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Start for freeMike Salguero, the founder and CEO of ButcherBox, has built a $550 million meat delivery empire. In this in-depth interview, Mike shares the fascinating journey of growing ButcherBox from a small Kickstarter campaign to a major player in the direct-to-consumer meat industry.
The Origins of ButcherBox
Before starting ButcherBox in 2015, Mike had previously founded and run a company called CustomMade.com. While CustomMade grew to significant revenue, it ultimately failed after taking on too much venture capital funding and losing its culture and focus. This experience taught Mike valuable lessons that he applied when starting ButcherBox:
- Don't take on outside investors or venture capital if possible
- Maintain control of the company and culture
- Focus on profitability from day one
- Build a sustainable business model
The idea for ButcherBox came when Mike and his wife were trying to find high-quality grass-fed beef. Realizing there was a gap in the market, Mike started selling meat to friends and exploring how to ship it directly to consumers.
Launching with Kickstarter
Rather than raising venture capital, Mike decided to launch ButcherBox through a Kickstarter campaign in 2015. This allowed him to validate demand and get initial customers without giving up equity. Some key aspects of the Kickstarter launch:
- Set an initial goal of $25,000 in pre-sales
- Ended up raising $210,000 from 1,100 initial customers
- Offered grass-fed beef, chicken, and pork in subscription boxes
- Promised free bacon for life if they hit $100,000 in sales
The Kickstarter campaign proved there was strong demand for high-quality meat delivery. It also allowed ButcherBox to start with a base of passionate customers.
Early Growth Strategies
After the successful Kickstarter, Mike focused on a few key strategies to drive ButcherBox's initial growth:
Influencer Marketing
- Reached out to health and wellness influencers who had mentioned grass-fed beef
- Offered to include influencers' recipes in ButcherBox shipments as a way to start conversations
- Paid influencers ongoing commissions rather than upfront fees
- Found email blasts from influencers were most effective
Referral Program
- Allowed existing customers to refer friends for a $20 trial box
- Found referred customers had higher retention rates
- Referrals now account for about 30% of new customers
Free Bacon Offer
- Initially offered free bacon in first box due to a technical glitch
- Saw huge response, so made it an ongoing promotion
- Later expanded to "bacon for life" for subscribers
Facebook Advertising
- Became a major customer acquisition channel
- Focused on creating large volumes of new ad creative
- Eventually outsourced ad buying and creative to specialized agencies
Operational Focus
Mike credits much of ButcherBox's success to an obsessive focus on unit economics and operational efficiency:
Box Economics
- Aimed for $20 gross profit per box initially
- Tracked all costs associated with each box (meat, packaging, shipping, etc.)
- Constantly worked to optimize and reduce costs
- Now targets 30% gross margins
Supply Chain
- Partnered with existing meat processors rather than vertically integrating
- Hired industry veterans to negotiate better pricing
- Focused on high quality standards and audits of suppliers
Outsourcing
- Outsourced most operations like fulfillment and customer service
- Allowed company to stay lean and focus on growth
- Only brought dry ice production in-house as a critical component
Scaling Challenges
As ButcherBox grew rapidly, it faced some common scaling challenges:
Hiring and Culture
- Went from 85 employees pre-COVID to 240 at peak
- Brought in many new managers and executives
- Lost some of the entrepreneurial culture temporarily
- Has since reduced headcount and refocused on core values
COVID-19 Impact
- Saw huge demand spike during pandemic lockdowns
- Revenue jumped from $220M in 2019 to $450M in 2020
- Struggled to keep up with growth operationally
Post-COVID Slowdown
- Growth flattened after COVID spike
- Had first year of declining revenue in 2022
- Forced company to refocus on efficiency and profitability
Recent Initiatives
To reignite growth, ButcherBox has pursued some interesting new initiatives:
Media Acquisition
- Acquired cooking content company Truffle Shuffle
- Using content to inspire customers to cook more
- Exploring ways to use content for customer acquisition
New Products
- Launched spice line to complement meat offerings
- Considering other complementary product expansions
Improved Referral Program
- Optimized referral offers and process
- Now a major driver of new customer acquisition
Future Outlook
Mike sees ButcherBox as a long-term, multi-generational business. Some of his goals and perspectives:
- Aiming to reach $1 billion in annual revenue
- Wants to transform the meat industry to be more ethical and sustainable
- No plans to sell the company or go public
- Focused on steady, profitable growth rather than hypergrowth
Key Lessons for Entrepreneurs
Mike shared several valuable insights for other entrepreneurs:
- Bootstrap if possible rather than raising venture capital
- Focus obsessively on unit economics and profitability
- Be willing to outsource non-core functions
- Maintain company culture and entrepreneurial spirit as you scale
- Look for arbitrage opportunities and underserved markets
- Build for the long-term rather than a quick exit
The ButcherBox story demonstrates how a focused entrepreneur can disrupt a massive industry by identifying an unmet consumer need and executing relentlessly. By staying true to his vision and values, Mike has built a company that is not only financially successful, but is working to transform the meat industry for the better.
Article created from: https://www.youtube.com/watch?v=orMbq2LtzKE
