As the CEO of MiumMium, a marketplace for on-demand chefs, I was saddened to see Kitchensurfing and Kitchit close their doors in late April. Through my experiences as a chef in different restaurants, I have learned not to rejoice when competitors fail as it is usually a sign of difficult times ahead. In fact, Kitchit and Kitchensurfing failed even having received sizable capital over the years of more than 27 million from various Venture Capitalists. Their failures can only mean that capital will get harder to come by for businesses such as ours.
When we see two businesses well capitalized, focused on niche markets (Kitchensurfing was covering a portion of New York City and Kitchit operated in a few US cities) and offering services that appeared to be in high demand, we need to ask ourselves what went wrong in their approach. Was it their execution? Was it bad leadership? Or simply a flawed business model?
My team and I have had a few discussions with employees of both businesses. During our discussions, we only heard positive comments about the management and both companies seemed to have had great business leaders. A few employees that we spoke with questioned the continual realignment of the business strategy and many wondered if it wasn’t the Venture Capitalists, who kept interfering with management decisions and dictating the direction the company should take, who were partly to blame. However, no one to whom we spoke to could pinpoint why both businesses went belly up. From an outsider’s perspective and as a business woman operating in the Personal Chef industry, I have spent a lot of time trying to understand what exactly went wrong with my former competitors; I surely don’t want to see MiumMium end up in the same way.
I believe the key reason for these start-up companies’ failures is their fear to truly embrace the sharing economy. Let’s take a look at Kitchit who launched in 2011. The founders recently wrote on their site: “Our initial service, the Kitchit Marketplace, empowered diners to connect with chefs via a peer-to-peer platform and create custom events. We partnered with top chefs—from boldface names to up-and-coming talents—as we expanded from San Francisco to Los Angeles, New York, and Chicago.”
Similar to Kitchensurfing, at the beginning Kitchit was a true marketplace for home chefs (this is pretty much the same business model proposed by MiumMium today.) However, after raising capital, the management team modified the business model and opted for a fixed price/menu offer,“We vertically integrated our business model, playing a more hands-on role in menu creation, sourcing, and prep. For customers, Kitchit Tonight offered one-click booking and prices starting at $39 per person.”
The vertical integration, which required hiring and training chefs, additional staff, renting commercial kitchens and purchasing food significantly increased fixed costs and depleted the capital of the business rapidly. This change in strategy was the beginning of the end.
Sangeet Paul Choudary, in his highly praised book Platform Scale, explains the transformation of today’s economy from Pipes to Platforms. Historically, goods were manufactured and pushed to the consumer in a system he described as Pipes. However, with the arrival of the internet-based economy, we saw the rise of online platforms orchestrating value in the creation of an ecosystem of producers and consumers. The sharing economy’s foundation is a series of platforms where producers can monetize goods or services in exchange for money. Each platform acts as a marketplace, attracting, curating and cultivating relations between all parties. The strength of such an approach is its leveragability and scalability. Without scalability, Airbnb and Uber would still be operating in their home market. The use of a platform that can be distributed everywhere made them the global powerhouses that they are today. By dropping the marketplace strategy and their original platform to adopt a more archaic pipe approach, Kitchit turned its back to the future and faced the past. How can you conquer the world when you need an industrial kitchen in each city where you operate? If you are running a “quasi-restaurant” business you will end up facing the quasi-cost of a restaurant, which is a really low-margin business.
By abandoning the idea of a Home Chef marketplace and replacing it by a large catering corporation, both Kitchensurfing and Kitchit precipitated their end. Yes, there is comfort in old and proven business models. However, they usually require an immense amount of capital and a long time to succeed. As Tom Goodwin (@tomfgoodwin) said: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.” Therefore, we at MiumMium strongly believe that we should not employ chefs or operate restaurants if we are to succeed in the Global Personal Chef marketplace.
Six months ago, on December 12, 2016, we launched MiumMium in the Province of Quebec, Canada. So far, we have spent a tiny fraction of the money raised by our competitors. We have one programmer on payroll and no office expenses. Our small team is working day in and day out to achieve our dream. Over the last 6 months we registered more than 11,000 chefs in 9 countries, making MiumMium the largest home chef marketplace in the world. We are increasing bookings every day and are proud to see a lot of our past clients request our services again. We know that the service of our chefs is exceptional and many times the meals offered by chefs are up to 40% cheaper than having a similar meal at the restaurant. We offer a unique and pleasurable experience within a growing market. All MiumMium requires now is to be known by the public. We will not be a global powerhouse tomorrow or next month, it will require more sacrifices, sleepless nights, hundreds of mistakes and millions of doubts. However, we are sticking to the platform, determinedly facing the future.