Some of the best companies only come into existence because they found a problem worth solving.
For Mike Salguero, CEO and Co-Founder at ButcherBox, the problem and opportunity in the extraordinarily fractured space of meat production and distribution simply could not be ignored. Armed with an idea to do things differently, the company ran a Kickstarter campaign in 2015, which caught the attention of the first thousand customers. From there, the company has continued to grow.
At the recent Creative Technologist conference hosted by venture capital fund Baukunst, Salguero shared that the company has generated $600 million in revenue without making a single cent of outside investment and shared some of the lessons he learned along the way.
A difficult 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 a series of financing rounds.
But for all the money it raised, the business was not a success. “My experience was really bad. We lost everyone’s money, which I was very ashamed of,” Salguero recalls. “At the very last minute, I had watered down so much that I only owned 5.5% of the company. TThe business failed and we went bankrupt, losing everyone’s money.”
After that, Salguero decided to take a completely different path with his next company, which he started after being confronted with a very personal problem. His wife has a thyroid condition, and while she was 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 hard to find in Boston supermarkets.
“WAs CustomMade fell apart, I started calling farmers and asking if I could buy a half portion of meat,” Salguero laughs. That’s a lot of meat, and he describes it as “basically two garbage bags full of beef.”
“I met meat farmers in parking lots and bought a few garbage bags full of meat — I’m sure that didn’t seem vague 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 so the basic idea for ButcherBox was born.
Meat in the mail
“I became obsessed with the idea and started researching how to 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 ask them for help. It skips a lot of the hard work,” explains Salguero. “I found the former head of operations at Omaha Steaks, which at the time was the big behemoth of meat in the mail. And he just said, ‘Oh, yeah, my non-compete just ended. I’ll be happy to help you. .’ He put all the pieces together in the beginning.”
Then everything suddenly started happening. Salguero was fired from CustomMade and while his ambition was to take 100 days off, go on a silent meditation retreat and recharge, less than a week later he threw himself into building ButcherBox.
He hired an intern and launched a Kickstarter campaign in September 2015, deciding out of desperation never to fundraise again. Fundraising wouldn’t be necessary, he thought, because he didn’t want to do this as a big business, but as a hobby.
“I’m only going to put $10,000 into this,” Salguero recalled the decision, adding that he promised to keep it light and easy. “I gave the equity to the Omaha Steaks guy and I gave the equity to the branding studio, which in hindsight was a mistake, because I had a much too low rating.”
All aboard the rocket ship
“We agree with vegetarians.” Mike Salguero, CEO, ButcherBox
The company had a goal of $25,000 for its crowdfunding campaign, but it ended up raising eight times that amount in pre-orders. It quickly 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 continued to grow.
When COVID-19 hit, the meat packaging industry was not doing well, but ButcherBox’s sales continued to grow as people started subscribing to home delivery services like there was no tomorrow. In 2019, the company had revenues of $225 million, but due to the pandemic tailwind, sales nearly doubled to $440 million. In 2021, the company posted $550 million, and this year Salguero is optimistic that his company will cross the $600 million mark.
“This whole time I’ve just been on a rocket ship,” Salguero says.
Numbers aside, the company has stayed true to its original mission of trying to make a difference.
ButcherBox became certified B corp in January 2021joins the ranks of other heartwarming companies such as Allbirds, Ben & Jerry’s, King Arthur Flour and Patagonia, bolstering its ambitions as a company that takes a stand.
Growing without external investments
Figuring out how to build and grow a business without outside investment is an exercise in sloppiness, but Salguero’s team had a few tricks up their sleeve, starting with the Kickstarter campaign and some communities that cared deeply about how and what they eat .
The company discovered how to hack its way to success by addressing bloggers and nutritionists. “You said to eat grass-fed beef,” the company told them and created an affiliate model to encourage them to promote its products. “WWe don’t have any money, so we can’t pay you up front, but we’ll pay you for every box that person gets, and we’ll make sure you get about $10 or $15,” their communications went, Salguero said.
A lot has changed since the early days. Today, the company pays much more upfront to access customers.
“TThe decision not to raise money forced us to make those kinds of moves. We created a moat around the whole paleo/keto/CrossFit world with all the influencers,” remembers Salguero. “All those influencers are still getting checks from us, and some of those checks cost $5,000 to $10,000 a month. They’re not going to represent anyone else’s stuff because they don’t want to stop that revenue stream.”
The company essentially stumbled upon influencer and affiliate marketing while staying lean.