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20VC: Rappi Founder Simón Borrero on Growth vs Profitability, Capital Efficiency, Raising $1.7Bn as a LATAM Company and Why Uber Eats Did More To Help Than To Hurt Rappi

Mar 18, 2021

Simón Borrero, Founder and CEO of Rappi, shares his entrepreneurial journey from software to creating a major on-demand delivery service in Latin America. He discusses the crucial balance of growth versus profitability and the significance of capital efficiency in his company's expansion. Borrero explains the metrics that drive success for Rappi and likens its scaling to a coffee shop’s growth. With $1.7 billion raised from top investors, he reveals the strategies that made fundraising successful and reflects on his evolution as a leader in this dynamic market.

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ANECDOTE

Donuts for Downloads

Rappi began by focusing on on-demand grocery delivery in a small neighborhood.
To gain initial traction, they gave away donuts in exchange for app downloads, directly engaging with early users.

INSIGHT

Zone Density

Zone density is crucial for on-demand delivery services like Rappi due to hyperlocal network effects.
Focusing on specific zones allows for higher density of merchants and couriers, optimizing service quality.

ADVICE

Fundraising Focus

Focus on demonstrating growth above all else to attract early-stage investors.
Strong growth metrics, such as high dollar retention and cohort performance, speak volumes to investors, especially in emerging markets.

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Simón Borrero is the Founder & CEO @ Rappi, the startup that has become a cornerstone of the Latin American mobile ecosystem, coined as "the next Everything Store of Latin America". To date, Simon has raised over $1.7Bn for the company from the likes of Sequoia Capital, a16z, Softbank, DST Global, Y Combinator and more. Prior to Rappi, Simon was the founder of multiple former companies including Imaginamos, a software studio he grew to over 300 people.

In Today’s Episode You Will Learn:

1.) How Simon made his way into the world of startups and came to found "the next Everything Store of Latin America" in Rappi?

2.) How does Simon think about the importance of zone density for a business like Rappi? What are the number of deliveries required for Rappi to make for the business to be breakeven? What is the key metric that determines the success of the business for Rappi today?

3.) How does Simon approach the balance of capital efficiency vs growth? How does one know when to pour fuel on the fire and go for growth? When is the right time to really focus on unit economics? Why does Simon believe expanding Rappi can be analogised to scaling a coffee shop?

4.) Rappi has now raised $1.7Bn from some of the best investors in the world, what does Simon believe Rappi did to enable them to be so successful fundraising? Was it a difficult shift for Simon to make moving from lean to capital abundance with the successful fundraises? What changed? How did Simon change as a leader? What is the story of Sequoia coming in?

5.) Customer acquisition: What were some of the biggest challenges when it came to initial customer acquisition for Rappi? What does Simon mean when he says "donuts for downloads"? What is the story there?

6.) Driver acquisition: In the UK and the US, driver acquisition is a big challenge, what did Rappi to do enable them to scale their driver supply so efficiently? What works? What does not work?

7.) Restaurant acquisition: What were the hardest elements of onboarding the first restaurants? How did Uber Eats entering the market actually make Rappi so much more efficient as a business and service?

Item’s Mentioned In Today’s Episode

Simon’s Favourite Book: The Prosperity Paradox

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