Misfits Market: Abhi Ramesh

Transcript from https://podmenti.com/t/cbc99470c384199c

Yeah.
Woefully unprepared.
for Covid.
Just a sheer volume of folks kind of signing up.
On top of all this
It was a very challenging kind of personal time as well. My um my wife was actually diagnosed with lymphoma.
During Covid.
During Covid.
So
If my wife hadn't been going through that type of cancer treatment, I probably would've s looked at some of the problems that Miss Fitz was going through at the time and been like, Holy cow, this is like life or death.
But
It certainly did.
Give me perspective.
On
What is truly a life or death problem?
and what are actually just hard problems that you can deal with and at the end of the day
Comment on the other side.
Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.
They built.
Guy Roz and on the show today, how Abby Ramesh realized that
People will buy less than perfect food for a lower price.
and launched Misfits Market.
Grocery delivery service that's been valued at two billion dollars.
When you walk into an upscale grocery store like Whole Foods or Wagman's
You actually pay a hidden price for blemish-free fruits and vegetables, which, I think for the most part, is fair enough, right? Those stores want pristine produce.
Because customers are just gonna pick around the misshapen apples and carrots and squash, and those will eventually get thrown away.
Now when it comes to how produce is evaluated by the USDA.
The top grade is Fancy, and the second highest is US number one.
But some produce never makes it great at all.
But the problem is that fruits and vegetables are natural products, which means a lot of them are weirdly shaped or might have blemishes and bruises.
And in many cases.
That produce gets sent to animal feedlots, or worse, it rots in the fields.
Mm.
This discovery was a revelation to Abby Ramesh several years ago when he visited an apple farm in Pennsylvania.
Seeing all these imperfect looking but
Perfectly edible apples rotting away.
He wondered.
Is there a business here?
The short answer was yes, but it wasn't exactly the business Abby set out to build.
What started out as a grocery business really ended up as more of a logistics business.
The company Abi founded is called Misfits Market, and today it sells and delivers over a thousand products to customers in 48 US states, including, yes, misshapen fruits and vegetables.
for less money than what you might find at a premium grocery store.
Misfits was an idea that came to Obby after several previous startups fizzled out, and we'll hear about some of those too.
As for Abi
He grew up mainly in the Atlanta area. He was seven years old when his parents immigrated to the US from India.
Both of them were software engineers, and both of them had very high expectations for their kids.
If I ever got anything below
A hundred on a test.
My dad would show up to the school.
And this wasn't for show, he actually meant it. He would schedule a meeting and he'd be like
Why did he get it
a ninety seven. You know, is there anything we need to be doing at home to make sure he's not missing three points out of a hundred on on an exam?
And
He did that a ton.
Um
And I you know.
As any
kind of teenager growing up at the time, I was like, this is nuts. My parents are crazy. Like what's wrong with them? Um, I think I understand it a little bit more now. For both my parents,
Education is what got them.
Here. Yeah.
is at the end of the day what got them out of India, what got them the opportunities to move to the United States. So
For them it's such this critical, critical foundation. Um
And as as I think in most of my like, what do you want to be when you grow up?
Um yeah, uh it answers. It was probably like either an engine or a doctor.
Yeah.
Um
I guess w while you were in high school, um you were doing some tutoring'cause you you were doing SAT
prep for people, right?'Cause that'cause I guess you
Did really well in your SAT and
started like a tutoring program where you like informally or formally
Tutoring people in high school?
Yes. So
So so the SAT
I I took it twice, uh and I actually got a I perfect score on the SAT. Wow and so
Um by the way, just this is just as as an aside.
The only other person on this show who I believe got a perfect on their SAT
Does a business that is somewhat competitive with yours just thrive market?
Yes. So I listened to that.
that uh episode as well. And I did not know that. I was like, holy cow. And believe it or not, I believe
Uh, Nick also started and worked on a tutoring business of some sort, if I recall.
So maybe there's something to some correlation between a perfect SAT score and starting a food delivery, grocery delivery business.
All right, keep going. So you so in high school, right?
So the tutoring business kinda came naturally out of that where, you know, I th there were a few other high schoolers, uh, you know, friends of mine that were like had good scores and SATs, and we said, Hey
Let's go create a you know a tutoring program to run that. Now
To be honest, it was mainly because I had to make money. Yeah.
Um
I think when I was fifteen
I wanted to buy
Like a go kart or something like that. And my parents said, Sure.
But you pay for it. Yeah.
And I was like, I can't pay for it, I don't make money. And so they were basically like, but go make money and figure it out. And so at an early age, it was like you got if you want to buy stuff, you need to kind of earn and appreciate what things actually cost and why they cost and what it takes to go generate that. Um, obviously as a high schooler, you have
you know, only a handful of things you could do to go make money. And so I started tutoring people.
All right, so you um you go off to college, go to Penn.
Um and you
Start your degree studying economics.
So you get there in two thousand ten. Um and I guess
While you're there.
You restart this tutoring company, but in a in a more sort of methodical way. It's called Altair Prep, is that right? Yes.
And so tell me what what was the new
idea.
So
It was somewhat of a technology idea.
we created a gigantic Excel spreadsheet.
tagging thousands and thousands of SAT and A C T questions. We then use this to essentially create a personalized uh program for kids who uh wanted to
get much higher scores than S C T and A C T. And so what we'd end up doing is the program was you take a diagnostic test at first. We will then take that diagnostic test, see which
thirty questions you missed, go to our bank.
of tagged
you know, 10,000 questions and essentially go and build you a 10 week program personalized to the exact types of questions that you had been missing on your diagnostic.
You know.
Early on we thought we were gonna monetize this by building software.
When you say we was you and who, who else?
So the the main co-founder was uh a friend from high school named uh Darwish. She actually runs a different startup today, and I worked on another company with him after. So
You know, we actually had clients and we were tutoring folks. You were g like physically sh showing up to like a library and tutoring kids?
Actually an important distinction. So
I was not doing the tutoring anymore. I was
helping build and design the curriculum.
kind of pushing on strategy, we hired tutors. Um, and actually as we started to kind of
get a little bit more momentum and traction and and clientele for all terror, I was like, okay, I actually think this merits
you know, investing more time and energy, I'm gonna go take a year off from school to do it.
Alright, so sometime in 2012.
You decide.
To move to Los Angeles to really build.
this business up. So r basically it is a it's a test prep business, but you wanted to turn it into a
Software product?
Yes. And so the the primary reason was
Though the test prep
kind of business model, the tutoring business model allowed us to get traction quickly and you know had real margins and we were able to get it to a certain scale.
Um we thought about how we could actually scale it beyond that. Like how do you scale a physical tutoring business to a thousand, two thousand? Really hard to do. So like, okay, we gotta go software. Um
And so the reason we moved to LA was there's a small incubator in LA that essentially said, Well
You know, we will write you a twenty five thousand dollar check.
to go build the software around this. So instead of
you know, a giant tutoring business, we can actually have like a recurring subscription sort of software business. So that was the idea.
The the long story short was that did not work.
given who our customer was, you know, like a a high performing student with you know parents that that that want to figure out a way to get their students to get great scores.
they didn't want to just pay for software. They wanted to look a some a kid who got twenty four hundred on the SAT in the eyes and sit their kid down next to that kid and say, learn from this person. Um and so even though the software we built
kinda have the same pieces that
um the Excel sheet and the Tutor did, people ended up
Preferring the tutor. So
We realized that early on.
Ended up
Essentially dropping the software model entirely.
So basically you decided or you I it sounds like you
Decided that
It was time to kind of
Wrap that up and go back to college.
Yes, and and what ended up happening was
I took a full year off from Penn. This happened probably around month five or month six.
And
I still had
five or six months left on my my leave of absence. And so I ended up deciding that I was going to teach myself how to code, how to become software engineer.
in trying to build the software product for all their prep.
I realized how hard it was.
to
hire engineers to speak their language to do um unless you actually knew how to write code. So I was like, I'm going to spend the next five or six months
Learning how to code by myself.
And try to build things.
So once once it became clear that Altair wasn't gonna take off, I guess you you as you say, you
kinda dabbled in a few different ideas. Like one was a
Like kinda like a a stitch fix, but for men.
Called trend bent, I think, right? Yes. It was exactly like Stitch Fix.
before Sitchfix existed, so maybe I should have continued to do that. Um, but it was a style, a personalized style quiz for men. So you'd go online, you'd kind of go through this giant quiz, and then we'd essentially send shoppers to go and pick a box for you every month and and and send it to you. So
I I coded that myself from scratch. But you weren't you were doing this all with the twenty five thousand dollar grant that you got from that
Incubator.
Pretty much. Yeah,'cause there there were really no costs for you know for me it was it was I had to live somewhere and I crashed um on people's couches in LA and my only costs were my living costs.
After this kind of year, I guess you decide to go back
To school.
And then figure it out.
Um, w once you got your degree, were you still thinking
I'm gonna try something. I'm gonna do this again.
Or were you were you sort of like, I'm done with startup world. I'm gonna go get a
Corporate job.
So
The conscious side of me was
I'm kinda done.
Um
This whole startup thing's really hard.
You know, I'm at Wharton, I'm at the sort of premier institution for learning finance.
Why don't I go actually give that a shot?
Mm.
Okay, so so after you get your undergraduate degree uh from Wharton
Um, I guess you you get a job at Apollo Group, which is this like a big, prestigious private equity firm.
Yes.
But you didn't stay at that job very long, like I think less than a year. So so why why? I mean what what happened?
Um so so yes, I only lasted nine months there. So it was nothing about the firm itself or the experience. Um
I just got the itch to go do something else on my own, and I could not get rid of it.
you know, m most of my job was looking at these, you know, I'd say companies between fifty million dollars of revenue and three hundred million dollars of revenue. Um and so by my end my job was to go and like analyze them, underwrite them and and go and figure out whether Apollo would would lend to them.
Every single time.
that I would sit there and look at one of these pitch deck and build a bottle.
I was like
I wish that I were on the other side. And so it got to a point where I was like, gosh, like it's not like I don't like working here.
I just this itch is so strong that I feel like I have to go do something on my own. Um and
I reconnected with Darwish, who was my co-founder for Alter Prep.
Mm-hmm.
And funny enough
He essentially had the exact same itch.
And he was like, Gosh, I'm sitting here working in finance.
Thinking back to our Altair Prep days.
and we did something's wrong, we did something's right, like maybe we should give that another go.
Back into education technology.
Yes, and the reason that came up was because I I was talking to Darwish about how I had taught myself how to code, and he was like
Interesting because I also have kind of been teaching myself how to code as well, using a lot of these tutorials online, things like Code Academy. And we were like, d do we think that there is
An opportunity to actually build
kind of like a can we focus on
uh on teaching people software engineering skills.
And there were a whole lot of people
That we're looking at
kind of pivoting their careers.
From
finance, you know, c consulting to technology. Yeah. And
One of the big gap was
Yes, there were non technical jobs in tech, but if you didn't know how to code it was hard. And if you didn't study
Computer science and college you did know how to code.
Alright, so you guys decide
to do this and I g I guess you called it uh Horizon School of Technology. And this was this was like a boot camp.
Uh like kind of program, right?
Yes. As a twelve week program.
And
We hired an instructor because again, we were kind of the operational heads. We helped design the curriculum, but we wanted to make sure there were someone with like real credibility and also could teach computer science fundamentals well. Again, I'm self taught, so while I can write code.
I don't think I'm good enough to teach code. And by the way, what was the cost? How much did it cost to do the camp?
So
We priced it.
Uh
Ten thousand dollars.
Originally.
for a twelve week course.
I have to imagine the margins on that are pretty good.
Really good.
'Cause your expenses are low. It's not it's like a kind of a business where
You have a space of you know, and you've got the instructors.
And the curriculum, but
I mean
And then you just repeat that.
Yes. I'd say the the hardest part to the financial equation for the coding boot camp is just what your class size is gonna be.
You wanna have a big class size and and try to stretch that instructor cost to over as many students as possible. However
The more
students you have in a class, in theory, the less effective it is for the entire class. And so we had to balance class size with that. Did you have to raise any money to do this, or could you basically do this with very little money?
We didn't raise any money. When a student signed up, we took a deposit.
That deposit gave us enough to kind of fund some of the upfront cost of renting a space, paying the security deposit. And then you know, the the the rest of the business ended up being, you know, cash flow positive because once people paid their entire tuition up front,
We could fund the rest of the program after that.
So you have the successful
first pilot in Philly and then you move to San Francisco to try and establish
Yeah.
school there or to sort of head be headquartered there.
Yes, for for one one very large reason.
Um
We didn't just promise.
That you would learn how to code.
We also
Said
We were gonna help you find jobs.
To all the students. So you had to be there. Or internships or jobs. Yes, you had to be there.
Now
That increased the pressure a lot because
the cost of doing anything in San Francisco is a lot higher than it was in Philadelphia. Um so hiring instructors, teaching assistants, classroom space was a lot more. And so we knew that by moving to San Francisco it was gonna be a higher stakes game. Um but we still thought it was the right decision to actually start to scale the program.
All right, so you move to San Francisco and you do the same thing there, and how does it I mean how how how does it do?
So so moving to San Francisco allowed us to scale
in a very meaningful way.
Um, and actually believe we raised the price a little bit when we moved to San Francisco to probably more like twelve thousand, twelve thousand, five hundred. So so you can do the math, like if we're running two hundred students a year at that, you know, uh a tuition cost, like it was getting to be a real a real business for us.
And by the way, I'm just curious.
Today
Is that business?
Entirely under threat because of AI.
I think that is definitely a uh under threat because of AI. I also think it's under a threat because uh software engineering hiring has just uh ha has shrunk. Yeah. Those roles are just there are a lot fewer of them now. And then I also yes, definitely think the self serve tools uh have become a lot better as well.
Alright, so you've got this business going, Horizons, and
I and I mean it's doing well.
What happened to it?
So
It it's funny because you think that we would make the same mistake twice, but uh the the big realization for Ryzens again was we were like, Okay, we have this thing at a couple hundred students a year.
But going from zero students to a hundred students was easy. We couldn't see a world in which go from a hundred to five hundred or or five hundred to a thousand without like multiple years trying to scale up to multiple locations, multiple cities. Um and I think we still could have done it.
But I think, you know, b both of us looked at each other and said, like, do we actually want to be scaling a physical another physical tutoring, you know, education business? Um and th this was probably
early twenty eighteen. Um, we've been doing Horizons for three years now. It's a profitable business. We are making money from this, which is awesome, but it's really hard to scale. And um there was a period of time where we actually took on
A few hundred thousand dollars of external capital.
We returned it.

we looked at the type of business this was and we were like, this is not something
That
can withstand
venture style funding. Like it just doesn't make sense. And so rather than disappoint a bunch of investors who want to see a a 10X on a on a tutoring business, let's just give the capital back. And so maybe we should go look to see if we could do other things.
Okay.
So
I mean clearly your your the gears in your head are turning. You're thinking about what is the thing
That could work.
And you're living in the Bay Area.
And I guess you start to
You you sort of come across this idea of of
produce of maybe doing something with produce.
Tell me what
how that idea started to kind of
Crystallize in your head.
Yep, so
Um, there were a couple of moments that led up to
me deciding there was something interesting to do with selling produce online. Um the the the first one was I actually stumbled into an article.
That talks about
Produce spec.
They're actually like extraordinarily specific.
specifications that the USDA puts out.
For every item bananas, apples, oranges, there is strict guidelines.
on you know what falls into what tier. If you look at Apples, for example, there's extra fancy, fancy
You know, grade one, grade two, and all the way down.
And so I I I I stumbled in an article that kind of was explaining some of this, and I just didn't realize that that's actually how how produce grading is based on size and shape and color. Although meat is graded based on fat distribution, but it's yeah, I it's it's
Basically a grading method that enables
grocery stores to charge different prices for different products. Exactly.
What kind of piqued my curios was when you read through some of the standards, some of them are sort of like very quantifiable. You know, it's like, Oh, you know, you don't want a a rotting spot on your pair when you sell it, or you know, you you need a certain size. And some of them are pretty vague.
You know, some of them are like, you know, you want the apple to be clean.
On the outside.
And it's like, well, what does that mean? You know what I mean? If there's a little dirt on it, does that not count as clean? And so so I uh this just piqued my curiosity and I kind of just put it in a folder in the back of my head, but I was just interested having learned about it.
Um
And then I think the most
Pivotal moment for me.
Um
I actually ended up moving from
San Francisco.
To Philadelphia. This is after you decided. Well, this is you decided to fold the business or sort of wind it down. We decided to wind down Horizon. I still did not know.
what I was gonna do next. So my girlfriend at the time, uh wife now
uh was finishing up her med school at Penn.
And so
On one of our adventures, we ended up going to an apple orchard.
Located about forty minutes outside of Philly.
And when I was there, I
remember seeing like we were going through the apple orchard and for every apple that was, you know, on the tree that we could go pick, there were like
hundreds on the ground already.
And so I you know, I remember that article that I read, so I ended up asking the farmer, I was like, What happens
to all these apples and the girl like what do you with them? I'm more just curious. And he he points this giant cold storage container that he has and says, I put them all there.
I donate some
I make cider with some, and I end up having to throw out.
The vast majority of them, at the end of every season.
Hm. So I was very curious. I was like, can I look at them?
So he opens up his cold storage uh little container, I look inside, and I just see um giant drums of apples, and I pick one or two out and I was like, nothing seems wrong with these. Like, yeah, maybe they're a little small, like I maybe see a bruise on one or two, but like I don't see anything fundamentally wrong with these apples. So I was like, Can I buy some from you?
You want to buy them for for what reason? To just to experiment or to eat them or to what? I I was just generally curious about like does it taste any different from the apples that we're picking from the trees. I see. And I think the the other thing going through my head at the time was
Okay, if these apples could be sold via retail channels for a dollar an apple and sold to
the juicing cider channels for twenty cents and Apple quite less. Or less five cents. There's a whole lot in between.
There.
And so
Are there apples here that could be sold?
for forty cents or fifty cents due to the retail channel, and is there something there? And so
In a in a sense, it was sort of testing the farmer'cause I was like, Okay, can I buy these? And he said, Sure, how many ever you want? And I was like
You know.
How much do you want me to pay for them? And he kinda was just like name your price.
You know, pay pay whatever you want for them. Right.
That was probably the first moment where
kinda made me realise like
I am looking at a grade of apples that I as a consumer would feel totally fine eating.
And I'm talking to a farmer
that is willing to give it to me at almost any price. You know, not not any price, but it i is is basically saying like
my alternative here is either zero or five cents or ten cents. And there's a whole lot of room between that and what I as a consumer and probably willing to pay given the price of apples at the grocery store.
And the beauty of apples is you can really they last a long time.
Yes.
Like apples in particular.
Exactly. And and if you think about the time that I was doing this in Philadelphia, this was kind of late summer, you know, summer to late summer.
And so
A lot of what was being grown at the time
was these kind of like hardier seasonal s fruits and vegetables. Apples were a huge part of it. The squashes, the potatoes, the onions, like
I was so excited.
I need to immediately figure out
If this is a one off.
thing that I just learned about this apple farmer.
Or if
This exists across
other commodities. And so
The first thing I did when I got back home to Philly
is I
was Googly around to see how I could find get in contact with other farmers.
What's interesting is
The USDA actually publishes a list of every organic certified farm.
Wow.
Some people ask me why do we start organic at Misfits, because we actually started the business only doing organic produce. In part
I think it was because, you know, I thought that starting organic would kinda give us more of the quality credibility, but
The real answer is there's not a list of all conventional farms, but there is a list of all organic farms online on the US Davis website. And so what I did when I got back home is I pulled that list of every organic farm in Pennsylvania.
And I started cold calling.
or emailing all of them.
Well.
One of the challenging things was some of the Amish farms, you probably know they can't use cell phones. They don't use and so they have their one phone landline in the barn. Yeah. And so if you don't catch them at six AM, you're not gonna catch them the rest of the day. So I'd wake up early, call'em at six A. I would call them and ask
Hey.
Do you have produce that you can't sell?

And most of them would say, Yes, why, who are you, what do you want? And I would just say, I want to buy it from you.
They all said great, come on by and so uh
Drive to the farms.
I start buying up cases and cases of their kind of grade two product.
Ma mainly apples.
Squash.
Apples, squash, onions, potatoes, beets, um uh carrots, a lot of root vegetables. Things that just last a long time in cold storage. Last a long time. There's huge quantities of and
You know, a lot of these are like w was fascinating about the root vegetables, especially, was um
There are significant
Aesthetic.
Imperfections. Nothing but aesthetics. Like I'm seeing carrots that are just with like two roots coming out of it and
Two roots, they're twisted around each other. It's like you know, they're two carrots that are almost like hugging each other. So
I I started buying all the stuff. And it was your boy spending a couple hundred bucks.
Max. Yeah. Yeah.

Th the interesting thing f that I found was f for most of these farmers
They didn't even have a price.
For these items.
They kinda were like, I don't really know, you know, like what would you pay? Um things have changed a little bit now, but but but at the time
There was really no market.
for these items and so there was no such thing as a market price.
And by the way, you're buying the produce, but what were you doing with even buying a hundred dollars worth of
You know
I mean that's you might have like several cases of of produce stacked up in your apartment. What
Well were you were you eating it? Were you just buying it just to buy it? I I would eat some of it but I can't eat cases of it. And so um there's a lot of produce just sitting around my apartment and I and I lived in an apartment building, so I started leaving it out.
for free for people to take.
in the apartment building. And so it was really just kind of like a way to test
the supply side. If it was good. If it was good enough to eat. If it was good enough. So I'd eat some of it, I'd give away a lot of it, and then like there were just cases and cases of squash sitting in my living room. Yeah.
And I have photos.
My apartment.
Was filled with produce.
When we come back in just a moment.
Abby is able to find customers for those stacks of squash and all of his other produce, but the much bigger challenge?
Delivering it.
Stay with us, I'm Guy Raz, and you're listening to how I built this.
Hey, welcome back to How I Built This. I'm Guy Raz.
So it's August of two thousand eighteen and Abi is pretty sure he can buy all of the ugly produce he can handle at a
Big discount.
From farmers around Philadelphia. But having a supply?
Is only half of the equation.
And then the missing piece was is her demand.
Are people interested?
In
quote unquote good quality produce, but not your grocery store grade, um delivered to you but at a discount.
So how did you test whether there there was demand?
'Cause it's before you raise any money, you're using your own cash right now. My own cash. Um
I I put up a a landing page.
Um I built the landing page myself. Um what'd you call it?
So I the original name was Misfits Market. So the the name has stuck. Misfits Market. Oh. I call the Misfits Market. That first farmer I met he used the word misfit. He's like, These are the Misfit apples. So I was like, Misfits Market. No one has it.
It's not trademark like let me let me do it. So Wow, and you got Miss Fitzmarket dot com, like no problem.
Got Miss Fitzmarket.com.
So day zero of of testing demand, I got the domain.
um for ten dollars or seven whatever costs on on GoDaddy. Yeah um use Shopify to kind of get a basic landing page up.
And
At the time I put up uh two items. One was a small box, one was a large box. Did you specify what produce would be in there?
Uh I I just list it out what was seasonal.
Um and I said, Hey, for the small box you're gonna get, you know, ten to twelve pounds or whatever it is of of seasonal produce and for the large box you'd get fifteen to twenty pounds of seasonal produce. Um
And uh if I remember the the early pricing right, I think the small box was twenty two dollars and the large box was thirty five dollars. Right. So I put that landing page up.
And
Created a Facebook ad account.
Put my personal credit card on it.
It started to drive
Pre sale traffic.

Mm-hmm.
And
What I decided to do was I was like, I'm going to lean into
The weirdness and the wonkiness.
of the fruits and vegetables.
And so
I took photos of
the kind of ugly twisted carrots and the weird shape squash. And I would just um say like, you know, ugly fruit in need of a home.
And those are my Facebook ads.
And when they get to the landing page, they couldn't order at that time, it was just a pre order.
It was a pre order so they could pay. So so they could click buy and actually like pay the twenty two or thirty five dollars. But I had a uh a you know blurb that said
You know, shipping starting in two weeks.
So but these were ads that were going out all over the country?
No. So I I limited the ads. Yeah. So my assumption was I'm gonna start with like
Philadelphia area focus on you know apartment buildings and neighborhoods that that are near me and we'll figure out a way to get them there from these farms.
And and
what were you I mean, sort of in that t time period, what were you spending on ads? I mean, was it
Thousands of dollars, tens of thousands of dollars? Like what did it cost?
I started I probably started with like, you know, fifty, a hundred dollars a day, two hundred dollars a day.
What was very interesting was
When I got my first two or three conversions for people to sign up.
It cost me like five dollars.
Or ten dollars per person. Per person to get a side of. Yeah. And I was like, Okay.
I think I can figure out a way to make this work if that scales.
Now does that scale is the question, so the only way to know is to start scaling spend.
And so
I took it from fifty to a hundred to two hundred to five hundred. Um, probably on my own. I got to a point where I was probably spending about
you know, fifteen hundred dollars a day on
Paid ads on Facebook.
Um
and bringing in a hundred customers a day.
Wait, h hold hold on one sec,'cause you're you're getting a little ahead of yourself. Um, can we can we just wind back to when you
uh just had a few hundred customers'cause I think
you're about a month into this thing and and obviously you need you need some money to get it going.
Uh and from what I gather you reach out to this
A friend of yours named Edward Lando. Yes. Uh who who is Edward?
Yeah, I think of Edward as like
He was a co-founder of For All Terror. He was less involved in kind of the day to day of the the tutoring company, but I had still kept in touch with him and he was a friend of mine from Penn.
I told him.
That
I was working on this.
Um, and I was like, I gotta figure out a way to get money, otherwise, you know, I'm I'm dead meat.
And he um he offered to put in
The first check.
almost like a no questions asked. Um and he wrote a hundred fifty thousand dollar
Investment into misfits. Hm.
There's no corporate entity.
There are no documents.
I opened up a Bank of America account and he wired 150K into it. And then I was like, Don't worry, I'll figure out the docs, I'll figure out the entity later. And in the early days he also
You know, he was living in New York City at the time and he was like, Look, like if if you need help doing stuff
I will help you. Um, and so he actually came down to
Philly for the first few months of
The founding of Misfits, it actually helped me.
on the ground with things as well, in addition to putting in that first check.
All right you now had uh about a couple hundred people.
to deliver boxes to. And so tell me about that. Like were you did you
I don't know, like rent a y a a U Haul truck and drive to a bunch of different farms and then bring the stuff back to
Your apartment or did you like rent a space and start to like hand
Pack the boxes.
That first order.
So
That's almost exactly what I did.
Um
I very quickly signed a lease.
On
uh a small warehouse base in north Philly.
I purchased two industrial
Uh refrigerators.
Put it in the warehouse space. I was like, this is where I'm gonna store at least the things that should be kept cold, like apples. So I had a warehouse space.
I then went and drove to all these farms.
And started to
pick up inventory to fulfill the four hundred plus orders. Um
Three times a week.
I'd go out, rent a U Haul in the morning.
Drive out two and a half hours to the farms.
spend the entire morning and afternoon collecting all the produce, drive back to the fulfillment center.
And what I am doing is the first kind of ten to fifteen boxes.
I packed on my own.
And
uh I actually delivered them myself.
But I very quickly realized
While I could do the sourcing and and those pieces.
the fulfillment and the logistics was going to become impossible to do solo. Um, so I put up initial job listings on Craigslist.
And who's to how are you I mean, the packing is easy, but delivering them is a different story.
To each address in you know, in the Philly area. How did you do that? So delivering was really hard.
At first
I just handed the boxes. I'd hand like five at a time or ten at a time to
these drivers that I hired off of Craigslist.
Yeah. Um and whose cars.
their own cars. They use their own cars to deliver the boxes. Now the hardest thing that I realized was routing.
Because if I hand
Ten boxes to you.
This is why UPS is the best. Those ten boxes might take you twelve hours to do if you're not going to be able to do
Route them in correctly, and you're not gonna route them in your head.
There was an off the shelf
routing tool where you can plug in
Fifty addresses at a time.
And it will create an optimal route for those fifty addresses. Right. And
That is what
I used we would route them through this man or routing software, print out.
The
Output transcript:
Hand it them and say this is the order.
For your ten orders, go deliver them.
By the way, I would think that at this point
You would bring in your dad, who was a a logistics specialist on shipping.
So I call it's fun it's funny you say that because um
I didn't really tell my parents about this.
Until months later.
What do you mean you didn't tell him about this?
Um they they didn't even know I was working on Misfits.
They thought you were doing nothing?
Pretty much. Yeah. Ex certainly with amongst my parents who were like, Well
You left Apollo, this like big fancy job.
You started this um
Horizons think it didn't work out? Like is this like a this is just a track record of doing things that are not gonna work? And so I didn't tell them. Yeah. I I think the first time I told them about Misfits was
right before we released our press release for our for our seed round of two million dollars. Wow. Okay. All right, we'll get there. So
You um you got this logistics software and it does that w does it work?
Yeah, it it did work.
But
Very quickly.
I realized that
having my own drivers go and deliver these things was just way too hard. And I was just do I was doing work that other people had already done, the big logistics providers. Um
And so
Probably about three weeks into it.
I switched from
uh our own drivers to UPS FedEx. Yeah.
Now
What I had not thought about to date was how you actually package the items.
I just put
Squash.
Apples
Onions, potatoes.
Peaches.
In a box together.
And handed them to a driver.
Placed on the ground.
Tossed on a doormat with the peaches.
Bouncing around with the hard butternut squash getting bruised.
Correct. And and when I was handing them to our own drivers to go do that.
It was fine.
Now I put on a FedEx truck and it's bouncing around a FedEx truck going to a sort center or going down.
Everything changed. I start to get
You know, people are still customers are still happy. They like they love the boxes, but like one in fifteen would email and be like
Uh my squash smashed my peaches.
In the box. Like what are you gonna do?
And so
That was uh it was an important moment'cause I realized like if this is gonna scale
I have to figure out the packaging side of this. Yeah,'cause that the basically once somebody calls and says that, and then you gotta go and send the m more peaches, you're you've lost money on that order.
Exactly.
And even today.
the the packaging of of what we do is actually a huge component. Um so I I started testing a variety of different things like insulated bags, containers for peaches, uh wrapping fruits, separating them with cardboard dividers instead of the boxes, all those sorts of things. Um
And eventually find a solution that kinda that that has worked.
even for the FedEx deliveries.
So when you were but just going back to like
the these first customers. I mean the marketing was very simple. It was like this weird looking fruits and vegetables, but
Essentially were you sending this message people saying, Hey
You're spending too much on
perfectly pristine produce when you can get the same quality that might look a little blemished or weird.
for a fraction of the cost. Were you m sending that message out, um, in these ads?
Yes, I I would say that the message
There were two.
One was
Get really high quality produce.
At a discount.
And the second message was
help fight food waste.
We have a huge food waste problem in the US and
You know, forget about
whether you should fly on planes or not.
Ten percent of
greenhouse gas emissions in the US comes from methane produced by landfills.
Which is which are filled with food waste. Uh it's uh an order of magnitude higher than what's produced by by planes.
At what point they'cause this is now
the fall, early winter of twenty eighteen, do you go out and l and look for real money?'Cause you got about a hundred and fifty thousand from Edward, your sort of first investor, but
You needed to raise a couple million at this point.
Yes, and
Between
kind of the end of the summer of twenty eighteen and and the end of the year, between August and December, we kept growing at that same clip. So by the time December rolled around,
We had a couple thousand customers and the warehouse was getting packed. Um I had gone from
one packing shift to two packing shifts. So we had a a six AM to two PM shift of packing orders, and we had a two PM to ten PM shift for packing orders to warehouse. Um we got from two refrigerators to five refrigerators. So the business was growing. Um and so
In October, probably a late October, I reached out to
A guy by the name of Patrick who was at a a new fund called Green Oaks Capital.
Patrick had been my deskmate at Apollo.
The other thing I forgot to mention probably is
When I
built that landing page for these customers to sign up.
they signed up into a subscription, right? It wasn't just that I'd have 200 one time orders or three hundred one time orders. These are repeat orders that were either biweekly or weekly. And so I had a real, you know, at a couple thousand customers ordering
weekly. You know, it was a scale business doing a couple million dollars of ARR.
So
I gave Patrick some of the high level metrics and I was like that this is what I'm trying to build. Ultimately I think this can be kind of like um something we can scale nationally. I think there's a lot of supply of this ugly produce.
What do you think?
Uh, they came back a week later and they said we would write a two million dollar check into this.
I mean that's unbelievable, you know, given given how quickly
that happened. I let me just kinda dig into this for a moment.
Your friend had faith in you.
This is a low margin business.
It is, you're dealing with like
highly perishable
Products.
Right.
I mean now
the business has evolved and we'll get to that. But at this point it's like fruits and vegetables.
And
I mean it's like
A supply chain nightmare like the
The margins are th like the math has to be perfect to make this work. Yep.
It's really risky.
So I think you're right in that
The first investment from Ed was very much so like a
You know, you're a friend, I trust your execution, you'll figure it out. Like angel, friends and family check.
I think the green oak check
The big part of why w what got them sort of excited about this was
the the unit economics component of it as well.
Like
I think they looked at the ability
To buy
produce that you could sell for
Eighty cents in the dollar.
you you could the fact that we could buy that for forty cents the dollar, thirty cents a dollar, I think they looked at that and they were like, that is a very interesting
kind of arbitrage opportunity. And I think there should be a way to scale that. And
My my thesis from day one was
I have a cost advantage on the supply and I can pass on
a chunk of that cost advantage to the consumer, still have a chunk that, you know, and and keep that in between to have, you know, margin for the business. Um, but that cost advantage from the supply is kind of what drives everything.
Okay, now it's twenty nineteen, you've got two million.
Who were your first hires?
Wha what were those roles?
A director of operations was probably the first or second hire that I made.
And how did you recruit them? How did you find them? Did you look for people with experience in food? Who were they? Yep. So the first director of Ops Hart that we had is uh she was a woman with um specifically experience running a food
Fulfillment center.
Um
one of the decisions that I made early with hiring some of these roles
was I did not go super senior with my hires. And it was actually
something that I kind of disagreed with multiple times with some of our investors over the years, who oftentimes encouraged me to go like, Hey, hire you know, hire like the super fancy chief operating officer from
XYZ uh e commerce company like early. And
I
Never did that. I actually ended up hiring folks that were right for the stage that we were in today, not for the stage that we'd be at in three years. Um, there's pros and cons to doing that. And I think for me,
I needed someone that could do the job.
Not someone who could sort of build infrastructure and go hire teams to go do the job. And so the first director of Hops, the ops that we hired, um, she had done the job. She knew how to manage a two shift
Yeah, thirty thousand square foot.
Warehouse with some food.
But you know with your ambitions here.
To make this work, because this is not really just a
produce business or food business. This is a logistics business. This is a supply chain business. I mean
Really, and it reminds me we did the story of uh
Zoomy is this um
surf and skate shop a couple years ago.
And I remember the founder saying, you know, the key to a successful retail business
is inventory management. He's like forget about
Everything else.
If you want to have a good retail business, you've got to manage inventory.
Perfectly.
And I think that
Philosophy applies here.
w not necessarily with inventory, but but with the logistics and the margin it's just so
the line between this not working and this working is so
Pen.
A hundred percent. And and it's funny you say that because
There's a couple of smaller companies that I advise the uh these days and
One of the things I told them r recently, both of them was like
you have to be very honest with yourself on what what business you actually are in.
Because w with us, right, with Misfits, it's easy to say, oh, we're e commerce, we're you know grocery, we're but but
Fundamentally.
We're at operations and logistics business.
And being excellent at that is actually what is required. Um, if you've seen the McDonald's uh, you know, documentary, like when they realize they're a real estate business, that's when McDonald's actually started to work. And so realizing what business you actually are in, like what is the fundamental driver is so critical. Um
And I think it was probably late twenty nineteen that I realized that. That you are in.
Then I learned that
Parishable.
Fulfillment.
Logistics.
is the business that we are in.
Um and and the the the way I learned it is
Between that two million dollar seed round
And
March twenty twenty over that period of time.
We moved
Warehouses three times.
And the growth was coming.
From
customer I mean you were you were basically spending tons of money on
on customer acquisition.
tons of money on customer acquisition, but but also we started to scale
the number of items we'd bring in, right? Like this was no longer squash, potatoes, apples, beets, and peaches. Um we started to increase
the variety of items that the box would have. So we'd have leafy greens, we'd have broccoli, we'd have um a a variety of other fruits. So we probably went from
Five or ten items.
to thirty or forty different items. And so imagine not just um packing those thirty or forty items in a box. Imagine the inventory requirements now because we need to actually uh hold inventory for thirty or forty different types of produce items, each with a different temperature requirement. Um broccoli comes on ice.
which I don't know if people realize when broccoli shipped it it it comes on a ton of ice, ice melts, and then water gets all over the warehouse, so you have to have drains. Um so there's all these small operational nuances that we started to kind of learn by doing this.
When we come back in just a moment.
A not so small operational nuance?
The unprecedented challenge of delivering groceries
During a pandemic.
Stay with us, I'm Guy Raz, and you're listening to how I built this.
Welcome back to how I built this. I'm Guy Roz.
So it's the end of twenty nineteen and Misfit's market is growing so fast that it's easy to forget the company is
Barely a year old.
They're moving beyond Pennsylvania for deliveries and moving into other types of food as well.
На час produce.
One of the first ones was actually a salad dressing.
Item. And I believe that at the time it was a shelf life issue. So they were like, We have a bottled salad dressing. It has, you know, 120 days of shelf life.
Grocery stores can't buy things that only have five months or six months of shelf life often. And so w we looked at that and said,
Can we test?
A non produce item.
as part of our offering. Um so so when someone kind of came in to to look at their their next order, there's an option that said, you know, add salad dressing and we sold out of them.
Wow.
And so that was kind of our first foray into non produce items. Um
And that also kind of gave us some initial clues as to how we would attack the nonproduced categories, essentially by looking at some of these other inefficiencies. Um things can have manufacturing errors. So so one of our early buys was
Um a giant shipment of olive oil.
The labels on the cans were printed upside down.
Hm.
And so
they can't sell that through their traditional channels and so they ended up finding us and we bought, you know, the twenty thousand cans of Trey I think it's Trey was a brand new massive discount. At a huge discount. Because th they can't sell it at
Whole foods because you need the and so you can basically say your customers, hey, we got upside down labels and
Did that kind of become
the model like the you know, I rem I don't know if it's still the case, but I remember when I was a kid.
my parents would take me to get all my clothes at Ross dressed for less.
That's w that was where I got my clothes and I always had like irregular jeans. You know, like there's like seven stitches instead of like twelve. And you know, and and or like one pant leg was slight slightly longer than the other. And you know, my mom would just cut it off or something.
And uh that was it. I mean it was like that was that's why it was so much cheaper.
Exactly.
All of that exists in food.
It's interesting'cause it sounds like this wasn't part of the plan putting in olive oil. It was just gonna be produce.
Yes. So
Once we started doing it, we realized there's a lot of potential here to kind of meet customer demand and to obviously increase our baskets, but the original non produce items that that that we added um came because these brands came to us.
So
From where I understand the way it works, like if you go to a Whole Foods, right, you there's a farm.
Or like a food manufacturer.
Then it goes to a packing plant.
Then it goes to a distributor.
Then it goes to the grocery store, and then to you and every
part of that process, somebody's adding a dollar to the pro or more to the cost.
What you're able to do, if I'm understanding this correctly, is
Cutting out some of those steps.
So that's what enables you to really
Offer up.
A lower price?
So that combined with the fact that we're getting a lower price in general, kinda when we buy the these rescue buys in particular. Right. Today when you look at our assortment, we have twelve hundred different items.
Not every single one of those items are rescued or opportunistic. We offer some that are kind of like
regular items just to make sure that we can fill the basket and there's consistency.
Alright, bye.
Um the middle of twenty nineteen, I believe. Let's back back to the timeline.
You guys um
You raise you do a series A, sixteen and a half million dollars. Um
Also led by Green Oaks, your first seed investor.
But to get to the scale you wanna get to, you know you're gonna have to raise at this point.
A lot more money. I mean i because
Again, it's not just about because still at this point you're dealing with small farms, but at some point you're gonna have to deal with really big farms.
If you're gonna go national and you're gonna need
Lots of cash. I mean you got the logistics and supply chain and warehouses all over the country. We're talking about like
Diapers dot com or Amazon kinda.
Complex business like that.
Yes, and that journey I would say began right at our series A.
Um, so once we raise that round, the ambition very clearly became go national and go national fast. Um
We launched
multiple new fulfillment centers.
in that next twelve month period.
So
Our our first kind of thought was we're missing a really big market on the West Coast.
And so
We ended up launching a new facility in Salt Lake City.
We built that facility from the ground up.
So
three hundred thousand square foot
refrigerated and freezer facility that was custom built.
For us.
And so
You know, a lot of the capital you raise went towards
Um you know.
investing in that infrastructure over the o over the next two years.
W what I'm curious about is I wanna get I wanna get to Covet, because Covet obviously was gonna have a huge impact. It's unanticipated, but it would

impact on the business and in terms of its growth.
The to sign up for Misfits was free and is free, right?
Yes, it's free. It's free to sign up for Misfits. We have like a plus program that if people want to, they can opt into later. Um, that's an annual fee and you get additional discounts.
across our assortment, our private label, um, you know, lower fee. You you get all those things as part of the PUS program, but the actual base experience is free.
And the shipping is free with the base experience.
It's free at a certain uh threshold, depending on your zip code. After like how much you spend, okay. Yep.
So all right, you have
Now
momentum and you've got a lot of people and investors who are committed to this and Covet hits.
In March of twenty twenty, w how how many had you already
Gone into New York, were you in that market at that point?
We were in New York, so so uh by March of twenty twenty, we were in
most of the kind of northeastern states. And we had opened up some of the West Coast as well via that Salt Lake City facility. So
We were
you know, semi-national in a lot of ways by by that point in time and and it opened up a lot of different geographies.
Uh and Covet hit.
We um
I mean I think m most businesses uh can can say this like we were woefully unprepared for Covid. And specifically I just think the
The the volume of demand.
Uh and how quickly it came. Um
Between March and April.
Our
Cost for base almost double.
you know, even an additional five percent in demand or ten percent in demand in our business requires like meaningful planning and execution,'cause we have to go get more inventory, get more boxes, make sure we have the warehouse space, logistics capacity, and that's for five or ten percent of incremental demand.
Wow. So so how did you guys deal with that?
So uh we made the the decision to turn off
Like all new customer acquisition first and put up a wait list.
Um

That wait list then started to explode as well. And so we uh
We had to kind of temper expectations on when we would offboard people off that wait list. Just the sheer volume of folks kind of signing up was uh, you know, something we had we had never seen before and and did not anticipate. On top of all this, we didn't know whether our business was an essential business or not.
The guidelines that were being put out by the state of New Jersey made it pretty unclear. They said if you're a grocery store,
You're an essential business, so you can stay open, but
What about a grocery fulfillment center like us? And and so
We assumed that we were sensual, um, and there was a lot of confusion and for a moment in time, you know, the
the authorities actually said you're not, you know, you guys have to shut down. Um
I actually got in touch with the governor's office in New Jersey. Uh the the governor New Jersey had to actually kind of like step in and say no no
Uh misfits is actually an essential.
It's a central business, we can keep them operating. So um
And then on top of that, obviously like you know
But by this point in time, our total warehouse staff was about seven hundred people.
Um and so just managing
Covid.
Make sure people were safe, but also
continuing to kinda deliver boxes and getting them out the door on time was
was incredibly challenging.
Hm.
Um but also.
probably exhilarating also. I mean th the this you're you're watching your business just
Double, triple, quadruple growth.
Yes. So so the growth was absolutely incredible. And like honestly at the time I think we were like w we didn't believe the numbers were real.
But but yes, I think c covet accelerated our business by multiple years.
and and become kind of more of a grown up company in a lot of ways that and and we otherwise probably wouldn't have done that for multiple years, but the scale and the velocity of the scale from COVID forced us to do that. It was exhilarating, but I think at the time like
You know, th there was so much that everyone was nervous about as to whether like we would just collapse under the under the pressure and the weight. Um
I also
Um
It was a very challenging kind of personal time as well. My um my wife was actually diagnosed with lymphoma.
During Covid. During Covid.
Um and she's a doctor. She's a doctor. Oh my gosh. My fiance at the time, wife now, she was diagnosed with lymphoma.
Was it an aggr was it aggressive when it was diagnosed? You gotta go start treatment ASAP. Um
And so
You know, I'm sitting here and I'm like, Okay, I gotta figure out
how to run these warehouses.
During Covid.
Travelling. Flying. Trav travelling.
But also figure out a way to sort of help
My wife who's going through
chemo radiation. And you probably had to be really careful because her her immune system was compromised. Yeah, I would do um
Seven days seven days on, seven days off routine. So I'd do a week.
at the facilities.
Then out of quarantine for seven days.
Uh then
uh visit her family uh was amazing and actually like moved down rented a house in the suburbs of Philly and I'd go visit them
uh after quarantining back and forth. So that was our routine for but the better part of it. I shear in a mask. I had a little a corner of the house that I would like sit in
uh at first. And so going through those two experiences at the same time and and seeing her go through that experience while I was dealing with Miss Fitz Covid.
It it certainly did
Give me perspective.
On
What problems matter.
And what problems matter a little bit less because
Um
If my wife hadn't been going through g going through that type of cancer treatment
I probably would've s looked at some of the problems that Misphis was going through at the time been like holy cow, this is like life or death.
But
on the personal front, there was actually a life or death problem.
And so gives you perspective on
what is truly a life or death problem.
And what are actually just hard problems that you can deal with and at the end of the day, um, you'll probably figure out and come in on the other side.
Well.
So yeah I mean twenty twenty was a pretty pretty intense year, but but look at the you know, we we emerged from twenty twenty.
cancer free on the personal front, which is awesome. And then and then we got through COVID as an organization. And I think at the end of COVID, we were you know like a a nine figure run rate company on a revenue basis.
Um
There's so mu I mean, there's so much we could talk about. Today you're in forty eight states, you're in every state, right? in Alaska or Hawaii, I don't think, right?
Or not in a last parai, but all yeah, forty eight lower states. Everywhere else, right. Okay. So so you've done this. I mean you basically

box and and you've scaled it nationally.
And I think the last time you raised money was in late twenty twenty one. I re I read the valuation at that time was like two billion dollars. Yes.
Um but you've gone on and acquired a you qu acquired a competitor that was based here.
in California, uh what were they called? Imperfect foods. Imperfect foods, yeah, yeah, yeah. And I still see that they're still branded Imperfect Foods, right? Yes. So we we um closed that acquisition in October of twenty twenty two. That's been a little over two years now.
But we kept the brand separate because
Yeah, both brands have
you know, have invested a qu quite a bit in the brands over time. They mean slightly different things to different people, so we've kept them separate, but they're both under the Misfits market umbrella. So Misfits is the parent organization and we have the Imperfect Brand and the Misfits brand.
Alright, let's talk about logistics. Imperfect I think, they have their own.
Trucks.
which is really hard to build. We did a story a couple of years ago about uh Guayaki or Bomate, and that's how they
They grew, they built their own
distribution network with their own electric vehicles.
You guys misfits.
You still use third party companies to do deliveries, right?
So
Until we acquired Imperfect, Misfits was all
Uh third party delivery.
Um buying imperfect.
We thought that the
the logistics network was actually like
really important.
And so today with Imperfect, uh, we acquired a fleet of
About four hundred vans.
And we're doing our own deliveries with our own drivers, own vans and trucks for about 70%, 70 to 75% of the deliveries that we do nationwide.
For
Imperfect or for both personal. I think our view is that
the fulfillment and the logistics for perishables, that is our core competency. And so we should own as much of that as possible.
Um
And and
Now when I kinda think about the next stage of Misfits, and we've started to do a little bit this over the past six to eight months is
We're now
Allowing other brands
To use
our perishable
fulfillment centers and our parishable logistics.
Other brands like that do the same thing?
other direct consumer brands that they're like if if you have a direct consumer dog food company or cat food company or smoothies, you know, a any brand that does perishable
direct consumer deliveries. I think our realization over the years has been like
the third party infrastructure today for that is not very good. Um third party infrastructure is still designed for ambient widget delivery. It's not designed for food. Um
And so w I think what we have today, besides the grocery platform, you know, the items, the customer demand, I actually think what we have built that is in some ways even more valuable is
The leading
Parishable.
fulfillment of logistics infrastructure nationwide. Um, and so we're starting to allow other brands to kind of piggyback off of our investments over the years.
Wow. When do you g I mean, I know you're privately held and and so your numbers are not transparent and that's fine. Um but I mean do you uh anticipate you're close to profitability?
Yes.
Yes, so w we've um
We're we're pretty much there now. The business is mid nine figures in revenue and growing at a decent clip. So ultimately, I think the the very intentional strategy here is continue to grow.
the direct consumer business, but then start to really monetize
this infrastructure, um, and by infrastructure I mean
The ability to source
the ability to fulfill and the ability to deliver, monetize that infrastructure because there's a whole lot of other end revenue markets that could benefit from that.
You're now going into your seventh year here.
I mean
It's amazing how big this thing has become.
And you're also really young, I mean you're in your early thirties.
Um this is a big business.
What at some point there's gonna be an endgame.
Is it going public? Is it selling to Amazon? Is it or Walmart or something I don't know wha wha what is your what's the vision here?
So
All the data that I've seen still points to.
We're in the second or third inning. The stats are
A trillion dollars a year in the US of grocery spend.
of that trillion dollars
twelve to thirteen percent is online today.
Now well that
Get to a hundred percent? Probably not, but if I look at any other category.
you know, thirty, forty percent in that ballpark. And so if we're at twelve or thirteen for grocery, we have a ways to go. Double, triple, quadruple from where it is today until we get to a point where online grocery f is as digitally penetrated as these other categories like clothing and electronics and and and whatnot. And now in terms of like
the strategic uh kind of exit. Like do we IPO do do we kind of sell to strategic and and honestly, I think like
we keep those doors open for now and we keep doing what we believe is right for kind of long term value creation, which is grow the core consumer business, grow third party.
We're profitable. As we start to add more revenue on top of this, we should only kind of become more profitable and we'll kind of see where things take us over the next couple of years in terms of end outcome.
Hm.

W when you think about the the journey you took and where you you are now.
You know it's it was a long one, but it in the grand scheme of things, a very short one, right? I mean m many founders
Don't
You know, see
significant success until you know in into into their m forties or even later.
Um how much of of this do you attribute to to the work and the and the grind and the skill and how much do you think had to do with luck and timing?
I think luck always plays a role.
Um, and I would be naive to say it did not play a role here. I think that we started at a time
Where
potential customers out there were
We're willing and open to consider this as a way to get groceries.
I think the Covid wave that bump.
was clearly luck. Like there, you know, no way you could manufacture that. So I think those things were definitely helpful.
At the same time
This is a business where I I like to say like the pennies matter.
Every single
operational decision that we have made over the years.
They've kinda led us to this as well.
And there have been a lot of periods where it's been true grind.
The first two years of business were
Complete grind. I think
getting through COVID.
was a grind. I think the integration of
Miss Fits and Imperfect from twenty twenty two to the end of twenty twenty three was a grind. So I think it has required an incredible amount of hard work to make this happen.
Almost think
The luck kind of amplifies
or multiplies the the end outcome.
That's Abi Ramesh, founder and CEO of Misfits Market.
By the way, remember back at the beginning when Abby went to that orchard near Philadelphia and saw all those unwanted apples?
Well, that place is still going strong and still producing a lot of extra apples, which are still used to make cider.
In fact, Weavers Orchard says its cider is a frequent award winner.
at the annual Mid-Atlantic Apple Cider Contest in Hershey, Pennsylvania.
Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at guyros.com or on Substack.
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I'm Guy Raz and you've been listening to how I built this.