Nick Green's mom didn't buy the fun kids cereals and sugary juice drinks that his friends had growing up.
"She was maniacal about health and wellness. We were the ones that had milk from cows not treated with hormones and cereal without sugar," Green said. "I didn't understand it at the time, but it made a huge difference for me."
It laid a foundation for Green that food should be good for the body and for the planet — ideas that translated in the company, Thrive Market, which he co-founded in 2014.
The Edina native and Thrive's chief executive was recently named a 2020 Ernst and Young Entrepreneur of the Year for the online grocery and consumer goods company that has seen its rapid growth augmented by the onset of the pandemic.
"In March we went from a lot of people trying to find healthy food online to everyone trying to," Green said.
Green knew most growth in grocery was going to be online, he just never expected to see it happen so fast.
Food was one of the first aspects of daily life to be transformed when the coronavirus pandemic hit the U.S. in the spring. Shoppers who had never bought groceries online scrambled to place orders, sign up for delivery membership and establish new food shopping routines from their smartphones and laptops.
Thrive Market's year-over-year revenue was up 40% before the pandemic, but the crush of new online customers sent its annual membership enrollments skyrocketing.
Since March, business has doubled.
But like all businesses bolstered by the pandemic, the challenge now is in sustaining those new customers as life slowly returns to normal.
Green and co-founder Gunnar Lovelace started Thrive on the belief that people wanted to eat healthier foods, but lacked access to them due to geography, finances or intimidation.
When trying to launch Thrive, Green and Lovelace hit a brick wall with institutional investors and venture capitalists. "We were rejected by every investor in the early days because they didn't believe Middle America wanted to get healthy," Green said.
The co-founders instead pieced together $8.5 million from authors, independent entrepreneurs and small food brands that also agreed lack of access was a problem primed to be solved.
Thrive is a membership-based online grocery store that sells food, beauty and cleaning products that are typically found in high-end or boutique market retailers, like Whole Foods, but at a discounted rate — which Green says aims to be between 25-50% below retail prices.
Green grew up in Edina, the son of a Mexican American mother from Denver and a white American father who was raised on a Midwest farm. His mother, after seeing several of her family members suffer from type 2 diabetes, was strict about serving her kids foods she believed would avoid negative health conditions.
After Green in 2010 sold the first company he started — a college test prep program — Lovelace approached him about investing in a new online food market. Green countered that he wanted to be a partner and proposed a slightly different concept. The two agreed and Thrive Market was born.
In its first five years, Thrive grew at a steady pace, much faster than traditional brick-and-mortar retail, Green said.
Then the pandemic hit and stay-at-home orders created a surge in demand. More than 400,000 people have become Thrive members since March, pushing the company's membership over 1 million. Thrive doubled its fulfillment staff, adding 450 workers, at its two fulfillment centers in Reno, Nev. and Batesville, Ind.
Between April to June alone, Thrive shipped more than 20 million products across the country.
After being rejected by investors early on, Thrive has since raised several hundreds of millions of dollars in funding and now employs about 800 people at its warehouses and Los Angeles corporate office.
"I think we proved the early skeptics wrong," Green said. It turns out Middle America was interested in this type of food and household products as 50% of Thrive's sales come from the Midwest and Southeast.
And while Thrive has grown quickly during the pandemic, so have other online of food and consumer-goods retailers. Many delivery services are competing for online grocery dollars — from Amazon's Prime Fresh to Shipt to Instacart — and other independent marketplaces like Boxed or Imperfect Foods.
"How many apps are you going to download on your phone? How many of these things are you going to use?" said Phil Kafarakis, a food industry analyst and former president of the Specialty Food Association.
"How you run your life and who you are going to pick to make it easier will matter (in determining which online companies survive)."
Online marketplaces that source, sell and ship all their own products — like Thrive — face similar challenges as meal-kit companies, he said. Too many meal-kit companies vying for a small number of consumers through promotional discounts led to a winnowing of the field in recent years.
"The back end supply chain side can be a nightmare. If you're not big, you're going to struggle to fulfill all the orders," Kafarakis said of grocery and home goods delivery companies.
Some have already failed, including Brandless, the dual-headquartered San Francisco and Minneapolis e-commerce company that was sold and shut down in February, and whose new Utah-based owner is currently trying to resurrect.
Green said he isn't worried about retaining the company's newest pandemic members; the business model requires a commitment from its customers.
"Some people will switch over to e-commerce and once things open up, they will go back (to in-store shopping)," Green said. "But you can't just come on Thrive Market once; you actually have to commit to an annual membership."
He believes Thrive's social mission is also a differentiator. The company tries to feature women-owned and BIPOC-owned brands, Green said, and for every paid $60 annual membership, Thrive Market donates a free membership to a low-income family or individual.
Thrive, a certified B Corporation, set up a COVID relief fund that gives customers a chance during the checkout process to donate money for families in need and first responders to help buy their groceries. In the first four months, the fund raised more than $1 million.
Green says that as an online marketplace, Thrive is broadening geographic access while the discounts and donated memberships are making some of these products more financially accessible.
But the intimidation factor remains highest access hurdle to clear.
"I think in some ways that is the biggest barrier," Green said. "When they walk in (to a store) and see people who they don't recognize, or they see products they don't recognize, or read labels with ingredients that they don't understand, the message they get is: 'This is not for me,' " he said. "They also see bougie brands that seem out of touch to them."
Kristen Leigh Painter • 612-673-4767
