Each month, we’ll interview the founder(s) of a portfolio company we have been fortunate to partner with and provide you with insights into how they started their business, their motivations, some of the challenges they have encountered, and how their business is run. The first interview in this series is with Paul Tory (Co-Founder & CEO) and Josh Goulburn (Co-Founder & COO) of Foodbomb and Eric Tran, Associate at Aura Group in the Venture Capital team.
Paul Tory and Josh Goulburn
Foodbomb is a digital marketplace connecting food service businesses to wholesale food suppliers. The platform streamlines the procurement process for the food service industry while integrating seamlessly into existing workflows and operating systems.
Paul: The problems we’ve identified in the industry all relate to the antiquated ordering process between venues and suppliers. For venues, the challenges include managing multiple suppliers across multiple disconnected channels such as email, phone, fax, text, etc., lack of pricing transparency, the need to manually contact suppliers to compare prices, and the overwhelming load of administrative paperwork.
From the suppliers’ perspective, the challenges include aggregating and managing the orders received through multiple channels, working on debilitating credit terms that have historically subjected them to poor working capital cycles and inherent bad debt issues, and optimising their costly sales and payment recovery functions.
The ‘aha’ moment for Foodbomb came from my ringside perspective of all these problems having built and sold my own wholesale meat supplier business and later, operating an online home meat delivery business that often fielded requests from food services looking to order wholesale online.
Paul: What gets venues excited about Foodbomb is the platform’s ability to streamline the venues' ordering process and drive greater efficiencies to their business. By accessing our platform, venues can choose from over 100 wholesale suppliers and a catalogue of over 50,000 products across 14 different food categories and manage their entire kitchen operations via a single checkout. They also benefit from the buying power that comes with being part of a buying group of over 3,000 registered venues. Also, venues are very excited about our ability to deliver deeper operational insights through our reports and provide additional opportunities to automate workflow through our integrations with point-of-sale and accounting systems.
For the suppliers, whose greatest challenges include acquiring new customers and limiting bad debt, Foodbomb serves as a hyper-targeted digital channel that not only drives them leads but also paid orders where payment is guaranteed. With Foodbomb, bad debt is a thing of the past. Suppliers love us because we can help improve their cash conversion cycles, reduce resource needs for payment recovery functions and enable them to divert resources towards winning new business.
Josh: A couple of points to add to the venue side of things, I think the power of having pricing transparency is extremely valuable for an industry that has traditionally operated in opaque settings. The ability to log in, search ‘avocado’ and get an indication of where avocado pricing is at across the board from 10-15 suppliers is super powerful. Also, the ability to source new suppliers. It’s just not easy these days to source new suppliers for venues that are opening up. So again, the ability to come on one platform and source specialised suppliers in every category is a proposition that has resonated with venues.
Paul: The first milestone was in 2018, we won the StartupSmart Award as part of SmartCompany’s annual Smart50 Awards. This was ahead of 70 startups in Australia while we were only a year into our journey. It was a big event in Melbourne and we were the only company that didn’t show up. We didn’t think we had a chance! They kept calling us, asking if we were going to fly down for the evening but wouldn’t tell us if we’d won or not. It just wasn’t within our budget at the time to go on a brief holiday in Melbourne. So that was a cool bit of recognition in the early days.
Another proud milestone was raising our first institutional funding round from EVP (Equity Venture Partners). It was super exciting and later having Aura join the ride late last year serves as ongoing recognition of what we’re trying to build at Foodbomb.
I think launching in Melbourne and the ease at which we launched is what stands out to date. Obviously, we weren’t aware that COVID-19 was going to put a big dampener on that, but the ability to ring suppliers in another state and achieve almost 100% uptake was a big moment for us as it demonstrated that we could replicate Sydney’s playbook for entering a new market efficiently to achieve both depth and breadth which is important for a hyperlocal marketplace.
Josh: Another aspect of the business we’re really proud of is the super strong team we have today and the retention rate of the talent we’ve found, which has been amazing. We’ve had people with us for three years now. Our first engineer and BDM are still with us, and we now have a team of 25. We make a point of celebrating milestones as a team such as one-year anniversaries or two year anniversaries.
Josh: When COVID-19 hit we were suddenly forced to take stock of where everything was and work through a range of permutations caused by the crisis before we could move forward. We’d anticipated that the likely restrictions would involve limiting the flow of people and their ability to interact as carriers which meant disruptions to the food services industry and to our B2B model. But we realised there was an opportunity to launch a direct-to-consumer solution to address the initial problems around supply shortage and accessibility for households. And so, within 24 hours of conception, we went live with the direct-to-consumer product which ultimately proved to be a good decision as it helped offset almost all reduction in B2B sales and allowed us to maintain our momentum.
From a B2B growth perspective, which we remain focused on as our core business, it continues to be about remaining agile. This means staying on top of the latest timelines on restrictions, planning how we will operationally ramp things up in reopening markets, and how to execute our strategy in front of our ideal target market.
Paul: And while B2B sales have been negatively impacted in the immediate term, I think COVID-19 will be a positive factor in accelerating the industry’s understanding of what Foodbomb’s value proposition is. What we’ve started to see are venues running smaller teams and business owners working more hours which has led them to look for ways to optimise procurement, administration and being more price-conscious. On the other side, a lot of suppliers face the reality of possibly losing their businesses overnight as receivables are suddenly doubtful and they are left without means to access households without platforms like Foodbomb.
Paul: Always product-focused! We believe we are going to win by having the greatest product we can offer and the greatest value to our venues so that price continues to become a lesser determining factor. Our goal has always been to embed ourselves so heavily in the lives of both venue and supplier that they can’t live without us and I don’t think that has changed throughout COVID-19. An example of this in action is having our product managers and designers spend more time with venues to figure out how they use the platform and what they want.
Josh: That’s right and as far as principles go, we are keeping it super simple. We’re not over-engineering this. We always look across the board and try to understand how each of our growth targets can be impacted by each function which then helps us build the process structure and strategy for each function. It is an iterative process of adjusting, refining and reviewing.
Josh: Yeah you are 100% right there. Culture is definitely important to us and we’re still young so I can’t say it is clearly defined yet. It’s a work in progress and we hope to deliver the next iteration to the team over the coming months. But it essentially starts from our set of core principles that we don’t waiver from which then goes to underpin our recruitment strategy. For us, this means that we want to onboard amazing people that can add a lot of value to the company, both in performing their duties but also contributing to a culture that drives engagement and promotes productivity.
Paul and I always talk about culture using the analogy of a high-performance sports team where if everyone understands their role and does their job to the best of their ability, then as a whole, the team wins. That means needing everyone to understand what worked, what didn’t work and constantly seeking to improve at what we do.
Paul: As Josh said, we’re putting together a presentation on company culture which is largely aspirational and with the end goal in mind. We understand that culture is like concrete. When first laid out, it is malleable and can take many shapes, however, after time it will harden and becomes very hard to change. So we are being proactive to ensure that by the time the team triples or quadruples in size, we will have defined a winning culture.
Josh: This is a very interesting question because the commentary right now internally is around where we are today and where we want to be. And I feel like for the last couple of years we have been sprinting so hard to try and raise funding and to try to build the team and now that we have the core foundations in place, we’re able to take a step back and assess where we need to be.
Being a product-led company, we hope to transform the product from its current form which is largely a comparison site with a bunch of other key transactional features around it into an order management tool that, as Paul mentioned earlier, is so heavily embedded in the lives of venues and suppliers that they can’t live without us. And in terms of the broader vision, we feel that we can truly disrupt the industry in Australia and have a national footprint with strong penetration in the key domestic market but also believe that our product has global applications and would hope to have made inroads into key international markets.
Paul: Yep and we want such a significant share of Australian venues on the platform that as a supplier you simply must be on Foodbomb. You know if you are not on the platform and your competitors are you will lose market share. We have seen that play out in other B2B marketplaces where, as a supplier, you need to be listed and you need to be aggressive. An example would be Webjet, where you’re an airline, and if you’re not on Webjet then you’re losing flights to other players. Or if you’re a hotel group, and you’re not on HotelsCombined, then you are losing market share. We are already at a point where we are getting suppliers calling up telling us they are losing business to Foodbomb and wanting to join our platform, so we are heading in that direction. We just need to do it faster!
To learn more about Foodbomb and their mission to streamline the wholesale ordering process visit the Foodbomb website.