I’m not a coffee drinker. When I was a kid, my mom was such a grouch until she had her morning cup that it turned me off the stuff. It’s only fitting, I suppose, that my wife is a coffee addict too. (What would a psychiatrist say about that?)
Coffee is at the core of today’s economy–if you consider all the caffeine-fueled startups around the country. It is also at the core of $58 billion Starbucks, which is facing a rising cohort of next-wave coffee companies such as Blue Bottle and Stumptown that are trying to persuade Americans to appreciate distinctive brews the way we might vintage wines. High-end venture capitalists and Wall Street firms like Morgan Stanley are catching the wave too, as senior writer Danielle Sacks explains in “Brewing the Perfect Cup”. Even for a coffee agnostic like me, the lessons are compelling.
What this coffee war represents is a parable, one that appears often in this issue. Innovation in business requires both great vision and great faith, usually in the face of daunting opposition. The line between ambition and delusion can be difficult to discern. Can Blue Bottle, with just 14 shops, really hope to unseat 20,000-store Starbucks? Can Jack Dorsey’s Square (“Back to Square One“) unseat not only other digital payment adversaries like PayPal but the entire payment establishment: Visa, Western Union, your local bank? Tory Burch started her fashion firm a decade ago at her kitchen table; it’s on track to generate $1 billion in revenue by year’s end, has boutiques around the globe, and, says Burch, is only getting started (“Pretty Smart“).
Our cover story about YouTube examines this challenge from both sides (“Rebooting YouTube“). On the one hand, YouTube is “the 800-pound gorilla,” as a former exec says it thinks of itself: the dominant video site with more than 1 billion fans and 100 hours of new content uploaded every minute. It’s the Starbucks to firms like Maker, Fullscreen, and even Yahoo, which is trying desperately to steal talent, buzz, and revenue from the leader.
On the other side, YouTube is working to unseat traditional video entertainment on TV, a $212 billion advertising arena versus the mere $5.6 billion that YouTube is estimated to bring in annually. Is Susan Wojcicki, Google employee No. 16, who recently took over YouTube operations and is instituting a whole new plan, a defender of the status quo? Or is she a renegade out to dethrone networks like CBS and TBS and everyone in between? Because the answer is clearly “yes” to both, the saga has both natural drama and broad appeal for all of us: In any business today, the competitive threats coming from all sides are matched by opportunities that are broad, varied, and everywhere.
Which is why I still don’t need coffee–there’s plenty of excitement all around to keep me on my toes. That doesn’t mean I begrudge anyone their liquid black gold; my mom and my wife would both revolt (not to mention just about every employee at Fast Company). I can appreciate the essence of coffee, just as I can appreciate the challenges of YouTube and Tory Burch and Square. I hope you find indulging in their stories as satisfying as your beverage of choice.