by Nick Taranto
Luckily, the company’s early web presence did not depend solely on my less-than-awesome web skills. As an engineer who had previously started two software companies, Josh actually knew how to program software. He coded day and night, working with two brothers in Slovakia who barely spoke English, guys we found through a Google search.
While they worked on the web experience, I spent the days hauling myself to the local grocery store on Fourteenth Street and Eighth Avenue, where I’d buy salmon fillets and bunches of basil, hustle them back to my apartment, and pack them into flat-rate FedEx packages. It was super scrappy. I sweated my ass off in the ninety-degree NYC humidity, hauling boxes down to the local shipper and sending them to any friends who were willing to be guinea pigs. (Disclosure: We were begging our friends and family to place an order. Anyone who did was just doing so to be nice and supportive; they were very much sympathy orders.)
If we were going to get DineInFresh off the ground, we were going to need to raise money—that was quickly becoming clear. We had liquidated our 401(k)s, and we were living off our credit cards. The cost of starting a business has come down dramatically since the late 1990s, when it would cost hundreds of thousands of dollars just to get a website live. Through a mix of cloud hosting and outsourced software and design development, we could afford to pay a few thousand dollars to set up DineInFresh.com as a fully functional e-commerce website.
However, we were planning to ship both bits and bytes and bok choy and basil. This would require far more capital. We built rudimentary financial models and forecasted that we would need $200,000 to take us one year. There was just one problem with this: Josh and I were broke.
Selling a Dream Is Hard Work
Our first investor pitch was to my dad. Calling it a pitch is actually a pretty blatant misrepresentation. I took the train out to the suburbs where my dad lives, I told him I was not going to be able to pay rent the next month, and I begged him for a loan. He had watched my transitions from the Marine Corps to Wall Street to being an “entrepreneur” with some trepidation. At one point, he staged a mini-intervention of sorts to make sure I wasn’t going off the rails. Now I was begging him for money to send perishable food to people via FedEx.
My dad has always been the most supportive person in my life, and this time was no different. He dug into his retirement savings and made the first investment into DineInFresh.com. And while this was an essential infusion to keep our fledgling business alive, in reality, it was only enough to cover rent and the most basic expenses of the business.
We continued our fund-raising efforts, and over the next month, we knocked on over 150 doors, trying to raise money, but no one said yes. We were trying to start a consumer-facing e-commerce food business, and neither Josh nor I had ever done anything in consumer, e-commerce, or food. It was not an easy sell. And for Josh and me, it was incredibly stressful. We were trying to get the basics of the business off the ground while spending twenty to thirty hours per week pitching people for money. Raising money is a skill, and we needed to become experts at it.
Over the next few months, we made big bets. At one point, both my credit cards were maxed out, I was four months behind on my student loans, and we couldn’t pay any of our suppliers. Was it even possible to ship people fresh meat, fish, and produce? Would anyone buy what we were selling?
I soon realized running a start-up in New York City was the adventure of a modern lifetime. For years, I’d been looking for adventures, throwing myself against the world from the Arctic to Indonesia to the Marine Corps and beyond. And here I’d finally found it, staring me in the face from my own laptop in my hometown. There were no more islands left to map and very few mountains left to summit, but the entire Internet was there to be dissected, explored, and mastered. Furthermore, people had needs and problems that were not being answered through traditional business models—and we were going to figure out ways to solve them.
That was our mission. We knew we could use tech and hustle to figure out opportunities and address them. And that’s what we did in the early days. Day in and day out, Josh and I found ways to identify problems and build solutions. I had never worked so hard or been so stressed—but I’d also never been as passionate about waking up every day. I had found what I was supposed to do and who I was meant to be. And it felt good.
Everybody Needs a Rabbi
By July of 2012, both our bank accounts were empty, our credit limits were reached, and fund-raising wasn’t going well. We were striking out at every turn. We didn’t yet have a real product or business, so we were still too early-stage for venture capitalists. Instead, we had approached hundreds of angel investors, wealthy individuals who invest in the earliest stages of start-ups.
Everyone had a different excuse for turning us down. I met the guy who invented the Chipwich ice cream sandwich. “I sold a billion Chipwiches!” he screamed at me in the kitchen of his $20 million Park Avenue apartment. “You think you can sell a billion of these meal things?” I said yes. He said no. We had hundreds of conversations that ended the same way.
Then a friend from college introduced us to his former boss, Lior Delgo, an Israeli entrepreneur in San Francisco who had just sold his business to Microsoft for over $100 million. I talked with Lior on the phone, and we immediately hit it off. He was former Israeli Special Forces, and we connected over our military backgrounds. Josh and I made a trip to visit Lior and his business partners in Silicon Valley. We brought local grappa and our prototype box, and we spent the weekend at a kid’s birthday party, picking fresh lemons in the backyard of a mansion and walking with Lior around the Stanford campus, talking military tactics. After putting my HBS negotiating lessons to work, Lior and his crew ultimately took over a piece of our nascent business in exchange for $400,000 of funding. We gave up a lot, but we gained more—the opportunity to continue. Now we had real money. And it was time to get to work.
We realized pretty quickly that my Manhattan living room was seventy-five degrees on a good day, and Nimmi might actually leave me if we kept hacking and packing raw salmon on our kitchen table. We needed some proper refrigeration. As Josh continued to code, I explored the Bronx, Harlem, Queens, and Brooklyn, looking for cheap refrigerated space. While I found some pretty alarming Bushwick meat lockers, there was nothing acceptable on the market at a reasonable price.
That’s when I found Alan “the Rabbi” Dorn on Craigslist. He was a fifty-year-old Jewish Long Island dad who had pulled himself up by the bootstraps. He had never graduated from high school but had built a bus rental and industrial real estate mini-empire across Queens and northern Brooklyn. Most importantly, he was willing to rent us space in the old Guinness beer-bottling factory on a month-to-month basis. Month-to-month rentals were practically unheard of in NYC, and the rates were more than reasonable. We had ourselves a deal.
We now had enough money to really make stuff happen. We spent that early funding on boxes, building out a refrigerator in the warehouse in Queens, and designing a more functional website and brand. We knew from other start-ups like Bonobos, Warby Parker, and Birchbox that a strong brand with good design would be essential to convincing early adopters to try our service. Josh and I had launched the original website from my couch, but now that we had money, we knew we needed something better. We found what we needed in Hipster Chris, a smart guy from Bushwick with a penchant for cut-off jean shorts and fixed-speed bikes whom we hired to do our brand and website design work.
The three of us—Josh, Hipster Chris, and I—sat in a room together, and over the course of one whiskey-fueled evening, we iterated through dozens of different names and dot-coms. These ranged from the painfully obvious (FoodFresh.com) to the bizarre (Makan.com, inspired by my time in Indonesia). We found a dozen names that we liked, but they were all already in use and not for sale. We were trying to move as quickly as humanly possible, but our domain was worth agonizing over—it was the equivalent of our storefront. If it sounded or looked bad, it would automatically discourage
potential customers from giving us a try.
Ultimately, we fell in love with Plated.com. Hipster Chris had some awesome logo ideas around the plate and the dinner table, and we loved the connotations of “plated”—refined, but simple, two syllables, easily pronounceable to the media and customers (unlike DineInFresh), and reminiscent of memorable dinner experiences. We tracked down the Internet troll who owned the domain, and we structured a special agreement whereby we leased the domain from him over a year, with the right, but not the obligation, to buy the domain outright at the end of twelve months. The thinking here was that we didn’t want to spend a massive amount of cash up front on the domain, but that if things were going well (and we’d know that within twelve months), we’d have more cash to buy it. Hence Plated was born.
But we still had a long way to go.
Giving Up Is the Only Sure Way to Fail
The idea to build out a refrigeration system had come from the same source as all great innovation: necessity, also known as, we had no other option. We couldn’t afford to rent an actual refrigerated industrial space, so Josh figured out a way for us to build a refrigeration system the low-cost way.
He spent time doing research online and came upon a community of people who were largely hunters and small restaurant owners. These guys built their own refrigerators from air conditioners and after-market adapters. The hunters used them to store their game, and the restaurateurs used them to build affordable walk-in coolers. “This is great!” he said. “We can do this. Let’s make it happen.”
We put $20,000 of equipment onto our personal credit cards and set out to build a one-thousand-square-foot walk-in refrigerator. We figured we could stuff our little assembly line into the warehouse, pack our boxes, and have our business off and running. As Josh promised, everything would be puppies and roses after that.
Who doesn’t want puppies and roses? The big day came. We flipped the system on and waited for the space to cool down. Keep in mind that this was August and the warehouse was a belowground space. The other side of the roof was black asphalt. It was essentially a driveway. That asphalt was absorbing every particle of heat—and it was regularly over ninety degrees outside.
We turned the system on, and Josh went back to the apartment to write code for the website. I stayed out in Queens to watch our baby, making sure it didn’t catch fire. It didn’t, but that doesn’t mean we weren’t about to get burned anyway.
One thing we hadn’t considered was that this was a system built on retrofitted air-conditioning units. Air-conditioning units drip condensation. We needed to tend to that or our food would soon be swimming. We devised a condensation drainage system that was basically the opposite of sophisticated. The best way to describe it is that I had to empty five-gallon buckets of air conditioner water every six hours. I slept in the warehouse, emptying the buckets while we waited for the room to cool down.
We knew it might take a day or two to stabilize, but we were hopeful. It was a big space, and it took a little while for the concrete to cool and the temperature to come down. I was practically living in the bottling factory, working day and night with a team of contractors to get this contraption to work.
We needed the temperature inside the fridge to be forty degrees. The temperature started out at ninety degrees. After twenty-four hours, it went down to sixty degrees. After two days, it was at fifty-five degrees.
And then it stopped. We couldn’t get it any colder. After four horrible days, two things happened:
I got pneumonia and almost died. We realized this was never going to work. Ben Horowitz, a famous tech entrepreneur and legendary venture capitalist, has a term for this sort of experience. He calls it a “WFIO.” It stands for We’re Fucked, It’s Over. Hammer to the head of the nail.
After sinking $20,000 and three weeks into the refrigerator, it failed spectacularly. It wasn’t nearly cold enough to safely store salmon, beef, and fresh basil. So we swallowed the $20,000 loss on our credit cards (that one hurt), chalked it up to a lesson well learned, and started over.
When It Rains, It Hurricanes
We used the Rabbi’s truck to move from Queens to another one of his properties in Brooklyn, a vacant terminal market that dropped into the East River. It was a beautiful location, right on the river, with a panoramic skyline view of Midtown Manhattan. The space had loading docks, and we figured if we couldn’t build a refrigerator, we’d rent one. So we called around, I visited a few refrigeration rental places, and eventually I rented a massive, ten-thousand-pound refrigerated cargo container. The guys rented us a Sea Box refrigerated cargo container, which is primarily used on ships to send perishable cargo across the ocean. We put it in the parking lot outside the loading dock, plugged it in to an outlet inside the warehouse, and got going.
On my daily commute, I would ride my bike from my apartment in Manhattan over the Williamsburg Bridge up past the Domino Sugar factory to Greenpoint, where we had our space. At that point, I could fit in my messenger bag all the recipe cards that we’d printed at Kinko’s, plus herbs and baguettes from the Whole Foods in Union Square. We pulled our first recipes off the Internet and cobbled together six-step instructions in Microsoft Word. We wouldn’t add photos or color to our recipe cards until later.
The Rabbi had connected me to a few people he knew who were looking for full-time warehouse work, and I hired them. One of them still works for us in the Bronx; she is our longest-tenured employee, and over the years, she has been promoted to a leadership position. The Rabbi’s contacts were great, but we needed more hands to help.
At this point, we were almost ready for our big launch. We knew we’d need someone who could crush it on social media, and a friend told us about Emily Grant. Emily was living in Atlanta at the time, working as a community manager at an art museum. We interviewed her on Skype and offered her the job shortly thereafter. She started working part-time for us from Atlanta in October. She must have liked us, because she gave her two weeks’ notice, leased out her apartment, and got ready to leave for New York.
Amazingly, we convinced Thrillist to write about us on the day we were going to launch, and we were super excited about what that could bring. We had delusions of becoming the next big thing overnight. Reporters were going to be banging down our doors.
But a few days before the launch, another story was taking up the airwaves. All the news syndicates were talking about the big storm. Whatever. It’s not going to be a big deal, we thought. Who knew that we soon would know the wrath of Hurricane Sandy. The day before launch, we stayed up all night making last-minute preparations. We camped out in the warehouse, and as the night went on, the forecast for Hurricane Sandy got worse and worse. No one had slept, but the Thrillist piece posted, and we were pumped. We were just waiting for all the sales to roll in.
Our official launch date was October 29, 2012—the day Hurricane Sandy slammed into New York City. By noon, Sandy hit full force. The power went out. We didn’t have running water. There was no Internet for miles. Not only was it the worst day of Internet traffic in the history of NYC, our facility came within inches of flooding.
We were basically watching the East River surge into the parking lot, over and over. It picked up our Sea Box—a ten-thousand-pound storage container—and pulled it into the river. The one thing that kept the Sea Box from being washed out and away was a big yellow power cord plugged in inside the warehouse.
We say we were working to get Plated off the ground, but Hurricane Sandy literally got Plated off the ground. Imagining that Sea Box boing-ing back and forth like a yo-yo, holding all our time and investments and capital and hopes as it bobbed wildly on the East River, was our next WFIO moment. We almost went out of business before we even opened for business. We were incredibly lucky.
Emily was getting ready to drive herself, her dog, and two bags of clothes up to New York the following week. She called while watching Hurricane Sandy unfold from the sidelines. She had just quit her job and now felt like she was wat
ching her future city literally wash away—and potentially her future company, too. “Oh my God, what is going to happen?” she asked.
Josh knew we had to remain totally calm. “We’re in Tribeca,” he said. “We’re eating homemade ice cream. We’re all working out of a friend’s apartment today.” He told her that we had a little snafu with the shipping container. “But we’re good. Everybody’s safe. We’re fine.”
And we were. Over the years, I’ve met dozens of multimillionaire entrepreneurs and dozens of folks who flopped. To build a business from scratch, you need to be smart and hungry. That’s a given. But the biggest difference between success and failure? It’s being a stubborn fighter who never quits.
Plated wasn’t dead in the water, not quite. But if we were going to make this into a real business, it was time to build the team that would take us there.
Hire People Who Are Smarter Than You
As both Plated and the East Coast recovered from Hurricane Sandy, we realized we needed help getting the word out. Neither Josh nor I had ever done anything remotely related to marketing before, and again, we had no idea how to build a consumer business, or a food business, or an e-commerce business. We started throwing spaghetti against the wall, hoping that something would stick.
It had been two months since launch, and we had not yet figured out how to drive customers, revenue, or traction, and we only had weeks of cash left in our bank accounts.
The practical people in my life began to talk me down from the ledge. I could tell Nimmi thought I was on the brink of losing it, and my mom offered all sorts of consolation, like, “Don’t worry, you can always get another job.” But I didn’t want a job. I wanted Plated to work.
We were burning the candle at both ends, trying to find customers to take Plated to the next level, and we were frustrated that we couldn’t get any traction. Our product was infinitely better than when we had first started in June. Back then, our beta customers (my mom and dad) would come home to soggy FedEx boxes. But as LinkedIn cofounder Reid Hoffman is fond of saying, if you are not embarrassed by the first version of your product, you’ve launched too late.