Steve Avery was always into food, but after moving to Israel from his native Canada in 2003, it became a central part of his home life with his wife, Tal, and their kids. Tal began mastering the baking of sourdough breads and pastries, while Steve grilled, roasted, and sauteed his way through cookbooks and cooked internationally inspired culinary dishes for his family and friends. Outside of the kitchen, he became addicted to story-driven food documentaries, like Anthony Bourdain’s Parts Unknown29, and the cinematic Netflix original series, Chef’s Table which introduced Steve to the story, history, and foods of some of the world’s greatest chefs.
A perpetual student, Steve always enjoyed learning from the very best minds, which is why when MasterClass released their first cooking class with Gordon Ramsay,31 Steve was excited to learn home cooking skills directly from this world-famous chef. However, the experience didn’t live up to his expectations, as it lacked the depth, story, and perspective he desired, and only amounted to a generic experience. It was 2018, and Steve was coming off of a previous exit when he started to think about what he wanted to dedicate this next chapter in life to be.32 He was driven to create a venture with positive impact and a massive global footprint; it was clear to him that his passion lay at the intersection of cooking, education, and storytelling.
It was, characterically, while cooking for his own 40th birthday party for friends, that he had the eureka moment. What he had been looking for, and what he felt was missing in the world, was a centralized resource for cooking education taught by the very best, most impactful chefs, who would each share their unique perspective, a lifetime of knowledge, and an inspiring journey. Together, these chefs would create the world’s first dedicated platform and premium experience for home cooking. YesChef was out to build a new type of company that combined technology, user experience, and video content, and would therefore have to pave its own way.
When Steve talks about fundraising, he’s both pragmatic and forward-thinking. Working towards a fictional world domination, he describes the breakdown of his vision and the buildup to his fundraising story. Once he had a high-level idea of what the product experience would look like, he defined a fundamental set of four questions designed to stress-test the concept, prove market interest (from both the chefs and the consumer), and validate YesChef’s ability to execute against this vision. Steve describes a tactic called the “5 Whys”, which he uses to help get to the core of things, while being blatantly honest with himself.33 This simple problem-solving method forces you to ask yourself a cascading set of “why?” questions in order to identify the root source of a given problem or challenge, and analyze and eliminate issues that can cause predictable failure. This is one of the methods Steve used to devise his four fundamental questions:
1. Could YesChef recruit the best chefs in the world to teach on their platform?
2. Would people want to take the classes?
3. Could YesChef produce Hollywood-grade educational content?
4. Would all of the math work (e.g. is CAC <Price to Customer)?
Being a lone wolf in this endeavor came at a price. Steve describes taking on YesChef as a sole founder, which he did not do out of a romantic sense of self determination, yet his inability to find partners would not be an obstacle in his pursuit of building YesChef. In fact, there is little he romanticizes about startup life all together. The long hours and energy required to all be together. The long hours and energy required to get a business off the ground, let alone become profitable, is a tough journey allon its own. “I'm the sole founder. I don't say that boastfully, it's made everything much more difficult and slow,” said Steve. “It has taken us a lot longer to get to where we are today than it would have had I had two or three other co-founders.”
At the same time, Steve knew his lack of experience in content creation would be a major roadblock. He found salvation in an old friend he grew up with in Toronto, Karen Shaw, a seasoned producer of feature films and documentaries. At first, Karen just gave advice, from talent recruiting to production needs and operational challenges. But by 2019, Karen had joined YesChef full-time, taking on a pseudo co-founder role as Head of Productions. While many people had advised Steve to lower his expectations and seek out tier-2 talent (individuals who were skilled but not globally recognized), Steve knew this wasn’t the play for his vision – it had to be tier-1 chefs in order for the business to differentiate itself in the market and deliver 10x the value to its subscribers. “The internet is literally flooded with amateur, user-generated content (UGC), and ad-supported content. The greatest chefs did not have their own platform, and consumers were tired of this crappy, exhausting online cooking experience,” said Steve. Top-tier talent and high production value are both expensive, but would also serve as key parts of the company’s DNA, lending themselves to everything from fundraising to growing the subscriber base.
Steve and Karen started by creating a ‘sizzle’ (a short video typically used by production studios to help develop concepts for shows and movies, or basically an MVP34 for videos). They did so by repurposing footage from Netflix’s Chef’s Table35 to create a 90-second ‘sizzle’ trailer to express the concept of YesChef to investors and chefs.
It was at this stage that Steve was also able to secure $150,000 dollars in angel funding from friends and family, which enabled him to produce the sizzle, and begin traveling to meet with chefs at events around the world. With the sizzle in one hand and a presentation in the other, Steve succeeded in recruiting his first handful of world-renowned chefs – Jose Andres, Edward Lee, and Nancy Silverton – and began garnering interest from a handful of others.
The following hypothesis lies at the root of the YesChef value proposition: consumers want to take deep-dive classes by world-renowned chefs. While his research uncovered a massive market for food shows and e-learning with MasterClass and Netflix as comparable and contemporary references, it also revealed that over 100 million people around the world considered themselves to be “home chefs”, defined by the overall investment they had in food and cooking. These home chefs would be the early-adopter market that YesChef needed to build its business. However, as YesChef was out to do something totally new in this market, it needed to demonstrate that people wanted to pay for such an experience, and so Steve set out using a combination of research, surveys, and user testing, albeit with a ‘hacker’ mentality and guerrilla techniques. Looking for investment for a B2C startup in Israel is challenging enough, but adding to that a food focus and expensive video content, Steve knew that it would be nearly impossible to raise from local venture capital funds, especially as a Canadian native who didn’t have army connections or a lifelong network in Israel beyond his Zell network.36
The most realistic way to secure funding that he had identified would be to show actual proof that people were ready to pay to subscribe to YesChef.
Running Facebook ads, Steve drove traffic to two experiments: an early signup form for YesChef, and a mock website (which shall remain nameless) to mimic what an actual site might look like, offering the intended value proposition to the user and testing people's propensity to pay sight unseen. Over 6,000 people pre-registered, more than half of whom completed a 15-minute questionnaire. Steve also managed to successfully take consumers through a conversion funnel to the point of payment, however, after ‘submitting’ their credit card info they received an error message. No data was ever really saved or sent, but it provided the proof Steve needed to be able to demonstrate that people were, in fact, ready to pay $180 per year for an unlimited subscription to an ever-growing library of classes by the world’s greatest chefs. With these various indicators of early product-market-fit and strong consumer signals, Steve had proven that people actually wanted YesChef.
In February 2019, Steve closed the first SAFE37 totalling $1.3 million dollars from 2 UK-based funds, Founders Factory and Brighteye Ventures, as well as from several international angel investors, who not only believed in the concept, but also appreciated cooking and had quickly understood the market opportunity.38 He avoided using his energy on investors that didn’t see YesChef’s potential early-on, comparing the conversations to pushing a rock uphill. “Any investor that I had to try to prove the idea to didn't ultimately invest,” said Steve. “It was all of the people who were like ‘Oh, why doesn't this exist yet?’ who got it, and invested.”
When asked about why this much money was needed at a pre-seed stage, Steve answered, “We needed our initial funding in order to go out and answer our four questions. It was the minimum amount of money we needed to prove our thesis and get us to the next milestone.”
With the money in the bank, YesChef became real. Steve moved out of his home office and into a WeWork office, recruited core employees who would be assigned to build the digital platform, and together with Karen, began planning the production of their pilot class in June with Chef Edward Lee in his hometown of Louisville, Kentucky.
When they began, they explored the various options for making the productions come to life, including budget, manpower, and highly-skilled operations and execution. They first spoke with many established production studios, from multinational conglomerates to boutique houses, but were basically laughed out of every room. “We actually had extensive talks with some great production studios, including the one behind my primary inspiration, Chef’s Table, but everyone thought we were crazy,” said Steve. “No one believed we could create 5 hours of content with each chef for our budget, which was something like 5¢ to Netflix’s $1 per minute of run-time.”
In other words, Steve believed they could produce high-quality, cinematic content at a 20x lower cost. Adopting this approach, Karen used her experience as an on-the-ground producer to form a crew of professionals to produce the pilot with Chef Lee, which consisted of over 15 people on the ground, and 7 days of shooting on location in Kentucky. Steve, Karen, and most of the team flew in and produced their first class on budget, at the quality they sought, and with more than 5 hours of final video to show for it.
This perhaps underlines a fundamental belief Steve has that the devil is in the details. Through lessons learned in his previous startup experiences, especially at Hola, where Steve was part of the core team that led the company to a $200 million dollars exit, Steve believes that getting to success is based on a culmination of many small moving parts that need to be orchestrated to deliver real value. “In order to get a startup to succeed, you need to understand things to their core and focus on the bits and bites,” said Steve. “It’s not the glamorous image of entrepreneurship that is often portrayed, it’s the unsexy things that ultimately create value.”
Steve believes startups usually have the chance to run up to three “experiments”, where typically the first two might fail while the third one works. Steve’s love for Excel aided him in building the business model, which combines a multitude of assumptions, calculations, and guesstimates. But in fact, Steve recommends a much simpler approach when trying to tackle new problems: use the back of a napkin. “The back-of-the-napkin approach will get you about 95 percent of the way there,” said Steve. “If it doesn't work on the napkin, then it definitely won't work in the Excel spreadsheet, and you risk being overly optimistic with your assumptions.”
Did the business model work, both on the napkin, and in real life? The final key to answer this question, and to obtain the conviction Steve needed, lay in getting real people to pay real money for YesChef. In December of 2019, YesChef.me began selling subscriptions to the platform under the guise of a “Pre-launch,” offering the concept and value proposition with a truly minimal landing page, which showed off the three chefs and concept art for the platform itself, but little else. YesChef succeeded in driving over $35,000 dollars in sales in two weeks, selling both annual and lifetime subscriptions, which averaged about $180 dollars in revenue per user. The start of the conversion funnel had taken shape, and even though the platform would only go live in a private beta version in February of 2020, it proved that the cost of acquiring a new user (CAC) was lower than the net revenue, even at this very early stage where most subscribers were coming through a paid Facebook channel.
Steve put all of the math together – the subscription model, the production costs, the marketing spend, and the product, development, and operating costs – into an extensive Excel spreadsheet with a 3-year outlook. These metrics were key drivers of pursuing YesChef in full gear, producing another 1.5 classes (Chef Nancy Silverton, and part one of Chef Dario Cecchini), and focusing its marketing and product efforts. And what do you know? The math checked out.
Steve laid out enough data to prove that YesChef could tackle the next phase, and that he and the team had enough persistence and ingenuity to execute. Steve updated his pitch deck and went out to raise another round, closing a second SAFE of $1.5 million dollars in May of 2020 from current investors and the addition of AltaIR Capital.39
“We have had a ton of challenges along the way, and like any good startup, it’s a rollercoaster of emotions, but being able to answer our core questions gave us the focus to do the most important things first: use our limited resources to prove that this was a startup that had high-growth potential, and the ability to become a ‘unicorn,’” said Steve. “In other words, it gave me the confidence and evidence needed to pursue my dreams, recruit our chefs, team, and investors, and deliver the product experience I have dreamed about for 3 years now.”
In 2020, YesChef sold more than $1 million dollars in subscriptions to nearly 10,000 subscribers from 80 different countries, and has 4 classes live on the platform, offering over 20 hours of content. At the time of this writing, YesChef has exclusive contracts with 13 internationally-renowned chefs, including Nancy Silverton, Edward Lee, Dario Cecchini, and Erez Komarovsky, and more coming in 2021 with Chefs Sean Brock, Kwame Onwuachi, Chris Bianco, Virgilio Martinez & Pia Leon, Nina Compton, Francis Mallmann, Narda Lepes, and Asma Khan. YesChef has a distributed team with headquarters in Israel, and employs more than 25 people. The company has gone on to raise over $3.2 million dollars to date, and is now fundraising for a large equity round.40
1. What are the 5 Whys and how did Steve use them to his advantage?
2. What are the benefits and challenges of being a sole founder? How did Steve compensate?
3. Who were YesChef’s early-adopters? Why were they the most suitable target for YesChef’s go-to-market strategy?
4. Why did Steve think it would be nearly impossible for him to raise from local venture capital funds? How did he validate the concept?
5. What is the benefit of back-of-the-napkin math according to Steve? When is the right time to build a financial model in Excel?