- These things are eerily
similar to us humans. - [Sundown] Well, this is
where we're gonna prepare their food and their bed. - And this guy sells about $200,000 worth of them every single year. Thank you.
- So from the beginning, we've increased about 40% year over year. - How did he do it? Why mushrooms? - [Sundown] Every day
they're growing 50% bigger. So the window of harvest, is actually pretty small. - How he turned his passion
into a profitable business, while claiming anyone can do the same. - As we were figuring out
how to grow mushrooms, we failed miserably. And this is one piece of advice that any mushroom grower can take. No one person can do it all if you wanna be a
scaling, growing business. We have spent $0 on actual advertising.
- What? If you have a 9-to-5, but wanna get into doing this? - Well, there's a lot
of people doing that. - Do they really?
- So you totally could. We sold out everything we
grew for the first few years. - I drove to a small city of Walla Walla to discover the answers we all seek. All right, Sundown, you are a Washington State
Entrepreneur of the Year. But before we find out how that happened, tell our audience what
exactly you do here. - Our primary purpose is to
build healthy relationships, and we do that by growing mushrooms, which is a great way to meet people, because mushrooms are
fun, they're healthy, and they catch people's eye. - Awesome, did you have like
a background in farming? - My background is pretty varied. Farming was kind of sprinkled
in on a very low level, small community farms, I dabbled into aquaponics
for a little bit. But, by and large, I worked at the Apple stores for 10 years, I worked at UPS for a year and a half, done a variety of other just jobs, you know, that pay the bills. - No farming whatsoever. So why mushrooms out of
all the farming choices, especially in Walla Walla, right? - Yeah, so those small
experiences I did have, really gave me the bug that said that it was important for us to have local sources for our food and to be able to do that year round. So when we looked at the
different components, we realized that there wasn't
a significant mushroom grower in this region, and there was some demand, Walla Walla is a tourist industry, so there's some really
fine restaurants here. And that's what we had in our pockets, so we started with growing mushrooms. - Tell us exactly where we are though, just in a quick snippet. - Yeah, you came on a
really great day, Paul. Today is the opening day of the Downtown Walla
Walla Farmers Market. - [Paul] Exciting.
- It is mushroom weather, as you can tell by the wind and the rain. - [Paul] On and off with the rain, yeah. - Yeah, so we play off that. But we have a lot of great vendors here, and some food vendors
are still pretty early in the farming season. But we have a lot of
other crafts and artisans that participate in this market. (upbeat music) - Hey, you guys, we just got to the farm. Welcome to Walla Walla. Look at this beautiful hay field. I know Sundown's already in
there waiting for us, so. Hello. - Hey, Paul, welcome to Chesed Farms. - Hey, I just saw you two minutes ago. - Yeah, welcome back.
- All right. It's exciting to be actually at the farm. Talk to us about why you
have a sawdust machine. - Sure, well, this is where
we're gonna prepare their food and their bed.
- Food and bed. - So you can think of this
as a bed and breakfast for alien life forms.
- Spoiled mushrooms. They need their food and bed, okay. - Yes, so we have their
room and their food. There's a number of ways
you can mix the substrate. And we take a bag. - What are you mixing in there too? - Oh yeah, we're mixing oak
sawdust, in pelletized form, and oat pellets. Yeah, pick up our good
old unicorn bag there, just gonna put it on this
hopper, step on the pedal. - How much? Oh!
- Yeah. One step in everything. - It all just mixed up.
- This revolutionized our business. - Up until last year, we were
mixing this stuff in totes, and then measuring it
by hand into the bags. - Wow, so we have water, we have everything they need to get going? - Yeah, the three
ingredients that we're using, it does take a few minutes here for the pellets to absorb the water. And then, you see they kind of break down, so we have these totes and
we'll make 12 in a batch. And in that time, it's ready to be folded. - Okay.
- You wanna make one? - Sure. So then we just, do we open
it up all the way like that? - [Sundown] Yeah, and
just pull it up there. Make sure you hold onto it.
- Okay. - [Sundown] 'Cause it's about
10 pounds of stuff coming. And then, wait for the water
to drip, and we're good. Good job, Paul. - All right, I'm switching careers. - Just go ahead and put
that right next to that one. - Yeah! Share with us your monthly
expenses here at the farm. - You're talking more overhead as opposed to material stuff?
- Yeah, as business, yeah. - Yeah, so in our overhead, we're in a controlled environment, you see, we're in a warehouse.
- Mhmm. - We are leasing this
space, so we have our lease, we have utilities, mostly electricity, insurance, about 3,500.
- Okay, not bad. - You know, if we include
like our software, and QuickBooks, and those kind of things, so somewhere in that ballpark. - [Paul] So this is where
you spend most of your time, I'm guessing, right?
- Oh yeah. - The long weeks that you put in, this is where it happens? - It's either this or I'm on the road delivering mushrooms to somebody, but even more so here. - Well, I wanna go check out, what do you call it, the incubator? - The incubation room.
- Incubation room. - Yeah, or the myceli room. - Tell us a little bit about that. This is where they kind of
hang out, eat, and grow. - Yeah, the creature spends
most of its life as mycelium. It's under our feet everywhere we walk, pretty much.
- Interesting. - And that's what we're gonna go see. So this will be the underground stage. We've inoculated our bag of substrate with a little bit of grain
that has some mycelium on it so that they can then continue to expand, and eat, and get ready to be mushrooms. - Let's go check it out.
- Yeah. - Help us understand what
in the world's happening in this room, 'cause it's like 81 degrees. - Yeah, so this is where
the mushrooms are growing, expanding, eating all their food in their nice prepared
room and breakfast board. - Nice.
- And as they do that, they're also metabolizing, so they're creating heat in here. This would be the underground
phase of the mushroom. - [Paul] Call that the underground? Okay. - Yeah, and so they're just hanging out. This is what we typically don't see, but it's happening underneath
our feet as we walk around, especially in the forest. Each of these little points was a grain that had mycelium on it. And they're expanding out, and then they're finding each other and they're becoming one and reconnected. And we leave 'em in here until that point where they've essentially eaten up all the food that they want. They're starting to sense
the scarcity of their food, so they wanna send out
that next generation. And that's where we'll take
them over to our fruiting room, cut open a hole, and let
them grow their mushroom so that they can do the next generation. However, we're gonna cut that off and turn them into food for us. - Interesting, it's like this. Right?
- Yeah. - Let's say I wanted to
start a mushroom farm today. I have zero knowledge,
zero farming experience. Can you give me a step-by-step
plan on what that looks like? And I know there could be a lot, but give us your version.
- Yeah, it is a lot. For interest of time today, I can break it down into some three simple-
- Phases? - Phases, that will give you an overview. So the first one is you wanna understand who's your competition
and who's your customer? Where are these mushrooms gonna go? And knowing your competition will also help you know what
customers are not being served. So after you research your
competition and your customer, then you wanna get your setup made. So the most important step
of the mushroom operation is growing the mushroom. Here we're in this incubation phase. There's actually companies
now that focus just on this. So you don't have to
have this infrastructure, you can just build your fruiting room, bring these ready-to-fruit
blocks into your fruiting room, fruit them, package 'em, sell 'em, and you're done with a lot
less overhead going into it. And then, third is you gotta follow up. So as those things are taking place, you've already talked to your customers, you gotta let them know
every step of the way. They wanna know the farmer, make sure they know who you are, where are they at in the process. Things happen and you just tell 'em. Chefs know, especially with
dealing with local food, that it doesn't always
turn out the way you hoped, but just make sure you're
following up every step of the way and that you show up with
what you say you can do. - Is there anything else
to add as far as research? What are some key traits or key aspects that we need to
remember about the research? - Well, research is be bold and be proud of what you're gonna do. Even though in your early
stages, let 'em know. So at a restaurant, for instance, you're gonna wanna read
their menu first, right? See what they're serving. Go through their website and social media, and look for statements that
say they value local products. - Hmm, that's a good one.
- Those are gonna be easier customers to connect with. And if they don't say that, keep looking, and you can return to
those customers later if you think you can
build that relationship. In the grocery stores, if that's the market you wanna go after, go talk to that produce manager. And if you just happen
to have a nice community and neighborhood that you're
involved in and known, you could just do some direct sales, and then offer some online sales
and possibly a subscription and just deliver in your neighborhood. Make it simple.
- Okay. So how much do you typically
sell at a market like this? - So up until the end of last year, we sold out everything we
grew for the first few years. - Wait, you brought
everything from the farm and it was all gone?
- Everything on the farm, which at, you know, the
peaks towards those end was probably about 20 to 30 pounds. Nowadays we have more mushrooms. In fact, we're going into more
farmers markets, two today, it'll be two on Fridays.
- Okay. - So Walla Walla is a great community because it's got a lot of foodies. So our goal right now is to
average about $1,000 per market for this market.
- Wow. - Other markets that are a little smaller, smaller communities that may
not have a rich food community, we're shooting for like 300 to 500, which is a decent amount. - Right, but this isn't the only way you sell mushrooms, by the way. - No.
- I wanna make that clear. Okay.
- Yeah. - [Paul] This is just an
opportunity in spring, you get out, and you
meet with the community. - [Sundown] Yeah, six months of the year, this is what we're doing,
Fridays and Saturdays. - Nice, I wanna come back to the fact that you got into this with absolutely no experience in farming. So where did you learn from as far as your information that you got? - Primarily, it was the YouTube. - Here comes YouTube again, okay. - Yep, YouTube University, right? - [Paul] Yep, free doesn't cost you much. - Free, you can watch it and listen to it while I'm doing other things. You can go back to it and review it. - Before I ask you about
specifically what YouTubers, 'cause I'm interested to find out, but what is the startup
cost though, Sundown? Like, if I wanted to get
into the same industry, how much does it cost? Do I need to have a lot of money? - Everything depends, right? That's what I learned in accounting class. Everything depends. But our startup, we had a
garage, had a three-car garage. So we converted one of those carports into our mushroom farm with $5,000. And we sought out recycled materials that we could get and things like that. For ours, we overdid the
construction for sure. (chuckles) So we built actual walls, insulated them, mini split systems to
control the climates. - [Paul] You realized you don't need that is what you're saying? - For that size of space, they have what's called a Martha tent, named after Martha Stewart.
- Have to check that out. - And it's just a pretty simple grow tent with a much less
complicated humidification and temperature system that would've fit nicely in our space. But go big or go home. - Where are we going
next? Tell us about it. Walla Walla Factory?
- Pasta Factory, yeah. - Yeah, so what's the relationship there? - [Sundown] So the Walla
Walla Pasta Factory is right here on Main Street, just two blocks from
where we're at right now, and they were our very first Walla Walla restaurant customer. - All right, here they are,
Walla Walla Pasta Factory. - That's the spot, so cool. I know one of the questions
that we love asking is the profit margins, revenue questions. So if you're willing to share, can you walk us through
your revenue as it is today? - So from the beginning, we've increased about 40% year over year. And, last year, just shy of 200,000. This year, because we also scaled back some of those additional
products we're doing, and I'm working on being more conservative in my forecasting, I'm shooting to break 250,000. - Okay, I'm curious, I wanna ask you guys how much of the 200,000
they made last year do you think Sundown
actually gets to keep? Answer below, A, 20 to 30%, B, 30 to 60%, or, C, 60 to 80%. We'd love to hear from you. All right, blitz time with Sundown. You ready?
- Ready. - All right, rapid answer. How many times can you
harvest from the same block? - Commercially, one is
really all you wanna go for, but a block can be
harvested up to three times. - Got it, any tips for
negotiating with retailers? - If you're small and starting out, we guaranteed our product,
so we kept the inventory low so that we wouldn't
have to replace product. And on the couple times where we did, we replaced the product. - Okay, is mushroom farming
the hardest type of farming? - I don't think so. I couldn't tell you what the
hardest form of farming is. - Good point. Where did you get your spores,
mycelium, to get started? - Did I get that right?
- Yes, so we primarily get our mycelium from
The Mycelium Emporium. We do some in-house and also
the Mossy Creek Mushrooms. - Gotcha, record number of mushrooms you've harvested in a year? - Last year, we hit somewhere around 3 1/2 tons of mushrooms. - Whoa, okay, if you weren't a farmer, what would you be doing instead? - (chuckles) I'd be farming.
- You'd be farming? How has running this business
changed you personally? - It's changed me personally in just becoming who I'm meant to be. - Running a small business like Sundown's can sometimes feel like a juggling act. Bills to settle, vendors to
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experience the difference Melio can make today. As far as revenue, how
much is it from wholesaling versus directly to consumer? - Yeah, that's a good question. 'cause we do have a
diversified market going on. And it's been pretty consistent,
just around that 50% mark. - Really?
- Yeah, give or take. Direct to consumer versus wholesale. The farmers market being a big part of that direct-to-consumer component. - All right, when you first got started, how did you build the
relationships with restaurants, with other sellers or buyers? Like, what was your pitch? Or maybe you don't need a pitch 'cause everybody wants mushrooms. - Well, that definitely helped, and I'm a bold person when
it comes to stuff like this. So it's pretty much walking in and finding out who the decision maker is, and then asking them,
if they like mushrooms, if they use mushrooms, are their customers looking for mushrooms? So with the restaurants, I'm
looking to talk to the chef. If it's a bigger restaurant,
I'll find a manager. But the chefs are typically
the ones to connect with. And then, with the restaurant in specific, I'll look at their menus and try to see, "I noticed you had this dish on your menu, this is a place where
this particular mushroom would do really well. Or this would be a mushroom that could expand a new
dish for your menu." So figuring out how it fits
into their current offerings and how to expand their offerings. And then, in the grocery stores, it's the produce manager. - But it's all face to face essentially? - Yes, that is the key. - Well, I am dying to
try one of the dishes. I heard that they're
making something for us with the mushrooms. - Yeah, Chef Corie's in there right now putting something together. - Dude, let's go, let's go check it out. All right, sweet. Well, it's good we get like inside access before everything opens up, right? - Yeah.
- I see this menu. What do we got here as
far as Chesed Farms? - Yeah, so we're right
on the top of the menu, the Wild Mushroom Bruschetta, using our oyster mushrooms.
- That's awesome, cool. - But today we're gonna
try out that bruschetta. (upbeat music) So this is a crostini with
oyster mushrooms on it. A little bit of the shiitakes as well, some caramelized onions. This is a local bread
from Wheatland Bakery that's been toasted. And then, we have a olive
oil and balsamic vinaigrette from another local company. - All right, well dig
in, I'll do it with you. - Let's do it, my favorite part. - Wow, that's freaking good. So what are some of the biggest challenges that you faced when you
first were starting out? - Yeah, well, our history is unique in that we started the week that the Covid shutdown happened. - No way, you were one
of those businesses? - Yeah, we filed on March 15th, and then four days later,
it was the shutdown. - Wow.
- We were already building, and as we were figuring
out how to grow mushrooms, we failed miserably a
number of times in trying to figure out how we were
gonna start the growth process. And that led to leaning
more on those folks that are already doing it, we tried to rewrite the script. - Reinvent the wheel?
- Reinvent the wheel, yeah. So that was definitely
challenging and slowed us down. And then, Covid made a big impact, 'cause the farmers market shut down. There weren't any farmers
markets to start with. Luckily, I have some digital
experience in websites and can move pretty quickly. So we just fired up a website and we got into the newspaper as a business starting up in Covid, so that was the story. And we were delivering people on bicycle, 'cause no one was on the road and we're in a small town, and we sold out. So the challenge was the external factors that you don't think about. - Yeah, we are at the
harvesting area of the farm. Right?
- Yeah. - This is absolutely amazing. Can you give us a quick breakdown on what kind of mushrooms
we're looking at here? They're all beautiful by the way. - Yeah, so these are some
rock stars that we've got, the lion's mane up front. - Wow.
- Little fuzzy hairs. People really enjoy that one. The snow oyster, which this is something that started here at this farm. - Really?
- It's not the only white oyster mushroom out there, but we had a blue oyster mushroom, then the batch spit out
a couple white ones. And so we took the tissue
culture and got it into liquid, and we're able to cultivate it. This is a pearl oyster mushroom, which has just been a monster, it's a new one for us as well.
- It's huge. - The chestnut mushroom,
which is my personal favorite, rich umami flavor, nutty twist
to it, super tender caps. - How would you eat this? Give us a recipe
recommendation by the expert. - Yeah, so one of my favorites is it mimics crab and lobster meat, and my wife's allergic to shellfish. I love clam chowder. So this, we shred it up, and we can mix it into a chowder recipe. And I get the best of both worlds, I get my chowder and
I get to keep my wife. (Sundown laughs)
- That is a good combination. Guys, we wanna hear what
you think as far as recipes. Comment below, out of all these
mushrooms you've seen here, what's the best way to prepare it? Love to hear your thoughts and comments. Tell us how we know that
they're ready to harvest. Obviously, I would think, well, there's no rocket science to it. They're ready, take 'em off. Give me an elaborated
version of how do we know? - It's an important question,
because they grow so fast. Every day they're growing 50% bigger, so the window of harvest
is actually pretty small. For the chestnuts for instance, it's within like six to eight hours. If we go a little bit past that, they're gonna be less than prime. And, of course, we're a premium brand, so we want the best mushroom.
- So the flavor does change if you don't harvest it
in a particular time? - Yeah, 'cause they
start to transform more into giving off spores. And so even the material, the flesh of the cap, changes
into gills and spores, so you have less cap flesh. So we like them when
they're nice and curved. We still have a richer brown color. They'll lighten up in color as well. The blues is a tricky one. They start off rich
blue, like marine blue. And as they mature, they
fade off almost into silver. So you wanna catch 'em right
when they're still blue, but big enough that we're
getting the yield we want. And one way to tell is the curve, so we like a little bit of curve left on the oyster mushroom there. And then, it's also the touch.
- Mhmm, like the firmness? - Yeah, so they're not totally firm. They have a little bit of
rubbery bounce give to them. - They're such a
beautiful little creation. - Lion's mane, we're looking
for some defined icicles or hairs on there. You can let 'em grow really long. But we like to say that we're
micro-culturists, right? Like a horticulturist
takes care of plants. So we take care of mushrooms. I'm not a mycologist, I'm not a scientist, so don't ask me the Latin names. - Okay, I was gonna go there next, yeah. - But essentially the oyster
mushroom is a classification where they are really closely related. - Well, I'm excited to
harvest this with you and learn a little bit.
- Sweet. - Before we do that though, how long did it take for
you to make enough mushrooms out of your home garage
to then branch out, and lease, and get a bigger space? - Well, I'm a fast talker so we probably should have grown more. But we were able to work with
another locally-focused lender that bridges the gap between
the bank and startup. - So you brought them
up because they helped you branch out of your garage? - Yeah, so they gave us the financing to get into this place.
- I see, okay. - But we were able to demonstrate, so in the garage, we
were able to demonstrate that we knew what we were doing, we had some clientele in our sales. Like I said, we didn't have any losses. So everything we grew, we sold. - How long did it take
you to prove that concept? How long were you in the garage? - Six months.
- That's it? - Yeah, so we started talking
to Craft3 six months in, and then we had the lease on
this place two months later. - Let's talk advertising,
how much you spend, what sources, what has the
best ROI, and so forth? - I'm glad you're asking this question, 'cause this is one of those
things I'm pretty proud of, that we have spent $0
on actual advertising. - What? - In four plus years. We got Instagram and Facebook, and then we got an email newsletter, and our website has a lot
of information on that. And then, it's the face to face. So farmers market is
not just a sales avenue, but it's a teaching and
relationship-building opportunity. - For sure, yeah.
- And then, we also do some special events. So we've done some, we
call them master classes at wineries and restaurants where we're pairing mushroom-heavy dishes, and, at the case of a winery, we're gonna pair that with a wine. And then, through that meal, we're talking about the farm, and I'm talking about mushrooms, and their benefits, and how we do it, and so people get a real
immersive experience. - Yeah, sounds like a
fun experience for sure. - Yeah, full of fun guys.
- Yeah. Share with us the experience
of being on local TV. What did that do to your business? How did you secure those
spots and so forth? - Yeah, well, I have no idea
how we secured those spots, just like I have no idea how I landed on your
YouTube channel today. - Fresh starts, it's a new year, and I'm here with Sundown Hazen at... - Chesed Farms. - So if you've kind of wondered what's going on in Walla Walla, we're growing mushrooms thanks
to Sundown at Chesed Farms. - So we have a public station here called the Blue Mountain Television, and they reached out to us and wanted to do more segments
about local businesses and local organizations. They see our mushrooms at
their local grocery store, so I imagine that helped connect it. Then we also had a local news reporter from the Tri-Cities here who reached out to us last December. He wanted to do a piece,
his producer said, "Well, we've already done
a mushroom farm before." So he went back to the website and noticed that we were selling our soil substrate.
- He found something else. - And he said, "Why don't
we do that in the spring?" And so he followed up a month or so ago, and we did a piece with the wheat farmer who's using our substrate to
turn that into a fertilizer for the wheat fields out here. - What did that do to business? Do you see an uptick or
this is just another way to, you know, build brand
awareness and that's all it did? - Brand awareness would be,
I think, a big part of it. It still surprises me, you know, we're a town of 44,000 people- - Not a lot.
- It is a lot, but it's also not a lot. But it's, in perspective, still run into people all the time like, "We had no idea that there
was a mushroom grower in our community."
- Really? Okay. - So even with the
newspapers and the TV stuff, like, there's still room
to grow and raise awareness that's not always front
of mind for me, right? I'm in it every day so I just assume like, "Of course everybody knows
we're growing mushrooms, we're everywhere."
- Yeah. What are the biggest challenges
of running a mushroom farm? - Yeah, I have a phrase I
say, I say, "#farmlife." In our case, machines break
down, contamination happens. - Oh, dang.
- Yeah, so our- - How do you deal with that? Just toss everything and start over? - In some cases, yeah,
maybe not everything, but it might be an entire batch. It just gets tossed out. We have codes so that we
know every step of the way where this mushroom came from, from the original liquid culture. So I can scan these.
- Give me an example, yeah. - Yeah, so we have the QR code there. - Gotcha, PO-04, so April 22nd probably? - That's when this bag was made. It was April 22nd. But if we scan the QR code, you'll see a whole string
of letters and numbers. that let me know each
individual grain bag, grain jar, and which original liquid
source that it came from. - What software you using
to track it this way? - We're doing some Google Sheet stuff, and there's a couple software platforms that are under development, and we're on some beta
stuff for, so I'm hopeful. But right now it's
simply, we just do that, and we enter it into a Google form and keep track of stuff that way. - Okay, thanks for sharing. Guys, if farming is interesting to you, but you just don't wanna
be in the mushrooms, we're gonna be interviewing
an oyster farm very soon. I can't give you an exact release date, but make sure to subscribe and like so that you don't miss it. If you have a 9-to-5, but
wanna get into doing this, Sundown, how would you approach it? - Well, there's a lot
of people doing that. - Do they really?
- So you totally could, yeah. And I would start with the fruiting stage, so make sure you have a tent. Some people do it as small as boxes that they build that you can
stick a ready-to-fruit block in there and it'll grow the mushroom. - So if you have an apartment,
or a home, or whatever, that's where you start, right?
- You could. - You need to go lease anything? - No, there's lots of
companies you can find all over the country that will ship you ready-to-fruit blocks. In fact, you could probably find them at some stores these days. I heard someone bought one at Walmart. - Oh wow.
- Yeah. - I never had to look for one,
I'll have to check it out. It's basically this
block that you're buying? - Yep, yeah, before we're
obviously cutting it open here, but it's the final stage,
it just needs to be cut open and put into an environment
where it can be allowed to grow. And then, you have a viable product that you can either enjoy for yourself and/or bring to the market. - Well, then that leads
me to the next question. That is how do we determine
price on the mushroom? One is more expensive, the
other is less expensive. How does that come about?
- Yeah. - Like, I would imagine that
would be the priciest, right? The lion's mane? - Yep, lion's mane and
chestnuts are in one category. And then, our oyster mushrooms
are in our other category. - Why is that? Is it just the
time that it takes to grow? 'Cause, material wise, they're
all eating the same stuff. - Yeah, but it's time. So I like to say they gotta
pay their rent, right? - That's a good one.
- They gotta pay their rent. - So this guy has the highest rent? - Yep, and so they're like six weeks that they're spending
from start to finish, and then the oyster
mushrooms are three weeks. It's how many times you can turn over that shelf.
- That is cool. - So how many more products can I get? And so since we're getting
more and they grow faster, we can lower the price. - So if I wanna start a mushroom company, maybe focus on the ones that grow faster, 'cause I can sell more? Would that be a logical decision? - We gotta check out
your competition again. Start at step one, check
out your competition and what's not being produced? What are people asking
for that you can fill? 'Cause if you have a flood of oyster mushrooms in your market, why grow more oyster mushrooms? - Gotcha, okay. All right, let's talk about what I think everybody's waiting to hear from you, and that is phase two of
setting up a mushroom farm. And that is just setting up the
operation physically, right? - Yeah.
- What's important? What are some equipment
that we can't live without? Anything else you wanna highlight? - So, at this stage, I would recommend that you start with just
fruiting the mushroom. Can you grow a mushroom? So if you focus on the fruiting component of all the process, that's a lot less set up
that you're gonna need and a lot less technical
experience that you're gonna need. But it's the most important
step of the whole process, because that's the mushroom. So set up your fruiting
room or fruiting tent. Make sure you have a nice clean
area to package and harvest, and a place to store those mushrooms, 'cause you wanna keep 'em cool. So those are the three things.
- That's it? - You got the fruiting room, a place to package and harvest, and a place to store your mushrooms, and you can be in the mushroom business because there's lots of other businesses that can support you
in those earlier steps. - So it doesn't sound like you need a lot of equipment necessarily. - No, we started to try to do everything from start to finish. In hindsight, that would've been the thing that I would also maybe do different is just focus on that fruiting stage. - Interesting.
- Which is a lot of fun, a lot less equipment needed. And then, that's the most important part of the sales in my opinion, because I like to eat and
I like to talk to people. - Speaking of eating ,this
bread looks amazing by the way. - Yeah, this bakery, All Things Artisan, is not just a bakery, they
also have freeze dryers. So they are freeze drying, and powdering, and packaging our mushrooms to give us that value-added product
that we are able to offer. - Okay, sweet. All right, before we
talk about phase three of starting a mushroom company, let's talk YouTube briefly. Like, with what you know today, a lot of it came from YouTube, where did you learn from? Who specifically? And anything else you wanna highlight? - So still, to this day, we're going back to those YouTube channels that we've found resourceful.
- Same. - [Sundown] Mossy Creek is, one, Andrew's a lot of fun to watch. Just a great character,
and he is doing good work. And so with the earlier stages of liquid culture, and
getting the genetics, and how we wanna maintain that library, that's our go-to there. Mike from Southwest Mushrooms,
I like to think of him, I tell people, "He's the
Bob Ross of mushrooms." - Interesting, I bet.
- I hope he sees this, 'cause I mean that in
the most endearing way. He's just so soft spoken, he's got this beautiful Afro, and he's also really detailed in his whole operation,
shares a ton of stuff. But he's got a number of videos that we keep going back
to to check that out. - Now you've had time a little bit to explore the UpFlip Academy, right? What do you think about it? - Yeah, when I got signed in
and got my account set up, I was really surprised and eager to see what was available there. The first thing is I got a recommendation that I should check out
the Google Ads module. And being as we've never
spent anything on marketing, but we're at a scaling point, and do start thinking about like, "Well, what is gonna be the way to connect with that larger market that we can't and haven't been successful at connecting with?" So I'm gonna watch that one first. - Perfect.
- And then, the ability to network with other entrepreneurs to just talk about the
ways to run business as opposed to growing mushrooms is something I'm also looking to have some additional resources on. - Sweet, well, I'm excited
for you to learn from there. And, by the way, guys, if
you're looking to learn from world-class entrepreneurs or connect with awesome, amazing, successful business owners like Sundown, then you cannot miss the UpFlip Academy. We'll make sure we leave the link below. You mentioned starting this
business with a partner. Can you tell us how that came about? - Yeah, so after Jonathan and I got to know each other at church, I was remembering an experience
I had back in California, which I helped start a
nonprofit called SchoolGrown. We were building an 1,800
square foot greenhouse with aquaponic systems in it for schools. And so I thought, "Well, that's
a way to grow year round. What can we do to commercialize that and make it on a
commercial scale here with mushrooms and microgreens
in a retail space?" And one of the only people I
really knew in the community with some agricultural
experience with Jonathan, he happened to have been looking for work. So I said, "Hey, why
don't you come help me figure this out?" And so we started penciling out the design and the business plan, and then the rest is history I guess. - How much mushrooms on a daily basis do you discard because of spoilage? - Well, up until this
year, we've discarded nearly virtually none.
- Wow, good for you. - 'Cause we've been
able to sell as we grow and have always outsold
than we've grown, right? - Yeah, that's a good thing. - Yeah, we've had a demand
problem, not a supply. Well, that's changed as
we've gotten really good at scaling into this space, so now we do have some waste. One is we've started freeze drying. So we have the freeze-dried
products, powdered and pieces. And those have a five-year shelf life, so that helps build inventory-
- It's a good way to extend it.
- And extend that out, yep. We also donate to soup kitchens. So there's a couple different
soup kitchens in town that we'll donate those, before
they're spoiled mushrooms, that we didn't sell. And then, my favorite though,
which I discovered last year, and this is one piece of advice that any mushroom grower can take-
- Listen carefully. - And they should start right off the bat, is people who love mushrooms
don't care what they look like. So we have a high standard. - The uglier, the better.
- Yeah. We want them to be beautiful, and perfect, and that's our thing. And on the shelf they have to be, 'cause people are gonna
pull 'em off that way. But, at the farmers market,
and even online sales now, we bag them up and they'd be ugly. They're like probably a week old at least, so they totally look shriveled up. And we just throw 'em in mixed bags, half pounds or full pounds, and we label 'em Ugly and Tasty, and they're essentially half off of our regular retail price.
- Nice, that's a good idea. - People will gobble them up. They're sold out within an
hour of every farmers market. - The ones that just don't
look so clean and perfect, this is what goes into the ugly bag? - Yeah, but the customer
told us, as soon as I did it, they're like, "Oh this is great. I'm just gonna chop it up
anyways and throw it in a stew." And I'm like, "Why didn't
I do this three years ago?" - How'd you come up with it? - It was actually a chef
who was doing a pizza thing. So he wanted to use our mushrooms, wanted to source locally,
but was under a budget. And he said, "Well, hey,
do you have seconds?" Which is another term that people use. And I was like, "Oh, actually we do." So started selling him seconds. Have a couple other restaurants that have been taking
advantage of that as well. But, at the farmers market, there's something about
this brown paper bag sitting on the table with
this big sticker printed on it that says Ugly and Tasty. - That's what gets people's attention. - It pulls people in and they're like, it's funny, it's like, it's curious. They can't tell, they have to
come to the table to see it. - Yeah, if you love mushrooms, you know what we're talking about. - Yeah.
- The uglier the better. What are some of your favorite
mushrooms and the dishes? Can you give us a little inside look? - Yeah, my top right now
is the chestnut mushroom as far as what we grow.
- Why? - It's both for texture and flavor, and the texture's just so good. It holds up well in casseroles and chili, and heavy dishes.
- Ooh, okay, didn't know that. - But it's still super
tender to bite into. The best way though, because
it has such a good flavor, is to saute it up with a
little bit of thyme and butter, and then put it on some avocado toast with a little bit of diced tomato that way it showcases the mushroom itself, and then you get those other
textures to compliment it. - Okay, I got a quick challenge for you. One of my camera guys does
not like mushrooms very much. If you had 30 seconds
to convince him or her, and you guys watching, that mushrooms should be in their diet, what would you say? - I would say you should try 'em, 'cause they'll grow on you. (music screeches to halt) - Ha.
(Sundown laughing) You should try it, they'll grow on you. Taking into account
everything you've seen, everything you know, what qualities do you think a successful farming
entrepreneur should have? - I'd say three things. So patience being the first one, stamina, the second one, and persistence. - Mhmm, can you elaborate on one of them? - Yeah, so patience so that you slow down and realize that all the crisises aren't necessarily crisises.
- Stepping stones. - And you're working with people, right? So being patient with each person. And then, stamina because it is hard work. You know, I move one of
these 10-pound blocks 600 times a day. So it's, you know, a ton of material. - Man, that looks huge.
- Yeah, that's my workout. I don't need a gym membership. - Seriously.
- Justifies those 80 hours. - Yep.
- So yeah. So I'm moving every day, it's a workout. And then, the persistence, 'cause it takes time to
get to the final product, so you've gotta stick through
it, and then do it again. - Yeah, nothing's overnight. Knowing everything you know about the mushroom growing business, would you do anything different? Like, what are some things,
components about the business, about the industry that
you see that you're like, "Man, I wish that could be different"? - Well, I would say I didn't appreciate what can be done with mushrooms. - [Paul] You didn't appreciate? - I didn't fully appreciate it. So I talk about diversification as one way to grow your business. - Yeah.
- Right? What are the right ways
to add on additional items that compliment each other? So, originally, I was thinking we're gonna add on tomatoes, and herbs, and microgreens, and these, you know, other vegetable products that make sense at a farmers market table. As we've grown, you know,
we're in year five now, the mushrooms itself, so we've gotten into dehydrated
products of mushrooms, freeze-dried products, there's nutritional options, supplements. We use the spent substrate
blocks as a soil amendment. So there's value-added products
throughout our process line that I wish I would've focused on for our diversification to add value rather than trying to add
additional product lines. - Like, yeah, a tomato, basically. - Right? Like something totally different. So that's, I think, the biggest
thing that I would shift if I could go talk to myself
two or three years ago. - So what are these little dudes doing? - So this is the grain, so actually local wheat
grain out in those fields. And then, we've inoculated
it from our liquid culture. So this is one creature of mycelium that's a specific species. Yeah.
- When you say creatures like it's gonna jump out at you, you know? - I know, it feels like it when you get to live
with them all the time. But I guess organism
is a more common word, but I keep saying creature.
- My little baby. - Yeah, you gotta take care of 'em. So this is one creature. What we'll do is we'll shake this up and it breaks them all into pieces. - Interesting.
- And then, each little grain has its own autonomous
individual creature. (Paul whooshes air)
Yeah. - That seems mind-blowing.
- And then, we sprinkle those into those bags of substrate
so it just gets expanded. This little guy right here
will make 60 bags of substrate. - Oh wow.
- Which turns into potentially 120 pounds of mushrooms. - Let's talk profit margins briefly. What are your profit
margins rough estimates? - So our profit margins, gross to net, we're at like 50-60 to 30%. - Okay.
- So on the bigger end is our gross margin per block. And then, once everything's
all settled out, we land at about 30%.
- In the 30s. Okay, guys, earlier on, I asked Sundown, what his profit margins are. I asked you guys A, B, or C? Did you get it right? Comment below. Every entrepreneur that we talk
to always mentions systems. Talk about systems in your business and how they've helped you succeed, and give us an example of one. - Yeah, so there's obviously a number of different systems in
communication and electronics, and whatnot, and the way we grow. But I think the best one is actually this little laminated
piece of paper right here. - And the simplest, it looks like, right? - Yeah, so every station
has a sheet like this, which gives us what is
the purpose of this work, what do you need to do
this work at this station? And some of them break down
each step that you're doing. This is the packaging, so there's- - This is once you've harvested, right? - Yeah, so this is all the
stuff you need to package. And then, when you're done with that work, what do you need to do to
clean up and finish the work? You know, you always
gotta do the last step, which is cleaning up. - Right, 'cause if you didn't have this, then either you have to
be here all the time, or people just don't know
what the heck they're doing. - No, and this has been built by teaching people that have come in. So every time I train another employee, I learn what I don't know
and, like, how they see it, and so it critiques the process. I'm like, "Oh yeah, I
need to explain that." For example, our newest
employee who's fantastic, she's super fast, and she's moving, and she's taking these things on. But she's so fast, I gotta make sure I tell
her all the details, and one of 'em was our trays that we harvest into need to stack. And so I look over and she's
moving these mushrooms, we're moving and moving. I look over and the trays just mounted. I'm like, "Oh, I forgot
to tell you that part." - Missed a step or two, yeah.
- So yeah, "Make sure we can stack these up." - We're getting to the
end of our interview, so let's talk phase three and elaborate on that
and the importance of it. - Yeah, so I'd like to say phase
three is that communication with your customer primarily, so every step of the way. With the mushrooms I can
tell roughly in a week, 'cause they're starting to pin, that, "I think I'm gonna
have this many pounds so I can do that order, but I need to touch base
with you in four days, 'cause then I'll see if
they're actually growing or if some of them had problems." And so I can adjust, and then letting them know
when you're gonna be there. Ask a lot of questions too. What works best for them that you're willing to work within? But any way that the customer can know better where they
stand with you and who you are. - So you also have a subscription program for me to buy mushrooms. How effective has that been? Can you walk us through the process? - It ended up being a really
important part when we began. So not having a lot of mushrooms, you know, we were in the single
digits of pounds per week, and not knowing exactly
what we were gonna get. So what we did is we
started a subscription where you can get a half
pound or a full pound mix. And then, that way it was always something a little different, so
it's fun for the customer, they get to try new things and we could use whatever
we had available. So we've had customers, almost a dozen customers
that have been subscribers since the beginning, so four years of subscriptions, and we've had people that come and go, and it's been good. Up to this point, it's
been a very important part of our business because we
know the revenue's coming in and we have a way to
get our mushrooms out, and it gets us on the road. So that was another important part- - The subscription does?
- The subscription. - How so?
- So 'cause we know we're gonna go on the road, so
we open up other deliveries. So the subscription essentially pays for getting on the road, and every additional order that we do then becomes more profitable because we're paying less to
deliver all of them overall. - Mhmm, what about like you selling tea and some other products? - Yeah, we like to collaborate. - Just to collaborate a little bit? - Yeah, so at the farmers market, we have Hummingbird Tea, who's one of our neighbors there, and they do a lot of herbal teas. And then, they started
learning about the lion's mane and we started doing
the lion's mane powder. So they created a lion's mane matcha. - Wow, okay, that's cool. - And, for a long time,
we were adding a lot of other products onto our website, trying to, again, be the grocery store, and we had all those other
products to sell as well. We still keep those 'cause
they're shelf stable and they'll drop-ship essentially. If we get an order in, we'd drive down the road and we get it, and we can ship it.
- Right, makes sense. - So we cut out the fresh stuff and keep the shelf-stable stuff. - Yep, enjoyed this episode
and wanna get into farming? Well, make sure to check out episode 128 with a chicken farm that
started in the backyard. Like and subscribe. We'll see you next time.
