He lost his only 2 customers & was ready to quit—then he grew to $1.5M ARR in a year. | Josh Domingues, Founder of Flashfood

A few years into building Flashfood, Josh was $35K in debt with no money in his account. Just a few months earlier, he'd lost both the pilot customers he'd worked so hard to lock in. He'd worked for months to land them and had delivered what he promised.

But both retailers told him the problem he was solving was not important enough.

And then, he met Loblaws-- one of Canada's largest retailers. They loved the case studies he had. They tested it out and quickly launched it across 100% of their locations.

"I was going to shut down the company." That's how close it came to failing completely. Instead, a year after meeting Loblaws he was doing $1.5M ARR and had raised a $3M seed round. Now, he does 10s of millions in revenue and will soon be profitable.

Here's the story.   

Why you should listen:

• Why startups often drive founder to near bankruptcy.
• Why you need to keep testing your startup until you hear 'no'.
• Why sometimes large customers might be easier to close than small ones.
• How to get champions to close enterprise deals. 
• Why you might be a top priority for some customer sets and not others.

Keywords
food waste, grocery stores, app development, early stage founders, product market fit, sustainability, entrepreneurship, discount food, consumer behavior, environmental impact, enterprise sales, customer priorities, stakeholder buy-in, corporate culture, product-market fit, revenue growth, grocery industry, startup challenges, business strategy, environmental impact

Chapters

• 1:27 What is Flashfood & the Origin
• 5:19 Going All In
• 10:49 First Steps
• 17:38 The Pilot
• 24:19 Solving The Number One Priority
• 33:08 Getting Loblaws To Sign Up
• 41:41 The Business Model & Growth
• 47:06 Getting People To Join All In

Transcript

Josh Domingues (00:00):

You have to get to a reason why the idea that you have is not gonna work. Because if you can't get to a no, then you should just keep going. And you have to be brutally honest with yourself, be like, I need to figure out why the hell this thing shouldn't work. And then if you can't get that answer, then you just keep inching forward. By the time we raised our seed round of 3 million, I had like 35k line of credit debt, five grand of credit card debt and no money in my bank account. So 2018, this is our last shock. 'cause We had no retailers, I was actually gonna shut down the company. I'm like, I tried for like two years, two and a half years to sell into grocery. The groceries had told me they're not gonna do this. 

Intro (00:35):

“That’s Product Market Fit”, “Product Market Fit”, “Product Market Fit”, “I call it the Product Market Fit Question” “The name of the show is Product Market Fit” 

Pablo Srugo (00:47):

Listen, If you don't want the show to move up the rankings, you don't want it to get better guests. Totally get it. You know what? Don't leave a review, just don't do it. Why would you? But if you wanna help out, if you want better and better guests, if you wanna help the show, move up the rankings, then take literally five seconds and hit five stars. Thank you Josh. Welcome to the show man. 

Josh Domingues (1:05):

Yeah, thanks for having me. Excited to be on. I've watched a few of the episodes and listened to 'em, so it's cool to be here talking to you.

Pablo Srugo (1:11):

Awesome man. Well dude, you're like, you're in the food space, food tech space and actually I made one investment in that space, but there's not that many companies that play there. Maybe just  really high level, what is flash food? So we have some context and we'll jump into how it all started.

Josh Domingues (1:27):

We help grocery stores reduce food waste. So stores have excess food at the end of every day with two or three days of shelf life. And normally they have to either donate it, throw it out, or recycle it in different ways. So instead of doing that, we built a mobile app so that they can mark the price of the food down, and send our users a notification. You could see the deal through your phone, pay through your phone, pick it up in the store that same day. So we took the discount food rack, made it look cool, put it on your cell phone and all the foods up to 50% off. Most of it is 50% off.

Pablo Srugo (1:56):

Where's that idea come from in the first place?

Josh Domingues (01:58):

My sister was a chef, she called me after a catering event. She's like, I just threw out $4,000 worth of food. And I'm like, you are an idiot, why would you do that? She's like, <inaudible>. She's like, this feeling sucks. I feel horrible. She was walking home that night and she saw obviously people that were on the street and she's like, I just have to shovel out $4,000 worth of food with my boss over my shoulder telling me to do it. The realization was nobody wants that feeling and nobody wants to give somebody that feeling. So it's just like, what is this problem? So I started reading about food waste and what I learned is when food gets thrown out, it usually ends up in a landfill, gets covered by the garbage, and when it rots it doesn't have oxygen. And that whole process produces methane gas. So the statistic is if international food waste were a country, it'd be the third leading cause of greenhouse gas emission behind the US and China. Which floored me. And then at that time, this was in 2016, yeah, 2016. At that time I'm like, okay, where is food waste happening? And I read a bunch, I talked to a bunch of people

Pablo Srugo (2:57):

And why- just a simple question that came to me when you're thinking about your sister. why wouldn't they just donate the food to some sort of local foundation or something like that?

Josh Domingues (3:06):

Whole bunch of different reasons. The main one that organizations don't donate all of their food is because, well there's a bunch of reasons, but it's logistics. Like who's picking it up, who's dropping it off, who's paying the price, who's guaranteeing the safety? And so any organization that's coming to pick up food, like if you have like a regular scheduled window where you're, you're gonna come and you're like, we'll just take everything you have, then I think food companies would be way more open to that. Whether it's restaurants, grocery stores, whatever. But what ends up happening is you have bigger food rescue organizations that will send a truck every Thursday at this time to a store or every Saturday at this time. And they go to those stores based on what they expect the volume to be. But that volume could be different.

Josh Domingues (03:51):

So then they have to route their trucks based on where they're gonna get the most amount of volume. And then from a store perspective, like a restaurant, it's kind of the same thing. Like you don't know what's available at the end of the day so you can't commit to how much you're gonna have. And then the other thing is: this is perishable food. So this stuff doesn't have forever. Like you have a short window to do something with it. In the grocery space, every, almost every retailer donates food in massive quantities. And the restaurant space, same thing happens, but even still there's an issue with grocery shopping. So for consumers, when we go grocery shopping, we're reaching at the back for whatever has the longest shelf life and the near date itself moves to the front and we don't take it. And then in addition, if there's one watermelon on the shelf as consumers we assume it's the worst one.

Josh Domingues (04:35):

So they have to overstock the shelf so that we get selection. So kind of no matter how you paint it in a grocery store, you're always gonna have a surplus of fresh food to eat. Then the other thing to think about is like, I live in Canada and so do you. we're able to buy watermelon and passion fruit in the middle of the winter. Like that's a modern day miracle that that can even happen. So you think about the supply chain and getting food across the world, different hearts of the world, like that's just, it's a miracle that people don't think about enough. So being perfect on inventory is basically impossible for fresh food with a short shelf life. So those would be some of the reasons why food companies wouldn't donate everything.

Pablo Srugo (05:15):

When you get this call and you start looking into all this like what are you doing at the time? What's like your full-time job?

Josh Domingues (05:19):

So I used to be at, I used to play hockey at a pretty high level and my old agent was a pretty prominent NHL agent and he brought me in to run a family office for some of his NHL clients. So I was like the rocking ballers before I started flying. I was literally flying around just to get people to sign. It wasn't that cool like I was just flying around getting signatures on docs but I <crosstalk>

Pablo Srugo (05:42):

Were you closing? So were you managing money or were you closing clients and getting them on kind of, your multi-family office?

Josh Domingues (05:48):

We didn't manage, I was doing, I was managing the affairs. Like we didn't have a portfolio that we were managing. We were leveraging portfolio managers helping with cross border taxes, like being an NHL hockey player or an athlete in general. It's really unique from a financial perspective 'cause you make most of your money at a young age and there's a lot of cross border tax implications. There's a lot of benefits to different things like life insurance and what that could do for your family. You have a pension, how many games have you played? Do you get your full pension? Like all kinds of things. So it was kind of the foundation of building the family office. It wasn't built out but we had five clients and I don't know a few like maybe tens of millions of dollars that we were managing on behalf of players and it got down to like credit cards and phones and navigating everything for players. So that's what we were doing.

Pablo Srugo (06:36):

And so then you start spending time and what is like what happens? Do you just kind of get sucked into this problem? Like you find your mindshare, your attention just starts like getting pulled and pulled more in this direction?

Josh Domingues (06:45):

I started off in banking and I tried to start a company similar to Wealthsimple around the same time. And I tried to hire developers internationally. The whole thing failed. I was terrible. I didn't know what I was doing. But a few years after that, obviously Wealthsimple blew up in a good way and then the Bank of Scotland fired like 200 of their financial advisors and everybody who was a client with less than 200,000 got rolled into their proprietary robo-advisor. And I remember saying to myself like, I couldn't pull it off, I couldn't execute, but I was right on where the market was going and the next time I get that feeling I'm just going all in. Like I'm not gonna give it a second chance. Like I'm just dropping everything and doing it. So like now I would not recommend to people probably to quit your job and just do it. But for the first four years of my working career I just saved up money and was like, I'm gonna start something. 

Pablo Srugo (07:37):

you got ready for the moment. Yeah. And so when, so how early on in that like research phase do you quit and go all in

Josh Domingues (07:45):

so I read a National Geographics article on food waste. That was in March of 2016. I think I left my job in April or May <laugh> like it was like, it was like a month or two later. Although like I had spoken to a whole bunch of people and I learned that one grocery store. So there were a whole bunch of things around food waste. But one grocery store in Ontario at the time had roughly 40 locations. They had thrown out like $150 million worth of food the year before. So I was like, okay, like check the box on the food problem is there and like check the box on if I got a notification of groceries, like meat, chicken, steak produce for 50% off down the road, like I would buy it and go pick it up. Like that's obvious. So that was it.

Josh Domingues (08:28):

Like it was like a month or two months and then I just quit and dropped everything. I actually remember leaving a store, I went to go talk to a manager and he was in the store of one of the most densely populated communities in Toronto and they had no packages of chicken breast with less than three days, three days of shelf life. And I was like, Hey, what do you guys do with this food? He's like, oh you know like we donate it blah blah blah. I'm like, no, what do you actually do with this food? He's like, we have to pull it. He is like, 'cause customers don't pick it. They reach at the back and we can't just put 50% off stickers on all this food 'cause then people are just gonna buy that. So we have to pull this stuff three days out and I'm like, okay, if this was sent to people who live in these condos around here, this would sell out immediately and people would come grab it. So that was it. I remember leaving the store, I called my then girlfriend, now wife and I was like, hey quit at my job. I'm doing this food waste thing. It's an app with grocery stores. She's like, you know nothing about food, you're a picky eater and like you know nothing about grocery. I'm like, I don't care. I'm doing it. 

Pablo Srugo (09:25):

 Did you have a personal runway? Did you think about worst case scenarios and stuff or did you just jump in?

Josh Domingues (09:30):

I had like, I can share 'cause this is important. At an early stage I had something like 30 grand, 35,000 in savings and by the end of our like pre-seed round I guess, so we ended up raising 450 and 720 over like a year and a half, two years later on. And we'll get to that. But by the time that we raised 720, no, by the time we raised our seed round of 3 million, I had like 35K of line of credit debt, five grand of credit card debt and like no money in my bank account. So that like 30 or 40 K that I had in savings completely depleted. And then I was living off line of credit and credit card debt and I didn't pay that off - I didn't get a salary till we raised it in January of the next year. that's what my actual runway would've been at the time when I looked at it I was like, I have like a little over a year, like when I had like the 30 or 40 K was like, I probably could just scrape by for a year. But the app cost- the first version cost like 15K by the time it was built. And then all kinds of things that like went into it. But I was just like, this needs to happen. So

Pablo Srugo (10:39):

So what's your first step after that moment when you quit, what do you think? Is that where you think you have to go? Like do you think you have to talk to a bunch of customers? Do you think you have to sell some? Yeah, yeah. Or should we store or do you just think you have to build a product?

Josh Domingues (10:49):

So no, before I quit there were a couple really key things that I had to prove to myself. And I think the important thing in a really early stage is you have to get to a no, you have to get to a reason why the idea that you have is not gonna work. Because if you can't get to a no, then you should just keep going and you have to be brutally honest with yourself, be like, I need to figure out why the hell this thing shouldn't work. And then if you can't get that answer then you just keep inching forward. And why I share that as before I even left my job, I had talked to the grocery store, some of the grocery store folks and I understood the problem and I understood the size of the waste. And then from a customer perspective, I'm like, will people buy this food?

Josh Domingues (11:28):

And so what I did is I got into a Facebook group at the time called Buns and it was Toronto based, it's now called something different, but it was like a barter system. Like you could go in and you could trade stuff. So if you had a plate, a decorative plate that you had in your apartment and you didn't want it, you could put it up and people could offer trade things and people would go pick stuff up. So I put in and there was like 60,000 people, it was kind of this indie underground, trading cool Facebook group. And I put in there, hey, this is who I am, this is what I'm trying to do, like build an app that reduces food waste and this is how, and I'm like, would people use this? So then like a lot of people started commenting on, I think there was like, I remember because within the first few hours there were like almost 200 likes and something like 35 comments.

Josh Domingues (12:14):

And I remember being like, I didn't pay for any of this. This isn't an ad. There's just like real organic people saying they would do it. And then somebody forwarded me the Buns food group at the time, which was a group of 6,000 people that, weirdly enough, traded food. And that to me was insane. And so one of the stories that solidified the customer side to me was that there was somebody who bought a sandwich from Tim Horton's and it had bacon on it and they didn't know it had bacon and they can't eat meat. So they're like, Hey, I can't have the sandwich. Somebody else is like, I'll give you a subway token for it. So the person's like, yeah, okay, but I'm leaving my house. Pablo: No way <laugh>, they left their sandwich on their porch and then somebody went by grabbed the sandwich and left a subway token.

Josh Domingues (13:01):

I was like, what? Do people do this? And then I actually interviewed one of those people, like I found the web and interviewed the person just like on a call and she was like, yeah, I didn't have any money to buy - I had nothing until payday later that week. what I did- So that was the onset, it's the customers will do it. There's a massive issue in the grocery sector. I don't have a guarantee from the grocers that they'll do this. That was like the gap that I had to walk the bridge that I had to cross. But I knew customers would pay 50% off groceries. Like you, there's TV shows on discounting. people will go to the store with their coupon book and show how much they save so you know that the demand from a customer is there.

Josh Domingues (13:44):

And then the other thing I did was, and this was after I left my job, but we went to a store at Bay and Dundas in downtown Toronto, the Times Square of Toronto and there's a grocery store there and I bought like $200 worth of food that had a day left of shelf life. And we set up a table at the corner of Bay and Dundas like literally think of a little circular coffee table at a coffee shop and we just like taped logos around the side of it and they were flapping away in the wind,

Pablo Srugo (14:13)

Do you get permission to do this? Or were you just?

Josh Domingues (14:17):

Nope, nothing. And we sold all the food in like 20 minutes. We put it on-

Pablo Srugo (14:21) :

just at a discount. You just put it 50% off kind of 

Josh Domingues (14:24):

I put it at a dollar, a dollar per item and it was like within like 20 minutes everything was sold.

Josh Domingues (14:28):

And it's because we put it on Facebook, we put it on these groups, all these threads that I was in, like I just said like, Hey I'm doing this just to see if there was real demand from a customer. And there was one girl who took a subway for half an hour to go to come pick up food. She's like, I just care so much about the environmental impact of this. Like I needed to support it. And I'm like, all right, that to me checked the box on customers and then the big risk now is can you build the tech? Yes, I don't know how but yes. And then can you convince a grocer to do this? And I was like, I think we can

Pablo Srugo (15:01):

Well I'll say you know, just like one tangent, there's the environmental impact which drives people I think. But I will say one thing that's unsexy, but just completely true on the consumer side, especially if you can make something dramatically cheaper, you'll get dramatically more demand like basic economics 101, but you could see it everywhere. People love a good discount. it drives like black friday, whatever it is you wanna think about, whatever your analogy is, the dollar store, whatever it is. Like it works. And so if you can obviously, you know selling something that costs a lot of money for less is a losing proposition. But if you can find a way to make things cheaper, you will typically get a lot of demand for it.

Josh Domingues (15:40):

Especially food 'cause it's literally everybody who has to eat. And it was funny because I cared, I care predominantly about the environment and the market that we're in doesn't care about that. Like the market that we're in, people, consumers buying food care about affordability. So we actually went through like a full rebrand a couple times through the iteration, but our most recent was probably two years ago now. And it was more about the joy of landing a deal and what you can provide for your family. We don't talk about the food waste angle anymore because it's to the market that we're serving, both grocers, both consumers. Like it doesn't dictate purchasing power and it from consumers. It doesn't drive sales and purchases and it doesn't- a lot of retailers have sustainability goals and food waste reduction goals, and even though our numbers are meaningful for them at scale, like very meaningful, it doesn't drive decision-making from an executive level. So it ultimately comes down to like money and affordability from both the consumer and from the retailer side. And it was just a cool thing to learn through the growth of the business

Pablo Srugo (16:44):

I think. And it makes sense. I mean you see it you look at Temu, we look at Shein these companies are huge now and everybody talks about, you know, people made a big deal like Nike you know, 10, 20 years ago about like sweatshops and all this stuff and people care about it intellectually and there's certainly an amount of percentage of people who will actually make different, you know, decisions behavior like consumer decisions because of it. But by and large if you can get something 10 times cheaper, 50% like kind of a meaningful amount less, people will kind of ignore all that other stuff and just- and frankly for a lot of people that's just the reality. I mean I think there's only a small percentage of people who get to consider the other factors because everybody else like you said has to eat and that's priority number one. So then what do you do on the grocery store side?

Josh Domingues (17:39):

So, well we actually took a video of that like Bay and Dundas thing and then we sent it to the grocery executives being like, oh they're for sure gonna see this and they're gonna be like, oh this is awesome, let's put this thing in our store.  and We didn't even get a response <laugh> we got completely ghosted. I'm like okay, this is gonna be a lot harder than I thought it was. So the way we got our first one store pilot, the guy that I went to university with, his dad used to be the CEO of giant tiger in Canada and his former right hand person was a guy named Jeff York who was then the CO-CEO of Farmboy, which was a retailer. Now it's bigger than it was and it still is headquartered in Ottawa but they have locations across the GTA now.

Josh Domingues (18:21):

But then it was just Ottawa and three locations in London. So I got connected to Jeff on an email thread and then after like a couple weeks he just stopped responding to my emails, which kind of everybody does anyway <laugh>. And so he had his phone number on his email sign off. So it was like a Monday and I called him, I was like, Hey Jeff, it's Josh from FlashFood, I'm hiring somebody for Eastern Ontario. Which I was not, we didn't have a company then, and I'm gonna be in Ottawa on Friday, are you around? I would love to meet. He's like, yeah sure, happy to meet me at this store at this time. I was like perfect. So I woke up at four in the morning on Friday. I drove four hours out to Ottawa, I met him for like 20 minutes.

Josh Domingues (19:02):

He was on the phone for like 10 of those 20 minutes talking to somebody else and then at the end of it he's like, look, I like what you're trying to do. Like I'll give you a chance at like one store in London, which was furthest away from where their head office was at the time. Then he introduced me to a guy named Ryan who's a VP there who was like, I don't know at the time got voluntold to try this. And luckily for me Ryan was just a great partner at the time and really he gave it a shot and so that's how we got our first grocer and it was Farm Boy in London, Ontario are just one location.

Pablo Srugo (19:36):

And this was after like you'd already, you're already full-time at this point.

Josh Domingues (19:39):

I mean like I don't have a job at this point.I’m spending all my time on this!

Pablo Srugo (19:46):

Time volunteer. Yeah, yeah,

Josh Domingues (19:49):

Yeah.

Pablo Srugo (19:50):

Obviously there's always the hustle and like I think especially when you're trying to sell to effectively a founder, they kind of see that and they wanna give you a chance but it also feels like it was a bit of a struggle for them to see the value. Like is that true or what was like the friction point for the grocers? Like what value were you trying to sell and what did they think about it?

Josh Domingues (20:10):

It's funny. So we ended up having this pilot and it worked well enough that we ended up getting three stores in London that we got another retailer who gave us three stores, both Farmboy and this other retailer at the time only had 30 locations. So we actually lost both of them because after about a year of like these pilots, they're like look, the ROI is just not that high for all of our stores to do this. Like we only have 30 locations. I'm like, it's just not enough money. But then I got connected to a former executive from Loblaws who connected me to the person who ran their entire discount division and I told her the exact same story. I told her the metrics. So in these pilots we were selling about 70% of all the food we were driving in about 25 to 30% were net new shoppers to the store. And they were spending about two to three times more on full price food when they got to the store than what they spent on flash food. So if they were spending $10 on flash food, they're spending like 20 or 30 on full price stuff because you can't do your full shop on flash food.

Pablo Srugo (21:07):

And this is just to be clear, in these pilots what you have is they, you have consumers on an app, like you already have an audience and an application and when food comes in you send them like a notification, is that kinda how it worked?

Josh Domingues (21:19):

The store every morning posts food on the FlashFood app and users could see what's available, pay for it and go pick it up that day. you know in a lot of these places we didn't have users like we had to figure out how to get them. There was like no, there was no users. The way that we got our users in the first store in London was because we threw a pizza party at Western and invited, I don't even know how I got people there. Like we stood outside, we took a table outside the student center and we got approval for this and we just started talking to people about what we were gonna do and then looking back it was terrible 'because students don't have cars. So like going on campus, the store was like 10 kilometers from the campus.

Josh Domingues (22:01):

But that's what we did. We went to campus, got a bunch of emails, then had a pizza party a couple weeks later where like 27 people showed up to the pizza party. And then this is for the first store test, it ran like a week and a half and of those 27, like maybe seven or 10 people were customers on the app. And that was very manual. That was like emailing people being like, hey the food's posted. So we didn't have notifications, it was like go check this out. And the process was terrible. It was janky, it was brutal, it looked awful. The food was kind of scattered in different places. It wasn't centralized like it was very, very bad. It was very bad.

Pablo Srugo (22:35):

But you still ultimately drove, you got people to go to the store and buy this kind of food.

Josh Domingues (22:39):

and the biggest thing was about 30% of those people went twice in 10 days, used the app twice. And I'm like this is a small sample size but people will continue to shop this way and this is the worst the experience will ever be.  you couldn't do anything to make it worse. Like it was so terrible. Cashiers had no idea what it was. Employees didn't know what it was consumers are trying to educate the employers, they've got no idea who to call. Like it was not good.

Pablo Srugo (23:09):

Why would the store say it didn't move the needle? Like it just wasn't enough shoppers for them?

Josh Domingues (23:13):

No, no. this is the first test. Then we ran it with three stores and just in a 30 store chain, the money's not that much if you roll it out across 30 stores now at Loblaws or some of these other big partners, these are multi-billion dollar companies. Like if you're hitting these numbers in like 900 stores, that's a material ROI for basically no work selling what you would've thrown out. So remember they're taking their food, which is their money, they're throwing their money in the garbage and they're paying a waste management company to come pick up their money and take it away and it's ruining the environment. So like my pitch over time to different executives depending on who they are came back to being like, do you want more money? They're like, well yeah, and you're like okay. That's like overly simplified- 

Pablo Srugo (24:01):

I guess the part that's a little confusing to me is like -  I understand the numbers are gonna be 30 times bigger for 900 stores than 30 stores, but you'd think proportionately they're still throwing out whatever, 10% of their food, whatever that percentage is. So it should matter to them as much proportionally but that’s obviously not true. So like why not?

Josh Domingues (24:19):

Or maybe more like it should maybe matter to them more. And what I learned over the years of selling into enterprise is like everything that you do, especially in a retail store takes time. There was one guy who I met with who was a senior executive, like a C-level person at Target and he and I had a relationship and he is like Josh. I was like, why don't you just do this across all your stores? He's like, people don't realize, like for me to get like this pen moved from here to here across 1600 stores and however many hundreds of thousands of employees and those are in-store employees, the training protocols, he's like, that sounds easy, but it's not. And so what I've learned is for big companies, especially retailers, they only have so many, literally every year they do strategic planning where there's like, these are the five critical things we're working on and maybe there's one or two innovations or three and like those are the things we'll land on for next year.

Josh Domingues (25:18):

Let's go hit the plan. And that's what they do. 'cause Like that's what, that's what good businesses, big businesses do. So try to circumvent that and being something else that gets into that across an entire company. Especially a company like the one that we were partnered with who ended up going from 30 stores to like almost 50, they got acquired, farmboy got acquired by Sobey's for almost $900 million like in the time period that we were working with them. So like them getting their p and l ready for the process of selling their business was much more important now looking back than getting FlashFood to 30 stores and you don't know that in the moment. Like they basically said like Hey we've gotta cut this off. And I got, I had no real reason why. And then fast forward like eight or nine or 12 months later, they had acquired for whatever they got acquired for and they're like, look, we had to like clean everything up in the business. Like we couldn't have a couple things lingering in different stores that had to be uniform across the board

Pablo Srugo (26:12):

You know, I love that because it speaks to the-we talk a lot about solving a number one or number two priority problem for your customer. And I think this often gets- people say a lot, you know, hair on fire problem, all these sort of things. So it's cliche, people like know it but it gets a little lost because I see founders who are not doing that and yet, like the thinking is almost like, well I'm delivering an ROI like clearly I deliver an ROI so then people should buy the thing 'cause I deliver an ROI. 'cause Like if you could spend a dollar on something and get three back, like everybody should just do that 'cause that's good business. The reality is like the way companies work, they just can't do that.

Pablo Srugo (26:48):

Like you can't do everything that promises you to get $3 for every dollar you spend. It's too many initiatives. It's too many projects. And like you have to remember as much as let's say a company might have like 10,000 employees. It's not 10,000 brains doing 10,000 initiatives. Like it all boils down to like a handful. And in any given sector space or whatever it is, like let's say food waste or inventory, wherever that falls into it's probably like one, maybe two execs. Like that's how many brains. And so like they can only do, you know, 2, 3, 4 big things a year and you have to factor in what you'd said, which is whatever they do, they also understand they gotta get everybody aligned, they gotta get like everybody trained, all these sort of things. So you have to find something that for someone who has an actual budget is going to be a number one or number two priority thing. Otherwise you're just gonna be pushing up a boulder up a hill forever. And maybe like through sheer hustle you get some people to finally say yes, but you're never gonna get that pull.

Josh Domingues (27:46):

And that's why VCs rarely put money into these kinds of food tech companies. <Laugh> honestly like that's it. Like I've learned through the years, it's very difficult to do what we're doing 'cause we're selling to executives, food safety, merchandising, marketing, operations. Like you need a lot of people to align to do this. And we're over the hump now. Like those are still challenges, but now there's a pull, like now it's a lot of inbound. We launched independent products so retailers are lighting up fast now, but it literally took years to get over the hump and then in the middle of that hump too- we had a board meeting earlier this week. So it's just fresh in my mind. different people will be like why did it take so long to go from Canada to the US And like everybody has a horror story about Covid and I don't like referring back to Covid about things, but there's literally 18 months where like me and my head salesperson who live in Canada could not get into America.

Josh Domingues (28:47):

So like when you look back on that time period, like everybody tells Covid stories and, I don't want to, but when you look back on this, it was pretty funny. Here we are trying to sell and they’re like how does it work in the store? I'm like, well I can't show you but here's this video that I could show you. Here’s an album. So it's just like, it's funny to think through that and, and ultimately what we- so there's something that I wanna touch on that you talked about, but what I learned was especially for consumer but any big business. Canada's not big enough to build a big business in a lot of industries and sectors in my opinion. Like you need to go to America. So when we rolled out with Loblaws, I was talking to executives at Metro at Soby’s and there were copycats that came out and did exactly what we're doing and those companies would work with them because they weren't us.

Josh Domingues (29:34):

And I'm like, listen, we're going to America now. Like that's the focus. But what I wanna touch on that you were talking about around stakeholder buy-in is the other thing that people don't talk enough about as like two founders to early stage founders building a thing that is so obvious that has such an ROI to somebody who should wanna buy it is people don't care about their jobs that much. And what I mean by that is like somebody has to go outta their way to do a thing, especially if they're not told to do it by their boss. They have to go out of their way to do a thing and to spend time on a thing to bring a thing to life within a big organization. And these people, do they have young kids? Are they going to their cottage on the weekend with their families and drinking wine and like are they going on vacation?

Josh Domingues (30:19):

Like yeah, they're doing all of those things. So, not that they don't care about their job, but for them to go outta their way to help a young enterprise or an enterprising person build something within their business that's gonna be such a headache that's not gonna get them paid more, most times very unlikely gonna get them promoted. Fortunately, one of the low key things that really helped us was that almost every stakeholder that ushered us along had meaningful promotions in a short amount of time. 'cause We went in to sell through executives and they started to know other people's names to the point where it really benefited some people's careers being the leader internally at FlashFood. But that's impossible to do, it's very difficult to try to usher that along in a business and to convince somebody that you'll do that for them.

Josh Domingues (31:03):

it's very hard for somebody to believe that. And then the other side of things is the grocery sector is like by definition not risky because you're selling groceries. And so you think about who makes their- and we've grocery shopped pretty much the same way from the time our grandparents were taking us till now. Like sure there's like delivery and there's like cool things to do within a store, but ultimately you want to have fresh food and the chance to like pick through and see what you wanna buy. And it's an experience. And even with delivery, like I think through Covid there was like an 11% uptick of like total grocery shopping was like up to 11 or 12% for delivery during covid when like if you left your house you would die at like the peak of Covid. So it's like, is everybody gonna get their groceries delivered?

Josh Domingues (31:50):

Probably not. Like we literally couldn't leave our houses other than to go grocery shopping and they stayed open. So all that comes back to- you think about the people in leadership positions within the company that you're in and how they got there. It was not by taking huge risks and being right, it was actually by mitigating risk and staying in the middle path and being respectful and being liked enough to to move up in these roles. So if you're selling into a big company, it's usually gonna be somebody who says that what you're doing is cool, but they're not risky and they haven't had success in their career being risky. And then the other thing is they're probably making the most money they've ever made and the personal risk of them. If their kids are in private school,

Pablo Srugo (32:34):

I'm really worried because listen, you've been listening for like, what, 10, 20, 30 minutes now? Clearly you like it and the thing is the next episode is way better and you're gonna miss it. You're gonna miss it because you're not following the show. So take your phone out and hit that follow button. 

You have a lot to lose, especially, you as a startup, you have no credibility, none. So as much as you're sure that it's gonna help, it's gonna do a thing. Like they've heard other pitches and like frankly they don't really care and they don't have that much upside. So I think it, so then that kind of raises the question- how do you get Loblaws to sign up?

Josh Domingues (33:08):

It honestly goes back to Jeff York, the guy at Farmboy who just saw that I really cared about it. And back to what you were talking about founder led sales, you have to be liked, people have to know and feel for meeting you that you're gonna do everything you can to pull something off and then that's when somebody throws you a bone. And then fast forward that Loblaws meeting happened in the middle of 2018. And so for context, we were in three-six stores, so two partners all of 2017. They basically shut down in Q2 of 2018 and that's when we had the Loblaws meeting. We were in four stores in Loblaws in September. So at Loblaws I met the decision maker, got to the right person and she's-

Pablo Srugo (33:50):

and by the way, at this point you're still unfunded like living on your credit card? or did you raise a round at this point?

Josh Domingues (33:55):

We had raised 450k when we built the app before the first store. So that was in the beginning of 2017, end of 2016, 450k Canadian. And then we raised 750- I think we raised the 450 at the end of 2016, October, November. And the 750, November-ish of 2017. And then we were outta money, when we raised the 750, we had $753,000 in the bank after the round. So when people- part of that was we won Startup Fest, which was a hundred grand that came out of Montreal. And so when people say, we're outta money, it was like outta money and then the Loblaws meeting happened and we were like, we went through Techstars at the time so we had a little bit more money. I tried for like two and a half years to sell into grocery. The grocers have told me they're not gonna do this. Like, that's basically what's happened. I've done it with two different partners. I met with all the executives and all the companies in Canada.

Pablo Srugo (34:56):

I mean that's 'cause I just wanna pause on that. Like there's nothing worse. Honestly. There's nothing worse. Like, you know, you can get like investors that say no, you can have customers who don't wanna try it. You can have employees or co-founders who quit. But I don't think there's anything worse personally than doing the pilot actually having a level of success and like, the thing’s working and then two of them saying, yeah, it doesn't kind of move the needle for me. Like what do you do? you know what I mean? Like, and I just want to put that out there ‘cause you kind of just said it off the cuff, but I'm just thinking if it was me in those shoes, I'm like, man, okay, it's done. Like what am I doing? You know what I mean?

Josh Domingues (35:32):

You know what the play would've been? It would've been to open up pop-up shops starting around the country with severely discounted food that I get from third parties, like farms. So they bring it and then the food terminal. Like I literally think downtown Toronto, downtown Montreal, in like a cool area. You've got a small grocery store, it's only tech you can only pay with like software and you just come in and canvas the store and you buy food and you can get it at such a good price because I can get it. Like that's where my mind was going. And then I'm like, do I wanna do that? Like no, all right.

Pablo Srugo (36:05):

It’s a lot of work, great.

Josh Domingues (36:07):

I don’t wanna run a grocery store, but you're spot on. Like, but on the flip side, I think that that's back to what I said at the start of the call, that's a great place to be because that's the market telling you that it doesn't want you. So you could have like, you could do the whole like, I don't know man, product just drives me nuts sometimes. Just like product ideology and like all the work that goes into building a thing and thinking of a feature and like that drives me nuts because it's all - here's what we think will happen. Here's the research that we've done, here's the interviews we had. Like get something in somebody's hand and see what buttons are clicking and then make that easier and make that a better experience. And that's how you build a great product.

Pablo Srugo (36:46):

I've gone so agnostic on this stuff and, I know this is a tangent, but kind of somebody saying man, well this company - this is what happens in our world all the time, right? Like company X is not doing that well, but now they have this new idea they're gonna do this thing and here's how it's gonna work and like, you know, blah blah and, and then you are like, that makes a lot of sense, right? Like that's pretty exciting. I'm like, I don't know, dude. Like yeah it sounds good. I don't know. You don't know. He doesn't know. Nobody knows. Go put it out there and if the thing goes up and people adopt it. It's a great idea and otherwise it didn't work Like it just in theory, so many things sound great and in practice so few actually are,

Josh Domingues (37:22):

That’s just the reality of it. Yeah. And you know what's really tricky in your shoes is like trying to not get the seductive polished entrepreneur who can convince you to see why it's gonna be so great. And seeing through that because man, I ran this thing through like the hottest startup funding and then the worst startup funding markets in the last like 30 years, like since the.com boom. And there's companies that I knew intimately, I knew a lot of the details. I was very close with the founders, they were very charismatic and they were raising at such high- . I didn't even know, and I come from finance, I was a banker and then I was at a family office. And so I'm very adept with diligence and digging through companies.

Josh Domingues (38:06):

There's companies that were raising money and it's basically fraud. I'm like, this is basically fraud. And it was happening so much and I understand it on the flip side because investors are competing with each other to put money in the next Adam Newman who's going to the moon with the thing. And even like Travis Kalanick, these people had to have that way of thinking to win. And then the VC model is built on hitting the winners. Like that's it. Like you get like a 3x, it doesn't matter you get a 5x, it doesn't really matter depending on the size of your fund. So it was just fascinating to live through. But like yeah, it's- I could see what I was gonna say is you don't know until you look back on things like you just don't know.

Josh Domingues (38:50):

So back to what you're asking about Loblaws and why they made the call. We got into Loblaws at the end of Q3, Q4 of 2018 and three of their stores in London. And by January in 2019 we went from like three stores to 400 over a span of six weeks. 'cause They were like, this makes so much sense, we're putting this in half of our stores. And they lit it up, they put it out. We did joint marketing. They had a Super Bowl commercial about FlashFood. Like it was just insane when - to what we're talking about, it's really hard to fit into these boxes for a big company when you do. And if you could pull it off, it's nothing that you could have thought

Pablo Srugo (39:30):

I mean let's dive into that because that's, that's product market fit, right? And I wanna understand between those other pilots in this one, did you change the product at all? And if-

Josh Domingues (39:39):

nothing. literally nothing changed. Nothing changed.

Pablo Srugo (39:40):

So then, on the market side, what was different about those smaller ones, you kind of touched on this, but I just wanna go deeper on it. Like what was different about those smaller ones and this bigger one that they loved what they saw and the other ones didn't really care?

Josh Domingues (39:56):

Probably that the smaller ones could still grow by adding locations and Loblaw is such a big company as are most retailers that like now in different markets, Canada or America, you actually have to divest stores in different areas if you wanna launch stores in a particular area. Like you can't just grow to as many locations as you want because of anti-competition laws. So when you think about those big companies and like an opportunity for not even growth 'cause again, the financial upside was like they won, but these companies can lose $20 million in the couch in a year. Like even with the massive ROI that we're driving, now it's material. I don't think they anticipated it to be this big for all of our big partners. But yeah, I I think it was like these companies, it's harder for them to have an edge and they have to spend a lot more and have to do a lot more R and D versus the smaller companies that can still be really scrappy and scale.

Josh Domingues (40:51):

And you also have more resources at the big companies where you've established things nationwide a lot more credibly and consistently and rolled things out differently than a 15 store chain that just became a 30 store chain or like a 20 store chain that just became a 30 store chain. Like they don't have a lot of- those that are not big companies, even though they're multi-billion dollar companies, in the grocery space, they’re very small. Multi-Billion in sales. So yeah, I guess it's that. we ended up just getting, honestly we got lucky. Like I got to the right person at the right time. The product was in the right place and it just hit and she like tested it in London where we already had users. So like FarmBoy shuts down three stores, Loblaws turns on next week. Like it just like,

Pablo Srugo (41:35):

And what was the ROI? what does that look like for them? And also what's even the model, I guess we didn't talk about that. What's the price? 

Josh Domingues (41:40):

It's like a take rate. So we take a percentage of sales, so all the sales happen through us and then we send the retailer buying money. And for these public companies, they look at it as a contract to their waistline. So the money that comes in goes against their waistline, the p and L. So for grocery 2 or 3% margin companies, this is found money right to the bottom line. That's how they realize the revenue. And like it's in the millions and tens of millions for different partners net after all fees that they're getting back on an annualized basis. Some of 'em, like it's between-.. our established partners. It could be between five and 40 million annualized that they're getting back from us

Pablo Srugo (42:20):

I mean the only cost to them is kind of the infrastructure, the setup, the kind of training part of it. Like whatever they have to do in a store to just facilitate this. But they're not paying SaaS fees. Like there's no kind of hard cost against that newfound money.

Josh Domingues (42:36):

And they're also saving money on the, on disposal 'cause they're disposing less now and they pay based on tonnage.

Pablo Srugo (42:42):

And so what I maybe walk me through this. in that first year you're kind of struggling, you've got a year of just like kind of on the side then, you know, sometime on the side then like maybe a year of just struggle and you finally get these pilots and then they tell you no and then Loblaws comes in and you go from like that 3 to 400. What does revenue look like that year? Like when you're at the end of that year and you're at 400, what kinda run rate revenue are you looking at?

Josh Domingues (43:07):

I don't know, I'd have to look back, but it was like, yeah, I have no idea. It would've been like $0, maybe a thousand dollars to north of a million, maybe like a million and a half, a million. I don't know. I'd have to look back. It happened so fast too because we went, so we went to 400 and then by the middle of the year we went to 750. So like it literally just massive compounding effect.

Pablo Srugo (43:31):

This was what, 2019 now? 

Josh Domingues (43:33):

This was 2019 and we raised a seed round at the end of 2018 when the Loblaws deal was signed, we raised a seed round led by General Catalyst. And so 2019 was just woosh

Pablo Srugo (43:43):

And then 2020 what happens?

Josh Domingues (43:40):

But also we hold onto the cash. a hundred percent of the GMV for different partners. But between 30 and 60 days, between 45 and 60 days. So like the negative working capital is you're growing, you just keep building up and building up. “Oh that's beautiful.” And then 2020 happened and our business- we had a board meeting on the Friday when the NBA shut down and we were like, okay, let's model out if it gets cut in half (the business). And then we were like, two days later we were selling like 10% of what we were at the board meeting. It's like okay. that's where it's like you get these really smart people that have built things and even you model out what the world could look like and then you're wrong 48 hours later and going back to product and all the things, you can hypothesize what the future's gonna look like and still be very wrong, regardless of how many times you were right in the past. And like it's hard to not seduce yourself into thinking you're smarter than you are in predicting the future.

Pablo Srugo (44:42):

So I assume, I mean, you know, things like the short story, we won't get into this part of the story 'cause we're all about zero one, but I would assume the short story is kinda like things rebounded and you rebounded along. You hadn't burned that much capital, so you kind of had the time to, to wait out those. I mean it wasn't that long for grocery, right? Like maybe six months. You're probably back to good levels.

Josh Domingues (44:59):

There was the challenge. Yeah, the challenges that we had were touching. For flash food, the grocer employee has to touch the food and bring it over to somewhere else. And a lot of them just paused us. 'cause They're like, we don't want our employees touching anything that they don't have to. There was plexiglass put up, sprays all over the place, so it was just touch and go. But like, yeah, the business rebounded like everybody else did. Like there were no major pivots. We just had to button down the hatches and hold on just like everybody else. Like it was not unique.

Pablo Srugo (45:28):

And where are you at now? Like how many stores are you profitable? What kind of revenue levels are you doing?

Josh Domingues (45:32):

Not profitable. Pushing towards it in just under 2,500 stores. And I think what we announced publicly was that we've diverted, like we've saved shoppers over $250 million US on their groceries since we launched. So like that's 50% off. So it's like that would be the GMV number. 

Pablo Srugo (45:54):

Yeah. I assume you're kind of, you're over eight figures ARR, eight figures running, right? 

Josh Domingues (45:59):

Yeah. What is eight figures? Millions. Yeah, we're at tens. We're tens we're in the tens of millions of revenue and-

Pablo Srugo (45:05):

Well that's awesome man. you built a pretty, pretty solid business. Wasn't easy. Like it never is. I mean it really rarely is. Every now and then I get somebody on here, it's just like I launched a thing and it just worked. But out of the ones that work, that's like 5% out of the entire bucket, that's like 0.5%. So this is, this is more aligned.

Josh Domingues (46:25):

The thing that I'll say too is like, I was a solo founder, but like there were very early people that worked their asses off alongside me and, this whole thing doesn't happen if it's not for the team. And I think it's just like that goes, that's set about every business. Like it's not me and others that do these interviews. Like it could sometimes be like, oh I did this thing and like that's just. It's like a collection of people that like took risk, worked more.  all of the things in the-

Pablo Srugo (46:58):

How do you get people to go all in? Like founders, it is easy, they're motivated, they started with you. How do you get other people to be all in in those early days? The 5-10 people?

Josh Domingues (47:06):

Yeah, that's, I mean that comes back to the kind of person that you are. the business has to check the box on “yeah, this can be big” 'cause you have to tell a compelling story of something that can be big, not be lying about the future. 'cause Then people will be like, that's. I'm not gonna risk my career for this guy who's just lying about how big this can be. And then have conviction. Today people wanna be led. A lot of people wanna be led by somebody who has conviction and is willing to do stuff. So when the early team sees that, I'm just like buying a table and putting it at the corner of bay in Dundas and filming us selling groceries for a dollar. They're like, who the hell does this?

Josh Domingues (47:42):

We also had-  we got our first CTO, he was on sabbatical. He had sold his last company and he is like taking time off and I got him to do an audit on our app and then he lived in Liberty Village and he's like, Hey, I don't want to join. Like I'll do the audit, but I'm not gonna join full time. I can't commit to it. okay. So what we did was-  we only had 50 K in the bank and we saw a small two story loft space office in Liberty Village. And we rented it. I don't know why the landlord gave it to us. We signed a three year lease, five grand a month, went on kijiji bought a whole bunch of used furniture with a van, dropped it off and invited our CTO to come into the office.

Josh Domingues (48:21):

And he comes in, he is like, oh, okay. Like I guess you guys are kind of real, like sure whatever, I'll join, I'm in. And so you just have to take- these are stupid decisions. Like these are decisions that nobody should do. Like, they're not like, Hey, do this. This is gonna work. Like no, you have to do some dumb things and be willing to make mistakes and be willing to lose. And that's the thing that I think I come back to is, I wasn't afraid to fail on this 'cause it was just too important. And I think how you get people along, for me at least, was like the environmental impact of this has to change. Like it just can't stay the same. So that was the mission that I started on and now the affordability piece is equally if not more important for the world. So that'd be it for us at least.

Pablo Srugo (49:04):

Perfect. Well Josh, man, we'll we'll stop it there. I think that's perfect ending point. We typically have like the, when you find product, when did you find product market fit and, and the last piece of advice. But I think that was the last piece of advice. And the product market fit is pretty obvious when you go from three to like seven 50 stores in 12 months. That was probably, that was probably when you felt it.

Josh Domingues (49:21):

Yeah, it was a ride. It was a ride. I appreciate you having me on Pablo. Thank you.

Pablo Srugo (49:27):

Listen, when you go to a restaurant, you eat a nice meal. Maybe a fancy one, maybe not. Do you leave a tip? I assume you probably leave a tip. You probably leave a tip 100% of the time. Well guess what a review is just like a tip and I know you haven't been leaving one. So just like the waiter that doesn't get a tip after hours of great service, I'm getting a little frustrated. So take your phone out and leave a review. It helps the show move up rankings, it helps us get better guests. It doesn't just help me, it helps weigh more founders. Thank you.