Stefan Kalb of Shelf Engine: Combating Food Waste with Data Science

TRANSCRIPT

 

Hans Tung 

Hi everyone. Today we have Stephen Kalb from Shelf Engine on our show. Stefan Kalb is the CEO and co-founder of Shelf Engine. Kalb co-founded Shelf Engine in 2016 to address the global food waste pandemic he experienced first-hand with grocers. Prior to Shelf Engine, Kalb spent 7 years as the CEO of Molly’s, a healthy grab-and-go food company he started in 2009. While Kalb grew the company to more than 400 regional retail locations, food waste was eating into Molly’s bottom line. Hungry for a solution, Stefan and Shelf Engine co-founder Bede Jordan developed a model to considerably improve perishable food forecasting. After successfully cutting Molly’s food waste in half, Kalb and Jordan quit their day jobs to launch Shelf Engine with a mission of transforming the food supply chain by helping grocery stores reduce waste and increase sales through intelligent forecasting. Today, Shelf Engine has nearly 200 employees and manages orders for leading grocers at thousands of locations nationwide. Shelf Engine is a GGV portfolio.

 

Stefan Kalb 

Hey, Hans, it’s a real honor to be here. Thanks for having me.

 

Hans Tung 

Oh, we have been doing a series of interviews with folks in food tech sector, and several of them mentioned that food waste is a big problem. Lots of national brands are pushing grocers to carry more of them and even willing to provide advertising dollars to increase volume, even just being put into the store to get more shelf time and so forth. And as a result, a lot of them have to go to waste when past their expiration date. Is this the problem that you saw that was happening that is so systematic, that you feel compelled to start this company?

 

Stefan Kalb 

Yes, absolutely. Listen, there’s a couple major factors that are happening, you just pointed to one of them. The other one that’s really important to notice, as consumers, we are starting to just demand fresh food, we want really good fresh food in the grocery stores. And you know what, grocery stores weren’t really equipped for that. If you look back about 30 or 40 years ago, a grocery store wasn’t used to actually managing that much fresh food. So here we are, we’re adding all these kinds of foods that have two to three day shelf lives. And grocery stores are really suffering, right? And the waste rates are skyrocketing. There’s several issues to it, you point to one, the other one that’s a major piece is now that 60% of the store is highly perishable, the grocery stores are suffering in a major way.

 

Hans Tung 

And it seems like more and more stores are carrying locally sourced food as well. And with that is as a lot more complexity to forecasting, waste management too.

 

Stefan Kalb 

Yeah, there’s actually quite a few things that have added some real complexity of the forecasting. But one of the key ones is actually the massive proliferation of SKUS. If you look in the 1970s and you walked into the average grocery store, you had about 7,000 SKUS in the grocery store. Today, you walk into your average grocery store and you have about 45,000 SKUS.

 

Hans Tung 

45,000. It’s insane.

 

Stefan Kalb 

Wow, how can you manage that many? It’s absurd.

 

Hans Tung 

But most people would think that these grocery chains. They’re national, many of them were clients, like Whole Foods and Kroger’s and target and so forth. They should know their numbers. Somebody somewhere, maybe it’s on the mainframe, should have those data? So why can they just analyze and do the forecasting themselves? Yeah,

 

Stefan Kalb 

I love that. I’m gonna use that quote, by the way, I think it’s somewhere on the mainframe. I love that that’s that’s fantastic. Yeah, listen, like a lot of these grocers have a major problem on their hands and you think they’d have it solved by now. However, they’re in a situation that is somewhat impossible. The first is that the problem to solve is actually not super easy, you need a really thoughtful solution to be able to solve it. And it’s not just technology, right? You have to control a lot of things that are going on in the supply chain. The other thing is they’re large organizations, with people across 1000s of stores. So if you are one of the major grocers, you have to control for an immense amount of labor, an immense amount of different complex solutions, they’re not really there to be able to do that they are focused on something else. Grocers are focused on trying to get as many customers as possible, they want to land market share. And that’s where they should be focusing, right. And that’s where we can come in and make a real play is because our focus is, hey, we can forecast the right order, and we can forecast it really well. Then we can excel at that, while they can really focus on gaining market share.

 

Hans Tung 

But for every time you go to a grocery store, and you get the bill to pay. Every item is as if the QR code or code is captured exactly by item what customers buying. So in some sense, there should be a richness of information that’s captured in the database of these grocery chains. Are they not being able to share that data on a real time basis? Or is also because they don’t have enough data scientists that can analyze these data in a more expeditious manner, or they just don’t have enough firepower to build up the models to do the forecasting. Which one is it or was it a combination of these factors?

 

Stefan Kalb 

Yeah, you’re opening up the Pandora’s Box. This is this is about to get fun; we love to do. So here’s the reality is yes, you can see on your receipt that you’ve purchased all of these items, right? And they’re listed out there itemized. There’s actually quite a few levels of complexity that goes beyond just buying that SKU. So the first one is, was that item on promotion? Or was there some other kind of metadata that is attached to that item that is particularly interesting, that is sometimes stored in the data and sometimes not. The other major piece that is there is there’s a lot of the items that you’re going to buy that are not on strict UPC codes. And there are what’s called variable weight or EPLU codes. And the way that that data gets stored is fairly complex. So although your receipt looks pretty clean, when it gets stored in database, it’s quite complex. Now, let’s assume that the store has all that data comes in and they store it well, it’s right there. Well, the actual challenge is now how do you pull that data? And how do you make it useful? One of the greatest examples and you know, I remember, one of the first times that we met, and I told the story, one of the crazy examples is that the sales data that comes to the point sale system, is out of a different system of the stuff that is actually being received and purchased from the store. So if you want to look at the waste rate at any portion of the store, you literally have to somehow get the specific SKUS that sold within that store, go find in another system, those specific SKUS that got delivered, and try to match those up for a specific time period. It’s incredibly difficult. That’s why most of the time when we talk to executives at grocery stores, they don’t know what their true waste weights are by department, they actually don’t really know what their waste rate is for their whole store. So, the truth is, when you ask a question, and you know, I’d be happy to go into much more depth on this, is that yes, there is rich data, it’s very hard to get it. And a lot of grocers have about 80% of it right? And 20% of it, it’s pretty well messed up.

 

Hans Tung 

Can you share a bit more than how you do adding value? How you trying to get data from them? And based on data they gave you, which may be imperfect? How do you leverage that data to do better forecasting?

 

Stefan Kalb  

Yep. Great question. So there’s two pieces to what we do that that are really enabled us to be extremely effective. The first thing is on the data that we get from the grocer, we’re able to essentially, quote unquote, clean this data so that it’s actually very much accurate. So we have a direct integration to the grocer, and we have a direct integration to the vendor. And when we pull in this data, we’re able to clean it up and make sure that it all makes sense. So if you take something simple, like say an item is on promotion, and items on promotion, oftentimes I’ll have a different UPC code. So you literally need to know all the different variations the UPC code of a given item. We take care of all that kind of stuff, right.

 

Hans Tung 

So you work with both the grocers as well as the vendors in order to reconcile the data.

 

Stefan Kalb 

Absolutely, there’s no other way to do it. Because the receiving data at the store is just not good enough. So, you need that data from the vendor. Now, the second piece that we’re able to do that is extremely meaningful in terms of our forecasting, which we haven’t talked about our AI yet. But the other piece that’s super important is the data that we collect. We have a national field team that literally goes into stores every day, and they collect all sorts of data. How is that product placed in the store? Is that shelf being five foot or not? Is the correct UPC on there? Is the planogram adhering to it, are they actually merchandising it correctly, all this kind of information is coming into the system that enables us to true up the data to a very real number, I’ll give you a really funny example. Some of the greatest food waste that is happening in grocery stores are items that are being ordered, that cannot be sold in the store, they don’t have a place for him on the shelf. So they literally just sit in the back of the store and just spoil and they just keep getting ordered, ordered over and over again day after day. Because the grocery store system doesn’t even know that it’s not available for sale.

 

Hans Tung 

Unbelievable. Well, then, you mentioned AI, can we you share a bit more about how you do that?

 

Stefan Kalb 

Yeah, absolutely. Yeah, so I just talked about one, you know, like, real advantage that we have as to why we’re so effective. The second piece to addresses this and we’ve built an incredible product to be able to forecast what’s going to happen in the future. But the product has two real functions that enable us to do this really well. The first function is what you would guess is demand forecasting. How much is demand really going to be tomorrow? How much is it going to be next week? And how much is it going to be in a couple of weeks from now, right. And a lot of the things that you would expect come through from that terms, the data sources that we get everything from, you know, traffic data to weather data to the actual store sales, right. And what we’re able to do is we’re able to create a demand distribution, for every SKU for every store for every single day. Right, we can tell you with very high level of accuracy, what we believe a single SKU is going to sell at some store and say Los Angeles tomorrow. But it’s only half the equation. The other half of the equation is we need to be able to forecast the inventory in the store. And we need to be able to forecast it very, very accurately. Because your orders are going to shift drastically based on what you believe is in the store. But the main reason why grocers have basically said, hey, I’m just going to let my store managers order, and I can’t really force them to use my system is because their system is dependent on a faulty inventory. Their inventory strays very quickly from the actual inventory in the store. So they think they have way more inventory on hand than they actually do. So what happens is, and the real dysfunction and why we’re having so much food waste is because a store managers in the store notices from their system that it’s just asking for way too low of an order. So they say, I’m just gonna way over order so I make sure I don’t have holes in my shelf. That’s why you end up with food waste of 30% and produce departments and basically the same and bakery and deli, right, crazy high numbers because the store who’s ordering is basically saying, I don’t want to be with holes on the shelf. And this order seems too low. That is the great dysfunction that we’re seeing in all these other systems elsewhere.

 

Hans Tung 

Got it? And as you do that the AI obviously plays a role in the forecasting team. Can you share a bit more about that?

 

Stefan Kalb 

Yeah, absolutely. So we have a very unique business model, which is we approach a store and we say, we will manage your orders for your store. And we will actually guarantee your sales. Yeah. Which means we take the inventory risk 100%. So we pay the vendor for everything they deliver, but we only charge the store for what actually sells. Now, you say what about our AI? Well, that’s how confident we are in our AI. It’s the fact that we can order based off of what this AI is telling us to order. And we can deliver immense value to the grocer, radically increase their gross margin, decrease their waste, and then we’re able to make money as well. That’s how effective our forecasting is.

 

Hans Tung 

I remember early on even recently, we continue to have discussion. Why don’t you turn this into a subscription model? Where it’s the revenue your revenue stream is very predictable. Everybody needs it, pay as you go. But you know they’ll have you taken any inventory risk at all. And you strongly suggest every time, No, that’s not possible. That’s not the right way to work with grocers. Can you share a bit more about your reasoning? How you’re willing to take on this risk and why would be more more effective, and why we allow you to get more closer to we’ll be able to work with you instead.

 

Stefan Kalb 

Yeah, absolutely. I once I hope that this question lands and becomes one of the most interesting questions for Business School case study,

 

Hans Tung 

right? Absolutely. Once you get big, Yes, for sure.

 

Stefan Kalb 

The direction that we decided to go on this front. Yes. So listen, we approach this this situation, in a way that we said, How do we really win the market? How do we deliver the kind of value that is going to absolutely transform the grocery industry? Now, I think there is a business model to sell our our services in more of a subscription manner. The problem is, is that the stores aren’t going to be able to use what we have as full utility. And it’s not going to really deliver the value that we need. When we are in full control, and we take on inventory risk, we drive for all the possible savings we can, all the efficiency gains we can. By doing so we can essentially make the store way more money. If we can make the state store way more money, we think we can own the entire supply chain, we can essentially one day go to a grocer and say there is no reason why you would order anything outside of Shelf Engine. Because we can make you so much more money here. That’s why we believe it’s the dominant method now, it’s much riskier. Yep. SaaS is an understood business model. With SaaS, you don’t take inventory risk. Yeah, we’re decided to take a riskier approach for the sake of being able to own this entire market.

 

Hans Tung 

It is easier sell initially for sure. People more willing to give you a chance because you’re taking the risk. Now, to make that amount of work, you got to make sure that you know, the execution part of it inside a store is done, right? How do you ensure that if you decide, hey, this is what needs to be what needs to be order that you know, your customers will order them as you want them? Or you say, Oh, hey, just don’t do anything, we’ll do all the ordering. And the vendors was shipped to you, you just have to stock them onto the shelves? Or overtime. Do you? Do you imagine even more vertically integrated model to control what goes on the shelf of the stores? as well?

 

Stefan Kalb 

Yeah, yeah, I mean, listen, we had we had to perform at a high level. If we were just selling a SaaS product, I don’t think that our product would be nearly as good as it is today. Because we are on the hook every day for the performance of what we do. Yep, we need to have full shelves, we need to outperform your sales, and we need to make them money. And we need to make money ourselves. Yeah, that makes it such that our AI has a huge amount of rigor to it to be able to perform at this level, right? So we’re at the place where there’s unbelievable scrutiny, and there’s a lot of pressure to be able to perform. However, I think starting from day one, and this model has enabled us to build a product to be able to perform at that level. And I still think, you know, in terms of the business model, this is why we’re successful. It’s because we have this kind of pressure on us.

 

Hans Tung 

Right. So again, you know, to make sure it was executed correctly, how do we ensure that the things you order actually get into onto the shelf and be able to display and utilized correctly?

 

Stefan Kalb 

Yeah, so that’s comes back to a couple taxes we have, but most importantly, the field team, right, we have a field team that literally visits stores on a regular basis to make sure that everything is performing work correctly. I can actually tell you, you know, take a Kroger store, I can tell you how well a Kroger store is performing in Los Angeles versus Dallas versus Louisville, because of the kind of data that we get, the AI is in form of that level, right? If there’s things that need to be addressed on the management level, then we can also go back to Kroger and say, hey, these are the things that need to be fixed. But it gives us a terrific advantage to be able to have this field team.

 

Hans Tung 

You may see it faster than their CFO can, in some sense. Or maybe don’t row you can sell that information back to them for subscription.

 

Stefan Kalb 

You will one day win on the subscription model.

 

Hans Tung 

You can charge someone on a subscription basis. It is very, very good, important information to have pretty much at their fingertips that they cannot do on their own.

 

Stefan Kalb 

Absolutely, absolutely. And that’s very well something that we could do in the future, right? I think we’re at the point right now where their CFO must be quite pleased with us. Because of the bottom line.

 

Hans Tung 

Make me money send me the money. Yep, exactly. But over time, the more you do, the richer your data becomes and the more analytical you can be for them on the real time basis for them to make additional adjustments as needed.

 

Stefan Kalb 

Absolutely, absolutely.

 

Hans Tung 

Yeah. And then, you mentioned working with vendors and be able to order from them, as well, over time how right now all your clients are tier one, grocery stores, and whether it is Kroger’s, Target, or Whole Foods and so forth? How do you see your relationship with the vendors evolve?

 

Stefan Kalb 

Well, I’ve got some funny stories on that front as well. I mean, you can imagine when we got started, and we’re starting some of our regional relationships, and Kroger would call one of their vendors and say, hey, you’re gonna start working on Shelf Engine. You know, this is like the majority of their business, they’re like, excuse me. Listen, the vendors are very important partner to us, right? Because we don’t manufacture and we don’t distribute, we’re very clear on that we will never do so. These, these vendors are folks who really care about the product, they work hard to produce what they do, and to deliver an incredible amount of value to the stores. And we recognize that for us to be successful, we need to be able to drive immense value to them as well. And so by means of being able to increase their sales, has really meant that we have vendors on our side, vendors now are going around the country and saying, Hey, would you please work with Shelf Engine? Who would be very helpful if you did, so. That is driving a lot of our growth today, we start working with the retailer, they bring on a vendor, the vendor says wait, who are you? And then within a month or two, they’re selling on our behalf to all these other retailers?

 

Hans Tung 

Yep. I remember when we first invested in you guys, leading your series A almost three years ago, now, you guys had any issues recruiting engineers that were querying data scientist, but for now, that’s a lot more obvious the value you’re bringing to the table. Can you quantify kind of the size, or the the magnitude of the problem you’re solving, that i think that you know, for people who are serious about being a data scientist, solving your problem should be quite attractive.

 

Stefan Kalb 

Indeed, you’re bringing up all of our good board conversations, Hans. We were indeed having, struggling with hiring on the engineering side. And I think for us, it was quite important at first to build the core team in Seattle. And to and to have that closeness. And Seattle is a very competitive market. Yeah. Microsoft, Amazon, exactly, yes. And then everybody wants to open an office here, you’re seeing that with like Facebook, and Apple, etc. They keep expanding their offices here. You know, from our perspective, we’ve been able to generate one, a tremendous amount of public facing data about the impact that we have. It’s like, if you want to go make a really big impact in the world, come work for us. Like you should see the millions of pounds of food that are no longer going into a landfill. If we visibly shown how much food we’ve saved, you could see a big hole in a landfill because it’s no longer there. Right? Yeah, that’s, that’s cool. Right? That means a lot. It’s very cool. Yeah. And then the second thing is, and I think a lot of really smart and driven, people are looking and saying, Well, where do I want to go work, and they got to make a good bet. And sometimes if they want to go the startup route, they got to make a good bet on the startup. Now we’re starting to really show those results before, there’s a lot of talk. Now it’s like, oh, if you jump on board the day, it can be a very meaningful, life changing event for you on an equity perspective, and that matters. And it should matter for those who are making the choice to jump into a startup. So if you care about making an impact in the world, and you want to have a really good personal outcome, you should come join us, join us and in building, continuing to build a really awesome product.

 

Hans Tung 

Some of our past portfolios CEOs, who are guests on the show, have told me that a lot of people who interview for their jobs, listen to the podcast or first. And I just want to say if anybody out there who is serious about making a difference, and still want to do you know, amazing, interesting engineering or data science work, this is the best time to join Shelf Engine, because now there’s a clear product market fit. And this model has proven it does work. And you have the best sort of clients to work with in the have volume and bottom volume of data to and to analyze, it does not it’s hard to find job as both can make positive impact on society and have you know, very interesting rich data and meaningful work.

 

Stefan Kalb 

Absolutely and on top of that, and I try candidates this all the time, timing is really important. If you get to a company very early on, you may really enjoy that. But it’s going to be a slog, that’s going to be risky. Now when you’ve got a bunch of things de-risked, but then you can still get a lot of multiples from joining in a stage where the company isn’t worth several billion yet. It’s the kind of right time to be able to jump in. So if you’re listening to this, and you’re interested, please do reach out happy to talk to you personally or reach out to our recruiters here, we’d be quite excited to have you.

 

Hans Tung 

There’s definitely an opportunity to build you know, 50x 100x company from here. So that now is it’s a lot like you said, very much de-risked that we first invested in when first when Gary Tan of Initialized invested. So it’s a great opportunity.

 

Stefan Kalb 

And I should say hands on that level. Sorry to interrupt you. But I just want to say a huge thank you for believing in us. You know, that was almost three years ago, and we didn’t have the proof points that we have today. So really, really honored to have you on board and believing in us from the get-go.

 

Hans Tung 

Well, thank you. And our team has enjoyed working with you, not just Madhu and Robin on investment inside. But also on the platform things I Bailey and Steph and Jen have all enjoy working with you a lot, which is very interesting is that then you did Molly’s before so you understand the pain points yourself firsthand. How has that experience helped you to build Shelf Engine much more efficient manner and be able to take advantage of the opportunity in a way that other people just can’t? It’s not something that you can just, you know, graduate from college, or drop off from college and just try yourself, because he’s just like the industry context and experience.

 

Stefan Kalb 

Yeah, listen, domain experience, I think is really, really important, right? If you were trying to do this business, and you were building it off a bunch of assumptions of how the industry worked, you would struggle in a major way, it would be very difficult. So there’s two things that have come through that have helped tremendously for us. With my experience with Molly’s, the first one is on sales. I can very confidently walk into almost any grocery scenario, any vendor scenario, and I can understand their pain points, right? I’ve been through it, I’ve been in that scenario where one of my delivery drivers just quit the night before and I had to do a delivery route. I know what it’s like to work on the production line. I know all those different steps, I know what it’s like to show up the grocery store. And there’s some big, you know, problem hassle, I know what happens when all the refrigeration dies, and all the food goes to waste. And I can speak to that. And I can arrive in a sales meeting, and very adept at that kind of conversation. And that’s meaningful for customers, they want to know that they’re being heard, and they want to know that we understand what’s going on for them. The second thing, and I think this was very, very important for us upon the launch of the company in the early days, is just understand what the product needs to do. Because I’ve been there, and I know what’s going to be absurd, and it’s never gonna work to Hey, that’s actually possible. And we could put that together and make sense of it. And I think domain experience enables you to know those little details. I know, I know, a produce department inside now I can go into kind of each little product in the produce department all the way to a deli, I can tell you how those are being tagged, what the movement is on those, how much it grocery stores, making, who the main vendors are, that stuff just really matters in a huge way. And that’s been able to build us immense credibility through this growth stage as well.

 

Hans Tung 

As you’re building out Shelf Engine, what are some of the learnings that you had you have developed sense that you wish you knew earlier? Or what were some of the positive pleasant surprises that you didn’t know when you started this journey, and has been very interesting nuggets of knowledge and wisdom that you picked up along the way?

 

Stefan Kalb 

Yeah, this is probably the point where I’m gonna start giving you a lot of credit in the early stages when you ask for certain things. I think there’s this kind of back and forth between being able to scale very rapidly. And then as we scale very rapidly to be able to catch up with that and meet that kind of demand for the customers. I think the two big lessons that I’ve had is one is to invest in that hyper growth, and to continue investing in hyper growth. We’ve hit some, you know, stages where we grew so fast, we broke everything. And so I said, hey, let’s halt on growth, halt on sales until we catch up. And that was certainly a mistake. Because even when things feel crazy, you just have to keep going. Right? But the other thing and this is one thing you brought up a lot in the early days is we just didn’t have enough engineers. And so when shit hit the fan, we were growing at a crazy rate. I mean, our engineers were working surreal hours. And I mean there was burnout because Isn’t that right? Like, they just couldn’t meet some of the things that we need to do. I mean, I remember our system, we launched that one point, something like, like 500 stores in a matter of about a month. And our system just was super slow, all of a sudden, it couldn’t handle that kind of volume. So you have the most sophisticated AI in the world. But if it takes hours to run, it doesn’t matter, right? Yeah. And we, you know, we had engineers working on the crazy level to be able to get it to a place where it could run at that at that speed. And that problem was avoidable by hiring more engineers quite a few months before that, or certainly probably a year before that, right? Yes. So those were a couple of the big lessons. For us on that front, there’s some early stage lessons that have probably conveniently kind of forgotten. At this point, at this point, it’s it’s a lot more to do with scaling than than anything.

 

Hans Tung 

For sure, I’m also impressed the eventually end up finding the right partner on data science. Then that has made a huge difference as well, indeed, it’s into the engineering end of their lessons go almost hand in hand in both feeding off each other.

 

Stefan Kalb 

Yeah, I mean, the team is such a core part of being able to be successful here. And I mean, you probably get this point of view better than anybody else, because you see all these different CEOs and all these different teams. You know, from my perspective, we’re in this place where we’re basically we’ve landed upon this immense opportunity, where there’s this product market fit, which is pulling us at extreme speeds. And we need to be able to build this such a way that we can meet these kinds of objectives. And there is only a certain kind of folk that like this, right? Yes, you have to love this aspect of being able to accomplish these kinds of goals at these speeds in a tremendous uncertainty and lots of pressure. But at the same time, it’s one of the most fulfilling, rewarding things I’ve ever done in my life. When you’re alongside this kind of team, you feel like you’re part of a professional sports team.

 

Hans Tung 

That’s exactly how I feel about that experience as well. Yeah, absolutely.

 

Stefan Kalb 

And it feels like there is this massive stadium around you, cheering you on to make this happen, right. But that’s not for everyone. And that’s, that’s really important to know. But by finding some of these folks, and you pointed to our data science team, absolutely. Huge movers into being able to go on to this next stage and being able to scale at this level.

 

Hans Tung 

Yeah, obviously COVID change a lot of things is terrible for many people around the world. For for tech, it did accelerate adoption of mobile technologies by people in the offline world that were just you know, how to shut down therefore figure out how to do stuff online. How has COVID impacted you, when your grocers going through those ups and downs?

 

Stefan Kalb 

Yeah. COVID. For the food industry, let me begin was this wild experience, if you can look at the food industry, the number one day that is the most intense for the entire food industry is Thanksgiving. Thanksgiving, literally vendors and grocers are planning months in advance for that day, right? When COVID hit, it was the equivalent of Thanksgiving, happening day after day for two weeks straight without any planning. Imagine the rush of people come into your store. Imagine that, like you just like forgot that it was Thanksgiving, and you just didn’t have turkeys on hand, right? Like, that’s how crazy it was. For us, there’s two things that happen. The first of all, in 2020, the company grew about 10x. It was insane. Our top line grew about 10x. And it was it was a wild time. The grocers noted not only that they had deficient systems, but they need to update and make some changes right away. And we were a go to source to be able to make that happen very quickly, that we were already part of their long-term plan. But all of a sudden, that was accelerated. And that was that was quite good news. The thing that was quite challenging, though, is going from, you know, kind of started 2020 we were about 20 people. And we had a lot of pressure in terms of this growth. And all of a sudden, we had to go full remote. And you know, by the time we came back from the office, a couple months ago, we were about 200 people. And so we went from 20 to 200 during a pandemic without seeing each other. That’s really hard, right? That’s really hard. And that created I think a lot of things that we had to work on to be able to function at a high level just through zoom. But the good news is we grew a tremendous amount. It really propelled us and that was that was quite good. The difficult one was to be able to grow a team at that scale without seeing each other.

 

Hans Tung 

What are some things that you guys did during that time, you know, to build the culture and get people feel they are of the team? How do you keep them balanced? or stay sane, during this period of hypergrowth?

 

Stefan Kalb 

Yeah, you know, I don’t know that I have the best advice, I don’t think we did a terrific job of it. We did a lot of the stuff that’s generic, right? We did like online happy hours and made sure that our all hands happen every week. So everybody felt connected. And we did a lot of kind of like coffee dates and that kind of thing. And we made sure that that was, you know, cross functional, different people in different parts of the organization. But honestly, it’s it’s like, the real answer is, a lot of people kind of burned out, it was intense, you know, people will work in some crazy hours. And so, you know, there is a sense now saying, Okay, well, now that we’re back in the office, and things are opening back up a little bit like are we going to be able to have a little bit more of that breathing room a little bit more things normal and feel that camaraderie, when we’re working, that’s meaningful, it means a lot to be able to just go have lunch with a colleague, or, you know, just pull up a chair and say, hey, let’s look at this deck and work on this thing. That’s, that’s meaningful. And I think that that’s gonna make a big impact.

 

Hans Tung 

If I step back, you know, food waste is not just a American problem. It is a global problem. Some of the, the brands who you work with, obviously are global as well. Are you seeing any sort of inbound interest beyond the US to ask you to expand overseas at some point in the future?

 

Stefan Kalb 

Yeah. So we are getting quite a bit of inbound interests. We are you know, I’ll stay fairly vague on the statement. But we’ll be talking soon about some international expansion. Listen, every grocery store in the world is struggling with this exact same problem, right? There is some level of perishability, there’s some level of demand, they got to figure out what the ideal amount is to order. The biggest question for us is strategically, where’s the next sets of markets that make the most sense for us to jump into, right? We’ve gotten a lot of demand from Asia, we’ve gotten a lot of demand from Southeast Asia, we’ve got a lot of demand from Europe, we’ve gotten demand from the middle east, from Northern Africa, like it’s, it’s kind of everywhere. The question is, what makes sense as the next markets to to expand and be able to get a footprint? Yeah,

 

Hans Tung 

Go global is one of our themes. So whenever, whenever the time is appropriate, love to have those conversations, and just even easier for anyone around the world who want to be part of this mission. This is indeed a very good time to join, work on the problems here in the US first, and then go global with you. Again, there’s not many problems in the world that are, from an economic standpoint, offer a lot of upside, same time interesting problem to solve. And thirdly, and most importantly, making a positive difference in the world in a society we live in. Otherwise, you know, we keep on wasting like this, is this is unsustainable, is bad for environment for climate?

 

Stefan Kalb 

Oh, absolutely. I mean, the climate change impacts the I mean, listen, like there’s an argument to be made, that a huge portion of the impact that we’re having, if we just eliminated food waste, something between like 10 to 20%. But a climate change impact would just happen from from eliminating food waste. I mean, we see it right, like, it’s all these trucks running, carrying food that doesn’t need to be carried. It’s all the plastics that are being made for the packaging doesn’t need to be done. It’s all this stuff being grown, that that doesn’t need to be grown. It’s all the labor and the focus in terms of producing that food. It’s enormous, right? It’s enormous. It’s exciting to be able to work on this kind of mission and see these results at scale.

 

Hans Tung 

Yeah, absolutely. Thanks all for your time, I’m going to shift our discussion to last portion of the interview in this where we call a rapid-fire. We’ll asked two or three to three questions. And you just just just say what up on top of mind when you hear the question. The first one is, you can invite three people to to a dinner party, and this can be people who are alive or in the past, who would it be? And why?

 

Stefan Kalb 

Well, first of all, I’d put Hans Tung at the top of that. It would be incredible. I would say Rene Descartes. I want to think about someone who’s really translated math in an incredible way. And then I think I would want someone like, you know, who I’ve been really interested in lately is Ray Dalio. I think his book Principles. His decision making ability in the way that he’s been able to orient his company to make really great decisions, I think would be would be super cool.

 

Hans Tung 

At Stanford during my college years, I was just always fascinated by how do people make decisions? Yes, you can get a lot of knowledge. And some people were extremely smart. But even with all that data, how do you make the right decisions and frame questions in a way that helps you to find the answers that matter? Answer the questions that matter and actually make the impact is different than acquiring knowledge.

 

Stefan Kalb 

Yep, absolutely. Absolutely. Yeah, I think it’s just, it’s just so fascinating how, like you can get an organization and make the right decisions over and over again. And I think he has approached it in a fascinating way.

 

Hans Tung 

So if asked you a book that I’ve read recently, that has made an impact on you impression on you, would it be one of his books, it would be someone else’s,

 

Stefan Kalb 

who? Well, I think his book is absolutely fascinating. But if you get me to the opportunity to introduce a little bit of diversity, one book that I just got with my team, that I think is very powerful. It’s called the Five Dysfunctions of a Team. And I’m very big on getting authenticity and transparency within the team. And, again, it actually drives back to good decision making, but it’s to having a highly effective team. So anyway, we just got done reading that book. And yeah, that that is a that was a powerful one.

 

Hans Tung 

Yeah. Given the amount of talent, intellectual firepower of Seattle, to produce as many unicorns out of Seattle, what would be advice you will give to other founders who want to take on an important mission, do something outside of the comfort of Amazon, Microsoft, and Facebook and Google and etc, etc. And what will be advice for them to watch out for to take notice, in order to build a team and rally a team, you want to accomplish something meaningful, make impact out of Seattle?

 

Stefan Kalb 

Isn’t that the first thing that I would say for anybody who’s considering it is and this goes, the same for people who want to join a startup is, you can always go back, you can always go back to work on Amazon, you can go back to Apple, you can go back to Microsoft. And so the question is, do you want to end up at the end of your career? Wondering if you should have started a company if you should have joined a startup? Do you really want to actually be at the end of your career and be disappointed that you didn’t give it a try? that somebody said, Oh, we went through this great error, and you just stayed at Microsoft the whole time? I think the question is, like, go do it, why not go make that leap and just give it a try. Because the worst thing that’s going to happen is you’re going to fail, and you’re going to go back to your company. And that’s like, that’s great. That’s what Microsoft, Apple and Google are all there for, right. And I would share that same message with the people that you want to recruit. Because if you’re up for doing something really meaningful, people should join you. Because there is a safety net, especially if they’re effective. So go out and make it happen.

 

Hans Tung 

I think it was a great advice. One of the founder, I backed was at Bain consulting, Bain Capital, and then Stanford GSB. And never worked in the internet company before and asked him why doing this internet startup? Isn’t that risky? Because you have never done before. And he goes, Well, I’m young, I’m smart, and I’m marketable. Even though I don’t try it out, then when my opportunity cost is so low, because what if I don’t succeed at this next two, three years, I know I gave my best shot. And I always go back to a PE firm or consulting firm when you get a high paying job. So you know, I’m not taking any risk at all. So I should do something I really love and just go for it.

 

Stefan Kalb 

Absolutely, absolutely. Plus, I would argue that you actually gain so much from the experience and the possibility it’s probably advancing you in your career. There’s probably like, some great advantage to you actually leaving your job and going and doing something more interesting. It’s a little uncomfortable. But hey, like, what is life for them getting a little uncomfortable?

 

Hans Tung 

Definitely not for everyone. But I always felt that if I didn’t try do 2 startups, both of them did not work, end up selling both of them didn’t make much money. But if I hadn’t done that for three, four years, I don’t think it would be as effective as a VC since because he just lacked empathy. It’s easy to criticize someone not doing their job much harder to relate to and understand what exactly is going through and be able to help that team make better decisions. And I actually encourage anybody who want to be VC to work and be in the shoes of a founder, a startup first so you see what is what is like, and yeah is the ability to relate goes a long way to have a productive working relationship. Because he is the founder, the VC and the board will be critical stuck with each other for next five to eight years, you better enjoy doing it. And that chemistry that’s going to serve well otherwise is painful for you and for everyone.

 

Stefan Kalb 

Indeed, it’s a bit of a marriage. And Hans, you know, this is this is the point that I’m actually realizing we haven’t gotten the chance to really chat about your history that much. I’m looking forward to one day getting to know your path and how you became to be such the I don’t know if you notice it, Hans, but like in fundraising, everybody’s like, oh, wow, you have hands on your board. This is absolutely amazing. Right? You’ve gotten to this place where you have not told me that appreciate you telling me that it’s true. Yes, reputation in the valley, Hans. It’s incredible. It’s incredible. how you got there.

 

Hans Tung 

Yeah, that’s it’s going to be a great dinner party conversation. Sure. I mean, I wish there was no COVID, we would have been able to spend more time with each other in person. So I’m definitely looking forward to that. I have a nine year old son and he’s not fully vaccinated yet. So my wife doesn’t want me to travel that much. But once once he does, you will hopefully it will be different. Indeed. Yeah. So thank you so much for your time on the show. Again, not easy to find opportunity that’s gonna have huge upside, do something extremely meaningful, interesting work, at the same time, make a difference, positive difference in this world. So thank you, for you and your team for everything that you do.

 

Stefan Kalb 

Thank you for all your support. Han’s really, really honored and really appreciate everything you bring forward to us. And if you’re listening right now, do send us a note we’d love we’d love to talk to you about our open positions and what it means to join our team. So thank you and, and have a good day.