Worth Giving: Why Tech Investors Love This Organic Food Startup
Gunnar Lovelace was born in 1977 in Ibiza, Spain, in a 400-year-old house with no electricity or running water, the son of an Argentine mother who fled a military dictatorship and a Spanish father who was jailed under the fascist rule of Francisco Franco. In 1979, his mother brought him to the U.S. where they lived illegally for eight years as she struggled to make ends meet. Yet today, Lovelace’s greatest concern is not violence or hunger or fear. The immigrant businessman likes to say he has a triple bottom line: “people, planet and profit.”
“I had grown up poor. There had been so many survival concerns and a lot of trauma around the uncertainty that comes with that—where is rent going to be paid from, how are we going pay for food—so I knew early on that I wanted to make money and do well,” says Lovelace. “At the same time, my mother instilled in me a very strong sense of the value of service and civic participation. I’ve always been very interested in how to build businesses that can produce great returns, but also do good.”
Thrive Market reflects that philosophy. Lovelace, who became a citizen in 1990 after his mother married an American, was raised on his stepfather’s organic farm in Ojai, Calif., where the family ran a food co-op. He wanted to find a way to get healthful, inexpensive food to a larger population. So, along with cofounders Nick Green, Kate Mulling and Sasha Siddhartha, he created Thrive Market, a for-profit online discount wholesale market that delivers shelf-stable, organic and GMO-free foods and other grocery items to members who pay an annual $59.95 fee. Essentially a virtual warehouse club, Thrive democratizes the often financially out of reach world of “natural” goods, claiming to offer items at 25 to 50 percent off the retail price.
As of June 2016, Thrive had more than five million registered users and 300,000 paid members, according to Lovelace. To further expand Thrive’s reach, the company includes a philanthropic venture called Thrive Gives, which donates a membership to a low-income family for every full membership that Thrive Market sells. Over 200,000 free memberships are donated to these families, veterans, teachers and students, and the company is raising $100,000 a month through donations at checkout to subsidize their purchases.
“It doesn’t matter who you are, where you are from or what you believe, everyone wants to feel good in their bodies, and everyone wants the same thing for their children.”
“It doesn’t matter who you are, where you are from or what you believe, everyone wants to feel good in their bodies, and everyone wants the same thing for their children,” says Lovelace. “Allowing people to access health foods for less empowers them, it deals with macroeconomic lifestyle issues like the $300 billion spent on diabetes-related illnesses and it helps shift the supply chain away from toxic conventional agricultural conventions to organic and regenerative supply chains.”
The Los Angeles–based venture, nearly 3 years old, raised $111 million in June in its latest round of funding, including a commitment from investing firm Invus. Its total equity funding to date is $141 million, which started with early investors such as Brian Lee, CEO of the Honest Company; Stonyfield Farm cofounder Gary Hirshberg; author and speaker Deepak Chopra; Zulily cofounder Mark Vadon; and life and finance coach Tony Robbins. Thrive claims the “fastest growth of an e-commerce company in LA history” with a $120 million sales-run rate and 15 percent month-over-month sales growth. It has since added Greycroft Partners, E.Ventures and Cross Culture Ventures as investors. The company has reportedly grossed $5 million since its inception; it is shipping $200,000 worth of goods a day.
Jeff Mendelsohn, founder and chairman of New Leaf Paper, which fosters sustainability in the paper industry, is a company advisor. He sees Lovelace and Thrive as part of a growing trend toward socially conscious business. “Some of the most effective companies today have values built into every aspect of their operations and so they do well economically by doing well socially and environmentally,” he says. “It’s symbiotic.”
“It was so obvious to me that having money and having resources was going to empower me to have an adventure in life.”
For Lovelace, it’s precisely his background as an immigrant tied to places that faced oppression that has driven his desire to give to the needy in his new country. “The fact that someone like me can immigrate to this country and spend my entire life working for myself and basically be assured a rule of law and not be stolen from by institutional forces in the way that you get in so many other countries is such a blessing,” he says.
Lovelace traces the urge to give to his school years, when he received full scholarships to Oak Grove School in Ojai and then University of California, Santa Cruz. “I started a cultural center when I was in college,” he says, recalling the Junxion Pizza Lounge and Cultural Center at Santa Cruz, a nonprofit that raised $250,000 from students. The center worked to create constructive conversations across cultural divides both on campus and in a city-wide context. It was a satisfying accomplishment for a young man otherwise frustrated by college, where he struggled with standardized test taking and had a poor man’s yearning to go out and make money.
Fascinated by the internet, Lovelace started a web database company that did work for VC funds in Los Angeles and their portfolio companies. The business morphed into an educational software company, Ego X Studios, that taught children how to read through interactive cartoons, which he sold to Systech in 2001. “That was really the first ‘hit’ for me,” says Lovelace. “I was 22.”
He went on to create Cognition Technologies, a natural language processing company, which he sold to Burlington, Mass.-based Nuance Communications in 2013. He invested in several hundred acres of land near Santa Barbara, “a nature preserve purchased for personal and philosophical reasons,” according to Lovelace.
“It was so obvious to me that having money and having resources was going to empower me to have an adventure in life,” he says.
It took a lot of soul-searching to get to that adventure, however. Lovelace spent eight years in the tech industry, absorbed in the business but not really accomplishing his personal goals. He suddenly felt like he couldn’t do it anymore. “I actually had a nervous breakdown when I was 26. I woke up one day completely exhausted. I felt depressed, and I just knew that I couldn’t keep doing the things that I was doing,” he says. “It’s never worked when I’ve done something explicitly for money.”
Lovelace’s mother, Adriana Goddard, designs jewelry “imbued with attention and love.” She says her son began to turn around after he spent Mother’s Day 2004 selling her products at a flea market in the Los Angeles area. “He was astounded by how women were responding to my work,” Goddard recalls. “I was kind of a pioneer in doing a bohemian look that hadn’t been done in exactly that way before, and women loved it. He said, ‘We have to do a business.’”
Very quickly, Lovelace hired a CEO to run his technology company, Cognition, so he could go to work with his mother. His goal from the outset was not just to run another company. He wanted a business that allowed people to buy goods that meant something to them while participating in an ethical supply chain and encouraging fair trade. And he wanted to use the profits for social good. Love Heals was founded in 2005, and it has grown from Goddard’s flea market sales to an international business with 150 employees and goods sold out of 300 stores, including Neiman Marcus.
Partnering with Trees for the Future, Love Heals plants 10 trees for every piece of jewelry it sells. It has planted 1.5 million trees in Ethiopia, where forests and farmland have been devastated by clear-cutting, helping to create a more sustainable agriculture. The organization also partnered with Vitamin Angels to provide nutrients to more than 50,000 malnourished children, who are at risk of going blind due to Vitamin A deficiency. Today, projects are underway in Uganda and Senegal.
Lovelace was so empowered by his experience with Love Heals that he made the philanthropy part of his approach even more directly tied to the business with Thrive Market. In both cases, he says he is striving to create a bottom line that puts people over profit.
“There are a lot of people who have big ideas,” says advisor Mendelsohn of Lovelace. “But not so many who can actually make them work.”
Lovelace says he “regularly supports” about 50 nonprofit groups with personal checks, and that there is a place for direct charity. But his ambitions are greater. Combining business with giving, he says, “is the most exciting and most gratifying and most powerful way that I can be here on the planet.”
—With Rose Arce