The difference having a product makes: What has surprised me most about building ButcherBox

Mike Salguero

Although this is my second time leading an early stage venture — the first go-around being at CustomMade — I’ve been surprised by some of the differences building and growing ButcherBox.

What has been most exciting is the realization that I really, really love selling a product.

CustomMade was, from when we started the company, a marketplace that allowed talented makers, tradespeople, and creatives to connect with customers in search of unique products. While various items were sold through the site, we were only an intermediary. (That has since changed, as the current iteration of CustomMade, still run by my co-founder Seth, is now focused solely on jewelry.)

The experience of selling an actual product with ButcherBox, being able to deliver high-quality meat directly to our customers’ doors, is so different. You just have so much control over what your customers receive — in both price and quality. More than that, it has been astounding to see the impact that a great team can have on a business when working with a product.

And that’s really awesome.

For example, it is empowering to have the ability to tweak how much chicken we send out in one month or to cut the beef in different ways. Having this type of control is so much better than relying on others to delight and meet the needs of customers.

Also, when you get up to a certain volume of sales, what is fun is figuring out how process improvements can impact the bottom line. There are tremendous savings that can be made just by looking at places where the customer gets no value, but where you are paying a lot. With a product, you can target those areas and try to figure out how to improve them.

Take, for example, a way we improved a process that we initially thought was the only way we could procure meat.

Before Michael Billings, our amazing meat expert, arrived at ButcherBox, we would buy meat from one part of the country and ship to another to get cut — at a cost of 57 cents — and then we would ship it somewhere else after that — which cost us 35 cents more. So that process would make each piece of meat have an additional 92 cents per pound cost attached to it.

So we found ways to improve this system, shifted how we buy our meat, and now we buy right in the same city that we have it cut. Now, a process that once cost close to a dollar costs us only 6 cents in shipping.

The customer received no benefit from the way we were operating before. It is just waste. No one was getting any benefit other than the companies getting paid to move the meat from one end of the country to the other. We have decided to focus on these areas where customers get no value, but we are paying a lot and to change them one by one. In the process, we are building a much better customer experience while focusing on driving the most value possible for our customers.

Now we are able to take that money saved and put it back into the Box; we can give customers better value, give them more product. We can do this by being more efficient with operations related to the product.

And, whats more, having a product to work with has allowed for our teams’ creativity and operational excellence to flourish.

Whats cool about this company is that we have two types of people here. Our marketing team is like this really “blue sky” crew. For instance, one day recently, someone just chimed in during a meeting and said, “Let’s do a ‘Bacon Day.’” And everyone was immediately like, “Yeah, let’s do ‘Bacon Day.’”

And then we have this crew on the operations side that gets really fired up if they save a penny on the product. A penny!

But in reality, that makes an enormous difference. Saving penny per product on a trailer-load of our meat ends up resulting in $400 we don’t have to spend. So let’s say we do two trailers each week, saving that penny ends up as $800 a week, or about $40,000 we save per year; and that is a salary to add someone else excellent to the team right there.

I love that working with a specific product lets us get to be “blue sky” about some things, where the team has the mindset of “Let’s do this, this will be fun.” But I also love the operations side, who get thrilled figuring out how we can save 15 cents per pound. It is amazing.

What I’ve discovered with ButcherBox is that when you are in a product business, when you sell an actual product, and the volume of that increases, you can do things that just aren’t possible when working on a marketplace or app.

What’s most exciting is that in the end, through these processes, we are able to delight our customers more.

Mike Salguero is the founder and CEO of ButcherBox.

This post first appeared on the ButcherBox blog, Roam. If you want to subscribe to ButcherBox, click the banner above.

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