A Product Market Fit Show | Startup Podcast for Founders
00:24:51 · Pablo Srugo, Chaz Englander
[00:24:51] S1: So just to wrap up the fancy story that ultimately acquired by GoPuff, did they come to you? Did you go to them? And and same kind of idea, like, where was the business at more or less by the time that happened? [00:25:01] S0: We were out raising a 100,000,000, so the business in twelve months was flying. That's crazy. We went from zero cities to I think 15 cities in about six months. And even if you just think about that operationally, right? [00:25:16] S1: I was gonna ask, how many people like?
00:25:18 · Chaz Englander
[00:25:18] S0: This is a business where you needed a warehouse to operate, right? So that's 15 warehouse leases like signed and negotiated. You need to stock the warehouse, so every city had to have the appropriate local suppliers. But the demand was there and I think at acquisition I would guess about 70 or 80 people I think, but I'm not a 100% sure around that sort of number. In the head office, obviously if you include drivers and warehouse staff, it would have been maybe even, I don't know, 500 people maybe, maybe more including drivers, unknown, but a big number comparatively speaking. Yes. We're hour raising around and, you know, Arne, he got introduced to the founders of Go Path and they were great and I think the timing for them was great. The nature obviously of our business as well because for those that remember that market, it was very very competitive. Obviously COVID compounded it and you know, people were going out and raising like $20,000,000 c brands. But they were all focusing on like the biggest cities. What we did by fluke was we were a, before anyone else, which was lucky, but we also again another fluke that happened was we were focusing on these smaller like tier two cities where there was no competition. So I think, look, if I was playing it back, know, and I was in their shoes and go puff shoes, assume they were looking, you know, looking for European or UK based company and we had the best numbers by way of size, but also by way of kind of unique economics and retention because we are focusing on cities with, you know, just far, far, far less competition. And look, I mean, came along, you know, I said everyone did very well. I think them as well. I'd hope that if they look back on it, it was really a great decision from them, you know, they they won The UK market because of it, they're the biggest, if not the only now player in The UK market, but it was stressful. I mean, like, the thing is with that is, you know, we're raising around the burn rate of that business was huge just because, you know, you had to really subsidize riders, it was called in that market. You know, you're literally running out of money. I mean there's no two ways. So if you're going out to raise a round and you ditch that, that explodes and you're raising or you're doing an acquisition, you're running out of money and you're running out money fast.
00:27:22 · Chaz Englander, Pablo Srugo
And so it was super stressful, but looking back on it though, it was like, I remember this call that we had with the legal team at like two, 3AM, you know, all the signatures had landed and you know, the signatures have been released and it's like, you're there with like closest group of like, because everyone at the company, you know, we're like, we're our only friends because we've only hung out with each other for like twelve months. That feeling is just like, you know, you do that two or three months all over again because you're there, you're looking around, know, everyone's made a bit of money. Yeah. It just shattered as well. I think like the... As the adrenaline is like coming down, it was was awesome. [00:28:00] S1: Yeah. It's... And did you go work at GoPuff or was it like a clean ending? Like you saw it and and you're kinda done? [00:28:04] S0: So my brother Arne, so he was in engineering there, so he stayed on for three years. He wanted to enjoy it, learned a lot, great business, he made some great friends and stuff. I then stepped out entirely, I was doing a lot of, well off the back of the acquisitions we started to invest a bit, and that's kind of how the next business ended up being started. [00:28:25] S1: Yeah, so now we can dive into kind of what you're doing today, is ModelML, what's the origin story there?
00:28:25 · Pablo Srugo, Chaz Englander
[00:28:25] S1: Yeah, so now we can dive into kind of what you're doing today, is ModelML, what's the origin story there? [00:28:31] S0: Well for those three years, so we set up a small family office type setup where given Arnie was only 21, I was probably 27, we're like, well, we don't wanna just like give our money to like a wealth manager and just do nothing with our day. What are gonna do with our day? Why don't we invest our own money? Which was a great decision in hindsight in the sense that like, you know, you just learn so much, right? Like although there was advisors, investment banks, and even one private equity bid, and obviously we had that thing with Fat Lama where we to spark business. So we learned a lot about investing in the world of finance basically. I mean, it helps us study the accounting, but I didn't really know much prior to any of that. So we did that and we hired people to run our own money, right? So that's what we were doing and we were investing across. I always say when I speak to you, a variety of strategies, but the actual thing is looking back on this, we were just investing in like anything, right? Anything we thought was like cool, it would make money and we had like, we wanted to allocate risk like proportionately, We were kind of just doing, like, anything. Right? And so Do you think...
00:29:32 · Pablo Srugo, Chaz Englander
[00:29:32] S1: Was it smart, do you think, like, looking back, or was it, like, naive where you thought... Because, I mean, getting alpha in any asset class is, like, very hard to do. You need edge and you need all this stuff, assuming you assume, like, rational market and all that stuff. Like, were you just like diving into stuff and looking back, you're like, fuck. I can't believe like it worked or what's the [00:29:49] S0: Polite is, if you're asking whether we made money doing it, no. On balance, no. But but we didn't lose money. I... But we did make some money on some things, and then we did do some great investments and a couple of things, but generally speaking like we weren't making any money, right? So why are we doing it? I think so we're spending a lot of our day, you know, writing software to make that process better in one way or another. So either more efficient or we were trying to get to a level of insight quicker. And I, you know, I spent so much of my time just thinking of things that we could work on next, like as brothers, right? So Arnie must have got so fed up with me. I mean he had a full time job and every two minutes I'm like pitching him on like this new idea. [00:30:36] S1: So you wanted to start, you actively wanted to start another startup with him?
00:30:36 · Pablo Srugo, Chaz Englander
[00:30:36] S1: So you wanted to start, you actively wanted to start another startup with him? [00:30:39] S0: Yeah, hell yeah. This is so boring. So we were kinda writing software, bit of a day job, and then like there was all sorts of like different ideas and like we'd invest in things and we were like learning as we would go. And then we noticed that the idea that we should be working on full time was like the idea that was literally staring us in the face, which was the software that we are writing for ourselves to improve our own investment decision making process was great and people wanted that. Right? So that's how it started. And then, you know, we met a few people that, you know, were very senior in finance, know, a bunch of CEOs of the largest banks in the world and, you know, a bunch of really well known private equity investors and so on. And they were like, Hey, yeah, what's that? Like, this is pretty cool. Like, can we use that? Or like, how do I get hold of that? And then, you know, one thing leads to another and then we're like, hey, we obviously have to go at this full time. You know, the more the more time we then spent thinking about the value that we would bring to an actual customer, particularly when AI started to explode because then, you know, LLMs are really what took the software from being frankly not intelligent to intelligent, it was a no brainer. So the truth of the matter is like, it got to maybe end of twenty four or '24 time, and like we were kinda pushed out the door just based on customers wanting to use the product.