Coffee gets us up in the morning, powers us through long afternoons, and gives us a moment to reflect. For Sahand Dilmaghani, it’s also become the focus of his future and the testing ground for his wide range of experiences.
A McIntire graduate with concentrations in Finance and IT, Dilmaghani began his career as an Investment Banking Analyst for DCS Advisory (formerly Signal Hill Capital) doing middle-market M&A and private placement work for tech-enabled businesses. Two years into his analyst position, he felt the need to scratch a persistent entrepreneurial itch. Thanks to a Comm School connection he forged during his third-year exchange in Beijing, he found himself in Berlin at unu motors GmbH, during a very early stage of the scooter startup’s history.
Leveraging his operating and financial skills while growing his own tech and startup network, Dilmaghani said the time at unu was invaluable, as it served as the catalyst for his own startup, Terra Kaffe.
We recently spoke to Dilmaghani, who’s now on the verge of making a major push to break into the espresso home-brewing market, about how he plans to disrupt the industry, creating the right teams, following a strategy for success, and how McIntire prepared him for this crucial moment in his entrepreneurial journey.
You’ve worked in financial planning and investment banking. Did you ever expect to become an entrepreneur with a direct-to-consumer product startup? How has your current work changed your thinking?
I had been very active in entrepreneurship throughout my time at UVA and always wanted to launch my own company—eventually—I just never knew precisely what kind of business. I wouldn’t say I expected to become an entrepreneur with a DTC [direct-to-consumer] startup, but the combination of experience in finance, working in a DTC startup in Berlin, and being the son of a very design-centric mother certainly provided me the necessary technical skills, creative mindset, and personal confidence to create the next big DTC brand.
My thinking hasn’t changed per se; I would describe it as having grown. I find that I can pull from my eclectic experiences to more clearly and comprehensively evaluate situations and make decisions that deliver the best outcomes for my venture. The best example of that would be the upfront investments I’ve made in creatives for my company that, while when I was in banking, I may not have valued as heavily. At the same time, I utilized my financial discipline to carefully calculate the tradeoffs of these investments.
What’s been the biggest single challenge of getting your product ready for its launch?
Team building. It’s such a critical thing to get right, but when you’re at the earliest stage, it’s really hard to balance the fact that you need to bring people on quickly to support scaling the business, and at the same time, you need to be extremely picky about finding the right fit. I’ve been advised by many to take the “hire slow, fire fast” approach, but in reality, every circumstance is unique, and a founder goes through a lot of trial and error to find the right people.
I encourage everyone to read The Hard Thing about Hard Things by Ben Horowitz to better understand this experience. That being said, when you do manage to find the right person, it’s really just an incredible feeling. That’s definitely the case with my Design & Art Director, Nenad Dickov.
With so many ways for consumers to make espresso and American-style coffee in their kitchens, how do you see Terra Kaffe gaining ground in an already crowded market? What does it take to stand out?
We were initially inspired by the fact that millennials and gen X consumers are drinking much more espresso-based coffee than ever before, but seldom have it at home, largely due to cost and complexity. Although the espresso machine market is crowded, there was only one major player, Nespresso, that was delivering on this growing demand. Given that consumers are turning away from pod-based coffee because of the process’s unnecessary waste and high costs, we found the timing was perfect to bring out a new machine that delivers the same convenience but brews from beans, not wasteful pods.
The only companies that deliver this sustainable and convenient brewing at the moment have extremely high prices (i.e., with an average selling price of $1,400) and are terribly unattractive (e.g., utilizing 1990s user interfaces). Working with my team of designers, we created a contemporary product and brand that natively fits in a modern kitchen and leveraged the DTC business model to offer these best-in-class features for a drastically lower price.
How do you choose what coffee bean brands to approach about a partnership? What makes a good fit?
The first thing we focused on is quality. We only want to partner with brands that are equally conscientious about their coffee bean-sourcing methods and roasting parameters. In addition to product quality, we also look for brands that align with Terra Kaffe’s mission and values. The quality-conscious brands we aim to work with need to also be cognizant of their triple bottom line and be advocates for sustainable consumption.
How did McIntire give you the foundation to pursue your idea and inform what you’re doing now?
For me, it boils down to professionalism, teamwork (shout out to Professor Gary Ballinger), perseverance, and a positive attitude. Going through McIntire is definitely no breeze, but you come out the other end extremely polished and versatile in what you can handle. It’s essentially its own form of an incubator where you get your hands dirty in all aspects of business.
McIntire simply does a great job preparing you for all types of different paths. I have lots of classmates who went down a similar path of entrepreneurship, some who went into finance, others to marketing, accounting, consulting, and so on. Every facet of business is effectively open to you. The downside is it makes it really tough to connect with so many others my age who claim, “College doesn’t prepare you at all for the real world.”
Another thing that I don’t think I noticed or appreciated at the time is the entrepreneurial spirit that is instilled throughout the McIntire experience. All the students are involved in so many activities out of the classroom that it’s only natural that students end up working in teams on so much more than just classroom work. Once you start creating and building out your ideas, it’s extremely empowering and becomes really hard to stop.
What specific experiences at the Comm School stick with you?
There are a few things I vividly remember from my two years in the Comm School. Most notably, the close connection I had with professors, many of whom supported and advised me when pitching as a finalist in the first Galant Challenge. It’s incredible how approachable and collaborative the entire Comm School faculty is. As long as you’re passionate about what you do, the School will find a way to support you in making it happen.
Of course, I also have numerous memories of late nights with my group at the end of our first semester, which are certainly easier to look back on fondly; at the time, I suppose it was more about survival.
What are your long-term goals for Terra Kaffe?
We’re looking to reshape the home coffee ecosystem. We’re starting with a new all-in-one bean-to-cup espresso machine that gives people a better way to get quality coffee they love at home. We hope to use this positioning to later tap into the broader coffee market, building out a marketplace for all the amazing small roasters around the United States. Lots of them have great brands and even better coffee selections but struggle to have a voice on a national scale. Hopefully, we can use our brand and installed base of users as a platform to get these great brands noticed, thereby also giving consumers a wider variety of amazing coffee to enjoy. Simply put, we want to do everything we can to bring that elevated coffee experience of boutique cafes into the home.