Matthew Wadiak
Appearances
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
There are like almost too many. Yeah. I mean, yeah. So I could tell something anecdotal and kind of funny. Sure. So one customer called up or sent an email. I can't remember. And she was convinced that there was the tail of a rodent in her box. When we were all freaked out. So she sent this blurry cell phone picture, 15-year-old cell phone. I'm not a great picture.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
And we're like, oh my God, that's so horrible. And I think our ops manager, his name was Gary Kliegman, got on an airplane, flew out to her house, was like so apologetic, wanted to inspect the beast and opened it up. And it was, it was a beetroot. Yeah. Oh, God. Yeah.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
So, like, stuff like that, you can just imagine tales like that and just, like, you know, suffering and just a lot of boxes in transit all the time. So a lot of funny, funny stories and, you know, stressful times, like running out of an ingredient and, you know, halfway through packing boxes or something like that, power outages, you know, natural disasters, all kinds of stuff.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
But ultimately... Yeah, fresh food.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Yeah. I will say when you're working with people like that, the ops team, the marketing team, my co-founder, Elia, who is our CTO, you build these kind of friendships that are just like, these are my guys for life. We're just so, so close and connected even today. And it's nice to have gone through that experience with like-minded folks.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
So moments like that. In reality, something happened. You know, people tend to be pretty forgiving as long as you poison somebody or whatever. But, you know, we were hyper vigilant around that kind of stuff. We were young and we were you know, we wanted everything to be the best. So we put a lot of work into it. But there were there were there were a few funny stories like that along the way.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
We had a lot of cadence from day one because we, first of all, you have to understand the era. It was a time in which there was a massive underserved audience. And whenever you see pent up demand, it's about capitalizing on that demand from a marketing perspective to get share of market and capture as much total addressable market as possible, right? Yeah.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Yeah. So folks looking to exit a company, whether it's a sale or IPO, a lot of the business becomes oriented around, you know, readiness for sale or IPO, which includes a lot of internal audit, a lot of systems. You know, at one point we were running, you know, hundreds of millions of dollars of revenue on QuickBooks, you know, like putting an ERP in place. I'm like, oh, it's for the NetSuite.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
NetSuite is an easy today, but It was really difficult back then, especially when you're transferring over that much receivable and billing and complex systems. So I would say there are challenges associated with that. Any entrepreneurs out there listening, integrate your CRM and your ERP early. Don't do what we did. Yeah. The culture changes a little bit around that.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Certainly, there's excitement around those events, but it's very important to not lose creativity and engagement and innovation around product because... It's many companies get to that point, probably including Blue Abram and fail to innovate at the speed that they need to, as they did when they were early, because they're becoming more conservative. They're worried.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
They're getting ready for this financial event. And the financial event should not define the company. The company's innovation should define the company. So I'd say that that is, you know, was an area, the financial stuff was an area of focus. I think, you know, in hindsight, it's important to make sure the creativity and product innovation remain at the most important, the highest level.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
A lot of deals have fallen through in the last quarter because you...
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Yeah, so I've explored a variety of opportunities in food. I'm currently, I'm in my lab today as there are 3D printers in the background. I'm excited now having worked in a world of packaging and seen so much impact, you know, from an environmental standpoint, a consumer standpoint.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Obviously, I don't know if you've been following the news on, you know, now Friedman's list, plastic list, great, another great option for food. Yeah. All of us. And that's just scary. So we get that plastic out of our food. How do we get it out of our food system? How do we get it out of our beverage containers, which are the worst leakers of microplastics in our brain?
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
So we did something that was really unique on day one. And I entirely attribute this portion to my co-founder, Matt Salzberg, at the time. We had initially built a referral program into our initial web product that included rewards for customers. You know, as many companies have rewards for customers who are loyal to their brand. But what we did was a reverse referral program.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
So I'm working on a product now and I'll just give you first. I know that some of the people at home can't see it, but we have a little metal pot instead of a plastic bottle. And this is a water bottle. What I'm showing now is glass, but we'll have a glass metal version. And this is really cool. This guy just fits into there and clicks in. Wow. And basically, you can drink your iced tea.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
You can drink your beverages. You can drink your electrolyte solution in a pod now. So this IP is coming to market later this year. It's called Capsule with a K. Nice.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
It's red for you. Yeah, good. I love it. Let's hold this up and our screens match.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
So this is about five years of patent writing and submission to the U.S. Patent Office. We have about a dozen international patents. And it's really around dispensing concentrated solution in a pod, which can be anything from coffee, tea, to electrolysis, hydration, whatever.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
it's an interesting question. You know, I, I think when you're in it and you're really in it, you're, you, you never in your head feel like you made it, even though you might be millions of people, even though celebrities might be talking about it every week in the, in the news, you never really feel that. And that's the weirdest thing. I guess now in retrospect, um,
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Seeing the impact that that kind of cooking had on such a huge amount of people and meeting kids who are now adults who were children when they started cooking and they learned to cook through Blue Apron. I can now take a step back and appreciate what we did for the food system and how much good it became of teaching a new generation to cook.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
But I think when you're really in the weeds, it's hard to really... Well, I think it's hard.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
In a new big company, it doesn't matter what you're doing. Everything is trying to break your business. Everything. In every department, all the time. I think later, once businesses are more mature, it's not so crazy. But in a growing enterprise, it's very hard to appreciate the moments. I will say the thing that we did appreciate was... And this is really important culture.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
We had such a good culture in the moments that we had, the team outings, the team events, the team meetings. The team is really the company. A product is in the company, to be clear. The team and the people are the company. Everything we've talked about today is irrelevant without the human beings behind it.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
I mean, total, I think in our peak, like 6,000. But, you know, the core folks who were like the early ride or die people, you know, the couple hundred folks who were, you know, just there for the entire time, they were a special breed. And almost every one of them today is either a CEO or COO or founder of another company.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
And back in those days, thinking back 15 years ago, we would, instead of giving the buyer a reward or a free box for loyalty, we would allow, after the second box ordered,
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
You know, as a younger person, it would be more about how and I think a lot of a lot of more mature executives say give this answer. But I think it's really true. Like, calm down, like work on your messaging, work on your communication, listen to people more. And you can still push hard and you can still, I think, drive people to be successful.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
But there are there are more effective ways of doing that than, you know, losing your temper or shouting or having things done now. Or, you know, I just think I just think communication would have been more helpful, helpful for me as a younger guy.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
I'd say look forward to Capsule. DrinkCapsule.com is going to be coming out with a K. DrinkCapsule.com is going to be the new product and we're going to change the way people reduce plastic and drink their electrolyte.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Thanks so much, Rudy. Really appreciate it. Cool. Great to be here.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
the the customer to gift three first boxes to their closest friends and on its head initially we had thought we don't really know how people are going to respond to this because it's not a selfish gift it's not something that people receive personally it's the gift of giving right yeah yeah It was fascinating because we were the first to do that, that I know. And that became a viral sensation.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
So for the first few years of the company, 80% of our customer acquisition with double digit monthly growth, sometimes triple digit monthly growth, was attributed to our referral program, which was really novel for the time.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Yeah. So if you if you think back to the days of Iron Chef and Emeril Lagasse and the Food Network's peak, when people were still watching cable or more people were watching cable, at least. There was more interest in food and food celebrity and celebrity chefs than any time in history with less people actively cooking in America than any time in history simultaneously. So I think what we have...
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
hit was the cultural zeitgeist was saying we want to do this thing we want to cook at home but because people were watching cooking on tv and not cooking at home a lot of folks didn't know how to cook so oh apron ended up being the gateway that empowered folks to learn the basic skills to chop vegetables and prepare a piece of meat and put a basic meal together with their family
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
So that was embraced. And of course, you know, the rest after that VCs and PEs jumped on that and advertising went crazy.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Yeah, so acquisition through Facebook early days was our first cohorted spend into customer acquisition. And back, I'd say, you know, in the early days of Facebook, two years in or so, we didn't really have to advertise on Facebook for the first year. After that, we started dripping spend into social engagement and spending money on CAC. That was fairly cheap at the time.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
You know, back then you could have a business selling almost anything and have, I mean, people didn't talk about ROAS back then, but you could imagine like a seven or eight ROAS, right? In today's terms.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Facebook has been smart in that their strategy as a business is to take as much money from their customers as possible without bankrupting the company. It's great for their bottom line, but it's not the sole channel to acquire customers anymore. And we need to be a little bit more educated in our span as modern entrepreneurs. But back then, we could acquire a lot of customers online.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
through Facebook. And then of course we had influencer based ads, early days of, of influencers and social engagement and paid. And then we started, you know, things like, um, you know, my heart, you know, we did Howard Stern, we did TV, we did direct mail. We really did all of the channels at one point or another. And as the company became more mature, it became clear that, um,
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Sure. Blue Apron was the first meal kit company in America providing all of the ingredients and a recipe card that allowed customers to cook step-by-step recipes at home. And we grew from a tiny fulfillment center originally in Queens doing about 20 meals or 20 customers per week to millions of meals per week in three major geographies and five distribution centers.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Without recalling exact numbers from like 10 years ago, it was very good. And, you know, our CAC to LTV ratio was excellent. I still look at that. And I think a lot of folks, you know, look at ROAS and tacos and, you know, that kind of stuff today, especially Amazon sellers. But it really all boils back down to ratios between, you know, acquisition and LTV ratio.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
And, yeah, it was very good, obviously, in the early days without a lot of competition. We had high loyalty. We had high spend on a per customer basis. And over time, you know, when there was more P.E. and V.C., anything good is going to get copied. Right. People all dumped their VC checks into advertising, in many cases at a loss, and it became a bidding war.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
I think that's something we'll have to be aware of and conscious of is, do I want to grow at this pace? Do I want to attract investment in lookalike companies? And what am I prepared to do? How am I prepared to think about not just where I am today with LTVs and CAC, but what happens if this market becomes saturated and how I'm going to address that through different channels?
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Yeah, we had various programs. We had a kids' cooking school program. A lot of our customers were parents. So in the summertime, we would do an engagement around several boxes in succession that were also learnings, kind of like a summer school cooking, where you'd plant peas and we'd set a can of soil with peas. And that one week, you'd plant them. The next week, you'd water them.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
The third week, you'd clip them and use them in a salad. So we had really cool projects like that. We had lots of affiliate stuff going on.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
However you can engage customers in a creative way is useful because those are ultimately going to be your highest value users and customers. So I love stuff like that. And I think, you know, companies always have opportunities to be more creative. And oftentimes those kind of projects and those retention strategies are, you know, are fun and they don't cost much money, right?
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
So I'd say that that's really important. The other, I think, big opportunity that a lot of entrepreneurs miss out on from an LTV standpoint is really, really good customer service because the distressed customer is really just asking to become a lifetime customer if you treat them properly. So I think having really great CX is critical for any consumer. Yes.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
It was a tornado, I've got to tell you. So, yeah, we built our first center in Queens. We very quickly moved to a fulfillment center in Brooklyn. And we were packing 20,000 boxes a week on Mounder Street in East Williamsburg. Just like we had boxes lined up on the curb. We had trucks pulling up to this little one-way street, like big semis, like on an hourly basis. And then shortly after...
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
We filled that up. I got on a plane and I flew out to California and opened up our... In year one, our first fulfillment center in Richmond, California. And then very shortly after that, a fulfillment center in Grand Prairie near Dallas, Texas. So on a weekly basis, I was chief operating officer of the company. So I was flying...
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
to California and Texas every single week as we were hiring thousands of people to run fulfillment. And the challenge was beyond just building lots of stuff that had never been built before, packing food in a way that had never been packed before. So if you go to a grocery store today, anywhere in the world, you'll find fish that's vacuum skin packed. You'll find an individual steak.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
You'll find individual chicken breasts. None of that existed. 15 years ago. So it was pretty much foam overwrapped trays. But if you put something like that in a box and you send it in the mail, it's going to leak everywhere. So we had to really like, you know, do a lot of innovation around packaging around little sauces and little, um, Small portions of spice packets, things like that.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
And in many cases had to build engineering around machines to pack those items are now used commercially. So actually, a lot of people don't know this, but much of the work that Blue Apron did in lean packaging is now used in grocery stores that you can see it in the grocery store of it in.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
We tried to. We looked at a lot of 3PLs to try to manage fulfillment for us. At the end of the day, so I'm actually, my history is in food and cooking, and I started my career as a chef before I started my first business, and that migrated into Blue Apron over the years. So for me, being a food person, the quality of ingredients was really important.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
And part of the problem with the food system is that you can buy really commoditized food and have it packed for you in scale. But the kind of ingredients that you can use in a recipe is highly, highly limiting. So that wasn't an option. If we wanted to use really great ingredients,
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
pasture-raised meats and fresh herbs and organic produce and things like that, we really needed to work with farmers and then pack those ingredients ourselves. So behind the scenes, besides fulfillment, we built an entire supply chain around 250 farms growing food specifically for Blue Apron and then packaging those ourselves because that was our only option.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
So while it would have been nice to work with 3PLs, the issue is that they're generally expensive and... If you're not dealing with commodities or basic services like shipping and packing, in food, expensive, time-consuming, you lose all semblance of quality control, and that also affects customer service and customer-oriented rock. So we did it when we built it. It was a lot of work.
Living The Red Life
How Matthew Wadiak Is Disrupting the Beverage Industry
Yeah, so everybody's seen the office and you know that there's a big separation between the office and the warehouse, even though they're in the same building. We definitely had that complex where we had our engineering side, our web product, our marketing, our big office in New York City, and then we had all the fulfillment centers.