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

0:07 For the time that you Started with the first Until the time you could actually sell eggs. Was it weeks, was it months?

0:15 Uh months. I figured to get started I wanted to start selling to restaurants. But I was getting a lot of no's. They could buy eggs from Cisco.

0:24 For eighty nine cents a dozen. And they're not gonna pay me. four dollars a dozen when they buy pretty ten cents. I kept hearing from chefs. An egg is an egg is an egg is an egg. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.

0:49 they built. I'm Guy Raz and on the show today. Hamano Hare was inspired to buy a Texas farm. Wenty hens and some trailers from Craigslist. and built a nearly one billion dollar brand.

1:03 Vital Farms. Mm So for as long as anyone can remember Eggs weren't really a brand business. If you walked into a grocery store twenty years ago,

1:17 you'd likely pick out a carton of eggs based on the size, or if you wanted brown eggs versus white ones. No one gave much thought to where the eggs came from or who produced them. Which is strange if you think about it because Americans eat a lot of eggs, almost a hundred billion of them a year. It's a huge industry worth around fifty billion dollars annually. And yet until recently

1:43 Almost no one focused on building a brand and a story. Around eggs. Which is part of why Mat O'Hare decided to do it himself, starting out on a scrubby patch of Texas land with a handful of hens. The idea came to Matt in 2006 after reading an article by the founder of Whole Foods John Mackie. John, who was actually on the show a few years back.

2:06 wrote about a concept called conscious capitalism. The idea that a business should take care of its employees customers, the community, and the planet. Now whether you're skeptical about this idea or not, Matto Hare became a true believer.

2:21 And then eggs? Matt saw an opportunity to take this concept. and build a business. And what he wanted to produce were eggs that were different than what was available at the grocery store. Eggs that had bright orange yolks and didn't taste like they came out of a factory.

2:37 The hens would have space to roam outdoors and be treated more humanely than most egg-laying birds that are confined to cages. Now at the time Matt was in his fifties and had spent the previous few years as a charter boat captain. He had absolutely no experience as a large scale chicken farmer, and he didn't know much about selling food. In fact, as you'll hear, before Vital Farms, Matt had launched a bunch of different businesses, which were complex and challenging in their own right. Some of them did okay, and others fizzled out, but

3:11 All of them contributed to the businessman that Matt would eventually become. Meadowhare grew up in Rhode Island in the 1960s and 70s. He decided to skip college and made his way to Houston, Texas when he was around twenty years old. He got a job there working for a carpet cleaning company. And one day, while sitting in his van, surrounded by a bunch of equipment,

3:33 He thought maybe I should go into this business myself. I saw the name on the back of the carpet cleaning machine. Said Chemco Manufacturing Phoenix, Arizona, Model 75A. So I Got the phone number, called him up.

3:47 One day and we were just sitting in the I was in a kind of a commune house that I was living in. And I called him up and said, Hi, this is Matt O'Hare. And with

3:57 I looked up. Super Steam Carpet Cleaning. They just came up with a name. And I'd like to order. A model seventy five A, you know. And uh

4:05 Well we're having a special right now if you order two. You get a discount. Like, Oh, okay, whatever. That sounds great. Any chemicals? I said. Well, any carbon cleaning solution like you have by the gallon because we have fifty five gallon drums, like I said, Okay, I'll take a fifty five gallon drum. That was just being funny, you know, it's like have fun with it. And pretty soon he had this whole

4:25 Order. And it was like Three or four thousand dollars, I think. And it I he said would you um A thirty day term's okay.

4:34 And I cupped the phone and I said, Everybody know what thirty day terms means? Likely no one knew. And I said. Oh sure, that'd be fine. Two weeks later, a big truck, yellow freight lines, pulls up in front of the house. This commune house.

4:47 And starts unloading all the stuff in front of the house. Yeah, I had to look up what thirty day terms meant. And uh I'm I was qu all of a sudden in the business. I it's amazing t if you th to think about how the world worked in the mid seventies, where you could just Call up a company.

5:04 No credit check, no like And they say they just they said, Sure, we're gonna send you one out. And thirty day. Two and then they they're gonna expect a check within thirty days. And you did not have

5:18 three or four thousand dollars. At the time. I didn't have three or four hundred dollars. Yeah. And and you had you had worked for a previous company, so what did you you just started kind of like

5:30 I don't know, poaching their their customers? Well no, uh what I noticed is Houston was A boom town. They were taking farmland and converting it. At a rapid pace into subdivisions along my ten.

5:41 And the kids go out and play and they run around in the in the f farm fields That hadn't been converted yet. And they run into these brand new carpets and get'em dirty. And I found that we were cleaning carpets out there all the time. And were you

5:54 I mean, how are you able to come up with the cash within 30 days to pay for the machines? Well, I mean It was quick money because people would, you know, come and they pay cash. It was all cash business or check. I and I didn't pay it in three days. What I did instead is

6:09 Every few days I'd send. A small amount of money. So fifty dollars. A hundred dollars. And

6:16 After thirty days, I probably only paid fifteen percent of it back. But they still they're probably laughing at their office because every day they got another check for me. And I had more business than I could handle, so I ended up, you know ordering a third machine and paid for it the same way.

6:31 And uh it just kept growing the business. So This is night in the late seventies, um and so you were bringing in uh do you remember even w how much you were bringing in a year? The company was by the time I sold the company are all in because we were also gotta do equipment sales.

6:47 We end up being the top sales. Uh Organization. Um in the country for that company sold in the machine. Oh you became an agent selling their their cook cleaning machines, yeah. I think at the end by w by nineteen uh eighty we were a million dollars a year probably in sales. Wow.

7:03 And uh I sold the carpet cleaning portion to shut down the equipment portion. You you sold it in nineteen eighty. Yeah, five years. Okay. Okay, and I guess you got a a small chunk of money from that sale. Uh, because I think I guess with that money you bought a

7:20 Like a plant nursery. just outside San Antonio and you had like a little farm there and and you even raised some chickens, which of would of course lay the groundwork for for later on. We'll get there. Uh, but y I I guess you were kind of in a holding pattern, right? Like y you were doing this for just a few years. Yeah. I had dairy goats and I had chickens laying eggs and stuff and

7:42 Um So You know, that's when I first learned it, you know, when their chickens were running around on pasture, they made these beautiful, delicious eggs and I couldn't find them anywhere after that. But yeah. I saw them opportunity just to at least Do that for fun while I decided what my next big move was going to be.

7:57 I didn't know what I wanted to do, but I knew I wanted to ultimately moved to Austin and I wanted to start start a company there. But I didn't know what yet. So you all right, so you're in Austin around what, nineteen eighty three, eighty four time frame. Eighty three. Okay. So Matt

8:11 Many of our listeners will n who all listeners will remember an episode we did years ago, maybe twenty seventeen, twenty eighteen. With John Mackie, the founder of Whole Foods. This is a great episode. And Um tell me about 'Cause you met John Mackie and and he was just kind of starting out at that time, right? I mean he was really

8:30 Um getting into the into the natural foods business. Yeah. We had what we had in common, we were both entrepreneurs and Young entrepreneurs. I was twenty six or twenty seven, I believe. And John was a year and a half older than me.

8:43 But John had a really you know, Whole Foods was a great company in India, but when I met John, he was You'd see him in the produce department packing produce, you know. Um At the first real good sized store they had, which is ten thousand square feet. And uh

8:56 I was starting my company, which is um Barter Exchange. Yeah. So you are right, so you're in Austin and you are starting a new business. a barter exchange company, so

9:08 I know what bartering is, like, hey, uh I can give you this in exchange for that, right? Not exchanging money, but like services. W what what w help me understand what this business was. Alright, so I didn't invent the concept of of of bartering of barters. It's in the Bible. Well I mean but of these companies w what you know, where where you st you should stop doing the uh

9:32 A quid pro quo trading, you know, this for that. But instead you're doing uh you we we have a currency. And so the currency was called a trade dollar. And so w just to give you how b basically how the business ran. We Only companies could join.

9:46 And they would pay us five hundred dollars to join a membership. It's a membership. Right. Annual membership or just one time? One ton. Okay.

9:54 And then you get a credit card, the Barter Exchange Card. And that credit card enabled you to go and shop. At any of the other businesses. in that community. uh or nationwide.'Cause this is the national company I was starting.

10:07 I I decided right on the bat I was gonna build a national company, was gonna franchise it all of the United States. It was a you you would Your business and w first of all what kind of businesses are we talking about? Uh doctors, lawyers. Airlines, restaurants, uh manufacturers, radio stations, magazines, newspapers.

10:28 radio station and a doctor. You I pay you five hundred dollars and then That enables me to shop at any of these other businesses, but why would I even need to be part of this network? To use their services.

10:44 I'll give you a simple example. Let's c let's say you have a restaurant. And your restaurant is operating at about sixty percent capacity. Every lunch every day at lunch you have forty percent of your tables empty. Um you have plenty more capacity. Your food costs. In a restaurant, typically twenty five percent, roughly.

10:58 But your y your big cost in restaurant is your fixed overhead. So you have this perishable commodity called uh that seat that's Not worth anything if you can't fill it, right? You gotta You g have to have a new driveway.

11:11 And them. The asphalt company came to you and said it's gonna cost you ten thousand dollars. You join barter exchange.

11:19 We're gonna fill up some of those empty tables. With customers you wouldn't have had otherwise. Gonna send them in, they're gonna use their trade dollars to eat in your restaurant. And basically you're gonna buy That drive.

11:30 with incremental business. And your promise, your value prop was we're gonna save you money over the long term because Bartering is gonna you know, the cost for you to provide your service is much lower than the cost you would have to pay for someone else's services. In essence, yes.

11:47 But unfortunately That restaurant owner probably can't find a driveway guy who wants to eat ten thousand dollars in the meals at his restaurant, right? And so what this does is basically the reason why barter Yeah. It's always it was the first form of trade, right? Was barter. Um that's why they call it trade.'Cause it was trade or early on.

12:05 So this sounds like almost like it was a a membership club. It was a certain kind of entrepreneur who would join who'd be willing to do this. But basic am I right? It's a more more like a club. They would operate like a club. Yeah, but there were thousands and thousands of members. You know, um at some point at one point we were doing a hundred thousand processing over a hundred thousand transactions a month. And and help me understand. So you got the membership fee, the one time fee, but then how what was your recurring revenue?

12:32 We charge five percent cash and five percent Every time there's a transaction. And there'll be an invoice statement at the end of the month. And also tell people this should not be how you oper operate 100% of your business. This is a way to utilize excess capacity. Because it's nothing more perishable. You think about it, than an empty hotel room that didn't get sold last night.

12:54 or 32nd spot on a radio station yesterday that never got sold. They get nothing for that. This is a Fascinating business. I first of all, do these businesses exist anymore today? No, I think there's one or two that might still be around. Um

13:08 And how did the business do? Was it was it successful? Did you were you bringing in Was profitable? Uh yes and no. The hard part about the business was that you could never Consistently meet the customers' expectations.

13:23 Right. Because it's you you wouldn't you could have predictability. Th they come in thinking it's gonna save their company and it can help them, right? Or or their their expectations are that I'm gonna be able to No matter what you tell them that they're gonna be able to use their trade dollars right away for everything. And sometimes it's difficult to find something they wanted right away. So sometimes as people You know?

13:45 And and other people. And I'm in You know. I always said I'm I'm not I was never You know, I hate wasting my time being CEO of a company because it really is takes a lot of work. That was thirteen years of my life in that business. And this sounds like just a lot of

14:01 moving parks. Like I I can't uh I can there' thousands of cliches coming into my head like herding cats or you know just I'm just thinking you've got your own you're running a membership organization in it in Austin, then you're in charge of a network of membership organizations all over the country. So you're dealing with the franchise owners, and then you're dealing with the businesses in your area and maybe businesses in other areas and And I mean this is before email and you know Yeah, fax machines, maybe, but I'm just thinking like how you even deal with all the communication involved. It was a pain in the ass, I'll tell you it.

14:40 And it's funny'cause you just named all the issues, right? It was always something, you know, with always struggling with cash flow. It was a really Um knockdown drag out. It was really good education, though. One thing it taught me.

14:51 I learned. About so many different companies. 'Cause these they bring me in to cut clients would come and say, I've got this excess inventory and I can't move it. And what can I do? And how can I turn this into something I need? And I did c business with some big corporations. You know, we we did big deals with with airlines uh for for A lot of a lot of deals between. travel related assets in media related assets. We did a lot of that.

15:16 We really made a lot of money in arbitrage. We could buy something, move quickly,'cause we could have we we were the Fed. We could loan ourselves some money. Or or or take it off our And then flip it. But it was always a struggle.

15:28 And Can wear on you after a while. Yeah. Um all right, so you you eventually sell this business, I think in nineteen ninety five.

15:37 um and you make a little bit of money off of it. Um And I guess because you learn so much about the travel industry i in this arbitrage and this sort of bartering business uh you wound up launching a new business for a very specific market, which is airline employees, yes, flight attendants and and pilots. Um and the way I understand it, basically what you would like

16:02 Broker deals with hotels and resorts? for like inexpensive hotel rooms and and then you would uh turn them around and sell them to airline employees who would could fly somewhere cheap or f you know, f if they had some time off. Is that is that right? Yeah. There were dozens of these little companies that former airline employees would start and they would, you know They would place or even existing airline employees and they would

16:25 place they find got a deal with a hotel and a resort somewhere and say, airline employees We'll let you come for fifty percent off. Because they wanted to'cause the airline employees Key is they fly at the last minute. Stand by.

16:37 And I had a Really good context in the resort travel business, my previous business of partner exchange, you know, but I general managers and sales managers from all the main major hotels and and

16:50 And the resorts in Mexico and throughout the Caribbean. So we started growing the business and it was look it was easy to grow. Uh there was a travel magazine that was out there at the time called Airfare magazine, I believe it was called. I bought that magazine. For cheap.

17:05 And we took that and turned into a first class publication with a quarter of a million cer circulation called interline. And these were only airline um staff. There's millions of airline employees. And around the world, I would think. This is worldwide. And there were twenty five.

17:25 thirty companies doing this around the world at this time. Yeah. So there were other companies in the same business. And I did a roll up. I wanted to go and buy them all. Yeah. So you would really you could say, Hey, come just roll your business up in a mine, but then you'll have equity in this bigger business. And I I'd pay'em you know, they may get a small amount of money. I d I really don't remember the amounts, but it probably, you know Maybe I

17:46 twenty, thirty thousand dollars might be enough to get them on board and then would do an earnout and they were happy with that earn that earnout. Yeah. Okay, so this is starting to look like this could really go somewhere because you had done the barter exchange and that was challenging, but

18:02 This one really looked from what I read It looked like it was really promising and you did actually Take this public. In nineteen ninety eight. You went uh you you

18:14 You guys were doing like fifty million and Sales at at at its peak, I think. Right. Roughly fifty million. We had a Good group of people working at that. Um

18:24 At headquarters we had um a first class magazine. But We were still, you know, struggling new company. You know, we're All the all businesses are a challenge, especially when you had

18:34 when you're a mediocre uh operator like I was. I have to think, you know I mean, you know We had a couple of instances that set us back on our heels. Um Why do you think you were not a good operator? At that time.

18:49 Well what I've learned since then is I'm I'm really good at growing companies, but I get really bored at the blocking and tackling part. Which is really an important part of it. It's really the important part. I hadn't really learned a lessons that I've learned later in life, which is al always hire people that are ten times smarter than you and ten times better than you to run every aspect of the business. And I was still thought I was the smartest guy in the room.

19:13 And um and I wasn't You know, yeah. That uh Had a lot to learn. Did you have c I mean'cause you here in this conversation you come across as very

19:22 Mild and You know. Chill and and but w but you said you s you act like the smartest guy in the room. Were you argumentative, were you d were you dismissive of other people? Maybe uh not uh ostensibly, but uh I'm probably

19:39 was more than certainly not more than I am today, that's for sure. Uh I I certainly lacked humility. Um and uh Which I think is such an important aspect of being in in business. And I I I didn't do a good job making sure that I had the right people in the right seats in the bus. You know?

19:54 And that's such an important lesson. Yeah, for sure. Uh but I mean still the business was doing okay. I mean I think at at its peak you had like But like two hundred people working for you? Uh you people in in in the US and in Europe.

20:10 But then of course. Two thousand one rolls around. uh and September eleventh happens and and You're in the travel business and and you guys take a major hit, as does everyone in travel. And I I I read that actually

20:26 On that day at nine eleven, you were actually in New York City for a business meeting. Yeah. Got up early in the morning. And um went for my morning run.

20:35 And came back and was taking off my shoes in my hotel room Midtown. And I see an airplane. I see the one of the World Trade Center towers burning, like What is that? Small plane it crashed.

20:47 One. Watching it the second plane hit. I quickly laced up my shoes and decided I'm gonna run down. See if I can help at the World Trade Center. So I ran down the West Side Highway.

20:57 By the time it got to Chelsea. Um the first tower came down and I was surrounded by people that come out of the t the the tower covered in dust and I realized it. My sales are gonna go to zero.

21:09 for at least a period of time. And we couldn't afford it. We were h still hand to mouth. We're tight, you know, but we're We're okay. Yeah. So I got on the phone right before the second tower came down.

21:19 Got a phone with London and Austin laid off a hundred and forty people. That day? At that moment, before the second tower came down. Because you n well, all air travel had been suspended in the United States, but

21:33 I'm it just It's I guess yeah, well, I guess right away people couldn't travel, right? What happened is twenty percent of all airline employees within days were laid off. But you didn't know that yet on that day. You just knew that there was gonna be some challenges in your business and just so Protectively you lay off people, but still thinking will survive this.

21:55 Yes. Well. I wasn't sure. But I knew that. that we couldn't afford even a small bump on the road at this point. We were hand to mouth, uh cash flow wise, we was too tight, so I knew I had to make some immediate

22:06 Decisions. But I was really more concerned with life at that point. I wonder I yeah, I'm pretty good at triage and I thought, Well maybe I can help and so I I got back and r started running. Downtown. How long were you in New York City before you head back to Austin?

22:19 Well, I got down to the World Trade Center, wasn't able to do anything because there's no nobody now. to help and that was my and I walked up back to midtown with the the whole gang of us together. And um Came back to Austin a few days later. Oh and

22:32 Um basically selling the company. I what I saw happen that day is my My net worth which I calculated somewhere. And it's

22:41 Tens of millions of dollars because, you know. of the value of the company. Yeah, my my share of the company of the company. Yeah. two zero overnight. Okay, so you are now Forty five, forty six.

22:56 And Uh and and broke. Ha ha. Uh you know, uh by broke, I mean I own my house, which is really great. I had built it largely in barter. But you had no long term security. No.

23:10 But when the nine eleven happened, I was like Okay, now we got Nothing. You know? I and I quickly got it like a like consulting gigs, you know. Yeah. I came in and helped a little bit of that, but it was just you know, nickel and dime.

23:23 And and That's it. I mean you spend about a a year on help sort of unwinding it and And What were you gonna do? Yeah, I uh w w I had always wanted a sail

23:38 sell my company and then sail around the world. You know, I was always looking for the exit back then, you know. But you know, sell a company, buy a big sailboat and sell it around the world. Oh, you grew up in Rhode Island, so did you Grow up sailing? Yeah. Well when I was a kid I had a uh paper out when I was eight years old. And uh

23:54 From eight to twelve and it was you know, I Save my money and I I But Sailing lessons at Rhode Island Yacht Club when I was Eleven.

24:02 And I 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, there's that one little problem. Yeah, uh yeah. But I had a little bit of equity in my house. I had enough to to borrow three hundred thousand. Three hundred and thirty thousand I think I borrowed against against your house, okay. Mm-hmm. So I decided it was gonna be a charter captain.

24:22 Yeah. And uh I found a boat. Yeah. And in uh The British Virgin Islands. It was a charter boat. Um It was about

24:31 Five, six years old. Four cabin. And um My new girlfriend and I. She was game to jump on board with me.

24:39 Like so so you would be the captain of the boat and you would bring tourists on and take'em for a week long or three day long. Usually families. Um I also was doing charters uh in the Caribbean all winter and spring and fall. But I would move up to New England and charter all New summer in New England. Uh you know, from Maine to to uh New York. A girlfriend I who I believe is your wife now. No, she was my wife, but we were together.

25:09 Uh. Got it. Okay. So I was captain and chef. W and were you a pretty decent cook? I was. I had gotten to be uh over the years I had got uh I had worked in in the cooking business on Block Island in the summertime and you know worked my way up to to I would call line cook. Yeah. I I wanna put this in perspective for a minute because

25:28 You had gone from running uh two hundred plus person complex business. After thirteen years of running another very complex Barter. franchise business. You had been the CEO, you had big staffs, you had

25:45 Yeah, on calls and meetings. And and you are pivoting to a career at forty five, forty six. As a A captain and cook of a charter boat. Just you and your girlfriend. That's a big change. I mean that is a that's a very big change.

25:59 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 up down in the engine room covered in grease, fixing an engine And all this

26:13 without you know I had a generator, I had two big engines down there, plus you have the sails and And You're cooking. But you're also Taking them to three, four islands a day.

26:24 And your tour guide and you're teaching him to scuba dive and uh wakeboard and Yeah, it'll be on all the time. Two. I was now My ego had gotten pretty well crushed down. And uh which is in a good way.

26:39 By the way, what a gift. I know. It was really. I was, you know, taking care of people. I was a nursemaid, I was a diplomat. I was, you know, solv marriage problems when I could and and uh uh I was ch you know I was t teaching people to do a lot of interesting things and and I had a lot of kids on board.

26:56 You know, it was yeah, it was really busy. Was it a good business? I mean, it's a small business. It's it's you and Catherine basically and maybe some I'm part time employees, but w was it a Was it were you saving money? We we you know, we we'd we you know we're getting I think fifteen thousand dollars a week.

27:16 Uh 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 her deal. Which is sizable. I think we have, you know, forty, fifty thousand dollars a year in tips. But also I saw an opportunity while I was doing this'cause I'm an entrepreneur at heart and I had m million ideas that I couldn't execute there, but when I could was become a charter broker. Who it uh

27:36 book on other boats.'Cause we were oftentimes booked and I get inquiries from my client base and they say, uh we need you for New Year's, I'm not available, but I can get you another boat, and that was fifteen percent off the top. So I started booking charters. I started a company, it was called Vital Vacations. And uh the first vital company. It's interesting'cause uh 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 provide you know, working with third parties and taking a cut, right? Or

28:08 even in the franchise business. Like here you realize that by brokering charge other people, it was it was a much easier way to make money. Yeah. But I was still doing charters and I I I you know, and I really enjoyed being the captain, you know. I thought I was gonna do it the rest of my life. I really did. Really? Yeah. I remember somebody a mentor of mine early time early days, she told me

28:29 Uh, the average life of a charter captain is four and a half years. After that you're done. And I was like two years and like I'm gonna 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 Phil because every time like I'd come up with another idea and her eyes would go, Oh my God, here comes another one. And uh

28:55 I say. That have been written by John Mackie. Uh 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

29:06 A whole movement. A whole movement, right. But at the time it was f a four page essay. You know, and uh they described that, you know, businesses need to have a deeper purpose besides uh just making money. Oh, well that's interesting. It was always for me, how can I quick can I get in and

29:21 Quick can I get out with a lot of money? And like that's very interesting. I like that concept. And then he went on to talk about stakeholders. And I never even thought of a business as having more than one stakeholder, me, you know. Uh No, they're equal in a way. And described that, you know, what Whole Foods did is for their five stakeholders.

29:39 Which is the customers, the employees, the shareholders. The vendors, which I thought was interesting. The T Dem isn't 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.

29:55 Okay. All right, a question for you. You were and have been a vegetarian most of your adult life. At that time you were vegetarian But was anim were animal rights front and center in your mind? Was it something you thought about, or was being a vegetarian just a lifestyle

30:11 You know. You just kinda lived. Yeah, well. My friend John Mackie would be angry if he if he heard me calling me a vegetarian. He says you're not a vegetarian, Matt, you eat fish. So I

30:21 I call myself a peskov Pesca Vegan. Right. So yeah, animal welfare is No, especially having chickens on a farm. I mean my chickens Dell'ames. You know, they're all named after

30:33 Yeah. This is when you ran the farm in San Antonio. Yeah, that was uh years earlier. Yeah, they'll jump on your shoulders and I saw their uh you know, I I had little baby chicks, you know, that I w raised up the lay hands. Up to full laying hands. And you know, they know you that They're sentient beings. You can see that, you know, meaning they they feel happiness, they feel sadness, they feel anger, they feel hurt. All kinds of you they have personalities.

30:56 I I asked that because I Ya you know, you're thinking about a bunch of different businesses. You read Conscious capitalism. And

31:05 You decide to move back to Austin. And actually Buy a farm once again, which you had done in nineteen eighty. Help me understand how you made that decision. To to A move back to Austin.

31:18 And to buy. A farm again. Well I knew I wanted to move back to Austin. And so um And then John Mac and I I had gone with him and some friends on him.

31:27 Long. Scuba diving trip. So you had always kept in touch with him. Yes. Yeah. So We were on this trip and I was asking, you know, what's next for whole foods. And

31:41 He said you know. Well this this thing we're doing, you know, we're right now I'm funding this guy to um To do pasture raising of eggs. But he's he's decided instead he took the money and wanted to build a feed mill. So 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.

31:59 to pasture raise chickens, meaning where they're out on pasture eating the pasture. because we want to sell those types of eggs from from chickens that are well maintained. Plus the the eggs taste better. And I was like, Holy shit, that's exactly when 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's let their chickens up.

32:21 What I found when I had my farm is some 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 that they they're thicker and they taste much different. Much better. And I mean they're delicious. I don't really like

32:41 The ones with the pale yellow yokes. And What I found is that But the three hundred million chickens are out there, three hundred and thirty million chickens even at that time. Ninety

32:51 Five, ninety eight percent of them were living in in cages. Uh 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. Yeah, but I'd classify as the most torture farm animal in the world.

33:06 So John tells me the story. Uh about what he wanted to do. And I said, Well, that won't work. I said, What do you mean it won't work? I said, Well farmers aren't gonna give you the consistency you want. You need to have consistent rules.

33:18 And You need to create what I would call Yeah, yeah. Franchise model. Upside down franchise. The experience franchise, like

33:27 How would you do it? And I said, Well I would recruit farmers to to follow our system exactly. I'd put them on a contract and I'd buy all their eggs under that contract. But they'd have to follow the rules. That we set for them.

33:40 And then I would pack all their eggs. into a single brand. and sell'em 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. Ha.

33:56 When we come back in just a moment. John turns out to be wrong. And Matt dives head first. into the chicken business. Stay with us, I'm Guy Raz, and you're listening to How I Built This.

34:21 Hey, welcome back to How I Built This. I'm Guy Raz. So it's two thousand seven, and after talking to John Mackie about the challenges of the chicken business, Matt 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 ten acres available for sale.

34:40 And um he sends me twenty seven acres South Austin for sale. And for half a million dollars. It wasn't developed. It was just kinda scrub land. It was a flood zone. And you were going to do what? Okay, and and for half a million dollars.

35:00 Did you by the way, did you have half a million dollars? No. Okay. So I flew back to Austin. And looked at it. And it was you couldn't even s it was so t covered in brush. I had to

35:10 hack my way through the the brush just to find my way to the water. It's beautiful. Okay. Yeah. I offered him half the price, offered him a quarter million. And so uh the other I got on to financing and bought the farm. Well bought a piece of land.

35:24 Yeah. Were you gonna live there on this farm or are you gonna or you gonna you oh you had a house, you're gonna live in your house. No, I had an art house that we sold the it sold the house uh a couple of weeks earlier. Um by that point. And we had we're living in the R V. So this is like again. you are now in well, you know, into your early fifties.

35:42 And you're going to do I'm imagining You're gonna do some physical labor here to start to clear this Farm. Oh yeah. It was it was uh I bought it I bought a tractor. And the brush, the bramble, w what was it, like blackberries? Like what kind of bramble do you think? Oh it's whatever weeds would grow on it. And there was you know a lot of these you know little teeny trees. And I got a big shredder.

36:02 knocked over there almost unconscious with a tree brill in my head. It was quite a fun uh start. But I had a bl I was having fun. Yeah. We're cleaning up the property, um put in a vegetable garden, bought twenty laying hands. Um and this is this is nice fertile land. Yeah, I y but it wasn't made for f crops. I wasn't gonna do crops, I knew I was gonna do chickens. So I started with twenty and uh And they all had names. And uh and then I bought um A thousand baby chicks. Started raising them up.

36:28 Yeah. Built these pins. Made of of this electro plastic netting to keep the Predators out. And we'd move the pens.

36:36 And these little trailers around the property. Bought some old trailers on Craigslist. house trailers and outfitted them with nesting boxes and Every week we'd move them into a new plot. How many a how many chickens per Per pen.

36:48 Each one's probably call it two thousand square feet. Um but you're moving'em every week you're moving'em to fresh pasture. Gotcha. And and they're just eating Grass. Well, what I found out pretty quickly.

37:00 um to trial and error is that if they don't get four ounces of eighteen percent protein every single day. They will stop laying eggs within forty eight hours. Which is insects. I'm assuming in nature it's insect uh Seeds, little pieces of grain.

37:16 Uh bugs, worms. Um But we we fed them their grain. And I try to do all kinds of things like you know. Well

37:25 They all no matter what, they have to get four ounces a day of protein. Got it. And uh I would I would, you know, I got these raise these chicks from a day old and Finally we got production going. And and just to clarify, the The the purpose here, the idea here was, hey

37:42 we can make better tasting eggs if A bunch of things happen like The chickens have uh free Like you can roam around.

37:52 The the e are eating Grass. And e eating bugs and the result of that is a Really Deep orange.

38:00 Like that. I I imagine it took you some time before you f You were like, Yep, we got it. Well, yeah and and the seasonality to it also, because um in you know, in the summertime in Texas especially, you know, we had everything dies. There's no water. Well even if it rains, but we it does make any difference because if it's a hundred degrees, hundred and ten degrees for sixty days in a row, that it dries up anyway. Uh but the eggs started coming and I started packing them into cartons and I I I had a trailer, but primarily I was gonna start packing them into my uh my Subaru and take him out to restaurants. I figured to get started I wanted to start selling to restaurants.

38:43 And I start calling and calling and calling and calling restaurants and They didn't want to pay. Four dollars for a dozen. I think it was telling me three ninety three a dozen. And it was that much because the costs, right? I knew I I could not make money unless I sold it for at least uh forty nine dollars a case for fifteen dozen. But

39:05 I was getting a lot of no's because they're paying they could buy eggs from Cisco, you know, for these restaurants good. Or from the big food US 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 taking them to the food bank. It was so disheartening because I'm basically giving them away. I had six months of raising these chickens from day old and you know, and they finally got these great eggs, but no one knew what they were and they're like, no one wants those eggs. You know, they're four dollar eggs. Who wants to pay four dollars, three dollars and ninety cents for a dozen eggs? Especially when you're not serving it poached or Fried if it's just going into you know, cookies or something, and no one's gonna see it. Yep, and I finally got one restaurant.

39:52 That first one came up and said, I know what a pasture raised egg is. I used to have chickens. Yeah, 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 quick quick quickly about the The orange yoke, right?

40:07 It it's beautiful. Especially if you're making like fresh pasta, it's great. Um or serving it poach, but but uh from a nutritional standpoint, is there any difference? It depends how you do it. I mean, we don't make any claims. Um in my company because um Every chicken on pasture can eat whatever he wants.

40:25 Or she wants. She wants. And so I mean And The yolk colour can change because some chickens

40:31 You know, decide to stay in all day. You know, I'm just gonna stay home and eat grain, you know. And you never you know, they have the option to be on a hundred and eight square feet of pasture, but you don't have any guarantee that what they're gonna need. So we don't we stopped on nutritional claims. Right. And also it it opens you up to all kinds of class action claims and there's all yeah, right. Okay. So So you're now You got hands.

40:52 And and on the farm, did you build any buildings at the time or was it just It was just twenty seven acres of land. That's a lot of land. And you were just It was just a huge pasture and you were just moving these trailers around. We got about we ended up with about four or five thousand birds on the pasture full time. And I had help that live there in trailers'cause remember there's a flood zone, so I had to make sure that if a flood came we could move it. We had numbers of floods.

41:15 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. Wow. And most of these floods for some reason happened at three in the morning. I was like and we were out there loading chickens and pulling them in my Subaru, the same Subaru that I used to deliver eggs to, you know, to the restaurants in. I'm pulling these trailers off the farm, you know. So you now are trying to get restaurants in interested. Some of them

41:39 M mostly it's it's hard, but You get in a couple of places, but you are also friends with John Mackie. It goes way back to when before he was a big success. You've known him since nineteen eighty four. I gotta imagine. You're like, John, can you know, can you Can you help me out here? Like I've got these great eggs. Let's get'em into Whole Foods.

41:58 I would never ask John to do anything with Whole Foods. Uh I just do it and do it. Okay. Wha why? Number one I I know that I d I wouldn't And I I didn't want to ask John.

42:07 Ever to Get my eggs into Whole Foods if I could help it. You know, that was not what I wanted to do. Uh I think he did get he did one time he actually he uh talked to He sent an email. Uh to somebody about it.

42:18 That I that that I was a party to. But other than that, no. But what I do know is that For decade. Or more. John. I c w was behind the scenes.

42:28 Never directly and but was very helpful in the background. Yeah. People knew that I knew John. But I met one of the um presidents of Whole Foods on a hiking trip we took together.

42:39 With John. And uh and 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 uh I was just restaurants at that point and uh you weren't even in the Whole Foods in Austin. No.

42:54 No, okay. Not anyone in the southwest at all. Okay. So this guy got a hold of me and I I shipped him. You know? Um half pallet of eggs. That's It was pretty funny because I had no idea even how to load a pallet.

43:08 I had a brand, I had a label. And the brand sorry, we didn't give me a guess. It was You called it vital farms. And uh I bought I had cartons and I had a little label and I had uh boxes. Uh and then they say they're gonna come pick up.

43:23 This many eggs and it had to be on a pallet. For one store in Chicago? No, for the district for the Chicago region. So it's gonna go into the four states. And by the way, it was probably One case for every one of the stores. Fifteen dozen.

43:39 Just how many eggs is that roughly? Yeah, probably three or f four hundred, five hundred eggs, something like that. So meanwhile we fly. the the guy was gonna come pick, so it was onto my farm. So the driver truck driver pulls up, there's probably a teamster and pulls in. And uh

43:54 He said, I'm here to pick up a pallet of eggs. I said Oh hi, great. Can you open the back of your truck? I said, Yep. Meanwhile, we're washing eggs by hand one at a time. Okay. And so we just had me and my little helper. We we got

44:05 Uh I started building I started putting one case at a time on the pallet. And I get it all. It's about three quarters of the way, Phil. And I'm looking around and like I'm out of eggs and I've needed like four more cases and so while I'm washing some of the eggs out of the f the real refrigerators here and and getting them in the cart and he's watching me with amazing. He's never seen this before. And then I'm still short.

44:25 So I run out to one of those little mobile units, the little trailers that had chickens in'em and lifting up hens and I'm grabbing warm eggs out and uh I get these warm eggs and I put'em in the carton. And uh and he's like couldn't believe it. And I and I finally had enough eggs. Done. And this is f forty five minutes later. And then I gr I grabbed, I had been to uh U-Haul and got this shrink wrap. 'Cause they told me how to be shrimp up.

44:49 And I'm walking around the back of this with this with this green shrink wrap on his truck on the semi. Shrink wrapping it. Shrink wrapping it. And then I jumped off and said, You're all set to go. He just like he looked at me and shook his head, shut his doors and drove off the farm on my little funky, muddy dirt road, and uh off he went. And that was my first Yeah. I was so happy.

45:14 I can't imagine. Here's my question, right? So These Initial eggs go to And I'm and this is two thousand eight ish around then.

45:29 And I'm I'm walking into a Whole Foods, let's say in a Chicago suburb in two thousand eight. I I go go by the eggs. And I see this one brand vital. Far.

45:40 You know, there's Oh, there's a Whole Foods brand and there's and and they are saying cage free and there's this one and Why would I even pick this. I mean I didn't know knew nothing about it. How how were people gonna Even know about.

45:54 What this was. Whole Foods C were amazing partners. They still are just an amazing partner. And they stepped up because the the thing that they do is they they really believe. in what we're doing. It's not just about the money. It's it's the it's the stakeholder model. And you know, they believe in what we're doing from an animal welfare standpoint. They believed in in that pasture better for you. So um Yeah, and so they did have great signage in the stores.

46:17 But I was only on the shelf for But three or four weeks and all of a sudden I got a call from the Bobby Turner, I believe is his name, he's the vice president and said, Matt, we've got a problem up here. But

46:28 The uh health department. in Indiana's taking all your eggs off the shelf. Mm. And why? So'cause your label's not correct. You didn't have

46:37 The size of the egg and three eighths inch type. You didn't have the grade a grade on it. It had to say great A and it had to say l extra large and Yeah. All that stuff. So they yanked him all off the shelf in all four or five states.

46:50 Chicago, Illinois, Wisconsin. Uh Oh yeah. Indiana. So they came off the shelf. So I didn't get paid and I had to go back and Hopefully it's very understanding.

47:02 And uh sure enough, instead of just saying, We're done with you guys Thank you. 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 a month and five weeks later we're back on the shelf. Wow.

47:15 So uh you had to re read to basically have everything Uh to standard. Uh I I I guess that Within a year

47:25 you also got another lifeline from Whole Foods, which is uh and they they ha I mean, at the time it was more like this. I think it's less like this now. they were really into local foods, like really and you could go to an individual whole foods and and we've heard these stories in the show and you could pitch The local manager. They you got a a a loan. They gave you a hundred thousand dollar loan. Whole Foods had a program.

47:49 to support local Food producers. It's like a low interest loan, right? It was f it was I think it was five percent interest. Um which at the time was was not low.

48:01 Uh yeah. But a hundred but uh but was a hundred grand in two thousand nine was that critical was that like life changing Money at the t at that point? 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. Um I really had you know financed this thing a hundred percent of myself. I had gotten owner financing on the farm itself. I really got the loan. Because I knew that what

48:26 What came along with that was even more support from Whole Foods. And I wanted them as a partner. Yeah, and we signed we never missed a payment, never laid on a payment. We paid it off exactly in time. And at the time they you know they had eleven regions of whole foods. There's almost no national purchasing.

48:41 Each region made their own decision. So You had five separate billion dollar comp or I'm sorry, eleven separate one billion dollar companies in essence, with their own presidents and their own buyers. So you have to do one region at a time. So so you so you were in the Midwest, so you were not Uh not yet Nat just out of curiousity, when did you

49:00 When were you in all the Whole Foods Nationally what year? That really didn't happen until two thousand fifteen or sixteen. Okay, so that would come many years later. Okay. So this is like two thousand nine and you are But There's demand for this thing.

49:14 And I have to imagine That you can't produce enough egs. On this twenty seven acre farm. In Austin, like the it's just you don't have the capacity.

49:25 For them. Cash even to do that. No, it didn't have the in plus not enough room. But you know it it a hundred and eight square feet per bird outdoors, you can do the math, it's that's that's a thousand birds per hectare. Hundred and eight square feet per bird is what

49:39 is what you would require. Correct. We worked with um. Certified Humane and other organizations to come up with the standard and we w adopted the European standard of a thousand birds per hectare, which is again one hundred and eight square feet per bird. But that's not Like if I start an egg company and I and I call it pasture raised,

49:57 Um just'cause I like that term. Is that regulated? Is that is that like a is it legal language or is that still not No one's gonna Know what that means. It's actually self regulated within the industry, but I see there's been a couple of times when people have broken that standard and they've gotten sued and they've backed off.

50:14 And so we have competitors that would love to call their ex pasteurase, but they call'em free range instead because they have Somewhere between two square feet outdoors. Which is one animal welfare organization standard. And so you can get a w you can get away with that, basically. Yeah. So you now have to you cannot make enough eggs.

50:32 And you had experience with franchising in the past and working with Partners. So I imagine you reach back into your

50:41 Your toolbox of of of having done this in the past and and you start to think, okay To scale this, I can't do this just on this farm. In essence, yes. So um the first thing I did is started I figure Stick around Austin, it's convenient.

50:54 And I started adding farms around Austin and basically a lot of work. Farms of existing egg farmers. Or individuals that wanted to raise chickens our way. Yeah. So uh I got after You know, about a year and a half of you know, trial and error in central Texas. Uh I got a farmer up in Arkansas that agreed to build

51:14 Purpose built. Yeah. Um pasture raised barns just for us. Okay, and this would actually be the beginning of of your expansion. where you would start to partner with dozens of like these small egg farmers across the country.

51:28 Um 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 gonna be, you know, have those orange yolks and they were gonna taste the way you want them to taste. And like how are you making sure that they were doing You want it.

51:44 We had to hire people uh to go out and 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 it our methods. And if we found out, for example, that they were not letting the birds out first thing in the morning. Because you know, uh then we let'em know that it's not gonna work. And uh with them or if they were the pasture didn't look great, uh we would Get with him on that, or you know.

52:06 We're much more sophisticated today, but back then it was it was early on and we were just Yeah. What I'm what I'm curious about is attracting these farmers, right?'Cause you're you you're Working with people who have al had already been raising eggs and selling eggs and people who weren't, but

52:24 I I guess the incentive for them was There was predictability, like you were saying to them, Hey, we're gonna guarantee you we're gonna buy your eggs at this price. Is that What you could promise. Yes, what we did is n not only we promised that, but

52:40 One thing we all knew, and that was, you know. In this country. Farmers always lose at the end of the movie. They just do. Yeah. And we wanted to take that out. So we also knew that

52:52 Routinely all the big Chicken companies. egg companies, beef companies. Break their contracts. when there was economically

53:00 Favorable for the for the big producer. To do so. The big brands. And um yeah. So we went in early on and decided we're gonna be different and we're we're gonna be not only different, we're gonna treat them like a full on stakeholder. And and was I mean, was it just

53:16 But basically, A combination of whole foods kind of promoting these eggs but and people discovering them that i you you were I don't even just they they were just selling? Yeah, we

53:28 We had a hard time keeping them on the shelf. Um people found out about'em. At first, you know, we were expensive eggs, you know, back then They were four ninety nine. Which you know, I was told by the the buyer head buyer of Whole Foods fur early on, no one will ever pay five dollars for a dozen ever. And um now they're like eight bucks, I think. Eight to ten. Yeah. Yeah. Yeah. But I had a philosophy early on that I stuck with forever since then. And it's real. I have to really keep explaining this to folks like

53:52 We never ever are going to pound our chest and see how great we are. And The the the key to that is if you tell people how great you are, your customers aren't gonna 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,

54:10 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. Well we come back in just a moment. How Matt Gets Inspired. Into art.

54:28 Stay with us, I'm Guy Raz, and you're listening to how I built this. Mm. Hey, 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 want a really strong operator that would do would you know really run the day to day operation. So I found a young man named Jason Jones, who is a uh he worked for Motorola and uh he came to work and uh you know, I gave him his second MBA, I call it. Uh he came to work for me. He never worked for a startup before. He um I sold him twenty percent of the business for two hundred thousand dollars. And uh And he knew nothing about farming?

55:24 Nothing. He was just interested in this idea. Yeah. So he you wanted him to come aboard. To do what? I mean he he had a business degree, but you also had a lot of business experience.

55:37 What was he going to Bring to the business that you need it. Um primarily he was going to do all the blocking and tackling if or hiring was going to take place, he did it. He'd, you know, get on an airplane and fly somewhere if we had to. Um he was um I was mainly doing I was fo I'm gonna be focusing on capital formation if we needed. Uh I wouldn't which I really didn't because we were I wanna make sure we're profitable right off the bat. So at the very beginning we're profitable every year.

56:01 I didn't want dilution. I had learned my lesson, you know, about dilution and It got diluted. uh their business by having to Operating a loss and Avenue to keep raising capital.

56:11 But um Yeah, he was h instrumental in working with our our new partners at Arkansas. Right. And and he could quickly learn enough about how to do this that he could go And also

56:22 you know, explain to these partners in Arkansas. What they needed to do. That's right. But Pretty quickly we bought out the Arkansas.

56:30 uh operation after a number of years. We bought out the whole their farmer network. And purchase them. 'Cause they had their own farmer network. They had built a pharma network for me. There were thirty farms at the time, I think. Yeah, in two thousand fourteen or fifteen we bought them out.

56:44 And uh And that's when the business really started to take off because we're able to much more strongly enforce our standards. And uh we built relationships with the farmers directly. Without a third party in between us, and that was a big jump for us. Alright.

56:59 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'cause most like cartons are It was green. It was green until Uh yeah. I love I've kinda fell in love with this chalkboard art you see at Whole Foods. You know, the Seems like every Whole Foods had a ch a chalkboard artist, you know, and they they put specials in the produce department and it was looked like it was really cool.

57:22 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 Hirschburg who's a Food of um Sure. Stonyville Farms. Stonyfield, yeah. Stonyfield. And we had met at a um organic trade association meeting in Washington, DC. 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

57:44 I got this little yogurt container about this big. Zill cups, you have this big piece of real estate in an eight cart. You have such an opportunity there and I I knew we did. And all labels were just boring. You know. Yeah. Egg cartons are boring. It's just it's just eggs. There's no information on it at all. Yeah. And I knew to get people to try your eggs. It wasn't just gonna be that hey, these are pasteuries, you know, chickens are well maintained or whatever. We you know, we take care of our chickens, we love our chickens, we call them girls, call them ladies.

58:10 But it had to be something more. And so We splurged on that uh label and we really turned that into a piece of art and people their eyes are drawn to our carton and that would and w we knew that'cause they're like little cartoon like drawing of an a of a chickens. Yeah. Like like grass and flowers. Then they start looking at it and you see all the different little messages. Fresh air, sunshine, it would stay on it. Yeah. It was great. And uh we knew that if anybody would just try an egg, same thing I learned when I when chefs were buying my eggs, right? An egg is an egg is an egg, right? Just try it.

58:44 Just try it. So I imagine that part of the I mean 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 was it capital intensive? I mean I I'cause I don't think you had raised money up until this point. We're talking about like Now twenty thirteen, twenty fourteen. In 2013, 2012, I was approached by an investment banker one in two.

59:09 Raise some money for us. And My experience with invest investment bankers in the nineties was Right out of that. Wizard of Wall Street the uh DiCaprio movie, yeah. Uh yeah, right. Uh it was uh that type of pump and dump kind of thing.

59:22 This guy was different and he said we only uh I only raise money through private equity funds that are uh 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 in what we're doing for the

59:37 Planet. And there's two hundred and fifty of these private equity firms and we hold conferences with them every year and and if you're interested in raising capital and I said, Well, I'm not interested in doing anything about a way, but What do you think I could sell? A little bit of my personal stock for.

59:52 And he he gave me a number like Companies worth that much. I was shocked. I said, Well, it's run a process. I've never had any money, personally. I've you know been blocking and tackling my whole life. I never Yes, I had been worth money on paper, but I had never actually had.

1:00:05 Any real money. And so he ran a process for us for us to sell ten percent of the company. And came in at twice the the number. That he had said. Wow.

1:00:15 For the first time I had. You know. some real money. I could do something with it myself, you know, buy a house and do some things. And the company didn't get any of that money. It was basically we sold s 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 that would

1:00:31 Valuation again. So I had sold about twenty percent of the company. I wanna I wanna focus on the in on something else just for a sec.

1:00:43 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 twenty nineteen. And the person who took your place is a guy named Russell Diaz Conseco. um who I I guess kind of worked his way up the ladder, right, to to become CEO.

1:01:03 Yeah. And Russell really. took the bull by the horn and he moved up from director of operations to COO and president and then And I decided I wanted to take the company public in two thousand nineteen.

1:01:14 We decided it was time for him to move to that title. Yeah. And The stakeholder model is strong in this company today, if probably much stronger. Than when I started. I walk into meetings and no one knows who I am. And I'll I'll hear a bunch of twenty somethings in a room full of all the marketing people that work for us now.

1:01:30 And they're they're talking about how what the impact could be on this particular stakeholder of doing something like this and like Love it, you know, they're they it's it's in the fiber, which is really wonderful. Well one of the things, right, that I'm sure you've heard and and will definitely hear from listeners is Like I buy your eggs, okay, I can I can afford to buy them. And it's it's a it's a price I am willing to pay because I like them and I think they're they're good.

1:01:54 Um but they are in some ma some cases two or three times m more expensive than Right. battery cage produced eggs. And

1:02:05 Is is it really just It is it just the price of doing business? Like it ha they have to be that expensive because Of how they're produced? Well it costs more. It's a lot more expensive to produce eggs humanely. We have to pay the farmers.

1:02:20 You know, they buy they get loans in 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 wanna make sure the farmers, you know, we take care of our farmers. We have five hundred and seventy five. At the end of last year, uh uh

1:02:36 Farmers. And we hold their feet to the fire advice on the other way around as well. What I mean d I mean how much of an impact would you would you Say that.

1:02:45 Vital Farms' hat on. On other farms and the way they raise their eggs. They're not. Well, we haven't changed I think the factory farming method, the you know, the c the battery cages are still there, right? But it instead of being ninety five, ninety seven, or eight percent, whatever it is, it's around fifty or so today. I don't have the exact numbers, but somewhere in the half. So we've had a pretty bad impact and three hundred and

1:03:08 Thirty million laying hands in? Um a hundred and fifty. Hundred sixty million of those are now no longer in cages. So it's been a big big change. You know,

1:03:17 When you started you weren't even a a a rounding error, right, in terms of how m how much you how much of the market you had. What what percentage do you estimate of the egg market. Do Spital Farms have today? Like five I think we're under four.

1:03:32 Under four, that's I mean, in a country of three hundred million people, that's huge. Yeah. Yeah, when you think about it, we're um we're in about uh I can't remember. Eleven million households, Jay, twelve million households. And and really, you know.

1:03:45 The company is grown every single year. And and uh 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 uh

1:03:59 I'm a largest shareholder, I always have been. Matt, you um you're only seventy. mean you know, with the with modern technology could live like thirty plus more years. Right. I'm just approaching middle age. Right. So

1:04:13 Uh 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 what do you think you want to do? And Yeah, what he thought.

1:04:28 I've started Four or five new companies this year. Oh wow. This past year. In you're like incubating them or you are literally you are starting to I mean we started blue zone kitchens a couple of years ago and then hit a twelve million dollar run rate in our second year of frozen entrees from the blue zones. This is with Dan Butner, the blue zones, right? Dan Butner and I and Scott Marcus, my former CMO of Vital Farms, is a CEO. And then um I have a

1:04:52 a a number of other projects they display. An aviation company. Like building planes or it's a charter uh air charter. uh service in I I can sit on a beach with a with a You know uh

1:05:05 My tire Margarita. Uh for about fifteen minutes. And then I want to do something fun and I find starting companies and building companies to be a lot of fun. And the

1:05:15 fortunately I've gotten a lot better at it than I was, you know, in my twenties and thirties and forties and fifties. You know, I've just gotten to be I haven't had a failure in years and you know, since Before really before the sailboat days, you know, when I Yeah. the lessons I learned as a captain. You know, I had to lead people every day.

1:05:33 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 to really Yeah. Serve.

1:05:45 And um Yeah, I I wanna be profitable. But at the same time I don't need to make a lot of money. How much of of of where you got to today do you attribute to to And how much do you think had to do with

1:06:01 Timing being lucky. I uh that's interesting question. If I looked at it, I think. I tell you what. Twenty years ago I would have said.

1:06:09 That's all me. Mm. And 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.

1:06:20 I realize that Everything I've earn gotten in my life is is result of Be lucky. You know, my fiance has a hat for me, so I'm Like this guy alive.

1:06:32 And If you think I was not born in the streets of Mogadishu. uh where with machine gun fire happening around my head. I was born a middle class family in the United States. Every single thing I've I've gotten in business has been a gift from other people in a way. My hard work.

1:06:47 Come some lessons people taught me about hard work. Every bit of my success has I could name the people, the situations and the the people that inspire me to do it the right the right way. So I would say. And one sense it's a hundred percent luck.

1:07:01 And from Yeah. Just being in the right place at the right time. That's Meadow Hair. Founder of Vital Farms.

1:07:11 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 Carrie Thomson with music composed by Ramteen Arablui. It was edited by Neva Grant with research help from Casey Herman. Our engineer was Robert Rodriguez. Our production staff also includes Catherine Cypher, Chris Massini, John Isabella, Sam Paulson, Alex Chung, Ramel Wood,

1:07:59 Nor Gill and Elaine Coates. I'm Guy Raz and you've been listening.

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