What We Did When Our Early-Stage Startup Lost a Key Partner

2015-10-22-1445550525-102050-LauraJohnson.pngLaura Johnson is a co-founder of Salty Girl Seafood, Inc., a sustainable seafood company founded in 2014 and headquartered in Santa Barbara, California. They develop sustainable, traceable, chef-quality seafood products that incentivize sustainable fishing practices and promote stewardship of our oceans. For more information on Salty Girl Seafood products and stores, please visit the Salty Girl Seafood website or follow them on Facebook and Instagram. This article was co-authored by Norah Eddy, co-founder of Salty Girl Seafood.

One of the first and best pieces of advice my team and I at Salty Girl Seafood received as a young startup was to work with other startup companies. This expands your network, allows you to keep a finger on the pulse of startup culture and learn firsthand from other early-stage businesses.

So when Good Eggs, a food delivery platform, reached out to us to supply them with sustainable seafood, we leapt at the chance. Good Eggs was a well-funded and fast growing startup with a mission and company culture that aligned well with our own. Selling through their platform turned out to be an incredibly timely opportunity for our young company.

In true startup style, at the time we were gearing up to pivot. Good Eggs provided us with the launchpad for our new product line. Through their platform, we were able to validate product-market fit, refine the product and features, and obtain customer feedback -- something that for many food companies requires endless hours at farmer's markets and focus groups.

Good Eggs gave us the luxury of getting our product in front of our target customer with minimal risk and low overhead. The data and validation that we gleaned through our sales provided the necessary support for our company's pivot and fueled a successful transition. Without the opportunity to host our product on Good Eggs, who knows how much time and money we would have lost trying to achieve the same degree of validation.

But working with other early-stage companies can be risky. In a sense, choosing to work with startups means evaluating the strength of their model and team and determining whether or not the reward outweighs the risk. Ultimately, we were making an investment. In this case, Good Eggs seemed infallible: they had scaled, operating out of several locations (hubs) following city-by-city rollouts. Unfortunately, as CEO Rob Spiro mentioned in his letter to vendors this August, they made the egregious error that every investor dreads: they scaled it before they nailed it.

The recent news that Good Eggs was to close three of its four hubs, including Los Angeles (where our product was offered), came as a surprise to us. Hundreds of small businesses and food producers across the U.S. who relied on Good Eggs for a portion of their sales surely felt the shock as well. But this is the risk we knowingly take as startup teams working together.

For my team and me, Good Eggs provided a unique opportunity to obtain the key data to launch a new product, grow our brand and inform our strategy. I can only imagine there are countless other businesses and producers who have had a similar experience. Through this process, we have learned valuable knowledge that we hope to pass on to other young companies considering a similar risk.

  1. Don't put your eggs all in one basket (pun intended!). Diversify your sales through several small companies to start. It will hurt less if you lose a customer.
  2. Don't panic. Startup life is all about change and risk. Be prepared for it and react accordingly.
  3. Get out there and sell. Use it as an opportunity to find new customers. You proved you could sell through a small company. Now take your sales to the next level with a more established retailer.
Taking the lessons learned from Good Eggs, we are now prepared to launch our product line in retailers across Southern California. We will continue to grow (our Good Eggs customers are already reaching out and asking where to find us), and look forward to working with the next startup or retailer with whom we can accelerate.