Oscar: I’d like to welcome to the studio today Zalmi Duchman of the Fresh Diet, welcome.
Zalmi: Thank you, thanks for having me.
Oscar: On behalf of EO South Florida I’d like to congratulate you for earning your ranking in the 2014 team INC., fastest growing, privately held companies in the United States. Congratulations.
Zalmi: Thank you very much.
Oscar: Tell me Zalmi how did you do it and what is the fresh diet?
Zalmi: Sure, the Fresh Diet is the country’s largest fresh meal delivery service. We deliver three meals and two snacks every single day to our customers doorstep. It’s a big undertaking because we have thousands of customers around the country, and they’re getting food from us on a daily basis.
Oscar: That’s fantastic. What made you get into that business?
Zalmi: It was pretty much a fluke that I got into the business. I was working in a real estate company and just saw the concept out there on the internet. Saw that it was being done in Los Angeles, and couldn’t really find anybody here in south Florida that did it. Thought it was a great opportunity back in 2005 and just jumped in without looking back.
Oscar: What is unique about your business?
Zalmi: What’s unique about our business is the fact that we’re delivering product every single day fresh. For example if you see a Nutrisystem or a Jenny Craig, that’s coming in the mail, it’s frozen or shelf stable. Our product is delivered fresh. It’s cooked in the morning and then delivered to the customer’s door step every single day.
Oscar: At some point what triggered you to want to get into the business?
Zalmi: What triggered me to get into the business was the fact that I saw the market for health and lifestyle really taking a turn in the country. We know that obesity was a big problem, and just overall health issues. I saw an opportunity where people were looking for convenience. They were looking for someone really to diet for them because it’s so hard to diet. I saw the opportunity as this is going to be the easiest way for someone to lose weight or continue a healthy lifestyle, so just took advantage of that.
Oscar: I think I might be you’re next customer by the way.
Oscar: What is the ultimate vision for the fresh diet?
Zalmi: The ultimate vision for the fresh diet is to be the leader in healthy lifestyle living. Right now although we stick to the fresh meals delivery we really see ourselves getting into much different product lines like juices, or bars. Really anything in the healthy life style vision.
Oscar: Great. When you were getting ready to launch your business did you build out a detailed business plan?
Zalmi: No I don’t think we wrote a business plan for at least the first three years. I mean there was no market research, I had no background in food, I had no background in diet. It was just saw the opportunity and jumped right in. I mean the market research was done by my customers.
Oscar: Let’s talk about that, do you remember your first customer?
Zalmi: I do.
Oscar: How did you acquire them?
Zalmi: I acquired my first customer by putting in a very, very small Google AdWords budget on Google. I used the keyword “Diet delivery,” and signed three customers that I delivered to on January 1, 2006.
Oscar: Amazing, and now how many customers would you say you have?
Zalmi: On a daily basis we have about five thousand. Overall we’ve probably had a hundred thousand plus.
Oscar: What do you think made you so successful?
Zalmi: I think the Fresh Diet was very successful because we took advantage of the technology that was available to us, and we really used it to allow us to scale and grow very quickly. We built an ERP software system that helped us manage everything from the kitchens, to logistics, customer service, marketing. Really using technology to scale was I think our secret sauce.
Oscar: Do you have a background in technology?
Zalmi: I don’t have a background in technology, I have a little bit of background in web. I brought in a CTO very early on for equity, and that was a key decision.
Oscar: When you launched your business how did you finance the start of the company?
Zalmi: The company was financed purely on cash flow. I started the business on my credit card with $500. I had customers prepay for the food, and I used their money to build the business.
Oscar: Brilliant. Now your company has grown substantially, how have you financed the growth of your company?
Zalmi: The second year we actually got an SBA loan. The SBA loan was to make an acquisition. That was really the first financing that we took, and to get that I had to sign personally, mortgage my condo. It was definitely very stressful, but without that SBA loan I don’t think I’d be here today. Then eventually I did raise capital from an angel investor.
Oscar: Great, great. In your opinion can a company outgrow the abilities of its management team? If so how do you dealt with that?
Zalmi: Yeah it definitely can. I mean high growth is great but it’s usually a very, very big obstacle, and there’s many, many issues that come with it. I think the key to really managing it is having technology in place to help you manage it because without technology I think it gets just overbearing. When you have a company and you’re putting post notes on each thing, and you’re just doing it by hand it’s important to grow, and it’s impossible to manage. Really leveraging technology to help manage it as well is a key to that.
Oscar: Great. Do you have a very creative or unusual sales tactic or strategy that you use to acquire customers?
Zalmi: I don’t think we have any sales tactic. I mean most customers are looking for the product. It’s an expensive product, although clearly you can be saving money by not going out to restaurants, but to pay $35 for food every day is about $1200. Really what is someone spending $1200 a month on, medical insurance, rent. We’re competing with dollars which is tough, so it’s really about I think educating the customer that although it seems like it’s expensive it’s really not and overall you can actually save money by using this.
Oscar: Zalmi what are you most proud of in terms the Fresh Diet?
Zalmi: I would say I’m most proud of the job creating that we have done. We really peaked on our business in 2008, 2009 when the economy was obviously taking a big hit. Just being able to go from nine jobs to about two hundred and fifty jobs in those two years was something that made me feel great. Because giving someone a job is the best form of charity you really can do, and helping people help themselves. I really enjoy seeing people work for us, take home a paycheck, and being able to support their families.
Oscar: Very fantastic. Your company’s growing leaps and bounds, and you’re a very inspiring, dynamic entrepreneur, and I believe in what you’re doing. I’d like to make a one million dollar investment in your company. I’m curious how you would deploy those funds?
Zalmi: If we would take your money, I would deploy the funds by marketing. I mean at the end of the day the hardest part of our business is brand awareness and marketing. We are going up against the big boys of the world like Weight Watchers, Jenny Craig and NutriSystem, and our marketing budget is a drop in the bucket. Most of the funds would be going towards our marketing budget.
Oscar: Okay, fair enough. If I had the power to give you magical powers for just a few minutes and you had the power to go back in time to the very first day when you launched your business up through today. You had the power to reverse any one decision what would you change?
Zalmi: These are tough questions. I would probably change my mindset in the beginning more than anything. Because early on it’s really, really tough starting a business, and the stress that comes with it for the family and just the day to day. I think if I could go back I would tell myself to just change your mindset and really not be so stressed.
Oscar: You have just a little bit of magical power left. If you would look forward five years and tell me how the business climate will change and how that would impact your business?
Zalmi: I think over the next five years the biggest change that we’re going to continue to see is the move to mobile from the web. I think it’s going to affect every business, and our business specifically because ecommerce if a very big part of our business. Most people are signing up online. As the generation changes to more mobile we need to adapt and really make sure that we are on people’s fingertips, and at their fingertips so that they can purchase, pick meals, and do everything that they can on their phone.
Oscar: Great. What one word describes Zalmi as an entrepreneur?
Oscar: In your opinion are entrepreneur born or are they made?
Zalmi: I think it’s a combination of both. I think that an entrepreneur definitely has to be born with the ability to think out of the box and take risks. I also believe that it can be nurtured. I think growing up in a household would be a very good example of someone that see’s their dad or their mom as an entrepreneur. I think that goes a long way to building an entrepreneur. I think just also the community around them. I think some communities are better for entrepreneurs, and I think it goes a long way for an entrepreneur.
Oscar: Okay, fair enough. You’re a maven in the food business?
Zalmi: I try.
Oscar: Using food vernacular what would you say are the five main ingredients that an entrepreneur needs to have a successful company?
Zalmi: I think passion is probably the most important ingredient. I would say the second one is the ability to lead and the ability to explain the vision over to the people that work for them. Third would be the ability to manage. I think leading and managing is very, very different. I think you really need both of those qualities. The fourth would be probably some type of crazy ingredient. Really being able to be out of the box and take risks, and just to be the norm. The fifth ingredient would be to have no ego, and really understand that it’s not about you. It’s about the company, and it’s about the people that work for you, and it’s about the customers more than anything.
Oscar: Well done. Well done. Who do you go to now if you want to brain storm an idea or problem solve. Who’s your trusted advisors?
Zalmi: I’m lucky enough to live in south Florida and have a lot of friends that are entrepreneurs. We live in a community where there are lots of small business owners. I think the best people to go to, and that’s what I do is the fellow entrepreneurs and fellow small business owners. I’m lucky enough to have a few good friends that run big businesses and I have them at my fingertip, I can call them at any time.
Oscar: Super. Great leaders are always learning, where do you get your source of knowledge from?
Zalmi: I think I get most of my knowledge from the internet. Of course the internet is a very big place, but we’re lucky to live in a time where it’s all right there for us. I’m constantly on the internet, I’m constantly looking for what is the next up and coming thing, and I think that’s very important too, to really make sure that you have your pulse on what is coming up, and what the trends are.
Oscar: Okay, so as a leader how do you make a mark in your business, or even in your community?
Zalmi: I think making a mark in business is just continuing to run a fair business, and really be good to your employees, and really lead by example. In my community I think it’s important for entrepreneurs to really get involved in their community. I sit on the board of the Friendship Circle which is for special needs children. I think entrepreneurs usually have a lot of contacts, and they have people in the community. People respect entrepreneurs and they want to help entrepreneurs. I think we have a very big responsibility to really get out there and do whatever we can in the community.
Oscar: Hundred percent agreed. What is the boldest decision you’ve ever made in your professional career?
Zalmi: The boldest decision was probably when we opened up our kitchen in Los Angeles, and that was at the end of 2008. We took every dollar that we had in the bank for the security deposit. I believe it was about $30,000. We put it down without having one customer in LA. It was definitely a gamble that ended up paying off. I think that that was it.
Oscar: If I say the words to you trust and respect, what do they mean to you?
Zalmi: Trust is really mostly a feeling I think more than anything. It’ s obviously very important in business. It’s probably the most important thing that you can have as a person, and really being able to know that. That people trusts you makes it a lot easier for you to negotiate and to lead, and to manage, and to do all that, so it’s very important. I don’t remember the second one.
Zalmi: Respect. Respect is something that comes with the territory. I mean you’re either going to earn it or you’re not, and it’s going to be based on your actions. You just have to do what’s right and you’ll gain the respect from your colleagues, and your customers, and you’re employees.
Oscar: Agreed, agreed. Final question, let’s pretend tomorrow morning you wake up and the Fresh Diet no longer exists, what is the next venture that you’re going to be looking to launch?
Zalmi: Food tech right now is blowing up. There is a lot going on in the space. I’d really love to stick into that food tech space. Something that is definitely within the food world and technology world combined.
Oscar: Again on behalf of EO South Florida, congratulations for earning your rank on the INC. 2014, fastest growing, privately held companies in the United States. Your success is inspiring, and thank you so much for helping to fuel the entrepreneurial spirit in south Florida. It’s been a pleasure having you.
Zalmi: Thank you.
Oscar: Thank you.