Pod Insights The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch 20VC: HelloFresh CEO on Why When You Raise VC You Only Have Two Options, Why Your IPO Price is Irrelevant, Why Timing is So Important in Going Public & Why D2C is Not Dead with Dominik Richter About this episode Dominik Richter is the Founder & CEO @ HelloFresh, one of the largest direct-to-consumer businesses of the last decade and the #1 recipe box delivery service. Fun fact, two of the three biggest cooking facilities in North America are HelloFresh facilities with the third being Disney World Orlando. Dominik has made over 40 angel investments in the EU and the US. In Today's Episode with Dominik Richter We Discuss: 1. The Founding of One of the Largest D2C Companies: How did Diminik's dreams of being a footballer translate to founding HelloFresh? What does he know now that he wishes he had known when he started? Why does Dominik respect the brands that large banks have built? 2. To Raise or Not to Raise: Why does Dominik believe when you raise VC, you either have to sell or go public? What are the single biggest differences between raising in the US vs Europe? What are Dominik's biggest pieces of advice to founders raising today? Why does Dominik believe so many of the D2C companies should not have raised venture funding? 3. The IPO: When, How and Why: Why did Dominik decide to IPO the business so early? Why does Dominik believe that the first-day trading price is irrelevant? Why does Dominik believe that timing is so important when going public? What are the biggest pros and cons of being public? 4. The Rise and Fall of D2C: D2C has been crushed lately, why? Is this the end of D2C as a category? Is D2C an investable category for VC? HelloFresh is one of the biggest and $2.5BN market cap? What have been the best and worst resource allocations Dominik has made? Do recessions help or hurt recipe box businesses?
Transcript 10,800 words · 5 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 When you raise a lot of venture capital, you need to make a decision. Are you going to sell that company or are you going to take it public? The way that our category traded would have not allowed us to IPO the business at any other point in time. First day price, completely irrelevant.
0:14 Harry Stebbings? I am so excited for this one, Stae. Recently, we have Joey, founder and CEO at Allbirds on the show to discuss the current state of direct consumer and the future ahead. And today, we're joined by one of the largest direct-to-consumer businesses of the last decade, Dominic Richter, co-founder and CEO at HelloFresh, the number one recipe box delivery service. Fun fact, two of the three biggest cooking facilities in North America are HelloFresh facilities, with the third being Disney World Orlando. This is an incredible discussion on fundraising, IPO-ing and the future of direct consumer. But before we dive into the show today, there is no shortage of helpful AI tools out there. But using them means switching back and forth between yet another digital tool.
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3:12 Speaker 00 You have now arrived at your destination.
3:15 Harry Stebbings? Dominic, I am so excited for this. I heard many great things from Harley, from Nico, from Jeff. So thank you so much for joining me today.
3:22 Speaker 00 Harry, it's great to be here.
3:23 Harry Stebbings? I always find it fascinating going back to childhood. What did you want to be when you were a child, when you grew up? Let's just start there. I know it's weird, but just bear with me.
3:32 Speaker 00 I probably had the dream that many young kids have. I always wanted to become a footballer. That's what I did most in my youth, basically playing football each and every day. I played academy football. At some point, figured that the chances of getting there are very, very slim. And then pivoted towards university and the boring path of becoming a professional.
3:52 Harry Stebbings? I have a theory that athletes make some of the best entrepreneurs though because of two things, which is consistency and discipline. Both required to be very, very good at sport and then competition as well. Do you think there's a lot actually you carried with you from the intense sporting football competition to entrepreneurship?
4:10 Speaker 00 Absolutely. A lot of lessons and also painful lessons that you get taught. When you get left out of the team, when you don't agree with the manager, when you don't agree with some of your teammates. And then being able to absorb that, maybe you know, shut up, go to bed and next day, kind of like go back onto the pitch. And really trying to make the best and not have anybody notice how sad you are or sort of like how much that worries you. I think that is like a key lesson that you learn very, very early on.
4:38 Harry Stebbings? I never quite managed to hold back my disapproval with the manager. So maybe that's why I wasn't a good team player. We pivot away from football and decide that we're gonna go to Goldman Sachs. How did that happen? I'm just intrigued.
4:50 Speaker 00 To be fair, I think that was a mistake on my side. I'm still always fascinated. How good some of the big banks and the consulting firms are to lure in top talent. The job is pretty boring. Nonetheless, I think they attract like a huge deal of world-class talent each and every year. And in the end, I think that all comes down to marketing. They're just really good at marketing and at branding their places. As these are the most desirable places where you should go if you're a top graduate. And I have not been immune to resisting that. And so I also ended up there, but figured very quickly. That is probably not the right place for me. So after about nine months, I already left, so.
5:28 Harry Stebbings? I mean, it's longer than I spent at university, so at least you can tap yourself on the back for that. How does HelloFresh come about then? When was that? I'm gonna spend the rest of my life changing the way we eat.
5:38 Speaker 00 Already at university, I had a little void to fill. There was something of being an athlete and then ditching that career and focusing on something different. And I was always fascinated by entrepreneurship. I think the one thing that also throughout my childhood, I always figured sort of like I wanna run things. I wanna be at the helm of things. I wanna invent things. I wanna run a business. I wanna be the one making decisions. So I always had that type of drive of being my own boss and deciding about my own destiny. I started two businesses on the side during university without funding. Basically with some of our own funds and with free interns to do all of the work alongside myself and a friend. So after that.
6:20 Speaker 00 Short excourses to Goldman, I kind of like was moved back on track and starting that business. So what I did is actually moved to Berlin, which was, I think, up and coming, very different from what it is right now. European tech was up and coming. So in 2011, arrived in Berlin, little money in my pockets. And basically got together two of my smartest friends that I met throughout university. And we said, you know, we want to start something and we wanted to figure, we wanted to settle on something that we have a big passion for. Because that, to me, was one of the key lessons I learned when starting my, my side hustles at university. That you should be doing something that you're really passionate about, because you're always going to hit some rough stretches. And it's way easier to get out of bed in the morning when you have a rough stretch.
7:03 Speaker 00 When actually you're very, very passionate about what you're doing.
7:07 Harry Stebbings? I have this theory, which gets me in trouble a lot in the investing business that we have, which is I like to invest in second time founders. Because I think that there are so many fuckups that one makes the first time that you can avoid the second time. When you go back to deciding to start that business around a passion point. What are one or two of the biggest fuckups that you made in the early years? That you would change or would advise yourself about with the knowledge that you have now?
7:33 Speaker 00 We were definitely very naive in the beginning. And I think if you had talked to industry experts, they all would have told you how complex it is to ship perishables. How complex it actually is to run fulfillment, to run a supply chain at scale, to get growth marketing right. So all of the things that we didn't know, I think were actually very, very good. We didn't know them because otherwise we would have never started that business. And in terms of fuckups, there are a lot. I think the, the history of HelloFresh, especially in the first 18 months, plastered with, with fuckups and things that we learned. I remember one very vividly, we had a new record week. We had to source, I don't know the number any longer, but something like 10,000 potatoes.
8:16 Speaker 00 And you actually sourced 10,000 potatoes, which is like two big truckloads. And then the trucks actually collapsed and a highway was actually closed down because our trucks collapsed. And the whole highway was full of potatoes. So we couldn't deliver any customers. Customers, it was a huge deal making sure the fireman came, they closed off the street, they did all of these things. Just because like we had no idea how to ship potatoes. A truck broke down, we had no idea whether that's the right trucking company or not, probably chose the wrong one. That was very early on, fortunately, these things are eleven, twelve years behind us now. But this was definitely one that I remembered very, very vividly.
8:54 Harry Stebbings? Do you ever look and think, God, I didn't choose an easy business? And I mean that nicely, shipping SaaS is a lot easier than sourcing potatoes, shipping potatoes across the country.
9:05 Speaker 00 So it's maybe a contrarian view, I think a view that sometimes in the investor community is not much appreciated. But I like hard businesses, I like complex businesses.
9:16 Harry Stebbings? Why?
9:17 Speaker 00 If you figure them out, you create really big competitive modes. And that's because number one, you've figured something out that is hard, that is complex and you make it work. And that means that everybody else who wants to figure it out needs to work equally as hard. Plus you have a head start, you've figured something out and you're already working on the next thing. So I always feel like if you're working on a complex business and you solve something, then you're actually creating modes that are so hard to overcome. Plus you have the advantage of time that you can then use to your own advantage. That all compounds over time. And when you think about modes, right? In the beginning of a category, everybody starts from a blank sheet, nobody has any modes.
9:58 Speaker 00 If you're starting in a hard category and you're figuring something out, number one, you probably have less competition in the beginning. Number two, as you're figuring things out, you're creating modes. And then number three, you have a head start. So when your competition is figuring out what you've already figured out, you're already working on the next thing. And these things compound so much over time that then when a category like ours is now more than a decade old, we had a decade to solve some of the most complex problems here. Now, if I look at that from the outside, it would be absolute insanity to launch a competitor to us as of today. So that's why I like complex business model and complex problems. I think they're very often much more sustainable in the long run and they also attract a lot less competition.
10:40 Harry Stebbings? So what would you say then to Wall Street, to investors, to analysts who do have this negative perception? What are the most complex problems you think you've solved?
10:49 Speaker 00 Over time, the type of business that we run, you really need to build a lot of different muscles. We talked about being an athlete before. So if you're an athlete, you have a number of muscles and if just one of your muscles doesn't work very well, you're an injured athlete and you're on the bench. And it's a little bit the same with our business, right? You need to be world class, you need to build muscles in a lot of different dimensions. You need to be very good at building a brand, you need to be very good at building your last mile logistics network. You need to be very good at establishing all of your suppliers and your supplier relationships and those integrations. We're running forty two different fulfillment centers with heavy automation in those fulfillment centers around the world.
11:30 Speaker 00 You need to scale up your operation and basically run people and processes and technology at scale. So all of these are, in a way, muscles we have built to pretty big muscles. That helps us also going into new business verticals, like we have done more recently with a couple of others that we've launched. But in the end, I think these muscles are pretty strong and these are real competitive modes. We've always had some competitors that were also developing some of these muscles. But I think in the end, it's the sum total that you need to really be successful.
12:00 Harry Stebbings? Can I be blunt? And you might be really bored of answering this, and it's probably a shit question. We look at like a blue apron of the world, a very famous brand name that obviously did not end the way that investors wanted it to. Where did they go wrong where you went right? What's the difference?
12:16 Speaker 00 If I look internally and what we're trying to do and some of the philosophies that we carry, then maybe those are like a little bit different to some of the philosophies that some of our competitors or some of our US competitors specifically have carried. We've always had a big appreciation for understanding things in the most detail there is, diving deep and building things internally rather than leveraging external agencies or leveraging external suppliers. So we always felt there is a number of competencies, a number of muscles that we want to really understand in detail. And we rather build them in-house and we try to really figure things out and then that will really pay off in the long run.
12:59 Harry Stebbings? I had Mike at ButcherBox on the show and he was interesting. He said the biggest problem alternative providers had is they tried to vertically own everything. They tried to own all the services, they tried to do all the shipments, they tried everything. And you're like, don't do that. We're happy to pay a little bit higher price. We can outsource that. That's not our job. Do you think that's wrong? Do you need to vertically own everything?
13:21 Speaker 00 I don't think you need to vertically own everything. I think there are some parts of the value chain that you want to own. But it also depends on the stage of the business. So even today, we're incubating like a number of new business lines. And very clearly, in the first two, three years, we're trying to keep fixed costs like as low as possible. It's all about finding product market fit. In these times, I think it makes total sense to say, everything that doesn't have to do with product market fit, you wanna outsource. I don't wanna spend mental bandwidth on that. I wanna make sure I have a great product. I understand some of the distribution channels. I understand my consumers. I can act fast on their feedback. I don't wanna do all the stuff that can keep me up the whole night and the whole day and worry about that stuff.
14:05 Speaker 00 But at some point, I think it's really important that if you actually say like, hey, this is mission critical for my success. I don't want to have any dependency on somebody else. Plus, I also want to understand how good you are in something, right? Then you actually need to go in and do that yourself. And I think there have been different phases in our journey. I would definitely say also looking at some of the competition that we've had. At certain points in time, we felt that really going from five wholesale suppliers to integrating with one thousand five hundred suppliers all over the US directly to capture that margin upside, to get much better freshness and quality, that this is something that drives a lot of value.
14:47 Speaker 00 It meant that we had to hire like a hundred people internally and build technology for that, et cetera. But it really helped us to capture a lot more margin on every order that we did. We also never said we wanna outsource anything that has to do with performance marketing, for example. Because as a direct to consumer company, right? That's one of the biggest sensitivities on your LTV to CACs is your CAC. So I really wanna understand that end to end. I wanna dive deep. I wanna have world-class people internally who I can challenge, who can build up like a great growth engine. I don't think that even if that takes some time and investment in technology and people and process, those are things that I just do not want to have any dependency on anybody else.
15:29 Harry Stebbings? Can I ask you a weird one, but customer acquisition cost-wise, I'm always stuck. In the way that I'm like, does it go down over time? Because you have brand marketing, you have word of mouth, you're a bigger name. Or does it go up? Because you've saturated the core market that's most tangibly obvious for your products. Naturally, you're going to less obvious markets. Does it go up or down, do you think?
15:52 Speaker 00 So I think you described the two dynamics well, right? On the one hand side, you tend to penetrate much more deeply into a specific total addressable market. And that generally means that your customer acquisition cost goes up. On the other hand, like you're building a brand, you probably have a big database of people who have ordered with you at some point. And so those two dynamics kind of offset each other. As you scale and with more tenure on a market or in a geographies, you have really those two effects that are in some ways offsetting each other. And then you need to look really at the category, weighing out the other one. But you're describing well the two dynamics that you're seeing.
16:32 Harry Stebbings? In terms of capital allocation, we spoke about kind of the vertical integration there. But do you think the best CEOs are the best capital allocators? Do you agree?
16:40 Speaker 00 I think that's a very financial view. That's probably what a PE fund would tell you. It's they are the best capital allocators. I think capital allocation is a very important part of your job, but it's more than capital allocation, right? It's resource allocation. Where do you actually put sort of like your people? How do you organize your people? How do you make sure you bring out the best in your people, et cetera? These are jobs that are equally important as capital allocation. Probably capital allocation becomes more and more important the more mature your businesses. And the less it is about building and the more it is about allocating the capital that you have at the highest ROI projects.
17:17 Harry Stebbings? But in terms of like capital allocation, what was the best capital allocation decision you made? And what would you think was the worst?
17:24 Speaker 00 I think I have a pretty good track record in M and A. Over the last four years, we've generated about 1.5 billion in cash flow from operations. Of those 1.5 billion that we generated, we allocated roughly 900 million into making our own operations better. So in our fulfillment. Fulfillment network in our last mile logistics, in our technology, in our automation of some of the fulfillment centers. We spent about three hundred million on M and A and we did a share buyback of about two hundred million over that period. Hey, you generate one point five billion, how do you allocate that? That's in the end is capital allocation, right? The best capital allocation decision nonetheless was probably one of the M and A deals that we did.
18:08 Speaker 00 We bought a company called Factor, that's a ready meal company in the U S, which has been growing very nicely. And that has certainly been a very good return for us and hence a very good capital allocation decision.
18:19 Harry Stebbings? Can you take me to that decision then? We're sitting HelloFresh and obviously we have co-headquartered Berlin and New York. How did you come across it? Why were you excited by it?
18:28 Speaker 00 So first of all, we have been excited by other direct to consumer verticals. I think the way that I look at it, we operate a portfolio of different P and Ls of different business lines. We started the business in twenty twelve, we IPO'd the business in twenty seventeen. And at that point, we were active in six markets globally with one brand, HelloFresh. Post IPO, we said there's a lot more markets that we can go into with our meal kit brands. And we basically in the three, four years after that, so between twenty seventeen and twenty twenty, launched HelloFresh in another eight or nine markets as the one brand. We also said there's a good opportunity to actually go into a premium category
19:10 Speaker 00 and into a sort of like everyday value category and launched different meal kit brands with Green Chef in the U S and EveryPlate in the U S and also brought those to some of our European markets. At some point in twenty twenty, we said, okay, meal kits, we have a lot of business units, a lot of markets that are in the early days of their growth S curve. And we have others that are maybe a little bit more mature and where it's more about managing them for cash flow and where it's more about really building out the customer proposition. Basically became interested in what are other direct to consumer vertical that share a lot of the things that we like about meal kits? And maybe a lot of the complex problems that we already solved for meal kits. And we first had a big discussion about is that something we should incubate our?
19:54 Speaker 00 Back in twenty nineteen, we actually tried our hand at coming up with our own ready meal provider. But we sucked at cooking the meals. We were very good at generating demand. So I think six months after launch, we were at ten fifteen million dollar run rate with a small brand that we that we launched. But the meals were terrible, like we got really bad recipe ratings, customers didn't stick around. We tried that for probably about a year, but we couldn't really get the meal quality right. That's when we started looking into sort of like some of the other companies in that space. And really were focused on which companies make the best meals. Which companies have really cracked that food manufacturing process, that cooking process at scale?
20:37 Speaker 00 And how can we potentially partner up with them?
20:40 Harry Stebbings? Is quality not just a line to margin? And I know that sounds blunt, but it's like I can make the best meal, but it'll just be the lowest margin because I have the best produce. I have the best steaks.
20:50 Speaker 00 I would say it's one component of it, how much money you invest. But a lot is how do you cook that? How do you prep it? How long do you keep it in inventory? How quickly does it move from one station to the next station? That has all to do with the freshness of the product and the quality of the product can degrade like very, very fast. If you're not moving it from one station to the next station, you know, those are big cooking facilities. At the moment with Factor, we have two of the three biggest cooking facilities in North America. Guess what the other one is? The one that we're not owning of the top three cooking facilities in the U S.
21:24 Harry Stebbings? Tell me.
21:24 Speaker 00 Disney World Orlando.
21:26 Harry Stebbings? And so you get in touch with the Factor team and say, hey, we wanna buy you. We love your food.
21:31 Speaker 00 I think first we do a lot of desk work. We do a lot of desk research. We're trying to like really understand all of the competitors. We're trying to look at things like credit card data. We're trying to look at web traffic, blind tasting of meals and mystery shopping to understand the products. And do a lot of black work and pre-validation work before. And then at some point make a decision, hey, we should build a relationship, get to know each other. That's usually then your dating phase. You're trying to evaluate if that might be a fit, if there is some willingness.
22:02 Harry Stebbings? And then we decide to buy them. How's integration? How was that?
22:06 Speaker 00 Integration is very hard. Probably been an integration phase of about twelve to eighteen months where we worked through like a good plan. It was all about being aligned on our operating system. That is something that we talk a lot about internally. What is our operating system? That makes large groups of people run in the same direction, talk the same language. And then just, you know, making sure that, you know, we can build an athlete that carries over the best muscles that we have built at HelloFresh with the best muscles that we have built at Factor.
22:35 Harry Stebbings? What was the worst capital allocation decision you made on the flip side?
22:39 Speaker 00 In the rearview mirror, one of our share buybacks was at much higher levels than where the share price is trading today. So if I'm looking at the IRR of that investment, that was probably not a great investment. But then in the end, right, we're not doing that to to push the stock price. We're doing that to grow free cash flow per share by reducing the share count. So I think in the long run and in the end, all you can do is work on the long run. You're reducing the share count and then hopefully at some point in the future, that will also have been a good capital allocation decision. Two years or eighteen months after we've done it, the IRR on that does not look great.
23:15 Harry Stebbings? What did you IPO at? What was the price when you IPOed?
23:18 Speaker 00 We IPOed at about ten euros per share.
23:21 Harry Stebbings? Do you like being public? Obviously, I have many public markets CEOs on the show. None of them like it. They're honest about it. They're like, no, I wish I wasn't.
23:28 Speaker 00 There are some things which are definitely beneficial and there are others which are not incredibly beneficial. I feel when you raise venture capital, in the end, you need to make a decision. Are you going to go for a trade sale or are you going to IPO the business? Those are in the end the only two credible path. If you still want to run the business, if you still feel that there is a lot of runway ahead of you, then you probably don't want to sell the business and give up complete control. So you're going to IPO the business. It's not the easiest to have a daily reflection of everything that's going on on a on a screen and like a value put on you every day instead of like every two years or so.
24:08 Speaker 00 But it also is sometimes good is disciplines, teams, kind of like makes you think straight. You have a lot less of this insanity in public market companies than you might have seen in private market companies in the last three years. But if you want to keep being in charge and you have raised venture, in the end, you need to go public. That's pretty clear.
24:27 Harry Stebbings? How do you deal with team morale and the daily ticker on how much stock is worth? The joy of being private, obviously, is that you raise it a certain price and then people kind of have that in their mind as the anchor and they do the work. When it's daily, it's like, check, am I richer, am I poorer, am I richer, am I poorer? How do you prevent team morale sinking with macro taking effect on market caps?
24:52 Speaker 00 I do feel that people checking a stock price that happens like once you go public, especially in the beginning, because everybody is excited and everybody thinks like, hey, what's happening today? Why is it up 3%? Why is it down 3%? Guess what? It's just randomness or macro factors, et cetera. Your business is still the same. I think Warren Buffett had that great quote where he basically said, if I buy a hamburger at $2 and the next day they sell the same hamburger to me at $1, like I'm happy, you know, I can buy double the amount. It's still the same company. There might be like a different price on the stock ticker, but it's still the same company. And that's also if I look at the last 12 months, I think in almost every domain of the business,
25:34 Speaker 00 we're a better company today than what we were 12 months ago. So that's kind of like what really counts. And then in the long run, there will be times when, when things look differently.
25:43 Harry Stebbings? Two aspects before we move to people. One is like the unbundling of the space. I feel like people are getting more and more specific with preferences. You have like the gym bunnies who want protein meal kits and you see like gym meal kit companies that just do like protein gym bunnies. And then you see, you know, specific religious groups that have like religious meal kit companies. And it just seems like it's getting so unbundled as a space and segmented by societal group. Does that concern you, that unbundling of the space in this way?
26:14 Speaker 00 I don't think it concerns me. When you look at different consumer categories, it's very rare that you have a consumer category where one company has 100% market share. What you tend to have in consumer categories, you have one or two really big brands, usually global brands, that own a large share of that category, but then you always have like smaller niche players. Tastes are very different and that's not only about food, right? That's in beauty, that's basically everywhere in the direct to consumer or in different consumer categories. You tend to have the gorillas in a certain category and you tend to have a much more fragmented long tail because you also have long tail tastes and some niches.
26:55 Harry Stebbings? If we think about macro, I was thinking about this before and it's like, obviously we're in a tough time and like, we think about recessions coming in a recessionary period ahead. I was thinking, does that help you or does that hurt you? People can get food cheaper if they go to kind of more discount supermarkets, but then also they may not be going out to restaurants and they may get it instead. How do you think a recession impacts the meal kit business as a whole?
27:20 Speaker 00 So one of the first buckets people start saving is they're going less to restaurants. That's definitely what you have seen in previous recessions. The share of out of home food has actually declined, whereas the share of food that you consume inside your own home actually goes up. I think that's something that is marginally positive for us. On the other hand, there are definitely some customers who are much more concerned about their disposable incomes and they might think longer and harder about taking up a new routine. And that's also something that you can see with us. I think our existing customer base actually shows very good retention. They're on average ordering more meals with
28:02 Speaker 00 us than they did before, part of that because we made a lot of investments into the assortments, into the menu. But in tough macro times, a little harder to get customers to that first purchase, to basically say, I'm gonna start something which maybe is the same price, maybe slightly higher. So I'd say we have now shown over the last two years that we can also navigate through economic cycles without having like a hugely negative impact on our business.
28:29 Harry Stebbings? Do you think it's the hardest time ever to be a direct to consumer founder? I was chatting to another one the other day and they said, between Facebook performance challenges, Google challenges, recession, this is the hardest time it's ever been for direct to consumer founders.
28:43 Speaker 00 I'd say it's a very different time than what it was maybe five or seven or eight years ago, when the whole direct to consumer boom started. We started the company when direct to consumer was not really a term. I think we're today one of the largest direct to consumer companies outside of China. I don't really know any direct to consumer company that is much larger than we are, but it's Certainly like very different today than it was back then. And I think back then, you had a lot of people that started a direct to consumer company by going to a retail store, looking at shelf space, looking at what are the most outdated brands there that could use a new font and a new branding. And you started your direct to consumer company. It was very easy to get the first customers in.
29:26 Speaker 00 And especially if you were operating in the US with such a large domestic market, it was very easy with one or two growth channels to actually get to fifty or a hundred million of revenue without being like extremely sophisticated. I think very clearly those times are over. But I don't think that the time for direct to consumer is over because in the end, right, direct to consumer means you make it more convenient for the consumer. The consumer probably has a lot more information, has a lot more advice, has a lot more crowd feedback on your products. So I think from a consumer perspective, direct to consumer is anything but that. But what you need to do today, you need to have a very differentiated proposition. You need to either be deeply integrated on the supply chain,
30:10 Speaker 00 or you need to have a unique angle with distribution, or you need to be like very, very good to outperform some of your competitors or others to make the marketing equation work. But still, every single year, you have great direct to consumer companies being started. And every single year, you have great exits of direct to consumer companies, which have scaled to levels very few imagined they would actually get to.
30:35 Harry Stebbings? I was debating whether to go here, but fuck it, I'm enjoying this. And so I will. And we'll see how it goes. My question is like, is direct to consumer a venture backable segment? HelloFresh is like fucking amazing market leader, but it's like one of the all time leaders. And it's three and a half billion. But like, it's not like SaaS where there's fifty, twenty five over ten billion. It's like, as a category, is it venture backable? How would you respond if I asked that question to you?
31:06 Speaker 00 I don't think you can make a plain or broad statement that applies to all companies, but I do think they were.
31:13 Harry Stebbings? I just try.
31:15 Speaker 00 A lot of companies ended up being venture backed when the better path would have been to raise an angel round, trying to get to profitability and actually scale the business to a hundred, two hundred million in revenue. I've made a bunch of angel investments and I've had that discussion with founders a lot where they say like, you scaled the company to that level, you raised some venture money. I want to do the same and I very often advise them and said like, look at the personal outcome for you. The much less risky way is for many, many of those categories and many, many of those companies to not raise venture.
31:48 Harry Stebbings? You couldn't have done what you did without venture though, could you? Do you regret raising as much venture money as you did?
31:54 Speaker 00 I think we have a number of particular features, characteristics of our business model, why it makes sense to raise venture. Number one, you're cooking or eating basically on a daily basis, right? It's something that has like a very high frequency, which means what a lot of direct to consumer companies suffer from, that they don't get the frequency. We have very high frequency. Secondly, food is like such a big category that you can build like a really, really big company. So in the end, I think for what we actually didn't achieve, we didn't raise like crazy amounts of venture.
32:28 Harry Stebbings? How much did you raise in the end?
32:30 Speaker 00 Up to IPO, we raised around about three hundred million. We had a cumulative cash burn of about three hundred million before we actually started generating cash flow. And since we have started generating cash flow, I think about three years post IPO, we had our cash flow break even. And since then, we have returned cash to shareholders, invested in all the businesses, did M and A, et cetera. So I feel for the type of ambition level that we had and for the revenue growth and category that we were going after, it was not insane amounts that we raised.
33:02 Harry Stebbings? When you review your fundraising, no, it's not at all. I mean, we see AIC rounds raise that much, Dominic. So I mean, you're positively lean. When you review your fundraising though, is there anything that you know now that you would tell yourself, having all the knowledge you do now?
33:17 Speaker 00 We definitely developed our scar tissue around fundraising. We definitely started fundraising processes too late and it was very, very close to actually closing rounds and getting it done.
33:28 Harry Stebbings? Can you tell me a story of when it was thinnest, like closest?
33:32 Speaker 00 So I think in the early days, there were one or two occasions where we were literally like three to five days before thinking about filing for chapter eleven, which I guess is the is the is the right term, at least in US terms. Very, very close because in the end, I mean, you're probably sitting on the other side of the table, but in the end, there's always like, you know, things popping up, gets delayed by two weeks, gets delayed by another month, there is this one document missing, et cetera, et cetera. And all of a sudden, you're like, hey, my duty is actually when I feel like I cannot be able to to do payroll. It's actually my duty to flag that. They were definitely in the first one or two years. I think two occasions that I remember very vividly where it was very, very close to getting to that point.
34:14 Harry Stebbings? Dominic, how do you deal with those intensely stressful moments? Like that is like all night, you are not sleeping and you are having heart palpitations. How do you deal with the real stress moments?
34:25 Speaker 00 I think it definitely helps when you run a profitable company. You definitely sleep much better. You still have like as many problems and as many things that worry you, but you don't have this existential angst that you carry around with you. I think I definitely sleep better since the point that we were sustainably profitable and started generating like real profits. How do I deal with it? Generally with stress, I think my way to deal with stress is just having like a very good routine of doing sports. I'm a sports fanatic. It helps me clear my mind. It helps me get peace of mind. And every time I pick up one of many injuries that I pick up while doing sports and I can't do something for two weeks or three weeks,
35:04 Speaker 00 I'm getting really anxious and I can feel that I get like way more stressed, that I don't feel as healthy, that I don't feel as fit, that I do feel a lot more stressed.
35:12 Harry Stebbings? A lot of people say it doesn't get easier over time. I think that's bullshit. I think it does get easier. Do you think it gets easier over time?
35:20 Speaker 00 In the end, it's always a race against yourself and against your mind and how you feel about things. You have all those cases where people, you know, from one day to the next make a lot of money. And that high goes away after two or three months already. And I think that is something that in the end you need to be at peace with yourself, always just a race against yourself. Yes, you can probably afford a nicer chair and a better laptop and a nicer mattress. But in the end, it's all about being in control of your head and control of your mind and being at peace with yourself. I think that's the most important thing.
35:54 Harry Stebbings? What motivates you today then? If like the only voice that matters is the one in your head, what motivates you today?
36:01 Speaker 00 I would describe it with problem solving at scale. I don't want to take the easy route. I want to figure things out. It's that sense of competition, it's that sense of winning and it's that sense of probably like proving yourself over and over again that you can do it. But that is something that I really enjoy.
36:17 Harry Stebbings? I do want to ask about the expansion. You said about angel investments you've made. We obviously both sit in Europe. Many European companies try and win the US and fail. You've done it immensely well. Can you help me understand what does it take to win the US? And what are some of your biggest lessons from doing so well in the US as a originally European company?
36:39 Speaker 00 The differences really all go back to just the massive size of the domestic market in the US, right? The massive TAM that you can go after. If you're operating in such a big domestic TAM, you're making right from the start, you tend to make different decisions. You're trying to scale much faster. You're trying to hire more expensive people because in the end you're gonna have a lot more operating leverage. You're gonna have higher salaries. You're probably not caring as much about the details as about telling your vision. What I always felt is that bringing some of the more European skill set, diving deep, more of an engineering mindset, having attention to detail. To such a large domestic market like the US is like a really great success formula.
37:24 Speaker 00 The size of the domestic market caters more towards certain types of founders than would You tend to find in Europe. And what that means is that if you have grown up as a company in Europe and you go to the US, you definitely need to throw overboard a lot of the things that you feel that you have learned.
37:43 Harry Stebbings? What do you need to throw overboard?
37:44 Speaker 00 I think number one, everything that you know about competition will be ten X what you what you'll find in the US. Because the size of the price is just so much bigger that you will naturally have more competitors going after the same space. They will be able to raise vastly more venture capital than any of your competitors could do in in Europe. They will probably kind of like move equally fast as you do or even faster. So I think that's just one of those notions where we also struggled in the beginning, like what does that actually mean now? Do we need to pay people very differently now? That was definitely like a big discussion, right? And that I think is a big discussion for every for every company from Europe that goes to the US.
38:23 Harry Stebbings? And you do, don't you? That's the conclusion you come to.
38:26 Speaker 00 In the beginning, it's a lot more cowboy math that you need to do. And where you need to get comfortable with certain levels so that you can actually build a competitor that's worth competing with.
38:36 Harry Stebbings? Any others that we need to throw overboard? Or any other traditional European stigmas, approaches, mindsets, you're like, that's not going to work either. Approach to salaries, approach to competition, anything else?
38:47 Speaker 00 So the approach to fundraising as well, right? I believe for my seed round and for my series A round, I've been asked about providing business plans for the next five years, which were obviously all made up, et cetera. That is also like very different than the US. I think it has changed. We have been public since twenty seventeen. But back in the day, twenty twelve, twenty thirteen, twenty fourteen, twenty fifteen, I think that environment was very, very different. And it was very different what people were asking for.
39:13 Harry Stebbings? Why did you decide to go public so early? When you think about that, twenty twelve, I think you said the founding of the company and twenty seventeen, the IPO. We have five or six years to IPO is really fast, you know. Traditionally, it's the ten year journey to IPO. Why did you decide to go out that early?
39:29 Speaker 00 We had the notion that we want to run this company for a long time. When you raise a lot of venture capital, you need to make a decision. Are you going to sell that company or are you going to take it public? My view is the price at which you go public is completely irrelevant. Almost nobody sells at the price of the IPO. Everybody is locked up. In the end, it just matters at the point sort of like when lockups are over, when somebody wants to sell, et cetera. So the price at which you go public doesn't matter. It's all about grabbing the window. And we felt back in 2017, there was a window for business models like ours. Tried to make sure that we can get out through that window. And then felt like if we establish a public market track record, then sort of like valuation will take care of itself.
40:14 Speaker 00 Versus saying like, hey, let's optimize the last 10 percentage points and go public at that share price. And then, you know, the market is not there or you're actually going public. And six months later, when lockups are up, kind of like you're down 50%. The price at which you go public is completely irrelevant for everybody.
40:33 Harry Stebbings? I sometimes think that public markets in their mind have the idea that a company is finished or negative. I had the founder of Allbirds on the show and I tweeted that it went public at 3.8 billion and it's now 120 million. And I still, by the way, really like my Allbirds. The sentiment is just like the public markets wants it crushed. And so I just worry that sometimes perception can lead to reality. Although the price doesn't matter, it does. Because if you have a shit first day that leads to a shit first week and everyone goes, no, I knew that that was a bad category. And then that leads to a shit first month. And then team members go, fucking hell, we're down so much.
41:16 Harry Stebbings? I want to go to Airtable now.
41:21 Harry Stebbings? It can be a real knock on effect. So I'm just pressing you. Does it not matter?
41:26 Speaker 00 I think it's irrelevant. First day price, completely irrelevant. The price after 12 months, after two years? Yes, that starts being relevant. The price after three years, that's what you should be optimizing for. Think about it like that, right? I think also for us, if we had missed the window in 2017, potentially there would have been another window in 2020. Now, who knows whether that window actually opens or not? Whether you have a big crisis like the pandemic coming and the window is actually closed or not? All of the macro factors that you have that you can't control. There is so much uncertainty. History is littered with companies that wanted to go public and optimize and squeeze out the last 10% for the first day,
42:09 Speaker 00 and they missed the window and then had to do emergency fundraising if they weren't profitable, or put a lot of structure and ratchets in. We never had any structure. We never had any ratchets. We always were like very conservative on that end. And we wanted to go kind of like very quickly towards having common shares, no pref stacks in there. And we felt like if there is a window, we want to go out. And then on public markets, we can prove ourselves and everybody can decide. Let's make a decision whether that was successful or not three years in. In the end, I think it was the right decision. I think the way that our category traded would have not allowed us to IPO the business at any other point in time.
42:48 Harry Stebbings? Can I ask you, on you as a CEO, I actually spoke to, as I said, Jeff, Harley, Nico, many more actually around the table. They did actually kind of coalesce around a weakness as a CEO. I'm intrigued if you say the same weakness. It's like an all-star mystery misses. What do you think your biggest weakness as a CEO is?
43:07 Speaker 00 I don't particularly enjoy being the center of attention. I can be fairly good at it, but I just don't enjoy it that much. I always have to push myself. I think they are important up to a certain point, but it's definitely something that I'm definitely scoring very light on that one.
43:23 Harry Stebbings? They coalesced around storytelling and being public was the coalescing point. The one thing that it does help with is talent acquisition. And I do want to touch on this before we do a quick fire because Harley in particular told me I had to ask this. He said, you're particularly brilliant at hiring non-obvious talent, talent that many people might overlook. And you choose people that people wouldn't hire, but are actually brilliant. What do you look for that gives you the confidence to hire these non-obvious people?
43:52 Speaker 00 There's like different stages and definitely in the beginning, I think we prioritized a lot frugality. And mostly recruited friends, family and acquaintances. That's also always what I tell everybody in my angel portfolio. If you cannot convince some of your friends, family or acquaintances to join your company, then either your idea is not that good. Or you're just not a great salesperson. After that period, you have the opportunity for a couple of years to hire for raw smartness only. You don't need to hire for a lot of experience at that point in time. Business tries to figure itself out. All of the domains kind of like are still open. We've had really good experience with hiring people with very high degree of raw smartness, putting them on certain domains.
44:37 Speaker 00 And those people over the sort of like next five, seven years, becoming like some of the deepest domain experts in those topics. And I think back then, my board always pushed me during that stage. I think that is what he's referring to. Always pushed me at that stage to to hire more experienced people, to hire people that have led larger organization, larger teams, et cetera, et cetera. But we always felt like we need people who are super scalable in terms of their skillset, in terms of their personality. Who have an incredibly high work ethics. I think back in those days was very much expected of everybody to stay in the office till 10pm. I think that's also very different today. But nonetheless, I think that was a time where we hired for raw smartness only.
45:19 Speaker 00 And I think that was at that point, I think very contrarian with some of both our US investors versus our European investors.
45:26 Harry Stebbings? Are you back in office?
45:28 Speaker 00 For a certain amount of time, I think it's very important for collaboration and also for mentorship and building team cohesion.
45:35 Harry Stebbings? I think it's fundamental. Can you tell me, I played this game with, our team did like this walk the other day in London. And I said, can you tell me one role that is not made better by being in person? I can't. I know, devs. No, devs work better together. They're building product. It's a team.
45:52 Speaker 00 Yeah, look, one of the biggest trends in engineering is mob programming, which basically means like you're getting together three people around one laptop, giving them each other instant feedback. There's a huge value in that. Everything that has to do with planning, that has to do with aligning on strategy, figuring out architecture, playing thoughts back and forth, these things work way better. I do think if you have a plan, if you need to deliver, if it's like very clear what are the milestones where you need to get to, then potentially you don't need to necessarily sit next to your colleague. But I do think there are huge benefits to working together very, very closely and having strong bonds in your team.
46:31 Harry Stebbings? I'm like a grandpa, like just old school.
46:34 Speaker 00 It feels you're more grandpa than me on this.
46:37 Harry Stebbings? Listen, I want to do a quick fire round. So I say a short statement, Dominic, and you give me your immediate thoughts. Does that sound okay?
46:42 Speaker 00 All right.
46:43 Harry Stebbings? What do others not know that you know to be true?
46:47 Speaker 00 Everything around tactics is much more important than strategy. If you have the right strategy, you don't need to change your strategy every six months, every year. You have a long-term strategy, three to five years, and you're spending ninety-nine percent of your time on tactics.
47:02 Harry Stebbings? You can be CEO of any other company for a day. What company are you CEO of?
47:06 Speaker 00 Going back to my youth fascination with professional football, I probably would love to be the CEO of a Premier League football club for a day.
47:14 Harry Stebbings? Which one?
47:15 Speaker 00 Oh, I don't mind that much. I think it's not so much my my personal affiliation with any club as to rather wanting to to be on the table and understand how those businesses are run, how sophisticated some of the decision-making is, et cetera, et cetera.
47:29 Harry Stebbings? Tell me, how do you view competition? Is it like head down, row your own race? Or should founders like be very aware of competition?
47:36 Speaker 00 In my view, competition is a constant source of innovation and inspiration. I think it's extremely arrogant to not pay super close attention to competition. And I'm not only talking about your direct competitors. I'm also talking about all other companies that market to consumers that want to reach the same consumer. Like what are they doing? What are they experimenting with? Have they learned thousands of super smart people at all of those companies which are thinking every day about how to reach customers, how to build new technology, et cetera, to not listen to them, observe them and not basically get inspired and see that as as a big shortcut to your own experimentation and learning is extremely arrogant in my view.
48:18 Harry Stebbings? Tell me, you can have dinner with anyone, dead or alive. Who do you have dinner with and what do you ask them?
48:24 Speaker 00 I'm probably gonna choose Jeff Bezos. It's such an outlier, such an anomaly, how Amazon has scaled with such high investments in infrastructure, in technology and processes, completely reinvented how people think about organizations. And given that I'm also building in that space, sort of like at the intersection of supply chain, marketing and technology, I probably have questions for two weeks straight.
48:50 Harry Stebbings? Which competitor impresses you most?
48:52 Speaker 00 I think DoorDash has done an amazing job. I don't think they're directly competitive with us, maybe on the margin, like we're going after the same the same wallet. In the end, I think the way that they have also had a huge focus on operational excellence, how they have scaled in non-obvious ways, where everybody else in that space was focusing on other areas, had a certain hypotheses and they took the contrarian view, have a business that is, I think, operationally also very challenging, a three-sided marketplace. That is something that I have huge respect for and I think they've built like a massively successful business and they're very much focused on the long term. Tony and the team are doing such an amazing job.
49:34 Harry Stebbings? How do you think about your relationship to money, Dominic?
49:36 Speaker 00 There is a certain threshold where probably some things become a lot easier and a little bit more comfortable, but it's not the main motivator in everything that you do or that you should be doing.
49:49 Harry Stebbings? What's the best piece of advice you've been given in the journey?
49:51 Speaker 00 I think best piece of advice is, I would say, like, question a lot of things and like form your own view. I always feel if you're too much trying to follow the crowds, if you're not thinking first principle, if you're not kind of like asking the tough questions, then very often, you know, you end up being above average, but you're never gonna be like part of the zero point one percent in whatever domain you choose. I think you have to be contrarian to out-execute and out-perform the ninety nine point nine percent of others.
50:21 Harry Stebbings? I don't think that you can have any form of work-life balance if you wanna be part of the naught point one percent of anything. You can be good, you can be very good, but you can't be a fucking great CEO of a public company and have work-life balance. Agree or disagree?
50:36 Speaker 00 Work is part of life. I don't think that you need to be in balance. You should be enjoying what you're doing, and I think it's very fluid between, am I reading that article or that book because it makes me a better CEO, or am I reading it because I actually enjoy it? Am I reading that report or that consumer research that my team has prepared because I'm very interested or because I have to? I think that that whole term always assumes that work is bad and life is good, but in the end, sort of like they're very tightly connected. And work is part of life, so everybody needs to be balanced in some way, but it's not necessarily between work and life.
51:12 Harry Stebbings? You read books?
51:13 Speaker 00 I probably read about twenty-five to thirty books a year.
51:16 Harry Stebbings? What's the most memorable book recently? What should I read?
51:19 Speaker 00 Probably an obvious one, because a lot of people have been talking about it, but the Elon Musk biography definitely allowed me to pick up some things and also understand, like, some of the companies much, much better. There were definitely some elements of SpaceX in particular that I didn't understand as well before the book and then after.
51:36 Harry Stebbings? Tell me, final one. You said about, you know, if you wanna build for the long term, you have to go public. Where are you in ten years' time, Dominic?
51:44 Speaker 00 I think most likely I'll still be running HelloFresh. Hopefully HelloFresh at that point, not only two billion dollar business lines like we have today with our meal kits and our ready meals, but with a lot more different business lines that we have at that point, still solving problems at scale with some of the smartest people in the world. If I ever wake up and I feel this is not fun any longer, I feel like I'm not spending my time problem-solving, but I'm spending my time solving other people's problems and not my own problems and not problems that I'm excited about, then you'll probably find me either on the beach or running a football club. If after the one day that I sneak into the boardroom, I find that exciting enough.
52:24 Harry Stebbings? Dominic, listen, I've loved doing this. Thank you so much for me trying to take you to a psychologist's room. I really enjoyed it and you've been fantastic.
52:32 Speaker 00 It was a lot of fun. Thanks a lot, Harry.
52:35 Harry Stebbings? Now, if you want to see that fantastic discussion in full video, you can check it out on YouTube by searching for 20VC, that's 20 VC. But before we leave you today, there is no shortage of helpful AI tools out there. But using them means switching back and forth between yet another digital tool. What was supposed to simplify your workflow just made it way more complicated. Unless, of course, you're in Notion. Notion combines your notes, docs and projects into one space that's simple and beautifully designed. And you can leverage the power of AI right inside Notion across all your notes and docs without jumping between your work and with a separate AI-powered tool. Automate the tedious tasks like summarizing meeting notes or finding next steps, freeing you up to do the deep work.
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55:06 Speaker 02 As always, I so appreciate all the support and stay tuned for an incredible set of episodes coming next week.
Previous 20Growth: The Golden Rule to $100M in ARR, Why CAC to LTV is BS Early On, Why Your First Growth Hire Should Be a Former Founder & How Ramp Does 200 Growth Experiments Per Quarter with Guillaume Cabane Next 20VC: From Construction Worker to Billionaire CEO; The 21-Year Epic Journey of Procore to an $8.6BN Company, Advice from Tobi at Shopify on Being a Great CEO & Why The Idea of "Becoming an Entrepreneur" is BS with Tooey Courtemanche Page updated September 29, 2026 · transcript and summary are machine-generated
