Interview by Han Yang Lim
5 Minutes to Read
Timo Schmidt had quite a journey as the Co-Founder and CEO of Gousto: having appeared on the hit TV show Dragon's Den, he went on to raise over £11 million from 3 investors- including the likes of Unilever Ventures. As a result of his entrepreneurial intelligence, drive and grit, he has since seen numerous successes, including being titled the 2014 Young Entrepreneur of the Year at the Great British Entrepreneur Awards (GBEA). Founded in 2012, Gousto is now the most recognised pre-portioned food delivery service in the UK, having been voted the best UK recipe box service against her competitors. I was fortunate enough to be able to ask the man a few questions about his business and on being an entrepreneur.
Han Yang: You have ventured from being a finance professional in the world of hedge funds and asset management, making a transition to founding a startup. How did your finance background equip you and do you think others who venture straight into startups without prior work experience may be at a disadvantage?
Timo: Working in finance gives you a fantastic tool box, and a lot of these skills are extremely relevant for running a data driven startup. However, this is not essential and anyone can start a business. What matters is being commercial, and passionate about the idea.
Han Yang: From an Environmental and Social Governance (ESG) point of view, how does Gousto deal with food wastage?
Timo: We don't have any. Supermarkets waste 20%, we waste close to 0%. We run a just-in-time model powered by forecasting algorithms. Go Environment! We saved 120 tons in food waste in 2015 alone!
Han Yang: As an investor (previously) and now a founder, do you find regulations (particularly those in the health and safety space) a hindrance to your journey in building a startup? How has the ride been so far?
Timo: I don't see that as a big issue. Food quality matters hugely, and we care deeply about food tech, quality assurance and provenance.
Han Yang: Certainly, all founders would like to see their startups grow in business and value, how has Gousto dealt with the rapid expansion and astonishing growth rates it has experienced?
Timo: The growth has been amazing, and I'm very thankful for the team's effort of handling it so well. We're at 140 people and scaling an organisation that fast is the black belt of business and only possible because of the people. We have a couple of startup superstars who are still in their mid/late twenties but thanks to them we coped so well. We hire passionate, driven, intelligent people with lots of ownership thinking, and give them he responsibility and cheerlead them. This is the secret sauce to scaling that fast. 50% of the management team joined as interns, and now they lead large teams and are irreplaceable.
Han Yang: At what point did you decide that your business idea had potential to scale? What signs did you see and how did you go about achieving that part of your vision?
Timo: Testing, measuring, refining, and testing again. And some point we found the magic formula and it made click.
Han Yang: You mentioned previously that your food wastage levels are very low compared to supermarkets. How did you achieve that? Was it favourable 'drop-shipping' type contractual arrangements with your suppliers or extensive consumer data forecasting?
Timo: Our data guys are the smartest people in the world, it's all their credit...you don't find this level of talent and data magic at Tesco or big corporates.
Han Yang: There are many start ups that have failed because logistical costs grew to the point where the margins simply did not make business sense such as the failed US online grocer Webvan. How are you controlling costs in terms of logistics and do you see the logistics aspect as a bottleneck to Gousto's potential growth in overseas markets?
Timo: We run weekly trading sessions during which we go through every cost line in great detail, ensuring that progress is made fast. This level of focus creates amazing ownership thinking, and ingrains a culture that cares about cost. Every penny we save we invest into the customer and quality, so it really matters to everyone here. Furthermore, I see a lot of businesses that simply do not have viable models and I would not be surprised to see a lot of failure there over the next years.
Internationalisation is interesting, but once you realise how enormous just the UK opportunity is with 25 billion dinners being eaten every year, there is a lot of work here to get this right over the next ten years - fun times!
Han Yang: Entrepreneurship is famous for have a work-life imbalance that leads to people burning out from spending 100% of their time growing their business. How do you control your time to prevent this from happening? How successful have you been so far?
Timo: This is a very serious issue, and I've seen it happen many times. I'm blessed with an extremely high energy level, and love what I do. And coming from investment banking and the hedge fund world I actually find the hours very reasonable. What's more difficult is the intensity and the loneliness sometimes. The only way to hedge yourself here is to hire rockstars around you, and to give them budgets and targets and then let go. I could not have done this without the talent we have, it's an incredible group of people here at Gousto!
This interview has been edited for brevity and clarity. Photo provided by Timo Schmidt. Some questions have been contributed by Kenneth Joseph Tan.