Sweet and Sour Coffee

Like every coffee aficionado, I'm always trying to make the perfect cup of coffee. Yesterday, I formulated a blend I call “Sweet and Sour Coffee.” If you want to try it, instructions are below:

Using a stainless steel French Press, steep the following whole beans for five minutes (or longer, depending on the size of the French Press) in the following percentages:

40% Chiapas or Veracruz (Mexico, medium)
20% Sumatera (Indonesia, dark)
40% Andes or Cuzco (Peru, light)

Want more sour? Increase the percentages in favor of Sumatera.

Want more sweet? Increase the percentages in favor of Andes or Cuzco.

Making a perfect cup of coffee isn’t easy because water type, water temperature, steeping time, and whole bean quality can be unpredictable. Peru currently makes some of the best arabica light roasts, but just one bad season can cause country flavor profiles to change.

© Matthew Mehdi Rafat (December 2021)

Manila's Chinatown, Where Chinese and German Immigrants Intersected

I am a pessimist by nature, but good coffee—the world’s most traded commodity after oil—always cheers me up. To get a cup of coffee from farm/mountain to your mouth requires navigating diverse worlds of marketers, supply chains, bankers, and laws. Because the profit margins are great, cafés can become linchpins of revitalized communities and workspaces. 

I’m in Manila’s Chinatown, in a building once inhabited by German immigrants Ernest and Alfred Berg, who arrived in Manila around 1922 looking for better opportunities post-WWI. Within the Berg building was Cosmos Bazar, founded in 1926 and owned by a Chinese immigrant, Mr. Lim. Mr. Lim eventually sold his store to a Fujian, Chinese immigrant named Mr. Sy, and the full story is equal parts tragedy and fairytale. 

As a teenager, SY Lian Teng changed his name on a ship's manifest to “Ong Tico” to immigrate to the Philippines, working for his father in a sari sari shop. Preternaturally ambitious, he found an unpaid internship at Mr. Lim’s Cosmos Bazar for two years, increasing his business skills. After seeing Mr. Sy’s diligence, Mr. Lim offered the store to him when Mr. Sy was just 20 years old. 

In 1930, at the age of 24, Mr. Sy married LEE Siok Keng. By 1945, however, WWII bombings and fires destroyed the store and killed 8 of his 9 children and his wife. After 4 years of mental recovery back in China, in 1949, he returned to Manila, re-opened his store, and married a Filipina, Emerenciana Antonio Soyangco. They had four children. In 1951, he bought the Berg Department Store from Ernest Berg. A letter to one of his grandchildren carefully reminds his heir that family is more important than money. 

Today, “The Den” coffeeshop is located in Mr. Sy’s and Mr. Berg’s building. It sells the Philippines’ best coffeebeans, from Kalsada Coffee. Cosmo Bazar is nearby and sells only Pilot pens and pencils. 

© Matthew Mehdi Rafat (2019)

Bonus, from Fannie Tan Koa’s article: “‘I believe that 85% of Manila was destroyed by the Americans, not by the Japanese...’ ‘They [the Americans] wouldn’t stop bombing the city... to kill the Japanese [occupiers]...’ ‘But the Japanese have retreated; they are no longer here...’ ‘They answered, ‘Sorry, General MacArthur’s orders!’”

Interview with Vietcetera Cafe Owner Nguyen Bao Lam Bruce

I love coffeeshops, and I found Vietcetera while on my usual 3 to 6 mile daily walk in Saigon. The owner, Bruce Nguyen, was on-site, and ten seconds after meeting him, I knew I wanted to pick his brain. 

Bruce Nguyen

Q: How did you come up with the cafe's name? 

A: I didn't come up with the Vietcetera name. We're linked to an online magazine--they hate it when I call it a blog. They cover "new Vietnam," which could be anything from cooking, music, poetry, coffee, cocktails. We post about what's new. 

Q: Tell me about JAMLOS, which I see behind me on the wall. 

A: The cafe allows space for local brands. Their main location is a few blocks from here, and the owner makes accessories. Her most popular bag is a "pizza bag," a bag shaped like a pizza. We allow local businesses space and advertising. 

JAMLOS

Q: You live in Seattle, Washington but own three cafes in Saigon. How did you manage to get to where you are today? 

A: We're now in the first cafe, our D3 [District 3] location. My wife and I moved here around two years ago, and she came six months before I did. 

Let me back up. I was born in California but moved to Seattle. I've been a sheet metal fabricator for 17 years. [Me, looking surprised.] Yeah, I'm a little older than I look. I'm 38 now, and after 17 years of experience, I'll call myself a master metal fabricator. My wife was working in corporate at Nordstrom's. We made a decision to move here a few years ago, and her younger brother actually moved to SE Asia 10 years ago. He moved first to Vietnam from Seattle, then to Singapore. When he heard we were coming to Saigon, he quit his well-paid corporate job in Singapore so we could work on projects together. He decided to open an Airbnb right above this cafe. 

Before we opened this cafe, we were learning about coffee in Seattle, the home of Starbucks. A lot of America's coffee knowledge came out of Seattle, so it's easier to learn the trade there. I got certified as a Barista Level 1 SCA [Specialty Coffee Association], but just because you have a certification, it doesn't mean you're good. At the same time, the certification helps create a consistent standard about what makes good coffee. 

I opened this cafe in 2016. This is my wife's grandfather's house, and this is where he used to hang out. My brother-in-law got the idea to use the bottom floor for a retail business. We had local connections in the construction business who already knew the governmental authorization process, so we were good on that side. 

Q: I studied law, so I always ask about permits and legal processes. In America, opening a small business can be difficult because of overlapping jurisdiction. For example, your office might be in Bellevue, but if it does business in Seattle, it might need two permits or more. It's very difficult for a layperson to figure out. It sounds like in Vietnam, the process might be easier--as long as you have local connections. 

A: In the U.S., it's so much harder to run a business than in Vietnam because of all the regulations and different permits. Here, it's easier but they have regulations, too. They do stuff like health inspections. For instance, on our bathroom, we had to install a mechanism to make sure the germs from the bathroom wouldn't reach the kitchen. I didn't think it was necessary, but it's good the government cares about health. 

Q: Is it fair to say it's easy to do business in Vietnam if you have local connections but not if you show up alone? 

A: You're outgoing, and if you were to start here right now, you would just go to social gatherings and popups and create a helpful network. I'm not technically local. They have a name for people like me: "Việt Kiều" which means foreign Vietnamese. I was born in Hayward, California. 

Q: Earlier, we were talking about how entrepreneurial Vietnamese culture is. 

A: The Vietnamese are heavily influenced by the Chinese. My mother always said, "Of course they're good at business--they're Chinese." My wife is Chinese-Vietnamese, and I'm full Vietnamese. Remember: China was here for 1,000 years, so almost all Vietnamese have some Chinese in them. A good portion of the Vietnamese language is Chinese, similar to the way English has Latin roots. 

Q :Do you use robusta or Arabica beans? 

A: We're trying to be local 20% Vietnamese, 20% Ethiopian, and 60% Honduran. As of right now, we won't serve 100% Vietnamese beans, because the Vietnamese are just not there in quality. There are some quality suppliers, but it's not stable. Speciality coffee is very new to Vietnam even though Vietnam has a humongous coffee culture. When Airbnb selected us to do a local experience, we chose to do coffee. On our tour, we show people different styles of coffeeshops, and we explain the different production methods. If you really want to know Vietnamese culture, you have to know the coffee here. Our tour goes to all kinds of coffee shops, everything from popups in alleys to white collar places. 

Let me tell you about First to Third Wave. Third Wave is the newest trend in coffee, and First Wave is the older coffee-making method. In America, First Wave is like 7-11, or percolated coffee. Second Wave is more like Starbucks, and Third Wave is the cutting edge of coffee where every detail from seed to cup is emphasized. 

Let's say I want to introduce a customer to one of my pour overs. I don't expect them to say, "I taste chocolate and floral notes," but the very first thing I hope to hear as they drink my coffee is, "Wow, that's not bitter at all." We're trying to bring the best flavors out of the coffee. We do it through education, starting from the farmers, making sure they're using only the ripest cherries and the best methods. Third Wave is QA through a collaborative process. You don't have to like specialty coffee. I don't drink wine, but I appreciate a good sommelier. Coffee is the same thing. QA matters. 

You know, Vietnam is number one in exporting bad coffee. A lot of people in the world like cheap coffee, which tends to be bitter, but that's okay--Vietnam is fulfilling a need. Most of your instant coffee has Vietnamese beans. If it sounds like I'm talking trash, I'm really not. Vietnam supplies the world with what they want. 

Q: Do you serve cascara coffee here?

A: Yes. Cascara is the skin of the coffee cherry. Outside the coffee bean is a legitimate cherry. I consider cascara more of a tea than a coffee. 

Q: You now own three cafes in Saigon. It must have been more complex opening a cafe without grandpa's house to ease into, right? 

A: Actually, it got easier. People approached us and wanted to collaborate. I want to be sure I don't take credit for everything. I have a great management team: me, my brother-in-law, my wife, and our general manager, Tuong Nguyen. Our D1 location is also called Vietcetera, but we're sharing space inside Le Saigonais Concept Store. What happened was a clothing designer opened a store and wanted a cafe inside her place. We liked her style, and when we came in, it was a lot of fun. We demolished a lot of stuff [to create the perfect space]. The cafe is in D1 behind Ben Thanh market. 

Q: One of the things entrepreneurs tell me is that it's very difficult working with your spouse and your family, especially because of the risks involved. How have you managed that process? 

A: I'll say this first. I think it's certain type of people [who have problems]. Me and my wife never really argue with each other. We might bicker but we never fully argue. I love working with my wife. Does it mean I like working with her every second? No, and she'll say the same about me. I think there's a sensibility all three of us have, which is try not to let too many emotions get involved in business. Can you cut out emotions fully? No, but we do our best to respect each other. We try to speak calmly to each other. I take this approach with everything in my life. 

Q: What was easier or harder about opening your third cafe? 

A: It got easier for us, because at first, we weren't used to working with local construction guys. We have connections with local contractors, and I have a background in construction, so I know the standards [but the issue is that] Vietnamese and Americans have different mentalities. I think it's Communism in Vietnam back in the day, when the mentality was, "Get it done quickly and move on to the next one." In America, we have more pride in ownership, whether it's something you're building or fixing. In Vietnam, they just don't have the right experience, and I have yet to meet a construction contractor who's good at what he does. I was [also] a foreman back in Seattle. I'm used to hiring people and delegating work. Here, I'll draw out what I want, and they still can't get it right. 

Q: And you speak Vietnamese. 

A: I speak Vietnamese, but I don't speak Vietnamese construction. I can have a conversation but my skill isn't at a level where I am able to get into exact terms in Vietnamese. And Vietnamese is spoken differently here than in America. 

Q: What do you think about Saigon's future? 

A: Every single time I look at Forbes' and The Economist's lists of economies booming in the next 10 to 15 years, they've got Saigon in the top ten. From the mid-1990s, Vietnam got out of the Communist approach and opened up to foreign capital. 

I was in Hong Kong two months ago, and it's like the NYC of Asia. I've wanted to see Hong Kong since I was a kid because I grew up watching Hong Kong movies, and I loved it. I thought to myself, "How can Saigon compete with this metropolis?" But I meet foreigners all the time and they love Saigon. Hong Kong is pretty damn modern, but when you're walking around Saigon, you're standing in a cross-section of time. You'll see people wearing old rice farmer hats outside modern Michelin-star restaurants. In Saigon, you're standing in a moment of time between the modern and the ancient. 

Interview with Old Katy Coffee in Texas

I met Derrick when he personally delivered coffee beans to my uncle’s house in Katy, Texas. I came to Texas to visit my uncle, a tea drinker. We were both unfamiliar with specialty coffee in Katy, TX and after a few days, we gave up trying to find my regular cup of java. By chance, I wanted to visit Old Katy and stumbled on Derrick’s business—“Old Katy Coffee”—online. Below is a brief, impromptu interview with Derrick, the husband of the husband-wife team of Old Katy Coffee. 

Me: Thank you for personally delivering the coffee.

Derrick: I’m glad we resolved the shipping issue. I was able to modify our website to allow free shipping because we’re so close to you. Regular customers allow us to eliminate or reduce shipping costs. 

Me: Why don’t Houston and Katy have more specialty coffee?

Derrick: If you’re in the city, in trendy areas such as the Heights and Montrose, there will be some specialty coffee places. I enjoy coffee so much, but everything here is spread out, so it’s tough for any small or new business to gain market share. Plus, there are so many Starbucks. 

The biggest thing is education. Farmer’s markets are a big thing in Houston, and they’re great because they offer fresh products, and we get a chance to interact with people. Good coffee isn’t rocket science. It needs to be high quality and fresh. Peak flavor is 3 to 14 days after roasting. The key is to get it to people quickly and make sure people taste it during that peak flavor time period. The flavor is still good for 30 days but starts to decline thereafter. Typically, the coffee on the [store] shelf has been sitting there for a while, and that’s what people are used to. New customers often tell me they can drink straight black coffee for the first time. Again, education is the key. Once they drink our coffee, mine is fresher, and customers usually develop a taste for fresher, higher quality products.

Me: I went to the address listed online and in your Facebook page, but I only saw a postal office. 

Derrick: That’s our P.O. box. We don’t have brick and mortar shops yet. We do “pop up” shops at markets, stores, neighborhood amenity centers and corporate locations. We'll even partner with yoga and other wellness studios. 

We also support the March of Dimes and participate in hospital events, where we donate 100% of our profits. Right now, I’m trying to build a brand, and our brand is about using coffee as a means to connect with the community. 

Me: How long have you had this business? 

Derrick: About 5 months. 

Me: Can I ask what you did before?

Derrick: I’m a finance and management guy by trade. It’s similar to law, very transactional, lots of numbers. It feels good to serve and interact with people. As I’ve become older, I’ve found it very rewarding to serve people. Coffee is cool because it’s so universal and so diverse, but also something common that allows you to interact across cultures and cities. I’m trying to build a community, which is the goal of most specialty/craft coffee [sellers]. 

Me: What’s been the most difficult part so far, other than building a brand? 

Derrick: Getting recurring customers. If we get enough volume and demand, we'll open a store but we need to feel comfortable putting up capital. I’m a CFO by trade. I’m still doing part-time CFO work, assisting businesses, helping them get banking relationships in place, accounting, and so on. 

Me: I see you offer coffee beans from many different countries. How do you manage the supply chain and import/export issues? 

Derrick: Houston is of course an amazing port city with easy access to many coffee-producing countries, especially in Latin and Central America. As a result, our suppliers have good selection. We offer seasonal menus based on availability and most importantly, what our customers enjoy. We also like to throw in a few non-standard regions and flavors in order to present customers with some variety. 

Me: Are you originally from Houston? What made you choose Katy? 

Derrick: We've been in Houston and Katy for about 4 years now. I’m from Southern Oklahoma. Katy is a great place for family. You can’t beat the schools and the people here. I’ve got kids. At a certain point, you go where it’s best for the kids. 

Me: What’s it like, working with your wife so closely in this new business? 

Derrick: In certain cases, you have to separate the personal from the business. It’s a challenge but it’s also exciting and rewarding. We’re a good team, and there’s more positives than negatives. She handles sales and marketing while I work on back-end items such as systems, supplier logistics and of course accounting. 

Me: Thank you for your time, and best of luck!

Random Thoughts: Coffee and Tips

I had an interesting week. I stayed up late writing motions on a case where a public company is suing some ex-employees. The company is "pink-listed," or traded OTC (over the counter), at three cents a share. The company claims that my clients took their trade secrets. California case law requires "trade secrets" to have independent economic value, and this fabless semiconductor company's IC chips appear antiquated. (They have plenty of money to pay lawyers rather than R&D, apparently.) One line in my brief compared their product to the Gutenberg Press and how it couldn't be a "trade secret," even if a company makes its employees sign an agreement promising not to disclose the Gutenberg Press. The other side had no response to that line in their reply brief. As scintillating as all this might sound, the lawsuit is one example of how the big guys can crush or bankrupt small guys because it's usually more cost-effective for individuals to settle even frivolous cases than to pay for all the motions and depositions that come with any case (only 5 to 10% of civil cases actually get to trial, at least in Santa Clara County). In this case, my clients have decided to fight the good fight...and I guess I'll see how much debt I have to write off this year. Anyway, we'll get back to how my case is relevant to the economy.

First, I discovered this great foot massage place in San Jose, along Story Road (Little Vietnam/Saigon area). I talked with the owner, and we discussed how different cities deal with massage places. The vice squad of the local PD always vets these businesses--I represented some acupunture places before, so I am somewhat familiar with the licensing process. This San Jose owner has a great operation. He partnered with an educated Chinese immigrant who's been in California for many years. I am guessing she's the hard worker and connections, and he's the capital (he was perusing some bylaws as we spoke). They hire grads from massage schools in S.F. and L.A., probably pay them minimum wage, and the workers get to keep their tips. All of the workers are professional and appear to be Chinese immigrants. Customers are around each other in a relaxing, open area. Massages are only 20 dollars for an hour, an incredible bargain (massages are usually $40 to $60 an hour here, but those massages allow full body contact).

The massuers and massueses rely on tips in this business structure. After my massage, I gave my massuese a 4 dollar tip. I don't usually carry cash and use my credit cards to rack up points (paying off the balance each month). Realizing a 4 dollar tip was not enough, I asked my friend to provide me with two more dollars, thinking a 30% tip was sufficient. But in between receiving the additional dollars and giving it to my masseuese, I saw that she was clearly upset over receiving just a four dollars (20%) tip. When she received the 6 dollars, she appeared to be fine, or at least not insulted. Two thoughts came to mind:

1. There might be some relationship between how much it costs to buy one cup of coffee and tips. Coffee is ubiqitous and an everyday product. Everyone, rich, poor and even homeless, expects to be able to buy it. Pre-Starbucks, a cup of joe cost about a buck. In those days, a 2 dollar tip when the underlying service cost 20 dollars or less (e.g., bellhops, a few drinks) was sufficient. Now, even when the underlying cost for a service is 20 dollars or less, people expect more than just a few dollars as a tip. Psychologically, times have changed. A reasonable minimum tip might be calculated by how much it costs to buy two cups of coffee (in this case, around six dollars). Coffee prices might be a good indicator of inflation.

2. There's a greater lesson here than just how much to tip. A service economy relies on workers getting adequate tips, which shifts salary costs from businesses to customers. I did a service this week, too. I didn't get paid a tip, but I got paid $190/hr (a discounted rate, and I "no-charged" several hours also). The American economy has catapulted certain service professions from tip status into non-tip status. The non-tip jobs are usually the better ones, because the lack of tip means that the full price of the service is included, and the price is less elastic due to the greater bargaining power of the seller. I had to wonder, as I received my massage--who was contributing more to the economy and wellness? Me, with my motions and oppositions in a frivolous case filed by a three-cents-a-share company, or the masseuse?

I came to the conclusion that American society has arbitrarily vaulted my job into the non-tip column because theoretically, my job requires the use of other positions--paralegal, court clerk, judge, process server, and even a law school professor. The masseuse, while offering a more benign skill, gets paid less in the American economy because her job does not create other jobs. That appears to be the benchmark for getting paid in a capitalist system--make sure your job theoretically requires several other jobs, or is interlinked with a diverse set of jobs.

In reality, my job, at least this week, was less important or useful than the masseuse's. That's the problem with having a service-based economy--it arbitrarily makes certain positions better than others not based on output, but on expected total consumption. Other countries appear to be positioning their economies on output, i.e. paying persons who produce things more money. (Neither the masseuse nor I produce anything in the classical sense.) So in China, the jobs go to people who produce clothing, shoes, motorcycles, etc. People can make a living producing things. In India, the jobs go to people who produce generic drugs, steel, and computer products. Of course, all countries have a service and manufacturing sector, but until recently, most service-based jobs paid similarly, regardless of status. Doctors in Russia many years ago did not make much money. Lawyers certainly don't make as much money anywhere else in the world as they can in America. In Singapore, I interned in a firm's corporate legal division--almost all the lawyers in that division were women making about 45,000 U.S. annually. Looking at the American economy in this way, it appears to be based on pure air, just like our money post-Bretton Woods. Meanwhile, other countries are basing their service jobs on selling products to Americans. I don't have the time now or the mental energy to think these ideas through, but there is something dangerous lurking in the shadows (and no, I did not deliberately try to make that sound as ambiguous as possible).

I am off to Reno in eight hours for a short three day trip. I got a great deal on Southwest Airlines. The key to getting their cheaper internet fares seems to be buying a flight at least two weeks in advance. Speaking of Reno, there are two public companies in Reno that might be decent investments: 1) IGT, in which I own shares; and 2) SRP, or Sierra Pacific Resources.

SRP sells electricity and also natural gas. Once I get more funds available in my retirement accounts, I will look more closely at SRP and its dividend.

IGT sells gaming systems, better known as slot machines or electronic games, to casinos and Indian reservations. It's got a wide moat. No one is going to risk going with a newer, cheaper competitor in this area.

Due to my trip, I won't be posting anything new until at least June 24, 2008. I will update readers on the NVDIA shareholder meeting when I return. Good night, and wish me luck.