Background & Bio: Greg Connolly is a veteran entrepreneur with 5 companies and 2 successful acquisitions under his belt. He is currently Founder / CEO of Trifecta, the largest ‘all Organic’ meal delivery service in the country that has experienced over 11,000% growth in the first 12 months since it launched. Greg also writes for Entrepreneur Magazine, Founder Magazine, and Bodybuilding.com and has coached several dozen CEO’s through Clarity.fm and other platforms.
Comments Q and A
- What was the initial investment and how close/far are you from breaking even?
A/Initial investment was $50k from myself, followed about 5 months later by $50k from my sister when she joined the business. We were cash flow positive in month 3 and had broken even by month 5. We now have a staff and nice offices and make a profit every month even though we are continuing to expand. We are now raising a solid Series A to take us to the $100M in gross sales range hopefully by early 2018.
- Most meal delivery services are giving away 1-3 boxes free to get customers. Is this something you’ve done and if so/if not, what’s your Cost per Acquisition right now? Also, what percentage of your COGS is packaging and what percentage is shipping on average?
A/CAC is currently $16.91 and we do not give 1-3 boxes free. That is reserved for the well-funded giants in the ingredients space like Blue Apron. We focus on social media influencer marketing and have built ourselves into the ‘cool’ brand using it. We are able to get very accurate CAC numbers from our affiliate marketing platform Impact Radius.
Occasionally we will do promotions like Black Friday / Cyber Monday, but those are rare because they dig so deep into our Gross Profit Margin. We have never done more than 40% off your first week.
- What is your profit margins and who are your competitors?
A/Profit Margins: Our gross profit margins vary per item and shipment from 15% on super high-end items like Ahi Tuna to much higher like 60% on low-end items like brown rice. We ship from our kitchen and shipping facilities in Los Angeles so the same goes for shipping costs. Overall total company gross profit margins are around 30% and climbing as we continue to scale month over month. We think they will top out at around 45% gross profit margin in late 2018.
Competitors: Our competitors range from direct competitors like Freshly and other meal delivery service companies to indirect competitors like ingredient delivery services like Blue Apron & HelloFresh, to even further away in direct competitors like grocery stores to fast food restaurants. We don’t believe there is anyone doing ‘Organic’ in the fully cooked delivery space at the scale we are currently doing. We want to continue to expand and dominate this space like Blue Apron and HelloFresh did in the ingredients delivery space, both with multi-billion dollar premoney valuations after just 3 and 4 years in business respectively.
- Multi-million in sales is great but net income is what matters. Are you profitable? Many services aren’t yet.
A/Great question and you are absolutely correct. Yes, we are profitable, but we continue to grow and plunge money into the growth of the business. It is a major pet peeve of mine when people that don’t know much about business (not saying this is you) point to companies like Twitter and Uber and say “Oh well that’s great but they aren’t profitable” when they are doing hundreds of millions to billions in sales. The greatest quote of all time on it is from Jeff Bezos from Amazon when he said: “Your margin is my opportunity”. While many people are focused on taking money off the table early, the really good entrepreneurs are focused on one f*cking thing only — market domination. Someone like Uber or Twitter could INSTANTLY be profitable if they laid off some workers, or slowed growth in foreign markets, or a number of factors. The goal is to plunge all profits back into the business until it is enormous, and then take either a giant salary or sell a few hundred million in equity and buy whatever you want. People talked so much shit about how crazy Amazon was for Amazon Prime and other programs — who’s laughing now? Bezos. He completely owns e-commerce, and e-commerce is still like 6% of the total retail market. He will end up being one of the richest humans in history in he next 10 years. The only person who can give him a run for his money is probably Elon Musk.
- How did you approach building a sales team?
What got you from $250k in profits to 500k and 1M?
What tactics did you employ to acquire new customers at scale?
A/We have not built a sales team yet. I am the only salesperson at the company and I am the CEO. We do everything via inbound marketing using social media and affiliate marketing as mentioned above. Our first months looked like this: Month 1: $2350 in sales, month 2: $12,600 in sales, month 3: $38,000 in sales, month 4: $78,000 in sales, etc. We have used the same tactics from day 1 to day 500ish. The bigger we get, the more athletes we sponsor and more partners we target. We now have 6 U.S. Olympians, 10 power lifters, 24 CrossFitters, 3 bodybuilders, as well as several MLB, NHL, NFL and NBA players. We feed them all for free and put them all in our affiliate program. There is about 85 in all. Eventually, we will have hundreds, even thousands, and we will suddenly feel like we are ‘everywhere’ on social media. You get the idea.
- How did you start off your journey as an entrepreneur? Did you have much help from anyone? If you could start all over with the knowledge you have today, what would you never do again?
A/Entrepreneur Journey: In reality, I was an entrepreneur at a very early age selling things for money as a little kid. My first real company was a small web design firm that I launched in college to pay my bills as a teenager in 2001 where we made websites for local small businesses when the internet was really gaining speed. From there I just kept trying with new ideas and new partners.
Help: Yes absolutely. So much help it’s not even funny. I have gotten dozens of investments in different businesses from friends and family. My wife supported me for 3 years with the drink company. I have had untold numbers of investors, advisors, friends, other CEO’s, employees, customers, that have given me advice over the years. On top of that, there are so many resources these days it’s insane. I used to make my morning breakfast watching INC videos back to back to back on my laptop in the kitchen watching other entrepreneurs tricks and tactics and mindsets. I ended up writing for Entrepreneur Magazine and Foundr to try and give back. I started with simple help locations like SCORE and the local SBA office that were free and amazingly useful.
Start it all over: Yes I would do it again absolutely, but if I knew what I knew now at 18 I probably would have been a Mark Zuckerberg hah! The quicker and earlier you can learn and start, the better off you will be in life. Nothing forces you to learn faster than a dwindling bank account, pissed wife/girlfriend, etc. Necessity is the mother of invention and in entrepreneurship, you jump off the cliff and either build your wings on the way down or slapt and have to go work for someone else for a while. That is also the reason it’s great to start early — you’ve got nothing to risk, and probably nobody that is dependent on you life a family.
- Yes!! As an aspiring entrepreneur, this is what interests me most. Just trying to get that initial momentum built.
A/Moonlight immediately — become a voracious reader. I downloaded literally — no exaggeration — hundreds of eBooks from anywhere I could and read them all while I was driving, working out, etc. It is not he or she who is the smartest — it is he or she who learns the fastest…. Pick an idea you can start small with (like a review website where you review luggage or something) and write reviews and have affiliate links to Amazon. Once you have built your moonlighting business up to like $4-5k per month — quit your f*cking job and go full time on something you love. Your bills are then paid, and your good to go. Selling information on the internet is the EASIEST way to start by far, and it’s virtually free to start and has zero risks. Start today — literally today.
- Do you think meal delivery services are becoming a new normal? Also, how did you find your customers?
A/Yes I believe it is going to be the new normal. Would you go to Blockbuster anymore if they still existed? Probably not, because you push a button on your TV and can watch thousands of movies or shows instantly on NetFlix. The same will happen with Grocery when suddenly meal delivery is more cost effective because of our streamlined supply chain and fewer middlemen (distributors and retailers). I can deliver a meal to anyone’s door using our A La Carte menu of Chicken, Rice, and Broccoli for about $5 a meal right now. When that is $3 per meal and I have 300 types of meals to choose from, why would you grocery shop? You like standing in line and cooking and cleaning? I enjoy cooking every once in a while maybe for a romantic night with my wife, but we both work a ton at our jobs and during the week we don’t have time to cook 3 meals a day. It’s not the 1950’s anymore.
Customers: We find our customers through social media and major diet partners as explained above. We are heavily dependent on social influencer marketing and affiliate marketing to drive our business.
- Did you start out cooking the meals yourself and delivering yourself? Do you currently use another company to cook your food? And how are the meals delivered?? (I don’t know much about meal delivery businesses)
A/No we never cooked the meals ourselves and delivered ourselves. That is ‘small business’ thinking vs. ‘startup’ thinking. I am personally not very scalable so it would be virtually impossible for me to cook even 1,000 meals per week, let alone hundreds of thousands. We ship the meals through FedEx to all 50 states and our kitchen and shipping facilities are located in LA right next to the Ontario airport which is a big FedEx hub.