A few months back around December of 2011, a couple of guys felt the rush of adrenalin when they bumped into what seemed like a really exciting idea. The result was the birth of Yo! Potato, a food delivery service that lets you order food from ANY restaurant you want and not bother about minimum order or any other limitation. For the first time, we felt we gave the "ease" for people stuck with Pizzas when their taste buds are craving for something from that small Chinese restaurant in the neighborhood.
We were true to the principles of Lean Startup by not wasting away any time in setting up anything other than what was just required to get started. We setup a landing page in a day with the help of Kickofflabs and announced our launch in the most humble way on social media. The first month was mostly the 2 of us taking and delivering orders. We did just 17 orders. We kept growing and we crossed 900 orders last month alone. Some of the top celebrities used our service and we felt loved by everyone. We have received over 15 franchise requests in less than 3 months since our launch. People loved our blogs and newsletters. We were living our dream. The response was overwhelming. We got featured in all the top news dailies.
Many of our customers valued our service so much so that they suggested we charge them so they can order for even a cup of coffee, guilt-free. We did that with 30 days free trial in July and the response has been more than good so far. And then something happened. We ran out of money. We hunted a few friends who pitched in some but they dried up as well. All the VCs we talk to have just one thing to say - "It's too early for us to participate". We couldn't find many angels and the ones we met were not as aligned to our vision as we hoped.
Now, the reason I am writing this is to reach out to all of you and take possible connections to angels who might find Yo! Potato interesting enough to consider investing. Also, we are consider raising small amount of money from a bunch of interesting people like you. Though our fund requirement over 2 years is between 1-2 Cr, we can do with small chunks to keep us going from one milestone to another. Our current burn rate is around 2- 2.5L.
Pls do get in touch with me if you can contribute. My email is firstname.lastname@example.org. Thanks for taking the time to read this.
all the best!
What is your long term business model though? Are you taking a cut from restaurants apart from your customers? Not really responding to your request but want to get more insight.
The long term business model is multi-stream revenues. Kickbacks from restaurants, subscription fee from consumers, Ad revenues. We apparently envision to make Yo! Potato an end to end solution for food ordering.
I know somebody who is doing something similar in Mumbai.. Will try and talk to him to share some experience and advice on Angel money..
Appreciate it, Vijay. Any help will be appreciated!
The lean start up concept is designed to find a business model for which customers are willing to pay, in this case a major part of the business model i.e revenue, profit seems to be missing, you need to pivot and find a way which generates money, you may not need a investor rather investors would be queuing up when you find a profitable business model. I am sorry but what you have done cannot be considered a lean startup yet.
Thanks for the response. We apparently did follow lean startup and pivoted the major part of the business, the business model itself. When we started Yo! Potato, we made a "leap of faith" assumption that restaurants will see a lot of value in a service like this and will be happy to share healthy margin with us for helping them with more orders and also delivering them. That didn't happen. The competitors apparently seem to keep dragging each other into a price war and the restaurants seem to go with the one who charges the least. On the otherhand, our differentiators are well developed with the consumers since no one offers benefits of unlimited choice and no minimum order which really does make customers' lives so much more easier. We quickly realized the need for a pivot. Price and profits are proportional to the perceived value of the service and that apparently seems to be resting on the consumer front in our case. So, we radically changed the model and used the customer order data for the past 6 months when the service was free for consumers and have arrived at price points. We have done quite a bit of customer interviews and NPS to get there. Another example of our lean startup application is the number of split tests we have conducted just to optimize our landing page. We have iterated more than 26 versions of it before we ended up with the one that's getting us the best results.Not that we are desperate for the "lean startup" label but we are definitely serious about what we do and how we use lean startup tools.
Thanks for the read and response.
I saw your facebook page which does say you have a good fan following, and i am sure you would get a investor soon, however just wanted to give a feedback which i hope you would take constructively, when you did the iterations i assume you were not charging people, this is a mistake because if the iterations are not showing how your sales is varying it is not of much use, because your life line or blood is cash and you need to measure it, the lean startup model says you need to find a model which makes money, you may have got users but not bulk customers who pay. Another thing is about the "leap of faith", we should take leaps of faith but the lesson here is, your leap of faith here could have been verified without burning any cash, you could have simply asked the restaurant owners as part of your research :-)
Thanks for sharing your views, Sujoy. It took us 6 months to realize the need to change the model. Partly, because of the reaction from the investors. Left to us, we would still continue with our earlier model of only getting paid from restaurants, solve problems for huge number of people and then add layers of innovative features to it for further monetization and be the market leader. But, that kind of an attempt is not necessarily appreciated by investors who need more concrete plans to believe and see money coming in.
Having said that, it is crucial for us to foresee things, identify what we metrics to track to take a call on the model and further iterate or pivot. Thanks for the inputs!
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My rough math is you are spending Rs 225/= for every order delivered.
What has been you rate of growth M-O-M on Order volume ?
What is your average order size in Rs ?
At Present, your burn rate is way too high for the order volume. Unless, anyone knows how you are going to bring it down, it would be unviable as a business.
Will be happy to send you some details on the numbers if you provide me with your email ID. Mine is email@example.com. Appreciate all the support!