Ali started MealSurfers when he was 23 years old. He did extensive research into the food industry highly detailed laws and ran MealSurfers for about two years before selling it above market price to a private fund. Although this sounds like a complete success, Ali is sure he could have done more. In this interview, he reflects on the mistakes committed during the process of starting and growing MealSurfers.
Hi Ali! What's your background, and what are you currently working on?
I am Ali and I advise companies on product development and building data-focused services. I also have a podcast focused on groundbreaking graduate research called For Inquisitive Minds and another on building businesses called Serial Entrepreneurship with Ali & Upile. I am currently building an accessibility and advance care-related startup called Eberus. I also advise an emerging market fintech called Oraan.
I started MealSurfers when I was 23 years old and ran it for about 2 years before selling it to a private fund. While selling the business sounds like a success story, deep down I know I could have done more. Ultimately the model, environment, team and timing were all factors in the sale. We were fortunate that we were one of the only companies executing this model that managed to sell our assets and earn an above average return on investment.
Before I tell you my story, I’ll explain what MealSurfers was and why I started it. MealSurfers started as a way to connect home cooks with people who wanted to buy their food. I thought places with high population density like downtown Toronto, could use this model to meet their neighbours and find healthy food at a reasonable price. Some would say it’s like Uber for food, but it’s a little different, as I argued for TechVibes. The initial business model was to take a cut of the transactions but there were a number of pivots that changed this. As the business grew, we experimented with catering (charging businesses of all sizes for meals), food delivery for smaller food shops, charging for small food shops to set up their businesses (similar to cloud kitchens in a way) and running events. I’d argue we never focused on any of these revenue models long enough to see success - mostly because we started to bleed money.
While I was the founder, I acknowledge I couldn’t have done this on my own, and I want to give my gratitude to my day ones - Justin, Etan, Halima, Neil and Ankit. While this was not the entire team, they all played a huge role in shaping and moving the vision to where it ended up.
As I write this, I end each question with a ‘Tl;DR’. If you want the full answer you can read it, but if you’re in a rush, just check out the end.
What motivated you to start MealSurfers?
My thoughts on the topic of exchanging food didn’t start until I was feeling antsy at work. I liked my job at RBC. I had great colleagues and a really cool boss, but I just felt I was making no impact. I was itching to do something and had dozens of ideas I was testing. I would spend Monday mornings chatting with airtime providers in East Africa to test a remittance idea. Create UI mockups of an app connecting professionals and ex-pats in a city. I even spent three months trying to sell portable mobile phone chargers to various concert venues with a friend. Most of these ideas went nowhere. Sometimes there would be some traction, or an introduction to someone doing the same thing, but ultimately it led nowhere. My frustrations were mounting. Simultaneously I started to notice myself gain weight and realize how hard it is to find a healthy meal for a good price in downtown Toronto.
There was a third factor that really helped me push forward. While I may seem self-motivated, I needed something to keep me in check. I started a group called “Breakfast for Hackers” in Toronto. We would meet on the weekends and discuss various ideas. We probably had 10 meetings with all sorts of people trying to work on different ideas either looking for a brainstorming session, or feedback. It was fun, but people didn’t seem as interested after some time, and the meetings weren’t always well planned (my fault). The group disseminated but I kept in touch with everyone, pitching ideas constantly and obtaining some support.
What happened early in 2015 is a combination of these things. The frustrations at work, the need for a healthier diet, and the hackers I met, all came together. I started to identify the problem I wanted to solve was health-related. I wanted a better diet at a price that made sense. My hacker friends felt the same way, and they pointed to solutions in the market which I thought were incredibly faulty. I was not happy with pre-made box meals. I didn’t want to, nor had the time to make food. And I was not going to ride on the soylent wave because it didn’t feel natural. There had to be another way that fit my diet and my budget.
These frustrations continued to mount, and I kept asking myself ‘how can I eat better?’ At some point, the idea for MealSurfers was born. I don’t know if I had the idea swirling in my head, or if I had noticed and remembered certain situations from the past. Two things are for certain; one, my mother used to make lots of meals for people in our community and we would exchange food constantly. Some of my best dinners growing up were made by friends or colleagues of my parents. If I really liked the dish, my mom would find the recipe and try to make the food herself. Her versions of the meal were never the same. Two, in my religion, the tradition of exchanging food has been around for centuries. It is likely that this was brought into practice to help the poor and build a community. The tradition exists today, and is sometimes the main reason why hungry university students come to our mosque.
Noticing these two events in my life, I thought there was a potential for exchanging home-cooked meals on a large scale. It also helped that I was following Uber’s success very closely. I was very fortunate to work with some of the senior members on Uber’s team as they were doing a deal with RBC. Before the partnership, it was my job to do some due diligence, and make sure they were a good partner. I learned what I could about their model, and realized it could be applied to multiple markets. I probably didn’t realize it then, but I wasn’t betting on the technology, I was betting on people. I was betting that people would be more trusting of each other. I don’t think I was wrong, but my vision was definitely tainted.
When I had a reasonably good idea of the business I wanted to test, I asked my hacker friends for their thoughts. In fact, I asked many friends for their thoughts. There was lots of criticism, sometimes disguised as doubt. I had pitched so many ideas, that no one believed I was actually going to start something. In some ways, the advice given was never really thought through. I guess that’s what I deserve for being the boy who cried startup!
There were some friends who really did believe in the idea. They weren’t willing to jump on board just yet, but they were keen on seeing how things progressed. At such early stages, it’s hard to decipher the friends who are just interested, and the ones who really want to get on board. Many people will go so far as rolling up their sleeves, but only if their schedule permits. As someone diving headfirst into the idea, I was unaware that the team I started practice with, was not going to be the team I played the game with. This is a really important point because team is probably the number one thing that can make or break a company. When you read advice like this, it’s easy to brush over it. Any project I work on now, I make sure I get along with the team, that the group is motivated to succeed, and we all compliment each other’s skill set. I cannot emphasize how important this is.
As I started to learn these lessons, I grew more confident in my idea. I knew I needed to do three things now. I needed to assess the regulatory framework in the food space, primarily in Ontario. I needed to check the competition, and create a solid business case for doing this. And I needed to run a basic test to see how people would feel about this product.
- Friends, trends of unhealthy foods, no real competition, traditions in my family and the love of a good meal.
How did you build it?
Part of building the company involved understanding what are the reasons it could be shut down. I wanted to make sure I mitigated the major risks, before market testing. My conversations with Uber made me realize the importance of the law when dealing with on-demand business models. In every city, Uber was ruffling feathers and getting lawmakers to scratch their heads. The older generation didn’t trust Uber, but the forward-thinking millennials didn’t care. The model was working and the company had done lots of work on assessing appropriate drivers, protecting their liabilities, and marketing their business. Obviously I couldn’t copy everything they had done since we were in two different businesses, but their success was an inspiration. In my head, I was on the right path but I was proven wrong.
To dive deep into food law, the first thing I did was speak to friends who owned or worked in the industry. I started to learn about various laws, inspections, audits, and policy-makers in charge of the industry. I spoke to many cooks and caterers, logging all of their feedback while pitching my idea. Many were enthusiastic, but uncertain about the rules and regulations I would face. Those that owned restaurants and catering businesses cautioned that I would be in trouble for starting this business. I couldn’t derive any real conclusions from these conversations. I had to go to the source of the truth.
I found applicable food laws on the internet and started reading. I had never owned a restaurant, and never even thought about the laws surrounding this industry. It was not a fun read, but it taught me a lot. It was not enough to read just Ontario’s laws, I needed to read bills and laws in forward-thinking states like California and New York. I learned about home cooking bills that were submitted as a result of the recession, which were not acts in some parts of the United States. During the time these bills were being passed, Canada took a step backward and decided to limit what could be cooked and sold at home.
I realized the business I would be starting could lead to a public debate. People had strong opinions on this, and if large states and countries were deciding how to regulate it, I knew I was playing with fire. To prepare myself I spoke to a number of lawyers who listed these bills and laws in their blogs. Any lawyer I came across in North America, I would give them a call, and schedule 30-minute meetings over lunch. I would have a disgusting burrito bowl in one hand, while arguing on the phone for a homemade marketplace in the other. I learned a lot from these conversations by trying to understand where the laws came from. I learned that none of these laws were airtight, and the city didn’t have the resources to defend them. I also learned there were lawyers very interested in my idea, and desperately wanted to see it succeed. The best advice, however, was to get insurance.
I recall how long it took Uber and Airbnb to find the right insurance partners, and I knew this was going to be a struggle. I shopped around and spoke to a few different companies but was unsuccessful. It was not until one of my lawyer friends introduced me to a small insurance company, that I caught my lucky break. Together we discussed the business, the legal structure, and obtained a two million dollar liability insurance, which we thankfully never needed. Again, I learned so much from all of these conversations. Food companies need insurance from all sorts of things! It is really interesting to see what makes the world tick when you look under the hood.
Now that I had the laws and insurance checked out, I needed to know if this really was a business I could work on. I had been looking at competitors and the market, but I wanted to dive deep. I got in touch with every single competitor who would speak to me and asked them how they got started. To some, I would lie and say I am a student learning about the business. To others, I was honest and told them exactly what I would do. Speaking to my competitors was an obvious move, but it still surprises me how many young entrepreneurs I speak to that neglect doing this. There is a risk you obtain no information, but then you don’t really lose anything. However, you could obtain great feedback and an even better understanding of what you are about to commit to.
I spoke to over a dozen competitors from around the world and learned about their challenges with regulation, the business model failures, and general small business qualms. Some competitors offered to be a mentor, others told me I would fail. The conclusions I drew from these conversations, however, made two things clear. One, that no one had won in the market, and yet everyone loved the insight. To me, that meant it’s anyone’s game, and you just have to play your best to see where it goes. Those are the best games. There’s no Goliath. No heavy hitters. You’re not playing the house, you’re playing each other and the outcome could be very lucrative. Secondly, none of these competitors knew what they were doing. We were all up against laws and trends that were constantly changing. We were playing in an evolving industry and there were no right answers. We’re playing poker blind with equally shitty cards, yet somehow everyone believed they could win. Welcome to entrepreneurship. Or so I thought.
Alongside my direct competitors, there were companies that were trying to solve the same problem as us. These were food delivery companies like Foodora and Uber Eats, along with pre-made boxes such as Chowdy. I decided to speak to each of these and learn what they did to start their companies, and how their business models worked. This was incredibly helpful as it allowed me to see how we could be different, and also gave me an idea of the price point that made sense. My chat with Foodora’s MD was incredibly helpful, as it showed me the costs of running a delivery startup, and how their unit economics could only work at scale and with top-end brands. This left a huge room for the long tail - which was my target audience. The question that remained was whether or not I could convince people to buy these products and that led me to start market testing.
Up to this point, I had spent around 2-3 months doing this research, while working full time. I had no website, and a few friends interested in helping me out. I tapped two of those friends, Halima and Alan, and asked them to make some food for me that I would sell and deliver on their behalf. They agreed. I asked them to make the food and let me try it (free food!) and I took pictures that were used to create flyers. I posted these flyers in the lobbies, gyms, and community centers near where Alan and Halima lived. Since it was downtown Toronto, the population density was high enough that I thought I could obtain enough traffic. I added my mobile number for people who were interested in buying the meals, and did not source Alan or Halima specifically in the ads.
Luckily, people started calling. At first we offered only 3 meals per cook, but within a few days, we had to ramp that up to 10. Halima and Alan were starting to sell out, and they wanted to experiment with other meals. Simultaneously, I would interview strangers walking around downtown about my idea. I would take some work from home days or spend evenings talking to people and seeing if this opportunity had potential. A combination of these things made me overlook the fact that most people buying from Alan and Halima were people that already had an idea of this concept, and were just buying this on a trial basis. These sales were false positives, and I should have spent longer here studying the market.
Since I thought the market was telling me it is time to grow this, I tapped one of the hackers - Justin - at my breakfast event to build a website. I had already built the preliminary website called ‘foodali’ at the time, but it was not good enough. Justin saw my progress and we had worked together on something in university. He trusted me and I think that is why he joined. I guess he also liked free food tastings and the idea that this was part mission-driven.
It’s important to note that while I had done a significant amount of legwork, I kept him and anyone else I wanted to work within the loop. It added to my credibility, but also it kept me accountable. In some ways, I always knew I’d work with Justin, Halima and Alan, and I just needed to create a reason.
This was the point where I thought I could start looking for cooks outside of Halima and Alan. I thought this would be difficult, however I was wrong. Craigslist had tonnes of postings and I was able to contact many of the cooks and they were interested. I had to convince some that this was a website and platform for them to sell, while others got the idea right away. Before onboarding them, I needed to make sure they were safe, and that I could trust them. This is where free food tests came in.
I printed out the food preparation checklist from the government website, and studied it. Some of the items were outdated, and I knew if I asked cooks to let me inspect their homes with a printout, they would be curious. I had to create more legitimacy and this is when I decided to get a lawyer on board. The lawyer would help me draft documents that I could use to prove what we were doing was not illegal, and update the checklist, such that it was relevant. The biggest benefit of doing this, along with having a website, was that it gave us more credibility in the market. We posted these documents on the website for anyone to read.
At this time Justin was also wondering if we needed a designer to make the website more appealing. I had worked with Etan during an internship at BNOTIONS before joining RBC and I thought he would be a perfect fit. I reached out to him at the time, and he agreed this would be something exciting for him to work on.
When the team of three was formed, the website and documents were ready, I set out to call, visit, and acquire cooks. It was a brutal effort, travelling around the city to find cooks, only to realize that sometimes they were not interested. I visited parts of the city I had never known, and met people I would have never come across. It made me appreciate the diversity that exists in this great city.
It’s worth noting the goal of this business was not to try and check every meal eventually. Airbnb staff don’t visit every house, and Uber doesn’t check every cab. I knew if this was going to scale, I would have to stop these checks eventually, but as Paul Graham says, do things that don’t scale.
- Studied the regulations, identified gaps, obtained insurance, spoke to competitors.
- Started with flyers in buildings and two friends who were cooks, spent time interviewing people and being customer-focused
- Got cofounder for a website, found cooks on craigslist and community centers
- Created a food inspection checklist with a lawyer, checked every home for safe cooking
Which were your marketing strategies to grow your business?
Our business was two-sided, so growth relied on obtaining cooks and customers. I thought obtaining customers would be easy, but it was the cooks that were far easier. Posting in community centers, online websites, putting up blogs, and word of mouth got us dozens of sign-ups. People were signing up so fast, we needed to create a better way of tracking signups. We also needed to ask more questions on our form and as a result there were knowledge gaps across different people that had signed up.
To obtain customers, we tried a few things, but we also got really lucky. I quit my job in September to go full time on this, after working on the side for about 5 months. Etan and Justin joined me and we would work out of coffee shops and each other’s homes until November, when we were accepted into one of Toronto’s top accelerators - the Ryerson Digital Media Zone - the DMZ . The incubator gave us some office space, publicity, a strong network, and also earned us a mentor who offered us a chance to do an interview with CBC Radio.
My gut told me not to do the interview, because we weren’t ready for the fanfare. The media was riding on the Uber wave, and the tide was high. Our website and team were not ready to experience the high volumes. I checked with the team and they said we should get publicity, and I could tell that after two months of doing coffee shop work and not seeing significant profits, they needed an uplift. I agreed to do the interview on a Tuesday morning at the CBC studio - big mistake.
The interview started at 7 am, and by 7:45 am our website had crashed twice. It’s safe to say the interview went well, and we had thousands of people sign up to either cook for us, or join our newsletter. We had lots of feedback and people willing to work for us to make this thing grow. All of this happened from one radio interview at 7 am. Unbelievable.
In the following days, Justin, Etan, I and a new team member named Shub worked very hard to make sure we were responsive and ready for the additional traffic. The radio interview also got interested press from local newspapers to contact us for further interviews. Within the week, we were featured on Fast Company, two online blogs, and front page of the Toronto Metro. Even though we were not financially successful, it felt like we were kings.
Press and false status are killers. I started to feel less humble about my work, and started to overlook potential problems, assuming everything would be fine. My parents took extra copies of the newspaper, I was stopped a few times by people on the street, and I had old employers and classmates reaching out to congratulate me. I even started dating a girl outside my league! I let it get to my head.
The biggest problem, however, was not the way I started to see myself or the business, it was the negative feedback I was receiving. Specifically, it was an email from Toronto Public Health about our operations. I knew this day would come and I was prepared for it, but there were still many surprises.
Before I go into the email and how it eventually led to one of the big reasons why the business didn’t work, it’s worth mentioning other things we tried in the realm of marketing. We spent a lot of time using Facebook and Reddit ads, and we still posted flyers and sent postcards to local neighbourhoods. This form of advertising had limited reach - somewhere in the area of 5-10% uptake. Looking back, however, we should have focused on niche areas where restaurants were not supplying the right products. This means areas where there were more vegan needs, or places that had higher halal food expectations. If there was a way to plot this on a map (Google restaurant API, cross-referenced with blogTO or other social data about the neighbourhood) we could have targeted better. Hindsight 2020.
We also tried refer a friend, community events, tasters, mixers, partnering with grocery stores and Yelp but ultimately all of those areas were either break even or loss-making. The newsletter + organic social media approach was really helpful. Since this idea had a really strong communal element to it, it made sense that these mediums worked well. I am really grateful we brought on Vanessa , who was helping out at the DMZ at the time to show us what we needed to do in these areas to succeed.
Overall it was fun bringing people together but very few ended up becoming initial and even more so recurring customers. We raised awareness and many people knew what we were up to, so from a growth and consumer business standpoints we were a success. However not enough people were trying our products or coming back. We had educated the market, but the crux of product-market fit remained elusive. Businesses like this really thrive on a local, word of mouth approach. Creating small groups and managing growth in specific areas should have been the way to go.
- Incubator helped us out, also using social media and the obvious online tools.
- Radio interview put us on the map.
- Tried many marketing avenues, but struggled.
What made you want to exit MealSurfers?
I struggled a lot with deciding whether I would call MealSurfers a public success or a public failure. A rational definition of success for a startup is usually an exit or even a soft landing. Some sort of monetary return for your time spent. As you know. however, entrepreneurs are irrational. Success to us is always about something greater than money. Maybe it’s legacy, maybe it’s a mission, maybe it’s respect. If you consider those three things, I would actually say this was not a success.
We exited MealSurfers for a number of reasons. We didn’t obtain enough recurring customers, we faced constant regulatory hurdles, our team was not as dedicated as they could be, and I was too hung up on our initial business model. If I had to choose one reason above all, it would be my fault for sticking with the business model for too long. For not pivoting successfully and not listening to the market. In the end, to blame anything else for a startup not reaching its potential, is really a failure in recognizing your own shortcomings. I think anyone who is adaptable and has grit can build a business successfully.
Taking responsibility for my shortcomings helped me see how I can make improvements to future businesses. When I was operating the business, however, I didn’t recognize these areas of opportunity. I blamed the first three things I mentioned. Less than 10% of our customers would come back for another purchase and it was hard to create this incentive. There were too many variables at play since the meals were not standardized and timings always varied. McDonald's is open to serve you when you want, with the things you are used to. A home cook might alter the menus or cook earlier/later in the day. This made it hard to keep customers coming back, even after we adjusted our protocols for cooks.
Regulation was always a dark cloud that hung above us. Even though we were operating in a grey area, the threats from the regulatory body were always there. When we went on the radio and received the email from Toronto Public Health, we knew we were in trouble. The email led to a call with the head of the organization and he mentioned two interesting things. He acknowledged the city did not have a way of monitoring all the food activity with the current base of food inspectors. And more importantly, that he didn’t want to make this call but had to because incumbents were calling him to say MealSurfers will destroy their business. As an entrepreneur, that felt really good. The result of this call was for the TPH to monitor us more closely than before, and that meant some more operational work for our team.
We had monthly audits of our sales, customers, and anything related to our business. TPH would look at our insurance plans, and any documents we handed out relating to food. We even brought a knowledgeable food and safety operator on our team (shoutout Neil!), and we would still have to go through these audits. All of this was manageable, as I told myself any industry on the cusp of innovation has to go through this. At this time I found all of our local direct competitors (many who had sprung up since the interview) and tried to create a coalition of sorts to fight against these demands. Since we were the biggest in the space, and the only ones directly impacted, almost no one agreed to join forces just yet.
Things got worse when two major events occurred. First, a competitor of ours in California was sent cease-and-desist letters, stopping them from operating. They went through petitions and even formed a bill to fight this problem. Secondly, since TPH had our cooks information, they reached out without our knowledge and threatened to close down their operations if they were not allowed to audit their homes. This sounds intense, and I am not sure it was legitimate, but the threat alone worked. Many cooks called in and suggested they were uncomfortable working with us as a result of these calls. Many of our best cooks stayed on board, but it was an issue we were not too pleased with tackling.
All of this could drive the team to be less committed. As a leader, I started to feel these events impacting my morale, and easily noticed the team being less involved. Momentum spirals both ways, either it's going up, or it's going down. If it starts to decrease, it is up to the leaders to change that, and I admit, I did not do a good job. Leaders should have a fine balance between vulnerability, and unwavering self-belief, and I don’t think I had the mix right. Ben Horowitz in the Hard Things about Hard Things talks about this and I highly recommend a read.
Knowing all this, it is easy to assume that anyone of these things killed the business. I would disagree. I think what killed the business was my inability to listen to the market and pivot. I was a stubborn kid, focused solely on our concept. These things killed our concept (home-cooked food delivery) but they shouldn’t have killed our business. During the half-life of our business companies like Platterz started up and I still feel we could have pivoted to that model had we taken a step back.
In the Summer of 2015, all of these things had started to pile and I started to realize it might be best to think of shutting down. I emailed our cooks and let our team know that this is what I was thinking, and we started to think of creative ways to shut the business down. At first, I thought closing shop was the best thing ever, but I was convinced by our cooks that what we had built was sellable. I went to some venture capitalists, reached out to mentors, spoke to entrepreneurs I admired and started to put together a plan for exiting.
The exit plan was to do the following:
- Put together an asset list and attribute a monetary value to it
- Identify companies that would be interested in the purchase and frame the acquisition to their benefit
- Never ask to sell, always ask to merge/ie work together
- Inform the lawyers, cooks, and anyone in the network for help
As I started to prepare our decks and notify people, two interesting things happened. Firstly producers from the Food Network reached out and said they wanted to create a show based on our business. They would find three ethnic cooks, put them on our platform, promote the meals and the business in New York and see if it would take off. We would be paid $5000 per episode, if the pilot was successful. This seemed like a dream offer, but I ultimately turned it down after a series of meetings. The reasons were:
- A significant amount of time spent to make the pilot and modify the app
- Our team would not be featured on the show, and the website would rarely be featured
- The senior producers didn’t seem confident this was a good idea – I didn’t feel their energy
- Any merchandise, logo, brand, etc would be owned by the studio – the ultimate reason
While this deal was souring, an investor reached out through one of our cooks asking to invest in the business. He said he had a bunch of ideas and wanted to bring on his own CTO to make this successful. I was very grateful and thought this is what I wanted. However, I looked at all the things happening in the business and I realized it would be better that I move on and start something else from scratch. He understood, but wouldn’t take no for an answer. He insisted on buying the business, and keeping me on as a consultant. He liked what we had done, we had gotten on well, and he believed in me.
I took this information back to the team and they were thrilled at the result. Our core team would receive a soft landing for this business, and we could walk away with a nice profit. We weren’t millionaires, but it was an exit and a potential win at the time. We prepared the documents, negotiated terms and after some due diligence, finally signed. This process took around 2-3 months. I stayed on for 6 more months directing the business and then moved on. From what I understand the business now has reduced scope, and is no longer operating under MealSurfers.
The reason I struggled so much with deciding if I should call this a failure was all to do with my personal perspective. You can sell a story anyway you want, but grounding yourself, in reality, is the most difficult thing to do. I find solace in knowing, however, that entrepreneurs never fail. We only learn.
- Lack of recurring customers, regulation, lack of team dedication, my inability to understand the market
- Created an exit plan, turned down a television deal, almost raised more money
- Ended up being acquired and achieved a soft landing
Which were your biggest mistakes and challenges you had to overcome?
I mentioned much of this in the story so far so I’ll be brief:
- Personal: Not listening closely to the market – needing to pivot.
- Team: More dedication to the product.
- Market: Regulation & finding recurring customers
Which were your expenses? Did you achieve some revenue?
As this was my first real shot at building a business, I didn’t think I could raise money for it. When we started, I put in the initial $5000 for expenses like adverts, domains, packaging, transportation and such. When my co-founders came on, I didn’t pay them anything but gave them a large amount of equity as compensation. This showcases two major mistakes - one not thinking I had what it takes to raise the initial amount of money and two, compensating co-founders with large amounts of equity. Luckily the business didn’t last long enough for this to be problematic.
That initial $5k took us to about 6 months, and by that time we already had some revenue. In fact, as early as the third month, we were averaging 40 meals a month, so probably something like $400. We started by taking a 10% cut, but eventually moved this number around until we thought we had it right (but never really got there). I never had to put more money in as our revenue covered the costs, and we started generating a very small profit later in our business. Our expenses were minimal since we had free office space, weren’t paying ourselves, almost zero overhead. This was not sustainable obviously.
At our peak, we were probably averaging $7,000 in revenue through selling meals and catering. Catering brought the bulk of the money - I think we could have easily gotten 60% of our revenue this way, while meals took care of the rest. Catering was not a formal product - it was a ‘sophisticated’ google sheet that I had to convince my own network and extended network to buy from us. Catering itself is a complex market, where most cooks that worked for us, already catered on the side. This meant we would need to either target opportunities like lunch catering where they weren’t successful or obtain a lower fee to avoid people cutting us out of a deal.
We had no real website, no app, nothing focused on this catering market, but it started driving a lot of our demand. The problem with catering was it would tap out eventually - since a cook could only make so much fresh food, and if we’re using multiple cooks, we get into logistical problems. This meant we’d need to unlock more catering capacity by renting a kitchen or having faster deliveries.
Around April 2016 we started facing the regulation issue and the catering thing was put on hold. Had I raised money, I could have paid attention to both avenues but I had only one engineer and I needed to focus on maximizing operations. This was when revenue started to decline and the prospect of shutting down or selling became more apparent.
Right before selling, I think we ended up with around $1000 a month in revenue, which was a large drop. Luckily we didn’t lose money in this experience as the exit not only covered our cost but pro rata probably earned us what we would have earned had we kept working that year, and then some.
- Started with $5k, peak revenue was $7k a month
- Exited for a profit
If you had to start over, what would you do differently?
If I could go back in time and tell the 23-year-old me anything, it would be to be more analytical and be flexible with the model. I would tell myself to really listen to the market, and not be so adamant about proving a point around the sharing economy model. Usually, the best opportunities are just a short shift in trajectory away. We could have easily built companies like Platterz or Cloud Kitchens had we focused on these pivots.
Besides that, I think everything I did was a huge lesson. Surrounding myself with smart, hungry (no pun intended) people, was very useful in convincing me that I could do it. Quitting my job and going in full time was the best decision I ever made. Doing the interview, gathering feedback, and marketing the product in the many ways we did was a huge lesson. These learnings were invaluable in my roles following, and also taught me so much about myself. I think you’re truly not learning until you’ve pushed yourself to the extent of your abilities. That’s where the greatest learnings are.
Eventually I will start over, and work on a different business that is 1000x better than MealSurfers in every way. I have worked on a number of ideas since, but I am waiting to see what would take off. Also, you always learn more from what didn’t work than what did. This way I have far greater clarity and purpose going forward.
- Be more analytical and flexible, pivot faster
- Be grateful
Which are your favorite entrepreneurial resources?
Techmeme is good for following tech news. Apart from it, it is mostly:
- Farnam Street blog and podcast
- Anything by Naval Ravikant
- Anything by Paul Graham or Sam Altman
- And check out the podcast I co-host with Upile + Medium
As for books:
People…. Talk. To. People.
Customers, leaders, entrepreneurs – whatever. They are the best resources.