The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: The Memo: Scaling to $600M Revenues with No Venture Funding, The Most In Detail Breakdown of Consumer Subscription Unit Economics & Why D2C and Consumer Subscription is Not a VC Backable Model with Mike Salguero, Founder @ ButcherBox

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Apr 5, 2023

Mike Salguero, Founder and CEO of ButcherBox, shares his journey in building a $600M meat delivery service without ever taking venture capital. He discusses how his fatherless upbringing shaped his leadership style and the emotional awareness it brought him. Mike argues that consumer subscription models often struggle without VC funding, citing the pitfalls faced by many D2C brands. He reveals innovative marketing strategies that helped ButcherBox scale quickly and critiques conventional practices in customer acquisition, emphasizing efficiency and adaptation.

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ADVICE

Lifestyle Design over Business Plans

Throw out your business plan and design your ideal lifestyle three years out.
Prioritize what you want your daily life to look like over specific business details.

ADVICE

Outsource and Optimize

Outsource key functions like distribution to experienced partners instead of building in-house.
Focus on operational efficiency and eliminating waste, especially in bootstrapped businesses.

INSIGHT

Value of Constraints

Constraints, like limited runway, force efficiency and focus on unit economics.
Overfunding can lead to neglecting crucial cost optimizations early on.

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Mike Salguero is the Founder and CEO @ ButcherBox, the meat delivery subscription service that he has scaled to $600M in revenue, 215 employees and the national leader in the space. All of this achieved while raising $0 of venture capital. Prior to ButcherBox, Mike was the Founder & CEO @ CustomMade, an online marketplace that, unlike ButcherBox, raised millions in venture funding from prominent VCs.

In Today's Episode with Mike Salguero We Discuss:

1.) The Makings of a Great Entrepreneur:

How did Mike's father not being present in his childhood impact the type of leader he is today?
How does Mike's fear of abandonment show itself in his leadership style?
What does Mike know now that he wishes he had known when he started?

2. Consumer Subscription is Not a VC Backabale Business Model:

Why does Mike believe consumer subscription D2C businesses are not VC backable?
What are the biggest challenges of running a consumer subscription business?
Why did all the D2C food prep and delivery companies fail? What did they do wrong?
What happens to all the heavily funded D2C subscription companies of the last 5 years?
Why does Mike believe now is the hardest time ever to do D2C consumer subscription?

3. The Secret to Efficient Marketing:

How did ButcherBox scale to $50M in revenue with just one marketing channel working?
When should founders think about the second channel? How should they choose which one?
Why does Mike not like "brand marketing"? How did ButcherBox burn $8.5M on brand marketing? What are Mike's biggest lessons from doing this?
What emerging channel does Mike see as having the biggest potential over the coming years?
Why does customer acquisition increase with time? Why do elections cause it to increase?

4. The Economics of a $600M Revenue ButcherBox:

How much does it cost ButcherBox to acquire a customer?
What is their payback period on that customer? How has this change with time?
What is the single metric that drives the profitability of ButcherBox?
What are the single biggest points of margin in the business?
What is the lifetime value of a ButcherBox subscriber?
What are the single biggest points of churn in the customer lifecycle?

5. Venture Capital: To Raise or Not to Raise:

Why did Mike never raise venture capital for ButcherBox?
Has Mike ever sold secondary? Why not?
What would Mike most like to change about the world of venture capital?
What are his biggest lessons from raising VC with CustomMade? How did that impact how he approached building ButcherBox?
What does Mike believe all founders need to know about raising VC?