How one startup is transforming the flower delivery business
Josh Schachter is an entrepreneur, product executive, and is Advisor-in-Chief of 1–800StartupAdvisor.com. John Tabis is Founder and Chairman of The Bouqs, a leading online floral delivery service.
After living on the West Coast for nearly a decade (a streak my mother would prefer ends soon), I’ve learned that if you can’t be there in person, send flowers! And that’s why since 2013, The Bouqs has been my saving grace. And the quality of the company’s product is quite impressive, as my family can attest.
At nearly the same time I was making my move to California, John Tabis was planning his next one. And it involved disrupting the floral industry. He initially envisioned The Bouqs as a “flower service for dudes so that they didn’t screw up for their wives.” But guided by a fierce mission to foster sustainable and responsible farming, and shaped by John’s strategic acumen, The Bouqs has become so much more. Today, The Bouqs is LA’s leading flower delivery service. The company delivers tens of millions of flowers nationwide, employs 85 people in its Marina Del Rey HQ, and helps support sustainable farms for the betterment of the world. And after hearing from John Tabis directly, it is clear that there is much more on the horizon. The Bouqs’ drive to become number one has, of course, not been without challenges and can offer lessons for us all. Let’s hear from John and go “Inside the Pyramid” at The Bouqs.
Josh Schachter: Tell us about The Bouqs.
John Tabis: The Bouqs is a cut-to-order delivery flower service, and to enable that we are a two-sided organization. On the back end supply chain side, we’re vertically integrated to the farm, which means we have supply chain logistics capabilities, international capabilities, and technology that moves a product all the way from a farm to an end consumer. On the front-end, we have demand generation, technology tools, and marketing for individual e-commerce and subscription orders. Those create the two sides to our universe.
JS: When we talk about The Startup Pyramid, we always start at the top with the company vision. What has been the true north vision of The Bouqs since you started the company?
JT: Our formally written vision statement is to become the largest flower brand in the world for the betterment of the entire community, which includes the farmers, the florists, the consumers, and the planet. What we want to achieve is a world where every single flower is traced back to where it is grown and therefore every single farmer is held accountable for how they grow their flowers.
In today’s floral market, much like it’s been in produce for a long time, there’s a massive number of players and therefore a disconnect between the grower of the product and the receiver of the product, which is often not the same person as the buyer of the product. Our thesis at the beginning was that there are farms that are producing the right way (i.e. investing in sustainability and in their people) and there are farms that are not. And yet the customer has no idea how to distinguish which type a flower came from because of all these intermediary players along the way.
Our idea was that if we go back to the farm and deploy tracking and tracing technology then we can ensure that each stem is sold with a minimum of sustainability and responsible labor practices. If you scale that and become large enough, you become cheaper than the market, and you maintain better quality because you’re fresher, more efficient, and have less waste. If you can achieve this then at some point the whole market flips, and now all providers need to operate this way. Ultimately that’s what we would love to achieve.
JS: That’s a bold ambition. To create more traceability, lower cost, and to flip the market on its head. How has that forced your team to stretch beyond its comfort zone?
JT: The whole business model is stretching the team every day. Because we never lived any other reality, we never knew any other way of doing it. It’s not like our team comes from the floral industry. So it’s not like we’re flipping from the old way of doing things to the new way of doing things. But by definition it’s a lot harder to do things the way we’re doing them. For example, we could get flowers down the street by the LA farmers market. They’re perfectly good flowers. No one has any clue where they came from, but they’re decent. If you wanted to become a flower brand in LA you could just go to the flower market, fire up a website, get an order, and fulfill it. It’s a million times easier than trying to ship from South America like we do.
By definition we’ve made it harder on ourselves and on our customers by the way. Over the years we’ve been able to ship internationally, but that takes 5–6 days at the least to deliver. Then we launched North American farms which means you can get next day delivery. But not on Sundays or Mondays, because both Fedex and the farms are closed on Sundays. Our mission makes it harder on everyone, for a time. At some point we’ll get to a place where we have the capabilities, distribution, sophistication levels,etc., to eliminate all those hindrances; we’ll be able to deliver, fast, local, fresh, and nationwide 7 days a week. But until that time comes, we consciously make this tradeoff because we believe that our true north, our vision, is more important to the customer in the short term and will set us apart economically in the long term.
JS: Like the columns supporting the roof of any building, what would you say are the key pillars of your operations that are propping up your company vision?
JT: We have three core pillars that have enabled our company to grow: (1) Generate predictable revenue, (2) Be able to distribute ubiquitously, and (3) Create a foundation for expansion.
Predictable revenue is all about knowing when people will be ordering. There are lots of annualized events in our category (e.g. Mother’s Day, Valentine’s Day), which is very helpful.
Ubiquitous distribution means having a truly global supply chain. We have farms around the world, distribution centers across North America, and the next step for us is to be in stores.
In terms of expanding our foundation, right now The Bouqs is essentially a drop-ship gifting business. But a lot of the floral industry lies in weddings, funerals, and corporate décor and gifting. In today’s model we can’t do those things. We want to get there.
JS: Let’s pick apart one of these pillars and think through what metrics you’re using to measure your success and benchmarks.
JT: Predictable revenue is the easiest to walk through. The easiest way to generate predictable revenue is through recurring subscription. We know that 90-something percentage of subscribers are going to get an order next month. From a predictability perspective, subscriptions are the bomb. The key metrics are adoption rates, sign up rates, churn, LTV, AOV, all those different pieces rolled up together to represent the health of that business.
However, our business isn’t only subscription driven, and over time even more of it won’t be. For non-subscription revenues we use whatever metadata we have around past orders. For instance, let’s say you ordered for your mom’s birthday last year, and that’s coming up again. We know there’s a high likelihood you need to send something, and we know what flowers are likely to be sent for a mom’s birthday. We have data points around the occurrences of moms’ birthdays from people who have bought before.
JS: Early on how did you create your targets and your benchmarks for some of these core metrics?
JT: Early on we didn’t. With a small team and lack of resources having a basic understanding of the business was all that we could do. We were very, very, very basic. But that was ok because the business was growing at 6X. Over time we’ve focused a lot more on getting these things nailed down. Just as sophistication over KPIs has grown, so too has our planning.
When we launched The Bouqs we were going to be a flower service for dudes so that they didn’t screw up for their wives. We started putting out content on Facebook and no dudes clicked on anything. And then we put out pictures of flowers and a lot of women clicked on the content. We just put something out there and let people react to it. We tested it.
JS: Going back to your vision, you’re not going to flip the market on its head overnight. What are some of the stage gates and sequencing you’ve set for your company’s milestones?
JT: The reality is that we do what’s practical. When we started off at the beginning, we were very subscription-like without being a subscription service. We only had one price point at $40, we had no discounting, and we had no different speeds of delivery. It was the simplest version we could possibly build. You might ask ‘why so simple?’ One reason is it’s operationally easier to get off the ground. It’s way easier to have one box size and one price point. And the second reason is we wanted to wait and see what people asked for. So we started with a single SKU product and just waited for people to ask us for other stuff. Their input guided us on what was important and what wasn’t.
JS: Sounds like your initial stage gates were two things: (1) to demonstrate that you were able to operate, and (2) was to learn.
JT: Yes, exactly. The next stage gate was ‘how do we build a well functioning company? How do we get to a place where we have clear operating modalities, processes, KPIs, and team culture?’ It took a while, but we eventually got there.
2020 and beyond is about layering on top of what we already have. We define this by both geographic expansion and by expansion into additional service channels. We’re at the beginning of this phase.
JS: How do you and your teams manage the day to day work plan to make sure that everything everybody is working on is mapping back to your goals and pillars?
JT: We’ve done a good job of having different operating themes each year (last year was all about educating the customer). Our themes break into projects which then break into day to day tasks and ownership.
JS: Let’s shift the conversation to culture, which we say is the bedrock that allows companies to have everything else in place. Can you describe The Bouqs’ culture?
JT: The Bouqs is in a really great place right now. We have a culture that is driven by kindness and love, which can be very helpful to a performance culture, but also hinder it. That’s a really weird thing. I’ve seen in past years at times it’s been like an albatross, a weight around us. Because often what was most rewarding was the caring but not the execution or performance. Where we are now is a really nice balance of the two. We have really kind people. But at the same time we’ve gotten much better about being on top of our stuff.
JS: Lastly, what are some of your cultural values?
JT: We have five values that are core to our culture:
- Community Matters
- Straight Talk and Collaboration
- Get Things Done
- Accountability
- Genuine Engagement in the Mission
Let’s talk about the first one, Community Matters. We are in this to build a win-win for ourselves as employees and shareholders, for our centers and recipients, and for the farmers themselves. We don’t want to be gaining business at the expense of any stakeholder. So as an example, early on during COVID, the floral industry got crushed. All events were canceled and a lot of demand had fallen off. A lot of farmers have been in a rough spot. If we were thinking non-community centric, we could have chosen to squeeze them and grab every penny and cent. Instead, we said our pricing will stay exactly the same, we’ll do nothing, because we want them to stay with us.
Another important one is Get Things Done. There’s the classic ‘get shit done’ but ‘shit’ didn’t really feel like it belonged in our broader view of the world. Technically though, it is fertilizer. Originally we called it “passion” or something like that. But really it’s about just showing up every day. Wanting to be a part of what we’re doing. As you get more experienced you can tell if someone’s really in or if they’re just ‘kinda there’. And ‘kinda there’ doesn’t cut it. I use the analogy of a big boulder on the side of a mountain. If you have nine-tenths of the team standing under the boulder pushing it up, but 1 person on the team standing on top pushing it down it’s going to make things much more difficult. Everyone has to be pushing the boulder up the hill.
‘Inside the Pyramid’ is a blog series created by Josh Schachter, author of How Teams Can Outperform Using the Startup Ops Pyramid. In this series, Josh sits down with founders and entrepreneurs of leading tech companies to discuss the systems they’ve applied to successfully grow their business.
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