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.
Just curious about a few things which a potential investor might ask.
How is current burn rate of Rs 2.5 broken up (or what does it comprise of )
Are you now charging all customers or do you still have a free plan ?
Is the pricing in your current plan(s) operationally break even ? E.g. if you charge Rs 100 and are losing 10 bucks per order, then the problem potentially grows as you scale.
Are restaurants offering you a commission for deliveries ?If yes, how much ?
How many people do you have for deliveries and the average no of deliveries per person / per day ? Also how many in management and how many in operations.
What's your delivery model like ? Its it a hub and spoke where your delivery person goes from your office to a restaurant(s), picks up the order, delivers it to customer(s) and comes back to office. And Repeat.
Or is it a star model where the delivery guys are based around different restaurant clusters, orders sent to them and they pick up and deliver to customers
Your current website is pretty basic ? How much of an investment do you see happening in technology in the near future ?
If you aren't comfortable disclosing details in a public forum, you could probably send me an email at email@example.com
I have sent you an email.
Sent you an email. But to echo whats the common thread on the comments thread, is there a revenue model to get profitable off?
Also, have you considered memberships and offering a percentage of their memberships as a discount? Or charging a service fee to deliver?
Or to tie up with home-makers / house-wives who can become your kitchens? that saves you money from restaurants and offers you decent margins as well. Devise a menu and deliver within a neighborhood. Just need a cycle and a delivery walla and lots of phone followup.
happy to speak further.
I am sorry if i am being some thing rude . My Main thing is this " And then something happened. We ran out of money " because let me tell you few points
1) you are good with numbers
2) you are good with market strategy
3) you are good with customer and increase in customer level
if you are good with all above then y suddenly something happened and you lost all the money.. rather you might tell us what the wrong strategy lead it to empty the pockets or what ever the wrong finance you gone through that collapsed your earnings?
You can up with scratch and built some thing and lost the finance and look for some other money like VC or angel or what ever and if tomorrow the same thing happens the you respond like the same " And then something happened. We ran out of money "
My straight question is.. if your strategy is not good then you might collapse at early days of business but you came across good orders, good volumes, good customers who might give you more for small items like coffee etc etc then suddenly what happened? is it miracle or with bad strategy you followed and not willing to expose to people ?
Thanks for asking those questions. When we started Yo! Potato, the model was a bit different. We were going to make a lot of money from restaurants and keep it free for consumers and wow them. We eventually realized that wasn't going to work for various reasons including price wars which was going to get worse as more entrants come in, less differentiators between players from restaurant's point of view, etc. The plan in the first few months was to understand the customer ordering pattern, figure out the top restaurants most orders go to, partner with them, make loads of money from those orders. But, since we offer customers to order from any restaurant, there's always going to be a lot of restaurants they want food from that we don't make money. Hence that model could have worked only if we get higher kickbacks from restaurants we partner with to compensate for orders that's not going to make us money.This we figured was not going to happen from restaurants anytime soon.. The current model charges customers but retains all the differentiators consumers value. Since the new model fell in place only in July, it is going to take us a few months before we will see serious money.
Hope this clarifies.
Thats inclusive of everything Rohit. The burn rate just for COGS will be around a lac. We have 10 riders, 2 order takers, 1 Business manager and 2 promoters. Thank you.
But you recover the COGS, no? I mean when people get the food, they pay you, right?
So the real burn rate is 1.5 lakhs? For 10 riders I assume it's like 8k pm or such, and the rest as establishment cost.
Next, math on orders. 30 days in a month, 10 riders, 900 orders p.m. = 3 orders per rider per day? Even that is likely to be something concentrated on weekends etc. That's very very little, no - why do you even need 10 riders? (Just something to think about)
Third, riders use petrol bikes? That's gotta cost serious moolah. Why not use lunas/mopeds, or even bicycles (if you're local)?
Let me be blunt. I think you're way outspending and you're way early in the process to get large funding, so it has to be a personal thing (i.e. someone trusts you, likes you and will fund you). For that, a forum like this will have stupid guys like me who keep poking holes, and which is not of great help to you. Let me assume that you find a godfather and get money, and offer you some suggestions instead.
a) Get to a location where there are small offices and offer lunch menus of local or other restaurants (non ala-carte) in a simple one pager, for delivery. Avoid shops or large commercial complexes which have their own caterers.
b) Offer to pick up lunch dabbas of people in offices.
c) create custom "specials" of popular restaurants and offer them on your web site, a different one each week. Like a biryani special including a side dish and coke, with a 1, 2 and 3 item types.Hopefully if the demand improves the restaurant will find it meaningful to give you a piece of the pie for the business and the pre-planning.
d) Get fundoofied containers on the cheap through mass production. Use them instead of restaurants, hopefully get them to pay you. Sell advertising on the container.
e) When you know you'll lose money, refuse the business. That's the real lean thing about business.
Hopefully, this is of some help. Sorry for my bluntness. That's how I am.
If I might, what is the role of the business manager?
We were providing the service for free for consumers till Jul which got us a lot of traffic so much so that we even had to capacitate ourselves expecting jump in volumes consecutive months.We were almost growing at 50% m-o-m. Hence higher staff strength and burn rate. We will be able to manage with half of that currently given that we have pivoted into a "premium" model. We can bootstrap like crazy like we do currently and keep it at 1L. But, this is only good as long as we strive to keep the sales volume low. If we market ourselves through restaurants, we would need more people and need them quick.
If interested, I'd be happy to share our financials if you are considering an investment.
Thanks for the inputs!
Dear Krishna As Expected... Good and
Hey Krishna, i guess you have landed up at right place. Just go across the blog you will find a recent post which is from a guy in US or UK and he is willing to invest in people like you even in small bits, he even has lot of his friends who are willing to invest. So may be this be of certain help to you and keep going buddy you will eventually figure out the right thing for you.