Some of the best companies are born only because they found a problem worth solving.
For Mike Salguero, CEO and co-founder of ButcherBox, the problem and opportunity in the extraordinarily fractured space of meat production and distribution simply could not be ignored. Armed with an idea of how to do things differently, the company ran a Kickstarter campaign back in 2015 that caught the attention of its first thousand customers. From then on, the company continued to grow.
At the recent Creative Technologist conference organized by venture capital fund Baukunst, Salguero shared that the company had raised $600 million in revenue without taking a dime in outside investment and shared some of the lessons he learned from the event learned way.
A bumpy start
ButcherBox isn’t Salguero’s first rodeo. His first company was CustomMade.com, which raised $30 million in venture capital from First Round Capital, Google and Atlas Ventures in a series of funding rounds.
But despite all the money raised, the venture was not successful. “My experience was really bad. We lost everyone’s money, which made me feel ashamed,” Salguero recalled. “By the end, I had diluted myself so much that I only owned 5.5% of the company. The deal fell through and we ended up going bankrupt and losing everyone’s money.”
After that, Salguero decided to take a very different path with his next venture, which he started after a very personal problem. His wife has thyroid disease, and while they were on an elimination diet to find out what foods she might be intolerant to, they learned about grass-fed beef. However, this type of meat was hard to find in Boston supermarkets.
“When CustomMade was collapsing, I started calling farmers and asking if I could buy half a cut of meat,” laughs Salguero. That’s a lot of meat, and he describes it as “basically two garbage bags of beef.”
“I met meat farmers in parking lots and bought some garbage bags full of meat — I’m sure it didn’t seem sketchy at all,” he said. “But there was too much meat for my freezer, so I sold the excess meat to friends or people I worked for.”
Some of his buyers kept telling him that it would be much better if the meat was delivered to their homes, and that’s how the basic idea for ButcherBox was born.
meat in the mail
“I became obsessed with the idea and started researching how to mail meat. I had no idea how to do that. But I’m a big believer in finding people who have done something before and then asking them for help. It skips a lot of the hard work,” explains Salguero. “I found the former operations manager of Omaha Steaks, which was the big meat giant in the Post at the time. And he just said, ‘Oh yeah, my non-compete clause just ended. I’m happy to help.’ He put all the pieces together in the beginning.”
Then everything started at once. Salguero was fired from CustomMade, and while he aspired to take 100 days off to attend a silent meditation retreat and re-energize, he threw himself into building ButcherBox less than a week later.
He hired an intern and launched a Kickstarter campaign in September 2015, a decision made out of desperation to never raise funds again. Fundraising wouldn’t be necessary, he thought, since he wanted to pursue this as a hobby rather than a big business.
“I’m only going to put $10,000 in this thing,” Salguero recalls of his decision, adding that he’s vowed to keep things easy and simple. “I gave equity to the Omaha Steaks guy, and I gave equity to the branding studio, which in hindsight was a mistake because I had a far too low rating.”
All aboard the rocket
“We agree with vegetarians.” Mike Salguero, CEO, ButcherBox
The company had a goal of $25,000 for the crowdfunding campaign, but it ended up collecting eightfold in pre-orders. It soon turned many of the pre-order customers into subscribers, and the rest is history. The company went from sales of $275,000 in 2015 to $5 million in 2016, then to $31 million in 2017 and kept growing.
When COVID-19 struck, the meatpacking industry didn’t fare well, but ButcherBox’s revenue just kept growing as people started subscribing to home delivery services like there was no tomorrow. In 2019, the company had sales of $225 million, but tailwinds from the pandemic nearly doubled its sales to $440 million. In 2021, the company posted $550 million, and this year Salguero is optimistic his company will surpass $600 million.
“I was just on a rocket the whole time,” says Salguero.
Numbers aside, the company has stayed true to its original mission of making a difference.
ButcherBox became a certified B-Corp in January 2021, joining the ranks of other forward-thinking companies like Allbirds, Ben & Jerry’s, King Arthur Flour and Patagonia, solidifying its aspirations as a company that makes a stand.
Growth without external investments
Figuring out how to start and grow a business without outside investment is quite an exercise, but Salguero’s team had a few tricks up their sleeves, starting with the Kickstarter campaign and a series of communities that were very concerned about how and what they eat.
The company has figured out how to hack its way to success by tapping into bloggers and nutritionists. “They said eat grass-fed beef,” the company told them, creating an affiliate model to encourage them to promote their products. “We don’t have any money, so we can’t pay you up front, but we’ll pay you for every box that person gets and we’ll make sure you get around $10 or $15,” Salguero said in a statement said.
A lot has changed since the beginning. Today, the company pays a lot more upfront to get access to customers.
“The decision not to raise money forced us to take such steps. We created a moat around the entire Paleo/Keto/CrossFit world with all the influencers,” Salguero recalls. “All of these influencers are still getting checks from us, and some of those checks are $5,000 to $10,000 a month. They won’t represent someone else’s stuff because they don’t want to stop that stream of income.”
The company essentially stumbled into influencer and affiliate marketing while staying lean.