Rolf Weber

Transcript

Brett Kelly:
Well, welcome, welcome. Thanks for joining us.

Rolf Weber:
Thank you.

Introduction

Brett Kelly:
So Rolf, where were you born and grew up, and how do you think that’s influenced your life and business journey?

Rolf Weber:
So, I was born in Cologne in Germany, but my family moved to a little village, 50 kilometres from Cologne, in Western Germany. So, very, very humble, very unambitious environment. Lots of coal mining in the area. My parents were a retail assistant and a copper. It was a nice upbringing. I had everything I needed—household, food, playtime, everything healthy. But it was an environment that wasn’t very driven to achieve. It’s a bit depressing reflecting on it overall. So, I didn’t know what was driving me, but I first felt a bit stuck. Then I looked to study. I went to England to study and then lived in Hamburg in Germany.

Brett Kelly:
What did you study in England?

Rolf Weber:
First, in Germany, I studied engineering. Quite funny today—I studied environmental technology, solar engineering, those kinds of things. Then I added an energy economics degree in England on top, and that led me to Hamburg to work for PricewaterhouseCoopers in the consultancy sector for the energy industry. That was in the late nineties when the industry was moving from monopoly to broken-up models, and the mentality was interesting—very slow-moving, no customer orientation. So, it was a slow death for me. I kind of said, “Well, I didn’t perform.” And therefore, I also got made redundant, which was great. I got a bit of money, and then I moved to Australia 21 years ago.

Migration Story

Brett Kelly:
So, that move… what was the mental process behind selecting Australia? Why Australia? Run me through that migration story.

Rolf Weber:
Maybe an early sign of trying to do something different. During my studies, I backpacked, and I also spent six months here in Australia in the very early nineties. I kind of liked the place. A friend of mine was living here doing his PhD, so I visited him, and then with Andrea, we came visiting again. Then this opportunity came up with a bit of money in our pocket and no real reasons to stay. So, we thought, “Well, why don’t we, instead of just going to Australia on holidays all the time, why don’t we go there and go on holidays somewhere else?” And yeah, we came here for five or six months, had a good look around, and then decided to apply for permanent residency. For whatever reason, we handed in a very German application, with dividers and folders, and somehow that must’ve caught someone’s attention—probably they needed to reach a quota. We got permanent residency within seven weeks instead of the usual 15 months or whatever it was at the time. So yeah, we stayed and decided to give it a go.

We went to Manly when we were staying here for the first few months. And when we had to make a decision about where we wanted to live—Melbourne or Sydney.

Brett Kelly:
The mayor of Manly!

Rolf Weber:
So yeah, we just packed up, got here, and it was a whole new start. My first job in Australia was with IKEA. They were building the Homebush store at the time, and I was hired to set up a department within the store. It was kind of a three-step career. But for me, it was exciting. Money wasn’t the key driver. It was more like, coming from consultancy where you work with people, you produce paperwork, ideas, and they never get implemented. With this one, the store opens on the day, the doors open, 30,000 people walk in and you’d better be ready. You had to physically get something done. You had to build your own team, you had to train, and I had to...

Brett Kelly:
And what was the department?

Rolf Weber:
That was in Kitchen and Dining. Yes. And don’t ask me—I still know the product names! If you work too long at IKEA, you just keep remembering them. It’s horrible. But it taught me a lot about a fully integrated business model. I went there to learn. I didn’t get paid well, but I went there to learn, and I learned a lot. So, a fully integrated business model—you design the product, you design the packaging, you make sure the supply chain works all the way into the store. You learn about product presentation, you learn how to move products when they’re slow movers. I remember we had global overstocks of a specific table, and that table needed to move. So, pretty much overnight, orders came in, and 250 stores around the globe just shifted that table into better-selling positions to get rid of that stock.

So, in retail, it’s fast-moving. You’re always on the customer, you speak with the customer every day, and you can implement any learnings straight away, either the next morning or even during the day while you’re speaking. It taught me a lot, which I still draw on today when we made a big jump in implementing the value brand. Really stripping it back to what customers really need, and what’s part of the product versus what’s a benefit on top, and how to bring the cost down. There’s just so many things I learned through the process, especially the idea of a fully integrated business model—from designing the product to achieving the final outcome, you’re in full control and can tweak the whole value chain.

Brett Kelly:
So IKEA is one of the world’s great businesses. How many years did you end up there?

Rolf Weber:
About two and a half years, which was great. To make a career in IKEA, you have to be a global nomad, and you have to do a couple of years in Sweden in a little village, which gets pretty grey in winter. And I moved to Manly, and I didn’t want to go back to Sweden. Doing a store career in itself also wasn’t that appealing to me. So I decided to switch, worked in a couple of smaller businesses as a general manager, or also worked in a small consultancy for smaller and medium-sized businesses for a while.

But yeah, in Sydney, even then, in the early 2000s, it was clear to me that as an employee, it wouldn’t lead to where I wanted to go. Property ownership was already difficult back then.

Especially in Manly. And as luck would have it, I had a good mate also living in Manly. He went back to Germany for a while, but we kept in touch, and we always had an idea of starting a business together. Then he was in Europe working for eBay, generating a lot of ideas in 2006, 2007, and then came back. We basically locked ourselves up, looked at three specific business models, and decided to launch our own business at the end of 2008, which was Brands Exclusive.

Brett Kelly:
Now tell us, I know the Brands Exclusive story, but share that with everyone. So you ran through three... What were the three options you had? How did you choose Brands Exclusive, and how long did the business run?

Rolf Weber:
So the three options—one, I can’t even remember, it was very, very experimental, early stage, with a very high risk of failing. There was no proof anywhere in the world that this would work. So it was very early days. Route-to-market, product-market fit, all those kinds of questions were unanswered, so it had a lot of risk. The second one was a model in social gaming where Daniel had established a relationship with someone in Europe. We could’ve copied the platform and brought it to Australia, but it was legally questionable at the time, and the ownership structures and licensing weren’t all clear in terms of what was in it for us in the end. Plus, the customer acceptance wasn’t predictable enough for me to feel comfortable investing.

And the third one was what was called a shopping club back then—still is, some of them still exist. This was in 2008/9, during the GFC—remember that, anyone? So, there were lots and lots of overstocks within retailers. It was a platform to basically sell overstocks online to customers without taking ownership of the stock ourselves. So, it was a very capital-efficient business model. We would photograph the T-shirts, dresses, jeans, fashion products, then present them to an audience we generated. They’d place orders with us, and then we’d only buy as much as we’d sold and then ship it to the customer, so we could offer 60-70% off retail prices. The big downside back then was that the shipping times were incredibly long because we needed to get the order from the customer first, then place an order. And a lot of the wholesalers at the time didn’t have good stock control. So sometimes we’d sell something that didn’t exist or was damaged. The actual customer experience—long wait times, anywhere from a week to four weeks—was unfathomable today, and sometimes the order would be cancelled. It wasn’t great. So, that business model needed to evolve. But we still grew the business together in its peak days to 60 million in revenue within three years.

Brett Kelly:
Which would’ve been about 2011?

Rolf Weber:
We started in January 2009 in a little office, 200 square metres, and we had our first exit in 2012.

Brett Kelly:
So, you sold the business to...?

Rolf Weber:
APN, the radio network. The great idea at the time was that, at the end of the day, it was about audiences that you could sell products to. So radio had an audience, we had an audience—about 2 million-ish contacts in our database. Then, with the reach of radio, and the billboard networks, we saw there was an opportunity to build it out. We also saw a lot of risk in hitching ourselves to a listed company with a board of octogenarians. So, the risk panned out, and the opportunities didn’t, but you learn.

Brett Kelly:
Yeah. So this is... For everyone in the room, did you sell 50% of the business?

Rolf Weber:
So, the financial investors—we had venture capital investors as well as some seed angel investors—they sold out 100%, and they were very happy. The VCs came in, and after two and a half years, we made them four or five times the money. So, it was a good deal. Daniel and I sold down 50% of the shares that we had in the deal, and the idea was we should still be incentivized. The problem was that because we weren’t able to sell 100% and implement another incentive structure, we demanded to have a lot of control—even though 82% of the business was owned by the new owner. So, we had blocking and veto rights and all these kinds of things. And I wouldn’t recommend it for a buyer or a seller, because decisions are slow and you can’t go one way or the other. It just doesn’t work. That was the learning there.

Brett Kelly:
And so you stayed for another two years?

Rolf Weber:
Another two years. Then a new CEO came into the APN group business. Their shareholders never really liked the deal, so he just decided to clear the decks. It all made sense. So, no hard feelings. He then decided—or the group decided—to sell the business, which was also the point where Daniel and I decided to exit.

Brett Kelly:
And who did they sell the business to?

Rolf Weber:
They sold it to Adam Schwab, who runs Lux Group, but had Aussie or something... he had a lot of product businesses at the time. So, he had the home business, he had some daily deal businesses as well. So it kind of made sense at the time to buy us and add it into his business. But Adam then did a swap, where all the product businesses were swapped into Catch, and he took on the travel businesses to build Lux Group, which is obviously doing amazing now.

Brett Kelly:
Yeah, so that’s a great story. You’re out by 2014. Started in 2008. Huge learnings. So venture capital investors, an exit to a public company, partial exit, a...

Rolf Weber:
Bloody nose.

Brett Kelly:
A bloody nose, an unhappy marriage. And I think, just to dig into the pain of— you mentioned it gently—but when you get married to somebody you’re unsure of, to the point where you feel you need a lot of controls in the agreement you structure. Can you share with everyone the sorts of veto rights and other controls you had, and how the illusion those provisions give you versus the practicality of having to go back and forth with an investor or with a board, even when you have some of these rights? Especially when you’ve been running the business with you and Daniel?

Rolf Weber:
The agreement—when decisions became, or when it became apparent that there was no fit either way and the group wanted to get rid of the business—that gave us some financial protection and levers to not be totally screwed over despite our shareholdings. The idea was, well, 82% of our wealth is in your control, so we needed to have a little bit to counterbalance that. The bigger problem was more that the interests weren’t aligned on what the group wanted to do with the business, especially when leadership changed. So, we actually wanted to negotiate that they give us 100% of our earn-out when the CEO would leave, because there was a lot of trust there, but obviously that never happened. Nobody could sign up to that. But that was our thinking—when people change, relationships change.

Brett Kelly:
And so, when you sell... just to emphasize that, when you sell a business to a company that has a CEO who is an employee—whether it’s the CEO or head of M&A or whoever...

Rolf Weber:
They’ll be there three months, six months, or a year later—guaranteed.

Brett Kelly:
And the average tenure of an ASX-listed CEO is three years. The average tenure of a senior executive in many of these places is three years. And so that’s worth knowing. If they’ve been in their role for two years, they might still be there in 12 months, or they might not.

Rolf Weber:
And the deal was announced, and one of the biggest shareholders kind of went ape, sorry. And that was a clear sign that this wasn’t going to be fun. And then, obviously, the 80% owner paid a lot of money, so I wanted to help. And in the beginning, it was really well-intentioned, but you just lose focus on what’s important. So, we didn’t act fast enough or decisively enough on improving the customer value proposition, reducing lead times, maybe taking on more stock. We also lost track a bit of who we had in the business in terms of people. So, it was just another meeting, another hour here, another hour there, mentally distracted. So I think that was a bigger problem. The clauses in the deal were more like fallback protection.

Brett Kelly:
If you were sitting in the same position again, what are the two or three things you would change?

Rolf Weber:
The idea was, how do you incentivize a founder who has built a bit of wealth to keep going and drive the business? That’s the fundamental question that this deal structure tried to solve. However, how would you then go on later and value the remaining stake based on what formula? Everything can be gamed. That was incredibly complicated, and we spent more time trying to negotiate that instead of saying, “Well, okay, why don’t you sell 100%? Maybe there’s a time delay until you actually get paid, but you’ll get paid a minimum. And then there’s a performance bonus at the end that’s like a shadow equity type deal, maybe.” I think there are other ways to incentivize people that don’t lead to the frustration of thinking, “Well, you didn’t deliver on your bargain, therefore my wealth has decreased.” So that’s obviously a problem. And it didn’t work for them either because they couldn’t fire us, and they should’ve, because then they could’ve dealt with the sale differently, or they could’ve repositioned the brand, or whatever.

Brett Kelly:
So, sell 100%?

Rolf Weber:
Definitely, yeah. Of course, you need to find a structure. I wouldn’t do 82/18, where Daniel has 9%, I have 9%, and so on.

Brett Kelly:
I had been down to Brands Exclusive, I’d seen the photography, I’d seen the stock. I was very familiar with what was happening, which again, was a huge privilege to see the game being played in real time. You go from that—what’s the physical, emotional, and process—then what happens next?

Rolf Weber:
Oh yeah, the final selling process was bruising. I’m reasonably calm. This is me happy, and this is me angry.

Brett Kelly:
It’s a German thing.

Rolf Weber:
Not a lot of modulation here. An ex-employee actually took a video doing exactly that. But anyway, I was like a tiger in a cage in the last few weeks while that deal was being finalized. It was somewhat unfair on the family. So we decided to do something we’d remember, no matter what, after the deal. The deal finished in February or March, so we went as a family to New Zealand for three months over winter to just go skiing.

Brett Kelly:
How old were the kids at this point?

Rolf Weber:
Three and six. Just old enough to get on the skis with Anna, which was great. And then having permanent residency here... or citizenship even. You have permanent residency over there too, which was great. Free childcare. Free. Hannah went to a private one, so we went there. This isn’t private, so we have to pay a little bit. Is $14 a day alright? Anyway, I digress. We went there, spent three months in New Zealand in Arrowtown—beautiful place. I went up the mountain pretty much every day. Still can’t ski, but it doesn’t matter. The kids went to school there. Great memories were built. A bit of really letting off some steam for a longer time and thinking, “What did I learn? What do I like about myself? What do I like doing?” and these sorts of things. I also felt a bit... to be honest, a bit directionless about what’s next. That wasn’t clear to me either. With a network of friends, we started looking around at what some of the global business models that may or may not work in Australia, which is a bit of a story. Look around, see what works overseas, is it here, is it not? Does it make sense? One of the things I learned is that Australian consumers are much more advanced than people think in terms of their adoption cycle. Facebook adoption was one of the highest when it came to mobile phone adoption—even in the '90s, we had one of the fastest, highest per capita rates. When we started in 2008, '09 in fashion after the big dot com crash, you’d think, “How could you sell shoes online? It doesn’t work.” Well, people were buying overseas, under $1,000, and having them shipped in. That’s why looking around at what was happening overseas made sense to me.

Brett Kelly:
So the journey from that bloody nose exercise, tremendous idea to take the family away and try to give them a memory that isn’t the stress of that exercise... You come back, and the genesis of Marley Spoon. Maybe share with everyone where the idea came from and what the business is.

Rolf Weber:
Despite all my whining and bloody noses, I still could buy the house. That gave us a sense of security. There’s a bit of money in the bank, the house is paid off... breathe, nothing can take that away. So that then changes what you want to achieve in your next venture. The first venture was with Daniel, and we did a lot of work upfront to align on whether we really wanted the same thing out of this, if we wanted to work together. You may know your friend, you think you know your friend, but is it... when you do a venture together, do you really want the same thing?

So we actually had somebody working with us as a facilitator, just to make sure. And the idea was, we build it, we sell it, we make money. We didn’t want to build a legacy, we didn’t want our name on it. That was a bit of a tick, which then... with some of the financial goals that I hadn’t solved but ticked off in some parts, gave me a bit more freedom to look for a bit more than just making money. I wanted to continue to grow and learn. I learned a lot as a consultant, I learned a lot at IKEA, I learned a lot at building Brands Exclusive. I like being challenged, growing, and doing things I hadn’t done before. My career has been incredibly non-linear.

Entering a new industry was something that appealed to me. I wanted to also apply what I learned because things get easier when you get older, and have a bit of experience—you don’t make that mistake a third time. That was important to me. How can I provide value to what I’m doing? I got a bit older, and the Maslow pyramid, the bottom two rungs were solved. The product I was selling or the service I was providing needed to solve a problem for somebody and make their life better. That was becoming important then. Yeah, I still wanted to make some money.

Brett Kelly:
Still a capitalist. It’s a rare breed these days.

Rolf Weber:
Because it works, it works. Through Brands Exclusive, the venture capital fund, Klaus Hommels' Lakestar Europe, they, in 2014, invested in Marley Spoon in Europe, so Marley Spoon, the meal kit business. They looked at the map, saw their biggest competitor was HelloFresh, which was in Australia. Klaus told the CEO, Fabian, "I know a guy, or I know a couple of guys, maybe they can help with making deductions or building the team." That was how the contact was made to a super small fledgling startup in Berlin called Marley Spoon that had big ambitions to conquer the world with a better food solution.

Brett Kelly:
So just so that everyone heard that... So, Klaus, his fund was an investor in Brands Exclusive?

You’ve stayed in touch with him, he’s had a good experience, he got four or five times his money. He’s now invested in a startup in Germany. He says to those boys, 'Talk to these two boys I know in Australia.' I think this is a very important thing. Now, just before we move through that bit, the business today, the revenues are?

Rolf Weber:
200-plus million.

Brett Kelly:
200 million. Market cap?

Rolf Weber:
It’s been as high as 800 million.

Brett Kelly:
So it’s been as high as 800 million, it’s got over 200 million in sales. This is a significant business in a part of the market... People have got less time to cook than ever, and probably less skills. They want things easy, sent to them, that’s healthy and makes a difference. So this is a very long-term, well-positioned business. The opportunity came through a relationship that’s probably at this point over 10 years old. So, what happens next? They come to you—

Rolf Weber:
The idea was that Daniel and I help build the team. I talked about what I was looking for in my next gig, I didn’t have something properly lined up. I dabbled in founding other businesses but didn’t have my own—

Together with a couple of friends, we were founding shareholders of Mad Paws, which is now listed as well. A marketplace for pet boarding, pet sitting services. That was interesting. But that wasn’t something I wanted to run. We funded it, we were advisors, and helped the business along. We found a CEO, a junior CEO to run it and then helped him along. Nice side gig but not the main one. I still had my lookout. Then this opportunity came. I looked at it and thought, okay, I can bring something from my scaling business experience. I can learn something. I didn’t know food, didn’t know perishables, didn’t know refrigerated.

The business did... or the product is something that really helps people live a better, healthier life. When you look at it at scale, in a country that’s on the verge of an obesity crisis, if you can support people to live better and eat better, then there’s leadership to actually do something. And the other side of the “do well” part is that... through our supply chain and our business model, despite shipping food, we have less than 1% food waste in our supply chain. And our customers, who usually waste about $1000 on average in their fridges, go to maybe $50. Tremendous impact on the environment, if you like. It ticked all the boxes. So, I was reluctant to find somebody. Together with Fabian, the global CEO, we decided I’d be the one to run it.

Brett Kelly:
And what year did that end up being, ‘17?

Rolf Weber:
In early 2015, I flew to Berlin, spent some time with the founders and the team over there. Decided they were ambitious enough that I’d like to be part of it in the initial stages. We put the early team together, four or five people here in April, and we shipped the first box in June 2015. I think I officially became CEO in early ‘16, but it happened before then.

Brett Kelly:
How many packages are you shipping per day now?

Rolf Weber:
So, we’re shipping around 45 boxes, or 45,000 orders a week, which have roughly four meals at three meals per order. We ship 200 million... or two million times 10 a year... 20 million meals a year, yeah.

Brett Kelly:
Now, in the first year, in ‘16, how many meals were shipped approximately?

Rolf Weber:
In ‘15, 5,000 orders.

Brett Kelly:
So guys, compounding from 5,000 to 20 million is pretty fantastic.

Rolf Weber:
We went hard. I mean, every startup has insane growth rates. You ship one box, the next week you ship two. 100% growth. We went several hundreds. We stagnated, so our peak period was obviously during COVID, no question why—people stuck at home, doing online food, of course. We were a go-to place to help customers live. It was an interesting time with the team. It was very hard in our facilities operating under some illusion of COVID safety. We did our best to serve. We grew 40, 50% in three and a half, four weeks when at the end of March 2020, all hell broke loose. That was pretty crazy.

Shifting supply chains, everything moved online. You needed to get the product in the door. We needed to get people in the door and train them. We needed to organize, pick and pack, and stay one and a half meters apart in a facility that was cramped. Very challenging, but positively challenging. Because on the flip side, I was still involved with Mad Paws. 100% of their revenue broke away. I saw two sides of the COVID coin, which was interesting. On one hand, 50% of people on... salary reduced. On the other hand, we were scrambling to get staff into the door, one way or another, safe enough to operate. But yeah, very interesting. That was our peak time where we were shipping 65,000 orders, nearly 70,000 a week. And we started in a place not much bigger than this, maybe even smaller. We now have three meal kit facilities: Sydney, Melbourne, Perth. Combined footprint of 20-something thousand square meters that we occupy. In 2022, we purchased a ready-to-eat meal business which has its own 2,500 square meter kitchen, cooking facility as well.

Brett Kelly:
What's that business called?

Rolf Weber:
So that business is called Chefgood. Marley Spoon developed from a one-brand business that served seven different... or had seven different options to eat for only couples in 2015, to now we have Marley Spoon which offers roughly 130–140 meals to choose from, plus another 200, what we call add-on items, which are either sides, or ready-to-eat meals, or retail-ready packaged goods: snacks, drinks, those kinds of things.

Then we have a value brand called Dinnerly. I think the easiest way is Jetstar and Qantas—Jetstar in the good times, right? We have a premium and we have a value product on the meal kit end. And then we have the ready-to-eat business, Chefgood. The idea is that the value proposition evolves. We started off with helping people to cook. To really simplify it, we bring healthy, delightful, and easy meal solutions to every Aussie, and we do that as a group. And we moved away from helping people cook to helping people eat well.

That can be done within two minutes, prepared food in the microwave, all the way to slow-cooking meals that take hours and hours. We didn’t want to dictate how you live your life or how busy you are this week versus next week. Tremendous opportunity to move for us from serving two to three cooked dinners a week to now serve anywhere between 20 to 30 eating occasions in a week, from breakfast, lunch, dinner, seven days a week.

Funding & Hiring for Growth

Brett Kelly:
Can you share with everyone here how you funded the growth of Marley Spoon, the journey to a public company and what you've learned from your VCs, your growth funds, your public company shareholders, your pre-IPO and your IPO-type journey?

Rolf Weber:
So just for clarity, I don’t want to give false pretenses. I run the Australian Marley Spoon business or group. The Global Marley Spoon Group was listed on the ASX kind of. And I worked with Fabian, the global CEO, on making that happen. The Australian business, through industry settings and a bit of good fortune and a good team, was—and potentially still is—the jewel in the crown.

We had 40% of the group revenue at the time and we were the most profitable at the time. So that was one of the reasons why we listed the global group in Australia. Fabian was the one generally raising funds for Marley Spoon as such. There, the very big differences, VCs, with all their faults, still have a longer-term view and they want businesses to succeed. They’re not in and out. They’re not in there to, you have some long-term shareholders also in a listed business, but you also have a lot of opportunity seekers that go in and out when they see whatever opportunity that may be, totally dislodged from your actual performance.

And market sentiment moves because of interest rate changes, not because fundamentals change. So that's a big difference in terms of before and after, if you like. So, you have to keep that in mind if you're thinking of doing an IPO. I actually worked with the boys from, not worked with them, but spent a bit of time with them from Bikes Online when they were doing the peak e-commerce times, kind of considering an IPO, and just explained kind of what would happen and how much time you spend on working with investors and doing your roadshows and justifying where things are going, one way or another, versus just doing what you need to do and being in control. And they did not do it.

So it really depends on what you're trying to do and what your obligations are to your investors, to your team members, your shareholders, stakeholders, and so forth.

Brett Kelly:
So as you're doing all of that, you're married to Andrea, you’ve got two kids, how do you run your life in a sustainable and happy way while you're doing these other things? Because the impact of, I remember seeing Andrea at a function we were at when she was pregnant with your second child, walking up a hill, and you know that this is going on at the same time as these other things, particularly when things are complex. How have you tried to manage life in an integrated way or not?

Rolf Weber:
So, I was at the time a member of YPO. Having a group of like-minded people that understand what you're going through so you can kind of talk to them about the problems in a confidential way, can trust your team members in forums—a group of 8, 9, 10 people that can advise. They have a stake in your life. They’re kind of your personal board that really want to help you with good intentions, but they also tell you the truth. So that was important to have a place to vent, seek advice, let steam off and have certain problems or ideas, good and bad, you can share. So that really helped and is important.

Andrea has been super supportive through my whole journey. So we had Max being not even a year old, crawling on the floor. We didn’t have a lot of money when we started Brands Exclusive, and she said, “Well, go for it.” Right? She also said, “You have until January because then money’s out, so...”

Brett Kelly:
Go for it. You have until January.

Rolf Weber:
“If you're not funded by then, then you may have to find a job.” But still, there was a joint understanding of the level of risk we wanted to take as a couple, as a family, in pursuing opportunities, and that hasn’t necessarily changed. So that’s been really, really supportive in terms of how I sustain. I’ve had my ups and downs, but it’s pretty clear you need to moderate your alcohol intake. Well, I need to anyway. I need to. Regular exercise a couple of times a week, eat reasonably well. And that is the foundation. And if I do that three, four times a week, half an hour, an hour gym-ish, rowing, whatever, one glass, two glasses of wine a week maybe, then all is good.

Brett Kelly:
How old are the kids now?

Rolf Weber:
Max is 16, Ana is 13. It’ll be interesting in the next couple of years. She’s showing the typical signs of a girl. But they’re blessed, smart, healthy and staying out of trouble so far. So fingers crossed, we are really, really easy-going to be honest.

Brett Kelly:
So the people that have inspired you the most, helped you the most, or been the best example to you, are there any sort of North Star people like your VC friend or others that have really contributed to what you’ve been able to do?

Rolf Weber:
Not one person. It’s probably more about picking the best off. So I am an ever podcast listener. I don’t read as much as you do, but I do read the book or audiobook in the car, which is kind of the best invention ever.

Driving becomes bearable. So I try to pick up things I learn along the way and then implement them, which is kind of what you mentioned. That my team's dreading, "Oh, bloody hell. He read another book."

I pick ideas that I think have value or apply, and it could be listening to the Musk biography. So there’s a lot of intensity which I can learn from. I don’t have to pick up the bad ideas or go to the extremes, but there’s stuff you can do.

Brett Kelly:
You can learn from it anyway.

Rolf Weber:
That’s just one recent example where it’s kind of, “Okay, we can pick it up a bit more. We can be a bit more, like, increase the urgency.” And using the COVID example when our business was capable of doing it overnight. So we had COVID in Melbourne, we needed to shut the facility, 40% of our revenue pumping out of Melbourne. The Department of Health walked in and said, "Well, 100% of your people are now close contacts, so they’re home. I don’t care what you do here, I don’t care how you feed Victorians." Facility shut overnight, all trucks to Sydney. We served 96% of our customers. So you can use this example to go back to the business. Well, if we can do that overnight, we can do much more than we currently think we’re capable of. If you can grow your business and operate your business and grow it 40% in two to three weeks, this is a project to do in three months. Let’s go. Plenty of time.

Brett Kelly:
Yeah. The capacity of people under pressure is something else.

Rolf Weber:
I pick stuff from people, books, the big luminaries in startup land or business land, even other smaller people, unknown people that walk on the streets, people in the forums. Plenty of lessons I’ll learn from them.

Brett Kelly:
How did you overcome the supply chain challenges through that time? I think that would’ve been extremely stressful.

Rolf Weber:
I think for us, talking about seeds, we always try to work with our suppliers in a very respectful way along the way. So there’s a lot of give and take. You don’t blow up when there’s a little human mistake happening and become a jerk. You build relationships, and then when you need them, you can rely on them. And that worked for us. But it was a very hard slog on the phone constantly. The food supply chain shifted radically, so from hospitality and cafes and everything needed to go into wholesale supermarkets and us, as well as others that were doing food online. So it was a lot of being on the phone trying to get tins of tomatoes and all these kinds of things that led to fisty fights on the supermarket shelves. But yeah, relationships that you build and foster over a long time. That doesn’t mean you’re soft with your suppliers, but respectful. And then, on the other hand, you can rely on them as well.

Brett Kelly:
In 2015 when you actually started this, how many other players were in the market, and how many more players have entered the market since? And how do you see this category now in the next five to seven years?

Rolf Weber:
Yeah, so HelloFresh had probably the biggest head start. They were here three years-ish earlier. And then there were two or three other smaller players, including My Food Bag, who are now listed on the New Zealand Stock Exchange. So they started that business in New Zealand, also three, four years earlier, and then came to Australia to launch it here. So there were three or four players in the market.

It looked like an insignificant difference, but it was quite a significant difference. So at that time, when you were buying new kits, the meals for any given week were actually decided for you. So you get what you get, and you don’t get upset. We were the first ones to introduce choice, and it was very limited. The average order was three or four meals a week, still is. We had seven meals to choose from, vegetarian, and a couple of protein options. So at least you could vote off the ones you didn’t like.

But with most of our competitors, there’s pork in there, so you already exclude 20% of potential customers, if not more, in that week. So a customer gets something they don’t eat, and that drives churn. So we had that advantage. And then we also packed the meals into individual dish bags. Some of them were doing it, but the biggest competitor, HelloFresh, wasn’t doing that at that time. So that also gave us a leg up. So we went out with the Better Box as the difference.

We were pretty narrow in our approach. So you needed to want a subscription and you needed to want to cook in order to be a customer of Marley Spoon. Now, that is changing. And we did that in order to ensure we have a cost advantage because it was a subscription and we asked our customers to make the decision six days before delivery. We had this no-waste supply chain because we were very working capital efficient. We only bought the stuff after the orders were placed. 30–40 days’ payment terms, six days in advance. So that helped in building a business and keeping waste low because of our small volumes at the time. If you get your ordering wrong, then...

Brett Kelly:
You’ve got a big problem.

Rolf Weber:
Big, big problem.

Brett Kelly:
And you’d learned a ton about inventory through Ikea and through Brands Exclusive.

Rolf Weber:
Yep. Yeah, yeah, yeah.

So that really helped. Now that we have $200 million in revenue, still not big in terms of release calls, even Harris if you like, but it’s big enough to move into a rolling kind of stock. And therefore, the waste problem we can manage in different ways now to open up to faster delivery times. We are working through the ideas of not being a subscription-only business, also being a one-off order business as well. So I personally see huge opportunity there. So that’s one, change the business model on the back of the volume that we’ve achieved. And then the other one is broadening the offer. As I mentioned, we used to serve only three eating occasions at best, maybe four on our value product, also five times a week. But there’s so much more we can do, help people eat better.

Brett Kelly:
Yeah. Very, very interesting. Through your growth years, did you experience much senior manager or leadership turnover? And if not, how did you hire leaders and senior managers for growth in future years?

Rolf Weber:
So we haven’t seen a lot of turnover in our leaders. So when we were small, we actually had a very small team with generalists very early on in their careers. Our head of people started as an administrator in the fulfilment section, helping with ordering, helping with training new team members and so forth. And then very early on in her career, had an interest in people and HR. And then we worked together, and today, she’s a tremendous leader. Our head of finance, who now does a dual role, also COO, was in Berlin, started as an intern in finance, did our FP&A. Tremendous work ethic. He’s a beast and very literate, hardworking, smart, and started as an intern in finance, to now run a $200-million business finance department and operations. But I also hired some of my old mates from the Brands Exclusive business that I could trust on the operational side, and they're still with us.

So how do you hold onto them? I’m a very high-level, stay-out-of-your-way kind of leader. So my team has a lot of freedom to do what they need to do, which is very appealing to a lot of people. In my view, I hire somebody to do a job, so why would I do their job? It’s more about setting directions, setting goals, having strategic views, strategic discussions, and then, all things going well, I stay out of the day-to-day work so I can concentrate more on the higher-level framework setting, rather than being in the business.

So sometimes, I wonder if I’m the laziest person in the business. Physically, I may be. Mentally, probably not, but it looks a bit like that sometimes. That is appealing to a lot of people to stick around. And then we are in a very blessed industry and business because we get feedback from our customers about how we fundamentally change their lives for the better. And again, when you have that purpose, that brings a lot of people in, and they want to contribute to that.

Brett Kelly:
Yeah. You mentioned coming into an industry you didn’t have experience in being of interest to you. With your background, do you think learning a new industry allows for fresh eyes to think outside the box and drive growth? If so, what was one thing you identified, which was your light bulb moment?

Rolf Weber:
There is a good level of naivety. So when you come into an industry, you don’t know all the pitfalls and all the challenges. So the refrigerated supply chain—how can it be? Horrible. Fresh produce waste, I had an inkling that it could be a bit of a challenge. But the day-to-day management of it, I had no idea.

So you go in with a bit of naivety, and you probably hear that all the time. That allows—you know, I would've never started if I’d known. It’s one of those things. But at the end of the day, you also hire experts along the way, and then you can have that kind of yin and yang. They bring ideas on what works and what doesn’t. And then you can challenge or learn with fresh eyes or learn. And that is a very healthy thing. So we hired, of course, a culinary expert, a person who wrote recipe books to set us up with our recipes to start off on. And she had a lot of ideas on how images need to be produced, but she came from recipe books, not from the internet. With Brands Exclusive, we produced 15,000 products a month, which means the model comes in, throws on clothes, gets her to turn five times or him, and then that product is shot within a minute, and then next.

So it's kind of go, go, go, go, go. So I brought that to the production of food because our meals were up maximum a week’s worth of images that size. It wasn’t a book that stays on the shelf forever.

You didn’t need to produce it. And she came in, "Oh yeah, photographer with $2,000 a day." I said, no, it won’t. It’ll be $500. It’ll be a normal day rate. They're not superstars. If they don’t want to do it, I’ll pick one from the street who can operate an iPhone. That’s how we work.

And it wasn’t $500. It was $750. We needed a bit more quality than I thought, but you come from different angles to then find what you need for your particular business in an industry that’s also different. So we operated in delivering a meal solution. We didn’t sell ingredients. So it’s obviously very different from what you do. We needed to produce recipe cards versus selling fresh tomatoes or chips. So being open-minded, but also then finding things that are different to stand out, different. There was a light bulb moment, let me think about it. I may come back to it. Yeah.

Brett Kelly:
So there’s some great questions here. So most people start a business with their own capital or debt. What gave you the confidence at such a young age to raise capital for Brands Exclusive?

Rolf Weber:
So with Brands Exclusive, it was the... So Daniel and I were aligned in what we wanted to do, but very complementary in our skills. So when he then looked at, okay, this is the business we want to start together and what are the key elements? So on one hand, we needed to acquire customers through online performance marketing, and that’s where Daniel came in, build a website, produce products. And then we needed to build a supply chain and ship products.

And that’s where I came in, with my IKEA experience. So we felt that we had the skills to drive the business, and that then gives you the confidence when you speak with your suppliers, on one hand, that need to trust you with our brand, or with financial investors.

Brett Kelly:
The confidence is looking back, it looks like people are confident, but you’ve asked the question. And if you couldn’t have got the funding, you wouldn’t have been able to do it.

But the funding gives you some confidence.

Rolf Weber:
Yeah. The investors, on the other hand, when they invest in startups, they have a high-risk mentality and tolerance. There is a high likelihood of failure in that setting. So they look at the funnel. They look at the experience. They bring the networks that they can tap into in order to support the growth. And that seemed to work. But we raised that money in Europe because in Australia, that was not possible.

Brett Kelly:
Yeah. So that’s also very interesting. In terms of that European connection, where did that come from initially?

Rolf Weber:
That was Daniel having worked at eBay in Berlin. That’s where the European connection came from.

Brett Kelly:
Which is great. So again, a long-standing relationship. Books that you’ve learned the most from.

Rolf Weber:
Books I learned the most from. So it’s autobiographies, Steve Jobs, Musk, those kinds of things. Yeah.

Marley Spoon Culture

Brett Kelly:
Thank you for sharing your story. What is the culture like at Marley Spoon? Is it a family culture, or are you a sports team?

Rolf Weber:
Netflix’s No Rules Rules, it’s a book I cherish. They obviously talk about sports teams, and I try to move the business there as much as I can. But on the other hand, we have very long tenure for a lot of people, so that then breeds familiarity, and that’s also very helpful.

So we’re probably more in the middle, but we run half-yearly calibration meetings where we use the keeper test. So that’s something I took out of the books, kind of that question. If that person would leave tomorrow, would you cry a river or not?

And if you don’t, why is that? Is it because they do a good job for us, and you can replace the role, and there’s plenty of candidates? And therefore, you’re not worried about that person leaving the role, even though they do a good job? Or is it behaviorally a bit more disruptive, and you just haven’t had the guts to take action? Or it’s tremendous? But then you also need to look at, well, if that person is such a key talent or future star, are we doing enough to keep that person from moving on? So that is one of the most important meetings that we run, where we assess it as a group.

The senior executive team. They, before that, with their second leaders, go through their teams. And we look at probably not every pick-and-pack person in the facility, of course. But we have around 100 salaried people, and we go through 90 of them. And the team then, the executive team, holds each other to account. There’s a really good performer, great future, and then some others go like, “Nah, nah.” I’ve heard many different stories.

There’s a few issues here. So this is where you flush out, bring out into the open, great performance and underperformance, and then sit down, write down the actions. And within three months, that’s fixed one way or the other.

Brett Kelly:
Yep. So twice a year sort it out within 12 weeks. So really great insight. So all businesses are relatively working capital-like. How much thought went into deciding on the business models you went into?

Rolf Weber:
Yeah. So when you need to raise money to start the business, obviously, working capital—how much do you need to raise to fund the operations of the business versus the day-to-day versus the growth, customer acquisition, and so forth? Big consideration for Brands Exclusive, not having inventory. Having worked in an inventory business and seeing the millions on the shelves and having to deal with that kitchen table overstock, that was a huge consideration to—

Brett Kelly:
It’s good to see somebody who’s really amazing at doing that so that you know that you’re not... Because I care. I’m unbelievably good at managing.

Rolf Weber:
Yeah. So that’s obviously owning the supply chain and knowing... I think it’s called the beer game. So that’s part of the training processes within IKEA. So even if you are in retail at the end of it, you’re still trained in sustaining the supply chain, and it’s very important. So at the end of the day, imagine the P&L of the business that you want to build and look at the key lines. Imagine the balance sheet, look at the key lines, and then see what you can do to optimize upfront.

The Future of Business Technology

Brett Kelly:
Yeah. That’s great. Fast-forward five years, what are you most excited about from a technological perspective that will evolve in your business?

Rolf Weber:
Humanoid robots.

Brett Kelly:
Yeah. Okay. So let’s talk about people here. Elon Musk talks about his robots.

Rolf Weber:
Yeah. And there’s Figure and there’s a bunch of others.

Brett Kelly:
Yeah. And he’s showing his robots, and I think people think that robots are this mythical thing that’s a long way away. The Japanese are using them—

Rolf Weber:
So there’s two types. There’s the core bots, static ones, the robots you see on car production lines and so forth. And they’re no expert whatsoever, just pre-programmed to repeat the same movement over and over and over again. Huge upfront capital, but high repetition on the same work. What is coming is these human-like machines that learn, that you can actually sit next to, and can train in hundreds and thousands of different movements and different gigs. So what is important to me as we’ve been building our facilities is that our business model continues to change. So if I plonk millions and millions of dollars into conveyor belts and hard-to-move automation, we know we will be hampered in how we innovate.

So humans are extraordinary at adapting to a new process. So that’s why I’m so excited about these humanoids because I can change things, and they’re predicted to cost around 25 to 50 thousand US dollars. So that’s about a year’s worth of awards wages. And obviously, they work 20 hours a day for us while charging. But the idea is that you can be super adaptable as your business model evolves while still being super automated.

And you can step by step introduce that automation into an existing process, rather than having to rip everything out and become static. So I visited in Europe a facility also for meal kits, a company called Gousto doing 400 million there. I visited one of their fully automated sites doing two, three times what we do in Sydney, and they plonked 50 million pounds into it, and great, but unchangeable.

And the cost of capital today versus the cost of labor was the ability to change things. I didn’t think that made a lot of sense. But these humanoid robots, I can’t wait.

Setting Priorities

Brett Kelly:
Yeah. There are self-driving cars on the streets in the US.

There’s real progress in the humanoid space, which is really amazing. So last couple of questions. On a day-to-day basis, how do you set your priorities, and what makes a good day?

Rolf Weber:
A good day means all the boxes get ticked and high scores in willingness to repurchase and NPS, and low numbers of customer complaints. Our supply chain for food is super complex; a wilted salad leaf can lead to a complaint. So it’s very different in terms of complaint numbers compared to finished carton goods.

That’d be significantly less. But they know that makes a good day. A good day is when you have a great conversation with one of your team members, and they go away energized, knowing what they want to do and how they can contribute, and seeing a great next couple of months or weeks with Marley Spoon to drive growth. And then you look at them, and they’re turning the dial. So that’s another great day for me. What was the rest of the question? Yeah. That’s a great—

Brett Kelly:
Yeah. Just setting priorities.

Rolf Weber:
Setting priorities, for me, the position is kind of how do I translate 18 months, 24 months into today, and then have these discussions with the team. So if we want to be a meal solutions business that helps our customers live a healthy life and deliver those products in a delightful way and make it really easy, what does it look like? And what do I need to start today? Be it a change in our digital products, which we need to discuss with our global partners.

What do I need to do in terms of sourcing decisions today? What’s a delightful ingredient? How do we change the range, and all these kinds of things. So it’s this "Working Backwards," another book, and it’s actually called Working Backwards. So that’s how I operate—trying to envision not five years away, but one and a half, two years away because it’s clearer, and it’s fast-changing. I think five years is good, but it doesn’t drive decisions today as much as two years. And then look at the actions we need to have implemented three months, six months away.

Brett Kelly:
On behalf of everybody, I’d like to thank Rolf for his time today. I hope everyone has found that interesting and useful. We’re going to have morning tea now. And hopefully, there’ll be time for you to ask any questions that I haven’t been able to get to. Rolf, thanks again for sharing some time with us. I really appreciate it.

Rolf Weber:
Thank you.

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