Matt Salzberg founded Blue Apron in 2011 and served as President & CEO for its first six years. After raising $200 million from the likes of Bessemer, First Round, or Stripes Group, Matt led Blue Apron’s $1.9 billion IPO and served as CEO until the company had approximately $910 million of trailing revenue and 5,000 employees. Matt is currently Blue Apron’s Executive Chairman, and serves on the company’s Board of Directors.
In this episode you will learn:
- Private equity vs. VC
- Pattern recognition as a VC investor
- Raising financing for multiple financing cylces
- The experience of doing an IPO
- Executive Chairman responsibilities
- Leading a new industry
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
About Matt Salzberg:
Matt Salzberg founded Blue Apron in 2011 and served as President & CEO for its first six years, overseeing Blue Apron’s growth from idea to category-leading public company. During that time, Matt built Blue Apron into a nationally recognizable brand with millions of customers and innovative supply chain. Matt led Blue Apron’s $1.9 billion IPO in June 2017 and served as CEO until the company had approximately $910 million of trailing revenue and 5,000 employees. Matt is currently Blue Apron’s Executive Chairman, and serves on the company’s Board of Directors.
Matt has a passion for entrepreneurship and is heavily involved in the entrepreneurial ecosystem as an angel investor, board member and repeat founder. He is the co-founder of Embark Veterinary, a next generation genetic testing company for dogs, where he serves on the Board of Directors. He has also made dozens of investments in start-ups and served on a variety of corporate boards.
Before Blue Apron, Matt worked as a senior associate at Bessemer Venture Partners and as an analyst with The Blackstone Group. Matt holds an A.B. degree in economics, summa cum laude, from Harvard College and an M.B.A. from Harvard Business School. He was named 35 under 35 by Inc. Magazine, 40 under 40 by Fortune, and 40 under 40 by Crain’s. He was also the recipient of the E&Y Entrepreneur of the Year national award in 2016.
Connect with Matt Salzberg:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello, everyone, and welcome to the DealMakers Show. I think that we are all going to be learning very much from our next guest today. He has built something from nothing to something meaningful. In fact, they did an IP on the business. I think without further ado, Matt Salzberg, welcome to the show today.
Matt Salzberg: Alejandro, nice to talk to you.
Alejandro: Let’s do a little bit of a walk-through memory lane here, Matt. You did your undergrad and then also your MBA at Harvard. How would you say that this has helped to build your network?
Matt Salzberg: There are really some really excellent entrepreneurs that have come out of Harvard undergrad and in Harvard Business School, obviously. I think, particularly, I was an undergrad at Harvard around the time that Mark Zuckerberg dropped out and started Facebook. I think a lot of my friends and peers ended up going to Facebook in the early days. I think partly because that period of time, there were a lot of great companies that came out of Harvard and entrepreneurs that were inspired by that story. So, built a network partly through that as well as—at business school, obviously a lot of people go to business school with the aim of eventually starting a company. There are some really excellent companies coming out of my business school classes as well. Kind of like the Tough Mudders of the world Rent the Runway, some really excellent entrepreneurs in there as well.
Alejandro: That’s amazing. Did you get to see Mark Zuckerberg in the hallways?
Matt Salzberg: You know, we didn’t really know each other. We had a lot of mutual friends. It’s not that big of a school. I was an early, early user of Facebook because, as you know, Facebook had started off at Harvard College right when he launched it. I was user number in the 1,000s or something like that range.
Alejandro: Really cool. Your first job, your first real job, that was Blackstone. What were you doing here?
Matt Salzberg: When I graduated from college, I went to Blackstone. I was an analyst in the private equity group. That was basically where I got my first understanding of finance, investing, real business understanding. When I was an undergrad, I actually took a job running a cleaning service at Harvard. It was a $400,000 or $500,000 a year revenue student-run cleaners’ business. That was really my first introduction to business. But in the more professional context, Blackstone was an amazing training ground for just understanding how people really think about strategy, making money, and you get exposed to tons of different industries. I was there during ’04 to ’08, which was kind of the heat of private equities really, really big heyday more recently where Blackstone was doing 20-billion-dollar public to privates every week. It was a fund that went from 6 billion dollars to 20 billion dollars. While I was there, the company itself went public. So, it was a really exciting time to be there.
Alejandro: Wow. I believe Blackstone now manages something like over 400 billion. It’s insane.
Matt Salzberg: Yeah. It’s become a huge company.
Alejandro: Wow. What did you learn from your experience at Blackstone?
Matt Salzberg: I think fundamental investment analysis was the biggest part. What makes a good company fundamentally, how to value companies. I had the chance to meet lots of CEOs and attend lots of board meetings. So, I got to really understand how to interact with CEOs, how to speak with CEOs, and how CEOs talk to investors. I think between my time at Blackstone and then later on in my career, I was a venture capitalist, Bessemer Venture Partners. I think one of the skills that you develop there that you can really bring to starting a company is how do you talk to investors? How do you say the right things? How do you speak their language so that you communicate your ideas as effectively to them?
Alejandro: Yeah. I wanted to ask you about that. So, after Blackstone, you do your MBA. Then after the MBA, at Harvard, then you decide to join Bessemer like you were pointing to. Why the shift from private equity to VC?
Matt Salzberg: I didn’t love private equity, I would say. It was a really great job, but it was a grueling job. Right out of college, you’re working 80 hours a week. You’re doing somewhat mindless tasks in terms of financial modeling all night long. I wanted to do something—I loved the business intellectual sides of investing, but I wanted to do something a little bit more creative in terms of creating something that can change the world, that consumers could be emotionally involved with and that could leave a legacy. I decided when I was at Blackstone, I really wanted to start a company to have that impact that I wanted to have. I was a young guy with not a lot of experience, so I decided going to business school was the right path for me. I actually spent much of my business world time getting ready to start a company, getting exposed to venture capitalist for the first time, meeting startups for the first time. I concluded I had more to learn still, and that’s when I joined Bessemer after that to build out my network of early-stage investors, learn the pattern recognition that venture capitalist have for knowing what the elements of success are in the early stages of a company, so ultimately, I could put in place something like that. I had to think about what an early-stage business idea was and having a chance to explore that on someone else’s dime while in venture capital. So, I think that was a really effective path for me to get ready to start something.
Alejandro: Talking about that, Matt, the elements of success and the pattern, what are those elements of success in early-stage companies?
Matt Salzberg: Well, there are a lot of them. I think, obviously, the co-founding team is a really big one in terms of bringing together the right skills sets. In some cases, in fact, one of the things I recommend is having different skill sets in a founding team. So, not having two founders who are two founders in the same business school with the same backgrounds. In our case, I recruited my co-founders to join the company, and I recruited a CTO who had a background in software development and building e-commerce systems, as well as a chef who had had an operationally-oriented catering business and supply chain businesses to join me so that I could have people that complimented me in terms of the areas I wasn’t as strong in with my background to help me. I think that is the composition of founding teams is a really big one. Then understanding what industries and how venture capitalists would think about what businesses should be funded so that you could attract the right capital and frame your business the right way. With Blue Apron which is the company that I ultimately started, I knew that I wanted to go after a giant category. The grocery and food category is one of the largest retail categories that exists because I knew that being in a big market was an important element of success for an early-stage company, and allows you the room to maneuver in your business model as you develop your business company. Quite frankly, it was also one of the biggest retail categories that had very little e-commerce penetration. I think when I started Blue Apron, it was very low single-digit percentages like 1% or 2% of the grocery industry which sold through e-commerce, which to me, and this is how venture capitalists would also think about it, was such a crazy idea because every other big retail category had become extremely dominated by e-commerce, even in that period. So, thinking about the inevitability of that trend in a giant category meant that there would just be lots of opportunity, and how do you tap into that I think was a big theme for us.
Alejandro: Blue Apron, obviously, your first company, and taking that first leap of faith is a really big deal. At what point did you really decide, “Hey, this Bessemer thing is cool, but I need to start my own thing right now.”?
Matt Salzberg: It was kind of towards the end of 2011. Actually, when I joined Bessemer, in my job interview at Bessemer, I told one of the senior partners that I was going to leave and try to start a company as soon as I humanly could, while at Bessemer. They still gave me the job, which was amazing. So, I spent a lot of my time at Bessemer getting ready to leave. I liked it there. They’re great investors. I learned a lot. But I knew day one that I wanted to try to start a company. So, I spent my time there thinking through ideas. I spent my time there meeting people and getting ready to do that. Actually, an entrepreneur in residence at Bessemer named Jason Finger, who was the founder of Seamless and was hanging out at Bessemer at the time thinking about what he was going to do next. He and I became pretty good friends. He was actually the first person that said to me, “You know? Why don’t you just go and start figuring it out, and I’ll be your first investor and give you $25,000.” I said, “Oh, great. Yes, let’s do that.” I did have an idea at the time. At the time, it was actually a different idea than Blue Apron. It was not even the eventual idea that I ended up launching. But I left, and I recruited my first co-founder to join me to do that and raised even a little bit of money before I even settled on the idea for Blue Apron.
Alejandro: So, you already had the idea. You actually said, “This is it.” You gave your notice at Bessemer.
Matt Salzberg: Yeah.
Alejandro: And then why was that person—because you were talking about on the elements on success, the founding team. When you were thinking about, “This is the team that I need to look for, that I need to assemble,” what was that process like for you guys?
Matt Salzberg: Like I said, day one the idea that I had was different than Blue Apron when I first left Bessemer. For that idea, which was a totally different idea, I thought one of the elements of success, obviously, was having a CTO who understood software development better than I did because I wasn’t a technically-minded, trained in computer science software engineer. I had to build a custom software, website, and all the like. So, I went out and recruited a CTO. I met my first co-founder through a mutual friend, actually who had started another company at business school and was friends with my co-founder. We met at a happy hour, and I liked him. I thought he’d be a good co-founder and CTO, and I went out and recruited him to move from Boston to New York to join me to start this company. It was just the two of us. We were working on this other idea for a little bit. Built the website, and did some initial customer work. Over the course of a couple of months, actually generated a couple of $100,000 of revenue, actually, with this idea. It was a crowd-funding site for science and research, believe it or not. This was at the time that Kickstarter was becoming a really big successful phenomenon. I looked at that, and I said, “Well, Kickstarter is successful for art and creative projects. Someone really needs to serve the science and research community, which had very many of the similar funding problems and could leverage the internet to bring people together. So, we did a bunch of work on that. In the course of a couple of months, kind of concluded having done a lot more deep customer diligence that that wasn’t going to be the business that was going to be wildly successful for a variety of reasons. That’s when I said, “We’ve got to change what we’re doing 180 degrees. That’s how I came up with the idea for Blue Apron, looking at big retail categories, looking at the opportunity for e-commerce to transform them, designing a solution that could solve the logistical and other barriers that had prevented e-commerce from transforming grocery and then launching that. At that time, it was just the two of us. I went out and said, “Now, we’re starting a technology-enabled food business.” I really should get someone on my team who knows something about the food industry because I had never been in the food industry, and that’s when I recruited our third co-founder to be our chief product officer. He was a chef who had worked with my wife’s mom, believe it or not. She used to be the New York City’s Film Commissioner and threw a bunch of parties to attract films to New York to do business in New York for tax credits and stuff like that. So, he had been the caterer at those parties, and it just all came together. He loved the idea and wanted to join the team, so he joined as the third person on the team. But as you know, every business has different operating needs, and every individual has different areas of strengths and weaknesses. So, for me, as a business-minded, strategy-minded, marketing-minded, financially-oriented founder, I wanted somebody who understood the other two legs of our business, the food, and the technology, and that’s why I brought those guys in.
Alejandro: Got it. What were some of the early days of Blue Apron? Once you had the team, you knew what was going on and what kind of future or path to follow. What were some of the early days?
Matt Salzberg: The early days were crazy. Literally, the three of us launched the business ourselves. We built the whole first version of the website ourselves. We rented, I think it was a 500 sq. ft. commercial kitchen in Long Island City, New York in the middle of nowhere that a restaurant was using for extra storage. We begged 20 of my friends to try our product in our first week. Then literally designed the recipes. Did the photography. Bought the food. Packed the boxes and delivered them pretty much ourselves to get customer feedback and see where it went. We were literally like putting cans of canned tomatoes on skateboards because there was a Costco down the street. We were shopping at Costco and bringing the food back to our kitchen to do what we were doing and working with restaurant distributors and the like. The first week we launched, the feedback that we got from our customers was incredible. I had researched a couple of other business ideas in the past, and you always hear from people who say, “What do you think about this idea?” “Oh, that’s a good idea. If you build that, maybe I’d try it. I think that’s kind of interesting.” Very few people will just tell you to your face that your idea is bad. So, you get a lot of false positives when you’re doing research. But with Blue Apron, people’s eye bulged out of their heads with excitement. You could talk qualitatively; this was emotional and exciting and amazing for people. We got two-page written stories detailing every aspect of the cooking experience. We had people in the early days telling us things like, “You changed my life. You’ve saved my marriage.” You know, crazy stuff like that which just shows how emotional food and home cooking can be, and how important it is to our perception of ourselves and our culture as the place where people come together over homecooked meals in their kitchen, like one of the most intimate and important moments of your day. So, we were helping people be better versions of themselves. We were helping people be proud of what they created and bring a sense of hospitality to their homes. That feedback we got gave us a ton of confidence that we had a really good idea. Obviously, the very hard part of the business after that was the operations and the scaling of it because when you’re dealing with fresh and perishable food and trying to deliver that nationally in a scalable, low-cost way, that’s incredibly difficult and incredibly operational intensive. So, we essentially embarked on the next six years building the business from nothing to 900 million of revenue in six years. It was a non-stop effort to keep up with demand because we had so much demand. The supply took up all of our attention in terms of being able to provide our product.
Alejandro: Wow. So, during this time, especially during the early stages when you’re going from an A round to a B round or to a C round, what were some of the challenges that you guys were resolving because you’re saying now that, obviously, the delivery and making sure that the food arrives well. What other challenges were the ones that you guys were resolving?
Matt Salzberg: Of course, we had a design excellent recipe experience that people loved, but I would say the really hard part was bringing together 30 separate ingredients every day from a variety of different suppliers, doing all the quality control, the portioning of those ingredients into the right amounts, the packaging of those ingredients, getting them all into one box at the end of the day without any of them missing or arriving late from the supplier, or whatever. Then getting that in a high-quality way to the customer on time every week. I think because we built into our model this idea that the recipes every week would change which is one of the reasons customers came back to us week after week to constantly try our exciting new recipes, that made our supply chain very complicated because we changed over the rest of the ingredients that we were using every single week. So, we had to build a very robust supplier network that could handle that kind of just-in-time and flexibility that we needed. So, that was hard. We were constantly outgrowing suppliers. We were constantly seeking out new suppliers. We were constantly cutting out middlemen and going deeper and deeper into our supply chain up to the point where we eventually started growing ingredients directly with farms just for us. That gave us access to specialty ingredients that our competitors couldn’t get because they weren’t able to do the sophisticated supply-chain work of growing ingredients with farms. And it also gave us cost advantage, quite frankly. So, that was all very difficult. Then part of this work early on required a lot of labor. So, we had to hire thousands and thousands of people over the course of a couple of years in order to portion, package, shipping and receiving, quality control, food safety, you name it because we were not automated in any of these processes until very later on. So, until much later, we were able to raise a good amount of capital, invest in state-of-the-art production facilities, automated bagging machines, automated bottling machines, and the like. We had people doing this by hand. There were people in our facility in big refrigerated rooms taking a pallet of kale and portioning it out into little bags of kale.
Matt Salzberg: That was very labor intensive. And just managing the workforce in a high-quality way in terms of hiring, onboarding, training, managing productivity day-in-and-day-out because, at our core, we were essentially manufacturing products. I mean, we were essentially running a manufacturing center. That became a huge focus and a huge suck of our time, quite frankly because it was all-consuming.
Alejandro: Got it. What would you say, Matt, was the tipping point, or the moment where you were like, “Wow! I think that we are onto something big here.”?
Matt Salzberg: Well, like I said, literally day one when the customers gave us the feedback that they gave us, and I heard how emotionally they talked about what we did. That was when I thought we had something really special. The business itself didn’t really have any major inflection points. It grew exponentially day one and just kept growing exponentially through most of the early days of the business. I would correlate that to one, the fact that our customers truly loved our product and were emotionally involved with it because they were the ones creating it at home themselves. They were cooking the meal, not us. They were proud of the meal they created and that caused them to share it on social media. That caused them to share it with their friends. Caused them to talk about it at work. Then, one of the really smart things I did in the early days was I created this referral program that gave free deliveries of our products to our most avid customers to give to other customers. What that did was it created this incredible word of mouth because only our happiest, best customers were the ones recommending the service. We didn’t give the opportunity to recommend it to people who might not have been as happy. Though there, quite frankly, weren’t that many of those in the early days. We gave a free trial to someone who had never tried the product before, and they were always amazed by how good it was. Because if you remember at the time in 2012, 2013, almost nobody had ever ordered their groceries online or through the mail before. So, people would always say, “Oh, that looks great on the website, but is it going to be fresh? Is it going to taste good? How can I trust this?” So, when you have a friend introduce you to the idea, and that friend had a good experience, and there’s no cost to you to try the product because there’s a free trial, you’re going to try the product. Everyone who tried it said, “Wow! This is amazing. This was way better than I expected. I’m going to buy more.” So, that built into our growth funnel a very exponential curve in terms of our growth, in addition to the social media work and a lot of the PR work we were doing. That was incredibly cost-effective and still to this day, referrals are one of our absolute biggest channels. At the time, it was the dominant share over acquisition for a very long time.
Alejandro: Nice. At what point did you guys decide, “Hey, it’s time to raise some money here.”
Matt Salzberg: As I mentioned, early on, before I even came up with the idea for Blue Apron, I raised a little bit of money. When I left Bessemer, and I was working on this other idea which I call Petridish, the crowdfunding site for science and research, I think I raised like 700 to $800,000 right as I was doing that. I was fortunate to have been able to do that because I was in the venture capital industry and had spent time building relationships with angel investors who might want to back me. It’s very hard to raise angel investment money when you don’t know the angel investors, and you’re just pitching someone cold. But if you build a relationship with them over the course of a year, and they get to know you, it’s quite a lot easier. So, I did that and raised this money early on, and thankfully spent almost none of it on that other business idea. Didn’t pay myself a salary. I paid my co-founder a small salary to get him to join me, and that was really the only costs. When we abandoned that idea and pivoted to Blue Apron really quickly, we still had all that money in the bank. That’s one of the things that allowed us to get a very fast start in the business. Then revenue kicked in because with Blue Apron, per customer, we were generating $60 or $120 a week, and very few businesses generate that much revenue per customer for a consumer-scaled business and being a market quite as large as ours with as many customers who are potential customers. The revenue piled up very fast; I think, to the point where we were doing a couple million, at least, of revenue run rate. We said, “Maybe we should raise a little bit of money because things are going so well, and we can put some fuel on the fire, and invest in marketing, and more operations, and people, and the like. So, I went out, and I raised our first professional round from first round capital, and took it from there.
Alejandro: I also see that you raised from like really impressive people. Fidelity, Bessemer, Stripes Group, [Buss 25:08] Group just to name a few. Did you meet them all through your time of being a VC at Bessemer? What was the process of getting in front of these guys?
Matt Salzberg: We raised a lot of capital over the year. I think that very first angel round with people I knew, mostly $800,000. I think the first round was a couple million, maybe. Then Bessemer put in 5 million at our B. I knew Bessemer from Bessemer. Then Stripes Group, who I had met while I was at Bessemer led the C. I think that round was about a 50-million-dollar round, and we were probably doing 50 million+ dollars of revenue run rate at that point. So, we were already a pretty big fast-growing business. Then, a year or two ahead of our IPO when we were doing many hundreds of millions of dollars of revenue, Fidelity invested. That was during a period of time where the mutual funds were actively seeking out pre-IPO businesses to get involved with because from their point of view, by the time the IPO happened, it was already priced for perfection. They wanted to get in at a discount, build up a large position, they can’t get the allocations that they wanted in IPOs, and were willing to get in a little early, risk a little bit with the liquidity in order to do that. They ended up being a really excellent partner for us for a long time, but we were a very late-stage pretty big business by the time they got involved. I had just met them on the fundraising circuit when we were raising money.
Alejandro: How much money did you guys raise prior to the IPO?
Matt Salzberg: I think it was around 200 million?
Alejandro: Got it. For a business like Blue Apron, when you’re going from A to B, from B to C, how did you see those expectations shifting on a business like yours?
Matt Salzberg: Every time you raise money, you’re making a commitment to give at least a 2x, 3x+ return to that investor you’re bringing in. You’re raising the stakes every time in terms of the scale of exit that you’re shooting for. Though I will say early on, almost day one of the company’s life, I had said to myself I wanted to create the kind of business that could go public. So, I think that had been an ambition of the business early on, but every time you take on capital, you need to have more and more ambitious plans for the next phase. So, certainly, the expectations go up. I think when you take money from someone like Fidelity, you’re making an implicit commitment that you’re going to take your company public because that’s what they’re looking for. I think, obviously, with more capital, you professionalize your management team, you continue to [28:12] everything you could do.
Alejandro: What is it like to do an IPO, Matt?
Matt Salzberg: It’s grueling. It’s grueling, I would say. We had a very tough IPO. We did an IPO in summer of 2017. We were the first company in our industry to go public. I was the CEO still at the time. We had around a 2 billion evaluation in the IPO, but unfortunately, our IPO priced well below the initial range that our investment bankers told us that they thought it could get done at. Look, there are a lot of reasons that happened. I think one of the obvious things that happened during our roadshow was the day we launched our roadshow Amazon announced the acquisition of Whole Foods. I think that really threw a lot of our messaging off, and a lot of investors were trying to make sense of how the world was changing and got a little scared of the category quite frankly now that Amazon was entering “grocery,” even though, quite frankly, had very little to do with our business specifically. Doing a roadshow, it’s an incredibly grueling process. You do two full weeks of six to eight back-to-back meetings every day. When you’re the CEO, you’re talking the entire meeting, usually repeating yourself because the questions are very similar meeting to meeting, and the pitch is very similar meeting to meeting. You’re in, sometimes, three different cities in a day, traveling with the investment banks in their fancy private plane and pitching. It’s really, really tiring, and I think for us it was especially tiring because our pricing was coming in below the range. This acquisition just happened, which had shifted the attention of a lot of investors in the industry.
Alejandro: Got it. After the IPO, for you guys, it was a little bit bumpy. You were, obviously, leading this. You were the founding CEO, so I can’t even imagine how difficult this situation was for you. I want to ask you here, how was this experience for you and who did you need to be in the face of these circumstances in order to be effective?
Matt Salzberg: It was definitely very difficult. I was a public company CEO for a period of time after the IPO. Our stock started trading down the day our IPO happened, pretty much, partly for technical reasons because the thing priced with some negative momentum and then for other reasons as well. It was challenging. I think when you go public, you have a stock price that distracts your employee population in particular. You lose a little bit of the control over the narrative of your business because you’re bringing in so many new stakeholders who might not understand your business as well as you do. Startups are very good at, private companies in particular, crafting their narratives, explaining their value profit to consumers, curating their PR, and we were very good at that as a private company, but it became very difficult when you have buyers and also short-sellers putting out stories about you, some that are accurate, some that are inaccurate, and people just focusing the press on the day-to-day movement of the stock price rather than the substantive things of the company. That becomes a distracting thing. I think it’s important to focus the attention of your employee population on the company, not the stock price; easier said than done. It was challenging, I will say. For us, I ended up stepping down as CEO and becoming chairman. For the last year and a half, I haven’t had any day-to-day involvement in the business. We put in place a CEO who had been a public-company executive. I’m still one of the largest shareholders. In fact, the largest shareholder, collectively with my family, of the company and involved at the board level in trying to be helpful where I can.
Alejandro: Got it. What was the process of recruiting the CEO? At what point did you guys decide “Let’s bring someone that has been involved with public markets.”?
Matt Salzberg: I had actually hired him two years earlier than the IPO to come in as our CFO. He was an experienced public company CFO. He had been the CFO for Amor. So, we worked together for a period of time when I was CEO, and he was CFO. He was the natural person to come in after that.
Alejandro: In terms of responsibilities, obviously, now the CEO role is this person leading it, and now you step up. I always like to say it’s stepping up as the executive chairman of the business. What other responsibilities now of you, Matt, as the executive chairman?
Matt Salzberg: So, I’m chairman now. I was executive chairman for a period of time during the transition, but I’m really just a board member at the company. I don’t do anything day-to-day. So, my responsibilities are what a public company’s board chairman responsibilities are. I chair the board meetings. Obviously, I am involved in different committee work and helping evaluate the CEO, and helping with strategy. But look, our CEO runs the company. That’s his job, and my job is to be a board member, not a person running the company. I will say that’s a very challenging transition for someone who created the company, was CEO of the company for a very long period of time, and cares a lot about the company, it’s employees, and its customers. Especially, since I’ve stepped down, over the last year and a half, the company has had a tough time. So, it’s frustrating to be in that position where you’re not as involved as you used to be and watching something that you care about have some challenges.
Alejandro: How can you let it go, Matt, because in many instances, like just shifting from the CEO to a chairman or to a board member, it’s tough to let it go? How do you let it go emotionally and from every perspective that you can think of? What was the process for you?
Matt Salzberg: I don’t have any great answers to that. I think time, and we move on. Just like any job transition, anything. I’m really proud of what I created. I think the company has changed so many people’s lives. It’s still a very valuable company with an incredible brand, incredible products, and some really happy customers. I think I’m just proud of what I was able to contribute, and you move on to your next things.
Alejandro: Absolutely. How many employees are in Blue Apron?
Matt Salzberg: I don’t want to give you the wrong number.
Alejandro: Let’s say at the time of the IPO.
Matt Salzberg: The time of the IPO, we had probably around 5,000 employees.
Alejandro: Wow. That’s amazing. Well, you should definitely be very proud, and I actually have been a customer of Blue Apron. So, there you go. That was my little secret. In 2015, Matt, you launched Embark Vet. You were part of the founding team. Can you tell us a little bit more about this initiative?
Matt Salzberg: Yes. Embark was the second company I started. I started Embark with two dog geneticists, one of whom was a friend of mine from college, and the other was his brother. We incorporated that business together in 2015 while I was CEO of Blue Apron. The idea from Embark came from some of the research that Adam Boyko, Ryan Boyko were doing. Adam is a veterinary science professor at Cornell and Ryan was his brother. We carved some IP out of Cornell and created this direct-to-consumer dog genetics company. I helped them formulate the business plan, frame it correctly, get the right strategy. What we do is we sell these tests to consumers. You swab your dog’s cheek. Mail it to us. We process that and tell you all sorts of things about your dog: breed, mix, 170 health attributes. We have a relative-finder product. You can meet your long-lost dog, cousin, which is really interesting. That’s about 80% of the business. 20% of the business is actually breeders who professionally breed dogs and use our products, our tests in addition to—we have some marketplace products where breeders can find other breeding dogs based on their genetic profiles for breeding from that. So, that’s the business. We incorporated together. I also, in addition to co-founding it, was the first investor. So, I gave them their first capital. Then I joined the board right away. I’ve been on the board of that company since 2015. We launched it in 2016, and then we brought on some really great investors since then. Raised some follow-on capital, and the business has been doing really, really well. It’s a private company, so I won’t give you their numbers, but it’s a substantial business now in the tens of millions of revenue after a few short years. They have a really happy customer base, and a really big strategic upside because we’re collecting all this really excellent data on dogs, and their genetic profiles, and their behaviors, and their outcomes; and able too, in addition to selling great tests to people, do research that can improve the lives of dogs, extend their health, and can be commercialized in a variety of ways with partners and the like. So, it’s a very exciting company, and I’m really glad I got involved with it.
Alejandro: That’s amazing. I actually saw that they’ve raised more than 6 million from really sophisticated folks.
Matt Salzberg: Yeah.
Alejandro: So, that’s really amazing. Some of these investors that came in were from you guys’ ecosystem that you knew from previous ventures?
Matt Salzberg: A bunch of the angel investors who invested in Blue Apron also became angel investors in Embark. But then, we also brought in some new investors. We brought in Founder Collective who is on the board with me, Eric Paley, who have been great partners. Slow Ventures is an investor, and a number of other early-stage funds too.
Alejandro: Got it. What’s next for you, Matt?
Matt Salzberg: Good question. I’m still pretty busy with my board work, and I’m working on that. I’m not quite ready to announce something, but I’m working on starting a new business and getting all the pieces in place to do that. I think, for me, starting companies is something that I love to do. I love the impact that you can have and the creativity involved. It’s something that I think I’ve gotten pretty good at and want to keep doing that for the rest of my career.
Alejandro: I love it. This question that I have for you now is actually very timely. Knowing everything that you know now, and this is something that you could tell yourself now or even better before you even started with Blue Apron. Knowing what you know now if you could go back to the past and give yourself one piece of advice before launching the business, what would that be and why?
Matt Salzberg: That’s a tough question. I think there are so many different pieces of advice that can be helpful, but I think it is: take every day one day at a time. I think when you’re starting a company, you don’t realize, but when you put one foot in front of the other every day, it seems like small steps, but you could climb a whole mountain that way. I think as long as you’re making good decisions on a timely manner, on a day-to-day basis, you’re going to have success. There’s not just one path that’s the right path. There’s not just one decision that’s the right decision. So, hopefully, you have a good batting average on your decisions, you make more right decisions than wrong decisions and avoid some fatal decisions. But, if you’re working hard every day and putting one foot in front of the other, you’re going to make progress, and you’re going to be successful. So, I think that’s helpful to know when you’re thinking of starting out, which it sounds really intimidating, but when you’re in it, it’s just a matter of a number of small decisions back-to-back. It’s helpful when you’re there knowing and giving you some confidence when you get overwhelmed with the roller coaster emotions on a day-to-day basis when you’re starting a company from the swings of good and bad to take a step back and realize how far you’ve come and how you can keep moving on by just really focusing on progress day and day out.
Alejandro: I love it. What is the best way for folks that are listening to reach out and say “Hi,” Matt?
Matt Salzberg: Twitter, probably. Contact me on Twitter. I’m @mattsalz on Twitter. That would be great. I look forward to hearing from people.
Alejandro: Fantastic. Thank you so much, Matt. It has been a pleasure to have you on the DealMakers Show today.
Matt Salzberg: Yeah, thank you. This was a lot of fun.