Love With Food CEO: Investors Finally Over Webvan
Back when I first wrote about snack subscription service Love With Food, the subscription box model was everywhere. Two years later, several companies have gone bust or pivoted away from the model—including Cravebox, WalmartLabs’ Goodies.co, Lollihop, and Foodzie—and Love With Food CEO Aihui Ong say’s she happy to be in the group of subscription startups that’s still thriving. The company was actually helped in part by Walmart’s failure—according to Ong, Love With Food was the exclusive partner when the company shut down its service, offering their subscribers a chance to switch over. (Their agreement prevents Ong from disclosing how many subscribers made the move.)
Today Love With Food, which delivers monthly shipments of organic snacks like caramels, fancy pork rinds, Bonne Maman jellies, and sweet potato chips, announced a seed round of $1.4 million. The money comes from 500 Startups, Kapor Capital, and others. Ong, who has held leadership roles at Accenture and PeopleSoft, plans to continue fundraising, with a series A round in 2015.
I caught up with Ong about Love With Food, fundraising, and the lingering legacy of Webvan and its high-profile failure in the food delivery business back in 2001. Here is a lightly edited version of our conversation.
Xconomy: What has changed about Love With Food since we last chatted?
Aihui Ong: We’ve launched a new offering. For the first 1.5 years we had the tasting box, which was $10 [a month]. We have a lot of moms. They’re always telling us they’re tired of fighting with their kids for the samples in the box. They want more. So we launched the deluxe box—it’s triple the size with 16-20 different snacks. It’s $19.95 a month.
We’re much larger now. A lot of [food] companies have heard about us, so they’re always pitching to us. It’s not an issue now. Now we’re just choosing what tastes good and what’s unique. Every day we’re testing food that comes into our office.
X: What do you plan to do with the money?
AO: The new funding will be used to expand the team and also to expand the consumer insight part of our business. A lot of brands are coming to us, pitching us their product, because they can use us as a marketing platform. It’s more efficient than doing it in-store, giving out samples at stores like Whole Foods. And we collect data for them.
The market research is now replacing the traditional strategic focus groups. When we send out the product, we ask our very engaged community of foodies to give us feedback. Our brands can give between five and 10 questions, and our response rate is around 30-40 percent.
X: That sounds pretty high.
AO: We have incentives. It’s point system. The more you engage, the more points you get, and then you redeem them for free snacks in our marketplace. Everybody loves to eat, right? Everybody’s looking for free food.
The team itself, right now we have about 12 people full time, but with the new funding, we plan to hire more in terms of expanding the B2B part of our business. The next part is customer acquisition. We’re always looking to expand our user base.
X: What do you think is overrated in tech right now?
AO: I think a lot of photo apps for the phone. There are just so many. It’s just so much hype. Other than that, I think the good thing is the food space is finally getting its attention. I would say the food space has been the stepchild of the Internet for a really long time. No one wanted to fund the food space. If you look, there hasn’t been a successful exit. I know when we were fundraising people brought up Webvan. Are you kidding me? Webvan was like 1999. I think Webvan created a lot of backlash for the food space. That’s definitely turning around. The food delivery space is really hot. It might be over hyped. I think delivery of food to your home is overrated. Even those that you order raw food from and you cook at home, there is definitely too much steam going on for that space. There’s Blue Apron, Plated, Hello Fresh, Fresh Dish. There are so many of them. I think the space is very crowded. But all in all, I feel like the food space is definitely getting its attention from investors. Which is good for everyone in food tech.
The lunch space is really very overcrowded. Our office has catered lunch every Wednesdays. There are so many choices.
X: What other companies do you admire?
AO: I really admire ecommerce companies like ModCloth, Stella & Dot, and Nasty Gal. I know how difficult it is to deal not with just building the website, but the logistics part. Those three brands I really look to because they have built a really great brand. Anyone can sell apparel online, but not everyone can build a massive following and a community of customers. That’s priceless.
X: If you had to go work somewhere else, where would you go?
AO: I don’t think I could work for anyone else. I think this startup is the end of my employment career.
X: Do you think we’re in a bubble right now?
AO: That’s a very good question. I would say yes, I think valuations have skyrocketed, which is good for me, but I’m afraid of what’s going to come next year.
Everything that goes up must come down. I’ve seen two bubble bursts. One in 1999 and one in 2004. It’s a pattern. It’s a cyclical pattern that the economy cannot avoid. With how high valuations are, especially for Silicon Valley startups, it’s definitely a problem.
It’s good for startups up right now, but as an entrepreneur, I worry because I see what’s happened in the last 15 years. My advice to everyone is not to overspend. It’s easier to raise money now, but it’s not always going to be that rosy, as we’ve seen how the economy gone through bust and boom over the last decade.
X: Looking forward, what are you most excited about?
AO: Right now, we’re about to raise a second round. With daily deals there was a trend. I think the ones that did well survived. You see a pattern. When one daily deals site gets funded, they all got funded. At the end of the day, only two or three of them survived. I think the subscription model has the same pattern there. A lot got funded, but now there are only a handful of us left.
Walmart had a subscription box. They said, ‘your box is $10, ours is $7.’ The model didn’t work for them. They couldn’t make it work. In the end, we were the exclusive partner to buy their customers. Their customers joined Love With Food.