Leaders Podcast

The Art of Giving a Damn

With Philz Coffee CEO Jacob Jaber

Show notes

Over $70 million raised in VC funding.

On this episode, I talk with Jacob Jaber the CEO behind our favorite cup of coffee Philz Coffee. No his name is not Phil, It’s Jacob Jaber. And he’s the son of, you guessed it Phil. My love for Philz started when I tasted their iced mint mojito in San Francisco. There’s just something special about the way they do business. From its humble beginnings in the Bay area, Philz has grown from one store to over 40 catching the eye of Venture Capitalists and raising over $75 Million to help propel their growth. What I learned from Jacob is that it doesn’t matter if it’s a cup of coffee or some new whiz-bang technology, curiosity, and attention to detail, go a long way. But don’t take it from me, enjoy my far-ranging conversation with Philz Coffee CEO Jacob Jaber.

Read the Interview

Episode Transcript

Quick disclaimer: these transcripts are auto-generated. They are best used in addition to the Podcast audio not instead of. We cannot guarantee 100% accuracy.

James Fratzke: [00:00:00] Jacob welcome to the show. How are you doing today?

 

Jacob Jaber: [00:00:02] Doing great. How are you?

 

James Fratzke: [00:00:03] I'm doing well. Thanks for being here. You are the CEO of Philz Coffee which is my favorite cup of coffee. The iced mint mojito is to die for.

 

Jacob Jaber: [00:00:13] I agree.

 

James Fratzke: [00:00:14] Good. Well, we've already agreed on our first thing, so this is off to a great start. Let me start with this: At 18 your dad gave you the opportunity to run the business. Now you've grown into 40 plus locations, and you've raised about 75 million dollars in VC funding. In an interview one time, you said that you didn't know anything so everything was hard and easy at the same time. What did you mean by that? And what were some of those early lessons that you learned?

 

Jacob Jaber: [00:00:38] Yeah, well I'm generally curious, and I like to ask a lot of questions and I grew up young working near my dad. So I learned a lot. I learned the way to do business and I understood it at a young age [it] became pretty natural to me because of that experience. So working with people, understanding numbers and that you do good business in the right way was something I learned at a young age. That combined with just being curious and asking a lot of questions allowed me to learn in an effective way. And whenever I came across somebody who I thought had good knowledge in an area that I wanted to learn more about, I wouldn't be shy to talk to them and ask them a lot of questions so [that] I could learn. But, I wouldn't immediately accept what they told me. I had always filtered [it] through my own thoughts and you know, common sense. Most of the time that lined up, but sometimes I would challenge what someone would tell me because I thought a little bit differently. I think in business and in life one of the best traits is to be a constant learner no matter your role or title. You should always be learning and you should always be asking questions. I love challenging the status quo and asking why. Why is it done that way? And if you just go back to the root principles of any concept or thing and peel back the onion you begin to see things in a new light. I like meaning and I like to dig into the core of important topics so that you could come up with the right solutions.

 

James Fratzke: [00:02:40] So you mentioned being curious and having these "curiosity conversations" with people that had experience in things that were interesting to you, or that you wanted to learn more about. Would you categorize those as mentors or were these just casual conversations?

 

Jacob Jaber: [00:02:56] I guess you can, it depends how you define mentors [and] it is much more casual than that. There is just people I see regularly who I talk to. But I think learning could come from anywhere and anyone, and it's all about the questions and [...] the interest and the conversation. So you know if you're present in a conversation and you're talking with somebody who knows about a topic that you don't know, you can learn a lot from them -- as they can from you. So it's really about learning and less about having a mentor and [or] advisor. I definitely had a lot of relationships with people, but it [...] was always very casual until I grew in my career a little bit more. I've formalized a few relationships a little bit more and [...], monthly or bi-monthly with some of the folks that I admired a lot that helped me learn and grow.

 

James Fratzke: [00:03:54] Speaking of mentors I assume your dad Phil who is the Phil and Philz coffee was a mentor to you. That balance between father and mentor and founder of a company can be a little bit difficult. Can you tell us a little bit about that dynamic between the two of you?

 

Jacob Jaber: [00:04:12] Yeah, I mean I learned the most from him. He is an amazing person with some of the best business and people skills that I've come across [...] it's very authentic and that's the key. So you know I wouldn't necessarily sit and have a ton of conversations with my dad every day because we'd be working side by side. So again the learning was very organic, natural, and casual and sometimes you can't beat just working side by side and observing and seeing and watching. So a lot of the learning's with my dad were just working with him side by side versus sitting at a table with a cup of coffee and talking about things. And that was really effective because it improved efficiency. Like I learned [at a] much [more] rapid rate because instead of hearing words, [I] saw things and when you see things you can get a clearer picture of what it looks like in real life. Then you can make your own judgment on how to do it yourself.

 

James Fratzke: [00:05:14] You said in the interview one time that your job as CEO is really to uphold your dads values, those values that he taught you about business. What are some of those values that are crucial to Philz' success today?

 

Jacob Jaber: [00:05:28] Yeah, I think [just] being a good person, doing the right thing, being kind. So I think just treating people like -- Not like employees or numbers or customers but just people. And I think to give them an experience that feels warm welcoming and authentic no matter how they look, where they come from, what they wear. We wanted to celebrate the human spirit and diversity and making sure that you know hospitality is at the core of our culture. So just making sure everybody that came in felt welcome and everybody left with a better day and a smile was extremely important to us. We were really obsessed about that. So you know you can call that value just being customer focus or people focus, that's one. Another one I'd say is just making progress continuous. This ties back to learning a little bit but just continuously making progress and not being stagnant. And you know always challenging the status quo and finding ways to do things a little bit better -- Particularly the things that were already good at versus trying to marginally improve the things that we're not as good at. That doesn't mean we ignore those opportunities but sometimes in life people are you know instead of just focusing on elevating your strengths to massive strengths, you spend more time on the things that you're not as good at and you try to get great at those. You might be missing the opportunity to give value in the world. You're really great at.

 

James Fratzke: [00:07:20] Now one of the things that I value about Philz coffee and I'm talking about specifically coffee is that you guys work on one cup at a time, and you try to perfect and customize that cup for the individual customers. I think that's a great metaphor not only for business. Like how do you perfect that product to the best of your ability? But it's also kind of a metaphor for life like what are those little tweaks that you can do to make yourself the perfect cup of coffee. So in that analogy what are those tweaks? What are those habits are those tactics that you have that make you successful every day? Can you think of maybe two to three things that you do every day that help improve your cup of coffee -- metaphorically?

 

Jacob Jaber: [00:08:01] Yeah. Great question. [...] I think that we believe philosophically that the best cup of coffee is the one that comes to your taste, but that's true for everything in this world. The best is the one that comes to your tastes. So you know for me what I like to do is instead -- I haven't been reading books as much but reading really good articles. There's one site in particular that I that I subscribe to and really enjoy reading every week. It's called [00:08:32] Farnam Street. [2.3] So that that's a really good read. I've been listening to podcasts recently which is great. I kind of mix it up there's not really one I love it just depends on the subject. It ranges from science to philosophy and math to business to help. And I think when I go out and visit stores and I visit stores regularly multiple times a week and try to try to hit 10 stores a week at least. You know just learning from the team and the customers and seeing people and that's that's when I feel most alive.

 

James Fratzke: [00:09:14] We've talked a lot about learning and your history is interesting in a sense and I think it's kind of the new normal. You started going to community college. You decided to drop out. In your words, they were forcing you to learn stuff that wasn't interesting from people that weren't that interesting. But it seems to have worked out well for you. So if there was a young entrepreneur that came to you and said Hey Jacob I'm thinking about going to school but I have this entrepreneurial drive, Like what do I do? What would be your advice to them?

 

Jacob Jaber: [00:09:46] Well I mean I have a weakness which is obsessiveness. I get obsessed with something. So at this point in my life I'm obsessed about Philz and making it a success and I won't give up. So it's just about doing everything you can. You got to be determined. You've got to have perseverance. You're going to suffer a lot of pain. There's going to be really hard times. There is going to be really good times. But it's hard. It only gets harder as you grow, as you grow the company but it's also more exciting and in some ways it gets easier as you start putting together the right team you know. So the job changes over time but you have to you know -- I think you have to be super focused. And so many people give up too quick or spend their time you know circling around the thing they should be working on but don't necessarily just go for it. In the early days of anyone's career it's important to sometimes ignore what people might say, or have just a little bit of ignorance, a healthy amount of ignorance. Just to get you into that inner circle of what you're most passionate about because otherwise everyone is going to be too rational and pragmatic and you know talk you out of it. So and then the problem with school is it just doesn't make sense to me. Not it's so few people really know what they want to do at that stage in life and you're forced to choose a topic you spend so much time on and then you feel forced to stay in that field then that might not be it. So I think school has to be viewed a little bit differently and I think learning has to be about experiences. So school wasn't for me. You know I think everybody's a little bit different.

 

James Fratzke: [00:11:46] So you've talked a lot about learning and at Philz coffee you guys actually have a program for your team members called Philz University but it doesn't seem like you necessarily buy into school. So is this encouraging team members to go to school? How does it tie into their education

 

Jacob Jaber: [00:12:01] I think the name should be changed from school to learning, or from university to learning, because school isn't about learning. Learning is about learning, and learning comes in many different forms and ways. So I think whatever you call it it's not important, what matters is what it is. Philz University is a group of great people who are passionate about educating the people that join Philz to be their best in a multitude of ways both mechanically and figuring out how to do the job that needs to be done. But more importantly the thing we're more excited about is developmental learning experiences like how to be a leader, how to coach, how to get feedback business acumen and you know health and wellness. Just a multitude of different learning experiences that are available to all of our team members so that's the thing we're really excited about building and in the early days of it.

 

James Fratzke: [00:12:55] I love that your dad's name is Phil -- my dad's name is Scott. He [My dad] used to drive us to school in the morning and he used to tell us like, I don't care if you get an A or a C, I want you to learn something today. And so that's kind of a great perspective that you have. It doesn't really matter the performance from a school like typical what culture would assign is like you pass or fail it's what did you learn so I love that little tweak. Let's talk about feedback. You've talked about in the past how feedback inside your company has been very crucial to its success. And you welcome feedback from all levels you encourage all levels to get feedback whether you're a barista or you're one of the chief officers in the company. Tell us a little bit about that principle

 

Jacob Jaber: [00:13:42] Yeah I think it's hard -- much harder than you know, it's easy to talk about feedback but it's real hard to enact in real life because you know, you don't want to hurt anybody's feelings. But you kind of have to do it in order to help people get better. And I think you know feedback is just you could kind of look at it as food that helps you grow muscles. Right? Like just helps you grow skills. So the more feedback you're. And you don't always -- won't get full off of feedback, Right? The more feedback that you get, I think the better. It has to come from a good place. It has to be authentic and you know one of our values is about keeping it real and being authentic -- so you know if something was done bad you know it should be clearly said that it was done bad and why and what it could be -- What can be done to make it better, but always in a way that doesn't make the person feel like you're giving up on them. I think that's that's that's really important. [00:14:49] And then same thing for positive feedback. I think that. It's more important to give positive recognition than it is negative, because oftentimes the most effective way to promote more of the behaviors that you want and to get better is just acknowledging specifically when someone does something that you think was awesome and they're going to keep doing it. [23.3] And the more you recognize them, the things you love about them, that's just going to overtake the way they work -- versus focusing on the one or two things that they may not be doing well. So I think it's all a balance. But I think 75 should be positive recognition 25 should be constructive feedback. I don't mean to put a number on it but just to give a little bit of a concrete guidance on how to approach these things.

 

James Fratzke: [00:15:40] No, I think it makes sense to put a number on it like 75/25 because once you have a process then you can repeat that over time. I had a leader -- a mentor of mine once tell me the second I stop giving you feedback is the second you should be worried because I don't care about you anymore. Right?

 

Jacob Jaber: [00:15:56] That's great. I tell leaders that all the time. I think that's awesome advice.

 

James Fratzke: [00:16:01] Let's talk about [what it's] like for you as the CEO getting feedback. Does your ego ever come into play? How do you kind of check that at the door and just [be] be open to maybe feedback that's coming your way?

 

Jacob Jaber: [00:16:16] So, you know getting feedback sometimes for me can be hard depending on what it is because I take -- I put a lot of pressure on myself and I take losses pretty hard. So I'm still learning how to cope better with tough feedback. In the moment, I'm always appreciative and I take it in, but what will happen is I'll just muse over it for the next few days and you know try and learn from it and ask myself What can I do to get better. So I think that's really important. But it's hard. I think like baseball players probably have a pretty stressful job because if they have a pretty bad game, then you know it's going to be rough for them and it just you have to wait till the next game to see if you can make it up. So I think it's hard and it should be actually. You know if you don't -- if you're not a little bit disappointed about it, you're like shoot, you know that doesn't feel good and I need to get [better at] it. Then maybe you're not caring enough about that topic.

 

James Fratzke: [00:17:27] Let me shift gears a little bit to your personal life. It seems as if from the outside looking in, that you said it yourself you're obsessed with Philz coffee. Is there a such thing as work life balance for you right now or is it Philz is the balance and you get so much positive energy from that that some of the other pieces like a social life and things like that don't matter as much?

 

Jacob Jaber: [00:17:50] Both are true but I wouldn't say social life doesn't matter that much. So this is my other weaknesses, I don't know what to do with myself when there's no work besides spending time with my girlfriend -- We'll go to dinners we'll take walks we'll work out, things like that but I don't know what else to do. I'll sit down and I'll learn, I'll listen to podcasts. I try not to watch TV much. I like to play basketball once in a while. But I tell you that it's so important to make sure you have a social life and you have friends and you spend time with the people that you like a lot -- in a rich and healthy life friendship, relationship -- Something you're passionate about, family, hobbies -- All of those things need to be addressed to have a really full circle, rich fulfilling life. And right now you know what I definitely have going for me is a mission that I'm working on that I'm really passionate about -- That's very important. But that takes up that takes up most of my life and sometimes I'm a little too tired to do anything else.

 

James Fratzke: [00:19:08] I admire that about your work life balance. though as you've defined like what's important to you and it seems like there's little room for margin like you don't watch TV -- You know that the business is important to you, you know that relationships are important to you and that seems like a really natural successful mix of things to focus on. Let me tell you a little bit about a personal story so I had a friend say oh they're opening Philz in Fullerton. You know there's a drive through on that particular location, are they going to have a drive thru? I said no Philz coffee it's not set up for a drive-thru. You go in it's going to take a while for you to get your cup of coffee. As you guys expand, do you see that model changing where it's a little bit more of a quick service closer to a Starbucks or is that kind of intimate experience where it takes a little bit of time, important to the business model?

 

Jacob Jaber: [00:20:03] So it's funny you say that. At the core -- Philz will always be made by a person one cup at a time with love and passion. The thing to think about here though is the customer experience and our mission is to better days and build communities. And like the cup, I think a great experience may look different to one person right? So somebody may value convenience over going in and waiting in line and you know sitting in the beautiful gathering place in our stores and just having a cup of coffee and some food and socializing with people. So I think you have to you have to be empathetic and you have to think about the customer experience. And you know as I said earlier we love pushing barriers challenging the status quo. So our core experience will -- I want everybody to go in and experience Philz for the first time at that store and let the barista know it's the first time. But once in a while if you value convenience you know you have a mobile app where you can pre-order, prepay and pick it up for convenience. In terms of the drive-thru, We thought of it as an opportunity to think about how do we preserve and keep the quality and service -- But try this out take this opportunity to try it out to see if we can make it work for you know maybe the mom with multiple kids in the car and it being a hassle to get out of the car -- But she might want her cup of Philz. So it's all about serving the customer well. And how do we make drive-thru personalized? So we are actually going to be testing something out at Fullerton that won't distract from what we do. Yeah, so it might be a complete failure by the way or it might work out. We're not aiming for failure aiming or success, but you know I think everybody should go in the store and have the full experience because that's that's the magic.

 

James Fratzke: [00:22:04] I agree. Well, there's a couple of things I want to unpack there. Let's start with the first time experience which you've said before is very important to the success of Philz. Tell me a little bit about the first time experience in business in general how important is it?

 

Jacob Jaber: [00:22:18] I think the first time experience matters a whole lot. You know their first experience holds a lot of weight to people's impression of you. At the same time, people are generally forgiving which is good and they're willing to give things a try if maybe the first time it wasn't great. But getting that first experience could mean the difference between somebody who doesn't like it and somebody who kind of likes it, to somebody who loves it, to somebody who's just becomes an enthusiastic ambassador of the brand. Obviously we're aiming for the latter, but you know Philz is different when you walk into Philz it's totally different. You don't start at the cashier you started the barista you talk to the person that's crafting your cup. There's a menu board there's no lattes everything is handmade and I guarantee you like we can get the best cup for you. You know no matter if you like it dark, light, medium, sweet, not sweet, hot iced. You know we can there's over four million ways to enjoy Philz. So we can really personalize the cup for you. My favorite is the Tesora with honey and cream, I have four a day. And it's really good.

 

James Fratzke: [00:23:26] What size though, Jacob?

 

Jacob Jaber: [00:23:28] Small. Four smalls but it's still a lot -- that's like forty-eight ounces of coffee. Coffee is good for you the more you drink sometimes the better.

 

James Fratzke: [00:23:41] Well to your point coffee is healthy for you and Philz does a good job of using more natural ingredients. So things like honey and mint -- I assume those are a lot better for you than some of those other ingredients that other coffee shops are putting into their drinks. I want to get back to the drive through because you said something that stood out to me which is hey this drive-thru idea might fail, but you guys are going to try it anyway. It just reminds me of kind of how failure is glorified in a sense in today's world like hey it's okay if you fail. Can you tell me a little bit about how failure impacts you as an entrepreneur?

 

Jacob Jaber: [00:24:16] I think when you have conviction you have to give it a try and do your best to make it a success. But if it fails use that failure as a learning experience which you can then iterate on that idea to try it again or you give up on it but you keep the learning experience. So I look at failure as feedback.

 

James Fratzke: [00:24:39] This is the portion of the interview that I like to go into rapid fire mode. So I'm going to ask you some questions as we get to the tail end of the interview here. You ready?

 

Jacob Jaber: [00:24:46] Sure.

 

James Fratzke: [00:24:47] Here's my first one: if you could write a postcard to anyone on the planet past or present so it can be an icon or a family member. Who would you write it to and what would that postcard say?

 

Jacob Jaber: [00:25:00] I don't know [if it's] going to be rapid fire. Let's see.

 

Jacob Jaber: [00:25:04] So one of my favorite books is Law Of Success written by Napoleon Hill. I think that book really I got a lot from that and I read it at the right age when I was in my high teens. I would write is I'd like to have a cup of coffee with you and talk for a few hours.

 

James Fratzke: [00:25:22] What's one habit that you have, you know at night before you go to bed that helps set you up for success in the morning?

 

Jacob Jaber: [00:25:29] Oh I learn. I watch interviews on my iPad. I watch interviews. I'll you know watch any clips that I find interesting that I can learn from -- in any of the categories that are listed earlier like science, philosophy, psychology -- I'm really interested in those areas. So I just I learn before I go to bed, I try to use that as learning time. And you know like I get a lot more out of watching videos than reading. So it's a pretty entertaining night.

 

James Fratzke: [00:26:05] Let me ask you this one if you could hit the easy button on anything in your life and just kind of skip past all the hard stuff you had to go through and just get to the moral of the story or that lesson learned. Can you think of one thing you'd press easy button on?

 

Jacob Jaber: [00:26:18] I don't know. I don't know that I would press the easy button. It's a hard one because then you know just like people who win the lottery they don't know what to do with it and they become depressed. But when you work hard for it and you earn it you value it. So I don't -- I get your question and I'll try to answer your question.

 

James Fratzke: [00:26:37] I think that's a valuable answer Jacob. I mean I think to your point like you wouldn't because you learned lessons along the way and you think that that's it that's a valuable experience so I'm gonna accept that.

 

Jacob Jaber: [00:26:48] OK I would just add that probably learning how to have a more rich life beyond just like work you do. Yeah, I think that would be one.

 

James Fratzke: [00:27:00] Here's the last question What's one thing you haven't been able to share with the audience today that you'd like to share before we wrap up?

 

Jacob Jaber: [00:27:08] So I used to love basketball when I was growing up and I used to play a lot of basketball and I obsessed about it. And then I got really good at it and I was like number one on the team in the district for a few years then I stopped after Michael Jordan retired and then I went into gaming and I used to be obsessed with Starcraft and Diablo, those two games and I got obsessed about it so much that I would play all the time and then I got really good. I was in the rankings for like some of the best in the country after like a lot of hours playing competing with people in Asia and other parts of the world. And then I stopped that because I gained a little weight sitting at the desk. I think you know Philz is that thing now.

 

James Fratzke: [00:27:57] So it sounds like the moral of that story is that it doesn't matter what you're doing do it well. If you're spending your time on anything whether it's gaming, basketball or running a successful business try to be the best at it.

 

Jacob Jaber: [00:28:10] I agree. I agree with that.

 

James Fratzke: [00:28:13] Where can people keep up with you online real quick and then we'll let you go.

 

Jacob Jaber: [00:28:17] Twitter or Instagram. Mostly on Twitter Jacob Jaber just my name Instagram the same thing. Yeah, those are probably the two, two good ones.

 

James Fratzke: [00:28:33] Cool. Jacob thank you so much for your time today we really appreciate it.

 

Jacob Jaber: [00:28:37] You too. Take care guys.