Paul Shapiro: [00:00:00] Rachel, welcome to the business for good podcast.

Rachel Drori: Thanks for having me excited to be here.

Paul Shapiro: It is my pleasure to be chatting with you. I'm really looking forward to this. I want to get straight to it. You started this company a decade or so ago. You had an idea. It's swelled to a unicorn. You've had tremendous highs.

You've had some lows, but what was the reason you started this? You want to have some smoothies. You wanted to be selling smoothies to your friends. Like, you know, tell me, why would you even think about that? Why would you think let's, let's sell some smoothies.

Rachel Drori: All right, let's go back. So I grew up as an athlete.

I was a rower. And I was very well versed in health and wellness and nutrition. I was a lightweight rower. People look at me, I'm under five, four, five, four on a good day. Let's say they're very confused when I say I was a rower. So small one, but you know, really had to understand nutrition at a deep level.

And when I got to [00:01:00] college I. I was kind of poking around trying to figure out what I wanted to do and my senior year, I was introduced to this course called the politics of food. And I was a poli, I was a poli sci major, super interested in all of it. I was also a huge foodie and I was like, yeah, let's, let's try that.

And became fascinated. By learning about the system, learning about you know, the policy behind the system and was so inspired by my professor that it actually became an area of focus of mine. And I think that that plus my personal background of, you know, being a rower, just having this interest, being foodie and Post college working in an environment that I was burning the candle at both ends.

I was working, you know, all day, every day not nourishing myself. I had this light bulb moment where I was [00:02:00] like, Hmm, if I, somebody who really understands health and wellness and nutrition can't eat the way that I know I should, what is everybody else going to do? And I really started thinking about, well, how can I solve this problem for myself?

And this was when meal prepping was super popular and meal kits were super popular. And I thought about, well, if I could freeze the food. If the food could be frozen, then this might be an unlock. And then I painted this layer of the food system on top of it. And I was like, huh, well, not only can I solve this personal nutrition.

challenge, but there's actually a lot of benefit here that I can create along the way for the planet for the environment, for, you know, potentially changing parts of the food system. And that's really where the idea for Daily Harvest came [00:03:00] started with smoothies, as you mentioned, and decided that Direct to consumer was the way to do it.

Frozen food and direct to consumer were not two things that that were said in the same sentence at the time at all. And decided that freezing on the farm, freezing our produce, putting them in a format that people could understand. When you open a daily harvest cup, you see a All of the ingredients. You can't argue that like a cherry is cherry and people have a lot of mistrust of frozen food. So that was actually really important to be able to break through the notion of frozen food is dinosaur shaped chicken nuggets and frozen pizza. Again, this is 10 years back. So just kind of. Go on this journey.

And also knowing what I knew about the system, being able to really think upstream and ensuring that the food that I was sourcing was checking a lot of boxes from a sustainability and human nutrition [00:04:00] perspective and putting it in a format that was so convenient that. Instead of grabbing a bar, instead of grabbing, you know whatever in my company's pantry, I was able to eat better, but my friends would be able to eat better.

Is kind of how it, it started. And DTC was the way that I had had thought at the time. It turned out to be correct was the way to kind of break through this notion that frozen was a last resort, not a first resort.

Paul Shapiro: You mentioned you already had a job, right? Like this wasn't something that you were, to my knowledge, it's not something that you were planning to make into a new job.

You just wanted to have like a side thing. Was this a way because you just had a passion for getting more fruits and vegetables into people's intestines or was it that you just needed more money and so you wanted to have a side hustle?

Rachel Drori: Yeah. So I was working at guilt group at the time and I just personally was having all of these [00:05:00] autoimmune symptoms, like all this weird stuff was going on.

And as I said, I, I started it first for myself. And when I talked to friends about how I was solving this personal problem, everyone was like, can you do that for me? And that's when I realized that there was this opportunity. And when I'm mentoring other founders, I often. Talk about like, you know, my, my background was actually marketing.

I'm a marketer and for me, it would have been so easy to create a beautiful brand and, you know, something that people were excited about, but. What I realized at that moment is that I had a solution for a real problem. And I always tell, you know, aspiring entrepreneurs don't focus on the things that you know how to do focus on solving the consumer problem.

Like what is the problem that you're trying to solve? Focus on that first. And if the demand is there. The business will [00:06:00] succeed. And that is what drove the passion and drove the initial stages of the business. It was realizing that there was a real problem to solve and that I had stumbled upon a solution.

Paul Shapiro: The problem, just to be clear, was that people were not eating enough fruits and vegetables and your solution was to ship from prison to them. Okay. Got it. Yeah.

Rachel Drori: I mean, it's a huge problem. People do not eat enough fruits and vegetables. And. It is such a simple solution. Everybody knows they should eat their broccoli.

Everybody knows, you know, Brussels sprouts are good for you, but whether it is because they don't want to eat them, they don't have them conveniently at the ready when they are hungry. They don't like the taste of them. They don't know how to cook them. There are so many reasons they're rotting in their fridge, right?

Like how many times have you thrown out slimy spinach or fuzzy raspberries? There's so many reasons and so many excuses that we have for why we don't eat fruits and vegetables, but eating just one more serving of fruits and vegetables [00:07:00] every single day has major health benefits and major planetary benefits.

So you know, the business was founded around this premise of really helping everybody eat one more serving of unprocessed, real fruits and vegetables every single day.

Paul Shapiro: Right. Yeah, definitely a noble goal. I mean, it's it's always sobering to me when I see the statistics of how many Americans don't eat the RDA of fiber every single day, which is over 90%.

How many people don't eat the recommended daily number of fruits and vegetables, which is also over 90%. Like, it's just it's really remarkable just how fiber and vegetable phobic we seem to be as, as, as a society and maybe even as a species in some cases, but So what happened? Like, you know, were you thinking I'm going to set about to start a smoothie company, or were you thinking I'm setting out to create a food company?

I mean, obviously now you're in way more than DTC, you're in thousands of supermarkets and you've seen CPG products. I doubt that was your plan at the beginning, but your goal was [00:08:00] basically I'm going to sell some smoothies, but what happened, like, how did it come to pass that you thought, okay, well, I'm selling enough smoothies that maybe I'll quit my job to become a smoothie seller?

Rachel Drori: So it actually was the vision from the beginning was to be an omnipresent business that created convenient solutions for helping people eat. More fruits and vegetables every single day through multiple day parts, smoothies were just the first collection that we launched. But it was really about so much more than that.

And you know, we When, when the business started, it was really this idea that you know, a smoothie, I think I mentioned this earlier that you open a cup, you see all the ingredients and it was something that like people understand what a smoothie is. They understand what the ingredients are. And it was really.

Easy for people to kind of wrap their head around the differentiator of this is not processed hyper ultra processed food. This is [00:09:00] real food in a format that fits my lifestyle. How

Paul Shapiro: did you start, you know, like you're making smoothies, you've got to presumably go to some type of a commercial kitchen where you can make them.

So you're legally allowed to sell them. And then what, like, how do you make people know that, Hey, Rachel is selling smoothies. Like what's the next step.

Rachel Drori: Yeah, so I really started I started in a commercial kitchen in Long Island City. I had absolutely no idea how to create a food business. I was a marketer in the travel industry and I, you know, had, had this crazy idea and I was like, I've got to figure out how to do this.

So I found the organic food incubator. Which was in Long Island City. It's not there anymore. It's in New Jersey now, but and kind of figured it out in the beginning. You know, I had these grand aspirations of creating a really sustainable and forward thinking supply chain, but. You know, you can't start that way.

Zero purchasing power. So I went to [00:10:00] Trader Joe's and I would buy ingredients. They're frozen food is, is their frozen ingredients are wonderful. And I found a workspace that I would package everything up We have my right hand, which was my first team member. My left hand, who is my second, you know, team member doing the most ridiculous things to, to get the job done.

I was also pregnant when I started the business, which added another layer of complication. In a freezer one day. I mean, I like so many ridiculous stories.

Paul Shapiro: Where did the money come from? You mentioned that you had two employees that left in a right hand. So presumably somebody is paying them.

Where is that money coming from?

Rachel Drori: Yeah. So there was no money to start. I did everything just on the side and on the weekend and night and just started in New York City, and it was word of mouth told my friends who were part of the initial you know, light bulb that there was a [00:11:00] problem to solve that I was going to solve it for them.

And, You know, just spread the word that, that here it was. And after assembling smoothies at night on, on the weekends I actually brought my two high school aged at the time, nephews in the car with me. Cause it got to a point where I couldn't fit. In and out behind the steering wheel because my stomach was too big.

It was this whole thing. But they were hopping in and out of the car and, you know, dry going up elevators and delivering bags on dry ice of, of the food that I'd created. And You know, it was, it was pretty amazing to see how word of mouth spread because the problem was really being solved and quickly thereafter decided that I needed to expand.

So expanded to the tri state area and the problem to solve there was how do I ship this stuff, right? It's one thing to deliver in your car in the New York state. And then in New York City, [00:12:00] but beyond that was a ton of trial and error, mostly error.

Paul Shapiro: Yeah. Wow. So originally you've got your nephews who are delivering for you.

You are paying for all of this yourself. And were you thinking I'm learning this company money that I'll be paid back? Or you're just saying, I'm just basically donating this money.

Rachel Drori: Yeah. So originally it was just, you know, payment in sweat to myself. And what I actually said was and I often coach people to do this.

I put a, an arbitrary, but meaningful metric out into the world. And I told my friends and family, I said, if in, you know, six or I think it was, I think it was six months. If in six months I can get 10 times the amount of people that I know. Sorry, 10 more, 10 times more people that I don't know to purchase daily harvest than those that I did now, then I was going to quit my job and make this a real business.

And I had a little bit of savings and I [00:13:00] definitely, you know, had to invest during that time, but the metric was really about. Was I solving the problem in an objective, like an object, a way that I could measure it objectively in my head. And was there something that I was going to hold myself to that if it didn't work, I was going to move on with my life and not quit my job and not, you know kind of go for, for broke.

But I hit the metric really quickly and bootstrapped the business for a good six months after I quit my job. And I'd say I invested probably a total of, of 25, 000 in those beginning days, which I had in, in savings from all sorts of things, birthday money you know, camp jobs growing up and you know, decided to raise money when I realized that I was choking off growth.

Paul Shapiro: Yeah. So we had on an earlier episode of this podcast, we had on [00:14:00] Doug Evans, the founder of Juicero, and it was a really popular episode. People really loved hearing his story of, of rise and fall and rise again with his new business. But this was at the same time, you know, that he, what he was doing was when you were starting and he was this idea that he was going to ship fresh fruits and vegetables to people to make juices.

Did. I'm sure you were aware of what he was doing. He was in New York also, after all. Was what Doug was doing in any way an inspiration for you? Or did you find it useful to know that somebody else is trying to ship? Or was it more of a cautionary tale for you? Like, what was the relationship between Daily Harvest, which is trying to sell fresh smoothies, and then Juicero with a different model trying to do DTC juice, basically?

Rachel Drori: Yeah. So I'm going to add in a third company, a third variable to this conversation where it was also during the early days of Blue Apron, I was friends with the founders of Blue Apron or one of them and then became friends with the other. But and what I had learned from them was that [00:15:00] ambient and refrigerated was a very challenging business model.

So. Just hearing about their trials and tribulations. When I heard about Juicero, I had that in the back of my mind. So I didn't feel. Anyway, I think anybody trying to get people to eat more fruits and vegetables is a wonderful thing, but I knew how challenging it was going to be. And I had a lot of friends who are investors that I went to college with and a lot of them had, had you know, either invested or passed on, on Juicero.

So I've learned a lot about the business and I just wasn't. Totally sure that the problem being solved made was exactly what people wanted. And exactly the format. I think a single a tool with only one purpose is a challenging one to get on people's, You know, kitchen counter. So, you know, I [00:16:00] didn't, I would say, like, I kind of knew it was happening in the background.

I knew it was going to be a challenging business, but, you know, was definitely cheering them on and, and hoping that you know, they were going to succeed in a similar mission of helping people eat better.

Paul Shapiro: Yeah. Yeah. I mean, you know, it's interesting because now Juicero has become, you know, like a like a parody, right?

It's this problem that was in. It was like a solution in search of a problem. And, you know, the criticism of them back in at the time was, well, you know, you can. Why, why buy this fancy juicer when you can squeeze the product with your hands? And so, you know, that became like this meme that you could squeeze it.

I will say, you know, Doug made, in my view, a compelling case on the show where he said, you know, look, lots of people don't want to squeeze their own vegetables. It's kind of like saying, Oh, did you know you can fly from New York to LA in the same time? If you sit in economy as first class, well, you know, there's some people want to sit in first class.

And for those people, maybe they want to spend a lot of money on a, on a juicer that sits on their kitchen counter. So, you know, [00:17:00] you know, he was, you Trying to appeal to a higher end market and with the eventual goal of getting to a lower price. But you know, he, he persuaded me at least that I think he was treated unfairly in the press at that time.

And I'm glad he's doing a lot better now, but anyway, yeah. Yeah. And,

Rachel Drori: and, you know, to be fair, I think that the, there is a need for convenience when it comes to healthy solutions, fruits and vegetables, the opposite of convenient and as I said, like any way to solve that problem is a wonderful, is a wonderful Endeavor.

Paul Shapiro: Yeah, right. Look, of course, I agree. So let's get back off of Juicero and Blue Apron and back onto Daily Harvest here. You know, you started by basically putting in 25k of your own money. You're running around at night, driving car while pregnant, paying your nephews to deliver smoothies. And at some point you think, actually, I don't want to just do this in a local region.

I want to start making this into a bigger business. And at that point you need to start raising capital, as you mentioned, because you're, as you said, you're choking off growth. So how did you [00:18:00] go about this? You apparently, you know, you, you said that you knew many investors already because you had gone to school with them or you've gone to business school with them.

So at that point you think I need to start raising capital. Was the ambition to become a unicorn? Were you thinking at that point, I'm going to build this thing into a billion dollar valuation company?

Rachel Drori: So absolutely not.

Paul Shapiro: Okay. For

Rachel Drori: me, I was just, like, don't embarrass yourself. That was

Paul Shapiro: Ha, I gave, I gave up on that goal long ago, Rachel, so I guess your life will be better if you give up on that goal.

Rachel Drori: For somebody who kind of I have a very good sense of humor about myself. I have no problem making a complete fool of myself, but I was like, you know, this is reputation building. And if this doesn't work, I am probably going to try something else. And I want people to know that it was, you know, I gave it the old college try.

So you know, I think that, that the ambition Was big. The vision was big. The mission was big, but as [00:19:00] far as like, you know, aspirations to becoming unicorn or pressure on myself, I was kind of more in the school of, well, let's try it and see what happens. And, you know, if. What is the worst case scenario?

Very like, you know, stoicism focused if I could live with a, with a negative outcome, then, you know, it was a worthwhile endeavor and I would have learned a lot. So I'd say that was more the perspective that I came at it with. And You know, as I, I said, I, I did know a lot of investors. Unfortunately, none of them were consumer investors.

So they were all technology investors, which is where Juicero raised most of their money. When I told them what I was doing, they were all like.

Paul Shapiro: Yes. What right. What's in the, right. What's on the, on selling frozen, frozen fruits and vegetables, right. So

Rachel Drori: yes,

Paul Shapiro: but eventually you did go to the CPG investors.

You started raising capital and to fast forward over, [00:20:00] you know, the Critical part here. You went from being a company that was bootstrapping eventually to a company that is making tens and ultimately hundreds of millions of dollars of revenue annually. So that process happened very quickly for you. You know, you had a very fast rise, by the way, whenever people say meteoric rise, I can't bring myself to say it because meteors fall, they don't rise.

So I was like, you know, it's such a, it's like the opposite of true that it's a meteoric rise. Doug Evans had a meteoric fall. That's a better way to put it. But thankfully he's having a good rise now too. But anyway, the point is you had a rocket ride up into the atmosphere going from bootstrapping to tens and ultimately again, hundreds of millions of dollars of revenue.

What was that growth like for you personally? I know you had to add a lot of people. You had to bring on a lot of experts and professionals to help you along the way. But for you as somebody who was just, you know, selling smoothies out of your car to now be managing a business that was making hundreds of millions of dollars of revenue, what was that like for you?

Rachel Drori: Yeah. I had to learn a lot really, really [00:21:00] fast. And I think the trick of it, this is a something somebody said to me once and I was like, yes, that, but kind of just being a swan on the water where you kind of had, I had to portray this. You know, portrayed calm and confidence on top of the water, but under the water was paddling really fast, trying to figure out what I was doing.

And, and, you know, what I was doing in the founder and CEO role changed every three months. So in the beginning it was about bringing people on who knew what they wanted to do. We're experts in different areas. As I said, I didn't come from the food industry, so I really needed to bring people on who were experts in, in different areas, specialists, and you know, that quickly, Turned to, you know, how do you manage really highly effective [00:22:00] people and going from managing five to managing 10 to managing a hundred to managing 200.

Um, you know, those skills are, are. Things that people usually you know, gain over years and years and years of experience. And I didn't have that time. So having incredible friends and mentors and a wonderful coach are the things that I would say helped me stay above water.

Paul Shapiro: Sure. So you're now, you know, I like your analogy of, of the swan, you know, kicking furiously under the water, but looking peaceful and graceful above the water.

That definitely is a good analogy that I too will now use. And I'll attribute it to you since you're the one who told me about it.

Rachel Drori: It's a great one.

Paul Shapiro: Right. So at some point, you know, things are flying high. The company achieves a unicorn. Valuation your, your your series D where you guys were valued at 1.

1 billion. And reportedly you at that time earned over [00:23:00] one third of the company. So, you know, this has been totally transformational in your life, obviously, now that you have a net worth of hundreds of millions of dollars and the company is, you know, in this very high echelon, this like less than 1 percent of startups that make it to unicorn status.

And then tragedy strikes. Right. You have this really horrible event where dozens of people get sick. It's unclear why they're getting sick, but it appears to be from one of your products. And, you know, other companies have weathered these type of food safety problems. Like when Chipotle about a decade or so ago, they had a norovirus that decimated lines in their stores.

In fact, I remember at the time, You know, you used to have to wait at Chipotle, right? In line, you'd go there and you'd have to wait in line for a while. It was this long line. And all of a sudden, there's no line. Now, for somebody like me, that meant I went there more, right? So during the time when nobody else wanted to go, I was like, Oh, no lines.

I'm going to Chipotle. But you know, it was a very tough thing for them. They pulled themselves out of it. And obviously they're doing fine now. In fact, they're doing quite well now. And [00:24:00] Daily Harvest has pulled itself out of this, but walk us through what happened here. Not, not the details like, you know, we, people know what happened, right?

There was a Peruvian ingredient that turned out to make some people sick taro flour, not taro flour, but taro flour. But at the time you had no idea. What it was, right? There's just totally unclear. You know, it sounds like a pretty healthy French lentil and leak frozen product. Like, you know, it sounds pretty good, right?

Like, what could go wrong with that? So when you started hearing complaints about it, what was what were the first actions that you took?

Rachel Drori: Yeah, I it. This was, I'd say, the most challenging thing I've, I've ever faced, and you know, it was particularly challenging for the consumers who were adversely impacted, for sure it was something that was completely unprecedented.

And, you know, we had no idea what was, what was happening. We couldn't have those early days were, you know, working tirelessly with the team, trying to get to the bottom of, of what had happened. And at the same time, trying [00:25:00] to communicate incredibly transparently and effectively with everyone, all of the stakeholders You know, it's, it was a very interesting moment where you know, when you have a recall, there's a certain way that people are, are used to them going there.

They're used to you know, a recall with a root cause being announced immediately, and we couldn't do that. And we had this, this Community and this relationship with their customers that was built on transparency, transparency and trust. And we just decided to Stick with that in a really challenging moment.

So, you know, as we were kind of figuring out what was happening, we had scientists and doctors and my team and, you know, all of these experts around us trying to get to the bottom of it. Just trying to, to kind of bring our community and all of these followers along at the same time as you [00:26:00] know, the media kind of having its own heyday in a different direction separated from some of the realities of what was happening was incredibly Challenging.

But you know, we've been able to leverage all learnings from this experience and to ensure that we continue to evolve and improve as a business. And, you know, we're coming up on two years since and we've worked hard every day to earn and maintain the trust of our consumers, both new and old.

Paul Shapiro: Right. So I want to talk about, you know, what, what are the policies that you put in place? But first, did you think that this might be an existential threat to the company? I mean, I'm sure sales took a hit. I'm sure, you know, you guys are getting raked over the coals in the media. And as you said, you know, there were many people who are really seriously sick and some were hospitalized.

I mean, this is like a, you know, a serious problem for these people. So did you think like everything I've built might be at stake here? Like this could actually be the end of the company. Right.

Rachel Drori: Absolutely. I mean, I slept, I didn't sleep for months. And you know, [00:27:00] it was, it was 24 hours, 70s a week, all hands on deck to use every business cliche at once in one sentence.

But. You know, it was a very scary, scary moment trying to, you know, do whatever we could for the people who were impacted first and foremost, to try and help them figure out what was going on and help them get the medical help that they needed and dealing with, you know, the media and regulators.

And it was just, it was a lot. But. You know, we're focused now on the mission that we've always been focused, which is helping people eat more sustainably grown, sustainably sourced organic fruits and vegetables. We've launched a bunch of new collections. We've expanded into grocery. And you know, we've really Really double down on you know, the growth and the potential of helping when we were only D to C.

We can only really reach 16 percent of the population, which is what percentage of [00:28:00] people eat fruits and vegetables sorry, eat food that is, is purchased online, but 84%, which is the opposite of that is a lot larger. So really doubled down on, on growth to be able to reach the rest of our total addressable market and, and the consumers that need to be eating more fruits and vegetables every day.

Paul Shapiro: Yeah, yeah, for sure. So we're gonna get into that in just a moment. But like, you know, I had never heard of Tara flower. I don't know if you had ever heard of Tara flower. I mean, I know it's an ingredient in one of your products. That doesn't mean the CEO is aware of that, right? But so what can you do to prevent it from happening again?

You know, you said that you have all these safeguards in place, but like, I mean, I, I had no idea what Tara flower was until this happened.

Rachel Drori: Yeah.

Paul Shapiro: So you presume what, you know, you've got tons of skews, lots of ingredients. Like, how do you make sure that this doesn't repeat?

Rachel Drori: Yeah. So just. Really quickly, I'll tell you a little bit about how we decided to use the Tara, but we were creating a unprocessed or an ultra processed [00:29:00] alt, I don't even want to call it an alt meat cause it wasn't really, it was made out of nuts and seeds center of the plate solution for dinnertime.

And the goal was really to create one skew. That has that was focused on nuts and seeds and then to have one skew that had no allergens because we wanted to address that population at all. When you're creating something with unprocessed ingredients, it's actually like pretty hard. So we were looking hard for solutions and found out about this ingredient, Tara, which is the same plant as Tara gum, by the way, but, you know, different, different part of it.

And You know, our, our partners in the sourcing side were really excited to introduce us to taro flower, which was made from the seed, high protein, not an allergen. And we decided to add it to this, this crumbles collection. And. You know, we had always focused on biodiversity [00:30:00] and and introducing new ingredients to our customer base.

This was an ingredient that had been used for, you know, hundreds of years, thousands of years in South America. And you know, we decided to bring it here and there are other companies that had used it first, but. Not in a huge commercial scale. So when we launched it, we learned very quickly that as a certain percentage of the population cannot consume this ingredient similar to how some people have fauvism and can't.

Consume fava beans. Some people can't consume turmeric. It's a very similar reaction.

Paul Shapiro: Is that, is that the issue? It's not that taro flower is unsafe to eat. It's that there's a small portion of the population that's essentially allergic to it. That's, that's the concern. That

Rachel Drori: is the hypothesis. Yes. I would say that there's no determined cause quite yet.

But that is the, that is where the scientists and doctors have have been circling.

Paul Shapiro: So

Rachel Drori: yeah, okay.

Paul Shapiro: And so is, is [00:31:00] the pathway forward just not using those type of more novel, less known ingredients? Is that the idea? Exactly.

Rachel Drori: So if something hasn't been commercially used at scale for multiple years we just don't need to be innovators in that way.

And our food safety has always been best in class. And this was not necessarily like a tradition or this was not a traditional food safety challenge. This was something very different. So you know, we continue to uphold our standards on the food safety side. And you know, working with suppliers to bring wonderful ingredients that have been around for a longer, right?

Paul Shapiro: So just to be clear, like, it's not like this had a contamination problem. It wasn't like E. coli or salmonella. Like this is inherent to this type of plan to product that some people just can't do it. So let's move on from that. You start rebuilding though, right? So you get to a place where you're thinking, okay, like we have managed this.

We figured out what the problem is. We're now putting in the policies in place. We're rebuilding trust with consumers [00:32:00] and you decide that. You know, here's time to really start growing. And as you mentioned, you start getting more into CPG, not just not just DTC. It's a different market altogether to go into CPG, much more competition.

And you, you know, you, you're, you said that you are a marketer, like, how does this change? What the business is doing do you have to use more influencer marketing? Do you have to go into other channels? Like, how do you switch from marketing to that? 16 percent of people who are happy to order their food to the masses who just go to the supermarket.

Rachel Drori: So as I said, Earlier, the plan was always to be an omnipresent business and the way that I define omnipresent, the reason I say omnipresent instead of omni channel is because it's not about the channel. It's about you know, omni channel for me is a very business first way of, of talking about a problem.

For me, it was more about where do our consumers, where do potential consumers need us to be and how do we become as convenient as possible for people buying their groceries everywhere. So [00:33:00] So starting DTC, as I mentioned, was about education. How do we break through some of the negative connotation around frozen food?

How do we educate people that frozen can be a solution? And how do we educate people and not only. Frozen, but also our supply chain that we put so much effort into transitioning farms from organic to from conventional to organic investing in biodiversity, investing in, in farmer livelihood, all of that was really important to the brand.

And in order to grow the brand and build the brand and, and, you know, show people that we had created something different DTC was necessary, but the vision was always so much bigger than that. And. You know, trying to think about, well, when was going to be the right time to branch out into other channels?

I, I love my arbitrary metrics, but I had said, you know, once we have 25 percent brand awareness. That feels like the moment [00:34:00] when we would be able to not push our way into a grocery store, but be pulled in by grocers. And you know, in the early days of the business, I did research on, well, should I start in, in multiple channels and learned really quickly that not only is the frozen aisle really expensive, but to be able to have multiple SKUs as a new brand was like the idea of that was kind of a dream.

Like hilarious. And the space that I was going to get was like kind of bottom of the freezer aisle you know, where nobody was going to see us. And because of the cup format where we started with smoothies and soups and overnight oats people also wouldn't understand what it was. Cause it was different.

People would be like, is this ice cream is, you know, I don't know. So Thinking about that moment, then we were, when we were going to branch out, it was when we hit that, that arbitrary, but powerful metric of brand awareness, and that had meant that people had understand our supply chain. People understood the [00:35:00] value of what we had created.

People understood you know, how we were differentiated and people also knew the brand name. So. You know, hit that a year or so, or two years back, I would say. And you know, started building. Retailer relationships really quickly brought on a team of experts in the area. And you know, it's been a lot of, of trial and error, honestly, as has every part of the business, we started with a great partner in Kroger.

And had an understanding with them that this was a big, mutually beneficial opportunity, but we had a lot to learn and that there was going to be the need for experimentation. And you know, one of the benefits that I haven't touched upon yet of having so many SKUs is that not everybody wants to taste their greens.

And that's okay, right? Some people want a replacement for Haagen [00:36:00] Dazs and they want that to be their fruits and vegetables. And that's also great. So, really having a spectrum of different taste profiles and different nutritional needs and different Mostly taste profiles, because if the food isn't good, guess what?

You're not coming back. Nailed was key to those, in those early D to C days, but it was also really important when launching into retail. So, you know, being able to partner with someone like Croker and being able to say You know, we need a lot of skews and we're going to take up a lot of shelf space, but we have this brand awareness and take a bet on us and let's go on this journey together was incredibly powerful.

You know, and since we've launched in multiple retailers so we're, we're, you know, we're in target, we're in Wegmans, we're in Costco. And, you know, there's a lot more to come and that was not an exhaustive list, but you know, we learned a lot about How we get in front of this audience shopper marketing was not a function at Daily Harvest until, you know, we [00:37:00] launched into this new channel and You know, I'd say all of the, the marketing that we had done leading up to it was actually huge to make that initial launch really successful.

Paul Shapiro: Nice. So what's next? You know, you have now been in business for a decade or so. The company has raised hundreds of millions of dollars. You're in thousands of stores. It's, as you said, it's a well known brand. Is there an IPO? Is there an acquisition? Like how do your investors eventually get liquidity on this investment that they made?

Rachel Drori: Yeah. And it's a question that a lot of people ask ultimately you know, our mission is where our focus is and it is helping people eat more fruits and vegetables. We've launched so many different collections. We recently launched a. A pasta offering that is really differentiated fills with organic vegetables in a super convenient format made for sharing, which has been amazing.

So there's a lot more to do. There's a lot more retail expansion [00:38:00] to happen. And. You know, the, the thing that people often don't talk about is when you take on external money, when you raise money, there has to be a return and that's okay we have investors who are incredibly value aligned and values aligned, I should say, and.

Really know how important our mission is and what our ultimate focus is. And you know, as far as what the next step is for returning those dollars that we've we've raised over the years, I would say you know, the future is, is, you know, wide open to us and there's a lot of opportunity and a lot of potential, and I wouldn't say that we have, you know, one outcome You know, kind of underlined it really is going to be about you know, when is the right time?

What is the opportunity that's going to allow us to both focus on our mission, but also return to our investors because that is our fiduciary duty. And you know, I would say when the time [00:39:00] comes I think we'll know it. And, and we'll work closely with our investors and making sure that everybody wins.

Paul Shapiro: Cool. Well, I hope everybody does. When will there be another round? Will for, for daily harvest? No. Okay. You're shaking your head.

Rachel Drori: Yeah, no, no, no, no. We've we've raised a lot of money and, and the goal has, we've always really focused on profitability and, Being really resourceful with the money that we have raised.

The goal is, is never to raise more money, right? The goal is to be able to return money and to create a profitable, sustainable business from a financial perspective as well. So that's that's where we

Paul Shapiro: are. So the company can, it's can sustain itself without raising more VC dollars.

Rachel Drori: Yes.

Paul Shapiro: Yeah. Great.

Hey, congratulations. That's really wonderful. It's a amazing thing to be able to say in today's world. I, I, I've joked a lot that you know, so many people think in this world, they think that the goal was to raise more venture dollars and, you know, needless to say, at some point you have to [00:40:00] actually make profit.

It's it's quite an interesting thing. Now you have had this very wild ride, Rachel, from starting out in your car to be reaching extraordinarily high success to having serious challenges and adversity. And now you're back on track. You're making, you're, you're profitable. You're making real gains and expanding your own footprint in different channels.

Do you have any suggestions for resources that you think people would benefit from that have been helpful for you? Like you said, that you like to mentor people. If somebody says, okay, well, you know, I want Rachel to be my mentor through this podcast. What should I read? What should I look at? Where is there something that has been useful for you that I could look at myself?

Rachel Drori: So what I, how I answer this question is usually to ask people if they've listened to Brene Brown's Ted talk on the power of vulnerability. I think that you know, really embracing vulnerability and leadership and innovation is, is crucial and being open to [00:41:00] uncertainty and willing to take risks, it really helps us cultivate an environment where ideas can flourish.

So That is what I regret.

Paul Shapiro: Cool. Well, we will link to that TED talk, which is an excellent one in the show notes for this podcast episode at businessforgoodpodcast. com. And finally, Rachel, I'm sure, you know, you, you said, well, if this doesn't work out, I'll do something else and I'll hope that this will have been reputation enhancing for me at least.

Needless to say it, it certainly was and has been, and hopefully will continue to be so. But what might be the future? You have done like what should somebody think about doing that? You hope they'll create that doesn't exist in the world yet.

Rachel Drori: So there are two things that are two problems that I do think need solving.

One is personalized nutrition by having a wide variety of skews and by having a D to C platform, we've kind of started to get at this. But true personalization using genomics and data analytics is really a tough problem to solve. But I do think There's a big need for a tailored dietary [00:42:00] solutions.

Everybody has a different need and you know, to improve their health to prevent chronic disease. And I, I get really excited by by, you know, the idea of how, how to solve that one. The other one that I think a lot about is creating microbial based solutions for soil health. I think there's a huge opportunity to develop biofertilizers and biopesticides that'll really enhance soil microbiomes that can promote regenerative agriculture to restore, restore soil at fertility and to help sequester carbon.

Paul Shapiro: Very cool. Well, we've done some episodes on that in the past. I'll link to them here, but I, I share your passion for a lot of things getting more plants into people's diets improving soil health and figuring out better ways to make agriculture a little bit less taxing on the planet. So I'm grateful.

Rachel, for everything that you're doing, I've eaten daily harvest products and enjoyed them, and I am not one of the people who does DTC, so I'm grateful that [00:43:00] they're in that they're in CPG form now as well. And I admire all that you have accomplished with the company. So I'll continue to root for your success.

And hope to see when the stars do align to see either the acquisition or IPO that is going to do what you said, which is to finally provide that return to these investors. And I'll hope to see the company continue to get more fruits and vegetables into people's diet. So thanks for all you're doing to improve both public health and planetary health.

Rachel Drori: Thank you so much. This was fun.