Ralf Wenzel of JOKR: Return of Lifetime is much more important than Return of Investment

Hans Tung 

You speak multiple languages, you’re a very global citizen! Can you share with us what languages you speak, and how many countries you are operating in today?

 

Ralf Wenzel 

We are operating today in seven countries. Indeed, I feel at home in different parts of the world— I feel home in Latin America. I feel at home here in New York where we are operationally headquartered. I also feel home in Europe. I’ve been based, working and living in different parts of the world. With JOKR’s business, we are active in the US, Latin America and in Europe at this point of time.

 

Hans Tung 

Your intro is probably one of the longest we’ve ever had on this show, as you have such rich experience around the globe. Before we talk about JOKR in more detail, can you share a bit about the earlier stage of your career? How did you decide to become a founder, and how did you get into angel investing to support other founders?

 

Ralf Wenzel 

Basically, my story starts in East Germany. I grew up in East Germany, literally behind the Berlin Wall, and have lived and experienced the era of communism in Eastern Europe. Later, I also spent a number of years in Cuba, where we had family ties. I feel that it’s in our hands (the hands of individuals and entrepreneurs) to make a positive impact in the world. It is our attitude, our inspiration and the way how we work with teams and other people to really make a change. From the political history that I’ve experienced at a very young age, I believe that I have the motivation, inspiration, intrinsic belief and passion for personally getting involved in building things to accumulate and put great teams together, to create something outside of any political doctrine. I believe that entrepreneurs have a tremendous responsibility to create a positive impact on the world, and that’s why I started early on when internet was still at its very early stages. I started studying computer science in the in the late 90s, when Yahoo was still the biggest search engine, and when internet was still reserved to specific internet coffee shops or specific universities. I’ve seen the internet evolution and felt early on that internet will change our life more than we might think. I got inspired by the freedom that internet embraces, and I wanted to be part of this revolution of freedom, and the internet, by connecting different parts of the world, through connecting economies and people. That brought me into the technology segment and studying computer science, because I wanted to understand the insights of how internet works, and how to utilize the internet to improve everyone’s life. Since then (for the last 20 years), I’ve stayed very loyal to the internet and technology environment, it was the right choice at the right time.

 

Hans Tung 

You have an MS degree in Computer Science from Berlin, how did you go from being a someone who studied computer science and a programmer, to becoming a founder? What were some of the early influences or advice you got from others that made you decide to make that switch?

 

Ralf Wenzel 

It started when I was studying computer science with a friend of mine. If you studied computer science, it’s a very practice-oriented way of studying because you get to develop software yourself. With my friend from university, we had been working on every single project, and developing snippets of code and software together. We saw that there was a lot of demand for engineers from different type of companies, so we started as contractors (during our studies) to develop software for larger German enterprises, whom asked us to build content management systems, websites, customer service modules and components etc. The two of us built the software ourselves, we also got to sell that software, and felt that sense of “wow”. It was something the two of us were working on infant of the computer, where we were developing pieces of code, assembling it to a real software product, and generating value out of that. We then got attached to that way of freelance work, building our own things very early on. That helped us create the belief, that with your own hands and with expertise, you can create something that has value and is creative., rather than being employed at a company. That’s how it started, and after my studies, I ran into some other German entrepreneurs that were looking into building what later on became the largest platform for mobile value-added service distribution and production (a company called Jamba in the US). It was the leading mobile ringtone; he spoke about his idea and what he wanted to do. He was looking for someone to help on the product development side, engineering and technology, and I felt intrigued by that idea. It was at the beginning, when people started to have mobile phones (way earlier than the smartphones), I joined that entrepreneurial movement at that point of time, and we built the company together.

 

Hans Tung 

That’s probably in the early 2000s, when wireless value-addded services, and ringtones were quite popular globally. People wanted to piece things together and build a big global business.

 

Ralf Wenzel 

Exactly, that was in the early 2000s.

 

Hans Tung 

How did you go from that to building Skrill?

 

Ralf Wenzel 

What we had seen in the early 2000s, with the Jamba (in the US, Australia and English speaking markets, it was known under the name of “Jamster”), it was basically a group of very young, kind of crazy people getting together and building on the trend of mobile content, such as ring tones, mobile games, mobile wallpapers, as well as mobile operator portals that were behind Vodafone and Telefonica etc. It was us being very young and very ambitious, some few years later we sold the company to a combination of NewsCorp and VeriSign, two very large American companies, coming out of our garage-type setup in Berlin. That was another point of realization, that you can not only put together pieces of code, software and sell it to some enterprises, but also that, as a team you can create a company that company gets global recognition and bought by larger incumbents. That was another point of realization where we saw we could achieve more than what we would have believed. That then led a group of us to continuing the entrepreneurial journey. We moved to London, because at that point of time, the UK government was the first government in Europe to issue the so called “e-Money” license, that would have allowed you to build an electronic banking business. It was similar to what PayPal and other companies had done already in the United States. In Europe, there was no licensing for those type of companies , so the UK government was the first one to issue the so called “e-Money” license. We took advantage of that applied for the “e-Money” license, and were the first company in the UK and in Europe to be granted that “e-Money” license. We then built an online payment company on the back of that license, that on one insight became one of the largest electronic wallets in the world (next to a PayPal), with a strong emphasis on Europe and some emerging markets. We also built it out as a proposition that would allow merchants to take on online payments, and we also became one of the largest online payment aggregators for facilitating credit card transactions and alternative methods of payment. The company evolved through a number of strategic combinations, to what it is today, a publicly listed company called Paysafe. Even though we have been operating the company from the beginning with a very small team, it has now established itself as one of the strongest now global global online payment companies.

 

Hans Tung 

Fast forward to 2013 when you joined Foodpanda, how did you decide that hyperlocal was something you wanted to focus your energy on next, from mobile payments? Back in 2013 there were not a lot of players globally doing this, that was two years before Doordash started, Uber Eats came later, and in Asia, China, Meituan, and other Groupon clones evolving from that business into food delivery. How did you decide that hyperlocal is the next big thing for you?

 

Ralf Wenzel 

Again, I think I’ve been through many different points of realization. When we built the online payment business, and started to process payment transactions for hundreds of thousands of different merchants worldwide, we got to know a lot of the different businesses inside out, like which business were more successful, and why that was. By then I had already started to invest personally in different businesses, because I started to Angel invest in companies very early on, as you’ve also mentioned at the beginning. I got inspired by what internet does to change consumer behavior, because the availability of internet and the evolution of technology, has led since the early 2000s to a change in consumer behavior. Since then, consumer behavior and consumer requirements have changed exponentially, and consumers are looking for a certain degree of personalization and transparency, of choice and certain curation of ordering things, not even via websites, but via mobile apps. It’s interesting how the recognition and the requirements of consumers have changed, we’ve seen and observed very early on that in the emerging markets, we have a leap-frogging effect. In the emerging markets, the demographic structure is very different, you have a reverse demographic permit, because in markets such as Southeast Asia or Latin America, the vast majority of people are very young. In Western Europe, or in the US, it looks different because the vast majority is of an older demographic. The young demographic in emerging markets, and the leap frogging effect that people access the internet via mobile phones, and not via desktop computers, and many other elements, made me see and observe that there was a trend in the emerging markets, where internet evolution and behavior evolution was happening faster. And where was it happening fastest? It happening fastest where there has a high frequency of ordering. And where do we have a high frequency of ordering? You have high frequency of ordering everything that is attached to food. What I observe is that for consumers, there has been a trend for decades already, that consumers want to get the food ideally delivered to them. We’ve seen in Southeast Asia, the adoption of restaurant food delivery, with people calling restaurants and ordering foods to their doorstep, and this behavior in markets like Singapore, Malaysia, Taiwan and Indonesia was very established. When we started the business, it was very offline — if you walked down the streets of Singapore or Jakarta, every 100 meters, people would give you a flyer for food ordering with a telephone number on it. We observed it and thought, on one hand, Southeast Asia was moving so fast on the technology side; on the other hand, there’s a big food delivery business. What we did was combined that created, what became one of the first online food delivery businesses. We started the business by scanning flyers, and creating a marketplace for people to see the restaurants and telephone numbers. Later on, we converted that into an online ordering experience, and in the second step we built out the last mile logistics ourselves to improve the delivery experience to customers.

 

Hans Tung 

How did you build a team to operate locally in Southeast Asia, Taiwan and other places where you ended up having the local delivery? That’s a very local business, and being a global citizen with an international team, how did you localize that very quickly and effectively?

 

Ralf Wenzel 

What I’ve learned over the last 20 years of building businesses, is that there are two components that make businesses very successful. The first component is how to build the right team with a right constellation. The success of a business is not driven by the CEO or COO, or the success of a business— it’s driven by the entirety of a team. I often compare that to a jigsaw puzzle, if you have all these different pieces and they somehow need to connect to each other, it’s not that every piece needs to connect with any other piece, but you need to find a way to assemble the team that is interconnected. At initial stages of a company, that is as flat as possible, where people help each other and contribute equally, and don’t have super strong hierarchies. Building a company depends on your ability of putting together the right team that complements itself, where everyone adds an equal contribution. We found, especially when launching the Foodpanda business, that the combination of global citizens with very strong local talents makes the right mix— you need to have someone that comes with a fresh view, that wants to disrupt and change everything that happens locally, with someone that has the deep local experience and expertise of saying “this is how we have always done it; this is how it works in this country”. This is challenging in a positive way, the challenging atmosphere of someone getting in and saying “no, I want to do it like this; I want to do it like that., there’s a new way of doing it”, and someone that says “but locally, it’s this and that.” It’s the intersection, combination of global and disruptive views, with like the local experience, culture and flavor of how to most appreciate local interests and requirements.

 

Hans Tung 

Compared to other regions of the world, when you were looking at Delivery Hero expanding out of Europe, and decided to partner with them, what were some of your thoughts and considerations before deciding to do that? How did it end up, that within the Delivery Hero network, Foodpanda become the biggest contributor?

 

Ralf Wenzel 

That’s a very good question. What I’ve learned over the last 20 years in building businesses is that the number one success criteria for being successful, regardless of which market in the world, is the question of having he right team, and putting the right team together to make it work in the right way. I often compare the way of assembling a team for a successful business, to a jigsaw puzzle, where there are so many different pieces, and you need to find a way to interconnect those pieces. Not every piece connects equally to every other piece, but you have to find the right interconnection of very complimentary skill sets, and very complimentary people, and have them at least initially as part of the organization as much on a level as as possible. What has helped to be successful in a lot of those pesky markets that we’ve been in with Foodpanda, such as in Southeast Asia, was to find the right balance between global citizens, as well as strong local talents. The combination of people that constantly challenged the status quo, and the way things are done live locally, plus the ones that tell you how to find the best local appreciation for cultural and infrastructural aspects has been a winning factor. I’ve been on the ground in all those countries where we built our business, and always found a right combination of having some global-citizen-type of personalities sitting in the countries, and combining them with very strong, local-skilled people, creating and combined teams out of that, so you always have the dynamic of someone challenging the status quo, and someone trying to preserve the status quo. The dynamics have made the business become very successful.

 

Hans Tung 

Out of curiosity, you mentioned that you have ties to Cuba. Before you started Foodpanda in Southeast Asia, was there any thinking to do food delivery in Latin?

 

Ralf Wenzel 

With Foodpanda, we expanded to Latin America, and to other emerging markets like the Middle East, Eastern Europe, because of the same reasons, of them being very attractive markets for building out technology propositions, because the demographic structure of those markets of having young people— people looking to improve life quality; not having a desktop computer at home, but fulfilling f their online experiences through a mobile device; living in these so called “mega cities”, in very large metropolitan areas… Putting all of these factors together, and making emerging markets incredibly attractive for innovative online propositions, was where there were commonalities between Latin America and Southeast Asia. This is not culturally, but in terms of the adoption of highly innovative technology companies.

 

Hans Tung 

In the last decade, we saw Delivery Hero expanding into these countries from Europe, and most recently, Shopee from Southeast Asia, expanding into Latin, in both gaming and commerce. So we’re definitely seeing a lot more cross-polarization in collaborations between these emerging market regions. Overtime, you decided to sell your business to Delivery Hero, and Foodpanda became the biggest contributor of Delivery Hero. What were some of the considerations you went through to decide to do that? Usually most M&As don’t work, how did it become so that, Foodpanda became the biggest contributor within Delivery Hero to do so well?

Ralf Wenzel 

I think it was combination of different factors. On one hand, we as a team, and me personally, I’m always looking into what is the right thing to do for the greater good for customers, the team and well being of the company. I’d rather apply very rational thinking, than trying to always believe that we can win and do everything completely by ourselves. I believe in the combination of talents, as I do in terms of team building, and in the combination of strengths, ideas and power when it comes to combining businesses. The second component on the food delivery side, which is the same for businesses we’re building today, is that these businesses are highly synergetic. Because the businesses live from data points, the more access we have to data, the smarter we can be in terms of decision making, and the better the technology that we’re building, the better the algorithms and the level of personalization. Overall, if you combine businesses on that particular fields, it means you get access to more data, two more strings in terms of the team, and it’s it allows for more rational value creation. Both Nicholas, whom has been running the delivery hero business, as well as myself, we share the belief that businesses are built based on very strong entrepreneurial spirit, and that when combining businesses, we need to keep that entrepreneurial spirit by all means. We need to incentivize founders that are joining it, empower local geographies, appreciate the differences that exists in the team, and to make sure that we’re not trying to create too much commonality and force things through just one way of doing things. One of the reasons why Foodpanda has been so successful also after becoming part of Delivery Hero, is that the rhythm at which Foodpanda was doing things, the appreciation for the local elements, the appreciation for how Foodpanda had been built and has been succeeding, was kept after the acquisition. The acquisition and the period after did not enforce a new way of thinking, or a new way of doing things. Uo till today, Delivery Hero is a business that empowers local entrepreneurs with Foodpanda in Asia, Middle East, and the ones running the Delivery Hero businesses in certain parts of Europe.

 

Hans Tung 

In Southeast Asia, Grab, another GGV portfolio, has done very well in the food space. It sounds like Foodpanda and Delivery Here will continue to do well as well, so the market is huge and multiple players can win. After you left Delivery Hero and joined Southbank, you could have been a VC, “take it easy”, and not as much on the operational side, but what made you decide that you wanted to leave that and become an operator again, again betting on hyperlocal, and competing with some of the friends you made in the food delivery business?

 

Ralf Wenzel 

There’s one parameter in life that is even more important than return on investment— we often focus too much on return on investment, but I think I focus a lot on return of lifetime as well. Next to the return of investment criteria, the most precious thing that we have in life is is our time, and how we use and spend our time. If I look back into the last 20 years, what I personally enjoyed most was to have my kids, friends, and enjoy the interaction was family. Outside of that, what has been the most fulfilling thing for me personally was to create. As human beings, we want to craft, create and build things. I’ve always enjoyed that over the last two decades, and that has been very, very fulfilling, and why I wanted to get back to the crafting of things, teams and businesses. This is because for me, personally, that is one of the highest return of lifetimes that you can have, which is to build things that have a lasting effect on the world, and improve the lives of many different consumers. It was hence a very intrinsic motivation. And you’re right, out of economic reasons, I would not have needed to potentially build a new business, but it’s the intrinsic belief, the intrinsic joy, and the passion of spending many hours a day building companies and teams that are enjoying to be to be part of those companies.

 

Hans Tung 

One thing I noticed after talking to you, is that you have a management style that empowers teams to learn to work effectively with each other, having more chances to make decisions, and learn how to make those decisions more efficiently over time. You zoom in to help, but you’re not micromanaging or hovering them, you can step back and let them figure things out and experiment as well. How did you learn that management style, and how has that served so well for you across different geographies in different times?

 

Ralf Wenzel 

That is basically the evolution that my own kids have taken. My kids are now in their teens or early 20s. At the very beginning, you have to be always on top of them, protecting them— you need to teach them certain things, but at one point of time, you have to give them wings, support them and be there for them. From having learnt and built companies, and the evolution that companies take, but maybe it’s also the evolution of your own children, and finding the right level of support, for the right age, for the right amount of time. As you build teams, you have to be deeply engaged with your numbers, very analytical, and always understand what is happening with every single transaction in every single country of the world. You have to be on top of your data, and deeply involved in certain aspects of the business, but for a limited amount of time, it’s very important that you empower people, embrace their qualities and their skills, and allow them to succeed. The experience from having been an angel investor, and having been on the investment side as well, for instance, with companies such as SoftBank, gave me the right balance in terms of when to empower the teams and, making them strive, succeed and shine. That’s where they get the motivation from, which is by not being micromanaged, but by taking on responsibility, and using the responsibility for showing and proving that they can also build things themselves. From here, they’re stepping in and always being aware of the of the details, so it’s a balancing act. I’s important to play with it in a balancing way, and I believe that those entrepreneurs that are very high level, and hence might not be incredibly successful, but also those that are continuously micromanaging might not be building the right company culture, either, that’s why it’s a balancing act. At the end of the day, what I always tell those very strong and highly skilled individuals that are joining us, is that I want to make sure that they are becoming successful entrepreneurs themselves. I’ve kind of lost my mission if they stick around for a number of years just after having built a successful company. If they join a large corporate company, in a position x, y, z, that then I feel that I have failed as a manager. But if they leave the company and build their own company, then I’ve achieved what I wanted to achieve.

 

Hans Tung 

I completely agree. Let’s talk a bit more about JOKR in the US. There’s Instacart, Doordash, and Uber Eats, they all do something slightly different. But increasingly, you see Doordash expanding into other people’s territory and winning. In Latam, there’s Rappi and and others, how did you decide that you want to do hyperlocal again, and what makes JOKR in what it offers different from others? At the end of the day, you said whoever has the highest frequency of purchase with the consumers is going to win, because you can always upsell other services later and become a super app. We saw that work extremely well in Asia, with Meituan. How did you decide you want to do this and differentiate from other bigger competitors?

 

Ralf Wenzel 

There were two or three different elements that made me decide starting the JOKR business. Number one, also mentioned earlier, is that from the past 20 years of observing how consumer behavior is changing at an accelerated and exponential pace, it has lately shifted how every consumer wasted a more special user experience. Every single customer has level of individualism, with proprietary experiences, special products, exclusive offerings. Again, every customer wants to be treated differently, so the demand and requirement for personalization is higher than ever. Match that against Amazon, Instacart, and other platforms, which is rather a standardized offering for a very broad customer segments, personalization has moved on and there’s hardly any company that is adhering to the new personalization requirements. The second thing is, people nowadays celebrate moments and don’t plan ahead anymore, it’s about here and now, I also see that with my children. Whether we like that, as parents or older generations is a different question, but the here and now is being celebrated more than ever before. That’s why if you don’t build a platform e-commerce wise that is able to fulfill things instantly, and deliver things within minutes than hours, if you don’t adhere to that, then you’re losing on a competitive advantage. The third component is that people look for local products more than ever before. Last year, more than 50% of global FMCG growth was generated by small local brands, as compared to global brands. If you look around at the e-commerce platforms, and of course with large offline retailers, maybe 10% to 15% appreciate local brands, but the vast majority of the demand is for local brands. Last but not least, one big reason of why I wanted to build a new company again, is to give back to the planet and contribute to sustainability. We as entrepreneurs have a higher responsibility for driving sustainability than the politicians, politicians can come up with frameworks, regulations and guidelines, but we are the ones responsible for building propositions that are more sustainable. Those four components, sustainability, local products, instant delivery, and the high degree of personalization are the four attributes that are part of what we recognize in the world, part of consumer behavior, part of our own belief, and we don’t see that sufficiently reflected, implemented and fulfilled by any of the e-commerce companies. Those four big premises is what led to us building the JOKR proposition, of having a new generation of online grocery and online retail offering.

 

Hans Tung 

Can you expand more on the sustainability part?

 

Ralf Wenzel 

What is important on the sustainability part, is that you’re not building a platform and a company, similar to what the airline companies are doing, that are buying into some credit systems for offsetting their carbon footprint. What we wanted to do is to look into how to structure the business model, the core of what we are doing, so that by what we are doing and how we’re resolving on that, gives a more sustainable proposition. The centerpiece of that is how we think about consumer demand, consumer behavior ,and understanding consumers inside out. The centerpiece of JOKR, our way of thinking about data, is figuring out who our customers are, what they want, and when they want it. The intersection of customer data, product data, product in terms of inventory, and the timestamp, contextualizing that to hour of the day, day of the week, week of the month, to an ever-growing permutation of different products, required by different customer groups at different points of time. What that does is, if we contextualize all of these data points, it tells us exactly about the relevance. We want to build an e-commerce proposition that is only offering what is relevant to the customer, at that particular point of time. We only procure, not in bulk like most of other online and offline retailers are doing it— they’re stocking up, building bulk and getting advertising money from the CPG companies and pushing out products. If you look into the P&L of big retail companies, be it offline or online, the biggest cost impact that they have is the inventory losses and wastage. They’re throwing the equivalent of billions in inventory on a yearly basis, so the biggest sustainability component that is inbuilt into the business model, is that we only procure what we need, when we need it. The definition of “what is needed, when we need it” is driven by our data science approach to understand inside-out, for every micro geography to what customers really want. The second component to sustainability is that we’re trying to cut out the middlemen in the supply chain as much as possible, while aggregating and procuring products as directly as possible, and as local as possible, also by appreciating local product offerings, and trying to make sure that the majority of products that we are offering on the platform are local brands. By procuring them locally, we significantly cut the supply chain routes, and it goes without saying that the global CPG companies are rotating their products and inventory a couple of times around the globe. If we procure more locally, from local farmers, local breweries, local food and drink companies, and other physically small producers of retail and consumer goods, we’re also adding significantly to the sustainability component.

 

Hans Tung 

That’s a huge differentiation that most people probably wouldn’t expect. You’re still young company, but growing extremely fast, week on week, month on month. For our audience who are interested to try JOKR and try the local products you have, where are the cities that they can try JOKR today?

 

Ralf Wenzel 

As you know, Hans, we have a strong LatAM American soul. That’s why we’ve built out the business in markets like Mexico, Brazil, Colombia, and Peru. We’re currently active in three cities in Mexico— Mexico City, Guadalajara and Monterrey; we are live up and running in Bogota, Colombia; we are in Rio de Janeiro and Sao Paolo; we’re in Lima in Peru. We keep on expanding into additional cities in all of those countries, as well as additional countries in Latin America. We also have business in the US, we’re currently up and running in New York, expanding into Boston, Philadelphia, DC and further cities in the United States. Those are the cities we currently have on our radar, but over the next few months, we are increasing footprint even further, especially in the in the Americas.

 

Hans Tung 

In LatAM, you brought in an external team for Brazil, and you set up a local team yourself in Mexico— how did you think about different strategies for entering Latin?

 

Ralf Wenzel 

This is driven by the definition of who we want to partner with, and how our team needs to look like. As I said earlier, the definition of how we work together as a team is essential. In Mexico, I’ve been working together with a lot of strong individuals as part of previous businesses, and we got together again. Those people that I’ve been working together successfully previously in Brazil, had already started a similar type of business, so it was a very natural combination. We also do have some smaller businesses in in Europe, I forgot to mention them as part of like the earlier iteration, but we have JOKR also up and running in countries like Poland, Austria, even though Europe accounts for a small proportion of the revenue at this point of time. Also we have started to work together with incredible entrepreneurs and individuals that have been part of our previous businesses, so it was natural and organic way of starting to work together again.

 

Hans Tung 

One of the key things that struck me as usual by you guys, besides the four points you mentioned, was the fact that unlike Uber and Doordash, you made all your delivery team members full time employees, instead of third-party contractors. How did you decide that that was the right move? If it works for you, why would Doordash and Uber resist that so much? What benefits do you get by training them full time?

 

Ralf Wenzel 

You need to look at it from two different angles. If we care about sustainability and the well being of the planet and its inhabitants, it’s not only about preserving the overall ecological environment, but also about preserving certain standards in terms of how we appreciate human beings. We want to work together, in a company culture that does not have two different classes of people. The JOKR people, and the people that are associated with the JOKR business need to enjoy the same type of fair treatment across different functions, different roles and different type of activities. That starts with the engineers and translates down to the people that we have in our house, warehouses, up to the delivery rider. It’s our own belief that if we say we want to build the next generation type of company with a social and environmental responsibility, that we have to make sure we find measures of fair treatment for everyone. The second thing is that the political environment is moving towards that as well, so I think there’s a strong political belief across all different types of countries and geographies, that we need to find a way, that in a growing, on-demand society, we find rules and appreciation for those people that are carrying out the delivery. Politically, it trends towards a strong appreciation of that workforce anyways, and we’re just pre-empting that by our own belief. Last but not least, it’s the type of business model and how we are running the company that is allowing this type of fair and equal treatment and making full-time employees of our business by vertically integrating and cutting insufficient supply chains by procuring more locally, and by that tapping into significantly higher margin pools, as compared to marketplace companies. That higher margin pool does not only allow us to be beneficial to the customer, by not adding markups to the food that we are selling, by appreciating our delivery riders, and in terms of treating them as full-time employees, but obviously, also economically, towards ourselves. They’ve invested money and time into this business and our shareholders, to build a more valuable, creative and profitable company.

 

Hans Tung 

Another thing that intrigued me when I was talking to you guys, was the fact that you have a sort of mini-warehouse kind of approach on new distribution. We’ve definitely seen that model work quite well in in Asia, how did you decide that this was going to be part of your business model? How did you make that work with your unit economics?

 

Ralf Wenzel 

When we looked into the whole question of what customers want, when they wanted it, and where they wanted those specific products, this is the centerpiece of the JOKR proposition hyper personalization, by contextualizing time with demand, products and customers, while building these permutations, which is bringing data points of what, when and where the customer want the products together. I’m repeating that all over again, because it is the centerpiece of the of the JOKR proposition, and only works in its execution and fulfillment. If you take 100% control of your supply and inventory, you need to be the one that procures products, the one that is able to rotate the inventory, while building out the inventory. It only works in 100% decentralized fashion, so you need to bring the supply significantly closer to the demand, by only bringing the supply closer to the demand. Only then, will you accumulate data points in terms of what is needed locally, and by whom, and only then will you be able to fulfill the instant delivery promise, and only then will you procure more locally. If you procure locally and still physically bring the products to centralized warehouses, then you’re make the supply chain and economic proposition significantly more physically negatively impacted both economically and in terms of the service proposition. In order to fulfill on the promise of JOKR, which are local products to local customers, personalization, sustainability, and equal price points to offline retail, it has been a requirement and necessity to build out a narrow grid of micro fulfillment centers in every single neighborhood. We’ve been building out hundreds of those micro warehouses in our geographies already, and are building out about 10 new warehouses on a weekly basis, so we’re running incredibly fast on that. That is the only fulfillment and infrastructure side, and one of the key elements and components of our fulfillment strategy.

 

Hans Tung 

Holistically, you have a model that has high frequency of usage by consumers. You also mentioned that about 70%, if not more of the SKU carried are locally sourced, and you try to be truly personalized. You have have delivery fleets, that’s all your employees, that is only possible with the higher margin that you get from locally-sourced goods. You’re also not over-ordering from global brands, which is what they want retailers and others to do. We actually invest in companies that help retailers restock better to minimize some inventory and throwaways, which is wasteful for the environment in general, and you have many warehouses that can get to the end consumer faster. I also imagine you’re in areas with higher degree of urbanization, so you can deliver more orders per hour in denser and populated areas, where a lot of younger users want a better and different lifestyle. It feels like you have thought through, and have all these pieces of work well together to reinforce a superior business model. How did you think this through over time, to have these pieces fit well with each other, and be able to do this so quickly, in the last 5-6 months, and expand so quickly?

 

Ralf Wenzel 

It’s a combination of being very data driven, understanding our geographies and every single area we’re building our micro fulfillment hubs, as much as possible before we start. We’ve screened all the big cities of the world and looked into every single neighborhood, and analyze these few things beforehand: what the neighborhoods and areas we wanted to get into for building out a profitable, local on demand retail proposition. On one side, it was us being very data driven and data conscious before we started rolling out. The second thing is that this type of business model comes very natural to us as a team— the team behind JOKR is the same team that built the Foodpanda proposition, and the team behind part of the Delivery Hero success, that I’ve been working with for up to 20 years together. It is a business that for us as a team is the natural progression to what we have done before. We don’t need to go back to zero in understanding what it takes to build an on demand delivery business, because we have done it before and we now drive to even more perfection. The third element is that the business has been backed by a lot of secular trends as well. I think COVID, and the period before COVID accelerated the secular trends of people are getting more exposed to the benefits and convenience of on demand businesses, so there’s more consumer demand for those types of businesses than ever. Delivery platforms such as Doordash, and many others have proven that even as the pandemic has come, and with lockdowns getting released throughout the world, the trend of on demand ordering is sustainable. The acceleration that we’ve seen in on demand ordering is sustainable, and that’s why we see a lot of demand that is not being captured by sufficient players out there. Hence, the combination of us being more data driven, having a very strong team that has built similar businesses before, and strong secular trends have made it incredibly successful.

 

Hans Tung 

What are things you know today, that you wish you knew when you first start doing this business? Or even at the start, finding your first startup? What advice that you can share with our audience?

 

Ralf Wenzel 

The advice is to firstly focus on data as much as possible. Data science is not only a buzzword that you should write into your investor presentation, but also something that you need to build a team for capabilities of aggregating data and knowing how to use the data.

 

Hans Tung 

Knowing how to use data is extremely important because everybody can interpret data differently.

 

Ralf Wenzel 

Exactly, so knowing how to use data is really about understanding customers inside out, collecting real time data, contextualizing that, finding patterns and building algorithms around it. A lot of people think that AI is the buzzword to be used, but the precondition to making any artificial intelligence work is to have access to data, to know how to use, interpret and contextualize it, while matching data to build patterns out of that, and later on can you think about building great technology that sits on top of it. So, the first and most important advice for everyone is to be aware, professional, and double down on your efforts to interpret, use and manage data. The second thing is building the right technology layer on top of that, hiring the best possible engineers out there. Engineers are one of the most important resources, and unfortunately in nowadays’ world, there are not sufficient talents for engineering and computer science roles. As a business that wants to succeed, you have to build professional technology, and for me personally, it’s given advice to become as international as possible, and not be afraid of rolling the business outside of one country. If you roll it out in more than one country, you get aware of the sensitivities, challenge your own value proposition, and get access to more data as well. If you think about having a business in Bogota, Colombia, and having it simultaneously in New York, in the United States, and looking into the differences of consumer behavior, there is a match of consumer behavior. However there are also differences, and appreciating those differences, make your own proposition become more defensible and stronger, will allow you to build better technology, and make you appreciate different data points faster.

 

Hans Tung 

I think in your other life, if you had you chosen a different path from being CS, you would probably make a great sociologist. I always find that in order to be a very good VC or founder, you need to be able to analyze the bigger trends in society, and keenly aware of where the shifts, inflection points are happening, so that you can take advantage of that and build very interesting businesses that are sustainable, while capturing where the next big thing will emerge from. At this point, we’ll go into the last session of this interview, which is our quick-fire session in which we ask two or three questions, and you just tell us the first thing that comes to your mind. The first one is: If you’re going to have 3 people at your dinner party, alive or passed away, who will they be? Why?

 

Ralf Wenzel 

Nowadays I’m getting inspired by different people that look into how to change and improve this world. I would potentially take the architect Bjarke Ingels, whom looks into a completely new of how to build cities. I would also look into inviting Leonardo DiCaprio, an incredible actor who looks into having a strong sustainability agenda and how to preserve this planet. I would also look into (inviting) someone like Elon Musk, whom has a very disruptive and innovative power, he doesn’t only look into ways of disruptively improving this planet, but also even looking beyond this planet. Potentially, the chat between the three of them and my humble contribution can be a very interesting one.

 

Hans Tung 

That would be a great dinner party for sure. Next question is, what’s the one of the most interesting book you have read, recently or ever?

 

Ralf Wenzel 

I’m very inspired by Latin American literature. I’m a big fan of Gabriel García Márquez, one of the most interesting and most appreciated books are famous, like Love in the Time of Cholera, if you don’t apply a level of love, appreciation, passion and emotions to building companies, and showing empathy to our people, and obviously Love in the Time of Cholera reminded me of building businesses and the types of Cholera, so it’s having some kind of similarities and analogies. That’s definitely one of my preferred books.

 

Hans Tung 

From the answers you have given so far, you definitely have a mixture of a German and Latin side, that was very obvious during this session. The question, which is probably the most relevant, is: What is some of the best advices you have received or given to others? How have you leveraged the different sides of you to give the best advice to the people that you manage?

 

Ralf Wenzel 

One of the best advices I’ve received in my entrepreneurial journey very early on, has been to spend as much daytime as possible with people— don’t spend your days writing emails and chatting, but spent daytime being with your people, (customers, suppliers) engaging and talking. It was challenging throughout the pandemic but being with people and spending your time with people as a founder, an entrepreneur, and as a CEO is the most important thing. Try to avoid emails to the greatest extent you can, still write or read them at night, but the personal element is very important. The biggest advice I am giving to people is to be not afraid of trying out things and them. I think the biggest reason why certain ideas are not getting executed, or why certain entrepreneurs don’t strive is because they’re not trying it out. I think you have nothing to lose from trying out ideas, of being bold, not being afraid and being as execution oriented as possible. You can only analyze and predict things to a certain extent, but the end of the day, you have to try it out, measure it, put a great team together and be appreciative and acknowledgeable of your data. Failure comes from not trying, whereas failure doesn’t come from trying.

 

Hans Tung 

That’s great, thank you so much for your time! This was a very enjoyable session.

 

Ralf Wenzel 

Thank you so much, Hans! Looking forward to connecting soon, it was a great pleasure to be part of this session.

 

Hans Tung 

I’m sure we’ll chat again before the next board meeting, so you’ll be fine.

 

Ralf Wenzel 

Yes, thank you.