Sometimes, shitake happens. That was the case for Nikhil Arora and Alejandro Velez, who cast aside corporate ambitions to become mushroom farmers—and then to make mushroom farmers of the masses. The two are equal partners in Back to the Roots, which produces kits for growing gourmet mushrooms in coffee grounds—a locavore’s and recycler’s dream. The 31-employee company is based in Oakland, California. Arora and Velez spoke to Inc. Editor-at-Large Leigh Buchanan about finding the fun in fungi and their next product.

Arora: In 2009 we were in our last semester at Berkeley. Alejandro was going into investment banking. I was going into consulting. We had job offers lined up. Then one day the professor in our business ethics class was talking about sustainability and waste streams, and he said, “It’s even possible to grow mushrooms in coffee grounds.” Alejandro and I didn’t know each other at the time. We were two students in a class of 150. But for some reason, that sentence struck both of us, and we e-mailed the professor separately asking for more information. He said he didn’t have a clue: he’d just read it somewhere. But he introduced us.

Velez: Mushrooms grow on logs, so mushroom farmers use wood chips—mostly oak. They cut down trees or buy in bulk from lumberyards. The trees come from Seattle, but 80 percent of mushroom farms are in Pennsylvania, which means the trees have to be shipped all the way across the country. If mushrooms could grow on coffee grounds, then obviously that would be less expensive and more sustainable. To see if it worked, we set up ten buckets full of coffee grounds in two rows in the kitchen closet in my fraternity. Then we left for spring break. When we came back, one of the buckets had sprouted a full-grown oyster mushroom.

Arora: We took the mushroom to Chez Panisse, the best restaurant in town. We walked in, and Alice Waters happened to be there. She brought in her head chef, and they tried it on the spot. The chef said, “This is actually pretty delicious.” For a while we sold to Chez Panisse and to another local restaurant. But the business quickly became retail.

Velez: We approached some local Peet’s Coffee shops and asked if we could come around every day and take their grounds. After about six months we missed one day, and the stores started calling us and saying, “Where are you?” They wanted something official. They said, “You guys have to come at least five times a week and we’ll pay you to take away the grounds.” It’s a very tiny portion of revenue. But we get our raw material for free and actually make a little money on it.

Arora: We also save money, because a third of the cost for most mushroom growers is sterilizing the substrate. With coffee grounds, there is boiling hot water going through them every morning, sterilizing them. Since we don’t need massive rooms for sterilizing wood chips we are able to use space very efficiently and operate in the middle of a city. 

Velez: We became full-time mushroom farmers. For about a year we would collect coffee grounds, go back to our 800-square foot facility, harvest the mushrooms, and deliver them to Whole Foods and other places. As we did demos and farmers markets, customers kept saying to us, “There’s tomato kits out there and basil kits. Can you guys create mushroom kits?” We tried packaging the spores in these big bulky bags and showed them to the Whole Foods buyer. He said, “That’s hideous. I can’t put that in my store. But I do think you have something here.” So we had to take the idea of growing food and package it in way that combines design and ease of use.

Arora: The kits contain mushroom seeds and recycled coffee grounds. The mushrooms grow in 10 days out of the box—super, super fast. They got an awesome response from families and kids. The whole vision of our company is connecting people to food again. A year and a half ago we were in one Whole Foods and now we’re in 300. We’re in Home Depot. Safeway. Nordstrom. Bed, Bath and Beyond. We will sell 100,000 kits in just October, November and December.

Velez: Not long ago we came across the idea of Aquaponics. It’s how the Mayans used to farm 1,200 years ago. It takes advantage of the symbiotic relationship between fish and plants. The plants grow on top of the water and clean it for the fish, and the fish waste is pumped up and used as fertilizer for the plants. There are big farms doing this and selling both the fish and the plants. It uses 90% less water and 90% less energy.

Arora: We had already taken the idea of mushroom farming and shrunk it down into these kits. So we’ve been working with industrial designers for the last four or five months to shrink an aquaponic system down to something tabletop size—just three gallons. You grow your herbs or greens or beans on top and your goldfish or whatever are below. They’re still pets but now they’re working. You don’t have to feed the plants, just the fish. And you don’t have to clean the tank every week because the plants are using the waste as nutrients. It’s the perfect closed system.

We bootstrapped the mushroom kits, but we want to fund this one through Kickstarter. We’re launching that campaign today.