Interview with GoPuff co-founder Rafael Ilishayev on why the startup acquired BevMo, breaking into the California market, responding to drivers’ demands, more (Sam Dean/Los Angeles Times)

You’re probably familiar with BevMo from its legendary $1 billion acquisition by grocery chain Whole Foods in 2008. But did you know that BevMo was once California’s #1 liquor seller? Or that it once owned an entire floor at Safeway’s downtown San Francisco location? This former top liquor retailer, which closed its doors in 2017, offers a unique glimpse into retailing in the 1990s and 2000s. BevMo’s co-founder and CEO Rafael Ilishayev took time to discuss his experience breaking into a notoriously competitive industry, surviving the Great Recession, and his hopes for the future of online retailing.

What is the vision for GoPuff co-founder Rafael Ilishayev?

The vision for GoPuff, the company Rafael Ilishayev co-founded and runs, is to make the world’s most delicious food taste even better when inhaled through its unique product line. Ilishayev came up with the idea for the GoPuff while sitting around a kitchen table with his wife, Elizaveta, a talented pastry chef. Ilishayev co-founded GoPuff after a decade of selling for some of the top brands in the world, including Unilever, Kellogg, Procter & Gamble, and Coca-Cola. He’s been in the industry for over 20 years. While at Kellogg, Ilishayev was head of marketing for some of the biggest brands of cereal and food, like Cheerios and Frosted Flakes. Now he’s an entrepreneur in the ecommerce space, helping small and medium-sized businesses build their online presence through an easy-to-use platform that connects buyers and sellers.

Why did GoPuff co-founder Rafael Ilishayev acquire BevMo?

BevMo was always a niche business with little to no presence in the mainstream market, so when Ilishayev, who previously founded GoPuff, purchased it for $10M in 2011, he knew he needed to position himself to be seen as a mainstream brand. His strategy was to acquire a successful, established, mainstream brand that would enable him to gain mainstream recognition quickly.

 How did GoPuff break into the California market?

In 2008, GoPuff launched its first product, an all-natural vaporizer cartridge, with the help of a $3,000 investment from angel investors and some advice from friends. “The only reason why we made it was because people said ‘Hey, this is awesome, you should sell it,'” recalls founder and CEO, David Voss. They took the advice and sold over 100,000 cartridges over four years until they were ready to expand. By 2012, GoPuff had raised $30 million and opened its first brick-and-mortar store in Santa Monica, Calif.

 What are two main factors made the acquisition of BevMo so successful for GoPuff?

Two main factors made the acquisition of BevMo so successful for GoPuff. First, the startup had already gained traction and established a loyal following among the target audience. Second, GoPuff positioned itself as the first major player in a highly lucrative, underserved market that would bring significant revenue growth to the startup. It’s a strategy that GoPuff has been using to acquire new markets. This model could be a game changer for many startups, especially those operating in mature, high-growth industries.

Conclusion

Ilishayev said that the company decided to acquire BevMo after seeing the success other chains were having with the acquisition. BevMo had acquired a few different companies and was known for providing its customers with a unique selection of wine. Ilishayev added that the acquisition gave GoPuff a good platform to provide the same service to Californians. The acquisition also helped GoPuff expand into new markets they didn’t have before.

FaQs

1. What is the story behind GoPuff?

GoPuff is a mobile app that allows you to find local businesses around you. We started GoPuff In 2012, we raised $1 million in seed funding; in 2013, we raised $5 million in Series A funding from Sequoia Capital.

2. Why did you decide to acquire BevMo?

BevMo was founded in 2007 by two friends who wanted to create a marketplace for beer and wine. They spent years developing their business but struggled to get their product in front of consumers. They found getting their products in grocery stores challenging because they were too expensive.

3. How do you respond to drivers’ demands?

We are constantly listening to our customers and responding to their needs.

4. What’s your strategy for entering the California market?

We will be focusing on providing a superior product and service experience to our customers.