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Cracking the entrepreneurial code: an interview with Augusto Carneiro, co-founder of Nossa Familia

Photo Oct 16, 11 05 50 AM

When you walk into Nossa Familia’s espresso bar and roasting facility in Northwest Portland’s Pearl District, the atmosphere is thick with an intoxicating aroma. It’s the farm-to-roaster-to-espresso machine-to table cycle in full display, punctuated by the smiling and friendly faces of the employees there. But there is more than just delicious coffee to be found.

Behind the coffee shop is the roastery, distribution center, and corporate offices. Partnering with Community Vision, a local organization that finds meaningful employment for adults with disabilities, Nossa Familia hires their clients on a daily basis to stamp bags needed for bulk distribution and do other tasks.

IMG_7311 (1)In addition, Nossa Familia has an entire classroom set up with brewing equipment and espresso makers. They teach classes so that anyone can learn to be an expert barista in their own home (see nossacoffee.com for more info on all the services they offer).

It’s a grounded, sustainable and growing business that has been 11 years in the making, led by co-founder and CEO Augusto Carneiro.

Carneiro was raised in Rio de Janeiro, but came to Oregon in 1996 where he attended the University of Portland and earned a degree in engineering. He also met his wife in college. Soon after graduation they were married and became a successful professional couple with good jobs. They bought their own home and started a family. Carneiro was achieving what many of us hope to secure—an education, a career, a home, and family.

And yet for Carneiro, something was amiss.

We recently had a chance to chat with Carneiro at his facility over some fresh brewed espresso; here is a condensed and edited account of a fascinating and engaging founder story and interview.

Winging it in a competitive market

Built Oregon: Thanks for joining us today. So why on earth were you thinking about going off on your own and leaving that secure situation? What was it all about?

Carneiro: I’d wake up in the morning, and it was so hard to get out of bed to go to my engineering job. The company was a fine company. They had good educational programs. I just wasn’t built for it.

Nobody likes to be disappointed with where they are in life. But my advice is, if you are really dreading your day job, just start smiling and figuring out that you have an opportunity to say, “okay, this sucks”. So you’ve already tried something in life that you know you don’t like. Start thinking about other things that you would like.

Built Oregon: Oregon has an entrepreneurial ecosystem that is creative and inspiring, where many people decide to take on established verticals, business sectors that most everyone would perceive to be very, very hard to get into – like coffee, for instance. (There are more than 60 roasters in Portland.)

So why in the world did you get into coffee?

Carneiro: Ignorance is bliss. I think part of it is “you don’t know what you don’t know”.

One of my traits is not to worry about the details. So it’s surprising that I made it through engineering school. And it’s not surprising that I didn’t enjoy being an engineer.

IMG_2541I was already seeing that being an engineer was not, perhaps, the path, and so I talked to a cousin, who had started a roasting company in Brazil. He already had a very successful export company exporting green coffee beans, and (during a trip to Brazil in 2004) we sat down to talk about potentially selling coffee in the U.S.

He was very supportive and sent me to the U.S. with a box. I had a box of 70 pounds of coffee, and it was roasted and vacuum packed. I gave most of it away to family and friends and neighbors, sold some of it, and got really great reviews.

Built Oregon: So it was really just, “Here, take this back with you. See what you can do with it.”

Carneiro: Yes.

Built Oregon: So at the time you were, like, “Okay. I’ll try.” It wasn’t like the passion really hit you yet?

Carneiro: I sat down and I wrote what I thought was a business plan. Again, I went to engineering school, so we don’t have to write business plans. What I wrote was really a marketing plan, listing all the bike shops that I knew, and the bike races and promoters.

I thought, “We’re going to show up to bike events with coffee.” Essentially, that’s what we started doing.

A lot of people come into an industry because they have a passion for the product. Most of the other coffee roasters in town, they became coffee geeks, and then they start a coffee company.

I was not a coffee geek beforehand, and I tell people, if my family had been growing cacao, I’d have a chocolate company. For me, it has always been about the people, the people growing it and our customers, and now our employees.

In the beginning, I didn’t even know how to brew coffee. I just winged it.

We bought this $250 little home espresso machine at a trade show, and we took that to some bike events. At the beginning we showed up to bike races, and I have a friend, he was a big home barista. I had him come over and teach me how to make espressos.

Built Oregon: What happened after you sold that first batch?

Carneiro: We didn’t start it right away. I came back…and then started talking to different people about coffee and how you do this.

I met with a colleague from college. He had a bunch of good questions. I’m, like, “You know what? Do you want to just be a business partner?”

He said “Okay”, so we each put $400 in, and opened the first bank account. This was August 2004.

He had studied business. He knew a thing or two more, knew the right questions to ask. I was sold.

But we still had no clue. Looking back, if I was going to start a business I would have this whole process I’d follow, and we’d be going in three months instead of a year and a half. But again, I was about to have my second child, and had a full time job.

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Making connections and finding a vision

Built Oregon: You were still in your engineering job at this point, correct?

Carneiro: Yes. We started phone calls and meeting for lunch, and meeting in the evening, and going to a few spots and events with our coffee.

We were selling it to neighbors and friends. I was selling it to coworkers at work. We started our first website, and we did some small web sales. But it was really slow. It’s a lot of steps to start a brand. Even picking the name.

Built Oregon: How did you come up with the name Nossa Familia?

Carneiro: We did a naming exercise where we came up with a bunch of names, and then we sent it out to a bunch of people. It included everything from Volcano Coffee to Brazilian Coffee to Copacabana Coffee, a bunch of stuff.

We were having a really hard time, and then I went to a meeting (with his partner). He was, like, “I decided on a name- Nossa Familia” (translates to “our family” in English).

I said “Awesome, let’s go.”

Eventually somebody has to put a foot down.  And it was funny, because all of the feedback we got, one of the people that liked Nossa Familia said, “I like Nossa Familia. It kind of sounds like the mafia.”

fullcycleI’m, like, “Yeah.” But it describes who we are, and it describes our uniqueness.

Looking back now, what really happened is we were shooting from the hip. We both had full time jobs.

Built Oregon: When did you finally quit your job?

Carneiro: May of 2005.  But I still took no paycheck from the company. My first paycheck from the company was in 2007, so it took a long time.

(In late 2005) we went to U.S. Bank, and got a line of credit for $35,000.

Built Oregon: By late 2005, what were your sales like, and where were you selling?

Carneiro: If I look at my 2005 sales total, it was probably $40,000. That included sales from my cycling connections, and I got introduced to the people that run Cycle Oregon.

Built Oregon: Cycle Oregon – that’s an interesting connection.

Carneiro: I showed up with a BOB trailer and rode a couple of days, and promoted our coffee. Then we did one day where we sold bags of coffee, and in September 2005, we had one day where we sold $1,000 worth.

I still remember thinking, “A thousand dollars of sales in one day!”

Then the other cool thing is, the director of the ride, every time we’d meet he’d say “When are we going to go mountain biking in Brazil?”

I said “Okay, let’s go.”, and he said “Okay. I’ll get a few people together.”

IMG_2325I then put together our first mountain biking coffee tour (in Brazil) in November 2005. It was eight people (including the director of Cycle Oregon). It was our first coffee tour.

We didn’t really make that much money out of it, but it was so fun. This is why I started the business. One, to bring the farm to the people, but also to bring people to the farm and really showcase the transparency. And when people come back from there, they are huge advocates for the company.

They really see just how beautiful the farm is, and how well it’s run, and how happy everybody is there.

Built Oregon: So on that trip in 2005 you really made a very personal connection between your family past, and then this business.

Carneiro: It took three years for me. Sometimes things just take longer for you to realize your “why”.

I grew up in Rio. My dad was an electrical engineering professor, but we would spend all of the holidays at the farm. Three months out of the year, we’re at the farm. My grandma has a lot of cattle as well.

We would learn how to ride horses at five or six, but he was pretty protective. He wouldn’t let us go out on our own. But then, when I turned eight, he started having me going out with the cowboys. I was the second oldest grandchild. Now they have 27 grandkids. My mom is the oldest of ten.

Going to the farm, it’s this beautiful, big house. You imagine, as a kid, you have loads of aunts and uncles and you have loads of cousins running around. It’s super fun.

But I was one of the only grandkids that really enjoyed horseback riding, and when I was eight my grandpa started waking me up at 5:30 a.m. He’s the father of ten. He’s old school. It wasn’t like, “Okay, dear. Let’s get up.”

It was more like, “Time to go! Get up!”

Then I would have breakfast with them and my uncles. Now I realize they were doing their daily huddle. They were talking about who is doing what that day, and what the tasks were, and what needed to be done. Then I would go off with cowboys.

IMG_3614We would go herd cattle, and I vividly remember, especially in the winter. It’s pretty cold up there. I had wool mittens and a bunch of layers, and the sun is rising at 6:30 a.m., and I vividly remember riding my horse and thinking desperately that I really wanted all my friends to Rio to come and ride horses with me in the farm.

I wanted to bring everybody to the farm because it was so cool and so beautiful.

I think that’s the analogy.

Built Oregon: That’s where the connection came.

Carneiro: I really want to share that feeling and emotion with everybody. In November (2015) we’re going for our sixth coffee tour.

Everybody has their path

Built Oregon: What happened once you found your vision?

Carneiro: We came back and we said “We need to get our ducks in a row.” So we really launched the company in May of 2006.

This might be something that other entrepreneurs relate with. For a while I couldn’t tell people when we started. If we were talking to banks, we’d say, “Oh, we’ve been in business since 2004,” because we wanted to appear more established.

IMG_7373If we’re talking to other people, I don’t know. You’re in America and we hear about multi-millionaires, the overnight millionaires, the overnight successes.

So here we are in 2006, and we’re still slogging. I’m still not getting paid, and it just felt wrong to say, “Oh, yeah, we’ve been at this for two years now.”

It didn’t feel successful.

Only two years ago did we claim, or say, “We’ve been in business since 2004” This is when we started.

It was because of Cycle Oregon, because I realized, “Holy cow, this is our 10th Cycle Oregon. I need to own up to the fact that we’re a ten year-old company, and who cares if it has taken ten years to get there. Everybody has their path.”

Built Oregon:  You hadn’t yet started to roast your coffee locally- when did that happen?

Carneiro: In 2005, most of our shipments were FedEx. Then, in 2006, we brought a few palettes by boat. It took awhile to get here. I’m thinking “This is going to be tough competing with roasters (in Portland) that are claiming that, if your coffee is not roasted the day before, it’s bad.”

But really, we wanted to be that premium, high end, local coffee. We knew that selling coffee that was six weeks after roast date was going to be tough.

Sometime in 2006 I convinced my grandpa to let me bring in a container consignment. Essentially, my grandpa financed a container, and a container is 40,000 pounds of raw coffee.

So what we did is, that container was two thirds to three quarters green beans, and one third to one quarter was roasted coffee.

Again, the coffee wasn’t old. It just wasn’t as fresh as the competition.

Espresso BeansWe realized the coffee we had was very nice and drinkable, but not as fresh as Portlanders wanted it. I have all this coffee. Let’s just have Kobos (a coffee roaster in Northwest Portland) roast it for us, so we’d have locally roasted coffee.

So that’s what we did.

My thought was, my family (in Brazil) has the cultural know-how. We’re going to buy the cream of the crop. It comes in to Kobos. Then, they roast it based on the roast levels that we have, and we do all of the sales, marketing, and distribution.

So that was 2006, and we had a pretty good year. We went from $40,000 (in sales) to $75,000 in 2006, and to $290,000 in 2007. Then $600,000 in 2008 – (that year) we got into the University of Portland and New Seasons.

Built Oregon: And this was under the same sort of arrangement, where you had someone doing the roasting for you?

Carneiro: Yes. We only started roasting ourselves in 2012.

Built Oregon: When you opened this facility, right?

Carneiro: Yes.

Built Oregon:  So you just kept hustling, trying to get into more stores?

Carneiro: Grocery stores, restaurants, bakeries.

Built Oregon: And you had a sales staff, or was it this you?

Carneiro: Me and my partner.

Built Oregon: Just knocking on doors, using your charm?

Carneiro: That’s right {smiling}

IMG_1319

Shoving up the ceiling (with an innovative roaster)

Built Oregon: Because of the logistics involved of counting on these palettes of coffee to come from Brazil, and the potential bad weather, was there ever a moment where you had to just say, “I can’t deliver. I can’t get it done”?

Carneiro: Product was never a problem. The farms are very successful.

They started in the 1890s, those four brothers. They did really well. They bought more land. So now there’s five different coffee farms in the family. My cousin owns an export company.

Combined, the family probably produces four million pounds of coffee. We buy maybe 10% of one of the farm’s production.

Built Oregon: And you still worked out of your house at that time (2007), yes?

Carneiro: 2007 was the year that, essentially, my wife was tired of us being in the house. Here she had this new baby, and it was a one bathroom house that we had to share.

So we bought the first official company vehicle, and we went to an actual warehouse.

Built Oregon: And then the recession hit, and you leveled off a little bit?

Carneiro: The minimum growth we’ve ever had is 11%.

Built Oregon: So you still kept growing?

Carneiro: We still kept growing, but at $600,000, we were projecting bigger growth because we had been growing 100%. “Of course we can grow 100% every year.” We just thought it was that easy. It was only a couple of years later, looking back, we said, “Oh, that was ceiling number one.”

Photo Oct 16, 12 44 22 PMEssentially, from the $600,000 to $1.2 million, was us pushing the ceiling up, and only last year did we crack through the ceiling again. And we didn’t break it. We just kept shoving it up.

2009 was rough, because it was also the buyout year (Carneiro bought out his original partner). 2010 and 2011 were still rough years. I was by myself. We started losing some of our corporate accounts, because of corporate changes. But even with losing $100,000 of business, we were still growing overall.

Then in 2012, our numbers were a little bit better. We were able to get financing to buy the roaster. We secured this location and moved here in November.

Built Oregon: And that financing was from U.S. Bank?

Carneiro: Yes. U.S. Bank gave us the $75,000 to buy the roaster. It was a great deal.

Built Oregon: How much do they usually cost?

Carneiro: They’re $130,000 new.

Built Oregon:  And it adds all this energy efficiency.

Carneiro: Yes. That’s where the engineering background came in.

It was the engineering know-how without the coffee “geekiness”.

What happened is, this was a new technology (a Loring Coffee Roaster, which has an embedded afterburner and is able to recirculate the heat, saving 80% of energy compared to a conventional roaster).

Photo Oct 16, 11 11 01 AMIt’s a company out of Santa Rosa that started in the early 2000s. They hadn’t yet really proved themselves. There are a few people that like them, because it’s not a traditional drum roaster. The drum is fixed. Hot air roasters have a bad name, but this is a hybrid.

It wasn’t a proven technology, and I ask, “Well, how does the coffee taste?” The only other one in Oregon was in Eugene, so I stopped by over there and I called them, and they really liked it. Then I heard about this guy who won Roaster of the Year award, best coffee at this trade show, and he roasted on a Loring.

I think, “If this guy can win this award (using it), the other people are just talking without experience.”

We bought roaster number six (the sixth one ever built, purchased from another roaster who didn’t like it), and it has been really great.

The Oregon community lends a hand

Built Oregon:  Tell us about some of the help you’ve had along the way from state agencies and recourses, like the Oregon Small Business Development Center (OSBDC) and Grow Oregon (www.bizcenter.org).

Carneiro:  Early on I took a class from the OSBDC (around the time he bought out his partner and went forward on his own). I realized, you know what, I need to own it. I need to learn it. I need to learn it for myself. I took one of their business management classes, and it was really good.

And then recently Grow Oregon got in touch, saying, “Hey, we help companies.”

At that point, this was a year and a half ago. We were starting to look at expanding. We had an initial meeting with them to talk about the company and what it is that they could potentially help us with, and we said, “Well, there’s one, market research. We think we know who our demographic is, but we don’t know, and we are interested in expanding (beyond Portland)”.

To us, that was the highest value they provided, is by sitting down with us and helping us think it through.

By working with them (in conjunction with The Southern Oregon University Market Research Institute, funded in part by a donation from U.S. Bank), it forced us, internally, to look at who our demographic was. They have access to studies. They call it the “tapestry” (ESRI Tapestry Segmentation). There are 67 tapestry segments (in the U.S) of suburbanites, soccer moms and different types of people, at different income levels.

We had a few monthly meetings with them, and they worked with the group that does the research.

Built Oregon: So it’s helping you define those out-of-Portland markets without having to go there and make the mistake of them not working?

Carneiro: Yes. A lot of us like to think we have these great gut instincts. Sometimes they’re right. Sometimes they are a stomach ache.

Built Oregon: It sounds like they approached you to offer their help at just the right time, when you were thinking about expanding, and they had the reach and research capability to really provide you with some valuable help.

Carneiro: Yeah. I would have had no idea to really do market research. Do we pay somebody thousands of dollars? Do we do multiple trips? I think the fact that we specifically wanted to use the research to expand out of Oregon was an ideal fit.

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The future (and cracking the code)

Built Oregon: Paint us a picture a year from now, two years from now. You’ve invested your heart, your soul, into this. So where do you want it to be?

Carneiro: There’s a lot of ways to answer this.

Our goal, since opening the roastery and the espresso bar, has been to be one of the top in Portland. One of our core values is confidence with humility. So we never say we want to be ‘the’ best in Portland. We want to be known among the best in Portland, because there are some great roasters out there.

IMG_4714But we also want to be the friendliest. One of the acronyms and motives for the company that I created is ABMF, Always Be Making Friends, and we use that a lot. Even my kids are getting tired of me saying it, and it works.

Where we want to be business-wise? Two years ago we set the goal of doubling in size in two years, and we’re almost there. I want to crack through the ceiling again. We want to be in new markets.

What has happened in my entrepreneurial journey is, I’m just now getting ambitious. We just now cracked the entrepreneurial code.

I realize, why not me? These other companies did it. Why can’t we become a national player? Why can’t we become one of the 100 best companies to work for in Oregon?

We’re going be the first B Corp. coffee company in Portland. We’re at 79 points (just under the required minimum of 80 points).

Built Oregon: That’s awesome. This has really been great, we can’t thank you enough.

Carneiro: Yes. It was really fun.

To find out more about Nossa Familia, find them at their website, on Facebook, and on Twitter.

Postscript: For more information about Oregon Small Business Development Center and Grow Oregon, contact The Oregon Small Business Development Center Network, www.bizcenter.org. The OSBDCN provides advising, training, online courses, and resources for businesses. The 19 conveniently-located centers throughout Oregon offer assistance for every aspect of business development and management.

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Built Oregon Staff