Meal-kit delivery services have been all the rage in the past few years. Fresh ingredients delivered straight to your door, with step-by-step instructions and pre-measured ingredients. Now, anyone who might screw up the simplest of meals can look like an Iron Chef and have an amazing dinner experience at home.
And consumers aren't the only ones looking for a piece of the pie.
Plated, the NYC-based meal-kit delivery startup, was acquired by Albertsons Cos, the second-largest grocery chain in the country. Founded in 2012, Plated has had quite the wild ride leading to acquisition, including a three-month stint in Techstars' 2013 NYC cohort (disclosure: Techstars, which I founded, invested in Plated's seed round) to scoring a deal with Kevin O'Leary on Shark Tank in 2015.
I recently chatted with Plated co-founders Josh Hix and Nick Taranto about the mentors that influenced their trajectory and the formula they followed for an acquisition that will bring their business model to more than 2,300 stores across the U.S.
Brown: What methods did you use to break out in a crowded market?
Taranto: Continually enhancing the customer experience has always been at the core of everything we do. By leveraging data and technology, we've been able to differentiate our product. To achieve that, we focused on attracting the best talent out there--that has been critical to our success and is advice I'd give early-stage startups.
Was acquisition always a goal for Plated?
Hix: Acquisition was never the goal--I believe that if you start a company with any goal other than solving a real problem and impacting the world, you're stacking the odds against you (and they're already long odds!). This partnership was the best way to continue making progress against our original vision.
What was the process for acquisition?
Hix: From day one we thought that retail would be an important part of achieving the vision, and so the question was whether we'd attempt to build retail stores (which we've seen other digital first brands like Warby Parker do) or whether we'd partner with an existing retailer.
We started exploring relationships about four years ago and had some very structured thoughts about how a partnership would need to look in order to go forward with one. When we met the Albertsons Companies team, it quickly became apparent that we'd found the right partner. Our partnership was the outcome of a long, deliberate process years in the making.
What were your mentors' role in the acquisition?
Taranto: Kevin [O'Leary] has been a great supporter of our brand and has offered valuable insights and recommendations over the years. We were honored to be a part of the Techstars NYC class of 2013. The opportunity helped validate that we were onto something great that had real promise. It gave us access to their amazing network of investors, fellow entrepreneurs and experts to help us make the all-important contacts to move our business forward in its early days.
Does it matter where your business is located--was New York a key to the acquisition?
Hix: At the start, we needed to be in NYC to raise venture money and to tap into the culinary scene in New York. Over five years we've built an amazing team here in NYC, and this will be our home for the foreseeable future.
What is the most difficult part of starting a conversation (as a startup) with a business the size of Albertsons Cos?
Hix: Simply rising above the noise--with their size and scale, food companies of all stripes are interested in exploring opportunities to work with them. One of our investors, Drew Oetting at 8VC, had a great relationship and made an introduction. From there the Plated and Albertsons Co's management teams clicked--they were the first grocery chain we met that shared our vision.
What advice would you give to startups who are looking for corporations to take them seriously, or buy their services/products?
Hix: I'd say that focus is everything--no business can do everything, and the advantage startups have is doing one thing really, really well--if you try to do everything, you're not valuable to a larger company or to your customers.
What advice would you give to a founder who has a goal for acquisition?
Taranto: The goal when we started wasn't necessarily acquisition. We chose acquisition because we found the ideal partner in Albertsons Cos. We've been successful because we've had a laser focus on our customers and building the best possible product to serve them in a way no one else can. When you create a best-in-class product that has a differentiated business model, you'll be uniquely positioned to add value to other companies.