How Diversification Helped Our Business Survive And Then Thrive

Erik Muller, The FruitGuys

January 05, 2016

A lot of companies focus on doing one thing well. We think an Evergreen company needs to do several things well in order to succeed over the long haul.

But multiple business lines and far-flung geographic markets were not something we considered in the early days of our company. In 1998, San Francisco was teeming with young dot-com companies. Money was flowing, and workers were sick of unhealthy foods littering their offices.

Delivering fresh fruit to offices was a novel — yet refreshingly simple — concept that allowed The FruitGuys to grow quickly. Our first delivery was in 1998 by scooter; by 2000 we owned five delivery trucks. It felt like everyone in the city at that time was enjoying our fruit around the conference table. We even had a secret knock to gain entrance to Napster. That year, we hit $1 million in revenues.

But in 2001, the bubble suddenly burst. We were showing up to offices that were closed and had posted eviction notices. We were devastated when we found a chain around the door of one high-flying Internet company; it owed us thousands of dollars.

Things spiraled from there. We laid off 50 percent of our staff, and we lost half of our customers. We asked the remaining customers what they needed in addition to fruit. They said they wanted dairy service for their coffee and cereal needs, cut-fruit platters for the partner meetings, and bagels and other baked goods. Very quickly, we shifted gears. In addition to providing offices with fruit, we became their corporate caterers.

And we survived. In fact, we got back our footing and started once again to thrive. Over time we grew from being a regional office delivery service to a national provider of fresh fruit. By the mid-2000s, we were producing a few million dollars in revenue and growing. Ex-dot-com workers who moved from the Bay Area reached out to us and we started shipping fruit crates around the country. We continued to service the Bay Area with our expanded products.

Then 2008 hit. Our country went into a recession, and we were hit hard, losing approximately 25 percent of our revenue. We had a company vote — we had to decide if we should move forward with layoffs or reduce our salaries by 25 percent for 90 days to see if we could boost revenues during that period. Our staff voted on the latter, and we hit the streets trying to find new ideas. Out of that desperation, we again moved into another ancillary business.

The USDA had just piloted a program to provide fresh fruit to schools. I rented a car and drove all around California educating schools on how they could apply for grants for free money. I got a couple schools to sign up for it — and pay us to provide the fruit. This became a new line of business.

Today our school service accounts for approximately 15 percent of our revenue. We serve roughly 200,000 pieces of fruit every week to elementary students; the majority of these kids are part of the free and reduced meal plans. This was a necessity for our business to survive the last big bump in the road, but it also feels good to be making an impact for these kids who often don’t have access to fresh fruit. Our program is aligned with nutrition education, and in a few cases we provide on-site assemblies to teach the kids why eating healthy is important.

We now have 125 employees in nine different states. We serve thousands of companies with our fresh fruit every week. We’ve been growing our revenues 20 percent year over year for the past few years.

We will always sell fresh fruit. After all, we are The FruitGuys. But adding nuts, school programs, workshops and gifts to our business mix provides multiple layers of padding that protects our company from the ups and downs of an ever-changing environment and keeps us fruitful.

Erik Muller is the President of FruitGuys.

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