Mile High Organics is a regional online grocer delivering premium organic products to most metropolitan areas in Colorado. It started out in 2010 offering a list of 20 or 30 products, but has since evolved into a full-line organic grocer with thousands of items. It now delivers fresh meat and seafood, health and beauty products, as well as prepared foods including fresh-pressed juices, salads and complete meals. The addition of prepared foods boosted spending per customer to three times what it was before. Mile High Organics has 45 employees, with headquarters in Boulder and its main distribution center in Denver. Michael Joseph, the company’s sole owner, took some time from his busy schedule to talk about how his company started and evolved.

The Start

In 2005 I founded and grew another organic delivery company with a partner, but it was not the right partner so I left. People make all the difference in this business. After that I went to business school and worked at a private equity firm. With a strong vision after school, I couldn’t not start this kind of company. My first office was my home, and I partnered with one of my suppliers to rent warehouse space. Originally, all of our equipment fit on one pallet.

How did you fund your business in the beginning? Have you taken on any additional funding since?
I wrote myself a check, put everything I had into starting this company. But early on we made a big decision: to run a product on Groupon. It sold to 1,600 customers in one day, and we couldn’t get to Groupon to cut off the pipeline. We didn’t have the resources to deal with it, like a call center staff. I was on the phone at all hours of day. We started hiring quickly, making rash decisions. We had dramatic growing pains. We went from 150 orders in the system to hundreds per week. We went through a long painful period, but we didn’t go back. We kept about 15 percent of the Groupon customers, and got some additional awareness through word-of-mouth.

Later we started selling other products, and I couldn’t afford to fund the expansion. There were a couple of angel investors. My cousin was the first outside investor, and he put together a provisional group of investors. But we had started in an organic sense, and then jumped in scale. We got to where the company was on a good trajectory. But we still hadn’t caught up with our capital needs. The prospect of running out of cash was scary. I found a merchant cash advance as a lender of last resort. I had an MBA, and had worked in private equity, so I knew I was going into business with a loan shark. But the company wouldn’t have made it without that capital.

Running the Business

How did you learn to run your business?
I learned a lot of things by trying during my first business. But that only gave me a fundamental understanding of a very complicated business. There are lots of different kinds of products, packed in different ways for home delivery. I had a good group of advisers, but largely it was trial by fire. We are constantly experimenting to find what works in ordering, preparation, packing, and delivery. We went from 30 products to thousands, all with different characteristics, frozen and fresh, which we have to keep fresh all the way to the customer’s location. I also had some theoretical information from my MBA, where I learned the science behind operations and finance.

Who was your first customer?
I can’t remember the name. But I do remember a nice family we delivered to at the very beginning in Boulder that is still our customer today.

What was the biggest mistake you made in your first year?

I think it was being ill-planned for running that Groupon, not understanding how much business I would get, not being prepared for the onslaught of customers. Another one was not having a key operator in place who can run the day-to-day operations, the fulfillment. I can only do so much.

What’s the smartest thing you did in your first year?

I decided to follow my instinct and start the company. At that point in time I didn’t see another option. Now I have a business I love.

What’s the most rewarding thing about running your own business?

One is just delighting our customers. For example, some of our prepared foods, such as prepared juices, you can’t order after a cutoff time. When they found they couldn’t order because of that, some customers are disappointed that they have to buy store-bought foods. The other thing is our passionate staff. There are a number of people who really stuck with us. I love coming to work. And I am one of our best customers.

What’s the most difficult/challenging thing about running your own business?
The most difficult thing is keeping the team engaged and passionate. There’s no precise recipe. It has to do with knowing people and understanding what they want, and aligning their personal ambition around a goal. It means helping them focus on their career paths, helping them even if that path is not with us.

What’s the most surprising thing about running your own business?

If you’re persistent you can never predict what will happen. I’m constantly amazed. One of the most surprising things was the process of becoming part of a wellness program of large companies. We jumped through many procedural hoops. I was surprised how the team came together to make it happen. It’s a small team, and it seemed almost an unreachable goal. But they stepped up and came together to make it happen.

What business owner or entrepreneur do you admire most? Who is your role model?
I’ve met hundreds of amazing people, but one of my best role models was my cousin who was my first investor: Steve Markowitz. He was a self-made entrepreneur with a company that went public from nothing in four years. He mentored me through all the unexpected things that can happen.

What I’ve Learned

If you could go back to when you were starting your business, what advice would you give yourself?

To plan better.

What do you wish you had known before you started your business?
I wish I had known to make sure I had enough money and the right staff. I was a little bit seat of the pants with a big vision.