Skip to main content

The Problem With Growth

What do you think of this headline?..
Burger King to sell Starbucks' Seattle's Best brew -Reuters
If you're a coffee snob like myself, you're probably thinking: "nice job destroying your brand, Starbucks!" Of course, if you're a coffee snob like myself, you probably stopped drinking Starbucks years ago, or maybe around the time they announced their intent to sell instant coffee crystals in the grocery store.

(from Flickr user d2digital)

This headline pretty much sums up the problem with business growth and the reason why so many publicly traded companies eventually lose their premium-brand credibility. On one end of the spectrum, you have coffee enthusiasts who want a good strong cup of coffee. On the other end of the spectrum you have shareholders who demand constant earnings per share growth. At first, both groups are satisfied with expansion. Starbucks opens more stores, serves more cups of coffee and makes more money. But there's a limit to growth. There are only so many street corners and strip-malls in America. Coffee drinkers might be satisfied at this point, but shareholders never will. So Starbucks opens stores internationally, but it's a tough sell to the Asians and the Europeans. So they start cranking out new products, cutting costs in the stores, generally doing things to make the shareholders happy, even as it starts to piss off the coffee enthusiasts.

Contrast this with a small, privately-owned chain of coffee shops. Maybe the owner doesn't have aspirations to be a billionaire like Howard Schultz. Maybe he just likes being able to wake up in the morning and know that he can live comfortably for the rest of his life doing the one thing he loves: roasting and selling coffee. Maybe he takes pride in knowing that he has the best coffee in town, and the most highly respected brand with the coffee enthusiasts.

From the coffee snob perspective, I'd rather there be a different small chain of coffee shops in every city in America rather than a single conglomerate that operates stores in those cities. While it's great to see our favorite brands starting to grow and expand, too much growth will probably destroy the very thing about the brand that we once loved.


Wade said…
I've visited Starbucks in China and Malaysia and the places were full. Of course they were buying the sweet crap, not real coffee. I didn't see any in Thailand or Korea though.

Popular posts from this blog

In Praise of Southwest's 'C' Boarding Group

A few weeks ago I saw a tweet from someone complaining that their Southwest Airlines boarding pass had been assigned A20 (meaning they would be at least one of the first twenty passengers to board the plane). Apparently this person though they should have been assigned a higher number, less their flight experience be considerably spoiled.

Despite the complaints, Southwest has resisted demands to assign seats on its flights, a decision which I personally applaud. I'll admit that I was skeptical when they rolled out the newest boarding procedure, assigning both boarding groups and a line number; but in hindsight it seems like one of the best operational decisions they've ever made. If nothing else, it effectively eliminated the infamous "cattle call" whereby fliers were getting to airports hours in advance and sitting in line on the floor as if they were waiting for the midnight showing of the new Star Wars movie.

When I was an intern at Southwest Airlines last winter, I…

So You Want to be a Southwest Airlines Intern?

My personal website must have pretty decent SEO - because in the past year, I've received about two dozen emails from aspiring Southwest Airlines interns looking to draw on my experience in search of their own dream internship. In the past two weeks alone a few new emails have already started rolling in...

(from flickr user San Diego Shooter)

If you've found your way here, you might be hoping for the silver bullet; a secret tip that will propel you above the competition. Unfortunately, I do not know any inside secrets. I can only share my experience as an internship candidate about two years ago and, rather than responding individually to future emails I anticipate to receive, I hope that potential interns will find the information posted here valuable.

Understand: Southwest Airlines is a very unique company. The corporate culture at Southwest is truly unlike that of nearly every other company. But you probably already knew that, since it now seems mandatory for every management,…

Mixing Sports and Business

In the last two days I've devoured every article in the Washington Post about the Nationals painful and epic defeat on Friday night in the NLDS. It was a tough way to see the season end, there's no doubt about that.

(from wallyg on Flickr)
These articles make it clear that there are a lot of people emotionally invested in professional sports. I think they sometimes they forget that, ultimately, Major League Baseball is big business. Each team is a major corporation and the league itself is an organization governed by a bunch of executives. The television networks that show the games are under contract with the team owners and the games aren't usually available to those without cable.

This is why it can be so hard to be a fan in this game. It's the multi-millionaire and billionaire owners that call most of the shots. They get to decide how much they're willing to spend on players. They get to decide who to hire as the CEO of the company. They get to decide how much t…