How to Build a Complex Hardware Business by Starting Simple with David Rabie of Tovala

Courtland Allen 8s

What's up, everyone? This is Courtland from IndieHackers.com and you're listening to the Indie Hackers podcast. On this show I talk to the founders of profitable Internet businesses and try to get a sense of what it's like to be in their shoes.

How did they get to where they are today? How do they make decisions both at their companies and other personal lives and what exactly makes their businesses tick today? I'm talking to David Rabie the founder of Tovala. David welcome to the show and thanks for joining.

David Rabie 30s

Thanks for having me Courtland.

Courtland Allen 31s

So Tovala is a very interesting business because it's essentially three companies in one - you manufacture and sell a physical product. You prepare and sell food and you also build the software or the mobile apps really that power everything and glue it together. Can explain little bit more about how all of this works.

David Rabie 48s

Yeah. So the complexity of our business is really what makes the product so unique once it gets in customers hands, but essentially we've got a hardware team that has built and designed to manufacture for the countertop steam oven.

We've got a software team that has figured out the software to power the device the mobile apps that help you control it and figure out what you want to cook all the backends that powers everything and then obviously the website and all that to sell the products and then there's a culinary team that designs all of the recipes for the meals that are designed to be cooked in the product.

So they do the R&D to come up with the dishes and then they work with our production team in our kitchens to actually make those meals at scale every week and then ship them out to people's doorsteps. So there's a lot of moving pieces that all have to work in harmony so that the end product is as good as it is.

Courtland Allen 1m 36s

Yeah, I think it's not an understatement to call that complex and it seems it'd be super challenging to run a business this complex. Why did you just start decide to start a business that's really three or four businesses all under one roof when you could have started with something simple?

David Rabie 1m 51s

Yeah, I'm probably a little nuts and I think a lot of people that I talk to in the early days said as much that, they're oh this is a really cool idea seems incredibly hard and challenging but as I looked at the landscape of food options I was just trying to have something really delicious, healthy and convenient for dinner.

I felt that every option required some sort of compromise. So, food meal kits, for example, I still have to do all of the prep and all of the cooking and then clean a bunch of dishes and yes the food was healthy.

Maybe it was tasty if I did my job right but not super convenient. If I wanted to buy frozen food, cool. Not that fresh clearly and mostly not that healthy or tasty. If I go pick up from outside, I don't really know what’s in my food anyway, on and on as I looked through all these options.

I felt I wasn't exactly sure what I was looking for. And the more I thought about it. I realized well to build this perfect solution if you will - we're going to have to do everything from sourcing the ingredients to cooking them perfectly. And the only way to ensure quality was to actually control every link in that chain from the sourcing all the way real to the cleanup.

Courtland Allen 2m 56s

Yeah, that's fascinating because I mean obviously it's worked out pretty well in the end. You guys have over 50 employees. I was watching some reviews on YouTube of the Tovala oven and all of them were glowing.

People really like it but in the very beginning, when you're trying to start this business and you're realizing you have to do all these different things and people are telling you you're crazy - where do you get the confidence to push forward and actually continue working on this?

What told you that this was such a good idea that it was going to work despite the naysayers and despite the obvious challenges?

David Rabie 3m 24s

Yeah, I guess it's hard to remember most feelings when I first started but I'd say a couple things. I think first to me there was clearly a pain point in a huge opportunity and if you fast-forward 10 years from now 15 years from now the kitchen is going to look and operate fundamentally differently than it does today.

And it's one of the few areas in our lives that really hasn't changed that much but there's no doubt in my mind that automation is coming to the home and specifically to the kitchen. And so I knew we were on trend.

That was kind of the overarching reason and secondarily I'd say that I never looked too far ahead and I was fortunate to have a team that felt the same way. We really just took it one challenge at a time.

So we had this big vision the knew where we wanted to end up but it can be incredibly intimidating if you're constantly thinking about what is this product actually look at scale. How do we get there?

That's terrifying as opposed to what's just the next hurdle we have to clear and then the next hurdle that we have to clear just to survive. And if you do that enough and you build enough momentum and you do that over the course of a year or two, eventually you'll have a business.

Courtland Allen 4m 29s

So where did you learn that because that's not something that most people starting their first business would know. Had you started businesses before or did you done research into businesses or were you just sort of, luckily getting things, right?

David Rabie 4m 42s

Yeah, I know. I had started a company before that was not super successful. It was a mobile app and it really started as a passion project did not start as a business but got a fair amount of traction and I ended up trying to build it into something and I certainly learned a ton of lessons there.

But I'd say, probably where I learned this was at some point between the age of. Five and thirty I've known my whole life that I wanted to start my own business and my father's an entrepreneur and really this is the only thing I've ever wanted to do.

And so, I've been reading books and talking to people that have started their own companies and kind of try and absorb as much about this as possible my entire life and I'm sure this is one of those things where I had confidence in myself, my team and our business that it just drove us to just keep on executing and we would knowing that eventually we would get there.

Courtland Allen 5m 33s

Yeah, let's dive into that. Let's dive into the history of five year-old David Rabie why did you always want to start a business? Was it just, matter of emulating your father. I was there some sort of Ideal or some sort of outcome that you always envisioned for yourself?

David Rabie 5m 48s

Wow. You're getting really deep on me. It's a funny thing. So my parents are both immigrants and my dad would tell me growing up that he never had a choice when he was in his mid to late twenties as to what to do with his life there weren't all these opportunities for immigrants.

He'd gone to college but he wasn't hitting know how to recruit for companies or Corporate America and really the only path for him was to start a real-estate company because he had a couple family members in that space. It was blessing and a curse that I had all of these options growing up, but I guess having grown up in that environment and other family members having done the same thing and started their own companies.

It was really the only thing I aspired to do. And I guess it was seeded by family more than anyone else and that that was all I really imagined doing and so when I was an undergrad and my first jobs out of undergrad in my mind that we're all training to start my own business and I was always keeping my eyes open.

I kept this document think from when I was 16 of business lessons that I wanted to implement one day when I had my own company and by the time we started Tovala it was 30-40 pages long of different ideas that kind of gathered over time.

Courtland Allen 7m 0s

So I take it the mobile app company that you started before Tavola was one of the ideas in this this idea notebook. What's the story there? And why did that company fail?

David Rabie 7m 10s

So I'll be a little more sharp, the ideas that I was tracking were more about how to run and operate businesses and what to do with the company and much less about the actual ideas.

So things that I would implement when we started growing, how I would think about hiring incentives I would put in place and management ideas as I read books that I thought had good lessons.

I would drop them in there and it's separate document with business ideas that I wanted to start but that one was was much shorter to me. It's I've always been more allured by just the idea of building and scaling a company

Courtland Allen 7m 41s

Are there any ideas and that book that are particularly salient that you find yourself going back to over and over again?

David Rabie 7m 49s

I have an open that document in a couple years, but I'm sure I do actually remember opening it at some point in the last couple of years and realizing that a lot of those ideas we have implemented here at Tovala and none of these are revolutionary their ideas that other companies have executed successfully.

I think from the beginning my co-founder and I have been very disciplined and very focused on building a really strong culture here and being deliberate about those kinds of things instead of just letting the culture evolve on its own letting hiring evolve on its own lighting planning process evolve on its own. Those are things we've tried to be very thoughtful about how we want to execute.

Courtland Allen 8m 27s

It's interesting because I think probably just the process of having that idea notebook, the process of reading the books and the papers that you're reading and encountering those good ideas changed sort of the landscape of business in your mind to the point where even without having to open up that idea notebook and read about the specific, bullet points that you would write you probably were influenced to do those things regardless.

David Rabie 8m 48s

I think that's right. I think a lot of those are just things I've learned and are now ingrained in how I think and it's not just business books. I've read dozens of books on social psychology.

I recently - actually someone to helped me realize this - but I've read a ton of books on sports and coaching and teamwork within sports and I think there's a ton of lessons to be learned by successful coaches and how they manage and build their teams that is really relevant to companies.

Courtland Allen 9m 15s

So let's get into this mobile app company. What's the story there? Why did you start that business?

David Rabie 9m 20s

Sure. So the company was called Draftpedia and my roommate and I know were huge basketball fans still are not to the same degree and we'd often find ourselves talking about, where players went to college when they got drafted from and who they got traded for - all that kind of the talk you would have while you're watching the game.

This was 2011-2012. If you were to search for that information on your phone, the experience was pretty clunky if you want to get your answers quickly. And so we thought huh? Maybe there's an opportunity here to build an app.

That's just kind of a sports encyclopedia. And I also thought how this will be really good experience. I'll learn a lot. I've really only worked in food. This will be an interesting segue into tech to kind of learn how that world operates and we spent I don't know six or seven months building up the app and we did some of the work ourselves.

We hired a developer and designer to do some of the work themselves. We outsourced some of the data scraping and it was really good learning on, every piece of a business even though it was very early stage and we were doing this on the side.

We had other jobs at the time and then we launched and we did what we thought was a large marketing campaign with almost no money, but we got a lot of traction that tens of thousands of downloads, a lot of press covered us and at the time I had actually gotten into business school and was planning to move to Chicago to get my MBA.

I decided to spend the summer leading up to business school working on this company and thinking about raising money thinking about ways we can monetize. And so it ended up being amazing learning for me and really good insight into the world of tech and definitely has influenced what we're doing today, and I'm sure played some factor in me ending up coming up with an idea that's as much technology as it is food.

Courtland Allen 11m 8s

What advice would you have for other people who are in your situation who aren't technical themselves who don't know how to code but are really excited about building a mobile app or building a website because that's sort of a scary transition to make. How did you navigate that?

David Rabie 11m 22s

Yeah, if I could have done it over again, I probably would have tried to teach myself how to code and what I did teach myself was the very basics of scraping data which it was cool but ultimately we had to rely on someone else to develop the app and that was I was really interesting learning for me.

We hired the wrong person initially. They really didn't do a good job. It was a good lesson that we're not in a good spot to really judge people for technical work, not really knowing anything and we got really lucky with the next person we hired that they were able to work really well with us and we have learned kind of painful lessons on how to articulate what we're looking for and so very early on with the current company that I have I did everything I could to find a technical co-founder because they knew how essential it was and it was something that was sorely lacking building Draftpedia.

Courtland Allen 12m 14s

It's funny how those painful lessons that you learn by starting a business and having things go wrong and having things break and unexpected ways carry over with you to your future businesses and you don't end up repeating those exact same mistakes, even though you might have read about them, in advance there's really nothing living through it to make it really hit home.

David Rabie 12m 33s

And yeah I was going to say my co-founder and I have had a lot of those shared lessons independently. And so I think it made things a lot easier when we were first starting to work together, we got along immediately and had a lot of shared values but also a lot of shared lessons and so, it was to your point much easier for us to to know to avoid them because we experience them firsthand.

Courtland Allen 12m 57s

So what did the end look for Draftpedia? Why did you stop working on it?

David Rabie 13m 2s

Yeah, so I decided to go to business school. I got into business school moved to Chicago kept on working on it for a couple months while I was starting my MBA and it actually was a blessing in disguise because it gave me an excuse to meet a lot of people in Chicago that were in and around entrepreneurship here in a way that would have been really difficult if I didn't have this business.

Then after 3 months I took a step back and realized hey. I went to business school to start a food company. That was what my essays were about. That was my goal graduate and start my own company that was going to be sustainable and something really big and this was not that idea.

This idea had started as a small passion project and because it had some legs I decided to keep working on it, but it wasn't what I had moved to Chicago to spend two years on and so I had a conversation with my co-founder at the time it was still had his other job we decided to kill it and it wasn't super painful. I think it was clearly the right decision. Maybe we'd waited a few months too long. But in a way it was a relief it's okay. This was a nice chapter. A great Learning lesson for us but time to move on to do the next thing

Courtland Allen 14m 6s

Why food? you mentioned that you had worked with food and that sort of the thing that you came to business school for was to build a sustainable business involving food. Why was that your area of focus?

David Rabie 14m 18s

Yeah. So when I was 18 years old, I went on this health retreat with my Dad and it was really just a father-son bonding thing right before I was going to start college and it's this place in California called the Ashram and you hike for 5 days, you eat all vegetarian food, you do yoga and by the end of this week of exercise and yoga and great food and mental detox away from technology.

You feel so incredible. And when I did it at 18, it was the first time I was here consciously thinking about the food I was eating, exercise and how it was making me feel I was making me think and how positive those effects were on me and looking back it completely changed my life and it set me on this path of obsession with healthy eating, not in a bad way, but I devour tons of books on it.

I tried all these different diets and slowly became a core part of who I am. And I ended up spending most of my career after undergrad in the food industry and it's probably what I'm most passionate about. I was just in a meeting at the office and I had made a bowl of fruit for myself left in the conference room came back and they were all joking that it was so obvious that that was for me.

Because that's just how I eat. And like I said, it's become a core part of who I am and that's why I wanted to start a company in the food space to kind of try to take a lot of those lessons and help a lot of people eat better in a much easier way than they are today because I think it can make a huge difference in people's lives.

Courtland Allen 15m 45s

That's awesome because you have somebody vectors pointing in the same direction where it's not only what you care the most about and the most excited about but you also know the most about it and you're also want to influence and teach others the most about this and so. Yeah, why not - why would you start a business in any other area?

David Rabie 16m 0s

Right? Yeah. I'm very fortunate. I count my blessings every morning.

Courtland Allen 16m 4s

So what's the first step look when you decide? Okay, I'm no longer doing this basketball app. I'm going to start a business where my heart lies in food. What do you do after that?

David Rabie 16m 13s

Yeah, I think what I ended up doing was just . I tried to come up with a bunch of ideas and I think I started experimenting and trying a lot of different products that were out there and looking a lot at a lot of different startups to see kind of where was the new thing, I had this idea for had a couple of vending machine ideas initially.

And so I did some research there to see what kind of automation was there in vending machines. Why hadn't vending machines taken off in America the way they have an Asia and then moved away from that and the idea for Tovala came about when I was cooking for myself. And I said, I tried a lot of these other services out there and had recognized there was a gap and one day I was making food for the week. It was a Sunday.

And I was using five different appliances at once and I had this one appliance that was a steamer basket that had three different levels on it and each level you were supposed to be able to cook something different. And as I was using that and these other appliances, well, I was just thinking why is there not one product where I could put in all these different ingredients that have different cooking requirements so grains, vegetables, proteins, different starches and just push a button and have it just cook.

That was the first moment of “oh that would actually be really cool if that existed”. Then I started to sketch out what would this actually look like, started to talk to some people to ask “am I crazy or would this actually be pretty cool?” and then the next step was if you could you actually build something like this.

Slowly the idea kind of snowballed from there - from just an appliance to okay, well that doesn't solve the whole problem of well, you got to figure out what you want to eat, then you gotta buy the ingredients, then you gotta prep them. And yes, the cooking is part of that but it's not the only part of the process and so I started to think okay, maybe we build the whole food side as well. And that was kind of the beginning.

Courtland Allen 18m 0s

Yeah, again we're back to this massive complexity issue where you're trying to solve almost every problem we can and doing that you encounter other problems that you decide your business going to solve those too.

What's interesting about that is that a lot of people's businesses die because they're too complex, because they're too ambitious. It’s just hard to get off the ground - the founders will get discouraged and quit before they ever find any level of success. Why didn't that happen to you with Tovala?

David Rabie 18m 23s

Yeah, I guess we were fortunate so we won a business plan competition at my business school and some other, fairly well known companies had won in the past - Braintree, GrubHub, Simple Mills. It gave us some external validation for the idea and at that point it was myself, some classmates in Business School and a couple of interns and that was really it and all of my classmates went on to other jobs. And so there wasn't much of a team there yet. And we had a prototype that didn't really work that well it worked just okay, but I think that was the first point of oh, okay. I just won this competition we got some press I got a little money - now there's some pressure on me to actually go and do this and if I don't, I’m going to let a bunch of people down and there's pretty high expectations of companies that win this competition to actually go build really successful businesses.

So I'd say that was number one and then number two once Brian joined and then Peter our first engineer joined - we just took it in steps. It was okay, let's figure out the right tool to use right. Maybe it's an oven. Maybe it's a pressure cooker. Maybe it's a panini press who knows but what is the tool we're going to use to automate, okay? And how can we show people that you can scan a QR code? Because that's the mechanism we decided on scan a QR code put in raw ingredients and they'll come out really well and just doing that alone.

Yes, it's complex. But very very simple relative to building a whole business where those are shipping across the country and menu changes and everything that exists today. And so we were able to demonstrate that and that was enough to get a bunch of investors excited get us into Y Combinator and to get the flywheel moving a little bit. Then from there, we took the next step of okay, we built this one prototype. Some people like it. We think it's really cool. Let's go build another 20. Put them in a bunch of homes and see what people say and just get feedback and the we didn't have a chef on staff. Our team was five people. We were making the meals ourselves in our kitchen. We essentially set up a production line for the ovens so we could build all these prototypes.

We turned our garage into this production center in a way, we put the ovens in homes, bring them back, fix them up and put them back in homes. We deliver the meals we did interview people so it was extremely scrappy - really in an effort just to learn, get feedback and make sure we were making something people wanted before we even thought about scaling to anything like what we have today.

Courtland Allen 20m 48s

There's a lot of subtle stuff in there that I think would be easy for someone who hasn't started a business to just sort of gloss over not really appreciate and I think one of the big things here is that you weren't afraid to take really small bites off of this very large fish that you had.

You knew you wanted to build this appliance that would help automate kitchens into the future, but you weren't afraid to start with really tiny prototypes and to see how far you could get with just that prototype.

You didn't really need to build the entire business, immediately and I think that's a big difference between businesses yours that might be extremely complex and yet you survived in the early days and other businesses that might even be simpler than yours, but the founders could overwhelmed because they try to do too much too fast.

David Rabie 21m 27s

Yeah, I think just thinking about your value prop and what is what is the minimum viable version of that is actually really important and really difficult and even what we ended up shipping into homes was our version of an MVP and for us it was pretty clearly defined.

We knew our ovens: a) had to work, b) they had to work consistently c) the food had to taste really good.

Nothing else mattered. And now the business has so many more bells and whistles and there's so much more you can do with it but at day zero we knew that if those three things were true and we could execute on that. We would have enough momentum to keep building and if any of those were false our business would fail and so it is one of the reasons why we were able to build it with not that many people very short amount of time because we had this very clearly articulated MVP and it was a clear sprint to get there. And everybody was given a ton of autonomy and a ton of ownership over large portions of this company to just go and execute and build it.

Courtland Allen 22m 32s

One of the challenges that a lot of people struggle with a lot of will hear this advice to build a minimum viable product to not try to do too much too fast, but it's emotionally very difficult to do that. You're putting your name on this business. You're building something that's far less ambitious and less, impressive not as high-quality as you would to have. And so people resist that feeling and they don't launch early enough. How did you resist that feeling? And how did you feel about this very first version of Tovala that people are putting inside their homes.

David Rabie 23m 1s

We were very conscious of it. So I think Brian and I were both intellectually honest enough to say we want to get to market as quick as possible. We know what the MVP of the product looks like. We know we're going to have to make hard decisions on things we want in the product, but are just going to take too much time too much money.

And we had a lot of those hard conversations of hey, we know this part of the product is not fine we have to ship it and we have to get feedback and we just learned very quickly and iterated.

I think we had to do a lot of not a lot but we had to do some coaching of our team because we have a lot of people here that are perfectionist and they want to build amazing perfect things, which is great but we end up building in a way you have to train them out of that mindset and help them understand that perfect is what you want to ultimately strive for but if you strive for too much perfect in a start-up you'll die before you ever ship anything and it's a difficult thing to learn.

Courtland Allen 23m 59s

So I don't know very much about hardware businesses. In fact, you might be the first person I've had on the podcast who's actually shipping a physical good rather than doing pure software. How common is it in the hardware industry for people to get too ambitious and to build something that's way too big because I imagine it might be even easier to avoid that when you can actually see the limits of what you're building and it's very obvious how expensive it's going to be too.

Were there sort of constraints that were just naturally that crept up? or was it really just discipline that kept you from doing too much too fast?

David Rabie 24m 27s

So the interesting thing is I actually think in hardware it's more common to over engineer/over design and avoid MVP only because it's much harder to iterate. So once you build your product and ship it. It's really hard to make significant changes to it without spending a ton of money. And so there is this fear and this risk that what you end up building is not going to work.

It's not going to be wanted and you're going to be a year away from being able to iterate on it put something new out in the market. And so I think you actually see a lot of other hardware companies do the opposite of trying to build the perfect product. Spending way too much money releasing realizing that they made a bunch of mistakes because it's impossible to know how people are going to react and how what they're going to do with their product until it's out on the market and in that situation, a lot of hardware companies find themselves in trouble.

And so I think it is this hard balance of recognizing “okay, we're going to ship and it's going to be a long time until we can make significant changes to the hardware products” so we have to be comfortable with it. But we also don't want to wait two, three or four years to release a product and get all the feedback that's going to help us, eventually build what we hope is the perfect product.

Courtland Allen 25m 39s

And what were some of those things that you learned from customers by actually putting out this minimum viable Tovala oven in their homes.

David Rabie 25m 47s

The most obvious one ended up fortunately being a software change. We put out the product and the core of our business is these meals so we design these meals we ship them to your doorstep. The menu changes every week. It's under a minute to prep them. You put it in the oven scan a code and the oven cooks it automatically and that's our core business that worked great at day one, but you can also cook your own food in the oven.

It's not only for our meals we have some, chefs that buy the product just to cook their own food, but we did not invest a lot into that. So on the app when we launched there were eight very basic recipes. You could cook a piece of salmon. You could cook some broccoli.

And that was it and immediately we started getting feedback from customers saying hey, I want to be able to do a lot more with the oven. There's only eight recipes on here. There's no community online. There's no steam oven recipes I can find there's only two buttons on the oven itself. All I can do is toast and reheat. I just want more and we ended up spending. I'd say six months redoing the app entirely and adding a whole new set of responsibilities to our culinary team.

Now when you open the app, there's dozens of recipes from breakfast to kids meals. Our chefs are putting out new recipes on the app every two weeks and usage of people cooking their own meals has almost doubled. And we just didn't know we assumed that some point we'll build something that.

But it was so glaring from our customers that hey why don't you guys do this to get real value out of a product we’re putting on our countertops. We need to be able to use it outside of your meals. And so we listened and then we just we want to build.

Courtland Allen 27m 24s

Another interesting part of your story is and talking to people who want to start businesses. One of the things that paralyzes them. The most is the existence of competition people will be very excited to work on an idea and they'll look down to the market and say well, some so-and-so is kind of doing something similar.

So I guess I can't believe work on this but obviously there's less there's many thousands of kitchen appliances and alternative ways to order food or cook food or buy food. Why weren't you worried about the competition? Why are you so confident you could make this work despite the fact that you'd be one of hundreds operating in the space.

David Rabie 27m 56s

Yeah, I think if you looked at the space, there were a lot of companies operating in different parts of what we were doing, but there was almost no one really still isn't today that that was doing all three: that was building appliances, building software and manufacturing and designing food recipes.

So number one, we actually did think what we were doing was pretty unique. That being said since we've launched, there's been a lot of companies dancing around what we're doing and. Fundamentally what I tell our team is it doesn't actually matter the market opportunity is enormous and we know the trends are in our favor.

The kitchen is changing more and more parts of it are going to become automated and where we believe we are incredible operators and executors. And as long as we do our job, we're going to be successful - irrespective of what other companies do.

I think that's the right mentality to have I tell this all the time to folks but ideas are a dime a dozen. I think being able to execute bring them to life operate efficiently and continue to innovate is what separates the successful companies from the unsuccessful companies. I don't tend to think its competitors.

Courtland Allen 29m 1s

Was there a point a specific point you can remember where it became obvious to you that this was something that really was going to work in that people really wanted what you were creating?

David Rabie 29m 11s

I'd say there were there were a lot of different points. The very first one was the first time we made a meal in a steam oven at the scan of a barcode was a skin-on chicken breast with ratatouille and the beauty of a steam oven is that it keeps your food really moist, but you can still broil so you can still get a nice charr. It’s not just that your food turns out moist and with this skin on chicken breast it got the chicken super juicy, but the skin on top was still really crispy. I remember the first time we all took a bite of that our eyes popped out of our heads, we were like “oh my God, this is amazing”. If I can get this to my doorstep and scan a code and eat this three or four or five times a week that's going to be a game changer. That was at the very very early days of do, just our small team plus this firm that we work with the product manufacturing, they were helping us build these early prototypes.

It was a group of seven or eight of us that tried the product and it was amazing. Then I'd say along the way it's been other things like that. Moving forward it's mainly been from our customers but when we see quotes from customers saying we've changed their lives, they've lost so much weight and they want us to succeed so badly. All of these things that are pretty eye-opening give us a lot of confidence that what we're building is ultimately going to be really successful.

Courtland Allen 30m 24s

It's fascinating to hear about how you're actually manufacturing these ovens early early on and I want to dive into the logistics behind how you actually make a company this possible because it's hard enough to build a mobile app. That's pure software. That's pure code. All you need is a computer.

Building an actual appliance that you need to ship across the country and put in someone's house and have a make sure it doesn't blow up or injury anyone and actually works every time seems an order of magnitude more difficult. What was it to actually learn how to do that? and what are some of the first steps you took to actually create the first Tovala oven?

David Rabie 30m 56s

Yeah, so I have to give credit where credit is due and my co-founder and Peter our first engineer did the work on this I helped as much as I could but I'm not an engineer. I don't know how to build things if you will - not at all in the way that they do. I know how to build other things. But again, I think what we understood was that our value prop is this full-service.

It's not this, amazing piece of hardware. We're building. It's not the world's best mobile app. It's not the best recipe we've ever designed. It's the fact that all of these things work in harmony. And so that lens that that gave us at day 0 was okay we're not here to reinvent the oven we're not going to redesign an oven from the ground up. We're not going to build world's most beautiful oven and we're not going to put a touch screen in our oven.

We need an oven that cooks food really well, does it consistently and will survive and pretty early on we realized that steam ovens are a great differentiator. It makes the food come out more moist and more juicy. And so what we did was we went to a bunch of different manufacturers and try to find someone that was making a steam oven that we could work with - instead of doing it from the ground up.

And that was the strategy we employed at the very beginning and what that enabled us to do was get to market much quicker, much cheaper and with a lot lower risk because the group we ended up working with had released product in the market already and it was proven that it works.

And so I think being clear-eyed about your value prop and understanding how expensive it is to build custom tooling, how much time it takes, how much risk there is to build stuff from the ground up instead of working with existing product is really important.

The only other thing I will say is that Brian and I both tend to believe that most hardware if it isn't already it will be commoditized in the world that we live in today. And so innovating on hardware we never thought was a great business idea. And so this model kind of fit neatly with our overall macro view of hardware development.

Courtland Allen 32m 52s

Another interesting thing is that you were in business school while you're working on this and you had this strong history of really being interested in running a business and reading about running a business and having family members would run their own businesses. Were there any other companies whose footsteps you sort of found yourself following that inspired a lot of the things that you did with Tovala or are you sort of charting new territory the entire way?

David Rabie 33m 14s

I would say we're always looking to learn. I don't think there was one specific company. We were emulating there were models. So Keurig is the closest model, I would say at high level for what we've done.

They're pretty big differences in terms of the fact that we're working with fresh raw perishable products as opposed to coffee, but the idea of building a machine, making coffee to go along with it in our case food - at the time, in church first started there wasn't a software layer.

These weren't connected products, but now their products are little more connected I'd say ours are probably, the amount of complexity around the connectivity and the reasons to connect but Keurig has always been an interesting model for us to think about. And then other companies that do pieces of what we're doing, right? So there's tons of companies delivering meals across the country.

There's lessons to be learned there. There's tons of companies building connected appliances a lot of lessons to be learned there. Brian likes to joke that when we face a problem he will go dive into the research to try to find the solution and I will go dive into our network to find three people that have faced that problem to go talk to them and figure out how they solved it and I think the marriage of those two approaches has been really successful for us.

Courtland Allen 34m 26s

Such a useful habit to have because I think the standard way of solving problems is to assume that no one's ever encountered it before and to just try to puzzle through yourself and I think knowing that others have solved these problems before you and that you just need to find the material and really learn from their mistakes and their successes is a tremendous advantage. Another thing I would to talk about is the the funding story behind Tovala because you seem to have had all these different funding events that helped to get the company to the next level whether it was a business plan competition or getting into ycombinator. Let's start at the very beginning. What did you do with the money that you won from the business plan competition and how much money did you win?

David Rabie 35m 5s

We won $70,000 and I didn't do much with it at first, I think I paid some lawyers to do some documents for us and I think file for some initial IP and then kept the money and then once Brian joined and Peter joined shortly thereafter, we started using the money on prototype development and that was money well spent.

And we were able to do a lot with that first $70k and I don't think we were getting paid then. We were paying some people a little bit of money but it allowed us to last through the end of 2015 at which point we had gotten into ycombinator and raised our first pre-seed round of funding to kind of last six or seven months after that.

Courtland Allen 35m 45s

Was there ever a point where you considered just using that money and not raising money from any other investors or from the beginning that you think that you're always going to raise money from investors?

David Rabie 35m 55s

Yeah. Unfortunately, we never really saw a path to bootstrap this or are not raise money from institutions simply because it's such a capital intensive business. Needing to design a hardware product manufacturer a chip across the country pay for that inventory essentially do the same thing on the food side it is just very capital intensive and so there really was no path to doing this business and our minds aside from having to raise money.

Courtland Allen 36m 23s

What's it trying to raise money from investors with this grand vision of what the future is going to look like. When all you have at that point in time is a tiny prototype and a small team?

David Rabie 36m 33s

I would rewind even a little bit I started trying to raise money right after I finished business school and at the time all I had was a team of one, a prototype that barely worked and the validation of having won this competition. Under those circumstances, it was incredibly difficult. The business was to complex. The vision was too ambitious and most investors they want it to wait for more signal. They wanted to wait for other investors who want to wait for me to build a team before taking the leap. That being said, I want to give credit where credit is due there were investors that committed at that stage and one of which is one of the largest institutions that has ended up investing in us in subsequent rounds of funding.

But once Brian joined and then Peter joined and Alex and Adam and we started to round a team together and then we got into ycombinator - all of a sudden there were some early momentum behind what we were doing that gave early investors lot more confidence. That okay cool. They now have a team, that can kind of be scrappy, build things, they got into ycombinator. They have a prototype that actually works and makes food that's not half bad and that was enough for us to raise our first round of funding.

Courtland Allen 37m 40s

I think one of the many unique things about your business is not only that you're doing these physical appliances, but you're also located and the Midwest which is not exactly known for being a tech hub. What kind of effect does that have on your life as a founder in these early days?

David Rabie 37m 55s

Well, it was cold first three or four months that I was working with the guys. I would say big picture and to clarify we actually did a stint in California for ycombinator and then chose to move back to Chicago after that. And the reasons were really threefold. Number one, there's amazing Universities here. There's Northwestern University of Chicago, University of Illinois at DePaul, Columbia College, SAIC, University of Indiana is not far away and we were building and we still are building a very bold and ambitious B2C company.

So our thought was were really going to be unique in this hub in the Midwest and it should give us a leg up as we're recruiting the most talented people that have come out of these Universities and have decided to make the middle of their home and I think that has borne out a hundred percent.

We've recruited what we think is a incredible dynamite team that is also stuck with us. We've been fortunate to keep the vast majority of our team from from the day we started and I think that is one reason, one of those reasons is that we're here in the Midwest.

Another reason is cost just running a business out here cost of living is so much less than it is on the west coast and the bay area it's a lot that affects our runway and then the third one is more practical but actually moving people across the country in a permanent way is not easy.

Especially when you think about it's not just your team, but it's their spouses and if they have kids, it's their kids and at that stage after YC, we just didn't want to deal with it had too much on our plates. we want to build this business. We don't want to worry about relocating people, finding housing, getting new jobs. All that stuff.

Courtland Allen 39m 35s

That's very well thought out when you put it that way it almost seems a tremendous disadvantage to try to build a business in a tech hub.

David Rabie 39m 41s

I think there (and YC tried to convince us to stay) saying well, there's this pattern of hugely successful companies coming out of the Bay Area. There's a halo effect of being here, you're going to be surrounded by like-minded people that will push you and help teach you and guide you and mentor you and there's more investors.

All those things are true. Some of them have you no negatives to them as well. We just at the end of the day thought the pros of staying in Chicago outweighed all of those positives of the Bay area.

Courtland Allen 40m 9s

So I'm sure given all the things that you're working on. You've got to be pretty ruthless at prioritizing what to focus on at any given moment and where to spend most of your resources. Do you have any examples of how you've made these kind of decisions?

David Rabie 40m 22s

I do. So there's a great post by Fred Wilson that says at the end of the day of founder and CEOs job comes down to three things. Number one is set the vision number two is hire great people and number three is don't run out of money. And oftentimes I'll start my day by thinking about that or I'll start my week by thinking about that and think about what is the best use of my time that fits within this framework and that's not to say that I don't dive into specific problems because I do that all the time.

At any one point where I was asking ourselves, what's going to kill us this week was going to kill us this month. How can we help solve that problem, but I'm a big believer in giving people autonomy empowering them making sure they know what the goals are but letting them go do it and figure it out on their own I think people accomplish a lot more under that management style.

And so I'm not super involved in the day-to-day of what a lot of people do but if an employer or teammate at any point asks for help or needs my time, to me that is always time up and will always give them time. But again, and to your point. I am very particular about thinking about how I spend every day.

Courtland Allen 41m 28s

It's interesting to see the sort of interplay behind the first of those two points number one set the vision and number to hire great people and how if you're doing what you do, which is seems you sort of tell people, here's the end goal you figure it out on your own then it's super crucial to actually know what the end goal is. And then what the vision is that everybody's on the same page.

David Rabie 41m 48s

That's right. I think people need to know where you want to end up and you can help them get there, how to hold their hand if they need it, but people need to know what the goal is and I think we've been pretty good about articulating that I think we've gone through periods where the path from here to the end is very foggy and very gray, but I but I think we've been pretty good about setting the the goalposts out for people.

Courtland Allen 42m 11s

So one of the things that a lot of founders struggle the most with is not just building the product but actually getting the word out so that people actually learn about it and start using it. How did you get these first appliances in to people's kitchens and how have your strategies for growing Tovala changed over time?

David Rabie 42m 30s

I guess the first way we did it was through Kickstarter. That's how we got our first base of early adopters and Kickstarter's a great platform for finding early Tech adopters. So for us it was successful. Our success really was because of two things number one. We did a lot of on the groundwork to get the word out get people to beta test the product, collect their emails and and build up some buzz.

It's actually three things. So that was the first one. Number two, we were maniacal about leveraging all of our own personal networks. So I remember the day our Kickstarter campaign went live. We're sitting around our conference room table, which was also our kitchen table. Basically all of us were texting almost every single person we knew we were sending messages on Facebook. We were posting on LinkedIn. We were just asking people to help us share the message send this to people that will like it and help us get over the hump of hitting our goal in the first day.

Then the third piece was press. So we did a pretty wide press tour in New York and the Bay Area and LA before the Kickstarter campaign launched and this wasn't some massive PR firm or anything.

It was us. It was three of us just working our networks. Trying to get in front of journalists that we thought would be interested taking our our one working prototype into these meetings, taking food that we have made into the meetings demonstrating the product for people and just getting them excited about it.

But we got a lot of people to write about us the day our Kickstarter launched and a combination of those three things kind of led to really successful first day allowed us to hit our goal and ultimately translate it into our first several hundred customers about a year later.

Courtland Allen 44m 9s

How have things changed since those days? I imagine you're no longer on Kickstarter. Are you guys still doing Kickstarters?

David Rabie 44m 15s

We're not no. So we only did that one Kickstarter. Today, you can buy the product on our website, on Amazon or in a pop-up shop that we've got in Chicago. Those are really the only three places you can find the product and I would say the ways people find out about us - somewhat similar, somewhere different. One is definitely still word of mouth. So friends and people that own the product they're telling other people about it. It is something that is unique and interesting. So people to talk about it and I mentioned earlier for a lot of people it's made of difference in their lives.

I'd say number two is still press - we have gotten a lot of press. That's kind of evergreen and we still continue to get press and then the third one is our digital channels.

Facebook has been amazing for us in terms of driving awareness and helping educate people and retarget people that have shown interest and then, we've built out email funnels and things that to help slowly convert people that have expressed expressed some interest in our.

Courtland Allen 45m 9s

I think in all these sort of growth and marketing and sales related activities are challenging because they can sap so much time to investigate in a particular channel and then it turns out not to work. Have you guys done anything that didn't end up working?

David Rabie 45m 23s

Definitely. So we work with an agency called Bell Curve. They've been fantastic to work with and a lot of what they did, in our first few months put down was test a huge variety of different digital channels for us and and the goal obviously was to make them all work.

But at the same time we wanted to rule things out and say, Snapchat isn't it for example not to single them out. But Snapchat is not a great channel for us to attract eyeballs that are ultimately going to convert or core or whatever else it is and and each of those took time to validate and there's a lot of assumptions behind that. But yeah, it is it is painful and time-consuming where everybody just wants to see growth and results immediately. But some of these things take a really long time to kind of vet out.

Courtland Allen 46m 11s

What does the future of Tovala look like and what are the milestones that you're anticipating hitting from here on out?

David Rabie 46m 17s

Our goal is to be in every kitchen in America and that might sound overly ambitious and it probably is within the confines of our business today, but we ultimately want to work with other companies to so we hope to sell millions and millions of Tovala ovens but we know that the appliance industry is one that's that's fairly fractured and segmented and so it's actually get huge majority adoption. We're going to have to work with other companies.

That's something we've talked about doing and I'm sure will be part of our future plans. Similarly on the food side if you think about Keurig, it’s an interesting analog they worked with a ton of different brands. So if you buy a Keurig today, you can have Dunkin' Donuts coffee. You can have Starbucks coffee. You can have Green Mountain Coffee on and on.

We want to do something similar for our customers. So today you can buy Tovala meals and get them delivered or you can cook your own food through the app. In a future state we imagine there will be lots of different ways for you to get to Tovala meals and there will be a lot of different food that will cook automatically in the oven and they'll be different ways to get that food as well.

And ultimately our goal is really just to build a product that people use every day and literally cannot live without and I think we made a lot of progress towards that but there's still a lot of room to go.

Courtland Allen 47m 31s

Yeah, I want to get into your mind as a founder and having this this grand vision and yet not being there at this point in time. Do you have a road map in your head of the different things that you have to do in order to get there? And if so, can you share some of that with us?

David Rabie 47m 46s

I do, I do have a roadmap. I don't have a clear idea of exactly when each of those things happen except to know that in, five to ten years. I have an idea of where business needs to be at to be successful and as big as we are hoping and I would say tangibly it really does come down to continuing to build our own food operation and expand and open up more facilities and other parts of the country. And start to add more excuse for people that have different diets and today we only serve dinner but we've always talked about serving lunch and breakfast and dessert and those things will happen over time and similarly getting our food into other places.

So we'd love for people to be able to pick up our food at grocery stores and to get to that point we need a lot of people with our ovens and so it's kind of a chicken or the egg, but at some point that will happen and that all open up a whole new avenue for our customers to get our meals.

And then in terms of working with other food companies, I think it's just a matter of who's the first company we're going to work with. What does it actually look like? How do customers learn about that? What is the product? How do they cook it things that? But eventually we'd love to have tons of different food companies on the platform so that our customers can kind of enjoy a whole bunch of different meals that are cooked automatically.

Courtland Allen 49m 1s

What is life like for you personally? As a founder you mentioned earlier that you'd always sort of wanted to be involved in business and run your own company. Now that you are and you have this this incredibly successful company. Does it feel everything was cracked up to be?

David Rabie 49m 17s

Yeah, I love what I do and I wake up every morning I'm excited to go to work. I love the people that I work with. I count my blessings every day that I've been fortunate to be in this position to start a company this and so many amazing people have decided to join us for this ride.

There's nothing else I'd rather do, it's not to say there aren't lows and there are times when I'm and this is so difficult and so stressful but for the most part it's been an amazing journey and I hope we don't lose the feeling that we have now and kind of the state of our team and the culture we've built. I don't want to lose that because it is so amazing.

I hope and believe that almost everyone that works here with would say the same thing because we've tried to empower people to be a part of building that culture and it's a great thing. I know a lot of people that wake up and they're not excited to go to work and I feel very fortunate that that is the case for me.

Courtland Allen 50m 11s

Is there anything that's been unexpected that you maybe thought it would be trying to business and yet, the reality is very different?

David Rabie 50m 19s

Yeah my God, I'm sure there's a million things. I think one of the things people don't realize is especially in the early days. There's so many logistical, legal and administrative things that you need to do to get a business up and running and it's painful and you don't have money to afford the automated easy solutions and a lot of the stuff you just have to figure out yourself and a big part of being a founder is doing that stuff doing a lot of the dirty grunt work and a lot of that is not fun.

That just needs to get done and similarly I feel I have become an expert in equity in shares and options in the different mechanisms behind how our company raises money all these different aspects of the law that I guess I never really anticipated needing to have such an in-depth knowledge on.

But it's fun, and I would say one of the most fun challenging frustrating but ever you want to call it parts of running a fast growing startup is how quickly things change and how quickly things break and needing to put in the process and learn new things and adapt to continue to grow at the right pace.

I think is one of the defining characteristics of a fast-growing company and we're fortunate to have amazing people that thrive in those environment and are always looking for ways to kind of solve those challenges.

Courtland Allen 51m 43s

So I want to take advantage of the fact that I have you on the podcast someone who's super knowledgeable about hardware and he's built a business in the space. What's your advice for other people to see and who were considering building hardware business? I know you mentioned something earlier about how you believe that all hardware will eventually be commoditized if it isn't already. What do you mean by that as well?

David Rabie 52m 4s

So I think the way Asia in particular has evolved is ideas get copied very quickly. So if you see any stumble on some success domestically or even in other parts of the world, someone will get their hands on your product reverse engineer, it build it for cheaper and sell it and so the way to innovate and differentiate and succeed in the long run is really around customer experience, user experience user interface things of that nature that are not pure hardware.

I'd say the advice I would give to anyone thinking about starting a hardware company is again think about what is your true MVP? what is your true value prop and really really take a step back and think about whether you need a custom piece of hardware to prove that out and I'd say ninety-nine times out of a hundred the answer is going to be know. There's probably something you can buy online or hack together very quickly and cheaply just to prove it very, very, very early market validation and not spend a lot of time or money doing so I think that is the number one thing. I'd advise anyone to do and you can do it if you're a solo founder just trying to pack things together without having to think about what does this look at scale?

How am I going to get all this money to build a big physical product and ship it all across the country. Just think about it. Here we always talk about do things that don't scale. That's definitely applicable when you're thinking about building your first hardware product.

Courtland Allen 53m 30s

Listen David, I think that's great advice. Thank you so much for coming on the show. Can you tell listeners where they can go to learn more about Tovala? and about what you're up to you as well.

David Rabie 53m 39s

Yeah, thank you so much for having me. This is a blast. If you want to learn more about our product, you can just go to our website. It's Tovala.com. That's Tovala and hopefully you'll be interested in a better solution for dinner.

Courtland Allen 53m 54s

All right. Thanks so much, David.

David Rabie [00:53;55] Thank you.

Courtland Allen 53m 56s

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