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Rafael Illisha

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2022-11-02
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2022-11-02
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  1. “In the US, we are the undisputed leader in instant needs. We cover a third of the US. Hopefully that number is much higher in five years. And we've broken into and become in the dominant player in a lot more categories. Again, I had never thought that to be an authority in the baby and pet category. I think I'm going to be saying in five years a lot more categories than I ever thought that I'd be an authority in, but we're an authority. On a global scale, we're continuing to dominate expansion, I think this time around. We're going to own a market entirely and then open up other markets that we're then going to own entirely before expanding to new markets. I don't know how many markets that includes, but we're excited to see.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “So Kira and I have been really, really fortunate. We're cognizant of the fact that we're 29. And the way that we've gotten into the place where we got into is by surrounding ourselves, by the best people. I'm going to mention someone because you spoke to them, which is a meal. Meal Michael has been a close friend and advisor to Kira and I for five years, six years now. And he's probably the best dealmaker in the world. I firmly believe that. He's been nothing besides being an ally and a close advisor and everything. He's been an amazing friend. He's been really, really awesome.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Hired taller faster, and taller doesn't mean a person that comes from a pedigree of a background, but a person that has deep subject matter expertise in a given topic. So all the advancements that we made on the routing side, for example, that we hired, routing expertise seven years ago instead of five years ago or four years ago, would probably be even more advanced today. So kind of given the state we were and our first three years of being bootstrapped, we had to be very, very careful on the talent we bring on board because of how much it cost. If we hired some of that talent earlier, especially in the engineering and product side, we would have been even further. I mean, like we're deferred this ahead of any incident player by a massive margin, but that margin would be even wider. We were able to hire even earlier.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Gets harder is managing people in culture. You have to be even more transparent and you have to spend an even bigger time with your team to make sure that everyone has the same vision and understanding where you're going through. It gets easier, right? It's a different kind of hard work. Kier and I still spend a day and a week inside of the MFC every single week. We travel to a new MFC and visit it. So I think it's a core and important part of who we are. But the physical labor gets easier, the mental labor gets a lot harder.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Midpoint last year there was a lot of conversation. That's just what our board with investors on how fast we should be moving in Europe. And a lot of folks were really pushing us to expand to Germany faster expand to other areas in Europe faster. And I'm really glad that we did it. It wasn't very much a desirably more of a conversation than anything else on like how fast should we be moving in Europe and how many countries can we open up? Because like, yeah, it's funny, right? You do well and you start producing results. People are just like, you know, just replicating that, right? You get some pattern recognition. Just keep replicating what you've been doing. But it's not always that simple, right? On just kind of continuing a layer. Again, it doesn't match our core tonet of nail it and scale it. So I think that's probably been the only one in the last year. We've had conversations about how fast we should be moving in Europe, how much we're expanding. Obviously today, everyone's looking back and saying, good that we did it. Again, in hindsight, probably should.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “You're seeing in markets where we have kitchens attachment rates of 20%. So 20% of consolidated orders adding a kitchens item in there. So I think that business shows a lot of promise and a lot of growth and something that consumers obviously really love. I'm going to continue to place a really massive bet on that business, even though it is capital intensive, right? You have to physically build and open up kitchens. But the ROI on those kitchens is becoming better and better as we're continuing to refine assortment and the quality. And then two, it's very rare that you introduce a category that improves retention, improves frequency, and improves basket. Alcohol was one of those categories. The Gulpe of Kitchens business is another one of those categories that improves all and moves all three KPIs in the right direction.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “I have one that I can't mention that I think will be the biggest because we haven't launched it yet. I think that business one day can be as large as our retail business or as large as GOPUB as it exists today, right? The GOPA app. I think if we're talking about existing business units that exist today, I think our ads business has done tremendously well and has grown under the last couple quarters. Personally, the kitchen's business is my favorite business. I order our cauliflower pizza every day. My wife thinks I'm insane, but I enjoy and I really do think that we built an amazing consumer product. What I love about the kitchen's business even more is that on the standalone, the kitchen's business doesn't make sense. So we just launched kind of Gulp of Kitchens as a standalone business without core GOPUP for all of our general merchandise alcohol, everything else as a byproduct. You just don't have enough basket size to deliver a profitable business. But go of kitchens married with the core gob of a shortman together. It really is something special right here.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Since day one when we launch Gopa, we have looked almost an awed Amazon. I'm talking about not when the instant need space, but from a global e-commerce perspective. Everything that we solved from Amazon and Bezos why we hired so many people from Amazon is because we have an immense amount of respect for what they built, right? Specifically in the US, getting into any industry they see fit and then for many years dominating in that industry was something that we drew a lot of inspiration from. Not even in our industry, I think it's probably the most complicated and amazing business in the world. And I think what they built from logistical perspective and then expanding to new business units, right, whether it's FBA or AWS is something that we take a lot of inspiration from as we launch our new businesses, right? Whether it's Gopa Bads or some of the new businesses we have brewing that are launching in next two quarters.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “I'm obviously biased. I obviously have a bias. The instant needs world is very, very complicated. And I think I'll kind of a chip on our shoulder. A lot of people say, you know, this business can't be profitable two decades ago, web van and Cosmo couldn't make it. So today, two decades later, all these players plus Gobafus who started this thing remains to be seen whether this could be an EBITDA profitable business that puts a massive chip on our shoulder and you cure an eye. First of all, because we built a profitable business, we were profitable for three years. And second of all, a near 100% degree of confidence that we're going to do it again in the next 18 months. We have a massive chip on our shoulder, delivering that, proving to everyone that this is not just an amazing consumer business, not just something that consumers really love, but a very profitable business and sustainable business. To answer your question, folks that are thinking that way will be here to stay. On top of all of that, we're going to continue to be the number one global player, but anyone else that positions themselves.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Businesses that have not set up that same correct infrastructure that we want into. And two, frankly, like, we don't want to inherit the losses that this business has. And sometimes those losses are massive. Very small business from a revenue perspective with very, very large losses. It's got to be right is the long and short way of answering that.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “We know yes and no. It's such a massive distraction to integrate a shady business. Some of these businesses have decent amount of customers and it just makes sense to think about acquiring them for the user base, which is very different than on our business, the logistical technologistical business to acquire a business that doesn't have really good infrastructure, doesn't have really good tech. You have to scrap everything. You have to integrate your systems. You go into their buildings. Their buildings are trash. The distraction of having to do this, the juice is just not worth a squeeze nine out of ten times. But at one out of 10, where you had a really strong founder that really focused on building the right kind of business, it's worth looking at. We saw that in Dijon. We saw that in fancy, where not even necessarily the businesses were very big or strong, but the founders were so good and they matched our value so well that it just made sense to integrate. Now today, in today's environment, we're being very, very picky, right?”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Any business across any industry that's not focused on profitability is cooked. Instant needs is no exception. As it relates to instant needs, a lot more people are going to find it really hard to stay in business, especially the people that are today, which is a good majority that are thinking that this is not so bad, right? We're going to come out the other side of this really strong or this is going to be over and a quarter too. And Harry, my experience, I've seen that paranoid founders are usually the founders that win. The ultraparanoid, right? That are prepared for anything, right? Are usually the ones that win. And that's how we're treating it. We're ready for anything that the macro throws at us and we're building towards a business that's completely self-funded.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Probably wouldn't have tested as many things as we've tested, right? I mentioned pharmacy to you. It's not even the money aspect of the distraction factor for the team. I'm not focusing on the things that matter most. I mentioned kitchens earlier. We probably opened up too many kitchens too fast. Like right now we're ready to open up a lot more kitchens because the business is so well oiled. In general, we were moving very, very fast because the market was rewarding us for moving fast because we continue to deliver in a really big way. Kir and I continue to overdiver in the things that we do it. And the market's like, you know, wires, we did everything. Our investors, we'd be doing even more, right? We were saying no, so much. What about Southeast Asia? What about Japan? What about the rest of Europe? We said no so much of things, but in hindsight, we probably should have said no even more and just really focused on the things that we're exceptional at. Innovation is good, but innovation just for the sake of innovation is not good. You know, I mean, innovate where it's important.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Dominate there. We should have become the number one player in the UK on the UK that expanded our next country. That's what we did in the US as we continue to kind of expand throughout states. We used to own a market, entirely own a market, kill everybody in there, and then continue to expand. That strategy put out to be super fruitful because we opened up New York, for example, last. A lot of people thought that you guys are way too late. There's so many players, right? We own 70% of the instant needs market in New York right now. That's not even close to the number two player of a Dough or the last player to come in because we really, part of my flight, we had our shit together in a very, very deep way. That's the way we should have handled Europe, right? In hindsight, right? But no one has a crystal ball, right? No one a year ago could have told you in the midst of a bull market that we'd be going through this kind of economic downturn and maybe it wouldn't have mattered if we continue to stay through a bull market and people continue to value kind of growth over consolidated EBITDA. But here we are.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “I don't think we should ever launch Spain. This is like Harry me being very, very honest with you. We got into Spain via the Dija acquisition. We probably should have pulled out immediately. I think as founder, when you're in the midst of a bull market and everything is going great and your core US business is rocking, things are just piling on top of each other. Good things I'm talking about. Piling on top of each other. Everyone is telling you to do more because you've shown a massive track record of operational excellence. You kind of get this idea that you could take on more than you should take on. And we've always had a nail it, then scale it mentality. And Spain was a scale it then nail it strategy. What we really should have done in Europe is we should have owned a UK. We're now like, I think 25% market share in the UK and instant needs. That in the next two months will be low to mid-30s. We're going to continue to grow and kind of dominate.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Lived through recession. The closest thing I've had to economic downturn was on a micro basis because we didn't raise any money in the beginning. So we had to behave like we were in recession, but we actually never lived as ZOs during a recession. So we've been studying the last two times it happened. How did people behave? And we've been building, continuing to build an assortment that kind of matches those kind of behaviors.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Yeah, I've been studying a lot the past two recessions that have been happening in the US and what are the industries that grew through recessions. Alcohol is particularly resistant to any effects of an economic downturn, I think people drink when they're happier, they drink when they're sad. I think the type of alcohol that's purchased during a recession is different, right? People are not going to be buying. You're two $300 price tag item, but they're going to be buying more of your $15, $20 price point item. So I actually don't think baskets are going to change from a dollar amount perspective, but the assortment inside of the basket is going to change, right? More of the budget bottles, but more quantity versus one high ticket high-end item. So we've been leaning into alcohol in a really big way. Convenience also grew during the last recession, especially a few categories with inconvenience. Vices do very well. So we've been focused on studying the trends of the two previous records. It's the best data we have.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “So we haven't seen a big drop on conversion on price. The question is what the behavior looks like two, three, four months out. Is that customer continue staying a customer at a higher price point where we think consumer spending is going to get affected over the next couple quarters? So where I believe the world is going to head is in the next two or three quarters, the customer is going to get more price conscious. They're going to have less disposable income and they're going to start making decisions on what are the most important things in their life. And a way that we've structured GOP is it like fam specifically. It's like a no-brainer to be a part of FAM. It's very, very affordable. In general, GoPuff is very, very affordable. It's in line to what people see in traditional retail from a pricing perspective. And the last thing that we want them to do is start increasing fees and pricing in a way where today it doesn't matter, but two or three quarters where consumer spending starts getting affected. They're like, I go above it's too expensive.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “In the first 14 days. That's really, really important. What you're seeing is that you have your biggest drop off from order one to order two. Then you have a smaller drop off from order two to order three. And once it gets in the third order, they're our customer. They're not leaving go. If you look at order three, customers that meet it over three and you look at the retention cohorts over the next 12 months, we're losing low single digits percent of our customers, like two to three percent. So once it gets an order three, they're ours. The struggle is not just getting them to order three, but getting him to order three quickly. us like many other e-commerce players used to do an incentive only off one order right all of our incentives now are value over time right we built gamification into our platform where”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Actually, two ways to look at it. A customer that orders across three categories in their first order will spend six hundred dollars more that year than a customer that orders from one or two categories. So it's not just how frequent they order. It's what is the first time, the very first time they get them to go above. What is their shopping behavior? So are they coming into the with the intent of, I heard this place has really great ice cream. I'm going to buy a pint of ice cream. That customer, their first year, will spend less money than a customer that comes and buys their ice cream and also buys a snack and also buys some household items and maybe some medicine. Three or more categories means significantly more spend that first year. So what we try to do is breed better discovery on the first experience, right? Give a broader kind of category discovery, right, when you launch go above, especially on a new time customer. And also, we try to drive behavior to get to two orders.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Centers, you have the right contracts. There's a whole host of things that lead to building the right assortment and having the right gross margin associated with it. And then two, after you've built your target AOV, because like our AOV has improved hundreds of percentages since we launched a business, right? And we had an AOV in the teens. Then in the 20s, in the 30s, right? On an average basis, as the basket size continued to improve and as we continue to build more technology to be able to bin and batch better, the next layer of that is just more orders because now every order that's leaving the door is very profitable. So to get profitable on aggregate basis, right, on a totally bit of basis, you just need enough orders. Does that make sense?”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “So the first thing is none of it matters if you're not producing positive union economics. So a market is not producing. If your union economics are negative, it really doesn't matter on what you want to do or what you don't want to. Like today, our focus is a little different than maybe the way that you want me to answer that question. Like when you're growing, you want to do everything, right? You want to increase basket or you want to reduce costs. That's the only way to deliver positive unit economics. Once a market is achieved, it's target unit economics where there's four dollars positive on a per order basis or we have markets that are doing eight or nine dollars positive on a per order basis. After that, the only thing that matters is volume. You need to produce enough volume then in that city to cover your fixed cost. And so you're not positive on a gross margin basis. You're positive on an EBITDA basis. So first step, right, in this business is deliver positive unit economics, starting with a healthy gross margin. So that means underlying right built business, right? You have good vendor relations. You have the right distribution.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “Another order is going to come in within that same block, or in a really good city, orders are just flying in. They're doing five, six, seven, eight hundred orders a day. You don't even have that problem anymore, right? The system is just kind of working in the back end, batching orders together and sending it out. And the key to that, right, on the end side why it's a lot cheaper is you just need a lot less driver partners. You have fewer driver partners doing a lot more deliveries. And by the way, your driver partners love this, right? Because they're making a lot more money. They're getting paid on a per delivery side. So they're making a lot more money. You need less driver partners to fulfill the same amount of orders as a byproduct or CPO starts decreasing tremendously.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “You need a lot less drivers when you batch to fulfill a lot more deliveries. So your cost on a per order basis, it's actually not a 10 or 15% swing. In a market that has a high ODH the amount of orders a driver could fulfill an hour versus a market that has a weak ODH, the cost difference on the variable cost side could be as high as 50%. It's a massive difference of like metro that looks good or a metro that doesn't look good. And generally speaking in our business, a metro that doesn't look good is a new metro because it doesn't have enough orders yet on a per day basis where you can effectively batch because batching only works well if enough orders are coming in or decision could predict enough orders are about to come in and the same two or three square block radius of a given city or neighborhood or wherever that MFC is placed. So if you're going to be able to with a high degree of confidence predict that hey an order came in X two to three minutes wait to send that order out next two to three minutes”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Than a 20 minute average with a 15 minute deviation where there's an inconsistency in delivery. And that's kind of been our go-to for five, six, seven years. And I think we got a little carried away in the UK with trying to match what the local players were doing. Instead of going back to our roots, which is like, hey, this is what consumers generally want as a consistent delivery. And two, by the way, that's the profitable business, right? Because you can bin and batch a lot better. Your tech can predict orders coming in a lot better. And then in turn, you could deliver a really great experience.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “Yep, it absolutely concerns us. Looking back and being a little critical in ourselves, Gob was never built to be a ten or fifteen minute delivery service because the consumer on a global scale outside the US, right? We're focused in the UK for a second. In the UK, the consumer was almost taught 10 or 15 minute deliveries a norm. In New York, that was the case too. That's not a sustainable business model, right? Any stretch of imagination. The reason why it's not sustainable is because you can't batch orders. What makes a group of orders really, really profitable is if a driver can leave with two, three, four orders at once and still deliver it quickly. So what we learned from on the consumer side, I'm talking about the US business, and I think it translates really well on a global scale too, is people don't necessarily want a really fast delivery. They want a really consistent delivery. So they really have like a 30 minute average with a seven, eight minute deep.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “almost entirely the Ride OS business. That's improved routing binning and batching tremendously, it's all under the Gope of Umbrella now, the first week of October we have V two of that launching, which I think will keep P ninety delivery time stable, but will improve our ability to bin in batch by, I think, pretty close double digits. That's not a really huge effect on the consumer side. Consumers actually won't see a massive difference from a delivery type perspective, but it'll save us a good bit of money on our CPO side.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “So a lot of products that you build into product roadmap are things that are good for you or things that are good for the customer. And sometimes there's an overlap on things that are good for you, meaning the team or the company and the customer meaning the customer. So sometimes there's an overlap. Being relentlessly focused on things that are only going to drive better consumer behaviors, and I'll tell you like a feature that we're launching. We've talked to a lot of customers and the feedback they get is you place an order on GoPov and right after I place an order, I'm like, God, I forgot toothpaste a light bulb or batteries immediately after I click the place order button. So we'll give people a chance, two minutes post their order to continue to build their basket for anything that they want. Remind people, hey, these are items that you most frequently forget. So a lot of those kind of features where we're really listening to the customers that we're really doubling and tripling down on. The driver side, the first week of October, we're having a global rollout of a new routing software. So we've integrated.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “And I love that business, and it's one I think we'll come back to one day, but we just said, hey, it's a great idea just not for 2022. Sometimes saying no to these really shiny objects that customers might really love, but it just like given the environment of today, we can't afford to invest eight figures. And as net new business, that's going to take multiple years to pay back, right? Because it takes a while for these businesses to incubate and then reach a terminal velocity and everything else. So being really, really strict from a prioritization perspective. And then also controlling your fixed costs, right? So we're not going to add a fleet of hundreds of more buildings in the next 18 months. We're not going to be opening up buildings like we were opening a buildings in the last 18 months.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  30. “It's less buildings. So if you look at on a metro basis, all of our existing metros are producing cash flow. So you have, you're calling your cash cows, right? Philadelphia, Chicago's, Boston's, all of our Texas markets of the world that are producing cash flow, but you have a lot of new markets that need time to get first to unit economic profitability, then EBITDA profitability. So if you continue to open up markets, you're going to continue to have an existing business that produces free cash flow, but this emerging business that's still requiring investment and causing the overall picture to be negative, even a picture. So for us, that meant opening up significantly less buildings, less kind of fixed cost out the door, not focusing on initiatives that might be good for tomorrow, but not so good for today. Like I'll give you one that hits kind of close to home we launched a pharmacy business. We're actually delivering prescription drugs to”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  31. “Invest, right? We're not going to be opening up two or three dozen buildings a month that have kitchens. So it's a balance between driving really strong EBITDA and still innovating for the customer. So that balance for us at least meant that we're profitable in 2024.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  32. “Any company in any space that's not thinking about profitability right now and is not focused on profitability, there is a higher chance there not that these companies will probably not exist in the next year or year and a half. No matter how strong your balance sheet is because no one has a crystal ball. No one knows how long this is going to last. No one knows how long the capital markets are going to continue to stay depressed. And the reality is I could speak for us. We built a new financial model that's completely self-funded. One that doesn't require any more outside capital, one that only looks at our balance sheet. It's not one where we said, hey, we're going to cut all costs completely. We're going to stop innovation completely. We could be profitable even faster, but still somewhat of a balance of being able to continue to grow, continue to innovate, right? Like our kitchens business, for example, is crushing. Every week is a record from the week prior, right? We want to continue to invest into that business because it's doing well. But we're not going to invest how we used to.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  33. “What we see in the US when we're starting to market. So it's growing fast. I think the number one focus we have in the UK specifically today is continuing to drive a higher basket. Now we're in the 20s from a basket size perspective. I think that business continue to grow. And I think it's possible in the next couple of quarters. We're into high twenties, low 30s from an AOV perspective.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  34. “Margin is not the only element to profitability, right? You need a healthy basket size because you take dollars to the bank right now percentage points. As an example, I'll call is our lowest gross margin percentage category, but our highest gross margin dollar category. His baskets are much higher with alcohol baskets than non-alcohol baskets. So you'd rather lose a few percentage points on the gross margin percentage side and gain $10 or $15 on the basket sides you bring home are much higher. So across the US today, right, I'm going to exclude Europe, all the new markets that we expand into generally look very similar. They start with a slightly slower basket size because they're kind of direct correlation between 10 year and AOV. The longer you stay on the platform, the more you start ordering on GoBuff. In Europe, I'm kind of focused on the UK for a second. Basket has grown a lot over the last two quarters, but it's still double digits lower than”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  35. “Pay back is really, really incredible once you start humming correctly, right? In the beginning, right? It took maybe a year or year and a half for building to recoup its investment. Now some buildings you open up and three months later, you recoup all your fixed costs. So it really just boils down to did you set the right amount of time, energy on nailing the fiscal responsibility portion of this business being really strong on fiscal side and then scale the business.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  36. “This business is done right, it's actually not a low margin business. If you set up your structure correctly and you're buying correctly and your ads business is working correctly and now we're launching a whole new host of businesses that think they're going to improve our margin structure more, our gross margin structure is actually among the best in if you categorize like our retail peers instead of our tech peers it's among the best right we have gross margin in the high thirties low 40s depending on the region that you're in it's actually really really healthy margins to operate a profitable business especially on the unit level what I'll say though is a lot of people I don't want to beat a dead horse here but a lot of people when they were expanding to city to city they just weren't focused on how do we build really really strong margin profile in the business right there's no question right infrastructure is expensive right you have to build buildings as a setup racks you need equipment the whole nine yards but the return on capital on this business and how fast these markets”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  37. “Scale it, then nail it strategy. And when the capital market started getting more constricted, they realized their underlying business isn't all that strong. They're not producing really strong unit economics as a byproduct. A lot of people started really struggling. Really, it's just the beginning. I think it's going to continue. That trend is going to continue to accelerate because the initial strategy was grow at all costs, not really nail or business really nail our unit economics and then scale the business.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  38. “Capital markets have not been friendly for any growth companies over at a last, I would say two to three quarters, but we're talking about instant needs specifically. When you're starting a business as complicated as our business, right, where you have so much technological needs, supply chain needs, logistical needs, where you really need to nail it before you scale it, you have to really focus on the inner crux of your business, the infrastructure of your business before really expanding in a very big way. And that's what we did for our first couple of years. We spent a lot of time building the technology inside of the four walls of the building, building operational excellence, and then really scaling the business by proving that we can deliver really strong unit economics. Pretty much everyone else in the instant need space from across the globe had the opposite strategy. All we need to do is open up a whole host of buildings. We'll figure out the tech later. We'll figure out the operational excellence later, a supply chain set up. It's fine. We'll figure it out later.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  39. “These new verticals to now where we are today over a thousand cities on a global scale, 12,000 employees globally, much, much more drivers, obviously.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  40. “Kind of crazy, it's been almost 10 years, right? We've been at this for a decade. But GoBup started by solving our own use case. Here and I were college students, realized there's a pretty big need in the market. Everyone was going to the convenience store, a drugstore to pick up everything they needed. That experience wasn't always very safe and it wasn't always great and everyone was always busy. We said, why doesn't MD1 stock and deliver all these goods to students kind of across the country? And we could start this in Philadelphia and we had a little bit of an unorthodox start, as you know, Harry. We didn't raise money for our first three years profitable from day one. Use the profits from Philadelphia, right? Back then, go buff was a different service, right? Today we're 5,000 items. Back then, we were 100 to 200 items, snacks, drinks, and we used profits that we had from early GOP 1.0 to expand to five cities until we raised our first round and then GOPA really started changing, right? Alcohol, ice cream, vertical medication, baby pets. This kitchens business that we have.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  41. “When you schedule a demo or sign up, tell them I sent you and get that durable growth engine going. But now it's time for this incredible episode. Raf was fantastic, so I'm going to hand over to Raf Ilishaev, co-founder and CEO at GoPuff.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  42. “To get your free life insurance quotes and see how much you could save. That's policygenius.com. And speaking of game-changing tools like policy genius there, GainSight is the world's leading platform for helping companies of all sizes and industries drive durable growth through customer, product and community led strategies. And did you know that games like launched a new offering, GainSight Essentials in early March this year? Essentials makes it easier and more affordable for companies at any stage to reduce churn, drive more expansion and cross sell dollars and improve usage and adoption. And best of all, essential starts at just twenty thousand dollars per year and you can be liven as little as two weeks. like Callendley, Chewy, Dial Pad, and nearly a hundred others since its launch in March. Now you can start and scale with gain site, go to essanchals.gainsite.com to learn more and mention 20 VC for special pricing.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  43. “Need life insurance, but for me nothing is more important than my family and knowing they will be protected and looked after. If you follow my Twitter, you know how close I am to my mother and mortgage payments and other expanses, they don't disappear when you're gone, and life insurance just gets more expansive as you age, and so now is always the best time to buy. Policy genius was built to modernize the life insurance industry. Their technology makes it easy to compare life insurance quotes from top companies like AIG and Prudential in just a few clicks to find your lowest price. And with policy genius, you can find life insurance policies that start at just $17 per month for $500,000 of coverage and policy genius has licensed agents who can help you find options that offer coverage in as little as a week and avoid unnecessary medical exams. They're not incentivized to recommend one insurer over another, so you can really trust that guidance. Plus, there are no added fees. Head over to policy.”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source

  44. “The consumer was almost taught ten or fifteen minutes deliveries a norm. That's not a sustainable business model. We built a new financial model that's completely self-funded. One that doesn't require any more outside capital, one that only looks at our balance sheet. Wow, this is such a good show. This is 20 VC, the GoPuff memo, the monthly show where we deep dive on the business model of one company and really go deep. And today, as I mentioned, we're going deep on the GoPuff business model with RAF Ilishaev, co-founder and CEO at GoPuff. One of the market leaders delivering daily essentials in minutes. GoPuff's latest funding round, priced the company a reported $8.9 billion in March 2021. And to date, Raf has raised over $2.4 billion for the company from the lights of Excel, SoftBank Fidelity, Bailey Gifford, and more. And Rafa scaled the company to over one-third of the US with over $12,000 employees nationwide. But before we dive into the show state, we will hope we never”

    2022-11-02 · The Twenty Minute VC · 20VC: The GoPuff Memo: Why 10-15 Minute Delivery is an Unsustainable Model, The Plan to Make GoPuff Profitable by 2024, Mistakes Made in Europe and What the Europe Plan Should Have Been and What Does Quick Commerce Look Like in 5 Years with Rafael Illisha · IDENTIFIED FROM THE TRANSCRIPT · source