Cogent Conversations: Episode 18
Huw Birrell, Co-Founder and Co-Managing Director of Fresho
Covid-19 Mini-Series - Fresho
– Huw Birrell, Fresho
Covid-19 has impacted us all. It’s changing the way we live, the way we do business and the way we interact with each other. We’ve seen businesses react in a range of different ways, and decided to use this time to share some inspiring stories of digital business who are innovating to survive and thrive. In this short mini-series, we’ll share stories of how businesses are managing this from the coalface, how they’ve changed their product/strategy and how they’ve made it all happen with remote teams, and what they see for the future.
In the third episode of our Covid-19 mini-series, we talk with Fresho, a tech business that provides smart fresh food ordering software to some of the biggest names in the food industry.
Up until the point of social distancing and isolation, Fresho were solely focused on providing solutions that enabled cafes and restaurants to place orders with wholesale fresh food suppliers. As you can imagine, the need for this type of product dropped significantly when restaurants could no longer welcome dine-in guests.
Fresho’s food wholesaler network found themselves with an abundance of food and excess delivery capacity. People still needed to eat, even though they were now confined to their homes. Could Fresho’s platform help wholesalers get their food directly to customers?
Fresho responded quickly, deploying a solution that has opened them and their wholesalers to a new market, enabling anybody to order from the businesses that supply their favourite restaurants. They went from a B2B business offering to a B2C within a matter of days.
We spoke with Huw Birrell, Co-Founder and Co-Managing Director of Fresho about the new opportunities he and his team have found in some of the world’s most challenging times.
To keep up to date with what is happening with Cogent, including when new episodes of this podcast are released, you can subscribe to our blog at cogent.co/blog. Or follow us on Twitter: @cogent_co or Instagram: @cogent_co.
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Meet the hosts
Adam has led digital business, consulted to start-ups and corporates, run co-working spaces, and created his own podcast. Currently, he’s a Product Manager at Cogent, helping organisations verify their venture ideas and enable them to evolve their culture.
Mark’s an angel investor and the CEO of Cogent. Mark’s a sought-after advisor on topics spanning from fundraising to strategic planning and market entry. He has a unique perspective on digital businesses globally, and has play a key role in some of the most successful projects we’ve worked on.
Full Episode Transcript
Adam: This is the Cogent Conversations Podcast made by the people at Cogent. Cogent Conversations is about understanding all the things that go into making a digital business thrive. Helping create these types of organisations is what we love doing best. We also want you to have the opportunity to take the learnings from the best of what Melbourne has to offer, so you can apply them to your own business. To learn more about Cogent check us out at cogent.co.
Huw: It’s a really good point because Australia supplies, I think, it’s 95% of our own produce, and then we export three times as much. So we were never going to run out of food, it was just trying to get the distribution back through it. And obviously Woolworths and Coles, their sales have gone up significantly, and so they were scrambling and they were buying through different channels as well, through some of the wholesalers as well. So there was always enough food, it was just a matter of how you get it there. And I think, also delivering straight to the consumer and allowing people just to order from their home, particularly with the coronavirus, and contactless delivery, I think, was a great position to be able to do that because we had thousands of trucks throughout Australia that were already distributing to restaurants, and then all of a sudden, a lot of them just started delivering to consumers.
Mark: Welcome Adam, welcome Huw.
Huw: Yeah, thanks Mark.
Adam: Thank you. Thanks, Mark.
Mark: We’ll get into it. So we’re a couple of months into lockdown, the coronavirus has really dominated our conversation and thinking. In this short podcast series we’re trying to explore a little bit how some of the businesses close to Cogent have been impacted by the pandemic, how they’ve had to react and how they see their future. So, Huw, maybe you can just kick it off by telling us a little bit about what kind of impact coronavirus has had on Fresho.
Huw: Yeah, so Fresho is a fresh food technology platform that connects restaurants, independent supermarkets, like your IGAs, cafes, hotels and hospitals, and their suppliers. And we predominantly focus on fruit and veg, seafood and meat. We were processing about $60 million a month through our platform and deal with about 30,000 venues across Australia, New Zealand and the UK. Obviously there’s been a fair bit of an impact from coronavirus, particularly in the food service markets.
So the announcement effectively around the world that restaurants and cafes, and pubs would shut, except for takeaway, obviously put a significant impact on those businesses that we had, that supplied food service. But, on the flip side, retail has gone extraordinarily well. So businesses that were supplying your IGAs, or your Foodworks, or your independent grocers have grown. And we have got two pasta manufacturers on our system that are up by 500%.
So it’s a bit of a mixed bag. It does depend if you’re on food service and retail, and sort of what we saw, those businesses had both a mixture of food service and retail. And I think a lot of businesses will move to that model of supplying both outlets.
Mark: Yeah. Huw, I was just wondering about that moment for you. I can sort of remember the moment for me where it became quite real that this is going to be very different, but was there a moment for you way you went from thinking, “Oh yeah. There’s something kind of big happening here in the world.” To, “Oh, wow. This is going to change it for us.”
Huw: Yeah. I think that it was culminating. To complicate matters further, we’d actually raised $7 million towards the end of last year to expand into the UK and the US so that was obviously great timing in hindsight. And so we were actually launching in the UK and the US in a much smaller way around the exact same time. So effectively, I think the first case was reported here at the end of January, we were launching in the UK and we were, because we were launching in London with a number of suppliers over there in quite a big way, we sent three people over there. And that launch was targeted for the second week of March. And so we actually had to make a decision in mid February. We were like, “Well, with the information we know today, do we continue ahead with the launch?”
By mid Feb, yes, there had been some cases reported in Australia, but I guess it was still potentially of the view that it might be a little more like SARS which didn’t impact as much in those countries. So we took the strategic decision to launch and obviously we’d done a lot of work to get up to that point. But then it started to change, funnily enough, as the guys got over there. So they were over there in the first week of March, just as the first person, unfortunately, passed away in Australia.
So that March was a very hazy month. We were launching in the UK in a big way, obviously coronavirus was creeping up. We had obviously a lot of other development we were doing. I guess a lot of the stress we had was actually trying to get the people home from the UK much earlier than we thought they we’re going to be there. We originally planned that a few of them would be there for a month.
But they effectively were only there two weeks and we had to get them all out by sort of the 20th of March. But we’d sort of been building up to that point, we’d sort of noticed during March a bit of a shift. So we’d started working on going straight to consumers, and that was sort of one of the big changes we made.
Mark: Did you get early indicators through your platform and your ordering that the change was occurring or did that lag a bit?
Huw: No. So March was actually up until sort of 15th of March was record month, it’s always a big month, March. Where we did get an early indication was in the UK so that we were able to plan a bit earlier. UK, it was starting to see it a lot more and so the demand for consumer in the UK was earlier than it was here in Australia.
So while our restaurants shut down and on the 23rd of March in Australia, they shut down a bit earlier in the UK. So we sort of knew it was coming and that’s why we’d sort of started to plan for the consumer angle. And then all of a sudden, basically on the 20th of March, 19th of March, when the announcement went out, all of our suppliers rang us and said, not all of them, obviously the ones that we’re doing food service, the ones that we’re going to retail, they were fine. But they basically said, “We need it go to consumers.”
Mark: I mean, obviously notionally, we’re still eating the same amount of food, right? It’s just people are getting it from an alternative channel now. But you’re a pure B2B play and you made a really fast decision to go B2C. Can you tell us a bit about how that came about?
Huw: Yeah. So we were always B2B because obviously there’s less marketing spend you need on getting customers on board. You know, B2C is traditionally very marketing heavy. And we were always planning on getting to B2C at some point. Obviously coronavirus made it happen a lot quicker, but basically it was during that sort of last couple of weeks of March where we were okay, “Well, yeah, the UK, we’re getting signals out of there. We’ve got to actually start doing something about this.”
And so effectively, it took the organisation a week to sort of get things starting to move, get people’s heads around what we were doing. But I think most people in our organisation, I imagine sort of in Australia had had fair warning or that this had been building for three months in China and elsewhere.
So I think it was pretty easy to get the organisation to shift. And within a week we basically had the ability to go straight to consumers. The model to consumers was basically this food, fresh food, particular fruit and veggies, seafood and meat that was going to Rockpool, Movida, Donovan’s, Icebergs. So it was going to all the best restaurants in Australia and New Zealand and the UK, it was now available to go straight to consumers.
We’ve now had close to 50,000 people that have signed up in Australia and New Zealand. And, yeah, it’s really good because as you mentioned, Mark, the the same, in fact amount of food is being consumed it’s just gone through different channels. So it’s going through retail a lot more, but also, now a lot of the restaurants are doing these takeaways. But basically what they’re offering is it’s a much bigger array of produce. So as a consumer, you can go on, there’s a lot more variety and it’s actually cheaper than retail as well.
Mark: And was there any kind of cultural issues with the company? Because you’re going from one kind of audience to a completely different kind of audience too, was there any kind of really fast things that you learned or quick things you learned?
Huw: No, I think, it’s just in human nature that it’s sometimes hard to shift people. People get set, “Oh, this is what I’m doing for the next three or four months.” Development, you’ve got a pipeline, okay. “These are the features we’re building over the next month, three months, six months and sort of further down the track.” And we basically just had to say, “Well, let’s put that on hold for a month while we do this part.” And a lot of it, a lot of the features there are still very equivalent for business to business as well.
So it took a week, but again, I go back to the fact that I think a lot of people in Australia had been building up to it, knowing that, they’d been talking about this coronavirus for a number of months.
Mark: What do you see now emerging? Will this probably become a new norm or do you see that things will slowly return back to the way they are? Like how are you starting to plan where Fresho goes from here?
Huw: As I mentioned sort of, we’d always plan to go to consumers, but probably not for another couple of years. We’ve obviously got that business and it’s going really well. To have 50,000 people sign up in five or six weeks has a great result. So there’s a really powerful business there.
We were doing close to $20 million annually through it, so it’s a really good just business model by itself that basically in six weeks has gone from zero to that. So we will definitely keep it, and invest in it. And so now what we’ve told everyone, it’s just back to development on its merits. Everything’s got to, business to business and B2C. Let’s bring forward the development pipeline, and then just make a decision on a normal basis. So we’ve really gone back to normal processes,
Obviously forecasting the future and how long lockdown and how long this takes is obviously very hard. Obviously we’re in an industry, that part of our industry is very, very impacted. And a lot of the businesses we’ve spoken to won’t open with 10 people in there, but then a lot will, your cafes that are much smaller, they’ll open. So it’s good that it is starting to open up and we are already seeing a lot more volume through the B2B side.
Mark: It’s pretty amazing that you’re able to do that in such a short period of time. Is that beyond what you thought the organisation could do? Like if you say six months ago that you could go to consumer within a week, and I know the demand’s kind of changed so it’s a different game. But did you realise that you could turn something on or turn a new product or line of business on that quickly?
Huw: No, I’ve never seen a development team work so quickly. No, I mean I guess yeah, there was a lot of effort in there from everyone, our whole team. And it literally probably only took three or four days. I had a team meeting about what the new plan, what the short term impact and why we have to do it. Because, these, our suppliers were just screaming at us. They were looking, they were desperate because basically some of them, 95% of their volume just disappeared overnight.
Everyone wanted to help out these suppliers who sometimes had built up businesses over 20, 30 years, really good businesses and then all of a sudden with the stroke of a pen basically had lost 90, 95% overnight. So it was a really quick turnaround from the whole business, the developers, implementation, launching it and and sales as well. So it was a really great team effort.Obviously you can’t always be running at that velocity, but it was great, it’s fantastic that we were able to turn around so quickly.
Mark: And I presume that that was all done remotely or partially remotely as well. Right?
Huw: Yeah, that’s right.
Mark: At the same time.
Huw: Effectively, at the same time we were moving remote, and I think one of the things we’ve got, particularly our development team, they pair. And I think that helps a lot. Whereas if you had moved straight from remote, doing new venue with B2C or a new angle, I think that’s helped us, sort of that continuum of pairing and but just remotely. So you’re always engaged with people.
Mark: I’m interested a bit to talk about the wholesalers themselves a bit, right? Because I mean, in my mind, I think these are probably smaller SMEs. Is that right?
Huw: Yeah, they’re sort of anywhere from doing a $100,000 in sales up to $400 million. So some of them aren’t SMEs, but the majority of them are your SME, $40, $50 million of sales on a yearly basis.
Mark: Obviously you used an expression then, they were screaming at you for a channel. I’m just interested in that relationship. How did they make it known that you could help them? And how did you let them know you could help?
Huw: To build up businesses like this, all these suppliers and wholesalers, they’re very people driven and they won’t send you an email, they’ll just call you. They’ve built up a business over time and they saw it coming with not much notice. So they were just like, “We need a solution.” And we’ve got really good relationship with all our suppliers.
So we basically, saw an opportunity and particularly in those first few. I mean, there was so much panic buying from sort of mid-March to sort of mid-April, and all our retailers talked about how the fact it was Christmas for six weeks because everyone was just buying anything. I think freezer purchases went through the roof. So the meat guys had never sold so much beef mince, pork mince. But yeah, it was just great sort of effort from suppliers and our team just to pull it all together really quickly,
Mark: Can’t help but reflect on the irony of this though. We had a situation where the general public was worried the supermarkets were going to be empty and yet the wholesalers were sitting there going, “Who the hell are we going to sell off food to?”
Huw: Yeah, that’s right. It’s a really good point because Australia supplies I think it’s 95% of our own produce. And then we export three times as much. So we were never going to run out of food. It was just trying to get the distribution back through it. And obviously Woolworth’s and Cole’s, their sales have gone up significantly and so they were scrambling and they were buying through different channels as well through some of the wholesalers as well.
So there was always enough food. It was just a matter of how you get it there and I think also delivering straight to the consumer and allowing people just order from their home, particularly with the coronavirus and contactless delivery. I think was a great position to be able to do that because we had thousands of trucks throughout Australia that we’re already distributing to restaurants and then all of a sudden they’re just a lot of them just started delivering to consumers.
Mark: I wanted to ask you about how this was for you as the leader of an organisation as well and what you did to sort of take in the information as it was coming to you, synthesise it and then communicate that to the people within the organisation so that people felt like this is going to be okay and we’re going to stick together and work through this? How was that for you? And what did you do?
Huw: Yeah, it was, it was a very difficult sort of three weeks compounded by the fact that my business partner, James, he was in the UK with these launches. We were not only worried about how the coronavirus was going to impact our business and obviously our revenue and our staff and working remotely, but also for those two weeks when, how they’re coming home from the UK.
So that was our first priority is when do the guys come home from the UK. And so they got some of the last flights out on the 20th and successfully launched those businesses. So then once we got those guys home, then it was around, “Okay, well, how’s it impacting our business? And what are the key decisions we need to make?” Our revenue went down a bit, thankfully not too much because we’ve got a good spread, but we had to make some decisions about the business and obviously put further international expansion on hold until the economies open up.
So it was just a very interesting three weeks, one of the most interesting I think we’ll ever live through. But being able to communicate that, as Mark said, it was a lot harder by the fact that all of a sudden people just went to remote. We, sort of around about mid-March said, “If you want to work from home, you can.” We didn’t make it mandatory. It was only sort of when the government said that, “You should work from home.” That we sort of said everyone should work from home. Again, a couple of people still work from the office for various personal reasons, but it was sort of a communication issue, particularly with the working remote, which does make it a lot harder.
Mark: And during that period, Huw, and even up to now mental health has been kind of a theme for me as a CEO as well, and I’m sure for you as well. Particularly in that early period, everybody was incredibly stressed. You’ve had to kind of do this pretty substantial change of business, focus customers at the same time as having to manage company. How have you coped and to how have you helped your people cope?
Huw: Yes, personally, yeah, it was very stressful with just all those aspects happening with the guys in the UK, with bringing them home. And then obviously the working remotely and the business and how it impacts, it was very stressful, but it’s great having a lot of people you can talk to within the business. Everyone was very understanding. Obviously everyone copes differently and that’s why I guess we left the office open as well to people.
We obviously had a business delivering food that was essential. So I think some people just had to work from the office and that’s why we sort of left it open. So definitely personally, I thought it was a very challenging period. Thankfully it’s much more now on an even footing. The panic buying’s disappeared, everyone is aware of what’s happening. But yeah, definitely one of the more stressful periods I’ve had.
Adam Murray: I just wanted to ask you maybe a bit more of a personal question rather than around the business, Huw. For me, it’s sort of focused my values in a lot of different ways or maybe even changed my values. But I’m just wondering, is there something surprisingly good that’s come out of this for you personally? Like that you just noticed, “Oh right, wow. I wasn’t expecting that.” Or, “I didn’t know that about myself.” Is there something that’s come out like that for you?
Huw: Well, I guess spending more time with the kids at home, that’s always a good thing. And they’re very, very young. I guess I like to think that I can make decisions under some sort of pressure and I think I certainly we certainly didn’t get everything right in the business, but I think as a business, and this isn’t just me, but this is the ability of the team. We sort of navigated our way through this. At this point and obviously there’s a long way to go, but I think that’s obviously part of what I’ve done, but it’s also the whole team and the leadership team. But everyone in the business and just seeing people being able to effectively go from an office and one type of business and we’ve still got that business and overarching we’re the same, but all of a sudden go work remotely, deal with this pandemic and a bit of a shift in a business model or just an addition to a business model.
It’s pretty impressive across the board. And I’m sure there’s a lot of other businesses out there that are the same. But for people to cope with, and still be working, there were no holidays or anything. So I just found that impressive, what our team did that, just that there’s such a shift. Unsure if it will ever happen again in our whole lifetime. It was very impressive.
Adam Murray: It might be. I mean, I’ve been thinking about this myself, Huw. The idea that that is true across a lot of organisations, they adapted it a rate they thought was impossible. And obviously there’s just like a work rate that occurred at that point, but we can all reflect a little bit on how adaptable we can be with the right mindset and circumstances, right?
Huw: It’s like the tele-health. I think they’d been trying for three years to launch that and within three weeks it was launched. Yeah. Just took the right time and obviously people have to make quick, very quick decisions and that’s what it comes down to a lot, doesn’t it? Just really quick decision making and being adaptable in different situations. And yeah, you’re right, there was across the board and a lot of people adapting to it
Adam Murray: And in the medium term and the longer term, I mean, obviously for you, Huw, there’s a lot of unknowns here, particularly with restaurants reopening. Other than that kind of B2C model that you’re now pursuing, do you see this having longer term effects on the business? And how you operate beyond just the business lines, but people and culture and so on?
Huw: It’s interesting. I think the longer the working remotely goes on, the more likely that part of it will stay. No one really knows how much it would snap back, as some people are saying, to normal. I think it will generally go back to working from offices. People will go back to restaurants, hotels, pubs. They’ll eventually go back to traveling as well. But I think the longer this sort of thing stays in place, then the more likely that this remote working will become a part of it. If it is 18 months, then I think that’s effectively a lot of it will be here to stay. Whereas if it’s more just maybe another few months then … We’ve got a plan for both of those eventualities, but the good thing is we’re now set up, us as a business, for both those. For delivering to consumers and also our existing business to business relationships.
Adam Murray: If a people listening do want to buy, where do they go?
Huw: Just go to fresho.com and sign up and you’ll get access to some of the freshest produce there is. Just think of a steak at Rockpool or tacos at Movida or whatever your favourite dish at Icebergs Restaurant, looking over the water. All of it’s available.
Mark: So thank you, Huw. It’s been a good little snapshot of your world over the last few months.
Huw: Thanks. Thanks, guys, for having us. That was great.
Adam Murray: Yeah. It’s awesome to chat. Thanks, Huw.
Adam Murray: They help us get the word out there about all the great digital businesses in Melbourne. You can help by sharing an episode you love with a friend or by rating and reviewing this podcast for your favourite platform. And finally, if you want to tell us about how your business is thriving or you know of another digital business that is having an amazing, positive impact, the best way to do that is through emailing us through firstname.lastname@example.org. I’m Adam Murray and I look forward to hearing your story.