Vital Farms: Raising the Standard with Pasture-Raised

use that purpose to drive transformation throughout their business. In this special episode, we're sharing a positive case study, a deep dive with the CEO of a purpose led company who we think is getting it right. Today, we're going to talk about Vital Farms, a publicly traded food company based in Austin, Texas, with the purpose of improving the

lives of people, animals, and the planet through food. I had a great conversation with their CEO, Russell Diaz Conseco about how their mission drives decisions at every level of the company. But before we get to Russell, let's do some background. Vital Farms started in two thousand and seven on a twenty seven acre plot in southwest Austin with

only one farmer, Matt O'Hare. Matt saw an opportunity to change the way food is produced in America to reduce the environmental impact of the industrial approach to farming and give the power of food production back to small family farms, all while producing a high quality product at large scale. Starting with eggs, pasture raised egg gets a third or more of its diet the chicken does from grass, so

they're eating salad as a result. The quality and the taste of the egg is dramatically different than anything and even before. That's matt back in two thousand and nine at the original Vital Farms location. Now, most eggs look pretty much the same on the outside no matter how they're produced. But the hens at Vital Farms eat grass, which creates a beautiful golden yolk, more beta caroteen, less cholesterol, and more vitamin A than conventional eggs. But here's the thing,

Vital Farms was never just about eggs. That humble beginning was powered by an ambitious and inspiring purpose to improve the lives of people, animals, and the planet through food. And to do this, mattow Hair considered all the stakeholders. He designed his business for the welfare of the chickens, of course, but he also considered all of the people involved investors, small family farmers, employees, and customers, and last,

but not least, the planet. The industrial food system that's made food so cheap in this country comes at a huge which cost to the earth, and Matt wanted to provide the country with a real alternative. Matt's concept got the attention of another Austin based company, Whole Foods, which loaned him a hundred thousand dollars for equipment to scale his idea and then became his first customer. Up until now, the only way you really could get a pastor raised egg was to drive to a farm by a dozen

eggs and drive home. And that's a fairly large carbon flippent for for dozen eggs. And we think that getting them into the whole food stores and getting in with the customer is a more efficientative doing that, And this is when things really took off. Vital Farms started contracting with other pasture raised egg farmers, which allowed them to scale up distribution, and by two thousand and eleven, Vital Farms was doing four point nine million dollars in revenue.

Four years later, Vital Farms became a certified b corp. This certification measures a by's entire social and environmental impact In ten Matt handed the CEO job to Russell Diaz Conseco, who had joined the company in furteen as an egg warehouse manager. With Russell at the helm and Matt still

involved as executive chairman. On July thirty one, twenty Vital Farms went public on the NASDAC with the ticker b I t L on one of those of course, today, Vital Farms up sixty on the first day of trading, quite amazing, and in one Vital Farms hit two hundred and sixty million dollars in revenue and is now the largest producer of pasteurised eggs in the universe. And something that really caught my attention because an industrial farm would

never ever do this. In one Vital Farms created a label that allows you to actually log in and see the farms and hens where the eggs come from. At Vital Farms, we want everyone to know the truth about where their eggs come from without any bolt. After logging in to see the hands involved in my breakfast, I knew I wanted to learn more about this company. So the question we're here to answer today is how do

we make more stories like this one happen? I asked Vital Farms CEO Russell Diaz Conseco to sit down with us to share what he's learned about the challenges and rewards of keeping Vital Farms ambitious purpose front and center. Folks, I'm very excited to introduce today's guest, Russell Diaz Conseco, the CEO of Vital Farms. Russell, thanks for joining us. Thanks so much for having me, So let's jump right into it. I'd love to just have you tell our

listeners a little bit about yourself and your background. Thanks TI. So. I was born on the East Coast. I'm a product of parents on both coasts, very blue state upbringing. For the last twenty one years, I've lived in Austin, Texas. I moved here to pursue a really exciting opportunity with a grocery chain down here called H E B which is the biggest little grocery chain you never heard of,

but does billions and billions of dollars in business. And that was the place that I was told was the best in the business to learn grocery and I was really excited about doing that and my latest gig here at Vital Farms. I've been here for eight years, which is by far the longest company I've ever been with and and having the most fun by far. That's great. And so when did you join the company? I joined at the beginning of and you took over as CEO

from the founder Matt O'Hare. Is that right? Yes? In and how has that transition been? You know, in some places it's difficult for a founder to step back and hand a new CEO of the You're right, that transition is fraught with peril, and I think there are more stories of it not working well than stories of it working well. I think a couple of things worked to help make sure that this relationship would work, and ultimately this transition would work. One is I think a lot

of mutual respect. Right, Matt isn't just a sort of head in the clouds creative guys. He's an opportunity around every corner. He's also one of the hardest working people I've ever met, and so Matt will pursue his ideas with vigor and frankly, there's no kind of work that he won't do in pursuit of his goals. I have a lot of respect for that. We we actually share

that in common. I think he came to respect me pretty early on as somebody who um, he could trust to be transparent, to do what I say, say what I do, which is consistent with the culture of the place he was building. But more than that, I think it's it's not that common to find people who you in ploy as the entrepreneur who can show as much

passion for your thing as they do. And when I'm passionate about something, I'm all in, and so I can start to show up in a little bit with the kind of energy and the kind of ownership that I think entrepreneurs don't often see in the people they hire. Right, And is this your first experience at a different names for them, but a purpose led company, a company that pursues conscious capitalists. It is. I definitely have worked for some high quality companies that had some pretty strong cultures

and some pretty strong values. But the extent to which our purpose is something that people throughout the organization understand, no, And the extent to which our culture and our stakeholder model is built into kind of the daily conversation and how we make decisions, I've never seen it anywhere but here. So let's pivot to that. How do you articulate the Vital Farms purpose. Our purpose is to improve the lives

of people, animals, and the planet through food. And we do that through our mission, which is to bring ethically produced food to the table. Yeah, I love that. How would you characterize or talk about the dominant system that Vital Farms is trying to improve upon, you know, making that purpose real in the world. Well, you know, the

dominant system is the U s food system. And you know, I think the US food system is characterized by a very steady march post World War Two towards very high productivity through very high concentration of animals in the way that they're reared and food is produced, very high concentration

of players. There's been a lot of press lately about the Big four meat packers in the United States controlling the vast majority of just about any animal protein you could name a real concentration in terms of I think the productive benefits of that system to a limited set of stay holders and a lot of negative externalities that I think understate the cost of the food produced in that system, whether it's environmental externalities, whether it's the increased

risk from lack of resilience because it's so concentrated to all the people who died in meat packing plants over the last year and a half of COVID. That's what I would describe as system we're working too to disrupt. Right and Vital Farms started in the egg business and and so obviously chickens are a huge part of your supply chain, and past your raised chickens are a big part of your consumer proposition. Can you explain to our

listeners what that means? At its core, pasture raised means a system of rearing the chickens that is based in the outdoors and in allowing birds to exhibit their natural behaviors. Now, what I've learned in the eight years I've been in this business and in the twenty plus years i've been in the food business is a term doesn't have much meaning unless it's documented as a standard and then enforced

with inspection. And so one of the first things that our founder, mattow Hair did was when he decided to pursue and try to scale up what he thought was a very superior way to raise hands to lay eggs that was much better for them and for their welfare and their health. And frankly would produce better eggs as well. He went to a third party certifier, Certified Humane, and collaborated with them to create a standard for pasture raised egg production in the United States that would be well

documented and verified by them. So he realized early on, lots of companies claimed lots of things, but you're only as good as your ability to to convey and frankly, have transparency and trust that you're really doing what you're

saying you're doing. So the pastur A standard has specifications for everything from the amount of outdoor space that the birds will have in our case, it's a thousand birds per hectare, which works out to just under a hundred and nine square feet per bird if you do the math. It has specifications for how much space inside their barn where they go to sleep at night and be safe

from predators. It has specifications for all kinds of things around access to feed and water and how often you you provide those things to them, and and what you're gonna do to protect them from predators, and what you're gonna do to rotate those birds around the pastures so it doesn't get too eaten down in any one area. So it's a very comprehensive standard. And so for us, that all adds up to this thing we call pasture raised. It sounds great, How does that compare to the experience

of an average laying hand. So in the United States there are several different housing standards. I guess they might refer to it as ranging from no claim, which means the birds are being raised in cages, battery cages all the way through the pasture raised, which is what we do the majority. So it's still more than half of the laying hens. I believe it's about six of the laying hens in the United States are still being raised

in cages today. When I joined Vital Farms in two thousand fourteen, it was so we're really moving the needle, but there's still a long way to go. And much of the progress has been made in the conversion of birds out of cages simply to to them not being in cages. And that's a the low the next lowest level we believe of animal welfare called cage free. Cage free doesn't mean the birds go outside. Cage free means they're still inside a house, a barn, a big, big warehouse,

but they're no longer in cages. And in fact, the irony of the movement towards cage free, we believe is that many of the largest producers are taking the opportunity to raise their old caged houses and build even bigger and more efficient cage free houses. So you get rid of the cages. But now in stead of having a hundred thousand birds in one building, you might have five hundred thousand birds in one building or more. So the

experience for the birds gets worse in a way. Before I ever even contemplated doing a podcast, I was a customer of yours. I love the design of the packaging, first of all, but I was reading it just nord ing out on what you had to say, and I noticed the I think it's called hens behind the lens, where you can actually go and look at one of your farms. I loved that because it hits on such an important part of I believe being purpose led, which

is transparency. Has that been a hit with other customers, It's definitely hit a note. Look, I believe that what we've figured out how to do is not just doing the right thing every day, but it's doing the right thing every day and communicating in a way to all of your stakeholders that engenders their trust. Trust is easy to lose, hard to gain. We kind of all know that.

I think that this campaign is just one of many touch points over a long period of time that we use to just be radically transparent and really engage our stakeholders and what we're doing, because that's the only reason they have to pay more for what we do than what somebody else does. Right, And so, just in terms of comparing Vital Farms to industry standards, are there other industry practices that you'd like to improve on in the future. Do you have like any kind of a sort of

innovation roadmap? You know, when I think about what makes this place the kind of place for me to work out for eight years and the you know, the things that kind of get me out of bed in the morning, animal welfare improvement were the table stakes. That's what got me in the door. But what really excites me beyond that is that we are an alternative for so many of our stakeholders to a more traditional corporate system, not

just food system. I think about the people who join our company who are so engaged and so just frankly smart and capable and driven and have such extreme ownership.

So I like the fact that we're creating alternatives not just for the birds, but we're creating alternatives for consumers to actually get what they're paying for, you know, for retailers to have transparency because we're not perfect every day, and so we are we're the ones that tell them well in advance of the new things coming along and maybe the challenges as well, saying a supply chain issue. We're the alternative for the communities in which we operate, etcetera.

And so I just I mean, I come home proud every day of the work we do, and sometimes what I'm thinking about might not have anything to do with the chickens. Well, there are animal welfare advocates who have argued that and ethically produced egg is impossible because of the nature of the process. And given your purpose, how do you think about resolving that tension at vital Farms. I think I'd say a couple of things to that.

One is, Look, the reality is if you eat food produced by animals, whether it's the animal itself or something that comes from the animal, you have to be okay with animals dying to make that happen. That's number one.

So if that's a nonstarter, then you shouldn't eat eggs. Look, I know, fundamentally, I believe with all my heart that the birds laying eggs in our system enjoy a much better quality of life, much better health and welfare, and are much better able to exhibit their natural behaviors then the vast majority of birds in any other system in any other company. I also believe that my people have a better experience in my company than in the vast

majority of other companies. Then I could go around my stakeholder groups and point out the ways in which working with us makes them better off than just about any other company they could work with doing what we do. I read once that a thought exercise about your unique right to exist as a company is to imagine a world without you, and say, what would be different if

your company shut down tomorrow. And the first thing that would happen is the eggs that are produced by my millions of birds would now shift to being produced by another company. And if I think I've got the best animal welfare in the business, then We're going to shift animal welfare down. So is that better for the birds? Now? Look, I get it, And there are some people and I have a lot of respect for people who make food choices based in their beliefs. That's what our customers do too.

But the reality is we can't let their sense of perfection get in the way of fundamentally better than what we started with. Yeah. One of the things that I really do believe is that no company is perfect. That being truly purpose led is is a journey. Would you agree with that? Oh? Absolutely, We're learning every day. Yeah, and so i'd love to hear I want to talk a little bit more about the Vital Farms journey and

and also your journey is a leader. First, do you think that you know, being a purpose led business leader is harder, for instance, because you have so many more stakeholders to think about as the CEO of Vital Farms, then does the CEO of a traditional company. It's interesting, it's it's a different set of challenges. I don't know that i'd call it harder or easier. You know, the reality is every company has stakeholders. The question is do you realize it, do you acknowledge them and get treat

them that way? Right? Great point? Great point. The challenge that comes in when you're trying to manage or even work with multiple stakeholders. Isn't so much that you've always got misaligned interests. I do think that the challenges tend to come up when we're looking at different time horizons. So I believe fundamentally that our business can only be sustainable if it's sustainable over the long hole for all

of our stakeholders. So, for example, if farmers go bankrupt at the end of our movie, as so often happens in corporate agriculture, then we don't have sustainable supply chain, let's say. Or if our our people can't afford healthcare or daycare for their kids, then we don't have a sustainable workforce. So it has to be sustainable over the long hole for all of our stakeholders. But on any given day, what they might want may or may not be something I can agree to, and in that moment

there can be tension. What keeps us sustainable is the track record that over time it's all going to work out. Everybody wants more. Farmer would love to be paid more, and I'd love to pay more for their products. The consumer would love to pay less for the eggs. Of course I want to pay less. The retailer wants more trade dollars so they can have better profits, acetera, etcetera.

You can't be everything to everyone, but if you have the courage of your convictions that what you're doing will be sustainable for all of them of long haul, then it tends to work out in my experience, especially when you have values alignment. Yeah, this question is just occurring to me, but can you think of an example of a time when you had to keep your commitment to a set of stakeholders in a way that you know, Well, I guess what is the toughest decision in regard you've

You've had to make? Offer one that was a pretty transformational decision for us as a company. So when I joined, there was a terrible outbreak of avian influenza, and I believe it was that resulted in the destruction of more than ten percent of all the birds in America. Forty four million birds were depopulated. Um, that's a story for

another time. All of the avian influenza was spread inside those factory arms, even though the industry thought that the risk was going to be birds like ours that went outdoors, and none of ours were affected. But there was a typical boom and bus cycle where the shortage of eggs raised prices for eggs, and then the whole industry ramped up production, and then there was a bust where the price of eggs really tanked about a year later, and

we were left with way too many eggs. And our contracts with our farmers have us buying their eggs whether we need them or not. We when we write a contract with you, we say we're gonna buy all your eggs for a certain period of time and we'll figure out what to do with them. But this was sort of an unprecedented shock to the system, and many companies

left in that situation. We're simply telling farmers that they couldn't buy any more eggs for a while, and they'd call them back when they were ready to buy some more, and we certainly had the right within our contracts to do the same thing. We went to our board and we said, hey, if we walk away from these farmers for a period of time, will likely bankrupt them. And I don't think that means long term sustainability for the farmers, which is part of our values. And these aren't giant

corporations either. These are family farmers, right, These are individual family farmers who have put in not an insignificant amount of money to build out a farm to our specifications. They have a soul source contract with us, they have may have other income streams, but this is a this would be a big this would be a big hit

to their financial well being. And we all said, you know, you, look, if we walk away from them now, then when we need eggs again, are they going to be trusting Are they going to trust us not to do that to them again? And so will we even be able to get back in the business when we need them again. The board didn't take too long to debate the idea that it would be better for them to do another fundraise.

This is when we're a private company, take dilution and use that money to pay the farmers not to produce eggs until we were ready. In essence, we paid them one pent profit replacement. We made them whole for as long as we had too many eggs, and it was a lot. I mean, that was a year when we might have been budgeted to make a million dollars in iba DA and that cost us six million dollars. We spent six million dollars paying farmers not to produce eggs.

So think about private equity venture capitalists making that decision. Holy smokes. Yeah, how did that go over with the board? That must not have been a board meeting even looking forward to Well, I gotta tell you they stepped up because one of the things that our founder, mattow Hair had done so thoughtfully was he curated who he took

money from. And so we had this amazing board of impact investors who were pretty aligned with the idea that we shouldn't bankrupt the farmers, who were pretty aligned with the idea that the time horizon for this business to show its potential was over a little bit of a longer term horizon. And the payoff was that single act created a reputation in the industry that has led us to never market to attracting farmers, never advertise to attract

new farmers. We have a list of a hundred plus farmers waiting to get into this system because we're the rare guys apparently that do what they say and say what they do and stick up to you know, we stand behind our contracts, right, do the right thing. That's great. Love that story. What are the standards that you used to decide who gets into the family, as it were. That's a great question, and we actually have a team

of well over twenty. I want to say we're probably hitting about thirty people that both support our farms and help that new ones and onboard new ones, which is like a really big investment. Somebody said once that I think it might have been Peter Drucker said. If you want to know a company strategy, look at their budget. And if you look at our budget, what you'll find is that we spend an awful lot of money in

service of helping our farmers be really successful. And that starts with choosing the best ones, not unlike the focus we put in hiring. So some things we go through UM Typically we're looking for someone to be a referral from a trusted and high performing farmer who's already in our network and most of them are. Next, we might go to their neighborhood and talk to some references. It's always a good idea to go to the feed mill and ask if that person pays their bills on time.

Then we go look at their land. They may already have land, or they may be looking to buy some land. The land is really important for success. The right land is going to be in a part of the country that we call the pasture belt. The pasture belt is this goldilocks part of the country that's warm enough to have meaningful outdoor access year round instead of having feet and feet of snow in the northeast, for example, and wet enough to have meaningful vegetative cover instead of you know,

the the southwest for example. We might also want to look for things like um standing water or open bodies of water on their land because those can attract sort of wild water fowl that can introduce disease on a farms. There are lots of factors that go into the right kind of land in the right area. The other thing that we've discovered over the years that's really important is

treat cover. We used to think of pasture as a manicure golf course, but the reality is these laying hends are descended from jungle fowl, and so what they want is varied terrain under a canopy of treat cover, and so we increasingly are shifting our farm model to more of that. The really cool thing that allows for our farmers is if what we want for the birds is not a manicured lawn but instead varied, you know, sort

of very topography under a tree cover. Now we're helping a farmer make use of land that he probably didn't have an another use for. In essence, this is forest edge land that wasn't going to be good for a crop, and might not even be good for for grazing cattle. Just another area of inquiry. At some level, proclaiming yourself to be purpose led in business makes a company a target, even if by comparison you're a beacon of hope in your industry. Have you ever felt that pressure at Vital Farms.

It's interesting. I think we saw that with if I'm not mistaken, the CEO of of don Own, who, during a time when the stock wasn't performing as well as investors had expected, accused him of being overly focused on the purpose and not on the profits. That's right. There are certainly skeptics, and I gotta tell you, twenty five years ago in business school I was one of them.

I was, you know, firmly in the Milton Friedman camp of your job as management is to maximize share older value, and anything you do with the profits other than give it to the shareholder is socialism. I mean, yeah, us, that is exactly what he said. He comes up a lot on this show. Actually, I mean, and I believed it, Like, hey, if the company believes you should give money to a charity, give it to the shareholder. Let the shareholder choose the charity.

I mean, that's where I was in two thousand. You know, there's a falsehood in that whole chain of logic, which is I don't think about purpose and profits as two separate obligations on my balance scorecard. I actually think that the way we operate and our purpose are the things that give us the right to win in the marketplace and over time will produce outsized returns. Right, I again going back to that thought starter about hey, what does

the world look like if your company seeses to exist? Well, in essence, what that's asking is what makes you different? And what impact are you having that's different than everybody else? And the impact we're having this different is is about animal welfare, and it's about improving the lives of people, animals, and plant through food. It's our crew members, it's our armors, it's our consumers and retail partners. Right, it's the chickens.

It's less risk of you know, environmental destruction, if there's a flood, I mean better resilience for our factory workers, etcetera, etcetera. And so those things cost money, right, those things aren't all cheaper to do than a factory farm approach. Therefore, we have to have a way to get credit for them and have that resonate with consumers in order to exist, because otherwise we're just the most expensive egg producer in America.

So it's not a tradeoff like it's not. Well, we're gonna have a certain amount of purpose, but we've got to balance that with how much we dropped to the bottom line. It's actually a whole reason to exist and our strategy for for success in the marketplace. Are there any other leaders you mentioned the CEO of don Owne. Are there other leaders of purpose led businesses that have come to inspire you as you have kind of entered that or made the transition from the freedman model to

the purpose led model. Well, certainly, you know Whole Foods and John Mackie loom large for us at Vital Farms. They do an incredible amount of work verifying their vendors. So when they set out their own standards for egg production. They visited every one of our farms and they do every year to eighteen months. Nobody else that we supplied to does anything close to that. So I have a ton of appreciation for Whole Foods because they kind of do what they say, and they say what they do.

In fact, they probably do more than they get credit for in some regards. In terms of other leaders, one that has always been an influence for me as Paul Pullman, certainly when he was at Lever and the work he's doing since then. And then one of the kind of holy grail companies that we always look at is Patagonia.

There's always a little bit about what would Patagonia do question in our discussions to learn more about how vital Farms mission drives company culture and for some great advice for anyone trying to leave a purpose led organization, stay with us before you head to the break. We'd love to hear what you think about the show. Maybe you were inspired to take action, maybe you disagree with today's bullshit rating. Either way, we want to hear about it.

Leave us a message at two one two five oh five five, or send a voice memo to CBS Podcast at co collective dot com. You might even be featured on an upcoming episode back with Vital Farms CEO Russell Diaz Conseco talking about how they do their best to truly live their mission. So I guess in the realm of advice to other leaders now that you you know

you have made this transition. You know, Vital Farms began as a purpose led business, but there are now a lot of companies that didn't begin as purpose led businesses who are really trying to make that transition. So what advice would you have for other CEOs who are beginning that journey. Great question. I had the luxury of coming into it sort of already rooted in in this place. I do get calls occasionally from c e o s who asked, how do I do that? And it's often

in service of a financial goal. Hey, I'm thinking about having an I p O. What do you think the impact of my valuation would be if we had a purpose Hey, I'm thinking about doing a fundraise and I wanted what what it would it mean if I were a B corp? Could I if I were a B corp? How how much is that worth? And it's almost like a checklist item, and I got to tell you, I think you don't get the value of it if you think about it that way. And the example I would

give is our crew members. I believe that we have some of the best people working at Vital Farms that you'll find anywhere. But one of the things that all those people have in common, and it shows up in our engagement surveys, that shows up in our town halls, is their role as stakeholders and their expectations of us in terms of the transparency, the way we treat them, the way we behave. Their expectations are perhaps higher than

any other stakeholder group. They're in a position to know exactly what's going on in the business and they have zero tolerance for any bs. So, if you have a purpose but it's just on the wall and you're not really living it, or if you have a purpose but it actually isn't the thing that the people you've hired are wired to be excited about. It's not going to inspire them and it's not going to be a reason

for them to come or to stay. And so you've got to do it for real, and you've got to start with the purpose and let the business model come from that as a pose to trying to stick a purpose on top of a business model that you already think is the right one. Right back to that, I thought your insight about thinking about being purpose led through the lens of how is this going to add to

our valuation is the wrong way to think about it. Um. But it leads to another question that I wanted to touch on, which is does being purpose led mean being less competitive? God, so let me talk a little bit more about what a purpose does for me? And I totally did not get this twenty years ago, right I I want to be very humble about the fact that I'm a work in progress and the company's of work

in progress, and we're still figuring this out. There's a lot of talk about strategy and about the CEO being the chief strategy officer, the chief vision officer, and they got to set the direction and set the guardrails and then unleash the potential of the organization. I would argue that nothing is a better north star than a purpose that you're all aligned around. And that's not just for

you and your employees. That's for your shareholders, that's for your customers, right, that's for your board the purpose and alignment, amount of purpose and progress towards your purpose is the thing that calvanizes us all. It guides people in the moment when nobody else is watching, about maybe what the right decision is. It can guide us in our strategic conversations,

how does this help us achieve our purpose? It can embolden you to take risks and do things that might not pay off in the short run but pay off in the long run. And you know, the example that I like to use, and it may or may not seem relevant to little food company like Vital Farms, is Tesla, right?

I mean, look, a lot of people have strong opinions about Alan Musk and about Tesla, But regardless of where you sit in all that debate, I think it's fair to say a lot of Musk said many, many years ago, I want to move this planet to less dependence on oil, and I'm going to do that through a bunch of things. But the first one is going to be electric cars.

And and look what he's done. He's not. I mean, so many companies are tripping over themselves making announcements about their electric cars that are coming out after years of ignoring it. He lit the flame were all, so many cars are going to be electric, maybe a fraction of him will be Tesla's. He didn't start Tesla to make money. He started Tesla to electrify the auto industry. No, that's right.

And one of the proof points along the way that people some people may have forgotten, is that he actually opened up their patent portfolio to competitors in order to actually make that happen. He was like, the more electric cars there are in the world, the better off the world is going to be in, the better off we

will be as a company. Yeah, exactly. So, yeah, we we would call that an iconic action at our company, Like there are things that that purpose companies ought to do just because they will make people sit up and go, wow, they really mean it. So pivoting back to entrepreneurs, because there's a whole generation of purpose led businesses being born. You know what advice would you give to the purpose led entrepreneurs of tomorrow who are the next generation of

matdow Hairs. I think two things stand out as advice that I would give to an entrepreneur who's kind of thinking about this as a topic. One is, even in those early days when you're stressed and bootstrapping and don't know about making payroll and all the things that a

startup um founder is facing. Even then, you still have to be choosy about who your partner with and where you get your money from, because if you're misaligned with your early investors on your purpose and your commitment to it, it's going to be really hard to stick to it. That's number one. And there were times in our growth when I watched us not take the money we really thought we needed because we couldn't get it from the

right place and we knew that would be disruptive. The second thing I would say is you've got to live it. You have to live it even in your darkest moment. You can't cut a corner because you feel like you have no other choice. As soon as you do that, then it's a little bit of of a takeaway from the purpose you've articulated and from the trust your stakeholders have in you that you really mean what you're saying. So two really hard things to do in those early days.

Choose your partners wisely and don't stray. Let's pivot to the company culture because it's such a an important part of the equation. How would you describe your company culture at Vital Farms. Well, that's a great question. First of all, it's absolutely rooted in the tenets of conscious capitalism. It's something we sort of select for, it's something we manage against, it's something we talked about in our day to day work.

The way that we bring those to life in UH in terms of company values again, so that they can be more tangible and so that we can recognize when people are doing them and aren't doing them. Who articulated five values that we believe are important ingredients to being a part of a conscious company. The first is humility.

So we think humility is really important because if you're going to have truly collaborative relationships with your stakeholders, you have to be open to potentially them having some new information or a different idea that you need to be open to accepting and working with. You have to have the humility to admit when you've got something wrong. Um in order for people to trust you with their feedback.

Ownership again, in the spirit of collaborative problem solving across stakeholders, we want our people to have extreme ownership over their goal or the project they're managing or the result they're going after. But that doesn't mean doing all the work yourself. So ownership for the goal, but not necessarily working in

a vacuum to get it done. We want you to have a growth mindset, this sense of we reserve the right to get smarter over time, that in order to disrupt the dominant paradigm of food production, you have to be open to the possibility that some of the things you have to do look impossible, and you have to be open to the possibility that with enough human ingenuity you could make them possible. And you need to have empathy.

It's very hard to really work in a true sort of peer to peer relationship with a stakeholder if you can't walk in their shoes. And the last one is a competitive spirit. For this to be sustainable for the long haul for all of our stakeholders, we have to win. We've got to win, and we are passionate about winning

on behalf of our stakeholders. And that is part of the true north or that you know that that purpose, that that helps get us out of bed every morning to go to go back to battle with whichever competitor were focused on, whether it's competing for the best farmers, competing for the best space on the shelf, competing for scarce consumer attention, um competing for the best crew members. So those are the ways in which I would describe our culture and certainly at least the things that we

focus on reinforcing in our culture. Are there problems or opportunities in your industry that you would like to see the company take on in the future, And I mean that broadly the food industry. Are there opportunities that or problems that you'd like to take on in the future, really use your purpose to take on or solve, you know, they're seemingly limitless opportunity to disrupt both factory food in the way that we discussed earlier and frankly sort of

factory management, factory corporate management. And so for me, it's not so much that I would point to a specific animal husbandry practice that we want to change, and I would talk more broadly about the opportunity to really bring a whole new way of doing business, the whole new way of thinking about building trust and transparency, getting credit

for what you're doing. I mean, again, the biggest hindrance in my estimation two people being willing to pay more for food like ours that cost more to produce but is meaningfully different. Is them trusting that it's meaningfully different. A lot of consumers say, I'd be willing to pay more, but I just don't believe what I'm getting. Small example years ago, I got to meet with a grocery a buyer at a grocery chain we hadn't met with before

to talk about our eggs. And we have our standard presentation and we talk about what we're doing, and at the end he kind of rolls his eyes and he said, how do I know you're doing any of that stuff? The eggs all look the same. In fact, at least when I buy eggs from birds that are in cages, I know what I'm getting, right. So people say, well, gosh, are there really a lot of people in America that

could pay six bucks for a dozen eggs? And I would push back and say, first of all, that's not a whole lot, And actually six dollars for a dozen eggs is fifty cents an egg. You can have breakfast for a buck. Is that really a lot? The hold back is not people who have six bucks. The hold back is people who trust that it's worth more than a buck for that thing we're producing. So that's what I wanted to disrupt. I want transparency, I want to create more and more jobs that are meaningful in a

purpose driven company, and I want more stakeholder alignment. I think it's good for the world. That's what I want for the industry. That Okay, last question. So we define BS on this show as the gap between word indeed, and so we have a tool that we call the VS Scale where we rate organizations and ask them to rate themselves on that gap. On that scale, zero being the best zero gap between word indeed and a hundred

being the worst total BS. Taking into consideration that you are on your purpose led journey, where would you rate vital farms on that scale today? So you know, I'd love to say zero. And the truth is, as I think about it, I can't think of a of a material way in which we should deserve something less than a zero. But at the same time, I've been here an awful lot of years, and there is a difference

between your good intentions and your actions. And I couldn't tell you that on every day, every one of our over two people and all of their partners are doing everything exactly the way we would in the boardroom, and so I'm gonna say, Ted, give us a little room for the humanity of what we're doing and the fact that we do get better every day. Yeah. I love that answer, because nobody's perfect, right. And also, we really

believe that your purpose should transcend your current state. In other words, you should it should be ambitious, it should be driving change, it should be something that you have to grow into over time. So Russell, thank you so much for the time today and for your wisdom. We really appreciate it. This was absolutely great. Thank you, Ti. I enjoyed it very much. I'd like to end this show by giving Vital Farms an official BS score. As you know, the scale goes from zero to a hundred.

Zero means there's zero gap between word and deed, and a hundred means complete BS. Russell gave himself a ten. Based on what I've heard today, I'm going to actually give him a slightly better score. I'm going to give Vital Farms an eight. By the way, that's the lowest score of our season so far. So why an eight Because one of the key aspects of being purpose led

is transparency. It would have been easy for Russell to give himself in the company a zero, but by acknowledging that Vital Farms is on a journey and that there is always more work to be done, he builds trust and trust is the most important form of capital in business today. And look, of course no company is perfect, but I really believe that Vital Farms heart is in the right place. They're trying to live their purpose with transparency and integrity and backing up their words with actions

that build trust with all of their stakeholders. So, if you're starting a purpose led business or you're thinking of beginning the journey of transformation to become one, here are three things that Russell said that you should take away from this episode. One, if you're a purpose led entrepreneur who you take money from, matters a lot. In the early days, your bootstrapping and worried about making payroll, so there's a lot of pressure to take any money that's offered,

but it will pay off in the long run. To be choosy investors who align with your purpose and understand all of the stakeholders you serve are vital. Two, your purpose drives your business model, not the other way around. If you're the CEO of an established company starting the journey to become purpose led. A purpose isn't something you slap on as an afterthought. It needs to sit at the core of your business and it needs to be

operationalized throughout. This takes time and real work. Three purpose drives culture. Any conscious enterprise needs to define its values. At Vital Farms there are five Humility, extreme ownership of goals, getting smarter over time, empathy, and a competitive spirit. Now your values may be different, but they should be explicit and they have to be driven by your purpose. To weigh in with your thoughts on this episode, visit our

website Calling Bullshit Podcast dot com. You'll be able to see where Vital Farms ranks on BS compared to the other companies and organizations we feature on the show. And thank you for joining us today, Russell Diez Conseco, and thanks to the whole Vital Farms team for helping to make this episode happen. You can find Vital Farms social media handles on our site Calling Bullshit Podcast dot com.

Have an idea for a company or organization we should consider for the show, you can submit that on the site too, and if you thought this episode was clucking great, subscribe to the Calling Bullshit podcast on the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts. And thanks to our production team Hannah Beal, Jess Benton, Amanda Ginsburg, Andy Kim Hailey, Pascalites, D S. Moss, MICHAELA. Reid,

Basil Soaper and me John Zulu. Calling Bullshit was created by co Collective and is hosted by Me Time onto you. Thanks for listening. Before you go, we'd love to hear what you think about the show. Maybe you were inspired to take action, maybe you disagree with today's bullshit rating. Either way, we want to hear about it. Leave us a message at two one two five oh five zero five, or send a voice memo to CBS podcast at co collective dot com. You might even be featured on an upcoming episode.