The Exchanges

Q interesting. He said the biggest problem that alternative providers had is they tried to vertically own everything. They tried to own all the facilities, they tried to do all the shipments, they tried everything, and he was like, Don't do that. We're happy to pay a little bit higher price. We can outsource that. That's not our job. Do you think that's wrong? Do you need to vertically own everything?

A I don't think you need to vertically own everything. I think there are some parts of the value chain that you want to own, but it also depends on the stage of the business. So even today we're incubating like a number of new business lines and very clearly in the first two, three years, we're trying to keep fixed costs like as low as possible. It's all about finding product market fit. In these times, I think it makes total sense to say everything that doesn't have to do with product market fit, you want to outsource. I don't want to spend mental bandwidth on that. I want to make sure I have a great product. I understand some of the distribution channels. I understand my consumers. I can act fast on their feedback. I don't want to do all the stuff that can keep me up like, you know, um, the whole night and the whole day and worry about that stuff. But at some point, I think it's really important that if you actually say like, Hey, this is mission critical for my success. I don't want to have any dependency on somebody else. Plus I also want to understand how good you are in something, right? Then you actually need to go in and do that yourself. And I think there have been different phases in our, in our, um, journey, but I would definitely say also looking at some of the competition that we've had, That at certain points in time, we felt that really going from five wholesale su…

AI assessment note: “I don't think you need to vertically own everything.”

Q interesting. He said the biggest problem that alternative providers had is they tried to vertically own everything. They tried to own all the facilities, they tried to do all the shipments, they tried everything, and he was like, Don't do that. We're happy to pay a little bit higher price. We can outsource that. That's not our job. Do you think that's wrong? Do you need to vertically own everything?

A I don't think you need to vertically own everything. I think there are some parts of the value chain that you want to own, but it also depends on the stage of the business. So even today we're incubating like a number of new business lines and very clearly in the first two, three years, we're trying to keep fixed costs like as low as possible. It's all about finding product market fit. In these times, I think it makes total sense to say everything that doesn't have to do with product market fit, you want to outsource. I don't want to spend mental bandwidth on that. I want to make sure I have a great product. I understand some of the distribution channels. I understand my consumers. I can act fast on their feedback. I don't want to do all the stuff that can keep me up like, you know, um, the whole night and the whole day and worry about that stuff. But at some point, I think it's really important that if you actually say like, Hey, this is mission critical for my success. I don't want to have any dependency on somebody else. Plus I also want to understand how good you are in something, right? Then you actually need to go in and do that yourself. And I think there have been different phases in our, in our, um, journey, but I would definitely say also looking at some of the competition that we've had, That at certain points in time, we felt that really going from five wholesale su…

AI assessment note: “I don't think you need to vertically own everything.”

Q Yeah, it is. I never quite managed to hold back my disapproval with the manager. So maybe that's why I wasn't a good team player. I have to ask that. Okay. So we pivot away from football and decide that we're going to go to Goldman Sachs. Talk to me. How did that happen? I'm just intrigued.

A That was a mistake on my side. I'm still always fascinated how good some of the big banks and the consulting firms are to lure in top talent, because if you're being honest, the job is pretty boring. Um, nonetheless, I think they attract like a huge deal of world-class talent each and every year. And in the end, I think that all comes down to marketing. They're just really good at marketing and at branding their places as These are the most desirable places where you should go if you're a top graduate. I have not been immune to resisting that. And so I also ended up there, but figured very quickly that is probably not the right place for me. So after about nine months, I already left. So I'm not sure you can, you can call me a banker or anything like that. I think that was basically training. And then I left.

AI assessment note: “I have not been immune to resisting that. And so I also ended up there”

Q Tell me final one. You said about, you know, if you want to build for the long term, you have to go public. Where are you in 10 years time, Dominic?

A Let's see. Um, I think most likely as I still be running HelloFresh, hopefully HelloFresh at that point, not only two billion dollar business lines like we have today with our meal kits and our ready meals, But with a lot more different business lines that we have at that point, still solving problems at scale, um, with some of the smartest people in the world. If I ever wake up and I feel this is not fun any longer, I feel like I'm not spending my time problem solving, but I'm spending my time, um, solving other people's problems and not my own problems and not problems that I'm excited about. Then, um, you know, you'll probably find me either on the beach or running a football club. If after the one day that I sneak into the boardroom, I find that exciting enough.

AI assessment note: “I think most likely as I still be running HelloFresh”

Q um, customer acquisition cost wise, I'm always stuck in the way that I'm like, does it go down over time because you have brand marketing, you have word of mouth, you're a bigger name, or does it go up? Because you've saturated the core market that's most tangibly obvious for your products, and so naturally you're going to less obvious markets. Does it go up or down, do you think?

A So I think you described the two, the two dynamics well, right? On the one hand side, you tend to penetrate much more deeply into a specific total addressable market, and that generally means that your, that your customer acquisition goes, uh, cost goes up. On the other hand, like you're building a brand You probably have a big database of people who have ordered with you at some point. And so those two dynamics kind of offset each other. So I think, you know, as you scale and with more tenure, On a market or in a geographies, you have really those two effects that are in some ways offsetting each other. And then you need to look really at the category, sort of like, what is, what is weighing out the other one? But you're describing well the two dynamics that you're seeing.

AI assessment note: “those two dynamics kind of offset each other”

Q Yeah. Can I ask, you know, in terms of capital allocation, we spoke about kind of the vertical integration there, but do you think the best CEOs are the best capital allocators? I had Toby from Shopify on the show, and he said that the best CEOs are the best capital allocators. Do you agree?

A I think that's a very financial view. So capital, that's probably what a PE fund would tell you. It's that they are the best capital allocators. I think capital allocation is a very, is a very important part of your job, but it's more than capital allocation, right? It's resource allocation. Like where do you actually put sort of like your people? How do you organize your people? How do you make sure you bring out the best in your people, et cetera? I think these are jobs that are At least equally important as capital allocation. Probably capital allocation becomes more and more important. The more mature your businesses, the less it is about building and the more it is about allocating the capital that you have at the highest ROI projects.

AI assessment note: “I think these are jobs that are At least equally important as capital allocation.”

Q period ahead. I was thinking actually on a run, to be honest, Dominic. Does that help you or does that hurt you? People obviously can get food cheaper if they go to kind of more discount than supermarkets, but then also they may not be going out to restaurants and they may get it instead. How do you think like a recession impacts the meal kit business as a whole?

A So one of the first buckets where people start saving is they're going less to restaurants. That's definitely what you have seen in previous recessions is That the share of out of home food has actually declined, whereas the share of food that you consume inside your own home actually goes up. I think that's something that is marginally positive for us. On the other hand, there are definitely, you know, some customers who are much more concerned about their disposable incomes, and they might think longer and harder about taking up a new routine. And that's also something that you can see with us. I think our existing customer base actually shows very good retention. They're on average ordering more meals with us than they did than they did before. Part of that because we made a lot of investments into the assortment, into the menu, but it is in tough macro times, a little harder to get customers to that first purchase to basically say, I'm going to start something which maybe is the same price, maybe slightly higher. It's always very hard to make like a like for like comparison With going to the shop yourself, depending on how much you value your time, whether you're buying the same quality, the same cuts. We have now shown over the last two years that we can also navigate through economic cycles without having like a hugely negative impact on our business.

AI assessment note: “I think that's something that is marginally positive for us. On the other hand”

Q I do want to ask about the expansion. You said about angel investments you've made. We obviously both sit in Europe. Many European companies try and win the US and fail. You've done it immensely well. Can you help me understand what does it take to win the US and what are some of your biggest lessons from doing so well in the US as a originally European company?

A The differences really all go back to just the, the massive size of the domestic market in the US, right? The massive TAM that you can go after. If you're operating In such a big domestic time, you're making right from the start, you tend to make different decisions. You're trying to scale much faster. You're trying to hire more expensive people, because in the end, you're going to have a lot more operating leverage. You're going to have higher salaries. You're probably not caring as much about the details as about telling your vision. What I always felt is that bringing some of the more European skill set, Diving deep, more of an engineering mindset, um, having attention to detail to such a large domestic market like the US is like a really great success formula. Now, obviously I'm like vastly generalizing here, and there's like a lot of Americans that are, have as much or more attention to detail than any European out here. But I generally feel that the size of the domestic market caters more towards certain types of founders than what you tend to find in Europe. If you have grown up as a company in Europe and you go to the US, you definitely need to throw overboard a lot of the things that you feel that you have learned.

AI assessment note: “bringing some of the more European skill set... to such a large domestic market”

Q Well, you've only got one day there. Yeah. Uh, tell me, how do you view competition? Is it like head down, row your own race or should founders like be very aware of competition?

A So in my view, competition is, is a constant source of innovation and inspiration. I think it's extremely arrogant to not pay super close attention to competition. And I'm not only talking about your direct competitors. I'm also talking about in our case, all other companies that market to consumers that want to reach the same consumer. Like what are they doing? What are they experimenting with? What have they learned? There is thousands of super smart people at all of those companies, which are thinking every day about how to reach customers, how to build new technology, et cetera, to not listen to them, observe them and not basically get inspired and see that as, as a big shortcut. To your own experimentation and learning is extremely arrogant in my view.

AI assessment note: “I think it's extremely arrogant to not pay super close attention to competition.”

Q Yeah, it is. I never quite managed to hold back my disapproval with the manager. So maybe that's why I wasn't a good team player. I have to ask that. Okay. So we pivot away from football and decide that we're going to go to Goldman Sachs. Talk to me. How did that happen? I'm just intrigued.

A That was a mistake on my side. I'm still always fascinated how good some of the big banks and the consulting firms are to lure in top talent, because if you're being honest, the job is pretty boring. Um, nonetheless, I think they attract like a huge deal of world-class talent each and every year. And in the end, I think that all comes down to marketing. They're just really good at marketing and at branding their places as These are the most desirable places where you should go if you're a top graduate. I have not been immune to resisting that. And so I also ended up there, but figured very quickly that is probably not the right place for me. So after about nine months, I already left. So I'm not sure you can, you can call me a banker or anything like that. I think that was basically training. And then I left.

AI assessment note: “They're just really good at marketing... I have not been immune to resisting that.”

Q I do want to ask about the expansion. You said about angel investments you've made. We obviously both sit in Europe. Many European companies try and win the US and fail. You've done it immensely well. Can you help me understand what does it take to win the US and what are some of your biggest lessons from doing so well in the US as a originally European company?

A The differences really all go back to just the, the massive size of the domestic market in the US, right? The massive TAM that you can go after. If you're operating In such a big domestic time, you're making right from the start, you tend to make different decisions. You're trying to scale much faster. You're trying to hire more expensive people, because in the end, you're going to have a lot more operating leverage. You're going to have higher salaries. You're probably not caring as much about the details as about telling your vision. What I always felt is that bringing some of the more European skill set, Diving deep, more of an engineering mindset, um, having attention to detail to such a large domestic market like the US is like a really great success formula. Now, obviously I'm like vastly generalizing here, and there's like a lot of Americans that are, have as much or more attention to detail than any European out here. But I generally feel that the size of the domestic market caters more towards certain types of founders than what you tend to find in Europe. If you have grown up as a company in Europe and you go to the US, you definitely need to throw overboard a lot of the things that you feel that you have learned.

AI assessment note: “bringing some of the more European skill set... to such a large domestic market”

Q Well, you've only got one day there. Yeah. Uh, tell me, how do you view competition? Is it like head down, row your own race or should founders like be very aware of competition?

A So in my view, competition is, is a constant source of innovation and inspiration. I think it's extremely arrogant to not pay super close attention to competition. And I'm not only talking about your direct competitors. I'm also talking about in our case, all other companies that market to consumers that want to reach the same consumer. Like what are they doing? What are they experimenting with? What have they learned? There is thousands of super smart people at all of those companies, which are thinking every day about how to reach customers, how to build new technology, et cetera, to not listen to them, observe them and not basically get inspired and see that as, as a big shortcut. To your own experimentation and learning is extremely arrogant in my view.

AI assessment note: “I think it's extremely arrogant to not pay super close attention to competition.”

Q Yeah. Can I ask, you know, in terms of capital allocation, we spoke about kind of the vertical integration there, but do you think the best CEOs are the best capital allocators? I had Toby from Shopify on the show, and he said that the best CEOs are the best capital allocators. Do you agree?

A I think that's a very financial view. So capital, that's probably what a PE fund would tell you. It's that they are the best capital allocators. I think capital allocation is a very, is a very important part of your job, but it's more than capital allocation, right? It's resource allocation. Like where do you actually put sort of like your people? How do you organize your people? How do you make sure you bring out the best in your people, et cetera? I think these are jobs that are At least equally important as capital allocation. Probably capital allocation becomes more and more important. The more mature your businesses, the less it is about building and the more it is about allocating the capital that you have at the highest ROI projects.

AI assessment note: “I think that's a very financial view... it's more than capital allocation”

Q What was the worst capital allocation decision you made on the flip side?

A In the rear view mirror, one of our share buybacks was at much higher levels than where the share price is trading today. So if I'm looking at the IRR of that investment, that was probably not a great investment. But then in the end, right, we're not doing that to, to push the stock price. We're doing that to Grow free cash flow per share by reducing the share count. So I think in the long run, and in the end, all you can do is work on the long run. You're reducing the share count, and then hopefully at some point in the future, that will also have been a good capital allocation decision. Now about, uh, two years or 18 months after we've done it, the IRR on that does not look great.

AI assessment note: “one of our share buybacks was at much higher levels than where the share price”

Q like the gym bunnies who want protein meal kits, and you see like gym meal kit companies that just do like protein gym bunnies, and then you see, you know, specific religious groups that have like religious meal kit companies, and it just seems like it's getting so unbundled as a space and segmented by Like, societal group. Does that concern you, that unbundling of the space in this way?

A I don't think it concerns me because I do feel we're in the pole position to deliver a great value proposition to a lot of different audiences out there. When you look at different consumer categories, It's very rare that you have a consumer category where one company has 100% market share, and there's just one company for a certain consumer product. What you tend to have in consumer categories, you have one or two really big brands, usually global brands that own a large share of that category. But then you always have like smaller niche players, local players, because tastes are very different. And that's not only about food, right? That's in beauty. That's in self care. That's in soft drinks. That's in vitamins. That's basically everywhere in the direct to consumer or in different consumer categories. You tend to have the gorillas in a certain category, and you tend to have a much more fragmented long tail because you also have long tail tastes and some niches.

AI assessment note: “I don't think it concerns me because I do feel we're in the pole position”

Q period ahead. I was thinking actually on a run, to be honest, Dominic. Does that help you or does that hurt you? People obviously can get food cheaper if they go to kind of more discount than supermarkets, but then also they may not be going out to restaurants and they may get it instead. How do you think like a recession impacts the meal kit business as a whole?

A So one of the first buckets where people start saving is they're going less to restaurants. That's definitely what you have seen in previous recessions is That the share of out of home food has actually declined, whereas the share of food that you consume inside your own home actually goes up. I think that's something that is marginally positive for us. On the other hand, there are definitely, you know, some customers who are much more concerned about their disposable incomes, and they might think longer and harder about taking up a new routine. And that's also something that you can see with us. I think our existing customer base actually shows very good retention. They're on average ordering more meals with us than they did than they did before. Part of that because we made a lot of investments into the assortment, into the menu, but it is in tough macro times, a little harder to get customers to that first purchase to basically say, I'm going to start something which maybe is the same price, maybe slightly higher. It's always very hard to make like a like for like comparison With going to the shop yourself, depending on how much you value your time, whether you're buying the same quality, the same cuts. We have now shown over the last two years that we can also navigate through economic cycles without having like a hugely negative impact on our business.

AI assessment note: “That's something that is marginally positive for us. On the other hand”

Q me on that one. HelloFresh is like, Fucking amazing market leader, but it's like the one of the all time leaders and it's, you know, it's, it's three and a half billion, but like, it's not like SAS where there's, you know, 50 and, you know, there's 25 over ten billion. It's like, as a category, is it venture-backable? How would you respond if I asked that question to you?

A I don't think you can make a plain or broad statement that applies to all companies. But I do think there were a lot of companies that ended up being venture backed when the better path would have been to raise an angel angel round, trying to get to profitability and actually scale the business to a 102 hundred million in revenue. For sure. I've made a bunch of angel investments and I've had that discussion with founders a lot where they say like, you scaled the company to that level. You raised some venture money. I want to do the same. And I very often advise them and said like, Look at the personal outcome for you, or then obviously by extension myself as an angel, the much less risky way is to, is for many, many of those categories and many, many of those companies to not raise venture.

AI assessment note: “for many, many of those categories and many, many of those companies to not raise venture.”

Q Dominic, how do you deal with those intensely stressful moments? Like that is like, All night, you are not sleeping and you're having heart palpitations. Today and back then, how do you deal with the real stress moments?

A So the stress moments have probably become fewer over the last couple of years. I think it definitely helps when you run a profitable company, then in the end, um, you definitely sleep much better. You still have like as many problems and as many things that, that worry you, but you don't have this Existential angst that you, that you carry around with you. So I think I definitely sleep better since the point that we were sustainably profitable and started generating like real profits. How do I deal with it? Generally with stress. I think my, my, my way to deal with stress is just having like a very good routine of, uh, of doing sports. I'm a sports fanatic and it helps me clear my mind. It helps me get peace of mind. And every time I pick up one of many injuries that I pick up while doing sports, and I can't do something for two weeks or three weeks. I'm getting really anxious, and I can feel that I get like way more stressed, and that I'm not as much, that I don't feel as healthy, that I don't feel as fit, that I don't feel, that I do feel a lot more stressed.

AI assessment note: “my way to deal with stress is just having like a very good routine of doing sports”

Q Because if you have a shit first day that leads to a shit first week, and everyone goes, no, I knew that that was a bad category. And then that leads to a shit first month. And then team members go, fucking hell, we're down so much. I want to go to air table now. It can be a real knock-on effect. I'm just pressing you. Does it not matter?

A I think it's irrelevant. First day price, completely irrelevant. The price after 12 months, after two years, yes, that starts being relevant. The price after three years, that's what you should be optimizing for. Think about it like that, right? I think also for us, if we had missed the window in Potentially there would have been another window in. Now, who knows whether that window actually opens or not, whether you have a big crisis like the pandemic coming and the window is actually closed or not. All of the macro challenges that you have, all of the macro factors that you have, that you can't control. I think there is so much uncertainty and history is littered with companies That wanted to go public and optimize and squeeze out the last 10% for the first day. And they missed the window and then had to do emergency fundraising if they weren't profitable or put a lot of structure and ratchets in. We never had any structure. We never had any ratchets. We always were like very conservative on that end. And we wanted to go kind of like very quickly towards having common shares, no prep stacks in there. And, um, we felt like if there is a window, we want to go out. And then on public markets, we can prove ourselves and everybody can decide. Let's make a decision whether that was successful or not three years in. And in the end, I think it was the right decision. I think the way …

AI assessment note: “I think it's irrelevant. First day price, completely irrelevant.”

Q Why did you decide to go public so early? When you think about that, 2012, I think you said the founding of the company in 2017, the IPO. We have five or six years to IPO is really fast. You know, traditionally it's the 10 year journey to IPO. Why did you decide to go out that early?

A We had the notion that we want to run this company for a long time. And when you raise a lot of venture capital in the end, you need to make a decision. Are you going to sell that company or are you going to take it public? My view is The price at which you go public is completely irrelevant. Almost nobody sells at the price of the IPO. Everybody's locked up. And in the end, it just matters at the point sort of like when lockups are over, when somebody wants to sell, et cetera. So the price at which you go, at which you go public doesn't matter. It's all about grabbing the window. And we felt back in 2017, there was a window for business models like ours. We, Tried to make sure that we can get out through that window and then felt like if we establish a public market track record, then sort of like valuation will take care of itself versus saying like, hey, let's optimize the last 10 percentage points and go public at that share price. And then, you know, the market is not there or you're actually going public and six months later when lockups are up, kind of like you're down 50%. The price at which you go public It's completely irrelevant for everybody.

AI assessment note: “It's all about grabbing the window. And we felt back in 2017, there was a window”

Q Before we discuss people, because I think it's such an important point, but in terms of like capital allocation, what was the best capital allocation decision you made? And what do you think was the worst?

A I think I have a pretty good track record in M&A. Over the last four years, we've generated about 1.5 billion in cash flow from operations. Of those 1.5 billion that we generated, we allocated roughly nine hundred million Into making our own operations better. So in our fulfillment network, in our last mile logistics, in our technology, actually in our automation of some of the fulfillment centers, we spent about. Three hundred million on M&A and we did a share buyback of about two hundred million over that period. So that's kind of like, Hey, you generate 1.5 billion. How do you allocate that? That's in the end is capital allocation, right? As you can see, we have a strong preference first to investing back into the business, because we do think that our business can become a lot larger than what it is today. But the best capital allocation decision nonetheless was probably one of the M&A deals that we did. Um, we bought a company called Factor. That's a ready meal company in the US, which, um, has been growing very nicely since we actually applied a lot of the muscles that we developed to that business. And that has certainly been a very good return for us and hence a very good capital allocation decision.

AI assessment note: “the best capital allocation decision nonetheless was probably one of the M&A deals”

Q me on that one. HelloFresh is like, Fucking amazing market leader, but it's like the one of the all time leaders and it's, you know, it's, it's three and a half billion, but like, it's not like SAS where there's, you know, 50 and, you know, there's 25 over ten billion. It's like, as a category, is it venture-backable? How would you respond if I asked that question to you?

A I don't think you can make a plain or broad statement that applies to all companies. But I do think there were a lot of companies that ended up being venture backed when the better path would have been to raise an angel angel round, trying to get to profitability and actually scale the business to a 102 hundred million in revenue. For sure. I've made a bunch of angel investments and I've had that discussion with founders a lot where they say like, you scaled the company to that level. You raised some venture money. I want to do the same. And I very often advise them and said like, Look at the personal outcome for you, or then obviously by extension myself as an angel, the much less risky way is to, is for many, many of those categories and many, many of those companies to not raise venture.

AI assessment note: “I don't think you can make a plain or broad statement that applies to all companies.”

Q Dominic, how do you deal with those intensely stressful moments? Like that is like, All night, you are not sleeping and you're having heart palpitations. Today and back then, how do you deal with the real stress moments?

A So the stress moments have probably become fewer over the last couple of years. I think it definitely helps when you run a profitable company, then in the end, um, you definitely sleep much better. You still have like as many problems and as many things that, that worry you, but you don't have this Existential angst that you, that you carry around with you. So I think I definitely sleep better since the point that we were sustainably profitable and started generating like real profits. How do I deal with it? Generally with stress. I think my, my, my way to deal with stress is just having like a very good routine of, uh, of doing sports. I'm a sports fanatic and it helps me clear my mind. It helps me get peace of mind. And every time I pick up one of many injuries that I pick up while doing sports, and I can't do something for two weeks or three weeks. I'm getting really anxious, and I can feel that I get like way more stressed, and that I'm not as much, that I don't feel as healthy, that I don't feel as fit, that I don't feel, that I do feel a lot more stressed.

AI assessment note: “my way to deal with stress is just having like a very good routine”

Q No, I do agree. Do you think it's the hardest time ever to be a direct consumer founder? I was chatting to another one the other day and they said, you know, between Facebook performance challenges, You know, Google challenges, recession. Fuck it's hard. He said this is the hardest time it's ever been for direct to consumer founders.

A I'd say it's a very different time than what it was maybe five or seven or eight years ago when the whole direct to consumer boom started. We started the company when direct to consumer was not really a term. I think we're today one of the largest direct to consumer companies, um, outside of China. I don't really know any direct to consumer company that is Much larger than we are, but it's certainly like, um, like very different today than it was back then. And I think back then you had a lot of people that started the direct to consumer company by, you know, going to a retail store, looking at shelf space, looking at what are the most outdated brands there that could use a new font and a new branding. And you started your direct to consumer, um, company, and it was very easy to get the first customers in. And especially if you were operating in the U S with such a large domestic market, it was very easy with one or two growth channels to actually get to 50 or a hundred million of revenue without being like extremely sophisticated. I think very clearly those times are over, but I don't think that the time for direct to consumer is over because in the end, right, direct to consumer means you make it more convenient for the consumer. The consumer probably has a lot more information Has a lot more advice, has a lot more, um, crowd feedback on your products. So I think from a consu…

AI assessment note: “I think very clearly those times are over, but I don't think that the time”

Q Because if you have a shit first day that leads to a shit first week, and everyone goes, no, I knew that that was a bad category. And then that leads to a shit first month. And then team members go, fucking hell, we're down so much. I want to go to air table now. It can be a real knock-on effect. I'm just pressing you. Does it not matter?

A I think it's irrelevant. First day price, completely irrelevant. The price after 12 months, after two years, yes, that starts being relevant. The price after three years, that's what you should be optimizing for. Think about it like that, right? I think also for us, if we had missed the window in Potentially there would have been another window in. Now, who knows whether that window actually opens or not, whether you have a big crisis like the pandemic coming and the window is actually closed or not. All of the macro challenges that you have, all of the macro factors that you have, that you can't control. I think there is so much uncertainty and history is littered with companies That wanted to go public and optimize and squeeze out the last 10% for the first day. And they missed the window and then had to do emergency fundraising if they weren't profitable or put a lot of structure and ratchets in. We never had any structure. We never had any ratchets. We always were like very conservative on that end. And we wanted to go kind of like very quickly towards having common shares, no prep stacks in there. And, um, we felt like if there is a window, we want to go out. And then on public markets, we can prove ourselves and everybody can decide. Let's make a decision whether that was successful or not three years in. And in the end, I think it was the right decision. I think the way …

AI assessment note: “I think it's irrelevant. First day price, completely irrelevant.”

Q Is quality not just aligned to margin? And I know that sounds blunt, but it's like I can make the best meal, but it'll just be the lowest margin because I have the best produce. I have the best steaks I have. Do you see what I mean?

A I would say it's one component of it. How much, how much money you invest, but how do you cook that? How do you prep it? How long do you keep it in inventory? How quickly does it move from one station to the next station? That has all to do with the freshness of the product and the quality of the product can degrade like very, very fast if you're not moving it from one station to the next station. You know, those are big cooking facilities. At the moment with Factor, we have two of the three biggest cooking facilities in North America. Guess what the other one is? The one that we're not owning of the top three cooking facilities in the U.S. Disney World Orlando.

AI assessment note: “I would say it's one component of it. How much, how much money you invest”

Q No, I do agree. Do you think it's the hardest time ever to be a direct consumer founder? I was chatting to another one the other day and they said, you know, between Facebook performance challenges, You know, Google challenges, recession. Fuck it's hard. He said this is the hardest time it's ever been for direct to consumer founders.

A I'd say it's a very different time than what it was maybe five or seven or eight years ago when the whole direct to consumer boom started. We started the company when direct to consumer was not really a term. I think we're today one of the largest direct to consumer companies, um, outside of China. I don't really know any direct to consumer company that is Much larger than we are, but it's certainly like, um, like very different today than it was back then. And I think back then you had a lot of people that started the direct to consumer company by, you know, going to a retail store, looking at shelf space, looking at what are the most outdated brands there that could use a new font and a new branding. And you started your direct to consumer, um, company, and it was very easy to get the first customers in. And especially if you were operating in the U S with such a large domestic market, it was very easy with one or two growth channels to actually get to 50 or a hundred million of revenue without being like extremely sophisticated. I think very clearly those times are over, but I don't think that the time for direct to consumer is over because in the end, right, direct to consumer means you make it more convenient for the consumer. The consumer probably has a lot more information Has a lot more advice, has a lot more, um, crowd feedback on your products. So I think from a consu…

AI assessment note: “I'd say it's a very different time than what it was maybe five or seven”

Q Can you take me to that decision then? We're sitting HelloFresh and obviously we have co-headquartered Berlin and New York, but you know, we're in Berlin and we, how did you come across it? Why were you excited by it? Take me to the decision. I'm really fascinated by this one.

A We have been excited by other direct to consumer verticals. I think the way that I look at it is We operate a portfolio of different PNLs of different business lines. We started the business in 2012. We IPO the business in 2017. And at that point we were active in six markets globally with one brand HelloFresh. Post IPO, we said there's a lot more markets that we can go into with our meal kit brands. And we basically in the three, four years after that, so between 20 17 and 20 20 launched HelloFresh in another Eight or nine markets as the one brand. We also said there's a good opportunity to actually go into, um, a premium category and into a sort of like everyday value category and launched different meal kit brands with green chef in the U S and every plate in the U S and also brought those to some of our European markets. At some point in, we said, okay, meal kits, we have a lot of business units. A lot of markets that are in the early days of their growth S curve. And we have others that are maybe a little bit more mature and where it's more about managing them for cashflow and where it's more about really building out the customer proposition. But we've basically became interested in what are other direct to consumer vertical that share a lot of the things that we like about meal kits and maybe a lot of the complex problems that we already solved for meal kits. And we firs…

AI assessment note: “we basically became interested in what are other direct to consumer vertical”

Q Do you like being public? Obviously I have many public market CEOs on the show. None of them like it. They're honest about it. They're like, no, I wish I wasn't.

A There are some things which are definitely beneficial, and there are others which are not incredibly beneficial. When you raise venture capital, In the end, you need to make a decision. Are you going to go for a trade sale or are you going to IPO the business? Those are in the end, the only two credible path. And if you still want to run the business, if you still feel that there is a lot of runway ahead of you, then you probably don't want to sell the business and give up complete control. So you're going to IPO the business and you know, it's not always the easiest to have a daily reflection. Of everything that's going on on a, on a screen and like a value put on you every day instead of like every two years or so. But it also, um, you know, is sometimes good, um, is disciplines, teams kind of like makes you think straight. I think you have a lot less of this insanity in public market companies than you might have seen in private market companies in the last three years. So, you know, I think it has pros and cons, but If you want to keep being in charge for a long time and you have raised venture, in the end, you need to go public. That's pretty clear.

AI assessment note: “There are some things which are definitely beneficial, and there are others which are not”

Q What was the worst capital allocation decision you made on the flip side?

A In the rear view mirror, one of our share buybacks was at much higher levels than where the share price is trading today. So if I'm looking at the IRR of that investment, that was probably not a great investment. But then in the end, right, we're not doing that to, to push the stock price. We're doing that to Grow free cash flow per share by reducing the share count. So I think in the long run, and in the end, all you can do is work on the long run. You're reducing the share count, and then hopefully at some point in the future, that will also have been a good capital allocation decision. Now about, uh, two years or 18 months after we've done it, the IRR on that does not look great.

AI assessment note: “one of our share buybacks was at much higher levels than where the share price”