The F Word with Chip Gaberino, Topeca Coffee Roasters

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Chip:    My expectation was to fail. I was gonna fail on a small enough scale that I could get back up.

Lauren:    This week on The F-Word ...

Chip:    If you're having to be pulled in lots of different directions at one time, you're setting yourself up for mediocrity at best.

Lauren:    The founder of Topeca Coffee, Chip Gaberino.

Chip:    There's always something that you can do better every day.

Lauren:    Topeca Coffee is a staple for many Tulsans. Today we're chatting with Chip Gaberino, the co-founder of Topeca. It's one of the only companies in the world that follows a seed-to-cup method, meaning they control the beans from the time they're planted to the time they're roasted. Topeca Coffee is now sold in coffee shops and grocery stores around the US. But getting to this point didn't come without some obstacles. Chip, thanks for being here to share your story.

Chip:    Thank you. Excited to be here.

Lauren:    Great, we're excited to have you. Let's talk first about how it all started. Your mother-in-law in El Salvador approached you for help with her family's coffee farm. Tell us a little bit about her dilemma and how you and your family stepped in to help.

Chip:    Definitely. While I was getting my MBA, it coincided with one of the biggest downturns in price for green bean coffee, or for the price that the farmers get paid around the world. Coffee is the second largest traded commodity in the world, only second to oil. My mother-in-law came to visit her granddaughter and started discussing with me the idea and opportunity of getting involved and trying to change the way that we were doing business. In order to figure out a way to make coffee-growing a more sustainable business that could last not only and appreciate the previous 150 years that they had been doing it, but figure out a way to do it for another 150.

Lauren:    How'd you do that?

Chip:    My brother-in-law was going to school in Portland, and I was getting my MBA. The early 2000s was really one of the times that, from our perspective, was a boom for, especially, coffee. Coffee shops, especially coffee shops, were growing rapidly throughout the US and an appreciation and willingness to pay a higher price was growing, but the dollars were not trickling down to the farms yet. Some of the roasters really were seeing both sides of the coin and were visiting the farms and sourcing the coffees and seeing the conditions. What, I think, ended up happening, we were one of those players, was the desire and then execution on creating, essentially, a separate market where price was not specifically tied or determined by the market, but was tied more towards quality with the idea that as the roaster or purveyor to the final consumer that we would make that connection with consumers that we're willing to pay a higher price. My desire and passion, initially, was really actually focused more on sustainability. I didn't specifically have a passion for coffee. I think that came later. But I just really always have focused on how to create a more sustainable, balanced business.

Lauren:    Yeah. Now your coffee is a household name. Ask anyone, probably, in Oklahoma about it. "Oh, yeah, I know Topeca Coffee. We have it in my cupboard." But I know your journey getting to that point has had its fair share of mistakes and fears and failures. Can you share with us some of those times when maybe you screwed up and how you came back from that?

Chip:    You know, I came to a point where I think I've always been this way, but it's especially just narrowed it and focused an understanding of the reality that failures or challenges are always gonna happen almost on a daily basis, and the idea that there's always something that you can do better every day, and that there's something to learn. With that perspective, it's all shades of gray to me. It's the ability to always want more but still also be content with where you are at at that moment. They're not mutually exclusive. I think one of my first big challenges was I have a lot of grit.

Lauren:    That's a good thing.

Chip:    It can be. It is. But I could be stubborn sometimes in wanting to just push through. I always was of the opinion, and still am, that if I put my mind to something and work hard enough at it, I'll figure it out. What I think I ended up having to learn was that I shouldn't have put that effort needed to learn everything. You have to pick and choose your battles. Just because you can do it doesn't mean you should be doing it. There are a lot of parts within the business that, initially, I loved to try to do everything, at least for a little bit. But there are things that I'm not the best at, and that's okay.

Lauren:    Like what?

Chip:    Oh, I mean, let's see. There's a long list. I actually finally, the most recent one that's easiest to remember, is I'm pretty good with numbers but I don't have the time to focus on accounting. But I always was the one doing all the accounting until about last year. We hired a CPA full-time and it's been awesome. I wish I'd done it earlier. It's one of those challenges of a small business is there are a lot of things that you know you need to do, but don't have the time or money, necessarily, to do it.

Lauren:    Yeah. How do you decide? I'm sure there are small business owners listening who are like, "Yep, I get that. But now what?" What would you tell them?

Chip:    My first probably seven to 10 years was honestly, for me personally, was sticking my toe in the water with the idea that my expectation was to fail. I was gonna fail on a small enough scale that I could get back up. I decided how much equity investment I wanted and I got some equity investors and took on some debt. From then on, everything else, for me, was natural growth, internal growth, from spending our profits. My growth had been determined initially, right or wrong, but it had been determined more on my ability to generate more profit. The more profit I made, the more I spent on equipment and people and training and all the things needed to grow. There's a challenge, also, that I think we had from a perspective, especially coffee, and it's that we were in Tulsa, Oklahoma, in the Midwest. It definitely was a couple years behind from the east and west coast. As far as appreciation and understanding and willingness and desire to pay a little bit more per cup, those things-

Lauren:    Yeah, I'm sure it's so hard to convince people.

Chip:    Yeah, nowadays it seems like that's the trend and that's what the expectation is from the general public, but 15, 20 years ago it was not. Also, I'm naturally just a very empathetic person. It took me a while before I learned how to manage employees. I'm always wanting to figure out a way to bring out the best in everybody. The first time I had to let an employee go was one of the hardest things I ever did, but it was also therapeutic and rewarding. For instance, that employee I helped find another job. Many times forward, if an employee isn't working out, then I try to find them another job or I let them stay until they find a job or try to find them another job within the company that they are good at. I think that everybody truly can be great at something, they just have to find what it is.

Lauren:    Absolutely. That's so kind of you. Along that same line, let's talk more about your people. You are literally changing lives in El Salvador. You're giving them year-round work, higher wages than most, you're helping them and their children go to college. How has that mindset of caring for your employees well helped your business as a whole?

Chip:    Yeah, it's a lot easier to operate a company when you have happy employees. As far as I know, at least, as we're the only company of the scale that we do that works as a family from seed-to-cup, from growing, harvesting, exporting, importing, roasting, serving. The reason for that is logistics. It's very difficult. It's not easy. It's not a solution, I don't think, for everybody. I think it could be replicated, but as far as I know it really hasn't yet. But what it has allowed for us to be able to do is identify at each stage how to make it more sustainable. To me, a core part of sustainability is every partner within the system is profiting and is being rewarded for the work that they're doing. Some of the things that we've done is by putting the mill on the farm itself, it allows us to give a lot more full-time jobs. Having the export company there, as well, allows us to give and have the depth to have higher-paying jobs. A big part of our success has been that because of the fact that we are focused on specialty coffee, there's very specific aspects of the harvesting through the picking, whether it's having the same people every single year in and year out doing the harvesting, you don't have to retrain them. It's imperative that they know how to pick just the right beans. We pay more per pound in order to make sure that we can get the people that we want. One of the challenges or failures, I think, was when we first started our business. I wanted, and we all wanted, to do it in a model of what I call the vineyard approach, where all of our coffees came just from our farm. That was where the only coffees that we roasted, other than decaf. What that forced us to do on the farm level was to experiment. I needed to figure out a way to replicated to some degree the profile of a fruity Ethiopian, even though I didn't have a fruity Ethiopian coffee. That led us to the point of doing experiments on natural processed coffee, which is where you dry the coffee seeds inside the cherries. All that fruit gets absorbed into the coffee bean. We would have never probably done that if it hadn't been for me on the consumer side seeing the demand and communicating and then willing to take the risk and say, "Let's do 5,000 pounds of natural processed coffee. If it turns out bad, I'll still buy it and I'll figure out something to do with it."

Lauren:    Did that happen? Did you have some pretty bad batches?

Chip:    There were years, definitely. There were challenges. Totally. Then again, the first seven to 10 years was a matter of taking those risks and taking them in sizes that we knew that we could get back up once we fell down. Putting in the processes and the people and the equipment, it's taken a lot of time but I'm super proud of where we've come.

Lauren:    You have other ventures in town, too. You have Hodges Bend, Saturn Room, Open Container. What have you learned about balancing Topeca and these other projects?

Chip:    I did Hodges Bend because something I kept seeing is coffee shops that were busy and profitable in the morning, and then in the afternoon and night they would either slow down or they were full of people that were not purchasing anything. From a business perspective, it didn't make a lot of sense. Coming from and having gone to school in New Orleans and seeing a more café environment of the idea where a coffee shop didn't have to be just coffee or a bar didn't have to be just a bar, I think that a lot of places have food, alcohol, and coffee. But some of them feel like a restaurant, some of them feel like a bar, some of them feel like a coffee shop. My goal and desire when we did Hodges was to create an environment where both coffee and alcohol were equals, with the idea of elevating, also, the expectation and the quality of what people were gonna be consuming. We really shot for the ability to have excellence on both. I think that one of the biggest challenges and one of the hurdles for anyone is boredom. It's the-

Lauren:    Especially if you're an entrepreneur.

Chip:    Well, I mean, everybody's slow at some point in their business. Whenever I see an employee just going mind-numb because it's slow, it's so hard for me to watch. Besides the fact of knowing that we're slow and we're not necessarily making profit, but to see that employee's mind just go in circles. The idea of creating an environment where everybody's mind was challenged because they weren't just doing coffee, we cross train on everything. We have multiple certified sommeliers on staff. We reward and pay for certifications from certified wine tasters and certified spirit tasters, as well. We used to have two Q cuppers on staff. We have one Q cupper on staff, which is equivalent to a sommelier, but for coffee. We pay for all of the employees that work on the coffee bar at some point will go through our coffee training lab. We have an SEAA-certified training lab. One of the core aspects of sustainability, I think, for me, from the very beginning has always been about excellence, figuring out a way to have excellence consistently. I don't believe in or appreciate when you have an amazing experience one out of 10, and the other nine or eight were subpar. I'm always working to try to figure out a way to make sure that nine out of 10 is exceptional, eight or nine out of 10 is exceptional, and one or two are good with the understanding that we mess up. I call it the toothpaste rule. If I'm walking around with toothpaste on my face, I'd really like someone to tell me. It's a challenge 'cause customers typically don't want to tell you when they have a bad experience. They just keep it inside.

Lauren:    Especially Tulsans, I feel like. Very polite.

Chip:    They are very polite. But it's a challenge internally, I think, to express yourself. You feel like you'll be complaining or all the different issues with confronting the situation and expressing your discontent. But as an owner, I try really hard to pull that out of my customers and find people that I know that feel comfortable to tell me when they have a bad experience. Business in general is difficult. I think that for any entrepreneur, the key is also one of the keys for success, is finding people that you can trust and that will trust you and are willing and able to tell you when you're doing something wrong, or at least that they will give you their opinion. At the end of the day, it's your choice to listen and analyze and decide the validity or the value of that advice, but having someone that will give you their true, honest advice is priceless.

Lauren:    Do you ever feel like you have, between roasting coffee and managing Topeca and thinking about Hodges and your other bars, too many balls in the air? How do you keep them all moving? How do you keep juggling? How do you not drop the ball in a certain area?

Chip:    Yes and no, more no than yes.

Lauren:    That's good.

Chip:    There are days, obviously, where it seems like there's way too many balls in the air. The growth, actually, has allowed me to do what I was saying in the sense of earlier, to focus on what I'm good at and to find people and have the scale to afford to hire people that are exceptional at that task. There's a joy of wearing a lot of hats, but there's a sweet spot to where you have enough complexity in your life that it keeps you from boredom but where you can manage making sure that the balls don't fall. That applies to myself as well as any of my employees. It's really difficult to be exceptional at anything that you're not focused on. If you're having to be pulled in lots of different directions at one time, you're setting yourself up for mediocrity at best. One of my joys, actually, has been not only for myself but my other employees, as well, is to continue to grow to where I can have someone that is exceptional and focused on each different aspect of the business, whether it's marketing and graphics design or a CPA doing the accounting or HR. If it's not done, it has impacts on people's lives. Everybody deserves and wants to get paid on time and managing payroll and payroll taxes and sales tax. There's just so many things that have to be done. I remember doing it myself. I got it done, but a lot of times there were hiccups. It's awesome to have someone that's focused on it and know not only that there aren't gonna be any hiccups, but also that the employees are being serviced better and that everything that I can do make their lives easier is a positive.

Lauren:    Sometimes that's letting go of the reins on stuff, it sounds like.

Chip:    Exactly.

Lauren:    One of the extra projects that you also worked on was Torero, a restaurant that was by the BOK Center. Unfortunately, that didn't last very long. How many months were you open?

Chip:    We were open for about nine or 10 months, I think.

Lauren:    Nine or 10 months. Okay, short lifespan.

Chip:    Yep.

Lauren:    Can you talk about what happened with that?

Chip:    Definitely. We had some investors approach us with the idea of developing and opening a restaurant in that area. They have been a big part of the redevelopment of that area. They were looking for and trying to find the right match in order to be an anchor restaurant for the future development that was gonna be happening. I think a lot of the biggest challenges we had were size. It was a very big restaurant. It was designed probably anywhere from a year and a half to two and a half years before we actually opened. The whole process took anywhere from a year and a half to three years, probably, from negotiations and design and redesign. It was all based on an idea that what that neighborhood's gonna end up being that just hasn't come to fruition of multiple hotels and apartment complexes and multiuse buildings. We designed it both size and scale with the idea that quickly and soon after we would open, all that other stuff would actually have been there. One of our biggest challenges was we got Best New Restaurant of the Year from "Tulsa World" and "Tulsa People" and number of great articles and response from the community, but the challenge is that there's a lot of different opportunities and places for customers to go. A lot of times, people think about where they're gonna go by area as much as they do by restaurant. That area, when it was busy, was really busy. We were busy. Then when the area was slow, we were slow.

Lauren:    You depended pretty much on the BOK Center to have an event going on for you to have people in your restaurant.

Chip:    Yeah.

Lauren:    Okay.

Chip:    You know, there are some businesses that are there, but the majority are two streets off. Tulsa's weird in that at lunch time, you can be on a specific street and it's packed, and you walk one or two streets off and it's just dead. Having the lack of that consistency of volume of sales was a really big challenge, especially and amplified with the size of the restaurant that it was. I think that the area is a beautiful area and it has a lot of potential, but it's just gonna be another couple years before everything comes to fruition, I think.

Lauren:    Is this still something you're passionate about that you could see revamping or bringing back somehow?

Chip:    You know, we get asked a lot of times if we would add some of the items of Torero menu to Hodges or open it up again. You know, we all miss the food. We always talk about that. There's always a chance, so we'll see what happens.

Lauren:    What do you think's the biggest thing you took away from that whole experience, that pretty big failure? How did you grow personally through that and learn, now that you have some hindsight and you're able to say, "Okay, that didn't work but this was worthwhile because X?"

Chip:    Yeah, definitely. I mean, it was the largest project that we had done so far. With that, it was also the largest challenge I think I've ever had. With that experience, there were just a lot of things that it forced me to implement. One of the reasons why I pushed myself to finally hire a CPA was adding that to our number of businesses. That was the straw that broke the camel's back on forcing me to break down and hire a CPA. That's been awesome for all of my businesses. We got to work with a great consultant that came and gave us a bunch of advice with stuff that I'll use for the rest of my life. The challenge of managing that many employees and connecting and operating a restaurant of that size, there's a lot of things that we I think did right and there were some things, obviously, that we could have done better and did wrong. But at the end of the day, I think that, for me personally, one of the biggest challenges was just the fact that the neighborhood was not as developed as it will be.

Lauren:    You said you grew a lot through that relationship with your consultant. You said it would change how you operate the rest of your life. What are some of those lessons that you learned through that person?

Chip:    Restaurants are hard. I think it was him that said. Someone I remember once told me that restaurants are a place where you're trying to manage both manufacturing and retail in the same space. Managing your caustic goods with the idea of every time a hamburger sold, X number ounces of beef is taken out of inventory, two buns are taken out and a slice of cheese, and so on and so forth, isn't very effective. It's very difficult to have a system of that level. There are some places that are able to execute on that type of system. But he helped us implement a system that was a great combination of being able to be easy enough to use and small enough of time consumption on a daily basis to execute on that it allowed the managers to do it. I think at the end of the day, if something isn't easy then it's not gonna get done. As an owner or as a manager or boss, the easier you can make a task for an employee, the more likely it's gonna get done. It was really rewarding to gain that control over our numbers and information that we were getting out of the system that he helped us implement.

Lauren:    Be more data-driven, it sounds like.

Chip:    Yeah, and I'm naturally data-driven, but restaurants are extraordinarily complicated. There's just so many moving pieces. Coffee roasting is a million times easier than operating a restaurant, but this was a really empowering tool for me to be able to have that data and then have information that I could communicate and work with the managers to execute on.

Lauren:    Talk a little bit about your personal growth. I think a lot of entrepreneurs face this internal, and you talked a little bit about risk-taking. What do you think is the biggest personal growth that has come from your journey?

Chip:    For me, I've always been someone of searching for balance. I'm a pretty easygoing guy. I enjoy putting myself in environments where they are new and they are a little more uncomfortable, but the biggest personal growth has been just confidence. Little by little, you acquire more and more knowledge and experience. It's with that that you can enter into these complex situations where you have a lot more confidence in not only what's gonna happen and after you have succeeded and failed, both, multiple times, it makes it easier to weather the storms and how to confront those issues. I think, for me, the biggest reward and process has just been the development of confidence and understanding of the different variables in order to be able to execute better.

Lauren:    My final question. What would you say to other entrepreneurs who are in the thick of it right now, might be facing some failures of their own? What would you say to encourage them?

Chip:    They have to learn how to take risks and to fail and to be okay to fail. Take risks that they know they can get back up from with the idea of learning from them, and then executing differently on the next time. It's through those failures that you learn about yourself, where you learn about the industry and the business that you're in. You learn about other people and how to work with and to manage them. It's those challenges that create the perspective of how the world works.

Lauren:    Thank you so much for coming in today to share your experience, your story, with us, Chip. We're really grateful.

Chip:    Thank you.

Lauren:    I need to go get a cup of Topeca Coffee, I think.

Chip:    Me, too.

Lauren:    Next week on The F-Word ...

Tim:    It was scary there for a while. I mean, I didn't take a salary for two and a half years.

Lauren:    Tim Smallwood talks about establishing Oklahoma's first tropical smoothie café.

Dustin:    The F-Word is brought to you by 36 Degrees North, Tulsa's base camp for entrepreneurs. To learn more about our workspace, community, and resources, visit 36N.co. The F-Word, season one, is recorded at KOSU Studio, hosted by Lauren King and produced by Julie Combs.

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