Some of the the best companies emerge only because they have discovered a problem worth solving.
About Mike Salgero, CEO and Co-Founder of ButcherBox, the problem and opportunity in the extremely fractured space of meat production and distribution simply could not be ignored. Armed with an idea of how to do things differently, the company ran a Kickstarter campaign already in 2015, which attracted the attention of its first thousand customers. From there, the company continued to grow.
At the recent Creative Technologist conference organized by a venture capital fund Baukunst, Salguero shared that the company has seen $600 million in revenue without taking a single penny of outside investment, and talked about some of the lessons he’s learned along the way.
A rough start
ButcherBox isn’t Salguero’s first rodeo. His first company was CustomMade.com, which raised $30 million in venture capital from First Round Capital, Google and Atlas Ventures in series of funding rounds.
But despite all the money he raised, the company was not successful. “My experience was really bad. We lost everyone’s money, which I was ashamed of,” Salguero recalled. “At the very end, I was so diluted that I only owned 5.5% of the company. Tthe business failed and we ended up going bankrupt, losing everyone’s money.”
Salguero then decided to take a very different path with his next company, which he started after facing a very personal problem. His wife has a thyroid condition, and in the process of going on an elimination diet to find out what foods she might be intolerant to, they learned about grass-fed beef. However, this type of meat was difficult to find in supermarkets in Boston.
“WAs CustomMade went under, I started calling farmers and asking if I could buy a half share of the meat,” laughs Salguero. That’s a lot of meat, and he describes it as “basically two trash bags full of beef.”
“I was meeting meat producers in parking lots, buying a few trash bags full of meat — I’m sure it didn’t look sketchy at all,” he said. “But it was too much meat for my freezer, so I ended up selling the excess meat to friends or people I worked for.”
Some of his buyers repeatedly told him that it would be much better if the meat was delivered to their homes, and thus the main idea for ButcherBox was born.
Meat by mail
“I was obsessed with the idea and started researching how you mail meat. I had no idea how to do it. But I’m a big believer in finding people who have done something before and then asking them for help. It skips a lot of the hard work,” explains Salguero. “I found the former head of operations for Omaha Steaks, which was the big mail order meat giant at the time. And he just said “Oh yeah, my non-competition just ended. I will be glad to help you. He put all the pieces together at the beginning.
Then everything started happening all of a sudden. Salgero was fired from CustomMade, and although he had ambitions to take 100 days off, go to a quiet meditation retreat and recharge, he threw himself into building ButcherBox less than a week later.
He hired an intern and launched a Kickstarter campaign in September 2015, a decision made out of desperation to never raise money again. Fundraising wouldn’t be necessary, he thought, since he wanted to do this as a hobby, not a big business.
“I’m only going to put $10,000 into this thing,’” Salguero recalled of the decision, adding that he promised to keep things light and easy. “I gave equity to the Omaha Steaks guy and I gave equity to the branding studio, which in retrospect was a mistake because I had too low a valuation.”
All aboard the rocket ship
“We agree with the vegetarians.” Mike Salguero, CEO, ButcherBox
The company had a goal of $25,000 for the crowdfunding campaign, but ended up raising eight times that amount in pre-orders. I soon converted many of the pre-order customers into subscribers and the rest is history. The company went from $275,000 in revenue in 2015 to $5 million in 2016, then $31 million in 2017 and continues to grow.
When COVID-19 hit, the meatpacking industry didn’t do well, but ButcherBox’s revenue just kept growing as people started subscribing to home delivery services like there was no tomorrow. In 2019, the company had revenue of $225 million, but the tailwinds of the pandemic nearly doubled its profit to $440 million. In 2021, the company recorded $550 million, and this year Salguero is optimistic that his company will cross the $600 million mark.
“I was just on a rocket ship all this time,” Salguero says.
Beyond the numbers, the company continues to stay true to its original mission of trying to make a difference.
ButcherBox became a certified B corp in January 2021joining the ranks of other bona fide companies such as Allbirds, Ben & Jerry’s, King Arthur Flour and Patagonia, and further solidifies its aspirations as a company that takes a stand.
Growth without external investment
Figuring out how to build and grow a company without outside investment is a scrappy exercise, but Salguero’s team had a few tricks up their sleeve, starting with a Kickstarter campaign and a number of communities that were very interested in how and what they eat.
The company figured out how to expand its path to success by tapping bloggers and nutritionists. “You said eat grass-fed beef,” the company would tell them, and set up an affiliate model to help incentivize them to promote its products. “W“I don’t have any money, so we can’t pay you upfront, but we’ll pay you for every box that person gets, and we’ll make sure you get about $10 or $15,” Salguero said.
A lot has changed since the early days. Today, the company pays much more up front to gain access to customers.
“Tthe decision not to raise money forced us to make similar moves. We created a moat around the entire paleo/keto/CrossFit world with all the influencers,” Salguero recalls. “All of these influencers still receive checks from us and some of those checks are $5,000 to $10,000 per month. They won’t represent anyone else’s stuff because they don’t want to stop that revenue stream.
The company essentially stumbled into influencer and affiliate marketing, falling short in the process.