Andrew: Hey there freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy. It’s home of the ambitious upstart. And I have an interview here that’s about a guy who sells mushrooms. But frankly, if you focus on the mushrooms, you’re going to miss the point of the whole story. Nikhil Aurora is the co-founder of Back to the Roots. By finding his why, meaning his sense of mission, he was able to build a profitable, thriving company that sells, yes mushroom grown kits and aqua farms.
I invited him here to find out what his why is, how it impacts his business and to see how much of a business you can create by selling mushrooms. And it’s all here because of my buddy Scott Edward Walker of Walker Corporate Law. When I say he’s my buddy, it’s not like the two of us go fishing or anything. It’s because I’ve known him for years. He’s a great lawyer.
And if you’re a startup looking for a lawyer who gets your space, I recommend you check out WalkerCorporateLaw.com or actually just shoot Scott an email. Scott@WalkerCorporateLaw.com. Tell him your situation. Tell him you’re looking for a lawyer. And start the conversation that way.
All right Nikhil, I’m going to hit you with the hard question right away.
Andrew: How much money, what kind of revenue can you generate selling these mushrooms?
Nikhil: Quite a bit. We closed last year at 3.3 million dollars in revenue in 2013.
Andrew: 3.3, how old is the business?
Nikhil: Just hit four years.
Nikhil: And we’re expecting a lot more growth this year. We just launched into Costco. So that could be another big milestone for us this year, if we can do that launch as well.
Andrew: I should have asked you beforehand. But I kind of assumed you’d have it. Do you have a box with the mushroom? You have to show people. I’m used to you carrying it around?
Nikhil: I do, it’s here. [??]
Andrew: What’s going on? I should have asked. I want people to understand what we’re talking about.
Nikhil: [??] looks like the mushroom kit. So this is the little closed box right here. And you pop open the panel. And in just ten days, you get about a pound and a half of fresh oyster mushrooms that pop right out of the box. So just water it twice a day right in your kitchen window sill and you can get mushrooms popping right out of this little box.
Andrew: There you go. And as the back of the box that you set me up with shows, you can just chop them up and put them your fajita. We’re talking about stuff you can cook. This isn’t just for decoration or for fun right?
Nikhil: That’s right. Yeah, they’re fresh oyster mushrooms. They’re actually really, really delicious. In stores they go from 13 to 15 bucks a pound. And you can kind of grow them right there at your own window sill. I think that’s what got us so excited about it because it’s so quick like in ten days. We came into this knowing nothing about how to grow mushrooms or any kind of other food. And we, were just amazed like whoa this thing grows that fast. I think our goal with the box is like packaging up that same sense of wonderment and just offer it to more people.
Andrew: Oh, that’s great. Let’s see where I want to start off with, I guess the first thing that anyone listening to this is going to be curious about is, how did you come up with the idea to do this? And the answer came to you in a class. What was the class?
Nikhil: [??] It was a business ethics class actually. We were both, Alex, the other co-founder were undergrads at Cal. I was a business poly sci double major. He was a business education double major, no background in anything that had to do with food. And it was our last semester in this business ethics class. And the professor was talking about different sustainability topics. He was like, “Oh, I even read somewhere you can grow mushrooms in coffee grounds.” And it was about a 150 person class.
And for some reason, the two of didn’t know each other at the time, we both heard that one sentence, got inspired by it, reached out to him after class, like shot him an email, and asked him for more information. And he was like, “Honestly, I have no idea. This other kid asked about that too. You guys should link up.” And we both met up and just hit it off.
Andrew: What was it about that, that got you so excited?
Nikhil: Looking back at that time, we were thinking that’s really cool. We can grow [??] our own food [??] food off of trash. So Alex, he was in college and started what still is today the largest organization on campus called Ace Mentorship Project. It’s a one on one mentorship project. And it’s got a big passion for education and working with kids. And I had spent six months with it the year before and went to West Africa working on a sustainability recycling project.
So we both were undergraduate business students. But we had these side passions for sustainability and education. I think something about that one sentence that got us both like whoa, that’s a cool way maybe to combine some of these passions and [??] reaching out.
Andrew: Why do you care? Why go to Africa? Why not say, “Hey you know what, I’m living in the land of opportunity right now. I’m in California where all these people are building empires. Why don’t I just take this opportunity, build an empire. When I have money, then I’ll go to Africa and help people. But until then I better help myself. Why didn’t you do that?
Nikhil: I think there’s two things. I think one, being really fortunate in this environment. [??] kid with a family. And then college where you don’t have to wait to make an impact. You can make as big an impact with one dollar as you can with a million dollars. It’s about the passion you bring into it, and if, you were lucky to have been brought up like that, and-I think a lot of its money, but I learned so much.
Those six months for me were, abroad. I grew. I grew so much. I mean, you can look at it in terms of being selfless and selfish. In a selfless way, it’s like, I want to give back. I can right now. In a selfish way, too, like, you can grow a lot but the experience is I would not be able to start up this company if I did not have that experience. You know, that [??].
Andrew: I understand growing by taking an internship. I understand growing by getting a job. Starting a company that fails. Going to college. Reading books. All those things make sense. Going and helping someone else, I don’t get. Am I a jerk by the way?
Nikhil: You are not. You’re asking the right questions, so…
Andrew: So what did you learn by doing this stint over there?
Nikhil: I think I, honestly looking back the big thing I learned was just the impact that one person can make. I mean, I was at this 30,000-person school, the University of Magon [SP] in Accra in Ghana, and help set up what was a recycling program for a campus that had no recycling. And I had a chance, I mean, on the flip side, I had a ton of fun, traveled, backpacked, West Africa. But, at the same time, it’s like, just having one idea, one mission while you’re there. You can make an impact. There’s not that much time in six months, and, it was a cool feeling when we were leaving there to be like, I left something tangible behind.
Andrew: I get that. I had an internship. The only impact I had was I got to print out the labels that the stock broker I worked for we’d put on the letters soliciting business. Yeah, that’s not the same impact. Alright. I get how now it gives you a sense of accomplishment. How you can see that an idea that you have can actually help other people and come to life. You then get this mushroom business idea. You don’t know how to grow mushrooms. You don’t come from a farming background and so you go to YouTube.
Nikhil: Wikipedia and YouTube. Imagine half the crap you find on there on how to grow mushrooms. There’s a ton of hilarious videos out there too, but we started sorting through them and I ended up through videos and just reading articles online, and that’s the cool thing. You can give yourself in this day and age your own education. Just online. Free.
Now we didn’t take my college-y classes and have a four-year degree in, you know, agriculture. We just went online and started learning and eventually traced that one fact to this book, [??] Paul Stamos [SP] had written in 1994, I think it was, and traced that back to him, reached out to him, we just started building upon that. But step one was YouTube.
Andrew: Wow. You and I met. We were introduced by Sam Parr[SP] here, just a few blocks from my office, and, when we talked, I asked you about how you got this idea out there. You told me about buckets. That you used to take buckets to your first customers. But buckets are also where you initially experimented.
Nikhil: Yeah, so when we first had this idea we met up, it’s like, for a couple weeks, just like bouncing ideas back and forth. Eventually, right before Spring Break of our last semester we’re ‘What the heck. Let’s give this thing a shot. Let’s try it out.’ And got some mushroom spawn and a seed donated to us by Paul Stamos. This expert mushroom farmer.
Went to local Pete’s Coffee, this cafe shop here in California and started be like “hey, can we have your coffee grounds?” And I remember going in that actually pretty nervous. Like, are they going to give it to us or not? And they were so excited. “So it’s like, “please take this stuff from us.” You know, it’s like, this messy, muddy. We don’t want to deal with it. So coffee grounds of that. Planted these ten, literally ten paint buckets of Ace Hardware paint buckets of mushrooms. And Alex is tearing the kitchen closet and left not really knowing what we’re doing still.
We came back from Spring Break and Alex was the first one back to his fraternity and he just called [??]. And I remember he was so excited. You got to come up here right now. You won’t believe it. One of these things actually has these little baby mushrooms growing out of them. And out of those then buckets, one actually is growing something, and that was the first time. He was, I remember, “Okay you trying these?” “Dude I’m not trying these.” “You trying these?” “I”m not trying these.” We had no [??] good or bad.
And that one bucket, we walked over to Chez [SP] Panis [SP], this restaurant in Berkley. Chef Alice Waters, there, is, kind of one of the founders of this space. And she happened to be there and got her head chef to try them out. She’s like, “These are actually really good.” And that was our first, kind of, old confidence booster.
Andrew: That’s kind of cool. You go to her restaurant and she’s there like the greeter. You know, she’s not sitting in the back room. Not working the area like a celebrity. She’s there and approachable. But, why didn’t the other nine work? You read the YouTube. You put it in coffee. Where are we going wrong?
Nikhil: We went wrong for the next two years trying to get that one, that one bucket to grow on a bigger scale. I think, looking back, we thought about this a ton too, and I think part one is just an example in persistence. We had planted one bucket we probably would have never be here today. That one bucket. That wouldn’t have grown because there were so many factors we didn’t even know about at the time.
Andrew: What are some factors?
Nikhil: Moisture level, humidity, the amount of light they’re exposed to, how stale the substrate was, how much the spawn we mixed into there. All these different factors that at that point was, we did the couple weeks of YouTube videos. We’re not experts. For this thing [??] One of them grew.
Looking back that was…we’re so fortunate, because it gave us the confidence, but I think it was just a lesson in persistence that if we had planned on one and called it a day then we wouldn’t be here today, so we took that lesson with us a lot, and it’s like, you’ve got to vet things out properly if you want to try.
Andrew: You know what, I have to keep remembering that sometimes I will have someone teach me something or I’ll watch a video online or read an article online that teaches me how to do something. I try it and it doesn’t work and I go “Damn. It doesn’t work. I’m done. They lied to me.” And, maybe I should try it one, two, five more times. Maybe ten times the way that you did.
You walk into Alice Waters’ restaurant. Are you doing it because you want to sell her mushrooms to cook with?
Nikhil: At that point, we actually haven’t [??] sold mushrooms to restaurants. I think at that point it’s more, like, we had to settle this question, “Do these taste good?” We needed that validation. And, our first question was, “What’s the best restaurant in town that stocks food.” If we can get that [??] to like then we know we’re on to something. And, like, Chez [SP] Panis [SP] is five blocks away from Berkley, let’s walk it over there, so, it’s kind of where we started off with us, let’s get the best chef who we know of… [??]
Andrew: Just the validation.
Nikhil: Validation. You know.
Andrew: When she greeted me, I went to her restaurant with my wife and her mom and when she greeted us, I didn’t know who she was. They did. Once I knew who she was, I was a little intimidated because she’s a celebrity. I wasn’t walking in with a bucket of mushrooms. You’re walking in with a bucket of mushrooms. Do you feel intimidated? Do you feel like, “What am I doing here? I [??] this college.”
Nikhil: I think we were so…A, I think ignorance is bliss. I think at that time we did not know…we were so [??] we didn’t even know what that meant. Like, Chez Panis and what [??] she represented at that time. And I think too, something to this day, I still feel is this power of partnership. Like, I think when Alex said to get it we feel that we can do anything. This is, with the two of you, you can just [??] that energy out more. It will be this [??] have that confidence together, so, you’re kind of like, what’s the worse that can happen?
Andrew: I see, kind of like when you’re in high school and you’re with a buddy, you egg each other on and you can go and, you can egg cars or do other things. When you have a partner, you egg each other on. Let’s go in there to Chez Panis. Alright.
So she’s liking it. You’re not really trying to sell her buckets. You’re just getting the OK. The first sale came from Whole Foods, the local Berkeley location. You walked in there at that point with a box, nice packaging? What did you walk in there with?
Nikhil: It started off, actually, that same bucket of mushrooms that same day actually. That same day, same bucket. So [??[ well we were so nervous because we had this one bucket, you know, this, kind of, one big size crop of mushrooms. She and her head chef harvested half of them. So, we were like [??]. If she doesn’t like them, then we just lost half of all we got. You know, so, luckily she liked them. So now we have same bucket, half as many mushrooms.
And, so walking around different grocery stores. And that same day, driving around trying to see if anyone was interested in actually buying them now. And went to [??], Berkley Ball [SP], Safeway. [??] name that in, and eventually you’d come to Berkley Whole Foods and they were the one company slash people when we walked into the Berkeley Whole Foods, one of the first guys we saw in the produce department and [??] packing the vegetables and we were just like ‘Hey! Trying to grow mushrooms out of coffee grounds. What do you think?” And she ended up [??] awesome guy.
You’ve got the whole produce team and marketing team, is like [??] eight people huddling around this one bucket and they were like “[SP] coolest thing we’ve seen. You figure that out, you know, and we’ll introduce you to our regional buyer.” And he’s the one that first connected us to our actual buyer who’s still there today. But, still out of the same bucket.
Andrew: So, let’s take a step away from the mushrooms now because…one of the things we’re living here in San Francisco. People are getting rich left and right. They are inventing the future left and right. Cars that drive themselves. Apps that will share your secrets with other people and take photos that look old. It’s very easy to compare whatever you’re creating, whatever software you’re creating to them and say, ‘This isn’t as good. It’s not revolutionary.”
Now when you walk a step or two or as many as you have away from tech, don’t you feel any insecurity.? I know I sometimes do. Don’t you feel like, “Well I’m not working on anything that is as important as them. I working on a bucket.”
Nikhil: Yeah, it’s been…I think we our minds and our visions’ grown with the company. I think when we started off, we weren’t in this space, we weren’t entrepreneurs. We didn’t really, you know…We were both going down the whole corp-, I was going into consulting. I was going to Bess [SP] and Banks [SP] and, like, that was our path of success and et cetera on…So, I think we can, we’re both fascinated with this idea of, like…This a really, like…Food off of waste can be a massive idea. Like, food’s the most personal…
I think what we got, like, kind of, more and more excited about, is that ,at the end of the day, like, nothing’s more personal and important than the food you put into your body every single day and so I think we felt the, like, passion for what this could scale up to be and had some early validation, to be honest with you, too. I mean, we’re four or five months in maybe. So barely going to figure out how to grow mushrooms. And the BBC named the company to the top three social ventures in the world.
And, we were…My grandparents in this small little village, you know, in India, how we’re watching our company on BBC, and, it was, like. So I think we knew that this concept had the potential to inspire a lot of people. They kind of rethink food, and, I think from day one it wasn’t just mushrooms and coffee grounds, like, something bigger. I think that’s why we called the company “Back to their roots” too. We never called it x, y, and, z mushroom farm. I think we knew this was our start, but there’s something more to this, more movement.
Andrew: I see, and, that’s one of the things that I’ve learned from you before, and that I’ve noticed in other people, but really didn’t, wasn’t as aware of until I talked to you. People who build things worth wild don’t just talk about the one thing that they have in front of them. The mushroom.
They talk about the bigger vision, the bigger mission, and, at the top of the interview I said, that anyone watches this video and focuses on the mushrooms is going to miss what’s special about you and what you really did. When I asked you how you sold buckets in private. I asked you how you sold mushrooms that were in buckets to whole foods you said, by focusing on the why. So, what was it this point the why?
Nikhil: When we first got started?
Andrew: When you were just getting started. What was your why? What was your sense of mission? The word why comes from Simon Sinics [SP] book, and ted presentation where he says, people who have why create excellent products that other people want to be associated with. People who just have products have bland results.
Nikhil: Yeah. So, that’s funny. Our first website we had no clue we were stuff. First website was a picture of this beautiful beach with pristine environment. Our whole vision and mission at that point we were trying to make the world a better place through business than what we’re doing. We believe in the power. At that very, very early stage we didn’t really know we were going with this, but we knew what this represented.
This picture, this beautiful picture of nature is what this company represented. Try to make the world a better place to what we’re doing. Early on it was sustainability, reusing waste was our why, and, I think we’ve grown since then from just focus on reducing waste to the importance of food, and, our why has shifted a bit, but it always, I think early on, you can reduce. We have millions of pounds of waste in our community and do something productive with it. That was cool to us.
Andrew: I see. So, right there it wasn’t as developed as it is today. Today where is it? If I were to ask you, Nikhil, what is the why? What is your purpose?
Nikhil: Yeah. I think today our purpose is how people figure out where our food comes from. That’s our number one. Our question or mission is where does your food come from? We want to create products and everything we do that helps people to answer that question. We think there’s nothing more important than that. Talk about health, and, so many things.
If people knew where their food came from. It’s crazy how big of impact that can have, and, how little we know about it. It blows my mind still. I eat bread every day. I have no idea how bread is made. That blows my mind, you know. I think it’s so important.
Andrew: When you talked to Whole Foods were going to sell them buckets of mushrooms that they can resell to their customers, or were you selling them the mushrooms, a box like you showed me?
Nikhil: Early on it was actually the fresh mushrooms. We had a 2,000 square foot warehouse for the first commercial size place, and, we were growing fresh mushrooms, and, we packed them up in five pound boxes, sell those to Whole Foods, and, they would put them on the shelf as loose wholesale mushrooms. . . . [??] . . .
Andrew: How long did it take you?
Nikhil: We graduated in May. October 9th was our first sale. October 9, 2009 was our first. That was a three pound sale. Then we realized we had a long way to go from then [??]. We didn’t really, really kick it into gear. 010′ was our first real year.
Andrew: From May to October. Whole Foods says, yes, and, they’re waiting for their first supply. How do you keep them . . . Sorry?
Nikhil: That’s correct.
Andrew: How do you keep them still interested? How do you keep them from saying, you know what, those guys must of been flakes. We get lots of people that want to sell stuff. They can’t all do it. We’re moving on.
Nikhil: Yeah. I think a lot a communication. It goes back to that why. I think they were, we found our buyers as excited about the vision of this company as he was about the product, and, I think that’s something that we’ve been so grateful for since day one. I think that allowed him to stay with us. We spent six months just knee deep in coffee grounds. We plant, collect thousands of pounds of coffee grounds, plant them, try to harvest them, nothing would grow.
We probably filled up early on every dumpster, compost bin in the east bay trying to, because we had no clue what we were doing. We couldn’t grow anything, but we kept them in communication [??] us to focus on our why. Once you figure this out we can do this.
Andrew: And, people came into your warehouse, and, they started to see this, and, wanted to take bags home, and, this created an awareness, an epiphany maybe, maybe epiphanies to big a word, but what happened when they, what did you realize when they said that?
Nikhil: Yeah. One thing we’ve been since day one is just really open, and, transparent, and, did tons of tours reproduction, and, farming, and, warehouse. People have been coming. We would grow the fresh mushrooms. These big three pound, I would think basketball size bags of fungus. Clear bags of fungus, and, we’d [??] there for three weeks, and, the last week you slit them open and then in ten days get mushrooms out of it.
But at that time we were harvesting and selling loose wholesale to Whole Foods. And people would come by our facility and they’d take the whole tour. At the end of it they were like, “Whoa, it’s kind of cool. Can I take one of these bags home with me and grow them myself?” But we heard enough of these questions. We finally were like, “People are more excited about trying to grow these themselves than actually care about trying the fresh mushrooms. And the expediency mattered more to them.”
And that’s where we got inspired and like, “Hey, what if we sell this as a mushroom kit?” And the first one we took to Randy, our Whole Foods buyer, it was literally a basketball clear, you know, plastic bag of fungus. And we’re like, “We stuck this sticker on it from FedEx” to Randy. We had this whole meeting with the fresh mushrooms. At the end of the meeting we were super excited, pulled this bag out, like this kind of big, surprise and “ah ha” moment, pull it out right in front of him. And he was almost surprised that it was [??] in.
That’s the most disgusting thing ever seen in my life. No one’s putting a bag of fungus kit in the window sun. I’ll never forget that. I’ll never forget that face of his. And likely he was supportive enough to give us another shot. I think the [??] are indeed [??] figure that. At that time it was Alex [??] Pete’s coffee. But that was the start of the mushroom kit.
Andrew: So you and your R & D team, which is basically you and your co- founder, right, at that point?
Nikhil: Yes, me and Alex.
Andrew: How did you and Alex come up with, I’m looking now at an early version of the product, it looks just as good as it does to date, to me anyway, how did you end up with this box that’s just so elegant that will grow mushrooms in such a way that you almost want to display the mushrooms?
Nikhil: Yes, I mean at first making the big farmer’s market, the big [??] size down to a smaller bag, still a clear bag of fungus, took up to farmer’s markets, started selling them, you know? And realized that to that Bi-Care buyer it’s just a costly [??] process. And he was like, “That’s so disgusting.”
The second time he was like, “Let’s [??]. You guys have got to be able to hide this better. You can’t…I don’t want us to look at a whole bag of fungus. I want to see the mushrooms out of it.” It was awesome feedback. And Ralph [??] on [??] that end. Our first box, we were still on probably version four of the box. And our first box was Alex and I and Power Point.
And we were at that point so invested in the why because I think we still weren’t confident in our product that we literally had these essays on every side of this box. Like, it would be like he used size five font, you know? And now we’re just like, “I can’t believe we printed these boxes out.” But it was just, you know, like the whole thing was just like essays about…”
Andrew: Because you were so eager for people to understand the mission, to look beyond the box, beyond the fungus, beyond what was in their stomach, and understand the mission.
Nikhil: Totally. And I think at that point we didn’t do it right. We missed the boat. We were too far that side…
Andrew: I see.
Nikhil:…and not enough what is this thing first. You know? People had no clue what was in the box other than stories and constant evolution of how to find that balance so.
Andrew: I asked you before when we were at that event, the Bootstrap event that Sam Parr set me up with, I said, “I was preparing for our interview and I didn’t understand what the actual product was at first because you were so why oriented.” You said there’s a lot of refining in the product and the messaging, etc., and that always makes me wonder how do you do it?
Online I could just say this, and as soon as I post it people will Tweet their feedback to me. They’ll email me, they’ll comment at me, they’ll see me as I walk down the hall here and say, “By the way, you shouldn’t have asked Nikhil Hill this. You should’ve asked that. Here is the issue that I’d like to solve through these interviews.” Whatever
Andrew: How do you get that kind of feedback when you’re not Online? When you’re removed almost from your customer because your product is in a store?
Nikhil: A lot of it, and it’s kind of how we built this company, is in- store demo. So we’ve been through [??]. I literally owe it to every single Whole Foods nationwide. Their leadership, Whole Foods’ leadership, jokes around saying we visited more stores than they have. Because we literally built this company off of just…and day after day demos and demos. And we’ve learned so much from our customers, you know. You spend seven hours on a floor.
You’re talking to hundreds of people, and you hear it all. You hear, “That’s disgusting. I’m never going to put that on [??].” And you can ask them like, “What about – that’s disgusting.” Or you’re trying out so many different pitches and just how you’re saying things so. Our first two years that we kind of grew the company from just one or two stores in Nor Cal to national launch.
I think we literally refined our messaging and our vision enough to be able to simplify to something that now we can sell in Nordstroms, you know, Home Depot and other kinds of accounts that you normally wouldn’t expect a mushroom kit to be in.
Andrew: There’s also something else where you found a way to incentivize people to contact you after they bought. What was that?
Nikhil: Yes. So [??] really cool [??]. We still do it but it’s a one for one campaign. So anyone who posts a photo of their fully grown mushroom kit on our Facebook page, we should donate a kit to an elementary classroom of your choice. So it’s been the hugest win for us in terms of getting people to share their own photos Online which drives so much [??].
And it connects deeply to our tradition of getting kids excited about growing food. So that was [??]. We just were with the Aquafarm and they launched a campaign recently partnered up with a company called Revolution Foods. It’s a really cool company in Oakland. We’re for everyone who can [??], they can log online and vote for school to get a healthy serving of veggies donated to them.
So just kind of incentivize people not unlike, oh, get 10% off if you do this. It’s like trying to end up going back to the Y. But we felt we got so much more attraction when we focused the incentive and gauge of this on a commission versus some tangible like teacher, or award.
Andrew: One of your early websites was built on something like nonprofit soap box. Were you planning on being a nonprofit?
Nikhil: No. A friend of ours, Ryan, was running this and gave us a nonprofit discount. We jumped all over that for a while and we just moved out into it. But I think since day one, we’ve really felt passionate about running a profitable business. Something we’re proud about is running a profitable business.
We haven’t raised any outside venture funding. It’s been all debt which is basically foreseeing the impossible. We’ve been trying to get that year after debt. So I think we just probably, as far as keeping to his progress, like, Google is obviously something we look up to. Everyone does. Google is an amazing company.
Their mission was to make money and don’t do evil. And something about that for us was like a cop out. It was like setting the bar so low. Don’t do evil. I think another generation of entrepreneurs coming in, like, no, you can make money and do good at the same time. Don’t stop by not doing evil. And we proved that, in our hearts, you can, you know . . .
Andrew: Mixergy’s motto is make money and stop tripping little old ladies. We’re working on it. Something to aspire to. You know you’re right when you put it that away. Just don’t do evil is not enough.
Andrew: Let’s see what else. Even though you’re on the web here, the first customers came to you offline. You going into Whole Foods. You going into local retailers?
Nikhil: Yup. Exactly. Farmer’s Markets are the number one thing. That and dabbling in Farmer’s Markets . . .
Andrew: Were you standing in Farmer’s Market and just selling it, explaining it, evangelizing it?
Nikhil: Absolutely. Absolutely. I think early on it was probably the most, like, we would just tour them. Then we had to a couple of [??] with us early on. We were just harvesting. Our schedule early on was planting the coffee grounds. Planting them, harvesting them and then spending the evenings and weekends in stores or Farmer’s Markets. Just downloading them and learning it. It’s so much feedback, and the early buzz too. Early kind of support. People who were telling their friends.
Andrew: Nikhil, I’m looking at your personality here. You clearly have a busy office right now. Things going on, but you’re happy. I’m pushing you sometimes because I like to do that, and you’re fine. You’re not, like, embarrassed, upset, any of it.
You’re telling me stories about how you stood at Whole Foods and, frankly, being an hour in there as a customer is too much. You spent a day there. You were at Farmer’s Market talking to people. Were you always this kind of person who was personal, who was happy having conversations with people even if they aspire to stop tripping old ladies?
Nikhil: Well, I’ve learned so much. Public speaking and doing this kind of demoing stuff was so not my strength starting off. I think it was a fire by trial kind of learning where you realize that if you want to make it and do this thing, you’ve got to get there and start talking to people and demo something.
Now it feels like second nature to me, so you can throw us in a store and not feel awkward about stopping anyone walking by. If they have headphones on, walking right past you, you step in front of them and try to stop them.
Andrew: Did you do anything that helped you learn to talk about this, that helped you learn to present well?
Nikhil: So much of it, I think, was the forcing function of having to do it got us so much better. Because I think personally is all it is a fear mentally. Like once you get over it, it wasn’t that big a deal after I did that. And you do it a week in a row doing a demoing every single day, you quickly realize that you don’t have to feel awkward stopping people doing what they’re doing.
Especially, I think, when you have something personally. I was so proud about our products and what we’ve created. Like there’s a pride there and we’re not afraid of showing it off. Like we know if we stop somebody in a store, we’re not going to waste their time.
I think even if they don’t buy the product, I think ten seconds explaining this product to them, they’ll be, like, that’s kind of cool. I’m glad at least I saw that. I think it goes back to, like, making sure we always will be really passionate. Like are we still all in on this mission, this purpose and our product.
Because the moment that dips a little bit, I think everyone else sees that. You know. And I think if you have a, like, deep, deep passion for what you’re doing, it gives you the confidence to stop anybody if you want to share it.
Andrew: So was there a moment where you worried? If all we do is we tell a story about a happy-go-lucky guy who everything worked out because he had the guts, I don’t think we’re telling a full story here. When were you nervous? When did you feel like this thing wasn’t going to work out, or you weren’t right for it?
Nikhil: I think the biggest time when we were the closest, like the hardest time was we were beyond the first six months of not being able to grow anything. And I look back to that was purely a partnership of Alex and I that got us through that. That someone there to bounce it off of, there’s no way any of us by ourselves could have done that. But I think even after growing the business, with the point where we were growing the fresh mushrooms and we had just come out with the kit…there for a while we did both of them.
We did the mushrooms and the kits. And neither of them were selling very well and looking back now we were half-assing both of them. One, we didn’t really know how to do a branded CPG mushroom kit with the best mushroom farmers and there was probably a four or five month stretch of us trying to do both of them. And we have been really fortunate to have some amazing mentors along the way, and you can imagine some people we respect so much telling us, “Oh, do not do the kits! That’s the worst terrible idea to scale up the mushroom and create this massive mushroom farm and every city should have a mushroom farm.”
And at first we were sitting there with barely any revenue; just hanging by a couple of grants we had luckily won. We had a 50K grant from the Natashanie [SP] Foundation that we were hanging on penny by penny. And how to make this decision of finally giving up the fresh mushrooms to just focus on mushroom kits. And used to hold [??] the company, alright, that was our baby, figuring out how to go fresh mushroom. And all of a sudden we’re shutting down this 2,000 square foot facility that we spent, I can’t- . How many weekends and hours hammering up walls and all this kind of stuff. Just that uncertainty, it was crazy. And I can’t look back at it still; it was probably the hardest time.
Andrew: I can see the pain in your eyes even as you’re talking about it. And the reason you knew that it was the right decision is because the fresh mushrooms weren’t bring in a lot of money but you believed in the possibility of this thing that hadn’t yet shown any of its possibility really.
Nikhil: Yeah, we were still not in but a couple of stores but I think we just realized we started this thing on a string. We could spend 20 years and try and build this mushroom farm and still be at a 5 mile radius mushroom farm selling in Nor Cal [??]. We think we’re pretty good at getting people excited about something. Google us back to Impact. You asked this question early, you know about people building self-driving cars and they be like, “Well, we wanted to do something that impacts people and leaves a legacy.”
And we’re like the same amount of time, if we can create a product that is in every single kitchen across the county, that to us is more exciting than busting our butts…[??]… In 20 years, your still [??] the affect X population, you know. It was tough. I think it felt right.
Andrew: I’ve decided in the interviews to stop actually showing the websites mostly because I think anyone who wants to can go to the sites themselves and usually there’s not much to see. But in this interview anyone who’s listening this far should just go to BacttotheRoots.com and take a look at what the mushroom kit looks like when it’s fully, is it called florishing, budding?
Nikhil: Yeah, flushing.
Nikhil: Yeah. You want flush or growing.
Andrew: Boy! Even all the terminology around this isn’t even very pretty. It’s a good thing you guys have good designers. Flushing? That’s what I do with the toilet, not food. But it looks great. Let’s continue then. You’re in one store; you’ve changed the mission. Excuse me, you’ve changed the product, but not the mission, the mission just keeps growing. It’s time to go into other stores. How do you do it?
Nikhil: Yeah, our big transition was kind of us stepping back year over year. We had 010, 011, 012, and 013, our four years in business. And 010 was all about scaling up fresh mushrooms. Just how you take that one bucket and do it at a commercial scale; eventually go up to 100 of pounds a week.
And then 011 was this transition of creating this mushroom kit, farmers markets, Whole Foods here and there. But in 012, as you kind of talked about, was this big transition year for us from going from just a natural food space, Whole Foods, and ask ourselves, “Can we sell this thing beyond?” You know, Nordstrom, Home Depot, things like that. Some of them, like at Nordstrom, we met the buyers, Safeway, at tradeshows, just out demo’ing our products at different events and tradeshows.
Some of them, like Home Depot, we actually went to local store and asked them for the name of the regional buyer for all California Garden Store and Home Depot. He kind of gave us his name. And we were, it’s either first name dot last name, first name underscore last name, and we sent like 10 emails out. And one of them he responded to and he said, “I’m in San Diego. Can you meet me?” A day later we were getting coffee with him. We have an awesome still relationship…[??]…
Andrew: So you just flew out the next day?
Nikhil: Oh, absolutely to San Diego! No problem. And he’ll probably be here tomorrow. But that’s still [??]. It’s huge. We were in about 300 stores and explained our larger launch this Spring and work on a national rollout at Home Depot for this Q4. So we start off with a cold name and it’s been growing. It’s been really fun.
Andrew: What percentage of your sales come from online versus in retail stores?
Nikhil: About 30% online, that’s including Amazon, our website, other online retailers. Uncommon Goods is another big one for us.
Andrew: What do you say to someone who’s such a big buyer, who- Everything we hear about the big box stores is that they’re not letting people get away with anything because they’re so knowledgeable, because they’re so price dependent, because they’re so experienced. How do you convince someone with all that experience to buy from you, to be a good partner? What do you say?
Nikhil: Yeah. I think that the big box are moving the other way, to be frank. I think, with the rise in Amazon and e-commerce, if you want to buy something just transactionally, you can do that and click a button now online. So I think those stores like Whole Foods and Nordstrom are looking for products and companies that can bring back the experience in a brick and mortar.
I think there’s a huge debate, like what’s the future of retail stores. You know, for the online e-commerce. I think they’re turning into is a place that’s more for discovery, education, experiences. You look at Whole Foods now. One of the top retailers in the country. They’re killing it because of their focus on that, and everyone’s going to copy them in the grocery space.
So think for us it goes back to, like, our story, the why, the purpose, the experience of it, you know, and the last part of it about it is, like, oh, you’re going to get a pound and a half of mushrooms. That’s the last thing we focus on with our buyers too. It’s, like, having them buy into our vision because that’s what I think what they’re looking to share with their customers right now. To differentiate what they’re offering. So it’s been a cool, interesting kind of, even the last few years, we’ve seen that . . .
Andrew: I see. And I can see how that would help you get into schools. Am I understanding this right? Are you guys in some kind of partnerships in schools, or somewhere, somehow allowing students to sell this? What’s the deal with schools? I see it all over your Facebook page and your site.
Nikhil: Since schools are probably something you see on Facebook is people who’ve posted photos who would donate a curriculum and kit to an elementary school teacher, you know, whoever the ad is who sent to us. And then we haven’t really dug in deep with school fundraising, but it’s something we’re still exploring and excited about.
We’ve raised quite a bit of money, $2,000, because we keep sending kids out there selling Snickers bars to their friends and teachers, which that’s just, like, doesn’t make any sense. Like it’s the most unhealthy thing for kids while we’re making them evangelists. Like why don’t I get something fun and educational. So we started working on the fundraising program, and then just do a lot of classroom visits.
Our team every month is going out to classrooms and doing workshops like hands off sustainability workshops and just getting out there. So it’s more, I think, it’s where our passion as a company and I think the most tangible way for my one-for-one program.
Andrew: Alright. And then you got into aquafarms. Right. What is an aquafarm?
Nikhil: An aquafarm is a little three-gallon fish tank. And all the fish waste is actually pumped up to fertilize their plants. The plants are constantly breaking that down and cleaning the water for your fish. So one of the most annoying things of having a fish tank is constantly having to change your water every week or two.
And this whole science is based off of aquaponics. It’s a really cook kind of cutting edge way of growing food. And we starting thinking, like, how can we shrink this down to something for the home. And so I think, grow fresh basil or herbs to pop in your fish tank and keep a beta fish or any kind of small fish underneath. It’s a really cool symbiotic system.
Andrew: Let me see if I understand this. The fish is in water.
Andrew: The fish goes to the bathroom.
Andrew: This tube picks up his waste. Water waste.
Andrew: And feeds that to the plants that are on top. I then chop the basil off and put it in my food.
Nikhil: Absolutely. Yeah, it’s delicious.
Andrew: Is that waste enough? These are tiny fish.
Nikhil: Oh, I’ve had one in my apartment now since the launch date and huge, huge crop of basil on top of this thing. Every weekend I’m plucking some for a sandwich or an omelet. And the one beta fish in there. It’s unreal. For us, it’s like the coolest. Talk about, like, with aquaponics, is it’s such a fascinating technology. It uses 90% less water than traditional farming.
So you talk about this California drought, like there’s starting to be so many aquaponics farms popping up. And within ten years, it’s going to go from this crazy out there norm to you’re going to see so many farms servicing a lot of the foodie buying groceries.
Aquaponics is a really, really cool way of growing food. We visited a farm about a year half ago. I just totally fell in love with it. A big tour like this. This is the coolest way of growing food that we’ve seen. And asked around to see if there’s a home-sized version of it. And the smallest thing was like $400. It’s this plastic-like thing and sort of like this home- sized version and decided to see if we launch one.
Andrew: That’s it? Do I have to water my plants?
Nikhil: You feed your fish. You don’t have to do anything else. The water is constantly [TD]. The tank water is going out to the plants watering the plants, fertilizing them. And there’s no [TD]. This way it’s all going entirely off of rocks. So all the nutrients are coming just from the water. Pretty cool.
Andrew: So I just have to feed the fish. I don’t have to clean the tank. I don’t have to water the plants. I can go away for vacation as long as someone feeds the fish. We’re good.
Nikhil: Feed the fish or [TD].
Andrew: I was off for two weeks with an automatic feeder, so if you want to get real [laughs] hands on, we could do that.
Andrew: So, are you guys selling an automatic feeder?
Nikhil: We just linked to it on [Amazon]. It’s not our own designed one.
Andrew: I see. What YouTube channel did you watch, to learn how to do this?
Nikhil: This wasn’t a YouTube channel. This was a…we kind of learned our lesson from the Mushroom kit. [laughs]. I actually did it with that forum. We were like, “We’re not going through that process again [laughs]. A million iterations, so we actually found a really cool design company called Daylight Designs, industrial design firm from San Francisco, just awesome people. We linked up with them, got something like aquaponics experts to kind help. But pretty much, we don’t know the answer for this. Get some experts in the room, we dealing with it. So, it’s really kind of…
Andrew: You just had this vision? You and Alex had a vision that said, “Fish waste. Good fertilizer. We create this ecosystem. Bim, bam boom. We save the world?”
Nikhil: Well, it’s already been this, because we started on a big scale. And I think our version was like, we did it with a mushroom kit. Like take this big mushroom farm, shrinking it down to a tabletop experience. We were like, can we do that for aquaponics? So, aquaponics is not there. It’s actually a minor [reason] for you stop. It’s kind of been a resurgence recently. I think we’ve learned from that…
Andrew: I see them all over the place here. So, when I see an aquaponics ad, or a store with a big aquaponics sign, they have the fish in their water supply also?
Nikhil: You’ve seen an aquaponics store for [???
Andrew: I see them all over here. I go running to work, I see a couple.
Nikhil: It’s basically hydroponics, maybe. There’s a lot of hydroponics stores, which is soil-less growing. You’re just growing off the water, but you still have to add chemical nutrients…
Nikhil:…for the plants to grow. And then aquaponics which is much newer, and you won’t see aqua stores out there, where you are adding critical nutrients to the [??]. The fish waste is that, so it’s really sustainable. And on a big farm, they’re actually harvesting the fish like tilapia or catfish for their fresh produce. So, you get two food sources out of the same area.
Andrew: I see. So, you just have seen this, by caring more about the environment, by being more curious than I am. And then you said, “How do we break this down and make it small enough that people can put on their desk?”
Nikhil: Yeah, how to bring this aquaponics to go from this hippie super niche thing. We fell in love with it. We’ve got to bring some more people in. That was the challenge…
Andrew: All right, I could see how…
Nikhil: About how you bring design and ease of use to aquaponics, so every house can do it.
Andrew: I can see our connection is starting to get a little bit fuzzy. Why don’t I…well, first of, I freaking love this.
Andrew: I love my personal focus. I’m obsessed with doing these interviews. I’m obsessed with finding out other entrepreneur stories. I’m obsessed with talking to my audience about the issues that they have, and then bring them back in interviews. And I love seeing someone else with a similar obsession. It just creates this passionate work environment, this mission- driven life. And it creates products that other people never would have dreamed of before.
Hopefully, the part that I care about is finding out the perfect question; the perfect story ark, and so on. I notice the same thing in you here, and I don’t mean to put myself down and say, “I admire how you do it and I don’t do it.” I admire how you do it, because I feel like there’s a connection there. This is the kind of story that I admire, and am proud to bring out to my audience. Are you as happy as you seem you are? Or am I just perpetuating this lie, this entrepreneurial myth?
Nikhil: [laughs] And I’m having a blast. I’m really grateful for it. So, we have an awesome team. You can this all around me, everyone loves the noise.
Andrew: I can hear it.
Nikhil: It’s just a good vibe, man. And we’ve had people ask us, “What’s success in your mind?” There’s this quote that has stuck in my personal monologue, “Do what you love with people you love. That’s success.” If you can say everyday you did that, that can make the [theme].
Andrew: Do what you love with people you love. That’s success. Right. I’m going to leave it right here. April Dykeman in the pre-interview said to you actually, “What books do you recommend?” You said, “The Alchemist; Dr. Seuss for childlike creativity”…
Andrew:…”And Steve Jobs bio.” I’m surprised you didn’t say Simon Sineks, “Why?”
Nikhil: I haven’t read his book, actually. I went to see his TED talks, so I have to check it out.
Andrew: All right. And I think if you saw his TED talks, you got the heart of the book. It’s such a good TED talk, and it’s so exciting to see what you’ve done with that idea. The business and the website – actually, the business is Back to the Roots. If you want to see everything we’ve talked about, go to Backtotheroots.com. One last question; 3.3 million in sales, last year. What kind of profit can you do on that?
Nikhil: Sell the product to the market. I won’t take you up; I’m not answering that question exactly.
Andrew: I see.
Nikhil: But we felt very, very lucky.
Andrew: Are you taking a salary?
Nikhil: We are taking a salary.
Andrew: You are? You’re each taking salaries?
Nikhil: Each taking a salary, yeah.
Andrew: And the business is profitable, even though you have no outside funding? It’s self-sustaining, profitable and self-sustaining; both true?
Nikhil: Both…we’ve got loans in the credit line from a bank, because our hardest financial hit is we have 60 percent of our sales up to 65, in the Q4. Most of it gives them 30 days between Thanksgiving and Christmas. So, this huge ramp up here, we need cash just to finance inventory and everything that comes with that. So, we have been really fortunate to have some banks who can help us through the summer low, and then hopefully to pass the fourth quarter payroll back.
Andrew: A great success story. Thank you for being here, and sharing your story with us. Thank you all for being a part of it. Give me your feedback, let me know what you guys think. If you’ve watched us all the way through, I’m especially curious about your feedback. I know I’m going to get feedback from everyone
Andrew: But it’s the people who got all the way to the end that I’m especially excited about. Nikhil, thank you.
Nikhil: Thank you very much.
Andrew: Bye, guys.
Nikhil: It’s been a blast, man.
Andrew: [laughs] It’s been great.