Getting Our Hands Dirty with Urban Farming

Posted on June 23, 2015

“We didn’t plan on being mushroom farmers. During the last semester of our university careers, Nikhil lined up a corporate consulting job and I nabbed one in investment banking.” —Alejandro Velez

A lecture on sustainability in a business ethics class changed all that. The speaker mentioned that he had heard it was possible to grow edible mushrooms in recycled coffee grounds. Upon doing more research, we realized that no one had ever taken that idea and developed it commercially. We were intrigued. We set up 10 buckets of used coffee grounds fertilized with oyster mushroom spawn in my kitchen. Ten days later, we had sprouted our first crop.

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Over the years, we’ve taken pride in having grown our sustainable food business organically, without VC or equity funding. We conceived a business, fueled by a $5,000 prize from a campus innovation competition that allowed us to buy a van and rent a 200-square-foot warehouse. At that point, that was like giving us a million dollars! To date, our most substantial cash infusion has been $125,000 in prizes from business-plan competitions, including two worth $50,000.

Two weeks shy of graduation, we took the risk and nixed our plans to join corporate America—spending the holiday giving ourselves a crash course in urban farming, tweaking variables like humidity, air flow and temperature. We were entering a world of unfamiliar territory to both us (as startups) and the entire farming industry. The investment paid off. That October, we sold our first mushrooms to Whole Foods Market in Berkeley. We still have that invoice on our wall!

Over the years, we had to make key business decisions to ensure that the investment opportunity survived. At first we branched out into manufacturing and distributing indoor grow-at-home gourmet mushroom kits using recycled coffee grounds as “soil”: this became the basis for our company, Back to the Roots. We started off doing the fresh mushrooms, then both the mushrooms and kits, and now just the kits. We were almost out of business doing both. We realized they are very different operations–consumer-branded products vs. fresh produce–and we had to pick one to really execute well. The principle behind this is focus: You can’t do everything, but you can do some things very well.

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Today, Back to the Roots operates out of a 10,000-square-foot warehouse in Oakland, California, selling its DIY mushroom kits to 2,500 retailers internationally, including Whole Foods, Safeway, Home Depot, Loblaws in Canada and Three-Sixty in Hong Kong, as well as directly to consumers online.

Our greatest treasure, however, doesn’t come from the significant growth of our business. It comes from our end-of-year exercise when we help ensure our employees share our enthusiasm. We divide half the company’s profits among the 31-person team at year’s end. It’s a fun way to align everyone to the same goal. We’re all growing together. We really want to build a lifelong, generational brand.

Nikhil Arora and Alejandro Velez

Edited by Sharon Green, Editor-in-Chief