Reinventing a business killed by COVID

Joining me today is an entrepreneur who had a business that suffered of COVID closures in the restaurant space.

So he rebounded with an idea that I think most people expected to fail. I want to find out why he hasn’t.

Vitaly Alexandrov is the founder of Food Rocket, super-fast, on-demand grocery delivery.


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Vitaly Alexandrov

Vitaly Alexandrov

Food Rocket

Vitaly Alexandrov is the founder of Food Rocket, super-fast, on-demand grocery delivery.


Full Interview Transcript

Andrew: Hey, they’re freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. I’ve been doing this now for almost a decade and a half over 2000 interviews with entrepreneurs. I think I’ve got the biggest repository of detailed stories of entrepreneurs and how they built their businesses.

And the reason that I do it is because I’ve been an entrepreneur my whole life. And I get frustrated when people tell me the fake story of how they built their businesses. I get frustrated when I end up trying to grow and I’m following models that are just, that just look good on paper, but aren’t real.

And I want to understand how real businesses are built and that’s the original founding story here. And that’s why so many people have listened to over the years. Many of them come back and done interview. Joining me today is an entrepreneur who had a business that, uh, suffered as soon as a closures happened because of COVID.

And he rebounded with an idea that I think every article that I’ve read as basically left a little sneering comment, like, oh, here’s one, the end of the tech crunch article about him. What can we say good luck. They all have this sense of he is going to fail, but I think the idea makes a ton of sense and he’s been doing incredibly well.

And so I invited him here to talk about his business. It’s called food rocket. And what food rocket it does is it will get food to you, groceries to you within five to 15 minutes. Directly to your door from something that they called dark stores. I want to understand how this works. I want to understand whether why he thinks it’s going to work out when so many people don’t now understand what’s worked so far and how he was able to do it.

His name is Vitale Alexandros. And we’re going to hear about the food rocket story. Thanks to, well, my sponsor HostGator, which is basically. Sponsoring this and every single episode just about for this year, but I’ll tell you later why you should go to First, the tally. Good to have you here.

Vitaly: Yeah. Thank you, Andrew. Nice to meet you.

Andrew: What’s the revenue so far.

Vitaly: So, uh, we are, uh, Donald disclosed this information. So Bobby, it is, uh, so free to close to several, uh, Tens of thousands of dollars let’s say in that way

Andrew: Tens of thousands of dollars

Vitaly: Yeah. Per month.

Andrew: or per

Vitaly: Per month. per

Andrew: Oh, okay. I thought the business was, was even bigger than that. Tens of thousands of dollars per.

Vitaly: Yeah.

Andrew: wait, I have in my notes, 20 million so far, it hasn’t done that. It hasn’t.

Vitaly: So, no, no, no, no, no, no. We, because we, we, we just launched. So we launched that business model maybe four months ago. And so, but we are growing pretty fast, so around 40, 50% month over month. And that’s why, that’s why, there’s why pretty soon it will be like that.

Andrew: Let’s hope the previous businesses that you were running out of cloud, how much revenue is that doing

Vitaly: So, uh, so it was around, uh, $2 million per year?

but it was, but it was like, or typical business, like usual marketing agency? No, no, not like a startup.

Andrew: And what you wanted was a rocket ship. You wanted a business that wasn’t just going to produce a profit every year. Employ people grow at a reasonable rate. That’s what you wanted. And that’s why you call the company food. Rocket.

Vitaly: Yeah, that’s great. So yeah, because we deliver, we deliver groceries super fast, but that’s why we decided to call it like a rugged.

Andrew: Let’s start off with, uh, out of cloud. How’d you get started with that.

Vitaly: So I started that, I suppose then a year or so ago, I guess. Um, yeah, when I started his name in the university, so, and I. And I decided to launch something because I, I didn’t want to finish my university and start to find some job. And that’s why I wanted to have, I want to have my business and hire my, uh, uh, my friends to my company.

That was my target. And, uh, to get some money because I met my girlfriend, uh, she’s my wife right now, and I wanted to have some money

Andrew: You were just looking to make a little bit of money. How much money were you and have fun and be with your friends? How much money were you hoping to make with it?

Vitaly: Uh, when I launched it

Andrew: Yeah.

Vitaly: year. So, but maybe, I don’t know. Well, my, my targets was like, I dunno, 1000 degrade per month.

Andrew: 1000 a month, then you’d be happy and then figure out what to do with the rest of your life.

Vitaly: Um, yes. So to be honest, I didn’t think a lot about the money. So I just, Uh, said about how I can, how can I realize myself and my talents? So that’s what I thought before. So then definitely. Yeah, definitely. I’ve heard about some mining, but I didn’t have any specific numbers in mind.

Andrew: Okay. It was just, where am I going? What am I good at? Let me practice, let me explore. That’s the thing that you’re doing.

Vitaly: Um, yep. Yeah, yeah. That’s right.

Andrew: Okay. And what’s the first thing that you did? What’s the first client work that you took on?

Vitaly: So, uh, we’re some, uh, manufacture so of boxes, uh, and, uh, yeah, so, so what we did, we help customers with their. So we help with health companies to retain the customers better. And by using some different channels, like in my own marketing, push notifications, text messages, and yes, and then I started to sell, uh, from the day one.

So I started to call different companies, uh, tell about my business and that’s how I found the first. So he told me, oh, wow, that’s cool. So you have a salad, please contact our office and tell us a little bit more about that. So, and then I came to them and, uh, we had a great conversation and maybe you’re in a, in a week, I received my first money into my bank account, but I didn’t buy, to be honest, I didn’t have a bank account.

So when, when the, when, when they told them, yeah, so we want to work with, we want to work with you. So then I started to think how I can I open my bank accounts.

Andrew: So. I get that, but I don’t understand how you can use email marketing to get people to buy more boxes from a box company.

Vitaly: Yeah, because this is a big company. So a lot of customers, they had a lot of customers more than 1000, so, and some of them just forgot good about them. Some of them just not buy super frequently from them. So, yeah. And I tried to motivate them to buy more.

Andrew: Okay. So it’s just going back to their database of customers, sending out messages that you wrote yourself.

Vitaly: yeah, yeah,

Andrew: Okay. And did you set them up with new software or was it just whatever they had was fine.

Vitaly: Yeah. That’s a, why just, I suppose I just registered a MailChimp and send the, send the first email marketing campaign without,

Andrew: And is that the heart of what you were doing?

Vitaly: uh, I don’t know. So, uh, I

Andrew: mean for the, you were there for like eight years, right?

Vitaly: Uh, 10 years.

Andrew: 10 years. Okay. So you’re there for 10 years for that decade that you were there. What else did you do beyond email marketing?

Vitaly: So, um, so right now it’s mostly about the loyalty programs, how it can retain customers and like using different channels. Uh, some, we, we start to do some, what is called, uh, data science. So we build some algorithms that helps us to predict future sales for different retailers. So, right, right now it is much more than just the middle market.

So, yeah,

Andrew: But it started out with basic email marketing saying whatever it is that you already have in your database, we could bring it to life by starting to message those people. You start showing them orders, they get happy. And then your next step is what can we do to grow that even further? And you try to predict who’s more likely to buy.

I get it. The whole business makes a lot of sense. What was it that tire do out? Get a hundred people, get a hundred people working.

Vitaly: yeah,

Andrew: With only $2 million in sales. How do you get a hundred people working for you with $2 million in sales?

Vitaly: Yeah. So because I launched them because these business is original. So I started that in Russia. So that’s why I’m in the celery so much less. So that’s why we’re so. not super hard to have a lot of people and have a really cool pro profit be done. So, and to be profitable and as money. And that’s why, so when I w so, and then maybe in six and seven years, I started to think that it is a little bit boring for me to scale it further.

And that’s, that’s why I decided to build something big. So then I moved to the United States to Carol. With my family with my little son. So, and that’s called white came to the idea if we are.

Andrew: what’d you do at the company? Did you sell it? Did you sell your interest in it?

Vitaly: So, um, yeah, so we recently we signed a term sheet and so right now we are with, so I’m still on that. So it?

will be my first exit.

Andrew: Okay, congratulations. Before I move on from there, bottom line profit. How much with the business?

Vitaly: Uh, perfect. So are we done is around, uh, 32%.

Andrew: Okay.

Vitaly: So that means that yeah, yeah, yeah,

Andrew: goes just to you.

Vitaly: Yep.

Andrew: So that means you were pocketing about half a million dollars a year because you couldn’t invest it back in.

Vitaly: yeah, yeah. Yeah.

Andrew: you invest it back in?

Vitaly: So I didn’t miss anything. Maybe, maybe a $100 invested in this business.

Andrew: No. What’d you? What, what do you, when you took out more than half a million dollars a year for the last few years, what did you put it in? Did you buy real estate? Did you buy something

Vitaly: None. No, no, no. I ju I just, no, no, no. I just hired the best people. So I, yeah, so I bought some real estate, so I bought some land, so, so I bought A lot to be honest.

Andrew: A lot of real estate

Vitaly: yeah. It’s still real estate it’s land.

Andrew: what’d you buy the real estate.

Vitaly: Uh, so I mean, or some apartments, uh, I mean, yeah, I saw five months some land, so then I launched several businesses.

It wasn’t super or successful, but then we started to invest a lot in different, in different businesses and especially in food truck.

Andrew: Before we go on. What, uh, where did you buy the land and the buildings in Moscow or in San Francisco where you are now in Moscow and you still have it. People are still paying you right?

Vitaly: Yeah.

Andrew: Okay. All right. Got it. And then you said that you, you invested in a few other businesses. What are the other businesses?

Vitaly: Yeah. So, um, before food rockets, so we build a business it’s called a food costs. So they, we also worked in their food service industry and that’s all we call we’ll help small restaurants and grocery stores to decrease their food waste by predicting future sales. So we uploaded the data from the POS systems and then upload the data about the weather as is.

And I would see. And, uh, we are Sheldon how, uh, how many sales they will have within the next week for each sq, for each item and they menu and the, so it’s like a support for their supply chain managers. And so we’ll have that around 30 or 40 customers in, uh, San Francisco, LA in New York. And so we invested them all to the, in the building, all the salaries, because it’s not super easy.

So it’s around one year off, invest in error every month in the team.

Andrew: How’d you get, so I get it. This is the idea that look, if, if it’s going to be really cold, you’re probably going to want to sell more. I don’t know what soup or something like that. Right. And if it’s going to be really terrible weather, you’re not going to be selling a lot of anything. And so reduce what you’re going to buy basically like that.

Right. How did you get all that data? The, the data from restaurants that would inform your algorithms so that you can go back to your first customers and actually predict what was going to sell and what was not,

Vitaly: So, uh, we just came to the restaurants and I pitched them beside each and they provided me with an access to their POS system. So we can build some APA integration integrations with some basic bureau systems, like square to toast. So that’s how we got all this data for them.

Andrew: Got it makes sense. Okay. And that also indicates to you that there’s interest because when you’re walking around and saying, can I get your data so that I can build this for you? If they don’t want to give you your date, their data, they’re definitely not going to give you their money and data once the thing is built.

Okay. And so there was. Yeah, you sell it to a few dozen restaurants and then COVID hits the restaurants close, but then they reopened didn’t they, they reopened with a takeout with delivery, with all kinds of stuff, especially in San Francisco and Los Angeles with outdoor dining.

Vitaly: Yes. So careering by that, you know, I have a really great conversation with one of their advisors, Trump 500 startups. And so, and when I told him, so, man, I don’t know what to do because all the restaurants are closed. We don’t know, we don’t have enough money on our bank. To play to the celery store, our employees, unfortunately.

And I don’t see how we can go footer and all that. I mean, Metalli yes. So it’s a very great idea, but it is a great idea. Maybe we’ll be in. Uh, after this date, because all the restaurants are closed and it’s pretty hard for them to be, uh, will be to be to open that. And so they will struggle a lot. So that’s why it would be cool if we can find something in the same space.

So, and that’s why we decided not to just focus on this idea, but to try to use our own technologists we had before for our own business. So that’s why we use these algorithms for ourselves right now.

Andrew: Got it. So you said, all right, we can’t force these restaurants to use us. We can’t get them to be interested in anything right now because they’re really hurting. What can we do to not be so dependent on restaurants and then you’re fishing around for ideas. And you had a friend who basically did the food rocket model somewhere else.

Who’s the friend. And where did he do it?

Vitaly: Yeah. So I, I, uh, I have a friend Felipe, so here, um, he’s building this the same business model, uh, super far closer to delivery, uh, in Europe. So in four countries in three countries, uh, is it like are France, uh, Russia and Israel. So they have around 350 stores right now. And, uh, they opened that for just two years

Andrew: What’s the name of the company.

Vitaly: Um, this is the company.

Yandex. So this is

Andrew: Oh, I know Yandex. They’re the biggest, uh, the biggest internet company in Russia. So it’s and Yandex also does this kind of food delivery using.

Vitaly: yeah, yeah, yeah, yeah. They may have some division. They, they have some divisions and there are sill and Phillipa is one of the top managers who call on launch.

Andrew: Ah, got it. So through him, you saw that this worked and you S you said, ah, okay. Are you guys coming to the U S Yandex is not looking to come to the U S.

Vitaly: Yeah.

Andrew: There’s no.

Vitaly: Correct.

Andrew: Okay. All right. And so he says, no. And then what does he tell you about the viability of the model? What does he teach you about it?

Vitaly: Yeah. So I told him, so affiliate what they’re thinking, for example, if I launch that cure and for example, you can separate me in terms of some money, some are advice and yeah. And he said, yes, it’s cool. So I will have it?

to put 50 K dollars as my personal investments in these business model. And yeah. So I will answer early Jewish.

And so when you heard that, so, and this, this hallway, I started this business, so I understood that I have a lot of energy as entrepreneur. I have real cool knowledge from Felipe because he knows how it works. And so I need to just raise money. That’s it?

Andrew: Before we go to raise money. What did he teach you about it? It seems to me like it’s very basic. Get tiny little stores. It doesn’t need to be a lot of space. It doesn’t need to be in a fancy part of town. Right? The cheaper, the better put it, stack it up with groceries and then open up a delivery for this small area around that store.

That’s the, that’s the part that seems obvious. What did he teach you that wasn’t obvious and what was wrong about what seemed obvious?

Vitaly: So to build this model is super hard because, um, yeah, so you’re totally correct. But when we start to go deeper in this business model, it is real. It is really hard because you need to understand, Uh, what categories you need to have, like, uh, produce Berry snacks, uh, what was the percentage of each category?

So then you need to understand. Came to understand how I, how to hire a lot of writers and features. So this a really big issue because you are competing with the guys like DoorDash, Uber eats, uh, I don’t know all the Fido guys, so, and there, the, there were a load of tax, Colleen confession. Then you start to think how you can manage properly all your process inside the stores, because it’s super hard.

Okay. You can, you, you can have just one or two stores. It is really easy. So you don’t need to do anything in terms of, uh, engineering. So you just, you Can use just Google spreadsheets. That’s it. When you hit a bunch more stores, you need to build your own software for that. So, and this was their next big, next big issue for me, because I didn’t know.

What type of software I need for a reason. I mean, so definitely I understand in general. Yes. So we that we need some, some system for managing that, but it’s not like some specific parts. So I didn’t, I didn’t understand that. So Philly poles helped me with understanding how to do that and then maybe the most important part.

Uh, I received from him as that. How you need to build that from the beginning, from the day one. And what do you want to do in three years? So what do we want to build? Because, and because it’s so, okay. On demand, grocery delivery, it’s super easy. It’s not, this is not the cart, but the idea is that what you will do when you will have three or five competitors at the same time on.

Like DoorDash graph cop or Uber is there is no any difference. And for us, it was really important to understand, uh, how we will, um, different differentiate ourselves in, in, in a year. And this that’s where Felipe helped me a lot to understand how

Andrew: let me take each one of these separately. So the first one is which products, what, what did you learn about which products? And then I want to get to the hiring hacks, the software, what to do year one, day one, year three. Yeah. So what’d you do about the products, which soft, which products did he teach you to bring in?

Vitaly: Yeah, for example, we, we understood. For example, if you don’t go off and then, uh, go off a zoo, super big company. So $50 billion affiliation in?

the United States. And for example, they have focused most on snacks and alcohol. And we understood that we cannot compete with them directly just to sell alcohol and snacks as well. So no, no difference.

Andrew: that means that you can get, sorry, go ahead. I’m going to, I’m going to stop interrupting.

Vitaly: yeah, no, no difference. And that’s why we decided to focus on fresh. Like Berisha bowls, like, uh, produce fruits, frozen items, uh, ready to, so it is my charter to manage that because you have a, you have a food waste, uh, much more than if you just sell snacks and alcohol. So, and, but at the same time, if you sell, um, for perishables, then you have my repeat repeatable purchases per customer per month, much, much more than if you just sell snacks and alcohol.

So that was.

Andrew: Okay. And then

Vitaly: Yeah.

Andrew: it was, don’t go for what seems easy, which is alcohol and snacks. Go for something that’s more repeatable. Like people need milk on a regular basis and things like that for their families. Okay. I get that. What about the hiring hacks? How do you compete with all these other services?

Vitaly: You’re a for example, um, you’re in other important thing yet, in terms of, uh, higher end, we understood that we don’t want the higher, uh, personnel, like independent contractors, like, oh, all of these guys to do right now, dirty dash, I mean, UberEATS Instacart. We decided to hire them as full-time in place like W2.

So, and, and by doing that, we can provide them with. Um, conditions or provide them with some benefits. So they have women when they work as a full-time in place. So, and that’s how we can compete with the guys like DoorDash, for example.

Andrew: Okay, that does make a lot of sense, but then you also have a lot of variability in delivery. How do you schedule when people will show up and make sure that you have enough people for five to 15 minute delivery, but also not so many people that you’re wasting money on. People just sitting around.

Vitaly: Yeah.

yeah, totally. So it’s this very good question. So, uh, yeah, definitely when you don’t have a lot of volume of orders, so then you, of course, you’re a little bit more than two people that work inside the store because you need to, uh, maintain your SLA for the customers. I mean, the promise to 10 minutes permits and this why your.

Do three or four drivers at the same time and maybe not. All of them are just daily. We’re in all the, all the orders, uh, during the shift. So for example, sometimes you have a lot of photos. Sometimes you did have some waters. That’s why sometimes, uh, some, I don’t know, parts of the day, they just see them wait for any orders, but at the same, what, what, when the volume is. then, uh, the, the efficiency is starting to increase. So, but it’s not in the beginning. You definitely pay a little bit more because

Andrew: Yeah.

Vitaly: you don’t have to be willing to floaters.

Andrew: Okay. All right. That does help you hire more. But man, that seems so dangerous. Why, why are you doing all this? It doesn’t feel to me like you’re coming into this with the idea that the world needs groceries faster. I need to help them. It feels more like you’re saying. I need to create something big to create meaning in my life.

I need to see something that goes beyond the tiny little operation, where I go to work every day and have a happy life and a happy set of employees. I need to build something on a bigger canvas. It feels like that’s what it is. Right.

Vitaly: So, uh, to be honest, so this is the one part, so definitely you have to believe in there. So yeah, this is, this is the one that part, the second part is that definitely your, you can afford. Basically you don’t like. So, because before that I worked in this food service industry. I know a lot of people, I know how it works.

Uh, I really liked work with food. And at the same time, the one thing when, when we, Yeah.

I will tell you this story. So maybe it will help you to, to understand that more. So when I launched this, Uh, we launched or this business. Uh, in January, uh, like minimum viable product. So what do we need? So I just put some, uh, pictures on the website.

I use just Shopify boots on pictures, and then we start to deliver the groceries from hopefuls, from one,

Andrew: You just took, you took pictures of whatever was available at the local whole

Vitaly: Yeah, just yeah, yeah,

Andrew: it up on a

Vitaly: Yeah. Yeah.

So I put it on the website. So then I launched our Shopify. So I asked my friend to work for me as a driver and to see them in his car at the parking lot, near the whole foods in San Francisco.

And then I launched their plate. It’s like, Uh, 10, 15 minutes grocery with delivery. So, and we started to get a lot of for customers. So, uh, I received the first and the second order free to quickly and you know, why I still, and w what, what I saw that a lot of orders. So I started to chat with all of these customers on the website, and they stopped what they started to write me. Uh, Hey guys, you really do a great job because, you know, we have a lot of, um, old parents and we want to order them groceries because they cannot go out from home because of the COVID because of the COVID. And, uh, and yes, they can definitely wait for any Instacart, but it will be the next day, for example, or from whole foods, it will be the next day delivery, but they need something as soon as possible Right, now, for example, me, look, I don’t know, eggs red.

And then I realized, oh my God, this is a really good idea, for example. So I didn’t realize it in front of the day one. So I just think that, okay, we can just deliver that to the customers. And then I realized that we really can help people. And we have a lot of positive feedback from the people that can go out.

There are buildings. Yes, this, this is, this is the first, uh, the second we started to work a lot with the local communities. For example, we’ve hired a lot of people from, uh, different nonprofit organizations that cannot find the work. So we work a lot with some local, uh, uh, local nonprofit organizations.

So we work a lot with local producers. And for example, yesterday I was supposed to, or the stories in my Instagram, we work with some super. Local brands or, uh, bars. Uh, and so, and they just send me the message to retaliate it’s because we don’t have any PR uh, without having any opportunity to. To uh, to present our products in whole foods, in trader Joe’s and other big stores, because we don’t have enough power.

We just started that business. And when they came to us, we’re really happy to have them inside the, our application because we, because our main focus is to work with a local friend users with the local brands. That’s why we help a lot, some small brands that. So if your sales in different, uh, stores to increase their volume and the that’s how we differentiate from other companies like Gopal, because Gopal, okay.

They sell just sneakers and we sell a lot of local suppliers, local producers.

Andrew: I see, you’re saying you started talking to your customers and seeing how much your work was impacting them and especially people who you hadn’t thought about. Right. You don’t think about older people being quick to jump on a new tech company’s website and order. And then the other part know. When they’re local creators who are trying to get a, an audience, trying to get a customer base for you to give them that I can see how important that is.

And I did see it on your, on your website that you’re actively calling out local creators, anyone with new

Vitaly: Yeah.

Andrew: that you can show that. All right. So that does give you the sense of mission that maybe you didn’t walk into this with the ads were working. Why did you even bother having your friends sit in the car?

Why didn’t you just say whenever somebody ordered say thank you for your order. We’re experiencing problems. We’ll give you your money back or we haven’t charged your credit card. Sorry. We’ll try you again. Why didn’t, why don’t you do that MVP approach.

Vitaly: yeah, we need that. So, uh, we definitely, we, we couldn’t deliver that within 15 minutes because it took around 25 minutes just to find all the items since I had the whole foods. So that’s why when I received the. So then I wrote our customers that, to be honest, sorry, but we can deliver that in 15 minutes.

That’s why I will make you the full refund and we will deliver that to you definitely within an hour. So, but when I, uh, I stopped this marketing campaign in three days. But, uh, but I, uh, during these four days I realized that it, it definitely works because we received a lot of orders. I made, uh, the response to all of the costumers and I started to chat with them and ask a lot of questions.

Like, do we want this supervisor, but also the delivery? Uh, is it the, so what, what do you think about some, uh, And deliver your fee, meaning one quarter requirements. Do we need it or not? So, and especially the question about the old parents for th th this is this answer I received from one of our customers.

So she told that, yeah, it.

will be cool to do, to deliver that our old parents who lives

Andrew: 15 minutes. Why does somebody need the groceries in 15 minutes? Because what you said is right, it takes 25 minutes to just go through a fricking whole foods to find what you’re looking for. And then of course there is the waiting in line to check out and then the drive to and from, right. Even if you just replace that with somebody else doing it and give me the food in an hour, the way that I might, if I got in the car, but, you know, eliminate me getting in the car, that seems like a good, a good transaction.

Why does it have to be 15 minutes?

Vitaly: Your good question. And the reason is why it is 15 minutes because. Uh, this, uh, by delivering the items within 15 minutes, you can provide customers with wow experience. They, they, they, they never had before. So they have an experience of, uh, duly delivering something within 30 minutes or 60 minutes, But 15 minutes, this is a topic and now their business model.

So for example, door dash, can I do that in 15 minutes?

Andrew: does it matter? Do customers want it?

Vitaly: yeah, yeah,

Andrew: do. They need their food in 15 minutes.

Vitaly: Yeah.

because they don’t need to wait anything. They don’t need to choose some windows during the day to get there, to get the crosswords. Definitely. It’s just, yeah. And just one thing I want to mention here is that definitely they will.

Instacart or Amazon fresh, because if you want to order B quarters like ball corners, you will definitely use Instacart for example. But if you need something super fast, like X bread, me bananas, you need to go to some convenience store near your near your apartments. And that’s what we are replaced right now.

We are replaced the convenience stores near you.

Andrew: Uh, right. Amazon’s replacing whole foods, but with whole foods delivery to my house, you want to replace seven 11 with all the little things that I could get from there, the eggs, the milk I ran out of coffee today. I needed coffee. Got it. Okay. That’s the. I want to know about what you, when you are talking with, with Felipe.

Um, and he said to you, you need to think about your, your day one strategy and your year three strategy. I want to know what he said, but first let me say to everyone in the audience, if you need a website for your business, go to HostGator gets you great service, really low price.

And if you use my URL, they’ll give you an even lower price. to lowest price. Great service. I’ve been using them for years. All right. What was it that he told you that you needed for your strategy for day one and year three?

Vitaly: So we understood that. So are the more, the world is becoming more fast. I mean, insurance of duly or everything. And when stood that, when. All of our software from that they want to open that four different other brands that can use our fleet and our shelves for delivering the items super, super fast. For example, imagine some local marketplace in San Francisco or in Los Angeles, in Chicago that were existing in these cities and that they won’t have an opportunity to deliver some items within 15 minutes instead of 30 minutes, one hour, two days.

And they can. Uh, with stores as fulfillment centers to, to deliver any item within 15 minutes,

Andrew: an example who like, maybe there’s a new coffee brand that wants to got it. So if I have an idea for a new coffee brand, I want to be able to deliver it within 15 minutes to people in San Francisco. Now I don’t need to have my team, my, anything, I just partner with you now. There’s not enough margin in coffee for me to make money from that.

Right. So does that mean that I also would allow them to buy other items from food rocket? Is that what your vision.

Vitaly: Yeah, so, yeah. Yeah. You’re right. So the first is that some brands, some local brands, they can come to us and say, Hey guys, I want to sell my products. You’ll flip for them. This is the first and the second we want in the future. We want to create a specific, special bottom for different local marketplaces or for their websites.

For example, in your, as a user, you’ll go into some web. I don’t know. Let’s say the website for some items, for babies, let’s say yes. And, and when you’re going to a checkout and you see two buttons, like let’s say, deliver that in five hours, for example, or tomorrow, and deliver in 15 minutes with a food rocket, but you can pay some additional people there.

Andrew: Ah, got it. I guess, you know, Postmates was kind of starting to do that with, uh, with apple and I don’t know if they still do it where I can go to an apple store and have something delivered within two or three days, or I pay a little bit more. And then sometime in the same day, Postmates will deliver your.

Why should it be sometime in the same day, if you’re missing your charger for your iPhone, you need it in the next 15 minutes before the phone dies, apple should just partner with you, put your, put their stuff in your stores and then put a button. Do you need it in 15 minutes? We’ll deliver it right over.

Got it. That’s what you’re thinking. Doesn’t even have to be groceries. It’s just, we are the 15 minute delivery company, whatever you need. We’ll get you.

Vitaly: Exactly. Yes, exactly. This is the main idea because what we see right now, Our cohorts are great and the customers live us. So they, your order several times per week from us, they really like what we do. So we, we are getting a lot of feedback from them through Instagram, Facebook, anywhere. So, and we understand that the customers use us every day or several Sarah desperate week and the different, they won’t want a lot of other items. Uh, every week, let’s say the charge Juris. I don’t know, new iPhone. I don’t know batteries anything, and we definitely can deliver that as well. No, that’s right

Andrew: What else do you think that you’ll be able to deliver right away? If a company partners up with you

Vitaly: So, uh, electronics, so, uh, different items for home. I don’t know

Andrew: what’s worked for Yandex, has Yandex done this? Do they allow other people to use their service for delivery?

Vitaly: Yeah. Yeah. And they have that,

Andrew: And do you know, what’s worked for them. What else they’ve had delivered fast,

Vitaly: uh, for example, I know that they’re presentable. So Dan, you can put some services inside your app for what mean, for example, if we want some moving services or handyman services, you can just water that and get it within looking at maybe 15 but 30 minutes, for example. So then you can put some regular.

Well, let’s say services that people need to, you need, not every day, every week, every month you can put that there as

Andrew: Got it. So he’s saying to you, it’s natural to think about this as the replacement for seven 11 that’s day one replaced seven 11, make the fast food make food happen, but what’s a better longterm play is. Make 15 are fast delivery available for other businesses be that platform. And we may not even know what could need it, but whenever it is, you need to make that happen.

And it could be something like, um, uh, maybe an auto store discovers that they have items that need to be bought. And people go to the website to see if they, if they have it in stock. Well, why not just have it delivered over? Got it. Maybe you need that. Uh, I remember I had a flat tire and my car does not have an extra spare.

Right. I had to go to the store, uh, using an Uber to buy one of those cans and then flight, you’re saying, well, why shouldn’t the auto store? Just say, we’ll deliver it to you in 15 minutes.

Vitaly: Absolutely. That’s correct. So,

Andrew: I’m with you on this. You know, what’s interesting to me is you told our producer, this is really tough, which I totally believe.

But you said one of the things that I’m doing to try to get through this difficulty is I’ve noticed that there are people all over the world, entrepreneurs all over trying to do something similar. I’m in a chat group with them to see how they’re doing it. So you’re with people in Japan, in Canada, Columbia, right?

All of you trying to do this 15 minute delivery services, you are.

Vitaly: That’s correct.

Andrew: And then what did you learn from the way that they’re doing it? There?

Vitaly: So we’re changing a lot of ideas about this business model. I mean, what cohorts other players have? So, uh, what the average point away I leave, for example, what’s so different numbers. So maybe some ideas of how to from all the Europe. Your items, how to promote yourself as a business. So what works in other countries, what works, what doesn’t work in other countries, for example, from all around the world.

And that’s how we can get much more information

Andrew: Give me an idea. Think about one. Think about one thing. That’s not obvious that you learned from one of these other entrepreneurs. What did you see that worked for them for promoting the business for promoting the idea?

Vitaly: uh, there is a finding story, for example, and then the Geisinger, Uh,

Columbia and so Latin America. And so, and they told, for example, Some of the drivers. They can just work in some specific neighborhoods and cannot work in odd neighborhoods because of the gangs. And because, because you need, you need to be, let’s say the part of some gang to work in this specific

Andrew: wow. Okay.

Vitaly: Yeah. And That you can kind of deliver it to another neighborhood because you are not.

Andrew: That is amazing. This is in Columbia. Wow.

Vitaly: Yeah. So, and yeah, this is okay, but Okay.

And now this story, for example, we see that in other countries, for example, the, uh, alcohol delivery is a really big part. For example, England in America, in Europe, uh, some of the startups, they have some. And also in 15 minutes and it is a super popular, uh, for the, for the customers.

And, uh, that’s also interesting, I mean, to deliver some beer, for example, wine, uh, super fast, and we see that, So,

this category is super popular

Andrew: Got it. So even though you walked in saying, I can’t be the same as goPuff and Drizzy and all these other companies that are doing alcohol delivery, the fact that you’re seeing this be a part of the mix for others internationally is making you say, I need to rethink this, this idea that I entered the

Vitaly: Yeah, maybe. Yeah, maybe we move. Maybe we’ll put there, maybe we’ll put this category in the future for example, but what we see right now, we see that yes. These categories growing super fast and other countries. Yes.

Andrew: You know, what though? What are you going to do about having people know you? I try to know about all the new stuff that comes out. Cause I’m fascinated by this. I love this, especially when it comes to saving me time, get stuff delivered. I had no idea you even existed and I’m reading tech crunch on a regular basis.

Tech meme. How the hell are you going to get people to know that you exist?

Vitaly: Uh, so it’s Really funny, but you know, are maybe the vast majority of these companies are founded by people from, from Russia and, uh, yeah. For example for years, no more from New York, Uh, 1520 from New York, uh, bike from New York. This is the same

Andrew: saying all these different companies that are doing the, uh, the convenience store delivery, they’re all, they’re all rushing or many of them are Russian

Vitaly: uh, Russians, or a lot of them are from Germany.

Andrew: from Germany. Okay. That’s still, I don’t know any of them. The problem that you have is one that Instacart was able to solve. The problem is that. We don’t know your name. And so I don’t think I need to go and get something delivered 10 to 15 minutes. I don’t even think it’s a possibility. So I don’t even go to Google it with Instacart.

At least you started to see them partner up with local supermarkets and then you’d see their, their packages of local supermarkets. And you walk out of the supermarket go, why am I an idiot coming in here? When I see these people, clearly all my neighbors are getting it delivered. Let’s go see what this Instacart is.

And you sign up for that. There isn’t that here, because you’ve got the dark stores, which are these little stores that aren’t. Some of them people can walk into, but they’re not in people’s faces. How do you solve that problem?

Vitaly: Yeah. So.

Andrew: How are you going to get people to know that food is the place they should go whenever they want 15 minute delivery when they don’t even think they need 15 minute delivery or that it exists.

Vitaly: yeah, yeah. So yeah, th th they all have, they don’t have this habit right now. Definitely. They don’t have this knowledge that they can do get any item within 15 minutes. And so we use several marketing channels, like online, better bait ads, like Facebook, Instagram. So then, uh, local marketing means a lot.

I mean, we are make some, um, directly. Um, to the customer’s door hangers, we use that we’ll use this channel as well. So our, then we plan to launch ensure, uh, billboards, uh, or some ads on the bus, the bus

Andrew: That seems very expensive. This is all you paying for it. Where, like I said, it’s not, how are you going to do without paying? I like

Vitaly: it, it is much cheaper than the launch there. Your alarm marketing campaign through Facebook, it is much cheaper.

Andrew: okay. But still you’re still paying money versus. With other places you’re there in your face. You see their shoppers walk through the store, right. And you’re saying, I just don’t have that. It doesn’t matter that I don’t have it because I have lower fees and I have all these stores. And once people find out about 15 minutes, yes, it might be expensive to tell them about it the first time.

But once they find out 15 minutes available that embeds itself in their heads, they’re not going to forget. They’re going to go in.

Vitaly: Yes. And they really started to share the information about us, you know, start up everywhere. We have a lot of customers who just lost a lot of stories about, Hey guys, I cannot believe how it.

can work. So I I get, I get my groceries within 6, 7, 8 minutes. So it’s why we have. Uh, so really word of mouth effect, to be honest.

So, and that’s, that’s, that’s how we get a lot of customers let’s say for free because they start to share the information about us. So we have a referral program inside the application, so you can share your promo code with your friends. For example, we have a lot of customers from one co-leading, for example, in San Francisco.

So a lot of people leave in the same space. And the order 2, 3, 4 times per day from us

Andrew: see, and that’s the power of not giving people one-hour delivery, which is reasonable, but going 15 minute delivery is when you and I were talking before you said we could do five to 15 minutes. It doesn’t have to be even 15 minutes. The power of going that dramatically fast is what makes people want to talk.

All right. I buy it. I didn’t feel too bad about pushing on this, even though I looked at your face and it looked like you were getting depressed as I was pointing out all these different issues. But I didn’t feel bad because you’ve heard this before. How many, how many investors did you have to talk to before you raise money for this idea?

Vitaly: So to be honest with what’s, uh, it was super fast to raise these, uh, first money to raise first $2 million because, um, you know, w wonderful were investors. They already invested in the same start top. Uh, so that’s why, even though this business model much better, much better, so they know how it works. And when they, when we came to them and said, Hey guys, we were launching the same business model in, uh, in San Francisco.

They said, yeah, it’s cool idea. So we will have to invest in that. So, so, and this is the first thing. The second is that this business, this business, this business model is women All around the world. So that’s why investors

Andrew: All over the world.

Vitaly: Everywhere in your country.

Andrew: It’s booming.

Vitaly: Yes,

Andrew: It is. But, but

Vitaly: it is.

Andrew: you told our producer, one of my biggest challenges was fundraising. It was a challenge. You heard a lot of nos, you said, right?

Vitaly: So, yeah. Yeah.

Andrew: Let’s not minimize it. It was challenging to raise money. You heard a lot of people say this does not make sense. What I saw in tech crunch at the end of the article, they’re basically writing a short article on you.

This is Mike butcher, a tech crunch.

Vitaly: Yeah.

Andrew: And then saying, Matt, good luck with that. After bringing up the fact that there are other people already doing this and still,

Vitaly: Yeah.

Andrew: it was challenging to raise a $2 million.

Vitaly: So, uh, I mean maybe our, Yes.

I just want one to add the red to difference. And the first is to raise that like a free seed round and there are this, and maybe the more, uh, the card is think is to raise a series. So, and, uh, when we raised a seed round or free seed round, so it wasn’t, so maybe it was hard, but the bonus, it wasn’t too hard.

So, and when you’re raising series a, so, so you’re, you have much more challenged. So because there are a lot of competitors that raised much more than you. So for example, some of our competitors in the United States, they raised $300 million, $300 million. Yes. And, and the, for example, goPuff they raised recently, they raised $1 billion, maybe two or three months ago.

And so the question we had from our investors, Hey guys, how will you compete with all these players who already raised sensual, such a lot of money. Yes. And this is, this is a real big challenge. And the, this white w w our main, uh, answer to this question is pretty simple. Is that the first we are, so we have a really strong team.

So I have Michael fonder is originally from Amazon and Facebook, so he knows how to build all the process. So, uh, other in place, uh, from Google, And other big companies. So that’s why we know how to build this business model and not, no one has the same experience in the United States. I mean, from our competitors, all of them are for all of them are the United States is like the second market or the third market.

Andrew: But they can’t hire people like who gorillas from what? From Europe, they can’t just hire people to.

Vitaly: They, they can, but unfortunately, uh, this business model is about focusing on some specific market. So you can, you’re going to be the winner in several countries at the same time when you don’t have enough when they don’t. When, when you, when you haven’t built a strong business process, for example, is a, they started from Germany and it was the number one in Germany. And right now they’re number two, because Flink is number one there because they are super focused on Germany.

Andrew: And they did come to the U to New York recently.

Vitaly: Uh, Flink not, uh,

Andrew: gorilla gorillas. Yes. Yes. Okay.

Vitaly: very, yes. So yeah,

Andrew: All right. You’re saying we think we could do this. Give us a little bit of money. We’ll prove this out. San Francisco is the first market. How much money do you raise in San Francisco?

Vitaly: so, um, by this time we can raise the formula and indoors. You’re so, and yes, and that looked with Dylan. So we have really great expertise in the United States. So I have a lot of colleagues from really great companies with a great experience. So at the same time, we know how this business model originally works, uh, because we, we have this experience, uh, by using the knowledge of our investors and advisors, uh, from your th that’s called we combined combine this.

Strengths together.

Andrew: Got it. And you and you, and then eventually it seems like you’re. Maybe local grocery store could actually just use us. If there’s an Albertsons, why does Albertsons need to create their own network of these dark stores? Just white label us. If somebody wants Albertsons, they know that whole foods will deliver by next day, which is amazing through Amazon, but Albertson’s cause I should actually beat them if they partner up with you and you’ll make sure that a select a number of items will get to their people within 15 minutes.

That’s part of it too.

Vitaly: Yeah. Yeah, yeah, yeah.

Andrew: Okay. And where the others want to create their own brand. They beat to the beat in stuff to be, I don’t know what to be a delivery service that will get you stuff from their brand. Within 15 minutes, you are thinking at some point we will be just, the infrastructure will be the ups.

You don’t need to know that ups is delivering to your house. You just know somebody there.

Vitaly: We will be like, we will be like our super fast Amazon. I can say like that. So like Amazon’s, Troy’s.

Andrew: That’s the goal. That’s that’s a good, big story to tell people.

Vitaly: So we want to provide, we want to provide customers with a much better experience. So that’s what we see from the day one. Uh, when we look at our cohorts, they’re amazing. So people are very likely to buy from us and, uh, and, uh, so, uh, and. Doesn’t have such a cold her cohorts. Definitely. They are super weak.

And, uh, what wants to do we want to totally change the customer behavior customer experience and to provide them with a much better service with a much better or delivery with a good assert man. That’s what we, that’s what we are doing right now. So that’s why we believe there. Uh, for like, let’s say Amazon, that will be super hard to.

Because they have total in other business model, it will be super hard to build the same quickly and we can do that much faster than them. they do that.

Andrew: All right. It’s a food How much did you sell, uh, out of cloud for what was your exit on that?

Vitaly: So, uh, so this is the mining, so I told you it’s always around or two, two and a half, $3 million.

Andrew: So you sold it for two to $3 million.

Vitaly: Yeah.

Andrew: Okay. Fantastic. All right, Vitaly, congratulations on the success with food rocket. It’s exciting to see that this is happening and I’m looking forward to seeing it. Now, now that I’m out in Austin, I’m getting the same FOMO that I had before I moved to San Francisco. I would live in all these different cities and see that everything was coming to San Francisco first, and I wanted to try it and I hated reading about it in San Francisco and not having access to it.

And, uh, and now I feel that way right now with you, because I can’t get anything delivered in 15 minutes here in Austin. I not yet,

Vitaly: I hope.

Andrew: I want that. Wow. All right. You see that? I didn’t think I cared about, I think I thought it was going to be too fast, but you know what? I didn’t have coffee this morning.

I was pretty upset. All right.

Vitaly: Thank you.

Andrew: Thanks so much for being on here. Thank you all for listening. And of course, if you, uh, if you need a website, go to my sponsor, by, by one

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