The Ledger
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Richter: IPO price is completely irrelevant due to lockup periods
“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…”
Richter: US market competition is 10x tougher than in Europe
“Everything that you know about competition will be 10 X what you'll find in the US.”
Richter: Launching a HelloFresh competitor today would be absolute insanity
“Now, if I look at that from the outside, it would be absolute insanity to launch a competitor to us as of today, given that for 10 years we worked through a lot of these complex problems.”
Richter: VC-backed founders seeking long-term control must go public
“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.”
Richter: Most DTC startups should raise angel capital, not VC
“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.”
Richter: Raising VC forces founders to either sell or IPO
“When you raise a lot of venture capital, you need to make a decision. Are you gonna sell that company or are you gonna take it public?”
Richter: Investment banking and consulting jobs are pretty boring
“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.”
Richter: Complex business models create more sustainable long-term moats
“So that's why I like complex business model and complex problems. I think they're very often much more sustainable in the long run, and they also attract a lot less competition.”
Richter calls acquiring ready-meal startup Factor HelloFresh's best capital allocation
“But the best capital allocation decision nonetheless was probably one of the M&A deals that we did. We bought a company called Factor. That's a ready meal company in the US, which has been growing very nicely since we actually applied a lot of the muscles that…”
Richter: Public markets had less insanity than private markets
“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.”
HelloFresh came within days of bankruptcy twice during its first two years
“So I think in the early days, there were one or two occasions where we were literally like three to five days before kind of like thinking about filing for chapter 11, which I guess is the right term, at least in, in US terms, but very, very close because in t…”
Richter: European founders expanding to the US must unlearn past lessons
“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.”
Richter: HelloFresh could not have IPO'd at any other time
“I think the way that our category traded would have not allowed us to IPO the business at any other point in time.”
Richter: Early founders must be able to recruit friends and family
“If you cannot convince some of your friends, family, or acquaintances to join your company, then either your idea is not that good, or you're just not a great salesperson.”
Early HelloFresh employees were expected to work until 10 PM
“I think back in those days Was very much expected of everybody to stay in the office till 10 PM.”
Richter: Ignoring competitors as inspiration is extremely arrogant for founders
“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 …”
HelloFresh would never have started if founders knew the operational complexities
“And I think if you had talked to industry experts, whether that's industry experts in a CPG company, In a direct to consumer company, even though that concept didn't really exist back then, or at a supermarket, at a, at another food company, they all would hav…”
HelloFresh directly integrated 1,500 US suppliers to boost per-order margins
“That at certain points in time, we felt that really going from five wholesale suppliers to integrating with 1500 suppliers all over the US directly to capture that margin upside, to get much better freshness and quality, that this is something that drives a lo…”
HelloFresh never outsourced performance marketing to maintain full control of CAC
“We also never said we want to outsource anything that has to do with performance marketing, for example, because as a direct to consumer company, right? That's one of the biggest sensitivity on your LTV to CACs is your CAC. So I really want to understand that …”
HelloFresh generated $1.5B in operating cash flow over four years
“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 l…”
HelloFresh's first ready-meal venture hit $15M run rate before failing
“Six months after launch, we were at 10, fifteen million dollar run rate with a small brand that we launched, but the meals were terrible. Like we got really bad recipe ratings. Customers didn't stick around. It was basically a leaky bucket because the meals we…”
HelloFresh owns two of North America's three largest 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.”
HelloFresh CEO admits past share buyback yielded poor IRR
“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.”
Richter: HelloFresh is one of the largest DTC companies outside China
“I think we're today one of the largest direct to consumer companies outside of China. I don't really know any direct to consumer company that is Much larger than we are”
HelloFresh raised $300M total up to IPO, matching cumulative burn
“Up to IPO, we raised around about three hundred million. And that was the sort of like we had a cumulative cash burn of about three hundred million before we actually started generating cash flow.”
Richter: The psychological high from sudden wealth fades within three months
“You have all those cases where people, you know, from one day to the next make a lot of money, for example, and that high sort of like goes away after Two or three months already.”
Richter was required to provide 5-year plans for early HelloFresh rounds
“I believe for my seed round and for my series A round, I've been asked about providing business plans for the next five years, which were obviously all made up, et cetera.”
Richter: In-person work is essential for strategy, optional for execution
“Everything that has to do with planning that has to do with aligning on strategy, figuring out architecture, you know playing thoughts back and forth. These things work way better. I do think if you have a plan, if you need to deliver if it's like very clear, …”
Richter built university side businesses without funding using unpaid interns
“I started two businesses on the side during university without funding, basically with some of our own funds and. With free interns to do all of the work alongside myself and a friend”
Early HelloFresh truck collapse shut down highway with 10,000 spilled potatoes
“I remember one very vividly, which was, I think we had a new record week. We had to source, I don't know the number any longer, but something like 10,000 potatoes. And you actually source 10,000 potatoes, which is like two big truckloads. And then the trucks a…”
HelloFresh operates 42 heavily automated fulfillment centers globally
“We're running 42 different fulfillment centers with heavy automation in those fulfillment centers around the world.”
Richter: Recessions cause consumers to cut restaurant spending first
“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 …”
HelloFresh achieved cash flow break-even three years post-IPO
“And since we have started generating cash flow, I think about three years post IPO, we had our cash flow break even.”