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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

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July 21, 2008 9:52 AM

Startups cutting coffee costs, but maybe not toilet paper

Posted by Brier Dudley

Today's column:

I thought I was the cheapskate, until I saw how Seattle startups are trying to save money nowadays.

They're getting especially creative when it comes to coffee, the fuel that powers a lot of software development around here ...

Some are buying their own espresso machines; others are cadging free coffee. One consultant has resorted to diluting her morning cup in a water bottle so it lasts all day.

The question is whether these are desperate moves by companies on the edge, or evidence of creativity and innovation that will help them survive the downturn.

Everyone's feeling the squeeze. Google's watching its capital expenses, and Nathan Kaiser's switching from $4 lattes to drip coffee — or water.

Kaiser, founder of Seattle recruiting and networking venture nPost, started the conversation last week. On his blog and an e-mail list for Seattle startups, he noted that gas is getting expensive, but his fancy coffee is running $36 per gallon.

"Many meetings happen in coffee shops, where a typical coffee costs $4. Times that by 2-3 meetings per day, 5 days a week, 4 weeks a month, you get the idea," he wrote, asking fellow entrepreneurs to share ideas on how they're cutting costs.

Kaiser said he's saving money by using free, online productivity tools; haggling with insurance and phone companies; and lowering Web hosting costs.

But people perked up when he raised the coffee question. Kaiser's tip for people facing the daily grind of coffee-shop meetings:

"Drink water. Don't get a cup of coffee. If you must, get a drip coffee or even a hot or iced tea. Save 100% to 50% off the cost of a latte."

Geeky java enthusiasts in the startup community chimed in.

Brian Myers, vice chairman of the MIT Enterprise Forum of the Northwest, suggested buying an espresso machine -- even though his return-on-investment calculations suggest home-brewed drinks cost around $30 per gallon.

"But looking at it another way, a cappuccino is about $0.50 for coffee plus about a nickel for the milk, versus $3 at my favorite cafe," he wrote. "A couple a day and after a year an espresso machine looks like it has an ROI that will beat most startups."

Another suggested buying a bag of nice coffee beans for the office, then refilling it with cheaper beans from a place like Trader Joe's.

Startup veteran Mark Maunder contributed several good tips.

One was to have a chief financial officer who carefully reviews expenses. He was recently going to buy a new server, but his CFO suggested he first inventory the existing servers and their capacity. During that process, he found a $3,500 machine sitting idle, saving him the cost of a new one.

Maunder figured that his 50-milliliter espresso shots at Umbria have been running 4304 per gallon, including tips. He suggested that people try sweet-talking the manager of Peet's in Redmond, where he's been able to get quarter-pound sample bags of the store's best coffees free.

"Just send a new employee each time," he joked.

At stealthy Seattle startup Fridge Door, an Aerobie coffee press has easily paid for itself, and "we can all tell the difference between coffee with 'crisp cup character' and 'brooding fruited notes,' " co-founder Logan Bowers wrote.

If you just want a cheap jolt, consider this tip from corporate-efficiency consultant Marina Martin.

She switched to an iced espresso concoction — a blend of 8 ounces of brewed coffee, poured into an ice-filled Nalgene bottle that's topped off with water.

"A lot of people pour six or more cups of coffee throughout the day and don't even drink a third of that ... but the hot coffee is initially too hot to drink, and then it's tepid and gross, so the remaining liquid is a waste," she wrote.

"The iced espresso stays cold all day, so you can sip as you go along and get a nice even level of caffeination. This costs me about 23 cents each day for the equivalent of two iced venti Americanos at Starbucks."

Martin added that "it's somewhat of an acquired taste."

I preferred some of her other suggestions, like making sure you don't go overboard cutting expenses.

"It's all about creative solutions and figuring out what can give and what can't (or shouldn't) give," she wrote. "You do not want to buy the cheap toilet paper."

Unless you're down to Folgers.

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