after announcing them. According to press reports at the
time, investors couldn’t stomach the company’s burn rate
given its distant prospects of profit. “Absolutely no one I
spoke to had any appetite for this deal,” Neil Campling,
technology analyst for Aviate Global, told the Financial
Times after the HelloFresh IPO was abruptly postponed on
November 9. (Richter disputes this characterization, saying
HelloFresh had many interested investors, but wanted to
wait until the general climate of the tech market improved.)
In the past few years, the company has made upgrades
to its operations. Richter finally began hiring executives
with experience, like Tobias Hartmann, its new U.S. CEO,
who previously ran eBay Enterprise and Innotrac. The
New Jersey warehouse—now in Newark—has raised wages
to over $13 an hour. And the company’s margin (excluding
marketing) has increased from 17 to 23 percent. On November 1, 2017, HelloFresh had a successful IPO on the Frankfurt stock exchange, raising more than $330 million at a
valuation of $1.9 billion. Since then, shares have increased
and sales have continued to rise.
Still, HelloFresh has a ways to go when it comes to
improving the climate in its New Jersey operation. Two
former employees, a night shift security guard and a custodian, said they witnessed evidence of hard drug use, including heroin and crack, at the end of 2016. “You’d see people
getting high in the locker room,” says the security guard.
“It was a party.” In January 2018, police were called to the
Newark warehouse after an employee uploaded a photo to
social media of himself holding a .40-caliber Beretta with
the caption “I will pop a n***a at work LOL.” Police found
the gun in his HelloFresh locker.
Meanwhile, even as HelloFresh has made great strides in
improving customer satisfaction—it’s added customizable
menus, delivery day options, vegetarian meal plans—overall
retention rates haven’t budged, acknowledge Griesel and
Richter. People may be happier, but they quit just as often.
The company’s investors argue that HelloFresh’s financials will improve as the category matures. Earlier this year,
following fulfillment troubles and other problems, Blue
Apron cut back its marketing spending 35 percent as sales
fell 20 percent, leaving the door open for HelloFresh. To
surge past the incumbent, HelloFresh is still spending
aggressively on marketing in the U.S. Meanwhile, the industry is consolidating: In 2017, supermarket chain Albertsons
acquired Plated. In March, HelloFresh bought Green Chef, a
Denver-based meal-kit company that specializes in organic
food. In May, supermarket giant Kroger announced that it
planned to buy Home Chef, another meal-kit company.
HelloFresh is also starting to move its business beyond
subscriptions. There are many new code names flying
around the o;ce these days—“Ginger,” “Caviar,” “Happy
Hour.” In May, the company began testing selling meal
kits in nearly 600 U.S. Stop & Shops and Giant Food super-
markets. It’s also experimenting with prepared-food
vending machines in Europe.
And HelloFresh has made Samwer’s dreams come true
in at least two respects: It’s now the No. 1 company in its
category in every country where it operates. And HelloFresh is valued at almost twice its annual revenue—a multiple that is more than twice that of Blue Apron or Home
Chef, and approximately six times that of Green Chef, the
company it acquired.
By the end of 2017, Rocket’s stake in the company was
worth nearly $980 million, a gain from its overall investment.
(In April, the company sold $184 million worth of that stake.)
As of HelloFresh’s IPO, the co-founders’ own shares have a
current value of more than $195 million, based on HelloFresh’s share price at presstime. Thirty-eight current and
former members of management, co-founders, and other
holders together own options worth over $58 million. Baillie
Gi;ord’s stake, meanwhile, is down 23 percent. And, of
course, HelloFresh itself has yet to turn a profit.
Back at the Berlin café, as Richter and I finish our salads, I ask him how the company plans to become profitable by the end of the year—he’s promised as much to the public markets. He locks eyes with me and gets an edge in
his voice. “We have a lot of experience with starting markets
and then basically driving them to profitability over time,” he
says. The company has never publicly detailed any profitable
operation, either globally or in individual markets.
“We’re in over 10 markets right now, and a bunch of
markets are already profitable,” he says, but won’t specify
which ones. “Basically, over the course of the year, almost all
of the markets will have turned profitable. Hence, we will
also be profitable.” As he talks, he keeps holding my eyes
until I blink and look away. But he doesn’t elaborate further.
Richter has the tunnel vision of an athlete, who—like his
original benefactor—is willing to accept only one outcome:
winning. His early investors doubted HelloFresh had a
future, so Richter found new ones—and then got the original to invest millions of dollars more. Now, Richter, sitting
with a reporter at lunch, is setting down the truth of his
company the way he sees it, regardless of how the crude
math works. During his time as an entrepreneur, the world
has submitted to his will, and he will do everything in his
power to ensure it continues to do so.
At 2 o’clock sharp, he excuses himself. “I actually
have another appointment,” he says. A few minutes later,
back at the o;ce, I walk by and notice he’s upstairs,
sitting alone in his glass box, typing intently on his laptop.
BURT HELM is an Inc. editor-at-large.
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