A newsletter about branding, startups, and mission-driven companies aiming to make the world a better place.
👋 Welcome to For The Love, so happy to have you all here!
Today we’ll be discussing:
The dirt on bootstrapping from Farmgirl Flowers founder Christina Stembel
A roundup of new launches this week, including the newest addition to the low-sugar candy game
A snack food that’s not what it seems
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💣 For The Love of Startups
Despite the onset of an ongoing pandemic and rising unemployment rates, the startup world thrived in 2020 with global venture funding up 4% totaling $300 billion in investments. It was also a banner year for venture-backed IPOs — a record-breaking 13 VC backed companies went public at +$10 billion valuations.
That’s the startup story we hear — millions of dollars raised, the blue-chip funds that invested, and sky-high valuations.
But there’s another startup story — one that doesn’t include an attention-grabbing headline or that rocketship trajectory we’re led to believe is necessary for startup success.
It’s the story of a bootstrapped company.
“Bootstrapping is a harder journey, it's much harder, and it's much slower, which makes it less sexy,” Christina Stembel, founder of Farmgirl Flowers explained.
She started Farmgirl Flowers in 2010 with $49,000, having finally hit on a white space to tackle, after 10 years and a journal full of thousands of business ideas.
Farmgirl Flowers is now doing $64 million in revenue. Not bad for someone who grew up on an Indiana corn and soybean farm and didn't go to college.
I spoke to Christina about how she did it (without VC dollars behind her).
Tackle a BIG problem
According to Christina one of the most important things she considered when starting her business was market size. If she was investing her hard-earned savings (and years of her life) in this business, it had to at least have the potential for a lot of growth.
”I wanted to be able to grow really big. I knew if I was going to have one shot at starting a business, I wanted to really go for it...a lot of people don't think about this before they're starting a business. If I can only get 0.5% [market share], is that a big enough number to make me satisfied, I don't want a business that can only grow to a million dollars at scale.”
Pick one thing and do it well
When you don’t have millions in the bank you need to be even more strategic about where you spend your money. For Christina (and really any inventory-heavy business), this meant being very intentional about her product offering.
“I actually modeled Farmgirl after In-N-Out Burger, because there was no other industry doing less is more...There's always a 20-minute line. You never want to wait that long in line, but you do because you really want what they have...and they don't have hundreds of options — you get to pick single, double, or triple. And they have a better product than their competitors. And that's why it works. And so I could take that same philosophy and apply it to the floral industry. So instead of having hundreds and hundreds of options, I could just offer a few. and actually, in 2010, I launched with one option.”
An added bonus? This differentiated Farmgirl from competitors who all had +100 arrangements to choose from.
Know when things aren’t working, and evolve.
Even though it was a differentiator at launch, one SKU was not aligned with her long-term goal of scale, so she adjusted.
“We're looking at 75 skews for holidays, so it's much larger, but that results from supply chain issues of not having enough of something, so needing to add more that way...It's definitely morphed as we've grown and scaled, and we needed to change it, but it stayed pretty true to less is more and better quality and fewer options.”
Another early initiative that needed to change? Recycled vases.
At launch, Christina was excited to take an eco-friendly approach to packaging and offered burlap wrapping or recycled vases. Only one of those options remains.
“I quickly turned that option off because it was me driving around to Goodwills everywhere…It’s all the things that you change, when you're like, ‘this is a great idea.’ And then ‘this is a horrible idea. There's no way to scale it.’”
Expect hard decisions
When you’re running a bootstrapped business, it’s a lean operation, which inevitably means money is tight when cash isn’t flowing quite as predicted and there’s no cushion sitting in your bank account.
“Not running out of money for Farmgirl, literally, that's the thing I'm the most proud of in my entire life. Because it's been the hardest thing to do in my entire life.”
“We got down to $411 one time, which was scary, but there are even scarier times because that's when it was just me. You know, there are times when I've gotten down to a couple thousand in the bank with lots of employees…there have been many sleepless nights before payroll, and many calls about how soon I could transfer my 401k if I needed to...So yeah, not running out of money is the hardest thing.”
You’re the tortoise, not the hare
While there’s still huge growth potential, in a bootstrapped company it’s likely not going to be fast.
“I think you have to wrap your head around the fact that you're not going to have an early exit. You're not going to work really hard for three years, and then be able to live the rest of your life without worrying about money. And so if that's why you're building a company, bootstrapping is definitely not the way to go. Because it's been 10 years, 120 hour weeks, every week to do it.”
Christina has grown her business by “spending less than we made. It's a very novel concept, which slows you down. We could be doing hundreds of millions of dollars right now if we had had money to spend on marketing, and we just didn't. When our competitors are spending $80 on customer acquisition costs, and we're spending $0.98 on customer acquisition costs, you're going to grow slower. But even with that, we've had 50 to 100% growth. So I still count it as successful.”
But the benefit is, that slow growth leads to profitability, which means more security and more control.
“I've had people asking me if we're profitable since day one. And I'm like, how could we not be? How would I pay my bills?”
There’s no one to answer to
Not taking money from anyone means, well, there’s no one to make (or influence) decisions but you.
While many founders value having the perspective and accountability of a helpful board, this can speed up decision making as markets change.
“This year with COVID, I didn't have to run anything by anyone, any plan, I was just like, this is how I'm going to save my company this year, this is how we're going to do it. And we started the next day.”
Christina did go out to raise VC money when she wanted to start buying properties for their distribution centers. But the VC’s she spoke to cautioned her against it. Why? Because it would look bad on her balance sheet.
This underscores the difficulty that many entrepreneurs have in finding investors that share the vision. While Christina couldn’t find VCs who wanted to invest in a company that owned distribution centers, the Harry’s founders did spend $100 million of investor capital on a German blade manufacturer.
Either way, those kinds of long term investments are rare.
Company culture is #1
“I truly believe that our secret sauce, the thing that makes us who we are, is our team. I can't grow a $64 million company on my own.”
Your employees are your support system in any business. And when you’re the only one calling the shots, you can reward them however you see fit, even if not the most cost-effective.
Christina explained her decision to create a 401K matching plan for Farmgirl Flowers’ employees:
“When I was working at Stanford, the thing I liked the most about it was the retirement plan. And that's probably what kept me there that long...I think it's better for the company too, because people that are happy, and that are treated well, are going to work harder for you, and going to help you build.”
“We can launch any benefit that we think will be useful for our team...investors would say ‘that takes too much money from marketing, and then you'd be doing this much more quickly.’”
Hiring the right people is expensive, but worth it
“Our customer care team is just phenomenal. I tell them all the time like that's the one job at Farmgirl world that I would not do. I just wouldn't do it. And so the fact that I have people that will do it long-term that have been here for years and take care of customers every day, and do it so well, means those customers come back to us. And I don't have to go spend a lot of money acquiring a new customer like our competitors do, because they're not taking care of their customers. Because why would they care about customers when you don't care about them?”
Hiring the right people costs more money, but from Christina’s perspective, it’s a worthy investment.
“I think we save it in other areas that you can't really benchmark. I can't say how much less I'm spending on marketing as a concrete number, because I have customer care team members that treat people so well that they come back over and over again. I can say how many times people come back, but I can't say that's the reason.”
Sometimes you need to make hard choices
Originally, Christina had bike couriers delivering the flowers but realized it wasn’t financially sustainable.
“I made some emotional decisions that weren't good for the company, like having bike couriers for years longer than we should have, just because I was emotionally tied to the idea that it was a big part of who we were.”
This is the kind of decision that might have come sooner with the advice and feedback of a board that had a financial stake in the company. The idea that there’s something larger at stake is a lesson she learned, perhaps the hard way.
“We were subsidizing that by so much...I personally didn't want to lay those people off and take that part of the business away…The way I think about things now is that I have 250 people that rely on me for their jobs and their paycheck. And if I'm not doing what's right for the company, because of 11 jobs I want to save, I need to think about that a little bit differently.”
Lastly, trust your gut
“Everybody thought I was crazy to start, in their words, a flower shop. I knew it was going to be a flower company.”
As self-made (and bootstrapped) self-made billionaire Sara Blakely said:
"One of my greatest weaknesses is also one of my greatest strengths: being underestimated."
🔥 For The Love of Newness
For those of you that walked away from last week’s newsletter wondering what to do about those chocolate cravings (also me) Gigantic! Is here with lots of “all-natural, plant-based goodness” and less sugar.
Merit is a new minimalist beauty brand (think Glossier for grown-ups) that's paraben-free, sulfate-free, and EU compliant. (For reference — Europe has banned 1328 ingredients from beauty products, in contrast to the US’s...11.)
Everist is a new brand of plant-based, preservative-free “water-activated haircare concentrates.”
Hilma released vegan immune gummies— “a healthy habit you’ll actually look forward to.”
💡For The Love of Interestingness
For next week’s newsletter, Charlie and I are collaborating on a roundup of 2021 trend predictions from our favorite consumer-goods experts. Vote here on your favorite (and we’ll give over $500 to the winner’s charity of choice).
🔍 For The Love of the Details
Move over chocolate and peanut butter.
Take a hike apple pie and vanilla ice cream.
Say hello to…
Bubble tea and popcorn?
It’s the flavor pairing you didn’t know you needed in the world’s most confusing advertisement.
Are you drinking it with the huge bubble tea straw?
Doesn’t the popcorn turn into mush at the bottom of the cup?
Why is it exploding?
Wait… is this real?
“Yes, it’s real!” They exclaim.
Actually, it’s not.
It’s just Bubble Tea flavored popcorn — while likely delicious, not as advertised.
“Universal Yums, where you can shop the world’s best snacks & candies” — except the one in the picture.
Thank you for being part of For The Love!
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Written by Aja Singer, a brand and creative strategy consultant interested in all things startup, mission-driven, and community. Born in Canada. Based in Brooklyn. You can also find me on Instagram and Twitter.