Feb 9, 2024
40 min
Episode 22

TOP CEO: ButcherBox- 'The Crossroads' (With Mike Salguero)

Mike Salgueiro  00:00

I had poor health, I didn't have a lot of friends left, I had lost the culture of the company, I didn't even want to get out of my car to come into work. And I worked myself into a job where I had a whole bunch of bosses being all my investors, and I was miserable. 

The Detective  00:13

Imagine you're the CEO of Butcherbox, a subscription based service that delivers high quality grass fed and organic meats directly to customers doors, you're leading your pack through the rainy jungle, unable to see what's ahead. And your resources are limited. The goal, becoming profitable through the quality of your product. Past expeditions have taught you lessons on external funding. So now you venture on your own.

Mike Salgueiro  00:54

There was no money for people who are in box subscription companies and they all went out of business. How

The Detective  00:59

do you compete without that extra help? The trail is muddy. The undergrowth makes you stumble, the sun amps up the heat. But you and your team, cut through the vines and cross the rivers

Mike Salgueiro  01:15

530 100 and then 220. And we went from 220 to 450, and then 450 to 550. And like we've kept going

The Detective  01:23

year after year, your profit rises and rises. And just when it all seems to go the way you planned, a tropical disease threatens to bring your journey to a stop

Mike Salgueiro  01:36

this virus that was spreading and the factory shutdown, I notified the team let's load up an inventory. I think something's coming. The

The Detective  01:43

pressure is on more as expected out of you and your resources are running dry. Do you give up quality and your reputation? Or do you risk growth and quantity to make sure you keep your promises? The time to act is now it all comes down to your original mission to provide people like yourself with consciously raised me,

Mike Salgueiro  02:09

I'm not going to be able to run this anymore. 

The Detective  02:12

This is the story of Mike Salgueiro. And this is The Crossroads.

Ben Kaplan  02:21

You started the company in 2015. It seems like that notion of the values of the company is important not only because it helps you run the company, but because it was part of the founding idea of Butcherbox. So take us through back like how that came to be how you came to be a purveyor of a subscription meat business and how that relates to those values.

Mike Salgueiro  02:40

So I had run a company before this for eight years, we were venture backed raised about $30 million financing and the business didn't work and we ended up losing everyone's money. What was the business? The business was called Custom made.com. And it was a marketplace for custom stuff. We raised money from Google for sure. On Capitol accomplice and others custom stuff. What are we talking about? Like furniture and jewelry mostly?

Ben Kaplan  03:05

So custom made furniture and jewelry kind of bespoke things you were doing at scale? You raised a bunch of money to do it. Yeah,

Mike Salgueiro  03:10

we were like Upwork. But for custom stuff. So you would like say what you're looking for, we'd find the makers, they'd bid on the work you do. You pay them through our platform, hire them through our platform and watch them make it through our platform. We bought a website that was built in 1996. We were a subscription business for a few years and then we pivoted to a marketplace concept. And you know, I learned a lot in that experience. And I was fortunate to be able to raise money and have investors but when I started Butcherbox, so I basically we let everyone go we wound down the company and three days later I started Butcherbox and Butcherbox had been a hobby for me I was my wife and I were trying to clean up our diets and eat grass fed beef and we couldn't find it. So I started like talking to farmers and bought beef from farmers and then it was too much meat. So I sold some to my friends. And you know just kind of like stumbled into this like World of hey, I want to eat more consciously raised meat. How do I do that? And then I decided I was going to start a hobby business like a subscription business where I was going to have a few 1000 subscribers. And if I made a little bit of money off them every month like great, I could cover my expenses and have a nice little business on my hands. And was

Ben Kaplan  04:26

that intended to be your full time occupation? Or is this like a side hustle? I have a personal interest

Mike Salgueiro  04:30

side hustle side hustle. This was like the Tim Ferriss Four Hour Workweek, like build a side hustle that covers your nut and then go figure out something else to do. I knew I was going to be an entrepreneur, but I didn't think that this was going to be like my thing. I wanted to build a big company. I didn't think this was going to be the company. And we started with a Kickstarter campaign. So I worked from May until September launched in September. And again it was like oh, let me just do this. This like I'm sure no one's actually going to want to purchase this but let me see. And we went out to raise 25 grand and raise 250 grand, and then things just started to snowball when people

Ben Kaplan  05:04

do Kickstarter sort of crowdfunding for different reasons. Some people do it to actually raise the money to do it. Some people do it for you know, it's marketing, you bring people in, you give people a stake in it. What was the thought for you? What was the purpose of the crowdfunding?

Mike Salgueiro  05:16

Well, Kickstarter, you don't actually give people a steak in it's a pre selling platform,

Ben Kaplan  05:21

what I meant is like a steak, like they're pulling for you and your business. They're like, Oh, I knew, you know, Butcherbox. When was that part of the strategy then or not?

Mike Salgueiro  05:30

The belief was that we could game it. So the belief was that we could put in small amounts of dollars, and then have a large return on those dollars. So we basically tried to reverse engineer like how Kickstarter worked and how they got, there was this verified badge. And once your Kickstarter verified, you showed up on the homepage, you showed up in emails, like all these doors unlock for you. And so we basically we're like, let's just try to get Kickstarter verified. And if we can, then they'll do a bunch of sales for us. And the idea was, yeah, it was a pre selling, because I want I didn't want to do was launch a website with a whole bunch of inventory sitting on a freezer, because I didn't raise any money. So the idea was, okay, let me see if I can sell some boxes, which we did, we sold like 1000 boxes. And then let's build the inventory, because people on Kickstarter used to like waiting six months to receive something. In our case, they waited two weeks. So once I saw the orders come in, then we started cutting the meat and shipping it out. And then we have an immediate customer base, to then go back to and get onto a subscription. And so it what it did is it we pre sold a lot which infused the company with cash. And with pre orders that then we were able to ride as we built out like a business without raising money. So I put 10 grand into the into the business. And that's the only money that's ever been into the business. I

Ben Kaplan  06:49

think lots of people try to do that. Sometimes it's difficult because they either have trouble delivering what they said they were going to do. So it sounds like you had that setup, or they have trouble converting it into a business meaning it's a successful Kickstarter campaign. And then it doesn't translate into subscriptions or things like that. So have you thought all of that through? Or were you just kind of adjusting as you go? And based on the response, so

Mike Salgueiro  07:09

I don't really put a lot of credence into having big fancy plans. Because I think oftentimes, like doors open that you weren't expecting to be open. So no, I didn't think through like, what's going to happen. It was kind of like, one is the Kickstarter gonna be successful. Within three days. It was like, Okay, this is gonna be successful that it was like, okay, cool. We're gonna ship out these boxes. Let's hire an intern to come in and pound the phones and try to get like, Hey, how's it going? Have you cooked anything? Do you want to be a subscriber cool, that worked 30% of people like roll to a subscription. And then, you know, it's just like, you learn and you just keep moving, you just keep moving. It's not about I think too many people fall in the trap of like, a lot of planning and not a lot of action. And I believe that you act, you pick up on signals, and then you plan accordingly, is a much better strategy.

Ben Kaplan  07:59

Lots of entrepreneurs, including ones listening to the show might be like you search for you're sort of grasping in the darkness for product market fit, trying to find that before you don't have it, you're trying a bunch of stuff, you have theories. And what happens is, as you're going through that process is a lot of times tons of companies like execute perfectly, really great CEOs, and they don't make it because they don't quite get the important stuff, right. They get a lot of stuff, right, but not like the critical pieces. And there are other companies that get a ton of stuff wrong. But because actually still grow because they get like the critical things. Right. So what did you get? Right? Do you think? And do you feel like you've executed perfectly on all the other stuff? Or was it just that you got these things? Right? That were the critical things?

Mike Salgueiro  08:41

Hell no, definitely not? No, I mean, we got we got lucky. And I would say the number one decision that we made was to not raise money. Like, if you look back at our growth, what we did the channels we opened up, none of that we would have found if we had gone out and raise money

Ben Kaplan  08:57

you think you would have had even though you would have more money, you would have done less? Well as a business overall, if you had raised

Mike Salgueiro  09:03

I truly believe we would be out of business right now if we had raised money, because you would

Ben Kaplan  09:07

have been laser focused on profitability from the start. And you would have just been like looking for market share and spending a ton. Is that why or is it some of the reasons?

Mike Salgueiro  09:15

So we started in 2015. And 2015. Blue Apron was like the Darling and had raised at a $2 billion valuation. And there was like at least 75 Blue Apron look alikes out there. So if we had raised we'd be like out raising money in the summer of 17.

Ben Kaplan  09:30

And he would have been thought of as like, Oh, we're the like the blue apron of meat or something people would have called you that you would have been pigeon holed in that. Yep.

Mike Salgueiro  09:35

Which they did. Yeah. In summer of 17. Blue Apron goes public and their stock craters. And what happened was all the venture capital in the box subscription food space dried up immediately. And so for 17 1819 basically up until COVID. There was no money for people who are in box subscription companies and they all went out of business. So the only ones left are like HelloFresh and Blue Apron just got bought like that. That was it. But before, if you remember, in 15, and 16, there was like tons of these are all advertising against each other with different deals on Facebook. And so it, it actually opened this path where there was all of a sudden nobody in this space, and we just went into that space. And so if we had raised money, we would have built a non profitable acquisition channel on Facebook, trying to leverage Facebook, hoping for the best with LTV. And we would have been out raising money in 2017, right as Blue Apron was collapsing. And people would have said no to us, and I'd be like not working on Butcherbox. I mean, that's obviously a story who knows what would have happened and also our approach. So we started with a subscription people in meat were like subscription, nobody's going to do subscription. Now I was like, I want a subscription. Because once you get a customer, you can keep them going. So it's like a profitable business. Because the

Ben Kaplan  10:47

counterpoint at that point was something like you'd always see like Omaha Steaks during the holidays and get this like holiday thing. And that's it. And then that was the model. The other

Mike Salgueiro  10:55

thing is we had a curated box. So you would order we don't do this currently, but we do it for some people, but you would order like I want beef and chicken, and then we would decide what to send you. Right. And I did that because I didn't want to let it inventory. Because if you're like, Oh, I think we're gonna have 1000 ribeye sales, let me put up 1000 ribeyes in inventory, that's cash sitting in your freezer, can't do that if you if you raise money, or if you didn't raise money. So we built a whole scenario where like, you would get a beef and chicken box, you didn't know what was showing up and we would send you whatever we wanted to because then we could basically build it in real time and ship it out. That unlocked a whole bunch of stuff for us. And like, you know, so literally, we stumbled into like a product market fit because we made the decision not to raise money. And and that wasn't like some genius on that it was like I raised money. We did five rounds of financing, we raised $30 million. And I just didn't like the way that I was treated. And I thought that the company suffered as a result.

Ben Kaplan  11:51

If you enjoy this show, you'll love TOP CMO with me, Ben Kaplan.


 it's never been a better chance and opportunity to do that. I would definitely encourage marketers to be engaged in the product development process, because your banking, your truck

Customer 1  12:08

brands, great moments, but it's the great brands that create movements. And that's the spirit of justice.

Ben Kaplan  12:15

This is the podcast where we go around the globe to interview marketing leaders from the world's biggest brands, fastest growing companies and most disruptive startups available wherever you get your podcasts. Sometimes entrepreneurs are surprised by this. And we have a lot of top a lot, a lot of clients who are founders for companies that when you raise outside money, like a lot of people get into being an entrepreneur because they don't want to work for someone else. And then you raise money and it feels like you work for someone else. Did you experience that? Did it feel like that? Hell yes.

Mike Salgueiro  12:48

My my number one piece of advice to entrepreneurs, people who are like wanting to start a company thinking about starting a company or you have started a company, I think that people spend way too much time on a business plan. How's this gonna work? What's the revenue model? What are our channels? What do we do if those channels don't like the whole business plan, they spent no time on what I call lifestyle plan. And what I encourage anyone who comes to talk to me about like, how do I start a company is to do a visioning exercise. Think of yourself three years in the future and describe your day. What does it look like? Are you waking up at home? D? Are you hanging out with your kids in the morning? You taking them to school and then going to work? Are you traveling? Are you like speaking? Are you in an office? Are you not in an office? What is your office look like? Like just let your heart like kind of write a day of like a creative writing exercise of your perfect day, and then build a business that powers that the best entrepreneurs I know, have really strong boundaries in between, like what they want personally and family and health and how their business helps support that. And I think what happens is people are like, Oh, well, I have this great idea. And so I'm just going to become like a slave to my idea. And the problem with that is you don't realize you're gonna wake up, this is exactly what happened to me. I woke up seven years into running a business, I had poor health, I didn't have a lot of friends left, I had lost the culture of the company. Because my VCs told me I should hire people that like weren't the right fit for the company. I didn't even want to get out of my car to come into work. And I had worked myself into a job where I had a whole bunch of bosses being all of my investors, and I was miserable. But in the moment, you're like, why needs to do whatever it takes for the company. And the reality is you don't like start with what you want out of your life and then work backwards. Because if you don't do that, you're just gonna be a slave to your company.

Ben Kaplan  14:31

There was this famous psychological study, they took two groups of students and they're all new art students, and it was all about who could do the best sculptures and they said to one group, go work on one sculpture for the semester, making sure it's your best one, you're gonna be graded on this. And then the other group, they said, you're gonna be graded based on quantity. So just like, make however much art you can make, that's what you're going to be graded on. And what was interesting about the study was that of course, the people who had quantity made a lot of it, but they also made the highest quality The art as well, because they had had so many iterations, so much output they learned from they just got better, versus the people that were trying to be perfect. Yeah.

Mike Salgueiro  15:08

And that's the you know, like, I think, first of all, in order to bootstrap a company, you need to be really careful about spending money, because you don't have any money. Like, that's the only way it works. You can't, you can't Bootstrap, quote, unquote, Bootstrap, and then spend money like you're a funded company that doesn't work that way. Like if you're going to bootstrap, you got to be like, dedicated to bootstrapping. And one of the things about bootstrapping is like, you know, to your point on like, the sculptures, it with bootstrapping, you need to make sure that you are focused on making money. Like, that's important means you need to make profit on the customers that are coming in. You need to be watching how much it costs to service those customers. And you need to like, follow the things that make you money. And I think that, you know, in our case, it was like, Okay, we're going to do Kickstarter. Okay, that worked. We made some money. Great. What's next? All right. Well, this thing was influencers. But during our Kickstarter campaign, we noticed some people were tweeting about us, and like, there was a lot of activity as a result of those people tweeting, and these people were influencers, like diet, people. So we reached out to all the diet, people were like, can you promote our product, and then it just snowballs and snowballs and snowballs. And, you know, we're constantly just refining and focusing and making sure we're not spending a lot of money. Because if you spend a lot of money, you can't bootstrap until you've like figured out a path to profitability. At

Ben Kaplan  16:25

what point did you start realizing like I take us through what happens after you sign up those 30% sign over subscriptions? What kind of business did you have? And you start thinking this isn't maybe like my side hustle. So I can figure out the next thing. This is my main hustle. Yeah,

Mike Salgueiro  16:38

I mean, so we grew like stupidly fast. So first year, we did 215,000, and a Kickstarter, and then another, like 75 grand. So we finished the year having started in September at $300,000. The next year, we did 5 million the year after we did 33 million the year after we did 105 million. So it was like 530 100, and then 220. And then COVID hit, and we went from 220 to 450, and then 450 to 550. And like we've kept going so we grew stupidly, stupidly fast. And look like I'm no genius. We we got very lucky, our timing was great. Our team was great. Like, a lot of COVID happened, like a lot of stuff fell in our favor. But we knew pretty quickly. The first part was like, Oh, wow, people are like signing up. They seem to like this. This is cool. And then it was like, We got to 5 million. It's like, okay, there's something here. And then it was like 30 million is like oh my god, like this is like a real thing. And I kept saying, which I think is like important for people to know, because a lot of people listen to the show are probably like looking to start a company or run a company or currently running a company. I throughout the entire thing was like, oh, once it gets to like x, I'm not going to be able to run this anymore. So I remember the first thing was like, once we do like a million dollars a month, like I'm not the right CEO, I'll just I'm a failure. Like, I'm not the right guy. And then it was like once we got to a million dollars a month and I had like a mentor working with me, he's like, You should, you should set your sights higher as like, Okay, fine. Once we get to like $100 million, I'm not the right guy for this job. And then you know, I hit 100 million, it's like, okay, so you're constantly like you dealing with the own head trash that you have about, like, how good are you at this at this role. But the thing I say about Butcherbox is like, I did not expect this to be a half a billion dollar company, like change changing the lives of millions of households in this country who are eating Butcherbox. I expected this to be like maybe 10,000 subscribers, maybe a million dollars in revenue. And like, I did not expect what, like what Butcherbox wanted to become was very different than what I had thought it would become. And when COVID hit, we were actually pretty early on COVID, I was watching a lot of the kind of fringe news outlets that were talking about this disease that was happening or this virus that was spreading. And I had a friend who lived in China, and she couldn't get back in the country and the factory shut down. So very early on, I had notified the team, like let's load up an inventory. I think something's coming. I had no idea like how much demand would change. But I did think factories were gonna slow down or shut down. And that was going to be a problem. So we were like as well prepared for COVID as possible. And yet, you know, we I mean, I remember it was St. Patrick's Day of 2020. And we were just like we stopped marketing altogether and just orders were just flying in. And if you remember that's when you were going to grocery stores and there was like no meat left on the shelf. When

Ben Kaplan  19:30

this starts happening. What were your emotions? Do you remember this one TV commercial where like, people are all excited when the sales are coming in? The office is cheering and then it keeps going even more than like they're cheering more than suddenly it keeps going. They're like, Oh, what are we going to do? Like? Was that what it was like? Or what was the emotional ride as you sort of saw these orders coming in?

Mike Salgueiro  19:47

Yeah, it was pretty i Well, first of all, I had COVID at the time, so I was also nursing a really bad cough and fever. And at that point you didn't even know like wasn't going to kill me. So But I, yes, it started off as like, wow, this is really cool. And then it was like, Okay, we just need to like, we started just removing everything from our website that was like a promotion, or was like, you know, made it easier for people to purchase or anything, we just like, get rid of all of that. And maybe it was probably five to 10x. A normal day is what we were signing up. And we knew, because we had found pockets of growth before. So we knew that we needed to hold on for as long as possible. Like when a big wave comes, you're like waiting for that perfect wave. And when that wave comes, you want to ride that thing for as long as you can before you like topple into the water. And so, you know, I was No, it was more like, Yeah, we're gonna sign up as many people as we can. This is great, or like, you know, like, keep going, keep going, keep going. We lasted about two weeks. And then we had to basically shut down our website and not allow anyone else to sign up. And the reason why was because we basically also saw all of our current members move their ordering in there were like I want to watch right now because they couldn't get me. And so there was just a run on our freezers.

The Detective  21:11

Five years into the expedition, Mike was successfully leading the pack across the wilderness milestone after milestone from a hobby through a Kickstarter campaign to a subscriber based venture worth over $100 million in revenue. As 2020 loomed closer, a new peak seemed inevitable. Mike and his team were approaching the top of the mountain, then disease truck, and COVID-19 stopped the world. Yet, Mike was prepared to survive. But demand and expectation hit Butcherbox like a tropical storm, they suddenly couldn't deliver what was promised, not with the same quality. So Mike was faced with a crossroads. Should he encourage unrestrained growth, or prioritize his existing customers and keep his promises?

Mike Salgueiro  22:13

In order to make sure that there was enough meat for our members to make sure that they weren't going to have to go to the grocery store, we decided to put everyone on a waitlist and not sign up any new subscribers, which is a pretty big decision to make.

Ben Kaplan  22:27

And was that against your nature, meaning, you're a growth oriented CEO, founder, you've grown the company with the explicit goal of not taking outside money, bootstrapping, everything you do is about how do I create more demand? And particularly if you're direct to consumer rights, you're not much and kind of people just going to encounter you, right? You're trying to reach people, then you're getting? Is it painful to do it? Even though you're thinking yourself like, this is the right thing to do? We should we should serve as our own customers? Was it difficult just because of the emotion of it? Like everything you're doing is get more of this? And now you're saying I want the opposite? Yeah, I

Mike Salgueiro  23:00

mean, I'm a deep believer in core values. And if you're a CEO, you really need to understand what the core values are the company or architect those core values, and then make sure that you're adhering to them. I like to say a values, not a value unless it's defended. One of our core values is being member obsessed, we don't have a value of like, grow at all costs, we have a value of being member obsessed. And when I told the team was like, Yeah, it sucks. But I don't want to have to go to a grocery store right now to buy my own meat, because we ran out. And I bet there are a whole bunch of our customers who were in the same boat, it was a pretty easy decision to make, because it was the right thing for our members. And to this day, I get thank yous from members who are like you were there for me during COVID, I'll stay with you forever. You prioritized us instead of like growth,

Ben Kaplan  23:44

do people realize that decision or I get entrepreneurs would understand, we

Mike Salgueiro  23:47

sent an email to our audience being like, we are not going to grow anymore, because we want to make sure that you have enough meat. So we took the attaboy from our membership. And yeah, it was very, very well received people really, really respected that we did that at a time when we could have just like, added a lot more people and left our members looking for me

Ben Kaplan  24:07

how big a decision was that in terms of dollars? Do you have a sense of how many subscriptions you kind of had to leave on the table?

Mike Salgueiro  24:14

I've I've no idea. I don't know how things would have turned out. I mean, to be honest, maybe we would have grown a lot more. But maybe we would have lost a lot more people because they're like, screw these guys at a time of need. They were there for me. Before

Ben Kaplan  24:26

we go back. There's one sense which is let's turn off incoming orders. We're gonna satisfy existing customers, but you also have to satisfy your existing customers and there's supply chain shortages and it's harder to get things and people may be sold out. And also there's other issues because you're positioning yourself as premium products which means that I'm not just expecting a steak I'm expecting a steak that is worthy of buying a subscription service that I can't get at my supermarket. So what was happening behind the scenes to make sure that man you just you just kill the new coming business but then the people end up upset anyway because As they're not getting either the quality or the delivery or the service or whatever it is that they're used

Mike Salgueiro  25:04

to expecting. No, yeah, I mean, so in terms of the meat itself, we we would never, and a lot of companies have done this, we would never do this. We would never like, try to do a bait and switch like, oh, we'll give you something different because that's like better that we had to make sure that the people that we work with are adhering to our standards, even throughout a very difficult time. We did have to like, for example, for a while there was like, very little chicken. So people who had chicken in their box were like, look, we don't have any chicken, do you want to replace it with this? Do you want to replace it with this like giving them options so that they're not like, where's my chicken. But we we we knew that we could not we couldn't stray from like our claims, because that's our brand, like our brand, like what we stand for, like from me all the way down to what we deliver to the customer is we obsess over the details, we're going to make sure that you have the highest quality product, and then we stand behind it and like there's there's nothing that could have happened that would have encouraged us to like make that move. We just never would do that.

The Detective  26:13

When faced with the fork between quality and quantity, Mike took the road of quality and chose to keep his promises and value Bucha boxes principles. All of the expedition stakeholders were informed about the decision and valued the pack is commitment to fairness, excellence and service, Mike chose the road of uncertainty about potential growth, seeking to harvest the long term benefits of building trust with existing customers. This included taking extra care of his crew and customers managing shortages, ensuring standards were maintained and addressing concerns. Mike made a tough call as a leader prioritizing brand promises and not compromising key factors. But one of the future of Butcherbox.

Ben Kaplan  27:10

What do you think that you would have had the success you've had with Butcherbox without having the eight years of an unsuccessful company? First?

Mike Salgueiro  27:20

I don't I mean, first of all, I learned a lot in those eight years. And secondly, what was important to me the first time around versus what was important to me the second time around were dramatically different. And the second time around, I took a more gentle heart led approach to leading to managing people and to myself

Ben Kaplan  27:38

to see where like Mike 2.0 of CEO that second time around like us, there were some rougher edges. Some other things just by circumstances, you had a chance to like kind of redo it how you would envision yourself better than before? For sure. Did you ever as it was growing, you've stayed true to this like it's going to be bootstrap company. But I'm sure you're getting a lot of offers. People want to invest private equity combs all of these sorts of things. And plus, you have that voice inside your head that you were describing, saying, Oh, this is the time where I get the CEO who scales these kinds of companies and do these kinds of things. So were you tempted at that point to sort of say like, yeah, we've gotten to this point. But sounds like many times over what you envisioned for your life, three years or five years you've done, you can get out there are people who run these kind of businesses and grow them, you could do a really good job hiring that. What were you telling yourself? Should I raise money? Now maybe this is the point where we turn this into 10x? What it is in two years instead of five? Did you ever think any of that? Were you tempted? Yeah,

Mike Salgueiro  28:35

I mean, absolutely. And I still think about that. And so about three years ago, post COVID, I went out to write like my three year vision of the company. And what actually really stuck with me was writing 100 year vision for the company. And when you look at iconic food brands in this country, like the food brands that everyone knows whether it's Hershey's or Mars, or Campbell's or Tyson or Purdue, they all have a very similar makeup. Generally, they're privately held, there might be a small portion, that's public, like 10% of the voting stock of Tyson is public, everything else private, privately held, family owned, multi generational play, that is the makeup of the majority of iconic food brands in this country. And so the idea that, like we're going to spin up a food brand and like five years, and then we're just going to, like, you know, have this big thing on our hands. That might not actually be the thing that we need to build. And so where I have shifted is like it started as a hobby. It was like, Oh, this hobby started growing. I'm like, maybe we just sell this thing. Let's just flip it now. And what I've learned over time is like okay, so meat in this country is really broken, which I'm totally happy to talk about, but meat needs a lot of care to in order to like fix itself because it there's a lot of things wrong with meat and if people are waking up to that they want better meat in order for me to change their knees. To be a company that doesn't have outside funding, nobody's asking me to like pump a gross margin or figure out, I mean, we hold ourselves, we hold ourselves very accountable. But like nobody's asking for certain financial metrics, because we don't have a board and we don't have people watching over us. It needs some company that's able to take a long term view and be like, Yeah, we need to change me. And so I've kind of like gotten to the point where I'm like, I don't know, if I was to go raise money, I think it changes the dynamic, it changes the approach, it has the potential to change the approach and the dynamic. And I don't really necessarily think that that's what Butcherbox wants. And so again, it's like really tuning into what the company wants. And I did not expect Butcherbox to be as big as it is. And I believe that it's my job to basically steward it the best I can. Now if it's 100 year old, is somebody ever gonna sit by see, yes, I'm not running this thing. I can't run this thing forever. It's a lot of work. Well,

Ben Kaplan  30:57

it's a very Japanese approach to think in terms of 100 years, right? It's an approach, right?

Mike Salgueiro  31:02

Totally. But it's very freeing. It's like one of the things on my heart right now is worker welfare. So in in slaughterhouses, or in processing facilities in this country, if you remember, there was the book, that jungle that a lot of us had to read, growing up. But like conditions are not great for the worker in a processing facility. And it turns out that if you want to like go and check on worker welfare, like, how are these workers being treated? Are they allowed to vote to have much? Or like, how many injuries have their bed? How much overtime? Do they have to do? etc, etc, etc. There is no third party agency in this country that will that will help me do that. None. I could go and figure out in Fairtrade certified t shirt and Bangladesh no problem. Is this a sweatshop is it? Not? How are they treating people? No problem. You want to do that in this country and a processing facility? You cannot do it? And we've tried. And so something like that, in a normal world would be like, oh, yeah, there's there's no third party agency. Like, I guess we can't do anything about that. We'll just like, turn a blind eye and just keep buying from people and like, not ask them questions. And we're like, you know what, let's just build it ourselves. Because we got time, what I'd rather do is wake up, you know, three years from now and be like, Yeah, we built the first like, meat processing certification for worker welfare. And like, it took us three years. But here we are, you can't do that. If you're taking a short term time horizon. That's just one example of how we change me.

Ben Kaplan  32:24

And also, one thing is to sort of take money. Another question for you is just to exit right to exit. And I think that the question comes up for different listeners of the show, as well as, what is the opportunity cost of what I'm doing now? What else could I be doing? That could be more time with family, that could be more personal projects. But what happens to is a lot of founders CEOs will say that they'd go start another company. Totally, no, the question is, can you do more now with sort of what you've built and expanding? And it sounds like you've found a deeper purpose in this and a longer term vision, versus just doing something else and people, some people, like I love the thrill of starting things, I want to start something fresh and have the struggle or other people like, hey, I want to have impact, and maybe you have more impact, where you are then doing something else.

Mike Salgueiro  33:09

I think that people who are dreaming of doing something else are the very people who didn't build out a lifestyle plan. Because the reality is like, Oh, you want to go work on your own things? Okay, cool. Like I can do that. I can do that right? Now. You want to go invest in other things. You want to be an investor, you want to start other companies, you want to like start a side hustle, you want to start a nonprofit, you want to do this, you want to do that you can do all that stuff. You just have a plan for it to your question, if I was to sell the company tomorrow, right? It's like somebody comes along, and they have a huge chat, and I can't ignore it. And I'm like, Okay, fine, I'll sell. And by the way, I'd have to believe that they could take my vision to like a better level than I can, which I would believe in with some companies. Cool. Okay, what would I do? I would erase my whiteboard and be like, what's next? And the problem I have is that the growth curve of Butcherbox is like, literally world class, like there are very few companies that have grown as fast as even funded ones that have grown as fast as we have. And so like, what am I going to do start over and like try to hit that growth curve? That sounds terrifying, because it's going to be very hard to go 5 million 30 million 100,000,200 20 million like, that is a growth curve that is basically impossible to replicate. Maybe I'm selling myself,

Ben Kaplan  34:20

who knows talk about some present day challenges, more current times, we've chatted in the past about you tend to be someone that likes to set different milestones sounds like sometimes you can tell the story, but you set these kind of off the cuff milestones and you promise different things. Take us through what some of those are, I think two notable ones in particular that you made and how that kind of tested you as CEO as well.

Mike Salgueiro  34:44

There are a number of examples of where I have made a promise to the staff or, you know, like we talked about earlier, making a promise to our members of a way in which we're going to behave and I believe that my word is the most important thing I have as a CEO like if you Want to lead people they need to? They need to believe that when you say something's going to happen, or you're going to do something that you're actually going to do it,

Ben Kaplan  35:06

what did you promise? And was it like an off the cuff promise? Like it came to you? And you did

Mike Salgueiro  35:11

it? Yeah, yeah, totally. So one year, one of the first years, we, we set out, I'm a big believer in goal setting. So we had like, five goals for the year. And we're looking at those goals. And it was like, man, if we hit those goals, that'd be amazing. And I was like, silly enough to say, if we hit those goals, I'm going to take you all to Mexico. And then lo and behold, at the end of the year, it's like, Oh, my God, we hit the goals. And I had this critical, you know, like, do you take them to Mexico and spend a bunch of money? How many people were talking? There was, like, 2025 people at the time? So do you fly them all to Mexico? Or do you take them to a Mexican restaurant and you're like, we're in Mexico, okay. And I was like, No, dammit, like, we're gonna take them to Mexico. And it cost us I don't know what it was, like, 50 grand or something. Because we also took people's spouses and whatnot. And it was like, No, we're going to Mexico, because that's what I said I was going to do. And I think that set up the lore of like, when we grind and we hit numbers, we do cool stuff. And we got paid back for that multiple

Ben Kaplan  36:06

times. The next one was more expensive, a little bit of a harder decision. What was the next one? Yeah,

Mike Salgueiro  36:10

the next one was in 2020, we decided that we needed to focus more on profitability when we were profitable, but we wanted to be more profitable. And so we said, we had a goal to hit 20 million in profit. And we said, we need to be more profitable than that. And so I on a whim, I was like, asked my CFO, like, are you okay? If I say this? And he's like, Yes, I on a whim said anything above 20. We're going to split 5050, the house takes 50 and the employees take 50. You know, maybe we'd had 22. And we'd like to give out another million dollars in profit share.

Ben Kaplan  36:38

Okay, so you're thinking a little bit lower expectations than what it ended up being? Yeah.

Mike Salgueiro  36:43

And then COVID hit, and then we doubled, and we barely spent any money in marketing. And so we had a massive amount of profit away above what we thought. And we ended up paying every employee a profit share for $83,000. And yet again, it was like, what you're really going to do that I mean, the, you know, advisors of mine, were like, don't do that. Don't do that. And I'm like, What am I supposed to do? I said it. And like, I'm a man of my word. If there's one thing about me, if I say I'm going to do something, or if I say I'm going to, if you do this, I'm going to do this, like I will do it. Because like, if you don't have that, what do you have?

Ben Kaplan  37:21

Final question for you. If you are listening to this show, back in your prior company, and you're sitting there you tune in to Gosh, I'm feeling tired. I'm a little bit burned out. And it was you back then in you are listening to yourself. Now. What would you tell yourself? Maybe there's some other listeners here who are just trying to figure out do they stick with it? Do they not? Is there a ladder up against the right wall? Because they spent all their time trying to climb the ladder? What advice do you give yourself to Mike 1.0,

Mike Salgueiro  37:45

there is a lie that is pervasive in entrepreneurship right now. And that lie is that in order to succeed, you need to be on it. 24/7 365. And oftentimes, I see entrepreneurs who have bad marriages have bad health are not around for their kids and are like depressed, and the only thing they have going for them is grinding it out at work. And if I was to talk to the younger me, it would be a conversation around balance and a conversation around. Make sure that you're focusing on the things that matter while you're trying to build this thing like yes, it matters like the company matters. But make sure you're focusing on all the other things that matter, because if you don't have those at the end of the day, you have nothing.

The Detective  38:30

By sticking to his values, Mike turned Butcherbox into a half a billion dollar company. In a true display of leadership and vision. He refused to go down the path that promised to short term success. Mike chose the muddy road. He dreamt of 100 year legacy, and his decision is proof of his focus on building a brand that resonates and remains member obsessed. So what is the lesson to learn? Not all that glitters is a golden treasure. The promise of profit may be tempting, but it takes a seasoned leader to realize what's best for his pack. The jungle will try adventurous again and again. And the canopy might feel too thick to see even a few steps ahead. But it's all about going back to the core principles to choose the right path. And with that, it's Case Closed.

The Detective  39:41

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