Hey Contrarians,

You ever see a business and wonder, “How’d they do that? Actually. How did they turn that idea into something real?”

Today’s newsletter is about that. It’s also about how relatively “normal” humans, with normal brainpower, and even pretty normal ideas can be the ones behind those companies (i.e., you don’t have to be Elon Bezos).

But more than anything, whether you like it or not (the data says you probably do), today’s newsletter is about one thing:

Coffee.

Today in 5 minutes or less, you’ll learn:

✔️ 10 steps behind a $20M+ coffee biz

✔️ 2 levers for your biz hiding in plain sight

✔️ 1 quick math lesson you should know...

10 steps behind a $20M+ coffee biz

Here’s what you should know: According to its founder, before this biz was making ~$22M in annual sales, it made $15M annually. Before that, the numbers were $6M, $2M, $650k, $80k, and $30k. Long story short, not an overnight success. (Big wins rarely are.)

The biz we’re talking about is Atlas Coffee Club. I recently met up with Michael, one of the founders, to get his takeaways from close to a decade of grinding away – including the 10 steps he’d follow to ideate, launch, and scale a biz like this again while slowly weaning off a full-time job.

Here’s what he said…

Step 1: The idea

I know what you’re thinking: “No sh*t.” But when it comes to ideas, consider this: The not-so-obvious thing about ideas is that a good one executed well is better than a brilliant one not executed at all.

Michael came up with the idea for Atlas at a coffee shop. The odd part is, the guy didn’t even like coffee. Literally, here’s the face he made while telling me how he used to think of coffee:

But at this shop, Michael had coffee that was really, truly delish. So he asked the barista all about its production process and origin.

“I’m learning all these things and from there I was like, oh coffee comes from over 50 countries, there are so many things about each of these places that make it taste different… Let’s tell that story.”

There you have it – an idea. Now the work starts…

Steps 2-10:

Step 2: Get your partner, if you want one. For Michael, that was one of his best friends from high school.

Step 3: Pick a name and brand. Atlas Coffee Club was the clear winner, with “Atlas” implying it’s sourced from around the globe and “Club” referencing the community they wanted to build among fans.

Step 4: Secure a digital presence. Go ahead and check for relevant domain names and social media handles. It’s fun, but it’s also important.

Step 5: The pay-to-door test. Create a landing page for pre-sales that can help you collect data that validates whether your products are something people want.

Step 6: Find a supplier. Luckily, that part wasn’t too crazy for the team. Per Michael, you can go from “I see a coffee I want” to “getting it in-house” in like 10 days. Fast forward, nowadays Atlas orders from farms 6 months before harvest.

Step 7: Shipping. Some businesses will take your branding and packaging and fulfill this part of the process. (One day I’ll tell you about a CPG company I invested in... and their warehouse’s ~$50k “great tahini disaster”)

Step 8: Paid ads. As Michael explained, his family and friends were sold on the idea, but that wasn’t good enough to go all-in. To validate it further, they ran some paid ads online to see how people were converting to customers.

Step 9: PR. I never recommend startups do this, but damn if it worked wonders for Atlas. “We got really good at pitching press,” Michael told me. Once they got those organic backlinks working for them, it ultimately brought their customer acquisition costs down.

Step 10: Pull the trigger. Per Michael, “It was actually a conversation with my dad that got me over the edge. He said ‘You’re 27, there’s never going to be a more risk-free time to do this. If you’re ever going to take a risk in your life, the soil is fertile for now.’”

A quick message...

I’m always super impressed by founders who can take an idea from steps 1-10. But if you read this newsletter, you know I prefer working with experts and peers to buy proven biz’s that have taken care of steps 1-9 for me already.

That’s why we built our Mastermind program. It’s a community of people from all walks of life who we equip with education, tools, and expert mentorship they can use to become business owners. Seem interesting? Fill out our questionnaire here. Now back to the show...

2 levers for your biz hiding in plain sight

I love Atlas Coffee Club’s birth story – but what’s the special sauce that’s turned them into a multi-million dollar giant? Michael shared 2 huge levers they use:

1. Magic moments

I know this isn’t Disney World, but Walt was onto something when he created the “most magical place on Earth.” In every business, the math has to check out. But throw some magic into the equation, and man, can it pay dividends.

If there were an Olympics of “magic moments,” Atlas Coffee Club would be in it. The biz has (at least) 3:

• A coffee box that doubles as a piece of art representing the coffee’s country of origin
• An awesome postcard from that month’s country
• A tasting card about the coffee’s notes and history

These aren’t big “secrets,” folks. They’re relatively tiny – yet extremely thoughtful – additions that make all the difference. Because of them, Atlas isn’t delivering a cup of coffee. It’s delivering a travel experience to another part of the world. Their product is something people want to collect, not toss out.

(Bookmark this quick segment for more of my ideas on creating magic moments in boring businesses...)

2. Say this 10 times fast: SOPs

Now say it another 10. Why? Because they’re a critical ingredient behind Atlas’s growth, Contrarian Thinking’s growth, and so many others.

SOPs = Standard Operating Procedures. The processes that keep the trains of a biz running on schedule. Often the biggest difference I see between businesses that make it and those that fail is the attention to detail put into these systems and processes.

Per Michael, “It’s fewer things done better to the Nth degree that actually causes the business to win. One of my favorite quotes is that ‘most businesses die from indigestion, not starvation.’”

1 quick math lesson you should know...

Ever heard the phrase “play the right games, win the right prizes”? In any role, there are 10k metrics you could track. Know which is your north star. Know which game you’re trying to play.

For Atlas (and many other subscription businesses), that game is determining how much to spend on ads. Here’s the formula Michael uses to find that out:

Let’s walk through that in English…

The formula is LTV/CAC, or your Lifetime Value divided by your Customer Acquisition Cost:

• LTV = How much money you make over the lifetime of a customer
• CAC = How much it costs to get that customer (your advertising spend)

Now here’s Michael’s equation for LTV:

LTV = Average Order Value (or the amount customers pay per order) × Gross Margin (or the cut the biz takes) × The average # of months customers stay

So, if the average order value is $20, Michael’s margin is 50%, and a customer stays for 10 months, then the LTV is $100.

Using that number, you determine how much you can afford to “acquire” each customer. As a bootstrapped company, Atlas needed an aggressive LTV/CAC ratio greater than 5, meaning they could afford $20 or less to acquire each customer.

And that, dear friends, is enough math for today…

The bottom line: This ain’t rocket science

My point is never to tell you that there’s one perfect playbook for building a biz or one simple way to get rich. It’s just to show you that you can.

That normal humans, with normal brainpower, and even pretty normal ideas are taking risks and finding ways to start, grow, or buy businesses every day.

They’re doing things step by step over months, not overnight. They’re using simple levers like “magic moments” and SOPs to delight customers and run smooth operations. They’re making use of some relatively straightforward math, too.

And I think that’s all pretty cool.

I also think my biggest takeaway from this whole meeting with Michael is that I’m not all that great at coffee tasting.

Wine on the other hand…

-Codie

“Be a builder in a world of users.”

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🎧 I hopped on the My First Million podcast yesterday. Wanna give it a listen?

What’d you think of this week’s newsletter?

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