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The Ins and Outs of Joining Your First Startup Team

By Adam Salomone

I talk with many aspiring entrepreneurs about joining early-stage startups, whether in the food space or in the larger innovation arena. Oftentimes, these job-seekers approach the hiring opportunity in the same way they might a more traditional role with a larger company. Given the risk inherent in joining a startup, where the future is far from certain, it's perilous to forgo a more in-depth examination of a startup's prospects before jumping on-board. Whether because a job seeker is enamored with the mission or vision for a particular startup, or because an in-depth analysis can seem too direct or prying, it can be common to ignore these common indicators of startup health. But, if you find yourself in this position, you owe it to yourself and the company you are considering joining to tackle these thorny issues upfront.

Below is an inexhaustive list of questions and issues to explore with the team. Individual situations may require different kinds of questions, but these are meant to cover three main areas:

  • The current financial health of the company, as well as the forward-looking business plan.
  • The vision for the company and the 3-5 year plan to get there.
  • The overall culture at the company, and the founder(s)' expectation for how team members work together.

While it may feel uncomfortable to be so upfront in delving into the below, beware joining a team where the founder either cannot or will not articulate answers to these questions. 

  • How much money have you raised to date? What's the current runway for the company and when will you have to raise your next round of funding? If you've raised money already, who are your investors?
  • Is there a board of advisors or a formal board that oversees our operations?
  • What are the plans for the next round of funding? What is the anticipated timing and size? Are you in conversations with any investors about the next round of funding?
  • What is the status of the company's product? Has it launched yet? If so, how many customers do you have? If not, when will it launch? Can you walk through a demo of the product (even if it's in beta)?
  • What is the business model? Can you share detailed financial projections for the business?
  • What companies are your primary competition? How are they different? How are you better? 
  • Where will the company be in 3 years? 5 years? In terms of size, funding, revenue and overall impact in the market.
  • How are you envisioning the responsibilities for this position? How does it relate to the rest of the team?
  • How many employees are on the team currently? How does everyone work together? What are your hiring plans for the next 12 months? How will you find those people?

You'll notice that many of these questions are similar to what a potential investor might ask. While it's a subtle distinction, there is an opportunity cost and an investment that you make in joining a startup where the future is uncertain. So, you have to think of yourself as an investor in the company and ask the appropriate questions to evaluate the opportunity. You should get a sense right off the bat of whether a founder has a good handle on his/her business. If you come away without a clear sense of the vision, don't be afraid to follow-up and ensure you have a strong level of understanding of where the business is headed. 

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Setting the Terms with First Round Investors

Participating in a panel discussion last week at Venture Cafe on investing in food startups, a first-time entrepreneur asked about "deal breakers" when raising your first round of capital. While there are a lot of decision points that go into negotiating a deal, in general there are a few foundational elements to pay attention to.

Anatomy of a Startup Pitch

It should go without saying that as a founder, you can’t afford a bad pitch. But, even more than that, you cannot afford even a mediocre or “all right” pitch. Time is too tight, fundraising too difficult, and the competitive pool too large (and getting larger every day). That crucial first impression can either open doors to your next raise, or send you back to the drawing board.

We’ve seen a lot of pitches at The Food Loft. Here are the common issues we see.

Smart Kitchen Summit and the Future of Cooking

I'm just back from Seattle and the Smart Kitchen Summit. If you were on the fence about attending, check out the #SmartKitchen17 stream on Twitter for some of the highlights. It was one of the top conferences I've been to in a while, in part because of the companies, startups and individuals in attendance. 

Sitting in the audience, talking with people in the industry and playing with some of the tech on display, I've come away with a few thoughts on the future of our kitchens (smart, dumb or otherwise).

Here’s why the Albertson’s + Plated Pairing Makes Sense

By Adam Salomone, CEO of The Food Loft

Albertson’s announcement on Wednesday that they had completed the acquisition of Plated marks the next stage of evolution of the meal-kit space. Coming on the heels of the Blue Apron IPO, rumors that Green Chef was open to an acquisition and news that grocers themselves are starting their own meal-kit lines, we have officially reached “peak meal-kit.” Even a year ago, new entrants were flooding the market with all manner of niche, segmented consumer offerings, and at that time (and indeed well before that), there was plenty of hand-wringing about how all this would end.

It seems we’ve firmly entered the consolidation and acquisition phase. Which is a good thing, both for competing meal-kit companies and the foodtech ecosystem at large. And, while grocery stores seem like natural distribution points for meal-kits, eliminating a lot of the delivery cost and packaging material, it was unclear exactly how such a deal might take shape.

We now have our answer, and after reading and thinking more about the partnership, it makes a lot of sense. Here are a few reasons why:

  • Albertsons has a footprint in 35 states across 19 different brands and 2,200+ stores. That’s a distribution growth engine to rival Wal-Mart (well, almost). No doubt, expect to see Plated meal-kits showing up in most, if not all, of those Albertson’s locations.
  • More to the point though, Plated allows Albertsons the potential to offer a much more robust set of dinner-time solutions. In the future, a consumer could conceivably walk into the grocery store and have the option of doing their grocery shopping, grabbing a meal-kit, grabbing something fresh-and-ready to go, or taking one of the meal-kit recipes on-offer that day and having the groceries delivered same-day to their home. There are some assumptions in that evolution, but it allows Albertsons to own a much greater percentage of the possible dinner-time outcomes with one acquisition (especially because Plated can provide the logistics as well as the recipes themselves, which is important in the grocery delivery example).
  • Related to the above, a presence in Albertsons eliminates the 1+ week lag time between ordering a meal-kit and receiving it. And it allows for much greater customization (meal-kits just for that evening vs for three nights, etc).
  • With 35MM customers coming into their stores each week, and with the notoriously high CPA for meal-kit companies (into the $100s per customer), Albertsons effectively lowered Plated’s CPA for new customers to $0. And, if those customers are coming into Albertsons stores to get the kits, they likely will pick up other items while they’re there, increasing margins and overall basket size.
  • On Plated’s end, no doubt Albertsons will work to leverage their extensive inventory management to drive down COGs at the company. Margin improvement in the long-term could be substantial.
  • But perhaps the most interesting and important development is this: Albertsons was gearing up for their IPO earlier this year and shelved the plans after Amazon announced the Whole Foods acquisition. Shortly after, Amazon announced plans for their own meal-kit offering. With Plated onboard, Albertsons now has a company with more logistical know-how paired with Albertsons much larger brand footprint (relative to Whole Foods). While Amazon has an uncanny ability to hack the system, and a penchant for spending money to do it, Albertsons acquisition could give them enough of a foothold in this market to be both ahead of Amazon, and to make their dreams of an IPO come true.

 

 

Should Massachusetts Implement a Soda Tax?

Should Massachusetts Implement a Soda Tax?

Since the summer of 2016, soda tax bills have been popping up around the country; first in Philadelphia and later in Chicago and San Francisco that November. This has led to the recent debate on whether or not the state of Massachusetts should implement a soda tax. While it’s no secret that soda is unhealthy and many may feel it is good to tax the product because it is unnecessary to a healthy diet, there are those on both sides of the argument.

A tentative hearing was scheduled on June 20th and while we may not know the outcome or plan our state government has for the tax, we do know what the bill would change. Should the policy be put in effect, the taxation of a beverage would be based upon it’s sugar content per 12 ounces. For example, a drink with five to 20 grams of sugar would be taxed one cent per ounce while a drink with more than 20 grams of sugar would be taxed two cents per ounce. To put this in perspective, a 12- ounce can of Pepsi that contains 41 grams of sugar, would be charged an extra $0.24.

State Senator Jason Lewis, one of sponsors of the policy says, “The goal of this legislation is to reduce the consumption of sugary drinks replacing it with water and other healthier beverage choices, particularly among children and teenagers.” Those in favor of the tax argue that many families and children in Massachusetts are suffering from chronic illnesses like Type 2 Diabetes, heart disease, cancer, tooth decay, and strokes. It is believed that the largest source of added sugar in American diets comes from sugary drinks and supporters feel that the tax would cut down on consumption of sugar and lessen the impact of those illnesses.

The director of the Nutrition and Weight Management Center at Boston Medical Center, Caroline Apovian, feels we should regulate soda and sugary beverages the same way we do alcohol saying, “We regulate alcohol. We do not sell alcohol to children. We tax it and you can’t drink while you are working.” Apovian further states that it’s possible to overeat by drinking sugary beverages since “there is absolutely no nutritional value to sugar-sweetened beverages whatsoever. Your brain doesn’t register those calories, because it’s liquid.” That being said, the CDC claims that about half of the American population consumes at least one sugary beverage per day.

On the other side of the argument however, Governor Charlie Baker said that the bill would have a negative effect on low- income families stating, “I don’t think we should be raising taxes and I’ve said that before, especially not a tax that basically hits low-income people a lot harder than it hits everybody else.” In agreement with Governor Baker, representatives from the Massachusetts Beverage Association say that the tax could threaten jobs and hurt local businessmen and that there are better ways to fund programs important to our communities.

Despite whatever side you may be on, it is important to recognize the impact sugary drinks have on our diets. While those not in favor of the tax claim it could harm people moneywise, it is no secret that the tax could help healthwise. Should the policy go through, Massachusetts will be the first state with this type of bill in effect. And should the policy not go through, we can continue to help our local community ourselves by raising awareness, encouraging healthy alternatives, and making and sharing good food.

 

 

 

Food Revolution and the Growth of Boston’s Health Food Community

The recent opening of Food Revolution, a commissary kitchen with a more specialized focus than others, is anticipated to bring change to the Boston food community. The new share commissary is aimed at providing a safe and clean kitchen space for startups in the health food community, specifically for gluten and dairy free companies. Boston’s health food community can thank cofounders Caroline Huffstetler and Craig Olsen for their idea and for putting it into action.

Caroline, a cofounder of Food Revolution, first had the idea of a kitchen dedicated to small gluten or dairy free food companies while working at her other commissary, The Local Fare. Also centered around providing health food to the Boston area, Caroline and The Local Fare's other cofounder, Michelle Wax, would have to advise health foodies with Celiac Disease not to purchase some of the kitchen’s products. Despite sterilizing the space and making sure to keep all ingredients separated, knowing that gluten can sometimes stay in the air for up to two whole days, she decided to create a gluten free space.

Also the founder of her own food company, Nutty Life, Caroline wanted to create more than just another kitchen. Hoping to provide a space for new startups to ask questions, get advice, and learn from companies that have built themselves from the ground up before, she wanted to create a tight-knit community as well.

After starting and successfully running Nutty Life with no resources besides her own knowledge, research and ambition, Caroline says she regrets not having a mentor to go to throughout the process. She believes the best resource for getting a business off the ground is having someone to lean on and plans to facilitate the ideas of networking and guidance through mentorship in the Food Revolution kitchen. Caroline says, “Right now our goal is to just spread the word. In a year from now we’d like to have a fully occupied kitchen and to hold classes once a month.” She plans to host events to encourage asking questions and sharing ideas [as well as creating a series dedicated to giving advice and saying what it really takes to get a business of the ground.] And while she believes having a mentor is good for any entrepreneur starting a business, whether that business be food related or not, Caroline especially wants to create a sanctuary for like- minded companies with common goals inside Food Revolution’s kitchen. (Those goals being to finally put that gluten or dairy free label on their product.) By doing this, Caroline will also be expanding Boston’s health community at large.

In general, for those with their own food companies looking to take part in a commissary and find kitchen space of their own, you are going to need to know what you are looking for and what you want out of your space. Caroline advises, “When you’re trying to get space in a kitchen and are first meeting the person who runs it, it’s like a laid back job interview. Just be yourself and make sure you have your list of must haves and questions.” She recommends comparing the pros and cons of the different kitchen space options and not basing your final decision off option prices only. She admits to first making this mistake on her own by choosing a space based upon price instead of what she needed out of the kitchen. Caroline says, “It’s also good to look at the location and be sure all your production needs are met.” So consider pricing but also think of what appliances or tools you need to get your business off the ground. Not every place will have the same appliances as others, some may have too many or some may not have enough. For example, it’s good to think about if you need lots of counter space or can make do with a smaller area. Caroline described this thought process with a cookie baking example. She explained that if you are making cookies, you should be thinking of your output, what you need to reach it, and asking yourself questions like; “Do I need big or small mixers? What size ovens are best? Is a dishwasher a must or can I go without it?”

Think about your product and what it takes to produce it and then go to each possible space with a list of needs, wants, and questions ready. Specifically, for those interested in space at Revolution Kitchen, having products in the same food genre- specialty health foods- is probably wise. If your products require production in a gluten or dairy free environment, then Caroline’s new kitchen is definitely for you. Her goal is to get 10 to 15 similar businesses into the space and a year from now, she hopes for the kitchen to be filled and for the companies that have found a home there to be well on their feet. For those with gluten or dairy free companies interested in applying for a space at this new commissary, all one has to do is email Caroline at info@food-rev.com to set up a time to meet and talk in person. For those interested in a health food commissary with gluten or dairy products, same goes for applying to The Local Fare. Contact bostonlocalfare@gmail.com for more information!

Not every commissary works for every person. The important thing is knowing and finding what is right for you and making sure you have those needed resources around you to be successful. And whether it be a food business or not, finding your community and people as an entrepreneur is important. As for us who have found our people in Boston’s food scene, we are excited for the emergence of another food community brought to life by Caroline’s Food Revolution.

 

To apply for kitchen space, email info@food-rev.com or bostonlocalfare@gmail.com.

To check out Caroline Huffstetler’s own health food company, Nutty Life, click here!