Filmed on July 11, 2019
Motley Fool Ventures is kicking off a video series featuring the founders of our portfolio companies and other engaging members of our entrepreneurial ecosystem. In this episode, Investment Officer, Kristine Harjes, sits down with Jeff Grass, CEO of HUNGRY Marketplace — the first-ever marketplace that connects companies with great local chefs to provide office and event catering. Analyze HUNGRY from a venture capitalist’s perspective as Jeff pitches the company, takes us through its expansion and capital-raising success, and describes his vision for HUNGRY’s future.
We invite you to watch the video or read the lightly edited transcript below.
Kristine Harjes: Hi, there, Venture Fools. Investment officer Kristine Harjes, here. I am excited to kick off a series where we take a deeper dive into the Motley Fool Ventures portfolio and some of the leaders of these companies. [We’re] starting today with Jeff Grass, who is the CEO of HUNGRY Marketplace. Jeff, thank you so much for being here, today.
Jeff Grass: Thank you for having me, Kristine. It’s great.
Harjes: So if we could start off with some basics about HUNGRY. Let’s pretend that you and I are meeting for the first time. You are looking to raise some money and you know that I am an investor. How do you pitch HUNGRY?
Grass: Well, [with] HUNGRY what was created is really the first-ever marketplace that connects companies with great local chefs to provide office and event catering. Think kind of Uber meets the office catering market. The core of the innovation is we’re tapping into the source of supply — essentially, great local chefs that are cooking out of wholesale locations — that allows us to provide much higher-quality food at a very affordable price point; yet, provide it in a way that makes it very reliable and solves a lot of the key pain points for buyers in the market today.
Harjes: Clearly the pitch worked for Motley Fool Ventures. What do you think was most compelling about it for, specifically, The Motley Fool?
Grass: Well, I think the team, here, really saw the big-picture opportunity. The office catering market is now a $25 billion per year industry. It’s growing very quickly; yet, it’s amazing that such a huge industry [is] currently served by restaurants and traditional catering companies, neither of [which] is ever designed around providing food for an office.
And so there’s a really amazing level of mismatch between the needs of the market today — especially the buyers of office food, which are generally office managers and executive assistants — and the providers and the capabilities those providers have. That really creates, I think, a great opportunity to invent something entirely new that’s very much specifically designed to solve today’s challenges in a fundamentally better way. That’s how HUNGRY was born.
Harjes: Absolutely. Something that we look for at Motley Fool Ventures is tech-enabled companies. Some people think tech and they think cybersecurity, or these really complex types of companies and that’s not at all what we mean by tech-enabled. I think HUNGRY is a really great example of what we do mean, which is that companies can use technology in a way that’s very innovative and very disruptive to an established industry. To that extent, what are some of the ways that you’ve been able to take an innovative tech-focused approach to the catering market?
Grass: It’s interesting. We really look at ourselves as a technology company. We’re essentially a digital marketplace and logistics platform. We spent over two years before really starting to focus on growing the business — two years building the underlying infrastructure and technology to support the business — so we are a tech company first; but, as you said, we’re kind of a tech-enabled service provider.
But what it really allows us to do is to stitch together this network of chefs in a way that makes it very efficient, very scalable, [and] very reliable to deliver a level of service and solution that’s pretty unique in the market today.
Harjes: That’s what captured our attention with Motley Fool Ventures.
Harjes: You have a bunch of rock star investors on your cap table. How were you able to amass such an impressive lineup?
Grass: Well, I’d say a little bit strategic and hard work, and a little bit kind of lucky along the way. The overarching theme is everybody that invested I think believes in our core purpose and what we’re trying to build. Who we really are, I should say.
I describe the what we are in terms of a platform that connects companies to chefs; but, the who we are is we’re a very purpose-driven company. We’re very focused on improving the lives of everyone we touch. That includes the chefs that are on our platform (they’re our partners), the admins and office managers that are ordering the food (they’re essentially our clients), the guests that are eating the food, and also the communities in which we operate.
We really try to take a very holistic view into our business and focus on how we make sure everyone is better off with HUNGRY in existence. I think people see the bigger picture and the great opportunity we have to improving chefs’ lives. We’re helping chefs become entrepreneurs and develop a whole, new career path. We have over 100 chefs, now, on our platform that are making really significant incomes relative to what they’re used to; yet, also helping these other constituents, as well.
Harjes: How did you get there? Tell us the story.
Grass: We’re very fortunate. We’ve got wonderful backers like Motley Fool Ventures and Sands Capital Ventures, and even Jay-Z’s new venture fund, Marcy Venture Partners are all on the venture side. We were lucky enough to have Jay-Z and Beyoncé’s personal chef as an advisor to HUNGRY through the formative stages and he helped connect us to the team at Motley Fool Ventures.
But we also have some great backers from the food space, as well, so [we’re] really trying to bring that expertise and knowledge to the table. Walter Robb, who’s a former co-CEO of Whole Foods is an investor. Seth Goldman from Beyond Meat — who’s obviously gotten a lot of press, lately, with their IPO — is an investor. We have some great celebrity chefs who also are supporters of our mission and empowering chefs, helping chefs. So chef Tom Colicchio from Top Chef and chef Ming Tsai from Simply Ming are investors.
And we have some other great names from the entertainment space in addition to Jay-Z. Usher has chosen to invest. Ndamukong Suh, who was in the Super Bowl last year, is an investor. We’re really privileged to have such a wonderful group of supporters.
Harjes: That is super cool.
Grass: Thank you.
Harjes: So thinking about the company’s journey, how did you build such an impressive company that was able to attract all of these names? And going back to the very inception of the idea, how did you get to where you are today?
Grass: We started, actually, with a different idea. We originally started with the concept of a platform of chefs; but, thinking more office workers, so we started [with] this more B2C approach to the market. And what we quickly found was the more we sold, the more money we were losing. So trying to sell and deliver one and two-person meals is just a really hard way to go.
What was interesting, that we didn’t plan on or didn’t realize, was these office workers were saying, “Hey, this is awesome. I want to support these local chefs. It’s really high-quality food for our team lunch on Friday. Can we bring it in for the whole team?” So we started to see not just 1-2% orders but suddenly 40-50% orders. We were like, “Whoa, we can make money with those size orders.” Sixty days after we launched, the business pivoted to office catering and really abandoned the B2C side.
Some of it was starting with an initial idea and then not being so wedded to that idea that we were able to see what really would work — what would create a better business model — and then quickly [flipping] to catering.
Harjes: I think that’s a trend that we see frequently with our portfolio companies. You need to listen to your customer and be willing to be adaptable, especially at these very early stages. So, looking ahead, where do you see the company going in the future? You say that you think of yourselves as a technology company. That is a pretty wide definition of where you could go.
Grass: Yes. I’d say two directions to answer that. One is in the near term it’s very much taking the technology platform we’ve created and playbooks around how we go to market. Around how we build and manage a chef network. How we run our catering services side. We call them cookbooks internally. And taking that know-how and that technology that supports us to then launch HUNGRY in additional markets.
Today we offer it in Washington, DC. We’re in Philadelphia. We recently launched in Atlanta with Usher and his mom’s help. They’ve been wonderful partners. We’re about to launch in Boston. Then next will be Brooklyn and Lower Manhattan and then Charlotte before the end of the year. So there’s a geographic expansion that is very much the near-term focus and really standing up HUNGRY in lots of other cities across the country.
But we also see a little bit of a bigger picture in this platform of terrific, independent chefs [that] could really be leveraged in lots of other segments of the food space. We see endless opportunities for growth of the business; but, for the near term, we’ll be very hyper focused on the catering market.
Harjes: I think that makes sense. It really is a huge industry (catering alone), and then the food industry, of course. Are there any companies within the industry that you would maybe even consider competitors that you look to, admire, and that you’ve learned from?
Grass: Yes. I think we look at everybody that’s in the space and I think you can learn something from all of them. I’d say one company that has really caught fire and is growing exponentially — you see their funding rounds and their valuation growing crazy — is DoorDash.
They’re not a direct competitor. They focus more on B2C food delivery, but they’ve been very innovative in their approach and how they’ve gone about it. And even have learned from them in terms of how they launch in new markets and how they would hire. What they would do. What their launch rubrics were and things like that. I’d say that’s a company that stands out.
But there’s players at all different facets of the space. EzCater is a large player in our space with a very different model that we look at a lot. There’s a number of players that use what’s called restaurant broker model that is essentially helping clients source food from local restaurants. [This] is very different than us working directly with chefs.
But nobody is really doing what we’re doing today. We really see ourselves as very unique in the market. Our marketplace business model, I think, is very unique, as well. And we’re seeing, today, it’s providing some really significant advantages in the market, for sure.
Harjes: Can you elaborate on that? What are these advantages?
Grass: If you go to our website (tryhungry.com), you can see all the different chefs, their menus, their prices, their ratings. We’re adding reviews, here, shortly. It provides clients a platform of variety.
One of the big pain points in the office catering market is, “If I’m an administrative assistant and my job is to bring in food all the time, I can’t just keep ordering Panera, because people get bored with it really fast. Then I have to find another restaurant, and another restaurant, and another restaurant. And every time I try another restaurant, I’m worried about how reliable they’re going to be. I don’t know what their portioning is versus the next restaurant’s portioning.”
They may not even have menus that are designed to travel to the office and keep long enough to be good from a transport perspective. So there’s lots of concerns and anxieties around every time you go to the new one. Being a platform of chefs, we provide lots and lots of variety to solve that challenge; yet, by owning the delivery and the whole services side of our business, we can make it very predictable, very consistent, and very reliable. That really helps differentiate our platform.
Harjes: It wins you customer loyalty, and that’s how you get the money to keep coming in.
Grass: Yes. I talk every day with our team [that] it’s about building long-term, enduring relationships with our clients. It’s not about the quick sale. It’s about really understanding what their needs are. Their challenges. How we can really make sure we’re helping them solve them. And hopefully impressing them time and time again with the quality of the food, the quality of the service, our reliability, our pricing, all the choices that we have, and have them use us over and over again.
It’s that, I’d say, intense focus on the customer, like you said, that has guided us in terms of how we’ve constructed the model. We recently rolled out full clean-up service. We’ll come back after the catering is over and do the full clean-up for the office manager, because they don’t want to do that. I think that really helps differentiate us in lots of ways in the market.
Harjes: Yes. Since Motley Fool Ventures invested, it seems like every time I speak to you you’ve rolled out a new city.
Harjes: You’re always expanding so quickly. What are some of the biggest challenges?
Grass: Well, we’re definitely trying to go fast. We feel like we spent over two years working out the technology and tinkering with how we would do it. In many ways, I guess we were excited to get going and start [rolling] things out. That said, we make lots of mistakes and we’re learning a lot every day.
Each time we roll out a new market we’re learning a lot. We’re changing our approach. We’re adapting. What we did in the first market is very different than what we’re doing now and we’re only on our third or fourth market. That said, we’re really optimizing around being able to go quickly and also [making] sure the markets get off to a fast start and get to profitability very quickly, as well.
We are a business that has a very capital-efficient business model. We want to be very capital efficient and think we can both grow quickly as well as be efficient in the process. So trying to learn as we go is critically important in that regard.
Harjes: And given the importance to you and the company about giving back to the communities and really serving them, how are you able to find new pathways in these different cities to give back?
Grass: Well, in our company we have a core commitment to the communities in which we operate, and I’d say there’s two core areas of focus. One is a focus on environmental sustainability. Our caterings are designed to use materials that are recyclable or fully compostable and biodegradable. Part of the reason I love that we rolled out the clean-up service is we can actually make sure we are recycling and reusing as many of the elements as we possibly can. And behind the scenes, my secret initiative is we’re trying to eliminate all plastic from our operation. Personally I think there’s way too much plastic in this world.
The other big commitment is around helping fight hunger in the communities that we operate. So we really enlist our clients for help in that. For every two meals they order, we provide a meal to those in need. I’d say those are the two primary areas of focus that we have around giving back and trying to help make the world a better place.
Harjes: Amazing. I love that.
Grass: Thank you.
Harjes: As we wrap up, a couple of fun questions. If you’re allowed to pick favorites, what’s been your favorite meal that you’ve had from the platform?
Grass: Oh, the favorite meal. Yes, it’s hard when you’ve got lots of chefs that are all very prideful people. Maybe I can share that there’s a new offering that we have that’s called the HUNGRY Chef experience. We established an events division at the beginning of this year, and it’s really taken off like a rocket. Basically a subset of our chefs are not just great chefs, but great personalities. They can put on an amazing show.
So we have a dinner party offering that we call this HUNGRY Chef experience. We have former White House chefs and TV champion [chefs] that will come to your house. Will finish making the meal. Will plate the meal. Will meet with your guests and interact. I’ve actually used it myself a couple of times and it’s been just awesome.
We do have one chef who’s this amazing chocolatier — an undiscovered gem. National Geographic just ranked her chocolate [within] the top ten in the world.
Grass: I know for sure that’s my wife’s favorite, because the chocolate is absolutely unbelievable.
Harjes: That’s awesome.
Grass: She participates, sometimes, in these chef experiences, as well.
Harjes: One final question before we wrap up. We’re in the middle of peak summer. I’m sure people are looking for beach reads. Do you have any books that you consider a must-read?
Grass: Any books?
Harjes: Or podcasts.
Grass: Well, this is a great podcast. We were just talking before, and my favorite podcast is [about] being an entrepreneur. This is the fourth company that I’ve started and led. It’s Guy Raz’s “How I Built This,” which is one that I tend to listen to when I’m walking to and from work all the time. Anything around entrepreneurship and helping build a better business.
A keen interest of mine is also in culture and how we really create and foster the kind of environment and culture that can make us successful. I talked about how we’re a very purpose-driven company. We put a lot of emphasis on our nine core values inside the company and really creating an environment that helps people grow and develop quickly. I tend to be an avid consumer of those kinds of things.
Harjes: Great. Well, thank you, Jeff, so much for taking the time to peel back the curtain on HUNGRY Marketplace.
Grass: Thank you for having me, Kristine.
Harjes: This information is for informational purposes only and does not constitute an offer to purchase or sell any security. Our lawyers would like you to know.
You can find out more about HUNGRY Marketplace at tryhungry.com and you can always find out more about Motley Fool Ventures at FoolVentures.com. For Jeff Grass, I’m Kristine Harjes. Thanks for listening and Venture On!