Written by Jennifer Maerz, contributing editor of Lean Startup Co.
We know how much you all love founder stories, the nitty-gritty details about how this person built a billion dollar company based on an assumed void in the marketplace. You want to learn the invaluable secrets of a founder’s “Ah-ha!” and “Uh-oh!!!” moments. We don’t mean to brag here, but our founder network is pretty tight. So you should think of Lean Startup Week (Oct. 31-Nov. 6) as a jam-packed week of tactical inspiration for all you bootstrapping moguls-in-the-making.
Take Christina Stembel, for example. The CEO and founder of Farmgirl Flowers is one of our featured speakers at Lean Startup Week. She launched her company in 2010 as an environmentally and socially conscious alternative to the floral industry giants, staking the company’s name on delivering bespoke flower arrangements sourced from small American farmers. Farmgirl Flowers started as a San Francisco experiment, offering one daily option and a few seasonal products, and became the national brand for artisanal bouquets (while reducing floral industry waste by 40 percent).
We’re excited to have Christina join us for Lean Startup Week, as she’s been a vocal advocate of Lean Startup being a useful roadmap for her business. We recently hosted a Lean Startup webcast with Christina and another Lean Startup Week speaker, Meeteor’s Mamie Kanfer Stewart. As a teaser for Christina’s talk at our flagship conference, we’re offering some edited nuggets of founder wisdom that she gave us during that awesome founder webcast.
The scrappy approach to getting those first customers
“My husband gave me the idea of putting my arrangements in coffee shops with marketing cards, because that’s really all I could afford. It cost me $20 a week in materials. For the first two years, that’s all the marketing I did. Every neighborhood in San Francisco had a coffee shop with one of my arrangements in it, and I would give the staff free flowers in exchange for letting me put [flowers] right on the bar. So I knew thousands of people were going to pass them every day. And then I would count the cards, and if 50 to 100 cards were taken every week then I knew to keep doing it because it was worth the 20 bucks.”
Staying focused on your core customer base as interest in your brand grows
“I learned that you can say no. And it’s better for the company to say no.
“I was spending a significant portion of my time dealing with about 10 percent of the customer base, and I really had to look at it and be like, ‘Why am I doing all of these things? Why are we putting so much emphasis in weddings and events or subscriptions when those are going to be less than 5 percent of the industry? And who am I really trying to target? Who am I really trying to compete with?’ I’m trying to compete with the e-commerce companies in the gifting space, so the birthdays, anniversaries, things like that.
“The time that I was allocating on subscription services for business, which have a much higher touch point, and all these other things that come with it, they were taking time away from how I was going to get to a billion-dollar company—which comes from staying focused on the gifting space and going after that target customer.
“Initially, I felt badly because people would want me to do these pop-ups, and do this farmers market, and do this fancy retailing stuff, or plants for their fancy showrooms, and I’m like, ‘But we don’t do that, why am I doing this?’ Once I thought clearly on what my focus was, who my customer was, and how I was going to be able to get to the billion dollars in a timeline that I am comfortable with, that made it much easier for me to say no to the ones that don’t.
“I came up with great [flower vendors] that liked to recommend. So if there are ways that I can send business that isn’t right for Farmgirl to other female founders, it makes me feel really good in the process.”
What it means to grow slowly without VC money
“A couple years ago, when I saw so many other strikingly similar companies with very similar models going out there and raising $20 million, I got really scared and thought I have to go raise capital. And every networking event that you have to go to as a founder to get your name out there, I would see that the first, second, or third question anybody would ask me had to do with funding. As soon as I would say we’re bootstrapped, they would look over my shoulder for someone more important to talk to because it was just assumed that we weren’t going to be successful.
“And then I’d find myself qualifying our business, like, ‘Hey, we’re the 14th fastest growing company in San Francisco.’ I really had to qualify us as, ‘We’re successful.’ And I got really scared. I made some poor decisions for the company based on being scared—I tried to raise capital. I couldn’t. I was unsuccessful at it. And then I finally just stepped back to think about why I wanted to raise capital, and I found the reasons were all based on my ego. We didn’t need capital.
“Every conversation you have [in Silicon Valley] is like, ‘Oh we’re on Series C and we’ve raised this much from this person that’s very fancy, and it makes us really validated in what we are doing.’ And it’s all ego driven.
“I don’t need capital to grow. We will grow slower, we will grow the right way. At the end of the day, I’ll own probably 95 percent and my team will own the other 5 percent and it will be wonderful, and if we can get it to a billion dollar company with a 23 percent net profit margin and that kind of ownership, that’s a pretty successful company.”
How open communication systems directly affect the bottom line
“We do everything in-house here, including customer service. We all sit in one very big, raw warehouse next to each other. There’s no offices or anything like that. Our managers can hear customer service on the phone and know what’s going on, but we also use Slack channels and we’ll have a different channel for every different thing. If they’re having technology issues with the website, there’s [a channel] for that. There’s a flower quality Slack channel. There’s a delivery one for local delivery. Then the managers of that department know exactly what’s going on in real time.
“It helps us because there’s no, ‘Oh, we didn’t know about this for three months,’ and meanwhile our sales dropped 20 percent. We know immediately what’s going on. If we’re having a flower quality issue, it’s something that we take very seriously, and then we figure out what the problem is, and we fix it immediately. We just have a very open communication.”
Using Slack to turn the ship when problems occur
“We moved into a new warehouse that’s two levels as opposed to being in one level. We saw within a couple of weeks our negative customer response rate went from less than 1 percent to 6 percent almost, which is huge. We fixed [the problem] within two and a half weeks.
“I followed the life of the flower from when it arrived from the farm to when it actually got boxed and shipped or hand-delivered to the customer. I sent flowers to [two people] without my team knowing so then I could test them, and found exactly what the issue was.
“It was something so stupid, a speed bump that we had to take all of our huge carts of flowers over after receiving them that was actually sloshing water on all the heads of these flowers—which then, you don’t notice right away, but three to four hours later, they have brown spots all over them. I figured out what the problem was, changed the entire structure of the warehouse, and how we’re receiving, processing, and shipping the flowers, and within two and a half weeks, it went back down to under 1 percent quality issues. It took a total of one month from the customers complaining to [complaints] going back down to under 1 percent. We fixed the issue because the communication was so open using Slack channels.”
From one founder to another: Christina’s best advice
“Don’t spend too long thinking that everything has to be perfect to get things going. Just try it. See if people respond to [your idea], tweak it quickly, and in the amount of time that you would have spent rewriting that business plan and that financial model 14 times, you could’ve gotten some brand awareness, and some really good data and feedback from customers out there on what they like and don’t like that would do that for you.
“Do things differently. Don’t just copy someone else’s work. I firmly believe in this. We have a lot of strikingly similar companies out there, and I wish people had more pride in doing things themselves. So come up with something that really sets you apart. Don’t just say, ‘This person’s doing well. Let me just go copy this.’ If they’re doing well, you can do better. You can come up with something better than what they’re doing, and so really do that.
“Also, know your numbers. And I know this sounds basic, but I know so many people who don’t know their numbers. I’m in our credit card statements and our bank statements every day, probably three times a day. Know what you’re spending money on, know if something isn’t working to fix it quickly.
“Don’t be afraid of failure. We opened in Los Angeles last year and we closed Los Angeles four and a half months later. It wasn’t working because of things that we couldn’t change. So close it down quickly and move on to something that will work. Pivot quickly.”
On keeping that initial startup culture at scale
“We’ve grown pretty quickly and I want to make sure we don’t lose the culture I built Farmgirl on initially—it’s very challenging to keep that culture. Our culture is scrappiness, which I’m really proud of. We drink out of a hose here, for real. And just keeping the, ‘Hey, we’re all on one team. We are all working for the same goal.’
“A couple weeks ago, I got frustrated that I was hearing for the first time, ‘Oh, that’s not my job. That’s not my department.’ I’d never heard that before because everybody was very inclusive and collaborative in getting things done. So I took all of our managers’ job descriptions and erased everything on them and I just wrote: ‘Problem solve, care, and get stuff done.’ And that’s the only thing on the job description. We had a meeting [where] we explained why this is the culture we need to keep building, because we’ve brought on new managers and we brought in a lot of new team members. And so it’s a constant learning experience.
“We try things. They work, they don’t work.
“I’ve been a little reactive, because we’ve had to grow so quickly, and so now I’m trying to put more thought into things. I’m figuring out better programs and better ways to make sure that the communication is very good, the transparency is good with our employees and our team members, and that everybody feels like a value add to the organization as a whole.”
Hear more from Christina and other successful startup founders at Lean Startup Week Oct. 31-Nov. 6 in San Francisco.