Coffee + tech startup Craft Coffee is bringing the $4 billion American coffee market online.
Everyone deserves good coffee, even if they have no idea what it is. In fact, there is no ‘perfect’ coffee, no roast that is the best or objectively good. Every person has an intensely personal opinion on what coffee they like, and often they don’t know what they like, having just taken on marketing jargon as their preferences until they try a blind taste test.
These are just a few of the things that founder Michael Horn and his team at Craft Coffee learned over the last 3 years, and for the past 10 weeks they have participated in Y Combinator‘s Summer Class in Silicon Valley to build the technology behind those insights. Just like startups in the movies, they lived and worked in a Victorian home together and created more product and pushed the business further in those two and a half months than they had in their previous three years in operation.
Some background: Craft Coffee is an artisan and speciality coffee delivery company that selects top coffees from small roasting businesses around America and delivers a selection of three each month. However, after doing this for a few years, Michael and the team realized they weren’t leveraging the full power of the Internet to revolutionize and personalize the coffee industry.
“We’ve spent the last three years building the first Internet startup in coffee space. We collected lots of data and looked at coffee customers in a new way, and really asked them what they wanted,” Michael tells me. “There’s a great opportunity, a unique play we’ve begun, to sell coffee on Internet in a compelling way. Over 130 million Americans pay $4 billion a year on regular beans they drink at home. Of that $4 billion, hardly any is sold online. The opportunity, just as Zappos saw with shoes, is clear. We now have the code to make it happen, to personalize the online coffee buy experience through learning algorithms based on ratings and education. It’s not unlike a Pandora for coffee.”
The Coffee DNA Project is the company’s latest product and now the basis for their entire business. It began with a proprietary scientific analysis of thousands of coffees to create identifiable traits and tags for each. Then they built a recommendation algorithm that connects the dots around people’s coffee preferences, to figure out why they like what they like.
The Coffee DNA Project simply asks what coffees you drink, then recommends artisanal roasts from American small businesses that you would also like, without you needing to know the fancy coffee jargon. The more you rate coffees, the smarter it gets at recommending them to you.
This has allowed Craft Coffee to shift their entire business to be more personal and customizable. They now sell coffee that matches your preferences, without you knowing what your preferences really are, and in the exact amounts you want.
“We love the artisan roasters, but a lot of the country isn’t there yet. Most Americans stick with the big coffee brand names. We want to push past the buzz, hype and exclusion of the artisanal coffee scene to get to all Americans,” Mike said. “We are lowering the barrier and opening the gateway to new coffee experiences for everyone, by easing people into discovery with customizable price points and our learning algorithm.”
All the changes and new offerings that Craft Coffee is implementing are entirely based on user feedback: They learned that every coffee drinker is different. To respond to that, and to truly bring coffee onto the Internet, they are becoming a software company in addition to a coffee subscription company. Beyond suggesting new roasts, their algorithm learns each customer’s individual consumption rate and will offer to send more coffee when it thinks they’ve run out; it can also adjust the exact amount sent to customers and the exact timing of deliveries so customers can personalize each and every delivery they get.
Mike proudly adds, “Y Combinator has made one bet on coffee over the past 10 years they’ve been around, and it’s us.” It’s easy to see why. They’ve set up a scalable, customizable customer experience in an industry that has been untouched by the e-commerce revolution. While the Coffee DNA Project is still in its first version (navigating menus filled with dozens of coffee options can be a bit cumbersome), they’ve laid a groundwork that’s better for coffee farmers, roasters and customers that’s accessible for the vast majority of American coffee drinkers who don’t make a cup of burr-ground Yirgacheffe pour-over in a Hario V60 with a precision scale.