Breaking the Wheel: GreenMaven, Food Hubs, and the Heartbreaking Story of Relay Foods

Chris Newman
Feb 18, 2017 · 7 min read
via Supermarket News

When my farm was first starting up in 2013, the farm-to-table community around Charlottesville was all abuzz about a promising local startup called Relay Foods. This was an online grocery store that, at least initially, sourced foods almost exclusively from farms in Virginia with the idea that “the farmers [are] the celebrities promoting their foods, as it should be.” Relay would just be the thing that brought the farms and the foodies together.

At a farmers’ conference in our county’s administrative building, a Relay rep reiterated this point about farmers being the center of the story, and even announced their new website would give each farm its own page to talk about its story and its products. A childhood friend of my wife’s was involved with the company at a very early stage and talked about it very convincingly. The company was attracting scores of young, idealistic employees committed to the idea of local agriculture.

I was cautiously optimistic until I actually visited their website. Two things set off red flags:

  1. The company was funded with for-profit venture capital (eventually to the tune of over $14 million)
  2. Products from local farms — like pasture-raised free range eggs — were competing head to head with factory-produced crap like Eggland’s Best

Relay’s rank and file was filled with passionate people, several of whom I knew personally to have a fanatic commitment to local. But the nucleus of decisionmakers was stocked with venture capitalists and serial entrepreneurs.

This prompted me to write an article that included a prediction of the Relay’s fate. Specifically:

Online grocery stores, even the Local-oriented ones with the big green truck [Relay Foods], are consolidators with investors to consider (that’s how they got the big green truck). Right now they’re fairly small and don’t have enough customers to force farmers to take their prices, but one day and with enough customers, they will. Perhaps they won’t apply the squeeze when they’re able, but capitalism’s record of self-restraint is not encouraging.

That was written three years ago. Fast forward to January 2017, and this happens: Relay Foods merges with regional distributor Door to Door Organics, shutters its Charlottesville warehouse and lays off nearly 50 now-disillusioned employees, moves its warehouse to Pennsylvania, and leaves just about any farm that isn’t already working with a distributor (which would, of course, be practically all of them) in the lurch.

And So It Was Written.


The Problem with Food Hubs

via wiseGEEK

Physical food hubs are not the vehicle for bringing local food to the mainstream. Why?

There are two types of food hub: for-profit and non-profit. What they have in common is a need for physical infrastructure — warehouses, trucks, etc.

For-profit food hubs pay for this infrastructure with investors who expect to get plenty more than just their money back. This means the food hub will be pressured (or forced, depending on the cap table) by investors to grow market share as efficiently and quickly as possible. That’s why the inclusion of Eggland’s Best and other brands like it was such a red flag — it was a clear indicator that Relay would expand its market share not by doing the hard work of evangelizing Local food to more people, but rather by feeding them from the grocery store and, implicitly, forcing farmers to compete with their prices.

Less generously, it telegraphed that whoever(s) drove the strategic decisions at Relay wasn’t a true believer in Local; instead, Local was just a marketing hook and perhaps a way to distinguish itself from Instacart or Amazon Fresh. If they were willing to make this compromise, then they would make another: cutting the legs out from under all but the largest suppliers in the name of improving its metrics, but retaining just enough of them to maintain that “local” hook. But the end game was to either go national or attract a buyer, not to proliferate local food.

Non-profit food hubs have a different problem. They have all the same infrastructure requirements of the for-profits, but nowhere near the same ability to raise money. And so farmers’ emails — including the few I’ve sent — to NPO food hubs are usually met with “sorry, not accepting new suppliers at the moment” responses unless they get lucky and call at exactly the right time. The story is much the same with popular farmers markets, and for much the same reason.

So there we have it: the for-profit food hubs eventually sell out by necessity, and the non-profits have their hearts in the right place but can’t scale. The common denominator? Physical infrastructure.


Beyond the Hub

HBO

I was too cheap to upgrade to the version of Quickbooks that included inventory management. So one day I wrote a simple app to enter inventory as received from the abattoirs, and mark as gone when it sold. It didn’t take long to realize that, if the other farmers near me used the app, we’d have a real-time snapshot of all the locally-grown food available in any given area.

And so GreenMaven was conceived.

The idea is simple: farmers enter their products, eaters enter their grocery lists, GreenMaven’s algorithms match them up and aggregate the orders into itineraries that anyone — college students, retirees with extra time on their hands, customers, but most likely the farmers themselves — can get paid to hop in their car and fulfill.

It works out for farmers because they don’t have to take deep price cuts so a hub can maintain the cost of its infrastructure. The products are delivered to the customer with the farm’s own branding (and any other marketing they want to include in the package). New farmers can enter the market easily, unconstrained by waiting lists attached to physical hubs and markets. And — very importantly — the farmer continues to have a direct relationship with the customer.*

It works out for consumers because they don’t have to pay the markup imposed by the hubs, or wait for the hub’s delivery or pickup date, or wonder if the hub is being honest about its sourcing, or hope their farmer’s market (another kind of hub) will a.) be open, b.) not get rained on, or c.) not be sold out of whatever groceries they happen to need. Best of all, groceries could be delivered within hours on any day of the week, eliminating one of two big competitive advantages of B&M markets like grocery stores.

In this model we move beyond the food hub, shrinking down the middle man from a bloated mass of physical assets to a set of algorithms that can be deployed anywhere in seconds.

*This last point is absolutely critical. Relay’s farms often pushed business to the hub in the interest of making things easier for both themselves and their customers, but did so at the expense of their direct connections to those customers. This left them extremely vulnerable in the event Relay went belly up or, as happened, sold itself and exited that farm’s market. The hub’s orphaned suppliers would have to go recapture those customers all over again; and the orphaned customers would have to go farm shopping.


Community Supported Agriculture. For Real, This Time

GreenMaven’s biggest promise, the one that serves the true social purpose that drove me into farming in the first place, was left out of the discussion above: GreenMaven turns production, rather than distribution, into the bottleneck. Let’s explain why that’s a good thing.

With physical hubs, there are always too many farmers for the hub’s infrastructure to handle, even while the overall demand for local food relentlessly outpaces the overall supply. But with an algorithmic hub like GreenMaven, producers can enter as they like. This creates a triple shot of choice, fair price competition, and convenience that opens up the market to way more consumers than any physical hub could hope to capture. Demand will overwhelm the local supply, but GreenMaven’s growth isn’t tied to buying more trucks and renting more warehouses. Instead, it’s tied to the 30 seconds it takes to spool up more compute/storage capacity on AWS. And it’s tied, initially, to the number of farmers in the system.

That last part is a good thing, because it’ll drive more growers into the market. And those growers will include not just professional farmers, but home gardeners and other hobbyists who always wind up with more stuff than they can eat or give away. This creates a virtuous cycle where growers and eaters chase each other into a hub whose growth is restricted not by its ability to raise capital, purchase equipment, and leverage economies of scale, but solely by the number of growers and eaters who want to participate.

In this system, farmers and consumers — the collective of the food community — are not just the stars of the show. They run it.

  • Farmers and customers interact directly.
  • Growers and eaters, big and small, can all participate.
  • Prices reflect farmers’ costs and what customers will pay — not the cost of the hub’s infrastructure, branding, and investors’ expected ROI.

GreenMaven just runs in the background to make sure all the above is nice and easy for everyone. It enables communities to run their own foodsheds. And it could be the biggest contribution of digital tech to community-supported agriculture since the invention of e-commerce websites.

Imagine!


GreenMaven’s alpha project is launching this Spring in Charlottesville, Virginia. A beta will follow in Washington, D.C. With success, we’ll be able to bring markets online all over the country. We’re hoping to do this without venture capital — instead relying primarily on crowdfunding and donations.

Stop laughing. Please clap.

Support the project at Patreon! GreenMaven’s informational site will launch the week of 2/20/2017. Interested in working with us to break the wheel? Email chris@sylvanaqua.com or visit our GitHub.

NewCo Shift

Covering the biggest shift in business and society since the industrial revolution

Chris Newman

Written by

Working toward a sustainable future with Sylvanaqua Farms, the Accokeek Foundation, and GreenMaven. Support it all here: https://www.patreon.com/farmermang

NewCo Shift

Covering the biggest shift in business and society since the industrial revolution

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