GoPuff Is a $40 Billion Delivery Company. 9 Years Ago it Started as a Hookah Store
The story of GoPuff is fascinating not only because the company is dominating one of the most competitive spaces right now, but also because it has come a long way from its days as a hookah Store.
Here is the story:
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How It Started
GoPuff was started by two 19-year old roommates, Rafael Ilyashev and Yakir Gola. Their idea: a “one-stop puff shop” where a user can buy hookahs, vaporizers, grinders, and rolling papers in addition to some snacks.
The two co-founders launched with profitability in their sights. This pushed them to implement some unorthodox strategies.
Their initial funding: They got it by selling furniture left behind in an empty office on Craigslist. That trade netted them over $60,000.
Their development team: Instead of draining their wallets hiring programmers in the US, they hired contractors from Ukraine to build their platform.
As for marketing: They relied on pre-class pitches to get the word out.
The plan worked. The website gained traction and more items were added.
Soon, GoPuff had an app and it switched from a hookah store to a 30-min delivery platform.
Due to the early focus on profitability, the company was able to grow for 2.5 years without getting outside funding!
What Makes GoPuff Unique?
Unlike other delivery companies which fulfill orders from 3rd-party stores, GoPuff runs its own fulfillment centers.
This vertically integrated model allows the company to have higher margins as it buys the products directly from producers and distributors.
It also helps maximize efficiency as each Warehouse is selected to fit all 3,000 that GoPuff offers and is laid out to enable speedy delivery.
The model elevates the customer experience. Today 30% of the app growth is due to word of mouth by satisfied customers!
GoPuff’s early success and unique strategy fueled its expansion. The company has raised over $3.4B so far. The funding helped it grow to over 250 fulfillment centers across the US over half of which were set up in the past 3 years.
The company has been on a tear over the past couple of years. In 2021, it acquired a food delivery service in the UK to start its global expansion.
Pretty cool story, considering that the company started as a puff store.
Thanks for reading — Mahmoud
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