In a recent episode of the Dealmakers’ Podcast, entrepreneur David Rabie shared his inspiring journey from childhood dreams to building a groundbreaking company. David’s story is a testament to the power of passion, resilience, and unwavering focus. Here, we delve into key takeaways from his interview, offering invaluable insights for aspiring entrepreneurs.
His venture, Tovala, has attracted funding from top-tier investors like Changer Club, Comcast Ventures, Pritzker Group, and FJ Labs.
In this episode, you will learn:
- Early exposure to entrepreneurship and a clear desire to chart his own path shaped Rabie’s journey.
- An adventurous spirit led to China, where he sought to learn from a different culture, ultimately discovering the importance of cultural exposure in personal growth.
- Experience at Veggie Grill emphasized the significance of building a brand that resonates deeply with both customers and employees.
- Stepping into a leadership role at Groovy Spoon provided invaluable lessons in management and ownership, setting the stage for his future ventures.
- Pursuit of an MBA and internship at Google equipped with insights into building a thriving company culture and understanding venture capital.
- The ‘aha’ moment while cooking sparked the idea behind Tovala, a revolutionary system aimed at streamlining the entire cooking experience.
- Tovala’s resilience in the face of challenges, including a critical funding setback, highlights the importance of unwavering belief in one’s vision and leveraging existing relationships.
- Tovala’s culture, rooted in empowerment, care, and transparency, has been pivotal to its success, emphasizing the significance of a strong organizational culture.
For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
The Ultimate Guide To Pitch Decks
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About David Rabie:
Mr. David Rabie is a Co-Founder of Tovala where he serves as Chief Executive Officer. He is an Angel Investor. He’s a self-professed food nut with an MBA from Chicago Booth.
Before starting Tovala, he worked for the co-founder and CEO of Veggie Grill and ran Groovy Spoon – a bi-coastal chain of frozen yogurt stores. He also spent time working at Google and Foundation Capital.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Connect with David Rabie:
Read the Full Transcription of the Interview:
Alejandro Cremades: Already hello everyone and welcome to the dealmakerr show. So today. We have a very exciting founder. We have a founder that is gonna be talking to us about this rocket ship that he’s building but more in particular, we’re gonna be discussing topics like product market fit. Death experiences with investors pulling a termsh sheett just with three weeks of runaway evolving as a Ceo as you know you go from cycle to cycle and you need to make sure that the company is not outpacing you so he’s going to be telling us his journey. You know with that and then also maintaining culture. As you scale amongst other things so without fartherdo. Let’s welcome our guest today David Rabi welcome to the dealmakerr show. So originally born and raised in Los Angeles to a family of entrepreneurs tell us say how was life growing up.
David Rabie: Thank you! I’m excited to be here.
David Rabie: I had a great childhood and I I was raised to want to be an entrepreneur I and I never wanted to enter corporate America and I always wanted to start my own company and I remember as a little kid thinking. Okay I’m going to start a company but I I don’t like anything what kind of company am I going to start. But I knew I wanted to start a company and it wasn’t until I turned 18 and and went on this health retreat that I realized my passion lies in food and health and wellness and that’s where I should probably point all my energy.
Alejandro Cremades: So at what point did it become evident that you did not want to do corporate America and that your future was you know, always in building companies.
David Rabie: I cannot remember a single point in time when I wanted to join a big company my whole life I don’t I never wanted to work for someone else beyond doing it for a few years to learn but I never saw that as my path of of climbing the corporate ladder.
Alejandro Cremades: Now in your case you know, eventually 1 thing that that really made a a difference is I mean you went to um to school and then you know you you went into working at this large scale restaurant but before doing that you went to China and 1 thing I want to ask you is. How do you think that getting out of the us, especially going to China changed your perspective towards you know, looking at things.
David Rabie: Yeah, it’s a great question I decided to go to China this was 2009 China was still booming the Us was in the midst of ah economic recession and I thought there was a lot of action happening in China and I would learn a lot of things and. That was true. China was exploding. It felt like buildings were going up on a weekly basis and there was a hive of economic activity. Um, and I nearly started a business there. We we had a but I was there with a friend. We had a great business idea but it didn’t feel like home to me. And and so I had no interest in settling down and and building something for the long haul and so I ended up coming back to the Us. But I’m a big believer in traveling opening up your eyes and seeing different cultures helps you grow as a person and and that was definitely my experience living in China for a few months
Alejandro Cremades: So obviously not so much corporate. But definitely when you came back, you went in and and work you were working for this company called veggie Grill and I’m sure that that was quite a. Fulfilling experience because it was right up your alley in in your interest and passion.
David Rabie: Yeah, it was amazing. Veggie grill was I’d say one of the first more commercial plant-based restaurant chains in the country and they had a truly evangelical following of customers people that worked there. Loved it. They loved the brand. They loved the product. They loved each other. And the company had huge ambitions and and I was fortunate to be able to work not only in the restaurant. But for one of the founders and do a bunch of different random projects for him at a young age and so was able to learn a lot from him learn a lot from this great culture and and brand. Um. And kind of inspire me to want to go build something similar. Not not a plant-based restaurant but a company that had similar love from its employees and its customers.
Alejandro Cremades: Now after this experience you were recruited by Groovy Spoon frozen yogurt to be the c o o so a c oo you know right? away at such a young age you know I’m sure that this was quite the a pivotal moment for you too.
David Rabie: Yeah, it was. It was a small business and I was still pretty happy at the veggie grill but I thought this is an opportunity to basically run a company at ah at a very young age frankly probably make a ton of mistakes and learn before I go do it myself. And and so I took this leap of faith and it was an incredible learning opportunity I was thrown into the job. There was almost no infrastructure I was given a lot of freedom to figure out how to grow this business. Um, and I learned I learned a lot about what it means to manage people manage up manage down. Ah, have true ownership over outcomes and a p and l and and all of that. Um, and while Tavalla is at a much more significant scale than than Groovy Spoon was I do think a lot of the time I spent there helped me prepare for what I’m doing now.
Alejandro Cremades: So then it sounds like you were scaling up pretty quickly through the ranks. Ah at what point did it become evident that business school was the right next stop for you.
David Rabie: Yeah I had actually always wanted to go to business school I I wanted to study business I went to an undergrad that didn’t have business as a major and and I’ve always been fascinated about business. Um, and I thought it would be a great life experience. So. Out of undergrad I I was very much planning to go to business school I took my gmats the summer after I graduated college so knew I was kind of on a 3 to 5 year time horizon to go to business school. Um, and after I don’t know it was like ah a couple years a year and a half at groby spoon I decided all right now’s the time. And and I also wanted a ticket out of California I had spent my my whole life in California aside from small stints abroad and I wanted to try something different and and so I landed in Chicago and and thought for a number of reasons booth would be a really great place for me to expand my network and and frankly get a business off the ground. Ah, my my plan in going into business school was I’m going to start a company incubated at at school and use that as a launching pad.
Alejandro Cremades: Now during this time at business school I mean obviously you did a mobile lab for sports so that was a really nice stint there that they you know, got your feet wet but some of the other things that you did while you were at school to kind of like continue to learn and to really understand.
David Rabie: And death.
David Rabie: Alejandro Cremades:
How it would look like if you were ready to launch your baby. Your thing was working at places like Google or even at a venture capital firm. So why did you choose you know those 2 initiatives and they what kind of you know mindset or or worldview did it open up for you.
David Rabie: Yeah I think my my intent in going I interned at Google for a summer ah Google is one of the greatest companies ever founded and I thought okay if I can just pick up 2 or 3 things about what makes this place magical. What? what? they’ve done here how they’ve built great culture. Um, it’ll be worth it and and I think I did and this was many years ago now. But I do think I learned a bunch of things I also was trying to meet people that maybe could help me with tavalla tavalla at that point was an idea so I I had started to think okay, maybe this is what I’m going to end up doing after I graduate a year later and and I thought Google would be a great place to network and and start to build connections. So undoubtedly it helped with with those things and then I was fortunate to get an opportunity to spend some time with foundation capital a silicon valley-based fund and really what I was hoping to learn there is what’s it like on the other side of the table. Because I figured if I’m going to go build a company I had eyes on building. Ah a highgrowth company. We were going to need to raise venture capital and and the more I could learn about how vcs think and how deals come together from the other side of the table I I thought it would give me some edge when it was time for us to go raise capital for for my company.
Alejandro Cremades: So Let’s talk about that because eventually the idea of Towaah you know, finally that idea that you were hoping that one day would knock on your door since saying you were a little and you wanted to be coming on entrepreneurp eventually that knock was knocked I mean that door was knocked and. How did that happen and what was that process of looking into it incubating it and and bringing it to market.
David Rabie: Yeah I think like a lot of entrepreneurs I had a bit of an aha moment for me I was cooking for myself. It was a Sunday I was spending multiple hours cooking my my food for the week and I was using I think 3 different appliances in my home. And I had this moment of frustration of I’m just sitting in my kitchen babysitting these appliances pushing buttons. Why couldn’t you automate this and that was the first aha of okay that would make life a lot more convenient if you could automate this part of the experience. And then as I started talking to people I started talking to people about this concept. It became clear sure you can automate the cooking but that only solves one part of the journey. The the journey really begins that what am I going to have for dinner then it buys then it then it moves to okay I’ve I’ve made my decision I’m Goingnna go buy ingredients from here or I’m gonna order food from there. Um. If you buy the ingredients you got to prepare them then you have to do the cooking and then you have to do the cleaning and the question is how do you How do you solve that whole journey but still deliver a great product at the end of the day and eliminate all the time and energy that goes into making that meal in the first place. And so after a lot of conversations. A lot of feedback with what I thought were potential customers for this product. The concept quickly evolved and became more of a system where okay, we’re going to control the food experience. Whatever the device ends up looking like we’re going to connect those pieces with software.
David Rabie: So that we can deliver this great home-cooked meal but not not really have any work left on the hand of the the end customer. Um, and so once I kind of coalesced around that concept I took it through 6 different classes in business school. It was kind of my case study or my project in those classes. Um. I found basically every grant dollar the university had to offer to would be entrepreneurs I tried to meet with every alum that was a venture capitalist or former founder build my network soak up as much as I could in terms of learnings and then by my last quarter in business school. Ah, the University Of Chicago booth has a business plan competition called the new venture challenge and we took it through this competition. Um, and and the hope was okay if we can win in the competition. It’ll put us on the map in Chicago at at the time it came with $70000 of funding so we’ll get some capital to hopefully pour into r and d. Ah, and and try to get off and running and as it’s a long story in and of itself. But fortunately we we won the competition in 2015 and and really haven’t looked back since.
Alejandro Cremades: So then talk to us about finding product Market fit.
David Rabie: Yeah, it’s a great question. Um, it took us just to go back a little bit. It took us about 2 years after we won the competition to to launch our product. So we we won in the summer of 2015 we went through y combinator we we launched on kickstarter and then um. early summer late spring of 17 we finally launched in homes and and everything kind of went live at the same time so we started chipping ovens across the country. We started chipping food across the whole United States the ovens went online. We started taking orders for more food. So this very complex business that we had been building for. Call it 12 to 18 months. All of a sudden was now live in homes and and we were hoping everything worked and very quickly. We started to get some very positive signals people. Loved the food and they were reordering and after six weeks eight weeks ten weeks we started to see okay. Yeah, we’re only talking you know hundreds of customers but the retention rates on these customers are significantly better than what we had forecast and what we had seen in in you know other meal kit companies or prepared food companies and so that started to give us an inkling that we were on to something and then as the business scaled. Um, not significantly but started to scale those retention rates held and even started to improve and so there was frankly, a ah big internal debate I would say as to whether we had product market fit or not because we had customers that were obsessed with the product and the word of mouth was amazing and the retention was amazing.
David Rabie: It was multiples higher than the peer set so not incrementally higher but we were playing a different game but what we didn’t have was the other side of the equation we were struggling to get people in the door and and achieve that hockey stick growth that is expected when you when you go raise venture dollars and and so is this. Ongoing debate whether we had it or didn’t have it and I you know I think where we finally coalesced was around. We’re not going to have it until demand outstrips supply. So we have a product people love but they’re not pining for it. They’re not They’re not driving so much interest in it yet like we are missing one part of the the fit and and then that happened in the fall of 2019 September of 2019 we made some big changes to how we positioned the product in the market and how we priced it and our growth just exploded. Um, overnight we started selling 50% more ovens than the next week it was 50% again and 50% again and and the business just took off and and we broke like we we literally could not supply enough ovens or food so we had to. Turn off our marketing for days at a time we had to throw our corporate team into our food facilities to pack boxes and get food out the door. Um, but then when we you know at the end of the year we looked at our chart and it was a hockey stick like truly the business was kind of growing steadily and then up into the right out of nowhere.
Alejandro Cremades: That’s amazing. So I guess for the people that are listening to get it. What ended up being the business model. How do you guys make money.
David Rabie: Yeah, so it’s very similar to Nespresso or kuurig or but you know a razor blade and in that sense where our goal is not to sell and profit off ovens. The goal is get on the customer’s countertop so that we can sell them a lot of food. And so we’re willing to eat some loss on the oven in order to do that and and when we think about our customer acquisition cost. It is partially ah what we lose or gain on the oven and then whatever we go spend on marketing. But once we’re on the countertop we own. What we think is the most valuable real estate in the home. It’s Bay Taval is basically like this ongoing advertisement in people’s homes and so part of that is what drives the really strong retention and and lifetime value that we see from our customers because every day they’re staring at the oven and and they’re using it. They’re using it for their own food and our meals. Um. And so that’s always been. The game is let’s get on as many counters as possible and then we can sell them more food. We can improve our margins on the food we can start to sell third -party food and and we have we’ve driven up the the spend every year that that we’ve been in existence.
Alejandro Cremades: And also you know for that growth I mean once you get that hockey stick you know it’s time to put some some fuel on the fire. So how much capital have you guys raised today? yeah.
David Rabie: We’ve raised a little over a $100000000 um over multiple rounds.
Alejandro Cremades: But I know that that has not been a easy you know journey because there was quite a you know? really you know adrenaline moment during Covid What happened there.
David Rabie: Ah, yeah, we we went to raise our series b at the beginning of 2020 really off the back of this hockey stick growth and industry leading retention and and some nice margin improvement and and there was a ton of interest in the deal and. Ah, we signed a term sheet towards the end of January of of 2020 just ah, a few days after my my first daughter Elizabeth was born and then one month later um the deal came apart and we won’t get into why but it came apart in a very unexpected way. Um. Really no, no bad actors on on either side but it came apart and because we were you know? ah in in longtime search of product market fit. We didn’t have a lot of runway and and we knew and yeah we had raised ah a bridge round in the summer of 2019 and that had bought us. About a year of runway little less and we knew all right. That’s it like we got to find product market fit or this business won’t exist and the second we find it, we’re going to have to go raise money? Um, and so when the deal came apart. We had less than a month of runway left in the bank um ton of employees to support and on our corporate team and in our our production teams. Um. And this was the very end of February of twenty twenty so it was the first week. The market had really collapsed the daw fell 10000 points that week but covid was not yet a truly understood concept beyond hey there is this really bad virus that’s circulating and and who knows what it’s going to do to the economy. Um, and so the next.
David Rabie: Ah, well first the next few days and the next month where this period of insane uncertainty and what we had to do was go back to our existing investors explain what happened offer very lucrative terms in order to secure a small amount of capital to bridge the business and and allow us to keep everyone’s jobs. Um, and and the reason we’re able to do that is we we had investors that really believed in us. They believed in the vision they had seen us execute and I think there was a lot of conviction that hey we we really found something here. The business is exploding and there is obviously some risk that the world shuts down for a long period of time and no business exists. But. There’s also some upside that maybe maybe this crazy pandemic thing will be good for a business like ours which which ultimately is what happened and so we closed this small bridge round and then went back to trying to raise a full series b in the very early days of covid which is pretty crazy. Um. Some crazy things happen to us then too like we had other deals come apart the first few weeks of March but by the end of March of 2020. We’d secured a term sheet um and closed our series be ah, a little bit after that.
Alejandro Cremades: I Mean it sounds like very um, crazy on certain moments literally that you’re like walking on a very thin line and at any moment you can just like a sleep and and Fall. Ah, So who do you think you needed to be during that time as a leader as a founder. To be able to keep pushing through in such a difficult moment.
David Rabie: It’s a really good question. Um I don’t think I pretended to be anyone to start I do think there’s multiple ways to lead companies and I think you have to be authentic, otherwise it doesn’t work. That’s that’s my own personal view in that moment I was um. I tried to be very confident. Ah very inspiring very transparent with our team. Ah, as to what happened and why and what were the implications but inspire belief in in our company’s mission. Um, and. I think we did that and I don’t think it was just me I think it was our our leadership team. My co-founder. Um, nobody walked out the door when we told everyone hey we’ve got you know weeks of runway left people stood by us and and that trust was rewarded. We we ended up raising money and. Um, had you know 2020 was a hard year in a lot of ways but it was very successful year for the business. Um, so yeah, that’s that’s how I showed up in that moment and you know in times of adversity. That’s what we’ve tried to do is be transparent be confident. Um. And and use a lot of the capital. We’ve built over the years of of treating our team with autonomy treating them with respect building trust in those difficult moments. That’s when all the work over the years and all the investment in culture pays off um you you can’t expect to not invest in culture and then when things get bad.
David Rabie: Have everyone stand by your side and and run through a wall for you like that’s that’s investment. You have to make over time.
Alejandro Cremades: And let’s double click on on culture. No now you guys have raised over 100000000 and that you are you know, really making a killing. How do you? How how have you guys gone about maintaining culture in in in such a period of crazy growth.
David Rabie: Um, the.
David Rabie: Yeah, it’s really hard. We’re definitely not the experts by any means and we we have gone through multiple periods of transition with our culture I think the the culture pre-product market fit pre-covid when it’s a bunch of people all together in 1 big room. Trying to figure this thing out um, is different than the culture of a growth stage startup. Um and we we did our best to manage that transition in ah in an authentic way and I think there are some key elements of our culture that haven’t changed since day one but there’s a lot that have changed and and I think that’s been really important for us of. How does our culture and our values evolve as the business grows and the the needs of the business change. Um, and and personally as I evolve as a leader and I think the the company took on some of my my best strengths in its culture and and some of my biggest weaknesses and. My weaknesses are things that I’ve worked on and and we as a company have had to work on ah that manifested in our culture and so ah to me. The biggest thing is that for us culture has never been an afterthought and it’s been something. We’ve paid an immense amount of attention to since day one and um, you know what? what sets our culture apart I think is. A deep deep investment in our people and care for our people that permeates the whole organization. So anyone that joins within a few weeks is the feedback we always hear is people here are so incredibly kind. They’re very caring and there’s no politics somehow like people just don’t politic at tavalah.
David Rabie: And and that’s been true since day one and and I think that is ah such a defining part of our culture and the the only other thing I’ll add is these kind of huge roadblocks that we run into these existential threats. They come to define the culture how we responded what happened. Becomes part of company lore and and becomes cemented in how people perceive what it means to be a Tavalah What it means to to be a tavalan and and those are really positive things for us. Even though we have had all these difficult moments we came through the other side a stronger organization and having done that many times in a row now.
Alejandro Cremades: So obviously when this people join they they you know obviously join because they are very they find very compelling the future that you guys are living into and on and that vision ultimately is going to shape up a little bit the culture so or a lot the culture.
David Rabie: It’s a central part of who we are.
Alejandro Cremades: Because you got to get people rowing at the same you know time towards the same goal. No now imagine you were to go to sleep tonight David and you wake up in a world where the vision of tavalah is fully realized what does that world look like.
David Rabie: I don’t think it exists I will say that I think the vision will always be out of reach and we’ll keep going to it. But I think our big vision is to get on every countertop in this country and to be able to help people. Enjoy. Amazing home-cooked food without any work and I think we’re on our way to doing that I think there we obviously say I have a long ways to go. Ah, the reality is most people don’t know we exist even though we’ve we’ve built some scale to the business. Um, but the love and joy we hear from our customers on a daily basis. Ah, that’s reflected in our retention rates and our usage rates. We want to bring that to the whole country and and we want to do it in a way that appeals to different diets and different price points and different ah places people go buy their food and and we’re starting to do that as the business expands and. We add a lot more types of fuar menu and and we expand our distribution channels beyond direct to consumer and we expand beyond one oven now we’ve got 2 ovens on the market I think we’re on our way to achieving the vision but um, still a long ways to go.
Alejandro Cremades: How do you think that consciousness. Um, now I mean before you know people were like I remember you know Mcdonald’s and you know a culture of like crazy you know junk food but now people are very conscious about taking care of themselves. You know the diet ah cooking at home. How do you think that you know open mindset you know about and also consciousness around you know health and diet. How do you think that has helped you guys to be at the right time in history.
David Rabie: Yeah I think that’s been a tailwind for probably ten fifteen years twenty years that has undoubtedly helped us I think people are more conscious of what they’re eating. They’re willing to spend more to eat better. Um, and that’s a big part of our appeal. What I will say though that I think is ah a. Truism of ah America and of any food business is that if your food doesn’t taste good. It doesn’t matter and and that has been true for us since day one. It’s been a core principle that no matter what our food has to taste great if if our tech is amazing and the app is amazing and the oven looks great and the packaging is. Eco-friendly and you know great experience. But the food doesn’t taste good. Nothing else matters. Um, so that’s been true since day one and the other thing that is true in this country and it’s been just a gradual march in this direction is convenience wins like for for as healthy as people want to be and as much as people claim they want to cook. People want things that are easy and that’s defining trade of many many successful companies and in the country and in the world and we play well into that we we are trying to give people the convenience but without compromising on quality and for a lot of people they they actually don’t believe you can have those 2 things and that’s something we have to get over. For folks is yeah the meal is actually going to taste amazing and you you just scan a coat and skepticism is one of the biggest barriers to adoption for us people just don’t believe it is as good or as true as we claim it’s going to be.
Alejandro Cremades: Now let’s reverse a little bit the question that I asked you earlier about future and vision I want to talk about the past but doing so with a lens of reflection. So let’s say I was to put you into a time machine and I bring you back in time and I bring you back in time to that moment where. Were maybe like cooking at home and and all of a sudden you know like the idea that ended up becoming Tabboah you know, like hits you, you’re like at Tama like oh my god you know I think that finally finally I get my calling you know and what I should be pursuing as as an entrepreneur let’s say youre able to all of us how then show up right there without younger David. You know 9 years earlier now back in in that year two thousand and fourteen when you know things were hitting you with this and let’s say you were able to give that younger David one piece of advice before launching a business. What would that be and why give me what you know now.
David Rabie: Ah, that’s a great question I was going to joke and say don’t do it. But that’s not that’s not what I would tell him um one piece of advice I would probably say.
David Rabie: I would probably tell him that focus is going to be the number 1 thing the number 1 thing. It’s so easy to say but there’s so many distractions when you’re starting and running a company and it’s so easy to try to do too many things. And existential threats will focus you running out of money will focus you and and some of those things happen to us and forced insane amounts of focus but many other times in our existence we were scattered and we were trying 7 different things and. Um, you know, lured by all of these exciting potential initiatives when we should have been hyperfocused so I think that’s probably the one piece of advice I would give and and I’m sure much younger me would ignore it. Ah and think of course I’m going to focus that sounds nice, but. In hindsight I think it’s it’s one of the most important things.
Alejandro Cremades: Amazing. So David for the people that are listening that will love to reach out and say hi. What is the best way for them to do so.
David Rabie: You can send me an email. It’s just I got the first email at tavola so it’s David at savola.com
Alejandro Cremades: You say enough? Well hey David thank you so much for being on the deal maker so it has been an honor to have you with us today.
David Rabie: My pleasure. Thank you for having me.
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected]