This Week in Startups - E1006: Farmer’s Fridge CEO & Founder Luke Saunders is creating a connected network of vending machines offering fresh & healthy meals, shares insights on creating a restaurant-like experience, solving food-supply chain issues, capitalizing on grassroots marketing & real-world virality & using sales

Episode Date: December 3, 2019

0:44 Jason intros Luke and describes how he found out about Farmer's Fridge 5:01 How did Luke overcome barriers of making a vending machine feel like a restaurant 9:18 Luke's life before Farmer's Fridge 11:52 How Luke discovered the issues of distribution that led to Farmer's Fridge 16:18 Building the first Farmer's Fridge vending machine 23:48 Ideal locations for Farmer's Fridge machines & where the first machine was placed 29:35 How did Farmer's Fridge begin to expand and hit critical mass 34:22 Using sales data to craft the most appealing menu 37:00 Getting VCs interested 41:57 Who was the first bold VC to put $ in? How did they prove themselves to institutional firms? 46:27 Machine cost over time & maximizing inventory 49:56 How hardships made Luke fearless 51:30 "Startup cannibalism"??? & low-burn culture 54:27 Farmer's Fridge NYC expansion 58:27 How does Farmer's Fridge compare to fast-casual salad restaurants

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Applications are due December 23rd. Learn more and apply at launchaccelerator.co. Hey everybody. Welcome to this week in startups today on the program. I have a founder who is in the vending machine space and you're like, oh, really? Vending machines like Coca-Cola? No. This vending machine I ran into at an airport and I walked by it and had a beautiful display

and it was showing this incredible farm fresh produce, eggs, chicken. And I said, wow, this looks like the future. Let me go check this machine out. And there were two or three people kind of not using it but trying to figure it out. And it was a standard vending machine. It looked a little different than a Coca-Cola one because it had a big, beautiful screen on it. And I tried it. And it was amazing.

And the name of that machine is Farmer's Fridge. You can go take a look at Farmersfridge.com. And the name of that founder is Luke Saunders, and he's with us today on This Week. It's Robert. Welcome to the program, Luke. Thank you very much for having me. Okay. So I'm in an airport. I can't remember, but I'm in an airport. Okay. I'm walking by. It might have been Dallas or something. And I see this machine.

I guess here's Fast Company doing a little video of it. And these little jars came out of it. Beautiful little jars after I ordered. And there was some nice forks there. And I got a couple of eggs. I got a little salad. I got some chicken. And I was like, this is perfect because I want to eat healthy when I'm on the go. And there's no better description of on the go than at an airport. And I said to myself, wait a second, are these, is this fresh or not? I had all these questions. And this machine kind of explained it very nicely.

And I then sat down and opened my three little jars. They look like jars of, I don't know, yogurt or maybe that pickles might come in. very well done and I ate the food I said this is amazing this is the future let's find this founder and bring him on the podcast so tell me a little bit about farmer's fridge when you started it and where you're at now and why did you start it yeah no great starting point so I founded the company in 2013 we're actually six years ago yeah almost to the day six years ago we opened and sold our first salad so it was the third week of our October in 2013.

Got it. From a vending machine. It was from a vending machine, yeah. Because actually, you know, believe it or not, when I was getting started, you know, one of the core things I would tell people like, hey, I think that I could re-architect the way that people think about food and the supply chain for this. And, you know, the end point of distribution would be a vending machine. So, like, would you buy lunch from a vending machine if it were high quality and cheaper?

and a lot of people would actually say no. They were like, why would I ever do that? So despite giving them a value proposition, which is absolutely undeniable. It's cheaper, it's faster, and it's better because it's higher quality straight from the farm. People said no. Yeah, I think like in the abstract,

when you walk them through it, they're like, why would I ever do that? What was the, aside from the, it's different, did you get the objection? to a more detailed point? No. And no. And actually that's part of how I knew that we were on the right track

because nobody could actually give me a good answer about why not. And so, you know, at this point six years ago was really like, I'm going to get this thing up and running and I'm going to prove that what you say you're going to do and what you're actually going to do are two different things. Because there's no, like, again, people didn't have a really good reason. I was like, let me get this straight. To your point, it's cheaper. It's more convenient.

and it's going to taste at least as good, if not better. Yeah. Because it'd be more fresh in a lot of ways. And so, like, nobody could actually give a good answer other than why, you know, it's not a restaurant. And that's really not, you know, when you think about what is a restaurant, it's a place you go and you buy food. And most people buy it because they want the cheapest, best-tasting most convenient thing. I mean, just to get to first principles, we're humans, we need food. Exactly.

This provides food. Yep. We have to pay for food. We have to wait for food. so you can buy food and get it faster. It should be a big win. So you as a founder had that conviction. Users are telling you they don't want it.

When did you know that users don't know what they actually want? And how did you convince them? Because it does seem like I experienced what you're talking about, which is hovering around the machine. People were hovering around that machine. Yeah. Trying to figure it out because they'd never seen it before. Yeah, so it really, the feedback was good.

Like I understood, okay, there's a barrier to overcome here. Right. And I can't, the machine at the time, as the machine is, it's not going to be able to, like, talk to people in the way that someone who works in a restaurant can, right? Like, it can't walk outside and talk to people on the street. So everything about it has to speak to freshness. Got it. Has to speak to a premium experience.

So, like, everything, when I was getting started, it was what would you do to make a vending machine feel like a restaurant? Got it. So we had it wrapped in reclaimed wood. I spent, you know, $2,500 on this massive neon sign that went on top. I had this big block of astroturf in front of it with stanchions so that it created like lines. And it just lots of little cues that made it feel like a restaurant. Behavioral cues.

Things that are reptilian brains can be like, yes, this is what I'm supposed to do. there's a cue. Exactly. Yes. And we even invested like this food court that we were in was a total dump. Yeah. And so I went out and I bought a bunch of plants and I spruced up like the area around it with those freshness cues and live plants and everything we could think of to make people feel

differently. And actually the packaging itself, which it was really hard to find something that could merchandise the product and look fresh and appealing. And my brother-in-law was like, you should really try mason jars. It's a really great way to, and I went on Pinterest. And I found this. I'm like, this is actually not going to work for me because I'm trying to get people to buy from a vending machine. And that's just too much of a barrier.

But the mason jar thing became a phenomenon. Mason jar salads. Yes. Are beautiful. I don't know if you've ever seen them, but if you type in mason jar salads on the interwebs, you will see like a layer of green, a layer of red, some green beans, some whatever. Exactly. And that's where. It looks gorgeous.

Exactly. And so we actually, like initially I pushed back on. this idea because even that it seemed like I'm adding a layer of friction with the vending machine itself and now I've got to convince people to buy it out of a jar. But once I saw the images, it was very clear like that's a great way to show the transparency of the product and how each ingredient is layered and all that stuff. So we did end up launching that way. And so everything about the machine was how is it fresh? How does it feel like a restaurant? And then I had myself and two people stand at the fridge for four hours a day and just talk to people, explain it,

really help them understand. And that was really critical to sort of building an initial critical mass around how the process worked, where the food came from. And so when I knew it was working, is about a weekend, I'd had multiple customers that had been back every single day. Really? Yes. And so it was just very clear, like I started to get to know them.

And in some ways it was bitter sweet because I knew that was not going to be like a scalable way to operate the business. Maybe and maybe not, right? I mean, if a, if the machine can service as many consumers as, let's say, a fast, casual stand, those typically have two people working in them. And if you cut one person out and just had one person there, you'd be saving half the labor costs, not 100%. And you're not making it there. so you save all that labor. And the space footprint is what? 20%, 10%.

Yeah, it depends. It depends on the restaurant. But I think even kind of going back in time to why I started the business, the whole idea was how do you bring fresh, healthy food to places that it could not go? Was that the original driving force? And then you said vending machine?

Or were you in Japan and sort of vending machines allowing people to buy underwear and everything in the world? and you're like, why don't we buy underwear from vending machines in America? So definitely the former. So before this, I'd been like a small business entrepreneur. I had a bike rental company in college. I sold it when I graduated.

And I went to work with my dad in a family grease lubricant manufacturing business. So, you know, it was basically half a million dollars in revenue, like in a garage in Long Island City, Queens. And they were losing a ton of money because it was 2009 when I graduated. So I took this job. I'd work there in the summers, and he's like, I could use some help. And I thought this would be a great chance to really understand how business works. Yeah. Right in the middle of the Great Recession.

Yeah, exactly. Brilliant timing. So as soon as I started, he's like, oh, by the way, I can't afford to pay you. And I really, you know, we have no money left to, like run this. We're probably going out of business. The whole family's ruined. But see you Monday, 9 a. Yeah.

Break donuts. It was like a trial by fire experience. But, yes, that was really actually pair of place. Did your family lose that? everything in fact? Pretty close. Like, get a cell their house,

like, you know, sell cars and stuff like that. But we were able to turn the business around and actually grow it over the course of a few years. So we moved it from New York to New Jersey, like retooled the whole thing and got it stable and profitable again.

So again, it was like still pretty small. So you did a turnaround. It's your first job. Yeah. In the middle of the financial crisis. Yes. Good on you. So,

but it was a good, like, really small case. And I loved. it. But then my wife got into law school in Michigan. And so I needed to get a job in Michigan. And it was basically like what could a guy who's done grease lubricant manufacturing do? Not a whole lot, it turns out. And so I got a job as a metal finishing salesman. And metal finishing, in case you're not familiar, is like the industrial version of a nonstick pan. So you go into factories

and engineering teams and you sell them coatings for metal. It's basically like, you're a materials business. For them to spray or paint onto. So they actually, it was, it was a lot, it was even harder. Like, I'd have to convince them, site unseen, to send me their parts so I could coat them and send them back. How do you coat them with a spray gun or something? So it's a combination.

We did all kinds of coatings. So you had spray coatings. You had like dip coatings. There's like, uh, auto catalytic type coatings. And also, you really learned how to build on a very, basic level, mechanical objects, physical stuff, and manipulate atoms in the real world. Yeah, sort of. And more importantly, in that job, what I realize is a lot of this stuff is just kind of hacked

together. So, like, big food plants are taking all this engineering and sort of they're building a custom machine to make granola bars or pizza or whatever they're doing. And I also got a really good look at the supply chain for food. And so I was going into a lot of the food manufacturing plants. and realized that the biggest constraint was actually the amount of time it took to get a product from the factory to the consumer. And so a lot of times it was like six months for the granola bar that was getting made to go to the gas station down the street. Yeah.

Because there's warehouses and distributors and sub-distributors, local distributors. Yep. Yeah. So like, so. What a waste. Yeah. And like it's very efficient at reliable cheap calories, but not necessarily like fresh meals. And then the other end, you have six months for your eggs. are not a great window. No.

Don't want to eat that six-month-old mason jar salad. No, definitely not. And on the other hand, I was like basically only fast food restaurants in those places. And so to the original idea, it was, well, if I can compress the supply chain for fresh food and leverage this, the idea of centralized manufacturing with points of distribution that have a different unit model than a restaurant, I could solve the problem for making fresh, healthy meals more accessible. So you had this great insight on the back end about the, the, the, you know, the

distance and the flipping of food between producer, distributor, and retailer and a couple of other parties in the middle. And so you're like, wait a second, this is a distribution chain problem. And it's a consumer adoption problem on the last mile. Yes. And it's a packaging problem. So you decided to take something that had three or four different incredibly challenging parts and then put them all together.

When we get back, I want to know how you made. the actual vending machine. And I want to know how many vending machines there are in the world, because I understand you've raised over $40 million now for this vision. I want to know about that too. But really, I want to know

how long did it take to make the first machine? Did you use somebody else's? And then how many are out there now when we get back on this vegan service. Hey, everybody. I'm here with my friend Jason Maynard, who works at Netsweet? Tell everybody, what do you do, Jason?

You know, I do many things here at Netsuite, but I run the field operations for the business unit. And field operations means one. Sales, marketing, business development, all the stuff in terms of how we acquire customers, take care of them, service them, make sure they're happy. I know what NetSuite does, but for people who are listening, what's the right moment for a startup to engage with NetSuite? Is it at 10 employees, 50, 100, at $1 million in revenue, $10 million, or $100 million in revenue? It's a good question. I think people should engage with NetSuite when they start to lose control over the visibility in their business.

So it depends on if you're a venture back company, that can happen pretty quick because once you start raising money, then all sorts of pressures and expectations come on you. We deal with some family-owned businesses and other startups who maybe a little bit later in their life cycle. But it's really when that complexity takes its toll. What's the amount of effort I should expect to put into implementing NetSuite at my company? Is it a 10-hour process, a 1 hour, a 10-month, 10-week, 10-day? You know, we've been focused more and more of the last two, three years to make that as simple as possible and sort of simplifying our packages. So if you're a small business just getting started, raised an A round or something like that, you know, we should be able to get you in in 30, 45 days, get you up and running. And our goal is to make it as simple as possible for you. And so that hopefully can get you what you need to remove the initial layer of complexity. And then as you grow, you can add more of what you need. All right. Right now, Netsweet is offering you valuable insights with a free. guide the seven key strategies to grow your profits.

So go to netsuite.com slash twist, netsuite.com slash twist and get that free guide. Seven key strategies to grow your profits. We appreciate the work you're doing in the startup community. It's great stuff. Thanks, pal. Thanks. All right. We'll be back one more.

Hey, everybody, welcome back to this week in startups. I'm your host, Jason Kalakhanis. You can find me on Twitter at Jason and Instagram at Jason. You can follow the show at TWI startups, both on Instagram and on Twitter. and we're active and you can DM us and you can suggest guests. And if you want to advertise, we're sold out for this year, but maybe next year. My guest today, Luke Saunders, is the CEO and co-founder of Farmer's Fridge. Did you build the first machine or did you just get something off the shelf?

How does one, because I've always been fascinated by vending machines myself? There's something neat about them, isn't there? Did you buy or build the first one? And how did you make that decision? Yeah. So, you know, originally I was thinking like building a custom machine. And I actually thought because of my metal finishing sales job, I knew some people made machines.

And yeah. You know, so actually I reached out to a couple of engineering firms. And it turns out it's very expensive to build a custom machine. Like the first quote was a million bucks. What? And they were like, and they were like, we don't even know if it'll work. No guarantees. and by the way, this doesn't include any software.

And so I was like, well, my entire startup budget for this project is like 75 grand. It's basically like the money we had saved and some credit cards and stuff. Yeah, they're like, that'll get you a keypad. Yeah, and so that wasn't an option. And so I kind of went home very depressed. So I was like, well, this idea, I think, you know, the economics of like sorted out how to make good food and all that. But then somebody said, well, have you thought about just using a vending machine? And I thought, and I actually said this, like, no, because I've never seen a vending machine that could, like, merchandise the product in the way that I'm envisioning this.

And I don't think it can be a vending machine in the sense that if people see a vending machine, they're not going to trust the quality of the food. So, but I didn't have any other options. So I actually got on a plane and I went to Las Vegas for the vending show. There's a show every year. Wow. And I kind of walked around the show and found different pieces of the puzzle. And so was able to take some off the shelf equipment and mash it together with some software that was being sold. And like nobody was talking to anybody.

Actually was walking the show and said like, does this work with that? They're like, no. Yeah, they're not up to API. Yeah, exactly. They're not on ZAPPA or if this and that. No, no, no. They're not like pumping like updates into your Slack room. No, none of that.

Not quite a not level. So I kind of like, it was sort of this like science project mashed together. Yeah, it's a Franken machine. Yeah, and really just it was a true MVP. Like, how do I, and then we actually wrapped it and reclaimed wood ourselves in Chicago. Perfect. It did all of the like bells and whistles to make it look nice. Did it work?

Almost. Like it was, it could serve meals reliably like five times in a row. And then, you know, what would actually happen when we figured out, it took us like a couple weeks. But people were able to jam the elevator function by reaching in. Like if they ordered multiple products and reached in between vends, it would actually jamming the machine. I apologize about that. Yeah.

No. So, but anyway, yeah. So it would work most of the time. But also was like I did, my office was the food court. And so anytime it didn't work, what we would do is we would. Well, maybe when nobody was looking. But no, we would just actually give away all the food and pretend like it was like a really busy day. Yeah.

Take this. Yeah. To take it. It's all good. Yeah. We just got to get the stuff out of her. It's going to rot. in the machine. We're going to have stinking eggs in here in a minute. And then when people would

show up, we just see, yeah, we just had a great day. It was totally sold out. And so you make it. Yeah. But so, no, it didn't, it didn't work really great. But it proved that people were willing to buy lunch and that it wasn't like a novelty thing. Like, because people kept coming back and ultimately, like, the food quality was high and the user experience was actually pretty intuitive. Yeah. It worked. the average price of the food is three or four dollars or something like that per so our average ticket is like 650 675 or it includes two or three items or it includes one point two items one point two items so four bucks an item five bucks in items yeah exactly like five

five and change and i ordered eggs and they were cheap yeah like it should have been like two bucks um eggs a loss leader for you is that like your Costco chicken where like you're like hey get these eggs and you're like well now they're going to treat themselves to some pudding or something i think i have a yogurt of pudding or something yeah so actually our chicken is our loss. Like it's probably the lowest margin product. What does it cost for like an ounce or two? What is it two or three ounces? Yeah, it's two dollars. And it's it's like at 1.8 ounces or something last time I checked. It's really good actually. It was nice and shredded and packed in there. And I just felt like I was eating healthy in an airport. It was like a really cool feeling. I feel a little bit of guilt because they were plastic. Yeah. And I was like, I don't want to throw this plastic jars away. I think about keeping them maybe because they're kind of nice. Yeah. Nope. So a lot of people keep them. And then we also have a return on the fridge. Right. So you probably had already left the airport area, right?

No, I was just in another gate. I did think about going back because I noticed that. And I guess people do do that like half the time or something. Yeah, so it really depends on the location. So like in an airport, we get a lot of like the flight attendants and pilots will return stuff. But travelers typically, they'll keep it, wash it out and reuse it or just recycle it. It feels like it's reusable. Like it feels better than like those Tupperware things that you kind of reuse a couple of times.

You're like, this is so cheap. I got to throw it out. It's colored. Well, and that was the whole idea. We actually printed our name on it because we right away, the first time I tested the packaging, I dropped it off at a friend's house. And I came back a week later to ask her how it went. And I noticed she had taken the jars and used them all throughout her kitchen. So there was like pretzels in one and dog biscuits and another. They're kind of precious. They're really nice. And I was like great. I'm going to print our name on there. A little bit harder plastic. Like it doesn't feel like cheap plastic. And they're really easy to clean because it's not like it's coated in, you know, peanut butter or something like that. No, super easy. How many machines are there now? So we're close to 400.

Wow. And you make them all yourself now? You have a contract manufacturer? How do you do it now? So it's a combination. We basically, so we do all the software in-house. We have a team of software engineers that do all that. We spec all the electronics and the electromechanical portion is built to our spec now.

And then the what we call like the shroud. So the thing that actually makes the machine look nice, that's our design and we contract it out. Do you build all that in America or you have some coming from China? How do you do it? So it's, again, a mix. So it's like electronics are coming from China. The machine and the shroud are here. And then-

Cheaper to build that metal shroud here, the box, because shipping all those would be super expensive? Yeah. And I think, too, just like, you know, from what we found, like the suppliers were, it was actually pretty easy to set them up in the U.S. and not have to go and fly 12 hours versus ordering electronics through Alibaba was like, you know, pretty reliable. So it just depended where,

what we were trying to accomplish and we happen to find really high quality suppliers. Like the shroud, for example, Michigan is great for furniture building. And so it turns out, like if you think of it as a piece of furniture, you free yourself from thinking about the metal contraption that's made in some big giant factoring. You're making it with studs or some kind of frame? It's more just the shaping of things and the cutting of it and it's the same type of fabrication. So as long as we created the spec, we sat down at a CNC machine and kind of like cut it all out and then pieced it together and then gave it to somebody to say, hey, can you like operationalize this to make a hundred of them? Where are these machines? We talked about airports.

That's obvious. I would think colleges would be the no-brainer in office buildings. Where do you put them? all of those places. Yeah. Which one's the most easiest to place? Like people are just like, get it over here now. Well, it was funny, actually, nowhere at first.

So nobody wanted it. Nobody wanted your machine that broke after five? Nobody wanted it. And it was funny. By the way, the most delightful thing that can happen when you're interacting with the vending machine is not getting what you just paid for and calling the 800 number and asking for your 75 cents.

Like, why don't even put that number there? Yeah, I don't know. And I don't know that anyone would answer it. It must be like some legal thing. I think so, actually. I'm going to go ahead and ask everybody to go get those numbers and let's all just call. And I want you to record the call and let us know if you get your 75 cents. It must be a legal thing.

They must be required to send the 75 cent check. No questions asked. They are. What a lot of people do is they actually just give like in an office, the HR or whoever's facilities manager actually has coupons from the vending supply. And so they'll usually just give you that. It's like a refund now. but in any case So nobody wanted it.

No. So when I showed up, I actually was living in Ann Arbor, my wife was finishing up law school. I was like incubating the idea. And when we were getting ready to move, I quit my job and was going to open the first one in Chicago. So I started walking the streets of the city going to all the places you'd expect that this would be a great fit. Places like the Merchandise Marr or Willis Tower, formerly Sears Tower. And just like anything that I thought of is lots of people, iconic places with a bunch of extra space, especially considering this thing was only going to be like 20 square feet.

Yeah, you just put in the lobby. What's the problem here? Well, apparently nobody was interested. And actually, it was funny. The first place I showed up, I didn't even have a picture. I just said, I'm going to do this thing. And I'm going to pay you money for the space you're not using. And they looked at me like, what do you mean?

What does it look like? How big is it? I had to go and actually create a 3D render. I'd never done that before. But no, everybody said no because they were worried that I would compete against the restaurants. Of course. And some people just like didn't want to be the first person. They were risk averse.

Like who is this guy? Am I going to have a giant paperweight in my lobby? And so we ended up in a food court that was, ended up going bankrupt a year later. So when I say this was not a nice food court, I mean it was really not a nice food court. And they were the only place they would take us. And I think they actually thought they were getting one over on me because when I walked in and they tried to lease me a space in line in the food court. And I said, no, like, I don't think I want a storefront.

I think that space right down there in the middle of the food court. If you have an outlet there, I'll pay you like $800 for that spot. And the guy looked at me like trying to keep a straight face and was like, I'll think about it and get back to you. And like, I got the lease like six hours later. Yeah, because by the way, they're charging $600 for you have a full bone restaurant that you could have made your office and it's got a sink and a shower. Exactly. Yeah. You dummy.

Yeah. So you literally competed against yourself. You negotiated against yourself. Yeah. How about 800? He was like, let me get back to you on that. When I had already,

I had gotten some feedback from these other places on like what they were charging for stuff. And so I knew kind of like general market like it might be $2,000 at another place or something. So I had, I had some sense. But I just didn't want to, I was getting desperate. Nobody was saying yes.

And I was like, look, I just need a place to open because I've already paid for this fridge. and if I get the fridge and it's not ringing sales, then I'm not making money and I don't have a budget for that. And so I was like, look, I just, I need a place to showcase this. I need somewhere to bring people and show them the fridge, and that was really the way that we got our first location.

So, no, and then once we had that one. If you're overpaid, now you got it working. Yep. How do you get the college, the hospital, like these kind of places to buy in? How do you talk them into it when we get back on this week and start? Do you want to turn your idea, your brilliant idea, into a beautiful website? If you do, then you could build a blog and you could publish content. Maybe you could sell some products or services, promote a physical event or an online business,

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All right. My guest is Luke Saunders. He is from Farmers Fridge. You can go check them out at Farmersfridge.com. He's got 400 machines in the United States. First machine, you can get five great products and then it would break. He overpaid for his first location. and this thing was duct tape and chewing gum.

But then you kind of got it working. And then I assume you go to some other places and say, hey, you want to check it out here. You make a little teaser video and then you start emailing and sending people like a link to it and say, hey, would you like to have food between, what was the cell? Do you want to have food when all these restaurants closed overnight when the nurses are working or college kids are studying? Yeah, exactly. It was like, are you crazy? there's no healthy options kind of anywhere in sight in a lot of these places. And not only are we going to solve that problem for you,

but it's going to also be available 24 hours a day, seven days a week. And it's, by the way, cheaper than anything else. And so there was like all these selling points. And you're not using the space. Like it just felt like too many things. Win, win, win, win, win. Yeah. And so what we found out is that a lot of places actually had

contracts with people to provide food. And so we would go to a hospital and say, hey, we want to put a fridge in here. And they would say, that's great. But we have a contract with so-and-so. Oh, like a global contract for the whole facility, restaurant associates or something. Yeah, exactly. For like a vending contract or a food service contract. So then I was like, oh, I got to sell to these big companies. And then they'll help me sell to the, the client. And so, of course, they had no interest. They're like, this is, uh, you know, competition or we just don't have time for you, whatever it was. Um, and so really what we did, we just kept hammering away at the accounts and the customers because we were starting to build

a fan base in our one location. And little by little people, the word got out. And it was, it became, uh, kind of grassroots. So like the people at the hospital were saying, like, what do you mean I can't have fresh meals because you have a content? You have a The contract is to serve us, and this is in service of us, so you should do it. And so it really took time. And a lot of grassroots that kept pushing and kept pushing, and then we had our first couple big breaks. So we ended up in a shopping mall that was on Michigan Avenue, very high profile, and then

people started seeing it there. And then the hospital called us up. They actually called one of the real estate brokers who originally had not even replied to my email. And finally, I did get them on the phone. They said, this is a great idea, but it's not for us. We lease space to restaurants. So if we take this concept to the people that we're supposed to be leasing space for, they're going to think we're nuts. And then actually, it turns out they worked for the hospital system.

And so they were calling me up and say, hey, will you come in here? And that was really the catalyst. It took us about a year to get the reputation and just really push the grassroots to start to be calm known as a good solution for this. And then once we executed well, it became like a self-fulfilling thing where more and more people wanted it. They knew we could execute and so on. Is there some network effect in this business where you get 100 locations in a city, people download the app and start ordering from the app or does everybody just swipe their credit card and pick from the touchscreen? Is it 90% touchscreen, 10% app? Yeah, it's actually low on the app,

mostly because it's an impulse purchase. So most people think about food and they buy food. The network effect is mostly around the economies of scale and distribution. So like you're building a route-based business, and the more fridges you add, the more density you build. In addition, we've actually seen sales, even as we've gotten more dense, sales actually go up because people start to recognize it.

They're familiar with the product, start to change their routine, So they know. So just like Starbucks. Exactly. It's like, why are they open a Starbucks? It's one, two blocks away. And it's like, that's why they're doing it. Yeah, exactly.

Because they want to hit you twice on the way to work. You pass the first one. You're like, nah. By the second one, you're like, oh, great. Cold brew with that pumpkin spice. You try that yet? I have not tried that yet. No.

I'm going to go ahead and advise you to not. I just had one of those the other day. It felt like I snorted four Adderals. Really? I've never snorted four hours. I'm assuming that's what it takes. I mean, it is cold brew. Yeah.

That is so powerful. powerful that I think if you drink this before 7 a.m., you're going to be wired. And it's so, it's not that sweet. So it's a little bit. But yeah, they make this like, yeah. So you have the real world virality, huh? Yeah, and also menu planning, right? So we're actually-

Wait, what does that mean? So we get a lot of data on what people like. Ah. And that data actually allows us to refine the menu. Got it. And then the bigger the network is, the more tests we can run. And so we can actually refine the menu faster. Right.

And so it is, it's proven to be a really powerful thing. So actually when I started, only 50% of people actually liked the food. They thought Farmer's fridge was convenient. They liked the price point. But they were going there because it was convenient and cheap. Right. And so now that number is like 95%. It's taste.

Yeah, exactly. Really? It's just being... Give me an example or two. What did you take off the menu that was just boring AF? And then you added something that was lit AF. So let's see. I'm just trying to relate to you like Gen X to Millennial.

You look like a millennial. Yeah, I'm a Gen Xer. So I'm trying to keep this lit AF. Okay, all right. Well, so a good example, we had like this product today. It's called North Napa salad. And we first put it on the menu. It was actually like pretty reasonably popular.

And we started asking people like, what would you do to make it more appealing? How would it taste to be? Or how, what would you like to see in the salad? It's the Napa salad. Napa cabbage kind of jam. Yeah. I know about this napa cabbage. Yeah.

It's a delicious. It's an awesome salad. And what we found is that people wanted it to be more fillings. So we added some chickpeas and sales went up. And then they wanted a little bit of tanginess and some cheese. And so we added the feta. And all of a sudden it went from like lowest performer to highest performer. You give the people their cheese.

Yeah, exactly. Especially. Where do you get bacon bits in here? You're going to be all five. We actually had the cheater salad when I first started. was a it was meant to be kind of a provocative like our one like cheat salad and it had turkey bacon and it was great. Yeah, did it sell well?

It sold really well for years. And then, you know, as we cleaned up our labels and actually made a better version of that, which today is a twist on a cob salad. How do you deal with the salads? I know this is like tactical and in the weeds, but I think it's an obvious question that people will have. How do you deal with the dressing? Is the dressing in the salad already or part of the?

cap? It's in a tiny container at the top of the jar. Yeah, I think I remember this. And so you actually pop it open, pour it and pour it open, pour it and shake it up. Yeah. Exactly. That's the great thing about mason jar salads. You can make them for the week and then you pour your dressing and you shake it and it's like perfectly done without having to take out like a big bowl and mix it. Exactly. Yeah. No. So what was the tipping point where the venture capital community embraced this idea? and how did you get them on board? Because I know you raised like a $30 million round, and before that you'd raise like $10 or something.

How did you raise the money for this idea? Because, let's face it, people were kicking you out of locations. They were taking your picture and posting it at the security desk. Don't let this kid in again, which is a crazy idea. Yes.

Did VCs do the same thing, or did they think you were crazy like a fox? Yeah, yeah, and it's interesting. So I actually really never, wasn't familiar with the VC world. Like I was like a small business entrepreneur, salesman, kind of, and based in Chicago. And so when I got started, it was really like, I'm going to build a nice small business. Like this is, it could be impactful, but I was.

Lifestyle business. Yeah, like, exactly. I want to solve this problem, but it can, it can be a nice little, like organically growing business. And all of a sudden, the demand took off. I realized is that the business needed a bunch of infrastructure to scale. And I needed to raise capital. So I actually read the book, like how to be smarter than a VC. And because actually someone wanted to invest in the business, they were like,

you have no idea what you're doing, read this book. I've never heard of this book. How to be smarter than a VC. Was it good? Yeah, it's great. It's like if you Google like VC. Yeah, it's like the number one seller on Amazon. Perfect.

And you, so I read this book. And then I built a pitch deck and I went around and actually, you know, we had like angel investors and people like that in Chicago. But I got really lucky we met with a VC group that happened to be in Chicago for the weekend and visiting some of their LPs. And I fed them lunch and I thought it was kind of just like a meet and greet meeting. And they made an offer on the spot. Wow. And so it was a very unusual situation. We had a couple of angel investors lined up and they said, don't go that route.

You need to go the VC route. And I went home. I talked about it with a bunch of people and decided that that was the right path. But then we really didn't fit the mold of a traditional VC business at all. And so it was very difficult for the next round to get people, especially where they sort of actively don't want you to own things or move stuff around or do like, operations. Yeah, they're like making a marketplace. Sell software to other people to make machines. Do not take this on yourself. Yeah, exactly. And we're sort of saying like everything about this business, because we haven't

talked about it a lot, but we actually make all of the food. We distribute all of the food. And we own, so we own the whole experience from end to end. Right. And we're literally cutting avocados on the line, making dresses some scratch. Like, that's what makes the product so good. It's full stack. It's fully integrated because you have this new format. It's got to be done to your specification. I mean, of course, you could outsource it. But if you outsource it, then that product is being optimized for a different reason than customer delight. Exactly. It's being optimized so that copacor can put in the worst low-quality avocados to make money off of your customers as opposed to getting your customers come back. Exactly. That's like,

and they're actually trying to amitriize their R&D across like five different customers or 20. And so they're selling your, your hard one ideas to someone else. Right, you're educating people. Exactly. You're like, cut the slices like this. You're like, no, we have to do this. And so actually for our second round, most VC investors were like, this is nuts. You have no chance of success.

And good luck. Really, I told it to you like that? Or you interpreted that. In different ways. Some people were direct. Some people just never got back to me. But you got the message, right? When they said it in a direct way, I'm curious, how did they phrase it?

Like, what was the most candid way somebody phrased it? The most brutal. this is not a VC business. You should not even think about it. Right. Don't raise venture capital. Exactly. Which is actually like a good advice. And actually I was going to say like he was very direct, but he's also a close friend.

And someone who I like he actually worked at Redbox and was like the first person that educated me on how to build this company. Like at one fridge it was working. And he happens to be a VC. And so I went to him to get money and he was like, no. No. Touched to the temple ball. Exactly. I help you, but I couldn't invest this business. Well, I mean, why do you think VCs don't like your business?

Well, so I think it's changed. Well, why did most not like it initially? And then why do they like it now? Yeah, so I think initially it was really this idea that you had to have physical infrastructure and the scaling was going to be hard. Like, we'd hear that a lot. Like, how are you going to scale this up and, you know, it just seems too hard and there's all these executional risks?

So the infrastructure and the complexity of the business. made it easy for venture capitalists to say no. Yeah. But you got that first slug of capital? Who was that bold VC who deserves credit for when they zip through Chicago on the LP meeting? It's a firm called Great Point Ventures. Great Point Ventures, as opposed to Bad Point Ventures, Great Point Ventures. Never heard of them where are they based.

They're based here in San Francisco. Great. Wow. Big fund, medium-sized fund? It's about a $200 million fund. They're now on their second $200 million fund. Ah, was their first phone when they invested in you? Yeah, we were like one of their first.

investment. I tell this to founders all the time. Oh my God. The best thing for a founder is to find a first time fund. Do you know why? Why? Because they need to put the money to work. They had no track record and they're going to have fresh eyes and they might want to try something. We say it, the way we say it in the industry is they might jump the fence. They might take a risk, right? Yeah, I think that's true. I think they were looking at this and they were saying we've got a lot of time and we can make a bet, you know, a few of these like small high risk bets. Yeah. And especially early in the life cycle, whether it's their first fund or early in the fund, I think they're more open to that for sure.

How did you convince the oldsters, the people who've been at venture capital for three decades, four decades, two or three, four decades, to, you know, and they're on fund five or ten to come in and invest in what you're doing? So I think really what changed is we were able, so we showed we could scale the company. So we had actually scaled into Chicago. we were now at 150 on our way to 250 bridges. It was undeniable. The traction was undeniable. Yeah, it was in a lot of the initial objections about, like, can you scale this up? Or is it a fad?

You know, we had proven. We'd taken a lot of those things out of it. And we'd actually shown that we were able to leverage the data that we were collecting to optimize the menu and create like really compounding like 3, 4x growth. and so it was like, oh, this is actually a really compelling unit model. You are disrupting the way that food gets to market in an environment where restaurants basically have rising retail. Like, all every cost is going up. So the retail apocalypse, not being able to get workers, workers minimum wage going up, the competition for workers who are hitting the gig economy and saying, well, why would I go do a shift at this restaurant when I can do Uber whenever or lift whenever I want?

And I don't have to deal with a boss dragging my ass into the same location. Just pop in my car, do a couple rides, get out, go to the movies, and do a couple more rides or pick up my kids. It's hard for a fast food restaurant to compete against Uber Lyft and other alternatives because they pay more. Right, exactly. And you're your own boss. You have no boss. Really, the whole thing that people miss about the gig economy is not having a boss because bosses are a-holes almost universally. I'm listening to over there.

I'm listening over there. I'm listening over there in the engineering room. But they are. And not having a boss is so nice and delightful. You feel agency in your life. There's nobody coming in telling you what to do. But that was a big headwin against these restaurants. Here in San Francisco, the mid-tier restaurants are starting to put kiosks in and kiosks.

And you're like, wait, this is a restaurant, not with a tablecloth, but this is a restaurant with a $20 entree. And I'm ordering from an iPad. Really? Yeah. And then you do it and you're like, thank you. Yeah, that was like totally seamless. I was really annoying to have this like 20 year old like actor be really pissed off at me for their life and having to be a waiter and they get my order wrong because they're not paying attention. Like it's so nice to use that kiosk.

Yeah. So I think that that's a good example where you had these outside forces starting to converge. So like what we had been saying for three or four years now it was very obvious. Like the business could scale. You're seeing people move to kiosk. ordering the unit economics of like delivery had become more clear. So there was a bunch of startups that when we were just getting started out here that were doing like individual drops.

Like postmates you mean and stuff like that? Yeah, but like actually making the food and dropping it off. Yeah, we had a company we invested in Calbento. Okay. And then there was, that was doing pre-prepared meals to your home for 12 bucks. And you really had to charge $15 an entree to make it work. But it was a really hard business. Exactly.

Food waste, et cetera. Yeah. And so people kind of got it all together. Yeah. and these machines, they must have gone down in cost over time. Yes. So it's things like that as we started to optimize, we were able to show. So a big part of it was like we were able to show we could make money on the food that we were selling.

We were able to, you know, just the basics of like running a good business. We were able to show that the cost of the fridge was coming down. Yeah, those fringes I would think would be, at least at 75K was your budget for the first. Did you go over budget, I assume? So no. And actually, at the time it was about 25. I was able to like, you know, scrape together. Yeah. So I was able to do, I was able to afford two plus my first month's like operating costs.

So 25K per. And I'm assuming that, I'm wondering if that cost went up or down because you're making higher quality ones now that are more less hacked together. So we spent like three years, like iterating on the box. And we, we ultimately got it down as low as like four. Wow. And and then it was like, oh, that's actually a little two. cheap and so we brought it back up and made it a nicer experience. So if it's 10 grand, let's say, and how many of those, how much inventory is in it? Like 100, 200 of these jars, 300? Yeah, so every location is different. So the way the system works is we're actually making fresh food every single day, like I mentioned. And then every night a cost function algorithm runs. And so it rebalances the load in the system. So it looks at what's the real-time inventory across the network and then sends it to different places. Oh, so if you don't order the next,

napa cabbage salad at this location, it might go to the one next door where they ran out. Exactly. So they're housing each other's inventory. Yeah, well, so they're not housing each other. So it's just looking at the network and then rebalancing it every night. I got it. But like in a location like the airport, there might be 100 or 200 items. And then at a hospital in the suburbs, there might only be 40.

And so it ranges depending on the location. So you don't have to fill it to capacity. Correct. You fill it to the right amount for that area so you don't have waste. Exactly. And if people, one of the things that's great about this business is that if something runs out, it's not like they're looking at it and going, oh, there's no more Reese's peanut butter cups left or all the Coke Zero is gone. It just goes off the menu, so you don't even know there's no more Reese's pieces left. So we actually do tell people that it sold out.

That it's sold out. Why? FOMO? No, it's more like we want to, we have a bummer button that's called. And so we're actually measuring like how many people showed up and hit that bummer button and didn't get what. they wanted. And so then the algorithm gets smarter about what to send there. We can also look at like, well, did the person hit the bummer button and still buy something? Did they not? So it was like nap a cabbage salad or bust? Right. And so like what person? Yeah, exactly. Right. Oh, so if it's bummer and I

don't go for the Greek salad, you know something. You're not that bummed. Yes. You didn't find another option at another location. Right. That's fascinating. So we do want people to know that like these are the options. And we debate it. We made them. disappear. We brought them back. It's always, it's iterative. I need to get a bummer button. Just like a general bummer button. Just like hit it in your everyday life. Like the one of the great, like you don't have to say anything. Just press the button. You know what you are. You're like this archetypal product guy combined with an archetypal supply chain guy. You're like Tim Kluke plus like an Elon Musk. Because like Elon's superpower is not only does he know product. Like he's really good at product,

but he's an engineer. So all that time working at your dad's like, lubricant business and all this like horrific suffering you did like that actually makes you fearless doesn't it like you don't have any fear of like rolling up your sleeves and doing any job no not at actually remember we were we were sort of like running out of money every month and and the the original uh like one of the original guys who invested was like you're nuts like what are you doing i was like honestly this is like not that hard i was that's like i like try doing that and like your whole family like your house is on the line and get to like sell your car yeah And so when you're willing to operate at that level, it just, I think it's a good.

I'm falling in love right now. Yeah. Thank you very much. You see the stars in my eyes? You just said, like, I sold my car to keep my, and I'm just like, like, just love. But it's like, it's, it's, you know, like me to look at it. Like, oh my God, I love this founder. Did you sell your car?

I did. So when the grease in the, in the, in the Greece. That wasn't like a theoretical. Oh, no, it was a real thing. Like, it was like I, we were, we needed the money. And, and it was, it was a, like an Audi. hatchback A3. Oh, it's a nice car.

Oh, it was super nice. What did you get like 24K for that? I got exactly 20 grand for it. See, I know my cars. That's 20 grand. Yep. And did you downgrade to like a shitty Prius or a Honda Fitt or you have the bus pass? No, yeah, I had the bus pass.

So I was taking the subway. Walk, wow. Yeah, but it was, it was, we needed that. Audi to the A train. Yes. There's your biography. Yeah. But it was, like, that's the kind of stuff I really enjoy actually about building

companies is like those moments where it's like do you have the conviction to do that like is that you know great yeah you got skin in the game yeah honestly there's so many entitled entrepreneurs out there right now who like literally i'm like they're like we're running out of money can we get more money and i'm like yeah how many people you got they're like 27 i'm like all right um how many if you let go of would you be at break even they're like yeah we'd have to let go of like four people i'm like great let go of eight. And they're like, what? I'm like, yeah, just take those eight jobs and assign them to the other 19 people and

then triple your runway and hit break even. And they're like, oh, that'd be a real bummer for our culture. I'm like, you know, it'd be the real bummer button. Going out of business. The real bummer button for your startup is that you show up and the padlocks on the door and everybody goes home. So are we saving 19 people or are we going to cut up the other eight bodies and eat them? Like, this cannibalism, the startup cannibalism.

At some point, you run out of food on the boat. Yeah. No, I think thankfully... And somebody draw straws, and that's it. Yeah, I think there's also like... You can avoid that, too, by just, you know, originally assigning those eight things to less people. Right.

Don't bring as many people in the journey. And it's interesting just where we've seen, like, we kind of, you have some money or you do things a little bit less lean, and actually, like, that's what's bad for your culture. It's like we just recently We got like a We finally have like an office that has like lighting and a carpet Yeah

And it's really nice You know what you should do? Yeah You should chop up your CMO and make a little CMO fed a salad And everybody said you could save you're gonna save like 2% We were about to order like the new desk And I'm like what's wrong with the IKEA desk that we have Like that we have a brand

You have IKEA desks? Yeah exactly they're like not you know what Jeff Bezos made everybody do Yeah You don't know the story? The doors I think I think I think the IQ desks are actually cheaper than the doors. They are. So that's good.

That's good. Yeah. So it's like, like we could get the doors. You make them put them together themselves? We did originally. We had to stop because like some people were coming in and did not use a screwdriver. And we're putting the legs on backwards.

And then the desks were unsafe. So there's like a limit. We did it for probably the first 25. And then you're like, you know what? I just need you in the sales department to start having for dollars. You don't need to put your desk together and have it to collapse on your ankle. Exactly. I've got you in a cast.

And then there's like workman's comp and stuff like that. Exactly. So 400 machines. I heard you in New York, the big apple. We are. That's not, that's Broadway. How did it fly? We actually have a fridge, 225 Broadway.

Oh really? 225 Broadway. That's down by City Hall Canal Street area? Yeah. Where? Like Dwayne Street or something? Where is it? It's a federal, one of the federal buildings?

It's further down. It's further south. It's, I'm not sure exactly the cross street, but it's closer to the World Trade. Center. Yeah, that's right where Casey Neistat's place is. He's a 360 something, 368 Broadway. How's it going? In New York, because New Yorkers, I mean, people in Chicago

are difficult and people in New York are impossible. I mean, you're dealing with, like, they're going to really high-end restaurants. They're very high-end people. And they do not take any bullshit. How have you fair to New York? Is it different launching in New York? So I think it's

different you want to really be cognizant of like new markets and the differences and that was your second is it was our it was our first outside the miss Midwest and I'm originally from new Jersey so I know everything you're talking about I lived in New York for a few years and the bar is definitely really high if I'd started this company in New York I'd definitely burn the machine down I would have been out of business throwing it down the subway stairs um and so you know part of the thinking was we'd actually reached a point where we could uh really like executed a high level. And we have a team of people that are making sure that this happens really well. And what was the reaction? And so far the reaction's been great. So actually, like, that was the thing that,

again, back to the first fridge, is turns out that people everywhere, including in New York, just want food to be more convenient, cheaper, and taste good. Yeah. And so if you provide that, it doesn't actually, like, so again, we're not, like, if we were charging $15, like the bar might be higher. We're charging seven and it's in New York. And so people are actually thrilled that they're getting, they're saving money. And what's even more is the cost of living is so much higher in New York that the relative value is actually higher. It's bonkers. They're probably like, this is ridiculous. It's a bargain. When you're in New York and you find a place with a buck 50 slice of pizza, you bookmark it. Yeah, exactly. Wait a second. Everybody's charging $3. And I had mine because we had

farmer's fridge in New York in the 90s. It was these little boxes. And it was a Pakistani guy on the corner, who I became friends with, and he would see me walking down the corner. And these guys liked their drinks with a lot of milk and sugar in it. He'd see me coming. And I'm watching him,

and he starts scooping the sugar. And when you say you want a sugar, they put like four spoonfuls of sugar, then you want milk. It takes the heavy cream, the milk, boom, he's pouring it in. I would get this thing. It would look like I had milk and somebody spilled their coffee in it. And then he would give me that big crawler.

50 cents for the crawler. 50 cents for a big large coffee. Give me a big crawler, big coffee for a dollar. That's New York. That was the original. And just like same kind of health profile. Yeah, exactly. Like very, very similar.

I don't know where they made them in Hoboken or whatever, but there was some donut chop in Hoboken where they were making crawlers that I swear was the size of a baby's arm. It was gigantic. Yeah, no, actually, it was funny. Like, is one of the things that kind of planted the seed for, Farmer's Fridge is similar. When I was working in Long Island City, there was a guy on the corner, and he had this, like, Eurostand. And he was like, he would get there at like five in the morning. Yeah, they had to get the spot. And he would make food. He'd sell it all by like two o'clock.

Yeah. And then he would be there until like eight o'clock at night cleaning the thing. Yep. And then he'd be back again at 5 a.m. the next morning. No, and you saw him at 5, but he had to pick the thing up at 3.30 and drive it and drag it in Manhattan. Yeah. I used to get up early sometimes or come home late. Fairness. Sorry, Mom. And at like 4 o'clock in the morning, you would see these guys going from the West Side Highway, the same Pakistani guys, and it was like a great migration.

They would be carrying those boxes where they would sit in like a toll booth box and they would drag them from, you know, 11th Avenue all the way to Broadway. I mean, this must have been a hell of a workout. That's entrepreneurship there, not these people who are like, you know, Le Clause out. Kind bars. So what's going on? You and Sweet Green got beef? No. I don't think so.

I think that's a great, like it's, you know, for educating people about, like, high-quality ingredients and it's just a completely different business. Yeah, but you would tell me before we got on here that they're ripping people off with those $18 salads. I did not mention anyone by name. She did. She did. I didn't.

You did mention an $18. You spent $15 on the salad. I infer, I infer, you say $15 from a salad. I infer sweet green. No, I think there's a lot of places you can get a $15 salad. A lot of people are ripping me. people off a $15,000. And actually, to be fair, I think those places are charging what it costs. Yeah, they might not be that profitable. So I think there's definitely, it's a different structure.

And so it's more about, when I think about it a lot is affordability. So when you think about, you know, San Francisco, I don't really think it's a huge problem for the people working at a tech firm to pay, you know, but I, when you look at the average American, they have less than $14. a day to spend on food. Right. And so if an item at a QSR restaurant is 15 bucks, it's like literally negative one meal, like you can't, it doesn't compute. Yeah, it doesn't make sense. And so it's more, I think, for me,

just how do we remove any extraneous things in the supply chain and make food cheaper at that higher quality level? Could I eat a full meal for under 10, eight? So you could, like three items is a full meal? Yeah, I mean, like, seven hundred. Like five to six hundred calories. So, like we actually comp, like, how many calories can you buy it,

farmer's fridge versus a subway. And that's like our right now, kind of the metric that we look at is like, are we providing calories at least as cheaply as subway? And okay, so you're as affordable. You want to use the word cheap. Affordable as subway. Correct.

But the ingredients are at least 10x better. That's your words not mine. You ever see those olives? Those things, I don't think they ever changed the olives. I think they just dumped them on top. So one of those olives in there has been in there since Clinton was president. I'm sure of it. They just keep dumping olives in.

like this giant olive. It's like a sourdough. It just keeps going. Yeah, it's like it gives it some flavor. You know what's amazing about, people are so woke and angry and outraged at everything, but I did a tweet the other day. I couldn't believe it how affordable roast chicken is.

Do you know about this? $499 at Costco. And did you read the article about how they actually bought the chicken farms, Costco? Yes. It's so popular. It's $100,000 a day, I think. Is that right?

Yeah, it's something bonkers. Somebody look it up. I think there's a New York Times story. We'll throw it up on the screen, St. Nick. And this thing, $5, you get a roast chicken. And I tweeted, what a triumph of capitalism that you can get a roast chicken that feeds. What does that feed? Three people?

I mean, I would say probably four, like a family of four for five bucks. And then you can have some money left over to get some vegetables and stuff. All right. Let's just go with three. Three people are eating protein for $1.50. You spend $5 on vegetables. That's a heck of a lot of vegetables. Now you're at $10.

It's $3 a person to have a fully healthy meal. And you know what people did? They went crazy on me that I don't understand how poor people are and how poor people can't afford to go to Costco. And I said, wait a second. Costco is designed for poor people and for middle class people to have their dollars extend. That's the whole value proposition.

The food supply system is an incredible triumph in America. Is it not? I think that we are able to provide extremely cheap, reliable calories to a lot of people. Too many calories is the issue now. We've actually crossed the Rubicon. The system is so good at what it does that our problem is no longer starvation or money. It's getting fat. Yeah.

And I think if you go back like 150 years, you'd have people that like on a regular basis we're starving because there was like shortages of food or it was too expensive. And so to your point, like I do think that we. We've done a very good job of making food very cheap and reliable. And the mistake is? I think that there's like a miscalibration and the quality of calories. So if you look at the, like we have a chart that we look at. And so things like high sugar, high salt, high fat, all that stuff has gotten much cheaper over the last 50 years.

High salt, high fat is cheaper. Yeah. All that's getting cheaper. The bad stuff. And actually fruits and vegetables are getting more expensive. Right. They're still affordable overall, but they are. But on a relative purchasing power, they're actually getting more expensive.

Really? Yeah. And so that's really, when you look at it, it's the basket that people are being able to get is a bit mixed up. See, that was weird because I thought, like, getting a Snickers bar today, that's got a couple hundred calories, I'm guessing. And that costs, what, two bucks? Yeah, maybe less if you get it at Costco. Okay, buck 50 for Snickers. I'm not talking king size.

Take it easy over there. You getting that king size? Let's go with a regular snows. The whole bag. That's a buck 50. How many bananas do you get for a buck 50? Three? Four?

I don't know. Isn't it like 20, 30 cents for bananas? That might be another lost leader at play. Yeah, I was going to actually say, like, I think we can get a banana for like 10 cents, under 10 cents. So let's call 20 cents a banana. Yeah. You could get like six bananas for the price of a Snickers bar.

What we have to realize in this country is that people actually do have competitive choices and are making bad decisions, right? How much of this people's own responsibility? I mean, you're providing a really quick, easy option, so that's helpful. But people still have to say, I want to eat some chicken and eggs and salad as opposed to eating a Snickers bar and a slice of pizza. So, I mean, so I actually, I think where we probably are on a similar wavelength is in terms of like how the economy drives certain, like, at a macro level, like we've really

triumphed in making cheap food more available. Right. But the, you know, to me, it's actually like you make the wrong kinds of calories. much cheaper. Yeah. And again, on a calorie per calorie basis, it is much cheaper to get a, like a stickers bar has 250 calories. Ah.

You know, so I think when you make it apples to apples and, and. Yeah, so if we actually looked at apples, which it might be. They're like 80 to 100. Calories. So you got to buy like four of them to be a snicker. Versus like a bag of chips, right? Or some French fries or or actually like a soda. So I think when you actually look at like the whole picture,

there's quite a bit of cheap high-calorie food. And the other thing about it is it's not easy to regulate how much you eat. So the food is designed to make you want to eat a lot of it. The other thing is the distribution system, you may not know this, but in my research, I found that it takes up to six months for stuff to get to consumers. It's already right. But it actually is the fault of the distribution system as well. Selling shelf-stable fast food, the Snickers bar.

could be a year old, doesn't taste any difference. The chips could be three, four, five months old. It doesn't taste any difference, I think. Maybe chips is a bad example. But an apple that's six months old versus six days old is a big difference. And you are doing a huge mitzvah for humanity by taking this very operational technical problem and getting people affordable food at the right price. Yeah, and I think on principle to your point is my whole thesis was if I just make it

cheaper and more convenient than unhealthy food, it will actually change the way people eat. So I think that's the big difference is getting people. Any announcements? You got any announcements anything you want to share? Because we can hold the episode for when that drops. So, you know, the New York thing, we actually haven't really talked about it a lot. We've gone from zero to 100 fridges over the last few months, and we're going to be announcing it over the next few weeks. Wow. And how do you get 100 deployed in locations? You figured that out. How did you figure out the location? You got a team that just does that? Yeah, that's all we do. And we have actually,

like distribution partners. So we work with now that the big food service companies that wanted to not work with us at the beginning now see this as a huge benefit because we're able to provide fresh healthy meals, 24 hours a day in places that they can't service. And they get paid what, like 20, 30% of whatever you sell? Oh no, it's fresh foods. The margins are much lower than that. So they get four points or five points. Yeah, exactly. So they're like a tax, but they are also, if you do do it right with them, they become this incredible grease on the wheels to getting you into those locations. It's a great lubricant.

Yes. Back to the lubricant. Back to the lubricant. Okay. Listen, Luke, continued success. Congratulations on hitting 100 in record time. If you want to work for Farmers Fridge and help people get great food, go to Farmersfridge.com. You know, you never know.

Maybe you email Luke at Farmersfridge.com will pick up. You're looking for developers. You're looking for salespeople? What are you looking for? All of the above. So engineers, salespeople, those are the big ones right now. Operations, we're very operational. appreciately intense business.

It's going to be a public company. You're going to get to 10,000 machines and you're going to go public. I think we want even more than that. I think you're going to get to 10,000 go public and then the sky's the limit after that. I really want to congratulate you, Luke, from your dad's failing business, selling the Audi, and here you are. 100 machines in New York. Corporate strategy is open.

There you go. That's the first person who draws storehouse as a corporate strategy person. I'm going to make a corporate strategy. corporate strategy brisket is coming up if we have a little startup cannibalism. All right, we'll see you all next time. Bye-bye.