Y Combinator Startup Podcast
00:16:52 · Chaz Englander, Gustaf Alstromer
[00:16:52] S0: Yeah. Yeah. We just don't like losing. [00:16:56] S2: Maybe go back to winter 'seventeen, Fat Lama. Tell us about Fat Lama. [00:17:02] S0: So Fat Lama was a marketplace that allowed people to rent items from people nearby. With the main differences you were insured. So if you're my neighbor and I lent you a camera, a $10,000 camera, I'm insured. If I lent you a drill, the same thing. That was what we did differently with the model. That model had been tried a lot of times before, But it still took us three years to find product market fit. I sort of defined product market fit loosely as the unit economics add up. People want what you have in terms of product in a sort of relatively large addressable market, right? But it took us three years to get there. And I think that was, you know, we learned so much during that period. And so, yeah, that was Fat Lama, and I can talk more about that in a second. But what about Fancy?
00:17:46 · Arnie Englander, Gustaf Alstromer, Chaz Englander
[00:17:46] S1: Yeah, so Fancy, again, consumer business. So we were a last mile grocery delivery business, which now everyone's probably bored of speaking about them. But back then, so this was end of twenty nineteen, start of twenty twenty. So our model was a little bit different to a DoorDash or an Instacart. So we were what's called a vertically integrated model, which means we had our own warehouses, we held the stock ourselves, and this was relatively new in Europe. I think there was one other player doing it out of Turkey, but in The U. K. In particular, we were the first ones. And really, it started it as a delivery app for students. I was a student at the time, and it really came about the need. I was really sitting there one day thinking, God, I could do with some Pringles or some beer, to be honest, and I didn't want to walk to the corner shop. Was, five minutes away. [00:18:34] S2: And this was during COVID? [00:18:35] S0: So this was just before COVID. This was, [00:18:37] S1: like, three months before COVID, and we kind of built the app MVP in sort of four to six weeks. I studied computer science at uni. And so it was just before COVID, and really, almost instantly, as opposed to Fat Loma, we kind of found product market fit almost overnight, which sounds obvious, right? It's like you're delivering sort of beer, ice cream to students at [00:18:57] S0: the same cost as they would get it
00:18:57 · Chaz Englander, Arnie Englander
[00:18:57] S0: the same cost as they would get it [00:18:59] S1: from the corner shop anyway. So we took off, that was obviously really exciting. And then we got onto YC, and then COVID happened. And COVID, for our business, was really that shot of adrenaline. I mean, COVID happened, everyone was staying at home, the business really then started to take off. It was an amazing business. It's an extremely difficult business. I'm sure we'll come on to it in a bit, but we got hit with, always like to say, a lot of cricket bats to the face. A lot of stuff can go wrong, but it was awesome. So we continued to grow in The UK. We raised money out of YC, and then we got an acquisition offer from GoPuff about eighteen months after we started. And GoPuff, at the time, a market leader. They were very, very big in The US, and they wanted an opportunity to come into Europe, and we were best placed for that. It really was an incredible ride.
00:19:51 · Chaz Englander
[00:19:51] S0: Yeah, yeah. It was like the... At least for that amount of time, felt like the perfect kind of start up ride, I'd say. But, again, I think Fat Lama was the polar opposite. The story I always talk about with Fat Lama in terms of perseverance was, you know, I was maybe very early 20s, obviously. And at that time, when you believe in something and you're raising a small angel around so this is pre YC, right? We were raising, I think, maybe 50,000 maybe $100,000 which nowadays is like, suppose back then, at least then, it meant everything to us. We were scraping around. We were doing half an hour pitches with an angel that might put in $2,000 right? We were just doing everything we could. We fundamentally believed in this idea. And anyway, so we built the MVP. We launched and I started accounting. So I was big on, are the numbers going to make sense? So I had my forecasted average transaction value, my retention, everything else. So we launched, and pretty much straight away, like within the first day, got a rental. And the rental was for $600 So I'm like over the moon. I'm updating. One of the first things I did is I'm straight into the financial model, and I'm updating the average order value. And this thing is looking crazy. I'm like, we're going home. We're going We're home. Right? So that was on Friday. It was just to returned on Sunday lunchtime. Alright? And remember, the criticism I got, know, I probably did 100 pitches to raise money, and maybe one out of 100... I must have done close to 1,000 in the end with TS, but the other 99 was like, no one's going to lend out an item because everyone's going to steal them. And even if you have insurance, the insurance isn't going to work, right? Anyway, so we had... And that's all I'm thinking. That's all we're thinking about at the time. So we had this first rental. Anyway, got to Sunday, and the lender of the item called us
00:21:34 · Arnie Englander
[00:21:34] S1: and said, I can't get
00:21:35 · Chaz Englander
[00:21:35] S0: ahold of the borrower of this item. So we're like, okay, it's fine. And then we realized after a couple of hours he wasn't responding, and we started to get a bit nervous. One of the things we did, it was a native app, and when people search, because it helps with what you show in the search results, we save or we look at the latitude and longitude, so quite an accurate geolocation of the individual. So we had that. I was like, I'm going straight out there. We've got go and find this item. And this was like an 1,800 pound drone, right? So for us, this was like everything, right? So we went up. Anyway, so I arrived on this random street in North London, and there was just a door open to this house. I don't think we've ever told this story because it's just like, it's that awful. And the door was there. Door was open. I couldn't believe it. As I opened the door, there it was. The drone was just there on the side. So I picked up this drone. I got back in the car, and I just went straight down to the lender's house. I arrived at the lender's house. But you've to picture this, right? What's going through my head is everything that we've pitched, every person that I pitched, family and friends, we had spent months, probably close to a year at this point, convincing people that this would work, and they believed us, and they believed Arndes and I, and they bought into this. And so all I'm thinking is like, I've lied to them. My whole world was falling apart at this point. And so anyway, I arrived at the borrower's house, or the lender's house, rather, opened the door, and he was like, Hey, you're not the lender? And I was like, Oh, I know. I gave him the drone. He was like, And you're wearing a Fat Alarms T shirt? I was like, Yeah, we deliver the item back automatically. He was like, This is awesome, man. Like, closed the door. And so it did add up in terms of the insurance. We focused on verification, but it fundamentally came to that perseverance piece. It's like, We believe this is something that should exist, and we believe from a tech perspective we could make it work. And it ended up doing so. But yeah, it was tough.