Mark Stambler had just put a batch of bread in the oven when he got the news. It was August, and Good Eggs — the startup that’d been delivering his award-winning, organic loaves throughout Los Angeles for more than two years — was shutting down service in the region, effective the next delivery day, the email informed him. It would also pull out of Brooklyn and New Orleans and lay off nearly 140 employees, out of a workforce that was once more than 300. It had grown too fast, the company admitted, and was making mistakes.
Mark Stambler
Stephen Zeigler
Stambler’s operation, Pagnol Boulanger, is just him and a part-time assistant working out of Stambler’s Los Feliz home. He even stone-grinds the flour for his traditional French sourdoughs himself. He is, in other words, exactly the kind of producer the delivery startup wanted on its roster: homespun, high-quality, authentic, small. And Good Eggs, the 62-year-old baker said, “frankly seemed like a godsend. There’s no way I could have distributed my bread to all the people who live in the greater Los Angeles area.” Customers could go online and order groceries from a number of local producers, and four times a week, Stambler would drop off his signature loaves, still warm, at Good Eggs’ warehouse in the morning, to be delivered by company employees that day. No longer.
Good Eggs was founded in July 2011 in San Francisco. The two software developers behind it wanted to build an efficient way for small farmers and producers to reach consumers who were interested in fresh, beautiful ingredients but didn’t necessarily have the time to hunt them down at a farmers market or a grocery store (which probably wouldn’t carry them to begin with). It was a promising idea, well-positioned at the white-hot Venn-diagram center of some of the biggest themes in tech right now: tech-enabled on-demand delivery, food, eye-popping funding rounds. Good Eggs started operating on a limited basis in the Bay Area in 2012, and by the end of the following year, it had expanded to full service there, opened three additional hubs around the country, and was on its way to hiring hundreds of employees. To date, it has raised almost $53 million in venture capital.
But by Good Eggs’ own admission — and as Stambler’s sudden email indicated — building the business was immensely, unexpectedly difficult. On-demand delivery, perishable inventory, strict regulations, fluctuating prices, and city-specific quirks added up to a host of logistical challenges that can’t always be neatly predicted or solved by software. At the same time, Good Eggs is up against a slew of rivals: Ingredient- and grocery-delivery startups like Blue Apron, Plated, Instacart, HelloFresh, Gobble, and FreshDirect; precooked meal services such as Seamless, Caviar, and Sprig; and behemoths like Amazon, Google, and Uber, which are getting into food delivery with a massive infrastructural head start. In other words, the company was seeking to enter an enormous industry with a uniquely convoluted supply chain and a history that’s literally as old as farming itself — and it was hoping to do so rapidly, in the face of heavy competition.
The business of disrupting food is hard. The business of disrupting anything is hard.
Good Eggs, for its part, says it’s committed to sticking around and eventually expanding again, having recently introduced original recipes and faster delivery. This month, it replaced its co-founder and CEO, Rob Spiro, with Bentley Hall, who’s been working in the food industry for about a decade. The company may well survive.
But its August stumble is illustrative, not just for the Blue Aprons and AmazonFreshes of the world, but for any company hoping to make big changes in the physical world. The business of disrupting food, as Spiro and Stambler and Hall all surely now know, is hard — but the truth is, the business of disrupting anything is hard. Tech utopianism and Silicon Valley success stories like those of Uber and Airbnb have taught a generation of would-be entrepreneurs that turning an entire entrenched industry on its head is as easy as combining a smart idea, good intentions, seed money, market research, and elbow grease. But Uber and Airbnb are the exceptions rather than the rule, and Good Eggs’ tumultuous history to date is an object lesson for the entire on-demand tech economy, a reminder of what can go wrong when a startup tries to grow too big, too quickly. Move fast and break things is as good a mantra as any for a software company, but maybe not for an industry in which when moving fast means upheaving a centuries-old system nearly overnight, and when those breakable things aren’t zeroes and ones but potatoes and eggs.
Before Good Eggs existed, Spiro spent a year after Yale University harvesting heirloom tomatoes and eggs from pastured chickens on a family friend’s farm in the lower Hudson Valley. He still speaks of the experience in the devotional language of a convert.
“When you see that firsthand on a farm, you realize very viscerally how transformative it is for your health, for the land, for people eating it, for the community that builds around it,” Spiro told me in early November, when he was still the CEO. We were on the top floor of Good Eggs’ 56,000-square-foot warehouse, which is physically part of, though not affiliated with, a produce distribution center in San Francisco’s blue-collar Bayview neighborhood. Below us were walk-in coolers full of cauliflower and squash, shelves of pasta and crackers, and employees driving off with the day’s final deliveries, packed in Good Eggs’ signature brown grocery bags.
“It’s just, like, plain and simple better for everybody, better for the world, and the food tastes a lot better,” Spiro added. “Once you realize that, and have that aha moment about where good food comes from and how it’s grown and made, it’s very hard to go back. And if you want to eat that way and you’re living in the Bay Area, it’s relatively easier than it is in other places, but you still have to hustle to get the best kind of food.”
A few years would pass before Spiro returned to agriculture. In 2007, he co-founded Aardvark, a social search site that was acquired by Google for a reported $50 million in 2010. Spiro worked as a product manager on Google+ for a year before leaving to start Good Eggs along with Alon Salant, who’d helped found the web and mobile development firm Carbon Five.
Food is a massive industry, one that generated $643 billion in sales in the U.S. alone in 2013; that estimate doesn’t include restaurants and bars, which contributed an additional $543 billion. Salant and Spiro sensed that customers wanted more convenient ways of getting it. Although e-commerce has traditionally made up a small slice of grocery sales, a recent Nielsen survey of 30,000 people worldwide found that one-quarter were ordering groceries online, and more than half were willing to do it. The duo also saw that consumers were becoming ever more health-conscious and placing more value on unprocessed foods. Between 2004 and 2014, the number of farmers markets nationwide skyrocketed from 3,700 to 8,300, according to the U.S. Department of Agriculture.
Good Eggs is right at the nexus of those trends, a clear product of the Bay Area's food culture and tech ethos. What further sets it apart is an emphasis on customer choice. Instead of physically visiting a single farmers market, or accepting whatever happens to be available in a community-supported agriculture (CSA) box, Good Eggs shoppers select from a cornucopia of goods from a variety of producers: gluten-free bread, grass-fed beef, raw milk, wild sea scallops, pies, organic cranberries and kale, all showcased in lust-inducing photos on Good Eggs' website. “Our intent is to replace your trip to the supermarket,” Spiro said.
After months of research, Spiro and Salant held their pilot launch party in July 2012, on the streets of an open-air farmers market in San Francisco’s Mission District. It expanded delivery to the entire Bay Area in February 2013, then opened shop in New Orleans and Los Angeles in June, and Brooklyn in November. In 2014 alone, the company’s producers tripled from 300 to almost 1,000.
Good Eggs designed its business to ease the burden of billing, delivery, and marketing for producers. Its software compiles orders and customer information for food-makers, and, internally, the company uses data-driven algorithms to predict how much of a product will be needed on a certain day. (Until recently, Good Eggs delivered orders two days after they were placed.)
Spiro said this system is “10 times more capital-efficient” than that of a typical grocer, mostly because it dramatically cuts down on the problem of “shrink,” the industry term for produce that’s delivered to supermarkets but ultimately isn’t sold. One study estimates that 12 billion pounds of fresh fruit and vegetables annually go to waste this way in the U.S.
One of Good Eggs’ first L.A. producers was Stambler, who’s been baking bread at home in Southern California since 1977. In early 2013, before the L.A. hub was even up and running, the general manager invited him to bring some loaves to her home. As they discussed the concept over mouthfuls of fluffy sourdough, he was sold. “When they told me … they were going to market my bread, and get it out to customers, and collect payment from them, and deposit it in my bank account with no effort on my part, I was just in heaven,” he said.
The praise came almost as quickly as the growth. The New York Times’ Jenna Wortham raved, “There’s just one word for the food from Good Eggs that successfully made its way into my kitchen: phenomenal!” Wired declared that Good Eggs “is here to provide the much-needed tech and software support to the local food movement,” and famed Bay Area chef and “slow food” movement pioneer Alice Waters endorsed it. Forbes put Spiro on its “30 Under 30” list in food and wine in 2014. USA Today nominated the company for Entrepreneur of the Year.
Stephanie M. Lee / BuzzFeed News
Time and again, Good Eggs’ leaders cast it as an agent in a broader movement. Consumption, they said, was not just financial and physical, but emotional — political, even, in that it said something about your values. “I love that, the concept of being empowered by what you consume,” Max Kanter, a community manager who helped launch the L.A. hub, told the culinary magazine Life & Thyme. “It’s really easy to go into a grocery store and be bombarded by marketing to feel empowered, but the products you’re buying are coming from all over the country. With Good Eggs, you can come to events and meet people, you can e-mail the farmers. We provide a connection you don’t get when you go to the grocery store.”
Along the way, Good Eggs sold investors like Index Ventures, Baseline Ventures, and Sequoia Capital on its vision and raised $52.5 million, according to the company. And Stambler was pleased with the company, which generated a steady and increasing percentage of his monthly income — 20% by the end, or about $240 for 60 loaves. He so enjoyed hanging out with the rapidly growing staff that he routinely baked them an extra loaf. He’d unload his deliveries at a 9,000-square-foot facility in a former Hostess bakery by the L.A. River; as large as it was, the staff was planning to move into a space more than twice that size — 20,000 square feet — within the same building. In a room that once churned out processed sweets, there were now young people lounging at desks and couches, working on their MacBooks by lamplight, and chatting about local food all day, Stambler recalled. This was a group who loved what they were doing.
In L.A., the trouble began, as it so often does, with traffic. The city’s perpetually clogged highways are a secret to no one, including Meg Glasser, who in the spring of 2013 was the first employee at the hub, and, eventually, its general manager. Still, she didn’t grasp just how bad the congestion was, or what it would mean for simple decisions like which day to do Good Eggs’ initially once-a-week deliveries on: Wednesday.
That was the day of the popular Santa Monica Farmers Market. Good Eggs would take orders online on Sunday and Monday, pick up produce at the market Wednesday morning, and bring it to customers that day, so it was as fresh as possible.
Stephanie M. Lee / BuzzFeed News
As it turns out, Wednesday mornings are among the worst times to drive in L.A. (although Friday is technically the all-around worst), according to an analysis by traffic data firm INRIX. Glasser’s team quickly discovered how hard it was to traverse the sprawling region to make a delivery window of a few hours. Good Eggs eventually stopped picking up food from the Santa Monica market, but “even two years later, Wednesday was always our biggest day because our original customers came on Wednesday,” Glasser said. “It created future challenges for us that we could have never anticipated.”
Why didn’t someone at headquarters better research traffic patterns before L.A. took the plunge? Glasser appreciates that she and her staff had freedom to experiment with new ideas, like delivering to the downtown area by bike. But “there probably should have been more guidance early on,” she acknowledged. “The model really should probably be honed in — I wouldn’t say perfected, but honed — before you expand to other cities.”
Other hubs had their own region-specific challenges — like climate. “California can grow lettuce more or less all year long; their climate’s much milder,” said John Bartlett of Bartlett Farm, a flower, produce, and egg farm north of New Orleans. But the South’s more extreme temperatures mean farmers there have relatively short windows to produce a lot of quality food.
Unpredictable day-to-day weather also complicates life for growers like the Lancaster Farm Fresh Cooperative, whose produce was on Good Eggs before it actually came out of the fields. “From the time they order it until it’s harvested, there could be a rainstorm,” said Nick Tyrrell, the former New York City sales representative for the Pennsylvania collective. “Even an inch of rain can really affect the harvest for the next day.” When farmers couldn’t provide the promised goods, Good Eggs would have to quickly track down substitutes or refund customers. “Whenever companies come into this sort of model and don’t already have a background in it,” Tyrrell said, “they don’t really grasp how often things like that can happen.” (Good Eggs spokesperson Ally Khantzis said that when it became clear that not all food could be locally sourced year-round in New York and Louisiana, those operations would use produce from other hubs in the off-seasons.)
And then there's the other, bigger, more existential question about Good Eggs: In a place like Brooklyn, is there a real need for it? “There’s already a food culture there and there’s so many other outlets to get stuff in people’s neighborhoods," Tyrrell said. "There’s not really any reason to have it delivered to your house."
Stephanie M. Lee / BuzzFeed News
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