From six years spent at Starbucks to designing a new countertop coffeemaker that cranks out cold brew, Mesh Gelman has been working at the cutting edge of coffee.
During his time at Starbucks, he witnessed the rising popularity of cold beverages, a trend that his new startup, Cumulus Coffee Company, aims to capitalize on.
In this podcast episode, we talk with Gelman about coffee trends; developing a new product from scratch; the difference between big organizations and start-ups; and his past work as an innovation consultant.
You can listen to this episode of our Innovation Answered podcast by clicking play above, or subscribing to it on your favorite podcasting platform. If you have an Alexa device, just say “Alexa, play the Innovation Answered podcast.”
Hadley Thompson:
Welcome. You’re listening to the Innovation Answered podcast. Innovation Answered is the podcast from InnoLead, the web’s most useful resource for corporate innovators and changemakers. If that sounds like you, we encourage you to subscribe to the podcast so you’ll catch all of our future episodes.
I’m Hadley Thompson, Editorial Assistant at InnoLead, and in this episode, we catch up with Mesh Gelman, founder and CEO of the Cumulus Coffee Company. They’ve designed a new countertop coffeemaker that makes cold brew beverages using pods similar to Nespresso. Last fall, Cumulus raised a $20 million funding round from backers that include former Starbucks CEO Howard Schultz, and it’s launching the product in 2024.
Before starting Cumulus, Gelman ran an innovation consultancy called Two Canoes, and he also spent six years at Starbucks — first overseeing all store retail and brand partnerships, then as Senior Vice President running the company’s Siren Ideas Group, which focused on innovative solutions. While at Starbucks, he observed the rise of cold coffee beverages, a trend that Cumulus is hoping will drive its growth. We talked about that, and some of the lessons he learned at Starbucks, during our conversation.
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Hadley Thompson:
So we can start by talking about your time at Starbucks. Tell us a little bit about what you did there, and what the culture was like. I’ve heard that some meetings start with a coffee tasting. Maybe you can debunk that or not?
Mesh Gelman:
This isn’t a prop. This is actually you know, my cold coffee, and it’s delicious. But yes, so I guess we could start this off with a little coffee tasting virtually. At Starbucks, we do coffee tastings not at the start of every meeting but at the standing meeting. I was on the USL team, so the United States Senior Leadership Team. That was my first role in the company, and we had a standing meeting every Monday and Friday. We would start off with a coffee tasting and really what it is about is keeping you really connected to the reason of being at Starbucks, right?
Ultimately, it’s fascinating. You have this global company, with billions of dollars in revenue, which is all done one cup at a time. When you stop and think about having to get it perfect every single time for every customer, and if you don’t get it right… Having a coffee tasting at the beginning, no matter what you’re discussing, just keeps everybody really rooted in what is it that you’re doing.
If I’m sitting here having a virtual coffee tasting with you, the way it would work is that there’d be a rotation. Another person, no matter who you are, no matter what your function is, even if you’re not a coffee person, you could be IT, you will get a chance to lead the coffee tasting. A coffee tasting is a fascinating ritual where you have this little sampling cup, you have a little bit of coffee. At Starbucks, it was made off of a French press and the person doing the coffee tasting would choose a coffee first and foremost because there was something personal about that coffee that they connected with. Maybe they were on this great vacation in Costa Rica and it was very memorable for them, they would maybe take a Costa Rican coffee. It’s always to personalize it.
Then, the other part is that you would pair it with a food that would enhance the notes of the coffee. If it was chocolatey, nutty, hazelnut, vanilla, spicy, fruity, whatever the notes of the coffee would be. When you have the two together and the way you actually taste the coffee, you kind of like sniff it, you slurp it, you talk about it. It’s a very fun, noisy process. Long story short, I remember my first coffee tasting. I hosted it virtually. It was a Friday morning and I was remote. As you can see I’m wearing a yarmulke in my head, so I’m Sabbath observant. On Sabbath, we’re not allowed to cook. So how do I have coffee on Sabbath? Thankfully, Starbucks has a way for us, it’s with the Via, with the instant coffee. So you just have to have hot water in the urn, then just add in the Via.
I made everybody rip open it, put it in their coffee, and drink it. It’s an important ritual. It makes a difference in what your business is. It taught me this important lesson: to always remember what is your connection to the consumer and why you exist. What are you here to serve and what are you here to do? So for us at Cumulus that’s easy because we also can do so much with coffee tastings and coffee experience and things like that might be a little harder for Amazon. Maybe everybody gets on a truck, you know they do the the meeting in a truck or something.
Hadley Thompson:
I recently went to Spain and I stumbled upon a ritualistic cacao tasting, which was really cool. What you said reminded me of that a lot, really taking it in and getting a feel for it, and savoring it, and all of that good stuff. What do you observe when you go into Starbucks, Caffé Nero, or a Dunkin’ today, and who do you find most interesting in that landscape?
Mesh Gelman:
Once I put this out there, I don’t think anybody’s going to be able to unsee it. It is the amount of cold cups coming out of the door, crazy stats. Starbucks has shared publicly that 75% of all beverages coming out of Starbucks today are on ice. To think about that iconic white cup with the green logo that we all come to see and love is only one out of every four cups coming out, whether it’s Starbucks, Caffé Nero, Dunkin, or a Wawa, it makes no difference where you are. The dominance of cold coffee is just so overwhelming and, to me, it’s so interesting how people not only have gravitated towards cold, but it’s what they do with it as well. You see people’s little nuances. To me, that’s the big thing that I see.
I think the other thing that I see is how, unfortunately, today, there’s a seismic shift in the way consumers are behaving. Whether it’s because of technology and what’s happened with all the delivery services and everything like that, or mobile orders, everything has become very transactional. That human connection piece is not being nurtured. One of the greatest things that, at least at Starbucks is so special, is that you come in there and watch them write your name on the cup and talk to you, and ask, “How are you, how’s your day going?” It just fascinates me how the consumer, in general, has lost that piece. I don’t know if it’s a self-inflicted wound or what it is, but it’s just not there anymore. I think those are really the two things that come forefront for me.
Whether it’s because of technology and what’s happened with all the delivery services and everything like that, or mobile orders, everything has become very transactional. That human connection piece is not being nurtured.
Hadley Thompson:
I find it interesting that the cold cup, the plastic cup, raises a sustainability issue because that’s a lot of plastic.
Mesh Gelman:
Oh, tons, right? Which, by the way, again, no plug for cumulus, but enjoying it at your home and not trying to greenwash but the fact that you’re in a glass cup or something that you don’t have to deal with waste is a big deal.
A few companies, and I think Starbucks for one, is leading an initiative trying to get people to bring in their cups and reuse them. It’s a hard task, especially, again, all the effort needed operationally to do that. But the pain point is for the consumer. At the end of the day, if consumers have shifted so much to everything has to be on demand and convenience first and everything like that, anything that adds any friction to that process, or slows you down is an inconvenience. There’s a lot of tension that exists in what we want idealistically and then what we really do. It’ll be interesting to see how that develops over time.
Hadley Thompson:
You spent some time consulting with big brands, what did you observe from that time in terms of their challenges that worked and what didn’t work?
Mesh Gelman:
Sure, I think that the one common denominator, whether it was brands that we worked with or brands that we engaged with in conversations and didn’t work with, is that everybody, everybody is worried about growth, and everybody’s worried about innovation. Usually, when we work with organizations, I like to loosely put it like we weren’t consultants per se, but we were kind of like CEO whisperers. At the end of the day, the thing that I noticed as a constant, is that the higher up, we engage with the organization, whether it was with the C suite, with the CEO of the company, or with the board at the board level, once you strip away some of the near term, everyday battles or issues that they’re dealing with, everybody wants to be at their core more innovative and more growth-oriented.
There is this tremendous envy about what’s happening with some of the growth stories. I think it’s also because the growth stories are so interesting and so disruptive. They’re also getting a lot of attention, and people are talking about them, and they’re on trend, and things like that have given leadership a lot of time to pause and like reflect, and ask “Are we doing something wrong? Are we adjusting quickly enough? Or what do we need to do to get more growth-oriented and more innovative?”
Hadley Thompson:
So, I’m currently off caffeine, but what is something about the coffee market today that would surprise people whether that’s at cafés or in grocery stores?
Mesh Gelman:
If you’re off caffeine, the first thing I would tell you is that you need a good decaf. When you were on caffeine, what was your coffee ritual?
Hadley Thompson:
I’m a hot coffee person. I’m also a hot latte person. I like to make my coffee at home, I feel like it’s more personalized that way, and it’s more special.
Mesh Gelman:
Ultimately, that’s what’s really so special about coffee, is that there are so many things, so many areas of product or services that are very functional, and we need them. We need them every day, but they’re very few emotional things. Actually, 50 years ago, coffee probably wasn’t like that. Going back to Starbucks, when Howard joined, Starbucks coffee was on the decline as a beverage, which is crazy to think about. Not only did it become a growth category, but we’re drinking way more coffee today per capita than we ever drank before.
The more and more great coffee experiences come, it will be a continually expanding category when it transfers from being a functional experience to a personal experiential experience. It became a moment of pause, whether it’s something that you want to do by yourself in your home, you want to connect with a friend and catch up, or just kind of have some ritual around your routine. The coffee market is just ripe with opportunity, to continue to expand.
You cannot have enough coffee. You think about like cold coffee. For example, I shared earlier how 75% of beverages consumed now are cold versus hot and the interesting thing that I think what’s happening now in coffee, is that as cold becomes a more dominant beverage than hot past that tipping point, it’s also a full-day beverage. A hot beverage is something that hot drinkers, as data has shown, focus on in the morning. But as the day continues, they move away from that. But when you go into cold coffee, it has its occasions throughout the day. This is actually one of those trends that we recognize as such a great opportunity with Cumulus, historically, the way you make cold coffee, it’s a very complicated process. A lot of the offerings have different varieties that are available and hot is not available in cold.
That’s one of the big things that we worked on. We have multiple offerings of different types of flavor profiles that could work on different occasions throughout the day, including a decaf cold brew. Imagine having, at night, after dinner, a decaf espresso, that you throw over your ice cream for affogato, or an Espresso Martini. Cold has had this amazing ability to extend the day of coffee and give you moments like, “Ah, I’m craving that coffee, there’s something there and I could get it.” I think that the biggest opportunity for coffee is to keep up-leveling those experiences throughout the different day parts, allowing for these great moments.
The more and more great coffee experiences come, it will be a continually expanding category when it transfers from being a functional experience to a personal experiential experience.
Hadley Thompson:
If you could tell us a little bit about Cumulus — you just touched on it, but what is the product, how did you develop it, and how was it sold?
Mesh Gelman:
The Cumulus Coffee Company was after I left Starbucks and I started working with all these wonderful companies. My previous company was called Two Canoes. The idea is on one side are these large companies, one canoe that struggles with growth and innovation. The other canoe is where all the disruption lies. The idea is to have a foot in each canoe. How do we bring unfair advantages to both sides?
As much as we were focused on big companies, we were always churning up ideas that we could ultimately build into something meaningful over the last four or five years. We’ve been quietly at work.
To step back a little bit, I was fortunate to have a front-row seat when cold became a thing when it burst onto the scene in 2014 at Starbucks. Then, it quickly followed in 2015 with Nitro Cold Brew. Just the idea of thinking about nitro is almost like a Guinness. It gets infused with nitrogen and it takes on this creamy milky texture. It’s such a beautiful expression, such a quality product, and nothing added to it. It wasn’t a fad. It wasn’t something that became seasonal. It was fascinating to watch it. When you think about the cold brew process, you have to soak it for 24 hours to get the flavor out. It’s a real pain point to deliver a great experience. I saw that firsthand. I saw the huge demand.
As we think about growth and innovation, it’s all about these great moments of frictionless experiences. That’s what consumers want. We want these elegant solutions. There was no great way to experience cold brew at home. Yes, you could get an RTD product, but then you’d junk up your refrigerator. You could make it yourself. It’s messy and you always can question “Did I get it right?” Meanwhile, if I wanted to enjoy a hot coffee, I could pop my espresso capsule into the machine and do that with my eyes closed and have a great espresso shot. Why wasn’t there anything like that for cold?
What we’ve done is, over the last four years, we developed a countertop solution that’s able to make on-demand three beverages. We can make a cold brew, we can make a Nitro Cold Brew, and we can make a cold-pressed espresso. The way we do that is, one of the exciting things if you think about infusing a beverage with nitrogen, and the quick analogy to think about is a SodaStream, where you’re gassing a beverage. You need to get those balloons of gas to those cartridges to make sure that you have the bubbles with nitrogen. Here’s a fun fact, 79% of the air that we breathe, is nitrogen. The technology that we developed is a machine that takes the nitrogen from the air that we breathe, and we use that to infuse it into the beverage, which means you, as a consumer, never have to worry about running out of nitrogen. You don’t have to worry about ordering or paying more for nitrogen, as long as you’re breathing so is the machine. It’s this high-quality and sustainable way to always have the most premium beverage possible.
Hadley Thompson:
What were some of the key challenges you faced during the product development phase of Cumulus and then how did you overcome them?
Mesh Gelman:
There are a few things. Number one is this whole design for cold. At every single point in the supply chain, from the time we source our green coffee, to how we blend it, to how we roast it, how we find and design a capsule, and the equipment that is necessary to create, we had to make a full net new, never done before production line to be able to create this type of packaging for thinking about how do we have a coffee machine if we’re going to be designed for cold? How do we deal with things like cleaning the machine? If you think about a hot machine on your counter, as soon as the heat goes through it, it could kill everything. We had to think about how we wanted to be fully cold never touched by hot. With that as our Northstar, how do you run a machine that you can’t introduce heat to to keep it food-safe? A nice, fun challenge.
What does that mean that you’re harnessing nitrogen from the air? How does that work and how do you do that? One of our first iterations of the development, before Cumulus was even formed as a company when we just projected things, this was when we figured out how to do it. We were making a beautiful beverage, but we couldn’t get it to something that could be commercial. It was amazing to see the beautiful pour coming off the machine, but it couldn’t go out of a lab because it wasn’t scalable. The engineering design of it is not something that can be mass scale, so rethinking all of that.
The way we attack these challenges has been through the idea that we’re not a startup. What does that mean, “We’re not a startup?” No, we’re building a company. How we approach challenges, instead of trying to use brute force, is to find the talent necessary with the subject matter expertise that could problem solve that for us. That’s been a huge unlock for us to accelerate that here we are and getting ready to launch in the coming months.
Hadley Thompson:
If you think about being a startup entrepreneur, compared to being a Starbucks employee, those are two very different worlds. What makes them so different and what is some advice that you have for folks working in big companies at the moment?
Mesh Gelman:
The difference between being at Starbucks versus where I am today is you could erase the names, Starbucks and Cumulus, and overall, the biggest difference is a business that’s in motion is the core business that you are always are so mindful of protecting and earning the continuation of your business. That’s so big at sometimes it can be crippling and intimidating. “Oh, my God, if I do that, do I have the ability to make a tough decision where that will impact revenue in the near term because that pivot will help us for the long term?” Being able to make that decision is so hard when you’re a new company, like where I am today.
It goes from being “This is our growth goal,” to “This is the area where we’re exploring,” and just the differences between those sentences. It’s like “I don’t know, but let’s experiment.” “Let’s try that out.” Right. You’re not lapping anything. You’re benchmarking against anything. You go on this journey of discovery, on one hand, is this great luxury that you have that you’re able to test and fail and figure things out, but on the other hand, you’re missing a different luxury, which is the scale and infrastructure.
I think that there are pluses and minuses or there are different things that are attractive about what was happening at Starbucks versus what’s it like to be an entrepreneur. Everybody can be an entrepreneur and an innovation leader, usually, there’s a lot of gut, there’s something that’s telling you, you just see it, you know it, you think about inside a big organization, how do I get that done? Look at that as leverage. That was the way I always thought about it at Starbucks.
Look at that big organization as your leverage. The fact is that you have the infrastructure, resources, technology, manpower, and playground to do so much more. As you think about whatever your R&D process is and whatever the different departments your innovation is going to touch, think about if you are a startup, you don’t have that fear. You don’t have all that knowledge and history and repeatability that’s already in place. If you could go ahead and just look at it and say, “You know what, I don’t have to take the risk and leave my company. I don’t have the emotional strength to do that.” Or maybe “Life circumstances don’t give me that luxury,” that’s okay because you can be a really great entrepreneur and startup person, and in a way even more effective because you can leverage the infrastructure. Take your energy, take your passion, and persuade people and bring them along on your journey.
Hadley Thompson:
Mesh, this has been a fascinating conversation. I’m so glad you could take the time to be on the podcast.
Mesh Gelman:
Well, thank you, thank you for having me, and Hadley, we can’t wait to have you drinking a decaf cold brew Nitro Cold Brew from your countertop.
Hadley Thompson:
I’m excited. I’m very excited for that.
You can find out more about Cumulus at cumuluscoffee.com. You can learn more about InnoLead, sign up for our email newsletter, or find out about our upcoming in-person event Leveraging AI, taking place May 16 in Silicon Valley at an innolead.com.
We have a great group of speakers lined up from Amazon, Ancestry, and Airbus Acubed Innovation Center, and that’s just the A’s.
It is an event you do not want to miss if you’re involved in AI strategy and execution in a big organization.
To listen to more than 60 of our earlier podcast episodes, search for Innovation Answered on your podcast platform of choice.
Thanks to Mesh Gelman and Scott Kirsner for their help on this episode.
