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Why This Meal Delivery Startup Is Making Its Customers Buy Ovens
Here’s why Blue Apron’s business model failed — and how Tovala aims to fix it
Marc Andreessen was once asked what message he’d put on a billboard. His answer: “I’ve actually thought about hiring a skywriter to do this one. Right in the heart of San Francisco would be a billboard with just two words on it: Raise Prices.”
He was mostly referring to charging more for the same product, which is usually good advice. But there’s another interesting spin on this idea, embodied by a meal delivery startup called Tovala. The company is essentially taking the Blue Apron model (which famously crashed and burned) and trying to improve it, mostly by charging more up front.
Blue Apron has had a painful life as a public company; the stock is down about 98% since its IPO. The meal kit delivery pioneer has struggled with customer acquisition costs and lifetime value. When Blue Apron went public, it looked like a pretty simple money machine: According to its prospectus, it would pay $94 to get each new customer, those customers would spend $606 in their first year, $261 the year after, and diminishing amounts after that. But as long as Blue Apron kept acquiring new customers at reasonable prices, and kept them on the platform for long enough, they’d…
