Exclusive: Whizz CEO Shares Fundraising, Expansion Plans
Exclusive: Whizz CEO Shares Fundraising, Expansion Plans
Grubhub + Starbucks, DoorDash pushes back in Seattle, coffee prices
We’ve got a juicy interview today, sitting down with Mike Peregudov, Co-Founder & CEO of Whizz. His company just closed on $12M in fresh funding for its ebike rental business, as it looks to both 10X its fleet in its NYC hometurf and expand to new markets. Read on for the full play-by-play, and more!
Today:
Whizz Wants to Cover the Country in Bright Green E-Bikes
Grubhub Grabs Starbucks Partnership
Chart Time | Toast Restaurant Trends
DoorDash Pushes for Compromise in Seattle
INTERVIEW | Whizz Co-Founder & CEO Mike Peregudov
Modern Delivery: Let’s start with the basics, what is Whizz, and what led you and the founding team to create it?
Mike Peregudov: Whizz is an e-bike and soon e-moped subscription service for delivery drivers who work on food delivery platforms. We started this company a little over two years ago, in February 2022. Being immigrants ourselves, we understood very well the pains of the delivery drivers, most of whom are immigrants. This is a dramatically underserved audience, many of them don’t have access to credit scores and can’t afford to buy a new electric bike. They also feel a lack of quality service and safety. Understanding their challenges firsthand, we saw an opportunity to fill this gap in the market.
Starting from the first month, it began to grow constantly. I thought we could build the best bike on the market and combine it with a good service based on our built in house software. We just simply did everything a bit better than others and that was enough to become the leading service in the market.
How would you say Whizz is different from some of your competitors, like JOCO or Zoomo?
To start, JOCO operates on a different business model. While Whizz is subscription-based, JOCO is more like a bike-sharing model similar to city bikes but for delivery drivers. They have special dock stations in the city, and their customers rent bikes on a minute-by-minute basis. In contrast, at Whizz, we don’t have any dock stations. We rent out electric bikes and mopeds on a monthly basis, with a minimum contract of one month. Our customers get a bike from us and use it as if it’s their own. The bike itself is much better for long rides (and delivery workers do really long rides).
Regarding Zoomo, our main difference lies in approach. While the services are similar in general, we put much more effort into building a localized high quality service. There is no secret sauce but there are two pillars: the best bike on the market (with the largest certified battery on the market) and the best software that helps scale fast but maintain a high level of service.
Another key aspect is our strong focus on healthy unit economics, which we consider very important for long-term success.
What can you tell us about your recent partnership with Grubhub?
We just started our partnership with Grubhub a few months ago, and we are very proud to be their official electric bike partner for delivery drivers. In September 2023, we also reached a similar agreement with DoorDash, another leading platform in this space. With both platforms, we are the official electric bike partner for their delivery drivers, which means we provide our electric bikes and services with exclusive terms for them.
We consider our partnerships with DoorDash, Grubhub, and other companies in the space as strategic. We believe that these partnerships will become the main channels for us to engage with and support delivery drivers, helping us acquire new customers and expand our reach.
Also, I think it’s super important to help their drivers to get safe, reliable and convenient bikes for their drivers, especially with an exclusive price. While all platforms are competing for drivers, they are trying to make them loyal and Whizz can help a lot here.
Congrats on the latest fundraising round, how did that come together?
The last year and the beginning of this year were not the easiest times to fundraise, especially in our space. You know what I mean. However, our strong traction and profitable unit economics helped a lot. Our recent fundraising round consists of two parts. First, we raised $5 million in equity in January from Leta Capital and other investors. Then, in May, we raised an additional $7 million in venture debt, led by Flashpoint VC, to expand our e-bike fleet. Combined, it’s $12 million in equity and debt.
What do you plan to spend the new capital on? What will we see Whizz get up to over the next 12 months?
First of all, we want to continue growing in New York. New York is a massive market, and with our current fleet of around 2,500 electric bikes, we still hold less than 5% of the market. Our goal is to expand to at least 20-30k bikes in the next couple of years here. Additionally, we aim to go beyond New York and beyond e-bikes. This month, we are launching electric mopeds, with the first 50 arriving in June. You will soon see our mopeds on the streets of New York.
We also plan to expand beyond New York and launch in other cities. The next milestone is to roll out in up to five more cities on the East Coast, including Boston, Philadelphia, Chicago, and Miami. Not sure about the timing, but definitely in the next 12 months. Following that, we aim to go nationwide in ‘25-’26. The market is huge and growing. Our goal is to operate a fleet of 200,000 electric vehicles by the end of 2029, becoming the largest delivery fleet of electric two wheelers in the US.
Let’s go out with a fun one… what are some things about building a startup in America that are different from when you built your last company in Russia?
That’s a fun one, indeed, lol. My co-founders and I came from Russia, where we built two separate companies, but both in a delivery space. I founded a meal kit company similar to HelloFresh, which we eventually sold to a strategic investor in 2018 for around $25m. My co-founders built a business model similar to Whizz and sold it to a private equity firm a couple of years ago. We then decided to move to the United States, met here, and chose to build something new together in the delivery space, leveraging prior experience.
As for the differences, well… One major difference is the market size and dynamics. It’s all just much bigger, which means you have much higher upside but also you need to attract much more capital. America is not for bootstrapping, you should work with capital a lot if you want to have a chance to scale big.
Otherwise, I noticed that there are much more stakeholders actively involved. Like the city, government, unions, media, activists, neighborhoods, indirect competitors, lobby firms, etc. It's a super complex system with many groups of interests with different incentives. But in a good way. Not sure I fully understand it yet, but I like it. At least, It’s fun.
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3PD | Grubhub Finally Gets Some Starbucks
Evidently, Grubhubbers have been jonesin’ for their coffee fix for some time now: Starbucks was the most searched for merchant not available on GH’s platform. But you can now put those jitters aside, as Grubhub and Starbucks have announced a partnership. The coffee connection goes live in PA, CO and IL this month, with a roll out to the rest of the country expected by August. To ensure pumpkin spice latte lovers get their fixes just right, the two cos “have partnered to ensure delivery is as quick as possible” and will make use of specially designed to-go packaging.
The Big Picture: With this partnership, Starbucks finally has each of the big 3PDs under its belt, a marked shift in its strategy from a few years ago. The coffee giant only began working with Uber Eats in a couple of markets in 2018, before going nationwide in 2020. Its partnership with DoorDash began in Jan of last year, before hitting every state two months later (the same pace as this GH deal.) Starbucks has also worked with Gopuff since last fall, prepping the drinks inside select MFCs. Delivery represents a bright spot for Starbucks, with segment sales up 80% YoY, while its physical same-store sales have faltered as of late.
CHART TIME | How Much for that Latte in the Window?
Toast’s Q1 2024 Restaurant Trends Report shows caffeinated beverage prices reaching scalding levels, with the U.S. averaging $3.08 for a cup of regular coffee, $5.14 for cold brew, $5.46 for lattes, and $3.74 for tea. If you want a cheap latte, don’t head to hawaii, where the average price tops out at a whopping $6.69 (can’t they grow the beans there??) Also interesting are that LA and SF see the most early morning diners, and that patrons in states with higher wages seem to tip a bit less.
POLICY | DoorDash Pushes for Seattle Compromise
DoorDash is sticking to its guns in the battle over gig worker wages in Seattle. DD notes that the City Council decided not to vote on a compromise bill that would have lowered delivery driver wages to $19.97, from their current rate of $26.40 per active hour, plus compensation for mileage and tips. DoorDash is going so far as to note that if the wage change goes through, DD will drop its $4.99 Regulatory Response Fee, which should get volume back up for hungry consumers and merchants alike.
The Big Picture: DoorDash notes that between Feb and Mar 2024, higher costs in Seattle led to 590,000 fewer orders, and $14M less in merchant revenue. Due to less order liquidity, Dashers earned 13% per hour than they did prior to the changes. Still, it’s rare to see a company make an offer like DoorDash is doing now: change this law and we’ll do X in response. The 3PDs are facing regulatory changes across the country; just this week, Colorado passed HB24-1129, the Protections for Delivery Network Company Drivers bill, which prohibit delivery cos from reducing driver pay based on tips, and mandate companies pay couriers the entire tip. Couriers also get a new deactivation challenge procedure, and now have up to 60 seconds to decide whether or not they want to accept an order. Another law, SB24-075 offers similar protections to TNC drivers.
A Few Good Links
Senators from across the aisle sign letter alleging Amazon misled them about how much it controls its third party delivery drivers. European e-grocery Oda lays off 150, retrenches to Scandinavia. Cowboy Chicken picks Cartwheel. Ebike fire victims often find it impossible to hold companies accountable. Foxtrot Market set to return, under helm of original leader. CA may exempt restaurants from new junk fee ban. Hyundai debuts autonomous electric truck. Walmart, Albertsons push to decarbonize food transport. This grocer stocks hot items from TikTok. British grocer Sainsbury’s adds Klarna BNPL. Amazon and Walmart turn to generative AI to cut vendor costs. Walmart makes hourly workers eligible for bonuses, education access. QSRs have cut 10k jobs in CA in response to higher wages. Albertsons Media Collective expands reach with Rokt. Costco starts building its own ad business. Meijer adds SNAP payments to in-house app. Nikola shares H2 trucking stats. Rivian cuts costs amid push towards long term stability. EnerVenue raising $515M for battery tech. Better data helps Insomnia Cookies build loyalty program. Alibaba Guaranteed helps SMBs with cross-border orders. US economy adds robust 272k jobs in May. Port of Baltimore fully reopening. Joby buys Xwing. &Pizza reinvigorates brand. Bolt’s gamified insurance seems no fun for workers. Chinese delivery workers grumble about Meituan’s ~$1.40 + no fee cheapo eats.
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