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Upcycling's Upshot: How Urban Mushroom Farmers Turned Scavenging into a Business

“Our whole company is literally built on trash.”

In domestic relationships, one of the quickest ways to butter up your partner is by taking out the trash. In business, removing festering piles of waste also makes you the sort of person who gets missed when you're not around.

In 2009, Nikhil Arora and Alejandro Velez were recent graduates of the University of California at Berkeley who had both been offered positions in consulting and investment banking. Yet both were stuck on an idea they came across in their business ethics class: Gourmet mushrooms grow and flourish in recycled coffee grounds; thus, waste from one industry could be fertile ground for another. Trash, if not treasure, could be a sustainable and cost-free raw material.

The two set to experimenting with growing mushrooms in coffee grounds in the basement of Velez’s fraternity. They managed one crop in an old paint bucket and immediately charged out to their local Whole Foods, where they showed their harvest to the first person they saw in the produce department: “Hey, look, we grew these mushrooms.”

The two were sent from department to department by managers who were curious—and more than a little bemused—by the two college kids and their bucket of mushrooms. Two weeks later, they received a call from the regional produce manager for Northern California Whole Foods stores. They were told that if they could figure out how to do it on a larger scale, “we can blow this up in stores.”

So Arora and Velez turned down their corporate job offers and, learning from YouTube videos, trained themselves as urban mushroom farmers. “We both believe to our core that business doesn’t have to be something where for-profit is bad and nonprofit is good,” Arora says. “It’s an awesome tool, if leveraged correctly, to really make a quick difference.”

But if the pair were going to make a real go of upcycling coffee grounds and establishing themselves as gourmet mushroom suppliers, they would need more than what they could collect on foot from local coffee shops. At a community event, Arora and Velez met Shirin Moayyad, director of purchasing for Peet’s Coffee.

“Alex came tearing after me, calling, ‘Wait, wait, wait, can I speak to you?’” Moayyad remembers. Arora and Velez wanted an introduction to Peet’s business, because as Moayyad explains, “you can’t just walk in and say ‘give me your grounds.’”

Peet’s stores already had arrangements with waste management to dispose of the pounds and pounds of coffee grounds produced every day. Says Moayyad, “We would pay for waste collection, so why not pay them?” So Arora and Velez’s new company, Back To The Roots, started being paid to pick up one of their main raw materials.

For Peet’s, it was a no-brainer. The baristas hated dealing with the waste and came to greet the mushroom growers warmly. The company had always given away some grounds to gardeners in the summer for compost, but, “if you can produce something, create a locavore movement from it, it’s obviously so much more positive,” Moayyad says.

Back To The Roots began including Peet’s coupons in its grow-your-own-mushroom kits; Peet’s sold the kits in its cafes. Products from the two companies are shelved side-by-side in Northern California Whole Foods stores. What started as a small-scale farm supplying local restaurants and a few groceries expanded to include the mushroom kits, which now sell at 1,000 retail centers nationally. Since its founding, Back To The Roots has repurposed 1 million pounds of coffee grounds. After one year, the company had revenue of a quarter-million dollars; last year, it increased that number to $1.4 million. The company forecasts $5 million in revenue this year.

But all that success also meant that Arora and Velez had their own waste-stream problems. The heaps of coffee grounds they were using in-house to grow gourmet mushrooms for local use became a pile of leftover reused coffee grounds that sat in a growing mountain behind their warehouse. Their landlord gave them two weeks to clear the stuff.

So they did what most of us do when in doubt—put it on Craigslist. Community gardeners showed up in droves, telling Velez and Arora “I don’t think you understand the power of what you can do with the mycelium, the mushroom root, after you’re done.” Mushroom substrate is perfect for composting. Soon Back To The Roots was on back-order for their own waste, and trash, once again, had become somebody else’s treasure.

Max Cadji, who runs the garden for People’s Grocery in West Oakland, was among the composters who turned up. He had a history coordinating a small composting operation at UC Davis. “I just gave them some advice on testing, making, and balancing pH,” he says. “They figured out the rest.”

Back To The Roots developed an all-natural, sustainable, soil amendment entirely from the company’s waste, and this spring is introducing its organic MycoRootBoost fertilizer—made from mushroom mycelium—in Home Depot and Whole Foods stores. “It’s this kind of big, organic, sustainable counterpart to the chemical MiracleGro things out there,” Arora says.

In many ways, Back To The Roots still operates like a startup. Despite having a staff of 22 (and still hiring), the partners remain the face of the company, spending considerable time standing behind mushroom kit displays and proselytizing about the benefits of food grown from another industry’s by-product.

And with a depression-era grandmother’s eye for “waste not, want not” they’ve found ways to integrate reuse into things as mundane as their retail display areas. As the kits took off, Back To The Roots opted to break down and repurpose wooden pallets for their growing numbers of display units. “We pretty much tapped out all the pallets in Oakland,” Arora says, so they turned to their local Home Depot, which had begun selling their mushroom kits. “Our display units in Home Depot are now made from their own spent waste.”

The staff of Back To The Roots, like its owners, are largely ex-corporate types—investment bankers and financial advisors turned mushroom farmers. In a more metaphorical way, the company is finding other ways to repurpose—giving people a new direction in their working lives. “Our last ten years have been characterized by a lot of economic and political chaos creating a sense among us that ‘there has to be a better way to do this,’” Velez says.

“This whole country revolves around use and just throwing things away,” Arora adds. “Everything’s just one-time use. That’s not going to last. It’s not sustainable.”

The two speak in terms of value, the value in things that otherwise go to waste. In Back To The Roots’ warehouse, even the racks where they store their mushroom kits come from somebody else’s waste. Diverting all that has built the business. Says Arora with the pride of a true scavenger, “Our whole company is literally built on trash.”

Photo courtesy of Spencer Brown

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