From CustomMade to ButcherBox: A Serial Entrepreneur’s Journey

Mike Salguero’s story is a sign of the times. In the tech startup world, sometimes you go big. And sometimes you go home—and reinvent yourself with help from friends and industry experts.

Salguero is the co-founder and former CEO of CustomMade, an online marketplace for crafts and home décor. The Boston-area company raised about $25 million in venture funding, grew to well over 30-some employees and several million customers, but then its sales went flat and it had to scale back to a small operation earlier this year.

That’s when Salguero went full-time on his latest project. It’s called ButcherBox, and it’s what it sounds like: a box of naturally raised, grass-fed beef that gets delivered to your door for a monthly subscription fee ($129). Think high-end burgers, top sirloin, short ribs, and fillets. The meat, curated and frozen, comes from a collective of farms stretching from the Midwest to Montana.

What gives? This may seem like a random move for a Web startup founder, but there are lessons in serial entrepreneurship here.

Mike Salguero

Mike Salguero

The news is that Cambridge, MA-based ButcherBox is launching a Kickstarter crowdfunding campaign today. The stated goal is to raise $25,000. It’s just one of the channels the company is targeting: Salguero is also forming partnerships with CrossFit gyms and other subscription boxes, as well as doing Facebook advertising, to get the word out.

Subscription boxes are a pretty frothy sector—see Birchbox, Julep, and other efforts. But Salguero says he’s been thinking about the idea for two years. He has participated in cow-share programs, and he’s a health and nutrition buff. But he didn’t know much about the meat-delivery business. “I shelved the project three times,” he says.

Ron Eike

Ron Eike

Then he read an article about a veteran of the meat industry named Ron Eike. Eike ran operations for the beef distributor Omaha Steaks for 25 years. He’s retired, but he’s still connected to all the important constituents—cattle farms, processing plants, fulfillment centers. He’s from Nebraska but now lives in Iowa.

Salguero reached out by e-mail, and the two talked on the phone about a new business opportunity. They hit it off with their mix of online and offline experiences, and Eike flew out to Boston in April. By then, Salguero had also connected with Bobby Riley, the founder and CEO of Soldier Design, a brand-building firm based in Harvard Square that has designed the ButcherBox brand, packaging, and website.

Bobby Riley

Bobby Riley

When Eike came out, the trio gathered at Riley’s house for a family barbeque—where they grilled ButcherBox meat, of course.

Salguero also visited Eike on his home turf, flying to Wisconsin (they are using a fulfillment center in Madison) and driving down to Iowa. Salguero says he was impressed by the pictures of U.S. presidents on the walls of restaurants in Iowa’s caucus towns. But mostly he was there to see the different parts of the meat business firsthand.

“We ate a lot of beef and did a lot of driving,” Salguero says.

All of which goes to show the importance of personal relationships and rapport in building a new business—and it’s stuff that happens face to face, not in front of a computer or phone. Eike and Riley are now equity partners in ButcherBox, and each is instrumental to its chances of success.

Now the startup faces the big challenge of building a customer base. As Salguero puts it, “The business is pretty sexy at 1,000 boxes a month.” That assumes he keeps costs low and staffs the business at the level of a “two-man shop,” he says.

And it speaks to a key lesson he learned from his previous company: keep things tight and focused. At CustomMade, he says, “we raised a lot of money. At the time, we thought it was good, and we could turn the corner. But you start making decisions you wouldn’t otherwise.” He adds, “You end up doing so much stuff that’s not mission critical. We grew and got product-market fit, but not mass-market fit.”

So the goal with ButcherBox is to see if the team can get traction with the right product. They’re not looking for a mass market, just a dedicated one. And they’re not raising venture capital—at least, not yet.

Salguero shares a couple of other lessons from CustomMade: “If you don’t establish a brand upfront, it’s hard to establish it later. So we wanted to start at ground zero with brand being a big focal point.” (Hence Riley’s help.) Also, he says, “make sure you build the culture you want. We lost time in the beginning. There’s a lot of money out there right now. But you need to align your fundraising with your business.”

For ButcherBox, that means bootstrapping until now and raising a small amount from Kickstarter. It also means going after an elite customer base of foodies—people willing to shell out money every month for high-quality meat.

The business is “technologically not that complicated,” Salguero says. The most important thing is getting orders—something he understands from CustomMade’s early days of being a subscription business—and “making sure the experience is amazing.”

That’s really the key to ButcherBox’s chances in a noisy sector. It doesn’t have to be perfect out of the gate, but it does need to adapt. “There are two kisses of death—one is they open the box and say, ‘There’s not enough meat in here.’ And two is they say, ‘There’s too much meat.’ We have to dial in to the exact amount.” (The current goal is to include meat for 15 to 20 meals in each box. Next up will be to expand into chicken and pork.)

Salguero sums it up as an entrepreneur would: “We need to give people what they are looking for.” And that will mean focusing on “continuous improvement of the boxes,” he says. “We’ll figure it out incrementally.”

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