It will be interesting to see (i) whether this business model, which is effectively fair trade for organic farmers, becomes profitable and (ii) if it does, how long venture capitalists will acquiesce in the generous returns to suppliers. >>>
This Entrepreneur Thinks His Startup, Farmigo, Will Kill Off Supermarkets
In the not-too-distant future, says Benzi Ronen, founder and CEO of Farmigo, consumers will use mobile phones to order non-perishables like toothpaste and toilet paper from Amazon and then buy their fresh food–from “humanely raised” lamb chops to “locally foraged” ramps–from his six-year-old online grocer based in Brooklyn, NY. Using technology and community-organizing techniques borrowed from the Obama campaign, he is building a network of Farmigo reps who are spreading the word throughout their neighborhoods and distributing food at weekly pick-ups. Farmigo operates only in New York, New Jersey and parts of northern California, but Ronen, 44, believes he can take his model to all 50 states.
Ronen: Farmigo is a for-profit company. But we became one of the first Delaware Benefits Corporations. We changed the bylaws of our company so we’re not just about returning shareholder value, but also about maximizing the gains for our partners, who are farmers. The farmer gets 60% of the dollar you pay as a consumer. Our organizers get 10% and Farmigo gets 30%. That’s unheard of in the food business where farmers get 20%. When our investors say, “Let’s ratchet that down,” we say,“This is about making money” — because if our partners are healthy, then they’re going to bring more of their friends to you.