The Evolved Eater

by Nick Taranto

  Just a few months later, and we had come a long way. We were working with a part-time recipe editor building world-class recipes, we had a quasi-functional warehouse, and our website was looking like DaBomb Dot-Com, thanks to Hipster Chris. We needed to get the word out, but we had no money to buy advertising or PR or anything besides the bare essentials.

  I took the hustle accelerator and put the pedal to the metal. I e-mailed hundreds of journalists, bloggers, and Twitter influencers. I received exactly zero replies. I posted on Facebook, asking my friends for connections to anyone they knew in the media. One of my childhood friends messaged me that she knew the junior tech reporter for The Wall Street Journal and that she’d introduce me. I met him at Le Pain Quotidien in Midtown. It was informal—he asked me more questions about my time in the Marines than about Plated. Well, damn, I thought after the meeting, thinking it had been a waste and that I’d screwed up the opportunity.

  Two hours later, he e-mailed, asking for a photo, saying he would post it on the WSJ tech blog Digits later in the day. What? I thought.

  We’re getting WSJ coverage? Yeah!

  The article hit on December 10, 2012, and it really connected with the readers. For the first time ever, our customer service phones (a.k.a. our cell phones) started ringing with random people asking to invest. Among them was Andrew McCollum, one of the original Facebook founders. We were weeks away from running out of cash, but Andrew put in money, and we leveraged his name to raise enough money to keep us going.

  Now there were big-league investors putting their money behind us. And we were finally getting calls from real customers as opposed to the “sympathy orders” from obliging friends and family.

  It felt great, but we were still a tiny operation. Our headquarters was a team of four. We all loved food, and we were decent cooks, but none of us were exactly culinary experts. And since we were positioning Plated as a company that helped people prepare “fantastic gourmet meals” at home, we knew we needed someone whose culinary chops were the crème de la crème. Someone who could make Plated meals not just good, but great.

  It turned out the person we needed was Elana Karp. Elana had read about Plated on the Wall Street Journal tech blog and thought we were this huge company. She sent an e-mail with her résumé, and when Josh wrote her back, she thought, The cofounder of Plated e-mailed me! I am such a big deal!

  Elana had graduated from Cornell, done a tour of duty with Teach for America, and then moved to Paris where she spent a year learning to become a classically trained chef. She also worked for a company that started nutritional initiatives in school cafeterias, championing healthy eating and after-school cooking programs in public and private schools around New York City. Her mix of smarts, teaching, and culinary prowess—and her passion for helping people eat better—was exactly what Plated needed. But soon enough, she learned there were just four of us, and she was even more intrigued to be able to start something from scratch. “There’s nothing like it—and I want in,” she said.

  We made many hiring mistakes over the years, but we got something really right when we hired Elana. Josh and I made it our mission to hire only the best people, folks who were smarter than us. Our objective was to make Plated a place where the people were so smart, talented, and awesome that if we applied for a job, we couldn’t get hired.

  “Plated was the perfect marriage of the things I loved most,” Elana says. “That was an awesome moment, when I realized, ‘Wow. I can actually make a life and a job and a career out of this thing that brings me so much joy.’ Standing on a line in a kitchen is not satisfying to me. But figuring out ways to empower people to cook amazing meals for themselves? That is exciting to me. I started doing private cooking parties where I would travel to people’s homes with a knife kit and a bag of groceries and teach them how to cook these amazing meals. Plated allowed me to do this on a massive scale.”

  With Elana on the team, we were a legit culinary tour de force. We were no longer just a couple of guys chopping salmon alone in our kitchen. We had a culinary cofounder. Over four years later, Elana is part of the Plated bedrock and is the company’s chief culinary officer.

  9

  The Future of Food

  One-liner: At Plated, we have a vision for the Future of Food. Our business is about using technology and data to build a better solution for balancing profits, food quality, employee welfare, and sustainability.

  I could easily spend another hundred pages telling stories about Plated and how we went from two guys on a couch with an idea to a thriving multi-hundred-million-dollar company serving tens of millions of meals. But that is not this book—to get all the inside baseball on our early and growth trials and tribulations and what we learned along the way, you’ll have to wait for volume 2!

  This is a book about understanding what happened to food in America to make us sick and unhappy, and how Plated, starting with dinner, will be a driver of the change that must come. How do we go from where we are today to where we want and need to go in the future?

  What Plated Figured Out and Why the Model Works

  What’s so great about our business model? How are we able to work toward our audacious vision while creating a big and profitable business that delights millions of customers each night?

  Let’s go back to our core beliefs:

  Belief 1: Transparency and control over personal and planetary health are essential.

  Belief 2: The definition of healthy living is intensely personal.

  Belief 3: People succeed when it’s easier to do the right thing than the wrong thing.

  Belief 4: Food, and the experiences of choosing it, cooking it, and sharing it, are to be celebrated, and thoughtful design in all things is an essential part of that celebration.

  To build Plated, we knew the food—and the experience of choosing, cooking, and eating it—had to be amazing and personal. That’s why Elana was our fourth, and probably still our most important, hire. Elana and the entire culinary team are talented chefs and committed foodies who seek inspiration from their travels, their heritage, their “field trips,” and their training. But the Plated business model mixes art and science, using data far more effectively than any traditional recipe creation process.

  As Elana says, “Data and technology are integral to our menu creation process and are what, I believe, make it most unique. The Plated culinary creation process is different from most other kitchens in a few ways. First off, we’re totally customer obsessed. While we have a strong culinary point of view and house style, we make sure to balance that with the voice of our customers, ensuring we are creating recipes and cooking experience that meet their needs and taste buds.”

  In order to do that, we need to be nimble. We’re constantly testing, revising, and iterating on recipes to make sure that they never get stale. While our menu creation process starts months before a customer orders a recipe, we’ve set it up in a way that’s flexible so that we are able to make changes at any point in the process, which both supports the business and operational needs and the customer’s experience. We are sourcing, assembling, and delivering meals to customers in all forty-eight of the Lower 48. What we do behind the scenes is not straightforward.

  Elana continues, “Our business model works because we’re providing customers with an experience they can’t create on their own, and one that has value far beyond the cost of ingredients and delivery. Through our menu choices, we’re enabling customers to select and prepare meals they never would have thought of or tried to make at home, and we’re exposing them to new ingredients, flavors, and techniques. With each recipe, we’re enhancing their dinner experience.”

  Week after week, it’s a challenging task to ensure every customer is presented enough recipe choices to be excited about ordering from our menu. Think about us like a restaurant, where you come back and order a mix of new and encore recipes week after week, for years.

  We also gather data and learn how to improve by discovering the implied
taste preferences within our customers’ observed ordering and eating habits, week after week. By leveraging machine learning applications and artificial intelligence that get smarter without active input from either customers or our own Plated humans, the quality of our menu increases every week. Think about this like Netflix—you can both actively grade the movies and shows you watch, but Netflix also improves their recommendations for you based on passive things you do or don’t do, like binge-watching. With Plated, both passive and active customer feedback help us continuously improve, and that is just not possible with your typical nondigitally native food business.

  Through our customer order behavior, menu performance, feedback, and ratings, we’re able to learn about the success of recipes and menus in ways as specific as individual ingredients and as broad as overall menu mix. This allows us to create menus tailored to our customers in ways far more nuanced than they are even able to ask for. According to Elana, “The challenge—and fun part—for us is to balance this data and technology with the art of our work, and that balance is where the magic happens. It’s an exciting process today and one that I think will only get more exciting as we grow. Through our technology and delivery, we’re giving customers’ time back so they can actually enjoy that dinner experience with the people they love.”

  Lou Weiss, our former president and CMO, joined us in early 2016 after launching and leading e-commerce for the Vitamin Shoppe. He ultimately ran marketing and merchandising for the retailing giant and helped take them public at a multibillion-dollar valuation.

  Lou says, “I joined Plated because Nick and Josh had a vision for the company and the good it could do in the world, and that inspired me, as it does so many of us. But what impressed me most is that they weren’t just idealists. They had a business model for successfully achieving their vision. Most food businesses are supply chain driven—whether you’re a restaurant or a grocery store, you begin by guessing how much of each ingredient you’re going to need, and then you hope like hell that you were right. Since nobody has a crystal ball, the only question is how wrong will you be each day—a little or a lot?”

  Lou continues, “Plated’s model is the exact opposite—we are driven by the demand chain, not the supply chain. We make our weekly menus available to all our customers five weeks in advance. They look to see what meals we’ve suggested for them based on their past choices and ratings. Most often, they agree with those choices. Sometimes they swap in a different meal. Sometimes they add an extra night, or extra portions. Sometimes they skip a week. The point is that we know what the consumer demand is before we buy our ingredients. There is very little food waste, which is great for both the planet and our bottom line. And the produce is much fresher than the typical supermarket, because we know with a high degree of certainty how much of each ingredient we need each day, and we buy accordingly.”

  We consider technology and data to be part of our secret sauce, and as any chef knows, you never give away the secret recipe. But at a high level, because we offer so much choice and flexibility, and because we get so many individual meal ratings and reviews, we develop a keen sense of each customer’s individual meal preferences. As Lou says, “There isn’t a restaurant or grocery store on the planet that knows as much about its customers as we do. And even if they did know what we know, their operations aren’t nimble enough to create personal experiences based on that knowledge.”

  Consumer expectations continue to evolve, and that’s not going to change anytime soon. Technology is disrupting everything, both in ways specific to food (like hydroponic agriculture) as well as through innovations like self-driving cars, the quantified-self movement, nutrigenomics, and other technologies that will all affect how food is grown, transported, purchased, and consumed.

  When you used to go to the local butcher, they knew the cuts you liked, the quantities you would want, and when you would like it delivered. That personal knowledge and personalization was lost as we moved to supermarkets and large chains. Data analysis with mass customization will bring this back, so that you can be treated to what you want when you want it. Plated, because of our relationship with our consumers and the lack of need to invest in hundreds or thousands of physical retail locations, is in the prime position to leverage these innovations for the benefit of our customers, our business, and the broader supply chain. Our partnership with Albertsons is set to accelerate these exciting innovations at massive scale.

  Intelligent Supply Chain

  As our first institutional investor, John Frankel from ffVC, says, “The challenge here is this: Can the additional costs of packaging and shipping be offset by not having to hold inventory, not having to rent large footprints in prime locations, and not having to waste as much food? Our bet was that not only would there be offset but that the margins would be strong. The key to doing this was seeing the set of implied logistical and operational challenges being solved as a technology company would through process technology, machine learning, and data visualization, and not as a food manufacturing company might. It is clear to us that Plated is really a technology company that happens to sell food, not a food company that happens to use technology. The technology is not just used within the company but increasingly is being pushed into the supply chain so that the entire system runs more efficiently.”

  John’s bet is paying off. Our intelligent supply chain delivers a superior customer experience with a superior financial profile. What initially attracted John and his investment partners was our approach to the opportunity. “Food is just massive. It’s a $1.5 trillion market in the United States. So if you can carve out a few basis points of this market, you have a big business. The key to us was the fact that customers can order what they want, in the quantities they want, to be delivered on the day they want. We knew that this would create a logistical puzzle that many would find challenging to go after, but it also would lead to higher retention and a great business model. We like to invest in those.”

  The Plated intelligent supply chain is a superior operating model for food sourcing, distribution, and delivery. Dave Allen spent his career building and leading at many of the original Big Food behemoths. He held the most senior operations roles at Frito-Lay, US Foods, and Del Monte. Dave joined the Plated board of directors in 2015.

  As Dave says, “I have been in the food business for more than thirty years. The traditional food model requires more time, more waste, and excessive markups for each step in the supply chain. The traditional food supply chain has not implemented effective technology, and both the customer and the business suffer as a consequence. In traditional supply chains, the data is often inaccurate (traditional retail forecast for demand of a specific product is often more than 40 percent inaccurate) and is not shared among the parties; therefore, suppliers keep higher safety stock to meet unexpected demand. This creates excess inventory and waste (spoilage), which is particularly high in produce, seafood, and fresh chicken. Meanwhile, the customer is paying greater than 100 percent retailer markups!

  “The Plated model generates superior financial results while providing a convenient, high-quality, healthy, and low-waste option for consumers. That’s part of why I decided to invest and join the board. Most importantly, I invested because the team Josh and Nick have built is ‘best in class,’ and they are fully aligned with the Plated mission of making better food a reality for everyone.”

  At the end of the day, our customers love us because we enable them to create dinners that match and exceed their expectations—the artistry and the variety that Elana and our culinary team bring to each week’s menu and the pride that people feel preparing and sharing these meals with family and friends are the keystone of our success so far. We’re obsessed with ensuring that this is true forever—without it, all the innovation in the world doesn’t matter.

  The Plated Mission Is Bigger Than Plated

  Big Food argues that it has allowed humanity to continue our evolution, away from the indentured servitude of the ki
tchen, and toward a brighter future of convenience and ease, but creating a world of low-effort, high-satiation food as efficiently as possible that’s delivered through the traditional retail model has left Big Food in a very tough place. Its product portfolios are dated and increasingly out of sync with how and what consumers want to eat. Despite its best efforts, Big Food’s unrelenting need to create the most taste for the lowest possible cost has left it caught in the CRAP Trap.

  While some of the Big Food players may break through, the truly innovative solutions are coming from the entrepreneurs drawn to a big problem. The Farmers Business Network in South Dakota and Irving’s hydroponic farm in urban New Jersey are emblematic of the hundreds of entrepreneurs who are picking apart each step of the supply chain, searching for the problems and opportunities to use technology to make food better.

  When I chat with Irving about the Bowery Farming business model, he practically bubbles over with excitement. “The food system, and particularly fresh produce and the supply chain to support it, has been built around seasonality and the large-scale industrialization of agriculture,” he explains. “The cost of these improved efficiencies has meant that both the practices to grow produce and the time for the food to get to your table have been negatively impacted. At Bowery, we are able to change the model fundamentally, not only in terms of the way in which we’re growing but also the supply chain itself. We are locating our farms dramatically closer to the point of consumption. We are a hundred times more productive than the same square foot of traditional farmland, and because we are so close to where our food is being consumed, the time from farm to table is a fraction of what industrialized agriculture currently supports.”