Josh Hix, founder @ Plated

How many of you folks have used Plated before? So, some, but not that many. So at least we have a good opportunity to—

go sign up.

Yeah, to evangelize a little bit. But in a nutshell, just give the high-level description of what the company is. Sure.

So for the consumer— and Happy, I think we're gonna talk a bunch about the, you know, the business side— for the consumer, we help you cook. So we're a meal kit business. We deliver all the portioned ingredients you need to cook at home along with recipe content, paper recipe cards, video content, etc.

Got it. And you guys have raised roughly $90 million. You have— how do you say how many customers you've had?

I think all the, all the Sorry, I think all the lawyers will let me say at this point is a few hundred thousand.

Okay, and you guys recently sold a year ago, a little over a year ago for roughly, roughly $300 million to Albertsons, right?

Correct.

So these guys have an amazing story because similar to Giphy when we were talking before, it happened very quickly. What year were you guys started?

Started, so I have one co-founder. We started the business in the summer of 2012 and then sold in the summer of 2017. 5 years, which maybe is quick. I suppose in terms of venture-backed companies it is, but definitely didn't feel that quick.

It never feels fast when you're doing it every day. I want to hear about the early story, because you and I talked about it a few days ago, a week ago, and you were talking about just the early, the first iteration of the product I found to be kind of shocking actually. It's a pretty amazing story. Walk me through where you were a few months before starting the business and what led you to, let's say, the, the, the first month of the company.

So the, the, the kind of genesis of the company was we started out, my co-founder Nick and I, knowing that we wanted to work together but not on what. So it was team first and idea second, which I think is a, a reasonably good way to go about it. Um, what a lot of the, you know, academics would tell you is the number one thing that kills startups is co-founder conflict. I've certainly seen it, you know, with friends and, you know, sort of folks that I've run into. So that part was very important to get right. So then after we decided that we were going to work together, we sat down and looked at each other and went, well, what now? We need to figure out what the idea is. And tried to go through a process of figuring out, you know, what was both interesting to us. So it's kind of that, you know, P word, like what are we passionate about? But, you know, there's lots of things that we're passionate about that would probably be horrendous businesses. So what are we actually interested in? What do we care about enough to get up every day, including the bad days, and work on? And then also, you know, where do we think there's interesting business opportunity and kind of figure out where the overlap is? And we actually spent about 6 months doing that. So going through, looking at different ideas, talking to people, trying to be smart. Probably were not that smart, but trying to be, you know, effective at figuring out what was a good idea, right? Testing by talking to friends and family, by putting up landing pages, all the sort of techniques that, you know, everybody's familiar with, but trying to get to a good sort of handle on what was a reasonable business idea. And in part, we were trying to do that to a level of confidence that we felt good about taking money from friends and family before we went and and did that and launched the business.

And you basically locked yourself in a room for 6 months, you said, you and your partner. And what was interesting to me is some of the founders who have spoken today, who have spoke today, they had this, they kinda had, they had a pretty good brand from the get-go, or at least they had a, they knew what they wanted to be early on. Whereas you did not start, Play did not start start as Plated. Can you talk a little bit about the very first iteration of the product?

So part of this was that we were just like broke AF.

Less than broke, negative.

Yeah, both of us. So we met in business school, which is a lot of fun but also really expensive. And you know, both of us were paying for it ourselves, which is a way of saying that Citibank was paying for it. I think we tried to— we put it together once, we had something like a quarter million dollars in debt between the two of us. So, you know, we had negative money. We had some credit cards that, again, Citibank was also paying for that we used to fund the business. So we were just putting everything on a credit card. Nick, at least, was married, so his wife kind of supported us in the sense that she was paying for him and, you know, we worked out of their apartment and I ate all their food. But we had no money for anything, including a domain. So I think there were two things that we were doing. One was just being cheap, which is by necessity. The other thing was we were trying to be deliberate about starting the business and testing all of the— getting all the like obvious big mistakes out of the way before we, you know, bought and built the real brand. We wanted to mess up on a throwaway brand. So we started out with dineinfresh.com. It's awful, it's literal, it's hard to—

A $10 domain name.

Yeah, it was available. I mean, that was the basic search criteria. Go on GoDaddy, what can we buy that isn't, you know, that's available, right? But it's terrible. It's too literal. No good brands are literal. It's everyone, you know, is it dining, dine-in, how do you spell that? It was just, you know, it's too long, too many syllables, etc. But it was available and it was good enough to test on. So we ran on that brand for 3 months or so, during which we got through a bunch of milestones. We had enough conviction to take some money from friends and family, although that turned out to be a lot harder than we expected it to be. We raised that money enough to go buy Plated, which we had to negotiate. You know, not surprisingly, somebody owned it. They weren't using it, so it was reasonably affordable, and then build the brand identity around it and launch that properly.

What was the dine-in fresh period like? What were you doing?

What? In what sense? What were we doing?

Was it, it was just a basic landing page and you're driving traffic there through what, Facebook ads or?

So it was a fully functional website. It was ugly as sin, but It was a fully functional e-commerce site. It was taking orders for us that we were then fulfilling. All of it was super scrappy. We were doing it out of Nick's apartment, but it was a site to go to, place orders, manage your account, normal sort of e-commerce functionality, including, you know, kind of customer research. So I would sit there on the laptop and chat with people and ask what they liked or didn't like or why they were buying.

You were just using like an Olark, like a website plugin that allowed you to chat with anyone who visited the website.

Exactly.

And where was the traffic coming from?

Mostly Facebook in the early days. Now I don't know if that's that helpful in today's context, but back, way back in the day of 2012, it's funny, I say this to people now, I mean we started, we literally filed the incorporation papers in June of 2012, and the thing that people don't often remember was that in May of 2012 Facebook went public. Facebook was barely a thing then, and they were still basically, and in some cases literally, giving away media. There was some program you could sort of apply to, and I don't remember the mechanics, and they would just give you a $50,000 advertising credit. So we were spending— we didn't get that credit, by the way, but my point is just Facebook was very, very inexpensive. So we were spending $5 or $10 a day, and that was enough to drive 100 visits or whatever it was, enough that we could do kind of user research in real time.

100 visits a day turned out to be what, like 20 customers a week?

I don't think the conversion rate was that healthy, but something like that.

So like tens, tens a week, tens a month for your first handful of months, or 3 months, 6 months?

That's about right, yeah, probably 3 to 4 months.

And you were telling me about the early version of the meal kits. How were you creating the menu? And tell everyone how you were preparing the food.

Well, I mean, the theme to those answers and all of them is it was me and Nick doing everything, and we had no real experience in hardly anything. I mean, I have a software engineering background. I wouldn't claim myself as a professional engineer. I could do it enough to build the site and such. Nick was a Marine and had some, you know, reasonable sort of operations experience, but outside of that, call it engineering and operations, we didn't know anything about anything. We didn't know anything about the culinary part or the customer acquisition part or, you know, anything else. So, but we had no resources, so we just figured it out. So on the recipes part, we were just writing them or finding them on, you know, sites.

Recipes.com. Wherever.

You know, we were just, we were hacking it together. We were finding recipes, we were packing boxes at first out of his apartment. You know, we were just kind of doing whatever we needed to do to make it work.

So you're, you're, someone places an order that you have made up the menu, you're making the menu daily or weekly or something like that? Weekly. And you literally then just go to Whole Foods or Safeway or whatever you guys, whatever the stores are up here and you're literally just individually packing, packaging the ingredients and then taking it to the post office?

Yeah, we were hand fulfilling everything, which I know a lot of e-commerce companies get started that way. It just happened to be food, but.

What was the, like let's say you're packing chicken, what was that wrapped up in?

So on the packaging front, again, something we didn't know anything about, You know, we tried to be smart and certainly always erred on the side of food safety, but what that meant is, you know, the early packaging design was like way too much. You know, it's an industry challenge even today. You know, the amount of packaging is something that, you know, we focus on, but back then, like, it was comical. I mean, you'd get, you know, a freaking refrigerator-sized, you know, delivery for, you know, a chicken breast. It was wrapped in a bunch of, you know, insulation with ice packs, and the sort of general concept was the same as it is today, but a lot less elegant.

And how long were you doing this out of your apartment for?

The apartment piece only lasted probably 3 months. You know, we pretty quickly— I mean, we knew that that was not scalable. It was, you know, it was not the right thing to be doing for a lot of reasons. So as quickly as we could, we went out and found warehouse space. Space. Not that— like everything, that took a couple of tries to get it right, but we got out of the apartment pretty quickly.

And then, so you guys are bootstrapping the company up until this point. You are in debt. Are you paying for all this on a monthly basis with credit cards, or—

Yes.

So you're—

No other options. I mean, we— not for lack of trying. We were applying for small business loans and pitching everybody and every other, you know, method that we could think of to try to get access to capital, but we didn't have any.

And at that point, like, you're applying for small business loans, you just said. Did you actually think that this is gonna scale to something with hundreds of millions of dollars in value, or was it just, man, if we can get to like $500,000 a year in revenue, I'll be so happy?

So we— I don't think we really had any sense of how big that it might get. But we did both want it to get very big and also just in working through the spreadsheet math, which has its obvious limitations, but working through the spreadsheet math of the business model, it's very clear that, I mean, basically all e-commerce business models, I would say as a rule of thumb, most e-commerce businesses need to be very large to be break-even. There's exceptions to everything and I have friends that have dropship businesses and things like that that work, By and large, ecommerce is a high fixed cost, low variable cost business. So you gotta sell a shit ton of units to cover your high fixed cost. So we thought that we'd need to get big and that we were gonna have to raise money to get there.

So what happened between month, let's say, 4 and 8? I know you guys raised roughly $400,000 in funding. You raised a little bit of funding. What happened between that period?

So probably at month 3, we had enough confidence to go and raise money from people. Now, we thought that was going to be like, we go and pitch some people and yeah, it's hard, but we'll go do it. It took us 3 months and about 200 pitches to get anybody to say yes, and that first yes was a group of angels, you know, to the tune of about $400 grand, which today is like a joke of a seed round. I mean, most like venture businesses businesses are raising millions, not that that isn't without its downfall as well. So we raised that $400,000 from a group of angels, just individuals, right? People that had had some success before and were crazy enough to believe in us. And then bought the plated domain, built the brand, went to plan this big launch, which was its own special form of disaster. So building up to the launch, you know, we were doing what we thought we should do, which is try to get some press, um, get the website ready, get the inventory in order, et cetera, and then go try to get somebody to write about us. Uh, so Nick, my co-founder, was, was doing all the media at this point. Went out and got Thrillist in D.C., here, and Boston to do their sort of city-specific pieces on us. And, you know, we get all excited. We're thinking, is this, you know, this is gonna be it. They'll write these pieces, you know, we'll be a billion dollars overnight and ride off into the sunset. Sunset. And about 3 days before the launch, which was on a Monday in October of 2012, we start kind of, you know, hunkering down to get ready and figuring out— start hearing some noise about a storm coming. And for the folks that lived here in that time, you probably remember that was when Hurricane Sandy hit. So it was literally overnight Sunday into Monday when that hit, which just obviously devastated the area. No power, no internet, no, you know, no cell phone service in most parts of the city. We came within about 3 inches of our one kind of sad little warehouse being flooded out of business, which would have, I mean, completely ruined us. We had absolutely no, you know, backup money at that point. Survived that, thankfully. It's a fun story now in hindsight, but definitely came very close to killing the business. And then went off and, you know, were able to continue growing and eventually raise some venture capital money, sort of proper institutional capital.

And how long did— was that initial seed round supposed to last, or how long did it last you?

So I don't think we really knew how long it was going to last. We were just trying to stretch it as far as we could. You know, we had just been sort of beaten and battered by the fundraising process and, you know, you know, knew that it was going to be hard. So we were trying to stretch it as far as we could. I think, you know, we probably would have estimated 18 months of runway. It was probably more realistic, more realistically half of that. And in part because once things start working, you know, the marketing takes, requires money. Even though it, you know, it's profitable on an ROI basis, you sort of, you know, you pay Facebook and then it takes a few months to kind of make that money back.

Is anyone here in the Hustle's ambassador group? Oh, great. A fair bit of people. So I had a long post on there 2 or 3 days ago, and I got frustrated talking to a couple friends who were trying to recruit basically a co-founder to a company. And this co-founder, they're gonna pay the— it was an $80,000 job, and people weren't willing to take that because it was a huge step back. And their current salary. And even though they said they wanted to start a company, they're like, "Yeah, you know, like, I'm already getting paid like $150,000. No, I don't want to get paid $80,000." And it just pissed me off because— not pissed me off, but I was like, "Man, I don't think people quite understand when you start something, your early salaries are typically very, very low." For me, the first year, it was roughly like it came out to be like around $20,000 or $30,000, and the next year it was a little bit more than that, and now it's reasonable, but you're paying yourself very little early on, and you had that same journey, right?

Yeah, so I, you know, I think it's an important and somewhat nuanced topic. You know, I always feel compelled to sort of say I think that it's a you know, a privilege, and I feel privileged to have had the ability to go do it, even with all the debt, and that made it hard, and all those things. You still, you know, I was at a place in my life, I didn't have kids, you know, I had friends, I had a supportive family, I knew I wasn't gonna be homeless. And that safety net is something that not everybody has, so I think it's important to acknowledge that, because sometimes these things can get sort of glorified in a way they shouldn't. That said, yeah, we didn't pay ourselves shit for a long time, you know. It was a similar kind of story, you know, $20,000, $30,000 first year, maybe, you know, whatever, $30,000, $40,000 the second year. And by the way, when you start running short on money and you can't make all of payroll, you're the first person that doesn't get paid, and that happened multiple times. So, you know, I agree. I think like it's a reasonable expectation for somebody starting a business to, If you can't do it, you can't do it, and that's what it is, and that's sort of reality sometimes. But raising money, I mean, I do some angel investing now, and it's a huge red flag. I mean, if somebody's trying to take a big salary out of it, like, it's not a good use of the money.

What do you consider a big salary?

$80,000 is definitely a big salary for, you know, the first year of a company. I don't know where, I don't know if there's a bright line there, but it's closer to $20,000 than $80,000.

Yeah, I mean, I think that it's easy to glorify this entrepreneur journey, but it takes a long time to get, quote, market salaries, you know what I mean? And I think that when you and I were talking, I wanted to bring that up because I don't think that people understand.

Yeah, I don't think, you know, and there's no sort of one place you can just sort of look for what a market salary is, but I don't think that we were paying ourselves market salaries until after we sold the business after 5 years.

Let's talk a little bit about some pretty specific tactics. So basically after raising your second round, I mean, it was definitely like a— it started to grow nicely and things were working well. You guys ended up with roughly 1,200 employees and things were going well. What got you those first customers very, very early on in say the first 9, 10 months?

Yeah, it, it changed very rapidly and I think that's the, the, the real answer to how to go find those customers. I mean, it's a common question and, and it's an important one and I, I get why everybody asks it. But at the same time, you know, these things are really just arbitrage. It's finding places where, you know, the media or the attention of people is underpriced. I mean, that's like in a nutshell what you're looking for, whether it's influencers, not that that's exactly a secret anymore, or Facebook in the early days, or whatever the sort of new thing is. So what we were doing, the first ever customers were what we talked about a few minutes ago, had a chat client on the website, you'd come on, you'd get that sort of annoying little pop-up and, you know, say, hey, What can I help you with? And in the very early days, it was just me, you know. So Nick, my co-founder, was kind of— was not technical, so was off sort of doing everything offline, the media and the operations and all these things. And I was just sitting on a laptop doing everything there, writing the code for the website, doing the customer service, everything in between. And I would just literally sit there and talk to people on chat. And it was very helpful, you know, certainly at times kind of frustrating, but I would sit there and, you know, I remember the earliest of those chats, some of them would go for hours, which I still kind of wonder why people were willing to spend hours talking to a random person on the other side of a chat client, but they were very helpful in terms of telling me, you know, why did you click on that ad, which is on Facebook generally how they ended up on the website, and then tell me what you think of the website, what, you know, does this make sense to you, what parts of it don't, are you thinking about buying, are you not, like what would it take for you to buy. And then just building that back into the copy on the website, the signup flows, etc., in as real time as we could. Now that obviously doesn't scale, but over time Facebook in that first 2 years for us was a big channel. We layered on other things and honestly the way I always sort of describe this to investors and other people is we did it all in-house. Customer acquisition, that is. And it looks like a hedge fund trading desk. It's all just arbitrage of cost per click and cost per impressions and everything else. What are the tactics that other people are not using yet? And every time Facebook would put out a new tool, audience lookalikes, whatever it was, it would be great for a month and then okay for 3 more months and then not work at all after that.

How did you figure out what you could spend early on to acquire a customer?

We just tried to be careful, is my best answer, because we, you know, and again, I think this is very dependent on the business model. Most e-commerce businesses probably ought to be break-even on the first order. We're a subscription and a low-margin business, so we kind of had to make a bet on how many times you'd order, on what the lifetime value was. So we just tried to be conservative in the beginning and not shoot ourselves in the foot, and then as we, you know, as the business, you know, got older and we started having more customers or any customers that had been with the business for months or years, we'd have more, you know, informed view.

What about raising a lot of venture capital? You guys raised $90 million. I asked— we have not raised any venture capital, and I'm personally— I don't know if I actually want to ever do that. Maybe, maybe not. But when I asked you that question, Your answer was different than most entrepreneurs of venture-funded companies, which was 100% absolutely yes, I will do it again. Whereas most people I talk to say like, "Eh, maybe." And a lot of people say never again. You said wholeheartedly yes.

Yeah.

Can you tell me about that decision-making process and why you're gonna raise money again in the future?

So I think, I think it all comes down to knowing what you want to do. It probably sounds cheesy, but, you know, some business models require venture, uh, most don't. And I actually think, and I, I think, you know, a lot of the sort of topics and businesses that, that you talk about and cover are aimed at some of the non-venture, which is, I think, I'm a huge fan of. Like, I think that, that that, you know, kind of bootstrap businesses or lifestyle businesses are— don't get enough, you know, press, get a bad rap sometimes. Like a lot of my, you know, like happiest, most content friends are running those kinds of businesses. And so I think that it's, you know, they are equally as important, equally as valuable. I mean, probably on average, they're more valuable than venture businesses, right? I mean, that's no sort of secret that most venture businesses fail. They're very binary. It's sort of a billion dollars or nothing. So this is all, you know, don't sort of overweight what I'm saying. Some days I wake up and wish that I wanted to go build something that looked more like a bootstrap business. It's just not the stuff that I'm, I think, most interested in and most and best suited to build, which for me is kind of large-scale technology products. Those are the kinds of things I'm most interested in, what I've spent my whole adult life working in. And those tend to be venture-backed, you know, type businesses where you need to raise a lot of money to make it work. There is no amount of like, you know, hustle that will, you know, that will allow you to build Facebook without raising $1 billion. Like it just does— that is not simply possible. So for me, it's a no-brainer, which isn't to say that it's always fun or always pleasant or anything else. I mean, having a big board and a bunch of venture guys to manage and go out every, you know, once a year or once every year and a half to raise money is a big distraction and has very real downsides, including that it's no longer your business or just your business. You're gonna sell a bunch of it. You're managing other people's money, et cetera. Um, but for a certain kind of business, there's no option.

When you guys were starting out, were there a lot of competitors to you? Someone was asking that on the screen. Um, it's a— it seems like a pretty crowded space now. Was it like that then?

No, uh, is a short answer. You know, we were, as far as we are aware, the first company in the US. Uh, there was a company in Europe at the time that was getting started, you know, they started a bit ahead of us, but we didn't, you know, we weren't aware of them. Um, it's an interesting thing, just, you know, sort of waves of companies tend to get started around the same time. There's something just in the in the media, in the air, whatever it is, that a lot of, you know, similar types of businesses started around the same time. But it was not competitive, because there was no scaled businesses, there was hardly anybody doing anything. You know, the sort of label of food tech didn't exist back then. The closest, you know, sort of comparison that anybody had for us was Webvan, which was not a good comparison. We got— we were thrown out of, I can't even count how many people's offices, I don't know why they took the meetings in the first place. Separate sort of topic. But people would take these meetings and we'd start pitching and we'd get, you know, 90 seconds in, they're like, "Wait a second. This is just fucking Webvan? Get out of here." It's like, "Okay, well, thank you." But— so, no.

And if you had to start over again, would you start in this space now? Or is it too crowded?

I don't think today that I would go start in this space. At least not without a clever idea around how to differentiate yourself, around how to build an audience. You know, it's not clear to me where— and it doesn't mean that these things don't exist. I just, I spend my day-to-day running, you know, a medium-sized business at this point, not looking at sort of new customer acquisition channels. But it's not clear to me where you go build a big audience, you know, in a venture sort of style through, you know, through hypergrowth, et cetera, today, because Facebook and Google, to some extent, was the way that everybody did that from 2012 to probably 2016, and that's largely gone.

What year were— So you guys were on Shark Tank. What year was that?

We filmed in the summer of 2013. So they film it like a regular TV show, as far as I know anyway. I don't know a ton about the TV industry. And then air it throughout the season. So filmed in the summer of '13, the season is, you know, September to May or what have you. We aired in April of '14.

How much traffic did it bring to your website?

A huge, huge amount.

Like, uh, we were talking— I had a friend that was on there and she said that they had like 100,000 concurrent users at one point while the show aired. Is that what you—

So I think I'll give you the— rough numbers as I remember them, and I should go back and look at these one day, but, you know, so at the time, we were— we probably had, you know, you pull up Google Analytics and just look at the, you know, concurrent people on the site. It was probably 50 on average, if you just sort of looked at an average week. So across, you know, 24/7, middle of the night, middle of the day, whatever, probably 50 people on average were on the site. And back in 2014, Shark Tank still aired Friday nights. So we had a big party in the office and, you know, had TVs up on the walls with Google Analytics and these sorts of things. And within about 3 seconds of the segment starting, it went from 50 to 50,000.

No shit.

And then the site crashed, which is bad. We had a, you know, a backup site, just like a static page.

Like a Cloudflare thing.

Yeah. It was an email capture page. So, you know, not like a dynamic e-commerce site, just a flat page. You couldn't do anything other than leave your email. That came up, thankfully. That lasted 6 seconds or something and collected like 13,000 emails, and then that crashed. So we were on Heroku, if that means anything to anybody. So it's built on top of Amazon. It was our hosting platform at the time. They told us it was the single biggest database bike they'd ever seen. I say that not because it's anything to do with us. I think it's just— it's actually kind of interesting to me that a lot of folks still ask and don't seem to appreciate just like how effing big Shark Tank is as a platform. When we were on, and I suspect it's gotten bigger, I don't know, but when we were on, it was going into 11 million households on Friday night, which is like 10% of the households in the US, and that's before for Hulu and reruns and syndication and DVR, et cetera. So it's just, I mean, it's crazy.

And they don't, they don't take any, they don't get like an equity position in the company just for you being there or anything like that. It's just free. I mean, if you say no, it's free.

They used to. So you may have heard that. That's all gone. It's been gone for a long time. It's, you know, free, quote unquote, to go on. And then you do whatever deal you do with them.

A lot of the people I've interviewed— I've interviewed two other people today. Neither of them have ever sold their business. I think you're the first one I've spoken to today that has. When you were starting this, were you going into this like, "I'm never gonna sell this. I'm gonna run this forever," or "I'm only building to sell," which some people— which is great as well. What was your balance of— building to sell versus building to last forever.

Yeah. So I agree, both are great. Again, just sort of like knowing what you want is a big task but important. We wanted to run it forever. So I built two software businesses before this, and my business partner had done some other entrepreneurial things.

But those weren't really big hits, were they?

No. No, they were much smaller. You know, learned a ton, very worth doing, but much, much smaller businesses. But the point is, both of us had done enough things in our life, I suppose, that we just, you know, and maybe, who knows, maybe things would have changed, but we wanted to build and run the business indefinitely. You know, it was kind of what we wanted to do. We both had some other jobs that we really didn't like. You know, we didn't want to have to go get another job. We didn't necessarily, you know, want to go start another business. I mean, 'cause early days are hard. I just, I don't think there's any way around that. So we were building it to run indefinitely. The sort of flip side of that though is, you know, once you take venture money, I mean really anybody's money, but especially venture money, you know, that's a professional agreement to return that money at some point. And they've got their timelines, and if you've never sort of heard it, when you raise money from somebody, their business model becomes yours. You know, their timelines, fun timelines become your timelines, and you've got to give that money back at some point. And if you don't sort of know it, like, it's not just the silly guy in the sweater vest, it's not his money. It's like teachers' pension funds and real people. It's their money. So you got to give it back, which means you have to have some kind of plan for either going public or selling the business. You can't just stay private forever. I mean, There's exceptions to everything, but it's very, very difficult to do that. So we wanted to run it forever, but we were also making sure we were building relationships with the grocers and things like that.

And are there any regrets from selling? It's been over a year. Do you ever say to yourself, like, that was too soon? Or are you like, that was perfect timing? Or do you regret owning what used to be yours?

Yeah, I don't know what perfect timing means. I don't regret it. You know, it's bittersweet for sure. It's a little like, I mean, I don't have kids, so this is just what other people have told me, but you know, sort of having kids go off to college or leave the house or what have you, because it's not ours anymore. You know, I still run the business day to day, but we're owned by Albertsons, which is a big conglomerate of grocery stores. It's Albertsons and Safeway and, you know, 18 other brands. And they're a great partner, and you know, we get a lot out of, being in that sort of family of companies, but it's not really ours anymore.

And when you were starting this, were you just looking for something that you were interested in that could go big? I mean, was your interest in building a big business, or was the interest in mostly making sure that people consume healthy food?

Yeah, so—

That was a question on here. I think we could— most speakers, they have a deep passion for the problem.

Yes. So the short answer is yes. We were trying to solve our own problem. Both of us had, you know, kind of finance type jobs, working 100 hours a week and eating Seamless, you know, literally 7 nights a week and not really loving that. And then trying to cook and trying to eat, you know, a bit more more fresh food and just having a bunch of challenges and doing it in a way we were proud of. And it's easy to just, you know, sort of buy frozen stir-fry kits, but, you know, we were both like— Nick was engaged in getting married, I was dating, we were trying to, you know, impress significant others and just take care of ourselves. And we were having a bunch of challenges that we thought other people might have as well, which is go to the grocery store, we didn't really know what we were doing? How much do I buy? What recipe am I making? You know, you probably screw that up or the grocery store doesn't have everything you're looking for. At the end of the week, half of it's leftover, you throw it away, you feel bad about that, you probably weren't that good of a cook. Like, it just— there was a lot of friction in that process that we thought, you know, we certainly felt and felt that we could solve for other people and certainly had a passion for, you know, the kind of broader kind of healthy living space. And actually had a, you know, still do have a lot of plans for other product lines that kind of apply to that over time.

So you're talking about feeling bad for throwing foods away. If you were to pitch this idea to me years ago before this was a real thing, I would have said there's no way you're going to be able to ship food and it still be healthy. I mean, everyone says that. I mean, everyone's shocked. Oh my God, it still stays fresh. Early on, you probably didn't have very nicely insulated boxes. I don't know, you probably didn't have all this, the fancy nice stuff that you have now, dry ice. How were you figuring out how to get food from New York City to wherever you were going without going bad? That seems like a huge problem.

It's a challenge for sure. It's probably less of a challenge than you might think. So I mean, the short answer is it's not dry ice. It's never been dry ice. It's just sort of frozen and, you know, ice packs that are largely water and cornstarch. But in any case, you know, we were buying insulation. And there's a— there's reasonably, you know, sort of straightforward engineering ways to figure out that— to solve this problem. You know, the R-factor of the insulation, like, the sort of thermodynamics of it are not that complicated. So the problem was never really keeping the food fresh. Not that it's 100%, but that's not the biggest problem. The biggest problem is optimizing that sort of customer experience, you know, less packaging, fully recyclable, et cetera. And I actually saw, it's up here now, a question about sort of, you know, waste and these things.

Waste of what?

What's that?

What was the question?

Oh, just looking at this question here on recycling and waste and everything else.

Yeah, that's the next top question, which is recycling.

Yeah, so it's a good question, and it's something that we invest in a lot. But I think it's also worth, you know, kind of noting that it's a different dynamic than most people, including my family who asks me about it too, seem to really understand at first, which is really this. The waste— you walk into a grocery store, the produce that's in there, first off, is older than you think it is, just because of their supply chain. And something like 40% of that's getting thrown away. And by the way, that didn't show up like with Farmer Bob and his bare feet. It came on a truck wrapped in packaging. That's just the reality. You don't see it, but that's what's happening. So when we try to do, you know, kind of apples-to-apples comparisons, and it's not fully straightforward to do that, you know, I would say, and the lawyers, you know, won't allow me to sort of make this claim on the TV commercial or anything like that, but that the meal kit industry generally, this is not just Plated, is far more efficient than a grocery store in terms of food waste. Because you're throwing away close to nothing as a consumer of your meal kit. We're throwing away 3%, low single-digit percentages of the food, contrasted to 40% of the stack of tomatoes in that grocery store down the street being thrown away before you ever see them, and then you're gonna buy them and probably throw away half. That's about the consumer average nationally, is 50% of the fresh food that you buy gets thrown away. I'm sure everybody's had some version of that experience. You open your fridge on Sunday and it's like, well, this is all rotten. So on the food waste piece, the industry is, you know, probably a lot more efficient. On the packaging and the transportation, you know, we're probably less efficient because we're packaging, you know, individual portions rather than big portions. But it's very hard to tell if that, you know, is net-net actually any less impactful. And you get into a lot of wonky math around transportation and is the lettuce coming from California, is it not, how did it get here, truck miles, et cetera, et cetera. But I guess net-net, it's something we care about, we're working on, but I think the state of it all is different than is maybe apparent to people.

At what point in the company's existence did all these competitors come around?

It's a gradual process, you know. I mean, a couple of them started in the first year or two. You know, I think we've done a lot of competitive research over the years, and I'm very confident that there's really only ever been 6 companies that had any real scale. So there's been a lot of, you know, small companies. Most of them failed. To my earlier point, you know, it's not really a business that that you can run profitably at small scale. So most of the competitors have kind of come and gone, and, you know, and I think this is actually a, a pattern, not a coincidence. All 6 of those started within the first, call it 2 years of the industry, and I think beyond that, it was the sort of playing field was largely established, and you had a lot of kind of long tail companies that entered and exited, but nobody started sort of year 3 or after and got big.

So when you guys, you guys were all starting out around the same time, you've all scaled together. When that's going on, it's a dogfight for customers, right? I mean, it's, it's, you're going head to head with someone, with, you said 5 other, 6 other people. How, what was your plan to beat the other person, to survive, to win? And how were you being different from others?

Yeah, so, you know, again, this may sound cheesy, but I believe it. The point for our business, and I think for a lot of consumer-type businesses, not all, it's not true for probably Facebook, but for most businesses, I think you should just ignore the competition. It's about understanding who your customer is and serving that customer well, and as long as you're in a big enough market, the company will succeed. You know, when I was raising money, the example we would use all the time is Chipotle. Chipotle is basically lunch. They do a little bit of business at dinner, but it's mostly lunch, and it's, you know, mostly one product. There's 6 ingredients or whatever the count is, and yet that business does— and by the way, they're, you know, they're not national. They're in lots of places. I don't know exactly how many zip codes, but they're not in every zip code in the country. And it's a $4 billion revenue business. And there's national competitors and regional ones and local ones and the bodegas in the corner and everything else, and they still do $4 billion top line. Like, the point is not are they stealing customers from somebody else. The point is do you understand your customer and serve them well? And, you know, we looked at lots of examples in food like that. I mean, the grocery stores are in some ways a similar kind of story, you know. You know, pick your favorite grocery store. I promise you that's a big business. I mean, Albertsons does $60 billion top line, and probably a lot of people in this room have never been into an Albertsons. So our kind of internal mantra, not that we always were successful at following it, was the Amazon mantra. Focus on the customer, let the customer, or let the competitors sort of figure that out to them on their own.

So we only got a minute and a half, 2 minutes left. I want to talk about something that hasn't been addressed, and I saw the question on here, which is about co-founder relationships. How long did you know your partner before you guys became partners? And was there— there had to be, but what were some of the breaking points, and how did you guys resolve those issues?

So we knew each other for 4 years before, and my other 2 businesses I also started with friends. I think it's a, it's kind of a high-risk, high-reward strategy, if you will. When it works, there's nothing in the world better than, you know, winning as a team and winning with your friends. When it doesn't work, there's probably nothing worse than losing a friend over, you know, over work. But the way that, and I had a version of that in my first business, I was I was 21 when I did it, had no idea what I was doing, probably still don't know what I'm doing, but really had no idea back then. And the sort of co-founder relationship went sideways and, you know, it was not good. And I say now to people that I'm happy I kind of learned that lesson early in life. But the way that I thought about it was a friend, and a friend that I could do, you know, hard stuff with, not just a drinking buddy, but somebody that I could work with to work with. And Nick and I, I don't think we knew we were doing it at the time, but we, we had some trial runs at that. We did some volunteering in Haiti where we were quite literally sleeping on a concrete slab with mosquito nets and, you know, like physically hard, mentally hard stuff, uh, that kind of proved to us, at least in hindsight as we were making the decision to work together, that we could do it. And then the last piece, and I'll shut up, but, uh, we had complementary skill sets, not the same, and I think that's important because that's another one of the kind of common challenges I've seen people run into is, you know, you get two people who have the exact same bankr— you know, background. We worked at whatever, it doesn't matter. We worked at the same company together, we're friends, we're going to go do this, and we do the exact same things. It's like, okay, well, how are you going to figure out who does what? And, you know, only one person can run marketing, only one person can run engineering, etc., and at some point, like, that's going to cause a problem. So For us it was, we're friends, we can work together, and we have, you know, complementary skill sets. Nick was not technical, I was. He was a Marine, he was better at the operations, better at a lot of that stuff. And it just worked. And it's not to say we didn't fight, I think that's just part of human relationships, but it worked well.

And last, last question with a quick answer. Josh, 7 years ago, 6 years ago, wanting to start something in today's era, you know, what would you say, like, don't make this mistake. What mistake would you try to tell them to avoid?

Oh, man. There's a lot of them, but I don't know, maybe I'll just, I'll pick, you know, solve a real problem. I see too many people do this where, you know, they try to start something because there's some nifty new technology or, you know, the business model is too clever or whatever, if you can't describe the real problem it's solving for a real person very quickly, it's probably not a good idea. Although half the fun of this stuff is there's exceptions to everything and somebody in here will prove me wrong.

Josh, thank you very much. We really appreciate you taking the time.

Thank you.

Thank you.