Dominik Richter, HelloFresh - NOAH15 Berlin

Hi everyone, my name is Dominik Richter. I'm the founder of HelloFresh, a company I hope most of you have heard of. If you haven't, I'm not mad at you because we've been avoiding the public eye pretty much for the entirety of our company's life. But we've done a couple of pretty amazing things over the years, and we're just getting started. So I think it's time to get a bit more open and tell our story to the public as well.

Before I tell you what we do right now, let me kind of read out the vision that we have. If I find the clicker, you got it. Thanks. So our vision is to really build a global, truly global consumer food brand. Our vision is nothing less than to establish a wholly new and massive category on the grocery market. We want to give every household the opportunity to enjoy home-cooked meals without all the hassles associated with it. We reinvent weeknight dinners by disrupting the traditional food supply chain, allowing us to provide you with fresher, better, and more affordable meals delivered to your doorstep at the most convenient time of the week.

If you know what we're doing and you compare that to our vision, you will realize that we're probably like 20% where we want to be. But nonetheless, if you look at the traction we've experienced so far, it's already a business model that resonates extremely well with a certain set of customers, and we're constantly innovating to enlarge the addressable market that we have. One of the reasons why I think HelloFresh is really in the prime position right now is because we operate on the largest category that you have in retail, which is groceries. If you combine fashion, travel, and like five other big industries, you're nearly not anywhere near the size of the grocery market. It's the largest household expenditure for every single household in the world apart from mortgage or rent, and it's not going away.

So basically, if you look at how we've developed over the years, you can see that we started out pretty slowly, experimenting a lot, really finding out what customers like, and then once we found the right business model, once we found the right levers, really push the gas pedal. So right now, we're delivering close to 1 million meals per week. That's basically feeding a whole small town, everybody basically eating from us. On the one hand, that's a lot; on the other hand, that's pretty little given that we're active in seven different geographies, some of the most mature e-commerce markets in the world — the US, Germany, the Netherlands, the UK, Belgium, Austria, and Australia. So there is plenty and plenty of room to grow, and we're just getting started.

What we do right now is pretty much — not very different, but very much in the beginning of our vision. Right now, it all basically consumers opt in each week. They subscribe to a plan that fits their household size, that fits their need for the number of meals they want to have, and then basically we deliver everything to them on a weekly basis, catering to their dietary preferences. What we've done so far is really built out a highly efficient operations and logistics backbone, and I think that's actually very, very hard to copy and very hard to imitate for anyone that wants to compete with us. We can fulfill at lower cost, we can get the stuff much, much quicker than anybody else to you, and we're investing a lot in technology and operations to basically sustain that competitive advantage.

I very briefly touched upon the market before. There are some more stats around that right here. Like I said, we're active in seven countries, seven of the most mature e-commerce markets worldwide, and the global food industry only in those markets is over two trillion, of which basically groceries constitute about one trillion. If you look at our penetration rates, they're less than 0.1%, often less than 0.01% of all the households that we can penetrate. So there is loads and loads of room to grow in our existing markets. That's basically what we set out to do — we want to enhance customer proposition along a lot of different dimensions, from faster times to actually get your meals to more choice, to basically being able to really offer you narrow and well-defined delivery windows of 60 to 90 minutes.

In some of the metropolitan areas that we operate in, you already have a model like that. Take London for example: you can order, you get your first box two to three days later. That box is basically a selection from a menu of ten meals, you can choose three or five, you can get it in a 90-minute delivery time window. We've built out our own last-mile logistics services that really enhance customer proposition once again by basically having someone with the HelloFresh van handing over the package to you, allowing you to cook really good meals with your spouse or your family. So like I said, we still feel that penetration rates are very low, adoption rates are very low, but we're investing a lot to change that.

The game plan to get to where we want to be leads via increasing penetration. If we only managed to increase penetration from the very low levels where we are right now to some more like we see in much more developed markets for that model, like Sweden, you sit in a company with a revenue potential of more than 10 billion. It's about increasing retention in the end. For us, it's all about customer satisfaction. That means every week, customers can cancel, can skip, can basically say, 'I don't want your box next week.' That means every box that we send to the customer is another chance for us to impress the customer, but at the same time, a possibility to lose the customer. So we really need to put a lot of resources, a lot of our best people, on making sure that the box experience, the box opening experience, the recipes, the quality of ingredients, etc., is really high and that you are not going away disappointed but keep ordering our boxes. We actually do have pretty amazing retention rates in the sense that once people actually get into the habit of subscribing to our plans, there's very little drop-off. Why is that? It's basically because it's a lifestyle choice for those three or five times per week where you can commit to cooking at home. We really want to offer the best solution, the full-service solution, to making that best experience possible for you. Rather than thinking about what you want to cook, rather than thinking about where you're going to get this stuff, how much you buy of it — that's all the parts that you can outsource to us, plus all the delivery and the convenience associated with it.

Right now, like I said on many occasions, we're only targeting a small number of the total addressable market. But when I compare that with how we started, then we've already made a huge leap forward, and we continue to innovate week over week over week. I think one of the biggest mistakes that you can do when evaluating a new business model is basically saying, 'Hey, what the guys do today is what they're going to do in one year, in two years, and three years.' I often like to compare that to an automobile manufacturer or a computer manufacturer that brings out a new series of its products every few months or every few years. For us, that's basically every week, every two weeks. We improve the whole experience that you have with HelloFresh, and we basically get a new version and send it out to you. So there are a lot of people that have been with us for a long, long time, and I think they can best testify to that — that we constantly try to innovate and try to make the service better.

By building up that massive subscriber base, that's point three on here. We really have the chance to up- and cross-sell to a highly relevant socio-economic demographic. That basically means if you look at our customer base, it's the 30 to 50 year olds, those people that have a certain predictability in their life, that can commit to cooking three times, five times per week. For those guys, we really want to make sure that there's no reason to shop for these weeknight dinners anywhere else but HelloFresh. The way forward for us is really to say we want to innovate in the sense that we want to offer it at different price points, we want to offer it with more choice, with more delivery options, and basically in that way really drive scale, really enlarge the total addressable market. That will allow us to get to an even more profitable model than we are right now. Right now, the margin on each box is pretty amazing, and with each box more that we sell, and you've seen the growth curve from the beginning, that only helps us to achieve more scale.

To sum up, I think with HelloFresh, what we're tackling is a huge opportunity in the last area of retail, the last area that hasn't undergone the transition from offline to online — it's the grocery market. And I think we're really the ones in the pole position to capture that market opportunity in full size. Thanks.