Come for the convenience, stay for the community - that’s the idea behind Farmigo.
Started in 2009 as a provider of software that helps farmers sell products through Community Supported Agriculture (CSA) setups--in which consumers pledge regular support to a farm in exchange for shares of crops, and other direct-to-consumer programs--the Brooklyn-based startup in 2012 launched a service for consumers to order food from a network of local farms and pick up the baskets at a common location.
It’s kind of like FreshDirect meets an on-demand farmers market. You might even call it the Uber for CSAs.
“We wanted to tap into a much broader customer segment, that while they like the ideal of a CSA, they really want to feel like they’re picking what they’re getting every week,” says founder and CEO Benzi Ronen, who started the business with his coworker Yossi Pik. The two, both age 44, met while working at enterprise software company SAP where Pik served as vice president of engineering and Ronen as VP of product management.
Farmigo relies on volunteer organizers to establish pickup locations in exchange for discounts on their orders or, in some cases, commissions on sales. Commissions can also be donated to a school, if that’s the pickup location. Users order items online for pickup during time windows set by organizers on pickup days set by location by Farmigo. The startup currently serves 15,000 families from 350 pickup sites located in New York, New Jersey, Northern California and, as of this month, the Seattle-Tacoma area. It has raised $26 million to date, from the likes of Benchmark and Sherbrooke Capital.
Available products include produce, dairy and prepared foods like soup. Items are sourced from a maximum distance of about 250 miles away, says Ronen - a fraction of the average 1,500 miles food in the United States typically travels from farm to table.
The spirit of the startup is informed by the idea of a kibbutz, or an agricultural communal settlement in Israel. Ronen has volunteered at a kibbutz and his Israeli father founded one. Ronen and Pik met while working for SAP in Israel, and Pik leads Farmigo’s development center in Tel Aviv.
At a kibbutz, people work cooperatively and consume in proportion to their needs, explains Ronen. While the company doesn’t necessarily operate like a kibbutz, some of its engineers in Israel have lived in such communities. Ronen zooms out the perspective to talk about how the idea of a halutz - a Hebrew term he says can be used to refer to the founder of a kibbutz - plays into the culture of entrepreneurship in Israel.
Referencing the 2009 book Start-up Nation: The Story of Israel’s Economic Miracle, Ronen explains that Israel’s history has shaped it into a fertile incubator for entrepreneurship. Start-up Nation drew praise for outlining a model other nations can follow. (In fairness, it also attracted criticism for neglecting to delve into the key roles of foreign aid and the conflict with Palestine in Israel’s economy.)
Israelis have a mindset of worrying about the sustainability of their country’s existence, and so they’re less risk averse, Ronen says, apparently summarizing the book. This helps to create a culture rich in chutzpah, the Yiddish term for audacity, he continues wryly: “Every employee in an Israeli company feels like they’re the CEO.”
Conscription in the Israeli Defense Forces (compulsory for most 18-year-olds in the country) exposes a large number of Israelis to innovations in military technology such as missile guidance systems, he says - and so, many have the skills needed to build new technologies.
“Halutz literally means going ahead of someone, which is what pioneer means, right?” says Ronen. Historically the halutz went to the frontier, "which is the border."
The promise of fresh food sourced directly from farms isn’t a new thing. Farmigo is going up against the likes of FreshDirect, Good Eggs, Quinciple and others in its efforts to bring consumers the crispiest kale. But Ronen insists that Farmigo’s model is unique.
Because food is locally sourced, Farmigo cuts down on warehousing costs. Delivering to pickup locations means the company does away with to-your-doorstep delivery costs. The reduced cost of operations allows Farmigo to pay farmers 60 cents on every dollar the company spends. Ronen likens the minimal infrastructure to the approach of Uber, which runs a ridesharing service yet owns no cars, or Airbnb, which offers overnight stays without owning the properties where people are staying.
Pickup locations enhance a sense of community among users. The centralized locations are actually more convenient than waiting at home for items to arrive, he asserts. A parent can grab an order when picking the kids up from school, for example.
“I think something that’s pretty fundamental is that there’s no money changing hands at the organizer’s pickup site,” says Ronen. This allows the organizers to focus more on connecting with the people grabbing their groceries.
And human connection leads to customer loyalty. “That’s what I think we’re tapping into.”