Last year was a good year for Matt Salzberg. As CEO of US based, home cookery subscription service Blue Apron, he helped the startup raise $50 million in VC funding, achieve a valuation of over $450 million and successfully launch its new e-commerce store.
The company’s subscription growth flew past 1 million meals each month. In only a couple of years, Salzberg has turned this startup into one of the fastest growing companies in the world.
He tells Hot Topics how…
Hot Topics: Having worked in private equity and VC [Blackstone and Bessemer], what was the challenge of being on the other side of the table as CEO at Blue Apron?
Matt Salzberg: It’s obviously a very different kind of job, investing versus running a company. On the investment side it’s more of an analytical job but at Blue Apron, it’s the people side of the business that I find myself focusing on.
The pace of life as an entrepreneur is totally different to that of an investor. I use 100 per cent of my brain power focusing on my company whereas an investor has hundreds of companies, big pictures and trends.
HT: How much did your existing finance knowledge help you become an entrepreneur?
MS: On the VC side, I saw hundreds of different entrepreneurs and I could see who had a hard or easy time. Being a VC is all about pattern recognition and seeing which elements you need to have during the early stages of your business model.
At Blue Apron, my VC experience helped but so did having a team with complementary skills. At the start, I recruited two great co-founders to join me: Illia Papas with his e-commerce background and Matt Wadiak, with his culinary background. We’ve found this mix to be really useful.
HT: What has surprised you most about being a CEO?
MS: Spending most of my time with people! Blue Apron has grown massively and you have to adapt – you can’t do everything any more. So I’ve started managing and working and helping other people when something needs doing. That’s been a huge change for me.
It’s also very draining but ultimately rewarding. Our products are very emotional for people – the reviews make it all worth it. We get so much feedback about how we’re changing customer’s lives, how we save their marriages even!
HT: Is there anything you miss about being an investor?
MS: Um…not really. But don’t get me wrong, there are nice perks. Being an investor gives you access to hundreds of companies. And you get to meet different people from different industries, all with ideas and it’s a real flow of information.
HT: What gap in the market is Blue Apron filling?
MS: We provide people with a really easy, at home, experience so they can learn how to cook, learn about different ingredients and ultimately get dinner on the table.
The Blue Apron supply chain model is better than ones that have existed before – it’s more convenient, you get fresher food at better prices compared to a grocery store [Blue Apron is on average 60 per cent cheaper]. You save time and it’s more fun.
HT: Why is the food industry so ripe for disruption and attracting so much venture capital right now?
MS: The food industry is the largest industry to have so little e-commerce penetration – we’re talking low, single digit percentages of sales online. In other sectors, there are sometimes more than ten times that penetration.
Food has a really difficult supply chain and logistics problem because it’s dealing with perishable goods or packages that are all different sizes.
Previous attempts have basically just taken the existing supply chain and grocery store model and added a last mile distribution set, which doesn’t solve any of the underlying inefficiencies of the industry.
We’re re-thinking the supply chain around getting dinner on your table, direct from farms, direct from family run businesses – all at exactly the right amounts in an efficient way.
I think the food industry is particularly difficult to disrupt and so there is a large prize there for anyone who can do that.
HT: Do you have international expansion plans?
MS: We’re currently very focused on the US, and we want to further build upon Blue Apron’s subscription growth, but the international scale is an interesting opportunity for us and something we’ll think about over time.
HT: What was the incentive behind the recent move into e-commerce?
MS: Our mission is to make home cooking accessible and to help people be successful in the kitchen however we can. So there’s another element to the ingredients and recipes we send out: do you have the best tools, the right sized pots, the best chef’s knives et cetera?
We want to help our customers create the best foods from our recipes. So it’s all part of the overall experience.
HT: Are there certain regions that are outperforming others?
MS: We’re not just a city based company. In fact, there are many areas in parts of the country that are food deserts, where they haven’t got great access to grocery stores, where we deliver routinely. We’re very popular in suburban areas and rural areas too so it’s definitely not just a city phenomenon.
HT: Your company is very careful about how you source your ingredients, is that a personal decision?
MS: It is important to me. We care about sourcing ingredients from great suppliers that have really good practices. We aren’t exclusively organic but we do work a lot of organic suppliers and we evaluate suppliers constantly so we can get the best people on board.
HT: Would Blue Apron ever work alongside or with stores? Or even create your own?
MS: It’s not something we’re really looking at right now – but I would never say never.
One of the great benefits of our current model is that we have no stores. We have direct relationships with all of our customers because they’re giving us their demand data.
The Blue Apron supply chain model can then be planned intelligently and we don’t have to waste money on things like rent. Plus, we also have next to zero food waste in comparison with stores. Our measurements are precise and we haven’t got perishable food out in the store waiting to get bought; we only buy what the customer already knows they want.
HT: What can we expect from Blue Apron in 2015?
MS: So we’re continuing to grow rapidly. We’re scaling our team, we’re scaling our supply chain, our infrastructure and our marketing and we hope to make Blue Apron a nationwide, household name by the end of 2015.