Farmbox’s Pivot From D2C To B2B Results In Exponential Growth

Fifty-four million people are food insecure and lack consistent access to enough food to meet basic nutritional needs. Twenty-three million people live in food deserts, areas where people lack access to affordable and healthy food due to the absence of grocery stores, the high cost of healthy food, or transportation barriers. Food insecurity and living in food deserts are major contributors to obesity, diabetes, and other chronic diseases.

Based on her own experience with food insecurity, Ashley Tyrner launched Farmbox Direct in 2014. The company makes healthy eating accessible to people who are food insecure.

In 2019, Tyrner pivoted to focus on the healthcare plan market, partnering with Medicare Advantage, Medicaid, and private health insurance plans to offer produce boxes as a benefit to members. The company soared, generating $36 million in revenue last year and making the Inc 5000.

First Hand Understanding Of The Needs Of Low-Income People

In 2010, Tyrner’s husband abandoned her when she was pregnant. She moved in with her parents in Casa Grande, Arizona. She was on food stamps, living in a rural food desert, and had to drive 20 to 30 minutes to a grocery store.

She’s Hispanic. The issue is much more prevalent in Brown and Black communities. Half of the Americans living in food deserts are low-income. That’s where the idea for Farmbox Direct began. “I knew how hard it was to live on benefits while pregnant and trying to eat healthy,” she said.

Tyrner moved to New York City and took a job in fashion. By 2013, she had saved enough money to launch Farmbox Direct, a subscription box service that delivered fresh, seasonal produce to your door. She started the company to bring health equity to those who can’t afford it or live too far from grocery stores to maintain a healthy diet.

Food as medicine is a holistic approach to health that recognizes the power of food in preventing, managing, and treating diseases. Tyrner is a firm believer that eating a healthy diet rich in fruits, vegetables, whole grains, lean protein, and healthy fats not only provides our bodies with essential nutrients but also reduces the risk of chronic diseases such as heart disease and diabetes. This powerful approach to health empowers people to take control of their well-being and improve their overall health.

Farmbox subscribers choose from a variety of boxes filled with produce, dry goods, lean proteins, boxes that appeal to different ethnicities, or boxes focused on different chronic conditions such as diabetes and hypertension.

“We give digestible information to help change members’ behavior,” said Tyrner. Start small, she recommends. “Think of things like just getting up and moving your body and walking outside down the block. Then the next week, you could walk around the block.” It also offers a variety of recipes and cooking tips on its website.

The company had grown to $1 million in revenue by selling direct-to-consumers (D2C). Its exponential growth began when it introduced a new revenue stream—selling through health plans.

In 2019, Farmbox took advantage of the Medicare Modernization Act of 2003, which included a provision allowing Medicare Advantage (MA) plans to offer produce to their beneficiaries. MA plans are offered by private companies that contract with Medicare to provide benefits to Medicare beneficiaries.

The company created Farmbox Rx, which is focused on proactive wellness by delivering food as medicine across America in partnership with Medicaid, Medicare, and employer healthcare programs. Farmbox Rx is a first-of-its-kind nutrition program that makes healthy eating accessible to members of wellness-focused health plans. Health plans pay Farmbox Rx for the food that is shipped to their members. “Last year, we closed almost $36 million [in revenue],” said Tyrner.” The company closed its direct business.

These wellness-focused health plans are citically important. “While looming potential shutdowns wouldn’t have immediate impact to Medicare/Medicaid coverage, or FarmboxRX, as mandatory spend programs, the stagnant negotiations on discretionary appropriations could very well impact the 40+ million Americans that rely on federally funded food assistance programs such as SNAP and WIC,” said Tyrner.

The Power of Mentorship

Early on, raising funding was Tyrner’s biggest hurdle.

Tyrner tried to raise venture capital but was not able to. She met venture capitalists who commented on her lack of a college degree. She walked out on one VC who asked, “Could you please tell me what’s in the business bank account? Because you didn’t go to college, and women as a whole are really known not to be great with money.”

Now that the company is successful, VCs want in. But the company doesn’t need the money. She’s also turned down three acquisition offers.

She tried to get loans and a line of credit. “It was six or seven years into the business [before a bank would lend the company money],” said Tyrner.

Lack of venture and debt didn’t stop her from scaling her company. Farmbox is now number 100 on the 2023 Inc. 5000.

Books don’t teach you what to do when your bank collapses, commented Tyrner. Her bank was Silicon Valley Bank. Tyrner describes the experience as the worst 18 hours of her life. She had at least $10 million in deposits. Fortunately, she had more than one bank.

“My number one job [now] is to surround myself with the best talent I can find,” said Tyrner. “You’re dealing with a lot of different personalities with different needs.” Salespeople have different needs than techies. The exponential growth of the company since it pivoted to focus on the members of health plans is different than the growth Farmbox Direct experienced as a D2C brand.

“I’m very thankful I have really great mentors,” Tyner said. She found mentors through angel group dinners and events. Now that she is focused on health plans as Farmbox Rx’s customers, she meets mentors at trade shows.

She is fortunate to count Sam Kass as a mentor. He is an American political advisor, chef, and news personality who served as President Barack Obama’s Senior Policy Advisor for Nutrition Policy and executive director for First Lady Michelle Obama’s Let’s Move! campaign, as an assistant chef in the White House, and VC. He is on Farmbox’s advisory board.

John McClelland is the CEO of Liberty Fruit, the fruit distributor that Farmbox uses. He’s been an incredible mentor and helped her understand how to be an effective CEO. Her husband is a CEO as well. He’s had five exits. “I’ve been very fortunate to be able to reach out to his circle as well,” said Tyrner.

Where are you finding mentors?