In just over two years, meal-kit delivery startup Blue Apron has grown to become one of the most promising subscription-services companies in the U.S.
The business has continued to grow at a fast clip since attracting a $500 million valuation last May, opening a fulfillment center in November that is 10 times the size of its previous facility. Today, Blue Apron is delivering more than 1 million meals per month to customers across the country--up from zero when the company launched in August 2012.
Inc. recently spoke with founder Matt Salzberg about his vision for disrupting the food industry, and why he thinks Americans' hunger for subscription services will continue to grow. Below is a lightly edited version of the interview.
What are your plans for growing Blue Apron in 2015?
We just launched an integrated marketplace, so that when consumers are cooking our recipes at home they can also use the same cooking supplies that the staff in our test kitchens are using. The second big initiative we just launched is a family plan. Our first deliveries went out last week. It's something specifically designed for families, so recipes portioned for a family of four people. We think it's an approximate doubling of our addressable market.
Had you previously seen demand for a family-sized version of your core product?
We've already seen huge demand for the family product. A good percentage of our new signups are selecting the family plan because it's just a better fit for their lifestyle. It's a slightly different market, but it's the same core product and we're just designing it to fit better to families.
How do you approach the decision-making process when it comes to sticking to your core competency versus expanding into other areas?
With the marketplace, we think of that as part of our core product, which is, how can customers be as successful as they can be in the kitchen cooking our recipes? So that was a part of the experience that we didn't control that we needed to control, that we think is really important. When you're going after one of the largest markets that exists, which is groceries, you should be really focused, because you don't need to be everything to everybody. You want to be able to do what you do really, really well. That will allow you to scale more effectively.
Has Blue Apron had to combat "subscription fatigue," where consumers get overwhelmed by the rapidly growing number of companies offering subscription services?
We have very high retention dynamics, and it's very stable and predictable over time, so I think it depends on what the product is. It isn't about the subscription. Certain products are perfect fits for the subscription model and other products are not great fits. The fatigue is just emblematic of your product not being a good fit for that model, and if you have a really good fit, there won't be any fatigue.
You've said that the food system in the U.S. is built around getting food to grocery stores, not people's dinner tables. Does that represent a significant challenge for Blue Apron in the long term?
The entire grocery supply chain system is so screwed up today. There are a lot of components in the chain along the way, with a lot of middlemen taking a cut at each step. Beyond that, there's no end visibility into the customer, which results in a lot of waste and perishability of food that contributes to higher costs to customers. The challenge is showing people and educating them that buying food from Blue Apron is better for them from an experience perspective, a convenience perspective, a cost perspective, and a quality perspective than going to your grocery store. It's always difficult to get people to change their behaviors and try something new, even if it's better for them.