Woods Coffee Founder & CEO: Wes Herman

Summary

Wes was born in Canada, grew up in Columbia, and lived in Southern California .  He admits his dyslexia and ADHD growing up caused him to hate school and didn’t attend college after high school. After high school, Wes took the first job he was offered, which was a job making high-end cabinets in Los Angeles; a business that his neighbor owned.  Listen in to this episode to learn about how a kid that grew up with a learning disorder and didn’t even go to college, started a highly successful coffee-chain in the Pacific Northwest: Woods Coffee.  Stick around until the end to hear about what advice Wes has for his younger self, and what he wished he would have known as an young entrepreneur.

Podcast Transcript

Note:  There may be errors to this transcript (some funny, some confusing - we used an automated transcription software!)

Wes Herman  00:01

I'm not educated. I didn't go to you know, business school I don't have degrees. And I'm truly one of those scrappy,

Ash Faraj  00:11

inspiring career stories from today's top CEOs, executives and leaders. I'm your host ash and you're tuning in to the executalks podcast. This podcast is sponsored by wisdom app. Wisdom gives people expert help when they need it most. Listen in real time and ask questions to experts in areas from business to finance to fitness. It's a social audio app where you can listen in or host live conversations. Before we get into the show, we have a few Woods coffee gift cards to give out, listen to the episode and email me your favorite part of this story. The first few to email me we'll get the gift card sent to them. My email is ash at executalks.com. Wes was born in Canada. He grew up in Columbia, South America and later his life moved to Southern California. He admits that his dyslexia and ADHD growing up caused him to hate school and didn't attend college after high school. After high school, West took the first job he was offered, which was a job making high end cabinets in Los Angeles, a business that his neighbor owned. Listen into this episode to learn about how a kid that grew up with a learning disorder and didn't even go to college started a highly successful coffee chain in the Pacific Northwest and stick around until the end to hear about what advice Wes has for his younger self and what he wished he would have known as a young entrepreneur. He has been named Business Person of the Year by business pulse magazine and CEO of the Year by Bellingham Chamber of Commerce. We are joined today by the founder of one of my favorite coffee shops. Woods coffee, Wes Herman, welcome to the show. And thank you for being with us today.

Wes Herman  01:47

Ash, it's my pleasure.

Ash Faraj  01:48

I'm in a high school classroom with you Wes who is Wes relative to other kids,

Wes Herman  01:52

you know, I'm the class clown, I am the guy who tends to have friendships with everybody. I get in trouble a lot with the teacher. And I am also, you know, very charismatic to the point where people realize that I may do something with my life, and I may be successful. I was so happy to be done with high school. When I graduated, I realized I'd never have to go to school again. And that was a goal that I set early on, like to be out of school as soon as I possibly could.

Ash Faraj  02:26

So you didn't like school, you didn't go to college.

Wes Herman  02:28

I didn't know I hated school. And subsequently, as you'll hear in the rest of the story, it's why my kids ended up being homeschooled, because I had such a disdain for school. And I went to, you know, the finest schools, all private schools, great experience. I played a lot of sports did really well in that. But when it came to the actual academics, the stuff you go to school for, that's where I didn't do well. And you know, I just barely scraped by and happy day That day, I graduated.

Ash Faraj  03:00

So from what I know, and I don't sure how accurate this is, but you were born in Canada, you grew up in Columbia, South America, and then you moved to Southern California as an adult. And that's where you met your wife, Diana moved to Bellingham. Is that right?

Wes Herman  03:11

Yep, exactly.

Ash Faraj  03:12

So, you know, looking back, you know, I guess first of all moving around so much how do you think that impacted your perspective on life and shaped the way you think?

Wes Herman  03:20

That's a great question. The the part of growing up in different environments, there's a books written about people like me, that called Third Culture, kids, and third culture being that, you know, you're born in one place, you grew up in another place, and you ended up living, you know, the part of your life in a different place. So, it's typically people who are missionaries, kids, and or military kids, you know, those are the type of people that fit into this category.

Ash Faraj  03:49

So I guess, maybe talk to me a little bit about, you know, your disdain for school and what made you not like school, and,

Wes Herman  03:56

you know, I would probably be categorized as someone who had ADHD, I was dyslexic, dyslexic to this day. And so there was a lot of things that just didn't make any sense, you know, didn't, couldn't figure it out. And so, in my way, and, and a lot of entrepreneurs, you know, they find workarounds, and they become creative, figuring out ways to do things differently than the average person. And so I think I'm very much like that. And so, you know, it was math class was challenging, because, you know, that that was just a foreign subject to me. I'm good at math now. And I understand numbers, I understand finance. But you know, when it came to actual concepts of algebra and geometry and things like that, it was just way too complicated for my brain to handle. And I was one of those kids in school that said, you know, where in the world am I ever going to use what I'm learning now, in real life? Math is probably one of those critical things that you need to know and, you know, I figured that out as we went, but, you know, the the part of, you know, learning English and reading, reading was extremely challenging to me. So if I can say one critical thing about education, education is a extremely important tool for many people, I just happen to be one of those people that am a lifelong learner. And my education just happens to be better suited for outside the classroom.

Ash Faraj  05:25

Yeah, I know, there are many people who feel that way. You know, like, we were saying earlier about, what am I never going to use this. And so I, I can, I can even relate with that. So another thing that I read, you know, but he was, you know, you've been an entrepreneur pretty much your whole life, you know, like, that's, it's kind of like part of your DNA, I'm assuming, right? So in, you know, when you were 21, was when you when you started your first business, what was the first business or you started or purchase.

Wes Herman  05:50

So it can take you back to that that critical juncture where I'm graduating from high school, and realizing I'm in a college prep school, which my parents, you know, had every hope that I, someday graduate from high school, go on to college and make something of myself. But all my friends were going off to college, and you know, everybody was set to go. So when I graduated high school, I realized that I had four years to really make something of myself. So when my buddies came back from college, that I would have something to show for that. So I set four goals at that point. And those four goals were to be married, to own a home, to own a business and own a Mercedes Benz. And I needed to accomplish all four of those by the time I was 21. So needless to say, it really all happened in that last year, as I transitioned to 21, where I got married, bought a home. And then the business I was working in, which was a cabinet shop, but gone to work in a cabinet shop after high school. And I had the tested to go into firefighting to be a firefighter, I had become an EMT, so I could be a paramedic, I've done all kinds of things. But I kept doing this physical trade, that I learned how to use my hands and build things. So that cabinet business was something then by 19, I was managing. And then as I got married and bought the home, then the the man who owned the business decided he wanted to sell the business. So that's when I told my wife, I said, Hey, we need to buy this business, otherwise, I might not have a job. And she said, What's it like to own a business? And I said, I have no idea. But we're gonna find out. That's where I learned the my understanding my limited understanding at that time of finance and profit loss. And because I had no knowledge of what any of that meant, I was just realizing, you know what, I can figure this out as I go. And so I had that last goal of getting a Mercedes. So, six months into owning this business, I realized that my bank account was big enough where I could write the check. And I did. And so accomplish all the four goals. By the time I was 21. The lesson I learned in finance was this that I was living off of cash flow, not profit. So six months later, when the business needed the money back in the business, I had to sell the Mercedes and put the money back in just to keep us afloat. So that was that was my first entrepreneurial lesson in how to stay in business, not fail immediately.

Ash Faraj  08:24

So so if I'm hearing you, you built cabinets,

Wes Herman  08:29

cabinet maker, yeah, it was a custom cabinet shop, we specialized in building cabinets for the movie stars of Southern California. So that's where I spent my time was in very expensive homes, with people who had enough money to do whatever they wanted. And so we're able to buy that business. And we just parlayed that into, you know, a multi million dollar business venture that springboarded off into two other directions of remodeling those same homes. And then we also started building home. So the focus of my efforts for the 15 years after high school.

Ash Faraj  09:11

Yeah, and that was just, you just jumped into it. Like it wasn't like, oh, I wanted to go do this. I was just like, whatever job I get. How did you get into that?

Wes Herman  09:19

I had a neighbor had a neighbor who was a cabinet maker, and I knew him we knew the family in high school, I'd worked as a in a gas station in those days, it was a full service fueling station where you know, we would do full auto repair as well as just pumping gas. And so I had done that all through high school. And then I realized after I got to high school and right after I graduated high school that the guy who ran the the gas station asked me to manage the business. So I did but I realized quickly that you know, I really didn't enjoy having all that grease on my fingernails. This is back in the days where nobody wore a glove or plastic glove unless you were a surgeon. And so it was just one of those things where I just didn't like the physical part of of that work, enjoyed the management side enjoyed running the business and doing that. So when this neighbor said, Hey, I've got a position, I was willing to come in at the ground floor and start and learn something else in business,

Ash Faraj  10:20

there was a moment in your life, when you were homeschooling your four children, like you're mentioning, and you were working for a company that was selling into the coffee industry. What company was that by the way that you were before.

Wes Herman  10:30

So if I can fill in a couple gaps here, so I run this business and successful business and then the early 90s, I actually contracted a life threatening illness that put me on my back for a year, at the same time when the economy in Southern California had shifted. And we were now faced with, you know, just unique situations that we'd never experienced in in California. So my wife and I, that point, we had traveled to the Pacific Northwest for five years in a row, visiting my grandparents in Canada. And when we come through the Pacific Northwest, we really fell in love with the culture and the various aspects of the lifestyle. So in 93, that's when we decided, you know, what, we got nothing left to hold us here in Southern California. Let's make a run for it, which we did. We move to Bellingham. And we get by little 45 acre farm, not knowing what that is like, but just you know, out in the country. And that's why I spent a few years just recouping and recovering from this illness, had a viral case of encephalitis, viral encephalitis. Tax the brain, blood doesn't flow, it swells the brain, the blood isn't flowing you you die. So I was very fortunate to have survived that. So I meet a guy in Bellingham, that is starting up a company, the company's called FastCap. FastCap is right in my wheelhouse. Because it's a company that produces products for the cabinet making and construction industry, they were just starting out, they needed a sales manager. And I had never worked for anybody since I was you know, 18 or 19. And so I decided to jump in and go to work with that did that for two years. And we're selling a product, one product that did not fit the the wheelhouse of what they did. And that was this little product that sold into coffee. So I hit the road, and I was at Starbucks corporate. I was meeting with tallies, and you know, anybody who would listen. And then as I'd be on the road with all the other construction related facets of this business, I'd take these product, this product can go into coffee shops, and I started really developing a love and an interest for what I was experiencing in the coffee shop, you know, it was just, you know, I was all across the United States. So I was experiencing every coffee shop, from the mom and pop to you know, the the really well oiled machine of Starbucks at that point.

Ash Faraj  13:01

So you came up with the idea of teaching your kids to write a business plan to assign them to write a business plan around a coffee shop startup,

Wes Herman  13:07

I can't really claim that I had the idea of my wife was the one that kind of saw what I was going through my kids were drinking a ton of coffee, because that was their social opportunities to be, you know, engaged with their friends, because there was no Red Bull or monster at that point. So my wife actually put two and two together and said, one weekend, so why don't we start a coffee shop? And that's when I said, Well, how about we can teach our kids how to write a business plan. And we'll teach them how to write a business plan around this concept of coffee. And then we'll see if we can execute this together.

Ash Faraj  13:37

So I mean, I guess where did that was that just like, it was that kind of spontaneous of like, okay, we'll just, you know, see if they can come up with something was it like in the back of your head, like, we're gonna start a coffee shop, but I can see I want to see like how my kids can do it. Or you know what I mean,

Wes Herman  13:51

every entrepreneurial endeavor starts with just that little thought in the back of your mind about you know, something and how and why and could it and in my life, it was all about saying, Okay, well, can we start something here? What would this look like? Well, let's write a business plan. See if it's even feasible. We didn't have any money at the time. You know, once we wrote the business plan, I figured it all out and I was traveling, you know, a ton and seeing all these coffee shops, and in those days, you had two distinct coffee shops. So you'd have either had a little drive thru that were so commonly aware of in the Pacific Northwest, but is not in the rest of the United States. And then you had the full blown sit down coffee shop that Starbucks really fueled as a created what they created. So I was in all these coffee shops, realizing as I was traveling, that there was one other type of coffee shop that was out there and that was a full blown coffee shop with Drive thru. Even going back into those early years, you know, around 2000 to 2002. There just wasn't those type of shops. There were some CAPP drive throughs on a coffee shop but it wasn't common. So I was traveling in Illinois while we're writing this business plan, and I happen to be on the road, and I come across a Starbucks that has a sit down with a drive thru on the in a center of a strip. So there's businesses on either side, and I couldn't figure out how they get this drive thru in there. And where does it How does it exist? So I pulled off the road pulled around, and drove around the back and realized that it was in a fire lane and in the back of the alley in the building. And they had this drive thru functioning. And I just put two, two and three and three and four and four together and realize, Well wait a second, we wrote the business plan. This matches a site that I know of nearer where we live, that we hadn't been able to figure out how to get a drive thru in this is a great idea. So the next day, I flew back, went to this little town of Linden, went to the city and said, Hey, I'm thinking about, could I get a drive thru in this back alley lane, and that town was a town of 6000 people at the time? And they said, Sure. Now that's a great idea. So that's how we did that. And, you know, once we did it, then everybody said, Oh, that's makes perfect sense. But until that time, we didn't even see much of that here on the West Coast. And so that was kind of a new concept for us. And although it was in the middle of nowhere, and we didn't have traction, we couldn't really make this happen. I knew that the drive thru would be you know, kind of the fuel to that fire to keep it going.

Ash Faraj  16:29

Yeah, so rewinding just a little bit. So the business plan is ready, you have your initial budget, which was from what I read 23,000

Wes Herman  16:35

Yeah, 23,000 is what I needed to raise, because I didn't have anything to make do. And if that was just enough, to get everything done, open the doors, and you know, then start, you know, making some coffee and hopefully, hit the ground running, because I've still got this job that you know, is going to pay me so that I'm not a drag on the business.

Ash Faraj  16:57

Yeah, exactly. The 23,000 was somebody that you had to ask someone to partner with you. And in return for partial ownership. I assumed who was this person? What's the history that you ask them to partner with?

Wes Herman  17:06

These were friends that had actually followed us from Southern California when we moved to Bellingham, we had seven families that followed us because they liked what they saw. Once we got on the ground here. They were just a couple that had some money and liked the idea. They didn't drink coffee, they didn't understand what that meant to have a drive thru or a coffee shop or anything like that. They just trusted me that I had a good idea and that I could pull that off. So yeah, they we partnered with them on a business plan to make that all work. And that's how it started.

Ash Faraj  17:40

So they were they were close family friends, yes,

Wes Herman  17:43

which is, I think, in most startup businesses where you're going to find usually the money that you need to get off the ground. And I'm yet to find a true entrepreneur, that has not only the good idea, but all the cash needed as well. That is, those two are far and few between

Ash Faraj  17:59

huh. Okay, so one thing that you know, I feel strongly about and that I try to preach a few is that, you know, you can have a job and start a business the same time because I hear a lot of, you know, gurus, if you will, they say, you know, you have to either be two feet in or two feet out, you can't start a business and do a job at the same time. You can't do two things at once. And you had been working another job, from what I read five years, right for the whole time, that woods coffee was kind of kind of getting up and going this is five years, and you didn't quit your full time job until you got to store number six. Is that right?

Wes Herman  18:27

Correct.

Ash Faraj  18:27

How do you feel about people who say, you can't do two things at once?

Wes Herman  18:31

I think that that's probably true. For some, I've always been one that can handle multiple things. At the same time, it's kind of interesting, because two weeks before we opened our first store, I was actually fired from the job that I had as the national sales manager. So not only did we you know, have a plan and a clear plan of how we're going to make this successful, but then the the main funding source to keep us alive, the rug was pulled out from under us. First time I'd ever been fired in all my life. And but I still go back to the gentleman who owns that business. And I thank him for you know, showing me the coffee industry because without that job, I would have never understood you know anything about the coffee business. So I'm sitting, just a complete that that little story ash. I'm sitting in the original coffee shop, trying to figure out now it's open. And I'm trying to show that I'm a customer by sitting in the front window with my newspaper so that if somebody comes by, you know, they'll look inside and say, oh, there's at least one other person in there, you know, so then they would come in and say, Oh, I'm safe here. And you know, so and I'd parked my car right in front because we didn't have any customers you know, so we may need to make it look like there was somebody in there. And so I'm sitting there and I'm looking out the window and I see a quick service oil change place on the corner of where we are with this new business and they have no customers. For the one or two customers we have a day you know coming in didn't say that. But you know, we're just starting out, it's slow. And I'm looking over at this business, it's winter, it's cold, and they have no customers. And so I went over and inquired as to the owner, called the owner, and in about a 10 minute call. I said, Do you like that business? He said, No, it's It's really bad. It's not working. And I said, you want to sell it? He said, Yes. And I said, How much? And he gave me a number. I said, I'll buy it for half that. And he said, Can you have a check tomorrow, and I said, come on up. And so in that 10 minute call, we made a deal. Because this is going back now to my, you know, days in high school, when I knew what I was doing. And I knew business. So I knew that I could work over in that lube shop, keep an eye on the coffee shop, if they needed me, but they really didn't. And then that would be my job. And so I turned that around quickly. And it made money right away. And it was a great little business. Plus any customer that come in to get their oil change, I'd say, hey, there's a great little coffee shop right over there, once you go have a cup of coffee, and I'll take care of your oil change. And so I would literally be under a car, draining the oil out. And I'd have a phone to my ear, making the deal for the next coffee shop. And, you know, talking through lease negotiations, and various things like that. And so when go back to your original question, which was, can you do, you know, only one thing and focus on one thing, and should that be your focus. And I and I speak at colleges and talk to young entrepreneurs all the time about this idea, like, you know, they're talking about, well, you know, I'm going to do my initial, you know, raising of funds, and I've got to do this. And you know, and I got to give away part of the business, and so on, so forth. And in my case, I didn't want any of that I wanted to make sure that this thing stood on its own, and that it made money. And it really forced us to make money because we did things intentionally because it had to make money. And so people are blown away, especially young, younger entrepreneurs, when they hear the story of saying, Oh, you mean, I could still do my regular job and start this business and get it going. So I think there's space for that it's there for the entrepreneur that has no plan B and realizes that this is the only way they're going to succeed.

Ash Faraj  22:15

So do you believe in having a plan for everything? Or do you feel like maybe not having a plan sometimes is better?

Wes Herman  22:20

You have to have a plan. I don't believe in not having plan. People ask me all the time. Now, are you so surprised that your business is successful? And it's done very well? And I said no, because it's exactly how it was planned. We planned for multiple locations, we planned as to what the future would look like and where we would be and where the stores would be. And, you know, so we followed that plan to a tee. And it's been executed very well by myself and our family. And it's doing exactly what we want to be doing.

Ash Faraj  22:51

So I would imagine during the early days, you feel like maybe you're you're just like throwing money down like a deep hole, it's just like, you're just kind of losing money, losing money, losing money, looking back, the is there a moment that you remember, that was like really hard? You know, personally, you know, between maybe it was between you and your family or like, you know, you guys felt like, you know, maybe this isn't going to work or?

Wes Herman  23:12

Yeah, no, that's, that's a great question. Because I think that those moments are going to be profoundly there. In fact, when I meet entrepreneurs, young entrepreneurs, and they're on the exciting part before they've ever opened their door, I meet with them, and they're just so full of excitement. And I just think, to myself, Oh, my goodness, if you only knew what's going to happen during this next year, you know, then then you might be scared to death. And so a lot of times I counsel with young entrepreneurs to make sure that I'm warning them and telling them you like in your first year or two, it's gonna be tough, tough times. And for us, my wife and I, it was tough times, you know, I'd be over there, doing the oil change business, she would be over helping, you know, with whatever shifts, she needed to fill in the coffee shop, my two daughters were actively in the coffee shop. And then we had other employees as well. And it was starting to grow, we didn't have enough money to buy cups that had our brand on it. And it was really important for us to look like a brand that was successful from day one. And it wasn't, you know, just a mom and pop that didn't have a branded cup in our infinite wisdom, we decided that the easiest way to do these cups was to put a label on them. And so we would take a white cup, and we put a clear label on it that had our logo on it. And then we thought, you know, we love how Starbucks has these little boxes on the back of the cup where they you know, check off different things and put the milk in and you know as to what the milk is and all the information so that somebody building that handcrafted beverage knows how to build it. And so we put another sticker on the back. So each cup had two stickers. Well, in the beginning, my wife and I said you know what? We'll put those stickers on so we would finish our day. We would be done with dinner, we'd sit down with We put our feet up, and then we would sit and we would take a box of cups, and we would label every single cup with these labels. Yeah. When you think back at those times, you know, we're wondering, you know, where are we going to get customers from? How are we going to make this go. And as I said, our second store opened six months after our first one. So there's a lot of energy, a lot of cash going out the door. And you oftentimes wonder, you know, is this worth it? Can I make this go, but in the end, you know, it goes back to this part of a plan, which is, you have to be committed, and you have to do exactly what your plan is, and follow it and then be ready to adapt as you need to, but there is no plan B, you have to be committed. And that's, you know, what makes entrepreneurs who entrepreneurs are

Ash Faraj  25:48

so I hear that what's coffee is expanding into I hear It's gonna be from Linden all the way down to Chula Vista. Is that right?

Wes Herman  25:53

Could be, could be that's what I think, you know, I say that to my kids all the time will be from one border to the other.

Ash Faraj  26:01

Something I look for when I decide to partner with someone or hire someone is  integrity,  the most important quality and a leader is

Wes Herman  26:08

can do win at all costs

Ash Faraj  26:11

can do win at all costs.  Something I've struggled with as a leader has been

Wes Herman  26:16

inadequacy,

Ash Faraj  26:17

inadequacy,

Wes Herman  26:18

inadequacy, as a, I'm not educated, I didn't go to you know, business school, I don't have degrees. And I'm truly one of those scrappy, you know, get it done, figure it out kind of guys,

Ash Faraj  26:32

something I do to make sure I feel positive and stay productive is

Wes Herman  26:35

focus on the big picture.

Ash Faraj  26:37

If I were to go back and talk to my younger self in my mid 20s, I would tell myself,

Wes Herman  26:41

don't take things so aggressively. Enjoy the moment,

Ash Faraj  26:46

one setback or failure in my early 20s, I will never forget is

Wes Herman  26:51

lack of money,

Ash Faraj  26:53

lack of savings,

Wes Herman  26:54

I can vividly remember just gut wrenching times when there was not enough cash flow to meet payroll and do the things that I needed to do. You know, and it seemed like, there were times in my business life where we're on the edge of losing everything. And, you know, it could have gone easily the wrong way, if I hadn't, you know, just doggedly not given up. You know, and I think that lots of people give up when it gets hard.

Ash Faraj  27:23

The sweetest moment I felt in my entire career was when,

Wes Herman  27:26

oh, boy, you know, the pride of starting that first store, and, you know, having, you know, my two daughters, right, they're working in the store, my wife working in the store, I'm working, you know, at the oil change place, but coming in and doing, you know, I'd take a shift from time to time, you know, and just that whole pride of saying, You know what, this is ours, this is something that we're creating. And it was very unique and extremely satisfying.

Ash Faraj  27:54

Looking forward. If I could be remembered for just one thing, it would be

Wes Herman  27:57

philanthropy, you know, I've just found forming a foundation with my family because we believe so much in giving and helping others.

Ash Faraj  28:06

If I were stranded on an island, I had access to one meal, it would be

Wes Herman  28:11

a nice big steak.

Ash Faraj  28:12

I thought you're gonna say something about woods coffee.

Wes Herman  28:16

That would be that would be too gratuitous.

Ash Faraj  28:18

Thank you for tuning into this episode. Tune in next time to get another dose of inspiring career stories from today's top CEOs, executives and leaders. See you soon.

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