In 2009, brothers Mike and JC Conrad were hit hard by the recession. Mike was in real estate and JC was in construction. They got news their father was sick, so they left Seattle to go back home to Spokane, Washington.
"We were all on welfare," Mike tells Inc. "I was losing my house. My car was repossessed. I ended up going bankrupt. It was bad times."
Facing a grim future, the brothers, along with their cousin Adam Kremin, were talking about what they could do for work when they landed "on that chicken thing." That's a reference to an idea that germinated about 10 years earlier, when JC was a manager at a grocery store. He would order 40-pound boxes of boneless, skinless chicken directly from the ranchers. He'd have to cut it up, put it on a foam tray, wrap it with cellophane, and put it on the shelf for a couple more bucks per pound than the grocery store had bought it for.
The experience gave him an idea to help the store sell more chicken: Ask people if they wanted to buy boneless, skinless chicken for $1.49 per pound, which would save them 50 percent compared with the national average, if they bought the 40-pound box. About 1,000 customers signed up for the sale and the store sold 80,000 pounds of chicken in two days.
Revisiting the concept in 2009, the three men went to their church and started spreading the word about their offer: a 40-pound box of boneless, skinless chicken directly from the farm for $1.49 per pound. They figured that in such a down economy, people would be looking for deals on staples like chicken.
The business model was easy: Get people to prepay, rent a truck, go to a farm and buy all the chicken, and meet the customers at the church parking lot. People from all over Spokane started sending them cash and checks in the mail--a total of $40,000 in revenue for their first event in December 2009.
By the beginning of the following year, they formally started Zaycon Fresh and started holding more farm-to-customer events in Spokane.
"None of us are college educated; we're just entrepreneurs who have always run our own small businesses," Mike, who is the CEO of Zaycon Fresh, tells Inc. "We opened it up and we started selling anything we could--chicken, ground beef, steaks. There was no rhyme or reason; we were just trying to create revenue."
Zaycon started to grow in Spokane, and the founders repeatedly were asked if the business was available elsewhere. They decided to test whether they could get enough prepaid customers in other cities to make it worth holding events. First, they tried Seattle, and it worked. Then they tried Boise, and it worked there too. Portland was next, and they got a big response.
After that success, they built a website so people could register for upcoming events and prepay online, and eventually made the bold decision to expand Zaycon to parking lots across the country. To get the word out in the Midwest and South and on the East Coast, Mike and JC emailed 1,000 bloggers. Mike filled one truck up with boxes of chicken and drove from California to Florida, while Adam took his truck from Washington all the way to Maine, dropping off boxes of meat to bloggers to review. Posts about the products popped up on 400 blogs and Zaycon got thousands of signups.
Zaycon Fresh's revenue reached $400,000 in 2010. It began carrying other meats the next year and saw sales balloon to $4.6 million. But perhaps the real tipping point came in 2012 when the company was featured on Good Morning America. After the show aired, Zaycon received a flood of 35,000 registered customers. The surge in interest crashed their site.
"Good Morning America gave us great exposure and verified to the people that we were a legitimate company," Mike says. "It's a little weird buying chicken from the back of a truck, right? But being on TV validated our model."
As the pressure of a fast-growing business mounted, JC decided to cash out in 2012, so Mike and Adam bought him out. After gaining tens of thousands of new customers, they realized they needed to raise capital to keep up with demand. In March 2013 Zaycon secured $1 million from investor Mike Giunta, who would later make three more investments. Since then, Zaycon has also taken out $1.3 million in loans, and raised a total of $6.3 million from several investors, including former Priceline CEO Rick Braddock, who joined as chairman of the board.
From parking lots to politics
In 2014, Mike and Adam lobbied Washington congresswoman Cathy McMorris Rodgers and New York senator Kirsten Gillibrand to add language to the Farm Bill enabling people on welfare to buy food online with their food stamps.
"I want to help people who are in the same situation I was in to eat better food at a better price," Mike says. All three founders were at one time on food stamps.
The company continued to grow that year, reaching $17 million in revenue and employing a staff of 80. It now delivers to 1,200 parking lots across 48 states and has more than 120,000 customers. According to a report by investment bank Baird, Zaycon Fresh could bring in as much as $70 million in sales this year.
The Baird report says Zaycon's greatest advantage comes from cutting out the middlemen and selling direct, farmer-to-customer, which eliminates fixed assets like warehouses and ensures the food is fresher and cheaper. Most meat is 15 to 25 days old after going from the farm to the wholesale buyer's truck to the distributor's warehouse to the grocery store shelf.
Mike says his ultimate goal is to develop prepaid farmers' markets. This way, the farmers would know exactly how much food to bring, which reduces waste, and they would make more money selling directly to customers than they do selling to wholesale buyers. The customer still wins too, for they would be getting fresh and natural food directly from the farm but paying roughly half the price.
For now, the company's strategy is to roll out one product at a time and concentrate on pleasing employees, farmers, and customers. With 98 percent of customers referring Zaycon to their friends and family, according to a company survey, the model appears sound.
"If we focus on people, which is what this whole thing is about, the business will grow," Mike says.
Correction: An earlier version of this story misstated the following details: the cost savings to consumers for the sale of bulk chicken, which is roughly 50 percent; the number of employees at the company, which is currently 80; Kurt Roth's position, which is investment banker; and the source of a customer-referral survey, which is Zaycon Fresh. Additionally, the article mischaracterized the amount of investment capital Zaycon Fresh has raised. It is a total of $6.3 million.