Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Jason Kelly on Bloomberg Radio. All right, you are listening
Speaker 1: to Bloomberg Business Week on this Tuesday Carol Masser along
Speaker 1: with Jason Kelly. Now, back in the first week of May,
Speaker 1: we caught up with the head of blue Apron to
Speaker 1: hear how she and her team were managing through the
Speaker 1: pandemic and how user growth had moved up as a
Speaker 1: result of consumers being in lockdown and really uh spending
Speaker 1: of course, so much more time at home due to
Speaker 1: the virus. Let's get to another edition of Bloomberg Business
Speaker 1: Week Talks. It will be highlighted in an upcoming issue
Speaker 1: of Bloomberg Business Week magazine. Linda Kozlowski, president CEO at
Speaker 1: New York based Blue Apron, back with us on the
Speaker 1: phone from Garrison, New York. Linda, how are you and
Speaker 1: how is your team? All Right, It's so great to
Speaker 1: be here. I'm doing well and my team is doing well.
Speaker 1: We're continuing to just put every bit of energy we
Speaker 1: have into getting more boxes out to more people. And
Speaker 1: so what has been especially since we last talked to you, Linda,
Speaker 1: what's been sort of the biggest learning, like what what
Speaker 1: have you sort of learned the most about your business
Speaker 1: or your or your customer that you can point to.
Speaker 1: So I think, you know, the biggest learning is as
Speaker 1: things have evolved. You know, obviously when when COVID first hit,
Speaker 1: it was uncertain, you know, when things were going to change,
Speaker 1: how things were going to change, how people's behavior and
Speaker 1: reactions would adjust as as things move forward, And what
Speaker 1: we are seeing is we are seeing continued demand for
Speaker 1: the products UM as as people sort of grapple with
Speaker 1: the new reality and think about how much time they
Speaker 1: want to spend at home versus how much time they
Speaker 1: want to you know, want to be out even as
Speaker 1: things open again. UM. There's a lot of new information
Speaker 1: out in the in the world about about continuing to
Speaker 1: be cautious and continuing to um to sort of stay
Speaker 1: inside when possible, and and how to safely have contacts
Speaker 1: with other people. But we are seeing sort of the
Speaker 1: manifestation of the trend that we talked about in early May,
Speaker 1: which is the fact that people are telling us that
Speaker 1: no matter what happens, UM, they are starting to plan
Speaker 1: on cooking at home more. UM. This is a habit
Speaker 1: that they've really started to form um again, internal and
Speaker 1: external researches all pointing pointing to the same thing that
Speaker 1: no better. What happens as things start to ease up
Speaker 1: and restaurants open, what have you, That people have gotten
Speaker 1: a lot more confident in the kitchen and they plan
Speaker 1: on continuing to cook at home and they want interesting
Speaker 1: solutions to help them think about how to make that
Speaker 1: time more connected to family and less focused on preparation
Speaker 1: and planning. So we're continuing to see that trend. I
Speaker 1: do wander landed to you know, when you think about
Speaker 1: scenario planning, right, you think about those things that you
Speaker 1: know out of the box that could happen in the
Speaker 1: pandemic is certainly one of those things. But I do
Speaker 1: think as you look down the road, I think you know,
Speaker 1: when normal returns, you know, what are you doing though,
Speaker 1: and are you thinking about, you know, managing and an
Speaker 1: inevitable fall off in your business? Do you anticipate that? Well,
Speaker 1: I think that's a little bit of what UM, what
Speaker 1: I was referring to earlier. Um. You know, there's always
Speaker 1: going to be ebbs and flows as people have different needs.
Speaker 1: But what we're planning for is staying on the thing
Speaker 1: strategy we were on before, So before we actually got
Speaker 1: into the pandemic, we had a growth strategy that was
Speaker 1: obviously not based on a pandemic. It was based on
Speaker 1: product improvements, marketing improvements, and audience expansion, and we already
Speaker 1: thought that come together into one UM And now we're
Speaker 1: continuing to see that those products improvements, which we are
Speaker 1: continuing to do as we sort of ease out of
Speaker 1: the pandemic, UM are engaging people and and keeping them
Speaker 1: involved with the product. So it's there will always be
Speaker 1: ebbs and flows to the business, and again there's seasonality,
Speaker 1: trends um when we return to whatever that new normal is.
Speaker 1: But we're more focused on the longer term growth potential
Speaker 1: of some of the product improvements that we're putting in
Speaker 1: around variety, flexibility, healthier options, and continuing to drive new
Speaker 1: ways to create that variety in our business while also
Speaker 1: managing the complexity and being able to ex spanned our
Speaker 1: operations without having to put significant capital into that operations,
Speaker 1: given we already have so much ability to do that. Now.
Speaker 1: We we've made a lot of investments early on that
Speaker 1: are now paying off in in automation and the and
Speaker 1: the ability to UM to scale with labor essentially, So
Speaker 1: Linda talk to us about sort of the supply chain
Speaker 1: and the logistics side of this. Were there are things
Speaker 1: that you had to sort of resolve along the way.
Speaker 1: I mean, you've got folks obviously working physically, but you've
Speaker 1: got other folks working remotely, You're dealing with different suppliers.
Speaker 1: Talk to us about that process of maybe solving some
Speaker 1: of those issues. Yes, so, I think the the initial
Speaker 1: thing that we did was very similar to what a
Speaker 1: lot of people did, which is how do you think
Speaker 1: about making sure that you're developing a resilient supply chain
Speaker 1: across across a lot of different areas at the same time.
Speaker 1: Simplicity is key when faced with um rapidly changing environments.
Speaker 1: So early on we did make some modifications to our
Speaker 1: menu to some plify and streamlined suff of the recipe
Speaker 1: availability to make it faster and easier to pack and
Speaker 1: to manage logistics than Over time, we reintroduce that complexity
Speaker 1: back in and then it can again continue to evolve
Speaker 1: the product itself with new products offerings UM As we
Speaker 1: were able to manage some of those ebbs and flows
Speaker 1: and continue to bring labor into the facility so UM
Speaker 1: a lot of people had to streamline their their menus
Speaker 1: and and look at ways to to to avoid some
Speaker 1: complexity early on, and we're really happy that we're able
Speaker 1: to start bringing that complexity back in. We're already back
Speaker 1: up to full service on our our family menu and
Speaker 1: UM and very close to full variety on our two
Speaker 1: person menu, and so we're going to continue to do
Speaker 1: that along with introducing the new products and variety that
Speaker 1: we have into play. On the supply chain side, that's
Speaker 1: some scen area where we've had an advantage for quite
Speaker 1: some time because we've worked so closely with the producers
Speaker 1: and because UM we have really really high quality standards
Speaker 1: for our ingredients. UM we've always had really great relationships
Speaker 1: with our suppliers. We can consider it and move very
Speaker 1: quickly depending on supply, and we also have the ability
Speaker 1: to substitute and swap out if there's ever a challenge
Speaker 1: because of the nature of how our recipes are built,
Speaker 1: and so we're able to really flex that supply chain
Speaker 1: to make sure that we don't have to sacrifice any
Speaker 1: quality during this time where we continue to ramp volume.
Speaker 1: Linda just got a minute. We're gonna do some news
Speaker 1: and then come back and continue the conversation. But I
Speaker 1: do want to just quickly get your thoughts on supply chains.
Speaker 1: How have they been? Are they improving? Can you get
Speaker 1: everything that you want in terms of the products that
Speaker 1: you need to provide to customers. Yeah, we've had minimal
Speaker 1: disruption in our supply chain, and I think part of
Speaker 1: it is because of the quality that we're sourcing. UM.
Speaker 1: We are able to access high quality ingredients, oftentimes resourcing
Speaker 1: from the same places that restaurants with source from, and
Speaker 1: so therefore we're able to get really high quality ingredients
Speaker 1: and UM and hadmidable disruption. When we have had a disruption,
Speaker 1: it's usually when it comes to a certain amount of
Speaker 1: time UM, and so we can just swap recipes between
Speaker 1: weeks to make sure that we're getting the freshest possible products.
Speaker 1: But we are seeing you know, we've seen prices increase
Speaker 1: in in the grocery source supply chain, but we've been
Speaker 1: able to manage our prices very very closely so that
Speaker 1: we can, UM, we can make sure that we're still
Speaker 1: delivering great value to the consumer and haven't had to
Speaker 1: adjust any of that pricing at all. So Linda, I
Speaker 1: have to ask you, what have you learned about management
Speaker 1: and stress and sort of an organization at the core
Speaker 1: of our sort of human experience, and that all of
Speaker 1: this because you provide something that is fundamental to all
Speaker 1: of us. Not to be too silly about it, but
Speaker 1: you're literally delivering food to people. It's it's actually true.
Speaker 1: I mean I I talked about the fact that what
Speaker 1: we're doing is really one of the most intimate part
Speaker 1: of starts of people's lives because it's it's what you
Speaker 1: put in your body, it's what you feed your family.
Speaker 1: And it's part of the reason that we do feel
Speaker 1: so much pressure to to make sure that we're providing
Speaker 1: the highest quality ingredients and the best recipes because again,
Speaker 1: we're thinking about this product beyond the pandemic and um
Speaker 1: and it's really about, you know, removing stress and and
Speaker 1: creating incredible connecting moments. And so there's a huge amount
Speaker 1: of pressure even outside of this, But for me, it's
Speaker 1: it's really focused on a few things when it comes
Speaker 1: to leadership during this particular time. One is um to
Speaker 1: recognize the fact that I consider myself extremely lucky that
Speaker 1: I work and and run you know, a product that
Speaker 1: is so critical to people's lives and so important to
Speaker 1: people's lives of of being able to stay motivated and
Speaker 1: and and stay focused on everything you need to do.
Speaker 1: And then I think the other aspect of it is
Speaker 1: our number one priorities has got to be safety at
Speaker 1: all times, the safety of our customers and the safety
Speaker 1: of our employees UM as we sort of have frontline
Speaker 1: UM workers who are really UM putting themselves at risk
Speaker 1: every day to try to come in and make sure
Speaker 1: that that we're moving the business forward. And so we
Speaker 1: take those safety standards incredibly incredibly UM seriously, and even
Speaker 1: prior to the pandemic, we we already had some you know,
Speaker 1: incredibly high food safety standards and and heighten those even more.
Speaker 1: So number one priority is really making sure that everybody
Speaker 1: is safe. And then I think the bigger part about
Speaker 1: it is is really focusing the team on that mission
Speaker 1: of how do we make sure that we get food
Speaker 1: to people during this critical time, but something that isn't
Speaker 1: just going to be sustenance, something that they're actually really
Speaker 1: going to enjoy, something that's going to increase the connection
Speaker 1: of their family and UM, something that is going to
Speaker 1: add sort of a sense of accomplishment to their life.
Speaker 1: If there's somebody maybe who has like cooked before, or
Speaker 1: a sense of variety to their life, for somebody who
Speaker 1: you know, maybe as an expert cook and just wants
Speaker 1: to make sure that they shake up the routine. So
Speaker 1: I think staying focused on that mission during such a
Speaker 1: stressful time is really the most important. Yeah, totally. And
Speaker 1: I do wonder if you think about idea, you have
Speaker 1: to think about kind of the next stress on your business?
Speaker 1: And do you guys do? And I guess I always
Speaker 1: think about, you know, the big gorilla that's out there.
Speaker 1: I feel like for almost you know, many many industries
Speaker 1: or many you know, businesses, and that is Amazon and
Speaker 1: you know, as they decide or work on leveraging whole foods, Linda,
Speaker 1: you know and probably look at a model like yours,
Speaker 1: and especially how you're doing in the pandemic, you know,
Speaker 1: what do you think about? Um? And you know for Amazon,
Speaker 1: you know what would happen to you? Guys? How do
Speaker 1: you build a strategy kind of with that potential eventuality
Speaker 1: in mind? Well, to be honest, I think that that's
Speaker 1: that's to me, the biggest area of discipline is really
Speaker 1: being focused on how do we continue to build the
Speaker 1: business and add value for our customers and not get
Speaker 1: distracted by um by what could go wrong or what
Speaker 1: could be UM, what could sort of intervene. Because the
Speaker 1: way that we look at it is we are really
Speaker 1: were the experts in bringing incredibly delicious, UM incredibly like
Speaker 1: beautifully sort of creative and sourced meals to your home,
Speaker 1: teaching you how to cook them, are helping you cook
Speaker 1: them if you already know how to cook, and creating
Speaker 1: that moment with your family, and that is really what
Speaker 1: we focus on. That is all we do. And so
Speaker 1: I'm just a big believer that when it comes to
Speaker 1: certain moments in your life, that including the importance of
Speaker 1: food and what you put in your body and what
Speaker 1: you're serving your family, that that area of focus and
Speaker 1: that area of expertise is something that people are craving
Speaker 1: and people are looking for. And UM, when I think
Speaker 1: about the competitive future, I think that there's a huge
Speaker 1: amount of opportunity to innovate on how we actually develop
Speaker 1: products to serve you in the home and help you
Speaker 1: make meal time less stressful, help you, um add variety
Speaker 1: to your day. And so I'm less focused on big
Speaker 1: players that might focus on multiple things and um, and
Speaker 1: whether they're going to come into the space and more on,
Speaker 1: how can we actually make the best products, because this
Speaker 1: is all we do, and we're experts at it, and
Speaker 1: we're very very very good at being able to scale
Speaker 1: that when it comes to our production facilities, when it
Speaker 1: comes to our equipment, when it comes to our culinary authority,
Speaker 1: and really create restaurant quality experiences on an individual basis
Speaker 1: in every person's home. So just go, I think that's
Speaker 1: focus and that that Yeah, that's that's really the most
Speaker 1: important to me. So just like fifty seconds, so it
Speaker 1: sounds like you're not looking over your shoulder at Amazon.
Speaker 1: Is that safe to say? I'm not looking over my
Speaker 1: shoulder at all. I think it's more important that the
Speaker 1: customer wants me looking forward and figuring out how to
Speaker 1: develop better and better products. And again, you know, as
Speaker 1: we see demand increased, folks from new customers coming in
Speaker 1: as well as from existing customers who are buying more
Speaker 1: and more of the product, they're seeing the value in
Speaker 1: the product and they're seeing that that quality comes through. Well, Linda,
Speaker 1: I gotta say, we know you're busy, and we really
Speaker 1: do appreciate um you carving out again a nice tunk
Speaker 1: of time for us to just catch up on what
Speaker 1: you're up to and the business. Linda Koslowski, she is
Speaker 1: president and CEO of Blue Apron, joining us on the
Speaker 1: phone in New York,