Cashflow, Unit Economics, and Bootstrapping $550M ButcherBox with Mike Salguero | Ep 838

Summary

Episode Summary: Cashflow, Unit Economics, and Bootstrapping $550M ButcherBox with Mike Salguero | Ep 838

Podcast Information:

• Title: The Game with Alex Hormozi
• Host: Alex Hormozi
• Guest: Mike Salguero, Founder and CEO of ButcherBox
• Release Date: February 17, 2025

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Introduction

In Episode 838 of The Game with Alex Hormozi, host Alex Hormozi sits down with Mike Salguero, the founder and CEO of ButcherBox—a subscription service delivering high-quality meats to customers' doors, boasting annual revenues exceeding $550 million. The conversation delves into Mike's entrepreneurial journey, the pivotal lessons from his past ventures, and the strategic decisions that propelled ButcherBox to its current success.

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Mike Salguero’s Entrepreneurial Beginnings and Lessons Learned

Transition from CustomMade.com to ButcherBox

Mike begins by recounting his first business venture, CustomMade.com, which he co-founded with his best friend Seth Salguero. They acquired the company for a modest investment, transforming it into a platform for woodworkers to showcase their projects. Despite initial successes, including raising substantial venture capital (e.g., $1.9 million from First Round Capital and Google Ventures), the partnership with investors led to misalignment and eventual foreclosure of the business.

• Notable Quote:

  Mike Salguero [05:20]: "Most people told us no. We went to raise money and people are like woodworker listing site, like, hell no."

Key Takeaways from CustomMade.com

1. Investor Relations: Mike emphasizes the pitfalls of raising significant capital without fully understanding investor dynamics, leading to loss of control and company culture.

2. Maintaining Vision: The experience taught him the importance of staying true to the business vision and not compromising core values for external pressures.

3. Bootstrapping vs. Venture Capital: Mike contrasts his first venture's dilution-heavy trajectory with his later success in bootstrapping ButcherBox, highlighting the benefits of maintaining ownership and control.

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The Birth and Growth of ButcherBox

Origins Rooted in Personal Needs

The inception of ButcherBox was deeply personal for Mike. Faced with the challenge of finding grass-fed beef to manage his wife's autoimmune disorder, he embarked on a mission to streamline meat delivery directly to consumers.

• Notable Quote:

  Mike Salguero [17:08]: "My wife has an autoimmune disorder. We were following these elimination diets to, like, clean up our diet. We were trying to find grass-fed beef. Couldn't find it."

Launching ButcherBox

1. Initial Strategy: Mike started by selling surplus meat to friends and realized the potential of a direct-to-consumer subscription model.

2. Kickstarter Campaign: Utilizing a Kickstarter campaign in 2015, ButcherBox raised $110,000 from 1,100 backers after pivoting from selling only beef to including chicken and pork based on initial feedback.

   • Notable Quote:

     Mike Salguero [23:41]: "The first arbitrage Opportunity was with Kickstarter... we sold $40,000 in boxes in the first day."

3. Influencer Marketing: Reverse engineering successful influencer strategies, Mike established partnerships with health and wellness influencers, offering commissions tied to subscriber retention.

   • Notable Quote:

     Mike Salguero [39:49]: "...we started working on that, and then we launched ButcherBox.com to the world... we signed up five subscribers on the first day."

Building Robust Unit Economics

• Box Profitability: ButcherBox was designed to be profitable from the first box, meticulously accounting for all costs to ensure a sustainable $20 gross profit per subscription.

  • Notable Quote:

    Mike Salguero [43:12]: "We were charging $129. We were trying to make a $20 profit... it averages out to 20."

• Gross and Net Margins: Maintaining a healthy gross margin of around 30%, with net margins approximating 6.5%, exemplifies the company's focus on unit economics over aggressive scaling.

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Strategic Partnerships and Operational Excellence

Avoiding Vertical Integration Pitfalls

Mike explains ButcherBox's strategy of partnering with specialized providers rather than vertically integrating, allowing the company to focus on its core competencies.

• Notable Quote:

  Mike Salguero [59:20]: "We don't own our own farms. We work with partners... it's like the Toyota approach."

Ensuring Quality and Compliance

1. Robust Safety Audits: Partnering with top-tier suppliers and conducting thorough safety audits ensures product quality and mitigates risks associated with food distribution.

2. Focus on Core Operations: By controlling only essential components like dry ice production, ButcherBox maintains operational efficiency without overextending into areas outside their expertise.

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Financial Management and Shareholder Relations

Equity Distribution and Share Buybacks

ButcherBox opted to retain majority ownership, carefully managing equity distribution to employees and conducting share buybacks to provide liquidity without external pressures.

• Notable Quote:

  Mike Salguero [48:01]: "We have taken profits and repurchase shares... we're like, how do you cash people out?"

Valuation and Ownership

1. Share Valuation: Utilizing methods like reverse Dutch auctions and maintaining a fair valuation based on revenue emphasizes transparency and fairness with shareholders.

   • Notable Quote:

     Mike Salguero [49:17]: "The valuation is about a one for one with revenues."

2. Avoiding Over-Dilution: Mike highlights the importance of limiting equity dilution to maintain control and align long-term goals without succumbing to the typical VC-driven growth pressures.

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Enhancing Customer Retention and Acquisition

Lifetime Offer Strategies

ButcherBox implemented innovative offers, such as "Bacon for Life" and "Ground Beef for Life," to enhance customer retention by providing ongoing value that incentivizes long-term subscriptions.

• Notable Quote:

  Mike Salguero [32:36]: "We built this business on bacon... our top people have been with us from the beginning."

Referral and Marketing Channels

1. Referral Programs: Implementing a referral system where existing members can refer friends for discounted trial boxes has proven effective, contributing approximately 30% of new acquisitions.

   • Notable Quote:

     Mike Salguero [73:07]: "We're like 30% referral. And then... 30% meta, 20% organic affiliate."

2. Meta Advertising: Utilizing Facebook (Meta) ads remains a significant channel, balancing paid campaigns with organic growth to sustain customer acquisition rates despite challenges like the iOS privacy changes.

   • Notable Quote:

     Mike Salguero [75:28]: "We have 30% referral. And then I don't know what meta is because there's also organic and Google and whatnot. Say 30% meta, 20% organic affiliate."

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Acquisition of Truffle Shuffle and Content Strategy

Integrating Media and Cooking Classes

In June 2024, ButcherBox acquired Truffle Shuffle, a media company specializing in live cooking classes. This strategic acquisition aims to inspire customers to utilize their meat subscriptions effectively, addressing churn by encouraging regular consumption.

• Notable Quote:

  Mike Salguero [86:00]: "We bought a company called Truffle Shuffle... they're experts at hosting a live class to cook."

Benefits of Content Integration

1. Enhanced Customer Engagement: Live and recorded cooking classes provide value-added content, fostering a deeper connection with subscribers and reducing churn by inspiring regular use.

2. Top-of-Funnel Awareness: Publicly accessible content serves as organic marketing, increasing brand visibility and attracting new customers through shareable, high-quality media.

   • Notable Quote:

     Alex Hormozi [81:06]: "Content is the ultimate top of funnel because it can harness the algorithm, finding all those people who really want meat."

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Scaling Challenges and Organizational Adjustments

From Rapid Growth to Sustainable Operations

ButcherBox experienced exponential growth, particularly during the COVID-19 pandemic, scaling headcount from 85 to 240 employees. However, rapid expansion led to operational inefficiencies, emphasizing the need for a balanced approach between entrepreneurship and process management.

• Notable Quote:

  Mike Salguero [67:28]: "We grew incredibly quickly. The biggest rush that we made was... we decided to bring in a whole bunch of people to help, like, fix the wheels."

Organizational Restructuring

1. Hiring the Right Talent: Adopting a "barbell strategy," ButcherBox hires a mix of young, driven individuals and experienced professionals, avoiding the stagnant middle group typical in corporate structures.

   • Notable Quote:

     Mike Salguero [63:46]: "We hired people out of retirement... the very young and very old worked incredibly well."

2. Streamlining Management: Reducing managerial layers to ensure agility and maintain a culture of ownership, enabling faster decision-making and operational efficiency.

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Future Goals and Vision

Aiming for Multi-Generational Success

Mike articulates a clear vision for ButcherBox as a long-term, multi-generational enterprise focused on transforming the meat industry by promoting ethical animal treatment and providing high-quality products without the constraints of external funding.

• Notable Quote:

  Mike Salguero [70:52]: "The plan is to build a multi-generational long-term hold... we're in it for the long haul."

Scaling to $1 Billion

With aspirations to reach $1 billion in revenue, ButcherBox plans to continue honing its unit economics, expanding its media content, and leveraging efficient marketing channels to sustain growth without succumbing to the typical pitfalls of overcapitalization.

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Conclusion

Mike Salguero's journey with ButcherBox underscores the importance of:

• Maintaining Control: Bootstrapping to retain ownership and align the company with long-term goals.
• Focusing on Unit Economics: Ensuring each box sold contributes positively to the bottom line.
• Strategic Partnerships: Collaborating with experts and trusted partners to enhance product quality and operational efficiency.
• Innovative Marketing: Leveraging influencer partnerships, referral programs, and content integration to drive customer acquisition and retention.
• Adaptable Organization: Balancing rapid growth with sustainable operations to navigate scaling challenges effectively.

Mike's experience offers valuable insights for entrepreneurs aiming to build profitable, sustainable businesses without excessive reliance on external capital.

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Notable Quotes Summary:

• Mike Salguero [05:20]: Discussing initial investor skepticism.
• Mike Salguero [17:08]: Personal motivation behind founding ButcherBox.
• Mike Salguero [23:41]: Successful Kickstarter arbitrage.
• Mike Salguero [32:36]: Importance of lifetime offers.
• Mike Salguero [43:12]: Box profitability and focus on unit economics.
• Mike Salguero [59:20]: Strategy of avoiding vertical integration.
• Mike Salguero [48:01]: Share buybacks and financial management.
• Mike Salguero [73:07]: Breakdown of customer acquisition channels.
• Mike Salguero [86:00]: Acquisition and integration of Truffle Shuffle.
• Mike Salguero [67:28]: Challenges of rapid growth and organizational changes.
• Mike Salguero [70:52]: Vision for multi-generational success.

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This detailed summary encapsulates the essence of Episode 838, highlighting Mike Salguero's strategic approach to building and scaling ButcherBox while maintaining operational excellence and customer-centricity.

Transcript

[Alex]

Hey, guys, welcome back to the game. Today I have a special episode where I talk with Mike Salguero, who is the founder and CEO of ButcherBox, a subscription service that sends meat to people's doors. They do north of $550 million a year. And we broke this into probably like two halves. I'd say the first half we talk kind of the story of getting there and some of the lessons he's learned along the way. I'd say the second half of the podcast, we go really deep on tactical stuff that has, you know, materially improved the business. We get some of the unit economics. So for those of you who are a little bit more advanced, I think you will probably dig it a lot, or hopefully you'll enjoy it as much as I enjoyed talking to Mike. And with that being said, let's dive in, everybody. Welcome back to the game. I got a special episode for you guys today. I am here with my soon to be friend Mike, who owns Butcherbox, which is a company you may or may not have heard of, but you will have heard of it very soon as we go through a deep dive on the business. And so I would say, unlike some interviews with business people, I think a lot of it is narrative. We'll have a little bit of that in terms of the story of the business, but I want to dive into the actual unit economics, like how it works, how it scales, what's your cash flow cycle. I want to get into the nitty gritty. And then as Mike's going through it, I'll try and kind of encapsulate some of the pieces that I think could apply to any business of, like, through lines that anyone can use from it. So that's the plan, and that may not at all happen. So we'll find out. But, Mike, welcome.

[Mike Salguero]

Yeah, thank you.

[Alex]

So before you had Butcherbox, you had another business. Do you want to do a quick, like, how we got here and some of the lessons you learned from that business? The failure? Because I love. I love hearing about failures because the lessons that we get from them. I feel like every entrepreneur is always, like, building, like, all of the businesses prior are stepping stones to the business you have today, and then maybe someday this is the stepping stone to the next. The future version of Butcherbox or whatever.

[Mike Salguero]

Yeah. So, I mean, I could talk about a tremendous amount of failure in between college and my first business if we want to go there. But my first business was a company called custommade.com and my best friend Seth and I bought the company. We had approached A guy to sell us custommade.com for $140,000. Um, we didn't have any money at the time, so we gave him a check for $2,500 for a deposit and then had 90 days of due diligence, which is where you're supposed to figure out what happens at the company. And we took all that time to go raise money. And so we raised 500 grand. And the whole. Okay, yeah, the whole. The whole thing was we were both working in real estate, and we called it a shack in Manhattan. So this is 2008. Custommade.com got a ton of inbound traffic.

[Alex]

Yeah.

[Mike Salguero]

From typing in custom made. And it was filled with woodworkers who had their projects and stuff on there. And when you talk to these woodworkers that are like, I get all my money from custommade.com and I pay $35 a year for my subscription. And they had to, like, email the owner to, like, upload their content. So we were like, this is like a shack in Manhattan. We're just going to buy it, we're going to, like, overhaul it, turn it into. They can log in and manage their own content and. And jack up the rents. Makes sense. So people, you know, thought that was a good idea and gave us also.

[Alex]

A great narrative for raising money. As a side note, just even though, like, as a shack, in my head, like, everyone's like, okay, I get what you're.

[Mike Salguero]

Yeah, yeah. Of course. This was 2008, and in Boston, in real estate, and everyone had just lost their money. Cause Bernie Madoff just ran off with everyone's money.

[Alex]

Did something happen in 2008?

[Mike Salguero]

Yeah.

[Alex]

Oh, no way. Okay. Crazy.

[Mike Salguero]

Yeah. So Bernie Madoff ran off with everyone's money. We heard a lot of no's, but we cobbled together around, um, and then we got going, and things were working, and we raised another $500,000.

[Alex]

When you say things were working, what did you mean? So, like, you were starting to make more. Like, you were able to grow the revenue.

[Mike Salguero]

Yeah. So we had pivoted the website. You could now log in. We made a ton of mistakes, but we built a sales team. We had people calling to get makers to sign up for, like, an annual subscription or a monthly subscription. We hit about $60,000 in revenue a month.

[Alex]

What was it doing prior?

[Mike Salguero]

$35,000 a year.

[Alex]

Oh, geez. I mean, you did an amazing job.

[Mike Salguero]

But we were still losing a little bit of money and whatnot.

[Alex]

Also, a great frame for anyone who's listening to this is the idea that I had a mentor say this. He's like, right before you go to take your business to market, he's like, switch sides of the table and then try and say, you just bought your business today, what are all the things you'd fix about it? It's like, well, maybe just do those first. And so I think it's just a great like perspective on any businesses. Like, if I bought everything today, how would I. It's like a different lens at least. Anyways, for me it's been helpful, but please continue.

[Mike Salguero]

Yeah, so at the time it was like 2010, 2011, everybody in tech was raising money. And so we were looking at TechCrunch and looking at all this stuff. And at that time there weren't like all these accelerator programs and all these things that now are exist to help people. And so my co founder and I looked at each other. We're like, we have a good business, why don't we raise money? And so we ran around town again raising money, this time trying to raise from VCs. And we got First Round Capital, which is a very well known VC in New York. And then we got Google Ventures to invest in our company at a. It was a. We raised 1.9 million at like a 7 million pre money.

[Alex]

Sure.

[Mike Salguero]

That's where things started like falling apart. So most people told us no. We went to raise money and people are like woodworker listing site, like, hell no. And I was in a meeting and at this VC benchmark and I said, I was like, we built this function where somebody could post a project and makers could see them coming in and then they could bid on them. And I was like, pull up the job board. And this thing was like live action. We wanted to make it exciting and there are like these jobs rolling in, like custom coffee table customers. I was like, all we have to do is stand in between these transactions and we'll be the largest marketplace for custom stuff. It was 2011. As soon as I said the word marketplace, everyone wanted. In our deal, we went from no, no, no, no, no. To like marketplace. You could be the next Airbnb. And we're like, yeah, you bet. Yeah, sure, we can be whatever you want. Just give us some money. And so we raised the money on the premise that we were going to create a marketplace and stand in between a custom transaction, which wasn't the best premise, but people loved it. We raised 1.9. Six months later, there was one VC that we left out of the first deal. We're like, we don't want to raise more than 1.9. So you can't participate. Six months later, they're like, we'll give you four on 16. We're like, okay, we'll take more money. So we took four and then we did an 18.

[Alex]

So now you've diluted because now you're at. Because you had the 1.9 on 7. So you're. That was 21 or 2%, something like that. Right. I don't know the math somewhere there. Yeah. And then you did another quarter, so 25% with the second round. So you're. You guys are sitting a little bit above 50. Yep. At that point. Just from the two rounds.

[Mike Salguero]

Yeah.

[Alex]

Okay.

[Mike Salguero]

And then we're giving out equity to all of our employees and all that stuff. Got it.

[Alex]

I'm highlighting this because I, I know. I think I have some perspective on where you go.

[Mike Salguero]

There's a different path. Yeah. So. And then a few years later, we did a $10 million round on $30 million. It was actually 18 million. It was 10 of equity, 4 of debt, and 4 of secondary.

[Alex]

Okay, so you got some money off the table.

[Mike Salguero]

So we got some money off the table.

[Alex]

You're like reading the tea leaves and you're like, you know, there's no way we're gonna make anything.

[Mike Salguero]

Yeah. We got all of our Original investors got 3x their money if they wanted it. Many cash out.

[Alex]

My mother did not. Interesting.

[Mike Salguero]

She's like, I believe in you. Yeah, I think you should cash out, mom. But okay.

[Alex]

I feel like I took secondary.

[Mike Salguero]

Don't worry. Yeah. Like, I sold. So by the end of it, I mean, what really happened at the company? The big lesson I learned is, so Google, they have like incredible services for entrepreneurs. So if you're an entrepreneur and they invest in you, they can help you with a whole bunch of stuff. You want to like, manage your AdWords account. It's like, go talk to the people that run AdWords.

[Alex]

Yeah, right.

[Mike Salguero]

By the way, here are some gift cards. And like, they do all sorts of stuff to help you.

[Alex]

Yeah.

[Mike Salguero]

They're like, do you want us to come and look at your website and like, get under the hood of your technology? And we're like, yeah, of course. Google, come on in. And I, I mean, literally, the guy did this like, week long deep dive, came out and was like, that's the worst website I've ever seen. He's like, I can't believe we invested in this. Like, so our investors up.

[Alex]

How does this even make money?

[Mike Salguero]

How is this like. And these guys like, yeah. And so what ended up happening over the course. So immediately we were like, we have the wrong tech team. Our investors were like, you have the wrong tech team. You have to get rid of them. So we got rid of our tech team, and then it was like, you have the wrong product people. And then you have to get rid of the product people. You have the wrong marketing people. And what ended up happening over the course of about a year is I took all of the people who helped me build this company to help me, like, hack through the jungle to get to, like, the road. And we fired all of them, as one does. And I was left with a company of new hires. New hires. People that didn't fit the culture.

[Alex]

Mercenaries.

[Mike Salguero]

I hadn't written down the cultural values.

[Alex]

Yeah.

[Mike Salguero]

And I just have this vivid memory of sitting in my car in the parking lot being like, I. I can't go in. Like, I can't. I don't even want to go to work. Yeah. And I had a good salary, but by that point, with all the dilution, I owned like 8% of the thing, which I could go get a CEO job doing something. It was just like this. Like, what have I done?

[Alex]

Yeah.

[Mike Salguero]

And I let go of all my friends. It was bad.

[Alex]

Yeah. How many years was this?

[Mike Salguero]

Eight years of working on it.

[Alex]

This was eight years.

[Mike Salguero]

2015. Or, sorry, 2008 through 2015.

[Alex]

So we covered eight years in a pretty short little window. Just for anyone who's listening, I bring this up just because when you hear the stories or you watch literally the 62nd short about someone's career, it always, you know, you see the highlights and the low lights, but a lot of it is just kind of like the mundane middle of just dealing with the stress of every day. There's always fires, and there's a permeating level of baseline stress that doesn't really go away. Yeah.

[Mike Salguero]

And so, I mean, one big lesson was like, don't listen to investors. When I started Butcherbox, which we'll get into, I didn't want to take investment. There was also, like, I lost myself. I lost my team and I lost myself. And when I looked at the shambles that happened, it was like, I don't want to.

[Alex]

Did you shut it down?

[Mike Salguero]

Yeah. So we. We actually foreclosed on it because we had some venture debt. There was a little bit of debt. Our bank account got below what we owed, and they were like, we're taking it. So we actually did a. What's called a friendly foreclosure. They took it over. My co founder stayed and Is still running it.

[Alex]

Oh, it's still going.

[Mike Salguero]

Yeah.

[Alex]

Is it doing okay? It.

[Mike Salguero]

It's now a jewelry company, and it's just. They just do everything. There's no maker. There's no, like, no marketplace. The big problem that we had was you can't, like, these custom tr. If you want a custom coffee table or a custom piece of jewelry, there's like, 60 back and forths to, like.

[Alex]

Talk about every detail. Like. Yeah, right.

[Mike Salguero]

And we had to stand in between that in order to get our fee, which was like, 10%, which is a nightmare. It was a bad business.

[Alex]

Yeah.

[Mike Salguero]

But we. Because we sold everyone on Marketplace. Yeah. When we were like, this isn't going to work. People are like, well, that's what I invested in, so you need to keep going.

[Alex]

So doing the other version of so. Because. So I think about this sometimes as, like, the path not taken. So if you had not raised really any of the money besides the amount that you needed to kind of acquire the business. So at that point, what did you raise? The five. Where did you raise the $500,000? When you did, you didn't go through the due diligence. That period where you raised the 500. What was the. What was the. Or how much equity did you give away for that?

[Mike Salguero]

It was a convertible. So it converted into the next round. Like a safe round. Yeah.

[Alex]

Oh, great. Okay. So that ended up being, like, 5 or 6%. I mean, well, a little more than that. So like, 7% of the business. Yeah. Which should have been a pretty good move, effectively.

[Mike Salguero]

Yeah.

[Alex]

And if that business at the time said it was doing $60,000 a month. Right. So 720 a year. Ish. In terms of run rate, if you had stuck with the original model and just been like, I don't have to pursue this not as an insult, but, like, cockamamie business model, basically. Billy or bust business model is what I mean to say. It probably could have just been a very profitable. I mean, going from 35,000 a year to $60,000 a month in, like, 12 months is great growth. Yeah, totally. And was it profitable at that point?

[Mike Salguero]

It was almost profitable.

[Alex]

Okay. Like, you could have made it if you wanted to.

[Mike Salguero]

We could have been profitable. And that's one of the reasons why, like, I want to be here today. And I like talking to people like you who talk to entrepreneurs about a different path. Raising a bunch of money, diluting yourself, having people who tell you what to do, and losing your culture in the meantime and losing yourself.

[Alex]

Every business I've had has been Bootstrapped. Yeah.

[Mike Salguero]

I mean, so I get it. Yeah. So when I started Butcherbox, so I took the. We closed the business. We let go of 50 people, shut the doors. I literally closed the gate, put the lock on.

[Alex]

But then your partner's like, I'm still here though, and we're still going to keep. We're going to make this happen.

[Mike Salguero]

They, like spun it out and.

[Alex]

Are you guys still friends?

[Mike Salguero]

Yeah.

[Alex]

Okay, that's cool.

[Mike Salguero]

Yeah, it was a little rocky for a couple years, but, yeah, we're good friends. I took the weekend off. It was Memorial Day weekend, so it was a long weekend. And then I started Butcherbox on Tuesday. And I had known in the final year at Custom Made, it was very clear to me that we were going to hit a wall and there was like, no stopping it. My co founder had become CEO in that last year because he just loved the distressed. He wanted to be that.

[Alex]

What was revenue then.

[Mike Salguero]

So we. We would only talk about GMV because. Because it was platform. So our GMV, I think got to like 3 or 4 million a month. Okay. But, you know, then we took a 10. But actually because of. I forget all the reasons, it was like 7%.

[Alex]

Yeah. So like 200,000.

[Mike Salguero]

200,000Amonth. We at our height were burning 500,000amonth.

[Alex]

That is. Yeah.

[Mike Salguero]

Healthy burn.

[Alex]

Yeah, Healthy.

[Mike Salguero]

Just like never say anything like it.

[Alex]

Yeah. There's a road quote from Reid Hoffman. I think he was talking to Elon or Peter Thiel or something, and he. They were on the roof of the building that they were at for PayPal. And he said if we were one at a time lighting hundred dollar bills and pulling them off the building, he said, it wouldn't be as fast as we're actually burning money in this company. And I just saw that as such a visual of like, I could burn $100 bills slower than we're actually burning the money in this business, which I thought was hilarious.

[Mike Salguero]

Yeah, no, it's wild. I mean, you start adding a bunch of people and then you add managers to manage those people, and then you do a bunch of marketing and all of a sudden you're just like losing money. And when you raise, especially when you raise something like a $18 million round, they want you to spend the money as fast as possible. The thing that they don't talk about with venture is venture capitalists get paid. When they put money out on the street, they take a management fee. And so they have. Everyone around the table has the incentive to, like, put as much money as humanly Possible into these deals. And so you really. When you go like, people are like, how do I figure out what my valuation is? It's like, no, no, no. Just tell them how much money you can spend over the next 18 to 24 months and just argue for a bigger number. We're like, we can blow through 10 million. They're like, great, here's a check. So, yeah, it was.

[Alex]

Which is counter to how business works as a side note. So it's interesting because it's the collision of two different business models. And the one who has the voting rights is the one who wins. But their business model is deployment of capital and management fees, by and large. Obviously, there's carries and things like that, but there's that component and then there's the business model of the actual business. But the person who actually calls the shots is the. The person who makes the most money from the business prevails in terms of who has leverage in the conversation. Yeah.

[Mike Salguero]

And we had all the rights. So we negotiated really, really well. We had all the rights in our documents. My co founder, Seth, was just like a phenom at that. So they couldn't overthrow us. They didn't have any management decisions, et cetera. But it doesn't matter. Like at the end of the day when they're like, you're going to be blackballed if you don't.

[Alex]

Yeah. Like the pressure.

[Mike Salguero]

Xyz, you know. So at the end it was like, we're going to sell the company. We're going to bring in a different CEO, we're going to do all these things. None of which worked. Yeah. I knew the writing was on the wall. And so I'd been playing around with like, like, what am I going to do next? And I had a few ideas. I had a billboard company I was really interested in starting. I had a bond company I was really interested in starting. And I had this, like, shipping meat in the mail.

[Alex]

Interesting.

[Mike Salguero]

And the quick backstory. My wife has an autoimmune disorder. We were following these elimination diets to, like, clean up our diet. We were trying to find grass fed beef. Couldn't find it.

[Alex]

Huh.

[Mike Salguero]

Okay. And I just got obsessed with, like, where do you find grass fed beef?

[Alex]

Yeah. Why is this a hard thing to find?

[Mike Salguero]

Yeah, why is this hard to find? And I ended up, like, meeting a farmer in a parking lot and buying trash bags full of meat and being like, this is weird. And I started selling steaks to my buddies because it was like, too much meat.

[Alex]

Yeah.

[Mike Salguero]

And one of my buddies was like, this would be so much easier if it was delivered to my house.

[Alex]

Yeah, I don't want to like meet you at your house to pick up the meat in a bag.

[Mike Salguero]

Just ship it to my house. And so I was like, okay, how do you ship meat in the mail? I couldn't figure it out. This is all while I was like, still at Custom Made. And then I met.

[Alex]

This is while you were at custom Made.

[Mike Salguero]

Well, it was like the tail end.

[Alex]

Things were having an affair.

[Mike Salguero]

Yeah, yeah, things were closing down. Then I reached out to the former head of operations of Omaha Steaks, which at the time was like the big mail company. And he's like, yeah, like my non compete's over. Oh, great, I can help you.

[Alex]

That's amazing.

[Mike Salguero]

And so he made all these introductions.

[Alex]

Yeah, pro tip right here. Just for everyone listening, find the person who has built the business. Yes. Already very rare. It's, you know, from an entrepreneur's perspective, I think the beginning is always about how like, you know, you're very tactic obsessed. And obviously I talk a lot, a lot about tactic stuff on this channel, but I say beyond a certain point, it just becomes a lot about who because the leverage is in not having to live the 15 or 20 years or however long this guy had been in the steak business. You can either relive his life and then be 20 years older, or you can just find that guy and then he doesn't have to live your life either. And then you combine and everybody wins. And so I think in the earlier stages of my career, I thought way more what and how than who.

[Mike Salguero]

Yeah, also the way that I structured it so I had a whiteboard, I had the three ideas and I had the kill shot thing that if I didn't figure out this week or this month, like it, you don't have a business. So for the bomb thing, it was like a legal thing. And for the, for Butcherbox, it was like, how do you ship this? And so I actually like, every time I went to the bathroom I'd be like, all right, how do you ship me? Reaching out to people, trying to get somebody to help. He finally said, yes. And so fast forward to close the doors at Butcherbox or sorry, at Custom Made. And it was pretty clear that like, hmm, why don't I just like spend the summer messing around with this idea? So my intention was to build a hobby business. Like I was, I was very enamored by like Tim Ferriss four hour work week. Like, you know, build something that runs in the background and then you can go Live your life, you know, passive income. And that was like, I thought if we had a thousand subscribers and we made a $20 profit on each subscriber, it's $20,000 you. So if you customer service, if you outsource that, and if you build tech easy, like, you could have like $10,000 a month. And so I built. It was like WordPress on top of Stripe, which nowadays there's Shopify, which is incredible, but like WordPress on top of Stripe, which we basically ran with until last year when we moved to Shopify. And then we outsourced everything and it was like, okay, this is gonna be a hobby business.

[Alex]

I want to pause on something because I think it's such an important thing. So, like, I have had such a similar experience to. I think what you just walked through from a narrative perspective, which is that every time I've tried to, like, build a business, it doesn't work for me. It hasn't. And I've failed a bunch of times on businesses that I was like, I'm building a business. When I was like, how do I make some money that doesn't take a ton of my time? I end up building a really good business. And so it's just like an. Again, it's these, like these, these frames of questions. And I think this, at any level, you could ask it from a product line perspective or a new division perspective, but it's. It's like I have. I've had these, like, romantic ideas of like, this big thing that I want to have happen rather than, like, you know, I just, I just want to make some money in a really easy way. And then when. What's interesting, though, is that you're basically. I call it solving for zero, which is like, how do I solve for, like, no time and profit? But when you solve that problem, when you have no time and profit, it also scales a lot easier because you already started with the premise of how do I have it put no time not be as risky and be profitable. So, sorry, pick back up.

[Mike Salguero]

Yeah, no, that's right. If you build something to be a hobby, it can remain a hobby. And I can. I'll talk about our backbone now. But it's. It's very similar. Everything is third party. We have really tight specs on everything. But we took the perspective that I started with, I want a hobby. And nowadays I took the perspective of like, we're not going to learn how to ship boxes better than a company that's been in the business for 75 years. Like, why bother trying to do that. So anyway, we started with an intern and we decided that we were going to do a Kickstarter campaign or it was Kickstarter or Indiegogo at the time. This is 2015.

[Alex]

Also different way of raising money by the way, for anyone who's listening, pre sales. Yeah.

[Mike Salguero]

So it's not raising money, you're just selling your product and you're seeing if there's a market and you're getting money up front.

[Alex]

So my first gym, I saved all my money to start as soon as I and I and I wanted to start the gym as fast as human possible because I thought if I start the gym really quickly then I could start making money. Every gym after that gym I had multi month pre sales that would pay for the, that would finance the entirety of the gym off of people pre buying memberships and pre buying weight loss challenges and things. And so like this is definitely like a one on one to 201 entrepreneur. Like the first one, you know, you're, you're taking the outside capital. You're like, you know, I'll bet you I could just get my customers to just pay on different payment terms and just get. And then it's also also a great product market fit test. If no one wants to buy your pre sell, then thank God you didn't like raise money for it or something like that. It's like we actually know people want to buy it and they're willing to pay for it and wait.

[Mike Salguero]

Exactly. That's the great thing about Kickstarter is people are used to waiting a really long time to get their products. And we basically started, we hadn't launched yet, but we went out and showed our page to people and the first thing that we learned was people were like, I don't eat that much beef. We only had grass fed beef. We're trying to sell people 8 to 10 pounds of grass fed beef for $129. People are like, I don't eat that much beef, I would never buy this. And we're like, well, what if we put in chicken and pork as well? They're like, oh totally. Can you make it at the same standard? Like can you find chicken that's like raised better and pork that's raised better? And we're like, yeah. So we, we started with a box beef, chicken or pork and launched our Kickstarter. And I think one of the, you know, one of the things that we've done well as a company is found arbitrage opportunities.

[Alex]

Yeah.

[Mike Salguero]

And so the first arbitrage Opportunity was with Kickstarter. So back in 2015, Kickstarter had this verified badge, like, if it would be like Kickstarter verified. And so what we did is we watched these campaigns and to see, like, which campaigns got the verified badge and then tried to reverse engineer, like, how did they get the verified badge? And it was one part early momentum, you know, sales coming in. I tried to reach out to all the founders and be like, oh, we're doing this thing. Did whatever it took. And so we went out to raise 25,000 in sales.

[Alex]

Pre seed.

[Mike Salguero]

Right?

[Alex]

Yeah, Right.

[Mike Salguero]

And we ended up selling 40,000 in boxes in the first day.

[Alex]

Oh, geez.

[Mike Salguero]

And then we got the Kickstarter verified badge, and then we ended up doing. Doing 210,000 in pre sales, which was 1100 boxes of meat going. You know, the first. The beauty of Kickstarter is if you get that verified badge, it's no longer. You're no longer just asking your friends and your audience to shop. It, like, goes to everybody.

[Alex]

They'll push it out. Yeah.

[Mike Salguero]

And so it was a lot of random people we didn't know.

[Alex]

Just, I want to double click on the offer real quick. Offers, part of what we talk about. So what ancillary benefits or bonuses did you give to people beyond just the box of meat? Was there anything else that they got.

[Mike Salguero]

For being good one. So we offered. The way that you do with Kickstarter is you try to activate the people who have bought to go be your ambassadors. So we said, if we hit $100,000 in sales, we'll give everyone free bacon in their first box. Yeah. And that, like, people went crazy. They're like, I want the bacon, you know, and started, like, promoting it, putting it on their Facebook pages, all of that. That was it, though. That was the offer.

[Alex]

Our product, she had a referral bonus.

[Mike Salguero]

Yeah.

[Alex]

Really interesting.

[Mike Salguero]

Our product was really hard. Is still really hard to find.

[Alex]

Yeah.

[Mike Salguero]

So we're dealing with people who, like, want to eat healthier, feel guilty about the meat that they're eating, and we give them an answer to that. And so there was. It was really clear that we had struck a nerve really quickly. And so then during the Kickstarter campaign, so we signed up like 1100 people during the Kickstarter campaign. The most interesting thing that happened was there was a. We were like writing on Twitter to anyone who did Kickstarter, like, anyone who talked about grass fed beef to get them to talk about us and this one nutritionist.

[Alex]

So you're reaching out to them.

[Mike Salguero]

So just like, we Spoke to everybody.

[Alex]

This is warm outreach, or, sorry, this is cold outreach to affiliates. Fundamentally that you'd either pay for through sponsorships with money or free stuff or both. And then I don't know if you gave them affiliate links or it was just like, hey, just talk about our thing.

[Mike Salguero]

At this point, it was just talk about our thing.

[Alex]

So, like, I'll send you a free box of meat if you just talk about it kind of thing. Yeah, a great way to get started early from a, from a capital perspective. So it's like both of the examples that Mike talked about first is like, okay, if there's platforms that'll give you free reach, figure out what you have, you know, reverse engineer what free reach looks like, and they're just getting you customers for free. And I think some people especially, this is weird, but like a lot of small business owners were like, obsess about, like, they charge 10%. It's like they charge a commission on customers. They get you for free.

[Mike Salguero]

Right, Totally.

[Alex]

What are we talking about? You know, and then with the affiliates and influencers that you reach out to another way to basically, like, if you, if you factor in the cost, it's like literally just the hard cost of the box of meat is your advertising cost and everything above that is basically freebie. Right. And so both of these are super low capital ways early on to get those initial sales going. Sorry.

[Mike Salguero]

Yeah, so this nutritionist in California, this guy Chris Kresser, tweeted, like, this is an interesting, you know, I've told you to eat grass fed beef. This is an interesting place to get it. That's all he did. And we saw a flurry of activity from that. And by flurry I mean there was like seven people who signed up. But at the time that was like, holy, like, what, what just happened? And then we were like, you know, to what you were just talking about, we're like, we need to do more of that. Like, we're, we need to go find every influencer who's ever talked about grass fed beef and get them to promote. To promote us. So we finished the Kickstarter and then we immediately.

[Alex]

And that was a cta. So when you're pushing out to them saying, hey, promote our Kickstarter, basically, and they could send their traffic to your Kickstarter to, to, you know, the seven buyers that came in from that. The guy who did. Is that how. That's how the money came in?

[Mike Salguero]

Yeah. Well, so Kickstarter will tell you, like, where, like, where did this come from? So it came from Twitter. So we're like, that was.

[Alex]

But you were still in pre sale mode for this whole thing. Yeah. Okay.

[Mike Salguero]

Y.

[Alex]

Great.

[Mike Salguero]

Because we want it to be capital efficient. The whole idea was we're going to send you the butcher selections.

[Alex]

Okay.

[Mike Salguero]

So it. I didn't want to hold inventory because I don't know how many ribeyes we're going to sell. And this is really expensive inventory. So the idea was we'll sell a bunch of stuff and then we'll just decide what to put in the box.

[Alex]

Yeah.

[Mike Salguero]

So we sold a bunch of stuff and then it was like, okay, we have 1100 boxes. We talked to the. The place that we were working with. They created, you know, these different.

[Alex]

Did they have all types of meat? The one place they went to, they did.

[Mike Salguero]

So.

[Alex]

Wow. That was fortunate. Yeah.

[Mike Salguero]

We started working with this company in Wisconsin that did. They had a cutting facility and a pick pack ship facility. It was like they did everything.

[Alex]

So they just had it and they had no marketing, basically.

[Mike Salguero]

Yeah. Yeah. And so we. We shipped out all these boxes.

[Alex]

Yeah.

[Mike Salguero]

And then called every. We shipped them out really quickly. It was like a week.

[Alex]

And they were thrilled. I'm for Kickstarter.

[Mike Salguero]

Yeah. Wow. I got my box already. And then we called them. Hey, how are things going? Do you need any recipes? Would you like to become a subscriber?

[Alex]

Yeah.

[Mike Salguero]

And signed up, like, 40% of the people.

[Alex]

Amazing.

[Mike Salguero]

So right away we had, like, you.

[Alex]

Didn'T just send an email to 1100 people. Wouldn't that have been easier?

[Mike Salguero]

Nope. We had a guy, Nicky Graham, who picked up the phone and just like pounded the phone, and he was like, $10 an hour, plus, like a $5 spiff.

[Alex]

I just want to hit on this just. Cause, like, what's nice is that you're hitting all these really clear milestones that I feel like are just forgotten, which is like, just the elbow grease of what I'll consider, like, unscalable work or unscalable effort. Is like, a lot of times early on, everyone's looking for, like, I don't know if that scales. It's like, well, I mean, you know, we hand wrote 10001100 cards and we manually reached out to every single person and had conversations with them, and we asked them if they knew anybody else who'd be interested. Just like, the basics. Everyone's like, oh, I'm sure that would work. It's like, right. But it would just be work and you did it, and obviously it worked.

[Mike Salguero]

Yeah, well. And one thing that I think is important is I Knew that I couldn't do that. Like, if you put me in a room with a phone and said, Call 1100 people, no way. Like, the business wouldn't have gone anywhere. And so it's good to know what you're good at and what you're not good at, what you're willing to do, what you're not willing to do, and invest in the areas that you're not willing to do. Because if you believe in the business, there's a guy who, for $10 an hour is just like, okay, well, just. Yeah, he's thrilled. And he was good at it. And, like, then I didn't have to do it. But I think too often entrepreneurs take the approach of, like, they need to do everything.

[Alex]

Yeah.

[Mike Salguero]

And, like, I mean, the business would not exist if we hadn't made those phone calls. But if it was up to me, I would never make those phone calls.

[Alex]

Was there an offer that you gave them for the subscription, the 40% besides, like, hey, want to sign up?

[Mike Salguero]

I don't remember.

[Alex]

Like, get your next box. $10 off your next box, or you get bacon for free in your next box if you subscribe.

[Mike Salguero]

There must have been, but I don't actually remember. But what did happen was we launched butcherbox.com so in the background, we signed up these people, and we realized affiliates was a thing. So we started working on that. We launched ButcherBox.com to the world, and there were many people who were trying to get in on the Kickstarter, and they let you put up a link. So they were coming to our website, and they were buying. So right away, we signed up, like, five subscribers, 10 subscribers, like, on the first day. And what happened was we had a little tech issue. So when those new subscribers signed up, they got free bacon in their first box. Because we built the tech to be like, bacon's going in every first box. And two weeks in, I get a call from the tech guys. They're like, we have a really bad problem on our hands. I was like, what's going on? They're like, we've been sending bacon to everybody. And I was like, oh, my God, this is bad. And then my marketing guy was like, why don't we just tell people, sign up and get free bacon? And it was like, oh, well, we can't shut it off anyways. Let's do that.

[Alex]

That thing's broken.

[Mike Salguero]

It's broken. Like, we can't fix it, so we're just gonna. That became the cause.

[Alex]

I know that one. And, like, I knew that before I Even, like, heard or met you or heard the story from Harley and whatnot. So again, like, grand slam offers, like, and, you know, the free box of bacon. Like, I knew I've heard of that. Yeah. And so sometimes you start with get.

[Mike Salguero]

Bacon in your box. And then two years in, we created this bacon for life offer.

[Alex]

Yes.

[Mike Salguero]

And that really took off.

[Alex]

That ripped.

[Mike Salguero]

That was like. That was a ripper.

[Alex]

So you just one upped an already really good offer and said, not only do you get it in the first box, you'll get it in every box as long as you stay subscribed.

[Mike Salguero]

Presumably as long as you stay a subscriber. And, you know, ultimately, the bacon costs $4 and the box, you know, you're making your Prof. Profit off of. So it's like you're. It's not that big of a deal.

[Alex]

And you definitely acquire customers for less than 4, like the arbitrage on CAC or, you know, cost CPA, depending on what industry you're in.

[Mike Salguero]

Yeah.

[Alex]

Cost to require customers significantly higher. By basically said differently, if you add bacon for life in, your cost to require a customer drops by more than the cost of the bacon.

[Mike Salguero]

More importantly, they stayed longer.

[Alex]

Really?

[Mike Salguero]

Yeah. Oh, because now you have your free bacon, you don't want to get rid of your free bacon.

[Alex]

And so they can't come back.

[Mike Salguero]

Well, they. Now you can't. If you quit, you lose your for life offers. But we have that. We've built a whole thing around these for life offers. Our top people have been with us from the beginning, have like six or seven for life offers that they get every month. And they're like, why would I ever go anywhere else to buy my meat? Like, I have all these for life.

[Alex]

Okay, talk to me more about this because it's really interesting. So how can they stack multiple for life offer? Like, if I'm one of the 40%. Right. So I signed up on my subscription, and I still have the tech malfunction. So I get free bacon every month. Okay. How am I getting these other ones?

[Mike Salguero]

Well, so pretty soon after, I mean, this is several years in, this was like, you know, we're fast forwarding like five or six years. We started offering, like, okay, free bacon for life is kind of getting overused. Let's try ground beef for life.

[Alex]

Okay.

[Mike Salguero]

And then people were signing up on ground beef for life. But then our customers, our current customers are like, what the hell? Like, I want ground beef for life. So then we just started selling ground beef for life to our customers. So we're like, okay, for $50, we'll.

[Alex]

Sell you ground beef one time.

[Mike Salguero]

Ground. Yeah, Ground beef for life. So we just stacked all of these, like, offers on top of each other. Very few people.

[Alex]

So your gross margins went down on some of those people. But, like, they never. They're just. They're just the base. They just like, never.

[Mike Salguero]

And we've gotten smarter at being like, it's for a year.

[Alex]

For what?

[Mike Salguero]

And it's like, we've gotten a lot smarter and you lose them if you leave. And like. But yeah, Bacon. Bacon really built this. We built this business on bacon. So the. The. There's one. One channel. Well, I'll just say, yeah, there's the Influencer channel, which we'll. We can talk about the other thing that. So it went Kickstarter Arbitrage, Influencer Arbitrage, and then Facebook video Arbitrage.

[Alex]

Okay. Because I want to talk about. I'm guessing paid ads became the next, like.

[Mike Salguero]

Yes, Big after Influencer.

[Alex]

Yeah. So how long did you do inflow? So, okay, I'm going to retrace the steps real quick. So we had Kickstarter. And then. Then you officially opened the site. Kickstarter had a backlink to you so that people would go to the Kickstarter because they've got SEO and good rankings, whatever. And so then they'd find you. You started getting sales every day. You have your mess up on Bacon, but you're like, you know what? Screw it, let's give everybody bacon. And so the Influencer strategy worked well for the Kickstarter. So you kind of double down on that and say, how do we get every influencer on the planet to talk about Butcherbox?

[Mike Salguero]

Yes.

[Alex]

That was. So did you go like, Instagram, Twitter, like you just want to cross the different channels for influencers?

[Mike Salguero]

No. So what we did was we figured out that there's a company Thrive market. They're a big, like, online. Thrive had done this. Had done this thing where they. They had all these influencers and they. They gave a lot of them equity in the company to, like, actively promote Thrive. They were like, kind of the first ones to unlock Influencer.

[Alex]

Okay.

[Mike Salguero]

And so first we reached out to like everyone who mentioned Grass Fed Beef. And then we realized that there's like, a lot more people in health and wellness. And so we, like, Thrive Markets URL was like slash partner, slash one.

[Alex]

Okay.

[Mike Salguero]

And then slash two, slash three. And so we just like concatenated all the URLs and just like took every single person and then found their website and their contact information.

[Alex]

Oh, so you didn't go to Thrive. You just reverse engineered Thrive.

[Mike Salguero]

We reverse engineered all their influencers. Got a. Got a lead list of 400 people. And then I think you'll like this part. Like, because I like that part. The offer. That's a good one. That's a good way to get your warm leads.

[Alex]

Well, how I got my first leads for gym launch was paid a VA to go to CrossFit's website. Sorry, CrossFit. And literally look up every single affiliate. Affiliate box that they had.

[Mike Salguero]

Yep.

[Alex]

And so because. And gym owners usually put their personal cell phone number, their personal email as their actual, like, thing on the. On the CrossFit. But they wanted to get listed because they're paying $3,000 a year to get the listing of saying, I'm an official CrossFit. But for me, I got like, at the time, this is super early. You know, we had like 1600 names on this list, but it was enough for Facebook to make a look like audience off of that. And that single look like audience is like, what built gym launch. Like, I didn't call. Like, I tried to hit all these different audiences, and nothing worked. And as soon as I hit the ads to that audience, it was like, ding, ding, ding. I was like, oh, my God, this works amazing. So you reverse engineered your list also. Elbow grease for both of these. Right. Like, you just looked at the site, look at the directories, and manually, like, paste this stuff over.

[Mike Salguero]

Yeah. But again, you know, like, you used a va. I used a VA as well. I used somebody in the Philippines who, for like, 20 cents a record is just like, here you go and you sleep, and it's like, there the next day. Exactly. So the way that we reached out to these influencers, I thought was pretty genius. So we had this box, Right. We're shipping a box of meat. And at the time, there was like, Blue Apron and Hellofresh and all these companies, and they all even gone.

[Alex]

Right.

[Mike Salguero]

Or they're 2015. They were hot.

[Alex]

Yeah, I remember that. Yeah.

[Mike Salguero]

Blue Apron is now was purchased by Mark Laurie, who did jet.com and they're trying to, like, make something.

[Alex]

And then HelloFresh was a Darling. A little later than that. Yes.

[Mike Salguero]

And HelloFresh is still around there.

[Alex]

Okay. Yeah, I'm not ready.

[Mike Salguero]

So at the time, blue apron and HelloFresh would include a recipe in the box. Okay. And our customers were like, this is really great, but I'd love a recipe. And so what we did is we reached out to these influencers, and we're like, hey, we started this company on grass fed beef because we believed in, like eating grass fed beef. And you've talked about grass fed beef, but we didn't see a source of where to buy it. So we'd like to be that source. And by the way, we're shipping out all these boxes and we don't have any recipes. And what we'd like to do is include your recipe on. And the VA would like, you know, find taco bowl. Yeah, steak, whatever, and we, we'd love to include that in our box. And so these influencers who like, trade on influence are like, of course, yeah, use my recipe. No problem. Are you gonna, like, link to my website and all that stuff? And we're like, yeah, yeah. They're like, by the way, what's Butcherbox? And we're like, perfect, let's talk. So that was like, that was like. We called it the Trojan horse because it was like, not only do you get the recipes for free, but you also get, you know, you get in contact with all these. You get them to reply to you. As soon as they replied to us, then it was like, let's talk about Butcherbox.

[Alex]

So I want to double click on that real quick. So if you're dealing with influencers, you have to think about the currency they care about most. And a lot of influencers care more about fame than they do about money. And so you were able to deal in the currency they preferred. And so just as like for any business, it's like, is there a way that we can do this that's realistic, that actually provides real value to them in the way that they want to get value, which I think is actually like a really brilliant little nugget.

[Mike Salguero]

This is 2016, so this was a long time ago. At the time, the influencers, especially in the health and wellness space, didn't really know their value. And so we were able to go to those influencers and say, look, we don't have any money. We can't pay you up front. I'm not paying you like $5,000 to send an email. What we can do is we'll pay you $10 or $15 per subscriber for every month that they remain a subscriber.

[Alex]

So for life.

[Mike Salguero]

Yeah, that's great.

[Alex]

Baking for life.

[Mike Salguero]

Yeah.

[Alex]

Commissions for life.

[Mike Salguero]

Commissions for life. And people said, yes. They started, yeah, I'll do that, I'll do that. And so we figured out that, you know, tweets didn't work, Facebook posts didn't work. The thing that worked was a dedicated Email blast, where they would be like, here's butcherbox. Let me introduce this to you. And then ideally, with a last chance, like a last chance thing, and there was always an offer, $20 off free bacon, whatever it was. And because we're only paying these influencers $10 or $15 a month, we could do all of this and be box one profitable. Meaning we still made money. Because we started with a $20 profit, we still made money on that first box. Or at least it was like, we made a penny.

[Alex]

So let's talk about. Now that we're here, let's talk about the box economics. So you're profitable on box one, which, if we're juxtaposing this with custom made, Right. I always fundamentally, like, there are some business. It's basically, I think there are significantly fewer businesses that actually rely on outside capital to work than people. Like, if you want to build rockets, it's probably tough, right? Like, you probably have to do that. But so I see a lot of businesses that, like, even that hit me up, and they're like, hey, you know, I'm raising capital for my insert normal business. And I'm like, have you considered just making money?

[Mike Salguero]

Right.

[Alex]

No, but, like, it's just like, the perspective, right? And so box. When you're profitable. So walk me through, like, with the. The standard box, like that most people, you know what the cost is and. And all the costs associated. I know you really obsess about the box.

[Mike Salguero]

Yeah. So the Omaha Steaks guy who introduced us to the place in Wisconsin that.

[Alex]

We worked with, it's massive, by the way.

[Mike Salguero]

The One Nugget. Yeah, he, like, opened the whole business. That's why I was like, I need to start now. The One Nugget he left me with, he's like, listen, all we care about at Omaha Steaks is dollars per box. I was like, what does that mean? He means everyone at the company knows when a box comes off the line, how much money are we making off the box? And so that's how I built the business. I started the business, right? So we were charging $129. We were trying to make a $20 profit. We were only shipping from Wisconsin, which is a nightmare for California, but it was like, so we were losing money on California, but we're like, whatever. It averages out to 20.

[Alex]

Hey, guys, real quick. This podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast in word of mouth. If there's some element of this that you think somebody else should hear, or be relevant to them. It would mean the world to me if you shared this via text, via Instagram, via dm, via whatever way you like to share stuff with people you love. Thank you.

[Mike Salguero]

And it kept our focus. So, like, when I. And when I talk about $20 a box, I mean, like, all in, because we put all the costs associated with it in.

[Alex]

Yeah. So you, like, fully loaded the box in terms of cost. So it was $20. Credit card fees, net profit rather than gross profit per box. Are we saying gross profit?

[Mike Salguero]

Gross profit.

[Alex]

Okay, got it.

[Mike Salguero]

Because we, again, it was hobby business. So, like, it wasn't our labor, it wasn't our. So this is pick pack. So, like, putting all the stuff in from our distribution center into a box. The cost of the meat, the cost of the box, the cost to ship the box, the cost of the dry ice that goes in the box, the credit card processing fees, the tape that goes on the box, like, all of those things. And because we just became doggedly focused on dollars from our box. And what I love about this business, even to this day, is that we get to focus on the minutiae, negotiating the price of tape. And they're super creative. How are we going to get our next 500,000 customers? And we get to do both. But we just started with a DNA of, like, we're going to negotiate every single line item in this box.

[Alex]

So what is the gross margin percentage per box currently or that? Yeah. Oh, well, Both, sure.

[Mike Salguero]

Like, 30% is a healthy gross margin. Yeah. We definitely want to be around or above 30%.

[Alex]

Got it.

[Mike Salguero]

One of the challenges that we have as a business is that at least currently. So we're looking at pricing, model change. Currently you pay $169 and you choose six items in the box. And so it's kind of an inflationary disaster because the prices of meat fluctuate all the time. So if you stack it with rib eyes, you're way less than a 30% gross margin. If you stack it with really cheap stuff, you're way more than a 30% gross margin. That's an area where I feel like we're in, like, not in alignment with our customer. So I want to change that over time. But, yeah, currently we're looking at a 30%.

[Alex]

So what are net margins?

[Mike Salguero]

They're like six.

[Alex]

Okay, got it, got it.

[Mike Salguero]

We did like, six and a half last year. Certainly not a content business. Very different.

[Alex]

Yeah, yeah, yeah, yeah. Wait, six and a half million. Oh, yeah. I was like, that is. Okay. That's making sure and you did.

[Mike Salguero]

And the big. The big line item. So these businesses, like, I've seen so many of them, 30% gross margin, you got 10% to operate the place. That's salaries, technology.

[Alex]

So a third goes to ops of your gross margin.

[Mike Salguero]

Yeah. And then you got 20% left over for marketing and EBITDA, or in profit. Right. And so these businesses at scale, what they do, what you do is you market, market, market, market, market for years, build your name and then just try to collapse your marketing and take it all in every.

[Alex]

And hopefully get enough word of mouth, you know, from. From those customers that it can at least stave off. Turn.

[Mike Salguero]

Yeah, that's the, like the CPG playful. And that's what a lot of these companies are doing.

[Alex]

It's a tough business.

[Mike Salguero]

It is a tough business.

[Alex]

Like, it's. I mean, it's so. It's interesting because in so many ways it's like software. Yeah. With the exception of, like, rather than dealing with development, you're dealing with supply chain. That's your big. Like I said, like, I'm sure I know there's more fires, but, like, if I had to. If I had to simplify it into like the big buckets, most of the time, I feel like that's where. Why don't you tell me That's.

[Mike Salguero]

Yeah, no, I agree. I mean, so, you know, that was Blue Apron's whole thing. They raised a whole bunch of money and it was all like, we should be valued at a software multiple. Nowadays, box subscription companies are not valued as software multiple because there's like actual physical product being sold.

[Alex]

And you don't think their stick is as high as like a. I don't know. Well, a consumer tech company like Shopify, for example, they have 60% annual retention for like, new, new customers. Right. I would imagine that if. If that in the consumables business, that, that would be unbelievably good.

[Mike Salguero]

Yeah. Yeah.

[Alex]

What's your retention on, like a year one customer?

[Mike Salguero]

Gosh, it's not how we look at it.

[Alex]

Okay, interesting.

[Mike Salguero]

Yeah. Probably around 60%.

[Alex]

Yeah, that's like best. I mean, that's. Those are like best in class numbers. I mean, there's a reason that you're doing.

[Mike Salguero]

Yeah, yeah.

[Alex]

Is it 600 now that you guys are doing?

[Mike Salguero]

Yeah, well, it's like 550. Okay. Yeah, the 600 has been out there, but it's really 550. So, yeah, we're 550 million profitable since day one.

[Alex]

And you own 70%.

[Mike Salguero]

Yeah. So I, I gave equity to most employees, like early on.

[Alex]

Like a software company.

[Mike Salguero]

Yeah. Like. Like a venture backed one. And I was like, oh, this is what you do. You give out equity. Which are you happy about that?

[Alex]

In.

[Mike Salguero]

In many ways, yes. Like the people who helped me build this business, the people who helped me hack through the jungle, y are all millionaires. And you know, that's cool. That's like really neat. But also we have it. If you don't want to raise money. Yeah, which I don't. And you don't want to go public, which I don't. And you don't want to sell, which I don't. It's like, how do you cash people out?

[Alex]

Yeah, right.

[Mike Salguero]

That has been. That is a concern of mine all the time. Is like. So every year we've actually done a. We've taken profits and repurchase shares.

[Alex]

Got it.

[Mike Salguero]

So that people have.

[Alex]

And so then you basically set the valuation every year?

[Mike Salguero]

Actually, we do, yeah. There's a 409, a value. Somebody comes in and does a valuation. We also have done this thing which is. I don't know if your listeners are interested, but we've done this thing this year which is a reverse Dutch auction.

[Alex]

Okay.

[Mike Salguero]

So we are like we're going to allocate this much money to buy shares and then people can say what they're willing to sell at. And then we bought them that way, which is pretty interesting.

[Alex]

That's awesome. Yeah, that's very interesting.

[Mike Salguero]

Yeah, I was right. It's a really. It's actually more common now and it's a really great way to get like what the actual market value is. Because when you do evaluation, it's like not.

[Alex]

Dude, who makes it up. Who knows.

[Mike Salguero]

Right. So, yeah. So I mean, you know, just on that point, what did you.

[Alex]

What was the reverse Dutch auction valuation of the business?

[Mike Salguero]

It was like 50% of the.

[Alex]

What the 4 9, 8 was. What was the 490?

[Mike Salguero]

They have one valuation and then they do this control premium that they take off. But the valuation is about a one for one with revenues.

[Alex]

Okay, so like one X. Okay, got it.

[Mike Salguero]

Which is probably low. Who knows? I mean, it doesn't matter because you're not trying to sell. Like. Yeah, one for one with revenues is what people.

[Alex]

Yeah, I will give $1 so that you have a trillion dollar valuation.

[Mike Salguero]

Yeah, exactly.

[Alex]

0.0000%.

[Mike Salguero]

Right. Thank you. Yeah. So you know, the 30% that other people own is. It's $150 million problem.

[Alex]

That's.

[Mike Salguero]

Yeah, it's a big problem.

[Alex]

Yeah. Yeah. Do you see it as a problem?

[Mike Salguero]

I don't. I mean, you have to get comfortable with telling people to be patient. Right, right. It's like, look, we're not going to spend $150 million here.

[Alex]

No, this is super relevant for me.

[Mike Salguero]

Yeah. And, you know, so during COVID Covid was we grew the business tremendously and we almost shut off marketing. So, I mean, we just made so much profit.

[Alex]

Yeah.

[Mike Salguero]

And then we bought all these shares and we just started buying and buying and buying. But then inflation took over, and so our inflationary disaster, like, our margins just got super compressed. We went from like a 30% gross margin to a 25% gross margin after doing two price increases after cheese. So it was like there was no money. Yeah. And we never, like, ran out of money, but, you know, we're all looking around being like, dude, we just like, did a share buyback, like for 20 or $30 million over the past, like, three years. I'd really love that money right now.

[Alex]

Yeah, that'd be nice. Like, hey, can I. Yeah, yeah. And no Indian.

[Mike Salguero]

Do you want some shares?

[Alex]

Yeah. All right. Well, did you. So with. So this is. This is a great follow up question. So do you take regular distributions from the company or have you just been like, kind of like you took once or twice and that's like my, you know, my family set. And now everything's still like, me personally.

[Mike Salguero]

Yeah, Yeah. I take a salary.

[Alex]

Okay.

[Mike Salguero]

And a bonus. And then very early on, because we started as an llc, I owned all of the technology and employed everybody, and the company bought that from me. And so there's been distributions to cover that.

[Alex]

And you controlled both companies, so you got to pick what that was valued at.

[Mike Salguero]

That had to be third party value.

[Alex]

Oh, was it? Okay.

[Mike Salguero]

Gotta be fair to the shareholders.

[Alex]

It's not all you. Right. Yeah. Yeah. Okay. So when you've been doing the buybacks, were you at like 50, 50, and then over time you've kind of like bought your way back to 70, 30 or.

[Mike Salguero]

Yeah, I think, I think. Yeah, I think it was like 60. And now it's. Well, originally the. The Omaha Steaks guy, and there was also a brand guy. They this. My biggest mistake when I started the company was I value the company at a stupidly low rate.

[Alex]

Right.

[Mike Salguero]

And so I had just raised $10 million on a $30 million valuation.

[Alex]

Right.

[Mike Salguero]

I started this and I'm like, it's going to be a hobby. This isn't going to be anything. So the Omaha Steaks guy is like, I can connections. I Can do all this stuff, and it's $75,000 worth of work. And I'm like, well, I don't have that, so it could be equity. And he's like, okay, great. How much is the company worth? I was like, 750 grand. So he took 10% of the company.

[Alex]

So he's what? He's a 10% stakeholder?

[Mike Salguero]

Not anymore. I bought him out. And then there was a brand guy, which was the same thing, 10% of the company. And as we got going, I was like, ah, that. That's, like way too much. And they're not doing anything, right.

[Alex]

Yeah, yeah, they did one time work.

[Mike Salguero]

It's like one time work. Right. And so we bought them out. We bought them out when the valuation was 48 million.

[Alex]

Well, I'm sure they were thrilled.

[Mike Salguero]

And it was. Yeah, they got $200,000 a month for two years. Okay.

[Alex]

I'm sure you're still thrilled, you know. Right. Probably more than you made at Omaha.

[Mike Salguero]

Totally. Yeah. Way more.

[Alex]

1. One good phone call for him.

[Mike Salguero]

Yep. A little bit of work.

[Alex]

Yeah.

[Mike Salguero]

Except for life, man.

[Alex]

There's so many directions I want to go, but to put a button on the story, and then I want to go back and kind of unpack some numbers and things like that. If you're not going to IPO and you're not going to sell the company and the CPG playbook is that at some point you turn off the marketing. When is that?

[Mike Salguero]

Yeah, not anytime soon.

[Alex]

Okay. So you just want. You want to keep growing for a minute.

[Mike Salguero]

Yeah. So you have a goal like a.

[Alex]

Billion a year in sales or.

[Mike Salguero]

I mean, a billion. I'm very goal oriented, so I do have a billion on my whiteboard. But I recognize that before that I had a million, and before that I had 10 million and then 100 million.

[Alex]

So a billion will be enough for sure.

[Mike Salguero]

Yeah, totally. Then it'll be enough.

[Alex]

Yeah.

[Mike Salguero]

And lay down my arms and walk away.

[Alex]

Then you'll be happy. Just.

[Mike Salguero]

Totally. Yep, exactly. I would like. I think running this to a billion revenue would be a lot of fun. I don't know how fast that's going to be. We've definitely learned that it's gotten a lot harder. Like, as you grow, you just doubling and, you know, it's just harder.

[Alex]

Yeah. 1% on. How many customers do you have right now?

[Mike Salguero]

Like 430,000.

[Alex]

Yeah. So 1% on 430,000, it's like, oh, all of a sudden that's just, you know, 4,300 customers that we just have. If we lose 1%. It's like, okay, that's a decent amount of customers. And you're like, well, if it's 10% churn annually. And you said, I think you were keeping, well, 60 of your one or something.

[Mike Salguero]

No, I mean, our churn is like 3% a month.

[Alex]

Right. So that's 30ish percent or whatever.

[Mike Salguero]

It means you have to sign up 12,000 people a month before you stop trading water.

[Alex]

Just to chill.

[Mike Salguero]

Just. Yeah, yeah. So it's like, it's. Those numbers just get big.

[Alex]

It's 400 a day.

[Mike Salguero]

Yeah. Just like they're leaving. They're leaving.

[Alex]

Yeah, they're leaving. Yeah, they're falling out. Right.

[Mike Salguero]

Don't leave, people. We have a great product.

[Alex]

Dude, you had bacon for life. What are we talking about?

[Mike Salguero]

Yeah, you're losing your for life offer.

[Alex]

I really do love the, the lifetime. The lifetime offers.

[Mike Salguero]

Yeah.

[Alex]

I have a book that's coming out that talks about this, this particular offer structure. So, yeah, a lot of fun.

[Mike Salguero]

Yeah, Lifetime offer. People getting a box of meat seemed really magical. Like, it was like, wait, this is going to show up. It's going to be frozen. Like, I don't trust it. So money back guarantee, like, no questions asked. We'll just, we'll just refund you.

[Alex]

Let me, let me talk to some of the fears of business owners around money back guarantees, because I talk about them a lot too. What percentage of customers do you get who ask for refunds on like a monthly basis?

[Mike Salguero]

Oh, gosh, I don't even, like, so small. I don't even know the number.

[Alex]

Right. And the conversion increase is certainly worth having.

[Mike Salguero]

For sure. For sure. Also, like, you know, one of our core values is being customer obsessed.

[Alex]

Yeah.

[Mike Salguero]

Like, we actually want to deliver you an amazing product. Right. And so if we fail at that, you should get your money back. Yeah, that's like. And it's like, well, I'm worried about that. Well, fix your product. Make your product better. Like, spend time obsessing over your product and you'll do very well with money back.

[Alex]

It's like dollar per box and then also like happiness per box. Like on the customer side. Like your delight per box.

[Mike Salguero]

Totally. Yeah. I mean, it's all about your. Well, the metric that is commonly used is the Net promoter score. So it's all about your satisfaction with the. And we're constantly asking, what's your NPS right now? It's like a 63.

[Alex]

That's great.

[Mike Salguero]

Yeah, yeah, we're pretty happy with that. We want a perfect experience every time. And when you're shipping multiple species, you know, you had 12 to 15 species.

[Alex]

Do you eat fish?

[Mike Salguero]

Yeah, we do seafood.

[Alex]

How did that. How did you get. Was that just a whole nother? Have to find another supplier?

[Mike Salguero]

Yeah, we don't use any of that. So basically, we got going. We'll go all the way back. We got going. We're shipping out boxes. We're making $20 a box. The influencer thing is working. We got to about 6,000 subscribers. And it was clear to me that we had no idea what we were doing. It was like, okay, we've been faking it. That's great. But we need somebody who knows how to buy more.

[Alex]

An adult.

[Mike Salguero]

We need an adult right here. And so again, I went to LinkedIn, usually while on the toilet, and I reached out to this guy who lived in Boston and ran meat and seafood at one of these big grocery chains, but he had retired. And so I was like, interesting background. Let's talk. Pulled him out of retirement, and he came and started purchasing meat and seafood for us. Meat and then seafood. And I mean, the saving. My whole thing was, okay, we're shipping 60,000 pounds of meat. I've got. All I have to believe is that somebody can save me like 25 cents a pound. And this is, like, worth it, right? So he came in and just. He's like, you guys are paying his, like, second day. He's like, you guys are paying enough in chicken breast that you could send people £3 instead of £1. Do you want me to do that? And I'm like, yeah, yeah, that'd be great.

[Alex]

That'd be good. Yeah. 25 cents was the target. And he was like, I can give you a buck and a half.

[Mike Salguero]

And you're like, show them. I mean, multiples of his. Of his salary back. And, you know, I think it's really important to. That you hire experts in certain areas at the right time. But in certain areas, I want to.

[Alex]

So I wanna. I wanna hit on. On the. The meta part of this, which is like, all right, like, the big. The big turning points. Cause I like. I like, like, what are those? Those inflection points in the business. So it's like, all right, you switch from raising money to pre selling. That's pro. I feel like that's like setting yourself up on the right path. Okay, so that was number one. Number two is you realize this influencer thing has some legs to it, and then you go hardcore on getting influencers. You also reverse engineer somebody else's database, which I highly recommend if you're trying to reach out to people to find the high, like I call them HVTs, but high value targets. Like, how do we find the hvts and then grab them? Okay, so you do that. You have a happy accident with free bacon that ends up being a core component of the offer. And then later you turn on the lifetime version of that, and then you do that across, kind of horizontally across the box. You obsess about gross margin per box. So whatever your unit economics are of the business, you got super dot on that and just want to make every single p, every single penny count because you're on the same side of the table figuratively as the customer. You got experts in at the right times. The branding person up front, the Omaha steaks guy later, the meat purchasing guy, that all came in at key points to, like, unlock, you know, levels of profitability and growth. What's. What are some of the other ones that. That, that might have been skipped over in the.

[Mike Salguero]

Geez, man, that's good. Just like, boil it down in a good way, I think working like, so our backbone today. We still don't own our backbone. So distribution. We don't do. We don't own our own farms. We don't own our own.

[Alex]

Do you want to?

[Mike Salguero]

No.

[Alex]

Okay.

[Mike Salguero]

Because we believe that it's better to work with partners. It's kind of like the Toyota approach. Work with partners, hold their feet to the fire, hold them to a tight spec, have them do things they're not doing for anyone else, but trust that they know better than me. I don't know anything about farming. I don't know anything about slaughterhouses. That's a bad place for me to spend my time. The only piece of our entire backbone that we control is dry ice. We have two dry ice plants. And that's because if you don't have dry ice, you can't ship a box. And so we were like, we should. It's like a great insurance policy.

[Alex]

Yeah. Everything else, if you lose that revenue goes to zero.

[Mike Salguero]

Yeah, right.

[Alex]

Yeah.

[Mike Salguero]

Everything else is like, not. I don't think it's worth us. Us taking. And so. And I think that's like one common mistake in box subscription companies, in overfunded companies, and just with entrepreneurs in general.

[Alex]

Is vertically integrate, bro.

[Mike Salguero]

Yeah. You need to. You need to, like, own everything. You need to control all of it. And that has been a huge. It's actually been a huge part of our success.

[Alex]

Well, then let's. Because I'm sure you've had partnerships that didn't Go well. Yep. And you've obviously been really good at building these relationships. So to the greatest degree possible, do you have any kind of test for how you judge a partner's ability to fulfill on their promises before you've started working with them? Because obviously, you know, you're bringing a huge amount of business. There's a significant risk that you take on by having a partner do something bad. There's obviously with food, there's huge liabilities of a whole, you know, a whole state has rotten meat. It's like, I mean, it's a, it's more of a PR nightmare. It took Chipotle years to, to. To live down the salmonella issue that they had as a micro example.

[Mike Salguero]

Yeah. So, I mean, on the, on the meat side, we do robust safety audits. And you. Like, we're not working with you unless we've done a whole bunch of audits. On the other partner side, we're generally trying to work with the best, best people. Like best in class.

[Alex]

So you just look at an industry and say, okay, we, we want to find. Okay, so of all the different farms in the US that are grass fed, who's the biggest and the best? And you just try and do a deal with them.

[Mike Salguero]

Yeah. I mean, you try to balance like helping small farmers. Right. And working with big farmers. Because a small farmer might have 50 head and we might need like 100,000 head.

[Alex]

Right.

[Mike Salguero]

So we can't work with 2,000 small farmers. We generally work with collectives that then work with the farmers. So we're working with that collective saying, this is what we want, this is our spec, this is how we want it raised. And then they go and find the farmers. And again, it's like, we don't want to be on the ground. You know, I love meeting with farmers and doing all that, but like, that can't be what we do for inspecting.

[Alex]

Hooves is probably better.

[Mike Salguero]

So it's like really important to know what you're good at and what you're not good at and anything that you're not good at, including picking up the phone 1100 times. Like, just don't do. Try to get someone else to do it, because you can't. I don't think you can build a business unless you're feeling that flow and you're feeling like, really engaged. And that can only be done in the work that you're really good at.

[Alex]

You've been really good at picking those people, though. So like, what's your. Obviously there's the reputation of the company.

[Mike Salguero]

Right.

[Alex]

But Also, you're really good at picking, like, the Omaha steaks guy and the branding guy that you picked out, and even Nick, who did those first 1100 calls. Like, it's an uncanny trait. Like, you've been really good at it. I'm just, like, listening to the story I have. You haven't mentioned. I'm sure there were some horror stories, but, like, it seems like you've had a huge amount of success. And I feel like if I had had a different entrepreneur in the chair, I would have. I could totally hear the total other side of the story. I went to a couple partners early. What I learned is you gotta control everything if you want, you know, like. You know what I mean? Like, I've heard that side. And so you're obviously better at picking partners than most people. So, like, what do you think about. In trying to isolate, like, this person will work?

[Mike Salguero]

I mean, so early on, when you're talking about your first employees, I have this analogy. I think I stole it from someone. But building a company is hacking through the jungle with machetes. And so you're just like. You're just dropped in the middle of the jungle. You have a machete. You're like, I don't know where we're going at that point. You need people who are just gonna hack day and night with you, and it's grit. So I'm looking for athletes. I'm looking for people who have failed at something. I'm looking for people with a chip on their shoulder, daddy issues, all of that, because I've got all that. So I want to.

[Alex]

As all great men.

[Mike Salguero]

Oh, I. That's the type of person I want. And then as you grow, you realize that, like, okay, we need some experience here. And how do we get experience? One thing. This doesn't totally answer your question, but one thing that we did that was, like, I think pretty. I thought was pretty smart is I called it the barbell strategy. We hired people, like, out of retirement because they were so far along in their career. And we found that the middle, like, so really young and really old, worked incredibly well.

[Alex]

I would say, personally, I've had a lot of experience with that, too.

[Mike Salguero]

Yeah. And the middle is, like, they're super busy. They've got kids, they've got all these commitments. They want this to be, like, the one mark on their career.

[Alex]

Yeah, the one career. The career. Like careerists rather than people who want to do the work, which is different.

[Mike Salguero]

Hunger. Hunger.

[Alex]

Yeah. It's interesting because the people at the very beginning want to work all the time. Because they want to learn a lot. The people at the end want to work because they have nothing else to do. And they want to in some ways, like get. Have their experience be used. Like they want to be used. Right. And that both of those are actually concentrated on the work itself rather than the label ascribed to the work.

[Mike Salguero]

Totally.

[Alex]

And everyone. A lot of times people in the middle are. It's like you're three years on my resume. And I want to, you know, just leverage this brand.

[Mike Salguero]

I need to go from director to vp and then I need this and I need this. And. And yeah, we just found that people on the ends were just like so grateful and. And so like my title obsession. Yeah.

[Alex]

Yeah. I hate it.

[Mike Salguero]

My meat guy, I just remember this dinner I was at and it's like my meat guy and blue aprons meet guy was there and blue aprons. Meat guy's like 32 years old in like skinny jeans and a nice best. And my meat guys is like grizzled, like 65 year old. It's like, who do you think is buying chicken for cheaper?

[Alex]

Yeah, like. Like my guy looks like meat. Yeah. Yeah.

[Mike Salguero]

Like, yeah. I mean, so I don't really, like, I don't really know what's happened here. Like, I like to say, like, the. The business wanted to something way bigger than I expected.

[Alex]

Interesting.

[Mike Salguero]

And I just honor that as like, some of these people just kind of fell into my lap. But I definitely. My first company, I knew people were off culture and I hired them anyway. And this time around, we wrote down our core values and we're like, okay, this is what we're hiring for. One of our core values is relentless improvement. And to your question about partners, any partner you work with, there's gonna be problems.

[Alex]

Sure.

[Mike Salguero]

And we're just not afraid to talk about them. We do quarterly business reviews. We're like, you know, auditing. We're doing a whole bunch of stuff and telling you what you're doing wrong so you can fix it. Because most partners don't want to.

[Alex]

Like, just they want to fire the relationship or not talk to you. It's like, no, let's just keep getting better.

[Mike Salguero]

Yeah. Like, let's just get better. Like, we want to lock arms with you and get you better. And so we're also. Because we're trying to build a long term thing. Like, we're just locking arms with partners and trying to just move forward with them.

[Alex]

Talk to me. So given the growth rate that you had. So it was like, was it. It was like 5 million was the first like, or second year, I think, of business, right? Yeah.

[Mike Salguero]

So we started in September of 2015 and we did like 200 in the Kickstarter. We did like 500 grand and then we did 5 million and then 33 million and then 105 million. 220. Then Covid hit. We went to 450. Yeah.

[Alex]

And then you had what, like 500 and then 500 ish the next year?

[Mike Salguero]

450. 550. 550. 570. And then last two years ago, so 2023 we went down for the first year, which was pretty heartbreaking for a team that, you know, prides ourselves on growth.

[Alex]

So talk to me. So. Yeah.

[Mike Salguero]

And then last year we started growing again.

[Alex]

Okay, that's good. So I have two follow ups. So first one is talk to me about Rush. Like, what's your. Because like you grew really fast.

[Mike Salguero]

Yep.

[Alex]

And then you were essentially flat for like basically four years. Yeah. How does your perspective on where you want to take the company affect how you run the company with regards to growth's rate and like rush around goals? Yeah, I like talking about Rush a lot because I think it's where all mistakes happen. And you grew really fast without the intention of growing really fast. Yeah. Which I find has happened to me multiple times.

[Mike Salguero]

Yeah. You know, I think that we. So we grew, obviously we grew incredibly quickly. The biggest mistake that we made, the biggest rush that we made was the wheels kind of felt like they were falling off the bus at like 4:50. And we decided to bring in a whole bunch of people to help, like, fix the wheels.

[Alex]

We need bodies.

[Mike Salguero]

We need bodies. We need bodies and we need managers. We need people in the middle.

[Alex]

The middle. Right. Yeah. What was headcount? Just so I have context, what was headcount at that at like, I mean.

[Mike Salguero]

Going into Covid, we were 85 people.

[Alex]

So doing 200 going into Covid with a headcount of 80. Yeah, that's great.

[Mike Salguero]

And then coming like end of 21, we were at like to like maybe one one hundred and sixty. And then we got to a height of two hundred and forty.

[Alex]

Yeah.

[Mike Salguero]

With designs on, you know, we're going to be like 300 people.

[Alex]

Yeah.

[Mike Salguero]

And now I'm like, you know what? Like 150 sounds really good, right?

[Alex]

Yeah.

[Mike Salguero]

So yeah, we currently have. We have 25 associates in our drives facility. And then like 170 people outside of that. And so the rush was we hired a lot of people and what, what happens to companies and apparently I'VE learned now that this is a class $500 million trap. So you can add a book to your thing later. The $500 million trap is something bad happens, you hire a bunch of people because you don't know enough and everyone starts saying no. And you go from capital E entrepreneurship like a bunch of pirates, like, very little process. We're just going and growing and like to like, oh, we need, we need process. Like we need capital P process and entrepreneurship needs to come way down here. And that's what happened.

[Alex]

You guys are a bunch of kids.

[Mike Salguero]

You're a bunch of kids. Like you, Mike, are like, you know, have all these ideas and like, we need to correct you to. And, and that's what happened. And at the meantime, I broke my arm. Like my, like everything in my life kind of fell apart at the same time. And it was, it was a slog. And I'm, I'm really proud. Like last year we grew like 6%. And I'm like, fuck, yeah. Like, we'll take it.

[Alex]

Yeah.

[Mike Salguero]

And you know, so sometime along the journey I went from like, this is a hobby to I'm gonna just flip this thing, like, let me build this up and sell it for a hundred million dollars. And I went on a couple meetings and I was like, it just doesn't feel right.

[Alex]

Interesting.

[Mike Salguero]

And then it just kind of over time came to me of the meat industry is broken. Animals are not being treated well in this country and that's like hurting of like people who are eating it. And it's like, I just wish there was a company that like wasn't funded, had no one breathing down their neck who could just take the, play the long ball.

[Alex]

Yeah.

[Mike Salguero]

And just like this might take 25 years, it might take 100 years, but who cares? Like, we're in it for the long haul. And then after a while it was like, after pointing out everyone else who should be doing that, it's like, oh, maybe that's me. Yeah. And so I have no idea if this is what's going to happen. But the plan is to build a multi generational long term hold. If you look at food companies in the US many of them are family controlled, multi generational long term holds. And so that's kind of like that's how I've built since the past few years.

[Alex]

Yeah.

[Mike Salguero]

While reinserting myself and becoming a, becoming a pirate organization again.

[Alex]

Does it feel better? Yes.

[Mike Salguero]

Yeah. I mean we, we did a lot of work in the middle layer. Like a lot of directors, a lot of. Yeah.

[Alex]

Yeah.

[Mike Salguero]

At Our. At our height, we had 230 people and 85 managers. So, like, the average person had like one person underneath them. I just equated to like the restaurant worker where the receipt comes out and they grab it and they're like, where's the chicken parm? Yeah, yeah, on their phone. Like, chicken parm. You know, it's like, dude, what do you do all day? And so we've done a lot of work in, like, retasking people and just making sure that people are in the.

[Alex]

Right seats doing things.

[Mike Salguero]

Doing things. And it feels much better. We're moving much quicker. We're growing, We're. Yeah.

[Alex]

So you're losing 12,000 customers a month.

[Mike Salguero]

Yeah, something like that. Yeah.

[Alex]

Do you have any idea what the split is of new customers per month in terms of where the sources of customers come from? And is there an acquisition channel that you have not mentioned so far that majorly contributes to that?

[Mike Salguero]

Yeah. So right now we're heavily on referral and heavily on meta. Those are like the two.

[Alex]

Meta ads and referrals.

[Mike Salguero]

Ads and referrals.

[Alex]

What's the split?

[Mike Salguero]

We're like 30% referral. And then I don't know what meta is because there's also organic and Google and whatnot. Say 30% meta, 20% organic affiliate. All the other channels.

[Alex]

Yeah, influencers are 10 or whatever it is.

[Mike Salguero]

Referral's been really interesting. We now, if you're a member, you can refer a friend for a trial box and it costs $20. And we've just seen that work really well.

[Alex]

What does the referrer get?

[Mike Salguero]

Nothing.

[Alex]

Okay. Yeah.

[Mike Salguero]

We tried a whole bunch of different things that you get $50, you get this, you get that. What they like the most is giving their friends a box that's almost free. They just pay for shipping and handling.

[Alex]

Oh, so like a free plus shipping, basically. So it's like boxes free, it's $20 for shipping and handling kind of thing.

[Mike Salguero]

Exactly.

[Alex]

Interesting. So that's another offer. Yep.

[Mike Salguero]

And that's worked really well. You obviously get a lot of people who just take. Get one box. They're like sweet free meat. And then they cancel. But, you know, executed well. You see a lot of people stay and then they just become great customers. And if you. Yeah, if you like, a referred customer is a better customer. And so we've really leaned into that.

[Alex]

As a program because it compounds at scale, which is why it's so great.

[Mike Salguero]

Yeah, exactly. Yeah. We've shipped a box to 1.7 million, 1.75 million households in this Country. And so at a certain point, you're like, how do we inspire those people to do the sales on our behalf rather than us trying to, like, you know, retarget people on Meta. Yeah.

[Alex]

So there's two things that I wanted to get into. So one is the ad strategy, and second is, if I'm not mistaken, you guys did a media play, correct? Recently. Yeah. Yep. Yeah, I want to talk about that, because I think that's really cool. So let's do media play first.

[Mike Salguero]

Okay.

[Alex]

Yeah.

[Mike Salguero]

Yeah. We bought a company called Truffle Shuffle. These two. Two guys. One's actually in Vegas. We're gonna see them tonight for dinner. And they. They raised money on Shark Tank, and during COVID they decided that they were gonna sell truffles direct to consumer. These little mushrooms that are hard to get. And then once they started selling truffles, they realized that no one knows how to cook them, and so they started doing these instructional videos.

[Alex]

Yeah, you got my digiorno, and I'm just putting my truffles.

[Mike Salguero]

Exactly. People are like, how do I. What do I do with this? And that took off. And this is like Covid, where everybody's at home trying. All these corporations are trying to, like, treat their staff well and give them stuff and whatnot. So. So they. They ran a pretty interesting business for a while. Great content. Thousands of classes where they're teaching people how to cook.

[Alex]

And it's live or recorded?

[Mike Salguero]

Live. Interesting. Also recorded, but live. Yeah. And they just like that. They're experts at hosting a live class to cook.

[Alex]

Yeah. It's virtual.

[Mike Salguero]

Virtual, yeah. Our biggest challenge as a company, if you look at our churn, the people who are leaving. Our biggest challenge as a company is how do I inspire you to take the meat out of your freezer?

[Alex]

Yeah, they put it in there, and then they're like, oh, I've got two months worth. Like, I don't need any.

[Mike Salguero]

Right. And people think of their freezer as like, a savings account rather than a. Like. So when you say, what's for dinner? You open your fridge and look inside or you look on your phone and order something. So how are we gonna, like, inspire you? Well, one way to do that is if we do cooking classes. So we, you know, really like the founders, Jason and Tyler, and just decided that it was a good fit. We got it for, you know, like, a good price, and we ended up ingesting them. And so now we're doing cooking classes for our members. We're doing.

[Alex]

And that's included in the subscription?

[Mike Salguero]

Yeah, including the subscription do you do?

[Alex]

So how much of it is public and like available for people who are not buyers?

[Mike Salguero]

We're trying to figure that out.

[Alex]

Okay. Because I'm so like.

[Mike Salguero]

Yeah.

[Alex]

Because I don't know how big of a media company in terms of like, you know, impressions. They do. But like is my whole, my, my whole, my whole business model around content is just demonstration. Right. It's just like show, don't sell.

[Mike Salguero]

Yeah.

[Alex]

And then the selling will occur.

[Mike Salguero]

Yeah.

[Alex]

And so like whenever you have the opportunity. In my opinion, that's the, that's the most elegant, you know, way of selling.

[Mike Salguero]

Yes.

[Alex]

And so like these, you know, high end chefs having these really engaged high end. You know what I mean? Obviously relatable.

[Mike Salguero]

They're high end.

[Alex]

Yeah. Because on one level there's the retention piece. But I have this theory around the idea that this is, I don't have a double blind placebo test here, but this is Alex's opinion. I think that you retain customers that pay for a subscription with free content that's available for everyone for a couple reasons. Number one, a lot of people don't log into stuff. It's just like you're not like, oh, I'm going to go log in, what's my password? And then you're already like gone. It's not going to happen. So the reason that I have like all my courses on my site are all free and also available with no login is for that purpose. And it's certainly been a significantly better thing than me trying to hide it behind even an opt in wall just to collect people's emails. You can watch them and then at the halfway point or whatever, it just says, hey, you can opt in if you want. You can also not opt in and keep watching the video. And it's been exceptional for lead generation. And so thing one is that I don't think a lot of people, I think the utilization is not as high as I would like it to be. Even when you make these really high end things. The second is that it certainly doesn't drive. I think that you will drive more. Not you, but like one, anybody can drive more sales with making the media available to everyone. It also makes it more shareable. And I think that spins the referral machine. You get the media machine from platforms and then that will drive top of funnel sales and awareness. And I think that maybe you put a handful of them behind a paywall if you want to as a membership benefit. I'd be curious to know if. Because if we're thinking about how do we solve the problem? Sorry, this is me. Like, how do we solve the problem of the customers? I have bank too much meat and don't cook it because they're not inspired enough to cook. So it's like, okay, so we're trying to maximize on consumption in two ways. Consumption of meat, but consumption of meat cooking so that it leads to consumption of meat, right? And so if you were to pre educate, right, where people watch some show about some truffle meat dish and then purchase they're purchasing with intention to make a specific dish. And I think it's almost like it like colors them a different type of customer because their consumption experience was pre framed with recipes versus I'm gonna buy meat. Cause this is good quality meat and it's a good deal and I'm getting free bacon. Just this is me just. I'm totally spitballing here. But like, that would. That was. That was. When Harley told me that you bought that media business, that was immediately where I guessed or where I thought you were going. I was like, that's brilliant. Good. Push as much of that as humanly possible out, incorporate the product into everything. Way more eyeballs come in. Existing customers still attribute the benefit of their subscription to the show because they're still going to consume the meat. And so you still get the positive brand association, even if it's free for other people. And that was something that actually like I stumbled upon that. So because I've had media businesses, right, and there's always this big fear in anything media related, especially if you have memberships and things behind paywalls, that what if I give away too much for free, that I upset my paid customers. But in my experience, it hasn't been the case at all. One, because basically no one logged into anything as big, you know, big thing, you know, big point number one. But secondarily that I think the human brain has a very hard time attributing whether the content they watched was behind a paywall or not behind a paywall. I think we zoom out and say, has ButcherBox provided $129 of value to me this month? And you think about the one meal that you cooked from a recipe that you found, whether it was your recipe that was behind a paywall, not in behind a paywall, or just that they saw on a cooking show and used your meat, right? That wasn't even associated with the truffle hustle. Was that what it was?

[Mike Salguero]

Truffle shuffle.

[Alex]

Truffle shuffle, yeah. And so anyways, that's my genius. Two cents?

[Mike Salguero]

Yeah. That's more than two cents. Probably. That was probably worth more than two cents. I'll come back in a couple years and I'll have crossed off the billion. Still won't be enough. But yeah, I mean that's the beauty of owning content is pushing it out more, doing more with it, serving our member. But I think that gives me a lot to think about in terms of how are we pushing it to non members because we've definitely been careful. We've been like, well this should be a benefit for our members.

[Alex]

Yeah, I'd be curious because I think that. Because there would be. Because the math problem is solvable of does the increase in conversion and retention on members with this added benefit, which I'm sure you've measured now that we added into the box, has it measurably reduced churn or has it measurably increase conversion rate on the page, whatever. Versus the amount of new customers that come in with first, second, third touch point via content. Yeah, and my bet would be that you would. This is my bet, obviously. I don't know. But my bet would be that it'd be more on the. On the top end and then from the ads. Ads perspective because I know you run a ton of advertising. I'm sure it's like I feel like that kind of content taking them because if, if you have it public then you can let the algorithm tell you which pieces are the fire. Fire pieces of content of the cooking and then push that out as top of funnel awareness ads retarget people who are at do 50%, 75%, whatever it is with now your conversion stuff. But they have positive brand sentiment because now they're in the market. You know what I mean? They just consume this. They're literally. They were watched enough to be inspired. They were inspired enough to watch and so now we just want to see if they're inspired enough to buy.

[Mike Salguero]

Love it. Just love it. Yeah. There's a book called How Brands Market and what they found was they put up all these ads like billboards and stuff trying to get new customers, but they found that it actually drove more repeat orders. And so that's similar. Like if we put out content to the.

[Alex]

They'll be reminded to eat their meat.

[Mike Salguero]

That's right.

[Alex]

Right. I think it's brilliant and I think that I'm really excited to see what you do with it. How long ago was the acquisition?

[Mike Salguero]

We bought it in June of last year or something.

[Alex]

Okay, so it's still pretty recent.

[Mike Salguero]

Yeah, we just launched a Spice line with them. We've done a bunch of social content, but yeah, I think making more of it public would probably be a good thing.

[Alex]

And so the last piece was the ad strategy for Facebook. So what's been your thinking process for generating? Probably the amount of creative, I'm assuming. I mean, you've got a. I mean, yeah, you probably have to put out 50 pieces a day and you probably have gotten a crash course on running ads if you're the CEO of this business.

[Mike Salguero]

Yeah. So we've, we've gone all sorts of different ways. We have had ad agencies work on our stuff. So buyer ads and, you know, update and whatnot. We've done in, in house. We've gone back and forth. We're currently outsourced on our ad buying.

[Alex]

Interesting. So outsource media buyers. Who does the creative?

[Mike Salguero]

They do as well.

[Alex]

They do the creative too.

[Mike Salguero]

We do some. We give them guidelines, but they do it. The reason why was we weren't moving fast enough. So it has become, as you said. Yeah, it's become a game of. It's like an arms race. You gotta like be changing your creative all the time. You got. And we noticed that there were multiple, multiple, multiple meetings to like talk about and obsess about all these things. It was like, this isn't gonna work. We can't do this. So we, you know, we've made a hard pivot. I imagine at some point we'll come, we'll be like, okay, we're paying way too much. We need to like do it in house. But the speed.

[Alex]

Do they charge a percentage of ad spend?

[Mike Salguero]

Yeah, they do. Yeah. But so when you're spending a lot, that's a lot of money.

[Alex]

Yeah. And that's baked into cac.

[Mike Salguero]

That's baked into the cac.

[Alex]

Yeah.

[Mike Salguero]

Yeah.

[Alex]

Have you, have you done multiple different agencies over time or is it.

[Mike Salguero]

We have. I mean, there's certain agencies that work well at a smaller size and certain ones that work at a bigger size. We have, we haven't been able to grow with like one agency.

[Alex]

Okay. That you've had multiple.

[Mike Salguero]

Yeah. At. At different times where we've.

[Alex]

We have one right now. It's not like you have four running. We have one. Yeah, got it. Okay. Cuz I had a buddy who had a really big company and he had four different agencies working at the same time. And he was like, yeah, the world's big. All I need all of them just fully focused. And I was like, are you worried about like crossing like. Well, yeah. And that was the kind of the response was just like, well, there's 300 million Americans.

[Mike Salguero]

Yeah, there's a lot of Americans.

[Alex]

I'm not giving them. No one's getting any other access besides like pixel traffic. And so they can make their own lookalikes off of whatever they think is going to. Going to convert. And if there is some overlap, there's probably overlap with 10 other thousand companies that are also advertising. And so it's more. Because I think the deficit, like the, the constraint is more the creative power and mental. And mental bandwidth and attention and skill than, than really anything else. And so one team. And you probably know this from the companies or at least you've experienced this the same way I have. There's this law, I can't remember what it is. Tom Billy talked about it, but basically the square root of every company does 50% of the value creation. So it's like if you have 100 employees, 10 people do 50% of the value creation. And I thought about it and I was like, that sounds about right in terms of like, where's the contribution towards revenue and all that kind of stuff. And so when you think about that from the agency owner perspective, it's like, I'm getting these four really good people from this agency on my stuff, but I also want the four really good people from this company and the four really good people from this company. So anyway, it's just like a. Interesting because you have one agency that runs all of it. They're doing. I can't believe they're doing really everything. So they're going out.

[Mike Salguero]

We do some stuff internally as well.

[Alex]

But they're going to. So they're like going to farms and capturing stuff.

[Mike Salguero]

Oh, we have all that B roll.

[Alex]

Okay, so you have B roll.

[Mike Salguero]

We have all that. So they're not really taking any. They're not going all the way to shooting. We have all that content. And yeah, I mean, I think Facebook has been a wild place for the past few years. It's like either working really well or not working at all. We've also had more competitors come into our space. HelloFresh launched a company that is like, hello, Meat. Hello, Meat. Yeah. Is it really? No.

[Alex]

I was like, I don't even want.

[Mike Salguero]

To mention their name.

[Alex]

No free press.

[Mike Salguero]

Yeah, no free press for them. But, you know, everyone's copying us, everyone's advertising against us, which I think is a good thing. But it's like, here's why we're better than Butcherbox, you know, and it's, it's, it's a Different world. You know, I think there's been a lot of conversation about this on Twitter recently around, like, Facebook is great for retargeting. Somebody comes to your website, great, top of the funnel a little bit harder. Top of the funnel meaning, like, you're. You're exposing your brand to new eyeballs. That's where I think, you know, in order to grow from. To just continue the growth which we have to do, we have to have 12 to 15,000 people a month. Like, at least. We just need a lot more top of the funnel awareness. And one of the challenges I've had is driving top of the funnel awareness has been really hard.

[Alex]

It makes sense for the media acquisition. That's why I heard that I was like, brilliant.

[Mike Salguero]

Yeah, yeah. So we've done other things. Like, we've tried to do a lot of, like, brand top of the funnel stuff. That has not worked. I'm hopeful on the media thing, but really we're trying to, like, get the word out about what we're doing. We're trying to change the industry. But the. Yeah, Facebook has been. I mean, you could see it in our numbers. We were like, grow, grow, grow, grow, grow. And then there was the iOS change in 2021. It's just like, like, yeah. And then inflation. Yeah.

[Alex]

Made for business is easy.

[Mike Salguero]

Yeah, super easy. Super easy.

[Alex]

Everyone should do it. Yeah.

[Mike Salguero]

Yeah. I mean, I think that, like, focusing on the fundamentals is so important for people. Like, you broke down the business into, like, these moments and fundamentals along the way. And, you know, yeah, business is hard. It can be really challenging. But if you just focus on the things that matter and know the things that matter, it can be a lot easier.

[Alex]

And I think, oh, a big. This is me just saying from outside perspective, I think a big part of the success has also been that, like, you haven't had a mental option for pulling the rip cord, you know, and so when problems come, it's like, well, I'm not going anywhere. So you just kind of take it one bite at a time, you know? And I think that when you. It's almost like in a marriage, if you, like, if divorce is an option in your mind, then maybe you don't feel like having the conversation. It's like, you're like, you know what? Screw this. Right? But if it's just never an option and you're just like, I'm in. Under that hypothetical guise or premise, then it's like, that's the premise that you approach all the problems within the business is like, well, I either Die or we keep going. So we keep going. I'm still alive. Therefore we will solve these problems one at a time. Yeah, it is really interesting with the top of funnel component. I feel like the content is the ultimate top of funnel because it's the. You can harness the algorithm, finding all those people because it'll serve your meat stuff to the people who really want meat. And you don't have to figure out what the perfect look like audience is. They'll do that and then you have this massive retargeting audience where you can spend the amount of money you're spending now, but it's all warm traffic because you're getting a billion impressions a month on, on all this content being pumped out, which I think is so cool. I think it was just a brilliant acquisition.

[Mike Salguero]

Thank you.

[Alex]

So, yeah, I think I can say on behalf of all the entrepreneurs who listen to the game, thank you so much for sharing the story of Butcherbox. Butcherbox to a Billy and beyond. But thanks so much, man.

[Mike Salguero]

Thank you.

[Alex]

Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got it. You've got recruiting, hr, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30ish pages for each of the stages. Once you enter the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com roadmap R O A D map, roadmap.