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#016: Gaggia Espresso Machines had a problem

What to do with the oily film that formed on the top of their espresso. The result built an empire and even changed how fine espresso is judged.  This is a lesson of overcoming resistance to new innovations.

David Young:

Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor which is… Well it’s us. But we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.

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David Young:

Stephen, a little sleepy this afternoon as we record this. And thinking that I might need a little cup of espresso, just a little pick me up, just a little jolt. What are you thinking?

Stephen Semple :

I’m thinking that’s what we need to do. And we’re going to take a trip back to September 5th, 1938.

David Young:

For our espresso?

Stephen Semple :

For our espresso. That is when… Now I have to apologize because if we have any Italians, they’re just probably going to cringe when I say this name. Because the modern espresso machine was invented by Giovanni Achille Gaggia. Now I probably butchered that name, but that’s as close as I can get. Before that time, how espresso was made was it was boiled and cooked. And what made this machine different and it became the father of the modern espresso machine is it made espresso under pressure. And so it literally changed the way espresso is made, looks, and tastes because one of the results of making it that way was you actually get that little cream on the top of the espresso, which did not exist before that.

David Young:

Coffee suds, kind of.

Stephen Semple :

Yeah. And Achille literally changed the way we look at espresso, and changed the way espresso is graded and how coffee snobs look and describe espresso. Because when it first came out what people were doing was spooning that little cream off the top of it. They’re like, “Oh my God, what?” They would take their cup and they would scoop all of that off.

David Young:

And throwing it away.

Stephen Semple :

And throwing it away.

David Young:

They were saying, “Ooh, there’s a foam on top of my coffee.”

Stephen Semple :

Yeah. They were literally saying, “What is this scummy foam on the top of the coffee? And what’s wrong with it.” Now, normally what a company would do in that manner is choose to educate their customer, right? We’ve seen this over and over again working with companies have new technology or new innovations, “Let’s educate the consumer on this. Let’s let’s tell them how much better it is.” Achille decided to do something different. He decided to speak to the heart, not to the head. So guess what he did. He gave the foam a name. He romanticized it. He called it crema caffe naturale. Or natural coffee cream, which today we call la crema.

David Young:

La crema. And before that they looked at it like it was the same stuff you get when you boil a chicken and this foamy stuff rises to the top of… “Ooh, get rid of that.”

Stephen Semple :

Yeah. Well, to the point today, that if you’re competing and grading coffees, one of the things that gets graded is if there is no la crema on the top of the coffee there’s something wrong.

David Young:

Ain’t that great?

Stephen Semple :

Yeah. In fact this is a bit of a problem for Starbucks because Starbucks uses Arabica beans rather than Robusta beans, and Arabica beans naturally don’t have as much of the crema.

David Young:

Oh my gosh.

Stephen Semple :

Yeah. It went from this negative to this positive by giving it this name.

David Young:

And then people want it.

Stephen Semple :

And then people want it.

David Young:

You romanticize it and people want it. So what did this do to the whole industry? I mean, Starbucks… Yeah. This was back in 1932 what-

Stephen Semple :

Yeah, 1938. So they went on to become a huge business. They’re the most expensive espresso machines. You see them in the high end coffee shops, Gaggia espresso machines. The crazy thing is that they’re now owned by N&W Global Vending. And what I don’t understand is how they don’t leverage this origin story. So the story of the birth of la crema. If we worked with them, they invented la crema, We’d be leveraging it. Do you know who is leveraging the la crema story? Nespresso.

David Young:

Of course.

Stephen Semple :

So Nespresso comes along and they’re competing with Keurig in terms of the little pods you put in-

David Young:

Right. The fancy machine.

Stephen Semple :

Yeah. What’s different with their fancy machine? You get la crema. So they get Penelope Cruz going, “What’s the difference? La crema.”

David Young:

La crema.

Stephen Semple :

The company that’s leveraging it is not the company that invented it.

David Young:

So you know what I think is beautiful about it? Romanticizing it and creating a story about the La crema didn’t cost anything, right? Most other business owners would have thought, “Oh my gosh, our customers are telling us this is a problem. We need to invent a special ladle or some special filtration to get that stuff off the coffee.” And gone into some design and research cycle to figure out how to solve the problem instead of saying, “Oh, that’s not a problem. That’s just love on top of your cup of coffee. That’s the romance. That’s the good stuff.”

Stephen Semple :

That’s the good stuff. Because here’s the other thing, the moment you convince the consumer that that’s the good stuff, guess what? All the other machines you don’t want.

David Young:

Exactly-

Stephen Semple :

And Nespresso is smart enough that they looked back and they went, “We’re going to run this game again. And we didn’t invent this.”

David Young:

Yeah. And so Starbucks their big deal is lattes because it’s foam made out of cream and milk. So we don’t have to have crema.

Stephen Semple :

Exactly. So the lesson here is…

David Young:

Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.

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David Young:

Let’s pick up our story where we left off and trust me, you haven’t missed a thing.

Stephen Semple :

So the lesson here is speak to the heart, romanticize things. Don’t educate the consumer or try to necessarily change it. There is a different path here, and the path is romanticize it. He didn’t give it a technical name. He called it natural coffee cream.

David Young:

Yeah. Beautiful. Beautiful name.

Stephen Semple :

And that’s why you want it. You actually want it because it was like, “Oh, I actually want it because it has this.” And look, the other part of it is it wasn’t awful tasting. I drank espresso, I love espresso. If it tasted like crap you wouldn’t have been able to get away with it.

David Young:

Yeah. I think of other instances where… I can think of one where there’s a similar thing that happened. And maybe there’s a business story in this, but beer drinkers love an IPA because of the hoppy, hoppy taste in it. And when they first came out with hops, hoppy taste in beer was to keep it from spoiling on its way to India.

Stephen Semple :

Right.

David Young:

Right? It was an additive that made it taste bad. And it’s become something that’s like, “Oh, beer connoisseurs really want that.” I shared this with you, but I think this is a million-dollar idea for Heinz Ketchup company. They call that liquid that seeps out of the ketchup bottle and pours onto your plate before you want ketchup, they named it watery ooze years and years ago. Had they named it essence of ketchup, people would be collecting it in small bottles and storing it in their refrigerator, and adding it to sauces.

Stephen Semple :

Yeah. Gaggia would have been calling this coffee oil gunge.

David Young:

Exactly. What a genius though. I love that story because it didn’t cost him anything to solve the problem by creating a story around what people thought was a problem.

Stephen Semple :

Yeah. And turn that thing that was fine, because we’ve got to remember it, at its core it didn’t taste bad. Or the espresso they’re making is good, but take that thing that was perceived as being a negative and turn it into a positive and a differentiator.

David Young:

Yeah. It’s a feature.

Stephen Semple :

It is a feature. So the lesson for business owners is don’t automatically go, “Oh, I’ve got to remove this or I have to educate the consumer on it.” And maybe, “How can I actually make it desirable? How can I speak to the heart”

David Young:

Great lesson for an empire builder. Thank you, Stephen.

Stephen Semple :

Thanks, David. And enjoy your espresso.

David Young:

Oh, thank you. Yeah, I’ve got to go get an espresso.

Stephen Semple :

All right.

David Young:

Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app and leave us a big fat juicy five-star rating and review at apple podcasts. And if you’d like to schedule your own 90-minute empire-building session, you can do it at empirebuildingprogram.com.

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