Yet another VC funded tech start-up that is trying to be a ‘good food’ middleman goes under. This does not surprise me. First off, where are the margins to support these entities (esp. when farmers are still making teeny, tiny margins)? Second, when you start off with millions you don’t create a lean, strategic business. Build a solid business using business earnings and prove your model BEFORE you take on VC funding. Your thoughts?
Organic food delivery startup Good Eggs just announced that it will be closing its operations in Los Angeles, New York City and New Orleans — every city where it has a presence, except for San Francisco.
As a result, the company is also laying off nearly 140 employees, including some in its SF headquarters.
In a blog post, co-founder and CEO Rob Spiro talked about where Good Eggs goes from here. He said the team is still “100+ strong,” will continue to deliver food in the Bay Area, and will still be rolling out product improvements in the coming months.
Here’s how he explained the decision to make the cuts:
The single biggest mistake we made was growing too quickly, to multiple cities, before fully figuring out the challenges of building an entirely new food supply chain. We were motivated by enthusiasm for our mission and eagerness to bring Good Eggs to more people. But the best of intentions were not enough to overcome the complexity. Today we realize that in order to continue innovating in San Francisco, our original market, in order to continue figuring out all the complexity that is required to achieve our mission, we cannot productively maintain operations in other cities.
Spiro said the company will accept its final orders from non-SF customers today.
Good Eggs allows customers to go online and buy produce, meats, dairy products and more from local farms, then the startup handles packaging and delivery. It sounds like the team hasn’t quite figured out how to make that model financially sustainable, at least not in multiple cities, so it’s focusing on one market while it retools. If Good Eggs can fix the model, then perhaps it will revisit the question of geographic expansion.
This isn’t the first time the company has made cuts as it tries to improve operations — it laid off 15 percent of its workforce back in January.
Good Eggs was founded in 2011 and raised a $21 million Series C less than a year ago. Investors include Sequoia Capital and Index Ventures.
“When we started Good Eggs, we had a desire to create a company that, at its core, would do something good in the world by supporting local food systems,” Spiro wrote today. “We remain committed to that philosophy and extremely ambitious in the scope of our vision. We are grateful for your support as we start this next chapter.”