Jokr and Personalized Instant Commerce

In April of 2021, Ralf Wenzel and his team launched JOKR, a global platform for instant grocery and retail delivery at a hyper local scale. Within six months, the company operated in seven countries and its annualized revenue run-rate surpassed $100 million, showing no signs of slowing down.

I was lucky to invest in JOKR’s Seed and Series A rounds through my investment firm, Banana Capital. Here’s the inside story behind one of the world’s fastest growing and most customer-centric companies.

Ralf was born in East-Berlin and lived 10 meters from the Berlin Wall. He had family in Cuba and spent part of his childhood there, getting a glimpse of Latin America’s version of communism. Living between both systems as the Berlin Wall came down taught him to spot operational inefficiencies and inspired him to fix them.

He saw the internet coming and studied computer science at the University of Havana in the mid-90’s, betting his career on it. Over the next decade, he worked in engineering at Mercedes Benz, received a Masters in Computer Science at Berlin University of Technology and Economics, started numerous businesses, and even invented a voice-recognition engine.

The first startup Ralf joined was Berlin-based Jamba (Jamster) in 2004. The product distributed news, wallpapers, ringtones, and eventually games on mobile devices (which at the time had tiny black and white screens with text pads). Ralf led Sales and Business Development, expanding Jamba into 45 countries, becoming the world’s largest platform for mobile content. Jamba was acquired by VeriSign and NewsCorp in 2005 and was one of Europe’s first big tech exits, putting Europe’s tech scene on the map. Not only was this Ralf’s first taste of building a company, but it was also where he first met one of JOKR’s co-founders and now-CPTO, Sven Grajetzki.

After Jamba, part of the team moved to London to work on Moneybookers together, which later rebranded to Skrill and merged with Paysafe in 2015. Ralf stayed on for five years as COO, working closely with Sven in Product. Skrill, and then Paysafe went on to IPO, becoming one of the biggest payment companies in the world and the largest e-wallet behind PayPal and Alipay at the time. Ralf then launched a Seed-stage venture fund, Tocororo Ventures, to invest in tech and food startups around the world.

By 2013, many of JOKR’s eventual co-founders (Ralf, Sven, + new additions Ben Bauer and Konstantin “Koko” Sorger from Groupon) moved to Singapore to launch and scale foodpanda globally, which was at the time only in South East Asia. The company was initially incubated by Germany’s Rocket Internet and Ralf eventually became foodpanda’s founder and global CEO, with Ben (CCO), Sven (CPO), and Koko (CMO) all taking progressive roles as the company scaled. This was around the time Ralf met JOKR’s now-COO Aspa Lekka. Originally from Greece, she spent seven years playing professional handball across Europe. Ralf convinced her to join foodpanda for four years and then return after her MBA. foodpanda went on to launch ghost kitchens, new brands in each market, make over 12 acquisitions, and capture high market share in over 40 countries across South East Asia, MENA, Eastern Europe, Russia, and LatAm.

Over this time, Ralf became friends with Niklas Oestberg who co-founded Delivery Hero in 2011. Similar to foodpanda, Delivery Hero had captured high market share throughout Western Europe. Initially competitors and both based in Berlin, they combined forces in 2016, citing complementary geographic coverage and a shared investor (Rocket Internet, who had been buying up stakes in numerous on-demand companies around the world at that time). Niklas would focus on all operations as CEO, Ralf on M&A as Chief Strategy Officer, with other future members of JOKR’s founding team taking roles across the globe.

The Delivery Hero / foodpanda merger closed on December 31st, 2016 and the company IPO’d six month later in June 2017. Today, the public markets value Delivery Hero at ~$27 billion. foodpanda’s original markets make up the majority of Delivery Hero’s orders (2.5 billion run rate as of Q2 2021), and over half of its GMV ($33.43 billion) and revenue ($5.78 billion). Delivery Hero continued acquiring companies, making over 26 acquisitions and 22 outside investments that included Rappi in Latin America, Zomato in India, Deliveroo in Europe, and Woowa Bros in Korea (acquired).

Then, Softbank called.

In 2019, SoftBank recruited Ralf as a Managing Partner to lead its Latin American Tech Hub, an incubator for startups, joint ventures, and strategic initiatives across the region. Fascinated by the opportunity to launch 50 businesses in five years and work alongside SoftBank’s new $5 billion Latin America Fund, the team moved to Latin America.

Part of the role involved managing operations at numerous SoftBank portfolio companies. Market historians will remind us that 2019 and 2020 were challenging years for some SoftBank-backed companies. Spending most of their time on WeWork and Oyo, the SoftBank tech Hub was never realized. Then in March 2020, COVID hit.

Locked down around the world, Ralf reconnected with all the best operators he’d worked with over the past 20 years. As they ordered everything online (meals, groceries, kitchen supplies, furniture) they realized every purchase in each market all had an inconsistent customer experience. Poor product discovery, slow delivery, inadequate customer service, and even the wrong products being delivered all together. Over time, the team that had been building on-demand businesses since 2011 realized there was still a huge gap between customer expectations and what the market was delivering.

This market they were entering admittedly seems crowded at first glance. It consists of four major categories: Brick & Mortar, Supermarket Delivery, Marketplaces, and Instant Commerce. A non-exhaustive overview:

JOKR specifically operates in the instant commerce space, broadly defined as a service that delivers to customers in 15-minute or less. Within that, JOKR launched with a low-SKU collection of grocery products. Grocery retail is one of the largest categories globally at $9.8 trillion, or roughly ~10% of global GDP, however less than 3% (~$260 billion) of that is currently online.

There are many reasons for groceries' low online penetration, and the simplest answer is that existing offline solutions have generally been good enough for consumers. Things like agriculture and roads first built in the ancient era, food processing and global supply chains established during the industrial revolution, and densely trafficked roads and city plans that evolved around automobiles, all shaped how the global food and retail infrastructure evolved into multiple layers of distributors, consumer packaged goods (CPG) conglomerates, and national chains of physical brick & mortar stores by the 1990’s.

Many of these brick & mortar stores still exist, however are structurally unprofitable selling online as-is and were generally un-incentivized to figure out how to do so until 2020. They built businesses centered around daily two-way commutes from their customers. Their operations, business models, and cost structures are optimized for that in-person, in-store experience. Trips to the grocery store are generally not enjoyable and can take a total of 45 to 90 minute for some consumers. The inconveniences associated with traditional grocery shopping has encouraged users to take fewer trips (once a week on average). This has forced consumers to attempt to plan meals far in advance and make large orders to stock their fridge for weeks in advance, leading to significant time spent on meal planning and high food waste.

Most grocery stores have now begun to offer some form of their own in-house delivery, some of which are profitable. These profitable models generally have higher minimum order requirements, markups on items, non-flexible delivery windows (often multiple deliveries are pooled into one driver trip to save costs), and an unclear view into what products are actually in-stock due to outdated software stacks.

With the rise of mobile phones, a second major category emerged: three-sided marketplaces connecting couriers, local stores, and consumers. Customers order from a local store on the platform, and typically schedule a drop off time anywhere from 2-hours to one week in advance. The platforms dispatch a courier (non-salaried, on-demand worker) who drives to the retailer, walks around the store to locate each item in the order, works through the checkout line, delivers it to the customer, and repeats this multiple times at multiple stores spread around a city until they choose to stop. These marketplaces represented the first wave of mass-market online grocery adoption as they connected consumers with excess capacity at existing retail locations. Their asset-light models allowed them to scale very quickly, and their on-demand nature made them attractive for couriers in a competitive labor market as fast adoption of smartphones made it easy to earn an income.

As these marketplace models scaled, it became clear that a middle, software-layer taking an additional cut between the demand and an already complex supply side was inefficient. Brick & mortar stores traditionally have slim profit margins, as well as outdated software systems that make it difficult to connect their inventory with the marketplaces, providing an inconsistent customer experience (below). The marketplaces also saw limitations relying on existing infrastructure that was built around commuters, which led to longer delivery times and higher prices.

The item replacement process is core to most marketplace products

Long delivery times and high prices were exacerbated in 2020 by the COVID-19 pandemic, giving rise to the latest category in grocery: instant commerce. First proven out by goPuff in the US and Getir in Turkey, this model delivers groceries and other products to consumers in 10-15 minutes from micro fulfillment warehouses. These 2.5k-5k square foot hubs are not seen by the end-customer despite being located within minutes of them. The hubs have floor plans, shelves, packing, and logistics areas optimized for delivery. They pay rent, employ full-time workers, and carry their own inventory - the last of which can have compounding advantages at scale.

When the internet first hit in the 1990’s, companies like Webvan and Kozmo attempted to bring groceries and 15-minute delivery online. Both failed, ultimately due to poor pricing and customer segmentation, unnecessarily complex infrastructure, and simply expanding too fast without discipline around profitability. You could also argue a lack of smartphones for the delivery fleet was working against them. Most investors have since abandoned the category assuming the model doesn’t work, forgetting that Kozmo was profitable in four cities (and ironically raised money from Amazon in March 2000). Pink Dot, founded in 1987, has also operated profitably for over 30 years in Los Angeles, the first two decades operating mostly via phone orders and cash payments.