20VC Sprig's Gagan Biyani on The 3 Principles Of Fundraising and Building The World's Largest Restaurant

Summary Notes


In this episode of "20 Minutes VC," host Harry Stebbings interviews Gargan Biyani, co-founder and CEO of Sprig, a company aiming to become the world's largest restaurant by providing healthy, sustainable food at the touch of a button. Biyani shares insights from his past experiences as Lyft's interim head of marketing and co-founder of Udemy. He discusses Sprig's mission, growth strategies, and the importance of technology in scaling food delivery safely. He also reflects on the lessons learned from Chipotle's successes and challenges, emphasizing the need for economies of scale and a strong brand to create a competitive advantage in the food delivery market. Biyani also delves into fundraising strategies, the importance of conveying a company's mission, and the vision for Sprig's expansion and impact over the next five years. The episode is sponsored by Lisa, an online mattress company, and Mattermark, which provided data analysis for the show.

Summary Notes

Introduction to the 20 Minute VC Podcast

  • Harry Stebbings is the host of the 20 Minute VC podcast.
  • The episode is a special Founders Friday feature with Greylock Partners.
  • Guest Gagan Biyani, co-founder and CEO of Sprig, is introduced.
  • Gagan's background includes being Lyft's interim head of marketing and co-founding Udemy.
  • The podcast is sponsored by Lisa, a mattress company, and Mattermark, which provides data for the show.

Welcome back to the 20 minutes VC with your host, Harry Stebbings.

This quote introduces the host of the podcast, Harry Stebbings.

Therefore, joining me today, I'm thrilled to welcome Gargan Biani.

Harry Stebbings introduces the guest, Gagan Biyani, CEO of Sprig.

The 20 minutes VC is brought to you by Lisa Lisa are like the Toms and Warby Parker of the mattress industry.

This quote mentions the sponsors of the podcast, highlighting Lisa's business model and philanthropy.

We'd also like to thank mattermark for providing all the data and analysis for the show today.

Mattermark is acknowledged for providing data and analysis for the podcast.

Gagan Biyani's Background and Sprig's Mission

  • Gagan Biyani co-founded Udemy and was Lyft's interim head of marketing before starting Sprig.
  • Sprig aims to be the world's largest restaurant, offering healthy and sustainable food.
  • Gagan experienced a personal reassessment that led to the creation of Sprig.

Now, Gargan is the co-founder and CEO of Sprig, where he's on a mission to build the world's largest restaurant providing healthy and sustainable food to the world.

Harry Stebbings describes Gagan Biyani's current mission with Sprig.

I realized I'd gained about 20 pounds, was eating too much crappy food.

Gagan Biyani shares his personal health realization that contributed to starting Sprig.

Concept of Sprig and the Food Industry Dichotomy

  • Gagan identified a false dichotomy in the food industry: good food is expensive and time-consuming, while cheap food is unhealthy.
  • Sprig was conceived to provide convenient, healthy food at the touch of a button, a concept likened to "Lyft for food."

The food business has created this false dichotomy for consumers where either they get something that's good and it's expensive and it takes a lot of time and effort, or you can get something that's cheap and convenient, but it's terrible for you.

Gagan Biyani discusses the problematic dichotomy in the food industry that Sprig aims to resolve.

Lessons from Chipotle's Success and Challenges

  • Chipotle's efficient operation and high revenue per square foot are admired.
  • Chipotle faces challenges with unprocessed ingredients leading to higher incident rates.
  • Sprig is developing technology for root cause analysis to track food from production to consumption.

They're extremely efficient operationally, and yet still have a product that people love, which is particularly special.

Gagan Biyani appreciates Chipotle's operational efficiency and popular product.

We'll have technology that allows us to have root cause analysis to track the food from where it's produced to when it gets consumed.

Gagan Biyani explains how Sprig is learning from Chipotle's challenges and implementing technology to improve food safety.

Food Delivery and Preservation Techniques

  • Delivering food poses challenges to maintaining quality and taste.
  • Tricks like using skin-on chicken thighs help keep the chicken moist during delivery.
  • Burritos preserve well because the wrap protects the food from oxygenation.

Skin on chicken breasts, actually, or chicken thighs do great because the skin actually creates a protective layer that ensures that the quality, that the chicken stays moist and tasty.

Gagan Biyani shares how Sprig ensures food quality during delivery through specific cooking techniques.

Burritos, actually, the wrap, protects the food on the inside from oxygen.

Gagan Biyani describes how burritos are an effective food item for delivery due to their natural preservation qualities.

  • The transcript cuts off before Gagan Biyani can share his views on the market, as prompted by Harry Stebbings referencing Jason Calacanis.

And on his show you were very bullish in stating tha

The quote is incomplete, indicating a discussion on market trends and predictions was about to begin.## Winner Takes All Market Dynamics

  • The food delivery market is perceived as a winner takes all market, similar to Amazon and Uber.
  • Success in this market is attributed to economies of scale, which create a competitive advantage.
  • Branding and economies of scale can create a moat in food delivery.
  • Sprig aims to become faster, cheaper, and better quality as it scales, making it difficult for new entrants to compete.

"So I think that ultimately, if you look at the story of Amazon or Uber, Sprig has a lot in common with that, in terms of what market we're facing, which is a market where you would not necessarily expect that it would be winner take all by virtue of the fact that it doesn't have the same kind of network effects."

This quote highlights the belief that despite different network effects, the food delivery market can still be dominated by one player through economies of scale, much like Amazon or Uber.

"As we get bigger and bigger and bigger, Sprig will be faster, cheaper and better quality. And eventually the five years from now version of Sprig will be very difficult for a new entrant to come in and compete with."

The quote explains that with growth, Sprig will improve in efficiency and quality, creating significant barriers to entry for competitors.

Market Expansion Strategies

  • There is a comparison between Uber's and Lyft's market expansion strategies, with Uber being considered more responsible.
  • Uber took time to refine its business model before rapidly expanding, while Lyft expanded more quickly.
  • Sprig believes in perfecting the business model before aggressive expansion.
  • Deciding which markets to expand into involves assessing the likelihood of success and considering the competition.

"It took Uber over a year and a half to get out of, you know, they were in San Francisco and they were working on the product and trying to get it right, and then they launched their second market and then it took them another six plus months before they launch their third market."

This quote outlines Uber's initial slow and careful approach to expansion, emphasizing the importance of refining the product before scaling up.

"Ultimately, if you look at Lyft, what they eventually decided was, hey, we're going to compete in the United States and focus on the United States and beat Uber here."

The quote reflects Lyft's strategic pivot to focus on dominating the U.S. market rather than expanding internationally as aggressively as Uber.

"I think the overall thing you're looking for is which city is the most likely to succeed, right? So really you just want to say, hey, if you're going in your second market, you want to pick a market that you know is going to be successful because you don't get that many chances to have a second market."

This quote emphasizes the strategic importance of choosing a second market with a high likelihood of success due to the limited opportunities to make a strong second impression.

Competitive Edge and Funding

  • Capital and funding have played a significant role in Sprig's ability to survive and thrive in the competitive food delivery market.
  • Sprig does not currently view other companies as direct competitors in San Francisco.
  • The ability to raise money and VC confidence has been crucial for Sprig to weather the storm and now focus on market share.
  • Presenting a unique and differentiated value proposition is key to attracting VC investment.

"Yeah, I mean, at this point, honestly, we don't really think of ourselves as having many competitors, direct competitors, because in San Francisco, most of the direct competitors have either pivoted into a slightly different business or have fallen by the wayside."

This quote suggests that Sprig has outlasted its direct competitors in San Francisco, attributing this success to its unique positioning and the failure or strategic shifts of others.

"Our ability to raise money and the fact that vcs believed in us and our company really helped us weather the storm, if you will, as other companies were falling by the wayside."

The quote highlights the importance of VC support and funding in maintaining a competitive edge and surviving challenging periods in the market.

"It's kind of a two phase process. First you have to know in this case, Greylock and social capital at Sprig, we have to convince them that your approach is the right approach, and then you have to convince them you're the best company within that competitive set across that approach in the first know."

This quote explains the two-stage process of attracting VC investment: convincing them of the right approach and proving to be the best within the competitive set.## Vertically Integrated Approach

  • Vertically integrated approach is seen as beneficial for offering convenience, affordability, and quality.
  • Sprig aims to surpass the modern food landscape by excelling in these three areas.
  • The team at Sprig is considered highly capable and unique in their field.
  • Other companies often approach Sprig for talent acquisition when they fold, indicating Sprig's strong team reputation.

"So we can be more convenient, cheaper and better quality than what you can get in the modern food landscape."

This quote emphasizes the competitive advantage Sprig seeks to achieve through its vertically integrated approach, focusing on the key consumer decision factors: convenience, cost, and quality.

"I think both Greylock and social capital felt like the execution of the team that we've built here."

This quote highlights the confidence that investors Greylock and Social Capital have in the Sprig team's ability to execute their business model effectively.

Consumer Behavior and Sprig's Vision

  • Sprig intends to be a staple in consumers' lives, with the goal of customers using their service multiple times a week.
  • Recurring use is already seen among Sprig's "power users."
  • The aim is to reduce the need for cooking by providing a product that is better, faster, and more affordable.

"Sprig's vision is that one day you might eat Sprig five to ten times a week."

This quote outlines Sprig's long-term goal to become a frequent choice for meals, indicating a desire to significantly impact daily consumer habits.

Fundraising Process and Strategies

  • Timing of fundraising is crucial, aligning with the achievement of significant milestones.
  • Managing the process involves engaging with multiple VCs concurrently to create a competitive environment.
  • Selling the vision is essential, as VCs are looking for businesses that have the potential to change the world.
  • The fundraising process should be strictly managed with clear timelines to create urgency among VCs.

"You have to time the financing at a point where you have achieved a real milestone."

This quote stresses the importance of strategic timing in fundraising, suggesting that demonstrating progress is key to successful financing rounds.

"You have to really explain why the business is going to change the world or be really impactful to people's lives."

This quote underscores the importance of communicating a compelling vision to potential investors, as it is the transformative potential of the business that attracts investment.

Managing VC Relationships and Timelines

  • A clear and strict timeline is communicated to VCs to create a sense of urgency.
  • Updates on the fundraising process and the business are regularly provided to maintain engagement and manage expectations.
  • The strategy aims to ensure that VCs make decisions within a similar timeframe, allowing for choice and leverage in the final decision.

"I will literally tell them, hey, I expect this process to last three to four weeks and we're starting our first meetings next week."

This quote demonstrates the speaker's proactive approach to managing VC relationships by setting clear expectations and timelines from the outset.

Lessons from Past Experiences

  • At Udemy, the key takeaway was the importance of growth marketing in consumer businesses.
  • Exposure to various marketing channels and team-building at Udemy was instrumental.
  • Lyft taught the importance of brand and mission-driven operations.
  • These experiences contributed valuable insights into building a consumer business and were applied in Sprig's development.

"All consumer businesses are about growth."

This quote captures the essence of the lesson learned from Udemy, emphasizing growth as the lifeblood of consumer-oriented companies.

"The team taught me about brand and about having a soul."

Reflecting on the time at Lyft, this quote reveals the appreciation for a strong brand identity and the value of a mission-driven approach, which the speaker has taken to heart in their own ventures.## Lyft's Mission and Impact

  • Lyft aims to meet modern societal expectations while creating income opportunities for drivers.
  • Lyft's public image and company operations reflect its core mission and soul.
  • Sprig, like Lyft, focuses on growth and maintaining a genuine mission.

And that shows in the way that Lyft presents itself publicly and the way they run the company.

This quote emphasizes the alignment between Lyft's mission and its public image and operational strategies.

Quick Fire Round: Personal Preferences and Insights

  • The quick fire round is intended to elicit immediate, candid responses from the guest.
  • Favorite Sprig meal: grilled chicken with broccoli and sweet potato puree.
  • The meal choice reflects the guest's preference for simplicity and balance.

It's just grilled chicken with broccoli and sweet potato puree.

This quote shares the guest's favorite Sprig meal, highlighting the quality of the food and its balanced nature.

Reflection on Company Mission Communication

  • The importance of early communication about a company's mission is acknowledged.
  • The guest wishes they had started discussing Sprig's mission publicly sooner.

I wish that we had started the process of publicly talking about our mission earlier.

This quote reveals a retrospective desire to have communicated Sprig's mission to the public earlier in the company's development.

Favorite Book and Its Influence

  • The guest's favorite book is "The Tragedy of Great Power Politics".
  • Appreciation for the book's clear, thorough, and articulate argumentation.

That is probably the first book I've ever read that provided a holistic argument for a certain position that was thorough, clear, and easy to understand.

The quote highlights the book's impact on the guest's appreciation for logical argumentation and structured thought.

Mentors and Their Impact

  • Adeo Resi and Simon Rothman are mentioned as significant mentors.
  • The guest values the guidance and support provided by mentors and investors.

Adeo Resi from the founder institute was probably one of my biggest mentors.

This quote acknowledges Adeo Resi's influence on the guest's early career, particularly in raising capital and building a company.

Personal Development as a Founder

  • The guest identifies a need for patience in addition to aggressiveness.
  • Managing a larger team requires a more patient and responsible approach.

Patience is something that I'm learning is just as important as aggressiveness.

This quote reflects the guest's realization that balancing patience with a drive to succeed is crucial, especially when leading a growing team.

Sprig's Future and Growth

  • The ambition to build the largest restaurant in the world.
  • Anticipation that Sprig will become a household name in major cities.

I think we want to build the biggest restaurant in the world.

The quote conveys the guest's long-term vision for Sprig's expansion and recognition.

Gratitude and Conclusion

  • The guest expresses appreciation for the podcast and its contribution to entrepreneurs.
  • The host acknowledges the guest's inspiring journey and valuable insights.

Really enjoyed speaking with you and thank, you know, putting all this work into this podcast and helping other entrepreneurs out there learn how to be successful.

This quote shows the guest's gratitude for the opportunity to share their experiences and contribute to the entrepreneurial community.

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