Where do employees of West Coast tech firms get their caffeine fix?
More often than not, they turn to Equator Coffees & Teas, whose blends are stocked at Twitter's San Francisco headquarters and three of Google's Mountain View buildings. The café at LinkedIn's new 26-story headquarters in San Francisco's South of Market district will also stock Equator coffee when it opens in June -- just like all other LinkedIn Northern California office locations.
The small, tech-friendly roasting company launched 21 years ago in Mill Valley, just an hour north of its Silicon counterpart. Brooke McDonnell sold her mother's wedding ring to buy a small Petroncini roaster and start Equator with her life partner, Helen Russell. Today, their 90-employee company, which also has four standalone retail locations, projects some $15 million in revenue for 2016. And they recently became the first LGBT-certified business owners to win the Small Business Administration's highest honor, the annual Small Business Persons of the Year award.
But becoming the coffee roaster that helps fuel the Bay Area tech scene was a long journey that, in some ways, mirrors what many tech startups go through. For starters, McDonnell and Russell launched their roasting business in a garage, deciding to take a gamble on their own venture after running two coffee carts for several years in San Francisco and Oakland.
Product quality was the first priority: They wanted to focus on finding coffee beans from sustainable sources and build a "farm to cup" relationship rather than buying through a distributor. Like most disrupters, they wanted to change the modus operandi of their industry's supply chain.
After that, a number of pivots and chance encounters -- including a serendipitous meeting with LinkedIn's head of global food services -- led them to success. And much like your typical Valley upstart, Equator has had setbacks along the way, like the time when Starbucks acquired a bakery that represented 12% of its revenue. But thanks to its distinctive blends (and the resilience that most success stories share), the company has maintained double-digit sales growth for years.
From baristas to coffee roasters
In the early 1990s, just as Starbucks was taking off and Americans were finally discovering espresso-based coffee drinks (lattes, cappuccinos, macchiatos), McDonnell and Russell were in Portland, Oregon, trying their hand at real estate flipping. The duo themselves had grown up on instant coffee. But seeing the coffee shop culture take off in the City of Roses inspired them to bring the concept back to their home state of California.
After three successful years as coffee cart baristas, they set out to create their own roasting and wholesale operations with Equator. But first, they did their homework: McDonnell sought mentorship from veteran roasters and Russell spent several months working for espresso-machine maker La Pavoni. McDonnell then took the role of "executive chef," using her sophisticated palate from a childhood of international travels to create their product.
"She would start roasting the coffee, tasting the coffee, and pulling it on an espresso machine and really understand what the nuances of flavor were, and started to create her blends," Russell says.
"It was very unusual," she adds. "Back in 1995 there were probably only five women in the country roasting coffee."
Russell leveraged her own background in sales to take charge of the operational side of the business, cold-calling potential clients (like restaurants or boutiques) and convincing them of Equator's value as a coffee roaster and full-service consultant. For clients who wished to set up a coffee bar, Equator could help with lease negotiations, setting up the equipment and even creating P&L statements.
"We would sell them espresso equipment, brewing refrigeration -- whatever we could do to keep us afloat," Russell says.
Soon after, they secured orders from renowned chefs, including Thomas Keller from French Laundry restaurant and Pascal Rigo from La Boulange bakery. Equator created customized blends, including French Laundry Blend and Bouchon Blend.
In 2003, Equator moved out of the garage and into a larger location that would allow the company to scale. The owners turned to the SBA for a loan to purchase a 5,500-square-foot facility that would house their larger roasting operations. Capital Access Group, a certified development company that works with the SBA, helped Equator acquire the $1.1 million loan. "I thought it was impossible," Russell says, but explains that by putting aside as much cash flow as she could over a couple of years, they were able to round up the 10 percent down payment.
In the new millennium, the Starbucks brand exploded. Competitors started to flood the market, including Stumptown, Blue Bottle, and Philz Coffee. Additionally, the rapidly growing Starbucks acquired La Boulange--which meant Equator could lose its $1 million contract with the bakery overnight. Thankfully, according to Russell, the Howard Schultz-owned chain was unable to re-create the Equator blend and decided to honor the previous contract for three months. But the pair realized they needed to tweak their business model in order to survive in the newly crowded market.
"With all the competition," Russell explains, "one thing they all had in common was that they had a retail store and we didn't have one."
To complete the pivot, they turned again to the SBA in 2004 for a second loan, this time for $250,000 to open their first brick-and-mortar location at Proof Lab Surf Shop in Mill Valley. Since then, three other locations have followed in downtown Mill Valley, San Francisco, and Larkspur--just a few minutes south of San Rafael. But it was a chance meeting at their first location that sealed a relationship with LinkedIn.
"The head of global food services for LinkedIn stopped at the surf shop," Russell says. After drinking Equator's coffee, he called the company that manages LinkedIn's food service. "And he said, 'You brought me all these other roasters, but I just had the best cup of coffee I've ever had.'" The chance encounter landed them the LinkedIn gig, and opened the door to working with other big tech companies.
Today, Equator has more than 350 wholesale customers. Along with double-digit sales growth, the roaster has scaled its social responsibility and sustainability projects, including micro loans for farmers and land rights advocacy for women in Nicaragua. In 2008, Equator founded a coffee farm in Panama, Finca Sophia, and later became a certified B Corporation.
Not only is Equator well loved by the Silicon Valley crowd, it has received accolades along the way. The SBA said it chose the company from thousands of nominees based on growth in employees, sales, net profit, and net worth. The honor comes a few months after Equator (along with a group of other roasters) won the Good Food Award for best taste in responsibly produced coffee.
The Equator founders say the unique taste is one reason why the West Coast tech crowd is drawn to its brews -- that, plus the brand's transparency and sustainability. "Our customers love [us]," Russell says. "They love that we serve customers an excellent product that has a story. And they know we have dirt on our boots."