#24: Mike Salguero and Michael Billings – Butcher Box
BUTCHER BOX Podcast Transcript
Neil Dudley: Ladies and gentlemen, welcome to the Pederson’s Farms podcast. We are so excited you’re here. We appreciate you joining us. And we look forward to sharing these conversations with thought leaders from our industry. They’re going to paint a picture from every perspective – consumer, customer, vendor, employee, and peer – that I think is going to be super valuable, and we’re really excited to share. So, thanks for tuning in. Remember don’t tune out, and grab life by the bacon.
Everybody that is tuning in and joining, watching us on YouTube, or listening on a podcast app of any sort, we appreciate you for coming, lending your time and attention to the Pederson’s Farms Podcast. It is a thing that we really just enjoy doing, look forward to each and every time. And this episode in particular is one of the ones I’ve just kind of had on my bucket list of groups of people that I want to have and interview and talk to because, well, there’s just a wealth of knowledge sitting in Mr. Mike Salguero’s head as well as Michael Billings. And Karen’s joining us, and Ben is in the booth as always helping us make sure this conversation goes just as planned. Okay, good. Now that everybody knows who’s on the podcast here, let’s start with Mike. Tell us where the idea of ButcherBox came from and just quickly who you are, where you came from.
Mike Salguero: Sure. So quick backstory, I was born in Paraguay, moved up to the United States when I was four months old, single mother, four kids. And we moved to Western Massachusetts, which was a really small town in a farm community. So, I grew up there and then came to Boston for school. And I’d always been an entrepreneur. I had a paper route when I was really young. I was always looking to hustle and make money. A few years after I graduated from college, I started my first company, which was called Custommade.com, which was a Google ventures backed company. So, we played the whole VC game, raised a bunch of money. It was not a successful outcome. We lost everyone’s money. And I, in 2015, left the company – everyone left the company except for five people – and was kind of out on the street, licking my wounds and figuring out what’s next. And I’d always had this concept of- for Custom Made the idea was connecting a maker, somebody who make things with their hands, with the customer. And I had always talked about how people wanted that relationship with food as well and that people really wanted to know that the animal was treated well, and they wanted a relationship with the farmer, and they wanted to know the story of the animal. And I had thought that that would be an interesting thing to do. My wife has a thyroid condition; it’s an auto-immune disease. So, we were following these diets and they were all saying eat grass fed beef. And we couldn’t find any. We lived in downtown Boston. We’d go to the grocery store. They might have ground beef, but they didn’t have any cuts that were fun to eat or cook or anything. And I love cooking. So, I just got obsessed with this idea of like I wonder what it would be like if we could just bring this quality to more people? Because I’m sure more people than just me want grass fed beef. ButcherBox was supposed to be a hobby. Like this was my Tim Ferriss four hour work week, like automate everything and just like it runs itself and I’ll go live in Argentina and like call it a day. That was like the plan.
Neil Dudley: Go Tim Ferriss!
Mike Salguero: And we launched the Kickstarter campaign. I put $10,000 into the business, was like that’s all I’m doing. I’m not raising any outside capital, this is it. And the business just took off. We struck a nerve. And what we found was consumers all over the place- first of all, we learned before we launched, thank goodness, that we should not just do grass fed beef because the problems that customers were having with grass fed beef were the same as they were having with humanely raised pork or with chicken. Like people wanted to eat more conscientiously and didn’t know where to go to get it. Well, so the Kickstarter, it was a 30-day Kickstarter. We thought maybe we could get $25,000 in pre-orders; we got $215,000 in pre-orders, and the business just started spiraling. Then we called all those customers and got them to subscribe. And so, I built the business with the mindset of, again, it was going to be a hobby. So, we did things differently. We never raised money, so we have no outside capital, for which I’m happy to go into deeper. But I do think it’s a huge part of our story and our competitive advantage because we don’t have investors who want us to cut corners, which when you’re trying to change an industry is really important. And the way that we started, we had these curated boxes. So, you, as a customer, you’d order a box for $129, and we would send you five or six different cuts of meat in the box. And the reason why we did that is because we didn’t know how to handle inventory. And we didn’t want to have to buy a whole bunch of a certain cut and then not have it sold because then that’s money on a shelf. And I didn’t have any money in the business, so wasn’t going to happen. So, when I look back and reflect, a lot of the things that we stumbled into, the fact that it’s frozen, the fact it’s curated, or that’s one option, is really a product of the idea of having this be a hobby instead of a full-time pursuit. I’ll finish quickly, but so we’ve been at it now for six years, and I would say it took a year before I met Michael Billings. And when I met Mike, we had all these customers, and we had no idea what we’re doing purchasing meat. I’m not a meat guy. I like eating meat, I like to cook meat, but I had no idea what I was doing. And I was very clearly getting taken advantage of left and right. And I stumbled upon Mike’s LinkedIn profile and reached out to him. He happened to live in Boston. We shared a chicken sandwich at Shake Shack and sparks flew. And he joined, and in many ways, the reason why we’re here today is because of Mike, because of his background of knowing the meat industry so well, working at BJ’s for 27 years, basically 40 years of resume in meat, but always had a chip on his shoulder about how he wanted to change the industry for the better. And when you take a man like that and a man like me, who’s like the wild entrepreneur who’s like, yeah, actually we could start a revolution here, magic happened. Well, my journey has gone from kind of like, oh, this is going to be the side hustle to this is the hustle to this is like my lifetime hustle.
Neil Dudley: It is your legacy almost.
Mike Salguero: We are in a unique position to be able to change this industry, and that’s a noble pursuit that I’m just really fired up about. The transformation is the thing I’m most fired up about.
Neil Dudley: And look, everybody should understand when he says noble, he means that because people will not be most friendly to Mike Salguero because you’re causing pain in a lot of big companies lives. I mean, or are you? I perceive you are. Maybe that’d be even a better question for Michael Billings on it’s not as easy as it sounds to just say it out loud like that – change an industry.
Michael Billings: That’s for sure.
Neil Dudley: And maybe even it’s a good time to bring up that story, I don’t know. Michael, do you have anything you want to add to- I think Mike gave you a pretty good resume there or even history of your job.
Michael Billings: Yeah, I think one thing that, when he left a cryptic note on my LinkedIn account where it was like, interesting background, need to talk type thing, I said, all right, I’ll go talk to him. And it was actually two meetings. And the second one, he said come on, are you going to come help me or not? It was kind of like one of those. And it’s kind of ironic, we had a chicken sandwich, like he said. But when I decided, because I had 25 years of BJ’s, I had zero intention on going back to work. I grew up on Martha’s Vineyard, so I had plenty to do in the summer. But I thought through everything. Okay, so how hard is this job going to be? All right, so I have contacts. I know a little about packaging. I know logistics. I know all the players that could do our distribution. I mean, I know people that could be steak cutters. So, I kind of knew all that. Well, there’s one thing that I missed by 180 degrees. And that was that supply chain didn’t exist. I couldn’t just pick up the phone and say, hey, can I have a load of pork that is pasture raised? I mean, it just totally didn’t exist, any of it. There wasn’t GAP free chicken in scale. There wasn’t this pork in scale. There wasn’t grass fed, grass finished, no antibiotic traceable cattle in scale. I mean, it didn’t exist. And so, it became a real job.
Neil Dudley: Yeah. To say the least or to put it lightly. Okay so, thanks for that. I hope all the listeners will go, if you’re not familiar with ButcherBox, please go look them up and go look these two guys up. You’re going to find a lot of good just insight into an industry, into a thought process, into a perspective that I think is very valuable to you no matter what part of- what maybe your personal thoughts are. Hey, here’s a chance to learn something from a couple of guys that are in it deep, working it hard, and care so very much. So really hats off to you fellows. Now, okay, let’s see what’s the next thing to chase? I mean, there’s so many hot topic, hot button things we could talk about. I’ll throw a couple out. Somebody grab one that you like. COVID-19, Prop 12, e-commerce. Anybody want to grab one of those three things and let’s take off with it?
Michael Billings: I’ll talk about COVID-19. When it hit, the funny thing was I think that, and I would’ve never expected this, but when it hit, there was a point where we went on a waitlist. But we went on a waitlist because we couldn’t get enough chicken, which seems really weird. Beef was in pretty good shape, pork was in pretty good shape, but it was the chicken thing because of the plants. So many people run a chicken plant, they just didn’t have enough people to do it. Now, it’s become- it’s still the same challenge. I’m sure you see it with plants, it’s still shortage of people. And they got to take care of the people right first, and Australia is the trucking- the whole logistics supply chain has really crimped the boat, obviously everybody knows.
Neil Dudley: Yeah. I mean, if you don’t know, there are boats parked off the coast all around the United States that can’t get in.
Michael Billings: Yeah. I mean, we can talk about this later, but that’s one of the reasons that we’ve made a pretty good inroad in moving a bunch of this meat back to the US on the cattle side.
Neil Dudley: Let’s just talk about that now because that’s a great piece of it, right? I mean, I think that’s even a thing you guys are most proud of, part of that industry change you want to make.
Michael Billings: Yeah. Do you want to talk, Mike? Go ahead.
Mike Salguero: Sure. Well, okay, so first of all, I think here’s my perspective on COVID. I think there was a full-page ad in the New York Times and the Wall Street Journal like, ah, the supply chain is breaking, COVID is breaking the supply chain. I don’t think COVID broke the supply chain. I think the supply chain was broken before COVID was here. And I think our journey into providing our customer with grass fed beef, which we believe was a pasture raised animal, no confinement, just out eating grass, our journey in that is a really good indicator of a broken supply chain. So, when we started the company in 2015, we worked domestically. We bought our grass-fed beef domestically. Of course, I didn’t know what I was doing, and it took a little bit of time to figure out that our domestically raised grass-fed beef was actually just feedlot finished cows, basically treated the exact same way as normal feedlot. And when Mike came on board, he was like, first of all, there’s nothing in the US that will get us scale. Secondly, we have to like convince people to do something different because this is not the way that we’re trying to raise animals. And we moved our program to Australia. We got some heat for that from the industry, like what are you doing? There’s plenty of stuff here. And it’s like there isn’t, not to the degree and quality that we’re looking for. And then we wanted to bring it back ever since. We had a misstep in 2019 where we started building out a program and then it turned out that that- it just didn’t work and the individual passed away. So then we’ve been trying again this year. And I think what’s remarkable for people- what’s been remarkable for me as kind of a meat outsider is you’d think that it would be like, okay, let’s go build a program, let’s find the best grass, let’s find the happiest cows, let’s go there and build a program. Nope, not how it works. You literally have to go and find the places where there’s chain space, which means space to slaughter the animal, and then work backwards from there because the plants, which are largely controlled by four companies, they don’t have enough chain space as they call it to process your animals. And so even if you wanted to make grass fed a thing, you actually have to start with the processing facility and work backwards. And yeah, I mean, I think it’s been- so we are about 25% domestic right now. We are pushing as hard as we can to keep moving that number in the positive direction. So how do we make 25 into 50%? And it’s just remarkable the amount of things that you need to do and figure out and change. I mean, you have to change an industry. There’s only 2% of the market is grass fed beef in this country. That’s tiny compared to the other 98%. And the reality is the first 18 months of life for an animal is the same; it is cow, calf, and then it’s the yearling stage, and then almost all of them go to a feedlot. And we can talk about that. We can talk about that, during COVID in particular or when the price of corn is up, the farmer has gotten screwed time and time and time again. And here we are trying to do something different. And yeah, it’s been- I mean, Mike can talk about any of the details of how we’ve done it, but it’s been remarkable how challenging it is because, ultimately, we’re building a supply chain from scratch and a scaled supply chain from scratch. The number one thing that people will say is like, oh, grass fed beef is too expensive. And they are right, it is too expensive. The reason why is all of these inefficiencies in the market. And so, there’s nobody who’s tried to scale that. And that’s what we’re trying to do.
Neil Dudley: Gosh, there’s so much there. You could almost spend an hour talking about shackle space and is that real or not? I mean, is that real or is that just, is that their excuse because they don’t want to mess with it? It’s too small of a potential time on the floor. We’ve experienced a lot of similar things getting our pork program up and going. Anybody that’s in this space with us is going to totally relate to this conversation. So, we won’t keep diving into all that. Let’s kind of just point a little bit to Prop 12, and I can’t remember what it’s called in Massachusetts. I think consumers, people out there are hearing these things like- this is not going to align exactly with what you guys do, but you certainly sell bacon. And they say bacon is fixing to disappear in California. I’ve got people texting me like is that true? Are we really going to quit selling bacon in California? It’s kind of sensationalized by the media. What’s y’all’s take on Prop 12?
Michael Billings: Oh, we got three suppliers that all meet it.
Neil Dudley: See, I love that. That’s the simple thing right there.
Michael Billings: And we just added a third supplier because that’s kind of- we’ve got to kind of be ready for that. I thought that could happen. I think it’s a spot where if you’re in this space, you should be over supplied, and that’s what we did. So, we are all good. I think the industry is more worried about Prop 12 in California then they want to lead on. That’s my guess. Something like 70% of the people voted for it. So, I don’t think they can get it changed. It’s just a matter of when it happens.
Neil Dudley: Right. And that’s all over the board, isn’t it? What does your gut say?
Michael Billings: Well, my gut says if this goes on to be more states doing this, then maybe the USDA will step in and set some rules. I mean, as much as you want it all to change, we still have to be reasonable, and you have to realize that having a different rule in every state is a little tough on a producer, right? I mean, if everybody had a meat somewhat the same rules, then that would probably make it better. But that doesn’t mean the rules shouldn’t be tougher, with 24 square feet.
Neil Dudley: Now, you’re so right. I mean, I’m sitting around trying to figure it out just because I’d like to think I know what’s going to happen, but I can’t guess. I think I’ve heard arguments that they’ll pass it, it’ll go into effect, but it’ll never be actually policed or held accountable. What’s the accountability – a signature on a piece of paper? I mean, I guarantee they’ll come up with those. So that might be something to touch on. How do you guys guarantee your beef, pork, chicken, whatever you’re selling is what you say it is?
Michael Billings: Pork and chicken are both third party audit. We are GAP 3 on the chicken side and Certified Humane on the pork side, and Australia has pretty rigid rules for on the beef side.
Neil Dudley: I think that’s what I want to paint is you use somebody else. This is not- your customers are not counting on Mike and Mike or Mike and Michael feeling the pressure of a, I don’t even know what you’d want to say, profit expectation or something and just saying something. I like that idea. It’s a way to protect the consumer. Just say, look, we’re not saying this, there’s a third party making sure this happens.
Michael Billings: Yeah, I think I said it once before in something else. We have never- any movements we make now on claims are always going to be forward facing. We’re never going to step back. Just never, it just isn’t going to happen. So, we’re going to try like heck to keep pushing forward. It’s hard, especially on the cattle side.
Neil Dudley: Well and when you have the demand. This is- maybe let’s talk about this. How did you build such a loyal consumer base, such a strong brand, and such a, I guess just a big business in such a short amount of time? Do y’all have that answer?
Mike Salguero: A lot of prayer. I just want to go back just on the Prop 12 thing because I think that this is our differentiator, and it’s important for people to realize that, and I think it does answer the question you just had. So some companies, if you look at Prop 12, is they might take the approach of, hey, if Prop 12 starts gaining heat, more and more consumers are going to be looking for an animal that’s raised better, and that’s a small fraction of the market. So that means that our price, because we’re already paying for those pigs, is going to go up because there won’t be enough of those pigs around. There’ll be less supply of those pigs, and there’s more demand because California’s a big state, and all of a sudden, there’s going to be a supply and demand imbalance, and the price is going up. So, if you had a company that is more profit motivated, let’s say, or they have a lot of investors – we have no investors, we’ve never taken a dime, which I think is like a really big thing, we’re actually able to live our values. And so, our values are to change the industry. Like we want animals to be raised better. We want pigs to be raised better. If it costs more, fine. It just means that more people have decided to do the right thing. And so, that’s a good thing ultimately. But because we’re not like focused on what does that mean? Like are investors going to get upset? We don’t get put in situations that other companies have been put in. Other companies in our space who are, I guess you’d call them our competitors, have been found using different product or have been found screwing over farmers, not keeping their word, doing things that like we would just never do because we don’t have any outside funding. And the other thing is we got B Corp certified and the idea behind B Corp was to enable us to like put into the DNA of the company, put into the documents that we have to think about not just shareholders, that we’re not just supposed to make a bunch of profit for shareholders. We have to think about our impact on the world. And that’s measured, third party audit, just like a humane certification, but it’s on us, which I think is pretty cool. I mean, look, I ran a company before this for seven years, Custommade.com. We took $30 million of venture funding, and it didn’t work. And I mean, every day I’d get to work, and I’ve kind of rally everyone around whatever goal it was. And it just constantly did not work, did not work, did not work. I don’t think I’m any smarter now than I was then other than having the crushing defeat on my resume. So, in many ways, it just magically kind of happened. And I think our approach of not taking funding, I think our approach of every employee owns a piece of the company, our approach of having values, our approach of a mission, I think all of those things have helped. And I think the customers, like what they’re looking for. Like we have always been transparent with our customers. We will continue to be transparent with our customers. One of our core values is being authentic and we’re just going to do that. We’re going to live that.
Neil Dudley: Part of it is coming on these podcasts, like just this. You just come on and you aren’t worried about it at all. Like you didn’t send me some script, this is what we’ve got to stick to. I am free to throw any topic out there. Folks, if you’re listening, that is a real way to know if a company is transparent or not. That little piece, these interviews, this kind of conversation they’re so willing to be a part of is just a great insight into they’ve got nothing to hide. There’s no secret about it, this is how we do our business. That inspires me. It leads Pederson’s to bigger and better things. That’s one of the reasons you guys were one of my kind of most desired interviews because you just do that so well.
Mike Salguero: Thank you. Yeah, I feel, and I feel like Prop 12 was a great indicator of this, there is a transformation happening. The customer is caring way more about where their food is coming from across everything, not just meat, and companies are having to wake up. And at the very beginning you said something like large companies don’t necessarily like me or like us, and I’ve actually found that to be not so true. Like they see us as like, wow, we better listen because they’re clearly proving there’s a market here. They clearly have a lot of engaged customers. And what I like to think about is our members are helping to support a revolution in meat. And that’s pretty cool. And I think they picked the right horse to do that.
Neil Dudley: That is awesome. And I appreciate you for kind of correcting me. I don’t think everything- I’ve heard this said before – don’t believe everything you think. So, I have some opinions, but that doesn’t make them right, and that’s why some of these conversations are so valuable, just getting to hear your perspective on it. I would say I’ve been in conversations with, let’s say, billion-dollar multinational companies. And what is hard to convey is the small minute portion of the market we are today is going to be everybody in the future. And sometimes it’s hard to see that writing on the wall from those positions.
Mike Salguero: Yeah. I talked at the meat conference this year, and I equated that to econ. So, you look over, I’ve been going to the meat conference for six years, and first, we were the only .com there. And then one year, I guess, year three, it was like, oh, what’s Blue Apron doing or what are these meal kit companies doing? And it took a very long time for people to even be thinking about e-commerce because they thought it was niche. And then COVID hit, and it’s like if you didn’t have an e-commerce plan or you weren’t already set up, you’re in trouble because all these other companies just gobbled your customers. And it was like I know it doesn’t feel that way, but the next wave is claim space. And you’re either going to get on the train or you’re going to ignore it and call it niche, but it’s coming and it’s coming fast. And it is, customers are waking up.
Neil Dudley: I mean, it simply has to be that way; Pederson’s is still in business. Look, 15 years ago, we were getting laughed out of conferences like, oh my gosh, natural? You’re crazy. That’s just for the crazies. Now, people are like, hey, so what do y’all think about this? Or it’s just- it’s kind of just see what businesses stay in business. That tells you where the consumers are, what they want, where they’re going. Okay, I got to tell this story, I want to tell it. We can take it out of the podcast if it turns out being something you guys aren’t comfortable with, but our journey as friends, business associates, all those things is interesting. I think it tells a good story, and Michael can correct me on any of this path that he feels is incorrect. But I want to tell the story of Pederson’s and ButcherBox. It really starts with Mike. As I remember it, you were looking for bacon. You knew we made an uncured third-party verified humanely raised bacon and I feel like we talked and like, cool, let’s do it. But you initially wanted private label. I think that’s a good strategic position for you guys to be in. You’re using a lot of suppliers and that was part of the goal. Well, our leadership was like, no, we don’t do private label. I mean, we either sell our brand or we don’t do it. So, we got lucky enough I think for whatever, however, the stars aligned, and we got to do business with you guys for a good while. And it was good business. It really worked well for Pederson’s. And this was in the early years, probably before Michael even came on board. And then when Michael came on board, I got to meet him. And I was like- because Mike Salguero was pretty easy to negotiate with. Like, hey, we have it, here you go. I would like to say I don’t feel like I gouged him, but maybe I did unintentionally. Then Billings comes into the equation, and life gets a lot more real, let’s say. And so, we rock along there a little while. We’re working with them, selling bacon, and it gets to be a nice little chunk of our business. And Michael had always kind of been telling me, Neil, I’m going to need you to work with me on price and this consideration for private label. And folks, the lesson here is my stupidity. I want you all to hear this clearly, if you’re listening and you ever find yourself in this position. I thought they need me, I’m going to just plant my feet here and this is the way we do it, we’re private label and this is our price. Guess what? They didn’t need me. I think we had a good working relationship, but the truth is that’s the lesson – no customer needs you that much. There’s somebody out there that will want to solve that problem for them or be that solution. Billings, did I tell that anywhere close to the truth?
Michael Billings: Yeah, you nailed it. I will tell you one thing, if there’s anything I’ve learned over my career, it’s that I would have never done that if I wasn’t prepared on the other end. That’s kind of the way you do things from a buying side, right?
Neil Dudley: Yeah. There’s your side of that story too. I mean, I probably did have you over the barrel for a little while and you didn’t have another option in place. But I wasn’t smart enough to understand the truth of how important your business was to us, how hard it would hurt whenever I forced you to find somebody that would do it the way you wanted it to. So, I learned a lot. I think any listeners can learn a lot. I appreciate you guys doing what you do and just being willing to have that conversation here on air, like, hey Neil, that’s right. Because sometimes those failures are what you learn so much from. I tell you, it’s a hard lesson, but I’ve learned it. I would even say Mike probably could say the same thing about his first venture into VC and all that. Oh, I was going to say, how many times does somebody call you wanting to buy some of this company?
Mike Salguero: Not as often as you’d think actually. There’s a lot of people that call to invest in the company. Well, I guess that’s buying a piece of the company. But yeah, I mean multiple per week. But we’ve actually stayed fairly off the radar but intentionally. So, we don’t necessarily go and talk about ourselves that often. We’re starting to more and more around the topic of the revolution and how people can be part of it versus hey, look how we grew this, like look at how smart of a marketer I am. Like we don’t do that.
Neil Dudley: But everybody thinks that you must know a trick to marketing. Like no, maybe he doesn’t, maybe he just hit a- I would say no sugar bacon for Pederson’s was a similar kind of thing. Like we just blind luckily put a product out that timed the market and the consumers desires really well. And man, that’s a fun ride.
Mike Salguero: Yeah. I mean, I joked earlier about a lot of prayer, but like there are so many- there are too many things that have happened in this company for me to not honor that there seems to be some divine intervention happening in terms of how things have just played out and I am willing to make those leaps. It’s like something opens up and it’s like, oh, okay. I mean, at the very beginning, the way that we grew is via influencers. We had a Kickstarter campaign. There was a gentleman, Chris Kresser, who’s a paleo doctor, who like tweeted about us. And I don’t think we even asked him to tweet about us. I think he just randomly found it. And we saw all these signups coming from this one tweet. And we were like, oh, we should do some more of that. And it’s like, oh, okay. And then that just set up our whole path, which for the first two years, that’s what we did. We ran, before it was a thing, we ran an influencer affiliate blogger program, where all we did was go out to people who told their audience to eat grass fed beef, and we said, hey, we got turned on to grass fed beef because we’re reading your blog for my wife’s thyroid condition and trying to clean up her diet, but we couldn’t find any. So, we started this company. Do you want to like promote us? And they’re like, sure, no problem. And it just kind of helped us get going.
Neil Dudley: Do you find that you have to police yourself a little bit in expecting that those campaigns today have the same rate of return as they did early on?
Mike Salguero: They don’t; it is over.
Neil Dudley: Yeah. And well, I mean, so is it totally over or is it still worth doing, it just doesn’t pay as well as it used to? And when I say pay, I mean convert.
Mike Salguero: Yeah, yeah, yeah. So, the way that I talk about marketing is it’s like wildcatting for oil, which I’ve never done before, but this is my analogy. Where basically when you start, you want to just like have a small shovel and you’re just hitting the ground and trying to find, okay, there’s a little bit of oil there. Very cheap, very scrappy, very fast. You need to move quick. And then when you find something, it’s like let’s build a rig. And then it’s like, okay, it’s actually continuing to gush, let’s build a bigger rig. Let’s build a bigger rig. Let’s build a monster rig and like suck everything out of here. The oil well is still paying, but it’s not necessarily- and now you’ve invested so much infrastructure in it, it’s not nearly paying like it used to. So, you have to wildcat for the next thing. And so marketing’s like interesting, especially right now. I mean, last year it was like we didn’t have to market.
Neil Dudley: You almost needed to slow it down a little.
Mike Salguero: I’ve never been part of conversations that were like, hey, do you know the button used to convert worth when it was a different color? Can we change it back? [inaudible 35:00] But this year, so iOS, Apple’s operating system has changed the game in terms of tracking customers, which has made Facebook and Instagram and some of these platforms a lot more expensive. Also, people are buying a lot more, so that means a lot more people are marketing, and it has gotten really expensive and really hard. It’s really all about understanding that everything that you do in marketing is just a- especially on the internet, is a brief moment of time. And then you have to keep moving. You have to keep wildcatting. It’s like that rig is going. Let’s keep going because that rig is going to stop paying at some point, so we’ve got to find the next one, find the next one, find the next one.
Neil Dudley: That’s a great analogy. Everybody, listen to that, roll it back and listen to that again because that’s some really great advice from a guy. I mean, that’s just free value, and I appreciate you for giving that to us. It’s valuable to me. That’s making me think about our plans and our processes. Okay, cool. What are we doing in marketing? I mean, we hear kind of buzzing around Pederson’s is micro influencers now. So, you try to find more- Melissa Urban is a good example, and she has been a guest on the show. She does not think of herself as an influencer, but she has influence, especially years ago. Like you get her just to say buy it, you could guarantee it was going to get bought.
Mike Salguero: Melissa Urban is amazing. She is not a micro-influencer. She’s like the influencer, one of the biggest ones. And yes, we’ve enjoyed a long-standing partnership.
Neil Dudley: Oh, I know where I was going with that though. When we first started kind of being aware of Whole30, she still hadn’t exploded to the level she is now, but what she always had was that trust in her followers, people that were interested. Like she could say, “I like this” and they just trusted it and believed it. I think the really big influencers today have lost a little bit of that. So, they’ve got the big follower bases, they’ve got the great email lists and that kind of thing, but they don’t convert like they used to. So that’s where the micro people, with the smaller, more I guess engaged kind of followers is one of the things, who knows if it’s right. Like you said, keep wildcatting. That’s just one of those options that’s out there that gets batted around.
Ben Warren: On that front, I wanted to ask a quick question. Where is the next place for the marketing? I was driving back from a birthday party I had my kids at yesterday, and I drove by a billboard of yours, a ButcherBox billboard. And I thought to myself in preparation for this interview, that is a super online company, that’s an interesting strategy. And I just kind of wanted to see where you guys’ head is next for the marketing.
Mike Salguero: Yeah. I mean, I think the number one thing we’re doing as it relates to marketing, just not only marketing, is we’re really making a push to be in retail. So, when you look at the portion of online, so you look at online sales, post COVID is about 30% of people have purchased groceries online. And then it breaks down into about 15% of them regularly buy groceries online. So, it’s 15% of the overall market. But then when you look at them, it’s about 60 to 70% of them are clicking collect. So, it’s basically grocery shopping. They go to the store, they’re just like picking it up instead of going into the store. So really, you’ve got like 40% of 15%. So, it’s about 6%, 5 to 6%. So, when you look at the addressable market for us, so that’s 5% of 120 million households is 5 million, 6 million total people, when you look at the addressable market, it gets pretty small. And so, one of the things that we’ve talked a lot about and are preparing for and have active conversations happening now and have a whole retail team is what does it look like for ButcherBox to be where most people are shopping? Like if you’re going to build a renowned brand in meat, you need to be where most people are buying their meats, which is the grocery. So that is the big move that we’re making. We are doing some billboards, we’re doing TV, we’re doing a podcast, we’re doing radio. We do a lot of stuff. And what’s interesting about our business is it’s all dialed in, which is different than pretty much any other meat company out there. So, one of our advantages is that all the sales currently go through our platform. So, we know, oh, that billboard, okay well, how many people signed up in Denver, for example, because we have a lot of billboards in Denver. So we can back into what that cost was and what the value of advertising was, which is a little different than most of the other meat companies out there. So we’re really leaning into that. Where I believe the- where we are going, where I believe like the real mission here is, is to build a brand in meat known for doing the right thing. And that means a brand that can be purchased in multiple locations, not just a box delivered to your door, but you can go to the grocery store and pick it up, you could go to food service and pick it up. Interestingly, when I reflect on brands and meats, there aren’t that many brands that people know. And I would argue that probably some of the best-known brands are not meat, so like Beyond Meat or Impossible, which has gotten huge penetration in terms of people knowing about it, but it’s not meat. And so that, to me, indicates a real opportunity for us to build something that is satisfying what customers are looking for, which is a company that stands for doing things right.
Neil Dudley: Man, that is beautiful. And I love running alongside you guys or really kind of behind you in this space. I don’t know, there’s 29 things swirling in my head. I’m also thinking, geez, these guys have already spent a long time waiting on me to get on the call. By the way, I’ve got to come clean to everybody, I was way late to this call, so everybody was waiting on me to get here. Is there any specific thing that we should touch on that we haven’t yet? I mean, this has already been a whole lot of value. There’s a lot of stuff for people to go find more- research it. Really find out what grass-fed and grass finished means if you don’t already know. Find out what third-party verified humanely raised means. Look into Global Animal Partnership. And I’ll guarantee you, go to ButcherBox, you’re going to learn a lot of stuff there. Buy a box, just experience it. I mean, part of what I think is like be a practitioner of this, like go get involved, try it, like don’t form your opinions without that experience. I’m so scared that a lot of people talk and people believe them and just they haven’t really learned it for themselves. Mike, Michael, I do appreciate y’all so much. You’re killing it. Keep it up. If there’s anything we could ever help you with, you know for sure I’m interested. And if not, we’re going to keep championing your revolution and the things you’re doing because really, we live that same life.
Mike Salguero: Do you want to live negotiate some white label-
Neil Dudley: No, hell no, I’ve already tipped my hand. I’ll be giving you bacon for free. Oh yeah, sure. I mean, just anything, we need some business. But I think it’s a true insight into we’re trying to sell bacon each and every day, you’re trying to sell bacon, like we’re competitors. We are, but there’s no reason we can’t also work together, be a part of that conversation. I mean, that is how consumers end up with the best deal. That’s why Michael Billings is great at what he does. He makes sure he’s got multiple options for what he’s looking for. By the way, Michael, is there anything out there that the listeners, like I’m sure there’s going to be other industry people listening to this, is there anything you really need help with that maybe we could all rally around and make sure you got the help with?
Michael Billings: I think the biggest challenge is trying to get enough ranchers that want to do things the right way. I mean, we have a cattle guy. If he gets in contact with me, I can get contact with him. With harvesting cattle in two parts of the country, always looking to grow that amount that we’re harvesting every week.
Neil Dudley: Yeah, when you all go into the brick and mortar, you’re going to need even more supply than you probably have access to. So, if you’re a guy that raises cattle, pigs, chickens, any of those things, and you like what you hear here and you want to learn more, I promise these guys are the ones to talk to. They can help you get plugged into a network or even do something on your own.
Mike Salguero: If anyone wants to sign up for ButcherBox, they can use “Mike sent me” in the promo box and get I think $30 off your box.
Neil Dudley: Awesome. So “Mike sent me” is the code you should use. Go get ButcherBox for your first time. Mike, Michael, thank you so much. Karen, we appreciate you for putting it together. Ben, thanks for being here to get everything recorded and make sure I don’t make an idiot of myself. Everybody, come back next time. We’ll be talking to some more people from this beautiful industry that I guarantee will have some stuff you’ll want to hear.
Hey, everybody. Thank you so much for listening to this episode of the Pederson’s Farms Podcast. It’s been a blast bringing this to you, and I sure hope you enjoyed it and found value. If you did, tell a friend, share it out on social media, hit that subscribe button, or go check us out at pedersonsfarms.com. We sure hope you do. And thanks for being here.
A customer who bought Pederson’s bacon – ButcherBox’s, Mike Salguero and Michael Billings are visionaries leading a revolution in how our industry operates. Their core values and the market’s response to those values have made it clear they are certainly on to something!
Fun fact: Everyone at ButcherBox is named Michael…ok not actually true but I thought it would be a fun teaser.
(1:17) – Where did the idea for Butcher Box come from?
(7:46) – Michael Billing’s background and journey to joining Butcher Box
(10:10) – Experiences during Covid-19
(16:18) – Prop 12 and it’s affects on Pederson’s and Butcher Box
(18:45) – How do you guarantee your product is what you say it is?
(20:06) – More on Prop 12 & Brand Building
(27:24) – How Pederson’s & Butcher Box got working together
(31:15) – Marketing Strategies
(41:27) – Final Thoughts & wrap up
Use the Code Mikesentme for $30 off at butcherbox.com
The Pederson’s Farms Podcast is produced by Straight Up Podcasts & Root and Roam.