Andrew: Hey everyone. My name is Andrew Warner, the founder of Mixergy, where I interview entrepreneurs about how they built their businesses and we’re about to shatter some myths here in this interview. The first myth is if you’re going to be a startup entrepreneur, you need to be a software entrepreneur. Today’s guest sells meat . . . meat, a product that’s existed and that people have consumed about as long as humans have been around. That’s what he’s selling and wait until you find out how well he’s doing with it.
The second myth is that you have to raise money. He’s done it. I mean, he has some pretty strong opinions about what happens when you raise money and about why you probably don’t want to raise money.
And the third myth is about the inner part of the entrepreneur, where you think that that doesn’t matter. Today’s guest went through a period there where I think a lot of other people would have doubted themselves much more than he did, where he needed to build up his inner strength in order to start his company. He did it. I want to find out how, and I want to find out how he did this whole thing. Meat, guys, meat. He’s selling meat online. Wait until you find out how well he’s doing with it.
All right. His name is Michael Salguero. He is the founder of ButcherBox. ButcherBox delivers grass-fed—and we’ll find out why that matters—antibiotic and hormone-free meat to your door. And I want to find out how he can do that. I don’t think you can just put that in a UPS mail pouch and get it out. That was an issue and he figured it out.
This whole thing is sponsored by two great companies. The first is one that Michael might actually want to sign up for. It’s called ActiveCampaign. I’ll tell you about how it will help improve your email marketing. And the second is a software that we use to close more sales. It’s called PipeDrive. I’ll tell you more about both of those later. First, Michael, welcome.
Michael: Thank you so much for having me.
Andrew: Hey, I want to kind of go back a little bit further in your history than what we’re working on right now and go back to the time when you were 10 years old. Your mom was a single mom and she told you to do what if you wanted money?
Michael: Oh, get a job.
Andrew: Get a job, at 10.
Michael: Yeah, at 10. I had a paper when I was 10 years old. It was a daily paper, every day except for Saturday, so I’d be out there delivering papers. I think I had 35 on my route. Yeah, so at a very early age. I was the youngest of four with a single mother and at a very early age, I was told I’d have to do it myself if I wanted money or if I wanted to do some things. So, I would say I had a great upbringing and my mom was amazing, but definitely a work ethic was instilled in me very early on.
Andrew: And then you created a t-shirt that said what on the front?
Michael: Hah! You got some good data. So it said Buck Fush. You can figure out what that means. So this was 2004, George Bush versus John Kerry and I was working full time as a real estate guy and a sales guy and just created this t-shirt on a whim and it just took off. So we sold 17,000 t-shirts in three months, and I went all around the country and had a big sales force of people. This was kind of the pre-internet. The internet was around, but it wasn’t like internet distribution was a big thing.
Andrew: A sales force for selling anti-George Bush t-shirts?
Andrew: Wow. And where were they selling?
Michael: All over. The biggest seller is when we were in New York for the RNC and there were all these protests and all this stuff, so we were just in the heat of that. You know, at the time it wasn’t necessarily a big passion, but I was really into creating movements and creating these icons or brands that people wanted to wear and move on, so I always loved t-shirts because you could see that it was out there in the world and it was pretty cool.
Andrew: Just to be clear, it said “Buck Fush,” which is kind of a play on what they wanted to do to George Bush.
Andrew: Okay, and what year was this?
Michael: That was 2004.
Andrew: 2004, okay. So as I understand it, you were a guy who was going to take, who was in business classes. You were listening to professors who were telling you, “Hey, if you really want to make it in this world, the first thing you need to do is get an internship at a company like Morgan Stanley. Once you do that, then you build yourself up, up, up.” And you’re going down this path going, “I know I had a paper route. I was working since 10. Something doesn’t feel right here.” And then boom, you saw all these t-shirts, they hit and you realized, “You know what? This inner thing that I had inside me, this entrepreneurial spirit, is not wrong.” My teachers and my professors who were sending me in the other direction didn’t get it. Now you’ve got the bug. Now you decide, “I’m going to start something.”
As I understand it—I read this “INC Magazine” article about you—you then bought a domain in a company called CustomMade.com for $150,000. Am I right?
Michael: Yes. Well, there’s a short stint where I doubted myself as an entrepreneur and decided to go get a white-collar job. It took me six months to find a job in real estate, so I spent two and a half years working for the man, hating every minute of it, but it was all about confidence. It was like I didn’t have the confidence to actually go for it or my dreams.
Andrew: Why not? I love that you’re open about this, and I’m hoping later on as we talk about what happened with CustomMade that you’ll continue to be open, but I’m wondering why. Why did you still doubt yourself even though you’re a guy who sold t-shirts? If we go back in your history, we know that even in your childhood at one point you sold other t-shirts that said the word “Boston” them. What was it about you, even though you did all this, that made you think, “I’m not really an entrepreneur, I’m not one of those guys?”
Michael: You know, honestly, I think part of it is just that the world was a little different. It was a little less friendly to the entrepreneur back in 2006, so there weren’t like the incubators and the mentorship and the blogs and this stuff to like read and be like, “Oh yeah, I’m on the path of being an entrepreneur.” I was out of school and yeah, I had been successful with a t-shirt. But if you’re talking to my mother it’s like, “Yeah, I’m going to go sell t-shirts.” And it was like, “Okay, why don’t you go get a job?” So I didn’t have the confidence that like, “Oh, I’m really building something towards the future.” Even though I was really confident in my ideas and I was able to bring in a slug of money, I felt like I needed more time working for other people.
Andrew: I see.
Michael: Being the rookie.
Andrew: Pay your dues and all that. And again, this was before Paul Graham went out and started talking and recruiting entrepreneurs.
Andrew: This was before there was a startup ecosystem. Okay.
Michael: But now, in those same classes, they’re probably telling you not to go get an internship with Morgan Stanley but to go start something over the summer, so a lot of change in the past 10 years that focus from “You haven’t made it in business unless you’re working in finance,” to “You haven’t made it in business unless you’re starting your own company.” It’s been a huge change in the dialog.
Andrew: I love how dogmatic people are too. It’s always that you have to. “You have to now be an entrepreneur,” where before it was “You have to get a job and be an intern first.” Okay, so then I’m wondering what it was about CustomMade.com that drew you to it. I’m looking at an early version of the site. This was a site made for “Your source for all things custom made. You’re probably here because like us you realize that the best place to get unique furniture, cabinetry, and specialty items is directly from the artisans that created them.” What was it about that statement that I’m reading on the homepage that you’re smiling as I read that that said, “This is us, this is what we need to do?”
Michael: Is that like the Wayback Machine?
Andrew: Yeah, man.
Michael: So you’re looking at like [inaudible 00:07:31]. So, yeah. Super-ugly website, built in 1996 by a woodworker who built it to show off his stuff and then he had friends. It was early internet and his friends were like, “Oh, can you put my stuff on there as well?” And so it was really interesting, about 400 woodworkers from across the United States and Canada. And we talked to these guys and they were like, “I get all my business from that website, and I pay $35 a year for a subscription.”
My buddy and I were best friends, and we were looking to do something together and had looked at a whole bunch of different ideas. He was buying a custom coffee table and was like, “Why don’t we just buy this?” So we approached the seller. We called it a shack in their hat. So the idea was that you have all these people who are just getting huge value from this website and they’re paying $35 a year. How about we purchase the website? By the way, no technology experience whatsoever. Let’s purchase the website. Let’s reskin it, then let’s jack up the rents. That was like basically the whole investment piece.
Andrew: I see. That makes sense, though.
Michael: It’s simple. It’s pretty simple. So we had no money or minimal money. We put down a $5,000 deposit, which we split, and then our letter of intent was a 90-day due diligence period and within those 90 days, we went out and raised $140,000 to purchase the website. So basically, we risked five grand and then went and raised the rest. We put the logo on a Blackberry because Blackberries were the thing back. This was 2008, so this was right when the whole world was collapsing financially. A lot of the wealthy people in Boston lost their shirt with Bernie Madoff, so it was just like a bloodbath out there, and we were out there trying to convince people to give money to two people who didn’t even know how to do anything on a website. But we had this vision for this play where we were going to be able to add a lot more woodworkers and grow something very big.
So that business we started with money and we started not with your traditional VCs or angels. It’s just like regular people who are going to write $10,000, $15,000, or $20,000 checks. We ended up raising 500 grand, and I think there were like 40 people involved.
Michael: We got told no a lot before we were able to raise all that money.
Andrew: So I did a fast forward on the internet archive, and you really did improve the look of the site. It went from looking like a homemade site to one that was a little more professional. We’re still not at Etsy level, but Etsy is the kind of feel that you’re going for and the kind of artisan that you’re recruiting would be today maybe on Etsy, and so things are coming together.
Andrew: And still, there was a challenge, something that made you go back and reconsider the whole business. What happened?
Michael: So we got on the raising money train very early because we weren’t really able to start it without raising money and purchasing the domain. And then we raised a little bit more. So we raised $500,000 and then we raised $1.1 and we’re still building on a subscription business. So the whole idea was . . . In 1996, you had to go through a webmaster to get your content up on the web. Then it enters 2009, and you can actually log in and manage your own content and whatnot. So we built out a big subscription business, where we had 12 phone salespeople and we were just kind of like selling subscriptions. I think the top subscription package was like $700.
It was an interesting business. I mean, we were probably doing $2 million or $3 million a year, which was fine. It was certainly not a huge business. It would have been great. It would have cash-flowed well. It was cash-flowing well. And then we decided that we wanted to hit it big, go big time and so we decided to go raise a lot of money. We went around and nobody wanted to invest in a maker-based or a woodworker-focused subscription business. People were like, “That’s boring. That’s not going to scale. How big is woodworking in the U.S.?” and all the typical complaints that you hear as you sit here.
So we ended up literally after being told no like 60 times throughout the whole summer, one investor was like . . . So we had this thing on our website called the Job Board. The biggest question we got from potential subscribers was, “Well, how do I know that people are actually looking for jobs here?” And so we built out this board that would publicly post them. Basically, we went to an investor and in the meeting, I’m showing this job board and I’m like, “You know, all we have to do is just stand in between these transactions and take a fee and we have a huge marketplace on our hands.” As soon as I said “marketplace,” like the whole conversation changed. This was 2010, right around the time where Airbnb was trying to scale up and people were just so fired up about this notion of a marketplace and the notion that we were like two-sided and could stand in between and then money just started getting poured on us.
Andrew: The thing that investors started to feel about marketplaces, at first it was marketplaces are too hard because you have to go after two different groups of people and so on. Then they realized, “You know what? If you make it work, then you have a moat because no kid in his garage can create a marketplace on his own.” I see. So that was the attraction. And I noticed that even in my interviews that suddenly marketplaces were getting more funding and more excitement. People who ran marketplaces held themselves higher. Where before it was, “I just run a marketplace, I don’t really do anything,” it was, “I run a marketplace.” And so I can see that. You raised money from First Round Capital, which from what I’ve seen is one of the best investors because they’re so supportive, right?
Andrew: Atlas Venture, Google Ventures backed you guys. You raised a total of how much money?
Michael: So, in total, we raised $28 million over five rounds of financing. So we raised $1.9 from Google in first rounds and Founder Collective and then a few others, but those are the big ones and they were really the ones who were like early supporters of this notion of “Take it to a marketplace.” And then we did that, and then things were great. So then six months later, another $4 million got dumped in from them as well as another lead investor, and then a year later, $18 million got dumped in.
Andrew: Weren’t you a marketplace in the beginning? It was this guy Ted who ran the site. Am I right? He came up with the idea and then Ted started to sell his own stuff and then his friends sold their stuff. Isn’t that a marketplace?
Michael: It wasn’t really. It was more like a Yellow Pages with a portfolio. So you can have [inaudible 00:14:40].
Andrew: Oh, I see.
Michael: You weren’t selling anything. You weren’t like actually actively selling anything.
Andrew: They were paying to list themselves. So if someone like me wanted to buy new handmade furniture, I could go and see it. Got it.
Michael: [inaudible 00:14:51] contact and then we’d send an email that said, “This is a lead from CustomMade,” and then you would write to them. So we were always trying to convince people of our value and try to tell them it’s worth the $200 for them to have a subscription.
Michael: Of course, their biggest concern was, “Well, did I actually get any value?” You’re always trying to sell your value.
Andrew: Okay. Meanwhile though, because you raised so much money, you told our producer . . . I don’t know if you remember saying this but you said, “It’s so much money. I remember one time looking at this team of developers that we had, the tech team.” Do you remember what I’m talking about? What did you see them do?
Michael: So I went up to one of my engineers and I’m like, “Dude, every time I pass your desk you’re playing video games. What are you doing? You’re supposed to be working. This is work.” And he’s like, “No, I’m not playing video games. I’m watching people play video games.” I was like, “Oh my god. What does this guy do?” Yeah, so we had like 16 engineers and no idea what anyone was working on. We’ll probably talk about this later, but after much reflection, I’m like, “What happened? What went wrong?” We didn’t have product market set, so the marketplace that we had built was a really great tool for a customer to describe exactly what they want and meet a maker who could make it and facilitate the conversation online.
The challenge is you have customers who don’t know how to describe what they’re looking for, so they’re like, “I don’t know. I really need to talk about it.” And then you have makers who, a lot of these people didn’t graduate from high school or didn’t graduate from college and don’t write very well and are introverted and don’t sell, and now you’re asking them to do all their sales online and to do it on a computer screen. So you just imagine the form factor of like your shop, you have sawdust all over the place, and you’re trying to get on your laptop to like respond to a potential customer. It didn’t work. Doing a back-and-forth transaction online and us being in between but not being in between didn’t work.
Andrew: So then that’s the hard reset.
Michael: It took money, and we had convinced so many people that the marketplace was going to change the world that there was like no return. There was no going back. It wasn’t like, “Oh, actually this didn’t work, so let’s do something different.” It was like now we’re going to bring and build a marketplace, and the number one thing to do when you’re building a big marketplace is to build a big technology team and build a big product team and a big design team, even if they weren’t necessarily doing anything.
Andrew: Okay, so you and your co-founder said, “If we have to change everything, we have to take drastic steps to adjust,” and I can see it. Anyone who goes today to CustomMade.com is going to see not furniture and not a list of artisans who can make your next coffee table but custom-made jewelry. Custom-made jewelry is front and center on the site now.
Why don’t we take a moment to talk about our sponsor, and then I want to come back and say, in that little period where you guys were trying to figure out what to do, you personally had this little idea that frankly, if you came to me and said, “Andrew, can I raise money from you for this idea?” I would have said, “This is never going to work. It’s going to be too small.” And still, even as I read, I had to read so many times how well you were doing with this to make sure this is real. I went back to your website. I said, “This is amazing.”
All right. First, let me tell everyone about my first of two sponsors. The first sponsor is a company called PipeDrive. Mike, let me tell you, here’s an issue that you might as a salesperson identify with. Do you ever do any sales one on one?
Michael: Yes, I do.
Andrew: Do you get in your own head? Are you good at it?
Michael: I think I’m pretty good at it. I’m decent.
Andrew: What makes you good at it?
Michael: First of all, connection.
Andrew: Ah. So here’s the thing that I’ve found. A lot of people don’t have personal connection and they’re not especially good when they’re starting about building that rapport fast and what it takes to really sell for them is doing it often. The problem is they send one or two emails out, no one buys and they think, “I’ve done something wrong” and they procrastinate. They get in their own heads and they think they’re not good.
Here’s a trick that I’ve heard from one of my past interviewees. When he was starting on sales, he put a stack of quarters on the left side of his desk. Every time he made a phone call, he moved one of those quarters to the right. He would not get his butt off the seat until he moved all the quarters and at the end, first of all, he closed more sales because even if you suck, it’s a numbers game. You can close some sales, but he also became a better salesperson.
This is one of the reasons why I advocate PipeDrive. One of the things that PipeDrive will do for anyone who’s listening to me right now is it will give you that virtual stack of quarters. It will say, “Here’s how many people you reached out to today, this week, this year.” That’s phenomenally helpful. When you’re sitting down and thinking, “I’m not very good,” or “Maybe there’s something wrong with the way that I’m doing it,” to look at your stats and realize you only sent out two this week will tell you it’s not you. You’re not doing enough. It’s that you’re not moving. Get out there.
Here’s the second thing it does. I’ve talked to so many entrepreneurs. They’re really good at selling. I’m thinking about the founder of Ambassador. The founder of Ambassador is a good salesperson, maybe like you, in his gut. Are you like naturally a good salesperson?
Michael: I think so.
Andrew: Yeah, he was too. The thing is that in his gut he could sell, but he couldn’t tell other people “Here’s how to sell” because he couldn’t hand his gut out of his stomach and put it in their hands. Well, you know, out of his, whatever. Not stomach but gut is underneath the stomach, right? He couldn’t give it to them, so then he finally hired someone who was a VP of sales who said, “Dude, your gut is not helping us get to the next level. It got us here. It’s not going to get us there. What I need is a structure for sales,” and so he started laying out a structure.
Well, what PipeDrive does is it forces anyone who’s using the software to lay out their structure. What’s the step-by-step process for closing a sale? So now you know how many people you’re getting in your pipeline and how many steps there are to closing a sale. And because it gives you stats on how many people you’ve asked to buy, how many people you’ve closed, and where you lost them, you also know what part of your sales process feels good to you but is actually not helping your sales.
All right. Anyone out there who is in sales at all should understand these problems and should understand that this is going to help you as an individual but you should also know that as you add people to your team, each one of them can own a part of this pipeline and work together. I’m using the word pipeline and pipedrive interchangeably. I don’t want to be confusing at all. This is pipe as in the thing that is going to hit you in the knee. Why did I go with that? Whatever.
Pipe and drive because you’re going to drive more sales with this. Go to PipeDrive.com/mixergy. You’re going to get 14 days free. You’re going to get 25% off for your first three months after that. Frankly, within that period you’re going to see that this will help your sales. Do it. Be disciplined about it. Frankly, you’ve got to want to grow your business and there’s only one part that can really bring in money for your business and allow you to grow. It doesn’t have to be VC but even if you get VC money like Mike did at one point, ultimately, it’s got to come from the customers and PipeDrive is going to help it come from the customers. Go to PipeDrive.com/mixergy.
All right. In that period, you were thinking, Mike, “You know what? I’ve got to get healthier.” And so, to get healthier, what did you do for yourself? This will give me a sense of why you wanted me to emphasize grass-fed. I actually wasn’t even going to say grass-fed about your business, but it was part of what you were trying to do for your health. Tell me about what you did.
Michael: Yeah, sure. It actually really started with my wife. So my wife has a thyroid problem. She has hypothyroidism, so she takes a medicine every day. I know a lot of people have it. It’s an inflammatory disease. One of the things you can do is try to de-inflame your body. So we started following all these diets, and I just went along for the ride because I like to try to lose weight and be healthy and whatnot.
The first thing we did was the Whole 30 diet, and then we followed the Paleo diet and then we followed elimination diets and we were trying a whole bunch of different stuff and she is now gluten and dairy free. All these diets specifically said to eat grass-fed beef. You know, I knew nothing about grass-fed beef. I’m actually half Irigoian, which is like one of the capital’s grass-fed but it wasn’t something that I had prioritized and thought about.
We started looking and said, “Okay, let’s get some grass-fed beef,” and it turns out it’s like not in your local grocery store. It certainly wasn’t in our local grocery store. And I started doing more research and found a few farms online, but it was incredibly expensive. It was like you could fill your basket or your cart and then it was like $50 to ship it, so that wasn’t going to work. And then one of my friends, his father-in-law has a farm in New York and he started doing what’s called a cow share, which is essentially you get an eighth of a cow, which is about two trash bags full of meat. He would buy it from his father-in-law, drive it from New York or from Albany all the way to Boston, put it out in his living room, and you’d buy like an eighth of a cow, which is two trash bags and bring it home.
I did that once and the meat was fantastic, and it was too much for my small apartment, so I started sharing the steaks with friends because I had too many. It was like, “I’m not going to eat all this meat, so I’ll share some with you and share some with you and share some with you.” Six months later I needed more. I went back to him. This time, instead of getting an eighth of a cow, I got half a cow because the same friends that I had given steaks to were like, “Oh, next time you go, [inaudible 00:24:39]”. And the final time, I bought a whole cow and as the “INC” article says, I split it up like a drug dealer and sold it on the floor. And one of the guys who actually worked for me at the time at CustomMade was like, “This would be so much better if I could just have it delivered to my house.” And I was like, “Hmm, that’s interesting.”
At the time I knew I was leaving CustomMade, so my co-founder and I were having a lot of trouble with our investors. Basically, we went product market fed and then we were trying and trying to figure it out and it turned out it wasn’t working. So whose fault was it? It was definitely our fault, so they were out gunning for our heads. My co-founder had become the CEO. I was the CEO and then he was and I was bored. I was just like, “It’s done.” I was looking for something else to do, at least a hobby to get into, and I was looking for subscription businesses because when we were a subscription business at CustomMade, it was great because subscription just keeps coming in. It just keeps rolling in. So if you can do a sale, you can keep that sale going and so that was really exciting for me.
I started thinking about this concept of, “Hey, could we deliver grass-fed beef to your door on a monthly basis?” I had this idea. It was like a bug in my head and I just couldn’t get it out and I couldn’t figure out how to do it. I didn’t know how to ship it. I didn’t know how to procure it. I didn’t know how to get it cut. It seemed like a really great idea, but I had no idea how to put the pieces together. And I ended up meeting the former Head of Operations of Omaha Steaks.
Andrew: Because you went out of your way. You said, “I have to solve this fricking puzzle.” You went to LinkedIn and in one of the best uses of LinkedIn, you actually found the guy who did this for Omaha Steaks because they ship it all over. You contacted him and said, “Can I talk to you?” He said, “Here’s how we did it,” and he opened your eyes. How do you do that? How do you ship steak?
Michael: Well, very carefully is the answer. So Omaha Steaks and us, we’re similar in terms of we ship steaks frozen and pre-portioned in the [mail 00:26:59]. They do like a Styrofoam cooler. We don’t do that. When we started, we did, and essentially you can work with these frozen fulfillment houses that ship things frozen. You get it cut from different cutters and you have to procure it from certain farms. And then it gets cut into a 10-ounce portion or whatever you’re doing and then you ship it out and we ship with dry ice. It’s about five pounds of dry ice per day in transit, so you just load that thing up with dry ice and put it out on UPS or FedEx.
The amazing part of the model is that literally, we can get a box of meat anywhere in the country, so a lot of the people that we deal with might be in the middle of nowhere and following some diet or for whatever reason are trying to clean up the meat that they’re eating. And there are lots of different reasons. Usually, it’s health, caring about the environment, or caring about the animals, but for whatever reason, they’ve made that choice and they can’t find it. It’s just not in their grocery store. So our ability to ship directly to that customer regardless of where they are is a pretty powerful thing.
Andrew: And that was the first thing that you did. You didn’t start by going door to door in . . . where were you at the time, New York?
Andrew: Boston. You weren’t actually taking it door to door in Boston. You started from the beginning with a frozen fulfillment house. Did you even need that guy then from Omaha Steak? Once he told you that there’s a frozen fulfillment house, why did you even need to work with him? Couldn’t you just say, “Thanks for the piece of information, I’ll go find one and I’ll work with them and they’ll ship it out for me?” Why couldn’t you do that?
Michael: Yeah, I used [inaudible 00:28:33]. I mean, at this point he doesn’t really do much.
Andrew: So once he got you started with them . . ..
Michael: Yeah, he got us started and then kind of like let us free, right? So we use different people that he introduced us to. We use different fulfillment houses. I mean, our whole system is [inaudible 00:28:50].
Andrew: It was just opening your eyes to the fact that you don’t have to ship it from your house. You don’t have to ship it from the ranch. There are people who have the infrastructure in place. Got it. Okay.
Michael: Yeah, so he had the connections, right? Because I’m some guy who knows nothing about meat, trying to get involved with meat, so when you go and talk to a frozen fulfillment house, they’re not really that excited about working with you. You know, when I started and went to these guys I said, “Okay, look, we’re going to start a Kickstarter,” which I’m sure we’ll talk about “and I think it’s going to be really successful.” They were like, “Okay, we don’t know what a Kickstarter is and who is this guy? You’re not going to sell product. You think you are, but you’re not going to.”
Andrew: That’s what he was saying about you, but he might as well give you a little bit of advice because he was in the space.
Andrew: I don’t eat meat anymore. But when I was living in Argentina, I did eat grass-fed beef and I remember the taste is different. It takes a little getting used to because it is so clean, so pure, so much better than the stuff that you’re used to. It’s like if you’re doing a little bit of poison every day, you start to think that everything needs to taste that way. When you get rid of it, whatever you’re tasting feels a little weird. I could have gone with something better. You know what a better analogy was? When I was a kid, I would drink tea with three teaspoons of sugar in it all the time. The first time I drank tea with no sugar, I thought there was something weird with the tea. Eventually, after a few times of drinking it, I realized I don’t need all that sugar. It’s just not necessary. It’s the same thing here. I totally get not the environmental part of it or the health benefits of it, I just have no connection to it, but the taste blew my mind when I moved to Argentina and I had it.
So I told you that if you came to me with this idea, I would say, “It’s never going to be huge.” But the truth is not only was I wrong, you didn’t walk into this thinking it was going to be huge. You told our producer, “My goal was to sell” how many?
Michael: There’s an article somewhere that said . . . I got interviewed and I said, “If we get to 1,000 subscribers, this is a really sexy business.”
Andrew: Right. A thousand subscribers at how much a month?
Michael: It’s $129 a month.
Michael: It would have been a $1.5 million company with low expenses, and really what I was thinking was this was going to be kind of my hobby business or my side hustle while I went and figured out what the next big thing was.
Andrew: So let’s talk about inner entrepreneur because I love that you’re open about this stuff. We all go through it. It’s hard to get people who are in touch enough with it. You were going through a thing. Here’s what you told our producer and I highlighted it. You said, “I was dealing with a lot of head trash around being a failure.” Expand on that. What was going on in your head that kept you from seeing this for the big opportunity that it was and kept you from seeing who you were and your potential as an entrepreneur?
Michael: Yeah, so I mean I basically just [inaudible 00:31:39], right? So we raised $28 million. My co-founder took over, but we took the team from 50 people to 6, laid everybody off, closed up shop really quickly, and it certainly wasn’t the outcome that I sold all these investors on. It wasn’t the outcome that I had sold myself on that was going to happen, and I don’t know, I mean, you know . . .. One of the challenges of being an entrepreneur, especially if you’re a venture-backed entrepreneur, is that the only thing you compare yourself to is the exit. Like, that’s it. It’s like, never mind the millions of dollars of impact that we had on all these makers and all these people who worked for us, whose careers have just blossomed since they worked for us. That doesn’t matter. The only thing that matters is how much did you sell for and how much did you drive the value for your investors? At least that’s what I thought.
Andrew: Well, isn’t that right though? I think you were right in thinking that. That’s what they’re looking for. They might say, “Hey, I’m looking to get to know you for your next venture or for your next company,” but the truth is, they have a need too.
Michael: Yeah, sure. They’ve got pension funds and life insurance companies and people who require a return, who are expecting a return on their investment.
Andrew: Yeah, and you knew them personally. They were in the trenches with you. It’s really hard to let someone down when they believe in you to that degree, right?
Andrew: And so, were you depressed about it? Did you have a hard time thinking it through? What was it?
Michael: I wouldn’t say I was depressed about it. I mean, I didn’t really skip a beat, to be honest. So my plan was to leave CustomMade, take 100 days off and then start something else. By the time that CustomMade was coming to an end, I had already put all these pieces together, so I took a weekend off and then started ButcherBox. I literally took three days off. So I [inaudible 00:33:42] I’m not very good at like dwelling on . . . I don’t know if I should be, but dwelling on mistakes or dwelling on my things that I wish I did differently. There is a ton of regret. There is a ton of conversations I wish I had differently, people who we let go who I wish we took a chance on, situations where I wish I had said something different or did something different or even just like, you know, we didn’t need to raise a lot of money. I know it was there. I know people were like, “Here’s some more money,” but we didn’t need to.
Sure, I regret all that. But the biggest piece of head trash is when we started, and I would be honest and I’d say it’s still there. I certainly don’t think I’m like, “Oh wow, this is like an amazing success.” I have a huge chip on my shoulder to build something big and enduring and kind of do it my own way, but that continues to be my chip, the thing that I . . .
Andrew: It kind of feels like you have. All right. So then the first thing you did was you did Kickstarter. Why do Kickstarter as opposed to something else?
Michael: The main reason, honestly, was . . . So I spend all this time in marketplaces because I had just built a marketplace, and one of the things that happens in marketplaces is there’s a brief moment in time in any marketplace that’s reached liquidity, where basically the risk and reward is way out of whack, meaning you can risk relatively little amount of money and you get a really big reward. And I wanted to learn about that on Kickstarter while creating a project. So the thinking was, “I’ll put $10,000 into this project. Worst case scenario, nobody wants to purchase this and I just spent 10 grand learning about this different marketplace and really getting the inner workings of it.” But my hunch was that it was gameable, meaning like you could figure out a way to set up your campaign and do things in a way that was just going to have a tremendous amount of value or a tremendous amount of reward for the relatively . . ..
Andrew: Oh, I see. You were thinking the Kickstarter, crowdfunding marketplace is gameable. If you could get into it in 2015, which is when you were doing this, then you could understand what it takes to create something like this and where the opportunities were. You didn’t see opportunities in beef. You saw opportunities in crowdfunding marketplaces.
Michael: Well, I did see opportunities in the product that we were doing, but I thought it was going to be a fairly small opportunity. But I did see knowing how to utilize Kickstarter in particular, not necessarily building my own crowdfunding platform but knowing how to use that crowdfunding platform to push something to huge [inaudible 00:36:24].
Andrew: I see.
Michael: The best thing that I’ve been able to link it to is . . . I don’t know if you remember this, but 10 years ago, there were all these stores out there where they will sell your stuff on eBay.
Michael: They used to be like in every strip mall. It was like, “Sell your stuff on eBay.” And all that was, was somebody knew how to keyword-stuff something and take good photos of something and sell a trinket for $100, where if you did it, you would only sell it for $50. They knew the rules, right? And then, over time, eBay has made it so darn easy to post it yourself and they guide you through that process, that you don’t really need that intermediary anymore, so those people don’t exist anymore. So Kickstarter is basically, and it still is, at a point where if you know the rules and you’re able to play the playbook, you are able to have outsized returns compared to everybody else.
Andrew: Got it. Okay.
Michael: And so I wanted to learn that and I wanted to test and see if there was actually a market for grass-fed beef before I started the whole thing.
Andrew: There are two things that strike me about it. If you see my eyes darting everywhere, it’s because whatever you’re saying, I’m looking up. I want to see it. I don’t just want to hear you say it. I want to understand it better so I can ask follow-up questions and to go deeper.
The first thing that I’m wondering is the Kickstarter campaign was a one-time sale. If you were trying to do something on a subscription basis, it doesn’t feel like you were getting a subscription there. Am I right?
Michael: They don’t let you do a subscription on Kickstarter, so we did a one-time sale, but we also did 3-month, 6-month, and 12-months. But most of the people who came in were one time, and then we had to call each of them individually and try to get them to sign up for an ongoing subscription.
Andrew: I see. And by we, was it you calling them up?
Michael: No, I brought in some $12-an-hour guy to do that.
Andrew: To call them up.
Andrew: The other thing is, at one point the site was redirecting to TheOrganicButcherofMcLean.com. What is that?
Michael: That is the guy who owned ButcherBox.com, so when we launched, we were GetButcherBox.com. I had reached out to him before I started, saying, “Hey, I’d love to purchase your domain name.” And he was like, “Well, I don’t know. I really have all these ideas of what to do, and I want to do something online,” and blah, blah, blah. It was a pretty bad negotiation tactic. He told me his price. I forget what it was, and he’s like, “I don’t know. You’re not going to like this price,” but I think it’s like two grand or something and I was like, “Okay, cool. Let’s do it.” And he’s like, “Ah, no. Hold on. Never mind. Let me get back to you.” And basically, I just kept hounding him and a year later, he sold. So the first year we were GetButcherBox.com, and then we became ButcherBox.com.
Andrew: Okay. All right. I want to talk about my second sponsor. I think you’re going to benefit from them because I know what you’re using for email marketing and then I want to come back and talk about, for anyone who’s listening who’s got goals . . . We always ask guests about the goals that they had. I’ve never had anyone tell me that they did this with their goals and how it helped you hit your goals is really interesting.
First, I’ve got to tell everyone my sponsor is a company called ActiveCampaign. You use one of their competitors for email. What kind of email marketing do you do, Mike?
Michael: We do a lot. We rely heavily on email, whether it’s for potential customers or our current customers and we’re trying to get them to purchase more or just understand how to cook their products. We do a tremendous amount of email marketing.
Andrew: Yeah. I hunted around. I saw that you guys use, [screw it 00:39:45], I’m going to talk about competitors. You guys use SumoMe for collecting email addresses. That’s not the competitor. You use MailChimp for sending out email. You also use a couple of other tools for sending out email. The thing that strikes me is this. You do, when someone buys, start to send them into a second list, as a buyer list, right?
Andrew: Here’s what ActiveCampaign does to take that to the next step. Imagine if somebody is looking over and over at . . . where is that? Do you guys do a gift option?
Andrew: So imagine if I wasn’t looking at the “Order Now” page, but I kept looking at the “Gift” page. At that point, you might know Andrew is not necessarily interested in buying it for himself. Let’s add him to a sequence of messages that we send out to people who want to buy gifts with maybe a picture of someone who got a gift, a story of someone who gave a gift and the benefit, and a third message about why this is the right gift to give to anyone and how their recipient is going to be treated. With the other email providers, you can’t do that easily. What ActiveCampaign said was, “This is something that top marketers do that is so overwhelming that they either have to hire a specialist to manage their email marketing or the founder in many cases will just do it themselves because he geeks out on the software.” He said, “No, we have to come up with software that makes this easy and approachable for anyone.”
So, for you or anyone who’s listening to me, we all have parts of our website that people will maybe visit over and over again. Maybe it’s a specific blog post that they’re all migrating to. Maybe it’s an offer that they keep seeing over and over. Anyone who sees that blog post, anyone who sees that part of your site should be tagged and maybe you send a sequence of messages based on that. That’s the idea behind ActiveCampaign, smart email marketing that’s automated based on what people have done. And I’m giving you one example, what they’ve done on your website but it could also be what they’re doing with an email. So, if someone keeps clicking the same thing over and over again, you might be aware that they’re expressing an interest, not actively but passively that your software should take into account.
Now, ActiveCampaign is doing . . . I mean, we’re not talking about something that is mind-blowingly new. What they’re doing is what bigger marketers have done forever and keeping it so simple that anyone can do it today and I mean you, the person who’s listening to me, can do it today. You can play around with it and then you can pass it on to your team and have them do it and make sure that it keeps getting handled right because it’s easy and effective email marketing.
If you guys are listening to me and you want to try this out, I’m going to give you something. First of all, you can try it for free right now by going to a URL that I’m going to give you. Second, you’re going to get your second month free with them. Third, I know some of this is kind of new. You might not think of the possibilities of what you can do with this. They’re going to give you two free one-on-one sessions with one of their platform consultants so that you talk to them, you learn, you go implement and you can come back and have a follow-up call and say, “Here’s what I’m doing.” And finally, if you’re using someone else’s software, one that’s a little too easy and you’ve outgrown it and you want to go with something a little bit more powerful, you can actually get free migration and that is only if you use the special URL. It is ActiveCampaign.com/mixergy to get that offer. And you’re going to see, guys, this will really dramatically change your business and change the way you think about your potential and existing customers.
All right, let’s talk about the goals because this thing was so exciting to me that I underlined it in my notes and I bolded it. Talk to me about what your goals were and how you made sure that you were aware of them.
Michael: The initial goal, or which goal in particular?
Andrew: You know what? You’re right. Let’s go back to the first goal before we talk about the next three follow-up goals with where you want to be monthly, weekly, and daily for your sales. What was the original goal? How many subscribers?
Michael: Originally it was 1,000 subscribers. So we were like 1,000 subscribers for the year. Basically, we launched Kickstarter in September, 2015, and we finished up Kickstarter in October. I think by February we had 1,000 subscribers.
Andrew: Because of the calls that you were making to existing customers?
Michael: No, that brought in like 350. Actually, the thing that grew our business tremendously was during the Kickstarter campaign there was a doctor, Chris Kresser, who was a Paleo doctor and author and very well regarded in the Paleo space. He tweeted about us and said, “Hey, here’s a really interesting company. Go check it out,” and we just saw this flurry of sign-ups happen from the tweet and that was like, oh, that’s interesting.”
So we started reaching out to him as well as a whole bunch of other Paleo influencers, as we call them, but people who have large email lists and large followings and basically it was like, “Hey, we’ve noticed on this page that you say you should eat grass-fed beef. We’re a grass-fed beef company.” At that point, we’d also gotten into pasture-raised pork and chicken. But, “We’d love to basically set up a deal with you where you get a commission and you introduce people to our product.” And that works very well. We kind of unlocked that during Kickstarter and then by January had our first promotion and had really started to grow.
Andrew: I see.
Michael: So, by February, we were like, okay, 1,000 wasn’t enough. Three thousand? And then we flew through that. We were like, 5,000? And then it just continued to be like, “I don’t know. What can this all be?” So I had a sheet that I started that I thought was crazy and it’s like right next to my desk and it’s basically our first $100,000 month, first $100,000 week, first $100,000 day, first $1 million month, first $1 million week, first $1 million day. I just put it up and it was like, “All right, let’s see what happens.” People thought I was crazy. And yeah, we’ve hit all of them except for the $1 million day, which will be ridiculous at some point if we’re able to make it.
Andrew: Mike, when someone on your team would come to talk to you, when you sat down to work during the day, when a guest came to visit, all of those situations you were faced and they were faced with the goal of a $100,000 month, a $100,000 week, a $100,000 day, etc. and a $1 million month and so that would do what to you and the conversations you had with those people?
Michael: Yeah, I mean, one of the things we do as a company is we have these huge goals. So we set up these super-lofty goals that nobody thinks is attainable, and then, in this company, we’ve just blown through every single . . . I mean, we’ve been super aggressive and we still blow through it. But what we do is I’m a very goal-oriented person. I do way better in my personal life and my business life if I have goals that I’m being driven towards, and as a company, we’re all about the goals as well. So our goal for the year was to hit a subscriber [total 00:47:07], and at the time we had six people in our company. This was like last year, so last December when we were coming up to goal, and it was like, “Oh, we’ve got to do something crazy if we hit this goal.” I was like, “You know what? If we hit this goal, we’re going to Mexico.” We now have 35 people and we’re all going to Mexico.
Michael: Yeah. It’s kind of crazy but, you know, we said that that was the prize, so I don’t see how you walk it back.
Andrew: That’s fantastic. You know what? I noticed on your wrist that you have an orange wristband, and I’ve been wondering if that has something to do with goals or what’s the meaning of it?
Michael: Oh, this red one?
Andrew: Yeah, is it red? Okay.
Michael: It’s red. So it’s for my CrossFit. I go to CrossFit. It’s CrossFit Arsenal in Massachusetts. It’s an awesome place. So this year I am 36, and I’m the year of the rooster, which is this year. My brother is into Chinese history and stuff, and he has a Chinese New Year every year. And he’s like, “Oh, this is your year.” And I was like, “Oh, yeah. What does that mean? What does it mean for it to be your year?” Every 12 years is your year and essentially, it’s a year where you are going to have profound transformative experience in your life, and it can be either good or bad, but it will be profound. And Billy’s rather superstitious . . . wear red every day of the year, so I’ve been wearing this and I have like a red thing in my car that I’ve done every day of the year.
Andrew: What do you mean by done?
Michael: Is that superstitious?
Andrew: It’s just you’ve had something red on you every day of the year.
Michael: [inaudible 00:48:44]. There are red rubber bands and then things got better, so now . . . I was going to turn to your microphone . . .
Andrew: Yeah, where I have all beads and meditation beads. In your personal life, what kind of goals do you set for yourself?
Michael: Oh man. I do this exercise every January, where I come up with a massive list of goals. So I literally have . . . I don’t know . . . there are probably 60 goals that I track. I should be doing it daily. I don’t. I do it about every week, but it’s everything from spending time with my kids to how many times am I going to work out, how many times am I going to stretch, how many times am I going to meditate, how many times am I going to go on vacation, how many times am I going to go see my mother?
Andrew: How many times am I going to go see my mother? Some people would say, “Let that happen organically. Let your love for her dictate.” No. Why? Why is it important to have that written down?
Michael: So what I do . . . the exercise is you do an inventory of your life and like what positions in your life do you think are important and which ones do you . . . Like who’s counting on you to do things or what brings me happiness? You know, like I said, I was the youngest of four. The rest of my family has moved away, and my mom always has problems, like she can’t get the air conditioner out of her window and can’t get her porch furniture off the porch. You know . . . .
Andrew: I see. So, as much as you love her, little things could come up in your life that would keep you from seeing her and she might have all these different chores for you that you might start identifying her with the things that she needs done as opposed to what you want out of the relationship and this holds you accountable.
Michael: Yeah. It also just holds me accountable to doing . . . . If you set up your year, just like with the company, if you set up your quarter or you set up your month, if you set up your year with like, “This is what I intend to do,” you’re not going to hit everything but if you set it up in a way that’s like “This is what I want to do. This would be an amazing year,” and then you hit 80 percent of that, it would be pretty remarkable.
There’s a guy online, Jack Daly, who posted. He publishes his every year. And I mean, the guy’s got crazy goals. He’s like 30 marathons this year and four Ironmans and all this craziness. But yeah, I don’t know, I’m pretty crazy about goals.
Andrew: What’s been on your list over and over that’s almost like frustrating to keep seeing because you don’t hit it?
Michael: I have a weight-lifting goal. I want to have a 300-pound squat and a 400-pound dead lift. I’ve had that for a couple years, so that one’s been frustrating.
Andrew: Do you ever feel like, “You know what? Why do I keep trying for this? It’s never happening.”
Michael: Yeah, totally.
Andrew: You still put it on anyway.
Michael: Yeah. I’m like, I don’t know. Maybe this is . . . you know. So we haven’t gotten into this, but in addition to the company, which has been growing leaps and bounds and we’ve got 60 people now and we’re growing crazy and that’s been amazing, my family life has also boomed in the past year and a half. I had one daughter, and then we were blessed with identical twin girls, so that’s literally an egg splits. It’s a 1 in 100 chance. They are 14-months old, so there’s a lot of family stuff going on too. So when I look at like my dead-lift goal, I’m like, “Okay, I didn’t hit it, but I don’t know, does that matter? Well, if you want to hit it, like now’s the time. You’re not getting any younger.” It’s a good reminder.
Andrew: And your wife’s on board with it. She says, “You know what? My husband has this goal. We have kids. I need him to help with the kids, but this weight-lifting goal, working-out goal is important to him and it’s important to us.”
Michael: Well, she wants me to help out with the kids for longer.
Andrew: I remember I was trying to run more. The thing that helped me was just saying to my wife, “I need your help to get me to run more.” So it wasn’t now me trying to squeeze more time for myself out of our relationship, it was her helping me and us working together.
You and I met through Dan Littauer. He’s your partnership guy. What kind of partnerships could ButcherBox need?
Michael: I mean, there are lots of potential partnerships. One of the big ones is we talk with a lot of . . . . So I talked about the Paleo doctors but there are lots of people. Grass-fed beef or eating clean meat is not necessarily something that the mainstream finds to be important, which is why 98% of the beef consumed in the United States is a feed-locked cow.
And there are lots of people who have a voice with their audience and their audience listens to them and says, “Oh, yeah. Whatever he says, I’m into it,” or “Whatever she says, I do.” So people who can help spread our message and spread our message of clean meat, spread our message of how good it is for the environment or how much better it is for the environment, humane treatment of animals and all that stuff, which is really important to us, that’s great. And then there are a lot of companies, whether it’s kitchen equipment or cooking companies that just have the ear of people. Like you were saying, with the taste side. So like way better taste and they are helping to promote us as well.
I just love chatting about entrepreneurship. I love coaching entrepreneurs on when not to take venture capital and to try to do it yourself, because I think there’s a big . . .
Andrew: I feel like you’d be a good coach. Right now, I think you’d be a phenomenal coach. I wouldn’t be surprised if a couple of people reached out to you and just found a way to get to Boston just to learn from you, the goal-setting part that you did, the achievement that you did in a product that most people wouldn’t think would scale this much would draw people to you. I get it. What I’m wondering is, when he does these partnerships, and I’m looking at some of the things that’s in your traffic, is it like affiliates? I’m trying to understand how you get these customers. Now that I get where the business is and how big it’s gotten, I’m trying to get where you get the customers. So what kind of partnerships lead? Is it affiliates? Is it just getting people the right articles about you? Is it a combination of both?
Michael: Actually, it came out of the fact that we didn’t raise money. So, when we started the company, we didn’t raise any money because I didn’t want to go and do the $28 million thing. I wanted to do it for 10 grand running a Kickstarter campaign. And so, when we were thinking about how to market ourselves, we couldn’t do like, “Let’s go burn a bunch of money on Facebook and hope for the best.” So what we ended up doing was reaching out to some of these influencers or people that have their audiences and we paid them what’s like an ongoing royalty I guess is how you can call it, but essentially, an ongoing payment for every month that the customer stayed.
Andrew: I see. I read some of that. So “Business Insider” did a piece on you. They very clearly at the top said, “This is something that we get paid for,” but they did a real good job explaining it. I mean, the writer said, “I bought it. I took it home. I don’t have a grill at home.” I guess he’s a New Yorker. He borrowed one from a friend, grilled it, showed pictures of it, talked about how he just added salt and pepper to it and what it tasted like and then if you wanted it there was a link. By the way, the link is broken. You guys might want to get on it and tell them to fix the link. But that’s the kind of thing we’re talking about.
I see that “Whole 30” wrote about you guys from Whole30.com. Paleomg.com wrote about you and a bunch of different sites. Those are partnerships that he would do and that’s part of what drives your business. You have this mission, there’s a bunch of people who have this worldview or a similar worldview that can buy into your religion of grass-fed, healthy meat. You go expose them to your product. Sometimes it’s just for writing articles, sometimes an affiliate commission. That’s a part of the way that you get customers. What else do you do? Beyond the partnerships, tell me more about what you do to blow through your sales figures.
Michael: So we’ve started doing a whole bunch of other avenues and trying to find other gushers if you will, so other places where it’s just like, “Wow, this is working really well.” We’re doing a lot of content. We’re doing Facebook and Google, and we do a lot of emails, so we have a big email list of people who might have been a customer or might have almost been a customer but fell off and whatever we can do. We’ve just started doing—it’s actually been pretty successful—gift boxes. So lots of people have reached out to us, saying, “Hey, I have 10 people I want to send a gift to.” So we’ve been doing that, which has been working really well.
Andrew: You mean, like, “The holidays are coming up. I don’t want to give people another fruit basket. We’re much more of a meat-eater type of community. I’m going to send them meat.” Got it. Okay. Basically, you’re starting to get into the Omaha Steak part of the world.
Michael: Yeah. I mean, Omaha Steaks is a $700 million business, and they’re basically a gift business.
Andrew: That’s annual sales.
Michael: Yes. They do the majority of their business in the last two months of the year, and so people just get tons of gifts. I mean, there’s a time and a place for Omaha Steaks. I think Omaha Steaks is kind of, in terms of its positioning, and like the meat it’s providing is just not what a lot of people are looking for. A lot of people are looking . . .
Andrew: I also feel like it’s a little too mainstream to feel like a good gift. It’s a kind of thing that people would have had as a gift maybe from their uncle years ago. There’s that 10 or 20-year history there that people have connections with that doesn’t feel like the special new thing that you’re introduced to.
All right, let me talk about one challenging thing that you did and then I will also analyze some of the things that I’ve seen. One challenging campaign that you did to get customers and then I’ll analyze using SimilarWeb.com, frankly and what I’ve seen on your site. Some of the things that you did to get customers and then we’ll close it out, but I want to understand how you got to this number.
One thing that you did on Kickstarter . . . there’s something called Free.Bacon. There’s lots of different material on it. I do not even enjoy eating bacon. My mouth, look, you can actually see is literally watering from this fricking picture of bacon that you have on your screen. This was a campaign. Describe what the campaign was and how it did for you as a business.
Michael: Yeah, so bacon has like literally just grown its business. I mean, that’s our secret . . . bacon.
Andrew: What do you mean, your secret is bacon? I thought it was cows, not pigs.
Michael: Well, we actually moved even before the Kickstarter because we did a bunch of research. Nobody wanted eight pounds of beef a month delivered to their door. It just seemed like a much smaller concept than having pork and chicken as well or any variety of those three. So even when we launched Kickstarter, our positioning was all about grass-fed beef, but we were grass-fed beef, pork, chicken as well. And one of the great tricks for running a great Kickstarter campaign is you want to do something where you can get your current people who have already backed you really fired up about sharing you and whatnot. And what we did was we had a stretch-goal prize of $150,000. If we hit $150,000, everyone got free bacon in their box. So people just went nuts, I mean, sharing everywhere, just very excited about the fact that they were going to get free bacon, and then were just thrilled that they hit it.
So when we started, from a technical standpoint, everyone got bacon in their first box. At the same time, we had all these new subscribers joining and the new subscribers, we found out like three weeks into it were actually also getting bacon because we didn’t separate the first box that got shipped and whether it was a new subscriber versus a Kickstarter person.
Andrew: I see.
Michael: So instead of turning off the bacon, we were like, “Oh, this is definitely a feature, not a bug,” so we basically just started selling, “Sign up and get free bacon in your first box.” The only reason was because we didn’t know how to shut it off and it was going over so well. People were like, “Oh wow. I didn’t know I was going to get this bacon. I’m really excited about the bacon.” The reason why I say it grew us tremendously is one of the biggest promotions that we’ve ever done was this summer. It was Bacon Day.
Andrew: July 13th. Butcher Box Bacon Day.
Michael: Bacon Day, where we did bacon for life, which means if you sign up, we will put bacon in your box every single box that you get for the rest of your subscription and it worked incredibly well in terms of signups. It was kind of the first time that we broke our systems. Yeah, bacon has continued to be . . . .
Andrew: Broke your systems, meaning customer support couldn’t handle it. Broke your systems, meaning it took two weeks to respond to people’s questions. Broke your system, meaning the most subscriptions you . . . Okay, I’m going to give you a number. You’re okay with that, right? I told you before we started that I wasn’t going to reveal anything, but once you revealed it, I’m not editing it out, so with your permission, I’m going to say, before that, the most you ever sold in a single month was 6,000 subscriptions. Bacon Day led to 7,000 subscriptions in three days.
Andrew: That is breaking records and then it also broke customer service. You had a stripe on your phone, which anyone who knows what’s about to happen, your phone would vibrate whenever you got a sale. You used to do a drinking game with that. What was the drinking game around that?
Michael: Yeah, we did a drinking game that day because everyone was like . . . I mean, it was just like, “Oh my god. This is so cool.” But basically, that phone was going off so often, so we were playing like Hot Potato with the phone and you just pass the phone and then it would go off and the person would have to drink. It went off like 1,500 times in the business day. We stopped because it was a little too much.
Andrew: Okay, here’s what I see that you guys do when I’m on your site. Number one, you use pop-ups with a discount offer to collect email addresses, which is what allows you to grow your mailing list. Am I right?
Andrew: That’s one thing I saw. Number two, I see you guys do a considerable amount of paid ad buys, so obviously, you buy the word ButcherBox but you also buy phrases like Buy Meat Online and Grass-fed Meat Online, etc., right?
Andrew: You also do quite a bit, strangely, on Instagram though I haven’t seen your Instagram account and on YouTube, where it kind of makes sense. So you’re using social media. Do you have someone internally who’s in charge of this?
Michael: Yes, we do and then we do a lot of Facebook advertising as well.
Andrew: Buying Facebook ads.
Michael: It’s the biggest lever that we’ve been pulling recently.
Andrew: And it seems to me like at this point YouTube is really polished but hasn’t kicked off a lot of customers. It does seem to send you traffic.
Michael: YouTube is like just beginning.
Andrew: Yeah. It’s not unusual for you guys to have . . . My mouth is literally watering. That’s what I was doing there. It’s literally watering as I look at these pictures. The YouTube channel has a few dozen videos. It’s not unusual for a video to have just two or three dozen views, though there is potential in that I see from SimilarWeb traffic coming in. All right. I think I’ve analyzed everything for you here.
Michael: I believe a really big opportunity for us is to be a content creator, so what we’ve been doing today is leveraging those people that have existing networks and a voice, whether it’s a chef or a doctor saying, “This is great. You should eat this.” What we want to do is start to have ourselves be part of that conversation. So look out for a lot more content and we’re really dialing in both what our customers need in order to be able to be empowered to cook the piece of meat that we send them as well as what do potential customers need in terms of how to cook ribeye or how to sear a steak or how to roast a chicken or any of this other stuff that we’re producing. We’re actually building out a test kitchen which is going to be online in like a month, where we’ll just be able to crank through recipes and content more and more.
Andrew: Makes sense. Before we started, I asked you where you were and you were just like hunting all around your office. I got a sense of what the place looked like.
Michael: If you can find something.
Andrew: Looking for the right wi-fi and you said, “You know what? It turns out this place that we got for office space has really nice window views and so we’re going to start selling beef at retail.”
Michael: Well, we’re actually not selling the product, we’re just talking to people about it. But yeah, it’s a great window line. It’s like a billboard in Harvard Square, which is where our office is, so we had to try the retail thing.
Andrew: You never know where this stuff is going to go. Warby Parker . . . I remember interviewing the founder. They just had people come into their office space to try on glasses to get a sense of what their customers were like. In their office they were selling glasses. They were like, “This thing is actually more powerful than we expected. Let’s open up a bunch of retail store.” You’re smiling. It sounds like you’ve got some recognition there.
Michael: Yeah. You know, this was like an office play and it’s turned into a retail play and, you know, I’m a big believer in the red balloon. You’ve got to make sure you grab onto the right opportunities. Not everything is a good opportunity but just try to limit the downside and hop on the opportunities you can.
Andrew: All right. Let’s look at this. Even one of your pieces of content is Introducing the ButcherBox Kickstarter Playbook, so you’re going to teach people what you learned about doing Kickstarter to launch a business. All right. I’m going to close it out with one final question. I see the number here. I don’t want to reveal it if you’re not open to it, but remember, I said once you reveal it I’m not editing it out. I only say that because guests keep telling me, “Andrew, edit this part out. Take that part out.” Annual revenue . . . where are you guys now?
Michael: We will be north of . . . Annual revenue is . . . What do I want to say? We’re in the tens of millions.
Andrew: Yeah and by tens of millions he doesn’t mean like a low tens of millions. He’s kind of BSing you. It’s really considerable revenue. Sometimes people will like say six figures, but they include the stuff after the decimal point.
All right. Congratulations on getting this far. I keep thinking back to the beginning of your story, the guy who sold t-shirts, who sold the Boston t-shirt, the guy who used to take newspapers. Man, your mom must be so proud that you worked, you got your ass out of the house and got you to go do stuff because look at how far you’ve fricking come. The website, if anyone wants to go check it out is, ButcherBox.com. And the two sponsors who I mentioned . . . the first one helps us close more sales and get more guests here for Mixergy interviews. It’s called PipeDrive. Drive more sales. Go to PipeDrive.com/mixergy.
And the second, even if you don’t sign up for them, I urge you to go check out their web page because they have a couple of good images that will show you how marketing automation really can change your business, just a couple of really well-done images. Go to ActiveCampaign.com/mixergy. Scroll about halfway down the page and you’ll see what I’m talking about. ActiveCampaign.com/mixergy, I’m grateful to them. And guys, as always, my team is trying to figure out how well they’re doing with audio, so keep sending us feedback to Contact@Mixergy.com. Ari is specifically trying to improve the audio of the interviews, so let us know. Mike, thanks so much for doing this interview.
Michael: Yeah, absolutely. And if I could just put in a plug, if anyone does want to reach out to me, they can write to CEO@ButcherBox.com.
Andrew: CEO@ButcherBox.com. All right, cool. Thank you so much for doing this.
Michael: Thank you. Have a good one.
Andrew: Bye everyone.