or, What online video can learn from the coffee business.

There’s a pretty incredible thing happening in the coffee business here in New York and other cities all over the country — independent, locally-owned coffee shops are springing up that are giving Starbucks a run for their money by paying obsessive attention to quality of their product and creating a better, more unique experience than an international supercorporation possibly can.

I first noticed this in my own neighborhood when I wandered into Cafe Grumpy at a friend’s recommendation, or, more accurately, his obsession — he wouldn’t stop talking about it. Cafe Grumpy (their name is a poke at Starbucks baristas) (deleted, see Caroline’s comment below) started out in Brooklyn, then began conquering Chelsea with their ultra-fancy single-brew Clover coffee machines, which people obsess over; fair trade sourced and locally roasted coffee; and super-rich, hand-poured espresso drinks — no more expensive, and often cheaper, than the mass-produced ones at Starbucks — where they draw little designs with the foamed milk, part of a fun new trend called latte art. The coffee was noticeably tastier than most other cups I’d ever had, the place was cool and welcoming, and being the silly old hipster I am, I was soon hooked enough to start walking several blocks out of my way to stop in on my walks between home and work.

Sam pours up a cafe latte at Cafe Grumpy, from their Flickr stream.

But Cafe Grumpy’s just one example. Joe is opening shops all over the city, there’s the tiny Gimme Coffee in Soho and Brooklyn, Gorilla in Park Slope, and a couple Ninth Street Espresso locations, one of which broke off on its own as Everyman Espresso. In Los Angeles, there’s Groundwork coffee in Venice and Hollywood, my frequent hangout Kings Road, Intelligentsia (invading from Chicago), and the Latino-owned Sabor y Cultura. San Francisco’s got Ritual Roasters and Blue Bottle. In Austin, there’s the amazing Jo’s Coffee, creating some of the best new jobs for hipsters since Waterloo opened, and in Washington, D.C., there’s Tryst (their slogan: “no corporate coffee. no matching silverware”) and the fast-growing, famously black-owned Mayorga with over ten locations already. Many of these businesses are opening franchises in local airports and train stations — the places you’d expect to see yet another Starbucks — benefiting from programs to attract local businesses. And like Starbucks or Whole Foods’ Allegro team (a bunch of whom I met randomly last week in Austin, and who seemed uniformly passionate and smart), these businesses take personal pride in sharing the sourcing of their coffees, even visiting the growers and posting photos of their trips on Flickr.

Cafe Grumpy visiting coffee growers in Nicaragua.

Part of all this is a trend of local government and consumers wanting to support local businesses, and a simmering backlash against big chains, even corporations that are cloaked in green like Whole Foods and Starbucks (I don’t know of any real studies that these local businesses in general are greener or more socially responsible, especially since there’s no way to get coffee beans to U.S. cities without burning lots of fossil fuel; this is ultimately an intuitive / emotional issue, and in most cases, you can at least meet the owners and gauge for yourself). But these businesses wouldn’t be succeeding if they didn’t have better coffee, cooler design, and nicer, better trained staff than their bigger competition. It doesn’t hurt that coffee shops have some of the lowest overhead and best profit potential — high turnover, nice markups, all-day demand — of any kind of retail or restaurant, and they can open quickly and start making money in the smallest of spaces (even a small truck). In other words, everything that made Starbucks unstoppable is now enabling faster, smaller competitors to spring up and out-innovate them.

Now, if you still grab your coffee at the local deli, all this coffee obsession might seem like the most precious thing in the world to you, and I won’t belabor the metaphor, but the whole thing reminds me of the opportunities the web offers for startup businesses. Two years ago, we thought it was game over — Starbucks was EVERYWHERE, and mom and pop coffee shops seemed to have all but disappeared. But Starbucks actually laid the foundation for a new wave of innovation, and whole number of people with vision are now jumping in to fill the demand for even better coffee and nicer places to hang that the corporate colossus in the space can’t, and word of mouth is getting them customers fast. Right now, it might feel like Google, YouTube, and Facebook have completely taken over search, video, and social networking respectively, but maybe they’re just creating the foundation, too. Our friends at CafeMom have shown there’s real demand for a more specialized kind of social network; Tumblr’s showing there’s demand for a new, innovative alternative to Blogger; and if we’re smart, we’ll be creating some of the next wave of boutique video destinations (on sites like ThreadBanger and Indy Mogul, which are growing monthly in traffic).

Like Starbucks, YouTube isn’t going out of business any time soon, but I feel a lot of hope right now that there’s lots of room for online video indies to set up shop and coexist peacefully, especially since we’re not in a zero-sum game, and there seems to be no end of demand for our addictive product.

Or maybe I’m just a little too hopped up on caffeine right now.

Please promulgate us on the interweb.

Posted by Tim at 7:25 pm on Sunday, March 16th, 2008 in Branding, Industry, YouTube, business. You can follow responses through the RSS 2.0 feed. You can leave a response, or trackback from your own site.