Small Farm Business IDEAS
Five Acre Farms CEO Dan Horan took his time coming up with a plan to disrupt big agribusiness.
After starting his own organic farm in 1990, he spent nearly 20 years refining his vision, pivoting from an initial plan to own or franchise many small farms to a more efficient plan to partner with farmers and distribute local farm products in supermarkets.
The Yale School of Management graduate, who was a general manager at Gourmet Garage from 1995 to 1999 and the CEO of Papaya King from 1999 to 2010, knows the importance of having a clear idea.
"Simplicity is really important, " Horan tells Business Insider. "It's got to be simple, and sometimes to make something simple you have to really, really study everything about it. It might turn out to be complex, but you have to present it simply, particularly when it comes to people: when people buy something, they don't want a lecture."
Horan shared more insights into his philosophy and Five Acre Farms in the following interview.
Business Insider: How'd you come to start this particular business?
Dan Horan: It's a thing I've been thinking about for a long time. I got out of college almost 25 years ago and started an organic vegetable business, and when I went to business school I had this little model in my head of a regional food company. It was actually my application essay. A little more than three years ago, after I finished my last job and we sold the company, I decided to start it up. With some modifications I came up with Five Acre Farms.
BI: How has the current business evolved from your original idea?
DH: The original idea for Five Acre Farms was a little model for how you could make a living on a five acre farm near busy urban centers, almost like a franchise. I thought I could have 1, 000 of these things all over the place, and that they would produce vegetables and maybe some eggs that they would sell directly. Then there would be a 15 to 20% surplus that they would give to this central brand called Five Acre Farms that would then have a supermarket presence.
The more I thought about it, the more I realized that there were a lot of moving parts. I was really going to have to have an institute where I was going to train everyone. Was I just trying to focus on a regional strength, or was I trying to reinvent the wheel?
Instead I took the other approach. What's out there now that is not being properly served by the market? Where are the inefficiencies? I saw a lot of supply out there, and I made a list of all of the problems and all of the products in the Northeast because this is where I'm from.
So the idea went from starting new businesses to just starting one business with the existing supply. It was really just simplifying what was probably a much-too-complicated idea.
BI: The business model is to bring more scale and consistency to local food?
DH: I don't know if consistent is actually the right word. The idea is that we find farms using sustainable practices and bring their goods directly to the market under the brand of Five Acre Farms. It's much more about connecting the consumer to the farmer.
As it turns out there's a lot of very high-quality stuff out there that just gets thrown into the commodity market. If you know how to buy properly you can keep it out of the commodity market and make it more accessible to people. The reason why I say that I don't know if consistency is actually [the right word], is that a lot of the farms are slightly different. I think what happens is that you get a really authentic taste rather than one that's necessarily consistent.
But certainly availability, that's a big thing. We want somebody to be able to go into a supermarket 365 days a year and find good, local products. That part of it is fairly new in the Northeast — it shouldn't be but it just is.
BI: You guys sell products that are local and sustainable, but not organic. Do you get any backlash from that?
DH: Not really. I started organic farming in 1990 so I've been around organic food for a long time. You can't out-left me. I understand what organics is, but I also start with the premise that if organic food and conventional food were the same price, no one would buy conventional food.
There's some halo around organics but they've got a pricing problem. About 5% of the food out there is produced organically and that doesn't account for the fact that there are a lot of great farmers out there doing good things that may not follow exactly organic processes.
We haven't really had much tension in that department. If someone really wants to buy organic that's fine, I applaud them. If someone wants to buy conventional, that's fine too. I think the fact of the matter is that the major decision-point here is based on price. That might make some people uncomfortable, but I think the evidence bears that out. It has to be affordable and that has its own definition to each person. We really focus on having high quality, then being able to translate what are very complicated agricultural processes into very simple things that people can understand.
As it turns out, if it's fresher, it usually tastes better, so we usually put a high premium on taste and then worry less about the labels and allow accessibility to information.
If people want to know exactly what our farmers are doing they can learn that and if they don't like that then that's fine. This is not a panacea by any means but certainly transparency is as important as whether its sustainable, conventional, organic or whatever you want to call it.
BI: You've spent time working on a farm, in supermarkets, and in the restaurant business. What lessons did you pick up?
DH: I was in the supermarket business for a few years in the mid ’90s with a place called Gourmet Garage that's now throughout the city. I got exposed to a huge number of products, what people look for and like, how things are merchandised, the importance of packaging, and the importance of just having a consistent delivery process. The logistics of the food business are very important to the success of a product.
In the restaurant business, I was the CEO of Papaya King, and it was a fantastic experience — it's a New York icon. There, you really get a sense of what the public wants and likes and doesn't like, the importance of price, and the importance of having a good crew. I got a real sense of how important location is for store success and just for the range of products that are out there.
At Papaya King, you can have someone get a fresh-squeezed orange juice or papaya drink that's all real and then wash it down with a chili cheese dog. The buyer might be a 65-year-old woman with a pearl necklace. It just defied description, the customer base. It was everyone. It also showed you that if it tastes good, that's what's really important.