How we shifted toward fulfillment and raised 35M€ in 18 months ?
18 months ago, I made the most difficult strategic decision of my young career as CEO.
On the one hand, (1) a business line I had invested 5 years of my life in, generating €10M of annual revenue but with limited growth opportunities, on the other hand (2) a new business line, generating €20k of monthly revenue, with huge growth perspectives in an exploding market. One thing was for sure, we would not have the necessary resources to move forward on both fronts. We had to choose.
July 1, 2019, 8:30 am. I walk out of the nursery, where I just dropped my daughter off, ready for a day of work. Outside, the atmosphere is heavy, it’s going to rain. For a few days now, I have been feeling this painful tip in my stomach — an expression of my anxiety. As a CEO, I have learned to live with this unpleasant sensation — I often tell myself that it occurs to deliver a message. That morning, what message was it trying to send me?
On my way to the office, I think about the signals that should concern me if there was a real issue: (1) our Sales people are specifically complaining about not getting any more leads, (2) the conversion rate is dropping. In order to disregard anything that might prevent me from analysing these signals with complete objectivity, I agree to play the “What if?” game.
What if the Sales were right? What if this time we were starting to saturate our market ? I kept thinking for a moment, then dismissed it all outright and moved on, but the anxiety wouldn’t let go.
I arrive at the office and sit at my desk with a coffee. In front of me is a reproduction of Magritte’s Clairvoyance, given to me as a gift by a former employee a few months earlier. The artwork represents a painter who observes an egg, but paints a bird. I tell myself: “If I were the painter, what would the egg represent? What about the bird?”
At that moment, Pierre, Head of Data, comes to greet me. It’s a good thing, because together we often connect the dots. It’s 9 am, (luckily) he’s just had his first coffee and I drop the bomb: “What if we were saturating our market?” Far from being disturbed, he looks at me, laughs and replies: “you had another good night!” I give him my insights, and we run the numbers together. After a while, Pierre closes his computer and says: “It hurts to admit it, but I think Sales are right. On average we have called our leads 1.8 times and we don’t have a single lead that hasn’t been called in the last six months. We are saturating our market. Fuck.”
“Saturating our market” in an ultra-growth scheme means that the size of our addressable market would cap our acquisition speed and force us to slow down. I remember panicking for a second. Deep down, I knew it would be difficult to fund a business whose major market was showing a slowdown at €10M in revenue with a distant perspective of profitability.
In twenty minutes, we designed the optimal scenario: reduce expenses to extend our lifespan, open other cities smaller than Paris and aim for a profitable company with €20M in revenue within a few years. Nothing was impossible and it was comforting to know that we already had a plan.
But I couldn’t bring myself to be satisfied with it. Deep inside, I was starting to feel there was a mismatch between where I was taking the company and where I wanted to go. I had created Cubyn right out of school, without any professional experience, without any unemployment benefits. I had taken all the risks with the single ambition of building something big. Finding myself forced to slow down, to reduce my ambitions because of a market limitation was as frustrating as if someone had told me: “Adrien, you won’t be able to become the person you want to be”. So I started looking for the bird in Magritte’s painting.
At that time, at Cubyn, there were several small projects launched on business lines related to our main activity, and since its launch, I was following very closely a project called “Fulfillment”, operated by a Project Manager and which was already starting to generate 20k€ of monthly revenue. In search of the slightest signal, I started to analyse all the available data to finally get 3 insights:
1. The market was huge: >1Bn in France and >45Bn in Europe
2. The customers were 5 times bigger than on our historical business
3. Acquisition was possible through partnerships
The further I got into the analysis, the more convinced I became. Finally, one day I allowed myself to ask the only relevant question: “what if this project generating 20K€ per month was the new Cubyn?”
The moment I formulated this question into my mind, I thought “You are crazy”, then I was reminded of a quote by Salvador Dali: “The only difference between me and a madman is that I’m not mad.”. In the end, at every moment of doubt during the journey of transformation, Dali would be there to remind me that no visionary had ever emerged without being suspected of having an ounce of madness.
The more I dug into the subject, the more my beliefs about Fulfillment began to grow, but the decision was hard to make. I wasn’t born in wealth and from where i come from we never risk the value that was acquired or built. The increased level of risk, the fear of the reaction of our employees, investors market and family as well as the fear of being alone in my decision, were the main biases that were crippling my thinking.
I remembered the concept of “lonely spots” in an Harvard Business Review podcast about CEO decisions, describing situation when a CEO has a strong conviction about what needs to be done but knows that no one will like the decision. I wondered for a long time if it was my turn to make this kind of decision. In this case, Fulfillment was the solution to maximize the long-term return for Cubyn and all stakeholders, and it was my responsibility to make this decision for the company.
Accepting to change my focus was emotionally difficult. But I knew that during this first company stage, we had developed a unique capability that would benefit us with Fulfillment: the ability to have the best cost structure in a price-driven industry. Where every other first-mile company had failed, we were the only one who had made our unit economics work. I was confident that this capability would allow us to win the Fulfillment market, where our direct competitors were logisticians with very low levels of standardization and technology. I was convinced that we had to enter this sector with a 30% lower price point than the competition, and to stifle those competitors with our operational power and super-fast deployment and scaling capabilities.
In September 2019, we decided to re-focus on Fulfillment, and very quickly we deployed our first technologies in the warehouse. Our acquisition and focus efforts started to pay off in November 2019 with a revenue multiplied by 18 in 5 months. At that point, 40% of our business was already generated by Fulfillment and in January 2020 we reached 1 million monthly net revenue after only 6 months of operation.
In March 2020, the Covid-19 sanitary crisis emerged and the lockdown resulted in an e-commerce boom. The Fulfillment revenue was then multiplied by 3 in 3 months, while our historical business based on stores was almost at a standstill. At the same time, traditional logistics providers were closing their operations with huge shipping delays, and Amazon was limiting its Fulfillment offer to certain product categories only. We offered the best performances in the market in terms of promise and cost. The industry finally started to understand that to survive the health crisis and win in e-commerce, it needed agile, scalable, technological and neutral Fulfillment solutions. By the end of 2020, our fulfillment revenue growth had skyrocketed (x8) and our GMV reached €250M with the signature of major marketplaces such as Rakuten, Mirakl, Backmarket and Fnac.
In February 2021, 1.5 years after the launch of Cubyn Fulfillment, we closed a 35M€ fundraising to expand our network in Europe.
Our ambition is to build the largest e-commerce Fulfillment network in the world. This fundraising is just the first step and the beginning of a great adventure. And now, Dali and I agree: the only difference between us and a madman is that we are not mad…
