Which one has more growth marketing or HR
HelloFresh CEO: "After the IPO, I had to force myself not to look at the price"
It is one of the most impressive German start-up stories in recent years: Almost exactly six years after it was launched, the Kochbox startup HelloFresh goes public in November 2017. Despite gloomy forecasts and problems with US competitor Blue Apron, the Berliners seem to be on the road to success - with record sales of 902 million euros in 2017 and a current market capitalization of over 2.1 billion euros. In the new OMR podcast, founder and CEO Dominik Richter explains what effects the crisis is having on the competitor from the USA, how the marketing strategy has changed and why Germany cannot keep up with TV advertising in an international comparison.
We recorded the episode with Dominik Richter - like some other exciting ones - last week during the OMR Festival 2018. Since host Philipp Westermeyer was busy here and there, friends, colleagues and experts from our network stepped in for him and held the talks. In this case it was Erik Siekmann, managing director of the management consultancy Digital Forward.
"In the short term, it definitely hurt our public perception that our competitor in the USA was not doing so well," says HelloFresh founder Dominik Richter in an interview with Erik Siekmann. What is meant is the listed company Blue Apron, which is struggling with falling sales, declining customers, high customer acquisition costs and a significantly falling share price. Operationally, however, the Berlin company was able to benefit from the difficulties at Blue Apron last year, especially in the USA. “We used the time to catapult ourselves to the top of the market there. If we talk about it in three years' time, we will definitely rate the phase as very, very good, ”said Richter.
Regular podcast guest Sven Schmidt has often dealt very critically with the Kochbox business model in the past. High logistics costs and a customer churn rate that is hard to get under control would make it very demanding (Podcast # 101, October 9, 2017). After the negative development of Blue Apron, the VC expert even went so far as to advise against subscribing to HelloFresh shares (interview, October 26, 2017). Although HelloFresh, contrary to his initial assessments, dared the IPO and the share price development has been positive so far, he recently stuck to his judgment - and does not believe in the long existence of the business model (Podcast # 119, January 31, 2017).
Record sales at HelloFresh
Dominik Richter's confidence, on the other hand, is likely to come from the latest figures published by HelloFresh: Almost 40 million meals were delivered to 1.5 million customers and generated total sales of just over 900 million euros. Reaching the breakeven point is targeted for the fourth quarter of 2018. And a few days ago it was announced that the Berlin-based company was taking over the US competitor "Green Chef", which has sales of around 15 million US dollars per quarter.
Achieving rapid growth with a product that was completely new a few years ago and therefore requires explanation, such as cooking boxes, of course requires a not inconsiderable marketing budget on the one hand, but also very precise analysis and control of the individual channels on the other. “In the first few years we were extremely resource-limited - and only ever had enough money in our account to survive the next six months. That is exactly what made us better, ”says Dominik Richter. The initial shortage of money meant that people have always worked extremely data-driven and analytically. The HelloFresh founder explains: “We don't make any distinction between Upper Funnel, Lower Funnel or Brand. All channels have to pay off in a performance-oriented way. "
From vouchers in Amazon packages to paid social and TV
This requirement also applies to vouchers as a package insert; a channel that HelloFresh played intensively, especially in the early days. Dominik Richter: “We had discovered that we could reach our target group almost one-to-one with very low CPMs - and scaled it aggressively accordingly. That was an extremely important channel in the beginning. ”Today HelloFresh still uses this type of direct sales, but the relevance of the channel is no longer that great.
“There was no paid social in 2012, or it was still very early,” says Richter. "Vouchers are still good, but today we are better known and we are more represented on Facebook and generally in paid social and podcasts." TV advertising is also important, but it depends heavily on the country in question: "Germany is in the field of TV advertising rather a bit afterwards. It is relatively difficult to determine whether someone has really seen your spot or not. "
In the new OMR podcast you can hear what strategy is behind the current marketing mix from HelloFresh, what Dominik Richter's attitude to influencer marketing is and how the teams in Berlin and New York work together.
Our podcast partners:
A partner that we valued very much even before the festival phase, but only noticed during that time what a top mattress can do: Casper. They are guaranteed to be familiar to regular listeners to the podcast. The mattress was voted Best Invention of the Year by Time Magazine in 2015. There is only one model in different sizes and a right to return 100 days and nights (so enough time to try it out) - buying a mattress really couldn't be easier. In the OMR office, more and more colleagues are dreaming on the Casper mattress. Just give it a try. For all readers and listeners there is a 50 euro discount with the voucher code “OMR” on casper.com/omr.
The colleagues from CrossEngage deal with one of the most important marketing topics of these days: Customer Relationship Management (CRM), i.e. the question of how to keep existing customers without constantly having to win new ones. For this purpose, they have built software that links various data sources with one another - and ensures that the right message is sent to the right target group at the right time on the right channel. Customers include Deutsche Bahn and - to be precise - HelloFresh. If you want to convince yourself of the tool, just write a short email to us and we will bring you together.
Our third podcast partner today: the used car marketplace hey car. There all vehicles come directly from the dealer, are no more than eight years old, have a maximum of 150,000 kilometers on the clock and are therefore all eligible for a guarantee. There is also a decent customer service and options such as the trade-in of your old car. And if you're not looking for a car - maybe you're still looking for a job with an exciting startup in Berlin? hey car is still looking for employees in sales, online marketing, business development, design and HR! Apply here and step on the gas!
At the end a little reference to a colleague who was also our guest on the podcast: sports journalist and entrepreneur Oliver Wurm. In keeping with the upcoming soccer World Cup, he is once again publishing a special issue called “54-74-90-14” - and can still use a little support to make it happen. Supporters will then be named with their logo in the finished magazine and will also receive 100 issues. Strong deal, strong project. Curious? Just write an email to Oliver.
All topics of the podcast with HelloFresh founder Dominik Richter at a glance:
- Dominik Richter was at the OMR Festival for the first time. What was his impression like? (from 02:50)
- He did that before HelloFresh was founded in 2011 (from 03:30)
- What are the rumors that Dominik Richter was a professional soccer player and actor? (04:50)
- That is why the HelloFresh founder describes his WHU studies as a turning point in his career (from 05:50)
- After Dominik and co-founder Thomas Griesel had a look at the Berlin startup scene at the beginning of 2011, the first concrete plans for HelloFresh were already in place in late summer (from 07:00)
- This is what the founders learned in the first six months after the first delivery at the beginning of 2012 (from 8 a.m.)
- HelloFresh started with a small team as a test on the east coast of the USA at the end of 2013 (from 09:00)
- How did the company achieve almost 600 million euros in sales in the USA in such a short period of time? (from 10:15)
- This is how the group of shareholders of HelloFresh has developed since it was founded and during the first growth phases (from 12:45)
- After the IPO in November 2017: This is how much HelloFresh is currently worth (from 2:10 p.m.)
- Therefore, the IPO did not go as planned in 2015 - and still provided valuable learnings (from 3:20 pm)
- How difficult was it not to lose sight of day-to-day operational business during the phase of roadshows and investor relations? (from 18:50)
- The tasks and subject areas within HelloFresh and the management team are structured and divided (from 9:15 p.m.)
- How much was Dominik Richter aware of the complexity of HelloFresh's business model before it was founded? (from 23:00)
- HelloFresh is currently shipping this many dishes worldwide (from 25:00)
- How strong is the competition from HelloFresh? And in which market is there the most competition? (from 26:30)
- Therefore, the IPO dilemma of US competitor Blue Apron also had negative effects on HelloFresh, especially with a view to public perception - but in the long term, Dominik Richter believes in operational advantages (from 27:30)
- How does HelloFresh fare in a margin comparison with the competition? (from 29:00)
- Dominik Richter expects these consequences if Amazon should also enter the Kochbox business (from 30:30)
- What marketing measures did HelloFresh use to explain the as yet unknown product in the start-up phase? (from 34:30)
- What is the marketing mix like today? (from 37:30)
- How the efficiency of TV advertising differs in different markets (from 43:00)
- Regardless of which channel: Every marketing measure from HelloFresh has to pay off in a performance-oriented manner (from 44:30)
- According to Dominik Richter, what does HelloFresh's purely digital marketing mix look like at the moment? (from 45:40)
- Does HelloFresh work with agencies? If so, in which areas? (from 47:45)
- Berlin and New York: This is how the HelloFresh marketing teams work together (from 48:50)
- That is why HelloFresh relies on a cross-border uniform tech, data and tracking infrastructure (from 51:40)
- This is how Dominik Richter and his team convince marketing talents to come to HelloFresh - and these are the differences between Berlin and New York (from 52:40)
- According to Dominik Richter, how will the fight for tech and marketing talent develop over the next three years? (from 58:15)
As always, you can listen to the current OMR podcast on Soundcloud, iTunes (if the current episode is not yet visible, just subscribe) or via RSS feed. You can also find us on the Spotify, Stitcher and Deezer platforms. And - ALL NEW! - we are now also available as an Alexa Skill! Have fun listening - and thank you for every positive review.
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