After being diagnosed with cancer in 2006, Steven Novick was decided to adopt healthier eating habits in his life. However, as everyone that has taken that decision, he noticed how difficult it was to find healthy food for affordable prices. To solve this problem, he decided to found Farmstand.
In our fifth episode, Steven Novick tells us about Farmstand’s journey to traction. He goes into important topics as: initial research and test, challenges of being sustainable and marketing strategy.
Farmstand has more than 20 restaurants in London and aims to bring healthy, tasteful and affordable meals for everyone. Last month, it has raised $3 million in Series A funding.
Tell us a little bit about yourself, about Farmstand, and how this idea came to your mind?
So, first thing is I grew up in a working-class family in Milwaukee, Wisconsin, just across the street from the farms. My dad worked in a factory, mom worked in a supermarket. In 2006, I was diagnosed with cancer—the same cancer that killed Bob Marley. I had a melanoma, under my right thumb, so I’ve lost a third of my thumb and for Bob Marley it was in his right big toe and it ended killing him. So, I view my life right now as all bonus time, but when I was initially diagnosed, the prognosis wasn’t great.
And I wanted to change how I ate—yet finding healthy food was very difficult. So, I set three goals either way. The first goal is to come closer to friends and family because I worked all the time. The second goal—I wanted to kind of see the world—for me was finishing climbing the Seven Summits. So, I summitted Mount Everest 18 months after my cancer treatment. And the third thing—because it was so difficult to find healthy food—was to build a healthy, sustainable and affordable food company—especially need to be affordable outside grew up working-class.
INITIAL RESEARCH AND IDEA VALIDATION
In some of your previous interviews, you’ve mentioned the following: “putting together the first Farmstand menu involved extensive research.” How was this very first research you did?
Well, I guess the first thing is when I was diagnosed with cancer because the menu that we have at Farmstand is based on the diet that I’m still on today. So, a lot of the research I did involved talking to doctors. We have Dr. Chen, who is part of our board of advisors. We have a nutritional therapist, so I talked to the nutritional therapist.
And I did a lot of reading. One of the readings I did was about how plant-based food is ultimately better for you. There’s a study called The China Study, in which there are various views on that. There’s a book by Michael Pollan called the Omnivore’s Dilemma, and a lot of other things in between. Ultimately, the conclusion I came to is essentially: eating mostly a plant-based diet, avoiding any dairy, avoiding any added sugar what ultimately make me a healthier person, both physically and mentally […] I’ve now been cancer free for nearly 12 years. So, I think that validates kind of what I’ve done in terms of changing my health.
We also looked at what’s the market opportunity for a mostly plant-based, vegan-oriented food offering. Then we looked at a lot of other things as well, but ultimately came to the point that we’ve loved to be 100% vegan, but we don’t think there’s a market opportunity for that. As much as you have ideas, you want to make sure there’s an addressable market. We wanted to make sure the food was healthy, but it also tasted good and also had to be affordable.
[…] we’d love to be 100% vegan, but we don’t think there’s a market opportunity for that. As much as you have ideas, you want to make sure there’s an addressable market.
[Check also this post: 3 Steps to Assess Your Startup’s Market Size]
A FIRST TEST
Additional research that we did is we had our pop-up restaurant in my house for one night only. It was 200 people and we basically tested the menu and the menu again was 80% vegan, 5% sustainable fish, and 15% ethical meat. If you want to look it from a vegetarian perspective it’s 85% vegetarian, 5% sustainable fish, and 10% ethical meat. We don’t have any pork on our menu, we’ve never had dairy, and we’ve never had any added sugar.
EDUCATING INSTEAD OF SELLING
How have you been overcoming people’s “wrong” ideas about healthy foods? Because many people think: “they are expensive” or “they taste bad”. How are you convincing people about changing their minds?
Well, firstly, we inform and we educate. We never sell. Even the name “Farmstand”. We chose a name you want to think of “healthy” and think of “food”, not necessarily think of habit. Farmstand is essentially farm stalls on the side of the road. You typically find them outside of the farm. […] a name that was very friendly—not high and mighty. And as we’ve positioned ourselves whether on our website or any our social media we don’t talk about health. We inform and educate people what we do, but we’re never selling. When you come into or you see our restaurant, when you see Farmstand, we’re not telling you it’s healthy nor telling you it’s free from. People sometimes don’t realize this until later […]
So, I think one of the challenges we had to overcome from the pop-up to actually opening our first restaurant was making sure that we cooked all of our food in a central kitchen—which we do—and then we transport it to one of our 20 locations. You have to maintain flavour, you have to maintain the look of it, people have to enjoy it and it has to be good variation. So, one of the other challenges too is making sure there was good variation, so our menu changes seasonally with the seasons. […]
SUSTAINABLE AND ETHICAL
Which are the most difficult challenges when you’ve chosen to be at that level of sustainability and be that ethical on everything that you do?
Well, I think ultimately it comes down to your life, right? We live by a set of values, we describe what we stand for and it encompasses everything. We think everything you do in life has an impact on someone else. So ultimately, it had to be all about really five things: positively plant-powered, local seasonal made by us, nothing added, nothing wasted, and everyone’s got to be treated equally. So everyone is an owner of the business, everyone owns equity, the highest paid person is only paid 2.5 times the lowest paid person, we have an equitable board in terms of 50% are women and our entire team is 60% women.
[…] You can’t offer healthy sustainable food if your founder—in the case of me—or your senior team are being paid substantially more than others. First of all, it’s not fair. Secondly, in order to build a business that continues to grow and be profitable, you’ve got to keep everything aligned. People should be excited about growing the business on the equity side and creating value through that—not through taking large pay cheques and things like that.
[…] Some of the challenges we have on our end are that we recruit people on the senior level and they want to get paid a lot more money than our highest paid person. Our highest paid person right now is paid 55,000 pounds a year—it’s not me.
So, in order for people to come in and be able to make a contribution, we need to make sure we stay within our budget to allow us to grow our business. That’s been one of the challenges: trying to find certain people that want to join us but they have to stick with what our values and what we stand for. If they don’t want to fit within those values, then they’re not the right person. […]
Farmstand has offline, online, and corporate customers. What have been the most successful marketing strategies to get each one of these customers?
Our model, from a marketing standpoint, we say we’re again positively plant-powered, nothing added nothing wasted, we are available at restaurants, corporate cafes, and online. So we’re B to B to C model: we partner with businesses, we use our physical locations and technology to acquire online customers on a profit basis. Let me explain what that means: essentially our model is we have a central kitchen that supplies all of our Farmstands. Our restaurants create an offline experience that build the brand—they’re kind of like Apple Stores. Corporate cafes that we’re in now, provide free advertising and distribution.
These physical locations and the technology allow us to acquire customers on a profitable basis unlike traditional internet only businesses that are spending up to 300 pounds to acquire a customer, when they’re losing 90% of those customers within 12 months. That business will never work. […]
We think combining the online and offline makes sense. Our biggest successes have been partnering with businesses because they’re bigger customer base and it doesn’t require us to be targeting individuals.
[…] when you use the corporate restaurants that you have, people get to know about your brand, and probably a lot of customers come from there, right?
Yeah. What we did initially to attract our first corporates is they came into the restaurant […] We had the corporates come into the restaurant, they had this experience. They got a sense of what the brand was about, they were able to try our food, understand what our offering was, and make sure they knew what we were about. If we just brought them a plate of food or we sent them a box of food, I don’t think that would have worked very well. The experience in the restaurant was critical, securing that first corporate order and now we have 20 corporate partnerships. […]
Our restaurant is a combined fine dining and fast casual experience. I described as Whole Foods meets Soho house, which is the membership organization or membership club. We offer breakfast, lunch, and dinner, coffee, tea, cold pressed juices, beer, wine and bubbles at midday. It’s a build your own and ready to go concept. If a corporate comes in and says, “Hey, I can do this in my canteen!” or “hey, maybe I can just order food from you guys and have it delivered!” That makes the direct relationship much more profitable. We don’t need to rely upon third party distribution like Deliver U or Uber Eats. We can do this ourselves with the margins all higher.
But ultimately, we attract the underlying customer as well because the more they are using our app, we know what they want, we know what they buy, and they pick up in these locations. We then have a direct relationship with them. Using third-party distributors, generally, you don’t know who your customer is, you don’t have a direct relationship with them.
PIECE OF ADVICE
Finally, I would like to ask you a piece of advice for early-stage entrepreneurs that want to develop a business in this industry.
Well, first of all, I never offer advice. I can only offer the suggestion so maybe people view that the same way. I guess the first thing is that anything you want to pursue as an entrepreneur and this is kind of like my fourth startup—my first as the sole founder. I think you have to— as a book or a web, a podcast, or I think it’s maybe a TED talk about—start with the WHY. Why do you want to do something? And I think that is the first bit of advice. For me, the WHY was I had cancer, I wanted to try and find healthy food, it was difficult. So, I was trying to solve that as a problem. Now, for some people, WHY may be because they want to become a billionaire, they want to become famous. These are not interesting me. These are not things that are motivating for me at all.
[…] you have to start with the WHY.
Figure out why you want to do something and do it because you’re passionate about it, you’re solving a problem. As I mentioned, we’re trying to solve two global problems—but with the use of technology—and for us that’s funding universal healthcare and addressing environmental issues, and again, by eating a healthier, mostly plant-based diet to help solve these problems.
[…] I would suggest any entrepreneur that wants to build something, try to do it with the right intentions, not trying to do something just for money or just for fame. But if those are motivations for you, and that helps you to get excited that’s great. I think those are going to be more difficult ways of attracting people around you to help build a business though. But everyone’s got their own path and everyone’s got different things that are important to them.
FROM IDEA TO TRACTION…
- TIME: 1 year.
- Number of PIVOTS: None.
- Initial team background/composition: 27 full-time hired based on values, behaviour and grit operators of offline & online retail companies.
- Relevant PRACTICES: Objectives & Key Results (OKRs) and weekly one on ones.
- FUNDING to Traction: Founder put the seed financing in; Then Farmstand raised venture debt from a social impact fund called Quadia; Then it raised a Series A.