Living The Red Life - From Startup to IPO: Matthew Wadiak’s Journey to Success

Episode Date: February 27, 2025

SUMMARYMatthew Wadiak, co-founder of Blue Apron, joins the show to share his incredible journey of building one of the most well-known meal kit services in the world. He discusses the highs and lows of scaling a startup, including the challenges of logistics, fulfillment, and the process of taking a company public. From wild customer service nightmares to the pressure of keeping innovation alive while preparing for an exit, Matt provides an unfiltered look at the realities of running a high-growth business.Now, he’s onto his next big venture—Capsule, a new sustainable beverage company tackling the problem of plastic waste in packaging. With years of research and patented technology, Matt is revolutionizing how we consume drinks by replacing traditional plastic bottles with innovative, eco-friendly pod systems. He shares invaluable insights on entrepreneurship, leadership, and the importance of staying adaptable in an ever-changing business landscape.CHAPTERS02:35 - The Early Hustle: From Startup to Scale05:12 - The Two Worlds of a Growing Business07:43 - Logistics Nightmares: A Rodent Tale Gone Wrong10:26 - Surviving the Chaos of a Rapidly Scaling Business13:05 - Lessons from Taking a Company Public15:47 - The Biggest Pitfalls When Preparing for an Exit18:22 - From Blue Apron to Innovation: A New Sustainability Mission20:58 - Revolutionizing Beverage Packaging: The Birth of Capsule23:40 - The Hardest Lessons in Entrepreneurship26:19 - Final Advice for Entrepreneurs: What I’d Tell My Younger SelfConnect with Matthew Wadiak:Website: www.blueapron.comX: @MWadiakConnect with Rudy Mawer:LinkedInInstagramFacebookTwitter

Hello and welcome back to another episode of Living the Red Life. Today joining me is Matt and I'm sure you Maybe used or at least know his company So he founded Blue Apron Brew to 2 billion IPO Millions of customers using it weekly. I've been a fan and I'm so excited for this episode My name is Rudy Moore host of Living the Red Life podcast I'm here to change the way you see your life in your earpiece every single week.

If you're ready to start living the red life, ditch the blue pill, take the red pill, join me in Wonderland and change your life. So obviously most people know Blue Apron and you know, became a very, I think, disruptive and fast growing brand, at least in my eyes. Do you mind just giving a couple of minutes overview for people that maybe know less about it?

Sure. Blue Apron was the first meal kit company in America, providing all of the ingredients and a recipe card that allowed customers to cook step-by-step recipes at home. We grew from a tiny fulfillment center, originally in Queens, doing about 20 meals or 20 customers per week, two millions of meals per week, and three major geographies and five distribution centers. Yeah, it's crazy, right? Like I, you know, I've been a market specialist for 12, 15 years and I started in the health space and I did some marketing for a friend that owned a meal prep company.

And it's like running a business and marketing it's hard enough, but like just thinking about the fulfillment of going from 20 meals to that, it's like a whole second business, right? The fulfillment of it. So I would love to ask you some questions on that in a bit, but let's talk about the juicy growth side first, which is what my audience loves. What were some of the big breakthroughs or lessons growing it so big? We had a lot of cadence from day one because we, first of all, you have to understand the era. It was a time in which there was a massive underserved audience.

And whenever you see pent up demand, it's about capitalizing on that demand from a marketing perspective to get, um, share of market and, and capture as much total addressable market as possible. Right. So we did something that was really unique on day one. And I entirely attribute this portion to my co-founder, Matt Salzbrick, at the time. We had initially built a referral program into our initial web product that included rewards for customers, you know, as many companies have rewards for customers who are loyal to

a brand. But what we did was a reverse referral program. And back in those days, thinking back 15 years ago, we would instead of giving the buyer a reward or a free box for loyalty, we would allow after the second box ordered the customer to gift three first boxes to their closest friends. And on its head initially, we had thought we don't really know how people are going to respond to this because it's not a selfish gift. It's not something that people receive personally.

It's the gift of giving, right? Yeah. But that was fascinating because we were the first to do that, that I know. And that became a viral sensation. So for the first few years of the company, 80% of our customer acquisition few years of the company, 80% of our customer acquisition with double digit monthly growth, sometimes triple digit monthly growth was attributed to our referral program, which was really novel for the time. Yeah, it's fascinating. I know some companies do that. I still don't see that many do it. And I think it works so beautifully for like

that sort of product because it's like you're giving the gift of health in some ways, right? And like, you know, I guess 15 years ago, you really hit that health trend, right? I started in health about 15 years ago. I have a sports science background and you know, obviously now there's meal prep and meal kits on every corner. But yeah, I guess, do you feel you were part of, obviously there's a lot that went into the success, but was it a right place, right time sort of blue ocean thing when you started? Yeah, so if you think back to the days of Iron Chef and Emeril Lagasse and the Food Network's peak, when people were still watching cable, or more people were watching cable at least,

there was more interest in food and food celebrity and celebrity chefs than anytime in history with less people actively cooking in America than anytime in in history with less people actively cooking in America than any time in the history simultaneously. So I think what we hit was the cultural zeitgeist was saying, we want to do this thing. We want to cook at home. But because people were watching cooking on TV and not cooking at home, a lot of folks

didn't know how to cook. So Oh Apron ended up being the gateway that empowered folks to learn the basic skills to chop vegetables and prepare a piece of meat and put a basic meal together with their family. So, that was embraced. And of course, the rest after that, VCs and PEs jumped on that and advertising went crazy. Yeah. So you grew initially from this referral system. When did you get serious on like paid ads, TV, social ads, that sort of stuff? Yeah, so acquisition through Facebook early days

was our first cohorted spend into customer acquisition. And back, I'd say, you know, in the early days of Facebook, two years in or so, we didn't really have to advertise on Facebook for the first year. After that, we started dripping spend into social engagement and spending money on CAC. That was fairly cheap at the time. You know, back then you could have a business selling almost anything and have... People didn't talk about ROAS back then, but you could imagine like seven or eight ROAS in today's terms. Well, I said launch 10 years ago and I was super profitable on day one back in the golden

days. Now you lose money on the acquisition most of the time. Facebook has been smart in that their strategy as a business is to take as much money from their customers as possible without bankrupting the company. It's great for their bottom line, but it's not the sole channel to acquire customers anymore, and we need to be a little bit more educated in our span as, as modern entrepreneurs. But back then we could acquire a lot of customers through

Facebook. And then of course we had influencer based ads, early days of, of influencers and social engagement and paid. And then we started, you know, things like, um, you know, my heart, you know, we did Howard Stern, we did TV, we did direct mail. We really did all of the channels at one point or another. And as the company became more mature, it became clear that, you know, multi-channel approach, like most businesses today, was critical to maintaining reasonable capital.

Well, especially because eventually you create this, like, you know, I always teach, I teach a lot of entrepreneurs and on stage, like you want to become the go-to brand in your industry, right? So like that multi-channel approach, especially for you kind of gave you, you know, that, that and later I would love to ask about competitors that popped up along the way because I'm sure there was, you know, plenty that you were fighting off and stuff. But before that, the second part of the acquisition model that I always teach is the LTV. And most beginner entrepreneurs don't understand LTV. I didn't use to.

And then when I did, it helped me go to tens of millions instead of a few million, because I built a backend. Obviously, you had probably great CAC in the early days. You had all these quote unquote free customers from the referrals, right? Or obviously you had some cough there, but it wasn't bad. And then you probably had a crazy LTV too. What was your LTV and backend like? I can't, without recalling exact numbers from like 10 years ago, it was very good. recalling exact numbers from like 10 years ago, it was very good. And our CAC to LTV ratio was excellent. I still look at that and I think a lot of folks look at ROAS and tacos and that kind

of stuff today, especially Amazon sellers, but it really all boils back down to ratios between acquisition and LTV. Yeah, it was very good obviously in the early days without a lot of competition. We had high loyalty. We had high spend on a per customer basis. And over time, when there was more PE and VC, anything good is going to get copied. Right? there was more PE and VC. Anything good is going to get copied, right? So when there were VC drop money out there and CAC was still reasonable, people all dumped their VC checks into advertising, in many cases at a loss and it became a bidding war. I think that's something you'll have to be

aware of and conscious of is, do I want to grow at this pace? Do I want to attract investment in lookalike companies? And what am I prepared to do? How am I prepared to think about not just where I am today with LTVs and CAC, but what happens if this market becomes saturated and how I'm going to address that through different channels? Yeah. And I mean, your business was more than most, I would say, like set up super well for like high LTV, right? But did you, you know, obviously it's set up well because people love it and that becomes a habit, right?

Like a gym membership, if you get into the gym, you stay with the gym generally if it's good. But did you do any specific things to really drive lifetime customer value and loyalty or did you just let it be a good product and people stayed? Yeah, we had various programs. We had a kids cooking school program by a lot of our customers and parents. In the summertime, we would do an engagement around several boxes in succession that were also learnings, kind of like a summer school of cooking where like plant peas and like we'd set a can of soil with peas and that one week you'd

plant them the next week you'd water them third week you'd cut them and use them in a salad so we had like really cool like that just like that we had lots of affiliate stuff going on that that like kind of reminds me when I was a kid you had the magazines you know and you had to buy every month to get a new piece to build something, right? Like it's been more for that. However, you can engage customers in a creative way is useful because those are ultimately going to be your highest value users and customers. So I love stuff like that.

And I think, you know, companies always have opportunities to be more creative. Oftentimes those kind of projects and those retention strategies are fun and they don't cost much money. I'd say that that's really important. The other, I think, big opportunity that a lot of entrepreneurs miss out on from an LTV standpoint is really, really good customer service because the distressed customer is really just asking to become a lifetime customer if you treat them properly. So I think having really great CX is critical for any consumer. Good. Well, let's move into the customer side.

How did you do? Talk to me. There's got to be a cool story about the fulfillment of this. How did that go down? It was a tornado, I've got to tell you. So yeah, we built our first center in Queens. We very quickly moved to a fulfillment center in Brooklyn, And we were packing 20,000 boxes a week on Mowder Street in East Williamsburg. Just like we had boxes lined up on the curb, we had trucks pulling up to this little one-way street, like big semis on an hourly basis. And then shortly after we filled that up, I got on a plane and I flew out to California and opened up in year one, our first fulfillment

center in Richmond, California. Then very shortly after that, a fulfillment center in Grand Prairie near Dallas, Texas. On a weekly basis, I was chief operating officer of the company, so I was flying to California and Texas every single week as we were hiring thousands of people to run fulfillment. And the challenge was beyond just building lots of stuff that had never been built before, packing food in a way that had never been packed before. So if you go to a grocery store today, anywhere in the world, you'll

find fish that's vacuum skin packed. You'll find an individual steak. You'll find individual chicken breasts. None of that existed 15 years ago. So it was pretty much foam overwrapped trays. But if you put something like that in a box and you send it in the mail, it's going to leak everywhere. So we had to really like, you to really do a lot of innovation around

packaging, around little sauces and little small portions of spice packets, things like that. And in many cases, had to build engineering around machines to pack those items that are now used commercially. So actually, a lot of people don't know this, but much of the work that Lou Aprin did in lean packaging is now much of the work that Blue Apron did in lean packaging is now used in grocery stores that you can see it in the grocery store every day. That's cool. Yeah.

Well, a couple of things I want to ask. So I've scaled some products and offers to 40 million very fast in a matter of months and you've had even faster growth than that. And when it's like, okay, now we're growing like crazy, we've got to really figure out this fulfillment side. I'm always like, who can we hire from a top firm that's done it for 20 years? Was there any of that? You went and hired some really top experts, or were you just trying to figure it out as

you went? We tried to. We looked at a lot of 3PLs to try to manage fulfillment for us. At the end of the day. So I'm actually, my history is in food and cooking. And I started my career as a chef before I started my first business. And you know, that migrated into Blue Apron over the years. So for me being a food person, the quality of ingredients was really important.

And part of the problem with the food system is that you can buy really commoditized food and have it packed for you in scale. But the kind of ingredients that you can use in a recipe is highly, highly limiting. So that wasn't an option. If we wanted to use really great pasture raised meats and fresh herbs and organic produce and things like that. We really needed to work with farmers and then pack those ingredients ourselves. So behind the scenes, besides fulfillment, we built an entire supply chain around 250 farms growing food specifically for Blue Apron and then packaging those ourselves because

that was our only option. So while it would have been nice to work with three PLs, the issue is that they're generally expensive and. You know, if you're not dealing with commodities or basic services, like shipping and packing in food, expensive, time consuming, you lose all semblance of quality control. And that also affects customer service and customer oriented. Um, rock. So we did it when we built it.

It was, it was a lot. It's amazing. And so, and it must have felt like two businesses, right? Like one is the marketing business growth side, and then you've literally got this second, like fulfillment business. Yeah. It was so everybody's seen the office and you know that there's a big separation between the office and the warehouse, even though they're in the same building.

We definitely had that complex where we had our engineering side, our web product, our marketing, our big office in New York City, and then we had all of the Filman centers. Yeah. Yeah. And what about, I always like to say to every entrepreneur, like social media and stuff, you see the highlight reel, the good, but there's a lot of BS on the way and failure every day and stuff. So like with the one nightmare with logistics and that you will always remember or one story. There are like almost too many. Yeah. I mean, yeah.

So I could tell something anecdotal and kind of funny. Sure. So one customer called up or sent an email, I can't remember, and she was convinced that there was the tail of a rodent in her box. When we were all freaked out. So she sent this like flurry cell phone picture, 15 year old self-photographed, not a great picture. And we're like, oh my God, that's so horrible. And I think our ops manager, his name was Gary Kweegman, got on an airplane, flew out to her

house, was like so apologetic, wanted to inspect the beast and opened it up. And it was and it was a beetroot. Oh, cool. Yeah, so stuff like that, you can just imagine tales like that and just like those sufferings and just a lot of boxes in transit all the time. So a lot of funny stories and stressful times, like running out of an ingredient and halfway through packing boxes or something like that, power outages, you know, natural disasters, all kinds of stuff. But ultimately-

Fresh food. I was just gonna say fresh food is like a different game. You know, I remember this when I worked, you know, did the ads for this. I was doing the marketing for this meal prep company and they weren't obviously close to your size, but even that, it's just like listening to it all. I'm like, I'm glad I'm not in this business.

I will say when you, when you're working with people like that, the ops team, the marketing team, you know, my, you know, like my co-founder, Elia, who is our CTO, you build these kinds of friendships that are just like, you know, these are my guys for life, you know. We're just so, so close and connected even today. And it's nice to have had gone through that experience with like-minded folks. Yeah. And I mean, one thing that I think entrepreneurs don't realize too is like, if something goes wrong with a customer, it's like you figure it out and fix it for them. But when you get to a company your size, it's like if there really was a rat like tail in a box, right?

And then the PR gets it, it's like the end of your business all of a sudden sort of level. Right? So. And moments like that. In reality, something happened. People tend to be pretty forgiving as long as they poison somebody or whatever. But we were hyper vigilant around that kind of stuff. We were young and we wanted everything to be the best.

So we put a lot of work into it, but there were a few funny stories like that along the way. Yeah, I can imagine. So let's talk about the last couple of questions around this. Like, how was it more near the time where you took it public or near the end of your journey? And then, what are you doing now? Yeah. So folks looking to exit a company, whether it's a sale or IPO, a lot of the business

becomes oriented around readiness for sale or IPO, which includes a lot of internal audit, a lot of systems. At one point, we were running hundreds of millions of dollars of revenue on QuickBooks, like putting an ERP in place. I'm like, oh, it's for the MedSuite. MedSuite is an easy today, but it was really difficult back then, especially when you're transferring over that much receivable and billing and complex systems. So I would say, you know, there are challenges associated with that. Any entrepreneurs out there

listening, integrate your CRM and your ERP early. Don't do what we did. And, you know, the culture changes a little bit around that. Certainly, there excitement around those events, but it's very important to not lose creativity and engagement and innovation around product because many companies get to that point probably including Blue Apron and fail to innovate at the speed that they need to as they did when they were early because they're becoming more conservative. They're worried. They're getting ready for this financial event. And the financial event should not define the company. The company's innovation should define the company. So I'd say that that is, you know, was an area, the financial stuff was

an area of focus. I think, you I think in hindsight, it's important to make sure the creativity and product innovation remain at the most important, the highest level. Yeah, especially because I've sold and nowhere at this scale, but often, even myself, it's like when the LOIs, you know, and then you're going through the investigation phase and audit phase, I almost felt myself like get lazy with that business because I'm like, I'm about and then, but then it always takes way longer or the deal falls through and now you're like, Oh crap. Right. So that's a great,

great lot of deals have flown through in the last quarter because you get numbers because you're focused on the event. So that happens more than people think. I mean, it's way harder to sell than most people realize. Even me selling businesses for millions, not billions, it's like there's so much that goes into it that you don't realize that it is a big distraction. Absolutely. Yeah. And of course, lawyers are taking... They're the only ones who are profitable and involved in it, for sure. Yeah. That's always the way with lawyers, right?

They're the only ones that ever win. All right. So what about, how was it like after you let this thing you've built, now you've obviously been successful, big exit, how did you feel and what was next for you? Yeah, so I've, I've explored a very, a variety of opportunities in, in food. I'm currently, I'm in my lab today as our 3d printers in the background. I'm, I'm, I'm excited now having worked in a world of packaging and seen so much impact, you know, from an environmental standpoint, a

consumer standpoint. Obviously, I don't know if you've been following the news on, you know, now Friedman's list plastic list, great, another great author, and we just have plastic in everything. And the news last week is that adults have the amount of plastic, the size of like, you know, a plastic spoon in our brains, all of us, and that's just scary. So we get that plastic out of our food. How do we get it out of our food system?

How do we get it out of our beverage containers, which are the worst leakers of microplastics in our brains? So I'm working on a product now, and I'll just give you, I know that some of the people at home can't see it, but we have a little metal pot instead of a plastic bottle. And this is a water bottle. This is what I'm showing now is glass, but we'll have a glass and a metal version.

And this is really cool. This guy, this fits into there and clicks in. Wow. And basically you can drink your iced tea, you can drink your beverages, you can drink your electrolyte solution in a pod now. So this IP is coming to market later this year. It's called Capsule with a K. Nice.

Even my favorite. Did you get the red intentionally or was that by accident? It's red for you. Yeah, good. I love it. I love it. We can match it. I can just hold this up and our screens match.

Yeah, yeah. That's great. So how long have you been working on that? So this is about five years of patent writing and submission to the US Patent Office. We have about a dozen international patents. It's really around dispensing concentrated solution in a pod, which can be anything from coffee, tea, to electrolysis, hydration, whatever. Yeah. I mean, I'm big in school and I do triathlon. I have hundreds of little packets, right? Of electrolyte and stuff. Yeah, I can really see that taking off.

It's awesome. So that's really cool. So last couple of questions as we wrap up today just around entrepreneurship, I always try and ask these. In general, what was your biggest like, wow, moment I made it, or like biggest win you're proud of in business? It's an interesting question.

You know, I, I think when you're in it and you're really in it, you're, you, you never in your head feel like you made it, even though you might be millions of people, even though celebrities might be talking about it every week in the, in the news, you never really feel that. And that's the weirdest thing. I guess now in retrospect, seeing the impact that that kind of cooking had on such a huge amount of people and meeting kids who are now adults who were children when they started cooking and they learned to cook through Blue Apron, I can now take a step back and appreciate what we did for the food system and how much good

became of teaching a new generation to cook. But I think when you're really in the weeds, it's hard to really- Well, I think it's hard. Yeah, I think it's hard because it comes back to what I said because at the same time as that you got someone ringing you saying they got a rat's tail in their box. You got an employee suing you, right? You've got this, you know, this 10 other things happening with 10 of your other employees,

the warehouse messed up a shipping order, and you've got the finance guy wants a million things over here, the attorney needs answers to all these. You go, like, that's what people don't realize, I think, for especially a business your size, I imagine. Like, they all run simultaneously together. Yeah, and in a new big company, it doesn't matter what you're doing. Everything is trying to break your business. Everything, in every department all the time. So I think it later,

you know, once businesses are more mature, it's not so crazy, but in a growing enterprise, it's very hard to appreciate the moments. I will say the thing that we did appreciate was, and this is really important, culture. We had such a good culture in the moments that we had the team outings, the team events, the team meetings, the team is really the company. Product is in the company to be clear, the team and the people are the company. That's everything we've talked about today is irrelevant without the human beings behind it.

Yep. How many stacks did you get up to? I mean, total, I think in our peak, like 6,000, but, you know, the, the core folks who are like the early ride or die people, you know, the couple hundred folks who were, you know, just there for the entire time, um, they were a special breed and almost every one of them today is either a CEO or COO or founder of another company. That's really cool.

Cool. Well, last couple of questions, a similar entrepreneurial question. I always ask if you could go back in a time machine to your younger self and tell yourself something, what would be more about how, and I think a lot of more mature executives say, give this answer, but I think it's really true, calm down, work on your messaging, work on your communication, listen to people more. You can still push hard and you can still, I think, drive people to be successful.

But there are more effective ways of doing that than losing your temper or shouting or having things done now. I just think communication would have been more helpful for me as a younger guy. Good. Love it. And last question, where do people find more about you? Learn more about these stories, the new company and ventures? How can they find you?

I'd say look forward to Capsule. Drinkcapsule.com is going to be coming out with a K. Drinkcapsule.com is going to be the new product and we're going to change the way people reduce plastic and drink their electrolyte. Love it. Matt, it's been a pleasure. I know I could have asked you a hundred more questions. So maybe I have to get you back on down the line when this new venture really is fully live and we'll have to see how it grows and so much cross-views for that

across so many areas, right? So awesome and super awesome to hear the story and just a small spec of the story. So yeah, really appreciate you coming on. Thanks so much, Rudy. Really appreciate it. Cool. Great to be here. Thanks. All right, guys, that's a wrap. Keep living the red life and I'll see you all soon. Take care.