Welcome, Founded and funded My Name's Erica Shaffer. I work at Madrona Venture Group, and I'm very pleased to be here with Scott Jacobson, managing director of Madrid Venture Group, and Joe Heisbourg, the co founder and CEO Crowd Co. Cracow is a marketplace for high quality craft meets from farms and ranches around the world. They deliver directly to you through subscription and direct ordering. This is Joe's third successful startup. In each of those start ups, we're in somewhat different industries, but they were all looking to help people connect in meaningful, inauthentic ways. Cracow is taking up that mantle to connect consumers to farmers and ranchers through the dinner table, and the company has in very clever ways of doing that. But I'm getting a little bit ahead of myself. I thought we would start with hearing from Joe about how Cracow got started, where the idea come from. How did you test it out?

Thank you. Thanks for having me. So the the origin story of crowd cow, if you will, was my co founder Ethan. Larry and I were were were talking to each other and committed to like working together. We work together. Gosh, way back in the dot com kind of Faraday's way back when which is now, 20 years ago, um, and have remained friends since so But we never Since that early time we've never actually collaborated it again. And we'd both gone off, done different start ups on her own, and I think always wanted to work with each other since we got along so well, um, and I've been a solo founder and really wanted to return to having a co founder.

So we started a list of ideas, you know, the spreadsheet of, like, different ideas thesis how we might tested, how interested we are, how uniquely we're suited doing that idea. I think the market is just sort of raking ranking what we'd dio learn about and test and to figure out what we're gonna dio and crowd. Cat was not on that list at all. It is actually a guy named Brendan who had worked for Ethan a turban spoon, his previous company as an engineer. And then he was He had worked for me at Madrona Venture Labs and he had come to the office one day very excited, you know, and saying something like Oh, man, I'm so excited.

I'm getting a cow on Friday and it was like we're in this high rise downtown Seattle. Like what? You're getting a cow, you know, But he was so excited that he was like, Oh, yeah, you know, the farmer takes care of every animal. And by the way, when you when you sail in on the boat that settles the island as this family did generations ago, you get the best land. And let me tell you, it's really about growing grass. As much of this is about raising animals because it's about what they eat. The nutrient dense native grasses of this place.

They got their pick of the best part of the island. You know, it's in the family, and he's like explaining in every different way how much better this connection he had with his food. You know, one but two. He was like, and the beef just tastes incredible. So I looked at Brendan like, you know, an incarnation of he looked like he was so excited. And this is using, you know, joy joyful way. And I love beef. It was like when I was five,

I would get that excited with my mom said, We're having steak on Friday. So but, like, I can't have it because he wouldn't share. And I'm gonna, you know, hungry now. So I'm gonna stop it back to the grocery store where they don't have anything. What he described, you know, they seem the best they seem to have been able to do is a little orange sticker that says Special. So kind of whenever you have, you know, identified something you really want that's clearly better for the planet, for the animal tastes better,

you know, know the person and support a small community. I want that. That's the thing that I want to serve my kid and make my kid excited about. But I don't have that. The market's not giving me that. So no matter how much money I haven't want toe by that it's inaccessible. Brendan, you know, as he explained, it, would drive a truck out there and bring home £500 of meat and had a huge meat freezer, and it just sounded like, ah, pain, For example,

I said, Will you introduce the farm? And he said, Oh, you're too late. The only slaughter once a year. So when you have, like, a set of, like desires and a lot of pain to get there and early adopters, you know, going to that level of trouble, there's there's an opportunity in that, um but I didn't really realize that right away it was more just Hey, Ethan, you know you know,

Brendan, you know this thing where he buys a cow and yeah, Ethan was like, Yeah, he's been doing that for years. And would you ever do that? Sounds really cool because, yeah, Nicole's a vegetarian heathens wife. So I'm not going to get a meat freezer. And we just got to talking about, like, why isn't it that you can Why can't I just by £5 of that somehow and just tap my phone and it shows up? And as we framed it that way, Ethan kind of the light bulb of of like, Well,

g, there really should be a website where you can literally kind of quote, meet the farmer sitting on your couch on your iPhone, watch a video, see some photos, get that intimacy, and maybe you're you're buying. How, like, why don't we crowd fund on actual cow and 50 random strangers on the Internet can each get their 5 to £10. And then we're riffing on this just as kind of a joking around conversation like, Oh, yeah, yeah, you claim the shares. And when they've all sold the cow tips,

you know and you become a stakeholder and it was too fun. We're laughing and smiling, and so is a very real problem, a cool solution that made you laugh and smile, underpinned with, like, fundamental consumer trends around sustainable, transparent purchases within the beef or protein world, its environmental concerns. Animal welfare. It's, you know, obviously taste. I want the best steak. If I may need steak, you know,

let's eat less meat, eat better meat. There's these mega trends happening, and we knew there was something really potent about that idea. I think when we thought through the incumbent industry, being so slow and big and vertically integrated, they're not going to go do this, you know, and sold off line. They're not even really online yet. It felt like, wow, have we just sort of identified a very big market. Well, how big is it? You know,

beefs $100 billion if you add pork. If you had chicken, it's like another 40 odd $1,000,000,000 and it just felt really potent. The next step was like, How do we validate this? And and, you know, one of things that I learned actually, Madrona Venture Labs was you don't go and build code or build a prototype. You just start talking to people. So we even called 10 friends, and I called 10 friends, like, literally right then and there just to get reactions on the elevator pitch. And the reactions were so black and white, it was just like,

Oh, I'm totally doing this or I'm never doing this. I'm a vegetarian. And so you really have that kind of black and white feedback to an elevator pitch. Usually have a lot of questions and nuances. So we're like, This is great. Actually, you know, these people are friends, so we went down to the Starbucks. The nearest Starbucks literally also write that on the spot and just randomly went up to strangers. Excuse me, sir. May I ask you something to eat beef? Can I ask you some questions?

Were product designers We have an idea We got the same reaction. In fact, people were like, What is the URL? I got to write this down. You know, we didn't have a girl or a name or anything. It was just a concept. So it was all very encouraging enough so that we thought, Well, hey, let's go. Ah, let's get a cow, you know, And let's try to sell it using this crowdfunding thing and if we can sell it,

great, that's validation And we can keep exploring. And if we can't sell it, then you and I will get meat freezers and will be a will. Shut it down. The worst, worst cases will have a lot of great meat. Eat our wives will be a little matter, Does maybe, but you know, the name of ah, entrepreneurship. You gotta try things. They've got to be willing to fail. So that that was the origin story. We sold that first cow within 24 hours and we sent emails to our friends.

But we had orders from random strangers, so it really just right off the bat felt right. So I'll take it from here. It's a great kind of founding story, and you know, ultimately crowd cows expanded from, you know, selling, you know, kind of one Kawata time Teoh, A broad assortment, lots of different proteins. You know, you could buy it at any time, but crank out isn't the first company to sell meat online. And so maybe give us a little bit more about what makes crowd cast special and different for both your customers and the farmers you work with.

Yeah, and I will say, just in terms of assortment, you're right, it's It's at this point Beef, pork, chicken, bison, seafood. In fact, and given the quality and the assortment, even within each of those categories, I think that today crowd cow has the best assortment of any online retailer were offline. Frankly, um, the only you know,

prayer plays seafood. Things might. There might be some that beat us. There were just building on our seafood now, but really, that assortment is very strong. But what really makes us unique is, um, this idea of a connection to where your food came from. You know, we started with knocking on doors of farms and we built our own supply chain where, you know, we're talking about farms from 22 different states all across the United States. And wild caught fish from Alaska, etcetera, where it was literally down to the name of the boat and the fishermen etcetera right there on the pack of meat that shows up at your door with you in charge of which one you're gonna buy and why,

and favorite in your favorites. And, you know, we did not work with the incumbent supply chain it all. We built something completely stand alone, and so that gives us gives you as a consumer access to things you just literally can't find anywhere else unless you live within 20 miles of that particular farm. And they're also at a farmer's market kind of, you know, quality an assortment. So that's really that connection back to the producer, that transparency, to know that you're in control where your dollars go, who you're supporting, what you're eating. Why, how it was produced and raised full transparency on that.

Really the only ones doing that all in. Yeah, that's really powerful. Um, you know, one of the great things about e commerce and you know, we're here in Seattle, in the backyard of Amazon. It's just a simplicity for the customer. You find some things you want to buy, you click, and then in a day or two it shows up on your on your front doorstep. But there's obviously a lot of complexity and special things that go into making such a seamless experience. Can you give us a little bit of a look under the hood? I mean, what are the some of the,

you know, the things he built out that supply chain that enable that sort of magical customer experience? Yeah, a lot of its, you know, forecasting and process and then tools to support all that. So you couldn't just back to the very earliest days we did crowd fund the first cow, then go and you know by it get is pictured and wrapped. And then we packed and shipped. And that first cow actual shipped exactly five years ago today, basically, and but it took from the time credit cards were charged, you know, on the couch tips probably took three weeks before it's shipped. And we knew already, you know,

beyond a niche, people are gonna wait that long. It's got to be, you know, really, the vision of tap your phone and it shows up, right? Instantaneous. So we worked really hard, Teoh. And knowing that that was going to the case and knowing that we have this incredible sort met, you know, we're not gonna have one. New York steak products, Q. That's the commodity world.

The best they could give use price per pound and a sticker that says special. We're gonna give you variety. Different breeds qualities dry age, grass, grain. Your choice. All the farms local. You want something locally? Something from Japan. So we're gonna have a lot of New York State excuse as we had. Did the math were like, we're gonna have hundreds Excuse. So one of things we saw right away when you're shipping a perishable on your getting it's the door frozen and safe is their hearts. Still, there was certainly not five years ago. Third party logistics companies that could do that for you.

It's possible to sell shampoo, get a Shopify website and a higher three pl on your shipping orders now. Not gonna be cheap. They're not gonna be accurate. They're not gonna be cost effective. But they can do it for you perishables. They're going to say I can't do that and especially when you say Well, we're we've got, you know, 1000 plus products cues They're just literally look at you and say I go away. I can't I can't even price that I don't even know. So we very early on knew that we'd have to build that piece. So just in terms of our spy chain, we don't raise animals. That's farms. We don't slaughter them.

We don't do the butcher piece. That's a network we've assembled and coordinate with software. But we do do the order packing and shipping because there was no one else who could do that. And that's become a real asset. So between that whole end and from the farm to your door, all the pieces in between, we control that picking peace and we control the curation. The relationships obviously control the website, but all that software coordination using data will inform us you know how to keep this virtual shelves stocked and and and how we can optimize things so that you know when you when you place your order today your order will ship out tomorrow on a few live in Ah most major cities. You're gonna get it the next day or two days. So it's it's Ah, there's tons of technology in the whole system. So as an entrepreneur, you know that product market fit and building delightful customer experiences is really tough. Sometimes even when you do that, it's tough to build a good business.

And, you know, I would love to hear a bit about the journey. You know? How do you go from building a delightful customer experience, which would clearly have to navigating to building a great business? Yeah, that's a great one, I think. First, just to note is Ethan and I probably we're definitely not the ying and the Yang co founders that complement each other. We're probably more similar than we are different. And one of things were most similar honest, delightful customer experiences. And I don't mean just user interface. I really mean customer experience all the way through every point of contact and communication,

the physical opening, the box, every every aspect of that, measuring it, testing into it and creating experiences that people want to share with others and make them smile and make them come back. So we've biased for that. We, we, uh we also biased early for scale because we did want to build a big business. So we really spent a lot of time as technical co founders, right by background on pre planning and building all the systems for scale and making choices in the business of support scale. We were We were joke. Actually, the first, maybe one or two years in we were, If you take a step back of all you've accomplished in whatever appeared of time,

we would joke a lot about like, Well, we have built the most overbuilt meat selling system ever, for sure, because we were doing a small volume of orders with extremely high attention to detail in terms of logistics and the especially the customer experience that was preparing for scale. I think the part where there's it's always the hardest part in any business and ours there's particularly, Ah, there's a supply side on the demand side in our business. The supply side is hard. Shipping orders is hard, the software's hard. Despite changes hard, these air farms don't have websites and they don't answer their phone. So in the early days, we were knocking on doors and getting the car and driving to meet farms just to get our base built. And then once we had a reputation,

they started coming to us. But it took a while to get over those kind of Hunt's. They're not software humps at all. Took a lot of time, but we always kind of knew, You know, if we were, uh, hiring, where would we hired a compliment ourselves? So for us, it's the growth, marketing and merchandising side of business, more so than the the technical aspects. And certainly logistics is also an area where, uh,

you know, the domain in industry expertise on experience comes in is very relevant. Code 19 has had a major impact on the world and on all of our lives in attempting outsized impact on on the beat industry in which in which you participate, tell us about the impact of in 1910 on crowd count in all the broader industry. We've been home for a while, and our kids aren't going back to school right necessarily, or if they do, we doubt they'll stay back, and this has already been many months into it. We're also not going back to work, right, So, so much fundamental demand and behavior has changed fundamentally for now, going on three or four months and looks to stay changed for quite long time. For us, that meant,

you know, a lot less Meals are being eating in restaurants, initially starting with restaurant demand, going to zero and now creeping up very slowly. Um, so all that has gone home. All the school meals and and lunchtime meals at work have gone home. So all of the at home meal cooked uneaten stuff has gone up dramatically. And that's, um, accelerated the shift to online grocery. Furthermore, I think in our industry the meat plants, how disproportionately, um and negatively affect by cov virus infections. You know,

these big super scale meat plants where people are standing shoulder shoulder. It's all about efficiency and commodity to get you. That steak that I described in the grocery store can't work with social distancing at the scale and efficiency that it that it used to, and so that created shortages. You know, it's just viral infections rips through, but then they have to re engineer their processes and space people out at automation. That stuff takes a lot of time, so meat shortages even further shifted the demand towards turns online. And so for us, just a massive uptick in demand immediately overnight, and that's that's that's here to stay for quite some time. Fundamentally, I think it exposed the weaknesses and that existing supply chain, and hopefully, you know,

also, it's given people a chance toe, not just panic buy, but also how do you had to, you know, here's what we hear from our customers. Thank you for doing what you do, and I've introduced so many people to it. My parents, other neighbors and friends. People love to be the hero, and everyone's looking for the solution. And we've got such a great solution that people are happy to share great things with others. So we've benefited tremendously from all of that. I think the weakness in income, it's what I'm trying to say there is like they're kind of three big things in less 10 or 15 years.

A series of Netflix documentaries that exposed Big AG as having negative environmental and animal welfare consequences that made meat lovers feel guilty and question there have it. Then there is a wave of all to meet. You know, Bill Gates was funding a vegetable based protein because we've got to save the planet. You know, these kinds of messages in the mainstream again caused meat lovers to question or feel guilty didn't cause them. Stop eating meat, by the way. But it caused him to think about it more. And then the third wave is the fact that you can't buy meat and any grocery store for a week or more. And the reason why is because these extreme viral infections that just the implications to labour exposes again once again to the mass populist that like maybe we should be thinking about a better way to do the meat thing, and they're finding us the ones that are finding us. It is a better way. That's why we built it. So that's exciting that, you know,

we're getting long term habits formed, but also just the shift of awareness that, hey, there can be another way to do this. It happened in beer and wine. It happened in, you know, chocolate and lots of other food categories went from one or two brands that were commodity orientation. So, like local and international and varieties and artisanal. And that's where meat should be, too. And on the dimension of connected back to the source. So, you know, I know safety is paramount for you as it plays to your team.

Maybe a little bit more on Why? Why crowd? Cow hasn't been impacted in the ways that that some of the larger players in this market have yes of, you know, uncovered first hit hit in Seattle, which I feel grateful or lucky for, because it made us all here in Seattle. Think about Coverdell. I remember you remember Scott Cove. It was in the local news, and it wasn't in the national news. And we all felt kind of weird about that because we had community spread and we were all talking about Oh, no, this is un s capable Now we're gonna it's gonna change things. And it was weird to not see the nationalist talking about. There was a period of a few weeks there the very,

very beginning. So we took that like, we gotta act now. Remember, Redfin, I think had sent actually had an infection, right? Eso they'd also been very exposed to it early and they sent their whole headquarters home. Someone in our office said, Oh, while my friend works there and, you know, they were just told to work from home. Are we considering that? Should we send everybody home? And I was like,

Well, I think the first thing we need to do is I'm gonna I'm driving toe are fulfillment center tomorrow. See you by. The first thing we need to do is figure out safety for our our guys packing the orders out. You know, the vision here is, what we do is we've right a service that allows you to tap your phone and it just shows up. That's our fulfillment staff. They can't work from home, by definition is triggered a sort of wartime mentality. We rallied everyone around like OK, this Israel, what are we going to first Safety? What is it going to mean for the business? How do we plan? And we sort of got into this like very wartime mode.

And then it was like when we realized what it meant for the business was very positive in terms of demand, who met for a lot of our friends businesses was very negative. Other industries. We all felt a gratefulness and a responsibility and like this is our moment. This is our game day, like our customers need us more than ever. And then if you think it through our farms. And it's more than ever because a lot of them depend on restaurant sales, which goes to zero and are very diverse supply chain that can answer your question. Little regional processors, little Pharms, co ops All across the country. We're diversified. So even if they're impacted by the virus in terms of infection, we've got so many of them there is no single point of failure. So while we're resilient but in terms of if they're affected by cove,

it in terms of restaurant demand going by going down, we can really help them because we've got online and we're already there partner. So we sort of realized right away. Wow, we're in a really we're really ready for this. Very grateful for that broad assortment, as you talked about, you know, all of current subscription model Easy button for customers. Look, a couple things on your phone and it just shows up. You're in a great spot. And what's that? What's the future look like for Cracow. What? What are we seeing five years from death?

Five years is a very long horizon. Um, you know, we're certainly really bullish on online. And there are theoretically things in the five year time frame that would go beyond, uh, just online. I don't know how much Aiken really talk to that on the podcast, and we've dabbled in this, you know, we were suppliers toe to shake shack and the Seattle Mariners, and we've done some direct sales to the restaurants. Uh, you know, we've got ah, number one,

um online, Japanese wagyu, uh, seller. By far we are, and that's a restaurant meet, you know. So there's definitely things beyond just online that I think in the five year time for removal will consider in the near term. It's, you know, we're selling just proteins. Andan people don't eat just proteins, and there are lots of ways to cook proteins. And gifting is not a super big part of our business in it. And we have a great product that's imminently gift herbal. So I think in the kind of 1 to 2 year time from there's clear growth opportunities for us just in the online business and media agencies in the five year timeframe.

You know, ambitions could include things that aren't as adjacent to what's on your plate and meat, but look like things that could our platform could could easily accommodate. And, of course, the platform in terms of fulfillment is very special and currently advertised on one brand crowd cow. And I think that there's opportunity there to advertise that more, More broadly, I can appreciate not wanting to share the full playbook with the entire world's. I appreciate the broad approach. So, um, maybe too close. Let's just talk about I mean, this is you know, you This is not by far your first rodeo.

You've been an entrepreneur many times over Founder CEO several times. You know, what are things that you bring from, you know, for the entrepreneurs were listening here, You know, one of the things you bring from company to company, that sort of, you know, if you've learned, you know, over the years that you'd encourage people to think about that's a great question. I mean, for why do I do It is a question I talked to myself in my internal dialogue a lot over the years. Like, why do I do this?

Because I think each time I jump into a start up, I guess one thing is to realize you're jumping into a multi year thing, so don't be paralyzed by that and indecisive, but just, you know, because you gotta kind of just put one foot in front of the other and not give up ever. You know, just keep going. But you also know that you're on a journey that's gonna take you far down. Far I'm far deeper in the the beef world than I ever thought. And I've met with the the big major players in the industry at this point, and I'm I'm so much further deep in that industry than I ever would have imagined if I had asked me 10 years ago. So just choose carefully, I guess. Keep going, um,

in the early stage, demand is the most important thing. A lot of tech founders and I made this mistake for years. A lot of tech defenders, they use the hammer they've got, which is tech building coding, prototyping. There's a whole dialogue. There was a whole dialogue for a long time. Maybe still is I don't pay attention, but on Twitter, about like m v p. And, you know, rapid testing Now they've got the no code thing. You could test ideas really quick.

I don't even think that's different, right? For step. Why would you? Why would you take your idea and build a website for even three weeks when you could call? If you call the right people, call representative customers or call people who sold similar things to those same target customers? Ah, that's that was my number one learning Madrona Venture Labs where we really realized. OK, we've got to be really fast at validating. So as we thought, through the problem of how to get fast at validating, it always started with phone calls. And I remember. I mean,

you remember Scott. We work in a security camera, ai enable security camera platform, right? A lot of different target markets, but we killed the idea. We worked on it for quite a long time. Like a month or two, you know, we killed it. Really? The day it died was we finally talked to this guy who was ah, a sales guy for 20 plus years selling security camera systems into every possible target market, like airport and apartment buildings, real estate, private home,

everything. And, you know, all the vendors. He knew all the customer types, you know, all the objections. You know, all the technologies he knew that patents, landscape, all things we didn't know really that you can't just Google for and talking. We just realized between the fragmentation and the cost of in the market and the patent propellers, that people were litigious about everything we just realized. Okay, this is not a good a good place right at this point in time for a start up from our from our lab, at least.

And so I was talking to people. It's like a really good advice for a technical founder. Don't go build stuff. Go talk to people. That's great. Now that's Ah, that definitely resonates. And I think it's that's a good place to wrap. Um Well, Joe, it's been an absolute pleasure and honor. Teoh be ableto right along with you on this journey, and it's really a fun story to tell in a very I think relatable story for customers, for suppliers, for everybody. Eso Thanks for spending some time with us today.

And we look forward to all the great things that are ahead of us to come. Yeah, Thank you. And if I could put in one more plug to this, this is advice I always give entrepreneurs to when it comes Teoh finding investors or to work with You don't often have a choice right as much as you want, but the extent you've got choices or you want to prioritize your time, go for people who've got founder empathy. And so, you know, one of the reasons I really appreciate you, Scott, and working with you once watched. The pleasure is you've been an operator and you could be direct. And the more you could have people around the table who've got experience and have founder empathy happy you're going to be as a founder of the more successful you're gonna be as a team. So thank you. Thanks. I appreciate that.

Thanks for joining us were founded and funded. I always love hearing Joe talk about building crowd cow. It's such a fun story. If you're interested in buying some beef, chicken, fish, pork from crowd cow, you can just go to crowd cow dot com. C r o W d c o w dot com and please join us for more founded and funded episodes were producing them throughout the summer, including fund conversations with Madrona. Principal Danley Talking about the news of the day He's always got some great and interesting things to say and please send feedback if you have ideas and you have comments on this. My email is Erica at madrona dot com, and that's E R I k a and Madrona. M a d r o n a dot com till next time.