Hacking the supply chain: Pete Russell at TEDxAuckland

Summary

In 2008, the speaker, a successful entrepreneur in the food industry, attended the World Food Forum in Rome and realized the detrimental impact of large-scale food production on small farms and communities. This epiphany, coupled with the 2008 financial crisis, led to the creation of EB, an online platform that connects local food producers with consumers, cutting supply chain costs and making local food competitive with industrial alternatives. The model has proven successful in Auckland, with plans to expand globally, promoting a local food renaissance and the collective ownership of food commons.

Takeaways

• 🏡 The speaker lived in a multi-million dollar home on Waiheke Island in 2008, reflecting their entrepreneurial success.
• 🌐 They were involved in importing frozen pastries from a European multinational and selling them in Australian supermarkets.
• 📈 Their business achieved significant milestones, including ten million dollars in sales and their first million-dollar month.
• 🌾 Attending the World Food Forum in Rome made the speaker realize the negative impact of large-scale industrial food on small-scale farms and communities.
• 🔍 The 2008 global financial crisis led to a significant loss for their business due to currency fluctuations.
• 💡 The crisis prompted the idea of using technology to support local food systems, which could be more resilient and sustainable.
• 🛒 They founded EB, a business model akin to an online farmers market, to make local food as convenient and affordable as industrial food.
• 📊 The EB model streamlines the supply chain, allowing growers to receive half of the retail value, which is a significant improvement over traditional models.
• 🌱 EB has been successful, delivering over 25,000 boxes and proving that local food can be competitive with supermarket prices when delivered.
• 🌍 The business is expanding, with the first box delivered in Sydney and plans to explore new cities globally.
• 🌿 The speaker envisions a global food Renaissance, emphasizing the importance of local food systems for personal, familial, and global well-being.

Q & A

What was the speaker's initial business model before attending the World Food Forum?

The speaker's initial business model involved importing frozen pastries from a European multinational and selling them through supermarkets around Australia.

How did the World Food Forum change the speaker's perspective on their business?

Attending the World Food Forum made the speaker realize that large-scale industrial food was forcing small-scale family farms and artisan food producers out of the market, and they were part of the problem.

What major event occurred that forced the speaker to reconsider their business strategy?

The 2008 global financial crisis hit, causing the Australian dollar to plummet against the euro, which led to their business going from making profits to losses overnight.

What was the speaker's idea to address the issues faced by local food producers?

The speaker's idea was to use the technology and systems designed for complex long-distance supply chains and pair them with the short-distance advantage of local food to make local food viable again.

What is the name of the new business model the speaker started to support local food?

The new business model the speaker started is called EB, which is designed to revive local food.

How does the EB business model work?

EB operates like an online farmers market, allowing customers to buy from various local vendors, growers, and producers, and have them all delivered in a single box to their doorstep.

What is the hypothesis behind the EB business model?

The hypothesis is that by pairing high-tech supply chain solutions with the short-distance advantage of local food, they could make local food as affordable and convenient as industrial food.

How does the EB model's supply chain differ from traditional supply chains?

The EB model's supply chain is a same-day, direct link from the grower to the customer, which reduces costs and allows the grower to receive a larger share of the retail value.

What has been the outcome of the EB model in terms of pricing and delivery?

The EB model has been able to deliver products at prices on par with supermarket retail prices, and with the added benefit of delivery to the customer's doorstep.

How has the EB model impacted local growers and the community?

The EB model has allowed local growers to earn more and has provided a viable business model that supports the local food community, reducing waste and improving the livelihood of small-scale producers.

What is the future vision for the EB model and the global food Renaissance?

The future vision is to connect with local food leaders around the world to create a comprehensive grocery solution that makes local food the obvious choice for everyone, contributing to a global local food Renaissance.

Outlines

00:00

🏡 Success and Realization in the Food Business

In 2008, the narrator, living in a multi-million dollar home on Waiheke Island, reflects on his entrepreneurial success with his business partners, who were importing frozen pastries from Europe and selling them in Australian supermarkets. They achieved significant sales milestones, but a presentation at the World Food Forum in Rome made him realize the negative impact of large-scale industrial food on small-scale producers and communities. The 2008 financial crisis further highlighted the vulnerability of their business model. This led to the idea of using technology and supply chain solutions to support local food producers, which resulted in the creation of EB, an online farmers market aimed at making local food viable and competitive with industrial food.

05:02

🌱 The UBI Model: Revolutionizing Local Food Delivery

The UBI model, or online local food buyers club, is introduced as a way to make local food as affordable and convenient as industrial food. The model streamlines the supply chain by having growers pick to order and deliver directly to a hub, from where the food is packed and delivered to customers. This reduces supply chain costs significantly, allowing growers to receive a larger share of the retail value while customers pay no more than they would in a supermarket. The model has been successful, with over 25,000 boxes delivered in Auckland and expansion to Sydney. The business is also exploring collective ownership through the Food Commons model, ensuring it remains aligned with the interests of all participants. The ultimate goal is to connect with local food leaders globally to create a comprehensive solution that makes local food the obvious choice for everyone.

10:04

🌟 The Future of Local Food and Global Impact

The final paragraph emphasizes the positive impact of the local food movement on individuals, families, and the world. It suggests that by supporting local food systems, people can enjoy meals that are not only good for them but also contribute to a thriving global food Renaissance. The paragraph concludes with an optimistic call to action, encouraging people to embrace the joy of eating and drinking while also supporting a sustainable and local food future.

Keywords

💡Entrepreneurial hustling

Entrepreneurial hustling refers to the relentless effort and resourcefulness required to start and grow a business. In the video, the speaker describes years of 'entrepreneurial hustling' as part of the journey to achieving success with their multi-million dollar home and business. This term encapsulates the hard work, innovation, and perseverance often associated with entrepreneurship.

💡Frozen pastries

Frozen pastries are a type of food product that the speaker's business imports from a European multinational. These pastries are sold through supermarkets in Australia, highlighting the international trade aspect of the business. The term 'frozen pastries' is used to illustrate the specific product line that the business was initially successful with before transitioning to a more local focus.

💡Global food crisis

The global food crisis mentioned in the script refers to a period of widespread food shortage and high prices, which affects food security worldwide. The speaker learns about this crisis at the World Food Forum in Rome, leading to a realization about the impact of large-scale industrial food production on small-scale farms and communities. This concept is central to the video's theme of local food sustainability.

💡Supply chain

A supply chain is the network of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. In the video, the speaker discusses the inefficiencies of traditional supply chains, which often involve multiple intermediaries and result in high costs and reduced profits for growers. The video advocates for a streamlined supply chain to support local food production.

💡Local food

Local food refers to food that is produced, processed, and distributed within a relatively small geographical area, often by small-scale farmers and artisans. The video emphasizes the importance of supporting local food systems as a way to revitalize communities, reduce supply chain costs, and provide fresher, more sustainable food options. The speaker's business model, EB, is designed to make local food as convenient and affordable as industrial food.

💡Supply chain costs

Supply chain costs are the expenses associated with the process of getting a product from its origin to the end consumer. The video discusses how traditional supply chains, particularly for international products, can have high costs that eat up a significant portion of the food's value. The speaker's business model aims to reduce these costs by streamlining the supply chain and supporting local producers.

💡Retail value

Retail value refers to the price at which a product is sold to the end consumer in a retail setting. The script mentions that in traditional supply chains, the original grower or producer receives less than one-fifth of the retail value, while the speaker's model aims to allow growers to receive half of the retail value, thus improving their profitability.

💡EB (Online Farmers Market)

EB, as described in the video, is an online platform that functions like a farmers market, allowing customers to purchase local food directly from growers and have it delivered to their doorstep. This concept is central to the video's message about making local food as convenient and accessible as industrial food, while also supporting local economies and reducing supply chain inefficiencies.

💡Food Commons model

The Food Commons model is an ownership and governance model that is collectively owned by the participants involved, including customers, growers, and other stakeholders. The video mentions that EB is adopting this model to ensure that the business is not driven by a private agenda but rather serves the collective interests of the community. This model aligns with the video's theme of community empowerment and local food sustainability.

💡Global food Renaissance

A global food Renaissance refers to a widespread revival or rebirth of local food systems and sustainable food practices around the world. The video positions the speaker's business and its efforts as part of this larger movement, emphasizing the importance of connecting with local food leaders to create comprehensive solutions that make local food the obvious choice for consumers.

💡Sustainable food system

A sustainable food system is one that meets the food and nutrition needs of the present population without compromising the ability of future generations to meet their own needs. The video advocates for a shift towards local food production as a way to create a more sustainable food system, reducing environmental impact, supporting local economies, and improving food security.

Highlights

Entrepreneur living the dream in a multi-million dollar home in 2008, reflecting on success in the food import business.

Achieved ten million dollars in sales and first million-dollar month after two years in business.

Attended the World Food Forum in Rome to explore business expansion opportunities.

Realized the negative impact of large-scale industrial food on small-scale family farms and communities.

Felt personally implicated in contributing to the global food crisis.

The 2008 global financial crisis led to significant business losses due to currency fluctuations.

Considered the importance of local food growers and producers during the financial crisis.

Conceived a new business model to revive local food by combining high-tech supply chain solutions with local food advantages.

Founded EB, an online farmers market aimed at making local food as affordable and convenient as industrial food.

EB operates as an online local food buyers club, delivering a variety of local products to customers' doorsteps.

The business model hypothesizes that local food can be made competitive by reducing supply chain costs.

Describes the traditional supply chain process and its inefficiencies.

Proposes a same-day supply chain that allows growers to receive half of the retail value.

EB has delivered over 25,000 boxes, proving the viability of the local food model.

Prices are on par with supermarket prices, making local food a competitive and convenient choice.

EB is expanding to new cities and adopting the Food Commons model for collective ownership and governance.

Aims to connect with local food leaders globally to create a comprehensive grocery solution promoting local food.

Emphasizes the joy of sharing meals made from trusted and connected local food as a key benefit of the local food movement.

Transcripts

it's 2008 I'm living the dream

standing in our multi-million dollar

home on Waiheke Island looking out over

the city's skyline

I put my arms around Kathryn and saved

my wife and say honey we finally made it

after years of entrepreneurial hustling

and scraping we finally hit the big time

my business partners and I were

importing frozen pastries from a

European multinational and selling them

through supermarkets around Australia we

just after two years we just cracked ten

million dollar sales and we just also

correct our first million dollar month

life was good and there was plenty of

blue sky ahead sitting one morning

sipping my latte reading the local paper

I saw an ad for a presentation about the

world food forum that had just been

convened in Rome I thought I'm in food I

might meet some money and they expand

our business into New Zealand I'll go

along what hadn't occurred to me was

that the world food forum was actually a

gathering of delegates from governments

all around the world to address the

global food crisis that we were in the

grip of so and what I learned was that

large-scale mega scale industrial type

food was forcing small-scale family

farms and artisan food producers out of

the market which was in turn tearing

apart the fabric of the communities in

their areas of those business were and I

was part of the problem and sitting in

that room I felt I felt like a fox among

hounds I didn't I didn't know what to do

so

but I went home and I'm like but what

what am I gonna do like what am I meant

to do I've only a living here I'm you

know I've got a family to feed I've got

a big rent to pay I can't what would you

do and then something happened

unexpected that made it crystal clear

the 2008 global financial crisis hit

boom

the Australian dollar plummets against

the euro and we're paying in Euros

so our business goes from making great

profits to making terrible losses

overnight and the more sales we make the

more money we lose we call an emergency

board meeting and one of the options put

on the table is look let's just stop

trading until things even out a bit so

we can renegotiate us our prices with

our supermarkets and the like and in

that moment I thought wow I we're only

one of hundreds of food importers around

the country and I bet they're all having

the same meeting about the same time and

I wonder if they're putting that option

on their table and I wonder what the

supermarket shelves would look like

after just a few weeks if all the

businesses like us would just say just

stop that for a little while that food

coming in and in that moment it became

blindingly obvious how vital our local

food growers and local food producers

are and then I had an idea ah what if we

could take the smarts the technology and

all the complex all the systems to solve

the complex long-distance supply chain

and pair that with the short distance

advantage of local food maybe we could

cut enough fat out of the supply chain

to make local food viable again so with

the bunch of awesome people a lot of

awesome people

we started EB which is a completely new

kind of business model designed to

revive local food look there's more

people who have helped out

and the names up there but it certainly

is a great effort team effort

ubi is basically like an online farmers

market it's probably the easiest way to

explain it or online local food buyers

club you can buy from a variety of local

vendors growers and artists and

producers and local commercial food

producers as well and have them all

delivered on to your doorstep you know

in a single box the hypothesis for the

business model was that by pairing the

high-tech supply chain solution with a

short distance advantage of local food

we could make local food as affordable

and convenient as industrial food and

plus with the trend away from the going

the shopping experience of going into

store and buying your food and more and

more back to the old-fashioned way of

having your food delivered to your

doorstep because local food doesn't have

all the retail infrastructure all this

rent and everything to pay it might

actually be far enough behind to be

ahead so here's how it would work the

you've got your food on on ubi org the

growers basically picked to order then

deliver the food to the Ruby hub and

then it's packed and delivered to your

door all in one fluid motion okay and

the secret source of the EB model

basically comes down to the supply chain

so a traditional supply chain you the

grower grows of food then sells it and

transports it to the wholesale the

wholesaler then holds on to the food

until it sells and transports it to the

retailer the retailer that holds on to

the food until you transport yourself to

the retailer I pick the food up and

transport the food back home in that

scenario around 70% of the value of the

food is actually supply chain cost and

the growers getting about a third if

it's if it's as fresh food the Groves

getting about a third of the value which

is only really just enough to scrape by

international supply chains on the other

hand are more like five or more links

where over 80% of the value of the food

is actually supply chain costs and the

original grower or producer is getting

less than one-fifth of the retail value

and only large operations can really

afford those margins whereas with the

same day to link supply chain that we

were thinking about the grower would be

able to get half of the retail value and

the customer wouldn't have to pay any

more than they'd normally pay because we

could pretty much cut out up to 30% of

the cost of the supply chain so

everyone's better off so great theory

but would it actually work well like the

grazing entrepreneurs we are we just

jumped in and started doing it we've now

delivered over 25 thousand boxes to over

$1400 steps around Auckland and we've

got a prototype that we feel works it

does work and in the last 18 months

we've been tracking our prices and on

par we've been on par with the

supermarket End and retail prices their

in-store sticker prices and our prices I

delivered to your door so when you take

into account that the products deliver

to your door you're actually making a

bit of a saving and everyone's getting

paid above market rates we do sometimes

supplement our boxes from the markets

when it suits our growers but we always

buy directors often as possible and it's

great for our growers Bill and Marilyn

had been trying to keep their business

alive for a long time and the roadside

stall was great but it really didn't

scratch a surface going to the farmers

market is really good and it meant

losing their weekends and if they didn't

sell enough food they had a lot of waste

leftover cafes buy little buyers coops

organic shops great but after running

around really not worth the while and it

also works for our distribution team on

only three as little as 300 customers on

a space of a garage or shipping

container this is a very viable business

where everyone gets paid a good good

rate for their work today this is our

customer spread around Auckland and

we've just delivered our first box in

Sydney and we're adopting

we're looking at new cities around

around the world at the moment we're

with Ruby we're adopting the food

Commons model which is an ownership and

governance model that is collectively

owned by the participants that are

involved including customers growers all

sorts of different participants so

there's no fear of this being taken off

on some private agenda we are playing

movies displaying a very small part in a

global food Renaissance that's happening

around the world right now a local food

Renaissance it's happening around the

world right now our job is to connect in

with all of the local food leaders

around the world and work together to

piece together a grocery full

comprehensive grocery solution that

makes local food the obvious choice for

everyone but a thing that's best about

this is that the solution is actually

something we all love to do anyway and

that is sit around a table without loved

ones and the people we care about

sharing a meal made from food that we

can trust and connect with so it's good

for you it's good for your family it's

good for the world so let's eat drink

and be merry for tomorrow we thrive