The Pomp Podcast - #454: Rafael Ilishayev on Scaling a Consumer Business

Episode Date: December 17, 2020

Rafael Ilishayev is a Co-Founder and Co-CEO of goPuff. A first-generation immigrant, Mr. Ilishayev grew up in an entrepreneurial family in the New York metro area. In this conversation, we discuss the instant needs market, managing a fast growing business, how he raised $1+ billion while operating fairly quietly, the COVID-19 impact, and where GoPuff will be in 20 years. ======================= Want to sell your wonderful internet business? Tiny partners with founders to give them quick, straightforward exits that protect their team and culture. We’ll make an offer within a week, close the deal within a month, and keep your business operating for the long term. Get in touch at tinycapital.com, and we’ll let you know within a couple of days. http://www.tinycapital.com ======================= LVL is a new crypto investing platform that I'm an investor in. They allow anyone to trade an unlimited number of times per month for free. They have no trading fees and no spreads in the spot market. If you buy or sell more than $500 in Bitcoin on any exchange, you're spending too much on trading fees. Use LVL to save money and trade as many times you want. https://lvl.co/pomp ======================= Did you know only 1% of day traders actually turn a profit? So why are so many of us mistaking picking stocks for serious investing? You can’t control the markets, but you can control your risks. So how do billionaire investors control their risk? They invest in blue-chip art. If that sounds unusual to you, you’re not alone. But the ultra-wealthy have been investing in art for centuries. And since 2000, art has outperformed the S&P by an incredible 180%. Just a few years ago, a single work sold for $450 million! Imagine...Being able to invest in the very same paintings as millionaires and billionaires, at a fraction of the cost. Masterworks.io is an exclusive platform that makes it as easy as trading stocks online. And the best part is: you don’t need to know anything about art. Their experts will create a custom portfolio to meet your investment needs. With Masterworks.io you don’t have to choose between big risks and big returns. Sign up today, select PODCAST and you can skip the 70,000 waitlist to get first dibs. Just go to www.masterworks.io and select PODCAST.  =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Rafael Ilishaev is a co-founder and co-CEO of GoPuff. He's a first-generation immigrant that grew up in an entrepreneurial family in the New York metro area. In this conversation, we discussed the instant needs market, managing a fast-growing business, how he raised over $1 billion by operating fairly quietly, the COVID-19 impact, and where GoPuff will be in 20 years. I really enjoyed this conversation with Rafael, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors.

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All right, let's get into this episode. I hope you guys enjoy this one. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by POMP or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by POMP

as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Rafael here with me. Dude, thank you so much for doing this. Pom, thanks for having me, man. Absolutely. Let's just get started with your background. How did you and your co-founder end up starting the company and where were you born and just why? Yeah, our origin story starts even before you and I met, right? Both of us are first generation Americans. Our parents came to this country looking for a better life. Both of my

parents are entrepreneurs, right? They started their own business. My mom was in the pharmacy business and started her own pharmacy. My dad was in the restaurant business. And both for you, Kira and I, right? Ever since we were kids, we were working with our parents, right? Doing whatever it took like 10 11 12 years old we had very unorthodox uh upbringings in terms of uh just really really getting us encompassed uh with business and uh being really customer centric customer obsessed um and delivering kind of financial responsibility along the way so my first day of college uh karen and i went to drexel i moved from north jersey he moved from south jersey which was a shorter commute from him and uh you know we met each other the

the very first day and then immediately connected right we immediately connected because we shared the same values we really understood one another we worked together since we were kids and uh it's it's something that just literally made sense for us than day one and we recognized that you know by our second year that there's a pretty glaring uh need in the market right the in-store experience uh left a lot to be desired right no one no one wanted to go uh in-store in college and And on-demand delivery services, or what we call these third-party platforms, were anything but on-demand, right? They relied on the traditional infrastructure of existing businesses to operate, which are

good for it to scale quickly, but not really great for consumers or financial feasibility. So we did something, you know, kind of against conventional wisdom. We said, if we're going to make this work and kind of make money alongside of it, we're going to need to vertically integrate. We're going to need to own all the inventory and deliver to end consumers from our own micro-fulfillment centers, which at the time was not the best idea, right? People were like, Uber and Airbnb are starting to become very big. They're like, you can't go on an asset-heavy model.

It doesn't work. But for us, it just didn't make sense. It didn't make sense to run any other model. So we did things a little differently than kind of most day-area startups, right? For the first two years, we hadn't raised any money. We operated a profitable business from day one. And then two years later, after we expanded to five cities and like four additional verticals outside of like the snack and drink vertical we launched in, we raised our first our first dollars, our first BC dollars, which was the first dollars into the business. And then we went into complete stealth mode. So for three and a half, four years, no PR, no outside announcing, no fundraising announcements.

We raised four rounds kind of in between those four years. But we were just aggressively expanding. We went from opening up like four or five buildings a year to opening up 15 or 20 buildings a month. And we expanded to new categories. No secret we started as a college delivery service. But we expanded to over-the-counter medication and household and grocery and pet and baby and all these incremental new categories that kind of continue to grow. And just this past year, we kind of started telling our story to the world. We started telling, you know, here we are servicing 500 major U.S. cities.

This BevMo acquisition gives us access to the only state we don't really service today. And it gives us access in a pretty massive way. And we're just excited for what the future has in store for us. So let's go back to the beginning. Why start a business rather than kind of have one of the fleeting moments? I feel like everyone in college is always like, man, you know, I wish X, whatever that thing is, uh, you guys took it further and actually started the business. Was it the upbringing? Was it just, Hey, I always knew I wanted to be an entrepreneur. Like what was the reasoning behind actually wanting to start the business? that too i think uh both our parents both insurance parents were kind of giving us the confidence really early on as kids and instilling us all those values uh to kind of get off the

ground uh you know he actually started even another startup earlier he's 17 years old he had a company called qualified gems where he was selling jewelry online he was doing a couple million dollars before he entered college. So he had all this confidence and his motivation to go solve this problem. Fortunately for us, the problem that we were solving was in the hundreds of billions in the total addressable market when we started, now in the multi-trillions with all the incremental categories that we've entered into. So not only did we solve a problem that was really important for our own use case to solve, we solved a problem that was important for many, many others to solve as well. Got it. And so the idea of vertical integration,

you already mentioned it, like every business in the world over the last 10 years has been obsessed with asset light, asset light. How do I build a marketplace, right? How do I do on-demand asset light? You took this opposite approach of how do we vertically integrate? How do we own the inventory? What did you feel like you knew that other people were missing or why go kind of against the grain and do something that everyone else was really optimizing not to do? this uh pump this is a hard business right here this is uh you know opening up warehouses getting liquor licenses doing like this is like the hard way of expanding into uh to what we call this instant needs category uh but ultimately it's it's not like an easy

thing to scale so a lot of people just kind of push it to the side it's like well i don't want to be in the business of opening up micro fulfillment centers and stocking inventory worrying about supply chain and logistics and then opening up more massive distribution centers to support these things it's a lot easier to scale especially in the beginning when you don't have to deal with those things but as a byproduct right these third-party platforms have to monetize the gig economy right so make the spread of whatever they charge uh the customer to what uh the driver's take rate is for us you know like everything we draw we charge in delivery fees which is a flat that 195 plus the tip is a direct cost to the driver. We have no influence on the service or

delivery fees. We make our money on the gross margin of the goods. And fortunately for us in our space and the price concept we're looking at, those gross margins are very, very healthy. So our unit economics as a byproduct are super strong. Got it. And what was the decision behind basically not talking to anyone about any of this for three or four years, right? You, again, kind of bucked the trend. Everyone else wants to brag about every single fundraising round. Literally, they wake up in the morning and they issue a press release talking about how great they are. You did the exact opposite. Why? You know, it kind of goes back, right, to our origin story and how fortunate we were to have

really great coaches around us from day one. Like everyone that we had and to this day that coach us and you know make myself and you cheer better kind of continue to instill this customer the customer is the only thing that matters mindset nothing else matters and like as we look at you know the value of doing a press release over a fundraise that we just did right it's it was more ego driven than it was consumer driven so it's like the reason to do it is just to as you mentioned right to tell the world how great you are which is nothing but bad right it doesn't do any it It doesn't provide any real value, right? For us, right, the reason we raised the money

was to get GoPro more available nationally faster, right? Make more products available, right? And create more of these moments that were important for our customers. So ultimately, you know, it did nothing but drive, you know, what we thought would drive ego. So we said, there's no reason to do that. We're going to put the customer truly first.

Then this is something that we're just not going to stand behind. Got it. And so how is the business going so far? you mentioned a couple of metrics. I don't know what you've shared publicly, but how much capital have you raised? Who'd you raise it from? And how large has the business gotten to today? Yeah. So the business is growing very, very fast. All right. We're opening, like I said, we're opening roughly 15 to 20 of these micro-fulfillment centers a month. We're

expanding very, very rapidly in the West Coast, in New York City, which will be a fun launch in the first half of next year, New Orleans and Las Vegas. Those are the only metros that we're not in, in the U.S. today. And we have an aggressive look at the suburbs for next year as well. We service 500 major U.S. cities today. And the moments that we expanded into, right?

I alluded to them earlier, this over-the-counter medication category, this household category, this pet and baby. I never thought seven years ago when we started this business that we'd be an authority in the baby category. know but here we are right you know growing hundreds and hundreds of percent year over year uh in a category that's very very new and we're looking to expand out even more right we're

looking to add even more into that space in terms of uh uh like fundraising we raised just shy of one and a half billion dollars it allowed us to kind of remain aggressive and continue to open up uh these uh these licenses and and facilities very very quickly but i'll tell you like while we did that all of that we really had financial visibility and financial acumen in mind as kind of step one so if you look at our top markets today so markets that are open for over 18 months a hundred percent of those markets are profitable so it's like we built a model that's really repeatable we really focused on nailing this business model early on right when we were profitable for our first two years and then scaling it and then exploding it instead of

of kind of building on top of a business model that was generating losses. Got it. And so when you think through kind of the business model today, why go after these micro-fulfillment centers and kind of the vertical integration could be done many, many different ways, right? You even see maybe like a Whole Foods in kind of a really grand scale. Now they're testing in New York City, the idea of turning their stores into warehouses and really optimizing for online delivery. What is kind of the strategy? Is it just that you're more nimble? You can kind of service a smaller radius around a micro-fulfillment center, but you can have more of them and therefore it cuts down on time and cost? Or just walk me through kind of why micro-fulfillment

rather than maybe just 10 across the country as the strategy. So there's a number of reasons behind it. One of the things that's really important is being able to own the entire consumer experience end to end. So when you mess up, right, it's your own fault. It's not a delivery partner uh that you know or or a merchant partner that uh kind of caused the break in the consumer experience i think two uh and really important is speed right you want to be able to place these things very very close to to uh to your end customers we've gotten really good at mapping out the delivery zones outside these micro fulfillment centers and how many micro fulfillment centers we need per city you know some cities you know like a like a dallas has like 15 or 16

micro-fulfillment centers today to service one given metro, which is Plano and all those surrounding areas. But ultimately for us, you got to optimize to be able to, one, be there where your customers are, right? And two, be able to deliver very, very quickly and own the entire experience end-to-end. In terms of your marginal structure, your marginal structure, again, depends on, you know, what kind of goods you sell and, you know, how well you buy to well, how well you sell. And, you know, right now we're very, very copped to what people typically see in store, uh, like in, you know, whatever your local CVS or your Walgreens. So it's typical to what they see inside of an in-store experience, but still with a very, very healthy margin profile.

Got it. And walk me through, like, what does a micro fulfillment center entail? Is this a warehouse that's kind of on the edge of the city and people are going in and out, but it looks kind of like a, what people would envision as like an Amazon warehouse? Is it a, you know, second story somewhere? And literally you've got delivery drivers running up and downstairs. Like what exactly does a micro fulfillment center entail? Yeah. So our average MFC is roughly 8,000 square feet. Um, it's usually in the middle of, uh, of a city, right? You want to be as close to the customer as possible, right? So like we have some in the outskirts to serve the service like the suburbs. Uh, but predominantly these MFCs are in the middle of, of us cities during

a ground level uh they have you know a way to get loading uh they have liquor liquor inabilities in them so like in some in some cities uh where regulatory allows it's inside the mfc and other cities it's right next to an mfc so we'll have a liquor store uh and ultimately you know we position these things to be as close to the customer and to be able to continue to expand on these moments that are important for our customers right next year we're going to be launching quite a few new verticals that we're really excited about. And we want to make sure that as we launch these new verticals, we can remain a one-stop shop for our customers. So continuing to kind of use vertical integration to get into new categories that are important

for our customers. Got it. Walk me through the decision as to when you enter a new market. How do you evaluate which markets are the ones to enter? And kind of sequentially, where do you go? Yeah, so we built something we call GMOT. It's a GoPub market optimization tool. I think our team loves acronyms here. But essentially, it's a model that uses kind of all the internal data, what we call intent to purchase. So folks that are getting onto the platform, trying to order GoPub, but it's giving them a message that, uh, uh, that they can't order, uh, plus a bunch of tapestry tools. So lookalikes of like, what does a, what does a GoPub customer order and look like today versus what are the lookalikes all over the country? And then they'll develop heat maps on where to go. And I can tell you, like, as, uh, we've grown and as our customer base has developed, those heat maps and those high, like high areas have changed dramatically, right? like our first two years, it was, you know, predominantly college students today, you know,

sub 15% of our user base is college. So it, the, the user base has grown tremendously. So it's, uh, it, it kind of, we utilize that data and we use that regression model to then map where's the next sites to enter into. Got it. And then walk me through the same kind of analysis for new product categories, right? When you want to add on, uh, some of these verticals, how do you evaluate which ones are the next ones you're going to add? Yeah, we go back to the customer, right? Like our number one way that we look at it, right? We obviously have all the market data. But we'll look at like failed search results, right? Like something really simple. And like, hey, what are people searching for versus, you know, the results are not populating well. And sometimes that means we're missing a certain skew that people really, really want that we don't carry. versus like, you know, we're missing a whole category of goods that we need to enter into in a very, very big way. Like, you know, before we were in the baby category, a top five search

term was diapers, right? And we're like, you know, you know, do we really want to get into the baby space? But then ultimately we let the customer kind of dictate for us, right? With the space we need to be in and how do we continue to expand in this instant needs category. So, you know, ultimately for us, we take a customer first approach on category expansion and how do we believe it to be, you know, an important strategy of what we do. Absolutely. Walk me through the BevMo acquisition in terms of kind of how that came together and why that was so attractive for you guys. You know, BevMo is really, really interesting. One, GoPub, as much as we've expanded, we have not expanded into the fifth largest economy at all. We were not in California

in any way. And when we evaluated kind of the California expansion, it's either we continue to expand the way that we expanded and the regulatory framework in California for alcohol is very, very complicated. It's kind of acquire liquor licenses, or we acquire a locally beloved brand that already has all the infrastructure for us to aggressively enter the state. And there's really no comp to bevmo bevmo was a one-of-a-kind asset in uh in california that is really really loved by the customers that it ends as four million uh customers in their loyalty base and uh you know the combination of that their leadership team and the infrastructure that we inherited to be able to kind of enable uh gopuff's micro fulfillment strategy within a bevmo uh

really was uh with the decision to enter and ultimately give gopuff uh to all of our californian customers. I love that reasoning. In terms of the actual business you're in, most people would think of this as, oh, they do food delivery or they do goods delivery. You keep using the terminology instant needs. Talk through what exactly does that mean to you and kind of why do you view it that way rather than just on-demand delivery or whatever other terminology others would use? Yeah, that's a great question, Pomp. For us, we thought about what are immediate everyday needs that people need and again it started off as snacks and drinks right that was the the 2013 version of uh of instant needs and it kept expanding so rapidly into the other

categories that people want so like even though that we play in this instant needs category of continuing to deliver immediate everyday essentials uh to our customers we're going to continue to expand and deliver things from a one-stop shop basis so like what's important to our customers and what our customers keep telling us is not only to be able to get these products, but to be able to get these products bundled up into one order. So yeah, I am in the mood for ice cream,

but I also want toilet paper and laundry detergent delivered to me, right? And for that use case, that's the immediate everyday needs that's important for them. So ultimately, we're going to continue to expand to those use cases that are important for us.

Again, utilizing our business model of vertical integration to deliver it inside of a fulfillment center. So we don't have any plans to kind of like, you know, partner, go in store, pick up that incremental need that someone wants and then deliver it to them. We're going to continue to add them within our NFCs and deliver it to our consumers. Absolutely. And COVID-19 obviously had this massive impact in just society in general. Everyone had to go sit at home. I'm assuming that that was a massive

tailwind to your business. What did you see in terms of kind of earlier this year and into the end of the year with a consumer, either behavior changes or just a kind of affinity for what you're doing? What a ride 2020 has been, huh? You say that like somebody who spent many nights not sleeping. Yeah. Yeah. That was, uh, it was, it was, it was definitely, um, definitely a lot of learnings, right? So our business was, was growing triple digits year over year, uh, pre COVID, right? We were already kind of at a major accelerant. The business was developing and then COVID was like an incremental shot of adrenaline for us, right? All these new categories that we entered into saw growths, you know, up to like 1000% year over year, right? And some of our

newer categories and development of them, especially kind of in the early months of COVID. And even now, right, we're still seeing massive, massive growth year over year, but it was being able to adapt to that right like we were one of the first uh uh delivery uh companies to to enable no contact delivery we provided ppe masks like i'm talking about really early like in march uh our tech team i don't think slept in the month of april just developing tools uh to really make sure that our drivers operations associates and our customers were safe and we frankly did the best we could we we worked around the clock to really make sure that everyone was safe and to be able to continue to deliver an amazing experience to our customer. And I think

it really is a testament to our team, how everyone came together, you know, especially the folks on the ground, especially our driver partners, especially our OAs that were kind of on the ground, making sure the customers didn't have an interruption to service. Yeah. As you've built this, you know, COVID-19 obviously is an accelerant, but you'd already built a great business. You're a relatively young guy. So is your co-founder, obviously. How have the two of you kind of navigated building a large scalable business, raising, you know, over a billion dollars and kind of just really, I think, taking a home run swing, if you will, at an industry that one, has a lot of competition, but also two, is very obvious to people, whoever wins,

there will be incredible kind of financial rewards and kind of benefit to. How do you navigate that as a young, you know, first time founder? And I put first time in kind of quotes in terms of just like the first time building a really scalable technology-enabled business? Yep. You know, you definitely learned that you can't do it by yourself, right? We've, you know, internally and externally,

we surrounded ourselves with people that, you know, we call it 10Xing, right? The business is growing 3X year over year. You have to be 10Xing yourself, right? That starts with kind of all the coaches that we have around us. We've had some really, really amazing people that have been able to 10X myself

and you cure as human beings, uh kind of year over year for the last seven years and have taken us to awesome heights and our leadership team right we we know what we know and we know what we don't know we've hired a lot of really amazing people from all over the world uh to come in and help us really scale this business whether it's figuring out kind of the operational functions of this business the supply chain functions of this business the marketing you know technology product merchandising the whole nine yards right we have some of the best specialists from all over the world uh that are helping us solve these problems day in and day out and you kind of learn along the way but you

know in our opinion right the secret sauce is people and really making sure that you know whether again whether it's a tech issue or an operational process issue it comes down to like how good are your humans how well do they culturally match with you and then how do you scale you know our business is not an easy business to figure out we have a lot of moving parts We have this WMS that we built from scratch that powers our micro-fulfillment centers and the bidding and batching technology and then the routing technology to get to the driver. All of it had to be built one step at a time, but it really came down to the quality, both from a value match and technical expertise perspective of the people that we brought. Got it. And you've mentioned kind of coaches a couple of times. Are these investors who are acting as coaches?

Are they like executive coaches? Are they just people on an advisory board? Unpack that a little bit for me. Yeah, I mean, it's more like it's become, you know, it started as something formal and it's become something that, you know, like I'll give you an example. You know, one of the guys who's taught me

so much of what I know about merchandising is this guy, Tom Velios is the co-founder of a five below a company in the, in the East coast. And, uh, you know, he scaled three massive businesses in his lifetime. Uh, he's, I think Tom is 30 or 35 years older than me. And one of my closest friends and, uh, has taught me a lot to this day has continued to teach me a lot. And I have an analog to, to Tom in, uh, many different spaces in the business, whether it's kind of the BD function or the investment relations function that helped like, again, 10X, Ecure, and I, right? Me and my co-founder are like a unit. We're both two halves of a single CEO. And ultimately, all these people that we've gotten

on board, both investor and non-investor, have really helped myself in each scale. Yeah, I love that. In terms of the funding that you guys just took in, what are you planning to do with the money? you know for us it's like any other fundraiser make gopuff uh more available to customers uh all over uh the country we have this vision pop of being the world's go-to solution for immediate everyday needs right before we could be the world's go-to solution we've got to be us's go-to solution and uh we have some work to do we have some uh some kind of a heavy lifting to do in california uh from an integration perspective that's starting immediately um and we have three

US markets that we're not in. We're not in New York, we're not in Las Vegas, and we're not in New Orleans. We're planning to fix that in the next couple of months as well. So ultimately for us, we want to aggressively focus on the US this upcoming year, and then go into achieving a broader world's go-to solution as we then start achieving the US go-to solution first. What's the thing that you could envision five or 10 years from now, you guys being involved in in terms of whether it's a market category or geography that would be the most surprising to people today? Oh, God. I think services would be something that's really interesting. We're testing a lot of things with our CBG partners today. I don't want to divulge too

much, but that are really, really exciting. It utilizes vertical and utilizes our model, but it's very different than how people think about GoPuff today. And it's something that we're really, really excited about. We'll be piloting in the next couple of quarters. But that along with three or four, at least three new verticals launching in the first half of next year, stuff that we're really, really excited about. Got it.

As the CEO, you basically sit there and you worry about three things. You worry that you've got enough money in the bank. You worry about all the things that you're doing well and then all the threats to the business. What do you see as the biggest threats to the business in terms of, you know, the next 12 to 18 months that kind of keep you up at night or at least you're thinking about? You know, I used to, you realize it's all the same thing, right? Like, you know, six years ago, I'd be like, how are we going to scale the operations portion of this business or the supply chain function? Or how are we going to get engineering leadership in Philadelphia and like really scale that and then productly?

But then you realize it's all like, you know, people on the execution base, right? it's like our like can we out execute everyone else can we get the right folks in place right like again lessons learned over seven years a bad hire really sets you back months uh so like to this day you know you care and i still every interview every single hq employee right it's an entire weekend right i'm going back and forth and really really honing in and making sure that this person that's joining in is the right culture fit uh so for us it's all about like execution risks like We're two pretty aggressive co-founders that are moving very, very fast. And our ability to remain aggressive and impress them to accelerate them more is our biggest opportunity and risk in this business.

How has your relationship with your co-founder changed over time? People always talk about, you have the quintessential story, which I think people love. It's like, hey, we met in college first day. It was basically, we knew that we were going to be friends. and now years later, you've built this massive business together, but it's not the same relationship, I'm assuming. So how has that evolved over time?

You know, you're pretty different, right? You know, you cure is a natural introvert who's becoming more, who's become more extroverted over the years. I'm an extrovert who's become more introverted over the years. But I'd be hard pressed to find two other people that have internal values that are more aligned than you care about, right?

Like, we spend 17 hours a day together, which my fiance thinks is a little weird, but, you know, it is what it is, right? Like, we're here in Florida. We're in the same house together. We live in the same apartment building. We just bought two houses in Philadelphia that are right next to each other. Like, we are very, very, very close. Closer than I think I know anyone else to be. And, you know, you can't get into a lot of arguments with other people.

We're very passionate when it comes to our customers. But we very, very rarely argue with one another because we're so aligned in how we see the world and then ultimately how we see this business developing. So I think the biggest gift that college gave me was Ecure. It wasn't like this education, go up, everything is amazing. But the foundation was us finding each other and then being able to be so aligned to create such a great business and be able to have the privilege of scaling it. So is there a story that kind of highlights one time where you guys did disagree and how you were able to kind of figure out where the common ground was? Because it's interesting. I've got four younger brothers, and I'm assuming that your relationship with him is very similar to almost a brother where you get in arguments, but you always know at the end, like, hey, love you, and tomorrow we're going to be fine. Any stories there that kind of highlight how that's played out for you guys? yeah um you know we uh we entered new york uh as our state market before we raised any money and um you know we were we're feeling good about ourselves right we're feeling good that we figured

out this model we're figuring good that we figured out product market fit you know it's kind of like a high almost right like everything is going right and then something goes terribly wrong right uh we entered new york where we were grossly unprepared to be in new york we were the company was seven people um it was it was pre-funding we actually just we're just raising was the middle of us raising around and we desperately wanted to make new york work right and new york just required technology and capabilities the 2014 year old versions of ourselves just didn't have and you know i was very stubborn about making it work i was very stubborn because we had so much customers and we were making work and our customers loved us

it just we're by by the point we decided to shut it down and now reopen it years later uh we had already been in 14 markets but new york was taking more time than the other 13 combined together and each are kind of like was like i don't know why we're doing this i don't know why we continue to hit our head against the wall we're not able to scale it's really a crutch and uh yeah it kind of stands out as a place where it's like we kind of went at each other and like we got to be there and then ultimately he was right he was right um you know leaving new york was the best thing that we did as much as it pains me because i i grew up in brooklyn uh but you know ultimately now we're so much better prepared right we're i don't even recognize

the 2014 year old version of uh of our company uh but we were grossly under unprepared to enter a market and i think if we continue to bang against the head against the wall in york we would have been in a much different position today so it's like in that case two heads is much better than won. We kind of came together. We hashed it out. Ultimately, I think made the best decision for the business and now can enter New York in a much more aggressive fashion. How was fundraising during kind of this pandemic era? I'm assuming most of it was over Zoom and was it any different than the other fundraising rounds that you guys have done or anything worth kind of talking about there so for us uh this latest round uh was kind of co-led by an existing investor and a new

investor for the existing investors right you know them very well and they're like kind of seeing how the business is transforming they're like i'm gonna like holy shit right this is literally on fire growing so much uh kind of not month or a month but week over week uh and we got a lot of action from from other folks or a lot of people were noticing how much this business was growing and for us you know just like you know employees right it's really important that you really culturally vibe with the person that that's going to be with you right raising money is like a marriage that you cannot divorce so you got to be really certain that like these people that you're bringing into into the fold uh really have the same vision for the organization as you do and

for us d1 had that same vision right uh dan sonheim's great great guy akira was was spending a lot of time with them. And ultimately for us, that was predominantly like a Zoom and phone call thing, but we still had to be sure that these are our guys for scale. And I think they enjoyed the performance that we've had over the last couple of years and the kind of model that we built. But we had a lot of guys on the table, ultimately being very, very selective on who we wanted to bring into the fold. What's the number one thing that you've learned since you started the business? right? I'm sure there's a million things, but in your mind, like what's like the thing that sticks out as, uh, this was either the most important lesson, the thing that surprised

me the most from when I started to today. Yeah. You know, young founder, I think we try to do it all right. Like you try to do everything. Uh, yeah, I still only sleep like five, six hours a night, right? Like it used to be a lot less, but you know, we're still seven days a week we care about oh we this is all we really know uh but if we started hiring earlier and started really bringing on the talent that we brought on like 2015 16 and beyond like two years prior i think we would have been even more ahead so like again going back to you know the thing that i learned biggest lesson was was all around people and the kind of people that you bring on board and really making sure culturally you're building the right organization so we spend a lot

of time on kind of rethinking that rethinking about you know what our core values look like what is the personality of like you know we call it a team-oriented super athlete right and the super athlete became table stakes in this team or there's so many lessons learned kind of along the way from a cultural standpoint but it's what helps you kind of move at warp speed right it's what helps you launch business units that take others nine months and 30 dates. And ultimately getting those right group of individuals was the most painful lesson I think we learned early on, because I think that organization would have been much bigger than what it is

today. You know, no regrets, right? All learnings and kind of meaningful steps forward, but the secret sauce is definitely people. As you've experienced kind of COVID, there's been lots of benefits to the business, but obviously it kind of forced everyone home. Were there changes to the culture or things that you guys did to, to kind of ensure that everything kind of ran the way that you wanted it to

run, even though people weren't coming into the office as often? Yeah. So ultimately we continue to do the things that were, were important for, for GoPop, right? Every week me and you care addressed the whole company. We made sure we over indexed in, in team meetings. So you care and I were, were present in all those things. But it really came down to the leadership we had in the org as a whole and really, really making sure we're over aligned with our leadership team. So on the leadership team basis, we went from, you know, having one on ones, obviously, with all of our leaders every single week and kind of on a on a less formal basis to meeting with the LT team every single day.

Right. There's there's time on the on the calendar for one hour every single day to really make sure we're overly aligned, we're overly transparent, we're overly thinking about it. And then with the whole org every single Friday. So we spend a lot of time on really making sure we're over-communicated. It's not like the same thing where you can just walk in the head of your BD's office, you know, chat aggressively with him for 10 minutes and leave, right? You got to really make sure you're over-correcting for that. So that's what we did. And, you know, even on the non-business side, we recognized that as GoPub was doing really

well, others weren't, right? So we partnered with dozens and dozens of local businesses, putting their products into GoPuff, some of which we heard from their owners later would not have survived without GoPuff. And it was a really amazing feeling internally to not, one, give locally beloved products to the customers we love, but also help organizations that were kind of feeling the other side of the pandemic and their business affected in a very adverse way. Where did the name GoPuff come from? I wish I could tell you a really remarkable story. It's not as exciting, right? It's a name that really intrigued interest among our friends in college. And I got to tell you, it's a name that our customers love today.

We talk a lot about it in our customers about the name and the transition of the name. And today we have millions of active users that are using the platform. And it's a name that our customers really love and a name that really intrigues them. So ultimately it's, it's something that we thought of in college, right? Again, no secret. This business started in college, but it's a name that attracts a whole host of new customers today. Again, less than 15% of our user base today is college.

The most important question I'm going to ask you today is are you still having fun? I think I'm having more fun now than ever before, right? I can't, I can't imagine doing anything else, right? Again, I have no other hobbies. This is it for me. I love it. I'm doing it with another human that I love.

He cures really like a brother to me. And the kind of folks that we have on board, I'd be hard-pressed to find another LT team and another management team like ours. I'm really excited for what the next weeks and months have ahead and ultimately getting out of 2020 and going into 2021 really strong. I love it. I always ask everyone the same two questions to end it, and then you'll get to ask me one as the final thing. First question is, what is the most important book that you ever read?

This one is easy. It's Trillion Dollar Coach. I don't know if you read that one. It's a great one. Yeah, it's one that I really, really love. And I see a lot of analogs in my own life on uh on uh on that book and ultimately how uh how that book has shaped uh the lives of so many people um in silicon valley and otherwise absolutely second question is more fun aliens are you a believer or a non-believer i think i think aliens exist we had this it's funny we talked about this last night at two in the morning with the cure what was the debate he cures a hard known aliens a heart like he's like there's no there's no there's like there's

no fucking aliens in the world that's it i don't believe it you can't convince me i'm like i feel like there's aliens i'm glad you're the one who came on the podcast then because uh i don't need any uh anti-alien people to uh keep spreading that nonsense i'm with you no no i think there's aliens out there for sure uh you could ask me one question to finish up what you got for me Uh, you've been doing this for two years, right? Yep. What is the biggest surprise for you, man? What's the number one thing, the biggest insight you could give me? I think everyone's way more similar than they are different for sure. Uh, and if I had a really boiled down, you know, all these successful people and, uh, entrepreneurs, investors that come on,

uh, there's no secret to success. Like you just got to do the work. Um, and that's like, sounds pretty simple, but people kind of lose sight of that. And then the second thing I think is, and you actually said it earlier, is like, you can't do it alone, right? It really is every single person who comes on and tells a story of success will explain whether it was their parents, whether it was family members, friends, investors, coaches, colleagues, whatever it is, there's always a multitude of people in their life who kind of helped them along the way. and uh you know every story is different but they all have those common traits and so when you just hear it over and over and over again after talking to hundreds of people you're like

you know what this thing isn't really that complicated the hard part of staying kind of persistent and disciplined uh and just doing it for years and years and years and i think you know your story is a perfect example of that of you know as you get kind of seven eight ten years into a business you start to realize like we know what to do it's just an execution and people think. Right. And so I think that you're spot on and obviously the results speak for themselves so far. Got a long way to go. Long way to go. We're just getting started here. Love it. Where can we send people to find you on the internet or find more about GoPuff? Download the app and just GoPuff on the App Store, Google Play, or go to GoPuff.com.

All right. Are you on the internet anywhere or are you hiding? Yeah. Raphael, I have a long Russian last name. Ilishayev. You can find me Instagram, Twitter. I'm all over. All right, man. Listen, thank you so much for doing this. talk to you again in the future. Thanks so much.