In the not-too-distant future, says Benzi Ronen, founder and CEO of Farmigo, consumers will use mobile phones to order non-perishables like toothpaste and toilet paper from Amazon and then buy their fresh food--from “humanely raised” lamb chops to “locally foraged” ramps--from his six-year-old online grocer based in Brooklyn, NY. Using technology and community-organizing techniques borrowed from the Obama campaign, he is building a network of Farmigo reps who are spreading the word throughout their neighborhoods and distributing food at weekly pick-ups. Farmigo operates only in New York, New Jersey and parts of northern California, but Ronen, 44, believes he can take his model to all 50 states. This interview has been edited and condensed.
Forbes: What is Farmigo?
Ronen: It’s an online farmer’s market that connects you directly to local producers in your area where you can get all of your fresh food needs.
Forbes: How big is the company?
Ronen: We have 60 employees. A year ago we had 20. I can’t reveal revenues but the business has doubled in the last three months. We’ve raised $10 million in venture funding, for some farms we represent 40% of their sales and we’re feeding 15,000 families a month in 300 locations.
Forbes: Are you profitable?
Ronen: No.
Forbes: Did you start Farmigo to make money or to further a social mission?
Ronen: Farmigo is a for-profit company. But we became one of the first Delaware Benefits Corporations. We changed the bylaws of our company so we’re not just about returning shareholder value, but also about maximizing the gains for our partners, who are farmers. The farmer gets 60% of the dollar you pay as a consumer. Our organizers get 10% and Farmigo gets 30%. That’s unheard of in the food business where farmers get 20%. When our investors say, “Let’s ratchet that down,” we say,“This is about making money” -- because if our partners are healthy, then they’re going to bring more of their friends to you.
Forbes: Where are you from and how did you come to the business world?
Ronen: I’m originally from New York. My father is Israeli and my mother is from New Jersey. I went to high school in Israel and I did my army service there. I went to graduate school at the University of Michigan and studied business.
Forbes: Tell me about the business you started before Farmigo.
Ronen: I call it cliff jumping. You’re on steady ground, working for a big corporation and then suddenly there is no solid ground underneath you, no salary, and you’re hoping your parachute is going to open.
I had been working for
Forbes: Then you took another corporate job at
Ronen: I asked myself, can I start a company that will have a potential for a huge outcome but do something that will be much more satisfying and fulfilling by giving something back. My litmus test was, was it something I’d enjoy talking about at a dinner party with friends.
Forbes: Are you a foodie?
Ronen: I’m not a foodie. I eat healthy food and my family has a salad every night. My wife does most of the cooking. I’m not a chef, I’m not a farmer, I’m an entrepreneur. I saw a system that would be better for the consumer, better for the farmer and better for the planet.
Forbes: How did you get Farmigo off the ground?
Ronen: We started out giving Internet-browser-based software to farms. They were using pencil and paper. We took 2% of their sales. It was a no-brainer for them. We still have 300 farms in 40 states using our software. That business is profitable. We have $70 million worth of transactions going through that system.
Forbes: How did you transition to food delivery?
Ronen: From day one we set out with this mission of getting local healthy food delivered to everyone. We did a lot of surveys. We have a lot of quantitative data around what people want.
Forbes: What have you learned from that data?
Ronen: Twenty percent of the population was saying that they wanted to go to the farmers’ market every week, but the farmers’ market is only accessible for a three-hour period on a Saturday or Sunday morning. It couldn’t be their go-to place to get fresh goods every week.
Forbes: How did you build the business?
Ronen: We had teams in New York and Berkeley,
Forbes: How did you do it?
It was very similar to running a political campaign. We listed all the fundamentals from the 2008 Obama campaign. The person who leads marketing at Farmigo used to run email for Obama. If you want to be an organizer, someone becomes your internal champion at Farmigo.
The organizers are the lynchpins who bring the farmer and the consumer together. The organizers can make $6,000 a year, and you get a 30% discount on the food you order. We get 100 people a week saying they want to be organizers.
Forbes: What exactly do the organizers do?
Ronen: The organizer takes an active role in building and cultivating the membership. We give them tools to reach out to members, to post recipes and to track who’s purchasing each week. It’s very similar to a meet-up. It’s also similar to people who organized food co-ops out of their homes in the past. The organizers take the deliveries and make a one- to two-hour window available once a week for the members to pick up the food at the organizers’ home or other location like a school or workplace. The stereotypical organizer is an incredibly successful woman who might be a stay-at-home mom ready to take on additional challenges.
Forbes: For all your social ambitions, aren’t you serving elite customers who can afford $6.50 cantaloupes?
Ronen: The kind of food we’re selling is higher end. We’re selling carrots grown locally as opposed to carrots grown in China. We’re serving the high middle class. We’re looking for other avenues, like accepting food stamps
Forbes: What’s the most challenging part of expanding your business?
Ronen: Finding the right organizers, training them and creating these magical experiences when you come to pick up your food.
Forbes: Tell me about your plans for the future.
Ronen: We call it the unbundling of the supermarket. Over the last 100 years supermarkets have been moving in the direction of one-stop shopping. We wound up with Walmart. What’s happening now is that your phone is your one-stop shop. You can buy and optimize by category. You can buy perishables and have them delivered to your door. The biggest threat to Walmart is Amazon. Now with your phone you can buy once a week from Farmigo.
Forbes: But when I shop I like to smell the tomatoes and squeeze the zucchini
Ronen: That’s the number one barrier to Farmigo becoming a rapid success. In general, grocery shopping has been a laggard in ecommerce. But people are starting to think, maybe I’m not so great at picking out tomatoes. If I get them from a great local farmer where they will be delicious, and I know Farmigo will give me 100% money back if I’m unhappy, then I’ll be swayed.
Forbes: If I have to buy from a local farm, then I can’t get oranges in January.
Ronen: We work with a farm in Florida.
Forbes: You really think you can replace the supermarket?
Ronen: It’s already happening. The future is here. It’s just not distributed among everybody yet. The Farmigo customer has already replaced the supermarket. It’s now just a matter of expanding to more customers and organizers.
Forbes: If you get rid of super markets, where will people who can’t afford your prices shop?
Ronen: The food system needs to get to a point where higher-quality products are affordable to everybody. Once you reach massive scale, things can ramp up and prices will come down. Mass-produced food is subsidized by the government. If you took those same subsidies and granted them to small farmers, their prices would come down.
Forbes: Is Whole Foods aware you exist?
Ronen: I don’t know.
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