In March of twenty twenty, when the entire world was first reeling from the pandemic, Doug and Jason Barrow's coffee company had well other problems.
Well, when I get to the back and it goes anything going on, Everyone's like, no, everything's perfect, and then one person in the corner goes but it smells like campfire. I'm like campfire. Coffee roasting doesn't smell like campfire. About that time, the ceiling melted, opened up, and all the trusses above us were on fire. Within an hour, it was a complete loss. We weren't left with a paper clip.
I was like, I never thought this could actually happen.
What did you say to each other?
Oh shit? Oh shit?
Yeah? Oh shit is right. That's a moment every small business owner can tell you about. It happens in the lifespan of every company, and it's a moment that really tests your resolve. It might also be a moment that changes you and your business forever. I'm Ben Walter, CEO of Chase for Business.
And I'm Tanya need Fanoe, a lawyer and consultant for business owners.
And this is a show about those moments. Welcome to the Unshakables from Chase for Business and Ruby Studio from iHeartMedia. Hi, Tanya, Hey Ben, how are you. I'm great, We're here, we're doing it. We're starting the podcast and I am fired up. Okay, So do you want to tell the folks at home what we're going to be talking about on the show.
This is a show about small businesses. It's a topic that I'm very passionate about. I'm a small business owner myself, by the way, shout out to the Nebo Law firm. I know it can be hard to get a business up and running, let alone lead a business through a crisis.
And that's what we're doing on this show. We're sharing the daring stories of small business owners who face that crisis point and tell the story of how they got through it. Now, importantly, these aren't big Wall Street firms or Silicon Valley companies with big, fancy venture capitalists behind them. We're talking about regular people. They're the people who sponsor the Little League in your town that you see at the grocery store.
Yeah, people forget that. These unicorn stories are the exception. I'm really excited that we're going to get a chance to speak to typical business owners and we get to hear their stories. So not only do we get to be inspired, but the people listening get to be inspired as well.
Okay, I think we should get to the stories. What do you think?
I say, let's do it.
On today's episode, Luna Gourmet Coffee and Tea from Denver, Colorado. At the top of the episode, you heard Doug and Jason Barrow. They're brothers and owners of Luna Coffee. But back in the early two thousands, Doug never dreamed of owning his own coffee company. He worked an everyday corporate desk job.
When you're in corporate America, in management, you know, there are things like golden handcuffs, parachutes four one k's that are very attractive, you know, and when you go out on your own, it's a different game.
Now.
Doug wasn't sure what he wanted to do other than he knew he wanted to leave corporate America behind, and as it turned out, his brother Jason had been thinking the same thing.
But then we kind of woke up one day We're like, wait a minute, we're making a lot of money for these big guys. We probably could go to this ourselves.
But exactly what they wanted to go do well, they weren't really sure. They started working through a lot of different business ideas, frankly, just throwing things at the wall, including I think we should mention for posterity selling hot dogs outside of hardware stores. Nothing really stuck. They kept circling back to the same question.
How do we find something where the market is really really big, but there are still niche opportunities to really knock it out of the park with.
And finally it hit them coffee. Starbucks was national and back in the early two thousands, a new location was opening on every corner. They'd found their really really big market.
People go to coffee shops. It's a social, communal product, but everyone has like a personalized way of brewing their coffee, so this is an interesting medium to try to make a difference.
So, yeah, it was big, but there was still opportunity, there were niches that hadn't been cleared. And as a bonus, it was their passion. The two of them loved coffee.
It's something that you live and breathe and when you take a look back and look from a commodity standpoint, I mean it's one of the most traded commodities in the world, maybe like seventh or eighth to oil. Like you know, we drank four hundred million cups a day in the USA, but.
In Denver at the time, they weren't all good cups.
We thought to ourselves, well, why isn't there good coffee out here? I mean, why isn't there a proliferation of higher quality coffee.
So they'd found their market, their opportunity, and their why. They found a small roaster just a few hours outside of Denver called Luna Coffee, and they bought it. Tell us about what it was like in those early days when you first started.
Out, scary and fun, scary and liberating.
Being able to be on top and call the cards and make the decision and actually pull the trigger was I guess liberating and empowering. However, let's go thirty days into being an entrepreneur. We didn't have our cushy offices. I was start to roast coffee and my brother was starting to package and deliver coffee, and we started to look at ourselves and go, what exactly do we get ourselves into here?
I had so much pride that I would deliver in slacks and a button down.
When they first bought the business, Luna's existing clients were mostly high end restaurants that offered gourmet coffee with dessert.
Walking into all these restaurants, it's not just a delivery guy, it's I'm the owner of this coffee company.
It was a good start, but definitely not where Jason and Doug wanted things to end. They knew they could grow it, but they'd have to hustle.
I think I had many moments of oh my god, we're here in the garage. We literally had like pallettes of coffee in the middle, with a twenty five kilo roaster on one side, which is a small batch roaster, and then like a wooden old desk on the other side, and that was it. We were really bootstrapping it from the ground up.
Every single day brought new challenges, most of which Doug and Jason fought through with a smile and sometimes with a blowtorch.
We had a truck pull up to deliver coffee, but it had snowed and it was really icy out there, and we had this forklift that could only go on flat surface. If you try to give it any incline or whatever, it just didn't have the gusto to do anything. Okay, so my brother's out there with a blowtorch trying trying to melt the ice just so we can get the forklift out to pull out, you know, a palette of coffee to roast. It was just one of those moments where you're like, what are we doing?
So sounds like you started out, you know, your angle was selling coffee to restaurants so they could serve differentiated, high end coffee to their clients. But at some point you realized that wasn't going to scale as far as you needed, right, So how did that evolve?
Our philosophy was not to operate coffee shops. We instead acquired our way into the channels that we really believed were important food service, E commerce, consumer direct, and retail grocery.
Now, every acquisition was a strategic acquisition. We were looking for competencies that our company didn't have, and by pulling it into the full were also looking to leverage the synergies and the goodness across the brands. Across the channels.
They acquired a few smaller companies to supply their different customer types, and in twenty fifteen they made their biggest bet yet. It was a reverse acquisition of a family owned roaster in Denver named Boyer's Coffee. Originally founded in nineteen sixty five, Boyers was sold nationwide at large grocery stores. It was by far the most expensive acquisition Luna had made, and it brought a whole new set of challenges. When you went out and did these acquisitions, how did you
you were still small? These were big bets for the company. How did you finance that? How did you have the guts to go for that? I mean, that's a pretty daring thing to.
Do being in corporate. I think showed me being able to bet with a big wallet is huge. And so the angel investors that started with us seventeen years ago are still with our company now.
Ben hold on, I'm sorry, I need to cut in here. I'm not even a coffee drinker, but I feel like a little fullmall because I you should.
Be, because their coffee is really good. Our friend Doug, he knows what to do with a coffee being it's delicious.
Well, clearly they have something figured out. So I'm gonna have to get on the coffee train, even though I haven't been on it up to this point.
Come on, it's a good ride.
Okay. So you know already what my favorite part of this story.
Is, No, I don't. What is it?
The acquisition spiece? You know? I love that stuff. There's so many ways to be in business, and you don't have to always start from scratch and look at what it's done for them.
Yeah, but that comes with its own set of risks too, right, I mean it's not always that straightforward.
It's not, but you got to find the way that works for you, right.
Well, I mean they were able to do it without taking on a ton of debt. When you have to take on a ton of debt to do it, I've seen that go badly as well. The most important thing in any acquisition is buying the right company for the right reaching truth.
Okay, so what happens next?
Well, with the reverse acquisition of Boyers, Luna Coffee wasn't only in the local grocery aisle anymore. They were now being sold in all fifty states, and with the deal came a new factory that was three times bigger than the one they had before.
So to paint the pictures of the nineteen twenty seven schoolhouse really really cool, old schoolhouse that was converted to the roastery for the Boyer's family in nineteen sixty five. We acquired the roastery and the land when we bought Boyers in twenty fifteen.
Okay, it's quite literally the School of Coffee. This cool red brick schoolhouse even had a small retail space and coffee shop in front. By early twenty twenty, they were on track for their biggest year yet, and then COVID hit.
Being a food manufacturer, we were deemed an essential business that couldn't shut down right right. At the same time, we were really trying to learn fast what does it mean to be COVID compliant Because there wasn't a ton of guidance out there for companies like ours. We were trying to figure out, what is this six foot rule? What does this like wash your hands every sixty seconds? What are we doing here?
And just two weeks after that, I was.
Sitting in my office and someone jumps up and goes, hey, there's an alarm going off in the closet, and I'm like, what do you mean an alarm going off in the closet. Went to the closet and it said heat censor. I'm like, what the what the heck is that? So I get up immediately and run to the back, and then one person in the corner goes it smells like campfire. About that time, the ceiling melted, opened up and all the trusses above us were on fire.
Oh my god, that must have been terrifying.
It was, so we immediately went into fire protocol, called nine to one one evacuated the building. No one got hurt, and I stayed back with a garden hose trying to fight the fire. Within an hour, it was a complete loss, the six thousand square feet of corporate offices, the award winning four thousand square foot coffee shop, and then the manufacturing plant. We weren't left with a paper clip.
That must have just been devastating.
It was really weird to stand across the street of your business and watch it burn.
Oh it was. It was actually pretty terrible. I mean, just gut wrenching watching everything burn so fast.
Their factory it was gone, leaving nothing but a large pile of ash, moldering coffee beans, and melted steel.
It was definitely like, how is this really happening? The parking lot across the street is full of all of our employees and everyone's crying upset. We're like, okay, so just come back to work tomorrow. We'll figure this out. Just give us a minute.
Jason and Doug had a big decision to make, and they had to make it quickly.
You can't just like say, hey, I can't get it done. You can say I can't get it done, but if you do, then you kind of lose your shelf space.
But the challenge we had at the same time is there was pandemic buying going on. So do you remember when you couldn't find toilet paper? Coffee was one of those things as well. As soon as we put it on the shelf, they'd ripped back off and put it.
Back terrified they wouldn't get caffeine in the morning, that that was going to be a tragedy, real problem, as bad as the toilet paper. But just a day later they knew exactly what they had to do.
We kind of looked at each other within twenty four hours and said, there's not really a choice but the rebuild and move on, Like we've got to go forward, there's no back. So we kind of very quickly said we're going to rebuild and now we've got to figure out what that means.
I feel like the mindset was survive.
So they got back to work.
Everybody woke up and totally pitched in. Our employees all stood up and came back to work. We didn't lose one employee, honest to God.
Luckily for them, they had taken a page out of the liquor industry and had been stockpiling bagged coffee at a different facility. They had a four week supply that would buy them sometime while they figured out how to make more. Doug and his team were scrambling. They had to find another factory to rent that could handle roasting over five tons of coffee beans every day.
We had to eat some humble pie right because we went to one of our friendly competitors and said, do you use your facility as a second shift at night? And they said no. So imagine a chef that lost a restaurant that went to their competitor and said, do you use your restaurant overnight?
No?
Can I rent it from you and bring in all the stuff I need to do my stuff, do it all night long with my raw materials of my people, clean up and exit before your shift starts every day. Could we do that for the next year together? And we found a partner and that's what we did.
So we were kind of in a position where we had everybody rooting for the underdog. I think that whether it was our customers, whether it was our employees, whether it was our vendors, I think everybody was like, Yeah, whatever we need to do, let's get this done.
Fortunately, they'd planned for the worst and they'd established a disaster plan with a manufacturing partner a few years before, and just two weeks after the fire, Doug and Jason were back at at roasting coffee. But the problem there was still the matter of packaging it. They no longer had machines to label all these packages, so they literally had to do it by hand.
Millions and millions and pounds of coffee.
Okay, so they have this devastating fire. Almost everything they own goes up in smoke, except for what they've stashed at this other facility. And I really can't believe this, but their competitor allows them to use their equipment at right, they had to bag three million pounds of coffee by hand, But you can't do that.
Forever, absolutely not. It was completely unsustainable. Doug and Jason really had to find Luna a new home, and they had to find one that would scale with the business.
We had to completely get ourselves out of the core business and start rebuilding. We need to pick ourselves up and go work strategically on where the company is going to go next.
We took some money from the company and then from insurance and put that together and then said we're going to build something that is state of the art and for the future. We were already in a position where we were at max capacity, so we can either just build back exactly what we have, or we can be entrepreneurs and reach the stars. And we built a facility that had five times the capacity of our old facility.
And a year to the day after the fire left them with nothing, they roasted their first batch of coffee in their new state of the art facility. Six months after that, it was fully operational.
Now that we have built that, it allows the company to grow exponentially for the next five to seven years. And that's basically the new master plan is to grow to a fifty million dollar company.
So I have to ask your brother, since he's the one roasting the coffee, I mean, is this like a kid in a candy store for you now that you have this new facility.
It absolutely is, because you know, one of the things we had the opportunity to do is step back and say, what do we really want to be able to do and accomplish. We want high quality coffee at scale, So being able to get everything brand new is fantastic. I mean, we went from levers, switches and dials to full automation in packaging, which is a light year evolutionary jump.
Moving into the new facility was a total game changer for Luna Coffee up.
Until this year. Twenty twenty was in fact our highest grossing sales year. So somehow, even though we burned down, we produced more money in twenty twenty than any year previously.
And with that money they were able to focus on something that had always been at the heart of their plan, giving back.
Coffee grows around the equator, right, wrong or indifferent. There's a lot of poverty around the equator.
And once you go to origin and you realize that on equity, it's hard as a roaster to unrealize that. And so as we began buying more coffee, we simply began asking the elders of the farms that we buy from. We're going to pay you a fair wage and we're going to take but is there something that we can give? Is there a hand up, not a handout? How can we help?
In Peru and Colombia and Honduras, they've funded projects that have provided healthcare and clean water to communities. But their proudest.
Achievement, we've built six schools in the last five years.
Wow.
And it's really really amazing. Thank you, I appreciate it.
I think there's something to be said about karma because when we had our oh shit moment, people were there to support us. But in our philanthropy and our mission, we're trying to positively change lives and that includes everyone. We want to lift the farmers, we want to give career paths to our employees, and throughout that supply chain, it needs to be equitable.
Between their four craft coffee brands, Luna Gourmet Coffee now has two significantly less flammed facilities in Denver. They employ sixty five team members between the locations, and their coffee can be found at Costco, Safeway, Sam's Club, Target, and Walmart, and it's sold in all fifty states. They went from roasting thirty pounds of coffee every year to two and a half million, and they're not slowing down anytime soon. So we're going to be ending every episode of the
show by asking each guest the same question. Stay tuned till the end of the show to hear Doug and Jason's best advice for current or aspiring small business owners.
Okay, I can't even believe I'm about to say this, but I think I'm ready for a cup of coffee. And that's not even how I do it.
Men, I think Doug and Jason would support that.
Wow, I really can't imagine having my entire operation burned down and then go to work the next day. Please give me a minute to process that one.
Yeah, it really is an inspiring story.
Yeah, but you know the fact that it wasn't even a question as to whether they were going to rebuild or not. How are you standing outside watching your building burn and you're pretty much already just immediately say, oh, well, we already know what we're going to need to do. Most people probably wouldn't even be able to think, let alone decide what the next step is going to be.
Right, that's right. I can only imagine the emotion. I mean, knowing what they had put into that, they left their whole lives behind, they built this thing, they were about to explode into a new era of growth, and just watching it literally burn up before their eyes. You just I can only imagine the steely resolve they had is something else.
Yeah, it is. And just the amount of different thoughts that had to have been going on in their minds.
And well, you hurt him? Oh shit, oh shit, shit? Right, what you can't fault him? I mean that's what I would have said.
Yeah, But I also thought, how cool is it that everybody stayed with them?
Yeah? I know, And I think it speaks to the fact that they didn't just build a company, they built a culture. Yeah, and they built something that everybody believed in, because otherwise they wouldn't have stayed.
Yeah, And they did such a good job with that. And I think that's a huge challenge that that entrepreneurs face all around. How do you build the kind of team that will stay loyal, that will like these In this situation with Luna, these folks didn't know how their checks were going to be handled, frankly, right.
And it sounds like those relationships they built with their employees are the same types of relationships that they built with not just their vendors and their customers, but their competitors even right all across the ecosystem, they were building relationships based on trust, respect, doing the right thing, being reciprocity, reciprocity, helping each other out. And then I thought it was really fascinating how they were willing to go to a competitor.
That they were willing to go to a competitor, but more importantly, I think that the competitor was willing to say yes. And what I took away from that is, you know, business can be brutal and cutthroat, and it can and should be competitive, but it doesn't have to be mean.
It doesn't have to be mean. But and I'm sure it had a lot to do with who they are, because everyone wouldn't have done that for some other competitor who didn't have the same goodwill in the industry.
That's a lesson, right, is that the way you treat people always matters because you never know when you might need some help.
Yeah, inform that relationship before you need it.
Absolutely, relationships they're critical. You have to have the right relationships with your employees, with your contractors, and, as they proved, sometimes even with your competitors. But I think there's a little more to this story of how they were able
to survive that fire because they were protected. They'd thought about risk management, not just in terms of insurance, although they did have insurance and they had coverage for the building, which certainly helped, but they also had stored their products
somewhere else. They thought ahead. In my mind, they thought about risk the way bigger companies tend to think about risk, which is thinking through all the things that could go wrong, having a plan for that, and then making sure that they had the right things in place to be able to pull the trigger if they needed to, and they probably would have been dead without it.
What I liked about what these guys did is that they literally said, we borrowed from another industry. We did what the distillery industry did, and that's what set them up to not have nothing when the building burned. Nowt I view that as a short term risk management strategy, but they also had the long term strategy in place as well, where they had taken the time well in advance years before to figure out what would happen if something major happened, right, something big, where the product we
have stored off site just wouldn't cover us. That was so savvy of them as small business owners, because a lot of small business owners struggle with those things in the business that aren't urgent but are yet very very important. And I think that's a perfect example of something that's incredibly important but frankly not urgent when you're trying to handle the day to day, right.
Yeah. I asked businesses all the time, how do you manage your risk? And a lot of times they say to me, oh, yeah, you know, I have insurance, I have a broker, And I always say, listen, I used to spend my life providing insurance to small businesses and that's great, but that's only one type of risk management. And think about their situation. The insurance was great and helped them rebuild the building, and certainly that would have
been difficult without it. But even if you have a check from the insurance company, if you don't have the product your clients want, you might still be in trouble huge And then even if you have the product that they want, for the next four weeks when they place the next order. If you tell them it's going to be a year before I'm open running, you could have a problem. So they had thought not just one order, but two and three orders ahead in terms of what
could go wrong. And that's hard to do for two reasons. One is when you're, as you said, when you're in the thick of it, it's hard to take yourself out and think long term. But equally, optimistic business owners are not conditioned to think about all the bad stuff that could happen, where they're conditioned to think about all the
great stuff they're going to achieve. It's a tough balance because to be an entrepreneur you have to be so positive, but equally you have to have that reality check of what could go wrong.
Yeah, and maybe you're not that kind of person. Some entrepreneurs are just I see the vision, I'm going for it, I know what I want to do, and they don't think about the other part. But if you're that kind of an entrepreneur, you need to have someone on the team who does think like that. But I it is my job to think of the things that can go wrong, So I conditioned to think about those things and what I want like I want our listeners to think about
what risk management looks like for them. These guys knew that for the way that their business ran, they needed to have offsite product and such, they needed to have somewhere else to produce. What does it look like for someone else in another type of business? Right, everybody needs to examine what that is like for them. Maybe it's just having the appropriate documentation. Does someone else know what's in the head of the person who's running the business?
Beyond having an insurance policy? What do you have in place to protect the business on a short term and long term like our guys did here. I really want people to think about that.
Yeah, big businesses call it business continuity planning. Small businesses call it something I don't have time for.
Not urgent, but so important, exactly important. I want to go back to something we talked about earlier, business acquisitions, because this is really my lane. So Jason and Doug chose to buy Luna Coffee and grow it themselves instead of starting from scratch. Then they make an even bigger bet acquiring a company that was larger than they were, and that was of you know, of course, Bowyer's Coffee.
So Ben, what would you say is the most important thing for a small business owner to think about when looking to acquire a business. I've got my thoughts, of course, but I want to hear yours well.
So first of all, the most important thing in any acquisition is buying the right company for the right reacher. So it doesn't matter how you finance it, it doesn't matter how you pay. It matters that you're buying the right company for the right reasons, with the right plan. Now, they had it, and I give them a ton of credit for it, but I've seen that go sideways in so many different ways. They bought it because they thought, well, I could never build that, so I'll buy it, and
I can do it better than they can. Well you better really understand that before you get into that business, because whoever runs that business, I promise they know more about it than you do.
Oh absolutely, And that's why the due diligence part is so important. Like I have had clients who have come into the business acquisition model more cavalier than I prefer. They, Oh, this isn't that big of a deal. I've looked at the numbers and they, you know, they think they have it all figured out, and I'm like, no, you still need to do due diligence.
Well, the other thing I tell people is when you are buying a company, even if the founder isn't coming with the company, you're still buying that person because everything about that company is about that person who owned and built that company. Oh absolutely, And so you better believe that whatever you're buying is going to feel and smell and act like that person.
Yeah, and a lot of people underestimate that. I mean, the business has that person's footprint, it's got them all, it's all over it. Well, then I gotta say their big bet clearly paid off. They really made the company their own, and they found a way to make it so that their DNA was woven into the business. And let's be honest, that's a challenging thing to do.
Well, it sounds like they've really built something to last and something that has purpose and has meaning both for them, for their employees, and for the communities and farmers they're working with, which is just a terrific story. Okay, now before we go, I want to share one last part of my interview with Doug and Jason that I think you'll really like.
Okay, let's hear it.
We have a lot of small business owners listening today who really aspire to the level of success that you've achieved. What's the one piece of advice you have for them.
I would say, once you've done the research and have a strong business plan, you figured out what your capital funding requirements are, double that and then have a contingency plan if you happen to need more capital to realize your vision. Number two, I would say, take the time within your network to talk to other entrepreneurs that have done similar or different things and really listen and learn from their successes and their failures. Don't assume you know everything.
And Third, build an advisory group. We realized very early on whether it's banking, finance, taxes, distribution advice. For us, we've built an external advisory team to make sure that we would always be set up for success.
I would add two things. One is a support team that is personal, whether it be your partner, whether it be your dad or mom or friend. It is something that requires a significant amount of support because you have to focus on the business like it's a person. And secondly, I really believe it requires one hundred and ten percent
every single day, twenty four hours a day. The thing that they don't tell us about being an entrepreneur is you've got to like put on your company's superhero cape and be totally cool beyond that full time, because everyone is looking to you for the answer and for the vision and for the passion, and ultimately, when you get to a point where you can hire a team, you can instill that same ownership mindset downward.
Thanks so much for listening to the first episode of The Unshakables. Next episode, we'll be back with a story of a celebrity car detailer who redefined success by rebuilding his business not once, but twice after being pushed out of his own company. If you liked this episode, please rate and review it. It'll help our show find more listeners. I'm Ben Walter and this is The Unshakables from Chase for Business and Ruby Studio from iHeartMedia.
The Unshakables is a production of Ruby Studio from iHeartMedia and Wheelhouse DNA