1Mby1M Virtual Accelerator Investor Forum: With Elly Truesdell of Almanac Insights (Part 4)

Sramana Mitra: Are you familiar with ButcherBox?

Elly Truesdell: Yes.

Sramana Mitra: I did a story with the entrepreneur. What struck me was that one of the things he faces when talking to investors is that it is a perishable product. How do you view this? Lots of food companies are selling perishable products.

Elly Truesdell: It is the biggest challenge for the industry. When you look at Amazon, they haven’t figured that out. They still rely on Whole Foods to handle their fresh and perishable deliveries. You look at Campbell’s. They made a huge investment in and across a fresh food company. They eventually had to divest all of those assets because they didn’t know how to properly support that.

There is a real need for handling perishable foods and avoiding spoilage. That is where retailers have a better handle on it. We are actively looking at perishable goods. By nature, they’re almost always better for you particularly as consumers are less willing to cook at home.

Freshly prepared meals is a growing category. How do we reduce waste and get it to people more efficiently?

Sramana Mitra: Let me tell you what my thoughts are on this one. What you just said even more confirms what I concluded about this. In One Million by One Million, our philosophy is to help a million entrepreneurs reach a million dollars and beyond in annual revenue.

We acknowledge the fact that over 99% of entrepreneurs would need to build their businesses in a bootstrapped manner. The venture scale of going from zero to $100 million in 5 to 7 years does not apply to most businesses.

I think this fresh food or perishable food category is one of those, which lends itself very well to building small businesses. They could be $5 million to $10 million businesses that could be serving specific communities. As far as I’m concerned, that’s okay.

One of our favorite grocery stores in the Bay Area is Sigonas. The one that we go to a lot is the one in Redwood City across from Costco. It’s a very common behavior of people buying a certain amount of stuff at Costco and going to Sigonas to buy fresh produce. Sigonas is a small company. What’s wrong with that as long as they’re producing great stuff?

That’s our message. It’s okay to build smaller companies as well.

Elly Truesdell: Absolutely. It is very relevant. Another grocer that comes to mind that has followed that model is Erewhon in LA. They only have five storefronts. They’re small and heavily-focused on prepared foods. It’s a very expensive market but the level of care and retail standard is the best in the country.

There’s a real value in maintaining a certain size in order to retain the integrity of your product. That’s always an important reminder. These businesses don’t scale like tech companies. They can’t and they shouldn’t. 

Sramana Mitra: Tech venture investors should not be getting into everything. This is not a nail that can be hammered out. 

Elly Truesdell: The natural food and beverage world experienced that quite a bit in the past two years. Many businesses we knew saw high valuations who have gone through major downrounds. 

Sramana Mitra: On the positive side, Facebook has created this enormous micro-targeting capability. I often get fed advertisements of these home chefs from various ethnicities. I’m from Kolkata, India which prides itself for a very specialized cuisine.

I see these ads coming to me from Bay Area home chefs who are creating these very specialized regional Indian ethnic cuisines. They are micro-targeting and I happen to fall into that. That is great.

Elly Truesdell: There has been such an amazing support system for these businesses to grow. Facebook and Instagram have provided a whole new marketing platform and distribution platform.

Sramana Mitra: Wonderful conversation. In this self-quarantine mode, we are cooking every other day. We always eat home-cooked food. The frequency at which we are cooking is much higher right now. 

Elly Truesdell: That could be one silver lining if more Americans start to cook.

Sramana Mitra: Thank you for your time.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Elly Truesdell of Almanac Insights
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