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Wondery subscribers can listen to How I built this early and ad free right now. Join Wondery in the Wondery app or on Apple Podcasts. If you run a small business, you know there's nothing small about it. As a business owner, I get it. My business is and has always been all consuming since I started it. Every day there is a new decision to make and even the smallest decisions feel massive. Well, Shopify is a commerce platform that goes. That's what running a small business is like because Shopify was once one too. It's the right platform with all the tools you need to be successful. Shopify. Get all the big stuff for your small business right with Shopify. Sign up for your $1 per month trial and start selling today at shopify.combilt go to shopify.com built shopify.
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Klaviyo is the only CRM built for B2C and the key to making Black Friday and Cyber Monday your biggest wins yet. With marketing, service, analytics and all your customer data in one AI powered platform, Klaviyo helps you build relationships that drive more revenue and deliver truly personalized experiences at scale. Join the more than 176,000 brands like Away, Patrick Ta and Dollar Shave Club that already grow with Klaviyo at K L-A-V-I-Y-O.com hello and welcome to the advice line on How I built this Lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week I'm joined by a legendary founder, a former guest on the show who will help me try to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the Our number is 1-800-433-1298. Send us a 1 minute message that tells us about your business and the issues or questions that you'd like help with. And you can also send us a voice memo@hibtid.wondery.com and make sure to tell us how to reach you. And also don't forget to sign up for my newsletter. It's full of insights and ideas from some of the world's greatest entrepreneurs. You can sign up for free@guyraz.com or on substack and we'll put all of this info in the podcast description. All right, let's get to Joining me this week is Tony Hsu, the co founder and CEO of DoorDash. Tony, welcome back to the show.
- [03:05]
C
It's good to be back.
- [03:07]
A
You were first on the show way back in 2018, of course, to tell us the origin story of Doordash. And for those of you who missed it, we will put a link to it in the show Notes. Super awesome episode. It's about how Tony worked at the same restaurant where his mom worked when he was a kid because they immigrated to the US when you were four. You changed your name to Tony because you loved the show who's the Boss? And it's star Tony Danza, which is such a funny star. I love that story. And of course, how you came up with the idea for a food delivery business while you were at Stanford at the business school. And an idea that I should mention was met with a considerable amount of skepticism at the time. Right?
- [03:46]
C
Yeah, absolutely.
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A
And in part because people probably thought, well, the logistics and all the costs, associated costs, the margins are going to be terrible. I think when you were on the show in 2018, DoorDash had done something like $100 million deliveries at that point. And I think as of last year, I read you processed over two and a half billion orders. Is that right?
- [04:08]
C
Yeah. Yeah. That magnitude of change is hard to comprehend sometimes. But yes, a lot has changed in a short period of time.
- [04:15]
A
I mean, it's amazing. Doordash is now the largest food delivery service in the world, Tony. I know that, you know, today obviously you guys are continuing to build DoorDash into an even bigger, broader platform for, you know, local commerce, logistics. You've been expanding into grocery and retail international markets. I've used some of the other brands that you've acquired, like Wolt and Deliveroo, which I think is still in the process. Can you tell us a little bit more about some of the things going on with Doordash now? What is the sort of the vision for expanding the platform?
- [04:50]
C
Sure. So, you know, when you and I last spoke seven years ago, we were largely a single product. So restaurant delivery, single geography, United States company. And that occupied well over 99% of what we did. Today. DoorDash is a business with five big areas. Obviously, we still bring you lunch and dinner inside the U.S. we, as you mentioned, expanded about five years ago into other categories, delivering you groceries, convenience items, retail items. We now do this also internationally. So you mentioned that, you know, a couple acquisitions that we've announced. We now operate in over 35 countries. We have a B2B business where we help you do delivery from your own channel or help you with online ordering from your own app or your own website.
- [05:44]
A
That's amazing. One of the things that I was wondering about. Right, because when you started it out, it was called Palo Alto Delivery service, which doesn't flow off the tongue quite as easily as DoorDash. It was, I think just, it was like eight PDF menus and a Google voice number that went to you or one of your co founders.
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C
Yes.
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A
How are you measuring success? Like was it from the interest and engagement from restaurants or was it from people ordering from the platform? Like, how did you know this was sticking?
- [06:13]
C
Yeah, and you're right. There are three questions actually to know whether or not the idea for DoorDash would work. But the first question really was would consumers care if we made available all restaurants for delivery? You know, in 2013, only about 10 to 15% of restaurants offered their own delivery. And what we looked for really was how often would consumers order and come back without a discount or some sort of a marketing incentive? The other questions, of course. Well, one, will restaurants actually want to partner with us in adding incremental sales to their kitchens? And the final question was, would drivers, the dashers, we call them on our platform, would they actually want to partner with us?
- [06:56]
A
Yeah, you know, every once in a while I'll be on LinkedIn. And that video, there's a video of you and your three other co founders, your pitch video for y Combinator in 2013. And it's so fun to look at because you guys are so young and just naive and bright eyed and very kind of just, you know, humble and, and it's hard to imagine 2013 today, this is a company with a market cap of over $100 billion. I mean, you know, you're, you're, it's just unbelievable to see how quickly it's grown. But during that, in that time, I mean, there's been a lot of stress. Right. Like we talk, Even back in 2018, we talked about, about on the show how, you know, at a certain point Uber saw what you were doing and Uber was a giant, a behemoth and they start a competitor service. Uber eats. How, how have you managed stress over the years of trying to do a Lot of things of dealing with competitors, of just, you know, changing laws in different states, like, how do you manage all of that and handle the company? What are some of the things you do?
- [08:02]
C
Yeah, I think one of the principles that helps a lot, at least for me, is just focusing on what I can control. I don't get to control a lot of things and just starting by, you know, almost writing on a list of things of what not to worry about. I can't control what our competitors do, how much, you know, financial resources they have versus us. But I am able to control what products we deliver. And ultimately, you know, I get to control a lot of how we interact and serve audiences and our customers. And I feel like a lot of times when we experience stress, there's this possible feeling of being overwhelmed where everything is lost. Our agency completely goes away. And I think that's again, a reason why both on the professional what I do day to day, as well as personal front of trying to find high agency activities where I know I'm still in control. I'm still getting to feel very satisfied with the majority of hours I spend doing what I do. That's what allows me to keep going.
- [09:02]
A
Tony, are you ready to take some calls?
- [09:04]
C
Yeah, let's do it.
- [09:06]
A
All right, let's bring in our first caller. Welcome to the advice line. You are on with Tony Hsu, founder of Doordash. Please tell us your name, where you're calling from, and just a little bit about your business.
- [09:16]
D
Hi guy and Tony, it's a pleasure to be here with both of you. I am Ron Kormay, CEO and founder of Steelport Knifeco in Portland, Oregon. We are a small team crafting heirloom quality carbon steel kitchen knives in Portland, Oregon. Our basic tenant and every product that we make has to pass three requirements. Iconic design, functional details and everything. US source locally made.
- [09:44]
A
Wow. Ron, thanks for for calling in. So steel port knives. I I just popped on your website. You make knives in the U.S. kitchen knives and chef's knives, which I'm a huge fan of because I'm a cook and I've got a bunch of knives and wow, it's awesome. Tell me how you started this. Because many of the best knives in the world are today made in Japan and Germany and even China. There's some excellent knives made, but very few made in the U.S. cutco is an example I can think of. Tell me about why and how you started this.
- [10:14]
D
Yeah, I think it's like a lot of stories of entrepreneurs. Source of it has been frustration and Seeing a big gap in the marketplace. My background is technology and I've been involved with 11 startups throughout my careers. Wow. My previous company was a company called Fine Ex Cast Iron and we were the only premium American made cast iron. And we started that in 2012 and I sold it in 2019 and now there are eight other companies that make that category. So created the category. And one of my drivers around, how do we bring jobs back to us in 2019? I had the same experience. I went to the kitchen retail stores in the U.S. all the national ones and some of our local ones. And exactly what you said, guy. Every single knife was made outside of the country, primarily Japan, Germany or low and China.
- [11:10]
A
The premium, the premium knives, 100%.
- [11:13]
D
And if you know my background and things like that, that's like call for a fight. Like why? And if you're in a knife nerds in the cooking, you know that there's some really good artisans that make amazing knives in the US So I partnered with my business partner, Eitan zayas, who has 25 years of experience making knives, sharpening knives, and we started Steelport out of that big gap. But we are standing on shoulder of a very strong knife industry in the U.S. even Portland, Oregon is a knife town USA because we have so many knives, but they're all outdoor knives. So we are actually building on that.
- [11:49]
A
All right, I want to bring Tony in. Before we bring him in, tell us your question.
- [11:52]
D
So my question is that as we are a small company growing, when is the right time for a company, consumer goods startup like ours to expand its product line versus going deeper into its core offering? But we are smart people and we can start thinking about new stuff. Like you have a new line of cutting boards that are innovative, is patent pending, and has a really potential for doing that. How do we approach that decision?
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A
Right now you're selling only knives, but now you're thinking of cutting boards and other things. But when is the right time to do it? Tony Hsu, are you cooked? Do you cook at home?
- [12:28]
C
I do cook. I don't cook every night like you do, guy. That I just learned. That's incredible. That's an aspirational feat for me to do it every night, but okay, so it's a tough question and first, congrats on everything. I mean, it sounds like it's an incredible success and I'm going to learn a lot more now. Also about Portland, I didn't know it was called Knife Town usa. You know, the first part of what I would think through is Do I have the management bandwidth? Do I have the talent on my team to do it? What I've tended to find with projects at any company, no matter how much resources or capital you have, what tends to be the rate limiter is do you have a great single leader lead. It doesn't have to, you know, manage a large team or anything who can actually be responsible end to end for the next thing. In this case cutting boards. And if you have that person, it doesn't have to be your co founder, but it could be someone else who you believe you mentioned yet a small team who can do that end to end. I think that's a positive. The second question I would ask is do you have the financial Runway to be able to manage? You know, obviously what I would imagine would require some upfront investment, whether it's in materials or team or distribution. Later on, as you think about selling cutting boards, one of the nice things I do see here obviously is cutting boards hopefully will help you sell knives too. Which means that the two products reinforce one another. So that might be a nice offset. The final thing I would say, I think if you're feeling fully ready, you're probably too late. So there should absolutely be some element of risk. But I do think you can manage the risks if you can disentangle the problem.
- [14:17]
D
No, I really like the points that you're bringing up and again as your experience in Doordash probably matches that, the answer to those question is never yes, you never have enough smart update, enough resources like that. It becomes a question of trade off. And I'm curious as a, as a side I'm also another role I have is a faculty at university and adjunct professor.
- [14:42]
C
So my professorial question, you're polymath? Yeah.
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D
But my professional question always oh, look at the trade off that's in the classroom environment. I can advise that. But when it comes to my own business, it's really hard, especially as a small company to project. If I grab those resources that you're mentioning and put it in the core, I don't really know with any confidence more than 5050 what it will result versus putting something else. And I think looking at the history of Doordash you had to make similar stuff around. Do you focus around region and things like that? Is there a certain point you just throw your hearts in it and go with your God?
- [15:18]
C
I do think some of these kinds of strategic decisions are hard to your point point Ron, of putting it in pencil and paper or on a spreadsheet or asking AI to help make the decision, I think, like you said, you're not going to have the inputs required, you're not going to have the data required. So it is a bit of a gut call, but what I'm trying to say is it doesn't have to be this like all or nothing kind of bet that those tended to not be. I think the decisions in this particular case, where you're talking about, you know, adding a second product, you know, one that comes to mind for us at DoorDash was in 2016, we wanted to launch DoorDash Drive, which was this product to enable anyone to offer delivery from their own channel, from their own website, their own app. They don't have to list Even on the DoorDash app to do this. When we thought about starting that project, some of the things we thought through, even though as we were still scaling our own app across different cities, was who is this small group of leads that we can put together where we don't feel like we have to bet the whole company, but we can give it a great college try? Since you're a professor, I'll use that. Where we're going to put one of our best leads on it, who we think can do the job end to end, first and foremost to figure out whether or not there's something there.
- [16:45]
A
I totally agree. I would start by treating it as an experiment and an experiment in which you are willing, even willing to lose on. Willing to lose money on. In other words, if you want to do the cutting boards, which sounds like you are patent pending cutting boards, I'm excited. What innovations could possibly be being made in cutting boards? I can't wait to see. But what I would probably, the way I would go about it is treat it like an experiment, right? Maybe do a limited drop to the most loyal customers. You just make a few. And if it sells out and builds buzz, if There are only 100 available and they sell out and they build buzz, you know, the demand is real. But if not, you know, you've kind of protected the core here, which right now are knives. And you could always go back and try it again. I think of there's so many. Hexclad is a great brand. We did that, that episode on the show a couple months ago. And you know, those guys started with pans, you know, nonstick pans and pots. Now it's a multi. I mean, they do knives, they've got all kinds of bakeware and it's. It's a huge business called hexclad. Your name, Steelport, gives You a lot of room to try a lot of different things. Right. You don't, it doesn't just have to be knives. It can be a broader category of us made kitchen tools. Right. And so I think to Tony's point here you have an opportunity to really just experiment and to take let's say a, not a baby risk but like a toddler risk here, right? Not, not a full, full on, you know, grown up risk where you're betting the farm. But you, you, you, you try something and see how people respond.
- [18:26]
D
I really love the combination I'm hearing from you guys, which is testing, which is not only testing the market but I think Tony, you highlighted the leveraging which is a potential opportunity. People like Guy might not be ready for a high end top of the line knife but they need a cutting board and why not use this and they might get into and say a steel port cutting board was really amazing. Now I'm ready to make my experience complete or vice versa and that the cross leveraging and pollination is not knowable until we actually launch it. And Guy, I really like your connection of the name. The name steel port comes from steel first half and port from Portland. So steel port combined becomes kind of opens up and our new innovation is basically embedding steel inside two different layers of end grain cutting board composite recycled paper. So you have a two sided cutting board with a steel reinforcer allows you to not only have two sided cutting board but also make the cutting board extremely thin, is about half an inch thick compared to one and a half inches.
- [19:35]
A
I love that because I have one of those like slots in my kitchen with my cutting boards. I got rid of all my plastic cutting boards because everyone's telling me that there's, you know, you only beating plastic. But the wood cutting boards are so thick that it just takes up so much space in that, you know that, that cabinet.
- [19:51]
D
Great. So I expect to have a couple of customers coming through with names Tony and Guy on the.
- [19:55]
A
All right, you'll see it. Yeah, for sure, for sure. Ron Cormay, Steelport Knives is the brand. Good luck. Thanks for calling in, man. Really appreciate it.
- [20:04]
D
Thank you for having me. Have a great day.
- [20:07]
A
We're going to take a quick break, but when we come back, another caller, another question and another round of advice. I'm Guy Raz. Stick around. You're listening to the advice line on how I built this lab. For a limited time, earn up to 200,000 bonus points with the IHD One Rewards Premier Business Card. Visit ihd.com businesscard cards issued by JPMorgan Chase bank and a member FDIC offer subject to change terms apply. Welcome back to the advice line on how I built this. I'm Guy Raz and my guest today is Tony Hsu. He's the co founder and CEO of DoorDash. And we are taking your calls. And let's bring in our next caller.
- [20:48]
E
Hi Guy. Hi Tony. Thanks for having me. I'm Kathryn Shaw from Raleigh, North Carolina and I'm the co founder of Spring and Mulberry, a line of date sweetened dark chocolate bars. Spring and Mulberry began with a radical can sweets be indulgent without refined sugar?
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A
Thank you, Kathryn for calling in. Welcome to the show.
- [21:09]
E
Thank you.
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A
So Spring and Mulberry, it's a chocolate company. You make chocolate bars, right? I think. But you use dates to sweeten them, not cane sugar or corn syrup or other kinds of of sweeteners.
- [21:23]
E
Yes, correct. We use dates because they're a whole food ingredient. They're full of antioxidants. They actually have more antioxidants than blueberries, more magnesium than bananas. And the key is that they're full of fiber. And fiber helps slow the absorption of sugar in the body, reducing the glycemic index and glycemic load.
- [21:44]
A
Awesome. I'm looking at your website and I see that they're very artistic. Bars is like the dried strawberries pressed into the bar and pecans, whole pecans and like mango pieces. Really beautiful. Tell me about the idea or the origin story of the company.
- [22:00]
E
Well, it all started on a trip to Dubai on the way to visit my husband's family in India. There I discovered dates presented and elevated in beautiful gift boxes. And a few years later I unfortunately was diagnosed with breast cancer in my mid-30s. And that led me to quit refined sugar and explore the healing power of whole foods. And I wanted to showcase this wider world of flavor in our chocolate bars. So we either top them with fruits and florals, nuts and spices with flavors like mulberry, fennel or mixed berry or pecan date. Or we infuse the chocolate with essential oils, creating nostalgic flavors like mint leaf coffee and blood orange.
- [22:45]
A
That's awesome. Tell me a little about your background. Did you come from food or confections?
- [22:51]
E
Both my co founder Sarah and I have worked in consumer products and luxury goods our whole careers. She was an early employee at Harry's Grooming and at Siggy's Yogurt, working in product development, operations and finance. And I got my start in marketing and sales at Unilever and then at lvmh, Moet Hennessy, Louis Vuitton.
- [23:14]
A
Yeah. Wow, that's a great background to have. I mean, you know what, you maybe you should be telling us what to do with that background one day, guys.
- [23:22]
C
Sounds like it.
- [23:23]
E
I hope so.
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A
Tell us a little bit about how the business is doing. You said you started it in 2022.
- [23:29]
E
We did. We launched in beta in the spring of 2022, launched fully for holiday that year. We've grown 2 to 3x year over year consistently and now we're doing mid seven figures. We expect to double that in 2026.
- [23:46]
A
Wow.
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E
We have omnichannel distribution strategy. We want to be in natural channel grocery stores like Whole Foods and Sprouts, but we also want to be in specialty retailers like Airports, Total Wine, Nordstrom's and Bloomingdale's where we've launched this year. And direct to consumer is still 50% of our business.
- [24:08]
A
And probably the best margins, of course. Yeah. Cool. More questions for you before we get to them. What is your question for us?
- [24:16]
E
Well, we're really at an inflection point. So far to date in the business we've been profitable, but we're now starting to feel the cash flow strains of rapid scaling. I would love to hear from both of you as we think about what types of capital to raise, which partners to bring on, and how much risk to take in growth versus profitability. What frameworks would you recommend for helping us make those decisions as we fundraise into the next year?
- [24:45]
A
All right, some big questions to answer. Tony Hsu, I want to bring you in. Questions for Katherine.
- [24:51]
C
Yeah, I mean, Catherine, it's first of all incredible. Your personal story of turning a life event into this awesome solution not only for yourself, but for a lot of other people. So that's incredible to see. You know, when I think about what you're saying, the first question I kind of want to ask is what is the goal with the company?
- [25:15]
E
Our long term goal is really to help transform America's relationship with sugar and to do that by creating a product that's wholly better, to showcase how sweetness doesn't need to come from something that, you know, is linked to every major disease we face. We really believe in kind of sustainable, consistent growth. But in the next year, in order to hit eight figures, we need to launch nationally, you know, at Whole Foods, Sprouts or other major players. And that just requires a lot of cash. Grocery stores require slotting fees. They require free fills where you send in free product. You of Course need to support the product once it gets on shelf to make sure, you know, you're hitting. Hitting strong velocities. And so we have two reasons we're in a bit of a cash crunch. The first is just the seasonality of chocolate. We have to buy all of our holiday inventory during summer, which are the slowest months in the chocolate business. People switch to ice cream. And then the second is, you know, the upfront investments to get into these grocery stores.
- [26:22]
C
Got it. Okay. No, that's super helpful. You kind of stated some of the right principles, I think, from the beginning in your question. I think that's definitely principle number one. And principle number two is you don't want to lose control in terms of how you run the business. The best way to achieve principle number two of not losing control is actually to achieve principle number one, which is to keep up the momentum. The way I tend to think about this is you don't have to think about the financing kind of question all in one go, meaning I asked you a little bit about your goals for the company, and it sounds like they're pretty large, actually. You want to take this nationwide. You want to take this into other categories over time. You don't have to think about all of that. In this next financing milestone. One of the ways to build momentum is to think about always being able to deliver upon whatever promises you make. Investors, if you keep, you know, delivering upon those promises you're going to keep, likely creating better outcomes for customers, which is going to give you more opportunities to get more financing. If you can keep that expectation. Again, this process, I think, would do very well for you. And so the first question I'd probably think through if I were in your shoes is, what is the next milestone? Is it to get to all of the Whole Foods you mentioned and the sprouts of the world? Is it to get to more than that? If we were to think about what that milestone is, then work backwards on all the fees you mentioned and all the investments, perhaps in product development or distribution, then if you were adding a bit of buffer for some of those plans, what does that look like? That's probably the first starting place of thinking through what is the investment size you may need to get to the next level of scale for the company, then the obvious question for investors will be, well, what do I get in exchange for those dollars? Based on what you're saying, if you can healthily grow two to three times, which sounds like you are today, which is incredible, by the way, I think you're Going to find lots of willing suitors.
- [28:33]
A
Yeah, yeah. I want to piggyback on that for a second and ask you a quick question, Katherine, which is have you raised money already?
- [28:42]
E
We raised a pre seed when we were still a low six figure brand and have used that money over the past two years to get to mid seven figures. Those were mainly strategic angels, people who had worked in the industry. But we have not raised from venture capital.
- [29:02]
A
Got it.
- [29:02]
E
And we have not taken debt well, as you know.
- [29:06]
A
So let's say you're doing about 5, 6 million a year in sales, which is amazing, right. You're at a point now where you need cash, right, to fulfill these orders. So there are a couple of options because you know this better than anyone, that not all money is the same. Right. I mean there's. And so are there other options, you know, lines of credit, revenue based financing, purchase order financing. We've had a lot of brands on the show that have gone that route. You know, they'll get a purchase order, they'll go to a, you know, find lenders oftentimes at the high interest rates. But it's, but you, you hold onto equity. Those are all options. If you decide that you don't want to go out and raise capital. Are, are any of those on the table?
- [29:51]
E
It definitely makes sense for the summer cash flow crunch of buying inventory because you know, that isn't a burn rate problem. That's when money comes in versus when it goes out. So I think that makes a lot of sense for debt. On the equity side, I would say that would be more appropriate for investing in retail expansion, investing behind brand awareness building exercises and that sort of thing. You know, on the debt side, you know, I feel a little bit nervous about taking on significant debt if we're not going to be profitable. And this is the first year where we're, you know, kind of trying to figure out how close to zero we could be on either side of zero. So I guess a follow up question for Tony would be as you, you've raised money from some of the most prestigious venture capital firms in the world. What questions did you ask them to make sure they were the right partner for you?
- [30:47]
C
Yeah, it's a great question. I think lots of times we take for granted as the entrepreneur that investors will do diligence on us, but perhaps we don't return the favor and due diligence on them. I think one of the principles that I would add to, I think a lot of the great recommendations Guy made around alternate financing mechanisms is just what Are the time expectations for achieving your milestones or getting your money back if you were the investor? And what are the examples in your portfolio of companies or previous investments? Because time, I think, is one of those things here that is almost always against the entrepreneur where we always wish things could happen sooner. The investor actually has a completely different dimension of time. I would ask for examples of founders and entrepreneurs who perhaps did not make it in their portfolio and ask to call three or four of them. Then you'll get a pretty good triangulation in speaking with the founders of the company, especially those who maybe had less successful, not successful or shaky situations with the investment firm to give you maybe the comfort you need to actually proceed or find other financing mechanisms.
- [32:07]
A
Kathryn? It's really, really, really important advice, Tony. And I think that it sounds, Kathryn, you sort of have a sense of what you need to do to build distribution, national distribution, brand awareness. You're going to need equity capital probably because you're investing ahead of revenue, short term cash crunch. There may be other. One unrelated piece of advice I want to give you, just observing your brand is you have a really interesting opportunity here because over the last few years there have been some really big brands that have grown that are zero sugar. Lily's for example, we did Lilly's on the show. It was an amazing story. And that was sold at Hershey's. There's Choc Zero which does a similar thing. And then you've got the sugar brands. One thing that you could think about as you think about your long term growth and strategy is consider making a package of like squares, you know, like Ghirardelli makes those squares. And so you're only getting 12 grams of sugar per square. And it's a small indulgence. And it's also less expensive. Maybe it's only 75 cents or a dollar at the checkout stand. Right. Because your bars are expensive. They have to use a premium product. But going forward, you might want to think about a bag of just squares that you could down the road sell at Costco because that's really where you start to see big, you know, large scale growth.
- [33:37]
E
Right. And it gives the opportunity for people to trial before they buy, you know, a seven or nine dollar chocolate bar.
- [33:45]
A
Yeah, yeah. Tony, any last words of wisdom or advice for Catherine?
- [33:52]
C
Sounds like you have a really awesome business and you have a really great head on your shoulders. I would just keep going. I can tell based on the questions you're asking that you have a pretty strong point of view of what you're looking for and what you're not looking for, just stick to those guns. I think that a lot of times as the entrepreneur going through it for the first time or going into anything less familiar, there's always this desire to seek the expert opinion, if you will. And sometimes that helps. But I think a lot of times your gut probably already knows the answer for sure.
- [34:31]
A
Kathryn Shaw of Spring and Mulberry, thanks for calling in. Good luck.
- [34:34]
E
Thank you. Appreciate it.
- [34:36]
A
Thank you. Yeah, we have done quite a few chocolate brands on the show and it's always just a cool, it's always super cool. You think like in all these categories, you think, oh well, it's crowded. There's so many chocolate brands and there are but a good brand, a differentiated.
- [34:56]
C
One like this one, I'm absolutely going to go into a few stores and. Yeah. And probably buy one and you know, indulge myself.
- [35:03]
A
Yeah. I mean just really beautiful, just artful, beautiful bars. And so it's cool. It's a great idea. And it's not sugar free but it's right. It's lower. It's natural sugar and it's, and there's fiber. And so I think I looked at the nutritional label, four grams of fiber. It's a lot of fiber. I mean that's, you know. Yeah, that's great. All right, we're going to take another quick break but we'll be right back with another collar. Stay with us. I'm Guy Raz and you're listening to the advice line right here on how I built this Lab. Welcome back to the advice line on how I built this. I'm Guy Raz and my guest today is Tony Hsu. He's the co founder and CEO of DoorDash and we are taking your calls. And let's bring in our next caller.
- [35:53]
F
Thanks for having me. Yori Gabay, I'm calling from Stanford, Connecticut. I'm the founder, operator, investor of RA22 meets. For the past 20 years I've been in early stage technology companies in various roles and Route 22 meats is a mission driven company that was created to bridge the gap between small family farms and conscious consumers. We ship grass fed and grass finished meats from small family farms with full traceability back to the farm where it was raised.
- [36:31]
A
Great. Thanks for calling in. Yori, welcome to the show. So route or root depending on your pronunciation, Route 22 meats, it is a, you sell grass fed meat basically like.
- [36:43]
F
A box that is correct.
- [36:44]
A
And shipped directly to consumers. Frozen.
- [36:46]
F
That's right.
- [36:47]
A
I'm assuming okay, great. And tell me a little bit about how you started this business.
- [36:52]
F
I started this business because I personally was looking for the product and could not find the product that I was looking for. That's one reason. The second reason, I spent eight years managing the US operations of a medical device company and I was exposed firsthand for the healthcare system and so how broken it is. And I want to be a part of the solution. I wanted to bridge that gap between quality, clean food, if you will, and conscious consumers.
- [37:23]
A
Got it. Okay. But here's my question, right? And I think it's awesome. I love grass fed beef. I try to eat it basically 95% of the time when I can. There are options out there, right? There are companies, tons of options where you can order online, get grass fed meat sent to your house. Even grocery stores, even Costco sells grass fed ground beef, I think. So what is the thing that you're trying to offer? That's a little different.
- [37:52]
F
So at the basic level, what we offer is full traceability to the farm. So, you know, you can get a box with different cuts and every cut is going to have a different label and you can see which farm it came from. Okay. We don't work with big farms. It's small family farms on that level. Now what you mentioned is part of the challenge is because there is a trend and a lot of more people become aware of, of the health benefits of grass fed and grass finished meats. But there is no clear regulation that constitutes what grass fed meat is. The USDA dropped that definition 2016. So essentially you can go to the supermarket, find on the shelf a product that not necessarily meet the standards of grass fed and grass finished.
- [38:52]
A
Interesting. It's sort of like when you see things that say all natural, it means nothing. All right, before I bring Tony in, what's your question for us today?
- [39:02]
F
The question for Tony is, given our size and resources, how can we most effectively educate consumers and stand out in a market where larger player can outspend us but cannot match our authenticity, full traceability, regenerative standards, and true grass fed and grass finished meats.
- [39:28]
A
All right, Tony Hsu, before we answer Yuri's question, maybe you have some questions for him.
- [39:36]
C
Well, maybe I'll start with a thought, Yuri. And first, as a consumer, I'm a big believer in what you're doing. One of the things as I hear you talk about is this importance of finding the right customer for your initial product. And obviously it's someone who cares deeply about the same things that you do. And so the first thing I almost want you to say is to not lose that. I think there's two challenges. I see. One is can you build a product that truly delivers upon the promise that you're talking about? And the second is how do you actually market it so it can actually maybe grow in awareness in a way that is authentic but also I think differentiated from others who can outspend you? We really have to make sure that it's a product that people actually care about, meaning it's not only grass fed and it's traceable to your point, but that it actually tastes good and that it's as good or ideally better than what's available. You know, I think that's a big part of how we get judged. Then the second piece is almost like can we work together with that group of customers to figure out what is a term we can use to almost build a standard, if you will, for the type of product or the quality ingredient that you're actually bringing to the customer? You mentioned that maybe the USDA is not yet a willing partner. That's okay. But is there some term that almost the community of customers that you have that comes back and again and purchase your product over others that we can then use as actually the way to tell our story? It's always best to tell the story from the customer's perspective versus our perspective because it's a lot more natural and promotes that viral word of mouth growth.
- [41:30]
A
Yuri, I'm curious, give us a sense of your revenue so far. I think you mentioned you founded last year. How much, how much have you done sales so far?
- [41:40]
F
So we are probably going to finish the 12 months of operation about 100k.
- [41:45]
A
That's great.
- [41:45]
F
We bought the building in a farming community.
- [41:48]
C
It's awesome.
- [41:49]
F
Funny enough, used to be a McDonald's building. We fixed the building and now it's being used as a distribution center. And later on this year we intended to turn it into a farm store and bring more farmers to sell their products. Because farmers are good at farming, but they don't, you know, cold supply chain is something that is complex E commerce and things like that. So we want to build a platform that will enable them to actually make their product available to people across the country.
- [42:25]
A
Tony, are you finding that? I mean, I know that on doordash there's healthy options. There's a bunch of different categories. Are you guys able to discern any trends? Like are, are you seeing people looking out for more sort of keto focused diets or grass fed? I mean, is there A way for you to even know that?
- [42:43]
C
Yeah, well, we look at search terms and so we definitely see search behavior. And you're right. I mean, I think while there are geographic differences, I think the mega or macro trend is still on point to what Yori you're building, which is everyone wants to be healthier and that's, you know, there's exercise, but obviously nutrition and diet is a massive part of it and so on doordash people do look for these other options. And I think the key is, you know, it's almost like you're building this fire, right? And the most important thing is for that fire to keep burning in the beginning. And it's going to keep burning. If you have the group of passionate people, whether it's the fitness enthusiast, the people who are searching for this, it could be the restaurateur who really appreciates food from very clean supply chains. And I think as that fire keeps going, the way it's going to keep going is a they actually love your product. So I think it has to be both authentic, clean and it tastes great. And will they actually want to keep coming back to it, talking about it and then that gives you the right to build this huge explosion of a movement which then allows you to build this platform for all farms across the country, the world, perhaps one day to do this.
- [44:15]
F
Yeah, that's great.
- [44:17]
A
And Yuri, one last bit of advice. I think a one or two well placed podcast interviews, right? Or, you know, or even a public talk at a library or something is much better than thousands of dollars spent on Facebook ads. Right? Because if you can spend time talking about these issues and why you believe that grass fed is. It means many different things and that what you're offering is different, it would be worth having. Even if it's a podcast, it's only heard by a thousand people or 500 people, it could have a really significant impact because it's your business, the kind of business that grows through word of mouth. It's people saying to other people, I'm getting this great meat from this place.
- [45:02]
F
Yeah, yeah. We should keep going at it and reaching out to other communities.
- [45:09]
A
Yuri Gabay. The brand is called Grout 22 Meats. Good luck. Thanks for calling in, man.
- [45:13]
F
Thank you. Thanks.
- [45:15]
A
Yeah, it's interesting because I think even though I know a lot about this world, because I've been eating grass fed meat for a long time, like probably 15 years, I used to order it from a farm out in Idaho. I didn't know that. I assume that when people say grass Fed. It's grass fed. Like that's what the animal's eating the whole time.
- [45:36]
C
No, I think it's a, I think a lot about. Well, starting with our bodies and then to the things we put into our bodies, I think we kind of just take for granted or we don't think about it. And I think you're absolutely right. Actually. There is a massive void in society, but also in the food industry where someone like Yuri can actually occupy that space to define it for us. You're spot on. I mean, the traceability point is one that I didn't know about until probably a couple years ago.
- [46:08]
A
Yeah, yeah. And in this space, I mean, food certain, I mean certain brands can have a huge impact. I mean, Chipotle with Niman Ranch Pork. I mean, right?
- [46:20]
C
I mean, absolutely.
- [46:21]
A
They, they, when you can sort of scale this in a sustainable way, it can have a huge impact. And you know, grass fed beef is still. It's got to be less than 1%, maybe even smaller than that of all beef consumed in the U.S. yeah. But as more and more people kind of learn about the benefits, you know, it's there, there's, there's a lot of growth there.
- [46:42]
C
Yeah, 100%.
- [46:44]
A
Tony, I should have known that your advice would be great. Amazing. I mean, you've been, you've been through versions of all these things, like the dilemma over fundraising, over how to expand your, you know, your, your line, you know, how to build awareness for this thing, that it was weird to people. Wait, what? You know, so, I mean, it's, it's amazing because it wasn't that long ago when you were having these conversations.
- [47:09]
C
Yeah, 12 years ago. I think one of the things that is a privilege of being an entrepreneur is that implicitly, and I suppose with shows like this, explicitly, you belong to a community of other founders who honestly go through similar problems, whether it's in chocolates or knives or, you know, what Yori was doing with meats. And it's just they're very similar. I mean, you're a founder and, you know, you've gone through these similar issues too.
- [47:41]
A
If you could go back to when, you know, those early days looking at that video of you and Andy and Stan.
- [47:46]
C
How embarrassing.
- [47:48]
A
It's not. It's awesome. It's an awesome video. You should be really proud of it. If you go back. Right?
- [47:53]
C
Yeah.
- [47:54]
A
And to you, to yourself, when you were learning how to be a leader and how to, and how to start a business and you knew what, you know now, what do you think might have been helpful for you to have known then.
- [48:08]
C
I think the first thing that comes to mind, especially as I was hearing some of the stories of the founders on your show just now, is a lot of times the founders know the answers to the questions that they're seeking help on and it's this recognition that other people, and you cited so many of them who've created great products, were no different from any of the founders who are calling into your show and trying to get advice about all these different business building questions. And that's something that I wish I would tell myself 12 years ago, that trusting my own instincts, writing things down so I wasn't delusional and I can use that as a very intellectually honest exercise to debate with whoever I was trying to get help from. I think those sorts of things I would just put extra emphasis on. And you asked me, you know, sometimes where I gain sources of motivation or lessons learned. A lot of it comes from my own team and watching what they do, their successes, their setbacks and, you know, deriving lessons from them.
- [49:24]
A
That's awesome. Tony. Thank you so much for coming back on.
- [49:27]
C
Yeah, thanks Guy for having me.
- [49:29]
A
That's Tony Hsu, co founder and CEO of DoorDash. And by the way, if you haven't heard Tony's original How I Built this episode, you've got to go back and give it a listen. We will put a link to it in the show notes. Thanks so much for listening to the show this week. Please make sure to check out my newsletter. You can sign up for it for free@guyraz.com each week it's packed with tons of insights from entrepreneurs and my own observations and experiences interviewing some of the greatest entrepreneurs ever. And if you're working on a business and you'd like to be on this show, send us a one minute message that tells us about your business, the issues or questions you'd like help with and hopefully we can help you with them. And make sure to tell us us how to reach you. You can send us a voice memo@hibtid.wondery.com or call us at 1-800-433-1298 and leave a message there. And we'll put all this in the podcast description as well. This episode was produced by Kerry Thompson with music composed by Ramtina Rabloui. It was edited by Andrea Bruce and our audio engineer was Sina Lafrey. Our production staff also includes Alex Chung, Karla Estevez, Casey Herman, Chris Masini, Rommel Wood, Sam Paulson, Neva Grant, and Elaine Coates. I'm Guy Raz and you've been listening to How I Built this. If you like How I Built this, you can listen early and ad free right now by joining Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short survey@wondere.com survey.