The Americana food industry creates $240 billion dollars worth of waste every year. Nick Spina wanted to change that. So he launched Ethey, a zero-waste ready-to-eat meal delivery company that prevents one pound of food waste for each meal. In this episode of Shopify Masters, Nick tells us about his journey of finding the ideal production facility and launching a successful subscription model.
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Walking the path of the serial entrepreneur
Felix: What does 0% food waste mean, and what does it look like for your business?
Nick: We started out focusing on healthy meals to help with your busy lifestyle and really revolving around health for your body and your mind. Now we're evolving into your body, your mind and the planet as well. Ethey is based on 0% food waste, and so all the food scraps that we have in the facility goes down into a worm farm. The worms eat the food scraps which are turned into worm castings–which is worm poop–and that gets used for a number of different things such as gardening and farming. We've got a true sustainable loop in the business.
Felix: Tell us about your journey leading up to Ethey.
Nick: Ever since I was a kid I've always been an entrepreneur. I’d shovel driveways as a kid. I’d go to 20 driveways during the night and I’d be super tired, but I loved every single second of it. It was never about the money, but obviously that was really exciting at that young age. Right out of high school, I got into business. I started off as a marketing manager at a local venue in town, and a bartender. I worked my way up there and became the general manager of a business of about 65 people. About 65 staff and the venue held 600 to 700 people. That was a great first bite at managing a real business.
I was 21 then. By the time I was 22, I took over a district manager role of the entire hospitality group. We managed over nine different locations across Canada, and we had about 400 staff. That was a mix of venues, restaurants, hotels, and whatnot. That was a fantastic experience of managing a large team and attracting great talent and to work for the organization. I was in the middle of running somebody else's business, but I had always wanted to start my own. I took the leap of faith when I was 23 and I saved up every dollar that I had and I put it into a closed down venue in London, Ontario. That was the largest venue in town, it held over 2,500 people, and we opened that up.
30 days before opening is when we started construction. You can imagine what we had to complete within 30 days. It was a lot of sleepless nights. The opening night, we still had wet paint on the walls. It shows you what we had to do to make the magic happen. Extremely nervous, lost, definitely didn't sleep at all. I could barely even eat, but I was really excited. On opening night we had over 4,000 people in our parking lot, and it was absolutely incredible. That was the start to my actual entrepreneur career of running my own cash flow and my own business. I did that for two and a half years.
It was a fantastic experience of running my own team and my own cash, and getting the real benefits of running your own business. In the middle of this, I had another company which was a clothing line. I ended up selling that to somebody at Walmart, which was a great merger and acquisition experience. In between all this, all the chaos of running your own business, eating healthy continued to be a priority of mine. I had no time, or desire to make my meals for myself, so I thought a friend of mine, who's a chef, could maybe make my meals for me. I gave him a call and said, "Hey Chef Matthew, I've been eating out at a local restaurant twice a day, same rice and broccoli, I've been doing that for three months. I need to get out of this unsustainable habit and find a more sustainable solution. Would you make my meals for me?" He said, "Nick, sure. Let's do it."
That's when the real light bulb went off and I thought, "Hey, maybe there are other people out there like myself that could use something like this." I went back to him and I said, "Hey, Chef Matthew, what do you think about this idea?" He said, "Nick, I'll quit my job today and become employee number one." That's where this started. I rented out a friend's restaurant kitchen a couple of weeks later, and I told a couple of friends. The first week we made 60 meals, just him and I. It must have been midnight. We stayed there, and we didn't sleep, and we stayed there until 6:00 PM the next day. It was a long shift and whatnot, but we were excited about what this could potentially become. That was a little over six years ago.
For the first half year, we essentially rented out three of my friend's restaurants–their kitchens on Sundays were closed. I don’t think I slept at all on Sunday’s for an entire year, but it was well worth it. We kept growing the business. There's challenges as with any business that comes along. It's about figuring out how to get over those challenges. From there we opened up three restaurant kitchens–that was a logistical nightmare. From there we went and opened up our own production facility. We outgrew that within a year. We went and bought a bunch of new equipment, and opened up another production facility with double the floor space. We outgrew that one within a year. Then we went and said, "Hey we need to get out of this 2X growth mentality of successfully doubling the business year over year and getting into the 10 or the 20X growth mentality."
For the first five and a half years, we had successfully bootstrapped completely–no investors or outside capital. We kept reinvesting the cash flow of the business back in the business to be able to grow it. To meet that extreme exponential growth goal that we have, we had to open up a big facility. We ended up opening up a state of art 35,000 square foot facility that has special regulatory licenses that we work with the government on developing to be able to deliver our products, including meat, interprovincially and over into the American market as well. Right now, with the current investment in the facility, we can produce over $65 million in revenue. With the upcoming automation that we have coming in, we can produce about $110 million worth of revenue. Just out of London, Ontario.
Felix: You have experience in lots of different industries. How did you know when it was the right time to pursue a different venture?
Nick: In your gut you feel so excited about something that you just have to do it. That's how I felt when I thought of what this could become, also being first to market with it. We were the first to ship fully cooked food in the mail. That was something where I knew that with my prior experience of running businesses, that if we had zero competition, and that it's something that people want, then it’d be easy. We just had to build the foundation of the business and supply the demand rate and scale up. It was a no-brainer to me. People say that entrepreneurs take risks. I don't agree with that, because I don't think an entrepreneur would do what they do if they thought it was a risk. I definitely didn't see it as a risk. To this day, obviously, it panned out quite well for us.
Making great decisions quickly with the right network
Felix: You excel at speed, from idea right down to execution. What is your mindset or process for getting lift so quickly with your businesses?
Nick: You know what? A lot of people tend to think that they need to have all their ducks in a row to get started on something. I'm a little unique in the sense where I think that you just need to get started. The only way to eat an elephant is one bite at a time, and it's just about taking those bites. That's the way I like building businesses. It's just, "Let's get right at it." Time is the one thing that we don't have on our side, so we may as well take advantage of it and move as fast as possible and take the right steps in the right direction. A lot of people get hesitant to start things because they think that they have to do a hundred different things before they start. My mentality is: "Let's get right at it, and let's move as fast as possible."
Felix: If you were to start a new business right now, what are the essentials to do straight away? Where do you place your focus?
Nick: I support a lot of different entrepreneurs, especially with our model of merging and acquiring great-minded businesses, and working together to grow. Even looking back at myself, I think a lot of entrepreneurs like to say, "Hey I've done this on my own." The day that you start leaning on people for help and tapping into other people's experience to grow the business, you can grow a lot faster, you can pull together a lot more resources a lot quicker. As the business gets bigger, you're going to need to surround yourself with incredible people. We're at this stage in the business now where I highly believe that we've surrounded ourselves with some of the best people in the world to be able to make a big impact.
We've brought together some fantastic people such as Gary Vaynerchuk, the COO of FedEx Global, and a number of extremely fantastic people that are helping grow the business. Leaning on the right people and people that you trust to be able to grow the business with you is very important. Even from an early stage in the business, it could be very helpful. Even with the great success that we've had, looking back at it, we may have been able to grow a bit faster if I would've leaned on some of the right people in the beginning. It's definitely okay to ask for people to join your vision to grow it together.
Felix: What advice do you have for people who don’t feel like they have the network set up yet to lean on other business owners or founders?
Nick: I strongly believe in something really simple that I live by in my entrepreneurial life. It all depends on how much value you can offer somebody through a product, service, or opportunity. That's what makes everyone excited at the core of this. When you look from a partnership standpoint, there has to be something in it for the partner to be very excited about, on a number of different levels. It has to be on a financial level, it has to be on a personal growth level, it has to be on a purpose level. Be real about it. You don't need to make things up. If you make something up that you don't really necessarily care about in a purpose sense, or feel excited about, then people aren't going to feel the true excitement.
That's really important. Make sure that you are very excited about it. Then you can bring other people into that vision. When it comes to these partnerships and whatnot, you want to make sure that you're going to get them really excited, long term, about what you want to do. It's all about structure beyond that point to make sure that when you structure a deal with them, they're mutually aligned in terms of interest. If everything goes well, then they succeed and they win with you, and if things don't go well, the vendor is lined up to not win with you. You're both on the same page and you both go through the same motions together. That's what a true partnership is all about.
Choosing and then building impactful partnerships
Felix: What makes a good partnership? How do you make sure interests align?
Nick: It's a cliche saying, but rolling with the punches. When you're born on this planet, you don't know everything off the start. The same thing goes for entrepreneurship. The first day that you decide to be an entrepreneur, you're not going to know everything. You never will, because there's an endless amount of knowledge that you can obtain. The important thing is to get started and you can start rolling with the punches and learning from those punches. You get wiser as you go along. The earlier that you can do that, the faster you start learning, the more experience that you get. That's a very important mentality to have when it comes to building a business.
Felix: What elements did you bring to your partnerships that encouraged potential partners to take an interest in your business idea?
Nick: Think big. Always think big. Think bigger than big. Set up a path of how to get from A to Z and actually achieve those steps from A to Z. Talk to a lot of people. People are automatically going to get excited about what you're doing. As you keep going along and getting closer to that Z step, then people are going to start talking to each other about it. It's a very powerful thing, but also it has to obviously interest them. You have to have a purpose or such a big goal that it automatically attracts people to be a part of what you're doing.
Felix: When you first started the business, what was the big idea then, and how has it grown and evolved over time?
Nick: We wanted to be the biggest fully cooked meal delivery service in our city. We achieved that within the first number of months. These goals change as the business grows. Now we're the largest in Canada, and we're going to be making a very big impact in the US soon. We want to go global at some point as well. Beyond that, over the next 10 years, we're going to help save 10 billion pounds of food waste within this process of growing the business. From starting at being the largest and best meal delivery service in little London, Ontario, we're now looking at 10 billion meals. We've grown exponentially, and it's amazing. You see the first couple of weeks of operating, six years ago we saw 10 packages leave the door. Now we're seeing entire trucks leaving the building, delivering meals all over the country. It's invigorating. It's truly remarkable.
Using data to strike the balance between empathy and efficiency
Felix: Once you set your goal, how did you develop the framework to attain it?
Nick: The important thing is there's no recipe to overcome every challenge. There might be a good way of doing something, but there's no perfect way. That's something that people need to understand. You can only plan so much for a business. Let's take COVID for example. There's no book in place for when something like this happens in business. You have to deal with it when it comes to you. At the core of all, this is how you make decisions on a daily basis, because there's going to be things that are unplanned that come to you. I highly believe in just getting started. It's really about the ability to be able to make decisions on a daily basis that makes you successful. Some of those decisions can be catastrophic. It's important to make sure that you sit down and think everything out thoroughly and also lean on the right people for information.
I heard something very interesting. The number one reason why most companies fail is because the CEOs or leaders of these businesses are getting poor information, or poor quality information from their people or resources. They're not able to make good decisions based on that information that they receive. It’s important to make sure that you also have good knowledge of the people around you and that you've got a really good finger on the pulse of your industry. That's going to make you more successful in the long run.
Felix: What are some of your key strengths and weaknesses when it comes to evaluating all the information for informing your decisions?
Nick: One of my really big strengths is understanding people. You have to understand people to understand business. At the end of the day, an organization is not just an organization, it's a group of people. That's what makes the company tick. Everyone's different, and everyone operates on their own systems. That's probably a really key thing here. Resilience is also necessary. Being resilient is extremely crucial, because there's going to be challenges. Business is full of challenges every day. It's up to you to decide a maneuver to get around those challenges.
Once upon a time delivering meals in London, Ontario was difficult. Right out the door, and we figured out a way to do that. Now we figured out a way to get meals from London, Ontario to Los Angeles within 24 hours. That's the change as the business matures. I can't really see any major flaws. Maybe a potential major flaw would be–it hasn't happened yet–but would be when we have a big win or whatnot, we may celebrate that win and mentally take our foot off the gas. That's fine for a very short period of time, to be able to relax and enjoy the win, but you don't want to take it off for too long. You want to step on the gas even harder to be able to accelerate the business even further. That would be one of the points that I mentioned.
Felix: What are your key lessons when seeking to understand people?
Nick: People are human. They come from emotion when they're making decisions sometimes, and not logic. To understand that is very important. The most successful entrepreneurs in the world, some of whom I've talked to quite frequently, who are involved in our business, might answer a certain question differently from one day to another. That's an interesting note to take down because people are people, at the end of the day. That's the important thing to understand, because it's not black and white when decisions are made. These extremely high performers understand that. That's the important thing when it comes to making decisions. There is definitely a component of listening to your gut when you're making decisions, but trying to apply logic to that as much as possible to be able to make a more firm and impactful decision is the best.
Felix: How do you make sure these guardrails of logic are adopted throughout the whole organization, so that everyone has the right data to avoid these emotional decisions?
Nick: One of the best things to do, especially when it comes to hiring or bringing on advisors, is to make sure they've gotten a proven track record of achieving certain levels of success. That's the only way that you can really make a good decision about bringing someone on in a certain area. If they don't have that track record, then what do they have to prove that they are able to complete or provide what you want them to provide? Especially when it comes to an advisory position. You want these people to be able to provide pure and accurate advice.
The only way to make a good decision about bringing someone on board is their track record of proven success. That's what we look for when it comes to bringing people on. A great example is we want to strengthen our logistics side of the business, so we brought on what we strongly believe is the strongest in the world in terms of advisory, and that's the COO of FedEx. I don't believe that there's anyone better than that. Obvious proven track record of many, many years in the logistics industry. I trust that I'm going to get very pure information, advice, experience, and wisdom from him. That's the key thing when it comes to bringing on people around you.
Establishing an advisory board that empowers scaling
Felix: What’s your advice for a new business owner regarding when, why, and how to implement an advisory board?
Nick: You know what? Even if it's official or non-official, it's important to put together an advisory group of people where you can go and ask questions. Like it or not, at the end of the day, everyone doesn't know everything. Even at the highest levels of business, people are surrounded by people who are very wise in certain areas. Even at an early stage, it's important to have an unofficial advisory board that you can put together to help you grow the company.
Felix: Can you share with us some of your impactul or business changing advice you’ve ever received?
Nick: It's a cliche saying, but you learn the most from your mistakes. That's the interesting thing. You definitely feel the pain when you make a mistake, so you make sure to never make that mistake again. You also obviously take a wealth of knowledge as you go along, which is a more pleasant way of learning. That's all taken from the people around you.
Felix: How have the challenges to the business changed as you’ve scaled?
Nick: It's really interesting. The weight of the problems felt the same at that stage in the business. As a business we were able to overcome those challenges and we grew. The problems did in fact get more challenging, but we got wiser and brought wiser people into the business as we grew. We worked together to overcome these challenges, but they definitely felt the same size at that point in the business. Whatever point in the business that you're at, the challenges will probably feel the biggest that they have ever been up until that point–it's an interesting consideration.
Another interesting thing is that with the more people and resources that we have around us, I actually feel that it's slightly easier to run the business. In the beginning of a business, you have limited resources, limited capital, and you don't have as much to offer people to become a part of your vision. I do believe that as you go along and you grow the business, the challenges do get bigger, there's no doubt about it, but you're surrounded with more resources to be able to combat those challenges. It's quite interesting.
Embracing your scrappy, or doing whatever it takes to get it done
Felix: What were some of the biggest challenges that you faced early on, that now feel like an inflection point for the business?
Nick: Speaking of challenges back in our early days. It's funny looking back at it, but when we had three restaurants that we had rented, we didn't have any room to store anything. I was storing ice packs in boxes and wherever I could, I was using my car as a shipping container to store things. We actually went out and rented some space to store things in. When we had our first facility, three or four months in, we had almost completely outgrown it and had nowhere to store any of our materials.
I remember everyone working in this environment where we were pumping out these meals, but we had to store all of our shipping materials above everyone's heads in the facility. We ended up duct taping a number of things above everyone working, to be able to store these materials, to be able to operate the business. This probably went on for a couple weeks, but we did what we had to do. We made sure that everyone was extremely happy to be able to work in this environment, of course, and it was absolutely remarkable to see everyone come together to help in these situations. We had to deal with that challenge for quite a little bit. I remember even getting a call from Chef Matthew and saying, "Hey, Nick, we've got an entire truckload of ice packs."
At the time we didn't have a forklift. We only had a handful of staff. We thought, "Hey, how the heck are we going to get these ice packs off this truck?" I guess we're going to hand bomb it for the next 14 hours. So, that's what we did. It took us 14 hours. We did that once a month for probably six months until we could afford a forklift. You just have to be willing to do whatever it takes to overcome these challenges, but it's interesting when you think back to the challenge of the ice packs in the truck. If we didn't decide to take those ice packs off the truck we wouldn't have been able to deliver any meals to customers' doorsteps. The business would have had to stop. It's quite interesting.
Then more so too, the challenges of the past two years. How do you deliver a meal legally across the country, and make sure that it's CFI compliant? We decided to open up a state of the art facility with the proper regulatory licenses–which take a very long time to get. That requires a lot of capital, knowledge, and time. That was the challenge that we decided to do. It took us a long time to do. That enabled us to grow the business across the country. It was a fantastic decision, a fantastic challenge that we overcame, and I'm very, very proud of the team. Now we've got a handful of regulatory staff.
Did I ever think that I was going to be as well versed in food science as I am now? Absolutely not. Did we have to do that to do what we have to do? Absolutely. I'm extremely happy about it. It's interesting, as you go along with entrepreneurship and you grow, you become a little bit of everything, of every kind of career necessary. A little bit of knowledge on the legal side, a bit on the banking side, a bit on the operational side, food science side, marketing. You put on a bunch of different caps as you go along. When you can afford someone who's very strong to take over those roles for you, then you can focus on other areas of growth in the business. That's a very fantastic and exciting thing.
Felix: What were some of the big changes or decisions that you had to make early on? How did they pay off for the business?
Nick: The big one was opening up our state of art facility. That was a very big move. Here's the thing, people generally don't do things until they see them in their hands. What I mean by that is that no one likes to start a business unless they know it's 100%, or they have sales already coming through the door. The thing is, looking back to day one in the business, for the first couple weeks or month, we weren't making money. We were actually like every business. You don't make money right at the start, because you have to put a bit of money into it to get it off the ground. There were zero other businesses like this, except on the raw food side. We were taking a risk. But like I said, I didn't see it as a risk. I felt so strongly about this idea that I could barely sleep beyond not actually deliberately sleeping to operate the business on Sundays. And I had nothing to show for it but a feeling.
That's so important. That's the core of what makes entrepreneurs tick, it’s this certain feeling of vision and whatnot. You can see it and dream of what your idea could potentially become. That's what kept me up at night. It was a no-brainer for me to start the business. As we go along and grow the business, we have more things to show for it, but that vision has to keep on getting bigger to keep that excitement going. If you execute properly, you will achieve your vision. Once you achieve that vision, if you want the business to grow even bigger, you have to keep that vision wheel rolling and getting bigger as it goes along. When we opened up our facility, did we need a facility that could produce $100 million worth of revenue? Absolutely not. Did we need that for the future of the company, where we wanted it to go and where we saw our vision going? Absolutely. So, that's exactly what we did.
Managing logistics at scale to achieve $100 million+ in revenue
Felix: What were some of the main logistics challenges that you faced as you scaled?
Nick: We had to figure out how we were going to get a fully cooked meal from London, Ontario to, say, Vancouver. We had to get the right people involved, and we had to make sure that we found packaging that could keep the food cold for up to three days. All the food arrives to the customer the next day after it's cooked. Once upon a time, these were challenges that we had to overcome. How do you make sure that you can maintain that promise as you expand?
How are we going to be delivering these meals to Miami safely in the climate that Miami has? How do we ensure that it gets there on time? There's a lot of technology that we had to build behind this to be able to track everything and figure out certain packaging. When these things arise, you have to find a solution for them, and every challenge is unique. That's what keeps business exciting though is because it's almost like a game.
Felix: Tell us about your decision to add subscriptions to your business model.
Nick: The easy thing about our business is getting a customer to buy from you for the first time. The key is, how do you keep them coming back? Then how do you keep them coming back more frequently? Subscriptions definitely help with that. If you can somehow get into a subscription business as an e-commerce entrepreneur, it's a very beautiful thing and I would highly recommend it. You can grow a business off of one-time customers, but it's going to be a lot easier if you have a lot of returning customers.
Felix: What changes do you have to make in your business to support subscriptions?
Nick: Definitely the technology side. Working with different partners on board to be able to meet our needs, and there's a lot of different apps available on Shopify, to be able to support that.
Felix: With subscriptions, you have more predictable revenue. What has that unlocked for the business?
Nick: Yep. You've got a lot of more predictable revenue. You don't have to pay marketing dollars to get people to come back as easily. Then also for the customer. It just makes it a lot easier for these people to return to you. People may love your product, but people might forget to come back and order again. This is where the subscription comes in handy. It’s for people like that, where they just say, "Hey, I want to put this on autopilot and I would love to receive this every week. I just don't really want to have to keep going online and clicking checkout again every single time." If you can get into a business model where you do have a subscription, it's a very powerful thing.
Felix: What’s the most important area of focus for you, moving forward with the business?
Nick: Definitely vision. There's three things I strongly believe in at any point in the company. Right now, making sure that I check this as I go along. An extremely strong vision is one that I must have and any entrepreneur should have. Number two is great management in advisors and management advisors. That's extremely important. You can't run a business without them. And number three is truly, truly understanding your customers' needs. You have to have a product that people want and need. With those three things I strongly believe you can run an absolutely fantastic, phenomenal business with.