Yakir Gola On Raising $1.4 Billion For A Startup He Launched At Just 20 Years Old

Yakir Gola is the cofounder and CEO of goPuff which delivers everyday essentials, from cleaning supplies, home needs, and OTC medications to food and drinks in just minutes. The company has raised over $1.4 billion from top tier Accel, e.ventures, Softbank, D1 Capital Partners, 3L Capital, Anthos Capital, and Luxor Capital Group.

In this episode you will learn:

• Tracking customer unhappiness
• Picking your investors
• The benefits of a vertically integrated business
• Yakir’s top advice for other entrepreneurs

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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.

About Yakir Gola:

Connect with Yakir Gola:

• Linkedin
• Crunchbase
• Twitter

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a very exciting founder. Today, we’re going to be talking about how to make money before you raise the money because, obviously, it seems that people in the Bay Area think more about raising it rather than making it first, and now, investors are getting pickier as we go. I think today’s show is going to put a lot of perspectives. But without further ado, I’d like to welcome our guest today. Yakir Gola, welcome to the show.

Yakir Gola: Alejandro. Thank you so much for having me on your show today. I’m really excited about talking with you and sharing some lessons learned and our story here from goPuff. So thank you for having me today.

Alejandro: Born and raised in New Jersey in Cherry Hill. How was life growing up there? 

Yakir Gola: Cherry Hill; I continue to have amazing memories of childhood and a big fan of New Jersey, the home state where I grew up. It was great. I went to elementary school in Cherry Hill, middle school in Cherry Hill. I did go to high school, actually, in Bryn Mawr, Pennsylvania. That’s where I started building a relationship with the state of Pennsylvania. Then, following that, I went to college at Drexel University and then stayed in Philadelphia. I was working with my dad in the family jewelry business ever since I could remember growing up. So, for me, one of the main reasons to stay in Philadelphia was, I can continue to build the family business and grow that online aspect of it that I ended up running and building throughout high school and college. I stayed close to home. I was using my car going back and forth from Cherry Hill to Philadelphia, to classes and back, but it was a wonderful experience to grow up in Cherry Hill.

Alejandro: And here’s something that is really interesting is that you were always exposed to business before even going to school, so what kinds of takeaways did you get from seeing your family and being involved with the family business?

Yakir Gola: I have a lot of admiration for my father and for my family, in general, that came here from Israel with $20 in their pocket and grew up in below-the-line poverty in Israel and moved here with nothing. My dad got into the electronics business and then got into the jewelry business. He had some cash-for-gold stores while I was in college and also in high school, and I always worked with my dad. I remember growing up, every time he would come home, I would ask him, what was it like? What was it like that day? Did he make money? Did he not make money? Was it busy? Was it not busy? Then, ever since I was old enough, I was behind the showcase with him helping him, whether it was with jewelry sales or was helping transition the business to online. It was just a few jewelry shops, but I learned a lot, and I gained a lot of my knowledge around entrepreneurship and what it takes and the discipline and the work ethic that’s needed in order to be successful as an entrepreneur. So I think having my dad as the role model there and also other uncles starting their small business, you really learn because being a small business owner, that’s where you have to wear so many hats. You have to do everything, and no one’s going to do it for you, and you have to figure it out, and you have to use your resources wisely and get creative. I think that’s what taught me. I know also the same thing for my co-founder Rafael Ilishayev, where his family moved here from Russia. He worked in his dad’s business and his granddad’s business in having restaurants in New York and started off as a busboy. I think both of us connected in college given that experience of getting raised in a house with small business owners and entrepreneurs. I think that taught us a lot, and I think that is what enabled some of our learnings early on to success.

Alejandro: Talking about success: it’s been an incredible ride, obviously, with goPuff. But before we go into it, going to direct selling in Philadelphia was the segue into goPuff. Tell us about the experience of going into direct sales and getting together with Rafael.

Yakir Gola: I had a great experience at Drexel, and I think the best part of it, I think, was that I met Ralph, and we started goPuff together. I think, for me, one of the biggest accomplishments that I had at Drexel and in college was the networking and the people that I met. I think there’s a lot you learn in college, for sure. There’s a lot you learn in the classroom, but there’s also a lot you should be learning and utilize outside the class. That’s when I met Ralph in my freshman year in business class. We immediately connected given that we have extremely similar values, grew up – like I talked to you earlier – with parents that are both entrepreneurs, and both of us had the same level of ambition for starting a business, for also being an entrepreneur. I had a wonderful ride at Drexel. I met amazing people. It was also a platform to launch goPuff. It was probably not a better time than being in college, in my opinion, and starting a business there, given the networking aspect, the togetherness aspect, and the relationship building. And maybe it’s not as prevalent in COVID days today. Hopefully, we’ll be past that soon, but I can say that it was great to start a business at Drexel. It was a great experience at Drexel, and the best part was that Ralph and I started goPuff together. We thought of the idea our sophomore year. Every since we thought of the idea, we immediately went to work, and that was, honestly, our sole focus and failure wasn’t an option, and that was the mentality from day one. Even when we were passing the idea around and asking our friends, a lot of people looked at us and thought we were crazy and thought it was a really bad idea. Most people thought it was a bad idea, I will tell you, and we really went with our instincts. We believed in ourselves, and truthfully, we had each other, and there were the optimism and the positive reinforcement that we can make this happen. We can persevere through all of the bad times. That’s what we did. So it really was a great experience across the board.

Alejandro: How did you come up with the idea? How did you guys land this one and got that conviction like, “We need to bring this to life”?

Yakir Gola: I’ll tell you exactly. It was our buddy’s birthday, and I realized that I was the only one out of the friends’ group with a car. I was driving to the local convenience store, picking up snacks, picking up C-store-based items, and doing runs throughout the entire week and previous weeks because everyone would ask me for a favor because I was the one in the city with a car. It was that weekend where Ralph and I were in the car together and said, “How is there not a company that will deliver convenience-based items?” We went on Google; we did some research, and little did we know, there was no company that was solving this problem for Ralph and me, first and foremost, but to the general public. It wasn’t available. So the first part of the idea was, “Are we going to start a business that is going to make a meaningful impact in people’s lives? Are we going to change people’s lives? Are we going to make it better and change it in a better way and in a positive way?” That was, yes. Then we said, “Is there a big-enough total adjustable market? Is there a big enough opportunity? From an economic perspective, can the business make money? Can the business model be sound enough where the unit economics are very strong in order to start a business that makes money?” That’s how we thought of goPuff. That was the idea behind it. When we were studying in the library at Drexel, it was a week after we thought of the idea. We started sketching the app, and we asked ourselves, “Is this really what we want to do? This is going to take a huge commitment.” Like I said, failure is not an option. Ralph and I are very, very persistent. That is one thing I would say describes us is that when we put our eyes on something, we do everything we can to make it happen. And we said, “We’re going for it.” That was the way that we thought of the idea, and that was the start of something that we were able to bring to life in a meaningful way.

Alejandro: So, here, you were saying, “We’re going to go for it.” You go for it, and what are the next steps? What happened after?

Yakir Gola: We said, “We’re going to go for it,” contrary to everyone, our family members and friends telling us, “You guys should just start your business after college, after you graduate, or maybe think of a better idea.” That’s the feedback we got. We stuck to our guns and to our instincts. We said, “We’re going to go for it.” Once we said, “We’re going to go for it,” we had to get money to start it. We didn’t have savings; I paid myself through college; I don’t come from a background of money and the same thing for Rafael, so we had to come up with money to pay the developers that we met to build the app for us, and we had to get enough money to use as a down payment for rent for our first warehouse in South Philly. Granted, I think it was only $500 a month at the time. It was still a lot of money for us and money that we didn’t have. So, we had to think of ways to get money to start goPuff. There were things like – I could tell you one story, in particular, that comes to mind was when we knew that we needed money, we started talking to our really close friends, our network, and telling them about the idea, telling them that “We’re really ambitious and want to make this happen.” One of our good friend’s father knew a company that was moving from the mainline, which is the suburbs of Pennsylvania into Center City – big company, and they have a lot of furniture that they’re not using, and we could use for our new business. It was really nice of them at the time. We went there. We rented a U-Haul. We said, “This is great. We’re going to use this office furniture, these cubicles to launch goPuff.” They were like, “Take whatever you guys want. We really don’t need this.” So there were two stories worth of cubicles. We ended up saying, “We’re going to take all of this stuff; put it in a storage facility.” Over the course of over four to five months, we ended up selling that for over $40,000. That was literally one at a time. eBay, Craigslist, and selling it one piece at a time so we could get money to launch goPuff and pay developers to build the initial platform. That was one example out of many where we got creative; we utilized our relationships, and connections, and friendships to get money to launch goPuff. From day one, there was a huge focus on financial discipline and making the business cashflow-positive and nailing the business model before we were able to scale it, and that’s what allowed us to operate as a profitable business for the first few years. I would also tell you that we were the first delivery drivers; we were the first warehouse employees; we were the first customer service reps; we were the first marketing managers; we were the first merchandisers. We learned the business from the ground up, so we knew how to take over any single role or any position within the company. I think that mixed in with the financial discipline that we had from early-on is what carried us even to this day of having the ethos of financial discipline built into every aspect of goPuff’s culture. Of course, we were able to bring on investors and raise capital, and we’re really fortunate to have such amazing investors that believe in our long-term vision. But that came much later. The advice I would give entrepreneurs is, focus on your customers, and the money will follow. I think that’s proven true with many examples with us, but I can also point to many other entrepreneurs where that worked where they stayed laser-focused on their customers, and they got something off the ground. They didn’t wait for something to be perfect before it was launched. We’re big believers that done is better than perfect. That’s also built into the culture and something that we live by and one of our principles, too. That’s a little bit about how we got the business off the ground in just a short summary view.

Alejandro: In this case, just out of curiosity here and then for the people that are listening, how old were you when you guys started the business?

Yakir Gola: We started goPuff seven years ago – almost eight years ago at this point. We were 19 when we came up with the idea, and then 20 when we actually launched it.

Alejandro: Wow. Very impressive. So, Yakir, for the people that are listening to really understand how the business model works and how you guys make money, what can you tell us about this?

Yakir Gola: The way the business model works is, goPuff operates hundreds of micro-fulfillment centers across the U.S., where they’re operated by goPuff employees and employees within the micro-fulfillment centers. We buy inventory from manufacturers, from distributors across the world, and we store all of the inventory in these micro-fulfillment centers. We also have distribution centers that serve as main distribution centers that products get shipped to our MFCs. We make money off the product margins that we sell. We make sure that we’re very price-conscious, and we focus on being very competitive from a price perspective, but we make the spread of what we buy it for from these manufacturers and distributors to what we sell on the platform as the main source of revenue and profit for goPuff. When you think about that model, that inherent model of being vertically integrated and controlling the customer experience, we’re able to essentially determine what we’re selling. If customers request products, whether it’s local products or main CPG products, we’re able to get it on our platform right away. So there are a lot of benefits that are even beyond an economic perspective to being vertically integrated and controlling the customer experience. The other benefit of that is controlling the customer experience and being able to deliver very quickly to consumers. If we screw something up, that’s on us. If a product was bad or if a delivery was late, that’s within our control. We are a customer-obsessed company; we continue to improve. One of our big strategic objectives is to continue to improve the customer experience. That’s something that we remain very, very focused on. The business model, as I said, is really strong from an economic perspective given the vertical integration.

Alejandro: You were alluding to this before. It took a few years for you guys to get external capital, so, obviously, at this point, you were profitable. Why did you think that, at that point, it was a good idea to raise external money when you actually didn’t need it?

Yakir Gola: We saw how fast the industry was growing – how fast sales of convenience items and food items and grocery, as a whole, was transitioning to online, and it’s still growing at a warp speed right now. We, naturally, my co-founder and I are very ambitious by nature. We knew that in order to really accelerate the business and continue to expand our footprint and appeal to more customers and make goPuff everywhere and take what we were doing in five to six markets in a really amazing way and appealing to tens of thousands of customers at that time, we wanted to get to millions of customers and make sure goPuff was available everywhere. So we never went to raise money, but Anthos Capital was our first investor. They gave us a call, and they told us, “We love what you guys are doing. We were so fascinated at how you guys make the unit economics work, and you’re able to deliver such an amazing customer experience. We want to learn more about it.” We built a great relationship with them; we really connected with them from a values perspective. All their interns were using goPuff. That’s how they heard about us because, as I told you, we started off focusing on the college market. We were able to make a big name in the markets that we were in, whether it was Philadelphia or Boston, and their interns were all using goPuff at the time, and they were telling them about it. That’s how the word-of-mouth went viral earlier on. Then, investors started pouring in. We met this one group out of many, and they stood out to us the most, and that’s how they ended up investing.

Alejandro: What do you think made them different from the others that you were speaking with?

Yakir Gola: I think their inherent focus on believing in founders. They’ve invested in a lot of founder-led companies before, and they’ve had a really good reputation among other founders. We got a lot of references, and they just built an amazing relationship with founders. I think that’s what connected with myself and my co-founder on a personal level. That’s why we went with them, and that’s something that stood out to us the most.

Alejandro: How much capital have you guys raised to date?

Yakir Gola: We raised in total about 1.4 billion of capital.

Alejandro: Wow. That’s a lot of zeros, Yakir. That’s amazing. I always say that raising money is a stepping stone; it’s not a milestone because once you raise it, you need to deliver. It’s money in. Then, it’s money out. How do you get it out with returns? Absolutely. Yakir, in this case, how was that journey for you guys, and how would you say that process of raising money has evolved over time, perhaps from the minute that you raised for the first time from the external all the way to the last rounds that have been in the hundreds of millions?

Yakir Gola: Yeah. I’ll probably talk to a consistent theme, which is, focus on your customers and continue to improve the customer experience and continue to get feedback from your customers to improve your product. And I think, try to create a business model that doesn’t rely on outside capital. When you have a business, and I can speak to my experience, where with or without venture capital, with or without investors, our business model would work and would be very successful still. And maybe it would be a smaller degree, and our market capital would be smaller, but I’m a true believer of don’t rely or depend on future capital and build a business model that is very capital efficient. That’s something that we learned and continued to be true, and we continue to give a lot of advice to entrepreneurs around that is, a lot of times, people are looking to raise money before they even have a dollar of revenue or before they even have a product out there. I think trying to get something off the ground is really important. Done is better than perfect. Try it out. Get feedback. Talk to your customers and see what can be improved. Then, prioritize the initiatives that are going to have the biggest ROI and the biggest improvement on the customers, and also the biggest improvement on your bottom-line. It’s been an amazing journey thus far. As I told you, we’re just getting started. We’ve been really fortunate to bring on amazing investors and amazing partners that believe in our long-term vision of being the go-to solution for media everyday needs across not just the U.S. But even globally and across the world is something that is important to us, which is the investors that come on board are long-term oriented that believe in putting the customer first. And we’ve been fortunate to bring on amazing partners from the Series A round to our latest round that we just closed that was led by D1 Capital Partners and Accel. We also brought on Luxor and SoftBank as amazing partners for us. We’re fortunate to bring on such amazing partners. They continue to believe in Ralph, me, and our entire team to dominate and build a massive generational company, so we’re really excited about it.

Alejandro: You were alluding to the team, so how big is the company today? Anything that you can share so that the people listening get an idea of the size, number of employees, or anything else that you can share.

Yakir Gola: We’re nearing today, given that we just closed a major acquisition, BevMo – I’m not sure if you know about the business, but it’s a really big deal out in the West Coast – combined with goPuff, we’re nearing 6,000 full-time employees.

Alejandro: Wow.

Yakir Gola: That’s very exciting, all in. A mixture of that is home-office employees based in Philadelphia and San Francisco. Then, a lot of that is all of our general managers and our employees, operation associates, and micro-fulfillment centers across the U.S.

Alejandro: That’s pretty impressive, Yakir. Let’s talk about the vision that you have for this, that you and Ralph have created, obviously, with the team. If you had the opportunity, let’s say, to go to sleep tonight, Yakir, and you would wake up five years later – tremendous snooze. You wake up in a world where the vision of goPuff is completely realized. What does that world look like?

Yakir Gola: It’s a great question. Look. Our vision is to be the world’s go-to solution for immediate and everyday needs. I think the way I would describe it to you is that there are three main areas of focus: 1) Geographic expansion. We want to make goPuff everywhere. We’re only as good as if you’re able to use the service and really try us and realize how much it could benefit your life and how much time it could save you and save the day for you, whether it’s delivering baby products at 1:00 in the morning, diapers, or medicine if you’re sick and don’t want to leave the house, or Ben & Jerry’s, or popcorn if you’re watching a movie. We want to make goPuff available everywhere, first and foremost. It’s something that we continue to be focused on. 2) To continue to innovate from a category-expansion perspective. Like I told you, when we started goPuff, we only had 100 products. Today, we have 3,000, so there’s been a huge innovation in what we sell. As a result, there’s been a huge mix and transformation in our customer base where now less than 20% of our customers are college students. That’s how we started goPuff. When you think about the actual product, what we sell, there’s going to continue to be innovation there. Given that we’re vertically integrated, as I talked to earlier, and operate all the micro-fulfillment centers that control the customer experience, we’re able to listen to our customers. When they tweet at us or if they email us saying they want this specific product. We do a lot of partnerships with local businesses, and being a part of the community and connecting with local businesses, and empowering local businesses is really important to us. That’s the second pillar of category expansion is, continue to innovate there, and our business model and our technology allow us to do that in a meaningful way. So you’re going to continue to see a huge innovation there. 3) Continue to improve customer experience and continue to get better every single day; listen to our customer feedback. We have a metric we call Unhappiness. We look at how many unhappy customers we have as opposed to tooting our own horn and saying how many happy customers we have. We look at the unhappy ones and say, “How do we get better every single time? How do we make their experience, every single time, better than the one you had prior?” So, in five years, it’s bringing all that to life in a meaningful way. I think being a pioneer and changing the way that people shop for convenience and grocery online. But, as I talked to you about it, we’re just getting started. Less than 10% of sales of grocery and convenience are done online today. It’s growing at a very fast rate, but it’s still very small. I think about goPuff and the opportunity that we have given our growth rate and our first-mover advantage of this infrastructure we built of hundreds and hundreds of micro-fulfillment centers delivering to amazing customers and building the scale and being the best at delivering instant needs. We want to do that in a much more meaningful way and do our part in making people’s lives better, and having a positive impact in people’s lives is something that we want to be a part of. I think if I wake up in five years and that happens in more of a grand way than it is today, I’ll be very happy, and I know our shareholders will be very happy.

Alejandro: Would you say that perhaps COVID has helped a little bit to getting you closer to those five years in an accelerated way?

Yakir Gola: There’s no doubt about it, Alejandro. COVID has had a really big impact in all of eCommerce sales and all online sales. I think what it’s done is it accelerated the timeframe. The transition to eCommerce and online was already happening; it was already growing. This just removed some time, and it accelerated the timeframe, essentially, to get people more used to buying things through applications, through websites, and getting things delivered. It’s just accelerated the habits of consumers. Of course, we’re at the forefront of that, and given our delivery is happening within 20 to 30 minutes, and we have so many different categories of products, as I mentioned, and we operate big in this category of instant needs. We’re fortunate to be able to deliver to customers during this unfortunate time of COVID, but I do feel great about how we’re able to be there for our customers and to many people throughout the U.S. that we’re a need in the time where it is risky to go into stores. So, we’re able to have a meaningful impact in people’s lives throughout COVID, and we’re happy we had that opportunity to do that and be there for our customers.

Alejandro: One of the questions that I typically ask the guests that come on the show is if you had the opportunity, Yakir, to go back in time, and maybe we’re going back to that junior year in Drexel, where you were thinking about, with Rafael, of launching a business. Here, we’re going into the time machine, and we’re transporting ourselves back to 2013. Now, you’ve been through the ups and downs; you’ve seen the good, the bad, the ugly of building and scaling a business and going through numerous rounds of financing – tremendous growth – an incredible journey. If you had the opportunity of going back in time and having a chat with your younger self, with that younger Yakir, what would be that one piece of business advice that you would give to yourself before launching a company and why knowing what you know now?

Yakir Gola: It’s an excellent question. I think there is one thing, in particular, that I’ll turn to, and it was a big lesson learned for us is that done is better than perfect. That’s something that we’ve, in a meaningful way, have become part of the culture. As we think about launching, whether it’s new products, new categories, or new verticals is, let’s get learning. Let’s get something off the ground quickly so we can iterate and get feedback from customers, and let’s not wait for something to be perfect. As I think about early-on and looking at “Hey, what could we have done better?” is integrating and using that philosophy earlier-on. I would give that advice to all entrepreneurs, where I would tell them that just get your business off the ground. Don’t wait for months and months and years and years to have something perfect and to do all of these case studies and research and refine the product 200 times. Get something off the ground, then ask your customers and get feedback. A good example of what we did there is when we were the first delivery drivers. Ralph and I would do the deliveries ourselves, one, because we had to and we couldn’t afford to hire anyone, but I think also what that taught us is, we asked the customers, “What else would you want to see on goPuff? What are we missing?” What products would you like to see on there? What other product feature would you like?” We would take notes, and that would be our north star of listening to the customers. I think just getting something off the ground. Today, goPuff has transformed into a massive business where the customer base has changed, the product mix has changed, the core competencies are changed, and we’re proud of our origin and how we started off as focusing on the college demographic. We’ve, obviously, come a long way, but if you were to transfer that knowledge and experience to other businesses, you don’t know where you’re going to end up. Even if you look at Facebook, where the acquisitions that they made, and also their innovation on their product – and I can give you countless other companies, Google and Amazon included. They believed in that same concept of done is better than perfect, and they get something off the ground and continue to innovate, continue to listen to your customers, and make improvements based on that. That’s what I would say is that don’t wait for something to be perfect and get something off the ground. This industry is moving so fast where you just blink, and another day went by, another year went by. So, you have to be able to move at the pace of how fast things are moving in the world and in technology and in life. That’s the advice I would give to myself looking back and then to other entrepreneurs to start a business and making a mark for themselves.

Alejandro: Amazing. Yakir, for the folks that are listening, what is the best way for them to reach out and say hi?

Yakir Gola: I’m always happy to do mentorship and give advice to other founders. That’s something that my co-founder and I are passionate about is whether it’s investing in startups and other entrepreneurs or giving advice, it’s something that we do in our free time, which is not much time, but we make sure we find time to do it because it’s important to give back and to share our experiences and learnings with others. 

Alejandro: Amazing. Well, Yakir, thank you so much for being on the DealMakers show today.

Yakir Gola: Thank you so much, Alejandro. It was amazing to talk with you today, and I really appreciate you hosting me today. 

 

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