The responsibility that rests on the shoulders of the one college roommate with a car can be enough to break a person.
Yakir Gola, like any good business student, created a company to solve this problem.
“I was always driving to the convenience store to pick up stuff like cups and snacks for parties,” Gola said. “But I got sick of it. So we had this vision of creating a convenience store delivery service.”
The “we” in that equation included Rafael Ilishayev, a good friend who lived with Gola and several other roommates their sophomore year at Drexel University in 2013. That year, the two got to work on what would eventually become goPuff, a millennial-friendly convenience store delivery service that, over the course of four years, has expanded into 20 major markets and raised a Series A round total of $8.25 million to fund further expansion.
“We are trying to make convenience stores more convenient, because they really aren’t right now,” Gola said.
Ultimately, the co-founders want to have the app-powered service operating in every major city in America, and their suburbs. They’ve been opening in a new market every three weeks.
Crain’s Philadelphia spoke with Gola to learn more about the problem goPuff addresses, what it was like to create and run a startup in college, and why it’s so popular among millennials.
Q: What’s the story behind goPuff’s founding?
I was in college at Drexel, which is where I met Rafael. We actually met the first week of business class and became friends. By our sophomore year, we ended up living together with five other friends. I was the only one with a car because I was helping with my family business, and my family lives in New Jersey. But because I was the only roommate with a car, I was always the one driving to pick up stuff from the convenience store. Eventually, I got sick of driving all of my friends around just because I was the one with a car, so Raf and I started brainstorming. We realized we had a problem that was shared by many others, and ultimately came up with the idea of having a convenience store delivery service.
When we looked at the market, we saw that everyone was focused on solving last mile delivery with restaurants, charging a 15 to 20 percent upcharge, and then a $5 to $10 delivery fee. It was so expensive. We wanted to start something that was affordable and very quick, so we got to work on our convenience store delivery business. We spent about eight months developing the app, and then we launched.
We started in college delivery just to get into the market, and got a lot of traction on Philadelphia college campuses like Drexel, U Penn and Temple. Then we brought it to everyone ... pretty quickly. We started with 100 products in a really small, 500-square-foot warehouse, and within a few months we moved into a much bigger warehouse and started increasing the number of products we offered. All the profits we made were going back into the business to expand into new product categories and move into new markets. About six months after we launched in Philadelphia, we opened in Boston, and Rafael moved there to run it. This is all while we’re in college. We used class as a way to advertise; we wore our goPuff shirts there, told people to download the app and gave them free bottle openers. Everyone loved it.
Q: When did you two first realize you had a potentially viable business on your hands?
Raf and I were making a delivery to our very first customer who lived right next door to this giant 7-Eleven. When we saw that, we were kind of confused. I think the guy had ordered a Snickers, M&M’s, Gatorade and water. When we brought it over, we were like “Why did you use goPuff? Why didn’t you just walk to 7-Eleven?” And he said “Why would I walk to 7-Eleven when I can get all this stuff delivered to me?” After that, we ran back to the car and were like, “We have something here.”
Q: You say you’re trying to make convenience stores more convenient; where are stores like 7-Eleven dropping the ball?
When you live in the city, in particular, you have to drive to the store, find parking, wait in line and get judged on the products you’ve selected. No one wants to be judged when they’re buying four pints of ice cream and a bunch of snacks. At goPuff, we don’t judge, we just deliver whatever you want. Beyond that, our goal is to create more time in people’s days. A trip to the convenience store takes longer than 20 minutes, which is why people are using goPuff instead. It takes two minutes or less to order through the app, and you get all your stuff delivered in about 23 minutes — our average delivery time. By this time next year, we want our delivery time to be under 15 minutes.
We’re more convenient than the convenience store. That explains why our average basket size is almost five times the size of theirs. With goPuff, you don’t need to deal with anyone, and you won’t run into your neighbor or other people you don’t want to see. You’re getting all the products for the same price as the convenience store, delivered to your house in under 30 minutes. You’ll only pay a flat $1.95 delivery fee, no matter what you order, though that’s waived for orders over $49.
Q: How do you make deliveries so quickly, and how do you keep the delivery service fee to $1.95?
Our technology uses machine learning to batch orders together. It looks at the proximity of orders and how far they are from our warehouses, and then it groups the orders together with drivers. We actually had the opportunity to turn a lot of our warehouses into walk-in retail stores, but decided against it because we wanted to focus on being really good at really fast deliveries, because that’s what people want. People don’t want to plan anymore because so many impulse-driven services like goPuff now exist, getting you what you need, whenever you want it — whether you’re on your last roll of toilet paper or you want a quick snack. GoPuff will get that to you right away, 24/7.
As for the delivery service fee: We buy and own our inventory. And because we buy such a large volume of products, we’ve been able to negotiate good prices with manufacturers and wholesalers, who distribute the goods to our warehouses. So we are making our margins on selling the goods. We also monetize through consumer packaged good companies, who essentially pay us for virtual shelf space on our app. That’s how they get into the hands of millennials. When you look at some of the largest CPGs [consumer packaged goods companies] in the world — like P&G, Nestle, Unilever, and Pepsi — one of the biggest problems is being relatable to millennials, who want something that’s real that they can relate to. GoPuff solves that problem with our branding. Our social media content and advertising is all very organic, relatable, funny and different. It’s tough for big, publicly-traded companies to do that because they’re chasing volume. They want every single person in the world to buy their product, so they have a hard time relating to millennials.
Q: What percentage of your customers are millennials?
Around 80 percent. We have been able to reach an older crowd as we've grown and offered items like alcohol and household essentials, though.
Q: What business lesson are you grateful to have learned throughout this experience of starting and running goPuff?
Me and Raf were the delivery drivers for the first six months because we couldn’t afford to hire anyone. We were trying to make this business profitable, so very early on it was me and Raf doing everything: The customer service, finances, supply chain —everything. To be a good manager, you have to have done that; otherwise, it’s hard to know if the job was done correctly or not. Doing everything ourselves may have been the best thing that happened to us.
People often make excuses for themselves, saying they can’t start a business because it’s too risky. But to be successful in your particular business, you have to be willing to risk it all.
Q: So you risked it all, and it worked out. But what if it didn’t?
For us, failure wasn’t an option. When we were starting this business, we told ourselves, “This is it, there’s no option for failure here. It doesn’t exist.” I think if you have an exit strategy in your business, then you shouldn’t be an entrepreneur. If you have a backup plan, then you’re just in that mindset. For us, it just wasn’t a possibility to not succeed.