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

Posted on 5th April 2023 by Harry

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.

Episode Transcript

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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?

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