Vital Farms: Matt O’Hayer. How a serial entrepreneur re-branded the egg

26:32Yeah. When I was a kid, I had a paper route when I was eight years old from eight to 12. I saved my money and I bought sailing lessons at Rhode Island Yacht Club when I was 11. And I really learned to sail and I loved it. Okay. So here was the opportunity to do it, except you didn't have the money to do it. Oops. Is that one little problem? Yeah. But I had a little bit of equity in my house. I had enough to borrow$300 ,000,$330 ,000 I think I borrowed against my house. Against your house. Okay. So I decided I was going to be a charter captain. Yeah. And I found a boat in the British Virgin Islands.

27:10It was a charter boat. It was about five, six years old, four cabin. And my new girlfriend and I, she was game to jump on board with me. So you would be the captain of the boat and you would bring tourists on and take them for a week long or three day long trips? Usually families. Yeah. Okay. And I also was doing charters in the Caribbean all winter and spring and fall. But I would move up to New England and charter all summer in New England. from Maine to New York. And you have a girlfriend who I believe is your wife now. No, she was my wife, but we were together for nearly 20 years. Got it. Okay.

27:54So I was captain and chef. And were you a pretty decent cook? I was. I had gotten to be, over the years, I had worked in the cooking business in Blockhound in the summertime and worked my way up to, I would call it, line cook. Yeah. I want to put this in perspective for a minute because you had gone from running a 200 plus person complex business after 13 years of running another very complex barter franchise business. You had been the CEO. You had big staffs. You had, you know, on calls and meetings. And you are pivoting to a career at 45, 46 as a captain and cook of a charter boat. Just you and your girlfriend.

28:38That's a big change. I mean, that is a very big life change. That sounds glorious compared to what the reality was, which is I'm taking apart their toilet that they dropped the wrong stuff in and fixing it. And I'm down in the engine room covered in grease, fixing an engine and all this without, you know, I had a generator. I had two big engines down there. Plus, you have the sails and you're cooking. But you're also taking them to three, four islands a day and your tour guide and you're teaching them to scuba dive and wakeboard and, you know, all this stuff. You get me on all the time, too. Yeah.

29:15One thing I was really learning is that, you know, I was now, my ego had gotten pretty well crushed down and which is in a good way. By the way, what a gift. I know. It was really. What a gift. I was, you know, taking care of people. I was a nursemaid. I was a diplomat. I was, you know, solving marriage problems when I could. And I was, you know, I was teaching people to do a lot of interesting things and I had a lot of kids on board. You know, it was, you know, it was really busy. Was it a good business? It was a small business. It's you and Catherine, basically, and maybe some, I don't know, part-time employees.

29:48But was it a, were you saving money? I wouldn't say I was saving a lot of money, but I was, you know, we were getting, I think,$15 ,000 a week. And after you cover all your expenses, you know, you got a little bit left over. And there were tips. Catherine kept all the tips. That was their deal, which was sizable. I think we had, you know,$40 ,000,$50 ,000 a year in tips. But also I saw an opportunity while I was doing this because I'm an entrepreneur at heart and I had a million ideas that I couldn't execute there. But one I could was become a charter broker who would book on other boats because we were oftentimes booked and I get inquiries from my client base.

30:25And they say, we need you for New Year's. I'm not available, but I can get you another boat. And that was 15 % off the top. So I started booking charters. I started a company. It was called Vital Vacations and the first vital company. It's interesting because obviously it's a connection to what you do next, but it's also connected to what you did cleaning carpets because you realize that the money actually was about working with third parties and taking a cut, right? Or even in the franchise business. Like here, you realize that by brokering charters for other people, it was a much easier way to make money.

30:59Yeah, but I was still doing charters and I really enjoyed being a captain. I thought I was going to do it the rest of my life. I really did. Really? Yeah. I remember somebody, a mentor of mine early days, she told me, the average life of a charter captain is four and a half years. And after that, you're done. And I was like two years. I'm like, I'm going to do this the rest of my life. Well, right around four and a half years, I was done. I was like, okay. What happened? Well, I had a thousand ideas. Poor Catherine at the time, you know, I felt because every time I'd come up with another idea and her eyes would go, oh my God, here comes another one.

31:34And one thing that had happened is I'd read this essay that had been written by John Mackey called Conscious Capitalism. It was – Yeah, which became his kind of mantra. Well, it was a best-selling book after that. And now it's a whole movement. Whole movement, right. But at the time, it was a four-page essay. And it described that businesses need to have a deeper purpose besides just making money. And I was like, well, that's interesting. It was always for me, how can I, quick can I get in and quick can I get out with a lot of money? And like, that's very interesting. I liked that concept. And then he went on to talk about stakeholders.

32:12And I never even thought of a business as having more than one stakeholder. Me, you know. No, they're equal in a way. And described, you know, what Whole Foods did is for their five stakeholders, which is the customers, the employees, the shareholders, the vendors, which I thought was interesting. Teating them as an equal. And then the last one was the communities slash environment where they operate. So I was inspired by that. I knew that whatever I did going forward, I wanted it to be part of that kind of model. Okay. All right. A question for you. You were and have been a vegetarian most of your adult life.

32:44At that time, you were vegetarian. But were animal rights front and center in your mind? Was it something you thought about or was being a vegetarian just a lifestyle thing that you just kind of lived? Yeah, well, my friend John Mackie would be angry if he heard me calling me a vegetarian. He said, you're not a vegetarian, Matt. You eat fish. So I call myself a pesca vegan. Right. So yeah, animal welfare is, you know, especially having chickens on a farm. I mean, my chickens, they all had names. You know, they're all named after, you know. This is when you ran the farm in San Antonio. Outside of San Antonio, yeah.

33:20That was years earlier. You know, they're jumping your shoulders. And I saw their, you know, I had little baby chicks, you know, that I raised up to lay hands. Up to full laying hands. And, you know, they know you. They're sentient beings. You can see that, you know, meaning they feel happiness. They feel sadness. They feel anger. They feel hurt. All kinds of, they have personalities. I ask that because I, you know, you're thinking about a bunch of different businesses. You read Conscious Capitalism and you decide to move back to Austin and actually buy a farm once again, which you had done in 1980.

33:56help me understand how you made that decision to to a move back to austin and to buy a farm again well i knew i wanted to move back to austin and so um and then john mackie and i had gone with him and some friends on a long scuba diving trip so you had always kept in touch with him yes we got a lot closer um and since like 2004 yeah so we were on this trip and i was asking you know what's next for Whole Foods? And he said, you know, this thing we're doing, you know, right now I'm funding this guy to do pasture raising of eggs. But he's decided instead he took the money and wanted to build a feed bill.

34:36So instead of doing what I want him to do, I said, what did you want him to do? And I said, well, I wanted him to train farmers around the country to pasture raise chickens, meaning where they're out in pasture eating the pasture, because we want to sell those types of eggs from chickens that are well-maintained, plus the eggs taste better. And I was like, holy shit, that's exactly what I was. When I had my farm, I saw this huge difference in those eggs. And I've been looking for those eggs. I look for them all the time. I stop at farm stands all the time, hoping that that farmer has let their chickens up.

35:04Because what I found when I had my farm is when chickens wandered around on pasture and they ate something besides corn every day, which is what most chickens just get, primarily corn, a little bit of soybean meal, that the yolks get this beautiful orange color. And they're thicker and they taste much different, much better. and they're delicious. I don't really like the ones with the pale yellow yolks. And what I found is that the 300 million chickens that are out there, 330 million chickens, even at that time, 95, 98 % of them were living in cages, four, five, six, seven, eight birds to a cage, unable to stand up, unable to turn around, unable to stretch their wings their entire lives.

35:45What I classify as the most torture farm animal in the world. So John tells me the story, about what he wanted to do. And I said, well, that won't work. He said, what do you mean it won't work? He said, well, farmers aren't going to give you the consistency you want. You need to have consistent rules and you need to create what I would call a franchise model, an upside down franchise. And I had the experience in franchise. Like, how would you do it? And I said, well, I would recruit farmers to follow our system exactly. I'd put them on a contract and I'd buy all their eggs under that contract.

36:20but they'd have to follow the rules that we set for them. And then I would pack all their eggs into a single brand and sell them under that one brand. And I would make sure the farmers did their job right like you would have, like a franchise would. And he said, oh, that'll never work.

36:39When we come back in just a moment, John turns out to be wrong and Matt dives headfirst into the chicken business. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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40:24Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2007, and after talking to John Mackey about the challenges of the chicken business, John moves back to Austin, where he decides to buy a farm. I had a real estate agent in Austin. I said, send me, anytime you see over 10 acres available for sale. And he sends me 27 acres in South Austin for sale, and for half a million dollars. It wasn't developed. It was just kind of scrubland. It was a flood zone. And you were going to do what? I wasn't quite sure yet. I had different ideas, but one of them was to do chickens. Okay. And for half a million dollars.

41:04By the way, did you have half a million dollars? No. Okay. So I flew back to Austin and looked at it. And it was covered in brush. I had to hack my way through the brush just to find my way to the water. It was beautiful. And I offered him half the price, offered him a quarter of a million. And so, yeah, I got under financing and bought the farm. for$250 ,000. Well, bought a piece of land. I turned it into a farm. Yeah. Were you going to live there on this farm? Or are you going to, oh, you had a house. You were going to live in your house. No, I had a house that we sold. It sold the house a couple of years earlier by that point.

41:39And we had, we were living in the RV. So this is like, again, you are now in, well, you know, into your early 50s. And you're going to do, I'm imagining, you're going to do some physical labor here to start to clear this farm. Oh, yeah. Yeah, it was, I bought a tractor. And the brush, the bramble, what was it, like blackberries? Like what kind of bramble did you have? Oh, it's whatever weeds would grow on it. And there was, you know, a lot of these, you know, little tiny trees. And I got a big shredder. I got knocked over almost unconscious with a tree brown on my head. It was quite a fun start.

42:10But I always have fun. Yeah. We're cleaning up the property. I put it in a vegetable garden, bought 20 laying hens. And this is nice, fertile land. Yeah, but it wasn't made for crops. I wasn't going to do crops. I knew I was going to do chickens. So I started with 20, and they all had names. And then I bought 1 ,000 baby chicks and started raising them up. And I built these pens made of this electroplastic netting to keep the predators out. And we'd move the pens and these little trailers around the property. I bought some old trailers on Craigslist, house trailers, and outfitted them with nesting boxes.

42:46And every week, we'd move them to a new plot. How many chickens per pen? Each one's probably, call it 2 ,000 square feet, which we're moving them every week, we're moving them to fresh pasture. Gotcha. And they're just eating grass, basically. Well, what I found out pretty quickly through trial and error is that if they don't get four ounces of 18 % protein every single day, they will stop laying eggs within 48 hours. Which is insects, I'm assuming. In nature, it's insect seeds, little pieces of grain, bugs, worms. But we fed them their grain, and I try to do all kinds of things. You fed them grain?

43:28Well, no matter what, they have to get four ounces a day of protein. Got it. And I would, you know, I got these, raised these chicks from a day old, and finally we got production going. And just to clarify, the purpose here, the idea here was, hey, we can make better tasting eggs if a bunch of things happen. Like the chickens have free – like can roam around. They are eating grass and eating bugs. And the result of that is a really deep orange egg. I imagine it took you some time before you were like, yep, we got it. These eggs are consistently orange. Well, yeah. There's seasonality to it also because in the summertime in Texas especially, everything dies.

44:21There's no water. Well, even if it rains, it doesn't make any difference because if it's 100 degrees, 110 degrees for 60 days in a row, it dries up anyway. But the eggs started coming and I started packing them into cartons. And I had a trailer, but primarily I was going to start packing them into my Subaru and take them out to restaurants. I figured to get started, I wanted to start selling to restaurants. And I start calling and calling and calling and calling restaurants. And they didn't want to pay$4 for a dozen eggs. I think it was selling$3.93 a dozen. And it was that much because the costs, right?

45:00I knew I could not make money unless I sold it for at least$49 a case for 15 dozen. But I was getting a lot of no's because they could buy eggs from Cisco, you know, for these restaurants could. Or from one of the big U.S. foods or whatever for 89 cents a dozen. And I kept hearing from chefs, an egg is an egg is an egg is an egg. And pretty soon I'm backing that truck or my Subaru up and I'm loading it full of all these eggs and take them to the food bank. was so disheartening because You're basically giving them away. I had six months of raising these chickens from Bay Old and they finally got these great eggs but no one knew what they were and they're like no one wants those eggs.

45:40They're$4 eggs. Who wants to pay$4? $3.90 for a dozen eggs. Especially when you're not serving it poached or fried if it's just going into cookies or something and no one's going to see it. Yep. And I finally got one restaurant. The first one came out I know what a pasture-raised egg is. I used to have chickens. It was called Fonda San Miguel here in Austin, Texas. And they bought two cases every week. And I was overjoyed. Let me just ask quickly about the orange yolk, right? It's beautiful, especially if you're making fresh pasta. It's great. Or serving it poached. But from a nutritional standpoint, is there any difference?

46:20It depends how you do it. I mean, we don't make any claims in my company because every chicken on pasture can eat whatever he wants or she wants or she wants. And so, I mean, and the yolk color can change because some chickens, you know, decide to stay in all day. You know, I'm just going to stay home and eat grain, you know. And you never, you know, they have the option to be on 108 square feet of pasture, but you don't have any guarantee that what they're going to need. So, we don't, we stopped on nutritional claims. Right. And also it opens you up to all kinds of class action claims and there's all.

46:52Yeah. Right. OK. So so you're now you've got hens and on the farm. Did you build any buildings at the time or was it just it was just 27 acres of land? That's a lot of land. And you were just it was just a huge pasture. You were just moving these trailers around. We got about we end up with about four or five thousand birds on the pasture full time. And I had helped to live there in trailers because remember, there's a flood zone. And so I had to make sure that if a flood came, we could move in. And we had numbers of floods where we'd have to get there in the middle of the night and move the chickens into the trailers and pull them off the farm to a place across the road where it was high water.

47:26And most of these floods, for some reason, happened at three in the morning. And we were out there loading chickens and pulling them in my Subaru, the same Subaru that I used to deliver eggs to the restaurants in. I'm pulling these trailers off the farm. So you now are trying to get restaurants interested. interested. Some of them, mostly it's hard, but you get in a couple places, but you are also friends with John Mackey. It goes way back to when before he was a big success. You'd known him since 1984. I got to imagine you're like, John, can you help me out here? I've got these great eggs. Let's get them into Whole Foods.

48:01I would never ask John to do anything with Whole Foods. I just didn't do it. Okay. Why? Number one, I know that I didn't want to ask John ever to get my eggs into Whole Foods if I could help it. You know, that was not what I wanted to do. I think he did one time. He sent an email to somebody about it that I was a party to. But other than that, no. But what I do know is that for a decade or more, John was behind the scenes, never directly, but was very helpful in the background. People knew that I knew John, But I met one of the presidents of Whole Foods on a hiking trip we took together with John.

48:45And his VP reached out to me and said, we'd like to get eggs up in the Chicago Midwest region. And it was my first real order outside of the – I was just restaurants at that point. You weren't even in the Whole Foods in Austin? No. No. Okay. Not anyone in the Southwest at all. Okay. So this guy got a hold of me and I shipped him, you know, half a pallet of eggs. That was pretty funny because I had no idea even how to load a pallet. I had a brand. I had a label. And the brand, sorry, we didn't get this. It was, you called it Vital Farms. Vital Farms. And I bought, I had cartons and I had a little label and I had boxes.

49:24And then they said they're going to come pick up this many eggs and it had to be on a pallet. For one store in Chicago? No, for the Chicago region. So it was going to go into the four states. And by the way, it was probably one case for every one of the stores. And the case was half dozen, 15 dozen. Just how many eggs is that roughly? Yeah, probably 400, 500 eggs, something like that. So meanwhile, the guy was going to come pick up the eggs. So it was onto my farm. So the truck driver pulls up there. It was probably a teamster. He pulls in and he said, I'm here to pick up a pallet of eggs. I said, oh, hi, great.

50:01Can you open to the back of your truck? I said, yeah. Meanwhile, we're washing eggs by hand, one at a time. Okay. And so we just had me and my little helper. We got, I started building, I started putting one case at a time on the pallet. And I get it all about three quarters of the way to fill. And I'm looking around and like I'm out of eggs and I needed like four more cases. And so I'm washing some of the eggs out of the real refrigerators there and getting them in the cart. And he's watching me in amazement. He's never seen this before. And then I'm still short. So I run out to one of those little mobile units, the little trailers that had chickens in them.

50:33I'm lifting up hens and I'm grabbing warm eggs out. And I get these warm eggs and I put them in the carton. And he's like, couldn't believe it. And I finally had enough eggs done. And this is 45 minutes later. And then I grabbed, I'd been to a U-Haul and got this shrink wrap because they told me it had to be shrink wrapped. And I'm walking around the back of this with this green shrink wrap on his truck. On the semi. And just walking around the pallet, shrink wrapping it. Shrink wrapping it. And I jumped off and said, you're all set to go. And he just like, he looked at me and shook his head, shut his doors and drove off the farm, my little funky, muddy dirt road.

51:12And off he went. And that was my first. I was so happy. I can't imagine. Here's my question, right? So these initial eggs go to a dozen or so Whole Foods in the Midwest. Right. And I'm and this is 2008 ish around then. And I'm I'm walking into a Whole Foods, let's say, in a Chicago suburb in 2008. I go by the eggs and I see this one brand vital farms. And it's not it's just like, you know, there's there's a Whole Foods brand and there's and they are saying cage free and there's this. And why would I even pick this? I mean, I knew nothing about it. How were people going to even know about what this was?

51:59Whole Foods were amazing partners. They still are just an amazing partner. And they stepped up because the thing that they do is that they really believe in what we're doing. It's not just about the money. It's the stakeholder model. And, you know, they believe in what we're doing from an animal welfare standpoint. They believed in that pasture-raised eggs were better for you. so um yeah and so they did had great signage in the stores but i was only on the shelf for about three or four weeks and all of a sudden i got a call from bobby turner i believe his name is the vice president said matt we've got a problem up here what the health department in indiana has taken all your eggs off the shelf and why so because your label's not correct you didn't have the size of the egg and three-eighths inch type.

52:43You didn't have a grade on it. It had to say grade A and it had to say extra large and... Yeah. All that stuff. So they yanked them all off the shelf in all four or five states. Chicago, Illinois, Wisconsin, yeah, Indiana. So they came off the shelf. I decided to get paid and I had to go back and hopefully it was very understanding. And sure enough, instead of just saying, we're done with you guys, they patiently waited for me to send in the next round of eggs, build the next pallet in the back of the truck and send it back up. And five weeks later, we're back on the shelf. Wow. So you had to basically have everything to standard.

53:24I guess that within a year, you also got another lifeline from Whole Foods, which is, and they had, I mean, at the time, it was more like this. I think it's less like this now. They were really into local foods, And you could go to an individual Whole Foods, and we've heard these stories on the show, and you could pitch the local manager. But you got a loan. They gave you a$100 ,000 loan. Whole Foods had a program to support local food producers. That's right. And it's like a low-interest loan, right? I think it was 5 % interest, which at the time was not low. I think it was a fair market. But was$100 ,000 in 2009, was that critical?

54:12Was that like life-changing money at that point? You know, it really wasn't. I had sold my house. I had some capital from that. I had sold my boat. I had a little bit of money from that. I really financed this thing 100 % of myself. I had gotten owner financing on the farm itself. I really got the loan because I knew that what came along with that was even more support from Whole Foods. and I wanted them as a partner. And we never missed a payment, never laid on a payment. We paid it off exactly in time. And at the time, they had 11 regions of Whole Foods. There was almost no national purchasing.

54:45Each region made their own decision. So you had five separate billion dollar companies, I'm sorry, 11 separate$1 billion companies in essence with their own presidents and their own buyers. So you had to do one region at a time. So you were in the Midwest. So you were not yet now. But just out of curiosity, When did you when were you in all the Whole Foods nationally? What year? That really didn't happen until 2015 or 16. OK, so that would come many years later. OK, so this is like 2009 and you are. But there's demand for this thing. And I have to imagine that you can't produce enough eggs on this 27 acre farm in Austin.

55:27Like that is just you don't have the capacity or the cash even to do that. No, it didn't have, and plus there's not enough room. You know, 108 square feet per bird outdoors, you knew the math, that's 1 ,000 birds per hectare. 108 square feet per bird is what you would require. Correct. We worked with Certified Humane and other organizations to come up with a standard, and we adopted the European standard of 1 ,000 birds per hectare, which is, again, 108 square feet per bird. But that's not, like if I start an egg company and I call it pasture-raised, just because I like that term, is that regulated?

56:03Is that legal language or is that still not, no one's going to know what that means? It's actually self-regulated within the industry. But there's been a couple of times when people have broken that standard and they've gotten sued and they've backed off. And so we have competitors that would love to call their eggs pasture-raised, but they call them free-range instead because they have somewhere between two square feet outdoors, which is one animal welfare organization standard. And so you can get away with that basically. Yeah. So you now have to – you cannot make enough eggs. And you had experience with franchising in the past and working with partners.

56:41So I imagine you reach back into your toolbox of having done this in the past and you start to think, okay, to scale this, I can't do this just on this farm. In essence, yes. So the first thing I did is started, I figured stick around Austin, it's convenient. And I started adding farms around Austin. And basically a lot of them were - Farms, existing egg farmers. Or individuals that wanted to raise chickens our way. Yeah. Yeah. So I got after, you know, about a year and a half of, you know, trial and error in central Texas, I got a farmer up in Arkansas that agreed to build purpose-built pasture-raised barns just for us.

57:22Okay. And this would actually be the beginning of your expansion where you would start to partner with dozens of like these small egg farmers across the country. But I'm curious, I mean, how did you – like how did you make sure that they were raising eggs to your specifications, that they were going to be – you know, have those orange yolks and they were going to taste the way you want them to taste? And like how are you making sure that they were doing things the way you wanted? We had to hire people to go out and actually check the farms. It didn't take much because we were paying a premium for these eggs for these farmers, so they had to do our methods.

57:55And if we found out, for example, that they were not letting the birds out first thing in the morning because, you know, then we'd let them know that it's not going to work with them. Or if the pasture didn't look great, we would get with them on that. We're much more sophisticated today, but back then it was early on and we were just, yeah. What I'm curious about is attracting these farmers, right? Because you're working with people who had already been raising eggs and selling eggs and people who weren't. But I guess the incentive for them was there was predictability. Like you were saying to them, hey, we're going to guarantee you we're going to buy your eggs at this price.

58:38Is that what you could promise? Yes. What we did is not only we promised that, but one thing we all knew, and that was in this country, farmers always lose at the end of the movie. They just do. And we wanted to take that out. So we also knew that routinely all the big chicken companies, egg companies, beef companies, they would always break their contracts when it was economically favorable for the big producer to do so, the big brands. And so we went in early on and decided we're going to be different. And we're going to be not only different, we're going to treat them like a full-on stakeholder.

59:17And was, I mean, was it just basically a combination of Whole Foods kind of promoting these eggs and people discovering them that you were, I don't know, they were just selling? Yeah, we had a hard time keeping them on the shelf. People found out about them. At first, you know, we were expensive eggs. You know, back then they were$4.99, which, you know, I was told by the buyer, head buyer at Whole Foods early on, no one will ever pay$5 for a dozen, ever. Now they're like$8, I think, or more. Oh, eight to 10. Yeah. Yeah. But I had a philosophy early on that I've stuck with forever since then. And I have to really keep explaining this to folks.

59:55Like, we never, ever are going to pound our chest and see how great we are. And the key to that is if you tell people how great you are, your customers aren't going to feel compelled to tell people how great you are. You're already telling everybody. But if you never pound your chest and see how great you are, the customers will look at what you're doing and say, someone needs to tell people how great these eggs are. And so we end up with thousands and millions of customers bragging about our eggs, and they became a much better sales tool than we could ever do ourselves. When we come back in just a moment, how Matt gets inspired to turn his egg cartons into art.

1:00:32Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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1:02:18Rules and restrictions may apply.

1:02:25Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2010, and as Vital Farms continues to expand, Matt realizes he needs help, a new partner to focus on the nuts and bolts of the business. I wanted a really strong operator that would really run the day-to-day operation. So I found a young man named Jason Jones who was a – he worked for Motorola. And he came to work and I gave him his second MBA, I call it. He came to work for me. He never worked for a startup before. I sold him 20 % of the business for$200 ,000. And he knew nothing about farming? Nothing. He was just interested in this idea.

1:03:09Yeah. Yeah. So you wanted him to come aboard to do what? I mean, he had a business degree, but you also had a lot of business experience. What was he going to bring to the business that you needed? Primarily, he was going to do all the blocking and tackling. If our hiring was going to take place, he did it. He'd get on an airplane and fly somewhere if we had to. I was mainly doing, I was going to be focusing on capital formation if we needed, which I really didn't because I wanted to make sure we were profitable right off the bat. So at the very beginning, we were profitable every year. I didn't want dilution.

1:03:43I had learned my lesson about dilution and watched my friends who got diluted in their business by having to operate at a loss and having to keep raising capital. But yeah, he was instrumental in working with our new partners in Arkansas. Right. And he could quickly learn enough about how to do this that he could go and also explain to these partners in Arkansas what they needed to do? That's right. But pretty quickly, we bought out the Arkansas operation after a number of years. We bought out all their farmer network and purchased them. Because they had their own farmer network. They had built a farmer network for me.

1:04:20There were 30 farms at the time, I think. In 2014 or 15, we bought them out. And that's when the business really started to take off because we're able to much more strongly enforce our standards. And we built relationships with the farmers directly without a third party in between us. And that was a big jump for us. All right. Let's talk about branding for a moment. It's Vital Farms. the carton that they were coming in was black which was very different because most egg cartons are it was green it was green until yeah i love i kind of fell in love with this chalkboard art you'd see at whole foods you know they seems like every whole foods had a chalkboard artist you know and they they put specials in the produce department it looked like it was really cool we decided let's let's see if we can make a carton that looks like that yeah but i remember i had run into Gary Hirshberg, who's the founder of Stonyville Farms.

1:05:12Stonyville, yeah. Stonyville. And we had met at a organic trade association meeting in Washington, D.C. And we were talking. He'd just seen our eggs for the first time. He said, man, what you have is a great piece of real estate. I said, what do you mean? He said, I've got this little yogurt container about this big, these little cups. You have this big piece of real estate in an egg carton. You have such an opportunity there. And I knew we did. And all labels are just boring, you know? Yeah. Egg cartons are boring. It's just eggs. There's no information on it at all. Yeah. And I knew to get people to try your eggs.

1:05:43It wasn't just going to be that, hey, these are pasture-raised. You know, chickens are well-maintained or whatever. You know, we take care of our chickens. We love our chickens. We call them girls. We call them ladies. But it had to be something more. And so we splurged on that label, and we really turned that into a piece of art. And people, their eyes are drawn to our carton. And that would—and we knew that— Because they're like a little cartoon, like drawing of chickens. Yeah. Like grass and flowers. Then they start looking at it and you see all the different little messages. Fresh air, sunshine, it would say on it.

1:06:14Yes, it was great. And we knew that if anybody would just try an egg, same thing I learned when chefs were buying eggs, right? An egg is an egg is an egg, right? Just try it. Just try it. So I imagine that part of the plan was to continue to find more and more and more farms and to build up the network. But did you need to raise money? I mean, was it capital intensive? I mean, because I don't think you had raised money up until this point. We're talking about like now 2013, 2014. In 2013, 2012, I was approached by an investment banker wanting to raise some money for us. And my experience with investment bankers in the 90s was right out of that Wizard of Wall Street, the DiCaprio movie.

1:06:59Oh, yeah, right. It was that type of – Pump and dump kind of thing. Yeah, right. But this guy was different. And he said, I only raise money through private equity funds that are what he called impact investors. They're only interested in the triple bottom line. People, profit, and planets type of thing. They want to make sure we're making a profit, but they're more interested in what we're doing for the planet. And there's 250 of these private equity firms, and we hold conferences with them every year. And if you're interested in raising capital, I said, well, I'm not interested in doing anything right away.

1:07:28But what do you think I could sell a little bit of my personal stock for? And he gave me a number like, the company's worth that much? I was shocked. And I said, well, let's run a process. I've never had any money, personally. I've been blocking and tackling my whole life. I never, yes, I had been worth money on paper, but I'd never actually had any real money. And so he ran a process for us to sell 10 % of the company and came in at twice the number that he had said. I'm like, wow. For the first time, I had some real money. I could do something with it myself, you know, buy a house and do some things.

1:08:03And the company didn't get any of that money. It was basically, we sold, I sold a little bit of my stock. And so we did a couple more rounds of that. And the following year, we did one, it was two and a half times it would valuation again. So I sold about 20 % of the company. I want to, I want to focus in on something else just for a sec, which is this idea that you didn't really like being the day-to-day operator of the business, Right. Like that wasn't where your heart really was. And you eventually gave up the title of CEO. And I think this is around 2019. And the person who took your place is a guy named Russell Diaz Conseco, who I guess kind of worked his way up the ladder, right, to become CEO.

1:08:44Yeah. And Russell really took the bill by the horn. He moved up from director of operations to COO and president. And then I decided I wanted to take the company public in 2019. We decided it was time for him to move to that title. So, yeah, and the stakeholder model is strong in this company today, probably much stronger than when I started. I walk into meetings and no one knows who I am. And I'll hear a bunch of 20-somethings in a room full of other marketing people that work for us now. And they're talking about what the impact could be on this particular stakeholder of doing something like this.

1:09:15And like, I love it. You know, it's in the fiber, which is really wonderful. So one of the things, right, that I'm sure you've heard and we'll definitely hear from listeners is like I buy your eggs. OK, I can I can afford to buy them. And it's it's it's a price I am willing to pay because I like them and I think they're they're good. But they are in some cases two or three times more expensive than right. This battery cage produced eggs. eggs. And is it really just, is it just the price of doing business? Like they have to be that expensive because of how they're produced? Well, it costs more.

1:09:58It's a lot more expensive to produce eggs humanely. We have to pay the farmers. You know, they buy, they get loans and the banks, you know, when the interest rates went from one and a half percent to six, seven percent to buy a farm, that was more expensive for the farmers. We have to pay them more. And we want to make sure the farmers, you know, we take care of our farmers. We have 575 at the end of last year farmers, and we hold their feet to the fire and vice on the other way around as well. What, I mean, how much of an impact would you say that Vital Farms has had on other farms and the way they raise their eggs, their chickens?

1:10:32Well, we haven't changed. I think the factory farming method, you know, the battery cages are still there, right? But instead of being 95, 97, 8%, whatever it is, it's around 50 or so today. I don't have the exact numbers, but somewhere in the half. So we've had a pretty big impact on 330 million laying hens and 150, 160 million of those are now no longer in cages. So it's been a big, big change. You know, when you started, you weren't even a rounding error, right, in terms of how much of the market you had. What percentage do you estimate of the egg market does Vital Farms have today? Like 5%, 10 %?

1:11:12I think we're under 4 % last time I heard. I mean, in a country of 300 million people, that's huge. Yeah. Yeah, when you think about it, we're in about, I can't remember, 11 million households today, 12 million households. And really, you know, the company has grown every single year. And our earnings have grown every year. I mean, just in line, straight, you know, every single quarter exceeded the previous year, same quarter, every single for that consistency. And I'm the largest shareholder. I always have been. Matt, you're only 70. I mean, you know, with modern technology, you could live like 30 plus more years, right?

1:11:51I'm just approaching middle age. Right. Right. So – and you once had a dream of retiring and sailing off into the sunset, which you did for a few years, but you got bored. What do you think you want to do for the rest of your life? And I don't know. What are your thoughts? I've started four or five new companies this year. Oh, wow. This past year. You're like incubating them or you are literally – It depends. I mean we started Blue Zone Kitchens a couple of years ago and then hit a$12 million run rate in our second year of frozen entrees. from the Blue Zones. This is with Dan Buettner, the Blue Zones, right?

1:12:27Dan Buettner and I and Scott Marcus, my former CMO at Vital Farms is the CEO. And then I have a number of other projects. I just bought an aviation company. Like building planes? No, it's a charter, air charter service. And I can sit on a beach with a, you know, my tire margarita for about 15 minutes. And then I want to do something fun. And I find starting companies and building companies to be a lot of fun. And fortunately, I've gotten a lot better at it than I was in my 20s and 30s and 40s and 50s. I've just gotten to be, I haven't had a failure in years since really before the sailboat days.

1:13:10That lessons I learned as a captain, I had to lead people every day and I had to serve them every day. And so when I go into a new business today, it is with first and foremost, what is the deeper purpose of that business? What can I do to really serve? And yeah, I want to be profitable. But at the same time, I don't need to make a lot of money. How much of where you got to today do you attribute to the work and the grind? You put a lot of work in a lot of tractors and clearing brush. And how much do you think had to do with timing, being lucky? That's an interesting question. If I had looked at it, I tell you what, 20 years ago, I would have said, it's all me.

1:13:52and that that's shifted constantly over the years i had a really strong realization probably three years ago and i realized this thing about gratitude i realized that everything i've gotten in my life is a result of being lucky you know my fiance has a hat for me i'm luckiest guy alive and if you think i was not born in the streets of mogadishu with machine gun fire happening around my head. I was born in a middle-class family in the United States. Every single thing I've gotten in business has been a gift from other people in a way. My hard work comes from lessons people taught me about hard work.

1:14:31Every bit of my success has, I could name the people, the situations, and the people that inspired me to do it the right way. And so I would say, in one sense, it's 100 % luck. And from just being in the right place at the right time.

1:14:49That's Matt O 'Hare, founder of Vital Farms. By the way, the company went public in 2019 and is listed on the NASDAQ. As for Matt, he formally stepped off the board in early 2026, but will continue to serve the brand in an advisory role. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at gyros.com or on Substack. This episode was produced by Kerry Thompson with music composed by Ramteen Ereblewe.

1:15:27It was edited by Neva Grant with research help from Casey Herman. Our engineer was Robert Rodriguez. Our production staff also includes Catherine Seifer, Chris Messini, John Isabella, Sam Paulson, Alex Chung, Rommel Wood, Noor Gill, and Elaine Coates. I'm Guy Raz and you've been listening to How I Built This