January 7, 2025 • 47 mins
You asked, we delivered! Here's a re-run of our mind-blowing chat with Sait Cham. Even if you’ve heard it before, you’ll catch new gems on the second listen!
Key Insights:
- Starting from scratch to leading in logistics tech
- Key takeaways on resilience and leadership
- The benefits of focusing on unit economics early
- Practical insights on scaling for profitability
Connect with Sait Cham, Hutch and Pimento on LinkedIn and Instagram: @saitcham, @tryhutch and @pimentohq
Stay Updated with The Startup Leap: Instagram: @thestartupleappod | Twitter, YouTube, and TikTok: @thestartupleap
Watch on Youtube: https://youtu.be/3-U4m_GJcsM?si=sP308qDuLSxYrvlb
#TheStartupLeap #SaitCham #rerun #entrepreneur #tryhutch #pimentohq #LogisticsTech #FoundersJourney #EntrepreneurLife #3PLSolutions #BusinessGrowth #podcast #StartupLessons #yvonnebajela #mariarotilu
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
I never finished college.
(00:01):
I just remember having to figure out what am I going to do.
I developed this really good skill with emailing CEOs.
I would always just send an email to say,
hey, one time a company had run out of money.
It went away for a weekend.
And I'll never forget everyone asking me,
how are we going to get paid?
I said, day before payday, what do I say?
I don't think price you ever get it right.
There is a biting point where you make the customer wince a little bit.
(00:22):
Trivia, what percentage of customers
that have visited our hot showroom have converted?
Welcome to The Startup Leap, the number one podcast interviewing startup founders.
Hear real, raw stories of how they've navigated taking the leap.
I'm Yvonne.
And I'm Maria.
And this is The Startup Leap.
Any statements made by Maria, Yvonne or the Startup Leap guests
(00:45):
are solely their view and not advice.
Welcome, Sey.
Excited to have you today.
You're operating in such an interesting space.
As a market, $31 billion in size,
15,000 3PL companies operating in the UK and 5 billion parcels delivered every year.
So I'd love to get into your story.
It's an interesting one.
There's so many places I could, if I go a few steps back, I'd never finish college.
(01:10):
Oh, really?
Never went to university.
Wasn't like the genius, but you already knew you were going to be a business person.
I wish I could say it was, but it was a lot of me figuring things out.
When I was really young, my dad did a good, but maybe bad job
because he planted this thing called inquisitiveness and curiosity in me,
which has its pros and cons.
(01:30):
I would say the pros have outweighed the cons,
but it meant that I was interested in everything.
And when you're interested in everything, it's hard to focus on something, right?
Didn't finish college.
And I just remember having to figure out what am I going to do?
And I developed this really good skill of emailing CEOs to find work, right?
So I never had a CV and I would always just send an email to say,
(01:52):
hey, this is who I am. This is what I can do.
I'm willing to work for free.
Just cover my travel and I'll come in and I can help do whatever.
And I remember coming across this website of the 50 most interesting startups
in London type list.
And I emailed every single one.
You're just shooting your shot.
Yeah, just shooting my shot.
It's sales. It's pitching.
It was the first time I had to really pitch myself.
(02:13):
And one of the first responses was from the CEO of Henchman at the time.
And he was like, what are you doing tomorrow?
I was like, I'm around. I can come in.
So I made a trek to the offices in Tottenham Court Road.
It was such a shoot your shot moment.
I didn't know what all of the startups did.
I just reached out to every single one.
My theory was it would be easier to do it with startups than it would be
(02:33):
a regular corporate company.
So anyway, went to meet him and he was just like, we spoke briefly.
He was like, I need help to do this. Can you do it?
And I said, yes. He said, OK, cool. You can start tomorrow.
What did Henchman do?
Yeah, so Henchman was an on-demand delivery company.
It was around the wave of your Deliveroo's and your pre-Uber Eats as well.
The promise was we could deliver anything to you in London within an hour.
(02:56):
What year was this?
I want to say 2015.
They had categories on our app, so very similar to the Deliveroo experience
that you see today, where you have the partner restaurants.
But it also had this big button in the middle that said, get me anything.
So as a consumer, you could hit that button and the world was your,
or London was your oyster. We've delivered fridges, right?
So customers would hit a button and say, I need a fridge in an hour.
(03:17):
And we'll just make it work.
There were things that people were asking us to move papers from one place to another
and things like that. So it became your personal courier.
And the concept of Henchman was like it was your personal henchman.
And at first, we had all of the drivers in a black shirt, a tie, a bowler hat.
So they'll swap their helmet for a bowler hat when they're delivering.
(03:38):
All these little touches.
So that was like my first foray into what logistics was.
And logistics is one of those words that you hear.
You don't really know the meaning of, right?
Over the years, I've come to my own definition of what I believe logistics to be.
During that time, I did everything.
I was doing payroll, managing the drivers.
I was paying the drivers, managing our partner restaurants, managing the sales team.
(04:01):
I was doing all of these different things.
How many employees were there at the time?
About 35 employees.
At its peak, I was in around 600 deliveries a day.
That experience was the best experience ever.
And the reason why was the company died and then put itself back.
About seven times.
That journey as a learning curve is you can't imitate that.
You can't replicate that. It's really difficult.
(04:22):
I learned so much and loads of those skills that are applicable today.
It's so funny, I was catching up with the founder recently and we were laughing at
this one time where the company had run out of money and he went on holiday.
I don't know what happened.
It went away for a weekend.
And I'll never forget everyone asking me, are we going to get paid?
I remember looking at the company bank account and be like, I don't know where.
(04:44):
It's either one of the two things.
We've either got operating cash or we've got to pay everyone one of the two and
it's not going to be both.
I remember coming out with a plan on the spot, calling the founder and
me like, look, everyone's hounding me.
It's a day before payday.
Everyone's asking me, are we going to get paid?
What do I say?
And he said, say it, you figure it out.
Right.
I was like 22.
Whoa.
You were young.
I was young.
So then what I ended up deciding to do at the time was basically calling everyone
(05:06):
into the office one by one and saying, look, we can't pay you in full.
What's the minimum we can pay you for you to cover your bills?
I had this spreadsheet and everyone was like, I just need a grand to get me through.
And I remember paying everyone bit by bit and that allowed us to have enough money
to do both, but it was like those experiences that really shaped some of
the experiences today.
(05:27):
So Henchman ultimately died.
That's where I met my co-founder now.
So I stayed with the logistics part of the business and Ben, who's my co-founder
went with the software part of the business.
We came together and we split a little bit.
And you stayed in touch?
Yeah, Ben and I stayed in touch.
Our stories are very interesting because we both were doing startup-y stuff, right?
(05:51):
We always laugh because every time we done something non-logistics, it failed.
And every time we done something logistics, it worked out.
It's like the universe is telling you something.
So our paths, even though they were separate, we were doing the same things
away from each other.
And then when we came back years later, it just, the time was great.
And tell us a bit more about that coming back together.
(06:12):
How did that come about?
Cause you started Hutch right at the beginning of COVID.
How did that come about?
What was that aha moment where you were like, let's do this.
And did you do anything before that?
Was Hutch the first thing you tried?
Did you experiment with or without Ben?
So I've done a whole bunch of projects in between.
Ben and I worked on a project.
It's hard to call it a business, but we worked on a project called Recover, which
(06:34):
was a black mental health service.
It was a platform to help black people find black therapists.
It was born out of one of my friend's personal stories, who was the first person
I ever knew to go to therapy.
Right.
And I just saw this person transform in front of me.
And it was like most beautiful thing to see.
When we started to dig deeper into that, he was like, look, I had issues.
(06:54):
I went to loads of therapists and actually it wasn't only until I worked with a black
therapist that I felt seen, I felt heard.
And I was like, that should be everyone's story, right.
From our community, especially with the stats on mental health in the black community.
They're alarming, right?
Yeah.
That's so interesting because five years ago, mental health was a thing that no one
really spoke about within the community.
(07:14):
Exactly.
It can't be a thing where you go in a therapist.
Why?
For what reason?
And a lot of people who have therapists now hide it from their parents.
Yeah.
They still don't share it.
It's still a bit of a taboo to some degrees.
Yeah.
Ben and I, Ben was like just a hungry, yeah, I'll do it type guy.
Yeah, I'll do it.
I'll build it.
I'll do it.
So I was like, look, this is the idea.
Here's all of the data.
Ben, what can we do?
(07:35):
We figured out, let's just build us a matching platform.
So we built it.
Initially, we were overwhelmed with the coverage we got and the signups we got.
And essentially I was up and down sort of London meeting with a bunch of mental health
charities who wanted to buy the product to then use in their communities, right?
How did they find out about it?
(07:56):
I reached out.
I reached out.
Yeah, I remember.
Great emailing skills.
I was emailing.
Yeah.
I learned about CCJs, clinical commissioning groups.
So the idea was to go to these CCJs and sell the service, but target the areas that have
larger black populations because this is a product that could help their community.
But found a market fit is a very real thing.
(08:16):
It wasn't my story.
It was my friend's story.
And though I was very inspired by it and very moved by it, it wasn't my day to day experience.
I hadn't even seen a therapist, right?
Those gaps start to show as you're moving through the journey.
And it's like the golf and the knowledge gap to close, you realize is massive, right?
(08:39):
It's so despite the passion.
So I started to find that it was harder than it should have been.
You have to overcome the language barrier, right?
It's a whole different sector.
You have to overcome the lack of network barrier.
You have to overcome your lack of profile and your lack of credibility barrier.
So we ended up basically giving the assets away to the community.
Basically giving the assets away for free to one of the charities.
(09:02):
And then moved on to what I worked on after that, which was Wonderpay.
That's where we first met actually.
That is where we first met.
So at that point I was COO-ing.
And this is another story of Paul found a market fit.
And essentially Wonderpay was a travel slash payments platform.
How did it come about?
What was the aha moment for Wonderpay?
(09:24):
So my co-founder who loves to travel, his name was Raphael.
He loves to travel and essentially he wanted a better way to pay for travel.
And he saw the trends of your clanners.
And so he was like, let me build one for travel.
So it was a buy now pay later, like travel now pay later.
Yeah, we were building that.
Managed to raise some VC at the time.
(09:44):
Managed to get some partners on both the travel side and the lender side.
And we did quite well to build that.
And again, that golf was far bigger than the one at Recover, right?
We were learning two industries at the same time.
Travel and payments, right?
We had experience in neither of them.
When you're on VC journey, you need to keep raising to figure it out.
(10:05):
And we just couldn't figure it out in time.
And yeah, that story ended.
You brought up a point of the rights to the problem.
Because even if you're passionate about it, what is the combination of teams
that will give this a good shot?
They just have an edge for some reason, something about their background.
So even though you were passionate about it, you wanted to solve the problem.
(10:25):
It was just that the golf was just too wide.
You're also competing with people where the golf was just not as wide.
It's always good to reflect once it's done.
Yeah.
When the business was done, we done some form of at Wonderpay post-mortem.
Did this go wrong?
And we realized the deficit we were starting from was so big.
Ending a business is tough.
At what point did you have a conversation to say, you know what?
(10:47):
It's probably not working.
What did you hesitate?
How did you decide this was clearly not working?
One of the challenging things we've found in teams is
you might not get there at the same point.
So I realized quite early and I was like, yeah, I don't think this is going to work.
The difference between myself and my co-founders,
one of the challenges founders have is they tie their identity to the business.
(11:08):
Right.
When you bump into someone in the street or an old friend
before they even ask, how's your wife, they ask, how's business?
How's the business going?
True.
That's why a lot of founders keep going.
If there's one thing I'm good at doing is killing something when it's ready to die.
Right.
If you're enjoying the podcast, hit that subscribe button.
Yeah.
Whether you're watching on YouTube, anywhere else,
(11:29):
subscribing is the easiest way you never miss an episode.
Now let's get back to the episode.
It's fine to fail.
If it doesn't work, kill it, move on.
And obviously it's not as easy when you've got investors and you've got customers
and you've got all of these different things.
For me at the time, it was pretty easy to make that call because it just wasn't working.
And I didn't want to slog a dead horse.
So at that point in time, did you know that you wanted to go and build?
(11:52):
And at what point, because I know that you then went on to work at Fida.
So when did you decide to go again?
And what was that experience like at Fida?
Why did you decide to go to Fida in between starting Hutch?
Fida was a great experience because after Wonder Pay,
I wrote this list of the skills I felt I was missing.
A part of me felt like I was playing COO, if I'm being honest.
(12:14):
We didn't have any major customers.
We didn't have any, but I was so busy doing stuff,
but none of it was the right thing.
I wasn't doing stuff in the right direction.
So I wrote this list of the next job I have to work with closely to a COO or a CEO
that has these traits.
And it just so happened that our founding Fida,
(12:34):
the founding team was a very commercial CEO and a very operationally heavy COO.
And I've done so much due diligence on those two individuals as people.
And I was like, that's the place I want to work,
only because I want to see an action, right?
I need to see someone who's executing in real time up close.
And the business seems they had customers, they had thriving businesses, they were funded.
(12:56):
At what stage did you join?
Sub 10 people, I believe.
They were probably around 18 months into their business journey.
And just for context, Fida is a food delivery platform for businesses.
So again, in the logistics space.
And was that intentional to go with the logistics space?
Speaking of intentionality, I love the fact that you recognise where the gaps were
(13:17):
and in order to take yourself forward and for the future,
idea that you had to go and build again, you knew that you had some gaps to fill.
So you went out to fill those gaps.
Funny enough, one of my old friends from school,
he reminded me that my first hustle at school was the logistics business.
Oh, okay. So this goes way back.
It goes way back.
It goes way back.
Speaking about that founder market fit.
(13:38):
I'm telling you, only the year 10s and year 11s were allowed to go out to eat for lunch.
I would basically go out and they'll give me a pound.
So let's say they wanted chicken and chips for lunch.
I had a trolley, like a Sainsbury's trolley.
You were doing henchmen.
Henchmen from before.
And I didn't link it together until my friend made the connection.
Sometimes it's only retrospect that it makes sense.
(14:00):
Exactly. Exactly.
It'll be a big cue of the whole, literally a massive cue of the school.
I got banned by the teachers.
Product market fit.
Product market fit.
I got banned because they were like,
now canteen sales are going down because of you.
So when you joined FIDA, yes.
Did you know you were going to build a logistics company?
Was it in your mind that, okay, if I'm going to try to build in this space,
(14:21):
do I need to go somewhere that I know is best practice?
I can learn.
A bunch of so many different things.
The next place I wanted to do a really good job.
I felt at WanderPay, I didn't feel proud of what I did.
So I always felt I need somewhere where I know I can do good work.
And I knew I smashed it.
I henchmen doing that, the logistics stuff.
So I was like, I can go in and do the same.
But I always knew I wanted to get into logistics after.
(14:44):
I wasn't fully sure where, how, and what.
It was just at the back of your mind.
So it wasn't, okay.
Okay.
Absolutely.
Interesting.
So yeah.
And then, yeah, I went to FIDA.
And as I was saying, they were delivered to businesses.
So their flagship product was called Cloud Canteen,
which essentially was, if you worked at Google,
you have this massive canteen where you have many options to eat.
You don't actually have to leave the offices.
(15:06):
And FIDA tried to replicate that at companies that don't have a canteen.
Right?
That's why it's hence the name Cloud Canteen.
And every employee will have an access to an app.
And what we did in the background is we had a list of vendors
and we had to logistically map them to the location of the office
because we were delivering them exactly at lunchtime.
Interesting.
But you chose what you wanted on the same day.
(15:26):
Oh, that must have been a logistical night.
So it was hard.
So let's say you got your food delivery at 12.
Yeah.
For 400 people, you could order up until 11.
And then, and were you predicting?
Yeah.
Is there predictive analytics?
So there wasn't much predictive stuff,
but we did a lot of tricks like shrunk the menu, number one.
Yeah.
Ask about that.
(15:47):
Yeah.
Did you, what was the efficiencies like in that kind of business,
especially given the lack of predictability of the orders?
What was the revenue model?
Was it subscriptions or was it people pay?
In terms of the efficiencies, I would say it wasn't that efficient.
Right?
The company eventually got sold.
Had we probably stayed and tried to build out that product a bit more,
(16:08):
the next phase was definitely becoming more efficient.
Right?
We would run into problems like our competitors,
the restaurants would work with us and the competitors at the same lunchtime.
So not only are they getting 300 orders from us,
they're getting 300 orders from somebody else.
And then we had to learn to put that into contract where,
and come to the table maybe with the other competitors and say,
(16:28):
let's make sure we don't overflow the restaurants on the same day and work together.
But we were improving all the time.
Right?
We worked with some partner delivery drivers.
We had our own delivery drivers.
We worked with our industry, really pushed cargo bikes in London
and got them a lot of work because cargo bikes are the ideal vehicle to use.
(16:49):
They can weave in and out of traffic,
but they can take a large load and they don't get stuck in traffic.
But then you run into an issue,
maybe we have to go into a loading bay where you need a van.
So from an efficiency perspective, we were always trying to push that.
The offering was sold as a perk to companies.
Right?
This is how you can enrich your employee experience.
They get better choice of lunch, therefore they're happier.
(17:10):
Therefore you retain your staff and so on.
You'll be surprised at how many of these companies subsidized the lunch for the employees.
So an employee would log on to their account, see the menu and they'll have credits.
And then we took a commission, almost a delivery model,
took a commission from the restaurant.
And then dependent on the setup or the service,
(17:31):
the companies paid us as well to onboard that service into their company.
I was there for just over two years.
And then they were acquired.
Yes.
Compass Group bought them.
And yeah, that was the seed money I used to start Hutch.
Oh, so it was the proceeds that you used to start Hutch.
Before we get on to Hutch, obviously you went into the company
(17:53):
knowing that you wanted to develop some certain skills, right?
What was the key takeaways from that experience that you took into Hutch?
Going back to Henchmen was chaos, right?
FIDA was grown up Henchmen, right?
And up until that point, I had never had a grown up business startup experience.
I'd never worked for a startup, which was still a startup, but like...
(18:15):
At least had some playbooks, some best practices.
Exactly. Some playbooks, like consistent cadences, like rules and things like that.
And that was definitely a massive mind shift because sometimes we fall into the trap that you have.
Scrappy is amazing, but you don't have to be scrappy.
And the target should be get out of scrappiness, right?
Let's start scrappy because you have no choice.
(18:36):
Yeah.
Let's work to get out of scrappiness and let's be structured.
Let's be organized and let's be an actual company.
So Compass Group comes, acquires the business.
And is it that point that you decided to leave?
Yeah. So it was a weird time because it happened as lockdown was happening.
Some of us got furloughed and some of us were working from home.
I used that as an opportunity to sneak off and start building.
(18:58):
What I was trying to build was same day and on-demand delivery for e-commerce, right?
So the plan was to have these micro hubs, micro warehouses,
and to use those to power same day and faster delivery.
Was some of that spurred by COVID?
It was spurred by COVID. It was spurred by feeder.
Because that feeder as well, I learned about all of these tools that I can use to run the back office.
(19:21):
Yeah, gain efficiencies and actually reliability in the delivery of the service.
Exactly. That showed me we can do this with this tool.
I understood this software. I understood the market.
I knew how much it would cost to build this sort of tech infrastructure with coding
to build an on-demand delivery business.
I was speaking to loads of people that had brands.
What are you guys struggling with?
(19:42):
And it was such an interesting time because all of their orders were increasing because of COVID.
But they were literally physically handicapped because of COVID.
They couldn't physically go and post, I'll do it for you guys.
This is how it started.
And same day delivery is coming, same day delivery is coming.
Oh yeah, there's an interesting story as to why we never did same day.
Which essentially is when I managed to rope Ben in, he said,
(20:06):
because he was so burnt from his startup journey,
he was like, unless you can get it to work on a spreadsheet as a business, I'm not joining you.
So I went back to try it and I couldn't get the economics.
To work in a sustainable.
I love that.
There is something about the back of the envelope calculation.
Like, how is this a business?
Tell me what the unit economics is.
(20:26):
Just on a, we know it's not going to be like that in the future,
but just make it work with some assumptions.
Interesting.
And we had both of our business like a henchmen.
It was like this imaginary when we get here, we'll become profitable.
Or when we get here, we just need to make these tweaks and the unit economics will work.
But 99% of times that point never comes.
(20:47):
Right.
That's one of the things I really love.
We met in the very early days of you thinking about Harch.
And you were so focused on the unit economics.
And it was at the time where the market was like growth at all costs.
So you were an outlier from that perspective in terms of thinking about how we're going to
make this work from a numbers perspective and thinking about it very early and how
that's propelled you to get to where you are today.
(21:08):
The numbers you did then and now.
After time passed, did you check out or was it an exercise that really helped you think
at the time, but didn't quite match up to reality?
Number one, I have to give Ben a lot of credit because he was really hammering home.
He was like, mate, we basically both of us were tired of hemorrhaging cash.
We were tired.
Like we were so tired of raising and spunking it and raising and spunking it.
(21:32):
What we did is we went to all of the competitors at the time and I just copied their business
model and I just imprinted it on the wall.
And I just imprinted it onto a spreadsheet.
We just said, imagine this is our model.
Can we make this work?
What does this look like when we're at 5,000 parcels?
How do we become more efficient and more profitable than the incumbents?
(21:53):
If we make tweaks here, if we build this in this way, that was the start and the
genesis of our thinking.
This was right before anything was built.
So before we started and when a lot of sort of young entrepreneurs come to me now,
I always say, start with a spreadsheet, build a model.
It doesn't have to be perfect.
Ask yourself, is there a business there?
And if people start with a spreadsheet, what are they looking out for?
(22:13):
Some say, look, things are going to change so rapidly.
I don't really care about a spreadsheet because whatever is there is fiction.
What's going to happen in real life is probably going to be different.
Others say it's the exercise that counts.
So what's your view having started with the spreadsheet and gone through the experience?
What would you say if someone was starting with a spreadsheet?
How should they be thinking?
There's two sort of things about this is way more applicable to a service-based business.
(22:38):
Right.
Product is quite different because you're trying to find product market fit.
You're trying to figure things out.
I believe with service-based businesses, your goal is to make money from day one.
Right.
Try and make money from day one.
And I have this sort of big theory about product businesses for me are still the holy grail.
But the best way to get there is via service-based business first.
Right.
And there's so many reasons why this, but in terms of the spreadsheet question,
(23:01):
with a service-based businesses, try and make money from day one.
If I eventually, I don't know, have an app where someone can request a window cleaner.
Great.
But a better way is to start cleaning windows yourself.
Right.
You just knock on a hundred houses and say,
do you mind if you want me to clean your windows?
Right.
And then work out, does that work as a business model?
And then that gives you the time, the profitability, the base.
(23:23):
You're in control of your own destiny.
You don't have to focus on fundraising.
Got it.
So it's more like a way to buy yourself time.
100%.
I think this is really interesting because obviously we're seeing a lot of AI-enabled
service businesses and oftentimes these service businesses are very low margin,
require a lot of humans, a lot of friction typically.
And so where AI is applied to these businesses,
we're seeing margins rapidly expand and so on.
(23:47):
I want to go into particularly how you thought about the software piece
in applying that to 3PL.
Because if you look at the 3PL space, most players do use very old legacy,
clunky software, right?
And how did you think to build something that would drive efficiency,
but then take you to where you are now with Pimento?
Yeah, we go a little bit back.
(24:10):
When we fleshed out Hutch a bit more and we started to get our first customers
and started to deliver the service to them,
we looked for a warehouse management system,
which Pimento is, to run our warehouse.
Then it's technical and the plan was off the shelf and then build on top of it.
Right.
Our early customers were very demanding in terms of what they wanted their service to look like,
(24:32):
what they wanted their experience to be for their customers,
which was a good thing because it raised the bar.
But the existing tools didn't allow us to do it, right?
The existing tools dictate to you how you run your warehouse
and how you run your operation.
So what was the alternative for some of these brands that you were working with?
Would they just build out their own in-house systems?
They use legacy tools.
They'll use legacy tools.
So in terms of the customers using Hutch as a 3PL,
(24:55):
they would just either fulfill themselves or, I guess, do it.
Use somebody else who is using legacy tools.
And in terms of our software customers,
they'll be using those legacy platforms that, again, are very rigid,
and force you to ship orders out in a way that they want you to, right?
These tools, they suck.
They're really bad, right?
How far into Hutch did you start getting that?
(25:15):
Almost straight away.
Really?
So we did the initial phase of looking at tools to use, to implement.
It's very difficult to build a 3PL business without software.
You have to manage your inventory, track your orders.
We had a guest who started a CPG business and then went to build software
to make it more sustainable because they found that there were issues with it.
(25:36):
Absolutely.
And our view was we had two things that we're trying to build for.
One was building a platform that allowed our customers
to deliver the best experience to their customers, right?
So to give an example, some customers want on a Tuesday,
any order that goes out on a Tuesday, we're doing a promotion.
I want to put a handwritten note that says this,
(25:56):
or if we mess up and we send out a replacement,
I want a specific handwritten note that says, sorry, we messed up.
So it's like this personalized experiences,
but a common that you want to scale to improve customer experience.
The existing systems don't allow you to do it.
So what kept on happening is you have these brands that have these broad ideas
and these ambitious ways to deliver a great experience.
And they go to 3PL and they say, we can't do it.
(26:18):
Or we can do it, but it's going to cost you eight.
But that was because they didn't know how to do it profitably.
They didn't have to scale it.
Because the existing systems also kind of got the...
And the second, back to the numbers bit,
can we build a system that helps us be profitable all the time?
Right.
So we'll just build in it for ourselves and we're like,
we always need to be profitable.
We need those efficiencies and so on.
(26:39):
And we need to build all of these core, sexy tooling
to allow us to help our customers deliver great experiences.
So as a 3PL, we'll win in a lot of business from other 3PLs
because we could deliver that.
So when we were ready to launch Pimento,
we ended up with this offering that was a warehouse management system
(27:00):
catered for 3PLs and brands who want to deliver great experiences to their customers
and also run a profitable e-commerce operation.
Did you think you would have been able to start Pimento
without having gone through that whole experience with her?
No.
How did you validate Pimento because you said that other 3PLs
were already using you because of the software.
Was that the signal that, okay, maybe we just sell this thing directly to them?
(27:22):
What was the validation process within Hatch into Pimento?
Yeah. So essentially, we, first and foremost,
we made a lot of 3PL friends before we even thought about doing software.
And we were always...
Do you send your cold emails again?
Cold emails just reaching out.
And we were very shocked when we were understanding like
their gross margins and their net profit. We were like, you guys aren't...
(27:43):
Prompto.
Yeah, you guys aren't on the bread line.
Yeah.
And we were doing so well and we realized our software has a massive part to play in that.
Because a lot of these 3PLs are like...
Yeah, the margins are hard.
Exactly.
20-year-olds.
Exactly. A lot of them are mom and pops.
Exactly.
A lot of them are smaller operators.
So we realized, yeah, your margins are squeezed.
(28:04):
And then we also were always winning customers from them.
And the first bit of feedback we'll get is,
yeah, they just...
We didn't like the system.
Because the brands have to interact with the system as well.
We didn't like the system or they can't fulfill on these requests that we have.
One of our brands was like, look, my dad has got space in his warehouse.
We're just going to take stuff from Hutch and we're going to fulfill ourselves.
(28:26):
And we're like, that hurts.
Because you're not leaving because we've provided bad service.
It's just another opportunity opened up.
And then we were just like, should we just give them the software?
Just to run it and just see.
And we gave it to them, forgot about it.
And I'll never forget, we had a call with our accountants and they were like,
yeah, so you did it.
And you got this 15 grand from this customer.
We're like, huh?
What customer?
Wait.
(28:46):
We completely forgot that they were paying us.
And they were like, oh, so this is what SAS is about.
You're like, must be nice.
So you don't have to work every day.
You don't have to ship parcels every day to get the money.
This is...
And that was like the moment we were like,
that was like the easiest money we ever made.
So then I sent one of the cold emails to about 33 PLs just to see what was going on.
And basically the email said, hey, I'm say just like you, I run a three PL.
(29:11):
Unlike you, I built my own system.
This has allowed us to scale to here and here.
And we are better than incumbent one, incumbent two, incumbent three.
I'd love to do a demo book time here.
And I just got loads of them on a call and all of them were just blown away.
They didn't have any questions about the system and concerns about it.
The main questions was your three PLs, why are you going to steal our customers?
I was going to ask you tension between cooperation and competition.
(29:33):
Did you face that?
Like how significant was it?
Very. So three PL owners typically are quite paranoid
because you put in so much work to win a client.
So we had to build that trust.
One of the things we did was essentially convince them
that the software opportunity is big for us.
So we'll never steal your customer.
We have to put it in contract.
So there was a few things we did there to get them comfortable.
(29:56):
And that's one of the reasons why we decided to separate the brands
and split out into Pimento.
I'm just curious, how did you decide on pricing for the successive customers that came after?
We looked at the incumbents and said, we're like 30% better.
So we tried 30% more essentially.
So the way our plans work is we have like a basic plan, which is comparable to the incumbents.
(30:20):
So if you just want to go feature for feature,
you can use that and the pricing is comparable.
So if you just want a better system that has the same features, but we just do it better,
use our sort of base plan.
And then we have two other plans that have additional features.
Did you toggle the pricing?
Cause I feel like pricing is a bit of an art and a science.
Sometimes you overcharge and then you're like, yeah, we're pushing it.
(30:40):
Or no, maybe we hold and then people come or you undercharge and you're like, yeah, no,
this is way too good a deal for them.
Yeah. I don't think pricing, you ever get it right.
It's a journey and it's constant iteration.
I think there is this like biting point that we like even with the fulfillment business
at the time where basically you make the customer wince a little bit.
Yeah.
And that's when you know it's actually right.
(31:02):
Yeah. They wince a little bit.
If they're just like, oh, that's fine.
You're like, I'm lowballed.
So you want them to have a little bit of, not that is way too expensive.
I'm never talking to you again.
We almost offend them, but just like they wince a little bit and then they make the purchase.
What we're really good at in our sales process is always selling value, right?
(31:22):
It's the value, it's the value.
And one of the beauties is we have a showroom.
Hutch is a showroom for Pimento.
Right.
Ooh, that's a perfect customer acquisition channel.
It's a perfect channel, right?
And what that means is we can really show you the efficiency gains.
What we do is we will launch a new picking method.
We'll test it in Hutch and it will bring that case study into the sales process and say,
(31:43):
look, before this picking method, this is what efficiency looked like.
And now it looks like this.
And then we invite them to come down to the warehouse.
So it's a physically showroom, which the other software providers,
the software providers don't have, right?
I love that because we speak a lot about design partners,
like finding customers to build with, but you have that in Hutch, right?
You're your design partner.
I'll ask you guys a question, right?
(32:04):
Maybe trivia.
What percentage of customers that have visited our Hutch showroom
have converted to customers, Pimento customers?
60%.
Yeah, 50%.
100.
Ooh, that's incredible.
100.
That is compelling.
Interesting, 100%.
100%.
And also it's because the journey is quite long.
(32:25):
You've made it before.
I didn't make the journey, so I made it.
I have to, it's probably a part of that as well.
Obviously that's a service business with Hutch and now Pimento is pure software.
What sort of mental models did you have to take into account?
You and Ben building out Pimento and how did you think about the team
and how are you managing Hutch now?
Who's managing it?
Yeah, so absolutely lots.
(32:45):
That's still running fully operational.
Yeah, fully operational.
We knew that before we fully focused on Pimento
and it's what it took a bit of time, we needed to get the foundations of Hutch
in terms of a management, from a management perspective, really sturdy.
So we spent a while just really building out our management teams.
The last time I went to the warehouse was like three weeks ago.
(33:05):
So it fully runs on its own.
We catch up with the managers every other day.
We have our stand-ups.
We have certain sort of cadences.
So that's running really well.
In terms of the mental models, we went to every startup event,
listened to every startup podcast.
And then we realized very quickly that a lot of this stuff didn't apply
when we were building Hutch, right?
So the way we've employed staff for Pimento is
(33:29):
are these fast hyper-growth sort of mindset individuals?
Whereas on the Hutch side, still amazing individuals,
but they're more about operations and customer experience
and business as usual, if that makes sense.
Also almost have to have different personalities
when thinking about both businesses and leading the teams.
(33:50):
100%.
Even the way we look at the PNLs are different.
For example, the way you allocate revenue spend.
So how much you make and how much you're going to allocate of that
to how you're going to allocate the spending of that.
With Hutch, it's completely different, right?
With Hutch, we always try to have some form of cash held
because it's a heavy operational business.
You never know where you're going to need a forklift.
(34:10):
So you need to be a bit more conservative there.
And then with Pimento, it's a software business.
Your margins are way more healthy and way more generous.
It's completely different.
Can I ask an edgy question of the two businesses?
It's like comparing children now.
I'm just saying not pick, but of the two,
(34:32):
which would you say from an ROI perspective?
But if you think about purely from a business model,
which one really excites the entrepreneur in you
that likes to make money?
It's such a hard one because
with Hutch, there's something really good about
your business being physical.
You can see stuff, you can see boxes.
It felt very real.
(34:53):
But to be honest, the Pimento, the reward,
I'll give an example.
Our system's only gone down once.
It went down for two minutes.
In that two minutes, we received calls from every single customer
and that showed us how they rely on the system.
We onboarded a jewelry brand not too long ago
and we did what we call a handheld auction.
(35:14):
A handheld onboarding.
And I just remember calling the team.
I went outside, called the team and I was like,
guys, the difference we've made in 24 hours is insane.
And they keep coming up to me whilst I'm in the warehouse.
Thanks so much.
Like we've been telling our bosses to implement this for ages.
It's definitely a good feeling about empowering others.
Let's talk a little bit about fundraising.
(35:35):
You're quite privileged in that with Fida.
You obviously had the acquisition,
which you then used to fund Hutch.
And obviously I'm a very privileged investor in Hutch.
But I'm just curious how you thought about fundraising with Hutch
and how you're thinking about that with Pimento.
Yeah.
So I definitely recognize they're two different journeys.
I had to do a lot of learning on a Hutch journey to understand
(35:58):
what I guess fundraising vehicles applied best to that type of business.
I was a bit naive in that I saw fundraising as one thing, right?
I didn't really separate Angel and VC and PE.
I knew they existed, but I didn't know how do you apply them to your business case?
How do you apply them to your end goal, your story?
To make sure they fit.
(36:19):
Make sure they fit.
Because not every funding is for your business.
All of my entrepreneur friends were raising VC.
So it was very difficult to not just jump on the treadmill.
So we raised small amounts in sort of dribs and drabs as we went along the journey.
It's a really good way to raise, in my opinion.
Because the milestone is not in the raising.
It's in what comes after.
We've had term sheets.
And Ben always asked me this question.
(36:40):
When we've had the term sheet, ready to sign.
And he would say, but we're doing like 60K in profit every month.
Do we need to, do we actually need to raise?
And I'm like, that's such a good question.
Let's go back and model it and see if we need to raise.
And we plan out our next two years and say, we don't need to.
We always withdrew from those sort of instances.
And that must have been quite tough because I remember those moments where
(37:02):
you would get the term sheets and you'd be like,
especially when you're seeing all your peers raise.
It takes a lot of discipline to be like, we don't need this.
I got a rejection email from one of Europe's leading funds.
And it was the best email.
I probably should frame this email.
And this email essentially said, so for the delay,
(37:23):
the reason why it took long is we were deliberating a lot.
We think you're amazing and you will have a great business.
We just don't think that it's VC worthy.
We think you will get to around 25 million annually.
You build a profitable business.
But you will start to plateau from there.
And I said, 25 million.
That's not bad.
(37:44):
That's a very good outcome.
And you're telling me I don't have to raise and I can get at my pace
and we're in control of our destiny.
That's so funny.
That's not what most people would have got.
People are like, oh my God, that's how you're like, whoa, this is good.
That's good because I always knew that this is a platform for something else.
And I remember when you had that moment and it almost,
it put you back in control of your destiny.
100%.
And I remember you never think a rejection email would be like the confidence.
(38:11):
But it really was.
And I refer to that email a lot because those trends at what we're seeing, right?
We are seeing a plateau.
We are seeing it start to slow because it's a large,
it's a very commoditized market, to be honest.
It's very difficult to gain an edge.
There are a lot of raised to the bottom economics happening.
It's not that ripe for a typical venture fun story.
And another bit of advice I always give to young entrepreneurs is figure out your story.
(38:33):
There's no bad.
Just figure out your story, right?
And own it.
And own it, right?
And just lean into it.
And remember that this is not your last opportunity or this is not.
Obviously we've built a great business.
We serve almost like 90 customers.
And that's, you wouldn't consider that a stepping stone,
but we're very ambitious people.
Talk to us about that ambition.
Cause I know that with Mento,
(38:55):
your ambitions is to serve one in 200 parcels in the UK.
So this is obviously has the potential to be a venture scale business.
So talk to us about that transition from receiving that email,
hearing that it's not a venture-backable business,
but now building Pimento, which is,
and how that may have changed your view of ambition and what you want to achieve.
(39:17):
Yeah. So with Hutch, we were always ambitious.
Founders are taught to sell the sizzle and sell the vision.
But deep down, I was like, this is not going to get to a hundred mil
in the timeframe that you want it to get to a hundred mil.
And if it does, we would have to, it's a capital intensive business.
We will have to raise and raise and raise.
And we're seeing it with all of the incumbents that have gone down that journey,
that it's not easy and they're all struggling.
(39:39):
I know it's called some, a lot of entrepreneurs, just take the money,
just take the money.
But they forget that it shapes your trajectory.
It shapes your day to day.
It shapes who you hire, who you choose to work with.
Your strategy sometimes.
Cause now you're not just building alone.
You have partners who have expectations.
Very mindful.
And we're not, we have nothing against the VC venture backed journey.
(40:00):
We just knew it wasn't right for that business.
We think we can take their lunch money.
We think we've got a far superior product.
We think we can take Europe is scalable and it's just about, yeah,
identifying what is the right vehicles that you can use to grow your business
for your business.
What are your ambitions for Pimento?
What do you hope it becomes?
Yeah. So to, Yvonne mentioned it, one in 200 parcels.
(40:24):
So currently we're like one in 1700, so we got a way to go.
We want to be that layer for e-commerce and e-commerce brands and 3PLs to really
deliver great experiences to their customers and run profitable operations and allow them
to scale in a way that's not possible at the moment.
Without, and I feel like it's impossible to have conversations on tech now without AI.
(40:46):
Yes.
So did you have to think of your strategy with the product?
Does it have an AI component?
AI is not a phase.
I have to be super clear. It's not a phase.
However, the way founders and funds and the whole ecosystem rush to these trends, I don't
know, like flies in the light.
Yeah, water flame.
Sometimes it's not conducive to thinking through the problem.
(41:07):
Yeah, we're seeing that initial corporate rush start to wane.
You're totally right.
We know that there's opportunities.
It's always about problem backwards and not just how do we figure out AI and squeeze it
into the product.
Now we already have some versions of AI logic.
So for example, one of the large problems that a lot of warehouses operations have is,
(41:29):
I guess you've all ordered from Amazon where you order a pencil and it comes in a box.
Yeah, it's like, this is not such a waste.
The issue is the packers who are packing the orders typically go for the easiest one because
it's just easy to throw it in, right?
Or they go for the one that's closest to reach.
So we've built systems that essentially tell the packer based on the dimensions of the
(41:51):
product, the systems know, oh, that's a jumper so you can fold it.
So we have little glimpses of that.
And ultimately there's going to be way more opportunities within the product to do that.
Tell me a little bit about how you thought about your team, your culture, what kind of
company did you and Ben want to build?
How do you guys balance out in terms of the traits that you imprint upon the business?
Ben and I are quite, we started off very different in terms of the way we thought about business.
(42:14):
We've come closer, some we've even swapped the way we think at times.
A lot of people ask, oh, who wins the most debates and the most in business arguments?
And the truth is, it's dependent on the phase and the season that the business is in.
One becomes the winner more often than the other.
So when we are in a operational, we need to focus on our numbers, get profitable.
(42:35):
Ben is mostly right in that phase.
When it comes to let's grow, we need to grow, fill the warehouse.
I'm typically the winner in those debates and those seasons.
When I speak to a lot of founders and teams, I find that they define who they are as a
company quite broadly and say, this is who we are all the time.
But the truth is your company goes through phases.
(42:56):
So it's not who you are all the time.
It's who do we need to be in this phase, at this point.
And then when the demand, the economy changes, when the landscape changes, if there's an
opportunity, sometimes we said, all right guys, we're just going to buckle down and
focus on profitability, focus on our efficiencies.
And then a 3PL down the road shuts down and we're like, we need to go to growth mode and
(43:18):
go grab all of those customers who will do the big presentation and say, guys, we are
now in growth mode.
Now all you care about is skill.
If we're doing stand up and more than 20% of what you say you're doing today is not
to do growth.
How large is the team now?
So the Hatch team is around, I guess, 35 people or so.
And Pimento's at six, seven.
(43:38):
I'm curious Pimento, how did you land on that name?
It's a pepper.
Is it not?
It's one of my favorite seeds.
Really?
I was like...
That's all.
I use it all the time.
I make soups a lot.
Oh.
You just dash and compliment it.
Okay.
I was just curious, is this notion of founders scaling themselves?
What resources did you have to lean on?
What networks?
How did you organize to make sure that, because you come across as a very self-aware person
(44:02):
on where your gaps are and where your strengths are.
Love the concept of post mortems, where you retrospect your strengths.
Where you retrospectively look at a failure, not even only a failure, but even a success
and try and work through that.
People do those too infrequently.
You can apply it to small scale projects, tasks.
You can do a post mortem after an investor call where you sit with yourself and say,
(44:24):
what did I do?
What did I not do?
I've got a lot of writing after small moments, big moments.
So you write like a reflective writing.
Yeah.
I really try not to make the same mistake more than once.
It goes down to things like even the other day I was at a networking event and I kept
forgetting people's names.
I said, this is bad practice.
So I went home and I wrote from now on, I would study to not forget people's names.
(44:47):
And I've spent a lot of time watching videos and how to not forget.
So it's like that sort of commitment to self-improvement in a lot of the little ways.
And also the last thing I'll add is one of the key things we hire for, and this is because
these are the people I want around me, is highly opinionated people.
Ooh, what's the mental model there?
Why highly opinionated?
Because you could also argue, some of my say, if you have too many opinionated people in
(45:09):
a room, it's hard to move forward.
The way, especially at Hutch, on the surface, it looks like they're fighting for different
things.
So for example, the warehouse team are fighting for the most efficient way to do things.
But then the customer experience team are like, we want to deliver the greatest experience
to customers.
So a customer might say, I want you to put tissue paper in the boxes and fold it in this
particular way.
My thinking is, let them fight it out.
(45:30):
Let the warehouse say, no, that's not efficient.
Let the customer experience team say, no, but we have to make it happen for the customer.
And give them the framework and the cultural space for them to land in the middle, right?
So that company as a whole wins.
And they have a name for it.
Yeah, we have a name for it.
They have an internal beef.
And in eight out of 10 cases, it's always a happy medium.
(45:52):
But you can't do that unless you've empowered everyone to fight their corner and be super
opinionated about their part of the business.
But you hire people to bring in their experiences, their expertise and so on.
And what you really want is you want to be told that as a founder, your idea is stupid.
Let's say, for example, we have a big deal.
A big deal is on the table.
We're discussing pricing, right?
(46:14):
This happens all the time.
And that is probably where they're most different.
Some of the team are win it at all costs, give them a discount in the first year and then
price it up in the second year.
Some of us are very P&L.
No, we can't lose money on this and so on.
But what we always typically land on is this happy medium where we make money, we win the
(46:35):
deal, we come up with something creative to appease all of the different people.
There's always room to find something that works if you allow the creative conflict to happen.
Exactly.
And that's what we try to encourage.
And yeah, even now I'm thinking about the senior, I've got their faces in my head and
I'm just thinking you're super opinionated.
You're super opinionated.
But no, it works.
It really does.
We're coming at the end of the conversation.
(46:58):
And one of the things we ask is, imagine you had a time machine just as you started Hatch,
just as you started thinking of Pimentum as well.
And you could meet Sait at that time, 10 seconds.
What would you tell him?
Continue to back yourself.
One of the biggest qualities I have is I just always back myself and I'll back myself to
figure it out and make it work.
(47:20):
Sometimes it comes into doubt.
But I would love to expel those doubts and just be always remind myself to place bets
on yourself because my track record is I will always figure out and make it happen.
Enjoyed it.
Thank you for tuning into another episode of The Startup Leap, TSL for short.
Leave a review.
Tell us what you think of this episode on all our platforms at The Startup Leap pod.
(47:42):
Do you have a question?
Ask us and we'll ask our guests.
Go to thestartupleap.io.
See you next time.
I never finished college.
(00:01):
I just remember having to figure out what am I going to do.
I developed this really good skill with emailing CEOs.
I would always just send an email to say,
hey, one time a company had run out of money.
It went away for a weekend.
And I'll never forget everyone asking me,
how are we going to get paid?
I said, day before payday, what do I say?
I don't think price you ever get it right.
There is a biting point where you make the customer wince a little bit.
(00:22):
Trivia, what percentage of customers
that have visited our hot showroom have converted?
Welcome to The Startup Leap, the number one podcast interviewing startup founders.
Hear real, raw stories of how they've navigated taking the leap.
I'm Yvonne.
And I'm Maria.
And this is The Startup Leap.
Any statements made by Maria, Yvonne or the Startup Leap guests
(00:45):
are solely their view and not advice.
Welcome, Sey.
Excited to have you today.
You're operating in such an interesting space.
As a market, $31 billion in size,
15,000 3PL companies operating in the UK and 5 billion parcels delivered every year.
So I'd love to get into your story.
It's an interesting one.
There's so many places I could, if I go a few steps back, I'd never finish college.
(01:10):
Oh, really?
Never went to university.
Wasn't like the genius, but you already knew you were going to be a business person.
I wish I could say it was, but it was a lot of me figuring things out.
When I was really young, my dad did a good, but maybe bad job
because he planted this thing called inquisitiveness and curiosity in me,
which has its pros and cons.
(01:30):
I would say the pros have outweighed the cons,
but it meant that I was interested in everything.
And when you're interested in everything, it's hard to focus on something, right?
Didn't finish college.
And I just remember having to figure out what am I going to do?
And I developed this really good skill of emailing CEOs to find work, right?
So I never had a CV and I would always just send an email to say,
(01:52):
hey, this is who I am. This is what I can do.
I'm willing to work for free.
Just cover my travel and I'll come in and I can help do whatever.
And I remember coming across this website of the 50 most interesting startups
in London type list.
And I emailed every single one.
You're just shooting your shot.
Yeah, just shooting my shot.
It's sales. It's pitching.
It was the first time I had to really pitch myself.
(02:13):
And one of the first responses was from the CEO of Henchman at the time.
And he was like, what are you doing tomorrow?
I was like, I'm around. I can come in.
So I made a trek to the offices in Tottenham Court Road.
It was such a shoot your shot moment.
I didn't know what all of the startups did.
I just reached out to every single one.
My theory was it would be easier to do it with startups than it would be
(02:33):
a regular corporate company.
So anyway, went to meet him and he was just like, we spoke briefly.
He was like, I need help to do this. Can you do it?
And I said, yes. He said, OK, cool. You can start tomorrow.
What did Henchman do?
Yeah, so Henchman was an on-demand delivery company.
It was around the wave of your Deliveroo's and your pre-Uber Eats as well.
The promise was we could deliver anything to you in London within an hour.
(02:56):
What year was this?
I want to say 2015.
They had categories on our app, so very similar to the Deliveroo experience
that you see today, where you have the partner restaurants.
But it also had this big button in the middle that said, get me anything.
So as a consumer, you could hit that button and the world was your,
or London was your oyster. We've delivered fridges, right?
So customers would hit a button and say, I need a fridge in an hour.
(03:17):
And we'll just make it work.
There were things that people were asking us to move papers from one place to another
and things like that. So it became your personal courier.
And the concept of Henchman was like it was your personal henchman.
And at first, we had all of the drivers in a black shirt, a tie, a bowler hat.
So they'll swap their helmet for a bowler hat when they're delivering.
(03:38):
All these little touches.
So that was like my first foray into what logistics was.
And logistics is one of those words that you hear.
You don't really know the meaning of, right?
Over the years, I've come to my own definition of what I believe logistics to be.
During that time, I did everything.
I was doing payroll, managing the drivers.
I was paying the drivers, managing our partner restaurants, managing the sales team.
(04:01):
I was doing all of these different things.
How many employees were there at the time?
About 35 employees.
At its peak, I was in around 600 deliveries a day.
That experience was the best experience ever.
And the reason why was the company died and then put itself back.
About seven times.
That journey as a learning curve is you can't imitate that.
You can't replicate that. It's really difficult.
(04:22):
I learned so much and loads of those skills that are applicable today.
It's so funny, I was catching up with the founder recently and we were laughing at
this one time where the company had run out of money and he went on holiday.
I don't know what happened.
It went away for a weekend.
And I'll never forget everyone asking me, are we going to get paid?
I remember looking at the company bank account and be like, I don't know where.
(04:44):
It's either one of the two things.
We've either got operating cash or we've got to pay everyone one of the two and
it's not going to be both.
I remember coming out with a plan on the spot, calling the founder and
me like, look, everyone's hounding me.
It's a day before payday.
Everyone's asking me, are we going to get paid?
What do I say?
And he said, say it, you figure it out.
Right.
I was like 22.
Whoa.
You were young.
I was young.
So then what I ended up deciding to do at the time was basically calling everyone
(05:06):
into the office one by one and saying, look, we can't pay you in full.
What's the minimum we can pay you for you to cover your bills?
I had this spreadsheet and everyone was like, I just need a grand to get me through.
And I remember paying everyone bit by bit and that allowed us to have enough money
to do both, but it was like those experiences that really shaped some of
the experiences today.
(05:27):
So Henchman ultimately died.
That's where I met my co-founder now.
So I stayed with the logistics part of the business and Ben, who's my co-founder
went with the software part of the business.
We came together and we split a little bit.
And you stayed in touch?
Yeah, Ben and I stayed in touch.
Our stories are very interesting because we both were doing startup-y stuff, right?
(05:51):
We always laugh because every time we done something non-logistics, it failed.
And every time we done something logistics, it worked out.
It's like the universe is telling you something.
So our paths, even though they were separate, we were doing the same things
away from each other.
And then when we came back years later, it just, the time was great.
And tell us a bit more about that coming back together.
(06:12):
How did that come about?
Cause you started Hutch right at the beginning of COVID.
How did that come about?
What was that aha moment where you were like, let's do this.
And did you do anything before that?
Was Hutch the first thing you tried?
Did you experiment with or without Ben?
So I've done a whole bunch of projects in between.
Ben and I worked on a project.
It's hard to call it a business, but we worked on a project called Recover, which
(06:34):
was a black mental health service.
It was a platform to help black people find black therapists.
It was born out of one of my friend's personal stories, who was the first person
I ever knew to go to therapy.
Right.
And I just saw this person transform in front of me.
And it was like most beautiful thing to see.
When we started to dig deeper into that, he was like, look, I had issues.
(06:54):
I went to loads of therapists and actually it wasn't only until I worked with a black
therapist that I felt seen, I felt heard.
And I was like, that should be everyone's story, right.
From our community, especially with the stats on mental health in the black community.
They're alarming, right?
Yeah.
That's so interesting because five years ago, mental health was a thing that no one
really spoke about within the community.
(07:14):
Exactly.
It can't be a thing where you go in a therapist.
Why?
For what reason?
And a lot of people who have therapists now hide it from their parents.
Yeah.
They still don't share it.
It's still a bit of a taboo to some degrees.
Yeah.
Ben and I, Ben was like just a hungry, yeah, I'll do it type guy.
Yeah, I'll do it.
I'll build it.
I'll do it.
So I was like, look, this is the idea.
Here's all of the data.
Ben, what can we do?
(07:35):
We figured out, let's just build us a matching platform.
So we built it.
Initially, we were overwhelmed with the coverage we got and the signups we got.
And essentially I was up and down sort of London meeting with a bunch of mental health
charities who wanted to buy the product to then use in their communities, right?
How did they find out about it?
(07:56):
I reached out.
I reached out.
Yeah, I remember.
Great emailing skills.
I was emailing.
Yeah.
I learned about CCJs, clinical commissioning groups.
So the idea was to go to these CCJs and sell the service, but target the areas that have
larger black populations because this is a product that could help their community.
But found a market fit is a very real thing.
(08:16):
It wasn't my story.
It was my friend's story.
And though I was very inspired by it and very moved by it, it wasn't my day to day experience.
I hadn't even seen a therapist, right?
Those gaps start to show as you're moving through the journey.
And it's like the golf and the knowledge gap to close, you realize is massive, right?
(08:39):
It's so despite the passion.
So I started to find that it was harder than it should have been.
You have to overcome the language barrier, right?
It's a whole different sector.
You have to overcome the lack of network barrier.
You have to overcome your lack of profile and your lack of credibility barrier.
So we ended up basically giving the assets away to the community.
Basically giving the assets away for free to one of the charities.
(09:02):
And then moved on to what I worked on after that, which was Wonderpay.
That's where we first met actually.
That is where we first met.
So at that point I was COO-ing.
And this is another story of Paul found a market fit.
And essentially Wonderpay was a travel slash payments platform.
How did it come about?
What was the aha moment for Wonderpay?
(09:24):
So my co-founder who loves to travel, his name was Raphael.
He loves to travel and essentially he wanted a better way to pay for travel.
And he saw the trends of your clanners.
And so he was like, let me build one for travel.
So it was a buy now pay later, like travel now pay later.
Yeah, we were building that.
Managed to raise some VC at the time.
(09:44):
Managed to get some partners on both the travel side and the lender side.
And we did quite well to build that.
And again, that golf was far bigger than the one at Recover, right?
We were learning two industries at the same time.
Travel and payments, right?
We had experience in neither of them.
When you're on VC journey, you need to keep raising to figure it out.
(10:05):
And we just couldn't figure it out in time.
And yeah, that story ended.
You brought up a point of the rights to the problem.
Because even if you're passionate about it, what is the combination of teams
that will give this a good shot?
They just have an edge for some reason, something about their background.
So even though you were passionate about it, you wanted to solve the problem.
(10:25):
It was just that the golf was just too wide.
You're also competing with people where the golf was just not as wide.
It's always good to reflect once it's done.
Yeah.
When the business was done, we done some form of at Wonderpay post-mortem.
Did this go wrong?
And we realized the deficit we were starting from was so big.
Ending a business is tough.
At what point did you have a conversation to say, you know what?
(10:47):
It's probably not working.
What did you hesitate?
How did you decide this was clearly not working?
One of the challenging things we've found in teams is
you might not get there at the same point.
So I realized quite early and I was like, yeah, I don't think this is going to work.
The difference between myself and my co-founders,
one of the challenges founders have is they tie their identity to the business.
(11:08):
Right.
When you bump into someone in the street or an old friend
before they even ask, how's your wife, they ask, how's business?
How's the business going?
True.
That's why a lot of founders keep going.
If there's one thing I'm good at doing is killing something when it's ready to die.
Right.
If you're enjoying the podcast, hit that subscribe button.
Yeah.
Whether you're watching on YouTube, anywhere else,
(11:29):
subscribing is the easiest way you never miss an episode.
Now let's get back to the episode.
It's fine to fail.
If it doesn't work, kill it, move on.
And obviously it's not as easy when you've got investors and you've got customers
and you've got all of these different things.
For me at the time, it was pretty easy to make that call because it just wasn't working.
And I didn't want to slog a dead horse.
So at that point in time, did you know that you wanted to go and build?
(11:52):
And at what point, because I know that you then went on to work at Fida.
So when did you decide to go again?
And what was that experience like at Fida?
Why did you decide to go to Fida in between starting Hutch?
Fida was a great experience because after Wonder Pay,
I wrote this list of the skills I felt I was missing.
A part of me felt like I was playing COO, if I'm being honest.
(12:14):
We didn't have any major customers.
We didn't have any, but I was so busy doing stuff,
but none of it was the right thing.
I wasn't doing stuff in the right direction.
So I wrote this list of the next job I have to work with closely to a COO or a CEO
that has these traits.
And it just so happened that our founding Fida,
(12:34):
the founding team was a very commercial CEO and a very operationally heavy COO.
And I've done so much due diligence on those two individuals as people.
And I was like, that's the place I want to work,
only because I want to see an action, right?
I need to see someone who's executing in real time up close.
And the business seems they had customers, they had thriving businesses, they were funded.
(12:56):
At what stage did you join?
Sub 10 people, I believe.
They were probably around 18 months into their business journey.
And just for context, Fida is a food delivery platform for businesses.
So again, in the logistics space.
And was that intentional to go with the logistics space?
Speaking of intentionality, I love the fact that you recognise where the gaps were
(13:17):
and in order to take yourself forward and for the future,
idea that you had to go and build again, you knew that you had some gaps to fill.
So you went out to fill those gaps.
Funny enough, one of my old friends from school,
he reminded me that my first hustle at school was the logistics business.
Oh, okay. So this goes way back.
It goes way back.
It goes way back.
Speaking about that founder market fit.
(13:38):
I'm telling you, only the year 10s and year 11s were allowed to go out to eat for lunch.
I would basically go out and they'll give me a pound.
So let's say they wanted chicken and chips for lunch.
I had a trolley, like a Sainsbury's trolley.
You were doing henchmen.
Henchmen from before.
And I didn't link it together until my friend made the connection.
Sometimes it's only retrospect that it makes sense.
(14:00):
Exactly. Exactly.
It'll be a big cue of the whole, literally a massive cue of the school.
I got banned by the teachers.
Product market fit.
Product market fit.
I got banned because they were like,
now canteen sales are going down because of you.
So when you joined FIDA, yes.
Did you know you were going to build a logistics company?
Was it in your mind that, okay, if I'm going to try to build in this space,
(14:21):
do I need to go somewhere that I know is best practice?
I can learn.
A bunch of so many different things.
The next place I wanted to do a really good job.
I felt at WanderPay, I didn't feel proud of what I did.
So I always felt I need somewhere where I know I can do good work.
And I knew I smashed it.
I henchmen doing that, the logistics stuff.
So I was like, I can go in and do the same.
But I always knew I wanted to get into logistics after.
(14:44):
I wasn't fully sure where, how, and what.
It was just at the back of your mind.
So it wasn't, okay.
Okay.
Absolutely.
Interesting.
So yeah.
And then, yeah, I went to FIDA.
And as I was saying, they were delivered to businesses.
So their flagship product was called Cloud Canteen,
which essentially was, if you worked at Google,
you have this massive canteen where you have many options to eat.
You don't actually have to leave the offices.
(15:06):
And FIDA tried to replicate that at companies that don't have a canteen.
Right?
That's why it's hence the name Cloud Canteen.
And every employee will have an access to an app.
And what we did in the background is we had a list of vendors
and we had to logistically map them to the location of the office
because we were delivering them exactly at lunchtime.
Interesting.
But you chose what you wanted on the same day.
(15:26):
Oh, that must have been a logistical night.
So it was hard.
So let's say you got your food delivery at 12.
Yeah.
For 400 people, you could order up until 11.
And then, and were you predicting?
Yeah.
Is there predictive analytics?
So there wasn't much predictive stuff,
but we did a lot of tricks like shrunk the menu, number one.
Yeah.
Ask about that.
(15:47):
Yeah.
Did you, what was the efficiencies like in that kind of business,
especially given the lack of predictability of the orders?
What was the revenue model?
Was it subscriptions or was it people pay?
In terms of the efficiencies, I would say it wasn't that efficient.
Right?
The company eventually got sold.
Had we probably stayed and tried to build out that product a bit more,
(16:08):
the next phase was definitely becoming more efficient.
Right?
We would run into problems like our competitors,
the restaurants would work with us and the competitors at the same lunchtime.
So not only are they getting 300 orders from us,
they're getting 300 orders from somebody else.
And then we had to learn to put that into contract where,
and come to the table maybe with the other competitors and say,
(16:28):
let's make sure we don't overflow the restaurants on the same day and work together.
But we were improving all the time.
Right?
We worked with some partner delivery drivers.
We had our own delivery drivers.
We worked with our industry, really pushed cargo bikes in London
and got them a lot of work because cargo bikes are the ideal vehicle to use.
(16:49):
They can weave in and out of traffic,
but they can take a large load and they don't get stuck in traffic.
But then you run into an issue,
maybe we have to go into a loading bay where you need a van.
So from an efficiency perspective, we were always trying to push that.
The offering was sold as a perk to companies.
Right?
This is how you can enrich your employee experience.
They get better choice of lunch, therefore they're happier.
(17:10):
Therefore you retain your staff and so on.
You'll be surprised at how many of these companies subsidized the lunch for the employees.
So an employee would log on to their account, see the menu and they'll have credits.
And then we took a commission, almost a delivery model,
took a commission from the restaurant.
And then dependent on the setup or the service,
(17:31):
the companies paid us as well to onboard that service into their company.
I was there for just over two years.
And then they were acquired.
Yes.
Compass Group bought them.
And yeah, that was the seed money I used to start Hutch.
Oh, so it was the proceeds that you used to start Hutch.
Before we get on to Hutch, obviously you went into the company
(17:53):
knowing that you wanted to develop some certain skills, right?
What was the key takeaways from that experience that you took into Hutch?
Going back to Henchmen was chaos, right?
FIDA was grown up Henchmen, right?
And up until that point, I had never had a grown up business startup experience.
I'd never worked for a startup, which was still a startup, but like...
(18:15):
At least had some playbooks, some best practices.
Exactly. Some playbooks, like consistent cadences, like rules and things like that.
And that was definitely a massive mind shift because sometimes we fall into the trap that you have.
Scrappy is amazing, but you don't have to be scrappy.
And the target should be get out of scrappiness, right?
Let's start scrappy because you have no choice.
(18:36):
Yeah.
Let's work to get out of scrappiness and let's be structured.
Let's be organized and let's be an actual company.
So Compass Group comes, acquires the business.
And is it that point that you decided to leave?
Yeah. So it was a weird time because it happened as lockdown was happening.
Some of us got furloughed and some of us were working from home.
I used that as an opportunity to sneak off and start building.
(18:58):
What I was trying to build was same day and on-demand delivery for e-commerce, right?
So the plan was to have these micro hubs, micro warehouses,
and to use those to power same day and faster delivery.
Was some of that spurred by COVID?
It was spurred by COVID. It was spurred by feeder.
Because that feeder as well, I learned about all of these tools that I can use to run the back office.
(19:21):
Yeah, gain efficiencies and actually reliability in the delivery of the service.
Exactly. That showed me we can do this with this tool.
I understood this software. I understood the market.
I knew how much it would cost to build this sort of tech infrastructure with coding
to build an on-demand delivery business.
I was speaking to loads of people that had brands.
What are you guys struggling with?
(19:42):
And it was such an interesting time because all of their orders were increasing because of COVID.
But they were literally physically handicapped because of COVID.
They couldn't physically go and post, I'll do it for you guys.
This is how it started.
And same day delivery is coming, same day delivery is coming.
Oh yeah, there's an interesting story as to why we never did same day.
Which essentially is when I managed to rope Ben in, he said,
(20:06):
because he was so burnt from his startup journey,
he was like, unless you can get it to work on a spreadsheet as a business, I'm not joining you.
So I went back to try it and I couldn't get the economics.
To work in a sustainable.
I love that.
There is something about the back of the envelope calculation.
Like, how is this a business?
Tell me what the unit economics is.
(20:26):
Just on a, we know it's not going to be like that in the future,
but just make it work with some assumptions.
Interesting.
And we had both of our business like a henchmen.
It was like this imaginary when we get here, we'll become profitable.
Or when we get here, we just need to make these tweaks and the unit economics will work.
But 99% of times that point never comes.
(20:47):
Right.
That's one of the things I really love.
We met in the very early days of you thinking about Harch.
And you were so focused on the unit economics.
And it was at the time where the market was like growth at all costs.
So you were an outlier from that perspective in terms of thinking about how we're going to
make this work from a numbers perspective and thinking about it very early and how
that's propelled you to get to where you are today.
(21:08):
The numbers you did then and now.
After time passed, did you check out or was it an exercise that really helped you think
at the time, but didn't quite match up to reality?
Number one, I have to give Ben a lot of credit because he was really hammering home.
He was like, mate, we basically both of us were tired of hemorrhaging cash.
We were tired.
Like we were so tired of raising and spunking it and raising and spunking it.
(21:32):
What we did is we went to all of the competitors at the time and I just copied their business
model and I just imprinted it on the wall.
And I just imprinted it onto a spreadsheet.
We just said, imagine this is our model.
Can we make this work?
What does this look like when we're at 5,000 parcels?
How do we become more efficient and more profitable than the incumbents?
(21:53):
If we make tweaks here, if we build this in this way, that was the start and the
genesis of our thinking.
This was right before anything was built.
So before we started and when a lot of sort of young entrepreneurs come to me now,
I always say, start with a spreadsheet, build a model.
It doesn't have to be perfect.
Ask yourself, is there a business there?
And if people start with a spreadsheet, what are they looking out for?
(22:13):
Some say, look, things are going to change so rapidly.
I don't really care about a spreadsheet because whatever is there is fiction.
What's going to happen in real life is probably going to be different.
Others say it's the exercise that counts.
So what's your view having started with the spreadsheet and gone through the experience?
What would you say if someone was starting with a spreadsheet?
How should they be thinking?
There's two sort of things about this is way more applicable to a service-based business.
(22:38):
Right.
Product is quite different because you're trying to find product market fit.
You're trying to figure things out.
I believe with service-based businesses, your goal is to make money from day one.
Right.
Try and make money from day one.
And I have this sort of big theory about product businesses for me are still the holy grail.
But the best way to get there is via service-based business first.
Right.
And there's so many reasons why this, but in terms of the spreadsheet question,
(23:01):
with a service-based businesses, try and make money from day one.
If I eventually, I don't know, have an app where someone can request a window cleaner.
Great.
But a better way is to start cleaning windows yourself.
Right.
You just knock on a hundred houses and say,
do you mind if you want me to clean your windows?
Right.
And then work out, does that work as a business model?
And then that gives you the time, the profitability, the base.
(23:23):
You're in control of your own destiny.
You don't have to focus on fundraising.
Got it.
So it's more like a way to buy yourself time.
100%.
I think this is really interesting because obviously we're seeing a lot of AI-enabled
service businesses and oftentimes these service businesses are very low margin,
require a lot of humans, a lot of friction typically.
And so where AI is applied to these businesses,
we're seeing margins rapidly expand and so on.
(23:47):
I want to go into particularly how you thought about the software piece
in applying that to 3PL.
Because if you look at the 3PL space, most players do use very old legacy,
clunky software, right?
And how did you think to build something that would drive efficiency,
but then take you to where you are now with Pimento?
Yeah, we go a little bit back.
(24:10):
When we fleshed out Hutch a bit more and we started to get our first customers
and started to deliver the service to them,
we looked for a warehouse management system,
which Pimento is, to run our warehouse.
Then it's technical and the plan was off the shelf and then build on top of it.
Right.
Our early customers were very demanding in terms of what they wanted their service to look like,
(24:32):
what they wanted their experience to be for their customers,
which was a good thing because it raised the bar.
But the existing tools didn't allow us to do it, right?
The existing tools dictate to you how you run your warehouse
and how you run your operation.
So what was the alternative for some of these brands that you were working with?
Would they just build out their own in-house systems?
They use legacy tools.
They'll use legacy tools.
So in terms of the customers using Hutch as a 3PL,
(24:55):
they would just either fulfill themselves or, I guess, do it.
Use somebody else who is using legacy tools.
And in terms of our software customers,
they'll be using those legacy platforms that, again, are very rigid,
and force you to ship orders out in a way that they want you to, right?
These tools, they suck.
They're really bad, right?
How far into Hutch did you start getting that?
(25:15):
Almost straight away.
Really?
So we did the initial phase of looking at tools to use, to implement.
It's very difficult to build a 3PL business without software.
You have to manage your inventory, track your orders.
We had a guest who started a CPG business and then went to build software
to make it more sustainable because they found that there were issues with it.
(25:36):
Absolutely.
And our view was we had two things that we're trying to build for.
One was building a platform that allowed our customers
to deliver the best experience to their customers, right?
So to give an example, some customers want on a Tuesday,
any order that goes out on a Tuesday, we're doing a promotion.
I want to put a handwritten note that says this,
(25:56):
or if we mess up and we send out a replacement,
I want a specific handwritten note that says, sorry, we messed up.
So it's like this personalized experiences,
but a common that you want to scale to improve customer experience.
The existing systems don't allow you to do it.
So what kept on happening is you have these brands that have these broad ideas
and these ambitious ways to deliver a great experience.
And they go to 3PL and they say, we can't do it.
(26:18):
Or we can do it, but it's going to cost you eight.
But that was because they didn't know how to do it profitably.
They didn't have to scale it.
Because the existing systems also kind of got the...
And the second, back to the numbers bit,
can we build a system that helps us be profitable all the time?
Right.
So we'll just build in it for ourselves and we're like,
we always need to be profitable.
We need those efficiencies and so on.
(26:39):
And we need to build all of these core, sexy tooling
to allow us to help our customers deliver great experiences.
So as a 3PL, we'll win in a lot of business from other 3PLs
because we could deliver that.
So when we were ready to launch Pimento,
we ended up with this offering that was a warehouse management system
(27:00):
catered for 3PLs and brands who want to deliver great experiences to their customers
and also run a profitable e-commerce operation.
Did you think you would have been able to start Pimento
without having gone through that whole experience with her?
No.
How did you validate Pimento because you said that other 3PLs
were already using you because of the software.
Was that the signal that, okay, maybe we just sell this thing directly to them?
(27:22):
What was the validation process within Hatch into Pimento?
Yeah. So essentially, we, first and foremost,
we made a lot of 3PL friends before we even thought about doing software.
And we were always...
Do you send your cold emails again?
Cold emails just reaching out.
And we were very shocked when we were understanding like
their gross margins and their net profit. We were like, you guys aren't...
(27:43):
Prompto.
Yeah, you guys aren't on the bread line.
Yeah.
And we were doing so well and we realized our software has a massive part to play in that.
Because a lot of these 3PLs are like...
Yeah, the margins are hard.
Exactly.
20-year-olds.
Exactly. A lot of them are mom and pops.
Exactly.
A lot of them are smaller operators.
So we realized, yeah, your margins are squeezed.
(28:04):
And then we also were always winning customers from them.
And the first bit of feedback we'll get is,
yeah, they just...
We didn't like the system.
Because the brands have to interact with the system as well.
We didn't like the system or they can't fulfill on these requests that we have.
One of our brands was like, look, my dad has got space in his warehouse.
We're just going to take stuff from Hutch and we're going to fulfill ourselves.
(28:26):
And we're like, that hurts.
Because you're not leaving because we've provided bad service.
It's just another opportunity opened up.
And then we were just like, should we just give them the software?
Just to run it and just see.
And we gave it to them, forgot about it.
And I'll never forget, we had a call with our accountants and they were like,
yeah, so you did it.
And you got this 15 grand from this customer.
We're like, huh?
What customer?
Wait.
(28:46):
We completely forgot that they were paying us.
And they were like, oh, so this is what SAS is about.
You're like, must be nice.
So you don't have to work every day.
You don't have to ship parcels every day to get the money.
This is...
And that was like the moment we were like,
that was like the easiest money we ever made.
So then I sent one of the cold emails to about 33 PLs just to see what was going on.
And basically the email said, hey, I'm say just like you, I run a three PL.
(29:11):
Unlike you, I built my own system.
This has allowed us to scale to here and here.
And we are better than incumbent one, incumbent two, incumbent three.
I'd love to do a demo book time here.
And I just got loads of them on a call and all of them were just blown away.
They didn't have any questions about the system and concerns about it.
The main questions was your three PLs, why are you going to steal our customers?
I was going to ask you tension between cooperation and competition.
(29:33):
Did you face that?
Like how significant was it?
Very. So three PL owners typically are quite paranoid
because you put in so much work to win a client.
So we had to build that trust.
One of the things we did was essentially convince them
that the software opportunity is big for us.
So we'll never steal your customer.
We have to put it in contract.
So there was a few things we did there to get them comfortable.
(29:56):
And that's one of the reasons why we decided to separate the brands
and split out into Pimento.
I'm just curious, how did you decide on pricing for the successive customers that came after?
We looked at the incumbents and said, we're like 30% better.
So we tried 30% more essentially.
So the way our plans work is we have like a basic plan, which is comparable to the incumbents.
(30:20):
So if you just want to go feature for feature,
you can use that and the pricing is comparable.
So if you just want a better system that has the same features, but we just do it better,
use our sort of base plan.
And then we have two other plans that have additional features.
Did you toggle the pricing?
Cause I feel like pricing is a bit of an art and a science.
Sometimes you overcharge and then you're like, yeah, we're pushing it.
(30:40):
Or no, maybe we hold and then people come or you undercharge and you're like, yeah, no,
this is way too good a deal for them.
Yeah. I don't think pricing, you ever get it right.
It's a journey and it's constant iteration.
I think there is this like biting point that we like even with the fulfillment business
at the time where basically you make the customer wince a little bit.
Yeah.
And that's when you know it's actually right.
(31:02):
Yeah. They wince a little bit.
If they're just like, oh, that's fine.
You're like, I'm lowballed.
So you want them to have a little bit of, not that is way too expensive.
I'm never talking to you again.
We almost offend them, but just like they wince a little bit and then they make the purchase.
What we're really good at in our sales process is always selling value, right?
(31:22):
It's the value, it's the value.
And one of the beauties is we have a showroom.
Hutch is a showroom for Pimento.
Right.
Ooh, that's a perfect customer acquisition channel.
It's a perfect channel, right?
And what that means is we can really show you the efficiency gains.
What we do is we will launch a new picking method.
We'll test it in Hutch and it will bring that case study into the sales process and say,
(31:43):
look, before this picking method, this is what efficiency looked like.
And now it looks like this.
And then we invite them to come down to the warehouse.
So it's a physically showroom, which the other software providers,
the software providers don't have, right?
I love that because we speak a lot about design partners,
like finding customers to build with, but you have that in Hutch, right?
You're your design partner.
I'll ask you guys a question, right?
(32:04):
Maybe trivia.
What percentage of customers that have visited our Hutch showroom
have converted to customers, Pimento customers?
60%.
Yeah, 50%.
100.
Ooh, that's incredible.
100.
That is compelling.
Interesting, 100%.
100%.
And also it's because the journey is quite long.
(32:25):
You've made it before.
I didn't make the journey, so I made it.
I have to, it's probably a part of that as well.
Obviously that's a service business with Hutch and now Pimento is pure software.
What sort of mental models did you have to take into account?
You and Ben building out Pimento and how did you think about the team
and how are you managing Hutch now?
Who's managing it?
Yeah, so absolutely lots.
(32:45):
That's still running fully operational.
Yeah, fully operational.
We knew that before we fully focused on Pimento
and it's what it took a bit of time, we needed to get the foundations of Hutch
in terms of a management, from a management perspective, really sturdy.
So we spent a while just really building out our management teams.
The last time I went to the warehouse was like three weeks ago.
(33:05):
So it fully runs on its own.
We catch up with the managers every other day.
We have our stand-ups.
We have certain sort of cadences.
So that's running really well.
In terms of the mental models, we went to every startup event,
listened to every startup podcast.
And then we realized very quickly that a lot of this stuff didn't apply
when we were building Hutch, right?
So the way we've employed staff for Pimento is
(33:29):
are these fast hyper-growth sort of mindset individuals?
Whereas on the Hutch side, still amazing individuals,
but they're more about operations and customer experience
and business as usual, if that makes sense.
Also almost have to have different personalities
when thinking about both businesses and leading the teams.
(33:50):
100%.
Even the way we look at the PNLs are different.
For example, the way you allocate revenue spend.
So how much you make and how much you're going to allocate of that
to how you're going to allocate the spending of that.
With Hutch, it's completely different, right?
With Hutch, we always try to have some form of cash held
because it's a heavy operational business.
You never know where you're going to need a forklift.
(34:10):
So you need to be a bit more conservative there.
And then with Pimento, it's a software business.
Your margins are way more healthy and way more generous.
It's completely different.
Can I ask an edgy question of the two businesses?
It's like comparing children now.
I'm just saying not pick, but of the two,
(34:32):
which would you say from an ROI perspective?
But if you think about purely from a business model,
which one really excites the entrepreneur in you
that likes to make money?
It's such a hard one because
with Hutch, there's something really good about
your business being physical.
You can see stuff, you can see boxes.
It felt very real.
(34:53):
But to be honest, the Pimento, the reward,
I'll give an example.
Our system's only gone down once.
It went down for two minutes.
In that two minutes, we received calls from every single customer
and that showed us how they rely on the system.
We onboarded a jewelry brand not too long ago
and we did what we call a handheld auction.
(35:14):
A handheld onboarding.
And I just remember calling the team.
I went outside, called the team and I was like,
guys, the difference we've made in 24 hours is insane.
And they keep coming up to me whilst I'm in the warehouse.
Thanks so much.
Like we've been telling our bosses to implement this for ages.
It's definitely a good feeling about empowering others.
Let's talk a little bit about fundraising.
(35:35):
You're quite privileged in that with Fida.
You obviously had the acquisition,
which you then used to fund Hutch.
And obviously I'm a very privileged investor in Hutch.
But I'm just curious how you thought about fundraising with Hutch
and how you're thinking about that with Pimento.
Yeah.
So I definitely recognize they're two different journeys.
I had to do a lot of learning on a Hutch journey to understand
(35:58):
what I guess fundraising vehicles applied best to that type of business.
I was a bit naive in that I saw fundraising as one thing, right?
I didn't really separate Angel and VC and PE.
I knew they existed, but I didn't know how do you apply them to your business case?
How do you apply them to your end goal, your story?
To make sure they fit.
(36:19):
Make sure they fit.
Because not every funding is for your business.
All of my entrepreneur friends were raising VC.
So it was very difficult to not just jump on the treadmill.
So we raised small amounts in sort of dribs and drabs as we went along the journey.
It's a really good way to raise, in my opinion.
Because the milestone is not in the raising.
It's in what comes after.
We've had term sheets.
And Ben always asked me this question.
(36:40):
When we've had the term sheet, ready to sign.
And he would say, but we're doing like 60K in profit every month.
Do we need to, do we actually need to raise?
And I'm like, that's such a good question.
Let's go back and model it and see if we need to raise.
And we plan out our next two years and say, we don't need to.
We always withdrew from those sort of instances.
And that must have been quite tough because I remember those moments where
(37:02):
you would get the term sheets and you'd be like,
especially when you're seeing all your peers raise.
It takes a lot of discipline to be like, we don't need this.
I got a rejection email from one of Europe's leading funds.
And it was the best email.
I probably should frame this email.
And this email essentially said, so for the delay,
(37:23):
the reason why it took long is we were deliberating a lot.
We think you're amazing and you will have a great business.
We just don't think that it's VC worthy.
We think you will get to around 25 million annually.
You build a profitable business.
But you will start to plateau from there.
And I said, 25 million.
That's not bad.
(37:44):
That's a very good outcome.
And you're telling me I don't have to raise and I can get at my pace
and we're in control of our destiny.
That's so funny.
That's not what most people would have got.
People are like, oh my God, that's how you're like, whoa, this is good.
That's good because I always knew that this is a platform for something else.
And I remember when you had that moment and it almost,
it put you back in control of your destiny.
100%.
And I remember you never think a rejection email would be like the confidence.
(38:11):
But it really was.
And I refer to that email a lot because those trends at what we're seeing, right?
We are seeing a plateau.
We are seeing it start to slow because it's a large,
it's a very commoditized market, to be honest.
It's very difficult to gain an edge.
There are a lot of raised to the bottom economics happening.
It's not that ripe for a typical venture fun story.
And another bit of advice I always give to young entrepreneurs is figure out your story.
(38:33):
There's no bad.
Just figure out your story, right?
And own it.
And own it, right?
And just lean into it.
And remember that this is not your last opportunity or this is not.
Obviously we've built a great business.
We serve almost like 90 customers.
And that's, you wouldn't consider that a stepping stone,
but we're very ambitious people.
Talk to us about that ambition.
Cause I know that with Mento,
(38:55):
your ambitions is to serve one in 200 parcels in the UK.
So this is obviously has the potential to be a venture scale business.
So talk to us about that transition from receiving that email,
hearing that it's not a venture-backable business,
but now building Pimento, which is,
and how that may have changed your view of ambition and what you want to achieve.
(39:17):
Yeah. So with Hutch, we were always ambitious.
Founders are taught to sell the sizzle and sell the vision.
But deep down, I was like, this is not going to get to a hundred mil
in the timeframe that you want it to get to a hundred mil.
And if it does, we would have to, it's a capital intensive business.
We will have to raise and raise and raise.
And we're seeing it with all of the incumbents that have gone down that journey,
that it's not easy and they're all struggling.
(39:39):
I know it's called some, a lot of entrepreneurs, just take the money,
just take the money.
But they forget that it shapes your trajectory.
It shapes your day to day.
It shapes who you hire, who you choose to work with.
Your strategy sometimes.
Cause now you're not just building alone.
You have partners who have expectations.
Very mindful.
And we're not, we have nothing against the VC venture backed journey.
(40:00):
We just knew it wasn't right for that business.
We think we can take their lunch money.
We think we've got a far superior product.
We think we can take Europe is scalable and it's just about, yeah,
identifying what is the right vehicles that you can use to grow your business
for your business.
What are your ambitions for Pimento?
What do you hope it becomes?
Yeah. So to, Yvonne mentioned it, one in 200 parcels.
(40:24):
So currently we're like one in 1700, so we got a way to go.
We want to be that layer for e-commerce and e-commerce brands and 3PLs to really
deliver great experiences to their customers and run profitable operations and allow them
to scale in a way that's not possible at the moment.
Without, and I feel like it's impossible to have conversations on tech now without AI.
(40:46):
Yes.
So did you have to think of your strategy with the product?
Does it have an AI component?
AI is not a phase.
I have to be super clear. It's not a phase.
However, the way founders and funds and the whole ecosystem rush to these trends, I don't
know, like flies in the light.
Yeah, water flame.
Sometimes it's not conducive to thinking through the problem.
(41:07):
Yeah, we're seeing that initial corporate rush start to wane.
You're totally right.
We know that there's opportunities.
It's always about problem backwards and not just how do we figure out AI and squeeze it
into the product.
Now we already have some versions of AI logic.
So for example, one of the large problems that a lot of warehouses operations have is,
(41:29):
I guess you've all ordered from Amazon where you order a pencil and it comes in a box.
Yeah, it's like, this is not such a waste.
The issue is the packers who are packing the orders typically go for the easiest one because
it's just easy to throw it in, right?
Or they go for the one that's closest to reach.
So we've built systems that essentially tell the packer based on the dimensions of the
(41:51):
product, the systems know, oh, that's a jumper so you can fold it.
So we have little glimpses of that.
And ultimately there's going to be way more opportunities within the product to do that.
Tell me a little bit about how you thought about your team, your culture, what kind of
company did you and Ben want to build?
How do you guys balance out in terms of the traits that you imprint upon the business?
Ben and I are quite, we started off very different in terms of the way we thought about business.
(42:14):
We've come closer, some we've even swapped the way we think at times.
A lot of people ask, oh, who wins the most debates and the most in business arguments?
And the truth is, it's dependent on the phase and the season that the business is in.
One becomes the winner more often than the other.
So when we are in a operational, we need to focus on our numbers, get profitable.
(42:35):
Ben is mostly right in that phase.
When it comes to let's grow, we need to grow, fill the warehouse.
I'm typically the winner in those debates and those seasons.
When I speak to a lot of founders and teams, I find that they define who they are as a
company quite broadly and say, this is who we are all the time.
But the truth is your company goes through phases.
(42:56):
So it's not who you are all the time.
It's who do we need to be in this phase, at this point.
And then when the demand, the economy changes, when the landscape changes, if there's an
opportunity, sometimes we said, all right guys, we're just going to buckle down and
focus on profitability, focus on our efficiencies.
And then a 3PL down the road shuts down and we're like, we need to go to growth mode and
(43:18):
go grab all of those customers who will do the big presentation and say, guys, we are
now in growth mode.
Now all you care about is skill.
If we're doing stand up and more than 20% of what you say you're doing today is not
to do growth.
How large is the team now?
So the Hatch team is around, I guess, 35 people or so.
And Pimento's at six, seven.
(43:38):
I'm curious Pimento, how did you land on that name?
It's a pepper.
Is it not?
It's one of my favorite seeds.
Really?
I was like...
That's all.
I use it all the time.
I make soups a lot.
Oh.
You just dash and compliment it.
Okay.
I was just curious, is this notion of founders scaling themselves?
What resources did you have to lean on?
What networks?
How did you organize to make sure that, because you come across as a very self-aware person
(44:02):
on where your gaps are and where your strengths are.
Love the concept of post mortems, where you retrospect your strengths.
Where you retrospectively look at a failure, not even only a failure, but even a success
and try and work through that.
People do those too infrequently.
You can apply it to small scale projects, tasks.
You can do a post mortem after an investor call where you sit with yourself and say,
(44:24):
what did I do?
What did I not do?
I've got a lot of writing after small moments, big moments.
So you write like a reflective writing.
Yeah.
I really try not to make the same mistake more than once.
It goes down to things like even the other day I was at a networking event and I kept
forgetting people's names.
I said, this is bad practice.
So I went home and I wrote from now on, I would study to not forget people's names.
(44:47):
And I've spent a lot of time watching videos and how to not forget.
So it's like that sort of commitment to self-improvement in a lot of the little ways.
And also the last thing I'll add is one of the key things we hire for, and this is because
these are the people I want around me, is highly opinionated people.
Ooh, what's the mental model there?
Why highly opinionated?
Because you could also argue, some of my say, if you have too many opinionated people in
(45:09):
a room, it's hard to move forward.
The way, especially at Hutch, on the surface, it looks like they're fighting for different
things.
So for example, the warehouse team are fighting for the most efficient way to do things.
But then the customer experience team are like, we want to deliver the greatest experience
to customers.
So a customer might say, I want you to put tissue paper in the boxes and fold it in this
particular way.
My thinking is, let them fight it out.
(45:30):
Let the warehouse say, no, that's not efficient.
Let the customer experience team say, no, but we have to make it happen for the customer.
And give them the framework and the cultural space for them to land in the middle, right?
So that company as a whole wins.
And they have a name for it.
Yeah, we have a name for it.
They have an internal beef.
And in eight out of 10 cases, it's always a happy medium.
(45:52):
But you can't do that unless you've empowered everyone to fight their corner and be super
opinionated about their part of the business.
But you hire people to bring in their experiences, their expertise and so on.
And what you really want is you want to be told that as a founder, your idea is stupid.
Let's say, for example, we have a big deal.
A big deal is on the table.
We're discussing pricing, right?
(46:14):
This happens all the time.
And that is probably where they're most different.
Some of the team are win it at all costs, give them a discount in the first year and then
price it up in the second year.
Some of us are very P&L.
No, we can't lose money on this and so on.
But what we always typically land on is this happy medium where we make money, we win the
(46:35):
deal, we come up with something creative to appease all of the different people.
There's always room to find something that works if you allow the creative conflict to happen.
Exactly.
And that's what we try to encourage.
And yeah, even now I'm thinking about the senior, I've got their faces in my head and
I'm just thinking you're super opinionated.
You're super opinionated.
But no, it works.
It really does.
We're coming at the end of the conversation.
(46:58):
And one of the things we ask is, imagine you had a time machine just as you started Hatch,
just as you started thinking of Pimentum as well.
And you could meet Sait at that time, 10 seconds.
What would you tell him?
Continue to back yourself.
One of the biggest qualities I have is I just always back myself and I'll back myself to
figure it out and make it work.
(47:20):
Sometimes it comes into doubt.
But I would love to expel those doubts and just be always remind myself to place bets
on yourself because my track record is I will always figure out and make it happen.
Enjoyed it.
Thank you for tuning into another episode of The Startup Leap, TSL for short.
Leave a review.
Tell us what you think of this episode on all our platforms at The Startup Leap pod.
(47:42):
Do you have a question?
Ask us and we'll ask our guests.
Go to thestartupleap.io.
See you next time.
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