The challenge of conjuring up a tantalising meal for dinner party guests when you lack the time to cook and culinary imagination to experiment, is the kind of problem many people are lucky enough to have and that the internet has proved adept at solving. Gousto, an online delivery service created by two former City bankers in London, prepares the exact quantities of ingredients for at least three meals a week for the number of guests the customer wants to entertain.
Zest for business
The company was launched in 2012 by Timo Schmidt and James Carter, a German and a Brit who met at Rothschild Bank several years earlier.
Both had harboured ambitions of founding a food business and they hatched a plan when they were living close to the 1,000-year-old Borough Market, recently revived with artisan food suppliers in Southwark in London.
Mr Schmidt recalls that they toyed with several business ideas. “We got massively into food and organised a lot of dinner parties, travelling to Italy to sample meats and Alba for the truffles. We considered opening a store but rents in London are so high.”
Launching something where creating and testing meals was a core part of the job seemed a good idea when personal spending money would be tight, at least initially, Mr Schmidt reasoned.
Time poor but affluent
In what is a crowded market of online food businesses, Gousto gained traction by targeting time-poor but relatively affluent people. Although Mr Schmidt is reluctant to reveal too many financial details, he says that revenues grew by 500 per cent last year and are now in the millions of pounds.
To date the founders have raised more than $10m in equity backing from senior food industry executives acting as angel investors, private equity firm MMC Ventures and Unilever’s venture capital arm.
In the midst of this energetic expansion drive, Mr Schmidt decided to take time away from day-to-day operations to complete an executive MBA at Cambridge’s Judge Business School.
“When starting Gousto, I did everything from designing recipes to sourcing food,” he says. “But now we have about 70 employees, so it felt like I needed to become a grown-up chief executive.”
Given his background in finance, there is not much Mr Schmidt feels his tutors at Judge can teach him about balance sheets, cash flow and analytics.
“The finance book we’re reading in class is the one I taught myself at uni,” he notes. But the lessons on team management, leading teams, motivating and training people are of much more value, he believes, along with those on brand, communication, procedures, vision and reporting results.
“I’m now spending 50 per cent of my time on employees, and the remaining 50 per cent on customers, suppliers and shareholder communication.
“We have people like the former chief executive of Sky on our board, so being able to communicate vision, strategy and road map matters a lot.”
The challenge for the company is to manage the pace of growth and the changes this brings to the way it is run.
Gousto has been doubling its revenues every four weeks, Mr Schmidt notes. “We are running an extremely complex business model, that not just covers tech, data, marketing, product and operations, but actually has a huge supply chain and logistics side,” he says.
Again Mr Schmidt sees an advantage in using his formal education to help deal with this. “While the complexity by far exceeds the curriculum of the EMBA, the management science lecturers kindly helped me with the set-up and ideas for my problem,” he says.
The next stage will be to develop Gousto’s data collection expertise to surprise customers with recipes they might like based on their previous choices.
“I don’t plan on selling the business in the future as the upside is way too big,” Mr Schmidt says. “In 10 years, there will be an £80bn online grocery market.”