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

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

The Twenty Minute VC

Finance, Venturecapital, Tech News, News, Siliconvalley, Technology, Investing, Startups, Business

4.4 • 637 Ratings

🗓️ 5 April 2023

⏱️ 79 minutes

🔗️ Recording | iTunes | RSS

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Summary

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?

Transcript

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0:00.0	The biggest problem is the no-brainer acquisition channels have really dried up. Last year,
0:06.9	we spent $8.5 million on brand marketing. It's a really tough time to be running DTC right now.
0:12.4	I'm not sure it's a VC backable model. This is 20VC, the memo with me, Harry Stebbings, and on the
0:17.9	memo, we feature the hypergrowth journey of a breakout company.
0:21.1	The other day I tweeted, I want to cover a breakout, bootstrapped company, and over 100 suggestions
0:26.2	came in for this one company alone. They're now at $600 million in revenue, the national leader,
0:32.4	215 employees, and all with no venture capital. I'm so thrilled to welcome Mike Salgoero, founder and
0:39.0	CEO at Butcher Box, to the hot seat today to share the epic journey of Butcher Box, becoming the
0:44.6	national leader without raising a single dollar of venture financing. But before we dive into the
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	...

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