How I Built This with Guy Raz: Misfits Market – Abhi Ramesh

Release Date: March 31, 2025

In this compelling episode of "How I Built This with Guy Raz," Host Guy Raz delves into the entrepreneurial journey of Abhi Ramesh, the founder and CEO of Misfits Market. Misfits Market is a revolutionary grocery delivery service that specializes in delivering "imperfect" but perfectly edible fruits and vegetables at a fraction of the cost found in premium grocery stores. Valued at $2 billion, the company has grown exponentially, especially during the COVID-19 pandemic. This summary captures the key points, discussions, insights, and conclusions from the interview between Guy Raz and Abhi Ramesh.

Early Beginnings and Entrepreneurial Spirit

Abhi Ramesh's Early Influences

Abhi Ramesh grew up in the Atlanta area after his parents immigrated from India when he was seven years old. Both parents were software engineers who placed a strong emphasis on education. This foundation instilled in Abhi a relentless drive for academic excellence and entrepreneurial ventures from a young age.

[05:45] Abhi Ramesh: "If I ever got anything below 100 on a test, my dad would show up to the school... I think I understand it a little bit more now. For both my parents, education is what got them here."

First Ventures: Tutoring and Altair Prep

During high school, Abhi leveraged his academic strengths by starting a tutoring business to afford personal goals, such as purchasing a go-kart. This venture evolved into Altair Prep when he attended the University of Pennsylvania, focusing on personalized SAT and ACT preparation through a technology-driven approach.

[08:21] Abhi Ramesh: "It was mainly because I had to make money... I started tutoring people."

However, despite initial success, the transition from a physical tutoring model to a software-based platform proved challenging, leading Abhi to take a year off from college to self-learn coding and explore new entrepreneurial ideas.

Founding Misfits Market

Discovering the Opportunity

The seed for Misfits Market was planted during a visit to an apple farm in Pennsylvania, where Abhi noticed vast quantities of imperfect but edible apples going to waste. This revelation highlighted a significant problem: food waste in the U.S. agricultural sector.

[20:57] Abhi Ramesh: "Nothing seems wrong with these. I am looking at a grade of apples that I as a consumer would feel totally fine eating."

Validating Demand

To test the market demand, Abhi launched a landing page under the name "Misfits Market," offering subscription boxes of seasonal produce at discounted rates. Initial Facebook ads showcased the quirky, imperfect produce, attracting early adopters interested in both savings and reducing food waste.

[32:56] Abhi Ramesh: "We started Misfits Market... and I was like, misfits Market."

Securing Initial Funding

Recognizing the potential but limited resources, Abhi reached out to a friend, Edward Lando, who invested $150,000 without formal documentation. This injection of capital allowed Misfits Market to transition from a small-scale operation to a more structured business.

[36:10] Abhi Ramesh: "Edward offered to put in the first check, almost like a no questions asked... he wrote $150,000 investment into Misfits."

Scaling the Business

Operational Challenges and Solutions

As Misfits Market grew, Abhi faced significant logistical challenges, particularly in packaging and delivery. Initially handling deliveries personally was unsustainable, leading to the use of third-party delivery services like UPS and FedEx. However, mishaps such as damaged produce during transit underscored the need for specialized packaging solutions.

[41:17] Abhi Ramesh: "If this is going to scale, I have to figure out the packaging side of this."

To address these issues, Abhi experimented with various packaging methods, ultimately developing a system that minimized damage during shipping.

Expanding Product Offerings

Beyond produce, Misfits Market began including non-produce items like salad dressings and olive oil with manufacturing defects. This diversification not only met customer demand for variety but also increased the average order value.

[54:05] Abhi Ramesh: "We started to increase the variety of items... this was no longer squash, potatoes, apples... we added leafy greens, broccoli..."

Acquisition and Enhanced Logistics

In October 2022, Misfits Market acquired Imperfect Foods, a competitor based in California. This strategic move allowed Misfits to build its own fleet of delivery vans, enhancing control over logistics and reducing dependency on third-party services.

[65:24] Abhi Ramesh: "With Imperfect, we acquired a fleet of about 400 vans and we are doing our own deliveries with our own drivers..."

Navigating the Pandemic

Unexpected Surge During COVID-19

The COVID-19 pandemic posed both challenges and opportunities for Misfits Market. The surge in demand for online grocery delivery nearly doubled the customer base within a short period, forcing the company to scale operations rapidly.

[59:57] Abhi Ramesh: "Between March and April, our customer base almost doubled... COVID accelerated our business by multiple years."

Personal Trials Amidst Business Growth

During this tumultuous period, Abhi faced personal challenges as his wife was diagnosed with lymphoma. Balancing the demands of a rapidly growing business with the emotional toll of his wife's illness provided Abhi with profound insights into prioritizing life’s true challenges over business pressures.

[62:49] Abhi Ramesh: "If my wife hadn't been going through that type of cancer treatment, I probably would have looked at some of the problems that Misfits was going through at the time as like, holy cow, this is like life or death."

Achieving Market Leadership

Building a Robust Infrastructure

Misfits Market established multiple fulfillment centers across the U.S., including a significant 300,000-square-foot refrigerated facility in Salt Lake City. These investments were crucial for maintaining product quality and expanding nationwide reach.

Profitability and Future Growth

By the end of 2023, Misfits Market achieved a mid-nine-figure revenue run rate and approached profitability. The company's focus has shifted towards monetizing its robust logistics infrastructure by offering fulfillment services to other direct-to-consumer brands.

[67:43] Abhi Ramesh: "We have to be very honest with yourself on what business you actually are in... we're fundamentally an operations and logistics business."

Vision for the Future

Looking ahead, Abhi envisions continued growth in the online grocery sector, anticipating further market penetration. While considering potential exit strategies like IPOs or acquisitions, his primary focus remains on long-term value creation and maximizing the utility of Misfits Market's logistics capabilities.

[68:17] Abhi Ramesh: "If I look at any other category... online grocery is as digitally penetrated as these other categories... keep doing what we believe is right for long-term value creation."

Reflections on Success

Role of Luck and Hard Work

Abhi acknowledges the crucial role of timing and luck, particularly the unforeseen boost from the pandemic. Nonetheless, he emphasizes that relentless hard work and meticulous operational decisions were fundamental to Misfits Market’s success.

[70:12] Abhi Ramesh: "Luck always plays a role... The COVID wave, that bump was clearly luck... It has required an incredible amount of hard work to make this happen."

Conclusion

Abhi Ramesh's journey with Misfits Market is a testament to identifying market inefficiencies, leveraging operational excellence, and navigating unforeseen challenges with resilience. From humble beginnings addressing food waste to scaling a multi-billion-dollar enterprise, Misfits Market exemplifies how innovative thinking and persistent effort can transform industries. Abhi's story provides invaluable insights into entrepreneurship, logistics, and the importance of adaptability in the face of global crises.

Notable Quotes:

• [05:45] Abhi Ramesh: "For both my parents, education is what got them here... what took them out of India."

• [20:57] Abhi Ramesh: "Nothing seems wrong with these. I am looking at a grade of apples that I as a consumer would feel totally fine eating."

• [32:56] Abhi Ramesh: "We started Misfits Market... and I was like, misfits Market."

• [41:17] Abhi Ramesh: "If this is going to scale, I have to figure out the packaging side of this."

• [62:49] Abhi Ramesh: "If my wife hadn't been going through that type of cancer treatment, I probably would have looked at some of the problems that Misfits was going through at the time as like, holy cow, this is like life or death."

• [67:43] Abhi Ramesh: "We have to be very honest with yourself on what business you actually are in... we're fundamentally an operations and logistics business."

• [70:12] Abhi Ramesh: "Luck always plays a role... It has required an incredible amount of hard work to make this happen."

Misfits Market's story is a powerful example of how addressing environmental concerns, such as food waste, can intersect with successful business models, leading to significant societal and economic impact.