City of Berkeley Economics: The Value of Snobbery

The City of Berkeley, which Jane Jacobs called a “pretentious suburb,” isn’t doing well economically. There was a Barnes & Noble downtown, a kind of anchor store. It closed. There was a Ross downtown. It closed. Chain stores don’t do well in Berkeley. One downtown corner has gone through several renters, including Gateway Computers, Cody’s Books, and L.L. Bean, in just a few years. The main reason I go to downtown Berkeley is to take BART to San Francisco.

My neighborhood, North Berkeley, is doing much better, although there are two empty storefronts and the Starbucks will close. Elephant Pharmacy, a New-Agey kind of pharmacy (“the drugstore that prescribes yoga”), has been successful and has started opening branches in nearby cities. (It’s a good place to shop, too. Yesterday I bought some whole nutmeg there.) The Cheese Board, a worker’s cooperative, with a great selection of cheese, has done a good job adding pizza sales to cheese sales.

The overall economic record of the neighborhood is staggering, since it includes the original Peet’s, the inspiration for Starbucks, and Chez Panisse, the most influential restaurant in the world. It also includes the first Papyrus store. I don’t drink coffee, and didn’t start drinking tea until the Shangri-La Diet, so I never shopped at Peet’s until recently. A friend, however, has been going there almost its entire history. He says that when Mr. Peet died, the workers became a lot friendlier. Before that they had a snobbish attitude. Some workers from Peet’s started a similar business in Seattle, which they called Starbucks. It was very successful and they sold out to Howard Schulz, who greatly expanded it.

Was Mr. Peet’s snobbery “bad”? Well, it — plus the corresponding attitudes of Berkeley residents — allowed him to develop a unique business. After that business was developed, that attitude could be shed and the whole thing could be moved to a place (Seattle) where its business potential could be revealed. The shift of ownership allowed the idea to become separated from the “big business is bad” notion (which was helpful at first) and launch a thousand Starbucks. (An excellent company, by the way, that not only provides me a place to work but also produced How Starbucks Saved My Life, a very good and persuasive book.) This is yet another tiny illustration of my theory of human evolution, how it all started with hobbies which eventually became businesses. Peet’s wasn’t a hobby, but it was hobby-like in its expression of the owner’s attitudes. It was far more a labor of love than most businesses. There are other examples. Survivor is to The Real World as Starbucks is to Peet’s. The Omnivore’s Dilemma is to Slow Food as Starbucks is to Peet’s.