How Terra Kaffe Pre-Sold 10,000 Espresso Machines With No Reviews

I would say a year and a half, and I was like, "I don't know if this is ever going to get out. This might just be a beautiful design and a presentation."

“And how much had you spent at that time, two and a half million?”

I mean, the crazy thing was, we got to a point where we had one of those parties say, "If we're going to continue to fight into you, we need to see if this thing is like, we have to push a lot. We have a choice." The prior blew up, we sold so far in excess of what we anticipated. I had been in scenarios where I had to raise $2.5 million in 14 days, or it was game over,

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Are we just pretending like it's Joe Rogan?

Are we live? Yeah, we're live. You're live. Get him pulled that up. I do need a Jamie.

I have a Declan, but he's not here live with me. I went by the comedy mothership in Austin yelled, "Hey Joe, are you in there?" But I didn't have a chance to see him, but he didn't respond. I had to present down at a conference down there, and there was like a private event. They were like, "Yeah, the people on the list are like Joe Rogan and Bill Gurley."

And I was like, "Where am I going?" Like, "Why am I being invited to it right now?" Because they were like, "Yeah, do you want to send down a machine?" And then all of a sudden, I was just like, "I can send down a machine, but I can also send out myself with the machine." And they were like, "Yeah, come on down."

I was like, "All right, let's see who we meet." Coffee is a universal connector. People are passionate about coffee.

“And that's why I say, "Hand, I want to welcome you to the D.D.C. podcast."”

You said something in the pre-interview that your life was like the pursuit of happiness with Will Smith, but in reverse. Yeah. I explained to our listeners about your love of coffee and how your life is like that. Yeah.

Yeah, the pursuit of unhappiness. But yeah, I mean, the simplest terms of what that's referring to, is I essentially started my career on Wall Street, and then I ended it, schlepping hardware on the New York subway. Or at least that was the transition I made.

So it was always funny to talk with my parents,

and then being like, "You are banking now. You are a bad Easter." You have to become bad Easter. And I'm like, "No, I'm not a bad Easter, but I get how we bridge that gap." So yeah, that's the start of the company.

The start of the story was very lucrative career, and finance, and a lot of stability in job security. Not a lot of stability in time affluence, but it was working under our weeks. And just, you know, had a great team, actually,

so I had a good relationship with my boss with my MD there, which was rare as an analyst type of relationship with an MD to start with, but just figured, you know, what if I worked as hard for something that I was building from scratch,

“building for myself and trying to actually do something that made a difference?”

So take me into the schlepping part of it. We, let's stay with our Will Smith analogy here. What were those years like? I think you're so focused on having one foot in front of the other that it's actually hard to zoom out.

And those moments, you're just like, once you start on the path, you're kind of like the train is on the tracks and you're just touching for it. You just decide how fast. When I reflect on it, it was really, I mean, as on glamorous, as you could imagine.

And I think that that's really where it gets funny because a lot of times people think about startups. And I think that headlines oftentimes read very kind of glitz and glamoury, but in reality, what it actually looks like is, I was eating one meal a day for a year and a half,

I mean, it was great. It was the best thing. Exactly. Yeah. And then didn't have money for Uber's,

“you know, didn't even have really money for a proper dolly.”

I, for the first year, I had an old one of those gigantic blue Ikea bags with the big straps. And I would just put a 30 pound espresso machine in there, put the coffee beans cups, carrying it from location to location to demo it.

So I'd take it on the New York subway and then, you know, have about, you know, anywhere from like five to it doesn't people yell at me about why I'm taking up so much space in the middle of the cart. So yeah, just kind of sweating and sweating through the city

to be able to try and just get some data points. You know, like have a demo, have a prototype unit, see people enjoy a brew coffee, do a blind taste testing, really validate that thesis,

whether I was on to something or not. The rewarding part was every time I got a data point, the results brought back in order of magnitude greater validation. And anything I anticipated. So I kept evaluating the kind of sunk cost area,

like is this worth pursuing? And even though it was very much the bootstrap, ramen noodle type of lifestyle, everything I kept learning about what we were doing felt like it was resonating even stronger

than what I originally kind of theorized. So I decided to stick with it. You know, seven and a half eight years later, here we are.

“You would ask strangers to name an espresso brand”

and at that time what would they say? There was only one brand that could name, and it was an espresso. That was the only brand that would come in. And that's in Clooney.

Yeah, that's right. Can you believe they dropped them? Did they? Oh, I don't think I knew that. Was that more recent? Or did you see Brad Pitt now?

No, no, no. So Delongi got Brad Pitt, Jura has had Federer, and then on espresso, that started with Clooney.

I mean, he's still probably affiliated in some way, but they've dropped him as the face to the brand, and now it's to Alipa. That's smart. They probably saw that one picture of him where he had that really dark hair,

that black hair, and he looked really gond, and they're like, okay, he's done.

I always wanted to do a campaign with Larry David,

where it would be like, and I would want to surprise him, like on set, where he doesn't really know what he's supposed to do as the face to the brand, and then I teed up being like,

you know, Delongi, Jura, and espresso their machines are so ugly, they're so bad that they need these beautiful faces to represent them. Our machine's so good,

we don't need anybody who looks great to represent us, and then just happen to come out and be like, what the hell does that mean? Wow. If anyone in the audience knows Larry David or his people,

he needs to have this put in one of them, I think that is a great concept. I love that. I would love it. I wouldn't want an entirely candid reaction,

because I know how much of his show is unscripted, so I would love to just get him to react live and be like, you have to believe it. Yeah. Yeah.

That's so good. Yeah. Now, one of the most interesting things, in terms of my history interviewing podcast guests, is I don't know that I've ever interviewed someone

whose device or product that they created has 432 parts. Talk me through, like, so just the complexity that goes into building these machines, and to sort of,

walk me through the journey of building the terracaffe. What is it? Mark one, I guess. Yeah. Yeah.

I mean,

I always describe it as the journey as the journey of tradeoffs.

Like, if you have this absoluteist mentality,

“and I think there's this very heavy eye dolletry of creators,”

like, you know, the jobs of the world are what have you, and they look at these kind of storylines, our story arcs of their rigidity towards accepting

any sort of tradeoff or compromise, and it's just to me not realistic, in terms of what it actually takes to build real complex hardware, and the iterative process that comes with that. I think it's also important to know,

for anybody that isn't familiar with building complex hardware, is the complexity grows non-linearly with the number of parts in size of the device. And I remember reflecting on, I was like,

there's probably a few hundred hands that have been on our machine just in the development cycle alone, before even getting to mass production. So coordinating across all these individuals, all these stakeholders,

professionals from firmware engineering, software engineering, hardware engineering, mechanical engineering, within mechanical engineering,

having mold flow analysis, like having tooling experts,

it was crazy to do that in the first place,

and then doing it during COVID, was just absolute nightmare. In terms of, you know, you needed, it was like a stress test in communication skills,

organizations skills, and then yeah, I mean look candidly in the early days of the company, taking a ton of risk. Because the reality of it is,

we could have been on to something, it could have been a good idea, but what it takes to get that to market

there was a very high chance

that that product would have never made it out the door,

and when I was in the middle of it, you know, I feel like I can say it now that we've been around for so long, and have launched some new products, but I would say a year and a half,

and I was like, I don't know if this is ever going to get out. This might just be a beautiful design on a slide or, you know,

in a presentation. And how much did you spend at that time? Two and a half million. [laughter] You're two and a half million dollars in,

and we haven't talked about it, but you didn't take funding. This is all, this is self-funded. That was, no, we were pushed out for the first two years,

and then we did get funding, but we did not ever. And this was probably one of the hardest things, in terms of,

“like what I think really tested me in terms of leadership,”

was we never got one clear check. You know, every time they say, you know, put out a fundraising materials trying to raise,

so you speak to an 1824, or even maybe 36 month runaway, never had that. We would hit a milestone, and we would get a six-figure check,

maybe a small six-figure check, maybe a mid-sized six-figure check. It was literally like a meritocratic, like hit a milestone, get unlocked a little bit more funding.

So it was really hard to relate to a team, a sense of clarity of, this is exactly what the plan is for the next 12 months, three years, five-year plan, because in reality,

we were a lot of times just fighting for the next day, and that makes it really challenging, because a lot of times when people are joining a company, it's not just filling a line to the bigger picture, but feeling like there's this clarity of execution,

tied to that vision, and I think we had that, but there was just such a forced myopic thinking in the business because of the capitalization side. And so that was super challenging,

and developing the product, like I said, you know,

two and a half million dollars in halfway there,

was like, I'm figuring this out, but it is really like, you know,

“no stone unturned kind of policy of finding”

how we're going to get to the next, get it into the next milestone. Can you tell me about a compromise that you had to make during that time to get to get to product? Oh my god.

Yeah. That's such a laundry list of different things that we were, we were tweaking on the machine. I mean, I remember,

there was a period in like early 2023. We had a meeting called the Gun to the Head Meeting. It was like this thing needs to ship in six months. There is no alternative.

There is no like way to extend runway. There's no way to extend budget. What do we do differently today? And I was in a meeting with our CTO, our CLO,

our SVP product, and when we were like, okay, it's the four of us, what do we do different?

And I actually really appreciate our SVP product. It listed three things. You know, there was the dial that had just melt-throught thing. We wanted this beautiful,

perfect little click for each notch, and each notch to represent it in a very distinct and consistent modification, in terms of the percentages of how much the froth and whether it's a very silky,

frothmilk or a drier frothmilk, that customization is also important. If you use alternative milks or different types of milk from dairy milk, and we wanted this just delicious tactile response of clicking. And it was like,

kill this immediately, because the challenges you have a needle valve in there that's actually supposed to air rate and it's causing all sorts of issues in terms of controls, and we're spending so much time

to allow elements in the functional elements, kill it. So that's why it's just a smooth dial. There is no click space to it. You know,

we wanted to play with the connecting of the milk raft,

basically everything tied to milk.

Milk is a problem. The milk raft. We wanted this beautiful connection that auto connected into the, to the spout assembly of the machine,

and he was like, we need to stop messing with the graph. The graph needs to be simplified, simple mechanics. We were spending way too much time on it,

and it's holding up other things. And the one thing you learned in hardware is any one hold up can impact our ripple effect back to everything else you've done. Everything else you've done.

If it does change one of the, the alignments in the packaging, or inside the machine, all of the other surrounding elements can be impacted,

“and then you have to redo all your tolerance stackups.”

And that's why I love the expression in hardware development about the beauty about being 90% done is that you're half the way there. That's great.

You have a mass so much stuff that you're like, we'll come back to that. And when you do, you're like,

wait, that has ripple effects all the way back down the line. And so, you know,

like I said, there's a laundry list of items. Those are just a few examples. And then we said, hey,

you know what, we're going to change the mill graph later on as a fastball item, which is exactly what we've done. We actually launched it this year.

We updated the mill graph. It's a all glass body, beautiful connect disconnect system that we always wanted. We just said,

look, this is a compromise. We have to make it out the door and that was early 2024. What was the call that you made that a lot of other founders

might have been too proud to make to keep things afloat in that time?

because it's on, I'm not going to say the name of the group because I don't want to throw anyone under the bus in this sense. But I had another group that we were working with

on the design side that were, they actually called me and they said, we have never, like it's very, very seldom to see an early stage founder do what you just did.

And I think this is why we believe it's going to make it out the door. We were working with an engineering firm. We had an in-house engineering but we also had a supplemental engineering firm

that had a lot of expertise. And they were a huge part of the challenges in terms of the planning because we had set a very concrete plan with stage gates and milestones and corresponding budgets.

They had spent double the money and gone half the distance in what we had agreed upon. So essentially we got 25% of the advocacy that we expected. And I remember calling them their CEO

and being like, we won't survive if this continues. We're not going to get this product out the door. You are incredibly sophisticated. You do. You have launched a lot of products.

But maybe that's why the vast majority of your clients

are billion dollar companies and you should not be

really dabbling in early stage venture.

“But you have to remember that was early 2020, 2021.”

Venture funding boom was going absolutely crazy. It was a super frothy market. So there were a lot of startups that were raising high aid figures, high nine figures, sums of money.

And he was like, hey, it's on like, they're raising money and they're spending our bills. Why can't you? And it kind of hurt my pride in that moment. And I was like, that's great.

I don't know the end of their story and they don't know the end of my story. This is not going to work for where we're at today. And the reason why that was such a hard decision. And the reason why I so many people get trapped there

is because it feels like it's slightly almost like extortion where you are trapped because they have so much significant knowledge of your product. Most founders feel like there's no way to put that tooth paste back in the tube.

I've jumped on board with these guys. We got to finish it with these guys. Hell or high water. No, no, you're not going to finish this.

The reality is we spoke with another MPI specialist

which means new product introduction specialists. They said, you know how many projects actually get to market that start 20%. 4 out of 5 don't make it to market. And so we created this off ramp for them.

And then on ramp for another group that we were working with, they kind of overlap for a period of around three to four months.

“And frankly, I think that's what saved us”

and being able to get this product out the door was really making a pretty dire shift in terms of the core engineering infrastructure for building this product going through the entire MPI development process.

A little bit of a long story, but essentially that was one of the biggest changes we made that I think a lot of people would be scared to do. We talked about in the pre-interview a choice that you had to make around your design rates.

He told me about that. This is like one of those things that you study in theory that played out in reality. And I was so, hopefully wouldn't, but the reality that was I didn't have a choice at the time.

To get the view on out the door when we were bootstrapped, the TKL1 is what it was called. That product has since been a sunset. We haven't sold it since 2024. To get that product out the door

basically, we built off of the base model. That was part of the study I did in the early days of the company. I did tear down some of all of the competitors. There were only five competitors.

I was like, "You guys are all using commoditized parts. It's actually a good thing, not a bad thing." That gives me a base to build off of. That means there's an existing supply chain that can work with and I can use that as our,

let's say, quote unquote, "the one to build a better machine."

“Very important, especially if you're not sitting on,”

you know, mountains of cash. It allows you to be more iterative. It's like more software-minded in development. We found a really good vendor, a really good finalist emblem in China for the TKL1.

We did do custom design. I worked with the engineers that I worked with and my previous job in electric vehicles and they had incredible pedigree. But when it came time to cut the checks for tooling,

when it came time to cut the checks for the product to be designed. I didn't have money. I didn't have money for a purchase order of the containers, let alone tooling costs. I didn't even not only have money for the purchase order.

I didn't have money for the deposit. So like the 30% deposit upfront before they start mass production. And I remember the manufacturer being like, "Sahana, what is this?"

I thought, "We've done working together for a year and a half. I thought Americans have money. Why don't you have money?" I'm like, "Not all of us." And so the agreement we had to strike,

which again, I know I'm serious. Anybody would have looked at them. Well, that's a huge risk. It was, they would comfort the tooling. They would pay for it themselves.

They had full rights to use that design elsewhere outside of the US. And invariably, what ends up happening is they love what we're doing. They love our designs. They love our advertising.

I always shared it with them.

And I'll share a little bit of like a kind of tactical move that I did with that to elevate our manufacturing for future products later on.

And I think, at the end of the day,

“it was a fair deal where they said, "Look, we can sell this.”

We invested in it. We can sell this to other markets." But the challenge there then became that product would show up online on social forums, or people would just post-intag and say,

"Terri Cafe didn't build their machine. They didn't do it. They just bought something drop shit." And especially during the drop shit craze, I think of like 2019, 2020, 2021.

And it's like, "No, this is not true." And we would create content. We would do AMAs. We would do Instagram lives. We'd try and be out there as much as possible.

And we're like, "It does with all your questions. We are super honest and transparent about what we've done. What we haven't done."

And exactly what our trajectory is.

And we are going to be the most responsive brand in this space. We're going to be the most innovative. We are actually going to move the needle. And that's actually what we've seen is the bigger players are now watching us. And they copy our ideas.

They copy our marketing, our advertising, our product ideas. And it's like, "Great, you know what? If you want to, I know competition is not fun, but I'll let you keep tailing me." And I'm just going to say.

Exactly. A lot faster than you. So it did hurt us in the near term. Or at least it did hurt us. I should say more so in the medium term.

But it was a risk I was willing to take because there's only way to get off the ground. And again, you're pioneering it. So it's like, there's a V1 that's on the market. In other countries.

But you're out there pioneering, like you say, and pioneering and marketing and all these D to C channels. You're going to keep a challenge. Online stuff is evergreen, right? So if somebody posts something negative,

they think it's not true. Me coming into defendant can just seem defensive. And people are more likely, even if it's an anonymous individual, they're more likely to trust that than a brand.

“And that's like, OK, like, I think the best way to do this is actually”

put our faces out there. Like, we're not hiding from anything. We even tell people, like, this is our office address. You want to come by, pop in, open door policy. We're happy to invite you in, show you the inside in our workings.

But it was, it didn't end up becoming such a pernicious problem that it killed the company or anything like that. It was just, it made the 2023 year even tougher than what it was. Because we were kind of fighting to a battlefronts as a company. But anybody who knows the story of, like, Nike, right?

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Because you gave me the number that you actually went in on to build the machine from scratch. So talk to me about when you hit paidered, and how you knew that this was going to work. I mean, the crazy thing was, you know, we got to a point where based on,

and this is why capture shows so important, based on the way we were capitalized. We did have to make sure of equity in debt. And we had one of those parties say, like, you know, if we're going to continue to finance you,

this is more or so on the equity of us on the side. We need to see if this thing is like, are you building something people want? That was fair. We were here, I think, year and a half into development.

And they were like, does, is this something people want? We had to push a lot. We'd have a choice. And that's not an ideal good of marketer. It's not an investor saying, show me somebody wants this right now.

“That is not the way, if you want to talk about the actual”

momentum build of community fervor, brand equity development and growth. Like, that's not the way to do it. That's the tail wagging the dog. But again, there are a lot of things in the story of business building

that are not ideal. And they're not following some sort of MBA textbook. So he said, okay, this is the circumstance brand. We pushed it live. We did a pre-artic page or did a teaser campaign.

We left people know something was coming. We did our best to be mindful of not trying to cannibalize Q4 sales for the original kind of MVP product been launched. Just given this new product was still in pre-order. And we didn't even know it was going to be finished at that point.

We're like, okay, these are all the comms that we've planned out.

We'll do our best to communicate around that. We pushed the page live. The pre-artic blew up. Like it was insane. We sold so far in excess of what we anticipated.

So with a website, just one page. There's no reviews. There's no UGC. There's nothing. It doesn't exist yet.

We sold 10,000 of them. That's why. With what? With social posts with some ads? With some ads?

Social posts? Emailing our subscriber base at the time.

“I think was probably around like 70,000.”

Maybe 60, 70,000. And just the virality. And then, oh, and then we did one IR relevant. There was near coffee fest. It was local to hear.

We decided to get two boots. Make it like a gallery set up. Put it kind of manifest on the wall. And then having two of the machines, two prototypes. On the counter that we can brew coffee with.

And then we created a clear bodied version. So much, I mean, literally when I say being transparent, like literally physically transparent. Like, these are the inner workings of the machine. So you can actually see things moving.

I've always actually secretly wanted to launch a clear version,

which I know it still freaks some people out. Because it's still coffee. So there's a condensation and beans going through stuff. So like, um, but in any case, I always thought that would be kind of fun to launch.

Well, we can actually literally see a like a root gold bird machine moving around. Um, so that was how we went to market with the product. It went incredibly well. But we didn't know when it was going to ship.

And so we did our best to say, hey, we believe that this was the anticipated timeline. Based on what the CMs have told us, our business partners have told us. We were off by we said it was going to be in six months.

We were off by six months. It was still a year to go. What did you decide to or what did your manifesto say? What is Terracaffe's manifesto? It's, it's, it's too like they to like recite to you here.

And like you know, it was, it was just this, it's almost like a, you know, full emotion. All of them sacred moments of coffee and the rules that have placed throughout our lives. And so for us, it's elevating every coffee

lover's brewing experience that to us is what we, we stand for what we want to elevate.

“That's why we always say like if you leave us and you go for”

alumna soka, linear mini, or you even just want to do a Mario V60 pourover. That's a beautiful thing. That's it. We are trying to,

cake any given category and make that experience better. The biggest white space we saw was this in this evolutionary scale of coffee, the vast majority of people were still defaulting to pot base systems because of convenience.

But there was a way to basically covet and maintain that convenience

for ease of use. But still getting people to enjoy higher quality coffee, getting them kind of one step closer to that artisanal craft coffee by bringing them out of pots into the being a cup of world without sacrificing anything in terms of ease of use.

What is the central ease of use device that does that job? Because I, so I have a revel, I have the, I have the revel that I, you know, that a lot of people have that's just the, so what, what simplifies the ease of use.

Yeah, so brevill technically would be categorized as a, a semi-auto espresso machine. But for us, we were really looking at the, the the the the the the world. And we saw this category and it was called the actual

category name is a super automatic being the cup espresso machine, which makes have a little bit of a marble mouth. It's, yeah, it's a long name. I can see all of the sleeves of like a, you know, a Japanese streetwear.

Yeah, exactly. Um, but it's very, it was a very kind of, I would, I'm not going to say overly endingmatic category, but a largely unknown category. The idea was super autos are supposed to be you push a button

or you, you know, tap the screen, whatever it may be. And it does everything for you grinds, tamps, extracts, espresso, espresso, froth milk does the whole nine yards. Now, where the magic needs to

“wrote there is kind of, well, how much can you actually control that?”

And the beans that you use from the note that you use from how you like your coffee because everybody takes a little bit differently. So for us, it was, okay, the category is all using commoditized parts. The precision controls, the information, the ability to tweak things,

the modifications even just from the screen settings to like all the different names, the way you take it, everything had room to be developed in our opinion. Like when we started the company, that's the

essential way we saw was this landscape of people that are drinking more

artisanally out of home, the in-home optionally has not evolved at all. In those five brands, I mentioned they were on average 105 years old, incredibly expensive, incredibly complicated to use, and frankly, it just had really dated designs. So you're buying a three, four, five, six thousand,

sometimes dollar machine, and it doesn't even have vintage appeal. It's just Sega Genesis era designs. And you're like, this is a highly emotional purchase and a utilitarian purchase. So we can stand out with a distinctive design,

but we have to sit on your counter, sit on the central part of your counter,

Yeah, and anybody who's ever had a dinner party or had friends over, I mean, invariably, you're going to make your way to the kitchen. What do they say? It's just the heart of the home. So like, people are going to hang out there.

“So they want to show off, and we're like, why does every category is innovating?”

Every category is getting better, but that's consumer electronics, automotive. I mean, while I have a lot of hot dicks on automotive these days, but I'll spare you. But like, every, you know, we're seeing thermostats look nice,

or we're seeing connected fitness appliances look better. Everybody is incorporating new functionalities, and this category is just kind of stuck in the 1980s. And we're like, okay, that can be of the time, and the beauty about coffee is it's so personal.

There's so much you can do by taking in customer feedback, building a community and keeping innovating on the product. And it was like, okay, we can be that brand. We can make that. What do you think? So for 10,000 orders,

how many orders are you in now, by the way? Like around 70, 70,000, 75, 70, that's pretty badass. What was the central thing that people were buying into? Was it this visually striking nature of it? Was it a direct comparison to the convenience of the industry leaders kind of thing?

Like, what was the central hook that made people sign up like crazy?

And so it's always a feat that eyes before feeding the mouth kind of thing.

You start, it's like, it starts at Megda and then it ends prefrontal cortex. It's, you have to get them excited. It's the poetry, the emotion, the fervor that they're going to feel,

“you have to basically paint an aspirational picture”

that they get excited to dig in deeper. But it's a highly considered purchase. Nobody, nearly nobody is just doing an impulse purchase on our product. That's very, very seldom. Average window is tomorrow between 4 to 6 weeks.

We see it get that long telekits as long as 6 months. And honestly, there's probably hard to attribute consideration faces that are over a year. That's people save up for this type of machine. So that's what we typically see. The thing is people do want to make sure that it serves the whole household.

And that's where, you know, the whole thesis lied was. The average American household had two coffee machines per household. We're spending on average $2,000 a year on coffee. That number keeps increasing. We're having on average three and a half cups a day.

And we're looking at the preferences of coffee consumption, right? Latte became the most ordered drink out of home surpassing drink coffee. But how many times do you think we get a message? That's saying, I love lattes. But my husband was dripped.

Or I love espresso shots. But my wife loves capuccinos. So we're like, okay, the device itself is called super automatic. It should be serving the whole household. And you can do all of these things.

But that's where we had to actually build in a lot of the technology. Building in the hybrid, brilliant. That changes the tamping architecture for when you want to do a trip coffee. So you want to natural bloom cycle. You don't want to tamp the grounds versus when you want to do a flat white.

And having those ratios and proportions correct as well as the milk for offing and how it actually incorporates all of that. So for us, it was like, okay, we're serving everybody. We want to make sure that it can do that and do it well. Do it reliably.

Do it consistently. But that was, you know, it's one of the toughest things in terms of the buying journey. It looks a little different for everyone.

But you always have to lead with something that's really striking in the design.

And then let them kind of fall in love with that and then learn more more until it realize if it checks all their boxes or not. And I'm not saying it does for everyone. But clearly, there seems to be some product market fit with what we're doing here. Since, you know, given how we've grown over the years to reach 70,000 orders.

Can I just, can I qualify one thing? Yes. So in the orders, we have like hundreds of thousands now. So it's 70,000 machines installed base as a business right now. So that's just one little caveat which is we look at as like active installed base in field.

But yeah, you mentioned how you approach that those first 10,000 orders getting them. And then at this point, I'm interested what you're sort of like growth. How do you think about growth today? Yeah. For us, it's been a process of editing.

“Honestly, I felt like there was a period as a business where we would observe”

Educatorselves on every growth hack, every best practice at every income operator was doing. And I think at the end of the day, you still have to look at your business. That works for you all works for your community. Like we went down the path of looking at, you know, how do you build the crazy, most crazy affiliate program. But we have a different product category.

We're not in a place where we can see it out a thousand machines a month to different creators to create content for it. It was incredibly challenging to be able to find what was our growth hack. But we did look at that community.

And I was always a big believer in that Brian Chesky quote of like, you know,

I'd rather have a hundred people love me than I'm million people like me. If you love something, you never stop talking about it. If you like something, you never kind of bring it up. And to me, all of that virality coefficient came from the early days of doing the unscalable things.

to being able to get to know me, getting to know the brand, and getting them to be like, hey, like, I actually spoke to something. We see this all the time, but we're like, I kind of speak to the founder. I remember one of the customers literally was like, you know, you're like a really big deal. I'm really not, but that's really sweet that you say ahead.

“But that to me is what I think made the difference.”

Because when I look at our post purchase surveys for the past five years without fail, every single month, the number one variable as to how people people find out about us and why they buy. The number one variable every single month is word of mouth without a thing. And we have all of, you know, we run paid media, we run ads on that, we run ads on Google. Again, of course, it's high consideration.

So showing up on those platforms is important. We run tests on platforms like CTV, Pinterest, you name it, like we'll run all of those. Regardless of the month, every single month for the past five years, it's been word of mouth as a business.

It's well over one, one third, you know, touching on almost half of our order that coming from that.

It does mean it's a crawlwalk run, meaning the early days you're really just building up that relationship with a very tight nucleus. But I think in that adoption cycle, if you have a really strong early adopter community, I think the growth both in terms of velocity and overall surface area under the curve just grows so dramatically. If you have that really tight connective tissue with the first customer.

“So really how I think we've scaled this, yes, we've been consistent with high quality visuals, high quality ads,”

building great product. But to me, it's community. It's like product and community are the two winning pillars for our business, especially given. We can't do a lot of like CPG and FMCG brands do being, you know, at a really high AOV and a really high cost basis for the product. How do you think about, you know, we talked a little bit about your genius Larry David idea.

But at this point, how do you think about brand and how do you think about spending on brand versus performance? I don't anymore. I don't. I will say the headline is we virtually don't spend on brand awareness anymore. I believe in spending on your community.

So basically being there in every way we can.

That is economically feasible to be there for our community and double down on customers and let them be the biggest advocates outside of that is performance marketing. That is to me. By and large the way that we've seen, you know, the most effective route we've seen to get to profitability that we need to do this business. We were in a place where it was this is not going to be just a cash burn cycle that we just keep subsidizing with venture capital dollars.

“And it was a scary thing to do because I believe in brands so much.”

I believe in standing for something. I believe in having these various strong tenants and pillars of the brand that govern, you know, how you make decisions to ethos of the company. Your product has so much gravity. Your product has so much density and gravity that it is the brand almost anywhere you put it in my opinion. Like just looking if anyone's listening, make sure you go look at a terracaffe machine and it's such a striking.

And it's like you put so much work and investment into it that it's like it stands alone like as the brand. As you say, because people see it and they're compelled. They're like, this is a different experience. This is this, you know, I want this in my life kind of thing. So to me, it's like you don't have to spend as much.

I think at some stage getting Larry David is going to be, you're going to absolutely crush for you. But right now you are the brand. I think it's just I speak to operators all the time and I love it because no matter how big or small they are, I think everyone just learns and benefits from each other.

But without fail, it's always like the same three things that everybody is struggling with.

Once they kind of let's say like cross like a like a seven or even like eight figure threshold or once you pass that, I think early early days it looks really different. You may not even be live in market yet, so the problems might look different. But for those who have been in market for at least a little bit, it's always the same three things. How do I create enough creative assets?

So how do I create enough creative to actually support algorithmically what the platforms require? How do I juggle that with investment in brand that is not meant to be, you know, attributable to a sale. How do I actually allocate budget to that to invest in building top of funnel awareness in a responsible manner? And then third is users capitalization or some version of capitalization working capital is kind of like. This isn't investment banking looking at a public company with 20 25 years of history.

And then you just assume a straight line growth rate on the business and that's exactly how you're forecasting top line growth. It's not like that. There are all sorts of S curve j curve adoption cycles for your business that you're trying to decide on exactly what is the right risk profile for where we're at as a business. How much are we investing in inventory, whether you're a seasonal business or not.

Like everyone is dealing with some permutation of those three problems at any given point in time that I've spoken to unless they're so flushed with cash that those are very exceptional circumstances. That they can kind of do buckshot at the board do all forms of marketing. And and also of course, have the inventory, but they have other problems too.

But in short, those are the big three that I always see.

And for brand for us, that was a super scary thought to say, I want to pull back on this awareness side. But I realized there was a fallacy in there and that was putting minimal dollars towards brand awareness is a little bit of a trap for these brands that are growing quickly.

“And maybe not immaterial in size, but the dollars you have to really put towards brand awareness.”

You're never going from those seven touch points of marketing of like subconscious subconscious subconscious subconsciousness. You're not going to become Coca-Cola with your wanting K a month 15 K a month brand awareness budget. It's it's not going to move the needle enough. You're better off actually holding your bullets for one big campaign that can kind of rise to a level of prominence. That is if there's just a certain threshold or I always say there's a certain buying to that poker table that you just need to be able to afford if you want to play at that level.

But you know, just making a judgment call if you're there or not yet. You guys are 10 people solid eight figures.

Nespresso is a six billion dollar company.

Where is this going for come form? I'm telling you it's it's it's product and community. I fundamentally believe with how we built this business, how we've really built stability into the business and through that stability actually creating optionality and opportunity. There's just it feels like there's so much meat left on the bone because we are up until a year ago up until a year ago we were one hero skew in one market in one channel. So it was the O2 or the O1 before that, but online with one hero skew in the US that was it.

And we are in the category of coffee like it is everywhere globally. It is present in all channels and there is so much room to grow from a product portfolio and product performance standpoint and I love that we started in such a hard category. I'm clearly glad in for punishment and pain, but building our brand there is so much liberty and license to expand. And that's effectively what we've done with the Demi machine, which was our smaller form factor one, our arrow, frothor and much of mixer and then having some other exciting things coming out in early 27.

So super exciting. Have you tried CTV? I feel like CTV is a potentially a really good match for what you're building here. It has been performing incredibly well for us based off of their metrics. I do take their metrics with a grain of salt. So we have started because we have a lot of high fidelity video content that we have shot that we invested in.

“And I remember some of the stuff we shot was like early 24 when the O2 just got out and it was like we don't have the money to be investing in this.”

And then we put it on Instagram and we put it on Facebook and it just didn't convert. But it's just too, it's time and esoteric, but it's just so not native to the platform that it wouldn't perform incredibly well. So we just sat on this thing and that was like, like it wasn't even that much money in total. We probably spent like 30k on this high production high quality video shoot. And then when CTV started blowing up, we said like let's test it and it has performed so incredibly well on that platform.

It feels so native. It just feels like we're punching so far above our weight in terms of the asset quality. And it's like, hey, it was just, you know, a matter of timing to find the right platform where that type of content resonates. But yeah, so that's been one of the biggest areas we're scaling our spend right now. Can you show it the platform? I'm happy I'm happy to give credit where it's due. So we've been working with Vibe, so been really happy with them.

Yeah. Man, this, we're, we're at time here, but we were just scratching the surface. I, we're going to have to do a follow up. We didn't even get to your, what is the one line you'd use to describe your journey so far? A lot of people say death by a thousand paper cuts.

I believe the game of entrepreneurship is survival by a thousand candidates.

“That's how it made it. And frankly, I think anybody starting something or in the early innings of starting something,”

should gear up for the same mentality.

Just don't quit. Don't quit. Don't ever quit. There's always, there's always another card to play.

As, as hard or as grim as it is, I have been in scenarios where I had to raise two and a half million dollars and 14 days. Or it was game over. And we raised 2.6 and 13. Yeah. And you made sacrifices. You made the compromises that you had to do to keep it afloat.

And now you're ready to take on George, we'll not George Clooney. Yeah, do I lead by George Clooney, Brad Pitt, bring them all. Let's go. I love competition. I love, I love playing the win.

Honestly, a lot of times, I know that the notion of, you know, an ounce of prevention is worth a pound of cure.

“But in startup land, you're going to need a lot of pounds of cure.”

You're not going to be able to pre-meditate everything that's going to come to you. It's about those who actually fight through it that actually separates those that make it from those who don't. You will not be able to pre-meditate. It doesn't matter if you're in hardware. It doesn't matter if you're in consumer goods. It doesn't matter if you're in software. You're going to get punched in the face a lot.

It's, I hate to say it, but get used to it. And then take, in some aspects, have equity many and stay calm as you delegate and you communicate to your team. What's going on?

In some aspects, take it personally.

And be like, yeah, let me show you what I can do. Get a chip on your shoulder. Yeah, have a little bit of a chip on your shoulder. I mean, look at all the grades through time. A lot of them do have a little bit of that, that fire in them.

They have something to prove. And that's what I love about it. It's why I love talking to people who sound things.

I love talking to people who have been through it.

Because anybody who's been at this for a little bit has a story to share.

“And that's why I love that you do this because frankly, I think it's so cool to listen to these things.”

I'm sure what people went through. It's, I guess, I'm somewhat insulated. I'm so used to it because I'm surrounded by this. But I remind myself regular, like, when I talk to other friends that aren't, they're like, these stories are crazy.

And I'm like, this is, it's so, I get so much joy from sharing other people's stories. But then the sense of solidarity, but also in the sense of learning. Son, thanks again, man. This is fantastic. If you want to follow your journey anymore, where do you recommend they kind of do that?

Are you one LinkedIn or anything? Yeah, you can.

“I'm unlinked in just, uh, Sandal McGonney.”

And then, um, you know, for the company, just, you know, most active platform for us is Instagram. So at Terric Cafe, T-R-R-A-K-A-F-E. Uh, funny spelling by virtue of starting a company in Germany. But, um, yeah.

Like you said, there's so much more to cover. I'm happy to come back and, uh, thanks again for having me. They spend, we'll do it. Thanks so much for listening to today's episode. If you're not a subscriber to our newsletter, you can do that right now

at direct to consumeralloneword.co. I'm Erik Dick, and this has been the D-S-E podcast. We'll see you next time. Holiday starts early on Walmart Marketplace. Apply to sell and get your inventory to Walmart fulfillment centers

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