Notes for TWiST ep.620 — Sprig’s Gagan Biyani scales sustainable, on-demand healthy food up to the next level

Gagan Biyani, Sprig

Many say that on-demand food delivery will never really work. Sprig is proving them wrong.

On today’s ThisWeekInStartup episode Jason interviews Gagan Biyani, the co-founder and CEO of Sprig who didn’t listen to what others say and who’s doing what was thought to be impossible: deliver thousands of meals of healthy, delicious, hot and ready-to-eat food every night in 15–20 minutes max in the city of San Francisco

The competion (Uber, Munchery, Grubhub) just can’t keep up with all that.

Watch or listen TWiST ep. 620 (or read these notes) to listen to a founder busy building the next “Uber for Food Delivery” unicorn.

At the end of the episode, you’ll be sold it will be an unicorn. And you’ll have learnt a few things along the way.

Subscribe to ThisWeekInStartups podcast (and follow me on Medium for the notes) and you’ll be grateful you did.

Udemy

• Gagan Biyani is a co-founder and former president of Udemy, most successful — company out of Founders institute
• He co-founded Udemy 6.5 years ago, he spent there 3.5 years without vesting all his shares (it’s now a 9 figure company), but he doesn’t care cause he’s in it to make a positive impact in the world, not for the money
• One of the great things of the Founders Institute: you can join even if you don’t have a product, a company or an idea
• He wasn’t a technical cofounder, he met the other cofounders of Udemy there
• They had the vision of democratizing education and he thought it was going to be big
• Today Udemy is the leading marketplace for online learning on the internet with more courses than anybody else
• Everybody can create a course and sell it
• Business model: keeping a cut of the sales
• It was launched before the Courseras and the Udacities, it was the first to introduce the MOOC vision
• Secret to his growth that nobody was doing at the time: doing asynchronous courses instead of live courses (people prefer to watch videos when they like, instead of following live videos)

Lyft

• Between Udemy and Sprig he spent 6 months at Lyft
• He joined when Lyft was only in San Francisco, a dark period for Lyft from the outside when everybody thought they were doing something illegal or in a grey area of the law and were going to be shut down soon
• Inside the company they had no concern about it, they were 100% confident they were on the legal side and their vision
• They were seeing the downloads, the engagement from the users, how it was empowering people to make money just by driving other people around with the flexibility of doing it when they wanted and for as much as they wanted

Sprig

• Sprig is his new on-demand food delivery app
• With Sprig you can get food in 20 minutes, way less than what you wait with Grubhub and other intermediaries of food delivery
• Two things about Sprig that makes it special
• It’s the most convenient meal out there, delivered in 20 minutes against the average time taken is an hour/ an hour and half
• They make food you can eat everyday, noutritious, balanced food sourced responsibly from great farms (unique to Sprig)
• They make food, put in the cars and drive around from 10 AM to 10 PM refreshing it throughtout the day
• They were the first to go live with this idea
• At first they wanted to have home-cooked food in a peer-to-peer marketplace, but it was a terrible idea

Numbers

• It’s a less than 2 years old company
• 14 dollar per meal with 4–5 different meals always available in hotbags in cars, currently serving thousands meals a night
• They have already sold more than a million meals

Focus on quality

• The believe food must served hot and not heated later, better quality and experience for the customer
• They focus on quality food because based on their research people ordering it to be delivered care about quality more than speed
• They have a R&D team working on how to enhance food quality when it arrives to your door
• They retro-engineer food to make sure the quality is there when people receive it after n minutes
• They believe their quality is better than what you can buy from regular restaurants and in some cases even better than what you can cook at home
• They keep improving it
• Their superfans are using it often
• Sprig food is made to be eaten everyday, large amounts of their customers order multiple times a week
• They don’t have lots of staples, they vary the food a lot cause variety is part of the service people wants

Unit economics

• They are applying the lean methodology to the food industry
• It’s possible to be profitable and it will be one of the most profitable food business out there
• They have more leverage than other restaurants: they just have kitchens and try to cook as much as possible in there making their margins better than the standard 10–15% of the Chipotles
• Making so many meals they are paying less for the marginal cost of the ingredients per unit

Scaling to other cities

• They are building it to be scaled
• They launched also in Chicago and they are seeing better numbers than in SF cause their model is being refined after what they have learnt in SF, doubling down on things they knew they worked

Competitive advantage

• Sprig mission is to make eating well universally accessible
• The demand for accessible quality food is way more than the supply
• There will be a few players doing well in the food delivery business — doing it is really hard and doing it at scale is a great competitive advantage
• The bigger you are, the lower your cost of delivery and the better the quality is
• You grow bigger and bigger, your quality gets better and better and it gets harder and harder for small, new competitors to compete

Sprig vs Uber

• Sprig is mission-driven on food, Uber is not
• Sprig wants you to eat better, Uber probably doesn’t care
• Sprig is riding the trend that people will be more nutritious-conscious and will want to eat better in the future years
• Sprig brings the food to your door, with Uber you have to pick it up on the curb

Munchery

• Jason says their quality food is on par with Sprig’s, high quality ingredient
• Munchery is different cause you order the food in advance, you have a dlivery window where you have to be at home or at the office to receive it and then you have to heat it up in the microwave
• It’s an interim solution, people can’t get hot quality food on demand so they put up with heating it up
• As Sprig and Bento will grow, people will go with them cause you don’t have to microwave it (microwaving is extra work and extra time, people want to avoid if they can)

Blue Apron

• Not a real competitor, it sends you a box of ingredients every week and make it as easy as they can for you to prepare a good, healthy meal in 30 minutes — an hour
• It’s more of a efficient grocery shopping than on-demand delivery food
• They portionize everything so the amount of packaging is crazy

Guest chefs

• They like to work with Sprig cause the ingredients are sourced from the same quality sources high-quality restaurants source from

Kids launch boxes, hospitals, prisons

• Jason buys food boxes onlien for his daughter and keeps being pitched with kids launch boxes delivery services as a stand alone business
• It’s not just about schools: it’s also about hospitals, airports, prisons where bad, bad food is served
• Sprig will be eventually doing all that as well

Category of meals

• They are now serving dishes tagging them based on how many calories, vegetables and lean meat they have, giving users to see the nutrition info
• They have 3 categories: “clean”, ”balanced”, “fuel”
• They choose for their customers to give them healthy servings of food and their customers are loyal and trust them so much they just order without thinking about it
• “Clean” and “balanced” meals are more calories and protein lights, the “fuel” meal is packed with more proteins (38 grams guaranteed) and it’s ideal for the post-workout
• Low carb dishes are a trend, people are asking for them

Robotic kitchen

• It’s like the flying car: prototypes exist but they are decades away from being used in society at large

Portions

• Designed to be on serving, but in the future they may have family portions for family meals (like a whole chicken roast) depending on what the users want
• You eat it and you are done, no leftovers

Scale potential

• A million meals a year for 500 cities can be done, smaller cities less meals
• It has the potential of being multi-billion dollar company
• In SF one kitchen services the whole city

Funding

• They raised 45 millions in series B in april 2015
• You raise money when you can, don’t wait: Jason knows founders who had a chance to raise in summer but didn’t and now the market is tighter and they are having a hard time

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