The CEO of dinner kit delivery service Gobble on her four-year-long road to product/market fit, the dark days of being a founder, and protecting the company from copycats
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The Macro : Let’s start out with your recent news. When the news broke of your $10.75M Series A funding, Paul Graham tweeted, "Ooshma Garg does not give up." Is there a story behind that?
Ooshma Garg : [Laughs] I saw that -- that was really special. Paul’s one sentence meant a lot to me.
You know, Gobble started in 2010. We joined Y Combinator more than three years later, in the Winter 2014 batch. We just now raised our Series A, after really nailing our product over the past year. It's been a unique path, for sure. Things haven’t happened overnight.
How did Gobble start? Take us to the beginning.
The idea for Gobble was born out of an earlier startup that I was running called Anapata -- it was an online platform for company recruiting. By mid-2010, two years in, we were pretty popular: I made the Inc. 30 Under 30 list, I won a Fortune Magazine award for next-generation women founders, we’d started to get a lot of traction particularly with law firms.
But unfortunately, I was no longer passionate about what my company was doing. At the same time, my health was becoming compromised. I was working 24/7, eating Taco Bell and chicken nuggets every day. I was mentally stressed and physically unhealthy. I grew up eating home-cooked food every night: my dad cooked amazing, very nutritious Indian food from scratch. It came to a point where my parents were so worried that they offered to move to California to help make sure I was eating right! I finally said, OK, I know I'm not the only one with this issue. I need to solve this problem.
At that time, Airbnb was just taking off, along with the peer-to-peer economy and the set of original startups in this space. But it hadn’t taken off for food. So I started iterating on this idea and talking to chefs about how it could be possible to create home-cooked meals for around $8 a plate. We used to describe it as "peer-to-peer lasagna." I knew we were on to something.
In October 2010, I sold Anapata, and committed full-time to building Gobble.
How did it go?
Amazing, at the start. It was pretty unbelievable. In May of 2011 we closed a perfect seed round of $1.2 million from a group of all-star investors in Silicon Valley. I was so excited. As a single founder who started a business from scratch with just an idea on pen and paper, to get all of that faith and intelligent backing was incredibly validating. I felt so lucky to have raised that very quickly on my own, with no incubator or accelerator or anything else.
Flash forward to late fall of 2013. It's getting into that time of year where it's getting dark outside at 5pm. And my life was dark too. Gobble's still running, delivering meals each day across the SF Bay Area peninsula. But we're trying to widen our reach, and scaling seems impossible. We're just not seeing runaway growth. And we're running out of money. At that point, I think we might have had 25 employees or something, and less than $20,000 in our bank account. I was trying so hard to raise more money, and I just couldn't.
Why was it so hard to raise more at that point?
People were calling us a “lifestyle business." We were making money and had customers that loved us, but we just hadn't taken off in the way that we needed to. Some investors asked for their money back.
I remember in particular one really dark day -- I was sitting on a friend's couch, a fellow entrepreneur. I showed him a model of how much money we needed, and I remember everything on our business charts was just going down and to the right. He has told me since that he had never seen me so sad. I was so sad. I genuinely felt like I had to close the company.
Many people at that point will just decide to shut down the business. Hold a fire sale. I decided to apply to Y Combinator.
It seems like Gobble at that point was definitely not the prototypical YC applicant.
Definitely not. It was a bit of a unique case for them too. I remember that I emailed Jessica Livingston and Paul Graham, and met with them, and told them the situation. I asked if they thought that YC could help us at the stage that we were in -- if we could come up with a structure for the program that would make sense for Gobble. And we did.
What made you think that you should keep going with Gobble, and not shut down the business?
I think it’s that deep down, even though our numbers hadn’t taken off, I still believed that our mission was alive and real and unmet by anything else out there. I was so dedicated to it. I believed that it could work.
What did your investors think?
Well, I exchanged a sizable percentage of the company to YC for around $100,000. Some of our seed investors weren't thrilled. But once we made the decision, I was all the way in.
There were a ton of positives. One upside of course was the quick infusion of money that we needed. But it was also a way of strategically catalyzing the business. Instead of catalyzing the business from idea to seed, like most of my fellow YC batch mates were doing, my plan was to leverage the 3 months at YC to bring us from seed to Series A. I was going to use Demo Day as a platform and a stage to help kick off that Series A raise.
What were those three months like?
I'll be honest -- going into YC, I was joining up with a lot of other companies that were simply at a different stage, startups that had never raised any money or talked to investors before. So of course I felt like some parts were not totally relevant to me. But at the same time, if I’m going to do an experience, I wanted to be all in.
It wasn’t easy, balancing YC along with running my already sizable business. I had to be very efficient with my time. I didn’t attend every happy hour or unofficial batch party on weekends. I was ruthlessly focused on growing the business towards Demo Day. YC was amazing for focusing our company towards that goal.
So, you did end up raising a Series A -- but it wasn't immediately after Demo Day. It was more than a year later. What happened with the plan?
During YC, as I was focusing on Gobble's growth, it became apparent that we were grossly understaffed at an executive level. I had to focus on hiring for the business we wanted to have. Hiring at that level did not align with the 3 month structure of YC -- things ended up taking a little more time.
One of the most important decisions I've ever made was hiring Thomas Ricci, our Executive Chef, previously a trusted Executive Chef for Michelin-star chefs like Michael Mina and Roland Passot. He joined as our Executive Chef just after our time at YC ended, in May 2014. It took a couple of months of interviewing. It's a very hard position to fill: Someone has to have the talent and artistry of a chef, and the business savvy and cost consciousness of a business partner.
Why was that hire so key?
So much changed after Thomas joined. His passion for teaching about cooking collided with my lifelong phobia of cooking, and it worked out. Really soon after we started working together, we invented our 10 Minute Gourmet Dinner Kit, which has just turbo-charged our whole business.
I had also recently hired our Lead Engineer, Chris Woodford, who had previously built three startup companies in Canada and even wrote algorithms to give EMTs the most efficient medical evacuation route for catastrophic hard to reach emergencies. The three of us made up a powerhouse to execute on both the food and technology competencies that define Gobble.
The takeaway here is: Never underestimate the power of hiring the right person at the right time. I’ve learned a lot about hiring. A lot.
When we first were building Gobble and playing around with different ideas, we needed generalists -- so my college friends worked fine. However, once you’ve committed to scaling up one particular idea, I’m a firm believer in recruiting the equivalent of a championship basketball team. You need seasoned professionals.
Tell us the story behind this.
Well, I’m a very precise person and a perfectionist, and for many reasons I've always been afraid and stressed by the idea of cooking a meal. Part of this feeling is because I grew up in a household of Indian cuisine, where every meal takes at least one to two hours. That's why I created Gobble in the first place -- to avoid cooking.
But when Thomas and I started playing around in our test kitchen, trying to work on new products for Gobble, he taught me hacks. He showed me that if something is chopped this way, or pre-cooked that way, I could actually work with it and create something.
How was this such a fundamental change to Gobble's product?
At the time that Thomas joined, Gobble was delivering fully prepared meals in a box. The 10 minute dinner kits are different: We provide all the prepped ingredients for cooking a meal yourself. The customer makes the finishing touches, using 1 pan and less than 10 minutes.
I've become very inspired with the folklore around cake mix. You know, when cake mix was first created, nobody bought it when all you had to do was add water. When they changed the formula so that people had to crack an egg and add in some oil, it just took off. People want to have a hand in cooking their food. There’s no such thing as ‘cook mix’ nowadays -- I think of Gobble as getting pretty close.
Was it difficult to make the decision to pull the trigger on the change?
Not as much as you’d think. During YC, before I met Thomas, I knew there were things that were not quite working about our product. But I did not understand, or have the tools to solve the problem I was seeing.
As adults, when you grow up and have a husband or wife or kids, you just don’t feel good eating out of a takeout box. Even I, the founder, got sick of eating out of a box. Deep down, I knew there had to be something better, and that it didn’t exist out there yet. Once we got the right resources on the culinary side, it just all came together.
What was the response after you made the change?
We shipped the very first dinner kits on August 3rd, 2014. I remember the date so well -- it was a very important day.
Right away, the satisfaction was off the charts. On our surveys, customers were expressing happiness at levels they had never expressed with the ready-made food entrees we were sending before. People were emailing in, saying things like, 'My husband loved this meal that I cooked.'
We’ve grown our revenue by 25x in just the last year. Everything about our business immediately moved up and to the right, dramatically. It's the true definition of product/market fit.
We’d imagine that raising funding was easier after seeing that kind of a spike in growth?
Well. I tried to raise a Series A a total of three times in Gobble’s history. I visited practically every VC two to three times over the course of four years. Each time I was pitching the same company, but with a different product. People just don’t do that.
In a way, this last time was easier, because I knew that we had a much better product, with much better numbers. I was much more learned and experienced. But my past difficult experiences -- having so many investors say no, of joining an incubator after being a heavily anticipated seed-funded company -- all made going out for this round more daunting. But it worked out, and here we are.
Where do you go from here?
A new learning for me is that creating a breakout product is not the end of the story. My entire life before was focused on trying to figure out a product people love. Now it’s about protecting that product, and being the best company to deliver our own invention. That is a whole new challenge.
Are you concerned about copycats?
Ultimately, to protect your product you want to provide the best quality at the lowest cost, so that no one can undercut you. Nowadays that’s more difficult, because companies will get a gargantuan-sized funding round and undercut everyone, even themselves, and lose money on every order with the aim of starving out the competition and owning the space.
We’re delivering a tangible product, and we have a lot of data engineering and software and processes in place that we’ve created and proven out over time to help deliver our dinner kits at high quality and an efficient cost long term. Our software and processes are truly unique and proprietary.
How would you advise other founders to do the same thing Gobble did? How can you know when it's time to change your core product?
Firstly, I’m ruthless about how we spend money, and I think that has saved us. While you're iterating on the product, define the scrappiest MVP (minimum viable product) possible. Only spend your money on things that are directly helping you achieve that proof of concept. Gobble had been very no frills for a very long time.
We had only 3 to 4 employees for years, and our net burn was something like $40,000 a month, which is very low. Gobble went for four years on $1.5 million. Even though we weren’t seeing runaway growth, we had income and a gross margin on our business that helped to offset our costs.
I'd say give each product model six to nine months to grow. Looking back, after six to nine months, if we were still fighting tooth and nail to get to 15%, 20%, 25% growth, the model wasn’t working. After that many months working on a certain approach, if you are still fighting for each customer every day, that’s when you realize you don’t have product/market fit. You need to work on a change.
It sounds like it’s not just about “never giving up” -- it’s about knowing what to give up, and when.
Generally, I would say encouraging people never to give up is important. But along the way, you need to calculate in a scientific way what are the caveats to giving up or not giving up on the specific approach that you are taking. You need to think very long and hard about what you are trying to do at a high level, and then what you are trying to build to achieve that mission and if that particular solution is working. This journey requires a lot of adapting.