Flowers are the go-to gift for Mother’s Day. But have you ever stopped to think about where those fragrant petals come from?
At least 80% of cut flowers sold in the U.S. are shipped from overseas, according to Christina Stembel, founder of Farmgirl Flowers, who says that importation adds cost that’s bad for the local farming economy and consumers alike.
And that’s just one element of the multibillion-dollar flower industry that Stembel is challenging with her San Francisco-based startup. I spoke with the entrepreneur recently about her novel approach to floristry and what it takes to build a company from the ground up.
The interview has been edited and condensed for clarity. You can hear our entire conversation on Inflection Point.
Fortune: What’s different about your approach to flowers?
Christina Stembel: We don’t give options. We do one daily arrangement using 100% American-grown flowers, wrap it in re-used coffee bags, and then deliver it by bicycle courier. It’s different because customers don’t get to pick the type of flowers they want.
What’s the rationale behind that?
Standard florists don’t know what flowers their customers will want, so they have to buy lots of options—and then throw out what doesn’t sell. By not offering any options, we reduce our waste by about 40%. We budget 1%, and we don’t even hit that. We’re able to then give consumers a designer-quality arrangement at a generic e-commerce price.
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I know you’ve spent a lot of time digging into the floral industry and thinking about what’s wrong with it. What are some of the other problems areas you’ve discovered?
Waste is one. The second is imports. In the mid-90s when a lot of the leading e-commerce companies came on the scene, they changed the sourcing model just like any other industry—just like textiles and technology and coffee—getting all or most of their sourcing from South America. A minimum of 80% of the flowers sold in the United States now are imported, which didn’t make sense to me, because living here in sunny California you see flower farmers when you drive down Highway 1 and just about anywhere. The result is that 58% of American flower farmers have gone out of business in the last 25 years.
The third issue makes me sound a little bit like a snob—and I’m not, I promise—but I am a design snob a little bit, and I didn’t like the options that were out there. If I wanted to send flowers to my mom in Indiana, I had to use one of the traditional commerce companies. I would spend an hour sorting through over 100 options on a website to find the most visually appealing bouquet. What she received? Number one, it didn’t look anything like what I saw online, and number two, it wasn’t $100-worth of flowers. I wanted to send her something better. If I was going to spend $100, I wanted to give her a product that looked beautiful and appealed to my demographic and had a higher style element.
If I were going to send flowers to someone in New York or LA or somewhere like that, I could easily find a local designer florist, but I would have to spend $200 to send them a beautiful bouquet. Anywhere else, I had to resort to one of the e-commerce companies. I didn’t like what was out there.
When you started the business almost six years ago, it was local to San Francisco. Can anyone anywhere now order flowers from Farmgirl?
Yes, I’m so excited. When I first started Farmgirl, I thought, just like any wide-eyed entrepreneur might, “Oh, I’ll have national shipping going in 12 months.” I built it with the intention of competing with the big guys. And then I realized: If it was easy, everyone would be doing it. I figured out there are a lot of problems with shipping and trying to get to a price point that consumers can afford. Just even shipping flowers is hard. They’re perishable, and you’re shipping to states where it’s 110 degrees or under freezing. There were a lot of issues that I had to figure out. It took me a long time. We just launched national shipping in May. It’s growing like gangbusters. I’m very, very excited. It’s been wonderful.
Flowers aren’t considered a high-growth industry—in fact, sales have been steady and even declining. So when you think about this as a business person, how do you view that trajectory?
I did a lot of research first and found the same thing. It’s not a high-growth industry, but there is a lot of opportunity. Basically three companies make up about three quarters of the e-commerce space, and it’s a $3.5 billion space. There’s a lot of room for disruption. Research shows that younger consumers haven’t purchased flowers nearly as much as previous generations have, but for reasons that my model fixed. They didn’t like the aesthetics. They didn’t like that everything was imported. They weren’t getting marketed to in areas where they actually spend time. We do most of our marketing on social media channels, which really helps target the demographic that we’re looking for.
For more about the flower industry, check out this Fortune video:
Your website says you want to be 100% local by 2020. Why are you so focused on the local aspect?
It makes me feel a bit guilty that I’m putting so much emphasis on using American-grown flowers and yet all of the vessels, all the vases and other things we use are imported from India and China. If we’re creating American agriculture jobs, we should also be focused on creating other types of jobs in America. So that’s why.
What have you learned about creating a successful and sustainable business?
I feel like we kind of gloss over how hard it is. I’m a pretty tough girl, but there were a lot of tears, and there will be for anyone, guy or girl. You’re going to have to pivot quickly, especially if you’re bootstrapped. Coming here to Silicon Valley, the first question people ask me is if we’re funded or not. At first I thought that success equals funding. Now I don’t think that at all. I actually give more credit to people who are unfunded and able to build a sustainable company.
It’s so much harder when you don’t have $5 million sitting in the bank. It’s like, “OK, I have this much after payroll, and I need to move this around, and I really need to curb our growth a little bit right here because I need to make sure I have a reserve for this project coming up.” If we have a product that’s just not selling, I’m going to know within a week that it’s not selling, and I’m going to take it down and change something, because I don’t have the luxury of a safety net.
I’ve learned that success does not equal funding and that it’s OK, and it’s really good to pivot and adapt if something doesn’t work. For instance, last year we opened in LA and we closed in LA in one year. When I tell people, everyone’s like, “Oh, I’m so sorry.” I’m like, “No, no — this is a good thing.” I learned so much from that experience and I don’t regret it at all, and now I know what direction we’re going to go in as a company.
Well, on the funding thing, has this been a choice? Have you been approached? Why have you not gone that route?
I’m trying to build an integrity-driven business. I want to prove that it can be done, that you don’t have to sell out, as people call it, or do things that aren’t within your value system in order to run a business. A lot of people say things to me like, “Oh it’s just business.” But what does that mean? Does that mean you can do things you shouldn’t do because it’s under the umbrella of it being business?
When I was pitching to VCs, I got pretty far with a few of them, but there were always strings attached where we needed to make all of our team members 1099s instead of W-2s. I’m unwavering on that. I will not do that. We give everybody the opportunity to be full time with benefits, workers’ comp for our bike couriers, everything, because it’s the right thing to do. We take care of our team and they take care of us in return. Or an investor might say we need to switch to imports because they’re at least 50% cheaper than local flowers. I’m unwavering on that at this point.
I tried to raise money. I failed at it. I’m okay with saying that I failed at it because it’s totally fine; it’s normal. Now I’m actually really happy that I didn’t raise funding.
I know that you looked at other business before you decided to start Farmgirl Flowers. Will you share with us what some of your earlier ideas were?
I was one of those people who drove all of my friends and family nuts with a different business idea every week, and dinner parties with girlfriends would turn into mini focus groups. When I started Farmgirl, all of them sighed in relief, like, “Finally she just started one of them.” One of the more recent ones was iron-on pockets for women’s suits and things that don’t have pockets in them. Just ideas like that—I had a million of them, some with potential to make a lot of money. But I wanted to do something that I felt was leaving a positive mark, as well. Farmgirl was definitely the first idea I had that fulfilled both.
You had a day job at the time, which you quit to start this business. Tell us about that.
I was a director of alumni relations and campaign outreach for Stanford Law School. I was there for a little over five years. I was at the university overall for about 7.5 years. I always knew I wanted to start a business, and I knew it was never going to happen while having a day job. On the weekends I would work on business ideas and doing decks and financial models and stuff. I knew as long as I had that safety net and that really steady paycheck, it was never going to put the fire under me to do it. I like to tell the story of how originally I was so scared about running out of money that I switched from coffee to tea because Lipton teabags I could get for 16 cents a piece, vs. coffee at $1 a cup. It started to really sink in that, “Oh no, I have $49,000 in my bank account, and once I’m out, I’m out, so I’d better make this work.” It gave me a lot of fire.
What’s the best advice you’ve ever gotten about standing by your beliefs?
My parents always taught me that the best thing that you can have is integrity and that it doesn’t matter what anyone else thinks if you know that you’re doing the right thing. That’s always stuck with me. When I was pretty disheartened last year with the funding thing, my parents and friends would reassure me I was doing the right thing by my employees. I can honestly say that everything I do, I try to make the right decision. I honestly don’t have anything that I’m ashamed of that I’ve done in this business, and that’s the way I want to keep it.
Lauren Schiller is the host of Inflection Point, a public radio show and podcast featuring conversations with women changing the status quo. Inflection Point is produced at KALW in San Francisco, podcast on iTunes, and online at inflectionpointradio.org. The above article is an edited and condensed version of the broadcast interview. Click here to listen to the full audio.