You can’t really keep a good entrepreneur from continuing to launch companies. That appears to be the case once again with Stephen Rapoport. Rapoport previously built and sold the apartment-sharing site Crashpadder to Airbnb, but has since got itchy feet once again after exiting a few months ago. And what started out as a hobby business to keep him interested before the next big thing has turned into a much bigger project.
YourGrind launched in October last year, with the objective of making specialty coffee accessible to the mass market. But today it relaunches as Pact after closing a £500,000 ($768,600) first round of seed funding with Connect Ventures, Rowan Gormley (Naked Wine, Virgin Wine) and Ian West (Naked Wine, BSkyB).
Pact joins a competitive marketplace in the subscription coffee business in the U.K., which includes more established subscription coffee players such as HasBean and Kopi.
Much like the U.S. market, the U.K. market features numerous coffee clubs that focus on a bag per month/bag per fortnight model.
However, the big difference with Pact is that they plan to be the first to offer free, next-day delivery six days per week. In other words, by saving customers from ever running out of coffee they are competing for share of wallet with major supermarkets and shops, not the bag-per-month guys.
What we’re dealing with here is more a sort of “Zappos for coffee”-style play.
Rapoport’s ‘pitch’ is that by keeping a small selection of world-class coffees and shipping within seven days of roasting “we have been able to focus on removing friction from the first purchase (by matching bean selection and grind to brew method) and retention rates.” In other words, they plan to make their customers very happy.
“Our visit to subscription conversion has stayed over 20 percent for the past four weeks, and the average user buys over two bags per month,” Rapoport tells me.
Like Zappos, they are looking to create very strong bonds with their community, and it seems to be paying off. Last week, faced with 200kg of excess coffee, they asked customers to tell any friends who may be interested in their coffee. The result was 120 percent customer growth in just 24 hours, says Rapoport. Bang goes the wastage, literally.
Numbers are small but Rapoport is unfazed and quite open about it. They have 1,700 users and are shipping 100-350 packs of coffee per day, but the focus remains “on retention not growth.”
So does he plan to be the Zappos of coffee then?
“Yes and no. I am inspired by Tony Hsieh and his approach to customer service. Our product is roughly twice the price of supermarket coffee. Whilst we know this is great value for fresh-roasted, most people don’t, so trust is central to our business. The only way to nurture real trust is to stamp openness and honesty into the culture of the company and pair it with a passion for making customers happier.”
Admittedly this is more commerce than tech but it will be very interesting to see if they can scale this model in much the same way Zappos did.