Why is Starbucks doing this? To lap its competitors in customer experience and technology the way Apple has in electronics retail and Nike has in shoes. Starbucks is already way ahead of the game and didn’t need Square. But [Starbucks CEO Howard] Schultz seems to have recognized that the Square team are doing something special in retail, with a particular focus on the customer experience that most other payments and software companies see as an afterthought. Starbucks gains long-term access to Square’s thinking and technology.
I have a love-hate relationship with Starbucks. It’s become de rigueur for people who’ve discovered single estate and artisan coffees—what you’d find at Blue Bottle or Stumptown—to cap on Starbucks for taking so-so coffee beans (probably the best they can get in the quantities they need, but even so), seriously over-roasting them (which destroys most of the character of the individual coffee beans, but keeps the flavor consistent from bag to bag), and swarming into cities to drive out all those good independent coffee shops.
But we’re also guilty of at least a little revisionist history: fifteen or twenty years ago, none of those artisan places existed. When Starbucks came into Tampa in the ’90s, they did drive some independent coffee shops and small local chains out of business—by serving much better coffee. If it wasn’t for Starbucks, Blue Bottle and Stumptown wouldn’t exist. Places like Dunkin’ Donuts and Krispy Kreme and even McDonald’s all have better coffee now than they used to, because they had to step up their game.
And here’s my dirty secret: when I want to go out and do some work for a while at a coffee shop there’s a good chance I’ll end up at a Starbucks.1 They’re known quantities: almost always comfortable, clean, with power outlets and free wi-fi, and coffee which is never great but is drinkable.2 I love finding great independent/artisan coffee shops as much as the next middle-aged hipster does, but when I want to get work done, I’m not gonna risk finding myself drinking worse coffee for the same price in a room with a bare concrete floor and three sad couches rescued from the Salvation Army.
Anyway. What this partnership really means for Square, more than anything else, is that their name gets in front of a lot of people who wouldn’t otherwise see them, and that the idea of using a phone app as a credit card replacement—in more places than just your coffee shop—gets out there. That’s potentially a very big thing.
Don’t get me started on Starbucks instant coffee, though.