Christina Stembel didn't launch her San Francisco-based company with money from an outside investor. Instead, the Farmgirl Flowers CEO bootstrapped the flower delivery service herself using $49,000 from her savings. And now, her direct-to-consumer business is shaking up the flower industry.
Instead of offering hundreds of bouquet options, the company only carries a select number of curated daily arrangements. Customers choose an arrangement style, rather than specific flowers, Stembel tells CNBC Make It.
That's not the only thing that sets Stembel, 41, apart. Unlike many of her peers in the start-up world, she didn't attend college but rather worked for Stanford's alumni office for several years before launching her company in 2010. While Stembel says she wasn't sure if she was doing things right, she learned along the way to always trust your gut.
"I heard Oprah say every decision she made not trusting her gut ended up being a bad one … so I decided if trusting a gut instinct is good enough for Oprah, it's good enough for me," she said at Capital One's Spark Business Summer Celebration in New York City. (Stembel recently became a paid spokesperson for Capital One after years of strategically using its business credit card.)
Her instincts paid off. Farmgirl Flowers is on track to bring in $32 million in revenue in 2019, Stembel tells CNBC Make It. Here's how Stembel started her business from scratch and grew it into a multimillion-dollar operation.
Stembel always knew she wanted to start a business, she just didn't know which industry she wanted it to be in. "In San Francisco, everyone kind of has a business plan in their back pocket," she says. "So, I caught that bug and knew that was what I wanted to do."
But after about 10 years, a business idea finally clicked when she ordered Mother's Day flowers for her mom. She spent an hour sifting through a florist's online selections, finally landing on an all-white bouquet because she didn't think there was any way the order could be messed up.
However, when the flowers arrived, her mom's lilies had been mistakenly dyed Kelly green. It took several frustrating phone calls, plus re-ordering the flowers, to get something even close to what Stembel had originally wanted.
She saw an opportunity. "All of the business books that I read said to solve a real problem that you have," Stembel says. "And I was like 'This is a real problem that I have!' It's only a couple of times a year, but I have this problem ... and so other people probably do, too."
With this idea in mind, Stembel started saving. Once she had $49,000 in the bank to start her business, she quit her job as the director of alumni relations and campaign outreach at Stanford Law School in June of 2010. She officially launched Farmgirl Flowers in November of that year.
Stembel knew she couldn't start a business while working full-time: "I needed to make that actual physical move, where I was like 'OK, there is no paycheck coming in and I am going to run out of money pretty quick if I don't do this.'"
Stembel knew from the start that she wanted to "disrupt the way things are traditionally done in the flower industry."
For starters, Stembel set a goal to have all arrangements made in-house, so she could more effectively guarantee that customers would receive exactly what they ordered online. Initially, this meant making all of the flowers in her tiny apartment, Stembel says. But today, she employs close to 90 flower designers who fulfill hundreds of flower orders daily.
She also wanted to be sure her company provided quality bouquets, rather than a quantity of so-so choices.
"Instead of having hundreds of options, we offer a few curated daily arrangements," she says. "The biggest difference is you don't get to pick what the flowers are, you get to pick the style of arrangement."
The benefit of operating this way is that it cuts down on waste by about 40% of the industry standard, Stembel says.
Stembel, who didn't previously own a credit card, stumbled upon an unlikely business strategy: She opened a cash-back rewards card to help her get through the lean times. Last year, the millions of dollars she spent on the company card earned her over $133,000 in cash back, which she reinvested back into the business.
When she first launched Farmgirl Flowers, she had zero credit established, she says.
"The way I was raised was that I only bought what I could afford and I always only used debit cards," she says. "And so I had to get my first credit cards in my husband's name."
On her husband's recommendation, Stembel opened a Spark Cash card from Capital One in 2013, which she has used ever since. Earlier this year, the company signed her as a spokesperson because of her use of cash-back rewards.
In 2019, Stembel says her company will spend $7 million shipping flowers through FedEx, plus another $7.5 million purchasing flowers, all of which she'll put on her card. She earns 2% cash back, which would net her around $290,000 in rewards for the year.
Stembel says this extra cash helps cover unexpected expenses and bridges the gap during times of the year when flower sales may be slow.
In the flower industry, June, July and August are known as the "summer slump," Stembel says. It's a time when many flower companies have to lay off a huge percentage of their team members.
To combat the summer slump last year, the Farmgirl Flowers team used $115,000 in cash-back dollars for digital marketing during the summer months. By keeping the marketing efforts up, the company experienced a 69% year-over-year growth during that time, she says. In 2017, for comparison, it only saw an 18% to 21% year-over-year growth during the same period.
"We did not feel the pinch that I was expecting to feel and didn't have to find alternate means to pay my team," Stembel says.
This strategy has helped her make it through lean periods and continue focusing on long-term growth.
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