Like Phil, Fisher discovered that harnessing a long-standing passion, ice cream in her case, might offer the kind of fulfillment she’d been missing.
Finishing grad school, she’d narrowed her choices down to FBI special agent (she was accepted) or a career in ice cream. Fisher found an engineer to work with her, and at the end of her life’s savings, had Brr!, “a one-of-a-kid ice cream machine that perfects the process of using liquid nitrogen to churn exceptionally small ice crystals.” (Her first, rented liquid nitrogen tank was named Ken, “after the guy who rented it to me.”) The science means that Smitten is the creamiest, most flavorful ice cream you’ve ever had. And, like Philz’s coffee, Fisher’s ice cream is made-to-order, which means she was able to dispense with all the unpronounceable gunk that had crept into contemporary ice creams as stabilizers, and just use the most high-quality ingredients.
Once she had the process and the equipment, rather than making the VC rounds, and in the midst of a recession, Fisher strapped her unique contraption onto a red wagon (with a bungee), powered it with an old motorcycle battery, and took her product to the streets, literally. Following the food truck example, Fisher would tweet out a location and the day’s flavor, and then promptly sell out. Seven years later, the last four of them profitable, Fisher has six stores with four more coming. She’s now at a turning point in Smitten’s development, figuring out “how to manage growth, while…maintaining the quality and integrity of the product.” Rather than cutting corners to grow—especially tempting for food businesses who’ve been using top-quality, organic, locally-sourced ingredients—Fisher is determined to “use growth to improve” her Bay Area small business success.
Despite her passion for ice cream, people are what drive Fisher’s success, and that is how she visualizes Smitten’s continued growth. In the company’s organizational chart, she’s at “the very bottom” because she “works for everyone else.” Fisher makes sure that the family-feel of her first store, a repurposed shipping container, doesn’t become a thing of the past. In a March Forbes profile, she explained, “It’s really important to me that everyone who joins the company feels definitely connected with me, and that personal relationship.” Fisher thinks of the folks who wait in line for her ice cream the same way. “We don’t call anyone customers because customers are a transaction, and they are guests in our house”—if that house is one in which someone is always making incredible ice cream, like Strawberry Prosecco, just for you.
Prison Bars Can Be Delicious
The disparity between Philz’s and Fisher’s starts in business is significant, but developing a family business and quitting the rat race to pursue a passion are both familiar small business stories. Seth Sundberg’s path is less common—and that’s probably a good thing, since it involved a prison term.
It’s hardly a surprise that, at over seven feet tall, Sundberg is a former NBA player. When he left professional sports, he worked at a national mortgage company and his own investment firm. And then, as he says, he “got greedy”. In 2009, the same year Fisher was hitting the streets with Brr!, Sundberg cashed a fraudulent tax refund of $5 million and went to prison.
Prison made Sundberg feel “worthless,” but when he discovered that prisoners were eating chicken labeled “not for human consumption,” he needed to do something. Working with some other inmates, he created a food bar with ingredients from the commissary. He sold 3,000 of them to other inmates in the first seven months.
With the help of Defy Ventures’ Entrepreneur in Training program, Sundberg’s Prison Bars are available at “a handful of convenience stores, online food marketplaces, and restaurants,” and available for pre-order on the website, shipping this summer. Sundberg hopes to expand the distribution to nationwide grocery stores, Silicon Valley tech companies as employee snacks—and to “San Francisco tourists at attractions like Alcatraz Island.”
Those bars hadn’t looked like the future when he was on the inside, but when Sundberg was released, the reality of being an ex-con hit him: It’s really hard to get a job. Over two-thirds of released prisoners are back in lockup within three years—and by five years, it’s 75 percent. The lack of employment is a major factor in recidivism.
Thus, the Bay Area small business success Prison Bars was born. Healthy snack bars made with organic, non-GMO, gluten-free ingredients, they come in “criminally delicious” flavors like Roasted Peanut with Cranberry Coconut and Goji Cacao Crunch. But Prison Bars aren’t just a job for Sundberg. He says, “I want this to be a company that humanizes the 2.2 million incarcerated Americans out there.” Prison Bars helps formerly incarcerated people by providing jobs—the bars are currently produced by a team of four former inmates, and Sundberg hopes to eventually employ 100 formerly incarcerated workers. He’s become a humble but impassioned advocate for former inmates who want to work and be seen as more than just ex-cons.
Each of these entrepreneurs has a fascinating story, and we’ve just skimmed the surface here. If you’d like to learn more about how they each created their Bay Area small business success and are shaping the future of their companies, join us at an event for local small businesses, Treat Yourself, on May 5. These three rockstar business owners will be in conversation with Owen Thomas, Business Editor for the San Francisco Chronicle (and devoted dog owner), at the historic Firehouse 8.
Thomas’s expertise in business and the tech world of Northern California in particular will provide context for the stories of Philz, Smitten, and Prison Bars. He has his own fascinating story as tech writer extraordinaire; it’s hard to imagine someone better suited to dig into these founder’s stories. He’s the executive founding editor of The Daily Dot, and before arriving at the Chronicle, he was, among other things, executive editor of VentureBeat and managing editor of the notorious Valleywag. Thomas originally moved to the Bay Area to work on the Mother Jones website. He spent a year as West Coast Editor for Business Insider, covering stories like Pinterest’s move to San Francisco and Square’s ownership structure.
For coverage of Treat Yourself, including event photos and business advice from our Bay Area small business success speakers, check out A Whole Lotta #LoveLocal at Treat Yourself! and Grow Your Business by Putting People First.