Chad Munroe

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Chad Munroe (Founder & CEO of Jupiter)

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Guest Profile:

Interview Guest: Chad Munroe (Twitter: @CHMunroe)

Role: Co-founder & CEO of Jupiter

Previous: Product at SpaceX and Pratt & WhitneyStanford GSB

Quick Note: Yash led this interview!

Yash’s favorite quotes from the interview:

  • On the mission of Jupiter: “First, from a consumer perspective, we want to get to the point where you can onboard with Jupiter and in a matter of minutes, never have to think about your groceries again. And second, from a supply chain perspective, automated grocery means that we have extremely accurate demand data in terms of understanding what people need week to week. Scaling that up to a city level has a massive impact, both from a supply chain and sustainability perspective. I think that this will have to be kind of the way food distribution systems work in the future, and so, we're just building that.”
  • On the grocery market: “Grocery is a very big market. If you take a step back and think about who's in this market, the major players are not really like Instacart. Instacart is a big online player, but Kroger is even bigger. People who have space in cities across the country are the biggest players - Kroger, Aldi, Trader Joes, and Whole Foods come to mind.”
  • On raising capital as a Black founder: “Raising capital is very hard, regardless of who you are. A professor of mine at GSB told me that investors either optimize for greed or for risk. Meeting with investors, I can usually tell where the conversation is going by the questions they ask. Usually, they tend to optimize for greed when they've seen repeated patterns of success. When they see, for example, a white male dropout from Stanford, their needle swings to greed very quickly. But, how many black founders do you know that started a tech company, took it public, and raised billions of dollars? Obviously, there are institutional reasons for that, but it ends up becoming a cycle. If no Black founders are given the opportunities they deserve, no one has any successes.”
  • On changing the mentality of investors: “I don't expect VCs to just suddenly change their psychology and start giving founders of color a lot of money. But, I think there will be a generation where there are enough successful founders of colors such that investing in them is not seen as a risk.”

Key: CM (Chad Munroe); YG (Yash Gaitonde)

YG: Chad, thanks for coming on The Takeoff. To start, what is Jupiter?

CM: I don't like saying "the first'' anything to be honest, but I would describe Jupiter as the first automated grocer. When I say automated grocer, I mean automating the staples that people normally buy, automating the process of people getting tired of products and getting rid of them and automating the process of determining what recipes you're going to cook and what ingredients are part of those recipes — What do you have that's in your home that could make a certain recipe? What we're focused on is end to end, how can we build our product such that we can do two things. First, from a consumer perspective, we want to get to the point where you can onboard with Jupiter and in a matter of minutes, never have to think about your groceries again. And second, from a supply chain perspective, automated grocery means that we have extremely accurate demand data in terms of understanding what people need week to week. Scaling that up to a city level has a massive impact, both from a supply chain and sustainability perspective. I think that this will have to be kind of the way food distribution systems work in the future, and so, we're just building that.

YG: You kind of went into this, but how does your model differ from, say, Instacart and some of the other grocery delivery companies?

CM: Grocery is a very big market. If you take a step back and think about who is in this market, the major players are not really companies like Instacart. Instacart is a big online player, but Kroger is even bigger. People who have space in cities across the country are the biggest players: Kroger, Aldi, Trader Joes, and Whole Foods come to mind. When I think about how we differ from other grocers, I think in the context of physical retailers and online players. Purely speaking about the physical players, I think the physical players are still a better product than the online player in many ways. What we're trying to do is get the shopping experience to the point where if there's a Trader Joe's next door, people would still use Jupiter. Specifically how we're different from the physical player is that we only have one warehouse in a city where a physical player will have at least five or six. They'll have more capital expenditure than we do on their balance sheet, and we will waste a lot less because we have better demand data than any physical player.We're trying to make Jupiter an experience like going to the grocery store; it should be fun and delightful. Right now, we're building a social shopping experience inside of Jupiter that will essentially match the fun experience of the in-person grocery store at similar prices. If you're trying to win in the grocery market, and the mass market, your prices cannot be like Instacart prices. They have to be at most like Whole Foods, which people consider as premium. When it comes to online players, you tend to break down grocery into four pillars of grocery: price, selection, quality, and convenience. Good products do one thing exceptionally well. Great products do two things exceptionally well. In the current space, you have Instacart, which does selection exceptionally well, and can get to you in under an hour, which is very convenient. So, they do two things really well. Their prices are high as a result. You have other players like Good Eggs, where their primary thing is quality and freshness and their prices are kind of high because of that. You also have companies that fall into the low-cost end of the spectrum, like Imperfect Foods and Misfits Market. Their thing is that you get produce and other products at a very cheap price. Jupiter lies in the intersection of extremely high convenience and good prices. Those are the two things we will do exceptionally well. We want to change the way people think about convenience. Today it's, "How quickly can I get to you tomorrow?" We think it's going to be, "How can I make it so that you don't even have to think about products at all, they just show up." We feel that as long as we can do that at a good price, that will have a place in the market.

YG: Can you walk us through the history of Jupiter? How did you meet your co-founders, and what was your experience like going through Y Combinator?

CM: The story of Jupiter is kind of a weird one. I come from the aerospace industry. What I wanted to do was found aerospace companies. But then, you know, you realize that you can't really launch an aerospace company that easily because the capital required to do that is just so large.And so, I was looking for another field to get into, and I landed on logistics. I started at Stanford GSB in Fall 2017 with the objective of starting a company in heavy industry logistics. I immediately started looking for people in my class who I thought appreciated the space and who could also be good partners to work with. Anna (our CMO) was the first person I found. Anna was a part of the early team that launched Amazon Marketplace in Spain. She had a lot of marketplace experience and was also very familiar with fulfillment and operations. We actually launched a company our first year at GSB. It was a cross-border company where we realized that consumers in smaller countries are paying three times more than consumers in the most expensive cities in the US for the same products. We wanted to create a cross-border business where the inventory risk stayed in the US economy and after products were purchased, they were moved to the country, which would reduce the ultimate cost. We spent a year trying to build that business, and we eventually came up with the idea for Jupiter, which at first was enabling same-day delivery for B2C companies using people's homes as supplements. And so, Anna and I then partnered with Anuraag (our COO), who had worked at a logistics company in India called Ecom Express. He joined their team very early on and scaled across the country, so he was very familiar with package delivery and last-mile delivery in general. He was the best person in our class for that. We eventually asked him to join the team. And then I randomly met Will (our CTO) in a class. I showed up late, he showed up late, and we got assigned to the group that shows up late. The project we were given was a logistics project, and I enjoyed working with Will. He was very talented, very smart, and humble. I invited him to meet with us to see how the interaction would be, and we all loved it. We asked him to join the team, and we applied to YC and got in.YC was a very interesting place. After we got accepted, there was a dinner night and the founders of Airbnb were telling their story. We were all just sitting there like, how could we be that? How could we build something that is meaningful and that lasts in the community? We all lived together during YC, and it was a whirlwind. We were in a rapid ideation phase, where we were running three businesses at the same time. Anuraag would be delivering coffee because that was the only brand that we got. And so, we were delivering coffee to different places in the city, to people's offices and stuff like that. We realized quickly that same-day delivery was not going to work for direct consumer brands. Eventually, we pivoted to focus on the consumer and not be commoditized, because almost all of the big logistics providers tend to be pushed down on costs and we didn't want to do that. So, we essentially switched to, let's focus on a consumer. We tried everything for the consumer from handling their returns to holding onto packages while they're on vacation. We were just giving everyone a P.O. box which they could ship their things to. And so, we would come by every week and give them their packages. This worked because people got packages stolen in San Francisco. But, the problem with packages was that we didn't really know how to target someone who had a package problem. We talked to someone who ran a similar business and they said the CAC never worked out. But, we found something interesting: people wanted us to put their packages in their homes when they weren't there. That was where the initial idea for Jupiter came from, which was replenishing and restocking the products in your home using in-home delivery.We did that all the way until COVID hit. All of our members would just set up a grocery list, and we would come by and restock their groceries. All they needed to do was approve the list.

Jupiter’s logo.

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YG: What happened when COVID hit?

CM: A lot of people would probably think that COVID would help every company in the grocery space, but it was actually kind of a negative for us. When COVID hit, two things happened. One, everyone was home all the time so they didn't need in-home delivery. And, second, going inside peoples’ homes was problematic from a public health perspective.We quickly had to withdraw our team and were forced to be a product that was undifferentiated in the market. We did see a spike in growth but it wasn't as strong as it could have been. We had to pivot [again]. We had to quickly shift our supply chain to source from wholesalers, which improved our unit economics significantly. We then spent a month or two just developing a second component of our product, which is the automation that we built inside of Jupiter. This essentially goes back to that point that exceptional companies do two things incredibly well. Without in-home delivery, we were trying to predict what people wanted without having the information from inside the home, so we developed ways to get that information in a low friction way.

YG: With regards to your pre-COVID business model, how did you get customers comfortable with the idea of someone coming into their home when they weren't there?

CM: It's a provocative thing. I agree. The way that we came up with this idea was by meeting with young, dual-income families. Those kinds of households are already used to having help around the house like nannies and cooks, so the big thing that we needed to prove was, okay, our service is going to be just like a nanny, except we’re responsible for food in the home. To get our customers to trust our service like they would trust a nanny, we made sure to background-check every delivery employee, and we made sure the same employees delivered to the same house week-to-week.

YG: As you mentioned, you worked in aerospace before Jupiter. Where do you think the future of the aerospace industry is headed?

CM: I don't think anyone really thinks about the aerospace industry. It's kind of going on in the backdrop of everything. There are a few $50+ billion dollar companies like Raytheon and Northrop, and all they try to do is balance out risk. They’re constantly balancing their portfolio of projects and revenue between commercial and military. A lot of the players in military are still doing fine today, because even though there's a pandemic, their contracts were approved before the pandemic. Their businesses are relatively safe because the US spends more than anyone else on the military, and unless there's a big shift in military spending, these companies are going to be fine for a very long time.These companies tend to be century long companies. The reason they'll be around for a very long time is because there isn't really a venture model that supports creating competition for them. And what I mean by that is that if you were to start a new Northrop or a new Lockheed, you would need $100M to start with. But now you have people that are coming into the industry via self-funding, like Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin, so I think that we’re starting to see a lot of software billionaires increase their appetite, in terms of the companies they want to fund and maybe take a shot at a new Lockheed or something like that. But I think that’s still very, very, very far off. The space industry looks really bright, but the aircraft industry is not looking so bright, given the lack of commercial travel with COVID and how travel is changing. I think we may see a real rebound, but I think it'll take a few years before anything gets back to where it was. It’s hard to see people investing in anything new. With that said, I have a friend who's also building a commercial supersonic aircraft. The thing with building a new aircraft is that it's a long-term project, so it’ll take 10 years and the industry will rebound by the time that company gets to maturity. Military aerospace will remain the same as long as that military spending remains where it is, and it's hard for me to see that the US reduces its military spending, given the rise of China and other foreign adversaries. And so, it's hard for me to see the US reducing military spending, regardless of the president.

YG: So for companies like Boom Supersonic, do you think they are going to remain independent, or do you think their future is being acquired by Boeing or another big player in the space?

CM: If they aren’t going to be acquired, I think they need to raise another billion dollars. Given the current climate, I think they need that money within the next two years; though the next two years don't really look good for commercial travel. So, I think they’ll be in a position where either they close up shop, they get acquired, or they find a billion dollars somehow for the money to keep going.Don't get me wrong. The work they’re doing is incredible, but the climate is not good enough to warrant an investment in a new aircraft. There are also many questions when it comes to acquisition, because, who would acquire them? I don't think Delta or Southwest, because they are not buying / leasing new aircraft. Maybe Boeing takes a long term bet, but it will be a strange thing on the public market, because the market and aircraft industry are going down. Maybe I'm wrong, but I would bet that it’s a very precarious time. That being said, I think the US government is also trying to build a supersonic jet, so maybe that's a way.

YG: I know you're originally from Jamaica. I'm curious to learn more about your path to the US.

CM: I grew up in Montego Bay, a very sunny small town with a lot of beaches. I loved it there because you knew everyone. But growing up, my mom always lived in the US, and she would travel back to visit.Me moving to the US was like a surprise actually. My mom was going through the immigration process, but I didn't really know when it was going to happen or not. At the time, I was playing cricket at a high level. I was on a trajectory to at least make the national U-19 team, but then at 15, I was visiting the US and my mom was like, "Hey, you know, you're not going back."Moving to the US was not a massive, exciting thing for me because I couldn't pursue a career in cricket. I ended up attending one of the worst high schools in the country. That's how school works in the US. Even if you're really smart, if you live in a low-income community, you have to go to the local school, which limits upward mobility. Some people call this institutional racism, because you funnel people into a certain position using things like redlining. I was in some of the best schools in Jamaica and within one year of moving to the US, I was at the top of the class, without trying. I'm not saying that to brag, but I feel that I should have had the opportunity to go to a great school in the US, but I had to go to an underfunded high school due to the way that the US education system is structured.My high school had a 60% dropout rate. That’s already high and those that did graduate didn’t get to go to the best colleges. Those that went to college had to work during college to support themselves. A lot of that was true for me, too. I had to work while I was in college, but I luckily had a nice job as a software developer because someone took a chance on me.

YG: Going off what you said regarding institutional racism, when it comes to tech, I’m sure you know that Black founders receive an incredibly small percentage of total fundraising dollars. With Jupiter, you were able to raise from some of the most prominent VC firms in the country. Do you have any advice for other Black founders looking to raise?

CM: Raising capital is very hard, regardless of who you are. A professor of mine at GSB told me that investors either optimize for greed or for risk. Meeting with investors, I can usually tell where the conversation is going by the questions they ask.Usually, they tend to optimize for greed when they've seen repeated patterns of success. When they see, for example, a white male dropout from Stanford, their needle swings to greed very quickly. But, how many black founders do you know that started a tech company, took it public, and raised billions of dollars? Obviously, there are institutional reasons for that, but it ends up becoming a cycle. If no Black founders are given the opportunities they deserve, no one has any successes. As a founder of color walking into the room, I don't feel very confident that the probability that they're going to optimize for greed is pretty high, to be honest. When I started, my default was that I wouldn’t get funded, given this bias for greed. My thought process was that if I had the best team in the world, then they wouldn't care about me, they would only care about the team. Instead of asking them to invest in me as a founder of color, I was asking them to invest in my team. My team just has so much talent — you're investing in a woman founder, an international founder, and a diverse team. That was one of the main reasons we got into YC — they liked our team. It also had a big impact on our seed round, where we raised from two past GSB founders. When it comes to Pete Flint (GP at NFX) and Evan Moore (Partner at Khosla Ventures), I love that I got funded by them. I feel very respected as an entrepreneur.For me, being a Black founder was not going to prevent me from raising money. The data proves it’s harder, but I was going to find a way. And so, my advice to founders is to find a way. If you're building something that you believe in, there's always a way, even though it's hard and oftentimes not fair.The other thing is to figure out what you could do to get good signaling. YC is very unbiased and an incredible signal. At Jupiter, we tried things like applying to YC, and I was also fortunate to attend Stanford. Stanford added positive signaling for me, personally, but also gave me the opportunity to recruit other smart people.I'm not by any means telling people to go take on $200,000 in loans so you can recruit a team. But, if you're in a place like Google or an early-stage company that's relatively well known, all those things add credibility and add positive signaling that will help your case. I don't expect VCs to just suddenly change their psychology and start giving founders of color a lot of money. But, I think there will be a generation where there are enough successful founders of colors such that investing in them is not seen as a risk.

We hope you enjoyed the interview with Chad. We certainly learned a lot and hope you did too :)

You can find Chad on Twitter @CHMunroe.

Moderator: Yash Gaitonde (Software Engineer at Jupiter. On leave from the University of Michigan)

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