Keurig® was founded in 1990 by Peter Dragone and John Sylvan. Keurig® seemed to go from an unknown company to a billion dollar empire overnight. But, what few people know is that “overnight” took twenty years and there were lots of bumps along the way!
Sylvan and Dragone started with nothing but an idea for a single serve pod and coffee maker with multiple cup sizes and a twinkle in their eye. They had no money, no backers and no clue how to make their dream of a high quality, single serve coffee brewer a reality.They started tinkering and building prototypes until they got it right but, let’s just say “right” is a relative term at this point.
The first coffee maker was huge, heavy and expensive. It was not reliable and required a plumber to install it. As Dragone and Sylvan lugged brewer after failing brewing to potential backers there were often instances of exploding K-cups, floating coffee grounds, low brew temperatures, and hot water leaks. At this point they were still making the K-cups by hand and relying on their own taste tests. As a matter of fact Sylvan was diagnosed with caffeine poisoning admitting that he was consuming 30-40 cups of coffee per day!
Despite all of these issues, this early Keurig model was growing in popularity in commercial settings. Employees loved the convenience and seldom chose to go back to a traditional drip style brewer after using this revolutionary unit. Sylvan and Dragone knew they were on to something.
In 1993 Dick Sweeney joined to Keurig team assigned with the task of automating the brewer and coffee manufacturing process… and that he did. I have had the pleasure of visiting Green Mountain Coffee Roasters (GMCR) in Waterbury, VT. This is the original home of the K-cup and GMCR will forever be the true experts in the manufacturing process. The warehouse is huge, the process is completely automated, robots can be seen in most stations but, the human factor still exists to ensure the highest quality possible.
Meanwhile, back at the ranch, reliability was improving and demand was growing for Keurig® units in the workplace. However, the writing was on the wall, homes were where the real money could be made. With 75% of coffee consumption occurring at home, executives knew this was where they needed to head next.
It took nearly two years to develop a Keurig® brewer that would fit on a kitchen counter top, did not cost and arm and a leg and contained a water tank. The Keurig® founders were thrilled to be headed in this direction however, at the same time big name companies, with deep pockets were releasing their single serve coffee brewers as well. Keurig® could not compete, they simply did not have the money for a marketing campaign that came anywhere near the level of their rivals. When you can’t beat ’em, join ’em.
That is precisely what Keurig® did. Instead of going broke on commercials or print ads, they let their competitors spend their money spreading the word about single serve brewing and rode their coat tails. They set up brew stations in retail stores, gave demonstrations and shared free samples. Keurig® blew away their competition by creating a one on one experience with their end user. This is a philosophy that they still continue today. Keurig® team members and their national distributors can often be found hosting brewing demonstrations, sharing recipes and simply enjoying coffee with their customers.
Quality was finally perfected, the machines were now extremely reliable and producing a superior cup of coffee. Investors began coming on board. Decisions were now not up to Sylvan and Dragone but, a team of executives. This left Sylvan in particular, very frustrated. He decided it was time to move on and accepted a $50,000 buy out. Despite claims that he is not bitter about this dismal amount of money for his invention that is now worth billions, I would imagine he feels a bit discontent to say the least.
Dragone also left a few months later but, perhaps learned from Sylvans error and maintained his stake in the company. Green Mountain Coffee Roasters (GMCR) already held a piece the company at this point but, wanted it all. In 2006 Keurig became a wholly owned subsidiary of GMCR for an astounding $160 million dollars! This was truly a match made in heaven. Keurig® is really a technology company in the coffee industry. Nearly a third of their employees are engineers. GMCR are well respected experts in coffee sourcing, roasting and distributing. Combine these two forces and you have one heck of a power house that simply can’t be stopped.
I for one am beyond curious to see where Keurig® takes us next, I have a strong feeling that they will expand their horizons, not only perfecting the coffee experience but, take the entire pod coffee industry by storm! We are already enjoying iced coffee, cappuccino, and latte with the latest brewing systems. We can now fill travel mugs to the tippy top with K-Mug® pods. What’s next? Who knows, they have never been predictable or played by the rules in the past, they are bound to have a few surprises up their sleeve.
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