Gupta went from selling colored pencils to fellow 2nd graders to selling boxes of healthy food to millions of people nationwide. A venture capitalist turned entrepreneur, Gupta started NatureBox in 2011, launched in 2012, has raised $28 million and completed a million orders last year (according to TechCrunch).
Gupta answered questions at a Startup Grind event in the AOL office on Tuesday, September 30 and through talking about the struggles of starting his monthly snack service and raising capital, delivered some good advice for growing startups.
Comfortable VC to hustling entrepreneur
After a few years working at General Catalyst Partners, Gupta realized he wanted to join the other side – the startups. Gupta had always seen himself as an entrepreneur. He had businesses ventures when he was young, like the colored pencil industry, and was inspired by his grandfathers, both entrepreneurs.
“I loved the process of trying to build something or make something from nothing,” Gupta said.
A food lover who lost 70 pounds after learning about nutrition, Gupta wanted to get into the online food space, which he saw as a potential growth market. People spend 6 billion on food each year, yet only 2 percent of that is spent online, he said.
“One of the things we were really excited about was, what happens if the 2 percent of food that is transacted online becomes 10 percent, and how do we improve that,” said Gupta.
Gupta and his college roommate, Ken Chen, decided to start NatureBox, a website which manufactures its own healthy snacks and sells snacks in home-delivered boxes through a monthly subscription plan.
It didn’t start like that though.
Starting the startup - a website, big-box stores and lots of boxes
“We started very scrappy – we had no idea what we were doing,” Gupta said.
When Gupta and Chen began NatureBox, they were both working other jobs, so they mainly worked nights and weekends. Gupta calls Chen a good co-founder because they already had a friendship, so they were open each other and started with a clear understanding of their individual responsibilities.
When they decided to get serious, they holed up in an office and agreed to launch at the end of four days.
They went to the Santa Monica farmers market for ideas, bought nuts, took a picture and stuck it on the landing page of a very simple website. Surprisingly, 100 signed up for a product that didn’t yet exist.
The two stocked up at Costco, put the snacks in a brown bag, stuck on a NatureBox label made with Staples supplies and shipped them out. They did this each month, even when orders grew to 1,000 and they had to enlist their friends’ help to pack boxes from an apartment.
Eventually they sourced manufacturers.
Pitch til you get a “Yes”
Even the firm Gupta worked at rejected his pitch (at first!). He said the months of negative businesses meetings wore him and Chen down, but they kept going until they got their first yes.
“We realized we were at the beginning of a long journey where a lot of people would tell us we were crazy,” Gupta said. “Nothing had changed about our ability or commitment to be successful.”
That first yes turned everything around, he said, making it easier to get funding from other sources.
His advice to get to that first yes was to pitch to investors that would be interested. He didn’t change the food aspect of his business when investor feedback was that they did not want to enter the food space, he just pitched different people.
Gupta said investors, who often watch markets all day, tend to lag in identifying growth trends – they weren’t interested in food a few years ago and now they are. (General Catalyst eventually invested $2 million in 2012.)
Building a strong advisory board helped Gupta reinforce his pitch, he said, because it proved he could build a business, and also added people with other realms of experience to the team. He warned to “run away” from advisors that want something in return upfront, like equity. They should help because they genuinely want to get involved. He suggests talking to them once every month or every other month, getting them engaged and giving them goals and specific tasks to help with.
What’s cooking now at NatureBox?
The company has experienced rapid growth in its two years. Now the company manufactures their own food, sells snacks to corporations to feed employees and seeks expansion and more charitable ventures.
As for the transition from VC to hands-on entrepreneur, he said working in a startup is much more team-oriented than a capitalist firm. In building his business, he also had to do everything himself – hiring, setting expectations and creating a culture within employees.
He said when hiring, choose people that have a good attitude and can deal with the roller coaster of starting business.
He admits to having made many wrong decisions, and said no business has a perfect story. Today, he is still working on improving customer service and retention.
“I’m a big believer that you can never optimize everything about your business,” Gupta said. “You have to start out understanding and being self-aware that some parts of your business are going to be sub-optimal.”
Even so, I’d have to say it seems NatureBox is doing pretty well!