BTU #110: Co-Founding Plated & Raising $55M (Nick Taranto)

“It was like an apocalypse movie and it was the day we launched Plated – the worst day in the history of the internet. And then our cargo container got picked up in the storm surge and sucked out into the river. The only thing that kept our business from getting flooded out of business was that thumb width 220V electricity cord that got tangled around a phone pole and didn’t get sucked out to sea. It was just a lesson in perseverance.”
– Nick Taranto

Nick Taranto is the Co-Founder & CEO of Plated, a company whose “Mission is to Help People Eat Better, and Live Better.” Plated has raised over $55M in funding, and been featured in the Wall Street Journal, Forbes, NYT, Wired Magazine and more. He started out at Dartmouth College, after which he worked at KOMPIP Microfinance before going on to Harvard Business School. After HBS, he graduated from the Marine Corps’ The Basic School, where he Drilled as an active reservist for 3 years. He also worked at Goldman Sachs as a Private Wealth Advisor prior to starting Plated.

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Selected Resources

  • There’s a great book by Ben Horowitz at Andreesen Horowitz – the hard Thing About Hard Things. Before becoming a VC, he was an entrepreneur and started a few businesses. He talks through his experience and takeaways for aspiring entreprenerus.
  • A resource I go back ot again is entrepreneur.com – you have to sift through some of the news, but there are a lot of great articles about building a business. raising money, hiring, firing, building out a sales team, operations, different contracts and negotiations. Entrepreneur.com is free and a great resource
  • Wired Magazine’s article on Nick

Show Notes

Please note that I type these notes during the interview so there are likely to be misspellings, grammatical errors, and misquotes. This is not meant to be a verbatim account of our conversation, but a VERY basic text transcript of our discussion.

  • You joined the military later than most – what lead you to join the Marine Corps?
    • My career has been very non conventional. I didn’t have a big picture plan when I was 21 or getting off active duty about startups. The idea of “living in beta” or testing hypothesis for your business and your life and career as quickly as possible
    • I was 26 years old when I commissioned in the Marine Corps. I had gone through OCS and was looking at either going into consulting, which most of my peers in business school were doing, or accepting a commisison. I thought long and hard about this before graduating from graduate school. It was hard because no one coming out of HBS had gone active duty since World War 2. When I asked people for advice they thought i was crazy for “throwing my life away.” None of that feedback made sense to me. It wasn’t until I talked to David Gurgain, who is a professor at the Kennedy School and a politial commentator on CNN, and he served in four different White Houses. Most importantly he went to Law School and then commissioned in the Navy after law school. he said “you should go do it and you’ll never regret it.” That’s how I feel about itt. I was older than almost everyone in my platoon. But i saw it as a Now or Never proposition and knew I would regret it if I didn’t answer the call.
  • What did you learn in your time in the Marines that has helped you as an entrepreneur?
    • I specialized as an Infantry Officer before going the Reserves side and serving iwth a few different companies all over the East Coast. In my Infantry training in the early days of getting the business off-the-ground was incredibly useful. Operating under ambiguity. Being able to preserve emotionally, psychologically and physically. We had a lot of challenges getting the business up and off the ground. Putting one foot in front of the others and having a big mission ahead of us. When yo’re growing an organization it’s important to make a mission crystal clear so that people can internalize it and get the big picture. So the day to dya may be a slog but you’re getting out to work something bigger than yourself.
  • What aspects from the Marines did you most need to leave behind as an entrepreneur?
    • I’ve thought about this a lot.When you don’t have a miltiary background it’s easy to romanticize what goes on in the miltiary. The Marines has the best brand in the United States – they haven’t missed their recruiting qouta in a long time because their brand is so strong. There are definitely live of martial life that do not extend into the world of entrepreneurship or starting your own business.
    • The biggest is dealing with beauracrcy. So much of the miltiary is waiting for the mission to come down. In startups, especially in the early days, it’s all on you to figure out what th enext plan is, what the risks are, make those assessments, prioritize the entire world that is in front of you and develop an action plan. I tend to do best when there is no structure. Where it really is incumbent on me to develop and hold myself accountable and develop a plan. I do less well when given a plan and need to execute it. I was pretty happy to leave behind the beauraucy and think creatively and operate independently.
  • Between USMC & Plated?
    • Coming off active duty I didn’t know waht I wanted to do with my life. I spent time Active Duty with the Marine Corps but was feeling a little lost. I was in my late twenties, had a fiance who had been working “Real jobs” and I hadn’t yet had my first “real job” outside of the miltiary. I wasn’t sure who I was supposed to be, what I was supposed to do. The thought of working 7am to 7pm in a job I didn’t care about depressed me pretty fundamentaliy. I went to Wall Street for about six months and reinforced how different life paths could be. I saw my bosses on the desk on Wall Street who by all measures were successful – making a ton of money, had families, were running books of business – but many of them seemed to be lacking happiness, a bigger mission, and I knew that I didn’t want to put my head down, grind it out, put up the periscope ten years later with  acareer I wasn’t satsified with, beholding to a very large paycheck.
    • That’s when I really started to look around and see that the world of startups exsited. This was 2011 so back a bit, when the fad for entrepreneruship hadn’t really taken off like it has today. There weren’t as many resources in New York i could go to and ask about what their path to building a successful multi-million dollar business was. I was able to team upw ith a business school friend of mine in New York – he had built a data storage company straight out of college (Josh Hicks, my co-founder at Plated). We did this Founder Dating thing for three months – figured out if we’d worked well together. We did volunteer work togetehr in Hataii for a couple of weeks and had been through some tought stuff together. I approached him as a mentor of sorts, and we figure d
  • How to vet a partner
    • There is so much that can and will go wrong – it’s like developing a battle plan, everything looks great until it makes first contact with a customer. It’s really improtant to decide – are you up for starting something on your own. Do you want a co-founder? If it’s tough to ride the ups and downs alone, a co-founder is very helpful. If the answer is yes, it will be the most dillutive decision you make in terms of your equity. You’re giving half the company away before the company even exists – so it’s a ;big quesiton. But the way I’ve always thought of equity is you’re going to reduce your total stake in the enterprise, but it’s worth it to take that hit if you’re increasing your probability of success by an equal or greater ratio. You’re giving up 50% of business, but are you increasing probability of success by more than 50%? For me the answer was yes. I needed a co-founder, to go into battle together. The next question was who and what sort of skill set. It’s a really important question – human nature is to work with people similar to us. Who talk and think the same way. It can actually hurt your probability of success, especially in the early days. So finding someone with complementary set of skills was important. It started with diagnosigin myself and fiding where I  was weak and strong, and where I want to spend my time, and where I want to complement this. That self examination is really crucial.
    • I knw I didn’t want to do the coding or financila modeling. I wanted to be out selling and hustling. Developing the mission and vision and hiring employees and generating business. I needed someone who was more comfortable workign behidn the scenes, making sure the website worked, making sure we had the right spreadshets and wharehouse management point.
  • What was the genesis of Plated?
    • Josh and I had been working on a totally different idea and it wasn’t working. It was going nowhere fast. We were working out of a friend’s office and went for a walk in Central Park – a mile around, we would just do laps and laps talking and bouncing ideas off of each toehr. We came to this realization that this idea wasn’t going to work. We knew we were going ot work together – we had been through months of intense work nto killing each other and actually liking it so we asked: what comes next.
    • We had been thinking through this meal kit concept for some time. On this walk around the resevoir at the end of a couple of miels of walking we turned to each other and said – this is what we need to do. This is what the next attempt at starting a business will be.
    • One was that food industyr trend in general. And out of personal need – our own experience
    • On the food industry side we had done hundreds of case studies in business school, but only one case remotely related to food – a cranberry manufacturing case. So we didn’t really understand the size of the market, what they looke dlike, what the opportuniteis were, what the weaknesses were. As we explored that we realized (1) food is an ENORMOUS industry. Healthcare is bigger but incredibly regulated. While food is regulated it isn’t nearly as tough to build a business as in healthcare. (2) as we looked across the landscape we realized that no one had built a large business in food with data. There had been big failures in the 90s and 2000’s like WebVan – one of the first e-commerce companies, an online grocer who raised almost $1 Billion dollars from the best investors and now a case study as one of the worst failures. So fast forward from their failure to 2012 there really hadn’t been data technology and innovation in a long time. It didn’t make sense why that was the case.
    • The other realization for us was that we were both athletes – I’m an Iron Man Triathlete – it was hard, complex and expensive to get good food into our tummies. It took a lot of time to figure out what to eat, especially when it came to cooking. We found the more you cook the happier you are, the cleaner the food, the more control you have – this mattered to us in a big way. There was no way to make cooking to work for us, esepcially in NY  – the lines at stores can take an hour to get through. Working in Wall Street I put on 20lbs in six months, just sitting at my desk all the time and felt like crap. It was the first time I felt I lost control over what I was eating and what was going on in my life.
    • So between it bein ga huge market without a lot of data and technology and that problem we thought we could build a better food business with data and technology at the core DNA
  • For an active duty listener who is not familiar with Plated, how would you describe Plated to them?
    • We deliver everything you need to cook a chef designed meal at home in about thirty minutes. All the spices, meat, protein, kale, basil, plus a chef designed recipe card with an image of the final meal and some really easy to follow steps that anyone can use to get a good meal to your table in thirty minutes.
    • We’ve got over 15 options each week, the menu changes every week, our recipes change based on what you like and don’t like and we deliver it directly to your door.
  • What has been the hardest moment since starting Plated?
    • We had a really tough time getting the business going. Five years out its easy to tell a success story, but the first year we ran into obstacles and a literal flood at every turn. First, Josh and I had been working on different ideas for six months prior to starting Plated. We had burned through our savings, our IRAs… we were out of money. it was go and raise money from other people, or go and get jobs, and neither of us wanted to do that. Which meant we had to raise money from outside investors on Day 0. Neither of us had done anything in food or e-commerce or building a consumer brand. You imagine we found people to pitch for our fledgling company and they would say – you’ve never done anythign remotely related to this! Why should we give you money!?! We quite literally had doors slammed our face. We talked to 200 people in three months and the only yes we got was from my dad, who was by no means wealthy. I grew up in a very privileged household where eduction was always first and foremost but he wasn’t in a position to fund the business. He gave us enough money for ramen but it wasn’t enough to get the business up and off the ground. It was incredibly humbling as we tried to convince people that we were going to accomplish this thing in the world but got rejected at every turn
    • Eventually we cobbled together some funds. I met this group of Angel Investors – people who fund very early stage businesses. They were former Israeli defense commandos. They had moved from Israel to Silicon Valley and had built two very succesful businesses and sold them for hundreds of million of dollars. They liked the Marine Corps story, our hunger and passion, and we raised our first money from those Angels. They took a big chunk of the business in exchange for the cash they put in – very dilutive, but we didn’t have an option. Either stop our dream or keep going. So we had a little bit of money, but it didn’t get easier from there.
    • I’m putting a book out later this year or early next year. I tell some more stories in there – The Evolved Eater – a quest to eat better, live better and change the world.
    • I tell the story of having a little bit of money to run the business, but we were working out of my apartment on my couch. I was going to the local grocery store and buying chicken by the pound and we’d pack it and hand deliver around Manhattan, really hustling. We realized we needed a professional fulfillment center if we were going to growth the business.
    • We looked all over NY for space that was refrigerated. We couldn’t find anything. But we found a refrigerated cargo cater that they used to ship bulk goods across the ocean. We rented one of these things and parked it in Brooklyn that we rented on a month-to-month basis. This 40 foot long cargo crater we plugged into a 220V yellow cord the width of my fund and we started taking our inventory and run our operations from there right on the East River. Beautiful view of Manhattan right on the water. It was all fine and good until Hurricane Sandy hit in October 2012. It was also the date we officially launched as Plated. When Hurricane Sandy came down – it was really something to behold. The city shut down for DAYS! No electricity, elevators not working, traffic lights not working. It was like an apocalypse movie and it was the day we launched Plated – the worst day in the history of the internet. And then our cargo container got picked up in the storm surge and sucked out into the river. The only thing that kept our business from getting flooded out of business was that thumb width 220V electricity cord that got tangled around a phone pole and didn’t get sucked out to sea. It was just a lesson in perseverance
  • Was there a point at which things changed – where you knew this was going to succeed?
    • It took a year of just grinding it out. Then we got some press – just through hustle, telling reporters our story, asking them out for coffee. That early coverage led to the folks from Shark Tank reaching out to us. We didn’t apply, they reached out to us – the Producer said we love your story and think you’d be a great fit. They flew us out to LA in July of 2013 – one year after we officially incorporated we were at the Sony lot filming for Shark Tank. We filmed thought it went well – didn’t hear anything from eight months! Now we’re starting to get nervous because the whole idea was to raise money but also the publicity of getting in front of 10 million households on a Friday night.
    • To make al ong story short, we got a call an producers gave us one week that the show was going to air. We were two years in business and not seeing any breakaway velocity. A few hundred orders a week, just grinding things out. Then our Shark Tank episode aired and it was an inflection point – we had sprinted to get a nation-wide system in place. We wanted to take advatnage of the nation-weid media. We saw 1000X increase in traffic to our website – even with all our planning, th esite still crashed. It was great. We saw more revenue th emonth following the airing than we had seen in the entire history of the business leading up to that point. That coverage and demand it generated validated that this is not just an idea that works ro in San Francisco – this appeals to folks all over the country in every zip code. That gave us the confidence to raise our first “real” money – our Series A, which was $15 million. It also validated that we could go then build TV advertising and investing to really grow the business faster. It wasn’t until two years into the business that we had that validation
  • What advice do you have for someone on active duty who is thinking of starting a company when they get out?
    • It might be hypocritical advice, but it’s a really hard transition, going from the military straight into a startup lifestyle. Goign from having a persribed routine of what to wear and eat and then having complete and total freedom over everythign you do. It can be completely overwhelming. The advice I would give is – if at all possible, go try and work at a startup (fi you want to be an entrepreneur) at another startup for 3 months, 6 months, a year. See how startups succeed or fail and try to learn on someone else’s dollar before hussling on your own. There’s no susbtitute for doing it yourself, but there’s SO much to learn and it is so incredibly hard that you want to give yourself as many advantages as possible. If you can find a team taht will give you a shot – that you can learn how young businesses operate, what financials look like, what building out a team means, what hiring and firing means in the private sector, getting those skills and expereinces – it’ll be invaluable when you go out on your own
  • What resources have been helpful to you – books, podcasts, classes, etc – that you would recommend to other veterans thinking of starting a company?
    • There’s a great book by Ben Horowitz at Andreesen Horowitz – the hard Thing About Hard Things. Before becoming a VC, he was an entrepreneur and started a few businesses. He talks through his experience and takeaways for aspiring entreprenerus.
    • A resource I go back ot again is entrepreneur.com – you have to sift through some of the news, but there are a lot of great articles about building a business. raising money, hiring, firing, building out a sales team, operatinos, different contracts and negotiations. Entrepreneur.com is free and a great resource
  • Final words of wisdom?
    • Whether you go or build a business on your own or join a team that is already operating, there is such a hunger out there for veterans. Especially post 9/11 veterans. Everyone is looking to hire vets both for waht they can bring to the table and it’s also a great story to tell to everyone. There can be challenges in translating what it means to how you can help build or run a busines,s but don’t give up if at first it’s a challenge