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Philz Coffee can’t pay baristas $25 an hour, but it can help make their lives better

The coffee company raised $45 million in new venture capital.

Philz Coffee, the San Francisco-based company founded by Phil Jaber, is now run by his 29-year-old son Jacob.

The chain, which started out in 2002 as a coffee corner in Phil’s deli on Mission Street in San Francisco, now has 36 locations, with more than two dozen in the Bay Area including one in Facebook headquarters. By this time next year, Jaber expects to have somewhere around 50, with a planned expansion into Boston coming soon.

“I think about Philz as changing the way people drink coffee. If you look at our menu board, it consists of secret recipe blends that my dad has spent decades trying to create,” Jacob Jaber said at the Code Enterprise conference in San Francisco on Tuesday.

The expansion is being fueled by $45 million in new venture capital that Philz raised from TPG earlier this year. The big question is whether Philz can continue to create the welcoming culture and homey in-store environment it stresses as it chases national growth. Starbucks, which is a multibillion-dollar corporation, started as a venture-backed startup.

One of the main ways Philz stays true to its original spirit is to focus on hiring people that are a good match and taking good care of them.

“Close to 50 percent of people we hire come from referrals from team members who are already working for us,” Jaber said. “We’re not going to be able to pay a barista $25 a hour right now, but what we can do is we can create an education platform that is free and democratized, that’s available to every team member so that they’re improving themselves and learning skills so that there’s an opportunity for them to grow.”

Caring for their employees and their well-being is how Philz is able maintain an almost 50 percent retention rate, which Jaber said is almost unheard of in retail settings. And with new forms of employment popularizing, such as with Uber’s and TaskRabbit’s contracted workers, Jaber says Philz is thinking hard about how to be more empathetic with their scheduling and benefit packages.

It’s a stark difference from other trends coming from the Bay Area.

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