By almost any standards the startup in which I’m involved, Purple Carrot, has had a successful six weeks since our relaunch. We’re shipping more meals every week; customer feedback is almost entirely positive; very little has gone wrong (how great is that?); a round of funding is nearly complete, and that–combined with real income from our subscribers–is allowing the principals to take a breath, assess the overall picture, and move to the next phase before hitting the fundraising trail again.
This is all very encouraging. But as any startup person will tell you (and many have told me), the whole enterprise is about constant re-invention, and so we find ourselves struggling with a slew of high-impact questions. Whom do we hire first? Where do we physically settle? How do we move the mission forward while solidifying the business? How fast can we grow? How fast should we grow? And so on.
Those of us running the company have different roles, experiences, and priorities and–even more confounding–we get conflicting advice from our various gurus. It’s one thing to spout platitudes like “We’re not a business with a mission, we’re a mission with a business”–as if we were Trappist monks–but it’s another to start to assemble a broader team of people who understand both that there is a mission here and, within that context, that our top priority is to build a profitable company.
Every startup makes compromises, and I imagine that’s doubly true of self-described mission-driven companies like ours. That’s OK; almost everything in life involves compromise and most people, certainly most grownups, understand that. You can’t sell shoes at a reasonable price while giving away an equal number away for free without cutting costs somewhere; you may not be able to pay your dishwasher $20 an hour without cutting back a bit on your ingredient costs; you can’t try to source and sell responsibly raised food without selling high-profit organic junk food along the way; you can’t even make a “healthy” snack bar without an over-the-top sugar count–if you want to stay in business.
At the same time, it probably doesn’t pay to compromise too early, to surrender before the battle’s even been joined. We started this company because we wanted to sell terrific plant-based meals with responsibly sourced ingredients and the greenest packaging possible, while treating workers and the earth fairly. This alone would be an incredible achievement but we’re not a nonprofit, so let’s keep trying to do it while remaining attractive to investors and making a convincing argument that such a business can be sustainable–not only in an environmental sense, but in the sense of actually being profitable. This is no easy task, but it’s crucial. There is expensive stuff we need to do to grow the business and we’re developing a list of immediate priorities for our next stages–including a bigger office, since most of our leadership team is now sitting in a space smaller than a good-sized bathroom. But we can’t do those things at the expense of the mission, because without our mission, we don’t have a business.
We are not going to succeed if we follow one round of funding with another, forever, as many startups seem to do, growing until they fail. And yet there isn’t a clear model for us to follow: As no meal kit company has yet gone public, it’s impossible to know for certain which ones are truly profitable and what their internal costs are. We judge the most successful of them by how much money they’ve raised and how many meals they ship. Yet we know from our limited experience and common sense that the key to this business (and many others) working is not customer acquisition but customer retention. And there’s a big difference–who was it who first said “Selling dollar bills for 85 cents will get you a lot of customers, but it’s a terrible business”?
Amazon may not have been profitable for most of its existence (and was mocked for much of that time), but it created a sticky experience that made customer retention seem easy. What can a meal-kit company, which asks for regular, ongoing payment by customers–a company that’s more akin to a utility like cable or a service like Netflix than to a pay-per-order company like Amazon–do best to maximize customer retention?
Since the whole business of meal kits is new, the answers aren’t clear. The argument of a more traditional investor might be, “Make a great, unusual product that appeals to the right market segment, make it defensible, and you’ll look attractive.” But the barriers to entry in our business are so low that defensibility remains a real issue. What sets us apart?
From the beginning, we’ve said this: Our food is unusual and terrific; one of our leaders (modesty aside) has a marquis name; and we have a mission. Any of these can be mimicked, of course, but it’s the mission where we can stand out. We must build a community of true believers who see our meals as a benefit of membership. Think of National Geographic or Smithsonian, where the magazine was a benefit of joining the organization, or Martha Stewart, where the media and the products were almost indistinguishable.
I can see Purple Carrot becoming truly defensible by having a mission that is strong, wise, and believable. We need to attract customers to our company because they have the same goals as we do: creating food that is fair and green and nutritious and delicious. Sure, sometimes we’ll have to make compromises to achieve our goals, but if we can stay true to our core values and make good business decisions, we’ll make it.