I Sold Out

What's up, guys? It's Graham here. So, in the span of less than a year, I started a coffee company. I was immediately threatened with a lawsuit that forced us to start over just days before we planned to launch. I then got confronted by that person who showed up in Las Vegas shortly after posting a video about it. Now, more recently, we've sold out. In terms of how we got here and how much money I've actually made selling coffee, keep watching because, trust me, I could have never imagined what happened.

This all started about two years ago when I jokingly made an offhand remark that my coffee only cost 20 cents to make at home. Honestly, I didn't think much of it until I received a huge package of coffee in the mail from a subscriber, with an invitation to come join them in a coffee business as equal partners to bring the 20-cent iced coffee to market. And, uh, it worked! We spent months crafting the perfect brand, creating designs, and sourcing coffee from locally roasted and ethically sourced manufacturers from both Colombia and Brazil.

But within days of finally going live, we were hit with the threat of a trademark lawsuit from somebody else who claimed that our design was a little bit too similar to theirs, and that was a problem. Now, immediately, I felt like this was a bit of an empty threat since, after all, we did everything by the book and we consulted a trademark attorney for every step along the way. But after some back and forth with our lawyer, we just felt like it wouldn't be worth it to engage because even if we were in the right, it would cost significantly more money to defend ourselves in a lawsuit than it would be to completely start over from scratch.

So that's what we did. At the time, I remember being extremely disappointed that all of our patience and hard work had been flushed down the toilet for what seemed to be a complete waste. But after putting that aside and spending another few months rebuilding everything from the ground up, I have to say the new products came out even better than the original. We moved away from Brew Culture and took a totally different approach with the name Bankroll Coffee that features these fun, whimsical investing names, giving us so much more versatility under the whole coffee umbrella.

Now, I honestly had no idea what to expect from something like this because this was so different than any other business I've ever been involved in. But at the end of the day, I want to push myself outside of my own comfort zone, try something different, learn new things, and then I can incorporate all of that back on the channel for everybody watching. This coffee company fits into that perfectly. Our entire goal from the very beginning was to be the most cost-effective premium coffee sold online, shipped right to your front door.

It was never meant to be cheaper than something that you could buy in bulk at the grocery store, but for high-quality, ethically sourced coffee that's roasted right before it's shipped. All things considered, we pretty much sell at our own costs just for the sake of growing the business. So, I spent the next week filming a video detailing every intricacy of our business, including our wholesale cost of the coffee, the cost that we pay for shipping and packaging, our entire pricing model, and then what everyone wants to hear: how much money we expect to make.

But after posting that video, I gotta say we underestimated demand, and we were not prepared for how many people wanted to buy our coffee. We had ten thousand coffee bags and labels ready to go along with enough material to last us through the rest of the month. Although, when I posted that video Friday afternoon, by the time Monday came around, we were completely sold out of everything. In 72 hours, we had sold one hundred thousand dollars worth of our product—product that was supposed to last us 30 days.

That presented two problems. One, our Shopify account was flagged for suspicious activity because usually, you don't have a brand new account going from zero to one hundred thousand dollars in revenue over a weekend. Two, our coffee roaster literally could not keep up with demand because they roast their coffee to ship it out fresh the next day. There's only so much they could roast at a time without advance notice, and because of that, there was only so much we could do before things started falling behind. Thankfully, within about a week, we were able to get caught up on everybody who placed an order, and then today everything is running smoothly.

But if you think it ends there, just remember that lawsuit I mentioned earlier. Well, about that: a week after the video went live, I got a message on Instagram from the same person who said that I infringed on their trademark and caused us to completely start over from scratch. I was actually quite nervous to open up the message because it was a video, and there was no way for me to watch and preview what it said without him having seen that I saw it.

But apparently, he traveled all the way to Las Vegas to come and see me with a giant billboard. And here's what it said: "I saw your YouTube video when you were talking about why you had to change the name and start Bankroll Coffee, so I decided to come to Las Vegas. We have billboards launching in support of Bankroll Coffee. Let me know if you want to get together and let's make it happen." So, after some deliberation, I figured why not?

If you want to see the interaction and how that played out in the spirit of YouTube, I filmed everything. We've had the branding for Brew as well as all the legal stuff kind of buttoned up. So when I reached out, I was like, "Yo, I don't even want to call my lawyer. I want to figure it out. I want to try to help collaborate. I'm a fan; let's just talk about it." I was actually going to offer to cover all the rebranding costs through my team and my agency.

I don't think that that's the story I want to be told about that situation, so let's just hook it to Vegas and sit down with us. We discussed it with another trademark attorney, so do not contact you at all. Anything that we say to you, all of a sudden can be used against us if you decide you want to pursue anything. Thankfully, I was telling Alex on the way here it worked out for a reason. And then it's the final icing on the cake: we went to see the billboard paid for by the guy who I thought was nearly going to sue us.

That's it! We did it! We did it! Okay, it's gone. But listen, I get it. That's not what you came here for. You want to know how much money this coffee company makes, and I'll go into that. But there was an unexpected issue that came up that I feel like we need to address, and, uh, it's a problem. See, coffee is what's known as a commodity, which means the price of coffee beans fluctuates every single day, just like the stock of your favorite company.

Now, this would certainly be a good thing if the price of coffee goes down, and our profit margins increase, but that's not what's happening. Since coffee is a commodity, its price is often derived from what's called Coffee Futures. This is a way for manufacturers to hedge their cost basis ahead of time by agreeing to sell a certain amount of coffee at a certain price at a certain future date.

If that sounds confusing, here's what you need to know. Let's just say, for example, that you're a koi breeder, and you know with 100% certainty that you're gonna have a hundred fish for sale at the end of the year. But you don't know what the market is going to look like by the time those fish are born. So, you sell the rights to buy half of your future koi fish right now to the people who say, "I'll pay you twenty dollars a fish; I'll get those fish in December."

Well, if the price of those fish ends up going down in December, then that works in your favor because you were able to sell off half of your livestock ahead of time for a higher price. But in the event the price goes up, well, you got a guaranteed profit up front. The person who bought those fish ahead of time ended up making a profit because now those fish are worth a little bit more, and you get to sell off the other half of the fish for a little bit more than you expected.

That's basically what's happening here with coffee. The future price of locking in coffee contracts is going up way higher than expected due to an ongoing drought and COVID restrictions placing a limit on how much coffee could be shipped and produced. That means the cost of coffee has gone up the most in four years, and our wholesale costs are going up alongside with it.

On top of that, shipping costs are also going up way higher than expected. I swear, I think we picked the perfect time to go into the coffee business—insert sarcasm here. So, as a way to help mitigate this since a lot of these issues are far outside of our control, I think we found a fair middle-of-the-ground solution. That would be offering accessories items like the Bankroll Coffee mug, tumbler, diamond ice molds, and metal straws have enough profit margin built in to be included in the order, and that profit helps offset the loss of everything else and allows us a little bit more money left over to reinvest back into the business.

The bundle pack also allows us to optimize shipping by combining five packs under the same order, giving us a little bit more margin in terms of what we make as a company. Now, to be 100% transparent, before we go into the profit margins, I just want to say we don't take out any money from the company for ourselves. I have not spent a single penny on anything other than the business itself, and we intend to keep it that way for the foreseeable future.

So now, in terms of what we make from BankrollCoffee.com, here's what you came for. Overall, in the last 90 days, we've sold a total of 145 thousand dollars worth of coffee and coffee accessories, with an average order of just over thirty dollars. This is all from a business that cost us just over thirteen thousand dollars to start from scratch. Our most popular product by quite a large margin is the infamous 20-cent iced coffee, with a total portfolio bundle coming in right behind it, nearly tied with Diamond Hands.

Now, in terms of our own cost, we pay a wholesale price of anywhere from three dollars and thirty cents to four dollars and ten cents for the coffee itself, seventy-five cents for the bag, fifteen cents for the label, and eighty-six cents for the packaging. But beginning next month, our cost on coffee increases by sixty cents due to the shortage, so we're doing our best not to pass that cost on to you as the customer.

Beyond that, though, shipping is anywhere from five dollars and twenty-three cents throughout the West Coast to eight dollars and eighty cents on the East Coast, and that increases marginally if you order a second bag. We also now offer international shipping, but because that changes so much based on location to location, it's automatically calculated at checkout.

We also have some other fixed costs like the warehouse space, utilities, and employees, which we split between three other brands to save a little bit of money. But for all intents and purposes, we make a little bit less than two dollars a profit per bag of coffee sold, all of which just ends up going back into the business. The accessories, on the other hand, have much higher profit margins because they're typically bundled together with coffee and shipped within the same box.

With the Bankroll mug and tumbler, we make about eight dollars, and with the ice molds and metal straws, we make about two dollars profit. But thankfully, we don't have any marketing or customer acquisition costs quite yet because pretty much all we do is through word of mouth or YouTube. But at some point, that'll change, and I'd love to reach a brand new audience outside of what we've cultivated here.

But anyway, in total, out of 145,000 in sales, we've made about thirty-five thousand dollars in profit, all of which is reinvested back into the business to continue growing. We've also done fun giveaways, like signing 500 coffee tumblers for the first 500 people who ordered them, or putting random amounts of money in Bankroll Coffee mugs as a potential surprise.

We're also going to experiment with some marketing over the next few months, hire some new people, expand the warehouse space, and bring on more to the team for creative and branding. Now, what I actually found really cool is that week by week, sales are actually fairly consistent and growing, even though I don't actively mention it.

So that's telling me that people are routinely coming back on a regular basis and continuing to buy more, and that's incredible. Throughout the next six months, we definitely want to expand on that, further expand our own coffee options, give back to the causes we believe in, and honestly, just do something different while giving you reasonably priced coffee.

All things considered, and also as a huge thank you to everybody who made it to this point in the video: since everybody loves free stuff, if you decide to subscribe and save, we will throw in a totally free Bankroll Coffee mug for the first thousand people to place an order. And if you don't want to subscribe and save, I will give 20% off your first order just by using the code "YouTube" in the next seven days.

We're not making any money in this promotion up front, but I hope that you would enjoy it enough to come back again or even just tell a friend about it. That works too! By the way, to answer a few of the most common questions that I got asked on Instagram: number one, do we plan to go into retail? The answer is probably not right now. We have way more control selling direct, so we intend to keep that going as long as we can.

Do we plan to open up a coffee shop? Again, most likely no. There just would be no way that we could feasibly make this work without either losing a ton of money or charging four dollars per cup of coffee. Will we offer a tea? I would love to, and that's certainly something that we're going to be working on.

Is it any good? Okay, yes. So, with that said, you guys, thank you so much for watching. I really appreciate it. As always, make sure to destroy the like button, subscribe button, and notification bell. Also, feel free to add me on Instagram; I post pretty much daily. So if you want to be a part of it there, feel free to add me there.

As for my second channel, The Graham Stefan Show, I post there every single day I'm not posting here. So, if you want to see a brand new video from me every single day, make sure to add yourself to that. Thank you so much for watching, and until next time!