Bloom & Wild has 20% YoY growth: Aron Gelbard, Co-founder and CEO

0:00Aron Gelbard:Hello and welcome back to the Scaling Europe show. I'm Seb Johnson. I'm here with Aron, the co-founder and CEO of Bloom and Wild. How are you doing today Aron? I'm good, thanks. How are you Seb? Very good. How's business? Business is good. We've had a really good last few months. Started to really re-accelerate our revenue growth. Lots of new initiatives, which I'm sure we'll get on to. amazing and look blooming wild has said a super interesting story you've been around for over a decade now and you had this amazing explosion of growth during uh covid can you just take me can you just take me on a bit of a journey of like the business from where it was today where it was to where it is today sure so i started bloom and wild 13 years ago now uh really with a joy with a goal of making uh sending and receiving flowers the joy that it should be still working hard at that now expanded that mission to be not just about flowers but about gifts more broadly.

0:57In the early days, I thought that if we could really build out an amazing supply chain, much shorter than what the industry was doing, less waste, getting flowers to people more quickly at low cost, build proprietary technology that nobody in the industry was doing specifically for the purposes of our industry, and build a consumer brand that people genuinely love, people's favorite flower brand by a long way is Google, then we can build something special. And we did lots of things differently, including coming up with the notion of delivery through people's letterboxes, which we're still known for to this day.

1:33And a lot of that has really sort of been a constant as we've grown. We've also obsessed with customer feedback since day one, and I personally obsess over this. This is something that was sort of drilled into me. And growing up, I cared very much about earning praise from people and getting good reactions for what I did. And in my early jobs, and it was something that I wanted to bring into building an emotive business like a flower and gifting business. In our first seven years, we grew revenue to about 50 million pounds, having raised about 25 million to get there. and only spent about half of that.

2:14Business was close to break even. We were extremely fortunate in the first year of COVID. Our business tripled year on year in that first year, attracted loads of investor interest, raised over£100 million from some brilliant investors, including General Catalyst and Index at that time, and used that money to make two strategic acquisitions, a business in the Netherlands named Blumann and one in France named Bergamart. And that was really our pre-enduring COVID journey. Post-COVID, a number of things became more challenging. A lot of customers that we acquired when physical flower stores were closed and when people couldn't go and visit their loved ones reverted to either not buying flowers for their loved ones or buying them offline.

3:04And costs started to inflate. We had to put our prices up. not all of our customers stuck with us with those higher prices that we were forced to charge and we had this very strong shift to focus on profit because the fundraising environment also meaningfully changed and so we went through a short period of contraction as a business but have now returned to growth business growing around 20 percent year on year now we've been profitable for three years so we're in a exciting phase and i think there's still a enormous opportunity to go after and that's really our focus going forward amazing can i just touch on

3:44Aron Gelbard:one of the first things that you said because i think this is particularly interesting about the blooming world business model i guess is that you are a very consumer focused brand oriented uh company in general you know that you mentioned you obsess over customer kind of feedback and you had this amazing brand but at the same time you also had to build this like innovative supply chain engine that was much better than anything that existed at the time which is absolutely in many ways not customer focusing at all people don't even know that it exists how did you balance the two of those things it's like really building the engine of this like amazing business while also then building that this really snazzy loved customer focusing brand you're very kind to compliment us on both uh you can't do everything yourself as a founder and even in the early days, I started the business with my co-founder, Ben Stanway.

4:33He's now gone on to be the founder of Moneybox. And we divided and conquered. And he did a lot of the early development of the supply chain side. And I did a lot of the early development of the consumer and marketing tech customer service side. So even in those very early days, we divided and conquered. I then hired an amazing COO named Phil Burton, who's worked at a number of great scale-ups here in the UK. And he was with me for eight years, from 2015 to 2023. And a lot of the scaling of that supply side was done under his leadership, including the acquisition of Blumon, which gave us a physical supply base in the Netherlands, which is really important in our category.

5:18It's really the global hub of the flower industry. and the reason why we made the acquisition of Blumon was partly to enter the Netherlands and Belgium markets and strengthen our fast grain position in Germany but also heavily to really strengthen our muscle on the supply chain side sourcing relationships with hundreds of growers technology to manage those growers at scale technology to run a highly automated UK production process in our own fulfillment centers around Europe. And those were areas where we'd made less progress versus some of the consumer facing technology during our days when it was just blooming wild.

6:01So I think this has been one of the benefits of growing not only organically, but also through acquisitions for us is that we've been able to not only enter new markets through acquisition, but also bring on board new capabilities that are definitely part of where we are today.

6:20Aron Gelbard:Got it. Okay. And, you know, you touched on the transition from, you know, the sort of growth at all cost mentality that kind of existed 2020, 2021, as more VC money was being pumped into startups than we'd ever seen before, to this sort of like post 2021 era where it was, you have to achieve profitability. How did you find that transition as a CEO. That was the most challenging period of the 13 years that I've done this. And there've been many challenging periods. It's challenging at the beginning when you're trying to do everything yourself as well for different reasons. But as I mentioned, I care very much about earning great feedback, not least from my team.

6:58And so having to stand up in front of my team and say that we were changing our focus as a company and worst of all, that that was going to mean that not everybody was going to be able to carry on working with us anymore was a message that I found it really difficult to deliver and found it something that I hoped I would never have to do. But it was also absolutely the right thing to do. And it meant that we took the business to profitability and secured our company's future and was actually, even from a team perspective, the right thing to for the vast majority of people who we're able to keep on and for whom we've created great careers and actually more growth opportunity and a slightly sort of, I guess, like less dense organization than we'd been before.

7:50But certainly really challenging. I'd also started this business because I wanted to grow a business and had always been motivated by growth. So going into this period where actually we needed to temporarily forego growth in order to achieve profitability came very unnaturally both to me and to many of the leaders I'd hired around me and to the team at large but people understood the reasons they also looked around them they spoke to their friends and other companies and they realized that we were by no means unique and actually companies that were burying their heads in the sand and not focusing on profitability were the ones that were really running into trouble and so i think people understood that while i was making a difficult decision it was also a responsible leadership and that gave me um yeah a lot of strength as i as i understood that better and i think ultimately enabled us to come after a much stronger business than we were going into that period that's great to hear and you know i was

8:47Aron Gelbard:working in an early stage startup at the time and it you know everybody it was a brutal time for everybody across the tech ecosystem i'm i'm curious to hear did you learn anything about specifically like resilience going through that i mean that must have been such a hard thing to go through as as a founder of company to have to kind of go through that process of yeah i know announcing it to the team making those decisions and as you say it's the most challenging moment i guess in the history of the company for you anyway is there anything that you felt like you'd learn about founder resilience throughout that process yeah a couple of things i think firstly um it's not great for you as a founder it's much worse for people who um don't have a job from one day to the next and seeing some of the um you know maturity and uh good nature with which some of these folks responded and i you know i made sure to engage with every single person impacted personally um there were a range of responses but many people were really um incredible and i i learned a lot from some of these people and i was very motivated to help them in many cases was able to help them figure out what was next and we we actually announced uh redundancies in 2022 the day before what was intended to be the day of our summer party and we obviously with the redundancies announced the postponement of the party.

10:12It didn't make sense to do it then. And we said that we do it in the early autumn instead. So a couple of months later, and we invited back everybody who we'd had to say goodbye to. And almost everybody came. And the response was amazing. And just seeing people, you know, who processed this difficult news that we'd had to give them and still weren't felt the sense of connection to our business and wanted to spend time with their former colleagues and, you know, were really open with me about where they were, but, you know, not angry. And it was really very inspiring. So that was one thing. I think the second thing is, because I'm very driven by earning positive feedback, both from our customers, but also from my employees, doing something that I feared was going to result in negative feedback was something that I found difficult to face into.

11:12However, the fact that I think I delivered the message in a sort of authentic, humble and vulnerable way actually earned me positive feedback that I didn't expect to receive from my team. And because my expectations had been so low, I realized that actually they'd maybe been a bit too learned sometimes people understand things a little bit more than you think they're going to understand things and that's made me more confident going into other difficult conversations I've had since then because I've learned to fear them

11:45Aron Gelbard:less than I feared this one yeah and that makes sense and I want to touch on how the business is performing today so you said you're returning to growth 20 % year over year you've been profitable for a number of years now can you show anything about how this year has been how it looked how those kind of results look like yeah yeah so as i said 20 percent uh year on year over the course of this year financial year started in april so we're now sort of two-thirds of the way pardon me through that year there have really been three drivers of that growth the first one is that our core uk uh online flower gifting business has continued to perform really strongly we're gaining significant market share from competitors.

12:25A really important pillar of that is our loyalty scheme, Bloom and World Rewards, which has well over a million members now. We've also rolled it out into many of our other countries, which I'll come on to. And it's resulting in customers sticking with us more, increasing their frequency of placing orders, and that's really driving high quality growth. We also grow our business virally. So half our new customers discover us by initially being a recipient of our product, having a great experience and going on to become a customer. And so we've been doubling down on trying to drive that viral growth and that's been super effective as well.

13:05On top of that core business, we've got two main drivers of new growth. The first one is international. So Bloom and Wild is now present in eight countries, some of which we've expanded into organically, some through acquisition. and our goal is to replicate the success of our UK flower gifting business where we're the market leader in our other seven European markets where we're present and we're making strong progress on that especially in Germany which is the largest market opportunity and it's a market where we've really doubled down and seeing great results and growth well ahead of the growth rate we're seeing in the UK.

13:40The other major opportunity and we we touched on this already a little earlier is to replicate the success we've seen in UK flower gifting and many other gifting categories and the overall gifting market is between 10 to 15 times the size of the flower gifting market depending on what data you look at and if we can really go from being the destination that people trust for sending somebody a flower gift to the destination that people trust for caring from afar more broadly regardless of who the recipient is or what the occasion is then there's the opportunity to build a business that's both much larger but also plays a much more useful role in our customers lives and we've seen really strong results here growth is around 100 year on year in this part of the business customer feedback is actually even more positive than it is on the flower side I think some of the fewer perishability considerations certainly help us here.

14:41And it's an important aspect in us meeting our net zero commitment. So we seek to reduce our carbon footprint by 50 % per delivery from 2021 baseline to 2030. And diversifying from flowers into other gifting categories, which in many cases have a lower footprint per delivery, has also helped us stay on track for that goal now that we're sort of halfway through the period. So lots of positives.

15:09Aron Gelbard:Amazing. I actually bought my two daughters, one each of your mini Christmas trees. Thank you for doing that. They love them. They absolutely love them. It's like, I don't know, there's something nice about having an individual Christmas tree that they can like decorate themselves. If I talk to them with the kids, they're great to hear that. Oh, are they? Yeah, I mean, that makes sense. They absolutely love them. And then, you know, given the business is growing and you're kind of diversifying both geographically and then your product mix, everything seems like it's going well. How are you thinking about the future of the business?

15:39Aron Gelbard:You know, are you looking at a potential IPO one day? Are you thinking actually that's too far away at the moment, which is focused on becoming a stable, profitable business? How does that look? Yeah, so I wouldn't rule it out, but certainly not our plans either. We have a very long way to go. So we look to really build out other gifts at scale. We really want to replicate our success from the UK and other markets at scale. And that will be our focus over the coming years. And so while we are growing and profitable, we think there's an opportunity to accelerate growth, reach materially greater scale, serve many more customers and further increase margin and therefore financial stability, which in turn opens up new opportunities.

16:23I don't have any desire to sort of sell the business myself or go on to do something else. I love what I do and I think that there's the opportunity to do it for many more years. So personally excited about that. Whether at some point it will make sense for the business to transition to the public markets rather than fully be earned by private investors. The time may come where that's the right thing to do, but it's not something that we're working on now or soon. I think there's still a long way to go.

16:52Aron Gelbard:Amazing. I always want to get on to sort of e-commerce and AI more generally. you know you've built an incredibly successful e-commerce platform like company very much loved by users and consumers but i also wanted to talk about ai you know like are you how are you viewing or using ai at all in your business all the time every day and we have a a very strong focus here it's all over our okrs we are we have high expectations that everybody in our team is using AI multiple times a month, at least in many cases, multiple times a week or multiple times a day, it depends a little bit on the role. And we would really classify AI into a few types of use cases.

17:37So there's sort of the evolution and strengthening of what was previously sort of considered data science or machine learning. And that's for some of our proprietary work where we have got algorithmic processes and this does things for our customers like show different customers different products in a different order or send different marketing messages to different customers based on data that they've shared with us in the past and how we can therefore be most relevant to them. So for me that's a continuation of some of our proprietary work and we've really been able to accelerate here. What I think is new and where we've really leaned in as of many other companies is to be able to work more efficiently and this meant that we've been able to either do more with the same resources or reallocate to invest in areas of greater growth or greater opportunity and like many businesses we've invested heavily in our customer delight function for example where a significant percentage of our customer queries are now handled by our AI tools, which is good from a cost perspective, but actually good from a customer perspective as well, which means that we can respond much more quickly.

18:51In a time sense to business like ours, that's really valuable because often a customer's ordering for the next day. So if they contact us by email and our inbox is a little busy, we may not get to their email until after cutoff. If we've got an AI tool that's both triaging responses and then responding to the most urgent ones and trying to reach a resolution, then we actually achieve better outcomes as well. So for me, that's a good example of it not just being a cost opportunity, but also a customer service or customer proposition improvement opportunity. We're also using AI in areas like marketing and creative, for example.

19:27We recently have launched standalone greetings cards which you can send as well which is a new category for us and that's meant a significantly bigger range the the breadth of range we have in our greetings cards category is much bigger than enough loud category and it's therefore meant that we've needed to develop new processes for product creation product uploading management of skews that are much greater um volume than we've been able to do in the past and we've deployed ai um heavily to make that possible so uh many things that we're doing already also in internal functions like HR, finance, legal, ops, all sorts of areas.

20:03But also conscious that we're just getting started and that AI as a technology also has got a lot further to go. So really setting very clear expectations. So we expect everybody to be leaning in here and we're constantly looking for further opportunity. And I think every e-commerce company, to be honest, every company needs to be thinking in this way as well, because it will be what customers and also investors come to expect.

20:30Aron Gelbard:Amazing. It seems like you're really putting AI front and center of your business. Have you got any sort of like tips or advice for other consumer focused businesses to either get AI implemented in their business, but also get it adopted by the wider team? Yeah. So I think the first thing is don't just view AI as a cost saving opportunity. I think it can be a cost saving opportunity. But if you come at it from a view of not just how can I save money, but actually how can I do things that I wouldn't be able to do otherwise because they'd take too long or we don't have the resource and therefore I wouldn't be able to improve the customer proposition the same way.

21:03That's probably where the bigger opportunity is. And so I would encourage folks to do both. I think it's important on the cost side, make sure that you're tracking results. I think it's often easy to sort of qualitatively say where you're using AI. And I've really pushed my leadership team and wanted to demonstrate to our board what the financial impact of our AI tools has been. I think it's important to keep yourself honest on that front. In terms of ramp up, I think building into things like OKRs really helps. Well, I think investing in training has been important too. In our case, we found that external training has been not always fully met our requirements.

21:44And so we've really invested in a group of internal AI evangelists, given them the budget to really ramp up. These have been folks that have been really keen to sort of like explore and tinker with AI tools anyway. And then have those people really sort of spread their tentacles around our organization and teach their peers how to do new things so that over time, our collective experience level and therefore adoption rate and impact grows, but still a lot more to do on that front.

22:11Aron Gelbard:Amazing. That sounds like a really interesting approach, like empower a small group of individuals to sort of lead that charge and become the experts themselves um well one final question you know if you were to build bloom and wild today given the change in tooling the change in market dynamics what would you do differently yep two things so firstly i think we could have uh come at the flower and gifting opportunity uh rather than starting more narrowly on flowers uh earlier on in our journey in hindsight it's uh the customer's mission isn't to send somebody flowers, it's to express an emotion to somebody that they care about through the means of a physical item.

22:49And I think if we'd focused more widely on that earlier in our journey, we could have both accelerated faster, but also been more useful to our customers. I think the second one, we've talked about technology and AI, we leaned in heavily here in comparison to our peers. And I think that's been a source of competitive advantage. But I I think we could have done even more and gone faster and dedicated more resources to differentiation through technology. It's ultimately through that that we're creating a lot of our value as a business. So we have invested more significantly in later years here, but I would have dedicated more resource to our technology and differentiation there sooner.

23:33Aron Gelbard:Got it. Well, look, Aaron, thank you so much for joining me. I think what you've built is phenomenal. I'm a big fan myself and it's great to have the time to chat with you. Thanks very much for having me, Seb. Really appreciate it. No worries at all. All right, let's stay in touch.