Announcer: From 2820 Radio in Philadelphia, it's The Build, conversations with entrepreneurs and innovators about their dreams, their trials and their challenges. Joe: Sustainable, it's a word we hear a lot these days, but what's it really mean to run sustainable business? That support a sustainable business, how would you even know where to look? That's a frustrating pair of questions that Morgan Berman is trying to solve. With the team startup venture, Morgan is cataloging products and services that can help maintain their busy lifestyles without sacrificing their values. She has picked up plenty of accolades along the way from places like the Forbes 30 Under 30 List and the UN Foundation. As she navigates both crowdfunding and the venture capita worlds, she's discovering just what it takes to build a sustainable company of her own. It's the story of My MilkCrate coming up next on The Build. Announcer: The Build is made possible with support from 2820 Press providing business consulting and content strategy services to customer-obsessed companies nationwide. More information at 2820press.com. Joe: It's the Build. I'm Joe Taylor, Jr, joined today by Morgan Berman, founder of My MilkCrate. Welcome. Morgan: Thank you so much. Joe: It's so great to be here. For folks who'd been listening to the show, this is the first episode that we've actually done in our new studio, so we're learning all the interesting little sounds that the room makes. Morgan is our neighbor 2 doors down, so this might be the shortest anyone's ever had to travel to come be on the show. We're glad you made the journey. Morgan: Thank you. Yes, it was not arduous. Joe: We love to collect origin stories on the show. Tell me a little bit about how My MilkCrate got started. Morgan: It depends how far back do you want to go. We could go all the way back to before I was born. My mother was actually part of the farm-to-table renaissance in the city of Philadelphia. She was one of the first female chefs in Philly. The concept of eating locally and healthily and sustainably was with me before I even existed. When I was a child, she actually wrote books, reading and reviewing [thrift 00:02:21] shops. I was being taken on trips to go [thrift 00:02:25] shopping and learning about the value of money and also the value of reducing waste by not having to consume new products and the creative opportunity of taking something old and remaking into something new. Morgan: I actually started my first business when I was 16 with my mother taking old vintage purses and remaking them into new one-of-a-kind couture works of art. Anthropologie and Jo-Ann Shop actually bought some of those bags. I had a taste of freakishly early success. Then I got bored and stopped doing it. Of course, I probably would be retired by now if I'd kept doing it, but I was a silly, little 17-year-old. Morgan: Then, my mom, when she was a chef, actually back in the day, worked briefly with Judy Wicks and was a part of that scene. When I was living in West Philadelphia as an adult, I started learning about what that meant that Judy Wicks was like this movement really. She was more than a person. She'd really created a buy local, eat local movement across the whole country. I was reading about her and new urbanism. I was really captivated by these values that really [inaudible 00:03:36] with my upbringing and the possibility to use design to make a better city. Morgan: This is my city. I was born and raised in Philly. I wanted to contribute to it in a really tangible way. In my background in women's reproductive health while rewarding wasn't creative enough. I wasn't getting to do design, which is something I really missed. I applied to grad school to get a masters in sustainable design at Philadelphia University. I was lucky enough to be awarded an assistantship which meant I got to work part-time and basically earn my degree without having to pay for it. I was assigned to the head of our department, Rob Flemming, which was really lucky [inaudible 00:04:15] getting to connect me to a lot of sustainability leaders in the city. When it came time to do my master's thesis, I had worked for about 1 year at a local publication that focuses on sustainability. I saw a lot of the promise and enthusiasm that a publication in covering the topic of sustainability and urban living had, but I also saw a lot of the shortcomings. Morgan: Having worked at Apple part-time for about a year while doing research at Pen, I really was thinking a lot about mobile technology and how mobile technology was solving everyday consumer issues. I had people coming to me all day every day out of the main line being like, "I don't know how to do this. I want to find that. It was my job to figure out what was the tech solution, if there was one." Seeing the promise and pitfalls of print, I was like "I think that there's a way to help people embrace the values and the lifestyle that I'd become really infatuated with in West Philly about eating locally and shopping locally and living sustainably. Maybe that could be my master's thesis." When I was in grad school, I basically designed the first version of the app, put together a business model and started building all of the relationships that I would need to get this thing off the ground. Because it was well received and people are wanting to help, it started turning into what I didn't realize at the time was called a tech startup. Morgan: My earliest teammates, they reached out and said, "I want to be a part of this." I was like, "Okay. Sure." Eventually, we brought on Jason who's my co-founder and CTO, who built the first version of the app, which we launched August 2014. It's about 1.5 years now, which is amazing. The app went live for 1.5 years. We're about to launch version 2.2.4 on Monday. Next week, we're actually going to be doing our strategy session for 2016 and version 3, which is going to be a really big, really big update. I'm really excited about what we've got planned. Joe: Walk us through how the app actually works. Morgan: Sure. Right now, the best description that I have seen a reporter used is a green Yelp with [inaudible 00:06:22]. It's a directory tool that helps you find local sustainable businesses. Whether that's a fair trade coffee shop or a farm-to-table restaurant for lunch or a place to go buy something, whether it's clothing or for your house that's locally made, responsibly made fair trade, those kinds of values and qualifiers, those are the companies that are in our app. We also have a calendar of events that are all local sustainability-related events. The Clean Air Council's Greenfest or the Franklin Flea, which is local makers, often a lot of vintage [inaudible 00:06:57] for the environment. These are the kind of events that you can find in our calendar. Morgan: Then, the third kind of thing that you can do in the app right now is actually take action. You can sign up to do something, whether it's signing up for a bike share here in Philly called Indego or composting service or a CSA. Philly Foodworks has been running a CSA sign-up in our app. That's been really successful. You can actually get your local groceries delivered to you. We try to make it easy for people to stumble upon better ways of living, that will make them feel good about how they're spending their money. Those are the 3 things that you can currently do in the app. Joe: I love that you brought up Judy Wicks. For folks who are listening outside of Philadelphia, Judy created a really foundational experience in West Philadelphia called the White Dog Cafe. One of the things I always admired about what she had done there was it was this inner section of the idea of farm-to-table on sustainable eating, but also Judy was a fantastic and still is really, but she's semi-retired now, a fantastic business person because White Dog was outrageously successful for its time. Actually Judy managed to cultivate this bench of talent that spun out other types of businesses as well, Metropolitan Bakery and a bunch of folks that came up under her and just went out and started their own thing. Now, we have a lot of businesses that look at White Dog as their roots, but you wouldn't know it if you just came to Philadelphia today. You just think that all these businesses just have already existed. One thing I'd love to touch on here is how is it for you as the co-founder of a technology startup to reconcile the idea of social impact against making money? Morgan: I think the word I would challenge is against, I think what Judy proved is that it actually can facilitate that doing the right thing can actually lead to success and even greater success financially because people are drawn to things that reflect their values. They want to share who they are with the world, and they want to internally reaffirm who they think they are. If you're someone who thinks that you care about other people in your community and the planet, which a lot of people do, then you're drawn to spending your money at places like that. It can sound like a superficial thing to be like it's good marketing, but good marketing means you're resonating with people. That's really powerful, not superficial especially if you're doing it for good reasons. Joe: One of the other things that I wanted to touch on was you spent a good amount of time in the non-profit sector. What are some of the things that you have observed that, that for-profit organizations are adapting from that nonprofit world? Morgan: I think it ties into what I just said about the connection between profit and purpose, that those 2 things can be linked. I think the nonprofit world has had a monopoly on purpose for a very long time and the for-profit world has had a corner on the market of generating income. What I think has really started to change in the last ... It's been a decades long process, but bringing those 2 things together, I don't know if it would be a perfect future, if they were one and the same, but that's where it seems to be heading. Morgan: There's this organization that actually was the very first B Corp in the world called the Antares Foundation. That's how in the suburbs of Philadelphia. They actually were the very first organization to be for-profit, taking their profits and investing them purely in social good efforts. They actually are one of our funders now. They've been funding other companies that are in our app like Wash Cycle Laundry, which is another perfect example of a purpose-driven for-profit entity that is making our city a better place. That whole story, just like the Judy Wicks story, that Antares story, is also a Philadelphia one. I think Philly is driving that merging of the nonprofit and for-profit world. Morgan: Actually something another kind of coincidence or not is that Philly has a ridiculously high number of nonprofits for a city. It's been one of the reasons it's been a great place for us to launch here is because we have so many data partners in those nonprofits. The way that we generate all the listings in our app is by partnering with organizations like B Corp in the sustainable business network and fair food to bring all their certified accredited, whatever word that they use. We bring their businesses into our app and then we have put the badge of that nonprofit on that business. Having that nonprofit base and then those kind of social entrepreneur types like Jay Coen Gilbert, the founder of B Corp, those have all ... And Judy Wicks, those have been some powerful ingredients to make everything that's happening possible, including My MilkCrate. Joe: We've had a few guests on the show this season talked to us about the idea of B corporations. Until that came along, I don't think we had the language or at least even the legal structure to talk about a for-profit entity that's tasked in its charter with actually doing social good. Typically a corporation exists for the benefit of shareholders, the idea. We go back to Apple, for instance. Journalistic disclosure... Morgan: Always back to Apple. Joe: I think I was your boss for hot second, right? Morgan: Yeah. Joe: This was about 4 or 5 years ago when we were both working in Apple. The thing at the time was Apple came under a lot of heat because Apple had no community investment or charitable giving plans at all. Steve Jobs had pretty famously gone on the record and said, "My job is to make the maximum money for shareholders. It's up for shareholders to decide how they want to invest in social good." That's changed often a little bit. Tell me a little bit about how the journey has been for you to go, over the course of 5 years, to actually grow into this new leadership role. You've got a crew of folks that are populating the office down the way. You got a position now. What's it had been like to actually grow into not just a manager of people, but a leader? Morgan: I'm going to answer that, and then I want to remind myself to look up. I think there's actually a really great quote about how Apple, and I think Steve Jobs talked about the importance of taking their profits and investing them responsibly. I want to find that quote, so remind me to do that because I want to defend Steve. Joe: Oh, yeah. To be fair, a lot of the things that Apple did were ... And things that we even did on our team, so thinking back, we're in a slice of Apple retail back when it was a very fairly flat organization. One of the things that I was very proud of, of our team is that, a, we were tasked with solving whatever problems that folks walked in the door with. Whether you're the owner of the Philadelphia Eagles or you have just started up a cupcake truck, it was our job to just figure out what's the right solution for you. Most of the time, that involved actually helping people spend less money that you intended to spend, which in any business is usually not the way that you try to go. The bigger thing was that within that, we would carve out budget to do things that you would never do in a typical organization because Apple could get away with it. There was a lot of leeway down to the whims of individual leaders. Joe: We're probably outside of the NDA expiration periods about this, but Apple played a role in helping PhillyCAM get off the ground because we unloaded some equipment at about $1 above cost out the back door to be able to help Gretchen clear her budget. There were some other things that basically, as long as you got buy-in from your immediate supervisor, and at the end of the day, if you were just showing a profit, you can do whatever you wanted, right? I don't think that it's the same now that there's a hard core operations person in charge. The idea here is that you can structure a business in a way to know that you are actually diverting what would otherwise be pure profit into impacts. Let's pull that back and think about funding, right, because right now, how does My MilkCrate actually generate revenue? Morgan: Yeah. We generate a small amount of revenue right now. It has not been the focus of our company. We're, in that way, more of a West Coast tech startup. However, that is starting to shift. For the first 1.5 years, we were really just funded by investors. We have a lot of really wonderful, mostly local investors including Ben Franklin Technology Partners and Investors' Circle. As a part of the Ben Franklin money, we also have money through the Alliance Women Entrepreneurs fund, which is specifically money for women. All of the money we've brought on at this point has pretty much been, at least, institutional money, impact money, meaning like socially good funding and/or because we're a woman-founded company just a social good mission in the tech world. Morgan: We've been operating off of the investment money, but we have generated revenues through the premium accounts that we sell to business owners. Business owners like Mugshots and Zipcar and Ticketleap - happy catering these kinds of companies. They're all in the app. They don't get special treatment in terms of passing our criteria. Then once, if they want to take the next step to have a custom profile and to stand out in the app in terms of search results and things like that, then they pay an annual subscription fee for that. We've generated revenue from those sales as well as the take action campaigns. Philly Fooodworks being able to sign up for their CSA, the energy coop, those are companies bought the opportunity to reach our users and generate leads through our app users. Joe: I've heard you mentioned Yelp as an analogy as so much service. The business model sounds quite similar to Yelp. How do you defend My MilkCrate from just being perceived as a feature of some larger, more entrenched competitor? Morgan: Exactly. Right now, it very much looks like that, but what we're becoming is actually going to be a guided lifestyle experience. We're going to be allowing our users to tell us about their habits, their interests, their lifestyle and create a custom experience that guides them to becoming a better conscientious consumer. I've been calling it like a fitbit for your wallet. You'll actually be able to see your impact as a conscientious consumer and how well you're doing it, living your values. That's what's coming this year. Morgan: The directory tool in the Yelp kind of thing is like the backbone because we needed that database of those businesses and the events and all of that to be able to then do what's coming next. It's very much a Phase 1, but the vision and what the user experience is going to be like, that's only going to be a significant fraction of it. The actual experience is going to be finding what you need, learning about something that interests you and then actually progressing along a guided path and seeing yourself grow, and then eventually seeing your whole community grow as a group, so they'll have a very social feel as well. Joe: I want to go back to the idea of pitching investors because I'm having a vision of you pitching to somebody like Roseann at Ben Franklin Technology Partners. Tell me what the experience is to pitch in front of folks like that who really want lots of detail, lots of specific information? How did you get ready for that and what was that experience like? Morgan: It's funny you asked. Like I said, we launched the first version of the app in August 2014. In October of 2014, actually in September of 2014, I found out that we had been selected as one of the 5 companies from across the country to pitch on stage at Forbes 30 Under 30 to see a case. That was my first investor pitch. Joe: No pressure. Morgan: Two months after launching the first, and I have to admit rather while we're in Philly- version of our app, I was pitching in front of 2,000 of the most successful and well-respected tech people in the world. Everything after that's been kind of a cake walk, honestly. I don't really get nervous. It was baptism by fire kind of thing. Ever since then, it's whatever. Not to say that I don't have all the respect in the world for every other investor I've met, but nothing is as scary as that. It's been easier for me to just sit down and be myself and be honest. I think that that's really been part of our success with these investors is that they can feel comfortable with me and trust me, and we can have more of a dialogue instead of this kind of like me trying to jam a business plan down that group. Morgan: I think that, that is important because everything always changes, and that's something I really had to learn is that even from week to week, our business model, our products, our team can change pretty dramatically. What investors are looking for and what a successful company needs to be is adapt. It's about people and it's about thinking behind how you implement. That's really what matters most. That stage was a pretty contrived experience. It was terrifying. Ever since then, it's been easier to just have a more natural one like this. Joe: Now, you've had a little experience with crowdfunding as well. Morgan: Yeah. Joe: Tell us about that experience. Morgan: We launched our crowdfunding campaign when we launched the app in 2014. We did it on Indiegogo. What I did was I went around to local business owners that were in the app or were going to be in the app because that wasn't live yet. I said, "We're creating this experience for people to help consumers find businesses like yours. Our mission is to help you make more money. Could you help us get off the ground?" They donated products and services for us to sell in our crowdfunding campaign. Most like wildly successful crowdfunding campaigns, they have a gadget that's super cool, that people want, and they can pre-order it. That's a successful ... That's what you should do for crowdfunding. We didn't have that. We are selling a free downloadable app. Morgan: In order to have something that people would be willing to pay for, we had to rely on these business owners. They came through. The first 1 or 2, it was a little bit of a hard sell, but once we got 1 or 2, then, everyone else is like, "Oh, if they're doing it, yeah, I'll totally do it." Then we got probably 2 dozen businesses on board. Then, we're able to generate 103% of our goal. Conrad [Baron 00:22:42] actually came in at the last minute and put us over the limit, which was phenomenal. We're forever thankful to him for that. He did a little video with us that we also use in our crowdfunding campaign. Yeah, it was the most stressful probably experience I've had to date with running this company. It is not something to be done lightly, but it really helped us get the word out there and get the first funding in. Joe: As CEO today, where do you like to spend your time and what do you wish you were spending more time on? Morgan: Right now, I really see my job as in an ideal world, it would be ... I don't know if I mean ideal. I think it's supposed to be a fundraising all the time. In an ideal world, I wouldn't have to do that at all. I would dedicate myself 50-50 to product. Luckily, I've brought someone on who's better at organizational infrastructure and accountability. She's our newest teammate. She's going to be taking over what would probably be, in a tech startup, the CEO's job, but she's more of like a COO. What I love doing and what I'm best at is daydreaming about what we could accomplish and finding those partnerships. When I'm at my best, I'm doing things like building the new relationship we have with Lift or meeting with the D&C host committee yesterday. Those are the kind of seeing opportunities for overlap and mutual benefit and building that relationship and figuring out where we can be of service to these really fantastic opportunities for us. That's what I'm best at and what I love doing. Morgan: I also just love doing the rough design work for the app, what the user experience is going to be like and thinking about our brand and how people visually interact with us. I'm a very visual person. I love doing designs. Those are the things that I'm best at and would love to do more of. I'm starting to, but I've also been doing a lot of fundraising and negotiating with lawyers and figuring out what all these documents mean, finding a new office, setting up the office, hiring, firing, things that are not as much fun and can be scary and new, but are necessary. Joe: What's the hardest decision you think you've had to make as CEO? Morgan: It's weird because a lot of the decisions I have made, it hasn't felt like it was made in one moment. It was a snowball. The hardest things that I've dealt with, it hasn't been like I was handed a button that said yes and a button that said no, and I had to tap one. It hasn't really been like that. There had been so many. It's all hard, almost all of it. What do other people say? Joe: Most folks usually think about either the product or the team. Morgan: Yeah. When I think about the team, most definitely, there have been 4 people that have left and that has been hard, whether it was ... Because I was asking them to leave or I was helping them realize that they should decide to leave. That's been gut-wrenching. I haven't regretted any of it, thankfully, but again, like I said, it's been a snowball. I haven't made any quick decisions. Joe: It doesn't make it any easier. Morgan: It doesn't make it any easier, no. Another hard decision was just where to move our office because I had ... My team will tell you, I dream big. When I have that vision of what we're going to become in a few years, I want it now. One of the things was I really want a store front. It's not a normal thing for a tech startup to want, but it maybe it's because of my Apple roots, I want a store front that looks like a comfortable neighborhood coffee shop, where people come in and we have a representative that's there to just hang out with people and talk to them about sustainability, teach them about the app, show them about other businesses in the neighborhood, a kind of Apple-like experience. You can just come in and smooch and learn. That we have our offices in the back. Then like on Friday nights, we have an open house with drinks and smooching and talking to neighbors. Maybe 1 week, it's just for business owners. Then other weeks, it's for nonprofit partners. They have a really community interactive space that's also a really great marketing tool. I was like we're doing that now. That's where we're moving. They were like, "The budget and time and what is ... You're crazy." Morgan: I was travelling for work. I was out on the West Coast in 4 different cities in 10 days meeting with investors and Lift and Eventbrite and building relations with Facebook. It was awesome. It was East Coast tech entrepreneur wonderland. They were off looking at offices and sending me pictures and Facetiming with me and I was slowly having to come down from my cloud of like "It's going to happen. We're doing this." They're like, "Morgan, this place has holes in the wall, and it's $2,000 a month." I'm like, "The lights don't work." They're just like, "Clearly, not going to happen right now." We are really, Everyone said, "Morgan, I really think Ben's Desk is going to be the best option. I know that you didn't want to share his Facebook." Once I came and I saw it, I was like, "Okay, I can quit the dream on [pause 00:28:24]. This will be a very good intermediary." That was scary and hard for me because I get so excited when I finally have this crazy entrepreneur vision of what's going to happen, and I have to hit the pause button. I'm glad we did. Morgan: Now, when I come into the office, there's this little twinkle in my eye when I look around. I'm like, "This is ours." That's really special. It feels it's made something that is very intangible like our company in many ways. It's like this froth of nothing that it somehow eventually becomes something tangible and permanent and solid. This is one of those little moments that's solidifying froth of a tech startup. Joe: We'll have to put some links in the show notes because we're both in the same shared collaborative workspace. Benjamin's Desk is a client of our agency as well. We've worked on a lot of their marketing and messaging. Anthony Maher, who's the CEO there, is a fun, quirky guy, former pro soccer player, but he and his brother are very into design. What we've done in this new space was pretty interesting is we've got this very eclectic shared space right outside our studio here. You've got this gorgeous tricycle that you brought in. Then, we found these inherited Edison lights that have been strung out, like it's a carnival festival thing. It was just really neat festive atmosphere. Then, we found all these old trophies from the advertising agency that used to be here and set them out on this fireplace. We've got this weird, quirky, fun space here. Before we wrap up though, I do want to talk to you about what your dream is for My MilkCrate. Where does it go over the next 5 years? Morgan: I wanted to become a tool that die-hard sustainability geeks like myself are drawn to and can benefit from. In addition to that, I want it to be something that pretty much anyone can fall into and feel they can make it their own. That at the end of the day, we actually will be able to answer, I guess, conclude whether or not Mayor Michael Nutter, now former Mayor Michael Nutter was right when he said he was going to make Philly the most sustainable city in the country. We want to actually be able to have the data that proves whether or not we are. Joe: Thanks to Morgan Berman for joining us today. You can learn more about My MilkCrate at mymilkcrate.co or from the show notes posted at thebuild.biz. The Build is a production of 2820 Radio in Philadelphia, Pennsylvania. Our producer is Lori Taylor. Our associate producer is Katie Cohen Zahniser. Our talent coordinators Katrina Smith 00:31:20]and Gizemi. Post production team is led by Even Wilder. My name is Joe Taylor, Jr. Thanks for listening to The Build.