Ep 572 Selling Freshly to Nestle for $1.5B and Keeping $100M

John Warrillow (0:00)

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That's builttosell.com/tab.

Would you rather own 100% of a business you can finance yourself or 10% of something much larger? Mike Wystrach picked the second option. He started the meal delivery company freshly with $15 in the bank and his mother's ranch on the line. He raised more than $150 million and in 2020, sold the company to Nestle for a cool $1.5 billion.

He owned just under 10% by then and walked away with about $100 million personally. He also says that if he replayed his story 100 times over, half the times he'd end up with nothing. Mike's story, next.

Mike Wystrach, Book of the Built to Sell Radio. Hey, thanks for having me. I'm excited to share my story here. Yeah, well, let's get you to do it. How did you start freshly? What's the backstory here? Yeah, I mean, I was just trying to solve my problem. There was actually a few problems I had. So one, I had a restaurant at the time, and the restaurant wasn't doing that well. So I needed to figure out another revenue channel. And I started at, because I was working so much of the restaurant, I started having the chefs just make me to go meals. And I had a good family friend who was a doctor, who really got in the paleo diet. I said, you design them, because I want them to be healthy, but I don't even know what healthy means. So fast forward, I'm working a ton, but I'm in the best shape of my life, because I'm now all of a sudden eating healthy. And so people just started asking me to do it for them, and kind of a light bulb was like, well, I've got a restaurant that's got a ton of capacity, and I've got this demand state. So it kind of like, two things came together, and so ultimately that became the aha moment for Freshly. So I'd love to say that there were some great master planner sign, but it was kind of like, necessity is the mother of all invention. Isn't that funny? Sometimes businesses come out of strange directions. So it was meal delivery services, correct? For those who don't know what Freshly does. So what we did, I think the difference was there was different ways people are shipping food to your house. The big one was they were sending raw ingredients. So that's Blue Apron, HelloFresh, and then you had to cook it. So we started and we were fully cooked meals. That means all you had to do is heat it up. You could heat it up in the microwave, you could heat it in the oven. But what it meant is that for those of you who wanted the convenience of a healthy meal, but not any of the work, we did it all for you. So that was kind of like our magic thing. It turned out to be very hard to do at scale, but it was like, that's why the guys, it was easier to ship raw ingredients than it was fully cooked ingredients for sure. But yeah, that was our magic sauce. My mind immediately goes to how do you scale that? I can imagine having a hundred subscribers, but what was the plan to get to scale? Or was it a plan to scale? Yeah, look, we didn't know what we were doing. We were figuring out week by week, and I think it was constant continuous improvement. That's why I love startups, is because you get to create your own path. But the whole thing is that every week you got to get better, and you got to get better, and you got to keep trying new things, and some of those things work, and some of them fail. But I think, and I wouldn't necessarily put myself for the problem we solve remotely there, but it's the same thing when you read about SpaceX and these things, like they didn't know exactly how they were going to do it. They didn't know, but they just knew that it was possible, and they had the right people who were just not willing to quit, and that's kind of was our whole mantra. Did you think about financing yet? Because this sounds like an expensive business.

Yeah, it was. So it was funny because I was in Tucson, Arizona, which is now you can get venture capital anywhere in the world. Back in 2012 when we went out and raised, we ultimately got our first investor in 2014