This Week in Startups - NYC delivery wars, Cruise gives driverless rides in SF + Gopuff Co-CEO Rafael Ilishayev | E1378

Episode Date: February 4, 2022

First Jason and Molly discuss reports from "The Information" that Jokr is looking to sell its NYC delivery business due to heightened competition (1:51). Next, they cover how Cruise is opening up its driverless vehicles to give rides in San Francisco (11:09).  Then, Gopuff Co-founder and Co-CEO Rafael Ilishayev joins to discuss his rapid delivery business (19:12).  Almost a decade ago, Raf and his co-founder Yakir Gola started one of the fastest-growing commerce businesses while in college.  Most recently they raised $1B at a reported $15B valuation in July 2021. In this episode, you will learn: 1. The rationale behind operating a vertically-integrated model 2. How they operate hundreds of micro-fulfillment centers & manage deliveries in 20 minutes 3. Why they acquired BevMo and Liquor Barn to accelerate their alcohol delivery business instead of building it themselves 4. The challenges he sees going forward to operate the business well 5. Why Gopuff launched their own private label called “Basically” and hot food offering called "Gopuff Kitchens" 6. How influencers like Mr. Beast are choosing Gopuff as a key platform to distribute products Check out Gopuff: https://www.gopuff.com FOLLOW Raf: https://twitter.com/Rafaelilishayev FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood (00:00) Molly and Jason intro the show (01:51) The Information reported that Jokr is shopping it's NYC delivery business (09:57) Masterworks - Skip the waitlist to invest in art using promo code TWIST at https://Masterworks.io (11:09) We Live in the Future - Cruise Robotaxis open up for SF public in limited quantities (17:56) Linode - Apply to their Rise program for founder-led, early-stage startups and get 3 years of discounts at https://linode.com/twist. (19:12) Interview Gopuff Co-CEO Rafael Ilishayev (31:41) Ourcrowd - Check out the deal of the week at https://ourcrowd.com/twist (32:54) Gopuff's focus on the SKUs that matter for their customers (35:10) Can Gopuff operate profitably? (38:41) Managing Gopuff deliveries (43:34) Gopuff's pace of expansion (49:45) Will Gopuff enter the cannabis market? (50:51) What are Gopuff's potential headwinds? (53:27) Why Mr. Beast picked Gopuff as a distribution channel (59:24) How Gopuff picked up talent from the defunct Brandless team to launch their house brand, Basically (61:59) Gopuff's sustainability measures

All right, we have a great interview today with GoPuff's co-CEO, Raph Ilishayev. This is a great guest and a great business. You're really going to enjoy it. But first, we're going to tee up a very relevant story that broke right after we did this interview, which is Joker, J-O-K-R, is an instant delivery startup that is looking to sell its New York City. It's New York City so they can stay focused on their home turf in Latin America. Why? Because they're allegedly burning a ton of cash in New York City.

And possibly because Go-Puff is torching them in New York. City. Hey, oh, pun intended. Then we talk about Cruz, which is A, still around, and B, raising $1.3 billion from SoftBank, this is the autonomous driving startup that was acquired by GM, and is now starting officially a Robotaxy Beta in San Francisco. What could go wrong? What could go right? Who knows? Could it be an interesting 37 days, and this is going to be a great episode. Stick with us. This week in startups is brought to you by Masterworks, the first company allowing investors exposure into the Blue Chip artwork asset class. Twist listeners can skip the 30,000 person waitlist by going to Masterworks.io and using promo code Twist. Linode's startup program is built

specifically for founder-led early stage startups. It's called Rise and it comes with a three-year discount program and tech consultants to help with infrastructure growth. Apply today at linode.com slash twist. And Our Crowd. Our Crowd helps you invest early in pre-IPO companies alongside professional VCs. If you're interested in investing, you can join Our Crowd for free at OUR-C-O-W-D.com slash Twist. All right, we have a great interview coming up, but before that we got a little news.

that is very relevant to the great interview that we have coming up. Instant delivery startup Joker is in talks to sell. It's New York City operation after facing big losses, according to reporting by the information. And the reason I say it's relevant to our interview is that we're talking with GoPup co-CEO, Raph Ilishaya, and they're, of course, a competitor to Joker, and they seem to be going gangbusters.

Yep. But here, Joker is pulling out of the New York City market and this is a company, by the way, that only operates in one other U.S. city, which is Boston, and two, or B, just raise a $260 million series B at a $1.2 billion post-money valuation, which was co-led by GGBB and HB Capital. So what are we looking at here? Well, you know, it just reminds me of when Uber and Lyft and what was the other company? God, there was another, a sidecar.

There were a bunch of different people who were trying to do, you know, the Uber Lyft thing. And it became clear to Lyft that Uber was such a dominant player and so good at what they did and so well capitalized. That Lyft went to the cities, people forget this early on, that Uber had not gotten to yet. So there was a time when Uber was only in five cities. So Lyft said, okay, you're not in Atlanta. You're not in Nashville. We're going to go to those cities first. this way, we know you're coming, and when you do, we know you're going to put your foot down,

but maybe we can get a little head start here, maybe we can build up our brand. And I think what Joker is dealing with is you have a company backed by SoftBank, huh, who is super well capitalized, and they're going to play a certain playbook, which is whatever city you're in, we're going to dominate in. We'll spend twice as much money. We'll lose money if we have to. These things might seem anti-competitive. Discounting is not an anti-competitive practice.

you're allowed to give discounts, but it could be for a large company, if they did it to extinguish another company, I think it can be considered a anti-competitive practice. We'll have to double click on that of when it applies, but that's what's happening here. Joker just can't compete. There's too many players, too many fish in the pond, not enough algae or food or whatever for them to eat, which means you could have a collapse in the ecosystem. And when something collapses in the ecosystem and you're the fish that's big and doesn't die, you become more powerful.

So this is just too many fish in the pond. Some of them are going to die, and Joker apparently is folding. And that's healthy for a market. They're folding in New York City, and they appear to potentially, at least according to the information, have set their sights on a different pond.

Investors, a few months ago, Joker was going to further explain global operations after launching across over 10 cities in Latin America, Europe, and the U.S. Evidently, it's investors, probably because of all of the reason the big fish like GoPuff in the pond over here are saying we want you to double down on Latin America

because labor costs and competition are far lower. Jokers actually based in Latin America. Yeah. And so, yeah, they'll be closer to home. They understand those markets better. Big win. This reminds me of Uber in China. And Uber's philosophy was, we're going for the gold.

And if we get the silver, we're not happy about it, but we're in the game. But if we're bronze or below, we're going to sell the unit to whoever is gold or silver, and we're going to win that way. They did that with D.D., they did it in Russia. They did it in a couple of other markets with grab, I think, too. So they're folding New York because they can't win. And I think it's a smart, smart idea. If you're, again, in an industry and you're the number one or number two player,

you're in all likelihood going to hit profitability and you're going to print money, and it's going to be a delightful experience. When you're number three, four, or five, your acquisition base, and you're basically screwed. Postmates sold to Uber, DoorDash bought a company. I don't know if it was... I always forget the name of the company they bought.

But there was some other delivery service they bought. It's just really hard to exist as a fourth or fifth player. And now you're fighting a war really far from the homeland. And that also is a recipe for a disaster. We've seen that in wars, right? Like literally, it's kind of hard to go fight a war in, you know, maybe in modern times it's less so, but halfway around the world. Joker might be, I mean, Joker compared to potentially some other competitors, because let's not forget that the Wall Street Journal report since 2020, there's been five and a half billion dollars invested into just six instant delivery competitors in New York City. At least Joker is in a position where they've got a beachhead to retreat to, right? They can go back, refocus, re-concentrate in a Latin America and potentially kill it there for all we know. Whereas as the rest of this market consolidates,

Some of these companies, you know, get here. I think it's pronounced gorillas might end up dying. You're going to obviously hear a little bit more about the gopuff business model in a couple of minutes. And it doesn't seem like they're in danger of dying. But everybody is feeling the loss. It's going to be, you know, a very difficult business because it's about scale and it's about being able to survive for a decade. Who's going to be able to survive for a decade? DoorDash, Uber, eats, Amazon.

And it feels like GoPuff. But it doesn't feel like anybody after that has much of a chance of surviving. I think we'll look back on this in 10 years. And I would be surprised if the names I just mentioned were not the dominant players around the world, three or four of them. And I would be surprised if anybody else adds to that list. And even for GoPuff, I think, you know, with our interview today, as good as they're executing, as well as they're executing, they're going to be coming up against. Amazon, Doordesh, and Uber Eats. And those are going to be formidable competitors who, you know,

they're going to be hard to compete against because I, my personal feeling on this, and this is my feelings after we did the interview that's coming up in the second of the show, I don't know that people care about the difference between 15 and 45 minutes. You know, having experienced these now, I think it might be a little overblown. I think under an hour is the magic. and I think that means that the door dashes and ubers and eventually Amazon, if they choose to, are going to have a pretty good role to play here. I mean, I don't know about you, Molly.

Is there most of your purchases? Is there a difference for you between 15 and 60 minutes? Not really, right? Like at some point, it's just not, it's not that crucial unless it's, I don't know, tampons. But like, what I do think is interesting. Alcohol. Maybe alcohol. Well, and that's where, so the, the,

competitive advantage that GoPuff does have, and I'm not going to give away too much of our interview, but what I do think is interesting is that compared to DoorDash, Uber, and Amazon, which are, well, Amazon owns Whole Foods. So if you're getting groceries from them, at least, you know, you're getting groceries from a Whole Food. So they have that delivery. They have the fulfillment centers built into their delivery premise, whereas DoorDash and Uber are getting it from restaurants or ghost kitchens. And GoPuff's big differentiator, which we will discuss at length, is that they own their own

fulfillment centers and micro-fulfillment centers. So to me, this whole interview and listen for this, all comes down to the suburbs. Yep. Whoever wins the suburbs. I think it's going to be a big part of it, yeah. And also, we've talked about this

just in our investment careers, asset light versus asset-heavy businesses. And GoPuff has chosen asset-heavy to get some advantages in speed. And then the question is, if you're DoorDash, Uber-Eats, and you're fulfilling from Walgreens and CVS, and you're doing it in under an hour, which is a better business to be in.

It's going to be a dogfight and it'll be interesting to say. 2021 was a huge year for IPOs. We all know that. Over 1,000 companies went public. But two-thirds of those companies are now trading below their offering price, according to research from our friends over at Masterworks. And reports of raising interest rates are causing some investors to adjust their portfolios. That's why some people are allocating more capital into blue-chip art. MassWorks is the investment platform that lets you invest in shares of pieces by legends like Picasso, Monet, and of course, Banksy.

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See important disclosures at masterworks. com. All right. Let's do our next story, and this is in the We Live in the Future. W. LITF is our acronym. Lit A.F. It's what they say is right.

Cruz just opened at San Francisco Robotaxy Service to the public and announced a $1.3 billion raised from SoftBank, which is, you know, like a quaint raise from SoftBank. I know exactly. I was like, that sounds like so much money,

but not 10, not five, just a billy. Remember, Cruz was acquired by GM back in 2016 for $580 million. They raised over 13, billion to date, both before and after the GM acquisition. Cruise was recently valued at $30 billion. So let's talk about this robo taxi service. They're starting with a small number of users. California DMV gave Cruz a permit to test fully driverless vehicles in 2020. Right now it's going to be free. And in December 2021, the San Francisco Municipal Transportation Agency pushed against Cruz's

proposal to charge rides, citing safety and vehicles, ability to follow rules like picking a passengers at the curb instead of in the middle of the road. So, let's take a look at this, passengers. This is some B-roll of... This is Techies getting driverless rides in San Francisco and sitting in a vehicle that, of which no one is at the wheel.

They demonstrate rides, by the way, at night. So just to show like, our cars can see great. But the sign form does make it seem like they'll be testing in all times of day on both Apple and Android. devices. And by the way, these are going to be driving around San Francisco. So just like, heads up. Heads up. People in the crosswalk. I know you're already getting run down by cars.

They appear to call in the video the car from the cruise app. And you see the car doing basic driving things like slowing down to go over speed bumps and picking people up and, you know, not crashing. This feel like a good idea. San Francisco, the city to do this. Of all cities, that's exactly what I thought I was like, wow. I mean, it is bold. A lot of these driverless car. companies are doing their testing in Las Vegas and like Phoenix, where it's just like Arizona's good. Yeah, grid.

Right open. You got a nice grid. San Francisco's like a ball of hair with lots of homeless people in the street and hills you can't see over. Like, ooh, God help them. This is, I'm going to make a prediction here. This is not going to turn out well. Yeah.

I have a feeling where, and I don't know what the scale of this is, and I don't think they say, but this could be two cars that they're testing with 10 employees. So there might not be so many of the. on the road that we get a lot of you know, videos of it doing weird stuff. But this is not going to work in Manhattan or San Francisco

now. This seems like a really bad idea. As much as I'm pro-technology, I just think the pedestrian situation in a city like San Francisco at this moment in time, you brought up the homeless. And in some cases, you know, we might be saying homeless. We might be saying people who are on

fentanyl passed out in the street. So yeah. This is like, I mean, and it's not to make light of the situation. It's the reality. There are a lot of unintended human interactions in San Francisco, and it's in the road, it's in the crosswalks, it's not in the crosswalks. Like, it's a scary thing to,

what's interesting about this video, too, is that it's like a lot of techies trying to put the stamp on it. So in the video is Twitch CEO, Emmett Shear, Jamie Quinch from Uncommon Capital, Y Combinator President Michael Seibel. I mean, it just points to the fact that driverless taxis and fully autonomous vehicles. Oh, so the mob,

It's a mob project. It is something the mob really wants to work. Everybody wants this to work eventually. Sure. It is, but I mean, there's been no indication that driverless car technology is actually this far along by anybody. What I would like to know, maybe somebody who works at Cruise or PR or a GM or something can tell us, is there a safety driver remotely monitoring these cars? I'm going to guess there is. So what that would mean is it's a safety driver remotely monitoring these cars.

it's a self-driving car, but it's kind of running autopilot. In other words, there's somebody ready to take over at a home base looking at a computer somewhere in real time, because that is what I think is the great bridge here. One minute out of every,

I don't know, 50 to 100 is going to be really challenging for these cars. And maybe there'll be 48 minutes, 49 minutes out of every, let's say out of every hour. There'll be 55 easy minutes, three or four modestly challenging, and then one minute of, we need an intervention here because somebody jumped in front of the car

or there's a double park car or whatever. A bicyclist is doing something crazy. That's when a human needs to take over or at least monitor the situation and kind of backseat drive the AI. And I think that's what Waymo might have been doing in Arizona is that we're remote people. But it's coming.

It's definitely coming. I don't want to be down on it. To be clear, like I am not in the Locosa Nostra. We're joking. I'm trying to make this happen now. I do want this to happen. The mafia.

And I think it's very cool that Cruz, like Cruz is trying to build a purpose built vehicle that will essentially be small, but mass transit ready. Right? Like this is a great future for transit. Awesome. It's going to be interesting to see how this experiment goes. It's a start. Let's do it.

But everybody watch out. the over under at 37 days before a video is released that trends of a cruise car in San Francisco having a unique interaction. Yeah. Would you take the under 37 days before a video is released or over 37 days, Molly? You're taking the under? I'm taking the under. I'm taking the under. I probably would have taken the under on my own line, but I'll take the over. There's your bet everybody. Somebody got to keep track of these bets. thinking in bets, you know, we have to think in bets here. We have to always be handicapping as investors. So I think we're going to see like literally a homeless person fight a cruise car or a

bike, you know, God forbid, like ramming into the side of it or, you know, somebody slamming their horn and yeah. But I think it's, my, my bet is, you know, in a, in a grid-based city, we could see these being delightful in the next five years. And potentially, just to set up our upcoming interview with Roth from GoPup, potentially great delivery vehicles. So yeah, let's get to the interview with GoPup Co-Co-Co-Coreau. Great guest. Cloud infrastructure costs are one of the biggest expenses for startups, and they're also some of the most unpredictable. It's no wonder that many startups get lured to the major cloud providers with the promise of all these free credits only to wind up locked into unprecedented.

predictable cloud bills and outrageous costs. I've had this happen myself. Well, Linode is here to change the cloud journey for startups. How? Well, they provide predictable pricing. So you don't have any sticker shock. You don't have any unnecessary overages. And they have industry leading price to performance ratios with simplified infrastructure.

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It's really a great service, and it's great that you're of service to the startup community. I really appreciate that. com slash twist. We are excited today to talk to Rafael or Raf Ilishayev, CEO of GoPuff, which is instant, as I understand it, instant commerce, like no pressure. Some people are doing commerce. Some people are doing delivery. GoPuff is like, no, no, no, instant. Welcome to the show.

Really fast. Like super fast. Welcome to the program, Ray. Thanks. Thanks so much for having me, Jason, Molly. Good to see you. So let's define how fast you get products to people and what exactly you're delivering. How long has GoPuff been around and what is the mantra in terms of how quickly you get various items to people's homes?

What's the goal here? Yeah, why don't I start a little bit about the origin story. Tell you guys how we started this thing and, you know. No, no, no, no. Tell me the answer to my question first. Yeah. this PR speak where I know that somebody media trained you to tell me the origin story, I don't care.

I want to know the brass hacks. How quickly do you get stuff to people's doors? What's the goal? So we, on average, our delivery time is 17 minutes across the board. In newer cities like New York, it's been faster than that. Average delivery time and the low teens.

So very, very fast, but different to most folks coming from our micro-performance centers to our end customers. That's why the speed is made so quickly. minutes is your average. That's the real average. 17 minutes in a city.

Yeah, it's very, very, very fast. And in New York, it's 11 minutes. Yeah, it's in the low teens, but yes. Okay, so now explain to me how that is possible because I would think, just off the top of my head here, putting a bunch of stuff into a bag takes five minutes. So that gives you seven minutes to race it to somebody's house. How do you do it?

Walk me through the minute economics here. Yeah, so it took years of iteration. We've been doing this for nine years to get from, you know, 40 minutes in delivery to 30 to then sub 20. But the reality is it's a combination of a number of things. One, it's the infrastructure that you build within a city. So like, for example, in a city like Manhattan, we have close to 16 micro-fulfillment centers.

And each micro-fulfillment center has a certain radius that allows for a certain drive time or in the case of New York City a certain bike time. So it takes an average just shy of two minutes to pack an order. Most orders do not go out with a single batch. So they'll go out with one or two or three orders in a run. And then there's a very, very tight delivery window, the delivery zone around that micro fulfillment center that doesn't allow for a long run. So the key is to make sure that the driver or the biker is not going too far.

And then the empty leg that they're coming back with is obviously also short as well. So I don't want to oversimplify the problem, but it's a lot of work on infrastructure. and it's nine years of work on building the tech inside the micro-fulfillment centers to enable for a really fast-big. How big is a micro-fulfillment center? You said there's 16 of them in Manhattan or Manhattan, Brooklyn, and the boroughs. Which boroughs are you in? So we're in every borough but Staten Island.

We'll be in Staten Island in a month. We cover every major DMA in the U.S. all top 100 DMAs. Roughly 36% of the U.S. populations. Explain what DMA is. Yeah, what's a DMA. It's a, it's a, it's a, it's a master district. So like, so a hundred of the top cities in the U.S. will, we'll cover. And, you know, essentially, you know, just, just shy of 36% of the U.S. populations within a one-mile drive of a Gopup Microfit Center.

Wow. How big are they square foot was? And then how do you pick them? Are they former storefronts? Like I heard, like sometimes you guys, where some folks in the space are buying existing bodegas or corner stores? So the smallest one is probably like 5,500 square feet, and the largest one is like 20,000 square feet. That's a Bevmo.

So like, you know, kind of going all over the place, but we have some physical retail stores that we bought for the liquor licenses. Like in California, we bought Bevmo. In Kentucky, we bought Liquor Barn for their liquor license, and we use the existing infrastructure. They're larger stores. Yeah, sure. I have a Bevmo in my area, yeah.

So we'll use their infrastructure. We'll build a micro-fulfillment center within inside of a Bevmo. And then we'll deliver from there. But everywhere else, it's a standalone dark store or a micro fulfillment center that will then use for delivery. So anywhere between five and all the way up to 20,000 square feet. I mean, I feel like this is where we should clarify that the other big difference in addition to a 17-minute delivery time between you and every other delivery outfit is that you are purchasing and holding and packing your own inventory.

What made you decide to invest in those real estate assets? assets and inventory and curating. That's, you know, it's a complicated undertaking. Yeah, it's kind of when I wanted to hit a little bit about how we started because it is important. Sorry, now I'll allow the, uh, aren't you sorry. You know, it's, it's kind of hard to imagine nine years since we thought of the idea. Uh, you care and I were in college and like the entirety of the delivery just didn't make sense to us. Everyone, uh, how they were handling delivery was through this third party model.

I'm going to go to the store, pick up from the store, and deliver it from the store to end customers. And it was a shi-model model. Yeah, it was a shitty experience all around. You had no inventory controls. You had these crazy service fees. There's markup on items. Deliveries took too long. None of it made sense to us.

So we knew that we wanted to go first party from day one, right? We're in college solving our own problem, you care and I. And we knew we wanted to open up our own micro-fulfillment centers. We just had no idea how. And we had a little bit of an unorthodox kind of beginning. We didn't raise any money for the first two and after. years and we started up the business by finding office buildings that were throwing away all of their furniture and we would take all their furniture pack it up in the storage unit and then sell it we ended

up accumulating at $50,000 that was like our seed round so we started the business and then for the first two and a half years we just operated a profitable business we opened up in philadelphia it was just one micro fulfillment center for the entire city so the liver times were a lot longer back then. Then we opened up Boston, Washington, D.C., Austin, Texas, raised our first round, and then it's really where we started kind of expanding a lot better and, you know,

opening up and building more tech and more infrastructure. But the premise of the business is we were solving our own use case. Got it. So how much do you charge for a delivery? Two bucks. Two bucks. So, and are all of the runners or delivery people full-time staff?

Or are they contractors like DoorDash? Dordash? Eshers. For the most part. So our European business, they're full-time employees. Got it. And then the U.S. business, for the most part, they're independent contractors. Got it. And so those independent contractors, how many deliveries do they do per hour? How many can they do? And then what do they make? How do they get paid? So it's all across the board, depending on the tier of the market. Yeah, tier of the market. So anywhere between like three and five deliveries per hour. Three and five deliveries. A bike can make. And like the pay varies for

from like $17 an hour all the way up to like $30 an hour, depending on the tier of market, you know, how many orders are drivers doing, how efficient a driver is. But like, we're paying well above what I would say the industry norm is. And it's not because, you know, our drivers,

you know, the model per delivery actually is very similar to what you would see in traditional three people there. Well, wait, can I jump in? Because I still want to, I still want to go back to what made you decide,

because why you decided. to buy your own inventory because sure Instacart and DoorDash and Uber Eats and whatever like it might be suboptimal in some ways but it's still doing pretty well and so I still want to get to like why you were so committed to this this big investment of buying and curating your own inventory so there's two reasons one is that the experience at least for us the 20 year old version of ourselves was really really freaking shitty right that it makes sense it took too long the you would never get what you're very spoiled you've never had anybody to your shopping for you before and you're like, we can't live like this.

They're not picking up the right apple. The issue is they give you the wrong thing. The personal shopper on Instacard, I think we've all been through this. Yeah. You asked them for, like I was ordering those chocolate, uh,

Hagenas bars because Chimov was eating them one night. I was like, let me get those for the girls. And they brought me chocolate ice cream. Hockendos chocolate ice cream. I was like, no, I specifically picked the chocolate bars. Like, how do you get that wrong? Well, and we're teasing you, but the producers point out this was 2013, 2014,

the experience was probably very different. They hadn't gotten it down to a science. But they always get stuff wrong. That's the bottom line. They always get stuff wrong. And then the other thing is like, you know, we were raised in kind of as first generation Americans, right? Both of our parents came here, had us working from a young age.

And the reality is, they're like, you need to build a business that freaking makes money, right? And the 3P model doesn't make any money. Doesn't make any money on your unit economic basis. People talk about, you know, what their paths of EBTA is. We were EBITA profitable for our first two and a half years. Right before we raise them in a single dollar. Do you do substitutions then?

Like, how do you deal with that? Because that seems to me to be a major friction decision point where you're like, I want strawberry, you know, yogurt. And they're like, oh, strawberry's gone. Would you like raspberry? Can we substitute it for you? And then Instacart was like doing that in real time with the shopper. I don't know.

I always found it like, just get it right or don't give it to me was my philosophy. So do you guys do that, like swap it out thing and then back and forth with the users? No, not really. Because we owned the entire inventory and management part of the business. We own the supply. We're completely vertically integrated. So we have real time understanding of what's in stock and what's out of stop. So like an industry metric that a lot of folks use is like a mispack rate.

Like our misspac rate is 30 basis points right now. It's under half of a percentage point of all orders. So one in 300 orders you misspacks them. Even less than that. Yeah, one in 300. Correct. You're right. Your math is better to mind.

Back at your phone. It's his thing. So the reality is it's very, very low and it's getting smaller. And it took a lot of years of building really, really strong tech within the four walls of the building to get there. Right. This doesn't happen over, you know, over one or two or three years. A lot of learning and a lot of iteration before we started getting it right. So it took a lot of discipline and a lot of building of kind of tech and for church.

Because if you're like, hey, listen, here's the yogurt. It's in order. We're not going to have, you know, if you look at yogurt at Whole Foods, there might be 20 brands of yogurt. I'm assuming because you're doing micro stores, you're like, we're going to pick one yogurt brand and have it in stock. So it's less skews. Is that part of the magic is less skews? And then the store is organized in a much more sensible way. So whatever the most often ordered are are on the lower shelves and the less order are on higher shelves.

And it's just harder to make a mistake for the packers. Is that what's going on here? Yeah. So when we started, right, we were in this like convenience category, right? We're going to disrupt the convenience store. So we're going to have convenience store type of skews. By the time we got to like 20. 2015, 2016, we realized the opportunity is just a whole lot bigger.

So we started calling it instant needs, right? So anything someone needs from an immediate everyday basis will deliver to them. So we expand it into ice cream and then alcohol and over-the-counter media. Yeah. Over-to-counter medication, pet food, baby food, household essentials. We launch this go-up of kitchens business where we have full-blown commercial kitchens inside of our microfilman centers that we're using to deliver it. And now expanding into grocery in a much deeper way.

So like the way that we think about category and assortment expansion is basically on what our consumers want. So it's not like what's predefined by traditional brick and mortar retail, right? If something doesn't like neatly fit within grocery or convenience or drug, they don't kind of introduce it. Well, you don't have the room for it. I mean, you got a 5,000 to 15,000 square foot place. You just do not have the luxury of having what a supermarket might have.

Well, we could fit a lot more shoes per square foot than a supermarket can because we have no one walking in there. Yes, it could be narrower and taller. People are not getting on ladders in their supermarkets. You can. Think like 4 to 6,000 skews is what generally fits within our microfulfillment center. And like as much as we're introducing items and really being aggressive on introducing new items, the stragglers, we discontinue really quickly as well.

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slash twist and review the current deals. That's R-Crowd.com slash twist. to sign up for free. So we focus really well on like, you know, how do we make sure that the skews that matter most to our customers were introducing in a really meaningful way, right? We did it with alcohol in the beginning. It was really freaking tough because getting liquor licenses here in the U.S.,

you can imagine it's not an easy challenge by any stretch of imagination. You know, today we own just shy of 400 of them. So that took a lot of years of, again, of building, of getting it right. And it just doesn't happen overnight. the same thing when happening with the gopuff kitchen's business today. You know, the most requested item on gopuff was hot pizza. And we're like, oh, well, how the freak are we going to deliver hot pizza? Yeah, and you got Domino's does a pretty good job.

Well, it's, the reality is it's, people want a one-stop shop. People don't want just hot pizza. They want, so they're like. Right. That's why you see like DoorDash, for example, like you can order some food and then you can tack on in the next 10 minutes, some ice cream and some cold medicine and whatever. Talk to us about margins though. You know, I mean, you raised a billion dollars at a $15 billion valuation.

This is not what we think of with delivery companies, let alone ones that are vertically integrated and own all their own assets in this way. Like, how are you, are you marking up the price on items? How are you able to, what do your margins look like here? So margins in traditional kind of brick and mortar retail are really healthy for these kind of items, right? They're in the high 30s, low 40s. I usually, once you add in delivery, that's like where it starts up.

Yeah. So the $2, the $2 fees a direct pass-through. to our drivers plus the tip. So if you look at like our established markets, right, you know, even our most established markets still growing 70% of year over year, which is Philadelphia.

But like even if you look at our, you know, pre-2017 markets, right, they're operating today in the 15% EBITA margin, right? Fully loaded EBITA margin. So like if you're looking and kind of

identifying, you know, your comp markets and your established markets are producing strong EBIT on a per order basis, it kind of gives you all, the confidence in the world to continue to open up a massive amount of buildings, expand into new countries and continue to do it. So it's like, it's been our mantra from kind of day one. It's nailed this business model, produce really positive unit economics, and then scale it. And

it's why investors have been so excited about GoPup, right? It's kind of the opposite of everyone else's his approach. Well, you get it in 17 minutes. It's convenience or items like 7-11, which have, you're saying, a 30% margin. What's the average, you know, order size, 20, 40, 40 bucks? Yeah, just shy of $30. Okay, so we take 30 bucks, 30%, you're making it. You're making it. You're making $9 on the delivery, or thereabouts, 30%. So that's pretty healthy because these are items that are convenient. So it's not supermarket, it's convenience store, right? Like 7-11.

So it's not exactly right. So we started on the convenience store space, right? We had like 800, 900 skews similar to what a convenience store has, right? Today we have closer to, you know, 4,500 skews. So we're kind of across the spectrum, right, between over-to-counter medication, pet food, diapers, baby food. You know, we're getting into groceries. So like 100% of our New York stores

have a full-blown grocery storement today. Right? So like you're talking about fruits and vegetables. So the go-up of 2013, a go-up of 2022 are two very, very different go-puffs. You're maintaining that 30% and the driver can do three or four of these an hour.

Let's pick three. They get the two bucks. You're saying it's passed through it. They make six bucks. And then what is the average tip in Manhattan or a place like that? If it's a $30 ticket, people do 20% tip, six bucks?

It's kind of across the board. Right? It's a tipping is across the board. It's in the mid single digits. Mid single digits. So five, six bucks. So let's say you made five, four, five, six bucks. You do three of these orders in an hour.

Three times four is 12. You get the other six. That's 18. So that's what gets you to 18. Are you having a hard time finding those drivers? Because one of the themes we're hearing about is that there's a dog fight for drivers. 18 is double the minimum wage of the country. Well, more because I think it's seven and changes, the federal minimum wage.

And then New York City is 15 now, I think. So you're 30% higher than minimum wage. It's so hard to find drivers. Is that the gating factor for the hardest part of your business? Not quite as hard as kind of we're hearing the news come out from the industry. So like 90% of GoPuff delivery partners only work for GoPuff. And that's not because we only force them to work for GoPuff. It's because their own choice to work for GoPub.

And I think what's really, really unique about the GoPuff experience is you could choose to be a W2 employee. You could choose to be a delivery partner. If you want, you can apply and work for. for any one of our micro-fulfillment centers, we have tens of thousands of employees there. They're working inside of our buildings that are full-time employees. So it's like you have this option of, do I want to be a delivery partner that goes back to like a corporately owned location

every single day? You're not dealing with coming mom-and-pop pizza store or anything else, right? You're dealing with a group of employees day in and day out. Or you can choose to be a W-2 employee and work in one of our buildings. So it's this unique relationship that we have where a person can choose to be a delivery partner or person can choose to work in one of our buildings. So the Packers, inside the building are full-time employees. The runners are freelancers.

So that is a unique opportunity because it's essentially a pretty similar job. Yeah, some people prefer to flexibility of being a driver, a driver partner. And some people prefer to be a W-W2 employee, right? So it's like it really, we kind of give, we give folks an option to choose to partner with us as delivery partners or to work within our micro fulfillment centers as as uh as uh they they're making the same amount of money uh it's depending on the job within the building right a shift lead will make different in operations associate than a receiver right there's different jobs within a building and are they all on bikes you said in manhattan it depends on the market right some are

in cars and they they bring their own i assume bikes and cars just like everybody else does yeah that's right um is that a headwin for you at all the question about labor like certainly that's been an ongoing conversation about whether you're going to have to reclassify. It seems like that's died down some during the pandemic because everyone's so desperate for delivery. Is that a little bit of a boom? Yeah, I mean, listen, I'm squarely focused on our customers and our delivery partners, right? Like, what's best for our customers and what our customers want is what we're going to do.

So the reality is, like, we've paid attention to what's been happening kind of with the classifications of 1099s and kind of kept our closer on it. But the reality is, the vast majority of our drivers are really, really happy. Right. But what if your customers wanted your drivers to be employees, just to poke the bare a tiny bit? I don't think, I don't think it matters for the customers either way, how the drivers are classified as long as they're happy, right? And the reality is that. You disagree, Molly? You think like there's customers who care? No, I think that's true. Yeah, no, I think that's totally true. But like, I mean, I think as long as the drivers are happy is an important qualification.

In Europe, you have to make the drivers full time, though. I have to make them. And most countries in Europe, you do. Yeah. So this, and that affects the business, how? You just have to charge a little more for delivery. You have to instead of two bucks, you charge three or four? The price point is the same. The price of the goods kind of varies a little bit, depending on the market.

But the realities is that we're very, very competitive still in those markets. And like, we're not going to launch a market. There's two basic tenants that we have on like kind of launching new countries, new states, whatever it is. We won't launch in an area unless we believe we could be the number one market player in that area, right? We've done that in the U.S. If you look at third-party data, Yipit just released a study. We have 73% share in this instant needs category, right?

Quick Commerce, whatever you want. We call it instant needs here in the U.S. So we're trying to replicate the magic we have here into U.S. in Europe as well. We're not going to enter a country unless we can be the number one player there. And then two, it's like we're not going to operate and lose money forever, right? This business was built on the tenets of really, really strong unit economics and profitability. So we're not going to go out and open up markets and lose money for years and years in years, especially in a unit level and not produce a profit on the unit level.

So we're examining all of that and kind of every market that we're entering into and kind of making strategic decisions along the way and what makes most sense to vote for our customers, first and foremost, and then two, how unit economics play out. And does this model, well, this model ever work in the suburbs? Obviously, it won't work in the country where, like, you know, people might be 30 minutes, 45 minutes from a store. they can, I guess, order Amazon if they really want delivery, wait two days, but they're not going to get 17-minute delivery. So we assume if you live in the country and the boondocks, this isn't for you.

And the city, it obviously is. But what about the suburbs? You start to get out to New Jersey or White Plains from New York or Long Island, where people are, it's obviously not going to be 17 minutes, but it might be 27 minutes, 47 minutes. How are you thinking about the suburbs? Do you care or you just want to be in the metro? Yeah, suburbs is our largest opportunity today, right? We see larger baskets, more loyalty, higher retention in the suburbs, which is pretty spectacular.

And, well, we look at it two ways, right? We look at urban adjacency. So, like, areas that are, like, immediately outside of the city might be classified as suburbs, might be still classified as urban areas, and then kind of pure play suburbs. So, like, the entirety of 2022 is focused on those two categories. Give us the pure play suburbs. How do you attack that? You just change the expectation because in those places,

people are probably looking at a two, four hour window, right? Yeah, so gopuff is instant no matter what, but it's not going to be, you know, in the teens from a delivery standpoint, but to your point, in the high 20s, early 30s from an average delivery time in the suburbs, but we've proven out that it's like lots of cheap real estate in the suburbs, right? It doesn't seem like it would be that hard for you to actually pop up microcenters they can bring down that time.

Fix costs are really, really inexpensive. Yeah. Labor is generally cheaper. Yep. And it works really well. So we tested it actually when we acquired Devmo and we acquired Liquor Barn. There was a lot of stores within the suburbs. So we tested how the model would work.

We already have the real estate. You know what I mean? We already have the liquor licenses. Let's see how it works. And it was a phenomenal success. And we already had a few stores kind of in Pennsylvania and outside of Washington, D.C. and Arlington that were into suburbs that were working well. This just gave us even more confidence on this is an area that we want to make a massive investment in.

And again, like what I tell you in 2022, it's a massive focus for us. Yeah, I mean, that's where I feel like your business model is just poised to slay because people in the suburbs or even like, you know, I'm in the Oakland Hills, which I call herb urban. Like, I'm attached to a major metro area and most places will not deliver to me and that's insane. And the idea that you're in the position to have the real estate and the infrastructure to actually crack this market where people are desperate for delivery seems like a huge win for you. Yeah, I mean, and listen, this is like a freaking hard business to scale. It's a reason why we didn't make any, like, if you guys know a lot about Gopov kind of in the early days, like between 2015 and 2019, we didn't make any media announcement. There was no PR, there was no press releases, there's no media. We did that because we were really figuring out how to scale this business in a really massive, like all the infrastructure and tech it took to get to a place where you can open up a building a day, right?

We were opening up dirty buildings a month in the last couple of months, right? It's impressive and the team has done a lot of really great work to get there. but it took years of planning and years of tech buildup to get to a place where we could stand up up building a day. And it was gives us the opportunity today to kind of be a dominant player in kind of urban adjacencies and in suburbs. The acquisition of Bevmo got you, I think,

160, 170 stores in one acquisition, 300 million or 350 million, 2 million per store. Take me how you went through that decision, And was it because they already had liquor licenses or all lined up or was it more efficient to just get 166 of those stores for $2 million each than to stand up your own micro facility? So in the U.S., it takes anywhere between six months and like three years, depending on the state, to acquire a single liquor license. Oh, my Lord.

And each one, this is not a money equation. It's not like you could throw more cash against the problem and speed up the regulatory process to acquire liquor life. And then there's certain states that are quota state, I'm not going to get. too deep into the alcohol framework, but there's certain states there are quota states where you have to buy from an existing player. So you have to buy a local mom and pop or someone else, shut them down, move the license to your place, and then you could start delivering. In the case of California, it's a particularly difficult state to acquire liquor licenses. And acquiring the market dominant

player in California to give us kind of, I think it's like 60% of all of California's population are within a mile and a half of a Bevmo. So to give that kind of infrastructure boost, right, I think we could have still open up the buildings very fast. I don't think we ever would have been able to replicate the regulatory and liquor framework that Bevmo's built. Yeah. I'm talking about like even five or six or seven years out.

And like you said, those stores are completely inefficient design for consumers. So if you just took the back third of the store, I'm not sure if this is what you're planning and made that not available to consumers, but made it 12 because they tend to be high ceiling. He made it 15 foot high with ladders for the delivery business going out the back door. Man, that could be powerful. That's the plan, I guess, is to put your go puffs inside the back of the, of the, or the front of the Bev-Mose. Yeah, 110 of the stores are already converted. So out of the 161, 10010 have full go-buff capabilities, all of L.A.'s turned on.

All of San Francisco's turned on, San Diego. So we've, the plan, the original plan, I'll share with you guys that we never released. It was 45 stores in 2021. And we clearly went above and beyond that on our approach because the more we open up these BevModes and make go up available and the consumer demand, the more excited we got, we're like, man, we really need to change the plan here. And press to accelerate. And don't forget, we acquired a business that was doing hundreds of millions in revenue, right?

So we had to do this while doing no harm to the Bevmo business. So we are able to grow the traditional business by just doing some really basic blocking, tackling on the retail side, right? on the assortment side, introducing some items that they just didn't have. And, you know, so we grew the retail business by doing, again, really, really basic blocking, tackling. And the delivery business, I think, has surpassed everyone's expectation on what we did in California. I mean, it's so refreshing to talk to you and just have you be like, yes, we have nailed the business model. We are totally profitable.

We're making baller moves coming in, buy in Bev Mo. What comes next? Like, you have got to have people beating down your door to go public. Yeah, I think, you know, we're going to do what's, what's, we've been doing this for a long time, right? I mean, I think you guys know we can't talk about that, but we're going to do what's right for, for ourselves and for our customers and for the company. So, you know, we've been, we've been doing this for a really, really long time. We've raised a whole bunch of money. We have a lot of really, really great shareholders.

We got lucky kind of halfway through our journey to be really, really selective with the shareholders that we got on board, right? And right now we're just focused on our customer in a business and, you know, what happens next to what happens? And you figure out the business model, right? You feel confident in the margins and the predictability of the business, correct? Yeah. So I think as long as the UNET economics remain so profitable on the comp side, it gives me all the confidence in the world to invest in buildings and infrastructure, right? So like the biggest investment in this business is you got to open up a building, you got to acquire a liquor license, right? which again could be anywhere between $5,000 and $3 million per store.

And then you have some operating cash loss in the building before switch to break even and then profitability. So you have 100% of your cut markets that are producing profit today. So we define comp as 18 months or older. So as long as those trends remain true, you care and I are going to continue to invest in the business in a really, really massive way, right? We've been seeing some really crazy growth on the back half of that.

And if those trends don't remain true, then we won't invest in growth. right, we'll switch the profitability lever. Again, we're in a very fortunate position to be able to pull the lever and say, hey, if we want to go back to an EBIT up position, we could. Yeah. I mean, you want to grow, you want to take market share, but you know the predictability. You know, in year two at some point, 18 months, whatever it is, it could be 12, could be 24. You can hit profitability, which is what the public markets are looking for.

The public markets do not want inventory, as we've seen that are not predictable or have a path to profitability. And you clearly have that. Now, the name is go puff. And you have ease and Meadow and a bunch of other players out there delivering cannabis. Cannabis is legal in the majority of states. You started in a lot of college towns. Some college people might be known to have a drink or a puff as it were. I don't know if GoPuff was in any way related to puffing. But you sell rolling papers and hookas and other stuff. So talk to me about cannabis and how you view. the cannabis market and why you're not in it. If you bought Bevmo, why wouldn't you buy Yeezer Meadow? Seems like a no-brainer for a go-puff.

So we've been getting into kind of regulatory products for quite a while, right? Clearly, this alcohol world is very, very complicated and it's a state-by-state issue. But I can tell you about cannabis is it's a category that we won't touch until it's federally legal. There's just, there, there's too much complexity for a business of our size, kind of our magnitude. dude, I'm not going to go through, like the banking issues and the regulatory issues with, even with alcohol.

No, we know about the banking ones, I mean, and the regulatory with alcohol, those two things combined cause a problem, you think? It's just not something that we're considering until it's federally legal, right? We looked into a number of regulatory categories. This is one that we're not going to step into until the federal government decides what it wants to do with it in terms of legalizing or not legalizing. What are your potential headwinds? I mean, this is, you know, despite all of the positives here on your balance sheet, a very competitive business.

Like, what could come along and be a problem for you? Yeah, I mean, listen, we, the thing that I already don't sleep a lot at night, but the thing that really, the thing that bothers me kind of more than anything. That's how it should be. It's not as a founder. You're paranoid. Yeah. More than anything else is like the next generation of people, right? So it's like, we've been able to come in here, right?

We've done a lot of good, right? We've got to 73% market share in this instance the needs category. We're the number one seller of ice cream and e-commerce. We're approaching to be the number one seller of alcohol in e-commerce here in the U.S. Right? We have a lot of really great wins under our belt.

If the next generation of people are not the same level of scrappy, the same level of uncomfort, finding comfort and discomfort in the discomfort, you know, someone will come and out execute us. I think it's a fear that a lot of founders have. and Eukyri and I spent a lot of time on the people portion of this. You guys think it's crazy. Up until like 18, 19 months ago,

you care and I still did every single interview. It was our entire weekend. That was not crazy. I mean, if you want to set the culture of the company, if you interview everybody, that's great. You know, you're going to keep the culture and they get to meet you. But tens of thousands of where of Microsoft fulfillment center employees. It was getting out of hand, right?

So we did a leveling exercise. I think HR came in. and said, you know, you guys are killing yourself. It was our entire weekend, right? It was 10 hours back to back each day for Saturday and Sunday that we reserved for interviews. We still do kind of level five and level six and up for everyone that's joining. Those would be executive team members, directors and above, VPs and above.

We do senior managers and above. Right. Still. Top 20%. That's a smart move. Yeah. Yeah. And we set a really, really strict framework.

The kind of folks that we let into the organization and really making sure that we could scale. It's why I think the European business has been really freaking kicking ass, right? The folks that we got on board, first we made two acquisitions in the UK, both of which were essentially from aqua higher perspective, right? That's a good infrastructure, but we bought it because of the founders. We loved kind of their kick-ass attitude and, you know, whatever it takes kind of approach. And Alberto, who was the CEO of Dija, is running the UK market for us right now. I can tell you,

UK is like 7x higher from a run rate perspective than we had forecasted. Amazing. So tell me about speaking of kicking butt, Mr. Beast, obviously, who runs YouTube at this point. Yeah, exactly.

He's going to do a brand on your platform. He obviously did Mr. Beast Burger and rolled his own, you know, distributed food. And he's a very entrepreneurial guy. I met him. What are you doing with Mr. Mr. Beast? The Mr. Beast is launching an awesome chocolate bar.

It will be available in two places. It will be available on his website and on GoPuff. And I think, you know, GoPub has become like the go-to platform for celebrity influencer products, right? Mr. Bees is just really the latest and one that we're really, really excited about. Emmer Chamberlain launched her coffee on Goophev, and that was an awesome success. Selina Gomez's serendipity ice cream. Actually, one that we co-invested with her. We invest in right from GoPub's balance sheet and introduced Chris Paul, launch a Put Me On campaign with GoPov, which basically is all under, like, minority and underutilized brands, CBG brands, kind of across the country that applied on GoPuff.

So even though it's not a celebrity brand, it's one that we did with Chris Paul. And we have a whole slew of other celebrity. How do those deals go down? Is it the, you just reach out to the influencer, influencer reaches out to you, you talk to their management, how does it go down? So like 2017, 20, 20, 2018, it was a lot of GoPubb reaching out because like, so like here's what's crazy. Like in the last 18 months, we opened up more square footage than we did in the previous

three years combined together. So like we had a lot more coverage in the U.S. in the last 18 months. And again, it took a lot of years of work to get there. But because we have so much representation in the U.S. And GoPub has become such a dominant player, we went from like, hey, we're reaching out to folks and kind of telling them, hey, get it on Goop up to when folks reach out to us. This is something that we'll do.

We'll blow it up. We'll make it good, but it's going to be an exclusive for a while. So a lot of folks that have reached out to us as a byproduct have gotten really, really amazing launches. And you know, you get one success and then kind of success starts piling on. So after we launched the first brand, then the second brand came along, and then third brand. And then this Selena serendipity thing was gangbusters. And then, you know, this, I think this Mr. Beast partnership is going to be, if not the best one,

one of the best ones we ever had. Well, I mean, if you think about it from their side, they're making a product, you're giving them distribution, you're moving product for them. And then if people happen to not know about GoPuff net already, or maybe they heard about it but didn't download the app, you know, you get their entire audience to hear the word go puff five times in a, in a YouTube video or Instagram or TikTok, they might go try it, right? So it's a win-win for sure win-win. It's something that everyone's excited about. And like, you know, you get it to, you know, a third of the U.S. population. And like, here's a thing, right? Like, we don't have the same barriers that traditional retail has, right?

All these resets. And we can only introduce things once a quarter or anything like. We get from idea to our brain to it's available nationally is like 10 to 14 days. So we can move very, very fast on product introduction and product curation in a way that just, you know, traditional brick and mortar just can't. This is generally a question about, I'm sorry, do you have a follow up on that? No, no, no, go ahead. I have generally a question about expansion, but also it's somewhat selfish because I really

liked the Mr. Beast Burger. And I'm on your website, and I see that you're in Omaha and orange in Orlando, but not Oakland. So as part of your like urban strategy, how are you thinking about expansion and also, come on, man, cross the bridge. Just one little bridge. It's coming soon. I can promise you.

I mean, we have this tool that we built. It's called GMOT. It's a GOP market optimization tool. And essentially, it'll drop pins all over to country and tell us how much customers and potential revenue we're missing by not being in a geo. Oh, interesting. So what are the metrics? What are you pulling from to determine that?

So we're looking at intent to purchase. It's the number one metric, right? So it's folks that are getting onto the platform trying to order GOP up, we can't order GOP is where they get the message that, you know, we're not in your delivery zone. So that piles in, then we build lookalike audiences. So, like, we'll see what a gopub customer looks like in the geo, and then we'll match it to the demographics in that area and say, like, there's a higher likelihood than not than this person would be a gopuff customer. And here's what their LTV would look like.

Here's what... What determines a gopuff customer? Is it they're like the certain phone they use or Android or iOS more likely? Is it age? Is it single versus families? Yeah. It's more demographic base. So the average group of customers 30 years old, even though, like, we have...

I love bringing this example of our number one customer in Phoenix. You know, I spoke to her actually a few months ago is a 75 or 76 year old woman who just go up three times a day. Wow. Okay, well, that's an addiction. Well, but how would that target audience change per market? Because like you said, the suburbs are a huge opportunity, but that doesn't necessarily track. I'm generalizing, of course, but that doesn't necessarily track with 30-year-olds. So we'll find a market.

So the tool, I mean, is doing it now automatically. Again, I want that Mr. Beast chocolate bar as well. what I'm trying to tell you. It's coming. You send me the address after the podcast. I'm going to make sure we prioritize it. The realities will find a market that looks similar enough to it. That's either closed by.

There's no market that looks similar enough to it. Then we'll just use intent to purchase. And then it'll give us a revenue miss. So what we've been seeing a lot more is GMOT gets better to more data you input it. So the more markets that you expand into, the more data you have in different areas, the better GMOT becomes. So the reality, is we've been expanding to more suburbs, all of a sudden, the suburbs within our market optimization

tool started looking a whole lot better because the tool got a whole bunch more data that this is working. So, you know, there's been a lot more pins and a lot more kind of red-heated areas and places that we really need to expand into. Notice you're starting to compete with the people whose products you carry by having your own, you know, house brand and Amazon basics, if you will. It's called basically purified water, pretzels, batteries. No one trademarked that? Isn't that crazy? That's crazy that basically.

I mean, you have Amazon basics, but it's different than basically, but basically is a great brand. So does this let you maintain margin while lowering prices? Is that the intent here? So this started with out of a Consumer Insights report. So we had a report that came across My Neure's desk that 80% of GoPubub customers would love to see a private label brand on GoPuff that's high quality and affordable. So a line that's that's more affordable than kind of your traditional CPG, but still super high quality. So not, you know, a shitty paper towel or shitty toilet paper or, you know, like a pollen spring type of water. So to speak.

Yeah. Wow. No fun intended. So from our perspective, we looked at that and we're like, hey, this is something that our consumers are asking for. And it's a high margin opportunity. It's kind of another kind of win-win situation for us. So we started exploring it We hired a lot of the folks

From the brandless team Oh yeah the brandless team right That was a soft back bank team as well And Tina Sharkey was there I talked to they were on the pod And it didn't work out for them But I always thought what a brilliant idea Brandless was

Great team to acquire totally To do basically a version of that But with a much solid more solid foundation behind it Yeah yeah So I mean like again like The key around Gopav It's not like this one trick pony right It's not just private label

Or just alcohol or just alcohol or just the kitchen's bit. It's the combination of all of these things that makes GoPub's so great. And it's very, very, very rare that a GoBuff customer is just ordering from one category. So what we see is that when a person comes onto GoPubup for the first time, they come in with a pretty clear intent.

Like, I'm having a craving for ice cream, or, you know, I really want the snack, or I want a 12-pack or beer, whatever else it is. And as their life cycle kind of develops, there's a kind of direct correlation between 10-year and basket size and that correlation is growing with like multiple category expansion.

So like once the customer gets to like their second, third, fourth order, they're ordering from multiple categories at once and like in your active customer base, it's in low single-digit's percentage that someone's just ordering from one category. So they come to go up because they heard that we have something and then they go ahead and explore

and add a whole skew of other, you know, products that we have as well. Amazing. How are you thinking about, I'm starting to try to ask every single founder that we talk to, how they're incorporating sustainability and climate change into their business, because especially when it comes to delivery, that's actually something consumers are pretty sensitive to. And I wonder how you're thinking about that in terms of getting things to consumers and packaging and the whole shebang.

Yeah, something that is top of mind. We actually had a meeting about it like three hours ago. So really, really top of mind. That would be top of mind. Yeah, that's pretty much that. And then this. Boom. So in Europe, our packaging is, there's no plastic at all, right?

It's all paper. In the U.S., we're in a process of switching altogether. So like even our plastic products are entirely recyclable. They're recycled and recyclable. And it's like a 50-50 mix between recycled plastic and your non-recycled material, right? Like cornstarch or, you know, your biodegradable. The problem is with like a pure play non-plastic bag that's not paper. It's not strong enough to hold the products.

Again, I don't want to get to, to, to, to tactical of issues, but it rips right through. Oh, we love the tactical. I love that. I love tactical here in Slack. I was like, I love how specific Raff is. Like, you are not, no vague vagueness. I mean, let's be honest, tactical was what it's all about when it comes to this.

So, you know, but I see the packaging, you know, packaging sucks. Like everything is overpacked. So can you influence that? Yeah, I mean, we're switching to an, an entirely paper model, right? And that's the one that seems to work. We want to do it in a way that still make sense for the customer. So it's something that we're doing.

So we plant the flag on the ground that this is something that we want to do. Now, it's like, how do you do it in a way that doesn't piss off customers? So where there's a lot of minds that are working on this problem right now. A lot of people that are a lot smarter and you care and I that are working on it. And it's something that we're going to do, but we're going to do it in a way that really makes sense for our customers. Yeah. What do you think, Molly?

I love to hear it. I love to hear it. You just think about what the impact could be. You've got young people starting companies. You can dictate, hey, we want electric bikes. We want electric scooters, not gas vespas. We want Priuses. If you drive a Prius, we're going to give you an extra 50 cents per order.

You can really incentivize people and sort of trend things the right way. And then if you think about packaging, you know, one of the things I love about Amazon is they have frustration-free packing. And I would like to see more of this because, you know, if I'm ordering toothpaste, like, does it need to come in a box? And then the box need to be wrapped in plastic? Like, it's getting overkill sometimes. And then consumers really want it. I mean, they really are demand. Like the fact that you had a meeting about it three hours ago and the fact that like every time I get, you know, I get Hello Fresh, I think, and I get these surveys.

Like, why are you skipping? And one of the options is too much packaging. Like, it is on people's minds. and there is an opportunity for a company of your size and scale to, like, really make a big difference. Yeah, I mean, listen, like, this is one, I keep talking about customers. Even if customers weren't requesting this, this is something that you care and I would lean into. Yeah. And it's just like an added benefit that the customers also want this, right?

That this is something that, you know, I think public sentiment has shifted, this is something that's really, really important. So it's something that we're focused on. We're going to do it. We want to do it in a way that makes everyone happy. Yeah, I would love to have a button to give feedback and say, I didn't buy this because of the packaging. That would be amazing, you know? And then I don't know if you know this, Molly or Riff, when you're in Europe, the supermarkets are required to take the excess packaging from you. So in Europe, people will, if there's extra packaging, when they get their bags, you know, take their toothpaste out of the paper box and the plastic and leave that at the store.

Rather than bring it to their homes and the store is required to take that. Yeah, I mean, listen, there's. a long, we haven't got a long way to go. By no stretch of the imagination, I'm sitting here and saying, I've got everything figured out. You know, we got a lot, we got a lot to go and lots of learning. You're a great guest. I have to tell you, you get into the details,

you're tactical, you're honest, you dropped a couple of F bombs, I made, I've F bombs, a couple of ish bombs, you got a couple jokes. I like her to say freaking all the time. I do that all the time. It's a fucking great. Great guest. I think great guest, Molly, huh? I could not agree more. Roth, thank you so much. Raf, Ilylyev, CEO of GoPuff,

coming soon to Oakland. what? Send me your address after this. I'm going to take care of everything. Oh, you're the best. No freebie. Actually, for Molly can take freebies. Molly can take freebies.

I guess it's okay now. We have a no griff rule. We buy everything. And you know why I do that? Sometimes investors, yes. I was just going to see when we're going to be available

for your address. Oh, okay, there you go. I think he's sending you Mr. Beast bars. Hey, Mr. B. Send Molly a case. I'll, no. I'll DM Mr. Bice right now. I'll expect Molly to get a case

of these chocolate bars. Just send us the timeline and we'll be happy. Great, great guests, great business. I'll have to talk to you rough. I just downloaded the app. I'm going to order some stuff. I'm going to order some frosted flakes. Oh, way to rub it in.

I'm ordering some frosted flakes. Oh, look, Mr. Beast chocolate bars. Oh, extra dark chocolate with nuts. This freaking guy. Oh. Maybe I'll order it, and then I'll send an Uber with the bag over to you. I'll throw an Uber X. It doesn't wasteful about that at all.

No, I'll order it to my house and then said 50 bucks sending you an Uber. I'll send it in an Uber black tea. I'll drive my, I'll drive my EV to you. You guys are hilarious. It's an escalade. Anyway, we'll see you next time. Bye bye. Bye, guys.