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May 1, 2020

"The Fight Of My Life"

Christina Stembel joins Brian to discuss what the last few months has looked like from a CEO and owner of a "nonessential" business's perspective.

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Christina Stembel joins Brian to discuss what the last few months has looked like from a CEO and owner of a "nonessential" business's perspective.

Brian: [00:00:00] Hello and welcome to Future Commerce, the podcast about cutting edge and next generation commerce in a time of crisis. I'm your host, Brian. I am here with Christina Stembel, who is the CEO and founder of Farmgirl Flowers. Welcome, Christina.

Christina: [00:00:17] Thanks for having me. I'm so excited to be here.

Brian: [00:00:20] Super excited to have you. Farmgirl is such a joyful brand. I can't imagine actually a more joyful brand than what you've created. It's so cool. And I'm just really, really impressed with what you've done over the past 10 years. Tell me a little bit about how you got started. Tell us what drives Farmgirl.

Christina: [00:00:45] Thanks. I love that you call this a joyful brand. I'm going to have to use that. I love that a lot. Yeah. So I started a Farmgirl 10 years ago. And what drives Farmgirl, to answer that question, is just a lot of grit and resilience, really. You know, I bootstrapped it back in 2010 from my little tiny 100 square foot dining room in Russian Hill in San Francisco and just, you know, wanted to see if this idea of mine could work. And I thought that I would be able to prove the concept, see if it worked, if consumers liked the idea. It was a very novel, new idea back then. It was to do less is more was not so common as it is now. So I was, you know, looking at this big industry where everybody had a minimum of one hundred and sixty five options on the website and thought, "Can I do with one?" I launched with literally just one option, one bouquet. And it's grown a bit. We've changed it and evolved as we've grown, like every company does, but we're still fewer better. And the kind of pioneer of that in the floral space. And, you know, it's been very helpful that other companies, other industries have followed suit with the less is more because that's helped change consumer purchasing and for everybody to understand that concept better. But in florals it was very new and novel back then. But I know I started it 2010, just myself and just put the profits... It was also a kind of... This is not a new novel idea. This was kind of kicking it old school where I just thought let me just spend less than I make and reinvest the profits back into the company. {laughter} In the Bay Area that's not heard of. And then grow it that way. And that's what I did. And so every year, you know, I did more, much more, than the year before and grew very quickly. Everybody likes to call us an overnight success right now, which I find hilarious because I'm like, we're coming up on ten years. And it's been so many overnights and so many 120 hour weeks to make this a success, which I why I say it's a lot of great resilience. It's just been a lot of hard work. Two years in I was able to move it out of my little living room, not by choice. It is earlier than I would have wanted to. It was just that my landlord found out that I was running an illegal company from that apartment and put the pink slip on the door. And so I had to move out. Hired by first team member, which was super scary then. And, you know, until recently, until the COVID 19 pandemic we were about 200 people in a 30,000 square foot warehouse in San Fransisco. And everything changed on March 16th when that happened. But we grew it to this year, who knows with the economy. But we were on track and we'll see. We're still on track, but we'll see what happens later this year, to do about 50 million in revenue.

Brian: [00:03:46] Wow.

Christina: [00:03:48] Yeah. Still bootstrapped. I have never been to raise capital. You know, that initial thought of being able to prove the concept and then go raise was not accurate as a female founder. And so just bootstrapped it till now.

Brian: [00:04:01] What a story. Yeah. I mean, you're in a super exclusive club, the Hundred Club, which there are very few people out there that are in that club, let alone female founded, women owned. This is an incredible story. We've had a couple of other people that are connected with the show in that place. But it's really incredible to see this, especially in 2010. That was just a completely different world and time. I would love to hear, you know, just your story about how you've seen this people respond to you like back then versus how you're seeing people respond to you now. But I want to get into that maybe a little bit further down. In the meantime, you mentioned, you know, March 16th shutdown order in San Francisco. These are unprecedented times, obviously. I watched your Instagram post, which you are super active on Instagram. Your Instagram is incredible. You said you had to shut down all operations in San Francisco and move solely to your Equador operations. Talk to us a little bit about that process, what you were able to do in terms of, you know, shifting operations. What have you done since then? Tell me a little bit more about what's happened.

Christina: [00:05:22] Yeah, the last five weeks have just been a whirlwind. I can honestly it's been the hardest month of my life, I think. But, you know, I definitely feel like we're making it and we're getting through and you know, that saying what doesn't break you will make you stronger, which sounds so cheesy. It's so true, though. So that's been the last month. So we were given the order to shut down city wide. Now, a lot of people didn't adhere to it, but we did. And we were given twelve and half hours. So it came down at eleven thirty in the morning and we had to eleven fifty nine that night to shut down an entire operation where 80-85% of all of our orders came from that operation where we had two hundred people working and, you know, having to figure out what you're going to do with two other people and with orders that are already in the system and hundreds of thousands of dollars of inventory that's on its way to you, perishable inventory, which is just so different that if you have a sweater company or something like that, you know, you have flowers, that you have three days to sell or you have to throw them out. And there are hundreds of thousands of dollars of them coming already on planes and trucks and everything. So it was it was hard. We had to throw out about a hundred fifty thousand dollars of flowers we had. We gave away as many flowers as we could in that timeframe. And we had to furlough about one hundred and eighty people immediately. A hundred and ninety people, I think it was. Yeah. That day. And, you know, it was one of the hardest days of my life because, you know, I built this company to build good jobs and then to have to, like, tell people you don't have money to pay them without orders and without, you know, and our orders went down 60% immediately because everybody was scared. You know, nobody's buying flowers when they're scared, you know.

Brian: [00:07:07] Right.

Christina: [00:07:08] So and then we had this Ecuador operation, which I just I don't use the word luck, hardly ever. But this was pure luck. I came up with this idea last year to launch a distribution center in Ecuador with some farm partners that we work very closely with. And people thought I was nuts. I mean, absolutely nuts. We had some managers leave even because they didn't think the direction I was going in was what's the right one. So I hope they're listening to this because if I hadn't have done that, we would be out of business right now. We would be out of business right now. So I came up the idea in August, couple team members and I worked really hard to launch it by January. We launched it in three months after we started it, which I thought was super quick back then. But now, compared to what we've done in the last month, it's not. But we launched it January 5th. And when we were shut down, we immediately had to shift 85% of orders coming from San Fransisco and 10-15% coming from Ecuador to 100% coming from Ecuador. And they weren't build up with the infrastructure and the ability to do that, but they worked so hard with us to be able to do that as quickly as possible. And our customers really gave us grace and patience during that week because where you had all these orders in the system that we couldn't fulfill. We're like, how are we going to fulfill that? You know? And it's people with 25th wedding anniversaries and birthdays and special moments in their lives that we're going to miss because we can't get it there in time because it takes a lot longer to ship from Ecuador than here. And the people were just really, really amazing. Our customers were amazing. Our Ecuador operation was amazing. Since then, we have had to... I gave myself like an hour to cry in the shower and feel bad for myself.

Brian: [00:08:47] Just an hour? I feel like you need longer than that. This is crazy times.

Christina: [00:08:51] It might have been an hour a night for a while, and then I got to work because then I'm like, I have to save my company. I've worked 10 years for this. I literally have not taken out know I haven't taken any money off the table like a lot of CEOs have. I paid myself sixty thousand dollars a year. It's not like I've made a bunch of money off this company. I'm building it to make money off it, hopefully at some point. But I wasn't there yet and I was like I might have just wasted ten years of my life and built something really incredible just to have it go down because of a pandemic that I had no control over, you know, and, basically I'd like that is not going to happen unless I give it the fight of my life first. That's what I did. I'm like, I'm going to give this everything I've got. And then if it still goes under, I will know that I did everything in my power to try to save it. And so that's what I've been doing. And so we opened four additional distribution centers in the last month or fulfillment center.

Brian: [00:09:47] Oh, my gosh. That's like...

Christina: [00:09:49] Yeah.

Brian: [00:09:51] What was that process like? How is that even possible? Tell me a little bit about this process.

Christina: [00:09:58] I don't know. I think at the end of this, after I sleep for like a week, I mean, I wake up and I'm going to be like, "Oh, my God, did we really just do that?" And I'm so proud of my team because we opened another distribution center, like, fully with designers and everything at one of our farms in California because they have an exemption to work and they were getting ready to lay off their team. And so even though this didn't do what I wanted to... I tried first to get an exemption for my team so I could bring my team back to work. And then that didn't work. And so then I had to think, OK, well, you know, I can go to a farm that we work with already and they have an agriculture exemption. They have team members. But then I had to go and our team members, mostly English is their second language. And I, unfortunately, should have been better about this, but I do not speak a second language. And so excuse me, I need to get much better at that. But I had to go in one week we took enough of our equipment and retrained a new team in a different language with social distancing, which is very hard to do and launched it in a week, which, you know, had some bumps. And it was much... And we launched doing 400 units a day where we were doing thousands in San Fransisco. So we weren't at the same capacity, but we did it. And then now it's already up to doing 1200- 1400 a day. So we're getting there to just increasing it every week. And then we launched two other fulfillment centers in California that are doing non design, like ones that don't require as much design work bouquets at farm levels as well, as they have agriculture exemptions. And so we had to go to those farms, set them up, you know, build the infrastructure in the back of our web site to be able to do this, go train their teams and how to do it, get supplies there, do training, all of that and so we did that. And then we also launched a second one in Ecuador, because as soon as Ecuador was able to... They moved fast, like a week after the shutdown they were able to do so many more that, you know, not at 100% of what we're doing total between the two before that, but they were about 80% of what we could do. And then their government implemented a curfew, a mandated work curfew. And so they can only work half days. And so overnight we had to cut that back to only doing eight hundred orders a day from there, which is not enough to stay in business either. So they worked with us so, so quickly as well, and we opened a second one in Ecuador, in a different region, in a larger facility with another firm that we work with. So that way, with the social distancing, we had enough space and with only being able to work half time, we could bring in more people and still have the space to do so. And so they launched that two weeks after we came up with that idea as well. Or a week and a half almost. So we just have been... And now for Mother's Day, which is the ticking time bomb on our heads that we needed to be able to get enough supply for the demand. I think we have enough supply for the demand. But we'll see. We're still trying to get some of the facilities up to being able to do more. So we don't have to sell out as quickly as we probably will. So that's the very quick snapshot of what we've been doing in the last month. I seriously don't know how we've been able to do it. Just really thankful that we have such great farm partners that we work with. And just an amazing, like the Farmgirl management team that has been working with me on this is just... I am blown away and so appreciative. And I don't know how I got so lucky to have these people on my team. But I did, so I'm going to thank my lucky stars.

Brian: [00:13:28] That is incredible. You must have an incredible team because what you've done, you've completely shifted your entire business in a matter of a month.

Christina: [00:13:39] Yeah.

Brian: [00:13:39] It really doesn't get more dramatic than that now.

Christina: [00:13:43] No.

Brian: [00:13:43] And so you must have an incredible team. So I'm actually just astonished. I'm speechless with what you've been able to do in the past month. So it sounds like demand is still... You said you lost several orders at the beginning. It sounds like it's picked back up quite a bit. I mean, this is springtime. This is the most flower focused, friendly time in America right now. We're coming you the Mother's Day. I'm guessing that people want to bring more cheer outside, you know, cheer into their lives, into their homes where they're stuck right now. Have you seen that demand come back? And do you feel like maybe you're even growing your customer base right now?

Christina: [00:14:33] Yeah. That second most amazing, maybe tied for first most amazing thing that's happened is, you know, that initial decline of 60% sales immediately that we had... I didn't know if that was going to be the new normal, that our sales were going to be that low. But, you know, we started first thing, I turned off all marketing. We can't spend any digital marketing right now and our sales are 60% down. So since then, we haven't had any digital marketing at all. The only marketing we've been doing is email marketing. And it's been phenomenal. I just I can't even describe how our customers are. I mean, I feel like they're friends. I mean, like, I don't understand how they just rallied. So I did a video to let them know that we had shut down San Fransisco. Then we didn't say anything for a while because we just didn't have anything good to say. I was just so like, you know, fearful, I was just scared that we're, you know, and I was just really focused on what I was doing to pivot the company and all of the ads that I was in, all of the emails I was getting, all the ads I saw, they were just making me want to throw up.

Brian: [00:15:42] Yes.

Christina: [00:15:45] I just it's like right now, people are dying, companies are dying, everything's dying like and we are talking about, you know, flowers being pretty? Or, you know, a sweater that we need to buy? It just felt so disingenuous and not OK to me. And so because we didn't know what to say, I just didn't say anything. And then what I did is I just started like talking to our customer base about like, this is what's really going on. And I can't bring you, like, cheezy, you know, beautiful shots of flowers and talk about how beautiful nature is and flowers are and all of that when nothing feels like that right now for probably any of us. So let's just keep it real. And I started doing these kind of like almost like a diary every week where I do these weekly updates with our customers. And they started out really long letters. And then some people had some recommendations, our customers had recommendations. Why don't you do a video? And the reason I didn't do videos was because I didn't wanna be the person in front of the video. But I had to get over myself and just to do it and get in front of the camera. And so I do those every week now. And they're the most opened emails we've ever had. Like by ten times, like people will read them. 30-40% people open them and read them. It's crazy how many people. Some of them are 50%. It's nuts. And we have pretty big lists. So for that many people kind of freaks me out to think about that. Many people see my face in front of them. I know that it's working and our customers just rallied hard and supported us with their dollars and our sales the very next week rebounded to, you know, slightly lower than normal. I shouldn't say normal. We were trending at 60% year over year growth. So we were like 40 to 50%. It wasn't like it was less than last year or anything like that.

Brian: [00:17:31] Right.

Christina: [00:17:32] And then the week after that, we went even higher, up to 80 to 90%. We've had one week that's been over 200% growth. I mean, it's just been nuts with no marketing out there.

Brian: [00:17:43] Oh my gosh. Wow.

Christina: [00:17:43] Just, you know, like we brought back some emails about like Mother's Day and things like that. But we're not ever gonna say, like, "Hey, flowers make you breathe easier," like one of our competitors or anything like that that just seems so wrong right now to be talking like that when, you know, people's lives are just very different right now.

Brian: [00:18:05] Wow. Yeah. I think something that I'm pulling away from this and something that we've definitely emphasized at Future Commerce is how important it is to build a connection with your customers and really to build an audience. You have been extremely transparent and content focused. And obviously your product lends itself really well to that. But you personally have also, even prior to this, have spent a lot of time with your customers and been providing them with connection to your brand, through your face, through your voice, through investing in them. And you've built up a huge audience. And I think that that's... One of the key ingredients for long term success is having a community, and it sounds like what you're doing is you're actually just participating in your community as like a real member of that community. And I think that's such a huge takeaway for our listeners. Now's the time to be a real part of the community that you've built. If you have one. If you don't have a community, you're in trouble right now.

Christina: [00:19:16] Yeah. You can tell who has a community and who doesn't by how they're talking. Right?

Brian: [00:19:22] Yeah. Oh, yes. That is such a good indicator.

Christina: [00:19:25] Yeah.

Brian: [00:19:26] Really, really good point. So not only do you have a community, but that community is growing. We're seeing purchasing behaviors change. People are more inclined to buy online right now. That means less opportunity to interact with other people. You've got such a great community. They're spreading the word about Farmgirl Flowers. And they're helping you through this time. Do you feel like this change in purchasing behavior that you're seeing right now is a long term thing, or are you going to outlast this crisis? Are you acquiring customers for the long term right now as a result of this? Or is this sort of just everyone shifting online because they don't want to go outside?

Christina: [00:20:19] So we've always been digitally native, as they say, or we've always been eCom only. So we don't have a retail spot or anything like that. So unlike other companies that have had to shift fully to eCom from brick and mortar, we didn't have to do that because we were already set up that way. I do think we're acquiring for a long term. I'm hoping we are. I think that the changes that I've seen in purchasing, though... Well, first, I mean, I don't know if we're fortunate that we sell flowers or not. So I think, you know, I'm careful about how I say it because, you know, one positive to what we sell is that flowers are a great way to make people feel loved. And I am blown away by... The number one... Probably the reason that I still do this, because there's not ever going to be high margins in flowers and it's always going to be the hardest business, in my opinion, to ever do after knowing what I know now, because extreme perishability with rush, you have to have rush refrigerated delivery inbound and you have to rush delivery outbound where... It's nuts. I would never do this again. It's an absolute crazy thing to do. You know, I would never, ever do perishability again. Highly personal goods anyway. And but the thing that is just the most amazing thing about what we do at Farmgirl is that we show people that they're loved and with something beautiful and it's the flowers that are beautiful. But it's the sentiment that comes with it to know that someone's thinking of you. And right now, like being so detached from people and not being able to go out with your girlfriends or see your families even, I think it's amazing that we get to be like the catalyst. We get to be the form of what is showing people that they are still thought about, that they're loved and that someone wishes they could be with them. And so in the case where they can't be with them, they're going to send these flowers instead. And it's such an honor to be able to play that part right now. And I just think that we're lucky that we get to do that right now. And then, you know, on the flip side, the kind of negative about what we do is it's not truly, you know, a life essential. And so if the economy crashes, flowers are not something that you have to have to live. You know, food and things like that, staples are going to be, you know, the things that people are still spending money on if we go into a deep recession, which could happen. And so, you know, all of these things, while we have a really positive side right now, what happens if and when the economy crashes? What happens to a company that is not truly a necessity? And so we'll see if that happens. But my hope is that the customers that we're acquiring now love our product and also love what it represents in their life. And they'll continue to use us in the future. And I think we do a good job of making it a whole experience instead of it just being transactional, you know. And so I'm hoping that that experience will help consumers still purchase from us in the future as well. There are some big changes I've seen in consumer purchasing know that I am super excited about, which is the customers are willing to wait longer for things for the first time ever.

Brian: [00:23:24] Yes.

Christina: [00:23:26] Yeah. And without being irate about it. So, you know, I think that Amazon is probably the company, and I should be careful what I say legally, but in my opinion, it seems that Amazon was the company that made consumers shift their purchasing. Their brains just changed when Amazon came up that, you know, everything should be shipped free and it should be shipped fast, you know, like that whole triangle of fast, goods and cheap or whatever... Amazon let people think that that was actually a reality in life when it's not, right? So now with Amazon taking a month to get things to people, while I hear a lot of complaints about it, people are willing to wait. And people have had more openness to wait with us as well when we need to wait longer. Like we're sold out for a week in advance a lot of the time right now on most of our products, and consumers are still buying and waiting. Where, you know, a month ago or six weeks ago, that was not the case.

Brian: [00:24:25] What I'm hearing is I need to go order my mother flowers like right now.

Christina: [00:24:28] Yes. Like right now.

Brian: [00:24:31] No it's so true. The Amazon effect has had such a powerful... Well, it's changed are our whole lives, our whole culture, and I think you're right. People are actually quite, quite irate with Prime right now because it is taking longer than they've ever had to wait with Prime in the past. And as a result, I think they're are like, "OK, if Prime can't get me stuff in a month, then nobody can."

Christina: [00:25:03] Yeah.

Brian: [00:25:04] And so I think you're absolutely right. Consumer expectations have changed right now, whether or not they change for the future is I think is another question. But I do agree that I think that right now people are showing grace and it's wonderful. I think it's really, really, really good. I also loved just a few things that you've said, a couple phrases have stuck in my head. Earlier you said you had to get over yourself and just put yourself out there. I think that's another really, really important lesson just for everyone. No matter what position you're in right now. We all have to do things that are uncomfortable for us right now. And getting over ourselves and just kind of gritting our teeth and doing it for our jobs, for our lives, for the good of other people, that is such a great, I think, way to put what needs to be done right now. Another thing that I love that you said is that flowers are such an expression of love. And I totally agree with that. And I think that I disagree with you on one thing, which is that flowers are not essential. I think that even in... I mean, unless we go like full dystopian here, beauty is is actually essential. Beauty is essential. And flowers in particular, which are like nature's beauty. I think that there's a reason why your purchasing is up right now, because in times of trouble, beauty is actually valued even more. And it's more necessary. And so, you know, we might cut back on other spending but having things like flowers in our lives that change... In my household, well, we already enjoyed this, but we have been spending so much time gardening because it's so important to, I think right now to have that kind of beauty in your life. And so I would expect that, and this is just my, you know, sort of off the cuff prediction, but I would say that your growth is going to continue even if we head into recession. We're still going to spend money on things that that brighten lives and, you know, bring us joy.

Christina: [00:27:34] I hope so. I'll let you know if and when that happens.

Brian: [00:27:38] Yes, I definitely want to hear an update on that.

Christina: [00:27:42] I agree though. I'm a big believer. I have flowers, obviously, in my house all the time, and they just bring me so much joy. So I believe you that they definitely do bring joy. I just hope that it brings as much joy as I can of soup or some toilet paper. {laughter}

Brian: [00:27:58] I'll say, I read on your site that peonies are your favorite flower. They are also my wife's favorite flower. I am definitely going to have to go on your site and order some. Before we head out here, because I know we're kind of running out of time. But one thing that we talked about the very beginning of the episode was that you're in the Hundred Club. And I think this is really interesting going into this period. Talk to me about how having a 100% ownership of your business... Do you think that's going to give you an edge going into the next phase of this crisis? And what challenges do you expect to have to overcome? And how are you going to address some of those challenges? I know that's so uncertain right now, but I would just love to hear your sort of initial thoughts on what you see ahead.

Christina: [00:28:43] Yeah. Yeah. So, yeah, I am 99.86%. Almost 100, but I did have an early team member that did not stay for very long that has a small, tiny percent, which did teach me a lot not to do that again. To stay in the hundred club. But I always think that it's a benefit to have as much of your company as possible. And I think that that is super important right now because, you know, I'm able to make... Number one, I can make all the decisions that I think I need to make without going through so much red tape and rigmarole of getting buy in from other people, other people that might not understand things the same way that you do because you're the one that's in your business. And so it just gives you the control that you need to make decisions fast. And right now, I'm making so many decisions at like breakneck speed that I wouldn't be able to do if I didn't have hundred percent of my company because there'd be other decision makers involved with those percentages coming with that, you know? So I think that's one reason why it's even more important right now than ever because like I said, opening four distribution centers in four weeks has been... I couldn't go through board meetings and approvals and things like that to do that and do it at the speed that we needed to do it. So that is great. Also, if you do need to bring in outside investment or money or things right now having the most that you can to ensure that you still keep control of your company when you might not be able to make as good of a deal right now... I mean, I was talking to a friend and I was like, I feel like the vultures are like circling right now. I'm getting so many requests from investors right now, because everybody knows and they think they're gonna get a deal right now. And you might have to. You might be in a position where you have to make a deal that's not great because the deal you're going to get now versus what you would have gotten a year ago is very different. It looks very different. And the more equity that you still have, the more percent of your company that you still have to play with a little bit the better, because if you already are down to like 10% your company or 6% of your company, what do you do when you're going to be working your tail off and you're gonna go down to one percent?  Is that even worth the time that you're putting into it? So I think right now, especially, the more that you have of your company, the better, because you might not be in a position to be able to be as choosy as you would have during a great time economically.

Brian: [00:31:16] Mm hmm. Such good words to leave this. Thank you so much, Christina, for just opening up, sharing your insight and also for the great work that you're doing. I'm just again, I'm so impressed and I think there's just so many lessons that have come out of this. Thank you. Thank you for being on show. Where can people find you

Christina: [00:31:36] Thanks for having me. I really appreciate it. You can find us at FarmgirlFlowers.com. And then on Instagram and Facebook, as you mentioned, we're very active there, and we like to show behind the scenes and keep it real there with everyone.

Brian: [00:31:49] Well, I'm sure our listeners will go check you out. Thank you so much to our listeners. We appreciate all of your feedback in these times of trouble. And we'd love to have you come and give us your thoughts on this conversation and where you think things are headed. So head on over to FutureCommerce.fm or hit us up on LinkedIn or Instagram or Twitter or wherever you want to message us. We'd love to hear your thoughts and engage with you in this continued conversation and all work together to shape a future that we're proud of. Thank you so much for listening.

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