FRIDAY NIGHT MUSHROOM GROWS: THE HEALTHY KIND
The two took the intensity, time and focus they planned on applying to conventional careers to farming mushrooms. “We thought, let’s bring all of that energy we thought we’d use in banking to solve food,” says Arora. While all of their friends were going out on Friday nights and enjoying the waning moments of undergraduate life, Arora and Velez stayed in and focused on mushrooms.
On one Friday night in particular, Arora recalls waiting outside the local Peet’s Coffee for Velez to pick him up in a borrowed car. “I’m on the corner with these two trash bags full of coffee grounds over my shoulder and my friends are walking by saying, ‘What in the hell are you doing,'” Arora laughs.
Velez and Arora spent the first eight months after they graduated figuring out how to scale from a “bucket of mushrooms to a commercial operation,” in a 300-square-foot warehouse next to the Oakland International Airport. “Everyday we were knee deep in coffee grounds, collecting and planting,” says Arora. Soon they were growing 500 to 600 pounds of mushrooms a week and selling at farmer’s markets, grocery stores and restaurants. Then, they began inviting people to come tour the makeshift farm.
“We started realizing people touring our place were far more interested in how we were growing rather than what we were growing,” admits Arora. “And they were asking to take bags home to grow their own at home.”
FROM A MUSHROOM GROW KIT TO AQUAPONICS TO CEREAL
And so the first product, the mushroom kit, was born. It allows consumers to grow their own at home. Next was the water garden. A three gallon tank, the water garden is a mini aquaponics system–fish, water, herbs and all. “What we realized early on, doing the farming ourselves, is this pendulum has swung so far,” explains Arora. “Our grandparents and their parents knew where their food was coming from. They were canning it. They were making it. Two generations later, we have no clue where anything comes from.”
The company received a lifeline of an investment from an Oakland-based nonprofit investment organization called Fund Good Jobs and had piled up about $150,000 in business plan competitions. They took out credit lines from local banks. Still, they needed more. So they took to Kickstarter, with a campaign goal of $100,000 in 30 days. They eclipsed it, raising just under $250,000 in funding and another $250,000 in pre-orders for their water gardens. The pendulum seemed to be switching. Small-scale home gardening was the rage. Almost simultaneously, they took the minimalist and natural approach to cereal, creating the stoneground flakes, made from five ingredients.
“We don’t need to invent new foods, we just need to take it back to how it used to be,” believes Arora. “Cereal itself is a $10 billion category and the major players are taking year-after-year 4% and 5% losses. That’s a lot of space for new players.”
AN OPPORTUNITY TO BUILD THE ‘NEXT FOOD BRAND FOR OUR GENERATION’
And now, almost seven years since the fraternity kitchen, Back to the Roots is one of those players. They’ve grown from two to a team of more than 20. In 2014, they generated $4.6 million in revenue and hoped to double their sales for the year just ended. They’ve gained investments from TOM’s shoes founder Blake Mycoskie, former CEO and President of Stonyfield Farms, Gary Hirshberg and John Foraker, a fellow Haas grad and the current president of Annie’s organic foods, among others. They’ve expanded from selling mushrooms at local farmer’s markets to selling five different products in 10,000 distribution points including Whole Foods, Home Depot, Target, Costco, Safeway, Kroger, Petco, Nordstrom and Amazon. Most recently, they’ve raised a $5 million seed round.
“We see this opportunity to build the next food brand for our generation–what Kraft was for our grandparents and the first wave of natural food companies were for our parents–the Stonyfields and Earthbound Farms,” says Arora. “What’s that brand going to be for our generation? For us, it’s going beyond organic. It’s radical transparency. Knowing where your food came from, who made it and how it was made. Whether your growing your own food or just eating it, the same principles should apply. You know where it came from and who made it.”
Despite the substantial growth, the two founders are remaining true to their roots of creating a sustainable and personal connection with food–and the connection to their Berkeley background.
“As much as we’re in food, that finance and business background has been instrumental,” insists Arora. “The disruption of food is happening–and it’s fascinating to watch the diversity of folks–especially from this generation–saying we have to fix this food system.”