Atlas Coffee Club— Turning $5K into $22M ARR

Read time: 5 minutes

Good morning! It's Thursday, March 14th. Today, we're looking at the bootstrapped coffee subscription business that broke $20M in ARR last year!

THE FEATURE

Atlas Coffee Club— Turning $5K into $22M ARR

We've covered plenty of startups that receive massive seed rounds and immediately set out to disrupt their industries. But, you can often gain more business insight by digging deep into owner-funded companies.  

With that in mind, we're covering Atlas Coffee Club, a bootstrapped company that started out small in 2015 and rode steady subscription growth to $22M a year!

So, What's the Business?

Atlas Coffee Club founder Michael Shewmake wasn't a coffee expert when he found the inspiration for his company. 

In fact, he didn't even like the stuff. That was until he went to a coffee shop in Malibu, California, where he tasted coffee he legitimately enjoyed and had a barista educate him on the bean's origin and processing methods. 

This set off a light bulb in his head: how many other consumers were absolutely clueless about coffee bean sourcing and brewing techniques?

With $5K to his name and living in his parents' basement, he founded Atlas Coffee Club to bring coffee sourced from around the globe to consumers in search of the perfect blend. 

Take a look at the company's trajectory since 2015: 

• 2015: $30K

• 2016: $180K

• 2017: $650K

• 2018: $2M

• 2019: $6M

Then, the pandemic hit, boosting demand for subscription services and bringing annual revenue to $15M. Atlas Coffee has retained those customers, bringing recurring revenue to $22M last year. 

Plus, Shewmake pulls off $20M+ in revenue with just 26 employees!

How They Win: Turning Subscriptions into Experiences

Shewmake believes that creating a lasting business requires pairing numbers with "magical moments for customers."

Here are the three "magical moments" he crafted for his brand upon launch: 

1. Include a postcard with every shipment to remind consumers that the coffee comes from another country

2. A tasting card with specific details about the coffee

3. A story associated with the taste

By creating these magical moments, Atlas Coffee became more than a simple distributor.

To its customers, it's a master coffee curator who educates and exposes them to new varieties—akin to a wine sommelier. Plus, each month's coffee shipment comes from a different country, encouraging consumers to subscribe and continue their tasting journey. 

Playbook: Shewmake's Advertising Formula

For bootstrapped companies, everything is about bringing in more cash than you spend. And, for bootstrapped subscription services, a lot of those expenditures go toward advertising. 

Shewmake believes bootstrapped companies need an aggressive ratio of Lifetime Value (LTV) to Customer Acquisition Cost (CAC) that's greater than five. 

Here's a breakdown of how Shewmake determines his customer acquisition cost: 

• LTV= Average Order Value (x) Gross Margin (x) Average number of months customers stay

• So if an LTV is $100, that means his financially sound CAC is $20 (a fifth of the LTV)

With accurate estimates of how much Atlas Coffee Club could afford to acquire each customer, they could confidently invest in advertising and maintain profitability. When you top that off with bringing "magic" to subscribers, it's no wonder Atlas Coffee Club broke the $20M ARR mark. 

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