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Exit: John Warrillow

When the customer decides to buy the company Add to ...

I’m writing this article from Starbucks on Pine in downtown Seattle.

I ordered my usual, and the woman behind the counter asked if I’d like to try a “Clover” instead.

I’d never heard of a Clover-brewed coffee, so asked for a demo. The Clover is a special machine that simulates the freshness of brewing a French-press coffee in 90 seconds instead of the typical six-minute brew cycle.

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My new best friend went on to describe the Clover as a unit that was invented by Zander Nosler, a coffee addict who developed his penchant for caffeine while studying at Stanford. Apparently he liked the French-press taste but hated the hassle and wait time.

Mr. Nosler started by selling his $11,000 machines to small independent coffee shops desperate for a way to differentiate themselves from Starbucks.

Eventually, he convinced Starbucks to trial a few Clover units, and they were a hit. Customers liked the unique new approach to brewing and the freshness of the output. Since Clover delivers a custom cup for each use, customers could experiment with rare beans. Baristas loved them because they were faster and easier than the clunky process of brewing a French-press.

Here’s where things get interesting. According to my informant, Starbucks wanted to put a Clover unit into its 5,000 smaller stores across the United States.

Now that I have downed half of my Clover, I can actually do the math: 5,000 units times $11,000 is a $55-million order. At the time, Clover was an 11-person company. According to my Barista, Starbucks just went ahead and bought the company for a lot less than the purchase order it would have cut.

Have you ever wondered if your No. 1 customer may just decide to buy your company instead of your product?

Special to The Globe and Mail

John Warrillow is the author of Built To Sell: Turn Your Business Into One You Can Sell . Throughout his career as an entrepreneur, Mr. Warrillow has started and exited four companies. Most recently he transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which he sold to The Corporate Executive Board in 2008. He is the author of Drilling for Gold and in 2008 was recognized by BtoB Magazine’s “Who’s Who” list as one of America’s most influential business-to-business marketers.

Follow on Twitter: @JohnWarrillow

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