Matt Salzberg: Riding the Startup Rollercoaster
At 36, Matt Salzberg looked like the next business superstar. As CEO of Blue Apron, his picture graced the cover of Forbes with the headline, “To Infinity and Beyond.” His equity in his 5,000-employee company was worth $500 million. Glowing media coverage hailed Matt’s successes. Yet within a year, Blue Apron became the worst-performing IPO of 2017. Forbes quickly reversed course, claiming, “Blue Apron doesn’t have a future. It will eventually be killed.” The media is a cruel mistress that hails you when you are up and kicks you when you are down.
In amusement parks, rollercoasters bring you back safely, but there is no such certainty with the rollercoaster careers of startup founders. Matt’s story started when he raised $800,000 to launch a crowdfunding site, but customer feedback was bland, so he radically pivoted the business into a meal kit company. “With Blue Apron, we had positive letters from customers, saying, ‘You’ve changed my life; you’ve saved my marriage.’” This gave me conviction the business was going to be successful.”
The company scaled rapidly, yet the pace was exhausting as well-capitalized new entrants like DoorDash and Uber Eats entered the food delivery market. Matt’s strategy was to use scale to stay ahead of the competition. This high-stakes bet required growing operations quickly and spending massively on new customer acquisition, while hoping his scale would ultimately generate profits.
When Blue Apron went public in 2017, the spotlight of the public markets unleashed a torrent of negative press almost immediately. “The minute we went public, the PR landscape switched on us,” Matt says.
We had a tough IPO because Amazon bought Whole Foods during our road show and our narrative was lost to Amazon’s bigger megaphone. Once you go public, all the press cares about is earnings per share rather than customer results. As a public company, we had short sellers who planted bad PR stories trying to cause us to fail.
The negative press and poor-performing IPO affected employee retention. “Seeing the stock fall affected morale, which impacted our execution.” The “get big fast” strategy that worked for Netflix and Uber failed in the meal kit industry. When Matt’s stock became the worst-performing IPO of 2017, he resigned his position as CEO under pressure from his board.
Out of the day-to-day pressures, Matt took a year off, spending time with his wife and young daughters, reconnecting with friends, and reflecting. During this reset, he decided to launch his own venture capital firm—a “startup studio” called Material that incubates two companies a year. “After this stressful period with Blue Apron, I didn’t want to jump back into being CEO. I needed to be there for my young kids.”
Matt wants his legacy to transcend Blue Apron. From his IPO crucible, he has viscerally learned that it’s folly to ride the highs or lows. At 40, he is more grounded than a decade ago. Matt is hungry to use what he has learned to create more companies that solve hard problems and make a positive difference in the world.