Published on February 11th, 2009 | by John Ivanko2
ECOpreneurial Enterprises Thrive: Small Potatoes Urban Delivery
While the U.S. Congress and President Obama attempt to jump-start the economy (the destructive “growth” one, not the nature-based, restoration ECOnomy) by spending hundreds of billions of dollars they don’t even have, many ecopreneurs and the green businesses they manage continue to prosper in the restoration ECOnomy.
True, some of the proposed Federal spending will be devoted to the “green economy,” providing a boost to renewable energy production, energy efficient construction and more fuel efficient transportation. But the ecopreneurs my wife and I interviewed for our ECOpreneuring book have discovered that the “triple bottom line” approach to running an enterprise is more resilient to economic (or ecological) shocks — like the ones occurring around the world at an accelerating pace.
For example, take Small Potatoes Urban Delivery, or SPUD for short, founded by ecopreneur David Van Seters. Already North America’s largest online organic home grocer, SPUD merged with Organic Express and Westside Organics in 2008. With the amalgamation, SPUD now serves four major U.S. west coast markets: San Francisco, Los Angeles, Seattle and Portland.
In these times of change and challenges, we need success stories. Here’s the story of SPUD founder David Van Seters, adapted from ECOpreneuring:
Small Potatoes Urban Delivery, or SPUD, is no ordinary delivery service. First, they promote organic food with free home delivery. Second, they sell food grown or produced by local or regional farmers, whenever possible. Their business model intersects the double-digit growth in organic food and the buy-local movement, while reducing carbon emissions and urban congestion through their resource-efficient delivery service. Topping it off, SPUD harnesses the Internet to offer customers the opportunity to customize their orders with a guarantee of satisfaction.
David Van Seters, SPUD’s founder, president and CEO, admits: “We consider ourselves to be in the lifestyle enhancement business. It’s not just about simplifying busy lives with home delivery but also enhancing their lives in the broader sense of having a better quality environment and healthier communities.” SPUD protects the environment by buying local, organic, minimally packaged and eco-friendly products. It builds community by creating more direct connections between food producers and consumers, while reducing traffic congestion and pollution by delivering groceries on a set route and avoiding private car trips to the grocery store. Finally, they educate customers about important food issues through a weekly newsletter. Even leftover food is donated to food outreach groups and disadvantaged families.
“SPUD allows people to make a significant positive change with virtually no effort,” continues David, quite determined to change the world one grocery order at a time. “They just shift their purchases from one source to another, and then not only are they saving time to do better things with their lives, they are automatically reducing food miles, eliminating plastic bags, avoiding pesticides on crops and so on.” And their customers care, often joking that they get free karma with every grocery delivery.
The seed for SPUD germinated after David completed a study on the economics of sustainable community food systems. “It was through this work that I become much more aware of the high amount of waste and energy use in the grocery industry, as well as how the design of the system leaves growers and food producers with less than 20 cents of the food dollar.”
“So long as we can play a role in helping customers to reduce their food miles, we will continue to grow because we want to have a big social and environmental impact,” says David, who launched SPUD with $150,000 of his own money, transforming his livelihood from that of consultant to practicing ecopreneur. Already a profitable $10 million business with over 3,500 deliveries a week, SPUD serves the Canadian cities of Vancouver, Victoria and Calgary as well as the US cities of Seattle, Portland, San Francisco and Los Angeles.
“Preventing pollution, rather than just fixing it up after it occurred, is not a scientific or technical issue, it’s a management issue,” beams David. “When one of our delivery vehicles leaves the warehouse with 100 orders, it eliminates the need for an entire grocery store parking lot of cars to drive to the grocery store and back.” Harnessing the power of the Internet, potential customers can calculate how much energy, time and other costs could be saved by switching to SPUD. To further reduce environmental impacts, SPUD is gradually switching its vehicles over to alternative fuels like natural gas and biodiesel. In the beginning, working with local farmers was challenging. “When we started the business we thought we could just put out the call to local growers and they would produce the crops we needed,” explains David. “However, we had multiple farmers showing up on the same day with the same crop or farmers showing up late or showing up with wilted lettuce because they didn’t have refrigerated trucks. To overcome this, we partnered with a local distributor who helped organize the farmers and ensure that they delivered a high-quality product on time.”
In the summer and varying slightly from city to city, SPUD sources about 80 percent local fruit and vegetables (40 percent in the winter) compared to about 20 percent local content year round at a typical grocery store. Each of SPUD’s customer’s order travels an average of less than 745 miles (1,200 kilometers), more than cutting in half the national average of about 1,500 miles (2,400 kilometers). The fewer the food miles, the better SPUD’s Return on the Environment (ROE).
Capitalizing on their environmental, social, Internet-leveraged and local foundations, SPUD covets a unique and strong competitive advantage. “We can be competitive with grocery store retailers who offer home delivery because no one buys as locally as we do, and that is what our customers want,” says David. In a sense, SPUD provides farmers’ market freshness and organic selection to their customers’ doorsteps that costs no more than what they would pay at their local grocery store, thanks to the reality that they don’t rely on centralized warehouses like most other food retailers do.
Financing SPUD’s growth reflects a growing awareness of just how valuable value-driven business models translate to strong earnings even in an industry with marginal two percent profit margins. “We are seeing a strong increase in the number of investors who want to make triple bottom line investments,” observes David. “This should create a competitive advantage for social mission businesses in the long run.” To spur investment in SPUD’s expansion, his company offers convertible debentures — debt which can be converted to stock after one year or rolled over into a new loan. Some investors get out after a few years while others turn their debt into stock of the company.
With no plans to go public — something recognized as a threat to SPUD’s values — David is introducing both share ownership and stock options plans for all staff, staff who he credits as a talented and dedicated team who shares his passion for creating a better world.
Spoken of as perhaps the next Bill Gates of organic food delivery, David eyes the future, focusing on progress not perfection. “As long as we are continuing to get better every year, I am happy,” he admits. “You are not successful as an entrepreneur unless you are involved in an endeavor that is helping to build a better future for people and the planet. We try to enrich the lives of all the people involved in our business, including suppliers, customers, staff, investors and the communities we serve.”
Photo Credit: Small Potatoes Urban Delivery (SPUD)