How Starbucks Makes $41B/Year

How I got here…

21: Graduated Vanderbilt in 3 years Magna Cum Laude, and took a fancy consulting job.
23 yrs old: Left my fancy consulting job to start a business (a gym).
24 yrs old: Opened 5 gym locations.
26 yrs old: Closed down 6th gym. Lost everything.
26 yrs old: Got back to launching gyms (launched 33). Then, lost everything for a 2nd time.
26 yrs old: In desperation, started licensing model as a hail mary. It worked.
27 yrs old: "Gym Launch" does $3M profit the next 6 months. Then $17M profit next 12 months.
28 yrs old: Started Prestige Labs. $20M the first year.
29 yrs old: Launched ALAN, a software company for agencies to work leads for customers. Scaled to $1.7mmo within 6 months.
31 yrs old: Sold 75% of UseAlan to a strategic buyer in an all stock deal.
31 yrs old: Sold 66% of Gym Launch & Prestige Labs at $46.2M valuation in all-cash deal to American Pacific Group. (you can google it)
32 yrs old: Started making free content showing how we grow companies to make real business education accessible to everyone (and) to attract business owners to invest or scale their businesses.

Today: Our portfolio now does $200M/yr between 10 companies. The largest doing $100M/yr the smallest doing $5M per year. Our ownership varies between 20% and 100% ownership of the companies. Many of them we invested in early and helped grow (which is how we make our money - not youtube videos).

To all the gladiators in the arena, we’re all in the middle of writing our own stories. The worse the monsters, the more epic the story.

You either get an epic outcome or an epic story. Both mean you win.

Keep crushing. May your desires be greater than your obstacles.

Never quit,

Alex

*FULL DISCLOSURE*
I make content to make money - just - on a longer time horizon than most. I want to build trust with business owners so we can find the best ones and help them scale. And if they’re awesome, write them a check and go all the way as partners.

[connergpia]

And they have simple americans paying for overpriced coffee

[pher]

The roasting thing is basically what makes a coffee shop a thing nowadays. If your coffee isn’t roasted by you or someone local what are you doing that I can’t do?

Shop local drink local guys. Beer coffee anything.

[elpina]

They get crazy loot from the Prepaid cards also

[JustMe-noel]

Yeah just read a few articles about the struggles sbux is having being sandwiched in between coffee and casual restaurants. The price used to never be a problem but now research says it is

[harpjason]

Here in Kansas City Mo 3/7 coffee is having longer lines than SB daily...

[waynevictory]

They also provide a quality product and in general friendly service. I wasn’t a Starbucks customer for year. Till the Covid lockdown. An as a trucker driving the PA TURN PIKE they was actually cheaper than all the other fast food restaurants. The staff also was treated me great and never asked me to wait outside in a corner to get my food and drink. While Burger King was horrible as they doubled their price and was rude .

[bmejia]

Looking good Alex, thanks for the knowledge

[dylanmorgan]

Then why are they the most expensive? With an advantage like that, their markup makes no sense.

[youjying]

Starbucks makes their money by being the brand. They'd still make 38b+/year if they sourced their coffee same as anyone else. The only time that you should vertically integrate your supply chain is if you need to control how consistent it is, or control the quality(i.e. improve) of the product.

Your job as a business is to do the thing that you are supposed to do extremely well! As a coffee shop, don't worry about how to cultivate your own beans..m

[dpontes]

We must retake the beans of production

[cherokeerookie]

Sounds like someone needs to liberate those bean farmers from oppressive rates.
We need to raise the minimum wage of the bean farmer to match that of a US farmer.

[MicuRomano]

This guy always say the most obvious things.
Next episode : if it's raining, use an umbrella.

Wow, mindblowing

[Acekhan]

Kind of reminds me of the Ol' South. 😅

[YufanPan-cd]

Any advice for a high school freshman?

[harpjason]

Which product businesses would you say are unwise to use vertically integrated operations?
Sometimes outsourcing is more beneficial correct? Thanks for the knowledge you share with no expectation of return.

[samricher]

They actually rent their buildings though. They don’t own it

[ChristopherColombus-ł]

Basically they don't need to pay any extra money anywhere

[nicashvin]

Huh? Their coffee is terrible. They failed to launch in my country and only have shops in tourist areas now😅

[atrachadian]

Thay also make a lot of money in real estate

[pablotrujillomorales]

And the most important thing, they are overpriced