649: We Had 3 Weeks Left… This Saved My $35M/Year Company

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0:39Just head to OmniSend.com forward slash founder without the E to get started. All right, now let's jump back into the show. What happens when your$55 million bootstrap business collapses 50 % overnight and you have 36 hours to test a radical pivot or go bankrupt in three weeks? Well, today's guest, Christina Stemble, founder of Farm Girl Flowers, who's back for her second appearance on the show, with a completely different philosophy. After launching in 2010 with$49 ,000 in personal savings, Christina built Farm Girl Flowers into a massive business in the floral industry, hitting$55 million in revenue by betting on simplicity, direct-to-consumer, and zero VC money.

1:19But when COVID vaccines became available in 2021, sales collapsed, forcing her to take out a$3.5 million loan and rebuild the business model in less than a week. Now she's abandoned the growth at all costs mentality entirely. In this raw and honest conversation, you're going to discover why she turned down acquisition offers because the industry multiples were actually insulting, and why founders need to research exit comps before they start. Her controversial pivot from chasing$100 million to optimizing for double-digit profit and slow growth, and the brutal lesson she learned hiring an entire C-suite because that's what you're supposed to do, then firing them all a year later.

1:55This is an unfiltered conversation about what happens when you stop chasing the Silicon Valley narrative and start building the business you actually want to run with freedom and peace of mind at the front and center. hear the stories learn the proven methods and accelerate your growth and future through entrepreneurship welcome to the founder podcast with nathan chan so christina welcome back so you launched farm girl flowers in 2010 aiming to disrupt an industry characterized by confusion and waste. And 15 years later, how did your initial choice to offer just one daily arrangement solve key customer pain points?

2:46And how has that focus evolved to just to justify the highest ticket price in the market today? Yeah, I was super naive back then. I mean, I wish I could still do one daily arrangement. I still think it solves a huge pain point of too many choices. You know, choice fatigue, Being able to minimize waste is, you know, without all the complexity of having, you know, hundreds of SKUs. However, consumers want more choice is what I learned from that. So starting with one daily arrangement was a great idea and it worked at the time. It was a very interesting time in 2010 where companies were scaling back and you saw a lot of this like daily deals going on, the daily deal sites.

3:27And so consumer behavior was shifting. But I do think that in the last five years, especially, consumer behavior has shifted all the way back, plus some, the pendulum has swung even further on the other side with consumers wanting as much choice as possible. We see that in, you know, what people write about us having the highest average order value in the industry, which is questionable, but we can come back to that too. And, you know, while we do have a lot of expensive products, having one daily arrangement just didn't appeal to, you know, consumers at all levels of what they wanted to purchase, what type of products they wanted.

4:03And so we had to listen to that and adjust accordingly. So you started the brand 2010,$49 ,000 in personal savings. You hit a low point of$411 one and a half years later. Can you tell me about that time, like bootstrapping and that superpower that you believe is what made Farm Girl Flowers today and why that's so important to you? Yeah, it's funny because that$411 you just reminded me of, but that wasn't even the scariest moment because back then it was just me working at Farm Girl. You know, I would pretend that I had lots of people and I'd use the, you know, universal we when I would respond to people.

4:44And I even changed my name when I was doing customer service or events, you know, so it sounded like there were like three or four people here. But if it didn't work at that point, it was okay because I could live in my car if I needed to. I didn't have anybody else's livelihood, you know, on my head or my, you know, my thoughts. So I think the scariest part for me, or the most challenging part was, I think, right around when we spoke last, mid 2021, was we had more money in the bank, but we had a much higher, you know, we were on a$55 million, I think, revenue year, with a lot of people working for me.

5:20And we just built an infrastructure for, a$60-plus million company that we thought would be more like a$75 million company that year. And we missed forecasts immediately. We had a hockey stick down, which you never want to have for the first time in 11 years. We'd never had a month that didn't have increased year over year ever in the history of Farm Girl. And then as soon as the COVID vaccines became readily available, people started traveling to see their loved ones and stopped buying gifts. And we had just built this infrastructure for double the sales from 2019 to 2020. And we expected similar from 2020 to 2021.

6:00And then started to see that immediately in April, as soon as vaccines became readily available, that changed dramatically, more so than what all of my SOS forecasting could save us from. I think I went down to 30 % decrease, but when we went down 50 plus percent almost overnight, that was my$411 moment all over again, but at a much bigger scale. And I didn't think we would actually get past that one. I had to take out a$3.5 million loan that's really hard. I lived in a one-bedroom apartment. I didn't have any personal assets. I was paying myself$60 ,000 a year. It wasn't like I had a massive bank account that could pull us out of this.

6:48So that was the scariest time. And I think the thing that kept us alive and kind of our superpower is the fact that we're able to move very, very quickly because of those 104 nodes I talked about last time, not having investors, not having a board, not having to run everything up a chain and get, you know, 27 different opinions on what we should be doing. I literally did whiteboarding. I didn't sleep. I just for two days straight, I whiteboarded ideas of how to like save the company. And one of them looked like it would work. And I ran it by a CEO group that I'm in, some other CEOs, and thought they would give me really valuable information.

7:32And they were just like, yeah, you always seem to seem to make it work. So we trust you. And I was like, It's really hoping for more than that, you know. But my modeling with that idea was if we had, you know, we would try a new distribution model and change our entire product lineup. And if our sales went down, we knew they'd go down with this different distribution model. If they went down less than 12%, it was worth doing. And if they went down more than 12%, we'd be out of business. And we ran a fake scenario on our website. We modeled it to look like that was what our distribution would be and changed our products.

8:09Ran the test for just a day and a half because that's all the time we had. I literally was going to be out of business about three weeks. And it went down 11.6%, which was right under the 12%. Oh, my God. Yeah. And so that was a Friday night. We ended the test. And Monday, we laid off a facility. And Tuesday, we laid off a facility, which is what we needed to do in order to make this work. and we changed our entire product lineup and our distribution model in a week. And thankfully it worked, which is why we're still here. But had we had a board and all these investors that would want to weigh in, there's no way we'd still be here.

8:50So I think our superpower is our agility and our ability to move fast and to think creatively outside of the box, things that no one would do. You know, they're really hard things. It's not fun to lay off hundreds of people. It's really hard. It's horrible. And needing to do it that fast and being able to, you know, thankfully I had and still have a team that will roll with the punches with me and do the hard things when we need to. And that's why we're still here. That's our superpower. I don't think it has anything to do with what model we have because we've changed it so many times. I don't think it has anything to do with anything that makes us special other than the fact that we adapt, pivot, and move quickly.

9:31Wow. So yeah, what a crazy experience because when I interviewed you four or five years ago, as I said offline, you were kind of like F you to Silicon Valley, still are. You had 104 investors reject you and you're like, Nathan, I'm going to build a billion dollar company. This is going to be massive. And you were kind of growth, growth, growth, growth, growth. And it was super impressive. And we talked about offline that interview did really, really well. A lot of people reached out to you. And now you have a different philosophy because back then as well, like from a bootstrapping standpoint, you could only allocate 24 cents allocated per unit for your marketing.

10:16So you're pretty good with numbers, right? Like that's a testament. Yeah, but I'm also really naive at times. But I've never heard anyone say like, I can only allocate 24 cents per unit to my marketing. So you're obviously really good with numbers. So let's talk about, I guess, that change, that pivot, and your new philosophy there. Because you're still pro-bootstrapping, but you have a different philosophy around building a business. Talk me through that. Yeah. I remember. I started Farm Girl to compete with the big guys, with 1-800-Flowers, FTD. I wanted to be a billion-dollar company or bust, like you said.

10:57It was straight to the top. and a huge chip on my shoulder, like huge. All those 104, I was going to have my pretty woman moment and I was going to be like, what, you work on commission? Big mistake, you know, and send them flowers to thank them after, you know, we got to a billion dollars. And what I've realized is it's all ego. It's 100 % ego. It's wanting to get on the cover of Inc. Magazine or Entrepreneur Magazine and, you know, show all those people that said that I couldn't do it and then invested in all of our strikingly similar, as a legal word you can use, companies that were able to raise, you know, a hundred plus million dollars with a very similar concept to ours after us.

11:38I wanted to show them that, you know, you all didn't believe in me, but look, you know, look what we did. And honestly, that starts from a very young age with me. Like I've had a chip on my shoulder my whole life, you know, being raised in a very evangelical Christian household that was almost cult-like with, you know, men being the head and women just being, you know, helpmates or, you know, not important and wanting to show everybody I grew up with that I could do it and being the kid everybody made fun of in school because I made my own clothes. And like, there's definitely a trend here. And there's definitely a lot that could be unpacked in a psychologist office, probably.

12:12But what I've realized with that billion dollar bust goal was it was all my ego. And in order to get there, especially with the, you know, cost of customer acquisition, just climbing so quickly and seeing what our competitors were having to spend to acquire customers where we couldn't afford to because we didn't have that$100 plus million of investment that we could just pour into marketing.

12:41That$0.24 grew and we were spending$8 to$10, I think, when I spoke with you last. It's gone up in the last five years by a lot. I mean, ours now is around$20,$25, depending on time of year. And that is very low. And in order to keep it there, we need to be a smaller company. We could spend$60,$70,$80 to acquire a customer, to spend$115 was our AOV for Valentine's Day. With flowers in the U.S. being we have the highest, so we do have high prices. We aren't higher priced than a lot of our competitors, But because we don't have, you know, a thousand options and a lot of them starting at lower prices, people have this assumption that we're higher.

13:23We actually think we're the best value out there for what you're going to spend. But we don't offer$30 arrangements. You know, it's not worth shipping in a box for that since the shipping price is going to be more than that. So, you know, we make wise decisions and we stay the size we need to be. So if we can, if the LTV on a customer, you know, we have the highest LTV and I think it's about 1.75, you know, that's low. Flowers have a low LTV. So deciding to spend, you know, up to$100 to acquire a customer just so our top line rises so we can raise another round that might have to be a down round is just a really scary, risky place to be as a company.

14:04And that's how you have a fast track to, you know, having to sell for nothing and walk away with nothing. And so once I got my ego out of it and I was like, OK, what do I really want? Like, I like what I'm doing. You know, it's tough. It's really tough. You know, I tell my team all the time if we can do this, we can go do anything after it. We can go sell sweaters to our heart's desire, which is the analogy I always use. Like, oh, my gosh, wouldn't it be great if you could sell a sweater on clearance in June and not have it be in a compost bin six months earlier? You know, it's really tough what we do, but it's interesting and fun and we get to, you know, be creative and figure out how to solve problems daily.

14:42So I like it, you know. And so if I take the the end goal of needing to sell for a big number or get on the cover of a magazine, you know, what is the end goal then? Like, what are we working towards? And what every entrepreneur wants is to make money with what they're doing. Right. I've never heard anybody, you know, a lot of people be like, oh, it's not about the money and blah, blah, blah. But they're not, you know, they're not happy when they walk away with zero. You know, so, you know, you don't want to work for 15, 20 years. I know my trajectory is much longer than what a lot of entrepreneurs want.

15:14But even five to seven years, you don't want to work doing the grind, you know, 100 hours a week for that long to walk away with nothing. So I do want this to be financially worth the amount of effort I've put into it and the amount of sleepless nights that I've had and stress that I've had and probably 20 years of ulcers in my future. So we can do that. We just work on profitability instead of growth. And so that's what we did. We went from 2019, right before COVID, you know, being a company that was$34 million in profit or$34 million in revenue with$36 ,000 in profit without high executive compensation.

15:55So, you know, that's not a goal anybody has to, you know, that little margin is means every every unplanned expense is causing you not to sleep and to worry and to wonder if you can get a loan to pay it, you know. So I just really thought about it like, what do I want? I want to I want this to be worth the time I've put into it. I want to not have to start another company after this. After what I've learned from this, I used to think I was going to be a serial entrepreneur. I've decided I don't want to do that. I'll be happy with this being a long-term, you know, build to keep model. And like most companies are, they're just not the sexy, cool ones that people talk about, right, that have been around forever.

16:37So that's what we're doing. We're staying smaller. We're around the same size as we were. You know, we're growing this year. You know, what we did is we stabilized. We changed our distribution again, probably twice since I've talked to you. We've got a model that works financially for the company. It's not the company I wanted to be. It's not as fun as I, you know, like we used to make every bouquet in-house, and I loved that. I love that differentiated us from everyone else in the industry. That also meant we made no money, and we had constant lawsuits and constant headaches, and like, why do I want this, you know?

17:13So we found a model that works financially for us, and we focused on the profit, and we got it to double-digit profit levels. So now we can reinvest that into our growth. And we're doing really fun projects like farming. You know, we planted 40 ,000 peony plants. We're just doing fun things that we want to do that there's no way any board would allow us to do because it doesn't make any sense to put a million dollars into something that you're not going to get out for five years. Right. But it's fun and interesting. And so I'm really excited about where we're going now. And it's a much more fun way to do a business, get to think long term instead of very short term, and build it slower and more thoughtfully and more healthily financially so I don't have to worry about laying people off anymore.

17:56Because we've built a big enough nest egg that we can have five big unplanned expenses come our way and still be okay. And I can sleep much better. I sleep more hours than I've ever slept. more peacefully. And if I never make the cover of Entrepreneur Magazine or Inc. Magazine, that's fine. I'm fine with that because I'll have a bank account that is much better than I would have with that cover. So yeah, that's where I'm at. So I really respect that. So I was saying in many ways, as a founder, you've got this concept in your head or even as humans that it's never enough. And I think subconsciously, that's something that drives us to get to where we are and to have the success that we do.

18:46And the realization that you've had around it is enough is such a powerful one. And to feel at peace with where the company's at and not feeling so uneasy. Well, maybe you still feel uneasy. You still feel uneasy if certain things aren't working, right? Absolutely. I mean, you want to because that's what makes you change them. You know, if something is not working, you know, because we run the way we do, we know immediately that it's not working and we can fix it. And that gut, which I truly believe is just experience that we call gut, it's just your experience knows something's not right here and you don't move forward with it or you change it.

19:25So I'm still uneasy at times and I'm still not happy when things don't work. You know, it's a lot of work and it's it's disappointing that I'm like, oh, why didn't I catch that or why did I do that? Or, you know, a good example of that is, you know, usually it's when you listen to other people instead of what you think you should do. I think, you know, the more you grow, the more people want to tell you what they think you should do. Right. And it's always, you know, it's with good heart and it's good intention. And everyone's like, you know, they want to see, you know, you're working so hard.

19:57Like everyone's like, you're working so hard. Like it should be easier than this. And so all my friends that have companies are like, you need to hire a C-suite. Like this is ridiculous that you're this size company and you have no C-suite. And so then I hire a whole C-suite and it's the worst time I've ever had at the company. I mean, worst time, like not fun, like dreading, dreading work and having team members that just don't understand what makes Farm Girl special is the fact that we are our customers. We're close. We're connected to our customers. We understand what they want. We're constantly iterating and being creative, doing things that just don't fit a playbook that is learned in business school or at a giant company with so many layers.

20:37And so that didn't work. And so then you're like, wow, I just wasted a year, basically, like a year of onboarding and then offboarding. And that was a year that I could have been spending more time understanding AI tools for, you know for marketing and things that could be helping us or that's something that's on our brain right now so i'm just using as an example like there's so many things that require so much time and that's the thing that we have the least amount of so figuring out how to prioritize and use that wisely is i think one of the most important jobs i have and so to waste time is the most disappointing and the most unease that i have is when i made a decision that caused us to waste time when it comes to the business now you guys are still growing right but you're optimizing for profitability Absolutely.

21:21We're growing single digits instead of, you know, 50 percent year over year like we were. I think some of that is just marketing has gotten very expensive and we won't spend it, like I mentioned. You know, I think this year we're, I think, eight or nine percent up. You know, we'll take more steady small growth that we can do while being very smart about our unit economics. and that's the thing you know that you touched on earlier i don't think people know their numbers well enough and that's when they get in trouble um you know i probably i'm i'm on this side of the pendulum like i probably know them too much you know i'm in them too much uh but that's why we're here today because i know immediately what did we spend this on what did we spend this on and my team was you know used to getting those emails from me at 11 30 or 12 at night you know it's not that way anymore but when you don't have a buffer you worry about every penny then so but a lot of founders don't know the important numbers they don't know their cac ltv they don't know i mean they don't know what's working and not working and then they're just throwing money into the wind i'm like you might as well light on fire we've actually done things where we've turned off marketing at times like all performance marketing because you know we didn't have the money and i didn't it wasn't working so i'm like until we figure out how to make it work and i don't think that was the wisest thing because there is, you know, that when you turn it off, it takes a lot, a lot of ramp up time to get it back going.

22:48But when you need to do that and then figure out where you should be spending your money and doing it more wisely instead of, you know, you can't afford to just light things, you know, light money on fire, especially when you're bootstrapped and you shouldn't anytime. You, you shouldn't be using the dollars that you raised of other people's money that way when you don't know your numbers. Yeah, I agree. So right now Now, the business is growing slowly, controllably, and you're optimizing for profit. But you still have pretty high revenues, right? Like I think you said you guys will do at least$30 million,$40 million this year, right?

23:25In top line. Yeah, we'll do about$35 million this year, a little over$35 million. So it's still big business, but you don't have a C-suite. We have a head of suite, which are doers, and we keep it that way. We don't hire people that their impact is simply strategy. With all the tools out there, you don't need that anymore anyway. But we need people that do have strategy and strategic vision and creative vision, but they also are the doers as well. Yeah, I love that. So talk me through that transition because you said you modeled for one and a half days and it needed to be, it needed to make a difference of 12 % and you got to 11.6, right?

24:12Yeah. I wouldn't recommend it for anyone, Nathan, by the way, I would not recommend this for anyone. I know. I understand because the thought that goes to mind for me was just like, oh my God, like I was feeling, when you tell that story, I was feeling it and I'm like, oh my God, like that is so risky because how do you know you had enough traffic and data to get statistical significance over a one and a half day period? We absolutely didn't. Absolutely did not. Like we should not have run that for, I just didn't have any money. I didn't have any time. So I was like, if we ran this for 30 days, like 30 days would be a short test of this, right?

24:46To change your entire model. That would be a short test. And I'm like, I've got a day. And the only reason it went a day and a half is because we didn't have it set up properly. So we had four hours till we got it set up properly. So it was really like 24 hours was all the time I allocated to that test because it's all the time we had. I was like, if we had paid off all the bill, like I said, I had three weeks of money. I had three weeks of operating money, but not to pay all the bills. It would have been bankruptcy and, you know, um, not a good scenario. Yep. Yep. Yep. So to get the loan, uh, you had to, to do that personally.

25:19I was very fortunate that I have built great relationships with people and someone really helped me out in the, uh, in the founder. I, I'm not going to get her in trouble by saying who it was, but access to a bank and used numbers that were true, but weren't the most current numbers in order to help me get that loan. Just with somebody that I was on a panel with the year before. So I had to call in like a personal favor. And, you know, I didn't have anything to personally guarantee the loan. I'm like, do you want a car that has 150 ,000 miles on it. Like I don't like renting an apartment, you know, I didn't own any homes.

26:02It wasn't, um, this, this is not like I, I'm a different founder than what people imagine a lot of times. Right. So people think that founders of companies are just rolling in money. And, um, and like I said, we're, I'm doing better now than I was then. But, you know, if I had had the personal money, I would have just put it in. I mean, that's what you do for your company. I didn't. So, But having over three is like$3.3 million loan. It took me a year and a half to pay it off. And it was every day that year and a half was stressful to try to pay back that loan and make sure that I didn't let her down because she helped us out.

26:37There's a lot of companies during that time that were defaulting on loans. And just I was like, I will pay this off whether if I eat ramen for the rest of my life, I'll pay every penny of this off and did. Yeah, well done. Yeah, even one and a half years. That's pretty fast. So it sounds like the pivot that you made with the business was the right one. I'd love to talk about how you worked it out. Because I think sometimes like, you know, you'd think, you know, you're doing$60 million a year. Most people would think, okay, you're set for life. Like you just got to keep running the same playbook and then maybe get a decent exit.