The Lancaster Food Company: 20,000 Loaves Donated

One of the biggest challenges of building a commercial bread company is handling unsold product, otherwise known as waste.

From the beginning we donated any unsold product, initially to the Council of Churches Food Bank because I had a previous relationship with them from my Lancaster Community Gardens days. Over time we added a variety of food banks, kitchens, and churches, including Crispus Attucks and Water Street.

One of our key indicators is our “return rate”; it’s the measure of invoiced products vs. unsold product; we give full credit to stores for unsold bread. We lose money when there’s a lot, and we make money when there’s only a few. When there are no returns, we’re leaving money on the table because we don’t really know the strength of the demand.

The ideal scenario is that we keep increasing the amount we deliver, and it always sells out, but that doesn’t happen ofter, so the next best thing is we find the bottom of the market, which is indicated by just one or two unsold units of each variety.

We don’t currently disclose our unsold rate, so I’ll just say we’ve helped feed thousands of families since 2014. While it’s been a source of pride for us, it’s also a painful reminder that not all customers at all stores want or know about our products, and we have to do a better job marketing them.

And donating bread doesn’t align with our goals to get to profitability: we want to donate less–not because we don’t care, but because we need to be self-sustaining before helping others (put your own mask on first).

So we’ve been testing selling previously unsold product at Grocery Outlet, which has 22 stores in PA and over 300 in California. It’s going very well, so we’ll continue to add more of the PA stores, to the point we expect to reduce our unsold product to a very low percentage. This strengthens the company, gives people with lower incomes access to tasty, locally made organic bread at a lower price, and keeps read out of the waste stream.

We’ll continue to make donations, and we hope to get back up to our previous levels, but only as part of our overall growth plan. We much prefer treating root causes of poverty (with income through thriving-wage jobs), and keeping the company on the path to profitability.

The Tree

If we’re friends on Facebook you might recognize this tree.

This is the long rambling story of the tree.

For over a year I’ve posted this tree regularly. The Christmas tree from 2015: 
The rain tree: 
The New Year’s Tree (2016)
…which earned a comment from a friend:


I like this tree’s capacity to be many things. 🙌🏼

The Spring tree (2016)
The green tree
And one of my favorites
At some point someone commented “what is it with the damn tree?”
I must have posted well over 100 photos of the same tree. 
I’ve taken many more. I have a love affair with trees, particularly the grand sycamores next to creek beds, with their bright, barkless branches. I’m obsessed with these large, beautiful trees, and I’ve taken thousands of photos of them. There’s something about the way they capture light that lifts my spirit, especially during the darkest days of winter.
These are two of my favorite trees, these close companions. In the summer they’re surrounded by lots of green and share a beautiful canopy. I imagine their roots intertwined, sharing water and carbon and nurturing healthy soil for other living things among them. 

I love to visit with them, see how they’re doing, see how they change. 
election day, 2016
So this is the story of our tree. It’s not much of a mystery but it’s meaningful to me and a lot of people ask me about it. 
Bear and I take walks in the woods or fields almost twice daily when I’m not traveling. On dry days we’d hit the Loop (Farm view) at County Park or F&M’s Baker field, but when it rains we head here or Kiwanis because they’re mostly paved. But once I started the year of the tree, City View became the daily ritual, with few exceptions. 
Before we met this tree I would take pics of the beautiful trees, the beautiful reflections in water, my beautiful friend Bear, the beautiful sky. I wanted the beautiful family, and that hasn’t worked out. The perfect album, the perfect song, the perfect love, the perfect concept, the perfect justice–just perfection all around. But in my daily life I’d sometimes struggle to find the beauty, the good in people, and in myself. Especially in myself. 
My world fell apart in 2008 and didn’t stop falling until about 2013, but even then I hadn’t really processed things. Back then I thought I could do no wrong–I was, after all, the founder of successful software companies, able to make money out of thin air, make the big things happen, and of course, I was always right, informed by what I thought was a sense of justice. I was arrogant and self-assured.
But in 2008 the economy crashed and I crashed the project I had started, hurting people along the way. I spiraled down and ballooned up. I’ve posted about those years so I won’t rehash, but in 2013 things started to turn around. But something still wasn’t working. Sufficiently humbled, I might have gone too far in the self loathing. Even with the excellence of the new company, finally working directly on changing the world and having impact on people’s lives, I still didn’t have it right. 
——-
Our tree is a sycamore. 
It’s not tall, beautiful, or grand; it’s a flawed, weak, struggling sycamore, fighting invasive weeds and vines for sunshine and water, growing far from any creek bed on top of a landfill. 
One day I was about to post a picture of the perfect tree,
on the perfect day, and realized my pattern. I sought the obviously beautiful, the ideal, the excellent, instead of finding the beauty in the ordinary, the flawed, the struggling. It was always about the future perfect and not the present. For several years I listened to a Thich Naht Hanh lecture asking “do you see” about the how the tree is fed by the clouds, sun, and soil, and “smile to your eyes” in gratitude for the joy they bring, in every moment.  
——-
It’s hard to articulate; I’m writing this post in pieces and not everything connects. But on that day late in 2015 I decided to find the beauty in our struggling tree instead of the perfect one, and committed to posting only that one for a year. I felt like I needed to develop a discipline of it. Some days the beauty was in the fog, sometimes the moon, sometimes it was Bear, sometimes the vines seeming to hold the tree from its aspiring but unlikely glory. 
Sometimes it was the glow of the city in the far distance to the right, sometimes the wind, sometimes the deep blue sky on a summer’s day, and sometimes it was just the tree persisting, day after day, fulfilling its purpose, a grand sycamore. 
On my mind on any given day might have been trying to make payroll, or the Syrian refugees, or challenging news from last year’s election, or life without a partner, or the list of things I needed to get to later.  
But when I’d stop at the tree, it was the start of a meditation to clear my mind of all of that, and listen to the wind, or the leaves, or Bear’s feet on icy snow. 
——-
The first time I heard the following analogy I hated it. Thought it was hokey. Uncool. Because I’m so damn cool, I guess. 
Put your mask on first before helping others.” 
I would try to help others before myself. Maybe I felt I wasn’t good enough. I’ve felt that way about certain people, too–that I just wasn’t good enough for them. My pattern was to super-commit to something, throw myself into it with a sense of higher purpose, and ignore my own needs–physical, mental, emotional, and financial. They are mostly interrelated. I went from a pretty good natural athlete in high school in great shape (soccer) to an overweight depressive during companies 1 & 2 and after. One big difference? My obsession moved from soccer to music to building companies, and left the physical component aside. 
I’d work out occasionally, but not regularly, because I hated working out. Training to be the best at soccer, sure, I’ll do that. Surfing half the day, yeah I’ll do that. But going to the gym for myself? No. Couldn’t do it. So I substituted bad practices for good. I’d work late. When I got home I was too tired to cook, or it was more convenient to go to a restaurant and get waited on, served decent hot food but with mediocre ingredients, too much salt, and a few glasses of wine or scotch. The comfort of a few drinks and someone sharing light friendly conversation helped me rationalize it. But really if I went home alone, made dinner, and then had the evening ahead, well I just felt bored and alone. I couldn’t just sit with it. So eating out all the time filled that hole, and well, I don’t have kids so I could rationalize not saving the money. And that bummed me out too–we had tried when I was married but it didn’t work out for us. Part of that long stretch was coping with the reality that maybe I’d never be a father. 
——-
This Fall I was moved by the people at Standing Rock and their commitment and dedication to the cause of justice against a deeply flawed and imbalanced system of power concentrated for the few at the expense of the many. It spoke to me on so many levels, and when the State of North Dakota started using violence against people desperate to preserve their sacred land, traditions, water, and lives, it moved me to want to join them and help in some way, even if just showing support by being there. So I went with a group to make Thanksgiving dinner, which turned into a meal for 2,000. It was amazing. 
The next day we went to the camps, and I was struck by the rituals–the prayer, the ceremony, the storytelling at the fire, and the list of principles that helped keep the growing camp organized, healthy, and sane. At the gate was a sign that said “No alcohol beyond this point.” I smiled and nodded in agreement. I had already been moving in that direction, so it wasn’t a big deal. It felt like it was time. Over the next few weeks I ate out less and stayed in more, spent more time with family. I’ve been dropping weight pretty fast, sleeping much better, and started working out. It all feels really good and natural, and it makes me wonder how I got into that rut of false comfort. I’ll have a glass of wine with a friend now and again, but that late dinner out alone is over. 
Since the summer I’ve spent more time with family, especially over at my sister’s with her very entertaining kids, who are pretty good at dishing out a bad joke. I make dinner and lunch for myself, and sometimes breakfast, but I like my breakfast routine so I’m not changing that too much. When I get home I fill the time with writing, writing music, recording, or a bit of Netflix or a book. Like normal people, I guess. 
It took me a long time to learn to put the mask on first, but now that I’m doing it it feel natural. This week I plan to start putting the money I would have spent on false comfort into a college fund for my kids, and if I never have them, which is possible, it’ll be for someone else’s. 
——-
Trees are amazing. I’m so glad we got to spend so much time with our tree, but it’s time to move on. Maybe the discipline of it worked. Some days it felt like Groundhog Day, where I was practicing getting it right, to become the person I wanted to be, or rather to love the person I am. 
We’ve spent well over a year with our tree, and while we’ll see it again, we took a different path today and focused on the sunrise. It was a cold morning, just 25 degrees, the ground frozen. The shapes in the ground from horse tracks, shadows cast by the rising sun against the fields, the spots of blue sky through cloud cover, it was all beautiful, and flawed, and perfect, and we walked and listened to the wind. 

The Search for Expansion Space: Part I

About a year and a half ago, two professors from F&M released a report on Lancaster’s poverty problems.

The rate is about 29%; you can find data like this at the US Census bureau or through cool tools like PolicyMap, which also gives very refined views of neighborhood statistics.

Before we started The Lancaster Food Company in 2013, I spent some time on PolicyMap to try to figure out where we should locate the company. It’s a lofty goal–try to reduce poverty by hiring people living under the line who live within walking distance, and there isn’t a lot of real estate available in the city for food manufacturing.

Some of the highest poverty rates were right around South Water Street and Hazel. So we looked very closely at a few buildings when we started. We passed on the building that became Spring House’s third location. It’s a very cool building, but it needed a lot of work and we’re not developers. The property itself is two acres, and has a remarkable view of the city from its north side.

We ended up leasing a space completely inappropriate for food manufacturing, but we were eager to see whether we could prove our concept could become a viable company in the increasingly competitive certified organic food sector.

Liberty St space before the buildout

So we took a space at 341 East Liberty, complete with flaws and obstructions, and made it work. We invested in a conversion of the space with a loan from Community First Fund (the landlord would not finance a buildout for a startup), passed our USDA Certified Organic and FDA & PDA inspections, and literally took our products to market. Things really took off–we grew 30% every quarter until March of this year, when we hit production capacity.

We knew early on we’d need to expand, so we continued to look for space while growing the company at Liberty.

Just to the east of the Spring House building is the Brookshire Printing Company building. Across the street is a city-owned lot, warmly called Lot 13. We felt we could work with the Brookshire building, and went into contract with it. It needed work, but we’re flexible and figured out something that could get us to our own sustainability, plus the location couldn’t be beat for impact. The area’s poverty rate was something like 60% at the time. 
The bank required an environmental report. A “Phase I Environmental Report” is basically a survey of the immediate area. Phase II requires samples from the site itself. Old cities tend to build on top of themselves. As standards evolve, cities adapt, sometimes by burying the past and looking the other way. Lancaster is no different. 
Well. The Phase I report was alarming. There are high concentrations of PCBs next door, uphill on the UGI site; PCBs can cause leukemia and a host of problems you don’t want. PCBs were banned a long time ago (Monsanto was a primary manufacturer), but the site was never cleaned up. There was also benzene and lead. A visual inspection found a tank somewhere below ground level in a sort of basement with an unknown liquid in it. 
We balked. We couldn’t imagine building a food company in a space that could be potentially poisoning us and our employees, or tolerate even the perception that we were making food in possibly dangerous conditions. If that sounds like an overstatement, please read about the Housotonic river after GE dumped tons of PCBs into it.

We also looked at Lot 13 across the street, and asked for the most recent environmental report. Again, very high levels of lead, benzene, and some other harmful chemicals. We would have had to remediate the site, which isn’t currently part of our mission, so we passed.

Later this week I’ll post Part II about the space that almost was, and what we eventually landed on. It’s been a long, challenging process that almost killed the company. 

Almost Anyone Can Now Invest in Private Companies: SEC Finalizes CrowdFunding Rules

It’s been a long time, you and I. We’ll try this again for this special news. 
Yesterday, the SEC announced its final guidance for fundraising under the JOBS Act, and the news is overall very good for startups and any private companies that want to raise capital. 
Here’s the full 250+-page SEC document (and I expect you to read it all. Quiz on Friday). 
At least two parts are worth paying attention to: 
1) you can invest up to 10% of your net worth if you’re not an accredited investor (acc investor has at least $1 million net worth or $200k annually of income)’, which means if you’re net worth is $10,000, you can invest up to $1,000 in private companies, and
2) up to 30% of a stock offering can come from existing shareholders; the rest comes from the company issuing new stock. It’s a built-in path to liquidity for investors, employees, and founders, with a rational limit that should attenuate attempts to dump stock on the unsuspecting general public. 
That 30% rule gives companies a great answer to the “when will I see this money again” question. Until now, the only answers have been IPO, sale of the company, dividends, and stock buyback. 
Dividends require profitability. Stock buybacks require cash on hand, which really should be used to grow the company. IPOs are difficult and unlikely for most companies, and a sale of the company is an awfully radical step just to put cash in investors’ pockets. 
I’m not a financial expert by any means, but I’m thrilled by the new rules and look forward to great companies raising capital more easily. That said, I do not look forward to the inevitable absolute and soft fraud that will happen. 
“Soft fraud” is when the company is legitimate, but it oversells its prospects to unwitting investors; the company misleads them in a breach of ethics, but doesn’t quite cross the line of legal fraud. 
I’m looking forward to reading the entire document. Ok not really, but I probably will soon. Because, you know, geeks. 

Jobs vs Job training: Meet People Where They Are

I remember President Clinton giving one of his incredibly convincing speeches about boosting the economy, world trade, and transitioning screwed middle class workers from good jobs to theoretically better jobs if we just had this one thing: training.

So we funded a lot of training, largely focused on tech. Tech was gonna save everything. And then the market collapsed in 2000 and we hit the recession, and no amount of training would create new jobs for everyone getting training.

Training is important. Some people really thrive with it–they hit the classroom, hit the books, get first-hand exposure to new equipment, machinery, and technology, and companies hire them right after completion of the course or degree.

Yet manufacturers around here complain that they can’t get enough skilled workers. And this is for “good” jobs, with pay starting at $18/hr and higher.

Yet we have relatively high unemployment, and the city sports a high poverty rate and a higher near-poverty rate, making up 75% of its residents.

So how is this possible? Training is available, the jobs are available, so why the high unemployment, poverty, and unfilled jobs?

It’s because both the training and the jobs require an existing platform of skills and education, and that’s where the gap is. If someone hasn’t finished high school, or finished but isn’t literate (how is it possible that SDOL graduates 82% of seniors, yet 50% aren’t proficient at reading and math?), they won’t get through the training if they’re even admitted to the program.

If the goal is to employ people, you have to meet them where they are. We definitely have a lot of talented people getting solid jobs in local manufacturing; something like a gagillion percent of Stevens College graduates land jobs before they even graduate, with high starting pay.

But we have a significant number of neighbors who don’t have that basic foundation of education and skill. And it’s unlikely–not impossible, but unlikely–that they’ll get there.

So what to do?

You have to meet them where they are. We need to create demand for products and services that require little skill or education, but that also pay well. That’s what we’re trying hard to do at The Lancaster Food Company. We have a relatively high entry wage & benefits, and anyone who can lift 50 lbs and learn parts of the production can apply.

What other businesses could create demand for low-skilled labor? Or where skills could be developed? It could be service work, furniture production, bookbinding, composting–many, many types. The key is not to chase cheap labor overseas and keep these types of jobs here.

But what’s missing are the businesses–new ones and existing–focused on creating demand for those kinds of jobs. We’re hoping to see more businesses that build their model around ethical wages and unskilled or low-skilled labor.

That’s how we’ll end poverty in the city as we know it, and that’s how we’ll get the unemployment rate down. It will reduce crime, improve housing, and improve education. It will take 15 to 20 years for the full effect, but the immediate effect will be felt in the families of those that get the jobs, the place they live, and the places they shop.

Clinton was right, but he was wrong about the universal impact of training; it’s good for some people, but for others, you have to meet them where they are.

The Not Really Sharing Economy

Words have meaning, words matter.

Sharing is one of the great human attributes; you have something and your neighbor can benefit from it, you see the need, you offer to share it. There’s no or little cost to you, and no cost to your neighbor.

In the lunchroom: “Would you like to share my table?”
On the playground: “Would you like to share my ball?”
At the picnic: “Please, have some of our chicken!”.

That’s sharing.

We share without the expectation of something in return. Sharing is not transactional. It’s an act of generosity, an act of love, and sometimes an act of necessity.

So when the tech, investment, and startup media and bloggers came up with “The Sharing Economy”, they weren’t talking about you and I pooling our tools together, creating a tool library, and sharing it with others. They weren’t talking about a couple sharing a milkshake.

They were talking about transactions involving excess capacity of stuff–a house, a car, an office.

Folks, when you charge me to stay at your house, that is not sharing. That’s a great business model, and I love AirBnb, but that’s not sharing. That’s rent.

When you offer to drive me from one place to another for $15, that’s not sharing. That’s charging me for a transportation service.

Sharing is a beautiful thing. The media–and VCs, and etc, etc etc–got it wrong, and are sullying a great word with an otherwise stellar reputation.

Now that I’ve shared my thoughts with you, I’m going to go charge somebody for a loaf of bread.

Lancaster Food

So we’re rolling–we landed on shelves this week with the first four products from The Lancaster Food Company: organic whole wheat, organic soft white, organic sandwich rye, and organic sprouted multigrain.

Lots to catch up on, so I plan to start posting a bit more soon. I’ve said that before, eh?

The Lancaster Food Company

It’s been quite a while, folks! I’ve had difficulty blogging over the past nice months, as you might have noticed by the complete absence of posts.

For the past six months I’ve been working on a new company–The Lancaster Food Company. We make a range of organic food products, including organic breads, spreads, sauces, and salsas. Our parallel missions are to create thriving-wage employment for vulnerable populations, make tasty organic foods, and support the local food ecosystem here in the metropolis of Lancaster.

Starting a food business ain’t easy–it sure ain’t software. Finding a space, converting the space to a commercial food-grade facility, meeting the organic standard (i. e., fill out lots of forms), finding suppliers, buying equipment. What–you mean I can’t just provision services on Amazon Food Services? (Actually that’s not a bad idea–we could use a food accelerator here in the hometown).

I’ve decided to start blogging again. This time it will be very light on tech, light on startups, heavy on food startups, the food ecosystem, building a social impact business, and whatever else develops.

In the meantime, sign up to learn more about The Lancaster Food Company. Lancaster foods, oh yes. We’ll let you know of our launch–give us about five weeks to get our first batch out the door. Thanks for coming back!

Onward

I’m on the Chicago airport, sipping coffee and listening to unfortunate jazz while checking email. I just picked up the 13″ Air, so I’m enjoying the size of the screen and relative comfort of the keyboard. And I’m hoping I filled it out with enough software and old code to do some damage on this trip.

Traveling can be clarifying. I’ve been in a funk off and on for 5 years. The past year hasn’t been great personally or professionally (until we started BigLeap), and I’ve let a few things slide that deserved more attention.

Six weeks ago I started jogging, kind of like Forrest Gump in that there wasn’t any reason for it. Health in my case, but I’m not a fan of running, so it was surprising when I just did it. Having running shoes on put me in the frame of mind. Bear digs it because I’m not lagging behind, and I dig it because our hikes are shorter and more productive.

Carrying a bag puts one in a different frame of mind, too. I’m looking outward, not inward. People are so different in airports and planes, different from people I know and see regularly. Things seem more possible. I plan my next few days, check to make sure I’ve got everything I need for the 4th time ( I don’t, but I can recover), read more, think about the future instead of the path, get out of patterns of thinking and doing and into something new.

One attraction of traveling isn’t about leaving yourself behind, it’s about leaving the old clothes of the past that dressed you every day and putting on new clothes of possibility. I do best when I live in the possible, that space between the present and the future, the place where practicalities and limitations are malleable, lightweight, and re-shapeable like putty.

Life just changed significantly with the sale of the company; the biggest difference is that the obligations I built up with a lot of people have been satisfied. You sell the promise, the hope, the dream, the possibility, knowing you’ll make best efforts and there’s a pretty good chance you can deliver.  This one took too long in that sense, and I think it weighed heavily on me.

So onward–to the next one. And the next. If you’re a starter, that’s what you do. Start things.

Plane’s boarding.

Thoughts on The Sale of GiftWorks

A week ago FrontStream announced that it had acquired Mission Research, makers of GiftWorks (the company had changed its name to GiftWorks so that’s how I’ll refer to it herein).

I’ll try to carve out some brief insights. I’m writing this from the perspective of an entrepreneur to entrepreneurs. 
  • When I started the company, nonprofits had only high-priced, poorly designed software to choose from. Our mission was to give small nonprofits powerful tools for an affordable price so they could focus their resources and time on their missions, and not on software.

    I feel we accomplished that with the 2006 release, and since then positively impacted over 10,000 nonprofits. The company is taking great care of its customers–more now than at any prior time.

  • In deciding whether to accept an acquisition, we had to consider what scaling the company would like, whether our customers would be better off or not, how all stakeholders would fare, and whether we had accomplished our mission, and whether there were alternatives, which weren’t there in 2002.

    In order: I felt that scaling the company was a great path, but also felt our customers would do well under either scenario, that we had accomplished our mission, and that there are sufficient, viable, easy-to-use, affordable alternatives to GiftWorks (mind you, GiftWorks is still better as a total user experience, from the software to the support). I also felt that Frontstream’s FirstGiving.com was very much a complementary offering, and that our customers will be taken of well.

  • I like that the GiftWorksConnect.com team will continue to grow here in downtown Lancaster.
  • I don’t like the M&A process, dealing with lawyers, competing interests, and I’m certain the CEO feels the same way, and likely experienced much worse than I in terms of the stress and amount of work involved.
  • My time at the company…I had some of my best and worst days of my life there. I gained a lot of experience, learned a lot, screwed up enough that it hurts to think about, and made many friends. I probably would have done some things differently looking back, but I’m proud of what we built together and grateful for the help we received along the way.
  • The company will do very well if it continues to focus on serving customers. Steve has done a great job focusing on operational efficiencies and building a dedicated team. I’m sure he’ll do well as he continues to grow the company under Frontstream’s ownership.
  • The professionalism of the nonprofit sector seems to really have evolved among small nonprofits, which has been great to see. I’d say that GiftWorks and its education programs have been a positive contributor to that. I, on the other hand, have not evolved nearly so nicely 🙂
  • Working with Dave over the past few years has been one of the rewarding aspects of this, as well as serving with my old friend Tim Abbott, who’s a terrific nonprofit professional and a helluva singer. Tim was a great coach for me, especially when my temper could have gotten the better of me.
  • In the future I’ll be more careful about how much capital I raise (if any), and will be less flexible around terms. Investment terms really need to reflect alignment of goals of the founders, employees, and investors, and that wasn’t the case in my opinion and experience. 
The confidentiality agreement means I won’t be writing much more about this period, except in an obtuse, referential way, but I’ll figure out a way to convey some of the lessons learned over time. 
Thanks to everyone involved. We built a good company, and it’s continuing to have positive impact on the world.