#454: Rafael Ilishayev on Scaling a Consumer Business

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. =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Anthony Pompliano?

  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 Elishayev 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 discuss 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. First

• 0:40Anthony Pompliano?

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• 1:22Anthony Pompliano?

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• 2:03Anthony Pompliano?

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• 2:45Anthony Pompliano?

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• 3:29Anthony Pompliano?

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• 4:13Anthony Pompliano?

  entire waitlist. All right, let's get into this episode. I hope you guys enjoy this one.

• 4:17Speaker 01

  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.

• 4:42Anthony Pompliano?

  All right, guys. Bang, bang. I've got Rafael here with me. Dude, thank you so much for doing this.

• 4:48Speaker 02

  Pom, thanks for having me, man.

• 4:49Anthony Pompliano?

  Absolutely. Let's just get started with kind of your background. How did you and your co-founder end up starting the company and kind of where were you born and just why?

• 4:59Speaker 02

  Yeah, our origin story starts even before Yekir and I met, right? You know, 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 Yekir 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 upbringing in terms of just really, really getting us encompassed with business and being really customer centric, customer obsessed, and delivering kind of financial responsibility along the way. So our first day of college,

• 5:44Speaker 02

  Yekir and I went to Drexel. I moved from North Jersey, moved from South Jersey, which was a shorter commute from him. And, you know, we met each other 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 it's something that just literally made sense for us the day one. And we recognized that, you know, by our second year, that there's a pretty glaring need in the market, right? The in-store experience left a lot to be desired. No one wanted to go in-store in college. And on-demand delivery services, or what we call these third-party platforms where anything but on-demand, right? They relied

• 6:28Speaker 02

  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 visibility. 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 Bay Area startups, right?

• 7:12Speaker 02

  For the first two years, we hadn't raised any money. We operated 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 VC 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, you know, 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, no secret.

• 7:57Speaker 02

  We started as a college delivery service, but you know, 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 US cities. This Bevmo acquisition gives us the 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 involved for us.

• 8:30Anthony Pompliano?

  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, 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?

• 8:55Speaker 02

  I have to, I think both our parents, both insurance parents were kind of giving us the confidence really early on as kids and instilling us all those values to kind of get off the ground. You know, he actually started, even another startup earlier, right? He was 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, you know, he, he, 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 total addressable market when we started, now in the multi-trillions with all the incredible categories that we entered into.

• 9:38Speaker 02

  So not only did we solve a problem that was really important for our, our own use case to solve, we solved a problem that was important for many, many others to solve as well.

• 9:46Anthony Pompliano?

  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?

• 10:13Speaker 02

  This pump, this is a hard business, right? This is, you know, opening up warehouses, getting liquor licenses, doing it like, this is like the hard way of expanding into, to what we call this instant needs category. 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 and 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?

• 10:54Speaker 02

  So make the spread of whatever they charge the customer to what the driver's take rate is. For us, you know, like everything we draw, we charge in delivery fees, which is One ninety five 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 on the gross margin of the goods. And fortunately for us in our space and 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.

• 11:25Anthony Pompliano?

  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?

• 11:45Speaker 02

  You know, it kind of goes back right to, you know, our origin story and how fortunate we were to have really great coaches around us from from day one, like everyone that we had and to this day that that coached us and, you know, make myself and each year better, kind of continued 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 fundraiser 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. It doesn't do any, it doesn't, it doesn't provide any, any real value. Wait, for us, right?

• 12:30Speaker 02

  The reason we raised the money was to get 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.

• 12:53Anthony Pompliano?

  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?

• 13:05Speaker 02

  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 US today. And we have an aggressive look at the suburbs for next year as well. We service 500 major US cities today. And the moments that we expanded into, right, I alluded into 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

• 13:50Speaker 02

  in the baby category. You know, but here we are, right, you know, growing hundreds and hundreds of percent year over year 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 fundraising, we raised just shy of $1.5 billion. It allowed us to kind of remain aggressive and continue to open up these licenses 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. If you look at our top markets today, so markets that are open for over 18 months, 100% of those top markets are profitable.

• 14:33Speaker 02

  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 kind of building on top of a business model that was generating losses.

• 14:49Anthony Pompliano?

  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 at 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?

• 15:27Speaker 02

  So there's a, 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 that, you know, or a merchant partner that kind of caused the break in the consumer experience, I think. Two, and really important is speed, right? You want to be able to place these things very, very close to, 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 Dallas has like 15 or 16 micro fulfillment centers today to service.

• 16:08Speaker 02

  One given, you know, 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, you know, your marginal structure, right? 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 comped to what people typically see in store, 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.

• 16:51Anthony Pompliano?

  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 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?

• 17:11Speaker 02

  Yeah, that's our average MFC is roughly 8,000 square feet. It's usually in the middle 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 suburbs, but predominantly these MFCs are in the middle of US cities. They're on a ground level. They have, you know, a way to get loading. They have liquor, liquor enabilities in them. So like in some, in some cities where regulatory it allows it's inside the MFC and other cities, it's right next to an MFC. So we'll have a liquor store. And ultimately, you know, we positioned 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?

• 17:55Speaker 02

  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 customers. So continuing to kind of use vertical integration to get into new categories that are important for our customers.

• 18:12Anthony Pompliano?

  Got it. Walk me through the decision as to when you enter a new market. Like, how do you evaluate which markets are the ones to enter and kind of sequentially, where do you go?

• 18:22Speaker 02

  Yeah, so we built something we call G-MOT. It's a GoPup Market Optimization Tool. I think our team loves acronyms here, but essentially it's a, it's a model that, that uses kind of all the internal data, the what we call intent to purchase for folks that are getting onto the platform, trying to order GoPup, but it's giving them a message that, that they can't order, plus a bunch of tapestry tools. So look alikes of like, what does, what does a GoPup customer order and look like today versus what are the look alikes all over the country? And then they'll develop heat maps on where to go. And I could tell you like, as we've grown and as our customer base has developed, those heat maps and those hot, like high areas have

• 19:05Speaker 02

  changed dramatically, right? Like our first two years, it was predominantly college students. Today, you know, sub 15% of our user base is college. So it, the user base has grown tremendously. So it's a, 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.

• 19:27Anthony Pompliano?

  Got it. And then walk me through the same kind of analysis for new product categories, right? When you want to add on some of these verticals, how do you evaluate which ones are the next ones you're going to add?

• 19:37Speaker 02

  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, really simple and like, hey, what are people searching for versus, you know, the results are not populating well. And sometimes that means hey, 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. 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,

• 20:21Speaker 02

  right, with the space we need to be in and how do we continue to expand in this 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?

• 20:37Anthony Pompliano?

  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?

• 20:45Speaker 02

  You know, Bevmo is really, really interesting. One, GoPup, 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 is a one-of-a-kind asset in California that is really, really loved by the customers that it enters.

• 21:29Speaker 02

  There's four million customers in their loyalty base. And, you know, the combination of that, their leadership team and the infrastructure that we inherited to be able to kind of enable GoPup's microfilm and strategy within Bevmo really was the decision to enter and ultimately give GoPup to all of our Californian customers.

• 21:51Anthony Pompliano?

  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, you know, on-demand delivery or whatever other terminology others would use?

• 22:11Speaker 02

  Yeah, that's a great question, Pom. You know, for us, we thought about like, what are immediate everyday needs that people need? And again, it started off as snacks and drinks, right? That was the 2013 version 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 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

• 22:52Speaker 02

  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, you know, 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.

• 23:28Anthony Pompliano?

  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 consumer either behavior changes or just kind of affinity for what you're doing?

• 23:49Speaker 02

  What a ride 2020 has been, huh?

• 23:53Anthony Pompliano?

  You say that like somebody who spent many nights not sleeping.

• 23:56Speaker 02

  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? Um, all these new categories that we entered into, uh, saw growths, you know, up to like a thousand percent year over year, right? And, uh, in some of our newer categories and, and development of them, especially kind of in the, the early months of COVID, uh, and even now, right? We're still seeing massive, massive growth, uh, year over year, but it was being able to adapt

• 24:36Speaker 02

  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, 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, um, you know, especially the folks on the ground, especially our driver partners, especially our OAs, uh, that were kind of on the ground, making sure the customers didn't have an interruption to service.

• 25:22Anthony Pompliano?

  Yeah. As you've built this, you know, COVID-19 obviously is an accelerant, but you'd already built a great business. Uh, you're relatively young guy, uh, so is your co-founder, obviously. Uh, how have the two of you kind of navigated, um, building a large scalable business, raising, you know, over a billion dollars, uh, and kind of just really, I think, taking a, a home run swing, if you will, at an industry that, uh, one has a lot of competition, but also two is, um, very obvious to people, whoever wins, uh, there will be incredible, uh, kind of financial rewards and, um, uh, kind of benefit to, how do you navigate that as a, as a young, you know, first time founder? I put first time in kind of quotes in terms of just like the first time building a really scalable technology-enabled business?

• 26:07Speaker 02

  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 10x-ing, right? The business is growing 3x year over year, you have to be 10x-ing yourself, right? It 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, kind of year over year for the last seven years and have taken us to awesome heights. And our leadership team, right? 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 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,

• 26:51Speaker 02

  technology, product, merchandising, the whole nine yards, right? We have some of the best specialists from all over the world 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, right? We have, you know, 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 it to the driver.

• 27:34Speaker 02

  All of it had to be built kind of one step at a time, but it really came down to like the quality, both from a value match and, you know, technical expertise perspective of the people that we brought.

• 27:45Anthony Pompliano?

  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.

• 27:57Speaker 02

  Yeah, I mean, it's more like it's become, you know, it was, it started as something formal and it's become something that, you know, like we're, 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 Belios, who's the co-founder of Five Below Company in the, in the East Coast. And, you know, he scaled three massive businesses in his lifetime. I think Tom is 30 or 35 years older than me and one of my closest friends. And has taught me a lot to this day, has continued to teach me a lot. And I have an analog to Tom in many different spaces in the business, whether it's kind of the BD function or the investment relations function that helped like, again, 10x Ecur NI, right?

• 28:42Speaker 02

  We're pretty, me and my co-founder are like a unit. We're both two halves of a single CEO. And, you know, ultimately, all these people that we've gotten on board, both investor and non-investor, have really helped myself and Ecur scale.

• 28:59Anthony Pompliano?

  Yeah, I love that. In terms of the funding that you guys just took in, what are you planning to do with the money?

• 29:07Speaker 02

  You know, for us, it's like any other fundraiser, make GoPuff more available to customers all over the country. We have this vision pop of being the world's go-to solution for immediate everyday needs, right? Or we could be the world's go-to solution, we've got to be US's go-to solution. And we have some work to do. We have some, some kind of a heavy lifting to do in California from an integration perspective. That's starting immediately. 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, you know, ultimately for us, we want to aggressively focus on, on the US this upcoming

• 29:46Speaker 02

  year and then go into achieving kind of a broader, you know, world's go-to solution as we then start achieving the US go-to solution first.

• 29:58Anthony Pompliano?

  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 a geography, that would be the most surprising to people today?

• 30:10Speaker 02

  Oh God, I think services would be something that's really interesting. I mean, 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. That 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.

• 30:48Anthony Pompliano?

  Got it. As a 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?

• 31:07Speaker 02

  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 productively? But then you realize it's all like, you know, people on the execution base, right? It's like, can we out-execute everyone else? Can we get the right folks in place, right? Like, again, lessons learned over seven years of that hire really sets you back months. So like to this day, you know, you care and I still interview every single HQ employee, right? It's an entire weekend, right? Going back and forth and really, really honing in and making sure that this person that's joining in is the right culture fit. So for us, it's all about like execution risk.

• 31:51Speaker 02

  Like we're two pretty aggressive co-founders that, you know, are moving very, very fast. And our ability to remain aggressive and impressive to accelerate it more is our biggest opportunity and risk in this business.

• 32:06Anthony Pompliano?

  How has your relationship with your co-founder changed over time? People always talk about, you know, kind of you have the quintessential story, which I think people love is 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?

• 32:27Speaker 02

  You know, Yekir and I are pretty different, right? You know, Yekir 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 Yekir and I, right? Like, we spend 17 hours a day together, which my fiance thinks is a little weird, but it, you know, it is, 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 and 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, Yekir and I get into a lot of arguments with other people.

• 33:12Speaker 02

  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 Yekir, right? It wasn't like, you know, this education, go up, everything, right, 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.

• 33:41Anthony Pompliano?

  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, you know, 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, you know, tomorrow we're going to be fine. Any stories there that can kind of highlight how that's played out for you guys?

• 34:05Speaker 02

  Yeah. You know, we, we entered New York as our sixth market before we raised any money. And, 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? We entered New York where we were grossly unprepared to be in New York. We were, the company was seven people. It was, it was pre-funding, we actually, we were just raising, it 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 that the 20, 14-year-old versions

• 34:50Speaker 02

  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 it work and our customers loved us. It just was by the point we decided to shut it down and now reopen it years later, we had already been in 14 markets, but New York was taking more time than the under 13 combined together. And you're kind of 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 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. You know, leaving New York was the best thing that we did, as much as it pains me because

• 35:32Speaker 02

  I grew up in Brooklyn. But you know, ultimately now we're so much better prepared, right? We're, I don't know, even recognized at the 2014 year old version of our company. But we were grossly unprepared to enter a market. And I think if we continue to bang against the head against the wall in New York, we would have been in a much different position today. So it's like, in that case, two heads is much better than one. 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.

• 36:07Anthony Pompliano?

  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?

• 36:20Speaker 02

  So for us, this latest round 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, holy shit, right? This is literally on fire, growing so much, kind of not month over month, but week over week. And we got a lot of action from other folks. 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 is going to be with you, right? Raising money is like a marriage that you cannot divorce.

• 37:02Speaker 02

  You gotta be really certain that like these people that you're bringing into into the fold really have the same vision for the organization as you do. And for us, D1 had that same vision, right? Dan Sondheim is great, great guy. You care was was spending a lot of time with them. And ultimately for us, that was like predominantly like a Zoom and phone call thing. But we still had to be sure that like, these are our guys for scale. And I think they they enjoyed the performance that we've had over the last couple of years and the the kind of model that we built. But we had a lot of guys on the table, ultimately being very, very selective on on who we wanted to bring into the fold.

• 37:39Anthony Pompliano?

  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 this was either the most important lesson, the thing that surprised me the most from when I started to today?

• 37:53Speaker 02

  Yeah, you know, young founder, we think we try to do it all, right? Like, try to do everything. Yeah, I 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.

• 38:09Speaker 02

  We care as both of us. Oh, we this is all we really know. 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 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 spent 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 between table stakes is team oriented.

• 38:51Speaker 02

  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 thirty days. 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 all learnings and kind of meaningful steps forward, but the secret sauce is definitely people.

• 39:21Anthony Pompliano?

  As you've experienced 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 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?

• 39:39Speaker 02

  Yeah, so ultimately, we continued to do the things that were important for GoPuff. Every week, me and Yekir addressed the whole company. We made sure we over indexed in team meetings. So Yekir and I 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 having one on ones, obviously with all of our leaders every single week and kind of on a less formal basis to meeting with the LT team every single day. Right? There's time on the calendar for one hour every single day to really make sure we're overly aligned, we're overly transparent,

• 40:22Speaker 02

  we're overly thinking about it, and then with the whole org every single Friday. So we spent a lot of time on really making sure we're over communicating. 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 even on the non-business side, we recognized that as GoPuff 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 now,

• 41:06Speaker 02

  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.

• 41:17Anthony Pompliano?

  Where'd the name GoPuff come from?

• 41:22Speaker 02

  I wish I could tell you a really remarkable story.

• 41:27Speaker 02

  It's not as exciting, right? It's a name that really intrigued interest among our friends in college. I got to tell you, it's a name that our customers love today. We talk a lot about it, our customers, about the name and the transition to 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 something that we thought of in college. 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.

• 42:07Anthony Pompliano?

  The most important question I'm going to ask you today is, are you still having fun?

• 42:12Speaker 02

  I think I'm having more fun now than ever before. I can't imagine doing anything else. Again, I have no other hobbies.

• 42:20Speaker 02

  This is it for me. I love it. I'm doing it with another human that I love. He cares like, really like a brother to me. And the kind of folks that we have on board, you know, 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.

• 42:47Anthony Pompliano?

  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've ever read?

• 42:58Speaker 02

  This one is easy. It's Trillion Dollar Coach. I don't know, but if you read that one.

• 43:05Anthony Pompliano?

  It's a great one.

• 43:06Speaker 02

  Yeah, it's one that I really, really love. And I see a lot of analogues in my own life on that book. And ultimately, how that book has shaped the lives of so many people in Silicon Valley and otherwise.

• 43:26Anthony Pompliano?

  Absolutely. Second question is more fun. Aliens, are you a believer or a non-believer?

• 43:32Speaker 02

  I think, I think aliens exist. We had this, it's funny. We talked about this last night at two in the morning with Yekir.

• 43:40Anthony Pompliano?

  What was the debate?

• 43:41Speaker 02

  Yekir is a hard no on aliens. A hard like, he's like, there's no, there's no, there's, he'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.

• 43:52Anthony Pompliano?

  I'm glad you're the one who came on the podcast then, cause I don't need any anti-alien people to keep spreading that nonsense. I'm with you.

• 43:59Speaker 02

  No, no, no. I think there's aliens out there for sure.

• 44:02Anthony Pompliano?

  You could ask me one question to finish up. What do you got for me?

• 44:05Speaker 02

  You've been doing this for two years, right?

• 44:08Anthony Pompliano?

  Yep.

• 44:09Speaker 02

  What is the biggest surprise for you, man? What's the number one thing, the biggest insight you could give me?

• 44:15Anthony Pompliano?

  I think everyone's way more similar than they are different, for sure. And if I had to really boil down, you know, all these successful people and entrepreneurs, investors that come on, there's no secret to success. Like, you just gotta do the work. And that's like, sounds pretty simple, but people kind of lose sight of that. And then the second, 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,

• 44:54Anthony Pompliano?

  there's always a multitude of people in their life who kind of helped them along the way. And, 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 is staying kind of persistent and disciplined, 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, 10 years into a business, you start to realize, like, we know what to do. It's just an execution and people thing, right? And so, I think that you're spot on. And obviously, the results speak for themselves so far.

• 45:32Speaker 02

  Got a long way to go. Long way to go. We're just getting started here.

• 45:36Anthony Pompliano?

  Love it. Where can we send people to find you on the internet or find more about GoPuff?

• 45:41Speaker 02

  Download the app and just GoPuff on the App Store, Google Player, go to GoPuff.com.

• 45:46Anthony Pompliano?

  All right. Are you on the internet anywhere or are you hiding?

• 45:48Speaker 02

  Yeah. Raphael, I have a long Russian last name, Ilishayev. You can find me Instagram, Twitter, I'm all over.

• 45:55Anthony Pompliano?

  All right, man. Listen, thank you so much for doing this. I'll do it again in the future.

• 45:58Speaker 02

  Thanks so much.