I want to talk about why Blue bottle was worth $700 million to nestle.

Never get answer in just one word that would would be Amazon.

I should probably explain.

Amazon owns product search right when you look for something online, if you're buying it, you probably gotta Tamsin first.

They are the gatekeepers of online shopping, and they're doing an incredible job.

In fact, for years Amazon have used a hugely profitable business.

Their Web service is that host sites all over the Internet to prop up the retail platform that they've been building.

That's how they've been able to grow so quickly.

Do everything's are cheap, have this incredible customer experience.

64% of U.

S households have Amazon prime, and they're picking up about Ford every $10 spent online.

This terrifies the bigger companies because right now, if I go to amazon dot com and I search for, let's say Nespresso pods, Well, sure, I get a few ads first.

But then after that, yeah, I get Amazons recommendation, which happens to be especially parts, a big step for them to start selling on the platform now, at some point, any point really?

I'm losing Consejo.

Hey, we know loads of people want to buy pods.

You know what?

They'll pay for them.

Why don't we just do Amazon pods, right?

And then the first thing in any search is gonna meet Amazons phone product.

They bought whole foods.

Coffee is a growing category.

You can't help but think that this is where they're gonna go.

And this is a problem.

So how do you stop someone buying the Amazon part over the Nespresso pods?

Well, the answer's brand.

And this is where we come back to Blue bottle.

Now, I should say I have no inside knowledge here.

I met James Freeman once, Emmett, Brian me and a couple of times haven't met anyone from Leslie.

Blue Bottle is a kind of fascinating brand.

They paid $700 million for it.

They paid the equivalent off about $14 million per cafe.

They clearly weren't buying a business.

This probably wasn't a deal based on how much profit the company made.

This was another kind of valuation.

Blue bottles interesting to me and has been for a long time.

And to go back to why?

I'll tell you a quick story about the first time I stayed in New York in an A B and B on.

Like most people, I answered the questions that told the host what I did for a living.

When I got there, she was incredibly excited because she had brought for me.

Some blue bottle blue bottle had come to represent in her mind and in a lot of people's minds, Good taste.

Blue bottle weren't really the U.

S specialty coffee darlings the same way that, say, Intelligence Year or Stumptown counterculture were they kind of sat off to the side.

They didn't play well with other Children in the early days that that has changed a little bit.

Now there tone their language.

This style was a little bit different, and in some ways it was kind of rejected by the sort of elite of specialty coffee because it wasn't really serious enough.

But what they did a fantastic job of doing was making themselves that expression of taste.

If you look at their cafes, they build beautiful cafes.

James Freeman is clearly very thoughtful about how a cafe comes together and walking into any one of them.

It's clearly an expression of someone's aesthetic.

It resonates strongly with a lot of people that's incredibly impressive, and I think I underestimated in value by the rest of specialty coffee.

Blue Bottle had a different style of communication.

They talked about buying a $20,000 halogen siphoned brewing setup.

Not especially that just seemed insane, like that was ridiculous.

But that was a really smart piece of communication to lots of people.

They understood two things.

One, This company spends a lot of money on its coffee in a way that they can kind of understand.

And then they can have evoked that kind of stereotypical Japanese obsession with Kraft.

They were speaking a language most people could understand and at the same time specialty coffee where we were speaking a whole other language.

We were talking about variety and processing, and we talked about farm names that were almost impossible for people to pronounce.

We were speaking just a whole other language.

Blue bottle weren't and didn't for a long time, and I think this allowed them to build a brand by communicating better than most of us.

Sure, they got a lot of investment.

They were able to grow.

They were able to acquire companies like talks, his subscription or perfect grind again looking at ways to sort of break down the customer barrier and being more approachable.

That brand that consumer attachment people have, and people I met who were just normal people that drank coffee, a blue bottle really felt this defined them in a very positive way.

They produce very viral consumers of their stuff, and I've seen them described as like a hipster cafe.

But having been to a bunch of them and sat in them, that's not the traditional kind of hits the demographic going there.

It's people from their twenties through the fifties, by and large, pretty affluent by a large interested in a better product, perfect as a kind of growing demographic of huge, huge value to a company like Nestle.

So how do you retain that consumer relationship?

And I think that has to be through brand, so that, from my point of view, is why I think Nestle.

I thought the blue bottle was worth 700 1,000,000 dollars.

There you go.

Just a quick video.

For now, there will be more videos coming.

The basics of this place coming together gonna be shooting some more stuff very soon.

If you disagree, tell me in the comments below, I'm open to a conversation about this sort of stuff.

It's something I think about quite a lot.

So I want to talk more.

Thanks for watching on.

I'll see you soon.