How I Built This with Guy Raz – Dutch Bros. Coffee: Travis Boersma

Intro

In this episode of “How I Built This with Guy Raz,” host Guy Raz interviews Travis Boersma, the co-founder of Dutch Bros. Coffee. Dutch Bros. Coffee began as a small pushcart in Grants Pass, Oregon, and has since grown into a billion-dollar business with over 700 stores across the United States. Travis shares the story of how he and his brother Dane started the business with just $3,000 and built it into a thriving company known for its unique company culture and focus on customer experience. He also discusses the challenges they faced, their expansion plans, and the philanthropic arm of the company, the Dutch Bros. Foundation.

Main Takeaways

The Early Days and Foundation

• Dutch Bros. Coffee started as a pushcart in Grants Pass, Oregon and is now a billion-dollar business with over 700 stores
• Travis Boersma and his brother Dane started the business in 1992 with just $3,000
• Travis and his older brother Dane had a close relationship and often talked about crazy business ideas.
• Dutch Bros started as an espresso cart in a grocery store parking lot and is now a billion dollar beverage business with over 700 locations across the US.
• Travis and Dane grew up on a dairy farm in Grands Pass, Oregon and were very family-oriented.
• Dane had a Dairy Queen franchise at age 22 and later sold it for a $60,000 profit, which he reinvested in cows on the dairy farm.
• Dane had a vision to turn the dairy farm into a high-end, organic dairy before organic was popular.
• In the early 90s, the dairy farm began to struggle due to environmental regulations with the DEQ, resulting in the decision to sell the cows.
• Dane considered getting a job, but Travis suggested pursuing one of their business ideas instead.
• Travis suggested starting an espresso business after drinking espresso and mochas at SOC.
• They visited a local restaurant and a drive-through espresso stand to try espresso, and found the latter to be better.
• Travis had seen espresso carts in Portland as a kid and started consuming coffee in school.
• Travis and his brother got the idea to start a coffee cart after trying espresso drinks and liking them
• They found a cart for sale at Nordstrom’s, but it was not what they wanted
• Travis’s brother knew someone at Boyd’s Coffee in Portland, which sold espresso machines and carts
• They took a trip along the I-5 corridor to visit different coffee roasters and learn about the business
• Boyd’s Coffee sold off-the-shelf coffee carts, which was ahead of its time
• Founders were looking for a higher-end and better-equipped coffee cart to handle volume
• Idea was to put the cart at Fred Meyer, either inside or outside the store

Learning and Growth

• Learning how to make proper espresso was a barrier, but they found a roaster wholesaler to help them learn
• Meeting Paul Layton, owner and roaster of Coffee Corner, was a turning point, and he introduced them to green coffee beans
• Paul introduced them to green coffee beans and taught them about the different varietals
• Paul helped them choose equipment and taught them how to pull shots and steam milk
• They had limited funds, but were able to purchase a machine and a car for $12,000
• Paul encouraged them to experiment with different coffee blends and have fun with it
• Experimenting with different coffee blends was a challenge for the founders
• Steaming chocolate milk from Valorogue Dairy became the perfect addition to their menu
• Dutch Bros got its name from the founders being Dutch brothers, and they chose “bros” over “brothers” to break tradition
• The first Dutch Bros location was set up next to the post office in downtown Grants Pass for $150 a month
• Travis and Dan started their business selling espresso drinks from a push-cart in Oregon in 1992
• On their first day, they ran into a problem with the owner of the shopping center
• Travis and Dan negotiated with the owner and eventually found a solution to stay in the parking lot.
• On the first day, they made $65 and were profitable, which was more than they were making on the dairy farm.
• The push cart had low overhead and they earned customers one at a time through word of mouth and promoting the product.
• They gave free coffee to people getting their mail and gained more customers.
• The owners of the store parking lot allowed them to stay after the one-month agreement and they eventually gained the attention of the brass from Grocery Outlet.
• Fred Meyer approved them for a second location, which led to the purchase of another push cart.

Expansion and Challenges

• They mapped out personal and professional goals for Touchbrows, including opening locations in the 11 Western United States.
• Writing down their goals was like taking inventory of their dreams and helped them manifest what they wanted.
• They opened three more push carts and two Walmart locations, and eventually landed on the ultimate success.
• The founders learned the formula of “know your specific outcome, take massive action toward it, and ask yourself if the actions work” from Tony Robbins’ book
• They decided to move away from push carts and Walmart locations and build their own custom trailer for a drive-through coffee experience
• The drive-through concept was not popular at the time, but it became their niche and exceeded volumes of $300-$400 per day
• They worked with a customer named Marty McKenna, who wanted to replicate their concept in Medford, and he agreed to pay $500 per month for their name and products
• Marty’s business was successful and he eventually became one of their best “bro Easter” (baristas)
• Marty approached the founders about opening a new location, triggering thoughts about expanding beyond Grants Pass
• Marty became a partner in the business after 6 months to a year of working together
• Compromises and challenges arose due to differing priorities and commitments between the partners
• Founders decided to buy out Marty’s share of the business for 1.2 million at 7% interest
• The belief that “if you’re not growing, you’re dying” drove the founders to continue expanding after buying out Marty’s share
• The founders expanded their business by franchising and designing cool buildings for their coffee shops.
• Franchise owners invested their own money into fully equipped mobile units without requiring capital from the founders.
• The company’s roasting of their own beans became a cash cow and the lifeblood of their growth.
• The founders faced challenges, including the onset of a medical condition affecting one of the brothers and a warehouse fire that destroyed inventory.
• Despite challenges, the founders persevered and continued to grow their business.

Continued Growth and Success

• In 2004, a fire destroyed everything at Dutch Bros, including the coffee roasters.
• Paul, their green bean broker, found a solution to keep their product going by getting Boyd’s to roast coffee for them.
• Dane, Travis’ brother and business partner, was diagnosed with ALS after a year and a half of testing and ruling out other illnesses.
• Coping with Dane’s diagnosis was difficult for Travis emotionally and mentally as he was not only his business partner but also his best friend and mentor.
• Despite the challenges, Travis persevered and continued to run Dutch Bros, focusing on keeping their stores from being impacted.
• Travis persevered through tough times to keep Dutch Bros afloat
• Despite his struggles, he prioritized the business and continued to grow and scale it
• Dan’s battle with ALS took a toll on both him and the business
• The business faced challenges when expanding into new markets with inexperienced franchise owners
• Travis had to step up and perform to the best of his ability to ensure the success of the business
• 2008 was a challenging time for the company due to the real estate bubble bursting
• The decision was made to stop growth with franchising and evaluate how to best grow
• Franchise owners were struggling to make their stores profitable, which led to creative ideas that didn’t align with the company’s principles and values
• The team focused on teaching culture and business acumen to protect the brand and ensure profitability
• Travis had to make tough decisions, including considering selling the company or working on himself
• Travis attended Tony Robbins seminars for personal and business growth
• At a Tony Robbins seminar, Travis and his team realized they were in the relationship business selling love
• Dutch Bros only sells franchises to people who have worked in the company, creating a strong internal culture
• After Travis’ brother passed away, he continued to lead the company with his brother’s values and guidance
• Dutch Bros opened 20 locations in 2011, focusing on building momentum with their own people and strong culture
• Dutch Bros started as a coffee beverage place, but evolved into a cold beverage place with the introduction of the Rebel energy drink
• Brain Freeze, a frozen beverage, played a critical role in Dutch Bros’ growth
• Dutch Bros’ Blue Rebel, a drink with its own identity, became one of their biggest sellers
• Coffee is still the backbone of Dutch Bros’ business, but they also serve a variety of non-coffee drinks
• Dutch Bros stopped franchising in 2015 and decided to become a company-owned store, providing regional operator opportunities to their developed bench of qualified operators.
• Dutch Bros started as a coffee cart in 1992 and became a billion-dollar company
• In 2018, TSG bought a minority stake in Dutch Bros
• Dutch Bros went public in 2021 and raised $500 million in the IPO
• The company’s ambition is to grow to more than 4,000 stores
• Travis attributes their success to both hard work and being prepared for opportunities
• Travis Boersma, co-founder of Dutch Bros, believes in using resources to plan for the future
• Boersma credits their success to hard work and preparedness for opportunities
• Boersma is asked if America is better at espresso drinks than Italy, he diplomatically sides with Italy

Podcast Production

• The podcast was produced by Alex Chung with music composed by Rump Teen Arablewy
• How I Built This production staff includes J.C. Howard, K.C. Herman, Sam Paulson, Liz Metzger, Carrie Thompson, Elaine Coates, John Isabella, Chris Messini, and Carla Estevez

Summary

The Early Days and Foundation

Dutch Bros. Coffee started as a small pushcart in Grants Pass, Oregon, with Travis Boersma and his brother Dane investing $3,000 to start the business. Growing up on a dairy farm, the brothers had a close relationship and often discussed business ideas. They decided to venture into the espresso business after trying espresso drinks and finding them better than regular coffee. With the help of a roaster wholesaler named Paul Layton, they learned how to make proper espresso and experimented with different coffee blends. They set up their first location next to the post office in downtown Grants Pass and quickly gained customers through word of mouth and promotions.

Learning and Growth

Travis and Dane continued to expand their business by opening more push carts and Walmart locations. They eventually shifted their focus to drive-through coffee and built their own custom trailers. Despite facing challenges such as a warehouse fire and Dane’s diagnosis with ALS, Travis persevered and kept the business afloat. They stopped franchising and focused on building a strong internal culture. Dutch Bros’ success can be attributed to their commitment to quality coffee, innovative drinks like the Rebel energy drink, and a customer-centric approach.

Expansion and Challenges

The founders faced challenges when expanding into new markets with inexperienced franchise owners. Travis had to make tough decisions to protect the brand and ensure profitability. They attended Tony Robbins seminars for personal and business growth, realizing that they were in the relationship business selling love. Dutch Bros only sells franchises to people who have worked in the company, creating a strong internal culture. After Dane’s passing, Travis continued to lead the company with his brother’s values and guidance. Dutch Bros went public in 2021 and has ambitious plans to grow to over 4,000 stores.

Conclusion

Travis Boersma’s journey with Dutch Bros. Coffee is a testament to the power of perseverance, innovation, and a strong company culture. From humble beginnings as a pushcart in Oregon to becoming a billion-dollar company with hundreds of locations, Dutch Bros has revolutionized the coffee industry. Travis’s dedication to providing an exceptional customer experience and his commitment to the company’s core values have been instrumental in their success. As Dutch Bros continues to expand and evolve, it remains rooted in its mission to serve quality coffee and build meaningful connections with its customers.